Document:

Exhibit
10.2

 

REVOLVING
NOTE

 

		$42,000,000.00	October 19, 2016

 

FOR VALUE RECEIVED,
the undersigned (the “Borrower”), hereby promises to pay to BANK OF AMERICA, N.A., or registered assigns (the
“Lender”), in accordance with the provisions of the Agreement (as hereinafter defined), the principal amount
of each Loan from time to time made by the Lender to the Borrower under that certain Credit Agreement, dated as of October 19,
2016 (as amended, restated, extended, supplemented or otherwise modified in writing from time to time, the “Agreement;”
the terms defined therein being used herein as therein defined), among the Borrower, the Lenders from time to time party thereto,
and Bank of America, N.A., as Administrative Agent and L/C Issuer.

 

The Borrower promises
to pay interest on the unpaid principal amount of each Loan from the date of such Loan until such principal amount is paid in full,
at such interest rates and at such times as provided in the Agreement. All payments of principal and interest shall be made to
the Administrative Agent for the account of the Lender in Dollars in immediately available funds at the Administrative Agent’s
Office. If any amount is not paid in full when due hereunder, such unpaid amount shall bear interest, to be paid upon demand, from
the due date thereof until the date of actual payment (and before as well as after judgment) computed at the per annum rate set
forth in the Agreement.

 

This Note is one of
the Notes referred to in the Agreement, is entitled to the benefits thereof and may be prepaid in whole or in part subject to the
terms and conditions provided therein. This Note is also entitled to the benefits of the Guaranty. Upon the occurrence and continuation
of one or more of the Events of Default specified in the Agreement, all amounts then remaining unpaid on this Note shall become,
or may be declared to be, immediately due and payable all as provided in the Agreement. Loans made by the Lender shall be evidenced
by one or more loan accounts or records maintained by the Lender in the ordinary course of business. The Lender may also attach
schedules to this Note and endorse thereon the date, amount and maturity of its Loans and payments with respect thereto.

 

The Borrower, for itself,
its successors and assigns, hereby waives diligence, presentment, protest and demand and notice of protest, demand, dishonor and
non-payment of this Note.

 

[Remainder of Page Intentionally Left
Blank; Signature Page Follows]

 

     

     

    

 

THIS NOTE SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

 

	 	Gas Natural Inc.
	 	 
	 	By	/s/ Gregory J. Osborne
	 	Name:  Gregory J. Osborne
	 	Its: President & Chief Executive Officer

 

     

     

    

 

LoanS AND
PAYMENTS with respect thereto

	Date	 	Type of

Loan Made	 	Amount of

Loan Made	 	End of

Interest

Period	 	Amount of

Principal or

Interest

Paid This

Date	 	Outstanding

Principal

Balance

This Date	 	Notation

Made ByExhibit 10.3

 

Execution Version

 

 

 

Gas Natural Inc.

 

$50,000,000

 

$50,000,000
4.23% Senior Notes due October 19, 2028

 

______________

 

Note Purchase Agreement

 

______________

 

Dated
October 19, 2016

 

 

 

     

     

    

  

	 	Table of Contents

	 
	 	 	 
	Section	Heading	Page
	 	 	 
	Section 1.	Authorization of Notes	1
	 	 	 
	Section 2.	Sale and Purchase of Notes	1
	 	 	 
	Section 2.1.	Sale and Purchase of Notes	1
	Section 2.2.	Representations and Warranties	1
	 	 	 
	Section 3.	Closing	2
	 	 	 
	Section 4.	Conditions to Closing	2
	 	 	 
	Section 4.1.	Representations and Warranties	2
	Section 4.2.	Performance; No Default	3
	Section 4.3.	Compliance Certificates	3
	Section 4.4.	Opinions of Counsel	3
	Section 4.5.	Purchase Permitted By Applicable Law, Etc	4
	Section 4.6.	Payment of Special Counsel Fees	4
	Section 4.7.	Private Placement Number	4
	Section 4.8.	Changes in Corporate Structure	4
	Section 4.9.	Funding Instructions	4
	Section 4.10.	Subsidiary Guaranty	4
	Section 4.11.	Regulatory Approval	4
	Section 4.12.	Proceedings and Documents	4
	Section 4.13.	Existing Indebtedness	5
	 	 	 
	Section 5.	Representations and Warranties of the Company	5
	 	 	 
	Section 5.1.	Organization; Power and Authority	5
	Section 5.2.	Authorization, Etc	5
	Section 5.3.	Disclosure	5
	Section 5.4.	Organization and Ownership of Shares of Subsidiaries; Affiliates	6
	Section 5.5.	Financial Statements; Material Liabilities	6
	Section 5.6.	Compliance with Laws, Other Instruments, Etc	6
	Section 5.7.	Governmental Authorizations, Etc	7
	Section 5.8.	Litigation; Observance of Agreements, Statutes and Orders	7
	Section 5.9.	Taxes	7
	Section 5.10.	Title to Property; Leases	8
	Section 5.11.	Licenses, Permits, Etc	8
	Section 5.12.	Compliance with ERISA	8
	Section 5.13.	Private Offering by the Company	9
	Section 5.14.	Use of Proceeds; Margin Regulations	9
	Section 5.15.	Existing Indebtedness; Future Liens	9
	Section 5.16.	Foreign Assets Control Regulations, Etc	10

 

    	 	-i-	 

     

    

 

	Section 5.17.	Status under Certain Statutes	11
	Section 5.18.	Environmental Matters	11
	Section 5.19.	Notes Rank Pari Passu	12
	 	 	 
	Section 6.	Representations of the Purchaser	12
	 	 	 
	Section 6.1.	Purchase for Investment	12
	Section 6.2.	Source of Funds	12
	 	 	 
	Section 7.	Information as to Company	14
	 	 	 
	Section 7.1.	Financial and Business Information	14
	Section 7.2.	Officer’s Certificate	17
	Section 7.3.	Visitation	17
	Section 7.4. 	Electronic Delivery	18
	 	 	 
	Section 8.	Payment and Prepayment of the Notes	18
	 	 	 
	Section 8.1.	Maturity	18
	Section 8.2.	Optional Prepayments with Make-Whole Amount	18
	Section 8.3.	Allocation of Partial Prepayments	19
	Section 8.4.	Maturity; Surrender, Etc.	19
	Section 8.5.	Purchase of Notes	19
	Section 8.6.	Make-Whole Amount	20
	Section 8.7.	Change of Control	21
	Section 8.8.	Payments Due on Non-Business Days	23
	 	 	 
	Section 9.	Affirmative Covenants.	23
	 	 	 
	Section 9.1.	Compliance with Law	23
	Section 9.2.	Insurance	23
	Section 9.3.	Maintenance of Properties	23
	Section 9.4.	Payment of Taxes and Claims	24
	Section 9.5.	Corporate Existence, Etc	24
	Section 9.6.	Books and Records	24
	Section 9.7	Subsidiary Guarantors	24
	Section 9.8.	Notes to Rank Pari Passu	25
	 	 	 
	Section 10.	Negative Covenants.	25
	 	 	 
	Section 10.1.	Transactions with Affiliates	26
	Section 10.2.	Merger, Consolidation, Etc	26
	Section 10.3.	Sale of Assets	27
	Section 10.4.	Line of Business	28
	Section 10.5.	Economic Sanctions, Etc	28
	Section 10.6.	Liens	28
	Section 10.7.	Total Debt to Capital Ratio	30
	Section 10.8.	Interest Coverage Ratio	30
	Section 10.9.	Priority Debt	30

 

    	 	-ii-	 

     

    

 

	Section 10.10.	Consolidated Net Worth	30
	 	 	 
	Section 11.	Events of Default	31
	 	 	 
	Section 12.	Remedies on Default, Etc	33
	 	 	 
	Section 12.1.	Acceleration	33
	Section 12.2.	Other Remedies	34
	Section 12.3.	Rescission	34
	Section 12.4.	No Waivers or Election of Remedies, Expenses, Etc	34
	 	 	 
	Section 13.	Registration; Exchange; Substitution of Notes	34
	 	 	 
	Section 13.1.	Registration of Notes	34
	Section 13.2.	Transfer and Exchange of Notes	35
	Section 13.3.	Replacement of Notes	35
	 	 	 
	Section 14.	Payments on Notes	36
	 	 	 
	Section 14.1.	Place of Payment	36
	Section 14.2.	Home Office Payment	36
	 	 	 
	Section 15.	Expenses, Etc	36
	 	 	 
	Section 15.1.	Transaction Expenses	36
	Section 15.2.	Survival	37
	 	 	 
	Section 16.	Survival of Representations and Warranties; Entire Agreement	37
	 	 	 
	Section 17.	Amendment and Waiver	37
	 	 	 
	Section 17.1.	Requirements	37
	Section 17.2.	Solicitation of Holders of Notes	38
	Section 17.3.	Binding Effect, Etc	38
	Section 17.4.	Notes Held by Company, Etc	38
	 	 	 
	Section 18.	Notices	39
	 	 	 
	Section 19.	Reproduction of Documents	39
	 	 	 
	Section 20.	Confidential Information	40
	 	 	 
	Section 21.	Substitution of Purchaser	41
	 	 	 
	Section 22.	Miscellaneous	41
	 	 	 
	Section 22.1.	Successors and Assigns	41
	Section 22.2.	Accounting Terms	41

 

    	 	-iii-	 

     

    

 

	Section 22.3.	Severability	42
	Section 22.4.	Construction, Etc	42
	Section 22.5.	Counterparts	42
	Section 22.6.	Governing Law	42
	Section 22.7.	Jurisdiction and Process; Waiver of Jury Trial	42

 

    	 	-iv-	 

     

    

 

	Schedule A	—	Defined Terms
	 	 	 
	Schedule 1	—	Form of 4.23% Senior Note due October 19, 2028
	 	 	 
	Schedule 4.4(a)	—	Form of Opinion of Special Counsel for the Company
	 	 	 
	Schedule 4.4(b)	—	Form of Opinion of Special Counsel for the Purchaser
	 	 	 
	Schedule 5.3	—	Disclosure Materials
	 	 	 
	Schedule 5.4	—	Subsidiaries of the Company and Ownership of Subsidiary Stock
	 	 	 
	Schedule 5.5	—	Financial Statements
	 	 	 
	Schedule 5.7	—	Approvals and Consents
	 	 	 
	Schedule 5.15	—	Existing Indebtedness
	 	 	 
	Schedule 10.6	—	Existing Liens
	 	 	 
	Schedule B	—	Information Relating to Purchaser 
	 	 	 
	Exhibit 2.2	—	Form of Subsidiary Guaranty

 

    	 	-v-	 

     

    

 

Gas Natural Inc.

1375 East 9th St, Suite 3100

Cleveland, Ohio 44114

 

$50,000,000
4.23% Senior Notes due October 19, 2028

 

Dated October 19, 2016

 

To
the Purchaser Listed in

Schedule
B Hereto:

 

Ladies and Gentlemen:

 

Gas Natural Inc., an
Ohio corporation (together with any successor thereto that becomes a party hereto pursuant to Section 10.2, the “Company”),
agrees with the Purchaser as follows:

 

Section 1.         Authorization
of Notes.

 

The Company will authorize
the issue and sale of $50,000,000 aggregate principal amount of its 4.23% Senior Notes due October 19, 2028 (as amended, restated
or otherwise modified from time to time pursuant to Section 17 and including any such notes issued in substitution therefor pursuant
to Section 13, the “Notes”. The Notes shall be substantially in the form set out in Schedule 1. Certain
capitalized and other terms used in this Agreement are defined in Schedule A. References to a “Schedule” or “Exhibit”
are references to a Schedule or Exhibit attached to this Agreement unless otherwise specified. References to a “Section”
are references to a Section of this Agreement unless otherwise specified.

 

Section 2.         Sale
and Purchase of Notes.

 

Section 2.1.         Sale
and Purchase of Notes. Subject to the terms and conditions of this Agreement, the Company will issue and sell to the Purchaser
and the Purchaser will purchase from the Company, at the Closing provided for in Section 3, the Notes in the principal amount
specified opposite the Purchaser’s name in Schedule B at the purchase price of 100% of the principal amount thereof.

 

Section 2.2.         Subsidiary
Guaranty. (a) The payment by the Company of all amounts due with respect to the Notes and the performance by the Company
of its obligations under this Agreement shall be absolutely and unconditionally guaranteed by the Initial Subsidiary Guarantors
pursuant to the Subsidiary Guaranty Agreement dated as of even date herewith, which shall be substantially in the form of Exhibit 2.2
attached hereto (the “Initial Subsidiary Guaranty”), and otherwise in accordance with the provisions of Section 9.7
hereof.

 

     

     

    

 

	Gas Natural Inc.	 	Note Purchase Agreement

 

(b)         The
holders of the Notes agree to discharge and release any Subsidiary Guarantor from any Subsidiary Guaranty upon the written request
of the Company, provided that (i) such Subsidiary Guarantor has been released and discharged (or will be released and
discharged concurrently with the release of such Subsidiary Guarantor under such Subsidiary Guaranty), whether as a borrower, obligor
and/or guarantor, from all obligations under all Material Credit Facilities and the Company so certifies to the holders of the
Notes in a certificate of a Responsible Officer, (ii) at the time of such release and discharge, the Company shall deliver
a certificate of a Responsible Officer to the holders of the Notes stating that no Default or Event of Default exists, and (iii) if
any fee or other form of consideration is given to any holder of Indebtedness of the Company for the purpose of such release, holders
of the Notes shall receive equivalent consideration.

 

Section 3.         Closing.

 

The sale and purchase
of the Notes to be purchased by the Purchaser shall occur at the offices of Chapman and Cutler LLP, 111 West Monroe Street, Chicago,
Illinois 60603, at 9:00 a.m., Chicago time, at a closing (the “Closing”) on October 19, 2016 or on such other
Business Day thereafter on or prior to October 27, 2016 as may be agreed upon by the Company and the Purchaser. At the Closing
the Company will deliver to the Purchaser the Notes to be purchased by the Purchaser in the form of a single Note to be purchased
by the Purchaser (or such greater number of Notes in denominations of at least $100,000 as the Purchaser may request) dated the
date of the Closing and registered in the Purchaser’s name (or in the name of its nominee), against delivery by the Purchaser
to the Company or its order of immediately available funds in the amount of the purchase price therefor by wire transfer of immediately
available funds for the account of the Company to account number 8670312225, account name: Gas Natural Inc, ABA No. 071000039 at
Bank of America N.A., Chicago, IL. If at the Closing the Company shall fail to tender such Notes to the Purchaser as provided above
in this Section 3, or any of the conditions specified in Section 4 shall not have been fulfilled to the Purchaser’s
satisfaction, the Purchaser shall, at its election, be relieved of all further obligations under this Agreement, without thereby
waiving any rights the Purchaser may have by reason of any of the conditions specified in Section 4 not having been fulfilled to
the Purchaser’s satisfaction or such failure by the Company to tender such Notes.

 

Section 4.         Conditions
to Closing.

 

The Purchaser’s
obligation to purchase and pay for the Notes to be sold to the Purchaser at the Closing is subject to the fulfillment to the Purchaser’s
satisfaction, prior to or at the Closing, of the following conditions:

 

Section 4.1.         Representations
and Warranties. (a) The representations and warranties of the Company in this Agreement shall be correct when made and at the
Closing.

 

(b)         The
representations and warranties of the Initial Subsidiary Guarantors in the Initial Subsidiary Guaranty shall be correct when made
and at such Closing.

 

    	 	-2-	 

     

    

 

	Gas Natural Inc.	 	Note Purchase Agreement

 

Section 4.2.         Performance;
No Default. The Company and each Initial Subsidiary Guarantor shall have performed and complied with all agreements
and conditions contained in this Agreement or the Subsidiary Guaranty, as applicable, required to be performed or complied with
by it prior to or at the Closing. Before and after giving effect to the issue and sale of the Notes (and the application of the
proceeds thereof as contemplated by Section 5.14), no Default or Event of Default shall have occurred and be continuing. Neither
the Company nor any Subsidiary shall have entered into any transaction since the date of the investor presentation described in
Schedule 5.3 that would have been prohibited by Section 10 had such Section applied since such date.

 

Section 4.3.         Compliance
Certificates.

 

(a)         Officer’s
Certificate of the Company. The Company shall have delivered to the Purchaser an Officer’s Certificate, dated the date
of the Closing, certifying that the conditions specified in Sections 4.1(a), 4.2 and 4.8 have been fulfilled.

 

(b)         Secretary’s
Certificate of the Company. The Company shall have delivered to the Purchaser a certificate of its Secretary or Assistant Secretary,
dated the date of the Closing, certifying as to (i) the resolutions attached thereto and other corporate proceedings relating to
the authorization, execution and delivery of the Notes and this Agreement and (ii) the Company’s organizational documents
as then in effect.

 

(c)         Officer’s
Certificate of the Subsidiary Guarantors. Each Initial Subsidiary Guarantor shall have delivered to the Purchaser an Officer’s
Certificate, dated the date of the Closing, certifying that the conditions specified in Sections 4.1(b), 4.2 and 4.8 have been
fulfilled.

 

(d)         Secretary’s
Certificate of the Subsidiary Guarantors. Each Initial Subsidiary Guarantor shall have delivered to the Purchaser a certificate,
dated the date of the Closing, certifying as to (i) the resolutions attached thereto and other corporate proceedings relating
to the authorization, execution and delivery of the Initial Subsidiary Guaranty by such Subsidiary Guarantor, and (ii) such
Subsidiary Guarantor’s organizational documents as then in effect.

 

Section 4.4.         Opinions
of Counsel. The Purchaser shall have received opinions in form and substance satisfactory to the Purchaser, dated the date
of the Closing (a) from Kohrman Jackson & Krantz LLP, counsel for the Company, covering the matters set forth in Schedule 4.4(a)
and covering such other matters incident to the transactions contemplated hereby as the Purchaser or its counsel may reasonably
request (and the Company hereby instructs its counsel to deliver such opinion to the Purchaser), (b) from Chapman and Cutler
LLP, the Purchaser’s special counsel in connection with such transactions, substantially in the form set forth in Schedule
4.4(b) and covering such other matters incident to such transactions as the Purchaser may reasonably request, and (c) from
counsel for the Initial Subsidiary Guarantors, covering such matters incident to the transactions contemplated by the Initial Subsidiary
Guaranty as the Purchaser or its counsel may reasonably request.

 

    	 	-3-	 

     

    

 

	Gas Natural Inc.	 	Note Purchase Agreement

 

Section 4.5.         Purchase
Permitted By Applicable Law, Etc. On the date of the Closing the Purchaser’s purchase of Notes shall (a) be permitted
by the laws and regulations of each jurisdiction to which the Purchaser is subject, without recourse to provisions (such as section 1405(a)(8)
of the New York Insurance Law) permitting limited investments by insurance companies without restriction as to the character
of the particular investment, (b) not violate any applicable law or regulation (including, without limitation, Regulation
T, U or X of the Board of Governors of the Federal Reserve System) and (c) not subject the Purchaser to any tax, penalty or
liability under or pursuant to any applicable law or regulation, which law or regulation was not in effect on the date hereof.
If requested by the Purchaser, the Purchaser shall have received an Officer’s Certificate certifying as to such matters of
fact as the Purchaser may reasonably specify to enable the Purchaser to determine whether such purchase is so permitted.

 

Section 4.6.         Payment
of Special Counsel Fees. Without limiting Section 15.1, the Company shall have paid on or before the Closing the fees,
charges and disbursements of the Purchaser’s special counsel referred to in Section 4.4 to the extent reflected in a statement
of such counsel rendered to the Company at least one Business Day prior to the Closing.

 

Section 4.7.         Private
Placement Number. A Private Placement Number issued by Standard & Poor’s CUSIP Service Bureau (in cooperation with
the SVO) shall have been obtained for the Notes.

 

Section 4.8.         Changes
in Corporate Structure. The Company and each Initial Subsidiary Guarantor shall not have changed its respective jurisdiction
of incorporation or organization, as applicable, or been a party to any merger or consolidation or succeeded to all or any substantial
part of the liabilities of any other entity, at any time following the date of the most recent financial statements referred to
in Schedule 5.5.

 

Section 4.9.         Funding
Instructions. At least three Business Days prior to the date of the Closing, the Purchaser shall have received written instructions
signed by a Responsible Officer on letterhead of the Company confirming the information specified in Section 3 including (i) the
name and address of the transferee bank, (ii) such transferee bank’s ABA number and (iii) the account name and
number into which the purchase price for the Notes is to be deposited.

 

Section 4.10.         Subsidiary
Guaranty. Contemporaneously with the Closing, each Initial Subsidiary Guarantor shall have executed and delivered the Initial
Subsidiary Guaranty.

 

Section 4.11.         Regulatory
Approval. All regulatory and other approvals required to be in effect in connection with the issuance and sale of the Notes
hereunder shall have been obtained and be in full force and effect, all applicable waiting periods shall have expired without any
materially adverse action being taken by any applicable authority, and copies of the documentation thereof shall have been delivered
to the Purchaser.

 

Section 4.12.         Proceedings
and Documents. All corporate and other proceedings in connection with the transactions contemplated by this Agreement and all
documents and instruments incident to such transactions shall be satisfactory to the Purchaser and its special counsel, and the
Purchaser and its special counsel shall have received all such counterpart originals or certified or other copies of such documents
as the Purchaser or such special counsel may reasonably request.

 

    	 	-4-	 

     

    

 

	Gas Natural Inc.	 	Note Purchase Agreement

 

Section 4.13.         Existing
Indebtedness. The Purchaser shall have received evidence satisfactory to it demonstrating that, promptly after receipt of the
proceeds of the Notes, the Existing Debt, and all commitments and outstanding loans thereunder, have been terminated and paid in
full and all related Liens in respect of the Sun Life Debt have been released by the secured parties thereunder.

 

Section 5.         Representations
and Warranties of the Company.

 

The Company represents
and warrants to the Purchaser that:

 

Section 5.1.         Organization;
Power and Authority. The Company is a corporation duly organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation, and is duly qualified as a foreign corporation and is in good standing in each jurisdiction in which
such qualification is required by law, other than those jurisdictions as to which the failure to be so qualified or in good standing
could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. The Company has the corporate
power and authority to own or hold under lease the properties it purports to own or hold under lease, to transact the business
it transacts and proposes to transact, to execute and deliver this Agreement and the Notes and to perform the provisions hereof
and thereof.

 

Section 5.2.         Authorization,
Etc. This Agreement and the Notes have been duly authorized by all necessary corporate action on the part of the Company, and
this Agreement constitutes, and upon execution and delivery thereof each Note will constitute, a legal, valid and binding obligation
of the Company enforceable against the Company in accordance with its terms, except as such enforceability may be limited by (i)
applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the enforcement of creditors’
rights generally and (ii) general principles of equity (regardless of whether such enforceability is considered in a proceeding
in equity or at law).

 

Section 5.3.         Disclosure.
This Agreement, the financial statements listed in Schedule 5.5 and the documents, certificates or other writings delivered to
the Purchaser by or on behalf of the Company prior to June 27, 2016 in connection with the transactions contemplated hereby and
identified in Schedule 5.3 (this Agreement and such documents, certificates or other writings and such financial statements delivered
to the Purchaser being referred to, collectively, as the “Disclosure Documents”), taken as a whole, do not contain
any untrue statement of a material fact or omit to state any material fact necessary to make the statements therein not misleading
in light of the circumstances under which they were made. Except as disclosed in the Disclosure Documents, since December 31,
2015, there has been no change in the financial condition, operations, business, properties or prospects of the Company or any
Subsidiary except changes that could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
There is no fact known to the Company that could reasonably be expected to have a Material Adverse Effect that has not been set
forth herein or in the Disclosure Documents.

 

    	 	-5-	 

     

    

 

	Gas Natural Inc.	 	Note Purchase Agreement

 

Section 5.4.         Organization
and Ownership of Shares of Subsidiaries; Affiliates. (a) Schedule 5.4 contains (except as noted therein) complete
and correct lists of (i) the Company’s Subsidiaries, showing, as to each Subsidiary, the name thereof, the jurisdiction
of its organization, and the percentage of shares of each class of its capital stock or similar equity interests outstanding owned
by the Company and each other Subsidiary, (ii) the Company’s Affiliates, other than Subsidiaries, and (iii) the
Company’s directors and senior officers.

 

(b)         All
of the outstanding shares of capital stock or similar equity interests of each Subsidiary shown in Schedule 5.4 as being owned
by the Company and its Subsidiaries have been validly issued, are fully paid and non-assessable and are owned by the Company or
another Subsidiary free and clear of any Lien that is prohibited by this Agreement.

 

(c)         Each
Subsidiary is a corporation or other legal entity duly organized, validly existing and, where applicable, in good standing under
the laws of its jurisdiction of organization, and is duly qualified as a foreign corporation or other legal entity and, where applicable,
is in good standing in each jurisdiction in which such qualification is required by law, other than those jurisdictions as to which
the failure to be so qualified or in good standing could not, individually or in the aggregate, reasonably be expected to have
a Material Adverse Effect. Each such Subsidiary has the corporate or other power and authority to own or hold under lease the properties
it purports to own or hold under lease and to transact the business it transacts and proposes to transact.

 

(d)         No
Subsidiary is subject to any legal, regulatory, contractual or other restriction (other than the agreements and regulatory restrictions
listed on Schedule 5.4 and customary limitations imposed by corporate law or similar statutes) restricting the ability of such
Subsidiary to pay dividends out of profits or make any other similar distributions of profits to the Company or any of its Subsidiaries
that owns outstanding shares of capital stock or similar equity interests of such Subsidiary.

 

Section 5.5.         Financial
Statements; Material Liabilities. The Company has delivered to the Purchaser copies of the financial statements of the Company
and its Subsidiaries listed on Schedule 5.5. All of such financial statements (including in each case the related schedules and
notes) fairly present in all material respects the consolidated financial position of the Company and its Subsidiaries as of the
respective dates specified in such Schedule and the consolidated results of their operations and cash flows for the respective
periods so specified and have been prepared in accordance with GAAP consistently applied throughout the periods involved except
as set forth in the notes thereto (subject, in the case of any interim financial statements, to normal year-end adjustments). The
Company and its Subsidiaries do not have any Material liabilities that are not disclosed in the Disclosure Documents.

 

Section 5.6.         Compliance
with Laws, Other Instruments, Etc. The execution, delivery and performance by the Company of this Agreement and the Notes will
not (i) contravene, result in any breach of, or constitute a default under, or result in the creation of any Lien in respect
of any property of the Company or any Subsidiary under, any indenture, mortgage, deed of trust, loan, purchase or credit agreement,
lease, corporate charter or by-laws, shareholders agreement or any other agreement or instrument to which the Company or any Subsidiary
is bound or by which the Company or any Subsidiary or any of their respective properties may be bound or affected, (ii) conflict
with or result in a breach of any of the terms, conditions or provisions of any order, judgment, decree or ruling of any court,
arbitrator or Governmental Authority applicable to the Company or any Subsidiary, including, without limitation, the Approvals
and Consents, or (iii) violate any provision of any statute or other rule or regulation of any Governmental Authority applicable
to the Company or any Subsidiary.

 

    	 	-6-	 

     

    

 

	Gas Natural Inc.	 	Note Purchase Agreement

 

Section 5.7.         Governmental
Authorizations, Etc. No consent, approval or authorization of, or registration, filing or declaration with, any Governmental
Authority is required in connection with the execution, delivery or performance by the Company of this Agreement or the Notes,
except for any filing that has already been made or any approval that has already been obtained, including without limitation the
Approvals and Consents. The period of time for filing an appeal with respect to each Approval and Consent has expired, and each
Approval and Consent is in full force and effect.

 

Section 5.8.         Litigation;
Observance of Agreements, Statutes and Orders. (a) There are no actions, suits, investigations or proceedings pending
or, to the best knowledge of the Company, threatened against or affecting the Company or any Subsidiary or any property of the
Company or any Subsidiary in any court or before any arbitrator of any kind or before or by any Governmental Authority that could,
individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

 

(b)         Neither
the Company nor any Subsidiary is (i) in default under any agreement or instrument to which it is a party or by which it is bound,
(ii) in violation of any order, judgment, decree or ruling of any court, arbitrator or Governmental Authority or (iii) in violation
of any applicable law, ordinance, rule or regulation of any Governmental Authority (including, without limitation, Environmental
Laws, the USA PATRIOT Act or any of the other laws and regulations that are referred to in Section 5.16), which default or violation
could, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

 

Section 5.9.         Taxes.
The Company and its Subsidiaries have filed all tax returns that are required to have been filed in any jurisdiction, and have
paid all taxes shown to be due and payable on such returns and all other taxes and assessments levied upon them or their properties,
assets, income or franchises, to the extent such taxes and assessments have become due and payable and before they have become
delinquent, except for any taxes and assessments (i) the amount of which, individually or in the aggregate, is not Material
or (ii) the amount, applicability or validity of which is currently being contested in good faith by appropriate proceedings
and with respect to which the Company or a Subsidiary, as the case may be, has established adequate reserves in accordance with
GAAP. The Company knows of no basis for any other tax or assessment that could, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect. The charges, accruals and reserves on the books of the Company and its Subsidiaries
in respect of U.S. federal, state or other taxes for all fiscal periods are adequate. The U.S. federal income tax liabilities of
the Company and its Subsidiaries have been finally determined (whether by reason of completed audits or the statute of limitations
having run) for all fiscal years up to and including the fiscal year ended December 31, 2015.

 

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	Gas Natural Inc.	 	Note Purchase Agreement

 

Section 5.10.         Title
to Property; Leases. The Company and its Subsidiaries have good and sufficient title to their respective properties that individually
or in the aggregate are Material, including all such properties reflected in the most recent audited balance sheet referred to
in Section 5.5 or purported to have been acquired by the Company or any Subsidiary after such date (except as sold or otherwise
disposed of in the ordinary course of business), in each case free and clear of Liens prohibited by this Agreement. All leases
that individually or in the aggregate are Material are valid and subsisting and are in full force and effect in all material respects.

 

Section 5.11.         Licenses,
Permits, Etc. (a) The Company and its Subsidiaries own or possess all licenses, permits, franchises, authorizations, patents,
copyrights, proprietary software, service marks, trademarks and trade names, or rights thereto, that individually or in the aggregate
are Material, without known conflict with the rights of others.

 

(b)         To
the knowledge of the Company, no product or service of the Company or any of its Subsidiaries infringes in any material respect
any license, permit, franchise, authorization, patent, copyright, proprietary software, service mark, trademark, trade name or
other right owned by any other Person.

 

(c)         To
the knowledge of the Company, there is no Material violation by any Person of any right of the Company or any of its Subsidiaries
with respect to any license, permit, franchise, authorization, patent, copyright, proprietary software, service mark, trademark,
trade name or other right owned or used by the Company or any of its Subsidiaries.

 

Section 5.12.         Compliance
with ERISA. (a) The Company and each ERISA Affiliate have operated and administered each Plan in compliance with all applicable
laws except for such instances of noncompliance as have not resulted in and could not, individually or in the aggregate, reasonably
be expected to result in a Material Adverse Effect.  Neither the Company nor any ERISA Affiliate has incurred any liability
pursuant to Title I or IV of ERISA or the penalty or excise tax provisions of the Code relating to employee benefit plans (as defined
in section 3 of ERISA), and no event, transaction or condition has occurred or exists that could, individually or in the aggregate,
reasonably be expected to result in the incurrence of any such liability by the Company or any ERISA Affiliate, or in the imposition
of any Lien on any of the rights, properties or assets of the Company or any ERISA Affiliate, in either case pursuant to Title
I or IV of ERISA or to section 430(k) of the Code or to any such penalty or excise tax provisions under the Code or federal law
or section 4068 of ERISA or by the granting of a security interest in connection with the amendment of a Plan, other than such
liabilities or Liens as would not be individually or in the aggregate Material.

 

(b)         The
present value of the aggregate benefit liabilities under each of the Plans (other than Multiemployer Plans), determined as of the
end of such Plan’s most recently ended plan year on the basis of the actuarial assumptions specified for funding purposes
in such Plan’s most recent actuarial valuation report, did not exceed the aggregate current value of the assets of such Plan
allocable to such benefit liabilities. The term “benefit liabilities” has the meaning specified in section 4001
of ERISA and the terms “current value” and “present value” have the meaning specified in
section 3 of ERISA.

 

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	Gas Natural Inc.	 	Note Purchase Agreement

 

(c)         The
Company and its ERISA Affiliates have not incurred withdrawal liabilities (and are not subject to contingent withdrawal liabilities)
under section 4201 or 4204 of ERISA in respect of Multiemployer Plans that individually or in the aggregate are Material.

 

(d)         The
expected postretirement benefit obligation (determined as of the last day of the Company’s most recently ended fiscal year
in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 715-60, without regard to liabilities
attributable to continuation coverage mandated by section 4980B of the Code) of the Company and its Subsidiaries is not Material.

 

(e)         The
execution and delivery of this Agreement and the issuance and sale of the Notes hereunder will not involve any transaction that
is subject to the prohibitions of section 406 of ERISA or in connection with which a tax could be imposed pursuant to section 4975(c)(1)(A)-(D)
of the Code. The representation by the Company to the Purchaser in the first sentence of this Section 5.12(e) is made in reliance
upon and subject to the accuracy of the Purchaser’s representation in Section 6.2 as to the sources of the funds to be used
to pay the purchase price of the Notes to be purchased by the Purchaser.

 

Section 5.13.         Private
Offering by the Company. Neither the Company nor anyone acting on its behalf has offered the Notes or any similar Securities
for sale to, or solicited any offer to buy the Notes or any similar Securities from, or otherwise approached or negotiated in respect
thereof with, any Person other than the Purchaser, which has been offered the Notes at a private sale for investment. Neither the
Company nor anyone acting on its behalf has taken, or will take, any action that would subject the issuance or sale of the Notes
to the registration requirements of section 5 of the Securities Act or to the registration requirements of any Securities or blue
sky laws of any applicable jurisdiction.

 

Section 5.14.         Use
of Proceeds; Margin Regulations. The Company will apply the proceeds of the sale of the Notes hereunder to refinance existing
Indebtedness and for general corporate purposes. No part of the proceeds from the sale of the Notes hereunder will be used, directly
or indirectly, for the purpose of buying or carrying any margin stock within the meaning of Regulation U of the Board of Governors
of the Federal Reserve System (12 CFR 221), or for the purpose of buying or carrying or trading in any Securities under such circumstances
as to involve the Company in a violation of Regulation X of said Board (12 CFR 224) or to involve any broker or dealer in a violation
of Regulation T of said Board (12 CFR 220). Margin stock does not constitute more than 5% of the value of the consolidated assets
of the Company and its Subsidiaries and the Company does not have any present intention that margin stock will constitute more
than 5% of the value of such assets. As used in this Section, the terms “margin stock” and “purpose
of buying or carrying” shall have the meanings assigned to them in said Regulation U.

 

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	Gas Natural Inc.	 	Note Purchase Agreement

 

Section 5.15.         Existing
Indebtedness; Future Liens. (a) Except as described therein, Schedule 5.15 sets forth a complete and correct list of all
outstanding Indebtedness of the Company and its Subsidiaries as of October 19, 2016 (including descriptions of the obligors and
obligees, principal amounts outstanding, any collateral therefor and any Guaranties thereof), since which date there has been no
Material change in the amounts, interest rates, sinking funds, installment payments or maturities of the Indebtedness of the Company
or its Subsidiaries. Neither the Company nor any Subsidiary is in default and no waiver of default is currently in effect, in the
payment of any principal or interest on any Indebtedness of the Company or such Subsidiary and no event or condition exists with
respect to any Indebtedness of the Company or any Subsidiary that would permit (or that with notice or the lapse of time, or both,
would permit) one or more Persons to cause such Indebtedness to become due and payable before its stated maturity or before its
regularly scheduled dates of payment.

 

(b)         Except
as disclosed in Schedule 5.15, neither the Company nor any Subsidiary has agreed or consented to cause or permit any of its property,
whether now owned or hereafter acquired, to be subject to a Lien that secures Indebtedness or to cause or permit in the future
(upon the happening of a contingency or otherwise) any of its property, whether now owned or hereafter acquired, to be subject
to a Lien that secures Indebtedness.

 

(c)         Neither
the Company nor any Subsidiary is a party to, or otherwise subject to any provision contained in, any instrument evidencing Indebtedness
of the Company or such Subsidiary, any agreement relating thereto or any other agreement (including, but not limited to, its charter
or any other organizational document) which limits the amount of, or otherwise imposes restrictions on the incurring of, Indebtedness
of the Company, except as disclosed in Schedule 5.15.

 

Section 5.16.         Foreign
Assets Control Regulations, Etc. (a) Neither the Company nor any Controlled Entity (i) is a Blocked Person, (ii) has
been notified that its name appears or may in the future appear on a State Sanctions List or (iii) is a target of sanctions
that have been imposed by the United Nations or the European Union.

 

(b)         Neither
the Company nor any Controlled Entity (i) has violated, been found in violation of, or been charged or convicted under, any
applicable U.S. Economic Sanctions Laws, Anti-Money Laundering Laws or Anti-Corruption Laws or (ii) to the Company’s
knowledge, is under investigation by any Governmental Authority for possible violation of any U.S. Economic Sanctions Laws, Anti-Money
Laundering Laws or Anti-Corruption Laws.

 

(c)         No
part of the proceeds from the sale of the Notes hereunder:

 

(i)         constitutes
or will constitute funds obtained on behalf of any Blocked Person or will otherwise be used by the Company or any Controlled Entity,
directly or indirectly, (A) in connection with any investment in, or any transactions or dealings with, any Blocked Person,
(B) for any purpose that would cause any Purchaser to be in violation of any U.S. Economic Sanctions Laws or (C) otherwise
in violation of any U.S. Economic Sanctions Laws;

 

(ii)         will
be used, directly or indirectly, in violation of, or cause any Purchaser to be in violation of, any applicable Anti-Money Laundering
Laws; or

 

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	Gas Natural Inc.	 	Note Purchase Agreement

 

(iii)         will
be used, directly or indirectly, for the purpose of making any improper payments, including bribes, to any Governmental Official
or commercial counterparty in order to obtain, retain or direct business or obtain any improper advantage, in each case which would
be in violation of, or cause any Purchaser to be in violation of, any applicable Anti-Corruption Laws.

 

(d)         The
Company has established procedures and controls which it reasonably believes are adequate (and otherwise comply with applicable
law) to ensure that the Company and each Controlled Entity is and will continue to be in compliance with all applicable U.S. Economic
Sanctions Laws, Anti-Money Laundering Laws and Anti-Corruption Laws.

 

Section 5.17.         Status
under Certain Statutes. Neither the Company nor any Subsidiary is subject to regulation under the Investment Company Act of
1940, as amended, the ICC Termination Act of 1995, as amended, or the Federal Power Act, as amended.

 

The Company is subject
to regulation under the Public Utility Holding Company Act of 2005, as amended (“PUHCA”), however, has an exmption
from both reporting and record keeping requirements and has complied with and is in compliance with PUHCA. The Company is not subject
to regulation under the Natural Gas Act, the Natural Gas Policy Act or the rules, regulations and orders of the Federal Energy
Regulatory Commission or any other federal public utility or gas utility laws or regulations.

 

Section 5.18.         Environmental
Matters. (a) Neither the Company nor any Subsidiary has knowledge of any claim or has received any notice of any claim
and no proceeding has been instituted asserting any claim against the Company or any of its Subsidiaries or any of their respective
real properties or other assets now or formerly owned, leased or operated by any of them, alleging any damage to the environment
or violation of any Environmental Laws, except, in each case, such as could not reasonably be expected to result in a Material
Adverse Effect.

 

(b)         Neither
the Company nor any Subsidiary has knowledge of any facts which would give rise to any claim, public or private, of violation of
Environmental Laws or damage to the environment emanating from, occurring on or in any way related to real properties now or formerly
owned, leased or operated by any of them or to other assets or their use, except, in each case, such as could not, individually
or in the aggregate, reasonably be expected to result in a Material Adverse Effect.

 

(c)         Neither
the Company nor any Subsidiary has stored any Hazardous Materials on real properties now or formerly owned, leased or operated
by any of them in a manner which is contrary to any Environmental Law that could, individually or in the aggregate, reasonably
be expected to result in a Material Adverse Effect.

 

(d)         Neither
the Company nor any Subsidiary has disposed of any Hazardous Materials in a manner which is contrary to any Environmental Law that
could, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect.

 

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	Gas Natural Inc.	 	Note Purchase Agreement

 

(e)         All
buildings on all real properties now owned, leased or operated by the Company or any Subsidiary are in compliance with applicable
Environmental Laws, except where failure to comply could not, individually or in the aggregate, reasonably be expected to result
in a Material Adverse Effect.

 

Section 5.19.         Notes
Rank Pari Passu. The obligations of the Company under this Agreement and the Notes rank pari passu in
right of payment with all other senior unsecured Indebtedness (actual or contingent) of the Company, including, without limitation,
all Material Credit Facilities.

 

Section 6.         Representations
of the Purchaser.

 

Section 6.1.         Purchase
for Investment. The Purchaser represents that it is purchasing the Notes for its own account or for one or more separate accounts
maintained by the Purchaser or for the account of one or more pension or trust funds and not with a view to the distribution thereof,
provided that the disposition of the Purchaser’s or their property shall at all times be within the Purchaser’s
or their control. The Purchaser understands that the Notes have not been registered under the Securities Act and may be resold
only if registered pursuant to the provisions of the Securities Act or if an exemption from registration is available, except under
circumstances where neither such registration nor such an exemption is required by law, and that the Company is not required to
register the Notes.

 

The Purchaser represents
that it is an “accredited investor” (as defined in Rule 501(a)(1), (2), (3) or (7) of Regulation D under the Securities
Act acting for its own account (and not for the account of others) or as a fiduciary or agent for others (which others are also
“accredited investors”). The Purchaser further represents that the Purchaser has had the opportunity to ask questions
of the Company and received answers concerning the terms and conditions of the sale of the Notes.

 

Section 6.2.         Source
of Funds. The Purchaser represents that at least one of the following statements is an accurate representation as to each source
of funds (a “Source”) to be used by the Purchaser to pay the purchase price of the Notes to be purchased by
the Purchaser hereunder:

 

(a)         the
Source is an “insurance company general account” (as the term is defined in the United States Department of Labor’s
Prohibited Transaction Exemption (“PTE”) 95-60) in respect of which the reserves and liabilities (as defined
by the annual statement for life insurance companies approved by the NAIC (the “NAIC Annual Statement”)) for
the general account contract(s) held by or on behalf of any employee benefit plan together with the amount of the reserves and
liabilities for the general account contract(s) held by or on behalf of any other employee benefit plans maintained by the same
employer (or affiliate thereof as defined in PTE 95-60) or by the same employee organization in the general account do not exceed
10% of the total reserves and liabilities of the general account (exclusive of separate account liabilities) plus surplus as set
forth in the NAIC Annual Statement filed with the Purchaser’s state of domicile; or

 

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	Gas Natural Inc.	 	Note Purchase Agreement

 

(b)         the
Source is a separate account that is maintained solely in connection with the Purchaser’s fixed contractual obligations under
which the amounts payable, or credited, to any employee benefit plan (or its related trust) that has any interest in such separate
account (or to any participant or beneficiary of such plan (including any annuitant)) are not affected in any manner by the investment
performance of the separate account; or

 

(c)         the
Source is either (i) an insurance company pooled separate account, within the meaning of PTE 90-1 or (ii) a bank collective investment
fund, within the meaning of the PTE 91-38 and, except as disclosed by the Purchaser to the Company in writing pursuant to this
clause (c), no employee benefit plan or group of plans maintained by the same employer or employee organization beneficially owns
more than 10% of all assets allocated to such pooled separate account or collective investment fund; or

 

(d)         the
Source constitutes assets of an “investment fund” (within the meaning of Part VI of PTE 84-14 (the “QPAM Exemption”))
managed by a “qualified professional asset manager” or “QPAM” (within the meaning of Part VI of the QPAM
Exemption), no employee benefit plan’s assets that are managed by the QPAM in such investment fund, when combined with the
assets of all other employee benefit plans established or maintained by the same employer or by an affiliate (within the meaning
of Part VI(c)(1) of the QPAM Exemption) of such employer or by the same employee organization and managed by such QPAM, represent
more than 20% of the total client assets managed by such QPAM, the conditions of Part I(c) and (g) of the QPAM Exemption are satisfied,
neither the QPAM nor a person controlling or controlled by the QPAM maintains an ownership interest in the Company that would cause
the QPAM and the Company to be “related” within the meaning of Part VI(h) of the QPAM Exemption and (i) the identity
of such QPAM and (ii) the names of any employee benefit plans whose assets in the investment fund, when combined with the assets
of all other employee benefit plans established or maintained by the same employer or by an affiliate (within the meaning of Part
VI(c)(1) of the QPAM Exemption) of such employer or by the same employee organization, represent 10% or more of the assets of such
investment fund, have been disclosed to the Company in writing pursuant to this clause (d);or

 

(e)         the
Source constitutes assets of a “plan(s)” (within the meaning of Part IV(h) of PTE 96-23 (the “INHAM Exemption”))
managed by an “in-house asset manager” or “INHAM” (within the meaning of Part IV(a) of the INHAM Exemption),
the conditions of Part I(a), (g) and (h) of the INHAM Exemption are satisfied, neither the INHAM nor a person controlling or controlled
by the INHAM (applying the definition of “control” in Part IV(d)(3) of the INHAM Exemption) owns a 10% or more interest
in the Company and (i) the identity of such INHAM and (ii) the name(s) of the employee benefit plan(s) whose assets constitute
the Source have been disclosed to the Company in writing pursuant to this clause (e); or

 

(f)         the
Source is a governmental plan; or

 

(g)         the
Source is one or more employee benefit plans, or a separate account or trust fund comprised of one or more employee benefit plans,
each of which has been identified to the Company in writing pursuant to this clause (g); or

 

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	Gas Natural Inc.	 	Note Purchase Agreement

 

(h)         the
Source does not include assets of any employee benefit plan, other than a plan exempt from the coverage of ERISA.

 

As used in this Section 6.2, the terms
“employee benefit plan,” “governmental plan,” and “separate account” shall
have the respective meanings assigned to such terms in section 3 of ERISA.

 

Section 7.         Information
as to Company.

 

Section 7.1.         Financial
and Business Information. The Company shall deliver to each holder of a Note that is an Institutional Investor:

 

(a)         Quarterly
Statements — within 45 days (or such shorter period as is the earlier of (x) 15 days greater than the period applicable
to the filing of the Company’s Quarterly Report on Form 10-Q (the “Form 10-Q”) with the SEC
regardless of whether the Company is subject to the filing requirements thereof and (y) the date by which such financial statements
are required to be delivered under any Material Credit Facility or the date on which such corresponding financial statements are
delivered under any Material Credit Facility if such delivery occurs earlier than such required delivery date) after the end of
each quarterly fiscal period in each fiscal year of the Company (other than the last quarterly fiscal period of each such fiscal
year), duplicate copies of,

 

(i)         a
consolidated balance sheet of the Company and its Subsidiaries as at the end of such quarter, and

 

(ii)         consolidated
statements of income, changes in shareholders’ equity and cash flows of the Company and its Subsidiaries, for such quarter
and (in the case of the second and third quarters) for the portion of the fiscal year ending with such quarter,

 

setting forth in each case in
comparative form the figures for the corresponding periods in the previous fiscal year, all in reasonable detail, prepared in accordance
with GAAP applicable to quarterly financial statements generally, and certified by a Senior Financial Officer as fairly presenting,
in all material respects, the financial position of the companies being reported on and their results of operations and cash flows,
subject to changes resulting from year-end adjustments, provided that delivery within the time period specified above of
copies of the Company’s Form 10-Q prepared in compliance with the requirements therefor and filed with the SEC shall
be deemed to satisfy the requirements of this Section 7.1(a);

 

(b)         Annual
Statements — within 105 days (or such shorter period as is the earlier of (x) 15 days greater than the period applicable
to the filing of the Company’s Annual Report on Form 10-K (the “Form 10-K”) with the SEC regardless
of whether the Company is subject to the filing requirements thereof and (y) the date by which such financial statements are required
to be delivered under any Material Credit Facility or the date on which such corresponding financial statements are delivered under
any Material Credit Facility if such delivery occurs earlier than such required delivery date) after the end of each fiscal year
of the Company, duplicate copies of

 

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	Gas Natural Inc.	 	Note Purchase Agreement

 

(i)         a
consolidated balance sheet of the Company and its Subsidiaries as at the end of such year, and

 

(ii)         consolidated
statements of income, changes in shareholders’ equity and cash flows of the Company and its Subsidiaries for such year,

 

setting forth in each case in
comparative form the figures for the previous fiscal year, all in reasonable detail, prepared in accordance with GAAP, and accompanied
by an opinion thereon (without a “going concern” or similar qualification or exception and without any qualification
or exception as to the scope of the audit on which such opinion is based) of independent public accountants of recognized national
standing, which opinion shall state that such financial statements present fairly, in all material respects, the financial position
of the companies being reported upon and their results of operations and cash flows and have been prepared in conformity with GAAP,
and that the examination of such accountants in connection with such financial statements has been made in accordance with generally
accepted auditing standards, and that such audit provides a reasonable basis for such opinion in the circumstances, provided
that the delivery within the time period specified above of the Company’s Form 10-K for such fiscal year (together with
the Company’s annual report to shareholders, if any, prepared pursuant to Rule 14a-3 under the Securities Exchange Act
of 1934) prepared in accordance with the requirements therefor and filed with the SEC, together with the opinion of independent
public accountants described above, shall be deemed to satisfy the requirements of this Section 7.1(b);

 

(c)         SEC
and Other Reports — promptly upon their becoming available, one copy of (i) each financial statement, report, notice
or proxy statement sent by the Company or any Subsidiary to its principal lending banks as a whole (excluding information sent
to such banks in the ordinary course of administration of a bank facility, such as information relating to pricing and borrowing
availability) or to its public Securities holders generally, and (ii) each regular or periodic report, each registration statement
(without exhibits except as expressly requested by the Purchaser or holder), and each prospectus and all amendments thereto filed
by the Company or any Subsidiary with the SEC and of all press releases and other statements made available generally by the Company
or any Subsidiary to the public concerning developments that are Material;

 

(d)         Notice
of Default or Event of Default — promptly, and in any event within five Business Days after a Responsible Officer becoming
aware of the existence of any Default or Event of Default or that any Person has given any notice or taken any action with respect
to a claimed default hereunder or that any Person has given any notice or taken any action with respect to a claimed default of
the type referred to in Section 11(f), a written notice specifying the nature and period of existence thereof and what action the
Company is taking or proposes to take with respect thereto;

 

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	Gas Natural Inc.	 	Note Purchase Agreement

 

(e)         ERISA
Matters — promptly, and in any event within five Business Days after a Responsible Officer becoming aware of any of the
following, a written notice setting forth the nature thereof and the action, if any, that the Company or an ERISA Affiliate proposes
to take with respect thereto:

 

(i)         with
respect to any Plan, any reportable event, as defined in section 4043(c) of ERISA and the regulations thereunder, for which
notice thereof has not been waived pursuant to such regulations as in effect on the date hereof; or

 

(ii)         the
taking by the PBGC of steps to institute, or the threatening by the PBGC of the institution of, proceedings under section 4042
of ERISA for the termination of, or the appointment of a trustee to administer, any Plan, or the receipt by the Company or any
ERISA Affiliate of a notice from a Multiemployer Plan that such action has been taken by the PBGC with respect to such Multiemployer
Plan; or

 

(iii)         any
event, transaction or condition that could result in the incurrence of any liability by the Company or any ERISA Affiliate pursuant
to Title I or IV of ERISA or the penalty or excise tax provisions of the Code relating to employee benefit plans, or in the imposition
of any Lien on any of the rights, properties or assets of the Company or any ERISA Affiliate pursuant to Title I or IV of ERISA
or such penalty or excise tax provisions, if such liability or Lien, taken together with any other such liabilities or Liens then
existing, could reasonably be expected to have a Material Adverse Effect;

 

(f)         Notices
from Governmental Authority — promptly, and in any event within 30 days of receipt thereof, copies of any notice to the
Company or any Subsidiary from any federal or state Governmental Authority relating to any order, ruling, statute or other law
or regulation that could reasonably be expected to have a Material Adverse Effect;

 

(g)         Resignation
or Replacement of Auditors — within ten days following the date on which the Company’s auditors resign or the Company
elects to change auditors, as the case may be, notification thereof, together with such supporting information as the Required
Holders may request; and

 

(h)         Requested
Information — with reasonable promptness, such other data and information relating to the business, operations, affairs,
financial condition, assets or properties of the Company or any of its Subsidiaries (including, but without limitation, actual
copies of the Company’s Form 10-Q and Form 10-K) or relating to the ability of the Company to perform its obligations
hereunder and under the Notes as from time to time may be reasonably requested by any such holder of a Note.

 

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	Gas Natural Inc.	 	Note Purchase Agreement

 

Section 7.2.         Officer’s
Certificate. Each set of financial statements delivered to a holder of a Note pursuant to Section 7.1(a) or Section 7.1(b)
shall be accompanied by a certificate of a Senior Financial Officer:

 

(a)         Covenant
Compliance — setting forth the information from such financial statements that is required in order to establish whether
the Company was in compliance with the requirements of Section 10 during the quarterly or annual period covered by the statements
then being furnished, (including with respect to each such provision that involves mathematical calculations, the information from
such financial statements that is required to perform such calculations) and detailed calculations of the maximum or minimum amount,
ratio or percentage, as the case may be, permissible under the terms of such Section, and the calculation of the amount, ratio
or percentage then in existence. In the event that the Company or any Subsidiary has made an election to measure any financial
liability using fair value (which election is being disregarded for purposes of determining compliance with this Agreement pursuant
to Section 22.2) as to the period covered by any such financial statement, such Senior Financial Officer’s certificate as
to such period shall include a reconciliation from GAAP with respect to such election; and

 

(b)         Event
of Default — certifying that such Senior Financial Officer has reviewed the relevant terms hereof and has made, or caused
to be made, under his or her supervision, a review of the transactions and conditions of the Company and its Subsidiaries from
the beginning of the quarterly or annual period covered by the statements then being furnished to the date of the certificate and
that such review shall not have disclosed the existence during such period of any condition or event that constitutes a Default
or an Event of Default or, if any such condition or event existed or exists (including, without limitation, any such event or condition
resulting from the failure of the Company or any Subsidiary to comply with any Environmental Law), specifying the nature and period
of existence thereof and what action the Company shall have taken or proposes to take with respect thereto.

 

Section 7.3.         Visitation.
The Company shall permit the representatives of each holder of a Note that is an Institutional Investor:

 

(a)         No
Default — if no Default or Event of Default then exists, at the expense of such holder and upon reasonable prior notice
to the Company, to visit the principal executive office of the Company, to discuss the affairs, finances and accounts of the Company
and its Subsidiaries with the Company’s officers, and (with the consent of the Company, which consent will not be unreasonably
withheld) its independent public accountants, and (with the consent of the Company, which consent will not be unreasonably withheld)
to visit the other offices and properties of the Company and each Subsidiary, all at such reasonable times and as often as may
be reasonably requested in writing; and

 

(b)         Default
— if a Default or Event of Default then exists, at the expense of the Company to visit and inspect any of the offices or
properties of the Company or any Subsidiary, to examine all their respective books of account, records, reports and other papers,
to make copies and extracts therefrom, and to discuss their respective affairs, finances and accounts with their respective officers
and independent public accountants (and by this provision the Company authorizes said accountants to discuss the affairs, finances
and accounts of the Company and its Subsidiaries), all at such times and as often as may be requested.

 

    	 	-17-	 

     

    

 

	Gas Natural Inc.	 	Note Purchase Agreement

 

Section 7.4.         Electronic
Delivery. Financial statements, opinions of independent certified public accountants, other information and Officer’s
Certificates that are required to be delivered by the Company pursuant to Sections 7.1(a), (b) or (c) and Section 7.2 shall be
deemed to have been delivered if the Company satisfies any of the following requirements with respect thereto:

 

(i)         such
financial statements satisfying the requirements of Section 7.1(a) or (b) and related Officer’s Certificate satisfying the
requirements of Section 7.2 are delivered to each holder of a Note by e-mail;

 

(ii)         the
Company shall have timely filed such Form 10–Q or Form 10–K, satisfying the requirements of Section 7.1(a) or Section
7.1(b), as the case may be, with the SEC on EDGAR and shall have made such form and the related Officer’s Certificate satisfying
the requirements of Section 7.2 available on its home page on the internet, which is located at http://www.egas.net/ as of the
date of this Agreement;

 

(iii)         such
financial statements satisfying the requirements of Section 7.1(a) or Section 7.1(b) and related Officer’s Certificate(s)
satisfying the requirements of Section 7.2 are timely posted by or on behalf of the Company on IntraLinks or on any other
similar website to which each holder of Notes has free access; or

 

(iv)         the
Company shall have filed any of the items referred to in Section 7.1(c) with the SEC on EDGAR and shall have made such items available
on its home page on the internet or on IntraLinks or on any other similar website to which each holder of Notes has free access;

 

provided however, that in the case
of any of clauses (ii), (iii) or (iv), the Company shall have given each holder of a Note prior written notice, which may be by
e-mail or in accordance with Section 18, of such posting or filing in connection with each delivery, provided further, that
upon request of any holder to receive paper copies of such forms, financial statements and Officer’s Certificates or to receive
them by e-mail, the Company will promptly e-mail them or deliver such paper copies, as the case may be, to such holder.

 

Section
8.         Payment and Prepayment of the Notes.

 

Section 8.1.         Maturity.
As provided therein, the entire unpaid principal balance of each Note shall be due and payable on the Maturity Date thereof.

 

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	Gas Natural Inc.	 	Note Purchase Agreement

 

Section 8.2.         Optional
Prepayments with Make-Whole Amount. The Company may, at its option, upon notice as provided below, prepay at any time all,
or from time to time any part of, the Notes, in an amount not less than 10% of the aggregate principal amount of the Notes then
outstanding in the case of a partial prepayment, at 100% of the principal amount so prepaid, and the Make-Whole Amount determined
for the prepayment date with respect to such principal amount. The Company will give each holder of Notes written notice of each
optional prepayment under this Section 8.2 not less than ten days and not more than 60 days prior to the date fixed for such
prepayment unless the Company and the Required Holders agree to another time period pursuant to Section 17. Each such notice shall
specify such date (which shall be a Business Day), the aggregate principal amount of the Notes to be prepaid on such date, the
principal amount of each Note held by such holder to be prepaid (determined in accordance with Section 8.3), and the interest to
be paid on the prepayment date with respect to such principal amount being prepaid, and shall be accompanied by a certificate of
a Senior Financial Officer as to the estimated Make-Whole Amount due in connection with such prepayment (calculated as if the date
of such notice were the date of the prepayment), setting forth the details of such computation. Two Business Days prior to such
prepayment, the Company shall deliver to each holder of Notes a certificate of a Senior Financial Officer specifying the calculation
of such Make-Whole Amount as of the specified prepayment date.

 

Section 8.3.         Allocation
of Partial Prepayments. In the case of each partial prepayment of the Notes pursuant to Section 8.2, the principal amount of
the Notes to be prepaid shall be allocated among all of the Notes at the time outstanding in proportion, as nearly as practicable,
to the respective unpaid principal amounts thereof not theretofore called for prepayment.

 

Section 8.4.         Maturity;
Surrender, Etc.          In the case of each optional prepayment of Notes
pursuant to this Section 8, the principal amount of each Note to be prepaid shall mature and become due and payable on the date
fixed for such prepayment, together with interest on such principal amount accrued to such date and the applicable Make-Whole Amount,
if any. From and after such date, unless the Company shall fail to pay such principal amount when so due and payable, together
with the interest and Make-Whole Amount, if any, as aforesaid, interest on such principal amount shall cease to accrue. Any Note
paid or prepaid in full shall be surrendered to the Company and cancelled and shall not be reissued, and no Note shall be issued
in lieu of any prepaid principal amount of any Note.

 

Section 8.5.         Purchase
of Notes. The Company will not and will not permit any Affiliate to purchase, redeem, prepay or otherwise acquire, directly
or indirectly, any of the outstanding Notes except (a) upon the payment or prepayment of the Notes in accordance with this
Agreement and the Notes or (b) pursuant to an offer to purchase made by the Company or an Affiliate pro rata to the holders
of all Notes at the time outstanding upon the same terms and conditions. Any such offer shall provide each holder with sufficient
information to enable it to make an informed decision with respect to such offer, and shall remain open for at least ten (10) Business
Days. If the holders of more than 35% of the principal amount of the Notes then outstanding accept such offer, the Company shall
promptly notify the remaining holders of such fact and the expiration date for the acceptance by holders of Notes of such offer
shall be extended by the number of days necessary to give each such remaining holder at least seven (7) Business Days from its
receipt of such notice to accept such offer. The Company will promptly cancel all Notes acquired by it or any Affiliate pursuant
to any payment, prepayment or purchase of Notes pursuant to this Agreement and no Notes may be issued in substitution or exchange
for any such Notes.

 

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	Gas Natural Inc.	 	Note Purchase Agreement

 

Section 8.6.         Make-Whole
Amount.

 

“Make-Whole
Amount” means, with respect to any Note, an amount equal to the excess, if any, of the Discounted Value of the Remaining
Scheduled Payments with respect to the Called Principal of such Note over the amount of such Called Principal, provided
that the Make-Whole Amount may in no event be less than zero. For the purposes of determining the Make-Whole Amount, the following
terms have the following meanings:

 

“Called Principal”
means, with respect to any Note, the principal of such Note that is to be prepaid pursuant to Section 8.2 or has become or
is declared to be immediately due and payable pursuant to Section 12.1, as the context requires.

 

“Discounted
Value” means, with respect to the Called Principal of any Note, the amount obtained by discounting all Remaining Scheduled
Payments with respect to such Called Principal from their respective scheduled due dates to the Settlement Date with respect to
such Called Principal, in accordance with accepted financial practice and at a discount factor (applied on the same periodic basis
as that on which interest on the Notes is payable) equal to the Reinvestment Yield with respect to such Called Principal.

 

“Reinvestment
Yield” means, with respect to the Called Principal of any Note, 0.50% over the yield to maturity implied by the yield(s)
reported as of 10:00 a.m. (New York City time) on the second Business Day preceding the Settlement Date with respect to such
Called Principal, on the display designated as “Page PX1” (or such other display as may replace Page PX1) on Bloomberg
Financial Markets for the most recently issued actively traded on-the-run U.S. Treasury securities (“Reported”)
having a maturity equal to the Remaining Average Life of such Called Principal as of such Settlement Date. If there are no such
U.S. Treasury securities Reported having a maturity equal to such Remaining Average Life, then such implied yield to maturity will
be determined by (a) converting U.S. Treasury bill quotations to bond equivalent yields in accordance with accepted financial
practice and (b) interpolating linearly between the yields Reported for the applicable most recently issued actively traded
on-the-run U.S. Treasury securities with the maturities (1) closest to and greater than such Remaining Average Life and (2) closest
to and less than such Remaining Average Life. The Reinvestment Yield shall be rounded to the number of decimal places as appears
in the interest rate of the applicable Note.

 

If such yields are
not Reported or the yields Reported as of such time are not ascertainable (including by way of interpolation), then “Reinvestment
Yield” means, with respect to the Called Principal of any Note, 0.50% over the yield to maturity implied by the U.S.
Treasury constant maturity yields reported, for the latest day for which such yields have been so reported as of the second Business
Day preceding the Settlement Date with respect to such Called Principal, in Federal Reserve Statistical Release H.15 (or any comparable
successor publication) for the U.S. Treasury constant maturity having a term equal to the Remaining Average Life of such Called
Principal as of such Settlement Date. If there is no such U.S. Treasury constant maturity having a term equal to such Remaining
Average Life, such implied yield to maturity will be determined by interpolating linearly between (1) the U.S. Treasury constant
maturity so reported with the term closest to and greater than such Remaining Average Life and (2) the U.S. Treasury constant
maturity so reported with the term closest to and less than such Remaining Average Life. The Reinvestment Yield shall be rounded
to the number of decimal places as appears in the interest rate of the applicable Note.

 

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	Gas Natural Inc.	 	Note Purchase Agreement

 

“Remaining
Average Life” means, with respect to any Called Principal, the number of years obtained by dividing (i) such Called
Principal into (ii) the sum of the products obtained by multiplying (a) the principal component of each Remaining Scheduled
Payment with respect to such Called Principal by (b) the number of years, computed on the basis of a 360-day year composed
of twelve 30-day months and calculated to two decimal places, that will elapse between the Settlement Date with respect to such
Called Principal and the scheduled due date of such Remaining Scheduled Payment.

 

“Remaining
Scheduled Payments” means, with respect to the Called Principal of any Note, all payments of such Called Principal and
interest thereon that would be due after the Settlement Date with respect to such Called Principal if no payment of such Called
Principal were made prior to its scheduled due date, provided that if such Settlement Date is not a date on which interest
payments are due to be made under the Notes, then the amount of the next succeeding scheduled interest payment will be reduced
by the amount of interest accrued to such Settlement Date and required to be paid on such Settlement Date pursuant to Section 8.4
or Section 12.1.

 

“Settlement
Date” means, with respect to the Called Principal of any Note, the date on which such Called Principal is to be prepaid
pursuant to Section 8.2 or has become or is declared to be immediately due and payable pursuant to Section 12.1, as the
context requires.

 

Section 8.7.         Change
of Control. (a) Notice of Change of Control.  The Company will, within 15 Business Days after any Responsible
Officer has knowledge of the occurrence of any Change of Control, give written notice of such Change of Control to each holder
of Notes. Such notice shall contain and constitute an offer to prepay Notes as described in subparagraph (b) of this Section 8.7
and shall be accompanied by the certificate described in subparagraph (e) of this Section 8.7.

 

(b)         Offer
to Prepay Notes. The offer to prepay Notes contemplated by subparagraph (a) of this Section 8.7 shall be an offer
to prepay, in accordance with and subject to this Section 8.7, all, but not less than all, the Notes held by each holder (in
this case only, “holder” in respect of any Note registered in the name of a nominee for a disclosed beneficial
owner shall mean such beneficial owner) on a date specified in such offer (the “Proposed Prepayment Date”).
The Proposed Prepayment Date shall be not less than 20 days and not more than 60 days after the date of such offer (if
the Proposed Prepayment Date shall not be specified in such offer, the Proposed Prepayment Date shall be the 45th day after the
date of such offer).

 

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	Gas Natural Inc.	 	Note Purchase Agreement

 

(c)         Acceptance;
Rejection. A holder of Notes may accept or reject the offer to prepay made pursuant to this Section 8.7 by causing a notice
of such acceptance or rejection to be delivered to the Company at least 5 Business Days prior to the Proposed Prepayment Date.
A failure by a holder of Notes to respond to an offer to prepay made pursuant to this Section 8.7, or to accept an offer as
to all of the Notes held by such holder, in each case on or before the 5th Business Day preceding the Proposed Prepayment Date,
shall be deemed to constitute a rejection of such offer by such holder.

 

(d)         Prepayment.
Prepayment of the Notes to be prepaid pursuant to this Section 8.7 shall be at 100% of the principal amount of such Notes,
together with interest on such Notes accrued to the date of prepayment and without any Make-Whole Amount. The prepayment shall
be made on the Proposed Prepayment Date.

 

(e)         Officer’s
Certificate.  Each offer to prepay the Notes pursuant to this Section 8.7 shall be accompanied by a certificate, executed
by a Senior Financial Officer of the Company and dated the date of such offer, specifying: (i) the Proposed Prepayment Date;
(ii) that such offer is made pursuant to this Section 8.7; (iii) the principal amount of each Note offered to be
prepaid; (iv) the interest that would be due on each Note offered to be prepaid, accrued to the Proposed Prepayment Date;
and (v) in reasonable detail, the nature and date of the Change of Control.

 

(f)         Definition
of Change of Control. “Change of Control” means an event or series of events by which:

 

(A)         any
“person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Securities Exchange Act
of 1934, but excluding any employee benefit plan of such person or its subsidiaries, and any person or entity acting in its capacity
as trustee, agent or other fiduciary or administrator of any such plan) becomes the “beneficial owner” (as defined
in Rules 13d-3 and 13d-5 under the Securities Exchange Act of 1934, except that a person or group shall be deemed to have “beneficial
ownership” of all securities that such person or group has the right to acquire, whether such right is exercisable immediately
or only after the passage of time (such right, an “option right”)), directly or indirectly, of 35% or more of the equity
securities of the Company entitled to vote for members of the board of directors or equivalent governing body of the Company on
a fully-diluted basis (and taking into account all such securities that such person or group has the right to acquire pursuant
to any option right); or

 

(B)         during
any period of 12 consecutive months, a majority of the members of the board of directors or other equivalent governing body of
the Company cease to be composed of individuals (i) who were members of that board or equivalent governing body on the first
day of such period, (ii) whose election or nomination to that board or equivalent governing body was approved by individuals
referred to in clause (i) above constituting at the time of such election or nomination at least a majority of that board or equivalent
governing body or (iii) whose election or nomination to that board or other equivalent governing body was approved by individuals
referred to in clauses (i) and (ii) above constituting at the time of such election or nomination at least a majority of that board
or equivalent governing body (excluding, in the case of both clause (ii) and clause (iii), any individual whose initial nomination
for, or assumption of office as, a member of that board or equivalent governing body occurs as a result of an actual or threatened
solicitation of proxies or consents for the election or removal of one or more directors by any person or group other than a solicitation
for the election of one or more directors by or on behalf of the board of directors);

 

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	Gas Natural Inc.	 	Note Purchase Agreement

 

provided however,
that the Bison Infrastructure Transaction shall not constitute a Change of Control for purposes of this Agreement.

 

Section 8.8.         Payments
Due on Non-Business Days. Anything in this Agreement or the Notes to the contrary notwithstanding, (x) subject to clause
(y), any payment of interest on any Note that is due on a date that is not a Business Day shall be made on the next succeeding
Business Day without including the additional days elapsed in the computation of the interest payable on such next succeeding Business
Day; and (y) any payment of principal of or Make-Whole Amount on any Note (including principal due on the Maturity Date of such
Note) that is due on a date that is not a Business Day shall be made on the next succeeding Business Day and shall include the
additional days elapsed in the computation of interest payable on such next succeeding Business Day.

 

Section 9.         Affirmative
Covenants.

 

The Company covenants
that so long as any of the Notes are outstanding:

 

Section 9.1.         Compliance
with Laws. Without limiting Section 10.5, the Company will, and will cause each of its Subsidiaries to, comply with all
laws, ordinances or governmental rules or regulations to which each of them is subject, including, without limitation, ERISA, Environmental
Laws, the USA PATRIOT Act and the other laws and regulations that are referred to in Section 5.16, and will obtain and maintain
in effect all licenses, certificates, permits, franchises and other governmental authorizations necessary to the ownership of their
respective properties or to the conduct of their respective businesses, in each case to the extent necessary to ensure that non-compliance
with such laws, ordinances or governmental rules or regulations or failures to obtain or maintain in effect such licenses, certificates,
permits, franchises and other governmental authorizations could not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect.

 

Section 9.2.         Insurance.
The Company will, and will cause each of its Subsidiaries to, maintain, with financially sound and reputable insurers, insurance
with respect to their respective properties and businesses against such casualties and contingencies, of such types, on such terms
and in such amounts (including deductibles, co-insurance and self-insurance, if adequate reserves are maintained with respect thereto)
as is customary in the case of entities of established reputations engaged in the same or a similar business and similarly situated.

 

Section 9.3.         Maintenance
of Properties. The Company will, and will cause each of its Subsidiaries to, maintain and keep, or cause to be maintained and
kept, their respective properties in good repair, working order and condition (other than ordinary wear and tear), so that the
business carried on in connection therewith may be properly conducted at all times, provided that this Section shall not
prevent the Company or any Subsidiary from discontinuing the operation and the maintenance of any of its properties if such discontinuance
is desirable in the conduct of its business and the Company has concluded that such discontinuance could not, individually or in
the aggregate, reasonably be expected to have a Material Adverse Effect.

 

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	Gas Natural Inc.	 	Note Purchase Agreement

 

Section 9.4.         Payment
of Taxes and Claims. The Company will, and will cause each of its Subsidiaries to, file all tax returns required to be filed
in any jurisdiction and to pay and discharge all taxes shown to be due and payable on such returns and all other taxes, assessments,
governmental charges, or levies imposed on them or any of their properties, assets, income or franchises, to the extent the same
have become due and payable and before they have become delinquent and all claims for which sums have become due and payable that
have or might become a Lien on properties or assets of the Company or any Subsidiary, provided that neither the Company
nor any Subsidiary need pay any such tax, assessment, charge, levy or claim if (i) the amount, applicability or validity thereof
is contested by the Company or such Subsidiary on a timely basis in good faith and in appropriate proceedings, and the Company
or a Subsidiary has established adequate reserves therefor in accordance with GAAP on the books of the Company or such Subsidiary
or (ii) the nonpayment of all such taxes, assessments, charges, levies and claims could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.

 

Section 9.5.         Corporate
Existence, Etc. Subject to Section 10.2, the Company will at all times preserve and keep its corporate existence in full
force and effect. Subject to Sections 10.2 and 10.3, the Company will at all times preserve and keep in full force and effect the
corporate existence of each of its Subsidiaries (unless merged into the Company or a Wholly-Owned Subsidiary) and all rights and
franchises of the Company and its Subsidiaries unless, in the good faith judgment of the Company, the termination of or failure
to preserve and keep in full force and effect such corporate existence, right or franchise could not, individually or in the aggregate,
have a Material Adverse Effect.

 

Section 9.6.         Books
and Records. The Company will, and will cause each of its Subsidiaries to, maintain proper books of record and account in conformity
with GAAP and all applicable requirements of any Governmental Authority having legal or regulatory jurisdiction over the Company
or such Subsidiary, as the case may be. The Company will, and will cause each of its Subsidiaries to, keep books, records and accounts
which, in reasonable detail, accurately reflect all transactions and dispositions of assets. The Company and its Subsidiaries have
devised a system of internal accounting controls sufficient to provide reasonable assurances that their respective books, records,
and accounts accurately reflect all transactions and dispositions of assets and the Company will, and will cause each of its Subsidiaries
to, continue to maintain such system.

 

Section 9.7         Subsidiary
Guarantors. The Company will cause each of its Subsidiaries that guarantees or otherwise becomes liable at any time, whether
as a borrower or an additional or co-borrower or otherwise, for or in respect of any Indebtedness under any Material Credit Facility
to concurrently therewith:

 

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	Gas Natural Inc.	 	Note Purchase Agreement

 

(a)         execute
and deliver a joinder to an existing Subsidiary Guaranty (each, a “Joinder Agreement”) or execute and deliver
a Subsidiary Guaranty in substantially the form of the attached Exhibit 2.2 (each, an “Additional Subsidiary Guaranty”),
providing for the guaranty by such Subsidiary, on a joint and several basis with all other such Subsidiaries, of (i) the prompt
payment in full when due of all amounts payable by the Company pursuant to the Notes (whether for principal, interest, Make-Whole
Amount or otherwise) and this Agreement, including, without limitation, all indemnities, fees and expenses payable by the Company
thereunder and (ii) the prompt, full and faithful performance, observance and discharge by the Company of each and every covenant,
agreement, undertaking and provision required pursuant to the Notes or this Agreement to be performed, observed or discharged by
it; and

 

(b)         deliver
the following to each holder of a Note:

 

(i)         an
executed counterpart of such Joinder Agreement or such Additional Subsidiary Guaranty;

 

(ii)         a
certificate signed by an authorized officer of such Subsidiary containing representations and warranties on behalf of such Subsidiary
to the same effect, mutatis mutandis, as those contained in Sections 5.1, 5.2, 5.6 and 5.7 of this Agreement (but with respect
to such Subsidiary and such Joinder Agreement or Additional Subsidiary Guaranty rather than the Company);

 

(iii)         all
documents as may be reasonably requested by the Required Holders to evidence the due organization, continuing existence and good
standing of such Subsidiary and the due authorization by all requisite action on the part of such Subsidiary of the execution and
delivery of such Joinder Agreement or Additional Subsidiary Guaranty and the performance by such Subsidiary of its obligations
thereunder; and

 

(iv)         an
opinion of counsel reasonably satisfactory to the Required Holders covering such matters relating to such Subsidiary and such Joinder
Agreement or Additional Subsidiary Guaranty as the Required Holders may reasonably request.

 

Section 9.8.         Notes
to Rank Pari Passu. The Notes and all obligations under this Agreement are and at all times shall remain direct obligations
of the Company ranking pari passu with all other notes from time to time issued and outstanding hereunder without any preference
among themselves and pari passu with all Indebtedness outstanding under any Material Credit Facility and all other present
and future unsecured Indebtedness (actual or contingent) of the Company which is not expressed to be subordinate or junior in rank
to any other unsecured Indebtedness of the Company.

 

Section 10.         Negative
Covenants.

 

The Company covenants
that so long as any of the Notes are outstanding:

 

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	Gas Natural Inc.	 	Note Purchase Agreement

 

Section 10.1.         Transactions
with Affiliates. The Company will not and will not permit any Subsidiary to enter into directly or indirectly any transaction
or group of related transactions (including without limitation the purchase, lease, sale or exchange of properties of any kind
or the rendering of any service) with any Affiliate (other than the Company or another Subsidiary), except in the ordinary course
and pursuant to the reasonable requirements of the Company’s or such Subsidiary’s business and upon fair and reasonable
terms no less favorable to the Company or such Subsidiary than would be obtainable in a comparable arm’s-length transaction
with a Person not an Affiliate.

 

Section 10.2.         Merger,
Consolidation, Etc. The Company will not and will not permit any Subsidiary to consolidate with or merge with any other Person
or convey, transfer or lease all or substantially all of its assets in a single transaction or series of transactions to any Person
unless:

 

(a)         with
respect to any such transaction involving the Company, the successor formed by such consolidation or the survivor of such merger
or the Person that acquires by conveyance, transfer or lease all or substantially all of the assets of the Company as an entirety,
as the case may be, shall be a solvent corporation or limited liability company organized and existing under the laws of the United
States or any state thereof (including the District of Columbia), and, if the Company is not such corporation or limited liability
company, (i) such corporation or limited liability company shall have executed and delivered to each holder of any Notes its
assumption of the due and punctual performance and observance of each covenant and condition of this Agreement and the Notes and
(ii) such corporation or limited liability company shall have caused to be delivered to each holder of any Notes an opinion
of nationally recognized independent counsel, or other independent counsel reasonably satisfactory to the Required Holders, to
the effect that all agreements or instruments effecting such assumption are enforceable in accordance with their terms and comply
with the terms hereof;

 

(b)         any
Subsidiary of the Company may (i) consolidate with or merge with, or convey, transfer or lease substantially all of its assets
in a single transaction or series of transactions to, (x) the Company or another Subsidiary so long as in any merger or consolidation
involving the Company, the Company shall be the surviving or continuing corporation, or (y) subject to the provisions of Section 10.3,
any other Person so long as the survivor is a Subsidiary, or (ii) convey, transfer or lease all of its assets in compliance
with the provisions of Section 10.3;

 

(c)         each
Subsidiary Guarantor under any Subsidiary Guaranty that is outstanding at the time such transaction or each transaction in such
a series of transactions occurs reaffirms its obligations under such Subsidiary Guaranty in writing at such time pursuant to documentation
that is reasonably acceptable to the Required Holders; and

 

(d)         immediately
before and immediately after giving effect to such transaction or each transaction in any such series of transactions, no Default
or Event of Default shall have occurred and be continuing.

 

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	Gas Natural Inc.	 	Note Purchase Agreement

 

No such conveyance, transfer or lease of
substantially all of the assets of the Company shall have the effect of releasing the Company or any successor corporation or limited
liability company that shall theretofore have become such in the manner prescribed in this Section 10.2 from its liability
under this Agreement or the Notes.

 

Section 10.3.         Sale
of Assets. The Company will not and will not permit any Subsidiary to, sell, lease or otherwise dispose of any Substantial
Part (as defined below) of the assets of the Company and its Subsidiaries; provided, however, that the Company or any Subsidiary
may sell, lease or otherwise dispose of assets constituting a Substantial Part of the assets of the Company and its Subsidiaries
if such assets are sold in an arm’s length transaction and, at such time and after giving
effect thereto, no Default or Event of Default shall have occurred and be continuing and an amount equal to the net proceeds received
from such sale, lease or other disposition of that portion of such assets that exceeds the definition of Substantial Part (but
not less than that portion of such assets that exceeds the definition of Substantial Part) shall be used within 365 days of such
sale, lease or disposition, in any combination:

 

(1)         to
acquire productive assets used or useful in carrying on the business of the Company and its Subsidiaries and having a value at
least equal to the value of such assets sold, leased or otherwise disposed of; and/or

 

(2)         to
prepay or retire Senior Debt of the Company and its Subsidiaries, provided that (i) the Company shall offer
to prepay each outstanding Note in a principal amount which equals the Ratable Portion for such Note, and (ii) any such prepayment
of the Notes shall be made at 100% of the principal amount thereof, together with accrued interest thereon to the date of such
prepayment, but without the payment of the Make-Whole Amount. Any offer of prepayment of the Notes pursuant to this Section 10.3
shall be given to each holder of the Notes by written notice that shall be delivered not less than thirty (30) days and not
more than sixty (60) days prior to the proposed prepayment date. Each such notice shall state that it is given pursuant to this
Section 10.3 and that the offer set forth in such notice must be accepted by such holder in writing and shall also set forth
(i) the prepayment date, (ii) a description of the circumstances which give rise to the proposed prepayment and (iii) a
calculation of the Ratable Portion for such holder’s Notes. Each holder of the Notes which desires to have its Notes prepaid
shall notify the Company in writing delivered not less than five (5) Business Days prior to the proposed prepayment date of its
acceptance of such offer of prepayment. A failure by a holder of Notes to respond to an offer to prepay made pursuant to this Section 10.3,
or to accept an offer as to all of the Notes held by such holder, in each case on or before the 5th Business Day preceding the
proposed prepayment date, shall be deemed to constitute a rejection of such offer by such holder. Prepayment of Notes pursuant
to this Section 10.3 shall be made in accordance with Section 8.2 (but without payment of the Make-Whole Amount).

 

As used in this Section 10.3, a sale,
lease or other disposition of assets shall be deemed to be a “Substantial Part” of the assets of the Company
and its Subsidiaries if the book value of such assets, when added to the book value of all other assets sold, leased or otherwise
disposed of by the Company and its Subsidiaries during the period of 12 consecutive months ending on the date of such sale, lease
or other disposition, exceeds 10% of the book value of Consolidated Total Assets, determined as of the end of the fiscal year immediately
preceding such sale, lease or other disposition; provided that there shall be excluded from any determination of a “Substantial
Part” (i) any sale or disposition of assets in the ordinary course of business of the Company and its Subsidiaries,
(ii) any transfer of assets from the Company to any Subsidiary or from any Subsidiary to the Company or a Subsidiary, and
(iii) any sale or transfer of property acquired by the Company or any Subsidiary after the date of this Agreement to any Person
within 365 days following the acquisition or construction of such property by the Company or any Subsidiary if the Company or a
Subsidiary shall concurrently with such sale or transfer, lease such property, as lessee.

 

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	Gas Natural Inc.	 	Note Purchase Agreement

 

Section 10.4.         Line
of Business. The Company will not and will not permit any Subsidiary to engage in any business if, as a result, the general
nature of the business in which the Company and its Subsidiaries, taken as a whole, would then be engaged would be substantially
changed from the general nature of the business in which the Company and its Subsidiaries, taken as a whole, are engaged on the
date of this Agreement as described in the investor presentation referred to in Schedule 5.3.

 

Section 10.5.         Economic
Sanctions, Etc. The Company will not, and will not permit any Controlled Entity to (a) become (including by virtue of
being owned or controlled by a Blocked Person), own or control a Blocked Person or (b) directly or indirectly have any investment
in or engage in any dealing or transaction (including any investment, dealing or transaction involving the proceeds of the Notes)
with any Person if such investment, dealing or transaction (i) would cause any holder or any affiliate of such holder to be
in violation of, or subject to sanctions under, any law or regulation applicable to such holder, or (ii) is prohibited by
or subject to sanctions under any U.S. Economic Sanctions Laws.

 

Section 10.6.         Liens.
The Company will not and will not permit any of its Subsidiaries to directly or indirectly create, incur, assume or permit to exist
(upon the happening of a contingency or otherwise) any Lien on or with respect to any property or asset (including, without limitation,
any document or instrument in respect of goods or accounts receivable) of the Company or any such Subsidiary, whether now owned
or held or hereafter acquired, or any income or profits therefrom, or assign or otherwise convey any right to receive income or
profits, except:

 

(a)         any
Lien for any tax, assessment or governmental charge or levy which is not yet due and payable or which is being contested in good
faith and as to which the Company or such Subsidiary shall have made appropriate reserve;

 

(b)         Liens
incidental to the conduct of business or the ownership of properties and assets (including landlords’, carriers’, warehousemen’s,
mechanics’, materialmen’s and other similar Liens for sums not yet due and payable) and Liens to secure the performance
of bids, tenders, leases, or trade contracts, or to secure statutory obligations (including obligations under workers compensation,
unemployment insurance and other social security legislation), surety or appeal bonds or other Liens incurred in the ordinary course
of business and not in connection with the borrowing of money;

 

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	Gas Natural Inc.	 	Note Purchase Agreement

 

(c)         leases
or subleases granted to others, easements, rights-of-way, restrictions and other similar charges or encumbrances, in each case
incidental to the ownership of property or assets or the ordinary conduct of the business of the Company or any of its Subsidiaries,
or Liens incidental to minor survey exceptions and the like, provided that such Liens do not, in the aggregate, materially
detract from the value of such property;

 

(d)         any
attachment or judgment Lien, unless the judgment it secures shall not, within 60 days after the entry thereof, have been discharged
or execution thereof stayed pending appeal, or shall not have been discharged within 60 days after the expiration of any such stay;

 

(e)         Liens
securing Indebtedness of a Subsidiary to the Company or to another Subsidiary;

 

(f)         Liens
existing as of the date of Closing and reflected in Schedule 10.6;

 

(g)         Liens
incurred after the date of Closing given to secure the payment of the purchase price incurred in connection with the acquisition,
construction or improvement of property (other than accounts receivable or inventory) useful and intended to be used in carrying
on the business of the Company or a Subsidiary, including Liens existing on such property at the time of acquisition or construction
thereof or Liens incurred within 365 days of such acquisition or completion of such construction or improvement, provided that
(i) the Lien shall attach solely to the property acquired, purchased, constructed or improved; (ii) at the time of acquisition,
construction or improvement of such property (or, in the case of any Lien incurred within three hundred sixty-five (365) days of
such acquisition or completion of such construction or improvement, at the time of the incurrence of the Indebtedness secured by
such Lien), the aggregate amount remaining unpaid on all Indebtedness secured by Liens on such property, whether or not assumed
by the Company or a Subsidiary, shall not exceed the lesser of (y) the cost of such acquisition, construction or improvement
or (z) the fair market value of such property (as determined in good faith by one or more officers of the Company to whom
authority to enter into the transaction has been delegated by the board of directors of the Company); and (iii) at the time
of such incurrence and after giving effect thereto, no Default or Event of Default would exist;

 

(h)         any
Lien existing on property of a Person immediately prior to its being consolidated with or merged into the Company or a Subsidiary
or its becoming a Subsidiary, or any Lien existing on any property acquired by the Company or any Subsidiary at the time such property
is so acquired (whether or not the Indebtedness secured thereby shall have been assumed), provided that (i) no such
Lien shall have been created or assumed in contemplation of such consolidation or merger or such Person’s becoming a Subsidiary
or such acquisition of property, (ii) each such Lien shall extend solely to the item or items of property so acquired and,
if required by the terms of the instrument originally creating such Lien, other property which is an improvement to or is acquired
for specific use in connection with such acquired property, and (iii) at the time of such incurrence and after giving effect
thereto, no Default or Event of Default would exist;

 

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	Gas Natural Inc.	 	Note Purchase Agreement

 

(i)         any
extensions, renewals or replacements of any Lien permitted by the preceding subparagraphs (e), (f), (g) and (h) of this Section 10.6,
provided that (i) no additional property shall be encumbered by such Liens, (ii) the unpaid principal amount of
the Indebtedness or other obligations secured thereby shall not be increased on or after the date of any extension, renewal or
replacement, and (iii) at such time and immediately after giving effect thereto, no Default or Event of Default shall have
occurred and be continuing; and

 

(j)         other
Liens securing Indebtedness of the Company or any Subsidiary not otherwise permitted by clauses (a) through (i), provided
that Priority Debt shall not at any time exceed 10% of Consolidated Net Worth (determined as of the end of the then most recently
ended fiscal quarter), provided, further, that notwithstanding the foregoing, the Company shall not, and shall not permit
any of its Subsidiaries to, secure pursuant to this Section 10.6(j) any Indebtedness outstanding under or pursuant to any Material
Credit Facility unless and until the Notes (and any guaranty delivered in connection therewith) shall concurrently be secured equally
and ratably with such Indebtedness pursuant to documentation reasonably acceptable to the Required Holders in substance and in
form, including, without limitation, an intercreditor agreement and opinions of counsel to the Company and/or any such Subsidiary,
as the case may be, from counsel that is reasonably acceptable to the Required Holders.

 

Section 10.7.         Total
Debt to Capital Ratio. The Company shall not permit the Total Debt to Capital Ratio to exceed 0.50 to 1.00 at any time; provided
that, upon notice by the Company to the holders of Notes, as of the last day of each of the four consecutive fiscal quarters immediately
following a Qualified Acquisition, such Total Debt to Capital Ratio may be greater than 0.50 to 1.00, but in no event greater than
0.55 to 1.00.

 

Section 10.8.         Interest
Coverage Ratio. The Company shall not permit the Interest Coverage Ratio as of the end of any fiscal quarter to be less than
2.00 to 1.00.

 

Section 10.9.         Priority
Debt. The Company shall not at any time permit the aggregate amount of all Priority Debt to exceed 10% of Consolidated Net
Worth (Consolidated Net Worth to be determined as of the end of the then most recently ended fiscal quarter of the Company).

 

Section 10.10.         Consolidated
Net Worth. The Company shall not at any time permit its Consolidated Net Worth to be less than the sum of (a) 75% of the
total shareholders’ equity as reported in the Company’s Form 10-Q for fiscal quarter ending September 30, 2016, plus
(b) twenty percent (20%) of the sum of Consolidated Net Income (if positive) earned in each fiscal quarter, commencing with the
fiscal quarter beginning January 1, 2017.

 

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	Gas Natural Inc.	 	Note Purchase Agreement

 

Section 11.         Events
of Default.

 

An “Event
of Default” shall exist if any of the following conditions or events shall occur and be continuing:

 

(a)         the
Company defaults in the payment of any principal or Make-Whole Amount, if any, on any Note when the same becomes due and payable,
whether at maturity or at a date fixed for prepayment or by declaration or otherwise; or

 

(b)         the
Company defaults in the payment of any interest on any Note for more than five Business Days after the same becomes due and payable;
or

 

(c)         the
Company defaults in the performance of or compliance with any term contained in Section 7.1(d) or Sections 10.2, 10.3, 10.6,
10.7, 10.8, 10.9 and 10.10; or

 

(d)         the
Company or any Subsidiary Guarantor defaults in the performance of or compliance with any term contained herein (other than
those referred to in Sections 11(a), (b) and (c)) or in any Subsidiary Guaranty and such default is not remedied within 30
days after the earlier of (i) a Responsible Officer obtaining actual knowledge of such default and (ii) the Company receiving
written notice of such default from any holder of a Note (any such written notice to be identified as a “notice of default”
and to refer specifically to this Section 11(d)); or

 

(e)         (i)
any representation or warranty made in writing by or on behalf of the Company or by any officer of the Company in this Agreement
or any writing furnished in connection with the transactions contemplated hereby proves to have been false or incorrect in any
material respect on the date as of which made, or (ii) any representation or warranty made in writing by or on behalf of any Subsidiary
Guarantor or by any officer of such Subsidiary Guarantor in any Subsidiary Guaranty or any writing furnished in connection with
such Subsidiary Guaranty proves to have been false or incorrect in any material respect on the date as of which made; or

 

(f)         (i)
the Company or any Subsidiary is in default (as principal or as guarantor or other surety) in the payment of any principal of or
premium or make-whole amount or interest on any Indebtedness that is outstanding in an aggregate principal amount of at least $10,000,000
beyond any period of grace provided with respect thereto, or (ii) the Company or any Subsidiary is in default in the performance
of or compliance with any term of any evidence of any Indebtedness in an aggregate outstanding principal amount of at least $10,000,000
or of any mortgage, indenture or other agreement relating thereto or any other condition exists, and as a consequence of such default
or condition such Indebtedness has become, or has been declared (or one or more Persons are entitled to declare such Indebtedness
to be), due and payable before its stated maturity or before its regularly scheduled dates of payment, or (iii) as a consequence
of the occurrence or continuation of any event or condition (other than the passage of time or the right of the holder of Indebtedness
to convert such Indebtedness into equity interests), (x) the Company or any Subsidiary has become obligated to purchase or
repay Indebtedness before its regular maturity or before its regularly scheduled dates of payment in an aggregate outstanding principal
amount of at least $10,000,000, or (y) one or more Persons have the right to require the Company or any Subsidiary so to purchase
or repay such Indebtedness; or

 

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	Gas Natural Inc.	 	Note Purchase Agreement

 

(g)         the
Company or any Subsidiary (i) is generally not paying, or admits in writing its inability to pay, its debts as they become
due, (ii) files, or consents by answer or otherwise to the filing against it of, a petition for relief or reorganization or
arrangement or any other petition in bankruptcy, for liquidation or to take advantage of any bankruptcy, insolvency, reorganization,
moratorium or other similar law of any jurisdiction, (iii) makes an assignment for the benefit of its creditors, (iv) consents
to the appointment of a custodian, receiver, trustee or other officer with similar powers with respect to it or with respect to
any substantial part of its property, (v) is adjudicated as insolvent or to be liquidated, or (vi) takes corporate action
for the purpose of any of the foregoing; or

 

(h)         a
court or other Governmental Authority of competent jurisdiction enters an order appointing, without consent by the Company or any
of its Subsidiaries, a custodian, receiver, trustee or other officer with similar powers with respect to it or with respect to
any substantial part of its property, or constituting an order for relief or approving a petition for relief or reorganization
or any other petition in bankruptcy or for liquidation or to take advantage of any bankruptcy or insolvency law of any jurisdiction,
or ordering the dissolution, winding-up or liquidation of the Company or any of its Subsidiaries, or any such petition shall be
filed against the Company or any of its Subsidiaries and such petition shall not be dismissed within 60 days; or

 

(i)         one
or more final judgments or orders for the payment of money aggregating in excess of $10,000,000, including, without limitation,
any such final order enforcing a binding arbitration decision, are rendered against one or more of the Company and its Subsidiaries
and which judgments are not, within 60 days after entry thereof, bonded, discharged or stayed pending appeal, or are not discharged
within 60 days after the expiration of such stay; or

 

(j)         if
(i) any Plan shall fail to satisfy the minimum funding standards of ERISA or the Code for any plan year or part thereof or
a waiver of such standards or extension of any amortization period is sought or granted under section 412 of the Code, (ii)
a notice of intent to terminate any Plan shall have been or is reasonably expected to be filed with the PBGC or the PBGC shall
have instituted proceedings under ERISA section 4042 to terminate or appoint a trustee to administer any Plan or the PBGC shall
have notified the Company or any ERISA Affiliate that a Plan may become a subject of any such proceedings, (iii) the aggregate
“amount of unfunded benefit liabilities” (within the meaning of section 4001(a)(18) of ERISA) under all Plans, determined
in accordance with Title IV of ERISA, shall exceed an amount that could reasonably be expected to have a Material Adverse Effect,
(iv) the Company or any ERISA Affiliate shall have incurred or is reasonably expected to incur any liability pursuant to Title
I or IV of ERISA or the penalty or excise tax provisions of the Code relating to employee benefit plans, (v) the Company or
any ERISA Affiliate withdraws from any Multiemployer Plan, or (vi) the Company or any Subsidiary establishes or amends any
employee welfare benefit plan that provides post-employment welfare benefits in a manner that would increase the liability of the
Company or any Subsidiary thereunder; and any such event or events described in clauses (i) through (vi) above, either individually
or together with any other such event or events, could reasonably be expected to have a Material Adverse Effect. As used in this
Section 11(j), the terms “employee benefit plan” and “employee welfare benefit plan” shall
have the respective meanings assigned to such terms in section 3 of ERISA; or

 

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	Gas Natural Inc.	 	Note Purchase Agreement

 

(k)         except
as permitted by Section 9.7, any Subsidiary Guaranty shall cease to be in full force and effect, any Subsidiary Guarantor or any
Person acting on behalf of any Subsidiary Guarantor shall contest in any manner the validity, binding nature or enforceability
of any Subsidiary Guaranty, or the obligations of any Subsidiary Guarantor under any Subsidiary Guaranty are not or cease to be
legal, valid, binding and enforceable in accordance with the terms of such Subsidiary Guaranty.

 

Section
12.         Remedies on Default, Etc.

 

Section 12.1.         Acceleration.
(a) If an Event of Default with respect to the Company described in Section 11(g) or (h) (other than an Event of Default described
in clause (i) of Section 11(g) or described in clause (vi) of Section 11(g) by virtue of the fact that such clause encompasses
clause (i) of Section 11(g)) has occurred, all the Notes then outstanding shall automatically become immediately due and payable.

 

(b)         If
any other Event of Default has occurred and is continuing, any holder or holders of more than 50% in principal amount of the Notes
at the time outstanding may at any time at its or their option, by notice or notices to the Company, declare all the Notes then
outstanding to be immediately due and payable.

 

(c)         If
any Event of Default described in Section 11(a) or (b) has occurred and is continuing, any holder or holders of Notes at the
time outstanding affected by such Event of Default may at any time, at its or their option, by notice or notices to the Company,
declare all the Notes held by it or them to be immediately due and payable.

 

Upon any Notes becoming
due and payable under this Section 12.1, whether automatically or by declaration, such Notes will forthwith mature and the
entire unpaid principal amount of such Notes, plus (x) all accrued and unpaid interest thereon (including, but not limited to,
interest accrued thereon at the Default Rate) and (y) the Make-Whole Amount determined in respect of such principal amount (to
the full extent permitted by applicable law), shall all be immediately due and payable, in each and every case without presentment,
demand, protest or further notice, all of which are hereby waived. The Company acknowledges, and the parties hereto agree, that
each holder of a Note has the right to maintain its investment in the Notes free from repayment by the Company (except as herein
specifically provided for) and that the provision for payment of a Make-Whole Amount by the Company in the event that the Notes
are prepaid or are accelerated as a result of an Event of Default, is intended to provide compensation for the deprivation of such
right under such circumstances.

 

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	Gas Natural Inc.	 	Note Purchase Agreement

 

Section 12.2.         Other
Remedies. If any Default or Event of Default has occurred and is continuing, and irrespective of whether any Notes have become
or have been declared immediately due and payable under Section 12.1, the holder of any Note at the time outstanding may proceed
to protect and enforce the rights of such holder by an action at law, suit in equity or other appropriate proceeding, whether for
the specific performance of any agreement contained herein or in any Note or Subsidiary Guaranty, or for an injunction against
a violation of any of the terms hereof or thereof, or in aid of the exercise of any power granted hereby or thereby or by law or
otherwise.

 

Section 12.3.         Rescission.
At any time after any Notes have been declared due and payable pursuant to Section 12.1(b) or (c), the Required Holders, by written
notice to the Company, may rescind and annul any such declaration and its consequences if (a) the Company has paid all overdue
interest on the Notes, all principal of and Make-Whole Amount, if any, on any Notes that are due and payable and are unpaid other
than by reason of such declaration, and all interest on such overdue principal and Make-Whole Amount, if any, and (to the extent
permitted by applicable law) any overdue interest in respect of the Notes, at the Default Rate, (b) neither the Company nor
any other Person shall have paid any amounts which have become due solely by reason of such declaration, (c) all Events of
Default and Defaults, other than non-payment of amounts that have become due solely by reason of such declaration, have been cured
or have been waived pursuant to Section 17, and (d) no judgment or decree has been entered for the payment of any monies
due pursuant hereto or to the Notes. No rescission and annulment under this Section 12.3 will extend to or affect any subsequent
Event of Default or Default or impair any right consequent thereon.

 

Section 12.4.         No
Waivers or Election of Remedies, Expenses, Etc. No course of dealing and no delay on the part of any holder of any Note in
exercising any right, power or remedy shall operate as a waiver thereof or otherwise prejudice such holder’s rights, powers
or remedies. No right, power or remedy conferred by this Agreement, any Subsidiary Guaranty or any Note upon any holder thereof
shall be exclusive of any other right, power or remedy referred to herein or therein or now or hereafter available at law, in equity,
by statute or otherwise. Without limiting the obligations of the Company under Section 15, the Company will pay to the holder of
each Note on demand such further amount as shall be sufficient to cover all costs and expenses of such holder incurred in any enforcement
or collection under this Section 12, including, without limitation, reasonable attorneys’ fees, expenses and disbursements.

 

Section 13.         Registration;
Exchange; Substitution of Notes.

 

Section 13.1.         Registration
of Notes. The Company shall keep at its principal executive office a register for the registration and registration of transfers
of Notes. The name and address of each holder of one or more Notes, each transfer thereof and the name and address of each transferee
of one or more Notes shall be registered in such register. If any holder of one or more Notes is a nominee, then (a) the name
and address of the beneficial owner of such Note or Notes shall also be registered in such register as an owner and holder thereof
and (b) at any such beneficial owner’s option, either such beneficial owner or its nominee may execute any amendment,
waiver or consent pursuant to this Agreement. Prior to due presentment for registration of transfer, the Person(s) in whose name
any Note(s) shall be registered shall be deemed and treated as the owner and holder thereof for all purposes hereof, and the Company
shall not be affected by any notice or knowledge to the contrary. The Company shall give to any holder of a Note that is an Institutional
Investor promptly upon request therefor, a complete and correct copy of the names and addresses of all registered holders of Notes.

 

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	Gas Natural Inc.	 	Note Purchase Agreement

 

Section 13.2.         Transfer
and Exchange of Notes. Upon surrender of any Note to the Company at the address and to the attention of the designated officer
(all as specified in Section 18(iii)), for registration of transfer or exchange (and in the case of a surrender for registration
of transfer accompanied by a written instrument of transfer duly executed by the registered holder of such Note or such holder’s
attorney duly authorized in writing and accompanied by the relevant name, address and other information for notices of each transferee
of such Note or part thereof), within ten Business Days thereafter, the Company shall execute and deliver, at the Company’s
expense (except as provided below), one or more new Notes (as requested by the holder thereof) in exchange therefor, in an aggregate
principal amount equal to the unpaid principal amount of the surrendered Note. Each such new Note shall be payable to such Person
as such holder may request and shall be substantially in the form of Schedule 1. Each such new Note shall be dated and bear interest
from the date to which interest shall have been paid on the surrendered Note or dated the date of the surrendered Note if no interest
shall have been paid thereon. The Company may require payment of a sum sufficient to cover any stamp tax or governmental charge
imposed in respect of any such transfer of Notes. Notes shall not be transferred in denominations of less than $100,000, provided
that if necessary to enable the registration of transfer by a holder of its entire holding of Notes, one Note may be in a denomination
of less than $100,000. Any transferee, by its acceptance of a Note registered in its name (or the name of its nominee), shall be
deemed to have made the representation set forth in Section 6.2.

 

Section 13.3.         Replacement
of Notes. Upon receipt by the Company at the address and to the attention of the designated officer (all as specified in Section 18(iii))
of evidence reasonably satisfactory to it of the ownership of and the loss, theft, destruction or mutilation of any Note (which
evidence shall be, in the case of an Institutional Investor, notice from such Institutional Investor of such ownership and such
loss, theft, destruction or mutilation), and

 

(a)         in
the case of loss, theft or destruction, of indemnity reasonably satisfactory to it (provided that if the holder of such Note is,
or is a nominee for, the original Purchaser or another holder of a Note with a minimum net worth of at least $50,000,000 or a Qualified
Institutional Buyer, such Person’s own unsecured agreement of indemnity shall be deemed to be satisfactory), or

 

(b)         in
the case of mutilation, upon surrender and cancellation thereof,

 

within ten Business Days thereafter, the
Company at its own expense shall execute and deliver, in lieu thereof, a new Note, dated and bearing interest from the date to
which interest shall have been paid on such lost, stolen, destroyed or mutilated Note or dated the date of such lost, stolen, destroyed
or mutilated Note if no interest shall have been paid thereon.

 

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	Gas Natural Inc.	 	Note Purchase Agreement

 

Section 14.         Payments
on Notes.

 

Section 14.1.         Place
of Payment. Subject to Section 14.2, payments of principal, Make-Whole Amount, if any, and interest becoming due and payable
on the Notes shall be made in New York, New York at the principal office of Bank of America, N.A. in such jurisdiction. The Company
may at any time, by notice to each holder of a Note, change the place of payment of the Notes so long as such place of payment
shall be either the principal office of the Company in such jurisdiction or the principal office of a bank or trust company in
such jurisdiction.

 

Section 14.2.         Home
Office Payment. So long as the Purchaser or its nominee shall be the holder of any Note, and notwithstanding anything contained
in Section 14.1 or in such Note to the contrary, the Company will pay all sums becoming due on such Note for principal, Make-Whole
Amount, if any, interest and all other amounts becoming due hereunder by the method and at the address specified for such purpose
below the Purchaser’s name in Schedule B, or by such other method or at such other address as the Purchaser shall have from
time to time specified to the Company in writing for such purpose, without the presentation or surrender of such Note or the making
of any notation thereon, except that upon written request of the Company made concurrently with or reasonably promptly after payment
or prepayment in full of any Note, the Purchaser shall surrender such Note for cancellation, reasonably promptly after any such
request, to the Company at its principal executive office or at the place of payment most recently designated by the Company pursuant
to Section 14.1. Prior to any sale or other disposition of any Note held by the Purchaser or its nominee, the Purchaser will, at
its election, either endorse thereon the amount of principal paid thereon and the last date to which interest has been paid thereon
or surrender such Note to the Company in exchange for a new Note or Notes pursuant to Section 13.2. The Company will afford the
benefits of this Section 14.2 to any Institutional Investor that is the direct or indirect transferee of any Note purchased by
the Purchaser under this Agreement and that has made the same agreement relating to such Note as the Purchaser has made in this
Section 14.2.

 

Section 15.         Expenses,
Etc.

 

Section 15.1.         Transaction
Expenses. Whether or not the transactions contemplated hereby are consummated, the Company will pay all costs and expenses
(including reasonable attorneys’ fees of a special counsel and, if reasonably required by the Required Holders, local or
other counsel) incurred by the Purchaser and each other holder of a Note in connection with such transactions and in connection
with any amendments, waivers or consents under or in respect of this Agreement, any Subsidiary Guaranty or the Notes (whether or
not such amendment, waiver or consent becomes effective), including, without limitation: (a) the costs and expenses incurred in
enforcing or defending (or determining whether or how to enforce or defend) any rights under this Agreement, any Subsidiary Guaranty
or the Notes or in responding to any subpoena or other legal process or informal investigative demand issued in connection with
this Agreement, any Subsidiary Guaranty or the Notes, or by reason of being a holder of any Note, (b) the costs and expenses, including
financial advisors’ fees, incurred in connection with the insolvency or bankruptcy of the Company or any Subsidiary or in
connection with any work-out or restructuring of the transactions contemplated hereby and by the Notes and any Subsidiary Guaranty
and (c) the costs and expenses incurred in connection with the initial filing of this Agreement and all related documents and financial
information with the SVO provided, that such costs and expenses under this clause (c) shall not exceed $5,000. The
Company will pay, and will save the Purchaser and each other holder of a Note harmless from, (i) all claims in respect of any fees,
costs or expenses, if any, of brokers and finders (other than those, if any, retained by the Purchaser or other holder in connection
with its purchase of the Notes) and (ii) any and all wire transfer fees that any bank deducts from any payment under such Note
to such holder or otherwise charges to a holder of a Note with respect to a payment under such Note.

 

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	Gas Natural Inc.	 	Note Purchase Agreement

 

Section 15.2.         Survival.
The obligations of the Company under this Section 15 will survive the payment or transfer of any Note, the enforcement, amendment
or waiver of any provision of this Agreement, any Subsidiary Guaranty or the Notes, and the termination of this Agreement.

 

Section 16.         Survival
of Representations and Warranties; Entire Agreement.

 

All representations
and warranties contained herein shall survive the execution and delivery of this Agreement and the Notes, the purchase or transfer
by the Purchaser of any Note or portion thereof or interest therein and the payment of any Note, and may be relied upon by any
subsequent holder of a Note, regardless of any investigation made at any time by or on behalf of the Purchaser or any other holder
of a Note. All statements contained in any certificate or other instrument delivered by or on behalf of the Company pursuant to
this Agreement shall be deemed representations and warranties of the Company under this Agreement. Subject to the preceding sentence,
this Agreement, the Notes and any Subsidiary Guaranties embody the entire agreement and understanding between the Purchaser and
the Company and supersede all prior agreements and understandings relating to the subject matter hereof.

 

Section 17.         Amendment
and Waiver.

 

Section 17.1.         Requirements.
This Agreement and the Notes may be amended, and the observance of any term hereof or of the Notes may be waived (either retroactively
or prospectively), only with the written consent of the Company and the Required Holders, except that:

 

(a)         no
amendment or waiver of any of Sections 1, 2, 3, 4, 5, 6 or 21 hereof, or any defined term (as it is used therein), will be effective
as to the Purchaser or any holder unless consented to by the Purchaser or any holder in writing; and

 

(b)         
no amendment or waiver may, without the written consent of the Purchaser and the holder of each Note at the time outstanding, (i)
subject to Section 12 relating to acceleration or rescission, change the amount or time of any prepayment or payment of principal
of, or reduce the rate or change the time of payment or method of computation of (x) interest on the Notes or (y) the Make-Whole
Amount, (ii) change the percentage of the principal amount of the Notes the holders of which are required to consent to any amendment
or waiver, or (iii) amend any of Sections 8 (except as set forth in the second sentence of Section 8.2), 11(a), 11(b),
12, 17 or 20.

 

    	 	-37-	 

     

    

 

	Gas Natural Inc.	 	Note Purchase Agreement

 

Section 17.2.         Solicitation
of Holders of Notes.

 

(a)         Solicitation.
 The Company will provide each holder of a Note with sufficient information, sufficiently far in advance of the date a decision
is required, to enable such holder to make an informed and considered decision with respect to any proposed amendment, waiver or
consent in respect of any of the provisions hereof or of the Notes or any Subsidiary Guaranty. The Company will deliver executed
or true and correct copies of each amendment, waiver or consent effected pursuant to this Section 17 or any Subsidiary Guaranty
to each holder of a Note promptly following the date on which it is executed and delivered by, or receives the consent or approval
of, the requisite holders of Notes.

 

(b)         Payment.
 The Company will not directly or indirectly pay or cause to be paid any remuneration, whether by way of supplemental or additional
interest, fee or otherwise, or grant any security or provide other credit support, to any holder of a Note as consideration for
or as an inducement to the entering into by such holder of any waiver or amendment of any of the terms and provisions hereof or
of any Subsidiary Guaranty or any Note unless such remuneration is concurrently paid, or security is concurrently granted or other
credit support concurrently provided, on the same terms, ratably to each holder of a Note even if such holder did not consent to
such waiver or amendment.

 

(c)         Consent
in Contemplation of Transfer. Any consent given pursuant to this Section 17 or any Subsidiary Guaranty by a holder of
a Note that has transferred or has agreed to transfer its Note to the Company, any Subsidiary or any Affiliate of the Company in
connection with such consent shall be void and of no force or effect except solely as to such holder, and any amendments effected
or waivers granted or to be effected or granted that would not have been or would not be so effected or granted but for such consent
(and the consents of all other holders of Notes that were acquired under the same or similar conditions) shall be void and of no
force or effect except solely as to such holder.

 

Section 17.3.         Binding
Effect, Etc. Any amendment or waiver consented to as provided in this Section 17 or any Subsidiary Guaranty applies
equally to all holders of Notes and is binding upon them and upon each future holder of any Note and upon the Company without regard
to whether such Note has been marked to indicate such amendment or waiver. No such amendment or waiver will extend to or affect
any obligation, covenant, agreement, Default or Event of Default not expressly amended or waived or impair any right consequent
thereon. No course of dealing between the Company and any holder of a Note and no delay in exercising any rights hereunder or under
any Note or Subsidiary Guaranty shall operate as a waiver of any rights of any holder of such Note.

 

Section 17.4.         Notes
Held by Company, Etc.  Solely for the purpose of determining whether the holders of the requisite percentage of the
aggregate principal amount of Notes then outstanding approved or consented to any amendment, waiver or consent to be given under
this Agreement, any Subsidiary Guaranty or the Notes, or have directed the taking of any action provided herein or in any Subsidiary
Guaranty or the Notes to be taken upon the direction of the holders of a specified percentage of the aggregate principal amount
of Notes then outstanding, Notes directly or indirectly owned by the Company or any of its Affiliates shall be deemed not to be
outstanding.

 

    	 	-38-	 

     

    

 

	Gas Natural Inc.	 	Note Purchase Agreement

 

Section 18.         Notices.

 

Except to the extent
otherwise provided in Section 7.4, all notices and communications provided for hereunder shall be in writing and sent (a) by telecopy
if the sender on the same day sends a confirming copy of such notice by an internationally recognized overnight delivery service
(charges prepaid), or (b) by registered or certified mail with return receipt requested (postage prepaid), or (c) by an internationally
recognized overnight delivery service (with charges prepaid). Any such notice must be sent:

 

(i)         if
to the Purchaser or its nominee, to the Purchaser or nominee at the address specified for such communications in Schedule B, or
at such other address as the Purchaser or nominee shall have specified to the Company in writing,

 

(ii)         if
to any other holder of any Note, to such holder at such address as such other holder shall have specified to the Company in writing,
or

 

(iii)         if
to the Company, to the Company at its address set forth at the beginning hereof to the attention of Gregory J. Osborne, President
and CEO and James Sprague, Chief Financial Officer, or at such other address as the Company shall have specified to the holder
of each Note in writing.

 

Notices under this Section 18 will be deemed
given only when actually received.

 

Section 19.         Reproduction
of Documents.

 

This Agreement and
all documents relating thereto, including, without limitation, (a) consents, waivers and modifications that may hereafter be executed,
(b) documents received by the Purchaser at the Closing (except the Notes themselves), and (c) financial statements, certificates
and other information previously or hereafter furnished to the Purchaser or any holder, may be reproduced by the Purchaser or such
holder by any photographic, photostatic, electronic, digital, or other similar process and the Purchaser may destroy any original
document so reproduced. The Company agrees and stipulates that, to the extent permitted by applicable law, any such reproduction
shall be admissible in evidence as the original itself in any judicial or administrative proceeding (whether or not the original
is in existence and whether or not such reproduction was made by the Purchaser in the regular course of business) and any enlargement,
facsimile or further reproduction of such reproduction shall likewise be admissible in evidence. This Section 19 shall not prohibit
the Company or any other holder of Notes from contesting any such reproduction to the same extent that it could contest the original,
or from introducing evidence to demonstrate the inaccuracy of any such reproduction.

 

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	Gas Natural Inc.	 	Note Purchase Agreement

 

Section 20.         Confidential
Information.

 

For the purposes of
this Section 20, “Confidential Information” means information delivered to the Purchaser or any holder by or
on behalf of the Company or any Subsidiary in connection with the transactions contemplated by or otherwise pursuant to this Agreement
that is proprietary in nature and that was clearly marked or labeled or otherwise adequately identified when received by the Purchaser
as being confidential information of the Company or such Subsidiary, provided that such term does not include information that
(a) was publicly known or otherwise known to the Purchaser prior to the time of such disclosure, (b) subsequently becomes publicly
known through no act or omission by the Purchaser or any Person acting on the Purchaser’s behalf, (c) otherwise becomes known
to the Purchaser other than through disclosure by the Company or any Subsidiary or (d) constitutes financial statements delivered
to the Purchaser under Section 7.1 that are otherwise publicly available. The Purchaser and each holder will maintain the confidentiality
of such Confidential Information in accordance with procedures adopted by the Purchaser in good faith to protect confidential information
of third parties delivered to the Purchaser, provided that the Purchaser may deliver or disclose Confidential Information to (i) its
directors, officers, employees, agents, attorneys, trustees and affiliates (to the extent such disclosure reasonably relates to
the administration of the investment represented by its Notes), (ii) its auditors, financial advisors and other professional advisors
who agree to hold confidential the Confidential Information substantially in accordance with this Section 20, (iii) any other holder
of any Note, (iv) any Institutional Investor to which it sells or offers to sell such Note or any part thereof or any participation
therein (if such Person has agreed in writing prior to its receipt of such Confidential Information to be bound by this Section
20), (v) any Person from which it offers to purchase any Security of the Company (if such Person has agreed in writing prior to
its receipt of such Confidential Information to be bound by this Section 20), (vi) any federal or state regulatory authority having
jurisdiction over the Purchaser, (vii) the NAIC or the SVO or, in each case, any similar organization, or any nationally recognized
rating agency that requires access to information about the Purchaser’s investment portfolio, or (viii) any other Person
to which such delivery or disclosure may be necessary or appropriate (w) to effect compliance with any law, rule, regulation or
order applicable to the Purchaser, (x) in response to any subpoena or other legal process, (y) in connection with any litigation
to which the Purchaser is a party or (z) if an Event of Default has occurred and is continuing, to the extent the Purchaser may
reasonably determine such delivery and disclosure to be necessary or appropriate in the enforcement or for the protection of the
rights and remedies under the Purchaser’s Notes, this Agreement or any Subsidiary Guaranty. Each holder of a Note, by its
acceptance of a Note, will be deemed to have agreed to be bound by and to be entitled to the benefits of this Section 20 as though
it were a party to this Agreement. On reasonable request by the Company in connection with the delivery to any holder of a Note
of information required to be delivered to such holder under this Agreement or requested by such holder (other than a holder that
is a party to this Agreement or its nominee), such holder will enter into an agreement with the Company embodying this Section 20.

 

    	 	-40-	 

     

    

 

	Gas Natural Inc.	 	Note Purchase Agreement

 

In the event that as
a condition to receiving access to information relating to the Company or its Subsidiaries in connection with the transactions
contemplated by or otherwise pursuant to this Agreement, the Purchaser or holder of a Note is required to agree to a confidentiality
undertaking (whether through IntraLinks, another secure website, a secure virtual workspace or otherwise) which is different from
this Section 20, this Section 20 shall not be amended thereby and, as between the Purchaser or such holder and the Company,
this Section 20 shall supersede any such other confidentiality undertaking.

 

Section 21.         Substitution
of Purchaser.

 

The Purchaser shall
have the right to substitute any one of its Affiliates (a “Substitute Purchaser”) as the purchaser of the Notes
that it has agreed to purchase hereunder, by written notice to the Company, which notice shall be signed by both the Purchaser
and such Substitute Purchaser, shall contain such Substitute Purchaser’s agreement to be bound by this Agreement and shall
contain a confirmation by such Substitute Purchaser of the accuracy with respect to it of the representations set forth in Section
6. Upon receipt of such notice, any reference to the Purchaser in this Agreement (other than in this Section 21), shall be
deemed to refer to such Substitute Purchaser in lieu of the original Purchaser. In the event that such Substitute Purchaser is
so substituted as the Purchaser hereunder and such Substitute Purchaser thereafter transfers to the original Purchaser all of the
Notes then held by such Substitute Purchaser, upon receipt by the Company of notice of such transfer, any reference to such Substitute
Purchaser as a “Purchaser” in this Agreement (other than in this Section 21), shall no longer be deemed to refer to
such Substitute Purchaser, but shall refer to the original Purchaser, and the original Purchaser shall again have all the rights
of an original holder of the Notes under this Agreement.

 

Section 22.         Miscellaneous.

 

Section 22.1.         Successors
and Assigns. All covenants and other agreements contained in this Agreement by or on behalf of any of the parties hereto
bind and inure to the benefit of their respective successors and assigns (including, without limitation, any subsequent holder
of a Note) whether so expressed or not.

 

Section 22.2.         Accounting
Terms. All accounting terms used herein which are not expressly defined in this Agreement have the meanings respectively
given to them in accordance with GAAP. Except as otherwise specifically provided herein, (i) all computations made pursuant
to this Agreement shall be made in accordance with GAAP, and (ii) all financial statements shall be prepared in accordance
with GAAP. For purposes of determining compliance with this Agreement (including, without limitation, Section 9, Section 10 and
the definition of “Indebtedness”), any election by the Company to measure any financial liability using fair value
(as permitted by Financial Accounting Standards Board Accounting Standards Codification Topic No. 825-10-25 – Fair Value
Option, International Accounting Standard 39 – Financial Instruments: Recognition and Measurement or any similar
accounting standard) shall be disregarded and such determination shall be made as if such election had not been made.

 

    	 	-41-	 

     

    

 

	Gas Natural Inc.	 	Note Purchase Agreement

 

If at any time any
change in GAAP would affect the computation of any financial ratio or requirement set forth in this Agreement, and either the Company
or the Required Holders shall so request, the Company and the holders shall negotiate in good faith to amend such ratio or requirement
to preserve the original intent thereof in light of such change in GAAP; provided that, until so amended, (a) such
ratio or requirement shall continue to be computed in accordance with GAAP prior to such change therein, and (b) the Company
shall include relevant reconciliations in reasonable detail between calculations of such ratio or requirement made before and after
giving effect to such change in GAAP in each certificate of a Senior Financial Officer delivered pursuant to Section 7.2 during
such period, and shall provide such financial statements and other documents required under this Agreement or as reasonably requested
by the holders. Without limiting the foregoing, leases shall continue to be classified and accounted for on a basis consistent
with the GAAP treatment of leases on the date of the Closing for all purposes of this Agreement, notwithstanding any change in
GAAP relating thereto, unless the parties hereto shall enter into a mutually acceptable amendment addressing such changes, as provided
for above.

 

All references herein
to consolidated financial statements of the Company and its Subsidiaries or to the determination of any amount for the Company
and its Subsidiaries on a consolidated basis or any similar reference shall, in each case, be deemed to include each variable interest
entity that the Company is required to consolidated pursuant to GAAP as if such variable interest entity were a Subsidiary as defined
herein.

 

Section 22.3.         Severability.
Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition
or unenforceability in any jurisdiction shall (to the full extent permitted by law) not invalidate or render unenforceable such
provision in any other jurisdiction.

 

Section 22.4.         Construction,
Etc. Each covenant contained herein shall be construed (absent express provision to the contrary) as being independent
of each other covenant contained herein, so that compliance with any one covenant shall not (absent such an express contrary provision)
be deemed to excuse compliance with any other covenant. Where any provision herein refers to action to be taken by any Person,
or which such Person is prohibited from taking, such provision shall be applicable whether such action is taken directly or indirectly
by such Person.

 

Section 22.5.         Counterparts.
This Agreement may be executed in any number of counterparts, each of which shall be an original but all of which together shall
constitute one instrument. Each counterpart may consist of a number of copies hereof, each signed by less than all, but together
signed by all, of the parties hereto.

 

Section 22.6.         Governing
Law. This Agreement shall be construed and enforced in accordance with, and the rights of the parties shall be governed
by, the law of the State of New York excluding choice-of-law principles of the law of such State that would permit the application
of the laws of a jurisdiction other than such State.

 

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	Gas Natural Inc.	 	Note Purchase Agreement

  

Section 22.7.         Jurisdiction
and Process; Waiver of Jury Trial. (a) The Company irrevocably submits to the non-exclusive jurisdiction of any
New York State or federal court sitting in the Borough of Manhattan, The City of New York, over any suit, action or proceeding
arising out of or relating to this Agreement or the Notes. To the fullest extent permitted by applicable law, the Company irrevocably
waives and agrees not to assert, by way of motion, as a defense or otherwise, any claim that it is not subject to the jurisdiction
of any such court, any objection that it may now or hereafter have to the laying of the venue of any such suit, action or proceeding
brought in any such court and any claim that any such suit, action or proceeding brought in any such court has been brought in
an inconvenient forum.

 

(b)         The
Company consents to process being served by or on behalf of any holder of Notes in any suit, action or proceeding of the nature
referred to in Section 22.7(a) by mailing a copy thereof by registered or certified mail (or any substantially similar form
of mail), postage prepaid, return receipt requested, to it at its address specified in Section 18 or at such other address
of which such holder shall then have been notified pursuant to said Section. The Company agrees that such service upon receipt
(i) shall be deemed in every respect effective service of process upon it in any such suit, action or proceeding and (ii) shall,
to the fullest extent permitted by applicable law, be taken and held to be valid personal service upon and personal delivery to
it. Notices hereunder shall be conclusively presumed received as evidenced by a delivery receipt furnished by the United States
Postal Service or any reputable commercial delivery service.

 

(c)         Nothing
in this Section 22.7 shall affect the right of any holder of a Note to serve process in any manner permitted by law, or limit
any right that the holders of any of the Notes may have to bring proceedings against the Company in the courts of any appropriate
jurisdiction or to enforce in any lawful manner a judgment obtained in one jurisdiction in any other jurisdiction.

 

(d)         The
parties hereto hereby waive trial by jury in any action brought on or with respect to this Agreement, the Notes or any other document
executed in connection herewith or therewith.

 

* * * * *

 

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	Gas Natural Inc.	 	Note Purchase Agreement

 

If you are in agreement
with the foregoing, please sign the form of agreement on a counterpart of this Agreement and return it to the Company, whereupon
this Agreement shall become a binding agreement between you and the Company.

 

	 	Very truly yours,
	 	 
	 	Gas Natural Inc.
	 	 
	 	By	/s/ Gregory J. Osborne
	 	 	Name:  	Gregory J. Osborne
	 	 	Title:	President & Chief Executive Officer

 

     

     

    

 

	Gas Natural Inc.	 	Note Purchase Agreement

 

This Agreement is hereby

accepted and agreed to as

of the date hereof.

 

	 	Teachers Insurance and Annuity

                    Association of America

	 	 
	 	By	/s/ Joseph R. Cantey, Jr.
	 	 	Name:  	Joseph R. Cantey, Jr.
	 	 	Title:	Senior Director

 

     

     

    

 

	Gas Natural Inc.	 	Note Purchase Agreement

 

Defined Terms

 

As used herein, the
following terms have the respective meanings set forth below or set forth in the Section hereof following such term:

 

“Additional
Subsidiary Guaranty” is defined in Section 9.7(a).

 

“Affiliate”
means, at any time, and with respect to any Person, any other Person that at such time directly or indirectly through one or
more intermediaries Controls, or is Controlled by, or is under common Control with, such first Person, and, with respect to the
Company, shall include any Person beneficially owning or holding, directly or indirectly, 10% or more of any class of voting or
equity interests of the Company or any Subsidiary or any Person of which the Company and its Subsidiaries beneficially own or hold,
in the aggregate, directly or indirectly, 10% or more of any class of voting or equity interests. As used in this definition, “Control”
means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a
Person, whether through the ownership of voting securities, by contract or otherwise. Unless the context otherwise clearly requires,
any reference to an “Affiliate” is a reference to an Affiliate of the Company.

 

“Agreement”
means this Agreement, including all Schedules and Exhibits attached to this Agreement, as it may be amended, restated, supplemented
or otherwise modified from time to time.

 

“Anti-Corruption
Laws” means any law or regulation in a U.S. or any non-U.S. jurisdiction regarding bribery or any other corrupt activity,
including the U.S. Foreign Corrupt Practices Act and the U.K. Bribery Act 2010.

 

“Anti-Money
Laundering Laws” means any law or regulation in a U.S. or any non-U.S. jurisdiction regarding money laundering, drug
trafficking, terrorist-related activities or other money laundering predicate crimes, including the Currency and Foreign Transactions
Reporting Act of 1970 (otherwise known as the Bank Secrecy Act) and the USA PATRIOT Act.

 

“Approvals
and Consents” means, collectively, the approvals and consents set forth on Schedule 5.7.

 

“Attributable
Indebtedness” means, on any date, (a) in respect of any capital lease of any Person, the capitalized amount thereof
that would appear on a balance sheet of such Person prepared as of such date in accordance with GAAP, and (b) in respect of
any Synthetic Lease Obligation, the capitalized amount of the remaining lease payments under the relevant lease that would appear
on a balance sheet of such Person prepared as of such date in accordance with GAAP if such lease were accounted for as a capital
lease.

 

“Bison Infrastructure
Transaction” means that certain transaction in which the Company will merge with FR Bison Merger Sub, Inc., an Ohio corporation
(with the Company as the surviving entity) and become the wholly-owned Subsidiary of FR Bison Holdings, Inc. a Delaware corporation
as described in the Company’s Form 8-K as filed October 11, 2016.

 

Exhibit
2.2

(to Note Purchase Agreement)

 

     

     

    

 

	Gas Natural Inc.	 	Note Purchase Agreement

 

“Blocked Person”
means (a) a Person whose name appears on the list of Specially Designated Nationals and Blocked Persons published by OFAC,
(b) a Person, entity, organization, country or regime that is blocked or a target of sanctions that have been imposed under
U.S. Economic Sanctions Laws or (c) a Person that is an agent, department or instrumentality of, or is otherwise beneficially
owned by, controlled by or acting on behalf of, directly or indirectly, any Person, entity, organization, country or regime described
in clause (a) or (b).

 

“Business
Day” means (a) for the purposes of Section 8.6 only, any day other than a Saturday, a Sunday or a day on which commercial
banks in New York City are required or authorized to be closed, and (b) for the purposes of any other provision of this Agreement,
any day other than a Saturday, a Sunday or a day on which commercial banks in New York, New York or Cleveland, Ohio are
required or authorized to be closed.

 

“Capital”
means, as of any date of determination thereof, without duplication, the sum of (i) Consolidated Net Worth plus (ii) all
Total Debt.

 

“Capital Lease”
means, at any time, a lease with respect to which the lessee is required concurrently to recognize the acquisition of an asset
and the incurrence of a liability in accordance with GAAP.

 

“Closing”
is defined in Section 3.

 

“Code”
means the Internal Revenue Code of 1986, as amended from time to time, and the rules and regulations promulgated thereunder
from time to time.

 

“Company”
means Gas Natural Inc., an Ohio corporation or any successor that becomes such in the manner prescribed in Section 10.2.

 

“Confidential
Information” is defined in Section 20.

 

“Consolidated
Net Income” means, with respect to the Company and its Subsidiaries for any period, the net income (or loss) of the Company
and its Subsidiaries for such period, excluding any gains from Dispositions, any extraordinary gains and any gains from discontinued
operations determined on a consolidated basis in accordance with GAAP.

 

“Consolidated
Net Worth” means, as of any time the same is to be determined, the total shareholders’ equity (including capital
stock, additional paid-in-capital and retained earnings after deducting treasury stock, but excluding (to the extent otherwise
included in calculating shareholders’ equity), minority interests in Subsidiaries) which would appear on the consolidated
balance sheet of the Company determined on a consolidated basis in accordance with GAAP.

 

“Consolidated
Total Assets” means the total assets of the Company and its Subsidiaries as shown in the most recent consolidated financial
statements published by the Company and its Subsidiaries determined on a consolidated basis in accordance with GAAP.

 

    	 	-2-	 

     

    

 

	Gas Natural Inc.	 	Note Purchase Agreement

 

“Controlled
Entity” means (a) any of the Subsidiaries of the Company and any of their or the Company’s respective Controlled
Affiliates and (b) if the Company has a parent company, such parent company and its Controlled Affiliates.

 

“Default”
means an event or condition the occurrence or existence of which would, with the lapse of time or the giving of notice or both,
become an Event of Default.

 

“Default Rate”
means that rate of interest that is the greater of (i) 2.0% per annum above the rate of interest stated in clause (a) of the
first paragraph of the Notes or (ii) 2.0% over the rate of interest publicly announced by Bank of America, N.A. in New York,
New York as its “base” or “prime” rate.

 

“Disclosure
Documents” is defined in Section 5.3.

 

“Disposition”
means the sale, transfer, license, lease or other disposition (including any sale and leaseback transaction) of any property by
any Person, including any sale, assignment, transfer or other disposal, with or without recourse, of any notes or accounts receivable
or any rights and claims associated therewith.

 

“EBIT”
means, for any period, Consolidated Net Income for such period plus, to the extent deducted in determining such Consolidated Net
Income (without duplication): (i) Interest Expense for such period, (ii) income tax expense for such period, and (iii) non-recurring
expenses for such period, provided, however, that the aggregate amount of such non-recurring expenses that may be added
to EBIT in any fiscal year may not exceed the Non-recurring Expense Cap.

 

“EDGAR”
means the SEC’s Electronic Data Gathering, Analysis and Retrieval System or any successor SEC electronic filing system for
such purposes.

 

“Environmental
Laws” means any and all federal, state, local, and foreign statutes, laws, regulations, ordinances, rules, judgments,
orders, decrees, permits, concessions, grants, franchises, licenses, agreements or governmental restrictions relating to pollution
and the protection of the environment or the release of any materials into the environment, including but not limited to those
related to Hazardous Materials.

 

“Equity Interests”
means, with respect to any Person, all of the shares of capital stock of (or other ownership or profit interests in) such Person,
all of the warrants, options or other rights for the purchase or acquisition from such Person of shares of capital stock of (or
other ownership or profit interests in) such Person, all of the securities convertible into or exchangeable for shares of capital
stock of (or other ownership or profit interests in) such Person or warrants, rights or options for the purchase or acquisition
from such Person of such shares (or such other interests), and all of the other ownership or profit interests in such Person (including
partnership, member or trust interests therein), whether voting or nonvoting, and whether or not such shares, warrants, options,
rights or other interests are outstanding on any date of determination.

 

    	 	-3-	 

     

    

 

	Gas Natural Inc.	 	Note Purchase Agreement

 

“ERISA”
means the Employee Retirement Income Security Act of 1974, as amended from time to time, and the rules and regulations promulgated
thereunder from time to time in effect.

 

“ERISA Affiliate”
means any trade or business (whether or not incorporated) that is treated as a single employer together with the Company under
section 414 of the Code.

 

“Event of
Default” is defined in Section 11.

 

“Existing
Debt” means:

 

(a) the Sun Life Debt;

 

(b) the senior unsecured
notes due June 29, 2017 (outstanding balance as of 10/10/2016—$8,500,000), issued pursuant to a Note Purchase Agreement,
dated June 29, 2007, between Energy West, Incorporated and various purchasers (Allstate/CUNA), as amended from time to time ;

 

(c) the term loan due
April 1, 2017 (outstanding balance as of 10/10/2016—$8,000,000) from Bank of America, N.A., as agent, to Energy West, Incorporated,
pursuant to Amended and Restated Credit Agreement dated September 20, 2012, as amended from time to time

 

(d) the line of Credit
due April 1, 2017 (outstanding balance as of 10/10/2016—$18,550,000), pursuant to a Credit Facility, as amended from time
to time, from Bank of America, N.A., as agent, to Energy West, Incorporated; and

 

(e) the loan Agreement
and Note, in the original principal amount of $4 million, dated as of April 15, 2016, by and among NIL Funding Corporation and
Gas Natural Inc. (outstanding balance as of 10/10/2016—$4,000,000).

 

“Form 10-K”
is defined in Section 7.1(b).

 

“Form 10-Q”
is defined in Section 7.1(a).

 

“GAAP”
means generally accepted accounting principles as in effect from time to time in the United States of America.

 

“Governmental
Authority” means

 

(a)         the
government of

 

(i)         the
United States of America or any state or other political subdivision thereof, or

 

    	 	-4-	 

     

    

 

	Gas Natural Inc.	 	Note Purchase Agreement

 

(ii)         any
other jurisdiction in which the Company or any Subsidiary conducts all or any part of its business, or which asserts jurisdiction
over any properties of the Company or any Subsidiary, or

 

(b)         any
entity exercising executive, legislative, judicial, regulatory or administrative functions of, or pertaining to, any such government.

 

“Governmental
Official” means any governmental official or employee, employee of any government-owned or government-controlled entity,
political party, any official of a political party, candidate for political office, official of any public international organization
or anyone else acting in an official capacity.

 

“Guaranty”
means, with respect to any Person, any obligation (except the endorsement in the ordinary course of business of negotiable instruments
for deposit or collection) of such Person guaranteeing or in effect guaranteeing any indebtedness, dividend or other obligation
of any other Person in any manner, whether directly or indirectly, including (without limitation) obligations incurred through
an agreement, contingent or otherwise, by such Person:

 

(a)         to
purchase such indebtedness or obligation or any property constituting security therefor;

 

(b)         to
advance or supply funds (i) for the purchase or payment of such indebtedness or obligation, or (ii) to maintain any working
capital or other balance sheet condition or any income statement condition of any other Person or otherwise to advance or make
available funds for the purchase or payment of such indebtedness or obligation;

 

(c)         to
lease properties or to purchase properties or services primarily for the purpose of assuring the owner of such indebtedness or
obligation of the ability of any other Person to make payment of the indebtedness or obligation; or

 

(d)         otherwise
to assure the owner of such indebtedness or obligation against loss in respect thereof.

 

In any computation of the indebtedness
or other liabilities of the obligor under any Guaranty, the indebtedness or other obligations that are the subject of such Guaranty
shall be assumed to be direct obligations of such obligor.

 

“Hazardous
Materials” means any and all pollutants, toxic or hazardous wastes or other substances that might pose a hazard to health
and safety, the removal of which may be required or the generation, manufacture, refining, production, processing, treatment, storage,
handling, transportation, transfer, use, disposal, release, discharge, spillage, seepage or filtration of which is or shall be
restricted, prohibited or penalized by any applicable law including, but not limited to, asbestos, urea formaldehyde foam insulation,
polychlorinated biphenyls, petroleum, petroleum products, lead based paint, radon gas or similar restricted, prohibited or penalized
substances.

 

    	 	-5-	 

     

    

 

	Gas Natural Inc.	 	Note Purchase Agreement

 

“holder”
means, with respect to any Note, the Person in whose name such Note is registered in the register maintained by the Company pursuant
to Section 13.1, provided, however, that if such Person is a nominee, then for the purposes of Sections 7, 12, 17.2
and 18 and any related definitions in this Schedule A, “holder” shall mean the beneficial owner of such Note whose
name and address appears in such register.

 

“Indebtedness”
with respect to any Person means, at any time, without duplication, all of the following, whether or not included as indebtedness
or liabilities in accordance with GAAP:

 

(a)         all
obligations of such Person for borrowed money and all obligations of such Persons evidenced by bonds, debentures, notes, loan agreements
or other similar instruments;

 

(b)         all
direct or contingent obligations of such Person arising under letters of credit (including standby and commercial), bankers’
acceptances, bank guaranties, surety bonds and similar instruments;

 

(c)         net
obligations of such Person under any Swap Contract;

 

(d)         all
obligations of such Person to pay the deferred purchase price of property or services (other than trade accounts payable in the
ordinary course of business and, in each case, not past due for more than 90 days after the date on which such trade account payable
was created);

 

(e)         indebtedness
(excluding prepaid interest thereon) secured by a Lien on property owned or being purchased by such Person (including indebtedness
arising under conditional sales or other title retention agreements), whether or not such indebtedness shall have been assumed
by such Person or limited in recourse;

 

(f)         capital
leases and Synthetic Lease Obligations;

 

(g)         all
obligations of such Person to purchase, redeem, retire, defease or otherwise make any payments in respect of any Equity Interest
in such Person or any other Person, valued, in the case of a redeemable preferred interest, at the greater of its voluntary or
involuntary liquidation preference plus accrued and unpaid dividends; and

 

(h)         all
Guaranties of such Person in respect of any of the foregoing.

 

For all purposes hereof,
the Indebtedness of any Person shall include the Indebtedness of any partnership or joint venture (other than a joint venture that
is itself a corporation or limited liability company) in which such Person is a general partners or a joint venturer, unless such
Indebtedness is expressly made non-recourse to such Person. The amounts of any net obligation under any Swap Contract on any date
shall be deemed to be the Swap Termination Value thereof as of such date. The amount of any capital lease or Synthetic Lease Obligation
as of any date shall be deemed to be the amount of Attributable Indebtedness in respect thereof as of such date.

 

    	 	-6-	 

     

    

 

	Gas Natural Inc.	 	Note Purchase Agreement

 

“INHAM Exemption”
is defined in Section 6.2(e).

 

“Initial Subsidiary
Guarantor” means each Subsidiary that has executed and delivered an Initial Subsidiary Guaranty.

 

“Initial Subsidiary
Guaranty” is defined in Section 2.2(a).

 

“Institutional
Investor” means (a) the Purchaser, (b) any holder of a Note holding (together with one or more of its affiliates)
more than 5% of the aggregate principal amount of the Notes then outstanding, (c) any bank, trust company, savings and loan
association or other financial institution, any pension plan, any investment company, any insurance company, any broker or dealer,
or any other similar financial institution or entity, regardless of legal form, and (d) any Related Fund of any holder of
any Note.

 

“Interest
Coverage Ratio” means, for any period of four consecutive fiscal quarters, the ratio of EBIT for such period to Interest
Expense for such period.

 

“Interest
Expense” means, for any period, all expense of the Company or any of its Subsidiaries for such period classified as interest
expense for such period, including capitalized interest and interest under “synthetic” leases, in accordance with GAAP.

 

“Joinder Agreement”
is defined in Section 9.7(a).

 

“Lien”
means, with respect to any Person, any mortgage, lien, pledge, charge, security interest or other encumbrance, or any interest
or title of any vendor, lessor, lender or other secured party to or of such Person under any conditional sale or other title retention
agreement or Capital Lease, upon or with respect to any property or asset of such Person (including in the case of stock, stockholder
agreements, voting trust agreements and all similar arrangements).

 

“Make-Whole
Amount” is defined in Section 8.6.

 

“Material”
means material in relation to the business, operations, affairs, financial condition, assets, properties, or prospects of the Company
and its Subsidiaries taken as a whole.

 

“Material
Adverse Effect” means a material adverse effect on (a) the business, operations, affairs, financial condition, assets
or properties of the Company and its Subsidiaries taken as a whole, (b) the ability of the Company to perform its obligations
under this Agreement and the Notes, (c) the ability of any Subsidiary Guarantor to perform its obligations under its Subsidiary
Guaranty, or (d) the validity or enforceability of this Agreement, the Notes or any Subsidiary Guaranty.

 

“Material
Credit Facility” means, as to the Company and its Subsidiaries,

 

(a)         the
Credit Agreement dated as of October 19, 2016 among the Company, Bank of America, N.A., as Administrative Agent and L/C issuer,
and the other lenders party thereto, including any renewals, extensions, amendments, supplements, restatements, replacements or
refinancing thereof;

 

    	 	-7-	 

     

    

 

	Gas Natural Inc.	 	Note Purchase Agreement

 

(b)         any
other agreement(s) creating or evidencing indebtedness for borrowed money entered into on or after the date of Closing by the Company
or any Subsidiary, other than any intercompany note or notes among the Company and its Subsidiaries. or in respect of which the
Company or any Subsidiary is an obligor or otherwise provides a guarantee or other credit support (“Credit Facility”),
in a principal amount outstanding or available for borrowing equal to or greater than $5,000,000 (or the equivalent of such amount
in the relevant currency of payment, determined as of the date of the closing of such facility based on the exchange rate of such
other currency); and if no Credit Facility or Credit Facilities equal or exceed such amounts, then the largest Credit Facility
shall be deemed to be a Material Credit Facility; and

 

(c)         any
private placement document pursuant to which the Company or any Subsidiary has issued senior notes, either now existing or existing
in the future. 

 

“Maturity
Date” is defined in the first paragraph of each Note.

 

“Multiemployer
Plan” means any Plan that is a “multiemployer plan” (as such term is defined in section 4001(a)(3) of ERISA).

 

“NAIC”
means the National Association of Insurance Commissioners or any successor thereto.

 

“Non-recurring
Expense Cap” means (i) for the Company’s 2016 fiscal year, $4,500,000, and (ii) for each other fiscal year, $1,000,000.

 

“Notes”
is defined in Section 1.

 

“OFAC”
means the Office of Foreign Assets Control of the United States Department of the Treasury.

 

“OFAC Sanctions
Program” means any economic or trade sanction that OFAC is responsible for administering and enforcing. A list of OFAC
Sanctions Programs may be found at http://www.treasury.gov/resource-center/sanctions/Programs/Pages/Programs.aspx.

 

“Officer’s
Certificate” means a certificate of a Senior Financial Officer or of any other officer of the Company whose responsibilities
extend to the subject matter of such certificate.

 

“PBGC”
means the Pension Benefit Guaranty Corporation referred to and defined in ERISA or any successor thereto.

 

    	 	-8-	 

     

    

 

	Gas Natural Inc.	 	Note Purchase Agreement

 

“Person”
means an individual, partnership, corporation, limited liability company, association, trust, unincorporated organization, business
entity or Governmental Authority.

 

“Plan”
means an “employee benefit plan” (as defined in section 3(3) of ERISA) subject to Title I of ERISA that is or, within
the preceding five years, has been established or maintained, or to which contributions are or, within the preceding five years,
have been made or required to be made, by the Company or any ERISA Affiliate or with respect to which the Company or any ERISA
Affiliate may have any liability.

 

“Priority
Debt” means (without duplication), as of the date of any determination thereof, the sum of (i) all unsecured Indebtedness
of Subsidiaries (including all Guaranties of Indebtedness of the Company but excluding (x) unsecured Indebtedness owing to the
Company or any other Subsidiary, (y) unsecured Indebtedness outstanding at the time such Person became a Subsidiary, provided
that such Indebtedness shall have not been incurred in contemplation of such person becoming a Subsidiary, and (z)  all
unsecured Indebtedness of any Subsidiary Guarantors), and (ii) all Indebtedness of the Company and its Subsidiaries secured
by Liens other than Indebtedness secured by Liens permitted by subparagraphs (a) through (i), inclusive, of Section 10.6.

 

“property”
or “properties” means, unless otherwise specifically limited, real or personal property of any kind, tangible
or intangible, choate or inchoate.

 

“PTE”
is defined in Section 6.2(a).

 

“Purchaser”
means the purchaser that has executed and delivered this Agreement to the Company and the Purchaser’s successors and assigns
(so long as any such assignment complies with Section 13.2), provided, however, that a Purchaser of a Note that ceases to
be the registered holder or a beneficial owner (through a nominee) of such Note as the result of a transfer thereof pursuant to
Section 13.2 shall cease to be included within the meaning of “Purchaser” of such Note for the purposes of this Agreement
upon such transfer.

 

“QPAM Exemption”
is defined in Section 6.2(d).

 

“Qualified
Acquisition” means any acquisition of either or both the capital stock or assets of any Person or Persons (or any portion
thereof), or the last to occur of a series of such acquisitions consummated within a period of six consecutive months, if the aggregate
amount of Indebtedness incurred by one or more of the Company and their Subsidiaries to finance the purchase price of, or assumed
by one or more of them in connection with the acquisition of, such stock and property is at least $100,000,000.

 

“Qualified
Institutional Buyer” means any Person who is a “qualified institutional buyer” within the meaning of such
term as set forth in Rule 144A(a)(1) under the Securities Act.

 

“Ratable Portion”
means, with respect to any Note, an amount equal to the product of (x) the amount equal to the net proceeds being so applied
to the prepayment of Senior Debt in accordance with Section 10.3(2), multiplied by (y) a fraction the numerator of which
is the outstanding principal amount of such Note and the denominator of which is the aggregate principal amount of Senior Debt
of the Company and its Subsidiaries being prepaid pursuant to Section 10.3(2).

 

    	 	-9-	 

     

    

 

	Gas Natural Inc.	 	Note Purchase Agreement

 

“Related Fund”
means, with respect to any holder of any Note, any fund or entity that (i) invests in Securities or bank loans, and (ii) is
advised or managed by such holder, the same investment advisor as such holder or by an affiliate of such holder or such investment
advisor.

 

“Required
Holders” means at any time on or after the Closing, the holders of more than 50% in principal amount of the Notes at
the time outstanding (exclusive of Notes then owned by the Company or any of its Affiliates).

 

“Responsible
Officer” means any Senior Financial Officer and any other officer of the Company with responsibility for the administration
of the relevant portion of this Agreement.

 

“SEC”
means the Securities and Exchange Commission of the United States, or any successor thereto.

 

“Securities”
or “Security” shall have the meaning specified in section 2(a)(1) of the Securities Act.

 

“Securities
Act” means the Securities Act of 1933, as amended from time to time, and the rules and regulations promulgated thereunder
from time to time in effect.

 

“Senior Debt”
means, as of the date of any determination thereof, the total amount of all Indebtedness of the Company and its Subsidiaries determined
on a consolidated basis in accordance with GAAP, other than Subordinated Debt.

 

“Senior Financial
Officer” means the chief financial officer, principal accounting officer, treasurer or comptroller of the Company.

 

“Source”
is defined in Section 6.2.

 

“State Sanctions
List” means a list that is adopted by any state Governmental Authority within the United States of America pertaining
to Persons that engage in investment or other commercial activities in Iran or any other country that is a target of economic sanctions
imposed under U.S. Economic Sanctions Laws.

 

“Subsidiary”
means, as to any Person, any other Person in which such first Person or one or more of its Subsidiaries or such first Person and
one or more of its Subsidiaries owns sufficient equity or voting interests to enable it or them (as a group) ordinarily, in the
absence of contingencies, to elect a majority of the directors (or Persons performing similar functions) of such second Person,
and any partnership or joint venture if more than a 50% interest in the profits or capital thereof is owned by such first Person
or one or more of its Subsidiaries or such first Person and one or more of its Subsidiaries (unless such partnership or joint venture
can and does ordinarily take major business actions without the prior approval of such Person or one or more of its Subsidiaries).
Unless the context otherwise clearly requires, any reference to a “Subsidiary” is a reference to a Subsidiary of the
Company.

 

    	 	-10-	 

     

    

 

	Gas Natural Inc.	 	Note Purchase Agreement

 

“Subsidiary
Guarantor” means each Subsidiary that has executed and delivered a Subsidiary Guaranty.

 

“Subsidiary
Guaranty” means an Initial Subsidiary Guaranty or an Additional Subsidiary Guaranty.

 

“Substitute
Purchaser” is defined in Section 21.

 

“Subordinated
Debt” means all unsecured Indebtedness of the Company which shall contain or have applicable thereto subordination provisions
providing for the subordination thereof to other Indebtedness of the Company.

 

“Sun Life
Debt” means that:

 

(a) Fixed rate note
due June 1, 2017, pursuant to Note Purchase Agreement dated May 3, 2011 among the Company and certain of its Ohio Subsidiaries
and Sun Life Assurance Company of Canada, as amended from time to time; and

 

(b) Senior secured
guaranteed note due June 1, 2017, pursuant to Note Purchase Agreement dated May 3, 2011 among the Company and certain of its Ohio
Subsidiaries and Sun Life Assurance Company of Canada, as amended from time to time.

 

“SVO”
means the Securities Valuation Office of the NAIC or any successor to such Office.

 

“Swap Contract”
means (a) any and all rate swap transactions, basis swaps, credit derivative transactions, forward rate transactions, commodity
swaps, commodity options, forward commodity contracts, equity or equity index swaps or options, bond or bond price or bond index
swaps or options or forward bond or forward bond price or forward bond index transactions, interest rate options, forward foreign
exchange transactions, cap transactions, floor transactions, collar transactions, currency swap transactions, cross-currency rate
swap transactions, currency options, spot contracts, or any other similar transactions or any combination of any of the foregoing
(including any options to enter into any of the foregoing), whether or not any such transaction is governed by or subject to any
master agreement, and (b) any and all transactions of any kind, and the related confirmations, which are subject to the terms
and conditions of, or governed by, any form of master agreement published by the International Swaps and Derivatives Association,
Inc., any International Foreign Exchange Master Agreement, or any other master agreement (any such master agreement, together with
any related schedules, a “Master Agreement”), including any such obligations or liabilities under any Master Agreement.

 

    	 	-11-	 

     

    

 

	Gas Natural Inc.	 	Note Purchase Agreement

 

“Swap Termination
Value” means, in respect of any one or more Swap Contracts, after taking into account the effect of any legally enforceable
netting agreement relating to such Swap Contracts, (a) for any date on or after the date such Swap Contracts have been closed
out and termination value(s) determined in accordance therewith, such termination value(s), and (b) for any date prior to
the date referenced in clause (a), the amount(s) determined as the mark-to-market value(s) for such Swap Contracts, as determined
based upon one or more mid-market or other readily available quotations provided by any recognized dealer in such Swap Contracts.

 

“Synthetic
Lease Obligation” means the monetary obligation of a Person under (a) a so-called synthetic, off-balance sheet or
tax retention lease, or (b) an agreement for the use possession of
property creating obligations that do not appear on the balance sheet of such Person but which, upon the insolvency or bankruptcy
of such Person, would be characterized as the indebtedness of such Person (without regard to accounting treatment).

 

“Total Debt”
means, without duplication, all Indebtedness of the Company and its Subsidiaries, determined on a consolidated basis in accordance
with GAAP.

 

“Total Debt
to Capital Ratio” means, as of any date of determination, the ratio of: (i) Total Debt as of such date to (ii) Capital
as of such date.

 

“USA PATRIOT
Act” means United States Public Law 107-56, Uniting and Strengthening America by Providing Appropriate Tools Required
to Intercept and Obstruct Terrorism (USA PATRIOT ACT) Act of 2001, as amended from time to time, and the rules and regulations
promulgated thereunder from time to time in effect.

 

“U.S. Economic
Sanctions Laws” means those laws, executive orders, enabling legislation or regulations administered and enforced by
the United States pursuant to which economic sanctions have been imposed on any Person, entity, organization, country or regime,
including the Trading with the Enemy Act, the International Emergency Economic Powers Act, the Iran Sanctions Act, the Sudan Accountability
and Divestment Act and any other OFAC Sanctions Program.

 

“Wholly-Owned
Subsidiary” means, at any time, any Subsidiary all of the equity interests (except directors’ qualifying shares)
and voting interests of which are owned by any one or more of the Company and the Company’s other Wholly-Owned Subsidiaries
at such time.

 

    	 	-12-

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