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EXHIBIT 10.3
EMPLOYMENT AGREEMENT - VICE PRESIDENT
This Employment Agreement (the "Agreement") is effective as of February
21, 2002, by and between Pyramid Oil Company, a California corporation (the
"Employer") and Xxxx X. Xxxxxxxxx (the "Employee"). In consideration of the
mutual promises made in this Agreement, the parties agree as follows.
1.00. TERM OF EMPLOYMENT.
1.01. TERM. The Employer employs the Employee, and the Employee accepts
employment with the Employer, for a Term of six years beginning on February
21, 2002. The full Term of this Agreement (six years) shall be automatically
renewed on each succeeding annual anniversary date unless either party, which
is not then in material default of this Agreement, shall have given the other
party written notice of non-renewal at least 90 days prior to the next
succeeding annual anniversary date. Upon proper and timely notice of non-
renewal, there will then be five years remaining to the end of the then
current Term after the end of the year of the Term in which the notice of non-
renewal is given. Provided, however, that the Employer may not give notice of
non-renewal unless such notice is authorized by the vote or written consent of
at least a majority of the voting power of the Board of Directors of the
Employer.
1.02. EARLIER TERMINATION. This Agreement may be terminated earlier
only as provided subsequently in this Agreement.
2.00. DUTIES AND OBLIGATIONS OF THE EMPLOYEE.
2.01. TITLE AND DESCRIPTION OF DUTIES. The Employee shall serve as the
Vice President of the Employer. In that capacity, the Employee shall do and
perform all services, acts, or things necessary or advisable to fulfill the
duties of a corporate Vice President. However, the Employee shall at all
times be subject to the direction of the President, and to the policies
established by the Board of Directors of the Employer.
2.02. DEVOTION OF TIME TO THE EMPLOYER'S BUSINESS. (a) The Employee
shall devote a sufficient amount of his productive time, ability, and
attention to the business of the Employer to reasonably carry out his duties
as Vice President during the Term of this Agreement, not to exceed 40 hours
per work week. (b) During the Term of this Agreement, the Employee shall not
engage in any other substantial business duties or pursuits that materially
interfere with the performance of the services required under this Agreement.
The expenditure of reasonable amounts of time for other permissible outside
activities, (e.g., educational, charitable, or professional activities) shall
not be deemed a breach of this Agreement if those activities do not materially
interfere with the services required under this Agreement and shall not
require the prior written consent of the Employer's President. (c) This
Agreement shall not be interpreted to prohibit the Employee from making
personal investments or conducting private business affairs if those
activities do not materially interfere with the services required under this
Agreement.
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2.03. UNIQUENESS OF THE EMPLOYEE'S SERVICES. The Employer represents
and agrees that the services to be performed under the terms of this Agreement
by the Employee require a broad breadth of experience in the oil and gas
industry in general, and specific knowledge of the operations of the Employer
in particular; which are of a special, unique, unusual, extraordinary, and
intellectual character that few other qualified individuals possess who are
available to fill this position, such that the Employer is willing to provide
the inducements set out in this Agreement to retain the Employee.
3.00. OBLIGATIONS OF THE EMPLOYER.
3.01. GENERAL DESCRIPTION. During the Term of this Agreement, the
Employer shall provide the Employee with the compensation, incentives,
benefits, and business expense reimbursement specified elsewhere in this
Agreement.
3.02. OFFICE, STAFF, AND OTHER SUPPORT. During the Term of this
Agreement, the Employer, at the sole cost of the Employer, shall provide the
Employee with the current standard of support provided including but not
limited to an ISDN line, laptop and desk PC, cellular telephone, office space,
and administrative and clerical support suitable to the Employee's position
and adequate for the performance of his duties.
3.03. INDEMNIFICATION OF LOSSES OF THE EMPLOYEE. The Employer shall
indemnify the Employee for all necessary expenditures or losses incurred by
the Employee in direct consequence of the discharge of his duties on the
Employer's behalf.
4.00. COMPENSATION OF EMPLOYEE.
4.01. ANNUAL SALARY AND ADDITIONAL COMPENSATION. (a) As compensation
for the services to be rendered by the Employee under this Agreement, the
Employer shall pay the Employee an annual salary at the beginning minimum rate
per annum of $75,000, payable in equal semi-monthly installments of $3,125 on
the 15th and final day of each month during the Term of this Agreement. (b)
The Employee shall receive annual increases in salary in an amount to be
determined by the Employer's Board of Directors, and such salary increases may
not be decreased. (c) As additional compensation under this Agreement the
Employee shall receive annual contributions from the Employer to the
Employee's Simple XXX Plan in effect at the time of the execution of this
Agreement.
4.02. OTHER COMPENSATION. In the event the Employer's Board of
Directors institutes any additional compensation or incentive plans for its
management level employees (including, but not limited to stock bonus plans,
profit sharing, and the like) the Employee shall participate in the same to a
degree commensurate with his position with the Employer.
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5.00. EMPLOYEE BENEFITS.
5.01. ANNUAL VACATION. During the Term of this Agreement, the Employee
shall be entitled to five weeks vacation time each year with full pay. The
Employee may be absent from his employment for vacation upon reasonable notice
to the Employer of the vacation. If the Employee is unable for any reason to
take the total amount of authorized vacation time during any year, he may
accrue that time and add it to vacation time for any following year(s) or, in
the Employee's sole discretion, receive a cash payment in an amount equal to
the amount of annual salary attributable to that period.
5.02. ILLNESS. During the Term of this Agreement, the Employee shall be
entitled to an unlimited number of days per year as sick leave with full pay
and benefits.
5.03. DEATH BENEFITS. If the Employee should die during the Term of this
Agreement, the Employer shall pay his surviving spouse, designee, or estate
the remaining sums due under the then current Term of this Agreement at the
time of his death as provided under subsection 7.02(e) of this Agreement.
5.04. USE OF THE EMPLOYER-SUPPLIED AUTOMOBILE. (a) During the Term of
this Agreement, the Employee shall be entitled to the full use of an American
made or comparable automobile, SUV, or truck of his own choice in the
beginning price range of $35,000 to $45,000. (b) Every two years, on return
to the Employer of the Employer's automobile then being used by the Employee,
the Employee shall be entitled to the full use of a new vehicle in the same
price range adjusted for inflation. (c) The Employer also agrees to pay all
operating expenses of any nature whatsoever with regard to such vehicle, and
to procure and maintain in force a liability insurance policy on the vehicle,
with coverage including the Employee, in the minimum amounts of $500,000 for
bodily injury or death to each person per occurrence, and $1,000,000 total per
occurrence. (d) If the Employee is prohibited by order of any court from
holding or using a driver's license, the Employee will no longer be entitled
to this benefit, but shall instead receive the cash value of such benefit on
an annualized basis.
5.05. GROUP LIFE INSURANCE. The Employer shall include the Employee
under the Employer's group term life insurance coverage in an amount equal to
at least $50,000 during the Term of this Agreement. The Employee in his sole
discretion shall designate the beneficiary of such benefits.
5.06. GROUP MEDICAL INSURANCE. The Employer shall provide the Employee
with medical coverage during the Term of this Agreement by obtaining medical
insurance for the Employee with terms and coverage equal to or better than the
medical coverage in place at the time of the execution of this Agreement.
5.07. DENTAL COVERAGE. The Employer shall provide the Employee with
dental coverage during the Term of this Agreement by obtaining dental
insurance for the Employee with terms and coverage equal to or better than the
dental coverage in place at the time of the execution of this Agreement.
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6.00. BUSINESS EXPENSES.
6.01. BUSINESS EXPENSES. During the Term of this Agreement, the
Employer shall promptly reimburse the Employee for all business expenses
incurred by the Employee including expenditures for entertainment, gifts, and
travel.
6.02. REPAYMENT BY THE EMPLOYEE OF DISALLOWED BUSINESS EXPENSES. In the
event that any expenses paid for the Employee or any reimbursement of expenses
paid to the Employee shall, on audit or other examination of the Employer's
income tax returns, be determined not to be allowable deductions from the
Employer's gross income, and in the further event that any such determination
is acceded to by the Employer or made final by the appropriate federal or
state taxing authority or a final judgment of a court of competent
jurisdiction, and no appeal is taken from the judgment or the applicable
period for filing notice of appeal has expired, the Employee shall repay to
the Employer the amount of the disallowed expenses.
7.00. TERMINATION OF EMPLOYMENT.
7.01. TERMINATION FOR CAUSE. (a) The Employer reserves the right to
terminate this Agreement only if the Employee: (i) willfully breaches or
habitually neglects substantial and material duties that he is required to
perform under the terms of this Agreement, or (ii) commits acts of dishonesty,
fraud, misrepresentation, or other acts of moral turpitude that substantially
and materially adversely affects the Employer's operations, and that would
prevent the future effective performance of his duties. (b) The Employer may
at its option terminate this Agreement for the reasons stated in this section
by giving written notice of termination to the Employee without prejudice to
any other remedy to which the Employer may be entitled either at law, in
equity, or under this Agreement. (c) The notice of termination required by
this section shall specify the ground for the termination and shall be
supported by a statement of all relevant facts. (d) Termination under this
section shall be considered "for cause" for the purposes of this Agreement.
(e) Upon a termination for cause, the Employer shall immediately pay the
Employee or his surviving spouse, designee, successor, assignee, personal
representative, or estate 75% all sums otherwise to become due under the then
current full remaining Term of this Agreement. Such payment shall be made no
later than the 30th day of the above 30 day notice period and shall include
75% of all salaries and benefits accruing under sections 5.04 through 5.07 of
this Agreement through the remaining term of this Agreement (i.e., 75% of five
plus years of salaries and benefits). When calculating the sums due under
this subsection for the benefits accruing under sections 5.04 through 5.07 of
this Agreement, the Employee or his representative shall have the option in
his or her sole discretion with respect to each benefit, to either receive
from the Employer in lump sum payment the total cash value of such benefit
over the remaining Term of this Agreement or: (i) with respect to the
Employer-Supplied Automobile benefits, the Employee shall receive title to the
then current vehicle assigned to the Employee free and clear of all
encumbrances plus the sum of $3,750 per each year of the remaining Term of
this Agreement; (ii) with respect to the Group Life Insurance benefits, the
Employer shall maintain such benefits and coverage (or at the Employee's
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option provide like benefits and coverage through a transferable term life
insurance policy, the term of which is not less than 20 years) and pay all
premiums for the remaining Term of this Agreement as such premiums come due
and the Employee shall reimburse the Employer 25% of same within 30 days of
payment of the same by the Employer; (iii) with respect to the Medical
Insurance benefits, the Employer shall maintain such benefits and coverage and
pay all premiums for the remaining Term of this Agreement as such premiums
come due and the Employee shall reimburse the Employer 25% of same within 30
days of payment of the same by the Employer; and (iv) with respect to the
Dental Insurance benefits, the Employer shall maintain such benefits and
coverage and pay all premiums for the remaining Term of this Agreement as such
premiums come due and the Employee shall reimburse the Employer 25% of same
within 30 days of payment of the same by the Employer. Where a lump sum
payment is due the Employee under this subsection, the Employee may choose to
take the payment in the form of non-compensation payments (such as an annuity
or consideration for a non-competition agreement), and the Employer shall
reasonably cooperate with the Employee in arranging for such non-compensation
payments; and all costs incurred in arranging such deferred compensation shall
be paid by the Employer.
7.02. TERMINATION WITHOUT CAUSE. (a) This Agreement shall be terminated
upon the death of the Employee. (b) The Employer reserves the right to
terminate this Agreement not less than six months after the Employee suffers
any physical or mental disability that would prevent the performance of his
essential job duties under this Agreement, unless reasonable accommodation can
be made to allow the Employee to continue working. (c) Termination under this
section shall be effected by giving 30 days written notice of termination to
the Employee. (d) Termination under this section shall be considered "without
cause" for the purposes of this Agreement. (e) Upon a termination without
cause, the Employer shall pay the Employee or his surviving spouse, designee,
successor, assign, personal representative, or estate all sums otherwise to
become due under the then current full remaining Term of this Agreement. Such
payment shall be made no later than the 30th day of the above 30 day notice
period and shall include all salaries and benefits accruing under sections
5.04 through 5.07 of this Agreement through the remaining term of this
Agreement (i.e., five plus years of salaries and benefits). When calculating
the sums due under this subsection for the benefits accruing under sections
5.04 through 5.07 of this Agreement, the Employee or his representative shall
have the option in his or her sole discretion with respect to each benefit, to
either receive from the Employer in lump sum payment the total cash value of
such benefit over the remaining Term of this Agreement or: (i) with respect to
the Employer-Supplied Automobile benefits, the Employee shall receive title to
the then current vehicle assigned to the Employee free and clear of all
encumbrances plus the sum of $5,000 per each year of the remaining Term of
this Agreement; (ii) with respect to the Group Life Insurance benefits, the
Employer shall maintain such benefits and coverage (or at the Employee's
option provide like benefits and coverage through a transferable term life
insurance policy, the term of which is not less than 20 years) and pay all
premiums for the remaining Term of this Agreement as such premiums come due;
(iii) with respect to the Medical Insurance benefits, the Employer shall
maintain such benefits and coverage and pay all premiums for the remaining
Term of this Agreement as such premiums come due; and (iv) with respect to the
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Dental Insurance benefits, the Employer shall maintain such benefits and
coverage and pay all premiums for the remaining Term of this Agreement as such
premiums come due. Where a lump sum payment is due the Employee under this
subsection, the Employee may choose to take the payment in the form of non-
compensation payments (such as an annuity or consideration for a non-
competition agreement), and the Employer shall reasonably cooperate with the
Employee in arranging for such non-compensation payments; and all costs
incurred in arranging such deferred compensation shall be paid by the
Employer.
7.03. EFFECT OF MERGER, TRANSFER OF ASSETS, DISSOLUTION. (a) This
Agreement shall not be terminated by any voluntary or involuntary dissolution
of the Employer resulting from either a sale, merger, or consolidation in
which the Employer is not the consolidated or surviving corporation, a
transfer of all or substantially all of the assets of the Employer, or a
transfer in ownership of a controlling interest in the stock of the Employer.
(b) In the event of any such merger or consolidation, transfer of assets, or
transfer in ownership of a controlling interest in the stock of the Employer,
the Employer's rights, benefits, and obligations hereunder shall be assigned
to the surviving or resulting corporation or the transferee(s) of the
Employer's assets. The surviving corporation or the transferee of the
Employer's assets shall be bound by and shall have the benefit of the
provisions of this Agreement, and the Employer shall take all actions
necessary to insure that any such corporation or transferee(s) is bound by the
provisions of this Agreement. (c) Alternatively, prior to the close of the
subject transaction(s) (which will result in the merger or consolidation in
which the Employer is not the consolidated or surviving corporation, or the
transfer of all or substantially all of the assets of the Employer, or
transfer in ownership of a controlling interest in the stock of the Employer)
such corporation or transferee, or the Employee may elect to terminate this
Agreement. Termination under this section shall be considered "without cause"
for purposes of this Agreement, and the Employee shall be entitled to the
payments provided under subsection 7.02(e) of this Agreement (prior to or
contemporaneously with the close of the subject transaction(s) that triggers
this provision.
7.04. TERMINATION IN EVENT OF BANKRUPTCY OR SIMILAR PROCEEDINGS. (a)
This Agreement shall be terminated at the sole option of the Employee if the
Employer (i) Files a petition in bankruptcy court or is adjudicated a
bankrupt; (ii) Institutes or permits to be instituted any procedure in
bankruptcy court for reorganization or rearrangement of its financial affairs;
(iii) Has a receiver of its assets or property appointed because of
insolvency; or (iv) Makes a general assignment for the benefits of creditors.
(b) Termination shall be effected upon 30 days of written notice of
termination by either party. (c) Termination under this section shall be
considered "without cause" for purposes of this Agreement, and the Employee
shall be entitled to payment as provided under subsection 7.02(e) of this
Agreement, and such payment will be treated as a priority wage claim in the
bankruptcy court.
7.05. TERMINATION UPON BREACH OR TRANSFER. Upon the breach of this
Agreement by the Employer of any of its obligations under this Agreement or
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upon transfer of the Employee's principal place of employment for the Employer
outside of the Bakersfield area, the Employee in his sole discretion may
terminate his obligations under this Agreement by giving the Employer at least
30 days written notice. Termination under this section shall be considered
"without cause" for purposes of this Agreement, and the Employee shall be
entitled to the payments provided under subsection 7.02(e) of this Agreement.
7.06. TERMINATION BY THE EMPLOYEE. The Employee in his sole discretion
may terminate his obligations under this Agreement at any time for any reason
or no reason by giving the Employer at least one month notice. Termination
under this section shall be considered "without cause" for purposes of this
Agreement, and the Employee shall be entitled to the payments provided under
subsection 7.02(e).
8.00. GENERAL PROVISIONS.
8.01. INDEMNIFICATION. The Employer shall, to the maximum extent
permitted by law, indemnify, defend, and hold harmless the Employee against
any and all expenses, including reasonable attorneys' fees, judgements, fines,
settlements, and other amounts actually and reasonably incurred in connection
with any proceeding arising by reason of or related to the Employee's
employment by the Employer. The Employer shall advance to the Employee any
expenses incurred in defending any such proceeding to the maximum extent
permitted by law. In the event that portions of this provision are deemed to
be inconsistent with section 317 of the California Corporations Code of like
federal or state statute, this provision shall remain in force and effect to
the extent that it is not inconsistent with such statutes. The Employee shall
have the right, at all times during the Term of this Agreement, to retain
counsel of his choice, and at the expense of the Employer.
8.02. NOTICES. Any notices to be given by either party to the other
shall be in writing and may be transmitted either by personal delivery or by
mail, registered or certified, postage prepaid with return receipt requested.
Mailed notices shall be addressed to the parties at the most recent addresses
appearing in the records of the Employer, and each party may change that
address by written notice to the other in accordance with this section.
Notices delivered personally shall be deemed communicated as of the date of
actual receipt; mailed notices shall be deemed communicated as of three
business days from the date of mailing.
8.03. ATTORNEYS' FEES AND COSTS. If any legal action is necessary to
enforce or interpret the terms of this Agreement, the prevailing party shall
be entitled to reasonable attorneys' fees, costs, and necessary disbursements
in addition to any other relief to which that party may be entitled. This
provision shall be construed as applicable to the entire Agreement.
8.04. ENTIRE AGREEMENT. This Agreement supersedes any and all other
agreements, either oral or in writing, between the parties with respect to the
employment of the Employee by the Employer, and contains all of the covenants
and agreements between the parties with respect to that employment in any
manner whatsoever. Each party to this Agreement acknowledges that no
representations, inducements, promises, or agreements, orally or otherwise,
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have been made by any party, or anyone acting on behalf of any party, which
are not embodied in this Agreement, and that no other agreement, statement, or
promise not contained in this Agreement shall be valid or binding.
8.05. MODIFICATIONS. Any modification of this Agreement will be
effective only if it is in writing signed by the party or parties to be
charged.
8.06. EFFECT OF WAIVER. The failure of either party to insist on the
strict compliance with any of the terms, covenants, or conditions of this
Agreement by the other party shall not be deemed a waiver of that term,
covenant, or condition, nor shall any waiver or relinquishment of any right or
power at anyone time or times be deemed a waiver or relinquishment of that
right or power for all or any other times.
8.07. PARTIAL INVALIDITY. If any provision in this Agreement is held by
a court of competent jurisdiction to be invalid, void, or unenforceable, the
remaining provisions shall nevertheless continue in full force without being
impaired or invalidated in any way.
8.08. OPINIONS; DETERMINATIONS. Where the terms of this Agreement
provide for actions to be based on the opinion, judgment, approval, consent,
review, certification, or determination of any party, such terms are not
intended to be and shall not be construed as permitting such opinion,
judgment, approval, consent, review, certification, or determination to be
arbitrary, capricious, or unreasonable.
8.09. LAW GOVERNING AGREEMENT. This Agreement shall be governed by and
construed in accordance with the laws of the State of California.
8.10. SUCCESSORS; ASSIGNS. The terms, covenants, and obligations under
this Agreement shall be binding upon the heirs, executors, administrators,
successors, and assigns of the parties. No party shall sell, assign,
transfer, convey, or encumber this Agreement or any right or interest under
the same, or permit any such assignment, transfer, or encumbrance to occur by
operation of law without the prior written consent of the other party, which
consent shall not be unreasonably withheld. The sale, assignment, or transfer
of any interest in the Agreement shall not serve to invalidate any term of
this Agreement or affect the terms, covenants, and obligations under this
Agreement. The successor, transferee, or its legal representatives shall agree
in writing with the other party or parties to personally assume, perform, and
be bound by this Agreement.
8.11. WARRANTIES, IDENTITY, AUTHORITY. The parties represent and
warrant each for itself as follows: a) its respective legal status is that
which is set out in this Agreement, b) the names used in this Agreement are
their true, full legal names, c) the relationships stated in this Agreement
are true, and d) each has the authority to bind itself and/or the relevant
legal entity to the terms and conditions of this Agreement.
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Signatures
The parties have executed this Agreement on February 21, 2002 unless
otherwise indicated below.
"Employer" "Employee"
PYRAMID OIL COMPANY, XXXX X. XXXXXXXXX
a California corporation By -----------------------
Xxxx X. Xxxxxxxxx
J. XXX XXXXXXXX
By -----------------------------
J. Xxx Xxxxxxxx President
XXX X. XXXXXXXXXXXX
By ------------------------------
Xxx X. Xxxxxxxxxxxx, Secretary
