Document:

Hemisphere Energy Corporation: Exhibit 10.1 - Filed by newsfilecorp.com

Exhibit 10.1

HEMISPHERE ENERGY CORPORATION

AMENDED AND RESTATED STOCK OPTION
PLAN
JUNE 6, 2014 

TABLE OF CONTENTS 

	SECTION 1 DEFINITIONS AND
      INTERPRETATION 	1 
	     1.1 	Definitions 	1 
	   
       1.2 	Choice of Law 	6 
	     1.3 	Headings 	6 
	SECTION 2 GRANT OF
      OPTIONS 	6 
	     2.1 	Grant of Options 	6 
	   
       2.2 	Record of Option Grants 	6 
	     2.3 	Effect of Plan 	6 
	SECTION 3 PURPOSE AND
      PARTICIPATION 	7 
	     3.1 	Purpose of Plan 	7 
	   
       3.2 	Participation in Plan 	7 
	     3.3 	Limits on Option Grants 	7 
	   
       3.4 	Notification of Grant 	8 
	     3.5 	Limitation on Service 	8 
	   
       3.6 	No Obligation to Exercise 	8 
	     3.7 	Agreement 	8 
	   
       3.8 	Notice 	8 
	     3.9 	Representation to TSXV 	8 
	SECTION 4 NUMBER OF
      SHARES UNDER PLAN 	9 
	     4.1 	Board to Approve Issuance of Shares 	9 
	   
       4.2 	Number of Shares 	9 
	     4.3 	Fractional Shares 	9 
	SECTION 5 TERMS AND
      CONDITIONS OF OPTIONS 	9 
	     5.1 	Exercise Period of Option 	9 
	   
       5.2 	Number of Shares Under Option
    	9 
	     5.3 	Exercise Price of Option 	9 
	   
       5.4 	Termination of Option 	10 
	     5.5 	Vesting of Option and Acceleration 	11 
	   
       5.6 	Additional Terms 	11 
	SECTION 6 TRANSFERABILITY OF
      OPTIONS 	12 
	   
       6.1 	Non-transferable 	12

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	     6.2 	Death of Option Holder 	12 
	     6.3 	Disability of Option Holder 	12 
	     6.4 	Disability and Death of Option
      Holder 	12 
	     6.5 	Vesting 	12 
	     6.6 	Deemed Non-Interruption of
      Engagement 	13 
	SECTION 7 EXERCISE OF OPTION 	13 
	     7.1 	Exercise of Option 	13 
	     7.2 	Issue of Share Certificates 	13 
	     7.3 	No Rights as Shareholder 	13 
	     7.4 	Statutory Deductions 	14 
	SECTION 8 ADMINISTRATION
    	14 
	     8.1 	Board or Committee 	14 
	     8.2 	Powers of Committee 	14 
	     8.3 	Administration by Committee 	15 
	     8.4 	Interpretation 	15 
	SECTION 9 APPROVALS AND AMENDMENT 	15 
	     9.1 	Shareholder Approval of Plan
	15 
	     9.2 	Amendment of Option or Plan 	15 
	SECTION 10 CONDITIONS
      PRECEDENT TO ISSUANCE OF OPTIONS AND SHARES 	 16 
	     10.1 	     Compliance with Laws 	16 
	     10.2 	     Regulatory
      Approvals 	16 
	     10.3 	     Inability to Obtain
      Regulatory Approvals 	16 
	SECTION 11 ADJUSTMENTS AND
      TERMINATION 	16 
	     11.1 	     Termination of Plan 	16 
	     11.2 	     No Grant
      During Suspension of Plan 	17 
	     11.3 	     Alteration in Capital
      Structure 	17 
	     11.4 	     Triggering
      Events 	17 
	     11.5 	     Notice of Termination by
      Triggering Event 	18 
	     11.6 	   
       Determinations to be Made By Committee 	18

STOCK OPTION PLAN

SECTION 1 
DEFINITIONS AND INTERPRETATION

	1.1 	
      Definitions

As used herein, unless there is something in the subject matter
or context inconsistent therewith, the following terms shall have the meanings
set forth below: 

	 	(a) 	
      “Administrator” means such Executive or Employee of the
      Company as may be designated as Administrator by the Committee from time
      to time, or, if no such person is appointed, the Committee
  itself.

	 	 	 	 
	 	(b) 	
      “Black-Out” means a restriction imposed by the Company on
      all or any of its directors, officers, consultants, employees, insiders or
      persons in a special relationship whereby they are to refrain from trading
      in the Company’s securities until the restriction has been lifted by the
      Company. Should the Expiry Date for an Option fall within a Black-Out, or
      within seven (7) business days following the expiration of a Black-Out,
      such Expiry Date shall, subject to approval of the Regulatory Authorities,
      be automatically extended without any further act of formality to that
      date which is the tenth (10th) business day after the end of
      the Black-Out, such tenth (10th) business day to be considered
      the Expiry Date for such Option for all purposes under the Plan.

	 	 	 	 
	 	(c) 	
      “Board” means the board of directors of the
    Company.

	 	 	 	 
	 	(d) 	
      “Change of Control” means an occurrence when
    either:

	 	 	 	 
	 		(i) 	
      a Person or Entity, other than the current “control
      person” of the Company (as that term is defined in the Securities Act),
      becomes a “control person” of the Company; or

	 	 	 	 
	 		(ii) 	
      a majority of the directors elected at any annual or
      extraordinary general meeting of shareholders of the Company are not
      individuals nominated by the Company’s then-incumbent Board.

	 	 	 	 
	 	(e) 	
      “Committee” means a committee of the Board to which the
      responsibility of approving the grant of stock options has been delegated,
      or if no such committee is appointed, the Board itself.

	 	 	 	 
	 	(f) 	
      “Company” means Hemisphere Energy Corporation.

	 	 	 	 
	 	(g) 	
      “Consultant” means, in relation to the Company (other
      than an Employee or and Executive) or company that:

	 	 	 	 
	 		(i) 	
      is engaged to provide, on an ongoing bona fide basis,
      consulting, technical, management or other services to the Company or any 

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      Subsidiary other than services provided in relation to a “distribution”
      (as that term is described in the Securities Act);
	 	 	
       
	 	(ii) 	
      provides the services under a written contract between
      the Company or any Subsidiary and the individual or a Consultant Entity
      (as defined in clause (g)(v) below);

	 	 	 
	 	(iii) 	
      in the reasonable opinion of the Company, spends or will
      spend a significant amount of time and attention on the affairs and
      business of the Company or any Subsidiary; and

	 	 	 
	 	(iv) 	
      has a relationship with the Company or any Subsidiary
      that enables the individual to be knowledgeable about the business and
      affairs of the Company or is otherwise permitted by applicable Regulatory
      Rules to be granted Options as a Consultant or as an equivalent
      thereof,

and includes: 

	 	(v) 	
      a company of which the individual is an employee or
      shareholder or a partnership of which the individual is an employee or
      partner (a “Consultant Entity”); or

	 	 	 
	 	(vi) 	
      an RRSP, RRIF or TFSA established by or for the
      individual under which he or she is the
beneficiary.

	 	(h) 	
      “Disability” means a medically determinable physical or
      mental impairment expected to result in death or to last for a continuous
      period of not less than 12 months, and which causes an individual to be
      unable to engage in any substantial gainful activity, or any other
      condition of impairment that the Committee, acting reasonably, determines
      constitutes a disability.

	 	 	 	 
	 	(i) 	
      “Employee” means:

	 	 	 	 
	 		(i) 	
      an individual who is considered an employee of the
      Company or its Subsidiary under the Income Tax Act (Canada) (and
      for whom income tax, employment insurance and Canada Pension Plan
      deductions must be made at source);

	 	 	 	 
	 		(ii) 	
      an individual who works full-time or part-time for the
      Company or any Subsidiary providing services normally provided by an
      employee and who is subject to the same control and direction by the
      Company over the details and methods of work as an employee of the
      Company, but for whom income tax deductions are not made at source;
    or

	 	 	 	 
	 		(iii) 	
      an individual who works for the Company or any Subsidiary
      on a continuing and regular basis for a minimum amount of time per week
      providing services normally provided by an employee and who is subject to
      the same control and direction by the Company or any Subsidiary over 

- 3 - 

the details and methods of work as an
employee of the Company or any Subsidiary, but for whom income tax deductions
are not made at source,

and includes: 

	 		(iv) 	
      a corporation wholly-owned by such individual;
  and

	 	 	 	 
	 		(v) 	
      any RRSP, RRIF or TFSA established by or for such
      individual under which he or she is the beneficiary.

	 	 	 	 
	 	(j) 	
      “Executive” means an individual who is a director or
      officer of the Company or a Subsidiary, and includes:

	 	 	 	 
	 		(i) 	
      a corporation wholly-owned by such individual;
  and

	 	 	 	 
	 		(ii) 	
      any RRSP, RRIF or TFSA established by or for such
      individual under which he or she is the beneficiary.

	 	 	 	 
	 	(k) 	
      “Exercise Notice” means the written notice of the
      exercise of an Option, in the form set out as Schedule B hereto, duly
      executed by the Option Holder.

	 	 	 	 
	 	(l) 	
      “Exercise Period” means the period during which a
      particular Option may be exercised and is the period from and including
      the Grant Date through to and including the Expiry Time on the Expiry Date
      provided, however, that no Option can be exercised unless and until all
      necessary Regulatory Approvals have been obtained.

	 	 	 	 
	 	(m) 	
      “Exercise Price” means the price at which an Option is
      exercisable as determined in accordance with section 5.3.

	 	 	 	 
	 	(n) 	
      “Expiry Date” means the date the Option expires as set
      out in the Option Certificate or as otherwise determined in accordance
      with sections 5.4, 6.2, 6.3, 6.4 or 11.4, subject to any applicable
      Black-Out.

	 	 	 	 
	 	(o) 	
      “Expiry Time” means the time the Option expires on the
      Expiry Date, which is 4:00 p.m. local time in Vancouver, British Columbia
      on the Expiry Date.

	 	 	 	 
	 	(p) 	
      “Grant Date” means the date on which the Committee grants
      a particular Option, which is the date the Option comes into effect
      provided however that no Option can be exercised unless and until all
      necessary Regulatory Approvals have been obtained.

	 	 	 	 
	 	(q) 	
      “Insider” means an insider as that term is defined in the
      Securities Act.

	 	 	 	 
	 	(r) 	
      “Market Value” means the market value of the Shares as
      determined in accordance with section 5.3.

	 	 	 	 
	 	(s) 	
      “Option” means an incentive share purchase option granted
      pursuant to this Plan entitling the Option Holder to purchase Shares of
      the Company.

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	 	(t) 	
      “Option Certificate” means the certificate, in
      substantially the form set out as Schedule A hereto, evidencing the
      Option.

	 	 	 	 
	 	(u) 	
      “Option Holder” means a Person or Entity who holds an
      unexercised and unexpired Option or, where applicable, the Personal
      Representative of such person.

	 	 	 	 
	 	(v) 	
      “Outstanding Issue” means the number of Shares that are
      outstanding (on a non- diluted basis) immediately prior to the Share
      issuance or grant of Option in question.

	 	 	 	 
	 	(w) 	
      “Person or Entity” means an individual, natural person,
      corporation, government or political subdivision or agency of a
      government, and where two or more persons act as a partnership, limited
      partnership, syndicate or other group for the purpose of acquiring,
      holding or disposing of securities of an issuer, such partnership, limited
      partnership, syndicate or group shall be deemed to be a Person or
      Entity.

	 	 	 	 
	 	(x) 	
      “Personal Representative” means:

	 	 	 	 
	 		(i) 	
      in the case of a deceased Option Holder, the executor or
      administrator of the deceased duly appointed by a court or public
      authority having jurisdiction to do so; and

	 	 	 	 
	 		(ii) 	
      in the case of an Option Holder who for any reason is
      unable to manage his or her affairs, the person entitled by law to act on
      behalf of such Option Holder.

	 	 	 	 
	 	(y) 	
      “Plan” means this stock option plan as from time to time
      amended.

	 	 	 	 
	 	(z) 	
      “Regulatory Approvals” means any necessary approvals of
      the Regulatory Authorities as may be required from time to time for the
      implementation, operation or amendment of this Plan or for the Options
      granted from time to time hereunder.

	 	 	 	 
	 	(aa) 	
      “Regulatory Authorities” means all organized trading
      facilities on which the Shares are listed, and all securities commissions
      or similar securities regulatory bodies having jurisdiction over the
      Company, this Plan or the Options granted from time to time
    hereunder.

	 	 	 	 
	 	(bb) 	
      “Regulatory Rules” means all corporate and securities
      laws, regulations, rules, policies, notices, instruments and other orders
      of any kind whatsoever which may, from time to time, apply to the
      implementation, operation or amendment of this Plan or the Options granted
      from time to time hereunder including, without limitation, those of the
      applicable Regulatory Authorities.

	 	 	 	 
	 	(cc) 	
      “RRIF” means a registered retirement income fund as
      defined in the Income Tax Act (Canada);

- 5 - 

	 	(dd) 	
      “RRSP” means a registered retirement savings plan as
      defined in the Income Tax Act (Canada);

	 	 	 	 
	 	(ee) 	
      “Securities Act” means the Securities Act (British
      Columbia), RSBC 1996, c.418 as from time to time amended.

	 	 	 	 
	 	(ff) 	
      “Share” or “Shares” means, as the case may be, one or
      more common shares without par value in the capital stock of the
      Company.

	 	 	 	 
	 	(gg) 	
      “Subsidiary” means a wholly-owned or controlled
      subsidiary corporation of the Company which definition may be varied by
      the Committee to confirm with the changing interests of the
  Company.

	 	 	 	 
	 	(hh) 	
      “TFSA” means a tax-free savings account as described in
      the Income Tax Act (Canada).

	 	 	 	 
	 	(ii) 	
      “Triggering Event” means:

	 	 	 	 
	 		(i) 	
      the proposed dissolution, liquidation or wind-up of the
      Company;

	 	 	 	 
	 		(ii) 	
      a proposed merger, amalgamation, arrangement or
      reorganization of the Company with one or more corporations as a result of
      which, immediately following such event, the shareholders of the Company
      as a group, as they were immediately prior to such event, are expected to
      hold less than a majority of the outstanding capital stock of the
      surviving corporation;

	 	 	 	 
	 		(iii) 	
      the proposed acquisition of all or substantially all of
      the issued and outstanding shares of the Company by one or more Persons or
      Entities;

	 	 	 	 
	 		(iv) 	
      a proposed Change of Control of the Company;

	 	 	 	 
	 		(v) 	
      the proposed sale or other disposition of all or
      substantially all of the assets of the Company; or

	 	 	 	 
	 		(vi) 	
      a proposed material alteration of the capital structure
      of the Company which, in the opinion of the Committee, is of such a nature
      that it is not practical or feasible to make adjustments to this Plan or
      to the Options granted hereunder to permit the Plan and Options granted
      hereunder to stay in effect.

	 	 	 	 
	 	(jj) 	
      “TSXV” means the TSX Venture Exchange Inc.

	 	 	 	 
	 	(kk) 	
      “Vest” or “Vesting” means that a portion of the Option
      granted to the Option Holder which is available to be exercised by the
      Option Holder at any time and from time to
time.

- 6 - 

	1.2 	
      Choice of Law

The Plan is established under, and the provisions of the Plan
shall be subject to and interpreted and construed solely in accordance with, the
laws of the Province of British Columbia and the laws of Canada applicable
therein without giving effect to the conflicts of laws principles thereof and
without reference to the laws of any other jurisdiction. The Company and each
Option Holder hereby attorn to the jurisdiction of the Courts of British
Columbia. 

	1.3 	
      Headings

The headings used herein are for convenience only and are not
to affect the interpretation of the Plan. 

SECTION 2 
GRANT OF OPTIONS 

	2.1 	
      Grant of Options

The Committee shall, from time to time in its sole discretion,
grant Options to such Persons or Entities and on such terms and conditions as
are permitted under this Plan. 

	2.2 	
      Record of Option
Grants

The Committee or the Administrator, as applicable, shall be
responsible to maintain a record of all Options granted under this Plan and such
record shall contain, in respect of each Option: 

	 	(a) 	
      the name and address of the Option Holder;

	 	 	 
	 	(b) 	
      the category (Executive, Employee or Consultant) under
      which the Option was granted to him, her or it;

	 	 	 
	 	(c) 	
      the Grant Date and Expiry Date of the Option;

	 	 	 
	 	(d) 	
      the number of Shares which may be acquired on the
      exercise of the Option and the Exercise Price of the Option;

	 	 	 
	 	(e) 	
      the vesting and other additional terms, if any, attached
      to the Option; and

	 	 	 
	 	(f) 	
      the particulars of each and every time the Option is
      exercised.

	2.3 	
      Effect of Plan

All Options granted pursuant to the Plan shall be subject to
the terms and conditions of the Plan notwithstanding the fact that the Option
Certificates issued in respect thereof do not expressly contain such terms and
conditions but instead incorporate them by reference to the Plan. The Option
Certificates will be issued for convenience only and in the case of a dispute
with regard to any matter in respect thereof, the provisions of the Plan and the
records of the Company shall prevail over the terms and conditions in the Option
Certificate, save and except as noted below. Each Option will also be subject
to, in addition to the provisions of the Plan, the terms and 

- 7 - 

SECTION 3 
PURPOSE AND PARTICIPATION 

conditions contained in the schedules, if any, attached to the
Option Certificate for such Option. Should the terms and conditions contained in
such schedules be inconsistent with the provisions of the Plan, such terms and
conditions will supersede the provisions of the Plan. 

	3.1 	
      Purpose of Plan

The purpose of the Plan is to provide the Company with a
share-related mechanism to attract, retain and motivate qualified Executives,
Employees and Consultants to contribute toward the long term goals of the
Company, and to encourage such individuals to acquire Shares of the Company as
long term investments. 

	3.2 	
      Participation in
Plan

The Committee shall, from time to time and in its sole
discretion, determine those Executives, Employees and Consultants to whom
Options are to be granted. 

	3.3 	
      Limits on Option
Grants

If the Company is listed on the TSXV, the following limitations
shall apply to the Plan and all Options thereunder so long as such limitations
are required by the TSXV: 

	 	(a) 	
      the maximum number of Options which may be granted to any
      one Option Holder under the Plan within any 12 month period as at the
      Grant Date shall be 5% of the Outstanding Issue (unless the Company has
      obtained disinterested shareholder approval as required by the
    TSXV);

	 	 	 
	 	(b) 	
      disinterested shareholder approval (as defined in the
      TSXV corporate finance manual) is required to the grant to Insiders,
      within a 12 month period, of a number of Options which, when added to the
      number of outstanding incentive stock options granted to Insiders within
      the previous 12 months, exceed 10% of the issued Shares;

	 	 	 
	 	(c) 	
      with respect to section 5.1, the Expiry Date of an Option
      shall be no later than the tenth anniversary of the Grant Date of such
      Option, subject to any applicable Black-Out;

	 	 	 
	 	(d) 	
      the maximum number of Options which may be granted to any
      one Consultant within any 12 month period must not exceed 2% of the
      Outstanding Issue; and

	 	 	 
	 	(e) 	
      the maximum number of Options which may be granted within
      any 12 month period to all persons engaged in investor relations
      activities must not exceed 2% of the Outstanding Issue and such options
      must vest in stages over 12 months with no more than 25% of the Options
      vesting in any three month period, and such limitation will not be an
      amendment to this Plan requiring the Option Holders consent under section
      9.2 of this Plan.

- 8 - 

	3.4 	
      Notification of
Grant

Following the granting of an Option, the Administrator shall,
within a reasonable period of time, notify the Option Holder in writing of the
grant and shall enclose with such notice the Option Certificate representing the
Option so granted. In no case will the Company be required to deliver an Option
Certificate to an Option Holder until such time as the Company has obtained all
necessary Regulatory Approvals for the grant of the Option. 

	3.5 	
      Limitation on
Service

The Plan does not give any Option Holder that is an Executive
the right to serve or continue to serve as an Executive of the Company or any
Subsidiary, nor does it give any Option Holder that is an Employee or Consultant
the right to be or to continue to be employed or engaged by the Company or any
Subsidiary. 

	3.6 	
      No Obligation to
Exercise

Option Holders shall be under no obligation to exercise
Options. 

	3.7 	
      Agreement

The Company and every Option Holder granted an Option hereunder
shall be bound by and subject to the terms and conditions of this Plan. By
accepting an Option granted hereunder, the Option Holder has expressly agreed
with the Company to be bound by the terms and conditions of this Plan. In the
event that the Option Holder receives his, her or its Options pursuant to an
oral or written agreement with the Company or a Subsidiary, whether such
agreement is an employment agreement, consulting agreement or any other kind of
agreement of any kind whatsoever, the Option Holder acknowledges that in the
event of any inconsistency between the terms relating to the grant of such
Options in that agreement and the terms attaching to the Options as provided for
in this Plan, the terms provided for in this Plan shall prevail and the other
agreement shall be deemed to have been amended accordingly. 

	3.8 	
      Notice

Any notice, delivery or other correspondence of any kind
whatsoever to be provided by the Company to an Option Holder will be deemed to
have been provided if provided to the last home address, fax number or email
address of the Option Holder in the records of the Company and the Company shall
be under no obligation to confirm receipt or delivery. 

	3.9 	
      Representation to
TSXV

If the Company is listed on the TSXV, as a condition precedent
to the issuance of an Option, the Company and the Option Holder must be able to
represent to the TSXV as of the Grant Date that the Option Holder is a bona
fide Executive, Employee or Consultant of the Company or any Subsidiary.

- 9 - 

SECTION 4 
NUMBER OF SHARES UNDER PLAN 

	4.1 	
      Board to Approve Issuance of
  Shares

The Committee shall approve by resolution the issuance of all
Shares to be issued to Option Holders upon the exercise of Options, such
authorization to be deemed effective as of the Grant Date of such Options
regardless of when it is actually done. The Committee shall be entitled to
approve the issuance of Shares in advance of the Grant Date, retroactively after
the Grant Date, or by a general approval of this Plan. 

	4.2 	
      Number of Shares

Subject to adjustment as provided for herein, the number of
Shares which will be available for purchase pursuant to Options granted pursuant
to this Plan, plus any other outstanding incentive stock options of the Company
granted pursuant to a previous stock option plan or agreement, will not exceed
10% of the Outstanding Issue at the Grant Date. If any Option expires or
otherwise terminates for any reason without having been exercised in full, the
number of Shares in respect of such expired or terminated Option shall again be
available for the purposes of granting Options pursuant to this Plan. 

	4.3 	
      Fractional Shares

No fractional shares shall be issued upon the exercise of any
Option and, if as a result of any adjustment, an Option Holder would become
entitled to a fractional share, such Option Holder shall have the right to
purchase only the next lowest whole number of Shares and no payment or other
adjustment will be made for the fractional interest. 

SECTION 5 
TERMS AND CONDITIONS OF OPTIONS

	5.1 	
      Exercise Period of
Option

Subject to sections 5.4, 6.2, 6.3, 6.4 and 11.4, the Grant Date
and the Expiry Date of an Option shall be the dates fixed by the Committee at
the time the Option is granted and shall be set out in the Option Certificate
issued in respect of such Option.

	5.2 	
      Number of Shares Under
  Option

The number of Shares which may be purchased pursuant to an
Option shall be determined by the Committee and shall be set out in the Option
Certificate issued in respect of the Option. 

	5.3 	
      Exercise Price of
Option

The Exercise Price at which an Option Holder may purchase a
Share upon the exercise of an Option shall be determined by the Committee and
shall be set out in the Option Certificate issued in respect of the Option. The
Exercise Price shall not be less than the Market Value of the Shares as of the
Grant Date. The Market Value of the Shares for a particular Grant Date shall be
determined as follows: 

- 10 - 

	 	(a) 	
      for each organized trading facility on which the Shares
      are listed, Market Value will be the closing trading price of the Shares
      on the day immediately preceding the Grant Date, and may be less than this
      price if it is within the discounts permitted by the applicable Regulatory
      Authorities;

	 	 	 
	 	(b) 	
      if the Company’s Shares are listed on more than one
      organized trading facility, the Market Value shall be the Market Value as
      determined in accordance with subparagraph (a) above for the primary
      organized trading facility on which the Shares are listed, as determined
      by the Committee, subject to any adjustments as may be required to secure
      all necessary Regulatory Approvals;

	 	 	 
	 	(c) 	
      if the Company’s Shares are listed on one or more
      organized trading facilities but have not traded during the ten trading
      days immediately preceding the Grant Date, then the Market Value will be,
      subject to any adjustments as may be required to secure all necessary
      Regulatory Approvals, such value as is determined by the Committee;
    and

	 	 	 
	 	(d) 	
      if the Company’s Shares are not listed on any organized
      trading facility, then the Market Value will be, subject to any
      adjustments as may be required to secure all necessary Regulatory
      Approvals, such value as is determined by the Committee to be the fair
      value of the Shares, taking into consideration all factors that the
      Committee deems appropriate, including, without limitation, recent sale
      and offer prices of the Shares in private transactions negotiated at arms’
      length.

Notwithstanding anything else contained herein, in no case will
the Market Value be less than the minimum prescribed by each of the organized
trading facilities that would apply to the Company on the Grant Date in
question. 

	5.4 	
      Termination of
Option

Subject to such other terms or conditions that may be attached
to Options granted hereunder, an Option Holder may exercise an Option in whole
or in part at any time and from time to time during the Exercise Period. Any
Option or part thereof not exercised within the Exercise Period shall terminate
and become null, void and of no effect as of the Expiry Time on the Expiry Date.
The Expiry Date of an Option shall be the earlier of the date so fixed by the
Committee at the time the Option is granted as set out in the Option Certificate
and the date established, if applicable, in paragraphs (a) or (b) below or
sections 6.2, 6.3, 6.4, or 11.4 of this Plan: 

	 	(a) 	
      Ceasing to Hold Office - In the event that the Option
      Holder holds his or her Option as an Executive and such Option Holder
      ceases to hold such position other than by reason of death or Disability,
      the Expiry Date of the Option shall be, unless otherwise determined by the
      Committee and expressly provided for in the Option Certificate, the
      90th day following the date the Option Holder ceases to hold
      such position unless the Option Holder ceases to hold such position as a
      result of:

	 	 	 	 
	 		(i) 	
      ceasing to meet the qualifications set forth in the
      corporate legislation applicable to the
Company;

- 11 - 

	 	(ii) 	
      a special resolution having been passed by the
      shareholders of the Company removing the Option Holder as a director of
      the Company or any Subsidiary; or

	 	 	 
	 	(iii) 	
      an order made by any Regulatory Authority having
      jurisdiction to so order, in which case the Expiry Date shall be the date
      the Option Holder ceases to hold such position;
OR

	 	(b) 	
      Ceasing to be Employed or Engaged - In the event that the
      Option Holder holds his or her Option as an Employee or Consultant and
      such Option Holder ceases to hold such position other than by reason of
      death or Disability, the Expiry Date of the Option shall be, unless
      otherwise determined by the Committee and expressly provided for in the
      Option Certificate, the 90th day following the date the Option
      Holder ceases to hold such position, unless the Option Holder ceases to
      hold such position as a result of:

	 	 	 	 
	 		(i) 	
      termination for cause;

	 	 	 	 
	 		(ii) 	
      resigning his or her position; or

	 	 	 	 
	 		(iii) 	
      an order made by any Regulatory Authority having
      jurisdiction to so order, in which case the Expiry Date shall be the date
      the Option Holder ceases to hold such position.

In the event that the Option Holder ceases to hold the position
of Executive, Employee or Consultant for which the Option was originally
granted, but comes to hold a different position as an Executive, Employee or
Consultant prior to the expiry of the Option, the Committee may, in its sole
discretion, choose to permit the Option to stay in place for that Option Holder
with such Option then to be treated as being held by that Option Holder in his
or her new position and such will not be considered to be an amendment to the
Option in question requiring the consent of the Option Holder under section 9.2
of this Plan. Notwithstanding anything else contained herein, in no case will an
Option be exercisable later than the Expiry Date of the Option. 

	5.5 	
      Vesting of Option and
  Acceleration

The vesting schedule for an Option, if any, shall be determined
by the Committee and shall be set out in the Option Certificate issued in
respect of the Option. The Committee may elect, at any time, to accelerate the
vesting schedule of one or more Options including, without limitation, on a
Triggering Event, and such acceleration will not be considered an amendment to
the Option in question requiring the consent of the Option Holder under section
9.2 of this Plan. Notwithstanding the foregoing, the Committee’s election to
accelerate the vesting schedule applicable to Options held by all persons
engaged in investor relations activities shall be subject to receipt of the
Regulatory Authorities approval. 

	5.6 	
      Additional Terms

Subject to all applicable Regulatory Rules and all necessary
Regulatory Approvals, the Committee may attach additional terms and conditions
to the grant of a particular Option, such 

- 12 - 

terms and conditions to be set out in a schedule attached to
the Option Certificate. The Option Certificates will be issued for convenience
only, and in the case of a dispute with regard to any matter in respect thereof,
the provisions of this Plan and the records of the Company shall prevail over
the terms and conditions in the Option Certificate, save and except as noted
below. Each Option will also be subject to, in addition to the provisions of the
Plan, the terms and conditions contained in the schedules, if any, attached to
the Option Certificate for such Option. Should the terms and conditions
contained in such schedules be inconsistent with the provisions of the Plan,
such terms and conditions will supersede the provisions of the Plan. 

SECTION 6 
TRANSFERABILITY OF OPTIONS 

	6.1 	
      Non-transferable

Except as provided otherwise in this section 6, Options are
non-assignable and non-transferable. 

	6.2 	
      Death of Option
Holder

In the event of the Option Holder’s death, any Options held by
such Option Holder shall pass to the Personal Representative of the Option
Holder and shall be exercisable by the Personal Representative on or before the
date which is the earlier of one year following the date of death and the
applicable Expiry Date. 

	6.3 	
      Disability of Option
  Holder

If the employment or engagement of an Option Holder as an
Employee or Consultant or the position of an Option Holder as a director or
officer of the Company or a Subsidiary is terminated by the Company by reason of
such Option Holder’s Disability, any Options held by such Option Holder shall be
exercisable by such Option Holder or by the Personal Representative on or before
the date which is the earlier of one year following the termination of
employment, engagement or appointment as a director or officer and the
applicable Expiry Date. 

	6.4 	
      Disability and Death of Option
  Holder

If an Option Holder has ceased to be employed, engaged or
appointed as a director or officer of the Company or a Subsidiary by reason of
such Option Holder’s Disability and such Option Holder dies within one year
after the termination of such engagement, any Options held by such Option Holder
that could have been exercised immediately prior to his or her death shall pass
to the Personal Representative of such Option Holder and shall be exercisable by
the Personal Representative on or before the date which is the earlier of one
year following the death of such Option Holder and the applicable Expiry Date.

	6.5 	
      Vesting

Unless the Committee determines otherwise, Options held by or
exercisable by a Personal Representative shall, during the period prior to their
termination, continue to vest in accordance with any vesting schedule to which
such Options are subject except for Options which are 

- 13 - 

required to be subject to a vesting schedule pursuant to the
policies of the Regulatory Authorities. 

	6.6 	
      Deemed Non-Interruption of
  Engagement

Employment or engagement by the Company shall be deemed to
continue intact during any military or sick leave or other bona fide leave of
absence if the period of such leave does not exceed 90 days or, if longer, for
so long as the Option Holder’s right to re-employment or re-engagement by the
Company is guaranteed either by statute or by contract. If the period of such
leave exceeds 90 days and the Option Holder’s re-employment or re-engagement is
not so guaranteed, then his or her employment or engagement shall be deemed to
have terminated on the ninety-first day of such leave. 

SECTION 7 
EXERCISE OF OPTION 

	7.1 	
      Exercise of Option

An Option may be exercised only by the Option Holder or the
Personal Representative of any Option Holder. An Option Holder or the Personal
Representative of any Option Holder may exercise an Option in whole or in part
at any time and from time to time during the Exercise Period up to the Expiry
Time on the Expiry Date by delivering to the Administrator the required Exercise
Notice, the applicable Option Certificate and a certified cheque or bank draft
or wire transfer payable to the Company in an amount equal to the aggregate
Exercise Price of the Shares then being purchased pursuant to the exercise of
the Option. Notwithstanding anything else contained herein, Options may not be
exercised during a Black-Out unless the Committee determines otherwise. 

	7.2 	
      Issue of Share
  Certificates

As soon as reasonably practicable following the receipt of the
Exercise Notice, the Administrator shall cause to be delivered to the Option
Holder a certificate for the Shares so purchased. If the number of Shares so
purchased is less than the number of Shares subject to the Option Certificate
surrendered, the Administrator shall also provide a new Option Certificate for
the balance of Shares available under the Option to the Option Holder concurrent
with delivery of the Share Certificate. 

	7.3 	
      No Rights as
Shareholder

Until the date of the issuance of the certificate for the
Shares purchased pursuant to the exercise of an Option, no right to vote or
receive dividends or any other rights as a shareholder shall exist with respect
to such Shares, notwithstanding the exercise of the Option, unless the Committee
determines otherwise. In the event of any dispute over the date of the issuance
of the certificates, the decision of the Committee shall be final, conclusive
and binding. 

- 14 - 

	7.4 	
      Statutory
Deductions

At the time the Option is exercised, the Option Holder shall
deliver to the Company, by certified cheque, bank draft or wire transfer, funds
equal to the amount that the Company determines in good faith it is required to
remit to the appropriate government authority in respect of statutory deductions
applicable to the exercise of the Option (the “Remittance Amount”). For greater
certainty, the Company shall not be required to process the Exercise Notice
until the Option Holder has delivered the Remittance Amount as aforesaid, and
the Option Holder shall not be entitled to receive a certificate representing
the Shares acquired upon exercise of the Option until such delivery has been
made. 

SECTION 8 
ADMINISTRATION 

	8.1 	
      Board or Committee

The Plan shall be administered by the Administrator with
oversight by the Committee. 

	8.2 	
      Powers of Committee

The Committee shall have the authority to do the following:

	 	(a) 	
      oversee the administration of the Plan in accordance with
      its terms;

	 	 	 	 
	 	(b) 	
      appoint or replace the Administrator from time to
      time;

	 	 	 	 
	 	(c) 	
      determine all questions arising in connection with the
      administration, interpretation and application of the Plan, including all
      questions relating to the Market Value;

	 	 	 	 
	 	(d) 	
      correct any defect, supply any information or reconcile
      any inconsistency in the Plan in such manner and to such extent as shall
      be deemed necessary or advisable to carry out the purposes of the
    Plan;

	 	 	 	 
	 	(e) 	
      prescribe, amend, and rescind rules and regulations
      relating to the administration of the Plan;

	 	 	 	 
	 	(f) 	
      determine the duration and purposes of leaves of absence
      from employment or engagement by the Company which may be granted to
      Option Holders without constituting a termination of employment or
      engagement for purposes of the Plan;

	 	 	 	 
	 	(g) 	
      do the following with respect to the granting of
      Options:

	 	 	 	 
	 		(i) 	
      determine the Executives, Employees or Consultants to
      whom Options shall be granted, based on the eligibility criteria set out
      in this Plan;

	 	 	 	 
	 		(ii) 	
      determine the terms of the Option to be granted to an
      Option Holder including, without limitation, the Grant Date, Expiry Date,
      Exercise Price 

- 15 - 

	 	 	
      and
      vesting schedule (which need not be identical with the terms of any other
      Option);
	 	 	
       
	 	(iii) 	
      subject to any necessary Regulatory Approvals and section
      9.2, amend the terms of any Options;

	 	 	 
	 	(iv) 	
      determine when Options shall be granted; and

	 	 	 
	 	(v) 	
      determine the number of Shares subject to each
    Option;

	 	(h) 	
      accelerate the vesting schedule of any Option previously
      granted subject to Regulatory Authorities requirements; and

	 	 	 
	 	(i) 	
      make all other determinations necessary or advisable, in
      its sole discretion, for the administration of the
Plan.

	8.3 	
      Administration by
  Committee

All determinations made by the Committee in good faith shall be
final, conclusive and binding upon all persons. The Committee shall have all
powers necessary or appropriate to accomplish its duties under this Plan. 

	8.4 	
      Interpretation

The interpretation by the Committee of any of the provisions of
the Plan and any determination by it pursuant thereto shall be final, conclusive
and binding and shall not be subject to dispute by any Option Holder. No member
of the Committee or any person acting pursuant to authority delegated by it
hereunder shall be personally liable for any action or determination in
connection with the Plan made or taken in good faith and each member of the
Committee and each such person shall be entitled to indemnification with respect
to any such action or determination in the manner provided for by the Company.

SECTION 9 
APPROVALS AND AMENDMENT 

	9.1 	
      Shareholder Approval of
  Plan

Notwithstanding any provision contained in this Plan, the Plan
must be reconfirmed as prescribed by the Regulatory Authorities by a resolution
passed by a majority of the votes cast at a meeting of shareholders, and if this
Plan is not reconfirmed by the shareholders as required by this provision, no
further grants of Options may be made under this Plan. 

	9.2 	
      Amendment of Option or
  Plan

Subject to any required Regulatory Approvals, the Committee may
from time to time amend any existing Option or the Plan or the terms and
conditions of any Option thereafter to be granted provided that where such
amendment relates to an existing Option and it would: 

	 	(a) 	
      materially decrease the rights or benefits accruing to an
      Option Holder; or

- 16 - 

	 	(b) 	
      materially increase the obligations of an Option
      Holder;

then, unless otherwise excepted out by a provision of this
Plan, the Committee must also obtain the written consent of the Option Holder in
question to such amendment. If at the time the Exercise Price of an Option is
reduced and the Option Holder is an Insider of the Company, the Insider must not
exercise the option at the reduced Exercise Price until the reduction in
Exercise Price has been approved by the disinterested shareholders of the
Company, if required by the the Regulatory Authorities. 

SECTION 10 
CONDITIONS PRECEDENT TO ISSUANCE OF
OPTIONS AND SHARES 

	10.1 	
      Compliance with
Laws

An Option shall not be granted or exercised, and Shares shall
not be issued pursuant to the exercise of any Option, unless the grant and
exercise of such Option and the issuance and delivery of such Shares comply with
all applicable Regulatory Rules, and such Options and Shares will be subject to
all applicable trading restrictions in effect pursuant to such Regulatory Rules
and the Company shall be entitled to legend the Option Certificates and the
certificates representing such Shares accordingly. 

	10.2 	
      Regulatory
Approvals

In administering this Plan, the Committee will seek any
Regulatory Approvals which may be required. The Committee will not permit any
Options to be granted without first obtaining the necessary Regulatory Approvals
unless such Options are granted conditional upon such Regulatory Approvals being
obtained. The Committee will make all filings required with the Regulatory
Authorities in respect of the Plan and each grant of Options hereunder. No
Option granted will be exercisable or binding on the Company unless and until
all necessary Regulatory Approvals have been obtained. The Committee shall be
entitled to amend this Plan and the Options granted hereunder in order to secure
any necessary Regulatory Approvals and such amendments will not require the
consent of the Option Holders under section 9.2 of this Plan. 

	10.3 	
      Inability to Obtain Regulatory
    Approvals

The Company’s inability to obtain Regulatory Approval from any
applicable Regulatory Authority, which Regulatory Approval is deemed by the
Committee to be necessary to complete the grant of Options hereunder, the
exercise of those Options or the lawful issuance and sale of any Shares pursuant
to such Options, shall relieve the Company of any liability with respect to the
failure to complete such transaction. 

SECTION 11 
ADJUSTMENTS AND TERMINATION

	11.1 	
      Termination of Plan

Subject to any necessary Regulatory Approvals, the Committee
may terminate or suspend the Plan.

- 17 - 

	11.2 	
      No Grant During Suspension of
  Plan

No Option may be granted during any suspension, or after
termination, of the Plan. Suspension or termination of the Plan shall not,
without the consent of the Option Holder, alter or impair any rights or
obligations under any Option previously granted. 

	11.3 	
      Alteration in Capital
  Structure

If there is a material alteration in the capital structure of
the Company and the Shares are consolidated, subdivided, converted, exchanged,
reclassified or in any way substituted for, the Committee shall make such
adjustments to this Plan and to the Options then outstanding under this Plan as
the Committee determines to be appropriate and equitable under the
circumstances, so that the proportionate interest of each Option Holder shall,
to the extent practicable, be maintained as before the occurrence of such event.
Such adjustments may include, without limitation: 

	 	(a) 	
      a change in the number or kind of shares of the Company
      covered by such Options; and

	 	 	 
	 	(b) 	
      a change in the Exercise Price payable per Share
      provided, however, that the aggregate Exercise Price applicable to the
      unexercised portion of existing Options shall not be altered, it being
      intended that any adjustments made with respect to such Options shall
      apply only to the Exercise Price per Share and the number of Shares
      subject thereto.

For purposes of this section 11.3, and without limitation,
neither: 

	 	(c) 	
      the issuance of additional securities of the Company in
      exchange for adequate consideration (including services); nor

	 	 	 
	 	(d) 	
      the conversion of outstanding securities of the Company
      into Shares shall be deemed to be material alterations of the capital
      structure of the Company.

Any adjustment made to any Options pursuant to this section
11.3 shall not be considered an amendment requiring the Option Holder’s consent
for the purposes of section 9.2 of this Plan. 

	11.4 	
      Triggering Events

Subject to the Company complying with section 11.5 and any
necessary Regulatory Approvals and notwithstanding any other provisions of this
Plan or any Option Certificate, the Committee may, without the consent of the
Option Holder or Holders in question: 

	 	(a) 	
      cause all or a portion of any of the Options granted
      under the Plan to terminate upon the occurrence of a Triggering Event;
      or

	 	 	 
	 	(b) 	
      cause all or a portion of any of the Options granted
      under the Plan to be exchanged for incentive stock options of another
      corporation upon the occurrence of a Triggering Event in such ratio and at
      such exercise price as the Committee deems appropriate, acting
      reasonably.

- 18 - 

Such termination or exchange shall not be considered an
amendment requiring the Option Holder’s consent for the purpose of section 9.2
of the Plan. 

	11.5 	
      Notice of Termination by Triggering
      Event

In the event that the Committee wishes to cause all or a
portion of any of the Options granted under this Plan to terminate on the
occurrence of a Triggering Event, it must give written notice to the Option
Holders in question not less than 10 days prior to the consummation of a
Triggering Event so as to permit the Option Holder the opportunity to exercise
the vested portion of the Options prior to such termination. Upon the giving of
such notice and subject to any necessary Regulatory Approvals, all Options or
portions thereof granted under the Plan which the Company proposes to terminate
shall become immediately exercisable notwithstanding any contingent vesting
provision to which such Options may have otherwise been subject, provided that
Regulatory Authorities approval of the same must be received in respect of
Options held by Consultants engaged in investor relations activities.

	11.6 	
      Determinations to be Made By
    Committee

Adjustments and determinations under this section 11 shall be
made by the Committee, whose decisions as to what adjustments or determination
shall be made, and the extent thereof, shall be final, binding, and conclusive.

SCHEDULE A 

HEMISPHERE ENERGY CORPORATION 

STOCK OPTION PLAN - OPTION CERTIFICATE

This Option Certificate is issued pursuant to the provisions of
the Stock Option Plan (the “Plan”) of Hemisphere Energy Corporation (the
“Company”) and evidences that <@> [Name of Option Holder] is the
holder (the “Option Holder”) of an option (the “Option”) to
purchase up to <@> common shares (the “Shares”) in the capital
stock of the Company at a purchase price of Cdn.$<@> per Share (the
“Exercise Price”). This Option may be exercised at any time and from time
to time from and including the following Grant Date through to and including up
to 4:00 p.m. local time in Vancouver, British Columbia (the “Expiry
Time”) on the following Expiry Date: 

	 	(a) 	
      the Grant Date of this Option is <@>, 20<@>;
      and

	 	 	 
	 	(b) 	
      subject to sections 5.4, 6.2, 6.3, 6.4 and 11.4 of the
      Plan, the Expiry Date of this Option is
  <@>,20<@>.

To exercise this Option, the Option Holder must deliver to the
Administrator of the Plan, prior to the Expiry Time on the Expiry Date, an
Exercise Notice, in the form provided in the Plan, which is incorporated by
reference herein, together with the original of this Option Certificate and a
certified cheque or bank draft payable to the Company in an amount equal to the
aggregate of the Exercise Price of the Shares in respect of which this Option is
being exercised. 

This Option Certificate and the Option evidenced hereby is not
assignable, transferable or negotiable and is subject to the detailed terms and
conditions contained in the Plan. This Option Certificate is issued for
convenience only and in the case of any dispute with regard to any matter in
respect hereof, the provisions of the Plan and the records of the Company shall
prevail. This Option is also subject to the terms and conditions contained in
the schedules, if any, attached hereto. 

[Include the following TSXV hold period only if the exercise
price of the stock options is based on less than Market Price or if the option
is granted to a director or officer.]  

[Any share certificates, or witten notice
in the case of uncertificated shares, issued pursuant to an exercise of the
Option before <@>[date four months and one day after Grant
Date] will contain the following legend: 

“Without prior written approval of
the TSX Venture Exchange and compliance with all applicable securities
legislation, the securities represented by this certificate may not be sold,
transferred, hypothecated or otherwise traded on or through the facilities of
the TSX Venture Exchange or otherwise in Canada or to or for the benefit of a
Canadian resident until <@>[date four months and one day after
Grant Date].”] 

- 2 - 

	Dated as of
    ___________________________________________________________________________	 	 
	  	 	 
	HEMISPHERE ENERGY 	 	 
	CORPORATION 	 	 
	by its authorized signatory: 	 	 
	 	 	 
	 	 	 

The Company and the Optionee under the terms and conditions of
the Plan is a bona fide Executive, Employee of Consultant of the Company
or any Subsidiary, entitled to receive Options under the TSX Venture Exchange
Policies. 

The Option Holder agrees to execute, deliver, file and
otherwise assist the Company in filing any report, undertaking or document with
respect to the awarding of the Option and exercise of the Option, as may be
required by the Regulatory Authorities. The Option Holder further acknowledges
that if the Plan has not been approved by the shareholders of the Company on the
Grant Date, this Option is not exercisable until such approval has been
obtained. 

	Signature of Option Holder: 	 	 
		 	Date signed:
    ___________________________________________________________________________
	Signature 	 	 
	  	 	 
	  	 	 
	Print Name 	 	 
	  	 	 
	  	 	 
	Address 	 	 
	 	 	 
	 	 	 

OPTION CERTIFICATE – SCHEDULE

[Complete the following additional terms and any other
special terms, if applicable, or remove the inapplicable terms or this schedule
entirely.] 

The additional terms and conditions attached to the Option
represented by this Option Certificate are as follows: 

	1. 	
      The Options will not be exercisable unless and until they
      have vested and then only to the extent that they have vested. The Options
      will vest in accordance with the following:

	 	 	 
		(a) 	
      <@> Shares (<@>%) will vest and be
      exercisable on or after the Grant Date;

	 	 	 
		(b) 	
      <@> additional Shares (<@>%) will vest and be
      exercisable on or after <@> [date];

	 	 	 
		(c) 	
      <@> additional Shares (<@>%) will vest and be
      exercisable on or after <@> [date];

	 	 	 
		(d) 	
      <@> additional Shares (<@>%) will vest and be
      exercisable on or after <@> [date];

	 	 	 
	2. 	
      Upon the Option Holder ceasing to hold a position with
      the Company, other than as a result of the events set out in paragraphs
      5.4(a) or 5.4(b) of the Plan, the Expiry Date of the Option shall be
      <@> [Insert date desired that is longer or shorter than the
      standard 90 days as set out in the Plan] following the date the Option
      Holder ceases to hold such position.

SCHEDULE B 

Hemisphere Energy Corporation 
STOCK OPTION
PLAN

NOTICE OF EXERCISE OF OPTION

TO: The Administrator, Stock Option Plan

The undersigned hereby irrevocably gives notice, pursuant to
the Stock Option Plan (the “Plan”) of Hemisphere Energy Corporation (the
“Company”), of the exercise of the Option to acquire and hereby
subscribes for (cross out inapplicable item): 

	 	(a) 	
      all of the Shares; or

	 	 	 
	 	(b) 	
      ______________of the Shares;

which are the subject of the Option Certificate attached hereto
(attach your original Option Certificate). 

The undersigned tenders herewith a certified cheque or bank
draft (circle one) payable to the Company or in an amount equal to the
aggregate Exercise Price of the aforesaid Shares and directs the Company to
issue the certificate evidencing said Shares in the name of the undersigned to
be mailed to the undersigned at the following address (provide full complete
address): 

_________________________________________________

_________________________________________________

_________________________________________________

_________________________________________________

The undersigned acknowledges the Option is not validly
exercised unless this Notice is completed in strict compliance with this form
and delivered to the required address with the required payment prior to 4:00
p.m. local time in Vancouver, BC on the Expiry Date of the Option. 

DATED the _________day of __________________, 20 ____

	 	 
	 	Signature of Option HolderHemisphere Energy Corporation.: Exhibit 10.2 - Filed by newsfilecorp.com

Exhibit 10.2

EXECUTIVE EMPLOYMENT AGREEMENT 

MEMORANDUM OF AGREEMENT made effective as of the 23 day
of March, 2010 BETWEEN: 

Hemisphere Energy Corporation, a
body corporate having its head office at Vancouver, British Colombia (the
“Corporation”) 

- and - 

Don Simmons, an individual
resident in Vancouver, British Columbia, (the “Executive”) 

WHEREAS the Executive is a senior executive of the
Corporation and is considered by the Board of Directors of the Corporation to be
a valued employee of the Corporation and has acquired skills and abilities
relating to and an extensive background in and knowledge of the Corporation’s
business and the industry in which it is engaged; 

AND WHEREAS the Board of Directors recognizes that it is
in the best interests of the Corporation and its shareholders that the
Corporation retain the continuing dedication of the Executive to his office and
employment; 

AND WHEREAS the Corporation believes it is fair and
reasonable to the Corporation that the Executive receive fair treatment in the
event of a termination of employment or in the event of a Change of Control in
respect of the Corporation; 

NOW THEREFORE in consideration of the premises and the
mutual covenants herein contained and in consideration of the Executive
continuing in office and in the employment of the Corporation, the Corporation
and the Executive hereby covenant and agree as follows: 

	1. 	
      Definitions

For the purposes of this Agreement, the following terms shall
have the following meanings, respectively: 

	 	(a) 	
      “Affiliate” shall have the meaning ascribed
      thereto, in the Canada Business Corporations Act as at the date of
      this Agreement.

	 	 	 
	 	(b) 	
      “Agreement” means this agreement and all schedules
      attached hereto, and in each case as they may be amended or supplemented
      from time to time, and the expressions “hereof”, “herein”, “hereto”,
      “hereunder”, “hereby” and similar expressions refer to this agreement and,
      unless otherwise indicated, references to articles, sections and
      subsections are to articles, sections and subsections in this
      agreement;

	 	 	 
	 	(c) 	
      “Annual Base Salary” has the meaning ascribed
      thereto in Section 5(a) hereof

	 	(d) 	
      “Annual Compensation on Termination” means the
      Annual Base Salary of the Executive (before giving effect to any reduction
      thereof constituting a Good Reason under subsection 1(j) hereof) payable
      by the Corporation as at the end of the month immediately preceding the
      month in which the termination of employment hereunder takes effect,
      together with the Average Annual Bonus representing the lost value of all
      benefits enjoyed by the Executive, at the time of the termination of
      employment.

	 	 	 	 	 
	 	(e) 	
      “Associate” shall have the meaning ascribed
      thereto in the Canada Business Corporations Act, as at the date of
      this Agreement.

	 	 	 	 	 
	 	(f) 	
      “Average Annual Bonus” means an amount equal to
      either:

	 	 	 	 	 
	 		(i) 	
      the average of the annual bonus paid to the Executive
      over the two (2) years immediately prior to any termination of the
      Executive; or

	 	 	 	 	 
	 		(ii) 	
      if the Executive has not been continuously employed by
      the Corporation for a period of two years prior to termination, the last
      annual bonus paid to the Executive prior to the termination of the
      Executive.

	 	 	 	 	 
	 	(g) 	
      “Board of Directors” means the Board of Directors
      of the Corporation.

	 	 	 	 	 
	 	(h) 	
      “Change of Control” means the occurrence of a
      transaction or a series of transactions following the effective date of
      this Agreement, other than as agreed to in writing by the Executive, as a
      result of which:

	 	 	 	 	 
	 		(i) 	
      any Person acquires or becomes the beneficial owner of,
      or a combination of Persons acting jointly or in concert or pursuant to a
      voting trust acquire or become the beneficial owner of, directly or
      indirectly, such number of Voting Securities of the Corporation which,
      together with such Person’s or Persons’ then owned Voting Securities of
      the Corporation, if any, represent 50% or more of the Voting Securities of
      the Corporation, whether such 50% threshold percentage is achieved through
      the acquisition of previously issued and outstanding Voting Securities, or
      of Voting Securities that have not been previously issued, or any
      combination thereof, or any other transaction having a similar effect;
      PROVIDED, HOWEVER, that the provisions of this subsection (i) shall be
      deemed not to apply to:

	 	 	 	 	 
	 			
      (A) 
	the acquisition of 40% or more of the Voting Securities
      of the Corporation by the Executive or any Associate(s) of the Executive
      or by any voting trust in which either the Executive or any Associate(s)
      of the Executive participate(s); and
	 	 	 	 	 
	 		(ii) 	
      a majority of the directors of the Corporation is removed
      from office at any annual or special meeting of shareholders or in any
      other manner whatsoever;

- 2 - 

	 		(iii) 	
      the Corporation merges or is consolidated with, completes
      a successful take-over of or is successfully taken over by or concludes an
      arrangement for the disposition of the Corporation to or for the
      acquisition of any other corporation(s) or legal entity(ies) (other than
      with, of, by or to a wholly- owned Subsidiary or Subsidiaries of the
      Corporation) and such transaction or series of transactions results in a
      Person (other than the shareholders of the Corporation, taken as a whole,
      immediately before the transaction in question) acquiring or becoming the
      beneficial owner of, or a combination of Persons (other than the
      shareholders of the Corporation, taken as a whole, immediately before the
      transaction in question) acting jointly or in concert or pursuant to a
      voting trust acquiring or becoming the beneficial owner of, directly or
      indirectly, such number of Voting Securities of the resulting
      Corporation(s) or legal entity(ies), so as to gain effective control of
      the resulting Corporation(s) or the legal entity(ies), PROVIDED, HOWEVER,
      that the provisions of this subsection (iii) shall be deemed not to apply
      to any transaction in which the majority of the directors of the
      Corporation (as it was constituted prior to the transaction) remain as a
      majority of the directors of the Corporation following such
      transaction(s); or

	 	 	 	 
	 		(iv) 	
      the Corporation sells all or substantially all of its
      assets, over the reasonable objection of the Executive, to any other
      corporation(s) or legal entity(ies) (other than to a wholly-owned
      Subsidiary or Subsidiaries of the Corporation), and for the purpose of
      this subsection (iv), “substantially all” shall mean 75% or more in value
      of the “proved reserves” of the Corporation from time to time;

	 	 	 	 
	 	(i) 	
      “Corporation” means Hemisphere Energy Corporation
      and its Affiliates and Subsidiaries.

	 	 	 	 
	 	(j) 	
      “Effective Date” means, in the event of
      termination of employment by the Corporation or the Executive, the
      effective date of written notice provided to the Executive or the
      Corporation, respectively.

	 	 	 	 
	 	(k) 	
      “Good Reason”, in each case except as agreed to in
      writing by the Executive, means:

	 	 	 	 
	 		(i) 	
      a Change of Control;

	 	 	 	 
	 		(ii) 	
      the Executive is assigned any responsibilities or duties
      materially inconsistent with his position, duties, responsibilities and
      status with the Corporation as President and Chief Executive Officer as in
      effect at the date of this Agreement, or there is a material change in the
      Executive’s position, duties, responsibilities (including reporting
      responsibilities), titles or offices as contemplated by this
    Agreement;

- 3 - 

	 		(iii) 	
      any failure by the Corporation to continue to provide the
      Executive any benefit, bonus, profit sharing, incentive, remuneration or
      compensation plan, stock ownership or purchase plan, stock option plan,
      life insurance, disability plan, pension plan or retirement plan in which
      the Executive was entitled to participate in as at the date of this
      Agreement (or as may be added to or amended to benefit the Executive, from
      time to time) or the taking by the Corporation of any action materially
      adversely affecting the Executive’s participation in or materially
      reducing his rights or benefits under or pursuant to any such plan. The
      Executive shall also be entitled to participate in and to receive all
      rights and benefits under any plan or program adopted by the Corporation
      for its executive officers as a group. Nothing in this Agreement affects
      of fetters the discretion of the Corporation to grant or award or not any
      bonus, option.

	 	 	 	 
	 		(iv) 	
      the Corporation requires the Executive to relocate to any
      city or community other than the City of Vancouver, except for required
      travel on the Corporation’s business to an extent substantially consistent
      with the Executive’s business obligations under this Agreement;

	 	 	 	 
	 		(v) 	
      there is any material breach by the Corporation of any
      material provision of this Agreement; or

	 	 	 	 
	 		(vi) 	
      any adverse change by the Corporation or its successor in
      title, and without the agreement of the Executive, in any of the duties,
      powers, rights, discretions, salary, title, or lines of reporting, such
      that immediately after such change or series of changes, the
      responsibilities and status of the Executive, taken as a whole, are not at
      least substantially equivalent to those assigned to him immediately prior
      to such change, or any other reason which would be considered to amount to
      constructive dismissal by a court of competent jurisdiction.

	 	 	 	 
	 	(l) 	
      “Just Cause” includes, without in any way limiting
      its definition under common law, any improper conduct by the Executive
      which is materially detrimental to the Corporation or the wilful failure
      of the Executive to properly carry out his duties.

	 	 	 	 
	 	(m) 	
      “Option” has the meaning ascribed to it in
      subsection 5(d) hereof.

	 	 	 	 
	 	(n) 	
      “Person” includes an individual, partnership,
      association, body corporate, trustee, executor, administrator, legal
      representative and any national, provincial, state or municipal
      government.

	 	 	 	 
	 	(o) 	
      “Stock Option Agreement” means the Stock Option
      Agreement of the Corporation with respect to Stock Options granted to the
      Executive under the terms and conditions of the Option Plan or Plans in
      existence within the Corporation at the time of such grant.

	 	 	 	 
	 	(p) 	
      “Subsidiary” has the meaning ascribed to it in the
      Securities Act (Alberta) as at the date of this Agreement;
    and

- 4 - 

	 	(q) 	
      “Voting Securities” means any securities of the
      Corporation ordinarily carrying the right to vote for the election of
      directors and any securities immediately convertible into or exchangeable
      for such securities.

	2. 	
      Employment of the
  Executive

The Corporation shall continue to employ the Executive, and the
Executive shall serve the Corporation, as an officer of the Corporation in the
position held as of the date hereof, on the terms and conditions and for the
remuneration hereinafter set forth, or in such other position, or on such other
terms and conditions or for such other remuneration as the parties hereto may
subsequently agree. In such position, the Executive shall perform or fulfil such
duties and responsibilities as the Board of Directors may designate from time to
time and as are consistent with such position. 

	3. 	
      Performance of Duties/Responsibilities of the
      Executive

During the period of his employment, the Executive shall
faithfully, honestly and diligently serve the Corporation and shall carry out
such tasks as the Corporation may from time to time reasonably request. The
Corporation may change the Executive’s responsibilities and status, provided
that such change or series of changes would not constitute Good Reason. The
Executive shall devote his full time and efforts to the business of the
Corporation and to fulfilling the Executive’s responsibilities, and the
Executive shall use his best efforts to promote the interests of the
Corporation. Notwithstanding the foregoing, the parties to this Agreement
acknowledge and agree that the Executive has held and will continue to hold
interests and positions in outside business opportunities as are known to the
Corporation as of the effective date of this Agreement and as may change from
time to time with the consent of the Corporation, which opportunities the
Executive is entitled to continue to participate in during the term of this
Agreement provided such participation does not detract from the ability of the
Executive to fulfil his obligations to the Corporation. 

	4. 	
      Term

This Agreement shall continue in full force and effect from the
date hereof and for a period of indefinite term unless earlier terminated in
accordance with the provisions of Article 6. 

	5. 	
      Remuneration

	 	 	 
		(a) 	
      The Corporation shall pay to the Executive a gross annual
      salary of $120,000, which may thereafter be increased as determined
      by the Board of Directors (as increased from time to time, the “Annual
      Base Salary”). This annual salary shall be payable in accordance with
      the Corporation’s usual payroll practices, but, in any event, not less
      than monthly.

	 	 	 
		(b) 	
      In addition to the annual salary payable to the
      Executive, the Executive shall be entitled to receive a performance bonus
      as and when determined by, and at the discretion of, the Board of
      Directors.

	 	 	 
		(c) 	
      The Executive shall be entitled to the following
      benefits:

- 5 - 

	 	(i) 	
      annual paid vacation of five (5) weeks;

	 	 	 
	 	(ii) 	
      the Executive shall be entitled to, at the Corporation’s
      sole expense, monthly parking privileges at or near the Corporation’s
      principal executive offices located in Vancouver, British
  Columbia;

	 	 	 
	 	(iii) 	
      the Executive shall be entitled to, at the Corporation’s
      sole expense, such further benefits as may be determined by the Board of
      Directors at a future date, including but not limited to sport club,
      health club or family scholarship contributions, in accordance with the
      terms of any such arrangement;

	 	 	 
	 	(iv) 	
      the Corporation shall pay or reimburse the Executive for
      all reasonable out of pocket business expenses including, without
      limitation, all travel and promotional expenses payable or incurred by the
      Executive in connection with the proper discharge of his duties under this
      Agreement. All payments or reimbursement shall be made upon submission by
      the Executive of vouchers, bills or receipts for all such reasonable
      expenses;

	 	 	 
	 	(v) 	
      the Executive shall be entitled to participate and to
      receive all rights and benefits under any life insurance, disability,
      medical, dental, health and accident plans maintained by the Corporation
      for its employees generally and for its executive officers specifically,
      with eligibility and benefits determined in accordance with the terms of
      such policy; and

	 	 	 
	 	(vi) 	
      the Executive shall be entitled to participate in and to
      receive all rights and benefits under the Corporation’s profit sharing and
      stock option plans as the same may be constituted from time to time,
      together with such other plan or plans as may be implemented by the
      Corporation during the term of this Agreement, provided that such
      participation shall be in accordance with and subject to all applicable
      terms and conditions of such plans.

	 	(d) 	
      The Corporation has granted to the Executive options to
      purchase shares in the common stock of the Corporation, and the
      Corporation may hereafter continue to grant options to the Executive
      (collectively the “Options”), which Options are to be governed by
      the terms and conditions of the Corporation’s Stock Option Agreement(s),
      as amended.

	6. 	
      Termination

	 	 	 
		(a) 	
      Termination of Employment by the Corporation for
      Just Cause. The Corporation may terminate this Agreement and the
      Executive’s employment with the Corporation at any time without notice or
      further obligations to the Executive for reasons of Just Cause.

	 	 	 
		(b) 	
      Termination of Employment without Just
      Cause. Subject to subsection 6(e) hereof, if the Executive’s
      employment is terminated (a) by the Corporation other than for Just Cause,
      or (b) by the Executive in response to a Good Reason within 

- 6 - 

	 	 	
      ninety (90) days after the Good Reason has taken
      effect, the Executive shall be entitled to receive, and the Corporation
      shall pay to the Executive, immediately following termination, a cash
      amount equal to the Annual Compensation on Termination:

	 	 	
       
	 		
      (i)       Annual Base Salary (12
      months); plus

	 	 	 
	 		
      (ii)      Average Annual
      Bonus

	 	 	 
	 	(c) 	
      Executive Stock Options on Termination Without Just
      Cause In the event of a termination pursuant to Section 6(b)
      hereof, the Multiplier created by the calculation set out in 6(b) shall
      also represent the number of months following the Effective Date of the
      termination (the “Notice Period”) for which the Executive shall be
      entitled to the accelerated and immediate vesting of those Options which
      would have otherwise vested during the Notice Period and which accelerated
      Options may be exercised by the Executive in accordance with the
      timeframes set out in the Stock Option Agreement, in such
      circumstances.

	 	 	 
	 	(d) 	
      Resignation or Retirement. The Executive
      may terminate this Agreement and the Executive’s employment with the
      Corporation at any time by giving ninety (90) days written notice of
      termination to the Corporation, even if the Executive does not do so for
      Good Reason, and the Corporation shall have no further obligation to the
      Executive under this Agreement or pursuant to the Executive’s employment,
      and no other compensation shall be payable to the Executive after the
      expiry of the said notice.

	 	 	 
	 	(e) 	
      Non-Applicability. Subsections 6(b) and
      6(c) do not apply in the event of termination of the employment of the
      Executive as a result of the death, disability or retirement of the
      Executive.

	7. 	
      Change of Control

Subject to the terms of this Agreement, the Executive agrees to
remain in the employ of the Corporation during the period commencing with any
act taken by any Person, or the announcement of an intention to take such act,
which may result in a Change of Control of the Corporation and ending with the
final conclusion of all matters associated with such act or announcement. 

	8. 	
      Resignations and
Release

If the employment of the Executive is terminated for any of the
reasons set forth in Article 6 hereof, the Executive shall immediately tender
his resignation from any position he may hold as an officer or director of the
Corporation. Upon the payment of the appropriate amounts described in this
Agreement, if any, the employee agrees to accept such payment as full and
complete satisfaction of any and all outstanding obligations, from the
Corporation to the Executive. The Executive further agrees to provide the
Corporation, prior to any payments hereunder, with an executed Release in a form
satisfactory to the Corporation, with respect to all 

- 7 - 

matters arising out of this Agreement, the
termination of this Agreement and the termination of the employment
relationship. 

	 	
       
	9. 	
      No Obligation to
Mitigate

The Executive shall not be required to mitigate the amount of
any payment or benefit provided for in this Agreement by seeking other
employment or otherwise, nor shall the amount of any payment provided for in
this Agreement be reduced by any compensation earned by the Executive as a
result of employment by another employer after termination or otherwise. 

	10. 	
      Confidentiality

	 	(a) 	
      In the event of the termination of the employment of the
      Executive, howsoever initiated, whether by the Corporation or the
      Executive, the Executive agrees to keep confidential all information of a
      confidential or proprietary nature concerning the Corporation, its
      subsidiaries and affiliates and their respective operations,
      opportunities, assets, finances, business and affairs and further agrees
      not to use such information for personal advantage, provided that nothing
      herein shall prevent disclosure of information which is publicly available
      or which is required to be disclosed under appropriate statutes, rules of
      law or legal process.

	 	 	 
	 	(b) 	
      The Executive recognizes and understands that in
      performing the duties and responsibilities of his employment as outlined
      in this Agreement, he has been and will be a key employee of the
      Corporation and will occupy a position of high fiduciary trust and
      confidence, pursuant to which he has developed and will develop and
      acquire wide experience and knowledge with respect to all aspect of the
      services and businesses carried on by the Corporation and its Affiliates
      and the manner in which such businesses are conducted. It is the expressed
      intent and agreement of the Executive and the Corporation that such
      knowledge and experience shall be used solely and exclusively in the
      furtherance of the business interest of the Corporation and its Affiliates
      and not in any manner detrimental to them. The Executive therefore agrees
      that so long as he is employed by the Corporation pursuant to this
      Agreement he shall not engage in any practice or business in competition
      with the business of the Corporation or any of its Affiliates, nor shall
      he take any act that would result in a conflict of interest with respect
      to the Executive’s duties under this
Agreement.

	11. 	
      Legal Proceedings

	 	 	 
		(a) 	
      To the extent that it is lawfully able to do so, the
      Corporation shall indemnify the Executive and his heirs, and legal
      representatives against all costs, charges and expenses (including any
      amounts paid to settle any actions or satisfy any judgment) reasonably
      incurred by the Executive in respect of any civil, criminal or
      administrative action or proceeding to which he has been made a party by
      reason of being or having been an employee, director, or officer of the
      Corporation if:

- 8 - 

	 		(i) 	
      the Executive acted honestly and in good faith with a
      view to the best interests of the Corporation; and

	 	 	 	 
	 		(ii) 	
      in the case of a criminal or administrative action or
      proceeding that is enforced by a monetary penalty, the Executive had
      reasonable grounds for believing that his conduct was lawful.

	 	 	 	 
	 	(b) 	
      To the extent that it is lawfully able to do so, the
      Corporation shall indemnify the Executive and his heirs, and legal
      representatives against all costs, charges and expenses reasonably
      incurred by the Executive in respect of an action by or on behalf of the
      Corporation to procure a judgment in the Corporation’s favour to which the
      Executive is made a party by reason of having been an employee, director,
      or officer of the Corporation, if:

	 	 	 	 
	 		(i) 	
      the Executive acted honestly and in good faith with a
      view to the best interests of the Corporation; and

	 	 	 	 
	 		(ii) 	
      in the case of a criminal or administrative action or
      proceeding that is enforced by a monetary penalty, the Executive had
      reasonable grounds for believing that his conduct was
  lawful.

	12. 	
      Enurement

This Agreement shall enure to the benefit of and be enforceable
by the Executive’s successors or legal representatives but otherwise it is not
assignable. 

	13. 	
      Entire Agreement

Except as specifically excepted herein, this Agreement
constitutes the entire agreement between the parties hereto pertaining to the
subject matter hereof. No amendment or waiver of this Agreement shall be binding
unless executed in writing by the party to be bound thereby. 

	14. 	
      Provisions Which Operate Following
      Termination

Notwithstanding any termination of this Agreement for any
reason whatsoever and with or without cause, the provisions of Articles 8, 10,
11 and 16, and any of the provisions of this Agreement necessary to give
efficacy thereto, shall continue in full force and effect following such
termination. 

	15. 	
      Headings

The headings of the articles, sections and subsections herein
are inserted for convenience of cross reference only and shall not effect the
meaning or construction hereof. 

- 9 - 

	16. 	
      Severability

If any provision contained herein is determined to be void or
unenforceable in whole or in part, it shall be and be deemed to be severed from
this Agreement without effecting or impairing the validity of any other
provision herein. 

	17. 	
      Choice of Law

This Agreement shall be governed and interpreted in accordance
with the laws of the Province of Alberta and the courts of the Province of
Alberta shall be the sole and proper forum with respect to any suits brought
with respect to this Agreement. 

	18. 	
      Most Favoured - Nation
  Provision

If there is a conflict between the provisions of this Agreement
and the provisions of any incentive compensation plans, benefit plans, pension
plans, any other perquisites payable, or any basis of compensation or the
payment of benefits to the Executive generally, the parties acknowledge and
agree that it is the intent of this Agreement that the Executive shall receive
the maximum of the amounts owing to him hereunder or thereunder and in no event
shall the Executive be disadvantaged as a result of such a conflict. 

	19. 	
      Notices

Any notice or other communication required or permitted to be
given hereunder shall be in writing and shall be prepaid first-class mail, by
facsimile or other means of electronic communication or by hand-delivery as
hereinafter provided. Any such notice or other communication, if mailed by
prepaid first-class mail at any time other than during a general discontinuance
of postal service due to strike, lockout or otherwise, shall be deemed to have
been received on the fourth business day after the post-marked date thereof, or
if sent by facsimile or other means of electronic communication, shall be deemed
to have been received at the time it is delivered to the applicable address
noted below either to the individual designated below or to an individual at
such address having apparent authority to accept deliveries on behalf of the
addressee. Notice of change of address shall also be governed by this section.
In the event of a general discontinuance of postal service due to strike,
lock-out or otherwise, notices or other communications shall be delivered by
hand or sent by facsimile or other means of electronic communication and shall
be deemed to have been received in accordance with this section. Notices and
other communications shall be addressed as follows: 

	 	(a) 	
      if to the Executive:

		Don Simmons 	
		 	
		 	
		 	

- 10 - 

	 	(b) 	
    if to the Corporation:
	 
	 	 	 	 
	 		
    Hemisphere Energy Corporation
	 
	 	 	Suite 650 -789 West Pender St. 	 
	 		
    Vancouver, BC V6C 1H2
	 
	 	 	Attention: Chairman, Board of Directors 	 
	 		
    Facsimile: (604) 685-9676
	 

	20. 	
      Copy of Agreement

The Executive hereby acknowledges receipt of a copy of this
Agreement duly signed by the Corporation. 

IN WITNESS WHEREOF, the parties hereto have duly
executed and delivered this Agreement. 

	/s/ Erin Casey	 	/s/
      Don Simmons 
	Witness 	 	Don Simmons 

HEMISPHERE ENERGY CORPORATION 

	By: 	/s/
      Charles O’Sullivan 	 
	  	 Charles O’Sullivan 	 

- 11 -

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