Document:

exv10w3

 

Exhibit 10.3

RESTRICTED STOCK AGREEMENT

     This Restricted Stock Agreement (this “Agreement”), is entered into effective as of the Grant
Date (as defined in paragraph 1), by and between COMMERCE ENERGY GROUP, INC., a Delaware
corporation (the “Company”), and STEVEN S. BOSS (“Recipient”).

Recitals

     A. Recipient has entered into an Employment Agreement (the “Employment Agreement”) dated as of
August 1, 2005 with the Company;

     B. The Employment Agreement provides that Recipient shall receive an award of restricted
shares of the Company’s common stock, $0.001 par value per share;

     C. The Company maintains the 1999 Equity Incentive Plan, as amended (the “Plan”), which is
incorporated into and forms a part of this Agreement;

     D. The Compensation Committee of the Company’s Board of Directors (the “Committee”)
administers the Plan;

     E. Recipient has been selected by the Committee to receive an award of restricted shares of
the Company’s common stock, $0.001 par value per share (the “Common Stock”), under the Plan; and

     F. The grant of restricted stock is made pursuant to the terms of Section 4(e) of the
Employment Agreement.

Agreement

     1. Award and Consideration. On the terms and conditions set forth in this Agreement,
the Company, hereby issues to Recipient on August 1, 2005 (the “Grant Date”), Two Hundred Thousand
(200,000) shares (the “Restricted Shares”) of Common Stock. All of the Restricted Shares issued
hereunder shall be deemed issued to Recipient as fully paid and nonassessable shares, and Recipient
shall have all rights of a stockholder with respect thereto, including the right to vote, receive
dividends (including stock dividends), participate in stock splits or other recapitalizations, and
exchange such shares in a merger, consolidation or other reorganization. The Company shall pay any
applicable stock transfer taxes.

     2. Escrow and Repurchase Right.

          (a) Escrow. For purposes of facilitating the enforcement of the provisions of this
Section 2, Recipient agrees, immediately upon receipt of the certificate(s) for all the Restricted
Shares, to deliver such certificate(s), together with a “Stock Assignment Separate from
Certificate” in the form attached hereto as Exhibit A, executed in blank by Recipient (and
Recipient’s spouse if required for transfer) with respect to each such stock certificate issued
hereunder, to the Secretary or Assistant Secretary of the Company or their designee (the “Escrow
Holder”) to hold in escrow for so long as such Restricted Shares remains subject to any
Repurchase Right (as defined below), and granting the Company the authority to take all
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necessary to effectuate all transfers and/or releases (including releasing such shares of
Common Stock with respect to which the restrictions have lapsed) as may be necessary or appropriate
to accomplish the objectives of this Agreement in accordance with the terms hereof. Recipient
hereby acknowledges that such appointment of the Escrow Holder with such stated authorities is a
material inducement to the Company to enter into this Agreement, and such appointment is
accordingly irrevocable. Recipient agrees that neither the Company nor such Escrow Holder shall be
liable to the Recipient or any Permitted Transferee for any actions or omissions unless such Escrow
Holder is grossly negligent or engages in willful misconduct relative thereto. The Recipient
agrees that the Escrow Holder may rely upon any letter, notice or other document executed by any
signature purported to be genuine and may resign at any time.

          (b) Scope of Repurchase Right.

               (i) If Recipient’s employment by the Company is terminated before the Restricted Shares
and Additional Securities (as defined below) are released from the Company’s Repurchase
Right (as defined below), the Company shall, upon the date of such termination, have the
right to repurchase all or any portion of the Restricted Shares and Additional Securities
for $0.001 per share (the “Repurchase Right”). The Company may exercise the Repurchase
Right by delivering written notice to Recipient within ninety (90) days after the date of
termination.

               (ii) If the requisite period (in the case of Restricted Shares vesting over time)
(“Vesting Period”) or the Performance Goal (as defined below) for any Performance Period (as
defined below) are not met, the Company shall have the right to repurchase the Restricted
Shares and any Additional Securities allocated to the Vesting Period or that Performance
Period, for $0.001 per share (the “Repurchase Right”). The Company may exercise the
Repurchase Right by delivering written notice to Recipient within ninety (90) days after the
first anniversary of the Commencement Date, in the case of Restricted Shares vesting over
time, or within ninety (90) days after the date that the Company files its Annual Report on
Form 10-K with the Securities and Exchange Commission with respect to Restricted Shares
vesting during any applicable Performance Period.

               (iii) Upon delivery of a repurchase notice pursuant to this Section 2(b), the Company
shall become the legal and beneficial owner of the Restricted Shares being repurchased and
all rights and interests therein or relating thereto, and the Company shall have the right
to retain and transfer to its own name the number of Restricted Shares being repurchased by
the Company. Recipient shall forfeit the right to all cash or other property from time to
time received, receivable, or otherwise distributed in respect of or in exchange for all or
any part of the Restricted Shares and Additional Securities that are repurchased by the
Company pursuant hereto.

          (c) Termination of the Repurchase Right. With respect to each of the fiscal years
ending July 31, 2006 through July 31, 2008 (each a “Performance Period”), the Repurchase Right
shall terminate and cease to be exercisable with respect to 50,000 shares if the Company equals or
exceeds the performance targets established by the Board for purposes of this
Agreement (each a “Performance Goal”) for such Performance Period. Further, the Repurchase
Right shall terminate and cease to be exercisable with respect to 50,000 shares on the first
anniversary of the Commencement Date. Upon the Recipient’s termination of employment as a result
of termination by the Company without Cause or Resignation by the Recipient with Good

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Reason (as each such term is defined in the Recipient’s employment agreement with the Company), the Repurchase
Right shall terminate and cease to be exercisable with respect to the number of shares that would
have vested during the twelve (12) month period after such termination if the Recipient remained
employed with the Company.

          (d) Additional Securities. For purposes of this Section 2, Restricted Shares shall
include all securities received in replacement of the Restricted Shares, as a stock dividend or as
a result of any stock split, recapitalization, merger, reorganization, exchange or the like, and
all new or additional securities or other properties to which Recipient is entitled by reason of
Recipient’s ownership of the Restricted Shares (hereinafter called “Additional Securities”).
Recipient shall be entitled to direct the Company to exercise any warrant or option received as
Additional Securities upon supplying the funds necessary to do so, in which event the securities so
purchased shall constitute Additional Securities, but the Recipient may not direct the Company to
sell any such warrant or option. If Additional Securities consist of a convertible security,
Recipient may exercise any conversion right, and any securities so acquired shall be deemed
Additional Securities. All Restricted Shares, including Additional Securities, shall be subject to
the restrictions contained in this Agreement.

          (e) Transfer Restrictions. Until the Right of Repurchase lapses, Recipient shall not
transfer, assign, encumber or otherwise dispose of or grant a lien in or to any Restricted Shares
or Additional Securities, without the prior written consent of the Company. Prior to the Right of
Repurchase lapsing, Recipient may transfer Restricted Shares and Additional Securities (a) by
beneficiary designation, will or intestate succession, or (b) to Recipient’s spouse, children or
grandchildren or to a trust established by Recipient for the benefit of Recipient or Recipient’s
spouse, children or grandchildren (each, a “Permitted Transfer”). If Recipient makes such a
Permitted Transfer of any Restricted Shares or Additional Securities, then this Section 2 shall
apply to the transferee to the same extent as to Recipient. The Company shall not be required (i)
to transfer on its books any Restricted Shares or Additional Securities which have been sold or
transferred in violation of the provisions of this Agreement (and the Company may issue appropriate
“stop transfer” instructions to its transfer agent accordingly) or (ii) to treat as the owner of
the Restricted Shares or Additional Securities, or otherwise to accord voting, dividend or
liquidation rights to, any transferee to whom the Restricted Shares or Additional Securities have
been transferred in contravention of this Agreement. All certificates representing the Restricted
Shares or Additional Securities shall have endorsed thereon the following legend:

“The shares represented by this certificate are subject to potential
forfeiture and to restrictions upon transfer, including certain
options to purchase such shares, set forth in an agreement between
the issuer and the registered holder, a copy of which is on file at
the principal office of the issuer corporation and will be furnished
upon request to such registered holder.”

     3. Representations and Warranties of The Recipient. Recipient represents and
warrants to the Company each of the following matters:

          (a) Authorization. Recipient has full power and authority to enter into this
Agreement and this Agreement constitutes its valid and legally binding obligation, enforceable in
accordance with its terms.

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          (b) Purchase Entirely for Own Account. This Agreement is made with Recipient in
reliance upon Recipient’s representation to the Company, which by Recipient’s execution of this
Agreement Recipient hereby confirms, that the Restricted Shares will be acquired for investment for
Recipient’s own account, not as a nominee or agent, and not with a view to the resale or
distribution of any part thereof, and that Recipient has no present intention of selling, granting
any participation in, or otherwise distributing the same. By executing this Agreement, Recipient
further represents that he does not have any contract, undertaking, agreement or arrangement with
any person to sell, transfer or grant participations to such person or to any third person, with
respect to any of the Restricted Shares.

          (c) Investment Experience. Recipient acknowledges that he has such knowledge and
experience in financial or business matters that he is capable of evaluating the merits and risks
of the investment in the Restricted Shares.

     4. Compliance With Securities Laws.

          (a) In addition to the restrictions contained in this Agreement, the Company at its discretion
may impose restrictions upon the sale, pledge or other transfer of the Restricted Shares and
Additional Securities (including the placement of appropriate legends on stock certificates or the
imposition of stop-transfer instructions) if, in the judgment of the Company, such restrictions are
necessary or desirable in order to achieve compliance with the Act, the securities laws of any
state or any other law.

          (b) THE SALE OF THE SECURITIES THAT ARE THE SUBJECT OF THIS AGREEMENT HAS NOT BEEN QUALIFIED
WITH THE COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA AND THE ISSUANCE OF SUCH
SECURITIES OR THE PAYMENT OR RECEIPT OF ANY PART OF THE CONSIDERATION FOR SUCH SECURITIES PRIOR TO
SUCH QUALIFICATION IS UNLAWFUL, UNLESS THE SALE OF SECURITIES IS EXEMPT FROM QUALIFICATION BY
SECTION 25100, 25102 OR 25105 OF THE CALIFORNIA CORPORATIONS CODE. THE RIGHTS OF ALL PARTIES TO
THIS AGREEMENT ARE EXPRESSLY CONDITIONED UPON SUCH QUALIFICATION BEING OBTAINED, UNLESS THE SALE IS
SO EXEMPT.

          (c) All certificates representing the Restricted Shares or Additional Securities and all
certificates issued in transfer thereof or substitution therefor shall, where applicable, have
endorsed thereon the following legends:

               (i) “The securities represented by this certificate have not been registered under the
Securities Act of 1933, as amended. These securities have been acquired for investment and
not with a view to distribution and may not be offered for
sale, sold, pledged or otherwise transferred in the absence of an effective
registration statement for such securities under the Securities Act of 1933 or an opinion of
counsel reasonably satisfactory in form and content to the issuer that such registration is
not required under such Act.”

               (ii) Any legend required to be placed thereon by any applicable state securities law.

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     5. Section 83(b) Election. Recipient hereby represents that he understands (a) the
contents and requirements of a timely election made pursuant to Section 83(b) of the Internal
Revenue Code or similar provision of state law (collectively, an “83(b) Election”), (b) the
application of Section 83(b) to the grant of the Restricted Shares by Recipient pursuant to this
Agreement, (c) the nature of the election to be made by Recipient under Section 83(b), and (d) the
effect and requirements of the 83(b) Election under relevant state and local tax laws. Recipient
further represents that he intends to file an election pursuant to Section 83(b), the form of which
election is attached hereto as Exhibit B, with the Internal Revenue Service within thirty (30) days
following the grant of the Restricted Shares hereunder, and a copy of such election with his
federal tax return for the calendar year in which the date of this Agreement falls. Recipient
covenants to inform the Company of any change in Recipient’s state of residency. Recipient shall
provide the Company with a copy of any timely 83(b) Election. If Recipient makes a timely 83(b)
Election, Recipient shall immediately pay to the Company the amount necessary to satisfy any
applicable federal, state, and local income and employment tax withholding requirements. If
Recipient does not make a timely 83(b) Election, Recipient shall, either at the time that the
restrictions lapse under this Agreement or at the time withholding is otherwise required by any
applicable law, pay the Company the amount necessary to satisfy any applicable federal, state, and
local income and employment tax withholding requirements. The Company may require Recipient to
remit to the Company an amount sufficient to satisfy federal, state and local withholding tax
requirements prior to the delivery of any certificate or certificates for the Restricted Shares.
Recipient hereby represents that he has had an opportunity to consult a tax advisor.

     6. Distributions. The Company shall disburse to Recipient all dividends, interest
and other distributions paid or made in cash or property (other than Additional Securities) with
respect to the Restricted Shares and Additional Securities, less any applicable federal or state
withholding taxes.

     7. Not An Employment Contract. The grant of Restricted Shares will not confer on
Recipient any right with respect to continuance of employment or other service with the Company or
any Subsidiary, nor will it interfere in any way with any right the Company or any Subsidiary would
otherwise have to terminate or modify the terms of the Recipient’s employment or other service at
any time.

     8. Amendment. Except as otherwise provided herein, any provision of this Agreement
may be amended or waived only with the prior written consent of Recipient and the Board of
Directors of the Company.

     9. Assignment; Successors. The Recipient shall not transfer, assign or encumber any
of his rights, privileges, duties or obligations under this Agreement without the prior written
consent of the Company, and any attempt to so transfer, assign or encumber shall be void. The
Company may transfer, assign or encumber its rights, privileges, duties or obligations under this
Agreement (including, without limitation, the right to maintain the escrow for the Restricted
Shares or Additional Securities and the Repurchase Right), to any of its subsidiaries or
affiliates. Subject to the foregoing, this Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective heirs, executors, administrators, successors and
assigns.

     10. Entire Agreement. The Agreement, together with the Employment Agreement and the
Plan, constitutes the entire agreement of the parties and supercedes any and all

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agreements, either
oral or in writing, between the parties with respect to the subject matter hereof. If there is any
conflict in terms between this Agreement and the Employment Agreement, the terms of this Agreement
shall prevail. The terms of this Agreement shall be subject to the terms of the Plan, a copy of
which may be obtained by Recipient from the office of the Secretary of the Company; and this
Agreement is subject to all interpretations, amendments, rules and regulations promulgated by the
Board from time to time pursuant to the Plan.

     11. Choice of Law. This Agreement shall be governed by, and construed in accordance
with, the laws of the State of California as such laws are applied to contracts entered into and
performed in such State.

[SIGNATURE PAGE FOLLOWS]

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     IN WITNESS WHEREOF, the parties have executed this Agreement as of August 1, 2005 to reflect
the grant which was authorized on the Grant Date as first above written.

	 	 	 	 	 
	 	 	“COMPANY”
	 
	 	 	 	 
	 	 	COMMERCE ENERGY GROUP, INC.
	 
	 	 	 	 
	 

	 	By:	 	/s/ ROBERT C. PERKINS
	 

	 	 	 	 
	 

	 	Name:
	 	Robert C. Perkins
	 

	 	Title:
	 	Chairman of the Board

	 	 	 	 	 
	 	 	“RECIPIENT”
	 
	 	 	 	 
	 

	 	By:	 	/s/ STEVEN S. BOSS
	 

	 	 	 	 
	 

	 	Name:
	 	Steven S. Boss
	 
	 	 	 	 
	 	 	Address:
	 
	 	 	 	 
	 	 	Mr. Steven S.
Boss
Commerce Energy Group, Inc.
600 Anton Boulevard, Suite
2000
Costa Mesa, CA 92626

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EXHIBIT A

STOCK ASSIGNMENT SEPARATE FROM CERTIFICATE

FOR VALUE RECEIVED and pursuant to that certain Restricted Stock Agreement between the undersigned
and Commerce Energy Group, Inc., a Delaware corporation (the “Company”), dated as of August 1, 2005
(the “Agreement”), the undersigned hereby sells, assigns and transfers unto the Company
                                                                                (                    ) shares of the Common Stock of the Company, standing in his
name on the books of the Company, represented by Certificate No. ___herewith, and does hereby
irrevocably constitute and appoint                                          attorney to transfer the said stock in the
books of the Company with full power of substitution.

 

DATED:                                                             ,                    

	 	 	 	 	 
	By:
	 	 	 	 
	 

	 	 

	 	 

	 	 	 	 	 
	Print name:
	 	 	 	 
	 

	 	 

	 	 

Instruction: Please do not fill in any blanks other than the signature line. The purpose of this
assignment is to enable the Company to exercise its repurchase option set forth in the Agreement
without requiring additional signatures.exv10w4

 

Exhibit 10.4

INDEMNIFICATION AGREEMENT

     This Indemnification Agreement (this “Agreement”) is made and entered into and is effective as
of August 1, 2005, by and between Commerce Energy Group, Inc., a Delaware corporation (the
“Corporation”), and Steven S. Boss, an individual (“Indemnitee”).

Recitals

     A. Indemnitee performs a valuable service to the Corporation in his capacity as a director and
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 continue to serve as [a director/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 8

 

 

hereof. 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.

          (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 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

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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 is to be made against the Corporation under this Agreement, notify the
Corporation of the commencement thereof; but the omission so to notify the Corporation will not
relieve it from any liability which it may have to Indemnitee otherwise than under this Agreement.
With respect to any such action, suit or proceeding as to which Indemnitee notifies the Corporation
of the commencement thereof

          (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. After notice 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

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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.

     9. Subrogation. In the event of payment under this Agreement, the Corporation shall
be subrogated to the extent of such payment to all of the rights of recovery of Indemnitee, who

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     shall execute all documents required and shall do all acts that may be necessary to secure
such rights and to enable the Corporation effectively to bring suit to enforce such rights.

     10. Non Exclusivity of Rights. The rights conferred on Indemnitee by this Agreement
shall not be 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 Delaware for 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.

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     17. Headings. The headings of the sections of this Agreement are inserted for
convenience only and shall not be deemed to constitute part of this Agreement or to affect the
construction hereof.

     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:

	 	(a)	 	If to Indemnitee, to:

Mr.
Steven S. Boss

Commerce Energy Group, Inc.

600 Anton Boulevard, Suite 2000

Costa Mesa, CA 92626

	 	(b)	 	If to the Corporation, to:

Commerce Energy Group, Inc.

600 Anton Boulevard, Suite 2000

Costa Mesa, CA 92626

Attn: Chairman of the Board

or to such other address(es) as may have been furnished to/by Indemnitee to/by the Corporation.

[SIGNATURE PAGE FOLLOWS]

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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.

	 	 	 	 	 
	“Indemnitee”
	 	 	 	 
	 	 	/s/ STEVEN S. BOSS
	 	 	 
	 	 	Steven S. Boss
	 
	 	 	 	 
	“Corporation”	 	COMMERCE ENERGY GROUP, INC., a
	 	 	Delaware corporation
	 
	 	 	 	 
	 

	 	By:	 	/s/ ROBERT C. PERKINS
	 

	 	 	 	 
	 

	 	Name:
	 	Robert C. Perkins
	 

	 	Title:
	 	Chairman of the Board

-7-

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