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Exhibit 10.45
SETTLEMENT AGREEMENT AND RELEASE
This
Settlement Agreement and Mutual Release (the
“Agreement”) is effective as of the latest date
executed below, and is by and between Plaintiff, STEVEN D.
CRAIG, an individual, the authorized representative on behalf
of the ESTATE OF COLLETTE CRATER-CRAIG (“CRAIGS”),
and Defendant, GOLDEN PHOENIX MINERALS, INC. (hereinafter
“GOLDEN PHOENIX”) (collectively the
“Parties”).
PRELIMINARY STATEMENTS
On
August 30, 2006, STEVEN D. CRAIG filed a Complaint in Washoe
County as Case No. CV06 02103, against GOLDEN PHOENIX, stating
claims for “Specific Performance of Stock Option
Agreements, Money Lent Against Defendant Golden Phoenix
Minerals, Inc., and Interest Accrued On Money Due and Owing To
Plaintiff And Against GOLDEN PHOENIX.”
A
dispute arose among the Parties regarding GOLDEN
PHOENIX’s payment of deferred or “back”
salaries, and interest thereon, related stock options in the
amount of 984,300 shares of stock at 15 cents per share, which
were granted by GOLDEN PHOENIX to STEVEN D. CRAIG during May
of 2000, for reimbursement of business expenses, and interest
thereon, and the exercise of additional options in the amount
of 340,000 shares of stock at 37 cents per share and options
for 250,000 shares of stock at 15 cents per share issued in
September of 2003 and February of 2005, respectively
(hereinafter “Lawsuit”).
COLLETTE
CRATER-CRAIG was named in the Third-Party Complaint filed by
GOLDEN PHOENIX which sought a declaration of rights regarding
the payments of the deferred “back” salaries,
business expenses, and interest thereon, and the options
subject to the Lawsuit. STEVEN D. CRAIG and COLLETTE
CRATER-CRAIG were married during the time STEVEN D. CRAIG was
employed by GOLDEN PHOENIX. The marriage was terminated after
any rights subject of the Lawsuit had accrued. On October 18,
2005, GOLDEN PHOENIX agreed to comply with court orders for
equal dispersement of assets owed to STEVEN D. CRAIG and to
provide STEVEN D. CRAIG with one half of the values owed to
him and COLLETTE CRATER-CRAIG to be provided the balance of
the funds. COLLETTE CRATER-CRAIG since became
deceased on December 3, 2006.
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 STEVEN D. CRAIG’s dismissal of the Lawsuit with
prejudice, and the relinquishment of the Claims by both STEVEN D.
CRAIG and the authorized representative on behalf of the ESTATE OF
COLLETTE CRATER-CRAIG, the Parties have agreed as
follows:
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a.
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GOLDEN
PHOENIX shall, within twenty (20) trading days, not calendar days,
following receipt at the notice address below of the Agreement
executed by the CRAIGS, contact interested third parties to be
identified (hereinafter “Third Parties”) who have
indicated to GOLDEN PHOENIX that they are willing to purchase, at a
twenty percent (20%) discount of the share price, the 984,300
shares subject to the options granted at fifteen (15) cents per
share by GOLDEN PHOENIX to STEVEN D. CRAIG in May of 2000 for the
reimbursement of “back salaries” and interest
thereon.
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b.
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GOLDEN
PHOENIX shall, within the same twenty (20) trading day period
referenced in paragraph 2.a., make a good faith effort to obtain
the agreement of Third Parties to purchase the subject shares at
the share price determined as set forth in paragraph 2.d. Such
agreement by Third Parties is a condition precedent to the
covenants and releases set forth within this
Agreement.
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c.
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If
GOLDEN PHOENIX does not obtain the agreement of Third Parties
within the twenty (20) day trading period to purchase the subject
shares as set forth herein, the Parties may agree in writing to
extend the period for a specified number of trading days or to a
specific date. Each extension is subject to the provisions of this
Agreement, unless otherwise provided in writing.
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d.
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The
purchase price per share to the Third Parties of these stocks, both
registered and unregistered, will be determined by calculating the
mean average of the daily closing price of one (1) share of the
stock for twenty (20) trading days, not calendar days, immediately
preceding receipt by GOLDEN PHOENIX at the notice address below of
the Agreement executed by the CRAIGS, and this mean average share
price shall be further discounted twenty percent (20%). The
purchase price per share for any extension that may be necessary
will be determined consistent with this paragraph, however the
valuation period for each extension shall be twenty (20) trading
days immediately preceding the date the written extension is fully
executed by both parties.
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e.
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After
obtaining the agreement of Third Parties to purchase the subject
shares at the purchase price set forth in paragraph 2.d., GOLDEN
PHOENIX will establish an escrow account, mutually acceptable to
the Parties and Third Parties, fifty percent (50%) of the total
cost of which shall be borne by the CRAIGS and fifty percent (50%)
by GOLDEN PHOENIX. GOLDEN PHOENIX will retire the balance, owed on
that date, of the “back salaries,” not including
interest, to the CRAIGS, as against the fifteen (15) cents per
share exercise price of the subject options identified in paragraph
2.a., the resulting shares to be placed in the aforementioned
escrow pending completion of the purchase by the Third
Parties.
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f.
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GOLDEN
PHOENIX and the CRAIGS agree that all scheduled payments of the
“back salaries” shall be suspended upon the execution
of this Agreement and subsequent extensions, if necessary, pending
the use of the balance owing, as against the exercise price of the
options, described in paragraph 2.e., and these scheduled payments
shall be terminated thereafter. Upon execution of this Agreement,
GOLDEN PHOENIX will no longer make payments that have been deducted
from the scheduled payments on behalf of STEVEN D. CRAIG for
insurance premiums. All responsibility for continuing any such
insurance shall be STEVEN D. CRAIG’s sole responsibility and
he will not hold GOLDEN PHOENIX responsible for the cancellation of
any such insurance. If GOLDEN PHOENIX does not obtain the agreement
of Third Parties within ten (10) trading days after the termination
of the immediately preceding time period prescribed by this
Agreement, or subsequent extension, if necessary, and the
“back salaries” have not been applied to the exercise
price of the options, the scheduled payments of the “back
salaries” shall resume beginning the sixth day of the month
following said ten (10) trading day period. In no event after the
initial suspension of the scheduled payments of the “back
salaries” shall GOLDEN PHOENIX be responsible for or required
to resume making payments of any insurance premiums on behalf of
STEVEN D. CRAIG.
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g.
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The
CRAIGS may exercise through escrow a portion, all or none of the
options, identified in paragraph 2.a., remaining after the
retirement of the balance of “back salaries” as
described in paragraph 2.e. The CRAIGS' election to exercise a
portion, all or none of the remaining options must be made prior to
the deposit of monies into escrow by the Third Parties. Monies used
to exercise these options, in excess of the “back
salaries,” shall be held in escrow to be delivered to GOLDEN
PHOENIX after completion of the purchase by the Third
Parties.
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h.
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The
Third Parties will purchase the entirety of shares resulting from
the options exercised as set forth in paragraphs 2.e. and 2.g, by
first placing into escrow monies sufficient to satisfy the purchase
price of all of the shares subject to the options exercised or
elected to be exercised as set forth in paragraphs 2.e. and 2.g,
said purchase price to be determined pursuant to paragraph 2.d.
Monies deposited into escrow by the Third Parties may be applied by
the CRAIGS to the exercise price of the remaining options pursuant
to paragraph 2.g. After the Third Parties deposit the
aforementioned monies into escrow and any remaining options that
the CRAIGS choose to exercise pursuant to paragraph 2.g. are
exercised, the escrow holder shall deliver to the Third Parties all
shares resulting from the options exercised as set forth in
paragraphs 2.e. and 2.g. Any of the remaining options not exercised
pursuant to this Agreement shall be immediately
terminated.
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i.
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At
the time the purchase by the Third Parties is completed and shares
held in escrow delivered to the Third Parties, th
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