Exhibit
10.1





EMPLOYMENT
AGREEMENT




THIS
EMPLOYMENT AGREEMENT (the “Agreement”) is made
as of ___________, 2009, between Mass Hysteria Entertainment Company, Inc., a
Nevada corporation (the “Corporation”), and
Daniel Grodnik (the “Employee”).




Introduction




The
Corporation wishes to retain the services of the Employee and the Employee
wishes to be employed by the Corporation, on the terms and conditions set forth
in this Agreement.




NOW,
THEREFORE, for good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties agree as follows:




1.  Employment.  The
Employee and the Corporation hereby agree upon the terms and conditions of
employment  hereinafter set forth.




2.  Term.  The
term of this Agreement shall commence on the date hereof and continue until
____________, 2014 (the “Term”), unless sooner
terminated as herein provided including termination under any of the subsections
described in paragraph 9, 10 or 11.




3.  Duties.  The
Employee shall serve as Chief Executive Officer of the Corporation, in which
capacities he shall be responsible for directing the operations and strategy of
the Corporation and its subsidiaries and such other duties consistent with such
position as the Board of Directors of the Corporation (the “Board”) shall
determine from time to time.  Without limiting the foregoing, the
Employee shall consult with the Board with respect to determining the
Corporation’s business strategies.  The Employee shall receive no
additional compensation for any services rendered as a Director in the event he
is simultaneously employed by the Corporation and serving as a director of the
Corporation. Employee will also serve as temporary Chief Financial Officer until
such officer is located and engaged.




4.  Compensation.




(a)  Salary.  For
all services rendered by the Employee pursuant to this Agreement, during the
term of this Agreement the Corporation shall pay the Employee a salary at the
annual rate of $360,000,  (which amount shall be automatically
increased by ten percent (10%) when and if the
Corporation’s  revenues, based on the trailing twelve months on a pro
forma basis, exceed $1,000,000)  during the term of this
Agreement.  The Board in its sole discretion may further increase said
salary from time to time.  Payments hereunder shall be made at the
same frequency as payments made to other employees of the
Corporation.  In exercising such discretion, the Board of Directors
shall, not less than once each year, assess the Employee’s performance relative
to performance criteria discussed by the Board with the Employee and adopted by
the Board at the beginning of such year.




(b)  Bonus.   At
any time, at the sole discretion of the Board, the Corporation may grant to the
Employee a bonus in such amount and in such form, as it deems
appropriate.  In addition, the Employee will earn a bonus as
follows:  two percent (2%) of the gross worldwide theatrical box
office sales (as reported by Daily Variety) on each theatrically released Mass
Hysteria motion picture.




(c)  Equity.   The
Employee shall be granted an employee stock option to purchase common stock in
an amount equal to 20,000,000 shares at an exercise price of $0.07 per
share.  The options shall vest equally over a 5 year period (4,000,000
shares per year).  Each series of options  shall survive for
24 months following vesting, and may be exercised all or in part by employee,
and each shall include a “cashless feature.”.




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(d)  Addition
Allowance.  The Employee shall be also entitled to a payment of
seventy five thousand dollars ($75,000) in the event that the Corporation
produces any film during the Term with a budget of greater than $2,000,000 and
less than $5,000,000 and shall be entitled to a payment of one hundred thousand
dollars ($100,000) in the event that the Corporation produces any film during
the Term with a budget of greater than $5,000,000.  Such allowance
shall be paid no later than three (3) months following the release of the
branded Mass Hysteria movie.  This additional allowance is only paid
on theatrically released branded Mass Hysteria movies.




5.  Full Time; Best
Efforts.  During the term of this Agreement, the Employee shall
use his best efforts to promote the interests of the Corporation and shall
devote his full time and efforts to its business and affairs.  The
Employee shall not engage in any other activity that could reasonably be
expected to interfere with the performance of his duties, responsibilities and
services hereunder.




6.  Expenses.  The
Employee is authorized to incur reasonable expenses for promoting the business
of the Corporation, including expenses for entertainment, travel and similar
items.  The Corporation will reimburse the Employee for appropriate
expenses upon the Employee’s presentation of an itemized account of such
expenditures.  The Corporation shall at all times retain access to the
records maintained by Employee relative to reimbursable expenses.




7.  Benefits.  During
the Term of this Agreement, the Employee shall be entitled to, and the
Corporation shall provide the following benefits in addition to those specified
in Section 4:




(a)  Vacation.  The
Employee shall be entitled to four (4) weeks paid vacation in each twelve (12)
month period during the Term. Vacation may be taken at such time(s) as the
Employee may determine provided that such vacation does not interfere with the
Corporation’s business operations. The Employee must use his vacation in any
event by December 31 of the year next following the year in which the vacation
accrues or such vacation time shall expire.  The Employee shall not be
entitled to compensation for unused vacation except that, upon termination of
his employment, the Corporation shall pay to the Employee for all of his
accrued, unexpired vacation time.  The Employee shall have his
vacations paid for, provided that such vacation not exceed $15,000.




(b)  Health
Insurance.  At any time, the Corporation may,  at the
sole discretion of the Board, pay for the Employee’s health and medical
insurance consistent with those provided to other key employees of the
Corporation through the Term of this Agreement.




(c)  Life
Insurance.  At any time  during the Term of this
Agreement, the Corporation may,  at the sole discretion of the Board,
pay for the Employee’s personal life insurance coverage up to a maximum amount
of $2,500,000 per year.




(d)  D&O Liability
Insurance.  At any time  during the Term of this
Agreement, the Corporation may,  at the sole discretion of the
Board,  maintain in effect directors’ and officers’ liability
insurance covering the Employee, with coverage reasonably satisfactory to the
Employee.




(e)  Car
Allowance.   During the second year to the fifth year of
this Agreement, the Corporation will provide to the Employee a car allowance of
$1,000 each month during the Term of this Agreement and shall pay such car
allowance not less frequently than monthly. Except as provided in Section 6
above, the Employee shall be responsible for insurance, maintenance, gas and all
other items of operation for the car.




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(f)  Pension and Retirement
Benefits.  At any time during the Term of this Agreement, the
Corporation may,  and at the sole discretion of the Board, contribute
an amount equal to ten percent (10%) of the Employee’s annual salary to a
qualified retirement account either set up by the Corporation or by the
Employee.




(g)  Other Benefits. The
Corporation shall provide to the Employee the same benefits it makes available
to other key employees of the Corporation.




8.  Disclosure of
Information.  The Employee recognizes and acknowledges that the
Corporation’s trade secrets and all other confidential and proprietary
information of a business, financial or other nature, including without
limitation, lists of the Corporation’s actual and prospective customers, as they
exist from time to time (collectively, the “Confidential
Information”), are a valuable and unique asset of the Corporation and
therefore agrees that he will not, either during or after the term of his
employment, disclose any Confidential Information concerning the Corporation
and/or its subsidiaries, to any person, firm, corporation, association or other
entity, for any reason whatsoever, unless previously authorized to do so by the
Corporation’s Board.  It is understood that the term “Confidential
Information” shall not include any information that has entered or enters the
public domain through no fault of the Employee.  The Employee shall
not make any use whatsoever, directly or indirectly, of the Confidential
Information, except as required in connection with the performance of his duties
for the Corporation.  For the purpose of enforcing this provision, the
Corporation may resort to any remedy available to it under the law.




9.  Disability and
Death.  In the event that Employee is absent from employment by
reason of illness or other incapacity by which Employee is unable to perform the
essential functions of his position for more than six (6) consecutive months
during the term of this Agreement or if the Employee dies during the term of
this Agreement , the Corporation may  terminate this Agreement
and  the Corporation shall pay to the Employee’s estate in a lump sum
within 90 days  an amount equal to 100% of the Employee’s annual
salary rate then payable to the Employee pursuant to paragraph 4(a) of this
Agreement.




10.  Termination.  The
Corporation shall have the right, on written notice to the Employee, by action
of its Board to terminate the Employee’s employment immediately at any time for
cause .  For purposes of this Agreement, “cause” shall mean
(i) conviction
of a crime involving dishonesty or (ii) willfully
engaging in conduct materially injurious to the Corporation or (iii) the material
breach of this Agreement or any other agreement between the Employee and the
Corporation, which material breach has not been cured by Employee within ten
days after Employee’s receipt of written notice from the Corporation of such
material breach.  Employee shall not be required to mitigate the
amount of any payment provided for in this paragraph 10 by seeking other
employment or otherwise, nor shall the amount of any payment or benefit provided
for in this paragraph 12 be reduced by any compensation earned by Employee as
the result of employment by another employer, by retirement benefits, by offset
against any amount claimed to be owed by Employee to the Corporation or
otherwise.  In the event of termination of this Agreement for cause
(including death or disability), the Corporation shall have no further
obligation to make any payments or provide any benefits hereunder, with the
exception of any Medical coverage that was provided during the Employee’s
employment.  Such Medical coverage shall continue for such period of
time equal to the time the Employee worked at the Corporation, but in no event
shall the Medical coverage be discontinued less than one-year after the
termination of said Employee.




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11.  Change in
Control.




(a)           In
the event that (i) the duties and
responsibilities of Employee are at any time significantly changed (by
diminution, increase or other significant alteration) from the duties and
responsibilities presently exercised by him or (ii) there is a
“Change in Control” (as hereinafter defined) of the Corporation, Employee may at
his election, at any time within one year after either of such events, terminate
this Agreement with 60 days prior written notice and Employee shall be entitled
to the following compensation, in lieu of the other compensation and bonuses
provided herein:




(i)           The
Corporation shall pay as severance pay to Employee, no later than the thirtieth
day following the effective date of termination, a lump-sum payment equal to
Five Million Dollars ($5,000,000).




(ii)           All
the shares of common stock of the Corporation issued hereunder shall become
freely-traded after a 90-day period from the effective date of the Change of
Control, in accordance with Rule 144, promulgated under the Securities Act of
1933, as amended. The Company will accept reasonable legal opinion from any law
firm with respect to the removal of the restricted legend of such
shares.




(iii)           For
an eighteen (18) month period after such termination, the Corporation shall
arrange to provide the Employee with life, disability, and accident and group
health insurance benefits substantially similar to those that Employee was
receiving immediately prior to the termination




(b)           Employee
shall not be required to mitigate the amount of any payment provided for in this
paragraph 11 by seeking other employment or otherwise.




(c)           For
purposes of this Agreement, a “Change in Control”
shall be deemed to have occurred if (i) any “person” or group
of  “persons” (as the term “person” is used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934) (other than persons (A) holding
equity interests or (B) with whom the Corporation has entered into definitive
agreements regarding the purchase of equity interests, as of the first day of
the term date of this Agreement and their affiliates, and other than the
Employee) becomes the beneficial owner, directly or indirectly, of securities of
the Corporation representing 50% or more of the combined voting power of the
then outstanding securities of the Corporation; (ii) during any period of
two consecutive years, individuals who at the beginning of such period
constitute the Board of Directors, and any new director whose election or
nomination was approved by the directors in office who either were directors at
the beginning of the period or whose election or nomination was previously so
approved, cease for any reason to constitute at least a majority thereof; or
(iii) the stockholders of the Corporation approve a merger or consolidation of
the Corporation with any other entity, other than a merger or
consolidation which would result in the voting securities of the Corporation
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity) more than 50% of the combined voting power of the voting
securities of the Corporation or such surviving entity outstanding immediately
after such merger or consolidation.




12.  Enforceability,
etc.  This Agreement shall be interpreted in such a manner as
to be effective and valid under applicable law, but if any provision hereof
shall be prohibited or invalid under any such law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating or nullifying the remainder of such provision or any other
provisions of this Agreement.  If any one or more of the provisions
contained in this Agreement shall for any reason be held to be excessively broad
as to duration, geographical scope, activity or subject, such provisions shall
be construed by limiting and reducing it so as to be enforceable to the maximum
extent permitted by applicable law.




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13.  Notices.  Any
notice or other communication given pursuant to this Agreement shall be in
writing and shall be personally delivered, sent by overnight courier or express
mail, or mailed by first class certified or registered mail, postage prepaid,
return receipt requested to the parties at their respective addresses set forth
on the signature page hereof, or to such other address as the parties shall have
designated by notice to the other parties.




14.  Waiver.  The
waiver by either party of a breach of any provision of this Agreement by the
other shall not operate or be construed as a waiver of any subsequent
breach.




15.  Successors and
Assigns.  This Agreement shall inure to the benefit of and be
binding upon the Corporation, its successors and assigns, and the Employee, his
heirs and legal representatives.




16.  Entire
Agreement.  This Agreement constitutes the entire agreement
between the parties with respect to the subject matter hereof.  It may
be changed only by an agreement in writing signed by the party against whom
enforcement of any waiver, change, modification, extension or discharge is
sought.  This Agreement shall be construed in accordance with and
governed by the laws of the State of Texas without giving effect to principles
of conflicts of laws.  Any disputes shall be resolved in accordance
with the rules of the American Arbitration Association . This Agreement may be
executed in multiple counterparts, each of which shall be deemed an original,
but all of which together shall constitute one and the same
agreement.




IN
WITNESS WHEREOF, the parties have executed this Agreement as of the date first
above written.




MASS HYSTERIA ENTERTAINMENT COMPANY,
INC.








By:____________________________________________


Name: Daniel Grodnik


Title: Chairman of the Board of
Director








EMPLOYEE





By:
___________________________________________


Daniel Grodnik