Document:

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                                                                   Exhibit 10.32
                              FIRST AMENDMENT TO
                    PLAINS EXPLORATION & PRODUCTION COMPANY
                           2002 STOCK INCENTIVE PLAN

    WHEREAS, Plains Exploration & Production Company (the "Company"), having
previously adopted the Plains Exploration & Production Company 2002 Stock
Incentive Plan (the "Plan"), and in accordance with the powers granted to the
board of directors of the Company (the "Board") pursuant to Section 17 of the
Plan, does hereby amend the Plan, effective as of the effective date of the
approval by the stockholders of the Company of (i) the Plan, (ii) this
amendment, and (iii) the merger of 3TEC Energy Corporation into a wholly-owned
subsidiary of the Company as follows:

    RESOLVED, the first sentence of Section 4.1 of the Plan is hereby amended
and replaced in its entirety by the following:

          "The maximum number of Shares that may be made the subject of Options
          and Awards granted under the Plan is 1,500,000: provided, however,
          that in the aggregate, not more than 1,500,000 of the allotted Shares
          may be made the subject of Restricted Stock awards or Restricted
          Stock Units under Section 9 and 10 of the Plan respectively (other
          than Shares of Restricted Stock made in settlement of Performance
          Units pursuant to Section 11.1(b))."

    RESOLVED FURTHER, Section 4.4 of the Plan is hereby amended and replaced in
its entirety by the following:

          "In no event may more than 1,500,000 Shares be issued upon the
          exercise of Incentive Stock Options granted under the Plan."

    FURTHER RESOLVED, each of the officers of the Company shall have authority
to take such further action as they or any of them may deem necessary to
effectuate the foregoing.

    Adopted by the Board on February 19, 2003.<PAGE>

                                                                     EXHIBIT 4.6

                             CERTIFICATE OF INCREASE
                                       OF
                  SERIES E JUNIOR PARTICIPATING PREFERRED STOCK
                                       OF
                            HARKEN ENERGY CORPORATION

                       (Pursuant to Section 151(g) of the
                        Delaware General Corporation Law)

         Harken Energy Corporation a corporation organized and existing under
the General Corporation Law of the State of Delaware (the "Corporation") does
hereby certify:

         FIRST, that in a Certificate of Designation filed with the Secretary of
State of the State of Delaware on April 7, 1998, pursuant to Section 151 of the
General Corporation Law of the State of Delaware, the Corporation was authorized
to issue 175,000 shares of Series E Junior Participating Preferred Stock, as a
series of the Corporation's authorized Preferred Stock, par value $1.00 per
share;

         SECOND, that the board of directors of the Corporation by resolution
adopted March 6, 2003, duly authorized and directed that the number of shares of
the Corporation's Junior Series E Participating Preferred Stock be increased
from 175,000 shares to 3,300,000 shares.

         IN WITNESS WHEREOF, the Corporation has caused this Certificate to be
signed by its duly authorized officer on March 27, 2003.

                                HARKEN ENERGY CORPORATION

                                By:    /s/  A. Wayne Hennecke
                                       -----------------------------------------
                                       A. Wayne Hennecke, Senior Vice President-
                                       Finance and Secretary<PAGE>

                                                                   EXHIBIT 10.35

                                Option Agreement

                                     between

                            Harken Energy Corporation

                                       and

                              HBK MASTER FUND L.P.

                                 March 18, 2003

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This Option Agreement is entered into this 18th day of March 2003 between:

     (1)  HARKEN ENERGY CORPORATION ("HEC") of 580 WestLake Park Boulevard,
          Suite 600, Houston, Texas 77079, United States of America; and

     (2)  HBK MASTER FUND L.P ("HBK") of c/o HBK Investments L.P., 300 Crescent
          Court, Suite 700, Dallas, Texas 75201, United Stated of America.

WHEREAS, HBK holds $4.93 million nominal of Harken Energy Corporation 5% Senior
Convertible Notes due 2003 (the "2003 Notes").

NOW, for full and valuable consideration which the parties hereto acknowledge,
HEC and HBK agree as follows:

    1     Definitions

          In this Agreement, unless the context otherwise requires, the
          following expressions have the following meanings:

          (A)  "business day" means each Monday, Tuesday, Wednesday, Thursday,
               and Friday which is a day on which banking institutions in the
               City of New York, Houston Texas, and London England are not
               obligated or authorized by law, regulation or executive order to
               close;

          (B)  "the Call Option" means the option granted in accordance with
               Section 2;

          (C)  "the Call Option Period" means the period beginning on the date
               hereof and ending on 30 April 2003;

          (D)  "the Option Price" means the price, payable in cash, of 60% of
               nominal value of the 2003 Notes to be purchased by HEC pursuant
               to the Put Option or Call Option;

          (E)  "the Put Option" means the option granted in accordance with
               Section 3; and

          (F)  "the Put Option Period" means the period beginning on 1 May 2003
               and ending on 26 May 2003;

    2     Grant and Exercise of the Call Option

          (A)  In consideration of these presents, HBK hereby grants to HEC the
               right and option during the Call Option Period to purchase from
               it, and it shall be obliged to sell, up to $4,930,000 nominal of
               2003 Notes at the Option Price on the terms of this Agreement.

          (B)  Notice of exercise of the Call Option may be given at any time
               and from time to time to HBK during the Call Option Period in
               respect of any multiple of $10,000 in aggregate principal amount
               of 2003 Notes.

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               Such notice shall be given in writing specifying a date for
               completion which date shall be not more than 5 business days nor
               less than 3 business days after the date of service of the
               notice.

    3     Grant and Exercise of the Put Option

          (A)  In consideration of these presents, HEC grants to HBK the right
               and option to sell to HEC, and HEC shall be obliged to purchase
               from HBK, at the Option Price such nominal amount of 2003 Notes
               which shall equal, when aggregated with the 2003 Notes purchased
               by HEC from HBK pursuant to the Call Option by the end of the
               Call Option Period, $3,700,000 nominal of 2003 Notes.

          (B)  Notice of the exercise of the Put Option may be given by HBK at
               any time and from time to time to HEC during the Put Option
               Period in respect of any multiples of $10,000 of 2003 Notes. Such
               notice shall be in writing and specify a date for completion
               which date shall be not more than 5 business days nor fewer than
               3 business days after the date of service of the notice.

    4     Non-Assignability

          The Put Option and the Call Option may not be assigned in whole or in
          part.

    5     Notices

          Any notice to be given by HEC hereunder shall be deemed served if
          faxed to HBK at facsimile number (214) 758-1207 with a telephone
          confirmation from HBK of receipt or if delivered to HBK at (214)
          758-6132. Any notice to be given by HBK hereunder shall be given by
          HBK and shall be deemed served if faxed to HEC at facsimile number 001
          281 504 4100 (Attention A. Wayne Hennecke, Senior Vice
          President-Finance and Secretary) with a telephone confirmation from
          HEC of receipt or if delivered to HEC at its address set out in this
          Agreement.

    6     Counterparts

          This Agreement may be executed in any number of counterparts, all of
          which taken together shall constitute one and the same instrument.
          Either party may enter into this Agreement by executing any such
          counterpart.

    7     Choice of law / Arbitration

          With respect to any matters under this Agreement that are governed by
          state law, but excluding the next paragraph of this Section 7, which
          shall be governed by the United States Federal Arbitration Act, the
          parties agree that this Agreement shall be construed and governed by
          the laws of the State of Texas.

                                        3

<PAGE>

          Any dispute between HBK and HEC as to a violation or alleged violation
          of any provision of this Agreement shall be resolved by final and
          binding arbitration, which arbitration shall be conducted in
          accordance with the rules of the American Arbitration Association
          insofar as said rules are not in conflict with the provisions of this
          Agreement, with such arbitration hearing to be conducted in Houston,
          Texas. The arbitration provisions of this Paragraph shall be governed
          by the United States Federal Arbitration Act. THE PARTIES UNDERSTAND
          AND AGREE THAT THIS SECTION CONSTITUTES A WAIVER OF THEIR RIGHT TO A
          TRIAL BY JURY OF ANY CLAIMS OR CONTROVERSIES COVERED BY THIS
          AGREEMENT, AND THAT NONE OF THOSE CLAIMS OR CONTROVERSIES SHALL BE
          RESOLVED BY A JURY TRIAL.

          The arbitration provided for in this Agreement shall be final and
          binding and enforceable in any court of competent jurisdiction, and
          such arbitration shall be the sole method of resolving disputes
          between the parties with respect hereto.

      8   Miscellaneous

          Any facsimile signature of any person on a document required or
          permitted pursuant to this Agreement shall constitute a legal, valid
          and binding execution thereof by such person.

IN WITNESS whereof, this Agreement has been entered into as of the day and year
first above written.

HARKEN ENERGY CORPORATION                          HBK MASTER FUND L.P

By: /s/ Bruce  N. Huff                             By: HBK Investments L.P.
    -----------------------
Name: Bruce N. Huff                                Its: Investment Manager
Title: President and Chief Operating Officer
                                                   By: /s/ Kevin O'Neal
                                                       -----------------------
                                                   Name: Kevin O'Neal
                                                   Title: Authorized Signatory

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