SETTLEMENT AGREEMENT AND GENERAL RELEASE
Exhibit 99.1
Execution Copy
This Settlement Agreement and General Release (this “Agreement”) is hereby entered into by and
among Xxxxxx X. Xxxxxxx, an individual (the “Executive”), and Commerce Energy, Inc., a California
corporation, formerly known as Commonwealth Energy Corporation, (the “Company”), and Commerce
Energy Group, Inc., a Delaware corporation (“Commerce”).
Recitals
A. The Executive was employed as Senior Vice-President of Energy Supply of Commerce and of the
Company; and
B. The Executive’s status as an officer, employee, and in all other capacities with Commerce
and any of its parents, direct and indirect subsidiaries, affiliates, divisions and related
entities (hereinafter collectively referred to as, “Commerce and its Related Entities”) irrevocably
ended on February 8, 2006 (the “Resignation Date”).
Agreement
In consideration of the mutual promises contained herein and for other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereby agree
as follows:
1. Effective Date. Except as otherwise provided herein, this Agreement shall be
effective on the eighth day after it has been executed by each of the parties provided that the
Executive shall not have exercised his right to revoke Sections 7, 8 and 9 of this Agreement as
provided in Section 10(c) of this Agreement (the “Effective Date”).
2. No Continuation of Employee Benefits. Except as expressly provided in this
Agreement or in the plan documents governing the employee benefit plans of Commerce and its
Related Entities, the Executive acknowledges that he no longer is eligible to receive, accrue or
participate in any employee benefits or benefit plans provided by Commerce and its Related
Entities for employees, including, without limitation, medical, dental and life insurance
benefits, and Commerce’s 401(k) retirement plan; provided, however, that nothing in this Agreement
shall waive the Executive’s right to any vested amounts in Commerce’s 401(k) retirement plan,
which amounts shall be handled as provided in the plan.
3. COBRA Benefits. The Executive shall have the right to continue coverage under the
Company’s group medical, dental and vision plans at his own expense in accordance with the
provisions of COBRA.
4. Settlement Payment. Commerce agrees to pay the Executive an amount equal to
$48,816.09 (the “Settlement Payment”). The Settlement Payment shall be paid in a lump sum one
business day after the Effective Date. Payment shall be made by check mailed to the address
provided by the Executive herein. The Settlement Payment shall be subject to applicable state and
federal withholding taxes. In addition, the Executive shall be entitled to keep as his own the
following Company provided equipment: one IBM T41 laptop computer,
one 17” flat-screen monitor, one Motorola cell phone and one Blackberry, all of which are
currently in possession of the Executive. The Executive shall be solely responsible for all
service fees required to utilize such hardware. The receipt of the equipment/hardware by the
Executive also shall be subject to applicable state and federal withholding taxes. The Executive
understands that he will not receive any portion of the Settlement Payment or the
equipment/hardware if he revokes Sections 7, 8 and 9 of this Agreement as provided in Section
10(c) of this Agreement, or if the Company’s Chief Executive Officer has not received a signed
original of this Agreement.
5. Cancellation of Stock Options and Repurchase of Restricted Shares.
(a) The Executive acknowledges that he has been granted options to purchase 50,000 shares of
the common stock of Commerce with an exercise price of $3.50 per share (the “Options”), all of
which are currently subject to exercise. The parties hereto agree that in consideration of the
Settlement Payment the Options and any other rights to purchase securities of Commerce held by the
Executive shall be cancelled as of the Effective Date.
(b) The Executive also acknowledges that he has been issued 10,000 shares of restricted common
stock of Commerce which are subject to a right to repurchase held by Commerce (the “Restricted
Shares”). The parties agree that Commerce has exercised its right to repurchase all of the
Restricted Shares pursuant that certain Restricted Stock Agreement by and between Commerce and the
Executive dated December 12, 2005 and has hereby repurchased the Restricted Shares, allocating a
portion of the Settlement Payment as payment in full for the Restricted Shares.
6. Acknowledgement of Total Compensation and Indebtedness. The Executive
acknowledges and agrees that the payment of monies and equipment/hardware provided in Section 4 of
this Agreement extinguishes any and all obligations for monies or other compensation or benefits
that the Executive claims or could claim to have earned or claims or could claim is owed to him as
a result of his employment by Commerce and its Related Entities through the Resignation Date, or
otherwise, except as expressly set forth herein.
7. Complete Release. Except as otherwise expressly provided in this Agreement, the
Executive, for himself and his heirs, executors, administrators, assigns, affiliates, successors
and agents (collectively, the “Executive’s Affiliates”) hereby fully and without limitation
releases and forever discharges Commerce and its Related Entities, and each of their respective
agents, representatives, shareholders, owners, officers, directors, employees, consultants,
attorneys, auditors, accountants, investigators, affiliates, successors and assigns (collectively,
the “Commerce Releasees”), both individually and collectively, from any and all rights, claims,
demands, liabilities, actions, causes of action, damages, losses, costs, expenses and
compensation, of whatever nature whatsoever, known or unknown, fixed or contingent, which the
Executive or any of the Executive’s Affiliates has or may have or may claim to have against the
Commerce Releasees by reason of any matter, cause, or thing whatsoever, from the beginning of time
to the Effective Date (“Claims”), including, without limiting the generality of the foregoing, any
Claims arising out of, based upon, or relating to the recruitment, hiring, employment, relocation,
remuneration, investigation or termination of the Executive by any of
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the Commerce Releasees, the Executive’s tenure as an employee and/or an officer of any of the
Commerce Releasees, any agreement or compensation arrangement between the Executive and any of the
Commerce Releasees. The Executive specifically and expressly releases any Claims arising out of or
based on: Title VII of the Civil Rights Act of 1964, as amended; the Americans With Disabilities
Act; the National Labor Relations Act, as amended; the Equal Pay Act; ERISA; any alleged violation
of any statute of Michigan and California, the common law of Michigan and California on fraud,
misrepresentation, negligence, defamation, infliction of emotional distress or other tort, breach
of contract or covenant, violation of public policy or wrongful termination; state or federal wage
and hour laws; or any other state or federal law, rule or regulation dealing with the employment
relationship or operating a publicly held business. Nothing contained in this Section 7 or any
other provision of this Agreement shall release or waive any right that the Executive has to
reimbursement of expenses by Commerce or the Company with respect to which the Executive may be
eligible.
8. Waiver of Unknown Claims.
(a) The Executive understands and agrees that his release provided herein extends to all
Claims released above whether known or unknown, suspected or unsuspected. The Executive expressly
waives and relinquishes any and all rights he may have under any laws intended to prevent the
release of unknown claims, such as California Civil Code Section 1542, which provides as follows:
“A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES
NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF
EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM OR HER MUST HAVE
MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR.”
(b) It is the intention of the Executive through this Agreement to fully, finally and forever
settle and release the Claims as set forth above. In furtherance of such intention, the release
herein given shall be and remain in effect as a full and complete release of such matters
notwithstanding the discovery of any additional Claims or facts relating thereto.
9. Release of Federal Age Discrimination Claims by the Executive. The Executive
hereby knowingly and voluntarily waives and releases all rights and claims, known or unknown,
arising under the Age Discrimination In Employment Act of 1967, as amended (“ADEA”), which he
might otherwise have had against Commerce or the Company or any of the Commerce Releasees
regarding any actions which occurred prior to the Effective Date.
10. Rights Under the Older Workers Benefit Protection Act. In accordance with the
Older Workers Benefit Protection Act of 1990, the Executive hereby is advised of the following:
(a) The Executive has the right to consult with an attorney before signing this Agreement and
is encouraged by Commerce and the Company to do so;
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(b) The Executive has twenty-one (21) days from his receipt of this Agreement to consider it;
and
(c) The Executive has seven (7) days after signing this Agreement to revoke Sections 7, 8 and
9 of this Agreement (which must be revoked in their entirety and as a group), and such Sections of
this Agreement (as a group) will not be effective until that revocation period has expired without
exercise. The Executive agrees that in order to exercise his right to revoke this Agreement within
such seven (7) day period, he must do so in a signed writing delivered to Commerce’s Chief
Executive Officer before the close of business on the seventh calendar day after he signs this
Agreement.
11. Non-Disclosure of the Agreement by the Executive. After the execution of this
Agreement by the Executive, neither the Executive, his attorney, nor any person acting by,
through, under or in concert with them, shall disclose any of the terms of or amount paid under
this Agreement (other than to state that Commerce has filed this Agreement and/or agreements
related thereto as public documents) or the negotiation thereof to any individual or entity;
provided, however, that the foregoing shall not prevent such disclosures by the Executive to his
attorneys, tax advisors and/or immediate family members, or as may be required by law. The
non-disclosure obligations in this Section shall not apply to Commerce. The Executive understands
and acknowledges that Commerce must file this Agreement and make disclosures relating to it in its
filings with the U.S. Securities and Exchange Commission.
12. No Filings. The Executive represents that he has not filed any lawsuits, claims,
charges or complaints against Commerce, the Company or the Commerce Releasees with any local,
state or federal agency or court from the beginning of time to the date of execution of this
Agreement; that he will not do so at any time hereafter based upon events prior to the date of
execution of this Agreement; that he will not induce, encourage, solicit or assist any other
person or entity to file or pursue any proceeding of any kind against Commerce, the Company or the
Commerce Releasees or voluntarily appear or invite a subpoena to testify in any such legal
proceeding; and that, if any such agency or court ever assumes jurisdiction over any such lawsuit,
claim, charge or complaint and/or purports to bring any legal proceeding, in whole or in part, on
behalf of the Executive based upon events occurring prior to the execution of this Agreement, the
Executive will request such agency or court to withdraw from and/or to dismiss the lawsuit, claim,
charge or complaint with prejudice. This Section 12 shall not prohibit the Executive from
challenging the validity of the ADEA release in Section 9 of this Agreement. It shall not be a
breach of this Section 12 for the Executive to testify truthfully in any judicial or
administrative proceeding.
13. Confidential and Proprietary Information. The Executive acknowledges that
certain information, observations and data obtained by him during the course of or related to his
employment with Commerce and its Related Entities (including, without limitation, projection
programs, business plans, business matrix programs (i.e., measurement of business), strategic
financial projections, certain financial information, shareholder information, product design
information, marketing plans or proposals, personnel information, customer lists and other
customer information) are the sole property of Commerce and its Related Entities and constitute
“Confidential Information” as defined the Commerce Energy Group Code of Business Conduct and
Ethics. The Executive represents and warrants that he has returned all
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files, customer lists, financial information and other property of Commerce and its Related
Entities that were in the Executive’s possession or control without retaining copies thereof. The
Executive further represents and warrants that he does not have in his possession or control any
files, customer lists, financial information or other property of Commerce and its Related
Entities. In addition to his promises in the Commerce Energy Group Code of Business Conduct and
Ethics, the Executive agrees that he will not disclose to any person or use any such information,
observations or data without the written consent of the Board of Directors of Commerce. If the
Executive is served with a deposition subpoena or other legal process calling for the disclosure
of such information, or if he is contacted by any third person requesting such information, he
will notify Commerce’s Chief Executive Officer as soon as is reasonably practicable after
receiving notice and will reasonably cooperate with Commerce and its Related Entities in
minimizing the disclosure thereof.
14. Remedies. The Executive acknowledges that any unfair competition or misuse of
trade secret or Confidential Information belonging to Commerce and its Related Entities, or any
violation of Commerce Energy Group Code of Business Conduct and Ethics, and any violation of
Sections 11 and 13 of this Agreement, will result in irreparable harm to Commerce and its Related
Entities, and therefore, Commerce and its Related Entities shall, in addition to any other
remedies, be entitled to immediate injunctive relief. To the extent there is any conflict between
the Commerce Energy Group Code of Business Conduct and Ethics and this Section 14, the provision
providing the greatest protection to Commerce and its Related Entities shall control.
15. Cooperation Clause.
(a) To facilitate the orderly conduct of Commerce and its Related Entities’ businesses, for
twelve (12) months after the Effective Date, the Executive agrees to cooperate with Commerce’s and
its Related Entities’ reasonable requests for information or assistance related to the time of his
employment.
(b) For twelve (12) months after the Effective Date, the Executive agrees to cooperate with
Commerce’s and its Related Entities’ and its or their counsel’s reasonable requests for information
or assistance related to (i) any investigations (including internal investigations) and audits of
Commerce and its Related Entities’ management’s current and past conduct and business and
accounting practices and (ii) Commerce and its Related Entities’ defense of, or other participation
in, any administrative, judicial, or other proceeding arising from any charge, complaint or other
action which has been or may be filed relating to the period during which the Executive was engaged
in employment with Commerce and its Related Entities. Except as required by law, court or
administrative order or authorized in advance by the Board of Directors of Commerce, the Executive
will not communicate, directly or indirectly, with any third party, including any person or
representative of any group of people or entity who is suing or has indicated that a legal action
against Commerce and its Related Entities or any of their directors or officers is being
contemplated, concerning the management or governance of Commerce and its Related Entities, the
operations of Commerce and its Related Entities, the legal positions taken by Commerce and its
Related Entities, or the financial status of Commerce and its Related Entities. If asked about any
such individuals or matters, the Executive shall say: “I have no comment,” or words to that general
effect, and shall direct the inquirer to Commerce.
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The Executive acknowledges that any material violation of this Section 15 will result in
irreparable harm to Commerce and its Related Entities and will give rise to an immediate action by
Commerce and its Related Entities for injunctive relief.
(c) Commerce agrees to reimburse the Executive for all reasonable expenses the Executive
incurs in providing information and/or assistance under this Section as long as the expenses have
been authorized by Commerce’s Chief Executive Officer or its Board of Directors in advance.
Further, the Executive shall not be required to provide any information or assistance under this
Section that exceeds twenty (20) hours in the aggregate, unless the parties hereto shall agree upon
a commercially reasonable rate of compensation for the additional assistance. The Executive shall
be in compliance with this Section as long as he provides reasonable cooperation, upon reasonable
notice and so long as Commerce’s requests for information and/or assistance are in a commercially
reasonable time, place and manner.
16. No Future Employment. The Executive acknowledges that on the Resignation Date,
he resigned as an officer, an employee, and in all other capacities with Commerce and its Related
Entities and his status as an officer, employee and in all other capacities with Commerce and its
Related Entities irrevocably ended as of the Resignation Date and will not be resumed at any time
in the future. The Executive agrees that he will not apply for, seek or accept employment by
Commerce and its Related Entities at any time unless invited to do so by Commerce and its Related
Entities.
17. Non-disparagement. The Executive agrees not to disparage or otherwise publish or
communicate derogatory statements about Commerce and its Related Entities and any director,
officer or manager and/or the products and services of these entities to any third party.
Commerce and its Related Entities will not authorize or tolerate any disparagement of, or the
publication or other communication of derogatory statements about, the Executive and/or the
Executive’s knowledge, skill, abilities or managerial or employment performance to any third
party. It shall not be a breach of this Section 17 for the Executive or an authorized
representative of Commerce and its Related Entities to testify truthfully in any judicial or
administrative proceeding, or to make factually accurate statements required in legal or public
filings.
18. Governing Law. This Agreement shall be governed by and construed in accordance
with the laws of the State of California, without giving effect to principles of conflict of laws.
19. Venue and Waiver of Right to Jury Trial. The parties hereto agree that all
actions or proceedings arising directly or indirectly under or related to this Agreement, whether
instituted by the Executive or Commerce and its Related Entities, shall be litigated in courts
located within the State of California, County of Orange, and each of the parties hereto expressly
consents to the jurisdiction of any local, state or federal court located within said state and
county, and consents that any service of process in such action or proceeding may be made by
personal service upon him wherever he may be located, or by certified or registered mail directed
to his last known address. The parties hereby waive trial by jury in connection with any future
dispute between them, any objection based on forum non conveniens, and/or any objection to venue
of any action instituted as provided in this Section 19.
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20. Attorneys’ Fees. In any action, litigation or proceeding between the parties
arising out of or in relation to this Agreement, including any purported breach of this Agreement,
the prevailing party shall be entitled to an award of its costs and expenses, including reasonable
attorneys’ fees.
21. Non-Admission of Liability. The parties understand and agree that neither the
payment of any sum of money nor the execution of this Agreement by the parties will constitute or
be construed as an admission of any wrongdoing or liability whatsoever by any party.
22. Severability. If any one or more of the provisions contained herein (or parts
thereof), or the application thereof in any circumstances, is held invalid, illegal or
unenforceable in any respect for any reason, the validity and enforceability of any such provision
in every other respect and of the remaining provisions hereof will not be in any way impaired or
affected, it being intended that all of the rights and privileges shall be enforceable to the
fullest extent permitted by law.
23. Entire Agreement. This Agreement, together with the attachments hereto,
represents the sole and entire agreement among the parties and, except as expressly stated herein,
supersedes all prior agreements, negotiations and discussions among the parties with respect to
the subject matters contained herein.
24. Waiver. No waiver by any party hereto at any time of any breach of, or
compliance with, any condition or provision of this Agreement to be performed by any other party
hereto may be deemed a waiver of similar or dissimilar provisions or conditions at the same time
or at any prior or subsequent time.
25. Amendment. This Agreement may be modified or amended only if such modification
or amendment is agreed to in writing and signed by duly authorized representatives of the parties
hereto, which writing expressly states the intent of the parties to modify this Agreement.
26. Counterparts. This Agreement may be executed in one or more counterparts, each
of which will be deemed to be an original as against any party that has signed it, but all of
which together will constitute one and the same instrument.
27. Assignment. This Agreement inures to the benefit of and is binding upon the
Company and its successors and assigns, but the Executive’s rights under this Agreement are not
assignable, except to his estate.
28. Notice. All notices, requests, demands, claims and other communications
hereunder shall be in writing and shall be deemed to have been duly given (a) if personally
delivered; (b) if sent by telecopy or facsimile (except for legal process); or (c) if mailed by
overnight or by first class, certified or registered mail, postage prepaid, return receipt
requested, and properly addressed as follows:
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If to the Executive:
|
Xxxxxx X. Xxxxxxx 0000 Xxxxx Xxx Xxxxxxxx, Xxxxxxxx 00000 |
|
If to the Company
or Commerce:
|
Commerce Energy Group, Inc. 000 Xxxxx Xxxxxxxxx, Xxxxx 0000 Xxxxx Xxxx, Xxxxxxxxxx 00000 Attn: Chief Executive Officer Fax: (000) 000-0000 |
Such addresses may be changed, from time to time, by means of a notice given in the manner provided
above. Notice will conclusively be deemed to have been given when personally delivered (including,
but not limited to, by messenger or courier); or if given by mail, on the third day after being
sent by first class, certified or registered mail; or if given by Federal Express or other similar
overnight service, on the date of delivery; or if given by telecopy or facsimile machine during
normal business hours on a business day, when confirmation of transmission is indicated by the
sender’s machine; or if given by telecopy or facsimile machine at any time other than during normal
business hours on a business day, the first business day following when confirmation of
transmission is indicated by the sender’s machine. Notices, requests, demands and other
communications delivered to legal counsel of any party hereto, whether or not such counsel shall
consist of in-house or outside counsel, shall not constitute duly given notice to any party hereto.
29. Miscellaneous Provisions.
(a) The parties represent that they have read this Agreement and fully understand all of its
terms; that they have conferred with their attorneys, or have knowingly and voluntarily chosen not
to confer with their attorneys about this Agreement; that they have executed this Agreement without
coercion or duress of any kind; and that they understand any rights that they have or may have and
sign this Agreement with full knowledge of any such rights.
(b) Both parties have participated in the drafting of this Agreement with the assistance of
counsel to the extent they desired. The language in all parts of this Agreement must be in all
cases construed simply according to its fair meaning and not strictly for or against any party.
Whenever the context requires, all words used in the singular must be construed to have been used
in the plural, and vice versa, and each gender must include any other gender. The captions of the
Sections of this Agreement are for convenience only and must not affect the construction or
interpretation of any of the provision herein.
(c) Each provision of this Agreement to be performed by a party hereto is both a covenant and
condition, and is a material consideration for the other party’s performance hereunder, and any
breach thereof by the party will be a material default hereunder. All rights, remedies,
undertakings, obligations, options, covenants, conditions and agreements contained in this
Agreement are cumulative and no one of them is exclusive of any other. Time is of the essence in
the performance of this Agreement.
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(d) Each party acknowledges that no representation, statement or promise made by any other
party, or by the agent or attorney of any other party, except for those in this Agreement, has been
relied on by him or it in entering into this Agreement.
(e) Each party understands that the facts with respect to which this Agreement is entered into
may be materially different from those the parties now believe to be true. Except in the case
where the existence of any additional or different facts constitutes the breach of a representation
or warranty, each party accepts and assumes this risk and agrees that this Agreement and the
releases in it shall remain in full force and effect, and legally binding, notwithstanding the
discovery or existence of any additional or different facts, or of any claims with respect to those
facts.
(f) Unless expressly set forth otherwise, all references herein to a “day” are deemed to be a
reference to a calendar day. All references to “business day” mean any day of the year other than
a Saturday, Sunday or a public or bank holiday in Orange County, California. Unless expressly
stated otherwise, cross-references herein refer to provisions within this Agreement and are not
references to the overall transaction or to any other document.
(g) Each party to this Agreement will cooperate fully in the execution of any and all other
documents and in the completion of any additional actions that may be necessary or appropriate to
give full force and effect to the terms and intent of this Agreement.
EACH OF THE PARTIES ACKNOWLEDGES THAT HE/IT HAS READ THIS AGREEMENT, UNDERSTANDS IT AND IS
VOLUNTARILY ENTERING INTO IT, THAT IT INCLUDES A WAIVER OF THE RIGHT TO A TRIAL BY JURY, AND THAT
IT INCLUDES A RELEASE OF ALL KNOWN AND UNKNOWN CLAIMS.
[Signature page follows]
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[Signature page to Settlement Agreement and General Release]
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the dates indicated
below.
| “Executive” | /S/ XXXXXX X. XXXXXXX | |||
| Xxxxxx X. Xxxxxxx | ||||
| Dated: April 12, 2006 | ||||
| “Company” | COMMERCE ENERGY, INC., a California corporation |
|||
| By: | /S/ XXXXXX X. BOSS | |||
| Xxxxxx X. Boss Chief Executive Officer |
||||
| Dated: April 12, 2006 | ||||
| “Commerce” | COMMERCE ENERGY GROUP, INC., a Delaware corporation |
|||
| By: | /S/ XXXXXX X. BOSS | |||
| Xxxxxx X. Boss Chief Executive Officer |
||||
| Dated: April 12, 2006 | ||||
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