Document:

Filed by Bowne Pure Compliance

 

Exhibit 10.3

SHARE LENDING AGREEMENT

Dated as of February 11, 2008

among

GMX RESOURCES INC. (“Lender”),

and

JEFFERIES FUNDING LLC (“Borrower”),

and

JEFFERIES & COMPANY, INC.,

in its capacity as Collateral Agent (as hereinafter defined).

This Agreement sets forth the terms and conditions under which Borrower may borrow from Lender
up to the Maximum Number of Shares (as hereinafter defined) from time to time.

The parties hereto agree as follows:

Section 1. Certain Definitions. The following capitalized terms shall have the
following meanings:

“Business Day” means a day, other than a Saturday or Sunday, on which (i) regular
trading occurs in the principal trading market for the Common Shares and (ii) the Clearing
Organization is open.

“Cash” means any coin or currency of the United States as at the time shall be legal
tender for payment of public and private debts.

“Clearing Organization” means The Depository Trust Company, or, if agreed to by
Borrower and Lender, a Securities Intermediary at which Borrower and Lender both maintain accounts.

“Closing Price” on any day means, with respect to the Common Shares (i) if the Common
Shares are listed or admitted to trading on a U.S. securities exchange registered under the
Exchange Act or are included in the OTC Bulletin Board Service (operated by the Financial Industry
Regulatory Authority, Inc.), the last reported sale price, regular way, in the principal trading
session on such day on such market on which the Common Shares are then listed,

 

 

 

admitted to trading or included (or, if the day of determination is not a Business Day, the
last preceding Business Day) and (ii) if the Common Shares are not so listed or admitted to trading
or if the last reported sale price is not obtainable (even if the Common Shares are listed,
admitted to trading or included on such market), the average of the bid prices for the Common
Shares obtained from as many dealers in the Common Shares (which may include Borrower or its
affiliates), but not exceeding three, as shall furnish bid prices to the Borrower (which bid prices
shall be made available to the Lender by the Borrower upon request by the Lender).

“Collateral” means any Cash or Non-Cash Collateral. Each of the parties to this
Agreement hereby agree that Cash and each item within the definition of Non-Cash Collateral shall
be treated as a “financial asset” as defined by Section 8-102(a)(9) of the UCC.

“Collateral Account” means the securities account of the Collateral Agent maintained
on the books of Jefferies & Company, Inc., as Securities Intermediary, and designated “Jefferies &
Company, Inc., as Collateral Agent of GMX Resources Inc., as pledgee of Jefferies Funding LLC, as
Borrower of Loaned Shares.” Any Collateral credited to the Collateral Account shall be segregated
from all other assets and property of the Collateral Agent, which such segregation may be
accomplished by appropriate identification on the books and records of the Collateral Agent, as a
“securities intermediary” within the meaning of the UCC, including 8-501(b)(1) thereof. The
Collateral Agent acknowledges that the Collateral Account is maintained for the benefit of Lender
and undertakes to treat Lender as entitled to exercise the rights that comprise the Collateral
credited to the Collateral Account.

“Collateral Agent” means Jefferies & Company, Inc., in its capacity as collateral
agent for Lender hereunder, or any successor thereto under Section 21.

“Collateral Percentage” means 100%.

“Common Shares” means shares of common stock, par value $0.001 per share, of Lender,
or any other security into which the Common Shares shall be exchanged or converted as the result of
any merger, consolidation, other business combination, reorganization, reclassification,
recapitalization or other corporate action (including, without limitation, a reorganization in
bankruptcy).

“Convertible Notes” means the $105,000,000 aggregate principal amount of 5.00%
Convertible Senior Notes due 2013 issued by Lender, or up to $125,000,000 aggregate principal
amount to the extent the option to purchase additional Convertible Notes (the “Option”) is
exercised in full as set forth in the purchase agreement relating to the initial purchase of the
Convertible Notes.

“Convertible Notes Settlement Date” means February 15, 2008.

“Credit Downgrade” occurs when either (i) Standard & Poor’s Ratings Services, a
division of the McGraw-Hill Companies, Inc., (“S&P”) and Moody’s Investor Services
(“Moody’s”) rates the creditworthiness of Jefferies Group, Inc.’s long term unsecured and
unsubordinated debt or deposit obligations at BBB or below for S&P and at Baa2 or below for
Moody’s or (ii) S&P or Moody’s rates creditworthiness of Jefferies Group, Inc.’s long term
unsecured and unsubordinated debt or deposit obligations at BBB- or below for S&P and at Baa3 or
below for Moody’s, or, if either S&P or Moody’s ceases to rate such debt, an equivalent or lower
rating by a substitute rating agency mutually agreed upon by the Lender and the Borrower.

 

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“Credit Upgrade” occurs when either (i) S&P and Moody’s rates the creditworthiness of
Jefferies Group, Inc.’s long term unsecured and unsubordinated debt or deposit obligations better
than BBB for S&P and better than Baa2 for Moody’s, and (ii) S&P or Moody’s rates the
creditworthiness of Jefferies Group, Inc.’s long term unsecured and unsubordinated debt or deposit
obligations at BBB+ or better than for S&P and at Baa1 or better than for Moody’s, or, if either
S&P or Moody’s ceases to rate such debt, an equivalent or higher rating by a substitute rating
agency mutually agreed upon by the Lender and the Borrower.

“Cutoff Time” shall mean 10:00 a.m. in the jurisdiction of the Clearing Organization,
or such other time on a Business Day by which a transfer of Loaned Shares must be made by Borrower
or Lender to the other, as shall be determined in accordance with market practice.

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

“Guarantor” means Jefferies Group, Inc. in its capacity as the guarantor under the
Guaranty.

“Guaranty” means the guaranty between the Guarantor, as guarantor, and the Lender, as
the guaranteed party, dated February 11, 2008, pursuant to which the obligations of Borrower under
this Agreement have been guaranteed by the Guarantor.

“Indenture” means the Indenture between Lender and The Bank of New York Trust Company,
N.A., as trustee, pursuant to which the Convertible Notes are to be issued, as such Indenture is in
effect as of the Convertible Notes Settlement Date.

“Lender’s Designated Account” means the securities account of Lender maintained on the
books of Jefferies & Company, Inc., as Securities Intermediary, and designated “GMX Resources Inc.”
to be established promptly after the execution of this Agreement.

“Loan Availability Period” means the period beginning with the Convertible Notes
Settlement Date and ending on the Facility Termination Date, except for any period designated by
the Lender under the Registration Rights Agreement as a Blackout Period (as defined therein).

“Loaned Shares” means Common Shares initially transferred to Borrower in a Loan
hereunder until such Loan or portion thereof is terminated and a corresponding number of Loaned
Shares is transferred to Lender pursuant to this Agreement; provided that in respect of any such
Common Shares initially transferred to Borrower by Lender and subsequently transferred by Borrower
to another transferee, “Loaned Shares” means an equivalent number of Common Shares. If, as the
result of a share dividend, share split or reverse share split, the number of outstanding Common
Shares is increased or decreased, then the number of Loaned Shares under outstanding Loans shall,
effective as of the payment or delivery date of any such event,

 

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be proportionately increased or decreased, as the case may be. If any new or different
security (or two or more securities) shall be exchanged for the outstanding Common Shares as the
result of any reorganization, merger, consolidation, reclassification, recapitalization or other
corporate action (including, without limitation, a reorganization in bankruptcy), such new or
different security (or such two or more securities collectively) shall, effective upon such
exchange, be deemed to become a Loaned Share in substitution for the former Loaned Share for which
such exchange is made and in the same proportion for which such exchange is made. For purposes of
return of Loaned Shares by Borrower or purchase or sale of securities pursuant to Section 6 or
Section 12, such term shall mean securities of the same issuer, class and quantity as the Loaned
Shares as adjusted pursuant to the two preceding sentences.

“Market Value” on any day means (i) with respect to Common Shares, the most recent
Closing Price of the Common Shares, and (ii) with respect to any Collateral that is (a) Cash, the
face amount thereof, (b) a letter of credit, the undrawn amount thereof and (c) any other security
or property, the market value thereof, as determined by the Collateral Agent, in accordance with
market practice for such securities or property, based on the price for such security or property
as of the most recent close of trading obtained from a generally recognized source or the closing
bid quotation at the most recent close of trading obtained from such source, plus accrued interest
to the extent not included therein, unless market practice with respect to the valuation of such
securities or property in connection is to the contrary.

“Maximum Number of Shares” means, at any time, a number of Common Shares equal to the
product of (i) the aggregate principal amount of Convertible Notes issued pursuant to the
Indenture, divided by $1,000, and (ii) the Conversion Rate (as such term is used in the Indenture)
applicable at such time.

“Non-Cash Collateral” means (i) any evidence of indebtedness issued, or directly and
fully guaranteed or insured, by the United States of America or any agency or instrumentality
thereof; (ii) any deposits, certificates of deposit or acceptances of any institution which is a
member of the Federal Reserve System having combined capital and surplus and undivided profits of
not less than $500 million at the time of deposit; (iii) any investments of any Person that is
fully and unconditionally guaranteed by a bank referred to in clause (ii); (iv) any repurchase
agreements and reverse repurchase agreements relating to marketable direct obligations issued or
unconditionally guaranteed by the United States of America or issued by any agency thereof and
backed as to timely payment by the full faith and credit of the United States of America; (v)
commercial paper of any corporation incorporated under the laws of the United States or any State
thereof that is rated “investment grade” A-1 by S&P, or any successor thereto, or P-1 by Moody’s,
or any successor thereto; (vi) any money market funds (including, but not limited to, money market
funds managed by the Collateral Agent or an affiliate of the Collateral Agent) registered under the
Investment Company Act of 1940, as amended; (vii) any letter of credit issued by a bank referred to
in clause (ii); and (viii) all proceeds of the foregoing; provided that in no event shall Non-Cash
Collateral include “margin stock” as defined by Regulation U of the Board of Governors of the
Federal Reserve System.

 

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“Pledge Period” means any period beginning on a Pledge Date and to the extent such
Pledge Date occurred as a result of a Credit Downgrade ending on the earlier of (i) the Business
Day immediately following the day on which Borrower notifies Lender and the Collateral Agent
that a Credit Upgrade has occurred and (ii) the date on which this Agreement shall terminate in
accordance with the terms of this Agreement.

“Registration Rights Agreement” means the registration rights agreement between the
Lender and the Borrower dated February 11, 2008.

“Scheduled Trading Day” means any day on which (i) The NASDAQ Global Select Market, or
any successor to such exchange or any substitute exchange or quotation system to which trading in
the Common Shares has temporarily or permanently relocated (provided that Borrower, in a
commercially reasonable manner, has determined that there is comparable liquidity relative to such
Common Shares on such temporary or permanent substitute exchange or quotation system as on The
NASDAQ Global Select Market), is scheduled to be open for trading for their respective regular
trading sessions and (ii) each exchange or quotation system, where trading has a material effect
(as determined by Borrower in a commercially reasonable manner) on the overall market for futures
or options contracts relating to Common Shares, is scheduled to be open for trading for their
respective regular trading sessions.

“Securities Act” means the Securities Act of 1933, as amended.

“Securities Intermediary” means a “securities intermediary” as defined by Section
8-102(a)(14) of the UCC.

“UCC” means the Uniform Commercial Code, as in effect in the State of New York, as in
effect from time to time. Any reference to particular sections of the UCC shall be deemed to
embrace successor renumbered provisions thereof.

Section 2. Loans of Shares; Transfers of Loaned Shares.

(a) Subject to (i) the terms and conditions of this Agreement and (ii) the execution of the
Guarantee by the Lender and the Guarantor, Lender hereby agrees promptly to make available for
borrowing by Borrower at any time and from time to time during the Loan Availability Period a
number of Common Shares up to, in the aggregate, the Maximum Number of Shares. For the avoidance of
doubt, any Loaned Shares returned by the Borrower may be borrowed again during the Loan
Availability Period.

(b) Subject to the terms and conditions of this Agreement, Borrower may, from time to time, by
written notice to Lender (a “Borrowing Notice”), seek to initiate a transaction, or a
series of staggered transactions, in which Lender will lend Common Shares to Borrower through the
issuance by Lender of such Common Shares to Borrower upon the terms, and subject to the conditions,
set forth in this Agreement (each such issuance and loan, a “Loan”); provided that the
number of Common Shares borrowed in any such Loan shall be equal to no less than 1.0% of the issued
and outstanding Common Shares at such time. Such Loan shall be confirmed by a schedule and receipt
listing the Loaned Shares included in such a Loan provided by Lender to Borrower (the
“Confirmation”). Such Confirmation shall constitute conclusive evidence with respect to
the Loan, including the number of Loaned Shares that are the subject of
the Loan, to which the Confirmation relates, unless a written objection to the Confirmation
specifying the reasons for the objection is received by Lender from Borrower within five Business
Days after the delivery of the Confirmation to Lender; provided that in no event shall the delivery
of the Confirmation or any such objection thereto delay the transfer of Loaned Shares to which a
Borrowing Notice relates pursuant to clause (d) below.

 

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(c) Notwithstanding anything to the contrary in this Agreement, Borrower shall not be
permitted to borrow or have any right to take delivery of, or otherwise receive or be deemed to
have received, any Common Shares hereunder to the extent (but only to the extent) that after such
receipt of such Common Shares (i) the “beneficial ownership” (within the meaning of Section 13(d)
of the Exchange Act and the rules and regulations promulgated thereunder) of Common Shares by
Borrower or any affiliate of Borrower subject to aggregation with Borrower under such Section 13
and such rules would exceed 9.0% or violate any applicable risk management, trading or investment
policies and procedures of Borrower, as determined by the Borrower in its sole discretion, or (ii)
Borrower would be subject to Section 16(b) of the Exchange Act, as determined by the Borrower in
its sole discretion, and any Loan hereunder shall be void and have no effect to the extent (but
only to the extent) that (i) such “beneficial ownership” would be in excess of 9.0% or would
violate any applicable risk management, trading or investment policies and procedures of Borrower,
or (ii) Borrower would become subject to Section 16(b) of the Exchange Act. If any delivery owed
to Borrower hereunder is not made, in whole or in part, as a result of this provision, Lender’s
obligation to make such delivery shall not be extinguished and Lender shall make such delivery as
promptly as practicable after, but in no event later than one Business Day after, Borrower gives
notice to Lender that such delivery would not result in (i) such “beneficial ownership” being in
excess of 9.0% or violating any applicable risk management, trading or investment policies and
procedures of Borrower, or (ii) Borrower becoming subject to Section 16(b) of the Exchange Act.
If, notwithstanding the foregoing, any delivery of Common Shares is erroneously made to Borrower or
Borrower otherwise receives or is deemed to have received Common Shares in excess of the foregoing
limitation contrary to the first sentence of this clause (c), such Common Shares shall remain the
property of the Lender and the Borrower shall be deemed to hold the same as bailee of Lender and
shall have no voting, dispositive control or pecuniary interest with respect thereto.
Notwithstanding anything to the contrary in this Agreement, Lender shall not be liable to Borrower
for any delivery of Common Shares in contravention of Section 2(c) pursuant to a Borrowing Notice
delivered by Borrower.

(d) Lender shall transfer Loaned Shares in any Loan to Borrower on or before the Cutoff Time
on the date specified in the Borrowing Notice for the commencement of such Loan, which shall be no
later than the third Business Day following the Borrowing Notice, either in one or in a series of
staggered transactions, as specified in the Borrowing Notice. Delivery of the Loaned Shares to
Borrower shall be made in the manner set forth under Section 13 below.

Section 3. Collateral.

(a) Unless otherwise agreed by Borrower and Lender, Borrower shall, no later than 10:00 a.m.
New York time on the third Scheduled Trading Day immediately following a day on which a Credit
Downgrade has occurred, upon written request of Lender, transfer to the
Collateral Agent, for credit to the Collateral Account, Collateral with a Market Value at
least equal to the Collateral Percentage of the Market Value of the Loaned Shares as of the close
of business on the Business Day immediately preceding such transfer (any such date, a “Pledge
Date”).

 

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(b) During any Pledge Period, any Collateral transferred by Borrower to the Collateral Agent
shall be security for Borrower’s obligations in respect of the Loaned Shares and for any other
obligations of Borrower to Lender hereunder. Borrower on the Pledge Date pledges with, assigns to,
and grants the Collateral Agent for the benefit of Lender a continuing first priority security
interest in, and a lien upon, the Collateral, which shall attach upon the transfer of the Loaned
Shares by Lender to Borrower and which shall cease upon the transfer of the Loaned Shares by
Borrower to Lender, a Credit Upgrade or upon the transfer of any such Collateral to Borrower in
accordance with the terms of this Agreement. In addition to the rights and remedies given to
Lender hereunder, Lender shall have all the rights and remedies of a secured party under the UCC.
To provide for the effectiveness, validity, perfection and priority of Lender’s rights as a secured
party, Borrower acknowledges that the Collateral Agent has obtained control of any financial assets
included in the Collateral (or shall have obtained control upon posting of such Collateral pursuant
to the terms contained herein) within the meaning of Sections 8-106 and 9-106 of the UCC. The
Collateral Agent acknowledges that it has control of the Collateral (or shall have control upon
posting of such collateral pursuant to the terms contained herein) on behalf of Lender within the
meaning of Section 8-106(d)(1) of the UCC. Except as expressly provided for in Section 12, Lender
may not use or invest the Collateral and the Collateral Agent shall take no instruction from Lender
regarding the use or investment of Collateral, unless a Borrower Default has occurred and is
continuing. Promptly upon the termination of any Pledge Period, the Collateral Agent shall release
to the Borrower all of the Collateral. The Securities Intermediary acknowledges that the Collateral
Account is maintained for the Collateral Agent and undertakes to treat the Collateral Agent as
entitled to exercise the rights that comprise the Collateral credited to the Collateral Account.

(c) Except as otherwise provided herein, upon the transfer to Lender of Loaned Shares pursuant
to Section 6, the Collateral Agent shall release to Borrower Collateral with a Market Value equal
to the Collateral Percentage of the Market Value of the Loaned Shares so transferred but only to
the extent that immediately following such transfer of Collateral, no Collateral Deficit would
exist. Such transfer of Collateral shall be made no later than the Cutoff Time on the day the
Loaned Shares are transferred, or if such day is not a day on which a transfer of such Collateral
may be effected under Section 13, or if the transfer of Loaned Shares by Lender to Borrower occurs
after the Cutoff Time on such day, then in each case the next day on which such a transfer may be
effected.

(d) If Borrower requests a Loan during the Pledge Period and transfers Collateral to the
Collateral Agent, as provided in this Section 3, and Lender does not transfer the relevant Loaned
Shares to Borrower, Borrower shall have the absolute right to the return of the Collateral; and if
Lender transfers the relevant Loaned Shares to Borrower and Borrower does not transfer Collateral
to the Collateral Agent as provided in this Section 3, Lender shall have the absolute right to the
return of the relevant Loaned Shares.

 

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(e) Borrower may, upon notice to Lender and the Collateral Agent, substitute Collateral for
Collateral securing any Loan or Loans; provided that such substituted Collateral shall have a
Market Value such that the aggregate Market Value of such substituted Collateral, together with all
other Collateral, shall equal or exceed the Collateral Percentage of the Market Value of the Loaned
Shares as of the date of such substitution.

(f) At the end of any Business Day, the Collateral Agent shall cause the cash balance of the
Collateral Account to be invested in an interest-bearing U.S. dollar-denominated deposit account
with The Bank of New York Trust Company, N.A., or any other institution which is a member of the
Federal Reserve System having combined capital and surplus and undivided profits of not less than
$500 million at the time of deposit (the “Deposit Account”). The interest rate paid on
such deposit will vary from day to day and will be equal to the sum of a published based rate plus
or minus an additional percentage. Any interest on such cash balances invested in the Deposit
Account will be credited to the Collateral Account and become part of the Collateral. Such funds
invested in the Deposit Account are not insured by the United States Federal Deposit Insurance
Corporation. The parties hereto agree that jurisdiction, within the meaning of Section 9-304(b) of
the UCC, in respect of the Deposit Account (and any other account established pursuant hereto) is
the State of New York, and each party represents that it has not, and agrees and covenants that it
will not, enter into any agreement to the contrary. For purposes of any transfers of cash balances
to or from the Deposit Account only, “Business Day” shall mean any day, except Saturday, Sunday and
any day which is a day on which banking institutions are authorized or required by law, regulation,
executive order or other government action to close in London or New York or a day on which the New
York Stock Exchange is closed.

Section 4. Mark To Market.

(a) During any Pledge Period, if, at the close of trading on any Business Day during the Loan
Availability Period, the aggregate Market Value of all Collateral shall be less than the Collateral
Percentage of the Market Value of all the outstanding Loaned Shares (a “Collateral
Deficit”), Lender may, by notice to Borrower and the Collateral Agent, demand that Borrower
transfer to the Collateral Agent, for credit to the Collateral Account, no later than on the third
Business Day, additional Collateral so that the Market Value of such additional Collateral, when
added to the Market Value of all other Collateral, shall equal or exceed the Collateral Percentage
of the Market Value of the Loaned Shares on such Business Day of determination.

(b) During any Pledge Period, if, at the close of trading on any Business Day during the Loan
Availability Period, the aggregate Market Value of all Collateral shall be greater than the
Collateral Percentage of the Market Value of all the outstanding Loaned Shares (a “Collateral
Excess”), Borrower may, by notice to Lender and the Collateral Agent, demand that the
Collateral Agent transfer to Borrower, no later than the following Business Day, such amount of the
Collateral selected by Borrower so that the Market Value of the Collateral, after deduction of such
amounts, shall thereupon be at least equal to the Collateral Percentage of the Market Value of the
Loaned Shares on such Business Day of determination; provided, however, that with respect to
clauses (a) and (b), the Collateral Agent will promptly give Lender a statement
setting forth the Market Value of all Collateral upon Lender’s request and Lender shall have
the right to audit the Market Value of all Collateral.

 

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(c) Notwithstanding the foregoing, with respect to any outstanding Loans secured by
Collateral, the respective rights of Lender and Borrower under Section 4(a) and Section 4(b) may be
exercised only where a Collateral Excess or Collateral Deficit exceeds 2% of the Market Value of
the Loaned Shares.

Section 5. Loan Fee. Borrower agrees to pay Lender a single loan fee per Loan (a
“Loan Fee”) equal to $0.001 per Loaned Share. The Loan Fee shall be paid by Borrower on or
before the time of transfer of the Loaned Shares pursuant to Section 2(d) on a
delivery-versus-payment basis through the facilities of the Clearing Organization.

Section 6. Loan Terminations.

(a) Borrower may terminate all or any portion of a Loan on any Business Day by transferring
the corresponding number of Loaned Shares to Lender, without any consideration being payable in
respect thereof by Lender to Borrower. Immediately following any such transfer, Borrower shall
provide written notice of termination to Lender as soon as is practicable.

(b) All outstanding Loans, if any, shall terminate on the Facility Termination Date and all
Loaned Shares under outstanding Loans shall be delivered by Borrower to Lender, without any
consideration being payable in respect thereof by Lender to Borrower, no later than the fifth
Scheduled Trading Day following the Facility Termination Date.

(c) If, on any date, the aggregate number of Loaned Shares under outstanding Loans exceeds the
Maximum Number of Shares, the number of Loaned Shares in excess of the Maximum Number of Shares
shall be delivered by Borrower to Lender, without any consideration being payable in respect
thereof by Lender to Borrower, no later than the fifth Scheduled Trading Day following such date.

(d) If, as a result of complying with this Section 6, as promptly as reasonably practicable
(but subject to applicable law, regulation or policy), (i) the “beneficial ownership” (within the
meaning of Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder)
of Common Shares by Borrower or any affiliate of Borrower subject to aggregation with Borrower
under such Section 13 and such rules would exceed 9.0% or violate any applicable risk management,
trading or investment policies and procedures of Borrower, as determined by the Borrower in its
sole discretion, or (ii) Borrower would be subject to Section 16(b) of the Exchange Act, as
determined by the Borrower in its sole discretion, then Borrower shall be permitted to extend the
date on which Loaned Shares are due under this Section 6 for all or a portion of the corresponding
delivery obligation but in no event longer than such time to allow Borrower to return such Loaned
Shares, through one transaction or a series of transactions, without causing (i) such “beneficial
ownership” to be in excess of 9.0% or to violate any applicable risk management, trading or
investment policies and procedures of Borrower, or (ii) Borrower to become subject to Section 16(b)
of the Exchange Act.

 

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(e) If Borrower is unable to satisfy its obligations to deliver any Common Shares under this
Section 6 due to (i) any requirement under, or possible violation of, any laws, or rules or
regulations of any regulatory or self-regulatory authority or related policies and procedures
(whether or not such requirements or related policies are imposed by law or have been voluntarily
adopted by Borrower) or (ii) illiquidity in the market for Common Shares, each of such clauses (i)
and (ii) as determined by the Borrower in its commercially reasonable discretion, Borrower shall,
upon prior written notice to Lender, be permitted to extend the date on which Loaned Shares are due
under this Section 6 to a date, as determined by the Borrower in its commercially reasonable
discretion, as promptly as practicable after the conditions described in clause (i) or (ii), as
applicable, cease to exist.

Section 7. Distributions.

(a) If Lender pays a cash dividend or makes a cash distribution in respect of all of its
outstanding Common Shares, Borrower shall pay to Lender (whether or not Borrower is the holder of
any Loaned Shares at such time), within three Business Days after the payment of such dividend or
distribution, an amount in cash equal to the product of (i) the amount per Common Share of such
dividend or distribution and (ii) the aggregate number of Loaned Shares under outstanding Loans as
of the record date of such dividend or distribution.

(b) If Lender makes a distribution in respect of all of its outstanding Common Shares in
property or securities, including any options, warrants, rights or privileges in respect of
securities (including a distribution of Common Shares and any options, warrants, rights or
privileges exercisable for, convertible into or exchangeable for Common Shares) (a “Non-Cash
Distribution”), then (i) such Non-Cash Distribution shall be treated as additional Loans of
such Non-Cash Distribution in an amount equal to the product of (x) the per Common Share amount of
such Non-Cash Distribution and (y) the aggregate number of Loaned Shares under outstanding Loans as
of the record date of such dividend or distribution, and (ii) the definition of “Loaned Share”
shall be deemed to be modified to include the per Common Share kind and amount of such Non-Cash
Distribution.

(c) During the Pledge Period any interest, cash distribution or cash dividend made on or in
respect of any Collateral for any Loan hereunder, shall, subject to (e) below, be delivered by the
Collateral Agent to Borrower, on the date such interest, cash distribution or cash dividend is
received by the Collateral Agent.

(d) During the Pledge Period any non-cash distributions or dividend made on or in respect of
any Collateral for any Loan hereunder shall, subject to (e) below, be delivered by the Collateral
Agent to Borrower on the date such non-cash distribution or dividend is received by the Collateral
Agent.

(e) During the Pledge Period, if the cash or other property received by the Collateral Agent
under the provisions of paragraph (c) or (d) of this Section 7 qualifies as Collateral, to the
extent that a transfer of such cash or other property to Borrower by the Collateral Agent would
give rise to a Collateral Deficit, the Collateral Agent shall (only to the extent of any such
Collateral Deficit) not make such transfer of cash or other property in
accordance with this Section 7, but shall in lieu of such transfer immediately credit the
amounts that would have been transferable under this Section 7 to the Collateral Account.

 

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Section 8. Rights in Respect of Loaned Shares.

Subject to the terms of this Agreement, and except as otherwise agreed by Borrower and Lender,
Borrower, insofar as it is the record owner of Loaned Shares, shall have all of the incidents of
ownership in respect of any such Loaned Shares until such Loaned Shares are required to be
delivered to Lender in accordance with the terms of this Agreement, including the right to transfer
the Loaned Shares to others. Borrower agrees that it or any of its affiliates that are the record
owner or holder of security entitlement to any Loaned Shares will not vote such Loaned Shares on
any matter submitted to a vote of Lender’s shareholders.

Section 9. Representations and Warranties.

(a) Each of Borrower and Lender represents and warrants to the other that:

(i) it has full power to execute and deliver this Agreement, to enter into the
Loans contemplated hereby and to perform its obligations hereunder;

(ii) it has taken all necessary action to authorize such execution, delivery
and performance;

(iii) this Agreement constitutes its legal, valid and binding obligation
enforceable against it in accordance with its terms;

(iv) the execution, delivery and performance of this Agreement does not and
will not violate, contravene, or constitute a default under, (A) its certificate of
incorporation, bylaws or other governing documents, (B) any laws, rules or
regulations of any governmental authority to which it is subject, (C) any contracts,
agreements or instrument to which it is a party or (D) any judgment, injunction,
order or decree by which it is bound; and

(v) (A) this Agreement is not unsuitable for it in the light of such party’s
financial situation, investment objectives and needs and (B) it is entering into
this Agreement in reliance upon such tax, accounting, regulatory, legal and
financial advice as it deems necessary and not upon any view expressed by the other.

(b) Lender represents and warrants to Borrower, as of the date hereof, and as of the date any
Loaned Shares are transferred to Borrower in respect of any Loan hereunder, that the Loaned Shares
and all other outstanding Common Shares of Lender have been duly authorized and, upon the issuance
and delivery of the Loaned Shares to Borrower in accordance with the terms and conditions hereof,
and subject to the contemporaneous or prior receipt of the applicable Loan Fee by Lender, will be
duly authorized, validly issued, fully paid and non-
assessible Common Shares, and the shareholders of Lender have no preemptive rights with
respect to the Loaned Shares.

 

11

 

(c) Lender represents and warrants to Borrower, as of the date hereof, and as of the date any
Loaned Shares are transferred to Borrower in respect of any Loan hereunder, that the outstanding
Common Shares are listed on The NASDAQ Global Select Market, or any successor to such exchange or
any substitute exchange or quotation system to which the trading in the Common Shares may be
temporarily or permanently relocated, and the Loaned Shares have been approved for listing on The
NASDAQ Global Select Market, or any substitute exchange or quotation system to which the trading in
the Common Shares may be temporarily or permanently relocated, subject to official notice of
issuance.

(d) Borrower represents to Lender that it has, or at the time of transfer to the Collateral
Agent shall have, the right to grant to Lender, and that Lender shall acquire, a continuing first
priority security interest in the Collateral.

(e) Lender represents and warrants to Borrower, as of the date hereof, and as of the date any
Loaned Shares are transferred to Borrower in respect of any Loan hereunder, that Lender is not
“insolvent” (as such term is defined under Section 101(32) of Title 11 of the United States Code
(the “Bankruptcy Code”) and any applicable state law) and Lender would be able to purchase
the Maximum Number of Shares in compliance with the laws of Lender’s jurisdiction of organization.

(f) The representations and warranties of Borrower and Lender under this Section 9 shall
remain in full force and effect at all times during the term of this Agreement and shall survive
the termination of this Agreement for any reason.

Section 10. Covenants.

(a) Borrower covenants and agrees with Lender that it will not transfer or dispose of any
Loaned Shares initially transferred to Borrower by Lender as a Loan hereunder of which it is the
record owner except pursuant to a registration statement that is effective under the Securities
Act; provided that Borrower may transfer any such Loaned Shares to any of its affiliates without a
registration statement so long as such transfer is exempted from registration under the Securities
Act and such affiliate transferee does not transfer or dispose of such Loaned Shares to any
non-affiliated transferee except pursuant to a registration statement that is effective under the
Securities Act.

(b) Lender agrees and acknowledges that Borrower has represented to Lender that Borrower is a
“financial institution,” “swap participant” and “financial participant” within the meaning of
Sections 101(22), 101(53C) and 101(22A) of Title 11 of the Bankruptcy Code. The parties hereto
further agree and acknowledge (A) that this Agreement is intended to be (i) a “securities
contract,” as such term is defined in Section 741(7) of the Bankruptcy Code, with respect to which
each payment and delivery hereunder is a “settlement payment,” or “margin payment,” as such term is
defined in Section 741(8) of the Bankruptcy Code and 546(e), and (ii) a “swap agreement,” as such
term is defined in Section 101(53B) of the Bankruptcy Code, with
respect to which each payment and delivery hereunder is a “transfer,” as such term is defined
in Section 101(54) of the Bankruptcy Code, and (B) that Borrower is intended to be entitled to the
protections afforded by, among other sections, Sections 362(b)(6), 362(b)(17), 546(e), 546(g), 555
and 560 of the Bankruptcy Code.

 

12

 

(c) Lender covenants and agrees that, on any day on which Lender effects any repurchase of
Common Shares, Lender shall give Borrower a written notice of the number of its outstanding Common
Shares (a “Repurchase Notice”) if, following such repurchase, the number of outstanding
Common Shares (which shall include on any determination date the Loaned Shares then outstanding)
shall have decreased by more than 1.0% since the immediately preceding Repurchase Notice (or, in
the case of the first such Repurchase Notice, the number of outstanding Common Shares as of the
date hereof).

(d) Lender covenants and agrees that neither it, nor any other person, will purchase Common
Shares, directly or indirectly, such that, after giving effect to such purchase, the Maximum Number
of Shares will be in excess of 34% of the number of outstanding Common Shares at such time.

(e) Lender covenants and agrees that, on the date hereof, Lender will provide to Borrower a
properly executed Internal Revenue Service Form W-9.

Section 11. Events of Default.

(a) All Loans, and any further obligation to make Loans under this Agreement, may, at the
option of Lender by a written notice to Borrower (which option shall be deemed exercised, even if
no notice is given, immediately upon the occurrence of an event specified in either Section
11(a)(iii) or 11(a)(iv) below), be terminated (i) immediately upon the occurrence of any of the
events set forth in either Section 11(a)(iii) or 11(a)(iv) below and (ii) two Business Days
following such notice upon the occurrence of any of the other events set forth below (each, a
“Borrower Default”):

(i) Borrower fails to deliver Loaned Shares to Lender as required by Section 6;

(ii) Borrower fails to deliver or pay to Lender when due any cash as required
by Section 7;

(iii) the filing by or on behalf of Borrower or Guarantor of a voluntary
petition or an answer seeking reorganization, arrangement, readjustment of its debts
or for any other relief under any bankruptcy, reorganization, compromise,
arrangement, insolvency, readjustment of debt, dissolution, winding-up or
liquidation or similar act or law, of any state, federal or other applicable foreign
jurisdictions, now or hereafter existing (“Bankruptcy Law”), or any action
by Borrower for, or consent or acquiescence to, the appointment of a receiver,
trustee, custodian or similar official of Borrower or Guarantor, or of all or a
substantial part of its property; or the making by Borrower or Guarantor of a
general
assignment for the benefit of creditors; or the admission by Borrower or
Guarantor in writing of its inability to pay its debts as they become due;

 

13

 

(iv) the filing of any involuntary petition against Borrower or Guarantor in
bankruptcy or seeking reorganization, arrangement, readjustment of its debts or for
any other relief under any Bankruptcy Law and an order for relief by a court having
jurisdiction in the premises shall have been issued or entered therein; or any other
similar relief shall be granted under any applicable federal or state law or law of
any other applicable foreign jurisdictions; or a decree or order of a court having
jurisdiction in the premises for the appointment of a receiver, liquidator,
sequestrator, trustee or other officer having similar powers over Borrower or
Guarantor or over all or a part of its property shall have been entered; or the
involuntary appointment of an interim receiver, trustee or other custodian of
Borrower or Guarantor or of all or a substantial part of its property; or the
issuance of a warrant of attachment, execution or similar process against any
substantial part of the property of Borrower or Guarantor; and continuance of any
such event for 15 consecutive calendar days unless dismissed, bonded to the
satisfaction of the court having jurisdiction in the premises or discharged;

(v) Borrower fails to transfer Collateral within two Business Days of the time
when such transfer is due in accordance with Section 3 and Section 4;

(vi) Borrower or Guarantor notifies Lender of its inability to or intention not
to perform Borrower’s or Guarantor’s, as applicable, obligations hereunder or under
the Guarantee, as applicable, or otherwise disaffirms, rejects or repudiates any of
its obligations hereunder or under the Guarantee, as applicable; or

(vii) any representation made by Borrower under this Agreement in connection
with any Loan or Loans hereunder shall be incorrect or untrue in any material
respect during the term of any Loan hereunder or Borrower fails to comply in any
material respect with any of its covenants under this Agreement; provided that the
Borrower shall have the right to dispute in good faith any such notice from Lender
of Borrower’s default under this Section 11(a)(vii).

(b) All Loans, and any further obligation to make Loans under this Agreement, may, at the
option of Borrower by a written notice to Lender, be terminated two Business Days following such
notice by Borrower upon the occurrence of any of the events set forth below (each, a “Lender
Default,” and any Lender Default or Borrower Default, a “Default”):

(i) the filing by or on behalf of Lender of a voluntary petition or an answer
seeking reorganization, arrangement, readjustment of its debts or for any other
relief under any Bankruptcy Law, or any action by Lender for, or consent or
acquiescence to, the appointment of a receiver, trustee, custodian or similar
official of Lender, or of all or a substantial part of its property; or the making
by
Lender of a general assignment for the benefit of creditors; or the admission
by Lender in writing of its inability to pay its debts as they become due; or

 

14

 

(ii) the filing of any involuntary petition against Lender in bankruptcy or
seeking reorganization, arrangement, readjustment of its debts or for any other
relief under any Bankruptcy Law and an order for relief by a court having
jurisdiction in the premises shall have been issued or entered therein; or any other
similar relief shall be granted under any applicable federal or state law or law of
any other applicable foreign jurisdictions; or a decree or order of a court having
jurisdiction in the premises for the appointment of a receiver, liquidator,
sequestrator, trustee or other officer having similar powers over Lender or over all
or a part of its property shall have been entered; or the involuntary appointment of
an interim receiver, trustee or other custodian of Lender or of all or a substantial
part of its property; or the issuance of a warrant of attachment, execution or
similar process against any substantial part of the property of Lender; and
continuance of any such event for 15 consecutive calendar days unless dismissed,
bonded to the satisfaction of the court having jurisdiction in the premises or
discharged.

Section 12. Remedies.

(a) Notwithstanding anything to the contrary herein, if Borrower is required to return Loaned
Shares pursuant to Section 6 or Section 11 and, on the date on which Borrower is required to return
Loaned Shares pursuant to Section 6 or Section 11, the purchase of Common Shares by Borrower in an
amount equal to all or any portion of the number of Loaned Shares to be delivered to Lender shall
(i) be prohibited by any law, rules or regulation of any governmental authority to which it is or
would be subject, (ii) violate, or would upon such purchase likely violate, any order or
prohibition of any court, tribunal or other governmental authority, (iii) require the prior consent
of any court, tribunal or governmental authority prior to any such repurchase or (iv) subject
Borrower, in the commercially reasonable judgment of Borrower, to any liability or potential
liability under any applicable federal securities laws (other than (x) Section 13 and Section 16(b)
of the Exchange Act, (y) any requirement under, or possible violation of, any laws, or rules or
regulations of any regulatory or self-regulatory authority or related policies and procedures
(whether or not such requirements or related policies are imposed by law or have been voluntarily
adopted by the Borrower) or (z) illiquidity in the market for Common Shares, in which events
Section 6(d) or 6(e) hereof, as applicable, shall govern) (each of (i), (ii), (iii) and (iv), a
“Legal Obstacle”), then, in each case, Borrower shall immediately notify Lender of the
Legal Obstacle and the basis therefor, whereupon Borrower’s obligation to deliver Loaned Shares to
Lender shall be suspended until such time as no Legal Obstacle with respect to such obligations
shall exist (a “Repayment Suspension”). Upon notification of a Repayment Suspension and
for so long as the Repayment Suspension shall continue during the Pledge Period, Lender shall have
the right, exercisable in its sole discretion, to direct the Collateral Agent to, and the
Collateral Agent upon receipt of the written request of Lender (with a copy to Borrower) shall,
release to Lender an amount of Collateral with a Market Value equal to the Market Value of all (or
such fewer number as Lender may specify) of the Loaned Shares that are the subject of the Repayment
Suspension, whereupon the Borrower’s obligation to return
such number of Loaned Shares to the Lender shall automatically be extinguished.

 

15

 

Following the
occurrence of and during the continuation of any Repayment Suspension, Borrower shall use
commercially reasonable efforts to remove or cure the Legal Obstacle as soon as practicable. If
Borrower is unable to remove or cure the Legal Obstacle within a reasonable period of time under
the circumstances, Borrower shall pay to Lender, in lieu of the delivery of Loaned Shares otherwise
required to be delivered, an amount in immediately available funds (“Replacement Cash”) equal to
the Market Value of such Loaned Shares as of the date of such determination.

(b) If Borrower shall fail to deliver Loaned Shares to Lender on the due date when any Loan is
terminated under Section 6 or Section 11 or Borrower shall fail to pay the Replacement Cash to
Lender when due in accordance with Section 12(a) above, then, in either case, in addition to any
other remedies available to Lender under this Agreement or under applicable law, Lender shall have
the right (upon prior written notice to Borrower) to (i) purchase a like number of Common Shares
(and, Non-Cash Distribution, if applicable pursuant to Section 7(b)) (“Replacement Shares”)
in the principal market for such securities in a commercially reasonable manner in compliance with
applicable securities laws (and Lender shall promptly notify Borrower of the aggregate purchase
price of the Replacement Shares upon the exercise of such right), (ii) sell any Collateral in the
principal market for such Collateral in a commercially reasonable manner and (iii) apply and set
off the Collateral and any proceeds thereof (including any amounts drawn under a letter of credit
supporting any Loan) against the payment of the purchase price for such Replacement Shares and any
amounts due to Lender under this Agreement; provided that Lender shall not be permitted to exercise
its right to purchase Replacement Shares if Borrower is delivering Loaned Shares to Lender in
accordance with Section 6(d) or Section 6(e), and provided further that if any Repayment Suspension
or failure to deliver shall exist and be continuing, Lender shall not be permitted to exercise its
right to purchase Replacement Shares unless Borrower shall fail to deliver the Loaned Shares or pay
the Replacement Cash to Lender when due in accordance with Section 12(a) above. To the extent
Lender shall exercise such right, Borrower’s obligation to return a like amount of Loaned Shares or
to pay the Replacement Cash, as applicable, shall terminate and Borrower shall be liable to Lender
for the purchase price of such Replacement Shares and all other amounts, if any, due to Lender
hereunder. In the event that the purchase price of Replacement Shares (plus all other amounts, if
any, due to Lender hereunder) exceeds the amount of the Collateral, Borrower shall be liable to
Lender for the amount of such excess. The purchase price of Replacement Shares purchased under
this Section 12 shall include, and the proceeds of any sale of Collateral shall be determined after
deduction of, broker’s fees and commissions and all other reasonable costs, fees and expenses
related to such purchase and sale. In the event Lender exercises its rights under this Section 12,
Lender may elect in its sole discretion, in lieu of purchasing all or a portion of the Replacement
Shares, to be deemed to have made such purchase of Replacement Shares for an amount equal to the
Closing Price of Common Shares on the date Lender elects to exercise this remedy. Upon the
satisfaction of all Borrower’s obligations hereunder, any remaining Collateral shall be returned to
Borrower.

 

16

 

Section 13. Transfers.

(a) All transfers of Loaned Shares to Borrower hereunder shall be made by the crediting by a
Clearing Organization of such financial assets to Borrower’s “securities
account” (within the meaning of Section 8-501 of the UCC) maintained with such Clearing
Organization. All transfers of Loaned Shares to Lender hereunder shall be made by the crediting of
such Loaned Shares to Lender’s Designated Account (whereupon, for the avoidance of doubt, such
Loaned Shares credited to Lender’s Designated Account shall become the property of Lender, and
Borrower shall have no voting, dispositive control or pecuniary interest with respect thereto).
All transfers of Collateral to the Collateral Agent by Borrower shall be made by crediting the
Collateral Account. All transfers of Collateral to Lender by the Collateral Agent shall be made in
the manner directed by Lender. In every transfer of “financial assets” (within the meaning of
Section 8-102 of the UCC) hereunder, the transferor shall take all steps necessary (i) to effect a
delivery of such financial assets to the transferee under Section 8-301 of the UCC, or to cause the
creation of a security entitlement in favor of the transferee in such financial assets under
Section 8-501 of the UCC, (ii) to enable the transferee to obtain “control” (within the meaning of
Section 8-106 of the UCC), and (iii) to provide the transferee with comparable rights under any
similar law or regulation of any other jurisdiction that is applicable to such transfer.

(b) Except as otherwise provided herein, all transfers of cash hereunder to Borrower or Lender
shall be by wire transfer in immediately-available, freely-transferable funds.

(c) A transfer of securities or cash may be effected under this Section 13 on any day except
(i) a day on which the transferee is closed for business at its address set forth in Section 18 or
(ii) a day on which a Clearing Organization or wire transfer system is closed, if the facilities of
such Clearing Organization or wire transfer system are required to effect such transfer. Any
transfer not effected because of this clause (c) shall be made on the next following day on which
such transfer may be made.

Section 14. Indemnities.

(a) Lender hereby agrees to indemnify and hold harmless Borrower and its affiliates and its
former, present and future directors, officers, employees and other agents and representatives from
and against any and all liabilities, judgments, claims, settlements, losses, damages, fees, liens,
taxes, penalties, obligations and expenses (including, without limitation, any losses relating to
Borrower’s market activities as a consequence of becoming, or of the risk of becoming, subject to
Section 16(b) of the Exchange Act, including, without limitation, any forbearance from market
activities or cessation of market activities and any losses in connection therewith) incurred or
suffered by any such person or entity directly or indirectly arising from, by reason of, or in
connection with, (i) any breach by Lender of any of its representations or warranties contained in
Section 9 or (ii) any breach by Lender of any of its covenants or agreements in this Agreement.

(b) Borrower hereby agrees to indemnify and hold harmless Lender and its affiliates and its
former, present and future directors, officers, employees and other agents and representatives from
and against any and all liabilities, judgments, claims, settlements, losses, damages, fees, liens,
taxes, penalties, obligations and expenses incurred or suffered by any such person or entity
directly or indirectly arising from, by reason of, or in connection with (i) any breach by Borrower
of any of its representations or warranties contained in Section 9 or (ii) any breach by Borrower
of any of its covenants or agreements in this Agreement.

 

17

 

(c) In case any claim or litigation which might give rise to any obligation of a party under
this Section 14 (each an “Indemnifying Party”) shall come to the attention of the party
seeking indemnification hereunder (the “Indemnified Party”), the Indemnified Party shall
promptly notify the Indemnifying Party in writing of the existence and amount thereof; provided
that the failure of the Indemnified Party to give such notice shall not adversely affect the right
of the Indemnified Party to indemnification under this Agreement, except to the extent the
Indemnifying Party is materially prejudiced thereby. The Indemnifying Party shall promptly notify
the Indemnified Party in writing if it accepts such claim or litigation as being within its
indemnification obligations under this Section 14. Such response shall be delivered no later than
30 days after the initial notification from the Indemnified Party; provided that, if the
Indemnifying Party reasonably cannot respond to such notice within 30 days, the Indemnifying Party
shall respond to the Indemnified Party as soon thereafter as reasonably possible.

(d) An Indemnifying Party shall be entitled to participate in and, if (i) in the judgment of
the Indemnified Party such claim can properly be resolved by money damages alone and the
Indemnifying Party has the financial resources to pay such damages and (ii) the Indemnifying Party
admits that this indemnity fully covers the claim or litigation, the Indemnifying Party shall be
entitled to direct the defense of any claim at its expense, but such defense shall be conducted by
legal counsel reasonably satisfactory to the Indemnified Party. An Indemnified Party shall not
make any settlement of any claim or litigation under this Section 14 without the written consent of
the Indemnifying Party.

Section 15. Termination of Agreement.

(a) This Agreement shall terminate upon (A) the earliest of (i) the date as of which Lender
has notified Borrower in writing of its intention to terminate this Agreement at any time after the
entire principal amount of Convertible Notes ceases to be outstanding and the Lender has settled
all payments or deliveries in respect of such Convertible Notes (as such settlement may be extended
pursuant to market disruption events or otherwise pursuant to the Indenture), whether as a result
of conversion, repurchase, cancellation, at maturity or otherwise, (ii) the written agreement of
Lender and Borrower to so terminate, (iii) the termination of the purchase agreement relating to
the Convertible Notes without issuance of the Convertible Notes or the failure of the initial
offering of the Convertible Notes to close, in each case pursuant to the terms of such purchase
agreement and the Indenture, (iv) the occurrence and continuance of a Borrower Default, at the
option of the Lender, as set forth in Section 11(a) and (v) the occurrence of a Lender Default, at
the option of the Borrower, as set forth in Section 11(b) (the date of such earliest occurrence,
the “Facility Termination Date”) and (B) Borrower’s full satisfaction and discharge of its
duties and obligations under Section 6.

(b) Unless otherwise agreed in writing by Borrower and Lender, the provisions of Section 14
shall survive the termination of this Agreement.

 

18

 

Section 16. Delegation.

Neither party shall delegate its obligations under this Agreement without the prior written
consent of the other party, and any attempt to delegate obligations arising under this
Agreement without such consent shall be void; provided that notwithstanding the foregoing and
anything to the contrary herein, Borrower may designate any person to deliver Loaned Shares to
Lender when due in accordance with this Agreement and to otherwise perform Borrower’s obligations
in respect of this Agreement and any such designee may assume such obligations. Borrower shall
only be discharged of its obligations to Lender to the extent of any such delivery or performance.

Section 17. Transfer and Assignment.

Neither party shall transfer or assign its rights or obligations under this Agreement without
the prior written consent of the other party, and any attempt to transfer or assign any rights or
obligations arising under this Agreement without such consent shall be void; provided that
notwithstanding the foregoing and anything to the contrary herein, Borrower shall have the right to
assign its rights and obligations under this Agreement to any of its affiliates that benefit from
the Guaranty and be released from all of its obligations under this Agreement.

Section 18. Notices.

(a) All notices and other communications hereunder shall be in writing and shall be deemed to
have been duly given when received.

(b) All such notices and other communications shall be directed to the following address:

	 	(i)	 	If to Borrower to:
	 
	 	 	 	Jefferies Funding LLC

c/o Jefferies & Company, Inc.

520 Madison Avenue

New York, NY 10022

Attention: General Counsel

Telephone No.: (212) 284-2266

Facsimile No.: (212) 284-2280
	 
	 	(ii)	 	If to the Collateral Agent to:
	 
	 	 	 	Jefferies & Company, Inc.

520 Madison Avenue

New York, NY 10022

Attention: General Counsel

Telephone No.: (212) 284-2266

Facsimile No.: (212) 284-2280

 

19

 

	 	(iii)	 	If to Lender to:
	 
	 	 	 	GMX Resources Inc.

One Benham Place

9400 North Broadway, Suite 600

Oklahoma City, OK 73114

Attention: James Merrill

Facsimile: (405) 600-0600
	 
	 	 	 	With a copy to:
	 
	 	 	 	Crowe Dunlevy

20 North Broadway, Suite 1800

Oklahoma City, OK 73102

Attention: Michael Stewart

Facsimile: (405) 272-5238

(c) In the case of any party, at such other address as may be designated by written notice to
the other parties.

Section 19. Governing Law; Submission To Jurisdiction; Severability.

(a) This Agreement shall be governed by and construed in accordance with the laws of the State
of New York, but excluding any choice of law provisions that would require the application of the
laws of a jurisdiction other than New York.

(b) EACH PARTY HERETO IRREVOCABLY AND UNCONDITIONALLY (A) SUBMITS TO THE NON-EXCLUSIVE
JURISDICTION OF ANY UNITED STATES FEDERAL OR NEW YORK STATE COURT SITTING IN NEW YORK CITY, AND ANY
APPELLATE COURT FROM ANY SUCH COURT, SOLELY FOR THE PURPOSE OF ANY SUIT, ACTION OR PROCEEDING
BROUGHT TO ENFORCE ITS OBLIGATIONS HEREUNDER OR RELATING IN ANY WAY TO THIS AGREEMENT OR ANY LOAN
HEREUNDER AND (B) WAIVES, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO, ANY DEFENSE OF AN
INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT AND ANY RIGHT
OF JURISDICTION ON ACCOUNT OF ITS PLACE OF RESIDENCE OR DOMICILE.

(c) EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES ANY RIGHT THAT IT MAY HAVE TO TRIAL BY JURY IN
ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY.

(d) To the extent permitted by law, the unenforceability or invalidity of any provision or
provisions of this Agreement shall not render any other provision or provisions herein contained
unenforceable or invalid.

 

20

 

Section 20. Counterparts.

This Agreement may be executed in any number of counterparts, and all such counterparts taken
together shall be deemed to constitute one and the same agreement.

Section 21. Designation of Replacement of the Collateral Agent.

If at any time while this Agreement is in effect (i) Jefferies & Company, Inc. ceases to be a
Securities Intermediary or (ii) Lender shall determine, in its sole discretion, that any of the
relationships by or among the parties hereto are reasonably likely to prevent Lender from
acquiring, or jeopardize the continuation of, Lender’s continuing first priority security interest
in the Collateral as contemplated under Section 3(b), Lender shall be entitled to designate a bank
or trust company reasonably satisfactory to Borrower as a successor Collateral Agent. In the event
of a designation of a successor Collateral Agent, each of the parties to this Agreement agrees to
take all such actions as are reasonably necessary to effect the transfer of rights and obligations
of Jefferies & Company, Inc. as Collateral Agent hereunder to such successor Collateral Agent,
including the execution and delivery of amendments to this Agreement as shall be necessary to
effect such designation and transfer.

Section 22. Role of Agent.

(a) Each party agrees and acknowledges that Jefferies & Company, Inc., an affiliate of
Borrower, will (i) act and has acted solely as agent and not as principal with respect to the
Loans, and (ii) has no obligation or liability, by way of guaranty, endorsement or otherwise, in
any manner in respect of the Loans (including, if applicable, in respect of the settlement
thereof). Each of the Borrower and the Lender agrees it will look solely to the other party (or any
guarantor in respect thereof) for performance of such other party’s obligations under the Loans.

(b) Each party further agrees and acknowledges that the obligations of the Collateral Agent
hereunder are only those expressly set forth in this Agreement. The Collateral Agent may consult
with legal counsel, independent public accountants and other experts selected by it and shall not
be liable for any action taken or omitted to be taken by it in good faith in accordance with the
advice of such counsel, accountants or experts. Neither the Collateral Agent nor any of its
directors, officers, agents or employees shall be liable for any action taken or not taken by it in
connection with this Agreement (i) with the consent or at the request of Lender or (ii) in the
absence of its own gross negligence or willful misconduct. The Collateral Agent shall not incur
any liability by acting in reliance upon any notice, consent, certificate, statement, or other
writing (which may be a bank wire, telex or similar writing) believed by it to be genuine or to be
signed by the proper party or parties. Lender shall indemnify the Collateral Agent against any
cost, expense (including counsel fees and disbursements), claim, demand, action, loss or liability
(except such as result from the Collateral Agent’s gross negligence or willful misconduct) that the
Collateral Agent may suffer or incur in connection with this Agreement or any action taken or
omitted by the Collateral Agent hereunder.

 

21

 

Beyond the exercise of reasonable care in the custody
thereof, the Collateral Agent shall have no duty as to any Collateral in its possession or control or in the possession or control of any agent, bailee,
clearing corporation or securities intermediary or any income thereon or as to the preservation of
rights against prior parties or any other rights pertaining thereto. The Collateral Agent shall be
deemed to have exercised reasonable care in the custody and preservation of the Collateral if the
Collateral is accorded treatment substantially equal to that which it accords its own property, and
shall not be liable or responsible for any loss or damage to any of the Collateral, or for any
diminution in the value thereof, by reason of the act or omission of any agent, bailee, clearing
corporation or securities intermediary selected by the Collateral Agent in good faith (or selected
by an agent, bailee, clearing corporation or securities intermediary so selected by the Collateral
Agent or by any agent, bailee, clearing corporation or securities intermediary selected in
accordance with this parenthetical phrase).

Section 23. Amendments.

No amendment or modification in respect of this Agreement shall be effective unless it shall
be in writing and signed by the parties hereto.

 

22

 

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

	 	 	 	 	 	 	 	 	 	 	 
	GMX Resources Inc. 

as Lender	 	 	 	Jefferies Funding LLC

as Borrower	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By:

	 	/s/ Ken L. Kenworthy, Jr.
 

Name: Ken L. Kenworthy Jr.
	 	 
	 	By:
	 	/s/ Jason D. Griffith
 

Name: Jason D. Griffith
	 	 
	 

	 	Title:   President
	 	 	 	 	 	Title:   Executive Vice President	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Jefferies & Company, Inc., 

as Collateral Agent	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	By:

	 	/s/ Jason D. Griffith	 	 
	 	 	 	 	 	 	 

	 	 	 	 
	 	 	 	 	 	 	 

	 	Name: Jason D. Griffith	 	 
	 	 	 	 	 	 	 

	 	Title:   Executive Vice President	 	 

 

23Filed by Bowne Pure Compliance

 

Exhibit 10.4

REGISTRATION RIGHTS AGREEMENT

dated as of

February 11, 2008

between

GMX RESOURCES INC.,

and

JEFFERIES FUNDING LLC

 

 

 

TABLE OF CONTENTS

	 	 	 	 	 
	 	 	Page	 
	 
	 	 	 	 
	ARTICLE 1
	 	 	 	 
	Definitions
	 	 	 	 
	 
	 	 	 	 
	Section 1.01. Definitions
	 	 	1	 
	Section 1.02. Other Definitional and Interpretative Provisions
	 	 	4	 
	 
	 	 	 	 
	ARTICLE 2
	 	 	 	 
	Registration Rights
	 	 	 	 
	 
	 	 	 	 
	Section 2.01. Demand Registration
	 	 	5	 
	Section 2.02. Shelf Registration
	 	 	5	 
	Section 2.03. Registration Procedures
	 	 	7	 
	 
	 	 	 	 
	ARTICLE 3
	 	 	 	 
	Indemnification and Contribution
	 	 	 	 
	 
	 	 	 	 
	Section 3.01. Indemnification by the Company
	 	 	10	 
	Section 3.02. Indemnification by Share Borrower
	 	 	11	 
	Section 3.03. Conduct of Indemnification Proceedings
	 	 	11	 
	Section 3.04. Contribution
	 	 	12	 
	 
	 	 	 	 
	ARTICLE 4
	 	 	 	 
	Miscellaneous
	 	 	 	 
	 
	 	 	 	 
	Section 4.01. Binding Effect; Assignability; Benefit
	 	 	14	 
	Section 4.02. Notices
	 	 	14	 
	Section 4.03. Waiver; Amendment; Termination
	 	 	15	 
	Section 4.04. Governing Law
	 	 	15	 
	Section 4.05. Jurisdiction
	 	 	15	 
	Section 4.06. WAIVER OF JURY TRIAL
	 	 	16	 
	Section 4.07. Specific Enforcement
	 	 	16	 
	Section 4.08. Counterparts; Effectiveness
	 	 	16	 
	Section 4.09. Entire Agreement
	 	 	16	 
	Section 4.10. Severability
	 	 	16	 
	 
	 	 	 	 

 

 

 

REGISTRATION RIGHTS AGREEMENT

AGREEMENT dated as of February 11, 2008 between GMX Resources Inc., an Oklahoma corporation
(the “Company”), and Jefferies Funding LLC (the “Share Borrower”).

In consideration of the mutual promises made herein and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

ARTICLE 1

Definitions

Section 1.01. Definitions. (a) The following terms, as used herein, have the following
meanings:

“Affiliate” means, with respect to any Person, any other Person directly or indirectly
controlling, controlled by or under common control with such Person, provided that no
securityholder of the Company shall be deemed an Affiliate of any other securityholder solely by
reason of any investment in the Company. For the purpose of this definition, the term “control”
(including, with correlative meanings, the terms “controlling”, “controlled by” and “under common
control with”), as used with respect to any Person, shall mean 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.

“Automatic Shelf Registration Statement” shall mean a registration statement filed by a
Well-Known Seasoned Issuer which shall become effective upon filing thereof pursuant to General
Instruction I.D. for Form S-3.

“Blackout Period” means either the Section 2.01(d) Blackout Period or the Section 2.02(e)
Blackout Period, as applicable.

“Board” means the board of directors of the Company.

“Business Day” means any day except a Saturday, Sunday or other day on which commercial banks
in New York City are authorized by law to close.

“Common Shares” means shares of Common Stock.

“Common Stock” means the common stock, par value $0.001 per share, of the Company and any
stock into which such Common Stock may thereafter be converted or changed.

“Company Securities” means (i) the Common Stock, (ii) securities convertible into or
exchangeable for Common Stock, (iii) any other equity or
equity-linked security issued by the Company and (iv) options, warrants or other rights to
acquire Common Stock, or any other equity or equity-linked security issued by the Company.

 

 

 

“Convertible Notes” means the $105,000,000 aggregate principal amount of 5.00% Convertible
Senior Notes due 2013 issued by Company, or up to $125,000,000 aggregate principal amount to the
extent the option to purchase additional Convertible Notes is exercised in full as set forth in the
purchase agreement relating to the initial purchase of the Convertible Notes.

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

“NASD” means the National Association of Securities Dealers, Inc.

“Person” means an individual, corporation, limited liability company, partnership,
association, trust or other entity or organization, including a government or political subdivision
or an agency or instrumentality thereof.

“Public Offering” means an underwritten public offering of Registrable Securities of the
Company pursuant to an effective registration statement under the Securities Act, other than
pursuant to a registration statement on Form S-4 or Form S-8 or any similar or successor form.

“Registrable Securities” means, at any time, any shares of Common Stock borrowed by the Share
Borrower from the Company in accordance with the terms of the Share Lending Agreement that have not
been sold in a primary offering pursuant to an effective registration statement of the Company. For
the avoidance of doubt, any shares of Common Stock that have been returned by the Share Borrower to
the Company pursuant to the Share Lending Agreement and then borrowed again by the Share Borrower
pursuant to the Share Lending Agreement shall be deemed “Registrable Securities” until they are
sold in a primary offering pursuant to an effective registration statement of the Company.

“Registration Expenses” means any and all expenses incident to the performance of or
compliance with any registration or marketing of securities, including all (i) registration and
filing fees, and all other fees and expenses payable in connection with the listing of securities
on any securities exchange or automated interdealer quotation system, (ii) fees and expenses of
compliance with any securities or “blue sky” laws (including reasonable fees and disbursements of
counsel in connection with “blue sky” qualifications of the securities registered), (iii) expenses
in connection with the preparation, printing, mailing and delivery of any registration statements,
prospectuses and other documents in connection therewith and any amendments or supplements thereto,
(iv) security engraving and printing expenses, (v) internal expenses of the Company (including all
salaries and expenses of its officers and employees performing legal or
accounting duties),

 

2

 

(vi) reasonable fees and disbursements of counsel for the Company and
customary fees and expenses for independent certified public accountants retained by the Company
(including the expenses relating to any comfort letters or costs associated with the delivery by
independent certified public accountants of any comfort letters requested pursuant to Section
2.03(h)), (vii) reasonable fees and expenses of any special experts retained by the Company in
connection with such registration, (viii) reasonable fees and disbursements of counsel for the
Share Borrower incurred in connection with the sale of the Registrable Securities after the end of
the Hedging Reserve Termination Date as defined in the Underwriting Agreement, (ix) fees and
expenses in connection with any review by the NASD of the underwriting arrangements or other terms
of the offering, and all fees and expenses of any “qualified independent underwriter,” including
the fees and expenses of any counsel thereto, (x) fees and disbursements of underwriters
customarily paid by issuers or sellers of securities, but excluding any underwriting fees,
discounts and commissions attributable to the sale of Registrable Securities, (xi) costs of
printing and producing any agreements among underwriters, underwriting agreements, any “blue sky”
or legal investment memoranda and any selling agreements and other documents in connection with the
offering, sale or delivery of the Registrable Securities, (xii) transfer agents’ and registrars’
fees and expenses and the fees and expenses of any other agent or trustee appointed in connection
with such offering, (xiii) expenses relating to any analyst or investor presentations or any “road
shows” undertaken in connection with the registration, marketing or selling of the Registrable
Securities and (xiv) all out-of pocket costs and expenses incurred by the Company or its
appropriate officers in connection with their compliance with Section 2.03(m).

“SEC” means the Securities and Exchange Commission.

“Securities Act” means the Securities Act of 1933, as amended.

“Share Lending Agreement” means the share lending agreement dated as of February 11, 2008
among GMX Resources Inc., as Lender, Jefferies Funding LLC, as Borrower, and Jefferies & Company,
Inc., as Collateral Agent.

“Underwriting Agreement” means the underwriting agreement dated February 11, 2008 between the
Company and Jefferies & Company, Inc.

“Well-Known Seasoned Issuer” shall have the meaning set forth in Rule 405 under the Securities
Act.

 

3

 

(b) Each of the following terms is defined in the Section set forth opposite such term:

	 	 	 	 	 
	Term	 	Section	 
	Company
	 	Preamble
	Damages
	 	 	3.01	 
	Demand Registration
	 	 	2.01	(a)
	Indemnified Party
	 	 	3.03	 
	Indemnifying Party
	 	 	3.03	 
	Inspectors
	 	 	2.03	(g)
	Records
	 	 	2.03	(g)
	Shelf Registration
	 	 	2.02	 
	Underwritten Takedown
	 	 	2.02	 

Section 1.02. Other Definitional and Interpretative Provisions. The words “hereof”, “herein”
and “hereunder” and words of like import used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement. The captions herein are included for
convenience of reference only and shall be ignored in the construction or interpretation hereof.
References to Articles, Sections or Exhibits are to Articles, Sections and Exhibits of this
Agreement unless otherwise specified. All Exhibits annexed hereto or referred to herein are hereby
incorporated in and made a part of this Agreement as if set forth in full herein. Any capitalized
terms used in any Exhibit but not otherwise defined therein, shall have the meaning as defined in
this Agreement. Any singular term in this Agreement shall be deemed to include the plural, and any
plural term the singular. Whenever the words “include”, “includes” or “including” are used in this
Agreement, they shall be deemed to be followed by the words “without limitation”, whether or not
they are in fact followed by those words or words of like import. “Writing”, “written” and
comparable terms refer to printing, typing and other means of reproducing words (including
electronic media) in a visible form. References to any agreement or contract are to that agreement
or contract as amended, modified or supplemented from time to time in accordance with the terms
hereof and thereof. References to any Person include the successors and permitted assigns of that
Person. References from or through any date mean, unless otherwise specified, from and including
or through and including, respectively.

4

 

ARTICLE 2

Registration Rights

Section 2.01. Demand Registration. (a) If the Company shall receive a request (each such
request shall be referred to herein as a “Demand Registration”) from Share Borrower that the
Company effect the registration on an appropriate form under the Securities Act of all or any
portion of the Registrable Securities, and specifying the intended method of disposition thereof,
then the Company shall use its reasonable best efforts to effect, as expeditiously as possible, the
registration under the Securities Act of all Registrable Securities
for which Share Borrower has requested registration under this Section 2.01, all to the extent
necessary to permit the
 disposition (in accordance with the intended methods thereof as aforesaid)
of the Registrable Securities so to be registered in a primary offering by the Company; provided
that, the Company shall not be obligated to effect a Demand Registration unless the aggregate
proceeds expected to be received from the sale of the Registrable Securities requested to be
included in such Demand Registration equals or exceeds 1.0% of the issued and outstanding shares of
Common Stock.

(b) At any time prior to the effective date of the registration statement relating to such
registration, the Share Borrower may revoke such request, without liability to the Company, by
providing a notice to the Company revoking such request.

(c) The Company shall be liable for and pay all Registration Expenses in connection with any
Demand Registration, regardless of whether such Registration is effected.

(d) Upon written notice to the Share Borrower, the Company may postpone effecting a
registration pursuant to this Section 2.01 during any 90-day period for a reasonable time specified
in the written notice but not exceeding 45 days (the “Section 2.01(d) Blackout Period”) if (i) the
Company reasonably determines that effecting the registration would materially and adversely affect
an offering of securities of such Company the preparation of which had then been commenced or (ii)
the Company is in possession of material non-public information the disclosure of which during the
period specified in such notice the Company reasonably believes would not be in the best interests
of the Company; provided that, in the event the disclosure relates to a previously undisclosed
proposed or pending material business transaction, the disclosure of which the Company determines
in good faith would be reasonably likely to impede the Company’s ability to consummate such
transaction, the Company may extend the Section 2.01(d) Blackout Period from 45 days to 60 days;
and provided, further, that such Section 2.01(d) Blackout Period shall not exceed an aggregate of
120 days in any 360-day period. The Company shall not specify in the written notice to the Share
Borrower the nature of the event giving rise to the Section 2.01(d) Blackout Period effecting a
registration pursuant to this Section 2.01.

Section 2.02. Shelf Registration. (a) At any time when the Company is eligible to use Form
S-3 (or, if the Company is at such time a Well-Known Seasoned Issuer, an Automatic Shelf
Registration Statement), Share Borrower may request the Company to effect a registration of the
Registrable Securities under a registration statement pursuant to Rule 415 under the Securities Act
(or any successor rule) for a primary offering of the Registrable Securities by the Company (a
“Shelf Registration”). The Company shall be required to effectuate Public Offerings from such
Shelf Registration (an “Underwritten Takedown”)
whenever requested by the Share Borrower upon a three Business Days prior notice.

 

5

 

The
provisions of Section 2.01 shall apply mutatis mutandis to such Underwritten Takedown, with
references to “filing of the registration statement” or “effective date” being deemed references to
filing of a prospectus or supplement for such offering and references to “registration” being
deemed references to the offering. So long as the Shelf Registration is effective, Share Borrower
may not request any Demand Registration pursuant to Section 2.01 with respect to Registrable
Securities that are registered on such Shelf Registration.

(b) If the Company shall receive a request from Share Borrower that the Company effect a Shelf
Registration, then the Company shall use its reasonable best efforts to effect, as expeditiously as
possible, the registration under the Securities Act of all Registrable Securities for which Share
Borrower has requested registration under this section.

(c) At any time prior to the effective date of the registration statement relating to such
Shelf Registration, Share Borrower may revoke such request, without liability to the Company, by
providing a notice to the Company revoking such request.

(d) The Company shall be liable for and pay all Registration Expenses in connection with any
Shelf Registration.

(e) Upon written notice to the Share Borrower, the Company may postpone effecting a
registration pursuant to this Section 2.02 during any 90-day period for a reasonable time specified
in the written notice but not exceeding 45 days (the “Section 2.02(e) Blackout Period”) if (i) the
Company reasonably determines that effecting the registration would materially and adversely affect
an offering of securities of such Company the preparation of which had then been commenced or (ii)
the Company is in possession of material non-public information the disclosure of which during the
period specified in such notice the Company reasonably believes would not be in the best interests
of the Company; provided that, in the event the disclosure relates to a previously undisclosed
proposed or pending material business transaction, the disclosure of which the Company determines
in good faith would be reasonably likely to impede the Company’s ability to consummate such
transaction, the Company may extend the Section 2.02(e) Blackout Period from 45 days to 60 days;
and provided, further, that such Section 2.02(e) Blackout Period shall not exceed an aggregate of
120 days in any 360-day period. The Company shall not specify in the written notice to the Share
Borrower the nature of the event giving rise to the Section 2.02(e) Blackout Period effecting a
registration pursuant to this Section 2.02.

 

6

 

Section 2.03. Registration Procedures. Whenever Share Borrower requests that any Registrable
Securities be registered pursuant to Section 2.01 or 2.02 subject to the provisions of such
Sections, the Company shall use all
reasonable best efforts to effect the registration and the sale of such Registrable Securities
as its primary offering in accordance with the intended method of disposition thereof as quickly as
practicable, and, in connection with any such request:

(a) The Company shall as expeditiously as possible (but in no event more than 30 days after a
Demand Registration) prepare and file with the SEC a registration statement on any form for which
the Company then qualifies or that counsel for the Company shall deem appropriate and which form
shall be available for the sale of the Registrable Securities to be registered thereunder as its
primary offering in accordance with the intended method of distribution thereof, and use all
reasonable best efforts to cause such filed registration statement to become and remain effective
for a period of not less than 180 days, or in the case of a Shelf Registration or Automatic Shelf
Registration Statement, for so long as any Convertible Notes remain outstanding. Any such
registration statement shall be an automatically effective registration statement to the extent
permitted by the SEC’s rules and regulations.

(b) Prior to filing a registration statement or prospectus or any amendment or supplement
thereto (other than any report filed pursuant to the Exchange Act that is incorporated by reference
therein), the Company shall, if requested, furnish to the Share Borrower and each underwriter, if
any, of the Registrable Securities covered by such registration statement copies of such
registration statement as proposed to be filed, and thereafter the Company shall furnish to such
Share Borrower and underwriter, if any, such number of copies of such registration statement, each
amendment and supplement thereto (in each case including all exhibits thereto and documents
incorporated by reference therein), the prospectus included in such registration statement
(including each preliminary prospectus and any summary prospectus) and any other prospectus filed
under Rule 424, Rule 430A, Rule 430B or Rule 430C under the Securities Act and such other documents
as the Share Borrower or underwriter may reasonably request in order to facilitate the disposition
of the Registrable Securities.

(c) After the filing of the registration statement, the Company shall (i) cause the related
prospectus to be supplemented by any required prospectus supplement, and, as so supplemented, to be
filed pursuant to Rule 424 under the Securities Act, (ii) comply with the provisions of the
Securities Act with respect to the disposition of all Registrable Securities covered by such
registration statement during the applicable period in accordance with the intended methods of
disposition by the Share Borrower set forth in such registration statement or supplement to such
prospectus and (iii) promptly notify the Share Borrower holding Registrable Securities covered by
such registration statement of any stop order issued or threatened by the SEC or any state
securities commission and take all reasonable actions required to prevent the entry of such stop
order or to remove it if entered.

 

7

 

(d) The Company shall use all reasonable efforts to (i) register or qualify the Registrable
Securities covered by such registration statement under such other securities or “blue sky” laws of
such jurisdictions in the United States as the Share Borrower holding such Registrable Securities
reasonably (in light of the intended plan of distribution) requests and (ii) cause such Registrable
Securities to be registered with or approved by such other governmental agencies or authorities as
may be necessary by virtue of the business and operations of the Company and do any and all other
acts and things that may be reasonably necessary or advisable to enable the Share Borrower to
consummate the disposition of the Registrable Securities, provided that the Company shall not be
required to (A) qualify generally to do business in any jurisdiction where it would not otherwise
be required to qualify but for this Section 2.03(d), (B) subject itself to taxation in any such
jurisdiction or (C) consent to general service of process in any such jurisdiction.

(e) The Company shall immediately notify the Share Borrower holding such Registrable
Securities covered by such registration statement, at any time when a prospectus relating thereto
is required to be delivered under the Securities Act, of the occurrence of an event requiring the
preparation of a supplement or amendment to such prospectus so that, as thereafter delivered to the
purchasers of such Registrable Securities, such prospectus will not contain an untrue statement of
a material fact or omit to state any material fact required to be stated therein or necessary to
make the statements therein not misleading and promptly prepare and make available to the Share
Borrower and file with the SEC any such supplement or amendment.

(f) Share Borrower shall have the right to select an underwriter or underwriters in connection
with any Public Offering resulting from its exercise of a Demand Registration (including any
Underwritten Takedown), which underwriter or underwriters may include any Affiliate of Share
Borrower. In connection with any Public Offering, the Company shall enter into customary
agreements (including an underwriting agreement in form substantially identical to the Underwriting
Agreement) and take such all other actions as are reasonably required in order to expedite or
facilitate the disposition of such Registrable Securities in any such Public Offering, including
the engagement of a “qualified independent underwriter” in connection with the qualification of the
underwriting arrangements with the NASD, if requested at such time.

 

8

 

(g) Upon execution of confidentiality agreements in form and substance reasonably satisfactory
to the Company, the Company shall make available for inspection by the Share Borrower and any
underwriter participating in any disposition pursuant to a registration statement being filed by
the Company pursuant to this Section 2.03 and any attorney, accountant or other professional
retained by the Share Borrower or underwriter (collectively, the “Inspectors”), all financial and
other records, pertinent corporate documents and properties of the
Company (collectively, the “Records”) as shall be reasonably necessary or desirable to enable
them to exercise their due diligence responsibility, and cause the Company’s officers, directors
and employees to supply all information reasonably requested by any Inspectors in connection with
such registration statement. Records that the Company determines, in good faith, to be
confidential and that it notifies the Inspectors are confidential shall not be disclosed by the
Inspectors unless (i) the disclosure of such Records is necessary to avoid or correct a
misstatement or omission in such registration statement or (ii) the release of such Records is
ordered pursuant to a subpoena or other order from a court of competent jurisdiction. The Share
Borrower agrees that information obtained by it as a result of such inspections shall be deemed
confidential and shall not be used by it or its Affiliates as the basis for any market transactions
in the Company Securities unless and until such information is made generally available to the
public. The Share Borrower further agrees that, upon learning that disclosure of such Records is
sought in a court of competent jurisdiction, it shall give notice to the Company and allow the
Company, at its expense, to undertake appropriate action to prevent disclosure of the Records
deemed confidential.

(h) The Company shall use reasonable best efforts to furnish to the Share Borrower and to each
such underwriter, if any, a signed counterpart, addressed to such Share Borrower or underwriter, of
(i) an opinion or opinions of counsel to the Company and (ii) a comfort letter or comfort letters
from the Company’s independent public accountants, each in customary form and covering such matters
of the kind customarily covered by opinions or comfort letters, as the case may be, as the Share
Borrower or the managing underwriter therefore reasonably requests.

(i) The Company shall otherwise use all reasonable efforts to comply with all applicable rules
and regulations of the SEC, and make available to its security holders, as soon as reasonably
practicable, an earnings statement or such other document covering a period of 12 months, beginning
within three months after the effective date of the registration statement, which earnings
statement satisfies the requirements of Rule 158 under the Securities Act.

(j) The Company may require the Share Borrower promptly to furnish in writing to the Company
such information regarding the distribution of the Registrable Securities as the Company may from
time to time reasonably request and such other information as may be legally required in connection
with such registration.

 

9

 

(k) The Share Borrower agrees that, upon receipt of any notice from the Company of the
happening of any event of the kind described in Section 2.03(e), such Shareholder shall forthwith
discontinue disposition of Registrable Securities pursuant to the registration statement covering
such Registrable Securities until the Share Borrower’s receipt of the copies of the supplemented or
amended
prospectus contemplated by Section 2.03(e), and, if so directed by the Company, the Share
Borrower shall deliver to the Company all copies, other than any permanent file copies then in the
Share Borrower’s possession, of the most recent prospectus covering such Registrable Securities at
the time of receipt of such notice. If the Company shall give such notice, the Company shall
extend the period during which such registration statement shall be maintained effective (including
the period referred to in Section 2.03(a)) by the number of days during the period from and
including the date of the giving of notice pursuant to Section 2.03(e) to the date when the Company
shall make available to the Share Borrower a prospectus supplemented or amended to conform with the
requirements of Section 2.03(e).

(l) The Company shall use all reasonable best efforts to list all Registrable Securities
covered by such registration statement on the securities exchange or quotation system on which the
Common Stock is then listed or traded.

(m) The Company shall have appropriate officers of the Company (i) prepare and make
presentations at any “road shows” and before analysts and rating agencies, as the case may be and
(ii) otherwise use their reasonable efforts to cooperate as reasonably requested by the
underwriters in the offering, marketing or selling of the Registrable Securities.

ARTICLE 3

Indemnification and Contribution

Section 3.01. Indemnification by the Company. The Company agrees to indemnify and hold
harmless the Share Borrower, its Affiliates, its officers, directors, employees, partners and
agents, and each Person, if any, who controls the Share Borrower within the meaning of Section 15
of the Securities Act or Section 20 of the Exchange Act from and against any and all losses,
claims, damages, liabilities and expenses (including reasonable expenses of investigation and
reasonable attorneys’ fees and expenses) (“Damages”) caused by or relating to (i) the breach by the
Company of any covenant of the Company under this Agreement, (ii) any untrue statement or alleged
untrue statement of a material fact contained in any registration statement or prospectus relating
to the Registrable Securities (as amended or supplemented if the Company shall have furnished any
amendments or supplements thereto) or any preliminary prospectus or free-writing prospectus (as
defined in Rule 405 under the Securities Act), or (iii) any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the statements therein
not misleading, except insofar as such Damages are caused by or related to any such untrue
statement or omission or alleged untrue statement or omission so made based upon information
furnished in writing to the Company by the Share Borrower or on the Share
Borrower’s behalf expressly for use therein. The Company also agrees to indemnify any
underwriters of the Registrable Securities, their officers and directors and each Person who
controls such underwriters within the meaning of Section 15 of the Securities Act or Section 20 of
the Exchange Act on substantially the same basis as that of the indemnification of the Share
Borrower provided in this Section 3.01.

 

10

 

Section 3.02. Indemnification by Share Borrower. The Share Borrower agrees to indemnify and
hold harmless the Company, its officers, directors and agents and each Person, if any, who controls
the Company within the meaning of either Section 15 of the Securities Act or Section 20 of the
Exchange Act to the same extent as the foregoing indemnity from the Company to the Share Borrower,
but as to clauses (ii) and (iii) only with respect to information furnished in writing by the Share
Borrower or on the Share Borrower’s behalf expressly for use in any registration statement or
prospectus relating to the Registrable Securities, or any amendment or supplement thereto, or any
preliminary prospectus or free-writing prospectus. The Share Borrower also agrees to indemnify and
hold harmless underwriters of the Registrable Securities, their officers and directors and each
Person who controls such underwriters within the meaning of either Section 15 of the Securities Act
or Section 20 of the Exchange Act on substantially the same basis as that of the indemnification of
the Company provided in this Section 3.02. As a condition to including Registrable Securities in
any registration statement filed in accordance with Article 2, the Company may require that it
shall have received an undertaking reasonably satisfactory to it from any underwriter to indemnify
and hold it harmless to the extent customarily provided by underwriters with respect to similar
securities. The Share Borrower shall not be liable under this Section 3.02 for any Damages in
excess of the income realized by the Share Borrower under the hedging transactions related to the
sale of Registrable Securities to which such Damages relate.

Section 3.03. Conduct of Indemnification Proceedings. If any proceeding (including any
governmental investigation) shall be instituted involving any Person in respect of which indemnity
may be sought pursuant to this Article 3, such Person (an “Indemnified Party”) shall promptly
notify the Person against whom such indemnity may be sought (the “Indemnifying Party”) in writing
and the Indemnifying Party shall assume the defense thereof, including the employment of counsel
reasonably satisfactory to such Indemnified Party, and shall assume the payment of all fees and
expenses, provided that the failure of any Indemnified Party so to notify the Indemnifying Party
shall not relieve the Indemnifying Party of its obligations hereunder except to the extent that the
Indemnifying Party is materially prejudiced by such failure to notify. In any such proceeding, any
Indemnified Party shall have the right to retain its own counsel, but the fees and expenses of such
counsel shall be at the expense of such Indemnified Party unless (i) the Indemnifying Party and the
Indemnified Party shall have mutually agreed to the retention of such counsel or (ii) in the
reasonable judgment of such Indemnified Party representation of both parties by the same
counsel would be inappropriate due to actual or potential differing interests between them.

 

11

 

It is understood that, in connection with any proceeding or related proceedings in the same jurisdiction,
the Indemnifying Party shall not be liable for the reasonable fees and expenses of more than one
separate firm of attorneys (in addition to any local counsel) at any time for all such Indemnified
Parties, and that all such fees and expenses shall be reimbursed as they are incurred. In the case
of any such separate firm for the Indemnified Parties, such firm shall be designated in writing by
the Indemnified Parties. The Indemnifying Party shall not be liable for any settlement of any
proceeding effected without its written consent, but if settled with such consent, or if there be a
final judgment for the plaintiff, the Indemnifying Party shall indemnify and hold harmless such
Indemnified Parties from and against any loss or liability (to the extent stated above) by reason
of such settlement or judgment. Without the prior written consent of the Indemnified Party, no
Indemnifying Party shall effect any settlement of any pending or threatened proceeding in respect
of which any Indemnified Party is or could have been a party and indemnity could have been sought
hereunder by such Indemnified Party, unless such settlement includes an unconditional release of
such Indemnified Party from all liability arising out of such proceeding.

Section 3.04. Contribution. If the indemnification provided for in this Article 3 is
unavailable to the Indemnified Parties in respect of any Damages, then each such Indemnifying
Party, in lieu of indemnifying such Indemnified Party, shall contribute to the amount paid or
payable by such Indemnified Party as a result of such Damages (i) as between the Company and the
Share Borrower on the one hand and the underwriters on the other, in such proportion as is
appropriate to reflect the relative benefits received by the Company and the Share Borrower on the
one hand and the underwriters on the other, from the offering of the Registrable Securities, or if
such allocation is not permitted by applicable law, in such proportion as is appropriate to reflect
not only the relative benefits but also the relative fault of the Company and the Share Borrower on
the one hand and of such underwriters on the other in connection with the statements or omissions
that resulted in such Damages, as well as any other relevant equitable considerations and (ii) as
between the Company on the one hand and the Share Borrower on the other, in such proportion as is
appropriate to reflect the relative fault of the Company and of the Share Borrower in connection
with such statements or omissions, as well as any other relevant equitable considerations. The
relative benefits received by the Company and the Share Borrower on the one hand and such
underwriters on the other shall be deemed to be in the same proportion as the total proceeds from
the offering (net of underwriting discounts and commissions, if any, but before deducting expenses)
received by the Company and the Share Borrower bear to the total

 

12

 

underwriting discounts and
commissions received by such underwriters, in each case as set forth in the table
on the cover page of the prospectus (it being understood that such discounts and commissions
may be equal to zero). The relative fault of the Company and the Share Borrower on the one hand
and of such underwriters on the other shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the Company and the Share
Borrower or by such underwriters. The relative fault of the Company on the one hand and of the
Share Borrower on the other shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by such party, and the parties’ relative intent,
knowledge, access to information and opportunity to correct or prevent such statement or omission.

The Company and the Share Borrower agree that it would not be just and equitable if
contribution pursuant to this Section 3.03 were determined by pro rata allocation (even if the
underwriters were treated as one entity for such purpose) or by any other method of allocation that
does not take account of the equitable considerations referred to in the immediately preceding
paragraph. The amount paid or payable by an Indemnified Party as a result of the Damages referred
to in the immediately preceding paragraph shall be deemed to include, subject to the limitations
set forth above, any legal or other expenses reasonably incurred by such Indemnified Party in
connection with investigating or defending any such action or claim. Notwithstanding the
provisions of this Section 3.03, no underwriter shall be required to contribute any amount in
excess of the amount by which the total price at which the Registrable Securities underwritten by
it and distributed to the public were offered to the public exceeds the amount of any Damages that
such underwriter has otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission, and the Share Borrower shall not be required to
contribute any amount in excess of the amount by which the total price at which the Registrable
Securities were offered to the public (less underwriters’ discounts and commissions) exceeds the
amount of any Damages that the Share Borrower has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged omission. No Person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any Person who was not guilty of such fraudulent misrepresentation.

 

13

 

ARTICLE 4

Miscellaneous

Section 4.01. Binding Effect; Assignability; Benefit. (a) This Agreement shall inure to the
benefit of and be binding upon the parties hereto and their respective heirs, successors, legal
representatives and permitted assigns.

(b) Neither this Agreement nor any right, remedy, obligation or liability arising hereunder or
by reason hereof shall be assignable by any party hereto.

(c) Nothing in this Agreement, expressed or implied, is intended to confer on any Person other
than the parties hereto, and their respective heirs, successors, legal representatives and
permitted assigns, any rights, remedies, obligations or liabilities under or by reason of this
Agreement.

Section 4.02. Notices. All notices, requests and other communications to any party shall be
in writing and shall be delivered in person, mailed by certified or registered mail, return receipt
requested, or sent by facsimile transmission,

if to the Company to:

GMX Resources Inc.

One Benham Place

9400 North Broadway, Suite 600

Oklahoma City, OK 73114

Attention: James Merrill

Facsimile: (405) 600-0600

with a copy to:

Crowe & Dunlevy, Suite 1800

20 North Broadway

Oklahoma City, OK 73102

Attention: Michael Stewart

Facsimile: (405) 272-5283

if to the Share Borrower:

Jefferies Funding LLC

c/o Jefferies & Company, Inc.

520 Madison Avenue

New York, NY 10122

Attention: General Counsel

Facsimile: (212) 284-2280

 

14

 

with a copy to:

Davis Polk & Wardwell

450 Lexington Avenue

New York, New York 10017

Attention: Witold Balaban

Facsimile: (212) 450-3834

All notices, requests and other communications shall be deemed received on the date of receipt
by the recipient thereof if received prior to 5:00 p.m. in the place of receipt and such day is a
Business Day in the place of receipt. Otherwise, any such notice, request or communication shall
be deemed not to have been received until the next succeeding Business Day in the place of receipt.
Any notice, request or other written communication sent by facsimile transmission shall be
confirmed by certified or registered mail, return receipt requested, posted within one Business
Day, or by personal delivery, whether courier or otherwise, made within two Business Days after the
date of such facsimile transmissions.

Section 4.03. Waiver; Amendment; Termination. No provision of this Agreement may be waived
except by an instrument in writing executed by the party against whom the waiver is to be
effective. No provision of this Agreement may be amended or otherwise modified except by an
instrument in writing executed by the Company and Share Borrower.

Section 4.04. Governing Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York, without regard to the conflicts of laws rules
of such state.

Section 4.05. Jurisdiction. The parties hereby agree that any suit, action or proceeding
seeking to enforce any provision of, or based on any matter arising out of or in connection with,
this Agreement or the transactions contemplated hereby shall be brought in the United States
Federal or New York State court sitting in Manhattan, and any appellate court from any such court,
so long as such court shall have subject matter jurisdiction over such suit, action or proceeding,
and that any case of action arising out of this Agreement shall be deemed to have arisen from a
transaction of business in the State of New York, and each of the parties hereby irrevocably
consents to the jurisdiction of such courts (and of the appropriate appellate courts therefrom) in
any such suit, action or proceeding and irrevocably waives, to the fullest extent permitted by law,
any objection that it may now or hereafter have to the laying of the venue of any such suit, action
or proceeding in any such court or that any such suit, action or proceeding which is brought in any
such court has been brought in an inconvenient form. Process in any such suit, action or
proceeding may be served on any party anywhere in the world, whether within or without the
jurisdiction of any such court. Without limiting the foregoing, each party agrees that service of
process on such party as
provided in Section 4.02 shall be deemed effective service of process on such party.

 

15

 

Section 4.06. WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ANY
AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT
OR THE TRANSACTIONS CONTEMPLATED HEREBY.

Section 4.07. Specific Enforcement. Each party hereto acknowledges that the remedies at law
of the other parties for a breach or threatened breach of this Agreement would be inadequate and,
in recognition of this fact, any party to this Agreement, without posting any bond, and in addition
to all other remedies that may be available, shall be entitled to obtain equitable relief in the
form of specific performance, a temporary restraining order, a temporary or permanent injunction or
any other equitable remedy that may then be available.

Section 4.08. Counterparts; Effectiveness. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument. This Agreement shall become effective
when each party hereto shall have received counterparts hereof signed by all of the other parties
hereto. Until and unless each party has received a counterpart hereof signed by the other party
hereto, this Agreement shall have no effect and no party shall have any right or obligation
hereunder (whether by virtue of any other oral or written agreement or other communication).

Section 4.09. Entire Agreement. This Agreement constitutes the entire agreement among the
parties hereto and supersede all prior and contemporaneous agreements and understandings, both oral
and written, among the parties hereto with respect to the subject matter hereof and thereof.

Section 4.10. Severability. If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction or other authority to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants and restrictions of this Agreement
shall remain in full force and effect and shall in no way be affected, impaired or invalidated so
long as the economic or legal substance of the transactions contemplated hereby is not affected in
any manner materially adverse to any party. Upon such a determination, the parties shall negotiate
in good faith to modify this Agreement so as to effect the original intent of the parties as
closely as possible in an acceptable manner so that the transactions contemplated hereby be
consummated as originally contemplated to the fullest extent possible.

 

16

 

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

	 	 	 	 	 
	 	GMX RESOURCES INC.

 	 
	 	By:  	/s/ Ken L. Kenworthy, Jr.
 	 
	 	 	Name:  	Ken L. Kenworthy, Jr. 	 
	 	 	Title:  	President 	 
	 

	 	 	 	 	 
	 	JEFFERIES FUNDING LLC

 	 
	 	By:  	/s/ Jason D. Griffith
 	 
	 	 	Name:  	Jason D. Griffith 	 
	 	 	Title:  	Executive Vice President 	 
	 

 

17

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