Exhibit 99.3
VOTING AND STANDSTILL AGREEMENT
This Voting and Standstill Agreement, dated November 17, 2005
("Agreement"), is entered into by and between Xxxxx Xxxxxxx (the "Stockholder")
and Commerce Energy Group, Inc., a Delaware corporation ("Commerce").
RECITALS
WHEREAS, as of the date hereof, the Stockholder and Commerce are entering
into a Settlement Agreement and General Release (the "Settlement Agreement") in
connection with the Stockholder's resignation as an employee and an officer of
Commerce and any of its parents, direct or indirect subsidiaries, Affiliates,
divisions or related entities (collectively referred to herein as "Commerce and
its Related Entities");
WHEREAS, the execution and delivery of this Agreement in form and substance
satisfactory to Commerce, with respect to certain voting, standstill and other
matters is a material inducement to Commerce's willingness to enter into the
Settlement Agreement.
NOW THEREFORE, in consideration of the premises and the mutual covenants
herein set forth, the parties agree as follows:
ARTICLE 1
SHARES SUBJECT TO AGREEMENT
The shares of common stock, par value $0.001 per share, of Commerce
("Common Stock") subject to this Agreement are all shares of Common Stock
beneficially owned as of the date of this Agreement, together with any other
shares of voting capital stock of Commerce acquired by the Stockholder after the
date of this Agreement, whether pursuant to the exercise of any convertible
security beneficially held by the Stockholder or otherwise (collectively
referred to herein as the "Shares").
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDER
The Stockholder represents and warrants to Commerce as follows:
2.1 Authorization, etc. The Stockholder has the requisite power, authority
and legal capacity to execute, deliver and perform and to consummate the
transactions contemplated by this Agreement. The Stockholder has duly executed
and delivered this Agreement. This Agreement constitutes the legal, valid and
binding obligations of the Stockholder, enforceable against the Stockholder in
accordance with its terms, except as such enforcement may be limited by any
applicable bankruptcy, insolvency, moratorium or similar law affecting
creditors' rights generally.
2.2 No Conflicts; Consents. The execution, delivery and performance by the
Stockholder of this Agreement and the consummation of the transactions
contemplated by this Agreement do not conflict with, contravene, result in a
violation or breach of or default under (with or without the giving of notice or
the lapse of time or both), or give rise to a claim or right of termination,
amendment, modification, vesting, acceleration or cancellation of any right or
obligation or loss of any material benefit under any Law applicable to the
Stockholder or any material contract, agreement, or instrument to which the
Stockholder is a party. No Consent of any Governmental Authority or other person
is required to be obtained by the Stockholder in connection with the execution
and delivery by the Stockholder of this Agreement.
2.3 The Shares. The Stockholder has the sole right to vote the Shares held
by him, and none of the Shares is subject to any agreement, arrangement or
restriction with respect to the voting of such Shares, except as contemplated by
this Agreement or by the Settlement Agreement and the transactions contemplated
thereby. Commerce acknowledges and agrees that certain of the Shares are held in
escrow by Paul, Hastings, Xxxxxxxx & Xxxxxx LLP, which Shares are to be released
as of the date of this Agreement, and such Shares are to be sold to Commerce or
certain of its directors as described in the Settlement Agreement.
ARTICLE 3
COVENANTS OF THE STOCKHOLDER
3.1 Voting for Directors of Commerce. From the date of this Agreement and
continuing until October 9, 2007 (the "Termination Date"), the Stockholder
hereby agrees that, at any meeting of the stockholders of Commerce, however
called, or in connection with any written consent of the stockholders of
Commerce, the Stockholder shall vote (or cause to be voted) the Shares in favor
of the directors nominated by the Board of Directors of Commerce (the "Board")
in any election of directors of Commerce. On matters not involving the election
of directors of the Board, the Stockholder agrees as follows: (a) subject to
this Agreement, to vote all shares of voting capital stock of Commerce held by
him in the manner recommended by the Board to the other stockholders of
Commerce; (b) not to call or support anyone else in seeking to call, any special
meeting of stockholders of Commerce, or encourage any other Person to do so; (c)
not to seek to remove or support anyone else in seeking to remove, without
cause, any members of the Board, or encourage any other Person to do so; (d) not
to submit or support anyone else in seeking to submit any shareholder proposal
as defined under Regulation 14A promulgated under the Securities Exchange Act of
1934, as amended; and (e) not to publicly announce that the Stockholder is
seeking a waiver of any of the provisions of this Section 3.1. The Stockholder
also agrees not to nominate or recommend a candidate for election to the Board.
The Stockholder will cause its respective Affiliates (excluding Commerce and its
Related Entities) to be bound by the provisions of this Section 3.1.
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3.2 Standstill. From the date of this Agreement and continuing until the
Termination Date, except pursuant to a negotiated transaction approved by the
Board, the Stockholder and its Affiliates will not, in any manner, directly or
indirectly:
(a) make, effect, initiate, cause or participate in (A) any
acquisition of beneficial ownership of any securities of Commerce and its
Related Entities, (B) any acquisition of any assets of Commerce and its Related
Entities, (C) any tender offer, exchange offer, merger, business combination,
recapitalization, restructuring, liquidation, dissolution or extraordinary
transaction involving Commerce and its Related Entities, or involving any
securities or assets of Commerce and its Related Entities or (D) any
"solicitation" of "proxies" (as those terms are used in the proxy rules of the
Securities and Exchange Commission) or consents with respect to any securities
of Commerce;
(b) form, join or participate in a "group" (as defined in the
Securities Exchange Act of 1934, as amended, and the rules promulgated
thereunder), pooling agreement, syndicate or voting trust with respect to the
beneficial ownership of any securities of Commerce, or otherwise act in concert
with another stockholder of securities of Commerce for the purpose of acquiring,
holding, voting or disposing of Commerce's securities;
(c) act, alone or in concert with others, to seek to control or
influence the management, Board or policies of Commerce;
(d) take any action which might force Commerce to make a public
announcement regarding any of the types of matters set forth in clause "(a)" of
this sentence;
(e) request or propose that Commerce (or its directors, officers,
employees or agents), directly or indirectly, amend or waive any provision of
this Section 3.2, including this subsection (e);
(f) agree or offer to take, or encourage or propose (publicly or
otherwise) the taking of, any action referred to in clauses "(a)", "(b)", "(c)",
"(d)" or "(e)" of this sentence;
(g) assist, induce or encourage any other Person to take any action
referred to in clauses "(a)", "(b)", "(c)", "(d)" or "(e)" of this sentence;
(h) enter into any discussions or arrangements with any third party
with respect to the taking of any action referred to in clauses "(a)", "(b)",
"(c)", "(d)" or "(e)" of this sentence; or
(i) vote any capital stock of Commerce in favor of, or initiate,
propose or otherwise solicit stockholders of Commerce for the approval of one or
more stockholder proposals or induce or attempt to induce any other individual,
firm, corporation, partnership, or other entity to initiate any stockholder
proposal.
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3.3 Restrictions on Resale; Lockup Agreements. From the date hereof and
continuing until the Termination Date, except as provided in the Settlement
Agreement, Stockholder shall not sell or transfer the Shares other than in the
manner required by, and subject to all other limitations of, Rule 144 under the
Securities Act of 1933, as amended ("Rule 144"), as would be applicable to
"affiliates" of Commerce (as defined in Rule 144). In addition, Stockholder
agrees to enter into any lock-up agreement with respect to the Shares to the
extent that the executive officers (as defined under the Securities Exchange Act
of 1934, as amended) of Commerce enter into such lock-up agreements.
3.4 Further Actions and Assurances. From the date hereof and continuing
until the Termination Date, the Stockholder shall use all reasonable efforts to
take, or cause to be taken, all actions, and to do, or cause to be done, and to
assist and cooperate with Commerce in doing, all things necessary, proper or
advisable to consummate and make effective the transactions contemplated by this
Agreement. The Stockholder is entering into this Agreement solely in its
capacity as the record holder or beneficial owner of the Shares.
3.5 Restrictive Legend. The Stockholder agrees, within 30 days after the
date hereof, to surrender to an agent of Commerce, the certificate or
certificates representing the Shares, for the sole purpose of the agent affixing
thereto an appropriate legend, which will include, without limitation, the
following language:
"THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A VOTING
AND STANDSTILL AGREEMENT, DATED NOVEMBER 17, 2005. A COPY OF SUCH
VOTING AND STANDSTILL AGREEMENT WILL BE FURNISHED TO THE RECORD HOLDER
OF THIS CERTIFICATE WITHOUT CHARGE UPON WRITTEN REQUEST TO THE COMPANY
AT ITS PRINCIPAL PLACE OF BUSINESS."
3.6 Continuing Disclosure. The Stockholder covenants that it shall promptly
advise Commerce with respect to any matter hereafter arising or discovered that,
if existing or known at the date of this Agreement, would have caused a
statement made herein to be untrue, or that constitutes a breach or prospective
breach of this Agreement.
3.7 Specific Performance. The Stockholder acknowledges and agrees that (a)
the covenants, obligations and agreements of the Stockholder contained in this
Agreement relate to special, unique and extraordinary matters and (b) a
violation of any of the terms of such covenants, obligations or agreements will
cause Commerce irreparable injury for which adequate remedies are not available
at law. Therefore, the Stockholder agrees that Commerce shall be entitled to an
injunction, restraining order or such other equitable relief (without the
requirement to post bond) as a court of competent jurisdiction may deem
necessary or appropriate to restrain the Stockholder from committing any
violation of such covenants, obligations or agreements or to enforce
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specifically terms and provisions hereof. These injunctive remedies are
cumulative and in addition to any other rights and remedies Commerce may have.
ARTICLE 4
GENERAL PROVISIONS
4.1 Fees and Expenses. Except as contemplated by this Agreement, all costs
and expenses incurred in connection with this Agreement and the consummation of
the transactions contemplated hereby shall be paid by the party incurring such
expenses.
4.2 Severability. If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated. It is hereby stipulated and
declared to be the intention of the parties that they would have executed the
remaining terms, provisions, covenants and restrictions without including any of
such which may be hereafter declared invalid, void or unenforceable.
4.3 Entire Agreement. This Agreement (including the documents set forth in
any Schedules hereto) contains the entire understanding of the parties with
respect to the transactions contemplated hereby.
4.4 Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement, and
shall become effective when one or more of the counterparts have been signed by
each party and delivered to the other parties, it being understood that all
parties need not sign the same counterpart.
4.5 Notices. All notices, consents, requests, instructions, approvals 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:
Commerce:
000 Xxxxx Xxxx.
Xxxxx 0000
Xxxxx Xxxx, Xxxxxxxxxx 00000
Attention: Chief Executive Officer
Phone: 000-000-0000
Fax: 000-000-0000
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with a copy to:
Paul, Hastings, Xxxxxxxx & Xxxxxx LLP
000 Xxxx Xxxxxx Xxxxx
Xxxxxxxxxxx Xxxxx
Xxxxx Xxxx, Xxxxxxxxxx 00000
Attention: Xxxx X. Xxxxx Xxxxxx, Esq.
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
the Stockholder:
Xxxxx Xxxxxxx
12136 Skyline
Xxxxx Xxx, Xxxxxxxxxx 00000
Facsimile: (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.
4.6 Amendments; Waivers, etc. No amendment, modification or discharge of
this Agreement, and no waiver hereunder, shall be valid or binding unless set
forth in writing and duly executed by the party against whom enforcement of the
amendment, modification, discharge or waiver is sought. Any such waiver shall
constitute a waiver only with respect to the specific matter described in such
writing and shall in no way impair the rights of the party granting such waiver
in any other respect or at any other time. Neither the waiver by any of the
parties hereto of a breach of or a default under any of the provisions of this
Agreement, nor the failure by any of the parties, on one or more occasions, to
enforce any of the provisions of this Agreement or to exercise any right or
privilege hereunder, shall be construed as a waiver of any other breach or
default of a similar nature, or as a waiver of any of such provisions, rights or
privileges hereunder. The rights and remedies of any party based upon, arising
out of or otherwise in respect of any inaccuracy or breach
of any representation, warranty, covenant or agreement or failure to fulfill any
condition shall in no way be limited by the fact that the act, omission,
occurrence or other state of facts upon which any claim of any such inaccuracy
or breach
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is based may also be the subject matter of any other representation, warranty,
covenant or agreement as to which there is no inaccuracy or breach.
4.7 Cooperation. The Stockholder and Commerce agree to take, or cause to be
taken, all such further or other actions as shall reasonably be necessary to
make effective and consummate the transactions contemplated by this Agreement.
4.8 Successors and Assigns. All covenants and agreements contained herein
shall bind and inure to the benefit of the parties hereto and their respective
successors and assigns.
4.9 Governing Law. This Agreement, and the rights of the parties hereto,
shall be governed by and construed in accordance with the laws of the State of
California as such laws apply to agreements among California residents made and
to be performed entirely within the State of California.
4.10 Venue. The parties hereby agree that all actions or proceedings
arising directly or indirectly hereunder, whether instituted by the Executive or
Commerce and its Related Entities, shall be litigated in courts having situs
within the State of California, County of Orange, and the each of the parties
hereby expressly consents to the jurisdiction of any local, state or federal
court located within said state and county, and consent that any service of
process in such action or proceeding may be made by personal service upon the
parties wherever such parties may be located, respectively, or by certified or
registered mail directed to the Executive at his/its last known address. The
parties hereby waive any objection based on forum non conveniens and any
objection to venue of any action instituted hereunder.
4.11 Waiver of Jury Trial. EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY
CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE
COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH PARTY HEREBY IRREVOCABLY
AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN
RESPECT OR ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO
THIS AGREEMENT, OR THE BREACH, TERMINATION OR VALIDITY OF THIS AGREEMENT, OR THE
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH PARTY CERTIFIES AND
ACKNOWLEDGES THAT (i) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY
HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE
EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (ii) EACH SUCH PARTY
UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (iii) EACH SUCH
PARTY MAKES THIS WAIVER VOLUNTARILY, AND (iv) EACH SUCH PARTY HAS BEEN INDUCED
TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION 4.11.
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ARTICLE 5
DEFINITIONS
5.1 For purposes of this Agreement, unless otherwise specified in the
Agreement, the following terms shall have the following meanings:
Affiliate: the "Affiliate" of a Person shall mean any other Person that
directly or indirectly through one or more intermediaries controls, is
controlled by, or is under common control with such Person.
Agreement: is defined in the introductory paragraph to this Agreement.
Board: is defined in Section 3.1 of this Agreement
Commerce and its Related Entities: is defined in the recitals to this
Agreement.
Common Stock: is defined in the recitals to this Agreement.
Consent: any consent, approval, waiver, agreement, license, or report or
notice to, any Person.
Governmental Approval: means any consent, approval, authorization, waiver,
permit, concession, franchise, agreement, license, exemption or order of,
declaration or filing with, or report or notice to, any Governmental Authority.
Governmental Authority: means any federal, state, local or foreign court,
legislative, executive or regulatory authority or agency.
Law: all applicable provisions of all (a) constitutions, treaties,
statutes, laws (including the common law), codes, rules, regulations, ordinances
or orders of any Governmental Authority, (b) Governmental Approvals and (c)
orders, decisions, injunctions, judgments, awards and decrees of or agreements
with any Governmental Authority.
Person: any individual, partnership, joint venture, corporation, limited
liability company, trust, unincorporated organization, government or department
or agency of a government.
Securities Act: the Securities Act of 1933, as amended.
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IN WITNESS WHEREOF, the Stockholder and Commerce have caused this Agreement
to be duly executed with effect from the day and year first above written.
COMMERCE ENERGY GROUP, INC.
By: /S/ XXXXXX X. BOSS
---------------------------------
Xxxxxx X. Boss
Chief Executive Officer
/S/ XXXXX XXXXXXX
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XXXXX XXXXXXX
[Signature page to Voting Agreement]
