ASSET PURCHASE AGREEMENT

Exhibit 2

 

ASSET PURCHASE AGREEMENT

 

by and among

 

DIVERSIFIED ENERGY COMPANY d/b/a HIGHLAND PROPANE COMPANY

 

(as “Seller”)

 

RGC RESOURCES, INC.

 

(as “Shareholder” of Seller)

 

and

 

INERGY PROPANE, LLC

 

(as “Buyer”)

 

(July 12, 2004)

TABLE OF CONTENTS

 

 

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ASSET PURCHASE AGREEMENT

 

THIS ASSET PURCHASE AGREEMENT is made and entered into this 12 ^th day of July, 2004, by and among DIVERSIFIED ENERGY COMPANY d/b/a HIGHLAND PROPANE COMPANY, a Virginia corporation (“Seller”), RGC RESOURCES, INC., a Virginia corporation, shareholder of Seller (the “Shareholder”), and INERGY PROPANE, LLC, a Delaware limited liability company (“Buyer”).

 

RECITALS

 

A. Seller desires to sell to Buyer, and Buyer desires to acquire from Seller, substantially all of the assets of Seller upon the terms and conditions hereinafter set forth.

 

B. Shareholder, being the holder of all of the issued and outstanding capital stock of Seller, desires that Seller sell to Buyer substantially all of the propane distribution and wholesale assets of Seller upon the terms and conditions hereinafter set forth.

 

AGREEMENT

 

In consideration of the above premises, the mutual agreements herein contained and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

 

ARTICLE 1. DEFINITIONS

 

In addition to terms defined elsewhere in this Agreement, the following terms shall have the meanings assigned to them herein, unless the context otherwise dictates, both for purposes of this Agreement and all Schedules and Exhibits hereto:

 

“Accounts Receivable” shall have the meaning set forth in Section 3.1(c).

 

“Agreement” or “this Agreement” shall mean this Asset Purchase Agreement, as amended from time to time by the parties hereto, together with all Schedules and Exhibits hereto.

 

“Assets” shall mean Seller’s right, title and interest in and to all of the assets and properties owned and used by Seller in connection with the Business, tangible and intangible, including, without limitation, the assets and properties described on Schedule 2.1 hereto, but in no event shall “Assets” include the Real Property and the other Excluded Assets.

 

“Assumed Contracts” shall mean the Contracts and Other Agreements set forth on Schedule 2.1B , Schedule 2.1D and Schedule 2.1E hereto.

 

“Assumed Liabilities” shall have the meaning set forth in Section 4.2(b) hereof.

 

“Benefit Plans” shall mean any and all pension, retirement, savings, disability, medical, dental, health, life (including any individual life insurance policy as to which Seller is the owner, beneficiary or both), death benefit, group insurance, profit sharing, deferred

compensation, stock options or other stock incentive, bonus incentive, vacation pay, sick pay, severance or termination pay, employment agreement, “cafeteria” or “flexible benefit” plan under Section 125 of the Code, or other employee or director benefit plan, trust, arrangement, contract, agreement, policy or commitment, whether formal or informal, written or oral, under which employees or former employees of Seller are entitled to participate by reason of their current or prior employment, or current or former directorship, with Seller, including, without limitation, any “employee benefit plan” as defined in Section 3(3) of ERISA, (i) to which Seller is a party or a sponsor or a fiduciary thereof or (ii) with respect to which Seller has made payments, contributions or commitments, or may otherwise have any liability.

 

“Business” shall mean the business of Seller with respect to the following: (i) purchasing, trading, marketing, distributing and selling propane gas on a retail or wholesale basis; and (ii) selling, servicing and installing parts, appliances and supplies related exclusively to the propane gas business on a retail or wholesale basis, and which is currently part of the business being acquired by Buyer pursuant to this Agreement at the Closing.

 

“Closing” shall mean the transfer by Seller to Buyer of the Assets and by Buyer to Seller of the consideration set forth herein and the consummation of the transactions contemplated by this Agreement, except as relating to the transfer of the Real Property as contemplated in Article 15 of this Agreement.

 

“Closing Date” shall be the time of the Closing established pursuant to Section 4.1 hereof.

 

“Code” shall mean the Internal Revenue Code of 1986, as amended.

 

“Contracts and Other Agreements” shall mean all of Seller’s contracts, agreements, leases, subleases, mortgages and licenses, to the extent related to the Business.

 

“Customer Deposits” shall have the meaning specified in Section 3.1(x) hereof.

 

“Damages” shall have the meaning set forth in Section 11.1 hereof.

 

“Documents and Other Papers” shall mean and include, to the extent owned by Seller and related to the Business, any document, agreement, instrument, certificate, notice, consent, affidavit, letter, telegram, telex, statement, file, computer disk, microfiche or other document in electronic format, schedule, exhibit or any other paper whatsoever.

 

“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended.

 

“Excluded Assets” shall mean the Real Property described on Schedule 2.1A hereof and the assets and properties described on Schedule 2.2 hereof.

 

“GAAP” shall mean generally accepted accounting principles consistently applied.

 

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“Hazardous Substances” shall have the meaning ascribed to that term in 42 U.S.C. §9601(14).

 

“IRS” shall mean the United States Internal Revenue Service.

 

“Knowledge” with respect to Seller means the actual knowledge, without further investigation, of any of those individuals listed on Schedule 1 hereto, and with respect to Buyer means the actual knowledge, without further investigation, of any of the officers of Buyer.

 

“Lien” shall mean any lien, pledge, claim, charge, security interest or encumbrance of any nature whatsoever.

 

“Material Contract” shall mean and involve any Contracts and Other Agreements, if it involves, relates to or affects the Business or the Assets or both and if any one or more of the following applies: (i) it involves, or may reasonably be expected to involve, the payment or receipt of Twenty-Five Thousand Dollars ($25,000) or more in the aggregate (whether in cash or in goods or services of an equivalent value) over its term, including renewal options, or during any one year, or (ii) it is a noncompete or similar agreement imposing restrictions on the conduct of the Business, or (iii) it burdens, benefits, or imposes liabilities upon, or with respect to, any of the Real Property.

 

“Noncompetition Agreement” shall have the meaning set forth in Section 3.3 hereof.

 

“Organizational Documents” of an entity shall mean, if a corporation, its articles of incorporation or certificate of incorporation, as the case may be, and Bylaws, and if a limited liability company, its certificate of formation and limited liability company agreement, and any other documents, agreements or instruments relating to the creation, formation, organization, governance or ownership of such entity.

 

“Permitted Encumbrances” shall have the meaning set forth in Section 6.10(a) hereof.

 

“Person” means a natural person, partnership, limited partnership, corporation, limited liability company, trust, government, government agency and any other legal entity.

 

“Purchase Price” shall have the meaning set forth in Section 3.1 hereof.

 

“Real Property” shall have the meaning set forth in Section 6.10(a) hereof.

 

“Release” shall have the meaning ascribed to that term in 42 U.S.C. §9601(22).

 

“Retained Liabilities” shall have the meaning set forth in Article 5 hereof.

 

“Title Commitment” shall have the meaning set forth in Section 15.4 hereof.

 

“Title Company” shall mean Lawyers Title Insurance Corporation.

 

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“Title Policy” shall have the meaning set forth in Section 15.4 hereof.

 

ARTICLE 2. PURCHASE AND SALE OF ASSETS

 

2.1 Assets . Subject to the terms and conditions hereof and subject to the representations and warranties made herein, at the Closing Seller shall validly sell, assign, transfer, grant, bargain, deliver and convey the Assets, including, without limitation, the assets and properties described on Schedule 2.1 hereto, to Buyer.

 

2.2 Excluded Assets . Described on Schedule 2.2 hereto are those assets and properties owned or used by Seller that are specifically not being purchased by or transferred to Buyer and are excluded from the Assets.

 

ARTICLE 3. PURCHASE PRICE; NONCOMPETITION AGREEMENT

 

3.1 Aggregate Purchase Price . The aggregate purchase price (the “Purchase Price”) for the Assets is Twenty-Seven Million Four Hundred Thousand Dollars ($27,400,000), plus an amount equal to the sum of the following:

 

(a) The value of the propane gas inventories of the Business located in Seller’s bulk storage tanks and trucks on the Closing Date, with the amount of such inventory to be based upon a reading from the sight gauge located on such bulk storage tanks and trucks taken jointly by a representative of Buyer and a representative of Seller on the Closing Date, and the value of such inventory to be based upon the lesser of (i) the historical cost of such inventory computed on the same basis as reflected on Seller’s books and records, and (ii) Exxon’s posted price at Apex plus eight cents ($0.08) on the Closing Date;

 

(b) The value of the parts, supplies and appliances inventories of the Business on the Closing Date that are usable and saleable in the ordinary course of the Business of Seller, with the amount of such inventory to be based upon a physical inventory taken jointly by a representative of Buyer and a representative of Seller on or as soon after the Closing Date as practicable, but in any event within fifteen (15) days after the Closing Date, and the value of such inventory to be based upon the actual cost as reflected on Seller’s books and records; and

 

(c) The amount of the billed and billable accounts receivable arising from the Business of Seller and owned by Seller as of the Closing Date, reduced according to the discount formula set forth on Schedule 3.1 hereto (the “Accounts Receivable”);

 

minus an amount equal to the sum of the following:

 

(x) An amount equal to the sum of the customer deposits given to Seller and net customer budget payment account credits (after taking into account customer budget payment account debits) of the Business held by Seller on the Closing Date (the “Customer Deposits”) as determined by Buyer and Seller from the books and records of Seller on or as soon after the Closing Date as practicable, but in any event within thirty-five (35) days after the Closing Date; and

 

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(y) An amount equal to the property and ad valorem taxes (including personal property and inventory) with respect to the Assets that are required to be paid by Buyer subsequent to the Closing Date, which taxes relate, in whole or in part, to periods prior to the Closing Date. In the event the amount of any property or ad valorem tax cannot be ascertained as of thirty-five (35) days after the Closing Date, proration shall be made on the basis of the preceding year and to the extent that such proration may be inaccurate Seller and Buyer agree to make such payment to the other after the tax statements have been received which are necessary to allocate such taxes properly between Seller and Buyer on a pro rata basis as of the Closing Date.

 

3.2 Allocation of Purchase Price . Buyer and Seller agree to allocate the Purchase Price to the Assets in the manner provided on Schedule 3.2 hereto.

 

3.3 Noncompete Agreement . At the Closing on the Closing Date, Seller and Shareholder each will enter into a noncompetition agreement with Buyer in the form of Exhibit A attached hereto (the “Noncompetition Agreement”).

 

ARTICLE 4. CLOSING

 

4.1 Closing Date . The Closing shall take place concurrently with the execution and delivery by Buyer, Seller and Shareholder of this Agreement (such time of Closing is herein called the “Closing Date”), and the Closing shall take place at the offices of Seller’s legal counsel in Roanoke, Virginia. Subject to the satisfaction of the conditions set forth in Article 15 hereof, the closing of the purchase of the Real Estate shall take place as provided in Article 15.

 

4.2 Transfer of Assets . At the Closing:

 

(a) Seller shall sell, transfer, assign, grant, bargain, deliver and convey to Buyer (or one or more of its designees) all of Seller’s right, title and interest in and to the Assets (other than governmental licenses, permits and approvals to the extent not assignable to Buyer), free and clear of any and all Liens. The transactions contemplated by this Section 4.2(a) shall be effected or evidenced by delivery by Seller to Buyer of bills of sale, assignments, warranty deeds and other documents of transfer acceptable in form and substance to Buyer.

 

(b) Buyer shall assume the liabilities of Seller accruing after the Closing (and not attributable to any violation, breach or failure to perform occurring prior to the Closing) under the Assumed Contracts to which Seller is a party and with respect to Customer Deposits (collectively, the “Assumed Liabilities”). Such assumption of the Assumed Liabilities shall be effected or evidenced by delivery by Buyer to Seller of an appropriate written instrument or instruments of assumption acceptable in form and substance to Seller.

 

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4.3 Payments by Buyer . Subject to the terms and conditions of this Agreement, Buyer shall make payments to Seller, as follows:

 

(a) At the Closing, Buyer shall deliver to Seller cash in the aggregate amount of Twenty-Seven Million Four Hundred Thousand Dollars ($27,400,000).

 

(b) At the Closing, assuming the Assumed Liabilities and only the Assumed Liabilities;

 

(c) Fifteen (15) days after the Closing, delivering to Seller, cash or immediately payable funds in an amount equal to the sum of (i) the value of the propane gas inventory of Seller as calculated under Section 3.1(a) above, and (ii) the value of the parts and appliances inventory of Seller as calculated under Section 3.1(b) above; and

 

(d) Forty (40) days after the Closing, delivering to Seller, cash or immediately payable funds in an amount equal to the sum of the Accounts Receivable of Seller, which sum shall be reduced by (i) the amount of the Customer Deposits as calculated under Section 3.1(x) above, and (ii) the amount calculated under Section 3.1(y) above.

 

4.4 Taxes .

 

(a) Seller shall be responsible for and agrees to pay all sales, use and transfer taxes arising out of the conveyance of the Assets (other than the Real Property and except as set forth in Section 4.4(b)).

 

(b) Buyer shall be responsible for and agrees to pay the motor vehicle transfer of title fees and sales taxes from the transfer by Seller to Buyer of the motor vehicles included as part of the Assets.

 

4.5 Payments by Seller . Subject to the terms and conditions of this Agreement, at the Closing Seller shall pay to each employee of the Business that is hired by Buyer, an amount, subject to applicable withholding, equal to such employee’s accrued but unused vacation time plus an amount equal to any performance bonus earned by such employee for periods up to the Closing Date.

 

ARTICLE 5. LIABILITIES NOT ASSUMED BY BUYER

 

Seller shall be responsible for all of its liabilities and obligations not hereby expressly assumed by Buyer (the “Retained Liabilities”), and Buyer shall not assume, or in any way be liable or responsible for, any liabilities or obligations of Seller, except the Assumed Liabilities. Without limiting the generality of the foregoing, Buyer shall not assume, or in any way be liable or responsible for, the following Retained Liabilities:

 

(a) Any liability or obligation of Seller with respect to employment or consulting agreements, pension, profit sharing, welfare and other Benefit Plans, or amounts owing for commissions or compensation, termination, severance or other payments to present or former employees, officers, directors or shareholders of Seller;

 

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(b) Any liability or obligation of Seller, or any consolidated group of which Seller is a member, for any foreign, federal, state, county or local taxes of any kind or nature, or any interest or penalties thereon; or

 

(c) Any liability or obligation under the Consolidated Omnibus Budget Reconciliation Act, as amended, and the Tax Reform Act of 1986, with respect to employees of Seller (whether salary, hourly or otherwise) who are not employed by Buyer.

 

ARTICLE 6. REPRESENTATIONS AND WARRANTIES OF SELLER AND SHAREHOLDER

 

Seller’s and Shareholder’s representations and warranties set forth in this Article 6 are qualified in their entirety by (i) Seller’s Knowledge (other than the representations and warranties set forth in Sections 6.1, 6.2, 6.3, 6.7, 6.10(a), 6.10(b), 6.14(a), 6.18(b), 6.21 and the first sentence of Section 6.12(a), as to which there is no such qualification), (ii) Section 14.11 of this Agreement, and (iii) the information included in the various schedules and exhibits referenced in, and attached to, this Agreement. Subject to the foregoing, Seller and Shareholder, jointly and severally, represent and warrant that, as of the Closing Date (other than the representations and warranties set forth in Section 6.21 which are made only as of the date of any sale of a parcel of Real Property from Seller to Buyer):

 

6.1 Corporate Organization . Seller is a corporation duly organized, validly existing and in good standing under the laws of the Commonwealth of Virginia, and has all requisite corporate power and authority to own, operate and lease its Assets and to conduct the Business as and where such Business is now conducted. Shareholder is a corporation duly organized, validly existing and in good standing under the laws of the Commonwealth of Virginia. Seller has no subsidiary that is involved in the Business and does not hold any equity or other ownership interest in any other entity that is involved in the Business.

 

6.2 Due Qualification . Seller is duly qualified to do business and is in good standing under the laws of each jurisdiction in which the nature of its Business or of the properties owned or leased by it makes such qualification necessary.

 

6.3 Authority; Binding Effect . Seller and Shareholder have the right, power, authority, and capacity to execute and deliver this Agreement and all other agreements contemplated hereby to be entered into by it, to perform the obligations hereunder and thereunder on its part to be performed and to consummate the transactions contemplated hereby and thereby. The execution and delivery by Seller and Shareholder of this Agreement and all other agreements and documents contemplated hereby to be entered into by it and the performance by Seller and Shareholder of their respective obligations to be performed hereunder and thereunder and have been duly approved by all necessary corporate action, and no further approvals are required by the officers, directors or shareholders of Seller in connection therewith. This Agreement constitutes, and when duly executed and delivered, all other agreements contemplated hereby to be entered into by it will constitute, the legal, valid, and binding obligations of Seller and Shareholder, enforceable against such parties in accordance with its terms, except as enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium, or other similar laws relating to or affecting creditors’ rights generally and to general equity principles (whether such enforceability is considered in a proceeding at law or in equity).

 

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6.4 No Creation of Violation, Default, Breach or Encumbrance . The execution, delivery and performance of this Agreement by Seller and Shareholder does not (i) violate (A) any statute, rule or regulation to which such Person is subject or (B) any order, writ, injunction, decree, judgment or ruling of any court, administrative agency or governmental body to which such Person is subject, (ii) conflict with or violate any provision of the Organizational Documents of Seller, or (iii) except for the consents set forth in Schedule 6.4 hereto, require the consent of any Person or result in the breach of or constitute a default (or an event which, with notice or lapse of time or both, would constitute a default) under, violate, conflict with, breach or give rise to any right of termination, cancellation or acceleration of, or to a loss of benefit to which Seller is entitled, under (A) any mortgage, indenture, note or other instrument or obligation for the payment of money or any contract, agreement, lease, sublease or license, in each case, to which Seller is a party, or (B) any governmental licenses, authorizations, permits, consents or approvals required for Seller to own, license or lease and operate its properties or to conduct its Business as presently conducted by it.

 

6.5 No Present Default . Except as set forth on Schedule 2.1E , all of the Assumed Contracts are valid and in full force and effect and constitute legal, valid and binding obligations of Seller. Seller is not in default under or in breach of any mortgage, indenture, note or other instrument or obligation for the payment of money or any contract, agreement, lease or license, no other parties to any such mortgage, indenture, note, instrument, obligation, contract, agreement, lease or license is in default thereunder or in breach thereof; no event has occurred which, with the passage of time or the giving of notice, would constitute such a breach or default by Seller or by any such other party; no claim of default thereunder has been asserted or threatened; and neither Seller nor any other party thereto, is seeking the renegotiation thereof.

 

6.6 Approvals, Licenses and Authorizations .

 

(a) No (i) order, license, consent, waiver, authorization or approval of, or (ii) giving of notice to, or (iii) registration with or the taking of any other action in respect of, any Person not a party to this Agreement, and no filing, recording, publication or registration in any public office or any other place, in each case is, necessary on behalf of Seller (y) to authorize Seller’s execution, delivery and performance of this Agreement or any other agreement, document or instrument contemplated hereby to be executed and delivered by Seller, or (z) for the legality, validity, binding effect or enforceability with respect to Seller of any of the foregoing.

 

(b) All licenses, permits, concessions, warrants, franchises and other governmental authorizations and approvals of all federal, state, local or foreign governmental or regulatory bodies required or necessary for Seller to carry on its Business as and where presently conducted by it have been duly obtained and are in full force and effect and are set forth truly, correctly and completely on Schedule 6.6 hereto. There are no proceedings pending or threatened which are likely to result in the revocation, cancellation or suspension or any material modification of any thereof.

 

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6.7 Compliance With Law . Seller is not in violation of any statute, law, rule or regulation, or any order, writ, injunction or decree of any court, administrative agency, governmental body or arbitration tribunal, to which it or any of the Assets is subject in connection with the operation of the Business.

 

6.8 Financial Statements .

 

(a) Seller has delivered to Buyer the balance sheets of Seller as of September 30, 2001, 2002 and 2003 and the related statements of income, shareholder’s equity and cash flows for each of the fiscal years then ended, and the notes thereto, and the balance sheet of Seller as of May 31, 2003 and 2004 and the related statements of income, shareholder’s equity and cash flows for the eight-month period ended on each such date.

 

(b) The financial statements referred to in Section 6.8(a) above fairly present the financial position, results of operation and cash flows of Seller as and at the relevant dates thereof and for the periods covered thereby in accordance with GAAP.

 

(c) Except as set forth in the September 30, 2003 balance sheet of Seller or in the Schedules hereto, Seller has no (i) liabilities or obligations, direct or contingent, accrued or otherwise, of a nature customarily reflected in financial statements in accordance with GAAP, except those incurred after September 30, 2003 in the ordinary course of business consistent with past practice and except lease and other contract obligations and other obligations or liabilities which are disclosed in this Agreement or the Schedules hereto, and (ii) liabilities or obligations under any Benefit Plans except those incurred after September 30, 2003 in the ordinary course of business consistent with past practice and pursuant to the terms of the Benefit Plans.

 

6.9 Absence of Certain Events . Except as set forth on Schedule 6.9 hereto, since March 31, 2004, the Business of Seller has been operated only in the ordinary and normal course of Business and in particular:

 

(a) There has not been any adverse change in the Assets or in the financial condition, results of operations or condition, financial or otherwise, of Seller with respect to the Business, taken as a whole;

 

(b) There has not been any damage, destruction or loss adversely affecting the Assets or the Business, which would result in a adverse change in the Assets or the Business, taken as a whole;

 

(c) Except in the ordinary course of business, there has not been any increase or decrease in the compensation payable to or to become payable by Seller to any of the officers, key employees or agents of the Business, or change in any insurance, pension or other beneficial plan, payment or arrangement made to, for or with any of such officers, key employees or agents or any commission or bonus paid to any of such officers, key employees or agents;

 

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(d) Seller has not (i) incurred any obligation or liability or assumed, guaranteed, endorsed or otherwise become responsible for the liabilities or obligations of any other person (whether absolute, accrued, contingent or otherwise), except normal trade or business obligations incurred in the ordinary course of business; (ii) mortgaged, pledged, created or subjected to a Lien any of the Assets; (iii) sold, assigned, transferred, leased or otherwise disposed of any of the Assets, except in the ordinary course of business, or acquired any Assets or any interest therein except in the ordinary course of business; (iv) amended, terminated, waived or released any rights or canceled any debt owing to or claim by Seller; (v) transferred or granted any rights under any Contracts and Other Agreements; (vi) modified or changed any Material Contracts, or (vii) entered into any transaction, contract or commitment which by reason of its size or otherwise was material to the Business or financial condition of Seller or which was not in the ordinary course of the Business as now conducted; and

 

(e) Seller has not terminated, discontinued, closed or disposed of any plant, facility or business operation related to the Business.

 

6.10 Title to and Condition of Properties .

 

(a) Schedule 2.1A hereto contains a true, correct and complete list of all real property related to the operation of the Business which is owned by Seller, including an accurate and legally sufficient description of each property and the interests therein (the “Real Property”). Schedule 2.1B hereto contains a true, correct and complete list of all leases and subleases of real and mixed property related to the operation of the Business under which Seller is a lessor or lessee (true, accurate and complete copies of which have previously been delivered to Buyer). Seller has good, marketable and indefeasible fee simple title to all of the real properties described on Schedule 2.1A hereto, and good, marketable and indefeasible title to all the leasehold estates created by the leases and subleases described on Schedule 2.1B hereto. The Real Property described on Schedule 2.1A is owned by Seller free and clear of Liens, easements, restrictions and reservations except only for those matters which are included in the Title Commitment (collectively, such matters hereinafter referred to as “Permitted Encumbrances”). As to leasehold estates under the leases and subleases identified on Schedule 2.1B , Seller has quiet and peaceable possession of each of the leased properties. All leases and subleases in which Seller is a lessor or sublessor, or lessee or sublessee, are in full force and effect, there is no default or event of default thereunder and the rent thereunder has not been prepaid for more than a one-month period.

 

(b) A true, correct and complete list of all propane tanks which are owned or serviced by Seller and all other personal property included in the Assets having a fair market or book value per unit in excess of Two Hundred Fifty Dollars ($250) is included on Schedule 2.1C and a true, correct and complete list of all leases of personal property included in the Assets under which Seller is a lessee or lessor involving any propane tank or any vehicle or other personal property having a fair market or book value per unit in excess of Two Hundred Fifty Dollars ($250) is included on Schedule 2.1D (true, accurate and complete copies of which have previously been delivered to Buyer). All propane tanks used in the Business which have a capacity of at least one hundred

 

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twenty (120) gallons are under contract to customers or are physically located on Seller’s tank storage locations. Seller has good and marketable title to (i) all of the personal property set forth on Schedule 2.1C and indicated as being owned by it, (ii) all of the Assets reflected in the September 30, 2003 balance sheet of Seller, and (iii) all Assets purported to have been acquired by Seller after September 30, 2003, free and clear of all Liens, except Permitted Encumbrances and except for such Assets disposed of in the usual and ordinary course of business consistent with past practices. All of the Assets are in Seller’s possession and control.

 

(c) The conduct of the Business by Seller in the ordinary course is not dependent upon the right to use the property of others, except as identified on Schedule 2.1D hereto. The Assets include all utility connections, and the right to use the same, necessary for the conduct of the Business in the ordinary course and said utilities are available under public rights of way or easements benefiting the Real Property. All of the Real Property has both physical and legal access to an open and publicly-dedicated road.

 

(d) The tangible personal property Assets being transferred by Seller are, taken as a whole, in good operating condition and repair (ordinary wear and tear excepted).

 

(e) All inventories of the Business are of a quality and quantity usable and salable in the ordinary course of the Business as historically conducted.

 

(f) The accounts receivable of the Business as shown on Seller’s books and records have arisen in the ordinary course of business, represent valid and enforceable obligations owed to Seller and are recorded as accounts receivable on the books of Seller in accordance with GAAP.

 

6.11 Intellectual Property . Schedule 2.1H hereto contains a list of all patents and applications therefor, trademarks, trademark registrations and applications therefor, trade names, service marks, copyrights, copyright registrations and applications therefor, and trade secrets, both foreign and domestic, owned, possessed, which are being sold by Seller and which are related to the operation of the Business and Seller owns the entire right, title and interest in and to the same, together with the goodwill associated therewith.

 

6.12 Contracts and Commitments .

 

(a) To the extent not listed on Schedule 2.1B or Schedule 2.1D , Schedule 2.1E hereto lists all Material Contracts related to the operation of the Business to which Seller is a party or by which it or any of its assets or properties are bound (true and correct copies of each of which have been previously delivered to Buyer). Each Material Contract (whether disclosed on Schedule 2.1B , Schedule 2.1D , Schedule 2.1E or otherwise) is in full force and effect and embodies the complete understanding between the parties thereto with respect to the subject matter thereof. Except as expressly set forth on Sc