Document:

Prepared and filed by St Ives Financial

Exhibit 10.1

SAVIENT PHARMACEUTICALS, INC.

EMPLOYMENT AGREEMENT

FOR

PAUL HAMELIN

SENIOR VICE PRESIDENT – COMMERCIAL OPERATIONS

 

 
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Contents

	

    	

    
	Article 1. Term of Employment	1
	 	 
	Article 2. Definitions	1
	 	 
	Article 3. Position and Responsibilities	5
	 	 
	Article 4. Standard of Care	6
	 	 
	Article 5. Compensation	6
	 	 
	Article 6. Expenses	8
	 	 
	Article 7. Employment Terminations	8
	 	 
	Article 8. Change in Control	16
	 	 
	Article 9. Assignment	18
	 	 
	Article 10. Legal Fees and Notice	19
	 	 
	Article 11. Confidentiality and Noncompetition	19
	 	 
	Article 12. Outplacement Assistance	20
	 	 
	Article 13. Miscellaneous	20
	 	 
	Article 14. Governing Law	22

 

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Employment Agreement

     This Agreement is made, entered into, and is effective as of the Effective Date, by and between the Company and the Executive. 

Article 1.      Term of Employment

	1.1	
 The Company hereby agrees to employ the Executive and the Executive hereby agrees to serve the Company in accordance with the terms and conditions set forth herein, for a period of three (3) years, commencing as of the Effective Date.

	 	 
	1.2	
 Commencing on the third (3rd) anniversary of the Effective Date, and each anniversary thereafter, the term of this Agreement shall automatically be extended for one (1) additional year, unless at least ninety (90) days prior to such anniversary, the Company or the Executive shall have given notice in accordance with Section 10.2 hereof that it or he does not wish to extend the term of the Agreement. 

Article 2.      Definitions

	
2.1	
“Agreement” means this Employment Agreement.

	 	 
	
2.2	
“Annual Bonus” means the annual bonus to be paid to the Executive in accordance with the Company’s annual bonus program as described in Section 5.3 herein.

	 	 
	
2.3	
“Base Salary” means the salary of record paid to the Executive as annual salary, pursuant to Section 5.2, excluding amounts received under incentive or other bonus plans, whether or not deferred.

	 	 
	
2.4	
“Beneficial Owner” shall have the meaning ascribed to such term in Rule 13d-3 of the General Rules and Regulations under the Securities Exchange Act.

	 	 
	
2.5	
“Beneficiary” means the persons or entities designated or deemed designated by the Executive pursuant to Section 13.6 herein.

	 	 
	
2.6	
“Board” or “Board of Directors” means the Board of Directors of the Company.

	 	 
	
2.7	
“Cause” means: 

	 	(a)  Executive materially breached any of the terms of this Agreement and failed to correct such breach within fifteen (15) days after written notice thereof from the Company; 

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	 	(b)	
 Executive has been convicted of a criminal offense involving a felony giving rise to a sentence of imprisonment;

	 	 	 
	 	(c)	
 Executive has breached a fiduciary trust for the purpose of gaining a personal profit, including, without limitation, embezzlement; or

	 	 	 
	 	(d)	
 Despite adequate warnings, Executive intentionally and willfully failed to perform reasonably assigned duties within the normal and customary scope of the Position. 

	 	 
	
2.8	
“Change in Control” or “CIC” of the Company shall be deemed to have occurred as of the first day that any one or more of the following conditions is satisfied: 

	 	 	 
	 	(a) 	Any consolidation or merger in which
    the Company is not the continuing or surviving entity or pursuant to which
    shares of the Common Stock would be converted into cash, securities, or other
    property, other than (i) a merger of the Company in which the holders of
    the Common Stock immediately prior to the merger have the same proportionate
    ownership of common stock of the surviving corporation immediately after
    the merger, or (ii) a consolidation or merger which would result in the voting
    securities of the Company outstanding immediately prior thereto continuing
    to represent (by being converted into voting securities of the continuing
    or surviving entity) more than 50% of the combined voting power of the voting
    securities of the continuing or surviving entity immediately after such consolidation
    or merger and which would result in the members of the Board immediately
    prior to such consolidation or merger (including for this purpose any individuals
    whose election or nomination for election was approved by a vote of at least
    two-thirds of such members) constituting a majority of the Board (or equivalent
    governing body) of the continuing or surviving entity immediately after such
    consolidation or merger; 

	 	 	 
	 	(b) 	Any sale, lease, exchange, or other
    transfer (in one transaction or a series of related transactions) of all
    or substantially all the Company’s assets; 

	 	 	 
	 	(c) 	The Company’s stockholders approve any plan or proposal for the liquidation or dissolution of the Company; 

		 	 
		
(d)	
Any Person shall become the Beneficial Owner of forty (40) percent or more of the Common Stock other than pursuant to a plan or arrangement entered into by such Person and the Company; or

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	 	(e) 	During any period of two consecutive
    years, individuals who at the beginning of such period constitute the entire
    Board of Directors shall cease for any reason to constitute a majority of
    the Board unless the election or nomination for election by the Company’s stockholders of each new director was approved by a vote of at lest two-thirds of the directors then still in office who were directors at the beginning of the period.

		 
	
2.9	
“CIC Severance Benefits” means the payment of severance compensation associated with a Qualifying Termination occurring subsequent to a Change in Control, as described in Section 8.3.

		 
	
2.10	
“Code” means the United States Internal Revenue Code of 1986, as amended.

		 
	
2.11	
“Common Stock” means the common stock of the Company, $.01 par value.

		 
	
2.12	
“Compensation Committee” means the Compensation and Stock Option Committee of the Board, or any other committee appointed by the Board to perform the functions of such committee.

		 
	
2.13	
“Company” means Savient Pharmaceuticals, Inc., a Delaware corporation, or any Successor Company thereto as provided in Section 9.1 herein.

		 
	
2.14	
“Director” means any individual who is a member of the Board of Directors of the Company.

		 
	
2.15	
“Disability” or “Disabled” means for all purposes of this Agreement, the meaning ascribed to such term in the Company’s long-term disability plan, or in any successor to such plan.

		 
	
2.16	
“Effective Date” means May 23, 2006.

		 
	
2.17	
“Effective Date of Termination” means the date on which a termination of the Executive’s employment occurs.

		 
	
2.18	
“Employment Date” means March 1, 2006, that being the date on which Executive was originally employed by the Company as Managing Director – Rosemont Pharmaceuticals Limited, a subsidiary of the Company, prior to his promotion effective as of May 23, 2006.

		 
	
2.19	
“Executive” means Paul Hamelin who, as of the Effective Date, resides at 2998 South Lake Leelanau Road, Lake Leelanau, Michigan 49653.

		 
	
2.20	
“Good Reason” shall mean, without the Executive’s express written consent, the occurrence of any one or more of the following:

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(a)	
Reducing the Executive’s Base Salary;

	 	 	 
	
 	
(b)	
Failing to maintain Executive’s amount of benefits under or relative level of participation in the Company’s employee benefit or retirement plans, policies, practices, or arrangements in which the Executive participates as of the Effective Date of this Agreement; provided, however, that any such change that applies consistently to all executive officers of the Company or is required by applicable law shall not be deemed to constitute Good Reason;

	 	 	 
	 	(c) 	
 Failing to require any Successor Company to assume and agree to perform the Company’s obligations hereunder; 

	 	 	 
	 	(d) 	
 The occurrence of any one or more of the following events on or after the announcement of the transaction which leads to the CIC and up to twenty-four (24) calendar months following the effective date of a CIC:

	 	 	 	 
	 	 	(1) 	Requiring Executive to be based
    at a location that requires the Executive to travel at least an additional
    thirty-five (35) miles per day;

	 	 	 	 
	 	 	(2) 	Requiring Executive to report to
    a position which is at a lower level than the highest level to which Executive
    reported within the six (6) months prior to the CIC; 

	 	 	 	 
	 	 	(3) 	Demoting Executive to a level lower
    than Executive’s level in the Company as of the Effective Date; or

	 	 	 	 
	 	 	(4) 	A material diminution of the scope
    or authority of Executive’s position, duties or responsibilities as in effect immediately prior to the effective date of a CIC.

	 	 
	2.21	
 “Notice of Termination” means a written noticewhich shall indicate the specific termination provision in this Agreement relied upon, and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive’s employment under the provisions so indicated, and, where applicable, shall specifically include notice pursuant to Section 1.2 that Company has elected not to renew this Agreement.

		 
	
2.22	
“Person” shall have the meaning ascribed to such term in Section 3(a)(9) of the Securities Exchange Act and used in Sections 13(d) and 14(d) thereof, including a “group” as defined in Section 13(d) thereof.

		 
	
2.23	
“Position” shall have the meeting ascribed to it in Section 3.1.

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2.24	
“Qualifying Termination” means any of the events described in Section 8.2 herein, the occurrence of which triggers the payment of CIC Severance Benefits hereunder.
	 	 
	2.25 	
 “Securities Exchange Act” means the United States Securities Exchange Act of 1934, as amended.
	 	 
	2.26	
 “Service Multiple” shall be equal to the quotient resulting from a formula the numerator of which is the lesser of (a) full number of completed months that have elapsed since the Effective Date of this Agreement (but not less than 6 months) and (b) eighteen (18); and the denominator of which is twelve (12);
	 	 
	2.27 	
 “Severance Benefits” means the payment of severance compensation as provided in Sections 7.4 and 7.6 herein, and not payable due to a Change in Control of the Company.
	 	 
	2.28 	
 “Successor Company” shall have the meaning ascribed to it in Section 9.1.
	 	 
	2.29  	
 “Term” shall mean that period of time commencing on the Effective Date and ending on the Effective Date of Termination.

Article 3.      Position and Responsibilities

	
3.1	
During the term of this Agreement, the Executive agrees to serve as Senior Vice President – Commercial Operations of the Company, and at the discretion of the Company, as part of such position, shall also serve as Managing Director of the Company’s subsidiary Rosemont Pharmaceuticals Limited, or in such other position which Executive shall agree to accept or to which Executive shall be promoted during the Term.  Executive shall report directly to the President and Chief Executive Officer or such other position which is at a higher position or level in the Company than Executive and as shall be determined by the President and Chief Executive Officer in his sole discretion, and shall maintain the level of duties and responsibilities as in effect
as of the Effective Date, or such other level of duties and responsibilities as Executive may be assigned during the Term, provided, however, that it is specifically agreed that the portion of Executive’s duties related to serving as Managing Director of Rosemont Pharmaceuticals Limited is at the discretion of the Company and the failure to maintain Executive in such role shall not be deemed to be a material diminution of the scope or authority of Executive’s position, duties or responsibilities for any purpose or reason under the terms of this Agreement (the “Position”).  With respect to the portion of Executive’s duties related to serving as Managing Director of Rosemont Pharmaceuticals Limited, Executive will spend an appropriate allocation of his time at
the offices and facilities of Rosemont, as such shall be agreed with the President and Chief Executive Officer of the Company, provided, however, that such time allocation shall not exceed one-third of Executive’s time.

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Article 4.      Standard of Care

	4.1 	
 During the term of this Agreement, the Executive agrees to devote substantially his full time, attention, and energies to the Company’s business and shall not be engaged in any other business activity, whether or not such business activity is pursued for gain, profit, or other pecuniary advantage unless such business activity is approved by the Compensation Committee (or, in the event the Compensation Committee ceases to exist, the Board).  However, subject to Article 11 herein and approval by the Compensation Committee (or the Board, as the case may be), the Executive may serve as a director of other companies so long as such service is not injurious to the Company. 

Article 5.      Compensation

	
5.1	
As remuneration for all services to be rendered by the Executive during the term of this Agreement, and as consideration for complying with the covenants herein, the Company shall pay and provide to the Executive those items set forth in Sections 5.2 through 5.8.

	 	 
	
5.2	
Base Salary. The Company shall pay
the Executive a Base Salary in an amount which shall be established from time
to time by the Board of Directors of the Company or the Board’s designee;
provided, however, that such Base Salary shall not be less than THREE HUNDRED
FIFTEEN THOUSAND DOLLARS (US$315,000) per year. 

	 	 	 
	 	(a)	
 This Base Salary shall be paid to the Executive in equal installments throughout the year, consistent with the normal payroll practices of the Company. 

	 	 	 
	 	(b) 	The Base Salary shall be reviewed
    at least annually following the Effective Date of this Agreement, while this
    Agreement is in force, to ascertain whether, in the judgment of the Board
    or the Board’s designee, such Base Salary should be increased based primarily on the performance of the Executive during the year. If so increased, the Base Salary as stated above shall, likewise, be increased for all purposes of this Agreement and shall not, in any event, be decreased in any year.

	 	 
	
5.3	
Annual Bonus. In addition to his Base
Salary, the Executive shall be entitled to participate in the Company’s
annual short-term incentive program, as such program may exist from time to time,
at a level commensurate with the Position. The percentage of Base Salary targeted
as annual short-term incentive compensation shall be established for the Position
by the Company’s Compensation Committee in its sole discretion (the “targeted
Annual Bonus award”). Executive acknowledges that the amount of annual
short-term incentive, if any, to be awarded shall be at the sole discretion of
the Company’s Compensation Committee, may be less or more than the targeted
Annual bonus award, will be prorated from the Effective Date for the remainder
of the calendar year 2006 and will be based on a number of factors set in advance
by the Compensation Committee for each calendar year, including the Company’s
performance and the Executive’s individual performance. Nothing in this
Section 5.3 shall be construed as obligating the Company or the Board to refrain
from changing, and/or amending the short-term incentive program, so long as such
changes are equally applicable to all executive employees in the Company. 

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5.4	
Long-Term Incentives.The Executive shall be eligible to participate in the Company’s long-term incentive plan, as such shall be amended or superseded from time to time provided, however, that nothing in this Section 5.4 shall be construed as obligating the Company or the Board to refrain from changing, and/or amending the long-term incentive plan, so long as such changes are equally applicable to all executive employees in the Company. Executive acknowledges that any awards under the Company’s long-term incentive plan in 2007 based on performance in 2006 will be prorated from the Effective Date for the remainder of the calendar year 2006.

	 	 
	
5.5	
Retirement Benefits.The Company shall provide to the Executive participation in any Company qualified defined benefit and defined contribution retirement plans as may be established during the term of this Agreement; provided, however, that nothing in this Section 5.5 shall be construed as obligating the Company to refrain from changing, and/or amending the nonqualified retirement programs, so long as such changes are equally applicable to all executive employees in the Company.

	 	 
	
5.6	
Employee Benefits. During the Term,
and as otherwise provided within the provisions of each of the respective plans,
the Company shall provide to the Executive all benefits to which other executives
and employees of the Company are entitled to receive, as commensurate with the
Position, subject to the eligibility requirements and other provisions of such
arrangements as applicable to executives of the Company generally.  

	 	 	 
	
 	
(a)	
Such benefits shall include, but shall not be limited to, group term life insurance, health, dental and life insurance, and short-term and long-term disability. 

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(b)	
The Executive shall likewise participate in any additional benefit as may be established during the term of this Agreement, by standard written policy of the Company.

	 	 
	
5.7	
Vacation.  The Executive shall be entitled to, in accordance with and pursuant to Company policy, such paid vacation as is customary for the Position within the Company, but in any event not less than twenty (20) paid vacation days during each calendar year, pro-rated for partial years of employment; provided, however, that without prior written approval, Executive may carry forward into the next year no more than ten (10) unused vacation days from the current year.

	 	 
	
5.8	
Right to Change Plans. The Company shall not be obligated to institute, maintain, or refrain from changing, amending, or discontinuing any benefit plan, program, or perquisite, so long as such changes are equally applicable to all executive employees in the Company.

Article 6.     Expenses

	
6.1	
Upon presentation of appropriate documentation, the Company shall pay, or reimburse the Executive for all ordinary and necessary expenses, in a reasonable amount, which the Executive incurs in performing his duties under this Agreement including, but not limited to, travel, entertainment, professional licensing fees, dues and subscriptions, and all dues, fees, and expenses associated with membership in various professional, business, and civic associations and societies.

Article 7.     Employment Terminations

	
7.1	
Termination Due to Death. In the event
the Executive’s employment is terminated while this Agreement is in force
by reason of death, the Company’s obligations under this Agreement shall
immediately expire. Notwithstanding the foregoing, the Company shall be obligated
to pay to the Executive the following: 

	 	 	 
	
 	
(a)	
Base Salary through the Effective Date of Termination; 

	 	 	 
	
 	
(b)	
An amount equal to the Executive’s unpaid targeted Annual Bonus award, established for the fiscal year in which such termination is effective, multiplied by a fraction, the numerator of which is the number of completed days in the then-existing fiscal year through the Effective Date of Termination, and the denominator of which is three hundred sixty-five (365);

	 	 	 
	
 	
(c)	
All outstanding long-term incentive awards shall be subject to the treatment provided under the applicable long-term incentive plan of the Company; 

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(d)	
Accrued but unused vacation pay through the Effective Date of Termination; and 

	 	 	 
	
 	
(e)	
All other rights and benefits the Executive is vested in, pursuant to other plans and programs of the Company.

	 	 	 
	
 	
(f)	
The benefits described in Sections 7.1(a) and (d) shall be paid in cash to the Executive in a single lump sum as soon as practicable following the Effective Date of Termination, but in no event beyond thirty (30) days from such date. All other payments due to the Executive upon termination of employment, including those in Sections 7.1(b) and (c), shall be paid in accordance with the terms of such applicable plans or programs. 

	 	 	 
	
 	
(g)	
With the exception of the covenants contained in Articles 9 and 14 and Sections 7.1(f), 13.3, 13.5, and 13.7 herein (which shall survive such termination), the Company and the Executive thereafter shall have no further obligations under this Agreement.

	 	 
	
7.2	
Termination Due to Disability.  In the event that the Executive becomes Disabled during the term of this Agreement and is, therefore, unable to perform his duties herein for more than one hundred eighty (180) total calendar days during any period of twelve (12) consecutive months, or in the event of the Board’s reasonable expectation that the Executive’s Disability will exist for more than a period of one hundred eighty (180) calendar days, the Company shall have the right to terminate the Executive’s active employment as provided in this Agreement. 

	 	 	 
	
 	
(a)	
The Board shall deliver written notice to the Executive of the Company’s intent to terminate for Disability at least thirty (30) calendar days prior to the Effective Date of Termination. 

	 	 	 
	
 	
(b)	
Such Disability to be determined by the Board of Directors of the Company upon receipt of and in reliance on competent medical advice from one (1) or more individuals, selected by the Board, who are qualified to give such professional medical advice.

	 	 	 
	
 	
(c)	
A termination for Disability shall become effective upon the end of the thirty (30) day notice period unless prior to the expiration of such thirty (30) day notice period Executive returns to work with medical documentation of his fitness to resume his duties determined to be acceptable by the Board of Directors in their sole discretion. Upon the Effective Date of Termination, the Company’s obligations under this Agreement shall immediately expire.

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(d)	
Notwithstanding the foregoing, the Company shall be obligated to pay to the Executive the following: 

	 	 	 	 
	
 	 	
(1)	
Base Salary through the Effective Date of Termination; 

	 	 	 	 
	
 	 	
(2)	
An amount equal to the Executive’s unpaid targeted Annual Bonus award, established for the fiscal year in which the Effective Date of Termination occurs, multiplied by a fraction, the numerator of which is the number of completed days in the then-existing fiscal year through the Effective Date of Termination, and the denominator of which is three hundred sixty-five (365);

	 	 	 	 
	
 	 	
(3)	
All outstanding long-term incentive awards shall be subject to the treatment provided under the applicable long-term incentive plan of the Company;

	 	 	 	 
	
 	 	
(4)	
Accrued but unused vacation pay through the Effective Date of Termination; and 

	 	 	 	 
	
 	 	
(5)	
All other rights and benefits the Executive is vested in, pursuant to other plans and programs of the Company.

	 	 	 
	
 	(e)	
The benefits described in Sections 7.2(d)(1) and (d)(4) shall be paid in cash to the Executive in a single lump sum as soon as practicable following the Effective Date of Termination, but in no event beyond thirty (30) days from such date. All other payments due to the Executive upon termination of employment, including those in Sections 7.2(d)(2) and (d)(3), shall be paid in accordance with the terms of such applicable plans or program. 

	 	 	 
	
 	(f)	
With the exception of the covenants contained in Articles 8, 9, 11, and 14 and Sections 7.2(e), 13.3, 13.5, and 13.7 herein (which shall survive such termination), the Company and the Executive thereafter shall have no further obligations under this Agreement.

	 	 
	7.3	
 Voluntary Termination by the Executive. The Executive may terminate this Agreement at any time by giving Notice of Termination to the Board of Directors of the Company, delivered at least fourteen (14) calendar days prior to the Effective Date of Termination.

		 	 
		
(a)	
The termination automatically shall become effective upon the expiration of the fourteen (14) day notice period. Notwithstanding the foregoing, the Company may waive the fourteen (14) day notice period; however, the Executive shall be entitled to receive all elements of compensation described in Sections 5.1 through 5.6 for the fourteen (14) day notice period, subject to the eligibility and participation requirements of any qualified retirement plan. 

		 	 
		
(b)	
Upon the Effective Date of Termination, following the expiration of the fourteen (14) day notice period, the Company shall pay the Executive his full Base Salary and accrued but unused vacation pay, at the rate then in effect, through the Effective Date of Termination, plus all other benefits to which the Executive has a vested right at that time (for this purpose, the Executive shall not be paid any Annual Bonus with respect to the fiscal year in which voluntary termination under this Section occurs).

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(c)	
With the exception of the covenants contained in Articles 8, 9, 11, and 14 and Sections 13.3, 13.5, and 13.7 herein (which shall survive such termination), the Company and the Executive thereafter shall have no further obligations under this Agreement.

	 	 
	7.4	
Involuntary Termination by the Company without Cause. At all times during the Term, the Board may terminate the Executive’s employment for reasons other than death, Disability, or for Cause, by providing to the Executive a Notice of Termination, at least sixty (60) calendar days (ninety (90) calendar days when termination is due to non-renewal of this Agreement by the Company pursuant to Section 1.2) prior to the Effective Date of Termination; provided, however, that such notice shall not preclude the Company from requiring Executive to leave the Company immediately upon receipt of such notice. 

		 	 
		
(a)	
Such Notice of Termination shall be irrevocable absent express, mutual consent of the parties.

		 	 
		
(b)	
Upon the Effective Date of Termination (not a Qualifying Termination), following the expiration of the sixty (60) day notice period (90 days in the case of non-renewal), the Company shall pay and provide to the Executive:

		 	 	 
		
 	
(1)	
An amount equal to the Service Multiple times the Executive’s annual Base Salary established for the fiscal year in which the Effective Date of Termination occurs;

		 	 	 
		
 	
(2)	
An amount equal to the Service Multiple times the Executive’s targeted Annual Bonus award established for the fiscal year in which the Effective Date of Termination occurs; provided, however, that no payment shall be made under this Section 7.4(b)(2) if the Effective Date of Termination is less than twelve (12) months after the Effective Date of this Agreement;

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(3)	
A continuation of the welfare benefits of medical, dental and life insurance coverage (or if continuation under the Company’s then current plans is not allowed, then provision at the Company’s expense but subject to payment by Executive of those payments which Executive would have been obligated to make under the Company’s then current plan, of substantially similar welfare benefits from one or more third party providers) after the Effective Date of Termination for a number of months equal to the Service Multiple times twelve (12). These benefits shall be provided to the Executive at the same coverage level as in effect as of the Effective Date of Termination, and at the same premium cost to the Executive which was paid by the Executive at the
time such benefits were provided. However, in the event the premium cost and/or level of coverage shall change for all employees of the Company, or for management employees with respect to supplemental benefits, the cost and/or coverage level, likewise, shall change for the Executive in a corresponding manner. The continuation of these welfare benefits shall be discontinued if prior to the expiration of the period, the Executive has available substantially similar benefits at a comparable cost to the Executive from a subsequent employer, as determined by the Compensation Committee (or, in the event the Compensation Committee ceases to exist, the Board); 

		 	 	 
		
 	
(4)	
All outstanding long-term incentive awards shall be subject to the treatment provided under the applicable long-term incentive plan of the Company;

		 	 	 
		
 	
(5)	
An amount equal to the Executive’s unpaid Base Salary and accrued but unused vacation pay through the Effective Date of Termination; and

		 	 	 
		
 	
(6)	
All other benefits to which the Executive has a vested right at the time, according to the provisions of the governing plan or program. 

		 	 
		
(c)	
In the event that the Board terminates the Executive’s employment without Cause on or after the date of the announcement of the transaction which leads to a CIC, the Executive shall be entitled to the CIC Severance Benefits as provided in Section 8.3 in lieu of the Severance Benefits outlined in this Section 7.4.

		 	 
		
(d)	
Payment of all of the benefits described in Section 7.4(b)(1) shall be paid in cash to the Executive in equal bi-weekly installments over a period of consecutive months equal to the Service Multiple times twelve (12) and beginning on the fifteenth day of the month following the month in which the Effective Date of Termination occurs.  

		 	 
		
(e)	
Payment of all but forty thousand dollars ($40,000) of the benefits described in Section 7.4(b)(2) shall be paid in cash to the Executive in a single lump sum as soon as practicable following the Effective Date of Termination, but in no event beyond thirty (30) days from such date.  The forty thousand dollars ($40,000) which was withheld shall be paid in cash to the Executive in a single lump sum at the end of the twelve (12) month restrictive period set forth in Sections 11.2 and 11.3 of this Agreement. 

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(f)	
Except as specifically provided in Section 7.4(e) and (f), all other payments due to the Executive upon termination of employment shall be paid in accordance with the terms of such applicable plans or programs. 

		 	 
		
(g)	
With the exception of the covenants contained in Articles 8, 9, 10, 11, 12 and 14 and Sections 7.4, 13.3, 13.5, and 13.7 (which shall survive such termination), the Company and the Executive thereafter shall have no further obligations under this Agreement. 

	 	 
	
7.5	
Termination for Cause. Nothing in this Agreement shall be construed to prevent the Board from terminating the Executive’s employment under this Agreement for Cause. 

		 	 
		
(a)	
To be effective, the Notice of Termination must set forth in reasonable detail the facts and circumstances claimed to provide a basis for such termination for Cause. 

		 	 
		
(b)	
In the event this Agreement is terminated by the Board for Cause, the Company shall pay the Executive his Base Salary and accrued vacation pay through the Effective Date of Termination, and the Executive shall immediately thereafter forfeit all rights and benefits (other than vested benefits) he would otherwise have been entitled to receive under this Agreement. The Company and the Executive thereafter shall have no further obligations under this Agreement with the exception of the covenants contained in Articles 9, 10, 11, and 14 and Sections 13.3, 13.5, and 13.9 herein (which shall survive such termination).

	 	 
	
7.6	
Termination for Good Reason. Except
where Section 2.20(d) is applicable, this Section 7.6 shall only become effective
when at least twelve (12) months have elapsed since the Effective Date of this
Agreement. Prior to this Section 7.6 becoming effective, any notice of termination
by Executive may only be given pursuant to Section 7.3. The Executive shall have
sixty (60) days from the date he learns of action taken by the Company that allows
the Executive to terminate his employment for Good Reason to provide the Board
with a Notice of Termination. 

		 	 
		
(a)	
The Notice of Termination must set forth in reasonable detail the facts and circumstances claimed to provide a basis for such Good Reason termination. 

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(b)	
The Company shall have thirty (30) days to cure such Company action following receipt of the Notice of Termination. 

		 	 
		
(c)	
The Executive is required to continue his employment for the sixty (60) day period following the date in which he provided the Notice of Termination to the Board. The Company may waive the sixty (60) day notice period; however, the Executive shall be entitled to receive all elements of compensation described in Sections 5.1 through 5.6 for the sixty (60) day notice period, subject to the eligibility and participation requirements of any qualified retirement plan. 

		 	 
		
(d)	
Upon a termination of the Executive’s employment for Good Reason during the Term, and following the expiration of the sixty (60) day notice period, the Company shall pay and provide to the Executive the following:

		 	 	 
		
 	
(1)	
An amount equal to the Service Multiple times the Executive’s annual Base Salary established for the fiscal year in which the Effective Date of Termination occurs;

		 	 	 
		
 	
(2)	
An amount equal to the Service Multiple times the Executive’s targeted Annual Bonus award established for the fiscal year in which the Effective Date of Termination occurs;

		 	 	 
		
 	
(3)	
A continuation of the welfare benefits of medical, dental and life insurance coverage (or if continuation under the Company’s then current plans is not allowed, then provision at the Company’s expense but subject to payment by Executive of those payments which Executive would have been obligated to make under the Company’s then current plan, of substantially similar welfare benefits from one or more third party providers) after the Effective Date of Termination for a number of months equal to the Service Multiple times twelve (12). These benefits shall be provided to the Executive at the same coverage level, as in effect as of the Effective Date of Termination and at the same premium cost to the Executive which was paid by the Executive at the
time such benefits were provided. However, in the event the premium cost and/or level of coverage shall change for all employees of the Company, or for management employees with respect to supplemental benefits, the cost and/or coverage level, likewise, shall change for the Executive in a corresponding manner. The continuation of these welfare benefits shall be discontinued prior to the end of the one-and-one-half (1.5) year period in the event the Executive has available substantially similar benefits at a comparable cost to the Executive from a subsequent employer, as determined by the Compensation Committee (or, in the event the Compensation Committee ceases to exist, the Board);

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(4)	
All outstanding long-term incentive awards shall be subject to the treatment provided under the applicable long-term incentive plan of the Company;

		 	 	 
		
 	
(5)	
An amount equal to the Executive’s unpaid Base Salary and accrued but unused vacation pay through the Effective Date of Termination; and

		 	 	 
		
 	
(6)	
All other benefits to which the Executive has a vested right at the time, according to the provisions of the governing plan or program.

		 	 
		
(e)	
In the event of termination of Executive’s employment for Good Reason on or after the date of the announcement of the transaction which leads to the CIC and up to twenty-four (24) months following the date of the CIC, the Executive shall be entitled to the CIC Severance Benefits as provided in Section 8.3 in lieu of the Severance Benefits outlined in this Section 7.6.

		 	 
		
(f)	
The Executive’s right to terminate employment for Good Reason shall not be affected by the Executive’s incapacity due to physical or mental illness unless such incapacity is determined to constitute a Disability as provided herein. 

		 	 
		
(g)	
Payment of all but forty thousand dollars ($40,000) of the benefits described in Section 7.6(d)(1) and payment of all of the benefits described in Section 7.6(d)(2) shall be paid in cash to the Executive in a single lump sum as soon as practicable following the Effective Date of Termination, but in no event beyond thirty (30) days from such date. The forty thousand dollars ($40,000) which was withheld shall be paid in cash to the Executive in a single lump sum at the end of the twelve (12) month restrictive period set forth in Sections 11.2 and 11.3 of this Agreement. 

		 	 
		
(h)	
Except as specifically provided in Section 7.6(g), all other payments due to the Executive upon termination of employment shall be paid in accordance with the terms of such applicable plans or programs. 

		 	 
		
(i)	
Notwithstanding anything herein to the contrary, the Company’s payment obligations under this Section 7.6 shall be offset by any amounts that the Company is required to pay to the Executive under a national statutory severance program applicable to such Executive.

		 	 
		
(j)	
With the exceptions of the covenants contained in Articles 8, 9, 10, 11, 12 and 14 and Sections 7.6, 13.3, 13.5, and 13.7 (which shall survive such termination) herein, the Company and the Executive thereafter shall have no further obligations under this Agreement.

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Article 8.     Change in Control

	
8.1	
Employment Termination Following a Change in Control. The
Executive shall be entitled to receive from the Company CIC Severance Benefits
if a Notice of Termination for a Qualifying Termination of the Executive has
been delivered; provided, that:

	 	 	 
	
 	
(a)	
The Executive shall not be entitled to receive CIC Severance Benefits if he is terminated for Cause (as provided in Section 7.5 herein), or if his employment with the Company ends due to death, or Disability, or due to voluntary termination of employment by the Executive without Good Reason.

	 	 	 
	
 	
(b)	
CIC Severance Benefits shall be paid in lieu of all other benefits provided to the Executive under the terms of this Agreement.

	 	 
	
8.2	
Qualifying Termination. The occurrence
of any one or more of the following events on or after the date of the announcement
of the transaction which leads to the CIC and up to twenty-four (24) months following
the date of the CIC shall trigger the payment of CIC Severance Benefits to the
Executive under this Agreement:

	 	 	 
	
 	
(a)	
An involuntary termination of the Executive’s employment by the Company for reasons other than Cause, death, or Disability, as evidenced by a Notice of Termination delivered by the Company to the Executive;

	 	 	 
	
 	
(b)	
A voluntary termination by the Executive for Good Reason as evidenced by a Notice of Termination delivered to the Company by the Executive; 

	 	 	 
	
 	
(c)	
Failure to renew this Agreement (if the Agreement would expire unless renewed within such period), as evidenced by a Notice of Termination delivered by the Company to the Executive; or

	 	 	 
	
 	
(d)	
The Company or any Successor Company materially breaches any material provision of this Agreement and does not cure such breach within thirty (30) days of receiving a written notice from the Executive with such notice explaining in reasonable detail the facts and circumstances claimed to provide a basis for the Executive’s claim.

	 	 
	
8.3	
Severance Benefits Paid upon a Qualifying Termination. In
the event the Executive becomes entitled to receive CIC Severance Benefits, the
Company shall pay to the Executive and provide him the following:

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(a)	
An amount equal to two (2)times the Executive’s annual Base Salary established for the fiscal year in which the Effective Date of Termination occurs;

	 	 	 
	
 	
(b)	
An amount equal to two (2)times the Executive’s targeted Annual Bonus award established for the fiscal year in which the Executive’s Effective Date of Termination occurs;

	 	 	 
	
 	
(c)	
An amount equal to the Executive’s unpaid Base Salary and accrued but unused vacation pay through the Effective Date of Termination;

	 	 	 
	
 	
(d)	
All outstanding long-term incentive awards shall be subject to the treatment provided under the applicable long-term incentive plan of the Company;

	 	 	 
	
 	
(e)	
A continuation of the welfare benefits of medical, dental and life insurance coverage for two (2)full years after the Effective Date of Termination (or if continuation under the Company’s then current plans is not allowed, then provision at the Company’s expense but subject to payment by Executive of those payments which Executive would have been obligated to make under the Company’s then current plan, of substantially similar welfare benefits from one or more third party providers).

	 	 	 	 
	
 	
 	
(1)	
These benefits shall be provided to the Executive at the same coverage level, as in effect as of the Effective Date of Termination or, if greater, as in effect sixty (60) days prior to the date of the Change in Control, and at the same premium cost to the Executive which was paid by the Executive at the time such benefits were provided. 

	 	 	 	 
	
 	
 	
(2)	
In the event the premium cost and/or level of coverage shall change for all employees of the Company, or for management employees with respect to supplemental benefits, the cost and/or coverage level, likewise, shall change for the Executive in a corresponding manner. 

	 	 	 	 
	
 	
 	
(3)	
The continuation of these welfare benefits shall be discontinued prior to the end of thetwo year period in the event the Executive has available substantially similar benefits at a comparable cost to the Executive from a subsequent employer, as determined by the Compensation Committee (or, in the event the Compensation Committee ceases to exist, the Board). 

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8.4	
Form and Timing of Severance Benefit. Payment of all of the benefits described in Sections 8.3(a) through (c) shall be paid in cash to the Executive in a single lump sum as soon as practicable following the Effective Date of Termination, but in no event beyond thirty (30) days from such date. All other payments due to the Executive upon termination of employment shall be paid in accordance with the terms of such applicable plans or programs.

	 	 
	
8.5	
Excise Tax. In the event that a Change in Control occurs, and a determination is made by the Company pursuant to Section 280G and 4999 of the Code that a golden parachute excise tax is due, the benefits provided to the Executive under this Agreement that are classified as “parachute payments” (as such term is defined in Section 280G of the Code), shall be limited to the amount just necessary to avoid the excise tax.  

	 	 	 
	
 	
(a)	
This limitation shall be applied if, and only if, such a limitation results in a greater net (of excise tax) cash benefit to the Executive than he would receive had the benefits not been capped and an excise tax been levied.

	 	 
	
8.6	
With the exceptions of the covenants contained in Articles 8, 9, 10, 11, 12 and 14 and Sections 13.3, 13.5, and 13.7 (which shall survive such termination) herein, the Company and the Executive thereafter shall have no further obligations under this Agreement.

Article 9.     Assignment

	
9.1	
Assignment by Company. This Agreement
may and shall be assigned or transferred to, and shall be binding upon and shall
inure to the benefit of any Successor Company, with Successor Company for purposes
of this Agreement being defined as a company that (i) acquires greater than fifty
percent (50%) of the assets of the Company or (ii) acquires greater than fifty
percent (50%) of the outstanding stock of the Company, or (iii) is the surviving
entity in the event of a CIC. 

	 	 	 
	
 	
(a)	
Any such Successor Company shall be deemed substituted for all purposes of the “Company” under the terms of this Agreement.

	 	 	 
	
 	
(b)	
Failure of the Company to obtain the agreement of any Successor Company to be bound by the terms of this Agreement prior to the effectiveness of any such succession shall be a breach of this Agreement, and shall immediately entitle the Executive to benefits from the Company in the same amount and on the same terms as the Executive would be entitled to receive in the event of a termination of employment for Good Reason as provided in Section 7.7 (failure not related to a Change in Control) or Section 8.3 (if the failure of assignment follows or is in connection with a Change in Control). 

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(c)	
Except as herein provided, this Agreement may not otherwise be assigned by the Company.

	 	 
	
9.2	
Assignment by Executive. This Agreement
shall inure to the benefit of and be enforceable by the Executive’s personal
or legal representatives, executors, administrators, successors, heirs, distributees,
devisees, and legatees. 

	 	 	 
	
 	
(a)	
If the Executive dies while any amount would still be payable to him pursuant to this Agreement had he continued to live, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement, to the Executive’s Beneficiary. 

	 	 	 
	
 	
(b)	
If the Executive has not named a Beneficiary, then such amounts shall be paid to the Executive’s devisee, legatee, or other designee, or if there is no such designee, to the Executive’s estate.

Article 10.     Legal Fees and Notice

	
10.1	
Payment of Legal Fees. To the extent
permitted by law, the Company shall pay all legal fees, costs of litigation,
prejudgment interest, and other expenses incurred by Executive in contesting
a termination, if Executive prevails.

	 	 
	
10.2	
Notice. Any notices, requests, demands,
or other communications provided by this Agreement shall be sufficient if in
writing and if sent by registered or certified mail to the Executive at
the last address he has filed in writing with the Company or, in the case
of the Company, at its principal offices to the attention of the Chief Executive
Officer.

Article 11.     Confidentiality and Noncompetition

	
11.1	
Disclosure of Information. The Executive
recognizes that he has access to and knowledge of confidential and proprietary
information of the Company that is essential to the performance of his duties
under this Agreement. 

	 	 	 
	
 	
(a)	
The Executive will not, during and for five (5) years after the term of his employment by the Company, in whole or in part, disclose such information to any person, firm, corporation, association, or other entity for any reason or purpose whatsoever, nor shall he make use of any such information for his own purposes, so long as such information has not otherwise been disclosed to the public or is not otherwise in the public domain except as required by law or pursuant to administrative or legal process.

	 	 
	
11.2	
Covenants Regarding Other Employees. During the term of this Agreement, and for a period of twelve (12) months following the Executive’s termination of employment for any reason, the Executive agrees not to actively solicit any employee of the Company to terminate his or her employment with the Company or to interfere in a similar manner with the business of the Company.

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11.3	
Noncompete Following a Termination of Employment. From
the Effective Date of this Agreement until six (6) months following the Executive’s
Effective Date of Termination for any reason, the Executive will not: (a) directly
or indirectly own any equity or proprietary interest in (except for ownership
of shares in a publicly traded company not exceeding three percent (3%) of any
class of outstanding securities), or be an employee, agent, director, advisor,
or consultant to or for any competitor of the Company, whether on his own behalf
or on behalf of any person; or (b) undertake any action to induce or cause
any customer or client to discontinue any part of its business with the Company. 

	 	 
	
11.4	
Waiver of Covenants Upon a Change in Control. Upon the occurrence of a Change in Control, the Executive shall be released from each of the covenants set forth in Section 11.2 and 11.3, if such Executive is terminated by the Company without Cause or if the Executive terminates his employment with the Company for Good Reason.

Article 12.     Outplacement Assistance

	
12.1	
Following a termination of employment, other than for Cause, the Executive shall be reimbursed by the Company for the costs of all outplacement services obtained by the Executive within the one (1) year period after the Effective Date of Termination; provided, however, that the total reimbursement shall be limited to an amount equal to ten percent (10%) of the Executive’s Base Salary as of the effective date of termination.

Article 13.     Miscellaneous

	
13.1	
Entire Agreement. With the exception
of the Company’s Proprietary Information and Inventions Agreement and the
Offer Letter, previously executed by Executive on June 10, 2002 (the terms of
which are incorporated herein by this reference), this Agreement supersedes any
prior agreements, or understandings, oral or written, between the parties hereto
or between the Executive and the Company, with respect to the subject matter
hereof, and constitutes the entire agreement of the parties with respect thereto.

	 	 
	
13.2	
Modification. This Agreement shall
not be varied, altered, modified, canceled, changed, or in any way amended except
by mutual agreement of the parties in a written instrument executed by the parties
hereto or their legal representatives.

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13.3	
Severability. In the event that any
provision or portion of this Agreement shall be determined to be invalid or unenforceable
for any reason, the remaining provisions of this Agreement shall be unaffected
thereby and shall remain in full force and effect.

	 	 
	
13.4	
Counterparts. This Agreement may be
executed in one (1) or more counterparts, each of which shall be deemed to be
an original, but all of which together will constitute one and the same Agreement.

	 	 
	
13.5	
Tax Withholding. The Company may withhold
from any benefits payable under this Agreement all federal, state, city, or other
taxes as may be required pursuant to any law or governmental regulation or ruling.

	 	 
	
13.6	
Beneficiaries. To the extent allowed
by law, any payments or benefits hereunder due to the Executive at the time of
his death shall nonetheless be paid or provided and the Executive may designate
one or more persons or entities as the primary and/or contingent beneficiaries
of any amounts to be received under this Agreement. Such designation must be
in the form of a signed writing acceptable to the Board or the Board’s
designee. The Executive may make or change such designation at any time.

	 	 
	
13.7	
Payment Obligation Absolute. Absent actions deliberately or willfully taken by the Executive to materially injure the Company, the Company’s obligation to make the payments and the arrangement provided for herein shall be absolute and unconditional, and shall not be affected by any circumstances, including, without limitation, any offset, counterclaim, recoupment, defense, or other right which the Company may have against the Executive or anyone else. 

	 	 	 
	
 	
(a)	
All amounts payable by the Company hereunder shall be paid without notice or demand. Subject to the provisions set forth in Sections 7.4 and 7.6, and Article 11, each and every payment made hereunder by the Company shall be final, and the Company shall not seek to recover all or any part of such payment from the Executive or from whomsoever may be entitled thereto, for any reasons whatsoever.

	 	 	 
	
 	
(b)	
With the exception of the Company’s willful material breach of its payment obligations under Articles 7 and 8 of this Agreement (provided, however, that no such breach shall be deemed to have occurred until the Executive has provided the Board with written notice of such breach and a reasonable opportunity for cure), the restrictive covenants contained in Article 11 are independent of any other contractual obligations in this Agreement or otherwise owed by the Company to the Executive. Except as provided in this paragraph, the existence of any claim or cause of action by Executive against the Company, whether based on this Agreement or otherwise, shall not create a defense to the enforcement by the Company of any restrictive covenant contained
herein.

 

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(c)	
The Executive shall not be obligated to seek other employment in mitigation of the amounts payable or arrangements made under any provision of this Agreement, and the obtaining of any such other employment shall in no event effect any reduction of the Company’s obligations to make the payments and arrangements required to be made under this Agreement. 

Article 14.     Governing Law

	
14.1	
To the extent not preempted by federal law, the provisions of this Agreement shall be construed and enforced in accordance with the laws of the state of New Jersey.

IN WITNESS WHEREOF, the Company, through its duly authorized representative, and the Executive have executed this Agreement as of the Effective Date.

	 	Executive:
	 	 	 
	 	/s/ Paul Hamelin          
	 	Paul Hamelin
	 	 	 
	 	Company:
	 	 	 
	 	Savient Pharmaceuticals, Inc.
	 	 	 
	 	By:	/s/ Christopher Clement
	 	 	Christopher Clement
	 	 	Chief Executive Officer & President

 

22Exhibit 10.45

                        ASSET PURCHASE AND SALE AGREEMENT

                                  BY AND AMONG

                       CENTURY WELL SERVICE, INC., ET. AL.

                                       AND

                          DALECO RESOURCES CORPORATION
                             EXECUTED: MAY 23, 2006

<PAGE>

            THIS AGREEMENT,  dated May 23, 2006 ("Execution Date") but effective
as of Closing Date, is entered into by and among Century Energy  Management Co.,
Inc.,  Newport  Transmission,  Inc.,  Biscayne Petroleum Corp., River Resources,
LLC., Rockhound Exploration & Development,  LLC. and Century Well Service, Inc.,
whose address is 9 Riverside Drive, Chester, WV 26034 (hereinafter  collectively
referred to as "Seller") and Daleco  Resources  Corporation  with one or more of
its subsidiary  entities,  whose collective  address is 120 North Church Street,
West  Chester,  Pennsylvania  19380  (hereinafter  collectively  referred  to as
"Buyer").

                                   WITNESSETH

            WHEREAS, Seller owns various undivided interests in the Assets; and

            WHEREAS, Seller entered into a Letter of Intent with WE Energy, LLC,
dated March 31, 2006 ("Letter of Intent"); and

            WHEREAS,  the Letter of Intent  provides  that the  purchaser of the
Assets may be WE Energy, LLC or its designee, and

            WHEREAS, Buyer is the designee of WE Energy, LLC, and

            WHEREAS,  the Seller desires to sell and convey and Buyer desires to
purchase and acquire the Assets, effective as of the Effective Date.

            NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency  of which are hereby  acknowledged,  the  parties,  intending  to be
legally bound hereby, agree as follows:

                            ARTICLE 1 -- DEFINITIONS

            The following  terms shall have the meanings  ascribed to them below
when used in this Agreement:

            1.1 "Accounts Receivable",  shall mean all accounts, instruments and
general intangibles (as such terms are defined in the Uniform Commercial Code of
Ohio) attributable to Seller's interest in the Assets with respect to any period
of time from and after the Closing Date.

            1.2 "Agreement", shall mean this Asset Purchase and Sale Agreement.

            1.3  "Assets",  shall mean  Seller's  assets  listed on Schedule 1.3
hereto, except the Excluded Assets. The Assets include, but are not limited to:
<PAGE>

                  1.3.1.  the Equipment,  the Oil and Gas  Properties,  Real and
Personal Property, Pipeline Interests and Oil and Gas Contracts; and

                  1.3.2  Copies of all of  Seller's  documents  relating  to the
Equipment,  the Oil and Gas  Properties,  and the  Wells to  include,  by way of
example and not limitation, Production, financial, title, logs, core, geological
and  engineering  records,  and all other  files  whether  kept  manually  or in
electronic  form,  that covers,  deals with or relates to the Assets or any part
thereof; ("Books and Records").

            1.4 "Assignment" or "Assignments" shall mean one or more Assignments
and Bills of Sale in substantially  the forms of Exhibit "A-1",  through Exhibit
"A - 3" hereto and Deed or Indenture for the  conveyance of real property in the
form attached hereto as Exhibit "A-4".  The Assignments  covering leases held by
production  shall contain special  warranty deed language,  conveying the Assets
without warranty,  either expressed or implied, except for claims by, through or
under the Seller,  but not otherwise,  with full  substitution  and  subrogation
rights all as more particularly set forth in the Assignment,  with all Equipment
conveyed "AS IS and WHERE IS, without warranty of merchantability OR fitness for
a particular  PURPOSE." The  Assignments  covering leases not held by production
shall be conveyed by Quit Claim  Assignments.  Real Property will be conveyed by
general warranty Deed.

            1.5  "Closing",  shall  mean the  consummation  of the  transactions
contemplated by this Agreement.

            1.6 "Closing  Date",  shall mean the date on which the Closing shall
have the meaning set forth in Paragraph 2.3.

            1.7 "Effective Date", shall mean 7:01 a.m. Eastern Standard Time, on
the Closing Date.

            1.8 "Encumbrance",  shall mean all liens,  claims or encumbrances of
whatever  type to include by way of example  and not  limitation  any  mortgage,
lien,  security  interest,  pledge,  charge,  encumbrance,   claim,  limitation,
reversionary  interest,  preferential  right  to  purchase  any of  the  Assets,
irregularity,  burden,  hypothecation  or defect, a complete and correct list of
which is attached hereto as Schedule 1.8.

            1.9 "Environmental Condition", shall mean any condition of the soil,
subsurface,  surface waters,  ground waters,  atmosphere or other  environmental
medium,  whether or not yet discovered,  which results,  or could  reasonably be
expected  to  result,  in  any  damage,  loss,  cost,  expense,  claim,  demand,
investigation,  lien or liability relating to the Assets as a result of or under
any Environmental Law.

            1.10 "Environmental  Law", shall mean the Resource  Conservation and
Recovery Act of 1976, as amended, the Clean Air Act, as amended, the Clean Water
Act, as amended, and the Comprehensive Environmental Response,  Compensation and
Liability Act, as amended, and all federal,  state, local and other governmental
regulations,  orders,  interpretations or rulings issued  thereunder,  and other
Legal Requirements relating to air or water quality,  hazardous or solid wastes,
hazardous   substances,   the   prevention  or   remediation   of  pollution  or
environmental  damage,  protection of the environment or any other environmental
matters.
<PAGE>

            1.11 "Equipment", shall mean those items of equipment, inventory and
spare parts  belonging  to the Seller,  a partial  list of which is set forth on
Schedule 1.11 hereto,  to include by way of example and not limitation  the: (i)
equipment  located  on the Oil and Gas  Properties;  (ii)  appurtenant  thereto,
and/or,  (iii) used in connection with the Oil and Gas Properties,  the Pipeline
and/or  the  Wells  to  include,  by way of  example  and  not  limitation,  the
Infrastructure;  (iii)  drilling  rigs and  related  equipment,  to include  all
tubulars, drill stems, dozers, tractors and bits .

            1.12 "Escrow Agent" shall have the meaning as described in Paragraph
3.1, and "Escrow  Agreement"  shall mean that  document set forth as Exhibit "B"
hereto.

            1.13 "Excluded  Assets" shall mean those assets of Seller not listed
on Exhibit 1.3 and not conveyed to Buyer, to include,  by way of example and not
limitation, the "Robo Enterprises wells", three designated automobiles, the West
Virginia  assets,  any stock owned by the Seller and the Seller's names, as more
fully set forth on Schedule 1.13.

            1.14 "Execution Date", shall have the meaning set forth above.

            1.15  "Existing  Burdens",  shall mean Lease  Burdens and  Permitted
Encumbrances  of record as of the Effective  Date or of which Buyer has received
written notice prior to the Closing Date.

            1.16 "Final Settlement Statement",  shall mean that Final Settlement
Statement as provided for.

            1.17  "Gathering  System"  shall mean the Seller's  pipeline  system
connected to the Wells and transporting the hydrocarbons and water produced from
a well to tanks or a first purchaser's pipeline or an end user's interchange,  a
description of which is set forth on Schedule 1.17 hereto.

            1.18  "Infrastructure",  shall  mean  the  Gathering  System,  water
disposal  and  transportation   systems,   separation  equipment,   measurement,
electrical  and other  systems in place as of the Closing  Date and used or held
for  use in  connection  with  the  ownership  or  operation  of the Oil and Gas
Properties,  a  description  and listing of which is set forth on Schedule  1.18
hereto.

            1.19 "Lease", shall mean an instrument granting the lessee the right
to explore for and to remove hydrocarbons from the mineral estate, or other like
conveyance  of the right to use the  lands of  another,  a list of which  Leases
comprising part of the Assets is attached as Schedule 1.19.

            1.20  "Lease  Burdens",  shall  mean all  Royalties  and  Overriding
Royalties  and such other  rights to share in the  Production  from the Wells of
record as of the  Effective  Date, a list of which is set forth on Schedule 1.20
hereto.

            1.21 "Lease  Operating  Expenses",  shall mean any and all costs and
expenses  properly  charged  by  the  operator  of  the  Wells  pursuant  to the
applicable operating agreement governing operations on such Wells.
<PAGE>

            1.22 "Legal Requirements",  shall mean any law, statute,  ordinance,
decree,  requirement,  order, judgment,  rule or regulation including, by way of
example and not limitation,  the terms of any license, permit,  certificate,  or
abandonment  approval  promulgated,   issued  or  enacted  by  any  governmental
authority to include,  without limitation,  any bonding requirements of Buyer or
other regulatory approval governing the transfer of operations to Buyer.

            1.23 "Letter of Intent,"  shall mean that certain letter dated March
31,  2006 by and  among  Seller  and WE  Energy,  LLC,  setting  forth the terms
pursuant  to which the Seller  was  willing to sell the Assets and WE Energy was
willing to buy the Assets.

            1.24 "Net Revenue Interest",  shall mean a Revenue Interest less all
Lease Burdens, a schedule of which is attached hereto as Schedule 1.44.

            1.25  "NOV"  shall  mean a notice  of  violation  issued by the Ohio
Department  of  Natural   Resources  or  any  other  regulatory   agency  having
jurisdiction  over the  Assets,  a list of which is set forth on  Schedule 1. 25
hereto.

            1.26 "Oil and Gas Contracts", shall mean all rights of Seller to any
contracts  that affect or relate to the Oil and Gas Properties or the Production
attributable  thereto  including  amendments  thereto.  "Oil and Gas  Contracts"
includes,  by way of  example  and  not  limitation,  area  of  mutual  interest
agreements,  acreage contribution agreements, advance payment agreements, bottom
hole  agreements,  division  orders,  drilling  contracts,  dry hole agreements,
exploration   agreements,   farm-in  and  farm-out  agreements,   gas  balancing
agreements  (including  claims to  recover  natural  gas or money gas  balancing
agreements  with  respect to  Production  before the  Effective  Date),  Surface
Agreements,  natural gas sales,  exchange,  treating and  processing  contracts,
operating agreements, net profits agreements,  participation agreements, storage
agreements,  support  agreements,  transfer orders,  transportation  agreements,
water rights agreements, and salt water disposal agreements.

            1.27 "Oil and Gas  Properties",  shall  mean those  Leases,  Working
Interests,  Overriding  Royalty  Interests,  Net Revenue  Interests and Wells of
Seller set forth on Schedule 1.44 hereto.

            1.28 "Operator",  shall mean the person designated as the "operator"
of the Oil and Gas Properties in the Operating Agreement governing the Wells.

            1.29 "Operating  Agreements",  shall mean those agreements governing
the operation of the Wells, as set forth on Schedule 1.29 hereto.

            1.30 "Ordinary  Course of Business",  shall mean the ordinary course
of business and conduct of operations in the oil and gas industry and consistent
with past custom and practice, and shall include, without limitation, operations
of a kind and nature conducted in a manner consistent with those of a reasonably
prudent operator in the same or similar circumstances.

            1.31  "Outstanding  Obligations",  shall  mean  those  Taxes,  Lease
Operating  Expenses,   Royalties,   and  Overriding   Royalties  and  any  other
liabilities  or expenses  relating to the  ownership and operation of the Assets
accruing on or before the Effective Date and which Seller has not paid as of the
Closing Date, a list of which is set forth on Schedule 1.31 hereto.
<PAGE>

            1.32  "Overriding  Royalty",  shall  mean a  non-operating  interest
carved  out of a Working  Interest's  share of the oil and gas  produced  at the
surface,  free of production  expenses, a list of which is set forth on Schedule
1.44.

            1.33 "Permits", shall mean all permits, licenses and approvals, from
any and all agencies, whether county, state or Federal, for the operation of the
Seller's activities, a list of which is set forth on Schedule 1.33 hereto.

            1.34 "Permitted Encumbrances",  shall mean those Encumbrances as may
exist on the Oil and Gas Properties  from time to time in the Ordinary Course of
Business,  which are: (a) liens for Taxes not yet due and payable, or if due and
payable,  are being  contested in good faith in the Ordinary Course of Business;
(b) inchoate,  statutory or operator's  liens  securing  obligations  for labor,
services,  materials and supplies  furnished to the Oil and Gas Properties,  but
only if such liens are not  delinquent  and will be  discharged  in the Ordinary
Course of Business; (c) Encumbrances that arise under Oil and Gas Contracts of a
type and nature  customary  in the oil and gas industry to secure the payment of
amounts that are not yet delinquent or, if  delinquent,  are being  contested in
good faith in the Ordinary Course of Business;  (d) Encumbrances that arise as a
result of Oil and Gas  Contracts  that can be  terminated  on  thirty  (30) days
notice,  and  orders  and  laws a list of which is set  forth on  Schedule  1.34
hereto.

            1.35  "Person",  shall  mean  an  individual,   group,  partnership,
corporation, trust, Limited Liability Company or other entity.

            1.36  "Pipeline",  shall mean all of the  Seller's  interest  in the
Gathering System.

            1.37  "Pipeline  Interest",  shall  mean  Seller's  interest  in the
Pipeline.

            1.38 "Production",  shall mean all hydrocarbons produced,  saved and
sold from the Wells.

            1.39  "Real  and  Personal  Property"  shall  mean all real  estate,
drilling rigs,  workover rigs,  service rigs and all tangible  property (whether
real, personal or otherwise)  equipment associated with and used by, on and with
the  production  operations,  the pipeline  operations,  the saltwater  disposal
operations,  the drilling  rigs,  work over rigs and service  rigs  (hereinafter
drilling rigs, work over rigs and service rigs are  collectively  referred to as
"Drilling Rigs"), a list of which is set forth on Schedule 1. 39 hereto.

            1.40  "Revenue  Interest",   shall  mean  the  gross  revenues  from
Production  attributable to a Working Interest,  a list of which is set forth on
Schedule 1. 44 hereto.

            1.41 "Royalty",  shall mean that  proportionate  share of Production
payable to the owner of the mineral estate or its designee, free of all expenses
of Production.

            1.42 "Surface  Rights",  shall mean all rights,  by whatever name or
designation,  to  include,  by way of  example  and not  limitation,  easements,
rights-of-way,  meter site agreements  compressor site  agreements,  and surface
leases for the drilling,  completion  and  production of a well, the laying of a
pipeline,  the installation of a meter site or compressor site or other items of
tangible  property incident to the production or transportation of hydrocarbons,
a list of which is set forth on Schedule 1.42.
<PAGE>

            1.43 "Taxes", shall mean all ad valorem,  severance, and other taxes
or fees levied upon or measured by Production,  personal  property  taxes,  real
property  taxes,  and any and all other taxes or fees of  whatever  type or kind
assessed or which are based upon the ownership of the Assets, business privilege
taxes and all other  taxes  levied by any  governmental  body or agency upon and
required for businesses doing business within their jurisdiction.

            1.44 "Wells",  shall mean Seller's interest in those wells set forth
on Schedule 1.44 hereto.

            1.45  "Working  Interest",  shall  mean an  interest  in the  leases
embodying operating rights,  operating obligations  (including,  but not limited
to,  obligations  to bear the costs and expenses of exploring  for and producing
hydrocarbons) and the right to share in Production, a list of which is set forth
on Schedule 1. 44 hereto.

                  ARTICLE II -- PURCHASE AND SALE OF THE ASSETS

            2.1 Transfer. Subject to the terms of this Agreement,  Seller hereby
agrees to sell, transfer,  assign,  convey and deliver unto the Buyer, and Buyer
hereby agrees to purchase,  acquire and accept, the Assets,  effective as of the
Effective Date.

            2.2 Closing.  At the closing,  subject to the  provisions of Article
VII and VIII,  the Buyer will  deliver the  Purchase  Price in  accordance  with
Article III below to the Escrow Agent.

            2.3 Closing Date.  The date of the Closing shall be a date not later
than  sixty  (60) days  after the  Execution  Date,  unless  extended  by mutual
agreement of the parties  hereto but in any event not later than July ___, 2006.
Buyer may  unilaterally  extend the Closing Date for an  additional 30 days upon
the payment to Seller of an  additional  $25,000.00  Good Faith Deposit (as that
term is defined in Paragraph 3.1 below).

            2.4 Execution.  Upon the execution of this Agreement, this Agreement
shall  become a binding  agreement  by and  between  the  Buyer and the  Seller,
subject to the parties fulfilling their respective  conditions to Closing as set
forth in Articles VII and VIII below.

            2.5  Assignments.  Subject  to the  terms  and  conditions  of  this
Agreement  and in reliance upon the  representations  and  warranties  contained
herein, at Closing, Seller shall convey, transfer, assign and deliver all of the
Assets (by executing and delivering one or more counterparts of the Assignments,
together with a description of the respective Assets attached thereto) to Buyer.
The Assignments  covering leases held by production  shall provide for a Special
Warranty  of title to the  Assets  by,  through  and under the  Seller,  but not
otherwise,  with all Equipment conveyed "AS IS and WHERE IS, WITHOUT WARRANTY OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE." The real property shall be
conveyed to Buyer by General  Warranty  Deed.  All leases not held by production
shall be conveyed to Buyer by a Quit Claim Assignment.
<PAGE>

                          ARTICLE III-- PURCHASE PRICE

            3.1 Price.  The purchase  price for the Assets shall be Four Million
Dollars  ($4,000,000)  ("Purchase  Price") less all good faith  deposits  ("Good
Faith Deposits") paid to Seller by Buyer on or before the Closing Date, of which
Fifty Thousand Dollars  ($50,000) has already been paid by Buyer to Seller as of
the Execution Date, plus 250,000 shares of Daleco Resources  Corporation  common
stock,  par value $.01  ("Stock"),  subject to the terms and  conditions  of the
Registration Rights Agreement.  The Purchase Price as adjusted by: (a) Paragraph
3.3 below,  and (b) less any Good Faith Deposits is referred to as the "Adjusted
Purchase Price."

            3.2 Manner of Payment, Escrow Agent.

                  3.2.1 At the  Closing,  the Buyer will pay to Crabbe,  Brown &
James,  LLP,  500 South  Front  Street,  Suite 1200,  Columbus,  Ohio 43215 (the
"Escrow  Agent") the Adjusted  Purchase Price in immediately  available  Federal
funds.  Upon receipt of the Adjusted  Purchase  Price in  immediately  available
Federal funds,  Seller shall deliver to the Buyer the Assignments and such other
Closing documentation as required herein.

                  3.2.2 At the  Closing,  the Buyer  will  deliver to the Escrow
Agent a  Certificate  in the name of the Seller,  or its  designee,  for 250,000
shares of Stock. The Certificate  shall bear the following  restrictive  legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED OR QUALIFIED
PURSUANT TO THE SECURITIES  ACT OF 1933 OR THE SECURITIES  LAWS OF ANY STATE AND
MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF (i)
AN EFFECTIVE  REGISTRATION STATEMENT AS TO THE SECURITIES UNDER THE 1933 ACT AND
AN EFFECTIVE REGISTRATION OR QUALIFICATION OF SUCH SECURITIES FOR SALE UNDER ANY
APPLICABLE STATE  SECURITIES LAW; OR (ii) AN OPINION OF COUNSEL  SATISFACTORY TO
THE CORPORATION THAT SUCH REGISTRATION AND QUALIFICATION IS NOT REQUIRED.

                  3.2.2.1  The Stock shall be subject to a  registration  rights
agreement  ("Registration  Rights Agreement") in form and substance identical to
Exhibit C hereto.  The Registration  Rights Agreement shall be effective for one
year from the Closing Date  ("Term") and shall grant to the Seller  "piggy back"
registration  rights onto Buyer's  registration of common stock during the Term.
The Seller shall have no rights to demand a  registration  of the Stock acquired
by it under  Paragraphs  3 and 3.2.1 or this  Agreement  generally.  The parties
incorporate by reference the Registration  Rights  Agreement  (Exhibit C) herein
for all purposes as though the  Registration  Rights  Agreement was set forth at
length herein.

            3.3 Allocation of Revenues and Assumption of Liabilities. Subject to
the terms and provisions hereof, as of the Effective Date:

                  3.3.1 Buyer  purchases and acquires the Assets and assumes the
liabilities and  obligations  pertaining to the Assets which accrue on and after
the  Closing  Date  (to  include,  by way of  example  and not  limitation,  all
obligations  arising  after  the  Closing  Date:  (i)  under  the  Leases  which
constitute a portion of the Oil and Gas  Properties;  (ii) under the Oil and Gas
Contracts; (iii) referenced herein or on Exhibits and Schedules hereto; and (iv)
other Legal  Requirements),  as evidenced by the execution of this Agreement and
the execution and  acceptance of each  Assignment,  but excluding  however:  (x)
Excluded  Liabilities (as defined in Paragraph 3. 3.2 below) or, (y) liabilities
or obligations arising from a breach of any the obligations of Seller under this
Agreement.
<PAGE>

                  3.3.2  Seller  shall  retain  and  bear  the  liabilities  and
Obligations  attributable  to Seller's  ownership or operation of the Assets and
arising  and/or  incurred  prior to the Effective  Date,  to include,  by way of
example and not  limitation:  (i) costs for Leases or leasehold  interests under
any existing letter of intent, prospect acquisition agreement, or other contract
or document  to which  Seller is a party and (ii) all  Outstanding  Obligations,
whether  or not  actually  invoiced  or  billed  prior to or  subsequent  to the
Effective Date (collectively,  the "Excluded  Liabilities"),  excluding however:
(x) liabilities  specifically assumed by the Buyer under this Agreement; and (y)
liabilities  arising  from a breach of any of  Buyer's  obligations  under  this
Agreement.

                  3.3.3 Seller shall receive all proceeds of Production actually
produced,  sold and  delivered  before  the  Closing  Date,  and Buyer  shall be
entitled to all  proceeds  of  Production  actually  produced,  saved,  sold and
delivered on and after the Closing Date.

                  3.3.4   Seller   shall   receive  all  revenues  and  benefits
attributable  to the Assets  earned  prior to the  Closing  Date and Buyer shall
receive all revenues and benefits attributable to the Assets earned on and after
the Closing  Date,  to include all  prepayments  for drilling  contracts  and/or
services  received by Seller  prior to the  Closing  Date but not  performed  or
drilled by the Closing Date.

                  3.3.5 Taxes  assessed  on and against the Assets  shall be pro
rated as of the Closing Date in accordance with Paragraph 9.7, with the Purchase
Price to be adjusted in accordance with Paragraph 3.3.

                  3.3.6 Purchase Price  Adjustment.  The Purchase Price shall be
adjusted as follows:

                        3.3.6.1 Upwards by:

                              3.3.6.1.1  Taxes actually paid  by  Seller  out of
Seller's  funds  in respect of  the Assets and  relating  to periods on or after
the Closing Date  and which were not deducted from revenues  attributable to the
Assets as of and after the Closing Date.

                        3.3.6.2 Downwards by:

                              3.3.6.2.1 The totality of the Good Faith Deposits.

                              3.3.6.2.2  The amount shown on Schedule  1.8, paid
to any creditor, mortgagee, lien holder, or any other party by Buyer to whom the
Seller  is indebted  and to whom  payment must be  made  to allow  the Seller to
deliver  the Assets  to  the Purchaser free and clear of all Encumbrances, other
than Permitted Liens, at Closing.
<PAGE>

            3.4 Closing  Statement.  Seller shall deliver to Buyer not less than
two business days before the Closing Date a statement (the "Closing  Statement")
setting forth the  adjustments  to the Purchase Price provided in Paragraph 3.3,
using estimates  where actual amounts are not known at the Closing.  The Closing
Statement  shall be prepared in form and  substance  mutually  acceptable to the
parties.

            3.5 Additional Consideration.  For a period of three (3) years after
the  Closing  Date,  Seller  shall have the right  depending  on the  reasonable
availability  of the T-4 drilling  rig  acquired by Buyer from Seller,  upon not
less  than  thirty  (30) days  prior  written  notice  to Buyer,  to use the T-4
drilling  rig for the  drilling  of up to five  (5)  wells  per  calendar  year.
Seller's cost for  utilization  of the T-4 drilling rig shall be Buyer's  actual
costs of operating  the T-4 drilling rig plus fifteen  percent  (15%).  Seller's
costs shall mean those costs which are customarily associated with the operation
and  management  of a drilling rig  operating  in Ohio,  as shall be further set
forth in the drilling contract to be executed by Buyer and Seller at the time of
engagement  of the drilling  rig. The parties  agree to work together to provide
Buyer  with as much  lead  time as  appropriate  for the  scheduling  of the T-4
drilling rig.

            ARTICLE IV -- THE SELLER'S REPRESENTATIONS AND WARRANTIES

            4.1 Each Seller  represents and warrants to Buyer and its successors
and assigns that as of the Execution Date and as of the Closing Date:

            4.2 Organization. Each Seller is duly organized and validly existing
under  the  laws of the  State of its  formation,  and  each  Seller  is in good
standing and qualified to do business in each jurisdiction  where it is required
for the conduct of Seller's business.

            4.3 Authority.  Each Seller has all requisite power and authority to
carry on its business as presently  conducted,  to enter into this  Agreement to
sell the Assets on the terms  described  in this  Agreement,  and to perform its
obligations  under this  Agreement.  The  execution  of this  Agreement  and the
consummation  of the  transaction  contemplated  by this  Agreement (i) has been
approved by the  shareholders and board of directors of the each Seller and such
other corporate  requirements to which each Seller is subject, and (ii) will not
violate,  nor be in conflict with, any provisions of its governing  documents or
any material agreement or instrument to which each Seller is a party or by which
each  Seller or any of the  Assets is bound,  or any  judgment,  decree,  order,
statute, rule or regulation applicable to each Seller or any of the Assets.

            4.4 Binding  Obligation.  This  Agreement has been duly executed and
delivered  on behalf of each Seller in  accordance  with the  provisions  of the
governing  documents.  All documents and  instruments  required  hereunder to be
executed  and  delivered to Buyer shall have been duly  executed and  delivered.
This Agreement does, and such documents and instruments will, to the extent they
are binding on Buyer,  constitute legal,  binding  obligations of each Seller in
accordance with their terms.

            4.5 No  Breach  of  Statute,  Decree  or  Contract.  The  execution,
delivery and  performance of this Agreement by each Seller does not and will not
breach any Legal Requirement, will not at the Closing conflict with or result in
a breach of or  default  under any  agreement  or any order,  writ,  injunction,
decree,  contract,  agreement or instrument to which any Seller is a party or by
which  the  Assets  are or may be bound,  will not  result  in the  creation  or
imposition  of any lien,  charge or  encumbrance  of any nature  upon any of the
Assets,  and will not give to others any  interest or rights in, or with respect
to any of the Assets, except to the extent of Permitted Encumbrances .
<PAGE>

            4.6 No Litigation or Adverse Events. Except as set forth in Schedule
4.6, to the best of each Seller's  knowledge there is no suit,  claim or action,
or legal,  administrative,  arbitration  or other  proceeding,  or  governmental
investigation, pending or, to each Seller's knowledge, threatened, by or against
any Seller or the Assets,  and no event or condition of any character exists, to
the Seller's  knowledge,  pertaining to any Seller or Assets, that could prevent
the  consummation  of the  transactions  contemplated by this Agreement or which
might  result in a  material  loss of any  portion  of the  Assets,  a  material
diminution in the value of any of the Assets or a material interference with the
use and enjoyment of any of the Assets.

            4.7  Taxes.  Except  as  set  forth  on  Schedule  4.7,  all  Taxes,
assessments, excises and other levies which, if not paid, could constitute liens
or charges  attributable  to the Assets except for Taxes being contested in good
faith and by appropriate proceedings have been paid in the ordinary course. Each
Seller  remains  responsible  for Taxes due and owing for  periods  prior to the
Effective Time.

            4.8  Accuracy  of  Documents.  All copies of Oil and Gas  Contracts,
Permits,  and other  documents,  provided by each Seller in connection  with the
transactions  contemplated  hereby,  are complete and accurate and have not been
amended  or  modified.   Each  Seller  has  provided   Buyer,   its  agents  and
representatives with access to all documents which Buyer requested.

            4.9 Title.  Each Seller has good and marketable  title to all of the
Assets  to be  conveyed  to  Buyer  by it at  Closing,  free  and  clear  of all
Encumbrances  except for the Existing  Burdens.  The Assignments  will convey to
Buyer,  subject to Existing  Burdens,  each Seller's title to the Assets without
reservation.  Other than the Existing  Burdens,  each Seller has not created any
additional liens, claims or Encumbrances affecting the Assets from and after the
Closing Date.  Seller shall for each lease held by production  provide a Special
Warranty of title to the Assets to Buyer by,  through and under Seller,  but not
otherwise,  with full power of substitution and subrogation.  For each Lease not
held by  production,  each Seller shall convey such lease to Buyer by Quit Claim
Assignment.  Seller  shall  provide  warranty  of title as to the real  property
conveyed to Buyer by General Warranty Deed.

                  4.9.1  Equipment.  EXCEPT FOR THE SPECIAL  WARRANTIES OF TITLE
GIVEN BY SELLER IN THE  ASSIGNMENTS,  SELLER  DISCLAIMS ANY  WARRANTIES  EXPRESS
AND/OR IMPLIED,  INCLUDING WITHOUT  LIMITATION ANY WARRANTIES OF MERCHANTABILITY
OR FITNESS FOR A PARTICULAR  PURPOSE  (INCLUDING  WARRANTIES WITH RESPECT TO THE
PRESENCE OF ENVIRONMENTAL CONDITIONS,  EXCEPT AS SET FORTH IN PARAGRAPH 4.12, OR
NATURALLY OCCURRING  RADIOACTIVE  MATERIAL AFFECTING THE ASSETS) OR ANY PROPERTY
REAL, PERSONAL OR MIXED OR EQUIPMENT  (INCLUDING PIPELINE EQUIPMENT) CONVEYED TO
AND ACQUIRED BY BUYER,  WITH ALL SUCH REAL AND PERSONAL  PROPERTY AND  EQUIPMENT
BEING TRANSFERRED,  ASSIGNED, SOLD, PURCHASED, ACCEPTED AND ACQUIRED "AS IS" AND
"WHERE  IS"  WITHOUT   WARRANTY  OF  FITNESS   FOR  A   PARTICULAR   PURPOSE  OR
MERCHANTABILITY.
<PAGE>

            4.10 Status of Leases.

                  4.10.1 Payments. To the best of each Seller's knowledge, after
reasonable  inquiry,  since Seller's  acquisition of the Assets, all Oil and Gas
Properties  are  in  full  force  and  effect  with  all  Royalties,  Overriding
Royalties,  rentals, shut-in royalties and other such payments due in respect to
the Oil and Gas  Properties  having been  properly and timely paid (except where
Royalty payments have been legally suspended to Royalty owners whose whereabouts
are unknown or who have title defects). Seller remains responsible for its share
of any  payments  due to the  owner  of an Oil  and  Gas  Property  that  may be
determined to be due for periods prior to the Closing Date.

                  4.10.2  Each  Seller  remains  responsible  and liable for any
payments that may be determined to be due for periods prior to the Closing Date,
to include  royalties for periods due on hydrocarbons  produced,  saved and sold
prior to the Closing  Date even though the proceeds of which are not received by
the Seller until after the Closing Date.

                  4.10.3 Working  Interests.  Seller's Working  Interests in the
Oil and Gas Properties are represented on Schedule 1. 44.

                  4.10.4 Net Revenue  Interests.  Seller's Net Revenue Interests
in the Oil and Gas Properties are represented on Schedule 1. 44.

                  4.10.5  Overriding   Royalty.   Seller's   Overriding  Royalty
Interests binding the Assets are set forth on Schedule 1. 44.

                  4.10.6  Compliance  with  Laws.  Seller,  as owner,  operator,
driller  and a  non-operator,  has,  to the  extent  required,  complied  in all
material  respects  with  all-applicable  laws,  regulations  and  orders of all
governmental agencies having jurisdiction over the Assets and the conduct of its
business.

            4.11 Necessary  Action.  Each Seller shall take or cause to be taken
all such  actions,  as would a prudent  businessman  under  the same or  similar
circumstances,  as may  be  necessary  and  advisable  to  consummate  and  make
effective the sale of the Assets  contemplated  by this  Agreement and to assure
that the Seller will not be under any material  corporate,  legal or contractual
restriction  that  would  prohibit  or delay  the  timely  consummation  of such
transactions;  provided, however, that Seller shall not be required to file suit
or assume any additional liabilities in performing its obligations.

            4.12 No Default.  Each Seller is not in default  under,  and has not
received  a notice of  default  or  termination  (to  include  a  self-executing
termination clause under any instrument to which Seller is a party) with respect
to  any  Asset  or the  title  of  the  Seller  thereto.  Except  for  Permitted
Encumbrances, and the Encumbrances set forth in Schedule 1.8 hereto all of which
shall be paid in full at or prior to the Closing,  no condition exists that with
notice or lapse of time or both would  constitute a default  under any mortgage,
indenture,  loan credit  agreement or other  agreement or instrument  evidencing
indebtedness for borrowed money, or create a lien,  charge or other  Encumbrance
on any of the Assets. Seller has not received any notice of default with respect
to,  any  order,  writ,  injunction  or  decree  of  any  court,  commission  or
administrative agency in connection with the ownership, development or operation
of the Assets, or any part thereof,  which would materially adversely affect the
value of the Assets.  All of the proceeds from the sale of Production  are being
properly and timely paid to the Seller by the  purchasers of production  without
suspension or indemnity other than standard division order indemnity.
<PAGE>

            4.13  Environmental  Claims.  Except  as set forth on  Schedule  1.8
hereto, to the best of Seller's knowledge, after reasonable inquiry, there is no
Environmental  Condition  in, on or under any of the  Assets  which has not been
disclosed to Buyer prior to the Effective Date. Each Seller has not received and
has no knowledge of any notice of or any threat of any claim, suit,  proceeding,
inquiry,  investigation,  or judicial or administrative action arising out of or
based upon any Environmental Condition or Environmental Law, pertaining directly
or indirectly, to any of the Assets.

            4.14. Existing Burdens. Seller represents that the Lease Burdens and
other Existing Burdens on the Wells do not reduce the Net Revenue Interest below
the percentages set forth on Schedule 1.44.  Seller does warrant the represented
Net Revenue  Interest  against all claims  arising by, through and under Seller,
but not otherwise.

            4.15 Permits.  All permits necessary for the operation of the Assets
are in full force and effect.

            4.16 Absence of Changes.

                  4.16.1  Since  January  31,  2006,  there has not been (a) any
material reduction in the rate of production of Hydrocarbons from any of the Oil
and Gas Properties other than changes (i) in the ordinary course of operation to
include, by way of example and not limitation,  weather related curtailments and
interruptions and pipeline or end user curtailments and interruptions  (ii) that
result from depletion in the ordinary  course of operation and (iii) that result
from  variances  in markets for  Production,  and except as disclosed to Buyer's
representatives  and agents and examined in the Buyer's field examination of the
Assets,   none  of  the  Oil  and  Gas  Properties  has  suffered  any  material
destruction,  damage or loss, or (b) any material casualty loss,  whether or not
covered by insurance.  Seller  represents  and warrants from the Effective  Date
through the Closing Date, Seller has Owned and caused the Oil and Gas Properties
to be operated in a manner  consistent with its historical  practices and in the
ordinary and regular  course of business of being a  non-operating  owner of the
Oil and Gas Properties.

                  4.16.2 Since January 31, 2006, there has not been any material
reduction in the operations,  revenues or contracts of drilling,  well servicing
and commercial saltwater disposal facilities.

                  4.16.3 Since January 31, 2006, there has not been any material
reduction in the hydrocarbons transported by the Gathering System.
<PAGE>

            4.17  Each  Seller  is not a party  to any  union  contract.  All of
Seller's  employees  are  "employees  at will"  and have no  contracts  or other
agreements with Seller that would obligate  Buyer, in any capacity,  to fund any
severance  package,  401(k),  pension  or other  fund on behalf of the  Seller's
employees.

                  4.17.1  Each  Seller has made and is current on all  workmen's
compensation and unemployment  compensation  payments  required and/or levied by
any  governing  body in the states,  counties or local  ordinances in which each
Seller conducts its business.

            4.18  There are no  imbalances  under any gas  balancing  agreements
affecting the Assets and Buyer shall not be obligated to deliver any oil and gas
produced from the leases to any party by virtue of any prepayment made under any
production sales contract or other contract or similar agreement.

            4.19 Each Seller has not  received  any amounts for the sale of oil,
gas, or other  hydrocarbons in excess of the amounts  permitted by laws,  rules,
and regulations of the United States government or any state agency.

            4.20 Each Seller shall  indemnify  and hold Buyer  harmless from any
claims and demands from all brokers or finders employed or retained by Seller.

            4.21  There  are  no  bankruptcy,  reorganization,  or  receivership
proceedings  pending,  being  contemplated  by, or, to the  knowledge of Seller,
threatened against any Seller.

            4.22 Each  Seller has or will have prior to  Closing,  obtained  all
requisite  third party  consents,  if same are  required,  in order to transfer,
convey and assign the Assets to Buyer.

            4.23 Each Seller has  maintained in effect  through the Closing Date
all policies of  insurance  covering its  activities  and the Assets,  a list of
which is set forth on Schedule 4.23 hereto.

            4.24 Each Seller  acknowledges that Buyer will pay WE Energy,  LLC a
finder's fee with respect to this  transaction to which each Seller has no claim
or interest and for which Seller shall have no liability.

            4.25 Each Seller  represents  and Warrants that the listing of NOV's
as set forth on Schedule 1. 25 consists of all of the open NOV's to which Seller
is subject or of which it has notice or which are  pending.  Seller is not aware
of any  inspection  by any  governmental  official  resulting  in  finding  of a
violation of any  applicable  law or regulation in the conduct of its activities
except as shown on Exhibit 1. 25.

             ARTICLE V -- THE BUYER'S REPRESENTATIONS AND WARRANTIES

            5.1 The  Buyer  represents  and  warrants  to each  Seller as of the
Execution Date and the Closing Date as follows:

                  5.1.1  Existence.  The  Buyer  is a  company  duly  organized,
validly  existing,  and in good  standing  under  the  laws of the  state of its
formation,  and is in  good  standing  and  qualified  to do  business  in  each
jurisdiction where it is required for the conduct of Buyer's business. The Buyer
has duly authorized the execution, delivery and performance of this Agreement by
all  necessary  action,  and the  same is a  binding  obligation  of the  Buyer,
enforceable in accordance with its terms.
<PAGE>

            5.2 No Breach of Statute or Contract.  The  execution,  delivery and
performance  of this  Agreement will not breach any statute or regulation of any
governmental authority, and will not at the Closing conflict with or result in a
breach of or default  under any of the terms,  conditions,  or provisions of the
Buyer's  Certificate of Organization  or any order,  writ,  injunction,  decree,
agreement or instrument to which the Buyer is a party or by which it is bound.

            5.3  Sophisticated  Buyer.  Buyer represents and warrants that it is
experienced and  sophisticated in the oil and gas industry,  that it is familiar
with the Assets,  operation of the Assets and other Oil and Gas Properties,  and
is making this acquisition based upon its own due diligence and knowledge of the
Assets without reliance on any  representation  or warranty of Seller other than
those expressly set forth in this Agreement.

            5.4  Buyer  and/or  its  representatives  and  agents  have  had the
opportunity to examine and have conducted field examination of the Assets.

            5.5 Buyer shall be exclusively  liable for the payment of a finder's
fee to WE Energy, LLC and Seller shall bear no responsibility therefore.

            5.6 Public  Company;  Regulatory  Requirements.  Buyer is a publicly
traded company,  regulated by State and Federal securities laws and regulations.
Buyer has complied with all state and federal  securities  laws and  regulations
applicable  to Buyer by virtue of entering  this  Agreement,  including  but not
limited to all public notice and reporting requirements.

                             ARTICLE VI -- COVENANTS

            6.1  Retention  of  Good  Faith  Deposit.  In  the  event  that  the
transaction  contemplated  by this Agreement  fails to close through no fault of
the  Seller,  the  Seller may retain  all  deposits  paid to Seller.  Should the
transaction fail to close as a result of actions of the Seller such that Buyer's
conditions  to  Closing  under  Article  VII  are not  met,  then  Seller  shall
immediately return $25,000.00 to Buyer in immediately available funds.

            6.2 Post Closing  Cooperation.  Each of the parties hereto agrees to
use all reasonable  efforts to take promptly,  or cause to be taken, all actions
and to do  promptly,  or to cause to be done,  all things  necessary,  proper or
advisable under applicable laws and regulations to consummate and make effective
the  transactions  contemplated  by this  Agreement,  including  using  its best
efforts to obtain all  necessary  waivers,  consents and approvals and effecting
all necessary  registrations and filings.  In case at any time after the Closing
Date any further  action is  reasonably  necessary or desirable to carry out the
purpose of this Agreement,  the proper  officers  and/or  directors of Buyer and
Seller shall take such necessary action.

            6.3 Access and Information.  Seller and Buyer shall afford the other
and their  respective  representatives  such access during normal business hours
throughout  the period  prior to the  Closing to such  information  as the other
party shall  reasonably  request.  Subject to the  requirements  of law, each of
Seller  and Buyer  shall  hold in  confidence  all such  non-public  information
regarding the other until such time as such  information  is otherwise  publicly
available.
<PAGE>

            6.4 Expenses.  Except as otherwise agreed in writing,  all costs and
expenses  incurred in connection  with this Agreement shall be paid by the party
incurring such expenses.

            6.5 Certain Filings, Consents. Seller and Buyer shall cooperate with
one another (i) in promptly  determining  whether any filings are required to be
made or any consents,  approvals,  permits or authorizations  are required to be
obtained under any federal,  state or foreign law or regulation or any consents,
approvals or waivers are required to be obtained from parties to loan agreements
or other contracts  material to Seller's or Buyer's  business in connection with
the consummation of the transactions contemplated by this Agreement, and (ii) in
promptly making any such filings,  furnishing information required in connection
therewith   and   seeking   timely  to  obtain  any  such   consents,   permits,
authorizations, approvals or waivers.

            6.6  Operations.  At or before  Closing,  Seller shall  execute,  as
necessary,  change of operator  documentation  for filing  with the  appropriate
agencies  in Ohio so that Buyer will be the  designated  operator of the Oil and
Gas Properties operated by Seller prior to Closing and all other Assets owned by
Buyer after the Closing. At or before Closing,  Buyer shall obtain required bond
necessary for transfer of ownership and release of Seller as operator of the Oil
and Gas properties being transferred as of the Closing Date.

            6.7 Post  Closing  Operations.  Commencing  as of the Closing  Date,
Buyer shall assume the position of operator of the Assets previously operated by
Seller.  Seller  agrees to handle  all  matters as  operator  of the Oil and Gas
Properties  arising prior to the Closing Date as would a prudent  operator under
the same or similar circumstances.

            6.8  Suspended  Revenues.  At Closing,  Escrow Agent shall retain an
amount to cover all suspended revenues  attributable to an Asset conveyed to the
Buyer which are  subject to any lease  burdens or lease  operators'  expenses in
immediately  available  Federal funds.  Suspended  revenues  attributable to the
Excluded  Assets or any  Asset not  conveyed  to the Buyer at  Closing  shall be
released to Seller. All other suspended revenue escrow amounts shall be paid and
released by agreement of the parties within ninety (90) days of Closing.

            6.9 Insurance. From and after the Closing Date, upon consummation of
the transaction  contemplated hereby, Buyer shall be entitled to the proceeds of
any  insurance  claim filed by Seller  prior to the Closing Date and relating to
the Assets post Effective Date.

            6.10 Post Closing Cooperation.  Each of the parties hereto agrees to
reasonably  cooperate,  one with the other, to effectuate the purpose and intent
of this Agreement.

            6.11 Post Closing  Revenues.  Each party  hereto  agrees to promptly
surrender to the other any revenues  attributable  to an Asset  received by them
and which  belongs to the  other.  To the extent  that Buyer  receives  revenues
attributable to Seller's  ownership of the Assets from which payment of royalty,
overriding  royalty or other Lease  Burdens must be paid,  Buyer will  surrender
such revenues to Seller net of such Lease Burdens and, on behalf of Seller,  pay
such Lease Burdens.
<PAGE>

            6.12 Pre-Closing Inspection.  Prior to the Closing, each Seller will
afford and assist Buyer, its agents and representatives in all phases of Buyer's
pre-Closing  inspection of all of the Assets, to include,  by way of example and
not  limitation,  examination of all  accounting  records,  legal records,  land
records, engineering and production records,  environmental records and reports,
an environmental inspection of the Oil and Gas Properties and saltwater disposal
sites, tanks, tank batteries, pipelines and other Assets.

          ARTICLE VII -- CONDITIONS TO THE BUYER'S OBLIGATIONS TO CLOSE

            7.1  The  Buyer's  obligation  to  close  shall  be  subject  to the
satisfaction  of the  following  conditions  prior to or at the Closing,  unless
waived by the Buyer.

            7.2 Compliance With Agreement.  Each Seller shall have performed and
complied in all respects with all its obligations under this Agreement which are
to be performed or complied with by it prior to or at the Closing.

            7.3 No Adverse  Change.  Neither the Assets nor the  business of the
Seller shall have been adversely affected in any material way, subsequent to the
execution  hereof,  and there  shall have been,  in Buyer's  sole and  exclusive
opinion, no substantial uninsured or underinsured claim of personal injury or of
damage to the Assets.

            7.4  Representation   and  Warranties  True  at  Closing.   Seller's
representation  and warranties  contained in this  Agreement  shall be deemed to
have been made on the  Execution  Date and  again at and as of the  Closing  and
shall then be true and correct in all material respects. At Closing, Buyer shall
be presented with a certificate of the President or other appropriate officer of
each Seller to this effect.

            7.5 Litigation.  No litigation or other  proceeding  shall have been
commenced or threatened against the Buyer or the Seller, which in the reasonable
opinion of the Buyer would materially and adversely affect its ownership, or the
value, of the Assets.

            7.6  Accounting.  Buyer  shall  have  received  from  Seller:  (i) a
complete  accounting of all funds  attributable to the Assets and paid to Seller
at the Closing , to include, by way of example and not limitation those funds to
be transferred in accordance  with  Paragraphs  3.3.4,  6.8 6.11; (ii) all joint
interest billing subsequent to the Closing Date; and (iii) an accounting for and
a transfer of all pre-paid  drilling  contracts  using or  employing  the Assets
which work is to take place on or after the Closing Date.

            7.7  Opinion of  Counsel.  Buyer  shall have  received an opinion of
Seller's  counsel  in form and  substance  satisfactory  to  Buyer,  in form and
substance identical to that attached hereto as Exhibit D.
<PAGE>

            7.8  Legality.  The Closing shall not violate any order or decree of
any court or governmental  body of competent  jurisdiction and no suit,  action,
proceeding or investigation, shall have been brought or threatened by any person
which  questions the validity or legality of this Agreement or the  transactions
contemplated hereby.

            7.9 Corporate  Certificate.  Seller shall have provided Buyer with a
copy  of a  certificate  of the  Secretary  of the  Seller  attesting  as to the
officers of the Seller, the Resolutions of the Board of Directors  approving the
transaction  contemplated  hereby and the minutes of the special  meeting of the
shareholders of the Seller approving the transaction.

            7.10 Delivery of Closing  Certificates.  Seller shall have delivered
to the Buyer a certificate  dated as of the Closing Date to the effect set forth
in Paragraphs 7.1 to 7.8 hereof.

            7.11 NOV's.  The NOV's  listed on  Schedule  1.24 are the only NOV's
received  by any Seller  and of which the  Seller  has notice as of the  Closing
Date. Each of the NOV's is capable of being  corrected  within sixty days of the
Execution  Date and will not prevent the transfer of  operations to the Buyer on
the Closing Date.

            7.12 Waiver of  Preferential  Right to  Purchase.  Seller shall have
provided  Buyer with any notice of sale and/or waiver of  preferential  right to
purchase as may be required under an Applicable Operating Agreement.

            7.13 Satisfaction of Encumbrances.  Except as specifically permitted
by the Buyer in writing to be satisfied by the Escrow  Agent post  Closing,  all
Encumbrances  of Seller  shall have been  satisfied  at or prior to Closing with
appropriate releases and satisfactions presented to Buyer at Closing.

            7.14 Filings. All filings,  whether Federal or state, to include any
Federal  and/or  state  filings  with  the  Internal  Revenue  Service  and  the
appropriate  agencies of the State of Ohio,  have been timely made and there are
no outstanding objections or administrative filings remaining for the receipt of
all necessary approvals to proceed forward with this transaction.

            7.15  Sellers  shall  have  delivered  executed  change of  operator
documentation  for filing with the appropriate  agency in Ohio so that the Buyer
will be designated as the Operator of the Oil and Gas  Properties  effective the
Closing Date.

         ARTICLE VIII -- CONDITIONS TO THE SELLER'S OBLIGATION TO CLOSE

            8.1  The  Seller'  obligation  to  close  shall  be  subject  to the
satisfaction  of the  following  conditions  prior to or at the Closing,  unless
waived by the Seller:

            8.2 Compliance  With  Agreement.  The Buyer shall have performed and
complied in all material  respects with all its obligations under this Agreement
which are to be performed or complied with by it prior to or at the Closing.

            8.3 Litigation.  No litigation or other  proceeding  shall have been
commenced or threatened against the Seller or the Buyer, which in the reasonable
opinion of the Seller would  materially and adversely  affect its ownership,  or
the value, of the Assets.
<PAGE>

            8.4   Representation   and  Warranties  True  at  Closing.   Buyer's
representation  and warranties  contained in this  Agreement  shall be deemed to
have been made as of the  Effective  Date and again at and as of the Closing and
shall then be true and correct in all  material  respects.  At  Closing,  Seller
shall be presented with a certificate of the President of Buyer to this effect.

            8.5  Legality.  The Closing shall not violate any order or decree of
any court or governmental  body of competent  jurisdiction and no suit,  action,
proceeding or investigation, shall have been brought or threatened by any person
which  questions the validity or legality of this Agreement or the  transactions
contemplated hereby.

            8.6 Delivery of Closing Certificates.  Buyer shall have delivered to
the Seller a certificate dated as of the Closing Date to the effect set forth in
Paragraphs 8.1 to 8.4 hereof.

            8.7 Opinion of  Counsel.  Seller  shall have  received an opinion of
Buyer's  counsel  in form and  substance  satisfactory  to  Seller,  in form and
substance identical to that attached hereto as Exhibit E.

            8.8 Payment of Purchase  Price.  Buyer shall have paid the  Adjusted
Purchase Price pursuant to Article III.

            8.9  Operations.  Buyer shall have  presented to Seller proof of its
ability to post the  requisite  bonds and the  documentation  required for it to
take over as Operator of Seller's Wells.

            8.10 Title.

                  8.10.1 Pre-Closing  Examination.  Prior to Closing Date, Buyer
shall have conducted an examination of the Assets, as would a reasonably prudent
purchaser under the same and similar  conditions to include physical  inspection
of the  surface  estate  of the Oil and Gas  Properties,  Equipment,  Wells  and
Seller's  books and  records.  Buyer will conduct  such other  examinations  and
inspections as to title to the Assets as Buyer deems necessary.

                ARTICLE IX -- CLOSING; TERMINATION; POST CLOSING

            9.1 Closing.

                  9.1.1 Place.  The Closing shall take place at such location as
mutually agreed upon by the Buyer and the Seller.

                  9.1.2  Termination.  At any  time  before  the  Closing,  this
Agreement  may be  terminated:  (i) by mutual  consent of the  parties;  (ii) by
either the Buyer or the  Seller if there has been a material  misrepresentation,
material breach of warranty or material  breach of covenant by the other;  (iii)
by the Buyer if any condition set forth in Article VII shall not be satisfied at
the Closing;  or (iv) by the Seller if any  condition  set forth in Article VIII
shall not be satisfied at the Closing.
<PAGE>

                  9.1.3  Transfer  of  Assets.   Seller  will,  subject  to  the
provisions  of this  Agreement:  (i)  execute  and  deliver to Buyer one or more
Assignments  satisfying the  requirements of Paragraph 2.5; and (ii) transfer to
Buyer by wire transfer all suspended  funds in accordance with paragraph 7.6 and
6.8.

            9.2 Transfer of Books and  Records.  Not later than thirty (30) days
after  Closing,  Seller will  transfer,  convey and  deliver  unto Buyer (to the
extent not theretofore  delivered),  at Buyer's sole cost and expense, the Books
and Records,  subject to any contractual restrictions with third parties. To the
best of Seller's  knowledge  and belief,  Seller is not a party to any agreement
and none of the Books  and  Records  is  subject  to any  contract  which  would
restrict or otherwise  prevent the transfer of the Books and Records in Seller's
possession to Buyer.

            9.3. Taxes. All Taxes shall be pro-rated between Seller and Buyer as
of the  Closing  Date.  Seller  shall be  charged  for all such  Taxes  based on
ownership of the Assets or  Production  actually sold prior to the Closing Date.
Buyer shall be charged for all such Taxes  based on  ownership  of the Assets or
Production from the Assets  actually sold commencing on the Closing Date.  Buyer
shall  pay all  documentary,  filing,  conveyance  and  recording  fees  for the
Assignments.

            9.4  Purchase  Price  Allocation.  Seller and Buyer  recognize  that
reporting  requirements  of  ss.1060(b) of the Internal  Revenue  Code,  and the
regulations promulgated thereunder, may apply to the transaction contemplated by
this  Agreement.  If so, Seller and Buyer agree that the Purchase Price shall be
allocated among the assets as mutually agreed by Seller and Buyer to comply with
and satisfy the requirements of ss.1060(b) and applicable regulation. Seller and
Buyer agree that no Asset shall be  allocated a negative  value.  The  allocated
value of the Assets is set forth on Schedule 9.4.

            9.5 Payment.  Buyer shall pay to the Escrow Agent,  on behalf of the
Seller, the Adjusted Purchase Price, in immediately available funds, pursuant to
the  terms  and  conditions  hereof  adjusted,  if at all,  and  the  Additional
Consideration pursuant to Paragraph 3.3.

            9.6  Thereafter,  the  Escrow  Agent  shall  pay to the  extent  not
satisfied  pre-closing  the  Encumbrances  set forth in Schedule 1.8 hereto,  in
their  entirety.  After the  satisfaction  of all:  (i)  Encumbrances;  (ii) the
satisfaction  of all of  Seller's  NOV's  existing as of the  Closing  Date,  to
include,  by way of example  and not  limitation,  those  NOV's  identified  ,on
Schedule  1.24 to the  extent  not  assumed  by Buyer;  (iii) any  suspended  or
delinquent  payments due under a Lease or any other Asset; and (iv) satisfaction
of any fees and costs due the Escrow  Agent,  the Escrow Agent shall  distribute
the net remaining  portion of the Adjusted  Purchase  Price plus the  Additional
Consideration  to  Seller  in  accordance  with  the  provisions  of the  Escrow
Agreement.  Upon the  complete  satisfaction  of the  Encumbrances  set forth in
Schedule  1.8 hereto and the NOV's as set forth in  Schedule  1.24  hereto,  the
security for said  obligations,  if any, shall be released to Seller unless such
security constitutes a portion of the Assets acquired by the Buyer hereunder and
in that case the security shall be released to the Buyer. All costs and expenses
of the Escrow Agent shall be the  obligation of the Seller with such costs being
satisfied out of the funds held by the Escrow Agent prior to distribution to the
Seller.
<PAGE>

                           ARTICLE X -- MISCELLANEOUS

            10.1  Notices.  Any  notice,  request  demand,  statement  or  other
communication  required or permitted  hereunder shall be in writing and shall be
deemed to have been duly given upon  receipt  by the  addressee  and may be hand
delivered, or sent by facsimile transmission (with the original delivered to the
addressee by the close of business the first  business day  following the day of
the facsimile  transmission),  certified  mail,  return receipt  requested or by
overnight  courier,  and shall be sent to or  delivered  to the  parties  at the
following addresses:

            If to Buyer:

            Daleco Resources Corporation
            120 North Church Street
            West Chester, Pennsylvania 19380
            Attention:  Gary J. Novinskie
            Fax No: 610-429-0818

            With copies to:

            Ehmann, Van Denbergh & Trainor, PC
            Two Penn Center Plaza, Suite 220
            1500 John F. Kennedy Boulevard
            Philadelphia, PA 19102
            Attention:  C. Warren Trainor, Esquire
            Fax No: 215-851-9820

            If to Escrow Agent:

            CRABBE, BROWN & JAMES, LLP
            500 South Front Street, Suite 1200
            Columbus, Ohio 43215
            Attention: Richard D. Wetzel, Jr., Esq.
            Fax No: (614) 229-4559
<PAGE>

            If to Seller:

            CENTURY ENERGY MANAGEMENT CO., INC.
            9 Riverside Drive
            Chester, West Virginia 26034
            Attention:  Patrick Arneault

            With copies to:

            CRABBE, BROWN & JAMES, LLP
            500 South Front Street, Suite 1200
            Columbus, Ohio 43215
            Attention: Richard D. Wetzel, Jr., Esq.
            Fax No: (614) 229-4559

            RUBEN & ARONSON, LLP
            4800 Montgomery Lane, Suite 150
            Bethesda, MD 20814
            Attention: Louis M. Aronson, Esq.
            Fax No.: (301) 951-9636

Or to such other  address as such party may  designate  by ten (10) days advance
written notice to the other party. The original of any Notice given by facsimile
transmission  shall be delivered to the  addressee by close of business the next
business day after the day of the facsimile transmission.

            10.2  Entire   Agreement.   This  Agreement   embodies  all  of  the
representations, warranties, understandings and agreements of the parties hereto
with  respect  to the  subject  matter  hereof,  and all  prior  understandings,
representations and warranties (whether oral or written),  to include the Letter
of Intent,  with respect to such matters are superseded.  This Agreement may not
be amended,  modified,  waived, discharged or terminated except by an instrument
in writing  signed by the party or an  executive  officer of a  corporate  party
against whom  enforcement  of the change,  waiver,  discharge or  termination is
sought.

            10.3  Severability.   The  invalidity  or  unenforceability  of  any
particular  provision of this  Agreement  shall not affect the other  provisions
hereof, and this Agreement shall be construed in all respects as if such invalid
or unenforceable provisions were omitted.

            10.4  Successors.  This  Agreement  shall be binding  upon and shall
inure to the benefit of the parties hereto and their  respective  successors and
assigns.

            10.5  Assignment.  This  Agreement  may not be assigned  without the
prior written consent of the other party.

            10.6  Confidentiality.  Each of the  parties  hereto  agrees  not to
publish  or other  wise  disclose  the  terms of this  Agreement  except  to its
directors, officers, employees,  accountants,  investors and members without the
express written consent of the other party, except as required by law.
<PAGE>

            10.7 Survival of  Warranties.  All  representations,  warranties and
covenants of the Seller and Buyer in this Agreement shall survive the Closing.

            10.8  Counterparts.  This  Agreement  may be executed in one or more
counterparts,  each of which shall be deemed an original, but all of which shall
constitute the same agreement.

            10.9  Neither  Party  Drafter.  The parties  hereto  agree that this
Agreement is the product of negotiation between the parties, that counsel during
its negotiations has represented each and that neither party shall be deemed the
drafter hereof.

            10.10  Governing  Law.  This  Agreement  shall  be  governed  by and
construed and enforced in accordance  with the laws of the State of Ohio without
giving effect to conflicts of laws provisions.

            10.11 Paragraph  Headings.  The paragraph headings in this Agreement
are for convenience of reference only and shall not be deemed to alter or affect
any provision hereof.

            10.12  Costs.  Each party agrees to bear 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  addressed
herein.

            10.13 Exhibits. The Exhibits and Schedules attached hereto, together
with all documents  incorporated by reference therein,  form an integral part of
this  Agreement  and  are  hereby  incorporated  into  this  Agreement  wherever
reference  is made to them to the same extent as if they were set out in full at
the point at which such  reference is made. Any Schedule  attached  hereto after
the Closing Date shall be deemed to have been a part of this Agreement as of the
Closing Date. Any such  "Post-Closing"  Schedule shall be initialed and dated by
each party hereto or, if the finding of the Mediation (as set forth in Paragraph
11.14 below), then the results of the Mediation may be attached hereto and shall
become a part hereof for all purposes.

            10.14 Dispute Resolution - The parties will attempt in good faith to
resolve any and all  controversies  of every kind and nature between the parties
to this Agreement  arising out of this Agreement (each a "Dispute")  promptly by
negotiations  between senior executives of the parties who have the authority to
resolve the Dispute. Within ten (10) days after the receipt of written notice of
the existence of a Dispute,  the  receiving  party shall submit to the other (or
others) a written  response.  The  notice  and  response  shall  included  (a) a
statement of each party's position and a list of documents or basis upon which a
party  believes  a dispute  exists  position,  and (b) the name and title of the
executive who will represent the party.  The executives shall meet at a mutually
acceptable  time and place within  twenty (20) days of the date of the disputing
party's  notice and  thereafter  as often as they deem  reasonably  necessary to
exchange relevant information and to attempt to resolve the dispute

            10.15 Sales and other  Transfer  Taxes.  Any and all sales and other
taxes  levied upon or imposed on the transfer of the Assets as  contemplated  by
this Agreement shall be an obligation of the Seller.
<PAGE>

            10.16 Public Notice.  Seller understands and acknowledges that Buyer
is a public entity and subject to the reporting  requirements  of the Securities
and  Exchange  Act of 1934,  as  amended  ("34  Act").  In  accordance  with the
provisions  of  the  Rules  and  Regulations  of  the  Securities  and  Exchange
Commission promulgated under the '34 Act, the Sarbanes-Oxley Act of 2002 and the
rules of the NASDAQ Exchange,  the exchange on which the Buyer's common stock is
traded,  Buyer must disclose the existence of this Agreement and file same as an
Exhibit  to its  quarterly  and  annual  filings  under the '34 Act. . The Buyer
acknowledges that its public filings are its sole responsibility .

            10.17 Recording Fees. Buyer will be responsible for all fees, stamps
or other expenses associated with the filing the Assignments.
<PAGE>

            IN WITNESS  WHEREOF,  the parties have executed this Agreement as of
the date and year first written above.

                                            SELLER:

Attest:                                     CENTURY ENERGY MANAGEMENT CO., INC.

/s/ Kristen S. Dietch                       By: /s/ Patrick J. Arneault
--------------------------------                --------------------------------
Kristin S. Dietch                               Patrick J. Arneault,
                                                Vice President

Attest:                                     NEWPORT TRANSMISSION, INC.

/s/ Kristen S. Dietch                       By: /s/ Patrick J. Arneault
--------------------------------                --------------------------------
Kristin S. Dietch                               Patrick J. Arneault,
                                                Vice President
<PAGE>

Attest:                                     BISCAYNE PETROLEUM CORP.

/s/ Kristen S. Dietch                       By: /s/ Patrick J. Arneault
--------------------------------                --------------------------------
Secretray Kristin S. Dietch                     Patrick J. Arneault
                                                Vice President

Attest:                                     RIVER RESOURCES, LLC

/s/ Kristen S. Dietch                       By: /s/ Patrick J. Arneault
--------------------------------                --------------------------------
Kristin S. Dietch                               Patrick J. Arneault
                                                President

Attest:                                     ROCKHOUND EXPLORATION &
                                            DEVELOPMENT, LLC

/s/ Kristen S. Dietch                       By: /s/ Patrick J. Arneault
--------------------------------                --------------------------------
Kristin S. Dietch                               Patrick J. Arneault
                                                President

Attest:                                     CENTURY WELL SERVICE, INC.

/s/ Kristen S. Dietch                       By: /s/ Patrick J. Arneault
--------------------------------                --------------------------------
Secretray Kristin S. Dietch                     Patrick J. Arneault
                                                Vice President
<PAGE>

[SEAL]

                                            BUYER

Attest:                                     DALECO RESOURCES CORPORATION

May 22, 2006                                By: /s/ Gary J. Novinskie
--------------------------------                --------------------------------
                                                Gary J. Novinskie
                                                President
/s/ Jody Spencer
--------------------------------
Secretary Jody Spencer

                                            ESCROW AGENT

                                            CRABBE, BROWN & JAMES, LLP

                                            By:
                                                --------------------------------
                                                Richard D. Wetzel Jr., Esq.
                                                A Member of the Firm
<PAGE>

                                    EXHIBITS

Exhibit A-1      Assignment and Bill of Sale with special Warranty
Exhibit A-2      Quit Claim Assignment
Exhibit A-3      Bill of Sale for Equipment and Personal Property
Exhibit A-4      Real Property Deed
Exhibit B        Escrow Agreement
Exhibit C        Registration Rights Agreement
Exhibit D        Opinion of Seller's Counsel
Exhibit E        Opinion of Buyer's Counsel
<PAGE>

                                    SCHEDULES

Schedule 1.8     Encumbrances

Schedule 1.11    Equipment

Schedule 1.13    Excluded Assets

Schedule 1.17    Gathering System

Schedule 1.18    Infrastructure

Schedule 1.19    Lease

Schedule 1.20    Lease Burdens

Schedule 1.25    NOV's

Schedule 1.29    Operating Agreements

Schedule 1.31    Outstanding Obligations

Schedule 1.33    Permits

Schedule 1.34    Permitted Encumbrances

Schedule 1.39    Real and Personal Property

Schedule 1.42    Surface Rights

Schedule 1.44    Wells, Working Interests, Overriding Royalty Interests, Oil and
                 Gas Properties; Net Revenue Interests

Schedule 4.6     Litigation

Schedule 4.7     Taxes

Schedule 4.23    Seller's Insurance Policies

Schedule 9.4     Property Value Allocation

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