LOAN MODIFICATION AND FORBEARANCE AGREEMENT
THIS LOAN MODIFICATION AND FORBEARANCE AGREEMENT, effective as of the 1st day of
May, 2003 (the "Agreement"), is by and among GMX RESOURCES INC., an Oklahoma
corporation, ENDEAVOR PIPELINE INC., an Oklahoma corporation, and EXPEDITION
NATURAL RESOURCES INC., an Oklahoma corporation (the "Borrowers") and LOCAL
OKLAHOMA BANK, N.A. (the "Bank").
WHEREAS, effective October 31, 2000 Borrowers and Bank entered into that certain
Credit Agreement (the "Original Agreement") whereby Bank provided Borrowers with
a revolving line of credit in an amount governed by a Borrowing Base which shall
not exceed $15,000,000.00, as evidenced by reducing revolving promissory note
with a stated like amount of even date with the Original Agreement (the
WHEREAS, as of June 18, 2001, Borrowers and Bank amended the Original Agreement
for the first time (the "First Amendment") in order to permit certain preferred
stock dividends and to evidence certain other changes as set forth therein.
WHEREAS, as of May 28, 2002, Borrowers and Bank amended the Original Agreement
as amended by the First Amendment for the second time (the "Second Amendment")
in order to increase the rate of interest, include a termination fee, alter the
reporting requirements and to make such additional changes as are set forth
WHEREAS, as of August 14, 2002, Borrowers and Bank amended the Original
Agreement as amended by the First and Second Amendments for the third time (the
"Third Amendment" and the Original Agreement as amended by the First, Second,
and Third Amendment is referred to herein as the "Agreement").
WHEREAS, the obligations described in the Agreement are secured by, among other
things not specifically set forth herein, certain oil and gas properties and
other properties as set forth in the Agreement; and
WHEREAS, all capitalized terms not otherwise defined herein shall have those
meanings assigned to such terms in the Agreement;
WHEREAS, Borrower has failed to comply with certain of its obligations set forth
in the Agreement including, but not limited to, certain financial covenants, and
as a result, is in default under the terms of the Agreement.
WHEREAS, The parties have agreed to enter into this Agreement for
the purpose of enabling Borrower to refinance its obligations to the Bank with
another lender or to otherwise obtain funds to satisfy such obligations in full.
NOW THEREFORE, in consideration of the mutual covenants and
agreements herein contained and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Borrowers and the
Bank hereby agree to amend the Agreement as follows:
Subject to the terms, covenants and conditions contained herein, the
Bank agrees to forbear from exercising certain of their rights under the Loan
1.1 The forbearance period ("Forbearance Period") will run from the
date first written above when this Agreement is executed by all parties hereto
through 5:00 p.m. CST on July 15, 2003.
1.2 Subject to the terms hereof, the Bank agrees to refrain from
exercising the following rights granted to them under the Loan Documents and
applicable law: (i) immediately accelerate and declare due and owing the entire
indebtedness or any portion thereof pursuant to the Loan Documents; (ii)
immediately realize upon or otherwise foreclose its security interests and
mortgage liens in and on the Collateral or any portion thereof; and/or (iii)
take any other actions to collect the indebtedness described therein.
1.3 Except as provided herein, the parties hereby acknowledge that
all terms and conditions set forth in the Loan Documents shall continue in full
force and effect, and all mortgages, security agreements, collateral documents
and other instruments securing payment of any Borrower's indebtedness to the
Bank under the Loan Documents shall continue in full force and effect as
security for payment of such obligations.
1.4 Nothing contained in this Section 1 shall be construed as
imposing any affirmative obligations on the Bank to renew, extend, or rearrange
in any way the obligations of Borrower or Guarantors under the Loan Documents,
the Guaranty Agreements or this Agreement.
1.5 Nothing contained in this Section 1 shall constitute any course
of dealing on the part of Bank that has the effect of changing or modifying any
terms of the Loan Documents, the Guaranty Agreements or this Agreement.
1.6 With the exception of the Bank's forbearance from the immediate
exercise of its remedies under the Agreement as such forbearance is described
herein, nothing contained in this Section 1 shall constitute a waiver of any of
the Bank's rights under the Loan Documents or this Agreement.
OTHER AGREEMENTS AND AMENDMENTS
2.1 Notwithstanding anything contained in the Note or in Section 2.6
of the Agreement, Scheduled Principal and Interest Payments, to the contrary,
until such time as the amounts outstanding on the Note are repaid in full
Borrower shall make the following payments on the Note:
Beginning May 1, 2003 and continuing on the first day
of each month thereafter through July 1, 2003, Borrower shall make
a principal payment in the amount of $120,000.00 together with a
payment of all accrued but unpaid interest on the Note. All
remaining principal plus all accrued but unpaid interest shall be
due and payable in full on the Maturity Date.
2.2 The provisions of Section 2 of the Credit Agreement, AMOUNT AND
TERMS OF CREDIT FACILITY, are hereby deemed amended as affected by Section 2.1