Exhibit 10.01


 


August 2, 2015


ASSET PURCHASE AGREEMENT


 


by
and among


 


KENTUCKY FRONTIER GAS, LLC


 


and


 


PUBLIC GAS COMPANY


 


Dated
as of August 5, 2015


 




     


    

    

 


ASSET PURCHASE
AGREEMENT


 


THIS ASSET PURCHASE
AGREEMENT (this “Agreement”) is made and entered into as of August 5, 2015 (the “Effective Date”)
by and among KENTUCKY FRONTIER GAS, LLC, a Colorado limited liability company (“Buyer”) and PUBLIC
GAS COMPANY, a Kentucky corporation (the “Company” or “Seller”) as follows:


 


RECITALS


 


WHEREAS, Seller
owns and operates, as a public utility with approval by the Kentucky Public Service Commission, a natural gas distribution business
located in the Commonwealth of Kentucky counties of Breathitt, Jackson, Lawrence, Lee, Magoffin, Morgan, and Wolfe including, but
not limited to all pipelines, meters, inventory (including gas), work in progress, rights of way, licenses, easements, pipeline
interconnections, office equipment, leases, fixtures, machinery, equipment, pipe vehicles and Seller’s files and records
pertaining to the same (the “Business”), and


 


WHEREAS, Seller
wishes to sell to Buyer, and Buyer wishes to purchase from Seller, the rights of Seller to the Purchased Assets (as defined herein)
used in the Business, subject to the terms and conditions set forth herein;


 


NOW, THEREFORE,
in consideration of the mutual covenants and agreements hereinafter set forth and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:


 


ARTICLE I


Purchase
and Sale


 


Section
1.01       Purchase and Sale of Assets. Subject to the terms and
conditions set forth herein, Seller shall sell, assign, transfer, convey and deliver to Buyer, and Buyer shall purchase from Seller,
all of Seller’s right, title and interest in substantially all of the assets used in the operation of the Business (the “Purchased
Assets”), free and clear of any mortgage, pledge, lien, charge, security interest, claim or other encumbrance (“Encumbrance”).


 


Rights of Way.
Seller transfers to Buyer any and all of its Rights of Way to access pipelines and meters along the Assets. Seller will sign a
quitclaim deed to Buyer to transfer any rights appurtenant to the Asset pipelines and meters.


 


Section
1.02       Excluded Assets. Notwithstanding the foregoing, the
Purchased Assets shall not include any real estate owned by the Seller or any of the assets set forth on Section 1.02 of
the Disclosure Schedules, which are incorporated herein by this reference and made a part hereof (the “Excluded
Assets”).


 




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Section
1.03       Assumption of Contracts and Liabilities. Subject to
the terms and conditions set forth herein, Buyer shall assume all of the contracts identified on Schedule 1.03(a) (the “Assigned
Contracts”) and agree to pay, perform and discharge all other liabilities and obligations of Seller relating to the Assigned
Contracts and all other liabilities of Seller incurred in the ordinary course of business arising after the Closing (the “Assumed
Liabilities”), except those liabilities and obligations specifically set forth in Section 1.03(b) of the Disclosure Schedules
(the “Excluded Liabilities”). There shall be no adjustment to the Purchase Price as a result of the Assumed
Liabilities. Other than the Assumed Liabilities, Buyer shall not assume any other contracts, liabilities, or obligations of Seller
of any kind, whether known or unknown, contingent, matured or otherwise, whether currently existing or hereinafter created.


 


Section
1.04      Purchase Price. The aggregate purchase price (the “Purchase
Price”) for the Purchased Assets shall be ONE MILLION NINE HUNDRD THOUSAND DOLLARS AND NO/100 ($1,900,000.00), payable
as follows: (a) within three (3) business days after the Effective Date of this Agreement, Buyer shall deposit Fifty Thousand Dollars
($50,000) (the “Deposit”) with Community Trust Bank, Pikeville Kentucky (the “Escrow Agent”),
which shall be credited against the Purchase Price at Closing, and (b) the balance of One Million Eight Hundred and Fifty Thousand
Dollars ($1,850,000), shall be paid to Seller at the Closing (as defined herein) in cash, by wire transfer of immediately available
funds in accordance with the wire transfer instructions to be delivered by Seller to Buyer prior to the Closing. If the Closing
does not occur, the Deposit shall be disbursed in accordance with Section 5.10 hereof.


 


Section
1.05      Allocation of Purchase Price. Seller and Buyer agree
to allocate the Purchase Price among the Purchased Assets for all purposes (including tax and financial accounting) as set forth
in Section 1.05 of the Disclosure Schedules. Buyer and Seller agree to file all tax forms (including without limitation)
IRS Form 8594, tax returns and claims for refunds in accordance with Section 1.05 of the Disclosure Schedules.


 


Section
1.06      Non-disclosure of confidential information. The Parties
agree that information provided by Seller to Buyer pursuant to this Agreement is confidential and proprietary to the Seller and
remains the property of the Seller until the purchase contemplated herein is completed. Any Financial Information, Customer Contracts,
or other information provided to Buyer remains the confidential and proprietary information of the Seller until a sale is completed
and the Assets are transferred. Until such time, Buyer shall treat all such information as confidential and proprietary to Seller
and take all commercially reasonable steps to protect the provided information. To the extent Buyer
is required to disclose confidential information obtained from or related to Seller to obtain regulatory of financing approvals,
it shall maintain confidentiality to the extent required by or allowed by those agencies.


 




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ARTICLE II


Closing


 


Section 2.01       Closing.
The closing of the transactions contemplated by this Agreement (the “Closing”) shall take place no later than
10 business days following the date on which the last of the conditions to Closing set forth in Section 2.03 have been waived or
satisfied (other than conditions which, by this nature, are to be satisfied on the Closing Date), or on such other date as Buyer
and Seller may mutually agree in writing. The Closing shall take place at the office of Gas Natural, Inc. in Cleveland, Ohio, or
at such other location as the Parties may mutually agree in writing (the “Closing Date”). The parties may mutually
agree to effectuate the Closing by exchanging documents using e-mail, fax, or overnight courier by depositing all the deliverables,
including evidence of deposit in the Seller’s designated account of the Purchase Price, with the designated Escrow Agent.
With the execution of this Agreement, the parties will provide written instructions to the Escrow Agent detailing the duties and
responsibilities of the Escrow Agent as it relates to the disposition of the Deposit and Closing Deliverables, consistent with
the terms of this Agreement. Buyer shall be entitled to possession of the Assets and to begin
operating the distribution system on the Closing Date.


 


(a.) After the Effective
Date and subject to Closing, if Seller receives any payments or invoices from any third parties relating to the operations of the
Assets and attributable to the period after the Effective Date, Seller shall promptly make delivery thereof to the Buyer.


 


(b.) In the same manner,
if Buyer receives any payments or invoices from any third parties relating to the operations of the Assets and attributable to
the period before the Effective Date, Buyer shall promptly make delivery thereof to Seller.


 


Section
2.02       Closing Deliverables.


 


(a)          At
the Closing, Seller shall deliver to Buyer the following:


 


(i)          a
Bill of Sale in the form of Exhibit B hereto (the “Bill of Sale”) and duly executed by Seller,
transferring the Purchased Assets to Buyer;


 


(ii)         an
Assignment and Assumption Agreement in the form of Exhibit C hereto (the “Assignment and Assumption Agreement”)
and duly executed by Seller, effecting the assignment to and assumption by Buyer of the contracts and Assumed Liabilities;


 


(iii)        copies
of all consents, approvals, waivers and authorizations referred to in Section 3.03 of the Disclosure Schedules;


 


(iv)        a
certificate of the Secretary or Assistant Secretary (or equivalent officer) of Seller certifying as to (A) the resolutions of the
board of directors of Seller, duly adopted and in effect, which authorize the execution, delivery and performance of this Agreement
and the transactions contemplated hereby, and (B) the names and signatures of the officers of Seller authorized to sign this Agreement
and the documents to be delivered hereunder;


 




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(v)         a
certificate, dated as of the Closing date and signed by a duly authorized officer of Seller, that each of the conditions set forth
in Section 2.03 have been satisfied; and


 


(vi)        such
other customary instruments of transfer, assumption, filings or documents, in form and substance reasonably satisfactory to Buyer,
as may be required to give effect to this Agreement, including but not limited to:


 


(a)          Copies
of records related to customers conveyed to Buyer;


(b)          Monies
inclusive of interest accumulated currently held by Seller as deposits for customers being conveyed to Buyer;


(c)          Maps,
easements, rights of ways, permits, customer lists, and rate sheets.


 


(b)          At
the Closing, Buyer shall deliver to Seller the following:


 


(i)          the
Purchase Price;


 


(ii)         the
Assignment and Assumption Agreement duly executed by Buyer;


 


(iii)        copies
of all consents and authorizations referred to in Section 2.03(c) of the Disclosure Schedules;


 


(iv)        a
certificate of the Secretary or Assistant Secretary (or equivalent officer) of Buyer certifying as to (A) the resolutions of the
board of directors of Buyer, duly adopted and in effect, which authorize the execution, delivery and performance of this Agreement
and the transactions contemplated hereby, and (B) the names and signatures of the officers of Buyer authorized to sign this Agreement
and the documents to be delivered hereunder;


 


(v)         a
certificate, dated as of the Closing Date and signed by a duly authorized officer of Buyer, that each of the conditions set forth
in Section 2.03 have been satisfied;


 


(vi)        such
other customary instruments of transfer, assumption, filings or documents, in form and substance reasonably satisfactory to Seller,
as may be required to give effect to this Agreement, including but not limited to a written acknowledgement of the Buyer that it
is not a Foreign Investor, as defined under the Foreign Investment in Real Property Tax Act (“FIRTPA”).


 


Section
2.03       Conditions to Closing. The obligations of each party
to consummate the transactions contemplated by this Agreement shall be subject to the fulfillment, at or prior to the Closing,
of each of the following conditions:


 


(a)          No
governmental authority shall have enacted, issued, promulgated, enforced or entered any governmental order which is in effect and
has the effect of making the transactions contemplated by this Agreement illegal, otherwise restraining or prohibiting consummation
of such transactions or causing any of the transactions contemplated hereunder to be rescinded following completion thereof.


 


(b)          No
action shall have been commenced against Buyer or Seller, which is reasonably likely to prevent the Closing. No injunction or restraining
order shall have been issued by any governmental authority, and be in effect, which restrains or prohibits any transaction contemplated
hereby.


 




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(c)          The
transactions contemplated hereby shall have been approved by the Kentucky Public Service Commission (the “KPSC”)
upon terms and conditions reasonably satisfactory to each party as well as any other identified regulatory or financial releases
needed to transfer the Assets.


 


(d)          The
obligations of Buyer to consummate the transactions contemplated by this Agreement shall be subject to the fulfillment, or Buyer’s
waiver, at or prior to the Closing, of each of the following conditions:


 


(i)          All
representations and warranties of Seller contained in this Agreement or in any document or writing delivered by Seller in connection
with this Agreement shall have been true and correct in all material respects when given and as of the Closing Date.


 


(ii)         Seller
shall have duly performed and complied in all material respects with all agreements, covenants and conditions required by this
Agreement to be performed or complied with by it prior to or on the Closing Date; and


 


(iii)        Seller
shall have delivered to Buyer the deliverables listed in Section 2.02(a) and such other documents or instruments as Buyer reasonably
requests and are reasonably necessary to consummate the transactions contemplated by this Agreement.


 


(iv)        Since
the date of the Financing Statements, there shall have been no event, occurrence, fact, condition or change that is or could reasonably
be expected to become materially adverse to the operation of the Business, but specifically excluding any event, fact, condition
or change resulting from (i) any change in economic conditions, generally or in any of the industries or markets in which the Company
is operated; (ii) any omission to act or action taken with the consent of Buyer (including those omissions to act or actions taken
which are permitted by this Agreement); or (iii) changes in cash flow, net income and/or gross margin resulting from seasonal fluctuations
similar to those which have historically occurred in the Business of the Company.


 


(e)          The
obligations of Seller to consummate the transactions contemplated by this Agreement shall be subject to the fulfillment, or Seller’s
waiver, at or prior to the Closing, of each of the following conditions:


 


(i)          All
representations and warranties of Buyer contained in this Agreement or in any document or writing being delivered by Buyer in connection
with this Agreement shall have been true and correct in all material respects when given and as of the Closing Date.


 


(ii)         Buyer
shall have duly performed and complied in all material respects with all agreements, covenants and conditions required by this
Agreement to be performed or complied with by it prior to or on the Closing Date; and


 


(iii)        Buyer
shall have delivered to Seller the deliverables listed in Section 2.02(b) and such other documents or instruments as Seller reasonably
requests and are reasonably necessary to consummate the transactions contemplated by this Agreement.


 




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(iv)        Seller
shall have received all applicable required consents set forth in Section 3.03 of the Disclosure
Schedules in a form acceptable to Seller in its sole discretion.


 


ARTICLE III


Representations
and warranties of seller


 


Seller represents and
warrants to Buyer that the statements contained in this Article III are true and correct as of the date hereof. For purposes
of this Article III, “Seller’s knowledge,” “knowledge of Seller” and any similar phrases shall
mean the actual knowledge of any director or officer of Seller without investigation.


 


Section
3.01       Organization and Good Standing. Seller is a Kentucky
company in good standing under the laws of the Commonwealth of Kentucky duly qualified and authorized to do business as a utility
in good standing in the Commonwealth of Kentucky.


 


Section
3.02       Authority. Seller has full power and authority to enter
into this Agreement, and this Agreement constitutes a valid and binding obligation of Seller and is enforceable against Seller
according to its terms.


 


Section
3.03       No Defaults. The execution, delivery and performance
at the Closing of this Agreement by the Seller will not (i) conflict or result in a violation or breach of, or default under, any
provision of the Certificate of Incorporation, by-laws or other organizational documents of the Company, (ii) result in the creation
of any encumbrance on the Purchased Assets, or (iii) conflict with, or result in a breach of, any law, order, judgment, decree
or regulation binding on Buyer. Except for the “Required Consents”, as identified in Section 3.03 of
the Disclosure Schedules, no consent, approval, waiver or authorization is required to be obtained by Seller from any person or
entity (including any governmental authority) in connection with the execution, delivery and performance by Seller of this Agreement
and the consummation of the transactions contemplated hereby.


 


Section 3.04       Title
to Purchased Assets. As of the Closing Date, Seller will own and have good title to the Purchased Assets, free and clear of
Encumbrances.


 


Section 3.05      Condition
of Assets. Buyer has inspected the Purchased Assets and Seller shall maintain the Purchased Assets in their current condition,
ordinary wear and tear excepted, between the Effective Date and the Closing. The Purchased Assets comprise all of the assets necessary
for the operation of the Business as currently conducted.


 


Section 3.06       Assigned
Contracts. With the signing of this Agreement, Seller has delivered to Buyer copies of all Assigned Contracts. The Assigned
Contracts have not been further modified or amended or assigned, whether as collateral security or otherwise (except for any collateral
security assignments that will be released as of the Closing Date), and are in full force and effect; to Seller’s knowledge
there are no existing defaults by Seller under the Assigned Contracts; to Seller’s knowledge, no event has occurred or does
any circumstance exist which (whether with or without notice, lapse of time or the happening or occurrence of any other event)
would constitute any default. Except as otherwise provided in Schedule 3.03 (Required Consents) all Assigned Contracts are assignable
without the consent of any third party.


 




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Section 3.07       Compliance
With Laws. To Seller’s knowledge, Seller has complied, and is now complying, with all applicable federal, state and local
laws and regulations applicable to ownership and use of the Purchased Assets.


 


Section 3.08       Litigation.
Seller has not received notice that it is or may be in violation of any material order, writ, injunction, rule, regulation or decree
of any court or of any federal, state, municipal or other governmental authority or agency having jurisdiction with respect to
the Purchased Assets or the Business. Seller is not engaged in any legal action or other proceeding which would have a material
adverse effect on the Purchased Assets or the Business and to Seller’s knowledge, no such action has been threatened.


 


Section 3.09      Financial
Statements. Schedule 3.09 of the Disclosure Schedules contain Seller’s Financial Statements for the period ending
[June 30, 2015] (the “Financial Statements”). The Financial Statements were prepared from the books and records
of the Business using the same accounting principles, procedures, policies, and methods applied on a consistent basis throughout
the periods covered, are accurate and complete in all material respects and present fairly the financial condition and the results
of operations and changes in cash flows of the Business as of the dates and for the periods indicated in all material respects.


 


Section 3.10      Brokers
and Finders. The Seller has not taken any action with respect to any broker or finder which would give rise to any liability
on the part of Buyer or incurred any liability for brokerage fees, commissions or finder’s fees in connection with the transactions
contemplated by this Agreement which would give rise, to any liability on the part of Buyer.


 


Section 3.11      No
Undisclosed Liabilities. Seller shall have no liability or obligation as of the Closing Date that would be required to be disclosed
on a balance sheet prepared from the books and records of the Business, except for the liabilities and obligations of the Company
(i) disclosed or reserved against in the Financial Statements, or (ii) incurred or accrued in the ordinary course of business since
the date of the Financial Statements.


 


ARTICLE IV


Representations
and warranties of buyer


 


Buyer represents and
warrants to Seller that the statements contained in this Article IV are true and correct as of the date hereof. For purposes
of this Article IV, “Buyer’s knowledge,” “knowledge of Buyer” and any similar phrases shall
mean the actual or constructive knowledge of any director or officer of Buyer, after due inquiry.


 




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Section
4.01       Organization and Good Standing. Buyer is a
Colorado limited liability company and is in good standing under the laws of the Commonwealth of Kentucky and is duly qualified
and authorized to do business as a utility in good standing in the Commonwealth of Kentucky.


 


Section
4.02     Authority. Buyer has full power and authority to enter
into this Agreement, and this Agreement constitutes a valid and binding obligation of Buyer and is enforceable against Buyer according
to its terms.


 


Section
4.03       No Defaults. The execution, delivery and performance
at the Closing of this Agreement by Buyer will not (i) conflict with or result in a violation or breach of, or default under, any
provision of the Articles of Organization, Operating Agreement, or other organizational documents of Buyer, or (ii) conflict with,
or result in a breach of, any law, order, judgment, decree or regulation binding on Buyer.


 


Section
4.04       Brokers and Finders. The Buyer has not taken any action
with respect to any broker or finder which would give rise to any liability on the part of Seller or incurred any liability for
any brokerage fees, commissions or finder’s fees in connection with the transactions contemplated by this Agreement which
would give rise, to any liability on the part of Seller.


 


Section
4.05      Consents and Approvals. Except for the approval of
the KPSC as described in Section 2.03(c) no consent, approval or authorization of, or declaration, filing or registration with,
any governmental or regulatory authority is required by Buyer in connection with the execution, delivery and performance of this
Agreement or the consummation of the transactions contemplated hereby.


 


Section
4.06       Litigation. Buyer is not engaged in any legal action
or other proceeding which would affect Buyer’s ability to close the transaction contemplated by this Agreement and to Buyer’s
knowledge no such action has been threatened.


 


Section
4.07       Knowledge. Buyer has no knowledge of any present facts
or circumstances relating to Buyer which would materially adversely affect the ability of it to perform its obligations under this
Agreement.


 


Section
4.08       Knowledge of Inaccuracies. Buyer will promptly
notify the Seller if at any time prior to the Closing if Buyer acquires knowledge of any inaccuracy in the Disclosure Schedules
or in any of the representations made by Seller in this Agreement. If Buyer fails to notify Seller of any inaccuracy in the Disclosure
Schedules or in any of the representations made by Seller herein and it is determined that Buyer had actual notice of the same
prior to Closing, then Buyer will be deemed to have waived and released any and all claims resulting from or arising out of such
false or inaccurate representations or warranties.


 




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Section
4.09       Investigations. Buyer acknowledges that it has been
furnished with and has an opportunity to read this Agreement and all materials relating to the Business. Buyer further acknowledges
that it has been given ample opportunity to ask questions and request information of, and receive answers from Seller concerning
the Business, including but not limited to information relating to the business, finances, operations, and prospects of the Business.


 


Section
4.10      Financial and Technical Capability. Subject
to Public Service Commission regulations and approvals Buyer will have the financial capability to consummate the transaction
pursuant to the terms and conditions of this Agreement, and has the experience and technical know-how
to continue to provide safe and reliable services to the customers of the Company.


 


Section
4.11      Disclaimer. Except for the representations and warranties
of Seller expressly set forth in this Agreement, Buyer understands and agrees that the Purchased Assets are being acquired “as
is, where is” on the Closing Date, and that Buyer is relying on its own examination of the Purchased Assets. Without limiting
the generality of the foregoing and except for the representations and warranties of Seller expressly set forth in this Agreement,
Buyer understands and agrees that Seller expressly disclaims any representations or warranties as to the operation of the Business
and the Purchased Assets, including the condition, value or quality of the Purchased Assets or the prospects, liabilities, risks
and other incidents of the Purchased Assets and any representation or warranty of merchantability, usage, suitability or fitness
for any particular purpose with respect to the Purchased Assets or any part thereof, or as to the workmanship thereof or the absence
of any defects therein, whether latent or patent. Buyer further agrees that, except for the representations and warranties of Seller
expressly set forth in this Agreement and in the Disclosure Schedules and exhibits attached hereto, no due diligence materials
or other information or materials provided by, or communication made by, Seller or any representative of Seller will constitute,
create or otherwise cause to exist any representation or warranty whatsoever, whether or not expressly disclaimed by the foregoing.


 


ARTICLE V


Covenants


 


Section
5.01       Public Announcements. Unless otherwise required by
applicable law, neither party shall make any public announcements regarding this Agreement or the transactions contemplated hereby
without the prior written consent of the other party (which consent shall not be unreasonably withheld or delayed). The parties
acknowledge and agree that this Section shall not (i) prohibit Seller for filing a Form 8-K with the Securities and Exchange Commission,
including with any other required public securities, stock exchange, regulatory or other filing, or (ii) prohibit Buyer from filing
for any governmental application or consent pursuant to Section 5.06 or from disclosing this Agreement
and the terms of sale to any financial institution for the purpose of securing funds for the purchase.


 




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Section 5.02      Transfer
Taxes. All transfer, documentary, sales, use, stamp, registration, value added and other such taxes and fees (including any
penalties and interest) incurred in connection with this Agreement and the documents to be delivered hereunder shall be borne and
paid by Buyer when due. Buyer shall, at its own expense, timely file any tax return or other document with respect to such taxes
or fees (and Seller shall cooperate with respect thereto as necessary).


 


Section 5.03
      Conduct of Business Pending Closing. Seller agrees that from the Effective Date of this Agreement until the Closing Date,
unless otherwise consented to by Buyer in writing, Seller will carry on the Business in the ordinary course in substantially the
same manner as normally conducted including, without limitation, all sales, purchases, contractual dealings, management of stocks
and employee relations, and will not enter into any agreement or make any commitment relating to the Business except in the ordinary
course of business and consistent with past practice.


 


Section 5.04      Access
to Information. From the date hereof until the Closing, Seller shall (a) afford Buyer and its representatives reasonable access
to and the right to inspect all of the properties, assets, premises, books and records, contracts and other documents and data
related to the Seller’s business; (b) furnish Buyer and its representatives with such financial, operating and other data
and information related to the Seller’s business as Buyer or any of its representatives may reasonably request; and (c) instruct
the representatives of Seller to cooperate with Buyer in its investigation of the Seller’s business and the Purchased Assets.


 


Section 5.05       Hiring
of Seller’s Employees. It is Buyer’s non-binding intention, as of the Closing Date, to offer employment to all
employees of the Seller then employed by Seller in the Business (collectively the “Employees”), all such offers of
employment to be pursuant to Buyer’s standard employment practices and policies. Buyer’s intent to offer employment
to such Employees as of the Closing Date shall not create any written or oral contractual right of employment on the part of any
such Employee, except as otherwise agreed by the parties in writing.


 


Section
5.06       Governmental Approvals and Consents. The Buyer shall, as promptly as possible,
after the Effective Date: (i) make, or cause or be made, all filings and submissions required under any law applicable to
such party or any of its affiliates; and (ii) use reasonable best efforts to obtain, or cause to be obtained, all consents,
authorizations, orders and approvals from all governmental authorities, including, but not limited to the KPSC, that may be
or become necessary for the execution and delivery of this Agreement and the performance of the parties obligations pursuant
to this Agreement. The Seller shall cooperate fully with the Buyer and its affiliates in seeking to obtain all such consents,
authorizations, orders and approvals. The parties hereto shall not willfully take any action that will have the effect of
delaying, impairing or impeding the receipt of any required consents, authorizations, orders and approvals. Seller shall file
all necessary filings with the United States SEC as required for the transaction contemplated under this Agreement (if any). Failure
of Buyer to obtain any Governmental approval does not invoke the terms of Article VI.


 




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Section 5.07       Bulk
Sales Laws. The parties hereby waive compliance as to each other with the provisions of any bulk sales, bulk transfer or similar
laws of any jurisdiction that may otherwise be applicable with respect to the sale of any or all of the Assets to Buyer. Any taxes
that may be imposed by a government pursuant to any such bulk sales laws shall be borne exclusively by Buyer.


 


Section 5.08      Customer
Credit and Prepayments. Buyer shall honor all customer prepayments, deposits and credits on
the books and records of Seller, set forth in Schedule 5.08 of the Disclosure Schedules, as of the Closing Date, without
further charge or liability to Seller.


 


Section
5.09       Further Assurances. Following the Closing, each of the parties hereto shall
execute and deliver such additional documents, instruments, conveyances and assurances and take such further actions as may
be reasonably required to carry out the provisions hereof and give effect to the transactions contemplated by this Agreement
and the documents to be delivered hereunder.


 


Section 5.10      Expenses.
If Buyer fails to satisfy any of the “Conditions to Closing” in Section 2.03, that it is responsible for and Buyer
notifies Seller of its inability to meet those “Conditions to Closing” then all legal fees, costs and expenses incurred
by the Seller to such date (collectively, the “Transaction Expenses”) shall be borne by the Buyer. Upon such occurrence,
Seller shall deliver a statement of such Transaction Expenses to Buyer and to Escrow Agent and Escrow Agent shall, within three
(3) days of its receipt of such statements, deliver to Seller the portion of the Deposit required to pay the statement. If the
Transaction Expenses are in excess of the Deposit, Buyer shall within three (3) days of its receipt of the statement, pay the difference
to Seller. If the Deposit is in excess of the Transaction Expenses, the remainder of the Deposit shall be paid to Buyer. In addition,
all legal fees, costs and expenses of any hearing or administrative filing with any governmental agency required for the approval
of the transactions contemplated by this Agreement, shall be borne by the Buyer.


 


Section 5.11       Removal
of Assets. Seller will not enter into any agreement or contractual arrangement providing for, or requiring the sale of, any
of the Purchased Assets during the force and effect of this Agreement beyond those transactions conducted in the ordinary course
of the Seller’s operation of the business.


 




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ARTICLE VI


Indemnification


 


Section
6.01       Survival. All representations, warranties, covenants
and agreements contained herein and all related rights to indemnification shall survive the Closing for a period of twelve (12)
months.


 


Section
6.02       Indemnification by Seller. Subject to the limitations
contained in this Article VI, Seller shall defend, indemnify and hold harmless Buyer, its affiliates and their respective
members, directors, officers and employees from and against all claims, judgments, damages, liabilities, settlements, losses, costs
and expenses, including attorneys’ fees and disbursements (collectively, the “Damages”), arising from
or relating to:


 


(a)          any
inaccuracy in or breach of any of the representations or warranties of Seller contained in this Agreement or any document to be
delivered hereunder;


 


(b)          any
breach or non-fulfillment of any covenant, agreement or obligation to be performed by Seller pursuant to this Agreement or any
document to be delivered hereunder;


 


(c)          any
Excluded Asset or Excluded Liabilities;


 


(d)          any
liability relating to any employee benefit plan of Seller or Seller’s parent company (if any) or any of their affiliates,
as set forth in Schedule 6.02 of the Disclosure Schedules;


 


(e)          Any
liability relating to the employment or termination of employment of any employee by Seller prior to the Closing Date;


 


(f)          liability
of Buyer and/or Seller for unpaid federal, state or local, income, sales and intangible taxes for the period prior to the Closing;


 


(g)          liabilities
under laws governing workers’ compensation, unemployment compensation, social security or income tax withholding for the
period prior to the Closing.


 


Section
6.03      Indemnification By Buyer. Subject to the limitations
contained in this Article VI, Buyer shall defend, indemnify and hold harmless Seller, its affiliates and respective stockholders,
directors, officers and employees from and against all Damages, arising from or relating to:


 


(a)          any
inaccuracy in or breach of any of the representations or warranties of Buyer contained in this Agreement or any document to be
delivered hereunder;


 


(b)          any
breach or non-fulfillment of any covenant, agreement or obligation to be performed by Buyer pursuant to this Agreement or any document
to be delivered hereunder;


 


(c)          any
Assumed Liability; or


 


(d)          any
Assigned Contracts.


 




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Section
6.04       Indemnification Procedures. Whenever any claim shall
arise for indemnification hereunder, the party entitled to indemnification (the “Indemnified
Party”) shall promptly provide written notice of such claim to the other party (the “Indemnifying
Party”). In connection with any claim giving rise to indemnity hereunder resulting from or arising out of any
Action by a person or entity who is not a party to this Agreement, the Indemnifying Party, at its sole cost and expense and upon
written notice to the Indemnified Party, may assume the defense of any such Action with counsel reasonably satisfactory to the
Indemnified Party. The Indemnified Party shall be entitled to participate in the defense of any such Action, with its counsel and
at its own cost and expense. If the Indemnifying Party does not assume the defense of any such Action, the Indemnified Party may,
but shall not be obligated to, defend against such Action in such manner as it may deem appropriate, including, but not limited
to, settling such Action, after giving notice of it to the Indemnifying Party, on such terms as the Indemnified Party may reasonably
deem appropriate and no action taken by the Indemnified Party in accordance with such defense and settlement shall relieve the
Indemnifying Party of its indemnification obligations herein provided with respect to any damages resulting therefrom. The Indemnifying
Party shall not settle any Action without the Indemnified Party’s prior written consent (which consent shall not be unreasonably
withheld, conditioned, or delayed).


 


Section
6.05       Certain Limitations.


 


(a)          The
amount which an Indemnifying Party is or may be required to pay to an Indemnified Party in respect of Damages for which indemnification
is provided under this Agreement will be reduced by any amounts actually received (including amounts received under insurance policies)
by or on behalf of the Indemnified Party from third parties (net of out-of-pocket costs and expenses (including reasonable legal
fees and expenses) incurred by such Indemnified Party in connection with seeking to collect and collecting such amounts), in respect
of such Damages (such net amounts are referred to herein as “Indemnity Reduction Amounts”). If any Indemnified
Party receives any Indemnity Reduction Amounts in respect of an Indemnified Claim for which indemnification is provided under this
Agreement after the full amount of such Indemnified Claim has been paid by an Indemnifying Party or after an Indemnifying Party
has made a partial payment of such Indemnified Claim and such Indemnity Reduction Amounts exceed the remaining unpaid balance of
such Indemnified Claim, then the Indemnified Party will promptly remit to the Indemnifying Party an amount equal to the excess
(if any) of (i) the amount theretofore paid by the Indemnifying Party in respect of such Indemnified Claim less (ii) the amount
of the indemnity payment that would have been due if such Indemnity Reduction Amounts in respect thereof had been received before
the indemnity payment was made. An insurer or other third party who would otherwise be obligated to pay any claim shall not be
relieved of the responsibility with respect thereto or, solely by virtue of the indemnification provisions hereof, have any subrogation
rights with respect thereto, it being expressly understood and agreed that no insurer or any other third party shall be entitled
to any benefit they would not be entitled to receive in the absence of the indemnification provisions by virtue of the indemnification
provisions hereof. Seller and the Buyer will, and will use commercially reasonable efforts to cause their respective representatives
to, pursue promptly any claims or rights it may have against all third parties which would reduce the amount of Damages for which
indemnification is provided under this Agreement.


 




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(b)          Anything
contained in this Agreement to the contrary notwithstanding, the Seller will have no obligation to indemnify the Buyer with respect
to any matter if the Damages arise from a change in the accounting or tax policies or practices of the Seller on or after the Closing
Date.


 


(c)          Anything
contained in this Agreement to the contrary notwithstanding, neither the Buyer nor the Seller will be entitled to any recovery
under this Agreement for special, punitive, exemplary, incidental, indirect or consequential damages, lost profits or diminution
in value.


 


Section
6.06       Dollar Limitations.


 


(a)          Anything
contained in this Agreement to the contrary notwithstanding, in no event will the aggregate amount for which the Seller shall be
responsible to indemnify the Buyer, and for which the Buyer shall be responsible to indemnify the Seller, for any and all claims
under this Agreement exceed, and the Seller’s or Buyer’s aggregate liability for any and all claims under this Agreement
shall be limited to, an amount equal to $50,000 (the “Cap”).


 


(b)          Anything
contained in this Agreement to the contrary notwithstanding, no monetary amount will be payable by the Seller to the Buyer, or
Buyer to Seller, with respect to the indemnification of any claims pursuant to this Article VI until the aggregate amount
of Damages actually incurred by the Buyer with respect to such claims against the Seller, or by the Seller with respect to such
claims against the Buyer shall exceed on a cumulative basis an amount equal to $25,000 (the “Deductible”), in
which event the Seller, or Buyer (as applicable) shall be responsible only for the amount in excess of the Deductible. Notwithstanding
the foregoing, the Deductible shall not be applicable to indemnification claims against Seller relating to the Excluded Liabilities.
In connection with any claim for indemnification, the Buyer will promptly provide Seller with written notice of all claims included
in the Deductible and copies of all documents reasonably requested by the Seller relating thereto.


 


Section
6.07       Tax Treatment of Indemnification Payments. All indemnification
payments made by Seller under this Agreement may be treated by Buyer as an adjustment to the Purchase Price for tax purposes, unless
otherwise required by law.


 


Section
6.08       Effect of Ancillary Documents. For purposes of this
Agreement or contained in or made pursuant to any closing certificate or other instrument or agreement, Seller’s representations
and warranties shall be deemed to include the Schedules and all other documents or certificates delivered by or on behalf of Seller
pursuant to in connection with this Agreement.


 


Section
6.09       Exclusive Remedy. To the fullest extent permitted by
applicable law, the indemnification provided in this Article VI and specific performance pursuant to Section 8.13 shall
be the sole and exclusive remedies available to each of the parties for any matters in connection with this Agreement and the transactions
contemplated hereby.


 




    	 	15	 



    

    

 


Section
6.10       Exception. Notwithstanding the foregoing, the limitations
set forth in Sections 6.01 and 6.06 of this Agreement shall not be applicable to the indemnification claims brought by Buyer under
section 6.02 (c) and (f) hereof.


 


ARTICLE VII


Termination


 


Section
7.01       Termination. This Agreement may be terminated and the
Transactions abandoned at any time prior to the Closing:


 


(a)          by
the mutual written consent of the Seller and the Buyer; or


 


(b)          by
the Seller if the Required Consents are not obtained by 5:00 p.m. Eastern standard time (EST) on November 30, 2015 (the “Walk-Away
Date”). However, if as of 5:00 p.m. Eastern standard time on November 30, 2015 all other Required Consents are obtained
other than Kentucky Public Service Commission approval then November 30, 2015 shall be substituted with December 31, 2015 ; or


 


(c)          by
the Buyer, if the Seller shall have materially breached any of its representations, warranties, covenants or agreements set forth
in this Agreement, which breach (x) would give rise to the failure of a condition set forth in Section 2.03 and (y) cannot be cured
by the Seller by the Walk-Away Date; or


 


(d)          by
the Seller, if the Buyer shall have materially breached any of its representations, warranties, covenants or agreements set forth
in this Agreement, which breach (x) would give rise to the failure of a condition set forth in Section 2.03 and (y) cannot be cured
by the Buyer by the Walk-Away Date.


 


(e)          by
the Buyer if a substantial portion of the Purchased Assets are damaged or destroyed by fire, storm, or any other casualty (collectively,
a “Casualty”) prior to the closing date. Seller assumes all risk of destruction, loss or damage due to fire,
storm, or any other casualty prior to the Closing Date. Upon such destruction, loss, or damage of the facility, or a substantial
part of Sellers’ assets or its inventory, Buyer shall have the option to terminate this Agreement and in the event of the
exercise of such option all rights of Buyer and Seller shall terminate without liability to any party. Buyer shall notify Seller
within seven (7) days after receiving written notice of said destruction, loss or damage of the decision to terminate this Agreement.
If Buyer does not timely notify Seller of termination, this Agreement shall remain in full force and effect, provided, however,
that the Purchase Price shall be adjusted to reflect such destruction, loss or damage, and if Buyer and Seller are unable to agree
upon the amount of such adjustment, the agreement will stand terminated. If this Agreement remains in full force and effect subsequent
to such loss or damage, Buyer shall receive the insurance proceeds paid as a result of such Casualty, subject to adjustments made
agreed upon by Buyer and Seller to the purchase price.


 




    	 	16	 



    

    

 


(f)          by
the Buyer if Lost and Un-accounted for gas (L&U) as calculated for the distribution systems (Purchased Assets) exceeds an average
of 5% for the latest 12 month period available,


 


(g)          by
the Buyer if the amount of bare steel pipe in service as a part of the Purchased Assets exceeds 7000 feet.


 


(h)          by
Buyer if Buyer is unable to obtain adequate gas transportation and /or gas supply commitments from Jefferson Gas, LLC.


 


(i)          by
Buyer if Buyer determines that information obtained from Seller is incorrect, incomplete, or inaccurate.


 


Section
7.02       Effect of Termination. In the event of the termination
of this Agreement as provided in this Article VII, written notice thereof shall be given to the other party, specifying
the provision hereof pursuant to which such termination is made and this Agreement shall forthwith become null and void and there
shall be no liability on the part of the Buyer or the Seller or their respective directors, officers, and Affiliates, except nothing
shall relieve any party from liability for fraud or any breach of this Agreement.


 


ARTICLE VIII


Miscellaneous


 


Section
8.01       Expenses. Except as otherwise declared in Section 5.10
hereof, all costs and expenses incurred in connection with this Agreement and the transactions contemplated hereby shall be paid
by the party incurring such costs and expenses.


 


Section
8.02      Notices. All notices, requests, consents, claims, demands,
waivers and other communications hereunder shall be in writing and shall be deemed to have been given (a) when delivered by hand
(with written confirmation of receipt); (b) when received by the addressee if sent by a nationally recognized overnight courier
(receipt requested); (c) on the date sent by facsimile or e-mail of a PDF document (with confirmation of transmission) if sent
during normal business hours of the recipient, and on the next business day if sent after normal business hours of the recipient;
or (d) on the third day after the date mailed, by certified or registered mail, return receipt requested, postage prepaid. Such
communications must be sent to the respective parties at the following addresses (or at such other address for a party as shall
be specified in a notice given in accordance with this Section):


 


	If to Seller:	
        Public Gas Company, c/o Gas Natural, Inc.

        One Cleveland Center

        1375 East 9th Street

        Cleveland, OH 44114

        Attention: Gregory Osborne

        E-mail: gosborne@egas.net



 




    	 	17	 



    

    

 


	With a copy to:	
        Public Gas Company, c/o Gas Natural, Inc.

        One Cleveland Center

        1375 East 9th Street

        Cleveland, OH 44114

        Attention: Vincent Parisi

        E-mail: vparisi@egas.net

	 	 
	If to Buyer:	
        Kentucky Frontier Gas, LLC

        4891 Independence Street, Suite 200

        Wheat Ridge, CO 80033

        Attention: Robert J. Oxford

        Facsimile: 303-422-6105

        E-mail: igsinc@att.net

	 	 
	with a copy to:	
        John Hughes, Esq.

        124 West Todd Street

        Frankfort, KY 40601

        E-mail: jnhughes@johnnhughespsc.com

        502 227 7270: Phone



 


Section
8.03      Headings. The headings in this Agreement are for reference
only and shall not affect the interpretation of this Agreement.


 


Section
8.04       Severability. If any term or provision of this Agreement
is invalid, illegal or unenforceable in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any
other term or provision of this Agreement or invalidate or render unenforceable such term or provision in any other jurisdiction.


 


Section
8.05       Entire Agreement. This Agreement and the documents to be delivered
hereunder constitute the sole and entire agreement of the parties to this Agreement with respect to the subject matter contained
herein, and supersede all prior and contemporaneous understandings and agreements, both written and oral, with respect to such
subject matter. In the event of any inconsistency between the statements in the body of this Agreement and the documents to be
delivered hereunder, the Exhibits and Disclosure Schedules (other than an exception expressly set forth as such in the Disclosure
Schedules), the statements in the body of this Agreement will control.


 




    	 	18	 



    

    

 


Section
8.06       Successors and Assigns. This Agreement shall be binding
upon and shall inure to the benefit of the parties hereto and their respective successors and permitted assigns. Neither party
may assign its rights or obligations hereunder without the prior written consent of the other party, which consent shall not be
unreasonably withheld or delayed. No assignment shall relieve the assigning party of any of its obligations hereunder.


 


Section
8.07       No Third-party Beneficiaries. This Agreement is for
the sole benefit of the parties hereto and their respective successors and permitted assigns and nothing herein, express or implied,
is intended to or shall confer upon any other person or entity any legal or equitable right, benefit or remedy of any nature whatsoever
under or by reason of this Agreement.


 


Section
8.08       Amendment and Modification. This Agreement may only
be amended, modified or supplemented by an agreement in writing signed by each party hereto.


 


Section
8.09       Waiver. No waiver by any party of any of the provisions
hereof shall be effective unless explicitly set forth in writing and signed by the party so waiving. No waiver by any party shall
operate or be construed as a waiver in respect of any failure, breach or default not expressly identified by such written waiver,
whether of a similar or different character, and whether occurring before or after that waiver. No failure to exercise, or delay
in exercising, any right, remedy, power or privilege arising from this Agreement shall operate or be construed as a waiver thereof;
nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise
thereof or the exercise of any other right, remedy, power or privilege.


 


Section
8.10      Governing Law. This Agreement shall be governed by
and construed in accordance with the internal laws of the Commonwealth of Kentucky without giving effect to any choice or conflict
of law provision or rule (whether of the Commonwealth of Kentucky or any other jurisdiction).


 


Section
8.11       Submission to Jurisdiction. Any legal suit, action
or proceeding arising out of or based upon this Agreement or the transactions contemplated hereby may be instituted in any federal
court of the United States of America or the courts of the Commonwealth of Kentucky in the County where Seller or the Purchased
Assets are primarily located, and each party irrevocably submits to the exclusive jurisdiction of such courts in any such suit,
action or proceeding.


 


Section
8.12     Waiver of Jury Trial. EACH PARTY ACKNOWLEDGES AND
AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES AND, THEREFORE,
EACH SUCH PARTY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LEGAL ACTION
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.


 




    	 	19	 



    

    

 


Section
8.13       Specific Performance. The parties agree that irreparable
damage would occur if any provision of this Agreement were not performed in accordance with the terms hereof and that the parties
shall be entitled to specific performance of the terms hereof, in addition to any other remedy to which they are entitled at law
or in equity.


 


Section
8.14       Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original, but all of which together shall be deemed to be one and the same agreement. A signed
copy of this Agreement delivered by facsimile, e-mail or other means of electronic transmission shall be deemed to have the same
legal effect as delivery of an original signed copy of this Agreement.


 


Section
8.15       Disclosure Schedules. Seller shall update the Disclosure
Schedules prior to Closing to list any additional matters or events that arise between the Effective Date and the Closing Date.


 


[SIGNATURE PAGE FOLLOWS]


 




    	 	20	 



    

    

 


IN WITNESS WHEREOF,
the parties hereto have caused this Agreement to be executed as of the date first written above by their respective officers thereunto
duly authorized.


 


	 	Public Gas Company
	 	By Gas Natural, Inc. its sole shareholder
	 	 	 
	 	By:	/s/ Gregory J. Osborne
	 	Name:	Gregory J. Osborne
	 	Title:	President & CEO
	 	 	 
	 	Kentucky Frontier Gas, LLC
	 	 	 
	 	By:	/s/ Robert J. Oxford
	 	Name:	Robert J. Oxford
	 	Title:	Owner—Manager


 


[Signature Page to Asset Purchase Agreement]