Exhibit 10.16

 

Settlement Agreement

 

By and Between

 

Dov Amir and Daleco Resources Corporation

 

July 12, 2011

 

The following sets out the terms of the settlement of various obligations
between Daleco Resources Corporation (“Company”) and Dov Amir (“Amir”), which
settlement was approved by the Board of Directors of the Company on July 11,
2011.

 

Background:

 

In October 2006, Mr. Amir and the Company entered into a Separation Agreement
providing for Mr. Amir to receive $100,000 annually for three years (“Term”),
$50,000 of which will be deemed salary with the remaining $50,000 reducing the
debt owed to Mr. Amir (“Amir Debt”). Should the Amir Debt not be satisfied after
the expiration of the Term, the Company shall continue the $100,000 annual
payment, all of which shall be allocated to the payment of the Amir Debt until
the Amir Debt is fully satisfied. The Company reserves the right to prepay the
outstanding Amir Debt in full at any time. Upon satisfaction of the Amir Debt in
full, all payments to Amir under the Separation Agreement will cease. The
Company has not made certain payments required by the Separation Agreement
applicable to the Amir Debt. Also, pursuant to the Separation Agreement, the
Company was to satisfy the loan from First Citizens Bank to the Company or
provide sufficient substitute collateral for the bank so that the Amir Assets
were released. The Company has not been able to accomplish either of these and
the Amir Assets have not been released by the bank. The Amir Debt is summarized
below.

 

The Company has been making monthly payments to First Citizens Bank of principal
of $1,250 and interest. The balance of the Note at September 30, 2010 was
$45,661. The loan is secured by certain personal assets of Dov Amir.

 

On December 21, 2009, the Board of Directors granted an option to purchase
500,000 shares of Common Stock to Amir. The option is exercisable through
December 20, 2014 at an exercise price of $0.21 per share. The options vest 50%
in December 2010 and 25% in each of December 2011 and 2012.

 

The following table summarizes the Amir obligations:

 

   9/30/10   6/30/11  Series A Preferred Stock Dividends  $59,338   $59,338 
Principal of Note dated 10/1/95   45,485    45,485  Interest Payable   127,930  
 120,318  Bonus   25,000    25,000  Unpaid Salary   245,836    245,836  Total 
$503,589   $495,977 

 

 

 

 

Dov Amir has entered into four notes with the Company as follows (“Amir
Notes”): 

1. Note dated October 1, 1995, bearing interest at the rate of prime plus 3
percent in the principal amount of $91,062. This principal amount was satisfied
as of September 30, 2005.

2. Note dated October 1, 1995, bearing interest at the rate of 7% as a result of
various subsequent advances to the Company. The outstanding principal balance
was $45,485 as of September 30, 2010.

3. Note dated July 20, 1998, in the face amount of $25,000, bearing interest at
the rate of 2% over the prime rate charged by the Huntington National Bank of
Columbus, Ohio, through the maturity date, November 21, 1998, and 18%
thereafter. The principal amount has been satisfied as of September 30, 2006.

4. Note dated June 17, 2002, bearing interest at the rate of 7% in the principal
amount of $137,000. This principal amount has been satisfied as of September 30,
2005.

 

As of September 30, 2010, the outstanding principal and accrued but unpaid
interest on the obligations listed under numbers 1through 4 to Mr. Amir amounted
to $173,415, which includes $45,485 in principal and $127,930 in accrued
interest. In October 2010 the Company paid $10,000 of the accrued interest.

 

Mr. Amir was also entitled to a cash payment of $25,000 under his Key Man
Contract on June 30, 2002. This bonus has not been paid.

 

Prior to conversion of his Series A Preferred Stock into common stock, Mr. Amir
was entitled to have received dividends in the amount of $91,551of which $59,338
remains outstanding as of September 30, 2010.

 

As of September 30, 2010, the Company owed Mr. Amir $245,836 in accrued but
unpaid salary.

 

Settlement:

 

1.         First Citizens Bank- The Amir Assets shall remain pledged to the bank
and the Company shall continue to make monthly payments to First Citizens Bank
of principal ($1,250) and interest. Should the Company obtain cash proceeds from
equity funding of at least $750,000 from July 12,2011 through November 18, 2013,
the Company shall satisfy the loan from First Citizens Bank to the Company or
provide sufficient substitute collateral for the bank so that the Amir Assets
are released.;

 

2.         The December 2009 option (500,000 shares) shall immediately vest 100%
and be exercisable through December 20, 2014;

 

3.         The Company shall issue 419,292 shares of restricted Common Stock to
Amir in payment of (a) Series A Preferred Stock Dividends ($59,338),and (b)
principal ($45,485) due under the Note dated October 1,1995; and,

 

 

 

 

4.         As evidenced in the attached Note: Amir is granted the right to
convert any and all of the then outstanding Amir Debt and unpaid interest
thereon (totaling $391,154 as of the date of this Settlement Agreement) to
shares of restricted Common Stock of the Company at an exercise price of $0.25
per share. Such remaining debt shall accrue interest at 4% per annum until the
remaining Amir Debt and interest thereon is paid in full. The maturity date of
such debt and interest shall be December 31, 2015.

 

5.         This Settlement Agreement shall be binding upon and shall inure to
the benefit of the parties heirs and successors.

 

All obligations to Amir owed by the Company pursuant to the Series A Preferred
Stock, the Amir Notes, the October 2006 Separation Agreement and the Employment
Agreement dated October 1, 2001 are hereby considered satisfied by the parties
hereto hereby considered to be satisfied by the parties hereto.

  

DALECO RESOURCES ORPORATION   DOV AMIR       By: /s/ Gary J. Novinskie   /s/ Dov
Amir   Gary J. Novinskie, President   Dov Amir

 

Date: July 12, 2011 Date: July 12, 2011

 

 

 

 

PROMISSORY NOTE

 

$391,154 July 12, 2011

 

For value received, the undersigned, Daleco Resources Corporation, a Nevada
corporation (“Maker”), hereby promises to pay to the order of Dov Amir
(“Payee”), whose address is 325 N. Oakhurst- PH#3, Beverly Hills, California
90210, the principal sum of Three Hundred One Thousand One Hundred Fifty Four
Dollars ($391,154), with interest on the unpaid principal balance computed from
the date of this Note (“Note”) until paid in full at the rate of 4.0% per annum,
computed on the basis of a 365 day year and compounded annually. Prior to
demand, the principal sum and all accrued interest shall be payable by Maker to
Payee as set forth in that certain Settlement Agreement dated July 12, 2011,
which document is incorporated herein for all purposes (“Agreement”).

 

This Note may be prepaid in whole or in part at any time without penalty. Any
such payment or prepayment on this Note shall be applied, first, to the payment
of any accrued and unpaid interest as of the date of receipt and, then, to the
outstanding principal balance. In all events, this Note shall be paid in full no
later than December 31, 2015.

 

All payments and prepayments, if any, under this Note shall be made to Payee at
the foregoing address in Beverly Hills, California, and shall be deemed received
by Payee as of the first date that such payment is immediately available to
Payee in Beverly Hills, California, in collected federal funds.

 

If Maker is in default in paying when due any installment of interest or
principal on this Note, and if any such default is not corrected within five
business days after written notice of such default is delivered to Maker at the
address specified below, by either telephone facsimile transmission or messenger
delivery service, then this Note shall, at the option of Payee, bear interest
thereafter at the rate of 10.0% per annum until this Note is paid in full, and
the entire principal of this Note then remaining unpaid, together with all
accrued interest, shall, at said holder's option, be immediately due and payable
without any further notice or demand.

 

Except as expressly required by the preceding paragraph of this Note, Maker
hereby waives presentment, demand, notice, protest, and all other demands and
notices in connection with the delivery, acceptance or default of this Note. All
persons now or hereafter liable for the payment of the principal or interest due
on this Note, or any part thereof, agree that the time for the payment or
payments of any part of this Note may be extended without releasing or otherwise
affecting their liability on this Note.

 

If this Note is placed in an attorney's hands for collection, or collected by a
suit or through a bankruptcy or any other court, either before or after
maturity, or legal advice is sought in connection with any event of default,
then in any of such event, Maker shall be obligated to pay to the holder of this
Note reasonable attorney's fees and all costs and other expenses incurred in
enforcing the terms of this Note.

 

 

 

 

MAKER HEREBY IRREVOCABLY AUTHORIZES AND EMPOWERS ANY ATTORNEY OR ATTORNEYS OR
THE PROTHONOTARY OR CLERK OF ANY COURT OF RECORD IN THE COMMONWEALTH OF
PENNSYLVANIA, UPON THE OCCURRENCE AND CONTINUATION OF A DEFAULT HEREUNDER, TO
APPEAR FOR MAKER IN ANY SUCH COURT IN AN APPROPRIATE ACTION INSTITUTED BY PAYEE
OR ANY HOLDER OF THIS NOTE, AND TO CONFESS JUDGMENT IN SUCH ACTION AGAINST MAKER
FOR ALL SUMS DUE BY MAKER HEREUNDER TOGETHER WITH COSTS OF SUIT AND AN
AITORNEY'S FEE OF FIVE PERCENT (5%) OF THE UNPAID PRINCIPAL AMOUNT HEREOF. THE
WARRANT HEREIN GRANTED TO CONFESS JUDGMENT SHALL NOT BE EXHAUSTED BY ANY SINGLE
EXERCISE THEREOF, BUT SHALL CONTINUE FROM TIME TO TIME AND AT ALL TIMES UNTIL
FULL PAYMENT OF ALL AMOUNTS DUE HEREUNDER. FOR THESE PURPOSES, THIS NOTE OR A
COPY HEREOF VERIFIED BY AFFIDAVIT SHALL BE SUFFICIENT WARRANT.

 

Maker hereby waives the right of inquisition and all benefit that might accrue
to Maker by virtue of any present or future laws exempting any mortgaged
property, or any other property, real or personal, or any part of the proceeds
arising from any sale of any such property, from attachment, levy or sale under
execution, providing for any stay of execution, appraisement, exemption from
civil process or extension of time, and agrees that such property may be sold to
satisfy any judgment entered on this Note, in whole or in part and in any order
as may be desired by Payee.

 

Maker (i) acknowledges that this Note is a “cognovit” promissory note, which
means that, if Maker does not timely pay to Payee all of the principal plus
interest of this Note when due, then Payee shall be entitled, pursuant to the
foregoing paragraphs of this Note, to obtain an immediate judgment against Maker
for all amounts owed to Payee under this Note, without Maker being given any
additional notice that Payee is so doing, and that Payee shall be entitled,
immediately upon obtaining such judgment, to commence execution upon the assets
of Maker in order to obtain payment in full of the amount of such judgment; (ii)
acknowledges further that Payee would not have loaned the principal sum of this
Note to Maker if Maker had not agreed to execute and deliver to Payee a
“cognovit” promissory note; and (iii) represents and warrants to, and covenants
with, Payee, as an inducement to Payee to loan the principal sum of this Note to
Maker, that (A) the principal sum of this Note is being borrowed by Maker solely
for business purposes, (B) Maker does not claim and shall not assert or claim in
the future any right whatsoever to offset any amount against any payment to
become due under this Note, and (C) Maker, to its best knowledge and belief,
understands that the provisions of the foregoing paragraphs of this Note,
relating to Payee’s rights to obtain an immediate judgment against Maker, are
fully enforceable against Maker under the laws and in the courts of the
Commonwealth of Pennsylvania.

 

This instrument shall be construed according to and governed by the substantive
laws of the Commonwealth of Pennsylvania without regard to conflict of law
principles, and any judgment entered hereon should be given full faith and
credit in any state in which Payee may seek to enforce such judgment.
Application of such terms or provision to persons or circumstances other than
those as to which it is held invalid or unenforceable, shall not be affected
thereby, and each term and provision of this Note shall be valid and enforced to
the fullest extent permitted by law.

 

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THIS NOTE CONTAINS A CONFESSION OF JUDGMENT. A JUDGMENT MAY BE ENTERED AGAINST
MAKER WITHOUT NOTICE AND AN OPPORTUNITY TO BE HEARD. MAKER HEREBY CERTIFIES THAT
IT HAS CONSULTED AN ATTORNEY REGARDING THE IMPLICATIONS OF A CONFESSION OF
JUDGMENT AND KNOWINGLY AND VOLUNTARILY WAIVES ANY RIGHTS TO PRIOR NOTICE AND
OPPORTUNITY TO BE HEARD IN CONNECTION THEREWITH.

 

All notices or other correspondence required or made necessary by the terms of
this Note shall be in writing and shall be considered as having been given to
the addressee upon the date received if delivered by hand, mailed by registered
or certified mail, postage prepaid, or delivered by nationally recognized
overnight courier, at or to the respective addresses set forth in the opening
paragraph of this Note.

 

IN WITNESS WHEREOF, Maker has duly executed this Note in Chester County,
Pennsylvania the day and year first above written, intending to be legally
bound.

 

  DALECO RESOURCES CORPORATION       By: /s/ Gary J. Novinskie     Gary J.
Novinskie, President

 

Maker’s Address: Daleco Resources Corporation   17 Wilmont Mews, 5th Floor  
West Chester, Pennsylvania 19382   Fax No.: 610-429-0818

 

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