EMPLOYMENT
AGREEMENT
THIS
EMPLOYMENT AGREEMENT (this “ Agreement ”) is made
and entered into as of the 1 st day of August, 2008, by and between EnerJex
Resources, Inc., a Nevada corporation (“ EnerJex
”), and C. Stephen Cochennet (“ Cochennet
”).
W I T N E S S E T
H:
WHEREAS , the officers, managers and/or directors of
EnerJex are of the opinion that Cochennet has education, experience
and/or expertise which is of value to EnerJex and its owners,
and
WHEREAS , EnerJex and Cochennet desire to enter into
this Employment Agreement, pursuant to which Cochennet shall be
employed by EnerJex, to set forth the respective rights, duties and
obligations of the parties hereto.
NOW
THEREFORE , in
consideration of the promises and covenants contained herein, and
other good and valuable consideration, the receipt and sufficiency
of which the parties hereto acknowledge, EnerJex and Cochennet
agree as follows:
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EMPLOYMENT . EnerJex hereby agrees to employ Cochennet and
Cochennet hereby accepts such employment, upon the terms and
conditions hereinafter set forth.
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TERM . For purposes of this Agreement, “
Term ” shall mean the original term (as defined in
Section 2.1 below), if Renewal Term is initiated, then
“Term” shall mean the renewal term period.
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Original
Term :
The Term of this Agreement shall
commence on August 1, 2008 and expire on July 31, 2011, unless
sooner terminated pursuant to the terms and provisions herein
stated.
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Renewal
Term(s) : This Agreement shall automatically
be extended for additional one (1) year renewal terms unless
earlier terminated in accordance with the provisions of Section 6
below. Within 180 days from the end of the original contract either
party can notify the other side if they desire to terminate the
contract, otherwise the contract automatically renews as stated
above.
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Salary : EnerJex shall pay
Cochennet a base annual salary of Two Hundred Thousand Dollars
($200,000) per annum, payable in accordance with EnerJex’s
normal policies but in no event less often than semi-monthly (the
“ Base Salary ”). Effective April 1,
2009 and each April 1 st thereafter,
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Cochennet’s Base Salary shall be reviewed
and adjusted in the discretion of the Governance Compensation and
Nominating Committee of the Board of Directors of EnerJex. The
Governance, Compensation and Nominating Committee of the Board of
Directors shall have the right to increase the Base Salary more
often than annually at its sole discretion.
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Incentive
Compensation for Fiscal Year 2009 and Future Years
: Cochennet shall also be eligible for incentive
compensation in accordance with Addendum A , President and
Chief Executive Officer Incentive Compensation Plan, attached
hereto and made a part hereof by this reference.
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Fiscal
Year 2008 Incentive Compensation : EnerJex did not have a formal annual incentive
plan in place covering the President and Chief Executive Officer
for the fiscal year ended March 31, 2008. In recognition
of the accomplishments of this past fiscal year, EnerJex shall pay
Cochennet a lump sum cash bonus equal to $50,000.00, less
applicable taxes, within five (5) business days of the execution of
this Agreement. In addition to the cash bonus, EnerJex will grant
Cochennet 30,000 options of EnerJex common stock priced at $6.25
per share upon execution of this agreement. The options will vest
immediately and will have a three year term.
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Signing
Bonus :
As a signing bonus, Cochennet shall
be paid a one-time bonus equal to 45,000 options of EnerJex common
stock priced at $6.25 per share. The options shall vest
based on the following schedule: 10,000 options shall vest on July
1, 2009; 15,000 options shall vest on July 1, 2010; and 20,000
options shall vest on July 1, 2011. The options will be exercisable
for a three year term following the vesting date. Cochennet must be
employed by EnerJex on the above vesting dates for these options to
be vested.
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Equity
Incentive Plans : Cochennet shall be eligible to
participate in EnerJex’s equity incentive plans during the
term of employment as determined by the Governance, Compensation
and Nominating Committee of the Board of
Directors. EnerJex anticipates approaching the
shareholders to amend or adopt a plan which will authorize issuance
of restricted shares of common stock of EnerJex to be used in
incentive compensation programs.
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General
Benefits : Cochennet shall be entitled to
receive or participate in all benefit plans and programs of EnerJex
made available from time to time to executives or senior management
of EnerJex, including but not limited to, dental and medical
insurance, pension and profit sharing plans, 401(k) plans,
incentive savings plans, stock option plans, group life
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insurance,
salary continuation plans, disability coverage and other fringe
benefits.
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Long-term
Disability Insurance : If
EnerJex does not maintain a long term disability plan for its
executives and senior management, Cochennet may seek out and obtain
individual long-term disability insurance (covering a disability
lasting for over 180 days) and EnerJex shall pay for and maintain
such insurance for the Term of this Agreement, including any
Renewal Term(s), sufficient to pay Cochennet an amount up to 50% of
his base salary for the period of
incapacity. Notwithstanding the foregoing, in no event
shall EnerJex’s annual payment for such coverage exceed
$2,000.00 per year, unless otherwise approved by the Governance,
Compensation and Nominating Committee of the Board of
Directors.
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Director
and Officer Insurance : EnerJex shall use commercially reasonable
efforts to purchase and maintain a Directors and Officers liability
insurance policy on terms and conditions deemed acceptable by the
Board of Directors, acting in good faith, which policy shall cover
Cochennet at all times during his employment Term, including any
Renewal Term(s). Such liability insurance shall be at a value of a
minimum of One Million dollars ($1,000,000).
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Business
Expense : Cochennet shall be entitled to
receive proper reimbursement for all reasonable out-of-pocket
expenses incurred for purposes of paying business expenses,
including without limitation, business travel, entertainment,
lodging and similar activities directly by Cochennet in performing
Cochennet’s duties and obligations under this Agreement,
including those expenses incurred for the use of a company cell
phone and home office. EnerJex shall pay or reimburse
such expenses on at least a monthly basis, upon submission by
Cochennet of appropriate receipts, vouchers or other documents in
accordance with EnerJex’s policy.
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Automobile Expenses
: EnerJex shall provide Cochennet with either (i)
a corporate vehicle owned or leased by EnerJex, or (ii) an
allowance of up to $1,000.00 per month for the lease or purchase
payments. In addition, EnerJex shall pay for all expenses relating
to Cochennet’s operation and use of an automobile in the
course of performing duties and obligations under this
Agreement. EnerJex shall pay or reimburse such expenses
on at least a monthly basis, upon submission by Cochennet of
appropriate receipts, vouchers or other documents in accordance
with EnerJex’s policy.
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Vacation : Cochennet shall be entitled during
the Term of this Agreement to four (4) weeks vacation per year
during which time Cochennet’s compensation will be paid in
full. In an effort to keep Cochennet fresh
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and alert,
Cochennet should make every effort to use allotted vacation time
and there shall be no carry forward of unused
days. Cochennet may take the vacation periods at any
time during the year as long as Cochennet schedules time off as to
not create hardship on EnerJex. In addition, Cochennet
shall have such other days off, including paid sick leave and paid
holidays, in accordance with EnerJex’s policy.
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Position : Cochennet is employed as President and Chief
Executive Officer and a nominated Member of the Board of Directors
and shall perform such services and duties as
are defined in Addendum B , Job Description, attached
hereto, and as are normally associated with such position, subject
to the direction, supervision and rules and regulations of
EnerJex.
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Place of
Employment : The
place of Cochennet’s employment and the performance of
Cochennet’s duties will be at EnerJex’s corporate
headquarters and at Cochennet’s home office or at such
location as agreed upon by EnerJex and Cochennet.
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Extent of
Services : Cochennet shall at all times and to the best of
his ability perform his duties and obligations under this Agreement
in a reasonable manner consistent with the interests of
EnerJex. The precise services of Cochennet may be
extended or curtailed, from time to time at the discretion of
EnerJex, and Cochennet agrees to render such different and/or
additional services of a similar nature as may be assigned from
time to time by EnerJex. However, EnerJex shall not
materially alter Cochennet’s title, duties, obligations or
responsibilities or transfer Cochennet outside of the Kansas City,
Missouri area without Cochennet’s prior written
consent.
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5.3.1
Except as otherwise agreed by
EnerJex and Cochennet in writing, it is expressly understood and
agreed that Cochennet’s employment is fulltime and of a
critical nature to the success of EnerJex and is therefore
exclusive. Cochennet may not be employed by other
entities, except for subsidiaries of EnerJex, or otherwise perform
duties and undertakings on behalf of others or for his own interest
unless pre-approved by the Board of Directors. EnerJex acknowledges
that Cochennet presently, or may in the future, serve on the Board
of Directors, provide consulting services for or be an executive
officer of other companies and such action shall not be a breach of
this section; provided , however , that such
companies are: (a) listed on Addendum C , attached hereto;
and (b) do not compete with EnerJex or interfere with the
performance of Cochennet’s duties pursuant to this Agreement,
as determined in the reasonable judgment of the Board of
Directors.
5.3.2
Additionally, EnerJex recognizes
that Cochennet has, or may have in the future, equity positions in
other companies, which either: (a) are listed on Addendum C
attached hereto; or (b) do not compete with EnerJex in the
reasonable judgment of the Board of Directors. EnerJex
recognizes that such equity positions may occasionally require some
limited attention from Cochennet during normal business
hours. However, Cochennet agrees that if such time is
considered excessive by the Board of Directors, Cochennet shall be
so advised and noticed by EnerJex and Cochennet shall be required
to make appropriate adjustments to ensure his duties and
obligations under this Agreement are fulfilled.
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TERMINATION . The Term of this Agreement shall end upon its
expiration pursuant to Section 2 hereof, provided that this
Agreement shall terminate prior to such date: (a) upon
Cochennet’s resignation, death or permanent disability or
incapacity; or (b) by EnerJex at any time for “ Cause
” (as defined in Section 6.4 below) or without
Cause.
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By
Resignation . If Cochennet resigns with “
Good Reason ” (as defined below) this Agreement shall
terminate but Cochennet shall be entitled to receive:
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(a) a
lump sum payment equal to all earned but unpaid Base Salary through
the date of termination of employment,
(b) a
lump sum payment equal to the lesser of (i) 12-months Base Salary
or (ii) the Base Salary Cochennet would have received had he
remained in employment through the end of the then existing
Term;
(c) a
lump sum payment equal to the annual incentive amount (assuming
achievement at 100% of target) that Cochennet would have earned if
he had remained employed through June 30 th following the last day of the current fiscal
year; and
(d) immediate
vesting of all equity awards (including but not limited to stock
options and restricted shares).
For purposes of
this Agreement, “ Good Reason ” means any of the
following if the same shall occur without Cochennet’s express
written consent:
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a material
diminution in Cochennet’s Base Salary;
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a material
diminution in Cochennet's authority, duties, or responsibilities,
including a requirement that Cochennet report to a
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corporate
officer or employee instead of reporting directly to the Board of
Directors of EnerJex;
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a material
change in the geographic location at which Cochennet must perform
the services for which he is employed;
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any other
action or inaction that constitutes a material breach by EnerJex
under this Agreement; or
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Cochennet
resigns within twelve (12) months of a Change of Control (as
defined in Section 7).
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Cochennet shall
be required to provide notice to EnerJex of the existence of any of
the foregoing conditions within 30 days of the initial existence of
the condition, upon the notice of which EnerJex shall have a period
of 30 days during which it may remedy the condition without giving
rise to the obligations under this Section 6.1.
If Cochennet
resigns without Good Reason, Cochennet shall be entitled to
receive all earned but unpaid Base Salary through the date of
termination of employment.
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By Reason
of Incapacity or Disability : If
Cochennet becomes so incapacitated by reason of accident, illness,
or other disability that Cochennet is unable to carry on
substantially all of the normal duties and obligations of Cochennet
under this Agreement for a continuous period of one-hundred-eighty
(180) days (the “ Incapacity Period ”), this
Agreement shall terminate but Cochennet shall be entitled to
receive:
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(a) a
lump sum payment equal to all earned but unpaid Base Salary through
the date of termination of employment,
(b) a
lump sum payment equal to the annual incentive amount (assuming
achievement at 100% of target but pro rated based on the number of
days worked during the fiscal year) that Cochennet would have
earned if he had remained employed through June 30
th following the last day of the current fiscal
year; and
(c) a
lump sum payment equal to an amount equal to six (6) months Base
Salary.
For purposes of
the foregoing, Cochennet’s permanent disability or incapacity
shall be determined in accordance with the disability insurance
policy covering Cochennet, if such a policy is then in effect, or
if no such policy is then in effect, such permanent disability or
incapacity shall be determined by EnerJex’s Board of
Directors in its good faith judgment
based upon
Cochennet’s inability to perform normal and reasonable duties
and obligations.
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By Reason
of Death : If Cochennet dies during the Term of
this Agreement, EnerJex shall pay to Cochennet’s
estate:
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(a) a
lump sum payment equal to all earned but unpaid Base Salary through
the date Cochennet’s death,
(b) a
lump sum payment equal to the annual incentive amount (assuming
achievement at 100% of target but pro rated based on the number of
days worked during the fiscal year) that Cochennet would have
earned if he had remained employed through June 30
th following the last day of the current fiscal
year; and
(c) a
lump sum payment equal to an amount equal to six (6) months Base
Salary.
Other death
benefits will be determined in accordance with the terms of
EnerJex’s benefit plans and programs.
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For
Cause .
If the Term of this
Agreement is terminated by EnerJex for Cause, Cochennet shall be
entitled to receive all earned but unpaid Base Salary through the
date of termination of employment. However, if a dispute
arises between EnerJex and Cochennet that is not resolved within
sixty (60) days and neither party initiates arbitration proceedings
pursuant to Section 13.8 , EnerJex shall have the
option to pay Cochennet a lump sum payment equal to six (6) months
Base Salary (the “ Severance Payment ”) in lieu
of any and all other amounts or payments to which Cochennet may be
entitled relating to his employment with EnerJex. Such
determination to pay the Severance Payment shall be made in the
reasonable judgment of the Board of Directors. If
EnerJex elects to make a payment to Cochennet of the Severance
Payment, the parties hereto agree that such Severance Payment and
the payment provided by Section 6.6 shall be
Cochennet’s complete and exclusive remedy for such a
termination for Cause.
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For purposes of
this Agreement, “ Cause ” shall mean:
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an adjudication
of Cochennet’s fraud, theft or dishonesty with
respect to EnerJex;
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Cochennet’s conviction of a felony, a
crime involving moral turpitude or other act causing material harm
to EnerJex’s standing and reputation;
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Cochennet’s continued material failure to
perform Cochennet’s duties to EnerJex after thirty (30)
days’ written notice thereof to Cochennet; or
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gross
negligence or willful misconduct by Cochennet with respect to
EnerJex.
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Without
Cause .
If EnerJex terminates
Cochennet’s employment without Cause, Cochennet shall be
entitled to receive:
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(a) a
lump sum payment equal to all earned but unpaid Base Salary through
the date of termination of employment,
(b) a
lump sum payment equal to the annual incentive amount (assuming
achievement at 100% of target) that Cochennet would have earned if
he had remained employed through June 30 th following the last day of the current fiscal
year;
(c) a
lump sum payment equal to an amount equal to the lesser of (i)
12-months Base Salary or (ii) the Base Salary Cochennet would have
received had he remained in employment through the end of the then
existing Term; and
(d) immediate
vesting of all equity awards (including but not limited to stock
options and restricted shares).
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Effect of
Termination on Unused Vacation Time : Upon the termination of this
Agreement, unless termination is for Cause, Cochennet shall also
have the right to receive any accrued but unused vacation time for
that current fiscal year, and any benefits vested under the terms
of any applicable benefit plans.
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Time of
Payment: Any amounts payable under this
Section 6 shall be paid in a single lump sum within 30 days
following Cochennet’s termination of employment.
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Release
and Waiver . Notwithstanding the preceding
provisions of this Section 6 or any other provision in this
Agreement to the contrary, Cochennet’s entitlement to any
post-termination payment under this Agreement shall be subject to
and conditioned upon Cochennet’s execution of a release and
waiver of claims on the form reasonably acceptable to
EnerJex.
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For purposes of
this Agreement a “Change of Control” shall
mean:
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The
consummation of a merger or consolidation of EnerJex with or into
another entity or any other corporate reorganization, if more than
50% of the combined voting power of the continuing or surviving
entity’s securities outstanding immediately after such
merger, consolidation or other reorganization is owned by persons
who were n
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