Exhibit 10.16
SettlementAgreement
ByandBetween
DovAmirandDalecoResourcesCorporation
July12,2011
Thefollowingsetsoutthetermsofthesettlement ofvarious obligations between Daleco ResourcesCorporation (“Company”) and DovAmir(“Amir”), which settlement was approved by the Board ofDirectors of the Company on July 11,2011.
Background:
In October 2006, Mr. Amir and the Company entered into a Separation Agreementproviding for Mr.Amir to receive $100,000 annuallyfor three years (“Term”),$50,000 ofwhichwillbe deemed salary with the remaining $50,000 reducing the debtowed to Mr. Amir (“Amir Debt”). Shouldthe 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 allocatedto the payment of the Amir Debtuntil the Amir Debt isfully satisfied. The Company reserves the right toprepay the outstanding Amir Debt in full at any time. Upon satisfaction of the Amir Debtin full, all payments toAmir under the Separation Agreement willcease.The Company has not made certain payments required by the Separation Agreement applicableto the Amir Debt. Also, pursuant to the Separation Agreement,the Company was to satisfy the loan from First Citizens Bank to the Company orprovide sufficient substitute collateral for thebank so that the Amir Assets werereleased. The Company has not beenable to accomplish either of these and the Amir Assetshave not been released by the bank. The AmirDebt is summarizedbelow.
The Company has been making monthly payments to First CitizensBank ofprincipal of$1,250 and interest. The balanceof theNote at September30, 2010was $45,661. Theloanis secured by certain personal assets ofDov Amir.
On December21, 2009, the Boardof Directors granted an option to purchase 500,000shares of Common Stock to Amir. Theoption is exercisablethrough December 20, 2014 at an exercise price of$0.21 per share.Theoptions vest50% in December 2010 and 25% ineach of December 2011 and 2012.
Thefollowing 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 fournoteswith the Company as follows (“Amir Notes”):
1.NotedatedOctober1,1995,bearinginterestattherateofprimeplus3 percentinthe principal amount of $91,062. This principal amount was satisfied as of September30, 2005.
2. Notedated October1, 1995, bearing interest at the rate of 7% as aresultof various subsequent advances to the Company. The outstanding principal balance was $45,485 as of September 30, 2010.
3. Notedated July 20, 1998, in the face amount of $25,000, bearing interest at the rate of 2% over the primerate charged by the Huntington National Bank of Columbus,Ohio,through thematurity date,November 21, 1998, and 18%thereafter. The principal amount has been satisfied as of September 30, 2006.
4. Notedated June 17,2002, bearing interest at the rate of 7%intheprincipal amount of $137,000. This principal amount has been satisfied as of September 30, 2005.
As ofSeptember 30, 2010, the outstandingprincipal and accrued but unpaid interest on the obligations listed undernumbers 1through 4 to Mr. Amir amountedto $173,415, which includes$45,485 in principal and $127,930 inaccrued interest. In October 2010 the Company paid$10,000 of the accrued interest.
Mr. Amir was alsoentitled to acashpayment of $25,000 under his Key Man Contract on June 30, 2002. This bonushas notbeen paid.
Priorto conversion of hisSeries A Preferred Stock into common stock, Mr. Amir was entitled to have receiveddividends in the amount of$91,551of which $59,338remains outstanding as of September30, 2010.
As of September30, 2010, the Company owed Mr. Amir $245,836in accrued but unpaidsalary.
Settlement:
1. First Citizens Bank- The Amir Assets shall remain pledged to the bank and the Company shall continue to makemonthly payments to First Citizens Bankof principal ($1,250) and interest. Should the Company obtain cash proceeds from equityfundingofat least$750,000 from July 12,2011 throughNovember 18, 2013, the Company shall satisfy the loan from First Citizens Bank to theCompany or provide sufficientsubstitutecollateral for the bank so that the Amir Assets are released.;
2. The December 2009option(500,000 shares) shall immediately vest100% and beexercisable through December 20, 2014;
3. The Company shall issue 419,292 sharesof restricted Common Stockto Amir in payment of (a) Series A Preferred Stock Dividends ($59,338),and (b) principal ($45,485) due under theNote dated October1,1995;and,
4. AsevidencedintheattachedNote:Amirisgrantedtherighttoconvertanyandall of thethen outstanding Amir Debtand unpaid interest thereon (totaling $391,154as of the dateof this Settlement Agreement) to shares of restricted Common Stock ofthe Companyat an exercise price of $0.25 per share. Such remaining debtshall accrueinterest at 4% per annum until theremaining Amir Debtand interest thereon is paidin full. The maturity dateof such debt and interestshall be December 31, 2015.
5. ThisSettlement Agreement shall bebinding uponand shall inure to thebenefit of theparties 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”), herebypromisesto pay to the order of Dov Amir (“Payee”), whose address is325 N.Oakhurst- PH#3,Beverly Hills, California 90210, the principalsumof Three Hundred One Thousand One Hundred Fifty Four Dollars ($391,154), with interest on the unpaid principal balance computed from the dateof this Note (“Note”) until paid in full atthe rate of 4.0% perannum, computed onthe basis of a365 day yearand compounded annually. Prior to demand,the principal sum andall accrued interestshall be payable by Maker to Payee as set forth in that certain Settlement Agreement dated July 12, 2011,which documentis incorporated herein for all purposes (“Agreement”).
ThisNote may be prepaid in whole or in part at any time without penalty. Any such payment or prepayment on this Noteshall be applied, first, to thepaymentof any accrued andunpaid 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, andshall be deemed received byPayee asof the first date that such payment isimmediately available to Payee in Beverly Hills, California, incollected federal funds.
IfMaker is in defaultin paying when due any installment of interest or principal on this Note, and if any such defaultisnot corrected within five business days after written notice of such default is delivered to Maker at theaddress specifiedbelow, by either telephone facsimiletransmissionor messenger delivery service, then this Note shall,at theoption of Payee, bear interest thereafter at the rate of 10.0%per annum until this Noteispaid in full, and the entireprincipal of this Note thenremaining unpaid, together with all accrued interest,shall, atsaidholder's option,beimmediately due and payable without any further notice ordemand.
Except as expressly required by the preceding paragraphofthis Note,Maker hereby waives presentment, demand, notice, protest, and all other demands and notices in connection withthedelivery,acceptance or defaultof this Note.All persons now or hereafter liable for the payment of theprincipal or interest due on thisNote, or any part thereof, agreethat the time for the payment or payments of any part of this Notemay be extended without releasing or otherwise affecting their liability on thisNote.
If this Note isplaced in anattorney's hands for collection, orcollected bya suit or througha bankruptcy or any othercourt, either before or aftermaturity, or legal advice is sought in connection with anyevent of default, then in any of such event, Maker shall be obligated to pay to the holder ofthis Note reasonableattorney'sfees and all costs and otherexpenses incurred in enforcing the termsof this Note.
MAKER HEREBY IRREVOCABLY AUTHORIZES AND EMPOWERS ANY ATTORNEY OR ATTORNEYS OR THE PROTHONOTARYOR CLERK OF ANY COURTOF RECORD INTHE COMMONWEALTHOF PENNSYLVANIA, UPON THE OCCURRENCE ANDCONTINUATION OF A DEFAULT HEREUNDER,TO APPEAR FOR MAKER IN ANY SUCH COURT INAN APPROPRIATE ACTION INSTITUTED BY PAYEE OR ANY HOLDER OF THIS NOTE,AND TOCONFESSJUDGMENT IN SUCHACTIONAGAINST MAKER FORALLSUMS DUE BY MAKER HEREUNDER TOGETHER WITH COSTS OF SUIT AND AN AITORNEY'S FEE OF FIVE PERCENT(5%) OF THE UNPAIDPRINCIPALAMOUNT HEREOF. THE WARRANTHEREIN GRANTEDTO CONFESS JUDGMENTSHALL NOT BE EXHAUSTEDBYANY SINGLE EXERCISE THEREOF, BUTSHALL CONTINUE FROM TIME TO TIME ANDAT ALLTIMES UNTILFULL PAYMENTOF ALL AMOUNTS DUE HEREUNDER. FOR THESE PURPOSES, THISNOTE OR A COPY HEREOF VERIFIED BY AFFIDAVIT SHALLBE SUFFICIENT WARRANT.
Maker hereby waives the right of inquisition and all benefit thatmight accrue to Maker byvirtue of any present or future laws exemptingany mortgaged property, or any other property,real or personal, or any part of the proceeds arising fromany saleofany such property, from attachment,levyor sale under execution,providing for any stay of execution, appraisement, exemption from civil process or extension oftime, and agrees that such property may be soldto satisfy any judgment entered on this Note, in whole or in partand inany orderas may be desired by Payee.
Maker (i) acknowledgesthat this Noteis a “cognovit” promissory note, which means that, if Maker does not timely pay toPayee all of the principalplus interestof this Note when due,thenPayee shall be entitled, pursuant to the foregoing paragraphs of this Note,to obtain an immediatejudgment against Maker for allamounts owed toPayee under this Note, without Maker being given any additional notice that Payeeis so doing, andthat Payee shall be entitled, immediately uponobtaining such judgment,to commence execution upon the assets of Maker in order toobtain payment in full ofthe amount of such judgment; (ii) acknowledges further that Payee would not have loaned theprincipal sum of this NotetoMaker ifMaker hadnot agreed toexecute and deliver to Payee a “cognovit” promissory note; and (iii) represents and warrants to, andcovenants with,Payee, as an inducement to Payee to loanthe principal sum of this Noteto Maker, that(A) the principal sum of this Note is being borrowed by Makersolely forbusiness purposes, (B)Maker does not claim and shall not assert or claim in the future anyright whatsoever to offset anyamount against any payment to become dueunder this Note, and (C)Maker, to its bestknowledge and belief, understands that the provisions of the foregoingparagraphs of this Note, relating to Payee’s rights to obtain an immediate judgment against Maker, arefully enforceable against Maker under the laws and in the courts of the CommonwealthofPennsylvania.
This instrument shall be construed according toand governed by the substantive lawsofthe Commonwealth of Pennsylvania withoutregard to conflict oflaw principles, and any judgment entered hereon should be given full faith and credit inany statein which Payee may seektoenforcesuch judgment. Application ofsuch terms or provision to persons or circumstances other than those as to which it is held invalid or unenforceable, shallnot be affected thereby,and each term and provisionof this Note shall bevalid and enforcedto the fullest extent permitted bylaw.
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THIS NOTE CONTAINS A CONFESSION OF JUDGMENT. A JUDGMENT MAY BE ENTEREDAGAINST MAKERWITHOUTNOTICEANDANOPPORTUNITY TO BE HEARD. MAKER HEREBY CERTIFIES THAT IT HAS CONSULTED AN ATTORNEY REGARDING THE IMPLICATIONS OF A CONFESSIONOF JUDGMENT AND KNOWINGLY AND VOLUNTARILY WAIVES ANY RIGHTS TO PRIOR NOTICEANDOPPORTUNITYTO BE HEARD IN CONNECTION THEREWITH.
All notices or other correspondence requiredor made necessary by the termsof this Note shallbe in writing and shall be consideredas having been given to theaddressee 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 ofthis Note.
INWITNESS WHEREOF,Maker has duly executed thisNote in Chester County, Pennsylvania the day and year first above written, intending to belegally bound.
| DALECORESOURCES CORPORATION | ||
| By: | /s/ Gary J. Novinskie | |
| Gary J. Novinskie, President | ||
| Maker’sAddress: | Daleco Resources Corporation |
| 17 Wilmont Mews, 5th Floor | |
| WestChester, Pennsylvania 19382 | |
| Fax No.: 610-429-0818 |
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