Document:

exv10w4

 

Exhibit 10.4

HARVEST NATURAL RESOURCES

2006 LONG TERM INCENTIVE PLAN

Employee Restricted Stock Agreement

               Agreement made at Houston, Texas, USA, as of «Grant_Date», by and between HARVEST NATURAL
RESOURCES, INC. (the “Company”) and «First_Name» «Last_Name» (the “Grantee”).

               It is hereby agreed as follows:

	 	1.	 	Grant of Stock; Consideration. The Company hereby grants (the “Grant”),
pursuant to Article VIII of the Harvest Natural Resources 2006 Long Term Incentive Plan
(the “Plan”), to the Grantee of «Restricted_Stock_Grant» 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 Internal Revenue Code of 1986, as amended.
	 
	 	 	 	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.
	 
	 	2.	 	Incorporation of Plan by Reference. The Grant has been granted to the Grantee
under the Plan, a copy of which is attached hereto. All of the terms, conditions, and
other provisions of the Plan are hereby incorporated by reference into this Restricted
Stock Agreement (the “Agreement”). Capitalized terms used in this Agreement, but not
defined herein shall have the same meanings as in the Plan. If there is any conflict
between the provisions of this Agreement and the provisions of the Plan, the provisions of
the Plan shall govern.
	 
	 	3.	 	Restriction Period. Subject to all of the terms and conditions of the Plan and
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 and the Plan shall
apply to the Restricted Shares shall commence on «Grant_Date» and end on «Restricted_Until»
(the “Restriction Period”). At the end of the Restriction Period, all restrictions under
the Plan 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 you, your beneficiary or your estate,
whichever is applicable at the time of delivery.
	 
	 	4.	 	Restrictions. 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 recipient
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 recipient 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 your rights to such Restricted Stock shall
terminate without further obligation on the part of the Company unless you remain 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, an Employee’s employment with the Company is terminated for any reason except Total
Disability, death, and layoff with benefits under a Company severance plan, any 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.
	 
	 	5.	 	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.
	 
	 	6.	 	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 of the foregoing restrictions on transfer of the Restricted Shares,
and any other restrictive legend deemed necessary or appropriate by the Committee.
	 
	 	7.	 	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.

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	 	8.	 	Grantee Bound by Plan. The Grantee hereby acknowledges receipt of the attached
copy of the Plan 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.
	 
	 	9.	 	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.

	 	 	 	 	 
	 	HARVEST NATURAL RESOURCES, INC.

 	 
	 	BY:  	
 	 
	 	 	James A. Edmiston 	 
	 	 	TITLE: President and CEO 	 
	 

	 	 	 	 	 
	 	GRANTEE:

 
«First_Name» «Last_Name»

 	 
	 	DATE:  	 	 
	 	 	 	 
	 	 	 	 
	 

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.

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	o	 	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.

	 	 	 	 	 
	 
	 	 
«First_Name» «Last_Name»

 	 
	 	 	 

Attachment (copy of the Plan)

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Exhibit 10.5

STOCK UNIT AWARD AGREEMENT

     This Stock Unit Award Agreement (this “Agreement”) is made by and between Harvest
Natural Resources, Inc., a Delaware corporation (the “Company”), and James A. Edmiston III (the
“Executive”) as of the 15th day of September, 2005 (the “Grant Date”).

     Whereas, the Company desires to grant to the Executive the stock unit award specified
herein (the “Award”), subject to the terms and conditions of this Agreement; and

     Whereas, the Award is a “stock value right” as that term is defined in Treasury
Regulation § 31.3121(v)(2)-1(b)(4)(ii); and

     Whereas, the Executive desires to have the opportunity to hold the Award, subject to
the terms and conditions of this Agreement;

     Now, therefore, in consideration of the premises, mutual covenants and agreements
contained herein, and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto, intending to be legally bound hereby, agree as
follows:

	1.	 	Grant of Stock Unit Award. Effective as of the Grant Date, the Company hereby awards to the
Executive 250,000 Stock Units. A “Stock Unit” is a right to receive on the Payment Date,
after vesting thereof, a cash amount equal to the excess of (a) the Fair Market Value of one
share of the Stock on the Valuation Date over (b) 100 percent of the Fair Market Value of one
share of the Stock on the Grant Date. For purposes of this Agreement the “Fair Market Value
of one share of the Stock” means the average of the high and low trading prices per share of
the Stock for the applicable date as reported by the New York Stock Exchange or the principal
stock exchange on which the Stock is then traded. The Stock Units that are awarded hereby to
the Executive shall be subject to the prohibitions and restrictions set forth herein with
respect to the sale or other disposition of such Stock Units and the obligation to forfeit and
surrender such Stock Units to the Company (the “Forfeiture Restrictions”). In accepting the
award of Stock Units set forth in this Agreement the Executive accepts and agrees to be bound
by all the terms and conditions of this Agreement.
	 
	2.	 	Definitions. For purposes of this Agreement, the following terms shall have the meanings
indicated below:

	 	(a)	 	“Affiliate” means an Entity that is required to be treated as a single employer
together with the Company for certain benefit plan purposes under section 414 of the
Code.
	 
	 	(b)	 	“Board” means the Board of Directors or other governing body of the Company or
its direct or indirect parent.

 

 

	 	(c)	 	“Change of Control” means the occurrence of any of the following events:

	 	(i)	 	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 Section 2(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 (A), (B) and (C) of
subsection (iii) of this Section 2(c); or
	 
	 	(ii)	 	individuals who, as of the date of this Agreement, constitute
the Board (the “Incumbent Board”) cease for any reason to constitute at least a
majority of the Board; 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
	 
	 	(iii)	 	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 (iii), a Business Combination
will not constitute a change of control if the following three requirements are
satisfied: following such Business Combination, (A) 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, (B) 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, 

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	 	 	 	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 (C) 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, 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)	 	“Code” means the Internal Revenue Code of 1986, as amended.
	 
	 	(e)	 	“Disability” means the Executive no longer can perform one or more of the
essential functions of the Executive’s job even with reasonable accommodation and a
physician selected by the Company has confirmed such condition exists and has reported
his findings to the Company in a written notice received by the Company.
	 
	 	(f)	 	“Entity” means any corporation, partnership, association, joint-stock company,
limited liability company, trust, unincorporated organization or other business Entity.
	 
	 	(g)	 	“Forfeiture Restrictions” means any prohibitions and restrictions set forth
herein with respect to the sale or other disposition of Stock Units issued to the
Executive hereunder and the obligation to forfeit and surrender such Stock Units to the
Company.
	 
	 	(h)	 	“Payment Date” means the earliest of (i) September 14, 2015, (ii) six months
after the date the Executive incurs a Section 409A Separation From Service with respect
to the Company, (iii) the date of the death of the Executive, and (iv) the date the
Company incurs a Section 409A Change of Control.
	 
	 	(i)	 	“Section 409A” means section 409A of the Code and the rules and regulations
issued thereunder by the Department of Treasury and the Internal Revenue Service.
	 
	 	(j)	 	“Section 409A Change of Control” means a change in the ownership or effective
control of the Company or in the ownership of a substantial portion of the assets of
the Company within the meaning of Section 409A.
	 
	 	(k)	 	“Section 409A Separation from Service” means a separation from service from the
Company within the meaning of Section 409A.

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	 	(l)	 	“Stock” means the Company’s common stock, par value $0.01 per share.
	 
	 	(m)	 	“Valuation Date” means the last day immediately preceding the Payment Date on
which sales of the Stock are reported by the principal stock exchange on which the
Stock is then traded.

	3.	 	Transfer Restrictions. The Stock Units granted hereby may not be sold, assigned, pledged,
exchanged, hypothecated or otherwise transferred, encumbered or disposed of (other than by
will or the applicable laws of descent and distribution). Any such attempted sale,
assignment, pledge, exchange, hypothecation, transfer, encumbrance or disposition in violation
of this Agreement shall be void and the Company shall not be bound thereby.
	 
	4.	 	Vesting. The Stock Units that are granted hereby shall be subject to Forfeiture
Restrictions. The Forfeiture Restrictions shall lapse as to the Stock Units that are granted
hereby in accordance with the provisions of subsections (a) through (c) of this Section 4.

	 	(a)	 	Generally. The Forfeiture Restrictions shall lapse as to the Stock Units that
are granted hereby in accordance with the following schedule provided that the
Executive’s employment with the Company and all of its Affiliates has not terminated
prior to the applicable lapse date:

	 	(i)	 	the Forfeiture Restrictions shall lapse as to one-third of the
Stock Units subject to this Agreement after the later of September 15, 2006,
and the Stock Value Date;
	 
	 	(ii)	 	the Forfeiture Restrictions shall lapse as to an additional
one-third of the Stock Units subject to this Agreement after the later of
September 15, 2007, and the Stock Value Date; and
	 
	 	(iii)	 	the Forfeiture Restrictions shall lapse as to the remaining
one-third of the Stock Units subject to this Agreement after the later of
September 15, 2008, and the Stock Value Date.
	 
	 	The “Stock Value Date” is the first day after the Grant Date on which the average of
the Closing Price of the Stock for ten (10) consecutive [trading] days equals or
exceeds $25.00 per share. The “Closing Price of the Stock” means the final trading
price per share of the Stock as reported in The Wall Street Journal listing
of consolidation trading for New York Stock Exchange issues or the principal stock
exchange on which the Stock is then traded. If the Executive’s employment
relationship with the Company and all of its Affiliates terminates before the
applicable lapse date set forth in this subsection (a), except as otherwise
specified in subsections (b) or (c) below, the Forfeiture Restrictions then
applicable to the Stock Units shall not lapse and all the Stock Units then subject
to the Forfeiture Restrictions shall be forfeited to the Company upon such
termination of the Executive’s employment relationship.

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	 	(b)	 	Death or Disability. Notwithstanding any provisions of Section 4(a) to the
contrary, in the event the Executive’s employment relationship with the Company and all
of its Affiliates is terminated due to the death or Disability of the Executive prior
to the expiration of the term of this Agreement, the Forfeiture Restrictions shall
lapse as to the Stock Units that are granted hereby on the date of such termination of
the Executive’s employment relationship due to death or Disability.
	 
	 	(c)	 	Change of Control. Notwithstanding any provisions of Section 4(a) to the
contrary, in the event the Executive’s employment relationship with the Company and all
of its Affiliates is terminated within 730 days after or 240 days before a Change of
Control, the Forfeiture Restrictions shall lapse as to the Stock Units that are granted
hereby on the date the Executive’s employment relationship with the Company and all of
its Affiliates is terminated.

	5.	 	Time of Payment under the Award. To the extent the Forfeiture Restrictions lapse with
respect to the Stock Units granted hereby on or before the Payment Date the Company shall pay
to the Executive on the Payment Date the amount payable with respect to the Stock Units for
which the Forfeiture Restrictions have lapsed.
	 
	6.	 	Term.. This Agreement and the Executive’s rights hereunder shall terminate at 5:00 p.m.
(Central Time) on September 15, 2015.
	 
	7.	 	Tax Withholding. The Company shall be entitled to deduct from the amounts payable to the
Executive (or other person validly exercising the Award) under this Agreement and any other
compensation payable by the Company to the Executive any sums required by federal, state or
local tax law to be withheld with respect to any payment made by the Company to the Executive
under this Agreement. The Company shall have no obligation with respect to payment of the
Award until the Company or an Affiliate has received payment sufficient to cover all minimum
tax withholding amounts due with respect to the Award. Neither the Company nor any Affiliate
shall be obligated to advise the Executive of the existence of the tax or the amount which it
will be required to withhold.
	 
	8.	 	Capital Adjustments and Reorganizations.

	 	(a)	 	The existence of the Stock Units shall not affect in any way the right or power
of the Company to make or authorize any adjustment, recapitalization, reorganization or
other change in its capital structure or its business, engage in any merger or
consolidation, issue any debt or equity securities, dissolve or liquidate, or sell,
lease, exchange or otherwise dispose of all or any part of its assets or business, or
engage in any other corporate act or proceeding.
	 
	 	(b)	 	If the Company shall effect a subdivision or consolidation of the Stock or
other capital readjustment, the payment of a stock dividend with respect to the Stock,
or other increase or reduction of the number of shares of the Stock outstanding,
without receiving compensation therefor in money, services or property, then the number
of Stock Units awarded under this Agreement shall be appropriately

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	 	 	 	adjusted in the same manner as if the Executive was the holder of an equivalent
number of shares of the Stock immediately prior to the event requiring the
adjustment.

	9.	 	Employment Relationship. For purposes of this Agreement, the Executive shall be considered
to be in the employment of the Company as long as the Executive has an employment relationship
with the Company. The Board shall determine any questions as to whether and when there has
been a termination of such employment relationship, and the cause of such termination, under
the Plan and the Board’s determination shall be final and binding on all persons.
	 
	10.	 	Not an Employment Agreement. This Agreement is not an employment agreement, and no provision
of this Agreement shall be construed or interpreted to create an employment relationship
between the Executive and the Company or any of its Affiliates or guarantee the right to
remain employed by the Company or any of its Affiliates for any specified term.
	 
	11.	 	Notices. Any notice, instruction, authorization, request or demand required hereunder shall
be in writing, and shall be delivered either by personal delivery, by telegram, telex,
telecopy or similar facsimile means, by certified or registered mail, return receipt
requested, or by courier or delivery service, addressed to the Company at the Company’s
principal business office address and to the Executive at the Executive’s residential address
indicated beneath the Executive’s signature on the execution page of this Agreement, or at
such other address and number as a party shall have previously designated by written notice
given to the other party in the manner hereinabove set forth. Notices shall be deemed given
when received, if sent by facsimile means (confirmation of such receipt by confirmed facsimile
transmission being deemed receipt of communications sent by facsimile means); and when
delivered (or upon the date of attempted delivery where delivery is refused), if
hand-delivered, sent by express courier or delivery service, or sent by certified or
registered mail, return receipt requested.
	 
	12.	 	Amendment and Waiver. Except as otherwise provided herein, this Agreement may be amended,
modified or superseded only by written instrument executed by the Company and the Executive.
Only a written instrument executed and delivered by the party waiving compliance hereof shall
waive any of the terms or conditions of this Agreement. Any waiver granted by the Company
shall be effective only if executed and delivered by a duly authorized executive officer of
the Company other than the Executive. The failure of any party at any time or times to
require performance of any provisions hereof shall in no manner effect the right to enforce
the same. No waiver by any party of any term or condition, or the breach of any term or
condition contained in this Agreement, in one or more instances, shall be construed as a
continuing waiver of any such condition or breach, a waiver of any other condition, or the
breach of any other term or condition.
	 
	13.	 	Governing Law and Severability. This Agreement shall be governed by the laws of the State of
Texas without regard to its conflicts of law provisions. The invalidity of any provision of
this Agreement shall not affect any other provision of this Agreement, which shall remain in
full force and effect.

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	14.	 	Successors and Assigns. Subject to the limitations which this Agreement imposes upon the
transferability of the Stock Units granted hereby, this Agreement shall bind, be enforceable
by and inure to the benefit of the Company and its successors and assigns, and to the
Executive, the Executive’s permitted assigns and upon the Executive’s death, the Executive’s
estate and beneficiaries thereof (whether by will or the laws of descent and distribution),
executors, administrators, agents, legal and personal representatives.

	15.	 	Counterparts. This Agreement may be executed in two or more counterparts, each of which
shall be an original for all purposes but all of which taken together shall constitute but one
and the same instrument.

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     In Witness Whereof, the Company has caused this Agreement to be duly executed by an
officer thereunto duly authorized, and the Executive has executed this Agreement, all as of the
date first above written.

	 	 	 	 	 
	 	HARVEST NATURAL RESOURCES, INC.

 	 
	 	By:  	 	 
	 	 	 	 
	 	Title: 	 	 
	 

	 	 	 	 	 
	 	EXECUTIVE:

 
James A. Edmiston III 

 	 
	 	Address:

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