Exhibit 10.1

EXECUTION VERSION

PURCHASE AND SALE AGREEMENT

Between

GMX RESOURCES INC.

as Seller

and

EDF TRADING NORTH AMERICA, LLC

as Buyer

Dated as of

December 8, 2011

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TABLE OF CONTENTS

 

ARTICLE I DEFINITIONS      1   

Section 1.1

 

Certain Definitions

     1   

Section 1.2

  Other Definitions; Incorporation of Conveyance and Production and Marketing
Agreement Definitions      3   

Section 1.3

 

Rules of Construction

     3    ARTICLE II TRANSACTIONS      4   

Section 2.1

 

Purchase and Sale

     4   

Section 2.2

 

Tax Reporting

     4    ARTICLE III REPRESENTATIONS, WARRANTIES AND COVENANTS OF WORKING
INTEREST OWNER      4   

Section 3.1

 

Representations and Warranties of Working Interest Owner

     4   

Section 3.2

 

Use of Proceeds

     11    ARTICLE IV REPRESENTATIONS OF ROYALTY OWNER      11   

Section 4.1

 

Representations of Royalty Owner

     11    ARTICLE V CONDITIONS TO CLOSING      12   

Section 5.1

 

Conditions to Obligations of Working Interest Owner

     12   

Section 5.2

 

Conditions to Obligations of Royalty Owner

     12    ARTICLE VI CLOSING      14   

Section 6.1

 

Place of Closing

     14   

Section 6.2

 

Closing Documents

     14   

Section 6.3

 

Preclosing and Funding

     15    ARTICLE VII MISCELLANEOUS      15   

Section 7.1

 

Announcements; Confidentiality; Patriot Act

     15   

Section 7.2

 

Survival

     16   

Section 7.3

 

Expenses

     16   

Section 7.4

 

Notices

     17   

Section 7.5

 

Governing Law

     17   

Section 7.6

 

Successors and Assigns

     18   

Section 7.7

 

Entire Agreement; Amendments; Waivers

     18   

Section 7.8

 

Counterparts

     18   

SECTION 7.9

 

WAIVER OF JURY TRIAL AND OF PUNITIVE DAMAGES

     18   

SECTION 7.10

 

CONSENT TO JURISDICTION

     19   

 

Schedule 3.1 —   

Disclosure Schedule

Schedule 6.3 —

   Wire Transfers of Purchase Price

Exhibit A —

   Affidavit of Non-Foreign Status

Exhibit B —

   Opinion of Andrews Kurth, Special Counsel to Working Interest Owner

Exhibit C —

   Opinion of Crowe & Dunlevy, Special Oklahoma Counsel to   

Working Interest Owner

 

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PURCHASE AND SALE AGREEMENT

This Purchase and Sale Agreement (as from time to time supplemented or amended,
this “Agreement”) dated as of December 8 2011, is made by and between GMX
Resources Inc., an Oklahoma corporation (“Working Interest Owner” and a
“Party”), and EDF Trading North America, LLC, a Texas limited liability company
(“Royalty Owner” and a “Party”).

W I T N E S S E T H:

WHEREAS, Working Interest Owner is the owner of the Subject Interests (as
defined in the Conveyance referred to below); and

WHEREAS, Working Interest Owner desires to sell and Royalty Owner desires to
purchase the Production Payment (as defined in the Conveyance);

NOW, THEREFORE, in consideration of the mutual benefits and obligations of the
Parties contained herein, the Parties hereby agree as follows:

ARTICLE I

DEFINITIONS

Section 1.1 Certain Definitions. As used herein, the following terms shall have
the meanings set forth below, except as otherwise expressly provided:

“Closing” means the completion of certain of the transactions contemplated
hereby as described in Section 6.4.

“Closing Date” means the date on which the Closing is completed.

“Closing Documents” means, collectively, the Conveyance, the Production and
Marketing Agreement, the Mortgage, the EPL Service Agreement, the EGG Service
Agreement, and any other documents or instruments executed or delivered by or on
behalf of any Party at or before or in connection with the Closing.

“Conveyance” means the Conveyance of Term Overriding Royalty Interest dated as
of the date hereof made by Working Interest Owner to Royalty Owner that is
executed in connection herewith.

“Disclosure Schedule” means Schedule 3.1 to this Agreement.

“EGG Service Agreement” means the EGG Services Agreement to be entered into by
and among Endeavor Gathering, Endeavor Pipeline, Working Interest Owner and
Royalty Owner dated as of the Closing Date.

“Endeavor NAESB Contract” means that certain NAESB Base Contract for Sale and
Purchase of Natural Gas executed between Endeavor Pipeline and Royalty Owner
dated November 1, 2011, plus the Transaction Confirmation dated as of the
Closing Date.

 

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“Endeavor Gathering” or “EGG” means Endeavor Gathering LLC, a Delaware limited
liability company.

“Endeavor Pipeline” or “EPL” means Endeavor Pipeline Inc., an Oklahoma
corporation.

“EPL Service Agreement” means the EPL Services Agreement to be entered into by
and between Endeavor Pipeline and Royalty Owner dated as of the Closing Date.

“Existing Mortgage Holder” means CAPITAL ONE, NATIONAL ASSOCIATION.

“GMX Companies” means Working Interest Owner and Endeavor Pipeline.

“Good and Defensible Title” means such title to the Subject Interests (properly
reflected of record) that, after giving effect to the Permitted Encumbrances,
(a) will enable Working Interest Owner to truthfully make the representations
and warranties in Section 1.9 of the Conveyance and (b) except for the Permitted
Encumbrances (i) is free and clear of any encumbrances, liens, security
interests, mortgages, pledges, preferential purchase rights (other than those
that have been waived), or requirements for consents to assignment (other than
those that have been obtained) that would be applicable to or exercisable as a
result of the Conveyance and the other Closing Documents, and (ii) is free and
clear of any defects that would materially affect or interfere with the
operation, use, possession, ownership or value thereof.

“Initial Engineers” means Degolyer and MacNaughton

“Initial Reserve Report” means the internal reserve engineering performed by
Royalty Owner as part of its internal due diligence of the Subject Interests.

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

“Mortgage” means the Deed of Trust, Mortgage, Assignment, Security Agreement and
Financing Statement of even date herewith executed in connection herewith by
Working Interest Owner with respect to the Retained Interests and certain
Related Assets.

“Parties” means Working Interest Owner and Royalty Owner.

“Production and Marketing Agreement” means the Production and Marketing
Agreement dated as of the date hereof between Royalty Owner and Working Interest
Owner that is executed in connection herewith.

“Projected Yield” means ten percent (10.0%) per annum.

“Purchase Price” means $49,700,000.00.

“Related Assets” means (i) the Subject Interests and the Subject Hydrocarbons,
together with all rights, titles, interests, appurtenances, benefits and
privileges of Working Interest Owner attributable to each Subject Interest;
(ii) all of the real, immovable, personal and mixed property of the GMX
Companies (whether located on or off the Subject Interests) used in connection
with or attributable in any manner to the exploration or development of the
Subject Interests for

 

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Hydrocarbons, the operation of the Subject Interests, the treating, storing or
transporting of Hydrocarbons produced from the Subject Interests, or the
disposal or transporting of water and other byproducts of such production
(including salt water injection wells and related facilities); (iii) all rights
of the GMX Companies with respect to any and all contracts, agreements,
instruments, governmental orders and contractual rights insofar as they cover or
relate in any manner whatsoever to the Subject Interests; (iv) all rights of the
GMX Companies with respect to any and all easements, rights-of-way, rights,
permits, licenses and servitudes insofar as they are used or held in connection
with the exploration, development or operation of the Subject Interests or the
transportation of Hydrocarbons produced therefrom; (v) all proceeds of the
foregoing; and (vi) all files, records, data and documentation of the GMX
Companies pertaining or related to the Subject Interests or any of the assets
described in the preceding clauses (i) through (v), provided that all wells that
are producing from zones outside the Haynesville Shale formation for each
Subject Well, as set out in Exhibit A-1b to the Conveyance, including the wells
producing from the Cotton Valley Sand and Travis Peak formations, and all
leasehold rights, title, and interest related thereto, are not Related Assets.
For the avoidance of doubt, “Related Assets” shall also not include any assets
owned by Endeavor Gathering and the Gas that resides indefinitely within such
assets (commonly known as “line pack”).

“Release of Liens” means a release in form and substance satisfactory to Royalty
Owner pursuant to which Existing Mortgage Holder releases all of its liens,
security interests and other rights in and with respect to the Subject Interests
and the Related Assets.

Section 1.2 Other Definitions; Incorporation of Conveyance and Production and
Marketing Agreement Definitions. Other capitalized terms defined elsewhere in
this Agreement have the meanings so given them herein. Each capitalized term
used herein but not defined herein has the meaning given to it in the Conveyance
or (if not defined therein) in the Production and Marketing Agreement.

Section 1.3 Rules of Construction. The headings of the articles and sections of
this Agreement are for guidance and convenience of reference only and do not
limit or otherwise affect any of the terms or provisions of this Agreement. All
references in this Agreement to articles, sections, subsections and other
subdivisions refer to corresponding articles, sections, subsections and other
subdivisions of this Agreement unless expressly provided otherwise. Titles
appearing at the beginning of any of such subdivisions are for convenience only,
do not constitute part of such subdivisions, and will be disregarded in
construing the language contained in such subdivisions. The words “this
Agreement”, “this instrument”, “herein”, “hereof”, “hereunder” and words of
similar import refer to this Agreement as a whole and not to any particular
subdivision unless expressly so limited. Unless the context otherwise requires:
“including” and its grammatical variations mean “including without limitation”;
“or” is not exclusive; words in the singular form will be construed to include
the plural and vice versa; words in any gender include all other genders;
references herein to the Conveyance, the Production and Marketing Agreement, or
any other instrument or agreement refer to such instrument or agreement as it
may be from time to time amended, supplemented or restated; and references
herein to any Person include such Person’s successors and assigns. All
references in this Agreement to exhibits and schedules refer to exhibits and
schedules to this Agreement unless expressly provided otherwise, and all such
exhibits and schedules are hereby incorporated herein by reference and made a
part hereof for all purposes. This Agreement has been drafted with the joint
participation of Working Interest Owner and Royalty Owner and are to be
construed neither against nor in favor of either Party but rather in accordance
with the fair meaning hereof.

 

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ARTICLE II

TRANSACTIONS

Section 2.1 Purchase and Sale. Subject to and in accordance with the terms
hereof, Working Interest Owner agrees to sell and convey to Royalty Owner, and
Royalty Owner agrees to purchase from Working Interest Owner, the Production
Payment for consideration equal to the Purchase Price, and the Parties agree to
execute and deliver the Closing Documents. Working Interest Owner acknowledges
and agrees that the foregoing constitutes payment to Working Interest Owner of
reasonably equivalent value for the Production Payment. Royalty Owner will pay
the Purchase Price to Working Interest Owner at the Closing as provided in
Section 6.3.

Section 2.2 Tax Reporting. The Parties intend for the Production Payment to be
treated for federal income tax purposes (and for the purpose of any similarly
calculated state income or franchise taxes, but for no other purposes) as a
mortgage loan (and not a “royalty” or other “economic interest” in Hydrocarbons)
within the meaning of the Internal Revenue Code and the regulations and judicial
authority relating thereto, and the Parties agree to report the Production
Payment accordingly on all applicable tax returns. In so doing, Working Interest
Owner will apply the “noncontingent bond method” of calculating principal and
interest as provided in Treasury Regulation section 1.1275-4(b), using a
comparable yield equal to the Projected Yield and calculating a projected
payment schedule based on the Scheduled Quantities provided in the Conveyance.
If the Scheduled Quantities are ever adjusted as provided in the Production and
Marketing Agreement, Working Interest Owner, with the approval of Royalty Owner,
will adjust the projected payment schedule to reflect such changes in the
Scheduled Quantities and will appropriately reflect such adjustment to projected
payments in determining the amount of the net adjustment to be taken into
account under Treasury Regulation section 1.1275-4(b)(6).

ARTICLE III

REPRESENTATIONS, WARRANTIES AND COVENANTS

OF WORKING INTEREST OWNER

Section 3.1 Representations and Warranties of Working Interest Owner. In order
to induce Royalty Owner to enter into this Agreement and the Closing Documents
and to consummate the transactions described herein, Working Interest Owner
hereby represents and warrants to Royalty Owner, and to each beneficiary or
mortgagee under any Mortgage, both as of the date Working Interest Owner
executes this Agreement and as of the Closing Date, as follows:

(a) Existence and Authorization. Working Interest Owner and Endeavor Pipeline
are corporations duly organized, validly existing and in good standing under the
Laws of the State of Oklahoma. Each GMX Company is qualified to do business and
is in good standing in the State of Texas. Each GMX Company has the right,
power, authority, and qualifications necessary to conduct its business and own
its properties (including, as applicable, the Subject Interests and the Related
Assets) in such State, to execute and deliver the Closing Documents to which it
is a

 

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party, to perform all of such GMX Company’s obligations under the same, and to
convey to Royalty Owner the Production Payment. Working Interest Owner is not a
“foreign person” within the meaning of Sections 1445 and 7701 of the Internal
Revenue Code (i.e., Working Interest Owner is not a non-resident alien, foreign
corporation, foreign partnership, foreign trust or foreign estate as those terms
are defined in the Internal Revenue Code and any regulations promulgated
thereunder).

(b) No Conflicts. The execution, delivery and performance by each GMX Company of
the Closing Documents to which it is a party (including Working Interest Owner’s
application of the Purchase Price as provided in Section 3.2) are within the
corporate or limited liability company power, as applicable, of such GMX
Company, have been authorized by all necessary action on the part of such GMX
Company and its shareholders or members and managers, as applicable, and do not
and will not (i) violate any provision of such GMX Company’s charter documents
or other governing documents, (ii) violate any provision of Law or any order,
writ, judgment, decree or determination currently in effect having applicability
to such GMX Company, (iii) result in a breach of or constitute a default under
any Lease, any agreement binding or affecting the Subject Interests (or Working
Interest Owner with respect to the Subject Interests), any indenture, bank loan,
credit agreement or farmout agreement, program agreement, area of mutual
interest agreement, unit agreement or operating agreement, or any other material
agreement or instrument to which such GMX Company is a party or by which such
GMX Company or such GMX Company’s properties may be currently bound or affected,
(iv) cause such GMX Company to become obligated to (or obligated to offer to)
prepay, redeem or purchase any indebtedness (except the payment described in
Section 3.2), or (v) except as set forth in Section 3.1(b) of the Disclosure
Schedule and other than pursuant to the Mortgage, result in or require the
creation or imposition of any mortgage, lien, pledge, security interest, charge
or other encumbrance upon or of any of the properties or assets of such GMX
Company (including the Subject Interests). No GMX Company is in default under
any order, writ, judgment, decree, determination, indenture, agreement or
instrument in any manner that now or in the future could materially and
adversely affect the ability of such GMX Company to perform such GMX Company’s
obligations under this Agreement or the Closing Documents to which it is a
party, and all consents or approvals under such indentures, agreements and
instruments necessary to permit the valid execution, delivery, and performance
by such GMX Company of the Closing Documents to which it is a party and the
conveyance of the Production Payment to Royalty Owner have been obtained.

(c) Consents, Preferential Rights and Required Notices. Except as disclosed in
Section 3.1(c) of the Disclosure Schedule, all consents and waivers of
preferential purchase or other rights necessary to permit the valid conveyance
to Royalty Owner of the Production Payment and execution and delivery of this
Agreement and the Closing Documents have been obtained (or deemed obtained, due
to the time for exercising such preferential rights having expired). All advance
notifications (if any) to third parties of the transactions contemplated herein
and in the Closing Documents necessary to permit the valid conveyance to Royalty
Owner of the Production Payment and execution and delivery of this Agreement and
the Closing Documents have been or will be, prior to the Closing Date, timely
and properly given.

 

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(d) Financial Statements; No Material Adverse Changes. Working Interest Owner
has heretofore delivered to Royalty Owner true, correct and complete copies of
Working Interest Owner’s most recent audited annual financial statements (dated
as of December 31, 2010) and Working Interest Owner’s most recent unaudited
quarterly financial statements (dated as of September 30, 2011). Such financial
statements were prepared in accordance with generally accepted accounting
principles, consistently applied, and fairly represent the consolidated
financial position of Working Interest Owner and its subsidiaries as of the
dates thereof and their consolidated results of operations and consolidated cash
flows for the periods indicated therein (subject, in the case of such quarterly
financial statements, to normal year-end adjustments). Except for matters
described in Section 3.1(d) of the Disclosure Schedule, since the date of the
most recent audited balance sheet contained in such financial statements, no
material adverse change has occurred to the consolidated financial condition of
Working Interest Owner and its subsidiaries or to their consolidated operations,
cash flows, properties or prospects.

(e) Governmental Approvals. Except for approvals by governmental authorities
that are customarily obtained after closing and listed in Section 3.1(e) of the
Disclosure Schedule, (i) each GMX Company has obtained all authorizations,
consents, approvals, licenses and exemptions of, and has made all filings and
registrations with, any court or governmental department, commission, board,
bureau, agency or instrumentality, domestic or foreign, that are necessary for
the valid execution and delivery by such GMX Company of the Closing Documents to
which it is a party, and (ii) each GMX Company has obtained all such
authorizations, consents, approvals, licenses and exemptions, and has made all
such filings or registrations, that are currently required for the performance
of its obligations under this Agreement and the Closing Documents to which it is
a party.

(f) Enforceability. This Agreement has been duly executed and delivered by
Working Interest Owner, and as of the Closing Date each of the Closing Documents
will have been duly executed and delivered by each GMX Company. This Agreement
constitutes, and as of the Closing Date each of the Closing Documents will
constitute, the legal, valid and binding acts and obligations of each GMX
Company that is a party thereto, enforceable in accordance with its terms,
subject, however, to bankruptcy, insolvency, reorganization, moratorium and
other Laws affecting creditors’ rights generally and to general principles of
equity.

(g) Effective Conveyance of Property Interest. Upon due execution and delivery
by Working Interest Owner of the Conveyance, (i) the Conveyance will constitute
the legal, valid and binding conveyance of the Production Payment out of the
Subject Interests, and (ii) the Production Payment will constitute an interest
in real property owned by Royalty Owner (and not by Working Interest Owner) and
will constitute a “production payment” as defined in Section 101(42A) of the
Bankruptcy Code, and referred to in Section 541(b)(4)(B) of the Bankruptcy Code.
Neither the Conveyance nor any Subject Interest constitutes, or will constitute,
an executory contract or unexpired lease within the meaning of Section 365 of
the United States Bankruptcy Code.

(h) Full Disclosure. Taken as a whole, the information, memoranda, exhibits,
reports (other than reserve engineering reports), financial statements and other
data furnished by or on behalf of Working Interest Owner to Royalty Owner in
connection with the transactions described herein, including the data supplied
by or on behalf of Working Interest Owner to the Initial Engineers for use in
evaluating the data supplied by Working Interest Owner to Royalty Owner’s
reserve engineers, do not contain any untrue statement of a material fact or
omit to state

 

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any material fact that is necessary in order to make the statements therein, in
light of the circumstances under which such statements were made, not
misleading. To the best of Working Interest Owner’s knowledge, there is no
material fact that has not been disclosed to Royalty Owner that might reasonably
be expected to affect the value of the Production Payment or materially and
adversely affect the value of the Subject Interests. Except as listed in
Section 3.1(h) of the Disclosure Schedule, there are no reserves in the data
supplied by Working Interest Owner to Royalty Owner’s reserve engineers that are
attributable to properties and interests other than the Subject Interests.
Except for (i) production from the Subject Wells in the ordinary course of
business, (ii) matters listed in Section 3.1(h) of the Disclosure Schedule, and
(iii) changes in the general market prices of oil and natural gas, no material
adverse change in the condition of or remaining recoverable proved reserves
attributable to the existing Subject Wells or the Subject Interests has occurred
since November 30, 2011. The actions of Working Interest Owner in furnishing
information to Royalty Owner in connection with the transactions described
herein do not and will not violate any duty owed by Working Interest Owner to
any Person to which such information relates or any obligation of Working
Interest Owner under any existing agreement, document, or instrument.

(i) Title. Except for liens, security interests and other rights which are the
subject of the Release of Liens and are fully released and discharged thereby,
Working Interest Owner owns Good and Defensible Title to each of the Subject
Interests, and the GMX Companies own equivalent title to the other Related
Assets, free and clear of any encumbrances, liens or security interests (other
than Permitted Encumbrances).

(j) Taxes. All Taxes imposed or assessed with respect to or measured by or
charged against or attributable to the Subject Interests, the Subject
Hydrocarbons and the Related Assets have been duly paid (including all property
and ad valorem taxes for 2010 and earlier years), except for those not yet due
and payable or being contested in good faith by appropriate proceedings. Working
Interest Owner has filed all Tax returns required to be filed and such returns
comply with applicable Laws. Except as may be disclosed in Section 3.01(j) of
the Disclosure Schedule, no taxing authority is asserting that Working Interest
Owner is liable for past due taxes.

(k) No Tax Partnership or Other Joint Venture. No Subject Interest is held by,
or for any purpose treated as held by, any tax partnership (i.e., any entity,
organization or group deemed to be a partnership within the meaning of section
761 of the Internal Revenue Code, after giving effect to any applicable
elections and exclusions) or any other partnership or joint venture.

(l) Status of Leases and Wells. The Leases are in full force and effect, and
Working Interest Owner has complied with all material terms of the Leases and
all governmental orders or directives naming Working Interest Owner or
applicable to the Subject Interests. All rents, royalties and other payments due
or payable with respect to the Leases have been paid in a timely manner, and all
liabilities of any kind or nature incurred with respect to the Leases have been
paid and performed before becoming delinquent. Working Interest Owner is not in
default (and has not received any notice of default or claimed default) in any
material respect with respect to any Subject Interest or any Lease or any part
thereof. All wells, facilities and equipment which constitute part of the
Related Assets are in good repair and working condition

 

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(other than wells designated for plugging and abandonment and equipment related
thereto) and have been installed and maintained in accordance with good industry
standards and all applicable statutes, rules, regulations, orders, permits or
licenses of any governmental authority, agency or court. To the knowledge of
Working Interest Owner, no well comprising part of the Subject Interests is or
was subject to any penalty on allowables after the effective date of the
Conveyance because of any over-production (or any other judgments, orders or
decrees of any court or governmental authority or agency) which would (or did)
prevent such well from being entitled to its full legal and regular allowable
(as prescribed by any governmental authority, agency or court) from and after
such effective date. If a tract or tracts of land are listed on the Property
Exhibit to the Conveyance with respect to a Subject Well, such Subject Well is
located on such tract or tracts of land. If the Subject Interests pertaining to
a Subject Well are limited in the Conveyance to specified depths or formations,
such Subject Well is producing only from such specified depths or formations,
and all of such specified depths or formations are included within the Subject
Interests that pertain to such Subject Well. None of the reserves which comprise
Production Payment Hydrocarbons are being produced from any wells other than the
Subject Wells listed on the Property Exhibit, and if the Subject Interests
pertaining to a Subject Well are limited on the Property Exhibit to particular
depths or formations, all of such reserves pertaining to such Subject Well are
located within such depths or formations.

(m) Commitments to Contracts. Except as set forth in Section 3.1(m) of the
Disclosure Schedule:

(i) no third party has any right to purchase any Subject Hydrocarbons (including
any call, right of first refusal or preferential right to purchase) that does
not terminate within one month or is not terminable by Working Interest Owner
without penalty on notice of one month or less;

(ii) neither the Subject Interests nor the Hydrocarbons attributable thereto are
subject, committed, or dedicated to any joint operating agreement, unit
operating agreement, or area of mutual interest agreement; and

(iii) neither the Subject Interests nor the Hydrocarbons attributable thereto
are subject, committed, or dedicated to any Subject Contract that will or could
reasonably be expected to (A) reduce the percentage share of the Hydrocarbons
produced from or allocated to any Subject Interest below the Warranted Net
Revenue Interest for such Subject Interest, (B) cause Working Interest Owner to
be obligated to bear a percentage share of the cost of operation of such Subject
Interest that is greater than the Warranted Working Interest Percentage for such
Subject Interest (without a corresponding proportional increase in the
associated Net Revenue Interest or a right to reimbursement from a non-paying
joint interest owner), or (C) prevent or interfere with the ownership,
exploration, development, operation, maintenance or use of any of the Subject
Interests in accordance with prudent industry practices or in accordance with
the manner in which such Subject Interest is currently being owned, explored,
developed, operated, maintained or used.

 

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(n) Gas Balancing; Take or Pay, etc. Except as set forth in Section 3.1(n) of
the Disclosure Schedule, Working Interest Owner is not a party to or bound by,
and the Subject Interests and the Hydrocarbons attributable thereto are not
encumbered or affected by, any gas balancing, deferred production, gas banking,
pipeline, processing plant or other agreement or arrangement under which one or
more third Persons may take any of the production attributable to the Subject
Interests (or the products of such production) without full cash payment
therefor; and except as set forth in Section 3.1(n) of the Disclosure Schedule,
Working Interest Owner has no obligation in excess of $50,000 due to any
“overlift,” “over-produced” or similar status under any such agreement or
arrangement. Except as set forth in Section 3.1(n) of the Disclosure Schedule,
neither the Subject Interests nor the Hydrocarbons attributable thereto are
subject to any contract, agreement or arrangement (including advance payment
agreements, prepayments, take-or-pay makeup obligations or otherwise) whereby
the owner of the Hydrocarbons or any part thereof is not entitled to convey the
Hydrocarbons or to market the Hydrocarbons and to obtain the full market price
or value of the same. No Subject Interest is subject on the date hereof to any
regulatory refund obligation and, to the best of Working Interest Owner’s
knowledge, no facts exist which might cause the same to be imposed.

(o) Compliance with Laws. Except as set forth in Section 3.1(o) of the
Disclosure Schedule, (i) the Subject Interests have been owned and operated, in
all material respects, in accordance with all applicable Laws (including
Environmental Laws) of all governmental authorities having or asserting
jurisdiction relating to the ownership and operation of the Subject Interests,
and Working Interest Owner and all other operators of the Subject Interests are
in compliance in all material respects with all licenses and permits required
under any such Laws; (ii) each GMX Company has taken all steps reasonably
necessary to determine and has determined that no Hazardous Substance has been
disposed of or otherwise released on or to the Subject Lands or produced on the
Subject Lands and disposed of or released elsewhere (except for dispositions and
releases done in material compliance with all applicable Laws (including
Environmental Laws) and for which no GMX Company otherwise has any material
remedial obligations), and the use which the GMX Companies make and intend to
make of the Subject Lands will not result in any such disposal or release;
(iii) to the knowledge of each GMX Company, none of the Subject Interests is the
subject of any federal, state or local investigation evaluating whether any
remedial action is needed to respond to a release of any Hazardous Substances
into the environment or to the improper storage or disposal (including storage
or disposal at offsite locations) of any Hazardous Substances; (iv) no GMX
Company or, to the knowledge of each GMX Company, any other Person has filed any
notice under any applicable Law indicating that any GMX Company is responsible
for the improper release into the environment, or the improper storage or
disposal, of any Hazardous Substances or that any Hazardous Substances have been
improperly released, or are improperly stored or disposed of, upon any of the
Subject Lands; and (v) no GMX Company or any Affiliate of a GMX Company
otherwise has any material contingent liability under any Environmental Laws or
in connection with the release into the environment, or the storage or disposal,
of any Hazardous Substances.

(p) No Casualties or Condemnation. Except as disclosed in Section 3.1(p) of the
Disclosure Schedule, during the twelve months preceding the Closing Date no
Casualty or Condemnation has occurred that, individually or in the aggregate,
adversely affects any material portion of the Related Assets or the use or
operation thereof, or adversely affects the ability of any GMX Company to
perform its obligations under this Agreement or the Closing Documents to which
it is a party. As used in this subsection, “Casualty or Condemnation” means
(i) any fire, blowout, leak, explosion, accident, earthquake, act of public
enemy or other casualty (whether above or below ground and regardless of whether
covered by insurance) and (ii) any pending or threatened taking, in condemnation
or under the right of eminent domain, of any Related Asset or portion thereof.

 

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(q) Litigation. Except as set forth in Section 3.1(q) of the Disclosure
Schedule, there are no suits or proceedings pending or, to the knowledge of each
GMX Company, threatened against any GMX Company or the Related Assets that
involve (i) a dispute or claim concerning title to, operation of, or production
from any of the Subject Interests, (ii) any actual or purported lien, security
interest, charge or burden upon any of the Subject Interests or Subject
Hydrocarbons, or (iii) any other claim which would affect a transferee of any of
the Subject Interests or would adversely affect the value of the Production
Payment. Except as set forth in Section 3.1(q) of the Disclosure Schedule, there
are no suits or proceedings pending or, to the knowledge of the GMX Companies,
threatened against any GMX Company or the Related Assets that, if decided
adversely to the interest of a GMX Company could materially and adversely affect
such GMX Company, any of the Related Assets or the rights of Royalty Owner under
the Closing Documents. There are no bankruptcy, reorganization or similar
proceedings pending, being contemplated by or, to the knowledge of each GMX
Company, threatened against any GMX Company, and no GMX Company has made a
general assignment for the benefit of creditors.

(r) No Broker’s or Finder’s Fees. Working Interest Owner has not incurred any
obligation or liability (or taken any action) which might impose upon Royalty
Owner or Royalty Owner’s lenders or Affiliates any obligation or liability,
contingent or otherwise, for broker’s or finder’s fees in respect of any of the
matters provided for in this Agreement or the other Closing Documents.

(s) Copies of Permitted Encumbrances and Listed Documents. Working Interest
Owner has furnished to Royalty Owner true and complete copies of all of the
joint operating agreements, unit agreements, and other material agreements and
instruments evidencing the Permitted Encumbrances that exist as of the Closing.
Working Interest Owner has provided Royalty Owner with true and complete copies
of all contracts and instruments referred to in the Disclosure Schedule.

(t) Solvency. Upon the execution, delivery and performance by each GMX Company
of the Closing Documents to which it is a party (including Working Interest
Owner’s application of the Purchase Price as provided in Section 3.2), each GMX
Company is and will be solvent (as such term is used in applicable bankruptcy,
liquidation, receivership, or insolvency or similar Laws). Each GMX Company’s
capital is adequate for the businesses in which such GMX Company is engaged and
intends to be engaged. No GMX Company has incurred (whether hereby or
otherwise), nor does any GMX Company intend to incur or believe that it will
incur, debts which will be beyond its ability to pay as such debts mature. None
of the Closing Documents and none of the transactions thereunder constitutes a
fraudulent or voidable transfer or conveyance within the scope of Section 548 of
the Bankruptcy Code or any other applicable Law pertaining to fraudulent or
voidable transfers or conveyances.

 

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(u) No ERISA Liabilities. No GMX Company has any liabilities or obligations of
any kind with respect to any employee benefit plan that is subject to Title IV
of the Employee Retirement Income Security Act of 1974, as amended.

(v) Employee Disputes. Except as set forth in Section 3.1(v) of the Disclosure
Schedule, (i) neither the workers who operate the Related Assets nor any other
employees of any GMX Company are presently carrying out, or threatening, any
strike, slowdown, picketing or work stoppage, and (ii) within the last five
years there have not been any strikes, work stoppages, slowdowns, lockouts or
other material labor disputes involving any GMX Company, its employees, or the
operation of the Related Assets.

(w) Transmitting Utility. Working Interest Owner is not a “transmitting utility”
as defined in Section 9.102(a)(81) of the Uniform Commercial Code presently in
effect in the State of Texas.

(x) Insurance. The GMX Companies are carrying the insurance described on
Schedule 3.7 to the Production and Marketing Agreement and are otherwise in
compliance with Section 3.7 of the Production and Marketing Agreement.

(y) No Reliance. Working Interest Owner (i) has made its own independent
decision to enter into this Purchase and Sale Agreement, the other Production
Payment Documents, and the transactions contemplated herein and therein and its
own independent judgment as to whether such transactions are appropriate or
proper for it, in each case, based upon its own judgment and upon advice from
such advisers as it has deemed necessary, and in entering into such transactions
is acting for its own account, (ii) is not relying on any communication (written
or oral) of Royalty Owner, or of Royalty Owner’s Affiliates, as investment
advice or as a recommendation to enter into such transactions, it being
understood that any information and explanations related to the terms and
conditions of such transactions shall not be considered to be investment advice
or a recommendation to enter into such transactions, (iii) is capable of
assessing the merits of and understanding (on its own behalf or through
independent professional advice), and understands and accepts the terms and
conditions and risks of, such transactions and is also capable of assuming, and
assumes, such risks, and (iv) acknowledges that Royalty Owner and Royalty
Owner’s Affiliates are not, and are not acting as, an adviser to Working
Interest Owner in respect of such transactions with respect to legal,
regulatory, accounting, taxation, financial or any other matters in any
jurisdiction.

Section 3.2 Use of Proceeds. Working Interest Owner warrants and agrees that it
will use the Purchase Price to pay for its and Royalty Owner’s out-of-pocket
expenses and fees relating to the sale and purchase of the Production Payment
and to the Closing Documents as further set forth herein, to make any payments
or repayments required in order to obtain the Release of Liens, to develop its
hydrocarbon property base, and for general corporate purposes.

ARTICLE IV

REPRESENTATIONS OF ROYALTY OWNER

Section 4.1 Representations of Royalty Owner. Royalty Owner hereby represents
and warrants to Working Interest Owner as follows:

 

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(a) Royalty Owner is a limited liability company duly organized, validly
existing and in good standing under the Laws of the State of Texas. The
execution, delivery and performance of this Agreement and the transactions
described herein have been duly and validly authorized by all necessary action
on the part of Royalty Owner. Royalty Owner is a “United States person” within
the meaning of Section 7701 of the Internal Revenue Code.

(b) This Agreement has been, and as of the Closing the Closing Documents to
which Royalty Owner is a signatory will have been, duly executed and delivered
by or on behalf of Royalty Owner. This Agreement constitutes, and as of the
Closing each of the Closing Documents to which Royalty Owner is a party will
constitute, the legal, valid and binding obligations of Royalty Owner
enforceable against Royalty Owner in accordance with its terms, subject,
however, to bankruptcy, insolvency, reorganization, moratorium and other Laws
affecting creditors’ rights generally and to general principles of equity.

(c) Royalty Owner is acquiring the Production Payment for its own account and
not with any intention to transfer all or any part of the Production Payment to
others in violation of the Securities Act of 1933, as amended.

ARTICLE V

CONDITIONS TO CLOSING

Section 5.1 Conditions to Obligations of Working Interest Owner. The obligation
of Working Interest Owner to proceed with the Closing is subject to the
satisfaction, on or prior to the Closing Date, of all of the following
conditions precedent, provided that any one or more of such conditions may be
waived in whole or in part in writing by Working Interest Owner:

(a) Royalty Owner shall have performed all covenants and agreements required to
be performed by it hereunder at or prior to the Closing, and

(b) Each of Royalty Owner’s representations and warranties contained in Article
IV hereof shall be true and correct on and as of the Closing Date as if made on
such date.

Section 5.2 Conditions to Obligations of Royalty Owner. The obligation of
Royalty Owner to proceed with the Closing is subject to the satisfaction on or
prior to the Closing Date of all of the following conditions precedent, provided
that any one or more of such conditions may be waived in whole or in part in
writing by Royalty Owner:

(a) Working Interest Owner shall have performed all covenants and agreements
required to be performed by it hereunder at or prior to the Closing, and each of
the representations and warranties contained in Article III hereof or in any of
the other Closing Documents shall be true and correct on and as of the Closing
Date as if made on such date.

(b) The consummation of the Closing on the Closing Date shall not be prohibited
by any applicable Law or any applicable order or decree of any federal or state
court or agency having competent jurisdiction. No suit, action or other
proceeding shall be pending (i) that could have any material adverse effect on
the Related Assets or the value of the Related Assets or any adverse effect on
the value of the Production Payment, (ii) in which there is sought any remedy

 

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to restrain, enjoin or otherwise prevent the consummation of this Agreement or
the transactions contemplated in connection herewith, or (iii) in which any
allegation is made that this Agreement or any of the transactions contemplated
hereby is in violation of any Lease, indenture, bank loan, credit agreement,
farmout agreement, program agreement, unit agreement, operating agreement, or
other agreement or instrument to which Working Interest Owner is a party or by
which Working Interest Owner or Working Interest Owner’s properties may be
currently bound or affected.

(c) Royalty Owner shall have received a copy of the Operations and Environmental
Site Assessment prepared by Wood Group Production Services and dated
September 19, 2011, with respect to the Subject Lands and the Subject Interests.

(d) Royalty Owner shall have received copies of (i) all of the documents and
instruments referred to in the Disclosure Schedule hereto, (ii) all consents,
waivers of preferential purchase rights, and advance notices that are referred
to in Section 3.1(c), (iii) all operating agreements and other agreements and
instruments relating to Permitted Encumbrances that are referred to in
Section 3.1(s), and (iv) any other Subject Contracts requested by Royalty Owner;
and all of the foregoing shall be in full force and effect.

(e) Royalty Owner, in Royalty Owner’s sole discretion, shall be satisfied with
the results of any engineering, environmental or other review of the Related
Assets that it chooses to undertake, any due diligence investigation with
respect to the matters addressed by Working Interest Owner’s representations and
warranties in the Production Payment Documents, and with all legal matters
related to the transactions contemplated in the Production Payment Documents,
including the status of the consents and amendments obtained by Royalty Owner
with respect to Working Interest Owner’s loan agreements, mortgages and
indentures.

(f) Royalty Owner shall have received title opinions, in form and substance
reasonably acceptable to it, landman reports or other title information with
respect to title to the Subject Interests as may be requested by Royalty Owner.

(g) Royalty Owner shall have received certificates from the applicable public
officials of (i) the State of Oklahoma showing that Working Interest Owner and
Endeavor Pipeline are corporations that are duly organized, validly existing and
in good standing under the Laws of such state, and (ii) the State of Delaware
showing that Endeavor Gathering is a limited liability company that is duly
organized, validly existing and in good standing under the Laws of such state,
and (iii) the State of Texas showing that each or Working Interest Owner,
Endeavor Pipeline and Endeavor Gathering is duly qualified and in good standing.

(h) Royalty Owner shall have received insurance certificates establishing that
Working Interest Owner is in compliance with the requirements of Section 3.7 of
the Production and Marketing Agreement.

(i) Royalty Owner shall have received an Affidavit of Non-Foreign Status from
Working Interest Owner, substantially in the form attached as Exhibit A hereto.

 

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(j) Working Interest Owner shall have paid, or reimbursed Royalty Owner, in an
amount not to exceed $250,000, for the reasonable out-of-pocket costs and
expenses incurred by Royalty Owner in connection with its retention of legal
counsel and environmental, engineering and other professionals to assist with
its due diligence investigation of the Subject Interests and the negotiation and
preparation of the Transaction Documents. Royalty Owner will provide Working
Interest Owner with reasonable evidence (including any invoices) supporting the
costs and expenses incurred by Royalty Owner paid or reimbursed by Working
Interest Owner pursuant to Section 7.3.

ARTICLE VI

CLOSING

Section 6.1 Place of Closing. The Closing will occur at the offices of Royalty
Owner’s counsel in Houston, Texas, on December 8, 2011, or at such other place
and time as Working Interest Owner and Royalty Owner may specify.

Section 6.2 Closing Documents. At or before the Closing the following
instruments shall be duly executed and acknowledged, as applicable, and
delivered, each in form and substance satisfactory to Royalty Owner in its sole
discretion and in such numbers of counterparts as may be requested by either
Party:

(a) Counterparts of the Conveyance, executed by Royalty Owner and Working
Interest Owner.

(b) Counterparts of the Production and Marketing Agreement, executed by Royalty
Owner and Working Interest Owner.

(c) Counterparts of the Mortgage, executed by Working Interest Owner.

(d) Counterparts of the EPL Service Agreement executed by Endeavor Pipeline and
Royalty Owner, respectively.

(e) Counterparts of the EGG Service Agreement executed by Endeavor Gathering and
Royalty Owner, respectively.

(f) Counterparts of the Endeavor NAESB Contract executed by Endeavor Pipeline
and Royalty Owner.

(g) Counterparts of the Release of Liens executed by Existing Mortgage Holder;

(h) Legal opinions to Royalty Owner, in form and substance satisfactory to
Royalty Owner, from (i) Andrews Kurth LLP, special counsel for Working Interest
Owner, as set out on Exhibit B hereto (with such additional assumptions and
qualifications as may be acceptable to Royalty Owner); (ii) Crowe & Dunlevy, a
professional corporation, special Oklahoma counsel for Working Interest Owner,
as set forth on Exhibit C hereto (with such additional assumptions and
qualifications as may be acceptable to Royalty Owner).

(i) A certificate of a senior executive officer of Working Interest Owner given
to Royalty Owner, dated as of the Closing Date, certifying (to the best of his
knowledge, after due inquiry) as to the matters specified in Section 5.2(a) and
(b).

 

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(j) Certificates of a senior executive officer of each of Working Interest
Owner, EPL, and EGG, given to Royalty Owner, containing the names and signatures
of the officers of such company authorized to execute the Closing Documents to
which such company is a party and certifying to the truth, correctness and
completeness of the following exhibits attached thereto: (i) a copy of
resolutions or written consents duly adopted by the Board of Directors, members
or managers, as applicable, of such company and in full force and effect at the
Closing Date, authorizing the execution of the Closing Documents to which such
company is a party and the consummation of the transactions contemplated
therein, and (ii) a copy of the charter documents of such company and all
amendments thereto, certified, as applicable, by the appropriate official of the
appropriate state of organization.

(k) Such other documents as Royalty Owner may reasonably specify to effectuate
the conveyance of the Production Payment to Royalty Owner and the other
transactions contemplated herein and in the other Closing Documents.

Section 6.3 Preclosing and Funding. The Conveyance, the Mortgage and the Release
of Liens will be executed prior to the Closing and shall be delivered to Royalty
Owner contemporaneously with the funding described below and recorded promptly
thereafter. After receipt of such documents and the other items described in
Sections 5.2 and 6.2, the Closing will be completed as follows:

(a) Working Interest Owner and Existing Mortgage Holder will irrevocably
authorize, and Working Interest Owner does hereby irrevocably authorize, Royalty
Owner to accept delivery of the Conveyance, the Mortgage, and the Release of
Liens concurrently with Royalty Owner’s sending of the wire transfer described
in Part One of Schedule 6.3 and to file such instruments for record thereafter,
and Royalty Owner will pay the Purchase Price to Working Interest Owner by wire
transfer of immediately available funds in the amounts and to the accounts set
out on Schedule 6.3.

(b) The Parties will take such other actions and make such other deliveries of
documents as Royalty Owner deems necessary or appropriate to effectuate the
conveyance of the Production Payment to Royalty Owner and the other transactions
contemplated herein and in the other Closing Documents.

(c) Concurrently with the Closing, Royalty Owner or its Affiliates may execute
such commodity price hedges, interest rate hedges, or other derivative
transactions as Royalty Owner deems appropriate in connection with the
Production Payment, the marketing of the Production Payment Hydrocarbons and the
calculation of the final Purchase Price.

ARTICLE VII

MISCELLANEOUS

Section 7.1 Announcements; Confidentiality; Patriot Act.

(a) Each Party covenants and agrees with the other that, subject to applicable
Law, each Party will promptly advise and consult with the other and obtain the
other’s written consent before issuing any press release or other public
announcement with respect to this Agreement or

 

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the transactions described herein; provided, however, that if either Party
believes that such release or announcement is required by applicable Laws
(including stock exchange rules) or by a court or agency having jurisdiction,
such Party may make such release or announcement after it has used its
reasonable efforts to give the other Party written notice thereof, has provided
the text of such release or announcement to the other Party, and has permitted
the other Party reasonable opportunity to review and comment upon such release
or announcement. Each Party will hold in confidence this Agreement, the other
Production Payment Documents (except to the extent recorded in public records),
and any confidential information it has obtained from another Party, provided
that disclosure thereof is permitted: (i) to the lenders, hedge providers and
investors of any Party or any partner or member of any such Party and to the
Affiliates of any such Party, lender, hedge provider, investor, partner or
member, (ii) to the officers, employees, agents, consultants, auditors and
attorneys of any Party or any Person described in the preceding clause (i),
(iii) in the course of any arbitration, trial, or other legal proceeding between
any of the Parties or any partner or member of any such Party, their lenders,
hedge providers or investors, or the Affiliates of any such Party, partner,
member, lender, hedge provider, or investor, (iv) to the extent legally required
to be disclosed or otherwise subject to legal, judicial, arbitral, regulatory or
self-regulatory requests for information or documents, and (v) in connection
with any assignment or potential assignment of such Party’s, partner’s,
member’s, lender’s, hedge provider’s or investor’s rights (provided that each
such assignee or potential assignee is made aware that such information is
required to be held in confidence).

(b) Each Party notifies the other Party that, to the extent the notifying Party
is subject to the USA PATRIOT Act (Title III of Pub. L. 107-56), such notifying
Party is required to obtain, verify and record information that identifies the
other Party, including the other Party’s name and address and other information
that will allow such the notifying Party to identify the other Party in
accordance with such Act.

Section 7.2 Survival. The representations, warranties, covenants, agreements and
indemnities in this Agreement and the Closing Documents and other Production
Payment Documents will survive the Closing and the consummation of the
transactions described herein and therein.

Section 7.3 Expenses. Whether or not the Closing occurs, Working Interest Owner
will from time to time, promptly on demand, reimburse Royalty Owner for its
reasonable expenses incurred in connection with pursuing the transactions
contemplated herein in an amount up to $250,000, including all of Royalty
Owner’s legal and title fees and expenses, engineering fees and expenses,
environmental audit fees and expenses and other professional fees and expenses
incurred by Royalty Owner or its Affiliates in connection with due diligence
review and the preparation, review, negotiation or delivery of all documents for
such transactions (whether or not any such documents are executed), including
any term sheet or mandate or commitment letter, this Agreement, the Closing
Documents, the other Production Payment Documents, and any and all proposed
supplements, amendments or waivers from time to time prepared with respect to
this Agreement, the Closing Documents, the other Production Payment Documents,
and the transactions contemplated herein and therein; provided that the $250,000
maximum set forth above shall not, in any event, apply to limit Working Interest
Owner’s obligations under this Section 7.3 with respect to any fees or expenses
related to any period following the Closing. Working Interest Owner shall
indemnify and hold harmless Royalty

 

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Owner from and against any and all liability for any brokers’ or finders’ fees
arising with respect to brokers or finders retained or engaged by Working
Interest Owner or Working Interest Owner’s Affiliates in respect of the
transactions described herein and therein. In the event that the Closing does
not occur Working Interest Owner shall promptly reimburse Royalty Owner for any
loss resulting from reversing any commodity price hedge, interest rate hedge, or
other derivative transactions described at the end of Section 6.3.

Section 7.4 Notices. All notices, requests, demands, instructions and other
communications required or permitted to be given hereunder or under the other
Production Payment Documents must be in writing and must be delivered
personally, mailed by certified mail, postage prepaid and return receipt
requested, sent by telecopier, or sent by email confirmed by another writing, to
the Parties as follows:

 

To Royalty Owner, addressed to:

 

EDF Trading North America, LLC

4700 W Sam Houston Parkway N, Suite 250

Houston, Texas 77041

Attention: Eric Dennison

Fax No. (281) 781-0360

Phone No. (281) 653-5811

  

To Working Interest Owner, addressed to:

 

GMX Resources Inc.

9400 N Broadway, Suite 600

Oklahoma City, Oklahoma 73114

Attention: Chief Financial Officer

Fax No. (405) 600-0600

Phone No. (405) 600-0711

with a copy to:

 

Jones Day

717 Texas, Suite 3300

Houston, Texas 77002

Attention: Jeffrey A Schlegel

Fax No. (832) 239-3600

Phone No. (832) 239-3939

  

with a copy to:

 

Andrews Kurth LLP

600 Travis, Suite 4200

Houston, Texas 77002

Attention: Shahid A. Ghauri

Fax No. (713) 238-7171

Phone No. (713) 220-4626

Each Party may designate for itself a new or different address by written notice
to the other. In addition, a copy of all notices, requests, demands,
instructions and other communications given under this Section will be provided
to any mortgagee of the Production Payment that is from time to time designated
by Royalty Owner or that from time to time requests such copies from Working
Interest Owner. All notices given by personal delivery or mail will be effective
on the date of actual receipt at the appropriate address. Notice given by
telecopier or email will be effective upon actual receipt if received during
recipient’s normal business hours or at the beginning of the next Business Day
after receipt if received after the recipient’s normal business hours.

Section 7.5 Governing Law. EXCEPT TO THE EXTENT THE LAWS OF ANY OTHER STATE ARE
MANDATORILY APPLICABLE, THIS AGREEMENT IS TO BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS (WITHOUT REGARD TO PRINCIPLES OF
CONFLICTS OF LAWS) AND ANY APPLICABLE FEDERAL LAWS.

 

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Section 7.6 Successors and Assigns. This Agreement will be binding upon the
Parties hereto and their respective successors and assigns and, subject to the
restrictions set forth in Section 1.8 of the Conveyance, shall inure to the
benefit of the Parties and their respective successors and permitted assigns.
Nothing contained herein or in the other Production Payment Documents will in
any way limit or restrict the right of Royalty Owner, or Royalty Owner’s
successors and assigns, to transfer, assign or pledge their respective rights or
obligations hereunder and under the other Production Payment Documents, in whole
or in part. Working Interest Owner will not transfer, assign or pledge its
rights or obligations hereunder or under the other Production Payment Documents
without the prior written consent of Royalty Owner.

Section 7.7 Entire Agreement; Amendments; Waivers. This Agreement and the other
Closing Documents and Production Payment Documents constitute the entire
agreement between the Parties with respect to the transactions described herein
and supersede all prior negotiations, discussions, agreements and
understandings, whether oral or written, relating to such subject matter. This
Agreement may not be amended or modified, and no rights hereunder may be waived,
except by a written document signed by the Party to be charged with such
amendment, modification or waiver. Provisions of this Agreement that refer to
any consent, approval, amendment or waiver by either Party require such consent,
approval, amendment or waiver to be in writing. No waiver of any of the
provisions of this Agreement will constitute a waiver of any other provisions
hereof (whether or not similar) nor will such waiver constitute a continuing
waiver unless otherwise expressly provided. Each Party acknowledges that it has
read and understands the terms of this Agreement and the other Production
Payment Documents and has had the opportunity to consult with legal, tax and
accounting counsel and advisers of its choice concerning the meaning and effect
hereof and thereof. No Party has relied upon any other Party or its counsel or
advisers with respect to the meaning or effect of any such agreement or
instrument.

THIS WRITTEN AGREEMENT AND THE OTHER PRODUCTION PAYMENT DOCUMENTS REPRESENT THE
FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF
PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.

THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

Section 7.8 Counterparts. This Agreement may be executed by Royalty Owner and
Working Interest Owner in any number of counterparts, each of which shall be
deemed an original instrument and all of which together shall constitute one and
the same Agreement.

Section 7.9 WAIVER OF JURY TRIAL AND OF PUNITIVE DAMAGES. EACH PARTY HEREBY
KNOWINGLY, VOLUNTARILY, INTENTIONALLY, AND IRREVOCABLY (A) WAIVES, TO THE
MAXIMUM EXTENT NOT PROHIBITED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A
TRIAL BY JURY IN

 

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RESPECT OF ANY LITIGATION BASED ON, OR DIRECTLY OR INDIRECTLY AT ANY TIME
ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE OTHER
PRODUCTION PAYMENT DOCUMENTS OR ANY TRANSACTION CONTEMPLATED HEREBY OR THEREBY
OR ASSOCIATED HEREWITH OR THEREWITH; (B) WAIVES, TO THE MAXIMUM EXTENT NOT
PROHIBITED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY
SUCH LITIGATION ANY “SPECIAL DAMAGES”, AS DEFINED BELOW, (C) CERTIFIES THAT NO
OTHER PARTY AND NO REPRESENTATIVE OR AGENT OR COUNSEL OF ANY OTHER PARTY HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, OR IMPLIED THAT SUCH OTHER PARTY WOULD NOT,
IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVERS, AND
(D) ACKNOWLEDGES THAT IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT, THE
OTHER PRODUCTION PAYMENT DOCUMENTS AND THE TRANSACTIONS CONTEMPLATED HEREBY AND
THEREBY BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS CONTAINED
IN THIS SECTION. AS USED IN THIS SECTION, “SPECIAL DAMAGES” MEANS ALL
CONSEQUENTIAL, EXEMPLARY OR PUNITIVE DAMAGES (REGARDLESS OF HOW NAMED) BUT DOES
NOT INCLUDE ANY PAYMENTS OR FUNDS WHICH ANY PARTY HAS EXPRESSLY PROMISED TO PAY
OR DELIVER TO ANY OTHER PARTY.

Section 7.10 CONSENT TO JURISDICTION. ANY LEGAL PROCEEDING ARISING OUT OF OR IN
ANY WAY RELATED TO ANY OF THE PRODUCTION PAYMENT DOCUMENTS WILL BE BROUGHT AND
LITIGATED EXCLUSIVELY IN THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN
DISTRICT OF TEXAS, TO THE EXTENT IT HAS SUBJECT MATTER JURISDICTION, AND
OTHERWISE IN THE STATE COURTS SITTING IN HOUSTON, TEXAS, AND EACH PARTY AGREES
AND CONSENTS THAT SERVICE OF PROCESS MAY BE MADE UPON IT IN ANY LEGAL PROCEEDING
RELATING TO ANY OF THE PRODUCTION PAYMENT DOCUMENTS BY ANY MEANS ALLOWED UNDER
TEXAS OR FEDERAL LAW, PROVIDED THAT LEGAL PROCEEDINGS TO ENFORCE ANY LIEN OR
SECURITY INTEREST GRANTED UNDER ANY PRODUCTION PAYMENT DOCUMENT MAY BE BROUGHT
IN ANY COURT HAVING JURISDICTION OVER SUCH PROCEEDINGS. THE PARTIES HEREBY WAIVE
AND AGREE NOT TO ASSERT, BY WAY OF MOTION, AS A DEFENSE OR OTHERWISE, THAT ANY
SUCH PROCEEDING IS BROUGHT IN AN INCONVENIENT FORUM OR THAT THE VENUE THEREOF IS
IMPROPER, AND FURTHER AGREE TO A TRANSFER OF ANY SUCH PROCEEDING TO THE UNITED
STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF TEXAS, TO THE EXTENT THAT IT
HAS SUBJECT MATTER JURISDICTION, AND OTHERWISE TO A STATE COURT IN HOUSTON,
TEXAS. IN

 

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FURTHERANCE THEREOF, EACH PARTY HEREBY ACKNOWLEDGES AND AGREES THAT IT WILL BE
NEITHER INCONVENIENT NOR UNFAIR TO LITIGATE OR OTHERWISE RESOLVE ANY DISPUTES OR
CLAIMS IN ANY SUCH COURT.

[Signatures on next page]

 

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IN WITNESS OF THE FOREGOING, Working Interest Owner and Royalty Owner have each
executed and delivered this Agreement.

 

WORKING INTEREST OWNER:

 

GMX RESOURCES INC.

By:  

/s/ Harry C. Stahel, Jr.

 

Name: Harry C. Stahel, Jr.

Title:   Executive Vice President — Finance

 

ROYALTY OWNER:

 

EDF TRADING NORTH AMERICA, LLC

By:  

/s/ Eric Dennison

 

Name: Eric Dennison

Title:   Senior Vice President

Signature Page — Purchase and Sale Agreement

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SCHEDULE 3.1

to

Purchase and Sale Agreement

DISCLOSURE SCHEDULE

Section 3.1(b) Conflicts

None.

Section 3.1(c) Consents, Preferential Rights and Required Notices

None.

Section 3.1(d) Material Adverse Changes

None, except as disclosed in reports or other documents filed by Working
Interest Owner with the U.S. Securities and Exchange Commission (“SEC”) that are
publicly available on the SEC’s EDGAR system or posted on Working Interest
Owner’s website at http://gmx.investoroom.com as of the Closing.

Section 3.1(e) Governmental Approvals

None.

Section 3.1(h) Full Disclosure

None.

Section 3.1(j) Tax Disclosures

The following list of Tax Warrants filed in the 21st Judicial District Court,
Harrison County, Texas. Since GMXR is listed as Lessee of the tracts identified
in these warrants, when Harrison County cannot find or cannot collect ad valorem
tax from mineral owners, it names as Lessee as a defendant. GMXR will pay the ad
valorem tax and subsequently deduct the amount from future distributions to the
mineral owner:

 

DATE

   CASE NUMBER    AMOUNT   6/1/11    Case #110120T    $ 6,899.31    8/17/11   
Case #110244T    $ 10,757.73    9/12/11    Case #110307T    $ 2,125.90   
11/17/11    Case #110204T    $ 29,183.27   

GMXR has filed the protest, contending that compressors are not not subject to
ad valorem tax since they are already taxed as real property improvements,
otherwise we are double taxed.

 

Schedule 3.1 — Page 1

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DATE

   CASE NUMBER    AMOUNT   10/5/11    Case #201100254    $ 7,183.05   

Section 3.1(m) Commitments to Contracts

The dedication of gas and dedication of acreage within the Gas Gathering
Agreement between Endeavor Gathering LLC (as Gatherer), GMX Resources Inc., and
Endeavor Pipeline Inc. (as Shipper), dated November 1, 2009, plus the first
Amendment dated as of April 29, 2010, plus the second Amendment dated as of
April 29, 2010.

The Farmout Agreement Holt (Haynesville/Bossier Formation) Unit dated June 1,
2009 between GMX Resources Inc., (as Operator) and BP America Production Company
(as Non-Operator), plus the Amendment No. 1 dated April 12, 2010.

The Operating Agreement dated December 6, 2008 between GMX Resources Inc. (as
Operator) and Exxon Mobil Corporation (as Non-Operator) related to the Blocker
Ware Gas Unit.

The Operating Agreement dated May 1, 2009 between GMX Resources Inc. (as
Operator) and Mobil Producing Texas & New Mexico Inc. (as Non-Operator) related
to the Holt Gas Unit.

The Operating Agreement dated March 22, 2010 between GMX Resources Inc. (as
Operator) and EXCO Operating Company, LP and BG US Production Company LLC (as
Non-Operators) related to the Verhalen and Hamilton Gas Units.

The Participation Agreement dated December 5, 2003 between GMX Resources Inc.,
its wholly-owned subsidiaries Expedition Natural Resources Inc. and Endeavor
Pipeline, Inc., and Penn Virginia Oil & Gas Corporation, together with the First
Amendment dated February 27, 2004, the Second Amendment dated March 9, 2004, the
Third Amendment dated to be April 6, 2004, the Fourth Amendment dated to be
effective May 11, 2004, the Fifth Amendment dated effective January 1, 2005, the
Sixth Amendment dated to be effective January 1, 2006.

Oil and Gas Property Purchase Agreement dated June 12, 2008 between Loutex
Production Company (as Seller) and Working Interest Owner (as Buyer) related to
the Shaw Unit.

Section 3.1(n) Gas Balancing, Take or Pay, etc.

None.

Section 3.1(o) Compliance with Laws

Any items included in the Operations and Environmental Site Assessment prepared
by Wood Group Production Services, dated September 19, 2011, and furnished to
Royalty Owner.

Section 3.1(p) No Casualties or Condemnation.

None.

 

Schedule 3.1 — Page 2

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Section 3. (q) Litigation

None.

Section 3.1(v) Employee Disputes

None.

 

Schedule 3.1 — Page 3