**Exhibit 10.54**

 

SETTLEMENTAGREEMENT

 

ThisSettlement Agreement is entered into between POLAR MOLECULAR HOLDINGCORPORATION, a Delaware corporation, with principal offices at 4600 S. UlsterStreet, Suite 940, Denver, Colorado 80237 (“Polar”) and HOLME ROBERTS &OWEN LLP, a Colorado limited liability partnership, with offices at 1700Lincoln Street, Suite 4100, Denver, Colorado 80203 (“HRO”).

 

HROhas performed legal services for Polar for which it has rendered statements toPolar. HRO has received payment for a portion of its charges but the amount of$543,000 remains unpaid at this date. Polar has advised HRO that it ispresently financially unable to pay the balance due and has offered to issueshares of its Common Stock in satisfaction of one-half of the amount due($271,500) and to agree to a payment schedule for the remaining balance of$271,500.

 

Inconsideration of the foregoing and the mutual covenants herein, it is agreed asfollows:

 

1.Polar shall issue to HRO 1,357,500 shares of Polar Common Stock (the “Shares”),valued at $0.20 per share, the closing price of such shares as reported on theOver the Counter Bulletin Board Market on May 7, 2004, in satisfaction of$271,500.00 of Polar’s indebtedness to HRO.

 

2.Polar agrees to repay the balance of $271,500.00 in four equal monthlyinstallments of $67,875.00 each on July 1, 2004, August 1, 2004, September 1,2004 and October 1, 2004. Upon receipt of payments totaling $271,500.00,HRO shall release its security interest granted by Polar in Polar’s assets andfile appropriate notices of such release.

 

3.Polar represents that, with the exception of the issuance of shares of CommonStock to Lockhart Chemical Corporation, Polar’s sole outsource contractmanufacturer, and to certain employees and consultants in satisfaction ofunpaid compensation, Polar has not issued shares of its Common Stock at a priceof $0.10 per share to any other of its creditors as payment of indebtedness duesuch creditors. Polar further represents, warrants and agrees that, since January 1,2004 it has not, and it will not issue any of its Common Stock in satisfactionof any other indebtedness outstanding at this date at a value below the thencurrent fair market value as determined by reference to the price quoted on theOver the Counter Bulletin Board Market.

 

4. HRO hereby represents and agrees that it understands thatthe Shares have not been registered under the Securities Act of 1933 (the “1933Act”) or any state securities laws and that the Shares are being issued to HROin reliance upon an exemption from such registration requirements fortransactions not involving a public offering. HRO represents that it isacquiring the Shares for investment and with no view toward distribution of theShares to the public, except pursuant to an effective registration statementunder the 1933 Act covering the Shares or pursuant to an applicable exemptionfrom any registration requirement. HRO acknowledges that the certificatesrepresenting the Shares shall bear a legend calling attention to suchrestrictions on the transfer of the Shares.

 

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5. Polar agrees that it will cause the Shares to be registeredunder the 1933 Act pursuant to an appropriate form of registration statementcovering the Shares, and that it will use due diligence in preparing and filingsuch registration statement and pursuing the effectiveness thereof. Polar shallalso cause the Shares to be registered or available for public sale pursuant toan exemption from registration under the Colorado Securities Act. Polar will useall reasonable efforts to obtain effectiveness of the 1933 Act registrationstatement on or before December 1, 2004. If such registration statement isnot declared effective prior to that date, HRO may, at its election, demandthat Polar repurchase the Shares at a purchase price (the “Repurchase Price”)equal to the higher of the price at which the Shares were valued for purposesof this Agreement, as set forth in paragraph 1 above, or the closing price ofthe Shares on its principal trading market on December 1, 2004. Any suchelection shall be made in writing, no later than December 15, 2004. Uponreceipt of such notice of election Polar shall repurchase the shares at theRepurchase Price as soon as practicable, but in no event no later than December 30,2004.

 

INWITNESS WHEREOF this Agreement isenteredinto this 7th day of May, 2004.

 
| POLAR  MOLECULAR HOLDING CORPORATION |
|--------------------------------------|
|                                 |
| /s/  Mark L. Nelson                  |   |
| Mark L.  Nelson                      |
|                                 |
|                                 |
| HOLMES  ROBERTS & OWEN, LLP |
|                                 |
| /s/  Robert H. Bach                  |   |
| Robert  H. Bach                      |
| A  Partner                           |

 

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