EnerJex
Resources, Inc.

    27
Corporate Woods, Suite 350

    10975
Grandview Drive

    Overland
Park, Kansas 66210

    


    October
30, 2010

    


    West
Coast Opportunity Fund, LLC

    Montecito
Venture Partners, LLC

    Black
Sable Energy, LLC

    J&J
Operating, LLC

    c/o West
Coast Asset Management, Inc.

    ATTN:   Atticus
Lowe, CIO

    1205
Coast Village Road

    Montecito,
California 93108

    


    
      	
               
      

            	
              Re:

            	
              Recapitalization of
      EnerJex Resources, Inc. through Asset
  Purchases

            


    

    


    Gentlemen:

    


    We are
writing to summarize the binding terms and conditions of the proposed
transactions (the "Transactions") in
which EnerJex Resources, Inc. (the "Company"), will issue
certain shares of its restricted common stock, $0.001 par value per share (the
"Common Stock")
and pay a cash sum to acquire certain assets from J&J Operating, LLC ("J&J"); West Coast
Opportunity Fund, LLC ("WCOF"); Montecito
Venture Partners, LLC, a controlled affiliate of WCOF ("MVP");  Black
Sable Energy, LLC, a controlled affiliate of MVP ("BSE"); and certain
other cash investors to be identified (the Company, J&J, WCOF, MVP and BSE
are referred to herein collectively as the "Parties" and
individually a "Party").

    


    BINDING
AND ENFORCEABLE AGREEMENTS

    


    Upon
execution of counterparts of this LOI by you, the following lettered paragraphs
shall constitute the legally binding and enforceable agreement of WCOF and the
Company (in recognition of the significant costs to be borne by WCOF and the
Company in pursuing this transaction and further in consideration of their
mutual undertakings as to the matters described herein).

    


    A.           No Public
Disclosure.  None of the Parties shall make any public
disclosure concerning the matters set forth in this LOI or the negotiations with
respect to the Transactions, except either (i) with the prior written consent of
the other Parties, (ii) to the extent required by applicable law, or (iii) upon
execution of the definitive agreements setting forth the terms and conditions of
the Transactions (the “Definitive Agreements”).  Notwithstanding the
foregoing, the parties acknowledge that the members of MVP will need to consent
to the Transactions and authorize MVP to disclose the terms of the Transactions
to such members on a confidential basis for the sole purpose of obtaining their
consent to the Transactions and such related transactions as may be necessary or
convenient for enabling MVP to participate in the Transactions.  When
disclosure is permitted under this Paragraph A, the
disclosing Party first shall provide the other Parties an opportunity to review
and comment upon the proposed disclosure and shall incorporate reasonable
suggestions from the other Parties.

    


    B.           Operations.   During
the period from and after the signing of this LOI and ending on November 30,
2010 (the "Termination
Date"), the Company shall operate its business in the ordinary course
consistent with past practice and shall refrain from entering into material
contracts or other material transactions or from modifying any material
contracts, including compensation or benefit arrangements, without first
discussing such matters with WCOF.


    
      
         


      

      
         


        
          

        

      

      
         


      

    

    


    
      	
              West
      Coast Opportunity Fund, LLC

            	 
      	 
      
	
              Montecito
      Venture Partners, LLC

            	 
      	 
      
	
              J&J
      Operating, LLC

            	 
      	 
      
	
              Black
      Sable Energy, LLC

            	
              2

            	
              October
      30, 2010

            


    

    


    C.           No
Shop

    


    (i)           Subject
to the exception set forth in Paragraphs C(ii), C(iii) and
C(iv), below, until the earliest of (a) the execution of the Definitive
Agreements, (b) the Termination Date, or (c) the mutual termination of this LOI
(such period, the "Restricted Period"),
neither the Company nor any subsidiary of the Company nor any of the Company's
officers or directors (or any representative acting on their behalf) shall
directly or indirectly solicit or provide any information to or enter into any
agreement with any corporation, other entity, or person other than WCOF, MVP,
BSE, J&J, or any of their respective affiliates, concerning any acquisition
of any of the securities of, or all or substantially all of assets of, the
Company or any merger of the Company or any subsidiary of the Company or any
sale of any material assets or any sale of any shares of the Company or any of
its affiliates, other than pursuant to outstanding compensatory stock options,
warrants, convertible debentures, other contractual commitments made and
approved by the Company's Board of Directors prior to October 27, 2010 or with
entities that have executed non-disclosure or other agreements with the Company
prior to October 27, 2010.  If, during the Restricted Period, the
Company, any of its subsidiaries, or any officer, director, employee,
representative or other agent of the Company or any of its subsidiaries,
receives any inquiry or offer from any other company or person with respect to
the acquisition of the Company, its securities, or all or any material portion
of its assets (whether by stock purchase, asset acquisition, merger, or
otherwise), then the Company immediately shall advise WCOF of such inquiry in
detail or offer (including all terms thereof) and provide to WCOF copies of all
written documents memorializing or relating to such inquiry or
offer.

    


    (ii)          Notwithstanding
the provisions of Paragraph C(i),
above, during the Restricted Period, the Company shall be entitled to negotiate
with investors approved by WCOF (the "Approved Investors")
regarding the terms and conditions on which the Approved Investors may purchase
shares of the Company's Common Stock pursuant to a common stock offering
contemplated under the terms of the Transactions.

    


    (iii)        Notwithstanding
the provisions of Paragraph C(i),
above, if at any time during the Restricted Period, the Company receives a
written proposal from a third party for the acquisition of a majority of the
Company’s securities or assets, a merger of the Company with or into any other
entity, or any other similar transaction with the Company (an “Acquisition
Proposal”), and if the Board of Directors of the Company determines in
good faith, after consultation with independent financial advisors and outside
legal counsel, that such action is required in order for the Board of Directors
of the Company to comply with its fiduciary obligations to the Company’s
stockholders under Nevada law, and that such Acquisition Proposal constitutes or
is reasonably expected to lead to a "Superior Proposal" (as defined below), then
the Company may (x) furnish, pursuant to an acceptable confidentiality
agreement, information with respect to the Company to the third party who has
made such Acquisition Proposal; provided that the
Company shall promptly (and in no event later than 24 hours) provide WCOF any
material information concerning the Company that is provided to any third party
given such access which was not previously provided to the Parties; and
(y) engage in or otherwise participate in discussions or negotiations with
the third party making such Acquisition Proposal; provided, further, that the
Company shall promptly (and in no event later than 24 hours) provide to WCOF
(i) a written summary of the material terms of such Acquisition Proposal
(including the pricing, terms, conditions and other material provisions and the
identity of the proposed party or parties to such proposed Acquisition
Transaction) and (ii) if such Acquisition Proposal is in writing, a copy of
such Acquisition Proposal.   For purposes of the foregoing, the
term “Superior
Proposal” means an unsolicited, bona fide written offer made
by a third party to consummate an Acquisition Proposal that the Board of
Directors of the Company has determined in its good faith judgment is reasonably
likely to be consummated in accordance with its terms, taking into account all
legal, regulatory and financial aspects of the proposal and the third party
making the proposal, and if consummated, would result in a transaction in which
(i) the Company’s senior secured debentures are redeemed in full for cash at
maturity without requiring the debenture holders to forfeit any Company shares
of common stock, and (ii) the Company’s Board of Directors unanimously agree
that the value of the Company’s common shares would exceed the value resulting
from completion of the Transactions),


    
      
         


      

      
         


        
          

        

      

      
         


      

    

    


    
      	
              West
      Coast Opportunity Fund, LLC

            	 
      	 
      
	
              Montecito
      Venture Partners, LLC

            	 
      	 
      
	
              J&J
      Operating, LLC

            	 
      	 
      
	
              Black
      Sable Energy, LLC

            	
              3

            	
              October
      30, 2010

            


    

     

    (iv)          Notwithstanding
the provisions of Paragraph C(i),
above, the Board of Directors of the Company may enter into a definitive
agreement with respect to an Acquisition Proposal, if and only if, prior to
taking such action, the Board of Directors of the Company has determined in good
faith, after consultation with independent financial advisors and outside legal
counsel, (x) that such action is required in order for the Board of
Directors of the Company to comply with its fiduciary obligations to the
Company’s stockholders under Nevada law, and (y) that such Acquisition
Proposal constitutes a Superior Proposal; provided, however, that
(w) the Company has given the Parties at least ten (10) Business Days’
prior written notice of its intention to take such action (which notice shall
specify the material terms and conditions of any such Superior Proposal
(including the identity of the party making such Superior Proposal) and has
contemporaneously provided a copy of the relevant proposed transaction
agreements with the party making such Acquisition Proposal to the Parties),
(x) the Company has negotiated in good faith with the Parties during such
notice period to the extent the Parties wish to negotiate, to enable the Parties
to revise the terms of this LOI such that it would cause the Superior Proposal
to no longer constitute a Superior Proposal, (y) following the end of such
notice period, the Board of Directors of the Company shall have considered in
good faith any changes to this LOI proposed in writing by the Parties, and shall
have determined that the Superior Proposal would continue to constitute a
Superior Proposal if such revisions were to be given effect, and (z) in the
event of any material change to the material terms of such Superior Proposal,
the Company shall, in each case, have delivered to the Parties an additional
notice and the notice period shall have recommenced, except that the notice
period shall be at least two (2) business days.

    


    D.           Break-up
Fee.  As the sole remedy of WCOF, MVP, BSE and J&J, if the
Company either breaches its obligations under this LOI (including but not
limited to the "no shop" provisions in Paragraph C, above)
or the Definitive Agreements, or exercises the "fiduciary out" described in
Paragraph
C(iii) and C(iv), above, and
fails to close the Transactions contemplated herein, and within 120 days after
the date of the last day of the Restricted Period, the Company signs a letter of
intent or other agreement relating to the acquisition of all or substantially
all of the Company's assets or any of the securities of the Company (except for
outstanding compensatory stock options, warrants, convertible debentures, or
other contractual commitments made and approved by the Company's Board of
Directors prior to October 27, 2010), whether directly or indirectly and whether
through purchase, merger, consolidation, or otherwise, and such transaction is
ultimately consummated, then immediately upon the closing of such transaction,
the Company shall pay to WCOF a transaction break-up fee equal to Seven Hundred
Fifty Thousand Dollars ($750,000).

    


    E.           Access.  Subject
to the terms and conditions of that certain "Confidentiality Agreement" among
BSE, J&J, West Coast Asset Management, Inc. ("WCAM"), and the
Company previously executed (the "Nondisclosure
Agreement"), the Company shall afford WCAM's, WCOF's, J&J's, and
Approved Investors' employees, auditors, legal counsel, and other authorized
representatives all reasonable opportunity and access during normal business
hours to inspect, investigate, and audit the assets, contracts, operations, and
other records of the Company and its subsidiaries before
Closing.  WCAM, WCOF, J&J, Approved Investors, and their
respective representatives shall conduct such inspection, investigation, and
audit in a reasonable manner during regular business hours.


    
      
         


      

      
         


        
          

        

      

      
         


      

    

    


    
      	
              West
      Coast Opportunity Fund, LLC

            	 
      	 
      
	
              Montecito
      Venture Partners, LLC

            	 
      	 
      
	
              J&J
      Operating, LLC

            	 
      	 
      
	
              Black
      Sable Energy, LLC

            	
              4

            	
              October
      30, 2010

            


    

    


    F.           Consents.  The
Company, WCOF, MVP, and BSE shall cooperate with one another and proceed, as
promptly as is reasonably practicable, to seek to obtain all necessary consents
and approvals from lenders and others, and to endeavor to comply with all other
legal or contractual requirements for or preconditions to the execution and
consummation of the Transactions contemplated by this LOI and the Definitive
Agreements.

    


    G.           Reasonable
Business Efforts.   The Company, WCOF, MVP, J&J and
BSE shall negotiate in good faith and use their reasonable business efforts to
arrive at a mutually acceptable Definitive Agreements for approval, execution,
and delivery on the earliest reasonably practicable date.   The
Company, WCOF, MVP, J&J and BSE shall thereupon use their reasonable
business efforts to effect the Closing and to proceed with the transactions
contemplated by the Definitive Agreement as promptly as is reasonably
practicable.

    


    H.            Costs and
Risk.  The Company, WCOF, MVP, J&J and BSE each shall be
solely responsible for and bear all of their own respective expenses, including,
without limitation, expenses of legal counsel, accountants, and other advisers,
incurred at any time in connection with pursuing or consummating the Definitive
Agreements and the transactions contemplated thereby and each assume the risk
and expense of attempting to negotiate the Definitive Agreements and close the
Transactions.

    


    I.           Termination. In
addition to termination pursuant to Paragraph B, above,
either Party hereto may terminate this LOI if the Definitive Agreements are not
signed on or before the Termination Date, and thereafter this LOI shall have no
force and effect and the Parties shall have no further obligations hereunder
except with respect to the provisions of Paragraph H, above,
which shall survive the termination of this LOI (provided that the termination
of this LOI shall not affect the right and power of a Party to enforce against
the other Party any claims for such other Party’s breach of these Binding and
Enforceable Agreements prior to such termination).

    


    J.           Governing
Law.   This LOI and the Definitive Agreements shall be
governed by and construed in accordance with the internal laws of the State of
Nevada, without regard to application of the conflict of law principles
thereunder.

    


    K.           Miscellaneous.  This
LOI (i) constitutes the entire agreement among the Parties concerning the
subject matter hereof, except for that certain non-binding letter of intent of
an even date hereof, and supersedes all prior and contemporaneous
understandings, whether oral or written, regarding such subject matter, and (ii)
these Binding and Enforceable Provisions may not be modified or amended, except
by a written instrument hereafter executed by the Party sought to be charged by
such modification or amendment.   This LOI may be executed in
counterparts, each of which shall be deemed an original and both of which, taken
together, shall constitute one and the same instrument, binding on each
signatory thereto.  A copy of this LOI that is executed by a party and
transmitted by that party to the other party by facsimile or as an attachment
(e.g., in ".tif" or
".pdf" format) to an email shall be binding upon the signatory to the same
extent as a copy hereof containing that party's original
signature.


    
      
         


      

      
         


        
          

        

      

      
         


      

    

    


    
      	
              West
      Coast Opportunity Fund, LLC

            	 
      	 
      
	
              Montecito
      Venture Partners, LLC

            	 
      	 
      
	
              J&J
      Operating, LLC

            	 
      	 
      
	
              Black
      Sable Energy, LLC

            	
              5

            	
              October
      30, 2010

            


    

    


    If the
provisions of this LOI are acceptable, then please sign and date this LOI in the
spaces provided below and return a copy to me.  If this LOI is not so
accepted and delivered to me prior to 1:00 p.m., Central Time, on Saturday
October 30, 2010, then it shall expire at that time.

    


    We look
forward to hearing from you.

    


    
      
        	 
      	
                Sincerely,

              
	 
      	 
      	 
      
	 
      	
                EnerJex
      Resources, Inc., a Nevada corporation

              
	 
      	 
      	 
      
	 
      	
                By:

              	
                /s/ Steve Cochennet

              
	 
      	 
      	
                Steve
      Cochennet, CEO/President

              


      

    

    


    [Acceptance appears on the following
page.]


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    
      	
              West
      Coast Opportunity Fund, LLC

            	 
      	 
      
	
              Montecito
      Venture Partners, LLC

            	 
      	 
      
	
              J&J
      Operating, LLC

            	 
      	 
      
	
              Black
      Sable Energy, LLC

            	
              6

            	
              October
      30, 2010

            


    

    


    Acceptance

    


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

    


    
      
        
          
            
              
                
                  
                    	
                            West
      Coast Opportunity Fund, LLC

                          	 
      	
                            Montecito
      Venture Partners, LLC

                          
	 
      	 
      	 
      
	
                            By         West
      Asset Management, Inc.,

                          	 
      	 
      
	
                                          its
      Manager

                          	 
      	 
      
	 
      	 
      	 
      
	
                            By/s/ Atticus Lowe                                                  
      

                          	 
      	
                            By/s/ Atticus
      Lowe                                                     
      

                          
	
                                  Atticus
      Lowe, Chief Investment Officer

                          	 
      	
                                 Atticus
      Lowe, Manager

                          
	 
      	 
      	 
      
	
                            J&J
      Operating, LLC

                          	
                              

                          	
                            Black
      Sable Energy, LLC

                          
	 
      	 
      	 
      
	
                            By: /s/ John Loeffelbein                                                         
      

                          	 
      	
                            By:  /s/ Robert
      Watson                                                
       

                          
	
                                   John
      Loeffelbein, Member

                          	 
      	
                                   Robert
      Watson, Chief Executive
Officer