Document:

exv4w15

 

Exhibit 4.15

COMMERCE ENERGY GROUP

2006 STOCK INCENTIVE PLAN

 

SAR Award Agreement

 

Award No.
            

          You (the “Participant”) are hereby awarded Stock Appreciation Rights subject to the
terms and conditions set forth in this agreement (the “Award Agreement” or “Award”)
and in the Commerce Energy Group, Inc. 2006 Stock Incentive Plan (“Plan”). A copy of the
Plan is attached hereto as Exhibit A. A summary of the Plan appears in its Prospectus,
which is attached as Exhibit B. You should carefully review these documents, and consult
with your personal financial advisor, before exercising this Award. This Award is conditioned on
your execution of this Award Agreement.

          By executing this Award Agreement, you agree to be bound by all of the Plan’s terms and
conditions as if they had been set out verbatim in this Award Agreement. In addition, you
recognize and agree that all determinations, interpretations, or other actions respecting the Plan
and this Award Agreement will be made by the Board of Directors (the “Board”) of Commerce
Energy Group, Inc. (the “Company”) or any Committee appointed by the Board to administer
the Plan, and shall (in the absence of manifest bad faith or fraud) be final, conclusive and
binding on all parties, including you and your heirs and representatives. Capitalized terms are
defined in the Plan or in this Award Agreement.

	1.	 	Individualized Terms. This portion of your Award is being granted pursuant to
Section 7 of the Plan, and shall have the following terms:

	 	 	 
	Name of Participant
	 	 
	 
	 	 
	Date of Award
	 	 
	 
	 	 
	Number of Shares measuring
the value of this SAR

	 	                     Shares (“SAR Shares”).
	 
	 	 
	Base Price for SARs

	 	$___.___per Share.
	 
	 	 
	Vesting

	 	At the rate of ___% on each of the next ___
[monthly] [quarterly] [annual]
anniversaries of the Award Date; subject
to acceleration as provided in the Plan
and in Section 2 below, and to your
Continuous Service not ending before the
vesting date.

	2.	 	Accelerated Vesting; Change in Corporate Control. To the extent you have not
previously vested in your rights with respect to this Award, your Award will become –

	 	(a)	 	___% vested if your Continuous Service ends due to your death or “disability”
within the meaning of Section 409A of the Code;

 

 

Stock Appreciation Rights Award

Commerce Energy Group, Inc.

2006 Stock Incentive Plan

	 	(b)	 	___% vested if your Continuous Service ends due to your retirement at or
after you have attained the age of ___and completed at least ___full years of
Continuous Service;
	 
	 	(c)	 	according to the following schedule if your Continuous Service ends due to an
Involuntary Termination that occurs within the twelve months following a Change in
Control:

	 	 	 	 	 
	Date on which Your Involuntary Termination	 	Portion of Your Award
	Occurs (by reference to Date of Award)	 	As to which Vesting Accelerates
	Before 1st Anniversary
	 	 	0	%
	Between 1st and 2nd Anniversary
	 	 	 	%
	After 2nd Anniversary
	 	 	 	%

<Other desired schedule>

3. Vesting and Exercise of Your Award. No Shares will be issued and no cash will be paid
to you before your Award vests in accordance with Section 1 or 2 above and is exercised. To the
extent you have vested in this Award, you may exercise it at any time and from time to time in
accordance with the Plan, using the exercise form attached hereto as
Exhibit C. The amount you receive upon exercise will equal the product of –

	 	(a)	 	the number of SAR Shares that you designate for exercise, and
	 
	 	(b)	 	the excess of 100% of the Fair Market Value of a Share on the
date of exercise over the Base Price stated in Section 1 above

4. Form of Payments to You. The Company will make any payment to you under this Award in
the form of Shares, with cash paid in lieu of fractional Shares. Any Shares that you receive will
be free from vesting restrictions (but subject to such legends as the Company determines to be
appropriate). Notwithstanding the foregoing, the Company will not issue Share certificates to you
unless you have made arrangements satisfactory to the Compensation Committee to satisfy any
applicable tax withholding obligations.

5. Failure of Vesting Restrictions By executing this Award, you acknowledge and agree that
if your Continuous Service terminates under circumstances that do not result in accelerated vesting
pursuant to Section 2 above, you will irrevocably forfeit any and all unvested rights under this
Award, and this Award will immediately become null, void, and unenforceable.

[6. Long-term Consideration for Award. <OPTIONAL>. The Participant recognizes and
agrees that the Company’s key consideration in granting this Award is securing the long-term
commitment of the Participant to serve as [a key employee of the Company][a key employee of an
Affiliate of the Company][an officer of the Company][an officer of an Affiliate of the Company] who
will advance and promote the business interests and objectives of the Company Group. Accordingly,
the Participant agrees that this Award shall be subject to the terms and

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Stock Appreciation Rights Award

Commerce Energy Group, Inc.

2006 Stock Incentive Plan

conditions set forth in Section 25 of the Plan (relating to the termination, rescission and
recapture if you violate certain commitments made therein to the Company Group), as well as to the
following terms and conditions as material and indivisible consideration for this Award:

          (a) Fiduciary Duty. During his or her employment with the Company Group the
Participant shall devote his or her full energies, abilities, attention and business time to the
performance of his or her job responsibilities and shall not engage in any activity which conflicts
or interferes with, or in any way compromises, his or her performance of such responsibilities.

          (b) Confidential Information. The Participant recognizes that by virtue of his or her
employment with the Company Group, he or she will be granted otherwise prohibited access to
confidential information and proprietary data which are not known, and not readily accessible to
the competitors of the Company Group. This information (the “Confidential Information”) includes,
but is not limited to, current and prospective customers; the identity of key contacts at such
customers; customers’ particularized preferences and needs; marketing strategies and plans;
financial data; personnel data; compensation data; proprietary procedures and processes; and other
unique and specialized practices, programs and plans of the Company Group and their respective
customers and prospective customers. The Participant recognizes that this Confidential Information
constitutes a valuable property of the Company Group, developed over a significant period of time
and at substantial expense. Accordingly, the Participant agrees that he or she shall not, at any
time during or after his or her employment with the Company Group, divulge such Confidential
Information or make use of it for his or her own purposes or the purposes of any person or entity
other than the Company Group.

          (c) Non-Solicitation of Customers. The Participant recognizes that by virtue of his
or her employment with the Company Group he or she will be introduced to and involved in the
solicitation and servicing of existing customers of the Company Group and new customers obtained by
the Company Group during his or her employment. The Participant understands and agrees that all
efforts expended in soliciting and servicing such customers shall be for the permanent benefit of
the Company Group. The Participant further agrees that during his or her employment with the
Company Group the Participant will not engage in any conduct which could in any way jeopardize or
disturb any of the customer relationships of the Company Group. The Participant also recognizes
the legitimate interest of the Company Group in protecting, for a reasonable period of time after
his or her employment with the Company Group, the customers of the Company Group. Accordingly, the
Participant agrees that, for a period beginning on the date hereof and ending one (1) year after
termination of Participant’s employment with the Company Group, regardless of the reason for such
termination, the Participant shall not, directly or indirectly, without the prior written consent
of the Chief Executive Officer of the Company, market, offer, sell or otherwise furnish any
products or services similar to, or otherwise competitive with, those offered by the Company Group
to any customer of the Company Group.

          (d) Non-Solicitation of Employees. The Participant recognizes the substantial
expenditure of time and effort which the Company Group devotes to the recruitment, hiring,
orientation, training and retention of its employees. Accordingly, the Participant agrees that,
for a period beginning on the date hereof and ending two (2) years after termination of
Participant’s employment with the Company Group, regardless of the reason for such termination, the
Participant shall not, directly or indirectly, for himself or herself or on behalf of any other
person or entity, solicit, offer employment to, hire or otherwise retain the services of any
employee of the

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Stock Appreciation Rights Award

Commerce Energy Group, Inc.

2006 Stock Incentive Plan

Company Group. <ADDITIONAL ALTERNATIVE: NON-COMPETITION REQUIREMENT, TAILORED CAREFULLY TO
CONFORM WITH APPLICABLE LAW.>

          (e) Survival of Commitments; Potential Recapture of Award and Proceeds. The
Participant acknowledges and agrees that the terms and conditions of this Section regarding
confidentiality and non-solicitation [and non-competition] shall survive both (i) the termination
of Participant’s employment with the Company for any reason, and (ii) the termination of the Plan,
for any reason. The Participant acknowledges and agrees that the grant of Options in this Award
Agreement is just and adequate consideration for the survival of the restrictions set forth herein,
and that the Company may pursue any or all of the following remedies if the Participant either
violates the terms of this Section or succeeds for any reason in invalidating any part of it (it
being understood that the invalidity of any term hereof would result in a failure of consideration
for the Award):

	 	(i)	 	declaration that the Award is null and void and of no further force or effect;
	 
	 	(ii)	 	recapture of any cash paid or Shares issued to the Participant,
or any designee or beneficiary of the Participant, pursuant to the Award;
	 
	 	(iii)	 	recapture of the proceeds, plus reasonable interest, with
respect to any Shares that are both issued pursuant to this Award and sold or
otherwise disposed of by the Participant, or any designee or beneficiary of the
Participant.

The remedies provided above are not intended to be exclusive, and the Company may seek such other
remedies as are provided by law, including equitable relief.

          (f) Acknowledgement. The Participant acknowledges and agrees that his or her
adherence to the foregoing requirements will not prevent him or her from engaging in his or her
chosen occupation and earning a satisfactory livelihood following the termination of his or her
employment with the Company.]

7. Investment Purposes. You acknowledge that you are receiving this SAR Award for
investment purposes only and without any present intention of selling or distributing the Award or
the Shares issued pursuant to the Award.

8. Designation of Beneficiary. Notwithstanding anything to the contrary contained herein
or in the Plan, following the execution of this Award Agreement, you may expressly designate a
beneficiary (the “Beneficiary”) to his or her interest in the SAR awarded hereby. You
shall designate the Beneficiary by completing and executing a designation of beneficiary agreement
substantially in the form attached hereto as Exhibit D (the “Designation of
Beneficiary”) and delivering an executed copy of the Designation of Beneficiary to the Company.

9. Restriction of Transfer. This Award Agreement may not be sold, pledged, or otherwise
transferred without the prior written consent of the Compensation Committee. Notwithstanding the
foregoing, the Participant may transfer this Award (i) by instrument to an inter vivos or
testamentary trust (or other entity) in which each beneficiary is a permissible gift recipient, as
such is set forth in subsection (ii) of this Section, or (ii) by gift to charitable institutions or
by gift or transfer for

4

 

Stock Appreciation Rights Award

Commerce Energy Group, Inc.

2006 Stock Incentive Plan

consideration to any of the following relatives of the Participant (or to an inter vivos trust,
testamentary trust or other entity primarily for the benefit of the following relatives of the
Participant): any child, stepchild, grandchild, parent, stepparent, grandparent, spouse, former
spouse, domestic partner, sibling, niece, nephew, mother-in-law, father-in-law, son-in-law,
daughter-in-law, brother-in-law, or sister-in-law, and shall include adoptive relationships. Any
transferee of the Participant’s rights shall succeed and be subject to all of the terms of this
Award Agreement and the Plan.

10. Taxes. By signing this Award Agreement, you acknowledge that you shall be solely
responsible for the satisfaction of any taxes that may arise (including taxes arising under
Sections 409A or 4999 of the Code), and that neither the Company nor the Administrator shall have
any obligation whatsoever to pay such taxes. In addition, you acknowledge that the Company may be
required to withhold amounts from payments due to you under applicable law.

11. Notices. Any notice or communication required or permitted by any provision of this
Award Agreement to be given to you shall be in writing and shall be delivered personally or sent by
certified mail, return receipt requested, addressed to you at the last address that the Company had
for you on its records. Each party may, from time to time, by notice to the other party hereto,
specify a new address for delivery of notices relating to this Award Agreement. Any such notice
shall be deemed to be given as of the date such notice is personally delivered or properly mailed.

12. Binding Effect. Except as otherwise provided in this Award Agreement or in the Plan,
every covenant, term, and provision of this Award Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective heirs, legatees, legal representatives,
successors, transferees, and assigns.

13. Modifications. This Award Agreement may be modified or amended at any time, in
accordance with Section 15 of the Plan and provided that you must consent in writing to any
modification that adversely alters or impairs any rights or obligations under this Award Agreement.

14. Headings. Section and other headings contained in this Award Agreement are for
reference purposes only and are not intended to describe, interpret, define or limit the scope or
intent of this Award Agreement or any provision hereof.

15. Severability. Every provision of this Award Agreement and of the Plan is intended to
be severable. If any term hereof is illegal or invalid for any reason, such illegality or
invalidity shall not affect the validity or legality of the remaining terms of this Award
Agreement.

16. Counterparts. This Award Agreement may be executed by the parties hereto in separate
counterparts, each of which when so executed and delivered shall be an original, but all such
counterparts shall together constitute one and the same instrument.

17. Plan Governs. By signing this Award Agreement, you acknowledge that you have received
a copy of the Plan and that your Award Agreement is subject to all the provisions contained in the
Plan, the provisions of which are made a part of this Award Agreement and your Award is subject to

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Stock Appreciation Rights Award

Commerce Energy Group, Inc.

2006 Stock Incentive Plan

all interpretations, amendments, rules and regulations which from time to time may be promulgated
and adopted pursuant to the Plan. In the event of a conflict between the provisions of this Award
Agreement and those of the Plan, the provisions of the Plan shall control.

18. Governing Law. The laws of the State of Delaware shall govern the validity of this
Award Agreement, the construction of its terms, and the interpretation of the rights and duties of
the parties hereto.

19.  Not a Contract of Employment. By executing this Award Agreement you acknowledge and
agree that (i) any person who is terminated before full vesting of an award, such as the one
granted to you by this Award, could claim that he or she was terminated to preclude vesting; (ii)
you promise never to make such a claim; (iii) nothing in this Award Agreement or the Plan confers
on you any right to continue an employment, service or consulting relationship with the [Company
and/or its Affiliates] [Company Group], nor shall it affect in any way your right or the right of
the [Company and/or its Affiliates] [Company Group], as applicable, to terminate your employment,
service, or consulting relationship at any time, with or without Cause; and (iv) the Company would
not have granted this Award to you but for these acknowledgements and agreements.

20. Employment Agreement Provision [OPTION IF EMPLOYEE HAS AN EMPLOYMENT AGREEMENT] By
executing this Award, you acknowledge and agree that your rights upon a termination of employment
before full vesting of this Award will be determined under Section ___of your employment
agreement with the Company and                                                             , dated as of                                          ___, 20___.

BY YOUR SIGNATURE BELOW, along with the signature of the Company’s representative, you and the
Company agree that this Award is being made under and governed by the terms and conditions of this
Award and the Plan.

	 	 	 	 	 	 	 
	 	 	Commerce Energy Group, Inc.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

Name:

Title:
	 	 

The undersigned Participant hereby accepts the terms of this Award and the Plan.

	 	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

Name of Participant:
	 	 

6

 

EXHIBIT A

COMMERCE ENERGY GROUP, INC.

2006 STOCK INCENTIVE PLAN

 

Plan Document

 

 

 

EXHIBIT B

COMMERCE ENERGY GROUP, INC.

2006 STOCK INCENTIVE PLAN

 

Plan Prospectus

 

 

 

EXHIBIT C

COMMERCE ENERGY GROUP, INC.

2006 STOCK INCENTIVE PLAN

 

Form of Stock Appreciation Rights Exercise

 

	 	 	 
	Attention:

	 	Commerce Energy Group, Inc.
	 

	 	2006 Stock Incentive Plan Committee
	 

	 	600 Anton Boulevard
	 

	 	Costa Mesa, California 92626

Dear Sir or Madam:

     The undersigned elects to exercise his/her Stock Appreciation Rights with respect to ___
shares of Common Stock of Commerce Energy Group, Inc. (the “Company”) under and pursuant to an SAR
Agreement dated as of                     .

     The undersigned recognizes and agrees that the Company will satisfy its obligations arising
from this exercise notice through issuing shares of its Common Stock, with the name or names to be
on the stock certificate or certificates and the address and Social Security Number of such
person(s) to be as follows:

	 	 	 
	Name:
	 	 
	
 

	 
	 	 
	Address:
	 	 
	
 

	 
	 	 
	Social Security Number
	 	 
	
 

	 	 	 
	 

	 	Very truly yours,
	 
	 	 
	 

	 	 
	Date

	 	SAR Holder

 

 

EXHIBIT D

COMMERCE ENERGY GROUP, INC.

2006 STOCK INCENTIVE PLAN

 

Designation of Beneficiary

 

     In connection with Award Agreements between Commerce Energy Group, Inc. (the
“Company”) and                     , an individual residing at                                          (the
“Recipient”), the Recipient hereby designates the person specified below as the beneficiary
of the Recipient’s interest in Awards as defined in the Company’s 2006 Stock Incentive Plan (the
“Plan”). This designation shall remain in effect until revoked in writing by the
Recipient.

	 	 	 	 	 	 	 
	 

	 	Name of Beneficiary:	 	 	 	 
	 

	 	 	 	 

	 	 
	 

	 	Address:	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	Social Security No.:	 	 	 	 
	 

	 	 	 	 	 	 

     This beneficiary designation relates to any and all of Recipient’s rights under the following
Award or Awards:

	 	 	 	 	 
	 

	 	o
	 	     any Award that Recipient has received under the Plan.
	 
	 	 	 	 
	 

	 	o
	 	     the                                          Award that Recipient received pursuant to an award
agreement dated ___ ___, ___between
     Recipient and the Company.

     The Recipient understands that this designation operates to entitle the above-named
beneficiary to the rights conferred by an Award from the date this form is delivered to the Company
until such date as this designation is revoked in writing by the Recipient, including by delivery
to the Company of a written designation of beneficiary executed by the Recipient on a later date.

	 	 	 	 	 
	 

	 	Date:	 	 
	
 

	 
	 	 	 	 
	 

	 	By:	 	 
	
 

	 

	 	 	 	[Recipient Name]

Sworn to before me this

___day of                     , 200_

                                                            

Notary Public

County of                     

State ofexv4w16

 

Exhibit 4.16

COMMERCE ENERGY GROUP, INC.

2006 STOCK INCENTIVE PLAN

 

Performance Unit and Performance Stock Award Agreement

 

Award No.      ___

          In consideration of, and as a reward for, your past services rendered to the Company and to
provide you with an incentive for on-going superior performance (which has a value exceeding the
par value of the Performance Stock awarded pursuant to this Agreement) you are hereby awarded
Performance Units and Performance Stock subject to the terms and conditions set forth in this
agreement (“Award Agreement” or “Award”), and in the Commerce Energy Group, Inc.
2006 Stock Incentive Plan (the “Plan”), which is attached hereto as Exhibit A. A
summary of the Plan appears in its Prospectus, which is attached as Exhibit B. You should
carefully review these documents, and consult with your personal financial advisor, in order to
fully understand the implications of this Award, including your tax alternatives and their
consequences.

          By executing this Award Agreement, you agree to be bound by all of the Plan’s terms and
conditions as if they had been set out verbatim in this Award Agreement. In addition, you
recognize and agree that all determinations, interpretations, or other actions respecting the Plan
and this Award Agreement will be made by the Board of Directors (the “Board”) of Commerce
Energy Group, Inc. (the “Company”) or any Committee appointed by the Board to administer
the Plan, and shall (in the absence of manifest bad faith or fraud) be final, conclusive and
binding upon all parties, including you, your heirs and representatives. Capitalized terms are
defined in the Plan or in this Award Agreement.

     1. General Terms of Your Award.

Name of Participant

Date of Award

     2. Performance Unit. The Performance Unit portion of your Award is being granted
pursuant to Section 10 of the Plan, and shall have the terms set forth in the table below, subject,
absolutely, to the terms of the Plan and to the Committee’s discretion to interpret the Plan and
this Award in any manner that the Committee may deem reasonably necessary or appropriate in order
for this Award to satisfy the requirements for “performance-based compensation” within the meaning
of Section 162(m)(4) of the Code, and associated tax regulations and rulings. The Performance Unit
portion of your award provides that you may qualify to receive an amount of cash that falls within
the range specified in the table below, such amount to be determined based on the extent to which,
if at all, the Performance Measures for Determining Qualification have been satisfied and in
accordance with the weights assigned thereto.

	 	 	 
	Range in Amount of Cash

	 	Threshold: $                    
	 

	 	Target: $                    
	 

	 	Maximum: $                    
	 
	 	 
	Performance Period
	 	 

 

 

Performance Unit and Performance Stock Award

Commerce Energy Group, Inc.

2006 Stock Incentive Plan

	 	 	 
	Performance Measures

	 	See Schedule ___, attached hereto as Exhibit C.
	 
	 	 
	Qualification
	 	 

     3. Performance Stock. The Performance Stock portion of your award provides that you
may qualify to receive, subject to further vesting, a number of Shares (“Performance
Stock”) with a value that falls within the range of values specified in the table below, such
value to be determined based on the extent to which, if at all, the Performance Measures for
Determining Qualification have been satisfied and the weights assigned thereto. The Performance
Stock portion of your Award is being granted pursuant to Section 10 of the Plan, and shall have the
terms set forth in the table below; subject, absolutely, to the terms of the Plan and to the
Committee’s discretion to interpret the Plan and this Award in any manner that the Committee may
deem reasonably necessary or appropriate in order for this Award to satisfy the requirements for
“performance-based compensation” within the meaning of Section 162(m)(4) of the Code, and
associated tax regulations and rulings.

	 	 	 
	Range in Value of Shares of Performance Stock

	 	Threshold: $                    
	 

	 	Target: $                    
	 

	 	Maximum: $                    
	 
	 	 
	Performance Period for

Qualification
	 	 
	 
	 	 
	Performance Measures

	 	See Schedule ___,
attached hereto as Exhibit D.
	 
	 	 
	Pricing Date to
Determine Number of
Shares
	 	 
	 
	 	 
	Qualification
	 	 

	 
	Performance Period for Further Vesting

	 

	Performance Measure for

Determining Further Vesting

	 

	Further Vesting

     4. Issuance of Shares of Performance Stock. If you qualify to receive any Shares of
Performance Stock that remain subject to further vesting, the stock certificates evidencing such
Shares that will be issued as of the Pricing Date will bear the following legend that shall remain
in place and effective until all other vesting restrictions lapse and new certificates are issued
pursuant to Section 6(b) below:

“The sale or other transfer of the Stock represented by this certificate, whether voluntary,
involuntary, or by operation of law, is subject to certain restrictions on transfer set
forth in

2

 

Performance Unit and Performance Stock Award

Commerce Energy Group, Inc.

2006 Stock Incentive Plan

the Commerce Energy Group, Inc. 2006 Stock Incentive Plan, and in any rules and
administrative procedures adopted pursuant to such Plan and in a related Award Agreement. A
copy of the Plan, such rules and procedures and such Award Agreement may be obtained from
the Secretary of Commerce Energy Group, Inc.”

     5. Unvested Performance Stock. You will be reflected as the owner of record on the
Company’s books and records of any Shares of Performance Stock issued pursuant to this Award
Agreement. The Company will hold the stock certificates for safekeeping until such Shares have
become vested and non-forfeitable. You must deliver to the Company, as soon as practicable after
the date any Shares of Performance Stock are issued, a stock power, endorsed in blank, with respect
to any such Shares. If you forfeit any Shares of Performance Stock, the stock power will be used to
return the certificates for the forfeited Shares to the transfer agent for cancellation. As the
owner of record of any Shares of Performance Stock you qualify to receive pursuant to this Award
Agreement, you will be entitled to all rights of a stockholder of the Company, including the right
to vote Shares; subject, however, to the provisions of Section 6 hereof with respect to any cash or
stock dividends that are paid between the date of this Award and your receipt of shares pursuant to
a vesting event; subject in each case to the treatment of the Award upon termination of employment
before the particular record date for determining stockholders of record entitled to the payment of
the dividend or distribution. To the extent such a dividend is paid in stock, such stock shall be
subject to the same restrictions contained in Section 3.

     6. Dividends. When Shares are delivered to you or your duly-authorized transferee
pursuant to the vesting of the Shares, you or your duly-authorized transferee shall also be
entitled to receive, with respect to each Share issued, an amount equal to any cash dividends (plus
simple interest at a rate of five percent per annum, or such other reasonable rate as the Committee
may determine) and a number of Shares equal to any stock dividends, which were declared and paid to
the holders of Shares between the Grant Date and the date such Share is issued. To the extent that
your Continuous Service ends before vesting of the Shares, you will forfeit all dividends (whether
paid in cash or in stock) attributable to all such Shares.

     7. Qualification and Vesting.

	       (a)        After the Performance Period for the Performance Unit, if you qualify to receive an amount
of cash pursuant to the Performance Unit as determined and calculated by the Committee, you shall
be paid such cash amount in conformity with the Company’s bonus payment practices generally
applicable to senior executives of the Company.
	 
	       (b)        If you qualify to receive any Shares of Performance Stock, subject to further vesting, as
the further vesting restrictions become satisfied over time or upon satisfaction of the relevant
performance measures, the Company shall cause new stock certificates for the Shares of Performance
Stock so vested to be delivered to you, with such legends as the Company determines to be
appropriate. New certificates shall not be delivered to you unless you have made arrangements
satisfactory to the Committee to satisfy tax-withholding obligations.

     [8. Long-term Consideration for Award. <OPTIONAL>. The Participant recognizes
and agrees that the Company’s key consideration in granting this Award is securing the long-term
commitment of the Participant to serve as [a key employee of the Company][a key employee of an
Affiliate of the Company][an officer of the Company][an officer of an

3

 

Performance Unit and Performance Stock Award

Commerce Energy Group, Inc.

2006 Stock Incentive Plan

Affiliate of the Company] who will advance and promote the business interests and objectives
of the Company and/or its Affiliates (the “Company Group”). Accordingly, the Participant agrees
that this Award shall be subject to the terms and conditions set forth in Section 25 of the Plan
(relating to the termination, rescission and recapture if you violate certain commitments made
therein to the Company Group), as well as to the following terms and conditions as material and
indivisible consideration for this Award:

          (a) Fiduciary Duty. During his or her employment with the Company Group the
Participant shall devote his or her full energies, abilities, attention and business time to the
performance of his or her job responsibilities and shall not engage in any activity which conflicts
or interferes with, or in any way compromises, his or her performance of such responsibilities.

          (b) Confidential Information. The Participant recognizes that by virtue of his or her
employment with the Company Group, he or she will be granted otherwise prohibited access to
confidential information and proprietary data which are not known, and not readily accessible to
the competitors of the Company Group. This information (the “Confidential Information”) includes,
but is not limited to, current and prospective customers; the identity of key contacts at such
customers; customers’ particularized preferences and needs; marketing strategies and plans;
financial data; personnel data; compensation data; proprietary procedures and processes; and other
unique and specialized practices, programs and plans of the Company Group and their respective
customers and prospective customers. The Participant recognizes that this Confidential Information
constitutes a valuable property of the Company Group, developed over a significant period of time
and at substantial expense. Accordingly, the Participant agrees that he or she shall not, at any
time during or after his or her employment with the Company Group, divulge such Confidential
Information or make use of it for his or her own purposes or the purposes of any person or entity
other than the Company Group.

          (c) Non-Solicitation of Customers. The Participant recognizes that by virtue of his
or her employment with the Company Group he or she will be introduced to and involved in the
solicitation and servicing of existing customers of the Company Group and new customers obtained by
the Company Group during his or her employment. The Participant understands and agrees that all
efforts expended in soliciting and servicing such customers shall be for the permanent benefit of
the Company Group. The Participant further agrees that during his or her employment with the
Company Group the Participant will not engage in any conduct which could in any way jeopardize or
disturb any of the customer relationships of the Company Group. The Participant also recognizes
the legitimate interest of the Company Group in protecting, for a reasonable period of time after
his or her employment with the Company Group, the customers of the Company Group. Accordingly, the
Participant agrees that, for a period beginning on the date hereof and ending one (1) year after
termination of Participant’s employment with the Company Group, regardless of the reason for such
termination, the Participant shall not, directly or indirectly, without the prior written consent
of the Chief Executive Officer of the Company, market, offer, sell or otherwise furnish any
products or services similar to, or otherwise competitive with, those offered by the Company Group
to any customer of the Company Group.

          (d) Non-Solicitation of Employees. The Participant recognizes the substantial
expenditure of time and effort which the Company Group devotes to the recruitment, hiring,
orientation, training and retention of its employees. Accordingly, the Participant agrees that,
for a period beginning on the date hereof and ending two (2) years after termination of
Participant’s

4

 

Performance Unit and Performance Stock Award

Commerce Energy Group, Inc.

2006 Stock Incentive Plan

employment with the Company Group, regardless of the reason for such termination, the
Participant shall not, directly or indirectly, for himself or herself or on behalf of any other
person or entity, solicit, offer employment to, hire or otherwise retain the services of any
employee of the Company Group. <ADDITIONAL ALTERNATIVE: NON-COMPETITION REQUIREMENT, TAILORED
CAREFULLY TO CONFORM WITH APPLICABLE LAW.>

          (e) Survival of Commitments; Potential Recapture of Award and Proceeds. The
Participant acknowledges and agrees that the terms and conditions of this Section regarding
confidentiality and non-solicitation [and non-competition] shall survive both (i) the termination
of Participant’s employment with the Company Group for any reason, and (ii) the termination of the
Plan, for any reason. The Participant acknowledges and agrees that the grant of Options in this
Award Agreement is just and adequate consideration for the survival of the restrictions set forth
herein, and that the Company Group may pursue any or all of the following remedies if the
Participant either violates the terms of this Section or succeeds for any reason in invalidating
any part of it (it being understood that the invalidity of any term hereof would result in a
failure of consideration for the Award):

	 	(i)	 	declaration that the Award is null and void and of no further
force or effect;
	 
	 	(ii)	 	recapture of any cash paid or Shares issued to the Participant,
or any designee or beneficiary of the Participant, pursuant to the Award;
	 
	 	(iii)	 	recapture of the proceeds, plus reasonable interest, with
respect to any Shares that are both issued pursuant to this Award and sold or
otherwise disposed of by the Participant, or any designee or beneficiary of the
Participant.

The remedies provided above are not intended to be exclusive, and the Company Group may seek such
other remedies as are provided by law, including equitable relief.

          (f) Acknowledgement. The Participant acknowledges and agrees that his or her
adherence to the foregoing requirements will not prevent him or her from engaging in his or her
chosen occupation and earning a satisfactory livelihood following the termination of his or her
employment with the Company Group.]

     9. Designation of Beneficiary. Notwithstanding anything to the contrary contained
herein or in the Plan, following the execution of this Award Agreement, you may expressly designate
a beneficiary (the “Beneficiary”) to his or her interest in the Performance Unit and
Performance Stock awarded hereby. You shall designate the Beneficiary by completing and executing
a designation of beneficiary agreement substantially in the form attached hereto as Exhibit
E (the “Designation of Beneficiary”) and delivering an executed copy of the Designation
of Beneficiary to the Company.

     10. Income Taxes and Deferred Compensation. The Participant is solely responsible and
liable for the satisfaction of all taxes and penalties that may arise in connection with this Award
(including any taxes arising under Section 409A of the Code), and the Company shall not have any
obligation to indemnify or otherwise hold any Participant harmless from any or all of such taxes.
The Committee shall have the discretion to unilaterally modify this Award in a manner that (i)

5

 

Performance Unit and Performance Stock Award

Commerce Energy Group, Inc.

2006 Stock Incentive Plan

conforms with the requirements of Section 409A of the Code, (ii) that voids any election of
the Participant to the extent it would violate Section 409A of the Code, and (iii) for any
distribution election that would violate Section 409A of the Code, to make distributions pursuant
to the Award at the earliest to occur of a distribution event that is allowable under Section 409A
of the Code or any distribution event that is both allowable under Section 409A of the Code and is
elected by the Participant, subject to any valid second election to defer, provided that the
Committee permits second elections to defer in accordance with Section 409A(a)(4)(C). The
Committee shall have the sole discretion to interpret the requirements of the Code, including
Section 409A, for purposes of the Plan and this Award Agreement. In addition, you acknowledge that
the Company may be required to withhold amounts from payments due to you under applicable law.

     11. Notices. Any notice or communication required or permitted by any provision of
this Award Agreement to be given to you shall be in writing and shall be delivered personally or
sent by certified mail, return receipt requested, addressed to you at the last address that the
Company had for you on its records. Each party may, from time to time, by notice to the other
party hereto, specify a new address for delivery of notices relating to this Award Agreement. Any
such notice shall be deemed to be given as of the date such notice is personally delivered or
properly mailed.

     12. Binding Effect. Except as otherwise provided in this Award Agreement or in the
Plan, every covenant, term, and provision of this Award Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective heirs, legatees, legal representatives,
successors, transferees, and assigns.

     13. Modifications. This Award Agreement may be modified or amended at any time, in
accordance with Section 15 of the Plan and provided that you must consent in writing to any
modification that adversely alters or impairs any rights or obligations under this Award Agreement.

     14. Headings. Section and other headings contained in this Award Agreement are for
reference purposes only and are not intended to describe, interpret, define or limit the scope or
intent of this Award Agreement or any provision hereof.

     15. Severability. Every provision of this Award Agreement and of the Plan is intended
to be severable. If any term hereof is illegal or invalid for any reason, such illegality or
invalidity shall not affect the validity or legality of the remaining terms of this Award
Agreement.

     16. Counterparts. This Award Agreement may be executed by the parties hereto in
separate counterparts, each of which when so executed and delivered shall be an original, but all
such counterparts shall together constitute one and the same instrument.

     17. Plan Governs. By signing this Award Agreement, you acknowledge that you have
received a copy of the Plan and that your Award Agreement is subject to all the provisions
contained in the Plan, the provisions of which are made a part of this Award Agreement and your
Award is subject to all interpretations, amendments, rules and regulations which from time to time
may be promulgated and adopted pursuant to the Plan. In the event of a conflict between the
provisions of this Award Agreement and those of the Plan, the provisions of the Plan shall control.

6

 

Performance Unit and Performance Stock Award

Commerce Energy Group, Inc.

2006 Stock Incentive Plan

     18. Governing Law. The laws of the State of Delaware shall govern the validity of
this Award Agreement, the construction of its terms, and the interpretation of the rights and
duties of the parties hereto.

     19. Not a Contract of Employment. By executing this Award Agreement you acknowledge
and agree that (i) any person who is terminated before full vesting of an award, such as the one
granted to you by this Award, could claim that he or she was terminated to preclude vesting; (ii)
you promise never to make such a claim; (iii) nothing in this Award Agreement or the Plan confers
on you any right to continue an employment, service or consulting relationship with the [Company
and/or its Affiliates] [Company Group], nor shall it affect in any way your right or the right of
[the Company and/or its Affiliates] or [the Company Group], as applicable, to terminate your
employment, service, or consulting relationship at any time, with or without Cause; and (iv) the
[Company and/or its affiliates] [Company Group] would not have granted this Award to you but for
these acknowledgements and agreements.

     20. Employment Agreement Provision [OPTION IF EMPLOYEE HAS AN EMPLOYMENT AGREEMENT]
By executing this Award, you acknowledge and agree that your rights upon a termination of
employment before full vesting of this Award will be determined under Section ___of your
employment agreement with the Company and                                                             , dated as of                     
___, 20___.

     BY YOUR SIGNATURE BELOW, along with the signature of the Company’s representative, you and the
Company agree that this Award is being made under and governed by the terms and conditions of this
Award and the Plan.

	 	 	 	 	 	 	 
	 	 	COMMERCE ENERGY GROUP, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

Printed Name:

A duly-authorized officer
	 	 

     The undersigned Participant hereby accepts the terms of this Award and the Plan.

	 	 	 	 	 	 	 
	 

	 	Signature:	 	 	 	 
	 	 	
 

	 
	 	 	 	 	 	 
	 

	 	Printed Name:	 	 	 	 
	 	 	
 

7

 

EXHIBIT A

COMMERCE ENERGY GROUP, INC.

2006 STOCK INCENTIVE PLAN

 

Plan Document

 

 

 

EXHIBIT B

COMMERCE ENERGY GROUP, INC.

2006 STOCK INCENTIVE PLAN

 

Plan Prospectus

 

 

 

EXHIBIT C

COMMERCE ENERGY GROUP, INC.

2006 STOCK INCENTIVE PLAN

 

Performance Measures to Determine Qualification for Performance Unit

 

SCHEDULE _____

	 	 	 	 	 	 	 	 	 
	Measure

	 	Threshold
	 	Target
	 	Maximum
	 	Weight
	 

	 	 
	 	 
	 	 
	 	 

Range of Award Amounts for Use in Calculation

	 	 	 	 	 
	Threshold Award Amount

	 	Target Award Amount
	 	Maximum Award Amount
	 

	 	 
	 	 

Formula for Calculation

Calculate and add the following for each Measure to determine the cash amount Participant
qualifies to receive:

 

 

EXHIBIT D

COMMERCE ENERGY GROUP, INC.

2006 STOCK INCENTIVE PLAN

 

Performance Measures to Determine Qualification for Performance Stock

 

SCHEDULE ___

	 	 	 	 	 	 	 	 	 
	Measure

	 	Threshold
	 	Target
	 	Maximum
	 	Weight
	 

	 	 
	 	 
	 	 
	 	 

Range of Award Values for Use in Calculation

	 	 	 	 	 
	Threshold Award Value

	 	Target Award Value
	 	Maximum Award Amount
	 

	 	 
	 	 

Formula for Calculation

Calculate and add the following for each Measure to determine value of Shares of Performance
Stock Participant qualifies to receive:

 

 

EXHIBIT E

COMMERCE ENERGY GROUP, INC.

2006 STOCK INCENTIVE PLAN

 

Designation of Beneficiary

 

     In connection with Award Agreements between Commerce Energy Group, Inc. (the
“Company”) and                     , an individual residing at                                          (the
“Recipient”), the Recipient hereby designates the person specified below as the beneficiary
of the Recipient’s interest in Awards as defined in the Company’s 2006 Stock Incentive Plan (the
“Plan”). This designation shall remain in effect until revoked in writing by the
Recipient.

	 	 	 	 	 	 	 
	 

	 	Name of Beneficiary:	 	 	 	 
	 

	 	 	 	 

	 	 
	 
	 	 	 	 	 	 
	 

	 	Address:	 	 	 	 
	 

	 	 	 	 

	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	 

	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	 

	 	 
	 
	 	 	 	 	 	 
	 

	 	Social Security No.:	 	 	 	 
	 

	 	 	 	 

	 	 

     This beneficiary designation relates to any and all of Recipient’s rights under the following
Award or Awards:

	 	 	 	 	 
	 

	 	o
	 	any Award that Recipient has received under the Plan.
	 
	 	 	 	 
	 

	 	o
	 	the                                          Award that Recipient received pursuant to an award
agreement dated                      ___, ___between Recipient and the Company.

     The Recipient understands that this designation operates to entitle the above-named
beneficiary to the rights conferred by an Award from the date this form is delivered to the Company
until such date as this designation is revoked in writing by the Recipient, including by delivery
to the Company of a written designation of beneficiary executed by the Recipient on a later date.

	 	 	 	 	 
	 

	 	Date:	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	 	 	[Recipient Name]

Sworn to before me this

___day of                     , 200_

                                                            

Notary Public

County of                     

State of

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