Exhibit 10.4

EXECUTIVE RETIREMENT AGREEMENT
AND
GENERAL RELEASE
 
This EXECUTIVE RETIREMENT AGREEMENT AND GENERAL RELEASE (“Agreement”) is made as
of March 5, 2010, between Tri-Valley Corporation, a Delaware corporation
(“Tri-Valley”) and Tri-Valley Oil & Gas Co., a California corporation (“TVOG”)
and a wholly-owned subsidiary of Tri-Valley, on the one hand, and F. Lynn
Blystone (“Executive Officer”), on the other hand, with Tri-Valley, TVOG and
Executive Officer collectively hereinafter referred to as the “Parties”) in
recognition of the following facts:
 
R E C I T A L S:
 
WHEREAS, Executive Officer and Tri-Valley and TVOG entered into that certain
Employment Agreement (“Employment Agreement”) effective as of January 1, 2008,
pursuant to which Tri-Valley and TVOG retained Executive Officer to serve as
Chief Executive Officer and President of Tri-Valley and Chief Executive Officer
and President of TVOG.
 
WHEREAS, Executive Officer is presently the Chief Executive Officer of
Tri-Valley and Chief Executive Officer of TVOG and currently holds the following
positions:
 
1.  
Chairman of the Board of Directors of Tri-Valley, a Director on the Board of
Directors of Tri-Valley; and is the Chief Executive Officer of Tri-Valley;

 
2.  
Director and Officer of:

 
(a)  
TVOG;

 
(b)  
Pleasant Valley Energy Corporation, a Nevada corporation (“Pleasant Valley”);

 
(c)  
Select Resources Corporation, Inc., a Delaware corporation (“Select Resources”);

 
(d)  
Tri-Valley Power Corporation, a Delaware corporation (“Tri-Valley Power”);

 
(e)  
Great Valley Drilling Company, LLC, a Delaware Limited Liability Company
(“GVDC”);

 
- 1 –
 
EXECUTIVE RETIREMENT AGREEMENT
AND GENERAL RELEASE
TRI-VALLEY CORPORATION
F. LYNN BLYSTONE
MARCH 5, 2010

 
 

--------------------------------------------------------------------------------

 

 
 

 
 
(f)
Great Valley Production Services, LLC, a Delaware Limited Liability Company
(“GVPS”).

 
WHEREAS, all positions that Executive Officer holds with Tri-Valley, TVOG,
Tri­Valley Power, Pleasant Valley, Select Resources, GVDC, GVPS, and all other
positions, if any, Executive Officer holds with any of the affiliates of
Tri-Valley, TVOG, Tri-Valley Power, Pleasant Valley, Select Resources, GVDC, and
GVPS are collectively hereinafter referred to as “Tri-Vallev Positions”.
 
WHEREAS, Tri-Valley, TVOG, Tri-Valley Power, Pleasant Valley, Select Resources,
GVDC, GVPS, and any of the affiliates of Tri-Valley, TVOG, Tri-Valley Power,
Pleasant Valley, Select Resources, GVDC, and GVPS are collectively hereinafter
referred to as “Tri-Vallev Entities”.
 
WHEREAS, Executive Officer desires effective as of the Separation Date to retire
from Tri-Valley, to resign from all Tri-Valley Positions and to terminate the
Employment Agreement.
 
WHEREAS, the Parties hereto desire to enter into this Agreement in order to
memorialize: (i) the termination as of the Separation Date of the Employment
Agreement, (ii) the resignation as of the Separation Date by Executive Officer
of all Tri-Valley Positions and (iii) certain other agreements between
Tri-Valley, TVOG, and Executive Officer as set forth in this Agreement.
 
NOW, THEREFORE, in consideration of the agreements, covenants, representations,
and warranties contained in this Agreement, the Parties agree as follows:
 
ARTICLE 1 – DEFINITIONS
 
1.1             Definitions. The following terms, as used herein, shall have the
following meanings:
 
“Agreement” shall mean this Executive Retirement Agreement and General Release
between the Parties.
 
“Effective Date” shall have the meaning set forth in Section 8.1(f) to this
Agreement.
 
“Employment Agreement” shall have the meaning set forth in the first recital to
this Agreement.
 
“Executive Officer” shall have the meaning set forth in the preamble to this
Agreement.
 
- 2 –
 
EXECUTIVE RETIREMENT AGREEMENT
AND GENERAL RELEASE
TRI-VALLEY CORPORATION
F. LYNN BLYSTONE
MARCH 5, 2010

 
 

--------------------------------------------------------------------------------

 

 
“GVDC” shall have the meaning set forth in the second recital to this Agreement.
“GVPS” shall have the meaning set forth in the second recital to this Agreement.
“Parties” shall have the meaning set forth in the preamble to this Agreement.
“Pleasant Valley” shall have the meaning set forth in the second recital to this
Agreement.
 
“Released Claims” shall have the meaning set forth in Section 5.1 to this
Agreement.
 
“Select Resources” shall have the meaning set forth in the second recital to
this Agreement.
 
“Separation Date” shall mean the close of business on March 5, 2010.
 
“Settlement Payment” shall have the meaning set forth in Section 3.2 to this
Agreement.
 
“Surrendered Options” shall have the meaning set forth in the Section 4.1 to
this Agreement.
 
“Tri-Valley” shall have the meaning set forth in the preamble to this Agreement.
 
“Tri-Valley Entities” shall have the meaning set forth in the fourth recital to
this Agreement.
 
“Tri-Valley Positions” shall have the meaning set forth in the third recital to
this Agreement.
 
“Tri-Valley Power” shall have the meaning set forth in the second recital to
this Agreement.
 
“Tri-Valley Releasees” shall have the meaning set forth in Section 5.1 to this
Agreement.
 
“TVOG” shall have the meaning set forth in the preamble to this Agreement.
“Warrant” shall have the meaning set forth in Section 4.2 to this Agreement.
 
ARTICLE 2 – EMPLOYMENT AGREEMENT AND
 
RESIGNATION
 
- 3 –
 
EXECUTIVE RETIREMENT AGREEMENT
AND GENERAL RELEASE
TRI-VALLEY CORPORATION
F. LYNN BLYSTONE
MARCH 5, 2010

 
 

--------------------------------------------------------------------------------

 

 
 2.1 Employment Agreement. The Employment Agreement shall terminate on the
Separation Date. Notwithstanding the foregoing, Paragraphs 8(b) (Restrictive
Covenant), 9 (Confidential Information) and 10 (Remedies) of the Employment
Agreement shall survive the termination of the Employment Agreement.
 
2.2           Tri-Valley Positions. As of the Separation Date, Executive Officer
shall have resigned from all Tri-Valley Positions.
 
ARTICLE 3 – ACCRUED SALARY AND
 
SETTLEMENT PAYMENT
 
 3.1 Employment Agreement Payment. On or about the Separation Date, Tri­Valley
shall pay Executive Officer any accrued salary and/or bonuses due under the
Employment Agreement as of the Separation Date. The parties hereto agree that
the gross amount due Executive Officer on March 5, 2010 with respect to wages
(five days) will be Four Thousand Thirty-Eight Dollars and Forty-Seven Cents
($4,03 8.47). The parties hereto agree that the gross amount due Executive
Officer on March 5, 2010 with respect to accrued, but unpaid vacation, will be
Thirty-Five Thousand Six Hundred Fifty-Three Dollars and Twenty-Seven Cents
($35,653.27). The foregoing payments shall collectively be hereinafter referred
to as the “Emplovment Agreement Pavment.” The Employment Agreement Payment will
be subject to withholding as specified in Section 3.3 of this Agreement.
 
 3.2 Settlement Payment. Tri-Valley shall pay to Executive Officer a gross
amount of One Hundred Thirty-Six Thousand Eighty-Three Dollars and Twenty-Two
Cents ($136,083.22). This amount will be paid in two installments. This first
installment will be in the amount of Forty-Eight Thousand Five Hundred
Eighty-Three Dollars and Twenty­Two Cents ($48,583.22) to be paid not later than
September 15, 2010, and the second installment will be in the amount of
Eighty-Seven Thousand Five Hundred Dollars ($87,500) to be paid not later than
January 15, 2011. The foregoing payments shall collectively be hereinafter
referred to as the “Settlement Pavment.” The foregoing Settlement Payment will
be subject to withholding as specified in Section 3.3 of this Agreement. In
addition, the first installment payment will be subject to adjustment as is
appropriate to reflect reconciliation between Executive Officer and Tri-Valley
that will occur subsequent to the date of the Agreement with respect to
Executive Officer’s expense account.
 
 3.3 Withholding. Tri-Valley shall withhold from the Employment Agreement
Payment and the Settlement Payment such amounts as Tri-Valley is legally
obligated, or permitted by the Executive Officer, to withhold for applicable
taxes and deductions.
 
 3.4 All Compensation Paid. Executive Officer acknowledges that as of March 5,
2010, Executive Officer had been paid all wages, compensation, benefits
(including all earned and unused vacation days), and business expenses relating
to Executive Officer’s employment with the Tri-Valley or Tri-Valley Entities
through March 5, 2010.
 
- 4 –
 
EXECUTIVE RETIREMENT AGREEMENT
AND GENERAL RELEASE
TRI-VALLEY CORPORATION
F. LYNN BLYSTONE
MARCH 5, 2010

 
 

--------------------------------------------------------------------------------

 

 
 3.5 Life Insurance. With respect to a life insurance policy that Tri-Valley
maintains as key man insurance with respect to Executive Officer, Tri-Valley
will cause cause the policy to be assigned to Executive Officer, together with
its associated cash value ($38,916.68 as of March 5, 2010). The first Settlement
Payment payable on September 15, 2010 pursuant to Section 3.2 of this Agreement
has been reduced to reflect the life insurance associated cash value being
assigned to Executive Officer pursuant to this Section of this Agreement.
 
ARTICLE 4 – SURRENDER OF OPTIONS AND
 
ISSUANCE OF WARRANT
 
 4.1 Surrendered Options. As of the Separation Date, Executive Officer hereby
surrenders to Tri-Valley any and all outstanding options (“Surrendered Options”)
that Executive Officer may have been granted or awarded at any time from
Tri-Valley. Executive Officer hereby acknowledges and agrees that Executive
Officer will: (i) have no rights to or interest in the Surrendered Options
effective as of the Separation Date, and (ii) no longer participate in any stock
option plan maintained by a Tri-Valley Entity.
 
 4.2 Warrant. Tri-Valley agrees to grant to Executive Officer a warrant
substantially in the form attached hereto as Exhibit A to purchase Seven Hundred
Thousand (700,000) Tri-Valley Common Shares at a purchase price of the higher
of: (i) the closing price for Tri-Valley Common Stock on the New York Stock
Exchange/American Stock Exchange on the Separation Date as set forth in the Wall
Street Journal for the closing price for Tri-Valley Common Stock on the
Separation Date, or (ii) $1.85 per share (“Warrant”).
 
ARTICLE 5 – RELEASE
 
 5.1 Release. Except for the obligations set forth in this Agreement and in
consideration of the Settlement Payment, Executive Officer fully, finally, and
forever releases, waives and discharges the Tri-Valley Entities and all of their
predecessors, successors, partners, subsidiaries, parents, benefit plans, stock
plans, trusts, and all of their affiliated and/or related entities and all of
their past and present directors, officers, shareholders, supervisors, executive
officers, representatives, attorneys, and agents (collectively referred to as
the “Tri-Valley Releasees”) from any and all controversies, complaints, demands,
promises, obligations, proceedings, damages, liabilities, rights, and
claims/causes of action of every kind and nature whatsoever, including any from
the forfeiture of his rights under the Employment Agreement, whether known or
unknown, which Executive Officer may have had or had or claims to have or have
had against any or all of the Tri-Valley Releasees which are based upon any
acts, omission, occurrence, or event from the beginning of time to and including
the Separation Date (collectively referred
 
- 5 –
 
EXECUTIVE RETIREMENT AGREEMENT
AND GENERAL RELEASE
TRI-VALLEY CORPORATION
F. LYNN BLYSTONE
MARCH 5, 2010

 
 

--------------------------------------------------------------------------------

 

 
to as the “Released Claims”).
 
 5.2 Released Claims. Without limitation, the Released Claims include any claims
for (1) any injury, damage, loss, compensation, or expense arising out of or
relating to Executive Officer’s employment with and termination from a
Tri-Valley Entity, (2) any injury, damage, loss, compensation, or expense
arising out of or relating to the Employment Agreement, and/or (3) any injury,
damage, loss, compensation, or expense arising under federal, state and/or local
laws, such as Title VII of the Civil Rights Act of 1964, Age Discrimination in
Employment Act, Americans with Disabilities Act, Family Medical Leave Act, Fair
Labor Standards Act, National Labor Relations Act, Executive Officer Retirement
Income Security Act, California Labor Code, California Fair Employment & Housing
Act, California Government Code, California Business & Professions Code,
California Civil Code, California Family Rights Act, California Wage Orders
promulgated by the Industrial Welfare Commission, and the common law.
 
5.3           Waiver. Executive Officer acknowledges that he is familiar with
and understands the provision of Section 1542 of the California Civil Code
specified below:
 
“A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR
SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH
IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH
THE DEBTOR.”
 
Being aware and fully advised of the above California Civil Code Section,
Executive Officer expressly waives and relinquishes any rights or benefits that
Executive Officer may have thereunder, as well as any other state or federal
statutes or common law principles of similar effect.
 
ARTICLE 6 – CERTAIN COVENANTS AND
 
AGREEMENTS
 
 6.1 Confidential Terms. Executive Officer agrees that the terms of this
Agreement, including any payment thereunder, are confidential and shall not be
disclosed to any person or party except Executive Officer’s spouse, attorneys,
and to accountants and/or tax preparers for the purpose of preparing income tax
returns or except to the extent that such disclosure is compelled by valid legal
process. Executive Officer shall obtain the agreement of any person to whom
information concerning this Agreement is disclosed to keep such information
confidential pursuant to the terms set forth in this Section. Executive Officer
shall otherwise only be entitled to state to any other person or party with
respect to any
 
- 6 –
EXECUTIVE RETIREMENT AGREEMENT
AND GENERAL RELEASE
TRI-VALLEY CORPORATION
F. LYNN BLYSTONE
MARCH 5, 2010

 
 

--------------------------------------------------------------------------------

 

 
dispute that Executive Officer may have had with the Tri-Valley Releasees that
he has "resolved" any such dispute.
 
 6.2 Confidential Information; Trade Secrets. Without the prior and written
consent of Tri-Valley, Executive Officer shall not take, disclose, or use the
trade secrets or confidential information of a Tri-Valley Entity. Executive
Officer further promises and agrees not to engage in competition with any
Tri-Valley Entity while making use of trade secrets or confidential information
of any Tri-Valley Entity. Executive Officer acknowledges and agrees that the
terms “trade secrets” and “confidential information” include information
concerning any (i) documents, computer discs, and programs, (ii) discoveries,
(iii) improvements, (iv) methods, (v) technology, (vi) marketing and business
plans, (vii) environmental plans, (viii) exploration, exploitation, mining,
production, estimates of reserves or resources, drilling, sampling, assays,
logging, testing, completion, workover or recompletion information, (ix)
minerals or oil and gas exploration leads and prospects, (x) current, planned or
expired mineral claims, mining claims, and oil and gas leases (xi) plant design,
location, or operation, (xii) and business and financial information, relating
to a Tri-Valley Entity. Executive Officer represents and warrants that he has
returned to Tri-Valley all property of a Tri-Valley Entity in his possession,
including, but not limited to, keys, cell phone, automobile, equipment, files,
reports, documents, programs, or other written or graphic materials relating to
the business of a Tri-Valley Entity. Confidential information does not include
information which becomes generally known in the public through no action of
Executive Officer or after the date of this Agreement is independently developed
without the use of confidential information.
 
6.3. Acknowledgement Regarding Certain Facts. Executive Officer acknowledges
that he has not sustained any work-related injuries or illnesses besides those
that are subject to pending workers’ compensation claims, if any.
 
 6.4 No Other Severance Benefits; Full Satisfaction. Executive Officer
acknowledges and agrees that the Settlement Payment and the Warrant provided in
this Agreement are: (i) in lieu of any other severance benefits for which
Executive Officer may be eligible under any other agreement, including the
Employment Agreement, and/or any other severance plan or practice of a
Tri-Valley Entity, and (ii) are made in full and final settlement and
satisfaction of any and all claims that Executive Officer may have against a
Tri-Valley Entity or a Tri-Valley Releasee. Executive Officer acknowledges that,
absent this Agreement, Executive Officer is not entitled to the Settlement
Payment under Article 3 of this Agreement or the Warrant under Article 4 of this
Agreement.
 
 6.5 Certain Rights Not Affected. Nothing in this Agreement shall affect (1)
Executive Officer’s right to file claims for workers’ compensation or
unemployment insurance benefits, (2) applicable state or federal law that
creates rights that may not be waived, (3) Executive Officer’s vested retirement
or pension benefits, if any, and (4) any of Executive Officer’s rights under
COBRA.
 
- 7 –
EXECUTIVE RETIREMENT AGREEMENT
AND GENERAL RELEASE
TRI-VALLEY CORPORATION
F. LYNN BLYSTONE
MARCH 5, 2010

 
 

--------------------------------------------------------------------------------

 

 
 6.6 Indemnification Agreement Not Affected. Nothing in this Agreement is
intended or should be construed to contradict, modify, or alter the terms of
that certain Indemnification Agreement dated January 29, 2010, between Company
and Executive Officer.
 
 6.7 No Actions. Executive Officer warrants and represents that he has not filed
any actions, suits, complaints, arbitrations, charges, claims, or any other
proceedings against any of the Tri-Valley Releasees. If any lawsuit,
administrative charge, or other proceeding is commenced that involves a Released
Claim in a court, arbitration, government agency or other forum, Executive
Officer waives and agrees not to accept any award of money or other damages as a
result of such charge, lawsuit, or proceeding.
 
 6.8 Cooperation. Executive Officer agrees to fully and faithfully cooperate and
assist Tri-Valley Entities in connection with any actions, prosecutions, or any
other legal proceedings in which Tri-Valley Entities may require Executive
Officer’s cooperation. Executive Officer’s full assistance and cooperation with
Tri-Valley Entities shall include, by way of example and without limitation,
making himself available for interview by Tri-Valley Entities, reviewing and
analyzing documents from Tri-Valley Entities, providing declarations, affidavits
or sworn statements at the request of a Tri-Valley Entity, testifying for
Tri-Valley Entities in deposition, trial, or other proceedings in matters at the
request of a Tri-Valley Entity.
 
 6.9 No Reliance. Executive Officer represents and warrants that in executing
this Agreement, Executive Officer does not rely and has not relied upon any
representation or statement not set forth herein made by any of the Tri-Valley
Releasees or by any of the Tri­Valley Releasees’ agents, representatives, or
attorneys with regard to the subject matter, basis, or effect of this Agreement
or otherwise.
 
ARTICLE 7 – CERTAIN MISCELLANEOUS TERMS
 
 7.1 Compromise. The Parties acknowledge that this Agreement is made as a
compromise of any claims, that Tri-Valley and TVOG specifically deny liability
for any such claims, and that no act with respect to this Agreement, including
the giving of consideration for the Agreement shall be construed as an admission
of liability or responsibility to any person or that any of the Tri-Valley
Releasees engaged in any form of wrongdoing or violated any legal obligation
owed to Executive Officer. Neither this Agreement nor anything contained herein
shall be admissible in any proceeding as evidence of or an admission by
Tri-Valley, TVOG, or Tri-Valley Releasees of any violation of any law or
regulation or of any liability whatsoever. Notwithstanding the foregoing, this
Agreement may be introduced into a proceeding solely for the purpose of
enforcing this Agreement.
 
- 8 –
EXECUTIVE RETIREMENT AGREEMENT
AND GENERAL RELEASE
TRI-VALLEY CORPORATION
F. LYNN BLYSTONE
MARCH 5, 2010

 
 

--------------------------------------------------------------------------------

 

 
 7.2 Governing Law; Venue. This Agreement is to be construed in accordance with
and governed by the internal laws of the State of California without giving
effect to any choice of law rule that would cause the application of the laws of
any jurisdiction other than the internal laws of the State of California to the
rights and duties of the parties. Each of the parties hereto (a) agrees that any
action arising out of or relating to this Agreement shall be brought solely in
the State of California, (b) submits to the jurisdiction of the United States
District Court for the Central District of California and of the Kern County
Superior Court, and (c) irrevocably waives, to the fullest extent permitted by
law, any objection which it may now or hereafter have to the laying of the venue
of any such proceeding brought in such a court and any claim that any such
proceeding brought in such a court has been brought in an inconvenient forum.
 
 7.3 Titles and Subtitles. The titles and subtitles used in this Agreement are
used for convenience only and are not to be considered in construing or
interpreting this Agreement.
 
 7.4 Successors and Assigns. Except as otherwise provided herein, the terms and
conditions of this Agreement shall inure to the benefit of and be binding upon
the respective successors and assigns of the Parties. Nothing in this Agreement,
express or implied, is intended to confer upon any party other than the parties
hereto or their respective successors and assigns any rights, remedies,
obligations, or liabilities under or by reason of this Agreement, except as
expressly provided in this Agreement.
 
 7.5 Notices. All notices, requests, waivers, and other communications made
pursuant to this Agreement shall be in writing and shall be conclusively deemed
to have been duly given (a) when hand delivered to the other parties; (b) when
sent by facsimile if sent between 8:00 a.m. and 5:00 p.m. recipient’s local time
on a business day, or on the next business day if sent by facsimile other than
between 8:00 a.m. and 5:00 p.m. recipient’s local time on a business day; (c)
three business days after deposit in the U.S. mail with first class or certified
mail receipt requested postage prepaid and addressed to the other parties; or
(d) the next business day after deposit with a national overnight delivery
service, delivery fees prepaid, addressed to the other parties with next
business day, delivery guaranteed, provided that the sending party receives a
confirmation of delivery from the delivery service provider. All notices,
requests, waivers and other communications made pursuant to this Agreement shall
be addressed as follows:
 
If to Tri-Valley:
 
Tri-Valley Corporation Attn: President
4550 California Avenue Suite 600
Bakersfield, CA 93309
 
- 9 –
EXECUTIVE RETIREMENT AGREEMENT
AND GENERAL RELEASE
TRI-VALLEY CORPORATION
F. LYNN BLYSTONE
MARCH 5, 2010

 
 

--------------------------------------------------------------------------------

 

 
If to TVOG:
 
Tri-Valley Oil & Gas Co. Attn: President
 
4550 California Avenue Suite 600
Bakersfield, CA 93309
 
If to Executive Officer:
 
F. Lynn Blystone
P.O. Box 1105
Bakersfield, CA 93302
 
A Party may change or supplement their addresses, or designate additional
addresses, for purposes of this Section 7.5 by giving the other Party written
notice of the new address in the manner set forth above.
 
7.6 Amendments and Waivers. This Agreement may not be modified except in writing
signed by all Parties. No provision of this Agreement may be waived unless in
writing signed by all the parties. No course of dealing or delay on the part of
a Party in exercising any right shall operate as waiver thereof or otherwise
prejudice the rights of a Party, and no consent or waiver shall extend beyond
the particular case and purpose involved.
 
 7.7 Expenses. Each party shall pay its own costs and expenses that it incurs
with respect to the negotiation, execution, delivery, and performance of this
Agreement. If any action at law or in equity is necessary to enforce or
interpret the terms of this Agreement or the Warrant, the prevailing party shall
be entitled to reasonable attorney’s fees, costs, and necessary disbursements in
addition to any other relief to which such party may be entitled.
 
 7.8 Severability. If one or more provisions of this Agreement are held to be
unenforceable under applicable law, such provision shall be excluded from this
Agreement and the balance of the Agreement shall be interpreted as if such
provision were so excluded and shall be enforceable in accordance with its
terms.
 
 7.9 Construction. For purposes of this Agreement, whenever the context
requires, the singular number shall include the plural, and vice versa; the
masculine gender shall include the feminine and neuter genders; the feminine
gender shall include the masculine and neuter genders; and the neuter gender
shall include the masculine and feminine genders.
 
7.10 Entire Agreement; Conflicts Between Documents. This Agreement and the
Warrant constitute the entire agreement among the parties with respect to the
subject matter hereof and thereof, and no party shall be liable or bound to any
other party in any manner by
 
- 10 –
 
EXECUTIVE RETIREMENT AGREEMENT
AND GENERAL RELEASE
TRI-VALLEY CORPORATION
F. LYNN BLYSTONE
MARCH 5, 2010

 
 

--------------------------------------------------------------------------------

 

 
any warranties, representations, or covenants except as specifically set forth
herein or therein. In case of a conflict between this Agreement, on the one
hand, and the Warrant, on the other hand, this Agreement will govern.
 
7.11 Acknowledgment. Each Party to this Agreement acknowledges that: (a) it has
read this Agreement; (b) it has been represented in the preparation,
negotiation, and execution of this Agreement by legal counsel of its own choice;
and (c) it understands the terms and consequences of this Agreement and is fully
aware of the legal and binding effect of this Agreement.
 
7.12 Counterparts. This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument. An executed copy of this Agreement may
be delivered by facsimile or electronic means.
 
ARTICLE 8 – OLDER WORKERS’
 
BENEFIT PROTECTION ACT OF 1990
 
8.1            OWBPA of 1990. In accordance with the Older Workers’ Benefit
Protection Act of 1990, Executive Officer is aware of the following:
 
a. Executive Officer specifically intends knowingly and voluntarily that the
Released Claims shall include the federal Age Discrimination in Employment Act
of 1967, as amended by the Older Workers’ Benefit Protection Act of 1990
(“ADEA”), except that Executive Officer is not waiving any claim under the ADEA
that may arise after the date that Executive Officer signs this Agreement.
 
b. Neither Section 6.1 (Confidential Terms) nor any other provision in this
Agreement shall restrict Executive Officer bringing any proceeding to challenge
Executive Officer’s release and waiver of any ADEA claims in this Agreement; in
any such circumstance, the Tri-Valley Releasees may recover costs and attorneys’
fees specifically authorized by federal law.
 
c. Executive Officer agrees that the promises in this Agreement by Tri­Valley
and TVOG represent obligations by Tri-Valley and TVOG that are in addition to
anything of value to which Executive Officer otherwise is entitled from
Tri-Valley or TVOG and that, absent entering into this Agreement, Executive
Officer is not entitled to receive the Settlement Payment specified in Article 3
of this Agreement or the Warrant specified in Article 4 of this Agreement.
 
d. Executive Officer is hereby advised to consult with an attorney prior to
signing this Agreement because Executive Officer is giving up significant legal
rights. Executive Officer acknowledges that he has been so advised and has in
fact consulted with an attorney of his choosing prior to executing this
Agreement.
 
- 11 –
 
EXECUTIVE RETIREMENT AGREEMENT
AND GENERAL RELEASE
TRI-VALLEY CORPORATION
F. LYNN BLYSTONE
MARCH 5, 2010
 
 
 

 
 

--------------------------------------------------------------------------------

 

 
Executive Officer has twenty-one (21) days from the date this Agreement is
provided to him to consider whether to accept the terms of this Agreement. If
Executive Officer has not signed and returned the Agreement to Tri-Valley and
TVOG on or before the twenty-first day following Executive Officer’s receipt of
this Agreement, this offer shall be null and void. If Executive Officer chooses
to sign and return this Agreement sooner than twenty-one days, Executive
Officer’s signature below shall be deemed a waiver of the balance of the
consideration period.
 
e. Executive Officer may revoke this Agreement as provided in Section 8.2 below.
If Executive does so, the entire Agreement becomes invalid. If Executive Officer
does not revoke this Agreement, this Agreement becomes effective on the eighth
day (“Effective Date”) after Executive Officer signs this Agreement. Following
Executive Officer’s execution of this Agreement, Executive Officer agrees to
return this Agreement to Tri-Valley Corporation, Attn: John E. Durbin, Chief
Financial Officer, 4550 California Avenue, Suite 600, Bakersfield, CA 93309.
 
f. Executive Officer understands the terms and consequences of this Agreement
and of the release it contains.
 
g. Executive Officer is fully aware of the legal and binding effect of this
Agreement.
 
8.2. Revocation. This Agreement may be revoked by Executive Officer providing
written notice of revocation to Tri-Valley Corporation, Attn: John E. Durbin,
Chief Financial Officer, 4550 California Avenue, Suite 600, Bakersfield, CA
93309. Any revocation must be in writing and delivered by the close of business
on the seventh (7th) day from the date that Executive Officer signs this
Agreement. This Agreement shall not be effective until the seven-day revocation
period set forth in this Section 8.2 has expired.
 
[Signature Page Follows]
 
- 12 –
 
EXECUTIVE RETIREMENT AGREEMENT
AND GENERAL RELEASE
TRI-VALLEY CORPORATION
F. LYNN BLYSTONE
MARCH 5, 2010
 

 
 

--------------------------------------------------------------------------------

 
 
IN WITNESS WHEREOF, this Executive Retirement Agreement and General Release is
entered into as of the Separation Date.

DATED:  5 March, 2010                                      EXECUTIVE OFFICER

/S/ F. Lynn Blystone
F. Lynn Blystone

DATED:  5 March, 2010                                      TRI-VALLEY
CORPORATION
A Delaware corporation

/s/ G. Thomas Gamble
G. Thomas Gamble
Director and Vice Chairman
Board of Directors
Tri-Valley Corporation

DATED:  5 March, 2010                                       /s/ Henry Lowenstein
Director
Chairman of Personnel and Compensation
Committee
Board of Directors
Tri-Valley Corporation

DATED:  March 5, 2010                                      TRI-VALLEY OIL & GAS
CO.
A California Corporation

/s/ John E. Durbin
John E. Durbin
Chief Executive Officer
 
EXECUTIVE RETIREMENT AGREEMENT
AND GENERAL RELEASE
TRI-VALLEY CORPORATION
F. LYNN BLYSTONE
MARCH 5, 2010

 
 

--------------------------------------------------------------------------------

 

 
EXHIBIT A
 
 
TO
 
 
EXECUTIVE RETIREMENT AGREEMENT
 
 
AND
 
 
GENERAL RELEASE
 
FORM OF WARRANT

 
 

--------------------------------------------------------------------------------

 

 
 
TRI-VALLEY CORPORATION -
 
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THIS WARRANT HAS BEEN ACQUIRED FOR
INVESTMENT AND MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT UNDER SAID ACT AND SAID STATE SECURITIES LAWS OR AN
OPINION OF COUNSEL OR OTHER EVIDENCE SATISFACTORY TO COMPANY THAT REGISTRATION
IS NOT REQUIRED UNDER SAID ACT AND SAID STATE SECURITIES LAWS.
 

--------------------------------------------------------------------------------

TRI-VALLEY CORPORATION
 
WARRANT TO PURCHASE COMMON STOCK
 

--------------------------------------------------------------------------------

 
Tri-Valley Corporation, a Delaware corporation ("Company"), certifies that F.
Lynn Blystone ("Holder") is entitled to purchase from the Company, at any time
during the period set forth in Section 2.1 hereof, all or any portion of the
Warrant Shares (as hereafter defined) for a price per Warrant Share equal to the
Purchase Price (as hereafter defined).
 
This Warrant and the Warrant Shares issuable upon exercise of this Warrant are
subject to the terms and conditions hereinafter set forth:
 
1. Definitions. As used in this Warrant, the following terms shall mean:
 
1.1           “Agreement and Release” – As defined in Section 7.9 of this
Warrant. 1.2 “Common Stock” – The Company’s Common Stock.
1.3           “Issuance Date” – March 5, 2010, the effective date of the
original issuance of this Warrant.
 
1.4           “Purchase Price” – An amount equal to ___ Dollars ($ ____) for
each share of the Company’s Common Stock.1
 
1.5           “Subscription Form” – The form attached to this Warrant as Exhibit
1.
 
 
1 Section 4.2 of the Executive Retirement Agreement and General Release provides
that the Purchase Price will be at the higher of: (i) the closing price for
Tri-Valley Common Stock on the New York Stock Exchange/American Stock Exchange
on the Separation Date as set forth in the Wall Street Journal for the closing
price for Tri-Valley Common Stock on the Separation Date, or (ii) $1.85 per
share.
 
- 1 -

TRI-VALLEY CORPORATION
WARRANT NO.  
 
 

--------------------------------------------------------------------------------

 

 
1.6           “Warrant” – This Warrant or any warrant delivered in substitution
or exchange therefor as provided herein.
 
1.7            “Warrant Shares” – SEVEN HUNDRED THOUSAND (700,000) shares of the
Company’s Common Stock.
 
2. Exercise.
 
 2.1 Time of Exercise. This Warrant may be exercised at the principal executive
offices of the Company in California in whole or part at any time commencing on
the Issuance Date and terminating at 5:00 p.m., Pacific Standard Time, on March
5, 2015 (“Termination Date”).
 
 2.2 Manner of Exercise. This Warrant is exercisable at the Purchase Price for
each Warrant Share issuable hereunder payable: (a) in cash or by check payable
to the order of Company; (b) by cancellation of any then existing indebtedness
owed by the Company to the Holder; (c) in the manner described in Section 2.3
hereof; or (d) in any combination of the foregoing. Upon surrender of this
Warrant with the annexed Subscription Form duly executed, together with payment
of the Purchase Price for the Warrant Shares to be purchased, at the Company's
principal executive offices in California, the Holder shall be entitled to
receive a certificate or certificates for the Warrant Shares so purchased. The
purchase rights represented by this Warrant are exercisable at the option of the
Holder hereof, in whole or part, during any period in which this Warrant may be
exercised as set forth above.
 
 2.3 Cashless Exercise. The Holder may elect to receive, without the payment by
the Holder of any cash, that number of Warrant Shares equal to the value of this
Warrant, or any portion hereof, by the surrender of this Warrant, or such
portion, to the Company at the principal executive offices of the Company in
California. Thereupon, the Company shall issue to the Holder such number of
fully paid and nonassessable Warrant Shares as is computed using the following
formula:
 
 
X = Y(A-B)  A

 
where X = the number of Warrant Shares to be issued to the Holder pursuant to
this Section 2.3;
 
 
Y =
the number of Warrant Shares covered by this Warrant in respect of which the
cashless exercise election is made;

 
 
A =
the "fair market value" of one share of Common Stock at the time the cashless
exercise election is made; and

 
 
B =
the Purchase Price in effect under this Warrant at the time the cashless
exercise election is made.

 

 

- 2 -

TRI-VALLEY CORPORATION
WARRANT NO.  
 
 

--------------------------------------------------------------------------------

 

 
TRI-VALLEY CORPORATION
WARRANT NO.
 
The term "fair market value" of one share of Common Stock on any date shall mean
the average of the daily closing prices for a share of Common Stock on the ten
consecutive trading days commencing 10 days before the date upon which the
cashless exercise election is made. The closing price for each day shall be: (i)
the average of the last reported sales prices on the specified days (or if there
is no reported sale on any such trading date, the average of the closing bid and
asked prices on such trading date) if such Common Stock shall be listed or
admitted to trading on any national securities exchange; (ii) the average of the
last reported sales prices on the specified days (or if there is no reported
sale on any such trading date, the average of the closing bid and asked prices
on such trading date) if such Common Stock shall be listed or admitted to
trading on the NYSE-Amex US Exchange; (iii) the closing price, if reported, or
if the closing price is not reported, the average of the closing bid and asked
prices, as reported by the Nasdaq National Market, the Nasdaq SmallCap Market or
similar source or, if no such source exists, as furnished by two members of the
National Association of Securities Dealers, Inc., selected by the Company for
that purpose, on the specified date if such Common Stock is publicly traded but
is not traded or admitted to trading on any national securities exchange; or
(iv) the fair market value of such a share of such Common Stock on such dates as
determined in good faith by the Company's Board of Directors if such Common
Stock is not publicly traded. In the event that clause (iv) in the immediately
preceding sentence is applicable, the Company's Board of Directors shall
promptly respond in writing to any inquiry by the Holder hereof as to the fair
market value of one share of such Common Stock.
 
 2.4 Delivery of Stock Certificates. As soon as practicable, but not exceeding
15 business days after exercise of this Warrant, the Company, at its expense,
shall cause to be issued in the name of the Holder and deliver to the Holder a
certificate for the number of fully paid and nonassessable Warrant Shares so
purchased.
 
 2.5 Record Date of Transfer of Warrant Shares. Irrespective of the date of
issuance and delivery of certificates for any Warrant Shares or other securities
issuable upon the exercise of this Warrant, each person in whose name any such
certificate is to be issued shall for all purposes be deemed to have become the
holder of record of the Warrant Shares or other securities represented thereby
immediately prior to the close of business on the date on which a duly executed
Subscription Form containing notice of exercise of this Warrant and payment for
the number of Warrant Shares as to which this Warrant shall have been exercised
shall have been delivered to the Company.
 
3. Adjustments. In the event that the outstanding shares of Common Stock are at
any time increased or decreased or changed into or exchanged for a different
number or kind of shares or other securities of the Company or of another
corporation through reorganization, merger, consolidation, liquidation,
recapitalization, stock split, combination of shares, or stock dividends payable
with respect to such shares of Common Stock, appropriate adjustments in the
number, kind and price of such securities then subject to this Warrant shall be
made effective as of the date of such occurrence so that the position of the
Holder upon exercise of this Warrant will be the same as it would have been had
the Holder owned immediately prior to the occurrence of such event the number of
shares of Common
 
- 3 -

TRI-VALLEY CORPORATION
WARRANT NO.   
 
 

--------------------------------------------------------------------------------

 

 
Stock subject to this Warrant. Such adjustment shall be made successively
whenever any event listed above shall occur, and the Company will notify the
Holder of each such adjustment. Any fraction of a share resulting from any
adjustment shall be eliminated and the price per share of the remaining Warrant
Shares subject to this Warrant adjusted accordingly.
 
4.       Transfer of Warrant and Warrant Shares.
 
 4.1 Restrictions on Transfer. The Holder, by the Holder's acceptance hereof,
represents, warrants, covenants, and agrees that: (a) the Holder is an
“accredited investor” as such term is defined in Rule 501(a) promulgated
pursuant to the Securities Act; (b) the Holder has knowledge of the business and
affairs of Company; (c) this Warrant and the Warrant Shares issuable upon the
exercise of this Warrant are being acquired for investment and not with a view
to the distribution hereof; and (c) absent an effective registration statement
under the Securities Act of 1933, as amended ("1933 Act"), covering the
disposition of this Warrant or the Warrant Shares issued or issuable upon
exercise of this Warrant, this Warrant and/or the Warrant Shares issued or
issuable upon exercise of this Warrant will not be sold, transferred, assigned,
hypothecated, or otherwise disposed of without first providing the Company, if
the Company so requests, with an opinion of counsel, reasonably satisfactory to
the Company, to the effect that such sale, transfer, assignment, hypothecation,
or other disposal will be exempt from the registration and prospectus delivery
requirements of the 1933 Act. The Holder consents to the Company making a
notation in its records or giving to any transfer agent of the Warrant or the
Warrant Shares an order to implement such restriction on transferability.
Subject to the foregoing, this Warrant is transferable and may be assigned or
hypothecated from and after the date hereof. Upon surrender of this Warrant to
the Company at its principal executive offices in California with the
Subscription Form annexed hereto duly executed and funds sufficient to pay any
transfer tax, the Company shall, without charge, execute and deliver a new
Warrant in the name of the assignee(s) named in such instrument of assignment,
and this Warrant shall promptly be canceled.
 
 4.2 Payment of Warrant Exercise Taxes. All Warrant Shares issued upon the
exercise of this Warrant shall be validly issued, fully paid, and nonassessable,
and the Company shall pay all taxes and other governmental charges, if any, that
may be imposed in respect of the issue or delivery thereof (other than taxes
based upon income). The Company shall not be required, however, to pay any
applicable tax or other charge imposed in connection with any transfer of any
Warrant Shares into any name other than that of the Holder, and in such case the
Company shall not be required to issue or deliver any stock certificate until
such tax or other charge, if any, has been paid, or it has been established to
the Company's satisfaction that no tax or other charge is due.
 
5.       Reservation of Common Stock. The Company shall at all times reserve and
keep available out of its authorized but unissued shares of Common Stock, solely
for the purpose of issuance upon the exercise of this Warrant, such number of
shares of Common Stock as shall remain issuable upon the full exercise hereof.
 

 

- 4 -

TRI-VALLEY CORPORATION
WARRANT NO.   
 
 

--------------------------------------------------------------------------------

 

 
6.       Notices to be Given. Nothing contained in this Warrant shall be
construed as conferring upon the Holder hereof the right to vote or to consent
or to receive notice as a shareholder in respect of any meetings of shareholders
for the election of directors or any other matter or as having any rights
whatsoever as a shareholder of the Company. If, however, at any time prior to
the expiration of this Warrant and prior to its exercise, the Company intends to
issue a cash dividend, then the Company shall give written notice of such
issuance of such cash dividend to the Holder at least 15 days prior to the date
fixed for issuance of such cash dividend.
 
7.       Miscellaneous.
 
 7.1 Governing Law; Venue. This Warrant is to be construed in accordance with
and governed by the internal laws of the State of California without giving
effect to any choice of law rule that would cause the application of the laws of
any jurisdiction other than the internal laws of the State of California to the
rights and duties of the parties. Each of the parties hereto (a) agrees that any
action arising out of or relating to this Warrant shall be brought solely in the
State of California, (b) submits to the jurisdiction of the United States
District Court for the Central District of California and of the Kern County
Superior Court, and (c) irrevocably waives, to the fullest extent permitted by
law, any objection which it may now or hereafter have to the laying of the venue
of any such proceeding brought in such a court and any claim that any such
proceeding brought in such a court has been brought in an inconvenient forum.
 
 7.2 Titles and Subtitles. The titles and subtitles used in this Warrant are
used for convenience only and are not to be considered in construing or
interpreting this Warrant.
 
 7.3 Successors and Assigns. Except as otherwise provided herein, the terms and
conditions of this Warrant shall inure to the benefit of and be binding upon the
respective successors and assigns of the parties (including transferees of any
securities issued upon conversion of this Warrant). Nothing in this Warrant,
express or implied, is intended to confer upon any party other than the parties
hereto or their respective successors and assigns any rights, remedies,
obligations, or liabilities under or by reason of this Warrant, except as
expressly provided in this Warrant. The Holder may not sell, assign, pledge,
dispose of, or otherwise transfer this Warrant without the prior written consent
of the Company.
 
 7.4 Notices. Except as otherwise provided in this Warrant, all notices,
requests, waivers, and other communications made pursuant to this Warrant shall
be in writing and shall be conclusively deemed to have been duly given (a) when
hand delivered to the other parties; (b) when sent by facsimile if sent between
8:00 a.m. and 5:00 p.m. recipient’s local time on a business day, or on the next
business day if sent by facsimile other than between 8:00 a.m. and 5:00 p.m.
recipient’s local time on a business day; (c) three business days after deposit
in the U.S. mail with first class or certified mail receipt requested postage
prepaid and addressed to the other parties; or (d) the next business day after
deposit with a national overnight delivery service, delivery fees prepaid,
addressed to the other parties with next business day delivery guaranteed,
provided that the sending party receives a
 

 

- 5 -

TRI-VALLEY CORPORATION
WARRANT NO.   
 
 

--------------------------------------------------------------------------------

 

 
Agreement and Release) or by any of the Tri-Valley Releasees’ agents,
representatives, or attorneys with regard to the subject matter, basis, or
effect of this Warrant or otherwise.
 
7.11 Acknowledgment. Company and Holder, each on their own behalf, acknowledge
that: (a) it has read this Warrant; (b) it has been represented in the
preparation, negotiation and execution of this Warrant by legal counsel of its
own choice or has voluntarily declined to seek such counsel; and (c) it
understands the terms and consequences of this Warrant and is fully aware of the
legal and binding effect of this Warrant.
 
7.12 Lost or Destroyed Warrant. In case this Warrant shall be mutilated or
alleged to have been lost or destroyed, a new Warrant will be issued in place
thereof by the Company on presentation to the Company of reasonable evidence of
such mutilation, loss, or destruction and upon such indemnity, if any, as the
Company may reasonably require for its protection.
 
7.13 Transfer. The Holder may not sell, assign, pledge, dispose of, or otherwise
transfer this Warrant without the prior written consent of the Company. Subject
to the preceding sentence, this Warrant may be transferred only upon surrender
of the original Warrant for registration of transfer, duly endorsed, or
accompanied by a duly executed written instrument of transfer in form
satisfactory to the Company. Thereupon, a new warrant with identical terms will
be issued to, and registered in the name, of, the transferee.
 
7.14 No Rights as an Equity Holder. Prior to the conversion of this Warrant, the
Holder shall not have or exercise any rights as an equity holder of the Company
by virtue of its ownership of this Warrant unless specifically set forth herein.
 
[SIGNATURE ON NEXT PAGE]
 

 

- 7 -

TRI-VALLEY CORPORATION
WARRANT NO.   
 
 

--------------------------------------------------------------------------------

 

 
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by its duly
authorized officers and to be dated and delivered as of the Issuance Date.
 
COMPANY:
 
TRI-VALLEY CORPORATION
 
                                                                                                   
____________________________________
                                                                                                   
G. Thomas Gamble,

Director and Vice Chairman Board of Directors
Tri-Valley Corporation
 
                                                                                                   
____________________________________
                                                                                                   
Henry Lowenstein,

Director
Chairman of Personnel and Compensation Committee
Board of Directors
Tri-Valley Corporation

 
 

--------------------------------------------------------------------------------

 

 
 
EXHIBIT 1
 
SUBSCRIPTION FORM
 
TO
 
EXERCISE WARRANT
 
FOR
 
COMMON SHARES OF TRI-VALLEY CORPORATION
 
To: TRI-VALLEY CORPORATION:
 
The undersigned, the holder of the attached Warrant, hereby irrevocably elects
to exercise the purchase right represented by that Warrant for, and to purchase
under that Warrant, an aggregate of shares of the Common Stock of
 
Tri-Valley Corporation, a Delaware corporation, and herewith makes payment of
($ ) for those shares, and requests that the certificates for those shares:
 
Be issued in the name
of   ____________________________________________                                                                                                                    
 
Be delivered
to  ___________________________________________________                                                                                                                     
 
Whose address is  _________________________________________________ 
                                                                                                                      
 
Dated: ________________                                              
__________________________________________________
 
[Signature of Holder]

TRI-VALLEY CORPORATION
WARRANT NO.   
 
 

--------------------------------------------------------------------------------