Document:

EX-10.1

Exhibit 10.1

EXECUTIVE EMPLOYMENT AGREEMENT

     This Executive Employment Agreement (this “Agreement”) is effective as of May 1, 2009, between
R.G. Barry Corporation, an Ohio corporation (the “Company”), and Greg A. Tunney (the “Executive”).

WITNESSETH:

     WHEREAS, the Company and the Executive previously entered into an Executive Employment
Agreement dated as of February 7, 2006, as amended and restated effective as of December 31, 2008
(the “2006 Agreement”);

     WHEREAS, the Company and the Executive desire to enter into a new Executive Employment
Agreement subject to the terms and conditions contained herein; and

     WHEREAS, the parties agree that this Agreement contains the entire understanding of the
parties and shall supersede and replace the 2006 Agreement in its entirety;

     NOW THEREFORE, in consideration of the foregoing, of the mutual promises contained herein and
of other good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:

1. Position/Duties

     (a) During the Employment Term (as defined in Section 2), the Executive shall serve as the
Chief Executive Officer and President of the Company. In his positions as Chief Executive Officer
and President, the Executive shall report exclusively to the Board of Directors of the Company (the
“Board”).

     (b) In each of his respective capacities the Executive shall have the duties, authorities and
responsibilities for such positions set forth in the Company’s Code of Regulations. In addition,
the Executive shall have the duties, authorities and responsibilities (to the extent not
inconsistent with the Company’s Code of Regulations) commensurate with the duties, authorities and
responsibilities of persons in similar capacities in similarly sized companies and such other
duties and responsibilities as the Board shall designate that are consistent with the Executive’s
positions under this Agreement.

     (c) During the Employment Term (as defined in Section 2), the Executive shall devote
substantially all of his business time (excluding periods of vacation and other approved leaves of
absence) to the performance of his duties with the Company, provided the foregoing shall not
prevent the Executive from (i) participating in charitable, civic, educational, professional,
community or industry affairs or, with prior written approval of the Board, serving on the boards
of directors or advisory boards of other companies, and (ii) managing his and his family’s personal
investments, so long as such activities do not materially interfere with the performance of his
duties hereunder or create a potential business conflict or the appearance thereof. If at any time
service on any board of directors or advisory board would, in the good faith judgment of the Board,
conflict with the Executive’s fiduciary duty to the Company or
create any appearance thereof, the Executive shall, as soon as reasonably practicable
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any fiduciary duty to the other entity, resign from such other board of directors or
advisory board after written notice of the conflict is received from the Board. Service on the
boards of directors or advisory boards disclosed by the Executive to the Company on which he was
serving as of the Effective Date previously have been approved.

2. Employment Term

     With respect to the Executive’s position as Chief Executive Officer and President, the
Executive’s initial term of employment under this Agreement shall begin on May 1, 2009 (the
“Effective Date”) and shall end on the third anniversary thereof, unless sooner terminated as
provided in Section 5. Following the initial Employment Term, the Employment Term shall
automatically renew for additional one-year periods unless terminated pursuant to Section 5 or
unless either party gives the other ninety (90) days prior written notice of its intent not to
renew. The initial term and any renewal thereof are collectively referred to as the “Employment
Term.”

3. Compensation and Related Matters

     (a) Annual Base Salary

     The Company agrees to pay the Executive a base salary at an annual rate of not less than
$500,000 before all customary payroll deductions and withholdings. Base salary shall be payable in
accordance with the regular payroll practices of the Company, but not less frequently than monthly.
The base salary in effect for the Executive from time to time during the Employment Term shall
constitute “Base Salary” for purposes of this Agreement. The Executive’s Base Salary shall be
subject to annual review by the Board (or a committee thereof) and may be increased, but not
decreased, from time to time by the Board (or a committee thereof). No increase to Base Salary
shall be used to offset or otherwise reduce any obligations of the Company to the Executive
hereunder or otherwise.

     (b) Annual Performance Bonus

     During the Employment Term, the Executive shall be entitled to participate in the Company’s
senior management bonus program, as approved by the Compensation Committee of the Board, pursuant
to which the Executive shall have the opportunity to earn an annual bonus measured against Company
and individual performance. Any such annual bonus shall be paid in accordance with the terms of
the applicable bonus plan.

     (c) Long-Term Incentive Plan

     Beginning January 1, 2007 and annually thereafter, the Executive was and shall continue to be
entitled to participate in the R.G. Barry Corporation Amended and Restated 2005 Long-Term Incentive
Plan or any successor plan thereto (the “Plan”) (for so long as the Plan remains in effect for
executives of the Company), in an amount determined annually by the Board or the Compensation
Committee of the Board that is commensurate with his position, but in no event shall such amount be
less than that offered to any other executive of the Company. Incentives shall be paid in the form
of options, restricted stock units or cash, as determined annually by the Board or the Compensation
Committee of the Board.

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     (d) Other Awards

     During the Employment Term, the Executive shall be eligible to participate in any bonus and
other incentive compensation plans and programs available to the Company’s senior executives at a
level commensurate with his position, other than existing plans and programs that have been
terminated or frozen as to new participants as of February 7, 2006.

4. Employee Benefits

     (a) Benefit Plans

     (i) Except for plans and programs that have been terminated or frozen as to new
participants as of February 7, 2006 and subject to Section 4(a)(ii), the Executive shall be
entitled to participate in all benefit plans of the Company that are available to the
Company’s senior executives, including, but not limited to, pension, thrift, profit sharing,
401(k), medical coverage, disability, education, or other retirement or welfare benefits
that the Company has adopted or may adopt, maintain or contribute to for the benefit of its
senior executives subject to satisfying the applicable eligibility requirements and any
other terms of any such plan. Such benefits, in the aggregate, shall be no less favorable
than the level of benefits provided to the Company’s senior executives as of February 7,
2006 (without taking into account any terminated or frozen plan); provided, however, that in
the event there is a reduction of employee benefits applicable to senior executives
generally, nothing herein shall preclude the Company’s ability to reduce the Executive’s
benefits consistent with such reduction.

     (ii) Without limiting the generality of the foregoing, on January 15th of
each year during the Employment Term, the Company shall pay to the Executive an amount equal
to the product of 8.75%, multiplied by his Base Salary as in effect on the date of payment
in a lump sum. In exchange for such payment, the Executive agrees to relinquish any right
to participate in any long-term retirement plan or program of the Company now in effect or
hereafter established. Nothing in the foregoing shall be construed as a prohibition or
limitation of the Executive’s right to participate in the benefit plans and programs of the
Company described in Section 4(a)(i).

     (b) Vacations

     The Executive shall be entitled to annual paid vacation in accordance with the Company’s
policy applicable to senior executives, but in no event less than four (4) weeks per calendar year
(as prorated for partial years), which vacation may be taken at such times as the Executive elects
with due regard to the needs of the Company.

     (c) Perquisites

     During the Employment Term, the Company shall provide to the Executive all employee and
executive perquisites which other senior executives of the Company are generally entitled to
receive, in accordance with Company policy set by the Board from time to time, including country
club and health club memberships (initiation and dues). In addition to the foregoing, the Company
shall provide the Executive with (i) personal financial planning and tax services

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annually in an amount not to exceed $15,000 per year, (ii) an automobile allowance of $12,000
per year which shall be payable in substantially equal monthly installments on the first pay period
of each month, and (iii) monthly country club dues not to exceed $400 per month. The Company shall
have no right or claim to any automobile purchased by the Executive in whole or in part with the
automobile allowance.

     (d) Business and Entertainment Expenses

     Upon presentation of appropriate documentation, the Executive shall be reimbursed in
accordance with the Company’s expense reimbursement policy for all reasonable and necessary
business and entertainment expenses incurred in connection with the performance of his duties
hereunder.

5. Termination

     For purposes of this Agreement, “termination” or any form thereof shall mean a “separation
from service,” within the meaning of Treasury Regulation §1.409A-1(h), with the Company and all
persons with whom the Company would be considered a single employer under Sections 414(b) and (c)
of the of the Internal Revenue Code of 1986, as amended (the “Code”). The Executive’s employment
and the Employment Term shall terminate on the first of the following to occur:

     (a) Disability

     Upon thirty (30) days prior written notice by the Company to the Executive of termination due
to Disability, provided, however, that during such thirty (30) day period, the Executive shall not
have returned to the full-time performance of his duties and responsibilities under this Agreement.
For purposes of this Agreement, “Disability” shall mean the Executive is determined to be disabled
under the Company’s long-term disability plan without regard to any requirement that the Executive
incur a loss of income, or if no such plan exists, the Executive is totally and permanently
disabled for a period of at least 120 consecutive days as determined by a physician selected by the
Company and reasonably acceptable to the Executive or the Executive’s legal representative.

     (b) Death

     Automatically on the date of death of the Executive.

     (c) Cause

     Upon written notice by the Company to the Executive of a termination for Cause. “Cause” shall
mean any of the following:

     (i) gross negligence materially detrimental to the Company;

     (ii) Executive’s conviction of, or plea of nolo contendere with respect to, any felony
or any lesser crime or offense which involves a breach of trust or fiduciary duty owed to
the Company or any of its affiliates;

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     (iii) willful and continued failure of the Executive to perform the duties or
responsibilities of the positions held by him and such failure continues for thirty (30)
days after the Executive’s receipt of written notice from the Company setting forth the
specifics of such failure, unless such failure is the result of ill health or physical or
mental disability; or

     (iv) intentional misconduct of the Executive which is materially and demonstrably
injurious to the Company.

     (d) Without Cause

     Upon written notice by the Company to the Executive of an involuntary termination without
Cause, other than for Disability or as a result of the Executive’s death.

     (e) Good Reason

     Upon written notice by the Executive to the Company that he intends to terminate his
employment hereunder for Good Reason and the failure of the Company, within ten (10) days of its
receipt of such written notice, to cure the condition cited by the Executive in such notice as
constituting Good Reason. For purposes of this Agreement, “Good Reason” means the occurrence of
any one of the following events unless the Executive specifically agrees in writing that such event
shall not be Good Reason:

     (i) (A) the assignment to the Executive of any duty or responsibility without the
Executive’s consent that is inconsistent in any material respect with the position
(including, without limitation, his status, office and titles), authority, duties or
responsibilities as contemplated in Section 1, or (B) any other action by the Company
without the Executive’s consent which results in a material diminution in such positions,
authority, duties or responsibilities, which in case of either (A) or (B) continues for ten
(10) days after written notice of such action from the Executive to the Company;

     (ii) any reduction, directly or indirectly, in the Executive’s Base Salary or any
material reduction in the extent of Executive’s participation in the plans referred to in
Section 3 or the extent of Executive’s entitlement to the employee benefits, expense
reimbursements, fringe benefits or perquisites referred to in Section 4 (other than plans
that are terminated or frozen as to new participants on February 7, 2006 or any reduction
that impacts all participants or that results pursuant to the terms of any such benefit
plan);

     (iii) the failure of the Company to assign this Agreement to a successor to the Company
or failure of a successor to the Company to explicitly assume and agree to be bound by this
Agreement in a writing delivered to the Executive;

     (iv) requiring the Executive to be principally based at any office or location more
than thirty (30) miles from the current corporate offices of the Company in Columbus, Ohio;

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      (v) any failure of the Executive after his initial appointment or election to the Board
to be nominated by the Board (or the appropriate Board committee) at each subsequent
election of directors at which the Executive is up for election; or

     (vi) any other failure by the Company to comply with any term, condition or provision
of this Agreement which continues for ten (10) days after written notice of such failure
from the Executive to the Company.

     (f) Without Good Reason

     Upon thirty (30) days’ prior written notice by the Executive to the Company of the Executive’s
termination of employment without Good Reason (which the Company may, in its sole discretion, make
effective earlier than any notice date).

6. Consequences of Termination

     Subject to Section 7, the following amounts and benefits shall be due to the Executive upon
termination of employment during the Employment Term:

     (a) Disability

     If the Executive’s employment terminates by reason of Disability, the Company shall pay or
provide to the Executive (i) any unpaid Base Salary through the date of termination and any
vacation accrued in accordance with Company policy within thirty (30) days after the date of
termination; (ii) any unpaid bonus earned with respect to any fiscal year ending on or preceding
the date of termination in accordance with the applicable bonus plan; (iii) reimbursement for any
unreimbursed expenses incurred through the date of termination in accordance with the Company’s
expense reimbursement policy; and (iv) all other payments, benefits or fringe benefits to which the
Executive may be entitled under the terms of any applicable compensation arrangement or benefit,
equity or fringe benefit plan or program or grant or this Agreement (collectively, the “Accrued
Amounts”). In addition, the Executive shall receive (v) a Pro Rata Bonus as defined in Section
6(d)(vi)(B), payable at the time that annual bonuses are next paid to other senior executives of
the Company in accordance with the terms of the applicable bonus plan and (vi) an amount equal to
the payment the Executive received pursuant to Section 4(a)(ii) for the calendar year in which his
termination of employment occurs within seventy (70) days following the Executive’s termination of
employment.

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     (b) Death

     If the Executive’s employment terminates by reason of his death, the Executive’s estate (or to
the extent a beneficiary or beneficiaries has been designated, the named beneficiary(ies)) shall be
entitled to any Accrued Amounts at such times described in Section 6(a). In addition, the
Executive’s beneficiary(ies) shall receive a Pro Rata Bonus as defined in Section 6(d)(vi)(B)
below, payable at the time that annual bonuses are next paid to other senior executives of the
Company in accordance with the terms of the applicable bonus plan.

     (c) Termination for Cause or Without Good Reason

     If the Executive’s employment is terminated (i) by the Company for Cause, or (ii) by the
Executive without Good Reason, the Company shall pay to the Executive any Accrued Amounts at such
times described in Section 6(a).

     (d) Termination Without Cause or for Good Reason Prior to a Change in Control

     If the Executive’s employment is terminated by the Company (other than for Cause, Disability
or as a result of death) or by the Executive for Good Reason, and Section 8(b) is not applicable,
then:

     (i) The Company shall pay or provide the Executive with the Accrued Amounts at such
times described in Section 6(a).

     (ii) Any portion of the stock option granted to the Executive on February 7, 2006 that
is unvested on the date of termination shall become fully vested and remain exercisable for
twelve (12) months following termination, subject to Sections 12.03 and 12.04 of the Plan.

     (iii) The Company shall continue to pay to the Executive his Base Salary at the rate in
effect on the employment termination date, (or, if greater, the Executive’s Base Salary in
effect immediately prior to any event described in Section 5(e)(ii)) for a period of twelve
(12) months beginning within seventy (70) days following his termination of employment in
accordance with the Company’s regular payroll policies.

     (iv) Subject to his co-payment of premiums at the rate in effect on the date of his
termination of employment, the Executive shall be entitled to continue his participation for
one (1) year following termination of employment in all health and welfare plans in which
the Executive (and eligible dependents) is a participant at the time of such termination
upon the same terms and conditions (except for the requirements of the Executive’s continued
employment) in effect for active employees of the Company. Notwithstanding the foregoing,
(A) any amounts or benefits that will be paid or provided under this Section 6(d)(iv) with
respect to health or dental coverage after completion of the time period described in
Treasury Regulation §1.409A-1(b)(9)(v)(B) and (B) any other amounts or benefits that will be
paid or provided under this Section 6(d)(iv) shall be subject to the following requirements:
(I) the amount of expenses eligible for reimbursement or benefits provided during any
taxable year of the Executive may not

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affect the expenses eligible for reimbursement or benefits to be provided in any other
taxable year of the Executive; (II) any reimbursement of an eligible expense shall be made
on or before the last day of the taxable year of the Executive following the taxable year of
the Executive in which the expense was incurred; and (III) the right to such reimbursement
or benefit may not be subject to liquidation or exchange for another benefit. In the event
that the Executive obtains other employment that offers substantially similar or improved
benefits, as to any particular health or welfare plan, such continuation of coverage by the
Company for such similar or improved benefit under such plan under this Section 6(d)(iv)
shall immediately cease, provided that in no event shall any COBRA (or COBRA-equivalent)
benefits cease but they shall become secondary to the extent permitted by law while such
other benefits are in effect. To the extent such coverage cannot be provided under the
Company’s health or welfare plans without jeopardizing the tax status of such plans, for
underwriting reasons (e.g., disability benefits), the Company shall pay the Executive an
amount equal to the value thereof within 70 days following the Executive’s termination of
employment; provided that the “value” of benefits, if insured benefits, shall be the present
value (based on the two (2)-year U.S. Treasury rates as of the date of termination) of
premiums expected for coverage, and if not insurance benefits, shall be the present value of
the expected net cost (i.e., gross cost less any active employee premiums) to the Company to
provide such benefits. The continuation of health benefits under this Section 6(d)(iv)
shall reduce and count against the Executive’s rights under COBRA.

     (v) The Company shall pay to the Executive an amount equal to the payment the Executive
received pursuant to Section 4(a)(ii) of this Agreement for the calendar year in which his
termination of employment occurs. Such payment shall be made within seventy (70) days
following the Executive’s termination of employment.

     (vi) The Executive shall receive an amount, payable at the time that annual bonuses are
next paid to other senior executives pursuant to the terms of the applicable bonus plan,
equal to the greater of (A) the Executive’s target bonus opportunity under the Company’s
senior management bonus program for the plan year in which his termination of employment
occurs, determined without regard to any reduction in such target bonus opportunity that is
approved by the Board or the Compensation Committee of the Board after the beginning of such
plan year without the Executive’s consent; or (B) a pro-rata portion of the Executive’s
bonus for the performance year in which the Executive’s termination occurred (determined by
multiplying the amount the Executive would have received based upon actual performance had
employment continued through the end of the performance year by a fraction, the numerator of
which is the number of days that the Executive was employed by the Company during the
performance year in which the Termination occurred and the denominator of which is 365) (the
payment provided for in this subsection (B) is the “Pro Rata Bonus”).

     (vii) The Company shall, at its sole expense as incurred, provide the Executive with
reasonable outplacement services, the scope and provider of which shall be selected by the
Executive in his sole discretion; provided, that (A) the total cost to the Company in
providing such services shall not exceed $20,000; and (B) the Executive must incur such

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expenses no later than December 31 of the second calendar year following the calendar
year in which the termination occurred.

     (e) Six-Month Distribution Delay

     Notwithstanding anything in this Agreement to the contrary, if the Executive is a “specified
employee” (within the meaning of Section 409A of the Code and the Treasury Regulations promulgated
thereunder and as determined under the Company’s policy for determining specified employees), on
the Executive’s date of termination and the Executive is entitled to a payment and/or a benefit
under this Agreement that is required to be delayed pursuant to Section 409A(a)(2)(B)(i) of the
Code, then such payment or benefit, as the case may be, shall not be paid or provided (or begin to
be paid or provided) until the first business day of the seventh month following the date of the
Executive’s termination of employment (or, if earlier, the date of the Executive’s death). The
first payment that can be made to the Executive following such postponement period shall include
the cumulative amount of any payments or benefits that could not be paid or provided during such
postponement period due to the application of Section 409A(a)(2)(B)(i) of the Code.

7. Mitigation/Release

     The Executive shall not be required to mitigate the amount of any payment or benefit provided
for in Section 6 by seeking other employment or otherwise, nor shall the amount of any payment or
benefit provided for the Executive in Section 6 be reduced by any other compensation earned by the
Executive as the result of employment by another employer or by reason of the Executive’s receipt
of or right to receive any retirement or other benefits after the date of termination of employment
or otherwise, except as set forth in this Agreement. As a condition to receiving the severance
compensation provided for in Section 6, the Executive shall execute and deliver to the Company a
release of claims (other than claims arising under this Agreement) against the Company in a form
satisfactory to the Company within sixty (60) days following the date of termination so long as the
Company executes and delivers to Executive a comparable release of claims against the Executive.

8. Change in Control Benefits

     (a) Definition

     For purposes of this Agreement, “Change in Control” shall mean the first to occur of any of
the following events:

     
(i) any “person” (as defined in Section 13(d) and 14(d) of the Securities Exchange Act
of 1934, as amended (the “Exchange Act”)), excluding for this purpose, (A) the Company or
any subsidiary of the Company, or (B) any employee benefit plan of the Company or any
subsidiary of the Company, or any person or entity organized, appointed or established by
the Company for or pursuant to the terms of any such plan which acquires beneficial
ownership of voting securities of the Company, is or becomes the “beneficial owner” (as
defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the
Company representing more than fifty percent (50%) of the combined voting power of the
Company’s then outstanding voting securities; provided,

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however, that no Change in Control will be deemed to have occurred as a result of a
change in ownership percentage resulting solely from an acquisition of securities by the
Company; or

     (ii) persons who, as of the Effective Date, constitute the Board (the “Incumbent
Directors”) cease for any reason, including without limitation, as a result of a tender
offer, proxy contest, merger or similar transaction, to constitute at least a majority
thereof, provided that any person becoming a director of the Company subsequent to the
Effective Date shall be considered an Incumbent Director if such person’s election or
nomination for election was approved by a vote of at least fifty percent (50%) of the
Incumbent Directors; but provided further, that any such person whose initial assumption of
office is in connection with an actual or threatened election contest relating to the
election of members of the Board or other actual or threatened solicitation of proxies or
consents by or on behalf of a “person” (as defined in Section 13(d) and 14(d) of the
Exchange Act) other than the Board, including by reason of agreement intended to avoid or
settle any such actual or threatened contest or solicitation, shall not be considered an
Incumbent Director; or

     (iii) consummation of a reorganization, merger or consolidation or sale or other
disposition of all or substantially all of the assets of the Company (a “Business
Combination”), in each case, unless, following such Business Combination, all or
substantially all of the individuals and entities who were the beneficial owners of
outstanding voting securities of the Company immediately prior to such Business Combination
beneficially own, directly or indirectly, more than fifty percent (50%) of the combined
voting power of the then outstanding voting securities entitled to vote generally in the
election of directors, as the case may be, of the company resulting from such Business
Combination (including, without limitation, a company which, as a result of such
transaction, owns the Company or all or substantially all of the Company’s assets either
directly or through one or more subsidiaries) in substantially the same proportions as their
ownership, immediately prior to such Business Combination, of the outstanding voting
securities of the Company; or

     (iv) approval by the shareholders of the Company of a complete liquidation or
dissolution of the Company.

Notwithstanding the foregoing, the Executive shall not be entitled to any payment or benefit under
Section 8(b) unless the Change in Control also constitutes a “change in control event” under
Section 409A of the Code and the Treasury Regulations promulgated thereunder.

     (b) Effect

     If, within twelve (12) months after a Change in Control of the Company, the Executive’s
employment is terminated by the Company or a successor to the Company for any reason other than for
Cause or Disability or due to the Executive’s death or if the Executive terminates his employment
for Good Reason:

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     (i) The Company shall pay or provide the Executive with the Accrued Amounts at such
times described in Section 6(a).

     (ii) The Executive shall receive, within thirty (30) days following his termination of
employment, a lump sum cash payment equal to two (2) times the sum of (A) his Base Salary
at the rate in effect on the employment termination date or, if greater, on the date of the
Change in Control, plus (B) an amount equal to the Executive’s target bonus opportunity in
effect at the time termination of employment occurs or, if greater, on the date of the
Change in Control.

     (iii) In addition, for a period of one (1) year following any such termination of
employment, the Executive shall be entitled to continue his participation in all health and
welfare plans in which the Executive (and eligible dependents) participated at the time of
such termination upon the same terms and conditions (except for the requirements of the
Executive’s continued employment) in effect for active employees of the Company, including
any premium co-payment requirements. Notwithstanding the foregoing, (A) any amounts or
benefits that will be paid or provided under this Section 8(b)(ii) with respect to health or
dental coverage after completion of the time period described in Treasury Regulation
§1.409A-1(b)(9)(v)(B) and (B) any other amounts or benefits that will be paid or provided
under this Section 8(b)(ii) shall be subject to the following requirements: (I) the amount
of expenses eligible for reimbursement or benefits provided during any taxable year of the
Executive may not affect the expenses eligible for reimbursement or benefits to be provided
in any other taxable year of the Executive; (II) any reimbursement of an eligible expense
shall be made on or before the last day of the taxable year of the Executive following the
taxable year of the Executive in which the expense was incurred; and (III) the right to such
reimbursement or benefit may not be subject to liquidation or exchange for another benefit.
In the event that the Executive obtains other employment that offers substantially similar
or improved benefits, as to any particular health or welfare plan, such continuation of
coverage by the Company for such similar or improved benefit under such plan under this
Section 8(b)(ii) shall immediately cease, provided that in no event shall any COBRA (or
COBRA-equivalent) benefits or retiree benefits cease but they shall become secondary to the
extent permitted by law while such other benefits are in effect. To the extent such
coverage cannot be provided under the Company’s health or welfare plans without jeopardizing
the tax status of such plans, for underwriting reasons (e.g., disability benefits), the
Company shall pay the Executive an amount equal to the value thereof within 70 days
following the Executive’s termination of employment; provided that the “value” of benefits,
if insured benefits, shall be the present value (based on the two (2)-year U.S. Treasury
rates as of the date of termination) of premiums expected for coverage, and if not insurance
benefits, shall be the present value of the expected net cost (i.e., gross cost less any
active employee premiums) to the Company to provide such benefits. The continuation of
health benefits under this Section 8(b)(ii) shall reduce and count against the Executive’s
rights under COBRA.

     (iv) The Company shall pay to the Executive an amount equal to the amount the Executive
received pursuant to Section 4(a)(ii) of this Agreement for the calendar

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year in which his termination of employment occurs. Such payment shall be made within
thirty (30) days following the Executive’s termination of employment.

If the Executive’s employment is terminated by the Company for Disability or Cause, if the
Executive’s employment terminates because of his death, or if the Executive terminates his
employment without Good Reason, and such termination of employment occurs following a Change in
Control, the effect of such termination shall be governed by Section 6.

     (c) Excise Taxes

     Notwithstanding any other provision of this Agreement, if any payments or distributions in the
nature of compensation to be made to or for the benefit of the Executive, whether paid or payable
pursuant to this Agreement or otherwise (including the vesting of stock options and any other
events that result in a “payment in the nature of compensation” within the meaning of Section 280G
of the Code), are characterized as “excess parachute payments” within the meaning of Section 280G
of the Code or any successor provision, then the Company shall either:

     (i) pay to the Executive an additional amount equal to the excise taxes imposed by
Section 4999 of the Code or any successor provision on the Executive’s excess parachute
payments by December 31 of the calendar year following the calendar year in which the
Executive remits the related taxes, if such procedure provides the Executive with an
after-tax amount that is greater than the after-tax amount produced under the following
clause (ii); or

     (ii) reduce the amounts otherwise payable to the Executive under this Agreement to the
maximum amount that may be paid to the Executive without any portion of any payment to the
Executive under this Agreement or any other agreement constituting an excess parachute
payment, if this procedure provides Executive with an after-tax amount that is greater than
the after-tax amount produced under clause (i) above.

If clause (ii) applies, within ten (10) days of the date of termination of employment, the Company
shall notify the Executive of the amount of the reduction. All after-tax amounts determined for
purposes of this Section 8(c) shall be made by a qualified tax advisor that is acceptable to the
Executive, whose fees shall be paid by the Company. Any reduction pursuant to this Section
8(c)(ii) shall be made in accordance with Section 409A of the Code.

9. Confidentiality, Nonsolicitation and Noncompensation

     (a) Confidentiality

     The Executive acknowledges that the services which he will be providing to and for the Company
or its affiliates will give him access to, and the Executive hereby agrees to hold in a fiduciary
capacity for the benefit of the Company, any and all secret or confidential information, knowledge
or data relating to the Company or any of its affiliated companies, and their respective
businesses, which shall have been obtained by the Executive during his employment with the Company
and which shall not be in the public knowledge (other than by acts of the Executive or his
representative in violation of this Agreement). After the expiration or earlier termination of
this Agreement and the employment of the Executive hereunder, the Executive

-12-

 

shall not, without prior written consent or the Company, or unless required to do so by order
of a court, communicate or divulge any such information, knowledge or data to anyone other than the
Company and those designated by it. In no event shall an asserted violation of the provisions of
this Section 9(a) constitute a basis for deferring or withholding any amounts otherwise payable to
the Executive under this Agreement.

     (b) Nonsolicitation

     During the Executive’s employment with the Company and for the one (1) year period following
his termination, the Executive agrees that he will not, directly or indirectly, individually or on
behalf of any other person, firm, corporation or other entity, knowingly solicit, aid or induce (i)
any managerial level employee of the Company or any of its subsidiaries or affiliates to leave such
employment in order to accept employment with, or render services to or with any other person,
firm, corporation or other entity unaffiliated with the Company or knowingly take any action to
materially assist or aid any other person, firm, corporation or other entity in identifying or
hiring any such employee (provided, that the foregoing shall not be violated by general advertising
not targeted at Company employees or by serving as a reference for an employee with regard to an
entity with which the Executive is not affiliated), or (ii) any customer of the Company or any of
its subsidiaries or affiliates to purchase goods or services then sold by the Company or any of its
subsidiaries or other affiliates from another person, firm, corporation or other entity or assist
or aid any other person or entity in identifying or soliciting any such customer.

     (c) Noncompetition

     During the Executive’s employment hereunder and for the one (1) year period following his
termination, without the prior written consent of the Board, the Executive shall not, directly or
indirectly, own, manage, operate, control, be employed by (whether as an employee, consultant,
independent contractor or otherwise, and whether or not for compensation) or render services to any
person, firm, corporation or other entity, in whatever form, that operates as a wholesaler of one
or more product lines that are directly competitive to one or more of the product lines of the
Company or any of its subsidiaries on the date of termination of employment. The geographic scope
of the restriction set forth in the immediately preceding sentence shall include the United States
and any other country in which the Company, including its subsidiaries, markets or sells such
competing product line or lines. This Section 9(c) shall not prevent the Executive from owning not
more than one percent (1%) of the total shares of all classes of stock outstanding of any publicly
held entity engaged in such business.

     (d) Equitable Relief and Other Remedies

     The parties acknowledge and agree that the other party’s remedies at law for a breach or
threatened breach of any of the provisions of this Section 9 would be inadequate and, in
recognition of this fact, the parties agree that, in the event of such a breach or threatened
breach, in addition to any remedies at law, the other party, without posting any bond, shall be
entitled to obtain equitable relief in the form of specific performance, a temporary restraining
order, a temporary or permanent injunction or any other equitable remedy which may then be
available.

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     (e) Reformation

     If it is determined by a court of competent jurisdiction in any state that any restriction in
this Section 9 is excessive in duration or scope or is unreasonable or unenforceable under the laws
of that state, it is the intention of the parties that such restriction may be modified or amended
by the court to render it enforceable to the maximum extent permitted by the law of that state.

     (f) Survival of Provisions

     The obligations contained in this Section 9 shall survive the termination or expiration of the
Executive’s employment under this Agreement with the Company and shall be fully enforceable
thereafter.

10. No Assignments

     (a) This Agreement is personal to each of the parties hereto. Except as provided in Section
10(b), no party may assign or delegate any rights or obligations hereunder without first obtaining
the written consent of the other party hereto.

     (b) The Company may assign this Agreement to any successor to all or substantially all of the
business and/or assets of the Company provided the Company shall require such successor to
expressly assume and agree to perform this Agreement in the same manner and to the same extent that
the Company would be required to perform it if no such succession had taken place and shall deliver
a copy of such assignment to the Executive.

11. Notice

     For the purpose of this Agreement, notices and all other communications provided for in this
Agreement shall be in writing and shall be deemed to have been duly given (a) on the date of
delivery if delivered by hand, (b) on the date of transmission, if delivered by confirmed
facsimile, (c) on the first business day following the date of deposit if delivered by guaranteed
overnight delivery service, or (d) on the fourth business day following the date delivered or
mailed by United States registered or certified mail, return receipt requested, postage prepaid,
addressed as follows:

	 	 	 	 	 
	 

	 	If to the Executive:
	 	At the address (or to the facsimile number) shown

on the records of the Company
	 
	 	 	 	 
	 

	 	If to the Company:
	 	R.G. Barry Corporation

13405 Yarmouth Road N.W.

Pickerington, Ohio 43147

Fax No.: (614) 866-9787

or to such other address as either party may have furnished to the other in writing in accordance
herewith, except that notices of change of address shall be effective only upon receipt.

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12. Section Headings; Inconsistency

     The section headings used in this Agreement are included solely for convenience and shall not
affect, or be used in connection with, the interpretation of this Agreement. In the event of any
inconsistency between the terms of this Agreement and any form, award, plan or policy of the
Company, the terms of this Agreement shall control; no provision in any policy, code, plan or
program related to a violation thereof being grounds for termination, or similar language, shall
result in a “cause” termination unless such violation is also Cause under this Agreement and the
provisions hereof are complied with, and the foregoing shall apply even if the Executive signs an
acknowledgment or otherwise agrees to the provisions of such policy, code, plan or program.

13. Severability

     The provisions of this Agreement shall be deemed severable, and the invalidity or
unenforceability of any provision shall not affect the validity or enforceability of the other
provisions hereof.

14. Counterparts

     This Agreement may be executed in several counterparts, each of which shall be deemed to be an
original but all of which together will constitute one and the same instrument. One or more
counterparts of this Agreement may be delivered by facsimile, with the intention that delivery by
such means shall have the same effect as delivery of an original counterpart thereof.

15. Arbitration

     Any dispute or controversy arising under or in connection with this Agreement, other than
injunctive relief under Section 9(d) or damages for breach of Section 9, shall be settled
exclusively by arbitration, conducted before a single arbitrator in or around the Columbus, Ohio
area, administered by the American Arbitration Association (“AAA”) in accordance with its
Commercial Arbitration Rules then in effect. The single arbitrator shall be selected by the mutual
agreement of the Company and the Executive, unless the parties are unable to agree to an
arbitrator, in which case the arbitrator will be selected under the procedures of the AAA. The
arbitrator will have the authority to permit discovery and to follow the procedures that he or she
determines to be appropriate. The arbitrator will have no power to award consequential (including
lost profits), punitive or exemplary damages. The decision of the arbitrator will be final and
binding upon the parties hereto. Judgment may be entered on the arbitrator’s award in any court
having jurisdiction. Each party shall bear its own legal fees and costs and equally divide the
forum fees and cost of the arbitrator; provided, that if the Executive is a Prevailing Party (as
defined below), the Executive shall be entitled to recover all of his reasonable attorneys’ fees
and expenses incurred in connection with the dispute. A “Prevailing Party” is one who is
successful on any material substantive issue in the action and achieves either a judgment in such
party’s favor or some other affirmative recovery. Notwithstanding anything in this Section 15 to
the contrary, any amounts or benefits that will be paid or provided to the Executive under this
Section 15 shall be subject to the following requirements: (a) the expenses eligible for
reimbursement or benefits provided must relate to a dispute or controversy arising under or in
connection with this Agreement within three years following the Executive’s

-15-

 

termination of employment; (b) the amount of expenses eligible for reimbursement or benefits
provided during any taxable year of the Executive may not affect the expenses eligible for
reimbursement or benefits to be provided in any other taxable year of the Executive; (c) any
reimbursement of an eligible expense shall be made on or before the last day of the taxable year of
the Executive following the taxable year of the Executive in which the expense was incurred; and
(d) the right to such reimbursement or benefit may not be subject to liquidation or exchange for
another benefit.

16. Indemnification

     The Company hereby agrees to indemnify the Executive and hold him harmless to the fullest
extent permitted by applicable law against and in respect to any and all actions, suits,
proceedings, claims, demands, judgments, costs, expenses (including reasonable attorneys’ fees),
losses and damages resulting from the Executive’s good faith performance of his duties and
obligations with the Company. This provision is in addition to any other rights of indemnification
the Executive may have.

17. Liability Insurance

     The Company shall cover the Executive under directors and officers liability insurance both
during and, while potential liability exists, after the term of this Agreement in the same amount
and to the same extent as the Company covers its other officers and directors.

18. Miscellaneous

     No provision of this Agreement may be modified, waived or discharged unless such modification,
waiver or discharge is agreed to in writing and signed by the Executive and such officer or
director as may be designated by the Board. No waiver by either party hereto at any time of any
breach by the other party hereto of, or compliance with, any condition or provision of this
Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar
provisions or conditions at the same or at any prior or subsequent time. This Agreement sets forth
the entire agreement of the parties hereto in respect of the subject matter contained herein and
supersedes all other agreements between the parties, including the 2006 Agreement. No agreements
or representations, oral or otherwise, express or implied, with respect to the subject matter
hereof have been made by either party which are not expressly set forth in this Agreement. The
validity, interpretation, construction and performance of this Agreement shall be governed by the
laws of the State of Ohio without regard to its conflicts of law principles.

19. Code Section 409A

     It is intended that any amounts payable or benefits provided under this Agreement and the
Company’s and the Executive’s exercise of authority or discretion hereunder shall comply with the
provisions of Section 409A of the Code and the Treasury Regulations promulgated thereunder, and
this Agreement will be interpreted, administered and operated accordingly. None of the Company,
the Board or the Compensation Committee of the Board shall have any liability to the Executive with
respect to any failure to comply with the requirements of Section 409A of the Code.

-16-

 

20. Full Settlement

     Except as set forth in this Agreement, the Company’s obligation to make the payments provided
for in this Agreement and otherwise to perform its obligations hereunder shall not be affected by
any circumstances, including, without limitation, set-off, counterclaim, recoupment, defense or
other claim, right or action which the Company may have against the Executive or others, except to
the extent any amounts are due the Company or its subsidiaries or affiliates pursuant to a judgment
against the Executive.

21. Representations

     (a) The Company represents and warrants to the Executive that the execution of this Agreement
and the provision of all benefits and grants provided herein have been duly authorized by the
Company, and, upon the execution and delivery of this Agreement by the Executive, this Agreement
shall be the valid and binding obligation of the Company, enforceable in accordance with its terms,
except to the extent enforceability may be limited by applicable bankruptcy, insolvency or similar
laws affecting the enforcement of creditors’ rights generally and by the effect of general
principles of equity (regardless of whether enforceability is considered in a proceeding in equity
or at law).

     (b) The Executive represents and warrants to the Company that he has the legal right to enter
into this Agreement and to perform all the obligations on his part to be performed hereunder in
accordance with its terms and that he is not a party to any agreement or understanding, written or
oral, which could prevent him from entering into this Agreement or performing all of his
obligations hereunder.

22. Withholding

     The Company may withhold from any and all amounts payable under this Agreement such federal,
state and local taxes as may be required to be withheld pursuant to any applicable law or
regulation.

23. Public Announcements

     The Company shall give the Executive a reasonable opportunity to review and comment on any
public announcement (including any filing with a governmental agency or stock exchange) relating to
this Agreement or the Executive’s employment by the Company; provided, however, that the Company
shall not be prohibited from making any disclosure required by law.

24. Prior Agreements

     This Agreement supersedes all prior agreements and understandings between the Executive and
the Company, including the 2006 Agreement, regarding the terms and conditions of the Executive’s
employment with the Company and/or its affiliates. The parties agree that by entering into this
Agreement the Executive relinquishes any right or claim to any payment or benefits under the 2006
Agreement.

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     IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first
written above.

	 	 	 	 	 
	 	R. G. BARRY CORPORATION

 	 
	 	By:  	/s/ Jose G. Ibarra
 	 
	 	 	Name:  	Jose G. Ibarra 	 
	 	 	Title:  	SVP - Finance, CFO 	 
	 
	 	 	 
	 	                                              /s/ Greg A. Tunney
 	 
	 	GREG A. TUNNEY 	 
	 	 	 
	 

-18-EX-10.16

Exhibit 10.16

ASSET PURCHASE AGREEMENT

     This ASSET PURCHASE AGREEMENT (this “Agreement”), dated May 11, 2009, is by and among Seminole
Gas Company, an Oklahoma corporation (the “Buyer”), NGAS Gathering, LLC, a Kentucky limited
liability company (“NGL”), Daugherty Petroleum, Inc., a Kentucky corporation (“DPI” and,
collectively with NGL, the “Sellers”), and NGAS Gathering II, LLC, a Kentucky limited liability
company wholly owned by DPI (“New NGAS Gathering”). Capitalized terms used herein and not
otherwise defined shall have the meanings set forth in Article 1 hereof or, as applicable,
the meanings set forth in Schedule H.

RECITALS

     The Sellers own and manage the Gathering System (as hereinafter defined), which consists of
(i) a natural gas gathering system serving southeastern Kentucky, eastern Tennessee, and western
Virginia, and (ii) Stone Mountain Gathering System purchased by NGL from Duke Energy Gas Services,
LLC (“Duke”). The Parties desire, in accordance with the terms of this Agreement, that:

     (a) the Buyer acquire the Purchased Assets, free and clear of all Liens (other than
Permitted Encumbrances);

     (b) the Sellers contribute and convey the remaining undivided fifty percent (50%)
interest in the Gathering System, as well as the other Retained Gathering Assets to New NGAS
Gathering, free and clear of all Liens (other than Permitted Encumbrances); and

     (c) the following actions shall be taken as conditions precedent to the obligations of
the Parties to consummate the transactions contemplated herein, and as part of the
consideration to be paid by Buyer for the Purchased Assets:

          (1) the Governing Documents of New NGAS Gathering shall include provisions
substantially in the form of Exhibit K-1, providing for the appointment
and maintenance of an Independent Director, with the powers and prerogatives
specified therein, the sole business purpose provisions and other provisions
contemplated herein;

          (2) Buyer and New NGAS Gathering shall have entered into the Joint Ownership
Agreement in substantially the form of Exhibit A, providing for the
ownership, operation, further extension or expansion thereof, and the abandonment
or other disposition of the Gathering System;

          (3) the Buyer and New NGAS Gathering shall have entered into the SES
Gathering Agreement in substantially the form of Exhibit H, providing for
Buyer and New NGAS Gathering granting to SES the exclusive right to use, and
market capacity on, the Gathering System, as modified, extended or expanded;

          (4) the Buyer and New NGAS Gathering shall have entered into the SES Contract
Operating Agreement with SES;

          (5) SES and DPI shall have entered into the DPI Contract Operating Agreement;

          (6) DPI, on behalf of itself and the other DPI Producers that have existing
or subsequently acquire any interests in developed or undeveloped oil, gas or
mineral acreage or interests in the geographic region serviced by the Gathering
System, as the same may be extended or enlarged from time to time, shall have
entered into the NAESB Purchase Agreement with SES in substantially the form of
Exhibit I, providing for the gathering and purchasing by SES of gas
dedicated to the Gathering System by the DPI Producers, in accordance with the
terms thereof; and NRI shall make certain additional representations, warranties
and covenants with regard thereto in the Seller Parent Guaranty;

1

 

          (7) New NGAS Gathering and the Buyer shall have (i) secured their respective
obligations under this Agreement, the Joint Ownership Agreement and their (and
certain of the Affiliates’) respective obligations pursuant to (A) the security
interests in the Retained Gathering Assets (as expanded or extended), together
with the other interests of New NGAS Gathering, granted by New NGAS Gathering to
Buyer, pursuant to the NGAS Mortgages, in substantially the form of
Exhibit M-1, and (B) the security interests in the Purchased Assets (as
expanded or extended), together with the other interests of Buyer, granted by
Buyer to New NGAS Gathering, pursuant to the Seminole Mortgages in substantially
the form of Exhibit M-2; and (ii) delivered to the other, as further
support for the obligations under this Agreement and the Ancillary Agreements the
Seller Parent Guaranty contemplated herein; and

          (8) SES shall be granted a six-month option to purchase the ownership
interests in New NGAS Gathering from DPI and, alternatively, all of the assets of
New NGAS Gathering, and under certain circumstances and subject to certain
conditions, DPI may require SES to exercise the option on the ownership interests
in New NGAS Gathering (the “NGAS Options”), subject to certain conditions and
covenants, all as specified in the NAESB Purchase Agreement (as hereinafter
defined);

          (9) Sellers (and their Affiliates) shall grant to Buyer a right of first
refusal on the Kay Jay ROFR Assets (the “Kay Jay ROFR”), subject to certain
conditions and covenants, all as specified in Schedule H attached hereto;

          (10) SES and DPI shall enter into the Forward Sales Agreements (as
hereinafter defined) in accordance with the NAESB Purchase Agreement; and

          (11) SES, Buyer, DPI, for itself and the other DPI Producers, NGL, and New
NGAS Gathering shall enter into the Master Netting Agreement (as hereinafter
defined).

     NOW, THEREFORE, in consideration of the premises, mutual covenants, representations,
warranties, conditions and agreements set forth herein, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, it is hereby agreed
that:

ARTICLE 1

DEFINITIONS

     “Action” means any complaint, suit, proceeding, claim, arbitration, demand, assertion or other
similar action.

     “Additional Capital Costs” is defined in Section 2.5(a)(ii)(3).

     “Affiliate” means, as to any Person, any other Person or entity that, directly or indirectly
through one or more intermediaries, controls, is controlled by or is under common control with such
Person, whether by contract, voting power or otherwise. As used in this definition, the term
“control,” including the correlative terms “controlling,” “controlled by” and “under common control
with,” shall mean the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of an entity, whether through ownership of voting
securities, by contract or otherwise.

     “Agreement” means this Asset Purchase Agreement, together with the Schedules and Exhibits
attached hereto, as the same may be modified or amended in accordance with the terms hereof.

     “Ancillary Agreements” means each of the Bill of Sale, Joint Ownership Agreement, the Seller
Parent Guaranty to be executed and delivered by NRI and DPI, the SES Gathering Agreement, the NAESB
Purchase Agreement, the NGAS Mortgages, the Seminole Mortgages, SES Contract Operating Agreement,
DPI Contract Operating Agreement, the Master Netting Agreement, the releases described in
Section 2.7, the Forward Sales Agreement, Memorandum of Options and Agreements and each
other document, instrument or agreement delivered in connection herewith or therewith in accordance
with the terms hereof or thereof, including, without limitation any Ancillary Option Agreements.

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     “Ancillary Option Agreements” means each of the agreements and instruments pertaining to any
exercise of an NGAS Options, in accordance with the NAESB Purchase Agreement, and the Kay Jay ROFR,
in accordance with the terms thereof, as set forth on Schedule H.

     “Assumed Contracts” means those Contracts set forth on Schedule C.

     “Assumed Liabilities” means that proportionate share of the obligations and liabilities
attributable to, and allocable to, the Purchased Assets, to the extent, and only to the extent,
same arise from, and relate to, operations conducted, or occurrences happening, on or after the
Effective Date.

     “Bankruptcy” means, with respect to any Person, if such Person (a) makes an assignment for the
benefit of creditors, (b) files a voluntary petition in bankruptcy, (c) is adjudged a bankrupt or
insolvent, or has entered against it an order for relief, in any bankruptcy or insolvency
proceedings, (d) files a petition or answer seeking for itself any reorganization, arrangement,
composition, readjustment, liquidation or similar relief under any statute, law or regulation,
(e) files an answer or other pleading admitting or failing to contest the material allegations of a
petition filed against it in any proceeding of this nature, (f) seeks, consents to or acquiesces in
the appointment of a trustee, receiver or liquidator of the Person or of all or any substantial
part of its properties, or (g) if one hundred twenty (120) days after the commencement of any
proceeding against the Person seeking reorganization, arrangement, composition, readjustment,
liquidation or similar relief under any statute, law or regulation, if the proceeding has not been
dismissed, or if within ninety (90) days after the appointment without such Person’s consent or
acquiescence of a trustee, receiver or liquidator of such Person or of all or any substantial part
of its properties, the appointment is not vacated or stayed, or within ninety (90) days after the
expiration of any such stay, the appointment is not vacated. For purposes of Section 2.8
and the NNG LLC Agreement, the foregoing definition of “Bankruptcy” is intended to replace and
shall supersede and replace the definition of “Bankruptcy” set forth in Sections 18.101(1) and
18.304 of the Delaware Limited Liability Company Act (6 Del. C. 18.101 et
seq.), as amended from time to time.

     “Bill of Sale” means the Assignment, Conveyance and Bill of Sale for the Purchased Assets,
dated as of the Closing Date, executed by each Seller in favor of the Buyer, providing for a
special warranty of title, in substantially the form of Exhibit B, as modified to
accommodate recording practices and statutory references in Kentucky, Tennessee and Virginia.

     “Books and Records” means, in respect of any of the Purchased Assets, (a) the Operational
Data, whether hard copy or digital, (b) copies of all Assumed Contracts and correspondence
amending, modifying or waiving any provision or condition in any Assumed Contract, or otherwise
relating to Sellers’ or a counterparty’s actual or alleged nonperformance thereunder, but
specifically excluding routine matters resolved in the settlement process, (c) copies of all
software licenses and related documentation (including specifications, technical manuals, user
manuals, programming manuals, flow diagrams and file descriptions), whether owned or licensed, and
(d) all other records with respect to the foregoing in Sellers’ or any of their Affiliate’s
possession (including such records located in off-site storage or held by any Person performing
services for Sellers or any of their Affiliates) to the extent Sellers or any of their Affiliates
has rights thereto, whether in the form of paper, electronic (including electronic mail) or voice
recording media, including accounts receivable records, invoice and billing records, records of
payment history, credit support and posting records, databases, correspondence and miscellaneous
records. Buyer shall permit Sellers to have access to the Records as may be necessary for Sellers
to prepare tax filings and for other reasonable business purposes.

     “Business” means the Sellers’ and its Affiliates’ business of engaging in gathering of natural
gas using, operating, maintaining, repairing, replacing or marketing the available capacity on the
Gathering System as of date of this Agreement, in accordance with the past practices of the
Sellers, in accordance with all Requirements of Law, and in accordance with all applicable
Contracts.

     “Business Day” means a day other than Saturday, Sunday or a day on which banks are authorized
to be closed for business in the Commonwealth of Kentucky.

     “Buyer Claim” has the meaning set forth in Section 8.2(a).

     “Buyer Claim Notice” has the meaning set forth in Section 8.2(b).

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     “Buyer Indemnified Parties” has the meaning set forth in Section 8.2(a).

     “Buyer Secured Obligations” means all obligations and liabilities of Buyer under (a) this
Agreement and the Ancillary Agreements to which it is or become a party and (b) the Ancillary
Option Agreements if an NGAS Option is exercised, all of which shall be secured by the Seminole
Mortgages.

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

     “Closing” means the closing of the transactions contemplated hereby on the Closing Date.

     “Closing Date” means subject to the satisfaction of the conditions to Closing set forth in
Article 6, 10:00 a.m., Eastern Time, June 25, 2009 or such other date as may be mutually
agreed by Buyer and Sellers in writing.

     “Consent Costs” has the meaning set forth in Section 8.4.

     “Contracts” means any contracts, agreements, instruments, license agreements, commitments,
credit support documents, and invoices, schedules and annexes related thereto, entered into by
either or both of the Sellers (or to which the Sellers or the Purchased Assets (or the Retained
Gathering Assets) are otherwise bound), or by Sellers or any of their Affiliates that otherwise
relate to the Business, and valid as of the Closing Date.

     “Counterparty” or “Counterparties” means any of those parties to the Assumed Contracts other
than a Seller or a subsidiary or Affiliate of a Seller.

     “Deductible” has the meaning set forth in Section 8.4.

     “Delaware Act” means the Delaware Limited Liability Company Act (6 Del. C. 18 101
et seq.), as amended from time to time.

     “DPI Contract Operating Agreement” is defined in the Joint Ownership Agreement.

     “DPI Producers” means (i) DPI, and its respective successors and assigns, (ii) any Affiliates
or subsidiaries of DPI, whether presently existing or subsequently formed or acquired, and their
respective successors and assigns, if such subsidiaries or other Affiliates have any ownership
interests in any oil and gas production or reserves in areas serviced by the Gathering System as
same may be extended or expanded, and (iii) any drilling or development partnerships, joint
ventures or other arrangements in which any of the entities described in subparagraphs (i) or (ii)
own or hold an equity interest, own or hold any voting interests, or otherwise have the right to
direct the management or policies of the same and such entities have any ownership interests in any
oil and gas production or reserves in areas serviced by the Gathering System is expanded or
extended; provided, however, that DPI Producers shall not include non-Affiliates for who DPI or its
Affiliates have no control or ability to commit gas production under the NAESB Purchase Agreement.

     “Effective Date” means the Closing Date.

     “Environmental Laws” means any and all local, state or federal laws, rules, regulations,
orders, or judgments relating to the prevention of pollution, the preservation and restoration of
environmental quality, or the protection of human health, wildlife or environmentally sensitive
areas, the remediation of contamination or the handling, transportation, disposal or release into
the environment of Hazardous Materials, including, without limitation, those arising under or by
virtue of any lease, contract, agreement, document, permit, applicable statute or rule or
regulation or order of any governmental authority, specifically including, without limitation, any
governmental request or requirement to take any clean-up or other action with respect to any of the
Purchased Assets or Retained Gathering Assets or premises, including hazardous waste cleanup costs
under the Solid Waste Disposal Act, 42 U.S.C. 6901, et seq., the Resource Conservation and Recovery
Act of 1976 (RCRA), 42 U.S.C. 6901, et seq., the Comprehensive Environmental Response, Compensation
and Liability Act (CERCLA), 42 U.S.C. 9601, et seq., the Clean Air Act, the Federal Water Pollution
Control Act, the Toxic Substances Act, the Oil Pollution Act of 1990.

4

 

     “Equity Releases” as defined in Exhibit G to the NAESB Purchase Agreement.

     “Excluded Assets” means those interests and rights of the Sellers comprised of the following
items (x) with regard to the Purchased Assets, as of the Effective Date, and only insofar as
attributable and allocable to pre-Effective Date periods, and (y) to the extent an NGAS Option is
exercised (whether by SES or in accordance with the put provisions thereof), then with regard to
New NGAS Gathering, the NGAS Option Assets or the NGAS Option Equity Interests, as of the date of
exercise of the NGAS Option, and only insofar as attributable and allocable to pre-exercise date
periods: (a) all cash or cash equivalents; (b) all accounts payable or accounts receivable or other
working capital items; (c) all insurance policies and rights thereunder, including rights to any
cancellation value as of the Effective Date (or applicable exercise date), provided, however, that
this sub-clause (c) shall not apply to New NGAS Gathering and any separate insurance of New NGAS
Gathering to the extent the NGAS Equity Option is exercised; (d) all corporate, financial, tax and
legal (other than title) records and other Books and Records that constitute proprietary or
confidential business or technical information of DPI pertaining to its oil and gas producing
operations, whether or not also used in or relating to operations of the Business; (e) all
trademarks or service marks, trade names, slogans or other like property relating to or including
the names “NGAS” or “Daugherty” and any other Intellectual Property of DPI pertaining to its oil
and gas producing operations, whether or not also used in or relating to operations of the
Business; (f) the Existing Contracts (as defined in the NAESB Purchase Agreement); and (g) any
Contracts not listed as Assumed Contracts on Schedule C or are not 100% Assigned Contracts.

     “FERC” means the Federal Energy Regulatory Commission.

     “Forward Sales Agreements” is defined in Section 2.15.

     “Gathering System” means the aggregate of the following interests and rights of the Sellers,
exclusive of Excluded Assets:

     (a) the natural gas gathering systems and pipeline facilities, trap sites, compressors,
equipment, machinery, fixtures, flowlines, materials, improvements, personal property,
delivery meters and regulator stations associated with those lines of the Sellers or their
Affiliates serving southeastern Kentucky, eastern Tennessee and western Virginia, including,
without limitation, the following:

     (1) a 10-inch gathering line commencing at the point of interconnection
thereof with the facilities of Spectra Energy Partners, LP and East
Tennessee Natural Gas Pipeline, in the vicinity of Rose Hill, Virginia (the
“Spectra Interconnect”), and continuing northward for the remainder of the
line; (2) the entire 6-inch and 8-inch Claiborne County Utility District
Line that extends to and gathers unprocessed gas from wells in the Fonde
production area; (3) the entire 6-inch Amvest line that extends to and
gathers unprocessed gas from wells in the Amvest production area; (4) the
entire 6-inch Hickory Flats Prison Line; (5) all of the gathering lines that
extend to and gather unprocessed gas from wells in the production areas
known as Martin’s Fork, Leatherwood, Fonde, Amvest and Straight Creek,
including all production and gathering lines upstream of the Spectra
Interconnect that connect with and gather unprocessed gas from wellheads in
the afore described production areas where the DPI Producers have interests
and located in (A) the Kentucky Counties of Letcher, Perry, Leslie, Harlan,
Bell, but excluding the Gausdale/Kay Jay production area, (B) the Virginia
Counties of Lee and Scott and (C) the Tennessee Counties of Claiborne and
Campbell, all as set out on the map attached hereto as Schedule A;
(6) the Sellers’ (and any Affiliate’s) compressor stations in Rose Hill,
Martin’s Fork, Bill’s Branch, Young’s Branch, Fonde, Amvest, Straight Creek
and Martin’s Fork Booster Station, all as set out on the map attached hereto
as Schedule A; and (7) all associated pipeline facilities, valves,
trap sites, pigging stations, risers and manifolds, delivery meters, remote
measurement and monitoring equipment and related programs and hardware, and
regulator stations, and all other equipment and appurtenances connected with
or used and associated with the aforesaid gathering lines and compressor
stations;

     (b) all Rights of Way attributable to, used in connection with, or relating to the
above, including without limitation, all such rights and interests in or covering lands on
which any such pipelines

5

 

or gathering systems are located and including, without limitation, those set forth on
Exhibit G;

     (c) all permits and authorizations of any kind held by Sellers or any of their
Affiliates necessary for the use and operation of the above as shown in Schedule B,
and

     (d) all land or other real property interests underlying the compressors, as well as
any other real property or warehouse leases, real property fee interests or other interests
in real property described constituting part or otherwise used by Sellers or their
Affiliates in connection with the Business or other interests described in this definition,
including, without limitation, those described on Schedule F;

     (e) all inventories of pipe, materials and supplies, if any, owned or held by Sellers
or their Affiliates in connection herewith;

     (f) all software, computer programs, computer servers, and other Intellectual Property,
whether owned or licensed, used by Sellers or their Affiliates in connection with the
above-described interests or the Business insofar as described on Schedule G,
attached hereto; and

     (g) any other real, personal or mixed property interests, whether similar in nature or
not to those described above, owned or held by Sellers or any of their Affiliates necessary
to own or operate the Business or the Gathering System described above, other than Excluded
Assets, Receipt Meters and the 100% Assigned Contracts.

It is the intent of the Parties that the term “Gathering System” include all of Sellers’
interests in the above-described assets, interests and properties, whether completely or
accurately described in the exhibits and schedules attached hereto or not, subject to the
limitations and exclusions set forth in the foregoing description.

     “Governing Documents” means, with respect to an entity, (a) in the case of a corporation, the
applicable articles of incorporation, by-laws, or charter documents, of such corporation, (b) in
the case of a limited liability company, the applicable certificate of formation, limited liability
company agreement, operating agreement, or similar agreement for such company, (c) in the case of a
partnership, the applicable certificate of limited partnership, partnership agreement or limited
partnership agreement, as the case may be, or (d) any other instrument, document or agreement
relating to the formation, ownership, management, voting rights, or operation of such entity.

     “Governmental Action” means all consents, approvals, permits, waivers, exceptions, variances,
orders, proceedings, exemptions, publications, filings, notices to or declarations of or with any
Governmental Body.

     “Governmental Body” means any court, government (federal, state, local or foreign),
department, political subdivision, commission, board, bureau, agency, official or other regulatory,
administrative or governmental authority, including but not limited to the FERC, the Federal Trade
Commission, the Securities and Exchange Commission, any state public service or public utility or
similar commission, any other governmental, quasi-governmental or nongovernmental body
administering, regulating or having general oversight over natural gas, or other markets or
transmission systems (but excluding, for the avoidance of doubt, any counterparty to an Assumed
Contract in its capacity as such).

     “Governmental Permits” means all tariffs, licenses, franchises, permits, privileges,
variances, immunities, consents, rulings, exemptions, orders, judgments, decrees, approvals or
other authorizations of any kind issued by any Governmental Body.

     “Guarantors” means NRI and DPI with respect to the Seller Parent Guaranty.

     “Hazardous Materials” means any substance or material that is designated, classified,
characterized or regulated as a “hazardous substance”, “hazardous waste”, “hazardous material”,
“toxic substance”, “pollutant” or “contaminant” under Environmental Laws

     “Independent Director” means with regard to New NGAS Gathering, a Manager of New NGAS
Gathering who is not an employee, officer, director, manager or other Affiliate of NRI, DPI or any
of their respective

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subsidiaries or other Affiliates and who would otherwise satisfy the standards applicable to
an “independent director” under the rules and regulations of the New York Stock Exchange if NRI’s
voting capital stock were listed for trading on the NYSE.

     “Intellectual Property” means any or all of the following, and all rights arising out of or
associated therewith: (a) all United States, international and foreign patents and applications
therefor and all reissues, divisions, renewals, extensions, provisionals, continuations and
continuations-in-part thereof; (b) all confidential and trade secret information, including all
confidential inventions (whether patentable or not), proprietary software, invention disclosures,
improvements, trade secrets, proprietary information, know-how, technology, technical data and
customer lists, and all documentation relating to any of the foregoing throughout the world; and
(c) all copyrights, copyright registrations and applications therefor, and all other rights
corresponding thereto throughout the world.

     “IRR” shall have the meaning set forth in the Joint Ownership Agreement.

     “IRR Specified Discount Rate” shall have the meaning set for the Joint Ownership Agreement.

     “Joint Ownership Agreement” means the Joint Ownership Agreement dated as of the same date as
this Agreement, between Buyer and New NGAS Gathering, in substantially the form attached hereto as
Exhibit A.

     “Kay Jay ROFR Assets” is defined in Schedule H.

     “Kay Jay ROFR” is defined in Schedule H.

     “Knowledge of the Buyer” means the actual knowledge of Brent McDaniel and Louis Dorey.

     “Knowledge of the Sellers” means the knowledge of William S. Daugherty, William G. Barr III,
D. Michael Wallen, Michael P. Windisch, Brint Camp and John R. Bender, after reasonable inquiry and
investigation.

     “Law” means any law, statute, rule, regulation, ordinance order or other pronouncements,
actions or requirements of any Governmental Body, including, without limitation, Environmental Laws
or those relating to safety or welfare of humans or the environment.

     “Lease ROW” is defined in Section 3.15(b).

     “Lien” means any lien, mortgage, security interest, tax lien, attachment, levy, charge, claim,
restriction, imposition, pledge, encumbrance, right of first refusal, preferential purchase right,
drag-along right, tag-along right, right of first offer or other similar rights, conditional sale
or title retention arrangement, or any other interest in property or assets (or the income or
profits therefrom), whether consensual or nonconsensual and whether arising by agreement or under
any Requirement of Law, or otherwise, other than the Permitted Encumbrances.

     “Losses” has the meaning set forth in Section 8.2(a).

     “Master Netting Agreement” means that certain Master Netting and Setoff Agreement by and among
SES, Buyer, DPI, for itself and the other DPI Producers, NGL, and New NGAS Gathering in
substantially the form attached hereto as Exhibit T.

     “Maximum Indemnity Amount” has the meaning set forth in Section 8.4.

     “Memorandum of Options and Agreements” means the Memorandum of Options and Agreements, in
substantially the form attached hereto as Exhibit N.

     “NAESB Purchase Agreement” means the NAESB form gas purchase agreement, together with the
special provisions and any confirmations provided thereunder and including the NGAS Options and
Forward Sales Agreement, by and between DPI, on behalf of itself and the other DPI Producers, and
SES, in substantially the form of Exhibit I. The NAESB Purchase Agreement will be
effective as of the Effective Date, but to the extent Closing occurs on a date that is other than
the first of a calendar month, then the Gathering Fees thereunder shall be prorated

7

 

for the month in which Closing occurs, any volumes delivered by DPI during the remainder of
the calendar month in which Closing occurs shall be deemed gathered (not purchased) by SES
thereunder, and the purchase of volumes of gas thereunder shall commence on the first day of the
calendar month immediately following the month in which closing occurs.

     “Natural Gas Act” means 15 U.S.C. Sections 717 through 717(w), regulating the transportation
and sale of natural gas in interstate commerce, and any amended, together with any successor
statutes thereto, and together with any regulations promulgated thereunder.

     “Natural Gas Policy Act” means the Natural Gas Policy Act of 1978, Pub. L. No. 95-621 (Nov.
9, 1978) , and any amended, together with any successor statutes thereto, and together with any
regulations promulgated thereunder.

     “New NGAS Gathering” means NGAS Gathering II, LLC, a Kentucky limited liability company formed
prior to the Closing and wholly owned by DPI.

     “NGAS Credit Agreement” means that certain Amended and Restated Credit Agreement dated as of
May 30, 2008, by and among NRI, DPI, KeyBank National Association, as Administrative Agent, and the
lenders who are parties thereto, as amended by a First Amendment to Amended and Restated Credit
Agreement dated as of June 30, 2008 and a Second Amendment to Amended and Restated Credit Agreement
dated as of December 31, 2008, together with any promissory notes or other instruments, documents
or agreements issued or delivered pursuant thereto. For the purposes of Schedule 2.14(c),
Line of Credit mean the NGAS Credit Agreement and any proposed amendments thereto.

     “NGAS Mortgages” means the instruments pursuant to which Sellers grant Buyer a first Lien on
all of the Retained Gathering Assets to secure the performance of the Seller Secured Obligations,
in substantially the form of Exhibit M-1, as modified to accommodate recording practices
and statutory references in Kentucky, Tennessee and Virginia.

     “NGAS Option Promissory Note” has the meaning set forth in Exhibit G to the NAESB
Purchase Agreement.

     “NGAS Options,” “NGAS Option Promissory Note” and “NGAS Options Price” are defined in
Exhibit G to the NAESB Purchase Agreement.

     “NGAS Securities Purchase Agreement” means that certain Securities Purchase Agreement dated as
of December 13, 2005 by and among NRI and the investors identified as Buyers therein.

     “NNG LLC Agreement” shall mean the limited liability company agreement, operating agreement,
or applicable governing document and agreement for New NGAS Gathering, in substantially the form
attached hereto as Exhibit E.

     “NRI” means NGAS Resources, Inc., a British Columbian corporation, and the ultimate parent
company of Sellers and New NGAS Gathering.

     “100% Assigned Contracts” means the contracts and agreements described on Schedule I
attached hereto.

     “Operational Data” means all computer, digital, electronic, analog, telecommunications
(including voice recording), metering, and billing data or copies thereof relating to the Purchased
Assets, the Retained Gathering Assets and the operations associated therewith and held by the
Sellers or any of their Affiliates (to the extent a Seller or any of its Affiliates has rights
thereto).

     “Party” means each of the Buyer, the Sellers and New NGAS Gathering.

     “Permitted Encumbrances” means (a) liens for taxes or similar governmental charges imposed on
the Purchased Assets or the Retained Gathering Assets which are not delinquent as of the Closing
Date, (b) all rights

8

 

reserved to or vested in any Governmental Body controlling or regulating or having
jurisdiction over any of the Purchased Assets or the Retained Gathering Assets in any manner, and
in accordance with all applicable Laws, (c) liens created pursuant to the NGAS Mortgages and
Seminole Mortgages, (d) liens constituting any interest or title of a lessor or farmor under any
lease or farmout entered into by DPI listed in Schedule F attached hereto, insofar as they
cover only the property so leased or assigned or rights to take third-party production in kind
insofar as the same are waived or released by the holders of the same prior to Closing with regard
to the transaction under this Agreement and the Ancillary Agreements, and (e) restrictions,
encumbrances or other matters that are due to zoning or subdivision laws or regulations
individually and in the aggregate that do not materially and adversely affect the Purchased Assets
or Retained Gathering Assets; provided, however, that the Permitted Encumbrances pertaining to the
Purchased Assets or the Retained Gathering Assets from and after the Closing Date shall not (x)
include liens thereon previously created under the NGAS Credit Agreement, nor (y) interfere with
the operations of the Gathering System or materially detract from the value or use thereof.

     “Person” means any individual, corporation, partnership, joint venture, limited liability
company, association (whether incorporated or unincorporated), joint-stock company, trust,
Governmental Body, unincorporated organization or other entity.

     “Preferential Rights” is defined in Section 3.15.

     “Purchased Assets” means the following interests and rights of the Sellers, exclusive of
Excluded Assets, as of the Effective Date: an (i) undivided fifty percent (50%) (out of 8/8ths)
interest in the Gathering System, Assumed Contracts and Books and Records, but not including any
interest in the Excluded Assets; (ii) an undivided twenty-five percent (25%) of all of Sellers’
rights, titles and interests in and to the Receipt Meters; and (iii) an undivided one percent
(100%) of all Sellers’ rights, title and interest in, to and under the 100% Assigned Contracts.

     “Purchase Price” has the meaning set forth in Section 2.2.

     “Put Notice” is defined in Exhibit G to the NAESB Purchase Agreement.

     “Receipt Meters” means and includes any and all wellhead or other meters used to measure
volumes of gas delivered into the Gathering System.

     “Retained Gathering Assets” is defined in the Recitals.

     “Required Consents” means all of the consents, authorizations and approvals required from any
Person in order to close and consummate the sale to Buyer of the Purchased Assets, the contribution
of Retained Gathering Assets to New NGAS Gathering, the granting, closing and consummation of the
NGAS Options, the granting of the Kay Jay ROFR, the execution, delivery and performance of the
Ancillary Agreements, the Ancillary Option Agreements, and the other transactions as contemplated
in this Agreement, in such form and substance contemplated by Section 5.1, including,
without limitation, the consent and authorization and approval with regard to any Lease ROWs.

     “Requirements of Law” means any requirements of any Law, including but not limited to the
requirements of any applicable Governmental Permits or Governmental Actions.

     “Recitals” means the recitals to this Agreement.

     “Restricted Information” has the meaning set forth in Section 11.16(b).

     “Retained Gathering Assets” means all of each Seller’s and their Affiliates remaining interest
in the Gathering System, Assumed Contracts, and Books and Records, after conveyance of the
Purchased Assets to Buyer at Closing, together with 25% of Sellers’ right, title, and interest in
and to the Receipt Meters, after conveyance of the Purchased Assets to the Buyer at Closing.

     “Retained Liabilities” means any and all liabilities, obligations or Losses arising from or
relating to (a) the Retained Gathering Assets, (b) the Excluded Assets, or (c) the Purchased
Assets, insofar as the same arise from or are attributable to the ownership, operation or use of
the Purchased Assets (or events or matters occurring) prior to
the Closing Date.

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     “Rights of Way” mean easements, rights-of-way, servitudes, fee lands, surface and subsurface
lease agreements, surface use agreements and other rights and agreements related to the use of the
surface and subsurface.

     “Securities Act” means the Securities Act of 1933, as amended, supplemented or restated from
time to time, and any successor statute.

     “Sellers” has the meaning set forth in the Recitals.

     “Seller Claim” has the meaning set forth in Section 8.3(a).

     “Seller Claim Notice” has the meaning set forth in Section 8.3(b).

     “Seller Indemnified Parties” has the meaning set forth in Section 8.3(a).

     “Seller Parent Guaranty” means the Parent Guaranty of each of NRI and DPI, in substantially
the form attached hereto as Exhibit C.

     “Seller Secured Obligations” means all obligations and liabilities of (a) the Sellers and New
NGAS Gathering under this Agreement, including, without limitation, with regard to the Ancillary
Option Agreements, (b) New NGAS Gathering, DPI and the Affiliates of either of them or the
Affiliates of NRI under the Ancillary Agreements to which it is or becomes a party, to be secured
by the NGAS Mortgages and the Seller Parent Guaranty, and (c) DPI, and the other DPI Producers,
under the NAESB Purchase Agreement.

     “SES” mean Seminole Energy Services LLC, an Oklahoma limited liability company, and the
ultimate parent company of Buyer.

     “SES Contract Operating Agreement” is defined in the Joint Ownership Agreement.

     “SES Gathering Agreement” means the Gathering Agreement, dated as of the same date as this
Agreement, by and among Buyer, New NGAS Gathering and SES, pursuant to which Buyer and New NGAS
Gathering shall agree and commit to SES an undivided 100% of the capacity of the Gathering System
(as the Gathering System and its capacity may hereafter be modified, expanded, extended or
increased), in substantially the form of Exhibit H.

     “Seminole Mortgages” means the instruments pursuant to which Buyer grants New NGAS Gathering a
subordinated, second Lien on all of the Purchased Assets to secure the performance of the Buyer
Secured Obligations, in substantially the form of Exhibit M-2, as modified to accommodate
recording practices and statutory references in Kentucky, Tennessee and Virginia.

     “Subsequent Transaction” shall mean the closing and consummation, within six (6) months after
the date of termination of this Agreement by the Buyer in accordance with Section 10.1(c),
one of the following transactions (or the signing of a binding agreement, within six (6) months
after the date of termination of this Agreement, providing for one of the following transactions,
to the extent such transaction is actually thereafter closed and consummated under the binding
agreement): (a) a merger, consolidation or similar transaction for all or substantially all the
ownership interests or current assets of either DPI or NRI by a Person who is not an Affiliate of
Sellers or Buyer, (b) any direct or indirect purchase (except by Buyer or any Affiliate of Buyer or
SES) of (1) 50% or more of the Gathering System for aggregate consideration (whether cash or
non-cash, including without limitation, assumption of debt) involving $25 million or more, or (2)
100% of the Gathering System for aggregate consideration (whether cash or non-cash, including,
without limitation, assumption of debt) involving $50 million or more, or (c) if more than one
transaction occurs within the six (6) months following termination of this Agreement that would
qualify as a Subsequent Transaction pursuant to the foregoing clause (b) of this definition but for
the fact that such transaction fails the 50% test but such transactions, if aggregated, would
satisfy such 50% test, then all such transactions nevertheless will constitute a Subsequent
Transaction as of the point that such transactions, when aggregated, so qualify, then any such
aggregated transactions during such six (6) month period shall also count as a Subsequent
Transaction. To the extent Sellers or an Affiliate of Sellers or New NGAS Gathering transfers any
of

10

 

the Purchased Assets to an Affiliate of Sellers within six (6) months following the
termination of this Agreement, and such Affiliate subsequently sells such Purchased Assets (or the
equity interests of such Affiliate are sold) within this same six (6) month period to a Person who
is not an Affiliate of Sellers or the Buyer, then such subsequent sale by the Affiliate shall
nevertheless constitute a Subsequent Transaction if it meets the other terms of this definition.

     “Tax” or “Taxes” means any present or future federal, state, county, local or foreign taxes,
charges, levies, imposts, duties, other assessments or similar charges or withholding of any kind
whatsoever, including interest, penalties and additions imposed thereon or with respect thereto,
imposed by a Governmental Body.

     “Tax Returns” means any reports, returns, information returns or other information required to
be supplied to a taxing authority in connection with Taxes, including any return of an affiliated
or combined unitary group.

     “Treasury Regulations” means the regulations promulgated by the United States Treasury
Department under the Code.

ARTICLE 2

PURCHASE AND SALE; CONTRIBUTION; OTHER AGREEMENTS

     2.1 Purchase and Sale. As of the Closing, and subject to all of the terms and
conditions of this Agreement, the Sellers shall sell, transfer, convey, assign and deliver, and the
Buyer shall purchase, the Purchased Assets, free and clear of all Liens (other than Permitted
Encumbrances), and the Buyer shall assume all of the Assumed Liabilities (which Assumed Liabilities
the Buyer shall thereafter pay, discharge and perform, each on a timely basis with regard to its
share thereof).

     2.2 Consideration/Purchase Price. At the Closing, and subject to all of the terms and
conditions of this Agreement, in consideration of the (a) Sellers’ sale, transfer, assignment,
conveyance and delivery to Buyer of the Purchase Assets, free and clear of all Liens (other than
Permitted Encumbrances), (b) Sellers’ granting of the NGAS Options, (c) DPI’s granting of the Kay
Jay ROFR and (d) the Ancillary Agreements and the other agreements and actions of Sellers (and
certain Affiliates of Sellers) contemplated by this Article 2, the Buyer shall pay to the
Sellers $28,000,000 (the “Purchase Price”), subject to any adjustments contemplated in Sections
2.5, 5.1(b) and 9.1, by wire transfer on the date hereof to a designated
account of DPI at KeyBank National Association (as agent for all lenders under the NGAS Credit
Agreement), for the benefit of all Sellers, to be applied as a partial repayment of outstanding
borrowings under the NGAS Credit Agreement.

     2.3 No Assumption of Retained Liabilities. The Buyer does not and will not assume any
of the Retained Liabilities, which shall remain the sole responsibility of and shall be retained,
paid, performed and discharged solely by the Sellers, or as applicable, the Sellers’ Affiliates,
each on a timely basis.

     2.4 Excluded Assets. Notwithstanding anything to the contrary contained in
Section 2.1 or elsewhere in this Agreement, any right, interest or claim of the Sellers
relating to the Excluded Assets will remain the property of the Sellers, and neither the Buyer nor
any of its Affiliates shall have any right, title or interest therein after the Closing, whether or
not the Buyer exercises an NGAS Options.

     2.5 Adjustments at Closing.

     (a) Closing Adjustments:

     (i) Preliminary Settlement Statement. At Closing, the Purchase Price
will be adjusted as set forth in subparagraphs 2.5(a)(ii) and 2.5(a)(iii) below (the
adjusted Purchase Price delivered at Closing is referred to herein as the “Closing
Price”). No later than five (5) Business Days prior to Closing, Seller, will provide
to Buyer a preliminary settlement statement identifying all adjustments to the
Purchase Price to be made at Closing (the “Preliminary Settlement Statement”).
Sellers and Buyer acknowledge that some items in the Preliminary Settlement
Statement may be estimated, in the good faith opinion of Sellers, when actual
amounts are not available and may be subject to change in the Final Settlement
Statement (as defined in Section 2.5(b)).

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     (ii) Upward Adjustments. The Purchase Price will be increased at
Closing by the following expenses and revenues:

     (1) all normal and customary operating expenses, Taxes and capital
expenditures paid or incurred by Sellers allocable to the Purchased Assets
(including, without limitation, rentals and prepaid charges, including,
without limitation, prepaid Taxes, prepaid insurance and prepaid bonds), to
the extent they are attributable and allocable to the ownership or operation
of the Purchased Assets on and after the Effective Date; and

     (2) any other increases in the Purchase Price specified in this
Agreement.

     (iii) Downward Adjustments. The Purchase Price will be decreased by
the following expenses and revenues (to the extent of the allocable share
attributable to the Purchased Assets):

     (1) all actual operating expenses and capital expenditures paid or
incurred by Buyer in connection with the Purchased Assets (including,
without limitation, rentals and prepaid charges, including, without
limitation, prepaid Taxes and prepaid insurance), to the extent they are
attributable to the ownership or operation of the Purchased Assets before
the Effective Date; and

     (2) any other decreases in the Preliminary Sale Price specified in this
Agreement.

     (b) Adjustments After Closing.

     (i) Final Settlement Statement. Within thirty (30) days after Closing,
Sellers will prepare a final settlement statement for the Purchased Assets
containing a final reconciliation of the adjustments to the Purchase Price specified
in Section 2.5(a) (the “Final Settlement Statement”). However, the failure
of Sellers to complete the Final Settlement Statement within thirty (30) days after
Closing will not constitute a waiver of any right to an adjustment otherwise due.
Buyer will have thirty (30) days after receiving the Final Settlement Statement to
provide Sellers with written exceptions to any items in the Final Settlement
Statement that Buyer believes, in good faith, to be questionable. All items in the
Final Settlement Statement to which Buyer does not except within the thirty (30) day
review period will be deemed to be correct.

     (ii) Payment of Post-Closing Adjustments. Any post-Closing adjustments
to the Closing Price (including disputed items which have ultimately been resolved)
will be offset against each other so that only one payment is required. The Party
owing payment will pay the other Party the net post-Closing adjustment to the
Closing Price within ten (10) days after the expiration of Buyer’s thirty (30) day
review period for the Final Settlement Statement.

     (c) Additional Closing Payments.

     (i) any reimbursable Consent Costs under Section 8.4; and

     (ii) subject to any approval requirements under Section 5.2, the
capital costs attributable to expansions or extensions of the Gathering System paid
by Sellers between the date of this Agreement and the Closing (collectively, the
(“Additional Capital Costs”).

     2.6 Operation of Gathering System; Joint Ownership Agreement. From and after the
Closing, the ownership and operation of the Gathering System, as well as any modifications,
additions, improvements, expansions or extensions thereof, shall be conducted and governed in
accordance with the terms of the Joint Ownership Agreement and certain agreements entered into
pursuant to the Joint Ownership Agreement, as any of the same may be amended from time to time in
accordance therewith. Simultaneously with the Closing and the consummation of the other
transactions contemplated herein, Buyer and New NGAS Gathering shall execute and deliver (and DPI
shall cause New NGAS Gathering to execute and deliver) the Joint Ownership Agreement. In

12

 

accordance with the terms thereof, at the Closing Buyer and New NGAS Gathering shall also
properly execute, notarize and deliver (and DPI shall cause New NGAS Gathering to properly execute,
notarize and deliver) to Buyer, for Buyer to record in each county in which any of portion of the
Gathering System is located, a memorandum of the Joint Ownership Agreement, acknowledging that the
obligations therein are intended to constitute covenants running with the land, in form and
substance reasonably acceptable to Buyer and Sellers. In addition, pursuant to the Joint Ownership
Agreement, it is contemplated that New NGAS Gathering and Buyer shall enter into the SES Contract
Operator Agreement, and SES and DPI shall enter into the DPI Contract Operator Agreement.

     2.7 Seller’s Lien Releases. At or prior to Closing, Sellers shall deliver to Buyer
release documentation, in form and substance satisfactory to Buyer and sufficient to establish
clear, marketable and unencumbered title to the Purchased Assets (free of all Liens other than
Permitted Encumbrances) delivered to Buyer at Closing, and clear, marketable and unencumbered title
to the Retained Gathering Assets (free of all Liens other than Permitted Encumbrances) delivered to
New NGAS Gathering at Closing. Without limiting the generality of the immediately preceding
sentence, the Sellers shall deliver the releases described on Exhibit J attached hereto.

     2.8 Contribution of Retained Gathering Assets; Security Interests; New NGAS
Gathering.

     (a) Contribution of Retained Gathering Assets. At Closing, and immediately following
the conveyance of the Purchased Assets to Buyer at Closing, the Sellers shall contribute and
convey to New NGAS Gathering the Retained Gathering Assets, free and clear of all Liens
other than Permitted Encumbrances. New NGAS Gathering shall own or hold no other assets or
properties of any kind whatsoever following the Closing other than the Retained Gathering
Assets and its interests in any additions to or extensions of the Gathering System in
accordance with the Joint Ownership Agreement.

     (b) Security Interests in Retained Gathering Assets. At Closing, and to support the
full and prompt performance and satisfaction of all the Seller Secured Obligations, (1) New
NGAS Gathering shall grant to Buyer a first lien in and to all of the Retained Gathering
Assets, as the same may be modified, improved, repaired, replaced, extended or expanded,
from time-to-time, in accordance with the terms of the NGAS Mortgages; and (2) New NGAS
Gathering shall properly execute, have notarized and deliver to Buyer the NGAS Mortgages.
If an NGAS Option is exercised, whether by SES or in accordance with the put option
provisions thereof, the Liens granted under the NGAS Mortgages shall automatically
terminate, expire and be released upon the closing and consummation of such NGAS Option, and
the Parties shall promptly execute, deliver and record such further releases or instruments
as may be necessary or appropriate to reflect the termination and release thereof.

     (c) Independent Director; Governing Documents of New NGAS Gathering. As of the Closing
the provisions set forth in Exhibit K-1 shall have become a part of the Governing
Documents of New NGAS Gathering such that throughout the period when any of the Joint
Ownership Agreement or SES Gathering Agreement remain in effect (or at any time when neither
the Joint Ownership Agreement nor the SES Gathering Agreement, remain in effect but the
Gathering System is still owned partially by New NGAS Gathering or any Affiliates of
Sellers, on the one hand, and Buyer or any Affiliate of Buyer, on the other hand, New NGAS
Gathering shall be required to continue to (1) appoint and maintain an Independent Director,
and (2) such Independent Director’s approval shall be required prior to New NGAS Gathering
to filing any insolvency, or reorganization case or proceeding, to institute proceedings to
have New NGAS Gathering be adjudicated bankrupt or insolvent, to institute proceedings under
any applicable insolvency law, to seek any relief under any law relating to relief from
debts or the protection of debtors, to consent to the filing or institution of Bankruptcy or
insolvency proceedings against the New NGAS Gathering, to file a petition seeking, or
consent to, reorganization or relief with respect to the Company under any applicable
federal or state law relating to Bankruptcy or insolvency, to seek or consent to the
appointment of a receiver, liquidator, assignee, trustee, sequestrator, custodian, or any
similar official of or for New NGAS Gathering or a substantial part of its property, to make
any assignment for the benefit of creditors of New NGAS Gathering, to admit in writing New
NGAS Gathering’s inability to pay its debts generally as they become due, or to take action
in furtherance of any of the foregoing, dissolve, liquidate, sell or transfer all or
substantially all of the assets of New NGAS Gathering (whether in one or more transactions),
merge or consolidate with another entity or company, or take any other actions set forth in
Exhibit K-1, the NNG LLC Agreement, or take any other actions or enter into any
other transactions other than those expressly permitted under the Joint Ownership Agreement
or any other Ancillary Agreements. In addition, during

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the same period that New NGAS Gathering must maintain an Independent Director, the NNG
LLC Agreement shall provide that: (x) New NGAS Gathering may not vote on, or authorize the
taking of, any of the above-described actions, unless there is at least one Independent
Director then serving in such capacity (and any such vote without an Independent Director
shall be deemed void), and (y) neither the NNG LLC Agreement nor any of New NGAS Gathering’s
other Governing Documents shall be permitted to be amended or modified without the prior
written consent of Buyer, which consent shall not be unreasonably withheld. To the fullest
extent permitted by applicable Law, the Independent Director shall consider only the
interests of New NGAS Gathering and its creditors, if any, in acting or otherwise voting on
the matters referred to in this Section. No resignation or removal of an Independent
Director, and no appointment of a successor Independent Director, shall be effective until
such successor (i) shall have accepted his or her appointment as an Independent Director by
a written instrument, which may be a counterpart signature page to the NNG LLC Agreement,
and (ii) shall have executed a counterpart to the Governing Documents of New NGAS Gathering.
In the event of a vacancy in the position of Independent Director, DPI and New NGAS
Gathering shall, as soon as practicable, appoint a successor Independent Director. All
right, power and authority of the Independent Director[s] shall be limited to the extent
necessary to exercise those rights and perform those duties specifically set forth in this
Agreement and in the NNG LLC Agreement. Except as provided above, in exercising their
rights and performing their duties under this Agreement, any Independent Director shall have
a fiduciary duty of loyalty and care similar to that of a director of a business corporation
organized under the General Corporation Law of the State of Delaware. No Independent
Director shall at any time serve as trustee in bankruptcy for any Affiliate of New NGAS
Gathering. Notwithstanding the above, to the extent that the NGAS Options are exercised
(whether by SES or in accordance with the put options described therein), the obligation of
New NGAS Gathering to appoint and maintain an Independent Director shall automatically
terminate upon the closing and consummation of such NGAS Option, and the Parties shall
execute such further amendments to the NNG LLC Agreement or other instruments as may be
necessary or appropriate to reflect the termination thereof.

     (d) Other Provisions of NNG LLC Agreement. In addition to the Independent Director
provisions described above, the NNG LLC Agreement shall also expressly include (1) an
acknowledge that New NGAS Gathering is being formed to, among other things, enter and
perform into this Agreement, the Joint Ownership Agreement and the SES Gathering Agreement,
including, without limitation, with regard to the granting of the NGAS Options hereunder and
the right of first refusal options granted under the Joint Ownership Agreement, and (2) the
sole purpose and business of New NGAS Gathering shall be limited solely to the business,
agreements, obligations and commitments that are permitted to be made by New NGAS Gathering
under the Joint Ownership Agreement and the SES Gathering Agreement, and that no other
business or activity shall be engaged in or permitted to be done by New NGAS Gathering
without Buyer’s express written consent. Notwithstanding the above, to the extent that the
NGAS Options are exercised (whether by SES or in accordance with the put options described
therein), the obligation of New NGAS Gathering to limit its purpose solely as described
above shall automatically terminate upon the closing and consummation of such NGAS Option,
and the Parties shall execute such further amendments to the NNG LLC Agreement or other
instruments as may be necessary or appropriate to reflect the termination thereof.

     2.9 Seller Parent Guarantees. At Closing, and simultaneous with the execution and
delivery of this Agreement, each of NRI and DPI shall properly execute and deliver to Buyer the
Seller Parent Guaranty, in substantially the form of Exhibit C, guarantying the full
performance and satisfaction of all Seller Secured Obligations, and providing such other
representations and warranties and covenants as set forth therein.

     2.10 SES Gathering Agreement. At Closing, and immediately following the conveyance of
the Purchased Assets to Buyer, the contribution and conveyance of the Retained Gathering Assets to
New NGAS Gathering and the execution and delivery of the Joint Ownership Agreement, the Buyer and
New NGAS Gathering shall have executed and delivered to SES the SES Gathering Agreement. To the
extent any Additional Capital Costs are paid between the date of this Agreement and the Closing,
then this Agreement will be amended as of the Closing to amend the Gathering Fees under the SES
Gathering Agreement to increase such Gathering Fees by an amount that would provide to Buyer and
New NGAS Gathering a 20% IRR (meaning an IRR with an IRR Specified Discount Rate equal to 20%) on
all such Additional Capital Costs over the remaining term of such SES Gathering Agreement.

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     2.11 NAESB Purchase Agreement. At Closing, and immediately following the conveyance of
the Purchased Assets to Buyer, the contribution and conveyance of the Retained Gathering Assets to
New NGAS Gathering, the execution and delivery of the Joint Ownership Agreement and the execution
and delivery of the SES Gathering Agreement, DPI shall have executed and delivered to SES the NAESB
Purchase Agreement, on behalf of itself and the other DPI Producers, in substantially the form
attached hereto as Exhibit I. The NAESB Purchase Agreement shall provide for the
dedication of the DPI Producers’ natural gas production derived from their respective oil, gas and
mineral interests in the geographic region serviced by the Gathering System, as the same may be
extended or enlarged from time to time, and such dedication shall be expressly intended to be
covenants running with the land. In accordance with the terms of the NAESB Purchase Agreement, DPI
shall agree to cause any existing or future subsidiaries or Affiliates of DPI to be bound by,
execute and join as a party, the NAESB Purchase Agreement (with NRI’s covenants and agreements with
regard thereto being set forth in the Seller Parent Guaranty), provided, however, that SES, in its
sole discretion, may elect to waive such requirement in writing; provided, further, however, that
such dedication may exclude any interests that DPI or its Affiliates may be holding, as nominee,
for the sole benefit of a party other than DPI or any of its Affiliates. In addition, the NAESB
Purchase Agreement shall specify the terms of the NGAS Option and the Forward Sales Agreement to be
entered into at Closing. To the extent any Additional Capital Costs are paid between the date of
this Agreement and the Closing, then the above-described amendments to this Agreement relating to
the Gathering Fees under the SES Gathering Agreement shall correspondingly result in a similar
increase in the Gathering Fees under the NAESB Purchase Agreement.

     2.12 Buyer Second Lien. To support the full and prompt performance and satisfaction of
all Buyer Secured Obligations and any other obligations or liabilities set forth in the Seminole
Mortgages, (1) Buyer shall grant to New NGAS Gathering a subordinated, second lien (subordinate to
the liens, rights and claims of International Bank of Commerce, or its successors and assigns) in
and to all of the Purchased Assets, as the same may be modified, improved, repaired, replaced,
extended or expanded, from time-to-time, in accordance with the terms of the Seminole Mortgages;
(2) Buyer shall properly execute, have notarized and deliver to New NGAS Gathering the Seminole
Mortgages.

     2.13 NGAS Options; Kay Jay ROFR; Covenants.

     (a) NGAS Options. New NGAS Gathering and DPI shall grant to SES the NGAS
Options on the terms and conditions set forth in the NAESB Purchase Agreement.

     (b) Kay Jay ROFR. DPI shall (and hereby does) grant to Buyer the Kay Jay ROFR on the
terms and conditions set forth in Schedule H.

     (c) Covenants. Sellers, Buyer and the Guarantors shall comply and perform, or
cause to be complied with and performed, all of their respective covenants and agreements
pertaining to the NGAS Options and the Kay Jay ROFR set forth in Schedules G of the
NAESB Purchase Agreement and Schedule H attached hereto, respectively.

     2.14 Partial Repayment of NGAS Credit Agreement; Option Proceeds; Amendment to NGAS Credit
Agreement.

     (a) Not less than one (1) Business Day prior to the Closing Date, Sellers shall have
furnished an irrevocable notice to KeyBank National Association, in its capacity as
administrative agent under the NGAS Credit Agreement, of its intention to direct the payment
of the Purchase Price at the Closing by wire transfer to a designated account of DPI with
KeyBank National Association and to apply such funds as a partial repayment of the
outstanding loans under the NGAS Credit Agreement.

     (b) If an NGAS Option is exercised, whether by SES or in accordance with the put
options provisions thereof, Sellers agree that not less than $7.5 million of the NGAS Option
Price shall be applied to reduce the outstanding principal balance due under the NGAS Credit
Agreement.

     (c) On or before the Closing, the NGAS Credit Agreement shall be amended in the manner
contemplated Schedule 2.14(c) attached hereto.

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     2.15 Forward Sales Agreement; Master Netting Agreement; (a) Forward Sales
Agreement. At Closing, Sellers shall have entered into fixed price forward sales commitments
with SES as the counterparty (the “Forward Sales Agreements”) in accordance with the NAESB Purchase
Agreement.

          (b) Master Netting Agreement. At Closing, SES, Buyer, DPI, for itself and the other
DPI Producers, NGL, and New NGAS Gathering shall execute and deliver the Master Netting Agreement.

ARTICLE 3

REPRESENTATIONS AND WARRANTIES OF THE SELLERS

     The Sellers, jointly and severally, represent and warrant to the Buyer as of the date of this
Agreement and as of the Closing Date as follows:

     3.1 Organization. NGL is a limited liability company duly organized, validly existing
and is in good standing under the laws of the Commonwealth of Kentucky. DPI is a corporation duly
organized, validly existing and is in good standing under the laws of the Commonwealth of Kentucky.
New NGAS Gathering is a limited liability company duly organized, validly existing and is in good
standing under the laws of the Commonwealth of Kentucky. The Sellers have delivered or otherwise
made available to the Buyer true and complete copies of the Sellers’ and New NGAS Gathering’s
Governing Documents, as in effect on the date hereof. Each of the Sellers and New NGAS Gathering
is duly registered or qualified to do business as a foreign limited liability company or
corporation, as the case may be, and is in good standing under the laws of each jurisdiction which
requires such registration or qualification.

     3.2 Authorization. Each of Sellers and New NGAS Gathering has all requisite power and
authority to execute this Agreement and the Ancillary Agreements to which it will be a party and to
perform its obligations hereunder and thereunder. The execution and delivery of this Agreement and
the Ancillary Agreements to which it (or their respective Affiliates) is or will be a party and the
consummation of the transactions contemplated hereby and thereby have been duly and validly
authorized and approved by all requisite action by the Sellers, New NGAS Gathering or their
respective Affiliates. This Agreement constitutes, and upon execution each of the Ancillary
Agreements to which it is a party will constitute, a valid and binding obligations of the Sellers,
New NGAS Gathering and any of Affiliates (to the extent a party thereto), enforceable against each
of Sellers and New NGAS Gathering (and, as applicable, their Affiliates) in accordance with its
terms, except as such enforceability may be limited by (a) bankruptcy, insolvency, reorganization,
moratorium or similar Laws relating to or affecting generally the enforcement of creditors’ rights
and (b) the availability of equitable remedies (whether in a proceeding in equity or at Law).

     3.3 Non-Contravention; Absence of Breach. (a) None of (1) the execution or delivery
by either of the Sellers or New NGAS Gathering or any of their Affiliates (to the extent a party
thereto) of this Agreement and the Ancillary Agreements to which it will be a party, (2) the
consummation by either Seller or New NGAS Gathering of the transactions contemplated hereby or
thereby, and (3) the retention by Sellers of the Retained Liabilities, will (A) conflict with or
result in the breach of any term or provision of, or constitute a default under, the Governing
Documents of the Sellers, New NGAS Gathering or any of their Affiliates; (B) result in a default,
or give rise to any right of termination, cancellation or acceleration, impose any additional
obligation under any provision of any contract or agreement of either Seller, New NGAS Gathering or
any of their Affiliates, including, without limitation, any Assumed Contract, any loan agreements
(including, without limitation, the NGAS Credit Agreement), promissory notes, indentures,
debentures, convertible notes or bonds (including, without limitation, those under the NGAS
Securities Purchase Agreement), or other instruments to which either of the Sellers, New NGAS
Gathering or any of their Affiliates is a party or by which either Seller, New NGAS Gathering or
any of its Affiliates is bound; (C) result in the creation or imposition of any Lien (other than
Permitted Encumbrances) on any of the Purchased Assets or any of the Retained Gathering Assets,
(D) violate any Requirements of Law applicable to either of the Sellers, New NGAS Gathering, the
Purchased Assets or the Retained Gathering Assets; or (E) other than the Required Consents, require
on the part of the Sellers or Guarantors the approval, consent, waiver, authorization or act of, or
the making by the Sellers or Guarantors of any declaration, filing or registration with, any
Person.

          (b) Neither of the Sellers, New NGAS Gathering or any of their Affiliates is in breach or
default, nor has an event occurred which, upon notice, lapse of time or any combination thereof,
will result in a

16

 

breach of default of or give rise to any right of termination, cancellation or acceleration
under (1) any term or provision of the Governing Documents of the Sellers, New NGAS Gathering or
any of their Affiliates or (2) any provision of any contract or agreement of either Seller, New
NGAS Gathering or any of their Affiliates, including, without limitation, any Assumed Contract, any
loan agreements (including, without limitation, the NGAS Credit Agreement), promissory notes,
indentures, debentures, convertible notes or bonds (including, without limitation, those under the
NGAS Securities Purchase Agreement), or other instruments to which either of the Sellers, New NGAS
Gathering or any of their Affiliates is a party or by which either Seller, New NGAS Gathering or
any of their Affiliates is bound. Neither of the Sellers or New NGAS Gathering is in violation of
any applicable Requirement of Law.

     3.4 Requirements of Law. None of the Purchased Assets (including, without limitation,
the Gathering System), nor their use and operation, fail to comply or conform with, in any material
respect, all Requirements of Law.

     3.5 Governmental Permits. Except as set forth on the attached Schedule 3.5,
Sellers and New NGAS Gathering hold no Governmental Permits and, to the Knowledge of Sellers, no
Governmental Permits are necessary for them to own, use and manage the Purchased Assets or the
Gathering System and to carry on and conduct the Business as currently conducted by the Sellers.
Attached hereto as Exhibit D is the form of legal opinion of outside counsel for the
Sellers to be delivered to Buyer at the Closing, confirming their opinion on the matters addressed
in this Section 3.5 and certain other matters identified therein.

     3.6 Intellectual Property. Except as set forth on the attached Schedule 3.6,
none of the Intellectual Property owned or licensed by the Sellers or their Affiliates is used in
connection with the Business.

     3.7 Title to Purchased Assets; Condition of Purchased Assets. The Sellers have good,
marketable and valid title to all of the Purchased Assets and the Retained Gathering Assets, free
and clear of all Liens, and the Kay Jay ROFR Assets, free and clear of all Liens, other than: (a)
Permitted Encumbrances and (b) the Liens released at or prior to Closing in accordance with
Section 2.7 above. The Purchased Assets and Retained Gathering Assets that constitute
tangible personal property have been constructed, tested and maintained in all material respects in
accordance with applicable Law and prudent industry practice, and are fit for the particular
purpose for which they are used in the Business, subject only to ordinary maintenance requirements
and normal wear and tear expected in the ordinary course of business. In addition, as of the date
of this Agreement, all information and data provided or made available by or on behalf of Sellers
to REM Pipeline Consultants (an engineering firm engaged to review the Gathering System) is true,
correct and complete in all material respects and does not omit any facts or circumstances that, to
the Knowledge of the Sellers, would be material to REM Pipeline Consultants’ review, analysis or
conclusions; and such information was prepared and supplied in accordance with customary industry
practices.

     3.8 Assumed Contracts. 

          (a) Schedule C hereto sets forth a true and complete list of all of the Sellers’
Contracts, as amended, except to the extent a Contract is included as an Excluded Asset. The
information set forth on Schedule C is accurate and complete. True, complete and accurate
copies of each of the Contracts, including any Contracts constituting any of the 100% Assigned
Contracts or the Excluded Assets, have been furnished to Buyer. There are no oral or verbal
Contracts.

          (b) Except as set forth on Schedule 3.8(b), neither of the Sellers nor, to the
Knowledge of the Sellers, any Counterparty to any Contract is, as of the date hereof, in breach
thereof or default thereunder, and there does not exist under any provision thereof, to the
Knowledge of the Sellers, as of the date hereof, any event that, with the giving of notice or the
lapse of time or both, would constitute such a breach or default of any Contract.

          (c) Each of the Assumed Contracts and each 100% Assigned Contract is in full force and effect,
enforceable in accordance with its stated terms, and constitutes a legal, valid and binding
obligation of the Sellers and, to the Knowledge of the Seller, of the Counterparty thereto.

          (d) Except as set forth on Schedule C, no Assumed Contract nor 100% Assigned Contract
has been amended, supplemented or modified in any material respect from the copy thereof furnished
to the Buyer hereunder. True and complete copies of all Assumed Contracts and each 100% Assigned
Contract (including all

17

 

amendments, supplements and modifications thereto) have been provided or made available to
Buyer prior to the Closing Date.

     3.9 Litigation. Except as set forth on Schedule 3.9, there is no Governmental
Action, regulatory Action, or other suit, proceeding or Action initiated by any Person pending or,
to the Knowledge of Sellers, threatened (a) under or in respect of any of the Purchased Assets
(including, but not limited to, any claim related to environmental contamination, exposure,
releases or other environmental matters) or the rest of the Gathering System, or (b) which
questions the legality or propriety of the transactions contemplated by this Agreement.

     3.10 Tax Representations.

          (a) Neither the Sellers, New NGAS Gathering nor NRI is required by any applicable Law, as
modified by the practice of any relevant Governmental Body, to make any deduction or withholding
for or on account of any Tax from any payment to be made by it to the Buyer under this Agreement or
any Ancillary Agreement.

          (b) Each of the Sellers is classified as a domestic corporation for U.S. federal income tax
purposes. New NGAS Gathering is classified as a disregarded entity for U.S. federal income tax
purposes.

          (c) Each of the Sellers has filed all Tax Returns required to be filed under applicable Laws.
All such returns were correct and complete in all respects and have been prepared in compliance
with all applicable Law. All Taxes due and owing by each Seller (whether or not required to be
shown on any Tax Return) have been timely paid.

          (d) Each of the Sellers has withheld and timely paid all Taxes required to have been withheld
and paid in connection with any amounts paid or owing to any employee, independent contractor,
creditor, stockholder, or other Person or third party.

          (e) There are no Liens for due and unpaid Taxes upon any of the Purchased Assets or the
Retained Gathering Assets. The Purchased Assets are transferred to Buyer (and the Retained
Gathering Assets are transferred to New NGAS Gathering) free of, and cannot be made subject to, any
successor or transferee liabilities for Taxes (1) with respect to any Taxes of Sellers for any
taxable period or portion thereof ending on or before the Closing Date, or (2) with respect to any
other transactions contemplated by this Agreement, except for transfer taxes to be borne by Buyer
and Sellers pursuant to Section 9.1.

          (f) To the Knowledge of the Sellers, there is no basis for any Governmental Body to assess any
additional Taxes for any period for which Tax Returns have been filed. No foreign, federal, state,
or local tax audits or administrative or judicial Tax proceedings are pending against either of the
Sellers or, to the Knowledge of the Sellers, have been threatened (orally or in writing) with
respect to either of the Sellers. Neither Seller has received from any foreign, federal, state, or
local Governmental Body (including jurisdictions where the Seller has not filed Tax Returns) any
(1) notice indicating an intent to open an audit or other review; (2) request for information
related to Tax; or (3) notice of deficiency or proposed adjustment for any amount of Tax proposed,
asserted or assessed by any Governmental Body against either Seller.

          (g) Sellers have not waived any statute of limitations in respect of Taxes.

          (h) None of the Sellers nor New NGAS Gathering is a party to any Tax allocation, indemnity or
sharing agreement or similar contract or arrangement with respect to the Business or the Purchased
Assets.

          (i) None of the Purchased Assets: (1) is property which either Seller is required to treat as
being owned by any other Person pursuant to the “safe harbor lease” provisions of former Section
168(f)(8) of the Code; (2) is “tax-exempt use property” within the meaning of Section 168(h) of the
Code; (3) is “tax-exempt bond financed property” within the meaning of Section 168(g) of the Code;
(4) is “limited use property” within the meaning of Rev. Proc. 2001-28; (5) is subject to Section
168(g)(1)(A) of the Code; or (6) directly or indirectly secures any debt the interest on which is
tax exempt under Section 103(a) of the Code.

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     3.11 Brokers.

     Neither Sellers nor New NGAS Gathering is a party to any contract or agreement for the payment
of any broker’s or finder’s fee in connection with the origin, negotiation, execution or
performance of this Agreement for which Buyer will or could have any liability.

     3.12 Bankruptcy; Solvency.

     There are no bankruptcy, reorganization or arrangement proceedings pending, being contemplated
by or, to the Knowledge of the Sellers, threatened against either Seller or New NGAS Gathering.
Each of the Sellers and New NGAS Gathering is, and immediately after giving effect to the
transactions contemplated by this Agreement and the Ancillary Agreements will be, Solvent. For
purposes of this Section 3.12, the term “Solvent” means, with respect to the applicable
Person as of the date the determination is being made, that on such date (a) the fair value of the
property of such Person is greater than the total amount of liabilities, including, without
limitation, contingent liabilities of such Person that would constitute liabilities under GAAP, (b)
the present fair saleable value of the assets of such Person is not less than the amount that will
be required to pay its debts as they become absolute and matured, taking into account the
possibility of refinancing such obligations and selling assets, (c) such Person does not intend to,
and does not believe that it will, incur debts or liabilities beyond such Person’s ability to pay
such debts as they mature, taking into account the possibility of refinancing such obligations and
selling assets, and (d) such Person is not engaged in business or a transaction, and does not
intend to engage in business or a transaction, for which such Person’s property remaining after the
conduct of such business or the consummation of such transaction would constitute unreasonably
small capital.

     3.13 Take or Pay Arrangements.

     Neither Seller has received any prepayments or buydowns, or entered into any take-or-pay or
forward sale arrangements, such that Buyer will be obligated after the Closing Date to make
deliveries of gas without receiving full payment therefor.

     3.14 Imbalances. There has been no miscalculation, calculation error, measurement
problem or other similar event relating to the performance of the Business under any natural gas
gathering, processing or treating Contract that would give rise to any correcting adjustment under
any such Contract that would reasonably be expected to result in a material liability, loss or
cost. There are no material imbalances regarding the Purchased Assets, with regard to volumes of
gas received and delivered.

     3.15 Preferential Purchase Rights and Consents; Lease ROW.

          (a) Schedule 3.15 sets forth a true, correct and complete list of all (i) rights or
agreements (including, without limitation, any rights of first refusal, preferential purchase
rights, options, or similar agreements) that may permit any Person (other than Buyer or its
Affiliates) to purchase or acquire any of the Purchased Assets or the Retained Gathering Assets,
arising in connection with the transactions contemplated hereby (collectively, the “Preferential
Rights”), and (ii) all required consents, approvals, authorizations of, or similar rights, or
notifications to, any Person arising in connection with the transactions contemplated hereby. As
of the Closing Date, Sellers shall have obtained or made arrangements to obtain all of the Required
Consents and waivers of the Preferential Rights, and copies thereof or other evidence thereof shall
have been provided to Buyer.

          (b) To the extent a Right of Way for any part of the Gathering System is granted (whether
expressly or impliedly) under the terms of any oil, gas or mineral lease, rather than pursuant to
an independent grant of such Right of Way (in such case, a “Lease ROW”), Sellers represent and
warrant the following: (i) either (1) no third party gas (i.e., gas which is not attributable to
the lessee’s interests under the lease (or pooled unit) to which the Lease ROW is granted) is
being, gathered or transported across the portion of the Gathering System covered by the Lease ROW,
or (2) to the extent such Lease ROW permits gathering or transportation of third party gas (as
described in subpart (1) above) and third party gas is being gathered, any request for Required
Consent with regard thereto shall not waive or release any such third party gas rights, or other
rights, thereunder; and (ii) the loss of any Lease ROW would not materially adversely affect
Buyer’s ability to operate the Gathering System after Closing as contemplated in the Joint
Ownership Agreement.

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     3.16 Pipeline Regulation.

     Neither of the Sellers, nor New NGAS Gathering, nor the Purchased Assets, the Retained
Gathering Assets or the Business are subject to regulation by, or are under the jurisdiction of,
the FERC, the Natural Gas Act, the Natural Gas Policy Act or the public utility commission (or
similar body) of any state or other jurisdiction.

     3.17 Environmental.

     Except as set forth in Schedule 3.17: (a) the Purchased Assets or Retained Gathering
Assets are and, within any unexpired statute of limitations period, have been in compliance with
applicable Environmental Laws, (b) none of the Purchased Assets or Retained Gathering Assets are
subject to any unfulfilled remedial obligation imposed under applicable Environmental Laws,
(c) neither of the Sellers, nor any of their Affiliates has received any notice of alleged
violation of or potential liability under applicable Environmental Laws relating to the Purchased
Assets, the Retained Gathering Assets or the operations of or related to the Business that has not
been fully resolved to the satisfaction of the applicable Governmental Body with jurisdiction over
such matter, and (d) true and complete copies of all reports, correspondence and other documents
addressing potentially material environmental matters relating to the Purchased Assets and Retained
Gathering Assets have been made available for review by Buyer.

     3.18 Affiliate Held Assets.

     Except as set forth on Schedule 3.18, all of the Purchased Assets and Retained
Gathering Assets, together with all other properties, assets or interests used in connection with
the Purchased Assets or the Retained Gathering Assets or the Business, are owned and held, legally
and beneficially, directly by the Sellers, and not by any other Affiliates of Sellers or by third
parties.

     3.19 Information Underlying Reserve Reports.

     As of the date of this Agreement, all information and data provided or made available by or on
behalf of Sellers, or any of their Affiliates (including the DPI Producers) to Marshall, Miller &
Associates, Inc. and to Wright & Co., Inc. as reservoir engineers engaged to prepare reserve
reports for DPI is true, correct and complete in all material respects and does not omit any facts
or circumstances that would be material to the review, analysis or conclusions of Marshall, Miller
& Associates, Inc. or to Wright & Co., Inc. All such information was prepared and supplied in
accordance with customary industry practices, including, without limitation, historical development
and production costs.

     3.20 Sufficiency of Assets; No Adverse Change.

     At the Closing, Buyer (as owner of the Purchased Assets, as described herein) and New NGAS
Gathering (as owner of the Retained Gathering Assets, as described herein) will own and have the
legal and beneficial right to use and operate the Gathering System in a manner consistent with the
Business and with Seller’s past practices, subject to the provisions of the Joint Ownership
Agreement. In addition, there has occurred no change, effect, event or occurrence that is or would
reasonably be expected to be materially adverse to the business, condition (financial or
otherwise), results of operations, value, title, liabilities or obligations of, or related to, the
Business or the Purchased Assets or the Retained Gathering Assets, taken as a whole, since
December 31, 2008 or to the ability of the Sellers to consummate the transactions contemplated by
this Agreement; and to the Knowledge of the Sellers, there exist no facts or circumstances which
would prevent or materially hinder Buyer from (x) owning and operating the Gathering System, the
Business and/or the Purchased Assets as of the Closing Date in a manner consistent with the
Business and with Seller’s past practices, and (y) owning and operating the Gathering System after
Closing in the manner contemplated in the Joint Ownership Agreement and the SES Gathering
Agreement.

     3.21 Capitalization of New NGAS Gathering; No Subsidiaries.

     DPI is the sole owner and member of New NGAS Gathering, and owns (legally and beneficially)
100% of the limited liability company interests, membership interests or other equity or voting
interests of or in New NGAS Gathering; subject to the NGAS Equity Option and the Independent
Director provisions of the NNG LLC Agreement. New NGAS Gathering owns no equity or voting interest
in any Person.

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     3.22 Representations Regarding NGAS Credit Agreement.

Sellers hereby represent and warrant:

     (a) True, complete and accurate copies of the NGAS Credit Agreement, and each amendment
thereto have been furnished to Buyer; and the amendment described in Section 2.14(c)
has been duly executed and delivered by the parties thereto;

     (b) neither DPI nor, to the Knowledge of the Sellers, any counterparty to the NGAS
Credit Agreement is, as of the date hereof, in breach thereof or default thereunder, and
there does not exist under any provision thereof, to the Knowledge of the Sellers, as of the
date hereof, any event that, with the giving of notice or the lapse of time or both, would
constitute such a breach or default of such NGAS Credit Agreement; and

     (c) the NGAS Credit Agreement is in full force and effect, enforceable in accordance
with its stated terms, and constitutes a legal, valid and binding obligation of DPI and, to
the Knowledge of the Sellers, each of the counterparties thereto, except as such
enforceability may be limited by (a) bankruptcy, insolvency, reorganization, moratorium or
similar Laws relating to or affecting generally the enforcement of creditors’ rights and (b)
the availability of equitable remedies (whether in a proceeding in equity or at Law).

     3.23 Hard Rock Operations and Arkoma Operations.

     Sellers, or their Affiliates, participate in the operation and development of the HRE fields
(involving approximately 114,000 acres in Boone, Cabell, Jackson, Randolph and Roane Counties West
Virginia and Buchanan County, Virginia) with a joint venture partner, Hard Rock Exploration, Inc
under leases, farmouts, sponsored drilling programs, and other arrangements (collectively, the
“Hard Rock Operations”). Sellers, or their Affiliates, also participate in the operation and
development of the Arkoma field (a coalbed methane project involving approximately 14,000 acres in
the Arkoma Basin within Sebastian County, Arkansas and Leflore County, Oklahoma) through a joint
venture involving CDX Gas, LLC, also involving leases, farmouts, and other arrangements
(collectively, the “Arkoma Operations”). With regard to the Hard Rock Operations and the Arkoma
Operations respectively:

     (a) to the Knowledge of the Sellers, except as described in the most recent Form 10-Q
and Form 10-K filed on behalf of NRI with the United States Securities and Exchange
Commission, there exist no facts or circumstances which would or could result in (x) the
loss of any material property or contract rights relating to the (or constituting part of)
the Hard Rock Operations or the Arkoma Operations, (y) reduction of revenue to be received
by Sellers or their Affiliates attributable to the hard Rock Operations or Arkoma
Operations, and (z) increase the cost or liability of Sellers or their Affiliates relative
relating to the Hard Rock Operations or the Arkoma Operations, or with regard to the
ownership, development or operation thereof, in excess of what the costs and liabilities
therefore were in 2008.

     3.24 Production Data. The Sellers’ existing production data set forth in the model
delivered to Buyer on February 20, 2009 is, to the knowledge of the Sellers, true, correct and
complete in all material respects.

ARTICLE 4

REPRESENTATIONS AND WARRANTIES OF THE BUYER

     The Buyer represents and warrants to the Seller as of the Closing Date as follows:

     4.1 Organization. The Buyer is a corporation duly formed and validly existing and in
good standing under the laws of the State of Oklahoma. The Buyer has full corporate power and
authority to own or lease and to operate and use its assets and carry on its business as now
conducted and as it will be conducted with the Purchased Assets.

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     4.2 Authorization. Buyer has all requisite power and authority to execute and deliver
this Agreement and the Ancillary Agreements to which it will be a party and to perform its
obligations hereunder and thereunder. The execution and delivery of this Agreement and the
Ancillary Agreements to which it is or will be a party and the consummation of the transactions
contemplated hereby and thereby have been duly and validly authorized and approved by all requisite
action by the Buyer. This Agreement constitutes, and upon execution, the Ancillary Agreements to
which it is a party will constitute, the valid and binding obligations of the Buyer enforceable
against the Buyer in accordance with their respective terms, except as such enforceability may be
limited by (a) bankruptcy, insolvency, reorganization, moratorium or similar Laws relating to or
affecting generally the enforcement of creditors’ rights and (b) the availability of equitable
remedies (whether in a proceeding in equity or at Law).

     4.3 Non-Contravention. Neither the execution or delivery of this Agreement and the
Ancillary Agreements to which it will be a party by the Buyer nor the consummation of the
transactions contemplated hereby and thereby, including but not limited to the assumption of the
Assumed Contracts and Assumed Liabilities, will (a) conflict with or result in the breach of any
term or provision of, or constitute a default under, the Articles of Incorporation, By-laws or
other governing documents of the Buyer or any of its Affiliates; (b) result in a default, or give
rise to any right of termination, cancellation or acceleration of any material contract or
agreement of the Buyer or any of its Affiliates, including, without limitation, any loan
agreements, promissory notes, indentures or instruments to which the Buyer or any of its Affiliates
is a party or by which the Buyer or any of its Affiliates is bound; (c) violate any Requirements of
Law applicable to the Buyer; or (d) require on the part of the Buyer the approval, consent, waiver,
authorization or act of, or the making by the Buyer of any declaration, filing or registration
with, any Person, except for any the Required Consents and any Required Governmental Consents; and
except as would not prevent or delay in any material respect the consummation of the transactions
contemplated under this Agreement.

     4.4 Litigation. There is no Governmental Action, suit or proceeding initiated by any
Person pending or, to the Knowledge of the Buyer, threatened against Buyer which questions the
legality or propriety of the transactions contemplated by this Agreement.

     4.5 Buyer’s Financial Capacity. The Buyer has the present financial capacity and
resources to satisfy its obligations to close and consummate the purchase of the Purchased Assets
for the Purchase Price.

ARTICLE 5

CONSENTS; ADDITIONAL COVENANTS

     5.1 Required Consents; Waivers of Preferential Rights.

          (a) Sellers represent and warrant to Buyer that (i) except as set forth on Exhibit U,
Sellers have obtained as of the date of this Agreement, and shall bear all of the costs in
connection with obtaining, all Required Consents, subject to the provisions of Section 8.4,
and (ii) Sellers have obtained as of the date of this Agreement, and shall bear all of the costs in
connection with obtaining, waivers of any and all Preferential Rights. With regard to the
outstanding Required Consents, Sellers shall use diligent commercially reasonable efforts to obtain
all Required Consents prior to Closing.

          (b) With regard to the terms of certain requests in connection with Required Consents the
provisions set forth on Schedule 5.1(b) attached hereto shall apply.

     5.2 Operation of the Purchased Assets.

          (a) From the date of this Agreement and continuing until the Closing, Sellers shall operate
and maintain the Purchased Assets in the ordinary course consistent with past practices, keep its
Books and Records in accordance with past practices, maintain all of its existing insurance
coverage and pay all of its trade payables and other obligations on a timely basis, all as a
reasonable and prudent operator, in accordance with all Requirements of Law. With regard to New
NGAS Gathering and with regard to the Purchased Assets, Sellers will not, without the prior written
approval of Buyer take or permit any of the following actions:

     (i) amend the Governing Documents of New NGAS Gathering, except as contemplated
in Article 2, or issue or agree to issue any additional limited liability
company

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interests, membership interests (or other equity interests) of any class or
series, or any securities convertible into or exchangeable or exercisable for stock
(or other equity interests), or issue any options, warrants or other rights to
acquire any capital stock (or other equity interests);

     (ii) sell, transfer or otherwise dispose of or encumber any of the Purchased
Assets;

     (iii) waive, release, cancel, settle or compromise any debts, action or rights;

     (iv) allow New NGAS Gathering to incur, assume or guarantee any indebtedness
for borrowed money, or issue any notes, bonds, debentures or other similar
securities, or grant any option, warrant or right to purchase any of the same, or
issue any security convertible or exchangeable or exercisable for debt securities

     (v) make or change any material Tax elections (except as required by Law), or
settle or compromise any material Tax liability;

     (vi) hire or engage any employees;

     (vii) change any of the accounting methods or principles except to the extent
required under generally accepted accounting principles;

     (viii) make any capital expenditure or make any commitment to make any capital
expenditure in excess of $100,000;

     (ix) declare, pay or set aside for payment any amounts for dividends or other
distributions (including any amounts for the repurchase or redemption of any equity
interests) with regard to the NNG LLC Interests or make any provision therefor or
take any action in connection therewith, other than cash dividends;

     (x) adopt a plan of complete or partial liquidation, dissolution,
restructuring, recapitalization or other restructuring;

     (xi) pledge or mortgage any of the Purchased Assets;

     (xii) knowingly allow any permits, licenses or approvals, to terminate or
lapse;

     (xiii) enter into or amend, modify, terminate or allow to lapse or expire any
new contract or agreement not otherwise contemplated in this Agreement; and

     (xiv)
agree, whether in writing or otherwise, to do any of the foregoing.

ARTICLE 6

CONDITIONS TO CLOSING

     6.1 Condition to Closing.

          (a) Buyer’s Conditions. The obligation of Buyer to close and consummate the purchase of the
Purchased Assets, enter into the Ancillary Agreements to which it is a party, or consummate any of
the other transactions contemplated in this Agreement, are expressly conditioned upon:

     (i) the truth and accuracy, in all material respects (except for those
representations and warranties which are already qualified by “material” or similar
qualification, in which case, the truth and accuracy in all respects), of the
representations and warranties of the Sellers set forth in this Agreement;

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     (ii) the performance and satisfaction, in all material respects, of all
covenants and agreements of the Sellers and New NGAS Gathering required to be
performed hereunder on or prior to the Closing Date, including, without limitation,
the deliverable obligations set forth in Section 7.2;

     (iii) the delivery of a certificate duly executed by an authorized officer of
each Seller, certifying the satisfaction of the matters described in subparagraphs
(i) and (ii) above;

     (iv) the execution and delivery of the legal opinion of outside counsel for
Sellers and New NGAS Gathering in substantially the form of Exhibit D;

     (v) all Required Consents shall have been obtained, and copies thereof provided
to Buyer, unless expressly waived or deferred by the Buyer in writing at Closing;

     (vi) the amendment to the NGAS Credit Agreement contemplated by Section
2.14(c) and Schedule 2.14(c) shall have been duly and properly executed
by the parties to the NGAS Credit Agreement, and copies thereof have shall been
provided to Buyer;

     (vii) the amount of indebtedness outstanding under the NGAS Credit Agreement
shall not exceed $54.0 million, and Seller shall furnish to Buyer a certificate of
Seller’s chief financial officer certifying the balance then outstanding under the
NGAS Credit Agreement;

     (viii) SES shall have obtained all necessary approvals and lender financial
commitments (on terms and conditions satisfactory to SES, in its sole discretion)
sufficient for SES to close and fund the NGAS Options (whether pursuant to exercise
thereof by SES or pursuant to the put provisions therein);

     (ix) all Preferential Rights affecting the Purchased Assets hereunder shall
have been waived, or the time to exercise the same shall have expired in accordance
with its terms without exercise thereof;

     (x) no temporary restraining order, preliminary or permanent injunction or
other order issued by any court of competent jurisdiction or other legal restraint
or prohibition preventing the consummation of the transactions contemplated in this
Agreement; and

     (xi) the other exhibits, schedules, and forms of Ancillary Agreements
contemplated in this Agreement or in the exhibits and schedules attached hereto
which have not been completed and attached hereto shall have been prepared and
completed in a manner mutually satisfactory to Buyer and Sellers prior to Closing
and reflected in an amendment to this Agreement at or prior to Closing.

To the extent that Buyer elects to close and consummate the transactions contemplated in
this Agreement, nothing herein shall be deemed or intended as a waiver of any rights or
claims that Buyer may have under Article 8 with regard to any breach of
representations, warranties, covenants or agreements by Sellers hereunder.

     (b) Seller’s Conditions. The obligation of Sellers to close and consummate the sale of
the Purchased Assets, contribution of the Retained Gathering Assets, enter into the other
Ancillary Agreements to which either of Sellers is a party, and the performance of the other
transactions contemplated herein are expressly conditioned upon:

     (i) the truth and accuracy of all of the representations and warranties of
each of the Buyer set forth in this Agreement;

     (ii) the performance and satisfaction, in all material respects, of all
covenants and agreements to be performed and satisfied by Buyer on or prior to the
Closing Date, including, without limitation, the deliverable obligations set forth
in Section 7.3 below;

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     (iii) SES shall have provided to Sellers evidence, reasonably satisfactory to
Sellers, that SES has the lender financial commitments necessary for SES to close
and fund the NGAS Options; and

     (iv) the other exhibits, schedules, and forms of Ancillary Agreements
contemplated in this Agreement or in the exhibits and schedules attached hereto
which have not been completed and attached hereto shall have been prepared and
completed in a manner mutually satisfactory to Buyer and Sellers prior to Closing
and reflected in an amendment to this Agreement at or prior to Closing.

To the extent that Sellers elect to close and consummate the transactions contemplated in
this Agreement, nothing herein shall be deemed or intended as a waiver of any rights or
claims that Sellers may have under Article 8 with regard to any breach of
representations, warranties, covenants or agreements by Buyer.

ARTICLE 7

CLOSING

     7.1 Closing. Subject to the satisfaction or waiver of the conditions to Closing in
this Article 7, the Closing shall take place on the Closing Date at the offices of Seller
in Lexington, Kentucky or at such other location as may be designated by the Parties.

     7.2 Seller’s Deliveries. On the Closing Date, subject to the satisfaction of the
conditions described in Section 6.1(a) above, Sellers shall have delivered to Buyer the
following:

          (a) A certificate of existence from the Secretary of State of the Commonwealth of Kentucky
stating that Seller is a validly existing corporation in good standing;

          (b) original copies of duly executed and notarized Bill of Sale;

          (c) To the extent not previously delivered, originals or true and correct copies of all
Contracts and originals or true and correct copies of all Books and Records;

          (d) original, duly executed copies of the Seller Parent Guaranty;

          (e) A certificate executed by the chief executive officer or president and the secretary of
each of the Sellers and each of the Guarantors certifying as to the satisfaction of each of the
conditions set forth in Section 6.1 hereof required to be satisfied by it;

          (f) A duly adopted resolution of each Seller authorizing the transactions contemplated in this
Agreement, certified by the Secretary of such Seller;

          (g) A duly executed NNG LLC Agreement; complying with the terms hereof;

          (h) All of the agreements, documents or items described in Section 6.1(a);

          (i) Evidence satisfactory to the Buyer of the compliance by Sellers, New NGAS Gathering under
the provisions of Article 2 hereof, and the valid appointment by New NGAS Gathering of the
Independent Director as a member of New NGAS Gathering;

          (j) original copies of duly executed and notarized releases, in such form or forms as are
satisfactory to Buyer, sufficient to evidence the full release and discharge of any Liens (other
than Permitted Encumbrances) on the Purchased Assets and the Retained Gathering Assets, including,
without limitation, those contemplated in Section 2.7;

          (k) original, duly executed copies of each of the other Ancillary Agreements;

25

 

          (l) A certificate of non-foreign status satisfying the requirements of Treasury Regulations
Section 1.1445-2(b); and

          (m) The copies of consents, waivers or other evidence represented to have been provided to
Buyer under Section 3.15 above;

          (n) A certificate executed by an authorized officer of the Sellers, certifying receipt of the
Purchase Price from Buyer;

          (o) Any other agreements, documents, instruments, certificates or information contemplated in
this Agreement to be provided to Buyer at or prior to Closing

     7.3 Buyer’s Deliveries. On the Closing Date, subject to the satisfaction of the
conditions described in Section 6.1(a) above, Buyer shall have delivered to Sellers the
following:

          (a) The Purchase Price;

          (b) A certificate of good standing from the Secretary of State of Oklahoma stating that the
Buyer is a validly existing corporation in good standing;

          (c) A duly executed and notarized Bill of Sale;

          (d) SES shall execute and deliver the SES Gathering Agreement and the NAESB Purchase
Agreement;

          (e) A duly executed and notarized Seminole Mortgages; and

          (f) A duly adopted resolution of Buyer authorizing the transactions contemplated in this
Agreement, certified by the Secretary of Buyer.

ARTICLE 8

INDEMNIFICATION

     8.1 Limitation on and Survival of Representations and Warranties. All representations
and warranties of Sellers and Buyers contained in this Agreement, or in any agreements or
instruments executed in connection herewith or delivered pursuant hereto, shall survive the Closing
for a period of twenty-four (24) months beginning on the Closing Date, but not longer, except that
the representations and warranties of Sellers set forth in (a) Sections 3.1, 3.2,
3.3, and 3.7 shall survive indefinitely, and (b) Section 3.10 shall survive
until the thirtieth (30th) day after the expiration of the applicable statute of limitations
relating thereto. Such representations and warranties shall only be effective with respect to any
breach or claim when notice of such breach or claim shall have been given in writing to the other
Party in breach or against whom indemnification is sought within such period. Any claim for
indemnification for which written notice has been given within the prescribed period may be
prosecuted to conclusion notwithstanding the subsequent expiration of such period.

     8.2 Indemnification by the Sellers.

          (a) Subject to the limitations set forth in this Article 8, the Sellers jointly and
severally hereby agree to INDEMNIFY, DEFEND AND HOLD the Buyer, its members, its directors,
officers, employees and Affiliates (collectively, the “Buyer Indemnified Parties”) HARMLESS from
and against any and all claims, causes of action, Actions, demands, suits, proceedings, judgments,
losses, liabilities, damages, costs and expenses (including, but not limited to, reasonable
attorneys’ fees, court costs, and other costs of investigation or defense) (collectively, “Losses”)
(any claims for such Losses by a Buyer Indemnified Party, a “Buyer Claim”) arising from, as a
result of or in connection with, any of the following:

     (i) any inaccuracy or breach of a representation or warranty made by the
Sellers in this Agreement or in any agreement or instrument executed in connection
herewith or pursuant
hereto;

26

 

     (ii) the breach of, or default in the performance by the Sellers of, any
covenant, agreement or obligation to be performed by the Sellers pursuant to this
Agreement or any agreement or instrument delivered pursuant to Article 7;
and

     (iii) any Retained Liabilities.

          (b) Promptly after receipt by a Buyer Indemnified Party of notice of an Action or other event
giving rise to a Buyer Claim with respect to which the Buyer Indemnified Party is entitled to
indemnification under this Section 8.2, the Buyer Indemnified Party receiving such notice
shall notify (the “Buyer Claim Notice”) the Sellers in writing of the commencement of such Action
or the assertion of such Buyer Claim; provided, however, that failure to give such notice shall not
affect the right to indemnification hereunder except to the extent of actual prejudice to the
Sellers. The Sellers shall have the option, and shall notify the Buyer Indemnified Party in writing
within thirty (30) Business Days after the date of the Buyer Claim Notice of its election, either:
(i) to participate (at the expense of the Sellers) in the defense of such Action or Buyer Claim (in
which case the defense of such Action or Buyer Claim shall be controlled by the Buyer) or (ii) to
take charge of and control the defense of such Action or Buyer Claim (at the expense of the
Sellers, and only to the extent Sellers have accepted all liability under the above indemnity with
regard to such defense and the results or judgment resulting from such Action). If the Sellers
elect to control the defense, it will not compromise or settle the Action or Buyer Claim absent
each Buyer Indemnified Party’s written consent, which may be granted or denied in such Party’s
reasonable discretion, if (A) the amount to be paid in settlement exceeds the Maximum Indemnity
Amount, to the extent applicable to the Losses in question, or (B) the settlement does not include
a provision reasonably satisfactory to the Buyer Indemnified Party releasing the Buyer Indemnified
Party from all liabilities with respect thereto. If the Sellers fail to notify the Buyer
Indemnified Party of its election within the applicable response period, then the Sellers shall be
deemed to have elected not to control the defense of such Action or Buyer Claim. If the Sellers
elect to control the defense of any Action or Buyer Claim, the Buyer Indemnified Party shall have
the right to employ separate counsel and participate in the defense of such Action or Buyer Claim,
but the fees and expenses of such counsel shall be at the expense of the Buyer Indemnified Party
unless: (1) the named parties in such Action or Buyer Claim (including any impleaded parties)
include both the Buyer Indemnified Party and the Seller and the Buyer Indemnified Party shall have
been advised by such counsel that there may be one or more legal defenses available to it that are
different from or additional to those available to the Seller, or (2) the Buyer Indemnified Party
has reasonably determined that Losses that may be incurred may exceed either individually, or when
aggregated with other Buyer Claims, the Maximum Indemnity Amount (in which case, the Sellers shall
not have the right to control the defense of such Action or Buyer Claim on behalf of the Buyer
Indemnified Party, it being understood, however, that the Sellers shall not, in connection with
such Action or Buyer Claim, be liable for the fees and expenses of more than one (1) separate firm
of attorneys (in addition to any local counsel) and that all such fees and expenses shall be
reimbursed as they are incurred).

          (c) If the Sellers do not control the defense of any Action or Buyer Claim, then the Buyer
Indemnified Party may settle such Action or Buyer Claim with the written consent of the Sellers
(not to be unreasonably withheld).

     8.3 Indemnification by the Buyer.

          (a) Subject to the limitations set forth in this Article 8, the Buyer hereby agrees to
indemnify, defend and hold the Sellers and their directors, officers, employees, and Affiliates
(collectively, the “Seller Indemnified Parties”) harmless from and against any and all Losses
imposed upon or incurred by the Seller Indemnified Parties (any claim for such Losses by a Seller
Indemnified Party, a “Seller Claim”) as a result of or in connection with any of the following:

     (i) any inaccuracy or breach of a representation or warranty made by the Buyer
in this Agreement or in any agreement or instrument executed in connection herewith
or pursuant hereto; and

     (ii) the breach of or default in the performance by the Buyer of any covenant,
agreement or obligation to be performed by the Buyer pursuant to this Agreement or
any agreement or instrument delivered pursuant to Article 8.

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          (b) Promptly after receipt by a Seller Indemnified Party of notice of an Action or other event
giving rise to a Seller Claim with respect to which the Seller Indemnified Party is entitled to
indemnification under this Section 8.3, the Seller Indemnified Party receiving such notice
shall notify (the “Seller Claim Notice”) the Buyer in writing of the commencement of such Action or
the assertion of such Seller Claim; provided, however, that failure to give such notice shall not
affect the right to indemnification hereunder except to the extent of actual prejudice to the
Buyer. The Buyer shall have the option, and shall notify each Seller Indemnified Party in writing
within thirty (30) Business Days after the date of the Seller Claim Notice of its election, either:
(i) to participate (at the expense of the Buyer) in the defense of the Action or Seller Claim (in
which case the defense of such Action or Seller Claim shall be controlled by the Seller) or (ii) to
take charge of and control defense of such Action or Seller Claim (at the expense of the Buyer). If
the Buyer fails to notify the Seller Indemnified Party of its election within the applicable
response period, then the Buyer shall be deemed to have elected not to control the defense of such
Action or Seller Claim. If the Buyer elects to control the defense of any Action or Seller Claim,
the Seller Indemnified Party shall have the right to employ separate counsel and participate in the
defense of any such Action or Seller Claim, but the fees and expenses of such counsel shall be at
the expense of the Seller Indemnified Party unless the named parties in such Action or Seller Claim
(including any impleaded parties) include both the Seller Indemnified Party and the Buyer and the
Seller Indemnified Party shall have been advised by such counsel that there may be one or more
legal defenses available to it that are different from or additional to those available to the
Buyer (in which case, the Buyer shall not have the right to control the defense of such Action or
Seller Claim on behalf of the Seller Indemnified Party, it being understood, however, that the
Buyer shall not, in connection with such Action or Seller Claim be liable for the fees and expenses
of more than one (1) separate firm of attorneys (in addition to any local counsel) and that such
fees and expenses shall be reimbursed as they are incurred).

          (c) If the Buyer does not control the defense of any Action or Seller Claim, then the Seller
Indemnified Party may settle such Action or Seller Claim with the written consent of the Buyer (not
to be unreasonably withheld).

     8.4 Limitation of Liability. Notwithstanding the foregoing, the Seller shall not be
obligated to indemnify the Buyer Indemnified Parties pursuant to Section 8.2(a)(i) except
to the extent the amount of all Losses incurred by the Buyer Indemnified Parties thereunder exceeds
Five Hundred Thousand Dollars ($500,000) in the aggregate (the “Deductible”), in which event the
Buyer may recover all Losses incurred in excess of the Deductible and (net of insurance proceeds or
other compensatory reimbursement from third parties actually received less expenses incurred in
connection therewith) the Seller’s maximum liability for Losses under Section 8.2(a)(i)
shall be Twenty Eight Million Dollars ($28,000,000.00) (the “Maximum Indemnity Amount”); provided,
however, that the Deductible shall not apply with regard to Losses under Section 8.2(a)(i)
regarding a breach of Sellers’ representations and warranties in Sections 3.1, 3.2,
3.3, 3.10 or 3.11; provided further, however, that the Deductible shall not
apply with regard to Losses under Section 8.2(a)(i) regarding a breach of Sellers’
representations and warranties in Section 3.7, insofar as such Losses exceed the difference
between (x) Two Hundred Fifty Thousand Dollars ($250,000), and (y) the aggregate out-of-pocket
costs and expenses, up to Two Hundred Fifty Thousand Dollars ($250,000), incurred by Sellers in
connection with obtaining the outstanding Required Consents; provided further, however, that Buyer
shall reimburse Sellers at Closing for such reasonable, documented, out-of-pocket costs and
expenses incurred by Sellers in connection with obtaining the outstanding Required Consents up to a
maximum aggregate amount equal to Two Hundred Fifty Thousand Dollars ($250,000) (collectively, the
“Consent Costs”).

     8.5 Sole and Exclusive Remedy. If the Closing occurs, the indemnification provisions
of this Article 8 shall be the sole and exclusive remedy of each Party (including the
Seller Indemnified Parties and the Buyer Indemnified Parties) with regard to the subject matter
covered thereby.

     8.6 Tax Treatment of Indemnity Payments. All amounts paid pursuant to this
Article 8 shall be treated as adjustments to the Purchase Price.

ARTICLE 9

TAXES AND FURTHER ASSURANCES

     9.1 Transfer Taxes. The Buyer shall pay 50% of all transfer, sales, recording and
similar Taxes arising in connection with the transactions contemplated hereunder, whether such
Taxes are imposed on the Sellers or the Buyer. The Parties shall cooperate to comply with all
requirements for such Taxes and shall provide such documentation and take such other actions as may
be necessary to minimize the amount of any such Taxes.

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     9.2 Allocation of Purchase Price. Attached hereto as Exhibit L, Buyer and
Sellers have jointly prepared a good faith allocation of the Purchase Price among the Purchased
Assets, the NGAS Options, the Kay Jay ROFR and the other items described on Exhibit L, in
accordance with the provisions of Section 1060 of the Code (collectively, the “Allocated Values”,
and individually, an “Allocated Value”). Buyer and Sellers shall report the transactions
contemplated hereby on all Tax Returns in a manner consistent with this allocation. If any taxing
authority makes or proposes an allocation different from the allocation determined under this
Exhibit L, such party may contest such allocation (or proposed allocation) and shall
provide written noticed to the other party of such fact and shall provide such additional written
notices as are reasonable to the other party to make it aware of the status and final disposition
of such contest allocation of the allocation made or proposed by such taxing authority. Further,
after providing written notice to the party adversely affected by such allocation (or proposed
allocation) by a taxing authority, the other party hereto may file such protective claims or Tax
Returns as may be reasonably required to protect its interests.

ARTICLE 10

TERMINATION

     10.1 Termination Events. This Agreement may be terminated at any time prior to the
Closing:

          (a) by the mutual written consent of Buyers and Sellers;

          (b) by Buyer if the Closing has not occurred by the close of business on July 1, 2009,
provided, however, that Buyer shall not be permitted to terminate under this Section to the extent
the failure to close is due to the breach of this Agreement by Buyer;

          (c) by Buyer if Sellers shall have breached or failed to perform in any material respect any
of its representations, warranties, covenants or other agreements contained in this Agreement,
which breach or failure to perform would give rise to the failure of a condition set forth in
Section 7.2; provided, however, that the breaching Party shall first be entitled to five
(5) days notice and the opportunity to cure and provided furthermore that the Party seeking to so
terminate not be in breach at such time;

          (d) by Sellers if Buyer shall have breached or failed to perform in any material respect any
of its representations, warranties, covenants or other agreements contained in this Agreement,
which breach or failure to perform would give rise to the failure of a condition set forth in
Section 7.3; provided, however, that the breaching Party shall first be entitled to five
(5) days notice and the opportunity to cure and provided furthermore that the Party seeking to so
terminate not be in breach at such time; or

          (e) by either Buyers or Sellers if any Law or enforceable rule of any Governmental Body
becomes final and effective, prohibiting or making illegal the consummation of the transactions
contemplated by this Agreement, upon notification to the non terminating Party by the terminating
Party.

     10.2 Effect of Termination.

          (a) In the event of any termination of this Agreement as provided in Section 10.1,
this Agreement shall forthwith be of no further force and effect and there shall be no liability on
the part of Buyer or Sellers except with respect to the Confidentiality Agreement or as set out in
Section 10.2(b), it being expressly agreed and acknowledged that the Confidentiality
Agreement shall survive any such termination.

          (b) Notwithstanding Section 10.2(a), if this Agreement is terminated for reasons other
than a termination by Sellers under Section 10.01(d) or Section 10.1(e), and, after
such termination any of Sellers or their Affiliates consummates a Subsequent Transaction, then
Sellers shall pay to Buyer within three (3) Business Days thereafter, a single payment in
immediately available funds of One Million Four Hundred Thousand Dollars ($1,400,000).

          (c) If a Subsequent Transaction occurs or more than one transaction that would qualify as a
Subsequent Transaction pursuant to clause (b) of the definition thereof but for the fact that such
transaction fails the 50% test in clause (b) of the definition thereof occurs, then in each such
case Sellers shall provide Buyer with prompt written notice thereof and shall provide Buyer with
access to all necessary documentation relating thereto for
the purpose of confirming amounts payable by or to Sellers hereunder.

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ARTICLE 11

MISCELLANEOUS

     11.1 Entire Agreement; Amendment. This Agreement and the documents referred to herein
to be delivered pursuant hereto constitute the entire agreement between the Parties pertaining to
the subject matter hereof, and supersede all prior and contemporaneous agreements, understandings,
negotiations and discussions of the Parties, whether oral or written, and there are no warranties,
representations or other agreements between the Parties in connection with the subject matter
hereof, except as specifically set forth herein or therein. Except as otherwise contemplated in
Exhibit G to the NAESB Purchase Agreement, no amendment, supplement, modification or
termination of this Agreement shall be binding unless executed in writing by the Party to be bound
thereby. No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a
waiver of any other provision of this Agreement, whether or not similar, nor shall such waiver
constitute a continuing waiver unless otherwise expressly provided.

     11.2 Expenses. Except as specifically set forth herein, each of the Parties shall pay
the fees and expenses of their respective counsel, accountants and other experts and the other
expenses incident to the negotiation and preparation of this Agreement and consummation of the
transactions contemplated hereby.

     11.3 Governing Law; Jurisdiction & Venue. This Agreement shall be construed, enforced
and interpreted according to the laws of the State of Texas, without regard to the conflicts of law
rules thereof; provided, however, that the Parties acknowledged that the actual conveyance of the
Purchased Assets under the Bill of Sale, and the actual conveyance of the Retained Gathering Assets
to New NGAS Gathering shall be construed, enforced and interpreted according to the laws of the
state where the properties conveyed sit. Each Party hereby irrevocably submits to the jurisdiction
of the courts of the State of and the federal courts of the United States of America located in
Harris County, Texas over any dispute or proceeding arising out of or relating to this Agreement or
any Ancillary Agreement or any of the transactions contemplated hereby or thereby, and each Party
irrevocably agrees that all claims in respect of such dispute or proceeding shall be heard and
determined in such courts. Each Party hereby irrevocably waives, to the fullest extent permitted
by applicable Law, any objection which it may now or hereafter have to the venue of any dispute
arising out of or relating to this Agreement or any Ancillary Agreement or any of the transactions
contemplated hereby or thereby brought in such court or any defense of inconvenient forum for the
maintenance of such dispute or Action. Each Party agrees that a judgment in any dispute heard in
the venue specified by this section may be enforced in other jurisdictions by suit on the judgment
or in any other manner provided by applicable Law.

     11.4 Assignment. This Agreement and each Party’s respective rights hereunder may not
be assigned, by operation of Law, change of control, or otherwise, without the prior written
consent of the other Party, which consent may be withheld in the discretion of such other Party.
Notwithstanding the foregoing, SES (with regard to the NGAS Options) and Buyer shall have the right
to designate one or more Affiliates to take title to and/or assume any or all of the Purchased
Assets at Closing (or with regard to the exercise of the NGAS Options or the Kay Jay ROFR), but SES
(with regard to the NGAS Options) and Buyer (with regard to the Kay Jay ROFR) shall remain liable
to the Seller hereunder notwithstanding any such delegation.

     11.5 Notices. All communications, notices and disclosures required or permitted by
this Agreement shall be in writing and shall be deemed to have been given at the earlier of the
date (a) when delivered personally or by messenger or by overnight delivery service by a recognized
commercial carrier, (b) five (5) days after being mailed by registered or certified United States
mail, postage prepaid, return receipt requested, or (c) when received via telecopy, telex,
facsimile or other electronic transmission, in all cases addressed to the Person for whom it is
intended at his address set forth below or to such other address as a Party shall have designated
by notice in writing to the other Party in the manner provided by this Section 11.5:

			
	     If to the Buyer:	 	Seminole Gas Company

1323 E. 71st Street

Suite 300

Tulsa, OK 74136

Attn: Alex Goldberg

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	If to the Sellers:
	 	Daugherty Petroleum, Inc.
	 

	 	 	NGAS Gathering, LLC
	 

	 	 	120 Prosperous Place, Suite 201
	 

	 	 	Lexington, Kentucky 40509
	 

	 	 	Attn: William G. Barr III

     11.6 Counterparts; Headings. This Agreement may be executed in several counterparts,
each of which shall be deemed an original, but such counterparts shall together constitute but one
and the same agreement. The headings in this Agreement are inserted for convenience of reference
only and shall not constitute a part, or impact the interpretation, hereof.

     11.7 Interpretation. Unless the context requires otherwise, all words used in this
Agreement in the singular number shall extend to and include the plural, all words in the plural
number shall extend to and include the singular and all words in any gender shall extend to and
include all genders. All references to contracts, agreements, leases or other understandings or
arrangements shall refer to oral as well as written matters. This Agreement has been negotiated
between the Parties and shall not be read in a light more favorable to one Party relative to the
other.

     11.8 Occasional and Bulk Sales Law. The Buyer and the Seller each agree to waive
compliance by the other with the provisions of the Bulk Sales Law of any jurisdiction.

     11.9 Waiver of Damages.

     Notwithstanding anything contained to the contrary in this Agreement, the Parties agree that
the recovery by any Party of any damages suffered or incurred by it as a result of any breach by
another Party of any of its obligations under this Agreement shall be limited to the actual damages
suffered or incurred by the non-breaching Party as a result of the breach by the breaching Party of
its obligations hereunder and in no event shall the breaching Party be liable to the non-breaching
Party for any indirect, consequential, special, exemplary, or punitive damages (including any
damages on account of lost profits or opportunities or lost or delayed generation) suffered or
incurred by the non-breaching Party as a result of the breach by the breaching Party of any of its
obligations hereunder; provided, however, that the foregoing shall not be considered a waiver of
cover damages.

     11.10 Severability. If any provision, clause or part of this Agreement, or the
application thereof under certain circumstances, is held invalid, the remainder of this Agreement,
or the application of such provision, clause or part under other circumstances, shall not be
affected thereby.

     11.11 No Reliance. No third party is entitled to rely on any of the representations,
warranties and agreements contained in this Agreement. The Buyer and the Seller assume no liability
to any third party because of any reliance on the representations, warranties and agreements of the
Buyer or the Seller contained in this Agreement.

     11.12 Agreement for the Parties’ Benefit. Except for the provisions of Article
8, which are also intended to benefit and to be enforceable by any of the Buyer Indemnified
Parties and the Seller Indemnified Parties, this Agreement is not intended to confer upon any
Person not a Party any rights or remedies hereunder, and no Person other than the Parties or such
Persons described above is entitled to rely on any representation, warranty or covenant contained
herein.

     11.13 Non-Waiver. No waiver by either Party hereto of any one or more defaults by the
other in performance of any of the provisions of this Agreement shall be construed as a waiver of
any other default or defaults, whether of a like kind or different nature.

     11.14 Further Assurances. At any time and from time to time at or after the Closing,
at any Party’s request and without further consideration, the Parties agree to cooperate with each
other, to execute and deliver such other documents, instruments of transfer or assignment, files,
books and records and do all such further acts and things as may be reasonably required to carry
out the transactions contemplated hereby.

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     11.15 Public Announcements. Except pursuant to a Requirement of Law, prior to the
expiration of one hundred eighty (180) days after the Closing Date, no Party hereto may make any
public announcements regarding this Agreement or the subject matter hereof without the prior
written consent of the other Party. Notwithstanding the foregoing, following the execution of this
Agreement, the Parties shall cooperate in issuing public announcements regarding the transactions
described herein.

     11.16 Confidentiality.

          (a) This Agreement is confidential and neither the fact that the Parties have entered into
this Agreement, nor any of the terms and conditions herein, may be disclosed to a third party
without the other Party’s prior written consent, except that either Party may disclose this
Agreement and its contents to its financial, accounting, engineering and legal advisors who have a
need to know such information and who agree to maintain its confidentiality.

          (b) From and after the Closing, the Sellers and Guarantors shall, and shall cause their
respective Affiliates to, keep confidential and not disclose all information relating to the
Purchased Assets (the “Restricted Information”), and shall not directly or indirectly use such
Restricted Information for any purpose, except as and to the extent permitted by the terms of this
Agreement or the Ancillary Agreements. The confidentiality obligation set forth in this Section
shall not apply to any information that (i) is in the public domain, (ii) is published or otherwise
becomes part of the public domain through no fault of the Sellers, Guarantors or any of their
Affiliates or (iii) becomes available to the Seller or any of its Affiliates on a non-confidential
basis from a source that did not acquire such information (directly or indirectly) from the
Sellers, Guarantors or the Buyer or any of their respective Affiliates on a confidential basis.
Notwithstanding the foregoing, the Sellers may make disclosures required by Law and in connection
with disputes hereunder; provided, however, that the Sellers, to the extent practicable, shall
provide the Buyer with prompt notice thereof so that the Buyer may seek a protective order or other
appropriate remedy or waive compliance with the provisions of this Section 11.16. In the
event that such protective order or other remedy is not obtained or the Buyer waives compliance
with the provisions of this Section 11.16, the Seller shall or shall cause the Person
required to disclose such Restricted Information to furnish only that portion of the information
that such Person is legally required, and, to the extent practicable, the Seller shall exercise
commercially reasonable efforts to obtain reliable assurance that confidential treatment is
accorded the Restricted Information so furnished. The Sellers’, Guarantors’, and their Affiliates’
confidentiality obligations under this Section shall continue for (5) years from the date hereof;
provided that, with respect to Restricted Information relating to any Assumed Contract, such
obligation shall terminate on a date that is the later of (A) the end of such five (5) year period
and (B) the date of termination of such Assumed Contract.

          (c) From and after the Closing, any restrictions contained herein or in the Letter of Intent
dated January 14, 2009 among the Buyer and the Seller relating to the Buyer’s use or disclosure of
any Restricted Information shall be null and void.

     11.17 WAIVER OF JURY TRIAL. EACH PARTY TO THIS AGREEMENT HEREBY IRREVOCABLY WAIVES
TRIAL BY JURY IN ANY ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY ANCILLARY
AGREEMENT.

     11.18 Post Closing Obligations.

          (a) At any time or from time to time after the Closing, each Party will, upon the reasonable
request of the other Party, execute and deliver any further instruments or documents, and exercise
commercially reasonable efforts to take such further actions as may reasonably be required, to
fulfill and implement the terms of this Agreement or realize the benefits intended to be afforded
hereby.

          (b) In addition, at any time or from time to time after the Closing, each Party will cooperate
reasonably with the other Party (and the other Party’s counsel, as applicable) and make available
their personnel, and provide such testimony and access to their books and records as shall be
reasonably requested, (i) in connection with the contest or defense against any action, suit,
proceeding, hearing, investigation, charge, complaint, claim, or demand in connection with (A) any
transaction contemplated under this Agreement or (B) any fact, situation, circumstances, status,
condition, activity, practice, plan, occurrence, event, incident, action, failure to act, or
transaction relating to the Purchased Assets (including during such period prior to Closing) or
(ii) otherwise at the

32

 

other Party’s reasonable request in connection with any other matter arising and relating to
the Purchased Assets, all at the reasonable out-of pocket expense of the requesting Party (unless
the requesting Party is entitled to indemnification therefor hereunder).

          (c) For a period of seven (7) years after the Closing Date, with regard to books, records,
documents or information concerning Taxes relating to the Purchased Assets or the Retained
Gathering Assets, and for a period of five (5) years after the Closing date, with regard to all
other books, records, documents or information reasonably related to the Purchased Assets or the
Retained Gathering Assets, without first giving notice to the other Party thereof and permitting
the other Party to retain or copy such books and records as it may select. During such period, each
Party will permit the other Party to examine and make copies, at the other Party’s expense, of such
books, records, documents and information for any reasonable purpose, including any litigation now
pending or hereafter commenced against the Party or its Affiliates, or the preparation of income or
other tax returns; provided, however, that all such examinations by the other Party shall occur and
all such access shall be provided to a Party at times and places reasonably set by the other Party.

     11.19 Counterparts. This instrument may be executed in any number of identical
counterparts, each of which for all purposes shall be deemed an original, and all of which shall
constitute collectively, one instrument. It is not necessary that each party hereto execute the
same counterpart so long as identical counterparts are executed by each such party hereto. This
instrument may be validly executed and delivered by facsimile or other electronic transmission.

     11.20 Survival. Subject to limitations in respect of representations and warranties
set forth in Section 8.1, all covenants and obligations in this Agreement, the Ancillary
Agreements and any other certificate or document delivered pursuant to this Agreement shall survive
the Closing and the consummation of the transactions contemplated hereby.

[Signature Page Follows]

33

 

     IN WITNESS WHEREOF, the Parties have executed this Agreement, by their duly authorized
representatives, on the date first above written.

	 	 	 	 	 
	 	NGAS GATHERING, LLC

 	 
	 	By:  	/s/ William G. Barr III,
 	 
	 	 	William G. Barr III, 	 
	 	 	Chief Executive Officer 	 
	 
	 	DAUGHERTY PETROLEUM, INC.

 	 
	 	By:  	/s/ William G. Barr III,
 	 
	 	 	William G. Barr III, 	 
	 	 	Chief Executive Officer 	 
	 
	 	NGAS GATHERING II, LLC

 	 
	 	By:  	/s/ William G. Barr III,
 	 
	 	 	William G. Barr III, 	 
	 	 	Chief Executive Officer 	 
	 
	 	SEMINOLE GAS COMPANY

 	 
	 	By:  	/s/ Robert B. Rosene Jr.
 	 
	 	 	Robert B. Rosene Jr.,       	 
	 	 	Chief Executive Officer and President 	 
	 

34

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