EXHIBIT 10.17
INDEMNIFICATION AGREEMENT
This Indemnification Agreement (this "Agreement") is made and entered into
and is effective as of July 1, 2004, by and between Commerce Energy Group, Inc.,
a Delaware corporation (the "Corporation"), and Xxx X. Xxxxxx, an individual
("Indemnitee").
RECITALS
A. Indemnitee performs a valuable service to the Corporation in his
capacity as a director and officer of the Corporation.
B. The Amended and Restated Certificate of Incorporation (the
"Certificate") and the Bylaws (the "Bylaws") of the Corporation provide for the
indemnification of the officers and directors of the Corporation as authorized
by the Delaware General Corporation Law, as amended (the "DGCL").
C. The Certificate, the Bylaws and the DGCL, by their non-exclusive
nature, permit contracts between the Corporation and its directors, officers,
employees and other agents with respect to indemnification of such persons.
D. In accordance with the authorization provided by the Certificate,
the Bylaws and the DGCL, the Corporation is entitled to purchase a policy or
policies of directors' and officers' liability insurance covering certain
liabilities which may be incurred by its directors and officers in the
performance of their duties to the Corporation.
E. As a result of developments affecting the terms, scope and
availability of such insurance, there exists general uncertainty as to the
extent of protection afforded such persons by such Insurance and by statutory
and bylaw indemnification provisions.
F. In order to induce Indemnitee to continue to serve as a director and
officer of the Corporation, the Corporation has determined and agreed to enter
into this Agreement with Indemnitee.
AGREEMENT
1. Indemnity of Indemnitee. The Corporation shall hold harmless,
indemnify and advance expenses to Indemnitee as provided in this Agreement and
to the fullest extent authorized, permitted or required by the provisions of the
Certificate, the Bylaws and the DGCL, as the same may be amended from time to
time (but, only to the extent that such amendment permits the Corporation to
provide broader indemnification rights than were permitted by the Certificate,
the Bylaws or the DGCL prior to adoption of such amendment); provided, however,
that the Corporation shall not indemnify Indemnitee in connection with any
proceeding, (or part thereof) initiated by Indemnitee, or any proceeding by
Indemnitee against the Corporation or its directors, officers, employees or
other agents, unless (i) such indemnification is expressly required to be made
by law, (ii) the proceeding, was authorized by the Board of Directors of the
Corporation, (iii) such indemnification is provided by the Corporation, in its
sole discretion, pursuant to the powers vested in the Corporation under the
DGCL, or (iv) the proceeding is initiated with respect to a proceeding to
enforce rights to indemnification pursuant to Section 8 hereof. The rights of
Indemnitee provided under the preceding sentence shall include, but shall not be
limited to, the rights set forth in the other sections of this Agreement.
2. Additional Indemnity. In addition to and not in limitation of the
indemnification otherwise provided for herein, and subject only to the
exclusions set forth in Section 3 hereof, the Corporation hereby further agrees
to hold harmless and indemnify Indemnitee:
(a) Against all liabilities, losses, expenses (including
attorney's fees), judgments, fines, ERISA excise taxes or penalties and amounts
paid in settlement actually and reasonably incurred or suffered by Indemnitee in
connection with any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative, to which he is a party
or a witness, by reason of the fact that Indemnitee is or was a director or
officer of the Corporation or is or was serving at the request of the
Corporation as a director or officer of another corporation or of a partnership,
joint venture, trust, enterprise or non-profit entity, including service with
respect to employee benefit plans, whether the basis of such proceeding is
alleged action in an official capacity as a director, officer, employee or agent
or in any other capacity while serving as a director, officer, employee or
agent.
(b) Otherwise to the fullest extent as may be provided to
Indemnitee by the Corporation under the non-exclusivity provisions of the DGCL.
3. Limitations on Additional Indemnity. No indemnity pursuant to
Section 2 hereof shall be paid by the Corporation:
(a) On account of any claim against Indemnitee for an accounting
of profits made from the purchase or sale by Indemnitee of securities of the
Corporation pursuant to the provisions of Section 16(b) of the Securities
Exchange Act of 1934 and amendments thereto or similar provisions of any
federal, state or local statutory law;
(b) On account of Indemnitee's conduct that was knowingly
fraudulent or deliberately dishonest, or that constituted willful misconduct;
(c) On account of, or attributable to, Indemnitee's conduct that
constituted a breach of Indemnitee's duty of loyalty to the Corporation or
resulted in any personal profit or advantage to which Indemnitee was not legally
entitled;
(d) For which payment has actually been made to Indemnitee under a
valid and collectible insurance policy or under a valid and enforceable
indemnity clause, bylaw or agreement, except in respect of any excess beyond
payment under such insurance, clause, bylaw or agreement;
(e) The payment of which by the Corporation under this Agreement
is not permitted by applicable law;
-2-
(f) If indemnification is not lawful (and, in this respect, both
the Corporation and Indemnitee have been advised that the Securities and
Exchange Commission believes that indemnification for liabilities arising under
the federal securities laws is against public policy and is, therefore,
unenforceable and that claims for indemnification should be submitted to
appropriate courts for adjudication) or is prohibited by any applicable state
securities laws with respect to any violation of applicable federal or state
securities laws; or
(g) In connection with any proceeding, (or part thereof) initiated
by Indemnitee, or any proceeding by Indemnitee against the Corporation or its
directors, officers, employees or other agents, unless (i) such indemnification
is expressly required to be made by law, (ii) the proceeding, was authorized by
the Board of Directors of the Corporation, (iii) such indemnification is
provided by the Corporation, in its sole discretion, pursuant to the powers
vested in the Corporation under the DGCL, or (iv) the proceeding is initiated
pursuant to Section 8 hereof.
4. Continuation of Indemnity. All agreements and obligations of the
Corporation contained herein shall continue during the period Indemnitee is a
director, officer, employee or other agent of the Corporation (or is or was
serving at the request of the Corporation as a director, officer, employee or
other agent of another corporation, partnership, joint venture, trust, employee
benefit plan or other enterprise) and shall continue thereafter so long as
Indemnitee shall be subject to any possible claim or threatened, pending or
completed action, suit or proceeding, whether civil, criminal, arbitrative,
administrative or investigative, by reason of the fact that Indemnitee was (i) a
director of the Corporation or (ii) serving in any other capacity referred to
herein, and shall inure to the benefit of Indemnitee's heirs, executors and
administrators.
5. Partial Indemnification. Indemnitee shall be entitled under this
Agreement to indemnification by the Corporation for a portion of the expenses
(including attorneys' fees), witness fees, damages, judgments, fines and amounts
paid in settlement and any other amounts that Indemnitee becomes legally
obligated to pay in connection with any action, suit or proceeding referred to
in Section 2 hereof even if not entitled hereunder to indemnification for the
total amount thereof, and the Corporation shall indemnify Indemnitee for the
portion thereof to which Indemnitee is entitled.
6. Notification and Defense of Claim. Not later than thirty (30) days
after receipt by Indemnitee of notice of the commencement of any action, suit or
proceeding, Indemnitee will, if a claim in respect thereto is to be made against
the Corporation under this Agreement, notify the Corporation of the commencement
thereof; but the omission so to notify the Corporation will not relieve it from
any liability which it may have to Indemnitee otherwise than under this
Agreement. With respect to any such action, suit or proceeding as to which
Indemnitee notifies the Corporation of the commencement thereof
(a) The Corporation will be entitled to participate therein at its
own expense;
(b) Except as otherwise provided below, the Corporation may, at
its option and jointly with any other indemnifying party similarly notified and
electing to assume such defense, assume the defense thereof, with counsel
reasonably satisfactory to Indemnitee. After
-3-
notice from the Corporation to Indemnitee of its election to assume the defense
thereof, the Corporation will not be liable to Indemnitee under this Agreement
for any legal or other expenses subsequently incurred by Indemnitee in
connection with the defense thereof except for reasonable costs of investigation
or otherwise as provided below. Indemnitee shall have the right to employ
separate counsel in such action, suit or proceeding but the fees and expenses of
such counsel incurred after notice from the Corporation of its assumption of the
defense thereof shall be at the expense of Indemnitee unless (i) the employment
of counsel by Indemnitee has been authorized by the Corporation, (ii) Indemnitee
shall have reasonably concluded that there may be a conflict of interest between
the Corporation and Indemnitee in the conduct of the defense of such action, or
(iii) the Corporation shall not in fact have employed counsel to assume the
defense of such action, in each of which cases the fees and expenses of
Indemnitee's separate counsel shall be at the expense of the Corporation. The
Corporation shall not be entitled to assume the defense of any action, suit or
proceeding brought by or on behalf of the Corporation or as to which Indemnitee
shall have made the conclusion provided for in (ii) above; and
(c) The Corporation shall not be liable to indemnify Indemnitee
under this Agreement for any amounts paid in settlement of any action or claim
effected without its written consent, which shall not be unreasonably withheld.
The Corporation shall be permitted to settle any action except that it shall not
settle any action or claim in any manner which would impose any penalty or
limitation on Indemnitee without Indemnitee's written consent which may be given
or withheld in Indemnitee's sole discretion.
7. Expenses. The Corporation shall pay the expenses incurred by
Indemnitee in defending any proceeding in advance of its final disposition,
provided that, to the extent required by the DGCL, the payment of expenses in
advance of the final disposition of the proceeding shall be made only upon
receipt of an undertaking by Indemnitee to repay all amounts advanced if it
should be ultimately determined by final judicial decision from which there is
no further right to appeal that Indemnitee is not entitled to be indemnified
under this Agreement or otherwise.
8. Enforcement. Any right to indemnification or advances granted by
this Agreement to Indemnitee shall be enforceable by or on behalf of Indemnitee
only in the Chancery Court of the State of Delaware if (i) the claim for
indemnification or advances is denied, in whole or in part, or (ii) no
disposition of such claim is made within sixty (60) days of request therefor.
Indemnitee, in such enforcement action, if successful in whole or in part, shall
be entitled to be paid also the expense of prosecuting his claim. It shall be a
defense to any action for which a claim for indemnification is made under
Section 2 hereof (other than an action brought to enforce a claim for
advancement of expenses pursuant to Section 7 hereof, provided that the required
undertaking has been tendered to the Corporation) that Indemnitee is not
entitled to indemnification because of the limitations set forth in Section 3
hereof, but the burden of proving such defense shall be on the Corporation.
Neither the failure of the Corporation (including its Board of Directors or its
shareholders) to have made a determination prior to the commencement of such
enforcement action that indemnification of Indemnitee is proper in the
circumstances, nor an actual determination by the Corporation (including its
Board of Directors or its shareholders) that such indemnification is improper,
shall be a defense to the action or create a presumption that Indemnitee is not
entitled to indemnification under this Agreement or otherwise.
-4-
9. Subrogation. In the event of payment under this Agreement, the
Corporation shall be subrogated to the extent of such payment to all of the
rights of recovery of Indemnitee, who shall execute all documents required and
shall do all acts that may be necessary to secure such rights and to enable the
Corporation effectively to bring suit to enforce such rights.
10. Non Exclusivity of Rights. The rights conferred on Indemnitee by
this Agreement shall not be exclusive of any other right which Indemnitee may
have or hereafter acquire under any statute, provision of the Certificate, the
Bylaws, agreement, vote of shareholders or directors or otherwise, both as to
action in his official capacity and as to action in another capacity while
holding office.
11. Survival of Rights.
(a) The rights conferred on Indemnitee by this Agreement shall
continue after Indemnitee has ceased to be a director, officer, employee or
other agent of the Corporation or to serve at the request of the Corporation as
a director, officer, employee or other agent of another corporation,
partnership, joint venture, trust, employee benefit plan or other enterprise and
shall inure to the benefit of Indemnitee's heirs, executors and administrators.
(b) The Corporation shall require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business or assets of the Corporation, expressly to
assume and agree to perform this Agreement in the same manner and to the same
extent that the Corporation would be required to perform if no such succession
had taken place.
12. Severability. Each of the provisions of this Agreement is a separate
and distinct agreement and independent of the others, so that if any provision
hereof shall be held to be invalid for any reason, such invalidity or
unenforceability shall not affect the validity or enforceability of the other
provisions hereof. Furthermore, if this Agreement shall be invalidated in its
entirety on any ground, then the Corporation shall nevertheless indemnify
Indemnitee to the fullest extent provided by the Certificate, the Bylaws, the
DGCL or any other applicable law.
13. Consent to Jurisdiction. The Corporation and Indemnitee each hereby
irrevocably consent to the jurisdiction of the Court of the State of Delaware
for all purposes in connection with any action or proceeding, which arises out
of or relates to this Agreement, and agree that any action instituted under this
Agreement shall be brought only in the Chancery Courts of the State of Delaware.
14. Governing Law. This Agreement shall be interpreted and enforced in
accordance with the laws of the State of Delaware.
15. Amendment and Termination. No amendment, modification, termination
or cancellation of this Agreement shall be effective unless in writing signed by
both parties hereto.
16. Identical Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall for all purposes be deemed to be an
original but all of which together shall constitute but one and the same
Agreement. Only one such counterpart need be produced to evidence the existence
of this Agreement.
-5-
17. Headings. The headings of the sections of this Agreement are
inserted for convenience only and shall not be deemed to constitute part of this
Agreement or to affect the construction hereof.
18. Notices. All notices, requests, demands and other communications
hereunder shall be in writing and shall be deemed to have been duly given (i)
upon delivery if delivered by hand to the party to whom such notice or other
communication shall have been directed, or (ii) if mailed by certified or
registered mail with postage prepaid, on the third business day after the date
on which it is so mailed:
(a) If to Indemnitee, to:
__________________________________
__________________________________
(b) If to the Corporation, to:
Commerce Energy Group, Inc.
000 Xxxxx Xxxxxxxxx, Xxxxx 0000
Xxxxx Xxxx, XX 00000
Attn: Chairman of the Board
or to such other address(es) as may have been furnished to/by Indemnitee to/by
the Corporation.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Indemnification Agreement as of the day and year first above written.
"Indemnitee" /S/ XXX X. XXXXXX
---------------------------------------
Xxx X. Xxxxxx
"Corporation" COMMERCE ENERGY GROUP, INC., a Delaware
corporation
By: /S/ XXXX X. XXXXXXXX
-----------------------------------
Name: Xxxx X. Xxxxxxxx
Title: General Counsel
-6-
SCHEDULE TO EXHIBIT 10.17
Commerce Energy Group, Inc. entered into Indemnification Agreements with
several officers and directors, each substantially identical to Exhibit 10.17
except that the Indemnitee and the date of the other Indemnification Agreements
are as follows:
Indemnitee Date of Agreement
__________ _________________
Xxxxxx X. Xxxxxxx July 1, 2004
Xxxx X. Xxxxxxxx July 1, 2004
Xxxx X. Xxxxxxxxxx July 1, 2004
Xxxxxxx X. Xxxxxxxx July 1, 2004
Xxxxx X. Xxxxxxx July 1, 2004
Xxxxxxx X. Xxxxxxxx July 1, 2004
Xxxxx Xxxxxxx July 1, 2004
Xxxxx Xxxxxx November 11, 2004
