HARVEST NATURAL
RESOURCES
Agreement
(this “Agreement”) made at Houston, Texas, USA, as of
May 19, 2008, by and between HARVEST NATURAL RESOURCES, INC.
(the “Company”) and Stephen C. Haynes (the
“Optionee”).
|
|
(a)
|
|
“BOARD” OR “BOARD
OF DIRECTORS” shall mean the Board of Directors of the
Company.
|
|
|
|
|
|
|
|
(b)
|
|
“CODE” shall mean the
Internal Revenue Code of 1986, as amended from time to
time.
|
|
|
|
|
|
|
|
(c)
|
|
“COMMITTEE” shall mean
the Human Resources Committee of the Board of Directors, or, if
there is no Human Resources Committee, the committee designated by
the non-employee members of the Board of Directors to administer
the Company’s long-term incentive plans.
|
|
|
|
|
|
|
|
(d)
|
|
“FAIR MARKET VALUE” of
Stock shall mean the average of the highest price and the lowest
price at which Stock shall have been sold on the applicable date as
reported by the New York Stock Exchange Composite Transactions. In
the event that the applicable date is a date on which there were no
such sales of Stock, the Fair Market Value of Stock on such date
shall be the mean of the average of the highest price and the
lowest price at which Stock shall have been sold on the last
trading day preceding such date.
|
|
|
|
|
|
|
|
(e)
|
|
“STOCK” shall mean the
common stock of the Company.
|
|
|
|
|
|
|
|
(f)
|
|
“SUBSIDIARY” shall mean
any corporation or similar legal entity (other than the Company) in
which the Company or a Subsidiary of the Company owns fifty percent
(50%) or more of the total combined voting power of all classes of
stock, or such lesser amount of ownership determined by the
Committee.
|
|
|
|
|
|
|
|
(g)
|
|
“TOTAL DISABILITY” and
“TOTALLY DISABLED” shall normally have such meaning as
that defined under the Company’s group insurance plan
covering total disability and determinations of Total Disability
normally shall be made by the insurance company providing such
coverage on the date on which the Employee, whether or not eligible
for benefits under such insurance plan, becomes Totally Disabled.
In the absence of such insurance plan or in the event the
individual is a Director or Consultant, the Committee shall make
such determination.
|
It is hereby
agreed as follows:
- 1 -
|
|
2.
|
|
Grant of Option;
Consideration . The Company hereby grants to the
Optionee on May 19, 2008, a nonqualified stock option to
purchase up to 50,000 shares of the Company’s Common Stock,
par value $0.01 per share (the “Shares”), at an
exercise price of $10.245 per share (the “Option”). The
Option granted hereunder is not intended to constitute an incentive
stock option within the meaning of Section 422 of the Code.
The terms of the Option are subject to adjustment in certain
circumstances, as provided in this Agreement.
|
|
|
|
|
|
|
|
|
|
The
Optionee shall be required to pay no consideration for the grant of
the Option, except for his agreement to serve as an employee of the
Company or any Subsidiary and other agreements set forth
herein.
|
|
|
|
|
|
|
|
3.
|
|
Vesting . Subject to all of the terms and
conditions of this Agreement, including acceleration of vesting in
the event of a Change of Control or Total Disability, the Optionee
may purchase up to 16,667 Shares upon exercise of this Option on or
after May 18, 2009, an additional 16,667 Shares upon exercise
of this Option on or after May 18, 2010, and the remaining 16,666
Shares upon exercise of this Option on or after May 18,
2011.
|
|
|
|
|
|
|
|
4.
|
|
Term and Termination of
Service .
This Option, to the extent it has not been previously exercised,
shall expire at 5:00 p.m. (Central Time) on May 18, 2015 or,
if earlier, at 5:00 p.m. (Central Time):
|
|
|
(i)
|
|
on
the date 3 months after the Optionee ceases to be an employee
of the Company or any Subsidiary for any reason other than a Change
of Control, Total Disability or death;
|
|
|
|
|
|
|
|
(ii)
|
|
on
the date 12 months after the Optionee ceases to be an employee
of the Company or any Subsidiary by reason of Total
Disability;
|
|
|
|
|
|
|
|
(iii)
|
|
on
the date 12 months after the date of the Optionee’s
death while in the employ of the Company or a Subsidiary or within
3 months after the termination of such employment;
or
|
|
|
|
|
|
|
|
(iv)
|
|
on
the date 12 months after the Optionee’s termination of
employment or service if such employment or service is terminated
within 730 days after the effective date of a Change of
Control.
|
|
|
|
|
Except in the case of a termination
subject to (ii) and (iv) above, the Option shall be
exercisable after the date of such termination of Optionee’s
service or employment only to the extent the Option was exercisable
at the date of such termination. In the case of termination subject
to (ii) above, any Options that are not exercisable shall
become exercisable effective as of Optionee’s termination
date. In the case of a termination subject to (iv) above,
Article 11 of this Agreement shall apply.
|
|
|
|
|
|
|
|
|
|
Notwithstanding anything to the
contrary in the Agreement, if and for so long as Optionee is
subject to an employment agreement with the Company, then the terms
of the employment agreement will govern the early expiration of the
Option including, without
|
- 2 -
|
|
|
|
limitation,
vesting and expiration dates. In the event of any conflict between
the Employment Agreement and this Agreement, the terms of the
Employment Agreement shall govern.
|
|
|
|
|
|
|
|
5.
|
|
Option Exercise
. The Option may be
exercised in whole or in part (to the extent then exercisable) by
contacting the Company’s designated agent for processing
Option exercises. An Option exercise must be accompanied by payment
in full of the exercise price (i) in cash, (ii) through
the withholding of shares of Stock (which would otherwise be
delivered to the Optionee) with an aggregate Fair Market Value on
the exercise date equal to the aggregate exercise price of the
Option, (iii) a combination of a cash payment and such
surrender of shares, (iv) by means of a broker-assisted
cashless exercise to the extent then permitted under rules and
regulations adopted by the Committee, or (v) in such other
manner as may then be permitted under rules and regulations adopted
by the Committee. As soon as practicable after the valid exercise
of the Option, the Company shall deliver to the Optionee one or
more stock certificates representing the Shares so purchased, with
any requisite legend affixed.
|
|
|
|
|
|
|
|
6.
|
|
Non-Transferability
. No right or interest
of the Optionee in the Option shall be pledged, encumbered, or
hypothecated to or in favor of any third party or shall be subject
to any lien, obligation, or liability of the Optionee to any third
party. The Option shall not be transferable to any third party by
the Optionee otherwise than (i) by will or the laws of descent
and distribution, (ii) pursuant to a qualified domestic
relations order as defined under the Code or Title I of the
Employee Retirement Income Security Act of 1974 to an immediate
family member, or (iii) to the extent authorized by the
Committee, to an immediate family member of the Optionee who
acquires the options from the Optionee through a gift.
|
|
|
|
|
|
|
|
7.
|
|
Compliance with Laws and
Regulations .
The obligation of the Company to deliver Shares upon the exercise
of this Option is conditioned upon compliance by the Optionee and
by the Company with all applicab
|
|
