¨ Confidential, for Use of the
Commission Only (as permitted by Rule 14a-6(e)(2))
x Definitive
Proxy Statement
¨ Definitive
Additional Materials
¨ Soliciting
Material Pursuant to §240.14a-12.
ENERJEX
RESOURCES, INC.
(Name of
Registrant as Specified in Its Charter)
(Name of
Person(s) Filing Proxy Statement, if other than the
Registrant)
Payment
of Filing Fee (Check the appropriate box):
x No
fee required.
¨ Fee
computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
1) Title
of each class of securities to which transaction applies:
2) Aggregate
number of securities to which transaction applies:
3)
Per
unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11: (set forth the amount on which the filing fee is
calculated and state how it was
determined):
4) Proposed
maximum aggregate value of transaction:
5) Total
fee paid:
¨ Fee
paid previously with preliminary materials.
¨
Check
box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its
filing.
You are cordially invited to attend the
annual meeting of stockholders of EnerJex Resources, Inc., a Nevada corporation
(“EnerJex”), to be held on Thursday, October 29, 2009, at 2:00 p.m., local time,
at 27 Corporate Woods, Suite 350, 10975 Grandview Drive, Overland Park, Kansas66210. At the annual meeting, you will be asked to consider and vote
on the following proposals;
1.
To
elect a new board of directors for EnerJex to hold office until the next
annual stockholder’s meeting, (the current nominees are C. Stephen
Cochennet, Robert G. Wonish, Daran G. Dammeyer, Darrel G. Palmer and Dr.
James W. Rector);
2.
To
reaffirm the appointment of Weaver & Martin, LLC as EnerJex’s
independent auditors for the next year;
and
3.
To
consider and act upon any other matters that may properly come before the
meeting or any adjournment thereof.
EnerJex’s
board of directors has fixed the close of business on September 4, 2009 as the
record date for the purpose of determining the stockholders who are entitled to
receive notice of, and to vote at, the annual meeting or any adjournment
thereof. A list of such stockholders will be available for examination by a
stockholder for any purpose germane to the meeting during normal business hours
at EnerJex’s Executive offices at 27 Corporate Woods, Suite 350, 10975 Grandview
Drive, Overland Park, Kansas66210 for 10 days prior to the annual
meeting.
Whether
or not you expect to attend the annual meeting in person, EnerJex urges you to
please vote your shares at your earliest convenience. This will ensure the
presence of a quorum at the meeting. Promptly voting your shares by signing,
dating and mailing the enclosed proxy will save EnerJex the expenses and extra
work of additional solicitation. Submitting your proxy now will not prevent you
from voting your shares at the meeting if you desire to do so, as your proxy is
revocable at your option.
Important Notice Regarding the
Availability of Proxy Materials for the Stockholder Meeting to be Held on
October 29, 2009. Our Proxy Statement and Annual Report to Stockholders
are available at www.enerjexresources.com/2009annualmeeting.
This
statement is furnished in connection with the solicitation by the board of
directors of EnerJex Resources, Inc. (hereinafter “EnerJex” or the “Company”) of
proxies in the accompanying form for the annual meeting of stockholders to be
held on Thursday, October 29, 2009 at 2:00 p.m. and at any adjournment
thereof.
This
proxy statement and the enclosed form of proxy were first sent to stockholders
on or about September 11, 2009.
If the
form of proxy enclosed herewith is executed and returned as requested, it may
nevertheless be revoked at any time prior to exercise by filing an instrument
revoking it or a duly executed proxy bearing a later date.
Solicitation
of proxies will be made by mail and by EnerJex’s chairman, C. Stephen Cochennet.
EnerJex will bear the costs of such solicitation and will reimburse brokerage
firms, banks, trustees and others for their actual out-of-pocket expenses in
forwarding proxy material to the beneficial owners of its common
stock.
As of the
close of business on September 4, 2009, the record date for the annual meeting,
EnerJex had outstanding and entitled to vote 4,799,236 shares of common stock.
Each share of common stock is entitled to one vote per share on all matters
submitted to a vote of EnerJex’s stockholders. Only stockholders of record at
the close of business on September 4, 2009 are entitled to vote at the annual
meeting or at any adjournment thereof.
Stockholders
who send in proxies but attend the meeting in person may vote directly if they
prefer and withdraw their proxies or may allow their proxies to be voted with
the similar proxies sent in by other stockholders.
VOTING
PROCEDURES AND
TABULATION
EnerJex
will appoint an election inspector to act at the meeting and to make a written
report thereof. Prior to the meeting, the inspector will sign an oath
to perform its duties in an impartial manner and to the best of its
ability. The inspector will ascertain the number of shares
outstanding and the voting power of such shares, determine the shares
represented at the meeting and the validity of proxies and ballots, count all
votes and ballots and perform certain other duties as required by
law. The inspector will tabulate the number of votes cast for,
against or abstained from the proposals described in the foregoing
notice.
The
presence at the meeting, in person or by proxy, of the holders of common stock
holding in the aggregate a majority of the voting power of EnerJex’s stock
entitled to vote at the meeting shall constitute a quorum for the transaction of
business. The vote of holders of common stock holding in the aggregate a
majority of the voting power of EnerJex’s stock present at the meeting, in
person or by proxy, shall decide the proposals to elect directors and
ratify the appointment of auditors. Abstentions will be counted for purposes of
establishing a quorum for the meeting, but will not count as votes cast for the
election of Directors or any other question. Accordingly, abstentions will have
the same effect as a vote cast “AGAINST” each proposal.
1
If
EnerJex receives a signed proxy card with no indication of the manner in which
shares are to be voted on the proposals, such shares will be voted in accordance
with the recommendation of the board of directors for such
proposal.
Brokers
who hold shares in street name only have the authority to vote on certain items
when they have not received instructions from beneficial owners. Any
“broker non-votes” will be counted for the purposes of establishing a quorum for
the meeting, but will not be counted as votes cast for the election of Directors
or any other question. Accordingly, “broker non-votes” will have the same effect
as a vote cast “AGAINST” each proposal.
Electronic
Access to Proxy Materials and Annual Report
This
proxy statement and our 2009 Annual Report are available at www.enerjexresources.com/2009annualmeeting. Electronic distribution
saves the Company the cost of printing and mailing the documents to you, reduces
the amount of mail you receive and is environmentally friendly by helping to
conserve natural resources consumed in the printing process.
QUESTIONS
AND ANSWERS
ABOUT
THE PROXY MATERIALS, PROPOSALS AND THE ANNUAL
MEETING
Q:
Why
did I receive a Notice of Internet Availability of Proxy
Materials?
A:
EnerJex’s
board of directors is providing these proxy materials to you in connection
with the annual meeting of stockholders, which will take place on
Thursday, October 29, 2009 at 2:00 p.m., local time, at the EnerJex
executive office, at 27 Corporate Woods, Suite 350, 10975 Grandview Drive,
Overland Park, Kansas66210. Pursuant to the rules of the Securities and
Exchange Commission, we have provided access to our proxy materials over
the Internet. Accordingly, we are sending a Notice of Internet
Availability of Proxy Materials, which is referred to herein as the
“E-proxy notice,” on or about September 11, 2009 to our stockholders of
record on September 4, 2009. The E-proxy notice and this proxy statement
summarize the information you need to know to vote by proxy or in person
at the annual meeting. You do not need to attend the annual meeting in
person in order to vote. As a stockholder, you are invited to attend the
annual meeting and are requested to vote on the items of business
described in this Proxy Statement.
Q:
When
was the E-proxy notice mailed?
A:
The
E-proxy notice was mailed to stockholders beginning on or about September11, 2009.
Q. How may I obtain EnerJex’s annual
report for the fiscal ended March 31, 2009?
A.
Stockholders
may request a free copy of EnerJex’s annual report by writing to: EnerJex
Resource, Inc., 27 Corporate Woods, Suite 350, 10975 Grandview Drive,
Overland Park, Kansas66210. Current and prospective investors can also
access or order free copies of EnerJex’s annual report and this Proxy
Statement at www.enerjexresources.com/2009annualmeeting.
Copies of our other financial information and reports are also available
free of charge on the SEC’s website at
http://www.sec.gov.
Q. What proposals are stockholders being
asked to consider at the upcoming annual meeting?
A.
EnerJex
is electing directors to serve for the next fiscal year and seeking
ratification of the appointment of its independent registered public
accounting firm.
Q. How does the board of directors
recommend that I vote?
A.
EnerJex’s
board of directors recommends that you vote your shares “FOR” each of the
proposals at the annual
meeting.
2
Q. What shares can I
vote?
A.
Each
share of EnerJex common stock outstanding as of the close of business on
September 4, 2009 (the record date) is entitled to one vote on all items
being voted on at the annual meeting. You may vote all shares owned by you
as of the record date, including (i) shares held directly in your name as
the stockholder of record and (ii) shares held for you as the beneficial
owner through a broker, trustee or other nominee, such as a
bank.
Q.
What is the difference between
holding shares as a “stockholder of record” and as a “beneficial
owner?”
A.
Many
EnerJex common stockholders hold their shares through a broker or other
nominee rather than directly in their own name. As summarized below, there
are some distinctions between common shares held of record and those owned
beneficially.
·
Stockholder of
Record: If your common shares are registered directly in your name
with EnerJex’s common stock transfer agent (Standard Registrar &
Transfer Co., Inc.), you are considered the stockholder of record with
respect to those shares. As the stockholder of record, you have the right
to grant your voting proxy directly to EnerJex or to vote in person at the
annual meeting. A proxy card is enclosed for you to
use.
·
Beneficial
Owner: If your shares are held in a brokerage account or by another
nominee (often referred to as being held in “street name”), you are
considered the beneficial owner of such shares, and these proxy materials
are being forwarded to you together with a voting instruction card by your
broker, trustee or nominee, as the case may be. As the beneficial owner,
you have the right to direct your broker, trustee or nominee how to vote,
and you are also invited to attend the annual
meeting.
Since a
beneficial owner is not the stockholder of record, you may not vote your shares
in person at the annual meeting unless you obtain a “legal proxy” from the
broker, trustee or nominee that holds your shares, giving you the right to vote
the shares at the meeting. Your broker, trustee or nominee should have enclosed
or provided voting instructions for you to use in directing the broker, trustee
or other nominee how to vote your shares.
Q. How can I attend the annual
meeting?
A.
Because
seating is limited, admission to the meeting will be on a first-come,
first-served basis. You should be prepared to present photo identification
for admittance. If you are not a stockholder of record as of the record
date but held your shares in street name, you should provide proof of
beneficial ownership as of the record date, such as your most recent
account statement prior to September 4, 2009, a copy of the voting
instruction card provided by your broker, trustee or nominee, or other
similar evidence of ownership. If you do not provide photo identification
or comply with the other procedures outlined above, you may not be
admitted to the annual meeting.
Please
let EnerJex know if you plan to attend the meeting by marking the box on the
enclosed proxy card. The meeting will begin promptly at 2:00 p.m. local time.
Check-in will begin at 1:30 p.m. local time, and you should allow ample time for
the check-in procedures.
Q. How can I vote my shares in person at
the annual meeting?
A.
Shares
held in your name as the stockholder of record may be voted by you in
person at the annual meeting. Shares held in street name may be voted by
you in person at the annual meeting only if you obtain a legal proxy from
the broker, trustee or nominee that holds your shares giving you the right
to vote the shares. Even if you plan to attend the annual meeting, EnerJex
recommends that you submit your proxy or voting instructions as described
below so that your vote will be counted if you later decide not to attend
the meeting.
3
Q. How can I vote my shares without
attending the annual meeting?
A.
Whether
you hold shares as the stockholder of record or in street name, you may
direct how your shares are voted without attending the annual meeting. If
you are a stockholder of record, you may vote by submitting a proxy to
EnerJex. If you hold shares in street name, you may vote by submitting
voting instructions to your broker, trustee or nominee. For directions on
how to vote, please refer to the instructions included on your proxy card
or, for shares held in street name, the voting instruction card provided
by your broker, trustee or nominee.
Q. Can I change my
vote?
A.
You
may change your vote at any time prior to the vote at the annual meeting.
If you are the stockholder of record, you may change your vote by (i)
granting a new proxy bearing a later date (which automatically revokes the
earlier proxy), (ii) providing a written notice of revocation of your
proxy to EnerJex’s corporate Secretary prior to your shares being voted,
or (iii) attending the annual meeting and voting in person. Mere
attendance at the meeting will not cause your previously granted proxy to
be revoked unless you specifically so request. If you hold shares in
street name, you may change your vote by submitting new voting
instructions to your broker, trustee or nominee, or, if you have obtained
a legal proxy from your broker or nominee giving you the right to vote
your shares, by attending the meeting and voting in
person.
VOTING
SECURITIES
The
following table presents information, to the best of EnerJex’s knowledge, about
the ownership of EnerJex’s common stock on August 31, 2009 relating to those
persons known to beneficially own more than 5% of EnerJex’s capital stock and by
EnerJex’s directors and executive officers. The percentage of beneficial
ownership for the following table is based on 4,799,236 shares of common stock
outstanding.
Beneficial
ownership is determined in accordance with the rules of the Securities and
Exchange Commission and does not necessarily indicate beneficial ownership for
any other purpose. Under these rules, beneficial ownership includes those shares
of common stock over which the stockholder has sole or shared voting or
investment power. It also includes shares of common stock that the stockholder
has a right to acquire within 60 days after August 31, 2009 pursuant to options,
warrants, conversion privileges or other right. The percentage ownership of the
outstanding common stock, however, is based on the assumption, expressly
required by the rules of the Securities and Exchange Commission, that only the
person or entity whose ownership is being reported has converted options or
warrants into shares of EnerJex’s common stock.
Name and Address of Beneficial Owner, Officer or
Director(1)
Number
of Shares
Percent of
Outstanding Shares
of Common Stock(2)
C.
Stephen Cochennet, President & Chief Executive Officer(3)
As
used in this table, “beneficial ownership” means the sole or shared power
to vote, or to direct the voting of, a security, or the sole or shared
investment power with respect to a security (i.e., the power to dispose
of, or to direct the disposition of, a
security).
(2)
Figures
are rounded to the nearest tenth of a
percent.
(3)
The
address of each person is care of EnerJex Resources: Corporate Woods 27,
Suite 350, 10975 Grandview Drive, Overland Park,
Kansas66210.
(4)
Does
not include 75,000 shares of restricted stock that could be issued on
August 4, 2010 if Mr. Cochennet remains an employee of EnerJex through
August 3, 2010.
(5)
Does
not include 20,000 shares of restricted stock that could be issued on
August 4, 2010 if Ms. Jones remains an employee of EnerJex through August3, 2010.
(6)
Based
on a Schedule 13D/A filed with the SEC on June 18, 2009, the investment
manager of West Coast Opportunity Fund, LLC (“WCOF”) is West Coast Asset
Management (“WCAM”). WCAM has the authority to take any and all
actions on behalf of WCOF, including voting any shares held by
WCOF. Paul Orfalea, Lance Helfert and R. Atticus Lowe
constitute the Investment Committee of WCOF. Messrs. Orfalea,
Helfert and Lowe disclaim beneficial ownership of the shares. Includes
500,000 shares of common stock underlying the potential conversion of a
$1,500,000 debenture currently held by
WCOF.
(7)
Based
on a Schedule 13G/A filed with the SEC on February 11, 2009, Enable
Capital Management, LLC, as general and investment manager of Enable
Growth Partners L.P. and other clients, may be deemed to have the power to
direct the voting or disposition of shares of common stock held by Enable
Growth Partners L.P. (354,825 shares of common stock) and other clients
(285,355 shares of common stock). Therefore, Energy Capital
Management, LLC, as Enable Growth Partners L.P.’s and those other
accounts’ general partner and investment manager, and Mitchell S. Levine,
as managing member and majority owner of Enable Capital Management, LLC,
may be deemed to beneficially own the shares of common stock owned by
Enable Growth Partners L.P. and such other
accounts.
PROPOSAL
1. ELECTION OF DIRECTORS AND MANAGEMENT
INFORMATION
At the
2009 annual meeting of stockholders, a board of directors consisting of five
members will be elected, each director to hold office until the next annual
meeting of stockholders, or a successor is elected and qualified, or until the
director resigns, is removed or becomes disqualified.
EnerJex’s
governance, compensation and nominating committee has nominated for election all
five of the current members of the board of directors: C. Stephen Cochennet,
Robert G. Wonish, Daran G. Dammeyer, Darrel G. Palmer and Dr. James W. Rector.
The nominees have consented to their nomination to the board of directors, and
will serve if elected. However, if the nominees should become unavailable for
election, the accompanying proxy will be voted in favor of holding a vacancy to
be filled by EnerJex’s current Directors. EnerJex has no reason to
believe that Messrs. Cochennet, Wonish, Dammeyer, Palmer or Dr. Rector will be
unavailable to serve as Directors.
5
The
following information is provided regarding the nominees for election to the
board of directors.
Name
Age
Term
Board Committee(s)(1)
C.
Stephen Cochennet
52
Since
8/15/06
None
Robert
G. Wonish
55
Since
5/4/07
GCNC
(Chairman) and Audit
Daran
G. Dammeyer
48
Since
5/4/07
Audit
(Chairman) and GCNC
Darrel
G. Palmer
51
Since
5/4/07
GCNC
Dr.
James W. Rector
48
Since
3/19/08
None
(1)
“GCNC”
means the Governance, Compensation and Nominating Committee of the board
of directors. “Audit” means the Audit Committee of the board of
directors.
C. Stephen Cochennet, has
been our President, Chief Executive Officer and Chairman since August 15,2006. Prior to joining EnerJex, Mr. Cochennet was
President of CSC Group, LLC. Mr. Cochennet formed the CSC Group, LLC through
which he supported a number of clients that included Fortune 500 corporations,
international companies, natural gas/electric utilities, outsource service
providers, as well as various start up organizations. The services provided
included strategic planning, capital formation, corporate development, executive
networking and transaction structuring. From 1985 to 2002, he held several
executive positions with UtiliCorp United Inc. (Aquila) in Kansas City. His
responsibilities included finance, administration, operations, human resources,
corporate development, natural gas/energy marketing, and managing several new
start up operations. Prior to his experience at UtiliCorp United Inc., Mr.
Cochennet served 6 years with the Federal Reserve System. Mr. Cochennet
graduated from the University of Nebraska with a B.A. in Finance and
Economics.
Robert G. Wonish has served
as a member of our board of directors since May 2007. Effective April 7, 2009,
Mr. Wonish was appointed President & Chief Operating Officer of Petrodome
Energy, LLC, a privately held firm. From December 2004 to June 30, 2007, Mr.
Wonish was Vice President of Petroleum Engineers Inc., a subsidiary of The CYMRI
Corporation, now CYMRI, L.L.C., which is a wholly-owned subsidiary of Stratum
Holdings, Inc. On July 1, 2007, Mr. Wonish was appointed President and Chief
Operating Officer of Petroleum Engineers Inc. Mr. Wonish was also President of
CYMRI, L.L.C. After the sale of Petroleum Engineers Inc. in March of 2008, Mr.
Wonish resigned all positions in Petroleum Engineers Inc. and CYMRI, L.L.C. as
well as resigning as a member of the Stratum Holdings, Inc. board of directors.
Mr. Wonish held the position of President & Chief Operating Officer of
Striker Oil & Gas, Inc. prior to his engagement with Petrodome Energy,
LLC.. He previously achieved positions of increasing responsibility
with PANACO, Inc., a public oil and natural gas company, ultimately serving as
that company’s President and Chief Operating Officer. He began his engineering
career at Amoco in 1975 and joined Panaco’s engineering staff in
1992. Mr. Wonish serves as EnerJex’s chairman of the Governance,
Compensation and Nominating committee and is a member of the company’s audit
committee. Mr. Wonish received his Mechanical Engineering degree from the
University of Missouri-Rolla.
Daran G. Dammeyer, has served
as a member of our board of directors since May 2007. Since July 1999, Mr.
Dammeyer has served as President of D-Two Solutions through which he supports
clients by primarily providing merger and acquisition support, strategic
planning, budgeting and forecasting process development and
implementation. From March 1999 through July 1999, Mr. Dammeyer was a
Director of International Financial Management for UtiliCorp United Inc.
(Aquila), a multinational energy solutions provider in Kansas City,
Missouri. From November 1995 through March 1999, Mr. Dammeyer served
as the Chief Financial Controller of United Energy Limited in Melbourne,
Australia. Mr. Dammeyer also served in numerous management positions
at Michigan Energy Resources Company, including Director of Internal
Audit. Mr. Dammeyer earned his Bachelor of Business Administration
degree, with dual majors in Accounting and Corporate Financial Management from
The University of Toledo, Ohio.
6
Darrel G. Palmer, has served
as a member of our board of directors since May of 2007. Since January 1997, Mr.
Palmer has been President of Energy Management Resources, an energy process
management firm serving industrial and large commercial companies throughout the
U. S. and Canada. Mr. Palmer has 25 years of expertise in the natural
gas arena. His experiences encompass a wide area of the natural gas
industry and include working for natural gas marketing companies, local
distribution companies, and FERC regulated pipelines. Prior to
becoming an independent energy consultant in 1997, Mr. Palmer’s last position
was Vice President/National Account Sales at UtiliCorp United Inc. (Aquila) of
Kansas City, Missouri. Over the years Mr. Palmer has worked in many civic
organizations including United Way and has been a President of the local Kiwanis
Club. Junior Achievement of Minnesota awarded him the Bronze
Leadership Award for his accomplishments which included being an advisor,
program manager, holding various Board positions, and ultimately being Board
President.
Dr. James W. Rector, has
served as a member of our board of directors since March 19, 2008. Dr. Rector is
the author of numerous technical papers along with a number of patents on
seismic technology. He was a co-founder of two seismic technology startups that
were later sold to NYSE-listed companies, and he regularly consults for many of
the major oil companies including Chevron and BP. In 1998, he founded Berkeley
GeoImaging LLC, which has completed five equity private placements for oil and
natural gas exploration and development projects. Dr. Rector is a tenured
professor of Geophysics at the University of California at Berkeley and a
faculty staff scientist at the Lawrence Berkeley National Laboratory. He has
been the Editor-in-Chief of the Journal of Applied Geophysics
and has also served on the Society of Exploration Geophysicists Executive
Committee. He received his Masters and Ph.D. degrees in Geophysics from Stanford
University.
When the
accompanying proxy is properly executed and returned, the shares it represents
will be voted in accordance with the directions indicated thereon or, if no
direction is indicated, the shares will be voted in favor of the election of the
five nominees identified above. EnerJex expects each nominee to be able to serve
if elected, but if any nominee notifies EnerJex before this meeting that he is
unable to do so, then the proxies will be voted for the remainder of those
nominated and, as designated by the Directors, may be voted (i) for a substitute
nominee or nominees, or (ii) to elect such lesser number to constitute the whole
Board as equals the number of nominees who are able to serve.
The vote
of holders of common stock holding in the aggregate a majority of the voting
power of EnerJex’s stock present at the meeting is required to elect the
nominees.
THE
BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF
ALL NOMINEES.
Director
Independence
EnerJex’s
board of directors has determined that Messrs. Wonish, Dammeyer, Palmer and Dr.
Rector are independent directors, as defined by Section 803 of the American
Stock Exchange Company Guide.
Board
of Directors’ Meetings, Committees, Directors’ Compensation and
Nominations
On 25
occasions during fiscal 2009, board of directors’ actions were taken by
unanimous written consent or resolution. The board of directors held an annual
meeting of directors following the 2008 annual meeting of stockholders and three
other meetings during fiscal 2009. All directors attended this annual meeting
and each of the meetings of the board committees on which he served. Directors
are encouraged, but not required, to attend the annual meetings of EnerJex’s
stockholders.
Audit
Committee and Financial Expert
On May 4,2007, we established and appointed initial members to the audit committee of our
board of directors. Mr. Dammeyer is the chairman and Mr. Wonish serves as the
other member of the committee. Currently, none of the members of the
audit committee are, or have been, our officers or employees, and each member
qualifies as an independent director as defined by Section 803 of the American
Stock Exchange Company Guide and Section 10A(m) of the Securities Exchange Act
of 1934, and Rule 10A-3 thereunder. The Board of Directors has
determined that Mr. Dammeyer is an “audit committee financial expert” as
that term is used in Item 401(h) of Regulation S-K promulgated under the
Securities Exchange Act. The audit committee held five meetings during fiscal
2009.
7
The audit
committee has the sole authority to appoint and, when deemed appropriate,
replace our independent registered public accounting firm, and has established a
policy of pre-approving all audit and permissible non-audit services provided by
our independent registered public accounting firm. The audit committee has,
among other things, the responsibility to evaluate the qualifications and
independence of our independent registered public accounting firm; to review and
approve the scope and results of the annual audit; to review and discuss with
management and the independent registered public accounting firm the content of
our financial statements prior to the filing of our quarterly reports and annual
reports; to review the content and clarity of our proposed communications with
investors regarding our operating results and other financial matters; to review
significant changes in our accounting policies; to establish procedures for
receiving, retaining, and investigating reports of illegal acts involving us or
complaints or concerns regarding questionable accounting or auditing matters,
and supervise the investigation of any such reports, complaints or concerns; to
establish procedures for the confidential, anonymous submission by our employees
of concerns or complaints regarding questionable accounting or auditing matters;
and to provide sufficient opportunity for the independent auditors to meet with
the committee without management present.
The governance, compensation and nominating committee is
comprised of Messrs. Wonish, Dammeyer and Palmer. Mr. Wonish serves
as the chairman of the governance, compensation and nominating
committee. The governance, compensation and nominating
committee is responsible for, among other things; identifying, reviewing, and evaluating individuals
qualified to become members of the Board,
setting the compensation of the Chief Executive Officer and performing
other compensation oversight, reviewing and
recommending the nomination of Board members, and administering our equity compensation plans. The
governance, compensation and nominating committee held five meetings during
fiscal 2009.
Officer and Director
Compensation Procedures
The
governance, compensation and nominating committee is responsible for
establishing and implementing, and monitoring adherence with, EnerJex’s
compensation philosophy. This responsibility also includes establishing and
approving the compensation program for its named executive officers and members
of EnerJex’s board of directors, which this committee believes is fair,
reasonable, and competitive. This committee acts pursuant to a charter approved
by EnerJex’s board of directors and may not delegate its authority.
EnerJex’s
compensation program is designed to retain and reward talented executives who
can contribute to its long-term success and to reward performance that is valued
by its stockholders. Key principles of EnerJex’s compensation philosophy, as
established by the governance, compensation and nominating committee, include
providing total compensation opportunities that are competitive within EnerJex’s
industry and ensuring that it aligns those compensation opportunities with
appropriate performance metrics. In this regard, EnerJex’s compensation
practices are intended to (i) provide competitive compensation packages
relative to our industry and competitors, at expected levels of performance,
which the governance, compensation and nominating committee believes is
sufficient to retain the talent necessary to run EnerJex’s business and execute
its strategies, (ii) support and reinforce important business goals and
objectives, and (iii) provide balanced incentives for achieving consistent
and strong results for all of EnerJex’s stakeholders, including stockholders,
employees, and customers.
Based on
the foregoing objectives, the governance, compensation and nominating committee
has structured EnerJex’s executive compensation to motivate employees to achieve
the business goals established by its board of directors. During fiscal 2009,
the governance, compensation and nominating committee engaged Longnecker &
Associates (“Longnecker”) to serve as EnerJex’s independent compensation
consultant. Longnecker provides expertise in the design and implementation of
EnerJex’s executive and director compensation plans, as well as providing the
governance, compensation and nominating committee with relevant market
data.
The
governance, compensation and nominating committee annually reviews all
compensation decisions relating to EnerJex’s named executive officers.
Administrative staff serves as management’s liaison with the governance,
compensation and nominating committee. In addition, outside legal counsel
provides assistance to the governance, compensation and nominating committee in
connection with administration of its responsibilities, such as negotiating and
drafting employment agreements, setting meetings and assembling and distributing
meeting materials.
8
EnerJex’s
chief executive officer has no direct role in setting his own compensation. The
governance, compensation and nominating committee does, however, meet with its
chief executive officer to evaluate his performance against his pre-established
goals, and he makes recommendations to the board of directors regarding budgets
that may affect certain of those goals. The chief executive officer also makes
recommendations regarding compensation matters related to his direct reports and
provides input regarding executive compensation programs and policies in
general.
Management
assists the governance, compensation and nominating committee by providing
information needed or requested by the governance, compensation and nominating
committee, such as reconciliation between actual performance and budget or
forecasted performance; historic compensation information; compensation expense;
EnerJex’s policies, reports and programs; and, information related to peer
companies. Management also provides input and advice regarding compensation
programs and policies, and their impact on EnerJex and its
executives.
Director Nomination
Procedures
The
governance, compensation and nominating committee determines nominees for
EnerJex’s board of directors. EnerJex’s directors approved the selection of the
nominees for directors named in this proxy statement.
Generally,
nominees for directors are identified and suggested by the members of the board
or management using their business networks. The board has not retained any
executive search firms or other third parties to identify or evaluate director
candidates in the past and does not intend to in the near future. In selecting a
nominee for director, the governance, compensation and nominating committee
considers the following criteria:
1.
whether
the nominee has the personal attributes for successful service on the
board, such as demonstrated character and integrity; experience at a
strategy/policy setting level; managerial experience dealing with complex
problems; an ability to work effectively with others; and sufficient time
to devote to the affairs of
EnerJex;
2.
whether
the nominee has been the chief executive officer or senior executive of a
public company or a leader of a similar organization, including industry
groups, universities or governmental
organizations;
3.
whether
the nominee, by virtue of particular experience, technical expertise or
specialized skills or contacts relevant to EnerJex’s current or future
business, will add specific value as a board member;
and
4.
whether
there are any other factors related to the ability and willingness of a
new nominee to serve, or an existing board member to continue his
service.
The
governance, compensation and nominating committee has not established any
specific minimum qualifications that a candidate for director must meet in order
to be recommended for board membership. Rather the governance, compensation and
nominating committee will evaluate the mix of skills and experience that the
candidate offers, consider how a given candidate meets the board’s current
expectations with respect to each such criterion and make a determination
regarding whether a candidate should be recommended to the stockholders for
election as a director. For the year ended March 31, 2009, EnerJex
did not receive any recommendations for directors from its
stockholders.
EnerJex
will consider for inclusion in its nominations of new board of director nominees
proposed by stockholders who have held at least 1% of the outstanding voting
securities of EnerJex for at least one year. Board candidates referred by such
stockholders will be considered on the same basis as board candidates referred
from other sources. Any stockholder who wishes to recommend for EnerJex’s
consideration a prospective nominee to serve on the board of directors may do so
by giving the candidate’s name and qualifications in writing to EnerJex’s
secretary at the following address: 27 Corporate Woods, Suite 350, 10975
Grandview Drive, Overland Park, Kansas66210.
9
A copy of the governance, compensation
and nominating committee charter is available on EnerJex’s website at www.enerjexresources.com.
Stockholder
Communications with the Board of Directors
Stockholders
who wish to communicate with the board or a particular director may send a
letter to the secretary of EnerJex at: 27 Corporate Woods, Suite 350, 10975
Grandview Drive, Overland Park, Kansas66210. The mailing envelope
must contain a clear notation indicating that the enclosed letter is a
“Stockholder-Board Communication” or “Stockholder-Director
Communication.” All such letters must identify the author as a
stockholder and clearly state whether the intended recipients are all members of
the board or just certain specified individual directors. The
secretary will make copies of all such letters and circulate them to the
appropriate director or directors.
Code of Ethics
EnerJex
has adopted a code of business conduct and ethics that applies to all of its
directors, officers and employees, as well as to directors, officers and
employees of each subsidiary of EnerJex. A copy of the code of business conduct
and ethics is available on EnerJex’s website at www.enerjexresources.com.
If any substantive amendments are made to the code of business conduct and
ethics or if EnerJex’s grants any waiver, including any implicit waiver, from a
provision of the code to any of its officers and directors, EnerJex will satisfy
any disclosure requirements of Form 8-K by disclosing the nature of such
amendment or waiver on its website at www.enerjexresources.com.
Limitation
of Liability of Directors
Pursuant
to the Nevada General Corporation Law, EnerJex’s articles of incorporation
exclude personal liability for its directors for monetary damages based upon any
violation of their fiduciary duties as directors, except as to liability for any
breach of the duty of loyalty, acts or omissions not in good faith or which
involve intentional misconduct or a knowing violation of law, or any transaction
from which a director receives an improper personal benefit. This exclusion of
liability does not limit any right which a director may have to be indemnified
and does not affect any director’s liability under federal or applicable state
securities laws. EnerJex has agreed to indemnify its directors against expenses,
judgments, and amounts paid in settlement in connection with any claim against a
director if he acted in good faith and in a manner he believed to be in
EnerJex’s best interests.
Executive
Officers
The following table sets forth certain
information regarding EnerJex’s current executive officers. EnerJex’s executive
officers serve at the discretion of the board of directors, unless otherwise
governed by employment contracts.
Name
Age
Position
C.
Stephen Cochennet
52
President
and Chief Executive Officer
Dierdre
P. Jones
45
Chief
Financial Officer
C. Stephen Cochennet has been
EnerJex’s president and chief executive officer since August 15, 2006. See Mr.
Cochennet’s biography on page 5 above.
Dierdre P. Jones has been
EnerJex’s chief financial officer since August 1, 2008. From August 2007
through July 2008 Ms. Jones served as our director of finance and
accounting. From May 2007 through August 2007, Ms. Jones provided
independent consulting services for the company, primarily in the testing and
implementation of financial accounting and reporting software. From May 2002
through May 2007, Ms. Jones was sole proprietor of These Faux Walls, a specialty
design company. She holds the professional designations of Certified Public
Accountant and Certified Internal Auditor. Prior to joining EnerJex,
Ms. Jones held management positions with UtiliCorp United Inc. (Aquila),
and served three years in public accounting with Arthur Andersen & Co.
Ms. Jones graduated with distinction from the University of Kansas with a
B.S. in Accounting and Business Administration.
10
Executive
Compensation
The
following table sets forth summary compensation information for the fiscal years
ended March 31, 2009 and 2008 for our chief executive officer and chief
financial officer. We did not have any other executive officers as of the end of
fiscal 2009 whose total compensation exceeded $100,000. We refer to these
persons as our named executive officers elsewhere in this report.
Summary Compensation
Table
Name and Principal Position
Fiscal
Year
Salary
($)
Bonus
($)
Option
Awards
($)
All Other
Compen-
sation
($)
Total
($)
C.
Stephen Cochennet
2009
$
186,525
$
50,000
$
-
(2)
$
-
$
236,525
President,
Chief Executive Officer
2008
$
156,000
-
859,622
(1)
-
$
1,015,622
Dierdre
P. Jones
2009
$
128,808
$
10,000
-
(2)
-
$
138,808
Chief
Financial Officer
2008
-
(3)
-
(3)
-
(3)
-
(3)
-
(3)
(1)
Amount
represents the estimated total fair value of stock options granted to Mr.
Cochennet under SFAS 123(R).
(2)
In
August, 2008, we granted C. Stephen Cochennet, our chief executive
officer, an option to purchase 75,000 shares of our common stock at $6.25
per share and we granted Dierdre P. Jones, our chief financial officer,
and option to purchase 40,000 shares of our common stock at $6.25 per
share under SFAS 123(R) as discussed in Note 3 to our financial statements
for the year ended March 31, 2009 included elsewhere in this report. These
options were rescinded in November 2008 at the request of the board’s
compensation committee and the approval of each option
holder.
(3)
Ms.
Jones was promoted to chief financial officer during fiscal 2009 and was
not a named executive officer in fiscal
2008.
Outstanding Equity Awards at Fiscal
Year-End
The
following table lists the outstanding equity incentive awards held by our named
executive officers as of March 31, 2009.
Option Awards
Fiscal
Year
Number of
Securities
Underlying
Unexercised
Options
Exercisable
(#)
Number of
Securities
Underlying
Unexercised
Options
Unexercisable
(#)
Number of
Securities
Underlying
Unexercised
Unearned
Options
(#)
Option
Exercise
Price
($)
Option
Expiration
Date
C.
Stephen Cochennet
2009
200,000
(1)
-
-
$
6.25
05/03/2011
Dierdre
P. Jones
2009
20,000
(2)
-
-
$
6.30
07/31/2011
(1)
These
options were exchanged for 50,000 shares of restricted common stock in
August of 2009.
(2)
These
options were exchanged for 5,000 shares of restricted common stock in
August of 2009.
Option
Exercises for fiscal 2009
There
were no options exercised by our named executive officers in fiscal
2009.
11
2000/2001
Stock Option Plan
The board
of directors approved the 2000/2001 Stock Option Plan and our stockholders
ratified the plan on September 25, 2000. The total number of options that can be
granted under the plan is 200,000 shares and all such shares were previously
granted to Mr. Cochennet. On August 3, 2009, we exchanged these outstanding
options for 50,000 shares of our restricted common stock. Therefore, all 200,000
shares reserved for issuance under this plan are again available for
issuance.
Stock
Incentive Plan
The board
of directors approved the EnerJex Resources, Inc. Stock Option Plan on August 1,2002 (the “2002-2003 Stock Option Plan”). Originally, the total number of
options that could be granted under the 2002-2003 Stock Option Plan was not to
exceed 400,000 shares. In September 2007 our stockholders approved a proposal to
amend and restate the 2002-2003 Stock Option Plan to increase the number of
shares issuable to 1,000,000. On October 14, 2008 our stockholders
approved a proposal to amend and restate the 2002-2003 Stock Option Plan to
(i) rename it the EnerJex Resources, Inc. Stock Incentive Plan (the “Stock
Incentive Plan”), (ii) increase the maximum number of shares of our common stock
that may be issued under the Stock Incentive Plan from 1,000,000 to 1,250,000,
and (iii) add restricted stock as an eligible award that can be granted under
the Stock Incentive Plan.
We had
previously granted 238,500 options under this plan. On August 3, 2009, we
exchanged all 238,500 outstanding options for 59,700 shares of our restricted
common stock. In addition, we granted 151,750 shares of restricted common stock
under the Stock Incentive Plan to employees for fiscal 2009 bonuses and 59,300
shares to our officers and directors for the prior rescission of stock options
in fiscal 2008.
General
Terms of Plans
Officers
(including officers who are members of the board of directors), directors, and
other employees and consultants and our subsidiaries (if established) will be
eligible to receive awards under the 2000/2001 Stock Option Plan and the Stock
Incentive Plan. A committee of the board of directors will administer the plans
and will determine those persons to whom awards will be granted, the number of
and type of awards to be granted, the provisions applicable to each grant and
the time periods during which the awards may be exercised. No awards may be
granted more than ten years after the date of the adoption of the
plans.
Non-qualified
stock options will be granted by the committee with an option price equal to the
fair market value of the shares of common stock to which the non-qualified stock
option relates on the date of grant. The committee may, in its discretion,
determine to price the non-qualified option at a different price. In no event
may the option price with respect to an incentive stock option granted under the
plans be less than the fair market value of such common stock to which the
incentive stock option relates on the date the incentive stock option is
granted. However the price of an incentive stock option will not be less than
110% of the fair market value per share on the date of the grant in the case of
an individual then owning more than 10% of the total combined voting power of
all classes of stock of the corporation.
Each
option granted under the plans will be exercisable for a term of not more than
ten years after the date of grant. Certain other restrictions will apply in
connection with the plans when some awards may be exercised.
Restricted
stock will have full dividend, voting and other ownership rights, unless
otherwise indicated in the applicable award agreement pursuant to which it is
granted. If any dividends or distributions are paid in shares of
common stock during the restricted period, the applicable award agreement may
provide that such shares will be subject to the same restrictions as the
restricted stock with respect to which they were paid.
These
plans are intended to encourage directors, officers, employees and consultants
to acquire ownership of common stock. The opportunity so provided is intended to
foster in participants a strong incentive to put forth maximum effort for our
continued success and growth, to aid in retaining individuals who put forth such
effort, and to assist in attracting the best available individuals in the
future.
12
Employment
Agreements
As of the
fiscal year ended March 31, 2008, EnerJex had not entered into any employment
agreements with its executive officers. On August 1, 2008, EnerJex entered into
employment agreements with C. Stephen Cochennet, its chief executive officer,
and Dierdre P. Jones, its chief financial officer. Each employment agreement was
approved by the governance, compensation and nominating committee of the board
of directors.
C. Stephen Cochennet – Chief
Executive Officer
On August1, 2008, we entered into an employment agreement with C. Stephen Cochennet, our
president and chief executive officer. Mr. Cochennet’s employment agreement was
approved by the governance, compensation and nominating committee of our board
of directors.
In
general, Mr. Cochennet’s employment agreement contains provisions concerning
terms of employment, voluntary and involuntary termination, indemnification,
severance payments, and other termination benefits, in addition to a non-compete
clause and certain other perquisites, such as long-term disability insurance,
director and officer insurance, and an automobile allowance. The original term
of Mr. Cochennet’s employment agreement runs from August 1, 2008 until July 31,2011. The term of the employment agreement is automatically extended for
additional one year terms unless otherwise terminated in accordance with its
terms.
Mr.
Cochennet’s employment agreement provides for an initial annual base salary of
$200,000, which may be adjusted by the governance, compensation and nominating
committee or our board of directors.
In
addition, Mr. Cochennet is eligible to receive an annual bonus of up to 100% of
his applicable base salary in cash or shares of restricted stock (if approved by
stockholders) subject to our obtaining certain business objectives established
by our board of directors. In addition Mr. Cochennet is eligible to receive
long-term incentives of up to 135,000 options to purchase shares of our common
stock based upon our achievement of specified performance targets. Additional
information regarding these options is set forth in the following
table.
Potential
Maximum #
Option
Fiscal Year
Grant Date
of Options
Strike Price of Options
Expiration Date*
2009
7/01/2009
30,000
Fair
market value on grant date
6/30/2012
2010
7/01/2010
45,000
Fair
market value on grant date
6/30/2013
2011
7/01/2011
60,000
Fair
market value on grant date
6/30/2014
*
The
options shall be immediately vested and exercisable from the grant date
through the option expiration date.
The
number of stock options granted each fiscal year shall be based upon a schedule
set forth in Mr. Cochennet’s employment agreement and will be prorated if
actual performance does not equal or exceed 100% of the targeted performance
conditions. Mr. Cochennet must be employed by us on the grant date to receive
the stock options.
The
maximum number of options available to be earned by Mr. Cochennet each year is
subject to a “catch-up” provision, such that if an element in any year is
missed, it may be “caught-up” in a subsequent year, so long as the cumulative
goal is met. For example, if the 2009 share price element of $11.00 is not met
by March 31, 2009, Mr. Cochennet would still be able to earn the available
options for this element if our share price is at least $16.85 on March 31,2010, or $22.55 on March 31, 2011. Any caught-up options would be granted at the
then current stock price. The cumulative goal for Mr. Cochennet’s long-term
incentive compensation is comprised of three factors; a 35% year over year net
reserve growth (40% of the goal), a 35% year over year net production increase
(30% of the goal), and the previously stated share price increases (30% of the
goal).
13
As
consideration for his efforts during fiscal 2008 we also agreed to pay Mr.
Cochennet a $50,000 cash bonus and grant him 75,000 options to purchase shares
of our common stock at $6.25 per share; 30,000 vested immediately upon grant and
the remaining 45,000 were to vest over a three year period. These options were
rescinded in November 2008 at the request of the board’s compensation committee
and with the approval of Mr. Cochennet in an effort to reduce compensation
expense which, through non-cash, would have had a substantial negative impact on
our financial statements and results of operations for the quarter ended
September 30, 2008. Shares subject to these options were returned to
the plan and are available for future issuance. On August 3, 2009, we issued Mr.
Cochennet 18,800 shares of twelve month restricted stock in consideration for
the prior rescission of the options discussed above.
Dierdre P. Jones – Chief
Financial Officer
On July23, 2008, Dierdre P. Jones, our former director of finance and accounting, was
appointed our chief financial officer. On August 1, 2008, we entered into an
employment agreement with Ms. Jones. The employment agreement was approved by
the governance, compensation and nominating committee of our board of
directors.
In
general, Ms. Jones’ employment agreement contains provisions concerning terms of
employment, voluntary and involuntary termination, indemnification, severance
payments, and other termination benefits, in addition to certain other
perquisites. The original term of the employment agreement runs from August 1,2008 until July 31, 2011.
Ms.
Jones’ employment agreement provides for an initial annual base salary of
$140,000, which may be adjusted by the governance, compensation and nominating
committee or our board of directors.
In
addition, Ms. Jones is eligible to receive an annual bonus up to 30% of her
applicable base salary and is also eligible to participate in other incentive
programs established by us.
We
granted Ms. Jones 40,000 options to purchase shares of our common stock at $6.25
per share for a period of three years, which vested immediately upon
grant. These options were rescinded in November 2008 at the request
of the board’s compensation committee and with the approval of Ms. Jones in an
effort to reduce compensation expense which, through non-cash, would have had a
substantial negative impact on our financial statements and results of
operations for the quarter ended September 30, 2008. Shares subject
to these options were returned to the plan and are available for future
issuance. On August 3, 2009, we issued Ms. Jones 10,000 shares of twelve month
restricted stock in consideration for the prior rescission of the options
discussed above.
Potential Payments Upon Termination
or Change in Control
On August1, 2008, EnerJex entered into employment agreements with C. Stephen Cochennet,
its chief executive officer, and Dierdre P. Jones, its chief financial officer.
Both of these agreements provide for payments to Mr. Cochennet and Ms. Jones
upon termination and for a change of control.
C. Stephen
Cochennet
In the
event of a termination of employment with EnerJex by Cochennet for “good
reason”, which includes by reason of a “change of control”, or by EnerJex
without “cause” (as defined in the employment agreement), Mr. Cochennet would
receive: (i) a lump sum payment equal to all earned but unpaid base salary
through the date of termination of employment; (ii) 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 30th
following the last day of the current fiscal year; (iii) a lump sum payment
equal to an amount equal to the lesser of (a) 12-months base salary or (b) the
base salary Cochennet would have received had he remained in employment through
the end of the then existing term of the agreement; and (iv) immediate vesting
of all equity awards (including but not limited to stock options and restricted
shares).
In the
event of a termination of Mr. Cochennet’s employment with EnerJex by reason of
incapacity, disability or death, Mr. Cochennet, or his estate, would
receive: (i) a lump sum payment equal to all earned but unpaid base
salary through the date of termination of employment or death; (ii) 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 30th
following the last day of the current fiscal year; and (iii) a lump sum payment
equal to an amount equal to six-months base salary.
14
If the
event of a termination of Mr. Cochennet’s employment by EnerJex for “cause” (as
defined in the employment agreement), Mr. Cochennet would receive all earned but
unpaid base salary through the date of termination of
employment. However, if a dispute arises between EnerJex and Mr.
Cochennet that is not resolved within 60 days and neither party initiates
arbitration proceedings pursuant to the terms of the employment agreement,
EnerJex shall have the option to pay Mr. Cochennet a lump sum payment equal to
six-months base salary in lieu of any and all other amounts or payments to which
Mr. Cochennet may be entitled relating to his employment with
EnerJex.
Dierdre P.
Jones
In the
event of a termination of employment by Jones for “good reason” prior to a
“change of control” or by EnerJex without “cause” prior to a “change of control”
(all terms as defined in the employment agreement), Ms. Jones would receive: (i)
a lump sum payment equal to 12 months of her salary; plus (ii) a lump sum
payment equal to the prorated portion of her bonus through the date of
termination; plus (iii) all unvested stock or options held by Jones shall
immediately vest and become exercisable for the full term set forth in such
stock option or equity award agreements; plus (iv) health insurance premiums for
a period of 12 months.
Further,
in the event of the termination of Ms. Jones’ employment by EnerJex in
connection with a “change of control” (as defined in the Employment Agreement),
without cause within 12 months of a “change of control”, or by Ms. Jones for
“good reason” within 12 months of a “change of control,” Ms. Jones shall be
entitled to: (i) a lump sum payment equal to 12 months of her salary; plus (ii)
a lump sum payment equal to 100% of her prior year’s bonus; plus (iii) all
unvested stock or options held by Jones shall immediately vest and become
exercisable for the full term set forth in such stock option or equity award
agreements; plus (iv) health insurance premiums for a period of 12
months.
Non-Employee
Director Compensation
The
following table sets forth summary compensation information for the fiscal year
ended March 31, 2009 for each of our non-employee directors.
Name
Fees
Earned
or Paid in
Cash
$
Stock
Awards
$
Option
Awards (2)
$
All Other
Compensation
$
Total
$
Daran
G. Dammeyer
$
58,000
$
12,000
(1)
$
-0-
$
-0-
$
70,000
Darrel
G. Palmer
$
26,500
$
-0-
$
-0-
$
20,000
(3)
$
46,500
Robert
G. Wonish
$
49,000
$
-0-
$
-0-
$
-0-
$
49,000
Dr.
James W. Rector
$
22,500
$
-0-
$
-0-
$
-0-
$
22,500
(1)
Amount
represents the estimated total fair market value of 2,182 shares of common
stock issued to Mr. Dammeyer for services as audit committee chairman
under SFAS 123(R), as discussed in Note 3 to our audited financial
statements for the year ended March 31, 2009 included elsewhere in this
report.
(2)
In
July, 2008, 28,000 stock options were granted to each of Messrs. Dammeyer,
Palmer and Wonish and 38,000 stock options were granted to Dr. Rector
under SFAS 123(R), as discussed in Note 3 to our financial statements for
the year ended March 31, 2009 included elsewhere in this report. These
total 122,000 options granted to Messrs. Dammeyer, Palmer and Wonish and
to Dr. Rector were rescinded in November
2008.
15
(3)
Mr.
Palmer was paid $20,000 for assisting in the establishment and development
of the audit committee and for his involvement and assistance to the chief
executive officer in finalizing the hedging instrument with
BP.
Board
compensation was set for fiscal 2009 upon the recommendation of an independent
compensation consultant and the governance, compensation and nominating
committee of the board of directors. The annual retainer for non-employee
directors is $20,000 with a meeting fee of $1,500 for those in attendance and
$750 for those who participate by telephone. The chairman of the audit committee
will be paid an annual retainer of $42,000, payable with $2,500 per month in
cash and $12,000 worth of common stock. Members of the audit committee will be
paid an annual cash retainer of $15,000 and $375 per meeting attended. The
chairman of the governance, compensation and nominating committee will be paid
an annual cash retainer of $8,000, payable quarterly, while members of that
committee will be paid an annual cash retainer of $2,000, payable quarterly, and
$375 per meeting attended. In addition, the directors are reimbursed for
expenses incurred in connection with board and committee
membership.
On August3, 2009, in an effort for us to preserve cash in light of deteriorated global
economic conditions and the significant declines in commodity prices of oil and
natural gas, each of our non-employee directors agreed to convert their
board/committee retainers for the period from July 1, 2009 through September 30,2009 into 32,000 shares of our restricted common stock.
Outstanding
Equity Awards at 2009 Fiscal Year-End
The
following table lists the outstanding equity incentive awards held by EnerJex’s
non-employee directors as of March 31, 2009.
Option Awards
Fiscal
Year
Number of
Securities
Underlying
Unexercised
Options
Exercisable
(#)
Number of
Securities
Underlying
Unexercised
Options
Unexercisable
(#)
Number of
Securities
Underlying
Unexercised
Unearned
Options
(#)
Option
Exercise
Price
($)
Option
Expiration
Date
Daran
G. Dammeyer
2009
40,000
(1)
-0-
-0-
$
6.25
05/03/2011
Darrel
G. Palmer
2009
40,000
(1)
-0-
-0-
$
6.25
05/03/2011
Robert
G. Wonish
2009
40,000
(1)
-0-
-0-
$
6.25
05/03/2011
Dr.
James W. Rector
2009
-0-
-0-
-0-
-0-
—
(1)
On
August 3, 2009, these options were exchanged for 10,000 shares of our
restricted common stock.
Certain
Relationships and Related Transactions
EnerJex
was not a party to any transactions or series of similar transactions since the
beginning of its last fiscal year in which:
•
The
amounts involved exceeds the lesser of $120,000 or one percent of the
average of its total assets at year end for the last two completed fiscal
years; and
•
A
director, executive officer, holder of more than 5% of its common stock or
any member of their immediate family had or will have a direct or indirect
material interest.
Section 16(a) of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”), requires EnerJex’s
executive officers and directors, and persons who beneficially own more than ten
percent of its common stock, to file initial reports of ownership and reports of
changes in ownership with the Securities and Exchange Commission and to furnish
EnerJex with copies of all such Section 16(a) forms they file. Based upon a
review of the copies of such forms furnished to it and written representations
from its executive officers and directors, EnerJex believes that as of the date
of this proxy each of its executive officers, directors and ten percent
stockholders were current in their 16(a) reports.
PROPOSAL
2. REAFFIRM THE APPOINTMENT OF WEAVER & MARTIN, LLC AS
AUDITORS FOR THE NEXT
YEAR
EnerJex’s
board of directors has selected Weaver & Martin, LLC as its independent
auditor for the current fiscal year, and the board is asking stockholders to
ratify that selection. Although current law, rules, and regulations require
EnerJex’s independent auditor to be engaged, retained, and supervised by the
audit committee of the board of directors, EnerJex’s board considers the
selection of the independent auditor to be an important matter of stockholder
concern and is submitting the selection of Weaver & Martin for ratification
by stockholders as a matter of good corporate practice.
It is expected that a
representative of Weaver & Martin will be present at the annual meeting to
respond to questions, but not to make a statement.
The vote
of holders of common stock holding in the aggregate a majority of the voting
power of EnerJex’s stock present at the meeting is required to approve the
ratification of the selection of Weaver & Martin.
THE
BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE REAFFIRMATION
OF WEAVER & MARTIN, LLC AS AUDITORS FOR THE NEXT YEAR.
Independent
Public Accountants
Weaver & Martin, LLC served as our
principal independent public accountants for fiscal 2009 and 2008 years.
Aggregate fees billed to us for the fiscal years ended March 31, 2009 and 2008
by Weaver & Martin, LLC were as follows:
Total
fees paid or accrued to our principal accountant
$
85,718
$
118,000
(1)
Audit
Fees include fees billed and expected to be billed for services performed
to comply with Generally Accepted Auditing Standards (GAAS), including the
recurring audit of the Company’s consolidated financial statements for
such period included in this Annual Report on Form 10-K and for the
reviews of the consolidated quarterly financial statements included in the
Quarterly Reports on Form 10-QSB filed with the Securities and
Exchange Commission. This category also includes fees for audits provided
in connection with statutory filings or procedures related to audit of
income tax provisions and related reserves, consents and assistance with
and review of documents filed with the
SEC.
17
(2)
Audit-Related
Fees include fees for services associated with assurance and reasonably
related to the performance of the audit or review of the Company’s
financial statements. This category includes fees related to assistance in
financial due diligence related to mergers and acquisitions, consultations
regarding Generally Accepted Accounting Principles, reviews and
evaluations of the impact of new regulatory pronouncements, general
assistance with implementation of Sarbanes-Oxley Act of 2002 requirements
and audit services not required by statute or
regulation.
(3)
Tax
fees consist of fees related to the preparation and review of the
Company’s federal and state income tax
returns.
(4)
Other
fees include fees related to the preparation and review of the Form S-1
Registration Statement.
Audit Committee Pre-Approval
Policies and Procedures
EnerJex’s
audit committee pre-approves all services to be provided to it by the
independent auditor. This process involves obtaining (i) a written
description of the proposed services, (ii) the confirmation of its
principal accounting officer that the services are compatible with maintaining
specific principles relating to independence, and (iii) confirmation from
its securities counsel that the services are not among those that the
independent auditors have been prohibited from performing under SEC rules, as
outlined in the audit committee charter. The members of the audit committee then
make a determination to approve or disapprove the engagement of Weaver &
Martin for the proposed services. In fiscal 2009, all fees paid to Weaver &
Martin were unanimously pre-approved in accordance with this
policy.
Less than
50 percent of hours expended on the principal accountant’s engagement to audit
EnerJex’s financial statements for the most recent fiscal year were attributed
to work performed by persons other than the principal accountant’s full-time,
permanent employees.
Report
of the Audit Committee
The
Company’s management is responsible for preparing our financial statements and
ensuring they are complete and accurate and prepared in accordance with
generally accepted accounting principles. Weaver & Martin, LLC, our
independent registered public accounting firm, is responsible for performing an
independent audit of our consolidated financial statements and expressing an
opinion on the conformity of those financial statements with generally accepted
accounting principles.
The Audit
Committee has reviewed and discussed with our management the audited financial
statements of the Company included in its annual report on Form 10-K for
the fiscal year ended March 31, 2009 (“10-K”).
The Audit
Committee has also reviewed and discussed with Weaver & Martin, LLC the
audited financial statements in the 10-K. In addition, the Audit Committee
discussed with Weaver & Martin, LLC those matters required to be discussed
by the Statement on Auditing Standards No. 61, as amended. Additionally,
Weaver & Martin, LLC provided to the Audit Committee the written disclosures
and the letter required by applicable requirements of the Public Company
Accounting Oversight Board regarding the independent accountant’s communications
with the Audit Committee concerning independence. The Audit Committee also
discussed with Weaver & Martin, LLC its independence from the
Company.
Based
upon the review and discussions described above, the Audit Committee recommended
to the Board of Directors that the audited financial statements be included in
the Company’s 10-K for filing with the United States Securities and Exchange
Commission.
Submitted
by the following members of the Audit Committee:
Daran
G. Dammeyer (Chairman)
Robert
G. Wonish
18
OTHER
MATTERS
As
of the date of this statement EnerJex’s management knows of no business to be
presented to the meeting that is not referred to in the accompanying
notice. As to other business that may properly come before the
meeting, it is intended that proxies properly executed and returned will be
voted in respect thereof at the discretion of the person voting the proxies in
accordance with their best judgment, including upon any stockholder proposal
about which EnerJex did not receive timely notice.
Expenses of Proxy
Solicitation
The principal solicitation of proxies
will be made by mail. Expense of distributing this proxy statement to
stockholders, which may include reimbursement to banks, brokers and other
custodians for their expenses in forwarding this proxy statement, will be borne
exclusively by EnerJex.
Proposals of
Stockholders
Any
stockholder proposal intended to be considered for inclusion in the proxy
statement for presentation at the EnerJex 2010 annual meeting must be received
by EnerJex by May 1, 2010. The proposal must be in accordance with the
provisions of Rule 14a-8 promulgated by the Securities and Exchange Commission
under the Exchange Act. It is suggested the proposal be submitted by certified
mail — return receipt requested. Stockholders who intend to present a proposal
at the EnerJex 2010 annual meeting without including such proposal in EnerJex’s
proxy statement must have provided EnerJex notice of such proposal no later than
July 16, 2010. EnerJex reserves the right to reject, rule out of order, or take
other appropriate action with respect to any proposal that does not comply with
these and other applicable requirements.
This Proxy is solicited on behalf of
the EnerJex board of directors
The undersigned appoints C. Stephen
Cochennet, Chairman of EnerJex Resources, Inc., with full power of substitution,
the attorney and proxy of the undersigned, to attend the annual meeting of
stockholders of EnerJex Resources, Inc., to be held Thursday, October 29, 2009,
beginning at 2:00 p.m., Central Time, at 27 Corporate Woods, Suite 350, 10975
Grandview Drive, Overland Park, Kansas66210 and at any adjournment thereof, and
to vote the stock the undersigned would be entitled to vote if personally
present, on all matters set forth in the Proxy Statement to stockholders dated
September 11, 2009, a copy of which has been received by the undersigned, as
follows:
1.
Election of
directors, to serve until the next annual meeting and until their
successors are elected and qualify (the Board recommends a vote FOR each
of the following nominees):
FOR
AGAINST
ABSTAIN
C. Stephen
Cochennet
¨
¨
¨
Robert G. Wonish
¨
¨
¨
Daran G. Dammeyer
¨
¨
¨
Darrel G. Palmer
¨
¨
¨
Dr. James W. Rector
¨
¨
¨
FOR
AGAINST
ABSTAIN
2.
Reaffirmation
of Weaver & Martin, LLC as auditors for the next year.
¨
¨
¨
THIS
PROXY WILL BE VOTED IN ACCORDANCE WITH THE SPECIFIC INDICATIONS
ABOVE. IN THE ABSENCE OF SUCH INDICATIONS, THIS PROXY, IF OTHERWISE
DULY EXECUTED, WILL BE VOTED FOR EACH OF THE MATTERS SET FORTH
ABOVE.
Date
___________________________, 2009
Number
of Shares ________________
Please
sign exactly as
your
name appears on
your
stock certificate(s).
If
your stock is issued in
Signature
the
names of two or more
Print
Name Here:
persons,
all of them must
sign
this proxy. If signing
in
representative capacity,
Signature
please
indicate your title.
Print
Name Here:
Please
check the following box if you intend to attend the annual meeting in
person: o
