ASSET PURCHASE AGREEMENT BY AND BETWEEN SHELL ENERGY SERVICES COMPANY, L.L.C. AND MXENERGY INC. DATED AS OF MAY 12, 2006

Exhibit 2.1

EXECUTION COPY

ASSET PURCHASE AGREEMENT


BY AND BETWEEN

SHELL ENERGY SERVICES COMPANY, L.L.C.

AND

MXENERGY INC.

DATED AS OF MAY 12, 2006

TABLE OF CONTENTS

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DISCLOSURE SCHEDULE

EXHIBITS

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ASSET PURCHASE AGREEMENT

This ASSET PURCHASE AGREEMENT (" Agreement "), dated as of May 12, 2006, is by and between Shell Energy Services Company, L.L.C., a Delaware limited liability company (" Seller " or " SESCo " ), and MxEnergy Inc., a Delaware corporation (" Buyer ").  Seller and Buyer are sometimes herein referred to as the " Parties " and/or individually as a " Party ".

Recitals

WHEREAS, Seller is the supplier of retail natural gas services in Ohio and Georgia and owns contracts and other assets relating thereto; and

WHEREAS, Seller desires to sell, and Buyer desires to purchase, all of the Assets (as hereinafter defined) on the terms and subject to the conditions in this Agreement.

NOW, THEREFORE, in consideration of the premises and mutual covenants set forth herein, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:

ARTICLE I
DEFINITIONS

1.1.          Definitions .  As used in this Agreement, the following terms shall have the following meanings unless the context otherwise requires:

" Accounting Arbitrator " means initially, Deloitte & Touche LLP as such person may be substituted as set forth in Section 2.7.

" Accounts Receivable " means all accounts, accounts receivable, advances receivable, Customer deposit money (including, deposit money relating to Customers paying budget billing) notes receivable and other monetary amounts owing or accrued by Third Parties on account of goods sold or services performed, or to be sold or performed, under the Retail Contracts or otherwise owned by the Seller.  Notwithstanding the preceding, any accounts receivable held by the Seller that arose from one of the Ohio LDCs (DEO, COH, NEON and VEDO) shall not be an Account Receivable for purposes of this Agreement.

" AGL " means Atlanta Gas Light Company.

" Affiliate " of a Person means a Person directly or indirectly controlled by, controlling or under common control with the other Person. For the purposes of this definition, "control" means, when used with respect to any Person, the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by contract, or otherwise, and the terms "controlling" and "controlled" have correlative meanings.

" Agreement " means this Asset Purchase Agreement, as the same may be amended or supplemented from time to time, together with the exhibits and schedules hereto.

" Applicable Law " means any federal, state, local or municipal statute, law (excluding principles of common law), rule, or regulation, or any judgment, award, order, ordinance, writ, injunction, or decree of, any Governmental Entity to which a specified Person or any Asset is subject.

" Assets " means all assets owned by Seller less and except the Excluded Assets, including:

(a)           all Accounts Receivable;

(b)           work-in-progress including unbilled revenues earned or accrued, or to be earned or accrued, under the Retail Contracts and attributable to natural gas that has been delivered but not yet billed by Seller;

(c)           the Retail Contracts and all Other Contracts, including any gas transportation agreements, storage and other service agreements or arrangements to the extent freely assignable and relating to the Business;

(d)           the Gas Supply;

(e)           the IT Systems;

(f)            the Books and Records;

(g)           all prepaid expenses, and other prepaid items relating to any of the foregoing Assets and the operation of the Business, except for those relating to the Excluded Assets or constituting or delivered pursuant to the Guarantees; and

(h)           all other assets, other than the Excluded Assets, of whatever nature and wherever located that are exclusively related to or exclusively used in the Business.

" Benefit Plan " means any employee benefit plan within the meaning of Section 3(3) of ERISA, and any other plan, program, agreement, arrangement, policy, contract, commitment or scheme, written or oral, statutory or contractual, that provides for compensation or benefits, including any deferred compensation, executive compensation, stock option or other stock plan, supplemental, bonus or incentive plan, severance pay, or any holiday or vacation plan or personnel policy or practice maintained, contributed to or sponsored by Seller or its Affiliates, as of the date of execution of the Agreement, for the benefit of any current or former Employee.

" Books and Records " means files, data and documents in every medium stored or contained in Seller’s or its Affiliates’ possession to the extent primarily related to the Assets or the Customers including, (a) present and pending customer lists, (b) all audio recordings from the call center of the Customers, (c) account and meter numbers, (d) rate codes, (e) class codes, (f) pricing, pricing models, financial statements, and related accounts receivable information, (g) historical usage information and imbalances statements received from any LDC, (h) Customer complaints, if any, and responses thereto and written communications with Governmental Entities pertaining thereto, (i) all business reply cards, (j) individual Customer billing and payment history, (k) written communications with Customers, (l) past regulatory filings with Governmental Entities (including any PUC), (m) written communications with Utilities concerning the Business, (n) data pertaining to the past twelve months of Gas Supply,

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(o) information regarding current marketing programs, (p) any other information necessary to enroll and continue servicing the Customers as customers of Buyer, (q) Utilities and pipeline invoices for the prior twelve month period, and (r) all data residing on the IT Systems to the extent related to relationship management and the billing system used in the Business.  Notwithstanding the preceding, Books and Records will exclude any of the preceding data and information to the extent that Seller is prohibited from providing such data or information pursuant to any Applicable Law.

" Business " means the current business of Seller with respect to retail sales of natural gas to customers (including Customers) in the State of Ohio and in the State of Georgia.

" Business Day " means any day other than Saturday or Sunday or any other day on which banks in Houston, Texas are permitted or required to close.

" Closing Conditions " means, collectively, Seller’s Closing Conditions and Buyer’s Closing Conditions.

" Code " means the Internal Revenue Code of 1986, as amended.

" COH " means Columbia Gas of Ohio, Inc.

" Commercially Reasonable Efforts " means efforts which are reasonably within the contemplation of the Parties at the date hereof and which do not require the performing party that is acting in good faith to take any extraordinary action or expend any funds other than expenditures which are customary and reasonable in transactions of the kind and nature contemplated by this Agreement in order for the performing party to diligently pursue and timely satisfy its obligations hereunder.

" Confidentiality Agreement " means the Confidentiality Agreement between Seller and MxEnergy Holdings Inc. dated as of December 13, 2005.

" Consequential Damages " means all exemplary, punitive, special, indirect, consequential, remote or speculative damages, including loss of profit, loss of revenue or any other special or incidental damages, whether in contract, tort (including negligence), strict liability or otherwise.

" Customer " means Seller’s counterparty with respect to each Retail Contract and includes (i) then current Customers of Seller, plus (ii) pending additional Customers of Seller.

" Data Retrieval Date " means the date that is one (1) Business Day prior to the Effective Date.

" Data Room " means the information and documentation provided in the electronic data files provided by Seller to Buyer in connection with the transaction contemplated herein, together with all additional information provided in writing to Buyer, its agents or representatives.

" Deductible Amount " means an amount equal to Three Hundred Thousand Dollars ($300,000).

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" Direct Claim " means any claim or the commencement of any claim, action or proceeding with respect to a Loss or potential Loss made or brought by a Party against the other Party pursuant to the indemnification provisions contained in Article VIII.

" Disclosure Schedule " means the schedules of Seller attached to this Agreement amended or supplemented in accordance with Section 7.9.

" DOJ " means the Department of Justice.

" DEO " means The East Ohio Gas Company.

" Effective Date " means the effective date and time of the transactions consummated pursuant to this Agreement, and shall be 12:01 a.m. on the Closing Date.

" Employee " shall mean each active employee of Seller or its Affiliates whose duties relate primarily to the Assets.  An Employee shall also include any such employee who is on a short-term disability, FMLA or military leave of absence but is reasonably expected to return to work within six (6) months.

" Encumbrances " means liens, pledges, options, mortgages, security interests, easements, charges, deeds of trust, restrictions and all other encumbrances.

" ERISA " means the Employee Retirement Income Security Act of 1974, as amended, and any successor thereto.

" Escrow Agent " means JPMorgan Chase, N.A., or if such firm is unable or unwilling to serve (or is, at the time of its retention under this Agreement, not independent as to Seller and Buyer), such other financial institution of national standing as is mutually appointed by Seller and Buyer.

" Escrow Agreement " means the Escrow Agreement entered into as of May 12, 2006 by and among Buyer, Seller and Escrow Agent.

" Excluded Liabilities " means the following:

(a)           any liability of Seller to the extent (i) unrelated to the Business or the Assets or (ii) related to the Excluded Assets;

(b)           liabilities and obligations of the Seller, fixed or contingent, that relate to the period prior to the Effective Date, whether or not the liability was certain of occurrence or reasonably quantifiable before the Effective Date;

(c)           any liability or obligation for Taxes relating to (i) business operations of Seller not otherwise included within the Business; (ii) the Business and its operations for periods occurring prior to or as of the Effective Date; or (iii) the Assets in so far as such Taxes relate to periods or portions thereof ending on or prior to the Effective Date, including, without limitation, (A) any and all liabilities or obligations for Taxes for which Seller or any of its predecessors or Affiliates is or may be liable, (B) any and all liabilities or obligations for Taxes for which the Seller may be liable pursuant to this Agreement, and (C) any and all liabilities or obligations for

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Taxes relating to the Business or the Assets, or with respect to which the Business or the Assets may be subject, levied, or assessed, whether incurred by Seller, its predecessor or Affiliates in the conduct of the Business or otherwise, to the extent such liability or obligation for Taxes relates to periods or portions thereof ending on or prior to the Effective Date;

(d)           any Benefit Plan of Seller or its Affiliates and any liabilities respecting any Benefit Plan; and

(e)           any liabilities of the Seller, fixed or contingent, related to the employment with or the termination of an Employee’s employment with Seller, whether or not liability was certain of occurrence or reasonably quantifiable before the Effective Date.

" FERC " means the Federal Energy Regulatory Commission.

" FTC " means the Federal Trade Commission.

" GAAP " means United States generally accepted accounting principles with such exceptions as may be noted or otherwise referred to on any financial statement (or notes or schedules thereto) or schedule hereto.

" Gas Supply " means the natural gas inventory held in storage by or for the account of Seller for deliveries to Customers in the State of Ohio or in the State of Georgia.

" Governmental Approvals " means all consents and approvals of Governmental Entities that reasonably may be deemed necessary so that the consummation of the transactions contemplated hereby will be in compliance with Applicable Laws.

" Governmental Entity " means any domestic or foreign national, state or local government, any subdivision, agency, board, commission, bureau, court, tribunal or other instrumentality or authority thereof, or any quasi-governmental or private body exercising any regulatory or taxing authority thereunder, including FERC, any PUC, the U.S. Treasury Department, the IRS, the DOJ and the FTC.

" Guarantees " means any and all obligations relating to the guarantees, letters of credit, bonds, cash deposits, and other sureties and credit assurances provided to any Governmental Entity (including any PUC), Utility, pipeline, contract counterparty or other Person by Seller or any of its Affiliates related to the Business or the Assets.

" HSR Act " means the Hart Scott Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations thereunder.

"Indemnified Group " means the Buyer Indemnified Group or the Seller Indemnified Group, as the context requires.

" IT System " means those information technology systems more particularly described on Schedule 1.1(a) .

" Knowledge " means (a) with respect to Seller, the actual and conscious knowledge of the Persons set forth on Schedule 1.1(b) , without any obligation by any such Person to conduct any

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investigation in connection with the transactions contemplated hereby or otherwise to determine the existence or absence of facts in any statement qualified by the "Knowledge" of any such Person, and (b) with respect to Buyer, the actual and conscious knowledge of the Persons set forth on Schedule 1.1(f) , without any obligation by any such Person to conduct any investigation in connection with the transactions contemplated hereby or otherwise to determine the existence or absence of facts in any statement qualified by the "Knowledge" of any such Person.

" LDC " means local distribution company.

" Losses " means any and all demands, claims, liabilities, losses, obligations, causes of action, damages, fines, penalties, costs, and expenses, including reasonable attorneys’ fees, court costs, and other costs of suit, but excluding Consequential Damages except to the extent of Consequential Damages owing to a Third Party.

" Material Adverse Effect " means any material adverse change in the Seller or the Assets that materially impairs the value of or operability of the Assets, taken as a whole, or that materially impedes the ability of a Party to consummate the transactions contemplated hereby, provided that the foregoing shall not include (a) any change that is attributable to (i) factors affecting the natural gas or electric power industries generally, (ii) general national, regional or local economic or financial conditions, (iii) the demand for or market price of natural gas, electricity, or other commodities, whether on a retail or wholesale basis, (iv) changes in Applicable Law, (v) actions taken or omitted to be taken, by or with the consent of Buyer or its Affiliates, (vi) actions or agreements expressly contemplated by this Agreement or matters referred to in Seller’s Disclosure Schedule or (vii) the announcement or pendency of the transactions contemplated by this Agreement or the consummation of the transactions contemplated hereby or (b) any matter which is cured (including cures effectuated by Seller) on or prior to the Termination Date.

" NEON " means North East Ohio Natural Gas.

" Other Contracts " means all contracts or agreements of Seller set forth on Schedule 1.1(c) .

" Permits " means licenses, permits, variances, exemptions, tariffs, rate schedules and other authorizations of or from Governmental Entities.

" Permitted Encumbrances " means (a) liens for Taxes, impositions, assessments or other governmental charges not yet delinquent or being contested in good faith, (b) statutory liens (including materialmen’s, warehousemen’s, mechanic’s, repairmen’s, landlord’s, and other similar liens) arising in the ordinary course of business securing payments not yet delinquent or being contested in good faith, (c) encumbrances of public record (other than encumbrances securing indebtedness of Seller or its Affiliates for money borrowed) set forth in Schedule 1.1(e) , (d) utility easements, restrictive covenants and minor defects, imperfections or irregularities of title, (e) purchase money liens and liens securing rental payments under capital lease arrangements set forth in Schedule 1.1(e) , (f) preferential purchase rights and other transfer restrictions, (g) encumbrances created by or resulting from the actions or inactions of Buyer, or its successors and assigns, (h) encumbrances which are set forth in any Permit, (i) restrictions imposed by any Governmental Entity, (j) encumbrances arising under the terms of the Retail

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Contracts or Other Contracts (provided such exception is not intended to relate to encumbrances of a third-party on the Retail Contracts or Other Contracts except as otherwise permitted under this definition of Permitted Encumbrances), (k) Governmental Approvals and consents of Third Parties, (l) the terms and conditions of the instrument creating any Asset or Seller’s interest therein and (m) such other encumbrances that do not materially detract from the value or materially interfere with the use of the Assets substantially in the manner presently used.

" Person " means any individual, corporation, partnership, joint venture, trust, limited liability company, unincorporated organization, Governmental Entity or other entity.

" Pre-Closing Data Retrieval Date " means the date that is eight (8) Business Days prior to the Effective Date.

" Proceedings " means all proceedings, actions, claims, suits, investigations and inquiries by or before any arbitrator or Governmental Entity.

" PUC " means the public utility commission, public service commission or similar Governmental Entity with oversight regarding the conduct of retail natural gas and electric businesses in the State of Ohio or in the State of Georgia.

" Retail Contracts " means all of Seller’s retail natural gas contracts for sales of gas to Customers in the State of Ohio and in the State of Georgia, including those set forth on Schedule 1.1(d) .

" Shell Benefit Plan " means the material Benefit Plans of Shell Oil Company as set forth in Shell’s Dimension Summary Plan Description.

" Shell Guaranty " means the form of Guaranty attached hereto as Exhibit D to be executed by Shell Oil Company at the Closing.

" Target Dekatherm Amount " means 37 million dekatherms.

" Tax Proceeding " means any notice of any audit, examination, contest, litigation, or other proceeding by or against any taxing authority that relates in whole or in part to any Tax.

" Tax Return " means any return, (including any information return), report, statement, schedule, notice, form, declaration, claim for refund or other document or other information filed with or submitted to, or required to be filed with or submitted to, any Governmental Entity in connection with the determination, assessment, collection or payment of any Tax or in connection with the administration, implementation or enforcement of or compliance with any Applicable Law relating to any Tax.

" Taxes " means all taxes, charges, duties, fees, levies, or other assessments, including income, gross receipts, excise, property, sales, transfer, ad valorem, profits, windfall profits, use, license, payroll, franchise, value-added, production, severance, withholding, payroll, employment, social security, and other taxes, however denominated, imposed by any Governmental Entity, whether disputed or not, and includes any estimated taxes, interest, penalties or additions to tax that are payable or may become payable in respect thereof.

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" Termination Date " means September 2, 2006, but if the sole reason for any delay in closing is related to ongoing regulatory review, and the parties are working in good faith to obtain such regulatory approval, such date shall be extended to comport with the reasonably expected timing of regulatory approval.  Notwithstanding the preceding in no event shall the Termination Date be extended beyond November 2, 2006.

" Third Party " means any Person other than (a) Seller and its Affiliates or (b) Buyer and its Affiliates.

" Third Party Claim " means any claim or the commencement of any claim, action or proceeding with respect to a Loss or potential Loss made or brought by a Third Party.

" Treasury Regulations " means one or more treasury regulations promulgated under the Code by the Treasury Department of the United States.

" Utility " means an LDC or other provider of tariffed services to the Customers, including without limitation, AGL, COH, DEO, NEON and VEDO.

" VEDO " means Vectren Energy Delivery of Ohio, Inc.

In addition, the following terms are defined in the respective Sections of this Agreement indicated below:

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1.2.          Certain Interpretive Matters .  In this Agreement, unless the context otherwise requires:

(a)           the singular number includes the plural number and vice versa;

(b)           reference to any Person includes such Person’s successors and assigns but, if applicable, only if such successors and assigns are permitted by this Agreement;

(c)           reference to any gender includes each other gender;

(d)           reference to any (i) agreement (including this Agreement, the Retail Contracts and the Other Contracts), document or instrument means such agreement, document or instrument as amended, extended, renewed or otherwise modified (including any waiver or consent) and in effect from time to time in accordance with the terms thereof and, if applicable, the terms hereof, and (ii) Applicable Law means such Applicable Law as amended, modified, codified, reenacted or replaced and in effect from time to time;

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(e)           reference to any Article, Section, Schedule or Exhibit means such Article, Section, Schedule or Exhibit of or to this Agreement, and references in any Article, Section, Schedule, Exhibit or definition to any clause means such clause of such Article, Section, Schedule, Exhibit or definition;

(f)            the words "this Agreement," "herein," "hereby," "hereunder," "hereof," "hereto" and words of similar import are references to this Agreement as a whole and not to any particular Section or other provision hereof or thereof, unless expressly so limited;

(g)           no consideration shall be given to the captions of the articles, sections, subsections, or clauses, which are inserted for convenience in locating the provisions of this Agreement and not as an aid in its construction;

(h)           the word "including" and its derivatives means "including, but is not limited to," and corresponding derivative expressions;

(i)            a defined term has its defined meaning throughout this Agreement, and each Exhibit and Schedule to this Agreement, regardless of whether it appears before or after the place where it is defined; and

(j)            each Exhibit and Schedule to this Agreement is a part of this Agreement, but if there is any conflict or inconsistency between the main body of this Agreement and any Exhibit or Schedule, the provisions of the main body of this Agreement shall prevail.

ARTICLE II
THE TRANSACTIONS

2.1.          Purchase and Sale .

(a)           At the Closing but effective as of the Effective Date, on the terms and subject to the conditions set forth in this Agreement, Seller shall assign, sell, transfer, set over and deliver to Buyer, all of the Assets as and to the extent existing on the Effective Date.

(b)           Nothing in this Agreement shall be construed as an attempt to assign any Asset which is non-assignable without the consent of a Third Party unless such consent shall have been given.  In the event and to the extent that the Parties are unable to obtain any required consent to such an assignment to Buyer and the Closing occurs, (i) Seller shall continue to be bound thereby and (ii)(A) Buyer shall perform and discharge fully all the obligations of Seller thereunder after the Effective Date and indemnify Seller for all Losses arising out of such performance by Buyer and its successors and assigns, (B) Seller shall exercise or exploit its rights and options under all such affected Assets only as directed by Buyer and at Buyer’s expense, and for the sole and exclusive benefit of Buyer and Buyer shall receive such rights and benefits related thereto, (C) Seller and Buyer shall each use their Commercially Reasonable Efforts to obtain any consents necessary to transfer such Asset and (D) if and when any such consent shall be obtained or such an Asset shall otherwise become assignable, Seller shall assign, in a manner consistent with Section 2.1(a), its rights and obligations under such Assets to Buyer and Buyer shall, without the payment of any further consideration therefor, assume such rights and obligations and continue to indemnify Seller as stated above.

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2.2.          Excluded Assets .  Notwithstanding anything herein to the contrary, the Assets shall include only those assets described in Section 2.1(a), and Buyer shall have no rights as a result of this Agreement to any assets of Seller other than the Assets, including any of the following excluded assets (collectively, " Excluded Assets "):

(a)           cash and cash equivalents as of the Effective Date, whether on hand, in bank accounts, financial institution accounts, margin accounts or in transit, except for customer deposits included within the definition of Assets;

(b)           all intercompany receivables between Seller and any of its Affiliates;

(c)           except for the Other Contracts set forth in Schedule 1.1(c) , gas supply agreements or arrangements, gas sales agreements or arrangements other than the Retail Contracts, gas transportation agreements or arrangements to the extent that they are not transferable, futures contracts or arrangements, hedge contracts or arrangements, and options and swap agreements or arrangements, and all other contracts and agreements not expressly described in Section 2.1;

(d)           tradenames, trademarks, service marks, logos, websites or domain names owned or used or held for use by Seller or its Affiliates, including "Shell", "SESCO", "Home Comfort" and derivatives thereof except for the license to use the foregoing during the transition period governed by the Transition Services Agreement;

(e)           insurance policies of or covering Seller or the Assets and rights thereunder in respect to any and all claims under such policies whether such claims are asserted before or after the Effective Date and all rights to any proceeds payable with respect thereto;

(f)            rights, claims and recoveries against Third Parties attributable to the period prior to the Effective Date;

(g)           Shell Home, LLC and any of its assets;

(h)           all other assets, properties, rights and claims of Seller or its Affiliates that do not constitute part of the Assets; and

(i)            files, correspondence, books, records or other documents relating to the foregoing.

Notwithstanding anything to the contrary provided in this Agreement, Seller’s representations and warranties in this Agreement shall not apply to any of the Excluded Assets, and this Section 2.2 shall not apply to any Taxes.

2.3.          Assumed Liabilities .  On the Closing Date, subject to Seller’s indemnity obligations set forth in Section 8.1(b) and Section 9.1, Buyer and Seller shall enter into the Assignment and Assumption Agreement pursuant to which, among other things, except with respect to the Excluded Liabilities, Buyer shall assume and shall be obligated to pay, perform and discharge in accordance with their respective terms, as and when they become due and payable, or are required to be performed, all liabilities and obligations, direct or indirect, known or unknown, absolute or contingent, of Seller attributable to the periods on or after the Effective

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Date relating to the Assets or the conduct of business with respect to the Assets, which arose or relate to the periods on, or after the Effective Date (collectively, " Assumed Liabilities ").  Buyer shall not assume any liability for the Excluded Liabilities and such Excluded Liabilities shall remain the sole responsibility of Seller, nor shall Buyer assume any liabilities for contracts that are not Transferred Contracts.

2.4.          Purchase Price and Earnest Money .

(a)           In consideration of the transfer to Buyer of the Assets, and in accordance with this Agreement, Buyer shall pay to Seller the sum of the following (the " Purchase Price ").

• • (i)            Base Amount .  Sixty-Two Million Five Hundred Thousand Dollars ($62,500,000) (" Base Amount ").

     

    (ii)           Marked to Market Contracts .  An amount (" Marked to Market Amount ") for the value at the Data Retrieval Date for the fixed price contracts and the variable price contracts, marked to market using the methodology set forth on Schedule 2.5(I) .  For the avoidance of doubt, a sample calculation prepared for May 11, 2006 utilizing such methodology is included as part of Schedule 2.5(I) .

     

    (iii)          Inventory .  An amount (" Inventory Amount ") for the value of the Gas Supply at each location set forth on Schedules 2.5(D)  and Schedules 2.5(E)  as of the Data Retrieval Date calculated using the methodology set forth on Schedule 2.5(F) .  For the avoidance of doubt, a sample calculation prepared for May 11, 2006 utilizing such methodology is included as part of Schedule 2.5(F) .

     

    (iv)          Unbilled Revenue .  An amount (" Unbilled Revenue Amount ") for the value of the of revenues under the Retail Contracts attributable to natural gas service provided to Customers by Seller prior to the Effective Date that have not been billed as of the Effective Date calculated using the methodology set forth on Schedule 2.5(M) .  For the avoidance of doubt, a sample calculation prepared for May 11, 2006 utilizing such methodology is included as part of Schedule 2.5(M) provided that any and all Unbilled Revenue Amounts shall not include any Taxes with respect to such revenues provided in this Section 2.4(a)(iv).

     

    (v)           Accounts Receivable .  An amount (" Accounts Receivable Amount ") for the value of the Accounts Receivable owned by the Seller as of the Data Retrieval Date calculated using the methodology set forth on Schedule 2.5(G) .  For the avoidance of doubt, a sample calculation prepared for May 11, 2006 is included as part of Schedule 2.5(G) .

     

    (vi)          Dekatherm Adjustment .  An amount (" Dekatherm Amount ") for the difference in the Target Dekatherm Amount and the projected volume of gas to be provided under the Retail Contracts determined as of the Data Retrieval Date calculated using the methodology set forth on Schedule 2.5(J) .  For the avoidance of doubt, a sample calculation prepared for May 11, 2006 is included as part of Schedule 2.5(J) .

     

    (vii)         Prepaid Items .  An amount (" Prepaid Items Amount ") which shall be equal to the amount of any cash deposits or prepaid expenses paid for by Seller or its Affiliates

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• • relating to the Assets for those goods and/or services contracted for in the ordinary course that have not been performed or delivered as of the Data Retrieval Date calculated using the methodology set forth on Schedule 2.5(H) .  For the avoidance of doubt, a sample calculation prepared for May 11, 2006 is included as part of Schedule 2.5(H) .

     

(b)           Concurrently with the execution of this Agreement, Buyer shall make a deposit in the amount of Three Million Dollars ($3,000,000), with Escrow Agent as the " Earnest Money " pursuant to the terms of this Agreement and the Escrow Agreement.

(c)           If the transactions contemplated by this Agreement are consummated, then the Earnest Money and any interest earned thereon (" Escrow Amount "), if any, shall be distributed to Seller and shall be considered as payment of a portion of the Purchase Price, and the Purchase Price payable by Buyer at Closing shall be reduced by the amount of the Escrow Amount.  Buyer and Seller shall provide written instructions to Escrow Agent to cause Escrow Agent to release such funds to Seller.

(d)           If (i) all conditions precedent to the obligations of Buyer set forth in Section 5.2 have been met; and (ii) the transactions contemplated by this Agreement are not consummated on or before the Closing Date because of: (A) the failure of Buyer to perform any of its obligations hereunder or (B) the failure of any of Buyer’s representations or warranties hereunder to be true and correct in all material respects as of the Closing, then, in such event, Seller shall have the right to terminate this Agreement and retain the Escrow Amount, as liquidated damages.  The Parties acknowledge that damages under such circumstances would be difficult to ascertain and that the Escrow Amount represents a reasonable estimate of such damages; payment of such Escrow Amount to Seller shall be Seller’s sole remedy for Buyer’s failure to close the transactions contemplated hereby for any reason.  Buyer and Seller shall provide written instructions to Escrow Agent to cause Escrow Agent to release such funds to Seller.

(e)           If this Agreement is terminated by the mutual written agreement of Buyer and Seller, or if the Closing does not occur on or before the Closing Date, for any reason other than as set forth in Section 2.2(d), then Buyer shall be entitled to the delivery of the Escrow Amount, free of any claims by Seller with respect thereto.  Buyer and Seller shall thereupon have the rights and obligations set forth in Section 10.2.  Buyer and Seller shall provide written instructions to Escrow Agent to cause Escrow Agent to release such funds to Buyer.

2.5.          Adjustments to Estimated Payment .  On or before four (4) Business Days prior to the Closing, Seller (with the cooperation of Buyer and Buyer will have the ability to review the preparation of the Closing Statement during Seller’s completion thereof) will prepare and deliver to Buyer a written statement prepared in accordance with Schedule 2.5 and the other provisions of this Agreement setting forth (i) the Base Amount, (ii) the estimated Marked to Market Amount, (iii) the estimated Inventory Amount, (iv) the estimated Unbilled Revenue Amount, (v) the estimated Accounts Receivable Amount (vi) the estimated Dekatherm Amount and (vii) the estimated Prepaid Items Amount (collectively, " Estimated Price "), in reasonable detail based on information available to Seller on the Pre-Closing Data Retrieval Date, and wire transfer instructions (the " Closing Statement ").  Within two (2) Business Days of receipt of the Closing Statement setting forth the Estimated Price, Buyer will deliver to Seller a written report containing any changes that Buyer in good faith believes are necessary to make the Closing

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Statement consistent with Schedule 2.5 based on the data available as of the Pre-Closing Data Retrieval Date with the explanation therefore.  Such Closing Statement, as agreed upon in writing by the Parties, will be used to determine the Estimated Price.  At the Closing, Buyer shall pay to Seller an amount (" Closing Payment ") equal to the Estimated Price less the Escrow Amount, payable by wire transfer in immediately available funds by wire transfer to the account or accounts designed by Seller.  Neither Tax assets nor Tax liabilities shall be included as adjustments on Schedule 2.5 and on the Closing Statement.

2.6.          Post Closing Settlement Adjustments .

(a)           Adjustment Items .  Post-Closing adjustments will be made to the Estimated Price within the time frames indicated related to the following items:

• • (i)            The Marked to Market Amount paid as part of the Estimated Price will be trued-up to reflect the actual Marked to Market Amount as of the Data Retrieval Date using the methodology set forth on Schedule 2.5(I) within ten (10) days after Closing.

     

    (ii)           The Inventory Amount paid as part of the Estimated Price will be trued-up to reflect the actual Inventory Amount as of the Data Retrieval Date using the methodology set forth on Schedule 2.5(F)  within ten (10) days after Closing.

     

    (iii)          The Unbilled Revenue Amount paid as part of the Estimated Price will be trued-up to reflect the actual Unbilled Revenue Amount as of the Data Retrieval Date using the methodology set forth on Schedule 2.5(M) within forty-five (45) days after the Closing Date.

     

    (iv)          The Accounts Receivable Amount paid as part of the Estimated Price will be trued-up to reflect the actual Accounts Receivable Amount as of the Data Retrieval Date using the methodology set forth on Schedule 2.5(G)  within ten (10) days after Closing.

     

    (v)           The Dekatherm Amount paid as part of the Estimated Price will be trued-up to reflect the actual Dekatherm Amount as of the Data Retrieval Date using the methodology set forth on Schedule 2.5(J) within ten (10) days after the Closing Date.

     

    (vi)          The Prepaid Items Amount paid as part of the Estimated Price will be trued-up to reflect the actual Prepaid Items Amount as of the Data Retrieval Date using the methodology set forth on Schedule 2.5(H)  within ten (10) days after Closing.

     

(b)           Post-Closing Adjustment .  As promptly as practicable after the Closing Date, and in any event not later than fifty (50) days after the Closing Date, Seller shall deliver to Buyer a statement (" Post-Closing Adjustment Statement ") reflecting (i)(A) the actual Marked to Market Amount, (B) the actual Inventory Amount, (C) the actual Unbilled Revenue Amount, (D) the actual Accounts Receivable Amount, (E) the actual Dekatherm Amount and (F) the actual Prepaid Items Amount, showing in reasonable detail its calculation of each such item, and (ii) the aggregate difference (" Post-Closing Adjustment Item Difference "), whether positive or negative, between the estimated amounts included in the Estimated Price and the actual amounts included in the Post-Closing Adjustment Item Difference (i.e. estimated amount — actual amount = the difference).  In the event that (A) such difference is positive then Seller shall pay such amount to

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Buyer and (B) such difference is negative, then Buyer shall pay such amount to Seller.  Subject to Section 2.7 below any such payment shall be made by the owing Party within six (6) days of the receipt of the Post-Closing Adjustment Statement

(c)           Access .  Buyer and Seller each agree to give the other Party and its authorized representatives reasonable access during regular business hours and upon reasonable advance notice to such employees and books and records of such Party as are reasonably necessary to allow the other Party and its authorized representatives to review the Post-Closing Adjustment Statement with respect to the items to be adjusted.

(d)           Neither Tax Assets nor Tax Liabilities shall be included as adjustments in the Post-Closing Adjustment Statement.

2.7.          Disputes .  In the event Buyer objects to the Post-Closing Adjustment Statement or the Post-Closing Adjustment Item Difference, Buyer, on or before the tenth (10th) day following the delivery of the Post-Closing Adjustment Statement, shall specify in reasonable detail any such objections in a notice sent to Seller (a " Dispute Notice ").  If (a) Buyer fails to deliver a Dispute Notice within the time period specified above for delivery of a Dispute Notice (the " Notice Period "); (b) prior to the expiration of the Notice Period, Buyer indicates in writing that it relinquishes its rights to object to the Post-Closing Adjustment Statement; or (c) Buyer and Seller agree on the resolution of all such objections or changes at any time subsequent to the expiration of the Notice Period, the Post-Closing Adjustment Statement and the Post-Closing Adjustment Item Difference, with any such changes as are agreed upon, shall be final and binding on the Parties.  If Seller and Buyer are unable to resolve the matters addressed in any Dispute Notice, each of Buyer and Seller shall within fourteen (14) Business Days after the delivery of such Dispute Notice, summarize its position with regard to such dispute in a written document of twenty-five (25) pages or less and submit such summaries to the Houston, Texas office of Deloitte & Touche LLP, or such other party as the Parties may mutually select (the " Accounting Arbitrator "), together with the Dispute Notice, the Post-Closing Adjustment Statement and any other documentation such Party may desire to submit.  Within twenty (20) Business Days after receiving the Parties’ respective submissions, the Accounting Arbitrator shall render a decision choosing either Seller’s position or Buyer’s position with respect to each matter addressed in any Dispute Notice, based on the materials described above. Any decision rendered by the Accounting Arbitrator pursuant hereto shall be final, conclusive and binding on Seller and Buyer and will be enforceable against any of the Parties in any court of competent jurisdiction.  Any payments required to be made pursuant to this Section 2.7 shall be made by the owing party within five (5) days of the final determination of such amounts.  With respect to any dispute under this Section 2.7, the cost of the Accounting Arbitrator will be borne by the Party which the Accounting Arbitrator rules against.  In the event that in any such dispute the Accounting Arbitrator rules in favor of Buyer on certain issues and the Seller on other issues the cost of the Accounting Arbitrator will be borne equally by the Parties.

2.8.          Utility/Pipeline Imbalances .  Seller and Buyer agree that any pipeline or Utility imbalances that arise prior to the Effective Time with respect to the Business shall be the sole responsibility or the sole benefit of Seller and Buyer shall have no claim to or responsibility for any such imbalances.  Buyer shall cooperate with and provide assistance to Seller in the event that Seller is required to settle any such imbalances in-kind provided that Seller shall remain responsible for any costs associated therewith.

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2.9.          Purchase Price Allocation .  Seller and Buyer agree to allocate the Purchase Price, as well as any subsequent adjustments to such price, as provided on Schedule 2.9 (the " Asset Allocation ").  The Parties hereby agree that (a) the Asset Allocation shall be completed in the manner required by Code Section 1060, (b) they shall comply with all filing, notice and reporting requirements described in Code Section 1060 and the Treasury regulations promulgated thereunder, and (c) they will report the federal, state, foreign and other tax consequences of the transactions contemplated by this Agreement in a manner consistent with such Asset Allocation.  Buyer shall prepare and deliver Form 8594 to Seller within thirty (30) days after the allocation has been determined (pursuant to this Section 2.9) to be timely filed under Applicable Law.  In any Tax Proceeding related to the determination of any Tax, neither the Buyer nor the Seller shall contend or represent that such allocation determined under this Section 2.9 is not a correct allocation.  Buyer and Seller shall notify and provide the other party with reasonable assistance in the event of an examination, audit or other proceeding regarding the agreed-upon allocation of the Purchase Price.

2.10.        Payments and Charges .  Each Party agrees that if any Party (" Receiving Party ") receives any payment that under the terms and provisions of this Agreement should have been paid to the other Party, the Receiving party shall remit such payment to the other Party as soon as reasonably practicable after its receipt.  Each Party agrees that if any Party (" Paying Party ") inadvertently pays any expense or charge that should have been paid by the other Party pursuant to the terms of this Agreement, the Paying Party can invoice the other party for such amount, such invoice to provide sufficient supporting documentation to permit the other Party to verify the appropriateness of the charge and that such charge should be paid by such other Party, and the other Party shall remit to the Paying Party such amount as soon as reasonably practicable after its receipt of such invoice.

ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER

Subject to the disclosures made by Seller in its Disclosure Schedule, Seller represents and warrants to Buyer as follows:

3.1.          Organization and Good Standing .  Seller (i) is a limited liability company that is duly formed, validly existing and in good standing under the laws of the jurisdiction under which it was formed; (ii) is duly qualified as a foreign limited liability company in each jurisdiction where such qualification is necessary because of its conduct of business; and (iii) has all requisite limited liability company power and authority and the legal right to own and operate its properties and to conduct its business, including the Business, as currently conducted.

3.2.          Authorization .  The execution, delivery and performance by Seller of this Agreement and the consummation by it of the transactions contemplated hereby have been duly authorized by all necessary company action on its part.  Except as may result from any facts or circumstances relating solely to Buyer or its Affiliates, the execution, delivery and performance of this Agreement by Seller and the consummation by it of the transactions contemplated hereby do not and will not (a) violate or breach its organizational documents, (B) violate or breach any Applicable Law binding upon it except as would not reasonably be expected to have a Material Adverse Effect or (c) except as provided for in Schedule 3.2 , result in any breach of, or constitute a default under, or give to others any rights of termination, amendment, acceleration or

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cancellation of, or result in the creation of any Encumbrance (other than a Permitted Encumbrance) on any of the Assets pursuant to, any note, bond, mortgage, indenture, contract, agreement, lease, license, certification, permit, franchise or other instrument, including the Retail Contracts to which Seller is a party or by which any of such Assets is bound or affected, except as would not reasonably be expected to have a Material Adverse Effect.

3.3.          Enforceability .  This Agreement is the legal, valid and binding obligation of Seller, enforceable against it in accordance with its terms, except that such enforceability may be limited by (a) applicable bankruptcy, insolvency, reorganization, moratorium and similar laws affecting creditors’ rights generally, and (b) equitable principles which may limit the availability of certain equitable remedies in certain instances.

3.4.          Consents .  Except as provided for in Schedule 3.4 , to the Knowledge of Seller, no authorization, approval or consent of any (a) Governmental Entity (other than with respect to the FTC or DOJ as provided for in Section 7.3) is required to be obtained by Seller in connection with the execution, delivery or performance of this Agreement and the consummation of the transactions contemplated hereby or (b) Person other than a Governmental Entity is required to be obtained by Seller in connection with the execution, delivery or performance of this Agreement and the consummation of the transactions contemplated hereby, except (i) where the failure by Seller to obtain such consents, approvals or authorizations would not reasonably be expected to have a Material Adverse Effect or (ii) as may be necessary as a result of any facts or circumstances relating solely to Buyer.

3.5.          Foreign Person .  Seller is not a "foreign person" within the meaning of Section 1445 of the Code.

3.6.          Contracts of Seller .

(a)           Schedule 1.1(c)  and Schedule 1.1(d)  contains a list of the following agreements and contracts to which Seller is a party or by which Seller or any of the Assets is otherwise bound (the " Transferred Contracts "):

• • (i)            each Retail Contract ( Schedule 1.1(d) ); and

     

    (ii)           Other Contracts ( Schedule 1.1(c) ).

     

(b)           Except as provided for in Schedule 3.6 , (i) neither Seller nor, to the Knowledge of Seller, any other party to any Transferred Contract is in breach or violation thereof, or default thereunder or (ii) Seller has not received any written notice regarding any actual or alleged violation or breach of or default under, any such contract, except where such breaches or violations would not reasonably be expected to have a Material Adverse Effect.  Seller has provided Buyer with access to true and complete copies of all of the Transferred Contracts.

3.7.          Title .  Seller has or will have as of the Closing Date good and defensible title to the Assets, subject to no Encumbrances except for Permitted Encumbrances; provided, however, Seller makes no title representation to the mark "Real Life, Real Easy".

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3.8.          Compliance with Laws .

(a)           To the Knowledge of Seller, Seller is not in violation of any Applicable Law related to the Assets or its conduct of business, nor is it in default with respect to any order, writ, judgment, award, injunction or other decree of any Governmental Entity applicable to it or with respect to the Assets, except such violations or defaults that would not reasonably be expected to have a Material Adverse Effect.

(b)           Seller (i) is not in violation of any Applicable Law and (ii) did not fraudulently induce any person to enter into any contract, in each case, in connection with Seller’s entering into any of the Retail Contracts except where such violations or fraudulent inducement would not reasonably be expected to have Material Adverse Effect.

3.9.          Permits .  Seller has all Permits that are required for the ownership or operation of the Assets or the conduct of the Business, except where the failure to have such Permits, would not reasonably be expected to have a Material Adverse Effect.  No notice has been received by Seller with respect to any failure by Seller to have any such Permit or to not be in compliance therewith.

3.10.        Tax Matters .  Unless otherwise provided on Schedule 3.10 :

(a)           All Tax Returns required to be filed by or with respect to the Seller (or any consolidated, combined, unitary or similar group of which the Seller is or was a member) have been timely filed and all such Tax Returns were correct and complete in all material respects.  All Taxes shown as due on such returns and all other material Taxes, whether or not shown as due on such returns, that are due and payable have been paid;

(b)           All Taxes that the Seller is or was required to withhold or collect in connection with any amounts paid or owing to any employee, independent contractor, stockholder, nonresident, creditor or other third party (including amounts paid or owing by or to the Seller) have been duly withheld or collected and, to the extent required, have been paid as required by law and the Seller has complied with all information reporting and record keeping requirements related to withholding and back-up withholding on payments to third parties.  The Seller has paid all employer contributions and premiums, in compliance with all Applicable Laws;

(c)           None of the assumed liabilities of the Seller (i) is an obligation to make any payments of (A) any amount that will be "excess parachute payments" under Section 280G of the Code (or any corresponding provision of state, local or foreign Tax law) and (B) any amount that will not be fully deductible as a result of Section 162(m) of the Code (or any corresponding provision of state, local or foreign Tax law) and (ii) is an obligation to compensate any individual for excise Taxes paid pursuant to Section 4999 of the Code;

(d)           To the Knowledge of the Seller, no written claim has been made by any Governmental Entity in any jurisdiction where the Seller does not currently file Tax Returns that it is or may be subject to Tax by such jurisdiction, nor has any such assertion been threatened;

(e)           There are no liens for Taxes upon the Assets except for Taxes not yet due and payable;

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(f)                                     None of the Assets of the Seller is "tax-exempt use property" within the meaning of Section 168 of the Code; and

(g)                                  There are no proposed reassessments of any of the Assets or other proposals or communications (whether formal or informal) of which the Seller has Knowledge that could increase the amount of Taxes payable by Buyer.

For purposes of this Section 3.10 (Taxes) and Article IX (Tax Matters), any reference to the Seller or any of its subsidiaries shall include (i) any corporation which merged or was liquidated with and into each Seller or any of its subsidiaries and (ii) any predecessor to the Seller or any of its subsidiaries.

3.11.                         Litigation .  Except as set forth on Schedule 3.11 , there are no Proceedings pending or, to the Knowledge of Seller, threatened against Seller or its Affiliates with respect to the Assets or the Business which would reasonably be expected to have a Material Adverse Effect, or which may affect the validity of any action taken or to be taken by Seller pursuant to or in connection with this Agreement.

3.12.                         Absence of Changes .  Except as set forth on Schedule 3.12 , since December 31, 2005:

(a)                                   no events with respect to the Assets have occurred nor has there been any change in the Assets, except for changes or events contemplated by this Agreement and changes or events in the ordinary course of business consistent with past practice which, together with any other such changes or events, have not had and would not reasonably be expected to have a Material Adverse Effect;

(b)                                  there has not been any loss, damage or destruction to any of the IT Systems (whether or not covered by insurance), other than in the ordinary course of business consistent with past practice;

(c)                                   the Seller has not written-off as uncollectible, or established any extraordinary reserve with respect to, any account receivable or other indebtedness, other than in the ordinary course of business consistent with past practice; and

(d)                                  the Seller has not pledged or hypothecated any of the Assets or otherwise permitted any of the Assets to become subject to any Encumbrance other than Permitted Encumbrances.

3.13.                         Brokerage Arrangements .  None of Seller or Seller or any Person acting on their behalf has entered (directly or indirectly) into any agreement with any Person, firm or corporation that would obligate, or would purport to obligate, Buyer to pay any commission, brokerage or "finder’s fee" in connection with the transactions contemplated herein.

3.14.                         Financial Statements .  The Seller has delivered to the Buyer accurate and complete copies of the following financial statements:  the audited balance sheet of the Seller as of December 31, 2003, December 31, 2004 and December 31, 2005 and the related statements of earnings, members’ equity and cash flows of the Seller for the fiscal years then ended, together

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with the notes thereto and the unqualified report and certification of PriceWaterhouseCoopers LLP relating thereto.

3.15.                         Customers .  Except for Customers that are directly served from any interstate or intrastate pipeline, all of the natural gas service addresses of the Customers in the State of Ohio are located in the local distribution company service areas of DEO, COH, NEON and VEDO, and all of the natural gas service addresses of the Customers in the State of Georgia are located in the local distribution company service area of AGL.

3.16.                         Seller’s Privacy Policies .  Seller has provided Buyer with access in the data room to Seller’s customer privacy policies in effect on the date hereof (" Seller’s Privacy Policies ").  Seller has made no written representations, warranties, promises or other provisions to Customers regarding the use or disclosure of customer data or information that do not conform to Seller’s Privacy Policies.  To the Knowledge of Seller, Seller has complied with Seller’s Privacy Policies in all material respects in Seller’s conduct of the Business.

3.17.                         Payment and Collections Guidelines .  Seller has provided Buyer with access in the data room to  Seller’s customer payment and collections policies in effect on the date hereof (" Seller’s Payment and Collections Guidelines ").  To the Knowledge of Seller, Seller has complied with Seller’s Payment and Collections Guidelines in all material respects in Seller’s conduct of the Business.

3.18.                         Employee Benefit Matters .

(a)                                   Schedule 3.18 includes a true and correct list of all Shell Benefit Plans.  With respect to each Shell Benefit Plan, Seller has delivered or made available to Buyer a true and complete copy of the Summary Plan Description for each Shell Benefit Plan.

(b)                                  No action, inaction or event has occurred with respect to any Benefit Plan or any employee benefit plan of Seller or of any entity that, together with Seller, would be considered a single employer within the meaning of Section 4001 of ERISA that has resulted, or that may result in the future, in a lien imposed upon any of the Assets.

(c)                                   Buyer shall not assume or have responsibility for any Benefit Plans or liability with respect thereto.

3.19.                         Accounts Receivable .  The amounts set forth in Schedule