Document:

MANAGEMENT SERVICES AGREEMENT

MANAGEMENT SERVICES AGREEMENT

MEMORANDUM OF AGREEMENT made as of and to have effect from the 1st day of January 2009.

BETWEEN:

Nation Energy Inc. 

11th Floor, 609 West Hastings Street

Vancouver, B.C. 

V6B 4W4

(hereinafter called the “Company”

OF THE FIRST PART

AND:

CARAVEL MANAGEMENT CORP.

11th Floor, 609 West Hastings Street

Vancouver, B.C.

V6B 4W4

(hereinafter called “Caravel”)

OF THE SECOND PART

WHEREAS Caravel is a private company in the business of providing management, office and administrative services to reporting companies; and

WHEREAS the Company wishes to retain the services of Caravel to provide such services to the Company on the terms and conditions of this agreement;

NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the premises and of the covenants and agreements hereinafter contained, the parties hereto have agreed as follows:

1.

APPOINTMENT

The Company hereby retains Caravel to provide management, office and administrative services to the Company in accordance with the terms of this agreement.

2.

TERM

This agreement shall commence on the first day of January 2009 and shall continue on a month-to-month basis until terminated by one of the parties.

This agreement may be terminated by either party upon 30 day’s written notice to the other party, without cause.

3.

REMUNERATION

The Company shall pay to Caravel for the services rendered by it hereunder:

(a)

the sum of $7,865.00 USD per month; and

(b)

any out-of-pocket expenses incurred by Caravel on behalf of the Company; and

(c)

specific specialized management services. 

The amount payable to Caravel hereunder may be altered from time to time during the term of this agreement by mutual agreement between the parties, provided however that in the event that any such increase is subject to the prior approval of the TSX Venture Exchange, or other such organization or regulatory agency, such increase will be subject to first obtaining such approval.

The sum payable and described in 3(a) shall automatically be increased 3% annually beginning one year after the effective date described in 2.

4.

SERVICES TO BE PROVIDED

Caravel shall provide the following services to the Company:

(a)

provide assistance with respect to the administration of the financial affairs of the Company;

(b)

provide liaison with the Company’s auditors;

(c)

assist the senior officers of the Company in developing financial plans for the Company; 

(d)

assist in developing and administering the exploration and development programs for the Company’s resource properties;

(e)

prepare, in consultation with the Company’s Audit Committee or Board of Directors, as the case may be, financial statements, related management’s discussion and analysis, press releases disclosing financial results and other financial information, and attend to the dissemination thereof to the public and the shareholders of the Company, as required; 

(f)

provide general bookkeeping and accounting services to the Company;

(g)

coordinate and administer the Company’s compliance with the financial reporting requirements of the securities regulatory authorities having jurisdiction;

(h)

perform or cause to be performed through the Company’s solicitors, the duties of a corporate secretary pursuant to the requirements of the Business Corporation Act; and

(i)

provide general office and administration services to the Company;

(j)

provide website creation and maintenance;

(k)

provide electronic filing of all material documents (SEDAR); 

(l)

provide the use of office and fixed assets.

5.

NOTICE

Any notice to be given under this agreement shall be in writing and shall be deemed to have been given if delivered to, or sent by prepaid registered post addressed to, the respective addresses of the parties appearing on the first page of this agreement (or to such other address as one party provides to the other in a notice given accordingly to this paragraph).  Where a notice is given by registered post it shall be conclusively deemed to be given and received on the fifth day of its deposit in a Canada post office at any place in Canada. 

Either party may terminate this agreement without notice or other act if:

(a)

Either party is in default in any material respect in the performance of any of its obligations under this Agreement or otherwise commit any material breach of this Agreement, and such default continues after thirty (30) days written notice from the non defaulting party to the defaulting party stating the particulars of such default.

(b)

Bankruptcy or insolvency proceedings are instituted by or against the other party or the other party as adjudicated a bankrupt, becomes insolvent, makes an assignment for the benefit of creditors or proposes or makes any arrangements for the liquidation of its debts or a receiver or receiver-manager is appointed with respect to any or all of the assets of the other party.

(c)

The Company may terminate this agreement with or without notice or other act if there is any change in the current control and/or management of Caravel which changes shall be unacceptable to the Company in the Company’s sole discretion.  This agreement is not assignable by Caravel, either directly or indirectly, without the written consent of the Company, which consent may be arbitrarily withheld.

6.

MISCELLANEOUS

6.01

This agreement may not be assigned by either party without the prior written consent of the other.

6.02

This agreement supersedes any prior agreement, verbal or written, made between the parties relating to the subject matter hereof, and states the entire agreement between the parties.  This agreement may be supplemented, altered, amended, modified or revoked by the parties only in writing.

6.03

The titles of headings to the respective paragraphs of this agreement shall be regarded as having been used for reference and convenience only.

6.04

This agreement shall enure to the benefit of and be binding upon the parties hereto and their respective heirs, executors, administrators, successors and permitted assigns.

6.05

This agreement shall be governed by and interpreted in accordance with the laws of British Columbia, Canada.

6.06

Time shall be of the essence of this agreement.

6.07

The relationship between the Company and Caravel is intended to be and shall be that of Principal and Independent Contractor.  The parties hereto acknowledge and agree that Caravel is not an employee, partner or joint venturer of the Company.  Caravel shall not act or attempt to act, or represent itself, directly or by implication, as an employee, partner or joint venturer of the Company.

6.08

The parties hereto acknowledge and agree that the Company is not appointing Caravel as its agent and that Caravel has no authority, either real or implied, to enter into any contracts or to otherwise bind the Company contractually.

6.09

Caravel shall not enter into any agreement, contract or arrangement with any stock exchange, with any regulatory authority or with any person, firm or corporation imposing any legal obligation or liability of any kind whatsoever on the Company.

IN WITNESS WHEREOF the parties hereto have executed this agreement as of the day and year first above written.

Nation Energy Inc.

________________________________________.

Director

CARAVEL MANAGEMENT  CORP.  

________________________________________.

Controllerfwhy10q20100630ex10-1.htm

 

OPERATING AGREEMENT

This Operating Agreement (the “Agreement”) is made and entered into as of this 12th day of August 2010, by and between FITT Highway Products, Inc., a Nevada corporation (“FHWY”) and F.I.T.T. Energy Products, Inc., a Nevada corporation (the “FITT”) (individually, a “Party”; collectively, the “Parties”).

RECITALS

WHEREAS, FHWY has a significant debt burden and is unable to raise capital from investors or to perform operating activities and;

WHEREAS, FWHY desires to have FITT, an unaffiliated corporation, raise capital and perform operating activities in connection with an energy shot product called “F.I.T.T. Energy With Resveratrol” and other related products (the “Products”) and;

WHEREAS, FITT desires to assist FHWY by raising capital from investors and performing operating activities for the Products.

NOW, THEREFORE, in consideration of the mutual promises herein contained, the Parties hereby agree as follows:

1.         OPERATING SERVICES

Attached hereto as Exhibit A and incorporated herein by this reference is a description of services to be provided by FITT for FHWY (the “Operating Services”).  It is understood by the Parties that FITT, in connection with its performing the Operating Services for the Products, will own all inventory of the Products and will record in its books and records all profit or loss activity (sales, cost of sales, operating expenses, etc.) associated therewith.

2.         RAISING CAPITAL

FHWY has experienced extreme difficulty raising capital because of its significant debt burden and because potential investors insist that their investments be used solely for the production of the Products and for related sales and marketing activities.  FITT agrees to raise capital in order to perform the Operating Services for the Products.

3.         TERM OF AGREEMENT

This Agreement shall be in full force and effect commencing upon the date hereof and shall have a term of 24 months therefrom, unless the Agreement is extended by written agreement by both Parties (the initial term and any extensions being defined as the “Term”).  Either Party hereto shall have the right to terminate this Agreement without notice in the event of the bankruptcy, insolvency, or assignment for the benefit of creditors of the other Party.  FITT shall have the right to terminate this Agreement on 30 days notice for any reason whatsoever.

  

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4.         ASSIGNMENT

During the Term of this Agreement, FITT shall have the exclusive right to perform the Operating Services for the Products.  Because FHWY has a significant debt burden, there may come a time when FHWY decides that continuing as a going concern is no longer in the best interest of its creditors and shareholders.  If such a determination is made, and FITT decides not terminate the Agreement in accordance with Section 3, FHWY agrees to assign all rights under this Agreement to FITT.

5.         TIME DEVOTED BY FITT

It is anticipated that FITT shall spend as much time as deemed necessary by FITT in order to perform its obligations hereunder.  FHWY understands that this amount of time may vary and that FITT may perform other services for other companies.

6.        PLACE WHERE SERVICES WILL BE PERFORMED

FITT will perform most of the Operating Services required by this Agreement at the FHWY offices currently located at 26381 Crown Valley Parkway, Suite 230, Mission Viejo, California 92691.  In addition, FITT will perform the Operating Services on the telephone and at such other place(s) as deemed necessary by FITT.

7.         INDEPENDENT CONTRACTOR

The Parties agree that FITT will act as an independent contractor in the performance of its duties under this Agreement.  Nothing contained in this Agreement shall be construed to imply that FITT, or any employee, agent or other authorized representative of FITT, is a partner, joint venturer, agent, officer or employee of FHWY, unless such person is working under an Employment Agreement with FHWY or has been hired as an employee of FHWY and FHWY consents to FITT using such person in its performance of the Operating Services.

8.         FUNDS DUE TO OR OWED BY FHWY

As of the effective date of this Agreement, an accounting will be prepared as to the net amount of monies owed by FHWY to FITT or by FITT to FHWY for advances made to date, and a note payable will be executed by the Party owing the net monies.

9.         FITT’S COMPENSATION PAYABLE TO FHWY

It is understood by the Parties that, in its performance of the Operating Services, FITT will own all inventory of the Products and will record in its books and records all profit or loss activity (sales, cost of sales, operating expenses, etc.) related to the Products.  As consideration for FHWY’s granting to FITT the opportunity to perform the Operating Services for the Products, FITT will pay FHWY $0.05 (5 cents) per bottle sold of the Products (the “Royalty”). The Royalty will first be applied to any amounts owed by FHWY to FITT as per Section 8 above, adjusted for subsequent net advances.  Once all net amounts owed by FHWY to FITT, if any, have been repaid, the Royalty will be paid directly to FHWY.

  

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FITT has agreed with its investors that no part of their investment or cash flow derived from its performance of the Operating Services will be used to pay any creditor claims of FHWY. Therefore, it is expressly understood and agreed by the Parties that no investment or operating funds from FITT will be used to pay creditor claims of FHWY, except as FHWY may designate from Royalty payments it may receive.  In addition, the Parties agree that any monies of FITT that are not used to pay the Royalty shall remain the sole property of FITT.

FITT will be solely responsible for all tax returns and payments required to be filed with or made to any federal, state or local tax authority with respect to the FITT’s performance of the Operating Services for the Products.

10.         FHWY’S COMPENSATION PAYABLE TO FITT

It is understood by the Parties that, in its performance of the Operating Services, FITT must raise capital and may incur losses.  In order to incentivize FITT to perform the Operating Services, FHWY agrees to issue to FITT 5,000,000 of its common shares, which shares will carry a standard Rule 144 restriction.  FITT has indicated it intends to use the 5,000,000 shares to incentivize FITT investors or providers of credit lines or product financing to FITT.  The shares will be issued as of the date of the Agreement and will be immediately vested.

11.         CONFIDENTIAL INFORMATION

FHWY and FITT acknowledge that each will have access to proprietary information regarding the business operations of the other and agree to keep all such information secret and confidential and not to use or disclose any such information to any individual or organization without the non-disclosing Parties prior written consent.  It is hereby agreed that from time to time FHWY and FITT may designate certain disclosed information as confidential for purposes of this Agreement.

12.         INDEMNIFICATION

Each Party (the “Indemnifying Party”) agrees to indemnify, defend, and hold harmless the other Party (the “Indemnified Party”) from and against any and all claims, damages, and liabilities, including any and all expense and costs, legal or otherwise, caused by the negligent act or omission of the Indemnifying Party, its subcontractors, agents, or employees, incurred by the Indemnified Party in the investigation and defense of any claim, demand, or action arising out of the work performed under this Agreement; including breach of the Indemnifying Party of this Agreement.  The Indemnifying Party shall not be liable for any claims, damages, or liabilities caused by the sole negligence of the Indemnified Party, its subcontractors, agents, or employees.

The Indemnified Party shall notify promptly the Indemnifying Party of the existence of any claim, demand, or other matter to which the Indemnifying Party’s indemnification obligations would apply, and shall give them a reasonable opportunity to settle or defend the same at their own expense and with counsel of their own selection, provided that the Indemnified Party shall at all times also have the right to fully participate in the defense.  If the Indemnifying Party, within a reasonable time after this notice, fails to take appropriate steps to settle or defend the claim, demand, or the matter, the Indemnified Party shall, upon written notice, have the right, but not the obligation, to undertake such settlement or defense and to compromise or settle the claim, demand, or other matter on behalf, for the account, and at the risk, of the Indemnifying Party.

  

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The rights and obligations of the Parties under this Article shall be binding upon and inure to the benefit of any successors, assigns, and heirs of the Parties.

13.         MISCELLANEOUS

(A)         This Agreement shall be constructed and interpreted in accordance with and the governed by the laws of the State of California.

(B)         The Parties agree that the Courts of the County of Orange, State of California shall have sole and exclusive jurisdiction and venue for the resolution of all disputes arising under the terms of this Agreement and the transactions contemplated herein.

(C)         ARBITRATION OF DISPUTES.

 

ANY CONTROVERSY OR CLAIM RELATING TO OR ARISING OUT OF THIS AGREEMENT SHALL BE SETTLED IN ORANGE COUNTY, CALIFORNIA BY ARBITRATION IN ACCORDANCE WITH JAMS ARBITRATION RULES APPLICABLE TO EMPLOYMENT DISPUTES (THE “JAMS RULES”).  JUDGMENT UPON THE AWARD RENDERED BY THE ARBITRATOR(S) MAY BE ENTERED IN ANY COURT HAVING JURISDICTION.  ALL PARTIES TO THE ARBITRATION SHALL BE ENTITLED TO THE FULL RANGE OF DISCOVERY PROVIDED UNDER CALIFORNIA CODE OF CIVIL PROCEDURE SECTION 1283.05.

 

THIS AGREEMENT IS GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA, IRRESPECTIVE OF CALIFORNIA’S CHOICE-OF-LAW PRINCIPLES.

 

BY SIGNING THIS AGREEMENT THE PARTIES ARE AGREEING TO HAVE ANY DISPUTE ARISING OUT OF THIS AGREEMENT DECIDED BY NEUTRAL ARBITRATION AS PROVIDED BY CALIFORNIA LAW AND ARE GIVING UP ANY RIGHTS THEY MIGHT POSSESS TO HAVE THE DISPUTE LITIGATED IN A COURT OR JURY TRIAL.  BY SIGNING THIS AGREEMENT THE PARTIES ARE GIVING UP THEIR JUDICIAL RIGHTS TO APPEAL.  IF EITHER PARTY REFUSES TO SUBMIT TO ARBITRATION AFTER AGREEING TO THIS PROVISION, THEY MAY BE COMPELLED TO ARBITRATE UNDER THE AUTHORITY OF THE CALIFORNIA CODE OF CIVIL PROCEDURE. THE PARTIES AGREEMENT TO THIS ARBITRATION PROVISION IS VOLUNTARY.

 

(D)         This Agreement shall inure to the benefit of the Parties hereto, their administrators and successors in interest.  This Agreement shall not be assignable by either Party hereto without the prior written consent of the other; which will not be unreasonably withheld.

  

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(E)         This Agreement contains the entire understanding of the Parties and supersedes all prior agreements between them.

(F)         No supplement, modification or amendment of this Agreement shall be binding unless executed in writing by the Parties.  No waiver of any of the provisions of this Agreement shall be deemed, or shall constitute, a waiver of any other provision, whether or not similar, nor shall any waiver constitute a continuing waiver.  No waiver shall be binding unless executed in writing by the Party making the waiver.

(G)         If any provision hereof is held to be illegal, invalid or unenforceable under present or future laws effective during the term hereof, such provision shall be fully severable.  This Agreement shall be construed and enforced as if such illegal, invalid or unenforceable provision had never comprised a part hereof, and the remaining provisions hereof shall remain in full force and effect and shall not be affected by the illegal, invalid or unenforceable provision or by its severance herefrom.

IN WITNESS WHEREOF, the Parties hereto have placed their signatures hereon on the day and year first above written.

	
COMPANY:

	  	
SERVICE PROVIDER:

	  
	  	  	  	  
	
FITT HIGHWAY PRODUCTS, INC.

	  	
F.I.T.T. ENERGY PRODUCTS, INC.

	  
	
a Nevada corporation

	  	
a Nevada corporation

	  
	  	  	  	  
	  	  	  	  
	  	  	  	  
	
 /s/ Derek Jones

	  	
 /s/ Michael R. Dunn  

	  
	
By:  Derek Jones

	  	
By:  Michael R. Dunn

	  
	
Its:  Director

	  	
Its:  Chief Executive Officer

	  

 

  

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EXHIBIT A

DESCRIPTION OF OPERATING SERVICES

The Operating Services to be performed by FITT will be those operating services related to the financing, production, marketing and distribution of the Products, and shall include, but not be limited to, the following pursuant to the terms of this Agreement;

 

	
1.

	
Produce the Products (the current product is “F.I.T.T. Energy With Resveratrol”)

	
  

	
a.

	
Arrange for production of product formula (currently owned and produced by Wellington Foods) to meet estimated sales needs.

	
  

	
b.

	
Arrange for production of labels and boxes to meet estimated sales needs.

	
2.

	
Develop marketing and promotion programs that will allow for sales activity and enhance branding opportunities for the Products.

	
  

	
a.

	
Direct Response Television – create and implement marketing and ad programs for the general television audience (such programs being commonly referred to as informercials).

	
  

	
b.

	
General internet marketing – create and implement marketing and ad programs directed to the general internet audience.

	
  

	
c.

	
Fitness Centers and Health Clubs – create and implement marketing and ad programs to be used to target clients of Fitness Centers and Health Clubs.

	
  

	
d.

	
High Schools, Colleges, Charities – create and implement marketing and ad programs to be used to attract business from patrons of High Schools, Colleges and Charities.

	
3.

	
Create compensation programs for affiliates and independent sales people associated with marketing targets identified in 2 above.

	
4.

	
Arrange for scheduling and delivery of the Products to a fulfillment center (for further delivery to end user customer) or to appropriate customer.  The fulfillment center currently used is Thill Logistics.

	
5.

	
Arrange for use of merchant accounts for the processing of customer credit cards for sales of the Products.

	
6.

	
Collect proceeds from sales of the Products.

	
7.

	
Pay to FHWY $0.05 (5 cents) per bottle sold of the Products as per Section 9 of this Agreement.

	
8.

	
Pay all operating expenses related to the production, marketing and distribution of the Products.

	
9.

	
Record in FITT’s books and records all assets and liabilities as well as all sales, cost of sales, and operating expenses related to the Products.

	
10.

	
Prepare periodic financial reports related to the financing, production, marketing and distribution of the Products.

 

 

 

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