SETTLEMENT AGREEMENT AND MUTUAL
RELEASE
This Settlement Agreement and Mutual
Release (the “Agreement”) is effective the 1st day of
December 2006, and is by and between Plaintiff, FRANK W. LEWIS,
TRUSTEE OF THE FRANK W. LEWIS REVOCABLE LIVING TRUST DATED MARCH
15, 2004; Third-Party Defendant, THE SHARON F. LEWIS TRUST DATED
JANUARY 22, 2004; and Defendant/Third-Party Claimant, GOLDEN
PHOENIX MINERALS, INC. (Frank W. Lewis Trust and Golden Phoenix
together may be referred to as the “Parties” or as a
“Party ”).
PRELIMINARY
STATEMENTS
On June 29, 2006, the Frank W. Lewis Trust filed
a Complaint in an action in the Second Judicial District Court,
Washoe County, as Case No. CV0601542. Golden Phoenix thereafter
brought a Third-Party Complaint against F.W. Lewis, Inc. as the
original party to the contract and the Sharon F. Lewis Trust Dated
January 22, 2004 as an assignee of claims related to the contract
(collectively, the "Lawsuit"). (F.W. Lewis, Inc. was not served
with the Third-Party Complaint, as Frank W. Lewis Trust produced to
Golden Phoenix a copy of the assignment of the claims which are the
subject of the Lawsuit to the Frank W. Lewis Trust and Third Party
Golden Phoenix, the Sharon F. Lewis Trust). The Lawsuit rises out
of contracts between F.W. Lewis, Inc. and Golden Phoenix, including
the main option, Exploration Agreement and amendments thereto, and
the parties rights, obligations and defenses thereto as set forth
in the pleadings. The Frank W. Lewis Trust and the Sharon W. Lewis
Trust maintain their rights to recover under the contracts, and
Golden Phoenix denies the allegations that it was in breach or owes
further obligations in any manner whatsoever.
The Parties now desire to resolve
the Lawsuit, and any and all other actual or potential claims that
may or could have been brought between them (whether permissive or
compulsory) (“Claims”), without the necessity for
further litigation and expense by settling the Lawsuit and the
Claims, whether known or unknown regardless of whether such claims
were asserted in the Lawsuit, between them.
AGREEMENT
In consideration of the foregoing,
the agreements, mutual covenants and conditions contained herein,
and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Parties agree as
follows:
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1.
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Incorporation of
Recitals . Each of the
preliminary statements is deemed to be true and correct, and the
same are hereby incorporated by reference as if fully stated
herein.
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2.
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Consideration.
As consideration for this Agreement
and the dismissal of the Lawsuit with prejudice, and the
relinquishment of the Claims, the Parties have agreed that Golden
Phoenix shall exchange 2,753,623 replacement shares pursuant to a
Noticed hearing under Section 3(a)(10) of the Securities Act of
1933, as amended, 15 U.S.C. 77c (a)(10) (the “Act”) for
the 2,753,623 securities issued on October 22, 2002. One-half of
the 2,753,623 replacement shares shall be issued to the Frank W.
Lewis Revocable Living Trust Dated March 15, 2004, and the other
half to The Sharon F. Lewis Trust Dated January 22,
2004.
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Settlement Agreement
Lewis’/Golden Phoenix
Page 1 of 6
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3.
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Compliance with SEC.
The new shares are exchanged for
“outstanding securities, claims or property interests,”
within the meaning of Section 3(a)(10) of the 1933 Act, which
includes the matters in the Lawsuit and the Claims of Frank W.
Lewis Trust and Sharon W. Lewis Trust, and such exchange is
expressly conditioned on an approved hearing of fairness of the
terms and conditions of said exchange, before the Court in the
Second Judicial District Court, Washoe County, hearing this
case.
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4.
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Deliveries
. The shares shall be exchanged
within a reasonable and timely manner after the entry of the Order
of approval of the hearing set forth in paragraph 3, including the
return of the prior certificate to the transfer agent and all other
necessary actions to complete the transaction.
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5.
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Release and Satisfaction of the
Claims . Upon the
completion of the exchange described in paragraphs 2, 3 and 4, the
Frank W. Lewis Trust shall file a dismissal with prejudice of the
Complaint with the Court within 5 business days. Golden Phoenix
will thereafter file a dismissal with prejudice of the Third-Party
Complaint, and Golden Phoenix shall then be released and discharged
from any and all liability to the Frank W. Lewis Trust or the
Sharon W. Lewis Trust including, but not limited to, any and all
claims for costs and attorneys’ fees, as well as any and all
claims, whether known or unknown and regardless of whether such
claims were asserted in the Lawsuit. Upon the filing of the
dismissal by the Frank W. Lewis Trust, the Frank W. Lewis Trust and
the Sharon W. Lewis Trust shall be released and discharged from any
and all liability to Golden Phoenix, including, but not limited to,
any and all claims for costs and attorneys’ fees, as well as
any and all claims, whether known or unknown regardless of whether
such claims were asserted in the Lawsuit.
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6.
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Tax Liabilities
. The Frank W. Lewis Trust and the
Sharon W. Lewis Trust agree that they are wholly and solely
responsible for the evaluation of any legal or financial
obligations related to the tax liability or implication of this
compromise, the exchange and relinquishment of the Claims,
Third-Party Claims and the dismissal of the Lawsuit.
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7.
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Warranties
. The Parties warrant that no
promises or inducements have been offered except as set forth
herein, that this Agreement is executed without reliance upon any
statements or representations by persons or parties released or
their representatives concerning the nature and extent of the
damages and/or legal liability therefor; that it is binding on the
Parties, as well as their respective companies, organizations,
successors, agents, heirs and assigns. The Parties further warrant
that they are legally competent and authorized to execute this
Agreement, and that they accept full responsibility
therefor.
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8.
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Compromise
. This Agreement constitutes a full
and final compromise and settlement of any and all disputes between
the Parties known or unknown, including, but not limited to, the
Lawsuit, the Claims and Third-Party Claims, which are disputed and
uncertain, and about which the Frank W. Lewis Trust, the
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