INDEMNIFICATION AGREEMENT
Exhibit
99.2
This
Indemnification Agreement (this “Agreement”) is made and entered into on January
23, 2008, and is effective as of January 28, 2008, by and between Commerce
Energy Group, Inc., a Delaware corporation (the “Corporation”), and C. Xxxxxxx
Xxxxxxxx, an individual (“Indemnitee”).
Recitals
A. Indemnitee
performs a valuable service to the Corporation in his capacity as an 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 serve as an 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 8hereof.
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.
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(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, a breach of Indemnitee’s
duties of professional responsibility to the Corporation by accepting any
subsequent employment as an attorney for any person, firm or entity that is
adverse to the Corporation, as this term is used in the rules of professional
conduct governing attorneys licensed to practice in California, unless the
Corporation has consented to such employment in advance, 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;
(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
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(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. Afternotice
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.
10. Non
Exclusivity of Rights. The
rights conferred on Indemnitee by this Agreement shall not be
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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 Delawarefor
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.
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:
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(a)
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If
to Indemnitee,
to:
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C.
Xxxxxxx
Xxxxxxxx
Xxxxx,
LLC
0000
Xxxx Xxxxxx, 0xx Xxxxx, Xxxxxx, XX
00000
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(b)
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If
to the Corporation,
to:
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000
Xxxxx Xxxxxxxxx,
Xxxxx 0000
Xxxxx
Xxxx, XX 00000
Attn:
Chief Executive
Officer
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or
to such other address(es) as may have
been furnished to/by Indemnitee to/by the Corporation.
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IN
WITNESS WHEREOF, the parties hereto
have duly executed this Indemnification Agreement as of the day and year first
above written.
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“Indemnitee”
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/s/
C. XXXXXXX
XXXXXXXX
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C.
Xxxxxxx
Xxxxxxxx
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“Corporation”
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COMMERCE
ENERGY
GROUP, INC., a
Delaware corporation
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By:
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/s/
XXXXXX X.
BOSS
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Name:
Xxxxxx X.
Boss
Title: Chief
Executive Officer
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