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Exhibit 10.2
 
THE SECURITIES OFFERED HEREBY HAVE NOT BEEN AND WILL NOT BE REGISTERED WITH THE
UNITED STATES SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF
ANY STATE PURSUANT TO AN EXEMPTION FROM REGISTRATION PROVIDED BY SECTION 3(b) OF
THE SECURITIES ACT OF 1933, AS AMENDED, AND THE RULES AND REGULATIONS
PROMULGATED THEREUNDER (THE "1933 ACT)

US $105,000.00

HYDROCARB ENERGY CORPORATION
8% CONVERTIBLE REDEEMABLE NOTE
DUE FEBRUARY 17, 2016

FOR VALUE RECEIVED, Hydrocarb Energy Corporation, (the “Company”) promises to
pay to the order of LG CAPITAL FUNDING, LLC and its authorized successors and
permitted assigns ("Holder"), the aggregate principal face amount of One Hundred
Five Thousand Dollars exactly (U.S. $105,000.00) on February 17, 2016 ("Maturity
Date") and to pay interest on the principal amount outstanding hereunder at the
rate of 8% per annum commencing on February 17, 2015.   The interest will be
paid to the Holder in whose name this Note is registered on the records of the
Company regarding registration and transfers of this Note.  The principal of,
and interest on, this Note are payable at 1218 Union Street, Suite #2, Brooklyn,
NY 11225 initially, and if changed, last appearing on the records of the Company
as designated in writing by the Holder hereof from time to time.  The Company
will pay each interest payment and the outstanding principal due upon this Note
before or on the Maturity Date, less any amounts required by law to be deducted
or withheld, to the Holder of this Note by check or wire transfer addressed to
such Holder at the last address appearing on the records of the Company.  The
forwarding of such check or wire transfer shall constitute a payment of
outstanding principal hereunder and shall satisfy and discharge the liability
for principal on this Note to the extent of the sum represented by such check or
wire transfer.  Interest shall be payable in Common Stock (as defined below)
pursuant to paragraph 4(b) herein.

This Note is subject to the following additional provisions:

1.            This Note is exchangeable for an equal aggregate principal amount
of Notes of different authorized denominations, as requested by the Holder
surrendering the same.  No service charge will be made for such registration or
transfer or exchange, except that Holder shall pay any tax or other governmental
charges payable in connection therewith.
 

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2.            The Company shall be entitled to withhold from all payments any
amounts required to be withheld under applicable laws.

3.            This Note may be transferred or exchanged only in compliance with
the Securities Act of 1933, as amended ("Act") and applicable state securities
laws.  Any attempted transfer to a non-qualifying party shall be treated by the
Company as void.  Prior to due presentment for transfer of this Note, the
Company and any agent of the Company may treat the person in whose name this
Note is duly registered on the Company's records as the owner hereof for all
other purposes, whether or not this Note be overdue, and neither the Company nor
any such agent shall be affected or bound by notice to the contrary.  Any Holder
of this Note electing to exercise the right of conversion set forth in Section
4(a) hereof, in addition to the requirements set forth in Section 4(a), and any
prospective transferee of this Note, also is required to give the Company
written confirmation that this Note is being converted ("Notice of Conversion")
in the form annexed hereto as Exhibit A. The date of receipt (including receipt
by telecopy) of such Notice of Conversion shall be the Conversion Date.

4.            (a)            The Holder of this Note is entitled, at its option,
at any time, and after full cash payment for the shares convertible
hereunder, to convert all or any amount of the principal face amount of this
Note then outstanding into shares of the Company's common stock (the "Common
Stock") at a price ("Conversion Price") for each share of Common Stock equal to
65% of the average of the two lowest closing bid prices of the Common Stock as
reported on the National Quotations Bureau OTCPK exchange which the Company’s
shares are traded or any exchange upon which the Common Stock may be traded in
the future ("Exchange"), for the twelve prior trading days including the day
upon which a Notice of Conversion is received by the Company (provided such
Notice of Conversion is delivered by fax or other electronic method of
communication to the Company after 4 P.M. Eastern Standard or Daylight Savings
Time if the Holder wishes to include the same day closing price). If the shares
have not been delivered within 3 business days, the Notice of Conversion may be
rescinded. Such conversion shall be effectuated by the Company delivering the
shares of Common Stock to the Holder within 3 business days of receipt by the
Company of the Notice of Conversion.  Once the Holder has received such shares
of Common Stock, the Holder shall surrender this Note to the Company, executed
by the Holder evidencing such Holder's intention to convert this Note or a
specified portion hereof, and accompanied by proper assignment hereof in blank. 
Accrued but unpaid interest shall be subject to conversion.  No fractional
shares or scrip representing fractions of shares will be issued on conversion,
but the number of shares issuable shall be rounded to the nearest whole share.
In the event the Company experiences a DTC “Chill” on its shares, the conversion
price shall be decreased to 55% instead of 65% while that “Chill” is in effect.
In no event shall the Holder be allowed to effect a conversion if such
conversion, along with all other shares of Company Common Stock beneficially
owned by the Holder and its affiliates would exceed 9.9% of the outstanding
shares of the Common Stock of the Company.

(b)         Interest on any unpaid principal balance of this Note shall be paid
at the rate of 8% per annum.  Interest shall be paid by the Company in Common
Stock ("Interest Shares").  The dollar amount converted into Interest Shares
shall be all or a portion of the accrued interest calculated on the unpaid
principal balance of this Note to the date of such notice.
 
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(c)         The Notes may be prepaid with the following penalties:
PREPAY DATE
PREPAY AMOUNT
< 30 days
115% of principal plus accrued interest
31- 60 days
121% of principal plus accrued interest
61-90 days
127% of principal plus accrued interest
91-120 days
133% of principal plus accrued interest
121-180 days
135% of principal plus accrued interest

This Note may not be prepaid after the 180th day. Such redemption must be closed
and funded within 3 days of giving notice of redemption of the right to redeem
shall be null and void

(d)         Upon (i) a transfer of all or substantially all of the assets of the
Company to any person in a single transaction or series of related transactions,
(ii) a reclassification, capital reorganization or other change or exchange of
outstanding shares of the Common Stock, or (iii) any consolidation or merger of
the Company with or into another person or entity in which the Company is not
the surviving entity (other than a merger which is effected solely to change the
jurisdiction of incorporation of the Company and results in a reclassification,
conversion or exchange of outstanding shares of Common Stock solely into shares
of Common Stock) (each of items (i), (ii) and (iii) being referred to as a "Sale
Event"), then, in each case, the Company shall, upon request of the Holder,
redeem this Note in cash for 150% of the principal amount, plus accrued but
unpaid interest through the date of redemption, or at the election of the
Holder, such Holder may convert the unpaid principal amount of this Note
(together with the amount of accrued but unpaid interest) into shares of Common
Stock immediately prior to such Sale Event at the Conversion Price.

(e)         In case of any Sale Event in connection with which this Note is not
redeemed or converted, the Company shall cause effective provision to be made so
that the Holder of this Note shall have the right thereafter, by converting this
Note, to purchase or convert this Note into the kind and number of shares of
stock or other securities or property (including cash) receivable upon such
reclassification, capital reorganization or other change, consolidation or
merger by a holder of the number of shares of Common Stock that could have been
purchased upon exercise of the Note and at the same Conversion Price, as defined
in this Note, immediately prior to such Sale Event. The foregoing provisions
shall similarly apply to successive Sale Events. If the consideration received
by the holders of Common Stock is other than cash, the value shall be as
determined by the Board of Directors of the Company or successor person or
entity acting in good faith.

5.            No provision of this Note shall alter or impair the obligation of
the Company, which is absolute and unconditional, to pay the principal of, and
interest on, this Note at the time, place, and rate, and in the form, herein
prescribed.

6.            The Company hereby expressly waives demand and presentment for
payment, notice of non-payment, protest, notice of protest, notice of dishonor,
notice of acceleration or intent to accelerate, and diligence in taking any
action to collect amounts called for hereunder and shall be directly and
primarily liable for the payment of all sums owing and to be owing hereto.
 
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7.            The Company agrees to pay all costs and expenses, including
reasonable attorneys' fees and expenses, which may be incurred by the Holder in
collecting any amount due under this Note.

8.            If one or more of the following described "Events of Default"
shall occur:

(a)          The Company shall default in the payment of principal or interest
on this Note or any other note issued to the Holder by the Company; or

(b)          Any of the representations or warranties made by the Company herein
or in any certificate or financial or other written statements heretofore or
hereafter furnished by or on behalf of the Company in connection with the
execution and delivery of this Note, or the Securities Purchase Agreement under
which this note was issued shall be false or misleading in any respect; or

(c)          The Company shall fail to perform or observe, in any respect, any
covenant, term, provision, condition, agreement or obligation of the Company
under this Note or any other note issued to the Holder, and not cure such
failure within 10 days of such event; or

(d)          The Company shall (1) become insolvent; (2) admit in writing its
inability to pay its debts generally as they mature; (3) make an assignment for
the benefit of creditors or commence proceedings for its dissolution; (4) apply
for or consent to the appointment of a trustee, liquidator or receiver for its
or for a substantial part of its property or business; (5) file a petition for 
bankruptcy relief, consent to the filing of such petition or have filed against
it an involuntary petition for bankruptcy relief, all under federal or state
laws as applicable; or

(e)          A trustee, liquidator or receiver shall be appointed for the
Company or for a substantial part of its property or business without its
consent and shall not be discharged within thirty (30) days after such
appointment; or

(f)            Any governmental agency or any court of competent jurisdiction at
the instance of any governmental agency shall assume custody or control of the
whole or any substantial portion of the properties or assets of the Company; or

(g)          One or more money judgments, writs or warrants of attachment, or
similar process, in excess of fifty thousand dollars ($50,000) in the aggregate,
shall be entered or filed against the Company or any of its properties or other
assets and shall remain unpaid, unvacated, unbonded or unstayed for a period of
fifteen (15) days or in any event later than five (5) days prior to the date of
any proposed sale thereunder; or

(h)          Defaulted on or breached any term of any other note of similar debt
instrument into which the Company has entered and failed to cure such default
within the appropriate grace period; or
 
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(i)            The Company shall have its Common Stock delisted from an exchange
(including the OTCBB exchange) or, if the Common Stock trades on an exchange,
then trading in the Common Stock shall be suspended for more than 10 consecutive
days;

(j)            Intentionally Deleted;

(k)          The Company shall not deliver to the Holder the Common Stock
pursuant to paragraph 4 herein without restrictive legend within 3 business days
of its receipt of a Notice of Conversion; or

(l)           The Company shall not replenish the reserve set forth in Section
12, within 3 business days of the request of the Holder.

(m)        The Company shall not be “current” in its filings with the Securities
and Exchange Commission; or

(n)         The Company shall lose the “bid” price for its stock in a market
(including the OTCPK marketplace or other exchange).

Then, or at any time thereafter, unless cured within 15 days (unless otherwise
set forth herein), and in each and every such case, unless such Event of Default
shall have been waived in writing by the Holder (which waiver shall not be
deemed to be a waiver of any subsequent default) at the option of the Holder and
in the Holder's sole discretion, the Holder may consider this Note immediately
due and payable, without presentment, demand, protest or (further) notice of any
kind (other than notice of acceleration), all of which are hereby expressly
waived, anything herein or in any note or other instruments contained to the
contrary notwithstanding, and the Holder may immediately, and without expiration
of any period of grace, enforce any and all of the Holder's rights and remedies
provided herein or any other rights or remedies afforded by law.  Upon an Event
of Default, interest shall accrue at a default interest rate of 24% per annum
or, if such rate is usurious or not permitted by current law, then at the
highest rate of interest permitted by law.  In the event of a breach of Section
8(k) the penalty shall be $250 per day the shares are not issued beginning on
the 4th day after the conversion notice was delivered to the Company.  This
penalty shall increase to $500 per day beginning on the 10th day.  The penalty
for a breach of Section 8(n) shall be an increase of the outstanding principal
amounts by 20%.  In case of a breach of Section 8(i), the outstanding principal
due under this Note shall increase by 50%.  If this Note is not paid at
maturity, the outstanding principal due under this Note shall increase by 10%.

If the Holder shall commence an action or proceeding to enforce any provisions
of this Note, including, without limitation, engaging an attorney, then if the
Holder prevails in such action, the Holder shall be reimbursed by the Company
for its attorneys’ fees and other costs and expenses incurred in the
investigation, preparation and prosecution of such action or proceeding.
 
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Make-Whole for Failure to Deliver Loss.  At the Holder’s election, if the
Company fails for any reason, except in circumstances beyond the control of the
Company through an act of god , to deliver to the Holder the conversion shares
by the by the 3rd business day following the delivery of a Notice of Conversion
to the Company and if the Holder incurs a Failure to Deliver Loss, then at any
time the Holder may provide the Company written notice indicating the amounts
payable to the Holder in respect of the Failure to Deliver Loss and the Company
must make the Holder whole as follows:
Failure to Deliver Loss = [(High trade price at any time on or after the day of
exercise) x (Number of conversion shares)]

The Company must pay the Failure to Deliver Loss by cash payment, and any such
cash payment must be made by the third business day from the time of the
Holder’s written notice to the Company.

9.            In case any provision of this Note is held by a court of competent
jurisdiction to be excessive in scope or otherwise invalid or unenforceable,
such provision shall be adjusted rather than voided, if possible, so that it is
enforceable to the maximum extent possible, and the validity and enforceability
of the remaining provisions of this Note will not in any way be affected or
impaired thereby.

10.         Neither this Note nor any term hereof may be amended, waived,
discharged or terminated other than by a written instrument signed by the
Company and the Holder.

11.          The Company represents that it is not a “shell” issuer and has
never been a “shell” issuer or that if it previously has been a “shell” issuer
that at least 12 months have passed since the Company has reported form 10 type
information indicating it is no longer a “shell issuer.  Further. The Company
will instruct its counsel to either (i) write a 144- 3(a)(9) opinion to allow
for salability of the conversion shares or (ii) accept such opinion from
Holder’s counsel.
 
12.         The Company shall issue irrevocable transfer agent instructions
reserving 583,333 shares of its Common Stock for conversions under this Note
(the “Share Reserve”). Upon full conversion of this Note, any shares remaining
in the Share Reserve shall be cancelled. The Company shall pay all costs
associated with issuing and delivering the shares. The company should at all
times reserve a minimum of four times the amount of shares required if the note
would be fully converted. The holder may reasonably request such increases from
time to time.

13.          The Company will give the Holder direct notice of any corporate
actions including but not limited to name changes, stock splits,
recapitalizations etc.  This notice shall be given to the Holder as soon as
possible under law.

14.          This Note shall be governed by and construed in accordance with the
laws of New York applicable to contracts made and wholly to be performed within
the State of New York and shall be binding upon the successors and assigns of
each party hereto.  The Holder and the Company hereby mutually waive trial by
jury and consent to exclusive jurisdiction and venue in the courts of the State
of New York.  This Agreement may be executed in counterparts, and the facsimile
transmission of an executed counterpart to this Agreement shall be effective as
an original.
 
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IN WITNESS WHEREOF, the Company has caused this Note to be duly executed by an
officer thereunto duly authorized.
 
Dated:
 2/17/2015                    
HYDROCARB ENERGY CORPORATION
               
By:
/s/ Kent Patrick Watts                
Title:
Kent Patrick Watts  

 
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EXHIBIT A

NOTICE OF CONVERSION

 (To be Executed by the Registered Holder in order to Convert the Note)

The undersigned hereby irrevocably elects to convert $___________ of the above
Note into _________ Shares of Common Stock of Hydrocarb Energy Corporation, 
(“Shares”) according to the conditions set forth in such Note, as of the date
written below.

If Shares are to be issued in the name of a person other than the undersigned,
the undersigned will pay all transfer and other taxes and charges payable with
respect thereto.
 
Date of Conversion:
  
 
Applicable Conversion Price:
  
 
Signature:
  
 
 
[Print Name of Holder and Title of Signer]
  Address:         

 
SSN or EIN:
 
 

Shares are to be registered in the following name:
  

Name:
  
  
Address:
  
  
Tel:
  
 
Fax:
  
 
SSN or EIN:
  
 

Shares are to be sent or delivered to the following account:
 
Account Name:
  
 
Address:
  
 

 
 
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