EXHIBIT 10.34

 

 

Separation and General Release Agreement

 

This Separation and General Release Agreement (the "Agreement") is made and
entered into, dated for reference purposes as of February 10, 2017 (the
“Agreement Date”), and effective as of the "Effective Date" identified in
Section 8.7, below, by and between EnerJex Resources, Inc., a Nevada corporation
(the "Company"), and Robert G. Watson, Jr. ("Employee"), with reference to the
following facts:

 

Recitals:

  

A.Employee has served as Chief Executive Officer of the Company for more than
six (6) years, and in that capacity voluntarily agreed to certain reductions in
compensation in order to assist the Company in responding to limited cash flow.

  

  

B.Employee has voluntarily resigned as an employee, Chief Executive Officer, and
a member of the board of directors of the Company.

  

  

C.The parties have agreed to execute this Agreement in order to confirm the
termination of Employee's employment with the Company, set forth the terms on
which such salary reduction amounts shall be paid to the Employee as Separation
and Consulting Consideration that the Company shall provide to Employee, and
memorialize certain releases and additional agreements between the parties.

 

Agreements:

 

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

 

1.Final Employment Date

 

1.1               Confirmation. The parties acknowledge and agree that effective
as of the Agreement Date (the "Termination Date"), Employee voluntarily resigned
as an employee, Chief Executive Officer, and member of the Board of Directors of
the Company.

 

1.2               Receipt of Final Wages. Employee acknowledges and agrees that
he has received payment in full of all accrued wages (including payment for
accrued and unused vacation time, if any, subject to the proviso at the end of
Section 2.1, below), expense reimbursements, and all other amounts due from the
Company to Employee with respect to all periods ended on and prior to the
Effective Date.

 

 

 

 

2.Separation and Consulting Consideration

 

2.1               Consideration. Provided that this Agreement becomes effective
pursuant to Section 8.7, below, and that Employee discharges his obligations
hereunder, the Company agrees that, in order to assist Employee in his
transition to new employment and in consideration of Employee’s past services,
his services pursuant to this Agreement, and Employee’s other covenants
hereunder, the Company shall pay to Employee the sum of One Hundred Ten Thousand
Dollars ($110,000) (the "Separation and Consulting Consideration"), which shall
be reduced by applicable federal and state tax withholding. The Separation and
Consulting Consideration shall be paid as follows (provided that, in any event,
shall be paid in full on or before December 31, 2017):

 

(a)                Commencing February 28, 2017, and continuing on the last day
of each of the succeeding calendar months, the Company shall pay to Consultant
Five Thousand Dollars ($5,000.00); and

 

(b)               On the date on which the Company sells or otherwise disposes
of all of the assets it currently owns in the States of Colorado and Texas, the
Company shall pay to Consultant the remainder of the Separation and Consulting
Consideration;

 

provided, however, if any payment is not timely made on or before the due date
therefor and the Company thereafter fails to make such payment within two (2)
business days following written demand therefor, then (a) all remaining payments
of the Separation and Consulting Consideration thereupon will be accelerated and
immediately due, and (b) Employee may assert against the Company a claim for
payment of wages for up to one (1) month's accrued and unpaid vacation time.

 

2.2               Purpose. Employee acknowledges and agrees that the Separation
and Consulting Consideration is being furnished in order to assist Employee in
his transition to new employment and in consideration of Employee's execution of
this Agreement, and that the furnishing of such Separation and Consulting
Consideration is not intended and shall not be construed for any purpose as an
admission by the Company of any liability to Employee by reason of the
termination of his employment with the Company.

 

3.Other Agreements

 

3.1               Return of Property. Employee represents, warrants, covenants,
and agrees that:

 

(a)                Company Property. He has returned to the Company all of the
Company Property in Employee's possession or custody. Employee further covenants
and agrees that if he hereafter discovers any other Company Property in the
possession or custody of Employee, then Employee immediately shall return such
Company Property to the Chief Financial Officer of the Company. For purposes of
this Agreement, the term "Company Property" shall mean all items of tangible and
intangible property owned by or otherwise belonging to the Company, including
but not limited to equipment, records, paper and electronic files, memoranda,
credit cards, keys, confidential and proprietary information, computer files,
passwords, and other physical or personal property and all copies thereof in any
form. Company Property shall not include the laptop computer that the Employee
has been using while employed by the Company and it is expressly agreed that
Employee may retain and use such laptop.

 

(b)               Employee Property. The Company acknowledges that Employee has
certain items of personal property that have been located at the Company's
premises or been in the possession or custody of the Company and that the
Employee agrees to leave such personal property in place until such time as
Employee has requested its removal at Employee’s cost.

 

 

 

 

3.2               Representations. Employee represents and warrants to the
Company that:

 

(a)                Liabilities. Except for obligations and liabilities incurred
by the Company in the ordinary course of Employee's duties as the Company's
Chief Executive Officer and in amounts within Employee's authority and
consistent with the Company's past practice, Employee has not knowingly caused
or created any material liabilities in the name of the Company or any of its
affiliates.

 

(b)               Claims. Except as set forth on Schedule 3.2(b), Employee is
not aware of any pending or has received any written notice of any threatened
claims by any party which can or may materially charge or burden the Company,
any affiliate of the Company, or any of their respective assets, except for (i)
claims by trade vendors arising in the ordinary course of the Company's business
in usual and customary amounts consistent with the Company's historical
experiences, and (ii) such other claims as have been disclosed in writing to the
Chief Financial Officer or its board of directors.

 

3.3               Condition Subsequent. If Employee breaches any of his
representations, warranties, covenants, or agreements set forth in this
Agreement, then the Company shall (a) not have any obligation to provide any
further Separation and Consulting Consideration that has not been provided as of
the date on which the Company discovers such breach, and (b) be entitled to
recover or rescind the delivery of any portion of the Separation and Consulting
Consideration previously provided by the Company. This remedy shall be in
addition to all other remedies the Company may have for any such breach.

 

3.4               Review and Revocation. Employee acknowledges and agrees that:

 

(a)                Review. This Agreement was first presented to him by the
Company on January 20, 2017, and Employee has been provided a period of
twenty-one (21) days to review and consider this Agreement before signing it.
Employee understands that he may use as much of such 21-day period as he wishes
prior to signing, and to the extent Employee has elected to execute this
Agreement prior to the expiration of such 21-day period, Employee has done so at
his own initiative.

 

(b)               Revocation. Employee may revoke this Agreement within seven
(7) days after signing it by delivering a written notice of revocation to the
Company within seven (7) days after Employee signs this Agreement. If Employee
so revokes this Agreement within that period of time, then no party shall have
any further rights or obligations under this Agreement (and, thereby, the
Company shall not have any obligation to provide the Separation and Consulting
Consideration).

 

3.5               Transition Consulting Services. The parties agree that the
Company will need transition consulting services from Employee in connection
with certain matters in which Employee has been involved during his employment
with the Company. Accordingly, in consideration of the covenants of the Company
hereunder, to the extent reasonably requested by the Company from time to time
during the earlier of either the closing of the sale by the Company of the
assets that it currently owns in the States of Colorado and Texas or six (6)
months following the Agreement Date, Employee shall:

 

(a)                Make, execute, and deliver such documents and instruments
(e.g., bank signature cards) as may be necessary to transition operating control
of the Company and its assets to successor officers and employees of the
Company;

 

(b)               Assist the Company’s officers and work with the company’s
advisors (including but not limited to its petroleum engineer providing the
reserve report for the Company’s assets that will be referenced in the Company’s
annual report on Form 10-K for the period ended December 31, 2016) in connection
with their preparation and filing of the Company’s annual report on Form 10-K
for the period ended December 31, 2016;

 

(c)                Sign such sub-certifications as to factual matters with
respect to the operations of the Company during the calendar year ended December
31, 2016, as may be reasonably requested by the Company in order to support the
certifications that the Company’s officers are required to provide under
applicable law in signing the Company’s annual report on Form 10-K for the
period ended December 31, 2016; and

 

(d)               Attend such meetings, participate in such telephone calls, and
respond to such emails and other written inquiries as may arise from time to
time.

 

 

 

 

4.Nondisclosure and Non-Circumvention Agreement; Non-Competition;
Non-Solicitation.

 

4.1               Nondisclosure and Non-Circumvention Agreement. Employee
acknowledges that he and the Company previously executed a Nondisclosure and
Non-Circumvention Agreement but agrees that this Agreement shall supersede and
replace all prior and contemporaneous agreements and understandings to the
extent the same relate to the matters addressed in this Section 4, including the
previously executed Nondisclosure and Non-Circumvention Agreement.

 

4.2               Non-Competition. Subject to Section 4.4, below, Employee
acknowledges that the nature of the Company's business is such that if Employee
were to become employed by, or substantially involved in, the business of a
competitor of the Company during the period of one (1) year following the
Agreement Date, then it would be difficult for Employee not to rely on or use
the Company's trade secrets and confidential information in connection with that
employment.

 

(a)                Thus, to avoid the inevitable disclosure of the Company's
trade secrets and confidential information, Employee acknowledges and agrees
that his right to receive the Separation and Consulting Consideration shall be
conditioned upon Employee not directly or indirectly engaging in (whether as an
employee, consultant, agent, proprietor, principal, partner, stockholder,
corporate officer, director or otherwise), or having any ownership interest in
or participating in the financing, operation, management or control of, any
person, firm, corporation or business that directly competes with Company or is
a customer of the Company and has operations located within a radius of twenty
(20) miles from any property that is leased, owned, or operated by the Company
as of the Agreement Date. If Employee engages, invests, or otherwise
participates in any competitive activity described in this Section 4.2, then the
Company shall (i) not have any obligation to provide any further Separation and
Consulting Consideration that has not been provided as of the date on which the
Company discovers such activity, and (ii) be entitled to recover or rescind the
delivery of any portion of the Separation and Consulting Consideration
previously provided by the Company. This remedy shall be in addition to all
other remedies the Company may have for any such breach.

 

(b)               Notwithstanding the foregoing, Employee shall not be deemed to
be in violation of the foregoing restriction solely by reason of Employee's
owning not more than one percent (1.0%) of the equity securities of any
corporation or other business enterprise, the equity securities of which are
listed for trading on a national securities exchange.

 

4.3               Non-Solicitation. Subject to Section 4.4, below, until the
date that is one (1) year after the Agreement Date, Employee agrees and
acknowledges that Employee's right to receive the Separation and Consulting
Consideration shall be conditioned upon Employee not either directly or
indirectly soliciting, attempting to hire, recruiting, encouraging, taking away,
hiring any employee of the Company or inducing or otherwise causing an employee
to leave his or her employment with the Company (regardless of whether to
commence employment with Employee or with any other entity or person). If
Employee engages in any such activity, then the Company shall (a) not have any
obligation to provide any further Separation and Consulting Consideration that
has not been provided as of the date on which the Company discovers such
activity, and (b) be entitled to recover or rescind the delivery of any portion
of the Separation and Consulting Consideration previously provided by the
Company. This remedy shall be in addition to all other remedies the Company may
have for any such breach.

 

 

 

 

4.4               Exception.

 

(a)                Notwithstanding anything in this Section 4 to the contrary,
(i) Employee shall be permitted to work and (ii) shall not be deemed to be in
violation of his covenants under the foregoing provisions of Section 4 by reason
of working as an employee of or consultant to (including in the circumstances
where some portion of the compensation for such employment or consulting
activity is paid in any working interest, performance incentive bonus or other
form of equity compensation) any entity that acquires any portion of the
Company's current assets located in Colorado and Texas (an “Excluded Entity”)
following the date of such Excluded Entity’s or Excluded Entities’ purchase of
such assets.

 

(b)               Notwithstanding anything in this Section 4 to the contrary, an
Excluded Entity shall not be deemed in violation of this Section 4 if the
Excluded Entity or Employee, as a representative of Excluded Entity, directly or
indirectly solicits, recruits or ultimately employs any employee of the Company.

 

5.                   Indemnification. The Employee will be entitled to the
continued right to indemnification, (i) in accordance with the terms of the
Indemnification Agreement between the Company and the Employee dated May 10,
2013 (the “Indemnification Agreement”), (ii) any and all rights to
indemnification under the Articles of Incorporation and Bylaws of the Company
and (iii) governing statutory and common law. The Company agrees and
acknowledges that the foregoing rights are vested contract rights of the
Employee and may not be changed in a manner adverse to the Employee. After the
Termination Date, the Employee’s right to indemnification and advancement of
fees from the Company will continue in accordance with the Indemnification
Agreement with respect to all current matters and will be applicable with
respect to any and all continuing and/or future investigations or matters that
may arise on or after the Termination Date that concern the Employee’s
activities while an employee or director of the Company. After the Termination
Date, the Company will (a) maintain in force at all times directors’ and
officers’ liability insurance for the Employee in an amount and scope at least
as favorable as the coverage presently applicable to directors and officers of
the Company, and (b) prior to the expiration of the term of any such policy,
will procure, pay for, and have in full force and effect either (i) an extended
term for such policy, or (ii) a successor or replacement policy of directors’
and officers’ liability insurance, or (iii) a six (6) year tail coverage policy
in respect of the Company’s current directors’ and officers’ liability insurance
policy.

 

6.Release of Claims

 

6.1               Representations and Covenants

 

(a)                No Injuries. Employee hereby represents and warrants to the
Company that, as of the Agreement Date, Employee is not suffering from any
physical or mental injury incurred through work performed in the course and
scope of his employment with the Company.

 

(b)               Ownership of Claims. Employee hereby represents and warrants
to the Company that Employee is the sole owner of, and has not assigned to any
other person any rights with respect to, any of the claims that Employee is
waiving under Section 6.2(a), below.

 

(c)                No Suits, Etc. Employee hereby (i) represents and warrants to
the Company that Employee has not filed any complaints, charges or lawsuits
against the Company or any of its affiliates or any of their respective
officers, directors, shareholders, or other agents, or with any governmental
agency or in any court based upon Employee's employment with the Company, the
termination of such employment, Employee's service on the Board of Directors of
the Company, or the termination of that service, or the ownership of the stock
of the Company; and (ii) covenants and agrees that he will not file any such
complaints, charges, or lawsuits at any time hereafter.

 

 

 

 

6.2               Release and Waiver. Except for "Excluded Claims" (as defined
below):

 

(a)                Release by Employee. Employee hereby releases and discharges
the Company and its affiliates, and their respective shareholders, officers,
directors, employees, insurance carriers, other agents, vendors, consultants,
successors and assigns (all such parties collectively are hereinafter referred
to as the "Company Released Parties"), of and from any and all claims, costs,
damages, expenses, liabilities, obligations and causes of action, whether known
or unknown, of every type and kind whatsoever, which Employee has or may
hereafter learn of against any or all of the Company Released Parties, arising
from or relating in any way to his employment with the Company or the
termination of such employment, including but not limited to claims based upon
or relating to: (a) any express or implied employment contract (including but
not limited to all employee compensation and benefit plans), including that
certain Second Amended and Restated Employment Agreement dated effective
December 31, 2014, by and between Employee and the Company; (b) wrongful
discharge; (c) claims of discrimination under Title VII of the Civil Rights Act
of 1964, as amended, the Americans with Disabilities Act, the Age Discrimination
in Employment Act, and the Texas Labor Code, including Chapter 21 of the Texas
Labor Code, which prohibit discrimination based on race, color, age, ancestry,
national origin, sex, religion, mental or physical disabilities, or marital
status; (d) any other federal, state or local laws or regulations prohibiting
employment discrimination; or (e) claims for additional wages, compensation,
retirement benefits or other entitlements or benefits.

 

(b)               Release by the Company. The Company hereby releases and
discharges Employee of and from any and all claims, costs, damages, expenses,
liabilities, obligations and causes of action, whether known or unknown, of
every type and kind whatsoever, which the Company has or may hereafter learn of
against Employee, arising from or relating in any way to Employee's employment
with the Company or the termination of such employment.

 

6.3               Excluded Claims. For purposes of this Agreement, the term
"Excluded Claims" means any claim arising from (a) a breach by a party of any of
his or its obligations, representations (which is material in nature),
covenants, or other agreements under this Agreement, (b) claims under any
written stock option agreement between Employee and the Company, (c) claims for
benefits under any qualified retirement plan sponsored by the Company and in
which Employee participates, (d) any right that Employee may have to elect
"COBRA" continuation coverage under any group health plan sponsored by the
Company, (e) any right that Employee may have to demand indemnification under
the Articles of Incorporation or Bylaws of the Company, any written
indemnification agreement between the Company and Employee, or applicable law,
or (f) fraud.

 

7.                   Voluntary Execution. EMPLOYEE HEREBY ACKNOWLEDGES AND
AGREES THAT: (A) EMPLOYEE HAS CAREFULLY READ THIS AGREEMENT; (B) EMPLOYEE FULLY
UNDERSTANDS HIS RIGHT TO DISCUSS THIS AGREEMENT WITH HIS ATTORNEY AND, TO THE
EXTENT THAT EMPLOYEE SO DESIRED, EMPLOYEE HAS AVAILED HIMSELF OF THIS RIGHT;
(C) EMPLOYEE UNDERSTANDS AND AGREES WITH EACH OF THE TERMS AND CONDITIONS OF
THIS AGREEMENT; AND (D) EMPLOYEE HAS VOLUNTARILY ENTERED INTO THIS AGREEMENT
FREELY AND WITHOUT COERCION.

 

 

 

 

8.Miscellaneous

 

8.1               Notices. All notices permitted or required by this Agreement
shall be in writing, and shall be deemed to have been delivered and received
(a) when personally delivered, (b) on the third (3rd) business day after the
date on which deposited in the United States mail, postage prepaid, certified or
registered mail, return receipt requested, (c) on the date on which transmitted
by facsimile or other electronic means producing a tangible receipt evidencing a
successful transmission, or (d) on the next business day after the date on which
deposited with a nationally-recognized private courier (e.g., FedEx, DHL, UPS,
etc.) for overnight delivery, addressed to the party for whom intended at the
mailing address, email address, or facsimile number set forth on the signature
page of this Agreement for such party, or such other mailing address, email
address, or facsimile number, notice of which has been delivered in a manner
permitted by this Section 8.1.

 

8.2               Further Assurances. Each party agrees, upon the request of
another party, to make, execute, and deliver such agreements, instruments, and
other documents, and to take such additional actions, as may be reasonably
necessary to effectuate the purposes of this Agreement.

 

8.3               Complete Agreement; Amendments. This Agreement contains the
entire agreement and understanding between the parties and supersedes and
replaces all prior and contemporaneous agreements and understandings, whether
oral or written, concerning Employee's employment with the Company and the
termination thereof; and shall not be modified or amended, except by a written
instrument executed after the Effective Date hereof by the party sought to be
charged with such amendment or modification.

 

8.4               Governing Law; Jurisdiction; Venue. This Agreement shall be
governed by and construed in accordance with the applicable provisions of the
law of the State of Texas (other than its conflict-of-law principles). Each
party hereby consents to the jurisdiction of the courts of the State of Texas
for purposes of all actions commenced to construe or enforce this Agreement. The
parties agree that the exclusive venue for all actions arising hereunder shall
be the courts of the State of Texas located in San Antonio, Texas, and hereby
covenant and agree not to assert that such forum is in any way inconvenient or
inappropriate.

 

8.5               Attorneys' Fees. If any action is commenced to construe this
Agreement or enforce the rights and duties set forth herein, then the party
prevailing in that action shall be entitled to recover its costs and fees in
that action, as well as the costs and fees of enforcing any judgment entered
therein.

 

8.6               Counterparts; Electronic Signatures. This Agreement may be
executed in counterparts, each of which shall be deemed an original and both of
which, taken together, shall constitute one and the same instrument, binding on
each signatory thereto. A copy of this Agreement that is executed by a party and
transmitted by that party to the other party by facsimile or as an attachment
(e.g., in ".tif" or ".pdf" format) to an email shall be binding upon the
signatory to the same extent as a copy hereof containing that party's original
signature.

 

8.7               Effective Date. The "Effective Date" of this Agreement shall
be the first day as of which Employee's seven-day revocation period described in
Section 3.4(b), above, expires without Employee having delivered to the Company
a written notice of revocation of this Agreement.

 

 

[Signatures appear on the following page.]

 

 

 

 

 

 

In Witness Whereof, the parties hereto have executed this Separation and General
Release Agreement, to be effective as of the Effective Date.

 

"Company:"   "Employee:"                     EnerJex Resources, Inc., a Nevada
corporation                         By:       Name:   Robert G. Watson, Jr.    
Title:                 Date:      Date:    

 

 

Address, Facsimile No. and Email for Notices   Address, Facsimile No. and Email
for Notices:           EnerJex Resources, Inc.       Attn:  Chief Financial
Officer   Mr. Robert G. Watson, Jr.   EnerJex Resources, Inc   123 Evans Avenue
  4040 Broadway, Ste. 508   San Antonio, TX 78209   San Antonio, TX 78209      
        Facsimile No.:  (210) 451-5546   Facsimile No.:  (210) 451-5546        
  Email:  dwright@enerjexresources.com   Email:  rwatson@enerjexresources.com  
                With a copies to:               Michael E. Pfau, Esq.      
Reicker, Pfau, Pyle & McRoy LLP       1421 State Street, Suite B       Santa
Barbara, California 93101               Facsimile No.:  (805) 966-3320      
Email:  mpfau@rppmh.com      

 

 

 

 

Schedule 3.2(b)

 

Claims

 

·Geronimo Holding Corporation and Randall Capps vs. American Standard Energy
Corp., a Nevada Corp.; American Standard Energy Corp., A Delaware Corp.; Loeb &
Loeb, LLP; Bernard Given; Baylor Operating, LLC; and Enerjex Resources, Inc.

·C & F Ranch, L.L.C. vs. Enerjex Kansas, Inc.