Document:

Exhibit 10.1

 

SETTLEMENT AGREEMENT

 

This Settlement Agreement (“Agreement”) is entered into among the United States of America, acting through the United States Department of Justice and on behalf of the United States Surface Deployment and Distribution Command (“SDDC”), Matson Navigation Company, Inc. (together, along with its parent corporation, Matson, Inc., and all affiliated entities, “Matson”), and Mario Rizzo (“Relator”) (hereafter collectively referred to as “the Parties”), through their authorized representatives.

 

RECITALS

 

A.                                    Matson is engaged in the business of ocean transportation and logistics services. Matson, Inc. is a publicly traded company, incorporated under the laws of the State of Hawaii with its principal place of business in Honolulu, Hawaii. Matson Navigation Company, Inc. is a wholly-owned subsidiary of Matson, Inc., incorporated under the laws of the State of Hawaii with its principal place of business in Honolulu, Hawaii.

 

B.                                    On October 10, 2010 Relator filed a qui tam action in the United States District Court for the Central District of California captioned United States ex rel. Rizzo v. Horizon Lines, LLC, et al. Case No: 2:10-cv-07409-PA-AJW, pursuant to the qui tam provisions of the False Claims Act, 31 U.S.C. § 3730(b) (the “Civil Action”). On June 13, 2012, Relator filed a First Amended Complaint: On August 23, 2013, Relator filed a Second Amended Complaint. Matson Navigation Company, Inc. was named as a defendant in each of the foregoing complaints. The gravamen of the Relator’s allegations is the improper reimbursement of certain fuel surcharges levied in connection with the

 

 

shipment of household goods. On May 10, 2013, the United States declined to intervene in the Civil Action.

 

C.                                    The Relator contends the United States has certain civil claims against Matson arising from fuel surcharges levied by Matson on Transportation Service Providers (“TSPs”) for the shipment of military household goods between Hawaii or Guam and any point within the continental United States between October 4, 2000 and June 3, 2014 that occurred under “Code 4 - International Door-to-Door” of the “International Property Rate Solicitations” programs or contracts (or any predecessor code(s) or program(s)) administered by the SDDC or any predecessor entity. Specifically, the Relator contends Matson failed to itemize its fuel surcharges and included in those surcharges amounts not properly related to fuel use by ocean vessels. Relator further contends these fuel surcharges were paid by the TSPs who were then improperly reimbursed for those surcharges by the SDDC. The conduct in this Paragraph C is referred to below as the Covered Conduct. The fuel charges themselves as described in the Covered Conduct are not Unallowable Costs as set forth in Paragraph 12 below.

 

D.                                    This Agreement is neither an admission of liability by Matson nor a concession by the United States or the Relator that their claims are not well founded.

 

E.                                     Relator claims entitlement under 31 U.S.C. § 3730(d) to a share of the proceeds of this Agreement and to Relator’s reasonable expenses, attorney’s fees and costs.

 

To avoid the delay, uncertainty, inconvenience, and expense of protracted litigation of the above claims, and in consideration of the mutual promises and obligations of this Agreement, the Parties agree and covenant as follows:

 

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TERMS AND CONDITIONS

 

1.                                      Matson shall pay to the United States $9 million (“Settlement Amount”) by electronic funds transfer pursuant to written instructions to be provided by Civil Division of the United States Department of Justice no later than 7 days after the Effective Date of this Agreement.

 

2.                                      Conditioned upon the United States receiving the Settlement Amount from Matson and as soon as feasible after receipt, the United States shall pay $2.565 million to Relator by electronic funds transfer, pursuant to written instructions to be provided by Relator’s counsel.

 

3.                                      Concurrent with Matson’s payment of the Settlement Amount, Matson will pay $950,000 to Relator for expenses and attorney’s fees and costs by electronic funds transfer pursuant to written instructions to be provided by Relator’s counsel.

 

4.                                      Subject to the exceptions in Paragraph 7 (concerning excluded claims) below, and conditioned upon Matson’s full payment of the Settlement Amount, the United States releases Matson, its officers, directors, agents, employees, successors, and assigns from any civil or administrative monetary claim the United States has or may have related to the Covered Conduct including claims under the False Claims Act, 31 U.S.C. §§ 3729 et seq.;  the Program Fraud Civil Remedies Act, 31 U.S.C. §§ 3801-3812; or the common law theories of fraud, payment by mistake, unjust enrichment, disgorgement of illegal profits, or breach of contract.

 

5.                                      Subject to the exceptions in Paragraph 7 below, and conditioned upon Matson’s full payment of the Settlement Amount, Relator, for himself and for anyone that may claim through him (including his heirs, successors, attorneys, agents, and

 

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assigns), releases Matson and its officers, directors, agents, employees, successors, and assigns from any civil monetary claim that Relator has or may have on behalf of the United States related to the Covered Conduct or the allegations in any of Relator’s complaints (either filed or proposed to be filed), or the investigation and prosecution thereof, including claims under the False Claims Act, 31 U.S.C. §§ 3729 et seq.;  the Program Fraud Civil Remedies Act, 31 U.S.C. §§ 3801-3812; any statutory provision creating a cause of action for civil damages or civil penalties for which the Civil Division of the United States Department of Justice has actual and present authority to assert and compromise pursuant to 28 C.F.R. Part O, Subpart I, Section 0.45(d); or common law theories of fraud, payment by mistake, unjust enrichment, disgorgement of illegal profits, or breach of contract.

 

6.                                      Conditioned upon dismissal with prejudice of the Civil Action as set forth in Paragraph 14 below, Matson fully and finally releases Relator and his heirs, successors, attorneys, and agents, from any claims (including attorney’s fees, costs, and expenses of every kind and however denominated) that Matson has asserted, could have asserted, or may assert in the future against Relator and his heirs, successors, attorneys, and agents, related to the Covered Conduct, the investigation and prosecution thereof, and Relator’s filing of the Civil Action. This release does not affect any claims arising under this Agreement.

 

7.                                      Notwithstanding the releases given in paragraph 4 and 5 of this Agreement, or any other term of this Agreement, the following claims of the United States are specifically reserved and are not released:

 

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a.                                      Any liability arising under Title 26, U.S. Code (Internal Revenue Code);

 

b.                                      Any criminal liability;

 

c.                                       Except as explicitly stated in the Agreement, any administrative liability, including the suspension and debarment rights of any federal agency;

 

d.                                      Any liability to the United States (or its agencies) for any conduct other than the Covered Conduct;

 

e.                                       Any liability based upon obligations created by this Agreement; or

 

f.                                        Any liability of individuals.

 

8.                                      Relator and his heirs, successors, attorneys, agents, and assigns shall not object to this Agreement but agree and confirm that this Agreement is fair, adequate, and reasonable under all the circumstances, pursuant to 31 U.S.C. § 3730(c)(2)(B). Conditioned upon Relator’s receipt of the payment described in Paragraph 2, Relator and his heirs, successors, attorneys, agents, and assigns fully and finally release, waive, and forever discharge the United States, its agencies, officers, agents, employees, and servants, from any claims arising from the filing of the Civil Action or under 31 U.S.C. § 3730, and from any claims to a share of the proceeds of this Agreement and/or the Civil Action.

 

9.                                      Conditioned upon receipt of the payments described in Paragraphs 1 and 3 above, Relator, for himself, and for his heirs, successors, attorneys, agents, and assigns, releases Matson, and its officers, agents, and employees, from any liability to Relator

 

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arising from the filing of the Civil Action, or under 31 U.S.C. § 3730(d), for expenses or attorney’s fees and costs.

 

10.                               Matson waives and shall not assert any defenses Matson may have to any criminal prosecution or administrative action relating to the Covered Conduct that may be based in whole or in part on a contention that, under the Double Jeopardy Clause in the Fifth Amendment of the Constitution, or under the Excessive Fines Clause in the Eighth Amendment of the Constitution, this Agreement bars a remedy sought in such criminal prosecution or administrative action. Nothing in this paragraph or any other provision of this Agreement constitutes an agreement by the United States concerning the characterization of the Settlement Amount for purposes of the Internal Revenue laws, Title 26 of the United States Code.

 

11.                               Matson fully and finally releases the United States, its agencies, officers, agents, employees, and servants, from any claims (including attorney’s fees, costs, and expenses of every kind and however denominated) that Matson has asserted, could have asserted, or may assert in the future against the United States, its agencies, officers, agents, employees, and servants, related to the Covered Conduct and the United States’ investigation and prosecution thereof.

 

12.                               a.                                      Unallowable Costs Defined: All costs (as defined in the Federal Acquisition Regulation, 48 C.F.R. § 31.205-47) incurred by or on behalf of Matson, and its present or former officers, directors, employees, shareholders, and agents in connection with:

 

(1)                                 the matters covered by this Agreement;

 

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(2)                                 the United States’ audit(s) and civil investigation(s) of the matters covered by this Agreement;

 

(3)                                 Matson’s investigation, defense, and corrective actions undertaken in response to the United States’ audit(s) and civil investigation(s) in connection with the matters covered by this Agreement (including attorney’s fees);

 

(4)                                 the negotiation and performance of this Agreement;

 

(5)                                 the payment Matson makes to the United States pursuant to this Agreement and any payments that Matson may make to Relator, including costs and attorney’s fees,  are unallowable costs for government contracting purposes (hereinafter referred to as Unallowable Costs).

 

b.                                      Future Treatment of Unallowable Costs: Unallowable Costs will be separately determined and accounted for by Matson, and Matson shall not charge such Unallowable Costs directly or indirectly to any contract with the United States.

 

c.                                       Treatment of Unallowable Costs Previously Submitted for Payment: Within 90 days of the Effective Date of this Agreement, Matson shall identify and repay by adjustment to future claims for payment or otherwise any Unallowable Costs included in payments previously sought by Matson or any of its subsidiaries or affiliates from the United States. Matson agrees that the United States, at a minimum, shall be entitled to recoup from Matson any overpayment plus applicable interest and penalties as a result of the inclusion of such Unallowable Costs on previously-submitted requests for payment. The United States, including the Department of Justice and/or the

 

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affected agencies, reserves its rights to audit, examine, or re-examine Matson’s books and records and to disagree with any calculations submitted by Matson or any of its subsidiaries or affiliates regarding any Unallowable Costs included in payments previously sought by Matson, or the effect of any such Unallowable Costs on the amount of such payments.

 

13.                               This Agreement is intended to be for the benefit of the Parties only.

 

14.                               Upon receipt of the payments described in Paragraphs 1 and 3, above, the Parties shall promptly sign and file in the Civil Action a Joint Stipulation of Dismissal of the Civil Action With Prejudice with respect to Matson only pursuant to Rule 41(a)(1). If the Court issues an order denying dismissal with prejudice or dismissing without prejudice, then this Agreement shall immediately become null and void and all amounts paid by Matson pursuant to this Agreement shall be returned to Matson within ten days of the issuance of any such order.

 

15.                               Except as provided for in Paragraph 3, each Party shall bear its own legal and other costs incurred in connection with this matter, including the preparation and performance of this Agreement.

 

16.                               Each party and signatory to this Agreement represents that it freely and voluntarily enters in to this Agreement without any degree of duress or compulsion.

 

17.                               This Agreement is governed by the laws of the United States. The exclusive jurisdiction and venue for any dispute relating to this Agreement is the United States District Court for the Central District of California. For purposes of construing this Agreement, this Agreement shall be deemed to have been drafted by all Parties to

 

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this Agreement and shall not, therefore, be construed against any Party for that reason in any subsequent dispute.

 

18.                               This Agreement constitutes the complete agreement between the Parties. This Agreement may not be amended except by written consent of the Parties.

 

19.                               The undersigned counsel represent and warrant that they are fully authorized to execute this Agreement on behalf of the persons and entities indicated below.

 

20.                               This Agreement may be executed in counterparts, each of which constitutes an original and all of which constitute one and the same Agreement.

 

21.                               This Agreement is binding on Matson’s successors, transferees, heirs, and assigns.

 

22.                               This Agreement is binding on Relator’s successors, transferees, heirs, and assigns.

 

23.                               All parties consent to the United States’ disclosure of this Agreement, and information about this Agreement, to the public. All parties further agree that neither Matson nor Relator shall publicly disclose this Agreement, the contents hereof, or any information about this Agreement except as may be required to obtain the Court’s dismissal of the Civil Action in accordance with Paragraph 14. Notwithstanding the preceding sentence, Matson may disclose this Agreement, the contents hereof, or any information about this Agreement as reasonably necessary to comply with NYSE listing requirements, and the securities laws and regulations and other laws applicable to it, and Relator may disclose this Agreement, the contents hereof, or any information about this Agreement as necessary to prepare tax filings.

 

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24.                               This Agreement is effective on the date of signature of the last signatory to the Agreement (the “Effective Date of this Agreement”). Facsimiles of signatures shall constitute acceptable, binding signatures for purposes of this Agreement.

 

[Signature Page Follows]

 

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THE UNITED STATES OF AMERICA

 

	
DATED: 
    	
6/17/2014
    	
 
    	
BY:
    	
/s/ Benjamin Wei
    
	
 
    	
 
    	
Benjamin   Wei
    
	
 
    	
 
    	
Trial   Attorney
    
	
 
    	
 
    	
Commercial   Litigation Branch
    
	
 
    	
 
    	
Civil   Division
    
	
 
    	
 
    	
United   States Department of Justice
    
	
 
    	
 
    

 

MATSON NAVIGATION COMPANY, INC.

 

	
DATED: 
    	
July 15,   2014
    	
 
    	
BY:
    	
/s/ Peter T. Heilmann
    
	
 
    	
 
    	
Matson   Navigation Company, Inc.
    
	
 
    	
 
    
	
DATED: 
    	
July 15,   2014
    	
 
    	
BY:
    	
/s/ Joel Sanders
    
	
 
    	
 
    	
Joel   Sanders
    
	
 
    	
 
    	
Gibson,   Dunn & Crutcher LLP
    
	
 
    	
 
    	
Counsel   for Matson Navigation Company, Inc.
    
	
 
    	
 
    

 

RELATOR MARIO RIZZO

 

	
DATED: 
    	
July 16,   2014
    	
 
    	
BY:
    	
/s/ Mario Rizzo
    
	
 
    	
 
    	
Mario   Rizzo
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
DATED: 
    	
July 16,   2014
    	
 
    	
BY:
    	
/s/ Wayne T. Lamprey
    
	
 
    	
 
    	
Wayne T.   Lamprey
    
	
 
    	
 
    	
Goodin,   MacBride, Squeri, Day & Lamprey,   LLP
    
	
 
    	
 
    	
Counsel   for Mario Rizzo
    

 

[Signature Page to Settlement Agreement]Exhibit
10.1

 

TERMS
OF FARM-OUT AGREEMENT

 

This
Agreement shall set forth the terms and conditions of the FARM-OUT AGREEMENT entered into on the 7th day of July 2014
by and between the following parties for the consideration stated herein:

 

First
Party: Northern Minerals & Exploration Ltd., a public Corporation, registered and existing under the laws of
Nevada, USA with offices located at 1301 Avenue M, Cisco, Texas, hereinafter referred to as Lessee.

 

Second
Party: Grasshoppers Unlimited Inc., a private Corporation, registered and existing under the laws of Texas, USA
with offices located at 717 Conrad Hilton Blvd., Cisco, Texas 76437, hereinafter referred to as Lessor.

 

WHEREAS
Lessor has good and valuable title in the two oil and gas leases identified as follows and more fully described in EXHIBIT
I and EXHIBIT II:

 

Callahan
County Shallow Oil Play: 

 

		●	3
                                         fully equipped wells

		●	1
                                         injection well

		●	Production
                                         flow lines

		●	Injection
                                         flow line

		●	Tank
                                         battery – two 150 BBL tanks with Separator

		●	Injection
                                         system – 150 BBL tank with Injection Pump

		●	Producing
                                         interval – Cook/Hope Sandstone at approximately 450 feet

		●	8
                                         un-drilled locations – spacing 2.5 acres per well

		●	60
                                         acres, more or less, in the lease – See Exhibit I for description of lease

		●	Net
                                         Revenue Interest of the lease is 70%

		●	Depth
                                         Limit is 1,000 feet

 

Lessee
agrees to earn 75% of the working interest in the lease, including the wells and equipment, from Lessor by causing and/or conducting
the following on the acreage/wells stated above:

 

		●	Bring
                                         the existing three wells back into production (these three wells have been inactive since
                                         November 2012)

		●	Conduct
                                         a H-5 pressure test on the Injection well

		●	Prepare
                                         a geological report on the acreage

		●	Agree
                                         to drill two (2) new wells prior to August 1, 2015

		●	Agree
                                         to drill six (6) new wells prior to August 1, 2016

		●	Pay
                                         $25,000 in cash on or before October 1, 2014

		●	Cause
                                         the issuance of 5,000,000 restricted shares of the Company’s common stock to be
                                         issued to Lessor or Lessor’s designee

		●	Enter
                                         into an Operating Agreement (A.A.P.L. Model Operating Form 610) with J.V. Rhyne, a licensed
                                         oil and gas operator in the State of Texas to operate the wells

 

Lessee
further agrees that any failure to meet the work commitments as stated herein will result in a forfeiture of the un-earned portion
of the lease.

 

    	 

    	 

    

 

Page Two

Terms of
Farm-Out Agreement

July 7,
2014 

 

Callahan/Eastland
Mississippi
Reef Play
in a Multiple
Pay Area: 

 

Lessee
further agrees to earn a 60% working interest in the oil & gas lease located near the Callahan
and Eastland County line in
Central Texas by conducting the
following:

 

		●	Prepare
                                         a geological report on the lease

		●	Agree
                                         to drill one (1) new well prior to August 1, 2015

		●	Pay
                                         $15,000 in cash on or before October 1, 2014

		●	Cause
                                         the issuance of 1,000,000 restricted shares of the Company’s common stock

 

The
total consideration for acquiring the 60% working interest is $65,000. 
The Net Revenue Interest of this lease is 75% and consists
of approximately 220 acres, more
or less, located in Callahan County, Texas.
This lease has no depth limit requirement on this lease.

 

Lessee
further agrees that any failure to meet the work commitments as stated will result in a forfeiture of the un-earned portion of
the lease.

 

LESSOR’S
WARRANTIES AND REPRESENTATIONS:

 

To
the best of Lessor’s knowledge, there is no existing or threatened litigation, arbitration or administrative proceedings
relating to these two leases being conveyed to Lessee;

 

Lessor
is not in violation of any existing laws, rules or regulations of the Railroad Commission of Texas (“RRC”).

 

Lessor
has not entered into, or agreed to enter into, any agreement, arrangement or understanding with any third party relating to these
two leases which may preclude Lessee from earning the Lessee’s Interest under this Agreement.

 

Lessor
acknowledges that there are no environmental or other liabilities, claims or circumstances relating to the conduct of oil and
gas operations on either of these two leases and are in good standing with the RRC.

 

TIME

 

Time
shall be of the essence as regards the provisions of this Agreement, both as regards the times and periods mentioned herein and
as regards any times or periods which may, by agreement between the Parties, be substituted for them.

 

ENTIRE
AGREEMENT

 

This
Agreement supersedes any previous written or oral agreement between the Parties in relation to the matters dealt with in
this Agreement and contains the whole agreement between the Parties relating to the subject matter of this Agreement at the
date hereof to the exclusion of any terms implied by law which may be excluded by contract. Each of the Parties
acknowledges that it has not been induced to enter into this
Agreement by any representation, warranty or undertaking not expressly incorporated herein. So far as permitted by law and
except in the case of fraud, each Party agrees and acknowledges that it’s only right and remedy in relation to any
representation, warranty or undertaking made or given in connection with this Agreement shall be for breach of the terms of
this Agreement to the exclusion of all other rights and remedies (including those in tort or arising under
statute). 

 

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Page Three

Terms of
Farm-Out Agreement

July 7,
2014 

 

AMENDMENT: 

 

Save
as otherwise expressly provided herein, no modification, amendment or waiver of any of the provisions of this Agreement shall
be effective unless made in writing specifically referring to this Agreement and duly signed by both Parties.

 

GOVERNING
LAW:

 

This
Agreement shall be governed by, construed, interpreted and applied in accordance with the laws of Texas.

 

SUCCESSORS
AND ASSIGNS

 

This
Agreement shall inure to the benefit of and be binding upon the successors and assigns of the Parties.

 

COUNTERPARTS:

 

This
Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original but all of which together
shall constitute one and the same instrument.

 

IN
WITNESS WHEREOF, the Parties have executed this Agreement as of the date first written above.

 

NORTHERN
MINERALS & EXPLORATION LTD 

(LESSEE)

 

/s/
Howard Siegel 

 

Howard Siegel,
President & Director

 

GRASSHOPPERS
UNLIMITED INC.

(LESSOR)

 

 /s/ Ginger Bunn

 

Ginger Bunn,
President

 

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EXHIBIT
I 

 

The
following is a legal description of the 60 acres, more or less, located in Callahan County comprising of three tracts:

  

Tract
1: 20 acres, more or less, out of the Northwest corner of Survey No.7, Bayland Orphan Home Survey, described by metes and
bounds as follows:

 

BEGINNING
at the Northwest corner of said Survey; THENCE East 625 feet;, THENCE South parallel with the West line of said Survey No. 7,
1394 feet; THENCE West 625 feet to West line of said Survey No. 7, THENCE West 625 feet to West line of said Survey No. 7; THENCE
North with West line of said Survey No. 7; 1394 feet to the place of beginning;

 

Tract
2: 20 acres, more or less, out of the Northwest part of Survey No.7, Bayland Orphan Home Survey, described by metes and bounds
as follows:

 

BEGINNING
at a point in the West line of said Survey, 1394 feet South of the Northwest corner of said Survey; THENCE East 625 feet; THENCE
625 feet; THENCE South parallel with the West line of said Survey No. 7, 1394 feet; THENCE West 625 feet to the West line of said
Survey No. 7, 1394 feet; THENCE West 625 feet to the West line of said Survey No.7; THENCE North with the West line of said Survey
No. 7, 1394 feet to the place of beginning;

 

Tract
3: 20 acres, more or less, out of the Northwest corner of Survey No.8, Bayland Orphan Home Survey, described by metes and
bounds as follows:

 

BEGINNING
at the Northeast corner of said Survey; THENCE West 330 feet; THENCE South parallel with the East line of said Survey No. 8, 2,788
feet; THENCE East 330 feet to East line of said Survey No. 8; THENCE North with East line of said Survey No. 8; 2788 feet to the
place of beginning.

 

Depth
limitation on all three tracts shall be limited down to 1,000 feet only.

 

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EXHIBIT
II 

 

The
following is a legal description of the 220 acres, more or less, located in Callahan County, Texas:

 

220
acres, more or less, of the Wm. J. Morgan Survey, Cert. 16/14, Abstract 272, Patent 224, Vol. 20, dated June 11, 1874, situated
in Callahan County, Texas and described as follows:

 

BEGINNINGat
a stake in the middle of the South boundary line of said Wm. J. Morgan Survey; THENCE North 1050 varas, a stake for corner; THENCE
East 1181 varas, a stake for corner; THENCE South 1050 varas to stake in South boundary line of Morgan Survey; THENCE West with
said South boundary line of Morgan Survey 1181 varas to the place of Beginning.

 

No
depth limit.

 

 

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