SETTLEMENT AGREEMENT
Exhibit 10.18
THIS SETTLEMENT AGREEMENT (“Agreement”) is made this 26th day of August, 2005 (the “Effective
Date”), by and between GOLDEN PHOENIX MINERALS, INC., a Minnesota corporation qualified to do
business in Nevada (“Golden Phoenix”); XXXX XXXXXXXX, dba WESTERN MINE DEVELOPMENT; RETRIEVERS LLC,
a Nevada limited liability company, and XXXX XXXXXX and XXXX XXXXXX, husband and wife (referred to
collectively as “Retrievers”).
RECITALS
A. Golden Phoenix has entered into an agreement with Xxxx Xxxxxxxx, doing business as Western
Mine Development, to acquire the “Kingston Mill,” which consists of various machinery and equipment
acquired from the Estate of Xxxx X. X’Xxxxx, Xx. The equipment comprising the Kingston Mill is
described on Exhibit A attached hereto. Title to the Kingston Mill has not been formally
transferred from Western Mine Development to Golden Phoenix.
B. Golden Phoenix contracted with Retrievers to disassemble and transport the Kingston Mill to
the Ashdown Mine situated in Humboldt County, Nevada. The disassembled Kingston Mill was
transported to Retrievers’ storage site in Xxxxxx County, Oregon. The parties acknowledge and agree
that Retrievers was paid in full for transpor-tation of the Kingston Mill.
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C. A dispute has subsequently arisen between Golden Phoenix and Retrievers regarding (1) the
amount of storage fees, if any, owed by Golden Phoenix owed to Retrievers, and (2) the amount of
work to be performed by Retrievers in developing the Ashdown Mine and milling facility. Retrievers
gave notice of a lien having attached to the Kingston Mill, and of Retrievers’ intent to sell the
mill at public auction to satisfy that lien in Xxxxxx County. Retrievers further gave notice of its
intent to file suit for breach of contract, lost profits, and other damages, although no suit was
initiated.
D. Retrievers and Golden Phoenix now wish to resolve and settle these disputes and all other
outstanding matters between them by way of this Agreement.
THEREFORE, the parties have agreed as follows.
SECTION ONE
Ownership and Lease of Kingston Mill
1.1 Transfer of Title; Leaseback. Upon execution of this Agreement, Golden Phoenix and
Western Mine Development will execute a Xxxx of Sale conveying ownership of the Kingston Mill to
Retrievers. Retrievers agrees to lease the Kingston Mill to Golden Phoenix for a term of five (5)
years and so long thereafter as mining and milling operations are conducted at the Ashdown Mine. In
consideration of this Lease, Golden Phoenix will make the following payments to Retrievers:
a. Golden Phoenix will pay Retrievers the sum of THIRTY THOUSAND DOLLARS ($30,000.00) upon
execution of this Agreement by way of a
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cashier’s check.
b. Golden Phoenix will pay Retrievers the additional sum of THIRTY THOUSAND DOLLARS
($30,000.00) within three (3) days of Golden Phoenix having received its Water Pollution Control
Permit from the Nevada Division of Environmental Protection, or by October 23, 2005, whichever
occurs earlier.
During the term of this Lease, Golden Phoenix will keep the mill in good working order through
regular maintenance and repairs, allowing for reasonable wear and tear, and will be solely
responsible for all related costs. Golden Phoenix will assume all liability for possession, use or
operation of the mill, and will indemnify and hold Retrievers harmless from any and all liability
associated with the mill.
In addition to the foregoing payments, Golden Phoenix agrees to hire Retrievers to perform all
earthmoving and other related activities at the Ashdown Mine, until all such activities and
reclamation are completed, as more particularly described in Section 2 below. In the event that
Golden Phoenix terminates Retrievers’ services prior to the completion of the Ashdown Project, or
in the event the Ashdown Project is completed in less than two (2) years from the Effective Date,
then Golden Phoenix must either (1) return the Kingston Mill to Retrievers or (2) exercise the
option to purchase set forth in Section 1.2 below. However, in the event the Ashdown Project is
completed on or after a two-year period from the Effective Date of this contract, after payment of
all sums due to Retrievers by Golden Phoenix, Retrievers will execute a Xxxx of Sale
of the mill to Golden
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Phoenix.
Retrievers will be allowed access to the Kingston Mill at all times.
1.2 Option to Purchase Kingston Mill. Retrievers hereby grants to Golden Phoenix the
exclusive right and option to purchase the Kingston Mill for the sum of TWO HUNDRED FIFTY THOUSAND
DOLLARS ($250,000.00). The option will have a term of five (5) years following the Effective Date.
The purchase price will be reduced by FIFTY THOUSAND DOLLARS ($50,000.00) at the end of every year
following the Effective Date. For example, on August 26, 2006 the purchase price will be
$200,000.00, and on August 26, 2010 the purchase price will be zero.
Upon exercising its option to purchase, Golden Phoenix will pay the remaining balance of the
purchase price to Retrievers within fifteen (15) days, and Retrievers will execute a Xxxx of Sale
conveying ownership of the Kingston Mill to Golden Phoenix.
This option to purchase may be assumed by any third party which acquires the rights and
obligations of this Agreement from Golden Phoenix. The third party may terminate the contract for
services described in Section 2 below by exercising the option to purchase and paying the balance
then due.
SECTION TWO
Construction Operations
2.1 Scope of Work. Golden Phoenix agrees to hire Retrievers to exclusively act as an
independent contractor for all construction and other activities, for which
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Retrievers is licensed, relating to the Ashdown Mine. These activities will include, but not be
limited to, site preparation; road construction and maintenance; installation of septic tanks and
other facilities; construction of tailings ponds; relocation of the Kingston Mill to the Ashdown
Mine; crushing, screening, and hauling of gravel and ore; equipment hauling; reclamation; and other
projects associated with Ashdown Mine and Mill, as may be requested by the Mine Manager from time
to time.
2.2 Mine Manager. The Mine Manager shall be Xxxx Xxxxxxxx, or such other person as
Golden Phoenix may designated from time to time.
2.3 Independent Contractor. Retrievers will act as an independent contractor at all
times, and shall be responsible for payment of worker’s compensation, unemployment taxes, federal
income tax withholding for employees, and all other costs, license fees, and taxes attributable to
its activities.
2.4 Work Orders. All pricing for labor and equipment will be negotiated between Golden
Phoenix Minerals and Retrievers LLC and will reflect current area and industry rates. Retrievers
will xxxx Xxxxxx Phoenix by written invoice, which will set forth the work performed and agreed
upon rates. Retrievers will xxxx Xxxxxx Phoenix for work performed between the 1st and 15th days of
each month, with payment due by the 25th of the month. Retrievers will xxxx Xxxxxx Phoenix for work
performed between the 16th day and the end of each month, with payment due by the 10th of the month
thereafter. Late charges will accrue at the rate of 1.5% per month, and Retrievers may
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declare a default if a payment is not received within thirty (30) days of its due date.
2.5 Fuel. Golden Phoenix, at its sole cost, shall furnish Retrievers with all diesel
and other fuels required for Retrievers’ conduct of operations.
2.6 Training. Golden Phoenix will provide all training required by the Mine Safety and
Health Administration (“MSHA”) to employees of Retrievers. Golden Phoenix will also prepare a
safety plan and provide technical assistance to Retrievers, so that Retrievers will remain in
compliance with MSHA regulations at all times.
2.7 Conduct of Operations. Retrievers will perform all work in a timely and efficient
manner in accordance with industry standards. Retrievers will comply with all laws and regulations
pertaining to the conduct of its operations.
SECTION THREE
Default and Termination
3.1 Notice of Default. If Golden Phoenix fails to make payment to Retrievers, as
provided in Section 2.4 above, or fails to fulfill any of the other obligations of this Agreement,
Retrievers shall give Golden
Phoenix notice specifying the nature of the default. Golden Phoenix
shall have thirty (30) days in which to remedy the default. If Golden Phoenix fails to do so, Retrievers may terminate this Agreement, take possession of the
Kingston Mill, and remove the Kingston Mill from the Ashdown Mine.
3.2 Termination by Golden Phoenix. Golden Phoenix may terminate
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Retrievers’ activities at the Ashdown Mine and mill by giving thirty (30) day’s advance written
notice thereof and by exercising its option to purchase the Kingston Mill as specified in Section
1.2 above.
SECTION FOUR
Dismissal of Legal Action
Retrievers agrees to take no further action in regard to the lien proceeding described above
in Recital C. Each party shall bear its own fees and costs related to such action. Each party
dismisses and releases, with respect to the other, all claims for relief, whether known or unknown,
relating to dismantling, transportation, and storage of the Kingston Mill, as well as any alleged
breach of oral agreements between Golden Phoenix and Retrievers relating to earthmoving and
construction activities at the Ashdown Mine.
All rights and obligations between the parties as of the Effective Date are set forth in this
Agreement and the Work Orders described in Section 2.4 above.
SECTION FIVE
Miscellaneous Provisions
5.1 Binding Effect. This Agreement shall inure to the benefit of and be binding upon
the parties hereto, their respective heirs, executors, administrators, successors, and assigns.
5.2 Applicable Law. The terms and provisions of this Agreement shall be
interpreted in accordance with the laws of the State of Nevada.
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5.3 Entire Agreement. This Agreement terminates and replaces all prior agreements,
either written, oral or implied, between the parties hereto, and constitutes the entire agreement
between the parties.
5.4 Void or Invalid Provisions. If any term, provision, covenant or condition of this
Agreement, or any application thereof, should be held by a court of competent jurisdiction to be
invalid, void or unenforceable, all provisions, covenants and conditions of this Agreement, and all
applications thereof not held invalid, void or unenforceable, shall continue in full force and
effect and shall in no way be affected, impaired, or invalidated thereby. However, should a
material provision of this Agreement be held to be void or invalid, the court shall have authority
to modify this Agreement so as to carry out the intent of the parties as determined by the court.
5.5 Time of the Essence. Time is of the essence of this Agreement and each and every
part thereof.
5.6 Confidentiality. All reports and data provided by Golden Phoenix to Retrievers
shall be held in strictest confidence, and Retrievers shall not disclose such information without
Golden Phoenix’s prior written consent.
5.7 No Partnership. Nothing in this Agreement shall create a partnership between Golden
Phoenix and Retrievers.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the day and year first
above written.
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| GOLDEN PHOENIX MINERALS, INC, | ||||||
| a Minnesota corporation | ||||||
| By | ||||||
| XXXX XXXXXXXX, dba WESTERN MINE | ||||||
| DEVELOPMENT | ||||||
| RETRIEVERS LLC, a Nevada limited liability company | ||||||
| By | ||||||
| XXXX XXXXXX | ||||||
| XXXX XXXXXX | ||||||
golden phoenix/7329
settlement agreement (retrievers) (8-05) (with xxxxxx changes)
settlement agreement (retrievers) (8-05) (with xxxxxx changes)
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EXHIBIT A
Ashdown Mill Equipment List stored at Xxxx Tingues Property
May 3, 2005
May 3, 2005
1.
|
1 — 40’ x50’ steel building (Star) | |
2.
|
1 — Grizzly w/10” x 10” openings | |
3.
|
1 — Coarse ore bin, 40 ton capacity in 2 steel framed sections | |
4.
|
1 — Plate feeder 24” | |
5.
|
1 — 20” x 22’ conveyor | |
6.
|
1 — Bucket elevator | |
7.
|
1 — 4’ x 8’ vibrating screen w/ 1/2” cloth | |
8.
|
1 — fine ore bin in 3 steel frame sections 130 ton capacity | |
9.
|
1 — 18” x 22’ feed conveyor | |
10.
|
1 — 6’ x 7’ Allis Chalmers Ball mill frame with trunion caps and discharge spout | |
11.
|
2 — 3” x 3” Slurry pump | |
12.
|
1 — 10” xxxxxx cyclone | |
13.
|
1 — 5’ x 6’ conditioner tank with mixer | |
14.
|
1 — bank (4 cells) #24 Deco roughers | |
15.
|
1 — bank (4 cells) #18 Deco cleaners | |
16.
|
1 — 40’ float cell frame | |
17.
|
1 — vertical 1” deco pump | |
18.
|
1 — 15’ thickener | |
19.
|
1 — Diaphragm pump 2” Xxxx-Xxxxxx | |
20.
|
1 — 4’ disk filter | |
21.
|
1 — 3” Sutorbilt blower | |
22.
|
1 — IR vacuum pump | |
23.
|
1 — Filtrate pump 2” | |
24.
|
1 — concentrate bin 550 ft3 | |
25.
|
1 — 2” vertical sump pump | |
26.
|
4 — reagent feeders | |
27.
|
1 — 10,000 gal fuel tank |
