Transfer Agent Instructions

IRREVOCABLE
TRANSFER AGENT INSTRUCTIONS


July ___, 2002


STOCK TRANS INC. 44 W. LANCASTER AVENUE ARDMORE, PENNSYLVANIA 19003


ATTENTION: PAT THORNER


RE: DALECO RESOURCES CORPORATION


Ladies and Gentlemen:


Reference is made to that certain Securities Purchase Agreement (the "SECURITIES PURCHASE AGREEMENT"), dated as of July ___, 2002, by and between Daleco Resources Corporation, a Nevada corporation (the "COMPANY"), and the Buyers set forth on Schedule I attached thereto (the "BUYER"), pursuant to which the Company shall sell to the Buyer up to Three Hundred Thousand Dollars ($300,000) of the Company's convertible debentures, which shall be convertible into shares of the Company's common stock, par value $0.01 per share (the "COMMON STOCK"). The shares of Common Stock to be converted thereunder are referred to herein as, the "CONVERSION SHARES." This letter shall serve as our irrevocable authorization and direction to you (provided that you are the transfer agent of the Company at such time) to issue the Conversion Shares to the Buyer from time to time upon surrender to you of a properly completed and duly executed Conversion Notice, in the form attached hereto as EXHIBIT I, delivered on behalf of the Company by David Gonzalez, Esq.


Specifically, upon receipt by the Company or David Gonzalez, Esq. of a copy of a Conversion Notice, David Gonzalez, Esq., on behalf of the Company, shall as soon as practicable, but in no event later than one (1) Trading Day (as defined below) after receipt of such Conversion Notice, send, via facsimile, a Conversion Notice, which shall constitute an irrevocable instruction to you to process such Conversion Notice in accordance with the terms of these instructions. Upon your receipt of a copy of the executed Conversion Notice, you shall use your best efforts to, within three (3) trading days following the date of receipt of the Conversion Notice, (A) issue and surrender to a common carrier for overnight delivery to the address as specified in the Conversion Notice, a certificate, registered in the name of the Buyer or its designee, for the number of shares of Common Stock to which the Buyer shall be entitled as set forth in the Conversion Notice or (B) provided you are participating in The Depository Trust Company ("DTC") Fast Automated Securities Transfer Program, upon the request of the Buyer, credit such aggregate number of shares of Common Stock to which the Buyer shall be entitled to the Buyer's or its designee's balance account with DTC through its Deposit Withdrawal At Custodian ("DWAC") system provided the Buyer causes its bank or broker to initiate the DWAC transaction. ("TRADING DAY" shall mean any day on which the Nasdaq Market is open for customary trading.)


The Company hereby confirms to you and the Buyer that certificates representing the Conversion Shares shall not bear any legend restricting transfer of the Conversion Shares thereby and should not be subject to any stop-transfer restrictions and shall otherwise be freely transferable on the books and records of the Company provided that the Company counsel delivers (i) the Notice of Effectiveness set forth in EXHIBIT II attached hereto and (ii) an opinion of counsel in the form set forth in EXHIBIT III attached hereto, and that if the Conversion Shares are not registered for sale under the Securities Act of 1933, as amended, then the certificates for the Conversion Shares shall bear the following legend:


"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE
SECURITIES LAWS. THE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND
MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES
LAWS, OR AN OPINION OF COUNSEL, IN A FORM REASONABLY ACCEPTABLE TO THE
COMPANY, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR APPLICABLE
STATE SECURITIES LAWS OR UNLESS SOLD PURSUANT TO RULE 144 UNDER SAID
ACT."


The Company hereby confirms to you and the Buyer that no instructions other than as contemplated herein will be given to you by the Company with respect to the Conversion Shares. The Company hereby agrees that it shall not replace Stock Trans Inc. as the Company's transfer agent without the prior written consent of the Buyer.


Any attempt by you to resign as transfer agent hereunder shall not be effective until such time as either the Company provides to you written notice that a suitable replacement has agreed to serve as transfer agent and to be bound by the terms and conditions of these Transfer Agent Instructions, or the expiration of the forty-five (45) day period commencing on the date of your notice of intended termination to the Company. Notwithstanding the foregoing to the contrary should the Company breach its contract with StockTrans ("Breach"), StockTrans may resign after having given Buyer not less than five (5) business days written notice of such Breach and intent to resign ("Notice"). Should the Breach be cured on or before the close of business on the fifth (5th) day after the delivery of the Notice, StockTrans agrees that it will not resign without the giving of a new Notice of a Breach or continuing Breach.


The Company and Stock Trans Inc. acknowledge that the Buyer is relying on the representations and covenants made by the Company and Stock Trans Inc., hereunder and are a material inducement to the Buyer purchasing convertible debentures under the Securities Purchase Agreement. The Company and Stock Trans Inc., further acknowledge that without such representations and covenants of the Company and Stock Trans Inc., made hereunder, the Buyer would not enter into the Securities Purchase Agreement and purchase convertible debentures pursuant thereto.


Each party hereto specifically acknowledges and agrees that in the event of a breach or threatened breach by a party hereto of any provision hereof, the Buyer will be irreparably damaged and that damages at law would be an inadequate remedy if these Transfer Agent Instructions were not specifically enforced. Therefore, in the event of a breach or threatened breach by a party hereto, including, without limitation, the attempted termination of the agency relationship created by this instrument in a manner other than described in the


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fifth paragraph of this letter, the Buyer shall be entitled, in addition to a ...