SETTLEMENT AGREEMENT AND RELEASE
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, XXXXXX X. XXXXX, an
individual, the authorized representative on behalf of the ESTATE OF XXXXXXXX
XXXXXX-XXXXX (“CRAIGS”), and Defendant, GOLDEN PHOENIX MINERALS, INC.
(hereinafter “GOLDEN PHOENIX”) (collectively the “Parties”).
PRELIMINARY
STATEMENTS
On August
30, 2006, XXXXXX X. XXXXX 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
XXXXXX X. XXXXX 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”).
XXXXXXXX
XXXXXX-XXXXX 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. XXXXXX X. XXXXX and XXXXXXXX XXXXXX-XXXXX were married
during the time XXXXXX X. XXXXX 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 XXXXXX X. XXXXX and to provide XXXXXX X. XXXXX with one half
of the values owed to him and XXXXXXXX XXXXXX-XXXXX to be provided the balance
of the funds. XXXXXXXX XXXXXX-XXXXX 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 XXXXXX X. XXXXX’x dismissal of the
Lawsuit with prejudice, and the relinquishment of the Claims by both
XXXXXX X. XXXXX and the authorized representative on behalf of the ESTATE
OF XXXXXXXX XXXXXX-XXXXX, 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 XXXXXX X. XXXXX 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 XXXXXX X.
XXXXX for insurance premiums. All responsibility for continuing any such
insurance shall be XXXXXX X. XXXXX’x 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 XXXXXX X.
XXXXX.
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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, the monies used to purchase these
shares shall be delivered from escrow to the Client Trust Account of Xxxxx
X. Xxxx, counsel for the CRAIGS, less the following: (1) fifty percent
(50%) of the fees owed to the escrow holder, (2) any monies necessary to
exercise the options as set forth in paragraph 2.g. and, (3) any payroll
taxes required to be paid by GOLDEN PHOENIX pursuant to the use of the
“back salaries” and the exercise of the subject options, to be distributed
to the CRAIGS by Xx. Xxxx.
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j.
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The
CRAIGS agree to assume all tax liabilities, including without limitation,
employer’s and employee’s payroll taxes and fees, i.e., employer’s and
employee’s share of F.I.C.A., State and Federal unemployment, withholding,
disability and any other applicable payroll taxes and fees, for the "back
salaries" credited and options exercised pursuant to this Agreement.
GOLDEN PHOENIX will identify amounts to be deducted pursuant to paragraph
2.i.(3).
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3.
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Release and Satisfaction of
the Claims. XXXXXX X. XXXXX shall file a dismissal with prejudice
of the Complaint and GOLDEN PHOENIX will dismiss its Third-Party
Complaint. In exchange for the payments from escrow and conditions made
under Paragraph 2 above, the Parties, and each of them, for and on behalf
of themselves, their heirs, executors, administrators, successors,
predecessors, assigns, insurers, parents, attorneys, parent corporations,
subsidiaries, related entities, trustees, partners, shareholders,
officers, directors, agents, employees, and third party administrators,
hereby release and discharge each and every party to this Agreement,
including their respective heirs, executors, administrators, successors,
predecessors, assigns, insurers, parents attorneys, parent corporations,
subsidiaries, related entities, trustees, partners, shareholders,
officers, directors, agents, employees, and third party administrators,
from any and all claims, demands, causes of action, obligations, damages,
and liabilities of any kind and nature whatsoever, whether in law or in
equity, which either party ever had, now has, or may in the future have in
any way connected with the matters, Lawsuit and Claims described in this
Agreement, including without limitation, any and all claims for options,
back salaries, business expenses and
interest.
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The
Parties, and each of them, acknowledge that there is a risk that, prior to the
execution of this Agreement, they may have incurred, suffered, or sustained
injury, loss, damage, costs, attorneys’ fees, or expenses, which are in some way
caused by and/or connected with the persons, entities, the matters referred to
in this Agreement, and which are unknown or unanticipated at the time that this
Agreement is signed, or which are not presently capable of being
ascertained. The Parties, and each of them, further acknowledge that
there is a risk that such damages as are known may become more serious than they
now expect or anticipate. Nevertheless, the Parties, and each of
them, acknowledge that this Agreement has been negotiated and agreed upon in
light of those risks and hereby expressly waive all rights they may have in any
such unknown claims and assumes the risk that the facts and law pertaining to
this dispute may change or be different than is now known. The
provisions of this paragraph extend to all claims actually made or which could
have been made in the above legal proceedings and all claims, whether or not
known, claimed or suspected, and whether currently existing or arising in the
future, by and between the parties hereto.
The
Parties, and each of them, acknowledge that they are aware that they may
hereafter discover facts in addition to, or different from, those which they now
know or believe to be true, but the Parties, and each of them, intend hereby
fully and finally and forever to settle and to release any and all matters,
disputes, and differences, known or unknown, suspected or unsuspected, which do
now exist, may exist, have existed, or may exist in the future which arise out
of, directly or indirectly, or are in any way connected with the matters
described in this Agreement and regardless of whether such claims were asserted
in the Lawsuit. In furtherance of this intention, the releases herein
shall be and remain in effect as full and complete general releases
notwithstanding discovery or existence of any such additional or different
facts.
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4.
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Tax
Liabilities. The CRAIGS 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, and the
dismissal of the Lawsuit with the exception of those amounts of applicable
taxes and fees chargeable against GOLDEN PHOENIX or that must be
withheld by GOLDEN PHOENIX, in excess of those amounts identified to be
deducted from the monies to be delivered to the CRAIGS pursuant to
paragraph 2.i.(3).
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5.
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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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6.
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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 and the Claims, which are disputed and uncertain,
and about which the CRAIGS and GOLDEN PHOENIX
make no admissions as to validity or
enforceability.
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7.
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Reliance on Own Judgment and
Legal Consultation. Each of the Parties acknowledges
that it relies wholly upon advice of counsel and its own judgment, belief
and knowledge as to the nature, extent and duration of the issues, claims,
defenses, rights and obligations relating to the Lawsuit, Claims and this
Agreement, and each represents that it has not been influenced to any
extent whatsoever in making this Agreement by any representations or
statements concerning the Lawsuit and Claims or regarding any other
matters made by persons, firms, or corporations who are hereby released,
or by any person or persons representing them. The Parties
acknowledge that they have retained and consulted their own attorneys in
executing this Agreement and the legal effect
thereof.
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8.
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Representations. The
CRAIGS and GOLDEN PHOENIX further represent and warrant as
follows:
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a.
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Consents. The
execution and delivery of this Agreement, and the consummation and
performance of the terms and conditions contemplated by this Agreement, do
not require any consent, approval or action of, or any filing with or
notice to any person, public authority or entity except as otherwise
stated in this Agreement and the Parties executing this Agreement are duly
authorized to enter into this
Agreement.
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b.
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Enforceability. Assuming
due execution and delivery of this Agreement by each Party, this Agreement
constitutes the valid and legally binding obligations of the Parties,
enforceable against the Parties in accordance with their
terms.
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c.
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No
Conflicts. Neither the execution, delivery or
performance of this Agreement will conflict in any respect with, result in
a breach of, or constitute a default under, any court or administrative
order or process, judgment, decree, statute, law, ordinance, rule or
regulation or any agreement or commitment to which parties executing the
same are party or are subject or bound, except where such conflict, breach
or default would not have a material adverse effect on their ability to
perform their obligations contemplated
herein.
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d.
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No
Assignment. No claims, third-party claims, or rights of
the Parties purported to have been released herein have been sold,
transferred or assigned and no attempt to do so shall
occur.
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e.
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Disclosure. The
statements of the Parties contained herein are true and correct in all
material respects and do not omit any material fact necessary to make the
statements contained herein not
misleading.
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f.
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Entire Agreement; No
Waiver. This Agreement constitutes the entire agreement
between the Parties relating to the subject matter contained
herein. No waiver of any of the provisions of this Agreement
shall be deemed a waiver of, nor shall constitute a waiver of any other
provision, whether or not similar, nor shall any waiver constitute a
continuing waiver. No supplement, modification or amendment of this
Agreement shall be binding unless executed in writing by all the
Parties.
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g.
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Construction. The
terms and conditions of this Agreement shall be construed as a whole
according to its fair meaning and not strictly for or against any
party. The Parties acknowledge that each of them has reviewed
this Agreement and has had the opportunity to have them reviewed by their
attorneys and that any rule of construction to the effect that ambiguities
are to be resolved against the drafting party shall not apply in the
interpretation of this Agreement, including any amendments. The
Parties further agree that prior drafts of this Agreement shall not be
relevant or considered in connection with the construction or
interpretation of this Agreement, or to vary, modify or contradict any of
the terms or provisions of this
Agreement.
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h.
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Accord and
Satisfaction. This Agreement shall be considered an
accord and satisfaction between the Parties and not a
novation. Should any Party default under the terms of this
Agreement, the non-defaulting Party shall be entitled only to the rights
and remedies set forth herein, and shall not have any right to reinstate
the lawsuit, the Parties expressly acknowledging the compromise of the
disputes in this Agreement.
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i.
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Notices. Any
notice or other communication required or permitted to be delivered to any
party under this Agreement shall be in writing and shall be deemed
properly delivered, given and received when delivered (by hand, by
registered or certified mail, return receipt requested, by courier or
express delivery service) to the address or facsimile number set forth
beneath the name of such party and its counsel below (or to such other
address as such party shall have specified in a written notice given to
the other parties hereto). In the event of failure of actual
receipt by reason of refusal of acceptance of delivery or change of
address and failure to give notice of such change, notice shall be deemed
received at the time of refusal of acceptance of first attempted
delivery.
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If
sent to XXXXXX X. XXXXX AND THE ESTATE OF XXXXXXXX
XXXXXX-XXXXX:
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XXXXXX
X. XXXXX AND THE ESTATE OF XXXXXXXX XXXXXX-XXXXX
C/o
Xxxxx X. Xxxx
0000
Xxxxx Xxxxxxx Xxxx., #000
Xxx
Xxxxx, XX 00000
Tel: (000)
000-0000
Fax:
(000) 000-0000
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If
sent to GOLDEN PHOENIX:
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GOLDEN
PHOENIX Minerals, Inc.
C/o
Xxxxxx X. Xxxxx, Esq.
Bullivant
Xxxxxx Xxxxxx, P.C.
0000
X. Xxxxxx, Xxx 0000
Xxxxxxxxxx,
XX 00000
Tel:
(000) 000-0000
Fax:
(000) 000-0000
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Any Party
may change its address for purposes of this paragraph by giving the other party
written notice of the new address in the manner set forth above.
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j.
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Partial
Invalidity. If any term of this Agreement or the
application of any term of this Agreement 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 of its
applications, not held invalid, void or unenforceable, shall continue in
full force and effect and shall not be affected, impaired or invalidated
in any way.
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k.
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Attorneys’
Fees. The parties to this Agreement shall bear their own
attorneys’ fees and costs incurred in this litigation, as well as on the
preparation of this Agreement. In the event that any Party
commences an action to enforce or interpret this Agreement, or for any
other remedy based on or arising from this Agreement or the Accompanying
Exhibit, the prevailing Party therein shall be entitled to recover its
reasonable and necessary attorneys’ fees and costs
incurred. For the purposes of this provision, the “prevailing party” shall
be that Party which has been successful with regard to the main issue,
even if that Party did not prevail on all
issues.
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l.
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Necessary
Action. Each of the Parties shall do any act or thing
necessary to execute any or all documents or instruments necessary or
proper to effectuate the provisions and intent of this
Agreement.
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m.
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Governing Law and
Forum. The laws of the State of Nevada, without giving
effect to choice of law or conflict of law principles, shall govern the
validity, construction, performance and effect of this
Agreement. Any lawsuit to interpret or enforce the terms of
this Agreement shall be brought in a court of competent jurisdiction in
Washoe County, Nevada.
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n.
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Counterparts and
Facsimile/copy. This Agreement may be executed in
counterparts, in different locations, and copies, scans or facsimiles of
signatures shall be legally binding as
originals.
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IN
WITNESS WHEREOF, the Parties hereto, intending to be legally bound, execute this
Agreement effective as of the last date executed below.
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[signature
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GOLDEN
PHOENIX MINERALS, INC.
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XXXXXX
X. XXXXX
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By:
/s/ Xxxxx X.
Xxxxxxxx
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Xxxxx
X. Xxxxxxxx
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Its:
Chief Financial Officer
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/s/ Xxxxxx X.
Xxxxx
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ESTATE
OF XXXXXXXX XXXXXX-XXXXX
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By:
/s/ Xxxxx X.
Xxxx
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Xxxxx
X. Xxxx
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Its:
Successor Trustee
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APPROVED
AS TO FORM AND CONTENT
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APPROVED
AS TO FORM AND CONTENT
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BULLIVANT
XXXXXX XXXXXX, PC
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By:
/s/ Xxxxxx X.
Xxxxx
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By:
/s/ Xxxxx X.
Xxxx
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Xxxxxx
X. Xxxxx
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Xxxxx
X. Xxxx
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0000
X. Xxxxxx, Xxx 0000
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0000
Xxxxx Xxxxxxx Xxxx., #000
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Xxxxxxxxxx,
XX 00000
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Xxx
Xxxxx, XX 00000
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Attorney
for GOLDEN PHOENIX
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Attorney
for XXXXXX X. XXXXX and the ESTATE OF XXXXXXXX
XXXXXX-XXXXX
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