Assets of Energy Company

Sale of assets of Energy Development Corporation which includes:

1. The sale is a combined sale of assets of EDC, Harris and SCOC. However, the transfer of Purchased Assets of EDC and Harris will be made at an initial closing soon after the sale is approved by the Bankruptcy Court, while the transfer of assets of SCOC will take place later.
2. The Acquired Assets will include substantially all of EDC’s assets, including all oil and gas assets and the name of EDC, and certain assets of Harris, including non-personal books and records selected by the Purchaser and any interest in the oil and gas assets. The Acquired Assets will be sold “as-is,” with no representations or warranties surviving closing.
3. The consideration for the sale and transfer of the EDC and Harris assets will consist of cash and stock of the Buyer. The cash component will consist of a $1.0 million, including $200,000 paid by the initial closing, inclusive of the Buyer’s Good Faith Deposit of $100,000, and an additional $800,000 to be paid from the first proceeds of any distribution received by Buyer or any affiliate of Buyer on account of claims against SCOC which have been acquired by Buyer or by any affiliate of Buyer, but in any event not later than the earlier of (x) the date which is five (5) Business Days after the date of final distribution on claims in the SCOC Case, or (y) one year from the Closing Date, as defined in the APA. The stock portion of the consideration will consist of 2,000,000 shares of Buyer’s Series A 7% Convertible Preferred Stock and 2,000,000 shares of Purchaser’s Series A Common Stock.
4. The sale is to be free and clear of all Encumbrances, other than Permitted Encumbrances, as defined in the Agreement.
5. The sale is subject to higher and better bids and to entry of an order approving the sale.
6. Specified assets are excluded from the sale, including but not limited to cash equivalents, claims between the estates and rights under the APA.
7. The APA provides for specified bidding procedures and bid protection provisions to be approved by the Court. The APA provides that subject to the approval of the Court, the Trustee may use part of the deposit to maintain operations pending the closing of the sale.
8. The APA provides that the closing of the sale shall be on a date which is 15 business days after entry of an order approving the sale, or such earlier date as agreed by the parties, subject to any applicable stay.
9. The Agreement contains other provisions, including provisions of the type normally contained in such agreements. The description contained herein is a summary only and is qualified in its entirety by the contents of the Agreement, which will control in the event of any conflict with this summary. All interested parties are urged to review the specific terms of the Agreement.