Document:

ROSS
      MILLER

                                    	 
      	
                                      Document
      Number

                                    
	
                                      Secretary
      of State

                                    	 
      	
                                      20110003879-21

                                    
	
                                      204
      North Carson Street, Suite 1

                                    	 
      	
                                      Filing
      Date and Time:

                                    
	
                                      Carson
      City, Nevada 89701-4299

                                    	 
      	
                                      01/03/2011
      4:31 PM

                                    
	
                                      (775)
      684 5708

                                    	 
      	
                                      Entity
      Number

                                    
	
                                      Website:
      www.nvsos.gov

                                    	 
      	
                                      C7725-1999

                                    
	 	 
      	
                                      In
      the Office of

                                    
	
                                      Certificate of
      Designation 
      
                                        (PURSUANT
      TO NRS 78.1955)

                                      

                                    	  
      	
                                            
                                        Dean
      Heller

                                        Secretary
      of
State

                                      

                                    

                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

    

    

    Certificate of Designation
For

    Nevada Profit
Corporations

    

    (Pursuant
to NRS 78.1955)

     

    1. Name
of corporation:

     

    
      
        
          
            	
                       
      EnerJex Resources,
Inc.

                  

          

        

      

    

     

    2. By
resolution of the board of directors pursuant to a provision in the articles of
incorporation this certificate established the following regarding the voting
powers, designations, preferences, limitations, restrictions and relative rights
of the following class or series of stock.

     

    
      
        
          	
                  Establishing
      and designating Four Million Seven Hundred Seventy-nine Thousand Four
      Hundred Sixty (4,779,460) shares, par value $0.001 per share, of Series A
      Preferred Stock.

                   

                  Further
      rights, preferences, restrictions and other matters relating to the Series
      A Preferred Stock are attached
hereto.

                

        

      

    

     

    
      
        	
                3.
      Effective date of filing (optional):

              	
                December
      31, 2010

              

      

    

    

    5.  Officer
Signature (required)

    

    
      
        	
                 /s/ Steve Cochennet

              	 
      
	
                Signature
      of Officer

              	 
      

      

    

     

    IMPORTANT:
Failure to include any of the above information and submit the proper fees may
cause this filing to be rejected.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    ENERJEX RESOURCES,
INC.

    

    CERTIFICATE
OF DESIGNATION

    OF

    PREFERENCES,
RIGHTS AND LIMITATIONS

    OF

    SERIES
A PREFERRED STOCK

    

    The
rights, preferences, restrictions and other matters relating to the EnerJex
Resources, Inc. (the “Corporation”) Series
A Preferred Stock are as follows:

    

    A.           Series A
Preferred Stock.  The "Series A Preferred Stock" and shall
consist of Four Million Seven Hundred Seventy-nine Thousand Four Hundred Sixty
(4,779,460) shares, par value $0.001 per share (the "Series A Preferred
Stock").

    

    B.           Preferred
Stock.  The rights, powers, preferences, privileges, and
restrictions of each share of Series A Preferred Stock are as
follows:

    

    1. 
          Dividends.  The holders of
record of shares of Series A Preferred Stock shall be entitled to receive
dividends out of funds legally available therefore, as set forth in this Section
1.

    

    1.1           Payment of Dividends on
Series A Preferred Stock.   The Corporation shall pay
dividends on the Series A Preferred Stock on a quarterly basis as set forth
below in an amount per share equal to the quotient determined by dividing (x)
the Cash Available for Distribution with respect to such quarter, by (y) the
number of shares of Series A Preferred Stock issued and outstanding on the
record date for such quarter.

    

    (a)           Cash Available for
Distribution.  For purposes of this Certificate of Designation,
the term "Cash Available for Distribution" shall mean, with respect to each
calendar quarter in which there are any shares of Series A Preferred Stock
outstanding, an amount equal to one-third of the Corporation’s net cash provided
from operating activities (adjusted for changes in accounts receivable, accounts
payable, and inventory), reduced by any principal
amount of debt repayment in such calendar quarter to the Corporation's
institutional bank lenders and other secured creditors.  For purposes
of the foregoing, the Corporation's "net cash provided from operating
activities" shall be determined in a manner consistent with the Corporation's
historical accounting practices consistently applied.

    

    (b)          Payment and Record
Dates.  The dividend payable on the Series A Preferred Stock
with respect to:

    

    (i)           The
calendar quarter ending March 31 shall be paid on or before June 30 to holders
of Series A Preferred Stock of record on May 31;

    

    (ii)           The
calendar quarter ending June 30 shall be paid on or before August 15 to holders
of Series A Preferred Stock of record on July 31;

    

    (iii)           The
calendar quarter ending September 30 shall be paid on or before November 15 to
holders of Series A Preferred Stock of record on October 31; and

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (iv)           The
calendar quarter ending December 31 shall be paid on February 15 to holders of
Series A Preferred Sock of record on January 31.

    

    (c)          Limit on Cumulative Amount of
Dividends.  Notwithstanding any other provision of this
Certificate of Designation to the contrary, in no event shall dividends be
payable on any share of Series A Preferred Stock in a cumulative amount per
share exceeding the Series A Maximum Cumulative Dividend Payment (as defined
below).

    

    1.2          Restrictions on Payment of
Dividends on other Classes and Series of Capital Stock.  For so
long as any shares of Series A Preferred Stock are issued and outstanding, the
Corporation shall not declare, pay or set aside any dividends on shares of any
other class or series of capital stock of the Corporation (other than dividends
on shares of Common Stock payable in shares of Common Stock) other than the
Series A Preferred Stock, unless the Corporation concurrently pays to the holder
of each issued and outstanding share of Series A Preferred Stock a dividend in a
like amount per as-converted share of Common Stock for each share of Common
Stock into which such Series A Preferred Stock is convertible as of the record
date for such dividend.

    

    2.         
   Liquidation, Dissolution or Winding Up; Certain Mergers,
Consolidations and Asset Sales

    

    2.1          Payments

    

    (a)           Priority Payment to Holders of
Series A Preferred Stock.  In the event of any voluntary or
involuntary liquidation, dissolution or winding up of the Corporation, the
holders of shares of Series A Preferred Stock shall be entitled to be paid out
of the assets of the Corporation available for distribution to its stockholders,
prior and in preference to any payment to the holders of the Common Stock, by
reason of their ownership thereof, an amount per share equal to the "Series A
Liquidation Amount" (as defined below), and in each case subject to appropriate
adjustment in the event of any stock dividend, stock split, combination or other
similar recapitalization with respect to the Preferred Stock.  As used
herein, the "Series A
Liquidation Amount" shall equal the excess of (a) the Series A Original
Issue Price plus all declared and unpaid dividends payable with respect to such
share of Series A Preferred Stock, reduced by (b) the cumulative
amount of dividends paid on the Series A Preferred Stock.  If upon any
such liquidation, dissolution or winding up of the Corporation, the assets of
the Corporation available for distribution to its stockholders shall be
insufficient to pay the holders of shares of Series A Preferred Stock the full
amount to which they shall be entitled under this Section 2.1, then
holders of shares of Series A Preferred Stock shall share ratably in any
distribution of the assets available for distribution in proportion to the
respective amounts which would otherwise be payable in respect of the shares
held by them upon such distribution if all amounts payable on or with respect to
such shares were paid in full.

    

    (b)           Remainder.  In
the event of any voluntary or involuntary liquidation, dissolution or winding up
of the Corporation, after the payment of all preferential amounts required to be
paid to the holders of shares of Series A Preferred Stock pursuant to Section 2.1, above,
the remaining assets of the Corporation available for distribution to its
stockholders shall be distributed among the holders of Series A Preferred Stock
(on an "as-converted" basis, as if all such shares were converted into the
number of shares of Common Stock into which the shares of each such Series are
then convertible), and holders of the Common Stock pro rata based upon the
number of shares of as-converted shares of Common Stock held by
each.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    2.2            Deemed Liquidation
Events.  For purposes of this Section 2, the
occurrence of any of the following events (each, a "Deemed Liquidation
Event") shall be treated as a liquidation, dissolution or winding up of
the Corporation and shall entitle the holders of shares of Common Stock and
Series A Preferred Stock to receive the amounts specified in this Section 2 in cash,
securities or other forms of consideration: (a) any acquisition of the
Corporation by means of merger or other form of corporate reorganization in
which outstanding shares of the Corporation are exchanged for securities or
other consideration issued, or caused to be issued, by the acquiring corporation
or its subsidiary (other than a mere reincorporation transaction) and pursuant
to which the holders of the outstanding voting securities of the Corporation
immediately prior to such merger or other form of corporate reorganization fail
to hold equity securities representing a majority of the voting power of the
Corporation or surviving entity immediately following such merger or other form
of corporate reorganization; and (b) a sale, lease, transfer or disposition of
all or substantially all of the assets of the Corporation.

    

    2.3            Valuation of
Consideration.  In the event of a Deemed Liquidation Event, if
the consideration received by the Corporation is other than cash, its value will
be deemed its fair market value.  Any securities shall be valued as
follows:

    

     (a)           Securities
not subject to investment letter or other similar restrictions on free
marketability:

    

    (i)           If
traded on a securities exchange, the value shall be based on a formula approved
by the Board of Directors and derived from the closing prices of the securities
on such exchange over a specified time period;

    

    (ii)     
    If actively traded over-the-counter or on another
quotation medium, the value shall be based on a formula approved by the Board of
Directors and derived from the closing bid or sales prices (whichever is
applicable) of such securities over a specified time period; and

    

    (iii)         If
there is no active public market, the value shall be the fair market value
thereof, as determined in good faith by the Board of Directors.

    

     (b)           The
method of valuation of securities subject to investment letter or other
restrictions on free marketability (other than restrictions arising solely by
virtue of a shareholder’s status as an affiliate or former affiliate) shall be
to make an appropriate discount from the market value determined as specified
above in Section
2.3(a) to reflect the approximate fair market value thereof, as
determined in good faith by the Board of Directors.

    

    2.4           Notice of Liquidation
Transaction.  The Corporation shall give each holder of record
of Series A Preferred Stock written notice of any impending Deemed Liquidation
Event not later than 10 days prior to the stockholders’ meeting called to
approve such Deemed Liquidation Event, or 10 days prior to the closing of such
Deemed Liquidation Event, whichever is earlier, and shall also notify such
holders in writing of the final approval of such Deemed Liquidation
Event.  The first of such notices shall describe the material terms
and conditions of the impending Deemed Liquidation Event and the provisions of
this Section 2,
and the Corporation shall thereafter give such holders prompt notice of any
material changes.  Unless such notice requirements are waived, the
Deemed Liquidation Event shall not take place sooner than 10 days after the
Corporation has given the first notice provided for herein or sooner than 10
days after the Corporation has given notice of any material changes provided for
herein.  Notwithstanding the other provisions of Certificate of
Designation, all notice periods or requirements in this Certificate of
Designation may be shortened or waived, either before or after the action for
which notice is required, upon the written consent of the holders of at least a
majority of the
then outstanding shares of Series A Preferred Stock.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    2.5           Effect of
Noncompliance.  In the event the requirements of this Section 2 are not
complied with, the Corporation shall forthwith either cause the closing of the
Liquidation Transaction to be postponed until the requirements of this Section 2 have been
complied with, or cancel such Deemed Liquidation Event, in which event the
rights, preferences, privileges and restrictions of the holders of Series A
Preferred Stock shall revert to and be the same as such rights, preferences,
privileges and restrictions existing immediately prior to the date of the first
notice referred to in Section
2.4.

    

    3.           Conversion
of Shares.  As of any date,
each share of Series A Preferred Stock shall be convertible under this Section 3 into a
number of shares of Common Stock as would be determined by dividing the Series A
Original Issue Price by the "Series A Conversion Price" (as defined below) then
in effect at the time of conversion.  The Series A Conversion Price
shall be subject to adjustment as set forth below.

    

    3.1           Right to
Convert.  Each share of Series A Preferred Stock may be
converted, at the option of the holder thereof, at any time after the date of
issuance of such share, at the office of the Corporation or any transfer agent
for the Series A Preferred Stock.

    

    (a)           Surrender of
Certificate.  Before any share of Series A Preferred Stock may
be converted into shares of Common Stock under this Section 3.1, the
holder thereof shall surrender the certificate therefor, duly endorsed, at the
office of the Corporation or of any transfer agent for the Series A Preferred
Stock, and shall give written notice by mail, postage prepaid, to the
Corporation at its principal corporate office, of the election to convert the
same, and shall state therein the name or names in which the certificate or
certificates for shares of Common Stock are to be issued.  As soon as
practicable thereafter, the Corporation shall issue and deliver at such office
to such holder of  Series A Preferred Stock, or to the nominee or
nominees of such holder, a certificate or certificates for the number of shares
of Common Stock to which such holder shall be entitled.

    

    (b)           Timing of
Conversion.  Any conversion under this Section 3.1 shall be
deemed to occur immediately prior to the close of business on the date of such
surrender of the share certificates for the Series A Preferred Stock to be
converted, and the person or persons entitled to receive the shares of Common
Stock issuable upon such conversion shall be treated for all purposes as the
record holder or holders of such shares of Common Stock as of such
date.  If the conversion is in connection with an underwritten offer
of securities registered pursuant to the Securities Act of 1933, as amended, or
a merger or sale of assets or other pending reorganization of the Corporation,
then the conversion may, at the option of any holder tendering Series A
Preferred Stock for conversion, be conditioned upon the closing of the sale of
securities pursuant to such offering, or of such other transaction, in which
event the person entitled to receive the Common Stock issuable upon such
conversion of the Series A Preferred Stock shall be deemed not to have converted
such Series A Preferred Stock until immediately prior to the closing of such
sale of securities or other such transaction.

    

    3.2           Automatic
Conversion.  Each share of Series A Preferred Stock shall
automatically be converted into the number of shares of Common Stock into which
it is then convertible at the Series A Conversion Price then in effect upon the
earlier to occur of (i) the first date as of which the Corporation has paid to
the holder of each issued and outstanding share of Series A Preferred Stock a
cumulative amount equal to the Series A Original Issue Price, or (ii) the date
on which such automatic conversion is approved by the holders of a number of
shares of Series A Preferred Stock representing a majority of the then issued
and outstanding shares of Series A Preferred Stock.  In the event of
an automatic conversion in accordance with clause (i) of this Section 3.2, the
Series A Preferred Stock shall be deemed to have been so converted as of the
date on which the Corporation pays to the holders of then issued and outstanding
Series A Preferred Stock the final dividend payment that occasions satisfaction
of the Maximum Cumulative Dividend Payment thereon.  

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    3.3           Series A Conversion Price
Adjustments.  The Series A Conversion Price shall be subject to
adjustment from time to time as follows:

    

    (a)           In
the event the Corporation shall declare or pay any dividend on the Common Stock
payable in Common Stock or in any right to acquire Common Stock or in the event
the outstanding shares of Common Stock shall be subdivided by stock split,
reclassification or otherwise, into a greater number of shares of Common Stock,
then the Series A Conversion Price shall, concurrently with the declaration or
payment of such dividend or the effectiveness of such subdivision, be
proportionately decreased.  In the event the outstanding shares of
Common Stock shall be combined or consolidated, by reclassification or
otherwise, into a lesser number of shares of Common Stock, then the Series A
Conversion Price shall, concurrently with the effectiveness of such combination
or consolidation, be proportionately increased.  In the event that the
Corporation shall declare or pay any dividend on the Common Stock payable in any
right to acquire Common Stock for no consideration, the Corporation shall be
deemed to have made a dividend payable in Common Stock in an amount equal to the
maximum number of shares issuable upon exercise of such rights to acquire Common
Stock.

    

    (b)           In
the event the Corporation at any time or from time to time makes (or fixes a
record date for the determination of holders of Common Stock entitled to
receive) a distribution (excluding any repurchases of securities by the
Corporation not made on a pro rata basis from all holders of any class of the
Corporation's securities (subject to obtaining any consents required elsewhere
in this Certificate of Designation)) payable in property or in securities of the
Corporation other than shares of Common Stock, then (except as otherwise
provided in Section
2, above, and subject to adjustment as otherwise required by this Section 3.3) in each
such event the holders of Series A Preferred Stock shall receive, at the time of
such distribution, the amount of property or the number of securities of the
Corporation that they would have received had their Series A Preferred Stock
been converted into Common Stock on the date of such event.

    

    (c)           Except
as provided in Section
2, above, if the Common Stock issuable upon conversion of the Series A
Preferred Stock shall be changed into the same or a different number of shares
of any other class or classes of stock, whether by capital reorganization,
reclassification or otherwise (other than a subdivision or combination of shares
provided for above), then each share of Series A Preferred Stock thereafter
shall be convertible into the number of shares of stock or other securities or
property to which holders of the number of shares of Common Stock of the
Corporation deliverable upon conversion of such share of Series A Preferred
Stock shall have been entitled immediately prior to such reorganization or
reclassification.

    

    (d)           For
purposes of this Certificate of Designation, the following definitions shall
apply:

    

    (i)           "Series A Maximum Cumulative
Dividend Payment" shall mean a cumulative amount, paid from and after the
Series A Original Issue Date, equal to the Series A Original Issue
Price.

    

    (ii)           "Series A Conversion
Price" shall initially be equal to One Dollar ($1.00) per share and shall
be subject to adjustment from time to time pursuant to Section
3.3.

    

    (iii)          "Series A Original Issue
Date" shall mean the date on which the first share of Series A Preferred
Stock was issued.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (iv)           "Series A Original Issue
Price" shall be One Dollar ($1.00) per share.

    

    3.4            No
Impairment.  The Corporation (i) shall not, by amendment of
this Certificate of Designation or through any reorganization, recapitalization,
transfer of assets, consolidation, merger, dissolution, issue or sale of
securities or any other voluntary action, avoid or seek to avoid the terms of
this Section 3;
and (ii) at all times in good faith shall assist in the carrying out of all of
the provisions of this Section 3 and shall
take all such action as may be necessary or appropriate in order to protect
against impairment of the conversion rights of the holders of the Series A
Preferred Stock.

    

    3.5            Certificate.  Upon
the occurrence of each adjustment or readjustment of the Series A Conversion
Price pursuant to this Section 3, the
Corporation, at its expense, promptly shall compute such adjustment or
readjustment in accordance with the terms hereof and prepare and furnish to each
holder of Series A Preferred Stock a certificate executed by the Corporation’s
President and Secretary, setting forth such adjustment or readjustment and
showing in detail the facts upon which such adjustment or readjustment is
based.  Upon the written request at any time of any holder of Series A
Preferred Stock, the Corporation shall furnish to such holder a like certificate
describing such adjustment and readjustment, the Series A Conversion Price at
the time in effect and the number of shares of Common Stock and the amount, if
any, of other property which at the time would be received upon the conversion
of a share of Series A Preferred Stock.

    

    3.6            No Fractional
Shares.  No fractional share shall be issued upon the
conversion of any share or shares of Series A Preferred Stock.  All
shares of Common Stock (including fractions thereof) issuable upon conversion of
more than one share of Series A Preferred Stock by a holder thereof shall be
aggregated for purposes of determining whether the conversion would result in
the issuance of any fractional share.  If, after the aforementioned
aggregation, the conversion would result in the issuance of a fraction of a
share of Common Stock, then the Corporation shall, in lieu of issuing any
fractional share, pay the holder otherwise entitled to such fraction a sum in
cash equal to the fair market value of such fraction on the date of conversion
(as determined in good faith by the Board of Directors).

    

    3.7            Record
Date.  If the Corporation endeavors to determine the record
holders or any class of securities of capital stock for the purpose of
determining the holders thereof who are entitled to receive any dividend (other
than a cash dividend) or other distribution, any right to subscribe for,
purchase, or otherwise acquire any shares of stock of any class or any other
securities or property, or to receive any other right, then the Corporation
shall mail to each record holder of Series A Preferred Stock, at least twenty
(20) days prior to the date specified as the record date in such action, a
notice specifying the date on which any such record is to be taken for the
purpose of such dividend, distribution, or right, and the amount and character
of such dividend, distribution, or right.

    

    3.8            Reservation of
Stock.  The Corporation at all times shall reserve and keep
available out of its authorized but unissued shares of Common Stock, solely for
the purpose of effecting the conversion of the shares of Series A Preferred
Stock, such number of its shares of Common Stock as shall, from time to time, be
sufficient to effect the conversion of all outstanding shares of Series A
Preferred Stock.  If at any time the number of authorized but unissued
shares of Common Stock shall not be sufficient to effect the conversion of all
then outstanding shares of Series A Preferred Stock, then in addition to such
other remedies as shall be available to the holders of Series A Preferred Stock,
the Corporation shall take such corporate action as, in the opinion of its
counsel, may be necessary to increase its authorized but unissued shares of
Common Stock to such number of shares as shall be sufficient for such purposes,
including, without limitation, engaging in best efforts to obtain the requisite
stockholder approval of any necessary amendment to this Certificate of
Designation.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    3.9            Notices.  Any
notice required by this Section 3 to be given
to the holders of Series A Preferred Stock shall be deemed given if deposited in
the United States mail, postage prepaid, and addressed to each holder of record
at such holder's address appearing on the books of the Corporation.

    

    3.10            No Adjustment of Series A
Conversion Price.  No adjustment in the Series A Conversion
Price shall be made as the result of the issuance or deemed issuance of
Additional Shares of Common Stock.

    

    3.11            Effect of
Conversion.  All shares of Series A Preferred Stock which shall
have been surrendered for conversion as herein provided shall no longer be
deemed to be outstanding and all rights with respect to such shares shall
immediately cease and terminate at the time of such conversion, except only the
right of the holders thereof to receive shares of Common Stock in exchange
therefor and to receive payment of any dividends declared but unpaid
thereon.  Any shares of Series A Preferred Stock so converted shall be
retired and cancelled and may not be reissued as shares of such series, and the
Corporation may thereafter take such appropriate action (without the need for
stockholder action) as may be necessary to reduce the authorized number of
shares of Series A Preferred Stock accordingly.

    

    3.12            No Further
Adjustment.  Upon any such conversion, no adjustment to the
Series A Conversion Price shall be made for any declared but unpaid dividends on
the Series A Preferred Stock surrendered for conversion or on the Common Stock
delivered upon conversion.

    

    3.13            Taxes.  The
Corporation shall pay any and all issue and other similar taxes that may be
payable in respect of any issuance or delivery of shares of Common Stock upon
conversion of shares of Series A Preferred Stock pursuant to this Section
3.  The Corporation shall not, however, be required to pay any
tax which may be payable in respect of any transfer involved in the issuance and
delivery of shares of Common Stock in a name other than that in which the shares
of Series A Preferred Stock so converted were registered, and no such issuance
or delivery shall be made unless and until the person or entity requesting such
issuance has paid to the Corporation the amount of any such tax or has
established, to the satisfaction of the Corporation, that such tax has been
paid.

    

    4.           Voting.  As
of any date, each holder of shares of  Series A Preferred Stock shall
be entitled to a number of votes equal to the number of shares of Common Stock
into which such shares of Series A Preferred Stock could be converted as of such
date under Section
3, and shall have voting rights and powers equal to the voting rights and
powers of the Common Stock (except as otherwise expressly provided herein or as
required by law, voting together with the Common Stock as a single class), and
shall be entitled to notice of any stockholders' meeting in accordance with the
Bylaws of the Corporation.  Fractional votes shall not, however, be
permitted and any fractional voting rights resulting from the above formula
(after aggregating all shares into which shares of Series A Preferred Stock held
by each holder could be converted) shall be rounded to the nearest whole number
(with one-half being rounded upward).

    

    5.           Protective
Provisions

    

    5.1            Series A Preferred
Stock.  Notwithstanding the provisions of Section 4, above, the
Corporation shall not take any of the following actions without first obtaining
the prior approval of  the holders of a number of shares of Series A
Preferred Stock, voting as a separate class, representing a majority of the then
issued and outstanding shares of Series A Preferred Stock:

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (a)           Amend Certificate of
Designation.  Amend, alter, or repeal any provision of this
Certificate of Designation; or

    

    (b)           Reclassification; Other
Securities.  Either (i) reclassify or otherwise change the
rights, preferences, or privileges of any securities of the Corporation so as to
cause such securities to have rights that are senior to or pari passu with the rights of
holders of the Series A Preferred Stock with respect to dividend payments or
liquidation proceeds, or (ii) create, or authorize the creation of, or issue or
obligate itself to issue, shares of any class or series of capital stock with
rights that are senior to or pari passu with the rights of
the holders of the Series A Preferred Stock with respect to dividend payments or
liquidation proceeds.

    

    5.2          No
Avoidance.  The Corporation will not, by amendment of this
Certificate of Designation or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or any other
action, avoid or seek to avoid the observance or performance of any of the terms
of the Series A Preferred Stock set forth herein and will at all times in good
faith assist in the carrying out of all such terms and in the taking of all such
action as may be necessary or appropriate, subject to the terms hereof, in order
to protect the rights of the holders of the Series A Preferred Stock against
dilution or other impairment, including without limitation the preservation of
the voting rights in this Section
5.

    

    6.           No
Reissuance of Preferred Stock.  No share or shares of Series A
Preferred Stock acquired by the Corporation by reason of purchase, conversion or
otherwise shall be reissued, and all such shares shall be cancelled, retired and
eliminated from the shares that the Corporation shall be authorized to
issue.

     

    [Signatures appear on the following
page.]

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    IN
WITNESS WHEREOF, the undersigned has executed this Certificate of Designation
this 31 day of December, 2010.

    

    
      
        	
                /s/ Steve Cochennet

              	 
      
	
                Steve
      Cochennet, CEO/PresidentSecurities
Purchase and Asset Acquisition Agreement

    

    by and
among

    

    EnerJex
Resources, Inc.,

    a Nevada
corporation

    ("Company")

    

    and

    

    West
Coast Opportunity Fund, LLC

    Montecito
Venture Partners, LLC

    RGW
Energy, LLC

    J&J
Operating Company, LLC

    Working
Interest Holding, LLC

    

    and

    

    Frey
Living Trust

    ("Investors")

    
      	 
      

    

    

    December
31, 2010

    
      	 
      

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Securities
Purchase and Asset Acquisition Agreement

    

    This
Securities Purchase and Asset Acquisition Agreement (the "Agreement") is made
as of December 31, 2010 (the "Effective Date") by
and among EnerJex
Resources, Inc., a Nevada corporation (the "Company"); West Coast
Opportunity Fund, LLC, a Delaware limited liability company ("WCOF");  Montecito
Venture Partners, LLC, a Delaware limited liability company ("MVP"); RGW Energy,
LLC, a Texas limited liability company ("RGW"); J&J
Operating Company, LLC, a Kansas limited liability company ("J&J"); Working
Interest Holding, LLC, a Kansas limited liability company ("WIH
LLC");  and Frey Living
Trust ("Frey
Living Trust" and, together with WCOF, MVP, RGW, J&J, and WIH LLC,
individually an "Investor" and
collectively the "Investors"), with
reference to the following facts:

    

    Recitals:

     

    A.   
        WCOF and Frey Living Trust are
the holders of certain of the Company's Secured Debentures.

     

    B.      
      MVP and RGW are the sole members of Black
Sable, which owns certain oil and gas working interests in the State of Texas
defined below as the "Black Sable Working Interests."

     

    C.        
    The "WIH LLC Members" are the sole members of WIH LLC,
which owns all of the issued and outstanding membership interests in WI LLC, and
WI LLC owns the "WI LLC Working Interests," as such terms are defined
below.

     

    D.           The
parties have agreed to execute this Agreement in order to memorialize the terms
and conditions on which each Investor shall contribute its respective
Contributed Assets to the Company in exchange for certain shares of the
Company's capital stock and cash, as further described below.

     

    Agreements:

    

    Now,
Therefore, the parties hereto, intending to be legally bound, do hereby
agree as follows:

    

    1.           Definitions.  For
purposes of this Agreement:

    

    1.1           "Articles
of Incorporation"
means the Company's Articles of Incorporation, as filed with the Secretary of
State of the State of Nevada on March 31, 1999, as amended through the date of
this Agreement and to be further amended by the Certificate of Designation
required to be filed hereunder.

    

    1.2           "Assignment
of Membership Interest" means that certain Assignment of Membership
Interest in the form attached hereto as Exhibit
A.

    

    1.3           "Black
Sable" means Black Sable Energy, LLC, a Texas limited liability
company.

    

    1.4           "Black
Sable Working Interests" means the working interests in the "El Toro
Project" and the "Cobb Field Prospect" listed on Exhibit B
hereto.

    

    1.5           "Certificate
of Designation" means that certain Certificate of Designation, setting
forth the rights, preferences, restrictions and other matters relating to the
designation of Series A Preferred Stock, in the form attached hereto as Exhibit
C, which is to be filed with the Secretary of State of the State of
Nevada concurrently with the closing of the transactions contemplated by this
Agreement.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    1.6           "Closing" shall have the meaning set
forth in Section 2.3,
below.

    

    1.7           "Code" means the Internal Revenue
Code of 1986, as amended.

    

    1.8           "Common
Stock" means the
common capital stock, par value $0.001 per share, of the Company.

    

    1.9           "Common
Stock Offering" means the Company's issuance of shares of its Common
Stock to investors who invest, collectively, at least Five Million Dollars
($5,000,000) of gross offering proceeds in the purchase of shares of Common
Stock at a price of Forty Cents ($0.40) per share.

    

    1.10         "Company
Intellectual Property" means all patents, patent applications,
trademarks, trademark applications, service marks, tradenames, copyrights, trade
secrets, licenses, domain names, mask works, information and proprietary rights
and processes as are necessary to the conduct of the Company’s business as now
conducted and as presently proposed to be conducted.

    

    1.11      
  "Compliance
Certificate" means that certain Certificate of Officer in the form
attached hereto as Exhibit
D.

    

    1.12         "Contributed
Assets" means (a) all of the issued and outstanding membership interests
in WI LLC, (b) all of the issued and outstanding membership interests in Black
Sable, (c) 617,317 shares of the common stock of Oakridge Energy, Inc., (d)
700,000 shares of the common stock of Spindletop Oil & Gas Co, (e) the
Secured Debentures held by WCOF, and (f) the Secured Debentures held by Frey
Living Trust.

    

    1.13         "Debenture
Assignment" means that certain Debenture Assignment in the form
attached hereto as Exhibit
E, pursuant to which a holder of Secured Debentures assigns and
contributes such Secured Debentures to the Company hereunder.

    

    1.14         "Equity
Incentive Plan" means that certain EnerJex Resources, Inc., Stock
Incentive Plan, as amended, under which the Company has reserved One Million Two
Hundred Fifty Thousand (1,250,000) shares of Common Stock for the granting of
options and the issuance of Common Stock as "restricted shares" to employees,
officers, and directors of and consultants to the Company.

    

    1.15         "Exchange
Act"
means the Securities Exchange Act of 1934, as amended.

    

    1.16         "Expired
Leases"
means those two mineral leases with Drehr and Jones as further described on
Exhibit
F hereto.

    

    1.17         "Financial
Statements
Date"
means September 30, 2010.

    

    1.18         "Key
Employee" means any executive-level employee (including division director
and vice president-level positions) as well as any employee or consultant who
either alone or in concert with others develops, invents, programs or designs
any Company Intellectual Property.

    

    1.19         "Knowledge,"
as applied to a party that (a) is a corporation, shall mean the current
actual Knowledge of such party's current Board of Directors and officers, (b) is
a limited liability company, shall mean the current actual Knowledge of such
party's managing member(s) or manager(s), as applicable, and (c) is either a
corporation or a limited liability company, shall include the current actual
Knowledge of those employees of the party who are responsible for the matter
that is the subject of the pertinent Knowledge-qualified
representation.

    
      
         

      

      
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    1.20         "Lien"
means, with respect to any asset (including any security), any mortgage, lien,
pledge, charge, security interest or encumbrance of any kind in respect of such
asset; provided,
however, that the term "Lien" shall not include (a) statutory liens
for Taxes that are not yet due and payable, (b) statutory or common law
liens to secure obligations to landlords, lessors or renters under leases or
rental agreements confined to the premises rented, (c)  statutory or common
law liens in favor of carriers, warehousemen, mechanics and materialmen, to
secure claims for labor, materials or supplies and other like liens, and
(d) restrictions on transfer of securities imposed by applicable state and
federal securities laws.

    

    1.21         "Majority
Investors" means Investors holding (or entitled to receive hereunder) a
majority of the shares of Common Stock issued or issuable pursuant to this
Agreement.

    

    1.22         "Material
Adverse Effect"
means an occurrence or circumstance having a consequence that, individually or
in the aggregate, is materially adverse as to the business, properties, assets,
liabilities, affairs, prospects, operations, operating results, or condition
(financial or otherwise) of the Company, individually or taken as a whole; provided, however, that such
term shall not include any circumstance or change related to (a) general
economic conditions, or (b) securities markets generally.

    

    1.23         "Non-Producing
Leases" means those certain Leases listed on Exhibit
O hereto.

    

    1.24         "Oakridge
Shares" means 617,317 freely tradable shares of the common stock of
Oakridge Energy, Inc.

    

    1.25         "Person"
means any individual, corporation, partnership, trust, limited liability
company, association, or other entity.

    

    1.26         "SEC"
means the United States Securities and Exchange Commission.

    

    1.27         "Secured
Debentures" means those certain Senior Secured Debentures of EnerJex
Kansas, Inc., a Nevada corporation formerly known as "Midwest
Energy, Inc." ("Subsidiary"), in the
aggregate original principal amount of $9,000,000, which were issued by the
Subsidiary pursuant to that certain Securities Purchase Agreement dated as of
April 11, 2007, by and among the Subsidiary and the purchasers of such Secured
Debentures, as amended.

    

    1.28         "Securities
Act" means the
Securities Act of 1933, as amended.

    

    1.29         "Series A
Preferred Stock" means the Series A Preferred Stock of the Company having
the rights, preferences, and privileges, and subject to the limitations and
restrictions, set forth in the Certificate of Designation.

    

    1.30         "Shares"
means the shares of Common Stock issued and sold by the Company to the
Investors pursuant to this Agreement.

    

    1.31         "Spindletop
Shares" means 700,000 freely tradable shares of the common stock of
Spindletop Oil & Gas Co.

    

    1.32         "Stock
Assignment" means that certain Stock Assignment Separate from Certificate
in the form attached hereto as Exhibit
G.

    
      
         

      

      
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    1.33         "Stock
Repurchase Agreement" means that certain Stock Repurchase Agreement
between the Company and WIH LLC in the form attached hereto as Exhibit
G, pursuant to which the Company has granted to WIH LLC the right to
require the Company to purchase from WIH LLC up to 3,750,000 Shares at a price
of $0.40 per Share and on the other terms and conditions set forth
therein.

    

    1.34         "Tax"
or "Taxes"
means (a) all federal, state, local, foreign and other net income, gross
income, gross receipts, sales, use, ad valorem, transfer, franchise, profits,
license, lease, service, service use, withholding, payroll, employment, excise,
severance, stamp, occupation, premium, property, windfall profits, customs,
duties or other taxes, fees, levies, assessments or charges of any kind
whatsoever, together with any interest and any penalties, additions to Tax or
additional amounts with respect thereto, (b) any liability for payment of
amounts described in clause (a) whether as a result of transferee
liability, of being a member of an affiliated, consolidated, combined or unitary
group for any period, or otherwise through operation of law, and (c) any
liability for the payment of amounts described in clauses (a) or (b) as a
result of any tax sharing, tax indemnity or tax allocation agreement or any
other express or implied agreement to indemnify any other person.

    

    1.35         "Tax
Return" means any return, declaration, report, statement, information
statement and other document required to be filed with respect to
Taxes.

    

    1.36         "Termination
Date" means December 31, 2010.

    

    1.37         "Transaction
Documents" means
this Agreement, the Assignment of Membership Interest instruments, Debenture
Assignments, and any other agreement, instrument, or document executed in
connection herewith.

    

    1.38         "WIH LLC
Cash Payment"
means an amount equal to One Million Five Hundred Thousand Dollars ($1,500,000),
subject to adjustment pursuant to Section 2.3(d),
below.

    

    1.39         "WIH LLC
Members"
means AINO, LLC; Clifford Johnson; Alva F. Johnson; CalioFog, LLC; James Miller;
Samson, LLC; IRA Resources, Inc., f/b/o Richard A. Mathews IRA 15916; The Waters
Group; Coal Creek Energy, LLC; Domco, LLC; Global Equity Funding, LLC; DV-8
Energy Series 6, LLC; Enutroff, LLC; and Mallard Management, Inc.

    

    1.40         "WI
LLC" means
Working Interest, LLC, a Kansas limited liability company.

    

    1.41         "WI LLC
Working Interests" means
(a) a twelve and one-half percent (12.5%) working interest in the lease
identified as the "Thoren interest" described on Exhibit
H hereto, and (b) an eighty percent (80%) working interest in each of the
other leasehold interests listed on Exhibit
H hereto.

    

    2.           Contribution
of Contributed Assets

    

    2.1           Closing.  The
closing of the issuance and delivery of the Shares shall take place on the date
hereof at the offices of the Company's counsel, DeMint Law, PLLC, 3753 Howard
Hughes Parkway, Second Floor, Suite 314, Las Vegas, Nevada 89169 (or by an
exchange of executed counterpart copies of this Agreement and the other closing
documents via facsimile and overnight courier between counsel for the Company
and the Investors), or at such other time and place as the Company and Investors
mutually agree upon orally or in writing (which time and place are designated as
the "Closing").

    
      
         

      

      
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    2.2         Contribution.   At
the Closing hereunder:

    

    (a)         Contribution
by WCOF.

    

    (i)           WCOF
shall execute and deliver to the Company a Debenture Assignment, assigning to
the Company all rights in and to Secured Debentures in the original principal
amount of One Million Nine Hundred Sixty Thousand Dollars ($1,960,000), on which
the Company was indebted to WCOF as of September 30, 2010, in the aggregate
amount of Two Million Four Hundred Ninety-eight Thousand Seven Dollars and
Seventy-one Cents ($2,498,007.71);

    

    (ii)       
  WCOF shall (A) execute and deliver to the Company a Stock
Assignment, assigning to the Company title to the Oakridge Shares, which the
parties agree have an aggregate value of One Million Six Hundred Seventy-six
Thousand Sixteen Dollars ($1,676,016), or $2.715 per share; and (B) transfer
such shares, of record, to an account at C.K. Cooper & Company and authorize
such brokerage firm to transfer such Oakridge Shares, by book transfer, to an
account maintained at such firm by the Company; and

    

    (iii)         WCOF
shall (A) execute and deliver to the Company a Stock Assignment, assigning to
the Company title to the Spindletop Shares, which the parties agree have an
aggregate value of One Million Two Hundred Ninety-five Thousand Dollars
($1,295,000), or $1.85 per share; and (B) transfer such shares, of record, to an
account at C.K. Cooper & Company and authorize such brokerage firm to
transfer such Spindletop Shares, by book transfer, to an account maintained at
such firm by the Company.

    

    (b)         Contribution
by MVP.  MVP shall execute and deliver an Assignment of
Membership Interest, assigning to the Company all right, title, and interest in
and to MVP's membership interest in Black Sable.

    

    (c)         Contribution
by RGW.  RGW shall execute and deliver an Assignment of
Membership Interest, assigning to the Company all right, title, and interest in
and to RGW's membership interest in Black Sable.

    

    (d)         Contribution
by WIH LLC.  WIH LLC shall execute
and deliver an Assignment of Membership Interest, assigning to the Company all
right, title, and interest in and to WIH LLC's membership interest in WI
LLC.

    

    (e)         Contribution
by Frey Living Trust.   Frey Living Trust shall execute and
deliver to the Company a Debenture Assignment, assigning to the Company all
rights in and to Secured Debentures in the original principal amount of One
Hundred Forty Thousand Dollars ($140,000), on which the Company was indebted to
Frey Living Trust as of September 30, 2010, in the aggregate amount of One
Hundred Seventy-eight Thousand Four Hundred Twenty-nine Dollars
($178,429).

    
      
         

      

      
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    2.3         Shares and
Other Consideration Delivered By Company.

    

    (a)     
    Transfer
Agent Instructions and Shares.

    

    (i)          Instructions.  The
Company shall issue to its transfer agent, and any subsequent transfer agent,
irrevocable instructions to issue certificates or credit Shares to the
applicable balance accounts at The Depository Trust Company ("DTC"), registered in
the name of each Investor identified in Section 2.3(a)(ii),
below or its respective nominee(s), for the Shares of Common Stock issuable at
the Closing pursuant to Section 2.3(a)(ii)
(the "Irrevocable
Transfer Agent Instructions").  The Company warrants that no
instruction other than the Irrevocable Transfer Agent Instructions referred to
in this Section
2.3(a)(i), will be given by the Company to its transfer agent with
respect to such Shares, and that the Shares shall be freely transferable on the
books and records of the Company to the extent provided in this Agreement and
the other Transaction Documents.  If an Investor effects a sale,
assignment or transfer of such Shares, then the Company shall permit the
transfer and shall promptly instruct its transfer agent to issue one or more
certificates or credit shares to the applicable balance accounts at DTC in such
name and in such denominations as specified by such Buyer to effect such sale,
transfer or assignment to be delivered within three (3) business
days.  In the event that such sale, assignment or transfer involves
Shares sold, assigned or transferred pursuant to an effective registration
statement or pursuant to Rule 144, the transfer agent shall issue such Shares to
the Investor, assignee or transferee, as the case may be, without any
restrictive legend.  The Company acknowledges that a breach by it of
its obligations hereunder will cause irreparable harm to an
Investor.  Accordingly, the Company acknowledges that the remedy at
law for a breach of its obligations under this Section 2.3(a)(i)
will be inadequate and agrees, in the event of a breach or threatened breach by
the Company of the provisions of this Section 2.3(a)(i),
that an Investor shall be entitled, in addition to all other available remedies,
to seek an order and/or injunction restraining any breach and requiring
immediate issuance and transfer, without the necessity of showing economic loss
and without any bond or other security being required.

    

    (ii)     
   Shares.  At
the Closing, and in consideration of the contribution of the Contributed Assets
by the Investors pursuant to Section 2.2, above,
the Company shall issue and deliver to:

    

    (A)          WCOF
Ten Million Five Hundred Fifty Thousand Forty-nine (10,550,049) shares of Common
Stock;

    

    (B)           MVP
Fifteen Million Five Hundred Ninety-five Thousand Five Hundred Forty
(15,595,540) shares of Common Stock;

    

    (C)           MVP
Four Million Seven Hundred Seventy-nine Thousand Four Hundred Sixty (4,779,460)
shares of Series A Preferred Stock;

    

    (D)           RGW
Four Million (4,000,000) shares of Common Stock;

    

    (E)           WIH
LLC Eighteen Million Seven Hundred Fifty Thousand (18,750,000) shares of Common
Stock, subject to adjustment pursuant to Section 2.3(d),
below; and

    

    (F)           Frey
Living Trust 223,036 shares of Common Stock.

    

    (b)         Cash to WIH
LLC. Authorize the transfer to WIH LLC, by wire transfer of immediately
available funds on the Closing Date or as soon thereafter as reasonably
practicable, a sum equal to the WIH LLC Cash Payment, subject to adjustment
pursuant to Section
2.3(d), below.

    

    (c)         Put
Agreement with WIH LLC.   Execute and deliver to WIH LLC
that certain Stock Repurchase Agreement in the form attached hereto as Exhibit
G.

    

    (d)         Adjustment
of WIH Cash and Stock.  If, as of the Closing, the WI LLC
Working Interests represent less than an eighty percent (80%) working interest
in each of the "WI LLC Leases" (as such term is defined in Section 4.5(d),
below), then the amount of the WIH Cash Payment and the shares issuable to WIH
LLC pursuant to Section
2.3(a)(ii)(E), above, shall be reduced proportionately to a percentage of
such full WIH Cash Payment and such shares that corresponds to the ratio of (x)
the actual percentage of the working interests in the WIH LLC Leases held by WI
LLC as of the Closing Date, to (y) eighty percent (80%).

    
      
         

      

      
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    3.           Representations
and Warranties of Company.  Except as otherwise set forth in
the Company Disclosure Schedule attached hereto as Exhibit I,
specifically identifying the relevant subparagraphs hereof, which
exceptions shall be deemed to be representations and warranties of the Company
as if made hereunder (the "Company Disclosure
Schedule"), which has been furnished to each Investor prior to the
execution hereof, as a material inducement to the Investors to enter into this
Agreement and purchase the Common Stock hereunder, the Company hereby represents
and warrants to each Investor that as of the Closing Date:

    

    3.1     
    Corporate
Organization and Authority.  The Company (a) is a corporation
duly organized, validly existing, authorized to exercise all its corporate
powers, rights and privileges, and in good standing under the laws of the State
of Nevada; (b) has all requisite corporate power and authority to own, lease and
operate its properties and assets and to carry on its business as now conducted
or contemplated to be conducted; (c) has all requisite power and authority to
execute, deliver and perform its obligations under this Agreement and the
Transaction Documents; and (d) is duly qualified or licensed to do business as a
foreign corporation in, and is in good standing under the laws of, each
jurisdiction in which the failure to so qualify would have a Material Adverse
Effect.

    

    3.2    
     Capitalization.  Immediately
prior to the Closing, the authorized capital of the Company shall consist
of:

    

    (a)         Common
Stock.  One Hundred Million (100,000,000) shares of Common
Stock, of which Five Million Eight Hundred Nine Thousand Six Hundred
Twenty-eight (5,809,628) shares are issued and outstanding.

     

    (b)         Preferred
Stock.  Ten Million (10,000,000) shares of Preferred Stock, of
which (i) Four Million Seven Hundred Seventy-nine Thousand Four Hundred Sixty
(4,779,460) have been designated Series A Preferred Stock for issuance
hereunder, none of which shall be issued or outstanding immediately prior to the
Closing, and (ii) the remainder of which, none of which shall be issued or
outstanding immediately prior to the Closing, may be designated and issued by
the Board of Directors from time to time pursuant to a certificate of
designation hereafter approved by the Board of Directors.  The rights,
restrictions, privileges and preferences of and restrictions upon the Series A
Preferred Stock are set forth in the Certificate of Designation.

     

    (c)         Other
Securities.  Except for Nine
Hundred Twenty-nine Thousand Two Hundred Fifty (929,250) shares of Common Stock
reserved for issuance pursuant to outstanding options granted to employees,
consultants, officers or directors under the Equity Incentive Plan, of which
options or shares have been respectively granted for the numbers of shares set
forth in Section 3.2(c) of the Company Disclosure Schedule (which shall also
show the vesting schedule and exercise price of such outstanding options and
shares that remain subject to any vesting schedule), there are not outstanding
any options, warrants, rights (including conversion or preemptive rights) or
agreements for the purchase or acquisition from the Company of any shares of its
capital stock.  Except for the Certificate of Designation, the
Securities Purchase Agreement, and the Transaction Documents, the Company is not
a party to or subject to any agreement or understanding, and to the Company's
Knowledge there is no agreement or understanding between any individuals and/or
entities, which affects or relates to the voting or giving of written consents
with respect to any Company security or the voting by a director of the Company.
Except as set forth in Section 3.2(c) of the
Company Disclosure Schedule, none of the Company's stock purchase agreements or
stock option documents or any other agreement, document or commitment (written
or oral) of the Company provides for acceleration of vesting (or lapse of a
repurchase right) upon the occurrence of any events.  All outstanding
shares of the Company’s Common Stock and all shares of the Company’s Common
Stock underlying outstanding options are subject to (i) a right of first refusal
in favor of the Company upon any proposed transfer (other than transfers for
estate planning purposes); and (ii) a lock-up or market standoff agreement of
not less than 180 days following the Company’s initial public offering pursuant
to a registration statement filed with the Securities and Exchange Commission
under the Securities Act. Except as set forth in the Company’s public reports
filed with the SEC under the Exchange Act, the Company has never adjusted or
amended the exercise price of any stock options previously awarded, whether
through amendment, cancellation, replacement grant, repricing, or any other
means.  Except as set forth in this Agreement, the Company has no
obligation (contingent or otherwise) to purchase or redeem any of its
securities.

     

    
      
         

      

      
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    (d)         Prior
Shares.  The outstanding shares of Common Stock are duly and
validly authorized and issued, fully paid and nonassessable.  To the
Knowledge of the Company, all such shares were issued in compliance with all
applicable state and federal laws concerning the issuance of
securities.

     

    (e)         409A Compliance. 
No stock options, stock appreciation rights or other equity-based awards issued
or granted by the Company are subject to the requirements of Section 409A of the
Code.  Each "nonqualified deferred compensation plan" (as such term is
defined under Section 409A(d)(1) of the Code and the guidance thereunder)
under which the Company makes, is obligated to make or promises to make,
payments (each, a "409A Plan") complies
in all material respects, in both form and operation, with the requirements of
Section 409A of the Code and the guidance thereunder.  No payment to
be made under any 409A Plan is, or to the Knowledge of the Company will be,
subject to the penalties of Section 409A(a)(1) of the Code.

     

    3.3         Subsidiaries.  Except
as set forth in Section 3.3 of the
Company Disclosure Schedule, the Company does not presently own, have any
investment in, or control, directly or indirectly, or hold any rights to acquire
any interest in any other corporation, partnership, trust, joint venture,
limited liability company, association or other business entity, nor has the
Company ever held such interest.  The Company is not a participant in
any joint venture, partnership or similar arrangement.

    

    3.4         Authorization.  All
corporate action required to be taken by the Company’s board of directors (the
"Board of
Directors") and stockholders in order to authorize the Company to enter
into the Transaction Documents, and to issue the Shares at the Closing and the
Common Stock issuable upon conversion of the Shares, has been taken or will be
taken prior to the Closing.  All action on the part of the officers of
the Company necessary for the execution and delivery of the Transaction
Documents, the performance of all obligations of the Company under the
Transaction Documents to be performed as of the Closing, and the issuance and
delivery of the Shares has been taken or will be taken prior to the
Closing.  The Transaction Documents, when executed and delivered by
the Company, shall constitute valid and legally binding obligations of the
Company, enforceable against the Company in accordance with their respective
terms except (i) as limited by applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance, or other laws of general
application relating to or affecting the enforcement of creditors’ rights
generally, and (ii) as limited by laws relating to the availability of specific
performance, injunctive relief, or other equitable remedies.

    

    3.5         Valid
Issuance of Shares.  The Shares, when issued, sold and
delivered in accordance
with the terms and for the consideration set forth in this Agreement, will be
validly issued, fully paid and nonassessable and free of restrictions on
transfer other than restrictions on transfer under the Transaction Documents,
applicable state and federal securities laws and Liens created by or imposed by
an Investor.  Assuming the accuracy of the representations of the
Investors in Section 4 of
this Agreement and subject to the filings described in clause (ii) of Section 3.6,
below, the Shares will be issued in compliance with all applicable federal and
state securities laws.  The Common Stock issuable upon conversion of
the Shares has been duly reserved for issuance, and upon issuance in accordance
with the terms of the Articles of Incorporation, will be validly issued, fully
paid and nonassessable and free of restrictions on transfer other than
restrictions on transfer under the Transaction Documents, applicable federal and
state securities laws and Liens created by or imposed by an
Investor.  Based in part upon the representations of the Investors in
Section 4 of
this Agreement, and subject to Section 3.6, below,
the Common Stock issuable upon conversion of the Shares will be issued in
compliance with all applicable federal and state securities
laws.

    
      
         

      

      
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    3.6         Governmental
Consents and Filings.

    

    (a)         Assuming
the accuracy of the representations made by the Investors in Section 4 of this
Agreement, no consent, approval, order or authorization of, or registration,
qualification, designation, declaration or filing with, any federal, state or
local governmental authority is required on the part of the Company in
connection with the consummation of the transactions contemplated by this
Agreement, except for (i) the filing of the Certificate of Designation, which
will have been filed as of the Closing, and (ii) filings pursuant to
Regulation D of the Securities Act, and applicable state securities laws,
which have been made or will be made in a timely manner.

    

    (b)         Without
limiting the generality of the foregoing, Company is not in violation of any of
the rules, regulations or requirements of the FINRA OTC Bulletin Board (the
"Principal
Market") and has no Knowledge of any facts or circumstances that would
reasonably lead to delisting or suspension of the Common Stock by the Principal
Market in the foreseeable future. During the one (1) year period prior to the
date hereof, (i) the Common Stock has been listed on the Principal Market or
quoted on the "gray sheets" (the " Gray Sheets "),
(ii) trading in the Common Stock or quotation on the Gray Sheets has not been
suspended by the SEC, the Principal Market or the Gray Sheets and (iii) Company
has received no communication, written or oral, from the SEC or the Principal
Market regarding the suspension or delisting of the Common Stock from the
Principal Market. Company and its Subsidiaries possess all certificates,
authorizations and permits issued by the appropriate regulatory authorities
necessary to conduct their respective businesses, and neither Company nor any
such Subsidiary has received any notice of proceedings relating to the
revocation or modification of any such certificate, authorization or
permit.

    

    3.7        
Securities
Matters.

    

    (a)         SEC
Filings.  The Company's issued and outstanding shares of Common
Stock are registered pursuant to Section 12(g) of the Exchange Act, and the
Company has filed all reports, schedules, forms, statements and other documents
required to be filed by it with the SEC under the Exchange Act for the three (3)
years preceding the date of this Agreement (or such shorter period as the
Company was required by law or regulation to file such material) (all of the
foregoing filed within the period of three (3) years preceding the date hereof
or amended after the date hereof and all exhibits included therein and financial
statements and schedules thereto and documents incorporated by reference
therein, being hereinafter referred to as the "SEC Documents") on
timely basis or has received a valid extension of such time of filing and has
filed any such SEC Document prior to the expiration of any such
extension.  The Company has delivered to the Investors or their
representatives, or made available through the SEC’s website at http://www.sec.gov,
true and complete copies of the SEC Documents.  As of their respective
dates, the SEC Documents complied in all material respects with the requirements
of the Exchange Act and the rules and regulations of the SEC promulgated
thereunder applicable to the SEC Documents, and none of the SEC Documents, at
the time they were filed with the SEC, 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 the light of the
circumstances under which they were made, not misleading.  As of their
respective dates, the financial statements of the Company 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 SEC with
respect thereto.  Such financial statements have been prepared in
accordance with generally accepted accounting principles, consistently applied,
during the periods involved (except (i) as may be otherwise indicated in such
financial statements or the notes thereto, or (ii) 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
position of the Company as of the dates thereof and the results of its
operations and cash flows for the periods then ended (subject, in the case of
unaudited statements, to normal year-end audit adjustments).  No other
information provided by or on behalf of the Company to the Investor which is not
included in the SEC Documents contains any untrue statement of a material fact
or omits to state any material fact necessary in order to make the statements
therein, in the light of the circumstance under which they are or were made and
not misleading.

    
      
         

      

      
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    (b)         Sarbanes-Oxley.  The
Company is in compliance with any and all applicable requirements of the
Sarbanes-Oxley Act of 2002 to small business issuers that are effective as of
the date hereof, and any and all applicable rules and regulations promulgated by
the SEC thereunder that are effective as of the date hereof.

    

    (c)         Investment
Company.  Neither the Company nor any of its affiliates is an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended.

    

    3.8         Litigation.  Except
as set forth in Section 3.8 of the Company Disclosure Schedule, there is no
claim, action, suit, proceeding, arbitration, complaint, charge, investigation,
pending or, to the Company's Knowledge currently threatened (i) against the
Company or any officer, director or Key Employee of the Company arising out of
their employment or board relationship with the Company; (ii) that questions the
validity of the Transaction Documents or the right of the Company to enter into
them, or to consummate the transactions contemplated by the Transaction
Documents; or (iii) that would reasonably be expected to have, either
individually or in the aggregate, a Material Adverse
Effect.   Neither the Company nor, to the Company’s Knowledge,
any of its officers, directors or Key Employees is a party or is named as
subject to the provisions of any order, writ, injunction, judgment or decree of
any court or government agency or instrumentality (in the case of officers,
directors or Key Employees, such as would affect the Company).  There
is no action, suit, proceeding or investigation by the Company pending or which
the Company intends to initiate.  The foregoing includes, without
limitation, actions, suits, proceedings or investigations pending or threatened
in writing (or any basis therefor known to the Company) involving the prior
employment of any of the Company’s employees, their services provided in
connection with the Company’s business, or any information or techniques
allegedly proprietary to any of their former employers, or their obligations
under any agreements with prior employers.

    

    3.9         Intellectual
Property.  The Company owns or possesses or can acquire on
commercially reasonable terms, sufficient legal rights to all Company
Intellectual Property without any known conflict with, or infringement of, the
rights of others.  To the Company’s
Knowledge, no product or service marketed or sold (or proposed to be marketed or
sold) by the Company violates or will violate any license or infringes or will
infringe any intellectual property rights of any other party.  Other
than with respect to commercially available software products under standard
end-user object code license agreements, there are no outstanding options,
licenses, agreements, claims, encumbrances or shared ownership interests of any
kind relating to the Company Intellectual Property, nor is the Company bound by
or a party to any options, licenses or agreements of any kind with respect to
the patents, trademarks, service marks, trade names, copyrights, trade secrets,
licenses, information, proprietary rights and processes of any other
Person.  The Company has not received any communications alleging that
the Company has violated or, by conducting its business, would violate any of
the patents, trademarks, service marks, tradenames, copyrights, trade secrets,
mask works or other proprietary rights or processes of any other
Person.  The Company has obtained and possesses valid licenses to use
all of the software programs present on the computers and other software-enabled
electronic devices that it owns or leases or that it has otherwise provided to
its employees for their use in connection with the Company’s
business.  To the Company’s Knowledge, it will not be necessary to use
any inventions of any of its employees or consultants (or Persons it currently
intends to hire) made prior to their employment by the Company.  Each
employee and consultant has assigned to the Company all intellectual property
rights he or she owns that are related to the Company’s business as now
conducted and as presently proposed to be conducted.  Section 3.9 of the
Company Disclosure Schedule lists all Company Intellectual
Property.  The Company has not embedded any open source, copyleft or
community source code in any of its products generally available or in
development, including but not limited to any libraries or code licensed under
any General Public License, Lesser General Public License or similar license
arrangement.  For purposes of this Section 3.9, the
Company shall be deemed to have Knowledge of a patent right if the Company has
actual Knowledge of the patent right or would be found to be on notice of such
patent right as determined by reference to United States patent
laws.

     

    
      
        
        

      

      
        -10-

        
          

        

      

      
        
        

      

    

     

    3.10    
  Compliance
with Law and Other Instruments.

    

    (a)          No
Violations.  The Company is not in violation or default (i) of
any provisions of its Articles of Incorporation or Bylaws, (ii) of any
instrument, judgment, order, writ or decree, (iii) under any note, indenture or
mortgage, (iv) under any lease, agreement, contract or purchase order to which
it is a party or by which it is bound that is required to be listed on the
Company Disclosure Schedule, or (v) of any provision of federal or state
statute, rule or regulation applicable to the Company, the violation or default
of which would have a Material Adverse Effect.  The execution,
delivery and performance of the Transaction Documents and the consummation of
the transactions contemplated by the Transaction Documents will not result in
any such violation or be in conflict with or constitute, with or without the
passage of time and giving of notice, either (i) a default under any such
provision, instrument, judgment, order, writ, decree, contract or agreement or
(ii) an event which results in the creation of any Lien upon any assets of the
Company or the suspension, revocation, forfeiture, or nonrenewal of any material
permit or license applicable to the Company.

    

    (b)          Foreign
Corrupt Practices. Neither Company nor any of its Subsidiaries nor any
director, officer, agent, employee or other Person acting on behalf of Company
or any of its Subsidiaries has, in the course of its actions for, or on behalf
of, Company or any of its Subsidiaries (i) used any corporate funds for any
unlawful contribution, gift, entertainment or other unlawful expenses relating
to political activity; (ii) made any direct or indirect unlawful payment to any
foreign or domestic government official or employee from corporate funds; (iii)
violated or is in violation of any provision of the U.S. Foreign Corrupt
Practices Act of 1977, as amended; or (iv) made any unlawful bribe, rebate,
payoff, influence payment, kickback or other unlawful payment to any foreign or
domestic government official or employee.

     

    3.11        Agreements;
Actions

    

    (a)          Except
for the Transaction Documents and as set forth in Section 3.11(a) of the Company
Disclosure Schedule, there are no agreements, understandings, instruments,
contracts or proposed transactions to which the Company is a party or by which
it is bound that involve (i) obligations (contingent or otherwise) of, or
payments to, the Company in excess of $50,000, (ii) the license of any
patent, copyright, trademark, trade secret or other proprietary right to or from
the Company, (iii) the grant of rights to manufacture, produce, assemble,
license, market, or sell its products to any other Person that limit the
Company’s exclusive right to develop, manufacture, assemble, distribute, market
or sell its products, or (iv) indemnification by the Company with respect to
infringements of proprietary rights.

    
      
         

      

      
        -11-

        
          

        

      

      
         

      

    

    (b)         Except
as set forth in Section 3.11(b) of the Company Disclosure Schedule, the Company
has not (i) declared or paid any dividends, or authorized or made any
distribution upon or with respect to any class or series of its capital stock,
(ii) incurred any indebtedness for money borrowed or incurred any other
liabilities individually in excess of $50,000 in the aggregate, (iii) made
any loans or advances to any Person, other than ordinary advances for travel
expenses, or (iv) sold, exchanged or otherwise disposed of any of its
assets or rights, other than the sale of its inventory in the ordinary course of
business. For the purposes of subsections (ii) and (iii) of this Section 3.11(b),
all indebtedness, liabilities, agreements, understandings, instruments,
contracts and proposed transactions involving the same Person (including Persons
the Company has reason to believe are affiliated with each other) shall be
aggregated for the purpose of meeting the individual minimum dollar amounts of
such subsection.

    

    (c)         Except
as set forth in Section 3.11(c) of the Company Disclosure Schedule, the Company
is not a guarantor or indemnitor of any indebtedness of any other
Person.

    

    3.12       Certain
Transactions

    

    (a)         Except
as set forth in Section 3.12(a) of the Company Disclosure Schedule, other than
(i) standard employee benefits generally made available to all employees, (ii)
standard director and officer indemnification agreements approved by the Board
of Directors, and (iii) the purchase of shares of the Company’s capital stock
and the issuance of options to purchase shares of the Company’s Common Stock, in
each instance, approved in the written minutes of the Board of Directors
(previously provided to the Investors or their counsel), there are no
agreements, understandings or proposed transactions between the Company and any
of its officers, directors, consultants or Key Employees, or any Affiliate
thereof.

    

    (b)         Except
as set forth in Section 3.12(b) of the Company Disclosure Schedule, the Company
is not indebted, directly or indirectly, to any of its directors, officers or
employees or to their respective spouses or children or to any Affiliate of any
of the foregoing, other than in connection with expenses or advances of expenses
incurred in the ordinary course of business or employee relocation expenses and
for other customary employee benefits made generally available to all
employees.  None of the Company’s directors, officers or employees, or
any members of their immediate families, or any Affiliate of the foregoing are,
directly or indirectly, indebted to the Company or have any (i) material
commercial, industrial, banking, consulting, legal, accounting, charitable or
familial relationship with any of the Company’s customers, suppliers, service
providers, joint venture partners, licensees and competitors, (ii) direct or
indirect ownership interest in any firm or corporation with which the Company is
affiliated or with which the Company has a business relationship, or any firm or
corporation which competes with the Company except that directors, officers or
employees or stockholders of the Company may own stock in (but not exceeding two
percent (2%) of the outstanding capital stock of) publicly traded companies that
may compete with the Company or (iii) financial interest in any material
contract with the Company.

    

    3.13       Rights of
Registration and Voting Rights. Except as set forth in Section 3.13 of
the Company Disclosure Schedule, the Company is not under any obligation to
register under the Securities Act any of its currently outstanding securities or
any securities issuable upon exercise or conversion of its currently outstanding
securities.

    

    3.14       Absence of
Liens. Except
as set forth in Section 3.14 of the Company Disclosure Schedule, the property
and assets that the Company owns are free and clear of all mortgages, deeds of
trust, Liens, and loans, except for statutory Liens for the payment of current
Taxes that are not yet delinquent and Liens that arise in the ordinary course of
business and do not materially impair the Company’s ownership or use of
such property or assets.  With respect to the property and assets it
leases, the Company is in compliance with such leases and, to its Knowledge,
holds a valid leasehold interest free of any Liens other than those of the
lessors of such property or assets.

    
      
         

      

      
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    3.15       Financial
Matters.

    

    (a)         Financial
Statements.  The Company has delivered to each Investor its
audited income statements for the twelve-month period ended March 31, 2010, and
its unaudited income statement for the six-month period ended September 30,
2010, and an audited balance sheet dated as of March 31, 2010, and an unaudited
balance sheet dated as of September 30, 2010 (collectively, the "Financial
Statements").  The Financial Statements have been prepared in
accordance with generally accepted accounting principles applied on a consistent
basis throughout the periods indicated, except that the unaudited Financial
Statements may not contain all footnotes required by generally accepted
accounting principles.  The Financial Statements fairly present in all
material respects the financial condition and operating results of the Company
as of the dates, and for the periods, indicated therein, subject in the case of
the unaudited Financial Statements to normal year-end audit adjustments. Except
as set forth in the Financial Statements, the Company has no material
liabilities or obligations, contingent or otherwise, other than
(i) liabilities incurred in the ordinary course of business subsequent to
Financial Statements Date, (ii) obligations under contracts and commitments
incurred in the ordinary course of business, and (iii) liabilities and
obligations of a type or nature not required under generally accepted accounting
principles to be reflected in the Financial Statements, which, in all such
cases, individually and in the aggregate would not have a Material Adverse
Effect.  The Company maintains and will continue to maintain a
standard system of accounting established and administered in accordance with
generally accepted accounting principles.

    

    (b)         Internal
Accounting and Disclosure Controls. Company maintains a system of
internal accounting controls sufficient to provide reasonable assurance that (i)
transactions are executed in accordance with management’s general or specific
authorizations, (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain asset and liability accountability, (iii)
access to assets or incurrence of liabilities is permitted only in accordance
with management’s general or specific authorization and (iv) the recorded
accountability for assets and liabilities is compared with the existing assets
and liabilities at reasonable intervals and appropriate action is taken with
respect to any difference. Company maintains disclosure controls and procedures
(as such term is defined in Rule 13a-15 under the 1934 Act) that are effective
in ensuring that information required to be disclosed by Company in the reports
that it files or submits under the 1934 Act is recorded, processed, summarized
and reported, within the time periods specified in the rules and forms of the
SEC, including, without limitation, controls and procedures designed to ensure
that information required to be disclosed by Company in the reports that it
files or submits under the 1934 Act is accumulated and communicated to Company’s
management, including its principal executive officer or officers and its
principal financial officer or officers, as appropriate, to allow timely
decisions regarding required disclosure. During the twelve months prior to the
date hereof, neither Company nor any of its Subsidiaries have received any
notice or correspondence from any accountant relating to any potential material
weakness in any part of the system of internal accounting controls of Company or
any of its Subsidiaries.

    

    (c)         Off Balance
Sheet Arrangements. There is no transaction, arrangement, or other
relationship between Company and an unconsolidated or other off balance sheet
entity that is required to be disclosed by Company in its Exchange Act filings
and is not so disclosed or that otherwise would be reasonably likely to have a
Material Adverse Effect.

    
      
         

      

      
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    3.16       Changes.  Since
the Financial Statements Date there has not been:

    

    (a)         any
change in the assets, liabilities, financial condition or operating results of
the Company from that reflected in the Financial Statements, except changes in
the ordinary course of business that have not caused, in the aggregate, a
Material Adverse Effect;

    

    (b)         any
damage, destruction or loss, whether or not covered by insurance, that would
have a Material Adverse Effect;

    

    (c)         any
waiver or compromise by the Company of a valuable right or of a material debt
owed to it;

    

    (d)         any
satisfaction or discharge of any Lien or payment of any obligation by the
Company, except in the ordinary course of business and the satisfaction or
discharge of which would not have a Material Adverse Effect;

    

    (e)         any
material change to a material contract or agreement by which the Company or any
of its assets is bound or subject;

    

    (f)          any
material change in any compensation arrangement or agreement with any employee,
officer, director or stockholder;

    

    (g)         any
resignation or termination of employment of any officer or Key Employee of the
Company;

    

    (h)         any
mortgage, pledge, transfer of a security interest in, or Lien, created by the
Company, with respect to any of its material properties or assets, except Liens
for Taxes not yet due or payable and Liens that arise in the ordinary course of
business and do not materially impair the Company’s ownership or use of such
property or assets;

    

    (i)          any
loans or guarantees made by the Company to or for the benefit of its employees,
officers or directors, or any members of their immediate families, other than
travel advances and other advances made in the ordinary course of its
business;

    

    (j)         
any declaration, setting aside or payment or other distribution in respect of
any of the Company’s capital stock, or any direct or indirect redemption,
purchase, or other acquisition of any of such stock by the Company;

    

    (k)         any
sale, assignment or transfer of any Company Intellectual Property that could
reasonably be expected to result in a Material Adverse Effect;

    

    (l)          receipt
of notice that there has been a loss of, or material order cancellation by, any
major customer of the Company;

    

    (m)        to
the Company’s Knowledge, any other event or condition of any character, other
than events affecting the economy or the Company’s industry generally, 
that could reasonably be expected to result in a Material Adverse Effect;
or

    

    (n)         any
arrangement or commitment by the Company to do any of the things described in
this Section 3.16.

    
      
         

      

      
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    3.17       Employee
Matters

    

    (a)    
     As of the date hereof, the Company employs such
full-time employees, part-time employees and consultants or independent
contractors as are listed in Section 3.17 of the
Company Disclosure Schedule, which sets forth a detailed description of all
compensation, including salary, bonus, severance obligations and deferred
compensation paid or payable for each officer, employee, consultant and
independent contractor of the Company who received compensation in excess of
$75,000 for the fiscal year ended March 31, 2010, or is anticipated to receive
compensation in excess of $75,000 for the fiscal year ending March 31,
2011.

    

    (b)          To
the Company’s Knowledge, none of its employees is obligated under any contract
(including licenses, covenants or commitments of any nature) or other agreement,
or subject to any judgment, decree or order of any court or administrative
agency, that would materially interfere with such employee’s ability to promote
the interest of the Company or that would conflict with the Company’s
business.  Neither the execution or delivery of the Transaction
Documents, nor the carrying on of the Company’s business by the employees of the
Company, nor the conduct of the Company’s business as now conducted and as
presently proposed to be conducted, will, to the Company’s Knowledge, conflict
with or result in a breach of the terms, conditions, or provisions of, or
constitute a default under, any contract, covenant or instrument under which any
such employee is now obligated.

    

    (c)          Except
as set forth in Section 3.17(c) of the Company Disclosure Schedule, the Company
is not delinquent in payments to any of its employees, consultants, or
independent contractors for any wages, salaries, commissions, bonuses, or other
direct compensation for any service performed for it to the date hereof or
amounts required to be reimbursed to such employees, consultants, or independent
contractors. The Company has complied in all material respects with all
applicable state and federal equal employment opportunity laws and with other
laws related to employment, including those related to wages, hours, worker
classification, and collective bargaining.  The Company has withheld
and paid to the appropriate governmental entity or is holding for payment not
yet due to such governmental entity all amounts required to be withheld from
employees of the Company and is not liable for any arrears of wages, Taxes,
penalties, or other sums for failure to comply with any of the
foregoing.

    

    (d)          Except
as set forth in Section 3.17(d) of the Company Disclosure Schedule, to the
Company’s Knowledge, no Key Employee intends to terminate employment with the
Company or is otherwise likely to become unavailable to continue as a Key
Employee, nor does the Company have a present intention to terminate the
employment of any of the foregoing.  The employment of each employee
of the Company is terminable at the will of the Company.  Except as
set forth in Section
3.17 of the Company Disclosure Schedule or as required by law, upon
termination of the employment of any such employees, no severance or other
payments will become due.  Except as set forth in Section 3.17 of the
Company Disclosure Schedule, the Company has no policy, practice, plan, or
program of paying severance pay or any form of severance compensation in
connection with the termination of employment services.

    

    (e)          The
Company has not made any representations regarding equity incentives to any
officer, employees, director or consultant that are inconsistent with the share
amounts and terms set forth in the minutes of meetings of the Board of
Directors.

    

    (f)          Each
former Key Employee whose employment was terminated by the Company has entered
into an agreement with the Company providing for the full release of any claims
against the Company or any related party arising out of such
employment.

    
      
         

      

      
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    (g)          Section 3.17 of the
Company Disclosure Schedule sets forth each employee benefit plan maintained,
established or sponsored by the Company, or which the Company participates in or
contributes to, which is subject to the Employee Retirement Income Security Act
of 1974, as amended ("ERISA").  The
Company has made all required contributions and has no liability to any such
employee benefit plan, other than liability for health plan continuation
coverage described in Part 6 of Title I(B) of ERISA,  and has complied
in all material respects with all applicable laws for any such employee benefit
plan.

    

    (h)          The
Company is not bound by or subject to (and none of its assets or properties is
bound by or subject to) any written or oral, express or implied, contract,
commitment or arrangement with any labor union, and no labor union has requested
or, to the Knowledge of the Company, has sought to represent any of the
employees, representatives or agents of the Company.  There is no
strike or other labor dispute involving the Company pending, or to the Company’s
Knowledge, threatened, which could have a Material Adverse Effect, nor is the
Company aware of any labor organization activity involving its
employees.

    

    (i)           To
the Company’s Knowledge, none of the Key Employees or directors of the Company
has been (i) subject to voluntary or involuntary petition under the federal
bankruptcy laws or any state insolvency law or the appointment of a receiver,
fiscal agent or similar officer by a court for his business or property; (ii)
convicted in a criminal proceeding or named as a subject of a pending criminal
proceeding (excluding traffic violations and other minor offenses);
(iii) subject to any order, judgment, or decree (not subsequently reversed,
suspended, or vacated) of any court of competent jurisdiction permanently or
temporarily enjoining him from engaging, or otherwise imposing limits or
conditions on his engagement in any securities, investment advisory, banking,
insurance, or other type of business or acting as an officer or director of a
public company; or (iv) found by a court of competent jurisdiction in a
civil action or by the Securities and Exchange Commission or the Commodity
Futures Trading Commission to have violated any federal or state securities,
commodities, or unfair trade practices law, which such judgment or finding has
not been subsequently reversed, suspended, or vacated.

    

    3.18        Tax Returns
and payments.  There are no federal, state county, local or
foreign Taxes due and payable by the Company which have not been timely
paid.  There are no accrued and unpaid federal, state, country, local
or foreign Taxes of the Company which are due, whether or not assessed or
disputed.  There have been no examinations or audits of any Tax
Returns or reports by any applicable federal, state, local or foreign
governmental agency.  The Company has duly and timely filed all
federal, state, county, local and foreign Tax Returns required to have been
filed by it and there are in effect no waivers of applicable statues of
limitations with respect to Taxes for any year.

    

    3.19       Insurance.  The
Company has in full force and effect fire and casualty insurance policies with
extended coverage, sufficient in amount (subject to reasonable deductions) to
allow it to replace any of its properties that might be damaged or
destroyed.

    

    3.20       Confidential
Information and Invention Assignment Agreements.  Each current
and former employee, consultant and officer of the Company has executed an
agreement with the Company regarding confidentiality and proprietary information
substantially in the form or forms delivered to the counsel for the Investors
(the "Confidential
Information Agreements").  No current or former Key Employee
has excluded works or inventions from his or her assignment of inventions
pursuant to such Key Employee’s Confidential Information
Agreement.  The Company is not aware that any of its Key Employees is
in violation thereof.

    

    3.21        Permits.  The
Company has all franchises, permits, licenses and any similar authority
necessary for the conduct of its business, the lack of which could reasonably be
expected to have a Material Adverse Effect.  The Company is not in
default in any material respect under any of such franchises, permits, licenses
or other similar authority.

    
      
         

      

      
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    3.22       Corporate
Documents.  The Articles of Incorporation and Bylaws of the
Company are in the form provided to the Investors.  The copy of the
minute book of the Company provided to the Investors contains minutes of
meetings of directors and stockholders and actions by written consent without a
meeting by the directors and accurately reflects in all material respects
actions by the directors (and any committee of directors) and stockholders with
respect to all transactions referred to in such minutes.

    

    3.23        83(b)
Elections.  To the Company's Knowledge, all elections and
notices under Section 83(b) of the Code have been or will be timely filed
by all individuals who have acquired shares of the Company's Common Stock
subject to substantial risk of forfeiture.

    

    3.24       Environmental
and Safety Laws.  Except as could not reasonably be expected to
have a Material Adverse Effect and as set forth in Section 3.24 of the Company
Disclosure Schedule, (a) the Company is and has been in compliance with all
Environmental Laws; (b) there has been no release or threatened release of
any pollutant, contaminant or toxic or hazardous material, substance or waste,
or petroleum or any fraction thereof, (each a "Hazardous Substance")
on, upon, into or from any site currently or heretofore owned, leased or
otherwise used by the Company; (c) there have been no Hazardous Substances
generated by the Company that have been disposed of or come to rest at any site
that has been included in any published U.S. federal, state or local "superfund"
site list or any other similar list of hazardous or toxic waste sites published
by any governmental authority in the United States; and (d) there are no
underground storage tanks located on, no polychlorinated biphenyls ("PCBs") or
PCB-containing equipment used or stored on, and no hazardous waste as defined by
the Resource Conservation and Recovery Act, as amended, stored on, any site
owned or operated by the Company, except for the storage of hazardous waste in
compliance with Environmental Laws.  The Company has made available to
the Investors true and complete copies of all material environmental records,
reports, notifications, certificates of need, permits, pending permit
applications, correspondence, engineering studies, and environmental studies or
assessments.   For purposes of this Section 3.24,
"Environmental Laws" means any law, regulation, or other applicable requirement
relating to (a) releases or threatened release of Hazardous Substance; (b)
pollution or protection of employee health or safety, public health or the
environment; or (c) the manufacture, handling, transport, use, treatment,
storage, or disposal of Hazardous Substances.

    

    3.25       Brokers and
Finders.  Except as set
forth in Section 3.25 of the Company Disclosure Schedule, the Company has not
retained any investment banker, broker or finder in connection with the
transactions contemplated by this Agreement.

    

    3.26       Disclosure.  No
representation or warranty of the Company contained in this Agreement, as
qualified by the Company Disclosure Schedule, and certificate furnished or to be
furnished to Investors at the Closing contains any untrue statement of a
material fact or, to the Company’s Knowledge, omits to state a material fact
necessary in order to make the statements contained herein or therein not
misleading in light of the circumstances under which they were
made.  It is understood that this representation is qualified by the
fact that the Company has not delivered to the Investors, and has not been
requested to deliver, a private placement or similar memorandum or any written
disclosure of the types of information customarily furnished to purchasers of
securities.

    
      
         

      

      
        -17-

        
          

        

      

      
         

      

    

    4.           Representations
and Warranties of Investors.

    

    4.1          Investment
Representations and Acknowledgments.  Each Investor, severally
and not jointly, represents, warrants and acknowledges to the Company (provided
that such representations and warranties do not limit or obviate the
representations and warranties of the Company set forth in this Agreement) as
follows:

    

    (a)        
Authorization.  Investor
has full power and authority to enter into this Agreement and all corporate
action on the part of Investor, its officers, directors, managers, members and
stockholders necessary for the purchase of the Shares has been taken, and this
Agreement constitutes the legally binding and valid obligation of Investor,
enforceable in accordance with its terms, except (i) as limited by applicable
bankruptcy, insolvency, reorganization, moratorium, and other laws of general
application affecting enforcement of creditors' rights generally, and (ii) as
limited by laws relating to the availability of specific performance, injunctive
relief or other equitable remedies.

    

    (b)         Brokers and
Finders.  Investor has not
retained any investment banker, broker or finder in connection with the
transactions contemplated by this Agreement.

    

    (c)          Purchase
Entirely for Own Account.  This Agreement is made with Investor
in reliance upon Investor's representation to the Company, which by Investor's
execution of this Agreement Investor hereby confirms, that the Shares to be
received by Investor will be acquired for investment for Investor's own account,
not as a nominee or agent, and not with a view to the sale or distribution of
any part thereof, and that Investor has no present intention of selling,
granting any participation in, or otherwise distributing the same.  By
executing this Agreement, Investor further represents that it has no contract,
undertaking, agreement or arrangement with any Person to sell, transfer or grant
participation to such Person or to any third Person, with respect to any of the
Shares.

    

    (d)          Restricted
Securities.

    

    (i)          Investor
understands and acknowledges that the offering of the Shares pursuant to this
Agreement will not be registered under the Securities Act on the grounds that
the offering and sale of securities contemplated by this Agreement are exempt
from registration pursuant to Section 4(2) and/or Regulation D of the Securities
Act, and that the Company's reliance upon such exemption is predicated, in part,
upon Investor's representations set forth in this Agreement.

    

    (ii)         The
certificates for the Shares shall bear a legend in substantially the following
form:

    

    "THE
SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "ACT").  SUCH SECURITIES MAY NOT BE
TRANSFERRED UNLESS A REGISTRATION STATEMENT UNDER THE ACT IS IN EFFECT AS TO
SUCH TRANSFER OR, IN THE OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE
COMPANY, SUCH TRANSFER MAY BE MADE PURSUANT TO RULE 144 OR REGISTRATION UNDER
THE ACT IS UNNECESSARY IN ORDER FOR SUCH TRANSFER TO COMPLY WITH THE
ACT."

    
      
         

      

      
        -18-

        
          

        

      

      
         

      

    

    (e)         Limitations
on Disposition.

    

    (i)           In
no event will Investor dispose of any of its Shares (other than pursuant to an
effective registration statement under the Securities Act or pursuant to Rule
144 promulgated by the United States Securities and Exchange Commission (the
"Commission")
under the Securities Act ("Rule 144") or any
similar or analogous rule), unless and until (i) Investor shall have notified
the Company of the proposed disposition and shall have furnished the Company
with a statement of the circumstances surrounding the proposed disposition, and
(ii) if reasonably requested by the Company, Investor shall have furnished the
Company with an opinion of counsel satisfactory in form and substance to the
Company to the effect that such disposition will not require registration under
the Securities Act.

    

    (ii)         Notwithstanding
the provisions of subsection (a) above, no such registration statement or
opinion of counsel shall be necessary for a transfer by an Investor that is
(i) a partnership to an affiliate, a partner of such partnership or a
retired partner of such partnership who retires after the date hereof, or to the
estate of any such partner or retired partner or the transfer by gift, will or
intestate succession of any partner to his or her spouse or to the siblings,
lineal descendants or ancestors of such partner or his or her spouse;
(ii) a corporation, to its stockholders in accordance with their interest
in the corporation; (iii) a limited liability company, to its members or
former members in accordance with their interest in the limited liability
company; or (iv) to the Investor's family member or trust for the benefit
of the individual Investor, if the transferee agrees in writing to be subject to
the terms hereof to the same extent as if he or she were an original Investor
hereunder.

    

    (f)          Investment
Experience and Disclosure of Information.  Investor (i) has
such Knowledge and experience in financial and business matters as to be capable
of evaluating the merits and risks of its prospective investment in the Shares;
(ii) has the ability to bear the economic risks of its prospective investment;
and (iii) is able to bear the economic risk of its investment and to hold the
Shares for an indefinite period of time.

    

    (g)         Accredited
Investor.  Investor is an "accredited investor," as such term
is defined for purposes of Rule 501 of Regulation D, as presently in effect,
promulgated by the Commission.

    

    (h)         Residence.  The
State of the principal residence or principal executive office of the Investor
is set forth below the Investor's signature on the signature pages
hereto.

    

    (i)          Non-Reliance
on Company. Investor is not relying on the Company with respect to the
tax and other economic considerations relating to this Agreement and the
purchase of the Shares. In regard to such considerations, Investor has relied on
the advice of, or has consulted with, his, her or its own personal tax,
investment or other advisors and has not relied on the Company or any of its
affiliates, officers, directors, attorneys, accountants or any affiliates of any
thereof and each other person, if any, who controls any thereof, within the
meaning of Section 15 of the Securities Act, except to the extent such advisors
shall be deemed to be as such.

    

    (j)          Full Access
to Company Records. Investor has been granted the opportunity to conduct
a full and fair examination of the records, documents and files of the Company,
to ask questions of and receive answers from representatives of the Company, its
officers, directors, employees and agents concerning the terms and conditions of
this Agreement and the purchase of Shares, the Company and its business and
prospects, and to obtain any additional information which Investor deems
necessary to verify the accuracy of any information received.

    

    (k)         No General
Solicitation. The Shares were not offered to Investor through an
advertisement in printed media of general and regular circulation, radio or
television.

    
      
         

      

      
        -19-

        
          

        

      

      
         

      

    

    (l)          Limited
Market. There is currently a very limited market for the Company’s Common
Stock on the Over-the-Counter Bulletin Board. There can be no assurances that a
liquid market will develop for the Company’s Common Stock or if developed, be
sustained in the future. Consequently, Investor may never be able to liquidate
its investment and Investor may bear the economic risk of its investment for an
indefinite period of time.

    

    4.2          Separate
Representations of WCOF.   WCOF represents and warrants to
the Company that:

    

    (a)          Contributed
Assets.  WCOF is the sole owner of the Secured Debentures,
Oakridge Shares, and Spindletop Shares, that WCOF is contributing to the Company
pursuant to Section
2.2, above, free and clear of all Liens, and has the sole power and every
right and lawful authority to transfer such Secured Debentures and shares to the
Company without the consent of any other Person.  Upon execution and
delivery of the instruments contemplated by Section 2.2, above,
the Company shall acquire title to such Contributed Assets free and clear of all
Liens arising by or through any act of or claim against WCOF.

    

    (b)          Waiver of
Claims for Interest.  WCOF agrees to accept the Shares being
issued to WCOF pursuant to Section 2.3, above,
in complete satisfaction of all claims against the Company with respect to the
principal of and interest on the Secured Debentures that WCOF is contributing to
the Company pursuant to Section 2.2,
above.

    

    4.3          Separate
Representations of MVP.

    

    (a)         Contributed
Assets.  MVP is the sole owner of the membership interest in
Black Sable that MVP is contributing to the Company pursuant to Section 2.2, above,
free and clear of all Liens, and has the sole power and every right and lawful
authority to transfer such membership interest to the Company without the
consent of any Person other than BSE and RGW, which consent has been
obtained.  Upon execution and delivery of the instruments contemplated
by Section 2.2,
above, to be executed by MVP, the Company shall acquire title to such
Contributed Assets free and clear of all Liens arising by or through any act of
or claim against MVP.

    

    (b)         Operating
Agreement.  MVP has delivered to the Company a copy of the
articles of organization of Black Sable and the Amended and Restated Operating
Agreement of Black Sable dated effective January 1, 2010, as amended (as so
amended, the "BSE
Operating Agreement").  Such articles of organization and BSE
Operating Agreement have not been further modified or amended, and remain in
full force and effect.

    

    (c)         Ownership
of Interests in Black Sable.  Except for the membership
interest in Black Sable that is held by RGW and is being contributed to the
Company pursuant to Section 2.2, above,
no Person other than MVP and RGW holds any membership interest or economic
interest in Black Sable, or any right, option, warrant or other security
exercisable for, convertible into, or exhangeable into a membership interest or
economic interest in Black Sable.

    

    4.4          Separate
Representations of RGW. RGW represents and warrants to the Company
that:

    
      
         

      

      
        -20-

        
          

        

      

      
         

      

    

    (a)         Contributed
Assets.  RGW is the sole owner of the membership interest in
Black Sable that RGW is contributing to the Company pursuant to Section 2.2, above,
free and clear of all Liens, and has the sole power and every right and lawful
authority to transfer such membership interest to the Company without the
consent of any other Person other than BSE and MVP, which consent has been
obtained.  Upon execution and delivery of the instruments contemplated
by Section 2.2,
above, the Company shall acquire title to such Contributed Asset free and clear
of all Liens arising by or through any act of or claim against RGW.

    

    (b)         Operating
Agreement.  RGW has delivered to the Company a copy of the
articles of organization of Black Sable and the Amended and Restated Operating
Agreement of Black Sable dated effective January 1, 2009 (the "BSE Operating
Agreement").  Such articles of organization and BSE Operating
Agreement have not been further modified or amended, and remain in full force
and effect.

    

    (c)         Ownership
of Interests in Black Sable.  Except for the membership
interest in Black Sable that is held by RGW and is being contributed to the
Company pursuant to Section 2.2, above,
no Person other than MVP and RGW holds any membership interest or economic
interest in Black Sable, or any right, option, warrant or other security
exercisable for, convertible into, or exhangeable into a membership interest or
economic interest in Black Sable.

    

    (d)         Black Sable
Working Interests.   The Black Sable Working Interests are
held by Black Sable free and clear of all Liens
whatsoever.   Except as expressly set forth on Exhibit
B hereto, (i) all leases under which Black Sable holds such Black Sable
Working Interests (the "Black Sable Leases")
are in full force and effect, and (ii) all taxes with respect to each Black
Sable Working Interest for all periods prior to the Effective Date of this
Agreement have been paid in full.  To the extent that it is hereafter
determined that any such taxes have not been paid (including but not limited to
all taxes attributable to all periods prior to the Effective Date of this
Agreement that are not yet due and payable), Black Sable shall pay or reimburse
the Company for such taxes upon written demand therefore.  Neither
Black Sable nor, to the Knowledge of Black Sable, any of the lessors under any
Black Sable Lease, is in default of its respective obligations under any such
Black Sable Lease, and to the Knowledge of Black Sable there do not exist any
circumstances that, with the delivery of notice or passage of time, would
constitute a default by any such Person under any such Black Sable
Lease.

    

    (e)         Condition
of Leaseholds.   Except as set forth on Exhibit
B hereto, to the Knowledge of Black Sable, (i) none of the leasehold
interests under any of the Black Sable Leases contains any waste materials
(whether toxic, hazardous, or extremely hazardous and related to the oil and gas
operations on such leasehold) or other adverse physical conditions, including,
but not limited to, the presence of unknown abandoned oil and gas wells, water
wells, sumps, pits, pipelines or other waste or spill sites, and (ii) all of the
equipment appurtenant to the real property that is included within any of the
Black Sable Leases is in good working order and condition, reasonable wear and
tear excepted.

    

    (f)          "As is" and
"Where is."   Except for the express representations and
warranties of Black Sable set forth in this Agreement or any of the instruments
delivered by Black Sable to the Company regarding the Black Sable Working
Interests or the Black Sable Leases:

    

    (i)           Neither
Black Sable nor any of its respective members, officers, directors, members,
agents, and attorneys, makes any warranties, express or implied, with respect to
the quality, design, physical condition, fitness for a particular purpose,
production volumes, profitability or capacity of any of the Black Sable Leases;
and

    
      
         

      

      
        -21-

        
          

        

      

      
         

      

    

    (ii)         All
such Black Sable Leases, and the wells, equipment and fixtures associated
therewith, are being delivered to the Company in their respective "AS IS, WHERE
IS" condition existing on the Closing Date, with reasonable exception for normal
wear and tear.  The Company assumes all risks that the properties that
are subject to such Black Sable Leases may contain waste materials (whether
toxic, hazardous, extremely hazardous or otherwise) or other adverse physical
conditions, including, but not limited to, the presence of unknown abandoned oil
and gas wells, water wells, sumps, pits, pipelines or other waste or spill sites
which may or may not have been revealed by Company’s investigation.

    

    4.5          Separate
Representations of J&J and WIH LLC.   J&J and WIH
LLC jointly and severally represent and warrant to the Company
that:

    

    (a)         Contributed
Assets.  WIH LLC (i) is the sole owner of one hundred percent
(100%) of the issued and outstanding membership interests in WI LLC, which
membership interests WIH LLC is contributing to the Company pursuant to Section 2.2, above,
free and clear of all Liens, and (ii) has the sole power and every right and
lawful authority to transfer such membership interests in WI LLC  to
the Company without the consent of any other Person.  No Person has
any option, warrant, or other right to acquire any membership or economic
interest in WI LLC.  Upon execution and delivery of the instruments
contemplated by Section 2.2, above,
the Company shall acquire title to such Contributed Asset free and clear of all
Liens arising by or through any act of or claim against WIH LLC or any Person
that assigned an interest in any of the WI LLC Working Interests to WIH LLC or
WI LLC.

    

    (b)         Articles
and Operating Agreement.  WIH LLC has delivered to the Company
a copy of (i) the articles of organization and the Operating Agreement of WIH
LLC dated effective December 7, 2010 (the "WIH LLC Operating
Agreement"), and (ii) the articles of organization and the Operating
Agreement of WI LLC dated effective December 7, 2010 (the "WI LLC Operating
Agreement").  Such articles of organization, the WIH LLC
Operating Agreement, and the WI LLC Operating Agreement have not been further
modified or amended, and remain in full force and effect.

    

    (c)         Ownership
of Interests in WI LLC.  Except for the membership interest in
WI LLC that is held by WIH LLC and is being contributed to the Company pursuant
to Section 2.2,
above, no Person holds any membership interest or economic interest in WI LLC,
or any right, option, warrant or other security exercisable for, convertible
into, or exhangeable into a membership interest or economic interest in WI
LLC.

    

    (d)         WI LLC
Working Interests.

    

    (i)           The
WI LLC Working Interests are comprised of (A) a one hundred percent (100%)
interest in the "Thoren interest" described on Exhibit
H hereto, (B) an eighty percent (80%) working interest in the remainder
of the leasehold interests identified on Exhibit
H, under which WI LLC holds such WI LLC Working Interests (collectively,
the "WI LLC
Leases"), and are held by WI LLC free and clear of all Liens whatsoever,
and (C) the interests in the Non-Producing Leases identified on Exhibit
O hereto.

    

    (ii)         Except
as expressly set forth on Exhibit
H, (i) all WI LLC Leases are in full force and effect, and (ii) all taxes
with respect to each WI LLC Working Interest for all periods prior to the
Effective Date of this Agreement have been paid in full.  Each WI LLC
Working Interest has the respective Net Revenue Interest ("NRI") set forth for
such WI LLC Working Interest on Exhibit
H.  To the extent that it is hereafter determined that any such
taxes have not been paid (including but not limited to all taxes attributable to
all periods prior to the Effective Date of this Agreement that are not yet due
and payable), J&J and WIH LLC shall pay or reimburse the Company for such
taxes upon written demand therefore.   Neither WI LLC nor, to the
Knowledge of J&J or WIH LLC, the lessor under any WI LLC Lease, is in
default of its respective obligations under any such WI LLC Lease, and to the
Knowledge of WIH LLC there do not exist any circumstances that, with the
delivery of notice or passage of time, would constitute a default by any such
Person under any such WI LLC Lease.

    
      
         

      

      
        -22-

        
          

        

      

      
         

      

    

    (e)         Condition
of Leaseholds.   Except as set forth on Exhibit
H hereto, to the Knowledge of J&J and WIH LLC, (i) none of the
leasehold interests under any of the WIH LLC Leases contains any waste materials
(whether toxic, hazardous, or extremely hazardous and related to the oil and gas
operations on such leasehold) or other adverse physical conditions, including,
but not limited to, the presence of unknown abandoned oil and gas wells, water
wells, sumps, pits, pipelines or other waste or spill sites, and (ii) all of the
equipment appurtenant to the real property that is included within any of the
WIH LLC Leases is in good working order and condition, reasonable wear and tear
excepted.

    

    (f)          "As is" and
"Where is."   Except for the express representations and
warranties of WIH LLC set forth in this Agreement or any of the instruments
delivered by WIH LLC to the Company regarding the WI LLC Working Interests or
the WI LLC Leases under which such WI LLC Working Interests are
held:

    

    (i)           Neither
WIH LLC nor any of its respective members, officers, directors, members, agents,
and attorneys, makes any warranties, express or implied, with respect to the
quality, design, physical condition, fitness for a particular purpose,
production volumes, profitability or capacity of any of the WI LLC Leases;
and

    

    (ii)         All
such WI LLC Leases, and the wells, equipment and fixtures associated therewith,
are being delivered to the Company in their respective "AS IS, WHERE IS"
condition existing on the Closing Date, with reasonable exception for normal
wear and tear.  The Company assumes all risks that the properties that
are subject to such WI LLC Leases may contain waste materials (whether toxic,
hazardous, extremely hazardous or otherwise) or other adverse physical
conditions, including, but not limited to, the presence of unknown abandoned oil
and gas wells, water wells, sumps, pits, pipelines or other waste or spill sites
which may or may not have been revealed by Company’s investigation.

    

    4.6          Separate
Representations of Frey Living Trust.   Frey Living Trust
represents and warrants to the Company that:

    

    (a)         Contributed
Assets.  Frey Living Trust is the sole owner of the Secured
Debentures that Frey Living Trust is contributing to the Company pursuant to
Section 2.2,
above, free and clear of all Liens, and has the sole power and every right and
lawful authority to transfer such Secured Debentures and shares to the Company
without the consent of any other Person.  Upon execution and delivery
of the instruments contemplated by Section 2.2, above,
the Company shall acquire title to such Contributed Assets free and clear of all
Liens arising by or through any act of or claim against Frey Living
Trust.

    

    (b)         Waiver of
Claims for Interest.  Frey Living Trust agrees to accept the
Shares being issued to Frey Living Trust pursuant to Section 2.3, above,
in complete satisfaction of all claims against the Company with respect to the
principal of and interest on the Secured Debentures that Frey Living Trust is
contributing to the Company pursuant to Section 2.2,
above.

    

    4.7          Separate
Representations of J&J.  J&J represents, warrants,
covenants and agrees that (a) within ten (10) days following the Effective Date
of this Agreement, J&J shall convey or cause the conveyance to the Company
of the Expired Leases, and (b) each such Expired Lease shall be on the
respective terms set forth on Exhibit
F hereto.

    
      
         

      

      
        -23-

        
          

        

      

      
         

      

    

    4.8          State and
Federal Securities Laws.   No federal or state agency has
passed upon the Shares or made any finding or determination as to the fairness
of the transactions contemplated under this Agreement.

    

    5.           Covenants
of Parties.

    

    5.1          Operations
of the Company.   Except as contemplated by this Agreement
or as described in Section 5.1 of
the Company Disclosure Schedule, during the period from the date hereof to the
Closing, the Company shall, and shall cause each of its subsidiaries to, conduct
its operations in the ordinary course of business consistent with past practice
and, to the extent consistent therewith, with no less diligence and effort than
would be applied in the absence of this Agreement, use its commercially
reasonable efforts to preserve intact its current business organizations, keep
available the service of its current officers and employees and preserve its
relationships with customers, suppliers, distributors, lessors, creditors,
employees, contractors and others having business dealings with it, with the
intention that its goodwill and ongoing businesses shall be unimpaired at the
Closing.  Without limiting the generality of the foregoing, except as
otherwise expressly provided in this Agreement, and except as described in
Section 5.1 of the Company Disclosure Schedule, between the date hereof and
the Closing, neither the Company nor any of its subsidiaries shall, without the
prior written consent of the Majority Holders:

    

    (a)          Amend
its Articles of Incorporation or Bylaws (or other similar governing
instruments), except to adopt and file the Certificate of Designation in order
to designate and authorize the issuance of 4,779,460 shares of Series A
Preferred Stock to be issued hereunder;

    

    (b)          Authorize
for issuance or grant, issue, sell, grant, deliver or agree or commit to issue,
sell, grant or deliver (whether through the issuance or granting of options,
warrants, commitments, subscriptions, rights to purchase or otherwise) any stock
of any class or any other debt or equity securities or equity equivalents
(including any stock options or stock appreciation rights) except for the
issuance and sale of Company Shares upon (i) the exercise of Company Stock
Options and other convertible securities of the Company granted, issued and
outstanding prior to the date hereof, or (ii) the sale of shares of Company
Stock to employees of the Company issued under the Company Equity
Incentive  Plan prior to the date hereof; provided that for purposes of
this Section 6.1(b),
Company Stock Options and other convertible securities of the Company shall not
be deemed granted, issued and outstanding prior to the date hereof, and shares
of Company Stock shall not be deemed issued to employees under the Company
Equity Incentive Plan prior to the date hereof under such options, convertible
securities and Company Stock, unless the same are disclosed in Section 2.2,
above, or in Section 2.2 of the Company Disclosure Schedule;

    

    (c)          Split,
combine or reclassify any shares of its capital stock, declare, set aside or pay
any dividend or other distribution (whether in cash, stock or property or any
combination thereof) in respect of its capital stock, make any other actual,
constructive or deemed distribution in respect of its capital stock or otherwise
make any payments to stockholders in their capacity as such, or redeem or
otherwise acquire any of its securities or any securities of any of its
subsidiaries;

    

    (d)          Adopt
a plan of complete or partial liquidation, dissolution, merger, consolidation,
restructuring, recapitalization or other reorganization of the Company or any of
its subsidiaries (other than the transactions contemplated hereunder and the
Common Stock Offering);

    

    (e)          Alter
through merger, liquidation, reorganization, restructuring or any other fashion
the corporate structure or ownership of any subsidiary;

     

    
      
         

      

      
        -24-

        
          

        

      

      
         

      

    

    (f)          Either
(i) incur or assume any long-term or short-term Indebtedness or issue any
debt securities, in each case, except for borrowings under existing lines of
credit in the ordinary course of business and consistent with past practices, or
modify or agree to any amendment of the terms of any of the foregoing;
(ii) assume, guarantee, endorse or otherwise become liable or responsible
(whether directly, contingently or otherwise) for the obligations of any other
person except for obligations of subsidiaries of the Company incurred in the
ordinary course of business and consistent with past practices; (iii) make
any loans, advances or capital contributions to or investments in any other
person (other than customary loans or advances to employees in each case in the
ordinary course of business consistent with past practice not to exceed Fifty
Thousand Dollars ($50,000) in the aggregate and to the extent permitted by
applicable law); (iv) pledge or otherwise encumber shares of capital stock
of the Company or any of its subsidiaries; or (v) mortgage or pledge any of
its material assets, tangible or intangible, or create or suffer to exist any
material Lien thereupon;

    

    (g)         Except
as may be required by applicable law or as contemplated by this Agreement, enter
into, adopt or amend or terminate any bonus, profit sharing, special
remuneration, compensation, severance, termination, stock option, stock
appreciation right, restricted stock, performance unit, stock equivalent, stock
purchase agreement, pension, retirement, deferred compensation, employment,
health, life, or disability insurance, dependent care, severance or other
employee benefit plan agreement, trust, fund or other arrangement for the
benefit or welfare of any director, officer, employee or consultant in any
manner or increase in any manner the compensation or fringe benefits of any
director, officer or employee or pay any benefit not required by any plan and
arrangement as in effect as of the date hereof (including the granting of stock
appreciation rights or performance units);

    

    (h)         Grant
any severance or termination pay to any director, officer, employee or
consultant;

    

    (i)          Except
as expressly contemplated by this Agreement, enter into or amend any employment
agreements, oral or written, increase the compensation payable or to become
payable by the Company or any of its subsidiaries to any of its officers,
stockholders, directors, employees or consultants, or adopt or amend any
employee benefit plan or arrangement, oral or written (including any amendment
to the Company Equity Incentive Plan or the agreements thereunder), or increase
the salaries or wage rates of its officers, stockholders, directors, employees
or consultants, in amounts not greater than and not with greater frequency than
under prior Company practices;

    

    (j)          Terminate
the employment of any employee, manager or officer or grant any severance or
termination pay to any member, manager, officer or any other employee, except
such terminations or payments in amounts not greater than under prior Company
practices or made pursuant to written agreements or other legally binding
commitments disclosed to the Investors in writing and in effect on the date
hereof;

    

    (k)         Exercise
its discretion or otherwise voluntarily accelerate the vesting of any Company
Stock Option as a result of the transactions contemplated hereunder or the
Common Stock Offering, any other change of control of the Company (as defined in
the Company Equity Incentive Plan) or otherwise;

    

    (l)          Other
than in the ordinary course of business and consistent with past practices,
(i) acquire, sell, lease, license, transfer or otherwise dispose of any
assets in any single transaction or series of related transactions having a fair
market value in excess of Fifty Thousand Dollars ($50,000) in the aggregate;
(ii) enter into any exclusive license, distribution, marketing, sales or
other agreement; (iii) enter into a "development services" or other similar
agreement; or (iv) acquire, sell, lease, license, transfer or otherwise dispose
of any Company Intellectual Property;

    
      
         

      

      
        -25-

        
          

        

      

      
         

      

    

    (m)        Except
as may be required as a result of a change in applicable law or in generally
accepted accounting principles, change any material accounting principle,
practice or method used by it;

    

    (n)         Revalue
in any material respect any of its assets, including writing down the value of
inventory or writing-off notes or accounts receivable, other than in the
ordinary course of business and consistent with past practices;

    

    (o)          Either
(i) acquire (by merger, consolidation or acquisition of stock or assets)
any corporation, partnership or other business organization or entity or
division thereof or any equity interest therein; (ii) enter into any contract or
agreement other than in the ordinary course of business consistent with past
practice that would be material to the Company and its subsidiaries, taken as a
whole; (iii) amend, modify or waive any material right under any Scheduled
Contract or any other material contract of the Company or any of its
subsidiaries; (iv) breach or otherwise violate the material terms of any
Scheduled Contracts; (v) materially modify its standard warranty terms for
its products or amend or modify any product warranties in effect as of the date
hereof in any material manner that is adverse to the Company or any of its
subsidiaries; (vi) authorize any new or additional capital expenditure or
expenditures if any such expenditure or expenditures or (vii) authorize any
new or additional manufacturing capacity expenditure or expenditures for any
manufacturing capacity contracts or arrangements;

    

    (p)          Make
or revoke any Tax election or settle or compromise any income Tax liability,
other than any such election or revocation that would not have a Material
Adverse Effect on the Company;

    

    (q)          Allow
any insurance policy relating to the Company's or any of its subsidiaries'
assets, properties or business to be amended or terminated without replacing
such policy with a policy providing at least equal coverage, insuring comparable
risks and issued by an insurance company financially comparable to the prior
insurance company;

    

    (r)          Fail
to file any Tax Returns when due (or, alternatively, fail to file for available
extensions) or fail to cause such Tax Returns when filed to be complete and
accurate in all material respects other than any such failure that would not
have a Material Adverse Effect on the Company;

    

    (s)          Fail
to pay any material Taxes or other material debts when due;

    

    (t)          Except
for those claims to be settled as set forth on Exhibit
M hereto, commence any litigation or any binding dispute resolution
process (other than in respect of any breach of or claim arising under this
Agreement), or settle or compromise any pending or threatened suit, action,
claim or other dispute that (i) relates to the transactions contemplated
hereby, or (ii) the settlement or compromise of which would involve more
than Twenty-five Thousand Dollars ($25,000) or that would otherwise be material
to the Company and its subsidiaries, taken as a whole, or relates to any Company
Intellectual Property matters;

    

    (u)          Take
any action or fail to take any action that could reasonably be expected to (i)
limit the utilization of any of the net operating losses, built-in losses, Tax
credits or other similar items of the Company or its subsidiaries under
Sections 382, 383, 384 or 1502 of the Code and the Treasury Regulations
thereunder, or (ii) cause any transaction in which the Company or any of its
subsidiaries was a party that was intended to be treated as a reorganization
under Section 368(a) of the Code to fail to qualify as a reorganization
under Section 368(a) of the Code;

    
      
         

      

      
        -26-

        
          

        

      

      
         

      

    

    (v)          Except
as set forth in Section 5.1(v) of the Company Disclosure Schedule, enter
into any licensing, distribution, sponsorship, advertising or other similar
contracts, agreements, or obligations which may not be canceled without penalty
by the Company or its subsidiaries upon notice of 30 days or less or which
provide for payments by or to the Company or its subsidiaries in an amount in
excess of Fifty Thousand Dollars ($50,000) over the term of the
agreement;

    

    (w)         Engage
in any willful action with the intent to directly or indirectly adversely impact
any of the transactions contemplated by this Agreement, other than pursuant to
rights expressly conferred upon the Company under this Agreement;
or

    

    (x)          Take
or agree in writing or otherwise to take any of the actions described in Sections 5.1(a)
through 5.2(w)
that it is prohibited from taking (and it shall use all commercially reasonable
efforts not to take any action that would make any of the representations or
warranties of the Company contained in this Agreement (including the Exhibits
hereto) untrue or incorrect).

    

    5.2          No
Shop.

    

    (a)          Subject
to the exception set forth in Sections 6.2(b),
6.2(c), and
6.2(d), below,
until the earliest of (i) the execution of the Definitive Agreements, (b) the
Termination Date, or (c) the mutual termination of this Agreement (such period,
the "Restricted
Period"), neither the Company nor any subsidiary of the Company nor any
of the Company's officers or directors (or any representative acting on their
behalf) shall directly or indirectly solicit or provide any information to or
enter into any agreement with any corporation, other entity, or person other
than one or more of the Investors, or any of their respective affiliates,
concerning any acquisition of any of the securities of, or all or substantially
all of assets of, the Company or any merger of the Company or any subsidiary of
the Company or any sale of any material assets or any sale of any shares of the
Company or any of its affiliates, other than pursuant to outstanding
compensatory stock options, warrants, convertible debentures, other contractual
commitments made and approved by the Company's Board of Directors prior to
October 27, 2010 or with entities that have executed non-disclosure or other
agreements with the Company prior to October 27, 2010.  If, during the
Restricted Period, the Company, any of its subsidiaries, or any officer,
director, employee, representative or other agent of the Company or any of its
subsidiaries, receives any inquiry or offer from any other company or person
with respect to the acquisition of the Company, its securities, or all or any
material portion of its assets (whether by stock purchase, asset acquisition,
merger, or otherwise), then the Company immediately shall advise WCOF of such
inquiry in detail or offer (including all terms thereof) and provide to WCOF
copies of all written documents memorializing or relating to such inquiry or
offer.

    

    (b)          Notwithstanding
the provisions of Section 6.2(a),
above, during the Restricted Period, the Company shall be entitled to negotiate
with investors approved by the Majority Investors (the "Approved Investors")
regarding the terms and conditions on which the Approved Investors may purchase
shares of the Company's Common Stock pursuant to the Common Stock
Offering.

    
      
         

      

      
        -27-

        
          

        

      

      
         

      

    

    (c)          Notwithstanding
the provisions of Section 6.2(a),
above, if at any time during the Restricted Period, the Company receives a
written proposal from a third party for the acquisition of a majority of the
Company’s securities or assets, a merger of the Company with or into any other
entity, or any other similar transaction with the Company (an "Acquisition
Proposal"), and if the Board of Directors of the Company determines in
good faith, after consultation with independent financial advisors and outside
legal counsel, that such action is required in order for the Board of Directors
of the Company to comply with its fiduciary obligations to the Company’s
stockholders under Nevada law, and that such Acquisition Proposal constitutes or
is reasonably expected to lead to a "Superior Proposal" (as defined below), then
the Company may (x) furnish, pursuant to an acceptable confidentiality
agreement, information with respect to the Company to the third party who has
made such Acquisition Proposal; provided that the
Company shall promptly (and in no event later than 24 hours) provide to the
Investors any material information concerning the Company that is provided to
any third party given such access which was not previously provided to the
Parties; and (y) engage in or otherwise participate in discussions or
negotiations with the third party making such Acquisition Proposal; provided, further, that the
Company shall promptly (and in no event later than 24 hours) provide to the
Investors (i) a written summary of the material terms of such Acquisition
Proposal (including the pricing, terms, conditions and other material provisions
and the identity of the proposed party or parties to such proposed Acquisition
Transaction) and (ii) if such Acquisition Proposal is in writing, a copy of
such Acquisition Proposal.   For purposes of the foregoing, the
term "Superior
Proposal" means an unsolicited, bona fide written offer made
by a third party to consummate an Acquisition Proposal that the Board of
Directors of the Company has determined in its good faith judgment is reasonably
likely to be consummated in accordance with its terms, taking into account all
legal, regulatory and financial aspects of the proposal and the third party
making the proposal, and if consummated, would result in a transaction in which
(i) the Company’s senior secured debentures are redeemed in full for cash at
maturity without requiring the debenture holders to forfeit any Company shares
of common stock, and (ii) the Company’s Board of Directors unanimously agree
that the value of the Company’s common shares would exceed the value resulting
from completion of the Transactions).

    

    (d)          Notwithstanding
the provisions of Section 6.2(a),
above, the Board of Directors of the Company may enter into a definitive
agreement with respect to an Acquisition Proposal, if and only if, prior to
taking such action, the Board of Directors of the Company has determined in good
faith, after consultation with independent financial advisors and outside legal
counsel, (x) that such action is required in order for the Board of
Directors of the Company to comply with its fiduciary obligations to the
Company’s stockholders under Nevada law, and (y) that such Acquisition
Proposal constitutes a Superior Proposal; provided, however, that
(w) the Company has given the Parties at least ten (10) Business Days’
prior written notice of its intention to take such action (which notice shall
specify the material terms and conditions of any such Superior Proposal
(including the identity of the party making such Superior Proposal) and has
contemporaneously provided a copy of the relevant proposed transaction
agreements with the party making such Acquisition Proposal to the Parties),
(x) the Company has negotiated in good faith with the Parties during such
notice period to the extent the Parties wish to negotiate, to enable the Parties
to revise the terms of this Agreement such that it would cause the Superior
Proposal to no longer constitute a Superior Proposal, (y) following the end
of such notice period, the Board of Directors of the Company shall have
considered in good faith any changes to this Agreement proposed in writing by
the Parties, and shall have determined that the Superior Proposal would continue
to constitute a Superior Proposal if such revisions were to be given effect, and
(z) in the event of any material change to the material terms of such
Superior Proposal, the Company shall, in each case, have delivered to the
Parties an additional notice and the notice period shall have recommenced,
except that the notice period shall be at least two (2) business
days.

    

    5.3          Access to
Information.  From and after the date hereof, Purchaser may,
directly or through its representatives, review the properties, books and
records of the Company and its financial and legal condition to the extent it
deems necessary or advisable to familiarize itself with such properties and
other matters.  The Company hereby agrees to permit Investors and
their representatives to have, from and after the date hereof, after reasonable
notice, reasonable access to the premises and to all of the books and records of
the Company and to cause the officers of the Company to furnish Investors with
such financial and operating data and other information with respect to the
Business as Investors will from time to time reasonably request.

     

    
      
         

      

      
        -28-

        
          

        

      

      
         

      

    

    

    5.4           Commercially
Reasonable Efforts.  Each of the parties hereto will cooperate
and use commercially reasonable efforts to take, or cause to be taken, all
appropriate actions, and to make, or cause to be made, all filings necessary,
proper or advisable under applicable Law to satisfy all conditions to the
Closing and to consummate and make effective the transactions contemplated by
this Agreement.

    

    5.5           Public
Announcements.  Except as otherwise required by law, neither
the Company, any of its respective subsidiaries and affiliates, or any of the
Investors or any of their affiliates shall issue any press release or otherwise
make any public statements with respect to the details of this Agreement, or any
proposed Third Party Acquisition (as defined in the Voting Agreements), without
the prior written consent of the other; provided that, nothing in
this Section 6.5 is intended or shall be construed as precluding the
Investors from disclosing to their members the existence and terms of this
Agreement to the reasonably required to obtain their approval of such
transactions and all other transactions incident thereto.

    

    5.6           Notification
of Certain Matters.  The Company shall give prompt notice to
the Investors, and the Investors shall give prompt notice to the Company, of
(i) the occurrence or nonoccurrence of any event the occurrence or
nonoccurrence of which has caused or would be likely to cause any representation
or warranty contained in this Agreement to be untrue or inaccurate in any
material respect at or prior to the Effective Time, and (ii) any material
failure of the Company, Company or Subsidiary, as the case may be, to comply
with or satisfy in any material respect any covenant condition or agreement to
be complied with or satisfied by it hereunder; provided, however, that the delivery
of any notice pursuant to this Section 6.6
shall not cure such breach or non-compliance or limit or otherwise affect the
remedies available hereunder to the party receiving such notice.

    

    5.7           Additions
to and Modification of Company Disclosure
Schedule.  Concurrently with the execution and delivery of this
Agreement, the Company has delivered to Investor a Company Disclosure Schedule
that includes all of the material information required by the relevant
provisions of this Agreement.  In addition, the Company shall deliver
to Investors such additions to or modifications of any Sections of the Company
Disclosure Schedule necessary to make the information set forth therein true,
accurate and complete in all material respects as soon as practicable after such
information is available to the Company after the date of execution and delivery
of this Agreement; provided,
however, that such disclosure shall not be deemed to constitute an
exception to its representations and warranties under Section 3, nor
limit the rights and remedies of the Investors under this Agreement for any
breach by the Company of such representation and warranties.

    

    6.           Conditions
to Closing

    

    6.1           Conditions
to Investors' Obligations.  The obligations of each Investor
under Section 2 of
this Agreement are subject to the fulfillment on or before the Closing of each
of the following conditions, any of which may be waived in writing by such
Investor but which waiver shall not be effective against any Investor who does
not consent in writing thereto.

    

    (a)           Representations
and Warranties.  The representations and warranties of the
Company contained in Section 3 shall be
true on and as of the Closing with the same effect as if made on and as of the
Closing.

    

    (b)           Performance.  The Company shall
have performed or fulfilled all agreements, obligations and conditions contained
herein required to be performed or fulfilled by the Company before the
Closing.

    
      
         

      

      
        -29-

        
          

        

      

      
         

      

    

     

    (c)           Blue Sky
Compliance.  The Company shall have complied with and be
effective under the securities laws of the State of California and any other
state, as necessary to offer and sell the Shares to each Investor.

    

    (d)           Secretary’s
Certificate.  The Secretary of the Company shall deliver to
each Investor at the Closing a certificate (i) stating that the copies attached
thereto of the Company’s Articles of Incorporation and Bylaws and the
resolutions of its Board of Directors and stockholders relating to the sale of
the Shares are true and complete copies of such documents and resolutions, and
(ii) certifying the incumbent officers and their signatures.

    

    (e)           Compliance
Certificate.  The Company shall have delivered to Investors the
Compliance Certificate, dated as of the Closing, signed by the Company's
President, certifying that the conditions set forth in Sections 6.1(a) and
6.1(b) have
been satisfied and stating that there shall have been no Material Adverse Effect
with respect to the Company since the Financial Statements Date.

    

    (f)           Authorization
of the Board of Directors of the Company.  The Board of
Directors shall have duly adopted resolutions authorizing the execution,
delivery and performance of this Agreement, the Transaction Documents, and each
of the agreements contemplated hereby, the filing of the Certificate of
Designation, the acquisition of the Contributed Assets in exchange for the
issuance and sale of the Shares, the Stock Repurchase Agreement attached hereto
as Exhibit
G, and the WIH LLC Cash Payment, and the consummation of all other
transactions contemplated by this Agreement and the Transaction
Documents.

    

    (g)           Closing of
Transactions Under Securities Purchase Agreement.  The
transactions contemplated by the Securities Purchase Agreement shall close
concurrently with the closing of the issuance of Shares under this
Agreement.

    

    (h)           Board of
Directors.  Immediately following the Closing, the Board of
Directors of the Company shall consist of Atticus Lowe, Robert G. Watson, James
Miller, and Lance Helfert.

    

    (i)           Deliveries
by Company.  The Company shall have delivered to the Investors
the share certificates, Promissory Note, and J&J Cash Consideration in
accordance with Section 2.3(b),
above.

    

    (j)           Stock
Repurchase Agreement.  The Company shall have executed and
delivered to WIH LLC the Stock Repurchase Agreement in the form attached hereto
as Exhibit
G.

    

    (k)           Fairness
Opinion.  The Company's Board of Directors shall have received
from C.K. Cooper & Company a written opinion that the terms of the
transactions contemplated by this Agreement are fair to the Company and its
stockholders.

    

    (l)           Employment
Agreement with Watson.  The Company and Robert G. Watson shall
have executed an Employment Agreement in the form attached hereto as Exhibit
J.

    

    (m)         J&J
Contractor Agreements.  The Company shall have executed and
delivered to J&J a Service Agreement and a Joint Operating Agreement in the
respective forms attached hereto as Exhibit
K.

    
      
         

      

      
        -30-

        
          

        

      

      
         

      

    

     

    (n)           Resignations.  All
Persons serving as officers or directors of the Company immediately prior to the
Closing shall have tendered to the Company their written resignation from such
respective position, effective immediately after the Closing.

    

    (o)           Settlements
with Vendors.   The Majority Investors shall have
delivered to the Company a certificate in the form attached hereto as Exhibit
L, confirming that the terms on which the Company shall have settled
claims of its vendors listed on Exhibit M
hereto are acceptable to the Investors.

    

    (p)           Opinion of
Counsel.  Counsel for the Company shall have delivered to each
Investor an opinion in the form attached hereto as Exhibit
N.

    

    (q)           Share
Trading.   The Company's Common Stock (i) shall be
designated for quotation on the Principal Market and (ii) shall not have been
suspended, as of the Closing Date, by the SEC or the Principal Market from
trading on the Principal Market nor shall suspension by the SEC or the Principal
Market have been threatened, as of the Closing Date, either (A) in writing by
the SEC or the Principal Market, or (B) by falling below the minimum listing
maintenance requirements of the Principal Market.

    

    (r)           No
Injunctions.  No provision of any applicable Law and no
judgment, injunction, order or decree will be in effect, and no action shall
have been commenced seeking any of the foregoing), which will prohibit the
consummation of the transactions contemplated under this Agreement.

    

    (s)           Good
Standing Certificates.  The Company shall have delivered to
Investors a certificate of good standing issued by the Secretary of State for
the State of Nevada, the State of Kansas, and the applicable authority for each
other jurisdiction in which the Company is qualified to do business, dated a
recent date before the Closing.

    

    (t)           Consents
and Qualifications.  The Company shall have obtained
(i) copies of all third party and governmental consents, approvals and
filings required in connection with the consummation of the transactions
hereunder (including, without limitation, all blue sky law filings and waivers
of all preemptive rights and rights of first refusal), and (ii) all
authorizations, approvals or permits, if any, of any governmental authority or
regulatory body of the United States or of any state that are required in
connection with the lawful issuance and sale of the Shares pursuant to this
Agreement shall be duly obtained and effective as of the Closing.

    

    6.2           Conditions
to Company's Obligations.  The obligations of the Company under
Section 2
of this Agreement are subject to the fulfillment at or before the Closing of
each of the following conditions, any of which may be waived in writing by the
Company:

    

    (a)           Representations
and Warranties.  The representations and warranties of each
Investor contained in Section 4 shall be
true on and as of the Closing with the same effect as though said
representations and warranties had been made on and as of the
Closing.

    

    (b)           Contribution
of Contributed Assets.  Each of the Investors shall have
executed and delivered to the Company the documents and instruments required
under Section
2.2(a), above, to effect the contribution of the Contributed Assets to
the Company.

     

    
      
         

      

      
        -31-

        
          

        

      

      
         

      

    

     

    7.           Termination
of Agreement

    

    7.1         Termination.  This
Agreement may be terminated at any time prior to the Closing:

    

    (a)           by
the mutual written consent of Company and the Majority Investors;

    

    (b)           by
Company, upon notice to the Investors, if an event occurs which, without any
breach by Company of its obligations under this Agreement related to such event,
render impossible the compliance with one or more of the conditions to the
obligations of Company set forth in Section 7.2 (and such
compliance is not waived by Company);

    

    (c)           by
the Investors, upon notice to Company, if an event occurs which, without any
breach by the Investors of their respective obligations under this Agreement
related to such event, render impossible the compliance with one or more of the
conditions to the obligations of the Investors set forth in Section 7.1 (and such
compliance is not waived by the Majority Investors);

    

    (d)           either:

    

    (i)           by
the Investors, upon written notice to Purchaser, if (A) the Investors are
not then in material default of their respective obligations under this
Agreement, (B) the Company has materially breached any of its representations,
warranties or covenants hereunder, (C) the Majority Investors deliver to the
Company a written notice describing the breach by Company, and (D)
Company  fails to cure such breach within fifteen (15) days following
delivery of that written notice describing the breach; or

    

    (ii)           by
Company, upon written notice to the Investors, if (A) the Company is not
then in material default of its obligations under this Agreement, (B) any of the
Investors has materially breached any of his, her, or its respective
representations, warranties or covenants hereunder, (C) Company delivers to
Investors a written notice describing the breach, and (D) Investors fail to cure
such breach within fifteen (15) days following delivery of that written notice
describing the breach.

    

    (e)           by
Company or the Investors, if the transactions contemplated hereby have not been
consummated on or before the Termination Date.

    

    7.2         Break-up
Fee.  As the sole remedy of the Investors, if the Company
either breaches its obligations under this Agreement (including but not limited
to Section 6.2,
above), or exercises the "fiduciary out" described in Section 6.2(c) and
(d), above, and
fails to close the Transactions contemplated herein, and within 120 days after
the date of the last day of the Restricted Period, the Company signs a letter of
intent or other agreement relating to the acquisition of all or substantially
all of the Company's assets or any of the securities of the Company (except for
outstanding compensatory stock options, warrants, convertible debentures, or
other contractual commitments made and approved by the Company's Board of
Directors prior to October 27, 2010), whether directly or indirectly and whether
through purchase, merger, consolidation, or otherwise, and such transaction is
ultimately consummated, then immediately upon the closing of such transaction,
the Company shall pay to the Investors a transaction break-up fee equal to Seven
Hundred Fifty Thousand Dollars ($750,000) (which break-up fee shall be allocated
to and shared by the Investors in proportion to the number of shares of Common
Stock issuable to each such Investor under this Agreement).

     

    
      
         

      

      
        -32-

        
          

        

      

      
         

      

    

     

    8.           Additional
Covenants of Parties

    

    8.1           Indemnification.
In consideration of each Investor’s execution and delivery of the Transaction
Documents and acquiring the Shares thereunder and in addition to all of the
Company’s other obligations under the Transaction Documents, the Company shall
jointly and severally defend, protect, indemnify and hold harmless each Investor
and each other holder of the Securities and all of their stockholders, partners,
members, officers, directors, employees and direct or indirect investors and any
of the foregoing Persons’ agents or other representatives (including, without
limitation, those retained in connection with the transactions contemplated by
this Agreement) (collectively, the "Indemnitees") from
and against any and all actions, causes of action, suits, claims, losses, costs,
penalties, fees, liabilities and damages, and expenses in connection therewith
(irrespective of whether any such Indemnitee is a party to the action for which
indemnification hereunder is sought), and including reasonable attorneys’ fees
and disbursements (the "Indemnified
Liabilities"), incurred by any Indemnitee as a result of, or arising out
of, or relating to (a) any misrepresentation or breach of any representation or
warranty made by the Company in the Transaction Documents or any other
certificate, instrument or document contemplated hereby or thereby, (b) any
breach of any covenant, agreement or obligation of the Company contained in the
Transaction Documents or any other certificate, instrument or document
contemplated hereby or thereby or (c) any cause of action, suit or claim brought
or made against such Indemnitee by a third party (including for these purposes a
derivative action brought on behalf of the Company) and arising out of or
resulting from (i) the execution, delivery, performance or enforcement of the
Transaction Documents or any other certificate, instrument or document
contemplated hereby or thereby, (ii) any transaction financed or to be financed
in whole or in part, directly or indirectly, with the proceeds of the issuance
of the Securities, or (iii) the status of such Investor or holder of the
Securities as an investor in the Company pursuant to the transactions
contemplated by the Transaction Documents.

    

    (a)           To
the extent that the foregoing undertakings by the Company may be unenforceable
for any reason, the Company shall make the maximum contribution to the payment
and satisfaction of each of the Indemnified Liabilities which is permissible
under applicable law.

    

    (b)           Promptly
after receipt by an Indemnified Person or Indemnified Party under this Section
9.2 of notice of the commencement of any action or proceeding (including any
governmental action or proceeding) involving a Claim, such Indemnified Person or
Indemnified Party shall, if a Claim in respect thereof is to be made against any
indemnifying party under this Section 9.2, deliver
to the indemnifying party a written notice of the commencement thereof, and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume control of the defense thereof with counsel
mutually satisfactory to the indemnifying party and the Indemnified Person or
the Indemnified Party, as the case may be; provided, however, that an
Indemnified Person or Indemnified Party shall have the right to retain its own
counsel with the fees and expenses of not more than one counsel for such
Indemnified Person or Indemnified Party to be paid by the indemnifying party,
if, in the reasonable opinion of counsel retained by the indemnifying party, the
representation by such counsel of the Indemnified Person or Indemnified Party
and the indemnifying party would be inappropriate due to actual or potential
differing interests between such Indemnified Person or Indemnified Party and any
other party represented by such counsel in such proceeding. In the case of an
Indemnified Person, legal counsel referred to in the immediately preceding
sentence shall be selected by the Majority Investors.  The Indemnified
Party or Indemnified Person shall cooperate reasonably with the indemnifying
party in connection with any negotiation or defense of any such action or Claim
by the indemnifying party and shall furnish to the indemnifying party all
information reasonably available to the Indemnified Party or Indemnified Person
which relates to such action or Claim. The indemnifying party shall keep the
Indemnified Party or Indemnified Person fully apprised at all times as to the
status of the defense or any settlement negotiations with respect thereto. No
indemnifying party shall be liable for any settlement of any action, claim or
proceeding effected without its prior written consent, provided, however, that the
indemnifying party shall not unreasonably withhold, delay or condition its
consent.  No indemnifying party shall, without the prior written
consent of the Indemnified Party or Indemnified Person, consent to entry of any
judgment or enter into any settlement or other compromise which does not include
as an unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party or Indemnified Person of a release from all liability in
respect to such Claim or litigation.  Following indemnification as
provided for hereunder, the indemnifying party shall be subrogated to all rights
of the Indemnified Party or Indemnified Person with respect to all third
parties, firms or corporations relating to the matter for which indemnification
has been made.  The failure to deliver written notice to the
indemnifying party within a reasonable time of the commencement of any such
action shall not relieve such indemnifying party of any liability to the
Indemnified Person or Indemnified Party under this

    
      
         

      

      
        -33-

        
          

        

      

      
         

      

    

     

    (c)           The
indemnification required by this Section 9.2 shall be made by periodic payments
of the amount thereof during the course of the investigation or defense, as and
when bills are received or Indemnified Damages are incurred.

    

    (d)           The
indemnity agreements contained herein shall be in addition to (i) any cause of
action or similar right of the Indemnified Party or Indemnified Person against
the indemnifying party or others and (ii) any liabilities the indemnifying party
may be subject to pursuant to the law.

    

    (e)           
To the extent any indemnification by an indemnifying party is prohibited or
limited by law, the indemnifying party agrees to make the maximum contribution
with respect to any amounts for which it would otherwise be liable under this
Section 9.2 to
the fullest extent permitted by law; provided, however, that: (i)
no Person involved in the sale of Shares which Person is guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the 1933 Act) in
connection with such sale shall be entitled to contribution from any Person
involved in such sale of Shares who was not guilty of fraudulent
misrepresentation; and (ii) contribution by any seller of Shares shall be
limited in amount to the net amount of proceeds received by such seller from the
sale of such Shares.

    

    8.2           Reports
Under Exchange Act.   With a view to making available to
the Investors the benefits of Rule 144 promulgated under the 1933 Act or any
other similar rule or regulation of the SEC that may at any time permit the
Investors to sell securities of Company to the public without registration
("Rule 144"),
Company agrees to:

    

    (a)           Make
and keep public information available, as those terms are understood and defined
in Rule 144;

    

    (b)           File
with the SEC in a timely manner all reports and other documents required of
Company under the 1933 Act and the 1934 Act so long as Company remains subject
to such requirements (it being understood that nothing herein shall limit
Company’s obligations under Section 4(c) of the Securities Purchase Agreement)
and the filing of such reports and other documents is required for the
applicable provisions of Rule 144; and

    

    (c)           Furnish
to each Investor so long as such Investor owns Registrable Securities, promptly
upon written request by an Investor, (i) a written statement by Company, if
true, that it has complied with the reporting requirements of Rule 144, the
Securities Act, and the 1934 Act, (ii) a copy of the most recent annual or
quarterly report of Company and such other reports and documents so filed by
Company, and (iii) such other information as may be reasonably requested to
permit the Investors to sell such securities pursuant to Rule 144 without
registration.

    
      
         

      

      
        -34-

        
          

        

      

      
         

      

    

     

    8.3           WCOF
Counsel Fees.   At or promptly following the Closing, the
Company shall pay the fees and expenses of Reicker, Pfau, Pyle & McRoy LLP,
counsel to West Coast Opportunity Fund, LLC, in connection with the execution
and delivery of this Agreement and the transactions contemplated herein,
provided that in no event shall the Company be obligated to pay under this Section 8.4 more than
Eighty-five Thousand Dollars ($85,000) in the aggregate for such fees and
expenses.

    

    8.4           Post-Closing
Agreements Regarding WI LLC Leases. The Company shall pay to
J&J, in its capacity as an operator of the WI LLC Working Interests ("Agent"), for
distribution to the Persons entitled thereto, the following:

    

    (a)           
An adjustment amount for oil that is in the tanks located on each of the WI LLC
Leases as of the Closing Date.  The adjustment amount for each Lease
shall be calculated as follows:  The product of (i) the Net Revenue
Interest on each WI, LLC lease, multiplied by (ii) the measured amount of oil in
the tanks as of December 31, 2010, multiplied by (iii) the price per barrel at
which oil is sold on the New York Mercantile Exchange on December 31, 2010, less
$7.75 per barrel, which price the parties agree to represent the fair market
value of such oil.  For the purposes of this calculation, the "Net
Revenue Interest" of each WI LLC Lease shall equal (x) the Net Revenue Interest
owned by WI LLC with respect to such respective WI LLC Lease, multiplied by (y) the 80%
working interest to be delivered to the Company pursuant to this
Agreement;

    

    (b)           The
amount of all invoices paid by or to be paid by Agent for operating expenses
(including, without limitation, salaries, equipment costs, utilities, and
vendors) on the WI LLC Leases through the Closing Date.  Agent shall
provide Company with a statement of such operating expenses on or before January
15, 2011 (the "Statement"), and
Company shall pay to Agent the amount thereof when due or, if later, within ten
(10) days after receipt of the Statement; and

    

    (c)           The
Company shall be liable for, pay, and hold WIH LLC harmless from taxes
attributable to the WI LLC Leases and accruing in any periods after the Closing
Date.  All severance and other gross production, collection, or use
taxes attributable to production from and after the Closing Date shall be paid
by the Company.

    

    8.5           Post-Closing
Agreements Regarding Black Sable Leases. The Company shall pay 88.09%
to MVP and 11.91% to RGW, in their respective capacities as former members of
Black Sable, the owner of the Black Sable Working Interests, the
following:

    

    (a)           An
adjustment amount for oil that is in the tanks located on each of the Black
Sable Leases as of the Closing Date.  The adjustment amount for each
Lease shall be calculated as follows:  The product of (i) the Net
Revenue Interest for such Black Sable Lease, multiplied by (ii) the
measured amount of oil in the tanks as of December 31, 2010, multiplied by (iii)
the price per barrel at which oil is sold on the New York Mercantile Exchange on
December 31, 2010, less $3.00 per barrel, which price the parties agree to
represent the fair market value of such oil.  For the purposes of this
calculation, the "Net Revenue Interest" of each Black Sable Lease shall equal
the Net Revenue Interest owned by Black Sable on each respective Black Sable
Lease that will be delivered to the Company pursuant to this
Agreement;

    

    (b)           The
amount of all invoices paid by or to be paid by Agent for operating expenses
(including, without limitation, salaries, equipment costs, utilities, and
vendors) on the WI LLC Leases through the Closing Date.  MVP and RGW shall
provide Company with a statement of such operating expenses on or before January
15, 2011 (the "Statement"), and
Company shall pay to Agent the amount thereof when due or, if later, within ten
(10) days after receipt of the Statement; and

    
      
         

      

      
        -35-

        
          

        

      

      
         

      

    

     

    (c)           The
Company shall be liable for, pay, and hold MVP and RGW harmless from taxes
attributable to the Black Sable Leases and accruing in any periods after the
Closing Date.  All severance and other gross production, collection,
or use taxes attributable to production from and after the Closing Date shall be
paid by the Company.

    

    8.6           Title
Reports on WI LLC Leases.   J&J and WIH LLC (a) acknowledge
that the Company has not yet received written title reports with respect to the
WI LLC Leases, and that such written title reports will not be available until
after the closing of the transactions contemplated by this Agreement, and (b)
covenant and agree that if such title reports reveal any material defects in
title with respect to any of the WI LLC Leases or any of the WI LLC Working
Interests (including but not limited to any evidence that WI LLC does not hold
an 80% working interest in any of the WI LLC Leases), then J&J and WIH LLC,
shall, in their sole discretion either:  (i) at their sole costs and
expense, cure such defects, including but not limited to procuring from all
third parties such quitclaims or other conveyances as may be necessary or
convenient for confirming that WI LLC holds an 80% working interest in each of
the WI LLC Leases; or (ii) return to the Company, upon demand, a number of
Shares (valued at $0.40 per share) and an amount of cash (in the respective
proportions in which the Company issued Shares and paid cash to WIH LLC pursuant
to Sections
2.3(a)(ii)(E) and 2.3(b), above) having
an aggregate value equal to the product of (x) Nine Million Dollars
($9,000,000), multiplied
times (y) a fraction, the numerator of which is the proved developed
PV-10 of the pertinent WIH LLC Lease, and the denominator of which is the
aggregate proved developed PV-10 of all such WIH LLC
Leases.   For purposes of the foregoing, the proved developed
PV-10 of each WIH LLC Lease shall be the figure therefor set forth in that
certain report dated December 1, 2010, entitled "J&J Operating, LLC, NYMEX
Strip 11-19-10 Adjusted for Hedged Volumes," issued by Randy B. Miller,
PE.

    

    8.7           Registration
of WIH LLC Shares.  The Company agrees that if the Shares
issued to WIH LLC pursuant to Section 2.3(a)(ii)(E) do not become readily
tradable under Rule 144 by the members of WIH LLC following the liquidation and
distribution of those Shares to those members more than six (6) months following
the date of issuance thereof, and if there is no reasonably available
work-around to permit the sale and disposition of those shares in the public
markets by or for the benefit of those members, then upon request of WIH LLC,
the Company shall prepare and file with the SEC a registration statement for
such shares and exercise its best efforts to cause that registration statement
to become effective under the Securities Act as promptly as reasonably
practicable.   The Company and WIH LLC each shall pay fifty
percent (50%) of the costs and fees of preparing and filing such registration
statement.   The members of WIH LLC shall provide to the Company
such commercially reasonable and customary representations, warranties, and
covenants as are customarily provided by investors on whose behalf an issuer of
securities is seeking to register such shares.

    

    9.           Miscellaneous

    

    9.1           Notices.  All notices,
elections, requests, demands, and other communications required or permitted
under this Agreement shall be in writing, and shall be deemed to have been
delivered and received (a) when personally delivered, or (b) on the
fifth (5th) business day after the date on which deposited in the national mail
system of the country of the sender's residence and (for items transmitted under
this clause "(b)" from a source in the United States to a destination also in
the United States) as evidenced by a receipt for registered or certified mail
signed by the recipient or an authorized agent of recipient, or (c) on the
date on which transmitted by facsimile or other electronic means generating a
receipt evidencing a successful transmission; or (d) on the next business
day after the business day on which deposited with a nationally or
internationally recognized overnight commercial delivery service (e.g., Federal
Express or UPS) for the fastest commercially available overnight delivery, with
a return receipt (or equivalent thereof administered by such regulated public
carrier) requested, freight prepaid, addressed to the party for whom intended at
the address, facsimile number, or email address set forth on the signature page
of this Agreement, or such other address, facsimile number, or email address,
notice of which is given in a manner permitted by this Section 9.1.

    
      
         

      

      
        -36-

        
          

        

      

      
         

      

    

     

    9.2           Binding on
Successors; Assignment.  This Agreement shall be binding upon,
and shall inure to the benefit of, the heirs, successors, assigns, and personal
representatives of each of the parties.

    

    9.3           Counterparts;
Electronic Signatures.  This Agreement may be executed in
counterparts, each of which shall be deemed an original and all of which, taken
together, shall be one and the same instrument, binding on each of the
signatories hereto.  A copy of this Agreement that is executed by a
party and transmitted by that party to the other party by facsimile or as an
attachment (e.g., in
".tif" or ".pdf" format) to an email shall be binding upon the signatory to the
same extent as a copy hereof containing that party's original
signature.

    

    9.4           Titles and
Subtitles.  The titles and subtitles used in this Agreement are
used for convenience only and are not to be considered in construing or
interpreting this Agreement.

    

    9.5           Amendments
and Waivers. Any term of this Agreement may be amended and the observance
of any term of this Agreement may be waived (either generally or in a particular
instance and either retroactively or prospectively), only with the written
consent of the Company and the Majority Investors.  Notwithstanding
the foregoing, this Agreement may not be amended to create any obligation on
behalf of an Investor to advance funds to the Company or purchase Shares beyond
the amounts set forth in Section 2.3(a)
without the consent or approval of such Investor.  Any amendment or
waiver effected in accordance with this Section 9.5 shall be
binding upon the Company, Investors, and any transferee of any
Shares.

    

    (a)           Rights
Among Investors.  Each Investor (or transferee holder of Shares
issued hereunder) shall have the absolute right to exercise or refrain from
exercising any right or rights that such holder may have by reason of this
Agreement, including without limitation the right to consent to the waiver of
any obligation of the Company under this Agreement and to enter into an
agreement with the Company for the purpose of modifying this Agreement or any
agreement effecting any such modification, and such Investor or transferee
holder shall not incur any liability to any other Investor or holder of Shares
with respect to exercising or refraining from exercising any such right or
rights.

    

    (b)           Exculpation
Among Investors.  Each Investor acknowledges that it is not
relying upon any person, firm or corporation, other than the Company and its
officers and directors, in making its investment or decision to invest in the
Company.  Each Investor agrees that no Investor nor the respective
controlling Persons, officers, directors, partners, agents or employees of any
Investor shall be liable to any other Investor for any action heretofore or
hereafter taken or omitted to be taken by any of them in connection with the
issuance of the Shares hereunder and shares of Common Stock issuable upon
conversion of the Shares.

    

    (c)           Effect of
Amendment or Waiver.  Each Investor acknowledges that by the
operation of this Section 9.5, less
than all of the Investors may effect an amendment or waiver of provisions of
this Agreement and therefore diminish or eliminate all rights of such Investor
under this Agreement even though such Investor has not consented to the
amendment or waiver.

    

    9.6           Severability.  If
one or more provisions of this Agreement are held to be unenforceable under
applicable law, such provision shall be excluded from this Agreement and the
balance of the Agreement shall be interpreted as if such provision were so
excluded and shall be enforceable in accordance with its terms.

    
      
         

      

      
        -37-

        
          

        

      

      
         

      

    

     

    9.7           Aggregation
of Stock.  All shares of the Common Stock or shares of Common
Stock issued upon conversion thereof held or acquired by affiliated entities or
persons shall be aggregated together for the purpose of determining the
availability of any rights under this Agreement.

    

    9.8           Entire
Agreement.  This Agreement and the Exhibits attached hereto
constitute the entire agreement among the parties and no party shall be liable
or bound to any other party in any manner by any warranties, representations or
covenants except as specifically set forth herein or therein.

    

    9.9           Survival of
Representations and Warranties.  The representations and
warranties of the parties contained in Sections 3 and 4 of this Agreement
shall survive the execution and delivery of this Agreement and the Closing and
shall in no way be affected by any investigation of the subject matter thereof
made by or on behalf of the Investors or the Company.

    

    9.10           Attorneys'
Fees.  If any action or proceeding is commenced to construe or
enforce the terms and conditions of this Agreement or the rights and duties
created hereunder, then the party prevailing in such action shall be entitled to
recover its attorneys' fees and the costs of enforcing any judgment entered
therein.

    

    9.11           Governing
Law.  This Agreement shall be governed by and construed in
accordance with Nevada law, without regard to the application of the conflict of
law principles thereunder.

    

    [Signatures appear on the following
pages.]

    
      
         

      

      
        -38-

        
          

        

      

      
         

      

    

    IN WITNESS WHEREOF, the
parties hereto have executed this Securities Purchase and Asset Acquisition
Agreement as of the day and year first above written.

    

    "Company:"

    

    
      
        
          
            
              
                
                  
                    
                      	
                              EnerJex
      Resources, Inc., a Nevada corporation

                            
	 
      	 
      
	
                              By

                            	
                              /s/ C. Stephen Cochennet

                            
	 	

                              C.
      Stephen Cochennet, Chief Executive Officer

                            
	 
      
	
                              Address,
      Facsimile No., & Email for Notices:

                            
	 
      
	
                              EnerJex
      Resources, Inc.

                            
	
                              ATTN:  Chief
      Executive Officer

                            
	
                              27
      Corporate Woods, Suite 350

                            
	
                              10975
      Grandview Drive

                            
	
                              Overland
      Park, KS 66210

                            
	 
      
	
                              Telephone
      No.:  (913) 754-7754

                            
	
                              Facsimile
      No.:  (913) 754-7755

                            
	
                              Email:

                            
	 
      
	
                              with
      a copy to:

                            
	 
      
	
                              ANTHONY
      N. DEMINT

                            
	
                              Attorney
      at Law

                            
	
                              DeMint
      Law, PLLC

                            
	
                              3753
      Howard Hughes Parkway

                            
	
                              Second
      Floor, Suite 314

                            
	
                              Las
      Vegas, NV 89169

                            
	 
      
	
                              Telephone
      No.:  (702) 586-6436

                            
	
                              Facsimile
      No.:  (702) 442-7995

                            
	
                              Email:  anthony@demintlaw.com

                            

                    

                  

                

              

            

          

        

      

    

    

     [Signatures continued on following
page.]

    
      
         

      

      
        -39-

        
          

        

      

      
         

      

    

     

    "Common
Stock Investors:"

    

    
      
        
          
            
              
                
                  
                    
                      
                        
                          	
                                  "WCOF:"

                                	 	
                                  "MVP:"

                                
	 
      	 	 
      
	
                                  West
      Coast Opportunity Fund, LLC, a

                                  Delaware
      limited liability company

                                	 	
                                  Montecito
      Venture Partners, LLC, a

                                  Delaware
      limited liability company

                                
	 
      	 	 
      
	
                                  By

                                	
                                  /s/ Atticus Lowe

                                	 	
                                  By

                                	
                                  /s/ Atticus Lowe

                                
	 
      	
                                  Atticus
      Lowe

                                	 	 
      	
                                  Atticus
      Lowe, Manager

                                
	 
      	
                                  Chief
      Investment Officer of Managing Member

                                	 	 
      
	 
      	 	 
      
	
                                  12/29/10

                                	 	
                                  12/29/10

                                
	
                                  Date

                                	 	
                                  Date

                                
	 
      	 	 
      
	
                                  Address, Facsimile
      No., & Email for Notices:

                                	 	
                                  Address, Facsimile
      No., & Email for Notices:

                                
	 
      	 	 
      
	
                                  West
      Coast Opportunity Fund, LLC

                                	 	
                                  Montecito
      Venture Partners, LLC

                                
	
                                  c/o
      West Coast Asset Management, Inc.

                                	 	
                                  c/o
      West Coast Asset Management, Inc.

                                
	
                                  1205
      Coast Village Road

                                	 	
                                  1205
      Coast Village Road

                                
	
                                  Montecito,
      California 93108

                                	 	
                                  Montecito,
      California 93108

                                
	
                                  Attention:
      R. Atticus Lowe

                                	 	
                                  Attention:
      R. Atticus Lowe

                                
	 
      	 	 
      
	
                                  Telephone:
      (805) 653-5333

                                	 	
                                  Telephone:
      (805) 653-5333

                                
	
                                  Facsimile
      No.:   (805) 648-6466

                                	 	
                                  Facsimile
      No.:   (805) 648-6466

                                
	
                                  Email:  alowe@wcam.com

                                	 	
                                  Email:  alowe@wcam.com

                                

                        

                      

                    

                  

                

              

            

          

        

      

    

    

    [Signatures continue on following
page.]

    

    Signature
Page for Common Stock Investors

    EnerJex
Securities Purchase and Asset Acquisition Agreement

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    
      
        
          
            
              
                
                  
                    
                      
                        	
                                "J&J
      Operating Company, LLC:"

                              	 	
                                "WIH"

                              
	 
      	 	 
      
	
                                J&J
      Operating Company, LLC, a Kansas

                                limited
      liability company

                              	 	
                                Working
      Interest Holding, LLC, a Kansas

                                limited
      liability company

                              
	 
      	 	 
      
	
                                By

                              	
                                /s/ John Loeffelbein

                              	 	
                                By

                              	
                                /s/ Sam Boan

                              
	 
      	
                                John
      Loeffelbein, Member

                              	 	 
      	
                                Sam
      Boan, Manager

                              
	 
      	 	 
      
	
                                By

                              	
                                /s/ James D. Loeffelbein

                              	 	
                                12/30/10

                              
	 
      	
                                James
      D. Loeffelbein, Member

                              	 	
                                Date

                              
	 
      	 	 
      
	 
      	 	
                                Address,
      Facsimile & Email for Notices:

                              
	 
      	 	 
      
	
                                Date

                              	 	
                                Working
      Interest Holding, LLC

                              
	 
      	 	
                                c/o
      J&J Operating Company, LLC

                              
	
                                Address,
      Facsimile & Email for Notices:

                              	 	
                                ATTN:  Messrs.
      Sam Boan, James D. Loeffelbein and John Loeffelbein

                              
	 
      	 	
                                10380
      W 179th St.

                              
	
                                J&J
      Operating Company, LLC

                              	 	
                                Bucyrus,
      KS 66013

                              
	
                                ATTN:  Messrs.
      James Loeffelbein and John Loeffelbein

                              	 	 
      
	
                                10380
      W 179th St.

                              	 	
                                Telephone
      No.:  (913) 709-0219

                              
	
                                Bucyrus,
      KS 66013

                              	 	
                                Facsimile
      No.:   (___) ________________________

                              
	 
      	 	
                                Email:  jdlmailbox@yahoo.com

                              
	
                                Telephone
      No.:  (913) 709-0219

                              	 	 
      
	
                                Facsimile
      No.:   (___)   ________________________
      

                              	 	 
      
	
                                Email:  jdlmailbox@yahoo.com

                              	 	 
      

                      

                    

                  

                

              

            

          

        

      

    

    

    [Signatures continued on following
page.]

    

    Signature
Page for Investors

    EnerJex
Securities Purchase and Asset Acquisition Agreement

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    
      
        
          
            
              
                
                  	
                          "RGW:"

                        	 	
                          "Frey
      Living Trust:"

                        
	 
      	 	 
      
	
                          RGW
      Energy, LLC, a Texas limited liability company

                        	 	
                          Frey
      Living Trust

                        
	 
      	 	 
      
	
                          By

                        	
                          /s/ Robert G. Watson

                        	 	
                          By

                        	
                          /s/ Philip Frey, Jr.

                        
	 
      	
                          Robert
      G. Watson, Manager

                        	 	 
      	
                          Name
      & title:

                        
	 
      	 	 
      
	
                          12/29/10

                        	 	
                          12/29/10

                        
	
                          Date

                        	 	
                          Date

                        
	 
      	 	 
      
	
                          Address,
      Facsimile & Email for Notices:

                        	 	
                          Address,
      Facsimile No., & Email for Notices:

                        
	 
      	 	 
      
	
                          RGW
      Energy, LLC

                        	 	
                          4105
      NE Rigels Cove Way

                        
	
                          ATTN:   Mr.
      Robert G. Watson

                        	 	
                          Jensen
      Beach, FL 34957

                        
	
                          123
      Evans Avenue

                        	 	 
      
	
                          San
      Antonio, Texas 78209

                        	 	
                          Telephone
      No.:  (772) 334-0474

                        
	 
      	 	
                          Facsimile
      No.:  (772) ________________________

                        
	
                          Facsimile
      No.:  (123 Evans Avenue

                        	 	
                          Email:  pf4105@comcast.net

                        
	
                          San
      Antonio, Texas 78209

                        	 	 
      
	 
      	 	 
      
	
                          Telephone
      No.:  (210) 451-5545

                        	 	 
      
	
                          Facsimile
      No.:  (___) ________________________

                        	 	 
      
	
                          Email:  robert.watson@blacksableenergy.com

                        	 	 
      

                

              

            

          

        

      

    

    

    Signature
Page for Investors

    EnerJex
Securities Purchase and Asset Acquisition Agreement

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    Exhibit
A

    

    Assignment
of Membership Interest

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    Exhibit
B

    

    List
of Black Sable Working Interests

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    Exhibit
C

    

    Certificate
of Designation

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    Exhibit
D

    

    Compliance
Certificate

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    Exhibit
E

    

    Debenture
Assignment

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Exhibit
F

    

    Stock
Assignment

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    Exhibit
G

    

    Stock
Repurchase Agreement

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    Exhibit
H

    

    WI
LLC Working Interests

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    Exhibit
I

    

    Company
Disclosure Schedule

     

    
      
         

      

      
        Exhibit
I, Page 1

        
          

        

      

      
         

      

    

     

    Exhibit
J

    

    Employment
Agreement with Robert G. Watson

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Exhibit
K

    

    Contract
Operating Agreement

    and

    Joint
Operating Agreement

    with

    J&J
Operating Company, LLC

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Exhibit
L

    

    Majority
Investor Approval Certificate

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Exhibit
M

    

    List
of Company Vendors with which Settlements to be Reached

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Exhibit
N

    

    Form
of Opinion of Counsel to Company

     

    
      
         

      

      
        Exhibit
N, Page 1

        
          

        

      

      
         

      

    

     

    Exhibit
O

    

    Non-Producing
Leases

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