This Consulting
Agreement (the “Agreement”) effective June 1,
2008, is made and entered into by and between HARVEST NATURAL
RESOURCES, INC. , a Delaware corporation (the
“Company”) of 1177 Enclave Parkway, Suite 300,
Houston, TX 77077, and KURT A. NELSON , whose address is
14130 Cardinal Lane, Houston, TX 77079-6838 (the
“Consultant”).
The Company
desires to engage Consultant to render consulting
services;
The Company and
Consultant wish to memorialize the terms and conditions upon which
Consultant is engaged to provide consulting services to the
Company; and
The Company and
Consultant anticipate that the level of services Consultant will
perform for the Company after May 31, 2008 will permanently
decrease to no more than 20 percent of the average level of
services performed by Consultant for the Company over the 36-month
period immediately preceding June 1, 2008.
NOW,
THEREFORE, the parties hereto, intending to be legally bound,
agree as follows:
1.
SERVICES AND NATURE OF RELATIONSHIP
1.1
Engagement . The Company hereby retains Consultant and
Consultant hereby accepts such appointment and agrees to perform
the services covered by this Agreement with all due skill and care
on the terms and conditions set forth in this Agreement.
Consultant’s services shall be provided in connection with
such assignments as the Company may make from time to time within
the area of Consultant’s expertise.
1.2
Reporting Relationship and Assignment . Consultant shall
report to the President and Chief Executive Officer of the Company
or his or the Company’s designees.
1.3 Method
of Performing Services . Consultant, as an independent
contractor, shall determine the method, details, and means of
performing any services furnished pursuant to this Agreement, but
the services contemplated herein shall meet the approval of the
Company. Consultant will devote sufficient time, attention and
energies to the business and interests of the Company and
diligently and to the best of his ability perform such duties
incident to this Agreement, and perform such other duties as
requested commensurate with the terms of this Agreement.
1.4
Compliance With Law and Company Policy. Consultant
represents that he is familiar with the safety and health rules of
the Company and its subsidiaries. Consultant shall comply with all
applicable safety and health rules, and policies, procedures and
codes of conduct
of the Company
and its subsidiaries, together with all applicable federal, state
or local safety and health laws, rules, regulations or orders in
which the Company and its subsidiaries do business.
Consultant
acknowledges that he has been provided copies of, and has read and
understands the Company’s Code of Business Conduct and Ethics
(the “Code”) and the Company’s Compliance Manual,
and Consultant agrees:
(a) to
comply with all policies of the Company and its subsidiaries,
including, without limitation, the Code and the Compliance
Manual;
(b) to
comply with all applicable laws and regulations, including, without
limitation, the laws and regulations of the United States and
Venezuela; and
(c) to
promptly report as provided in the Code any violation or suspected
violation of any law, regulation or Company policy.
This clause will
not require the Company to police Consultant’s compliance
with the Code, laws, regulations or company policies and shall not
impose any obligation on the part of the Company or its affiliates
under such laws, regulations or Company policies. Nothing contained
in this provision shall be interpreted as enlarging the legal duty
of the Company or its affiliates to Consultant or alter the status
of Consultant as set forth in this Agreement.
The preceding
paragraphs of this provision are agreed to by both the Company and
Consultant to be of the highest importance. A breach or violation
of any of the terms of this provision by Consultant will be
considered to be a material breach of this Agreement.
1.5 No
Authority to Bind . Consultant shall have no authority to
obligate the Company in any manner whatsoever in the absence of
specific prior written authority from the President and Chief
Executive Officer of the Company permitting Consultant to do so,
including without limitation incurring expenses or entering into
contracts.
1.6 Status
as Independent Consultant . Consultant acknowledges and
agrees that, in performing services pursuant to this Agreement,
Consultant shall be serving as an independent contractor.
Consultant agrees that Consultant is not and will not become an
employee of the Company or any of its subsidiaries while this
Agreement is in effect. Consultant agrees that the provision of
services pursuant to this Agreement will not entitle Consultant to
any rights or benefits afforded to the employees of the Company and
its subsidiaries, including such benefits as worker’s
compensation insurance, health insurance, sick leave, retirement
benefits or any other employment benefit. Consultant agrees that
the indemnification provisions of Section 5.1 shall apply to
any claims relating to the subject matter of this
Section 1.5.
1.7 Payment
of Taxes . Consultant agrees that he is solely responsible
for paying when due all income taxes, including estimated taxes, as
a result of or in connection with the compensation paid by the
Company to Consultant for services rendered under this Agreement.
The Company shall issue applicable U.S. or other tax forms or
reports to Consultant with respect to the compensation paid
pursuant to this Agreement. Consultant hereby indemnifies, and
undertakes to defend the Company and hold it free and harmless from
and against any demands
or claims for
any taxes, interest or penalties assessed by any taxing authority
with respect to sums paid to Consultant pursuant to this
Agreement.
2.1
Term. This Agreement shall become effective on
June 1, 2008. The term of this Agreement shall commence on
June 1, 2008, and shall continue through May 31, 2009
(the “Term”).
2.2
Termination. This Agreement may be terminated by either
party at any time for material breach by the other party, upon ten
(10) days written notice, if the breaching party has failed to
remedy the breach leading to the termination during that ten
(10) day period.
The Company shall
compensate Consultant for services rendered pursuant to this
Agreement as follows:
3.1
Rates . The Company agrees to compensate Consultant for
services provided pursuant to this Agreement at the rate of $200
per hour of service rendered under this Agreement, except when
providing services requiring travel outside of Houston, in which
case the rate will be $2,000 per day including travel
time.
3.2 Expense
Reimbursements . The Company agrees to reimburse Consultant
for reasonable business expenses incurred by Consultant in
performing services pursuant to this Agreement; provided, however,
that Consultant shall have furnished the Company promptly with
receipts or other documentation concerning any reimbursable
business expenses.
3.3 Timing
of Payments. Consultant shall provide the Company with a
statement describing his services and indicating the number of
hours (or, in the case of travel outside of Houston, the number of
days) of service he has provided under this Agreement in each
calendar month within ten (10) days after the end of that
calendar month. The Company shall pay Consultant the amount shown
on any such statement within thirty (30) days after receipt.
Payments to Consultant for reimbursement for expenses incurred
shall be made within thirty (30) days after the
Company’s receipt of an expense statement.
4.
ADDITIONAL COVENANTS BY CONSULTANT
4.1
Property of the Company .
4.1.1 Consultant covenants and agrees that upon the
termination of this Agreement for any reason or, if earlier, upon
the Company’s request, he shall promptly return all Property
which had been entrusted or made available to Consultant by the
Company.
4.1.2 The term “Property” shall mean all
records, files, memoranda, reports, price lists, drawing, plans,
sketches, keys, codes, computer hardware and software and other
property of any kind or description prepared, used or possessed by
Consultant during the term of this Agreement relating to the
Company or its business, operations or prospects (and
any
duplicates of
any such property) together with any and all information, ideas,
concepts, discoveries, and inventions and the like conceived, made,
developed or acquired at any time by Consultant individually or
with others during the term of this Agreement relating to the
Company or its business, operations or prospects.
4.2
Confidential Information . Except as required in the
performance of Consultant’s obligations hereunder, or
otherwise specifically required by law, or with the prior written
consent of the Company on a case-by-case basis, Consultant shall
hold confidential and shall not in any manner disclose, use for
personal benefit, or directly or indirectly use for the benefit of
any other person, Confidential Information (defined below) that has
come or shall hereafter come into Consultant’s possession.
Consultant recognizes the importance to the Company of protecting
its Confidential Information without regard to the passage of time,
and further recognizes that this restriction shall continue in full
force and effect during the Term of this Agreement and for a period
of five (5) years after the end of the Term, except as to
Confidential Information which constitutes
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