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EXHIBIT 10.1
SEVERANCE AWARD AGREEMENT
This
Severance Award Agreement (this 'Agreement') is dated as of
December
30, 2008, by and between and Pyramid Oil Company, a California
corporation
(the 'Company'), and John Alexander ('Executive') and together, the
'Parties.'
1.
AWARD. In
consideration of the many years of service that
Executive has performed for and on behalf of the Company, the
Company hereby
awards to Executive a supplemental payment in connection with his
future
severance of employment with the Company which is in addition to
any other
benefits under any plans or agreements with the Company or which he
has the
right to receive or which the Company may elect to grant to him at
such time.
2.
NATURE OF AWARD. On
the Payment Date, as hereafter defined,
Executive shall receive at the option of the Company: (i) 25,000
shares (as
amended for any stock split, stock dividend or similar
recapitalization
occurring after December 30, 2008) of the Company common stock (the
'Stock');
or (ii) the highest market value of the Stock during the period
from the date
of termination of employment until the Payment Date. However, if the
Company's outstanding stock or substantially all of its property is
acquired
by another Company (the 'Purchaser') for cash or property other
than stock,
the amount to be paid on the Payment Date shall be that amount that
is paid or
distributed in the transaction with respect to 25,000 shares of the
Company
common stock. If the
Company is acquired for the stock of the Purchaser or
for both stock and other property, the Stock shall consist of the
shares of
the Purchaser issued in the transaction with respect to 25,000
shares of the
Company common stock and the amount payable on the Payment Date
shall be such
Purchaser's shares or their fair market value in cash and any other
property
issued in the transaction in which the Purchaser acquired the
Company.
3.
PAYMENT DATE. The
Payment Date shall be either the date that is
the first day after six months have elapsed from the date of the
severance of
Executive's employment with the Company or, if the Executive dies
prior to end
of such period, the seventh day after the date of his death,
whichever is
shorter.
4.
EXISTENCE OF THE COMPANY. If the Company shall not be in
existence on the Payment Date or if the Purchaser has not assumed
the
obligations of the Company to Executive under this Agreement, the
amount of
cash and/or securities that Executive is entitled to receive on the
Payment
Date shall be placed in escrow for the benefit of Executive.
5.
ELECTION TO ISSUE STOCK; EXECUTIVE'S OPTION. If the Company
elects to issue the Stock to the Executive rather than to pay the
fair market
value of the Stock to the Executive, such Stock shall be registered
at the
Company expense before the issuance of the Stock or, if that is not
possible
for any reason, as soon as may be practicable. Notwithstanding the forgoing,
if the Stock is not registered within 90 days from the date of its
issuance,
the Executive will have the option to sell the Stock to the Company
at its
fair market value on the date that the Executive gives notice of
the exercise
of the option.
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6.
DETERMINATION OF FAIR
MARKET VALUE. For
purposes of this
Agreement, the fair market value of the Stock shall be determined
as follows:
a.
If the stock of the Company is listed on
