EXECUTION COPY
SECURED
GUARANTY
THIS SECURED GUARANTY
(this “ Guaranty
”), dated as of April 11, 2007, is made by EnerJex Resources,
Inc., a Nevada corporation, with headquarters located at 7300 West
110th Street, Seventh Floor, Overland Park, Kansas 66210 (the
“ Guarantor ”)
WHEREAS , Midwest Energy, Inc., a Nevada corporation,
with headquarters located at 7300 West 110th Street, Seventh Floor,
Overland Park, Kansas 66210 (the “ Company ”)
has on even date herewith issued senior secured debentures (the
“ Debentures ”) to the Holders, as defined
therein, pursuant to the terms of that certain Securities Purchase
Agreement dated as of even date herewith (as amended, modified,
supplemented or extended from time to time, the “
Securities Purchase Agreement ” and, together with all
related agreements and documents issued or delivered thereunder or
pursuant thereto, the “ Transaction Documents
”);
WHEREAS , it is a condition to the willingness of the
Holders to purchase the Debentures from the Company as contemplated
under the Securities Purchase Agreement that the Guarantor enters
into this Guaranty for the benefit of the Holders;
WHEREAS, the Guarantor will receive either a direct or
indirect benefit from the credit provided to the Company under the
Transaction Documents; and
NOW THEREFORE, the parties hereto,
intending to be legally bound, and in consideration of the
foregoing and the mutual covenants contained herein, hereby agree
as follows:
(a) The
Guarantor, jointly and severally, as primary obligor and not merely
as surety, hereby absolutely, unconditionally and irrevocably
guarantees: (i) the performance of all obligations of the Company
under the Transaction Documents, including without limitation the
due and punctual payment in full (and not merely the
collectibility) of all obligations under the Debentures, including
all principal thereof and all interest payable thereon, at the
interest rate provided therein, in each case regardless of the
extent allowed as a claim in any proceeding in respect of the
bankruptcy, reorganization or insolvency of the Company, the
Guarantor or any of their respective Affiliates (a “
Reorganization ”), in each case when due and payable,
according to the terms of the Debentures and the other Transaction
Documents, whether at stated maturity, by reason of acceleration or
otherwise; (ii) the due and punctual payment in full (and not
merely the collectibility) of all other sums and charges which may
at any time be due and payable by the Company in accordance with,
or under the terms of, the Debentures or the other Transaction
Documents, whether at stated maturity, by reason of acceleration or
otherwise; (iii) the due and punctual payment in full (and not
merely the collectibility), performance and/or observance of all
other indebtedness, liabilities, obligations, terms, covenants and
conditions contained in the Transaction Documents, whether now or
hereafter existing, on the part of the Company to be paid,
performed or observed; and (iv) the due and punctual payment and
performance in full (and not merely the collectibility) of any and
all other future advances and other obligations,
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indebtedness, obligations and
liabilities of the Company to each of the Holders of every kind and
description, whether now existing or hereafter arising, whether
direct, indirect or contingent, whether secured or unsecured, and
howsoever evidenced, incurred or arising, including without
limitation any future loans and advances made to the Company by any
Holder prior to, during or following any Reorganization (all of the
foregoing being hereinafter collectively called the “
Guaranteed Obligations ”).
(b) Notwithstanding
any provision contained in this Guaranty or any other Guaranty
Document (as defined in Section 2) to the contrary (except as
set forth in clause (c) below), it is the intention and guaranty of
the Guarantor and the Company that the obligations of the Guarantor
under this Guaranty shall be valid and enforceable against the
Guarantor to the maximum extent permitted by applicable law.
Accordingly, if any provision of this Guaranty creating any
obligation of a Guarantor in favor of the Holders shall be declared
to be invalid or unenforceable in any respect or to any extent, it
is the stated intention and agreement of the Guarantor and the
Holders that any balance of the obligation created by such
provision and all other obligations of the Guarantor to the Holders
created by other provisions of this Guaranty shall remain valid and
enforceable. Likewise, if any sums which any Holder may be
otherwise entitled to collect from a Guarantor under this Guaranty
shall be declared to be in excess of those permitted under any law
(including any federal or state fraudulent conveyance or like
statute or rule of law) applicable to the Guarantor’s
obligations under this Guaranty, it is the stated intention and
agreement of the Guarantor and such Holder that all sums not in
excess of those permitted under such applicable law shall remain
fully collectible by such Holder from the Guarantor and such excess
sums shall nevertheless survive as a subordinate obligation of the
Guarantor, junior in right to the claims of general unsecured
creditors, but prior to the claims of equityholders in the
Guarantor. This provision shall control every other provision of
the Guaranty Documents.
Section 2.
Security . This Guaranty (as the same may be amended,
modified, supplemented, replaced or extended from time to time) and
all obligations, indebtedness or liabilities of the Guarantor
arising hereunder, as well as the obligations under the other
Transaction Documents, shall be secured by the Pledge and Security
Agreement of even date herewith (as the same may be amended,
restated, renewed, replaced, supplemented or otherwise modified
from time to time, (the “ Pledge Agreement ”;
the Pledge Agreement, together with this Guaranty and any and all
other agreements now or hereafter securing this Guaranty, being
collectively referred to herein as the “ Guaranty
Documents ”).
Section 3.
Subsequent Changes . The Guarantor expressly agrees that
each Holder may, in its sole and absolute discretion, without
notice to or further assent of the Guarantor and without in any way
releasing, affecting or impairing the Guaranteed Obligations and
liabilities of the Guarantor hereunder: (a) waive compliance with,
or any default under, or grant any other indulgences with respect
to, the Guaranteed Obligations; (b) modify, amend or change any
provisions of the Guaranteed Obligations; (c) grant extensions or
renewals of or with respect to the Guaranteed Obligations, and/or
effect any release, compromise or settlement in connection
therewith; (d) agree to the substitution, exchange, release or
other disposition of the Guarantor or of all or any part of the
collateral securing the Guaranteed Obligations; (e) make advances
for the purpose of performing any term or covenant contained in the
Guaranty Documents or any other
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Transaction Documents evidencing the
Guaranteed Obligations, with respect to which the Company shall be
in default; (f) subject to the provisions of the Debentures, assign
or otherwise transfer the Guaranteed Obligations, including,
without limitation, the assignment and transfer of any
Holder’s rights and remedies under this Guaranty, or any
interest therein; (g) deal in all respects with the Company and the
Guarantor, the Guaranteed Obligations or any collateral securing
the Guaranteed Obligations as if this Guaranty were not in effect;
(h) extend credit to the Company or the Guarantor whether or not
(1) notice of election to terminate any of the Transaction
Documents or any other agreement among the Holders and the Company
or the Guarantor has been given by the Holders, or by the Company
or the Guarantor, or (2) any Event of Default, or any event which
with notice or lapse of time, or both, would constitute an Event of
Default, has occurred under the Debentures or any other agreement
among the Holders and the Company or the Guarantor; (i) replace any
existing obligations and the documentation therefore with an
amended and restated obligation and the documentation therefor; and
(j) settle or compromise any or all of the Guaranteed Obligations
with the Company or the Guarantor, and/or any other person or
persons liable therein, and/or subordinate the payment of same or
any part hereof to the payment of any other debts or claims which
may at any time be due or owing to the Holders and/or other
person.
Section 4.
Direct and Absolute Obligation . The liability of the
Guarantor under this Guaranty shall be primary, direct and
immediate and not conditional or contingent upon pursuit by the
Holders of any remedies it may have against the Company or the
Guarantor or any other party with respect to the Guaranteed
Obligations, whether pursuant to the terms of the Debentures or
otherwise. The obligations of the Guarantor under this Guaranty
shall be absolute and unconditional, irrespective of the
genuineness, validity, regularity, enforceability or priority of
the Debentures or the Transaction Documents, the Guaranteed
Obligations or any other circumstances which might otherwise
constitute a legal or equitable discharge of a surety or guarantor
and without regard to any counterclaim, setoff, declaration or
defense of any kind which any party obligated under the Debentures
or any other document evidencing or securing any of the Guaranteed
Obligations may have or assert. No exercise or nonexercise by any
Holder of any right given to it hereunder or under the Debentures,
and no change, impairment or suspension of any right or remedy of
any Holder, shall in any way affect any of either Guarantor’s
obligations hereunder or give the Guarantor any recourse against
any Holder. Without limiting the generality of the foregoing, no
Holder shall be required to make any demand on the Company, its
Affiliates and/or any other party, or otherwise pursue or exhaust
its remedies against the Company or any other party, before,
simultaneously with or after, enforcing its rights and remedies
hereunder against the Guarantor. Any one or more successive and/or
concurrent actions may be brought hereon against the Guarantor,
either in the same action, if any, brought against the Company
and/or any other party, or in separate actions, as often as a
Holder, in its sole discretion, may deem advisable.
(a) The
Guarantor hereby expressly waives: (i) diligence, presentment and
demand for payment and protest of nonpayment; (ii) notice of
acceptance of this Guaranty and of presentment, demand, dishonor
and protest; (iii) notice of any default hereunder or under the
Debentures or any other Guaranteed Obligations and of all
indulgences; (iv) all other notices and
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demands otherwise required by law
which the Guarantor may lawfully waive; (v) the right to assert in
any action or proceeding hereupon any setoff, counterclaim or other
claim which it may have against the Holders; and (vi) the benefit
of all other principles or provisions of law, statutory or
otherwise, which are or might be in conflict with the terms hereof.
As further consideration for the purchase of the Debentures by the
Holders from the Company and as a material inducement to the
Holders to purchase the Debentures and accept this Guaranty, the
Guarantor hereby irrevocably waives, disclaims and relinquishes all
claims, whether based in equity or law, whether by contract,
statute or otherwise, that the Guarantor might now or hereafter
have against the Company or any other person that is primarily or
contingently liable on the Guaranteed Obligations guarantied hereby
or that arise from the existence or performance of the
Guarantor’s obligations under this Guaranty, including, but
not limited to, any right of subrogation, reimbursement,
exoneration, contribution, indemnification, or participation in any
claim or remedy of the Company or any of its Subsidiaries against
the Holders or any collateral security that any Holder now has or
hereafter acquires.
(b) The
Guarantor is presently informed of the financial condition of the
Company and of all of the circumstances which a diligent inquiry
would reveal and which bear upon the risk of nonpayment of the
Guaranteed Obligations. The Guarantor hereby covenants and agrees
that the Guarantor will continue to keep itself informed of the
Company’s financial condition, the status of other
guarantors, sureties, or other parties liable with respect to the
Guaranteed Obligations, if any, and of all of the ci
