UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): October 23, 2009
U.S. Natural Nutrients and Minerals, Inc.
(Exact Name of Registrant as Specified in its Charter)
Registrant’s telephone number, including area code: 760-360-9547
America’s Driving Ranges, Inc.
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
TABLE OF CONTENTS
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Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangement of Certain Officers |
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Item 5.03 Amendments to Articles of Incorporation or By-laws; Change in Fiscal Year |
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Item 8.01 Other Events |
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Item 9.01 Financial Statements and Exhibits |
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Item 1.01 Entry into a Material Definitive Agreement.
1)
On October 26, 2009, U.S. Natural Nutrients and Minerals, Inc., a Nevada corporation (formerly known as America’s Driving Ranges, Inc.) (“USNNM” or the “Company”) entered into an Agreement with M Strata, LLC, a Nevada limited liability company (“M Strata”) (“M Strata Agreement”) whereby M Strata granted to USNNM permission and consent to mine the certain mineral products (the “Product”) from certain mining claims owned or controlled by M Strata located in Panaca, Nevada. Pursuant to the terms of the M Strata Agreement, M Strata will designate which claims may be mined and USNNM shall have the right to mine the Product and remove the Product from the mining claims so designated.
Simultaneously, USNNM entered into an agreement to physically mine the Product in the M Strata claims with JNH Mining, Inc. (“JNH”) (see below). The Company’s agreement with JNH is subject to the approval of M Strata which has indicated that it will approve subject to certain terms and conditions, including the procuring of certain insurance coverage and the provision of certain indemnifications. The M Strata Agreement further provided that it was granting USNNM the exclusive right to mine and purchase the Product from M Strata (“Exclusive Right”) and M Strata agreed that it will not sell Product or permit any other person or entity to purchase Product or mine on the claims controlled by M Strata other than USNNM, on condition that USNNM meets certain Purchase Minimums (as defined in the agreement) (“Purchase Minimums”) and makes timely payments therefor. In the event USNNM fails to meet the Purchase Minimums for a period of one year, then such Exclusive Right shall terminate and M Strata shall be entitled to either (i) terminate the M Strata Agreement and cause USNNM to terminate all mining operations on M Strata’s claims or (ii) sell Product to other purchasers in addition to USNNM. USNNM may cure any default in the Purchase Minimum by paying for the difference between the amount actually purchased in any one calendar year which was less than the Purchase Minimum and the amount actually ordered and paid for. Nothing in the M Strata Agreement conferred on USNNM or its agents any rights of ownership in any mining claims owned or controlled by M Strata now or in the future. In addition, USNNM agreed that it would only purchase Calcium Montmorillonite clay from M Strata and from no other source for the term of the M Strata Agreement or any extensions thereof.
The term of the M Strata Agreement is five (5) years and there is provision for automatic extensions of the term for additional one (1) year terms thereafter. The M Strata Agreement provides for payments by USNNM of $24.00 per ton of Product removed from M Strata’s claims, subject to periodic adjustment in accordance with the terms of the M Strata Agreement. Payments for Product are to be made by USNNM to M Strata on a monthly basis, upon presentation of invoices and in accordance with the terms of the M Strata Agreement.
Fifty percent (50 %) of the beneficial ownership of M Strata is owned by Paul Hait and Dennis Cullison, who are both directors of the Company and hold 1,000,000 and 750,000 shares of the Company’s Common Stock, respectively.
2)
On October 26, 2009,USNNM entered into a Mining Agreement (“the “Mining Agreement”) with Jeff Hayden and JNH Mining, Inc. (collectively referred to as “JNH”) whereby JNH agreed to perform the
following services related to the mining of Product, which will ultimately be incorporated into products sold by the Company to the general public.
Pursuant to the terms of the Mining Agreement, USNNM hereby hired JNH to mine Product from various locations in Panaca, NV owned by M Strata, which are the subject of the M Strata Agreement (see above) on an exclusive basis. M Strata will designate to USNNM which claims may be mined and USNNM shall advise JNH as to the claims so designated by M Strata. JNH will then mine the Product and remove the Product from the mining claims so designated. JNH represents that it has obtained all permits and approvals from the Bureau of Land Management (BLM) required to permit it to mine Product from a designated area of M Strata’s Eagle #4 Mining Claim. JNH agreed that, prior to commencing mining operations on any claim owned by M Strata, it would obtain all approved permits, post all required bonds at its sole cost, provide liability insurance, workers compensation insurance and automobile coverage and liability insurance for all operations commenced on said mining claims of M Strata and such coverage shall name M Strata and USNNM as additional named insureds. JNH further agreed that it would hold harmless and indemnify M Strata and USNNM from all claims, causes of action, lawsuits, losses, damages, injuries of any kind or nature, arising out of the activity of mining the mining claims of Owner including all legal fees and costs incurred by Owner or USNNM or both, in connection with any such claims .
During the term of the Mining Agreement, USNNM agreed to pay JNH for mining of the Product amounts ranging from $32.27 per ton to $33.88 per ton, subject to periodic adjustment (FOB Panaca, Nevada). The Mining Agreement also calls for (1) additional payments to JNH on the basis of customer orders for the Product generated by JNH and (2) an additional payment to JNH in the event of any sale of merger of USNNM to a third party.
The term of the Mining Agreement is five (5) years with one additional five (5) year extension at the option of either party.
JNH is owned by Jeff Hayden, who is the holder of 80,000 shares of the Company’s Common Stock.
Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers
On October 23, 2009, the shareholders of the Company re-elected our four directors (James Harrison, John Birchard, Paul Hait and Dennis Cullison) to an additional one-year term through the 2010 Annual Meeting of Shareholders or until their successors have been duly elected and qualified.
Item 5.03 Amendments to Articles of Incorporation or By-laws;
On October 23, 2009, the Company’s shareholders approved amendments to the Articles of Incorporation of the Company to:
1)
Change the name of the corporation from America’s Driving Ranges, Inc. to U.S. Natural Nutrients and Minerals, Inc.; and
2)
Increase the Company’s authorized capital from 100,000,000 authorized shares comprising 100,000,000 shares of common stock with a par value of $0.001 per share to 350,000,000 authorized shares comprising 300,000,000 authorized shares of common stock with a par value of $0.001 per share and 50,000,000 authorized shares of preferred stock with a par value of $0.001 per share. The amendment further provides that the preferred stock may be issued in one or more series, which may be designated from time to time by the Company’s Board of Directors
Thereafter, the Company caused an Amendment to the Company’s Articles of Incorporation to be filed with the Secretary of State of the State of Nevada, upon which filing the aforementioned amendments became immediately effective.
Item 8.01 Other Events
On October 23, 2009, the Company determined to change its business plan in order to primarily focus on the mining of certain mining claims, which contain natural mineral deposits commonly known as Calcium Montmorillonite.
The change of the Company’s business plan and related activities will require that the Company raise significant additional capital. As a first step in that process, the Company is about to launch a private placement of its preferred stock to raise up to $1,000,000. There is no guarantee that this placement will be successful, or if successful, it will raise the desired amount or be on terms and conditions which are beneficial to the Company.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
EXHIBIT
NUMBER
DESCRIPTION
3.1
Certificate of Amendment to Articles of Incorporation of America’s Driving Ranges, Inc. filed with the Nevada Secretary of State on October 23, 2009
10.1
Agreement dated October 26, 2009 by and between U.S. Natural Nutrients and Minerals, Inc. and M Strata, LLC
10.2
Agreement dated October 26, 2009 by and between U.S. Natural Nutrients and Minerals, Inc. and JNH Mining, Inc. and Jeff Hayden
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
U.S. NATURAL NUTRIENTS AND MINERALS, INC.
/S/ James Harrison
By:________________________
Name:
James Harrison
Title:
President
Dated:
October 29, 2009
EXHIBIT LIST
EXHIBIT
NUMBER
DESCRIPTION
3.1
Certificate of Amendment to Articles of Incorporation of America’s Driving Ranges, Inc. filed with the Nevada Secretary of State on October 23, 2009
10.1
Agreement dated October 26, 2009 by and between U.S. Natural Nutrients and Minerals, Inc. and M Strata, LLC
10.2
Agreement dated October 26, 2009 by and between U.S. Natural Nutrients and Minerals, Inc. and JNH Mining, Inc. and Jeff Hayden
Exhibit 3.1
ROSS MILLER
Secretary of State
206 North Carson Street
Carson City, Nevada 89701-4620
(775) 684-6708
Website: www.nvsos.gov
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Filed in the office of Ross Miller Secretary of State State of Nevada |
Document Number 20090753411-22 |
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Filing Date and Time 10/23/2009 12:30 PM |
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Entity Number E0365712008-7 |
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CERTIFICATE OF AMENDMENT (Pursuant to NRS 78.385 and 78.390) |
Certificate of Amendment to Articles of Incorporation
For Nevada Profit Corporations
(Pursuant to NRS 78.385 and 78.390 - After Issuance of Stock)
1. Name of Corporation: AMERICA'S DRIVING RANGES, INC.
2. The articles have been amended as follows: (provide article numbers, if available)
1.
NAME of Corporation: U.S. NATURAL NUTRIENTS AND MINERALS, INC.
2. SHARES: Number of Common Shares with par value: 300,000,000 Par Value per share $0.001
Number of Preferred Shares with par value: 50,000,000 Par Value per share $0.001
3. The vote by which the stockholders holding shares in the corporation entitling them to exercise a least a majority of the voting power, or such greater proportion of the voting power as may be required in the case of a vote by classes or series, or as may be required by the provisions of the articles of incorporation* have voted in favor of the amendment is: 4,844,500
4. Effective date of filing: (optional)
10/26/2009
(must not be later than 90 days after the certificate is filed)
5. Signature: (required)
X /s/Dennis Cullison
Signature of Officer
*If any proposed amendment would alter or change any preference or any relative or other right given to any class or series of outstanding shares, then the amendment must be approved by the vote, in addition to the affirmative vote otherwise required, of the holders of shares representing a majority of the voting power of each class or series affected by the amendment regardless to limitations or restrictions on the voting power thereof.
IMPORTANT: Failure to include any of the avobe information and submit with the proper fees may cause this filing to be rejected.
This form must be accompanied by appropriate fees.
EXHIBIT 2.1
Agreement
This Agreement is entered into this 26 th day of October, 2009, by and between US Natural Nutrients and Minerals, Inc. (hereinafter referred to as USNNM) and M Strata, LLC, a Nevada limited liability company (hereinafter referred to as Owner) with reference to the following facts:
A.
USNNM is in the business of marketing and selling for human consumption, animal consumption and for agricultural purposes a Calcium Montmorillonite clay (Product).
B.
Owner owns certain mining claims and rights wherein a high quality, unique type of Product exists.
C.
USNNM wishes to purchase Product from Owner and Owner wishes to sell Product to USNNM on the terms and conditions and pursuant to the Agreements set forth hereinafter.
NOW THEREFORE in consideration of the mutual covenants and agreements hereinafter set forth, the parties hereto do hereby agree as follows:
1. Permission to Mine. Owner hereby grants to USNNM permission and consent to mine the Product from various locations in Panaca, Nevada which are mining claims controlled by Owner. Owner will provide access to all claims they hold and USNNM or its agents shall have the right to mine the Product and remove the Product from the mining claims so designated. USNNM has indicated it intends to enter into an agreement to mine the Product with JNH Mining, Inc. (hereinafter referred to as JNH). Said agreement with JNH shall be approved by Owner but such approval shall not be unreasonably withheld or delayed. USNNM shall be required to enter into an agreement with the company or agent it selects to mine the claims which shall provide that USNNM and its agent shall provide liability insurance, workers compensation insurance and automobile coverage and liability for all operations commenced on said mining claims of Owner and such coverage shall name Owner and others as an additional named insureds and provide for direct access to such coverage to the insurance company so providing coverage’s and certificates of insurance. In that regard, USNNM and its agent shall hold harmless and indemnify to the fullest extent permitted by law Owner from all claims, causes of action, lawsuits, losses, damages, injuries of any kind or nature, arising out of the activity of mining the mining claims of Owner including all legal fees and costs incurred by Owner in connection with any such claims. Owner shall be entitled to hire legal counsel of its choice to defend it from any and all of the aforesaid claims, causes of action, losses, lawsuits, or otherwise at the cost and expense of USNNM.
2. Exclusive Right to Mine and Purchase Product . Owner hereby grants to USNNM the exclusive right to mine and purchase Product from Owner. Owner agrees it will not
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sell Product or permit any other person or entity to purchase Product or mine on the claims controlled by Owner other than USNNM on condition that USNNM purchases and makes payment to Owner as detailed in the following Schedule:
Schedule for Yearly Minimums
(Purchase Minimums)
Date
Amount of Minimum Purchase
11/24/2009 to 03/31/2010
150 Tons
04/1/2010 to 03/31/2011
1.500 Tons
04/1/2011 to 03/31/2012
7,500 Tons
04/1/2012 to 03/31.2013
24,000 Tons
04/1/2013 and thereafter
40,000 Tons
In the event USNNM fails to adhere to the Purchase Minimums for a period of one year then such Exclusive Right shall terminate and Owner shall be entitled to either (i). terminate this contract and cause USNNM to terminate all mining operations on Owner’s claims or (ii). sell Product to other purchasers in addition to USNNM. USNNM may cure any default in the Purchase Minimum by paying for the difference between the amount actually purchased in any one year which was less than the minimum as provided herein and the amount actually ordered and paid for. For example: in the event USNNM purchases and pays for 500 tons in one year and which is less than the Purchase Minimum for that year, if it desired to maintain its exclusivity, then it would have to pay for the difference at the price agreed to herein to maintain said Purchase Minimum. Such payment would have to be paid on or prior to the tenth day of the next succeeding month after the ending month of the year where the Purchase Minimum was not attained. Notwithstanding the foregoing, nothing in this agreement confers on USNNM or its agents any rights of ownership in any mining claims owned or controlled by Owner now or in the future.
3. Payment for Product During the term of the Agreement, USNNM shall pay to Owner at a place as directed by Owner, monthly or upon receipt of an invoice if such invoice is prior to the end of the month, the full purchase price of all Product sold by Owner to USNNM except for product being shipped to those off mine Way Stations that have previously been identified in writing to Owner, and agreed to by Owner, as approved Way Stations. USNNM shall provide to Owner copies of all invoices, statements and sales receipts generated by USNNM in connection with all sales of Product by USNNM to any person or entity and for any reason or purpose including product used for promotional purposes by USNNM. USNNM with make payment on Product previously delivered to the approved Way Stations to Owner within 3 days of the date the product has been paid for and allowed to leave the remote Way Stations. JNH shall maintain accurate records at the sites of the exact amounts of all Products delivered to remote Way Stations, customers or buyers of Product from USNNM including dates and times delivered, amounts and scale weights records, and the name of the Way Station or customer or buyer of Product to whom Product was delivered. The records of such sales and deliveries as aforesaid shall be faxed daily to Owner to the place designated by
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Owner. USNNM shall pay for said Product monthly or sooner and payment shall be accompanied by a recap of sales which shall be consistent with the daily faxed information required to be faxed daily as aforesaid and by a statement of an officer of USNNM that said information regarding calculating the payment is true and correct.
4. Price of Product . USNNM shall pay to Owner the sum of twenty-four dollars ($24) per ton (Base Price) for each ton sold or removed from Owners claim whether or not such Product is sold or given away as complementary to customers of Owner. For example: if USNNM sold or removed 5500 tons of Product in any month then USNNM would be required to pay Owner, as set forth herein, 5500 x Base Price of $24 per ton = $132,000. The Base Price of $24 per ton for the Product shall be adjusted by a Cost of Living Adjustment which shall be calculated as follows: the Base Price as set forth in this paragraph shall be increased if the Consumer Price Index U.S. City Average All Urban Consumers (Index) as published by the United States Department of Labor Statistics for the Los Angeles/Riverside/Orange County, increases over the base period index. The base period Index shall be compared with the Index for the same calendar month for each subsequent year (comparison month). If the Index for any comparison month is higher than the base period Index, then the minimum Base Price for the next year shall be increased by the identical percentage commencing with the next consecutive commencement month. In no event shall the minimum Base Price be less than $24 in the first year or less than any subsequent Base Price adjusted as provided here. (By way of illustration only), if USNNM commenced operations in July of 2009, then the base period index is that for July, 2009 (assume 176.3) and that Index shall be compared to the Index for July, 2010 (assume 185.8), and because the Index for July, 2010 is 5.39% higher, the Base Price for the period commencing August 1, 2010 through July, 2011, shall be 5.39% higher; likewise the Index for July, 2011 shall be compared with the Index for July, 2012. For purposes of calculating increases, the base period Index shall be the prior years Base Price so computed and adjusted as provided herein. Should the Bureau discontinue the publication of the above Index, or publish same or less frequently, or alter same in some other manner. then Owner shall adopt a substitute index or substitute procedure which reasonably reflects and monitors consumer prices. For example if the Base Price is $24 then the computation would be as follows for the CPI adjustment: $24 x .0539 = new Base Price of $25.29. If the next year the CPI adjustment was .025 then the computation to compute the new Base Price for the ensuing year would be $25.29 x .025 = $25.92. In addition, the Base Price of Product shall be also increased from time to time by an amount equal to 5% of the price increase charged by USNNM to its customers for bulk sales of Product at such time as prices are increased by USNNM. For example, if USNNM was charging its customers $200 per ton in bulk and it raised its prices to $250 in bulk then there would be a $50 increase. For example if the Base Price of Product after computing the new Base Price for any increase in CPI as provided herein, the Base Price after such CPI adjustment would then be adjust or would be increased as follows: Base Price is $25.29 + 5% of $50 = $2.50 per ton. New Base Price would be $27.29 per ton of Product.
5. Term. This Agreement shall be for an initial term of five years. The initial term of this Agreement shall be automatically extended for consecutive one year terms. This
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Agreement may be terminated by Owner in the event of any act of fraud, gross negligence or willful misconduct by USNNM or its agents or employees or for the failure of USNNM to pay all amounts due to Owner for Product sold by USNNM or Product removed from the mining site other than sites identified per section 3. Fraud shall be defined as USNNM intentionally failing to pay owner for Product that it knows has been removed from the site.
6. Assignment of Agreement and Rights Therein . This Agreement, and the rights and obligations hereunder, shall not be sold, transferred or assigned without the Owner’s consent which may be withheld in the Owner’s sole and absolute discretion which may be reasonable or unreasonable, and which may be withheld by Owner for any reason and for no reason.
7. Notices . Except as otherwise expressly provided herein or by law, any notice or consent or request required or permitted by this Agreement shall be in writing and shall be deemed properly given, served or delivered when it is mailed by U.S. mail addressed to either party or any party at the addressed last provided by such party to be served and as provided by written notice hereafter.
8. Entire Agreement . This Agreement constitutes the entire Agreement between the parties, supersedes all prior negotiations covering its subject matter which preceded or accompanied its execution. Any promises, representations, statements inducements, terms, or conditions, made to either party by the other party are of no force or effect unless expressly set forth herein. Except that that certain Confidentiality and Non-Disclosure Agreement dated May 21, 2009 executed by Jeff Hayden in favor of USNNM and its covenants and agreements set forth therein shall not be terminated.
9. Attorneys Fees . In the event either party shall bring any action against the other party to enforce any provision of this Agreement, then the prevailing party shall be awarded all costs and attorneys fees in connection with such action.
10. Indemnification . USNNM shall indemnify and hold harmless Owner and all of the persons provided to USNNM on list as provided by Owner as set forth in paragraph 1 hereof, from any and all claims, causes of action, losses, lawsuits, damages arising out of or in any way related to the operation of its business activities and mining on the mining claims of Owner including without limitation any and all legal fees and costs incurred by Owner in connection with any claim, loss, damages, lawsuits or the like. Owner shall have the right to employ attorneys as determined by Owner to represent Owner’s interests.
11 . Jurisdiction . Any suit, action or proceeding seeking to enforce any provision of, or based on any matter arising out of or in connection with, this Agreement or the transactions contemplated hereby may be brought in any federal or state court located in Las Vegas, Nevada, and each of the parties hereby consents to the jurisdiction of such courts (and of the appropriate appellate courts therefrom) in any such suit, action or proceeding and irrevocably waives, to the fullest extent permitted by law, any objection
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which it may now or hereafter have to the laying of the venue of any such suit, action or proceeding in any such court or that any such suit, action or proceeding which is brought in any such court has been brought in an inconvenient forum. Process in any such suit, action or proceeding may be served on any party anywhere in the world, whether within or without the jurisdiction of any such court. Each party hereto (including its affiliates, agents, officers, directors and employees) hereby irrevocably waives, to the fullest extent permitted by applicable law, any and all right to trial by jury in any legal proceeding arising out of or relating to this Agreement or the transactions contemplated hereby. The internal laws of the State of Nevada shall be applied to all matters.
12. Covenant of Non-Competition. As a material part of the consideration of Owner entering into this contract, USNNM covenants and agrees that in the event it, or any of its employees, locates any other areas containing Montmorillonite they shall immediately advise Owner of such existence and the exact location of same so that Owner shall be able to claim same for Owner and not for the benefit of USNNM. USNNM acknowledges and agrees that all locations of Montmorillonite shall belong to Owner and not to USNNM and USNNM shall immediately notify Owner of the existence of the Montmorillonite so that Owner may file a mining claim to same. In the event that USNNM or any of its employees records a mining claim for Montmorillonite in contravention of this Agreement, then such mining claim shall be for the benefit of Owner and the failure of USNNM or any of its employees to disclose that they have filed a mining claim on behalf of themselves or for the benefit of others or has provided such information to others so as to enable them to claim such montmorillonite as a separate mining claim shall be deemed an act of fraud pursuant to this Agreement and USNNM shall be liable to Owner and their heirs, successors and assigns for all damages caused thereby including punitive damages and the termination of this Agreement for fraud as provided herein. Notwithstanding the foregoing, USNNM or its employees covenants and agrees that they will not obtain for themselves or any other person or entity any mining claim for montmorillonite within a 500 mile radius of Panaca, Nevada for a period of 30 years from the date of this Agreement. The Agreements set forth in this paragraph 12 other than the covenant regarding mining claims set forth in the prior sentence shall remain in full force and effect for a period of 10 years after the expiration or sooner termination of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the date and year first above written.
Company
Owner
US Natural Nutrients and Minerals, Inc.
M Strata, LLC
/s/ James Harrison
/s/ Paul Hait
By__________________________ By___________________________
James Harrison, CEO
Manager
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EXHIBIT 2.2
Mining Agreement
This Agreement is entered into this 26 th day of October, 2009, by and between Jeff Hayden, individually and JNH Mining, Inc., a Nevada corporation (hereinafter Jeff Hayden and JNH Mining, Inc. shall be referred collectively referred to as JNH)) and U.S. Natural Nutrients and Minerals, Inc. (hereinafter referred to as USNNM) with reference to the following facts:
A.
JNH desires to perform mining services for the purpose of mining certain montmorillonite clay (Product) on mining claims owned and controlled by M Strata, LLC (Owner). USNNM has entered into an agreement with Owner which provides, among other things, that USNNM is authorized to cause Product to be mined from certain mining claims owned and controlled by Owner.
B.
JNH has represented to USNNM that it has the experience, financial capacity and credit to obtain and supply machinery, equipment, and personnel and all other tools and things necessary for the complete operation of mining and the conduct of mining operations for the extraction of Product from and on the mining claims of Owner.
C.
USNNM desires to hire JNH to mine Product and to deliver such Product to those customers of USNNM as USNNM shall so designate from time to time.
NOW THEREFORE in consideration of the mutual covenants and agreements hereinafter set forth, the parties hereto do hereby agree as follows:
1. Agreement to Mine. USNNM hereby hires JNH to mine the Product from various locations in Panaca, Nevada which are mining claims owned and controlled by Owner. Owner will designate to USNNM which claims may be mined and USNNM shall advise JNH as to the claims so designated by Owner. JNH shall mine the Product and remove the Product from the mining claims only so designated. Presently, JNH has obtained approval of all permits and approvals from the Bureau of Land Management (BLM) required to permit it to mine Product from a designated area of Owner’s Eagle #4 Mining Claim. JNH shall, prior to commencing mining operations on any claim owned by Owner, obtain all
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approved permits, post all required bonds at its sole cost, provide liability insurance, workers compensation insurance and automobile coverage and liability insurance for all operations commenced on said mining claims of Owner and such coverage shall name Owner and USNNM as additional named insureds and provide for direct access to such coverage to the insurance company so providing coverages and certificates of insurance. Owner has provided JNH the list of names to be named insureds. In that regard, JNH shall hold harmless and indemnify and hold harmless Owner and USNNM from all claims, causes of action, lawsuits, losses, damages, injuries of any kind or nature, arising out of the activity of mining the mining claims of Owner including all legal fees and costs incurred by Owner or USNNM or both, in connection with any such claims. Owner and USNNM shall be entitled to hire legal counsel of its choice to defend it from any and all of the aforesaid claims, causes of action, losses, and lawsuits or otherwise at the sole cost and expense of JNH.
2. Price and Payment for Product During the term of the Agreement, USNNM shall pay JNH for mining said Product as follows: (i). 0 to 1600 tons the sum of $33.88 for each ton so delivered to customers of USNNM, FOB Panaca, Nevada; and (ii) 1601 to 3200 tons the sum of $32.91 per ton so delivered to customers of USNNM, FOB Panaca, Nevada; and (iii). 3201 to 6400 tons the sum of $32.42 for each ton so delivered to customers of USNNM, FOB Panaca, Nevada; and (iv). 6401 and above, the sum of $32.37 per ton so delivered to customers of USNNM, FOB Panaca, Nevada. JNH agrees that in connection with the prices set forth in (i) through (iv) herein, 24% of the product so mined will be placed in totes at the prices set forth in (i) through (iv) inclusive. For example: if JNH mines 10,000 tons, 2400 tons will be placed in totes at the prices set forth herein. If more than 24% of the amount mined is required to be in totes as result of any order from USNNM, then the amount required to be in totes in excess of 24% shall be charged at $32.00 per each tote in excess of the 24%. Payment to JNH by USNNM shall be made within 10 days after receipt of an invoice from JNH. Payments to Owner shall be made contemporaneous to any payment made to JNH by USNNM. JNH shall provide to Owner copies of all invoices generated by JNH in connection with all delivery of Product by JNH to any person or entity as directed by USNNM. Payment shall be made to Owner for all Product removed from the mining claim by JNH or USNNM. JNH shall maintain accurate records of the exact amounts of all Product delivered to customers or buyers of USNNM including dates and times delivered amounts and scale weights records, and the name of the
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customer to whom Product was delivered. The records of such sales and deliveries as aforesaid shall be faxed the same day as a delivery is made by JNH to customer, to Owner, to the place designated by Owner.
The Price per ton for the Product shall be adjusted by a Cost of Living Adjustment which shall be calculated as follows: the Price as set forth in this paragraph shall be increased if the Consumer Price Index U.S. City Average All Urban Consumers (Index) as published by the United States Department of Labor Statistics for the Los Angeles/Riverside/Orange County, increases over the base period index. The base period Index shall be compared with the Index for the same calendar month for each subsequent year (comparison month). If the Index for any comparison month is higher than the base period Index, then the minimum Price for the next year shall be increased by the identical percentage commencing with the next consecutive commencement month. In no event shall the minimum Price be less than as set forth above in the first year or less than any subsequent Price adjusted as provided herein. (By way of illustration only), if JNH commenced operations in July of 2009, then the base period index is that for July, 2009 (assume 176.3) and that Index shall be compared to the Index for July, 2010 (assume 185.8), and because the Index for July, 2010 is 5.39% higher, the Base Price for the period commencing August 1, 2010 through July, 2011, shall be 5.39% higher; likewise the Index for July, 2011 shall be compared with the Index for July, 2012. For purposes of calculating increases, the base period Index shall be the prior years Base Price so computed and adjusted as provided herein. Should the Bureau discontinue the publication of the above Index, or publish same or less frequently, or alter same in some other manner, then JNH shall adopt a substitute index or substitute procedure which reasonably reflects and monitors consumer prices. For example if the Price is $32.37 then the computation would be as follows for the CPI adjustment: $32.37 x .0539 = new Price of $34.11. If the next year the CPI adjustment was .025 then the computation to compute the new Price for the ensuing year would be $34.11 x .025 = $34.96 per ton.
3. Term. This Agreement shall be for an initial term of 5 years and may be extended by either party on the same terms and conditions as herein provided for one additional 5 year period. Such extension shall be in writing and such extension right must be exercised prior to 6 months from the expiration of the initial term of this Agreement. In the event of the death or permanent disability of Jeff Hayden resulting in his inability to supervise the mining operation, then in such event USNNM shall have the right to approve the supervisor of the mining operation on behalf of
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JNH which approval by USNNM of such supervisor shall not be unreasonably withheld.
4. Termination for Fraud. This Agreement may be terminated immediately by USNNM in the event that JNH commits any act of fraud. Fraud shall be defined for purposes of this Agreement as a sale or delivery of Product to any person or entity without the knowledge or consent of USNNM first having been obtained and failing to report such unauthorized sale or delivery to USNNM within 24 hours of such unauthorized delivery or sale. Fraud shall also include the filing of any mining claim which has for its purpose the ownership or mining of any montmorillonite clay within a 500 mile radius of the mining claims of Owner without the prior express written consent of Owner and USNNM, which consent may be given or refused for any reason or no reason and may be refused whether such refusal is reasonable or unreasonable.
5. Termination for Willful Misconduct or Gross Negligence. This Agreement may be terminated by USNNM in the event that JNH commits any act of Willful Misconduct or Gross Negligence which as a result of such actions or lack of such actions USNNM or its successors and assigns suffer any economic loss in excess of $25,000. Such actions shall be determined by the facts existent as of the time of such termination by USNNM.
6. Assignment of Agreement and Rights Therein . This Agreement, and the rights and obligations hereunder, shall not be sold, transferred or assigned without the consent of each of USNNM and Owner which consent may be withheld in the Owner’s or USNNM’s sole and absolute discretion and which consent may be reasonable or unreasonable, and which may be withheld by Owner or USNNM for any reason and for no reason. It is understood and agreed by USNNM and JNH that such mining services are personal and a level of trust and confidence exists between USNNM and JNH such that no other person or entity may be acceptable to USNNM.
7. Additional Compensation to JNH. JNH shall be paid a fee for any and all orders generated by customers obtained by JNH. Such fee shall be equal to 3% of the Net Order Price for Product ordered and paid for by such customer within a 12 month period commencing from the time of the first order of any such customer obtained by JNH. Thereafter, and after the first year, any sales to any such customer obtained by JNH, JNH shall be paid a fee of 1.5% of the Net Order Price for Product sold and
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paid for by such ongoing customers obtained by JNH. JNH shall also be paid the above fees in the event that customers obtained by JNH bring additional customers to USNNM for the purchase of Product based on rate of 3% on the Net Order Price for sales to such customer in the first year and 1.5% on the Net Order Price for sales to such customer in the period after the first year of the first order. The term Net Order Price shall mean for purposes hereof as the sales price charged to customer minus the per ton price paid by USNNM to JNH for such product and minus payment for Product to Owner. For example: if the price charged to customer is $150 per ton and JNH is paid $32 per ton to mine it and Owner is paid $24 per ton for the Product then the fee in the first year would be $150-32-24=$94 per ton x 3%=$2.82 per ton for such customer in the first year and one-half that amount per ton for any year after the first year.
8. Additional Payments to JNH. Should USNNM be acquired or merged into another entity, then in such event JNH shall be paid an amount equal to five times, not to exceed $3,000,000, of the net taxable income as set forth on the federal tax return of the JNH Mining, Inc. most recently filed with the Internal Revenue Service immediately preceding the merger or acquisition. If the sale or merger results in the termination of the mining contract of JNH and if there is more than one year of the term of this Agreement then remaining, then in lieu of JNH being paid five times the net taxable income as aforesaid, JNH shall be paid ten times, not to exceed $6,000,000 of the net taxable income as set forth on the federal tax return of the JNH Mining, Inc. most recently filed with the Internal Revenue Service immediately preceding such merger or acquisition. For example: if a merger or acquisition occurs, and if JNH is terminated, then and only if JNH is terminated with more than one year remaining on the term of this Agreement, JNH will be entitled to ten times, not to exceed $6,000,000, instead of five times the net taxable income as described in this paragraph 8. In the event of any such merger or acquisition whereby JNH is paid ten times, not to exceed $6,000,000, of its net taxable income as aforesaid, JNH concurrently with the payment of said amount, shall assign, transfer and convey its interest in any and all personal property, structures, utility deposits, all other deposits and credits and all equipment owned or leased or used by it in the mining operation such that JNH will have transferred any and all interests it has to any and all property, whether deemed real or personal to the new merged entity or acquirer. If the sale or merger is for cash then payment to JNH will be in cash at the computed amount. If the merger is an exchange of stock or other
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securities then JNH will receive stock or securities of a value so computed as provided in this paragraph 8 based on the value agreed to by successor owner.
9. Covenant of Non-Disclosure and Non-Competition. Confidential Information obtained by JNH from Owner or USNNM or the successor and assigns of USNNM, about the operations, customers, charges and billings to customers of USNNM or Owner, quantities purchased by customers of USNNM and all of the methods and operations and business of USNNM and Owner and the knowledge about Panaca Montmorillonite and its properties and results of performance and tests and the existence and location of mining claims of Owner shall be deemed to be and is Confidential Information as more completely defined herein. "Confidential Information" means any and all information not generally known to the public that relates to the existing or reasonably foreseeable business of which, from all of the circumstances, JNH knows or has reason to know that USNNM or Owner intends or expects the secrecy of such information to be maintained. Confidential Information includes, but is not limited to, information relating to proposed or existing products or services, designs, samples, trade secrets, research and development plans, proposals and techniques, descriptions, test data, other data, reports, recommendations, commercial and strategic planning, pricing, vendor, customer and financial information and other proprietary information of USNNM or Owner and their heirs, successors and assigns, whether disclosed directly or indirectly, whether originals or copies, and whether or not legal protection has or has not been obtained or sought under applicable law. JNH shall treat all such information as Confidential Information regardless of its source and whether or not marked as confidential. As a material part of the consideration of USNNM entering into this contract, JNH covenants and agrees that in the event it locates any other areas containing Panaca Montmorillonite it shall immediately advise Owner of such existence and the exact location of same so that Owner shall be able to claim same for Owner and not for the benefit of JNH. JNH acknowledges and agrees that all locations of Panaca Montmorillonite shall belong to Owner and not to USNNM or JNH and JNH shall immediately notify Owner of the existence of Panaca Montmorillonite so that Owner may file a mining claim to same. In the event that JNH records a mining claim for Panaca Montmorillonite in contravention of this Agreement, then such mining claim shall be for the benefit of Owner and the failure of JNH to disclose that it has filed a mining claim on behalf of itself or for the benefit of others or has provided such information to others so as to enable them to claim such montmorillonite as a separate mining claim shall be deemed an act of
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fraud pursuant to this Agreement and JNH shall be liable to Owner and USNNM and their heirs, successors and assigns for all damages caused thereby including punitive damages and the termination of this Agreement for fraud as provided herein. Notwithstanding the foregoing, JNH covenants and agrees that it will not obtain for itself or any other person or entity any mining claim for montmorillonite clay within a 500 mile radius of Panaca, Nevada for a period of 30 years from the date of this Agreement. The Agreements set forth in this paragraph 9 other than the covenant regarding mining claims set forth in the prior sentence shall remain in full force and effect for a period of 10 years after the expiration or sooner termination of this Agreement. Nothing in this Agreement shall be construed as creating an express or implied license or any other right to the Confidential Information or any proprietary right of Owner or USNNM by JNH. In addition to any other relief afforded by law, Company shall have the right to enforce the provisions of this Agreement by specific performance and by injunctive relief against JNH and any other persons connected by reason of their actions. Damages and specific performance and injunctive relief shall not be construed as alternative remedies.
10. Indemnification . JNH shall indemnify and hold harmless Owner and USNNM and all of the persons on list as provided by Owner to JNH as additional named insureds and as set forth in paragraph 1 hereof, from any and all claims, causes of action, losses, lawsuits, damages arising out of or in any way related to the operation of its business activities and mining on the mining claims of Owner or relating to matters relating to the business of USNNM including any claims, causes of action, losses, lawsuits, and damages arising out of or in any related to Ronald Bell and Jon Scanlon including without limitation any and all legal fees and costs incurred by Owner or USNNM in connection with any such claims, losses, damages, lawsuits or the like. Owner and USNNM shall have the right to employ attorneys as determined and selected by Owner to represent Owner’s and USNNM’s interests and the sole cost and expense of JNH.
11 . Jurisdiction . Any suit, action or proceeding seeking to enforce any provision of, or based on any matter arising out of or in connection with, this Agreement or the transactions contemplated hereby may be brought in any federal or state court located in Las Vegas, Nevada, and each of the parties hereby consents to the jurisdiction of such courts (and of the appropriate appellate courts in Nevada) in any such suit, action or proceeding and irrevocably waives, to the fullest extent permitted by law,
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any objection which it may now or hereafter have to the laying of the venue of any such suit, action or proceeding in any such court or that any such suit, action or proceeding which is brought in any such court has been brought in an inconvenient forum. Process in any such suit, action or proceeding may be served on any party anywhere in the world, whether within or without the jurisdiction of any such court. Each party hereto (including its affiliates, agents, officers, directors and employees) hereby irrevocably waives, to the fullest extent permitted by applicable law, any and all right to trial by jury in any legal proceeding arising out of or relating to this Agreement or the transactions contemplated hereby. The internal laws of the State of Nevada shall be applied to all matters. All parties consent to service by Priority Mail and not personal service.
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Heirs, Successors and Assigns. This Agreement and the covenants and agreements set forth herein shall be binding on the heirs, successors and assigns of the parties hereto.
13. Attorneys Fees and Costs. The prevailing party in any dispute concerning the agreements or provisions of this Agreement or any matter pertaining to the relationship of the parties hereto shall be awarded all attorneys fees and costs incurred by such prevailing party in any action to enforce any of the terms or agreements set forth herein.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the date and year first above written.
JNH, Mining Inc. a Nevada corporation
By: Jeff Hayden
/s/ Jeff Hayden
Signature:__________________________
President
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US Natural Nutrients, and Minerals, Inc.
By: James Harrison
/s/ James Harrison
Signature:___________________________
Chief Executive Officer
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