exv10w4







Exhibit 10.4



EMPLOYMENT AGREEMENT




     This Employment Agreement (“Employment Agreement”), effective May 19, 2008 is between Harvest
Natural Resources, Inc. (the “Company”) and G. Michael Morgan, a resident of Texas, (“Employee”),
the terms and conditions of which are as follows:



     WHEREAS, the Company desires to secure the experience, abilities and service of Employee by
employing the Employee in the position of Vice President of Business Development upon the terms and
conditions specified herein;



     WHEREAS, the Company and Employee acknowledge that if Employee’s employment with the Company
terminates for any reason, Employee may inevitably disclose trade secrets of, and other proprietary
and confidential information about, the Company’s business, operations and prospects; and



     WHEREAS, Employee wishes to enter into this Employment Agreement to receive the benefit of the
provisions contained in it.



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



1. TERM OF EMPLOYMENT.




     Subject to the terms and conditions set forth in this Employment Agreement, the Company agrees to
employ Employee and Employee agrees to be employed by the Company for the term which started on May
19, 2008, and ends on May 31, 2009. On May 31, 2009, and on each anniversary thereafter (an
“Extension Date”) the term of this Employment 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 Employment 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 of Business Development, 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 Employment Agreement in the best interest of the Company and the Company’s
affiliates.



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     (c) The Company’s Right to Change Position or Duties. Subject to the terms of this
Employment 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.



3. COMPENSATION AND BENEFITS.




     (a) Base Salary. During the term of this Employment Agreement, Employee’s yearly base
salary shall be not less than $300,000.00 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 upon Employee’s performance under the guidelines
adopted by the Company, the Company’s 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 stock awards. Except as provided in Section
4(a), this Employment 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 expense
reimbursement policy, the Company shall pay or reimburse Employee for 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 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 of Business
Development..



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     (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.



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 1 of this Employment Agreement or (b) Employee resigns for Good Reason, then (v) 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 or resignation, (w) the Company
shall pay to Employee an amount equal to twenty-four 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 or resignation, (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 termination or resignation, 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 Internal Revenue Code of 1986, as amended
(the “Code”) and the rules and regulations issued thereunder by the Department of Treasury and the
Internal Revenue Service. 




          (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 1 of this Employment 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




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Employee’s termination of employment or
resignation, (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 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 or resignation, (v) if the date of
the Change of Control coincides with or follows the date of Employee’s termination of employment,
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 or resignation, or
the expiration of the general term(s) of the option(s) specified in the relevant option
agreement(s), whichever is the shorter period, (w) if the date of the Change of Control coincides
with or follows the date of Employee’s termination of employment, the restriction period on
restricted shares of stock granted by the Company to Employee will lapse upon the date of the
Employee’s termination of employment and a certificate(s) representing such shares will be
delivered to Employee within thirty (30) days after the end of the termination or resignation, (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 months following
the later to occur of the termination, resignation or 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 or resignation, and (z) the Company will pay 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 those 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 of (1) the date that is six months following the date of
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 not provided through an arrangement that is fully
insured by a third party 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 that is an insured benefit 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 is
not subject to liquidation or


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exchange for another benefit. Any tax gross-up payment made pursuant
to clause (z) of this Section 4(a)(3) shall be made by the Company by the end of Employee’s taxable
year next following Employee’s taxable year in which Employee remits the related taxes to the
Internal Revenue 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 1 of this Employment 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 Employment 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 upon the 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
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 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 Employment 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 Employment 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 services 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 Employment Agreement as
contemplated by Section 6(d).



     (g) Disability. Employee shall have a “disability” under this Employment 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(g) 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(g); or




          (2) individuals who, as of the date of this Employment Agreement, constitute the board of
directors of the Company (the “Incumbent Board”) cease for any reason to




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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 Employment 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
Employment 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 Employment 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 Employment Agreement, he shall not be entitled to participate in or receive
benefits under 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 Employment 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 Employment 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 Employment Agreement and the terms of any agreement granting Employee stock
options or restricted stock, the terms of this Employment 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 Employment 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 Employment 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 Employment 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
as an employee of the Company, which prospective interests are disclosed to Employee prior to or on
the date of Employee’s termination as an employee of the Company, he shall not, directly or
indirectly, own any interest in, manage, control, participate



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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 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 Employment 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)(3)(s), Section
4(a)(3)(t), Section 4(a)(4)(s) or Section 4(a)(4)(t) of this Employment 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
Employment 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



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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.



     By signing this Employment 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 Employment 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 Employment Agreement shall be deemed a waiver
of any provisions or condition of this Employment 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



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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 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 Employment 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 Employment Agreement to
any affiliate or successor, and no such assignment shall be treated as a termination of Employee’s
employment under this Employment Agreement; provided, however, that in the case of an assignment to
an affiliate, the Company shall not be relieved of its obligations under this Employment 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 Employment 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 Employment Agreement. As used in this Employment
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 Employment Agreement by
operation of law, or otherwise.



     (e) Assignment by Employee. Employee’s rights and obligations under this Employment
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 Employment 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 Employment Agreement constitutes the entire
agreement of the Company and Employee with respect to such terms and conditions.



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



     (h) Invalidity. If any provision of this Employment 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.



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     (i) Enforceability by Beneficiaries. This Employment 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 Employment Agreement to Employee’s devisee, legatee or other designee or, if there is
no such designee, to his estate.



     (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 Employment Agreement, then the
Company shall reimburse Employee, or pay on Employee’s behalf, all of Employee’s 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.



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



	 	 	 	 	 	 	 
	 	 	HARVEST NATURAL RESOURCES, INC.	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	 
	 	 	James A. Edmiston	 	 
	 	 	President and Chief Executive Officer	 	 
	 
	 	 	 	 	 	 
	 

	 	Date:	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	 
	 	 	G. Michael Morgan	 	 
	 
	 	 	 	 	 	 
	 

	 	Date:	 	 	 	 
	 

	 	 	 	 	 	 






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