EXHIBIT 10.18
COMMONWEALTH X. XXXXX SETTLEMENT AGREEMENT TERMS
The following is a summary of the terms of settlement reached
between the parties identified below. A final Settlement Agreement document
shall be drafted and circulated for comments by XxXxxxxxx, Will & Xxxxx. The
Settlement Agreement will be the final integrated agreement between the parties
and shall reflect the terms herein.
Xxxxxxxxx Xxxxx, Xxxxxxx Xxxxx and the Bloom Family Trust (along
with each of their past and present partners, partnerships, employees, agents,
representatives, insurers. attorneys, heirs, predecessors, successors, assignors
and assignees, and all persons and entities acting or claiming by, through,
under, or in concert with them or any of them, hereinafter collectively "Bloom")
on one hand, and Commonwealth Energy Corporation, ElectricAmerica, Inc., Xxx X.
Xxxxxx, Xxxxxxx X. Xxxxx, Xxxxxx X. Xxxxxxx, Xxxxxx X. Xxxxxxxx and Xxxxxx Xxxxx
(along with each of their shareholders, officers, directors, employees,
predecessors, successors, subsidiaries, divisions, affiliated companies, parent
companies, holding companies, partners, partnerships, officers, directors,
agents, representatives, insurers, attorneys, heirs, assignors and assignees,
bankers, investment bankers, and all persons and entities acting or claiming by,
through, under, or in concert with them or any of them, hereinafter collectively
"Commonwealth"), on the other hand, in order to resolve the action known as
Commonwealth Energy Corporation, et al. x. Xxxxx,, et al., Orange County
Superior Court Case 00CC15507 and all related and/or consolidated actions hereby
agree as follows:
Collectively, Bloom and Commonwealth shall be referred to as the
Parties.
1. Bloom will surrender all 5,895,160 shares and any options in
Commonwealth to Commonwealth. To the extent that Bloom possesses
or controls, directly or indirectly, any other shares or options
of any kind in Commonwealth, he shall forfeit such shares to
Commonwealth. To the extent that Bloom has optioned or
transferred shares to any third parties, those shares must be
forfeited to Commonwealth.
2. Mutual release of all claims plus provide a section 1542 waiver.
3. The Parties agree to obtain a Court order signed by a judge of
the Orange County Superior Court approving the settlement.
4. Payment from Commonwealth to Bloom is to be made within 24 hours
of court approval of settlement. Additional time will be allowed
to make payment if the 24 hour period includes a weekend or bank
holiday.
5. Bloom will not disparage, directly or indirectly, Commonwealth.
Commonwealth will not disparage, directly or indirectly, Bloom
but Bloom recognizes that Commonwealth may have to cooperate with
governmental agencies, including but not limited to the
California Public Utilities Commission, California Department of
Corporations or other state and/or federal enforcement agencies
in investigations against Bloom. Notwithstanding the foregoing,
Commonwealth will not affirmatively request any action against
Bloom that is not otherwise consistent with the fiduciary duties
and legal obligations of Commonwealth's
Board of Directors. Commonwealth's counsel will write a letter to
any regulatory agencies that Commonwealth has communicated with
concerning Bloom, including the Department of Corporations, the
District Attorney's office, and the Orange County Sheriff's
Department, notifying them of the settlement this matter and
confirming that Commonwealth has no interest in pursuing claims
against Bloom. CEC will not send any additional unsolicited
letters to any local, state or federal agencies concerning Bloom.
6. Commonwealth will indemnify Bloom for expenses, including
attorneys fees, incurred in the Julian and Wykydal litigation.
All such outstanding fees will be paid by August 30, 2001.
Commonwealth will have no additional future indemnification
obligations to Bloom, however, to the extent there is insurance
coverage for future cases involving Bloom, Commonwealth will not
object to Bloom seeking coverage under the policies.
7. Bloom cannot approach Commonwealth's shareholders, banking
institutions, employees, officers or board members either
directly or indirectly for the purpose of discussing anything
with respect to Commonwealth. Bloom can take no direct or
indirect action that interferes with Commonwealth's operations.
Bloom will make no attempt to solicit current Commonwealth
employees for a period of two (2) years.
8. Bloom can never own any interest, directly or indirectly in
Commonwealth. This includes proxies or third parties that Bloom
may choose to work through.
9. Both Commonwealth and Bloom will place $100,000 each into a
designated escrow account (with Bloom's portion to be placed
directly into such account by Commonwealth out of the proceeds of
the settlement funds) for the purpose of liquidated damages in
the event that any party is found to have breached the terms of
this Agreement. Whether a Parry is in breach of this Agreement is
to be decided by a single neutral arbitrator to be agreed to by
the parties. The funds will be held for a two year period and
liquidated damages will be $20,000 per occurrence. In the event
either party pays a sanction they are required to replenish the
account back to $100,000.
9a. The Parties agree that if this matter is disputed, such disputes
will be arbitrated before JAMS.
10. Bloom will assign the rights to his XXX.xxxxxxxxx.xxx website and
will agree physically to turn that website over to Commonwealth
as well as the domaine authority for the site. Bloom will also
agree not to start or participate in any other website related in
any way to Commonwealth.
11. Bloom will turn back to the company his shareholder list and any
copies that he has made and will not use or request copies of the
shareholder list in the future. He will identify any third
parties to whom he has provided a copy of the list and will
request the return of the copies in writing.
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12. Bloom agrees to reasonably cooperate in any lawsuits brought by
or against the company to include, but not limited to Xxxx
Wykidal, Xxxxx Xxxxx, etc.
13. To the extent Bloom can accomplish an assignment of lease of
Commonwealth's offices at no cost to Commonwealth, Commonwealth
will assume liability on the lease.
14. Bloom agrees to withdraw support from Xxxxxx Saline and ask him
to resign both orally and in writing prior to the final approval
of this settlement. The Agreement is not contingent upon Saline's
resignation.
15. Bloom agrees not to compete with Commonwealth in any of the
listed activities for at least two (2) years in any capacity.
Bloom will relinquish his right to be a 1% investor, or a
principal, employee, officer in any company that is engaged
wholly or in part in the listed activities, including but not
limited to any entity funded by Xxxx Xxxxx or Xxxxx Brothers
Securities. The listed activities are:
1. Retail or wholesale sale of electric energy or distributed
electrical power;
2. Alternative electrical generation sources;
3. Development and design of electrical fuel cells;
4. Manufacture or distribution of electric energy
conservation devices;
5. Energy management or consulting services;
6. Electrical service call centers; and
7. Electrical energy billing and backroom software.
17. Bloom agrees not to participate or help in any way in any
shareholder action adverse to Commonwealth, including but not
limited to a hostile takeover or proxy contest or merger.
18. Bloom agrees to the terms of the Accommodation Agreement and he
makes no claims now or in the future to the shares encompassed in
that Accommodation Agreement and he agrees to release the 1.2
million shares that have been transferred to Commonwealth per the
terms of the Accommodation Agreement.
19. Bloom agrees that all agreements under this Settlement Agreement,
including but not limited to the Severance Agreement and
Employment Agreement, are terminated.
20. Bloom will agree not to disclose any intellectual property
belonging to or developed by Commonwealth, including but not
limited to Triumph software and agrees not to use any
confidential information learned from Commonwealth in connection
with any competing entity.
21. All pending motions, depositions, etc. shall be taken off
calendar and a stay agreed to until such time as the court
approves or disapproves the settlement agreement.
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22. Mutual return of all subpoenaed documents and documents exchanged
in discovery.
23. Commonwealth will pay $7,190,000 in full settlement of this
matter as designated by Bloom. Of that amount, Commonwealth is
paying $4,790,000 in damages. The remaining $2,400,000 is paid by
Commonwealth to purchase 1,175,160 shares of Bloom's stock. The
parties agree that the remaining shares held by Bloom - 4,720,000
shares - are void.
24. The parties agree to file dismissals of their respective
complaints with prejudice after the settlement funds are in
Bloom's account.
25. In the event of any disputes under this agreement the prevailing
party will be entitled to the payment of its attorney's fees.
26. The Settlement Agreement terms are subject to a final vote of the
Board of Directors of Commonwealth Energy, which is scheduled for
Monday, August 13, 2001. The Directors signing this agreement
will recommend approval and a vote in favor. By entering into
this agreement neither party admits any wrongdoing or liability.
27. The parties intend to seek court approval of the settlement
agreement within one week of today's date. If the parties cannot
agree or any subsequent settlement agreement, either party may
enforce the terms of this agreement.
Dated: August 10, 2001 /s/ Xxxx Xxxxx
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Xxxxxxxx Xxxxx
Individually and for Bloom Family Trust
Dated: August 10, 2001 /s/ Xxxxxxx Xxxxx
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Xxxxxxx Xxxxx
Individually and for Bloom Family Trust
Dated: August 10, 2001 /s/ Xxxxxxx X. Xxxxx
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Xxxxxxx Xxxxx
for Commonwealth Energy Corporation, et al.
Dated: August 10, 2001 /s/ Xxxxxx Xxxxxxx
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Xxxxxx X. Xxxxxxx
for Commonwealth Energy Corporation, et al.
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