(b)
On
January 25, 2008, J. Robert Hipps, the Company’s principal financial officer,
tendered his resignation as Interim Chief Financial Officer and Secretary
of
Commerce Energy Group, Inc. (the “Company”), effective January 28,
2008. Mr. Hipps also tendered his resignation as an officer and
director of each of the Company’s subsidiaries to which he served in such
capacities, also effective January 28, 2008. Mr. Hipps agreed to
remain with the Company in a transitional consultant role through January
30,
2008.
(c)
On January 25, 2008, the Board of
Directors of the Company (the “Board”) appointed C. Douglas Mitchell as the
Interim Chief Financial Officer and Secretary of the Company and designated
him
as the Company’s “principal financial officer” for purposes of all filings with
the U.S. Securities and Exchange Commission (the “SEC”) under the Securities Act
of 1933, as amended, and the Securities Exchange Act of 1934, as amended,
effective January 28, 2008. Mr. Mitchell also will serve as Interim
Chief Financial Officer and as a director of the Company’s wholly-owned
subsidiaries, Commerce Energy, Inc. and Skipping Stone Inc.
Mr.
Mitchell, 57, is a partner of Tatum,
LLC (“Tatum”), an
executive
services and consulting firm
. He has been a partner
with
Tatum since 2004. Mr. Mitchell intends to remain a Tatum partner
while he serves as Interim Chief Financial Officer and Secretary of the
Company. Mr. Hipps also was a partner of Tatum.
Mr.
Mitchell’s prior experience while at
Tatum includes serving from September 2007 to January 2008 as the Interim
Chief
Financial Officer at Nexiant, Inc., a provider of inventory management products;
from April 2007 to August 2007 as Interim Chief Financial Officer at Performance
Team Freight Systems, Inc., a logistics and transportation company; from
September 2006 to March 2007, as Vice President and Acting Chief Financial
Officer for Borland Software Corporation., a software company listed on the
NASDAQ Global Market; from March 2006 to July 2006, as a consultant for
Macquarie Infrastructure Co. Trust, a subsidiary of a New York Stock Exchange
company; from October 2004 to February 2006, as Interim Chief Financial Officer
for eTelecare Global Solutions, Inc., a multi-national call center; and from
May
2004 to October 2004, as Interim Chief Financial Officer of the west coast
division of Antioch University. Mr. Mitchell also served as Chief
Financial Officer for Chicago Pizza & Brewery, Inc., a multi-location
restaurant enterprise listed on the NASDAQ Global Market from 2002 to
2004.
Earlier
in his career, Mr. Mitchell
served as Senior Audit Manager at Coopers & Lybrand. He also has
been Senior Vice President of Geneva Corporation, a mergers and acquisitions
firm then owned by Chemical Bank, from 1987 to 1990. Mr. Mitchell
earned a Bachelor of Science degree in Business Administration from the
University of Southern California. He received his CPA certification
in California.
Mr.
Mitchell was not selected pursuant
to any arrangement or understanding between Mr. Mitchell and any other
person. There are no family relationships between Mr. Mitchell and
the directors or executive officers of the Company.
On
January 23, 2008, the Company executed an Interim Executive Services Agreement
(the “Interim Services Agreement”) dated January 14, 2008 with Tatum to engage
Mr. Mitchell as Interim Chief Financial Officer. The Interim Services
Agreement sets forth the conditions under which services will be
provided. Under the terms of such agreement, Mr. Mitchell will become
an employee of the Company, subject to the supervision and direction of the
chief executive officer and the board of directors of the
Company. Tatum will have no control or supervision over Mr. Mitchell
as long as he is performing services under the Interim Services
Agreement.
Pursuant
to the Interim Services Agreement, the Company will pay $37,500 per month
(the
“Fee”) under the Interim Services Agreement, 70% of which will be paid directly
to Mr. Mitchell as a salary through the Company’s payroll system and 30% of
which will be paid to Tatum. The Interim Services Agreement also
provides that if, during Mr. Mitchell’s service to the Company, the Company
institutes a cash or equity based retention or similar plan, Mr. Mitchell
will
be entitled to be included in such plan on a basis consistent with senior
management, on either an equity, or at the Company’s option, cash-equivalent
basis. The term of the Interim Services Agreement will be for a
minimum period of three (3) months unless the Agreement is terminated sooner
pursuant to its terms. The Interim Agreement provides an option for
the Company to hire Mr. Mitchell on a permanent basis upon entering into
another
form of agreement with Tatum which will provide for the payment of additional
placement fees to Tatum.
In
connection with entering into the Interim Services Agreement, the Company
entered into its standard form of Indemnification Agreement with Mr.
Mitchell.
The
foregoing description of the Interim Services Agreement is only a summary,
is
not complete and is qualified in its entirety by reference to the actual
Interim
Services Agreement, which is attached hereto as Exhibit 99.1 and is incorporated
by reference herein. A copy of the Indemnification Agreement is
attached hereto as Exhibit 99. 2 and is incorporated by reference
herein.
On
January 29, 2008, the Company issued a press release announcing the resignation
of Mr. Hipps and the appointment of Mr. Mitchell as the Interim Chief Financial
Officer and Secretary of the Company. A copy of the Press Release is
attached hereto as Exhibit 99.3 and is incorporated by reference
herein.