Exhibit 4.4
HARVEST NATURAL RESOURCES, INC.
DEFERRED COMPENSATION PLAN
FOR THE BOARD OF DIRECTORS
1. PURPOSE
The purpose of this Plan is to 1) provide a means for deferring payment
of all or a portion of regular Board retainers, and 2) encourage Board
members to participate in the equity of Harvest Natural Resources, Inc.
(the "Company") on a long-term basis. Board Compensation eligible for
this deferral program includes all regular Board retainers, Chairman of
the Board retainer and Committee Chair retainers, excluding expenses
and meeting fees and business meeting fees, payable to Directors for
their service on the Board of Directors (the "Board") of the Company.
Such compensation eligible to be deferred is referred to herein as
"Compensation".
2. EFFECTIVE DATE AND PLAN YEAR
The first plan year is effective beginning June 1, 2003 and a new plan
year commences as of the first day of the month which follows the
Annual Meeting of Stockholders thereafter unless terminated or modified
by the Board of Directors.
3. ELIGIBILITY
Any individual serving as a member of the Board as of the effective
date of this Plan or who subsequently becomes a member is eligible
under this Plan, provided that no member who is an employee of the
Company or any of its subsidiaries shall be eligible under this Plan
during the time the he or she is an employee of the Company.
4. ELECTION
Election to defer Compensation is to be made on or before the first day
of the month which follows the Annual Meeting of Stockholders, for
Compensation for services as a member of the Board for the following
and later plan years; provided, however, the election to defer
Compensation for the period of June 1, 2003 through the first day of
the month which follows the next Annual Meeting of Stockholders is to
be made within 30 days after the approval of the Plan at the May 22,
2003 Board meeting.
Election to defer is a continuing election until changed by the
Director on or before the end of any plan year for the then following
and later plan years. However, once an election is made (and
effective), subsequent elections will have no effect on the amounts,
timing and manner of payment covered by the previous election.
Any newly elected Director who was not a Director immediately following
the preceding Annual Meeting of Stockholders may elect, within 30 days
after his or her term begins, to
defer Compensation for services as a member of the Board for the
balance of the plan year in which such election is made.
Forms shall be made available to Directors each year for the purpose of
making or changing their election.
5. AMOUNT
All or any portion, in multiples of 10%, of a Director's Compensation
may be deferred. Compensation includes regular Board retainers,
Chairman of the Board retainer and Committee Chair retainers and
excludes meeting fees paid for Board or Committee meetings, business
meeting fees and expenses.
6. DEFERRED ACCOUNTS
Each Director shall have a Harvest Stock Unit Account and a Fixed
Income Account (together, the "Accounts"). Amounts deferred pursuant to
paragraph 5 may be credited to either Account, at the election the
Director made at the time of the deferral election, in multiples of 10%
of such Director's Compensation within each account. At no time may the
Director transfer balances between Accounts.
(a) HARVEST STOCK UNIT ACCOUNT
(i) Amounts deferred and credited to the Harvest Stock
Unit Account shall be converted into phantom shares
of the Company's common stock on the basis of the
average Fair Market Value of the Company's common
stock during the 5 trading day period commencing on
the first trading day in a plan year. . "Fair Market
Value" means the average of the high and low trading
prices per share on the applicable dates, as
reported in The Wall Street Journal listing of
consolidation trading for New York Stock Exchange
issues. The Harvest Stock Unit Account will be
credited on or about the first business day which
follows the 5 trading day period.
(ii) On the record date for each cash dividend or other
cash distribution with respect to the Company's
common stock, each Director's Harvest Stock Unit
Account shall be credited with an amount equal to
the amount of the per share dividend or
distribution, multiplied by the number of phantom
shares of the Company's common stock in such
Account, and, if such Director is then serving as a
member of the Board, shall be converted into phantom
shares of the Company's common stock on the basis of
the Fair Market Value of the Company's Common Stock
on the payment date for such dividend or
distribution. If a Director is no longer serving as
a member of the Board on the record date for such
dividend or distribution, the amount representing
such dividend or distribution shall be credited to
and paid out of the Harvest Stock Unit Account to
such Director as soon as practicable after the
payment date for such dividend or distribution.
(iii) In the event of a subdivision or combination of
shares of Company common stock, the number of
phantom shares credited to the Harvest Stock Unit
Accounts on the effective date of such subdivision
or combination shall be proportionately subdivided
or combined as the case may be. No adjustment shall
be made in phantom shares in connection with the
issuance by the Company of any rights or options to
acquire additional shares of Company common stock or
securities convertible into Company common stock. In
the event of any stock dividend or reclassification
of Company common stock, any merger or consolidation
to which the Company is a party, or any spinoff of
shares or distribution of property other than cash
with respect to the Company common stock, the Human
Resources Committee shall cause appropriate
adjustments, if any, to be made in the phantom
shares to reflect such stock dividend,
reclassification, merger or consolidation, spinoff
or distribution of property.
(iv) The Company shall credit an additional 50 percent to
the Harvest Stock Unit Account of any Director who
elects to have his or her Compensation deferred and
credited to the Harvest Stock Unit Account. The
Company's matching contribution shall be credited to
the Harvest Stock Unit Account and shall remain so
credited until the Director's service as a member of
the Board is terminated for any reason. The
Company's matching contribution shall be forfeited
by the Director if he or she terminates service (for
reasons other than disability or death) prior to the
first anniversary of the plan year for which the
deferral is applicable. Notwithstanding the
foregoing, a forfeiture shall not be imposed if the
Director's termination of service occurs within two
years of a change of control of the Company or if
the Human Resources Committee determines that it is
in the best interests of the Company not to impose
the forfeiture.
(b) FIXED INCOME ACCOUNT
Amounts credited to the Fixed Income Account shall earn
interest compounded quarterly, from the date the Compensation
would otherwise have been paid until it is actually paid in
full. The rate of interest shall be set at an annual rate
equal to the greater of 10% or the "prime rate" for commercial
loans by Citibank.
7. DISTRIBUTION
All distributions from the Fixed Income Account and Harvest Stock Unit
Account shall be made in cash. Cash distributions from the Harvest
Stock Unit Account will be made on the basis of the Fair Market Value
of the Company's common stock on the last trading day preceding the
date of distribution multiplied by the number of phantom shares of the
Company's common stock in such Account represented by the distribution.
The Director
must elect, at the same time and on the same form provided
to elect a deferral of Compensation, the timing and manner of payment
of such Compensation.
(a) TIMING OF PAYMENT
Distributions from the Fixed Income Account shall begin on the
future date specified by the Director in the deferral election
form, including following retirement from the Director's
principal occupation. Distributions from the Harvest Stock
Unit Account shall begin no sooner than six months nor later
than one year following termination from the Board for any
reason, as specified by the Director in the deferral election
form.
(b) MANNER OF PAYMENT
The Director may elect to receive payment from the Accounts in
a lump sum or in 3 or 5 annual installments of an aggregate
amount of cash equal to the value of the accounts maintained
for the Director in the Accounts at the business day preceding
the installment payment divided by the remaining number of
such annual installments. If the amount in a Director's
Account is less than $50,000 at the time the first annual
installment is to be paid, the Company may elect to pay the
amount in a single lump sum.
(c) CHANGES TO DISTRIBUTION ELECTION
The Director may change his distribution election at any time
so long as the change is made at least one year prior to the
revised distribution date. In the event that the Director's
service terminates less than a year from the revised
distribution date, the prior distribution election will
determine the date and form of the distribution.
In the case of distributions from the Fixed Income Account, the lump
sum or first installment is to be paid in January of the year elected
by the Director. In the case of distributions from the Harvest Stock
Unit Account, the lump sum or first installment will be paid no sooner
than six months nor later than one year following the date of
termination of service as a member of the Board, as elected by the
Director, and any remaining installments in January of each succeeding
year until the total balance is paid.
In the event of the death of a Director then serving as a member of the
Board or a terminated or retired Director entitled to a distribution
under this Plan, the balance of the Accounts shall be payable to the
estate or designated beneficiary in full within 90 days of such
Director's, terminated Director's or retired Director's death.
The Director will designate his or her beneficiary at the same time he
or she elects deferral of Compensation. However, the latest designated
beneficiary will be the beneficiary or beneficiaries for the total of
all distributions from the Accounts. The
designated beneficiary may be changed at any time on a form provided by
the Secretary of the Company, provided that no designation will be
effective unless it is filed with the Secretary of the Company prior to
the Director's death. Directors who name a beneficiary other than their
spouse will be required to provide spousal consent to the beneficiary
designation.
8. UNFUNDED PLAN
The plan is intended to be an unfunded plan for tax purposes and under
Title I of ERISA.
The liability of the Company to any Director, terminated Director,
retired Director or his or her estate or designated beneficiary under
the Plan shall be that of a debtor only pursuant to such contractual
obligations as are created by the Plan, and no such obligation of the
Company shall be deemed to be secured by any assets, pledges, or other
encumbrances on any property of the Company.
At the sole discretion of the Company, the Company may establish or
become a signatory to a rabbi trust to accumulate assets to help
fulfill its obligations under the plan. The existence of such plan
shall not create a lien on any asset held by the Company, contributed
to any trust created, or otherwise designated to be used for payment of
any of its obligations created by this agreement.
9. INALIENABILITY OF DEFERRED COMPENSATION
Except to the extent of the rights of a designated beneficiary, no
distribution pursuant to, or interest in, the Plan may be transferred,
assigned, pledged or otherwise alienated and no such distribution or
interest shall be subject to legal process or attachment for the
payment of any claims against any individual entitled to receive the
same.
10. CONTROLLING STATE LAW
All questions pertaining to the construction, regulation, validity and
effect of the Plan shall be determined in accordance with the laws of
the State of Texas.
11. AMENDMENT
The Board of Directors of the Company in its sole discretion may amend,
suspend or terminate the Plan at any time. However, any such amendment,
suspension or termination of the Plan may not adversely affect any
Director's or his or her beneficiary's rights with respect to
Compensation previously deferred.
12. ADMINISTRATION
Administration of the Plan will be coordinated by the Controller of the
Company. Administration will include, but not be limited to, crediting
of deferred compensation,
dividends and accrued interest to individual Director accounts and
ultimate disbursement of deferred amounts.
13. EFFECTIVE DATE
This Plan shall become effective May 23, 2003 applicable only to
compensation for services rendered on or after that date.
APPROVED BY THE BOARD OF DIRECTORS May 22, 2003
AMENDED BY HUMAN RESOURCES COMMITTEE May 19, 2004