Document:

Unassociated Document

    SECOND
AMENDMENT

    TO

    CREDIT
AGREEMENT

    

    THIS
SECOND AMENDMENT TO CREDIT AGREEMENT (this “Second
Amendment”) is entered into and effective as of the Second 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”) and DD ENERGY,
INC., a Nevada corporation (“DD
Energy”) (collectively, “Borrowers”)
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 Second Amendment have the meaning given them
in the Credit Agreement.

     

    RECITALS

     

    A.           Borrowers,
Administrative Agent, L/C Issuer and Banks entered into that certain Credit
Agreement dated as of July 3, 2008 (as amended by that certain Letter
Agreement dated July 3, 2008, that certain Letter Agreement dated May 15, 2009,
that certain First Amendment to Credit Agreement dated August 18, 2009, and as
further amended, modified or supplemented, the “Credit
Agreement”).

     

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

     

    AGREEMENT

     

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

     

    I.           Amendments to Credit
Agreement.

     

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

     

    “Second
Amendment” means the Second Amendment to Credit Agreement dated as of the
Second Amendment Closing Date by and between Borrowers, Administrative Agent,
L/C Issuer and Banks.

     

    “Second Amendment
Closing Date” means January 13, 2010.

     

    Section 2.04, Borrowing Base
Determination, of the Credit Agreement is hereby amended by replacing the
text in Subsection (a) thereof with the following text:

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    “(a) The
Borrowing Base in effect as of the Second Amendment Closing Date is $6,746,000
relative to the Proved Reserves attributable to the Borrowing Base Oil and Gas
Properties and the Monthly Borrowing Base Reduction is $55,000.  The
Borrowing Base shall be automatically reduced on the first day of each month by
the Monthly Borrowing Base Reduction beginning February 1, 2010.  The
Borrowing Base and the Monthly Borrowing Base Reduction shall be re-determined
from time to time pursuant to the provisions of this Section.”

     

    Section 7.12(b), Senior
Funded Debt to EBITDA Ratio, of the Credit Agreement is hereby amended by
replacing the text of such section with the following text:

     

    “(b)  Senior Funded Debt to EBITDA
Ratio.  For the quarterly period ending December 31, 2009,
permit the ratio of Senior Funded Debt to Borrowers’ and their Subsidiaries’
consolidated EBITDA for that preceding quarter to be greater than 6.25:1.00; or
for the quarterly period ending March 31, 2010, permit the ratio of Senior
Funded Debt to Borrowers’ and their Subsidiaries’ consolidated EBITDA for that
preceding quarter to be greater than 5.75:1.00; or for the quarterly period
ending June 30, 2010, permit the ratio of Senior Funded Debt to Borrowers’ and
their Subsidiaries’ consolidated EBITDA for that preceding quarter to be greater
than 5.25:1.00; or for the quarterly period ending September 30, 2010, permit
the ratio of Senior Funded Debt to Borrowers’ and their Subsidiaries’
consolidated EBITDA for that preceding quarter to be greater than 4.75:1.00; or
permit, as of the last day of each fiscal quarter ending after September 30,
2010, the ratio of Senior Funded Debt as of such date to Borrowers’ and their
Subsidiaries’ consolidated EBITDA for the 12 month period ending on such date to
be greater than 4.25:1.00.  For the purpose of calculating the
foregoing ratio, EBITDA will be annualized by: (i) multiplying by 4 for the
three-month period ending December 31, 2009, (ii) multiplying by 2 for the
six-month period ending March 31, 2010, and (iii) multiplying by 1.33 for the
nine-month period ending June 30, 2010.  For the twelve-month
period ending September 30, 2010, and for each period thereafter, EBITDA will be
calculated based on actual EBITDA for the previous four fiscal
quarters.

     

    Section 7.12(c), Interest
Coverage Ratio, of the Credit Agreement is hereby amended by replacing
the text of such section with the following text:

     

    “(c)  Interest Coverage
Ratio. Permit, as of the fiscal quarter ending on December 31, 2009
and the last day of each fiscal quarter thereafter, the ratio of Borrowers’ and
their Subsidiaries’ consolidated EBITDA to Interest Expense for the 12 month
period ending on such date to be less than 2.50:1.00; provided that for the purpose
of calculating the foregoing ratio, each of EBITDA and Interest Expense will be
annualized by: (i) multiplying by 4 for the three-month period ending December
31, 2009, (ii) multiplying by 2 for the six-month period ending March 31,
2010, and (iii) multiplying by 1.33 for the nine-month period ending
June 30, 2010.  For the twelve-month period ending September 30,
2010, and for each period thereafter, each of EBITDA and Interest Expense will
be calculated based on actual EBITDA and Interest Expense, respectively, for the
previous four fiscal quarters.

     

    II.           Conditions.  This
Second Amendment is subject to satisfaction of the following conditions
precedent:

     

    (a)           this
Second Amendment has been executed and delivered by all parties
hereto;

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

    (b)           on
or before the Second Amendment Closing Date, Borrowers shall have paid to
Administrative Agent, in immediately available funds, an engineering fee in the
amount of $2,500 in accordance with Section 2.08(c) of the Credit Agreement;
and

    

    (c)           Borrowers
deliver to Administrative Agent such other documents as Administrative Agent
reasonably requests.

     

    III.          Representations, Warranties
and Covenants.  Borrowers represent and warrant to
Administrative Agent and Banks that (a) they possess all requisite power
and authority to execute, deliver and comply with the terms of this Second
Amendment, (b) this Second 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 Second Amendment to be effective, (d) the execution and
delivery of this Second Amendment does not violate their organizational
documents, (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 Second Amendment Closing Date as though made on the Second Amendment
Closing Date, (f) 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, and (h)
except as may be addressed in this Second 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 Second Amendment or any
other matters occurring prior to the Second Amendment Closing
Date.  In particular, but without limiting the generality of the
foregoing, Exhibit A attached to the Credit Agreement, as amended by this Second
Amendment or any prior amendment, describes all of Borrower’s Borrowing Base Oil
and Gas Properties.  The representations and warranties made in this
Second Amendment shall survive the execution and delivery of this Second
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 Second Amendment.

     

    IV.          Scope of Amendment;
Reaffirmation; Release.  All references to the Credit Agreement
shall refer to the Credit Agreement as amended by this Second
Amendment.  Except as affected by this Second 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 Second 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 Second 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 Second Amendment Closing
Date.

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

    V.           Miscellaneous.

     

    (a)           No Waiver of
Defaults.  Except as expressly provided for herein, this Second
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 Second Amendment must be in
form and substance satisfactory to Administrative Agent and its
counsel.

     

    (c)           Headings.  The
headings and captions used in this Second Amendment are for convenience only and
will not be deemed to limit, amplify or modify the terms of this Second
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 Second Amendment, including, without limitation, the reasonable fees and
disbursements of Administrative Agent’s counsel.

     

    (e)           Successors and
Assigns.  This Second 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 Second 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 Second 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.

     

    (g)           Governing
Law.  THIS SECOND AMENDMENT AND THE OTHER LOAN DOCUMENTS MUST
BE CONSTRUED, AND THEIR PERFORMANCE ENFORCED, UNDER TEXAS LAW.

     

    (h)           Entirety.  The Loan
Documents (as amended hereby) Represent the Final Agreement By and Among
Borrowers, Administrative Agent, L/C Issuer and Banks and May Not Be
Contradicted by Evidence of Prior, Contemporaneous, or Subsequent Oral
Agreements by the Parties.  There Are No Unwritten Oral Agreements
between the Parties.

     

    (Signature
pages follow)

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

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

     

    
      
        
          
            
              
                
                  
                    	 
      	
                            BORROWERS:

                          
	 
      	 
      
	 
      	
                            ENERJEX
      RESOURCES, INC.

                          
	 
      	 
      
	 
      	
                            By:

                          	
                            

                          
	 
      	 
      	
                            Steve
      Cochennet

                          
	 
      	 
      	
                            Chief
      Executive Officer

                          
	 
      	 
      
	 
      	
                            ENERJEX
      KANSAS, INC.

                          
	 
      	 
      
	 
      	
                            By:

                          	
                            

                          
	 
      	 
      	
                            Steve
      Cochennet

                          
	 
      	 
      	
                            Chief
      Executive Officer

                          
	 
      	 
      
	 
      	
                            –
      and –

                          
	 
      	 
      
	 
      	
                            DD
      ENERGY, INC.

                          
	 
      	 
      
	 
      	
                            By:

                          	
                            

                          
	 
      	 
      	
                            Steve
      Cochennet

                          
	 
      	 
      	
                            Chief
      Executive
Officer

                          

                  

                

              

            

          

        

      

    

    

    Signature
Page to Second Amendment

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    
      
        	 
      	
                ADMINISTATIVE
      AGENT, L/C ISSUER

                AND
      BANKS:

              
	 
      	 
      
	 
      	
                TEXAS
      CAPITAL BANK, N.A.,

              
	 
      	
                as
      Administrative Agent, L/C Issuer and

              
	 
      	
                a
      Bank

              
	 
      	 
      	 
      
	 
      	
                By:

              	
                /s/ Jonathan Gregory

              
	 
      	 
      	
                Jonathan
      Gregory,

              
	 
      	 
      	
                Executive
      Vice President

              

      

    

    

    Signature
Page to Second AmendmentENERJEX
RESOURCES, INC.

    27
Corporate Woods, Suite 350

    10975
Grandview Drive

    Overland
Park, Kansas 66210

    

    January
27, 2010

    

    
      	
              West
      Coast Opportunity Fund, LLC

            	
              Frey
      Living Trust

            
	
              1202
      Coast Village Road

            	
              5005
      SE Williams Way

            
	
              Montecito,
      CA  93108

            	
              Stuart,
      FL  34997

            
	 
      	 
      
	
              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
Debentures allow for the retirement of a portion of the Parent’s common stock
held by the Buyers in accordance with Exhibit A to the Debentures (the
“Redemption Schedule”).

     

    B.           The
Company is currently in the process of selling certain assets designated as the
Weidemier/Voigts project, which is anticipated to close on or before March 10,
2010 (the “Asset Sale”).

     

    C.           The
Company, the Parent and the Buyers wish to amend the Redemption Schedule as set
forth herein.

    
      
         

      

      
        1

        
          

        

      

      
         

      

    

    D.           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 Redemption
Schedule.  The Company, the Parent and the Buyers hereby agree
that the January and February redemption payment set forth on Exhibit A to the
Debentures (“Redemption Payments”) shall be extended to be paid on or before
March 10, 2010 to coincide with the anticipated close of the Asset
Sale.

     

    3.           Asset Sale Proceeds.
The Company hereby agrees to immediately use proceeds from the Asset Sale
(excluding the associated debt owed to Texas Capital) to make the full
Redemption Payments owed through March 31, 2010.

     

    
      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.

            

    

     

    
      	
               
      

            	
              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.

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

    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.

     

    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.

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

    

    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

              

      

    

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

    WEST
COAST OPPORTUNITY FUND,

    LLC

    

    
      
        	
                By:

              	
                /s/ Atticus Lowe

              	 
      
	 
      	
                Name:
      Atticus Lowe

              	 
      
	 
      	
                Title:
      Chief Investment Officer

              	 
      

      

    

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

    ENABLE
GROWTH PARTNERS LP

    

    
      
        	
                By:

              	
                /s/ Mitch Levine

              	 
      
	 
      	
                Name:  Mitch
      Levine

              	 
      
	 
      	
                Title:
      CEO

              	 
      

      

    

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

    ENABLE
OPPORTUNITY PARTNERS LP

    

    
      
        	
                By:

              	
                /s/ Mitch Levine

              	 
      
	 
      	
                Name:  Mitch
      Levine

              	 
      
	 
      	
                Title:
      CEO

              	 
      

      

    

    
      
         

      

      
        7

        
          

        

      

      
         

      

    

    FREY
LIVING TRUST

    

    
      
        	
                By:

              	
                /s/ Philip Frey Jr.

              	 
      
	 
      	
                Name:
      Philip Frey Jr.

              	 
      
	 
      	
                Title:
      Trustee

              	 
      

      

    

    
      
         

      

      
        8

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