Document:

Stock
Repurchase Agreement

    

    This Stock
Repurchase Agreement (this "Agreement") is made
and entered into, effective as of December 31, 2010 (the "Effective Date"), by
and between EnerJex
Resources, Inc., a Nevada
corporation (the "Company"), and Working
Interest Holding, LLC, a Kansas limited liability company ("Holder"), with
reference to the following facts:

    

    Recitals:

    

    A.           As
of the Effective Date of this Agreement, the Company is issuing to Holder
eighteen  million seven hundred fifty thousand (18,750,000) shares of
Holder’s Common Stock, and the Company has agreed that if it hereafter raises
equity capital through the issuance of additional shares of its Common Stock
after the Effective Date of this Agreement, then Holder may elect to require the
Company to repurchase up to three million seven hundred fifty thousand
(3,750,000) shares of such Common Stock at the "Repurchase Price" (as such term
is defined below).

    

    B.           The
parties have agreed to execute this Agreement to memorialize such Stock
Repurchase obligation.

    

    Agreements:

    

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

    

    1.           Definitions.  For
purposes of this Agreement, the term:

    

    1.1          “Additional
Issuance” means the offering, issuance and sale of shares of the
Company’s Common Stock that is designed primarily to generate cash working
capital for the Company.  For the avoidance of doubt, the term
"Additional Issuance" shall not include (a) the grant or issuance of
compensatory stock options or shares to employees or other Persons providing
services to the Company, (b) the issuance or sale of preferred equity securities
of the Company, or (c) the issuance or sale of any debt securities of the
Company, regardless whether such debt securities are convertible into equity
securities of the Company, or (d) any warrants, options, or other "equity
kickers" or "equity sweeteners (or shares issuable upon exercise or conversion
of any such instruments) incident to the offering, issuance or sale of any
securities described in the foregoing clauses (c) or (d).

    

    1.2          "Common
Stock" means the Common Stock of the Company, par value $0.001 per
share.

    

    1.3          "Person"
means a natural individual and a corporation, limited liability company, limited
partnership, general partnership, trust, fiduciary, governmental entity, and
each other entity or status that is recognized as a separate legal person under
applicable law.

    

    1.4          “Property
Contribution Transaction” means that certain transaction in which certain
parties are contributing assets to the Company and the Company is issuing shares
and paying cash therefor, as further described in the SPAA.

    

    1.5          “Maximum
Repurchase Amount” means, subject to reduction pursuant to Section 3.1(c),
below, the excess (if any) of:

    

    (a)           One
Million Five Hundred Thousand Dollars ($1,500,000), reduced by

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

     

    (b)           The
amount, if any, by which (x) the total amount of cash that the Company pays to
Holder under the SPAA at the closing of the Property Contribution Transactions,
exceeds (y) One Million
Five Hundred Thousand Dollars ($1,500,000).

    

    1.6          “Repurchase
Period” means the period of one (1) year commencing on the Effective Date
of this Agreement and expiring on the first annual anniversary
thereof.

    

    1.7          "Repurchase
Price" shall mean Forty Cents ($0.40) per Share.

    

    1.8          "Shares"
shall mean shares of the Company's Common Stock.

    

    1.9          "SPAA"
shall mean that certain “Securities Purchase and Asset Acquisition Agreement”
dated concurrently herewith by and among the Company; Holder; West Coast
Opportunity Fund, LLC, a Delaware limited liability company; Montecito Venture
Partners, LLC, a Delaware limited liability company; RGW Energy, LLC, a Texas
limited liability company; J&J Operating Company, LLC, a Kansas limited
liability company; and Frey Living Trust.

    

    2.           Notice of
Additional Share Issuances

    

    2.1          Initial
Notice.  If, at any time during the Repurchase Period, the
Company enters into any written agreement to conduct an Additional Issuance,
then promptly following the execution of that written agreement, the Company
shall deliver to Holder written notice of the such Additional Issuance,
including (a) the contemplated closing date for that issuance, and (b) the gross
amount of gross cash offering proceeds that the Company expects to receive in
that Additional Issuance.

    

    2.2          Closing
Notice.  Within ten (10) days following the closing of any
Additional Issuance during the Repurchase Period, the Company shall deliver to
Holder written notice of such closing date and the amount of gross cash offering
proceeds received by the Company in that Additional Issuance.

    

    3.           Repurchase
of Shares

    

    3.1          Election to
Require Repurchase.

    

    (a)           Written
Election.  At any time during the period of fifteen (15) days
following the Company’s delivery of a written notice under Section 2, above,
Holder may deliver to the Company a written election requiring the Company to
purchase from Holder a number of shares not exceeding the Maximum Repurchase
Amount, reduced (i) by the cumulative Repurchase Price theretofore paid by the
Company to Holder for the purchase of Shares under this Agreement, and (ii) to
the extent provided in Section 3.1(c),
below, provided that
(x) no such written election may be delivered after the expiration of the
Repurchase Period and (y) for the avoidance of doubt, the rights and duties of
the parties under this Agreement shall not apply to any Additional Issuance that
closes after the expiration of the Repurchase Period.

    

    (b)           Obligation
to Purchase.  If Holder timely delivers its written election
under Section
3.1(a), then subject to satisfaction of the conditions set forth in Section 3.2, below,
the Company shall be obligated to purchase from Holder, at the Repurchase Price
per Share, a number of Shares equal to the lesser of (i) the number of Shares
specified in Holder’s written election, or (ii) a number equal to the quotient
determined by dividing (x) the unused portion of the Maximum Repurchase Amount
by (y) the Repurchase Price.  For the avoidance of doubt, in no event
shall the Company be obligated to pay to Holder, cumulatively, for the purchase
of Shares under this Agreement, more than the Maximum Repurchase
Amount.

    
      
         

      

      
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    (c)           Holder
Waiver:  Reduction in Maximum Repurchase Amount.  If
the Company delivers to Holder written notice of an Additional Issuance pursuant
to Section 2,
above, and Holder fails to timely elect pursuant to Section 3.1(a),
above, to require the Company to purchase all of the Shares that Holder was
entitled to have the Company purchase hereunder by reason of such Additional
Issuance, then the Maximum Repurchase Amount shall be reduced by the Repurchase
Price that would have been payable by the Company for the Shares that Holder
failed to timely elect to have the Company purchase hereunder by reason of such
Additional Issuance.

    

    3.2          Conditions
to Purchase.   The obligations of the Company to purchase
Shares from Holder are subject to the satisfaction of the following
conditions:

    

    (a)           Lawful.   The
purchase of such Shares shall not be prohibited by any statutory limits imposed
under the laws of the jurisdiction in which the Company is incorporated,
including but not limited to any solvency-type limitation measured by reference
to the assets and liabilities of the Company.

    

    (b)           Lender
Consent.    The purchase of such shares (i) shall not
be prohibited by the terms of the Company’s loan agreements with any
institutional bank lender with which the Company then has any outstanding loans,
or (ii) if such loan agreements prohibit such purchase, the Company’s
institutional bank lender shall have consented to such purchase.

    

    (c)           Limit on
Cumulative Repurchase Price.  The Company shall not have paid
to Holder, cumulatively under this Agreement, more than the amount of the
Maximum Repurchase Amount, reduced to the extent provided in Section 2.1(c),
above.

    

    3.3          Closing.  Subject
to the conditions set forth in Section 3.2, above,
the closing of the Company’s purchase of Shares from Holder shall occur at the
offices of the Company or its counsel, as designated by the Company, on a
mutually acceptable date within fifteen (15) days following the date on which
the Company receives Holder’s written election under Section 3.1(a),
above.  At the closing:

    

    (a)           If
the there is no certificate evidencing the Shares, then Holder shall execute and
deliver in commercially reasonable form acceptable to the Company an assignment
sufficient to vest in the Company or its assignee title to the Shares being
repurchased under this Section 3.3, free and
clear of all liens, claims, and encumbrances whatsoever (other than any liens,
claims, or encumbrances).  If there is one or more certificates
evidencing such Shares, then Holder shall tender the Assignment Separate from
Certificate endorsed for the number of Shares being repurchased by the Company
hereunder, together with the certificates for the Shares being repurchased by
the Company.

    

    (b)           The
Company shall pay the purchase price for the Shares being repurchased hereunder
in cash or immediately available funds.

    

    3.4          Assignment
of Purchase Rights.  The Company may assign its rights under
this Section 3 to
such person(s), and for such consideration, as the Company deems appropriate,
provided that such
assignment shall not relieve the Company of the obligation to effect the
purchase of Holder’s tendered Shares in accordance with Sections 3.1, 3.2, and 3.3, above, except to
the extent that such assignee actually purchases Holder’s
Shares.

    
      
         

      

      
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    4.           Additional
Agreements

    

    4.1          Acknowledgment
Re Income Tax Matters.  Holder acknowledges that (a) this
Agreement is being executed by the Company in connection with the Property
Contribution Transaction in which Holder and certain other parties are seeking
to apply Section 351 of the Code to the contribution of assets to the Company,
and (b) the Company is not providing to Holder any assurances regarding whether
the existence of Holder’s rights under this Agreement causes any portion of the
Shares issued to Holder in that Property Contribution Transaction to be treated
as taxable “boot” under Section 351 of the Code.

    

    4.2          Assignment
of Holder’s Rights.   The parties (a) acknowledge that
Holder may elect to assign to one or more of its members a portion of the Shares
received by Holder in the Property Contribution Transaction, and (b) agree that
Holder may assign therewith all or any portion of its rights under this
Agreement, provided that (i) Holder provides written notice to the Company of
such assignment, and (ii) Holder, the assignee, and the Company execute an
“Acknowledgement” in the form attached hereto as Appendix
1.

    

    5.           Miscellaneous

    

    5.1          Notices.  All
notices permitted or required by this Agreement shall be in writing, and shall
be deemed to have been delivered and received (a) when personally
delivered, or (b) on the third (3rd)
business day after the date on which deposited in the United States mail,
postage prepaid, certified or registered mail, return receipt requested, or (c)
on the next business day following the date on which transmitted by facsimile or
other electronic means generating a receipt confirming delivery of the notice
(provided that on that
same date a copy of such notice is deposited in the United States mail, postage
prepaid, certified or registered mail, return receipt requested), to the mailing
address appearing on the signature page of this Agreement, or such other mailing
address, facsimile number, or email address, notice of which is given in a
manner permitted by this Section 5.1.

    

    5.2          Further
Assurances.  Each party agrees, upon the request of another
party, to make, execute, and deliver, and to take such additional steps as may
be necessary to effectuate the purposes of this Agreement.

    

    5.3          Attorneys'
Fees.  If any action 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.

    

    5.4          Partial
Invalidity.  If at any time any provision of this Agreement is
or becomes illegal, invalid or unenforceable in any respect under the law of any
jurisdiction, neither the legality, validity or enforceability of the remaining
provisions hereof, nor the legality, validity, or enforceability of such
provision under the law of any other jurisdiction, will in any way be affected
or impaired thereby, and the remainder of the provisions of this Agreement will
remain in full force and effect.

    

    5.5          Governing
Law, Jurisdiction, and Venue.  This Agreement shall be governed
by and construed in accordance with the internal laws of the State of Nevada,
without regard to the application of its conflict-of-law
principles.

    
      
         

      

      
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    5.6          Entire
Agreement; Amendment.  This Agreement (a) represents the
entire understanding of the parties with respect to the subject matter hereof,
and supersedes all prior and contemporaneous understandings, whether written or
oral, regarding the subject matter hereof, and (b) may not be modified or
amended, except by a written instrument, executed by the party against whom
enforcement of such amendment may be sought.

    

    5.7          Binding
Effect.  This Agreement shall be binding upon and shall inure
to the benefit of each of the parties hereto, as well as their respective heirs,
successors, and assigns.

    

    5.8          Counterparts;
Electronic Signatures.  This Agreement may be executed in
counterparts, each of which shall be deemed an original and both of which, taken
together, shall constitute one and the same instrument, binding on each
signatory thereto.   A copy of this 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.

     

    [Signatures
appear on the following page.]
 

    
      
         

      

      
        5

        
          

        

      

      
         

      

    
 

    In Witness
Whereof, the parties hereto have executed this Agreement, effective as of
the "Effective Date" set forth above.

    

    
      
        
          
            
              
                
                  
                    
                      
                        
                          
                            	
                                    “Company:”

                                  	 
      	
                                    "Holder:"

                                  
	 
      	 
      	 
      
	
                                    EnerJex
      Resources, Inc., a Nevada
      

                                    corporation

                                  	 
      	
                                    Working
      Interest Holding, LLC, a Kansas
      

                                    limited
      liability company

                                  
	 
      	 
      	 
      
	 
      	 
      	
                                    By

                                  	
                                    /s/
      Sam Boan

                                  
	
                                    By

                                  	
                                    /s/
      C. Stephen Cochennet

                                  	 
      	 
      	
                                    Sam
      Boan, Manager

                                  
	 
      	
                                    C.
      Stephen Cochennet, Chief Executive Officer

                                  	 
      	 
      
	 
      	 
      	
                                    12/31/10

                                  
	
                                    Address,
      Facsimile No., & Email for
      Notices:

                                  	 
      	
                                    Date

                                  
	 
      	 
      	 
      
	
                                    EnerJex
      Resources, Inc.

                                  	 
      	
                                    Address,
      Facsimile & Email for
      Notices:

                                  
	
                                    ATTN:  Chief
      Executive Officer

                                  	 
      	 
      
	
                                    27
      Corporate Woods, Suite 350

                                  	 
      	
                                    Working
      Interest Holding, LLC

                                  
	
                                    10975
      Grandview Drive

                                  	 
      	
                                    c/o
      J&J Operating Company, LLC

                                  
	
                                    Overland
      Park, KS 66210

                                  	 
      	
                                    ATTN:  Messrs.
      Sam Boane, James D.

                                    Loeffelbein
      and John Loeffelbein

                                  
	 
      	 
      	
                                    10380
      W 179th St.

                                  
	
                                    Telephone
      No.:  (913)

                                  	
                                       

                                  	 
      	
                                    Bucyrus,
      KS 66013

                                  
	
                                    Facsimile
      No.:  (913) 754-7755

                                  	 
      	 
      
	      
                                    Email:

                                  	
                                     

                                  	
                                       

                                  	 
      	
                                    Telephone
      No.:  (913) 709-0219

                                  
	 
      	 
      	
                                    Facsimile
      No.:   (___)

                                  	
                                       

                                  
	
                                    with
      a copy to:

                                  	 
      	
                                    Email:  jdlmailbox@yahoo.com

                                  
	 
      	 
      	 
      
	
                                    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

                                  	
                                      

                                  	 
      

                          

                        

                      

                    

                  

                

              

            

          

        

      

    

     

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

    Appendix
1

    

    Acknowledgement
of Assignment

    

    [See
following page.]

    
      
         

      

      
        7

        
          

        

      

      
         

      

    

    This
Acknowledgement of Assignment (the “Acknowledgement”) is
made and executed, effective as of ________________, 2011, by and among EnerJex
Resources, Inc., a Nevada corporation (the "Company"), and Working
Interest Holding, LLC, a Kansas limited liability company ("Original Holder"),
and ____________________ (“Assignee”), with reference to the following
facts:

     

    Recitals:

     

    The
Company and Original Holder previously executed that certain Stock Repurchase
Agreement dated effective December [__], 2010 (the “Repurchase
Agreement”), pursuant to which the Company granted o Original Holder the
right to require the Company to purchase from Holder up to 3,750,000 shares of
the Company’s Common Stock (the “Shares”) at a cash
price of $0.40 per share (the “Repurchase
Price”).  Concurrently with the execution of this
Acknowledgement, Original Holder is assigning to Assignee certain Shares, and
the parties have agreed to execute this Acknowledgment to confirm that Original
Holder has assigned to Assignee the right to require the Company to purchase up
to _____________ (______) Shares pursuant to the Repurchase
Agreement.

    

    Agreements:

    

    Now,
Therefore, the parties acknowledge and agree as follows:

    

    1.           Holder
has assigned to Assignee the right to require the Company to purchase up to
_____________ (______) Shares (such Shares, the “Assigned Shares”)
pursuant to the Repurchase Agreement.

    

    2.           On
the terms and subject to the conditions set forth in the Repurchase Agreement,
the Company agrees to purchase the Assigned Shares from Assignee pursuant to the
Repurchase Agreement.

    

    3.           This
Acknowledgement and the Repurchase Agreement (a) represent the entire
understanding between the parties regarding the subject matter hereof, and
supersedes and replaces all prior and contemporaneous understandings, whether
oral or written, regarding such subject matter, and (b) may not be modified or
amended, except by a written agreement executed after the effective date hereof
by the party sought to be charged by such modification or
amendment.   This Acknowledgement may be executed in
counterparts, each of which shall be deemed an original and both of which, taken
together, shall constitute one and the same instrument, binding on each
signatory thereto.   A copy of this Acknowledgement 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.

    

    In Witness
Whereof, the parties have executed this Acknowledgment on the date(s) set
forth below.

    

    
      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              	
                                      Working
      Interest Holding, LLC, a Kansas limited liability
      company

                                    	 
      	
                                      EnerJex
      Resources, Inc., a Nevada
  corporation

                                    
	 
      	 
      	 
      
	
                                      By

                                    	
                                      J&J
      Operating Company, LLC, a Kansas 

                                    	 
      	 
      
	 	limited
      liability company, its Class B Member and 	 	      
                                      By

                                    	 
	 	Authorized
      Agent	 	 
	 
      	 
      	 
      
	 
      	
                                      By

                                    	
                                         

                                    	 
      	  
	 
      	
                                      James
      D. Loeffelbein, Member

                                    	 
      	 
      
	 
      	 
      	 
      
	 
      	
                                      By

                                    	
                                         

                                    	 
      	 
      
	
                                      John
      Loeffelbein, Member

                                    	 
      	 
      
	 
      	 
      	 
      
	
                                      “Assignee:”

                                    	
                                        

                                    	 
      
	 	 	 	 
	
                                         

                                    	 
      	 
      	 
      

                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

    

     

    
      
         

      

      
        8Securities
Purchase Agreement

      

      by and
among

      

      EnerJex
Resources, Inc.,

      a Nevada
corporation

      

      and

      

      The
"Purchasers" named in Schedule 1 Hereto

      
        	
                 

              

      

      

      December
31, 2010

      
        	
                 

              

      

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      Securities
Purchase Agreement

      

      This
Securities Purchase Agreement (the "Agreement") is made
as of December 31, 2010 (the "Effective Date") by
and among EnerJex
Resources, Inc., a Nevada corporation (the "Company"), and the
investors listed on Schedule 1
hereto (each, a "Purchaser" and
collectively, the "Purchasers"), with
reference to the following facts:

      

      Recitals:

       

      The
parties have agreed to execute this Agreement in order to memorialize the terms
and conditions on which each Purchaser shall purchase the respective number of
shares of the Company's Common Stock set forth opposite the name of such
Purchaser on Schedule
1 hereto.

       

      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 by the Certificate of
Designation.

      

      1.2          "Certificate
of Designation" means that certain Certificate of Designation in the form
attached hereto as Exhibit
A, 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.

      

      1.3          "Closing" shall have the meaning set
forth in Section 2.2,
below.

      

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

      

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

      

      1.6          "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.

      

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

      

      1.8          "Equity
Incentive Plan" means that
certain EnerJex Resources, Inc. Stock Incentive Plan, as amended (the "Stock Incentive
Plan"), under which the Company has reserved 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.

      

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

      

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

      
        
           

        

        
          
          

          
            

          

        

        
           

        

      

      

      1.11       “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.

      

      1.12       "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 or are being contested in good faith
by appropriate proceedings or that are otherwise not material and are fully
reserved against in the Financial Statements, (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) deposits or pledges
made in connection with, or to secure payment of, workers' compensation,
unemployment insurance, old age pension or other social security programs
mandated under applicable laws, (d) 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 (e) restrictions on
transfer of securities imposed by applicable state and federal securities
laws.

      

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

      

      1.14       "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.

      

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

      

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

      

      1.17       "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 (the "Original Purchase
Agreement"), by and among the Subsidiary and the purchasers of such
Secured Debentures, as amended.

      

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

      

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

      

      1.20       "SP&AA
Agreement" means that certain Securities Purchase and Asset Acquisition
Agreement dated effective concurrently herewith, by and among the Company, 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, pursuant to which the Company has agreed to issue certain
shares of Common Stock, cash, and a promissory note to the other parties thereto
in exchange for the contribution of certain assets to and cancellation of
certain secured debentures of the Company.

      
        
           

        

        
          -2-

          
            

          

        

        
           

        

      

      1.21       "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.

      

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

      

      1.23       "Transaction
Documents" means
this Agreement and any other agreement or document executed in connection
herewith.

      

      2.           Purchase
and Sale of Common Stock

      

      2.1         Authorization
and Sale
of Common Stock

      

      (a)          Sale.  The
Company shall authorize the issuance and sale of up to an aggregate Twenty-five
Million (25,000,000) shares of the Company's Common Stock, having the rights,
restrictions, preferences, and privileges as set forth in the Articles of
Incorporation, on or before the Closing.

      

      (b)          Purchase.  Subject
to the terms and conditions of this Agreement, each Purchaser agrees, severally
and not jointly, to purchase at the Closing and the Company agrees to sell and
issue to each Purchaser at the Closing, that number of shares of the Company's
Common Stock set forth opposite each Purchaser's name on Schedule 1
hereto for a purchase price of Forty Cents ($0.40) per share.

      

      2.2         Initial
Closing.  The initial 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 Purchasers), or at such other
time and place as the Company and Purchasers mutually agree upon orally or in
writing (which time and place are designated as the "Initial
Closing").  At the Initial Closing, the Company shall deliver
to each Purchaser a certificate representing the Shares issued in the
name of the Purchaser against payment of the purchase price therefor by check,
wire transfer, cancellation of indebtedness or any combination thereof in
accordance with Schedule
1 hereto.

      

      2.3         Additional
Closing(s). The Company may sell, at one or more additional closings
(each, an "Additional
Closing" and collectively, the "Additional
Closings"), a number of Shares not exceeding twenty-five million
(25,000,000), reduced by the number of Shares issued at the Intial Closing and
all prior Additional Closings, to such Investors as the Company shall select,
provided the closing thereof occurs on or before March 31, 2011.  Each
Additional Closing shall take place at such time and place as shall be mutually
acceptable to the Company and the additional Investors subscribing for Shares at
such Additional Closings.  The Initial Closing and any Additional
Closing shall be referred to herein as the "Closing" or the
"Closings."

      

      2.4         Rounding of
Shares.  The Company and each Purchaser agree that no
fractional Shares shall be issued at the Closing, and that the number of Shares
to be issued to such Purchaser shall be rounded up to the nearest whole integer
for the aggregate amount of cash consideration paid by the Holder at the Closing
as set forth opposite such Purchaser's name on Schedule
1.

      
        
           

        

        
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      3.           Representations
and Warranties of Company.  Except as otherwise set forth in
the Company Disclosure Schedule attached hereto as Exhibit C,
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 Purchaser prior to the
execution hereof, as a material inducement to the Purchasers to enter into this
Agreement and purchase the Common Stock hereunder, the Company hereby represents
and warrants to each Purchaser 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 under the SP&AA Agreement, 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 (i)
Nine Hundred Twenty-nine Thousand Two Hundred Fifty (929,250) shares of Common
Stock reserved and available for issuance or option grants to employees,
consultants, officers or directors under the Equity Incentive Plan, and shares
for 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 SP&AA 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.  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 the SP&AA 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.   All shares of the Company's capital stock issued
on or after May 15, 2009, has been issued in full compliance with all applicable
state and federal laws concerning the issuance of securities, and to the
knowledge of the Company, all shares issued by the Company and all
predecessors-by-merger since the respective date on which each such entity was
incorporated incorporation have been issued in full 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, or (ii) as limited by laws relating to the availability of specific
performance, injunctive relief, or other equitable remedies.

      
        
           

        

        
          -5-

          
            

          

        

        
           

        

      

      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
a Purchaser.  Assuming the accuracy of the representations of the
Purchasers 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 a
Purchaser.  Based in part upon the representations of the Purchasers
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.

      

      3.6         Governmental
Consents and Filings.

      

      (a)          Assuming
the accuracy of the representations made by the Purchasers 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) Parent
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. Parent and its Subsidiaries possess all certificates,
authorizations and permits issued by the appropriate regulatory authorities
necessary to conduct their respective businesses, and neither Parent 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 Purchasers 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.

      
        
           

        

        
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      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.

      

      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 Parent nor any of its Subsidiaries nor any
director, officer, agent, employee or other Person acting on behalf of Parent or
any of its Subsidiaries has, in the course of its actions for, or on behalf of,
Parent 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, 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.

       

      
        
          
             

          

          
            -8-

            
              

            

          

          
             

          

        

      

       

      (b)          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)          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 Purchasers 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, and Liens, except for statutory Liens
for the payment of current Taxes that are not yet delinquent and encumbrances
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. Parent 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. Parent 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 Parent 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 Parent in the
reports that it files or submits under the 1934 Act is accumulated and
communicated to Parent’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 Parent 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 Parent 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.

       

      
        
          
             

          

          
            -10-

            
              

            

          

          
             

          

        

      

       

      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)          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)          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.

       

      
        
          
             

          

          
            -12-

            
              

            

          

          
             

          

        

      

       

      (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 Purchasers
(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.

       

      
        
          
          

        

        
          -13-

          
            

          

        

        
          
          

        

      

       

      3.22      Corporate
Documents.  The Articles of Incorporation and Bylaws of the
Company are in the form provided to the Purchasers.  The copy of the
minute book of the Company provided to the Purchasers contains minutes of
meetings of directors and stockholders and all actions by written consent
without a meeting by the directors and accurately reflects in all material
respects all 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 Purchasers 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
Purchasers 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 Purchasers, 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.

       

      
        
          
          

        

        
          -14-

          
            

          

        

        
          
          

        

      

       

      4.           Representations,
Acknowledgments and Warranties of Purchasers.  Each Purchaser,
severally and not jointly, represents, acknowledges and warrants 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:

      

      4.1        
Authorization.  Purchaser
has full power and authority to enter into this Agreement and all corporate
action on the part of Purchaser, 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 Purchaser,
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.

      

      4.2        
Brokers and
Finders.  Purchaser has not
retained any investment banker, broker or finder in connection with the
transactions contemplated by this Agreement.

      

      4.3        
Purchase
Entirely for Own Account.  This Agreement is made with
Purchaser in reliance upon Purchaser's representation to the Company, which by
Purchaser's execution of this Agreement Purchaser hereby confirms, that the
Shares to be received by Purchaser will be acquired for investment for
Purchaser'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 Purchaser has no present
intention of selling, granting any participation in, or otherwise distributing
the same.  By executing this Agreement, Purchaser 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.

      

      4.4      
  Restricted
Securities.  Purchaser 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) of the Securities Act, and that the Company's reliance upon such exemption
is predicated, in part, upon Purchaser's representations set forth in this
Agreement.

      

      4.5         Limitations
on Disposition.

      

      (a)          In
no event will Purchaser 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) Purchaser 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, Purchaser 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.

      (b)          Notwithstanding
the provisions of subsection (a) above, no such registration statement or
opinion of counsel shall be necessary for a transfer by a Purchaser 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 Purchaser's family member or trust for the benefit
of the individual Purchaser, 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
Purchaser hereunder.

       

      
        
          
          

        

        
          -15-

          
            

          

        

        
          
          

        

      

       

      4.6         Investment
Experience and Disclosure of Information.  Purchaser (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.

      

      4.7         Accredited
Investor.  Purchaser 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.

      

      4.8         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.

       

      4.9         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.

      

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

      

      4.11      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.

      

      5.           California
and Federal Securities Laws

      

      5.1        No
Qualification.  THE SALE OF THE SECURITIES WHICH ARE THE
SUBJECT OF THIS AGREEMENT HAS NOT BEEN QUALIFIED WITH THE COMMISSIONER OF
CORPORATIONS OF THE STATE OF CALIFORNIA, AND THE ISSUANCE OF SUCH SECURITIES OR
THE PAYMENT OR RECEIPT OF ANY PART OF THE CONSIDERATION THEREFOR PRIOR TO SUCH
QUALIFICATION IS UNLAWFUL UNLESS THE SALE OF SECURITIES IS EXEMPT FROM THE
QUALIFICATION BY SECTION 25100, 25102 OR 25105 OF THE CALIFORNIA CORPORATIONS
CODE.  THE RIGHTS OF ALL PARTIES TO THIS AGREEMENT ARE EXPRESSLY
CONDITIONED UPON SUCH QUALIFICATION BEING OBTAINED, UNLESS THE SALE IS SO
EXEMPT.

      

      5.2         Legend.  The
certificates for the Shares shall bear a legend in substantially the following
form (and any other legend required by the Commissioner of Corporations of the
State of California).

       

      
        
          
          

        

        
          -16-

          
            

          

        

        
          
          

        

      

       

      "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."

      

      6.           Conditions
to Closing

      

      6.1        Conditions
to Purchaser's Obligations.  The obligations of each Purchaser
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
Purchaser but which waiver shall not be effective against any Purchaser 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.

      

      (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 Purchaser.

      

      (d)          Secretary’s
Certificate.  The Secretary of the Company shall deliver to
each Purchaser at the Closing a certificate 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.

      

      (e)          Compliance
Certificate.  The Company shall have delivered to Purchasers
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 Articles of
Incorporation, the adoption of the Company's Bylaws, the issuance and sale of
the Shares, and the consummation of all other transactions contemplated by this
Agreement and the Transaction Documents.

      

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

       

      
        
          
          

        

        
          -17-

          
            

          

        

        
          
          

        

      

       

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

      

      (i)          Opinion of
Counsel.  Counsel for the Company shall have delivered to each
Purchaser an opinion in the form attached hereto as Exhibit
D.

      

      (j)          Proprietary
Information and Inventions Agreement.  The Company shall have
entered into a proprietary information and inventions agreement, in form and
substance satisfactory to such Purchaser, with each of its officers, key
employees, and any consultants identified by the Majority
Purchasers.

      

      (k)          Delivery
of Certificates.  The Company shall deliver certificates
representing the number of Shares set forth opposite each Purchaser's name on
Schedule
1 hereto.

      

      (l)          Good
Standing Certificates.  The Company shall have delivered to
Purchasers a certificate of good standing (including Tax 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.

      

      (m)          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
Purchaser 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)          Payment of
Purchase Price.  Each of the Purchasers shall have delivered
the purchase price by wire transfer or other immediately available funds, the
sum set forth opposite such Purchaser's name specified in Schedule
1, in payment of the purchase price of the number of Shares being
purchased by such Purchaser pursuant to this Agreement.

       

      
        
          
          

        

        
          -18-

          
            

          

        

        
          
          

        

      

       

      7.           Additional
Covenants of Parties

      7.1         Indemnification.
In consideration of each Purchaser’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
Purchaser 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 Purchaser 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 6
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 Purchasers holding at least a majority in
interest of the Registrable Securities included in the Registration Statement to
which the Claim relates.  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

      
        
           

        

        
          -19-

          
            

          

        

        
           

        

      

    

     

    (c)        The
indemnification required by this Section 6 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 Registrable Securities 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 Registrable Securities who was not guilty of
fraudulent misrepresentation; and (ii) contribution by any seller of Registrable
Securities shall be limited in amount to the net amount of proceeds received by
such seller from the sale of such Registrable Securities pursuant to such
Registration Statement.

    

    7.2        Reports
Under Exchange Act.  With a view to making available to the
Purchasers 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 Purchasers
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 Purchaser so long as such Purchaser owns Registrable Securities,
promptly upon written request by an Purchaser, (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 Purchasers to sell such securities pursuant to Rule 144 without
registration.

    

    7.3        Purchasers'
Counsel Fees. At or promptly following the Initial 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 7.4 more
than Eighty-Five Thousand Dollars ($85,000.00) in the aggregate for such fees
and expenses.

    
      
         

      

      
        -20-

        
          

        

      

      
         

      

    

    8.          
Miscellaneous

    

    8.1        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 DHL) 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 mailing address, facsimile number, or email address set forth on the
signature page of this Agreement, or such other mailing address, facsimile
number, or email address, notice of which is given in a manner permitted by this
Section 8.1.

    

    8.2        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.

    

    8.3        Counterparts.  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.

    

    8.4        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.

    

    8.5        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
Purchasers.  Notwithstanding the foregoing, this Agreement may not be
amended to create any obligation on behalf of a Purchaser to advance funds to
the Company or purchase Shares beyond the amounts set forth on Schedule
1 without the consent or approval of such Purchaser.  Any
amendment or waiver effected in accordance with this Section 8.5 shall be
binding upon the Company, Purchasers, and any transferee of any
Shares.

    

    (a)        Rights
Among Purchasers.  Each Purchaser (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 Purchaser or transferee
holder shall not incur any liability to any other Purchaser or holder of Shares
with respect to exercising or refraining from exercising any such right or
rights.

    

    (b)        Exculpation
Among Purchasers.  Each Purchaser 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 Purchaser agrees that no Purchaser nor the respective
controlling Persons, officers, directors, partners, agents or employees of any
Purchaser shall be liable to any other Purchaser 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.

    
      
         

      

      
        -21-

        
          

        

      

      
         

      

    

    (c)        Effect
of Amendment or Waiver.  Each Purchaser acknowledges that by
the operation of this Section 8.5, less
than all of the Purchasers may effect an amendment or waiver of provisions of
this Agreement and therefore diminish or eliminate all rights of such Purchaser
under this Agreement even though such Purchaser has not consented to the
amendment or waiver.

    

    8.6        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.

    

    8.7        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.

    

    8.8        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.

    

    8.9        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 Purchasers or the Company.

    

    8.10      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.

    

    8.11      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.]

    
      
         

      

      
        -22-

        
          

        

      

      
         

      

    

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

    

    
      
        
          
            
              
                
                  	
                          "Company:"

                        
	 
      	 
      
	 
      	
                          EnerJex
      Resources, Inc., a Nevada corporation

                        
	 
      	 
      
	 
      	
                          By

                        	 
      
	 
      	 
      	
                          C.
      Stephen Cochennet, Chief Executive Officer

                        
	 
      	 
      
	 
      	
                          Address and Facsimile No. for
      Notices:

                        
	 
      	 
      
	 
      	
                          EnerJex
      Resources, Inc.

                        
	 
      	
                          ATTN:  Chief
      Executive Officer

                        
	 
      	
                          27
      Corporate Woods, Suite 350

                        
	 
      	
                          10975
      Grandview Drive

                        
	 
      	
                          Overland
      Park, KS 66210

                        
	 
      	 
      
	 
      	
                          Facsimile
      No.:  (913) 754-7755

                        
	 
      	
                          Email:  scochennet@bizkc.rr.com

                        
	 
      	 
      
	 
      	
                          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

                        
	 
      	 
      
	 
      	
                          Facsimile
      No.:  (702) 442.7995

                        
	 
      	
                          anthony@demintlaw.com

                        

                

              

            

          

        

      

    

    

    [Signatures continued on following
page.]

    
      
         

      

      
        -23- 

        
          

        

      

      
         

      

    

    

    
      
        
          
            
              	
                      "Common
      Stock Purchasers:"

                    
	 
      	 
      
	 
      	
                      Montecito
      Venture Partners, LLC, a
California limited liability
      company

                    
	 
      	 
      
	 
      	
                      By

                    	 
      
	 
      	 
      	
                      Atticus
      Lowe

                    
	 
      	 
      	
                      Chief
      Investment Officer of Managing Member

                    
	 
      	 
      
	 
      	 
      
	 
      	
                      Date

                    
	 
      	 
      
	 
      	
                      Address and Facsimile No. for
      Notices:

                    
	 
      	 
      
	 
      	
                      Montecito
      Venture Partners, LLC

                    
	 
      	
                      c/o
      West Coast Asset Management, Inc.

                    
	 
      	
                      1205
      Coast Village Road

                    
	 
      	
                      Montecito,
      CA  93108

                    
	 
      	
                      Attention:
      Atticus Lowe

                    
	 
      	
                      Telephone:
      (805) 653-5333

                    
	 
      	
                      Fax:   (805)
      648-6466

                    
	 
      	 
      
	 
      	
                      Amount
      Being Invested by

                    
	 
      	
                      Purchaser:                            $
      _____________

                    
	 
      	 
      

            

          

        

      

    

    

    [Signatures continued on following
page.]

    

    Signature
Page for Common Stock Purchasers

    EnerJex
Securities Purchase Agreement

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Signatures
of Common Stock Purchasers Continued

    

    
      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              
                                	 
      	 
      	 
      
	
                                        Signature

                                      	
                                        Date

                                      	 
      	
                                        Signature

                                      	
                                        Date

                                      
	 
      	 
      	 
      
	 
      	 
      	 
      
	
                                        Printed
      Name of Purchaser

                                      	 
      	
                                        Printed
      Name of Purchaser

                                      
	 
      	 
      	 
      
	 
      	 
      	 
      
	
                                        Printed
      Name and Title of Person Signing on behalf of Purchaser

                                      	 
      	
                                        Printed
      Name and Title of Person Signing on behalf of Purchaser

                                      
	 
      	 
      	 
      
	
                                        Address and Facsimile No. for
      Notices:

                                      	 
      	
                                        Address and Facsimile No. for
      Notices:

                                      
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	
                                        Facsimile
      No.:  (_____) _____________________

                                      	 
      	
                                        Facsimile
      No.:  (_____)  _____________________

                                      
	
                                        Email: ____________________________

                                      	 
      	
                                        Email:  ___________________________

                                      
	 
      	 
      	 
      
	
                                        Amount
      Being Invested by

                                      	 
      	
                                        Amount
      Being Invested by

                                      
	
                                        Purchaser:                            $ ____________________

                                      	 
      	
                                        Purchaser:                            $ ____________________

                                      

                              

                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

    

    

    Signature
Page for Common Stock Purchasers

    EnerJex
Securities Purchase Agreement

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    SCHEDULE
1

     

    EnerJex
Resources, Inc.

     

    PURCHASERS
OF COMMON STOCK

    

    
      
        
          
            
              
                
                  
                    	
                            Purchaser

                          	 	
                            Cash 

                            Invested

                          	 	 	
                            No. of Shares of

                            Common Stock

                          	 
	 	 	 	 	 	 	 	 	 
	
                            Montecito
      Venture Partners, LLC

                          	 	$	[_________	]	 	 	[_________	]
	 
      	 	 	 	 	 	 	 	 
	
                            [____________]

                          	 	 	[_________	]	 	 	[_________	]
	 
      	 	 	 	 	 	 	 	 
	
                            [____________]

                          	 	 	[_________	]	 	 	[_________	]
	 
      	 	 	 	 	 	 	 	 
	
                            [____________]

                          	 	 	[_________	]	 	 	[_________	]
	 
      	 	 	 	 	 	 	 	 
	
                            TOTAL:

                          	 	$	[_________	]	 	 	[_________	]

                  

                

              

            

          

        

      

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Exhibit
A

    

    Certificate
of Designation

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Exhibit
B

    

    Compliance
Certificate

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Exhibit
C

    

    Company
Disclosure Schedule

    
      
         

      

      
        Exhibit
C, Page
1

        
          

        

      

      
         

      

    

    Exhibit
D

    

    Form
of Opinion of Counsel to Company

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