Document:

exv10w53

 

Exhibit 10.53

AMENDMENT NO. 1 TO EMPLOYMENT AGREEMENT

          
AMENDMENT NO. 1 TO EMPLOYMENT AGREEMENT, dated October 5, 2007 (this “Amendment”), to the
Employment Agreement, dated as of March 26, 2007 (the “Agreement”), by and between COMMERCE ENERGY
GROUP, INC., a Delaware corporation, on behalf of itself and any and all of its subsidiaries
(together, the “Company”), and ERIK A. LOPEZ, SR. (the “Executive”).

RECITALS

          A. The parties have entered into the Agreement;

          B. Section 5(d) of the Agreement permits the Executive to terminate the Agreement for Good
Reason; and

          C. Pursuant to and in accordance with Section 15 of the Agreement, the parties wish to amend
the definition of Good Reason in Section 5(d) of the Agreement to satisfy the definition of
“involuntary separation from service” in Treasury Regulation Section 1.409A-1(n).

AGREEMENT

          In consideration of the rights and obligations contained herein, and for other good and
valuable consideration, the adequacy of which is hereby acknowledged, the parties agree as follows:

          Section 1. Good Reason. Section 5(d) of the Agreement is hereby amended and restated
in its entirety to read:

          (d) Resignation for Good Reason. Executive may terminate this Agreement for
Good Reason (as defined in this Agreement) by giving written notice to the Company of such
termination, which termination will become effective on the 30th day following
receipt. As used in this Agreement, “Good Reason” shall mean any one of the following
events, provided that Executive gives the Company written notice specifying the event or
condition constituting Good Reason no later than one-hundred eighty (180) days after the
initial occurrence of the event or condition, and the Company has failed to cure the event
or condition within (30) days of receiving Executive’s written notice: (A) material
reduction in Executive’s base compensation, except as part of a general change in base
compensation for all similarly situated executives; or (B) any failure by the Company to
comply with a material provision of this Agreement. In the event of resignation for Good
Reason, Executive will be entitled to the benefits set forth in subsection (a) above in the
event of termination by the Company without Cause, on the same conditions that apply to
those benefits, specifically including, but not limited to, the signing of the separation
agreement and general release document, attached as Exhibit C.

          Section 2. Separation Agreement and General Release. Exhibit C to the Agreement is
hereby deleted in its entirety and replaced with Exhibit A hereto.

 

 

          Section 3. Effect of Amendment. Upon effectiveness of this Amendment, each reference
in the Agreement to “this Agreement,” “hereunder,” “hereof” or words of like import referring to
the Agreement shall mean and be a reference to the Agreement, as amended by this Amendment. Except
as specifically amended by this Amendment, the Agreement is and shall continue to be in full force
and effect and is in all respects ratified and confirmed. The execution, delivery and
effectiveness of this Amendment shall not, except as expressly provided herein, operate as a waiver
of any right, power or remedy of any party under the Agreement, as amended by this Amendment.
Capitalized terms not otherwise defined herein have the meanings set forth in the Agreement.

          Section 4. Incorporation by Reference. The provisions of Sections 7 (Interpretation,
Governing Law and Exclusive Forum), 9 (Severability), 10 (Successors and Assigns), 11 (Notices), 13
(Dispute Resolution), 14 (Representations), 15 (Amendments and Waivers), 16 (Golden Parachute
Limitation), 18 (Withholding Taxes) and 19 (Counterparts) of the Agreement shall be incorporated
into this Amendment, mutatis mutandis, as if references to “this Agreement” in the Agreement were
references to “this Amendment” in this Amendment.

          Section 5. Entire Agreement. All oral or written agreements or representations,
express or implied, with respect to the subject matter of the Agreement, as amended by this
Amendment, are set forth in the Agreement, as amended by this Amendment.

[remainder of page intentionally left blank; signatures appear on following page(s)]

2

 

          IN WITNESS WHEREOF, the undersigned have executed, or have caused to be executed, this
Amendment on the date first above written.

	 	 	 	 	 
	 	“Company”

COMMERCE ENERGY GROUP, INC.

 	 
	 	By:  	/s/ Steven S. Boss	 
	 	 	Name:  	Steven S. Boss 	 
	 	 	Title:  	Chief Executive Officer
 	 
	 

	 	 	 	 	 
	 

	 	“Executive”
	 	 
	 
	 	 	 	 
	 
	 	/s/ Erik A. Lopez, Sr.	 	 
	 

	 	 	 	 
	 

	 	ERIK A. LOPEZ, SR.	 	 

[Signature Page to Amendment No. 1 to Employment Agreement]

 

 

Exhibit A

SEPARATION AGREEMENT AND GENERAL RELEASEexv10w57

 

Exhibit 10.57

SEPARATION AGREEMENT AND GENERAL RELEASE

     This Separation Agreement and General Release (this “Agreement”) is hereby entered into by and
between Erik A. Lopez, Sr., an individual (the “Executive”), and Commerce Energy Group, Inc., a
Delaware corporation, on behalf of itself and all of its subsidiaries (collectively, the
“Company”).

Recitals

     A. The Executive has been employed by the Company pursuant to an Employment Agreement by and
between the Company and the Executive effective as of March 26, 2007, as amended by Amendment No.
1 dated as of October 5, 2007 (the “Employment Agreement”), serving as Senior Vice President and
General Counsel of the Company;

     B. On September 4, 2007, the Executive voluntarily tendered his resignation as Senior Vice
President and General Counsel of the Company; and

     C. The Executive’s employment with the Company and any of its parents, direct or indirect
subsidiaries, affiliates, divisions or related entities (collectively referred to herein as the
“Company and its Related Entities”) will be ended on the terms and conditions set forth in this
Agreement.

Agreement

     In consideration of the mutual promises contained herein and for other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereby agree
as follows:

          1. Effective Date. This Agreement shall be effective on October 5, 2007 (the
“Effective Date”).

          2. End of Employment. The Executive confirms that he voluntarily tendered his
resignation as Senior Vice President and General Counsel of the Company on September 4, 2007, and
the Executive hereby resigns from each and every other position he held with the Company and its
Related Entities, including as an employee, officer and/or director of each of its Related
Entities, effective on October 5, 2007, and the Executive’s employment with the Company and its
Related Entities has ended or will end, effective as of 5:00 p.m. PDT, on October 5, 2007 (the
“Termination Date”).

          3. Continuation of Benefits After the Termination Date. Except as expressly provided
in this Agreement or in the plan documents governing the Company’s employee benefit plans, after
the Termination Date, the Executive will no longer be eligible for, receive, accrue, or participate
in any other benefits or benefit plans provided by the Company and its Related Entities, including,
without limitation, medical, dental and life insurance benefits, and the Company’s 401(k)
retirement plan; provided, however, that nothing in this Agreement shall waive the Executive’s
right to any vested amounts in the Company’s 401(k) retirement plan, which amounts shall be handled
as provided in the plan.

 

 

          4. COBRA Benefits. The Executive shall have the right to continue coverage under the
Company’s group medical, dental and vision plans at his own expense in accordance with the
provisions of COBRA.

          5. Normal Salary Through Termination Date. Within one business day after the
Termination Date, the Company shall pay the Executive the prorated portion of his salary earned
through the Termination Date, and for all accrued, unused vacation days.

          6. Severance Payments. In return for the Executive’s promises in this Agreement, the
Company will provide Executive with a severance payment in the total gross amount of $200,000.00
(“Severance Payment”), less required withholdings and authorized deductions, and will accelerate
the vesting of a portion of the Executive’s restrictive stock pursuant to Section 8 of this
Agreement. The foregoing cash amount shall be paid in a lump sum by direct deposit upon the later
to occur of (a) the Termination Date, or (b) the next business day after the Company has received
both a signed original of this Agreement from Executive and a copy of a written communication from
the Executive to the Occupational Safety and Health Administration (“OSHA”) (i) informing OSHA that
he has settled all disputes with the Company and that he believes the settlement is a fair
resolution of the matters raised in his administrative complaint, (ii) enclosing a copy of this
Agreement, and (iii) withdrawing the Executive’s complaint filed with OSHA and designated as Case
No. 9-3290-07-065 (the “Administrative Complaint”) and requesting OSHA to promptly approve the
settlement and dismiss the Administrative Complaint. In addition, the Executive shall be entitled
to keep as his own the following Company provided equipment: the laptop computer used by the
Executive during his employment by the Company, which is currently in possession of the Company,
and one BlackBerry device, which is currently in possession of the Executive. The Executive shall
be solely responsible for all service fees required to utilize such equipment following the
Termination Date. The receipt of the equipment by the Executive shall also be subject to
applicable state and federal withholding taxes.

          7. Cancellation of Stock Options. The Executive acknowledges that he has been granted
options to purchase 45,000 shares of the common stock of the Company (“Common Stock”) with the
exercise price per share being the Fair Market Value (as defined in Commerce Energy Group, Inc.
2006 Stock Incentive Plan) of the Common Stock on the Grant Date (as defined in the Executive’s
Employment Agreement)(the “Options”), none of which have yet vested. The parties hereto agree that
the Options or other rights to purchase securities of Commerce shall be cancelled as of the
Termination Date.

          8. Acceleration of Vesting of Portion of Restricted Stock. The Executive acknowledges
that he has been granted restricted stock representing 60,000 shares of Common Stock (the
“Restricted Shares”), none of which have yet vested pursuant to a restricted share award agreement
dated March 27, 2007 (the “Restricted Share Agreement”). The Executive hereby agrees that 10,000
of the 60,000 Restricted Shares shall be cancelled and forfeited as of the Termination Date.
Effective as of the Termination Date, the Restricted Share Agreement is hereby amended as follows:
“Number of Shares Subject to Award” in Section 1 shall read “50,000” and “Vesting” in Section 1
shall read “50,000 shares shall vest on January 2, 2008.” All other terms of the Restricted Share
Agreement shall remain in full force and effect. As further consideration for the Company’s
promises in this Agreement, specifically including this

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Section 8, the Executive shall use all reasonable efforts to obtain, and shall cooperate with
the Company in obtaining, dismissal of the Administrative Complaint by OSHA on or before January 2,
2008.

          9. Acknowledgement of Total Compensation and Indebtedness. The Executive acknowledges
and agrees that the cash payments under Sections 5 and 6, the receipt of the equipment under
Section 5 and the accelerated vesting of Restricted Shares under Section 8 of this Agreement
extinguish any and all obligations for monies, or other compensation or benefits that the Executive
claims or could claim to have earned or claims or could claim is owed to him as a result of his
employment by the Company and its Related Entities through the Termination Date, under the
Employment Agreement or otherwise.

          10. Tax Consequences. The Executive acknowledges that (a) the Company has not made
any representations to him about, and that he has not relied upon any statement in this Agreement
with respect to, any individual tax consequences that may arise by virtue of any payment provided
under this Agreement, including, but not limited to, the applicability of Section 409A of the
Internal Revenue Code, and (b) he has or will consult with his own tax advisors as to any such tax
consequences.

          11. Status of Related Agreements and Future Employment.

               (a) Agreements Between the Executive and the Company. The Executive and the Company
agree that, in addition to this Agreement, (i) the Employment Agreement, (ii) the Indemnification
Agreement dated as of March 26, 2007 (the “Commerce Indemnification Agreement”), (iii) the
Restricted Share Agreement, and (iv) the Stock Option Award Agreement dated March 27, 2007 (the
“Stock Option Agreement”), are the only other executed agreements between the Company and the
Executive.

               (b) Termination of Employment Agreement. The parties hereto agree that the Employment
Agreement shall be terminated as of the Termination Date. Notwithstanding the termination of the
Employment Agreement, the Executive acknowledges that the duties and obligations set forth in
Section 6 of the Employment Agreement extend beyond the Termination Date. In the event that any
provision of this Agreement conflicts with Section 6 of the Employment Agreement, the terms and
provisions of the section(s) providing the greatest protection to the Company and its Related
Entities shall control.

               (c) Indemnification Agreement and Indemnification. Notwithstanding the termination of
the Employment Agreement or any provision of this Agreement, the Executive and the Company
acknowledge and agree that the Commerce Indemnification Agreement shall remain in full force and
effect in accordance with its terms.

               (d) Termination of Stock Option Agreement. The parties hereto agree that the Stock
Option Agreement shall be terminated as of the Termination Date.

               (e) Amendment of Restricted Share Agreement. The parties hereto agree that the
Restricted Share Agreement shall be amended as set forth in Section 8 above effective upon the
Termination Date.

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          12. Releases

               (a) Release by the Executive. Except as otherwise expressly provided in this
Agreement, the Executive, for himself and his heirs, executors, administrators, assigns,
affiliates, successors and agents (collectively, the “Executive’s Affiliates”) hereby fully and
without limitation releases and forever discharges the Company 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 “Company Releasees”), both individually and collectively, from any and all
waivable 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 the Executive or any of the Executive’s Affiliates has or may have or may claim to have
against the Company Releasees by reason of any matter, cause, or thing whatsoever, from the
beginning of time to the Effective Date (“ Executive Claims”), including, without limiting the
generality of the foregoing, any Executive Claims arising out of, based upon, or relating to the
recruitment, hiring, employment, relocation, remuneration, investigation, or termination of the
Executive by any of the Company Releasees, the Executive’s tenure as an employee and/or an officer
of any of the Company Releasees, any agreement or compensation arrangement between the Executive
and any of the Company Releasees (including, without limitation, the Employment Agreement), or any
act or occurrence in connection with any actual, existing, proposed, prospective or claimed
ownership interest of any nature of the Executive or the Executive’s Affiliates in equity capital
or rights in equity capital or other securities of any of the Company Releasees, to the maximum
extent permitted by law. The Executive specifically and expressly releases any Executive Claims
arising out of or based on: the Corporate and Criminal Fraud Act of 2002; the California Fair
Employment and Housing Act, as amended; Title VII of the Civil Rights Act of 1964, as amended; the
Americans With Disabilities Act; the National Labor Relations Act, as amended; the Equal Pay Act;
ERISA; any provision of the California Labor Code; the California common law on fraud,
misrepresentation, negligence, defamation, infliction of emotional distress or other tort, breach
of contract or covenant, violation of public policy or wrongful termination; state or federal wage
and hour laws; or any other state or federal law, rule or regulation dealing with the employment
relationship or operating a publicly held business. Nothing contained in this Section 12(a) or any
other provision of this Agreement shall (a) release or waive any right that Executive has to
indemnification and/or reimbursement of expenses by the Company with respect to which Executive may
be eligible as provided in Section 11(c), above, (b) release or waive any right that the Executive
has under the Restricted Share Agreement as amended by Section 8 of this Agreement, or (c) prohibit
the Executive from participating in the investigations of any non-waivable charge or complaint with
any state or federal agency that does not include a request for monetary relief on behalf of the
Executive.

               (b) Releases by the Company. The Company and its Related Entities hereby fully and
without limitation release and forever discharge the Executive and his heirs, assigns, agents and
attorneys (collectively, the “Executive Releasees”), individually and collectively, from any and
all rights, claims, demands, liabilities, actions, causes of action, damages, losses, costs,
expenses and compensation, of whatever nature, known or unknown, fixed or contingent, which the
Company and its Related Entities has or may have or may claim to have against the Executive
Releasees by reason of any matter, cause or thing whatsoever from

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the first date the Executive was an employee, officer or director of the Company and its
Related Entities to the Effective Date (“Company Claims”). Notwithstanding the foregoing, nothing
contained in this Section 12(b) or any other provision of this Agreement shall constitute a release
or waiver of (a) any right or claim that the Company may have pursuant to Section 6 of the
Employment Agreement, or (b) any right or claim that the Company may have against the Executive by
reason of any actions which would violate any law or governmental regulation and the release of
which would constitute a breach of fiduciary duty by the Company’s board of directors or officers.
As of the date of execution of this Agreement, the Company is not aware of any claim that would be
excluded from this release under subsection (b) in the preceding sentence.

          13. Waiver of Civil Code Section 1542.

               (a) The Executive and the Company and its Related Entities understand and agree that their
releases provided herein extend to all Executive Claims and Company Claims released above whether
known or unknown, suspected or unsuspected. The Executive and the Company and its Related Entities
expressly waive and relinquish any and all rights he/it may have under California Civil Code
Section 1542, which provides as follows:

“A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES
NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF
EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM OR HER MUST HAVE
MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR.”

               (b) The Executive expressly waives and releases any rights and benefits which he has or may
have under any similar law or rule of any other jurisdiction. It is the intention of each party
through this Agreement to fully, finally and forever settle and release the Executive Claims and
the Company Claims as set forth above. In furtherance of such intention, the release herein given
shall be and remain in effect as a full and complete release of such matters notwithstanding the
discovery of any additional Executive Claims, Company Claims or facts relating thereto.

               (c) To the extent that Section 1542 may be deemed to apply to the Company’s release set forth
in Section 12(b), the Company on behalf of itself and its Related Entities, expressly waives and
relinquishes any and all rights it or they may have under such Section, and any rights and benefits
which it or they may have under any similar law or rule of any other jurisdiction.

          14. Confidentiality of Agreement. After the execution of this Agreement by the
Executive, neither the Executive, his attorney, nor any person acting by, through, under or in
concert with them, shall disclose any of the terms of or amount paid under this Agreement (other
than to state that the Company has filed this Agreement and/or agreements related thereto as public
documents) or the negotiation thereof to any individual or entity; provided, however, that the
foregoing shall not prevent such disclosures by the Executive to his attorney, tax advisors,
prospective landlords (for the purpose of demonstrating ability to pay rent) and/or immediate

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family members, as may be required by law or by OSHA. The non-disclosure obligations in this
Section shall not apply to the Company and its Related Entities. The Executive understands and
acknowledges that the Company must make disclosures relating to this Agreement in its filings with
the U.S. Securities and Exchange Commission.

          15. Dismissal of the Administrative Complaint; No Other Filings. The Executive hereby
represents that he has withdrawn and requested dismissal of the Administrative Complaint. In
return for the Company’s promises in this Agreement, the Executive agrees to take such further
actions as may be necessary to cause the Administrative Complaint to be dismissed with prejudice.
The Executive represents that, except for the Administrative Complaint, he has not filed any
lawsuits or waivable claims, charges or complaints against the Company Releasees with any local,
state or federal agency or court from the beginning of time to the date of execution of this
Agreement; that he will not do so at any time hereafter based upon events prior to the date of
execution of this Agreement; that he will not induce, encourage, solicit or assist any other person
or entity to file or pursue any proceeding of any kind against the Company Releasees or voluntarily
appear or invite a subpoena to testify in any such legal proceeding; and that, if any such agency
or court ever assumes jurisdiction over any such lawsuit, claim, charge or complaint and/or
purports to bring any legal proceeding, in whole or in part, on behalf of the Executive based upon
events occurring prior to the execution of this Agreement, the Executive will request such agency
or court to withdraw from and/or to dismiss the lawsuit, claim, charge or complaint with prejudice.
It shall not be a breach of this Section 15 for Executive to testify truthfully in any judicial or
administrative proceeding.

          16. Confidential and Proprietary Information. The Executive acknowledges that certain
information, observations and data obtained by him during the course of or related to his
employment with the Company and its Related Entities (including, without limitation, information
concerning the legal strategies of the Company and its Related Entities, projection programs,
business plans, business matrix programs (i.e., measurement of business), strategic financial
projections, certain financial information, shareholder information, product design information,
marketing plans or proposals, personnel information, customer lists and other customer information)
are the sole property of the Company and its Related Entities and constitute Confidential
Information as defined in Section 6 of the Employment Agreement. The Executive represents and
warrants that he has returned or destroyed all files, customer lists, financial information and
other property of the Company and its Related Entities that were in the Executive’s possession or
control without retaining copies thereof, except for work product created by or under the direction
of the Executive during his employment with the Company and which is maintained in his personal
“precedent files” (the “Company-related Precedent File Material”). The Company-related Precedent
File Material shall be returned to the Company by the Executive, or made available for retrieval
from him by the Company, within ten (10) business days after the Effective Date of this Agreement.
The Executive further represents and warrants that, except for the Company-related Precedent File
material, he does not have in his possession or control any files, customer lists, financial
information or other property of the Company and its Related Entities. In addition to his promises
in Section 6 of the Employment Agreement, the Executive agrees that he will not disclose to any
person or use any such information, observations or data without the written consent of the Chief
Executive Officer or Board of Directors of the Company. If the Executive is served with a
deposition subpoena or other legal process calling for the disclosure of such information, or if he
is contacted by any

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third person requesting such information, he will notify the Company’s Chief Executive Officer
as soon as is reasonably practicable after receiving notice and will cooperate with the Company and
its Related Entities in minimizing the disclosure thereof.

          17. Remedies. The Executive acknowledges that any unfair competition or misuse of
trade secret or Confidential Information belonging to the Company and its Related Entities, or any
violation of Section 6 of the Employment Agreement, and any violation of Sections 14 and 16 of this
Agreement, will result in irreparable harm to the Company and its Related Entities, and therefore,
the Company and its Related Entities shall, in addition to any other remedies, be entitled to
immediate injunctive relief. To the extent there is any conflict between Section 6 of the
Employment Agreement and this Section 17, the provision providing the greatest protection to the
Company and its Related Entities shall control. In addition, in the event of a breach of any
provision of this Agreement by the Executive, including Sections 14 and 16, the Executive shall
forfeit, and the Company and its Related Entities shall, without excluding other remedies available
to them, be entitled to an award in the amount of the Severance Payment made by the Company to the
Executive.

          18. Cooperation Clause.

               (a) To facilitate the orderly conduct of the Company and its Related Entities’ businesses, for
a period of twelve (12) months after the Termination Date, the Executive agrees to cooperate, at no
charge, with the Company and its Related Entities’ reasonable requests for information or
assistance related to the time of his employment.

               (b) For a period of twelve (12) months after the Termination Date, the Executive agrees to
cooperate, at no charge, with the Company’s and its Related Entities’ and its or their counsel’s
reasonable requests for information or assistance related to (i) any investigations (including
internal investigations) and audits of the Company and its Related Entities’ management’s current
and past conduct and business and accounting practices and (ii) the Company and its Related
Entities’ defense of, or other participation in, any administrative, judicial, or other proceeding
arising from any charge, complaint or other action which has been or may be filed relating to the
period during which the Executive was engaged in employment with the Company and its Related
Entities. Except as required by law or authorized in advance by the Board of Directors of the
Company, the Executive will not communicate, directly or indirectly, with any third party,
including any person or representative of any group of people or entity who is suing or has
indicated that a legal action against the Company and its Related Entities or any of their
directors or officers is being contemplated, concerning the management or governance of the Company
and its Related Entities, the operations of the Company and its Related Entities, the legal
positions taken by the Company and its Related Entities, or the financial status of the Company and
its Related Entities. If asked about any such individuals or matters, the Executive shall say: “I
have no comment,” and shall direct the inquirer to the Company. The Executive acknowledges that
any violation of this Section 18 will result in irreparable harm to the Company and its Related
Entities and will give rise to an immediate action by the Company and its Related Entities for
injunctive relief.

          19. No Future Employment. The Executive understands that his employment with the
Company and its Related Entities will irrevocably end as of the Termination Date and

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will not be resumed at any time in the future. The Executive agrees that he will not apply
for, seek or accept employment by the Company and its Related Entities at any time, unless invited
to do so by the Company and its Related Entities.

          20. Non-disparagement. The Company will not authorize or condone derogatory
statements about the Executive to any third party, and will instruct senior management of the
Company that no such statements may be made. The Executive agrees not to disparage or otherwise
publish or communicate derogatory statements about the Company and its Related Entities and any
director, officer or manager and/or the products and services of these entities to any third party.
It shall not be a breach of this Section 20 for the Executive to testify truthfully in any
judicial or administrative proceeding, or to make factually accurate statements in legal or public
filings.

          21. Governing Law. This Agreement shall be governed by and construed in accordance
with the laws of the State of California, without giving effect to principles of conflict of laws.

          22. Arbitration. The parties hereto agree that any future dispute of any nature
whatsoever between them, including, but not limited to, any claims of statutory violations,
contract or tort claims, or claims regarding any aspect of this Agreement, its formation, validity,
interpretation, effect, performance or breach, or any act which allegedly has or would violate any
provision of this Agreement (“Arbitrable Dispute”) will be submitted to arbitration in Orange
County, California, unless the parties agree to another location, before an experienced employment
arbitrator licensed to practice law in California and selected in accordance with the rules of
Judicial Arbitration and Mediation Services, Inc. (“JAMS”), unless the parties agree to a different
arbitrator, as the exclusive remedy for any such Arbitrable Dispute. Should any party to this
Agreement hereafter institute any legal action or administrative proceeding against the other with
respect to any claim waived by this Agreement or pursue any Arbitrable Dispute by any method other
than said arbitration, the responding party shall be entitled to recover from the initiating party
all damages, costs, expenses and attorneys’ fees incurred as a result of such action. This
Section 22 shall not restrict actions for equitable relief by the Company for violation of
Sections 14, 16, 18 and 20 of this Agreement.

          23. Attorneys’ Fees. Except as otherwise provided herein, in any arbitration or other
proceeding between the parties arising out of or in relation to this Agreement, including any
purported breach of this Agreement, the prevailing party shall be entitled to an award of its costs
and expenses, including reasonable attorneys’ fees.

          24. Non-Admission of Liability. The parties understand and agree that neither the
payment of any sum of money nor the execution of this Agreement by the parties will constitute or
be construed as an admission of any wrongdoing or liability whatsoever by any party.

          25. Severability. If any one or more of the provisions contained herein (or parts
thereof), or the application thereof in any circumstances, is held invalid, illegal or
unenforceable in any respect for any reason, the validity and enforceability of any such provision
in every other respect and of the remaining provisions hereof will not be in any way impaired or

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affected, it being intended that all of the rights and privileges shall be enforceable to the
fullest extent permitted by law.

          26. Entire Agreement. This Agreement, together with the attachments hereto,
represents the sole and entire agreement among the parties and, except as expressly stated herein,
supersedes all prior agreements, negotiations and discussions among the parties with respect to the
subject matters contained herein.

          27. Waiver. No waiver by any party hereto at any time of any breach of, or compliance
with, any condition or provision of this Agreement to be performed by any other party hereto may be
deemed a waiver of similar or dissimilar provisions or conditions at the same time or at any prior
or subsequent time.

          28. Amendment. This Agreement may be modified or amended only if such modification or
amendment is agreed to in writing and signed by duly authorized representatives of the parties
hereto, which writing expressly states the intent of the parties to modify this Agreement.

          29. Counterparts. This Agreement may be executed in one or more counterparts, each of
which will be deemed to be an original as against any party that has signed it, but all of which
together will constitute one and the same instrument.

          30. Assignment. This Agreement inures to the benefit of and is binding upon the
Company and its successors and assigns, but the Executive’s rights under this Agreement are not
assignable, except to his estate.

          31. Notice. All notices, requests, demands, claims 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:

	 	 	 	 	 
	 

	 	If to the Executive:
	 	Erik A. Lopez, Sr.
	 

	 	 	 	54 Livingston Place
	 

	 	 	 	Ladera Ranch, California 92694
	 

	 	 	 	Fax: (949) 340-7211 (call first)
	 
	 	 	 	 
	 

	 	If to the Company:
	 	Commerce Energy Group, Inc
	 

	 	 	 	600 Anton Boulevard, Suite 2000
	 

	 	 	 	Costa Mesa, California 92626
	 

	 	 	 	Attn: Chief Executive Officer
	 

	 	 	 	Fax: (714) 481-6567

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

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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.

          32. Miscellaneous Provisions.

               (a) The parties represent that they have read this Agreement and fully understand all of its
terms; that they have conferred with their attorneys, or have knowingly and voluntarily chosen not
to confer with their attorneys about this Agreement; that they have executed this Agreement without
coercion or duress of any kind; and that they understand any rights that they have or may have and
sign this Agreement with full knowledge of any such rights.

               (b) Both parties have participated in the drafting of this Agreement with the assistance of
counsel to the extent they desired. The language in all parts of this Agreement must be in all
cases construed simply according to its fair meaning and not strictly for or against any party.
Whenever the context requires, all words used in the singular must be construed to have been used
in the plural, and vice versa, and each gender must include any other gender. The captions of the
Sections of this Agreement are for convenience only and must not affect the construction or
interpretation of any of the provision herein.

               (c) Each provision of this Agreement to be performed by a party hereto is both a covenant and
condition, and is a material consideration for the other party’s performance hereunder, and any
breach thereof by the party will be a material default hereunder. All rights, remedies,
undertakings, obligations, options, covenants, conditions and agreements contained in this
Agreement are cumulative and no one of them is exclusive of any other. Time is of the essence in
the performance of this Agreement.

               (d) Each party acknowledges that no representation, statement or promise made by any other
party, or by the agent or attorney of any other party, except for those in this Agreement, has been
relied on by him or it in entering into this Agreement.

               (e) Each party understands that the facts with respect to which this Agreement is entered into
may be materially different from those the parties now believe to be true. Except in the case
where the existence of any additional or different facts constitutes the breach of a representation
or warranty, each party accepts and assumes this risk and agrees that this Agreement and the
releases in it shall remain in full force and effect, and legally binding, notwithstanding the
discovery or existence of any additional or different facts, or of any claims with respect to those
facts.

               (f) Unless expressly set forth otherwise, all references herein to a “day” are deemed to be a
reference to a calendar day. All references to “business day” mean any

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day of the year other than a Saturday, Sunday or a public or bank holiday in Orange County,
California. Unless expressly stated otherwise, cross-references herein refer to provisions within
this Agreement and are not references to the overall transaction or to any other document.

               (g) Each party to this Agreement will cooperate fully in the execution of any and all other
documents and in the completion of any additional actions that may be necessary or appropriate to
give full force and effect to the terms and intent of this Agreement.

     EACH OF THE PARTIES ACKNOWLEDGES THAT HE/IT HAS READ THIS AGREEMENT, UNDERSTANDS IT AND IS
VOLUNTARILY ENTERING INTO IT, AND THAT IT INCLUDES A WAIVER OF THE RIGHT TO A TRIAL BY JURY, AND,
WITH RESPECT TO THE EXECUTIVE, HE UNDERSTANDS THAT THIS AGREEMENT INCLUDES A RELEASE OF ALL KNOWN
AND UNKNOWN CLAIMS.

     IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the dates indicated
below.

	 	 	 	 	 
	“Executive”

	 	/s/ Erik A. Lopez	 	 
	 

	 	 	 	 
	 

	 	ERIK A. LOPEZ, SR.	 	 
	 
	 	 	 	 
	 

	 	Dated: October
         5           , 2007	 	 

	 	 	 	 	 
	“Company”

	 	COMMERCE ENERGY GROUP, INC.,

a Delaware corporation
	 	 
	 
	 	 	 	 
	 

	 	By:  /s/ Steven S. Boss	 	 
	 

	 	 
	 	 
	 
	 	 	 	 
	 

	 	Printed Name:   Steven S. Boss	 	 
	 

	 	 
	 	 
	 
	 	 	 	 
	 

	 	Title:  Chief Executive Officer	 	 
	 

	 	 
	 	 
	 
	 	 	 	 
	 

	 	Dated: October         5            , 2007	 	 

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