Exhibit 10.1

 

EnerJex Resources, Inc.

4040 Broadway, Suite 508

San Antonio, Texas 78209

(210) 451-5545

 

February 10, 2017

 

By Email

 

PWCM Investment Company IC LLC

614 Davis Street

Evanston, IL 60201

 

Re:Satisfaction of Secured Indebtedness

Confirmation of Terms

 

Gentlemen:

 

We are writing to summarize the terms and conditions of the proposed
transactions described below (the "Transactions"):

 

Parties and Transactions

 

in which EnerJex Resources, Inc., a Nevada corporation (the "Company"), EnerJex
Kansas, Inc. (f/k/a Midwest Energy, Inc.), a Nevada corporation (“EnerJex
Kansas”), Working Interest, LLC, a Texas limited liability company (“Working
Interest”), Black Sable Energy, LLC, a Texas limited liability company (“Black
Sable”), Black Raven Energy, Inc., a Nevada corporation (“Black Raven”), and
Adena, LLC, a Colorado limited liability company (“Adena” and, together with the
Company, EnerJex Kansas, Working Interest, Black Sable, and Black Raven,
collectively “Borrower”), and PWCM Investment Company IC LLC, a Delaware limited
liability company and the other Buyers listed in the Loan Sale Agreement dated
February 10, 2017 (collectively, the "Successor Lender" and, together with
Borrower, individually a "Party" and together the "Parties"), in which (i)
Borrower will transfer certain of its assets to Successor Lender or the
controlled affiliates of Successor Lender, and (ii) Successor Lender will agree
to accept those assets in complete satisfaction of the Company's secured
indebtedness to the Successor Lender in the current aggregate unpaid principal
amount of approximately $17,925,000 plus all accrued and unpaid interest and
other charges thereon and thereunder and all other costs and claims
(collectively, the "Secured Indebtedness") arising under that certain Amended
and Restated Credit Agreement dated October 3, 2011, as amended prior to the
date hereof (as so amended, the “Credit Agreement”), by and among Texas Capital
Bank, N.A. (“TCB”) and IberiaBank (“IberiaBank” and, together with TCM,
“Original Lender”); Borrower; TCB, in its capacity as "Administrative Agent"
under the Credit Agreement; and DD Energy, Inc., a Nevada corporation (“DD
Energy”), and all promissory notes, mortgages, collateral assignments,
guaranties, and other documents and instruments evidencing or securing such
Secured Indebtedness, as further described on Appendix 1 hereto (collectively,
the "Loan Documents"). All rights of Original Lender under the Credit Agreement
and other documents and instruments evidencing and securing the indebtedness of
Borrower under the Credit Agreement have been sold and assigned to Successor
Lender pursuant to that certain Loan Sale Agreement dated February 10, 2017, by
and among Original Lender (as "Seller"), Successor Lender, and Borrower.

 

   

 

 

BINDING AND ENFORCEABLE AGREEMENTS

 

Upon execution of counterparts of this Letter Agreement by Successor Lender, the
following numbered Sections shall constitute the legally binding and enforceable
agreement of Borrower and Successor Lender (in recognition of the significant
costs to be borne by Successor Lender and Borrower in pursuing the Transactions
and further in consideration of their mutual undertakings as to the matters
described herein).

 

1.           Consideration for Loan Forgiveness. In Transactions that will close
concurrently at the "Closing" described in Section 5, below:

 

1.1         Conveyance of Colorado and Texas Assets.

 

(a)         Oil and Gas Properties. Borrower shall convey to Successor Lender
all right, title, and interest in and to all real property leases and oil and
gas producing properties and other assets of Borrower situated in the State of
Colorado, the State of Texas and the State of Nebraska including all equipment
and tangible personal property owned by Borrower, situated in such States, and
used by Borrower in connection with the ownership and operation of Borrower's
real property leases and oil and gas producing properties located in such
states, which assets (i) for the avoidance of doubt, shall include Borrower's
assets in the Adena Field, the NECO Project, Weld County, East Crown, and (ii)
also shall include the Oil and Gas Plugging, Lease and other Bonds associated
therewith, as described in more detail on Appendix 2 to this Agreement the
Operating Bonds (the assets described in this Section 1.1(a) collectively, the
"Oil and Gas Properties"). Prior to the Closing, the parties will evaluate
whether it may be more efficient to structure the conveyance of such Oil and Gas
Properties as a transfer of the ownership interests in the Company subsidiaries
(i.e., Black Sable Energy, LLC; Black Raven Energy, Inc.; and Adena, LLC) (the
"CO and Texas Operating Subsidiaries") that own record title to those Oil and
Gas Properties, excluding therefrom any cash assets of such CO and Texas
Operating Subsidiaries.

 

(b)         Effective Date; Adjusting Payment. The conveyance of such Oil and
Gas Properties shall occur as of January 1, 2017 (the “Effective Date”), and at
the Closing pursuant to Section 5, below, the Parties shall prorate the income
from and direct expenses of such Oil and Gas Properties (or, if applicable, the
CO and Texas Operating Subsidiaries) for the period from the Effective Date to
the Closing Date (the "Adjusting Period"), and if, with respect to such
Adjusting Period, (i) the income from such Oil and Gas Properties exceeded the
direct expenses of such Oil and Gas Properties, then at the Closing, Borrower
shall pay to Seller an amount equal to the amount of such income, or (ii) the
direct expenses of such Oil and Gas Properties exceeded the income from such Oil
and Gas Properties, then at the Closing, Seller shall pay to Borrower (or credit
against the Cash Payment due under Section 1.3, below) an amount equal to the
amount of such income (the payment due between the Parties under this Section
1.1(b), the "Adjusting Payment"). Expenses incurred prior to the Effective Date
but paid during the Adjusting Period are to be excluded from the calculation of
the Adjusting Payment. If any information with respect to the income from and
direct expenses of the Oil and Gas Properties in the Adjusting Period is not
available until after the Closing, then as promptly as practicable following the
first date as of which such information becomes available, the Parties shall
provide to each other a summary thereof and agree upon the Adjusting Payment due
with respect thereto (which shall be paid within 30 days after the date on which
the Parties agree upon the amount of such Adjusting Payment).

 

1.2         Oakridge Energy Shares. Borrower shall transfer to Successor Lender
all right, title, and interest in and to all shares of Oakridge Energy, Inc.
(the "Oakridge Shares" and, together with the Oil and Gas Properties, the
"Transferred Assets"), that are owned by Borrower.

 

1.3         Cash Payment. Borrower shall pay to Successor Lender by wire
transfer of immediately available funds the sum of $3,300,000, subject to
adjustment pursuant to Section 1.1(b), above (the "Cash Payment").

 

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2.           Forgiveness of Secured Loan. Successor Lender (a) agrees to accept
the conveyances, transfers, and payments described in Section 1, above, in
complete satisfaction of all amounts due under the Loan Documents and with
respect to the Secured Loan, and (b) agrees that at the Closing pursuant to
Section 5, below, and in consideration of Borrower's conveyances, transfers, and
payments described in Section 1, above, Successor Lender shall make, execute and
deliver such documents and instruments as may be necessary or appropriate for
evidencing the release of Borrower and its assets from any further obligation to
make any additional payments under the Credit Agreement or any of the other Loan
Documents or otherwise with respect to the Secured Loan.

 

3.           Additional Agreements of Parties.

 

3.1         Retention of Kansas Assets. For the avoidance of doubt, from and
after the Closing, Borrower shall retain its existing oil and gas properties
situated in the State of Kansas (and all equipment and tangible personal
property then owned by Borrower, situated in such States, and used by Borrower
in connection with the ownership and operation of Borrower's real property
leases and oil and gas producing properties located in Kansas), and Successor
Lender shall not have any claim against or with respect to any such assets.

 

3.2         Forbearance. The Parties agree that:

 

(a)         Suspension in Payments. Borrower shall not be obligated to make any
payments to Successor Lender under the Loan Documents or with respect to the
Secured Loan prior to the Closing; and

 

(b)         Forbearance. Successor Lender shall not enforce or exercise prior to
the Closing any remedies available to Successor Lender under the Loan Documents
by reason of any default by Borrower of any of its obligations under the Loan
Documents.

 

3.3         Company Shareholder Approval. The Company covenants and agrees to
(a) schedule a meeting of its shareholders to occur on or before March 31, 2017,
and (b) at such meeting, to seek approval of its shareholders for the
Transactions contemplated by this Letter Agreement.

 

3.4         ASEN Service Agreement.

 

(a)         Successor Lender hereby (i) acknowledges that (A) pursuant to a
letter agreement dated April 1, 2016 (the "ASEN Service Agreement"), American
Standard Energy ("ASEN"), an affiliate of Successor Lender, engaged the Company
to provide certain services to ASEN and agreed to compensate the Company for
such services at a rate of $60,000 per month, and (B) ASEN is delinquent in
paying amounts due to the Company under that ASEN Service Agreement, (ii) agrees
that (A) concurrently with the execution of this Letter Agreement, ASEN shall
pay to the Company the sum of $120,000 in satisfaction of the monies due to the
Company with respect to December 2016 and January 2017, and (B) ASEN shall pay
on or before the last day of each calendar month ending on or prior to the
Closing the $60,000 monthly fee due to the Company under the ASEN Agreement with
respect to such respective previous calendar month, and (iii) guaranties the
due, full, and punctual payment of the amounts that ASEN is obligated to pay to
the Company under the preceding clause "(ii)" and the ASEN Agreement.

 

(b)         Subject to ASEN (or Successor Lender) timely paying all amounts due
to the Company under clause "(ii)" of Section 3.4(a), above, and to Successor
Lender's performance of its obligations under this Letter Agreement, the Company
agrees that, at the Closing, the Company shall forgive ASEN's obligation to pay
any additional amounts under the ASEN Service Agreement with respect to all
periods prior to December 1, 2016. In the event of a termination of this
agreement, provided ASEN (or Successor Lender) have performed its obligations
under 3.4 (a) and 3.4 (b), the Company shall forgive ASEN's obligation to pay
any additional amounts under the ASEN Service Agreement with respect to all
periods prior to December 1, 2016.

 

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3.5         Employment Offers. Effective as of the date of the Closing,
Successor Lender may extend (but shall not be obligated to extend) (a) to any of
Borrower's employees an offer to commence employment with (or an offer to be
engaged as a consultant or advisor to) Successor Lender from and after the
Closing, and will assume accrued benefit costs for any such employees that
accept that offer, and (b) to each consultant or other person then engaged by
Borrower to provide services to Borrower and offer to provide services to
Successor Lender or its affiliate.

 

3.6         Alternative Transactions. Borrower covenants and agrees that if the
Company is unable to obtain on or before March 31, 2017, the shareholder
approval contemplated by Section 3.3, above, then Borrower shall take such
commercially reasonable actions as may be necessary or appropriate for enabling
the Parties to effectuate in compliance with applicable law as promptly as
reasonably practicable thereafter and as efficiently as reasonably practicable,
the Transactions contemplated by this Letter Agreement.

 

3.7         Reasonable Best Efforts. Borrower covenants and agrees to use
reasonable best efforts to assist Successor Lender in correcting any
deficiencies in title or security interest related to the assets of Borrower.

 

3.8         Satisfaction of Conditions. Each Party covenants and agrees to take
such commercially reasonable actions as may be reasonably necessary in order to
satisfy the conditions to and to facilitate the Closing of the Transactions on
or before April 30, 2017.

 

3.9         Daily Operations. Borrower shall use commercial reasonable efforts
to (a) maintain, preserve and protect all of its properties and equipment
necessary in the operation of its business in good working order and condition,
ordinary wear and tear excepted; (b) make all necessary repairs thereto and
renewals and replacements thereof except where the failure to do so could not
reasonably be expected to have a Material Adverse Effect (as defined in the
Credit Agreement); (c) use the standard of care typical in the industry in the
operation and maintenance of its facilities; and (d) cause its tangible property
relating to the Oil and Gas Properties to be maintained in good repair and
condition, cause all necessary replacements thereof to be made, and cause such
property to be operated in a good and workmanlike manner in accordance with
standard industry practices, unless the failure to do so could not reasonably be
expected to have a Material Adverse Effect, provided that, notwithstanding the
foregoing or any other provision hereof or of the Loan Documents to the
contrary, Borrower shall not be obligated to pay or incur any costs for any
capital improvements to the Oil and Gas Properties that are to be transferred to
Successor Lender hereunder.

 

4.           Representations and Warranties of Parties.

 

4.1         Borrower Representations and Warranties. Borrower represents and
warrants to Successor Lender that:

 

(a)         Authorization; Enforceability. Except for the approval of the
Company's shareholders as contemplated by Section 3.3, above, the execution and
delivery by Borrower of this Letter Agreement, the performance by Borrower of
its respective obligations under this Letter Agreement, and the consummation of
the Transactions contemplated hereby have been duly authorized by all necessary
corporate or limited liability action, as applicable, and no other proceedings
on the part of Borrower, its Board of Directors, shareholders, members, or
managers, as applicable, are necessary to approve and adopt this Letter
Agreement or to approve the consummation of the transactions contemplated
hereby. This Letter Agreement has been duly executed and delivered by Borrower,
and, when approved by the Company's shareholders as contemplated by Section 3.3,
above, and executed and delivered by the Successor Lender, will be, the legal,
valid and binding obligations of Borrower, enforceable against it in accordance
with its terms, except as such enforceability may be limited by (A) general
principles of equity (whether considered in a proceeding at law or in equity),
and (B) bankruptcy, insolvency or other similar laws affecting the enforcement
of creditors' rights generally.

 

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(b)         Ownership. Borrower is the sole legal and beneficial owner of the
Transferred Assets, free and clear of all liens, security interests, claims, and
encumbrances (other than (i) the liens securing the Secured Loan, and (ii) with
respect to the Adena Oil and Gas Property, an existing after-payout reversionary
working interest evidenced in documents of records, and (iii) a lien securing
taxes not yet due and payable). Subject to obtaining the approval of the
Company's shareholders as contemplated by Section 3.3, above, Borrower has full
power and every right and lawful authority, without the consent of any other
Person, to make, execute, and deliver this Letter Agreement and perform its
obligations hereunder.

 

(c)         Title. No Person (other than Successor Lender pursuant to this
Letter Agreement) has any option or other right to acquire the Transferred
Assets. Upon execution and delivery of this Letter Agreement and the performance
by Successor Lender of its respective obligations hereunder, Successor Lender
shall acquire title to the Transferred Assets, free and clear of all liens,
security interests, claims, and encumbrances whatsoever arising by or through
Borrower.

 

(d)         Brokers and Finders. Borrower has not engaged and is not obligated
to pay any fees to any broker or finder or other agent in connection with the
Transactions contemplated hereunder.

 

4.2         Successor Lender Representations and Warranties. Successor Lender
hereby represents and warrants to Borrower that:

 

(a)         Authorization; Enforceability. The execution and delivery by
Successor Lender of this Letter Agreement, the performance by Successor Lender
of its respective obligations under this Letter Agreement, and the consummation
of the transactions contemplated hereby have been duly authorized by all
necessary limited liability action, and no other proceedings on the part of
Successor Lender, its members or managers are necessary to approve and adopt
this Letter Agreement or to approve the consummation of the transactions
contemplated hereby. This Letter Agreement has been duly executed and delivered
by Successor Lender, and when executed and delivered by Borrower will be, the
legal, valid and binding obligations of Successor Lender, enforceable against it
in accordance with its terms, except as such enforceability may be limited by
(A) general principles of equity (whether considered in a proceeding at law or
in equity), and (B) bankruptcy, insolvency or other similar laws affecting the
enforcement of creditors' rights generally.

 

(b)         Ownership. Successor Lender is the sole legal and beneficial owner
of all rights of the lender (including those of all "Banks") under the Credit
Agreement and all other Loan Documents, free and clear of all liens, security
interests, claims, and encumbrances (other than the liens securing the Secured
Loan). Successor Lender has full power and every right and lawful authority,
without the consent of any other Person, to make, execute, and deliver this
Letter Agreement and perform its obligations hereunder.

 

(c)         Brokers and Finders. Successor Lender has not engaged and is not
obligated to pay any fees to any broker or finder or other agent in connection
with the Transactions contemplated hereunder.

 

5.           Conditions to Closing.

 

5.1         Conditions to Borrower Obligations. The obligations of Borrower
under this Letter Agreement are subject to satisfaction or waiver by Borrower of
the following conditions at or prior to the Closing:

 

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(a)         Each of the representations and warranties of Successor Lender
contained in Section 4.2 shall be true and correct on and as of the Closing with
the same effect as though such representations and warranties had been made on
and as of the date of the Closing;

 

(b)         Successor Lender shall have performed and complied with all
agreements and obligations contained in this Letter Agreement that are required
to be performed or complied with by Successor Lender on or before such Closing;

 

(c)         The shareholders of the Company shall have approved the Transactions
contemplated by this Letter Agreement;

 

(d)         ASEN (or Successor Lender) shall have paid prior to delinquency all
payments due to the Company in accordance with Section 3.4(a), above.

 

(e)         The Company shall have received from the issuance of debt or equity
securities or from another source after the date hereof and prior to the Closing
at least $5,000,000 of net offering proceeds.

 

(f)         No injunction or order must be in effect by any Court or other
governmental agency prohibiting the Transactions.

 

5.2         Conditions to Successor Lender's Obligations.

 

(a)         Each of the representations and warranties of Borrower contained in
Section 4.1 shall be true and correct on and as of the Closing with the same
effect as though such representations and warranties had been made on and as of
the date of the Closing;

 

(b)         Borrower shall have performed and complied with all agreements and
obligations contained in this Letter Agreement that are required to be performed
or complied with by Borrower on or before such Closing;

 

(c)         There shall not have occurred any material adverse event with
respect to the Oil and Gas Properties.

 

(d)         No injunction or order must be in effect by any Court or other
governmental agency prohibiting the Transactions.

 

6.           Closing. The closing of the Transactions contemplated by this
Letter Agreement (the "Closing") shall occur at the offices of the Company, 4040
Broadway, Suite 508, San Antonio, Texas 78209, at 10:00 a.m., Central time, on
or before April 30, 2017. At the Closing:

 

6.1         Borrower Deliveries. Borrower shall:

 

(a)         Make, execute and deliver such deeds, bills of sale, and other
instruments of transfer as may be necessary to vest in Successor Lender title to
the Transferred Assets, free and clear of all liens, claims, and encumbrances
(other than the liens under the Loan Documents);

 

(b)         Deliver to Successor Lender the sum of $3,300,000 (as adjusted for
Adjusting Payments) by wire transfer of immediately available funds; and

 

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(c)         Make, execute and deliver such other commercially reasonable
documents and instruments, and take such other commercially reasonable actions,
as may be necessary or convenient for effectuating the Transactions in
accordance with this Letter Agreement.

 

6.2         Successor Lender Deliveries. Successor Lender shall:

 

(a)         Make, execute and deliver in recordable form such reconveyances,
releases, and other documents and instruments as may be necessary to release all
assets of the Company (other than the Transferred Assets) from the lien securing
the Secured Loan;

 

(b)         Make, execute and deliver an instrument in commercially reasonable
form to memorialize the discharge of the Secured Loan in full and the release of
Borrower from all further claims under the Loan Documents; and

 

(c)         Make, execute and deliver such other commercially reasonable
documents and instruments, and take such other commercially reasonable actions,
as may be necessary or convenient for effectuating the Transactions in
accordance with this Letter Agreement.

 

(d)         Make all remaining payments, if any, that are due to the Company
under Section 3.4(a), above, with respect to all periods ending on or prior to
the Closing Date.

 

7.           Indemnification. Successor Lender hereby agrees to indemnify,
defend, and hold Borrower free and harmless from any and all claims arising from
or related to Successor Lender's operation of the Oil and Gas Properties arising
after the Closing Date, including the cost of defense of any such claims, and
further indemnifies Borrower from any and all claims arising from or related to
the environmental condition of the Oil and Gas Properties, whether arising
before or after the Closing Date. Buyer shall assume all obligations and
liabilities for the proper plugging of all wells at the Oil and Gas Properties
and any other unplugged wells located on the leases for any portion of the Oil
and Gas Properties. Successor Lender's obligations under this Section 7 shall
survive the Closing of the Transactions pursuant to this Letter Agreement.

 

8.           Termination of Agreement.

 

8.1         Termination. This Letter Agreement may be terminated prior to the
Closing as follows:

 

(a)         by written consent of Borrower and Successor Lender;

 

(b)         by either of the Parties, if any order of any Governmental Authority
permanently restraining, enjoining or otherwise prohibiting the consummation of
the Transaction shall have become final and non-appealable;

 

(c)         by Borrower, if there shall be a breach by Successor Lender of any
representation or warranty or any covenant or agreement contained in this Letter
Agreement which would result in a failure of a condition set forth in Section
4.1 and which breach cannot be cured or has not been cured within 15 calendar
days after the giving of written notice to Successor Lender of such breach;

 

(d)         by Successor Lender, if there shall be a breach by Seller of any
representation or warranty or any covenant or agreement contained in this Letter
Agreement which would result in a failure of a condition set forth in Section
4.2 and which breach cannot be cured or has not been cured within 15 calendar
days after the giving of written notice to Borrower of such breach;

 

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(e)         by Borrower, on the one hand, or Successor Lender, on the other
hand, if the Closing does not occur by the close of business on April 30, 2017
(the "Termination Date"); provided that, notwithstanding the foregoing, Borrower
may not terminate this Letter Agreement pursuant to this Section 8.1(e) if
Borrower is, and Successor Lender may not terminate this Letter Agreement
pursuant to this Section 8.1(e) if Successor Lender is, in material breach of
any of its respective obligations or representations, warranties, covenants or
agreements contained in this Letter Agreement. For the avoidance of doubt, a
Party not then in breach of its obligations hereunder may terminate this Letter
Agreement pursuant to this Section 8.1(e) if any of the conditions to such
Party’s obligations shall not have been satisfied by the Termination Date.

 

The termination of this Letter Agreement shall be effectuated by the delivery by
the Party terminating this Letter Agreement to each other Party of a written
notice of such termination.

 

8.2         Survival after Termination. If this Letter Agreement is terminated
in accordance with Section 8.1, above, then (a) no Party thereafter shall have
any further obligations to consummate the Transactions pursuant to this Letter
Agreement and (b) each Party shall retain all claims arising from a breach by
such Party of its obligations under this Letter Agreement.

 

9.           Miscellaneous.

 

9.1         Notices. All notices, requests, demands or other communications
permitted or required under this Letter Agreement shall be effective only if in
writing, and shall be deemed to have been given, received and delivered (a) when
personally delivered; (b) on the third (3rd) business day after the date on
which mailed by certified or registered United States mail, postage prepaid and
return receipt requested; or (c) on the same date on which transmitted by
facsimile or other similar electronic means generating a receipt evidencing a
successful transmission; or (d) on the next business day after the business day
on which deposited with a public carrier regulated under United States laws for
the fastest commercially available delivery (e.g., overnight), with a return
receipt (or equivalent thereof administered by such regulated public carrier)
requested, in a sealed envelope addressed to the Party for whom intended at the
address set forth on the signature page of this Letter Agreement or such other
address, notice of which is given as provided in this Section 9.1.

 

9.2         Severability. If any provision of this Letter Agreement is for any
reason found to be ineffective, unenforceable, or illegal by any court having
jurisdiction, such condition shall not affect the validity or enforceability of
any of the remaining portions hereof, unless it deprives any Party hereto of any
material right or license held by such Party under this Letter Agreement. The
Parties shall negotiate in good faith to replace any such ineffective,
unenforceable or illegal provisions as soon as is practicable, and the
substituted provision shall, as closely as possible, have the same economic
effect as the eliminated provision.

 

9.3         Independent Contractors. Performance by the Parties under this
Letter Agreement shall be as independent contractors. This Letter Agreement is
not intended and shall not be construed as creating a joint venture or
partnership, or as causing either Party to be treated as the agent of the other
Party for any purpose or in any sense whatsoever, or to create any fiduciary or
any other obligations other than those expressly imposed by this Letter
Agreement.

 

9.4         Binding Effect. This Letter Agreement shall be binding upon and
inure to the benefit of the Parties hereto and their respective successors and
assigns.

 

9.5         Force Majeure. Neither Party shall be liable for any default or
delay in performance of any of its obligations under this Letter Agreement if
such default or delay is caused, directly or indirectly, by fire, flood,
earthquake or other acts of God; labor disputes, strikes or lockouts; wars,
rebellions or revolutions; riots or civil disorder; accidents or unavoidable
casualties; interruptions in transportation or communications facilities or
delays in transit or communication; supply shortages or the failure of any
Person to perform any commitment to such Party related to this Letter Agreement;
or any other cause (whether similar or dissimilar to those expressly enumerated
in this Section 9.5) beyond such Party's reasonable control.

 

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9.6         Entire Agreement; Amendments. This Letter Agreement, and the
exhibits hereto (a) set forth the entire understanding of the Parties concerning
the subject matter hereof, and supersede all prior and contemporaneous
agreements and understandings relating to the subject matter hereof, whether
oral or written, and (b) may not be modified or amended, except by a written
instrument executed after the effective date of this Letter Agreement by the
Party sought to be charged by the amendment or modification.

 

9.7         Governing Law; Jurisdiction; Venue. This Letter Agreement shall be
governed by and construed in accordance with applicable provisions of the laws
of the State of Texas (without regard to application of its conflict-of-law
principles), and each Party hereby consents to the jurisdiction of the courts of
the State of Texas for purposes of all actions commenced to construe or enforce
this Letter Agreement. This Letter Agreement has been negotiated, executed, and
delivered in Bexar County, Texas, and shall be performed in such County, and the
exclusive venue for all actions arising under with this Letter Agreement shall
be the District Court in and for Bexar, Texas.

 

9.8         Attorneys' Fees. If any action or proceeding is commenced to
construe this Letter Agreement or enforce the rights and duties set forth
herein, then the Party prevailing in that action shall be entitled to recover
its costs and fees in that action, as well as the costs and fees of enforcing
any judgment entered therein.

 

9.9         Waiver. No waiver of any term, provision or condition of this Letter
Agreement, the breach or default thereof, by conduct or otherwise, in one or
more instances shall be deemed to be either a continuing waiver or a waiver of a
subsequent breach or default of any such term, provision or condition of this
Letter Agreement. The failure of any Party hereto to enforce at any time any
provision of this Letter Agreement shall not be construed to be a waiver of such
provision, nor in any way to affect the validity of this Letter Agreement or any
part hereof or the right of any Party thereafter to enforce each and every such
provision. No waiver of any breach of this Letter Agreement shall be held to
constitute a waiver of any other or subsequent breach.

 

9.10       Construction. This Letter Agreement is the result of negotiations
between the Parties and neither of the Parties entering into this Letter
Agreement has acted under any duress or compulsion, whether legal, economic or
otherwise. The Parties hereby waive the application of any rule of law that
ambiguous or conflicting terms or provisions should be construed against the
Party who (or whose attorney) prepared this Letter Agreement or any earlier
draft of the same. In this Letter Agreement, the word "Person" includes any
individual, company, trust or other legal entity of any kind, and the word
"include(s)" means "include(s), without limitation," and the word "including"
means "including, but not limited to." Unless the context of this Letter
Agreement otherwise clearly requires, references to the plural include the
singular and the singular the plural. Unless otherwise expressly indicated
herein, the words "hereof," "hereunder," and similar terms in this Letter
Agreement refer to this Letter Agreement as a whole and not to any particular
provision of this Letter Agreement. All references to "Section" herein shall
refer to the sections and paragraphs of this Letter Agreement unless
specifically stated otherwise. The section and other headings, if any, contained
in this Letter Agreement are inserted for convenience of reference only, and
they neither form a part of this Letter Agreement nor are they to be used in the
construction or interpretation of this Letter Agreement.

 

9.11       Counterparts; Electronic Signatures. This Letter Agreement may be
executed in counterparts, each of which shall be deemed an original and all of
which, taken together, shall constitute one and the same instrument, binding on
each signatory thereto. This Letter Agreement may be executed by signatures
delivered by facsimile or email, and a copy hereof that is executed and
delivered by a Party by facsimile or email will be binding upon that Party to
the same extent as a copy hereof containing that Party's original signature.

 

  9 

 

 

Acceptance of Terms

 

If the provisions of this Letter Agreement are acceptable, then please sign and
date this Letter Agreement in the spaces provided below and return a copy to me
by facsimile or email. If we do not receive from you prior 11:59 p.m., Central
Time, on February 10, 2017, a copy of this Letter Agreement that you have
executed to indicate your acceptance, then the offer memorialized above will
expire at that time.

 

[Signatures appear on following page.]

 

  10 

 

 

We look forward to hearing from you.

 

Sincerely,           EnerJex Resources, Inc., a Nevada corporation   EnerJex
Kansas, Inc. (f/k/a Midwest Energy, Inc.), a Nevada corporation           By    
By     Name:     Name:   Title:     Title:           Working Interest, LLC, a
Texas limited liability company   Black Sable Energy, LLC, a Texas limited
liability company           By     By     Name:     Name:   Title:     Title:  
        Black Raven Energy, Inc., a Nevada corporation   Adena, LLC, a Colorado
limited liability company           By     By     Name:     Name:   Title:    
Title:

 

  11 

 

 

Acceptance

 

The undersigned agrees to and accepts the foregoing terms and conditions of this
Letter Agreement, and agrees to be legally bound by the provisions of the
lettered paragraphs under the heading "Binding and Enforceable Provisions,"
above.

 

    PWCM Investment Company IC LLC,  a Delaware limited liability company      
      By   Date     Name:       Title:

 

  12 

 

 

Appendix 1

to

Letter Agreement

 

List of Loan Documents

 

1.Amended and Restated Credit Agreement among Texas Capital Bank, N.A., as
Administrative Agent (“TCB”), the other financial institutions and banks Party
thereto from time to time, EnerJex Resources, Inc. (“EnerJex”), EnerJex Kansas,
Inc. (“EnerJex Kansas”), DD Energy, Inc. (“DD Energy”), Working Interest, LLC
(“Working Interest”, and Black Sable Energy, LLC (“Black Sable,” together with
EnerJex, EnerJex Kansas, DD Energy and Working Interest, “Borrowers”).

 

2.Amended and Restated Mortgage, Security Agreement, Financing Statement and
Assignment of Production and Revenues from Working Interest to and in favor of
TCB (“Amended and Restated Mortgage”) with Mortgage Tax Affidavit.

 

3.Second Amended and Restated Mortgage, Security Agreement, Financing Statement
and Assignment of Production and Revenues from EnerJex Kansas and DD Energy to
and in favor of TCB (“Second Amended and Restated Mortgage”) with Mortgage Tax
Affidavit.

 

4.Master Amendment to, and Ratification of, Collateral Documents dated August
13, 2014 (recorded in Anderson, Douglas, Franklin, Greenwood, Johnson, Linn,
Miami and Woodson Counties, KS).

 

5.First Amendment to Amended and Restated Credit Agreement dated December 4,
2011.

 

6.First Amendment to Second Amended and Restated Mortgage; Ratification of
Liens; and Release of Liens dated December 4, 2011 among EnerJex Kansas, DD
Energy, Rantoul Partners (“Rantoul”) and TCB (“First Amendment”) with Mortgage
Tax Affidavit.

 

7.Second Amendment to Amended and Restated Credit Agreement dated August 31,
2012.

 

8.Mortgage, Security Agreement, Financing Statement and Assignment of Production
and Revenues dated August 31, 2012 from Working Interest, LLC to TCB (with
Mortgage Registration Tax Affidavit).

 

9.Deed of Trust, Mortgage, Security Agreement, Financing Statement and
Assignment of Production and Revenues dated August 31, 2012 from Black Sable
Energy, LLC to TCB.

 

10.Third Amendment to Amended and Restated Credit Agreement dated November 2,
2012.

 

11.Fourth Amendment to Amended and Restated Credit Agreement dated January 24,
2014, but effective December 31, 2012.

 

12.First Amendment to Amended and Restated Mortgage, Security Agreement,
Financing Statement and Assignment of Production and Revenues by Working
Interest, as Mortgagor, and TCB, as Mortgagee (“First Amendment to WI A&R
Mortgage”).

 

13.Mortgage, Security Agreement, Financing Statement and Assignment of
Production and Revenues from Working Interest to TCB (“WI Mortgage”), with
Mortgage Registration Tax Certificate.

 

 Appendix 1, Page 1 

 

 

14.Fifth Amendment to Amended and Restated Credit Agreement dated September 30,
2013.

 

15.Deed of Trust, Mortgage, Security Agreement, Financing Statement and
Assignment of Production and Revenues dated September 30, 2013 from Adena to
Chris D. Cowan, trustee, for the benefit of Agent (in such capacity, the
“Collateral Agent”)

 

·Morgan County, CO

 

·Phillips County, CO

 

·Sedgwick County, CO

 

16.Sixth Amendment to Amended and Restated Credit Agreement dated November 19,
2013.

 

17.Third Amended and Restated Note dated November 19, 2013 by Borrowers and made
payable to Texas Capital Bank, N.A. in the original principal amount of
$65,789,473.68.

 

18.Note dated November 19, 2013 by Borrowers and made payable to IBERIABANK in
the original principal amount of $34,210,526.32.

 

19.Seventh Amendment to Amended and Restated Credit Agreement dated June 16,
2014.

 

20.Eighth Amendment to Amended and Restated Credit Agreement dated as of August
13, 2014.

 

21.Master Amendment to, and Ratification of, Collateral Documents dated as of
August 13, 2014 (recorded in Anderson, Douglas, Franklin, Greenwood, Johnson,
Linn, Miami, and Woodson Counties, Kansas).

 

22.Ninth Amendment to Amended and Restated Credit Agreement dated as of April
29, 2015.

 

23.Tenth Amendment to Amended and Restated Credit Agreement dated effective as
of August 12, 2015.

 

24.First Amendment to Mortgage, Security Agreement, Financing Statement and
Assignment of Production and Revenues dated effective October 2, 2015 among
Working Interest and Agent (recorded in Woodson County, KS).

 

·Mortgage Registration Tax Affidavit dated October 16, 2015 executed by Working
Interest.

 

25.Second Amendment to Second Amended and Restated Mortgage, Security Agreement,
Financing Statement and Assignment of Production and Revenues dated effective
October 2, 2015 among EnerJex Kansas and Agent (recorded in Woodson County, KS).

 

26.First Amendment to Deed of Trust, Mortgage, Security Agreement, Financing
Statement and Assignment of Production and Revenues dated effective October 2,
2015 among Black Sable and Agent (recorded in Atascosa County, TX).

 

27.Deed of Trust, Mortgage, Security Agreement, Financing Statement and
Assignment of Production and Revenues dated effective October 2, 2015 from Black
Sable to Agent (recorded in Frio County, TX).

 

 Appendix 1, Page 2 

 

 

28.Deed of Trust, Mortgage, Security Agreement, Financing Statement and
Assignment of Production and Revenues dated effective October 2, 2015 from Black
Raven to Agent (recorded in Weld County, CO).

 

29.Deed of Trust, Mortgage, Security Agreement, Financing Statement and
Assignment of Production and Revenues dated effective October 2, 2015 from Black
Raven to Agent (recorded in Phillips and Sedgwick Counties, CO).

 

30.Eleventh Amendment to Amended and Restated Credit Agreement dated effective
as of November 13, 2015.

 

 Appendix 1, Page 3 

 

 

Appendix 1

to

Letter Agreement

 

Description of Colorado Bonds

 

[To Follow.]

 

 Appendix 1, Page 1