MANAGEMENT SERVICES AGREEMENT

 

THIS MANAGEMENT SERVICES AGREEMENT (this “Agreement”), dated June 25, 2016 but
effective as of July 22, 2015, is made by and between Nation Energy (Australia)
Pty Ltd, an Australian limited company (the “Company”), and Carmen J. Lotito, a
resident of Colorado (the “Advisor”).

WHEREAS, on the terms and subject to the conditions contained in this Agreement,
the Company desires to obtain certain operational, management and consulting
services from the Advisor and the Advisor desires to perform such services for
the Company.

NOW, THEREFORE, in consideration of the premises and the respective mutual
agreements, covenants, representations and warranties contained in this
Agreement, the receipt and sufficiency of which are hereby acknowledged, the
parties agree as follows:

1.     Engagement of Advisor. The Company appoints the Advisor and the Advisor
accepts appointment on the terms and conditions provided in this Agreement as
advisor to the Company, its direct and indirect subsidiaries and its direct and
indirect affiliates (collectively, the “Nation Group”), including any other
corporations or other entities hereafter formed or acquired by any member of the
Nation Group to engage in any business. The parties expressly acknowledge that
the Advisor is also an officer of the Company. Additionally, the parties
expressly acknowledge that the Advisor may be elected or appointed to director,
manager or officer positions of other companies in the Nation Group. It is
understood that the Advisor’s rights and obligations hereunder shall be
independent of the Advisor’s director, manager or officer positions with the
Company or other members of the Nation Group.

2.     Services of the Advisor. Subject to any limitations imposed by applicable
law or regulation, the Advisor shall render or cause to be rendered operational,
management, consulting, accounting and financial services to the Company and the
other members of the Nation Group as requested from time to time by the Board of
Directors of the Company (the “Board”) and agreed to by the Advisor, which
services may include advice and assistance concerning any and all aspects of the
operations, planning and financing of the Company and the other members of the
Nation Group and conducting relations on behalf of the Company or the other
members of the Nation Group with accountants, attorneys, financial advisors and
other professionals. The Advisor shall provide and devote to the performance of
this Agreement such time and resources of the Advisor as the Advisor shall deem
appropriate to the furnishing of the services hereunder. In addition, the
Advisor shall, as requested by the Board and agreed to by the Advisor, render
advice and expertise in connection with any acquisitions or dispositions
undertaken by the Company or the other members of the Nation Group.

3.     Reimbursement of Expenses; Independent Contractor. All obligations or
expenses incurred by the Advisor in the performance of his duties under this
Agreement shall be for the account of, on behalf of, and at the expense of the
Company, and all such expenses shall be promptly reimbursed by the Company. The
Advisor shall not be obligated to make any advance to or for the account of the
Company or any other member of the Nation Group or to pay any sums, except out
of funds held in accounts maintained by the Company or any other member of the
Nation Group, nor shall the Advisor be obligated to incur any liability or
obligation for the account of the Company or any other member of the Nation
Group. The Company shall reimburse the Advisor by wire transfer of immediately
available funds for any amount paid by the Advisor, which shall be in addition
to any other amount payable to the Advisor under this Agreement. The Advisor
shall be an independent contractor, and nothing in this Agreement shall be
deemed or construed to (i) create a partnership or joint venture between the
Company or any other member of the Nation Group and the Advisor, (ii) cause the
Advisor to be responsible in any way for the debts, liabilities or obligations
of the Company or any other party, or (iii) cause the Advisor to be an officer,
employee or agent of the Company or any other member of the Nation Group.

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4.     Other Activities of the Advisor; Investment Opportunities. The Company
acknowledges and agrees that the Advisor shall not be required to devote full
time and business efforts to the duties of the Advisor specified in this
Agreement, but instead shall devote only so much of such time and efforts as the
Advisor reasonably deems necessary. The Company further acknowledges and agrees
that the Advisor is engaged in the business of investing in, acquiring and/or
managing businesses for his own account, and for the account of other
unaffiliated parties, and understands that the Advisor plans to continue to be
engaged in such business (and other business or investment activities) during
the term of this Agreement. The Advisor makes no representations or warranties,
express or implied, in respect of the services to be provided by the Advisor.
Except as the Advisor may otherwise agree in writing after the date hereof:
(a) the Advisor shall have the right to, and shall have no duty (contractual or
otherwise) not to, directly or indirectly (i) engage in the same or similar
business activities or lines of business as the members of the Nation Group or
(ii) do business with any client or customer of the members of the Nation Group;
(b) the Advisor shall not be liable to any member of the Nation Group for breach
of any duty (contractual or otherwise) by reason of any such activities or of
the Advisor’s participation therein; and (c) in the event that the Advisor
acquires knowledge from a third party (not of the Nation Group) of a potential
transaction or matter that may be a corporate opportunity for any member of the
Nation Group, on the one hand, and the Advisor, on the other hand, or any other
person or entity, the Advisor shall not have any duty (contractual or otherwise)
to communicate or present such corporate opportunity to the Company or any other
member of the Nation Group, and, notwithstanding any provision of this Agreement
to the contrary, the Advisor shall not be liable to any member of the Nation
Group for breach of any duty (contractual or otherwise) by reason of the fact
that the Advisor directly or indirectly pursues or acquires such opportunity for
himself, directs such opportunity to another person or entity, or does not
present such opportunity to any member of the Nation Group. In no event will any
the Advisor be liable to any member of the Nation Group for any indirect,
special, incidental or consequential damages, including lost profits or savings,
whether or not such damages are foreseeable, or in respect of any liabilities
relating to any third party claims (whether based in contract, tort or
otherwise) other than for claims relating to the services which may be provided
by the Advisor hereunder (subject to Section 7 hereof).

5.     Compensation of the Advisor.

(a)     In consideration of the services to be rendered hereunder, the Company
will pay to the Advisor a monthly fee in cash in the amount of Twenty Thousand
Dollars ($20,000) (the “Consulting Fee”), payable in advance on the first (1st)
business day of each calendar month. The payment by the Company of the
Consulting Fee hereunder is subject to any applicable restrictions contained in
any Company debt financing agreements. If any such restrictions prohibit the
payment of any installment of the Consulting Fee, such Consulting Fee
installment shall accrue and the Company shall make such installment payment as
soon as it is permitted to do so under such restrictions, plus pay interest
thereon from the due date of such installment before giving effect to such
restriction to the date of payment at an interest rate of 10% per annum. If the
Company or other members of the Nation Group acquire or enter into any
additional business operations after the date of this Agreement (each, an
“Additional Business”), the Board and the Advisor will, prior to the acquisition
or prior to entering into the business operations, in good faith, determine
whether and to what extent the Consulting Fee should be increased as a result
thereof. Any increase will be evidenced by a written supplement to this
Agreement signed by the Company and the Advisor.

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(b)     Any payment pursuant to this Section 5 shall be made in cash by wire
transfer(s) of immediately available funds to or among one or more accounts as
designated from time to time by the Advisor to the Company in writing.

6.     Term. This Agreement shall commence effective as of the effective date
hereof and shall remain in effect on a month-to-month basis. The Advisor may
terminate this Agreement at any time upon written notice to the Company, such
termination to be effective upon the Company’s receipt of such written notice.
The Company may terminate this Agreement by giving written notice to the advisor
at least one calendar month in advance of the termination date. No termination
of this Agreement, whether pursuant to this Section 6 or otherwise, shall affect
the Company’s obligations with respect to the fees, costs and expenses incurred
by the Advisor in rendering services hereunder and not reimbursed by the Company
as of the effective date of such termination. In addition, the provisions of
Sections 7, 8, and 17 shall survive the termination of this Agreement and remain
binding and in effect.

7.     Liability. The Advisor shall not be liable for any mistakes of fact,
errors of judgment, or losses sustained by the Company or any of its
subsidiaries or affiliates, or for any acts or omissions of any kind (including
acts or omissions of the Advisor), except to the extent caused by intentional
misconduct of the Advisor as finally determined by a court of competent
jurisdiction.

8.     Indemnification of the Advisor. The Company and the other members of the
Nation Group hereby agree to jointly and severally indemnify and hold harmless
the Advisor from and against all losses, claims, liabilities, suits, costs,
damages and expenses (including attorneys’ fees) arising from his performance of
services hereunder. The Company and the other members of the Nation Group
further agree to reimburse the Advisor on a monthly basis for any cost of
defending any action or investigation (including attorneys’ fees and expenses),
subject to an undertaking from the Advisor to repay the Company if the Advisor
is determined not to be entitled to such indemnity.

9.     Assignment. Without the consent of the Advisor, the Company shall not
assign, transfer or convey any of its rights, duties or interest under this
Agreement, nor shall it delegate any of the obligations or duties required to be
kept or performed by it hereunder. The Advisor shall not assign, transfer or
convey any of his rights, duties or interest under this Agreement, nor shall he
delegate any of his obligations or duties required to be kept or performed under
this Agreement.

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10.     Severability. Whenever possible, each provision of this Agreement will
be interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement is held to be invalid, illegal, or
unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality, or unenforceability will not affect
any other provision or the effectiveness or validity of any provision in any
other jurisdiction, and this Agreement will be reformed, construed, and enforced
in such jurisdiction as if such invalid, illegal, or unenforceable provision had
never been contained herein.

11.     No Waiver. The failure by any party to exercise any right, remedy or
elections herein contained or permitted by law shall not constitute or be
construed as a waiver or relinquishment for the future exercise of such right,
remedy or election, but the same shall continue and remain in full force and
effect. All rights and remedies that any party may have at law, in equity or
otherwise upon breach of any term or condition of this Agreement, shall be
distinct, separate and cumulative rights and remedies and no one of them,
whether exercised or not, shall be deemed to be in exclusion of any other right
or remedy.

12.     Amendment. The provisions of this Agreement may be amended or modified
only with the prior written consent of the Company and the Advisor.

13.     Entire Agreement. This Agreement contains the entire agreement between
the parties hereto with respect to the matters herein contained and any
agreement hereafter made shall be ineffective to effect any change or
modification, in whole or in party, unless such agreement is in writing and
signed by the party against whom enforcement of the change or modification is
sought.

14.     Applicable Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Colorado, without giving effect to any
choice of law or conflict of law rules or provisions (whether of the State of
Colorado or any other jurisdiction) that would cause the application of the laws
of any jurisdiction other than the State of Colorado.

15.     Successors. This Agreement and all the obligations and benefits
hereunder shall inure to the successors and permitted assigns of the parties.

16.     Counterparts. This Agreement may be executed in multiple counterparts
with the same effect as if all signing parties had signed the same document. All
counterparts shall be construed together and constitute the same instrument.

17.     Confidentiality. The Company may not disclose the terms of this
Agreement except as may be required by applicable law or the rules of any
exchange on which the Company’s or its affiliates’ securities are traded.

 

 

{Signatures on following page}

 

 

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IN WITNESS WHEREOF, the parties hereto have caused this Management Services
Agreement to be executed and delivered as of the date first above written.

 

 

NATION ENERGY (AUSTRALIA) PTY LTD

 

By:   /s/ John R. Hislop                                  

Name:  John R. Hislop

Title:    CFO and Vice President

 

 

 

     /s/ Carmen J. Lotito                                   

Carmen J. Lotito

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