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On
February 10, 2011, Golden Phoenix Minerals, Inc. (the "Company") entered
into a Notice of Conversion and Note Settlement Agreement dated as of
February 9, 2011 (the "Note Settlement") with David A. Caldwell,
one of the Company's former officers and directors, with respect to that
certain unsecured promissory note (the "Note") issued to Mr.
Caldwell pursuant to an Employment Separation and Severance Agreement dated
January 19, 2010 (the "Separation Agreement"). The terms of the
Separation Agreement were previously disclosed on the Company's Current
Report on Form 8-K as filed with the U.S. Securities and Exchange Commission
on January 29, 2010 (the "Prior Report"). The information set forth
in the Prior Report in reference to the Note and Separation Agreement is
herein incorporated in its entirety.
Under the
terms of the Note, the Company owed Mr. Caldwell the aggregate amount of
$374,453.87 as of the date of the Note Settlement in principal plus interest
accrued thereon, with a maturity date 24 months from the date of the
Separation Agreement. Further, the Note provided that: (i)
after 12 months, Mr. Caldwell could elect to convert 50% of the outstanding
balance of the Note into shares of the Company's common stock, at a
conversion rate of 16.7 shares of Company common stock for each $1.00 of
principal and interest to be converted; and (ii) on the Note's stated
maturity date, Mr. Caldwell could elect to convert any remaining outstanding
balance of principal and interest into such number of shares of Company
common stock at a conversion rate of 10 shares of Company common stock for
each $1.00 of principal and interest to be converted.
As set
forth in the Note Settlement, Mr. Caldwell elected to exercise his right to
convert 50% of the outstanding balance, resulting in an issuance of 3,126,691
shares of Company common stock (the "Conversion Shares").
Additionally, Mr. Caldwell and the Company agreed that in settlement of the
remaining balance and any further obligations under the Note, in lieu of cash
or further conversion into Company common stock at the Note's maturity date,
the Company agreed to transfer certain of the Company's interests in private
securities not currently booked as assets of the Company.
Namely,
the Company agreed to transfer all of its right, title and interest in:
(i) 1,523,292 shares of Black Rock Metals Inc., a
privately held Canadian federally registered company ("Black
Rock"), currently held in the Company's name (the "Black Rock
Shares"), at a current agreed book value of $0.10 per share based on the
most recent sale of an aggregate of 5,300,000 shares by 11 individual
shareholders, for an aggregate deemed consideration of $152,329; and
(ii) a 1% net smelter return ("NSR") royalty in favor of the
Company on certain mineral properties and leasehold interests in Alaska,
pursuant to that certain Royalty Agreement entered into between the Company
and Great American Minerals Exploration, Inc., a Nevada company
("GAME") dated April 26, 1999 at a deemed value of $34,898. In
exchange for the Black Rock Shares and the GAME NSR, the Company will no
longer have any obligations to Mr. Caldwell under the Note. All other terms
and conditions of the Separation Agreement remain in full force and effect.
The
foregoing description is qualified in its entirety by reference to the Note
Settlement filed as Exhibit 10.1 attached hereto and incorporated herein by
reference.
Section 2.03. Creation of a Direct Financial Obligation or an Obligation
under an Off-Balance Sheet Arrangement of a Registrant
As disclosed
above under Item 1.01, the Company entered into a Note Settlement with Mr.
Caldwell whereby the parties agreed to settle certain outstanding debt owed
by the Company to Mr. Caldwell in exchange for certain of the Company's
interests in private securities not currently booked as assets of the
Company. In particular, the Company has agreed to transfer all of its right,
title and interest in and to the Black Rock Shares and the GAME NSR, having a
deemed aggregate value of $187,227. For additional information regarding the
transfer of such private securities, see the disclosure under Item 1.01
above, incorporate herein by reference.
The
foregoing description is qualified in its entirety by reference to the Note
Settlement filed as Exhibit 10.1 attached hereto and incorporated herein by
reference.
Item 3.02. Unregistered Sales of Equity Securities
As
disclosed in Item 1.01 of this Current Report on Form 8-K, Mr. Caldwell and
the Company entered into a Note Settlement on February 10, 2011, whereby Mr.
Caldwell elected to convert a portion of the outstanding Note into the
Conversion Shares at a rate of 16.7 shares of Company common stock for each
$1.00 of principal and interest being converted. The disclosure under Item
1.01, above, is incorporated by reference in its entirety into this Item
3.02.
The
issuance of the Note and subsequent conversion of a portion of the Note into
the Conversion Shares was conducted in reliance upon exemptions from
registration under the Securities Act of 1933, as amended (the
"Securities Act"), including, without limitation, the exemptions
provided by Section 4(2) of the Securities Act.
The
foregoing description is qualified in its entirety by reference to the Note
Settlement filed as 10.1, attached hereto and incorporated herein by
reference.
Item 9.01. Financial Statements and Exhibits
Exhibit
No. Exhibit Description
10.1
Notice of Conversion and Note Settlement Agreement
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