Exhibit 99.7
AGREEMENT AND RELEASE
This Agreement AND RELEASE ("Agreement") is made and entered into as
of November 17, 2005, by and among Commerce Energy Group, Inc., a Delaware
corporation ("Commerce"), Commerce Energy, Inc., formerly known as Commonwealth
Energy Corporation, a California corporation ("Commonwealth"), Paul, Hastings,
Janofsky & Walker LLP, a California limited liability partnership ("Paul
Hastings"), and the following individuals: Mr. Eric Alam, Mr. Bruno Kvetinskas,
Mr. Greg Lander and Mr. Peter Weigand (collectively, the "Skipping Stone
Stockholders," and each a "Skipping Stone Stockholder"). Capitalized terms used
in this Agreement and not otherwise defined herein shall have the meaning given
to them in the Merger Agreement (as defined below).
RECITALS
A. Commonwealth, Skipping Stone Acquisition Corporation, a Delaware
corporation and wholly owned subsidiary of Commonwealth ("Merger Sub"), Skipping
Stone Inc., a Delaware corporation ("Skipping Stone") and the Skipping Stone
Stockholders entered into an Agreement and Plan of Merger dated as of March 29,
2004 (the "Merger Agreement") pursuant to which Merger Sub was merged with and
into Skipping Stone, and the Surviving Corporation was a wholly owned subsidiary
of Commonwealth.
B. The Merger Agreement required, as a condition to the merger of Merger
Sub with and into Skipping Stone (the "Merger"), the establishment of an escrow
account into which each Skipping Stone Stockholder placed for the benefit of
Commonwealth twenty percent (20%) of the aggregate number of Merger Shares to
which he was entitled.
C. The escrow account was intended to be established pursuant the form of
Escrow Agreement attached to the Merger Agreement as Exhibit C (the "Form Escrow
Agreement").
D. The parties were unable to agree upon an escrow agent for the escrow
account. Accordingly, the Form Escrow Agreement was never fully executed.
E. Subsequent to the completion of the Merger, pursuant to the Agreement
and Plan of Merger by and among Commerce, Commonwealth and CEGI Acquisition
Corp. (the "Reorganization"), each outstanding share of common stock of
Commonwealth, including all of the Escrow Shares, was automatically converted
into shares of common stock of Commerce.
F. Paul Hastings has held the Escrow Shares (as defined in the Form Escrow
Agreement) as de facto escrow agent in accordance with the terms of the Form
Escrow Agreement.
G. The parties now desire to have the Escrow Shares released in accordance
with the terms of the Form Escrow Agreement as modified, altered and
supplemented by this Agreement.
AGREEMENT
The parties hereby agree as follows:
SECTION 1. RELEASE OF ESCROW SHARES
1.1 The parties agree that 322,215 of the Escrow Shares shall be
released from the Escrow Account to the Skipping Stone Stockholders in
accordance with Exhibit A attached hereto.
1.2 Paul Hastings shall within five (5) business days of the date
hereof release 322,215 of the Escrow Shares from the Escrow Account to the
Skipping Stone Stockholders in accordance Exhibit A.
SECTION 2. LIMITATION OF PAUL HASTINGS' LIABILITY
2.1 Paul Hastings undertakes to perform such duties as are
specifically set forth in this Agreement only and shall have no duty under any
other agreement or document, and no implied covenants or obligations shall be
read into this Agreement against Paul Hastings. Paul Hastings shall incur no
liability with respect to any action taken by it or for any inaction on its part
in reliance upon any notice, direction, instruction, consent, statement or other
document believed by it in good faith to be genuine and duly authorized, nor for
any other action or inaction except for its own gross negligence or willful
misconduct. In all questions arising under this Agreement, Paul Hastings may
rely on the advice of counsel, and for anything done, omitted or suffered in
good faith by Paul Hastings based upon such advice, Paul Hastings shall not be
liable to anyone. In no event shall Paul Hastings be liable for incidental,
punitive or consequential damages.
2.2 Commerce hereby agrees to indemnify Paul Hastings and its
partners, employees and agents for, and hold it and them harmless against, any
loss, liability or expense incurred without gross negligence or willful
misconduct on the part of Escrow Agent, arising out of or in connection with
Paul Hastings carrying out its duties hereunder. This right of indemnification,
compensation and reimbursement shall survive the termination of this Agreement,
and the resignation of Paul Hastings.
SECTION 3. STATUS OF FORM ESCROW AGREEMENT. Except as modified, altered and
supplemented by this Agreement, the parties agree to be bound by the terms of
the Form Escrow Agreement, which is hereby incorporated herein by reference.
SECTION 4. RELEASE BY SKIPPING STONE STOCKHOLDERS. Except as otherwise
expressly provided in this Agreement each of the Skipping Stone Stockholders,
their heirs, executors, administrators, assigns, affiliates, successors and
agents (collectively, the "Skipping Stone Stockholders' Affiliates") hereby
fully and without limitation release and forever discharge 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"), 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,
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which any of the Skipping Stone Stockholders or any of the Skipping Stone
Stockholders' Affiliates have or may have or may claim to have against the
Commerce Releasees by reason of any matter, cause, or thing related to or
arising in connection with the Merger Agreement and any other document or
agreement referenced in the Merger Agreement, including the Form of Escrow
Agreement attached thereto (the "Skipping Stone Agreements"), to the maximum
extent permitted by law.
SECTION 5. RELEASE REGARDING THE ESCROW SHARES. Except as otherwise
expressly provided in this Agreement, Commerce and its Related Entities hereby
fully and without limitation release and forever discharge the Skipping Stone
Stockholders and the Skipping Stone Stockholders' Affiliates, 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
Commerce and its Related Entities have or may have or may claim to have against
any of the Skipping Stone Stockholders or any of the Skipping Stone
Stockholders' Affiliates by reason of any matter, cause, or thing related to or
arising in connection with the Post-Closing True Up, as defined in the Merger
Agreement, to the maximum extent permitted by law.
[Signature page to follow.]
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IN WITNESS WHEREOF, the undersigned have executed, or have caused to
be executed, this Agreement on the date first written above.
COMMERCE ENERGY, INC.
By: /S/ STEVEN S. BOSS
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Name: Steven S. Boss
Title: President
COMMERCE ENERGY GROUP, INC.
By: /S/ STEVEN S. BOSS
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Name: Steven S. Boss
Title: Chief Executive Officer
PAUL, HASTINGS, JANOFSKY & WALKER LLP
By: /S/ JOHN F. DELLA GROTTA
------------------------------------
Name: John F. Della Grotta
Title: Partner
MR. GREG LANDER
/S/ GREG LANDER
-----------------------------------
Greg Lander
MR. ERIC ALAM
/S/ ERIC ALAM
-----------------------------------
Eric Alam
MR. BRUNO KVETINSKAS
/S/ BRUNO KVETINSKAS
-----------------------------------
Bruno Kvetinskas
MR. PETER WEIGAND
/S/ PETER WEIGAND
-----------------------------------
Peter Weigand
EXHIBIT A
RELEASE OF ESCROW SHARES TO THE SKIPPING STONE STOCKHOLDERS
SHARES HELD IN ESCROW ACCOUNT
AND TO BE RELEASED TO
SKIPPING STONE STOCKHOLDER STOCKHOLDER
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Eric Alam 34,985
Bruno Kvetinskas 33,295
Gregory Lander 36,199
Peter Weigand 217,736
A-1