Document:

FIFTH AMENDMENT
TO

AMENDED
AND RESTATED CREDIT AGREEMENT

 

THIS FIFTH AMENDMENT
TO AMENDED AND RESTATED CREDIT AGREEMENT (this “Fifth Amendment”) is entered into and effective as of
the Fifth Amendment Closing Date (as defined below) among ENERJEX RESOURCES, INC., a Nevada corporation (“Parent”),
ENERJEX KANSAS, INC. (f/k/a Midwest Energy, Inc.), a Nevada corporation (“EnerJex Kansas”), DD
ENERGY, INC., a Nevada corporation (“DD Energy”), Working
Interest, LLC, a Kansas limited liability company (“Working Interest”), BLACK SABLE ENERGY,
LLC, a Texas limited liability company (“Black Sable”; together with Parent, EnerJex Kansas, DD Energy
and Working Interest, collectively, “Original Borrowers”), BLACK RAVEN ENERGY, INC., a Nevada
corporation (“Black Raven”) and ADENA, LLC, a Colorado limited liability company (“Adena”;
together with the Original Borrowers and Black Raven, collectively, “Borrowers” and each, a “Borrower”)
and TEXAS CAPITAL BANK, N.A., a national banking association, as a Bank, L/C Issuer and Administrative Agent (in
such latter capacity and together with its successors and permitted assigns in such capacity the “Administrative Agent”),
and the several banks and financial institutions from time to time parties to the Credit Agreement, as defined below (the “Banks”).
Capitalized terms used but not defined in this Fifth Amendment have the meaning given them in the Credit Agreement.

 

RECITALS

 

A.Original Borrowers,
Administrative Agent, L/C Issuer and Banks previously entered into that certain Amended and Restated Credit Agreement dated as
of October 3, 2011, as amended by that certain First Amendment to Amended and Restated Credit Agreement dated as of December 14,
2011, that certain Second Amendment to Amended and Restated Credit Agreement dated as of August 31, 2012, that certain Third Amendment
to Amended and Restated Credit Agreement dated as of November 2, 2012, and that certain Fourth Amendment to Amended and Restated
Credit Agreement dated as of January 24, 2013 (as amended, restated, supplemented or otherwise modified from time to time, the
“Credit Agreement”).

 

B.Pursuant to the
Credit Agreement, Original Borrowers previously executed and delivered an Amended and Restated Note dated October 3, 2011 (the
“Original Note”), payable to the order of each Bank in the face principal amount of Fifty Million and
No/100 Dollars ($50,000,000) and certain other Loan Documents.

 

C.Parent desires
to enter into that certain Agreement and Plan of Merger dated July 23, 2013 (the “Merger Agreement”)
by and among Parent, BRE Merger Sub, Inc., a Delaware corporation (“Merger Sub”), Black Raven and West
Coast Opportunity Fund, LLC, a Delaware limited liability company (“West Coast”) pursuant to which (a)
Parent will purchase all of the outstanding Equity Interests of Black Raven (the “Stock Sale”) and (b)
Black Raven will merge with and into Merger Sub with Black Raven continuing as the surviving corporation (the Stock Sale, together
with the Merger Agreement, the transactions contemplated therein and all of the aforementioned transactions, collectively, the
“Merger Transaction”).

 

    	 

    	 

    

 

D.Concurrent with
the closing of the Merger Transaction, (a) West Coast will release all of the Liens, security interests and other rights previously
granted to or in favor of it by Black Raven, Adena and PRB Gathering, Inc., a Colorado corporation (“PRB”)
(the “West Coast Lien Releases”) and (b) Carlyle Energy Mezzanine Opportunities Fund, L.P., Carlyle Energy
Mezzanine Opportunities Fund-A, L.P. and CEMOF Coinvestment, L.P. (collectively, “Carlyle”; together
with West Coast, collectively, the “Lien Holders”) will release all of the Liens, security interests
and other rights previously granted to or in favor of them by Black Raven, Adena and PRB (the “Carlyle Lien Releases”;
together with the West Coast Lien Releases, collectively, the “Lien Releases”).

 

E.As a result of
the Merger Transaction, (a) Black Raven will become a direct Subsidiary of Parent and (b) Parent will hold 100% of Black Raven’s
then-outstanding Equity Interests.

 

F.Each of Adena
and PRB is a wholly-owned Subsidiary of Black Raven.

 

G.Adena holds record
title to certain Oil and Gas Properties located in the State of Colorado, including, without limitation, the Adena Assets (as defined
below).

 

H.Borrowers have
requested that Administrative Agent and Banks consent to the Merger Transaction.

 

I.Administrative
Agent and Banks desire to consent to the Merger Transaction subject to (a) Black Raven and Adena joining the Credit Agreement as
borrower parties in accordance with Section 6.13 of the Credit Agreement, (b) Adena granting Liens on the Adena Assets, (c) the
Lien Holders releasing the Lien Releases and terminating or assigning to Parent the debt secured by such Lien Releases, (d) Parent
granting a Lien on all of Parent’s Equity Interests in Black Raven, (e) Black Raven granting a Lien on all of Black Raven’s
Equity Interests in Adena and PRB and (f) the terms and conditions set forth herein.

 

J.Pursuant to such
joinder, the Original Note will be replaced with that certain Second Amended and Restated Note dated as of the Fifth Amendment
Closing Date executed and delivered by Borrowers, payable to the order of each Bank in the aggregate face principal amount of One
Hundred Million and No/100 Dollars ($100,000,000) (the “New Note”).

 

K.Borrowers, Administrative
Agent, L/C Issuer and Banks have agreed to amend the Credit Agreement, subject to the terms and conditions of this Fifth Amendment.

 

AGREEMENT

 

NOW THEREFORE, for
good and valuable consideration, the receipt and sufficiency of which are acknowledged, the undersigned hereby agree as follows:

 

I.Joinder
Agreement.

 

A.Joinder
of Black Raven and Adena. In connection with Section 6.13 of the Credit Agreement, Black Raven and Adena hereby unconditionally
and irrevocably (a) join the Credit Agreement as a party thereto and shall have all the rights of a Borrower and assumes all the
obligations of a Borrower under the Credit Agreement and the other Loan Documents to which the other Borrowers are a party, (b)
agree to be bound by the provisions of the Credit Agreement or such other Loan Documents as if Black Raven and Adena had been an
original party to the Credit Agreement or such other Loan Documents, and (c) confirm that, after joining the Credit Agreement and
the other Loan Documents as set forth above, the representations and warranties set forth in the Credit Agreement and the other
Loan Documents with respect to Black Raven and Adena are true and correct in all material respects as of the date of this Fifth
Amendment and that no Default has occurred and is continuing. Each reference to a “Borrower” under the Credit Agreement
and all other Loan Documents shall be deemed to include each of Black Raven and Adena except to the extent the context requires
reference only to another particular Borrower.

 

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B.Black
Raven and Adena Representations and Warranties. Each of Black Raven and Adena (a) represents and warrants to the Administrative
Agent and the Banks that this Fifth Amendment (i) has been duly authorized, executed and delivered by it by all requisite Corporate
Action and (ii) constitutes its legal, valid and binding obligation, enforceable against it in accordance with its terms (subject
to applicable Debtor Relief Laws and subject, as to enforceability, to equitable principles of general application (regardless
of whether enforcement is sought in a proceeding in equity or at law)) and (b) agrees that it will perform in accordance with their
terms all of the obligations which by the terms of the Loan Documents are required to be performed by it as a Borrower.

 

II.Specific
Amendments to Credit Agreement.

 

A.Article
I, Definitions, of the Credit Agreement is hereby amended by adding the following definitions in their proper alphabetical
order:

 

“Adena”
is defined in the Preamble to the Fifth Amendment.

 

“Adena
Assets” shall mean all assets of Adena, whether real or personal or mixed, tangible or intangible, direct or indirect,
including without limitation, those certain Oil and Gas Properties and all other property associated therewith owned by Adena,
as set forth on Exhibit A attached to the Fifth Amendment.

 

“Adena
Collateral” shall mean the Adena Assets in which a Lien is granted or to be granted pursuant to the Collateral Documents.

 

“Black
Raven” is defined in the Preamble to the Fifth Amendment.

 

“Conforming
Borrowing Base” means, as of the Fifth Amendment Closing Date, $36,500,000.

 

“Fifth
Amendment” means the Fifth Amendment to Amended and Restated Credit Agreement dated effective as of the Fifth Amendment
Closing Date by and among Borrowers, Administrative Agent, L/C Issuer and Banks.

 

“Fifth
Amendment Closing Date” means September 30, 2013.

 

“Merger
Transaction” is defined in Recital C to the Fifth Amendment.

 

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“Nonconforming
Borrowing Base” means, as and when determined, the positive difference, if any, between the Borrowing Base and the
Conforming Borrowing Base.

 

“PRB”
is defined in Recital F to the Fifth Amendment.

 

Article
I, Definitions, of the Credit Agreement is hereby amended by revising the following definitions in their entirety as follows:

 

“Borrowing
Base Utilization Percentage” means the ratio, expressed as a percentage, of (a) the Aggregate Outstanding Credit
Exposure to (b) the Conforming Borrowing Base.

 

“Collateral”
shall mean the assets of Borrowers and each of the Loan Parties, including, without limitation, the Adena Collateral, whether real
or personal or mixed, tangible or intangible, in which a Lien is granted or purported to be granted pursuant to the Collateral
Documents or the Existing Collateral Documents.

 

“Floating
Rate” means a per annum interest rate determined by reference to the following schedule:

 

Eurodollar Rate + Eurodollar
Margin at Borrower’s option pursuant to Section 2.02,

 

or

 

Base Rate + Base Rate Margin
at Borrower’s option or by default pursuant to Section 2.02.

 

“Intercreditor
Agreement” means (a) that certain Amended and Restated Intercreditor Agreement dated September 5, 2013
(as amended by that certain First Amendment thereto dated as of the Fifth Amendment Closing Date) by and among Administrative Agent,
Borrowers, BP Energy Company, Inc. and Cargill, Incorporated, and (b) any other Intercreditor Agreement among Administrative
Agent, a Borrower and an Approved Counterparty, executed in connection with Permitted Swap Contracts on terms and conditions satisfactory
to Administrative Agent providing for, amongst other things, the sharing of pari passu Liens on the Collateral to secure
the Total Obligations, which form of Intercreditor Agreement shall be in form mutually agreeable to Administrative Agent, a Borrower
and an Approved Counterparty. 

 

“Letter
of Credit Limit” means with regard to the Letters of Credit issued under Section 2.03, an amount
equal to $2,000,000.

 

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“Margin/Fee
Table” means the following table:

 

	 	Borrowing Base Utilization Percentage	Applicable Margin	Commitment

Fee	L/C

Fee
	Eurodollar

Margin	Base Rate Margin
	Level 1	  >100%	4.500%	3.500%	0.500%	2.750%
	Level 2	> 75%≤ 100%	3.000%	2.000%	0.500%	2.750%
	Level 3	> 50% ≤ 75%	2.750%	1.750%	0.500%	2.750%
	Level 4	> 25% ≤ 50%	2.500%	1.500%	0.500%	2.750%
	Level 5	≤ 25%	2.250%	1.250%	0.500%	2.750%

 

B.Section
2.04, Borrowing Base Determination, of the Credit Agreement is hereby amended by deleting Subsection (a) in its entirety and
replaced it with following:

 

(a)The
Borrowing Base in effect as of the Fifth Amendment Closing Date is $38,000,000 relative to the Proved Reserves attributable to
the Borrowing Base Oil and Gas Properties and the Monthly Borrowing Base Reduction is $0.00. The Borrowing Base shall be automatically
reduced on the first day of each month by the Monthly Borrowing Base Reduction beginning October 1, 2013. The Borrowing Base and
the Monthly Borrowing Base Reduction shall be re-determined from time to time pursuant to the provisions of this Section.

 

C.Section
2.04, Borrowing Base Determination, of the Credit Agreement is hereby amended by adding the following proviso to the end of
the penultimate sentence of Subsection (b) thereof:

 

; provided
further that, notwithstanding the foregoing, the Borrowing Base shall be automatically redetermined at any time and from time
to time as a result of redetermination of the Nonconforming Borrowing Base in accordance with Section 2.04(g) below.

 

D.Section
2.04, Borrowing Base Determination, of the Credit Agreement is hereby amended by adding the following new Subsection (g) to
the end thereof:

 

(g)Notwithstanding
anything to the contrary in this Agreement, the Nonconforming Borrowing Base may be redetermined by the Administrative Agent and
the Banks at any time and from time to time and such redetermination shall be effective immediately upon notice to Borrowers.

 

E.Section
6.11, Use of Proceeds, of the Credit Agreement is hereby amended by replacing the text thereof with the following text:

 

Use the proceeds
of the Loans for (a) the transaction costs, fees and expenses related to this Agreement and the transactions contemplated hereby,
(b) the acquisition, development and exploration of the Borrowing Base Oil and Gas Properties, (c) capital expenditures, (d) the
Merger Transaction and transaction costs, fees and expenses related thereto, (e) general corporate purposes that are of customary,
recurring types in the oil and gas exploration and production business and (f) Letters of Credit, in each case, not in contravention
of any Law or of any Loan Document. Notwithstanding the foregoing, proceeds of the Loans may only be used by or for the benefit
of, or on behalf of, PRB with the prior written consent of Administrative Agent and Banks.

 

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F.Section
6.27, Removal as Operator and Subordination of Liens, of the Credit Agreement is hereby amended by replacing the text thereof
with the following text:

 

Until the Obligations
have been paid in full and the Commitments terminated, and notwithstanding anything in any other document to the contrary, Borrowers
will, and will cause any Affiliate (including EnerJex Kansas and Black Raven) to, immediately resign and remove itself as the operator
of the Borrowing Base Oil and Gas Properties upon the written request of Administrative Agent if an Event of Default has occurred
and is continuing under the Credit Agreement or any other Loan Document. If Borrowers or any such Affiliate (including EnerJex
Kansas and Black Raven) is removed as operator pursuant to this Section 6.27, Borrowers will, and will cause any
Affiliate (including EnerJex Kansas and Black Raven) to, (a) immediately take any and all actions reasonably requested by Administrative
Agent or its designee to facilitate a smooth transition of operatorship from Borrowers or any such Affiliate to a successor operator
approved by Administrative Agent, (b) refrain from taking any action to oppose, delay or otherwise hinder the efforts of that successor
operator to assume operatorship of the Borrowing Base Oil and Gas Properties, and (c) fully cooperate in good faith with all such
efforts by Administrative Agent to pursue foreclosure and/or other rights and remedies available to Administrative Agent by law,
equity or otherwise. Additionally, EnerJex Kansas and Black Raven agree that so long as any of Obligations remain outstanding,
EnerJex Kansas’ and Black Raven’s Liens in and to any of the Collateral pursuant to any Operating Agreement, or at
law or in equity or otherwise (the “Subordinated Liens”) are and shall be subordinate in priority to the Liens
of the Administrative Agent in the Collateral under the Loan Documents for the benefit of the Banks, notwithstanding the date,
manner or order of grant, attachment or perfection of any of the Subordinated Liens or the Liens granted under the Loan Documents.
Notwithstanding any provision of applicable Law, the Loan Documents or the documents evidencing the Subordinated Liens or any other
circumstance whatsoever, EnerJex Kansas and Black Raven agree that: (i) any Lien on the Collateral securing any Obligations now
or hereafter held by or on behalf of the Administrative Agent or any agent or trustee therefor, regardless of how acquired, whether
by grant, possession, statute, operation of law, subrogation or otherwise, shall be senior in all respects and prior to any Subordinated
Lien and (ii) any Lien on the Collateral now or hereafter held by or on behalf of EnerJex Kansas, Black Raven or any agent or trustee
therefor regardless of how acquired, whether by grant, possession, statute, operation of law, subrogation or otherwise, shall be
junior and subordinate in all respects to all Liens on the Collateral securing the Obligations.

 

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G.Section
7.02, Investments, of the Credit Agreement is hereby amended by (a) deleting the “and” at the end of Section
7.02(e), (b) replacing the “.” at the end of Section 7.01(f) with “; and”, and (c) adding the
following new Section 7.02(g) to the end thereof:

 

(g)Investments
in connection with the Merger Transaction.

 

H.Section
7.12(b), Funded Debt to EBITDAX Ratio, of the Credit Agreement is hereby deleted in its entirety and replaced with the following:

 

(b)Funded
Debt to EBITDAX Ratio. Permit, as of the last day of each fiscal quarter, commencing with the fiscal quarter ending March 31,
2014, the ratio of Funded Debt to Borrowers’ and their Subsidiaries’ consolidated EBITDAX for that preceding quarter
to be greater than 4.50:1.00. For the purpose of calculating the foregoing ratio, EBITDAX will be annualized by: (i) multiplying
by 4 for the three-month period ending March 31, 2014, (ii) multiplying by 2 for the six-month period ending June 30,
2014, and (iii) multiplying by 1.33 for the nine-month period ending September 30, 2014. For the twelve-month period ending December
31, 2014, and for each period thereafter, EBITDAX will be calculated based on actual EBITDAX for the previous four fiscal quarters.

 

I.Section
7.12(c), Interest Coverage Ratio, of the Credit Agreement is hereby deleted in its entirety and replaced with the following:

 

(c)Interest
Coverage Ratio. Permit, as of the last day of each fiscal quarter, commencing with the fiscal quarter ending March 31, 2014,
the ratio of Borrowers’ and their Subsidiaries’ consolidated EBITDAX for each fiscal quarter to Interest Expense for
that quarter to be less than 3.00:1.00. For the purpose of calculating the foregoing ratio, EBITDAX will be annualized by: (i)
multiplying by 4 for the three-month period ending March 31, 2014, (ii) multiplying by 2 for the six-month period ending
June 30, 2014, and (iii) multiplying by 1.33 for the nine-month period ending September 30, 2014. For the twelve-month period
ending December 31, 2014, and for each period thereafter, EBITDAX will be calculated based on actual EBITDAX for the previous four
fiscal quarters.

 

J.Section
9.01(c), Other Covenants, of the Credit Agreement is hereby deleted in its entirety and replaced with the following:

 

(c)Other
Covenants. Any Loan Party fails to perform or observe any other covenant or agreement (not specified in subsection (a)
or (b) above) contained in any Loan Document on its part to be performed or observed and such failure continues for thirty
days after Borrowers receive written notice thereof from Administrative Agent or any event of default occurs and is continuing
under any other Loan Document for thirty (30) days after Borrowers receive written notice thereof from Administrative Agent; or

 

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III.Amendments
to Exhibits to Credit Agreement. Exhibit A attached to the Credit Agreement is hereby supplemented by adding the Borrowing
Base Oil and Gas Properties described on Exhibit A attached to this Fifth Amendment and each reference in any Loan Document to
such Exhibit A shall include and incorporate the Exhibit A attached to this Fifth Amendment. Exhibit C attached to the Credit Agreement
is hereby deleted in its entirety and replaced with Exhibit C attached to this Fifth Amendment. Each reference in any Loan Document
to such Exhibit C shall be deemed to refer to Exhibit C attached to this Fifth Amendment.

 

IV.Schedules
to Credit Agreement. Upon satisfaction of all conditions precedent set forth in Article VII of this Fifth Amendment, Schedules
1.01, 5.13, 5.19, 5.21 and 5.24 attached to the Credit Agreement are hereby deleted in their entirety and replaced with Schedules
1.01, 5.13, 5.19, 5.21 and 5.24 attached to this Fifth Amendment and each reference in the Loan Documents to such Schedules shall
be deemed to refer to Schedules 1.01, 5.13, 5.19, 5.21 and 5.24 attached to this Fifth Amendment.

 

V.Consent
to Certain Transactions. Subject to the terms of this Fifth Amendment, Administrative Agent and Banks hereby consent to (a)
the Merger Transaction and (b) the joinder of Black Raven and Adena as Borrowers under the Credit Agreement pursuant to Section
6.13 of the Credit Agreement.

 

VI.Limited
Waiver. Subject to the other terms and conditions set forth herein, Administrative Agent and Banks hereby waive Borrowers’
compliance with, and any resulting Event of Default arising from Borrowers’ failure to comply with, the financial covenant
set forth in Section 7.12(b) (Funded Debt to EBITDAX Ratio) solely in relation to the fiscal quarter ending September
30, 2013. The waiver granted hereunder does not indicate an intent to establish any course of dealing between Administrative Agent,
Banks and Borrowers with regard to future waivers, consents, agreements to forbear or any other modifications that may be requested.
Administrative Agent’s and Banks’ agreement to the waiver herein should not be construed as an indication that Administrative
Agent and Banks would be willing to agree to any further or future consents, waivers, agreements to forbear or any modifications
to any of the terms of the Credit Agreement or other Loan Documents, or any Events of Default or Defaults that may exist or occur
thereunder.

 

VII.Conditions
Precedent to Fifth Amendment. This Fifth Amendment shall be effective once each of the following conditions have been satisfied
in Administrative Agent’s sole discretion on or before the Fifth Amendment Effective Date:

 

		A.	Borrowers, Administrative Agent and Banks shall have executed and delivered this Fifth Amendment
(including, without limitation, all schedules, exhibits and annexes to be attached hereto and incorporated herein);

 

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		B.	Borrowers shall have executed and delivered the New Note;

 

		C.	Black Raven, Adena and the other Borrowers shall have executed and delivered Collateral Documents
covering, among other things, the Adena Collateral, Parent’s Equity Interests in Black Raven and Black Raven’s Equity
Interests in each of Adena and PRB;

 

		D.	Adena shall have executed and delivered Transfer Order Letters;

 

		E.	To the extent certificated, Borrowers shall have delivered to Administrative Agent new or replacement
stock certificates evidencing (a) Parent’s Equity Interests in Black Raven and (b) Black Raven’s Equity Interests in
each of Adena and PRB, in each instance, together with executed stock powers in favor of the Administrative Agent;

 

		F.	Borrowers shall have delivered executed copies of the Stock Sale, the Merger Agreement and all
other documents, certificates and other agreements executed and/or delivered in connection with the Merger Transaction, each in
form and content satisfactory to Administrative Agent;

 

		G.	Borrowers shall have delivered to Administrative Agent evidence satisfactory to Administrative
Agent in its sole discretion that the Merger Transaction has been consummated and all conditions therein have been satisfied, unless
waived by Administrative Agent in writing;

 

		H.	Borrowers shall have delivered to Administrative Agent the Lien Releases and such other evidence
of the termination or assignment to Parent of the Lien Holders’ debt, each in form and content satisfactory to Administrative
Agent;

 

		I.	Borrowers shall have delivered to Administrative Agent evidence, satisfactory to Administrative
Agent in its sole discretion, that Borrowers have entered into Permitted Swap Contracts covering sufficient notional volumes of
Borrowers’ reasonably anticipated Proved Developed Producing Reserves for the calendar years 2014 and 2015.

 

		J.	Borrowers shall have delivered to Administrative Agent such other documents as Administrative Agent
may request, including without limitation, (a) an insurance certificate providing proof of insurance for Black Raven, Adena and
PRB and their respective properties and (b) proper officer’s certificate and corporate resolutions of Black Raven and Adena
approving and adopting, among other things, (i) the Stock Sale, the Merger Agreement and the other transactions related to the
Merger Transaction and (ii) the joinder to the Credit Agreement, the execution and delivery of this Fifth Amendment and the other
Loan Documents contemplated herein and the granting of Lien, security interests and other rights thereunder in favor of the Administrative
Agent for the benefit of the Banks, in each case, in form and content satisfactory to Administrative Agent;

 

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		K.	Administrative Agent shall have received a favorable opinion of counsel to the Loan Parties, addressed
to Administrative Agent, as to such matters concerning the Loan Parties, this Fifth Amendment and the other Loan Documents, in
form and content satisfactory to Administrative Agent;

 

		L.	Borrowers shall have paid, in immediately available funds, to the Administrative Agent (i) a facility
fee in the amount of $138,750 in connection with the increased Borrowing Base on such date, and (ii) an engineering fee in the
amount of $2,500; and

 

		M.	Administrative Agent shall have received, in form and content satisfactory to it, such other assurances,
certificates, documents or consents related to the foregoing as Administrative Agent may request.

 

VIII.Representations,
Warranties and Covenants. Borrowers represent and warrant to Administrative Agent and Banks that (a) they possess all
requisite Corporate Power and authority to execute, deliver and comply with the terms of this Fifth Amendment, (b) this Fifth
Amendment has been duly authorized and approved by all requisite Corporate Action on the part of the Borrowers, (c) no other
consent of any Person (other than Administrative Agent and Banks) is required for this Fifth Amendment to be effective, (d) the
execution and delivery of this Fifth Amendment does not violate their Governing Documentation, (e)  the representations and
warranties in each Loan Document to which they are a party are true and correct in all material respects on and as of the Fifth
Amendment Closing Date as though made on the Fifth Amendment Closing Date, (f)  except as may be addressed in this Fifth Amendment,
they are in full compliance with all covenants and agreements contained in each Loan Document to which they are a party, (g) no
Event of Default or Default has occurred and is continuing, (h) except as may be addressed in this Fifth Amendment, no exhibit
or schedule to the Credit Agreement is required to be supplemented, amended or modified in connection with the transactions contemplated
by this Fifth Amendment or any other matters occurring prior to the Fifth Amendment Closing Date and (i) they have delivered true,
correct and complete copies of all documents associated, or delivered in connection, with, or contemplated in the Merger Transaction.
In particular, but without limiting the generality of the foregoing, Exhibit A attached to the Credit Agreement, as amended by
this Fifth Amendment or any prior amendment, describes all of Borrowers’ Borrowing Base Oil and Gas Properties. The representations
and warranties made in this Fifth Amendment shall survive the execution and delivery of this Fifth Amendment. No investigation
by Administrative Agent or any Bank is required for Administrative Agent or any Bank to rely on the representations and warranties
in this Fifth Amendment.

 

IX.Scope
of Amendment; Reaffirmation; Release. All references to the Credit Agreement shall refer to the Credit Agreement as amended
by this Fifth Amendment. Except as affected by this Fifth Amendment, the Loan Documents are unchanged and continue in full force
and effect. However, in the event of any inconsistency between the terms of the Credit Agreement (as amended by this Fifth Amendment)
and any other Loan Document, the terms of the Credit Agreement shall control and such other document shall be deemed to be amended
to conform to the terms of the Credit Agreement. Borrowers hereby reaffirm their obligations under the Loan Documents to which
they are a party to and agree that all Loan Documents to which they are a party to remain in full force and effect and continue
to be legal, valid, and binding obligations enforceable in accordance with their terms (as the same are affected by this Fifth
Amendment). Borrowers hereby release, discharge and acquit Administrative Agent, L/C Issuer
and Banks from any and all claims, demands, actions, causes of action, remedies, and liabilities of every kind or nature (including
without limitation, offsets, reductions, rebates, or lender liability) arising out of any act, occurrence, transaction or omission
occurring in connection with the Credit Agreement and the other Loan Documents prior to the Fifth Amendment Closing Date.

 

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X.Miscellaneous.

 

(a)No
Waiver of Defaults. Except as expressly provided herein, this Fifth Amendment does not constitute (i) a waiver of, or a consent
to, (A) any provision of the Credit Agreement or any other Loan Document, or (B) any present or future violation of, or default
under, any provision of the Loan Documents, or (ii) a waiver of Administrative Agent’s or any Bank’s right to insist
upon future compliance with each term, covenant, condition and provision of the Loan Documents.

 

(b)Form.
Each agreement, document, instrument or other writing to be furnished to Administrative Agent under any provision of this Fifth
Amendment, if any, must be in form and substance satisfactory to Administrative Agent and its counsel.

 

(c)Headings.
The headings and captions used in this Fifth Amendment are for convenience only and will not be deemed to limit, amplify or modify
the terms of this Fifth Amendment, the Credit Agreement, or the other Loan Documents.

 

(d)Costs,
Expenses and Attorneys’ Fees. Borrowers agree to pay or reimburse Administrative Agent on demand for all its reasonable
out-of-pocket costs and expenses incurred in connection with the preparation, negotiation, and execution of this Fifth Amendment,
including, without limitation, the reasonable fees and disbursements of Administrative Agent’s counsel.

 

(e)Successors
and Assigns. This Fifth Amendment shall be binding upon and inure to the benefit of each of the undersigned and their respective
successors and permitted assigns.

 

(f)Multiple
Counterparts. This Fifth Amendment may be executed in any number of counterparts with the same effect as if all signatories
had signed the same document. All counterparts must be construed together to constitute one (1) and the same instrument. This Fifth
Amendment may be transmitted and signed by facsimile or portable document file (pdf). The effectiveness of any such documents and
signatures shall, subject to applicable law, have the same force and effect as manually-signed originals and shall be binding on
Borrowers, Administrative Agent, L/C Issuer and Banks. Administrative Agent may also require that any such documents and signatures
be confirmed by a manually-signed original; provided that the failure to request or deliver the same shall not limit
the effectiveness of any facsimile document or signature.

 

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(g)Governing
Law. This Fifth Amendment and the other Loan Documents must be construed, and their
performance enforced, under Texas law.

 

(h)Entirety.
THIS FIFTH AMENDMENT, THE CREDIT AGREEMENT,
AND THE OTHER LOAN DOCUMENTS CONSTITUTE A “LOAN AGREEMENT” AS DEFINED IN SECTION 26.02(A) OF THE TEXAS BUSINESS AND
COMMERCE CODE, AND REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES RELATING TO THE SUBJECT MATTER UNDER THIS FIFTH AMENDMENT
AND UNDER THOSE OTHER WRITTEN DOCUMENTS AND MAY NOT BE CONTRADICTED BY EVIDENCE OR PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS
OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

 

(Signature pages follow)

 

    	12

    	 

    

 

IN WITNESS WHEREOF,
this Fifth Amendment is executed effective as of the Fifth Amendment Closing Date.

 

	 	BORROWERS:
	 	 	 
	 	 	 
	 	ENERJEX RESOURCES, INC.
	 	 	 
	 	 	 
	 	By:	       
	 	 	Robert G. Watson, Jr.
	 	 	Chief Executive Officer
	 	 	 
	 	 	 
	 	ENERJEX KANSAS, INC.
	 	 	 
	 	 	 
	 	By:	       
	 	 	Robert G. Watson, Jr.
	 	 	Chief Executive Officer
	 	 	 
	 	 	 
	 	DD ENERGY, INC.
	 	 	 
	 	 	 
	 	By:	       
	 	 	Robert G. Watson, Jr.
	 	 	Chief Executive Officer
	 	 	 
	 	 	 
	 	WORKING INTEREST, LLC
	 	 	 
	 	 	 
	 	By:	       
	 	 	Robert G. Watson, Jr.
	 	 	Chief Executive Officer
	 	 	 
	 	 	 
	 	BLACK SABLE ENERGY, LLC
	 	 	 
	 	 	 
	 	By:	       
	 	 	Robert G. Watson, Jr.
	 	 	Chief Executive Officer
	 	 	 

Signature Page to Fifth Amendment

   

    	 

    	 

    

  

	 	 	 
	 	BLACK RAVEN ENERGY, INC.
	 	 	 
	 	 	 
	 	By:	       
	 	 	Robert G. Watson, Jr.
	 	 	Chief Executive Officer
	 	 	 
	 	 	 
	 	– and –
	 	 	 
	 	 	 
	 	ADENA, LLC
	 	 	 
	 	 	 
	 	By:	       
	 	 	Robert G. Watson, Jr.
	 	 	Chief Executive Officer

 

Signature Page to Fifth Amendment

 

    	 

    	 

    

 

	 	ADMINISTRATIVE AGENT, L/C ISSUER
	 	AND BANKS:
	 	 	 
	 	 	 
	 	TEXAS CAPITAL BANK, N.A.,
	 	as Administrative Agent, L/C Issuer and
	 	a Bank
	 	 	 
	 	 	 
	 	By:	 
	 	 	W. David McCarver IV
	 	 	Senior Vice President

 

Signature Page to Fifth Amendment

 

    	 

    	 

    

 

SCHEDULE
1.01

 

COMMITMENT AMOUNTS

AND AGGREGATE COMMITMENT AMOUNT

 

	
        Bank

         

         

         
	
        Percentage

        Share

         

         

         
	
        Commitment

        Amount

         

         

         
	
         

         

        Percentage Share of Letters of 

Credit
        under the Letter of

 Credit Limit

         

	Texas Capital Bank, N.A.	100.0%	$100,000,000	100.0%
	Aggregate Commitment Amount:	 	$100,000,000	 

  

Schedule 1.01

 

    	 

    	 

    

 

SCHEDULE
5.13

 

SUBSIDIARIES

 

Subsidiaries of EnerJex Resources, Inc.

 

		1.	EnerJex Kansas, Inc.

		2.	DD Energy, Inc.

		3.	Working Interest, LLC

		4.	Black Sable Energy, LLC

		5.	Black Raven Energy, Inc.

 

Subsidiaries of EnerJex Kansas, Inc.

 

None.

 

Subsidiaries of DD Energy, Inc.

 

None.

 

Subsidiaries of Working Interest, LLC

 

None.

 

Subsidiaries of Black Sable Energy,
LLC

 

None.

 

Subsidiaries of Black Raven Energy,
Inc.

 

		1.	Adena, LLC.

		2.	PRB Gathering, Inc.

  

Schedule 5.13

 

    	 

    	 

    

 

SCHEDULE
5.19

 

OIL AND
GAS CONTRACTS

 

 

		1.	Month to month contract with Coeffeyville Resources (Oil) - EnerJex.

 

		2.	Month to month contract with Plains Marketing (Oil) - EnerJex

 

		3.	Month to Month with Plains Marketing (Oil) - Black Raven Energy

 

		4.	Month to Month with Western Operating (Gas) - Black Raven Energy

 

		5.	Month to Month with Sunoco (Oil) - Black Sable Energy (EnerJex Texas)

 

Schedule 5.19

 

    	 

    	 

    

 

SCHEDULE
5.21

 

PURCHASERS
OF PRODUCTION

 

 

 

		1.	For Kansas Production:

 

Coffeyville Resources, LLC

A CVR Energy Company

10 E. Cambridge Circle,
Ste. 250

Kansas City, KS 66103

(913) 982-0499

 

		2.	For Kansas Production:

 

Plains Marketing, L.P.

P.O. Box 4648 Houston, Texas
77210-4648(800) 772-7589

 

		3.	For Texas Production:

 

Sunoco Partners Marketing
& Terminals

1 Fluor Daniel Drive

Sugarland, TX 77478

281-637-6200

 

		4.	For Colorado Production:

 

Plains Marketing L.P.

333 Clay Street, Ste 1600

Houston, TX 77002

 

		5.	For Colorado Production:

 

Western Operating Company

518 17th Street, Ste
200

Denver, CO 80202

 

Schedule 5.21

 

    	 

    	 

    

 

SCHEDULE
5.22

 

SWAP CONTRACTS

 

 

		I.	ISDA 1992 Master Agreement dated as of July 3, 2008, by and among Parent, EnerJex Kansas and
DD Energy and BP Corporation North America Inc., as Approved Counterparty, together with the schedules, annexes and exhibits attached
thereto and each relevant transaction confirmation thereunder to the extent such parties have disclosed the material terms thereof
to Administrative Agent.

 

		II.	ISDA 1992 Master Agreement dated as of September 5, 2013, by and between Parent, and Cargill, Incorporated,
as Approved Counterparty, together with the schedules, annexes and exhibits attached thereto and each relevant transaction confirmation
thereunder to the extent such parties have disclosed the material terms thereof to Administrative Agent.

 

		III.	From time to time after the Closing Date and during the term of this Agreement, Borrowers agree
to enter into Swap Contracts and transactions thereunder, which are permitted under the terms of this Agreement.

 

Schedule 5.22

   

    	 

    	 

    

 

SCHEDULE
5.24

 

MATERIAL
AGREEMENTS; DEBT INSTRUMENTS

 

 

		1.	Option and Joint Development Agreement, as amended, dated August 11, 2011 among EnerJex Resources,
MorMeg, LLC and Haas Petroleum, LLC and the Joint Operating Agreement associated therewith, as amended.

 

		2.	Joint Development Agreement, as amended, dated December 31, 2010 among EnerJex Resources, Haas
Petroleum and Mormeg, LLC and the Joint Operating Agreement associated therewith, as amended.

 

		3.	Participation Agreement, as amended, dated January 1, 2010 among Black Sable Energy and various
other participants and the Joint Operating Agreement associated therewith, as amended.

 

		4.	Participation Agreement, as amended, dated May 1, 2009 among Black Sable Energy and various other
participants and the Joint Operating Agreement associated therewith, as amended.

 

Schedule 5.24

 

    	 

    	 

    

 

EXHIBIT A

 

Borrowing Base Oil and Gas PropertiesWORLD SURVEILLANCE GROUP INC.

NON-QUALIFIED
STOCK OPTION AGREEMENT

 

          World
Surveillance Group Inc. (the “Company”) hereby grants the following stock option. The terms and conditions attached
hereto are also a part hereof.

 

	Name of optionee (the “Optionee”):	Glenn D. Estrella
	Date of this option grant:	September 25, 2013
	Number of shares of the Company’s Common Stock subject to this option (“Shares”):	7,692,308
	Option exercise price per share:	$0.013
	Number, if any, of Shares that vest immediately on the grant date:	100%
	Shares that are subject to vesting schedule:	None
	Vesting Start Date:	n/a

 

Payment:

 

	Payment alternatives (specify any or all of Section 6(a)(i) though (iii)):	
        Section 6(a) (i) through (iii) 

 

This option satisfies
in full all commitments that the Company has to the Optionee with respect to the issuance of stock, stock options or other equity
securities.

 

	/s/ Glenn D. Estrella	World Surveillance Group Inc.
	
         

        Signature of Optionee
	 
	1608 Sheridan Drive 	By: /s/ Barbara M. Johnson
	Street Address	Name of Officer: Barbara M. Johnson
	Wall Township, NJ 07753	       Title: Vice President
	City/State/Zip Code	 

 

    	1

    	 

    

 

WORLD SURVEILLANCE GROUP INC.

 

NON-QUALIFIED
STOCK OPTION AGREEMENT – INCORPORATED TERMS AND CONDITIONS

 

 

1.          Grant
as Non-Qualified Stock Option. This option is a non-statutory stock option and is not intended to qualify as an incentive stock
option under Section 422 of the Internal Revenue Code of 1986, as amended, and the regulations thereunder (the “Code”).

                    

2.          Vesting
of Option.

 

(a)          Vesting
if Business Relationship Continues. The Optionee may only exercise this option on or after the date of this option grant for
the number of shares of Common Stock, if any, that are then vested in accordance with the vesting schedule set forth on the cover
page hereof. Notwithstanding the foregoing, the Board may, in its discretion, accelerate the date that any installment of this
option becomes exercisable. The foregoing rights are cumulative and may be exercised only before the date which is seven (7) years
from the date of this option grant.

 

(b)          Accelerated
Vesting Due to Acquisition. In the event an Acquisition occurs while the Optionee maintains a Business Relationship with the
Company and this option has not fully vested, this option shall become exercisable for 100% of the number of Shares subject to
this option, such vesting to occur immediately prior to the closing of the Acquisition.

 

(c)          
Definitions. The following definitions shall apply:

 

“Acquisition”
means each of the consolidation with or the acquisition by another entity of the Company in a merger or other reorganization in
which the holders of the outstanding voting stock of the Company immediately preceding the consummation of such event shall, immediately
following such event, hold, as a group, less than a majority of the voting securities of the surviving or successor entity or its
ultimate parent, or in the event of a sale or all or substantially all of the Company’s assets.

 

“Business Relationship”
means service to the Company or its successor in the capacity of an employee, officer, director, consultant or advisor.

 

“Cause”
means in the good faith determination of the Company, Optionee has (i) committed gross negligence, dishonesty or willful malfeasance
in the performance of the Optionee’s work or duties; (ii) committed a breach of fiduciary duty or a breach of any non-competition,
non-solicitation or confidentially obligations to the Company; (iii) failed on a substantial and continuing basis, after written
notice of such failure, to render services to the Company in accordance with the terms or requirements of Optionee’s Business
Relationship; (iv) been convicted of, or pleaded “guilty” or “no contest” to, any misdemeanor relating
to the affairs of the Company or any felony; (v) disregarded the material rules or material policies of the Company which has not
been cured within 15 days after written notice thereof from the Company; or (vi) engaged in intentional acts that have generated
material adverse publicity toward or about the Company.

          

    	2

    	 

    

 

3.          Termination
of Business Relationship.

 

(a)          Termination.
Except as otherwise provided in Section 3(c) and Section 4 below, if the Optionee’s Business Relationship with the Company
ceases, voluntarily or involuntarily, with or without Cause, no further installments of this option shall become exercisable, and
this option shall expire (may no longer be exercised) after the passage of 90 days from the date of termination, but in no event
later than the scheduled expiration date. In such a case, the Optionee’s only rights hereunder shall be those that are properly
exercised before the termination of this option. Any determination under this agreement as to the status of a Business Relationship
or other matters referred to above shall be made in good faith by the Board of Directors of the Company or the Committee of the
Board then administering such options (the “Board”).

 

(b)           Employment
Status. For purposes hereof, with respect to employees of the Company, employment shall not be considered as having terminated
during any leave of absence if such leave of absence has been approved in writing by the Company and if such written approval
contractually obligates the Company to continue the employment of the Optionee after the approved period of absence; in the event
of such an approved leave of absence, vesting of this option shall be suspended (and the period of the leave of absence shall be
added to all vesting dates) unless otherwise provided in the Company’s written approval of the leave of absence. For purposes
hereof, a termination of employment followed by another Business Relationship (for example, post-employment consulting service)
shall be deemed a termination of the Business Relationship with all vesting to cease unless the Company enters into a written agreement
related to such other Business Relationship in which it is specifically stated that there is no termination of the Business Relationship
under this agreement. This option shall not be affected by any change of employment within or among the Company and its Subsidiaries
so long as the Optionee continuously remains an employee of the Company or any Subsidiary.

 

(c)          Termination
for Cause. Notwithstanding anything to the contrary herein, if the Business Relationship of the Optionee is terminated for
Cause (as defined above), this option may no longer be exercised from and after the Optionee’s receipt of written notice
of such termination.

 

4.          Death;
Disability.

 

(a)          Death.
Upon the death of the Optionee while the Optionee is maintaining a Business Relationship with the Company, this option may be exercised,
to the extent otherwise exercisable on the date of the Optionee’s death, by the Optionee’s estate, personal representative
or beneficiary to whom this option has been transferred pursuant to Section 9, only at any time within 180 days after
the date of death, but not later than the scheduled expiration date.

 

    	3

    	 

    

 

(b)          Disability.
If the Optionee ceases to maintain a Business Relationship with the Company by reason of his or her disability, this option may
be exercised, to the extent otherwise exercisable on the date of cessation of the Business Relationship, only at any time within
180 days after such cessation of the Business Relationship, but not later than the scheduled expiration date. For purposes
hereof, “disability” means “permanent and total disability” as defined in Section 22(e)(3)
of the Code.

 

5.          Partial
Exercise. This option may be exercised in part at any time and from time to time within the above limits, except that this
option may not be exercised for a fraction of a share. This option shall be exercised by completing and submitting to the Company
the Stock Option Exercise Notice attached to this Agreement.

 

 6.          Payment
of Exercise Price.

 

(a)           Payment
Options. The exercise price and any required withholding taxes may be paid by one or any combination of the following forms
of payment that are applicable to this option, as indicated on the cover page hereof:

 

(i)          by
cash or a certified or bank check payable to the order of the Company; or

 

(ii)          if
the Common Stock is then publicly traded, delivery of an irrevocable and unconditional undertaking, satisfactory in form and substance
to the Company, by a creditworthy broker to deliver promptly to the Company sufficient funds to pay the exercise price, and any
required tax withholding; or delivery by the Optionee to the Company of a copy of irrevocable and unconditional instructions, satisfactory
in form and substance to the Company, to a creditworthy broker to deliver promptly to the Company cash or a check sufficient to
pay the exercise price and any required tax withholding; or

 

(iii)          subject
to Section 6(b) below, by delivery of shares of Common Stock of the Company having a Fair Market Value equal as of the date
of exercise to the exercise price and any required tax withholding.

 

In the case of (iii) above, “Fair
Market Value” as of the date of exercise shall be determined as of the last business day for which such prices or quotes
are available prior to the date of exercise and shall mean (i) the closing price (on that date) of the Common Stock on the
principal national securities exchange on which the Common Stock is traded, if the Common Stock is then traded on a national securities
exchange; or (ii) the last reported sale price (on that date) of the Common Stock on the NASDAQ Global Select Market, the
NSADAQ Global Market or the NASDAQ Capital Market (collectively “Nasdaq”), if the Common Stock is not then traded
on a national securities exchange; or (iii) the average of the closing bid and asked prices last quoted (on that date) by an established
quotation service for over-the-counter securities, if the Common Stock is not then traded on a national securities exchange or
reported on Nasdaq.

 

    	4

    	 

    

 

(b)          Limitations
on Payment by Delivery of Common Stock. If Section 6(a)(iii) is applicable, and if the Optionee delivers Common Stock held
by the Optionee (“Old Stock”) to the Company in full or partial payment of the exercise price and required tax
withholding and the Old Stock so delivered is subject to restrictions or limitations imposed by agreement between the Optionee
and the Company, a number of Shares shall be subject to all restrictions and limitations applicable to the Old Stock to the extent
that the Optionee paid for the Shares by delivery of Old Stock, in addition to any restrictions or limitations imposed by this
Agreement. Notwithstanding the foregoing, the Optionee may not pay any part of the exercise price hereof or required tax withholding
by transferring Common Stock to the Company unless such Common Stock has been owned by the Optionee free of any substantial risk
of forfeiture for at least six months. If the Optionee exercises this option by delivery of shares of Common Stock of the
Company, the certificate or certificates representing the shares of Common Stock of the Company to be delivered shall be duly executed
in blank suitable for purposes of transferring such shares to the Company.

 

          7.          Securities
Laws Restrictions on Resale. Unless and until registered under the Securities Act of 1933, as amended, or any successor statute
(the “Securities Act”), the Shares will be illiquid and will be deemed to be “restricted securities”
for purposes of the Securities Act. Accordingly, such shares must be sold in compliance with the registration requirements of the
Securities Act or an exemption therefrom and may need to be held indefinitely. Unless the Shares have been registered under the
Securities Act, each certificate evidencing any of the Shares shall bear a restrictive legend specified by the Company.

 

          8.          Method
of Exercising Option.

 

          (a)
          Exercise. Subject to the terms and conditions of this agreement,
this option may be exercised by written notice, in the form of the Stock Option Exercise Notice attached as Annex A, to
the Company at its principal executive office, or to such transfer agent as the Company shall designate. Such notice shall state
the election to exercise this option and the number of Shares for which it is being exercised and shall be signed by the person
or persons so exercising this option. Such notice shall be accompanied by payment of the full purchase price of such shares, and
the Company shall deliver a certificate or certificates representing such shares as soon as practicable after the notice shall
be received. Such certificate or certificates shall be registered in the name of the person or persons so exercising this option
(or, if this option shall be exercised by the Optionee and if the Optionee shall so request in the notice exercising this option,
shall be registered in the name of the Optionee and another person jointly, with right of survivorship). In the event this option
shall be exercised, pursuant to Section 4 hereof, by any person or persons other than the Optionee, such notice shall be accompanied
by appropriate proof of the right of such person or persons to exercise this option.

 

    	5

    	 

    

 

          (b)          Listing,
Qualification, etc. This option shall be subject to the requirement that if, at any time, counsel to the Company shall determine
that the listing, registration or qualification of the shares subject hereto upon any securities exchange or under any state or
federal law, or the consent or approval of any governmental or regulatory body, or that the disclosure of non-public information
or the satisfaction of any other condition is necessary as a condition of, or in connection with, the issuance or purchase of shares
hereunder, this option may not be exercised, in whole or part, unless such listing, registration, qualification, consent or approval,
disclosure or satisfaction of such other condition shall have been effected or obtained on terms acceptable to the Board. Nothing
herein shall be deemed to require the Company to apply for, effect or obtain such listing, registration, qualification or disclosure,
or to satisfy such other condition.

 

          9.          Option
Not Transferable. This option is not transferable, assignable or otherwise disposable except by will or by the laws of descent
and distribution; provided, however, that this option may be transferred to a grantor-retained annuity trust or a similar
estate-planning vehicle in which the trust is bound by all provisions of this option which are applicable to Participant. During
the Optionee’s lifetime only the Optionee can exercise this option. Upon any attempt to transfer, assign, pledge, hypothecate
or otherwise dispose of this option or of such rights contrary to the provisions hereof, or upon the levy of any attachment or
similar process upon this option or such rights, this option and such rights shall, at the election of the Company, become null
and void.

 

          10.          No
Obligation to Exercise Option. The grant and acceptance of this option imposes no obligation on the Optionee to exercise it.

 

          11.          No
Obligation to Continue Business Relationship. Neither this agreement, nor the grant of this option imposes any obligation on
the Company to continue the Optionee in employment or other Business Relationship.

 

          12.          No
Rights as Stockholder. Optionee shall have no rights as a stockholder with respect to any shares of Common Stock subject to
this option unless and until such time as Optionee has exercised this option in accordance with the terms hereof and a certificate
representing such shares is duly issued and delivered to the Optionee. Other than adjustments that the Board deems necessary or
appropriate in the event of a stock split, stock dividend, recapitalization, reorganization, merger, consolidation, combination,
exchange of shares, liquidation, spin-off, split-up or similar change in capitalization or event, no adjustment shall be made for
dividends or similar rights for which the record date is prior to such date of exercise.

 

          13.          Withholding
Taxes. If the Company in its discretion determines that it is obligated to withhold any tax in connection with the exercise
of this option, or in connection with the transfer of, or the lapse of restrictions on, any Common Stock or other property acquired
pursuant to this option, the Optionee hereby agrees that the Company may withhold from the Optionee’s wages or other remuneration
the appropriate amount of tax. At the discretion of the Company, the amount required to be withheld may be withheld in cash from
such wages or other remuneration or in kind from the Common Stock or other property otherwise deliverable to the Optionee on exercise
of this option. The Optionee further agrees that, if the Company does not withhold an amount from the Optionee’s wages or
other remuneration sufficient to satisfy the withholding obligation of the Company, the Optionee will make reimbursement on demand,
in cash, for the amount underwithheld.

 

    	6

    	 

    

 

          14.          Early
Disposition. The Optionee agrees to notify the Company in writing immediately after the Optionee transfers any Shares, if such
transfer occurs on or before the later of (a) the date that is two years after the date of this agreement or (b) the
date that is one year after the date on which the Optionee acquired such Shares. The Optionee also agrees to provide the Company
with any information concerning any such transfer required by the Company for tax purposes.

 

          15.          Arbitration.
Any dispute, controversy, or claim arising out of, in connection with, or relating to the performance of this agreement or its
termination shall be settled by arbitration in the State of Florida, pursuant to the rules then obtaining of the American Arbitration
Association. Any award shall be final, binding and conclusive upon the parties and a judgment rendered thereon may be entered in
any court having jurisdiction thereof.

 

          16.          Provision
of Documentation to Optionee. By signing this agreement (either in writing or by electronic transmission) the Optionee acknowledges
receipt of a copy of this agreement.

 

          17.          Miscellaneous.

 

(a)          Notices.
All notices hereunder shall be in writing and shall be deemed given when sent by certified or registered mail return receipt requested,
if to the Optionee, to the address set forth below or at the address shown on the records of the Company, and if to the Company,
to the Company’s principal executive offices, attention of the Corporate Secretary.

 

(b)          Entire
Agreement; Modification. This agreement constitutes the entire agreement between the parties relative to the subject matter
hereof, and supersedes all proposals, written or oral, and all other communications between the parties relating to the subject
matter of this agreement. This agreement may be modified, amended or rescinded only by a written agreement executed by both parties
(either in writing or by electronic transmission).

 

(c)           Fractional
Shares. If this option becomes exercisable for a fraction of a share because of the adjustment provisions contained herein,
such fraction shall be rounded down.

 

(d)          Issuances
of Securities; Changes in Capital Structure. Except as expressly provided herein, no issuance by the Company of shares of stock
of any class, or securities convertible into shares of stock of any class, shall affect, and no adjustment by reason thereof shall
be made with respect to, the number or price of shares subject to this option. No adjustments need be made for dividends paid in
cash or in property other than securities of the Company. If there shall be any change in the Common Stock of the Company through
merger, consolidation, reorganization, recapitalization, stock dividend, stock split, combination or exchange of shares, spin-off,
split-up or other similar change in capitalization or event, the restrictions contained in this agreement shall apply with equal
force to additional and/or substitute securities, if any, received by the Optionee in exchange for, or by virtue of his or her
ownership of, Shares, except as otherwise determined by the Board.

 

    	7

    	 

    

 

(e)          Severability.
The invalidity, illegality or unenforceability of any provision of this agreement shall in no way affect the validity, legality
or enforceability of any other provision.

 

(f)          Successors
and Assigns. This agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors
and assigns, subject to the limitations set forth in Section 9 hereof.

 

(g)          Governing
Law. This agreement shall be governed by and interpreted in accordance with the laws of the State of Delaware, without giving
effect to the principles of the conflicts of laws thereof.

 

(h)
          Company. Except where the context otherwise requires, the term
“Company” shall include the parent and all present and future subsidiaries, of the Company as defined in Sections 424(e)
and (f) of the Code, and any other entity in which the Company has a significant direct or indirect interest, as determined by
the Board in its sole discretion.

 

(i)          Code
Section 409A. By issuing this option at Fair Market Value on the grant date, the Company intends that this option will not
be subject to Code Section 409A. However, to the extent that the option under this agreement ever becomes subject to Code Section
409A, the Company shall make a reasonable good faith effort to bring any provisions which are inconsistent with Code Section 409A
and the accompanying regulations and other guidance related thereto into compliance with Code Section 409A; provided, however,
that nothing in this agreement shall be construed or interpreted to require the Company to increase any amounts payable to the
Optionee pursuant to this Agreement, to indemnify the Optionee against any adverse tax consequences under Section 409A, or to consent
to any amendment that would adversely change the Company’s financial, accounting or tax treatment of the payments or benefits.

  

    	8

    	 

    

 

ANNEX A

WORLD SURVEILLANCE GROUP INC.

Stock Option Exercise Notice

 

World Surveillance Group Inc.

For physical or courier delivery:

State Road 405, Building M6-306A

Room 1400

Kennedy Space Center, FL 32815

For mail delivery:

Mail Code: SWC

Kennedy Space Center, FL 32899

 

Dear Sir or Madam:

I, ___________________ (the “Optionee”),
hereby irrevocably exercise the right to purchase ______________ shares of the Common Stock, $0.00001 par value per share (the
“Shares”), of World Surveillance Group Inc. (the “Company”) at $________ per share pursuant
to a stock option agreement with the Company dated ________________ (the “Option Agreement”). Enclosed
herewith is a payment of $___________, the aggregate purchase price for the Shares. The certificate for the Shares should be registered
in my name as it appears below or, if so indicated below, jointly in my name and the name of the person designated below, with
right of survivorship.

 

I acknowledge and agree that the Option Agreement remains in
full force and effect and includes a number of restrictions on the Shares and on the transfer of the Shares.

 

Further, I understand that the Shares have not been registered
under the Securities Act of 1933, as amended, or any state securities laws. As a result, I understand that I must continue to bear
the economic risk of the investment for an indefinite time and that the Shares cannot be sold unless they are subsequently registered
or an exemption from registration is available.

 

Dated: ___________________________

 

 

_________________________________

Signature

Print Name:                    

 

Address:

_________________________________

_________________________________

 

Name and address of persons in whose name the Shares are to
be jointly registered (if applicable):

 

_________________________________

 

    	9

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