Document:

ENERJEX
RESOURCES, INC.

    27
Corporate Woods, Suite 350

    10975
Grandview Drive

    Overland
Park, Kansas 66210

    

    November
16, 2009

    

    
      
        	
                West
      Coast Opportunity Fund, LLC

              	 
      	
                Frey
      Living Trust

              
	
                2151
      Alessandro Drive, Suite 100

              	 
      	
                4105
      NE Rigels Cove Way

              
	
                Ventura,
      CA 93001

              	 
      	
                Jensen
      Beach, FL 34957

              
	 
      	 
      	 
      
	
                Enable
      Growth Partners LP

              	 
      	
                Enable
      Opportunity Partners LP

              
	
                C/o
      Enable Capital Management

              	 
      	
                C/o
      Enable Capital Management

              
	
                One
      Ferry Building, Suite 225

              	 
      	
                One
      Ferry Building, Suite 225

              
	
                San
      Francisco, CA 94111

              	 
      	
                San
      Francisco,
CA  94111

              

      

    

    

    
      	
               
      

            	
              RE:

            	
              Amendment to
      Debentures and Transaction Documents (this “Letter
      Agreement”)

            

    

    

    Dear
Buyers:

    

    Reference
is made to the June 21, 2007 Senior Secured Debentures, as amended (the “Debentures”), the
Securities Purchase Agreement, as amended (the “Purchase Agreement”),
and the Pledge and Security Agreement, as amended (the “Security Agreement”)
and other agreements and documents associated therewith, as amended through the
date hereof (collectively, the “Transaction
Documents”), all originally dated as of April 11, 2007, by and among
EnerJex Kansas, Inc.
(the “Company”), EnerJex Resources, Inc.
(“Parent”),
West Coast Opportunity Fund,
LLC (“West
Coast”), Frey Living
Trust (“Frey”), Enable
Growth Partners LP (“Enable Growth”) and Enable Opportunity Partners LP
(“Enable Opportunity”) (collectively, West Coast, Frey, Enable Growth and Enable
Opportunity may be referred to as the “Buyers”).  Capitalized
terms used but not otherwise defined herein have the meanings ascribed to such
terms in the Debentures, Purchase Agreement, the Security Agreement and/or the
Transaction Documents.

    

    WHEREAS:

     

    A.           The
Buyers were issued shares of the Parent’s common stock (the “Shares”) under the
terms of the Purchase Agreement and Transactions Documents.

     

    B.           The
Company and Parent desire to amend the Debentures to allow for the retirement of
a portion of the Shares as, and when, the Company redeems any of the
Debentures.

     

    C.           The
Buyers have certain participation rights for Subsequent Placements made by
Parent while any Debenture is outstanding.

     

    D.           The
Company and the Buyers wish to amend certain Sections of the Debentures, the
Securities Purchase Agreement and the Transaction Documents as set forth
herein.

    
      
         

      

      
        1

        
          

        

      

      
         

      

    

     

    E.           Certain
of the Transaction Documents provide that amendments may be made by written
consent of the Company and holders of at least sixty-five percent of the
aggregate number of Registrable Securities issued under the Securities Purchase
Agreement, and the undersigned Buyers constitute such requisite
holders.

     

    NOW THEREFORE, in
consideration of the premises and mutual promises herein contained, the Company
and the Buyers hereby agree as follows:

     

    1.           Defined Terms.
Capitalized terms used in this Letter Agreement which are not defined herein
shall have the meaning ascribed to them in the Transaction
Documents.

     

    2.           Amendment to
Debenture.  The Company and the Buyers hereby agree that the
COMPANY REDEMPTION Section of the Debentures shall be amended and restated to
read as follows:

     

    (6)       COMPANY
REDEMPTION.

     

    
      	
               
      

            	
              (a)

            	
              Redemption of
      Debentures. The Company may elect to pay to the Holder of this
      Debenture the Company Redemption Amount, subject to and in accordance with
      the terms of this Section 6, by redeeming the Principal, in whole or in
      part, in accordance with this Section 6 (a “Company
      Redemption”).  On or prior to the date which is the sixth
      (6th) Trading Day prior to the Company Redemption (each, a “Company Redemption Notice Due
      Date”), the Company shall deliver written notice (each, a “Company Redemption
      Notice”), to the Holder which Company Redemption Notice shall state
      the amount  which the Company elects to redeem pursuant to a
      Company Redemption (the “Company Redemption
      Amount”), which amount shall be applied, on a pro rata basis to all
      outstanding Company Debentures, to the outstanding Principal, together
      with accrued and unpaid Interest with respect to such Company Redemption
      Amount and accrued and unpaid Late Charges with respect to such Company
      Redemption Amount and Interest. Each Company Redemption Notice shall be
      irrevocable. The Company shall redeem the applicable Company Redemption
      Amount of this Debenture pursuant to this Section 6 together with the
      corresponding Company Redemption Amounts of the Other Debentures pursuant
      to the corresponding provisions of the Other Debentures.  If the
      Company elects a Company Redemption, then the Company Redemption Amount
      which is to be paid to the Holder on the applicable Company Redemption
      Date shall be redeemed by the Company on such Company Redemption Date, and
      the Company shall pay to the Holder on such Company Redemption Date, by
      wire transfer of immediately available funds, an amount in cash equal to
      the Company Redemption Amount.

            

    

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

     

    
      	
               
      

            	
              (b)

            	
              Retirement of
      Shares. In accordance with the schedule attached hereto as Exhibit
      A, and at any time before the Maturity Date, if the Company completes a
      Company Redemption within the time frames set forth on Exhibit A, or in
      advance of any time frames set forth therein, the Holder of this Debenture
      shall tender a number of the Parent’s shares of common stock held by the
      Holder for immediate cancellation in accordance with the schedule attached
      hereto as Exhibit A.

            

    

     

    
      	
               
      

            	
              (c)

            	
              Transfer
      Restrictions. For as long as the Company is in compliance with the
      redemption and retirement schedule set forth on Exhibit A, the Holder
      irrevocably agrees not to pledge, hypothecate, transfer, sale or otherwise
      encumber any shares of the Parent’s common stock currently held by Holder
      or otherwise issued to Holder after the date
  hereof.

            

    

     

    3.           Amendment to Securities
Purchase Agreement. The Company, the Parent and the Buyers hereby agree
that the COVENANTS Section 4(o)(iv) of the Debentures shall be amended and
restated to read as follows:

     

    
      	
               
      

            	
              (iv)

            	
              The
      restrictions contained in subsections (ii) and (iii) of this Section 4(o)
      shall not apply in connection with the issuance of:  (i) any
      Common Stock Equivalents issued pursuant to an employee benefit plan which
      has been approved by the Board of Directors of Parent, (ii) any security
      issued in or registered in a public offering by Parent or any of its
      Subsidiaries, (iii) issuance for services performed for the Company or
      Parent, (iv) any debt offering, including a line of credit, where the
      proceeds of which will be used to redeem all or a portion of the
      outstanding Debentures (if the debt offering does not redeem the
      Debentures in full, such offering will be required to subordinate to the
      Debentures), or (v) in connection with any acquisition by the Parent,
      whether through an acquisition of stock or a merger of any business or
      assets the primary purpose of which is not to raise equity
      capital.

            

    

     

    
      	
               
      

            	
              4.

            	
              Conditional
      Waiver.

            

    

     

    
      	
               
      

            	
              a.

            	
              The
      Buyers hereby waive any existing Event of Default under the Transaction
      Documents that does not, directly or indirectly, have a material negative
      impact on the Buyers’ security interest in the collateral or other
      properties of the Company in which it has a security interest, or have a
      material negative impact in the Buyers’ priority of payment under the
      Debentures.

            

    

     

    
      	
               
      

            	
              b.

            	
              The
      Company hereby represents and warrants to the Buyers that it has no
      knowledge of any material Defaults or Events of Default under the
      Transaction Documents.

            

    

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

     

    
      	
               
      

            	
              c.

            	
              The
      waivers granted by the Buyers in favor of the Company that are contained
      in this Agreement shall be null and void in the event the Company has
      breached its representation in
  Section 4(b).

            

    

     

    5.           Governing
Law.  This Letter Agreement shall be construed and enforced in
accordance with, and all questions concerning the construction, validity,
interpretation and performance of this Letter Agreement and all disputes arising
hereunder shall be governed by, the laws of the State of New York, without
giving effect to any choice of law or conflict of law provision or rule (whether
of the State of New York or any other jurisdiction) that would cause the
application of the laws of any jurisdiction other than the State of New
York.

     

    6.           Amendment.  It
is the intention of the parties that this Letter Agreement modifies and amends
the Transaction Documents to the extent set forth herein or as otherwise
necessary to effectuate the intentions of the parties as set forth
herein.

     

    7.           No
Waiver.  The execution of this Letter Agreement is not, and
shall not be deemed to constitute, a waiver, cure, or forbearance of any default
arising prior or subsequent to the date of this Letter Agreement, nor shall it
constitute a reinstatement of the terms described in the Transaction Documents,
except as set forth herein.  The Company agrees that no delay on the
part of any of the Buyers in exercising any power or right shall operate as a
waiver of any such power or right or preclude the further exercise of any other
power or right.  Any remedies contained herein are cumulative and not
exclusive of any remedies provided by law.  Notice to or demand in
circumstances under which the terms of this Letter Agreement do not require such
notice or demand shall not entitle the Company to further notice or demand nor
constitute a waiver of the rights of the Buyers to take any other or further
action without notice or demand.

     

    8.           Continuing Validity of
Transaction Documents.  Except as expressly provided for in
this Letter Agreement, the other Transaction Documents and all other documents
executed in connection therewith shall continue unchanged in full force and
effect, in accordance with their respective terms, and the parties hereby
expressly confirm and reaffirm all of their respective liabilities, obligations,
duties and responsibilities under and pursuant to the other Transaction
Documents.

     

    9.           Transaction Document.
This Letter Agreement shall be deemed and constitute a “Transaction Document”
under the Securities Purchase Agreement.

     

    10.           Recitals. The
recitals set forth above are true and correct and are hereby incorporated into
this Letter Agreement as if set forth at length herein.

     

    11.           Counterparts.  This
Letter Agreement may be executed in two or more identical counterparts, all of
which shall be considered one and the same agreement and shall become effective
when counterparts have been signed by each party and delivered to each other
party; provided that a facsimile signature shall be considered due execution and
shall be binding upon the signatory thereto with the same force and effect as if
the signature were an original, not a facsimile signature.

     

    12.           Headings.  The
headings of this Letter Agreement are for convenience of reference and shall not
form part of, or affect the interpretation of, this Letter
Agreement.

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

     

    13.           Severability.  If
any provision of this Letter Agreement shall be invalid or unenforceable in any
jurisdiction, such invalidity or unenforceability shall not affect the validity
or enforceability of the remainder of this Letter Agreement in that jurisdiction
or the validity or enforceability of any provision of this Letter Agreement in
any other jurisdiction.

     

    14.           Further
Assurances.  Each party shall do and perform, or cause to be
done and performed, all such further acts and things, and shall execute and
deliver all such other agreements, certificates, instruments and documents, as
any other party may reasonably request in order to carry out the terms of this
Letter Agreement and the consummation of the transactions contemplated
hereby.

     

    Kindly
confirm your agreement with the foregoing by signing the copy of this letter
where indicated below.

    

    IN
WITNESS WHEREOF, the parties hereto have executed or caused this Letter
Agreement to be duly executed by an authorized officer as of the date first
above written.

     

    
      
        
          
            
              
                	 
      	
                        Very
      Truly Yours,

                      
	 
      	 
      	 
      
	 
      	
                        Company:

                      
	 
      	
                        ENERJEX
      KANSAS, INC.

                      
	 
      	 
      	 
      
	 
      	
                        By:

                      	
                        /s/ Steve Cochennet

                      
	 
      	 
      	
                        Name:
      Steve Cochennet

                      
	 
      	 
      	
                        Title:
      Chief Executive Officer

                      
	 
      	 
      	 
      
	 
      	
                        Parent:

                      
	 
      	
                        ENERJEX
      RESOURCES, INC.

                      
	 
      	 
      	 
      
	 
      	
                        By:

                      	
                        /s/ Steve Cochennet

                      
	 
      	 
      	
                        Name:
      Steve Cochennet

                      
	 
      	 
      	
                        Title:
      Chief Executive
Officer

                      

              

            

          

        

      

    

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

    

    
      
        
          
            
              	
                      WEST
      COAST OPPORTUNITY FUND,

                    
	
                      LLC

                    
	 
      	 
      
	
                      By:

                    	
                      /s/ Atticus Lowe

                    
	 
      	
                      Name:
      Atticus Lowe

                    
	 
      	
                      Title:
      Chief Investment
Officer

                    

            

          

        

      

    

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

    
      
        
          
            	
                    ENABLE
      GROWTH PARTNERS LP

                  
	 
      	 
      
	
                    By:

                  	
                    /s/ Brendan O’Neil

                  
	 
      	
                    Name:
      Brendan O’Neil, CFA

                  
	 
      	
                    Title:
      Principal and Portfolio
Manager

                  

          

        

      

    

    
      
         

      

      
        7

        
          

        

      

      
         

      

    

    
      
        
          
            	
                    ENABLE
      OPPORTUNITY PARTNERS LP

                  
	 
      	 
      
	
                    By:

                  	
                    /s/ Brendan O’Neil

                  
	 
      	
                    Name:
      Brendan O’Neil, CFA

                  
	 
      	
                    Title:
      Principal and Portfolio
Manager

                  

          

        

      

    

    
      
         

      

      
        8

        
          

        

      

      
         

      

    

    
      
        
          
            	
                    FREY
      LIVING TRUST

                  
	 
      	 
      
	
                    By:

                  	
                    /s/ Philip Frey Jr.

                  
	 
      	
                    Name:
      Philip Frey Jr.

                  
	 
      	
                    Title:
      Trustee

                  

          

        

      

    

    
      
         

      

      
        9

        
          

        

      

      
         

      

    

    Exhibit A – West Coast
Debenture Redemption and Retirement Schedule

    

    In accordance with Section 6(b) of the
attached Debenture, the Holder hereby agrees, that upon payment of the
Redemption Amount specified below on or before each respective Redemption
Payment Date as set forth below, it will return the Retirement Shares set forth
below to the Parent for immediate cancellation:

    

    
      
        
          
            
              
                	
                        Redemption Amount

                      	 
      	
                        Redemption Payment Date

                      	 
      	
                        Retirement Shares

                      
	
                        $100,000

                      	 
      	
                        December
      31, 2009

                      	 
      	
                        50,000

                      
	
                        $200,000

                      	 
      	
                        January
      31, 2010

                      	 
      	
                        100,000

                      
	
                        $200,000

                      	 
      	
                        February
      28, 2010

                      	 
      	
                        100,000

                      
	
                        $100,000

                      	 
      	
                        March
      31, 2010

                      	 
      	
                        50,000

                      
	
                        $100,000

                      	 
      	
                        April
      30, 2010

                      	 
      	
                        50,000

                      
	
                        $100,000

                      	 
      	
                        May
      31, 2010

                      	 
      	
                        50,000

                      
	
                        $100,000

                      	 
      	
                        June
      30, 2010

                      	 
      	
                        50,000

                      
	
                        $100,000

                      	 
      	
                        July
      21, 2010

                      	 
      	
                        50,000

                      
	
                        $100,000

                      	 
      	
                        August
      31, 2010

                      	 
      	
                        50,000

                      
	
                        Balance
      of Principal and

                        Interest

                      	 
      	
                        (Maturity
      Date)

                        September
      30, 2010

                      	 
      	
                        0.5
      shares for each $1 of

                        Principal
      repaid

                      

              

            

          

        

      

    

    

    The Company and the Holder acknowledge
and agree that the Company may prepay the entire outstanding Principal and
Interest amount due under the Debenture at anytime, which would not affect the
number of Retirement Shares to be returned for cancellation.

    

    IN WITNESS WHEREOF, the parties hereto
have executed or caused this Exhibit A to be duly executed by an authorized
officer.

     

    Holder:

    WEST
COAST OPPORTUNITY FUND, LLC

    

    
      
        
          
            
              
                
                  
                    	
                            By:

                          	
                            /s/ Atticus Lowe

                          	 
      	 
      	 
      
	 
      	
                            Name:
      Atticus Lowe

                          	 
      	 
      	 
      
	 
      	
                            Title:
      Chief Investment Officer

                          	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      
	
                            Company:

                          	 
      	
                            Parent:

                          
	
                            ENERJEX
      KANSAS, INC.

                          	 
      	
                            ENERJEX
      RESOURCES, INC.

                          
	 
      	 
      	 
      	 
      	 
      
	
                            By:

                          	
                            /s/ Steve Cochennet

                          	 
      	
                            By:

                          	
                            /s/ Steve Cochennet

                          
	 
      	
                            Name:
      Steve Cochennet

                          	 
      	 
      	
                            Name:
      Steve Cochennet

                          
	 
      	
                             Title:
      Chief Executive Officer

                          	 
      	 
      	
                            Title:
      Chief Executive
Officer

                          

                  

                

              

            

          

        

      

    

    

    West Coast
Debenture

    
      
         

      

      
        A-1

        
          

        

      

      
         

      

    

    Exhibit A – Enable Growth
Debenture Redemption and Retirement Schedule

    

    In accordance with Section 6(b) of the
attached Debenture, the Holder hereby agrees, that upon payment of the
Redemption Amount specified below on or before each respective Redemption
Payment Date as set forth below, it will return the Retirement Shares set forth
below to the Parent for immediate cancellation:

    

    
      
        
          
            
              
                	
                        Redemption Amount

                      	 
      	
                        Redemption Payment Date

                      	 
      	
                        Retirement Shares

                      
	
                        $26,500

                      	 
      	
                        December
      31, 2009

                      	 
      	
                        13,250

                      
	
                        $53,000

                      	 
      	
                        January
      31, 2010

                      	 
      	
                        26,500

                      
	
                        $53,000

                      	 
      	
                        February
      28, 2010

                      	 
      	
                        26,500

                      
	
                        $26,500

                      	 
      	
                        March
      31, 2010

                      	 
      	
                        13,250

                      
	
                        $26,500

                      	 
      	
                        April
      30, 2010

                      	 
      	
                        13,250

                      
	
                        $26,500

                      	 
      	
                        May
      31, 2010

                      	 
      	
                        13,250

                      
	
                        $26,500

                      	 
      	
                        June
      30, 2010

                      	 
      	
                        13,250

                      
	
                        $26,500

                      	 
      	
                        July
      21, 2010

                      	 
      	
                        13,250

                      
	
                        $26,500

                      	 
      	
                        August
      31, 2010

                      	 
      	
                        13,250

                      
	
                        Balance
      of Principal

                      	 
      	
                        September
      30, 2010

                      	 
      	
                        0.5
      shares for each $1 of

                        Principal
      repaid

                      

              

            

          

        

      

    

    

    The
Company and the Holder acknowledge and agree that the Company may prepay the
entire outstanding Principal and Interest amount due under the Debenture at
anytime, which would not affect the number of Retirement Shares to be returned
for cancellation.

    

    IN WITNESS WHEREOF, the parties hereto
have executed or caused this Exhibit A to be duly executed by an authorized
officer.

     

    Holder:

    ENABLE
GROWTH PARTNERS LP

    

    
      
        
          
            
              
                
                  
                    	
                            By:

                          	
                            /s/ Brendan O’Neil

                          	 
      	 
      	 
      
	 
      	
                            Name:
      Brendan O’Neil, CFA

                          	 
      	 
      	 
      
	 
      	
                            Title:
      Principal and Portfolio Manager

                          	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      
	
                            Company:

                          	 
      	
                            Parent:

                          
	
                            ENERJEX
      KANSAS, INC.

                          	 
      	
                            ENERJEX
      RESOURCES, INC.

                          
	 
      	 
      	 
      	 
      	 
      
	
                            By:

                          	
                            /s/ Steve Cochennet

                          	 
      	
                            By:

                          	
                            /s/ Steve Cochennet

                          
	 
      	
                            Name:
      Steve Cochennet

                          	 
      	 
      	
                            Name:
      Steve Cochennet

                          
	 
      	
                             Title:
      Chief Executive Officer

                          	 
      	 
      	
                            Title:
      Chief Executive
Officer

                          

                  

                

              

            

          

        

      

    

    

    
      Enable
Growth Debenture

      
        
          
             

          

          
            A-1

            
              

            

          

          
             

          

        

      

      

    

    Exhibit A – Enable
Opportunity Debenture Redemption and Retirement Schedule

    

    In accordance with Section 6(b) of the
attached Debenture, the Holder hereby agrees, that upon payment of the
Redemption Amount specified below on or before each respective Redemption
Payment Date as set forth below, it will return the Retirement Shares set forth
below to the Parent for immediate cancellation:

    

    
      
        
          
            
              
                
                  	
                          Redemption Amount

                        	 
      	
                          Redemption Payment Date

                        	 
      	
                          Retirement Shares

                        
	
                          $13,500

                        	 
      	
                          December
      31, 2009

                        	 
      	
                          6,750

                        
	
                          $27,000

                        	 
      	
                          January
      31, 2010

                        	 
      	
                          13,500

                        
	
                          $27,000

                        	 
      	
                          February
      28, 2010

                        	 
      	
                          13,500

                        
	
                          $13,500

                        	 
      	
                          March
      31, 2010

                        	 
      	
                          6,750

                        
	
                          $13,500

                        	 
      	
                          April
      30, 2010

                        	 
      	
                          6,750

                        
	
                          $13,500

                        	 
      	
                          May
      31, 2010

                        	 
      	
                          6,750

                        
	
                          $13,500

                        	 
      	
                          June
      30, 2010

                        	 
      	
                          6,750

                        
	
                          $13,500

                        	 
      	
                          July
      21, 2010

                        	 
      	
                          6,750

                        
	
                          $13,500

                        	 
      	
                          August
      31, 2010

                        	 
      	
                          1,750

                        
	
                          Balance
      of Principal

                        	 
      	
                          September
      30, 2010

                        	 
      	
                          0
      shares for each $1 of

                          Principal
      repaid

                        

                

              

            

          

        

      

    

    

    The
Company and the Holder acknowledge and agree that the Company may prepay the
entire outstanding Principal and Interest amount due under the Debenture at
anytime, which would not affect the number of Retirement Shares to be returned
for cancellation.

    

    IN WITNESS WHEREOF, the parties hereto
have executed or caused this Exhibit A to be duly executed by an authorized
officer.

     

    Holder:

    ENABLE
OPPORTUNITY PARTNERS LP

    

    
      
        
          
            
              
                
                  
                    	
                            By:

                          	
                            /s/ Brendan O’Neil

                          	 
      	 
      	 
      
	 
      	
                            Name:
      Brendan O’Neil, CFA

                          	 
      	 
      	 
      
	 
      	
                            Title:
      Principal and Portfolio Manager

                          	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      
	
                            Company:

                          	 
      	
                            Parent:

                          
	
                            ENERJEX
      KANSAS, INC.

                          	 
      	
                            ENERJEX
      RESOURCES, INC.

                          
	 
      	 
      	 
      	 
      	 
      
	
                            By:

                          	
                            /s/ Steve Cochennet

                          	 
      	
                            By:

                          	
                            /s/ Steve Cochennet

                          
	 
      	
                            Name:
      Steve Cochennet

                          	 
      	 
      	
                            Name:
      Steve Cochennet

                          
	 
      	
                             Title:
      Chief Executive Officer

                          	 
      	 
      	
                            Title:
      Chief Executive
Officer

                          

                  

                

              

            

          

        

      

    

     

    
      Enable
Opportunity Debenture

    

    
      
         

      

      
        A-1

        
          

        

      

      
         

      

    

    Exhibit A – Frey Debenture
Redemption and Retirement Schedule

    

    In accordance with Section 6(b) of the
attached Debenture, the Holder hereby agrees, that upon payment of the
Redemption Amount specified below on or before each respective Redemption
Payment Date as set forth below, it will return the Retirement Shares set forth
below to the Parent for immediate cancellation:

    

    
      
        
          
            
              
                	
                        Redemption Amount

                      	 
      	
                        Redemption Payment Date

                      	 
      	
                        Retirement Shares

                      
	
                        $10,000

                      	 
      	
                        December
      31, 2009

                      	 
      	
                        5,000

                      
	
                        $20,000

                      	 
      	
                        January
      31, 2010

                      	 
      	
                        10,000

                      
	
                        $20,000

                      	 
      	
                        February
      28, 2010

                      	 
      	
                        10,000

                      
	
                        $10,000

                      	 
      	
                        March
      31, 2010

                      	 
      	
                        5,000

                      
	
                        $10,000

                      	 
      	
                        April
      30, 2010

                      	 
      	
                        5,000

                      
	
                        $10,000

                      	 
      	
                        May
      31, 2010

                      	 
      	
                        5,000

                      
	
                        $10,000

                      	 
      	
                        June
      30, 2010

                      	 
      	
                        5,000

                      
	
                        $10,000

                      	 
      	
                        July
      21, 2010

                      	 
      	
                        5,000

                      
	
                        $10,000

                      	 
      	
                        August
      31, 2010

                      	 
      	
                        5,000

                      
	
                        Balance
      of Principal

                      	 
      	
                        September
      30, 2010

                      	 
      	
                        0.5
      shares for each $1 of

                        Principal
      repaid

                      

              

            

          

        

      

    

    

    The
Company and the Holder acknowledge and agree that the Company may prepay the
entire outstanding Principal and Interest amount due under the Debenture at
anytime, which would not affect the number of Retirement Shares to be returned
for cancellation.

    

    IN WITNESS WHEREOF, the parties hereto
have executed or caused this Exhibit A to be duly executed by an authorized
officer.

     

    Holder:

    FREY
LIVING TRUST

    

    
      
        
          
            
              
                
                  
                    	
                            By:

                          	
                            /s/ Philip Frey Jr.

                          	 
      	 
      	 
      
	 
      	
                            Name:
      Philip Frey Jr.

                          	 
      	 
      	 
      
	 
      	
                            Title:
      Trustee

                          	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      
	
                            Company:

                          	 
      	
                            Parent:

                          
	
                            ENERJEX
      KANSAS, INC.

                          	 
      	
                            ENERJEX
      RESOURCES, INC.

                          
	 
      	 
      	 
      	 
      	 
      
	
                            By:

                          	
                            /s/ Steve Cochennet

                          	 
      	
                            By:

                          	
                            /s/ Steve Cochennet

                          
	 
      	
                            Name:
      Steve Cochennet

                          	 
      	 
      	
                            Name:
      Steve Cochennet

                          
	 
      	
                             Title:
      Chief Executive Officer

                          	 
      	 
      	
                            Title:
      Chief Executive
Officer

                          

                  

                

              

            

          

        

      

    

    
       

      Frey
Debenture

      
        
          
             

          

          
            A-1PROTEIN
POLYMER TECHNOLOGIES, INC.

      10%
CONVERTIBLE SECURED NOTE

      DUE
____________, 200_

      

      
        	
                $
    __________

              	
                ________,
      200_

              

      

      

      THIS
NOTE IS ISSUED PURSUANT TO AN EXEMPTION FROM THE REGISTRATION PROVISIONS OF THE
SECURITIES ACT OF 1933 (THE "SECURITIES ACT") AND QUALIFICATION PROVISIONS OF
APPLICABLE STATE SECURITIES LAWS.  NEITHER IT NOR THE SHARES OF COMMON
STOCK INTO WHICH IT CAN BE CONVERTED CAN BE SOLD, HYPOTHECATED OR OTHERWISE
TRANSFERRED UNLESS REGISTERED PURSUANT TO THE SECURITIES ACT AND QUALIFIED UNDER
APPLICABLE STATE LAW OR, IN THE OPINION OF COUNSEL REASONABLY ACCEPTABLE TO
MAKER, AN EXEMPTION THEREFROM IS AVAILABLE.

      

      FOR VALUE
RECEIVED, the undersigned, Protein Polymer Technologies, Inc., with an address
at 11494 Sorrento Valley Road, San Diego, California 92121, ("Maker"), promises
to pay to Hunter & Co., with an address at P.O. Box 5756, Boston,
Massachusetts 02206, as agent ("Payee"), on ___________, 200_, or sooner as
otherwise provided herein (the "Maturity Date"), the principal amount of
_______________ ($_________) Dollars in lawful money of the United States of
America (the "Principal”).  This Note bears interest (the "Interest"),
payable on the earlier of the Maturity Date or the date on which this Note is
converted into Maker's common stock as provided herein, at the annual rate of
ten percent (10%), except as otherwise provided herein, until the Principal and
all accrued Interest thereon (collectively the “Obligations”) shall be paid in
full.  This Note is convertible into Maker's common stock, par value
$0.01 per share (the "Common Stock"), as set forth below.

      

      1.      Interest.  Maker
shall pay the Interest, in arrears, on the Maturity Date.  Interest on
the Note will accrue from the most recent date to which Interest has been paid
or, if no Interest has been paid, from the date of delivery of the
Note.  Interest will be computed on the basis of a 360-day year of
twelve 30-day months.

      

      2.      Method of Payment.
Maker will pay Principal and Interest in money of the United States that at the
time of payment is legal tender for the payment of public and private
debts.  All payments shall be sent to Payee at its address first set
forth above or such other address as Payee shall notify Maker pursuant to the
provisions of Paragraph 13 (g)
below.  Anything to the contrary notwithstanding, Maker, at its
option, may pay Interest in shares of its Common Stock at the rate of ______
($______) _____ per share.

      
        
           

        

        
          
          

          
            

          

        

        
           

        

      

      Convertible
Secured Note

      of
Protein Polymer Technologies, Inc.

      payable
to Hunter & Co.

      as agent
dated ______, 2____

      

      3.      Security.  This
Note shall be secured (the “Lien”) by an interest the “Collateral,” as defined
in the security agreement (the “Security Agreement”) between Maker and TAG
Virgin Islands, Inc., as agent (“TAG”) dated as of the date hereof, subject to
the Permitted Encumbrances as defined and set forth in the Security Agreement,
and is entitled to the benefits of and security provided under the Security
Agreement a patent security agreement (the “Patent Security Agreement”) between
Maker and TAG dated as of the date hereof and the related documents. The
Collateral also secures (the “Szulik Lien”) a note issued by Maker to Matthew J.
Szulik in the principal amount of $6,414,837.00 dated as of January 9, 2008 and
subsequently amended (the “Szulik Note”).  The Lien is subordinate to
the Szulik Lien.  This Note, the Security Agreement, the Patent
Security Agreement and the related documents are sometimes collectively referred
to herein as the "Credit Documents."

      

      4.      
 Conversion.

      

       (a)      Payee's
right to Convert. Except as provided in Paragraph 4(d)(iii)
of this Section
4 below, Payee shall have the right, at any time commencing on the date
hereof until the close of business on the day the Obligations are paid in full,
to cause the conversion of all or any portion (if such portion is Five Thousand
[$5,000] Dollars or a whole multiple of Five Thousand [$5,000] Dollars) of the
Principal (the "Convertible Obligations") into shares of Common Stock (the
"Underlying Shares").  The price for conversion, subject to adjustment
as provided in Section
5 below, shall be Four ($0.04) Cents per share (the “Conversion
Price”).  Maker will not issue a fractional share of Common Stock upon
conversion but will round any fractional share to the nearest share so that if
the fraction is less than 0.5 no share shall be issued and if the fraction is
0.5 or higher the Company shall issue one full share

      

      (b)      Manner
of Conversion.  Payee may exercise its conversion right by giving
notice thereof to Maker setting forth the amount of the Convertible Obligations
to be converted.  Within fifteen (15) days after the giving of such
notice Maker shall issue the number of Underlying Shares into which the
Convertible Obligations are to be converted in accordance with the Conversion
Price and deliver to Payee a certificate or certificates therefor, registered in
its name or in accordance with its instructions, representing such Shares
against delivery to Maker of this Note marked paid in full.  If only a
portion of the Convertible Obligations then outstanding is converted, Maker
shall deliver to Payee, together with the aforesaid certificate(s), a new note,
in form and substance identical to this Note, except that the principal amount
thereof shall equal that portion of the Obligations then outstanding that has
not been converted.  If required by applicable federal or state
securities laws or regulations, Payee shall represent in writing to Maker prior
to the receipt of the Underlying Shares that such Shares will be acquired by him
for investment only and not for resale or with a view to the distribution
thereof, and shall agree that any certificates representing the Shares may bear
a legend, conspicuously noting such restriction, as Maker shall deem reasonably
necessary or desirable to enable it to comply with such federal or state
securities laws or regulations.

      

      (c)      Taxes
on Shares Issued.  The issue of stock certificates on conversion of
this Note shall be made without charge to Payee for any issue or transfer tax in
respect of such issue.  Maker shall not, however, be required to pay
any tax that may be payable in respect of any transfer involved in the issue and
delivery of Common Stock in any name other than that of Payee, and Maker shall
not be required to issue or deliver any certificates representing such Common
Stock unless and until the person or persons requesting the issue thereof shall
have paid to Maker the amount of such tax or shall have established to the
satisfaction of Maker that such tax has been paid.

      
        
           

        

        
          -2-

          
            

          

        

        
           

        

      

      

      Convertible
Secured Note

      of
Protein Polymer Technologies, Inc.

      payable
to Hunter & Co.

      as agent
dated ______, 2____

      

      (d)          Covenants
of Maker Relating to Conversion.  Maker covenants and agrees that from
and after the date hereof and until the date of repayment in full of the
Obligations, or full conversion of the Convertible Obligations:

      

      (i)      
It shall provide, free from preemptive rights, out of its authorized but
unissued shares, or out of shares held in its treasury, sufficient shares to
provide for the conversion of this Note from time to time as the Note is
presented for conversion;

      

      (ii)      All
Underlying Shares that may be issued upon conversion of the Convertible
Obligations will upon issue be validly issued, fully paid and non-assessable,
free from all taxes, liens and charges with respect to the issue thereof, and
will not be subject to the preemptive rights of any stockholder of
Maker;

      

      (iii)      If
any Underlying Shares to be provided for the purpose of conversion of the
Convertible Obligations require registration with or approval of any
governmental authority under any federal or state law before such shares may be
validly issued upon conversion, Maker will in good faith and as expeditiously as
possible endeavor to secure such registration or approval, as the case may be,
and Maker's obligation to deliver shares of the Common Stock upon conversion of
the Convertible Obligations shall be abated until such registration or approval
is obtained; provided, however, that this
Note and the Obligations shall remain outstanding unless paid in full until
Maker delivers the Underlying Shares and any then accrued but unpaid Interest to
Payee and in no event shall this Note be converted until Maker effects such
delivery; and

      

      (iv)      If,
and thereafter so long as the Common Stock shall be listed on any securities
exchange, market or other quotation system, Maker will, if permitted by the
rules of such exchange, market or other quotation system, list and keep listed
and for sale so long as the Common Stock shall be so listed on such exchange,
market or other quotation system, upon official notice of issuance, all
Underlying Shares issuable upon conversion of the Convertible
Obligations.

      
        
           

        

        
          -3-

          
            

          

        

        
           

        

      

      Convertible
Secured Note

      of
Protein Polymer Technologies, Inc.

      payable
to Hunter & Co.

      as agent
dated ______, 2____

      

      5.      Adjustment in Conversion
Price.

      

      (a)      Adjustments
for Change in Capital Stock.  Except as provided in Paragraph 5(n) below,
if Maker shall (i) declare a dividend on all its outstanding Common Stock in
shares of its capital stock, (ii) subdivide all its outstanding Common Stock,
(iii) combine all its outstanding Common Stock into a smaller number of shares,
or (iv) issue any shares of its capital stock by reclassification of its Common
Stock (including any such reclassification in connection with a consolidation or
merger in which Maker is the continuing corporation), then in each such case the
conversion privilege and the Conversion Price in effect immediately prior to
such action shall be adjusted so that if the Note is thereafter converted, Payee
may receive the number and kind of shares that it would have owned immediately
following such action if it had converted the Note immediately prior to such
action.  Such adjustment shall be made successively whenever such an
event shall occur.  The adjustment shall become effective immediately
after the record date in the case of a dividend or distribution and immediately
after the effective date in the case of a subdivision, combination or
reclassification.  If after an adjustment Payee upon conversion of
this Note may receive shares of two or more classes of capital stock of Maker,
Maker's Board of Directors, in good faith, shall determine the allocation of the
adjusted Conversion Price between the classes of capital stock.  After
such allocation, the conversion privilege and Conversion Price of each class of
capital stock shall thereafter be subject to adjustment on terms comparable to
those applicable to Common Stock in this Section
5.

      

       (b)      Subscription
Offerings.  In case Maker shall issue to all of its existing
stockholders or otherwise grant rights, options, or warrants entitling the
holders thereof to subscribe for or purchase Common Stock (or securities
convertible into or exchangeable for Common Stock) at a price per share (or
having a conversion price per share, in the case of a security convertible into
or exchangeable for Common Stock) less than the Current Market Price per share
(as defined in Paragraph 5(d) below)
on the record date for the determination of stockholders entitled to receive
such rights or granting date, as the case may be, then in each such case the
Conversion Price in effect immediately prior to such action (the “Existing
Conversion Price”) shall be adjusted by multiplying the Existing Conversion
Price in effect immediately prior to such record or granting date by a fraction,
of which the numerator shall be the number of shares of Common Stock outstanding
on such record or granting date plus the number of shares of Common Stock which
the aggregate offering price of the total number of shares of Common Stock so to
be offered (or the aggregate initial conversion price of the convertible
securities so to be offered) would purchase at such Current Market Price and of
which the denominator shall be the number of shares of Common Stock outstanding
on such record or granting date plus the number of additional shares of Common
Stock to be offered for subscription or purchase (or into which the convertible
or exchangeable securities so to be offered are initially convertible or
exchangeable).  Such adjustment shall become effective at the close of
business on such record or granting date; provided, however, that, to the
extent the shares of Common Stock (or securities convertible into or
exchangeable for shares of Common Stock) are not delivered, the Conversion Price
shall be readjusted after the expiration of such rights, options, or warrants
(but only to the extent that this Note is not converted after such expiration),
to the Conversion Price which would then be in effect had the adjustments made
upon the issuance of such rights or warrants been made upon the basis of
delivery of only the number of shares of Common Stock (or securities convertible
into or exchangeable for shares of Common Stock) actually issued.  In
case any subscription price may be paid in a consideration part or all of which
shall be in a form other than cash, the value of such consideration shall be as
determined by Maker's Board of Directors, in good faith.  Shares of
Common Stock owned by or held for the account of Maker or any majority-owned
subsidiary shall not be deemed outstanding for the purpose of any such
computation.

      
        
           

        

        
          -4-

          
            

          

        

        
           

        

      

      Convertible
Secured Note

      of
Protein Polymer Technologies, Inc.

      payable
to Hunter & Co.

      as agent
dated ______, 2____

      

      (c)      Other
Rights to Acquire Common Stock.  In case Maker shall distribute to all
holders of its Common Stock evidences of its indebtedness or assets (excluding
cash dividends or distributions paid from retained earnings of Maker) or rights
or warrants to subscribe for or purchase Common Stock (excluding those referred
to in Paragraph
5(b) above), then in each such case the Conversion Price shall be
adjusted so that the same shall equal the price determined by multiplying the
Conversion Price in effect immediately prior to the date of such distribution by
a fraction of which the numerator shall be the Current Market Price per share
(as defined in Paragraph 5(d) below)
of the Common Stock on the record date mentioned below less the then fair market
value (as determined in good faith by the Board of Directors of Maker) of the
portion of the assets or evidences of indebtedness so distributed or of such
rights or warrants applicable to one share of Common Stock, and the denominator
shall be the Current Market Price per share of the Common Stock.  Such
adjustment shall become effective immediately after the record date for the
determination of shareholders entitled to receive such
distribution.

      

      (d)      Current
Market Price.  For the purpose of any computation under Paragraphs 5(b) and
(c) above, the
"Current Market Price" per share of Common Stock on any date shall be deemed to
be the average of the daily “Closing Price” for the thirty (30) consecutive
trading days commencing forty five (45) trading days before such
date.  The "Closing Price" for each day shall mean the last reported
sales price regular way or, in case no such reported sale takes place on such
day, the closing bid price regular way, in either case on the principal national
securities exchange on which the Common Stock is listed or admitted to trading
or, if the Common Stock is not listed or admitted to trading on any national
securities exchange, the highest reported bid price as furnished by the
Financial Industry Regulatory Authority through NASDAQ or similar organization
if NASDAQ is no longer reporting such information, or by the Pink Sheets, LLC or
similar organization if the Common Stock is not then quoted on an inter-dealer
quotation system.  If on any such date the Common Stock is not quoted
by any such organization, the fair value of the Common Stock on such date, as
determined in good faith by Maker's Board of Directors, shall be
used.

      

       (e)      Action
to Permit Valid Issuance of Common Stock.  Before taking any action
which would cause an adjustment reducing the Conversion Price below the then par
value, if any, of the shares of Common Stock issuable upon conversion of this
Note, Maker will take all corporate action which may, in the opinion of its
counsel, be necessary in order that Maker may validly and legally issue shares
of such Common Stock at such adjusted Conversion Price.

      

      (f)      Minimum
Adjustment.  No adjustment in the Conversion Price shall be required
if such adjustment is less than 1% of the then Existing Conversion Price; provided, however, that any
adjustments which by reason of this Paragraph 5(f) are
not required to be made shall be carried forward and taken into account in any
subsequent adjustment.  All calculations under this Section 5 shall be
made to the nearest cent or to the nearest one-hundredth of a share, as the case
may be.  Anything to the contrary notwithstanding, Maker shall be
entitled to make such reductions in the Conversion Price, in addition to those
required by this Paragraph 5(f), as it
in its discretion shall determine to be advisable in order that any stock
dividends, subdivision of shares, distribution of rights to purchase stock or
securities, or distribution of securities convertible into or exchangeable for
stock hereafter made by Maker to its stockholders shall not be
taxable.

      
        
           

        

        
          -5-

          
            

          

        

        
           

        

      

      Convertible
Secured Note

      of
Protein Polymer Technologies, Inc.

      payable
to Hunter & Co.

      as agent
dated ______, 2____

      

      (g)      Referral
of Adjustment.  In any case in which this Section 5 shall
require that an adjustment in the Conversion Price be made effective as of a
record date for a specified event, if the Note shall have been converted after
such record date Maker may elect to defer until the occurrence of such event
issuing to Payee the shares, if any, issuable upon such conversion event over
and above the shares, if any, issuable upon such conversion on the basis of the
Conversion Price in effect prior to such adjustment; provided, however, that Maker
shall deliver to Payee a due bill or other appropriate instrument evidencing
Payee's right to receive such additional shares upon the occurrence of the event
requiring such adjustment.

      

      (h)      Number
of Shares.  Upon each adjustment of the Conversion Price as a result
of the calculations made in Paragraphs 5(a)
through (c)
above, this Note shall thereafter evidence the right to purchase, at the
adjusted Conversion Price, that number of shares (calculated to the nearest
one-hundredth) obtained by dividing (i) the product obtained by multiplying the
number of shares issuable upon conversion of this Note prior to adjustment of
the number of shares by the Conversion Price in effect prior to adjustment of
the Conversion Price by (ii) the Conversion Price in effect after such
adjustment of the Conversion Price.

      

      (i)      When
No Adjustment Required.  No adjustment need be made for a transaction
referred to in Paragraphs 5(a)
through (c)
above if Payee is permitted to participate in the transaction on a basis no less
favorable than any other party and at a level which would preserve Payee's
percentage equity participation in the Common Stock upon conversion of the
Note.  No adjustment need be made for sales of Common Stock pursuant
to any Maker plan for reinvestment of dividends or interest, the granting of
options and/or the exercise of options outstanding under any of Maker's stock
option plans, the exercise of any other of Maker's currently outstanding
options, or any currently authorized warrants, whether or not
outstanding.  No adjustment need be made for a change in the par value
of the Common Stock, or from par value to no par value.  If the Note
becomes convertible solely into cash, no adjustment need be made
thereafter.  Interest will not accrue on the cash.

      

      (j)      Notice
of Adjustment.  Whenever the Conversion Price is adjusted, Maker shall
promptly mail to Payee a notice of the adjustment together with a certificate
from Maker's Chief Financial Officer briefly stating (i) the facts requiring the
adjustment, (ii) the adjusted Conversion Price and the manner of computing it,
and the date on which such adjustment becomes effective.  The
certificate shall be evidence that the adjustment is correct, absent manifest
error.

      
        
           

        

        
          -6-

          
            

          

        

        
           

        

      

      Convertible
Secured Note

      of
Protein Polymer Technologies, Inc.

      payable
to Hunter & Co.

      as agent
dated ______, 2____

      

      (k)      Voluntary
Reduction.  Maker from time to time may reduce the Conversion Price by
any amount for any period of time if the period is at least twenty (20) days and
if the reduction is irrevocable during the period.  Whenever the
Conversion Price is reduced, Maker shall mail to Payee a notice of the
reduction.  Maker shall mail the notice at least fifteen (15) days
before the date the reduced Conversion Price takes effect.  The notice
shall state the reduced Conversion Price and the period it will be in
effect.  A reduction of the Conversion Price does not change or adjust
the Conversion Price otherwise in effect for purposes of Paragraphs 5(a)
through (c)
above.  Anything to the contrary notwithstanding, this Paragraph 5(k) shall
be void and of no effect if it violates the rules and/or regulations of any
exchange on which the Common Stock is then listed for trading.

      

      (l)      Prohibition
against Certain Reductions of Exercise Price.  Anything to the
contrary notwithstanding, in no event shall the Conversion Price be reduced
below the par value of the Common Stock.

      

      (m)    Notice
of Certain Transactions.  If (i) Maker takes any action that would
require an adjustment in the Conversion Price pursuant to this Section 5; or (ii)
there is a liquidation or dissolution of Maker, Maker shall mail to Payee a
notice stating the proposed record date for a distribution or effective date of
a reclassification, consolidation, merger, transfer, lease, liquidation or
dissolution.  Maker shall mail the notice at least fifteen (15) days
before such date.  Failure to mail the notice or any defect in it
shall not affect the validity of the transaction.

      

      (n)      Reorganization
of Company.  If Maker and/or the holders of Common Stock are parties
to a merger, consolidation or a transaction in which (i) Maker transfers or
leases substantially all of its assets; (ii) Maker reclassifies or changes its
outstanding Common Stock; or (iii) the Common Stock is exchanged for securities,
cash or other assets; the person who is the transferee or lessee of such assets
or is obligated to deliver such securities, cash or other assets shall assume
the obligations under this Note.  If the issuer of securities
deliverable upon conversion of the Note is an affiliate of the surviving,
transferee or lessee corporation, that issuer shall join in such
assumption.  The assumption agreement shall provide that the Payee may
convert the Obligations into the kind and amount of securities, cash or other
assets that it would have owned immediately after the consolidation, merger,
transfer, lease or exchange if it had converted the Note immediately before the
effective date of the transaction.  The assumption agreement shall
provide for adjustments that shall be as nearly equivalent as may be practical
to the adjustments provided for in this Section
5.  The successor company shall mail to Payee a notice briefly
describing the assumption agreement.  If this Paragraph applies, Paragraph 4(a) above
does not apply.

      

      6.          Covenants.  Maker
covenants and agrees that from and after the date hereof and until the date of
repayment in full of the Obligations it shall comply with the following
conditions:

      

      (i)      Maintenance
of Existence and Conduct of Business.  Maker shall, and shall cause
each of its subsidiaries, if any, to (A) do or cause to be done all things
necessary to preserve and keep in full force and effect its legal existence and
rights and maintain its property; and (B) continue to conduct its business so
that the business carried on in connection therewith may be properly and
advantageously conducted at all times.

      
        
           

        

        
          -7-

          
            

          

        

        
           

        

      

      Convertible
Secured Note

      of
Protein Polymer Technologies, Inc.

      payable
to Hunter & Co.

      as agent
dated ______, 2____

      

      (ii)      Books
and Records.  Maker shall, and shall cause each of its subsidiaries,
if any, to keep adequate books and records of account with respect to its
business activities.

      

      (iii)      Insurance.  Maker
shall, and shall cause each of its subsidiaries, if any, to maintain insurance
policies insuring such risks as are customarily insured against by companies
engaged in businesses and/or with property similar to those operated and/or
owned or leased by Maker or any such subsidiaries, as the case may be, including
but not limited to, insurance policies covering real property acceptable to
Payee on which Payee is named as an additional insured.  All such
policies are to be carried with reputable insurance carriers and shall be in
such amounts as are customarily insured against by companies with similar assets
and properties engaged in a similar business.

      

      (iv)      Compliance
with Law.  Maker shall, and shall cause each of its subsidiaries, if
any, to comply in all material respects with all federal, state, local and other
laws and regulations applicable to it or any such subsidiaries, as the case may
be, which, if breached, would have a material adverse effect on Maker's or any
such subsidiaries', as the case may be, business or financial
condition.

      

      (v)      Compliance
with Material Agreements, Licenses, Patents and Financial
Obligations.  All of the terms of Maker’s material agreements,
licenses, Patents as defined in the Security Agreement and financial obligations
shall be complied with, and each of them shall be kept in full force and effect
in accordance with their respective terms.

      

      (vi)      Maintenance
of Collateral.  Maker will keep the Collateral free and clear of all
liens and encumbrances except for those created by or referred to in the Credit
Documents.

      

      7.          Reorganization of
Maker.  If Maker is party to a merger, consolidation or a
transaction in which it is not the surviving or continuing entity or transfers
or leases all or substantially all of its assets, the person who is the
surviving or continuing entity or is the transferee or lessee of such assets
shall assume the terms of this Note and the Obligations.

      
        
           

        

        
          -8-

          
            

          

        

        
           

        

      

      Convertible
Secured Note

      of
Protein Polymer Technologies, Inc.

      payable
to Hunter & Co.

      as agent
dated ______, 2____

      

      8.      Representations and
Warranties of Maker.  Maker represents and warrants
that:  (i) it, and each of its subsidiaries, if any, is a corporation
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its organization and has all requisite power to carry on its
business as now conducted and to own its properties and assets it now owns; (ii)
it, and each of its subsidiaries, if any, is duly qualified or licensed to do
business as a foreign corporation in good standing in the jurisdictions in which
ownership of property or the conduct of its business requires such qualification
except jurisdictions in which the failure to qualify to do business will have no
material adverse effect on its business, prospects, operations, properties,
assets or condition (financial or otherwise); (iii) it, and each of its
subsidiaries, if any, and/or affiliates thereof, holds all material licenses and
patents and otherwise complies with all material laws, rules and regulations
required to permit it to own its property and conduct its business in the
jurisdictions in which it owns its property and conducts its business; (iv) it
owns the Collateral, free and clear of all liens and encumbrances except for
those held by Payee in accordance with the terms of this Note and the Security
Agreement, the Patent Security Agreement, the Szulik Lien and any encumbrances
that may exist pursuant to the Permitted Encumbrances, as that term is defined
in the Security Agreement; (v) the Patents are in full force and effect and
Maker is entitled to all rights relating thereto;  (vi) it has full
power and authority to execute and deliver this Note, and that the execution and
delivery of this Note will not result in the breach of or default under, with or
without the giving of notice and/or the passage of time, any other agreement,
financial instrument, arrangement or indenture to which it is a party or by
which it may be bound, or the violation of any law, statute, rule, decree,
judgment or regulation binding upon it; (vii) it has filed all reports,
schedules, forms, statements and other documents required to be filed by it with
the Securities and Exchange Commission (the “Commission”) pursuant to the
Securities Act of 1933 (the “Securities Act”) and the Securities Exchange Act of
1934 (the “Exchange Act”) (the “SEC Documents”); (viii) the SEC Documents have
complied in all material respects with the requirements of the Securities Act or
the Exchange Act, as the case may be, and the rules and regulations of the
Commission promulgated thereunder applicable to the SEC Documents, and none of
the SEC Documents, at the time they were filed with the Commission, contained
any untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading; (ix) as of their respective dates, Maker’s financial statements
included in the SEC Documents complied as to form in all material respects with
applicable accounting requirements and the published rules and regulations of
the Commission with respect thereto, such financial statements have been
prepared in accordance with accounting principles generally accepted in the
United States as in effect from time to time, consistently applied, during the
periods involved (except (a) as may be otherwise indicated in such financial
statements or the notes thereto, or (b) in the case of unaudited interim
statements, to the extent they may exclude footnotes or may be condensed or
summary statements) and fairly present in all material respects the financial
condition of Maker as of the respective dates thereof and the results of its
operations and cash flows for the respective periods then ended (subject, in the
case of unaudited statements, to normal year-end audit adjustments); (x) except
as may be set forth in the SEC Documents, Maker has not received notification
from the Commission and/or any federal or state securities bureaus that any
investigation (informal or formal), inquiry or claim is pending, threatened or
in process against Maker and/or relating to any of Maker’s securities; (xi)
except as may be set forth in the SEC Documents, there is no action, suit,
proceeding, or investigation pending or currently threatened against Maker, and
(xii) it has taken and will take all acts required, including but not limited to
authorizing the signatory hereof on its behalf to execute this Note, so that
upon the execution and delivery of this Note, it shall constitute the valid and
legally binding obligation of Maker enforceable in accordance with the terms
thereof.

      
        
           

        

        
          -9-

          
            

          

        

        
           

        

      

      Convertible
Secured Note

      of
Protein Polymer Technologies, Inc.

      payable
to Hunter & Co.

      as agent
dated ______, 2____

      

      9.           Defaults and
Remedies.

      

      (a)          Events
of Default.  The occurrence or existence of any one or more of the
following events or conditions (regardless of the reasons therefor) shall
constitute an "Event of Default" hereunder:

      

      (i)      Maker
shall fail to make any payment of Principal or Interest when due and payable or
declared due and payable pursuant to the terms hereof or the Szulik
Note;

      

      (ii)  
  Maker shall fail to perform any other obligation and/or covenant as
required by this Note, any of the other Credit Documents or the Szulik Note in
accordance with the respective terms thereof and such failure to perform shall
not have been cured within five (5) business days after Maker’s receipt of
notice of such failure to perform;

      

      (iii)    Any
representation or warranty made in this Note, any of the other Credit Documents
or the Szulik Note by Maker shall be untrue or incorrect in any material respect
as of the date when made or deemed made;

      

      (iv)  
 Any money judgment, writ or warrant of attachment, or similar process not
covered by insurance in excess of Twenty Five Thousand ($25,000) Dollars in the
aggregate shall be entered or filed against Maker or any of its properties,
including, but not limited to, the Collateral, or other assets and shall remain
unpaid, unvacated, unbonded or unstayed for a period of ten (10)
days;

      

      (v)     Maker
shall make an assignment for the benefit of creditors or shall be unable to pay
its debts as they become due;

      

      (vi)    Maker
shall have received a written notice of default related to any material
agreement to which it is a party and such act of default shall remain uncured
after any applicable cure period;

      

      (vii)   A
case or proceeding shall have been commenced against Maker, or any of its
subsidiaries, if any, (each a “Proceeding Company”) in a court having competent
jurisdiction seeking a decree or order in respect of a Proceeding Company, (A)
under Title 11 of the United States Code, as now constituted or hereafter
amended, or any other applicable federal, state or foreign bankruptcy or other
similar law; (B) appointing a custodian, receiver, liquidator, assignee, trustee
or sequestrator (or similar official) of a Proceeding Company, or any of its
properties, including but not limited to the Collateral; or (C) ordering the
winding-up or liquidation of the affairs of a Proceeding Company, and such case
or proceeding shall remain unstayed or undismissed for a period of ten (10)
consecutive days or such court shall enter a decree or order granting the relief
sought in such case or proceeding; or

      
        
           

        

        
          -10-

          
            

          

        

        
           

        

      

      Convertible
Secured Note

      of
Protein Polymer Technologies, Inc.

      payable
to Hunter & Co.

      as agent
dated ______, 2____

      

      (viii)      A
Proceeding Company shall (A) file a petition seeking relief under Title 11 of
the United States Code, as now constituted or hereafter amended, or any other
applicable federal, state or foreign bankruptcy or other similar law; or (B)
consent to the institution of proceedings thereunder or to the filing of any
such petition or to the appointment of or the taking of possession by a
custodian, receiver, liquidator, assignee, trustee or sequestrator (or similar
official) of such Proceeding Company, or any of its properties, including but
not limited to the Collateral.

      

      (b)          Remedies.  Upon
the occurrence of an Event of Default specified in Paragraph 9(a) above,
all Obligations then remaining unpaid hereunder shall immediately become due and
payable in full, plus interest on the unpaid portion of the Obligations at the
highest rate permitted by applicable law, without notice to Maker and without
presentment, demand, protest or notice of protest, all of which are hereby
waived by Maker together with all reasonable costs and expenses of the
collection and enforcement of this Note, including reasonable attorney's fees
and expenses, all of which shall be added to the amount due under this
Note.  The rights, powers, privileges and remedies of Payee pursuant
to the terms hereof are cumulative and not exclusive of any other rights,
powers, privileges and remedies which Payee may have under this Note or any
other instrument or agreement.

      

      10.      Acknowledgment of Payee's
Investment Representations.  By accepting this Note, Payee
acknowledges that, except as provided in the Registration Rights Agreement dated
as of September 3, 2009 between Maker and TAG, neither this
Note nor the Underlying Shares have been or will be registered under the
Securities Act or qualified under any state securities laws and that the
transferability thereof is restricted by the registration provisions of the
Securities Act as well as such state laws.  Based upon the
representations and agreements being made by it herein, this Note is being and
any Underlying Shares will be issued to it pursuant to an exemption from such
registration provided by Section 4(2) of the Securities Act, and applicable
state securities law qualification exemptions.  Payee represents that
it (i) is an “Accredited Investor” as that term is defined in Rule 501 (a) of
Regulation D promulgated under the Securities Act, and (ii) is acquiring this
Note and will acquire any Underlying Shares for its own account, for investment
purposes only and not with a view to resale or other distribution thereof, nor
with the intention of selling, transferring or otherwise disposing of all or any
part of these securities for any particular event or circumstance, except
selling, transferring or disposing of them only upon full compliance with all
applicable provisions of the Securities Act, the Exchange Act, the Rules and
Regulations promulgated by the Commission thereunder, and any applicable state
securities laws.  In addition, Payee understands and acknowledges that
any routine sales of these securities made in reliance upon Rule 144 promulgated
by the Commission under the Securities Act can be effected only in the amounts
set forth in and pursuant to the other terms and conditions, including
applicable holding periods, of that Rule.  Payee further understands
and agrees that no transfer of this Note shall be valid unless made in
compliance with the restrictions set forth on the front of this Note, effected
on Maker's books by the registered holder hereof, in person or by an attorney
duly authorized in writing, and similarly noted hereon as provided in Paragraph 13(h)
below.

      
        
           

        

        
          -11-

          
            

          

        

        
           

        

      

      Convertible
Secured Note

      of
Protein Polymer Technologies, Inc.

      payable
to Hunter & Co.

      as agent
dated ______, 2____

      

      11.      Limitation of Interest
Payments.  Nothing contained in this Note or in any other
agreement between Maker and Payee requires Maker to pay or Payee to accept
interest in an amount that would subject Payee to any penalty or forfeiture
under applicable law.  In no event shall the total of all charges
payable hereunder, whether of interest or of such other charges, which may or
might be characterized as interest, exceed the maximum rate permitted to be
charged under the laws of the States of California, New York or Delaware, the
United States Virgin Islands or any other state or domestic or other
jurisdiction in which either Maker or Payee may be located or may conduct
business or the Collateral my be located.  Should Payee receive any
payment that is or would be in excess of that permitted to be charged under such
laws, such payment shall have been and shall be deemed to have been made in
error and shall automatically be applied to reduce the Principal outstanding on
this Note.

      

      12.      Maker’s Right to Prepay the
Note.  Maker may prepay this Note without penalty at any time
after thirty (30) day’s notice to Payee.

      

      13.      Miscellaneous.

      

      (a)      Effect
of Forbearance.  No forbearance, indulgence, delay or failure to
exercise any right or remedy by Payee with respect to this Note shall operate as
a waiver or as an acquiescence in any default.

      

      (b)      Effect
of Single or Partial Exercise of Right.  No single or partial exercise
of any right or remedy by Payee shall preclude any other or further exercise
thereof or any exercise of any other right or remedy by Payee.

      

      (c)      Governing
Law; Waiver of Right to Jury Trial; Venue.  This Note shall be
construed and enforced in accordance with, and the rights of the parties shall
be governed by, the internal laws of the jurisdiction to be determined by Payee
applicable to contracts made and to be performed entirely within such
jurisdiction.  Maker hereby waives all right to trial by jury in any
action, suit or proceeding brought to enforce or defend any rights or remedies
under this Note, and agrees that any lawsuit brought to enforce or interpret the
provisions of this Note shall be instituted in state or federal courts, as
appropriate, in the jurisdiction to be determined by Payee, and Maker further
agrees to submit to the personal jurisdiction of such court and waives any
objection which it may have, based on improper venue, forum non conveniens or
sufficiency of contact with the forum state, to the conduct of any proceeding in
any such court and waives personal service of any and all process upon it, and
consents that all such service of process be made by mail or messenger directed
to it at the address set forth in Paragraph 12(g) below
and that service so made shall be deemed to be completed upon the earlier of
actual receipt or three (3) days after the same shall have been posted to its
address.  Nothing contained in this Paragraph 12(c)
affects the right of Payee to serve legal process in any other manner permitted
by law or affects the right of Payee to bring any action or proceeding against
Maker or its property in the courts of any other jurisdiction.

      
        
           

        

        
          -12-

          
            

          

        

        
           

        

      

      Convertible
Secured Note

      of
Protein Polymer Technologies, Inc.

      payable
to Hunter & Co.

      as agent
dated ______, 2____

      

      (d)      Headings.  The
headings and captions of the various sections herein are for convenience of
reference only and shall in no way modify any of the terms or provisions of this
Note.

      

      (e)      Loss,
Theft, Destruction or Mutilation of Note.  Upon receipt by Maker of
evidence reasonably satisfactory to it of loss, theft, destruction or mutilation
of this Note, Maker shall make and deliver or caused to be made and delivered to
Payee a new Note of like tenor in lieu of this Note.

      

      (f)      Modification
of Note or Waiver of Terms Thereof Relating to Payee.  No modification
or waiver of any of the provisions of this Note shall be effective unless in
writing and signed by Payee and then only to the extent set forth in such
writing, or shall any such modification or waiver be applicable except in the
specific instance for which it is given.  This Note may not be
discharged orally but only in writing duly executed by Payee.

      

      (g)      Notice.  Any
notice or other communication under the provisions of this Note shall be in
writing, and shall be given by postage prepaid, registered or certified mail,
return receipt requested, by hand delivery with receipt acknowledged, or by a
recognized overnight courier service, directed to the parties at their
respective addresses as set forth above, or to any new address of which either
party shall have informed the other party by the giving of notice in the manner
provided herein.  Copies of all notices sent to Hunter & Co. shall
be sent to TAG, at The Tunick Building, 1336 Beltjen Road, Suite 202, St.
Thomas, VI 00802.  All notices or communications shall be effective
upon receipt if hand delivered or sent by overnight courier service, or, if
mailed, four days after mailing or ten days after mailing if mailed to the
United States Virgin Islands.  Notice may also be given by facsimile
or email transmission to a party that provides its facsimile number or email
address to the other party and such notice shall be effective upon confirmation
to the sender of receipt.

      

      (h)      Transfer.  This
Note shall be transferable only on the books of Maker upon delivery thereof duly
endorsed by Payee or by its duly authorized attorney or representative, or
accompanied by proper evidence of succession, assignment, or authority to
transfer.  In all cases of transfer by an attorney, executor,
administrator, guardian, or other legal representative, duly authenticated
evidence of his authority shall be produced.  Upon any registration of
transfer, Maker shall deliver a new Note or Notes to the person entitled
thereto.  Notwithstanding the foregoing, Maker shall have no
obligation to cause Notes to be transferred on its books to any person if, in
the opinion of counsel to Maker, such transfer does not comply with the
provisions of the Securities Act and the rules and regulations
thereunder.

      

      (i)      Successors
and Assigns.  This Note shall be binding upon Maker, its successors,
assigns and transferees, and shall inure to the benefit of and be enforceable by
Payee and its successors and assigns.

      
        
           

        

        
          -13-

          
            

          

        

        
           

        

      

      Convertible
Secured Note

      of
Protein Polymer Technologies, Inc.

      payable
to Hunter & Co.

      as agent
dated ______, 2____

      

      (j)      Severability.  If
one or more of the provisions or portions of this Note shall be deemed by any
court or quasi-judicial authority to be invalid, illegal or unenforceable in any
respect, the invalidity, illegality or unenforceability of the remaining
provisions, or portions of provisions contained herein shall not in any way be
affected or impaired thereby.

      

      (k)      Gender.  The
use herein of the masculine pronouns or similar terms shall be deemed to include
the feminine and neuter genders as well and vice versa and the use of the
singular pronouns shall be deemed to include the plural as well and vice
versa.

      

      IN
WITNESS WHEREOF, Maker has caused this Note to be executed on its behalf by an
officer thereunto duly authorized as of the date set forth above.

      

      Protein
Polymer Technologies, Inc.,

      a
Delaware corporation

      

      
        
          
            	
                    By:

                  	 
      
	 
      	
                    Name:  James
      B. McCarthy,

                  
	 
      	
                    Title:  Interim
      Chief Executive
Officer

                  

          

        

      

      
        
           

        

        
          -14-

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