ex10-1.htm


    EXHIBIT
      10.1

     

    EMPLOYMENT
      AGREEMENT

     

    THIS
      EMPLOYMENT AGREEMENT, dated as of September 25, 2007 (the “Effective
      Date”) is entered into by and between TIDELANDS OIL & GAS
      CORPORATION, a Nevada limited liability company (the
“Company”), and  ROBERT W. DOWIES
      (“Executive”).

     

     

    RECITAL

     

    The
      Company desires to employ Executive, and Executive desires to be employed by
      the
      Company, in accordance with and subject to the terms and conditions set forth
      herein.

     

     

    AGREEMENT

     

    Accordingly,
      the parties hereby agree as follows:

     

    1.  Term.  Subject
      to Section 4, the Company hereby employs Executive, and Executive
      hereby accepts employment by the Company, to render services on behalf of the
      Company in the position and with the duties and responsibilities described
      in
Section 2 for the period commencing on the date of this Agreement
      and continuing in effect for a period of three (3) years (the
“Term”).  The Company and
      Executive may extend the Term of this Agreement by mutual written
      agreement.

     

    2.  Position,
      Duties, Responsibilities.  Executive shall be employed by the
      Company as  Vice President reporting directly to the President of the
      Company.  Executive shall devote Executive’s best efforts and
      Executive’s full time and attention to the performance of the services
      customarily incident to such offices (collectively, the
“Services”).  Executive acknowledges that
      the Services may include services for other entities, as directed by the Board
      of Directors. Executive specifically agrees to be bound by the covenants
      contained in Sections 4, 9 and 11 of the Independent Consulting Agreement
      between Company and Frontera Pipeline, LLC as described in said agreement.
      Executive shall be based at such place(s) as mutually agreed between the Company
      and Executive.

     

    3.  Compensation,
      Benefits, Expenses.

     

    3.1.  Salary.  In
      consideration of the Services to be rendered hereunder, Executive shall receive
      an annual salary in the amount of One Hundred Fifty Thousand Dollars ($150,000),
      payable in accordance with the Company’s standard payroll policies including
      compliance with applicable withholding requirements. At the request of Executive
      but subject to the approval of the Board of Directors, the Company may increase
      the cash salary payable under this Section 3.1 with commensurate decrease in
      the
      equity compensation payable for the respective annual period under Section
      3.2.  The first and last payment by the Company to Executive will be
      adjusted, if necessary, to reflect a commencement or termination date other
      than
      the first or last working day of a pay period.

     

    3.2.  Equity
      Compensation.  The first year during the term of this Agreement,
      the Company will issue Executive shares of  S-8 common stock with a
      value of Fifty Thousand Dollars ($50,000), valued  as of September 25
      of each year of this Agreement or the next closest trading day if September
      25
      falls on a weekend or holiday.  In each succeeding annual period of
      this Agreement, the Company will issue Executive of shares of S-8 common stock
      with values as follows:

     

    Year
      Two:        $100,000 – valued on the
      date of annual grant,

     

    Year
      Three:      $150,000 – valued on the date of
      annual grant.

     

    The
      Executive may also be eligible to
      receive stock option grants from time to time in the sole discretion of the
      Board of Directors. The Company shall also issue Executive 50,000 shares of
      restricted stock as consideration for the early termination of Executive’s
      previous employment agreement dated October 18, 2004.

     

    
 

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    3.3.  Benefits.  The
      Company shall provide Executive with the right to participate in and to receive
      benefits from all present and future life, accident, disability, medical,
      pension, stock and savings plans and all similar benefits made available
      generally to all employees of the Company.  Executive shall be
      entitled to the twenty (20) days of vacation annually, which shall accrue in
      equal monthly installments. .

     

    3.4.  Expenses.  The
      Company shall reimburse Executive for reasonable and properly documented travel,
      entertainment and other business expenses incurred by Executive in the
      performance of his duties hereunder in accordance with the Company’s general
      policies, as they may be amended from time to time during the course of this
      Agreement.

     

    4.  Termination
      of Employment.

     

    4.1.  By
      Death.  The Term shall terminate automatically upon the death of
      Executive.  The Company shall pay to Executive’s beneficiaries or
      estate, as appropriate, the compensation to which Executive is entitled pursuant
      to Section 3.1 (including any accrued vacation), and reimburse
      Executive for any expenses properly incurred by Executive pursuant to
Section 3.4.  Thereafter, the Company’s obligations
      hereunder shall terminate.  Nothing in this Section 4.1
      shall affect any entitlement of Executive’s heirs to any vested benefits of
      Executive or to the benefits of any life insurance plan.

     

    4.2.  By
      Disability.  If, in the sole and reasonable opinion of the Board
      of Directors, Executive shall be prevented from properly performing his duties
      hereunder by reason of any physical or mental incapacity for a period of more
      than ninety (90) days in the aggregate in any twelve-month (12-month)
      period, then, to the extent permitted by law, the Term shall terminate on,
      and
      the Company shall pay to Executive the compensation to which Executive is
      entitled pursuant to Section 3.1 (including any accrued vacation),
      and reimburse Executive for any expenses properly incurred by Executive pursuant
      to Section 3.4, in each case through the last day of the month in
      which the 90th day of incapacity occurs.  Thereafter the
      Company’s obligations hereunder shall terminate.  Nothing in this
Section 4.2 shall affect Executive’s rights to any vested benefits
      of Executive or under any disability plan in which he is a
      participant.

     

    4.3.  By
      the
      Company with Cause.  The Company may terminate, without liability,
      the Term with Cause (as defined below) solely pursuant to this
Section 4.3.  In the event the Company intends to
      terminate Executive with Cause, the Company may thereupon terminate Executive’s
      employment with Cause immediately upon notice to Executive.  In such
      event, the Company shall (i) pay Executive the compensation to which Executive
      is entitled pursuant to Section 3.1 (including any accrued
      vacation); and (ii) reimburse Executive for any expenses properly incurred
      by
      Executive pursuant to Section 3.4, in each case through the end of
      the day on which the Company terminates Executive.   Thereafter
      the Company’s obligations hereunder shall terminate.  Nothing in this
Section 4.3 shall affect Executive’s rights to any benefits vested
      as of the date of termination.

     

    Termination
      shall be with “Cause” if:

     

    (a)  Executive
      willfully engages in conduct that is in bad faith and materially injurious
      to
      the Company, including but not limited to, misappropriation of trade secrets,
      fraud, or embezzlement;

     

    (b)  Executive
      engages in malfeasance demonstrated by a pattern of failure to perform job
      duties diligently and professionally;

     

    (c)  Executive
      willfully refuses to implement or follow a reasonable and lawful policy or
      directive of the Company, which breach is not cured within thirty (30) days
      after written notice to Executive from the Company; or

     

    (d)  Executive
      materially breaches any term of this Agreement which breach is not cured within
      thirty (30) days after written notice to Executive from the
      Company.

     

    4.4.  Without
      Cause.  At any time, either the Company or Executive may terminate
      the Term for any reason, without Cause, by giving fifteen (15) days’
advance written notice to the other party.  In the event that
      Executive’s employment is terminated by either party pursuant to this
Section 4.4, the Company shall:  (i) pay Executive
      the compensation to which Executive is entitled pursuant to
Section 3.1 (including any accrued vacation) through the end of the
      day on which Executive’s employment is terminated; and (ii) reimburse
      Executive for any expenses properly incurred by Executive pursuant to
Section 3.4 through the end of the day on which Executive’s
      employment is terminated.  In the event that Executive’s employment is
      terminated by the Company without Cause pursuant to this
Section 4.4, the Company shall also pay Executive the severance
      payment as set forth in Section 5.  Thereafter the
      Company’s obligations hereunder shall terminate.  Nothing in this
      Section shall affect Executive’s rights to any benefits vested as of the date of
      termination (including, without limitation, stock options that have
      vested).

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    5.  Severance.

     

    5.1.  Without
      Cause.  In the event Executive’s employment with the Company is
      terminated by the Company without Cause as set forth in Section 4.4 above,
      the
      Company shall continue to pay Executive (i) his base salary on a semi-monthly
      basis plus (ii) the annual equity grant of shares as set froth in Section 3.2
      for the remainder of the Term (or the remainder of any written extension of
      the
      Term) as severance in return for a written release of any and all claims against
      the Company.  Executive shall be under no obligation to mitigate
      severance and any income or future employment of Executive with another company
      shall not offset or reduce the severance payments due under this Section
      5.

     

    6.  Assignment;
      Successors and Assigns.  Each party agrees that such party will
      not assign, sell, transfer, delegate or otherwise dispose of, whether
      voluntarily or involuntarily, or by operation of law, any rights or obligations
      under this Agreement, nor shall such party’s rights be subject to encumbrance or
      the claims of creditors.  Any purported assignment, transfer, or
      delegation thereof shall be null and void.  Nothing in this Agreement
      shall prevent the consolidation of the Company with, or its merger into, any
      other corporation, or the sale by the Company of all or substantially all of
      its
      properties or assets, or the assignment by the Company of this Agreement and
      the
      performance of its obligations hereunder to any successor in
      interest.  Subject to the foregoing, this Agreement shall be binding
      upon and shall inure to the benefit of the parties and their respective heirs,
      legal representatives, successors, and permitted assigns, and shall not benefit
      any person or entity other than those enumerated above.

     

    7.  Notices.  Unless
      otherwise agreed to, all notices, requests, instructions or other documents
      to
      be given hereunder shall be in writing or by written telecommunication, and
      shall be deemed to have been duly given if: (a) delivered personally (effective
      upon delivery); (b) mailed by certified mail, return receipt requested, postage
      prepaid (effective five (5) business days after dispatch); (c) sent by a
      reputable, established courier service that guarantees next business day
      delivery (effective the next business day); or (d) sent by facsimile (effective
      upon electronic confirmation of valid transmission of the
      facsimile).

     

    All
      notices and other documents hereunder shall be given to the Company
      at:

    


    Tidelands
      Oil & Gas Corporation

    1862
      W.
      Bitters Rd.

    San
      Antonio, TX 78248

    


    and
      to
      the Executive at the address of record on file with the Company.

    


    Notice
      of
      change of address shall be effective only when done in accordance with this
      Section 7.

     

    8.  Governing
      Law.  The validity, interpretation, enforceability, and
      performance of this Agreement shall be governed by and construed in accordance
      with the law of the State of Texas, without giving effect to its conflict of
      laws rules.

     

    9.  Outside
      Activities of Executive.  The Company acknowledges that Executive
      has commitments and business activities not related to the Company and that
      certain of these commitments and business affairs involve activities in the
      oil,
      gas and real estate industries. There shall be no restriction on Executive’s
      ability to fulfill such commitments or engage in such business
      activities.

     

    10.  Confidentiality.  Executive
      agrees that all confidential and proprietary information relating to the
      business of the Company shall be kept and treated as confidential both during
      and after the term of this Agreement, except as may be permitted in writing
      by a
      Company's Board of Directors or as such information is within the public domain
      or comes within the public domain without any breach of this
      Agreement.

     

    11.  Indemnification.
      In addition to any rights to indemnification to which Executive is entitled
      to
      under the Company's Articles of Incorporation and Bylaws, the Company shall
      indemnify Executive at all times during and after the term of this Agreement
      to
      the maximum extent permitted under Nevada Revised Statutes or any successor
      provision thereof and any other applicable state law, and shall pay Executive's
      expenses in defending any civil action, suit, or proceeding in advance of the
      final disposition of such action, suit or proceeding, to the maximum extent
      permitted under such applicable state laws.

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    12.  Entire
      Agreement.  The terms of this Agreement are intended by the
      parties to be the final expression of their agreement with respect to the
      employment of Executive by the Company and may not be contradicted by evidence
      of any prior or contemporaneous agreement.  The parties further intend
      that this Agreement shall constitute the complete and exclusive statement of
      its
      terms and that no extrinsic evidence whatsoever may be introduced in any
      judicial, administrative, or other legal proceeding involving this
      Agreement.

     

    13.  Amendments;
      Waivers.  This Agreement may not be modified, amended, or
      terminated except by an instrument in writing, signed by Executive and by a
      duly
      authorized representative of the Company other than Executive.  By an
      instrument in writing similarly executed, either party may waive compliance
      by
      the other party with any provision of this Agreement that such other party
      was
      or is obligated to comply with or perform; provided, however, that such
      waiver shall not operate as a waiver of, or estoppel with respect to, any other
      or subsequent failure.  No failure to exercise and no delay in
      exercising any right, remedy, or power hereunder shall operate as a waiver
      thereof, nor shall any single or partial exercise of any right, remedy, or
      power
      hereunder preclude any other or further exercise thereof or the exercise of
      any
      other right, remedy, or power provided herein or by law or in
      equity.

     

    14.  Severability;
      Enforcement.  If any provision of this Agreement, or the
      application thereof to any person, place, or circumstance, shall be held by
      a
      court of competent jurisdiction or by arbitrator(s) to be invalid,
      unenforceable, or void, the remainder of this Agreement and such provisions
      as
      applied to other persons, places, and circumstances shall remain in full force
      and effect.

     

    15.  Executive
      Acknowledgment.  Executive acknowledges (i) that Executive
      has consulted with or has had the opportunity to consult with independent
      counsel of his own choice concerning this Agreement and has been advised to
      do
      so by the Company, and (ii) that Executive has read and understands the
      Agreement, is fully aware of its legal effect, and has entered into it freely
      based on Executive’s own judgment.

     

    16.  Counterparts.  This
      Agreement may be signed in multiple counterparts, each of which shall be deemed
      an original but all of which together shall be deemed one and the same
      instrument.  Facsimile signatures shall create a valid and binding
      obligation of the party executing this Agreement with the same force and effect
      as if such facsimile signature page were an original thereof.

     

    


     

    *******************

     

     

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

     

    TIDELANDS
      OIL & GAS CORPORATION, a Nevada limited liability company

    


    
 

     

                           
                                                                                                        /s/
      James B. Smith         


    Name:
      James B. Smith 

    Title:
      President

    


    


    


    EXECUTIVE:


    


                                                                                                           
/s/ Robert W.
      Dowies                    


    Robert
      W.
      Dowies, an individual