Document:

exv10w3

 

Exhibit 10.3

HARVEST NATURAL RESOURCES

Employee Restricted Stock Agreement

          Agreement (the “Agreement”) made at Houston, Texas, USA, as of May 7, 2007, by and between
HARVEST NATURAL RESOURCES, INC. (the “Company”) and Keith L. Head (the “Grantee”).

     1.  Definitions:

	 	(a)	 	“AWARD” means, individually or collectively, a grant under this Agreement of
Restricted Stock, subject to the terms and provisions of this Agreement.
	 
	 	(b)	 	“BOARD” OR “BOARD OF DIRECTORS” shall mean the Board of Directors of the
Company.
	 
	 	(c)	 	“CODE” shall mean the Internal Revenue Code of 1986, as amended from time to
time.
	 
	 	(d)	 	“COMMITTEE” shall mean the Human Resources Committee of the Board of Directors,
or, if there is no Human Resources Committee, the committee designated by the
non-employee members of the Board of Directors to administer the Company’s long-term
incentive plans.
	 
	 	(e)	 	“EMPLOYEE” shall mean any person employed by the Company or a Subsidiary on a
full-time salaried basis. The term “Employee” shall not include a person hired as an
independent contractor, leased employee, consultant or a person otherwise designated by
the Company at the time of hire as not eligible to participate in this Agreement.
	 
	 	(f)	 	“RESTRICTED STOCK” shall mean Stock which is issued pursuant to Paragraph 2. of
this Agreement.
	 
	 	(g)	 	“STOCK” shall mean the common stock of the Company.
	 
	 	(h)	 	“SUBSIDIARY” shall mean any corporation or similar legal entity (other than the
Company) in which the Company or a Subsidiary of the Company owns fifty percent (50%)
or more of the total combined voting power of all classes of stock, or such lesser
amount of ownership determined by the Committee.
	 
	 	(i)	 	“TOTAL DISABILITY” and “TOTALLY DISABLED” shall normally have such meaning as
that defined under the Company’s group insurance plan covering total disability and
determinations of Total Disability normally shall be made by the insurance company
providing such coverage on the date on which the Employee, whether or not eligible for
benefits under such insurance plan, becomes Totally Disabled. In the absence of such
insurance plan or in the event the individual is a Director or Consultant, the
Committee shall make such determination.

 

 

     It is hereby agreed as follows:

	 	2.	 	Grant of Stock; Consideration. The Company hereby grants (the “Grant”) the
Grantee 20,000 shares of Stock of the Company’s Common Stock, par value $0.01 per share
(the “Restricted Shares”). The Grant granted hereunder is not intended to constitute
“performance based compensation” as that term is used in Section 162(m) of the Code.

The Grantee shall be required to pay no consideration for the Grant, except for his
agreement to serve as an employee of the Company or any Subsidiary and other agreements set
forth herein.

	 	3.	 	Incorporation of Agreement. Notwithstanding anything to the contrary in this
Agreement, if and for so long as Grantee is subject to an Employment Agreement with the
Company, then the terms of the Employment Agreement will govern the early expiration of the
Grant including, without limitation, vesting and expiration dates. In the event of any
conflict between the Employment Agreement and this Agreement, the terms of the Employment
Agreement shall govern.
	 
	 	4.	 	Restriction Period. Subject to all of the terms and conditions of this
Agreement, including the lapse of restrictions in the event of a Change of Control, the
period during which the restrictions set forth in this Agreement shall apply to the
Restricted Shares shall commence on May 7, 2007 and end on May 6, 2010 (the “Restriction
Period”). At the end of the Restriction Period, all restrictions under this Agreement
applicable to the Restricted Stock shall lapse, and, subject to paragraph 7 of this
Agreement, a stock certificate for the number of shares of Common Stock equal to the number
of Restricted Shares shall be delivered to the Grantee, the Grantee’s beneficiary or the
Grantee’s estate, whichever is applicable at the time of delivery.
	 
	 	5.	 	Restrictions. The Restricted Stock will be represented by a Stock certificate
registered in the name of the Grantee. Such certificate, accompanied by a separate
duly-endorsed stock power, shall be deposited with the Company. The Grantee shall be
entitled to receive dividends during the Restriction Period and shall have the right to
vote such Restricted Stock and all other stockholder’s rights, with the exception that (i)
the Grantee will not be entitled to delivery of the Stock certificate during the
Restriction Period, (ii) the Company will retain custody of the Restricted Stock during the
Restriction Period, (iii) none of the Restricted Stock may be sold,
transferred, assigned, pledged or otherwise encumbered or disposed of during the
Restriction Period and (iv) all of the Restricted Stock shall be forfeited and all of the
Grantee’s rights to such Restricted Stock shall terminate without further obligation on the
part of the Company unless the Grantee remains in the continuous employ of the Company or a
Subsidiary during the Restriction Period.

If, prior to the date on which the Restriction Period ends and applicable restrictions
lapse, the Grantee’s employment with the Company is terminated for any reason except Total
Disability, death, and layoff with benefits under a Company severance plan, any

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Restricted Stock shall be canceled and all rights there under shall cease. If reason for
termination is Total Disability, death, or layoff with severance benefits, the Restriction
Period will continue and applicable restrictions will lapse as if the Employee had continued
employment with the Company.

	 	6.	 	Non-Transferability. The Grant shall not be transferable to any third party by
the Grantee otherwise than by will or the laws of descent and distribution.
	 
	 	7.	 	Compliance with Laws and Regulations. The obligation of the Company to deliver
Restricted Shares is conditioned upon compliance by the Grantee and by the Company with all
applicable laws and regulations, including regulations of federal and state agencies. If
requested by the Company, the Grantee shall provide to the Company, as a condition to the
delivery of any certificates representing Restricted Shares, appropriate evidence,
satisfactory in form and substance to the Company, that he is acquiring the Restricted
Shares for investment and not with a view to the distribution of the Restricted Shares or
any interest in the Restricted Shares, and a representation to the effect that the Grantee
shall make no sale or other disposition of the Restricted Shares unless (i) the Company
shall have received an opinion of counsel satisfactory to it in form and substance that
such sale or other disposition may be made without compliance with registration or other
applicable requirements of federal and state laws and regulations, and (ii) all steps
required to comply with such laws and regulations in connection with the sale or other
disposition of the Restricted Shares have been taken and all necessary approvals have been
received. The certificates representing the Restricted Shares may bear an appropriate
legend giving notice that the Shares have not been registered under the Securities Act of
1933 (the “Act”) and are “Restricted Securities” as that term is defined in Rule 144 under
the Act and, further, giving notice of the foregoing restrictions on transfer of the
Restricted Shares, and any other restrictive legend deemed necessary or appropriate by the
Committee.
	 
	 	8.	 	Tax Withholding. Upon lapse of the restrictions applicable to the Restricted
Stock (or if you make the election under Section 83 (b) of the Code to be taxed immediately
upon the award of such shares), you must arrange for the payment to the Company of
applicable withholding taxes promptly after you have been notified of the amount due by the
Company. If no election is made under Section 83 (b) of the Code, you must pay such
withholding taxes or have Restricted Stock withheld to pay such withholding taxes upon the
lapse of restrictions applicable to the Restricted Stock.
	 
	 	9.	 	Administration.

	 	a.	 	The Committee. This Agreement shall be administered by the Committee.
Subject to such approvals and other authority as the Board may reserve to itself
from time to time, the Committee shall, consistent with the provisions of the
Agreement, from time to time establish such rules and regulations and appoint such
agents as it deems appropriate for the proper administration of this Agreement, and
make such determinations under, and such interpretations of, and

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	 	 	 	take such steps in connection with this Agreement as it deems necessary or
advisable.
	 
	 	b.	 	Authority of the Committee. Subject to the provisions herein, the
Committee shall have the full power to construe and interpret this Agreement and to
amend the terms and conditions of this Agreement to the extent such terms and
conditions are within the sole discretion of the Committee; provided, however, that
no amendments shall, without the consent of the Grantee, alter or impact any rights
or obligations under this Agreement.
	 
	 	c.	 	Decisions Binding. All determinations and decisions of the Committee
as to any disputed question arising under this Agreement, including questions of
construction and interpretation, shall be final, binding and conclusive upon all
parties. The Grantee hereby agrees to be bound by all decisions and determinations
of the Committee.

	 	10.	 	Adjustment Upon Changes In Stock. The number of shares granted as Restricted
Stock, shall be adjusted proportionately, and any other appropriate adjustments shall be
made, for any increase or decrease in the total number of issued and outstanding Stock (or
change in kind) resulting from any change in the Stock through a merger, consolidation,
reorganization, recapitalization, subdivision or consolidation of shares or other capital
adjustment or the payment of a stock dividend or other increase or decrease (or change in
kind) in such shares. In the event of any such adjustment, fractional shares shall be
eliminated.
	 
	 	11.	 	Change in Control. Notwithstanding anything to the contrary in this Agreement,
in the event of a Change in Control, during the Restriction Period, all restrictions
imposed hereunder on such Restricted Stock shall lapse effective as of the date of the
Change in Control.

For purposes of this Agreement, a “Change in Control” means the occurrence of any of the
following:

	 	a.	 	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 (i) of this Paragraph 11 the
following acquisitions shall not constitute a Change in 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 (c) of this Paragraph 11;
or

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	 	b.	 	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
	 
	 	c.	 	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 (c), a Business Combination will not constitute a
change in 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 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 the Plan,
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

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an actual or threatened election contest with respect to the
election or removal of directors.

	 	12.	 	Transfer of Employment. Transfer of employment between the Company and a
Subsidiary shall not constitute termination of employment or service for the purpose of
this Agreement. Whether any leave of absence shall constitute termination of employment
for the purposes of this Agreement shall be determined in each case by the Committee.
	 
	 	13.	 	Governing Law. This Agreement shall be governed and construed in accordance
with the laws of Texas, except to the extent that federal law applies.
	 
	 	14.	 	Grantee Bound by this Agreement. The Grantee hereby acknowledges receipt of
this Agreement and agrees to be bound by all the terms and provisions thereof (as presently
in effect or hereafter amended), and by all decisions and determinations of the Committee.
	 
	 	15.	 	Binding Effect: Integration: No Other Rights Created. This Agreement shall be
binding upon the heirs, executors, administrators and successors of the parties. This
Agreement constitutes the entire agreement between the parties with respect to the Grant,
and supersedes any prior agreements or documents with respect to the Grant. No amendment,
alteration, suspension, discontinuation or termination of this Agreement which may impose
any additional obligation upon the Company or impair the rights of the Grantee with respect
to the Grant shall be valid unless in each instance such amendment, alteration, suspension,
discontinuation or termination is expressed in a written instrument duly executed in the
name and on behalf of the Company and by the Grantee. Neither this Agreement nor the grant
of the Grant shall constitute an employment agreement, nor shall either confer upon the
Grantee any right with respect to his continued status with the Company.

(Signature page follows)

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	 	HARVEST NATURAL RESOURCES, INC.

 	 
	 	BY:  	/s/ James A. Edmiston
 	 
	 	 	James A. Edmiston 	 

	 
	 	 	TITLE:  President and CEO 	 
	 
	 	GRANTEE:

 	 
	 	/s/ Keith L. Head
 	 
	 	Keith L. Head 	 

	 
	 	DATE: June 6, 2007 	 
	 

ELECTION (FOR U.S. CITIZENS ONLY):

As permitted under Section 83 (b) of the Internal Revenue Code of 1986, as amended, I intend to
make the following irrevocable election:

	o 	 	I intend to make the election permitted under Section 83 (b) of the
Internal Revenue Code of 1986, as amended, to be taxed immediately
on the award of the Restricted Shares. I understand the
consequences and procedures for making this election, and I
understand that it is my responsibility to file the election with
the Internal Revenue Service.
	 
	þ 	 	I do not intend to make the election permitted under Section 83 (b)
of the Internal Revenue Code of 1986, as amended, and will be taxed
upon the lapse of restrictions applicable to the Restricted Shares.

	 	 	 	 	 
	 	 	 
	 	                                               /s/ Keith L. Head
 	 
	 	Keith L. Head 	 

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Exhibit 10.4

SEPARATION AGREEMENT

     This Separation Agreement (this “Agreement”) is between Harvest Natural Resources, Inc. a
Delaware corporation (the “Company”), and Kerry R. Brittain (“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 September 12, 2005 (the “Employment Agreement”);

     WHEREAS, Employee’s employment with the Company will end on July 15, 2007; 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 July 15, 2007
(the “Separation Date”). Employee and the Company waive any requirement of a termination
notice under the Employment Agreement. Under Section 1 of the Employment Agreement, the term
of Employee’s employment with the Company shall be renewed as of May 31, 2007, until and
including the Separation Date. 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 $245,000 on the
date that is six months following the date of 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, Employee shall have until the tenth
anniversary of the dates of the grants of the Options to exercise his rights with respect to
all Options which are vested or become vested during this period. Following the Separation
Date the Options shall continue to vest just as if Employee had continued in the employ of the
Company. 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. Nothing contained in this
Separation Agreement shall be deemed to accelerate or otherwise alter the vesting schedule for
the Options.

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. After Employee’s termination of employment on the Separation
Date, the Company will pay the premiums through April 20, 2009 for term life insurance on
Employee providing coverage of not less than $1,550,000 under similar terms and conditions to
the term life insurance provided executives of the Company. 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

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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 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
$490,000, (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) $245,000.

     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:

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(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

     (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

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	 	 	 	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 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

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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 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.

6

 

	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:                     , 2007	 	HARVEST NATURAL RESOURCES, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	Date:                     , 2007
	 	 	 	 	 	 
	 	 	 	 	 
	 	 	KERRY R. BRITTAIN
	 	 

7

 

EXHIBIT A TO SEPARATION AGREEMENT 
BETWEEN HARVEST NATURAL
RESOURCES,
 INC. AND KERRY R. BRITTAIN

 

 

EXHIBIT B TO SEPARATION AGREEMENT 
BETWEEN HARVEST NATURAL
RESOURCES,
 INC. AND KERRY R. BRITTAIN

Options:

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Grant	 	Exercise	 	Number	 	Expiration
	Plan	 	Date	 	Price	 	of Options	 	Date
	2001
	 	 	7-15-02	 	 	$	4.800	 	 	 	75,000	 	 	 	7-15-12	 
	2001
	 	 	2-20-03	 	 	 	6.100	 	 	 	40,000	 	 	 	2-20-13	 
	2004
	 	 	5-26-04	 	 	 	13.010	 	 	 	19,500	 	 	 	5-26-14	 
	2004
	 	 	3-4-05	 	 	 	12.795	 	 	 	35,000	 	 	 	3-4-15	 
	2004
	 	 	3-2-06	 	 	 	9.605	 	 	 	70,000	 	 	 	3-2-16	 

Restricted Stock:

	 	 	 	 	 	 	 
	 	 	Grant	 	Number
	Plan	 	Date	 	of Shares
	2004
	 	 	5-26-04	 	 	4,800
	2004
	 	 	3-4-05	 	 	3,500
	2004
	 	 	3-2-06	 	 	5,000

9

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00126-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00126-of-00352.parquet"}]]