exv10w8






Exhibit 10.8




SEPARATION AGREEMENT




     This Separation Agreement (this “Agreement”) is between Harvest Natural Resources, Inc. a
Delaware corporation (the “Company”), and Kurt A. Nelson (“Employee”) and is dated as of the latest
date set forth beside the signatures of the parties at the end of this Agreement.



     WHEREAS, Employee and the Company are parties to an Amended and Restated Employment Agreement
effective as of February 10, 2006 (the “Employment Agreement”);



     WHEREAS, Employee’s employment with the Company will end on May 31, 2008; and



     WHEREAS, the Company and Employee desire to reach agreement as to the terms of Employee’s
separation from employment;



     NOW, THEREFORE, in consideration for the payments and benefits provided to Employee and the
agreement and covenants of Employee and the Company as provided below this Agreement is made.



1. Separation Date. Employee’s separation date from the Company shall be May 31, 2008
(the “Separation Date”). Employee and the Company waive any requirement of a termination
notice under the Employment Agreement. Employee’s employment with the Company shall terminate
on the close of business on the Separation Date.



2. Termination of Employment Agreement; Continuation of Covenants. Employee and the
Company agree that Employee’s employment with the Company shall terminate on the Separation
Date. This termination of employment is by mutual agreement of Employee and the Company, and
Sections 4(a), 4(b), 4(c) and 4(j) of the Employment Agreement shall not apply with respect to
Employee’s termination of employment on the Separation Date. Employee acknowledges, agrees
and affirms that the covenants of Employee in Section 5 of the Employment Agreement including,
without limitation, in respect of property of the Company, trade secrets, confidential
information and non-competition continue to apply after the Separation Date in accordance with
the terms of the Employment Agreement. Employee further acknowledges and agrees that the
benefits provided to Employee in this Separation Agreement provide additional and sufficient
consideration for such covenants.



3. Consulting Agreement. Upon execution of this Agreement, the Company and Employee
shall execute and deliver a Consulting Agreement substantially in the form as set forth in
Exhibit A hereto.



4. Bonus. The Company shall make lump sum bonus payment to Employee of $200,000 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.



 









 








5. Stock Options. Employee has been granted the stock options listed in Exhibit
B attached hereto (the “Options”). Notwithstanding any provision in the Employment
Agreement or the stock option agreements pertaining to the Options to the contrary, after the
termination of his employment on the Separation Date, (i) with respect to those Options
granted prior to January 1, 2006, Employee shall have until the tenth anniversary of the dates
of the grants of the Options to exercise his rights with respect to those Options, and (ii)
with respect to those Options granted on or after January 1, 2006, all remaining unvested
options will vest on the Separation Date and Employee shall have until 5:00 p.m. on May 31,
2010 to exercise his rights with respect to those Options (whether the options vested prior to
or on the Separation Date). Except as modified by this Separation Agreement, all exercises of
the Options must be in accordance with and pursuant to the terms of the applicable option
plans and option agreements. The Company shall take any and all further actions necessary or
reasonably requested by Employee to effect the foregoing, and to confirm Employee’s ability to
exercise the Options in accordance with the provisions of this paragraph 5, without regard to
the termination of his position as an employee of the Company.



6. Restricted Stock. Employee has been awarded the restricted stock listed in
Exhibit B attached hereto (the “Restricted Stock”). Notwithstanding any provision in
the Employment Agreement or the restricted stock agreements pertaining to the Restricted Stock
to the contrary, the Restriction Period (as defined in the applicable long term incentive
plans) will lapse on the Separation Date, and a certificate or certificates for the Restricted
Stock, less any shares retained to meet withholding requirements, will be delivered to
Employee within 30 days after the Separation Date. The Company shall take any and all further
actions necessary or reasonably requested by Employee to permit the Restricted Stock to vest
in accordance with the provisions of this paragraph 6, without regard to the termination of
his position as an employee of the Company.



7. Continuation Benefits. The Employee shall be entitled to elect COBRA continuation
coverage under the Company’s group medical and dental program for 18 months for himself and
his dependents at no expense to the Employee. Except for those welfare benefits expressly
provided to Employee under this paragraph 7, except as specified in paragraph 9, from and
after the Separation Date Employee shall have no right to any other welfare benefits
including, without limitation, short term disability, long term disability and accidental
death and dismemberment.



8. Other Compensation and Benefits. After Employee’s termination of employment on the
Separation Date, Employee shall have no further rights under Section 3 of the Employment
Agreement, other than Section 3(g) (regarding reimbursement of expenses in the performance of
services under the Employment Agreement) and Section 3(i) regarding the right to
indemnification under the Company’s bylaws). Without limiting the generality of the foregoing
sentence, after Employee’s termination of employment on the Separation Date, (a) Employee
shall not be entitled to the payment of any bonus based on the Company’s performance contract
guidelines and (b) Employee shall be paid for any accrued and unused


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vacation time as of the Separation Date in accordance with the Company’s standard
policy.



9. Change of Control Benefits.




     a. If a Change of Control occurs prior to the Separation Date or within 240 days after
the Separation Date, then, in addition to the benefits accruing to Employee under this
Separation Agreement and notwithstanding any other provision in this Separation Agreement,
(i) on the later of the date of the Change of Control or the date that is six months
following the date of Employee’s Separation From Service, the Company shall pay to Employee
the Bonus Amount, (ii) until the second anniversary of 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 coverages Employee and Employee’s
dependents were receiving immediately before the Separation Date, (iii) on the later of the
date of the Change of Control or the date that is six months following the date of
Employee’s Separation From Service, the Company shall pay to Employee, an amount equal to
$400,000, (iv) any outstanding Options shall become fully vested and exercisable, and the
restriction period on the Restricted Stock will continue and will lapse as if Employee
remained in the employ of the Company, and (v) the Company will pay Employee, an additional
amount such that the net amount retained by Employee pursuant to the benefits described in
clauses (i), (iii) and (iv) of this paragraph 9(a), 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 such excise tax.




     b. For purposes of this Agreement, 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 Separation Date and (ii) (A) the target bonus percentage, if any,
as established by the Company’s Board of Directors for the fiscal year in which the Change
of Control occurs multiplied by (B) $200,000.




     c. For purposes of this Agreement, 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 paragraph 9(c) 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 paragraph 9(c); 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 Separation 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
including goodwill (a “Business Combination”), provided, however, that for purposes
of this subsection (3) of this paragraph 9(c), a Business Combination will not
constitute a change of control if, 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 Company’s assets 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 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.




	 	d.	If the dental, accident or health insurance benefits specified in paragraph
9(a) 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




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	 	 	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
the Separation Date or the date on which the Change of Control occurs. Employee
shall be eligible for reimbursement for covered medical, accident and dental
expenses incurred during the period commencing on the date of the Change of Control
and ending on the second anniversary of the date of the Change of Control. The
amount of medical, accident and dental expenses eligible for reimbursement provided
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 medical,
accident or dental expense 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 exchange for another benefit.


	 	e.	Any tax gross-up payment due pursuant to paragraph 9(a) shall be made by the
Company by April 15 of Employee’s taxable year next following Employee’s taxable year
in which Employee remits the related taxes to the Internal Revenue Service.





10. General.





     a. All applicable withholding, including but not limited to federal, state and Social
Security taxes, and any applicable garnishment, liens or other attachments, shall be
deducted from all amounts payable or stock distributable to Employee.




     b. Employee shall comply with applicable securities laws, as they relate to securities
of the Company owned by him, from and after the Separation Date.



11. Effect on Other Agreements. The Employment Agreement shall not terminate and shall
govern the terms of Employee’s employment with the Company until the Separation Date. To the
extent (and only to the extent) applicable, this Agreement shall be deemed to be an amendment
and novation to the Employment Agreement. Employee acknowledges the value of the matters
described in this Agreement and agrees that those matters are adequate consideration for such
amendment and novation. After the Separation Date, to the extent (and only to the extent)
there is a conflict between this Agreement and the Employment Agreement, the provisions of
this Agreement shall govern. Provisions of the Employment Agreement that do not conflict with
the provisions of this Agreement shall continue in full force and effect. Without limiting
the foregoing provisions of this paragraph 11, the miscellaneous provisions contained in
Section 6 of the Employment Agreement shall apply to this Agreement. If Employee’s employment
with the Company is terminated before the Separation Date, the provisions of the Employment
Agreement shall prevail, without giving effect to the provisions of this Agreement, and this
Agreement shall terminate upon any such termination of employment. The Indemnification
Agreement between the Company and Employee shall not terminate on the Separation Date and
shall


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continue to be effective as to all periods during which Employee has served as an
officer of the Company.



12. Release.





     a. Employee hereby releases any and all claims of any kind that he may have against the
Company and its subsidiaries, affiliates, and any of its or their directors, officers,
employees, or agents (in this paragraph 12, collectively “the Company”) that arise from any
events occurring on or before the date on which this Agreement is executed by Employee.
Employee waives any and all rights that he might have to bring any suit, charge, or demand
of any kind against the Company for claims that he is releasing. The claims that Employee
is releasing include, but are not limited to (i) all claims arising under federal, state, or
local laws prohibiting discrimination based upon age, race, sex, religion, disability,
national origin, or any other basis; (ii) any claims for “wrongful discharge”, breach of
contract, or other legal restrictions on the Company’s right to control or terminate the
employment of its employees; (iii) all claims under any tort or contract theory, including
but not limited to infliction of emotional distress, harassment, libel, slander, fraud,
misrepresentation, or invasion of privacy; (iv) all claims, including but not limited to
claims for retaliation, arising under common law or any federal, state, or local statute,
including but not limited to federal laws prohibiting discrimination based upon age, race,
sex, religion, disability, national origin or any other basis, such as those arising under
the Civil Rights Act of 1964, the Age Discrimination in Employment Act, the Americans with
Disabilities Act, the Equal Pay Act of 1963, the 1978 Pregnancy Discrimination, the
Rehabilitation Act of 1973, or any state counterparts to such acts; and (v) all claims for
discharge, demotion, suspension, threats, harassment or discrimination under the
Sarbanes-Oxley Act of 2002. The release contained in this paragraph 12 does not waive
claims arising under this Agreement for indemnification for acts within the scope of
employment as a result of Employee being a director, officer, employee or agent of the
Company or of any other corporation or any partnership, joint venture, trust or other
enterprise for which Employee served as such at the request of the Company.




     b. Employee understands that the release contained in this paragraph 12(b) specifically
waives all claims arising under any statute, regulation or contract, or under common law,
which are based on events occurring at any time before the signing of this Agreement; (ii)
does not waive rights or claims based on events occurring after the signing of this
Agreement; (iii) includes the future consequences of events that occurred before the signing
of this Separation Agreement; and (iv) includes all possible claims, including without
limitation those of which Employee is not currently aware or that Employee does not now
suspect to exist.



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     13. Miscellaneous.




     a. Successors; Binding Agreement. In addition to any obligations imposed by
law upon any successor to the Company, the Company will require any successor (whether
direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially
all of the business or assets of the Company to expressly assume and agree to perform this
Agreement in the same manner and to the same extent that the Company would be required to
perform it if no such succession had taken place.




     b. Enforceability by Beneficiaries. This Agreement shall inure to the benefit
of and be enforceable by Employee’s personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If Employee shall
die while any amount is payable to the Employee hereunder, all such amounts, unless
otherwise provided herein, shall be paid in accordance with the terms of this Agreement to
the executors, personal representatives or administrators of the Employee’s estate.




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




     d. Invalidity. If any part of this Agreement is held by a court of competent
jurisdiction to be invalid or otherwise unenforceable, the remaining part shall be
unaffected and shall continue in full force and effect, and the invalid or otherwise
unenforceable part shall be deemed not to be part of this Agreement.




     e. Governing Law. This Separation Agreement shall be construed in accordance
with the laws of the State of Texas.



	 	 	 	 	 	 	 
	Date:                     , 2008	 	HARVEST NATURAL RESOURCES, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	Date:                     , 2008
	 	 	 	 	 	 
	 	 	 	 	 
	 

	 	KURT A. NELSON	 	 






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EXHIBIT A TO SEPARATION AGREEMENT BETWEEN

HARVEST NATURAL RESOURCES, INC. AND KURT A. NELSON




CONSULTING AGREEMENT




     This Consulting Agreement (this Agreement”) is between Harvest Natural Resources, Inc., a
Delaware corporation (the “Company”), and Kurt A. Nelson (“Consultant”), and is dated on the latest
date set forth beside the signatures of the parties at the end of this Agreement.



RECITALS:




     The Company desires to engage Consultant to render consulting services;



     The Company and Consultant wish to memorialize the terms and conditions upon which Consultant
is engaged to provide consulting services to the Company; and



     The Company and Consultant anticipate that the level of services Consultant will perform for
the Company after May 31, 2008 will permanently decrease to no more than 20 percent of the average
level of services performed by Consultant for the Company over the 36-month period immediately
preceding June 1, 2008.



     NOW, THEREFORE, the parties hereto, intending to be legally bound, agree as follows:




	1.	 	SERVICES AND NATURE OF RELATIONSHIP





     1.1 Engagement. The Company hereby retains Consultant and Consultant hereby accepts
such appointment and agrees to perform the services covered by this Agreement with all due skill
and care on the terms and conditions set forth in this Agreement. Consultant’s services shall be
provided in connection with such assignments as the Company may make from time to time within the
area of Consultant’s expertise.



     1.2 Reporting Relationship and Assignment. Consultant shall report to the President
and Chief Executive Officer of the Company or his or the Company’s designees.



     1.3 Method of Performing Services. Consultant, as an independent contractor, shall
determine the method, details, and means of performing any services furnished pursuant to this
Agreement, but the services contemplated herein shall meet the approval of the Company. Consultant
will devote sufficient time, attention and energies to the business and interests of the Company
and diligently and to the best of his ability perform such duties incident to this Agreement, and
perform such other duties as requested commensurate with the terms of this Agreement.



     1.4 Compliance With Law and Company Policy. Consultant represents that he is familiar
with the safety and health rules of the Company and its subsidiaries. Consultant shall comply with
all applicable safety and health rules, and policies, procedures and codes of conduct of the
Company and its subsidiaries, together with all applicable federal, state or local safety and
health laws, rules, regulations or orders in which the Company and its subsidiaries do business.



 









 





     Consultant acknowledges that he has been provided copies of, and has read and understands the
Company’s Code of Business Conduct and Ethics (the “Code”) and the Company’s Compliance Manual, and
Consultant agrees:



               (a) to comply with all policies of the Company and its subsidiaries, including, without
limitation, the Code and the Compliance Manual;



               (b) to comply with all applicable laws and regulations, including, without limitation, the
laws and regulations of the United States and Venezuela; and



               (c) to promptly report as provided in the Code any violation or suspected violation of any
law, regulation or Company policy.



     This clause will not require the Company to police Consultant’s compliance with the Code,
laws, regulations or company policies and shall not impose any obligation on the part of the
Company or its affiliates under such laws, regulations or Company policies. Nothing contained in
this provision shall be interpreted as enlarging the legal duty of the Company or its affiliates to
Consultant or alter the status of Consultant as set forth in this Agreement.



     The preceding paragraphs of this provision are agreed to by both the Company and Consultant to
be of the highest importance. A breach or violation of any of the terms of this provision by
Consultant will be considered to be a material breach of this Agreement.



     1.5 No Authority to Bind. Consultant shall have no authority to obligate the Company
in any manner whatsoever in the absence of specific prior written authority from the President and
Chief Executive Officer of the Company permitting Consultant to do so, including without limitation
incurring expenses or entering into contracts.



     1.6 Status as Independent Consultant. Consultant acknowledges and agrees that, in
performing services pursuant to this Agreement, Consultant shall be serving as an independent
contractor. Consultant agrees that Consultant is not and will not become an employee of the
Company or any of its subsidiaries while this Agreement is in effect. Consultant agrees that the
provision of services pursuant to this Agreement will not entitle Consultant to any rights or
benefits afforded to the employees of the Company and its subsidiaries, including such benefits as
worker’s compensation insurance, health insurance, sick leave, retirement benefits or any other
employment benefit. Consultant agrees that the indemnification provisions of Section 5.1 shall
apply to any claims relating to the subject matter of this Section 1.5.



     1.7 Payment of Taxes. Consultant agrees that he is solely responsible for paying when
due all income taxes, including estimated taxes, as a result of or in connection with the
compensation paid by the Company to Consultant for services rendered under this Agreement. The
Company shall issue applicable U.S. or other tax forms or reports to Consultant with respect to the
compensation paid pursuant to this Agreement. Consultant hereby indemnifies, and undertakes to
defend the Company and hold it free and harmless from and against any demands or claims for any
taxes, interest or penalties assessed by any taxing authority with respect to sums paid to
Consultant pursuant to this Agreement.



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	2.	 	TERM AND TERMINATION





     2.1 Term. This Agreement shall become effective on June 1, 2008. The term of this
Agreement shall commence on June 1, 2008, and shall continue through May 31, 2009 (the “Term”).



     2.2 Termination. This Agreement may be terminated by either party at any time for
material breach by the other party, upon ten (10) days written notice, if the breaching party has
failed to remedy the breach leading to the termination during that ten (10) day period.




	3.	 	FEES AND EXPENSES





     The Company shall compensate Consultant for services rendered pursuant to this Agreement as
follows:



     3.1 Rates. The Company agrees to compensate Consultant for services provided pursuant
to this Agreement at the rate of $200 per hour of service rendered under this Agreement, except
when providing services requiring travel outside of Houston, in which case the rate will be $2,000
per day including travel time.



     3.2 Expense Reimbursements. The Company agrees to reimburse Consultant for reasonable
business expenses incurred by Consultant in performing services pursuant to this Agreement;
provided, however, that Consultant shall have furnished the Company promptly with receipts or other
documentation concerning any reimbursable business expenses.



     3.3 Timing of Payments. Consultant shall provide the Company with a statement
describing his services and indicating the number of hours (or, in the case of travel outside of
Houston, the number of days) of service he has provided under this Agreement in each calendar month
within ten (10) days after the end of that calendar month. The Company shall pay Consultant the
amount shown on any such statement within thirty (30) days after receipt. Payments to Consultant
for reimbursement for expenses incurred shall be made within thirty (30) days after the Company’s
receipt of an expense statement.



4. ADDITIONAL COVENANTS BY CONSULTANT




     4.1 Property of the Company.



          4.1.1 Consultant covenants and agrees that upon the termination of this Agreement for any
reason or, if earlier, upon the Company’s request, he shall promptly return all Property which had
been entrusted or made available to Consultant by the Company.




          4.1.2 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 Consultant during the term of this Agreement
relating to the Company or its business, operations or prospects (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




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Consultant individually or with others during the term of this Agreement relating to the
Company or its business, operations or prospects.




     4.2 Confidential Information. Except as required in the performance of Consultant’s
obligations hereunder, or otherwise specifically required by law, or with the prior written consent
of the Company on a case-by-case basis, Consultant shall hold confidential and shall not in any
manner disclose, use for personal benefit, or directly or indirectly use for the benefit of any
other person, Confidential Information (defined below) that has come or shall hereafter come into
Consultant’s possession. Consultant recognizes the importance to the Company of protecting its
Confidential Information without regard to the passage of time, and further recognizes that this
restriction shall continue in full force and effect during the Term of this Agreement and for a
period of five (5) years after the end of the Term, except as to Confidential Information which
constitutes a trade secret, in which case the restriction shall continue so long as such
information remains a trade secret. No later than the end of the Term of this Agreement,
Consultant shall return to the Company, without making and retaining copies thereof, all documents,
records, computer information, maps and charts and other repositories containing Confidential
Information. Consultant shall also return Confidential Information to the Company promptly
following its usefulness in performing its consulting services. As used in this Agreement, the
term “Confidential Information” shall mean all information of a confidential or non-public nature
concerning the Company or any of its affiliates existing or proposed business activities, including
without limitation, geological, geophysical and seismic data and interpretations, computer
analysis, maps, charts, reports, results of operations, proposed methods of operation, gas plant
designs, specifications or processes, financial information, information with respect to parties
with whom the Company or its affiliates has or intends to have business relationships and similar
information.



     4.3 Ownership. Consultant agrees that all processes, technologies, computer analysis,
discoveries and inventions whether new or enhanced and expanded, whether patentable or not,
conceived, developed, invented or made by Consultant during the Term of this Agreement which grew
out of Consultant’s work for the Company shall belong to the Company and not to Consultant.
Consultant shall not contribute or publish articles based upon the results of the services
performed under this Agreement unless such articles are approved in advance by the Company.



     4.4 Conflict of Interest and FCPA. Consultant covenants and agrees that Consultant
and his personnel and their immediate family will not receive and has not received any payments,
gifts or promises and Consultant will not engage in any employment or business enterprises that 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 the Company and its affiliates.
Consultant shall make all reasonable efforts to prevent conflicts of interest from arising out of
relationships between Consultant, his agents or his employees, on the one hand, and agents or
employees of the Company or its affiliates, on the other hand.



     Consultant shall not make any payments, loans, gifts or of anything of value or promises or
offers of payments, loans, gifts or of anything of value, directly or indirectly, to or for the use



11









 







or benefit of any official or employee of any government, political party or candidate for
political office or to any other person for the purpose of obtaining or retaining business, or 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, Venezuela and the United States, having jurisdiction over Consultant or the Company or
its affiliates.



     By signing this Agreement, Consultant acknowledges that he has not made any payments, loans,
gifts or of anything of value, or promises of payments, loans, gifts or of anything of value to or
for the use or benefit of any official or employee of any government, political party or candidate
for political office or to any other person for the purpose of obtaining or retaining business, or
which would violate the laws or regulations of any country, including, without limitation,
Venezuela and the United States, having jurisdiction over Consultant or the Company or its
affiliates.



     4.5 Reasonable and Continuing Obligations. Consultant agrees that Consultant’s
obligations under Section 4 are obligations which will continue beyond the date this Agreement
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 4 (including, without limitation, seeking a court order for specific performance).




	5.	 	GENERAL PROVISIONS





     5.1 Indemnities. CONSULTANT RECOGNIZES THAT INTERNATIONAL ACTIVITIES, INCLUDING
ON-SITE WORK AND TRAVEL INVOLVE A HIGH DEGREE OF RISK, WHICH RISK CONSULTANT ALONE ASSUMES AS PART
OF THE CONSIDERATION FOR HIS COMPENSATION. CONSULTANT HEREBY AGREES TO RELEASE, DEFEND, INDEMNIFY
AND HOLD THE COMPANY AND ITS AFFILIATES, CONTRACTORS AND SUBCONTRACTORS AND ALL OF THEIR RESPECTIVE
DIRECTORS, OFFICERS, EMPLOYEES, REPRESENTATIVES, AGENTS, LICENSEES AND INVITEES (HEREINAFTER
REFERRED TO COLLECTIVELY AS THE “COMPANY GROUP”) HARMLESS FROM AND AGAINST ANY AND ALL LOSS, COST,
DAMAGE OR EXPENSE OF EVERY KIND AND NATURE (INCLUDING, WITHOUT LIMITATION, FINES, PENALTIES,
REMEDIAL OBLIGATIONS, TAXES, COURT COSTS AND EXPENSES AND REASONABLE ATTORNEYS’ FEES INCLUDING
ATTORNEYS’ FEES INCURRED IN THE ENFORCEMENT OF THIS INDEMNITY CLAUSE) (HEREINAFTER REFERRED
COLLECTIVELY AS “INDEMNIFIABLE CLAIMS”) ARISING OUT OF BODILY INJURY (INCLUDING, WITHOUT
LIMITATION, SICKNESS TO OR DEATH OF PERSONS AND LOSSES THEREFROM TO RELATIVES OR DEPENDENTS) TO
CONSULTANT, LOSS OR DESTRUCTION OF PROPERTY OR INTERESTS IN PROPERTY OF CONSULTANT, OR IN ANY
MANNER CAUSED BY, RESULTING FROM, INCIDENT TO, CONNECTED WITH OR ARISING OUT OF PERFORMANCE OF THE
SERVICES HEREUNDER WHETHER OR NOT RESULTING IN WHOLE OR IN PART FROM THE SOLE, CONCURRENT, OR
COMPARATIVE NEGLIGENCE, OR STRICT LIABILITY OF THE COMPANY GROUP, OR DEFECT IN THE PREMISES,
EQUIPMENT, OR TOOLS OWNED, OPERATED OR CONTROLLED BY THE COMPANY



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GROUP. THIS INDEMNIFICATION AND RELEASE SHALL BE BINDING UPON THE HEIRS, NEXT OF KIN,
BENEFICIARIES, ASSIGNS, EXECUTORS AND ADMINISTRATORS OR OTHER PERSONAL REPRESENTATIVES OF
CONSULTANT. THE COMPANY HEREBY AGREES TO RELEASE, DEFEND, INDEMNIFY AND HOLD THE CONSULTANT
HARMLESS FROM AND AGAINST ANY AND ALL INDEMNIFIABLE CLAIMS ARISING OUT OF BODILY INJURY (INCLUDING
SICKNESS TO OR DEATH OF PERSONS AND LOSSES THEREFROM TO RELATIVES OR DEPENDENTS) TO THE COMPANY
GROUP, OR LOSS OR DESTRUCTION OF PROPERTY OR INTERESTS IN PROPERTY OF THE COMPANY GROUP, IN ANY
MANNER CAUSED BY, RESULTING FROM, INCIDENT TO, CONNECTED WITH OR ARISING OUT OF PERFORMANCE OF THE
SERVICES HEREUNDER WHETHER OR NOT RESULTING IN WHOLE OR IN PART FROM THE SOLE, CONCURRENT, OR
COMPARATIVE NEGLIGENCE, OR STRICT LIABILITY OF THE CONSULTANT, OR DEFECT IN THE PREMISES,
EQUIPMENT, OR TOOLS OWNED, OPERATED OR CONTROLLED BY THE CONSULTANT.



     5.2 Notice. 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 Consultant shall be sent to the Consultant’s
address provided above. Either party may change its/his address by providing notice to the other
party consistent with the terms of this section.



     5.3 Assignment/Subcontracting. This Agreement, and all duties and obligations
hereunder are personal in nature, and Consultant shall not assign this Agreement, or any portion
hereof, voluntarily or involuntarily by operation of law, or enter into any subcontract for the
performance of any services under this Agreement, or any portion thereof, without the Company’s
prior written approval. If the Company consents to a subcontract hereunder, Consultant shall
assume full responsibility for the acts or omissions of subcontractors. The Company may assign
this Agreement (1) to any affiliate of the Company, (2) to any person who agrees in writing to be
bound by the terms of this Agreement or (3) upon written notice to and written consent by
Consultant, which written consent shall not be unreasonably withheld.



     5.4 Audit. The Company, or its designated representative, shall have the right to
inspect and audit Consultant’s books, records and all associated documents to ensure compliance
with the terms and conditions of this Agreement. Consultant agrees to maintain such books, records
and associated documents for a period of two (2) years from the end of the calendar year in which
such costs were invoiced and to make such books, records and associated documents available to the
Company at all reasonable times within such period and for so long thereafter as any dispute
existing as of the expiration of such period remains unresolved. The Company may photocopy or
reproduce any such books and records.



     5.5 Governing Law. This Agreement and all matters relating to the meaning, validity
or enforceability thereof and the performance of the services hereunder shall be governed by the
laws of the State of Texas, exclusive of its conflict of laws rule.



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     5.6 Arbitration. SUBJECT TO THE PROVISIONS OF SECTION 4.5 OF THIS AGREEMENT, ANY
UNRESOLVED DISPUTE OR CONTROVERSY BETWEEN CONSULTANT AND THE COMPANY ARISING UNDER OR IN CONNECTION
WITH THIS AGREEMENT SHALL BE SETTLED EXCLUSIVELY BY ARBITRATION, CONDUCTED BEFORE A SINGLE
ARBITRATOR IN ACCORDANCE WITH THE RULES OF THE AMERICAN ARBITRATION ASSOCIATION THEN IN EFFECT.
THE ARBITRATOR SHALL NOT HAVE THE AUTHORITY TO ADD TO, DETRACT FROM, OR MODIFY ANY PROVISION
HEREOF. 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.



     5.7 Drugs, Deadly Weapons and Searches. Consultant shall abide by the following
Company policy regarding drugs, deadly weapons and alcohol:



               (a) Using, possessing, or being under the influence of alcoholic beverages, illegal drugs,
narcotics, or other controlled substances, and unauthorized drugs for which a person does not have
a current prescription, while on the Company’s Premises, is prohibited. Possession of deadly
weapons or explosives while on the Company’s Premises is prohibited.



               (b) The term “the Company’s Premises” is used in its broadest sense to include all work
locations, buildings, structures and all other facilities owned or controlled by the Company or one
of its affiliated companies or otherwise being utilized for the business of the Company or any of
its affiliates.



               (c) Violation of this Company policy will be cause for immediate removal from the Company’s
Premises, and termination as a material breach under this Agreement.



     5.8 Computer Facilities. If required for Consultant to perform services under this
Agreement, Consultant will have access to certain parts of the computer facilities and programs of
the Company and its affiliates. Consultant agrees that such access shall be subject to the
following conditions:



               (a) Access to computers of the Company and its affiliates shall be made only in the manner
prescribed by a Company representative. Access shall be made using only terminals owned or
controlled by the Company and its affiliates and only by Consultant.



               (b) Any user identification code provided by the Company or its affiliates shall be used
solely for access to the computers for conduct of the services for the Company or its affiliates
and only by Consultant.



               (c) Consultant shall not access software or data on the computer system of the Company and its
affiliates other than Consultant’s software or data without the Company’s prior written consent.



14









 





               (d) If Consultant should accidentally or inadvertently access any software of the Company and
its affiliates or data which Consultant is not authorized to access, then Consultant shall
immediately inform the Company and shall deliver to the Company or destroy as the Company may
advise any tangible materials (and all copies thereof) resulting from such improper access.



               (e) The Company or its affiliates may copy, use, disclose, distribute, dispose of or destroy
anything placed on computer systems of the Company or any of its affiliates by Consultant.



     5.9 Entire Agreement and Modification. This Agreement supersedes any and all
agreements, either oral or written, between the parties with respect to the rendering of consulting
services by Consultant for the Company, and contains all representations, covenants and agreements
between the parties with respect to the rendering of such services by Consultant. Any modification
of this Agreement will be effective only if it is in writing and signed by the party to be charged.



     5.10 Severability. If any term, provision, covenant or condition of this Agreement
shall be or become illegal, null, void or against public policy, or shall be held by an arbitrator
to be illegal, null or void or against public policy, the remaining provisions of this Agreement
shall remain in full force and effect and shall not be affected, impaired or invalidated thereby.
The term, provision, covenant or condition that is so invalidated, voided or held to be
unenforceable shall be modified or changed by the parties to the extent possible to carry out the
intentions and directives set forth in this Agreement.



     5.11 Successors and Assigns. Except as restricted herein, this Agreement shall be
binding on and shall inure to the benefit of the parties and their respective heirs, legal
representatives, successors and permitted assigns.



     5.12 Waiver. No waiver of any provision or consent to any action shall constitute a
waiver of any other provision or consent to any other action, whether or not similar. No waiver or
consent shall constitute a continuing waiver or consent or commit a party to provide a waiver in
the future except to the extent specifically set forth in writing. Any waiver given by a party
shall be null and void if the party requesting such waiver has not provided a full and complete
disclosure of all material facts relevant to the waiver requested. No waiver shall be binding
unless executed in writing by the party making the waiver.



15









 





     IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the date(s) set forth
below.



	 	 	 	 	 	 	 
	Date:                      , 2008	 	HARVEST NATURAL RESOURCES, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	Date:                      , 2008
	 	 	 	 	 	 
	 	 	 	 	 
	 

	 	KURT A. NELSON	 	 






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EXHIBIT B TO SEPARATION AGREEMENT BETWEEN

HARVEST NATURAL RESOURCES, INC. AND KURT A. NELSON




Options:




	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Grant	 	Exercise	 	Number	 	Expiration
	Plan	 	Date	 	Price	 	of Options	 	Date
	2001
	 	 	11-14-01	 	 	$	1.550	 	 	 	50,000	 	 	 	11-14-11	 
	2001
	 	 	2-20-03	 	 	 	6.100	 	 	 	20,000	 	 	 	2-20-13	 
	2004
	 	 	5-26-04	 	 	 	13.010	 	 	 	8,000	 	 	 	5-26-14	 
	2004
	 	 	3-4-05	 	 	 	12.795	 	 	 	10,000	 	 	 	3-4-15	 
	2004
	 	 	3-2-06	 	 	 	9.605	 	 	 	20,000	 	 	 	3-2-16	 
	2006
	 	 	2-27-07	 	 	 	9.625	 	 	 	55,000	 	 	 	2-27-14	 






Restricted Stock:




	 	 	 	 	 	 	 
	 	 	Grant	 	Number
	Plan	 	Date	 	of Shares
	2004
	 	 	3-2-06	 	 	 	3,000	 
	2006
	 	 	2-27-07	 	 	 	20,000	 







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