Exhibit 10.20
 
SETTLEMENT AGREEMENT AND GENERAL RELEASE
 
THIS SETTLEMENT AGREEMENT AND GENERAL RELEASE (the “Agreement”) is made and
entered into on the 15th day of March 2013 (the “Effective Date”), by and among
U.S. Rare Earths, Inc., a Nevada corporation (“USRE” or “the Company”), on the
one hand, and H. Deworth Williams (“D. Williams”), Edward F. Cowle (“Cowle”),
Geoff Williams (“G. Williams”), and Blue Cap Development Corp., a Nevada
corporation (“Blue Cap”)  (collectively referred to herein as “Defendants”), on
the other.
 
WHEREAS, USRE filed a complaint in the Eighth Judicial District Court in Clark
County, Nevada against Defendants D. Williams, Cowle, G. Williams, and Blue Cap,
Case No. A-12-668230-B (the “Nevada Litigation”), alleging, among other things,
claims for declaratory relief and breach of fiduciary duty;
 
WHEREAS, Defendants D. Williams and Cowle filed a Verified Petition for
Extraordinary Relief or, Alternatively, For Issuance of a Writ of Mandamus in
the Third Judicial District Court in and for Salt Lake County in the State of
Utah, a case subsequently removed to the United States District Court for the
District of Utah, Case No. 2:12-cv-00905-RJS (the “Utah Litigation”);
 
WHEREAS, Defendants filed numerous counterclaims in the Nevada Litigation and
brought in other individuals from whom they are seeking derivative relief on
behalf of USRE;
 
WHEREAS, USRE, on or about August 27, 2012, dismissed Defendants Williams and
Cowle from the Board of Directors on the ground that they had allegedly violated
federal law and otherwise allegedly breached fiduciary duties – allegations that
the Defendants have vigorously disputed and which USRE formally retracts by this
settlement and Agreement;
 
WHEREAS, USRE and Defendants (a “Party” or collectively, the “Parties”), in an
effort to avoid the expenses, time demands and uncertainties of litigation, have
reached an agreement to compromise and settle all disputes between them
including, but not limited to, the Nevada Litigation and Utah Litigation;
 
NOW, THEREFORE, for and in consideration of the mutual promises herein
contained, and for good and valuable consideration, the receipt, sufficiency and
adequacy of which are hereby acknowledged, the Parties to this Agreement agree
(subject to Court review and approval) as follows:
 
DEFINITIONS
 
“Defendants” means H. Deworth Williams, Edward F. Cowle, Geoff Williams, and
Blue Cap Development Corp.;
 
“USRE” or “the Company” means U.S. Rare Earths, Inc. and its officers,
directors, employees, shareholders, stockholders, attorneys, tax advisors,
agents, representatives, and assigns (the “Related Parties”);
 
The “Nevada Litigation” means U.S. Rare Earths, Inc. v. Williams et al., Case
No. A-12-668230-B, Eighth Judicial District Court, Clark County, Nevada;
 
The “Utah Litigation” means Williams, et al. v. U.S. Rare Earths, Inc.,
originally filed in the Third Judicial District Court in and for Salt Lake
County in the State of Utah, and removed to the United States District Court for
the District of Utah, Case No. 2:12-cv-00905-RJS;
 
The “Claims” means all demands, claims, counterclaims, cross-claims, causes,
actions, suits, losses, damages, costs, attorneys’ fees, expenses, demands and
amounts claimed due of whatsoever nature, known or unknown, whether in contract
or in tort, whether arising at common law, in equity, or by virtue of statute or
regulation, and any other causes of action that were or could have been asserted
by any Party against any persons, whether a Party or a Related Party, in the
Nevada Litigation or the Utah Litigation related to USRE, but excluding any
claim for breach of this Settlement Agreement.
 
 
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AGREEMENT
 
1. This Agreement is subject to the review and approval of the Court before whom
the Nevada Litigation (the “Nevada Court”) is pending.  Upon execution of this
Agreement by the parties, this Agreement and its attachments shall be promptly
submitted to the Court for appropriate notice to shareholders and approval of
settlement.  The parties shall further request that upon final approval by the
Court, the litigation pending in Nevada and Utah be dismissed, with
prejudice.  This Agreement shall be null and void in its entirety unless the
terms set forth herein are approved by the Nevada Court and all related
objections or appeal period limits have expired.
 
2. Except as to any claim based upon a breach of this Agreement, USRE, in
consideration of the points and undertakings agreed upon in Paragraphs four (4)
through eight (8) below, and for other valuable consideration, the sufficiency
of which USRE acknowledges, USRE hereby releases and forever discharges
Defendants and their officers, directors, employees, shareholders, stockholders,
attorneys, tax advisors, agents, representatives, and assigns from the Claims.
 
3. Except as to any claim based upon a breach of this Settlement Agreement,
Defendants, in consideration of the points and undertakings agreed upon in
Paragraphs four (4) through eight (8)  below and for other valuable
consideration, the sufficiency of which the Defendants acknowledge, Defendants
hereby release and forever discharge USRE and its officers, directors,
employees, shareholders, stockholders, attorneys, tax advisors, agents,
representatives, and assigns from the Claims.
 
4. As a material and integral part of this Agreement, Defendants release and
forever discharge USRE and its officers, directors, employees, shareholders,
stockholders, attorneys, tax advisors, agents, representatives, and assigns as
it pertains to:
 
(a)           the September 12, 2012, sale of an aggregate of 2,045,450 shares
of theCompany’s common stock to Lattimore Properties, Inc., a Texas
companyaffiliated with John Victor Lattimore, Jr. for a total of $550,000 (five
hundredfifty thousand dollars) at a price of $0.27 per share;
 
(b)           the September 13, 2012, Convertible Secured Promissory Note
(“Note” or “NoteAgreement”) entered into between USRE and Unique Materials, LLC
(“Holder”),affiliated with John Victor Lattimore, Jr. (Chairman of USRE’s Board
of Directors) pursuant to which the Company agreed to issue a Note for $650,000
at 5% interest;
 
(c)           Defendants hereby release and forever discharge any claim to any
interest inthe mining and exploration claims held by USRE, other than such
claims asDefendants may hold indirectly as common stockholders of USRE.
 
5. In settlement of all Claims as defined above, USRE and Defendants further
agree that this Agreement is contingent on the simultaneous execution of the
Stock Purchase Agreement and Voting Shareholder Agreement attached herein as
Exhibits 1 and 2, respectively.  This Agreement shall be null and void unless
the Stock Purchase Agreement and Voting Shareholder Agreement are simultaneously
executed.  All terms and conditions of the Stock Purchase Agreement and Voting
Shareholder Agreement are material to this Agreement and incorporated herein by
reference.
 
6. Subject and subsequent to a successful secondary or other cash-based stock
offering or PIPE (private investment in public equity) transaction (or
combination thereof) exceeding $6,000,000 (six million dollars) in proceeds at
any time throughout the calendar years 2013-2014, USRE agrees:
 
(a)  pursuant to the terms of the July 19, 2011, Agreement and Plan of Merger
between Colorado Rare Earths, Inc., Seaglass Holding Corp. and U.S. Rare Earths,
Inc. (Delaware), to assume and maintain the office lease of certain offices of
USRE located in Salt Lake City, Utah, and USRE further agrees to pay the ongoing
expenses associated with maintaining the lease and cost of operating the office
in the amount of $6,000 per month;
 
(b)  to reimburse Defendant D. Williams for the reasonable business costs and
expenses incurred and advanced by him for the benefit of USRE as provided in the
July 19, 2011, Agreement and Plan of Merger between Colorado Rare Earths, Inc.,
Seaglass Holding Corp. and U.S. Rare Earths, Inc. (Delaware) for an amount not
to exceed $145,000 total;
 
(c)  to reimburse Defendants for their costs and fees incurred in the Utah and
Nevada Litigations in an amount not to exceed $150,000;
 
(d)  to use all reasonable efforts to retrieve or “claw back” at least 2.1
million shares of USRE common stock that was authorized to be issued on or about
August 27, 2012, to certain individuals for non-cash consideration and future
services; and
 
(e)  that Edward F. Cowle be employed as a senior level executive with the
Company with an appropriate compensation package commensurate with that position
to be decided by the Board of Directors.
 
 
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7. Independent of a successful secondary or other cash-based stock offering or
PIPE transaction (or combination thereof) exceeding $6,000,000 (six million
dollars) at any time throughout the calendar years 2013-2014 or at all, USRE
further agrees:
 
(a) That Kevin Cassidy and his firm, Logic International Consulting Group, LLC
(“Logic”), including Logic’s affiliate Agincourt Capital, LLC (“Agincourt”), a
FINRA registered broker-dealer, and James J. Cahill, Agincourt’s Managing
Director and Registered Principal (“Cahill”), shall be compensated for their
consulting services rendered to date and through the settlement of this
litigation in the amount of three million (3,000,000) restricted shares and a
Convertible Unsecured Promissory Note in the amount of $650,000 (six hundred
fifty thousand dollars) convertible at one dollar ($1.00) per share of USRE
common stock.  This does not include the standard or customary compensation that
Cahill may earn through Agincourt’s normal course of business as Logic’s
affiliated broker-dealer.  Logic further agrees, following consultation with the
USRE Board of Directors, to restructure its consulting services agreement with
USRE in good faith.
 
(b) That the Defendants have represented that they are principals in a private
Idaho entity known as Thorium Energy, Inc. (formed in  2007) (“Thorium Energy”),
which, in conjunction with other geologists and experts, has developed, and is
developing, a proprietary process to extract, separate, process and handle the
radioactive rare earths mining by-product known as thorium, widely considered to
be a hazardous liability with regard to rare earths, and known to be existing in
high proportion to rare earths at the Lemhi Pass.  If this process becomes
viable, the remaining “heavy” rare earths mineralization in the Lemhi Pass
properties currently owned and held by USRE would thus become more readily
accessible and thereby, arguably more valuable.  Accordingly, USRE agrees and
hereby gives the Defendants and Thorium Energy a first right of refusal for ten
(10) years from the date this Agreement is executed to contract with USRE in
regard to its thorium on terms consistent with those as put forth by an
independent third-party bidder, joint venturer or other commercial bidder to be
determined by the parties at that time.  Further, USRE agrees to execute a
confidentiality and non-compete agreement in this regard at such time as the
Defendants’ process is so submitted and disclosed to USRE for this purpose.
 
(c) That USRE issue to either:  (i) John Victor Lattimore, Jr.; (ii) Lattimore
Properties, Inc., a Texas company affiliated with John Victor Lattimore, Jr.; or
(iii) Unique Materials, LLC (“Holder”), affiliated with John Victor Lattimore,
Jr. (at John Victor Lattimore, Jr.’s sole and absolute discretion), an option to
purchase up to three million (3,000,000) shares of USRE common stock at $1.00 a
share and upon other terms to be decided by the Board of Directors of USRE; and
 
(d) That the Holder of the Convertible Secured Promissory Note (“Note” or “Note
Agreement”) mentioned in paragraph 4(b) above or any affiliate of it may not
convert said Note or any other subsequent convertible note entered into with
USRE to stock at less than one dollar ($1.00) per share.
 
8. The Defendants agree that upon execution of this Agreement any intellectual
property, trademarks or the like (such as websites, web domains, internet
sites), bearing the name or terms “U.S. Rare Earths,” or in any way referring to
the mining and/or mineral claims and/or leases owned by USRE will be promptly
disclosed and immediately conveyed to the Company.
 
9. Neither this Settlement Agreement, nor the fact or any terms of this
Settlement Agreement, is an admission, evidence or concession by any Party of
any liability or wrongdoing or damages whatsoever.  Neither this Settlement
Agreement, nor the fact or any terms of this Settlement Agreement, nor the
settlement negotiations, nor statements in connection therewith, nor any related
documents shall be used or construed as an admission or other evidence of any
fault, liability or wrongdoing by or damage to any person.
 
10. The waiver of any Party of any breach of this Settlement Agreement by any
other Party shall not be deemed a waiver of any other prior or subsequent breach
of any provision of this Settlement Agreement by any other Party.
 
11. This Settlement Agreement may be executed in one or more counterparts.  All
executed counterparts and each of them shall be deemed to be one and the same
instrument.
 
12. The terms, provisions and language of this Settlement Agreement have been
negotiated and drafted by the Parties and their respective legal
counsel.  DEFENDANTS AND USRE AS DEFINED ABOVE REPRESENT AND WARRANT THAT THEY
HAVE CONSULTED WITH THEIR LEGAL COUNSEL.  Nothing in this Settlement Agreement
should be construed or interpreted against any Party as the drafting party, or
for any reason by operation of similar rules of construction.
 
13. Pursuant to its terms, this Settlement Agreement shall be binding upon and
shall inure to the benefit of the successors and assigns of the Parties,
including any entity into or with which any party may merge, consolidate or
reorganize.
 
14. This Settlement Agreement and any and all disputes arising out of or
relating to this Settlement Agreement shall be governed by and construed in
accordance with the laws of the State of Nevada, without regard to choice of law
principles.
 
15. Each of the Parties (i) irrevocably submits itself to the personal
jurisdiction of any state or federal court sitting in Nevada, as well as to the
jurisdiction of all courts to which an appeal may be taken from such courts, in
any suit, action or proceeding arising out of or relating to this Settlement
Agreement or any of the transactions contemplated by this Settlement Agreement,
(ii) agrees that it shall not attempt to deny or defeat such personal
jurisdiction by motion or other request for leave from such court, (iii) agrees
not to bring any action or proceeding arising out of or relating to this
Settlement Agreement or any of the transactions contemplated by this Settlement
Agreement in any other court, and (iv) expressly waives, and agrees not to plead
or to make any claim that any such action or proceeding is subject (in whole or
in part) to a jury trial.  Each of the Parties waives any defense of
inconvenient forum to the maintenance of any action or proceeding so brought.
 
 
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16. In the event that any Party to this Settlement Agreement shall file or be
required to defend any action to enforce the terms of this Settlement Agreement,
including without limitation, the successful defense of any claim brought by a
Party that is, or has been, released by the Parties under paragraphs 2 and 3
above of this Settlement Agreement, the prevailing Party shall be entitled to
recover from the non-prevailing Party all of the prevailing Party’s costs
associated with such action, including without limitation, reasonable attorneys’
fees.
 
17. If one or more of the provisions contained in this Settlement Agreement is
determined by a court of competent jurisdiction to be invalid or unenforceable
in any respect, the validity and enforceability of the remaining provisions of
the Settlement Agreement shall not be affected or impaired, and the Parties will
in good faith agree upon a valid and enforceable provision that shall be a
reasonable substitute for such invalid or unenforceable provision.
 
18. Except as otherwise indicated or provided in paragraph 6(c) above, the
Parties shall pay their own fees and costs, including attorneys’ fees, incurred
in connection with the Action and this Settlement Agreement.
 
19. This Settlement Agreement constitutes the entire agreement among the Parties
with respect to the subject matter thereof, and may be modified or amended only
by a writing signed by the signatories hereto.
 
[The remainder of this page has been left blank intentionally.]
 
20. This Settlement Agreement shall be relegated or reduced to an Order of the
Nevada Court such that its terms can be enforced by either Party by means of
filing a Motion for an Order to Show Cause in and before the Nevada Court in
which the litigation is now pending.  This Settlement Agreement shall become
effective on the date on which it has been executed by both sets of Parties and
upon such time as it has been approved by the Nevada Court (the “Effective
Date”).

 
By:  Edward F. Cowle
/s/ Edward F. Cowle
Title:  Defendant, an individual
Date: 3/15/2013
By:  H. Deworth Williams
/s/ H. Deworth Williams
Title:  Defendant, an individual
Date: 3/15/2013

By:  Geoff Williams
/s/ Geoff Williams
Title:  Defendant, an individual
Date: 3/15/2013
By:  Blue Cap Development Corp.
/s/ Geoff Williams
Title:  Defendant, a Nevada corporation
Date: 3/15/2013
 
By:  John Victor Lattimore, Jr.
/s/ John Victor Lattimore, Jr.
Title:  Chairman of the Board of Directors of USRE
Date:__________________________
 
By:  Kevin M. Cassidy
/s/ Kevin M. Cassidy
Title:  Chief Executive Officer of USRE
Date:________________________

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