Exhibit 10.1

 

 

PURCHASE AGREEMENT

between

GMX RESOURCES INC.,

an Oklahoma corporation,

and

KINDER MORGAN ENDEAVOR LLC,

a Delaware limited liability company

Dated October 16, 2009

 

 

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TABLE OF CONTENTS

 

          Page ARTICLE 1        DEFINITIONS    1       1.1      Defined Terms   
1       1.2      Interpretation and Construction    9 ARTICLE 2        THE
TRANSACTION; PURCHASE PRICE    10       2.1      Contribution to the Company   
10       2.2      Sale and Purchase    10       2.3      Purchase Price    10
      2.4      Purchase Price Allocation    10 ARTICLE 3        CLOSING    11
      3.1      Closing    11       3.2      Closing Deliveries by Seller    11
      3.3      Closing Deliveries by Buyer    12 ARTICLE
4        REPRESENTATIONS AND WARRANTIES OF SELLER    13       4.1   
  Organization of Seller    13       4.2      Company    13       4.3   
  Organizational Documents    13       4.4      Seller’s Authority    14
      4.5      No Conflict    14       4.6      Consents and Approvals    14
      4.7      Permits    14       4.8      Financial Statements    15       4.9
     Absence of Certain Changes    15       4.10      Tax Matters    15
      4.11      Compliance With Applicable Laws    17       4.12      Legal
Proceedings; Regulatory Proceedings    17       4.13      Tangible Assets    17
      4.14      Real Property    18       4.15      Certain Obligations of the
Company    19       4.16      Employee Matters    21       4.17   
  Environmental    21       4.18      Insurance    21       4.19      Brokerage
Fees    22       4.20      Solvency    22       4.21      Transactions with
Affiliates    22       4.22      Intellectual Property    22       4.23   
  Transaction Information    22       4.24      Notice of Commencement of Rig   
23       4.25      Bonding    23

 

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TABLE OF CONTENTS

(continued)

 

          Page       4.26      Non-Jurisdictional    23       4.27   
  Preferential Rights; Consents    23       4.28      Imbalances    23
      4.29      Reserves    23       4.30      Dedicated Gas    24       4.31   
  Books and Records    24 ARTICLE 5        REPRESENTATIONS AND WARRANTIES OF
BUYER    24       5.1      Organization    24       5.2      Buyer’s Authority
   24       5.3      No Conflict    24       5.4      Consents and Approvals   
25       5.5      Legal Proceedings    25       5.6      Brokerage Fees    25
      5.7      Nature of Investment; Investment Experience; Restricted
Securities    25 ARTICLE 6        CONDITIONS TO THE CLOSING; TERMINATION    25
      6.1      Conditions to Buyer’s Obligations    25       6.2      Conditions
to Seller’s Obligations    26       6.3      Termination    26       6.4   
  Effect of Termination    27 ARTICLE 7        ADDITIONAL AGREEMENTS    27
      7.1      Covenants and Agreements Pending the Closing    27       7.2   
  Public Announcements    30       7.3      Expenses    30       7.4   
  Transfer Taxes    30       7.5      Drilling Obligation    30       7.6   
  Certain Disclosure Matters    31       7.7      Additional Obligations    31
      7.8      Delivery of Alignment Sheets    31       7.9      Additional
Actions    31       7.10      Delivery of Tax Information    31       7.11   
  Access to Information and Confidentiality    32 ARTICLE 8        AMENDMENT AND
WAIVER    32       8.1      Amendment    32       8.2      Waiver    32 ARTICLE
9        INDEMNIFICATION    32

 

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TABLE OF CONTENTS

(continued)

 

          Page       9.1      Indemnification    32       9.2      Defense of
Claims    36 ARTICLE 10        MISCELLANEOUS    37       10.1      Notices    37
      10.2      Entire Agreement    38       10.3      Binding Effect;
Assignment; No Third Party Benefit    38       10.4      Severability    38
      10.5      Governing Law; Consent To Jurisdiction    38       10.6   
  Further Assurances    39       10.7      Counterparts    39       10.8   
  Currency    39

 

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EXHIBITS

 

A.    Assignment, Bill of Sale, and Conveyance B.    Assignment of Contract
Right C.    Contribution Agreement D.    Gas Gathering Agreement E.    Joint Use
Agreement F.    LLC Agreement G.    Pipeline Easement Agreement H.    Pipeline
Operating Agreement I.    Services Agreement

SCHEDULES

 

Schedule 1.1(a)    Seller’s Knowledge Schedule 1.1(b)    Buyer’s Knowledge
Schedule 2.4    Purchase Price Allocation Statement Schedule 4.2(b)   
Qualification Schedule 4.2(c)    Encumbrances to Ownership of Membership
Interests Schedule 4.2(d)    Options and Right to Acquire Equity Schedule 4.5   
No Conflict Schedule 4.6    Consents and Approvals – Seller Schedule 4.7   
Permits and Permit Proceedings Schedule 4.8(a)    Financial Statements
Schedule 4.8(b)    Exceptions to Financial Statements Schedule 4.8(c)   
Liabilities and Obligations Schedule 4.10    Tax Matters Schedule 4.10(i)    Tax
Jurisdictions Schedule 4.11    Compliance with Laws Schedule 4.12(a)    Legal
Proceedings Schedule 4.12(b)    Proceedings Schedule 4.13    Tangible Assets
Schedule 4.13(a)    Excluded Assets Schedule 4.14(a)    Owned Real Property
Schedule 4.14(a)(ii)    Rights of Other with respect to Owned Real Property
Schedule 4.14(b)    Rights-of Way Schedule 4.14(c)    Leased Real Property
Schedule 4.14(c)(ii)    Leased Real Property, Exceptions to Title Schedule 4.15
   Contracts Schedule 4.16    Employee Matters Schedule 4.17    Environmental
Matters; Environmental Reports Schedule 4.18    Insurance Schedule 4.19   
Brokerage Fees Schedule 4.21    Transactions with Affiliates Schedule 4.22   
Intellectual Property Schedule 4.25    Bonding Schedule 4.27    Preferential
Rights; Consents Schedule 4.28    Imbalances Schedule 5.6    Brokerage Fees

 

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PURCHASE AGREEMENT

THIS PURCHASE AGREEMENT is entered into on the 16th day of October, 2009,
between GMX Resources Inc., an Oklahoma corporation (“Seller”), and Kinder
Morgan Endeavor LLC, a Delaware limited liability company (“Buyer”).

Recitals:

WHEREAS, subject to the terms and conditions set forth herein, Seller desires to
sell, assign and transfer to Buyer and Buyer desires to purchase and take
assignment from Seller of, 40% of the issued and outstanding limited liability
company membership interests as more particularly described in the LLC Agreement
(the “Purchased Interests”) in Endeavor Gathering LLC, a Delaware limited
liability company (the “Company”); and

WHEREAS, Seller will use the proceeds from the Purchase Price to pay down debt
under the GMX Credit Facilities and to fund the contracting and operation of a
second drilling rig for the production of natural gas from the Dedicated
Acreage, as more fully described herein.

NOW, THEREFORE, in consideration of the premises and the representations,
warranties, covenants and agreements contained herein, the Parties hereto agree
as follows:

ARTICLE 1

DEFINITIONS

1.1 Defined Terms. As used in this Agreement, each of the following terms shall
have the meaning given to it below:

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

“Agreement” means this Purchase Agreement, as the same may be amended from time
to time.

“Assignment, Bill of Sale and Conveyance” means the Assignment, Bill of Sale and
Conveyance in substantially the form attached hereto as Exhibit “A”, dated as of
the date of the Contribution Agreement between Seller, as assignor, and the
Company, as assignee, as amended, supplemented or restated from time to time.

“Assignment of Contract Rights” means the Assignment of Contract Rights in
substantially the form attached hereto as Exhibit “B”, dated as of the Closing
Date and entered into between Endeavor Pipeline Inc., as assignor, and the
Company, as assignee, as amended, supplemented or restated from time to time.

“Assumed Obligations” has the meaning given such term in the Contribution
Agreement.

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“Balance Sheet” has the meaning assigned to such term in Section 4.8(a).

“Balance Sheet Date” means July 31, 2009.

“Benefit Plan” means any employee benefit plan or arrangement, including any
stock purchase, stock option, stock bonus, stock ownership, phantom stock or
other stock or equity plan, pension, profit sharing, bonus, deferred
compensation, incentive compensation, severance or termination pay,
hospitalization or other medical or dental, life or other insurance,
supplemental unemployment benefits plan or agreement or policy or other
arrangement providing employment-related compensation, fringe benefits or other
benefits and including “employee benefit plans,” as defined in Section 3(3) of
ERISA.

“Business” means the natural gas gathering business and related facilities
located in Harrison County and Panola County, Texas, including all pipelines,
real property rights, compression, related equipment, inventory, equipment,
contracts, capital or operating leases, and all other assets, in each case as
transferred to the Company pursuant to the Contribution Agreement.

“Business Day” means any day other than a Saturday, Sunday or other day on which
commercial banks in Houston, Texas are required or authorized to be closed.

“Buyer” has the meaning assigned to such term in the Introductory Paragraph.

“Buyer Indemnitees” means, collectively, Buyer and its respective Affiliates,
officers, directors, employees, agents, and representatives, but shall not
include the Company.

“Buyer Loss” means (i) a Loss actually incurred by a Buyer Indemnitee (other
than as described in clause (ii) of this definition) and (ii) Buyer’s 40% share
of a Loss actually incurred by the Company.

“Buyer Parent Guaranty” means the Guaranty Agreement delivered by Kinder Morgan
Energy Partners, L.P. in accordance with the LLC Agreement.

“Cash Contribution” means TWO HUNDRED THOUSAND DOLLARS ($200,000), such amount
having been contributed to the Company by Seller in accordance with the
Contribution Agreement.

“Closing” means the closing of the transactions contemplated by this Agreement.

“Closing Date” means the date on which the Closing occurs.

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

“Commencement of Rig Notice” means, pursuant to the Drilling Contract, the
letter from Seller to Helmerich & Payne International Drilling Co. dated
September 22, 2009 instructing Helmerich & Payne to activate FlexRig #384
immediately and begin drilling operations within 30 days.

 

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“Company” has the meaning assigned to such term in the Recitals.

“Confidentiality Agreement” means the Confidentiality Agreement dated June 16,
2009 between Seller and Kinder Morgan Tejas Pipeline LLC.

“Contract” means any agreement, Lease, Permit, evidence of indebtedness,
mortgage, indenture, security agreement or other contract or agreement (whether
written or oral).

“Contribution” has the meaning assigned to such term in Section 2.1.

“Contribution Agreement” has the meaning assigned to such term in Section 2.1.

“Cox Act” has the meaning assigned to such term in Section 4.26.

“Dedicated Acreage” has the meaning assigned to such term in the Gathering
Agreement.

“Dedicated Gas” has the meaning assigned to such term in the Gathering
Agreement.

“Deductible Amount” means an amount equal to 1% of the Purchase Price.

“Direct Claim” means any claim by an Indemnitee on account of a Loss which does
not result from a Third Party Claim.

“Disclosure Schedule” means the disclosure schedules attached hereto of Seller
or Buyer, as the case may be.

“Drilling Contract” means that certain Daywork Drilling Contract – U.S. dated
June 23, 2008 related to H&P FlexRig #384 between Seller and Helmerich & Payne
International Drilling Co, as amended by that certain May 7, 2009 letter from
Helmerich & Payne International Drilling Co to Seller, and subsequently amended
by that certain July 28, 2009 letter from Helmerich & Payne International
Drilling Co to Seller, and subsequently amended by that certain September 15,
2009 letter from Helmerich & Payne International Drilling Co to Seller, and
subsequently amended by that certain October 2, 2009 letter from Helmerich &
Payne International Drilling Co to Seller, as may be supplemented or amended
from time to time.

“Encumbrances” means liens, charges, pledges, options, mortgages, deeds of
trust, security interests, claims, restrictions (whether on voting, sale,
transfer, disposition, or otherwise), easements, and other encumbrances of every
type and description, whether imposed by Law, agreement, understanding, or
otherwise.

“Environmental Laws” means any and all applicable Laws in effect as of the date
of this Agreement pertaining to protection of the environment in effect in any
and all jurisdictions in which the Company has conducted operations, including,
without limitation, the Clean Air Act, as amended, the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended, the
Federal Water Pollution Control Act, as amended, the Resource Conservation and
Recovery Act of 1976, as amended, the Safe Drinking Water Act, as amended, the
Toxic Substances Control Act, as amended, the Superfund Amendments and
Reauthorization Act of 1986, as amended, and the Hazardous Materials
Transportation Act, as amended.

 

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“Environmental Reports” has the meaning assigned to such term in
Section 4.17(f).

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

“Excluded Liability” shall mean any liability or obligation of the Company, the
Gathering Assets or the Business that meets any of the following criteria: such
liability or obligation (a) arises out of, results from or relates to events
occurring or circumstances existing prior to the Closing, (b) results from the
Company’s status as an Affiliate of Seller or any of Seller Affiliates other
than the Company, (c) arises out of, results from or relates to the failure to
obtain the consent of the applicable rail road to assign the Railroad Boring
Permit(s) listed on Schedule 4.7 to the Company or (d) arises out of, results
from or relates to the failure to obtain (i) the Harrison County Road Boring
Permit described on Schedule 4.7 as “Under Blocker Road (CR-1319 & CR-1019)”
related to the Brown unit or (ii) either of the Texas Department of
Transportation Utility Permits described on Schedule 4.7 as “Under FM2625”
related to the Pawnee Lateral (Jo Ann Scott) or the “Under FM31” related to the
Sanders Moore 1 to 2.

“FERC” has the meaning assigned to such term in Section 4.26.

“Financial Statements” has the meaning assigned to such term in Section 4.8(a).

“Force Majeure” means acts of God, strikes, lockouts or other industrial
disturbances of a general nature and not specific to the affected Party, acts of
terror or the threat of acts of terror, acts of the public enemy, wars,
blockades, insurrections, riots, epidemics, governmental actions or
requirements, landslides, lightning, earthquakes, fires, storms, hurricanes,
high sea states, floods, high water, washouts, civil disturbances, explosions,
breakage or accident to machinery, equipment, or lines of pipe,
freezing/hydrating of wells or lines of pipe, partial or entire failure of
wells, the inability of either Party to acquire, or delays on the part of such
Party in acquiring, at reasonable costs, easements, rights-of-way, other surface
rights, Permits, materials, equipment, or supplies which are required to enable
such Party to fulfill its obligations under Section 7.5, and other causes,
whether of the kind enumerated herein or otherwise, but in the case of all of
the foregoing, only to the extent such event or occurrence is beyond the
reasonable control of the Party claiming Force Majeure and could not be avoided
or overcome by such Party by the exercise of due diligence and the performance
of such Party’s obligations under Section 7.5 of this Agreement.

“GAAP” means United States generally accepted accounting principles with such
exceptions to such United States generally accepted accounting principles as may
be expressly noted or otherwise expressly referred to on any individual
financial statement or schedule.

“Gathering Agreement” means the Gas Gathering Agreement in substantially the
form attached hereto as Exhibit “D”, to be dated as of the Closing Date and
entered into among the Company, Seller and Endeavor Pipeline Inc., as amended,
supplemented or restated from time to time.

“Gathering Assets” means all of the property and assets described on Exhibit A
to the Contribution Agreement.

 

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“GMX Credit Facilities” means both (1) that certain Third Amended and Restated
Loan Agreement (as first lien holder) dated effective as of June 12, 2008, among
Seller, as Borrower, Capital One, N.A., as Agent, and the Banks identified
therein, as amended by that certain First Amendment dated as of October 29,
2008, that certain Second Amendment dated as of November 12, 2008, that certain
Third Amendment dated as of February 26, 2009 (but effective as of December 31,
2008), and that certain Fourth Amendment dated as of June 3, 2009, and (2) that
certain Note Purchase Agreement (as second lien holder) with The Prudential
Insurance Company of America dated as of July 31, 2007, as amended by that
certain Amendment No. 1 to Note Purchase Agreement and Limited Consent dated
February 11, 2008, Amendment No. 2 to Note Purchase Agreement dated June 12,
2008, Amendment No. 3 to Note Purchase Agreement and Limited Waiver dated as of
February 27, 2009, and Amendment No. 4 to Note Purchase Agreement and Limited
Waiver dated as of May 6, 2009, in each case as in effect from time to time.

“Governmental Entity” means any legislature, court, tribunal, arbitrator,
authority, agency, commission, division, board, bureau, branch, official or
other instrumentality of the U.S., or any domestic state, county, city, tribal
or other political subdivision, governmental department or similar governing
entity, and including any governmental, quasi-governmental or non-governmental
body exercising similar powers of authority.

“Guaranty Agreement” has the meaning assigned to such term in the LLC Agreement.

“Hazardous Materials” means, whether alone or in combination, whether solid,
liquid or gaseous, (i) any pollutant, contaminant, substance, chemical or
material that is listed, classified or regulated pursuant to any Environmental
Law; (ii) any petroleum, petroleum product, waste oil, crude oil and its
fractions, asbestos and asbestos-containing material, urea formaldehyde, nuclear
materials, natural or synthetic gas, lead-based paint, pesticide or
polychlorinated biphenyl; and (iii) any hazardous substance, hazardous waste or
terms of similar import, as defined in any Environmental Law, to the extent any
of the foregoing are present in a quantity or concentration regulated pursuant
to an applicable Environmental Law.

“Indemnifying Party” means a Party required to provide indemnification under
Section 9.1.

“Indemnitee” means a Party entitled to receive indemnification under
Section 9.1.

“Intellectual Property” has the meaning assigned to such term in Section 4.22.

“Joint Use Agreement” means the Joint Use Agreement in substantially the form
attached hereto as Exhibit “E”, to be dated as of the Closing Date and entered
into between Seller and the Company, as amended, supplemented or restated from
time to time.

“Knowledge” or “knowledge” means, with respect to Seller, the actual knowledge
of the Persons listed on Schedule 1.1(a), and with respect to Buyer, the actual
knowledge of the Persons listed on Schedule 1.1(b).

“Laws” means any applicable statute, law (including common law), rule,
ordinance, regulation, ruling, requirement, writ, injunction, decree, order or
other official act of or by any Governmental Entity or any arbitral tribunal,
whether such Laws now exist or hereafter come into effect.

 

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“Leased Real Property” means all leasehold or subleasehold estates which are
used in the Business, excluding oil and gas leases.

“Leases” means all leases, subleases, licenses, concessions and other agreements
(written or oral), including all amendments, extensions, renewals, guaranties
and other agreements with respect thereto, pursuant to which the Company holds
any Leased Real Property used in the Business.

“LLC Agreement” means the Amended and Restated Limited Liability Company
Agreement of the Company (including any schedules, exhibits or attachments
thereto agreed upon by the Parties) in substantially the form attached hereto as
Exhibit “F”, to be dated as of the Closing Date, as amended, supplemented or
restated from time to time.

“Losses” means any and all claims, damages, liabilities, losses, causes of
action, fines, penalties, litigation, lawsuits, administrative proceedings,
administrative investigations, costs, and expenses, including reasonable
attorneys’ fees, court costs, and other costs of suit.

“NGA” has the meaning assigned to such term in Section 4.26.

“NGPA” has the meaning assigned to such term in Section 4.26.

“Notice” has the meaning assigned to such term in Section 10.1.

“Owned Real Property” means all fee interests in land (whether in whole or in
undivided interests), together with all buildings, structures, improvements and
fixtures located thereon, and Rights-of-Way owned by the Company and used in the
Business.

“Parties” means Seller and Buyer, collectively.

“Party” means Seller or Buyer, individually, as the case may be.

“Permits” means all licenses, permits, certificates of authority,
authorizations, approvals, registrations, franchises, and similar consents
granted or issued by any Governmental Entities or other Person and that are
associated with or necessary to operate the Gathering Assets or are used in
connection with the Business.

“Permitted Encumbrances” means (a) real estate taxes, assessments and other
governmental levies, fees or charges which are not due and payable as of the
Closing Date or which are being contested by appropriate proceedings,
(b) statutory liens, including mechanics liens and similar liens for labor,
materials or supplies incurred in the ordinary course of business for amounts
which are not yet delinquent or which are being contested by appropriate
proceedings, (c) zoning, building codes and other land use laws regulating the
use or occupancy of the Owned Real Property or the activities conducted thereon
which are imposed by any Governmental Entity having jurisdiction over the Owned
Real Property, and (d) easements, covenants, conditions, restrictions and other
similar matters of public record affecting title to the Owned Real Property.

 

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“Person” means any individual or entity, including any corporation, limited
liability company, partnership (general or limited), joint venture, association,
joint stock company, trust, unincorporated organization or Governmental Entity.

“Pipeline Easement Agreement” means the Pipeline Easement Agreement in
substantially the form attached hereto as Exhibit “G” dated of the Closing Date
between the Company and Seller, as amended, supplemented or restated from time
to time.

“Pipeline Operating Agreement” means the Pipeline Operating Agreement in
substantially the form attached hereto as Exhibit “H”, to be dated as of the
Closing Date and entered into between the Company and Endeavor Pipeline Inc., as
amended, supplemented or restated from time to time.

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

“Purchase Price” means THIRTY SIX MILLION DOLLARS ($36,000,000).

“Purchase Price Allocation Statement” has the meaning assigned to such term in
Section 2.4.

“Purchased Interests” has the meaning set forth in the Recitals.

“Reasonable Efforts” means efforts in accordance with reasonable commercial
practice and without the incurrence of unreasonable expense.

“Related Agreements” means the Assignment of Contract Rights, the Commencement
of Rig Notice, the Contribution Agreement, the Gathering Agreement, the LLC
Agreement, the Services Agreement, the Pipeline Operating Agreement, the
Pipeline Easement Agreement, the Assignment, Bill of Sale and Conveyance and the
Joint Use Agreement, and any other document or instrument executed and delivered
contemporaneously with, and as a part of the transactions consummated at, the
Closing.

“Reserves” has the meaning assigned to such term in Section 4.29.

“Rights-of-Way” means any easement, license, land use permit, right-of-way, or
similar real property interest used in the Business, including, without
limitation, easements and rights-of-way granted under oil and gas leases and any
parcel of land which is utilized in the Gathering Assets but not subject to an
easement, license, land use permit or right-of-way in favor of the Company.

“RRC” has the meaning assigned to such term in Section 4.25.

“Securities Act” has the meaning set forth in Section 5.7.

 

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“Seller” has the meaning assigned to such term in the Introductory Paragraph.

“Seller Affiliate” means any Affiliate of Seller.

“Seller Indemnitees” means, collectively, Seller, Seller Affiliates and their
respective officers, directors, employees, agents, and representatives.

“Seller Loss” means (i) a Loss actually incurred by a Seller Indemnitee (other
than as described in clause (ii) of this definition) and (ii) Seller’s 60% share
of a Loss actually incurred by the Company.

“Seller Parent Guaranty” means the Guaranty Agreement delivered by Seller in
accordance with the LLC Agreement.

“Services Agreement” means the Management Services Agreement in substantially
the form attached hereto as Exhibit “I”, to be dated as of the Closing Date and
entered into between the Company and Seller, as amended, supplemented or
restated from time to time.

“Shipper Parties” has the meaning assigned to such term in Section 4.30.

“Subordination Agreement” means a Subordination, Non-Disturbance and Attornment
Agreement in form satisfactory to Buyer and dated as of the Closing Date among
the Company, the Seller and one or more lenders under the GMX Credit Facilities
(or any agent thereof), as amended, supplemented or restated from time to time.

“Taxes” means any federal, state, local or foreign income, gross receipts,
license, payroll, parking, employment, excise, severance, stamp, occupation,
premium, windfall profits, environmental, customs duties, capital stock,
franchise, profits, margin, single business, withholding, social security,
unemployment, disability, real property, personal property, possessory interest,
sales, use, transfer, registration, capital gain, production, payroll, worker’s
compensation, value added, alternative or add-on minimum, amounts paid under an
agreement with a Taxing Authority, estimated tax or other tax of any kind
whatsoever, including any interest, fines, penalty or other like assessment or
addition thereto, whether disputed or not, including such item for which a
liability arises pursuant to Treasury Regulation Section 1.1502-6 (or any
similar provision of foreign, state or local law), as a transferee,
successor-in-interest, by contract or otherwise.

“Taxing Authority” means, with respect to any Tax, the Governmental Entity or
political subdivision thereof that imposes such Tax, and the agency (if any)
charged with the collection of such Tax for such entity or subdivision,
including any governmental or quasi-governmental entity or agency that imposes,
or is charged with collecting, social security or similar charges or premiums.

“Tax Return” means any return, report or statement required to be maintained,
retained or filed with respect to any Tax (including any elections,
declarations, schedules or attachments thereto, any amendment thereof, any
information return (which includes, but is not limited to, federal and state
wage reporting, employment and unemployment reports (e.g., IRS Forms 940, 941,
W-2, W-3 and their state and local equivalents) as well as reports of payments
made (e.g.,

 

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IRS Forms 1099 and 1042) that are required under Law to be maintained, retained
or supplied to any Taxing Authority), claim for refund, amended return or
declaration of estimated Tax, and including, where permitted or required,
combined, consolidated or unitary returns for any group of entities that
includes the Company.

“Tax Sharing Agreement” means any written agreement which provides for the
sharing, indemnification or allocation of Taxes between parties filing a
combined, consolidated, unitary or similar group Tax Return or unwritten past
practice with respect to the sharing or allocation of Taxes between parties
filing a combined, consolidated, unitary or similar group Tax Return.

“Third Party” means any Person other than (i) Seller or any Seller Affiliates
(including the Company) or (ii) Buyer or any of its Affiliates.

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

“Threshold” has the meaning set forth in Section 9.1(c).

“Transfer Taxes” means any real property transfer or excise, sales, use, value
added, stamp, documentary, recording, registration, conveyance, stock transfer,
intangible property transfer, personal property transfer, gross receipts,
registration, duty, securities transactions or similar fees or Taxes or
governmental charges (together with any interest or penalty, addition to Tax or
additional amount imposed), including, without limitation, any payments made in
lieu of any such Taxes or governmental charges.

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

1.2 Interpretation and Construction. In interpreting and construing this
Agreement, the following principles shall be followed:

(a) the terms “herein,” “hereof,” “hereby,” and “hereunder,” or other similar
terms, refer to this Agreement as a whole and not only to the particular
Article, Section or other subdivision in which any such terms may be employed;

(b) unless otherwise indicated herein, references to Articles, Sections, and
other subdivisions refer to the Articles, Sections, and other subdivisions of
this Agreement;

(c) all accounting terms not otherwise defined herein have the meanings assigned
to them in accordance with GAAP;

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

(e) the word “includes” and its syntactical variants mean “includes, but is not
limited to” and corresponding syntactical variant expressions;

 

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(f) the plural shall be deemed to include the singular, and vice versa;

(g) each exhibit, attachment, and schedule to this Agreement is a part of this
Agreement, but if there is any conflict or inconsistency between the main body
of this Agreement and any exhibit, attachment, or schedule, the provisions of
the main body of this Agreement shall prevail; and

(h) every covenant, term and provision of this Agreement shall be construed
simply according to its fair meaning and not strictly for or against any party
(notwithstanding any rule of law requiring an agreement to be strictly construed
against the drafting party), it being understood that the parties to this
Agreement are sophisticated and have had adequate opportunity and means to
retain counsel to represent their interests and to otherwise negotiate the
provisions of this Agreement.

ARTICLE 2

THE TRANSACTION; PURCHASE PRICE

2.1 Contribution to the Company. Prior to the Closing, Seller shall have
assigned and transferred, and/or shall have caused the applicable Seller
Affiliates to have assigned and transferred, to the Company the Gathering Assets
(the “Contribution”), and the Company shall have assumed the Assumed
Obligations, pursuant to a Contribution Agreement between Seller and the Company
in substantially the form attached hereto as Exhibit “C”, to be dated as of the
Closing Date (the “Contribution Agreement”), such that, at Closing, and after
giving effect to the payment of the Purchase Price as described below in
Section 2.3, the Company will own the Gathering Assets free and clear of all
Encumbrances, other than Permitted Encumbrances, and the only liabilities of the
Company will be the Assumed Obligations.

2.2 Sale and Purchase. At the Closing, and subject to the terms and conditions
in this Agreement, Seller shall sell, assign, transfer, deliver, and convey to
Buyer, and Buyer shall purchase and accept from Seller, the Purchased Interests,
free and clear of any and all Encumbrances.

2.3 Purchase Price. In consideration of the sale of the Purchased Interests as
described herein, Buyer shall pay the Purchase Price to Capital One, N.A. for
credit to Seller’s account. Such payment shall be made by confirmed wire
transfer of immediately available funds to a bank account or accounts to be
designated in writing by Capital One, N.A. to Buyer prior to the Closing.

2.4 Purchase Price Allocation. As set forth in Schedule 2.4, Buyer and Seller
have agreed to allocate the Purchase Price among the Buyer’s share of the
Gathering Assets under the methodology required pursuant to Section 1060 of the
Code (the “Purchase Price Allocation Statement”). Seller and Buyer shall report
the transactions contemplated hereby on all Tax Returns (including Form 8594 and
all other information returns and supplements thereto required to be filed by
the Parties under Section 1060 of the Code) in a manner consistent with such
Purchase Price Allocation Statement.

 

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ARTICLE 3

CLOSING

3.1 Closing. Subject to the terms and conditions of this Agreement, the Closing
shall be held at the offices of Bracewell & Giuliani LLP at 711 Louisiana
Street, Suite 2300, Houston, Texas 77002 on such date as the Parties shall
mutually agree, but such date shall be not more than five business days
following the satisfaction or waiver of the last to be satisfied or waived of
the conditions set forth in Article 6 (other than conditions that by their
nature can be satisfied only at the Closing, but subject to the satisfaction or
waiver of those conditions).

3.2 Closing Deliveries by Seller. At the Closing, Seller will deliver or cause a
Seller Affiliate, as applicable, to deliver the following documents, duly
executed by Seller or, if applicable, a Seller Affiliate:

(a) an assignment of limited liability company membership interests transferring
the Purchased Interests to Buyer, free and clear of any and all Encumbrances;

(b) a certificate to Buyer (i) stating that Seller is not a foreign corporation,
foreign partnership, foreign trust or foreign estate, (ii) providing its U.S.
Employer Identification Number and (iii) providing its address, all pursuant to
Section 1445 of the Code;

(c) a copy of the LLC Agreement, duly executed by Seller;

(d) a copy of the Pipeline Operating Agreement, duly executed by each of the
parties thereto;

(e) a copy of the Services Agreement, duly executed by the parties thereto;

(f) a copy of the Contribution Agreement, duly executed by the parties thereto;

(g) a copy of the Gathering Agreement, duly executed by the parties thereto;

(h) a copy of the Assignment of Contract Rights, duly executed by the parties
thereto;

(i) a copy of the Commencement of Rig Notice, duly executed by the parties
thereto;

(j) evidence reasonably satisfactory to Buyer that all Encumbrances relating to
the Gathering Assets, other than Permitted Encumbrances, have been released,
which evidence shall include instruments and documents necessary to release any
and all Encumbrances, other than Permitted Encumbrances, relating to the
Gathering Assets, including appropriate UCC financing statement amendments
(termination statements);

(k) a copy of the Joint Use Agreement, duly executed by the parties thereto;

 

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(l) a copy of a Subordination Agreement with or on behalf of each lender under
the GMX Credit Facilities at Closing, duly executed by the parties thereto;

(m) a copy of the Assignment, Bill of Sale and Conveyance, duly executed by the
parties thereto;

(n) a copy of the Memorandum of Gas Gathering Agreement, duly executed by the
parties thereto;

(o) evidence of receipt by the Company of the Cash Contribution;

(p) a copy of the Approval of Agent and Banks as described on Schedule 4.6;

(q) a copy of the Approval of Prudential Insurance Company of America as
described on Schedule 4.6;

(r) a copy of the Consent of Union Pacific as described on Schedule 4.6;

(s) a copy of the Pipeline Easement Agreement, duly executed by the parties
thereto;

(t) a copy of the Seller Parent Guaranty, duly executed by the party thereto;

(u) a certificate executed on behalf of Seller by the president or any vice
president of Seller, dated the Closing Date, representing and certifying that
the conditions set forth in Sections 6.l(a) and 6.1(b) have been fulfilled; and

(v) such other certificates, instruments of conveyance, and documents required
by this Agreement or as may be reasonably requested by Buyer and agreed to by
Seller prior to the Closing Date to carry out the intention and purposes of this
Agreement.

3.3 Closing Deliveries by Buyer. At the Closing, in addition to the payment of
the Purchase Price pursuant to Section 2.3, Buyer will deliver or cause its
Affiliates, as applicable, to deliver the following documents to Seller, duly
executed by Buyer or, if applicable, its Affiliate:

(a) a copy of the LLC Agreement duly executed by Buyer;

(b) a copy of the Buyer Parent Guaranty, duly executed by the party thereto;

(c) a certificate executed by an authorized officer of Buyer, dated the Closing
Date, representing and certifying that the conditions set forth in Sections
6.2(a) and 6.2(b) have been fulfilled; and

(d) such other certificates, instruments, and documents required by this
Agreement or as may be reasonably requested by Seller and agreed to by Buyer
prior to the Closing Date to carry out the intent and purposes of this
Agreement.

 

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ARTICLE 4

REPRESENTATIONS AND WARRANTIES OF SELLER

Subject to the disclosures made by Seller in Seller’s Disclosure Schedule and,
with respect to the Company, assuming the completion of the Contribution, Seller
represents and warrants to Buyer, as of the date hereof and the Closing Date, as
follows:

4.1 Organization of Seller. Seller is a corporation duly organized, validly
existing, and in good standing under the Laws of the State of Oklahoma.

4.2 Company.

(a) Organization of the Company. The Company is a limited liability company duly
organized, validly existing, and in good standing under the Laws of the State of
Delaware. The Company has all requisite limited liability company power and
authority, as applicable, to own, lease, and operate its properties and to carry
on its business as now being conducted. The Company does not own, directly or
indirectly, any capital stock or other equity securities of, or interests in,
any other Person.

(b) Qualification. The Company is duly qualified or licensed to do business as a
limited liability company and is in good standing in the jurisdictions in
Schedule 4.2(b), which are the only jurisdictions in which the property owned,
leased, or operated by it or the conduct of its business requires such
qualification or licensing.

(c) Ownership of Membership Interests; Encumbrances. Except as otherwise
indicated on Schedule 4.2(c), all of the limited liability company membership
interests of the Company are owned directly by Seller free and clear of all
Encumbrances, other than (i) restrictions on transfer that may be imposed by
federal or state securities Laws or (ii) encumbrances that arise out of any
actions taken by or on behalf of Buyer or its Affiliates. All outstanding
limited liability company membership interests of the Company have been validly
issued.

(d) Options and Rights to Acquire Equity. Except as set forth on Schedule
4.2(d), there are outstanding (i) no securities of any Seller, Seller Affiliate
or the Company convertible into or exchangeable or exercisable for shares of
capital stock or other equity interests of the Company, (ii) no options,
warrants, preemptive or other rights to acquire from Seller, any Seller
Affiliate or the Company, and no obligation of Seller, any Seller Affiliate or
the Company to issue or sell, any shares of capital stock or other equity
interests of the Company or any securities convertible into or exchangeable or
exercisable for such capital stock or equity interests, other than the rights of
Buyer to acquire the Purchased Interests pursuant to this Agreement, and
(iii) no equity equivalents or other similar rights of or with respect to the
Company. There are outstanding no obligations of Seller, Seller Affiliate or the
Company to repurchase, redeem, or otherwise acquire any of the foregoing shares,
securities, options, equity equivalents, interests or rights.

4.3 Organizational Documents. Seller has delivered to Buyer accurate and
complete copies of the organizational documents of the Company as currently in
effect.

 

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4.4 Seller’s Authority. Seller and each Seller Affiliate which is entering into
any Related Agreement has full corporate or limited liability company power and
authority to execute, deliver, and perform this Agreement and the Related
Agreements to which it is a party. The execution, delivery, and performance by
Seller and each Seller Affiliate, as applicable, of this Agreement and the
Related Agreements, and the consummation by it of the transactions contemplated
hereby and thereby, have been, or prior to the Closing, will be duly authorized
by all necessary corporate or limited liability company action of Seller and
such Seller Affiliate. This Agreement has been duly executed and delivered by
Seller and constitutes (and each Related Agreement to be executed by Seller, or
any Seller Affiliate, when executed will be duly executed and delivered by
Seller or such Seller Affiliate and will constitute), a valid and legally
binding obligation of Seller or such Seller Affiliate as the case may be,
enforceable against Seller or such Seller Affiliate in accordance with its
terms, except that such enforceability may be limited by (i) applicable
bankruptcy, insolvency, reorganization, moratorium, and similar Laws affecting
creditors’ rights generally and (ii) equitable principles which may limit the
availability of certain equitable remedies (such as specific performance) in
certain instances.

4.5 No Conflict. Except as described on Schedule 4.5, and except as may result
from any facts or circumstances relating solely to Buyer or its Affiliates and
assuming all consents, approvals, authorizations, and other actions described in
Section 4.6 have been obtained and all filings and notifications listed on
Schedule 4.6 have been made, the execution, delivery, and performance of this
Agreement and the Related Agreements by Seller and each Seller Affiliate party
thereto, and the consummation by it of the transactions contemplated hereby and
thereby do not and will not:

(a) violate or breach the certificate of incorporation or bylaws (or equivalent
organizational documents) of Seller, the Company or any Seller Affiliate which
is entering into any Related Agreements;

(b) violate, breach or contravene any Law binding upon Seller, any Seller
Affiliate or the Company; or

(c) result in any breach of, or constitute a default under, or give to others
any rights of termination, acceleration or cancellation of, or result in the
creation of any Encumbrance (other than a Permitted Encumbrance) on, any of the
Gathering Assets pursuant to, any Contract, lease, Permit or other instrument
relating to the Gathering Assets to which the Company, Seller or any Seller
Affiliate is a party or by which any of the Gathering Assets is bound or
affected.

4.6 Consents and Approvals. No Permit of, or declaration, filing or registration
with, or notification to, any Governmental Entity, or any other Person, is
required to be made or obtained by Seller, any Seller Affiliate or the Company
in connection with the execution, delivery and performance of this Agreement and
Related Agreements or the consummation of the transactions contemplated hereby,
except as set forth on Schedule 4.6.

4.7 Permits. Schedule 4.7 contains a true and complete list of all Permits
required or used in the operation of the Business or the Gathering Assets. Prior
to the date hereof, Seller has made available to Buyer true and complete copies
of all such Permits. Except as disclosed on

 

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Schedule 4.7, the Company holds, and prior to the Closing Seller or a Seller
Affiliate held, all Permits required by Law or otherwise necessary for the
conduct of the Business as presently conducted. Except as disclosed on Schedule
4.7, the Company is, and prior to the Closing Seller or such Seller Affiliate
was, in compliance with the terms of all such applicable Permits, and no
Proceeding is pending or, to the Knowledge of Seller, threatened with respect to
any alleged failure by the Company, and prior to the Closing Seller or such
Seller Affiliate, to have any such Permit or not to be in compliance therewith.

4.8 Financial Statements.

(a) Schedule 4.8(a) contains the unaudited, beginning balance sheet of the
Company (assuming the Contribution was made on January 1, 2009) as of the
Balance Sheet Date (the “Balance Sheet”), and related unaudited, pro forma
statement of income for the seven (7) month interim period ending July 31, 2009
(collectively, the “Financial Statements”). The Financial Statements have been
prepared in conformity with GAAP, consistently applied, except as otherwise
disclosed on Schedule 4.8(a) and except for the absence of notes and year-end
audit adjustments required by GAAP, subject to the assumptions and limitations
set forth therein.

(b) Except as set forth in Schedule 4.8(b), the Financial Statements, subject to
the assumptions and limitations set forth therein, fairly present the financial
position and results of operations of the Business as of and for the periods
covered thereby.

(c) The Company has no liabilities or obligations, whether known, unknown,
accrued, contingent or otherwise, except (i) as set forth in Schedule 4.8(c) and
(ii) as and to the extent reflected on, disclosed in, or reserved against in the
Balance Sheet.

4.9 Absence of Certain Changes. Except as disclosed in Seller’s Disclosure
Schedule or as contemplated by this Agreement, since the Balance Sheet Date,
(i) there have not been any changes in or changes in circumstances relating to
the assets or financial condition of the Company, (ii) the Business has been
conducted only in the ordinary course consistent with past practice, and
(iii) the Company has not suffered any loss, damage, destruction, or other
casualty to any of its property, plant, equipment or inventories (whether or not
covered by insurance).

4.10 Tax Matters. Except as disclosed on Schedule 4.10:

(a) the Company and Seller have filed, or have had filed on their behalf, within
the time and manner prescribed by Law, with the appropriate Taxing Authority all
Tax Returns required to be filed by the Company and Seller and all such Tax
Returns were and continue to be true, complete and correct since filed;

(b) all Taxes due and payable by or with respect to the Company, the Business,
the Gathering Assets and Seller have been paid in full within the time and
manner provided by Law;

(c) there are no outstanding agreements or waivers extending the statutory
period of limitations applicable to any federal, state, local or foreign income
or other Tax Returns required to be filed by or with respect to the Company or
Seller;

 

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(d) none of the Tax Returns of or with respect to the Company or Seller is
currently being audited or examined by any Taxing Authority and there are no
proposed, threatened or asserted audits, deficiencies, reassessments or claims
for Taxes against, or any adjustment of Taxes relating to the Company or Seller
or any property owned by the Company or Seller;

(e) no material deficiency for any Taxes has been assessed with respect to the
Company or Seller that has not been abated, paid in full or adequately provided
for on the Balance Sheet in a manner consistent with GAAP;

(f) the Company is not a party to any Tax Sharing Agreement or any other
agreement that provides an indemnity for or against Taxes that will survive
Closing;

(g) the Company does not have liability for the Taxes of any other person
(i) pursuant to Section 1.1502-6 of the Treasury Regulations promulgated under
the Code or comparable provisions of any Taxing Authority in respect of a group,
consolidated, combined or unitary Tax Return, (ii) as a transferee or successor,
(iii) by contract, or (iv) otherwise;

(h) Seller and the Company have withheld and paid within the time and manner
required by law all Taxes required to have been withheld and paid in connection
with amounts paid or owing to any employee, independent contractor, creditor,
stockholder, or other party;

(i) no claim has ever been made by a Taxing Authority in a jurisdiction where
the Company or Seller does not file a Tax Return that such entity is or may be
subject to taxation by that jurisdiction, and Schedule 4.10(i) sets forth all of
the foreign, federal and state jurisdictions in which the Company or Seller file
Tax Returns or are required to pay Taxes;

(j) except as required by Law, since the Balance Sheet Date, the Company has not
or has not had on its behalf: (A) made or changed any election concerning any
Taxes, (B) filed any amended Tax Return, (C) settled any Tax claim or
assessment, (D) received or filed a request for a ruling relating to Taxes
issued by a Taxing Authority or entered into any agreement with a Taxing
Authority relating to Taxes, (E) provided any power of attorney relating to Tax
matters, or (F) surrendered any right to claim a refund of any Taxes;

(k) neither of the Company nor Seller has participated, within the meaning of
Regulations section 1.6011-4(c), or been a “material advisor” or “promoter” (as
those terms are defined in sections 6111 and 6112 of the Code and the
Regulations promulgated thereunder) in any “reportable transaction” within the
meaning of Treas. Reg. 1.6011-4 or any predecessor provision and no Tax Return
filed by or on behalf of the Company or Seller contained a disclosure statement
under Section 6662 of the Code (or any similar provision of Law), and no Tax
Return has been filed by or on behalf of the Company or Seller with respect to
which the preparer of such Tax Return advised inclusion of such a disclosure;

(l) the Company is not part of an “affiliated group” as such term is defined
under Section 1504(a) of the Code and any similar provision of state or local
Tax law;

 

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(m) the Company is, and since formation has been, taxed as a disregarded entity
for federal income Tax purposes;

(n) none of the assets of the Company are “tax-exempt use property” within the
meaning of Section 168(h) of the Code or tax-exempt bond financed property
within the meaning of Section 168(g)(5) of the Code;

(o) there are no liens for Taxes on the assets of the Company other than
Permitted Encumbrances; and

(p) the Company is not a party to any agreement, contract, arrangement or plan
that has resulted or could result, separately or in the aggregate, in the
payment of any “excess parachute payment” within the meaning of Section 280G of
the Code (or any corresponding provision of state, local or foreign Tax law).

4.11 Compliance With Applicable Laws. The Company is, and prior to the Closing
with respect to the Business and the Gathering Assets Seller and applicable
Seller Affiliates have been, in compliance with all Laws, except as disclosed on
Schedule 4.11.

4.12 Legal Proceedings; Regulatory Proceedings.

(a) Except as disclosed on Schedule 4.12(a), there are no Proceedings pending
or, to the Knowledge of Seller, threatened against the Company, the Business or
any of the Gathering Assets, and there are no Proceedings pending or, to the
Knowledge of Seller, threatened against Seller or any Seller Affiliate that
could impair (i) the Company, the Business or any of the Gathering Assets or
(ii) Seller’s or any Seller Affiliate’s ability to effect the Closing. None of
the Company, the Business or any of the Gathering Assets is subject to any
judgment, order, writ, injunction, or decree of any Governmental Entity.

(b) Except as disclosed on Schedule 4.12(b), the Company is not, and neither
Seller nor any Seller Affiliate with respect to the Business or the Gathering
Assets is, a party to any Proceeding, no such Proceeding is pending or, to the
Knowledge of Seller, threatened, and to the Knowledge of Seller there is no
basis for any such Proceeding.

4.13 Tangible Assets. The Company has title to, or a valid leasehold interest
in, the tangible assets described on Schedule 4.13, which, together with other
tangible assets to be provided to the Company pursuant to one or more Related
Agreements, are the only tangible assets used by the Seller or any Seller
Affiliate in the conduct of the Business, and such tangible assets are, together
with the other tangible assets to be provided to the Company pursuant to one or
more Related Agreements, and when combined with the various services to be
provided to the Company pursuant to one or more of the Related Agreements,
sufficient to conduct the Business as conducted in the ordinary course of
business. The Company is in possession of and has good title to, or has valid
leasehold interests in or valid rights under Contract to use, all tangible
property included in the Gathering Assets. All such tangible personal property
is free and clear of all Encumbrances, other than Permitted Encumbrances, its
use complies in all respects with all applicable Laws, and is in working
condition, ordinary wear and tear excepted and is adequate for the purpose for
which it is now being used in the Business.

 

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4.14 Real Property.

(a) Schedule 4.14(a) describes each parcel of Owned Real Property. With respect
to each parcel of Owned Real Property (other than the Rights-of-Way):

(i) the Company has good and indefeasible fee simple title, free and clear of
all Encumbrances, except Permitted Encumbrances;

(ii) except as set forth in Schedule 4.14(a)(ii), neither the Seller, any Seller
Affiliate nor the Company has or will have leased or otherwise granted to any
Person the right to use or occupy such Owned Real Property or any portion
thereof; and

(iii) there are no outstanding options, rights of first offer or rights of first
refusal to purchase such Owned Real Property or any portion thereof or interest
therein.

(b) Except as set forth on Schedule 4.14(b), with respect to the Rights-of-Way
comprising the Owned Real Property, the Company has good and indefeasible title
to, or interests therein, sufficient to enable the Company to use and operate
the Gathering Assets and the Business in a reasonable and customary manner, free
and clear of all Encumbrances, except for Permitted Encumbrances, and to cause a
prudent Person engaged in the business of purchasing, owning and operating the
Business to accept such title. Except as set forth on Schedule 4.14(b), with
respect to the Rights-of-Way comprising the Gathering Assets, (A) the entire and
continuous length of each of the pipeline systems necessary for the conduct of
the Business is covered by valid, enforceable and recorded Rights-of-Way in
favor of the Company (or their predecessors in title, with assignment(s) of
record vesting title into the Company) and their successors and assigns, and
there are no spatial gaps in any of such Rights-of-Way, (B) the Rights-of-Way
grant the Company (or their predecessors in title, with assignment(s) of record
vesting title into the Company) the right to construct, operate, and maintain
each of these pipeline systems in, over, under, and across the real property
covered thereby, and to receive, gather and redeliver gas produced from lands
throughout the Dedicated Acreage and (C) each of these pipeline systems is
located within the confines of such contiguous Rights-of-Way and does not
encroach upon any adjoining real property.

(c) Schedule 4.14(c) describes each parcel of Leased Real Property, and a true
and complete list of all Leases for each such parcel of Leased Real Property.
The Company has made available to Buyer a true and complete copy of each such
Lease document.

(i) Neither the Seller, any Seller Affiliate nor the Company has not assigned,
transferred, conveyed, mortgaged, deeded in trust or encumbered any interest in
such Leases, except for assignments, transfers, conveyances, mortgages, deeds of
trust or other Encumbrances which will be released prior to Closing. The Company
has adequate rights of ingress and egress with respect to the Leased Real
Property and all buildings, structures, facilities, fixtures and other
improvements thereon. None of such Leased Real Property, buildings, structures,
facilities, fixtures or other improvements, or the current use thereof,
contravenes

 

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or violates any building or zoning Law, or any administrative, occupational
safety and health or other applicable Law, in each case, in any material respect
(whether or not permitted on the basis of prior nonconforming use, waiver or
variance).

(ii) Except as set forth on Schedule 4.14(c)(ii), the Company has a valid
leasehold interest in accordance with the terms of each Lease for the full term
of the Lease thereof. Each Lease covering the Leased Real Property is a legal,
valid and binding agreement enforceable in accordance with its terms against the
Company and, to the Knowledge of Seller, each other Person that is a party
thereto, and the Company is not in, and the Company or Seller has not received
notice of any, default (or any condition or event which, after notice or lapse
of time or both, would constitute a default) thereunder. Neither Seller nor, to
the Knowledge of Seller, any other party to any Leased Real Property is in
breach or default, and, to the Knowledge of Seller, no event has occurred which,
with notice or lapse of time, could reasonably be expected to constitute such a
breach or default or permit termination, modification or acceleration under such
Leased Real Property. The Company does not owe any brokerage commission with
respect to any such Leased Real Property.

4.15 Certain Obligations of the Company. Schedule 4.15 lists the following
Contracts that are related to the Business:

(a) any Contract (or group of related Contracts) for the lease of personal
property to or from any Person;

(b) any Contract (or group of related Contracts) for the purchase or sale of raw
materials, commodities, supplies, products, or other personal property, or for
the furnishing or receipt of services;

(c) any Contract concerning a partnership or joint venture;

(d) any Contract (or group of related Contracts) under which the Company has
created, incurred, assumed, or guaranteed any indebtedness for borrowed money,
or any capitalized lease obligation or under which a Person has imposed an
Encumbrance on any of the Gathering Assets;

(e) any Contract concerning confidentiality or noncompetition that will be
binding on Buyer, the Company or any of the Gathering Assets after the Closing
Date;

(f) any collective bargaining agreement that will be binding on Buyer, the
Company or any of the Gathering Assets after the Closing Date;

(g) any Contract for the employment of any individual on a full time, part time,
consulting, or other basis or providing severance benefits;

(h) any Contract between the Company, on the one hand, and Seller or any Seller
Affiliate, on the other hand;

 

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(i) any Contract pertaining to the processing, treating, dehydration,
separation, compression, conditioning, gathering, storage, exchange,
transportation or transmission of natural gas in all its forms and all other
hydrocarbons;

(j) any Contract that requires the Company to indemnify or otherwise make whole
any Person;

(k) any interconnection Contract;

(l) any Contract between the Company, on the one hand, and any Governmental
Entity, on the other hand;

(m) any Contract related to the construction of pipelines or related facilities;

(n) any other Contract (or group of related Contracts) the performance of which
requires or entitles the Company to make or receive payments in excess of
$25,000 annually or in the aggregate; and

(o) any Contract (or group of related Contracts) that (i) contains provisions
calling for the sale or purchase of raw materials, products or services at
prices that vary from the market prices of such raw materials, products and
services generally prevailing in customary third party markets; (ii) includes
“take or pay,” “meet or release,” “most favored nations,” “guaranteed minimum
throughput” or similar pricing and delivery arrangements; (iii) provides for the
prepayment in advance by any counter party to the Contract for the goods and or
services the subject of the Contract, with the obligation to repay or perform by
the other counter party in the future; (iv) contains interest rate, currency,
commodity or other swap, collar, hedge, cap, option or any other derivative;
(v) requires a capital expenditure or a commitment for a capital expenditure in
excess of $25,000, or (vi) includes “tolling,” “stand-by” or “contingent firm
capacity” provisions that might require the Company to provide, at the election
of the counter party to such agreement, gas gathering, processing, storage, or
firm transportation to such counter party, or its designee, irrespective of
current or future commitments of firm service in favor of parties other than the
counter party or its designees burdening the applicable Gathering Assets
comprising the Business.

Seller has made available to Buyer a correct and complete copy of each written
Contract listed on Schedule 4.15 and a written summary setting forth the
material terms and conditions of each oral Contract referred to in Schedule
4.15. With respect to each such Contract: (i) the Contract is legal, valid,
binding, enforceable, and in full force and effect, except that such
enforceability may be limited by (A) applicable bankruptcy, insolvency,
reorganization, moratorium, and similar Laws affecting creditors’ rights
generally and (B) equitable principles which may limit the availability of
certain equitable remedies (such as specific performance) in certain instances;
(ii) neither the Company, nor to Seller’s Knowledge any other Person, is in
breach or default, and no event has occurred which with notice or lapse of time
would constitute a breach or default, or permit termination, modification, or
acceleration, under such Contract; and (iii) neither the Company, nor to
Seller’s Knowledge any other party, has repudiated any provision of the
Contract.

 

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4.16 Employee Matters. Except as set forth on Schedule 4.16, the Company (i) has
no employees, (ii) is not and has never been the sponsor of and does not
participate in, maintain or contribute to any Benefit Plan, and (iii) has no
liability relating to any Benefit Plan, nor does any condition or set of
circumstances exist under which the Company could reasonably be expected to have
any liability with respect to any Benefit Plan. The Company is not a party to,
or bound by, any collective bargaining agreement or contract with a labor union,
and there are no unfair labor practice or labor arbitration Proceedings pending
or threatened to Seller’s Knowledge against the Company.

4.17 Environmental. Except as set forth on Schedule 4.17:

(a) The Company is and has been, and prior to the Closing, each owner of any of
the Gathering Assets has been, and the ownership, use and operation of the
Gathering Assets are and have been, in compliance with applicable Environmental
Laws, and has obtained and is in compliance with any Permits required under any
applicable Environmental Laws, all of which Permits are in full force and effect
with all Permit renewal applications, if any, having been timely filed;

(b) None of the Company, Seller or any Seller Affiliate has received any written
or other formal (whether written or otherwise) notice or demand letter from any
Governmental Entity or Third Party, indicating that the Company or any of the
Gathering Assets is in violation of, or liable under, any Environmental Law,
which violation or liability has not heretofore been resolved with such
Governmental Entity or Third Party;

(c) There are no conditions existing on any of the Gathering Assets or on
currently or formerly owned, operated or leased properties, assets, and
businesses of the Company (including soils, groundwater, surface water,
buildings or other structures) that would reasonably be expected to give rise to
any claim, proceeding, action, or liability under any Environmental Law;

(d) No such properties, assets, or businesses of the Company are contaminated
with Hazardous Materials in violation of, or in a manner that would reasonably
be expected to give rise to any obligation under, any Environmental Law; and

(e) The Company has not assumed contractually the liability of any other person
under any applicable Environmental Law.

(f) Seller has delivered to Buyer prior to the date hereof true and complete
copies of all internal and external environmental audits, studies, reports and
correspondence relating to environmental matters in each case relevant to the
Company or the Gathering Assets (collectively, “Environmental Reports”). Each of
the Environmental Reports is listed on Schedule 4.17.

4.18 Insurance. Except as disclosed on Schedule 4.18, all insurance policies
maintained with respect to the Company are in full force and effect and all
premiums due and payable on such policies have been paid (other than retroactive
or retrospective premium adjustments that are not yet, but may be, required to
be paid with respect to any period ending prior to the Closing Date). No notice
of cancellation of, or indication of an intention not to renew, any such
insurance policy has been received by Seller or the Company.

 

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4.19 Brokerage Fees. Except as set forth in Schedule 4.19, neither Seller nor
any Seller Affiliates have entered (directly or indirectly) into any agreement
with any Person that would obligate Buyer, any of its Affiliates or the Company
to pay any commission, brokerage or “finder’s fee” or other similar fee in
connection with this Agreement or the transactions contemplated herein.

4.20 Solvency. Seller (i) is not entering into this Agreement with the intent to
hinder, delay or defraud creditors, (ii) is solvent, (iii) will not become
insolvent as a result of the transactions contemplated by this Agreement,
(iv) is capable of paying its debts as they mature, (v) will remain capable of
repaying its debts as they mature after effecting such transfers, and (vi) is
receiving a reasonably equivalent value in exchange for the Purchased Interests.
The transfer of the Gathering Assets to the Company pursuant to the Contribution
Agreement was not wrongful or fraudulent with respect to Seller’s or any Seller
Affiliate’s creditors, and no creditor shall be entitled to bring any claim
under any Law against Seller, any Seller Affiliate, the Company or Buyer with
respect to such transfer. Each of Seller and any applicable Seller Affiliate has
and will have adequate capital or funding to meet its obligations arising under
this Agreement, including Section 7.5, and any Related Agreement to which it is
a party.

4.21 Transactions with Affiliates. Except as set forth in Schedule 4.21, and
other than the Related Agreements, all Contracts and other arrangements between
the Company, on the one hand, and Seller or any Seller Affiliate (other than the
Company), on the other hand, have been terminated prior to the date hereof.

4.22 Intellectual Property. Schedule 4.22 sets forth a true and complete list of
all patents, trademarks (registered or unregistered), trade names, service marks
and copyrights and applications therefor (collectively, “Intellectual
Property”), owned, used, filed by or licensed to the Company. With respect to
registered trademarks, Schedule 4.22 sets forth a list of all jurisdictions in
which such trademarks are registered or applied for and all registration and
application numbers. Except as set forth on Schedule 4.22, the Company owns, and
the Company has the right to use, execute, reproduce, display, perform, modify,
enhance, distribute, prepare derivative works of and sublicense, without payment
to or claim of infringement by any other person, all Intellectual Property
listed on Schedule 4.22, as applicable, and the consummation of the transactions
contemplated hereby will not conflict with, alter or impair or require the
consent of any Person with respect to any such rights, in each case.

4.23 Transaction Information. None of the documents or information, taken as a
whole, delivered to Buyer in connection with the transactions contemplated by
this Agreement contains any untrue statement of a material fact or omits to
state a material fact necessary in order to make the statements contained
therein not misleading. There is no fact or circumstance specific to the Company
or the Gathering Assets (as opposed to facts or circumstances of a general
economic or industry nature) known to Seller that has not been disclosed to
Buyer which, individually or in the aggregate, would reasonably be expected to
be material to Buyer’s decision respecting the acquisition of the Purchased
Interests.

 

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4.24 Notice of Commencement of Rig. As of the date hereof, Seller has delivered
the Commencement of Rig Notice to Helmerich & Payne International Drilling Co.
pursuant to the Drilling Contract such that a second drilling rig from such
Person will be fully operational on the Dedicated Acreage no later than the date
that is thirty (30) days after the date hereof.

4.25 Bonding. Except as set forth in Schedule 4.25, neither Seller, any
Affiliate of Seller nor the Company is obligated to the Railroad Commission of
Texas (the “RRC”) or any other Governmental Entity having jurisdiction over the
Gathering Assets for any surety bonds, payments, penalties, interest, or other
sums, and each of Seller, each of such applicable Seller Affiliates and the
Company is otherwise in good standing with the RRC and all other Governmental
Entities having jurisdiction over the Gathering Assets.

4.26 Non-Jurisdictional. Seller and the Company are “gathering” companies within
the meaning of Section 1(b) of the Natural Gas Act of 1938, 15 U.S.C. § 717(b)
(“NGA”), and are not subject to the jurisdiction of the Federal Energy
Regulatory Commission (“FERC”) under the NGA or the Natural Gas Policy Act of
1978, 15 U.S.C. §§ 3301, et seq. (“NGPA”). None of Seller, Endeavor Pipeline
Inc. or the Company is a “gas utility” within the meaning of the Cox Act, TEX.
UTIL. CODE ANN. §§ 121.001, 121.005 (the “Cox Act”). None of Seller, Endeavor
Pipeline Inc. or the Company has engaged in any activities, or received any
written notices or demand letters from the FERC, the RRC, or any other
Governmental Entity alleging that Seller, Endeavor Pipeline Inc. or the Company
has engaged in any activities that subject Seller, Endeavor Pipeline Inc. or the
Company, or its respective assets, facilities, activities, or services, to the
jurisdiction of, as applicable, the FERC under the NGA or NGPA or the RRC as a
“gas utility” under the Cox Act.

4.27 Preferential Rights; Consents. Except as set forth on Schedule 4.27, the
Gathering Assets are not subject to any preferential purchase rights or options,
rights of first offer, rights of first refusal, required third Person consents
to assignment, or similar rights held by any Person not a party to this
Agreement, the operation of which are triggered by the transactions described in
this Agreement.

4.28 Imbalances. Except as set forth on Schedule 4.28, as of July 31, 2009,
neither Seller nor the Company has a claim against any other Person, nor is
Seller or the Company subject to a claim by any other Person, with respect to
any imbalance pertaining to the Gathering Assets.

4.29 Reserves. Seller has provided to Buyer true and correct copies of the
reserve report dated effective as of September 1, 2009, prepared by MHA
Petroleum Consultants, Inc., regarding the oil and gas reserves underlying the
Dedicated Acreage as of such date (the “Reserves”). All production, operating,
tax, and other information provided by Seller to MHA Petroleum Consultants, Inc.
in connection with the preparation of such reserve report was true, correct, and
complete as of the effective date of such reserve report. Seller has no
Knowledge of any single event, occurrence or fact that, alone or together with
all other events, occurrences or facts, could reasonably be expected (a) to have
resulted in a material loss to, or material diminution in value (other than as a
result of a general decrease in the price of oil or in the price of natural gas,
as applicable) of, the Reserves, or (b) otherwise to have materially adversely
affected the ownership, use, operation, or amount of the Reserves, from the
effective date of such reserve report to the Closing Date.

 

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4.30 Dedicated Gas. (a) Seller and Endeavor Pipeline Inc., as parties to the
Gathering Agreement (the “Shipper Parties”), have title to, and the right to
sell or otherwise dispose of, the Shipper Parties’ owned portion of the
Dedicated Gas; (b) the Shipper Parties have the lawful right and authority to
dedicate to the performance of the Gathering Agreement the Shipper Parties’
owned portion of the Dedicated Gas; (c) on the Closing Date and at the time of
delivery under the Gathering Agreement, the Shipper Parties’ owned portion of
all Dedicated Gas shall be free and clear of any and all Encumbrances; (d) with
respect to portions of the Dedicated Gas not owned by the Shipper Parties, the
Shipper Parties have the lawful right and authority to dedicate to the
performance of the Gathering Agreement such Dedicated Gas; and (e) on the
Closing Date and at the time of delivery under the Gathering Agreement, all such
Dedicated Gas not owned by the Shipper Parties shall be free and clear of any
and all Encumbrances.

4.31 Books and Records. The books of account, minute books, record books and
other records of the Company, all of which have been made available to Buyer or
its representatives, are complete and correct.

ARTICLE 5

REPRESENTATIONS AND WARRANTIES OF BUYER

Subject to the disclosures made by Buyer in Buyer’s Disclosure Schedule, Buyer
represents and warrants to Seller, as of the date hereof and the Closing Date,
as follows:

5.1 Organization. Buyer is a limited liability company duly organized, validly
existing, and in good standing under the Laws of the jurisdiction of its
formation.

5.2 Buyer’s Authority. Buyer has full limited liability company power and
authority to execute, deliver, and perform this Agreement and any Related
Agreements to which it is a party. The execution, delivery, and performance by
Buyer of this Agreement and such Related Agreements and the consummation by it
of the transactions contemplated hereby and thereby, have been duly authorized
by all necessary limited liability company action of Buyer. This Agreement has
been duly executed and delivered by Buyer and constitutes, and each such Related
Agreement executed or to be executed by Buyer has been, or when executed will
be, duly executed and delivered by Buyer and constitutes, or when executed and
delivered will constitute, a valid and legally binding obligation of Buyer,
enforceable against Buyer in accordance with its terms, except that such
enforceability may be limited by (i) applicable bankruptcy, insolvency,
reorganization, moratorium, and similar Laws affecting creditors’ rights
generally and (ii) equitable principles which may limit the availability of
certain equitable remedies (such as specific performance) in certain instances.

5.3 No Conflict. Assuming all consents, approvals, authorizations, and other
actions described in Section 5.4 have been obtained and all filings and
notifications listed in Section 5.4 have been made, and except as may result
from any facts or circumstances relating solely to Seller or any Seller
Affiliate, the execution, delivery and performance of this Agreement by Buyer do
not and will not:

(a) violate or breach the certificate of formation or limited liability company
agreement of Buyer; or

 

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(b) violate or breach any Law binding upon Buyer.

5.4 Consents and Approvals. No consent, approval, authorization, license, order,
or permit of, or declaration, filing, or registration with, or notification to,
any Governmental Entity, or any other Person, is required to be made or obtained
by Buyer or any of its Affiliates in connection with the execution, delivery,
and performance of this Agreement and the consummation of the transactions
contemplated hereby.

5.5 Legal Proceedings. There are no Proceedings pending or, to the Knowledge of
Buyer, threatened seeking to restrain, prohibit, or obtain damages or other
relief in connection with this Agreement or the transactions contemplated
hereby.

5.6 Brokerage Fees. Except as set forth in Schedule 5.6, neither Buyer nor any
of its Affiliates have entered (directly or indirectly) into any agreement with
any Person that would obligate Seller, any Seller Affiliate or the Company to
pay any commission, brokerage or “finder’s fee” or other similar fee in
connection with this Agreement or the transactions contemplated herein.

5.7 Nature of Investment; Investment Experience; Restricted Securities. In
acquiring the Purchased Interests, Buyer is not offering or selling, and will
not offer or sell, the Purchased Interests for Seller in connection with any
distribution of any of such Purchased Interests, and Buyer does not have a
participation and will not participate in any such undertaking or in any
underwriting of such an undertaking except in compliance with applicable
securities Laws. Buyer acknowledges that it can bear the economic risk of its
investment in the Purchased Interests, and has such knowledge and experience in
financial and business matters that it is capable of evaluating the merits and
risks of an investment in the Purchased Interests. Buyer is an “accredited
investor” as such term is defined in Regulation D under the Securities Act of
1933 (the “Securities Act”). Buyer understands that none of the Purchased
Interests will have been registered pursuant to the Securities Act or any
applicable state securities Laws, that the Purchased Interests will be
characterized as “restricted securities” under federal securities Laws and that
under such laws and applicable regulations none of such Purchased Interests can
be sold or otherwise disposed of without registration under the Securities Act
or an exemption therefrom.

ARTICLE 6

CONDITIONS TO THE CLOSING; TERMINATION

6.1 Conditions to Buyer’s Obligations. The obligations of Buyer to consummate
the transactions contemplated by this Agreement are subject to the satisfaction
on or prior to the Closing Date of the conditions set forth below:

(a) Seller shall have performed and complied in all material respects with all
agreements required by this Agreement to be performed and complied with by it at
or prior to the Closing Date and all deliveries contemplated by Section 3.2
shall have been made;

 

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(b) The representations and warranties of Seller made in Article 4 qualified as
to materiality shall be true and correct, and those not so qualified shall be
true and correct in all material respects, as of the date hereof and as of the
time of the Closing Date as though made as of such time, except to the extent
such representations and warranties expressly relate to an earlier date (in
which case such representations and warranties qualified as to materiality shall
be true and correct, and those not so qualified shall be true and correct in all
material respects, on and as of such earlier date).

(c) Seller shall have obtained the release of, or binding agreements to release,
all Encumbrances on the Gathering Assets (other than Permitted Encumbrances),
such that, at Closing, the Company owns the Gathering Assets free and clear of
all Encumbrances, other than Permitted Encumbrances;

(d) no injunction, writ, temporary restraining order or any other order of any
Governmental Entity of competent jurisdiction shall have been issued , and no
statute, rule, regulation or executive order by a Governmental Entity shall have
been promulgated or enacted, that restrains, enjoins, prohibits or otherwise
makes illegal any of the transactions contemplated in this Agreement to be
consummated at the Closing.

6.2 Conditions to Seller’s Obligations. The obligations of Seller to consummate
the transactions contemplated by this Agreement are subject to the satisfaction
on or prior to the Closing Date of the conditions set forth below:

(a) Buyer shall have performed and complied in all material respects with all
agreements required by this Agreement to be performed and complied with by it at
or prior to the Closing Date and all deliveries contemplated by Section 3.3
shall have been made;

(b) the representations and warranties of Buyer made in Article 5 qualified as
to materiality shall be true and correct, and those not so qualified shall be
true and correct in all material respects, as of the date hereof and as of the
time of the Closing Date as though made as of such time, except to the extent
such representations and warranties expressly relate to an earlier date (in
which case such representations and warranties qualified as to materiality shall
be true and correct, and those not so qualified shall be true and correct in all
material respects, on and as of such earlier date).

(c) Seller shall have obtained the release of, or binding agreements to release,
all Encumbrances on the Gathering Assets (other than Permitted Encumbrances),
such that, at Closing, the Company owns the Gathering Assets free and clear of
all Encumbrances, other than Permitted Encumbrances;

(d) no injunction, writ, temporary restraining order or any other order of any
Governmental Entity of competent jurisdiction shall have been issued, and no
statute, rule, regulation or executive order by a Governmental Entity shall have
been promulgated or enacted, that restrains, enjoins, prohibits or otherwise
makes illegal any of the transactions contemplated in this Agreement to be
consummated at the Closing.

6.3 Termination. Subject to the provisions of Section 6.4, this Agreement may be
terminated at any time prior to the Closing in the following manner:

(a) by mutual written consent of the Parties;

 

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(b) by either Buyer or Seller if the Closing does not occur on or prior to
November 12, 2009; provided, that the right to terminate this Agreement under
this subsection shall not be available to a Party whose failure to fulfill any
obligation under this Agreement shall have been the cause of, or shall have
resulted in, the failure of the Closing to occur prior to such date;

(c) by written notice by one Party to the other if any Governmental Entity of
competent jurisdiction issued an injunction, writ or order permanently
restraining, enjoining or otherwise prohibiting the consummation of any of the
transactions contemplated in this Agreement and such injunction, writ or order
shall have become final and unappealable; provided, however, that the right to
terminate this Agreement under this subsection shall not be available to a Party
if such injunction, writ or order was primarily due to the failure of such Party
to perform any of its obligations under this Agreement; or

(d) by either Party if the other Party shall have breached any of its
representations and warranties or failed to perform its covenants or agreements
contained in this Agreement and such breach or failure to perform has not been,
or cannot be, cured to the reasonable satisfaction of the other Party within 15
days after receipt of written notice thereof.

6.4 Effect of Termination. Upon the termination of this Agreement in accordance
with Section 6.3, all rights and obligations of the Parties under this Agreement
shall become void and have no effect, except that (a) the agreements contained
in Section 6.3, this Section 6.4, Article 10, Sections 7.2, 7.3 and the
confidentiality provisions of Section 7.11 and (b) the Confidentiality
Agreement, shall each survive the termination hereof. Nothing contained in
Section 6.3 or this Section 6.4 shall relieve either Party from liability for
damages actually incurred as a result of any breach of this Agreement.

ARTICLE 7

ADDITIONAL AGREEMENTS

7.1 Covenants and Agreements Pending the Closing. From the date hereof to the
Closing Date:

(a) Conduct of Business. Except as specifically provided in this Agreement,
during the period from the date hereof to the Closing, Seller shall, and shall
cause applicable Seller Affiliates to, conduct the Business and operation of the
Gathering Assets in the ordinary course of business consistent with past
practice and shall use Reasonable Efforts to preserve, maintain, and protect the
Business and the Gathering Assets.

(b) Pre-Closing Restrictions. Without limiting the generality of Section 7.1(a)
and except as contemplated by the Contribution, prior to the Closing, without
the prior written consent of Buyer, Seller (with respect to the Gathering Assets
or the Business) shall not, and shall not permit any Seller Affiliate (with
respect to the Gathering Assets or the Business) or the Company to, take or
consent to any action to:

(i) amend the charter or bylaws or other equivalent organizational or governing
instruments of the Company;

 

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(ii) (A) transfer, issue, sell, pledge, encumber, dispose or deliver any shares
of capital stock of any class or any other securities or equity equivalents of
the Company; (B) grant options, warrants, calls or other rights to purchase or
otherwise acquire shares of capital stock of any class or any other securities
or equity equivalents of the Company or (C) amend in any material respect any of
the terms of any such securities or equity equivalents outstanding as of the
date hereof;

(iii) (A) split, combine, or reclassify any shares of capital stock or
outstanding equity of the Company; (B) declare, set aside or pay any dividend or
other distribution (whether in cash, stock or property or any combination
thereof) in respect of capital stock or outstanding equity of the Company;
(C) repurchase, redeem or otherwise acquire any securities of the Company; or
(D) adopt a plan of complete or partial liquidation or resolutions providing for
or authorizing a liquidation, dissolution, merger, consolidation, restructuring,
recapitalization, or other reorganization of the Company;

(iv) (A) create, incur, endorse, guarantee, or assume any indebtedness of the
Company; (B) cause the Company to make any loans, advances, or capital
contributions to, or investments in, any other Person; or (C) mortgage or pledge
any of the Gathering Assets, or assets of the Company, tangible or intangible,
or create any material Encumbrance thereupon other than Permitted Encumbrances;

(v) hire at, or transfer to, the Company, any employees,

(vi) acquire, sell, lease, license, assign, convey, transfer, or otherwise
dispose of, directly or indirectly, any assets;

(vii) cause the Company to acquire (by merger, consolidation, or acquisition of
stock or assets or otherwise) any corporation, partnership, or other business
organization or division thereof;

(viii) (A) amend, modify, or change in any material respect any Contract or
(B) enter into any Contract;

(ix) make any change in any material respect to any of the accounting
principles, methods, policies or practices used by the Business or the Company,
except for any change required by reason of a concurrent change in GAAP;

(x) cause the Company to engage in any new business or acquire the securities of
any other Person;

(xi) cause the Company to compromise any debt or claim or waive or release any
material right;

 

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(xii) other than in response to an emergency situation as is reasonably
necessary to protect human health or safety, or the environment, or to provide
for continuation of services of the Business, enter into any commitment for
capital expenditures other than with respect to pipeline construction project
described on Schedule 4.8(c);

(xiii) enter into any Contract that restrains, restricts, limits or impedes the
ability of the Company, the Business, or the Gathering Assets to compete with or
conduct any business or line of business in any geographic area;

(xiv) settle or compromise any pending or threatened Proceeding or any claim or
claims for, or that would result in a Loss by the Company or the Business;

(xv) (A) make, change or revoke any material Tax election or settle or
compromise any material Tax claim or liability or (B) prepare or file any Tax
Return (or any amendment thereof) unless such Tax Return shall have been
prepared in a manner consistent with past practice; or

(xvi) commit or agree to do any of the foregoing.

(c) none of the Parties shall take any action that causes the representations
and warranties made by such Party herein to be untrue or incorrect as of the
Closing Date;

(d) Filings; Additional Actions.

(i) Each Party shall use all Reasonable Efforts to obtain all declarations,
Permits and orders of, and to give all notices to and make all filings with, all
Governmental Entities (including those pertaining to the Governmental Approvals,
if any) and other Persons that may be or become necessary for its execution and
delivery of, and the performance of its obligations under this Agreement and
will cooperate fully with the other Party in promptly seeking to obtain all such
declarations, Permits and orders, giving such notices, and making such filings;
and

(ii) Seller shall, and shall cause the Company and applicable Seller Affiliates
to, use Reasonable Efforts to obtain at the earliest practicable date all
consents, waivers and approvals from, and provide all notices to, all Persons
that are not a Governmental Entity, which consents, waivers, approvals and
notices are required to consummate, or are otherwise in connection with, the
transactions contemplated by this Agreement, including the consents, waivers,
approvals and notices referred to in Sections 4.6.

(e) Seller shall promptly notify Buyer of any material problems or developments
with respect to the Business; and

(f) each of the Parties, promptly upon becoming aware thereof, shall give
detailed written notice to the other Party of the occurrence of, or the
impending or threatened

 

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occurrence of, any event that would cause or constitute a breach by such Party,
or would have caused or constituted a breach by such Party had such event
occurred or been known prior to the date of this Agreement, of any of its
respective covenants, agreements, representations or warranties contained or
referred to herein or in any document delivered in accordance with the terms
hereof.

7.2 Public Announcements. Buyer and Seller shall consult with each other before
they or any of their Affiliates issue any press release or otherwise make any
public statement with respect to this Agreement or the transactions contemplated
hereby. Buyer and Seller and their Affiliates shall not issue any such press
release or make any such public statement without the consent of the other
Parties, which consent shall not be unreasonably withheld or delayed, except as
may be required by Law or applicable rule of any stock exchange.

7.3 Expenses. Except as otherwise expressly provided in this Agreement, all fees
and expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the Party incurring such fee or expense.

7.4 Transfer Taxes. Seller shall be responsible for the payment of Transfer
Taxes resulting from the transaction contemplated by the Contribution Agreement,
and the sale of the Purchased Interests pursuant hereto.

7.5 Drilling Obligation. Seller shall fund the contracting and operation of a
second drilling rig for the production of natural gas from the Dedicated Acreage
pursuant to the Drilling Contract. For a period of not less than three (3) years
beginning on the Closing Date, Seller shall cause:

(a) two (2) drilling rigs to remain in continuous operation drilling horizontal
wells on the Dedicated Acreage with no cessation of operations for either
drilling rig of more than thirty (30) days between the completion by the
relevant rig of drilling operations in one well and the commencement by such
drilling rig of actual drilling operations in the next well;

(b) each well drilled after the Closing Date on the Dedicated Acreage by such
drilling rigs to be completed and equipped for the production of oil and gas;
and

(c) all wells that produce Dedicated Gas to be produced on a continuous basis
without interruption (in the absence of a permanent cessation of production due
to depletion of reserves), except as may be necessary for the performance of
well maintenance or workover or other operations intended to improve or restore
production.

Notwithstanding the foregoing, Seller shall not be liable to Buyer for failure
to perform any of its obligations described in this Section 7.5 to the extent
such performance is hindered, delayed, or prevented by Force Majeure. If Seller
is unable, in whole or in part, to carry out its obligations under this
Section 7.5 due to Force Majeure, Seller shall, as soon as possible, give
written and verbal notice to Buyer describing the circumstances underlying such
Force Majeure, but in any event not later than five (5) days after the discovery
of such Force Majeure. If Seller claims Force Majeure pursuant to this
paragraph, Seller shall use Reasonable Efforts to remove the cause, condition,
event or circumstance of such Force Majeure, and shall resume performance of any
suspended obligation as soon as reasonably possible after termination of such
Force Majeure. The decision to settle a strike or a labor disturbance is at the
sole discretion of Seller to the extent Seller claims Force Majeure.

 

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7.6 Certain Disclosure Matters.

(a) Each disclosure of Seller set forth in Seller’s Disclosure Schedule shall
limit a representation or warranty of Seller only to the extent such disclosure
specifically references the particular representation or warranty it is intended
to qualify or it is reasonably apparent on the face of such disclosure that it
qualifies such particular representation or warranty.

(b) Each disclosure of Buyer set forth in Buyer’s Disclosure Schedule shall
limit a representation or warranty of Buyer only to the extent such disclosure
specifically references the particular representation or warranty it is intended
to qualify or it is reasonably apparent on the face of such disclosure that it
qualifies such particular representation or warranty.

7.7 Additional Obligations. Seller shall timely pay amounts in full when due
(i) related to the construction of the “Verhalen 12” Unit A to Unit C Pipeline
Project,” including the amounts owed to C&C Oilfield Service under the Bid Form
for Pipeline Construction dated June 26, 2009, and (ii) related to compression
equipment ordered before the date of this Agreement, including the agreement
between Seller and Valerus Compression Services, LP dated June 19, 2008 in which
Seller ordered and agreed to pay for a “Cat 3608TALE / Ariel JGC-4” natural gas
compressor, also known as the Valerus Unit #3828. Neither Buyer nor the Company
shall have any liability or obligation for such amounts or such contracts, and
any liability or obligation related thereto shall be deemed an Excluded
Liability. Seller shall promptly transfer, or cause to be transferred, to the
Company title to the herein described pipeline and compressor. Such additional
compression assets and the payments required to be made by Seller pursuant to
this Section 7.7 shall be deemed to be included in Seller’s Initial Capital
Contribution (as such term is defined in the LLC Agreement).

7.8 Delivery of Alignment Sheets. Seller shall prepare and deliver to the
Company and Buyer, at Seller’s sole cost and expense, alignment sheets showing
pipelines and surface assets included within the Gathering Assets referenced to
recorded property rights, and otherwise reasonably acceptable to Buyer in form
and substance, within sixty (60) days after the Closing.

7.9 Additional Actions. Each of the Parties hereto agrees to use its Reasonable
Efforts to take, or cause to be taken, all appropriate action, and to do, or
cause to be done, all things necessary, proper or advisable to consummate and
make effective, in the most expeditious manner reasonably practicable, the
purchase and sale of the Purchased Interests contemplated by this Agreement.

7.10 Delivery of Tax Information. Within forty-five (45) days after the Closing,
Seller shall provide Buyer with a statement setting forth the adjusted Tax basis
and fair market value of each of the Gathering Assets as of the Closing Date.
Any and all information provided pursuant to this Section 7.10 shall be provided
at the Seller’s expense.

 

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7.11 Access to Information and Confidentiality. Between the date hereof and the
Closing, Seller:

(a) shall give Buyer and its authorized representatives reasonable access,
during regular business hours, in a manner that minimizes disruption to the
business, and upon reasonable advance notice, to such offices, plants,
pipelines, personnel, and other facilities, and such books and records of
Seller, applicable Seller Affiliates and the Company, as are reasonably
necessary to allow Buyer and its authorized representatives to make such
inspections as they may reasonably require to verify the accuracy of any
representation or warranty contained in Article 4; and

(b) shall cause officers and the other employees of Seller, applicable Seller
Affiliates and the Company to promptly furnish Buyer and its authorized
representatives with such financial and operating data and other information
with respect to the Business, the Gathering Assets and the Company as Buyer may
from time to time reasonably request.

Seller shall have the right to have a representative present at all times during
any such inspections, interviews, and examinations conducted at or on the
offices or other facilities or properties of Seller, applicable Seller
Affiliates and the Company. Additionally, Buyer shall hold in confidence all
such information on the terms and subject to the conditions contained in the
Confidentiality Agreement.

ARTICLE 8

AMENDMENT AND WAIVER

8.1 Amendment. This Agreement may not be amended except by an instrument in
writing signed by or on behalf of each of the Parties.

8.2 Waiver. Any Party may (i) waive any inaccuracies in the representations and
warranties of another Party contained herein or in any document, certificate, or
writing delivered pursuant hereto or (ii) waive compliance by any other Party
with any of such other Party’s agreements or fulfillment of any conditions to
its own obligations contained herein. Any agreement on the part of a Party to
any such waiver shall be valid only if set forth in an instrument in writing
signed by or on behalf of such Party. No failure or delay by a Party in
exercising any right, power, or privilege hereunder shall operate as a waiver
thereof nor shall any single or partial exercise thereof preclude any other or
further exercise thereof or the exercise of any other right, power, or
privilege. No waiver of any of the provisions of this Agreement or a breach
hereof shall be deemed or shall constitute a waiver of any other provision
hereof (regardless of whether similar), nor shall any such waiver constitute a
continuing waiver unless otherwise expressly provided.

ARTICLE 9

INDEMNIFICATION

9.1 Indemnification.

(a) Seller’s Indemnity. From and after the Closing, subject to the other terms
and limitations in this Article 9 (including Section 9.1(d)), Seller shall
indemnify, defend and

 

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hold harmless Buyer Indemnitees from and against any and all Buyer Losses
(i) that arise out of, result from or relate to any breach of Seller’s
representations or warranties made, as of the Closing Date, in this Agreement,
(ii) that arise out of, result from or relate to any failure by Seller to
perform or observe any term, provision, covenant or agreement to be performed or
observed by Seller under this Agreement and (iii) that arise out of, result from
or relate to any Excluded Liability.

(b) Buyer’s Indemnity. From and after the Closing, subject to the other terms
and limitations in this Article 9, Buyer shall indemnify, defend and hold
harmless Seller Indemnitees from and against any and all Seller Losses (i) that
arise out of, result from or relate to any breach of Buyer’s representations or
warranties made, as of the Closing Date, in this Agreement and (ii) that arise
out of, result from or relate to any failure by Buyer to perform or observe any
term, provision, covenant or agreement to be performed or observed by Buyer
under this Agreement.

(c) Limitations on Indemnity.

(i) Except as set forth in Section 9.1(c)(ii) and 9.1(d), Buyer Indemnitees
shall not be entitled to assert any right to indemnification under
Section 9.1(a)(i), (X) except with respect to individual claims or a series of
related or similar claims that each exceed $25,000 in amount (the “Threshold”)
and (Y) until the aggregate amount of all the Buyer Losses actually suffered by
Buyer Indemnitees as a result of individual claims (or a series of related or
similar claims) that each exceed the Threshold exceeds, on a cumulative basis,
the Deductible Amount, and then only to the extent such Buyer Losses exceed, in
the aggregate, the Deductible Amount. Except as set forth in Section 9.1(c)(ii),
Seller shall not be required to indemnify Buyer Indemnitees for Buyer Losses
under Section 9.1(a)(i) in any amount exceeding, in the aggregate, an amount
equal to the Purchase Price.

(ii) The foregoing provisions of Section 9.1(c)(i) shall not apply to any claim
arising out of, resulting from or relating to a breach of Seller’s
representations or warranties set forth in Sections 4.1 (Organization of
Seller), 4.2(a) (Organization of the Company), 4.2(c) (Ownership of Equity;
Encumbrances), 4.2(d) (Rights to Acquire Equity), 4.4 (Seller’s Authority), 4.10
(Tax Matters), 4.14 (Real Property) solely with respect to the Owned Real
Property listed on Schedule 4.14(a) under the heading “II. Fee Ownership (Full
and Undivided Interest)” and described as Tract No. GMX-TX-102-91, Tract No.
GMX-TX-102-83 and Tract No. GMX-TX-102-83A, and 4.19 (Brokerage Fees); provided,
that in no event shall Seller ever be required to indemnify Buyer Indemnitees
for Buyer Losses arising out of, resulting from or relating to breaches of such
representations and warranties in an amount exceeding, in the aggregate, an
amount equal to the Purchase Price.

(iii) The amount of any Buyer Loss for which a Buyer Indemnitee claims
indemnification shall be reduced by any insurance proceeds actually received by
Buyer Indemnitees with respect to a Buyer Loss.

 

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(iv) Except as set forth in Section 9.1(c)(v), Seller Indemnitees shall not be
entitled to assert any right to indemnification under Section 9.1(b)(i) until
the aggregate amount of all the Seller Losses actually suffered by Seller
Indemnitees as a result of individual claims (or a series of related or similar
claims) that each exceed the Threshold exceeds, on a cumulative basis, the
Deductible Amount, and then only to the extent such Seller Losses exceed, in the
aggregate, the Deductible Amount. Except as set forth in Section 9.1(c)(v),
Buyer shall not be required to indemnify Seller Indemnitees for Seller Losses
under Section 9.1(b)(i) in any amount exceeding, in the aggregate, an amount
equal to the Purchase Price.

(v) The foregoing provisions of Section 9.1(c)(iv) shall not apply to any claim
arising out of, resulting from or relating to a breach of Buyer’s
representations or warranties set forth in Sections 5.1 (Organization of Buyer),
5.2 (Buyer’s Authority) and 5.6 (Brokerage Fees); provided, that in no event
shall Buyer ever be required to indemnify Seller Indemnitees for Seller Losses
arising out of, resulting from or relating to breaches of such representations
and warranties in an amount exceeding, in the aggregate, an amount equal to the
sum of the Purchase Price.

(vi) The amount of any Seller Loss for which a Seller Indemnitee claims
indemnification shall be reduced by any insurance proceeds actually received by
Seller Indemnitees with respect to a Seller Loss.

(d) Tax Indemnity.

(i) Seller shall indemnify, defend and hold harmless Buyer Indemnitees and the
Company from and against any and all liabilities for Taxes that arise out of,
result from or relate to: (i) a taxable period (or portion thereof) of the
Company that ends on or before the Closing Date, (ii) any Taxes related to the
Business or the Gathering Assets related to a taxable period (or portion
thereof) that ends on or before the Closing Date, and (iii) any Taxes of Seller
or any Affiliate thereof that are imposed on the Company pursuant to Treasury
Regulation Section 1.1502-6 (or any similar provision of state, local or foreign
law), as a transferee, successor, by contract or otherwise. The limitations set
forth in Section 9.1(c) of this Agreement shall not apply to this
Section 9.1(d).

(ii) For purposes of Section 9.1(d), with respect to any taxable period that
begins before the Closing Date and ends after the Closing Date, the amount of
Tax (as calculated at the end of the applicable taxable period) that is
allocable to the Company, the Business or the Gathering Assets for the period
ending on or before the Closing Date shall be determined, in the case of
property or ad valorem taxes, on a per diem basis, and in the case of other
Taxes, shall be deemed equal to the amount which would be payable if the taxable
year ended on the Closing Date (based on an interim closing of the books as of
the close of such date).

 

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(iii) Payment of any amounts due under this Section 9.1(d) shall be made no
later than ten (10) days prior to the date on which such Tax liability is
required to be paid.

(e) Survival. All of the representations and warranties of the Parties set forth
in this Agreement, and the obligations set forth in this Article 9, shall
survive the Closing. Notwithstanding the foregoing sentence, any assertion that
Seller is liable for indemnification pursuant to Section 9.1(a)(i), must be made
in writing and must be delivered to Seller on or prior to the date that is
twenty-four (24) months after the Closing Date; provided, however, that (i) any
claim arising out of, resulting from or relating to a breach of Seller’s
representations and warranties set forth in Sections 4.16 (Employee Matters), or
Section 4.19 (Brokerage Fees) may be delivered to Seller at any time on or
before the date that is sixty (60) days after the applicable statute of
limitations date; (ii) any claim arising out of, resulting from or relating to a
breach of Seller’s representations and warranties set forth in Section 4.17
(Environmental) may be delivered at any time on or before the date that is five
(5) years after the Closing Date; and (iii) any claim arising out of, resulting
from or relating to (A) a breach of Seller’s representations and warranties set
forth in Sections 4.1 (Organization of Seller), 4.2(a) (Organization of the
Company), 4.2(c) (Ownership of Membership Interests; Encumbrances), 4.2(d)
(Options and Rights to Acquire Equity), 4.4 (Seller’s Authority), 4.10 (Tax
Matters), 4.14 (Real Property), (B) Section 9.1(a)(ii) and (C) any Excluded
Liability shall survive indefinitely.

(f) No Waiver as to Certain Claims. The liability of any party under this
Article 9 shall be in addition to, and not exclusive of, any other liability
that such party may have at law or in equity based on such party’s
(a) fraudulent acts, omissions or misrepresentations or (b) willful misconduct.
None of the provisions set forth in this Agreement, including the provisions set
forth in Section 9.1(e), shall be deemed a waiver by any Party of any right or
remedy which such party may have at law or in equity based on any other party’s
fraudulent acts, omissions or misrepresentations or willful misconduct nor shall
any such provisions limit, or be deemed to limit, (a) the amounts of recovery
sought or awarded in any such claim, (b) the time period during which any such
claim may be brought, or (c) the recourse which any such party may seek against
another party with respect to any such claim.

(g) Characterization of Indemnity Payments. All payments under this Article 9
shall be treated for Tax purposes as either an adjustment to the Purchase Price
or a contribution to the capital of the Company.

(h) Express Negligence. THE INDEMNITIES SET FORTH IN THIS ARTICLE 9 ARE INTENDED
TO BE ENFORCEABLE AGAINST THE PARTIES IN ACCORDANCE WITH THE EXPRESS TERMS AND
SCOPE THEREOF NOTWITHSTANDING TEXAS’ EXPRESS NEGLIGENCE RULE OR ANY SIMILAR
DIRECTIVE THAT WOULD PROHIBIT OR OTHERWISE LIMIT INDEMNITIES BECAUSE OF THE
SIMPLE OR GROSS NEGLIGENCE (WHETHER SOLE, CONCURRENT, ACTIVE OR PASSIVE) OR
OTHER FAULT OR STRICT LIABILITY OF ANY INDEMNIFIED PARTIES. THE PARTIES HERETO
ACKNOWLEDGE THAT THE INDEMNITIES SET FORTH HEREIN MAY RESULT IN THE INDEMNITY OF
A PARTY FOR ITS SIMPLE OR GROSS NEGLIGENCE (WHETHER SOLE, CONCURRENT, ACTIVE OR
PASSIVE) OR OTHER FAULT OR STRICT LIABILITY OF THE INDEMNIFIED PARTY.

 

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9.2 Defense of Claims.

(a) Notice. If an Indemnitee receives notice of the assertion of any claim or of
the commencement of any Third Party Claim with respect to which indemnification
is to be sought from the Indemnifying Party, the Indemnitee will give such
Indemnifying Party reasonable prompt notice thereof. In no event shall such
notice be given later than ten (10) days after the Indemnitee’s receipt of
notice of any such Third Party Claim. However, the failure to give timely notice
will not affect the rights or obligations of the Indemnifying Party except and
only to the extent that, as a result of such failure, the Indemnifying Party was
materially prejudiced. Such notice shall describe the nature of the Third Party
Claim in reasonable detail and will, if practicable, indicate the estimated
amount of the Loss that has been or may be sustained by the Indemnitee. The
Indemnifying Party will have the right to participate in or, by giving notice to
the Indemnitee, to elect to assume the defense of, any Third Party Claim at such
Indemnifying Party’s own expense and by such Indemnifying Party’s own counsel,
and the Indemnitee will cooperate in good faith in such defense at such
Indemnitee’s own expense.

(b) Opportunity to Defend. If within ten (10) days after an Indemnitee provides
notice to the Indemnifying Party of any Third Party Claim, the Indemnitee
receives notice from the Indemnifying Party that such Indemnifying Party has
elected to assume the defense of such Third Party Claim, the Indemnifying Party
will not be liable for any legal expenses subsequently incurred by the
Indemnitee in connection with the defense thereof. Without the prior written
consent of the Indemnitee, which shall not be unreasonably withheld or delayed,
the Indemnifying Party will not enter into any settlement of any Third Party
Claim which would lead to liability, adversely affect the Indemnitee or create
any financial or other obligation on the part of the Indemnitee for which the
Indemnitee is not entitled to indemnification hereunder. If a firm offer is made
to settle a Third Party Claim without leading to liability or the creation of a
financial or other obligation on the part of the Indemnitee for which the
Indemnitee is not entitled to indemnification hereunder and the Indemnifying
Party desires to accept and agree to such offer, the Indemnifying Party will
give notice to the Indemnitee to that effect. If the Indemnitee fails to consent
to such firm offer within twenty (20) days after its receipt of such notice, the
Indemnitee may continue to contest or defend such Third Party Claim and, in such
event, the maximum liability of the Indemnifying Party to such Third Party Claim
will be the amount of such settlement offer, plus reasonable costs and expenses
paid or incurred by the Indemnitee up to the date of such notice.

(c) Direct Claim. Any Direct Claim will be asserted by giving the Indemnifying
Party reasonably prompt written notice thereof, stating the nature of such claim
in reasonable detail and indicating the estimated amount, if practicable, but in
any event not later than twenty (20) Business Days after the Indemnitee becomes
aware of such Direct Claim; provided that the omission so to notify the
Indemnifying Party in a timely manner shall not relieve it from any liability
which it may have to the Indemnitee to the extent it is not materially
prejudiced as a result thereof. The Indemnifying Party will have a period of
thirty (30) days from the date of notice within which to respond to such Direct
Claim. If the Indemnifying Party does not respond within such thirty (30) day
period, the Indemnifying Party will be deemed to

 

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have accepted such Direct Claim. If the Indemnifying Party rejects such Direct
Claim, the Indemnitee will be free to seek enforcement of its rights to
indemnification under this Agreement.

ARTICLE 10

MISCELLANEOUS

10.1 Notices. All notices, requests, demands, and other communications required
or permitted to be given or made hereunder by a Party (each a “Notice”) shall be
in writing and shall be deemed to have been duly given or made if (i) delivered
personally, (ii) transmitted by first class registered or certified mail,
postage prepaid, return receipt requested, (iii) delivered by prepaid overnight
courier service requiring acknowledgment of receipt, (iv) delivered by
electronic mail confirmed by a non-automated response from the recipient, or
(v) delivered by confirmed facsimile transmission to the Parties at the
following addresses (or at such other addresses as shall be specified by the
Parties by similar notice):

If to Seller:

GMX Resources Inc.

9400 N. Broadway, Suite 600

Oklahoma City, OK 73114

Attention: Harry C. Stahel, Jr.

Fax: (405) 600-0600

Email: hstahel@gmxresources.com

with a copy to:

Crowe & Dunlevy

20 North Broadway, Suite 1800

Oklahoma City, OK 73102

Attention: James W. Larimore

Fax: (405) 272-5968

Email: james.larimore@crowedunlevy.com

If to Buyer:

Kinder Morgan Endeavor LLC

500 Dallas, Suite 1000

Houston, Texas 77002

Attention: Contract Administration Group

Fax: 713-369-8785

Email: contractadministration@kindermorgan.com

 

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with a copy to:

Bracewell & Giuliani LLP

711 Louisiana, Suite 2300

Houston, Texas 77002

Attention: John M. McCrory

Fax: 713-222-3220

Email: john.mccrory@bgllp.com

Notices shall be effective (i) if delivered personally or sent by courier
service, upon actual receipt by the intended recipient, (ii) if mailed, upon the
earlier of five (5) days after deposit in the mail or the date of delivery as
shown by the return receipt therefor, or (iii) if sent by facsimile or
electronic mail transmission, when the required confirmation is received if
received during the recipient’s normal business hours, or at the beginning of
the recipient’s next Business Day after receipt if not received during the
recipient’s normal business hours.

10.2 Entire Agreement. This Agreement, together with the Disclosure Schedules,
the exhibits, the Related Agreements and the Confidentiality Agreement,
constitute the entire agreement between the Parties with respect to the subject
matter hereof and supersede all prior agreements and understandings, both
written and oral, between the Parties with respect to the subject matter hereof.
There are no restrictions, promises, representations, warranties, covenants or
undertakings between the Parties, other than those expressly set forth or
referred to herein or therein.

10.3 Binding Effect; Assignment; No Third Party Benefit. This Agreement shall be
binding upon and inure to the benefit of the Parties and their successors and
permitted assigns; provided neither this Agreement nor any of the rights,
interests, or obligations hereunder may be assigned by a Party without the prior
written consent of the other Parties; and any assignment without such consent
shall be void. Except as provided herein, nothing in this Agreement is intended
to or shall confer upon any Person other than the Parties, and their successors
and permitted assigns, any rights, benefits, or remedies of any nature
whatsoever under or by reason of this Agreement.

10.4 Severability. If any one or more of the provisions contained in this
Agreement or in any other document delivered pursuant hereto shall, for any
reason, be held to be invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability shall not affect any other provisions
of this Agreement or any other such document. If any provision of this Agreement
is for any reason, held to be invalid, illegal or unenforceable, but would be
valid, legal and enforceable if minor changes were made, there shall be deemed
to be made such minor changes, and only such minor changes, as are necessary to
make it valid, legal and enforceable.

10.5 Governing Law; Consent To Jurisdiction.

(a) THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT REGARD TO ITS CONFLICT OF LAWS
RULES OR PRINCIPLES.

 

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(b) THE PARTIES HEREBY IRREVOCABLY SUBMIT TO THE JURISDICTION OF THE COURTS OF
THE STATE OF TEXAS AND THE FEDERAL COURTS OF THE UNITED STATES OF AMERICA
LOCATED IN HARRIS COUNTY, TEXAS OVER ANY DISPUTE BETWEEN THE PARTIES ARISING OUT
OF THIS AGREEMENT OR THE TRANSACTION CONTEMPLATED HEREBY, AND EACH PARTY
IRREVOCABLY AGREES THAT ALL SUCH CLAIMS IN RESPECT OF SUCH DISPUTE SHALL BE
HEARD AND DETERMINED IN SUCH COURTS. THE PARTIES HEREBY IRREVOCABLY WAIVE, TO
THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH THEY MAY NOW OR
HEREAFTER HAVE TO THE VENUE OF ANY DISPUTE ARISING OUT OF THIS AGREEMENT OR THE
TRANSACTION CONTEMPLATED HEREBY BEING BROUGHT IN SUCH COURT OR ANY DEFENSE OF
INCONVENIENT FORUM FOR THE MAINTENANCE OF SUCH DISPUTE. EACH PARTY AGREES THAT A
JUDGMENT IN ANY SUCH DISPUTE MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON
THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW.

10.6 Further Assurances. From time to time following the Closing, at the request
of a Party and without further consideration, the other Parties shall execute
and deliver to such requesting Party such instruments and documents and take
such other action (but without incurring any material financial obligation) as
such requesting Party may reasonably request to consummate more fully and
effectively the transactions contemplated hereby.

10.7 Counterparts. This Agreement may be executed by the Parties in any number
of counterparts, each of which shall be deemed an original, but all of which
shall constitute one and the same agreement. Facsimile copies of signatures
shall constitute original signatures for all purposes of this Agreement and any
enforcement thereof.

10.8 Currency. All references to “dollars” or “$” in this Agreement shall mean
United States Dollars.

[Signature page follows]

 

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IN WITNESS WHEREOF, the Parties have executed this Agreement, or caused this
Agreement to be executed by their duly authorized representatives, all as of the
day and year first above written.

 

“SELLER”

GMX RESOURCES INC.,

an Oklahoma corporation

By:  

/s/ Harry C. Stahel, Jr.

 

Harry C. Stahel, Jr.

Vice President – Finance

“BUYER”

KINDER MORGAN ENDEAVOR LLC,

a Delaware limited liability company

By:  

/s/ Duane Kokinda

 

Duane Kokinda

Vice President