EXHIBIT 10.2
EMPLOYMENT AGREEMENT
This Employment Agreement ("Employment Agreement"), effective September 12, 2005
is between Harvest Natural Resources, Inc. (the "Company") and Steven W. Tholen,
a resident of Texas, ("Employee"), the terms and conditions of which are as
follows:
WHEREAS, the Company and Employee entered into an amended and restated
employment agreement effective February 20, 2003 (the "Amended Employment
Agreement");
WHEREAS, the Company wishes to provide Employee with certain additional
benefits and the Company and Employee wish to change the benefits described in
the Amended Employment Agreement provided to Employee in the event of a Change
of Control;
WHEREAS, the Company and Employee acknowledge that if Employee's employment
with the Company terminates for any reason, Employee may inevitably disclose
trade secrets of, and other proprietary and confidential information about, the
Company's business, operations and prospects; and
WHEREAS, Employee wishes to enter into this Employment Agreement to receive
the benefit of the provisions contained in it.
NOW THEREFORE, for good and valuable consideration, the sufficiency and
receipt of which are acknowledged, the Company and Employee 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 started on January 1, 2001 and ends on May 31, 2006.
On May 31, 2006, and on each anniversary 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
Employment 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 Senior Vice President and
Chief Financial 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
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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 Employment 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.
3. COMPENSATION AND BENEFITS.
(a) Base Salary. During the term of this Employment Agreement, Employee'
yearly base salary shall be not less than $250,000 US, 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. The Company shall annually review
Employee's base salary.
(b) 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 guidelines adopted by the
Company, the Company's overall performance and any special
circumstances the Human Resources Committee and the Company's Board of
Directors deem appropriate. Any such bonus is to be determined at the
discretion of the Company's Human Resources Committee and the
Company's Board of Directors. Employee acknowledges that the Company
is not obligated to award him any bonus in any year.
(c) Special Bonus. Concurrently with the execution and delivery of this
Employment Agreement by the Company, the Company is paying Employee a
special bonus of $25,000.
(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 Options and Restricted Stock. Previously Employee has been
granted certain stock options and restricted stock pursuant to the
Company's long-term incentive plans. Except as provided in Section
4(a), this Employment Agreement neither increases nor decreases the
number of stock options and shares of restricted stock previously
granted, nor does it change the terms under which they were granted.
(f) Vacation. Employee shall be entitled to four (4) weeks annual
vacation.
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(g) Expenses. The Company shall pay or reimburse Employee for all
reasonable expenses actually incurred or paid by 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.
(h) 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 Senior Vice President and Chief Financial Officer.
(i) 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 (v) 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, (w) the Company shall pay to Employee within
thirty (30) days after the termination or resignation an amount
equal to twenty-four months of the maximum contribution the
Company may make for Employee under the Company's 401(k) profit
sharing plan as in effect immediately before Employee's
termination of employment or resignation, (x) 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, (y) the restriction period on restricted shares
of stock granted by the Company to Employee will continue and
will lapse as if Employee had continued in the employ of the
Company and a certificate(s) representing such shares will be
delivered to Employee within thirty (30) days after the end of
the applicable restriction period,
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and (z) Employee shall be reimbursed for up to $20,000 of
outplacement services with an outplacement service approved by
the Company.
(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 (s) the Company shall pay to Employee, within
thirty (30) days after the termination of employment 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, (t) the Company shall
pay to Employee, within thirty (30) days after the later to occur
of the termination, resignation or Change of Control, the Bonus
Amount, (u) the Company shall pay to Employee within thirty (30)
days after the termination or resignation an amount equal to
twenty-four months of the maximum contribution the Company may
make for Employee under the Company's 401(k) profit sharing plan
as in effect immediately before Employee's termination of
employment or resignation, (v) 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, (w) the
restriction period on restricted shares of stock granted by the
Company to Employee will continue and will lapse as if Employee
had continued in the employ of the Company and a certificate(s)
representing such shares will be delivered to Employee within
thirty (30) days after the end of the applicable restriction
period, (x) Employee shall be reimbursed for up to $20,000 of
outplacement services with an outplacement service approved by
the Company, (y) for a period of twenty-four months following the
later to occur of the termination, resignation or 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 Change of Control, an additional
amount such that the net amount retained by Employee pursuant to
the benefits described in this Section 4(a)(3) after 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 excise tax.
(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 (s) the
Company shall pay to Employee, within thirty (30) days after the
later to occur of the termination or Change of Control an amount
equal to twenty-four months
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of Employee's base salary as in effect immediately before
Employee's termination of employment, (t) the Company shall pay
to Employee, within thirty (30) days after the later to occur of
the termination or Change of Control, the Bonus Amount, (u) the
Company shall pay to Employee within thirty (30) days after the
later to occur of the termination or Change of Control, an amount
equal to twenty-four months of the maximum contribution the
Company may make for Employee under the Company's 401(k) profit
sharing plan as in effect immediately before Employee's
termination of employment, (v) any outstanding stock option(s)
granted by the Company to Employee shall become fully vested and
shall remain exercisable for twelve (12) months following the
later to occur of Employee's termination or Change of Control, or
the tenth anniversary of the date(s) of the grant(s) specified in
the relevant option agreement(s), whichever is the shorter
period, (w) the restriction period on restricted shares of stock
granted by the Company to Employee will continue and will lapse
as if Employee had continued in the employ of the Company and a
certificate(s) representing such shares will be delivered to
Employee within thirty (30) days after the end of the applicable
restriction period, (x) Employee shall be reimbursed for up to
$20,000 of outplacement services with an outplacement service
approved by the Company, (y) for a period of twenty-four months
following the later to occur of Employee's termination or 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, and (z) the Company shall pay to
Employee, within thirty (30) days after the later to occur of the
termination or Change of Control, an additional amount such that
the net amount retained by Employee pursuant to the benefits
described in this Section 4(a)(4) after 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 excise tax.
(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
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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)(v) and, in
addition, Employee or, if Employee dies, Employee's estate shall
be entitled to the provisions of Sections 4(a)(2)(w), (x) and (y)
with respect to the Company's 401(k) profit sharing plan,
Employee's stock options and Employee's restricted stock.
(d) Bonus Amount. The term "Bonus Amount" means twice the amount of 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
(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, all as reasonably determined
by 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 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
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participants, (7) the relocation of Employee more than fifty (50)
miles from the location of the Company's principal office on the date
hereof; or (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).
(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
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, together with its subsidiaries,
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:
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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
assets of the Company, together with its subsidiaries, 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 its subsidiaries 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 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 of Employment (the "Severance Plan")) 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 Employment Agreement, he shall not be entitled to
participate in the Severance Plan.
(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
Employment Agreement relied upon, and
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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 Employment 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 Employment Agreement and the terms of any
agreement granting Employee stock options or restricted stock, the
terms of this Employment 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 or any of its subsidiaries.
(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 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
business, products or services of the Company or any of its
subsidiaries.
(b) Trade Secrets.
(1) In consideration for the promises made in Section 5(d) of this
Employment 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.
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(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
and its subsidiaries which are in addition to those rights the
Company and its subsidiaries have 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.
(2) The term "Confidential or Proprietary Information" shall mean any
secret, confidential or proprietary information of the Company or
an affiliate (not otherwise included in the definition of a Trade
Secret under this Employment 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, Employee
covenants and agrees that, in connection with the business operations
and prospective interests of the Company on the date of Employee's
termination as an employee of the Company, which prospective interests
are disclosed to Employee prior to or on the date of Employee's
termination as an employee of the Company, 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 in competition with the Company or materially adverse to
the Company (unless the Company's 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
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1934, as amended, shall not be prohibited by this section. For
purposes of this Section 5(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 5(d), 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, 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,
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 5(d), and (ii)
Employee has received a payment from the Company pursuant to Section
4(a)(2)(y), Section 4(a)(3)(s), Section 4(a)(3)(t), Section 4(a)(4)(s)
or Section 4(a)(4)(t) of this Employment Agreement (the "Lump Sum
Severance Amount"), then, in addition to any other remedies that the
Company may have, Employee shall be 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
Employment 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, the Company or any of the Company's
subsidiaries.
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
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promise or offer, would violate the laws or regulations of any
country, including, without limitation, the United States of America,
having jurisdiction over Employee, the Company or any of the Company's
subsidiaries.
By signing this Employment 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, the Company or any of the Company's subsidiaries.
(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 are obligations which will continue
beyond the date Employee's employment terminates, and that such
obligations are 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 1177 Enclave Parkway, Suite 300, Houston,
Texas 77077. Notices and communications to Employee shall be sent to
Employee's home address as indicated by the records of the Company.
(b) No Waiver. Except for the notice described in Section 4(f), 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 EMPLOYMENT 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 EMPLOYMENT AGREEMENT, INCLUDING
THE ARBITRATOR'S FEES.
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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. 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
EMPLOYMENT AGREEMENT. THIS EMPLOYMENT AGREEMENT SHALL IN ALL RESPECTS
BE CONSTRUED ACCORDING TO THE LAWS OF THE STATE OF TEXAS.
(d) Assignment by Company; Meaning of "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
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
Employment 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 Employment Agreement. As used in this Employment 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 Employment 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 exception of any of the Company's stock
option plans (and related agreements), restricted stock plan (and
related agreements) and incentive plans, and the guidelines referred
to in Section 3(b), 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
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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 provision of this Employment Agreement is held to
be invalid, illegal or otherwise unenforceable, the remaining
provisions shall be unaffected and shall continue in full force and
effect, and there shall be deemed substituted for the provision at
issue a valid, legal and enforceable provision as similar as possible
to the provision at issue.
(i) Enforceability by Beneficiaries. This Employment 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 Employment Agreement to
Employee's devisee, legatee or other designee or, if there is no such
designee, to his estate.
(j) Reimbursement of Certain Expenses. To the extent Employee shall
prevail in any arbitration proceeding pursuant to Section 6(c) to
resolve any dispute or controversy between Employee and the Company
arising under or in connection with this Employment Agreement, then
the Company shall reimburse Employee, or pay on Employee's behalf, all
of Employee's reasonable expenses, including without limitation
attorneys' fees, incurred by Employee in connection with the
arbitration.
7. NOVATION.
This Employment Agreement is a novation to the Amended and Restated Employment
Agreement between the Company and Employee effective February 20, 2003, which is
hereby extinguished. As consideration for this novation, Employee acknowledges
the value of the matters described in the recitals to this Employment Agreement
and the other terms of this Employment Agreement and agrees that they are
adequate to make the novation binding in all respects.
IN WITNESS WHEREOF, the Company and Employee have executed this Employment
Agreement in multiple originals to be effective as set out above.
HARVEST NATURAL RESOURCES, INC. STEVEN W. THOLEN
By: /s/ Peter J. Hill By: /s/ Steven W. Tholen
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Peter J. Hill
President and
Chief Executive Officer
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