EMPLOYMENT SEPARATION AGREEMENT

 

Golden Phoenix Minerals, Inc., a Nevada corporation (the "Company") and Donald
R. Prahl, an individual (the "Employee"), agree as follows, as of the 28th day
of July 2009:

 

          1.        Employment. Pursuant to a written employment agreement
between the Company and Employee dated August 14, 2006, as amended by that
certain Addendum to Employment Agreement dated January 31, 2007, the Company has
employed the Employee as its Chief Operating Officer effective as of January 31,
2007 (collectively, the “Employment Agreement”). The Company and the Employee
now desire to terminate the Employment Agreement by mutual agreement, effective
the end of the workday, July 28, 2009 (“Termination Date”). The Company and the
Employee hereby agree to mutually terminate the Employment Agreement and sever
their employment relationship pursuant to the terms and conditions set forth in
this Employment Separation Agreement ("Separation Agreement").

 

          2.        Resignation. The Employee shall cease functioning in the
position of Chief Operating Officer for the Company, and in any other position
that he may hold or be construed to hold with the Company or its affiliates, and
shall cease to be an employee for the Company and its affiliates, effective on
the Termination Date. As of the Termination Date, the Employee hereby tenders
resignation, without cause, as the Company’s Chief Operating Officer and as any
other position that the Employee may hold, or may be construed to hold with the
Company or its affiliates, effective as of the Termination Date.

 

          3.        Payments. All payments of every description in this Section
3 shall be subject to the customary withholding tax and other employment taxes
as required with respect to compensation paid to the Employee.

 

                      3.1.     Expenses. The Company shall pay the Employee
$655.40, which represents those expenses incurred by Employee in connection with
his employment with the Company and for which Employee has previously requested
reimbursement and provided appropriate documentation. Such amount shall be paid
to Employee by the Company as soon as reasonably practicable out of available
funds, with any remaining balance to be paid in conjunction with those sums due
under Section 3.2(b).

 

                      3.2.     Severance. The Company shall pay the Employee an
amount equivalent to one (1) year of his current base salary of $125,000.00 as
severance pay (“Severance Pay”) as set forth below; Employee acknowledges and
agrees that the Company is not obligated to provide any further severance in
accordance with paragraph 4.5 or any other section of the Employment Agreement:

 

                                  a.        The Company shall immediately
convert $85,000.00 of the Severance Pay into 4,341,164 restricted shares of the
Company’s common stock, par value $0.001 per share (the “Shares”), which share
total is determined based on a 20% discount to the

 

 

 

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trailing 20-day volume weighted average closing price of the Company’s common
stock for the 20 days prior to the Termination Date as quoted by the OTC
Bulletin Board ($0.01958).

 

                                  b.        The Company shall pay the Employee
the remaining $40,000.00 of the Severance Pay in cash immediately upon the
closing of a joint venture transaction involving the Company’s Mineral Ridge
mining property. The Company will also pay any remaining balance of the expenses
set forth in Section 3.1 simultaneously with the payment of the funds outlined
in this Section 3.2(b).

 

                                  c.        The $18,000.00 previously advanced
to the Employee shall be credited against his invoice and shall constitute
payment in full for any and all fees owed for consulting services for the period
from November 2008 through July 2009.

 

3.3.     Stock Option Grants. Any unvested portion of the Employee’s stock
options outstanding as of the Termination Date shall vest immediately upon the
Termination Date, and shall otherwise be subject to the provisions and terms
thereof.

 

           4.        Release of Liability. The Employee acknowledges that he
enters this Separation Agreement freely and voluntarily, and agrees as follows:

 

                      4.1.     Title VII Claims. The Employee acknowledges that
Title VII of the Civil Rights Act of 1964, as amended, the Civil Rights Act of
1991, the Americans With Disabilities Act, as amended, the Age Discrimination in
Employment Act of 1967, the Vietnam Era Veterans Readjustments Assistance Act of
1974, the Federal Family and Medical Leave Act of 1993, as amended, and other
state and local laws provide the right to an employee to bring charges, claims
or complaints against an employer if the employee believes he has been
discriminated against on a number of bases, including but not limited to race,
ancestry, color, religion, sex, marital status, national origin, age, status as
a veteran of the Vietnam era, request or need for family or medical leave,
physical or mental disability, medical condition or sexual preference. The
Employee, with full understanding of the rights afforded him under these and
other federal, state and local laws, agrees that he will not file, or cause to
be filed against the Company, any charges, complaints, or actions based on any
alleged violation of these federal, state and local laws, or any successor or
replacement federal or state laws. The Employee hereby waives any right to
assert a claim for relief available under these federal, state and local laws
including, but not limited to, back pay, attorneys' fees, damages,
reinstatement, or injunctive relief, which the Employee may otherwise recover
based on any alleged violation of these federal, state and local laws, or any
successor or replacement federal, state or local laws.

 

          4.2.     Release of Claims. In exchange for the promises and covenants
set forth herein, the Employee hereby releases, acquits, and forever discharges
the Company, its parents and subsidiaries, and their officers, directors,
agents, servants, employees, attorneys, shareholders, partners, successors,
assigns, affiliates, customers, and clients of and from any and all claims
liabilities, demands, causes of action, costs, expenses, attorneys' fees,
damages, indemnities and obligations of every kind and nature, in law, equity,
or otherwise, known and unknown, suspected and unsuspected, disclosed and
undisclosed (“Claims”), (including but not

 

 

 

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limited to any federal, state or local law or cause of action including, but not
limited to, the National Labor Relations Act, Title VII of the Civil Rights Act
of 1964, as amended, the Civil Rights Act of 1991, the Americans With Disability
Act, as amended, the Federal Family and Medical Leave Act of 1993, as amended,
the Vietnam Era Veterans Readjustment Assistance Act of 1974, and state and
local laws, any allegation of wrongful termination and any claim arising out of
the Constitution of the State of Nevada; contract law; wrongful discharge;
discrimination; harassment; fraud; defamation; emotional distress; and breach of
the implied covenant of good faith and fair dealing), but only to the extent
that such Claims directly or indirectly arise out of or are in any way connected
with: (a) the Company’s employment of the Employee, (b) the termination of that
employment, (c) the Company’s performance of its obligations as the Employee’s
former employer; (d) claims or demands related to salary, bonuses, commissions,
or (e) vacation pay, fringe benefits, expense reimbursements, severance pay, or
any form of compensation. The Employee agrees to indemnify and hold the Company
and its shareholders, directors, officers, agents and employees harmless from
any liabilities, debts, demands, causes of action, injuries, costs, attorneys'
fees or damages of any kind arising out of the Employee’s action or inactions,
whether negligent or otherwise, with respect to, or in connection with the
Severance Agreement and the Employment Agreement.

 

          4.3.     ADEA Waiver. Employee acknowledges that he is knowingly and
voluntarily waiving and releasing any rights Employee may have under the Age
Discrimination in Employment Act of 1967, as amended (“ADEA”). Employee also
acknowledges that the consideration set forth in Section 3 given for the waiver
and release pursuant to this Agreement is in addition to anything of value to
which Employee was already entitled. Employee further acknowledges that he has
been advised by this Agreement in writing, as required by the ADEA, that:

 

                      a.        his waiver and release does not apply to any
rights or claims that may arise after the execution date of this Agreement;

 

                      b.        he has the right to consult with an attorney
prior to executing this Agreement;

 

                      c.        he has twenty-one (21) days to consider this
Agreement (although Employee may choose to waive this provision by voluntarily
executing this Agreement earlier);

 

                      d.        he has seven (7) days following the execution of
this Agreement to revoke the Agreement; and

 

                      e.        this Agreement will not be effective until the
date upon which the revocation period has expired, which will be the eighth
(8th) day after this Agreement is executed by both parties.

 

          5.        Confidential Information. The Employee acknowledges that
during the course of his duties with the Company, he handled confidential
information of the Company and its affiliates. The Employee agrees he will
retain in the strictest confidence all confidential matters

 

 

 

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which relate to the Company or its affiliates, including, without limitation,
pricing lists, business plans, financial projections and reports, business
strategies, internal operating procedures and other confidential business
information from which the Company derives an economic or competitive advantage
or from which the Company might derive such advantage in its business, whether
or not labeled "secret" or "confidential," and not to disclose directly or
indirectly or use by him in any way, either during the term of this Separation
Agreement or at any time thereafter except as permitted by law.

 

          6.        Trade Secrets. The Employee shall not disclose to any others
or take or use for the Employee's own purposes or purposes of any others at any
time, any of the Company's trade secrets, including without limitation,
confidential information; customer lists; information concerning current or any
future and proposed work, services or products; the fact that any such work,
services or products are planned, under consideration, or in production, as well
as any description thereof, computer programs or computer software. The Employee
agrees that these restrictions shall also apply to (i) trade secrets belonging
to third parties in the Company's possession and (ii) trade secrets conceived,
originated, discovered or developed by the Employee during the term of his
employment.

 

          7.        Inventions; Ownership Rights. The Employee agrees that all
ideas, techniques, inventions, systems, formulas, discoveries, technical
information, programs, prototypes and similar developments ("Developments")
developed, created, discovered, made, written or obtained by him in the course
of or as a result, directly or indirectly, of performance of his duties to the
Company, and all related industrial property, copyrights, patent rights, trade
secrets and other forms of protection thereof, shall be and remain the property
of the Company. The Employee agrees to execute or cause to be executed such
assignments and applications, registrations and other documents and to take such
other action as may be requested by the Company to enable the Company to protect
its rights to any such Developments.

 

          8.        No Disparagement of the Company or Employee. TheEmployee
agrees that he will not make any statements which are or may appear derogatory
about or disparaging to the Company or any of its agents, officers, directors or
other employees, except as may be required by court order or applicable law.

 

          9.        Non-Interference; No Solicitation. The Employee agrees not
to interfere with any of the Company's contractual obligations with others.
Furthermore, the Employee agrees during a period of eighteen (18) months
commencing on the Termination Date, the Employee agrees to not, without the
Company's express written consent, on his behalf or on behalf of another: (i)
contact or solicit the business of any client, customer, creditor or licensee of
the Company, (ii) hire employees of the Company, other than clerical employees,
or (iii) solicit the business of any client, customer or licensee of the
Company. The Employee acknowledges that this section 9 is a reasonable and
necessary measure designed to protect the proprietary information of the
Company.

 

          10.      Return Company Property. The Employee agrees that he will
promptly, within two (2) business days, return to the Company, all the Company's
or its affiliates' memoranda,

 

 

 

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notes, records, reports, manuals, drawings, designs, computer files in any media
and other documents (including extracts and copies thereof) relating to the
Company or its affiliates, and all other property of the Company.

 

          11.      Actions Contrary to Law. Nothing contained in this Separation
Agreement shall be construed to require the commission of any act contrary to
law, and whenever there is any conflict between any provision of this Separation
Agreement and any statute, law, ordinance, or regulation, contrary to which the
parties have no legal right to contract, then the latter shall prevail; but in
such event, the provisions of this Separation Agreement so affected shall be
curtailed and limited only to the extent necessary to bring it within legal
requirements.

 

 

12.

Miscellaneous.

 

          12.1.    Notices. All notices to be given by either party to the other
shall be in writing and may be transmitted by personal delivery, facsimile
transmission, overnight courier or mail, registered or certified, postage
prepaid with return receipt requested; provided, however, that notices of change
of address or facsimile number shall be effective only upon actual receipt by
the other party. Notices shall be delivered at the following addresses, unless
changed as provided for herein:

 

To the Employee:

Donald R. Prahl

5301 Williams Road

Silver Bay, MN 55614

 

 

To the Company:

Board of Directors

Golden Phoenix Minerals, Inc.

1675 East Prater Way, Suite 102

Sparks, Nevada 89434

Fax: 775-853-5010

 

          12.2.   Entire Agreement. This Separation Agreement supersedes any and
all agreements, either oral or written, between the parties hereto with respect
to its subject matter, including, but not limited to, the Employment Agreement.
Each party to this Separation Agreement acknowledges that no representation,
inducements, promises, or agreements, orally or otherwise, have been made by any
party or anyone acting on behalf of any party, which are not embodied herein,
and that no other agreement, statement, or promise not contained in this
Separation Agreement shall be valid or binding. Any modification of this
Separation Agreement will be effective only if it is in writing and signed by
both parties.

 

          12.3.   Governing Law. This Separation Agreement shall be governed by
and construed in accordance with the laws of the State of Nevada.

 

          12.4.   Jurisdiction and Venue. The parties hereby consent to the
exclusive jurisdiction of the state and federal courts sitting in Nevada with
the sole and exclusive venue of Washoe County in any action on a claim arising
out of, under or in connection with this

 

 

 

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Separation Agreement or the transactions contemplated by this Separation
Agreement, provided such claim is not required to be arbitrated pursuant to
Section 12.5. The parties further agree that personal jurisdiction over them may
be effected by notice as provided in Section 12.1, and that when so made shall
be as if served upon them personally within the State of Nevada.

 

          12.5    Arbitration. Any controversy, dispute or claim arising out of
or relating to this Separation Agreement or the Employment Agreement terminated
by this Separation Agreement, performance hereunder or breach thereof, which
cannot be amicably settled, shall be settled by arbitration conducted in Washoe
County unless some other location is mutually agreed to in a writing signed by
both parties. Said arbitration shall be conducted in accordance with the
Commercial Arbitration Rules of the American Arbitration Association at a time
and place within the above-referenced location as selected by the arbitrator(s).

 

a.        Initiation of Arbitration. After seven (7) calendar days prior written
notice to the other, either party hereto may formally initiate arbitration under
this Separation Agreement by filing a written request therefore, and paying the
appropriate filing fees, if any.

 

b.        Hearing and Determination Dates. The hearing before the arbitrator
shall occur within thirty (30) calendar days from the date the matter is
submitted to arbitration. Further, a determination by the arbitrator shall be
made within forty-five (45) calendar days from the date the matter is submitted
to arbitration. Thereafter, the arbitrator shall have fifteen (15) calendar days
to provide the parties with his decision in writing. However, any failure to
meet the deadlines in this paragraph will not affect the validity of any
decision or award. The arbitrator’s written decision shall summarize the issues
and resolution of the controversy, and the decision shall be based solely upon
the law governing the claims and defenses pleaded by the parties. The arbitrator
shall have the authority to award any relief available in a court of law.

 

c.        Binding Nature of Decision. The written reasoned decision of the
arbitrator shall be binding on the parties without the right to any writ of
review, appeal, or court review thereof.. Judgment thereon shall be entered in a
court of competent jurisdiction.

 

d.        Injunctive Actions. Nothing herein contained shall bar the right of
either party to seek to obtain injunctive relief or other provisional remedies
against threatened or actual conduct that will cause loss or damages under the
usual equity rules including the applicable rules for obtaining preliminary
injunctions and other provisional remedies.

 

e.        Fees and Costs. The cost of arbitration, including the fees of the
arbitrator, shall initially be borne by the Company; provided, the prevailing
party (as determined by the arbitrator) shall be entitled to recover all such
costs allowed by law, in addition to attorneys’ fees and other costs, in
accordance with Section 12.6 of this Separation Agreement.

 

          12.6.   Attorneys' Fees. In the event of any litigation, arbitration,
or other proceeding arising out of this Separation Agreement, or the parties’
performance as outlined

 

 

 

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herein, the prevailing party shall be entitled to an award of costs, including
an award of reasonable attorneys’ fees. Any judgment, order, or award entered in
any such proceeding shall designate a specific sum as such an award of
attorneys’ fees and costs incurred. This attorneys’ fee provision is intended to
be severable from the other provisions of this Separation Agreement, shall
survive any judgment or order entered in any proceeding and shall not be deemed
merged into any such judgment or order, so that such further fees and costs as
may be incurred in the enforcement of an award or judgment or in defending it on
appeal shall likewise be recoverable by further order of a court or panel or in
a separate action as may be appropriate.

 

          12.7.    Amendment, Waiver. No amendment or variation of the terms of
this Separation Agreement shall be valid unless made in writing and signed by
the Employee and the Company. A waiver of any term or condition of this
Separation Agreement shall not be construed as a general waiver by the Company.
Failure of either the Employee or the Company to enforce any provision or
provisions of this Separation Agreement shall not waive any enforcement of any
continuing breach of the same provision or provisions or any breach of any
provision or provisions of this Separation Agreement.

 

          12.8.    Ambiguities. This Separation Agreement shall not be subject
to the rule that any ambiguities in the contract are to be interpreted against
the drafter of the Separation Agreement.

 

          12.9.    Counterparts. This Separation Agreement may be signed in one
or more counterparts (by facsimile or otherwise), all of which shall be treated
as one and the same instrument.

 

IN WITNESS WHEREOF, the undersigned have executed this Separation Agreement as
of the date first hereinabove written.

 

 

 

THE EMPLOYEE

 

 

 

Date: July 28, 2009

 

 

 

By: /s/ Donald R. Prahl  
       Donald R. Prahl

 

 

 

THE COMPANY

 

 

 

 

Date: July 28, 2009

 

Golden Phoenix Minerals, Inc.

 

 

By: /s/ David A. Caldwell   
       David A. Caldwell,
       Chief Executive Officer

 

 

 

 

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