STOCK APPRECIATION RIGHT AWARD
AGREEMENT
This
Stock Appreciation Right
Award Agreement (this “ Agreement ”)
is made by Harvest Natural Resources, Inc., a Delaware corporation
(the “ Company ”) for the benefit of ___ (the
“ Employee ”) as of the 18th day of June, 2009
(the “Grant Date” ).
Whereas
, the Company desires to grant to
the Employee the stock appreciation right 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) so the Award does not constitute a
deferral of compensation for purposes of section 3121(v)(2) of the
Internal Revenue Code of 1986, as amended; and
Whereas
, it is intended that the Award is
exempt from section 409A of the Internal Revenue Code of 1986, as
amended pursuant to Treasury Regulation §
1.409A-1(b)(5)(i)(B); and
Whereas
, the Employee 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:
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1.
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Grant of Stock Appreciation Right
Award . Effective as of the Grant Date, the
Company hereby awards to the Employee a stock appreciation right
with respect to ___shares of Stock ( “SAR” ). A
“ SAR ” is a right to receive on the Exercise
Date, after vesting thereof, for each share of Stock underlying the
SAR with respect to which the SAR is exercised, an amount equal to
the excess of (a) the Fair Market Value of one share of the
Stock on the Exercise Date over (b) 100 percent of the
Fair Market Value of one share of the Stock determined as of the
Grant Date (the SAR Exercise Price). The SAR that is awarded hereby
to the Employee shall be subject to the prohibitions and
restrictions set forth herein with respect to the sale or other
disposition of such SAR and the obligation to forfeit and surrender
such SAR to the Company. In accepting the award of the SAR set
forth in this Agreement the Employee accepts and agrees to be bound
by all the terms and conditions of this Agreement.
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2.
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Definitions
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For purposes of this
Agreement, the following terms shall have the meanings indicated
below:
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(a)
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“ 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.
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(b)
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“ Board ” means
the Board of Directors or other governing body of the Company or
its direct or indirect parent.
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(c)
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“ Change of Control
” means the occurrence of any of the following
events:
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(i)
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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
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(ii)
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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
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(iii)
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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
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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 (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.
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(d)
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“ Code ” means
the Internal Revenue Code of 1986, as amended.
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(e)
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“ Committee”
means the Human Resources Committee of the Board.
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(f)
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“ Disability ”
means the Employee has been determined by the insurance company
that insures the Company’s group long-term disability program
to be totally disabled. In the absence of such an insurance plan,
the Committee may, in its sole discretion, determine that the
Employee has a Disability if the Committee concludes that the
Employee can no longer perform one or more of the essential
functions of the Employee’s job even with reasonable
accommodation.
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(g)
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“ Entity ” means
any corporation, partnership, association, joint-stock company,
limited liability company, trust, unincorporated organization or
other business Entity.
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(h)
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“ Exercise Date ”
means the date on which the Employee exercises the SAR or a portion
of the SAR.
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(i)
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“Exercise
Price” means the amount the Employee must
pay to the Company upon exercise of the SAR. The per share SAR
exercise price for each share of Stock underlying the SAR with
respect to which the SAR is exercised is 100 percent of the
Fair Market Value of one share of the Stock determined as of the
Grant Date.
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(j)
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“Fair Market
Value” per share of Stock means the average
of the high and low trading prices per share of 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.
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(k)
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“ Stock ” means
the Company’s common stock, par value $0.01 per
share.
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