Texas South Energy, Inc. 8-K


 


Exhibit 10.2


Employment Agreement

(Michael
J. Mayell)


This Employment Agreement
(“Agreement”) is entered into effective as of January 4, 2017 (the “Effective Date”), by and between Texas
South Energy, Inc., a Nevada corporation (the “Company”), and Michael J. Mayell (“Employee”).


WHEREAS, the Company
wishes to employ Employee and Employee wishes to be employed by the Company; and


WHEREAS, the Company
and Employee desire to enter into an agreement reflecting the terms of the employment relationship, including the termination thereof;


NOW, THEREFORE, in
consideration of the mutual covenants, representations, warranties, and agreements contained herein, and for other valuable consideration,
the receipt and adequacy of which are hereby acknowledged, the parties agree as follows:


1.       


Employment.
The Company hereby employs Employee, and Employee will hereby be employed by the Company, on the terms and conditions set forth
in this Agreement.


2.       


Term of Employment.
Subject to the provisions for earlier termination provided in this Agreement, the term of this Agreement shall begin on January
4, 2017 and shall terminate on December 31, 2019. Upon December 31 of each calendar year, commencing on December 31, 2017, the
term shall be extended for one additional year (the initial Term, together with each such year extension shall be referred to as
the “Term”), provided that neither the Company nor Employee notify the other on or prior to 90 days before the applicable
December 31st date that either party does not intend to extend this Agreement.


3.       


Employee’s
Duties. During the Term, Employee shall serve as President and Chief Executive Officer with such duties and responsibilities
as may from time to time be assigned to him by the board of directors of the Company (the “Board”), provided
that such duties are consistent with the customary duties of such position. During the Term, Employee shall serve as a member of
the Board. Employee agrees to devote his skill and attention to the business and affairs of the Company and to use reasonable best
efforts to perform faithfully and efficiently his duties and responsibilities. Employee shall not, either directly or indirectly,
enter into any full-time employment with or for any person, firm, association or corporation other than the Company during the
Term; provided, however, that Employee shall not be prohibited from (i) engaging in charitable activities, educational mentoring,
and community affairs, (ii) serving, with the prior approval of the Company’s Board, on the boards of a reasonable number
of business entities, trade associations and charitable organizations, (iii)  managing his personal investments and affairs
related to another business or companies (either as a principal, partner, shareholder, or member of such business), including operating
the business of Sydson Energy, Inc. and Sydson Resources, L.P., or (iv) any other such activity approved by the Board; provided
that such activities do not either individually or in the aggregate materially interfere with the performance of his duties hereunder.
Employee shall at all times observe and comply with all lawful directions and instructions of the Board.




    	  



    	 



    

 


4.       


Compensation.
For services rendered by Employee under this Agreement, the Company shall pay to Employee a base salary of $420,000 per annum (“Base
Compensation”). The Base Compensation is payable in accordance with the Company’s customary payroll practices and
subject to customary withholdings, including share withholdings as described in Section 14(b) hereof. The amount of Base Compensation
shall be reviewed by the Board on an annual basis as of the close of each 12-month period of this Agreement and may be increased
as the Board may deem appropriate. In the event the Board (or, if established, the compensation committee thereof) deems it appropriate
to increase Employee’s annual base salary, said increased amount shall thereafter be the “Base Compensation.”
Employee’s Base Compensation, as increased from time to time, may not thereafter be decreased unless agreed to by Employee.
Nothing contained herein shall prevent the Board from paying additional compensation to Employee in the form of bonuses or otherwise
during the Term.


5.       


Bonus. The Board
in its sole discretion may grant the Employee a bonus (“Bonus”) payable in shares of restricted common stock
or cash, as determined.


6.       


Additional Benefits.
In addition to the Base Compensation provided for in Section 5 herein, Employee shall be entitled to the following:


(a)       


Expenses.
The Company shall, in accordance with any rules and policies that it may establish from time to time for executive officers, reimburse
Employee for business expenses reasonably incurred in the performance of his duties. It is understood that Employee is authorized
to incur reasonable business expenses for promoting the business of the Company, including reasonable expenditures for travel,
lodging, meals and client or business associate entertainment. Request for reimbursement for such expenses must be accompanied
by appropriate documentation, and shall be reimbursed in accordance with the Company’s rules and policies as in effect from
time to time and as set forth in Section 8(k)(iii) below.


(b)       


Vacation.
Employee shall be entitled to vacation time, as determined by the Board, of not less than 6 weeks per year. Employee shall not
be entitled to compensation for, or to carry forward, any unused vacation time. Vacation time shall mean personal time when Employee
is not available to the Company by telephone, email or other communication.


(c)       


General Benefits.
Employee shall be entitled to health insurance benefits, either pursuant to a plan or shall be reimbursed if Employee maintains
his own health insurance.




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(d)       


Corporate Change.
Upon the occurrence of a “Corporate Change” as hereinafter defined, Employee shall be considered as immediately and
totally vested in any and all similar equity or equity-based awards previously made to Employee by the Company or its subsidiaries
under a “Long Term Incentive Plan” or other grant duly adopted by the Board or the Compensation Committee thereof (such
options or similar awards are hereinafter collectively referred to as “Awards”); provided, however, with respect
to Awards that are deferred compensation subject to Code Section 409A, such accelerated vesting shall not cause an acceleration
of a payment or result in a change in form of payment that would violate Code Section 409A. For purposes of this Agreement,
a “Corporate Change “ shall occur if (i) the Company (A) shall not be the surviving entity in any
merger, consolidation or other reorganization (or survives only as a subsidiary of an entity other than a previously wholly-owned
subsidiary of the Company) or (B) is to be dissolved and liquidated, and as a result of or in connection with such transaction,
the persons who were directors of the Company before such transaction shall cease to constitute a majority of the Board, or (ii) any
person or entity, including a “group” as contemplated by Section 13(d)(3) of the Securities Exchange Act of 1934,
as amended, acquires or gains ownership or control (including, without limitation, power to vote) of 50% or more of the outstanding
shares of the Company’s voting stock (based upon voting power), and as a result of or in connection with such transaction,
the persons who were directors of the Company before such transaction shall cease to constitute a majority of the Board, or (iii) the
Company sells all or substantially all of the assets of the Company to any other person or entity (other than a wholly-owned subsidiary
of the Company) in a transaction that requires shareholder approval pursuant to applicable corporate law; or (iv) during a
period of two consecutive calendar years, individuals who at the beginning of such period constitute the Board, and any new director(s)
whose election by the Board or nomination for election by the Company’s stockholders was approved by a vote of at least a
majority of the directors then still in office, who either were directors at the beginning of the two (2) year period or whose
election or nomination for election was previously so approved, cease for any reason to constitute a majority of the Board; or
(v) any other event that a majority of the Board, in its sole discretion, shall determine constitutes a Corporate Change hereunder.


(e)       


Country Club and/or
Health Club Dues; Car Allowance. The Company shall pay for Employee’s country club and/or health club dues and provide
for an appropriate car allowance, as determined by the Board.


7.       


Confidential Information
and Non-Compete. Employee, during the Term, will have access to and become familiar with confidential information, secrets
and proprietary information concerning the business and affairs of the Company, its controlled subsidiaries and other controlled
entities, including technical information, resource valuations and reports, business strategies and pricing information, and other
confidential and/or proprietary information (collectively, “Confidential Information”). Confidential Information
shall not include any information that is or becomes generally available to the public other than as a result of Employee’s
improper or unauthorized disclosure of such information in violation of this Agreement. As to such Confidential Information, Employee
agrees as follows:


(a)       


During the Term or
at any time following the termination of this Agreement, Employee will not, directly or indirectly, without the prior written consent
of the Company (1) disclose or permit the disclosure of any such Confidential Information, or (2) use, reproduce or distribute,
or make or permit any use, reproduction or distribution of, directly or indirectly, any such Confidential Information, except for
any disclosure, use, reproduction or distribution that is required or appropriate in the course of his employment with the Company,
its controlled subsidiaries or other controlled entities.




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(b)       


If, during the Term
or at any time following the termination of this Agreement, Employee is requested or required (by oral question or request for
information or documents, in any legal proceeding, interrogatory, subpoena, civil investigative demand, or similar process) to
disclose any Confidential Information, Employee agrees to notify the Company immediately in writing of the request or requirement
so that the Company may seek an appropriate protection order or waive compliance with the provisions of this Section. If, in the
absence of a protective order or the receipt of a waiver under this Agreement, Employee is, on the advice of counsel, compelled
to disclose any Confidential Information to any tribunal or else stand liable for contempt, Employee may disclose such Confidential
Information to the tribunal; provided, however, that Employee shall use his commercially reasonable best efforts to obtain a court
order or other assurance that confidential treatment will be accorded to such Confidential Information.


(c)       


Upon termination
of employment of Employee, for whatever reason, Employee shall surrender to the Company or destroy any and all documents, manuals,
correspondence, reports, records and similar items then or thereafter coming into the possession of Employee which contain any
Confidential Information of the Company or its controlled subsidiaries or other controlled entities.


(d)       


Employee agrees that,
while serving as an executive officer and/or director of the Company (the “Restrictive Period”), he shall not, without
the consent of the Company, in the States of Texas and Louisiana and offshore in the Gulf of Mexico (the “Restricted Territories”),
engage in the oil and gas business (the “Restricted Business”); further, Employee agrees that during the Restrictive
Period he will not participate, directly or indirectly, in the management or operation of or become an investor in (other than
with respect to ownership of less than five percent (5%) of the outstanding shares of any class of equity securities listed on
a national securities exchange or quoted on the Nasdaq National Market or SmallCap System), any corporation, partnership entity,
limited liability company, venture or enterprise of whatever kind, which is engaged in the Restricted Business anywhere in the
Restricted Territories. Employee agrees on his behalf and on behalf of his affiliates that none of them will, directly or indirectly,
alone or with others, during the Restrictive Period, solicit or assist anyone else in the solicitation of, any employee of the
Company to terminate his or her employment with the Company, provided that such restriction shall not apply to any such employee
who responds to a general advertisement of employment with an affiliate of Employee. Notwithstanding the above, the Company acknowledges
and understands that (i) Sydson Energy, Inc. and Sydson Resources, LP are ongoing businesses owning as much as a 50% working interest
in certain prospects owned by the Company, and (ii) Sydson Energy, Inc. and Sydson Resources, LP will continue to conduct their
respective business provided that they agree not to directly compete with the Company in any of its projects and to offer the Company
a participation of up to 50% in any new projects that Employee, Sydson Energy, Inc. or Sydson Resources, LP may acquire or develop
in the Restricted Territory during the Restrictive Period in the event that the Company consents to Employee’s pursuit of
such opportunity. Sydson Resources, LP, Sydson Energy, Inc. and Employee reserve the right to participate on a minority, non-operating
working interest basis with the Company with respect to minority positions, as the Company may offer in its sole discretion.




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(e)       


Employee recognizes
and acknowledges that the obligations of Employee contained in Section 7 of this Agreement are reasonable and necessary to
protect the legitimate business interests of the Company, and that any breach or violation of any of the provisions of such Section
is likely to result in irreparable injury to the Company for which the Company would have no adequate remedy at law. Employee agrees
that if Employee shall breach or violate Section 7 of this Agreement, the Company shall be entitled, if it so elects, to institute
and prosecute proceedings at law or in equity, including, but not limited to, a proceeding seeking injunctive relief, to obtain
damages with respect to such breach or violation, to enforce the specific performance of Section 7 this Agreement by Employee,
or to enjoin Employee from engaging in any activity in violation of Section 7 of this Agreement. Employee agrees that effective
service of process may be made upon Employee under the notice provisions contained in Section 11 of this Agreement.


8.       


Termination.
This Agreement may be terminated prior to the end of the Term as set forth below:


(a)       


Resignation (other
than for Good Reason). Employee may resign, including by reason of retirement, his position at any time by providing written
notice of resignation to the Company in accordance with Section 11 hereof. In the event of such resignation, except in the
case of resignation for Good Reason (as defined below), this Agreement shall terminate and Employee shall not be entitled to further
compensation pursuant to this Agreement other than payment for (i) any unpaid Base Compensation or unpaid Bonus accrued hereunder
as of Employee’s employment termination date, and (ii) any unpaid reasonable business expenses incurred prior to Employee’s
employment termination date, subject to the Company’s expense reimbursement rules and policies as in effect from time to
time (the “Accrued Amounts”). Accrued Amounts, if any, shall be paid to Employee in accordance with the Company’s
customary payroll practices as in effect from time to time, but in no event later than fifteen (15) days following Employee’s
termination of employment.


(b)       


Death. If
Employee’s employment is terminated due to his death, this Agreement shall terminate and the Company shall have no obligations
to Employee or his estate, beneficiaries or legal representatives with respect to this Agreement other than payment of the Accrued
Amounts, if any. Accrued Amounts, if any, shall be paid to Employee in accordance with the Company’s customary payroll practices
as in effect from time to time but in no event later than 15 days following Employee’s termination of employment on account
of death. Notwithstanding the foregoing, in the event of his death, Employee shall be considered as immediately and totally vested
in any and all outstanding Awards previously granted to Employee by Company or its subsidiaries; provided, however, with respect
to Awards that are deferred compensation subject to Code Section 409A, such accelerated vesting shall not cause an acceleration
of a payment or result in a change in form of payment that would violate Code Section 409A.




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(c)       


Discharge.


(i)       


The Company may terminate
Employee’s employment in the event of Employee’s Misconduct or Disability (both as defined below) only upon written
notice thereof delivered to Employee in accordance with Section 8(f) and Section 11 hereof. In the event that Employee’s
employment is terminated during the Term by the Company for any reason other than his Misconduct or Disability (both as defined
below), then, except as provided in Section 8(j)(i) below, (A) the Company shall pay in lump sum in cash to Employee, within fifteen
(15) days following the expiration of the revocation period for the Release (as defined below), but in no event later than the
fifteenth (15th) day of the third month following the year in which the Date of Termination occurs, an amount equal to three
years of the then Base Compensation owed to Employee, and (B) for six months following the expiration of the revocation period
for the Release, the Company, at its cost, shall provide or arrange to provide Employee (and, as applicable, Employee’s dependents)
with accident and group health insurance benefits substantially similar to those which Employee (and Employee’s dependents)
were receiving immediately prior to Employee’s termination (if any); provided, however, the benefits otherwise
receivable by Employee pursuant to this clause (B) shall be reduced to the extent comparable benefits are actually received
by Employee (and/or Employee’s dependents) during such period under any other employer’s plan(s) or program(s), with
Employee being obligated to promptly disclose to the Company any such comparable benefits; and provided, further,
however, that for the avoidance of doubt, the COBRA continuation period shall run concurrently with the period set forth
in this Clause (B). In addition to the aforementioned compensation and benefits, Employee shall be considered as immediately and
totally vested in any and all Awards previously granted to Employee by Company or its subsidiaries; provided, however, with respect
to Awards that are deferred compensation subject to Code Section 409A, such accelerated vesting shall not cause an acceleration
of a payment or result in a change in form of payment that would violate Code Section 409A. With respect to benefits set forth
under Clause (B) above, all insurance premiums and/or benefits payments made by the Company with respect to such benefits
shall be made so as to be exempt from Section 409A of the Code and, for purposes thereof, and either each such payment shall
be treated as a separate payment under Section 409A of the Code, or such payments shall be treated as medical benefits under
a separation pay plan, as described under Treasury Regulation Section 1.409A-1(b)(9)(v)(B). To the extent any such payments are
not exempt from Section 409A of the Code (i.e., they constitute “nonqualified deferred compensation” subject to
Section 409A of the Code), such payments shall be paid by the Company according to a fixed schedule consisting of monthly
installment payments. If the Company’s pre-tax payment of the premiums for such benefits would cause the Executive to be
taxed on the Company’s actual cost of providing such accident and group health insurance benefits because such benefits are
“self-insured,” the Company will instead pay such premiums on an after-tax basis so the premium amounts are included
in the Employee’s taxable income. With respect to any such benefits that are taxable and not otherwise excluded from deferred
compensation under Code Section 409A, any amount reimbursable and paid in one tax year shall not affect the amount to be reimbursed
or paid in another tax year, all reimbursements shall be paid no later than the end of the Executive’s taxable year following
the tax year in which such expenses were incurred and the reimbursements under this Section cannot be substituted for any other
benefit. The Company’s obligation to make the payments and provide the benefits described in this Section 8(c)(i) is
conditioned expressly on Employee’s executing (and not revoking) a general release of any and all claims arising out of or
relating to Employee’s employment and termination of employment in a form reasonably satisfactory to the Company and the
Employee (the “Release”). If Employee fails to execute a Release within forty-five (45) days following
the later of (i) the Date of Termination or (ii) the date Employee actually receives an execution copy of such Release
(which shall be delivered to Employee no later than five (5) business days following Date of Termination), or if Employee
revokes such Release within seven (7) days following execution, Employee shall forfeit all payments and benefits described
hereunder.




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(ii)       


In the event Employee
is terminated because of Misconduct, the Company shall have no obligations pursuant to this Agreement after the Date of Termination
other than for payment of the Accrued Amounts, if any. As used herein, “Misconduct” means (A) the continued
failure by Employee to substantially perform his duties with the Company (other than any such failure resulting from Employee’s
incapacity due to physical or mental illness or any such actual or anticipated failure after the issuance of a Notice of Termination
by Employee for Good Reason), after a written demand for substantial performance is delivered to Employee by the Board, which demand
specifically identifies the manner in which the Board believes that Employee has not substantially performed his duties, and the
Employee fails to cure such failure within fifteen (15) days after receipt of such demand, (B) the engaging by Employee
in conduct which is demonstrably and materially injurious to the Company, monetarily or otherwise (other than such conduct resulting
from Employee’s incapacity due to physical or mental illness or any such actual or anticipated conduct after the issuance
of a Notice of Termination by Employee for Good Reason), (C) Employee’s conviction for the commission of a felony or
(D) action by Employee toward the Company involving dishonesty. Anything contained in this Agreement to the contrary notwithstanding,
the Board shall have the sole power and authority to terminate the employment of Employee on behalf of the Company.


(d)       


Disability.
If Employee shall have been absent from the full-time performance of Employee’s duties with the Company for ninety (90) consecutive
calendar days as a result of Employee’s incapacity due to physical or mental illness, Employee’s employment may be
terminated by the Company for “Disability” and Employee shall not be entitled to further compensation pursuant
to this Agreement, other than for payment of the Accrued Amounts, if any. Notwithstanding the foregoing, in the event that Employee’s
employment is terminated by the Company due to Disability, Employee shall be considered as immediately and totally vested in any
and all Awards previously granted to Employee by the Company or its subsidiaries; provided, however, with respect to Awards that
are deferred compensation subject to Code Section 409A, such accelerated vesting shall not cause an acceleration of a payment
or result in a change in form of payment that would violate Code Section 409A.


(e)       


Resignation for
Good Reason. Employee shall be entitled to terminate his employment for Good Reason as defined herein. If Employee terminates
his employment for Good Reason, he shall be entitled to the compensation and benefits provided in Section 8(c)(i) hereof in
accordance with the terms therein, including, without limitation, the requirement that Employee execute and not revoke the Release
contemplated in Section 8(c)(i). “Good Reason” shall mean the occurrence of any of the following circumstances
without Employee’s express written consent; provided, that, Employee has provided a Notice of Termination to
the Company within fifteen (15) days after the initial occurrence of any such circumstance of Employee’s intention to
terminate Employee’s employment for Good Reason, and the Company has failed to cure, to the extent curable, such circumstance
within fifteen (15) days of receipt of the Notice of Termination given in respect hereof:


(i)       


the material breach
of any of the Company’s obligations under this Agreement without Employee’s express written consent; or


(ii)       


the failure of the
Company to obtain a satisfactory agreement from any successor to assume and agree to perform this Agreement, as contemplated in
Section 13 hereof.




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In addition, the
occurrence of a Corporate Change, shall constitute “Good Reason” hereunder, but only if Employee terminates his employment
within ninety (90) days following the effective date of such Corporate Change.


(f)       


Notice of Termination.
Any purported termination of Employee’s employment by the Company under Sections 8(c)(ii) (Misconduct) or 8(d) (Disability),
or by Employee under Section 8(e) (Good Reason), shall be communicated by written Notice of Termination to the other party
hereto in accordance with Section 11 hereof. For purposes of this Agreement, a “Notice of Termination”
shall mean a notice which, if by the Company and is for Misconduct or Disability, shall set forth in reasonable detail the reason
for such termination of Employee’s employment, or in the case of resignation by Employee for Good Reason, said notice must
specify in reasonable detail the basis for such resignation. A Notice of Termination given by Employee pursuant to Section 8(e)
shall be effective even if given after the receipt by Employee of notice from the Board to consider terminating Employee for Misconduct.
Any purported termination for which a Notice of Termination is required which is not effected pursuant to this Section 8(f)
shall not be effective.


(g)       


Date of Termination.
“Date of Termination” shall mean the date specified in the Notice of Termination, provided that the Date of
Termination shall be at least fifteen (15) days following the date the Notice of Termination is given; provided, however,
that in the case of Employee’s resignation for Good Reason, Date of Termination shall mean the close of business on the last
day on which the Company may cure any circumstance alleged by Employee to give rise to a Good Reason termination. Notwithstanding
the foregoing, in the event Employee is terminated for Misconduct, the Company may refuse to allow Employee access to the Company’s
offices (other than to allow Employee to collect his personal belongings under the Company’s supervision) prior to the Date
of Termination. Notwithstanding anything herein to the contrary, for purposes of this Agreement, “termination of employment”
shall mean Employee’s “separation from service” from the Company and its “affiliates” as defined
in Code Section 409A and Final Treasury Regulations Section 1.409A-1(h), including the default presumptions thereof.
For purposes of this Agreement, “affiliate” shall mean (i) any person or entity that directly or indirectly
controls, is controlled by or is under common control with the Company and/or (ii) to the extent provided by the Board, any
person or entity in which the Company has a significant interest. The term “control” (including, with correlative
meaning, the terms “controlled by” and “under common control with”), as applied to any person or entity,
means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such
person or entity, whether through the ownership of voting or other securities, by contract or otherwise; provided, however,
with respect to any payment or benefit subject to Section 409A of the Code, the term “affiliate” shall
mean any member of the Company’s control group within the meaning of Final Treasury Regulations Section 1.409A-1(h)(3),
as such may be modified or amended from time to time, by applying the “at least 50 percent” provisions thereof.


(h)       


Mitigation.
Employee shall not be required to mitigate the amount of any payment provided for in this Section 8 by seeking other employment
or otherwise, nor (except as set forth in Section 8(c)(i)(B)) shall the amount of any payment provided for in this Agreement
be reduced by any compensation earned or benefits received by Employee as a result of employment by another employer, except that
any severance amounts payable to Employee pursuant to the Company’s severance plan or policy for employees in general shall
reduce the amount otherwise payable pursuant to Sections 8(c)(i) or 8(e).




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(i)       


Excess Parachute
Payments. Notwithstanding anything in this Agreement to the contrary, to the extent that any payment or benefit received or
to be received by Employee hereunder in connection with the termination of Employee’s employment would, as determined by
tax counsel selected by the Company, constitute an “Excess Parachute Payment” (as defined in Section 280G of the
Internal Revenue Code), the Company shall fully “gross-up” such payment so that Employee is in the same “net”
after-tax position he would have been if such payment and gross-up payments had not constituted Excess Parachute Payments, and
such “gross-up” payment shall be made no later than the end of Employee’s taxable year next following Employee’s
taxable year in which he remits the taxes to which such gross-up payment relates. The Company shall reimburse any costs and expenses
incurred by Employee, including without limitation, attorneys’ fees due to a tax audit or litigation in connection with any
excise tax (including penalties and interest or other excise taxes thereon) under Code Section 4999 or Code Section 280G
and any such reimbursement shall be made by the end of the Employee’s tax year following the tax year in which such taxes
that are subject to the audit or litigation are remitted to the taxing authority, or where as a result of such audit or litigation
no taxes are remitted, by the end of the Employee’s tax year following the tax year in which the audit is completed or there
is a final nonappealable settlement or other resolution of the litigation. The Employee’s right to payment or reimbursement
pursuant to this Section 8(i) shall not be subject to liquidation or exchange for any other benefit.


(j)       


Code Section 409A.


(i)       


Notwithstanding
any provision of this Section 8 to the contrary, if all or any portion of the benefits provided in this Section 8 is
determined to be “nonqualified deferred compensation” subject to Code Section 409A, and the Company determines
that Employee is a “specified employee” as defined in Section 409A(a)(2)(B)(i) of the Code and the regulations
and other guidance issued thereunder, then such benefits (or portion thereof) shall be accumulated and paid on the first day of
the seventh month following Employee’s termination of employment. For purposes of this Agreement, whether Employee is a “specified
employee” will be determined in accordance with the written procedures adopted by the Board.


(ii)       


This Agreement
is intended to comply with the provisions of Section 409A of the Code, and shall be interpreted and construed accordingly.
The Company shall have the discretion and authority to amend this Agreement at any time to satisfy any requirements of Code Section 409A
or guidance published thereunder; provided, however, any such amendment shall maintain the economic terms of this Agreement for
the Employee. However, in no event will the Company have any liability for any failure of the Agreement to satisfy Code Section 409A,
and the Company does not guarantee that the Agreement complies with Code Section 409A.




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(iii)       


The Company
shall promptly reimburse Employee for eligible expenses under this Agreement that Employee incurs and properly reports to the Company
in accordance with its expense reimbursement rules and policies. Notwithstanding anything herein to the contrary or otherwise,
all reimbursements shall be made so as to be exempt from Section 409A of the Code and to the extent not exempt: (A) the
amount of expenses eligible for reimbursement or in-kind benefits provided during any calendar year will not affect the amount
of expenses eligible for reimbursement or in-kind benefits provided in any other calendar year; (B) the reimbursements for
expenses for which Employee is entitled to be reimbursed shall be made on or before the last day of the calendar year following
the calendar year in which the applicable expense is incurred; and (C) the right to payment or reimbursement or in-kind benefits
hereunder may not be liquidated or exchanged for any other benefit.


9.       


Non-exclusivity
of Rights. Nothing in this Agreement shall prevent or limit Employee’s continuing or future participation in any benefit,
bonus, incentive, or other plan or program provided by the Company or any of its affiliated companies and for which Employee may
qualify, nor shall anything herein limit or otherwise adversely affect such rights as Employee may have under any Awards with the
Company or any of its affiliated companies.


10.       


Assignability.
The obligations of Employee hereunder are personal and may not be assigned or delegated by him or transferred in any manner whatsoever,
nor are such obligations subject to involuntary alienation, assignment or transfer. The Company shall have the right to assign
this Agreement and to delegate all rights, duties and obligations hereunder, either in whole or in part, to any parent, affiliate,
successor or subsidiary organization or company of the Company, so long as the obligations of the Company under this Agreement
remain the obligations of the Company.


11.       


Notice. For
the purpose of this Agreement, notices and all other communications provided for in this Agreement shall be in writing and shall
be deemed to have been duly given upon satisfaction of both (i) and (ii) set forth below: (i) via email to the email address on
the signature page hereof and (ii) via mail when delivered or mailed by United States registered mail, return receipt requested,
postage prepaid, addressed to the Company at its principal office address, directed to the attention of the Board with a copy to
the Secretary of the Company, and to Employee at Employee’s residence address on the records of the Company or to such other
address as either party may have furnished to the other in writing in accordance herewith except that notice of change of address
shall be effective only upon receipt.


12.       


Validity. The
invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall remain in full force and effect.




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13.       


Successors; Binding
Agreement.


(a)       


The Company will
require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all
of the business and/or assets of the Company to expressly assume and agree to perform this Agreement in the same manner and to
the same extent that the Company would be required to perform it if no such succession had taken place. Failure of the Company
to obtain such agreement prior to the effectiveness of any such succession shall be a breach of this Agreement and shall entitle
Employee to compensation from the Company in the same amount and on the same terms as he would be entitled to hereunder if he terminated
his employment for Good Reason, except that for purposes of implementing the foregoing, the date on which any such succession becomes
effective shall be deemed the Date of Termination. As used herein, the term “Company” shall include any successor to
its business and/or assets as aforesaid which executes and delivers the Agreement provided for in this Section 13 or which
otherwise becomes bound by all terms and provisions of this Agreement by operation of law.


(b)       


This Agreement and
all rights of Employee hereunder shall inure to the benefit of and be enforceable by Employee’s personal or legal representatives,
executors, administrators, successors, heirs, distributees, devisees and legatees. If Employee should die while any amounts would
be payable to him hereunder if he had continued to live, all such amounts, unless otherwise provided herein, shall be paid in accordance
with the terms of this Agreement to Employee’s devisee, legatee, or other designee or, if there be no such designee, to Employee’s
estate.


14.       


Withholding Taxes.


(a)       


Tax Withholding.
The Company shall have the power and the right to deduct or withhold from any benefits payable under this Agreement an amount sufficient
to satisfy federal, state, and local taxes, domestic or foreign, required by law or regulation to be withheld.


(b)       


Share Withholding.
With respect to tax withholding required upon the upon the lapse of restrictions on any restricted common stock, or upon any other
taxable event arising as a result of any stock awards pursuant to this Agreement, Employee may elect, to satisfy the withholding
requirement, in whole or in part, by having the Company withhold shares having a fair market value on the date the tax is to be
determined equal to the minimum statutory total tax which could be imposed on the transaction. All such elections shall be made
in writing, signed by the Employee, and shall be subject to any restrictions or limitations that the Company, in its discretion,
deems appropriate. Any fraction of a share required to satisfy such obligation shall be disregarded and the Employee shall instead
pay the amount due in cash.


15.       


No Restraints.
As an inducement to the Company to enter into this Agreement, Employee represents and warrants that he is not a party to any other
agreement or obligation for personal services, and that there exist no impediments or restraints, contractual or otherwise, on
Employee’s powers right or ability to enter into this Agreement and to perform his duties and obligations hereunder.


16.       


Miscellaneous.
No provision of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to
in writing and signed by Employee and such officer as may be specifically authorized by the Board. No waiver by either party hereto
at any time of any breach by the other party hereto of, or in compliance with, any condition or provision of this Agreement to
be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any
prior or subsequent time. This Agreement is an integration of the parties’ agreement; no agreement or representations, oral
or otherwise, express or implied, with respect to the subject matter hereof have been made by either party, except those which
are set forth expressly in this Agreement. THE VALIDITY, INTERPRETATION, CONSTRUCTION AND PERFORMANCE OF THIS AGREEMENT SHALL BE
GOVERNED BY THE LAWS OF THE STATE OF TEXAS.




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17.       


Counterparts.
This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original but all of which together
will constitute one and the same instrument.


18.       


Arbitration.
Either party may elect that any dispute or controversy arising under or in connection with this Agreement be settled by arbitration
in Houston, Texas in accordance with the Employment Rules of the American Arbitration Association then in effect. If the parties
cannot mutually agree on an arbitrator, then the arbitration shall be conducted by a three arbitrator panel, with each party selecting
one arbitrator and the two arbitrators so selected selecting a third arbitrator. The findings of the arbitrator(s) shall be final
and binding, and judgment may be entered thereon in any court having jurisdiction. The findings of the arbitrator(s) shall not
be subject to appeal to any court, except as otherwise provided by applicable law. The arbitrator(s) may, in his or her (or their)
own discretion, award legal fees and costs to the prevailing party.


[Signature Page Follows]




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IN WITNESS WHEREOF,
the parties have executed this Agreement as of the date set forth above.


TEXAS SOUTH ENERGY, INC.


	By:	     /s/     James Askew
	Name:	James M. Askew
	Office:   	Chief Executive Officer
	Email address: jaskew@asconnenergy.com     
	MICHAEL J. MAYELL
	     /s/     Michael Mayell
	Email address: mmayell@sydson.com


 



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