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                                                                   Exhibit 10.1

                              EMPLOYMENT AGREEMENT

      This Employment Agreement ("Employment Agreement" or "Agreement"),
effective September 1, 2004 is between Harvest Natural Resources, Inc.
(hereinafter sometimes called the "Company") and James A. Edmiston III , a
resident of Texas ("Employee"),

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

      NOW, THEREFORE, in consideration of the premises, the terms and provisions
set forth herein, the mutual benefits to be gained by the performance thereof
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto agree as follows:

1.    TERM OF EMPLOYMENT.

      Subject to the terms and conditions set forth in this Employment
      Agreement, the Company agrees to employ Employee and Employee agrees to be
      employed by the Company for the term which starts on September 1, 2004 and
      ends on May 31, 2007. On May 31, 2007, and on each one-year period
      thereafter (an "Extension Date") the term of this Employment Agreement
      shall automatically be extended for a one-year period unless and until
      either party has given written notice to the other at least one year
      before any extension date that it or he wishes to terminate this Agreement
      as of such extension date.

2.    POSITION AND DUTIES.

      (a)   Position. Subject to annual election by the Company's Board of
            Directors, Employee's position shall be Executive Vice President and
            Chief Operating Officer of Harvest Natural Resources, Inc.

      (b)   Duties and Responsibilities. Employee's duties and responsibilities
            initially shall be those normally associated with Employee's
            position, plus any additional duties and responsibilities the
            Company initially may assign orally or in writing to Employee.
            Employee shall undertake to perform all Employee's duties and
            responsibilities for the Company and its affiliates in good faith
            and on a full-time basis and shall at all times act in the course of
            Employee's employment under this Employment Agreement in the best
            interest of the Company and Company's affiliates.

      (c)   The Company's Right to Change Position or Duties. Subject to the
            terms of this Agreement, the Company shall have the right, to the
            extent the Company from time to time reasonably deems necessary or
            appropriate, to change Employee's position, or to expand or reduce
            Employee's duties and responsibilities.

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3.    COMPENSATION AND BENEFITS.

      (a)   Base Salary. During the term of this Employment Agreement, Employee'
            yearly base salary shall be not less than $300,000 US (paid
            bi-weekly), which yearly base salary shall be payable from the
            Company's Houston offices to Employee in accordance with the
            Company's standard payroll practices and policies, and shall be
            subject to such withholdings as required by U.S. Federal law and the
            State of Texas, or as otherwise permissible under such practices or
            policies. Base salary for any partial period of employment shall be
            prorated. The Company shall annually review Employee's base salary.

      (b)   Signing Bonus. Employee shall receive a signing bonus of $50,000
            payable to Employee on the date of this Employment Agreement.

      (c)   Annual Bonus. Employee shall be eligible for such annual bonus as
            may be determined by the Human Resources Committee of the Company's
            Board of Directors and the Company's Board of Directors, which bonus
            shall be based on Employee's performance under the performance
            contract guidelines adopted by the Company, the Company's overall
            performance and any special circumstances the Human Resources
            Committee and the Board deem appropriate. Any such bonus is to be
            determined at the discretion of the Company's Human Resources
            Committee and the Board of Directors. Employee acknowledges that the
            Company is not obligated to award him any bonus in any year.

      (d)   Employee Benefit Plans. Employee shall be eligible to participate in
            the employee benefit plans, programs and policies maintained by the
            Company for similarly situated employees in accordance with the
            terms and conditions to participate in such plans, programs, and
            policies as in effect from time to time.

      (e)   Stock Option Award. As of September 1, 2004, Employee was granted a
            stock option to purchase 100,000 shares of the Company's common
            stock under the Company's 2004 Long Term Incentive Plan (the "Plan")
            at the average of the highest price and the lowest price on
            September 1, 2004 for the common stock of the Company as reported by
            the New York Stock Exchange. Except as otherwise provided herein,
            Employee's right to exercise this option shall vest over a three (3)
            year period: 33,334 shares on September 1, 2005; 33,333 shares on
            September 1, 2006; and 33,333 shares on September 1, 2007; provided,
            Employee is still an employee of Company and as otherwise set forth
            in the Plan and Stock Option Agreement, to be executed between
            Employee and Company effective as of the date of grant.

      (f)   Restricted Stock Award. As of September 1, 2004, Employee was
            granted 20,000 restricted shares of the Company's common stock under
            the Plan. Except as otherwise provided herein, the shares shall be
            restricted for a period of thirty-six (36) months commencing
            September 1, 2004. The terms and conditions of the award of
            restricted stock are set forth in the Restricted Stock Agreement to
            be executed between Employee and Company effective as of the date of
            grant.

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      (g)   Vacation. Employee shall be entitled to four (4) weeks annual
            vacation.

      (h)   Expenses. The Company shall pay or reimburse Employee for all
            reasonable expenses actually incurred or paid by the Employee in the
            performance of his services hereunder upon the presentation of
            expense statements or vouchers or such other supporting information
            as the Company may reasonably require of Employee.

      (i)   Office Facilities and Services. Employee shall be accorded such
            benefits and support services, including without limitation, office
            facilities, administrative assistant, communications, and such other
            perquisites as would normally be accorded by a corporation of the
            size and at the stage of development in the industry in which the
            Company is, to its Executive Vice President and Chief Operating
            Officer.

      (j)   Indemnification. Employee shall be entitled to the benefit of the
            indemnification provisions contained in the bylaws of the Company as
            the same may be amended.

4.    TERMINATION OF EMPLOYMENT.

      (a)   Termination By The Company Other Than For Cause Or Disability, Or By
            Employee For Good Reason.

            (1)   The Company shall have the right to terminate Employee's
                  employment other than for Cause at any time, and Employee
                  shall have the right to quit or resign for Good Reason at any
                  time.

            (2)   If (a) the Company or its successors terminate Employee's
                  employment with the Company other than (i) for Cause or (ii)
                  pursuant to a notice of termination delivered in accordance
                  with Section 1 of this Employment Agreement or (b) Employee
                  resigns for Good Reason, then (x) the Company shall pay to
                  Employee within thirty (30) days after the termination or
                  resignation an amount equal to twenty-four months of
                  Employee's base salary as in effect immediately before
                  Employee's termination of employment or resignation, and (y)
                  any outstanding stock option(s) granted by the Company to
                  Employee shall become fully vested and shall remain
                  exercisable for twelve (12) months following Employee's
                  termination pursuant to this section 4(a)(2), or the tenth
                  anniversary of the date(s) of the grant(s) specified in the
                  relevant option agreement(s), whichever is the shorter period,
                  and (z) any remaining restriction period on restricted shares
                  of stock granted by the Company to Employee will lapse as of
                  the date of termination or resignation and a certificate(s)
                  representing such shares will be delivered to Employee within
                  thirty (30) days after such date.

            (3)   If the termination or resignation described in Section 4(a)(2)
                  occurs within 730 days after or 240 days before a Change of
                  Control, then (v) the Company shall pay to Employee, within
                  thirty (30) days after the later to

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                  occur of the termination, resignation or the Change of
                  Control, an amount equal to twenty-four months of Employee's
                  base salary as in effect immediately before Employee's
                  termination of employment or resignation and the Bonus Amount,
                  (w) any outstanding stock option(s) granted by the Company to
                  Employee shall become fully vested and shall remain
                  exercisable for twelve (12) months following Employee's
                  termination or resignation, or the tenth anniversary of the
                  date(s) of the grant(s) specified in the relevant option
                  agreement(s), whichever is the shorter period, and (x) any
                  remaining restriction period on restricted shares of stock
                  granted by the Company to Employee will lapse as of the date
                  of termination or resignation and a certificate(s)
                  representing such shares will be delivered to Employee within
                  thirty (30) days after the later to occur of the termination,
                  resignation or the Change of Control, (y) for a period of
                  twenty-four months following the later to occur of the
                  termination or resignation or 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 benefits Employee and Employee's
                  dependents were receiving immediately before Employee's
                  termination or resignation, and (z) the Company will pay
                  Employee, within thirty (30) days after the later to occur of
                  the termination, resignation or the Change of Control, an
                  additional amount such that the net amount retained by
                  Employee pursuant to the benefits described in Section 4(a)(2)
                  and clause (x) of this Section 4(a)(3) after any federal,
                  state, local and other taxes (including without limitation any
                  excise tax imposed under Section 4999 of the Internal Revenue
                  Code of 1986, as amended from time to time) shall be equal to
                  the amount that Employee would have received pursuant to those
                  benefits before payment of any such taxes.

            (4)   If the Company or its successors terminate Employee's
                  employment with the Company pursuant to a notice of
                  termination delivered in accordance with Section 1 of this
                  Employment Agreement within 730 days after or 240 days before
                  a Change of Control, then (v) the Company shall pay to
                  Employee, within thirty (30) days after the later to occur of
                  the termination or the Change of Control, an amount equal to
                  twenty-four months of Employee's base salary as in effect
                  immediately before Employee's termination of employment and
                  the Bonus Amount, (w) any outstanding stock option(s) granted
                  by the Company to Employee shall become fully vested and shall
                  remain exercisable for twelve (12) months following Employee's
                  termination pursuant to this section 4(a)(4), or the tenth
                  anniversary of the date(s) of the grant(s) specified in the
                  relevant option agreement(s), whichever is the shorter period,
                  (x) any remaining restriction period on restricted shares of
                  stock granted by the Company to Employee will lapse as of the
                  date of termination and a certificate(s) representing such
                  shares will be delivered to Employee within thirty (30) days
                  after such date, (y) for a period of twenty-four months
                  following Employee's termination the Company shall continue to
                  provide Employee

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                  and Employee's dependents with the same level of life,
                  disability, accident, dental and health insurance benefits
                  Employee and Employee's dependents were receiving immediately
                  before Employee's termination of employment, and (z) the
                  Company shall pay to Employee, within thirty (30) days after
                  the later to occur of the termination or the Change of
                  Control, an additional amount such that the net amount
                  retained by Employee pursuant to the benefits described in
                  clauses (v), (w) and (x) of this section 4(a)(4) after any
                  federal, state, local and other taxes (including without
                  limitation any excise tax imposed under Section 4999 of the
                  Internal Revenue Code of 1986, as amended from time to time)
                  shall be equal to the amount that Employee would have received
                  pursuant to such benefits before payment of any such taxes.

      (b)   Termination By The Company For Cause, Or By Employee Other Than For
            Good Reason.

            (1)   The Company shall have the right to terminate Employee's
                  employment at any time for Cause, and Employee shall have the
                  right to quit or resign at any time other than for Good
                  Reason.

            (2)   If the Company terminates Employee's employment for Cause or
                  pursuant to a notice of termination delivered in accordance
                  with Section 1 of this Employment Agreement that is not
                  delivered within 730 days after or 240 days before a Change of
                  Control, or Employee quits or resigns other than for Good
                  Reason, the Company's only obligation to Employee under this
                  Employment Agreement shall be to pay Employee's base salary
                  (including accrued vacation) actually earned up to the date
                  Employee's employment terminates.

      (c)   Termination for Disability or Death.

            (1)   The Company shall have the right to terminate Employee's
                  employment on or after the date Employee has a Disability, and
                  Employee's employment shall terminate at Employee's death.

            (2)   If Employee's employment terminates under this section 4(c),
                  the Company shall pay Employee or, if Employee dies,
                  Employee's estate the amount provided for under section
                  4(a)(2) and, in addition, Employee or, if Employee dies,
                  Employee's estate shall be entitled to the provisions of
                  section 4(a)(2) with respect to Employee's stock options and
                  restricted stock.

      (d)   Bonus Amount. The term "Bonus Amount" means the higher of (i) the
            highest annual bonus earned by Employee for the last three fiscal
            years ending prior to the termination date, and (ii) (A) the target
            bonus percentage as established by the Company's Board of Directors
            for the fiscal year in which the Change of Control occurs,
            multiplied by (B) Employee's annual base salary for that fiscal year

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            (whether or not paid or accrued for the full year at the time of
            Employee's termination or resignation).

      (e)   Cause. The term "Cause" shall mean (1) Employee's final conviction
            of a felony by a trial court, (2) Employee's material breach of this
            Employment Agreement or (3) Employee's material violation of any
            policy or code of conduct of the Company.

      (f)   Good Reason. The term "Good Reason" shall mean any of the following,
            unless Employee shall have given his express written consent
            thereto: (1) a material breach of the terms and conditions of this
            Employment Agreement by the Company which remains uncorrected for
            thirty (30) days after Employee delivers written notice of such
            breach to the Company; (2) failure to maintain or reelect Employee
            to the position described in section 2(a); (3) a significant
            reduction of Employee's duties, position or responsibilities
            relative to the Employee's duties, position or responsibilities in
            effect immediately prior to such reduction, unless Employee is
            provided with comparable duties and responsibilities; (4) a
            substantial reduction, without good business reasons, of the
            facilities and perquisites available to Employee immediately prior
            to such reduction; (5) a reduction by the Company of Employee's
            monthly base salary in effect immediately prior to such reduction;
            (6) the Company fails to continue Employee's participation in any
            bonus, incentive, profit sharing, performance, savings, retirement
            or pension policy, plan, program or arrangement on substantially the
            same or better basis, both in terms of the amount of benefits
            provided to Employee and the level of Employee's participation,
            relative to other participants, (7) the relocation of the Employee
            more than fifty (50) miles from the location of the Company's
            principal office on the date hereof; (8) the failure of the Company
            to obtain a satisfactory agreement from a successor to assume and
            agree to perform this Agreement as contemplated by section 6(d); (9)
            after August 31, 2005 and before August 31,2006, the Company's Board
            of Directors appoints a Chief Executive Officer other than Employee
            or Dr. Peter J. Hill.

      (g)   Disability. Employee shall have a "disability" under this Employment
            Agreement on the date the Company receives written notice from a
            physician selected by the Company that Employee no longer can
            perform one or more of the essential functions of Employee's job
            even with reasonable accommodation.

      (h)   Change of Control. A "Change of Control" means the occurrence of any
            of the following:

            (1)   the acquisition by any individual, entity or group (within the
                  meaning of Section 13(d)(3) or 14(d)(2) of the Securities
                  Exchange Act of 1934) (a "Covered Person") of beneficial
                  ownership (within the meaning of rule 13d-3 promulgated under
                  the Securities Exchange Act of 1934) of 50 percent or more of
                  the combined voting power of the then outstanding voting
                  securities of the Company entitled to vote generally in the
                  election of directors (the "Voting Securities"); provided,
                  however, that for

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                  purposes of this subsection (1) of this Section 4(g) the
                  following acquisitions shall not constitute a Change of
                  Control: (i) any acquisition by the Company, (ii) any
                  acquisition by any employee benefit plan (or related trust)
                  sponsored or maintained by the Company or any entity
                  controlled by the Company, or (iii) any acquisition by any
                  entity pursuant to a transaction which complied with clauses
                  (i), (ii) and (iii) of subsection (3) of this Section 4(g); or

            (2)   individuals who, as of the date of this Employment Agreement,
                  constitute the board of directors of the Company (the
                  "Incumbent Board") cease for any reason to constitute at least
                  a majority of the board of directors of the Company; provided,
                  however, that any individual becoming a director after the
                  date of this Employment Agreement whose election, or
                  nomination for election by the Company's stockholders, was
                  approved by a vote of at least a majority of the directors
                  then comprising the Incumbent Board shall be considered as
                  though such individual were a member of the Incumbent Board,
                  but excluding, for this purpose, any such individual whose
                  initial assumption of office occurs as a result of an actual
                  or threatened election contest with respect to the election or
                  removal of directors; or

            (3)   the consummation of a reorganization, merger or consolidation
                  or sale of the Company, or a disposition of at least 50
                  percent of the assets of the Company including goodwill (a
                  "Business Combination"), provided, however, that for purposes
                  of this subsection (3), a Business Combination will not
                  constitute a change of control if the following three
                  requirements are satisfied:

                  following such Business Combination, (i) all or substantially
                  all of the individuals and entities who were the beneficial
                  owners, respectively, of the Company's voting securities
                  immediately prior to such Business Combination beneficially
                  own, directly or indirectly, more than 50 percent of the
                  ownership interests of the entity resulting from such Business
                  Combination (including, without limitation, an entity which as
                  a result of such transaction owns the Company or all or
                  substantially all of the 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

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                  directors of the Company, providing for such Business
                  Combination. For this purpose any individual who becomes a
                  director after the date of this Employment Agreement, and
                  whose election or nomination for election by the Company's
                  stockholders, was approved by a vote of at least a majority of
                  the directors then comprising the Incumbent Board shall be
                  considered as though such individual were a member of the
                  Incumbent Board, but excluding, for this purpose, any such
                  individual whose initial assumption of office occurs as a
                  result of an actual or threatened election contest with
                  respect to the election or removal of directors.

      (i)   Benefits. Employee shall have the right to receive any benefits
            payable under the Company's employee benefits plans, programs and
            policies (other than the Company's Policy for Termination and
            Separation from Employment (the "Severance Policy")) which Employee
            otherwise has a non-forfeitable right to receive under the terms of
            such plans, programs and policies (other than severance benefits)
            independent of Employee's rights under this Employment Agreement
            upon a termination of employment in addition to any other benefits
            under this section 4 without regard to the reason for such
            termination of employment. Employee acknowledges and agrees that
            until the termination of this Agreement, he shall not be entitled to
            participate in the Severance Policy.

      (j)   Notice of Termination. Any termination by the Company or by Employee
            for any reason shall be communicated by a notice of termination to
            the other party hereto and shall be given in accordance with section
            6(a). Such notice shall state the specific termination provision in
            this Agreement relied upon, and shall set forth in reasonable detail
            the facts and circumstances claimed to provide a basis for
            termination under the provision so indicated.

      (k)   No Mitigation. Employee shall not be required to mitigate the amount
            of any severance payment contemplated by this Agreement, nor shall
            any such payment be reduced by any earnings that Employee may
            receive from any other source.

      (l)   Stock Award Agreements. In the event of a conflict adverse to
            Employee between the terms of this Agreement and the terms of any
            agreement granting Employee stock options or restricted stock, the
            terms of this Agreement shall govern.

5.    COVENANTS BY EMPLOYEE.

      (a)   Property of the Company.

            (1)   Employee covenants and agrees that upon the termination of
                  Employee's employment for any reason or, if earlier, upon the
                  Company's request, Employee shall promptly return all
                  "Property" which had been entrusted or made available to
                  Employee by the Company.

            (2)   The term "Property" shall mean all records, files, memoranda,
                  reports, price lists, drawing, plans, sketches, keys, codes,
                  computer hardware and

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                  software and other property of any kind or description
                  prepared, used or possessed by Employee during Employee's
                  employment by the Company (and any duplicates of any such
                  property) together with any and all information, ideas,
                  concepts, discoveries, and inventions and the like conceived,
                  made, developed or acquired at any time by Employee
                  individually or with others during Employee's employment which
                  relate to the Company's business, products or services.

      (b)   Trade Secrets.

            (1)   In consideration for the promises made in section 5(d) of this
                  Agreement, the Company promises that it shall provide and make
                  available to Employee certain confidential, proprietary
                  information and trade secrets.

            (2)   Employee covenants and agrees that Employee shall hold in a
                  fiduciary capacity for the benefit of the Company and each of
                  its affiliates, and shall not directly or indirectly use or
                  disclose, any Trade Secret that Employee may have acquired
                  pursuant to section 5(b)(1) above during the term of
                  Employee's employment by the Company for so long as such
                  information remains a trade secret.

            (3)   The term "Trade Secret" shall mean information, including, but
                  not limited to, technical or non-technical data, a formula, a
                  patent, a compilation, a program, a device, a method, a
                  technique, a drawing, a process, financial data, financial
                  plans, product plans, or that: (a) derives economic value,
                  actual or potential, from not being generally known to, and
                  not being generally readily ascertainable by proper means by
                  other persons who can obtain economic value from its
                  disclosures or use, and (b) is the subject of reasonable
                  efforts by the Company and its affiliates to maintain its
                  secrecy.

            (4)   This section 5(b) is intended to provide rights to the Company
                  which are in addition to those rights the Company has under
                  the common law or applicable statutes for the protection of
                  trade secrets.

      (c)   Confidential Information.

            (1)   Employee covenants and agrees while employed under this
                  Employment Agreement and thereafter during the Restricted
                  Period he shall hold in a fiduciary capacity for the benefit
                  of the Company and each of its affiliates, and shall not
                  directly or indirectly use or disclose, any of the Company's
                  or the Company's affiliates' Confidential or Proprietary
                  Information that Employee may have acquired (whether or not
                  developed or compiled by Employee and whether or not Employee
                  is authorized to have access to such information) during the
                  term of, and in the course of, or as a result of Employee's
                  employment by the Company or its affiliates.

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            (2)   The term "Confidential or Proprietary Information" shall mean
                  any secret, confidential or proprietary information that the
                  Company or an affiliate (not otherwise included in the
                  definition of a Trade Secret under this Agreement) that has
                  not become generally available to the public by the act of one
                  who has the right to disclose such information without
                  violation of any right of the Company or its affiliates.

      (d)   Non-Competition. During the period of Employee's employment with the
            Company and thereafter during the Restricted Period, the Employee
            covenants and agrees that, in connection with business operations
            and prospective interest of the Company on the date of Employee's
            termination as an employee in the countries of Russia and Venezuela,
            which prospective interests are disclosed to Employee prior to or on
            the date of the Employee's termination as an employee, he shall not
            directly or indirectly own any interest in, manage, control,
            participate in, consult with, render services for, or in any manner
            engage in any businesses materially adverse to or in competition
            with the Company (unless the Board of Directors shall have
            authorized such activity and the Company shall have consented
            thereto in writing). Investments in less than 5% of the outstanding
            securities of any class of the Company subject to the reporting
            requirements of Section 13 or Section 15(d) of the Securities
            Exchange Act of 1934, as amended, shall not be prohibited by this
            section. For purposes of this section (d), the term "Company" shall
            include Harvest Natural Resources, Inc. and any of its affiliates or
            subsidiaries or any company in which it is a minority shareholder or
            a joint venture partner. For purposes of this section, the term
            "businesses" shall mean any enterprise, commercial venture, or
            project involving oil and gas exploration or production activities
            in the same geographic areas as the Company's activities during the
            period of Employee's employment.

            Further, during the period of Employee's employment with the Company
            and thereafter during the Restricted Period, the Employee covenants
            and agrees that he will not directly or indirectly through another
            entity induce or otherwise attempt to influence any employee of the
            Company to leave the Company's employment or in any way interfere
            with the relationship between the Company and any employee thereof.
            Further, the Employee will not induce or attempt to induce any
            customer, supplier, licensee, joint venture partner, shareholder,
            licensor or other business relation of the Company to cease doing
            business with the Company or in any way interfere with the
            relationship between any such customer, supplier, licensee, joint
            venture partner, shareholder, licensor or business relation of the
            Company.

            If (i) pursuant to the arbitration process described in Section 6(c)
            of this Employment Agreement (or such other process as to which the
            Company and Employee may agree upon in writing), it is determined
            that Employee has violated the provisions of this Section 7(d), and
            (ii) Employee has received a payment from the Company pursuant to
            Section 4(a)(2)(x), Section 4(a)(3)(x) or Section 4(a)(4)(v) of this
            Agreement (the "Lump Sum Severance Amount"), then, in addition to
            any other remedies that the Company may have, Employee shall be

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            obligated, and hereby agrees, to pay the Company, as liquidated
            damages, an amount (but not less than zero) equal to the product of
            (x) the Lump Sum Severance Amount and (y) a fraction whose numerator
            is the excess of twenty-four (24) over the number of calendar months
            that have elapsed since the last day of Employee's termination of
            employment under Section 4 of this Agreement and whose denominator
            is twenty-four (24).

      (e)   Employment Restriction - Conflict of Interest: Employee covenants
            and agrees that he will not receive and has not received any
            payments, gifts or promises and Employee will not engage in any
            employment or business enterprises that in any way conflict with his
            service and the interests of the Company or its affiliates. In
            addition, Employee agrees to comply with the laws or regulations of
            any country, including, without limitation, the United States of
            America, having jurisdiction over Employee or the Company.

            Employee shall not make any payments, loans, gifts or promises or
            offers of payments, loans or gifts, directly or indirectly, to or
            for the use or benefit of any official or employee of any government
            or to any other person if Employee knows, or has reason to believe,
            that any part of such payments, loans or gifts, or promise or offer,
            would violate the laws or regulations of any country, including,
            without limitation, the United States of America, having
            jurisdiction over Employee or the Company.

            By signing this Agreement, Employee acknowledges that he has not
            made and will not make any payments, loans, gifts, promises of
            payments, loans or gifts to or for the use or benefit of any
            official or employee of any government or to any other person which
            would violate the laws or regulations of any country, including,
            without limitation, the United States of America, having
            jurisdiction over Employee or the Company.

      (f)   Restricted Period. The term "Restricted Period" shall mean the
            two-year period which starts on the date Employee's employment
            terminates with the Company without regard to whether such
            termination comes before or after the end of the term of this
            Employment Agreement.

      (g)   Reasonable and Continuing Obligations. Employee agrees that
            Employee's obligations under this section 5 will continue beyond the
            date Employee's employment terminates if such continuance is
            reasonable and necessary to protect the Company's legitimate
            business interests. The Company additionally shall have the right to
            take such other action as the Company deems necessary or appropriate
            to compel compliance with the provisions of this section 5.

6.    MISCELLANEOUS.

      (a)   Notices. Notices and all other communications shall be in writing
            and shall be deemed to have been duly given when personally
            delivered or when mailed by United States registered or certified
            mail. Notices to the Company shall be sent to

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            1177 Enclave Parkway, Suite 300, Houston, Texas 77077. Notices and
            communications to Employee shall be sent to Employee's home address.

      (b)   No Waiver. Except for the notice described in section 4(d), no
            failure by either the Company or Employee at any time to give notice
            of any breach by the other of, or to require compliance with, any
            condition or provision of this Employment Agreement shall be deemed
            a waiver of any provisions or condition of this Employment Agreement

      (c)   Arbitration and Governing Law. ANY UNRESOLVED DISPUTE OR CONTROVERSY
            BETWEEN EMPLOYEE AND THE COMPANY ARISING UNDER OR IN CONNECTION WITH
            THIS AGREEMENT SHALL BE SETTLED EXCLUSIVELY BY ARBITRATION,
            CONDUCTED IN ACCORDANCE WITH THE RULES OF THE AMERICAN ARBITRATION
            ASSOCIATION THEN IN EFFECT. THE COMPANY WILL BEAR THE ADMINISTRATIVE
            COSTS OF ANY ARBITRATION UNDER THIS AGREEMENT, INCLUDING THE
            ARBITRATOR'S FEES. THE ARBITRATOR SHALL NOT HAVE THE AUTHORITY TO
            ADD TO, DETRACT FROM, OR MODIFY ANY PROVISION HEREOF. THE ARBITRATOR
            SHALL HAVE THE AUTHORITY TO ORDER REMEDIES WHICH EMPLOYEE COULD
            OBTAIN IN A COURT OF COMPETENT JURISDICTION, INCLUDING BACK-PAY,
            SEVERANCE COMPENSATION, REIMBURSEMENT OF COSTS, INCLUDING THOSE
            INCURRED TO ENFORCE THIS AGREEMENT, AND INTEREST THEREON IN THE
            EVENT THE ARBITRATOR DETERMINES THAT EMPLOYEE WAS TERMINATED WITHOUT
            DISABILITY OR GOOD CAUSE, AS DEFINED HEREIN, OR THAT THE COMPANY HAS
            OTHERWISE MATERIALLY BREACHED THIS AGREEMENT. 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, UNITED STATES OF AMERICA. NOTWITHSTANDING THE
            FOREGOING, THE COMPANY SHALL BE ENTITLED TO SEEK INJUNCTIVE OR OTHER
            EQUITABLE RELIEF FROM ANY COURT OF COMPETENT JURISDICTION, WITHOUT
            THE NEED TO RESORT TO ARBITRATION IN THE EVENT THAT EMPLOYEE
            VIOLATES SECTIONS 5(b), 5(c), 5(d) OR 5(e) OF THIS AGREEMENT. THIS
            AGREEMENT SHALL IN ALL RESPECTS BE CONSTRUCTED ACCORDING TO THE LAWS
            OF THE STATE OF TEXAS.

      (d)   Assignment by Company. This Employment Agreement shall be binding
            upon and inure to the benefit of the Company and any successor to
            all or substantially all of the business or assets of the Company.
            The Company may assign this Employment Agreement to any affiliate or
            successor, and no such assignment shall be treated as a termination
            of Employee's employment under this Employment Agreement; provided,
            however, that in the case of an assignment to an affiliate, the
            Company shall not be relieved of its obligations under this

                                       12
<PAGE>

            Agreement. The Company will require any successor corporation
            (whether direct or indirect, and whether by purchase, merger,
            consolidation or otherwise) to all or substantially all of the
            business or assets of the Company to expressly assume and to agree
            to perform this Agreement in the same manner and to the same extent
            as the Company, as if no such succession had taken place. Failure of
            the Company to obtain such assumption and agreement prior to the
            effectiveness of any such succession shall be a material breach of
            this Agreement. As used in this Agreement, "Company" shall mean the
            Company as hereinbefore defined and any successor to its business or
            assets as aforesaid which assumes and agrees to perform this
            Agreement by operation of law, or otherwise.

      (e)   Assignment by Employee. Employee's rights and obligations under this
            Employment Agreement are personal, and they shall not be assigned or
            transferred without the Company's prior written consent.

      (f)   Other Agreements. With the exceptions of any of the Company's stock
            option plans (and related agreements), incentive plans and change of
            control plans, and the performance contract guidelines adopted by
            the Company, this Employment Agreement replaces and merges any and
            all previous agreements and understandings regarding all the terms
            and conditions of Employee's employment relationship with the
            Company, and this Employment Agreement constitutes the entire
            agreement of the Company and Employee with respect to such terms and
            conditions.

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

      (h)   Invalidity. If any part of this Employment 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 Employment
            Agreement.

      (i)   Enforceability by Beneficiaries. This Agreement shall inure to the
            benefit of and be enforceable by the parties hereto and their
            respective heirs, legal or personal representatives and successors
            and if Employee should die while any amount would still be payable
            to him hereunder if he had continued to live, all such amounts shall
            be paid in accordance with the terms of this Agreement to Employee's
            devisee, legatee or other designee or, if there is no such designee,
            to his estate.

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

                                       13
<PAGE>

HARVEST NATURAL RESOURCES, INC.                  JAMES A. EDMISTON III

By:________________________________              By:___________________________
    Steven W. Tholen
    Senior Vice President and Chief Financial
    Officer

                                       14exv10w1

 

Exhibit 10.1

November 1, 2004

FirstCity Financial Corporation

6400 Imperial Drive, P.O. Box 8216

Waco, Texas 76712

     Re: Distribution of Proceeds from Sale of Subject Securities

Dear Sirs:

     Reference is made to that certain letter agreement relating to the
distribution of proceeds from the sale of certain Subject Securities, dated as
of September 21, 2004 (the “Proceeds Letter”), among FirstCity Financial
Corporation (“you” or the “Obligor”), The Governor & Company of the Bank of
Scotland, Bank of Scotland and BoS (USA) Inc. (collectively, the “Lenders”).
Unless otherwise defined herein capitalized terms used herein shall have the
meanings specified in the Securities Purchase Agreement, as defined in the
Proceeds Letter.

     You have requested that the Lenders agree to extend the time for payment
of the $8,000,000 fee payable to BOS-UK (as a result of the sale of the Subject
Securities) pursuant to clause (ii) of the Proceeds Letter.

     Provided that the sale of the Subject Securities is consummated on or
before November 30, 2004, the Lenders hereby agree that such fee shall be due
and payable 75 days following the Closing Date, and waive the requirement that
such fee be paid on the Closing Date.

     The foregoing is limited as provided herein and does not extend to any
other provisions of the Proceeds Letter not specified herein nor to any other
matter other than as described above. The Obligor hereby ratifies and confirms
that the Proceeds Letter continues in full force and effect. This letter
agreement may be executed in any number of counterparts with the same effect as
if the signatures hereto were upon the same instrument.

     Please indicate your agreement with the foregoing by executing in the
space provided below.

[Signature Page Follows]

 

 

     Please confirm your understanding of the foregoing by signing and
returning a copy of this letter.

	 	 	 	 	 
	 	Very truly yours,

BANK OF SCOTLAND, acting through its

New York branch, individually and as

Agent under the PFAL and Restated

Agreement

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

	 	 	 	 	 
	 	THE GOVERNOR & COMPANY OF

THE BANK OF SCOTLAND

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

	 	 	 	 	 
	 	BoS (USA) Inc.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

CONFIRMED AND AGREED

FIRSTCITY FINANCIAL CORPORATION

	 	 	 	 
	 	 
	By:  	 	 
	 	Name:  	 	 
	 	Title:  	 	 
	 

 

 

November 1, 2004

FirstCity Financial Corporation

FirstCity Consumer Lending Corporation

6400 Imperial Drive, P.O. Box 8216

Waco, Texas

     Re: Extension of Disposition Fee

Dear Sirs:

     Reference is made to that certain Fee Letter, dated as of November 29,
2002 (the “Fee Letter”), among FirstCity Financial Corporation, a Delaware
corporation, and FirstCity Consumer Lending Corporation, a Texas corporation
(together, “you” or the “Obligors”), and The Governor & Company of the Bank of
Scotland (the “Lender”). Capitalized terms defined in the Fee Letter shall
have the meanings specified therein (unless otherwise defined herein).

     You have informed the Lender that you intend to conduct a Disposition of
all of your interests in the Drive Collateral pursuant to that certain
Securities Purchase Agreement (the “Purchase Agreement”), dated as of September
21, 2004, among the Obligors, FirstCity Funding L.P., FirstCity Funding GP
Corp., IFA Drive GP Holdings LLC, IFA Drive LP Holdings LLC, Drive MG, Drive
Management GP LLC, Drive Holdings LP, Drive GP LLC and Drive Financial Services
LP. You have requested that the Lender agree to extend the time for payment of
any fee arising under Section 1 of the Fee Letter in connection with such
Disposition.

     Provided such Disposition is consummated on or before November 30, 2004,
the Lender hereby agrees that any fee arising under Section 1 of the Fee Letter
(as a result of such Disposition) shall be due and payable 75 days following
the consummation of such Disposition, and waives the requirement that such fee
be paid contemporaneously with the consummation of such a Disposition.

     The foregoing is limited as provided herein and does not extend to any
other provisions of the Fee Letter not specified herein (nor to any other
Disposition other than that contemplated in the Purchase Agreement) nor to any
other matter other than as described above. The Obligors hereby ratify and
confirm that the Fee Letter continues in full force and effect. This letter
agreement may be executed in any number of counterparts with the same effect as
if the signatures hereto were upon the same instrument.

     Please indicate your agreement with the foregoing by executing in the
space provided below.

[Signature Page Follows]

 

 

	 	 	 	 	 
	 	THE GOVERNOR & COMPANY OF THE

BANK OF SCOTLAND

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

FIRSTCITY FINANCIAL CORPORATION

	 	 	 	 
	 	 
	By:  	 	 
	 	Name:  	 	 
	 	Title:  	 	 
	 

FIRSTCITY CONSUMER LENDING CORPORATION

	 	 	 	 
	 	 
	By:  	 	 
	 	Name:  	 	 
	 	Title:

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