EXHIBIT 10.13
STOCK PURCHASE AGREEMENT
BY AND AMONG
TERRA SILEX HOLDINGS LTD. CO.
AND
DALECO RESOURCES CORPORATION
DATED: SEPTEMBER 20, 2001
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement dated September 20, 2001 by and
among Terra Silex Holdings Ltd. Co., a Pennsylvania limited liability company
whose principal address is ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ("Terra Silex")
and Daleco Resources Corporation, a Delaware corporation whose principal address
is ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ("DRC").
BACKGROUND
WHEREAS, DRC is a publicly owned holding company subject to the
reporting requirement of the Securities and Exchange Act of 1934, as amended
("'34 Act"); and
WHEREAS, DRC's subsidiaries own oil and gas reserves, timber
concessions mineral leases, and a patent for the remediation of contaminated
water and soils; and
WHEREAS, as of the date hereof, DRC has 4,452,574 shares of
common stock, par value $.01 issued and outstanding ("Common Stock") and
2,017,800 shares of preferred stock, par value $.01 issued and outstanding
("Preferred Stock"); and
WHEREAS, DRC's articles authorize 20,000,000 shares of Common
Stock and 10,000,000 shares of Preferred Stock; and
WHEREAS, Terra Silex desires to acquire and DRC desires to sell
up to 1,800,000 shares of Common Stock at a price of $1.25 per share in three
traunches ("Terra Silex Stock"); and
WHEREAS, In connection with the acquisition of the Terra Silex
Stock, Terra Silex desires to acquire and DRC desires to grant to Terra Silex
the right to purchase additional shares of Common Stock if and when DRC sells to
a third party, in one or more transactions, Common Stock (or Common Stock
equivalents) which constitute greater than 5% of the issued and outstanding
Common Stock immediately after such transaction ("Dilution Protection Rights");
and
WHEREAS, Terra Silex desires to acquire and DRC desires to ▇▇▇▇▇
▇▇▇▇▇ Silex 500,000 shares of Common Stock at an exercise price of $1.25 per
share in consideration of its purchasing the Terra Silex Stock for a value above
the current market price ("Price Warrants"); and
WHEREAS, Terra Silex has acquired that certain Agreed Judgment
granted by DRC and its subsidiary Westlands Resources Corporation in favor of
UTI Drilling LLP (formerly known as Southland Drilling Company, a division of
Triad Drilling Company) dated November 27, 2001 in that case captioned SOUTHLAND
CORPORATION V. DALECO RESOURCES CORPORATION, ET. AL., Case No: 98-34542, In the
District Court of ▇▇▇▇▇▇ County, Texas, 270th Judicial District ("Southland
Judgment"); and
WHEREAS, Terra Silex is willing to satisfy the Southland Judgment
in exchange for Common Stock; and
WHEREAS, DRC and Terra Silex are agreeable to the foregoing.
-2-
NOW THEREFORE, in consideration of the mutual agreement and
covenants set forth herein and intending to be legally bound hereby, the parties
hereto agree as follows: ARTICLE I.
INCORPORATION BY REFERENCE
The parties incorporate the Background provisions hereof as
though same were set forth at length herein. Any conflict between the Background
provisions and the body of this Agreement shall be resolved in favor the
language in the body of this Agreement. ARTICLE II.
FIRST TRAUNCHE STOCK SALE AND PURCHASE
2.1. PURCHASE AND SALE OF STOCK. Subject to the terms and
conditions of this Agreement and in reliance upon the representations and
warranties set forth below in Article V hereof, Terra Silex, simultaneously with
the execution and delivery of this Agreement and on the date hereof (the "First
Traunche Closing Date"), shall purchase and accept delivery from DRC, and DRC
shall issue, sell, assign, transfer and deliver to Terra Silex, certificates
representing 400,000 shares of its authorized but unissued Common Stock for the
following consideration:
(a) 280,000 shares in exchange for full and complete
satisfaction of the Southland Judgment; and
(b) 120,000 shares at a price of $1.25 per share, or One
Hundred Fifty Thousand Dollars ($150,000), in immediately available funds
("First Traunche Funds").
-3-
2.2. USE OF PROCEEDS. DRC agrees to use the First Traunche Funds
net of the expense reimbursement to be made to Terra Silex under paragraph 2.3
below, for general corporate purposes which shall include the satisfaction,
either in whole or in part, of DRC's franchise tax liability to the State of
Delaware.
2.3. REIMBURSEMENT OF EXPENSES. DRC shall reimburse Terra Silex
for its out-of-pocket expense incurred in connection with its due diligence and
negotiation of this Agreement up to a maximum of $40,000 simultaneously with the
closing on the First Traunche Funds. ARTICLE III.
SECOND TRAUNCHE STOCK SALE AND PURCHASE
3.1. PURCHASE AND SALE OF STOCK. Subject to the terms and
conditions set forth in this Agreement, within 45 days after the execution of
this Agreement ("Second Traunche Closing Date"), Terra Silex agrees to purchase
and accept delivery from DRC, and DRC agrees to issue, sell, assign, transfer
and deliver to Terra Silex, certificates representing 400,000 shares of Common
Stock (the "Second Traunche Closing") for a purchase price of $1.25 per share,
or Five Hundred Thousand Dollars ($500,000) in immediately available funds
("Second Traunche Funds"). The Second Traunche Closing Date may automatically be
extended by Terra Silex for an additional fifteen (15) days ("Second Traunche
Extended Closing Date"). Thereafter, Terra Silex may request, in writing, that
-4-
DRC extend the Second Traunche Extended Closing Date for up to an additional
thirty (30) days for Good Reason (as that term is defined below). Any request
for an extension of the Second Traunche Extended Closing Date must specifically
set forth the reason or reasons for the requested extension. DRC agrees that it
will not unreasonably deny Terra Silex's request for an extension of the Second
Traunche Extended Closing Date should Good Reason exist. For the purposes of
this Agreement, "Good Reason" shall be defined to mean Terra Silex's inability
to conduct or complete it due diligence due to factors outside of Terra Silex's
control to include, but not limited to, the failure of DRC to provide Terra
Silex with access to places under DRC's control or with material in the
possession or under DRC's control on a timely basis after reasonable and timely
request therefore.
3.2. USE OF PROCEEDS. DRC agrees to use the Second Traunche
Funds, less that amount payable to Terra Silex under paragraph 3.3(e) below, for
general corporate purposes.
3.3. CONDITIONS TO SECOND TRAUNCHE CLOSING.
(a) The results of the due diligence review contemplated by
Paragraph 3.4 hereof shall be satisfactory, in all material respects, to Terra
Silex, in its sole and absolute discretion;
(b) The representations and warranties of DRC, set forth in
Article V hereof, shall be true and correct as if made on the Second Traunche
Closing Date;
-5-
(c) There shall have occurred no material adverse change in
the business, operations, assets, liabilities, or revenues of DRC, including but
not limited to, any material adverse change in the status of outstanding
litigation or the quality or intrinsic value of DRC's assets from the date
hereof until the Second Traunche Closing Date;
(d) DRC shall have complied, in all material respects, with
its covenants and agreements set forth in Paragraph 3.4 below;
(e) At the Second Traunche Closing, DRC shall reimburse
Terra Silex for its additional expenses (including legal, due diligence,
accounting and other) incurred by it in connection with its due diligence and
negotiation of this transaction up to a maximum of an additional $110,000; and
(f) The Second Traunche Closing shall not be the subject of
any pending any action in either law or equity commenced by a third person to
hinder, delay or defeat the purpose or intent of this Agreement.
3.4. COVENANTS PENDING SECOND TRAUNCHE CLOSING.
(a) Between the First Traunche Closing and the Second
Traunche Closing, DRC shall provide Terra Silex with access, during normal
business hours and in a manner which shall not unreasonably disrupt the conduct
of DRC's business in the ordinary course, to its real property, leases and other
assets, business operations, employees, providers of goods and services
(including its legal, accounting, and consulting professionals) and customers so
as to permit Terra Silex to conduct a due diligence review of DRC and its
operations. Such access
-6-
shall include, but shall not be limited to, meetings with key personnel, a
review of accounting workpapers, financial projections, data regarding the
legality of DRC's patents and to insure that DRC's patents and technology do not
infringe upon the intellectual property of third parties, a viable market exists
for DRC's minerals, technology and patents; and, such other information as Terra
Silex may reasonably request; provided, however, that any and all such due
diligence shall be conducted at no unreasonable cost, risk or expense to DRC
except as specifically set forth herein;
(b) From the date hereof through the Second Traunche
Closing, DRC will continue to operate its business in the ordinary course,
consistent with past practice; and
(c) DRC shall have taken such action as shall be necessary
to cause to be appointed to the board of Directors of DRC a nominee of Terra
Silex, to serve until his successor is elected and qualified. ARTICLE IV.
THIRD TRAUNCHE STOCK SALE AND PURCHASE
4.1. PURCHASE AND SALE OF STOCK. Subject to the terms and
conditions set forth in this Agreement, within 60 days after the date on which
the Second Traunche Closing Date occurs ("Third Traunche Closing Date"), Terra
Silex agrees to purchase and accept delivery from DRC, and DRC agrees to issue,
sell, assign, transfer and deliver to Terra Silex, certificates representing
1,000,000 shares of DRC's authorized but unissued Common Stock (the "Third
Traunche Closing") for a purchase price of $1.25 per share, or $1,250,000 in
-7-
immediately available funds ("Third Traunche Funding"). Terra Silex may request
that the Third Traunche Closing Date be extended for up to an additional thirty
(30) days Good Reason. Any request for an extension of the Third Traunche
Closing Date shall be in writing and shall set forth with specificity the Good
Reason upon which the requested extension is sought. DRC agrees that it will not
unreasonably deny Terra Silex's request for an extension of the Third Traunche
Closing Date should Good Reason exist.
4.2. USE OF PROCEEDS. DRC will use the Third Traunche Funding,
net of the reimbursement of expenses required in Paragraph 4.3 below, to fund
its ongoing operations in the ordinary course.
4.3. CONDITIONS TO THIRD TRAUNCHE CLOSING.
(a) The results of the update of Terra Silex's due
diligence review of DRC shall be satisfactory in all material respects to Terra
Silex, in its sole and absolute discretion;
(b) The representations and warranties of DRC, set forth in
Article V hereof, shall be true and correct as if made on the Third Traunche
Closing Date;
(c) There shall have occurred no material adverse change in
the business, operations, assets, liabilities, revenues of DRC, including but
not limited to, any material adverse change in the status of outstanding
litigation or the quality or intrinsic value of DRC's assets from the date
hereof until the Third Traunche Closing Date;
-8-
(d) DRC shall have complied, in all material respects, with
its covenants and agreements set forth in Paragraph 4.4 below; and
(e) At Third Traunche Closing, DRC shall reimburse Terra
Silex for its additional expenses, if any, (including legal, due diligence,
accounting and other) incurred by it in connection with its continuing due
diligence and negotiation of this transaction, up to a maximum of an additional
$100,000.
(f) The Third Traunche Closing shall not be the subject of
any pending any action in either law or equity commenced by a third party to
hinder, delay or defeat the purpose or intent of this Agreement.
(g) Simultaneous with the consummation of
the Third Traunche Closing, DRC shall take such action as shall be necessary to
cause to be appointed to the Board of Directors of DRC a second nominee of Terra
Silex, to serve until his successor is elected and qualified.
4.4. COVENANTS PENDING THIRD TRAUNCHE CLOSING.
(a) Between the Second Traunche Closing and the Third
Traunche Closing, DRC shall provide Terra Silex with access, during normal
business hours and in a manner which shall not unreasonably disrupt the conduct
of DRC's business in the ordinary course, to its real property, leases and other
assets, business operations, employees, providers of goods and services
(including its legal, accounting, and consulting professionals) and customers in
order to permit Terra Silex to continue to conduct its ongoing due diligence
review of DRC and its operations. Such access shall include, but shall not be
-9-
limited to, meetings with key personnel, a review of accounting workpapers,
financial projections, data regarding the legality of DRC's patents and to
insure that DRC's patents and technology do not infringe upon the intellectual
property of third parties, and a viable market exists for DRC's minerals,
technology and patents; and, such other information as Terra Silex may
reasonably request; provided, however, that any and all such due diligence shall
be conducted at no unreasonable cost, risk or expense to DRC except as
specifically set forth herein;
(b) From the date hereof through the Third Traunche
Closing, DRC will continue to operate its business in the ordinary course
consistent with past practice; and
(c) From the date hereof through the Third Traunche
Closing, DRC agrees that it will not without the approval of its Board of
Directors: (i) incur, or agree to incur, except in the ordinary course of
business, any additional debt, other than trade debt, to include, by way of
example and not limitation, equipment leases, project financing and purchase
order factoring, (ii) declare or make any dividends or other distributions with
respect to its capital stock; or (iii) issue any debt securities.
ARTICLE V.
REPRESENTATIONS AND WARRANTIES
5.1. REPRESENTATIONS AND WARRANTIES OF TERRA SILEX.
(a) The execution, delivery and performance of this Agreement has been duly
authorized by Terra Silex in accordance with its management agreement. Terra
Silex is a validly existing limited liability company under Pennsylvania law and
-10-
has full power to execute, deliver and perform under this Agreement. This
Agreement constitutes a valid and binding obligation of Terra Silex, enforceable
against it in accordance with its terms, except as such enforcement may be
subject to bankruptcy and similar laws affecting creditors rights or general
principle of equity. The execution, delivery and performance of this Agreement
does not require any notice to or consent or approval by any third person.
(b) Terra Silex is acquiring the First Traunche Common
Stock and shall acquire the Second and Third Traunche Common Stock for its own
account, for investment and not with a present intent to resell or distribute
such Common Stock.
(c) Terra Silex and its members posses such knowledge and
experience in financial affairs and in business matters that Terra Silex and
such members are capable of evaluating the merits and risks of any investment in
DRC and are able to bear the economic risk of loss of such investment.
(d) Terra Silex has accessed the information filed by DRC
under the Securities and Exchange Act of 1934, as amended ("'34 Act") and other
information which it has requested from DRC from time to time. Terra Silex has
been able to access officers of DRC and third parties and ask questions about
such information and DRC.
(e) Terra Silex acknowledges that as a result of the
exercise of its rights hereunder it may become subject to the reporting
requirements of the '34 Act.
-11-
(f) Terra Silex has available to it from its members all
funds necessary to fund the First Traunche Funding, Second Traunche Funding and
Third Traunche Funding. Terra Silex does not have to or intend to incur debt to
fund its obligations hereunder.
(g) Terra Silex owns the Southland Judgment and has the
unfettered right to exchange the Southland Judgment for Common Stock consistent
with paragraph 2.1 above.
5.2. REPRESENTATIONS AND WARRANTIES OF DRC.
(a) DRC's Board of Directors has duly authorized consistent
with the provisions of Section 203(a)(i) of the General Corporation Law of the
State of Delaware and DRC's Bylaws, the execution, delivery and performance of
this Agreement and the issuance, sale and delivery of the Common Stock, due upon
exercise of the First Traunche, Second Traunche and Third Traunche Closings, the
Dilution Protection Rights and the Price Warrants. This Agreement constitutes a
valid and binding obligation of DRC, enforceable against it in accordance with
its terms, except as such enforcement may be subject to bankruptcy and similar
laws affecting creditors rights or general principles of equity. The execution,
delivery and performance of this Agreement does not require any notice to or any
consent or approval by and third person.
(b) For a period of five years from and after the date hereof, upon the written
request of Terra Silex advising the Board of Directors of DRC of the terms and
conditions upon which Terra Silex intends to acquire additional shares which may
-12-
or could cause Terra Silex to be deemed an "interested stockholder" (as such
term is defined in Section 203 (c)(5) of the General Corporation Law of the
State of Delaware), DRC agrees to take such action as maybe be possible to
approve such transaction under Section 203(a)(i) of the General Corporation Law
of the State of Delaware; provided , however, that nothing herein shall require
DRC to seek shareholder approval of the transaction under Section 203(b) of the
General Corporation Law of the State of Delaware
(c) As of the date of this
Agreement, DRC has (i) 20,000,000 shares of authorized Common Stock, of which
4,452,574 shares are issued and outstanding, (ii) 10,000,000 shares of preferred
stock authorized, of which 2,017,800 share are issued and outstanding,
(2,001,800 of which are convertible into Common Stock at a price equal to 85% of
the five day average closing price for DRC's Common Stock immediately preceding
the conversion date, but in no event will the conversion price be less than
$1.25, or a maximum number of shares of Common Stock or 16,014,400 and 16,000
par value $50.00 per share convertible into shares of Common Stock on a dollar
for dollar basis at the time of conversion), and (iii) options and warrants to
acquire 4,181,349 shares of Common Stock. There are no shares of treasury stock
and other capital stock equivalents authorized, issued or outstanding. All of
the outstanding shares of capital stock of DRC are validly issued, fully paid
and non-assessable and do not have the benefit of preemptive rights. Upon
issuance, the First Traunche Common Stock, the Second Traunche Common Stock and
-13-
the Third Traunche Common Stock will be validly issued, fully paid and
non-assessable free and clear of all liens, claims, charges, options, preemptive
rights, proxies and voting agreements;
(d) The financial statements filed by DRC with the
Securities and Exchange Commission ("SEC") were prepared in accordance with
generally accepted accounting principles, consistently applied, and fairly
present the financial condition and results of operations of DRC, as at the
dates and for the periods indicated. Other information filed with the SEC
substantially complies as to form and content with SEC rules and regulations and
does not contain a material misstatement of a material fact or omit to state a
fact necessary to make the statements made not misleading under the
circumstances. Except as set forth on Schedule 5.2(d), DRC possesses no
liabilities, absolute, contingent or otherwise, other than those liabilities
disclosed in the financial statements or the notes thereof. There have been no
material adverse change in the financial condition, results of operations or
prospects of DRC since the date of such filings not disclosed in a current
report on Form 10-KSB or 10-QSB ("SEC Reports"), and there is no fact not
disclosed to Terra Silex, known by DRC, which is likely to cause an adverse
change;
(e) DRC has good title to and the unrestricted right to use
its patents and other intellectual property used by it in its business. DRC
knows of no claims of conflict or infringement or any other reason why the use
of such patents or intellectual property in DRC's business is not technically or
financially feasible;
-14-
(f) Except as set forth in its SEC Reports and Schedule
5.2(f), DRC is in substantial compliance with laws, regulations and rules
applicable to it and has all licenses necessary to own and operate its business.
DRC has duly filed its federal, state and local tax returns and is not in
arrears in the payment of its taxes. DRC is presently in dispute with the State
of Delaware over the amount of Franchise Taxes due and owing for fiscal years
1999 and 2000.
(g) Neither DRC nor anyone authorized to act on its behalf
has, either directly or indirectly, taken or allowed to be taken any other
action on behalf of DRC which would subject the Common Stock issued pursuant to
this Agreement, to include the exercise of the Dilution Protection Right and/or
Price Warrant, to the registration and prospectus requirements of the Securities
Act of 1933, as amended (the "'33 Act").
ARTICLE VI.
SECURITIES AND BOARD MEMBERSHIP
6.1. RESALE OF SECURITIES.
(a) Terra Silex agrees and acknowledges that upon the
acquisition of some or all of the Common Stock of DRC to which it is or may be
entitled by reason of this Agreement, that it will become subject to certain
rules and regulations of the '34 Act, to include by way and not limitation Rule
13a and Rule 16a and 16b. Terra Silex agrees to fully comply with the Rules and
Regulations promulgated under the '34 Act in connection with the sale or resale
of any the Common Stock or other securities to which it is entitled by execution
of this Agreement.
-15-
(b) Terra Silex agrees that it will not sell or otherwise
transfer the Common Stock, the Price Warrant or the Common Stock issuable upon
the exercise of the Price Warrant ("Securities") except pursuant to an effective
registration under the '33 Act or in a transaction which, in the opinion of
counsel (reasonably satisfactory to DRC), qualifies as an exempt transaction
under the '33 Act and the rules and regulations promulgated thereunder.
(c) The Common Stock shall bear substantially the following
legend reflecting the foregoing restrictions on the transfer of such securities:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
WITH THE SECURITIES AND EXCHANGE COMMISSION UNDER THE SECURITIES AND
EXCHANGE COMMISSION UNDER THE SECURITIES ACT OF 1933, AS AMENDED ("`33
ACT"), OR ANY OTHER SECURITIES AUTHORITY. THE SECURITIES MAY NOT BE SOLD
OR TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE `33 ACT OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO
THE ISSUER THAT THE SALE OR TRANSFER IS EXEMPT FROM REGISTRATION UNDER
THE ACT."
6.2. BOARD NOMINEES. For so long as Terra Silex owns 400,000 or
more shares (adjusted appropriately to reflect stock splits, stock dividends and
reclassifications) of the outstanding shares of DRC common stock, DRC's Board of
Directors shall nominate, as a director, and shall use its best efforts to elect
(including recommending the election of such nominees to DRC's stockholders) and
to cause to remain as a director on the Board, one (1) nominee designated by
Terra Silex. On and after the funding of the Third Traunche Funds, the one
-16-
nominee referred to in the preceding sentence shall be increased to two nominees
and the level of required ownership of Common Stock by Terra Silex shall
increase from 400,000 shares to 5% of the issued and outstanding shares of
Common Stock.
6.3. DILUTION PROTECTION RIGHTS. At any time within the period
commencing after Terra Silex fully pays the First Traunche Funds and prior to
the fifth anniversary of this Agreement, should DRC sell, in one or more
transactions, 500,000 shares or more of Common Stock (or Common Stock
equivalents) ("Block Sale"), then:
(a) DRC shall give notice of each such Block Sale and its
terms to Terra Silex;
(b) Terra Silex shall have a period of thirty (30) days
after receipt of DRC's notice of each Block Sale to elect to purchase for the
same price at which the shares subject to the Block Sale were sold to a third
party, a number of shares equal to the difference between "x" and the number of
shares acquired by Terra Silex through the date of such election pursuant to
this Agreement ("Acquisition Shares"). The value of "x" shall be determined as
follows:
ACQUISITION SHARES = X
------------------------------------- ---------------------------------
Total number of issued and Total number of issued and
outstanding Common Stock outstanding shares
immediately prior to the Block Sale immediately after the Block Sale
-17-
(c) The Common Stock issued under this paragraph 6.3 shall
be, when purchased, fully paid and nonassessable and subject to the provisions
of Paragraphs 6.1(b) and (c) above. No fractional shares of Common Stock shall
be issued in connection with Terra Silex's exercise of its rights under this
Paragraph 6.3.
6.4. PRICE WARRANT. In consideration of Terra Silex's efforts in
organizing and structuring the transactions contemplated herein and the
execution of the Terra Silex Stock at a price above the then prevailing market
price thereto, DRC hereby grants to Terra Silex a Warrant to purchase 500,000
newly issued shares of Common Stock at an exercise price of $1.25 per share
("Price Warrant") a copy of which is attached hereto as Exhibit "A". The Price
Warrant may be exercised in whole or in part as set forth in paragraph 6.4(a)
below. The securities subject to the Price Warrant and the exercise price shall
be appropriately adjusted in the event of any stock split, stock divided,
recapitalization or other major change in the Common Stock after the date hereof
pursuant to that formula set forth in paragraph 6.3.
(a) PRICE WARRANT EXERCISE. Terra Silex may exercise the
Price Warrant as follows:
(i) After the First Traunche Closing and before
December 31, 2006, Terra Silex may exercise the Price Warrant for up to 125,000
shares of Common Stock (in multiples of not less than 50,000 shares).
(ii) After the Second Traunche Closing and before
December 31, 2006, Terra Silex may exercise the Price Warrant up to a maximum of
250,000 shares in the aggregate (in multiples of not less than 50,000 shares).
-18-
(iii) After the Third Traunche Closing and before
December 31, 2006, Terra Silex may exercise the Price Warrant up to a maximum of
500,000 shares in the aggregate (in multiples of not less than 50,000 shares).
(b) Should Terra Silex not have fully exercised the Price
Warrant by December 31, 2006 ("Expiration Date"), and should the five day
closing average for the Common Stock for the five business days immediately
preceding the Expiration Date ("Closing Price") be less than $1.25, then the
Expiration Date of the Price Warrant shall be extended by a period equal to:
5 years (The term of the Price Warrant) x $1.25
----------------------
Closing Price
6.5. REGISTRATION RIGHTS REGISTRATION RIGHTS. Terra Silex shall
have registration rights for the Common Stock acquired by Terra Silex under
Articles II, III , and IV and paragraph 6.3 and that Common Stock resulting from
the exercise of all or a portion of the Price Warrant under paragraph 6.4 above
as set forth in the Registration Rights Agreement attached hereto as Appendix
"B".
6.6. FRACTIONAL SHARES. Upon the exercise of the Price Warrant or
the Dilution Protection Rights, no fractional shares will be issued. Any
fractional shares will be rounded down to the next whole share.
-19-
ARTICLE VII.
MISCELLANEOUS
7.1. TERMINATION. Notwithstanding anything to the contrary in
this Agreement, this Agreement may be terminated at anytime prior to Closing:
(a) By mutual agreement of the parties hereto.
(b) By either party if the First Traunche Closing shall not
have been consummated on or before September 21, 2001, unless the failure to
consummate the Closing is the result of a willful and/or material breach of this
Agreement by the party seeking to terminate this Agreement.
7.2. ENTIRE AGREEMENT. This Agreement represents the final
agreement between Terra Silex and DRC with respect to the subject matter hereof
and may not be contradicted by evidence of prior, contemporaneous, or subsequent
oral agreements of Terra Silex and DRC. There are no unwritten oral agreements
between Terra Silex and DRC.
7.3. GOVERNING LAW. This Agreement shall be governed by, and
shall be construed and enforced in accordance with the laws of the Commonwealth
of Pennsylvania.
7.4. HEADINGS. Section and subsection headings in this Agreement
are included herein for convenience of reference only and shall not constitute a
part of this Agreement for any other purpose or be given any substantive effect.
7.5. NOTICE. All notices or other communications hereunder shall
be in writing, shall be effective upon receipt and shall be made by hand
-20-
delivery, certified mail return receipt requested, or by overnight courier,
postage prepaid addressed as follows:
To DRC: Daleco Resources Corporation
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇ ▇▇▇▇, Chairman
of the Board and Chief Executive
Officer
With a copy to:
▇▇▇▇▇▇, Van Denbergh & ▇▇▇▇▇▇▇, P.C.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: C. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
To Terra Silex: Terra Silex Holdings Ltd. Co.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇, Manager
With a copy to: ▇▇▇▇▇▇▇ & ▇▇▇, P.C.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Either party may change its address for Notice by giving the other party not
less than ten (10) days notice of its new address in accordance with this
Paragraph 7.5.
7.6. INVALIDITY OF CERTAIN PROVISIONS. Any term or provision of
this Agreement which is invalid or unenforceable in any jurisdiction shall, as
to such jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the remaining terms
and provisions of this Agreement or affecting the validity or enforceability of
any terms or provisions hereof.
-21-
7.7. MULTIPLE COUNTERPARTS. This Agreement may be executed in one
or more counterparts and be different parties hereto in separate counterparts,
each of which when so executed and delivered shall be deemed an original, but
all such counterparts together shall constitute but one and the same instrument;
signature pages may be detached from multiple separate counterparts and attached
to a single counterpart so that all signature pages are physically attached to
the same document.
7.8. NEITHER PARTY DRAFTER. The parties hereto agree that this
Agreement is the product of negotiation, that each has been represented by
counsel during its negotiation and that neither party shall be deemed the
drafter hereof.
7.9. COSTS. Except as specifically provided elsewhere herein,
each party agrees its legal accounting and other fees incurred in the
negotiation of the transaction contemplated hereby, the conduct of its due
diligence and the preparation of the documents, exhibits and schedules addressed
and referenced herein.
7.10. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective successors and
permitted assigns.
7.11. CONFIDENTIALITY. Terra Silex shall use its reasonable best
efforts to hold in confidence and treat as confidential, all information
acquired from DRC in the course of the due diligence review contemplated by
Section 2.4, 3.4, and 4.4 above and also cause its representatives to do so.
Terra Silex shall not, without the consent of DRC, disclose any such information
-22-
to any third party except to its representatives and except as required by law
or in connection with litigation. If the Second Traunche Closing is not
completed, Terra Silex shall promptly return all documents and other written
information obtained from DRC in the course of such due diligence review and
will not retain copies thereof or use such information for any purpose except in
connection with litigation. The restrictions in this paragraph shall not apply
to information available from public records of which is otherwise in the public
domain, or to information which is independently developed or acquired by Terra
Silex or its representatives.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement on the date set forth above.
TERRA SILEX HOLDINGS LTD. CO.
By: /s/
------------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇, Manager
DALECO RESOURCES CORP.
By: /s/
----------------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, President
-23-
Schedule 5.2(d)
NONE
-24-
Schedule 5.2(f)
10-QSB for the period ending December 31, 2000.
10-QSB for the period ending March 31, 2001
10-QSB for the period ending June 30, 2001.
-25-