ENERJEX RESOURCES, INC.
00
Xxxxxxxxx Xxxxx, Xxxxx 000
00000
Xxxxxxxxx Xxxxx
Overland
Park, Kansas 66210
November
16, 2009
|
West
Coast Opportunity Fund, LLC
|
Xxxx
Living Trust
|
|
|
0000
Xxxxxxxxxx Xxxxx, Xxxxx 000
|
0000
XX Xxxxxx Xxxx Xxx
|
|
|
Ventura,
CA 93001
|
Jensen
Beach, FL 34957
|
|
|
Enable
Growth Partners LP
|
Enable
Opportunity Partners LP
|
|
|
C/o
Enable Capital Management
|
C/o
Enable Capital Management
|
|
|
One
Ferry Building, Suite 225
|
Xxx
Xxxxx Xxxxxxxx, Xxxxx 000
|
|
|
San
Francisco, CA 94111
|
San
Francisco,
CA 94111
|
|
|
RE:
|
Amendment to
Debentures and Transaction Documents (this “Letter
Agreement”)
|
Dear
Buyers:
Reference
is made to the June 21, 2007 Senior Secured Debentures, as amended (the “Debentures”), the
Securities Purchase Agreement, as amended (the “Purchase Agreement”),
and the Pledge and Security Agreement, as amended (the “Security Agreement”)
and other agreements and documents associated therewith, as amended through the
date hereof (collectively, the “Transaction
Documents”), all originally dated as of April 11, 2007, by and among
EnerJex Kansas, Inc.
(the “Company”), EnerJex Resources, Inc.
(“Parent”),
West Coast Opportunity Fund,
LLC (“West
Coast”), Xxxx Living
Trust (“Xxxx”), Enable
Growth Partners LP (“Enable Growth”) and Enable Opportunity Partners LP
(“Enable Opportunity”) (collectively, West Coast, Xxxx, Enable Growth and Enable
Opportunity may be referred to as the “Buyers”). Capitalized
terms used but not otherwise defined herein have the meanings ascribed to such
terms in the Debentures, Purchase Agreement, the Security Agreement and/or the
Transaction Documents.
WHEREAS:
A. The
Buyers were issued shares of the Parent’s common stock (the “Shares”) under the
terms of the Purchase Agreement and Transactions Documents.
B. The
Company and Parent desire to amend the Debentures to allow for the retirement of
a portion of the Shares as, and when, the Company redeems any of the
Debentures.
C. The
Buyers have certain participation rights for Subsequent Placements made by
Parent while any Debenture is outstanding.
D. The
Company and the Buyers wish to amend certain Sections of the Debentures, the
Securities Purchase Agreement and the Transaction Documents as set forth
herein.
1
X. Xxxxxxx
of the Transaction Documents provide that amendments may be made by written
consent of the Company and holders of at least sixty-five percent of the
aggregate number of Registrable Securities issued under the Securities Purchase
Agreement, and the undersigned Buyers constitute such requisite
holders.
NOW THEREFORE, in
consideration of the premises and mutual promises herein contained, the Company
and the Buyers hereby agree as follows:
1. Defined Terms.
Capitalized terms used in this Letter Agreement which are not defined herein
shall have the meaning ascribed to them in the Transaction
Documents.
2. Amendment to
Debenture. The Company and the Buyers hereby agree that the
COMPANY REDEMPTION Section of the Debentures shall be amended and restated to
read as follows:
(6) COMPANY
REDEMPTION.
|
|
(a)
|
Redemption of
Debentures. The Company may elect to pay to the Holder of this
Debenture the Company Redemption Amount, subject to and in accordance with
the terms of this Section 6, by redeeming the Principal, in whole or in
part, in accordance with this Section 6 (a “Company
Redemption”). On or prior to the date which is the sixth
(6th) Trading Day prior to the Company Redemption (each, a “Company Redemption Notice Due
Date”), the Company shall deliver written notice (each, a “Company Redemption
Notice”), to the Holder which Company Redemption Notice shall state
the amount which the Company elects to redeem pursuant to a
Company Redemption (the “Company Redemption
Amount”), which amount shall be applied, on a pro rata basis to all
outstanding Company Debentures, to the outstanding Principal, together
with accrued and unpaid Interest with respect to such Company Redemption
Amount and accrued and unpaid Late Charges with respect to such Company
Redemption Amount and Interest. Each Company Redemption Notice shall be
irrevocable. The Company shall redeem the applicable Company Redemption
Amount of this Debenture pursuant to this Section 6 together with the
corresponding Company Redemption Amounts of the Other Debentures pursuant
to the corresponding provisions of the Other Debentures. If the
Company elects a Company Redemption, then the Company Redemption Amount
which is to be paid to the Holder on the applicable Company Redemption
Date shall be redeemed by the Company on such Company Redemption Date, and
the Company shall pay to the Holder on such Company Redemption Date, by
wire transfer of immediately available funds, an amount in cash equal to
the Company Redemption Amount.
|
2
|
|
(b)
|
Retirement of
Shares. In accordance with the schedule attached hereto as Exhibit
A, and at any time before the Maturity Date, if the Company completes a
Company Redemption within the time frames set forth on Exhibit A, or in
advance of any time frames set forth therein, the Holder of this Debenture
shall tender a number of the Parent’s shares of common stock held by the
Holder for immediate cancellation in accordance with the schedule attached
hereto as Exhibit A.
|
|
|
(c)
|
Transfer
Restrictions. For as long as the Company is in compliance with the
redemption and retirement schedule set forth on Exhibit A, the Holder
irrevocably agrees not to pledge, hypothecate, transfer, sale or otherwise
encumber any shares of the Parent’s common stock currently held by Holder
or otherwise issued to Holder after the date
hereof.
|
3. Amendment to Securities
Purchase Agreement. The Company, the Parent and the Buyers hereby agree
that the COVENANTS Section 4(o)(iv) of the Debentures shall be amended and
restated to read as follows:
|
|
(iv)
|
The
restrictions contained in subsections (ii) and (iii) of this Section 4(o)
shall not apply in connection with the issuance of: (i) any
Common Stock Equivalents issued pursuant to an employee benefit plan which
has been approved by the Board of Directors of Parent, (ii) any security
issued in or registered in a public offering by Parent or any of its
Subsidiaries, (iii) issuance for services performed for the Company or
Parent, (iv) any debt offering, including a line of credit, where the
proceeds of which will be used to redeem all or a portion of the
outstanding Debentures (if the debt offering does not redeem the
Debentures in full, such offering will be required to subordinate to the
Debentures), or (v) in connection with any acquisition by the Parent,
whether through an acquisition of stock or a merger of any business or
assets the primary purpose of which is not to raise equity
capital.
|
|
|
4.
|
Conditional
Waiver.
|
|
|
a.
|
The
Buyers hereby waive any existing Event of Default under the Transaction
Documents that does not, directly or indirectly, have a material negative
impact on the Buyers’ security interest in the collateral or other
properties of the Company in which it has a security interest, or have a
material negative impact in the Buyers’ priority of payment under the
Debentures.
|
|
|
b.
|
The
Company hereby represents and warrants to the Buyers that it has no
knowledge of any material Defaults or Events of Default under the
Transaction Documents.
|
3
|
|
c.
|
The
waivers granted by the Buyers in favor of the Company that are contained
in this Agreement shall be null and void in the event the Company has
breached its representation in
Section 4(b).
|
5. Governing
Law. This Letter Agreement shall be construed and enforced in
accordance with, and all questions concerning the construction, validity,
interpretation and performance of this Letter Agreement and all disputes arising
hereunder shall be governed by, the laws of the State of New York, without
giving effect to any choice of law or conflict of law provision or rule (whether
of the State of New York or any other jurisdiction) that would cause the
application of the laws of any jurisdiction other than the State of New
York.
6. Amendment. It
is the intention of the parties that this Letter Agreement modifies and amends
the Transaction Documents to the extent set forth herein or as otherwise
necessary to effectuate the intentions of the parties as set forth
herein.
7. No
Waiver. The execution of this Letter Agreement is not, and
shall not be deemed to constitute, a waiver, cure, or forbearance of any default
arising prior or subsequent to the date of this Letter Agreement, nor shall it
constitute a reinstatement of the terms described in the Transaction Documents,
except as set forth herein. The Company agrees that no delay on the
part of any of the Buyers in exercising any power or right shall operate as a
waiver of any such power or right or preclude the further exercise of any other
power or right. Any remedies contained herein are cumulative and not
exclusive of any remedies provided by law. Notice to or demand in
circumstances under which the terms of this Letter Agreement do not require such
notice or demand shall not entitle the Company to further notice or demand nor
constitute a waiver of the rights of the Buyers to take any other or further
action without notice or demand.
8. Continuing Validity of
Transaction Documents. Except as expressly provided for in
this Letter Agreement, the other Transaction Documents and all other documents
executed in connection therewith shall continue unchanged in full force and
effect, in accordance with their respective terms, and the parties hereby
expressly confirm and reaffirm all of their respective liabilities, obligations,
duties and responsibilities under and pursuant to the other Transaction
Documents.
9. Transaction Document.
This Letter Agreement shall be deemed and constitute a “Transaction Document”
under the Securities Purchase Agreement.
10. Recitals. The
recitals set forth above are true and correct and are hereby incorporated into
this Letter Agreement as if set forth at length herein.
11. Counterparts. This
Letter Agreement may be executed in two or more identical counterparts, all of
which shall be considered one and the same agreement and shall become effective
when counterparts have been signed by each party and delivered to each other
party; provided that a facsimile signature shall be considered due execution and
shall be binding upon the signatory thereto with the same force and effect as if
the signature were an original, not a facsimile signature.
12. Headings. The
headings of this Letter Agreement are for convenience of reference and shall not
form part of, or affect the interpretation of, this Letter
Agreement.
4
13. Severability. If
any provision of this Letter Agreement shall be invalid or unenforceable in any
jurisdiction, such invalidity or unenforceability shall not affect the validity
or enforceability of the remainder of this Letter Agreement in that jurisdiction
or the validity or enforceability of any provision of this Letter Agreement in
any other jurisdiction.
14. Further
Assurances. Each party shall do and perform, or cause to be
done and performed, all such further acts and things, and shall execute and
deliver all such other agreements, certificates, instruments and documents, as
any other party may reasonably request in order to carry out the terms of this
Letter Agreement and the consummation of the transactions contemplated
hereby.
Kindly
confirm your agreement with the foregoing by signing the copy of this letter
where indicated below.
IN
WITNESS WHEREOF, the parties hereto have executed or caused this Letter
Agreement to be duly executed by an authorized officer as of the date first
above written.
|
Very
Truly Yours,
|
||
|
Company:
|
||
|
ENERJEX
KANSAS, INC.
|
||
|
By:
|
/s/ Xxxxx Xxxxxxxxx
|
|
|
Name:
Xxxxx Xxxxxxxxx
|
||
|
Title:
Chief Executive Officer
|
||
|
Parent:
|
||
|
By:
|
/s/ Xxxxx Xxxxxxxxx
|
|
|
Name:
Xxxxx Xxxxxxxxx
|
||
|
Title:
Chief Executive
Officer
|
||
5
|
WEST
COAST OPPORTUNITY FUND,
|
|
|
LLC
|
|
|
By:
|
/s/ Xxxxxxx Xxxx
|
|
Name:
Xxxxxxx Xxxx
|
|
|
Title:
Chief Investment
Officer
|
|
6
|
ENABLE
GROWTH PARTNERS LP
|
|
|
By:
|
/s/ Xxxxxxx X’Xxxx
|
|
Name:
Xxxxxxx X’Xxxx, CFA
|
|
|
Title:
Principal and Portfolio
Manager
|
|
7
|
ENABLE
OPPORTUNITY PARTNERS LP
|
|
|
By:
|
/s/ Xxxxxxx X’Xxxx
|
|
Name:
Xxxxxxx X’Xxxx, CFA
|
|
|
Title:
Principal and Portfolio
Manager
|
|
8
|
XXXX
LIVING TRUST
|
|
|
By:
|
/s/ Xxxxxx Xxxx Xx.
|
|
Name:
Xxxxxx Xxxx Xx.
|
|
|
Title:
Trustee
|
|
9
Exhibit A – West Coast
Debenture Redemption and Retirement Schedule
In accordance with Section 6(b) of the
attached Debenture, the Holder hereby agrees, that upon payment of the
Redemption Amount specified below on or before each respective Redemption
Payment Date as set forth below, it will return the Retirement Shares set forth
below to the Parent for immediate cancellation:
|
Redemption Amount
|
Redemption Payment Date
|
Retirement Shares
|
||
|
$100,000
|
December
31, 2009
|
50,000
|
||
|
$200,000
|
January
31, 2010
|
100,000
|
||
|
$200,000
|
February
28, 2010
|
100,000
|
||
|
$100,000
|
March
31, 2010
|
50,000
|
||
|
$100,000
|
April
30, 2010
|
50,000
|
||
|
$100,000
|
May
31, 2010
|
50,000
|
||
|
$100,000
|
June
30, 2010
|
50,000
|
||
|
$100,000
|
July
21, 2010
|
50,000
|
||
|
$100,000
|
August
31, 2010
|
50,000
|
||
|
Balance
of Principal and
Interest
|
(Maturity
Date)
September
30, 2010
|
0.5
shares for each $1 of
Principal
repaid
|
The Company and the Holder acknowledge
and agree that the Company may prepay the entire outstanding Principal and
Interest amount due under the Debenture at anytime, which would not affect the
number of Retirement Shares to be returned for cancellation.
IN WITNESS WHEREOF, the parties hereto
have executed or caused this Exhibit A to be duly executed by an authorized
officer.
Holder:
WEST
COAST OPPORTUNITY FUND, LLC
|
By:
|
/s/ Xxxxxxx Xxxx
|
|||
|
Name:
Xxxxxxx Xxxx
|
||||
|
Title:
Chief Investment Officer
|
||||
|
Company:
|
Parent:
|
|||
|
ENERJEX
KANSAS, INC.
|
||||
|
By:
|
/s/ Xxxxx Xxxxxxxxx
|
By:
|
/s/ Xxxxx Xxxxxxxxx
|
|
|
Name:
Xxxxx Xxxxxxxxx
|
Name:
Xxxxx Xxxxxxxxx
|
|||
|
Title:
Chief Executive Officer
|
Title:
Chief Executive
Officer
|
|||
West Coast
Debenture
A-1
Exhibit A – Enable Growth
Debenture Redemption and Retirement Schedule
In accordance with Section 6(b) of the
attached Debenture, the Holder hereby agrees, that upon payment of the
Redemption Amount specified below on or before each respective Redemption
Payment Date as set forth below, it will return the Retirement Shares set forth
below to the Parent for immediate cancellation:
|
Redemption Amount
|
Redemption Payment Date
|
Retirement Shares
|
||
|
$26,500
|
December
31, 2009
|
13,250
|
||
|
$53,000
|
January
31, 2010
|
26,500
|
||
|
$53,000
|
February
28, 2010
|
26,500
|
||
|
$26,500
|
March
31, 2010
|
13,250
|
||
|
$26,500
|
April
30, 2010
|
13,250
|
||
|
$26,500
|
May
31, 2010
|
13,250
|
||
|
$26,500
|
June
30, 2010
|
13,250
|
||
|
$26,500
|
July
21, 2010
|
13,250
|
||
|
$26,500
|
August
31, 2010
|
13,250
|
||
|
Balance
of Principal
|
September
30, 2010
|
0.5
shares for each $1 of
Principal
repaid
|
The
Company and the Holder acknowledge and agree that the Company may prepay the
entire outstanding Principal and Interest amount due under the Debenture at
anytime, which would not affect the number of Retirement Shares to be returned
for cancellation.
IN WITNESS WHEREOF, the parties hereto
have executed or caused this Exhibit A to be duly executed by an authorized
officer.
Holder:
ENABLE
GROWTH PARTNERS LP
|
By:
|
/s/ Xxxxxxx X’Xxxx
|
|||
|
Name:
Xxxxxxx X’Xxxx, CFA
|
||||
|
Title:
Principal and Portfolio Manager
|
||||
|
Company:
|
Parent:
|
|||
|
ENERJEX
KANSAS, INC.
|
||||
|
By:
|
/s/ Xxxxx Xxxxxxxxx
|
By:
|
/s/ Xxxxx Xxxxxxxxx
|
|
|
Name:
Xxxxx Xxxxxxxxx
|
Name:
Xxxxx Xxxxxxxxx
|
|||
|
Title:
Chief Executive Officer
|
Title:
Chief Executive
Officer
|
|||
Enable
Growth Debenture
A-1
Exhibit A – Enable
Opportunity Debenture Redemption and Retirement Schedule
In accordance with Section 6(b) of the
attached Debenture, the Holder hereby agrees, that upon payment of the
Redemption Amount specified below on or before each respective Redemption
Payment Date as set forth below, it will return the Retirement Shares set forth
below to the Parent for immediate cancellation:
|
Redemption Amount
|
Redemption Payment Date
|
Retirement Shares
|
||
|
$13,500
|
December
31, 2009
|
6,750
|
||
|
$27,000
|
January
31, 2010
|
13,500
|
||
|
$27,000
|
February
28, 2010
|
13,500
|
||
|
$13,500
|
March
31, 2010
|
6,750
|
||
|
$13,500
|
April
30, 2010
|
6,750
|
||
|
$13,500
|
May
31, 2010
|
6,750
|
||
|
$13,500
|
June
30, 2010
|
6,750
|
||
|
$13,500
|
July
21, 2010
|
6,750
|
||
|
$13,500
|
August
31, 2010
|
1,750
|
||
|
Balance
of Principal
|
September
30, 2010
|
0
shares for each $1 of
Principal
repaid
|
The
Company and the Holder acknowledge and agree that the Company may prepay the
entire outstanding Principal and Interest amount due under the Debenture at
anytime, which would not affect the number of Retirement Shares to be returned
for cancellation.
IN WITNESS WHEREOF, the parties hereto
have executed or caused this Exhibit A to be duly executed by an authorized
officer.
Holder:
ENABLE
OPPORTUNITY PARTNERS LP
|
By:
|
/s/ Xxxxxxx X’Xxxx
|
|||
|
Name:
Xxxxxxx X’Xxxx, CFA
|
||||
|
Title:
Principal and Portfolio Manager
|
||||
|
Company:
|
Parent:
|
|||
|
ENERJEX
KANSAS, INC.
|
||||
|
By:
|
/s/ Xxxxx Xxxxxxxxx
|
By:
|
/s/ Xxxxx Xxxxxxxxx
|
|
|
Name:
Xxxxx Xxxxxxxxx
|
Name:
Xxxxx Xxxxxxxxx
|
|||
|
Title:
Chief Executive Officer
|
Title:
Chief Executive
Officer
|
|||
Enable
Opportunity Debenture
A-1
Exhibit A – Xxxx Debenture
Redemption and Retirement Schedule
In accordance with Section 6(b) of the
attached Debenture, the Holder hereby agrees, that upon payment of the
Redemption Amount specified below on or before each respective Redemption
Payment Date as set forth below, it will return the Retirement Shares set forth
below to the Parent for immediate cancellation:
|
Redemption Amount
|
Redemption Payment Date
|
Retirement Shares
|
||
|
$10,000
|
December
31, 2009
|
5,000
|
||
|
$20,000
|
January
31, 2010
|
10,000
|
||
|
$20,000
|
February
28, 2010
|
10,000
|
||
|
$10,000
|
March
31, 2010
|
5,000
|
||
|
$10,000
|
April
30, 2010
|
5,000
|
||
|
$10,000
|
May
31, 2010
|
5,000
|
||
|
$10,000
|
June
30, 2010
|
5,000
|
||
|
$10,000
|
July
21, 2010
|
5,000
|
||
|
$10,000
|
August
31, 2010
|
5,000
|
||
|
Balance
of Principal
|
September
30, 2010
|
0.5
shares for each $1 of
Principal
repaid
|
The
Company and the Holder acknowledge and agree that the Company may prepay the
entire outstanding Principal and Interest amount due under the Debenture at
anytime, which would not affect the number of Retirement Shares to be returned
for cancellation.
IN WITNESS WHEREOF, the parties hereto
have executed or caused this Exhibit A to be duly executed by an authorized
officer.
Holder:
XXXX
LIVING TRUST
|
By:
|
/s/ Xxxxxx Xxxx Xx.
|
|||
|
Name:
Xxxxxx Xxxx Xx.
|
||||
|
Title:
Trustee
|
||||
|
Company:
|
Parent:
|
|||
|
ENERJEX
KANSAS, INC.
|
||||
|
By:
|
/s/ Xxxxx Xxxxxxxxx
|
By:
|
/s/ Xxxxx Xxxxxxxxx
|
|
|
Name:
Xxxxx Xxxxxxxxx
|
Name:
Xxxxx Xxxxxxxxx
|
|||
|
Title:
Chief Executive Officer
|
Title:
Chief Executive
Officer
|
|||
Xxxx
Debenture
A-1
