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Exhibit 10.1
 
 
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EXECUTIVE AGREEMENT

THIS AGREEMENT (the “Agreement”) is made effective retroactively as of January
20, 2015, by and between Hydrocarb Energy Corporation (HECC), a Nevada
corporation with corporate office located at 800 Gessner, Suite 375, Houston,
Texas 77024 (the “Company”), and Kent P. Watts, a Texas resident (the
“Executive”), together referred to hereafter as the “Parties”.

In consideration of the mutual covenants contained herein and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:

1.        Employment

When effective, this agreement replaces any other prior agreements. The Company
shall employ Executive, and Executive hereby accepts employment with the
Company, upon the terms and conditions set forth in the Agreement for the period
beginning on the effective date and ending on the Termination Date, as defined
in Section 4 hereof (the "Employment Period").

2.        Position and Duties

During the Employment Period, Executive shall serve, as appointed by the board
of directors, as the Company’s Executive Chairman and Chief Executive Officer,
for which duties are generally prescribed in the Company’s bylaws, and shall be
responsible for such duties normally performed by persons serving in such
position as well as any other duties as may be reasonably prescribed or
delegated by the Board of Directors of the Company (the “Board”).

As defined by the bylaws of the Company and as Executive Chairman and Chief
Executive Officer, Executive is responsible for developing and building the
Company’s business plan towards enhancement of overall shareholder value. Such a
comprehensive business plan includes the company mission, objectives to achieve
the mission, strategies to achieve the objectives and entail subset plans for
management, operations, and financial plans. Executive shall work closely with
all top level executives of the Company to establish, implement, monitor, and
modify the company’s business plan.

The Company’s stock market development plan is a subset of the financial plan
and is an integral priority for Executive’s focus along with raising capital as
necessary to support the business plan of the company. Additionally, as
Executive Chairman, Executive shall establish agendas and chair all meetings of
the board of directors.
 

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3.        Base Salary, Bonus and Benefits

At Executive’s option, as must first be approved by the board of directors, he
may accept any or all of his future compensation under this Agreement in cash,
the restricted unregistered stock of the Company at market value, or any
preferred stock made available by the Company at face value. Election of
Executive to take common stock shall be calculated by using the closing price of
the Company’s common stock on the day that the compensation is deemed owed to
Executive. Compensation shall be as follows:

(a) Executive’s initial base salary shall be $250,000 annually.

At any time that the company becomes listed on either the NYSE MKT or NASDAQ
stock exchanges, Executives annual base salary shall be increased by $75,000.

(b) As measured from the beginning of the Company’s fiscal year beginning August
1, 2014 until July 31, 2015, once the company has raised a minimum of $9,400,000
in financing (including Shadow Tree/Quintium), Executive shall earn a $200,000
bonus that shall accrue but only be paid upon verification of counsel that
payment of such bonus does not breach any loan covenants that the company may
have regarding cash payments. For each subsequent fiscal year of this Agreement,
on an annual basis, Executive will earn a 2% bonus of the first ten million
raised in debt or equity financing and 1% for funds raised between ten and
twenty five million and ½% for funds raised over twenty five million.

(c) The Company shall reimburse Executive for all reasonable expenses incurred
in the course of performing his duties under the Agreement which are consistent
with the Company's policies in effect from time to time for its employees with
respect to travel, entertainment and other business expenses, subject to the
Company's requirements for its employees with respect to reporting and
documentation of such expenses.

(d) Executive shall be entitled to four (4) weeks of vacation per year, and up
to three (3) weeks of sick leave, during which times his compensation shall be
paid in full. Any un-used vacation time shall be forfeited and not carried over
to future period.

(e) Executive shall be eligible to participate, to the extent Executive meets
all eligibility requirements of general application, in each of the employee
benefit plans maintained by Employer from time to time in which employees of
Employer generally are eligible to participate, including by way of
illustration, any 401K Plan, and group medical, dental, life and AD&D plans.
Executive shall also be entitled to participate in the award of any stock
options, warrants, or other forms of non-cash compensation that may be offered
to qualified employees by the Board in its discretion.

(f) In the event of a "Change of Control" (see definition below), should
Executive cease to be an Employee of the Company or its successor, by reason of
(i) involuntary termination by the Company or its successor other than for Cause
any time within one year of a Change of Control, or (ii) voluntary termination
by Executive for any reason within 90 days of such Change of Control event, as a
severance payment the Company shall continue to pay Executive his then current
salary and insurance benefits for a one (1) year period beginning on the
Termination Date, or the remaining term of this Agreement, whichever is shorter.

 

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4.        Term and Termination

(a)    The Agreement shall be effective on the date first above written and
continue through July 31, 2017. The Agreement may be terminated at any time by:
(i) Executive's resignation with or without Good Reason (as defined below), (ii)
Executive's death or Disability (as defined below), or (iii) Company with or
without Cause (as defined below).

(b)    If Executive's employment with the Company is terminated by the Company
for Cause, or by Executive without Good Reason, Executive shall not be entitled
to a severance payment and will not receive his Base Salary beyond the
Termination Date.

(ii)    If Executive's employment with the Company is terminated by the Company
for any reason other than for Cause ("without Cause"), or if Executive
terminates his employment for Good Reason, Executive shall be entitled to
receive as a severance payment, his then current Base Salary and insurance
benefits for the lesser of the remaining term of this contract or a period of
twelve (12) months following the termination date.

(c)    For purposes of the Agreement, the following terms shall have the
meanings as set forth below:

"Cause" shall mean (i) the conviction of Executive for a felony, a crime
involving moral turpitude, or a plea of guilty or no lo contendre by Executive
to a charge of any such crime, (ii) Executive's theft or embezzlement, or
attempted theft or embezzlement, of money or property of the Company, (iii)
Executive's perpetration or attempted perpetration of fraud, or Executive's
participation in a fraud or an attempted fraud on the Company, or Executive's
unauthorized appropriation or attempted appropriation of any tangible or
intangible material asset or property of the Company, (iv) Executive's
dishonesty with respect to any matter concerning the Company, or (v) Executive's
substantial and repeated failure to perform his duties hereunder in accordance
with the reasonable directions of the Board.

"Change of Control" shall mean (i) the acquisition by any individual, entity or
group of beneficial ownership of 50% or more of the then issued and outstanding
stock of the Company; or (ii) consummation of a reorganization, merger or
consolidation or sale or other disposition of all or substantially all of the
assets of the Company (a "business combination"), unless, following such
business combination, (A) all or substantially all of the individuals and
entities who were the beneficial owners of the common stock immediately prior to
such business combination beneficially own, directly or indirectly, 50% or more
of the common stock or membership interests, as the case may be, of the entity
resulting from such business combination; or (iii) approval by the shareholders
of the Company of a complete liquidation or dissolution of the Company.
 

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"Disability" shall mean any illness, disability or incapacity of such a
character as to render Executive unable to perform Executive's primary duties
hereunder for a period of ninety (90) consecutive days, as determined in the
discretion of the Board.

"Good Reason" shall mean (i) material breach by the Company of its obligations
under the Agreement, including the failure of the Company to pay Executive the
Base Salary or any other payment or benefit due Executive hereunder; (ii) any
action of the Company that results in a material diminishment in Executive's
functions or responsibilities, or any attempt by the Company to cause Executive
to relocate as a requirement of his continued employment; (iii) any reduction in
Executive's Base Salary; or (iv) any material reduction of benefits unless the
same reduction is applicable generally to all employees of the Company.

(e)    A termination of the Agreement pursuant to its terms on the Expiration
Date or any subsequent anniversary date, shall not in and of itself constitute a
termination of Executive's employment with the Company. At such time, unless the
Company or the Executive terminates Executive's employment with the Company,
Executive shall become an employee at-will of the Company.

5.        Severability
 
Whenever possible, each provision of the Agreement shall be interpreted in such
manner as to be effective and valid under applicable law, but if any provision
of the Agreement is held to be invalid, illegal or unenforceable in any respect
under any applicable law or rule in any jurisdiction, such invalidity,
illegality or unenforceability shall not affect any other provision or any other
jurisdiction, but the Agreement shall be reformed, construed and enforced in
such jurisdiction as if such invalid, illegal or unenforceable provision had
never been contained herein.

6.        Complete Agreement

The Agreement embodies with respect to the subject matter hereof the complete
agreement and understanding among the parties and supersedes and preempts with
respect to the subject matter hereof any prior understandings, agreements or
representations by or among the parties, written or oral, which may have related
to the subject matter hereof in any way.

7.        Successors and Assigns

The Agreement is intended to bind and inure to the benefit of and be enforceable
by Executive, the Company and their respective heirs, successors and assigns,
except that Executive may not assign his rights or delegate his obligations
hereunder without the prior written consent of the Company.

8.        Choice of Law

All issues and questions concerning the construction, validity, enforcement and
interpretation of the Agreement shall be governed by, and construed in
accordance with, the laws of the State of Texas, without giving effect to any
choice of law or conflict of law rules or provisions (whethis of the State of
Texas or any other jurisdiction) that would cause the application of the laws of
any jurisdiction other than the State of Texas.
 

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9.        Arbitration

In the event of a dispute, the parties agree that such dispute shall be
submitted to binding arbitration in Texas, U.S.A., pursuant to the rules of
arbitration of the American Arbitration Association (the "Rules"). Except as set
forth in the Section, the arbitration shall proceed pursuant to the Rules in
effect on the date such arbitration is commenced.In the event of arbitration,
the parties shall attempt to reach agreement on the selection of a single
impartial arbitrator. If the parties are unable to agree on a single impartial
arbitrator, each party shall select one impartial arbitrator and those
arbitrators shall select a single impartial arbitrator who shall thereafter
conduct the arbitration as the sole arbitrator. The arbitrator so selected shall
be competent in the legal and technical aspects of the subject matter of the
Agreement. The arbitrator shall not limit, expand or modify the terms of the
Agreement nor award damages in excess of compensatory damages. Any party to the
arbitration may seek conservatory or interim measures in accordance with the
Rules. The prevailing party in the arbitration shall be awarded all attorney
fees and costs incurred in the arbitration. The final award shall specify the
factual and legal bases for the award, if any. Any final award or decision
issued as a result of such arbitration shall be final, binding and conclusive
between the parties, and shall be enforceable by any court having jurisdiction
over the party against whom enforcement is sought. Each party to the Agreement
hereby consents to non-exclusive jurisdiction and venue of the State of Texas,
for any court proceedings to enforce any such final award or decision. Except
where clearly prevented by the subject matter of the dispute, each party to the
Agreement shall continue performing its respective obligations under the
Agreement while the dispute is being resolved.

10.     Amendment and Waiver

The provisions of the Agreement may be amended or waived only with the prior
written consent of the Company and Executive, and no course of conduct or
failure or delay in enforcing the provisions of the Agreement shall affect the
validity, binding effect or enforceability of the Agreement.

IN WITNESS WHISEOF, the parties hereto have executed the Employment Agreement as
of the date first written above, approval date March 9, 2015.

 
EXECUTIVE:
         
/s/ Kent P. Watts                                    
   
Kent P. Watts
         
COMPANY:
         
Hydrocarb Energy Corporation
               
By: /s/ Charles F. Dommer                     
   
Charles F. Dommer
   
President and Chief Operating Officer
 

 

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