Exhibit 10.1
COMMERCE ENERGY GROUP, INC.
2005 EMPLOYEE STOCK PURCHASE PLAN
COMMERCE ENERGY GROUP, INC.
2005 EMPLOYEE STOCK PURCHASE PLAN
The following constitutes the provisions of the 2005 Employee Stock
Purchase Plan of Commerce Energy Group, Inc.
1. PURPOSE. The purpose of the Plan is to provide employees of the
Company and its Designated Subsidiaries with an opportunity to purchase Common
Shares of the Company. It is the intention, but not the obligation, of the
Company to have the Plan qualify as an "employee stock purchase plan" under
Section 423 of the Code. The provisions of the Plan shall, accordingly, be
construed so as to extend and limit participation in a manner consistent with
the requirements of that section of the Code.
2. DEFINITIONS.
(a) "ADMINISTRATOR" means (i) any person or committee to whom the
Board delegates administrative discretion under the Plan, and (ii) the Board,
which may exercise any and all administrative powers associated with the Plan.
(b) "BOARD" means the Board of Directors of the Company.
(c) "CODE" means the Internal Revenue Code of 1986, as amended.
(d) "COMMON SHARES" means shares of common stock, par value $.001
per share, of the Company.
(e) "COMPANY" means Commerce Energy Group, Inc., a Delaware
corporation.
(f) "COMPENSATION" means the sums of the types and amounts of
compensation determined from time to time by the Administrator in its sole
discretion to be eligible to be taken into account under the Plan, provided that
no such determination shall include or exclude any type or amount of
compensation contrary to the requirements of Section 423 of the Code, including
the equal treatment of participants having the same employer corporation.
(g) "CONTINUOUS STATUS AS AN EMPLOYEE" means the absence of any
interruption or termination of service as an Employee. Continuous Status as an
Employee shall not be considered interrupted in the case of (i) sick leave; (ii)
military leave; (iii) any other leave of absence approved by the Administrator,
provided that such leave is for a period of not more than 90 days, unless
reemployment upon the expiration of such leave is guaranteed by contract or
statute, or unless provided otherwise pursuant to Company policy adopted from
time to time; or (iv) in the case of transfers between locations of the Company
or between the Company and its Designated Subsidiaries.
(h) "CONTRIBUTIONS" means all amounts credited to the account of a
participant pursuant to the Plan.
(i) "CORPORATE TRANSACTION" means a sale of all or substantially all
of the Company's assets, or a merger, consolidation, or other capital
reorganization of the Company with or into another corporation, or any other
transaction or series of related transactions in which the Company's
shareholders immediately prior thereto own less than 50% of the voting shares of
beneficial interest of the Company (or its successor or parent) immediately
thereafter.
(j) "DESIGNATED SUBSIDIARIES" means the Subsidiaries (or other
entities with respect to sub-plans established under Section 19(d) hereof) that
have been designated by the Board from time to time in its sole discretion as
eligible to participate in the Plan.
(k) "EMPLOYEE" means any person, including an Officer, whom the
Company or one of its Designated Subsidiaries classifies as an employee for
payroll tax purposes and who (i) is customarily employed by the Company or one
of its Designated Subsidiaries for at least 20 hours per week, (ii) is
customarily employed by the Company or one of its Designated Subsidiaries for
more than five months in a calendar year, and (iii) has been employed by the
Company or one of its Designated Subsidiaries for at least six (6) months.
(l) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
(m) "OFFERING DATE" means the first business day of each Purchase
Period of the Plan.
(n) "OFFICER" means a person who is an officer of the Company within
the meaning of Section 16 of the Exchange Act and the rules and regulations
promulgated thereunder.
(o) "PLAN" means this 2005 Employee Stock Purchase Plan.
(p) "PURCHASE DATE" means the last day of each Purchase Period of
the Plan, provided, however, that if such date is not a business day, the
"Purchase Date" shall mean the immediately preceding business day.
(q) "PURCHASE PERIOD" means a period of one calendar month (or such
other period of up to 27 consecutive months that the Administrator may determine
in its sole discretion before an Offering Date), except for the first Purchase
Period set forth in Section 4(b).
(r) "PURCHASE PRICE" means with respect to a Purchase Period an
amount equal to 85% of the Fair Market Value (as defined in Section 7(b) below)
of a Share on the Offering Date or the Purchase Date, whichever is lower;
provided, however, that the Administrator may before any Offering Date establish
a different formula for determining the Purchase Price so long as the formula
does not result in a lower Purchase Price than is allowable under Section
423(b)(6) of the Code.
(s) "SHARE" means one Common Share, as adjusted in accordance with
Section 18 of the Plan.
(t) "SUBSIDIARY" means a corporation (or an unincorporated entity of
which the Company is a co-employer of its employees), domestic or foreign, of
which not less than 50% of the voting shares are held by the Company or a
Subsidiary, whether or not such corporation now exists or is hereafter organized
or acquired by the Company or a Subsidiary.
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3. ELIGIBILITY.
(a) Any person who is an Employee as of the date 30 days before the
Offering Date of a given Purchase Period shall be eligible to participate in
such Purchase Period under the Plan, subject to the requirements of Section 5(a)
and the limitations imposed by Section 423(b) of the Code; provided however that
eligible Employees may not participate in more than one Purchase Period at a
time.
(b) Any provisions of the Plan to the contrary notwithstanding other
than Section 3(c), no Employee shall be granted an option under the Plan (i) if,
immediately after the grant, such Employee (or any other person whose stock
would be attributed to such Employee pursuant to Section 424(d) of the Code)
would own shares of beneficial ownership of the Company and/or hold outstanding
options to purchase Shares possessing five percent (5%) or more of the total
combined voting power or value of all classes of Shares of the Company or shares
of common stock of any Subsidiary of the Company, or (ii) if such option would
permit his or her rights to purchase Shares under all employee stock purchase
plans (described in Section 423 of the Code) of the Company and its Subsidiaries
to accrue at a rate that exceeds Twenty-Five Thousand Dollars ($25,000) of the
Fair Market Value (as defined in Section 7(b) below) of such Shares (determined
at the time such option is granted) for each calendar year in which such option
is outstanding at any time.
(c) Company directors, consultants (the meaning of such terms to be
determined by the Administrator in its sole discretion), employees of affiliates
of the Company that are not corporate Subsidiaries, and Employees who are
ineligible to participate pursuant to Section 3(b)(i) above may, in the sole
discretion of the Administrator, be eligible to participate in any Company
sub-plan or sub-plans that the Administrator may establish in accordance with
Section 19(d) below.
4. PURCHASE PERIODS. Purchase Periods shall generally commence on the
first day of each calendar month (e.g., January 1, February 1, March 1) and
shall end on the last day of the calendar month in which the Purchase Period
begins. The Administrator shall have the discretion to establish the first
Purchase Period as commencing on or after the effective date determined in
Section 22 below. The Administrator shall have the power to change the duration
and/or frequency of Purchase Periods with respect to future purchases without
stockholder approval, provided that the Administrator shall announce any such
change at least fifteen (15) days prior to the scheduled beginning of the first
Purchase Period to be affected.
5. PARTICIPATION.
(a) An eligible Employee may become a participant in the Plan by
completing a subscription agreement on the form provided by the Company and
filing it with the Company's Human Resources Department or the stock brokerage
or other financial services firms designated or approved by the Administrator
from time to time (each, a "Designated Broker") prior to the applicable Offering
Date, unless a later time for filing the subscription agreement is set by the
Board for all eligible Employees with respect to a given Purchase Period. The
subscription agreement shall set forth the percentage of the participant's
Compensation (subject to Section 6(a) below) to be paid as Contributions
pursuant to the Plan.
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(b) Payroll deductions shall commence on the first full payroll
following the Offering Date and shall end on the last payroll paid on or prior
to the last Purchase Period to which the subscription agreement is applicable,
unless sooner terminated by the participant as provided in Section 10.
(c) A participant's subscription agreement shall remain in effect
for successive Purchase Periods unless modified as provided in Section 6 or
terminated as provided in Section 10.
6. METHOD OF PAYMENT OF CONTRIBUTIONS.
(a) A participant shall elect to have payroll deductions made on
each payday during the Purchase Period in an amount not less than one percent
(1%) (or $25 per payroll period, if greater), and not more than the lesser of
ten percent (10%) (or such other percentage as the Administrator may establish
from time to time before an Offering Date) of such participant's Compensation on
each payday during the Purchase Period or $1,000.00. All payroll deductions made
by a participant shall be credited to his or her account under the Plan. A
participant may not make any additional payments into such account.
(b) A participant may discontinue his or her participation in the
Plan as provided in Section 10, and may increase or decrease the rate of his or
her Contributions with respect to the Purchase Period only in accordance with
rules that the Administrator establishes before the Offering begins. Any change
in rate shall be effective as of the beginning of the next calendar month
following the date of filing of the new subscription agreement, if the agreement
is filed at least ten (10) business days prior to such date and, if not, as of
the beginning of the next succeeding calendar month.
(c) Notwithstanding the foregoing, to the extent necessary to comply
with Section 423(b)(8) of the Code and Section 3(b) herein, a participant's
payroll deductions may be decreased during any Purchase Period scheduled to end
during the current calendar year to 0%. Payroll deductions shall re-commence at
the rate provided in such participant's subscription agreement at the beginning
of the first Purchase Period that is scheduled to end in the following calendar
year, unless terminated by the participant as provided in Section 10.
7. GRANT OF OPTION.
(a) On the Offering Date of each Purchase Period, each eligible
Employee participating in such Purchase Period shall be granted an option to
purchase on the Purchase Date for the Purchase Period a number of Shares
determined by dividing such Employee's Contributions accumulated prior to such
Purchase Date and retained in the participant's account as of the Purchase Date
by the applicable Purchase Price; provided however that the maximum number of
Shares an Employee may purchase during each Purchase Period shall be the number
of Shares for which the aggregate Purchase Price equals the lesser of ten
percent (10%) of such Employee's Compensation earned during the Purchase Period
or $2,000.00, and provided further that such purchase shall be subject to the
limitations set forth in Sections 3(b) and 13.
(b) The fair market value of the Company's Common Shares on a given
date (the "Fair Market Value") shall be -
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(i) the closing sales price of the Common Shares for such date
(or, in the event that the Common Shares are not traded on such date,
on the immediately preceding trading date), as reported by the New York
Stock Exchange or the American Stock Exchange, or, if such price is not
reported, then on the nearest preceding trading day during which a sale
occurred; or
(ii) if such stock is not traded on either exchange but is
quoted on NASDAQ or a successor quotation system (A) the last sales
price (if the stock is then listed as a National Market Issue under The
Nasdaq National Market System) or (B) the mean of the bid and asked
prices per-share of the Common Shares as reported by the NASDAQ or
successor or,
(iii) in the event the Common Shares are not listed on a stock
exchange or quoted on NASDAQ but is otherwise traded in the
over-the-counter market, the Fair Market Value per share shall be the
mean between the most recent representative bid and asked prices; or
(iv) if subsections (i)-(iii) do not apply, the fair market
value established in good faith by the Board.
8. EXERCISE OF OPTION. Unless a participant withdraws from the Plan as
provided in Section 10, his or her option for the purchase of Shares will be
exercised automatically on each Purchase Date of a Purchase Period, and the
maximum number of full Shares subject to the option will be purchased at the
applicable Purchase Price with the accumulated Contributions in his or her
account. No fractional Shares shall be sold or issued pursuant to the Plan. Any
payroll deductions accumulated in a participant's account that are not
sufficient to purchase a full Share shall be retained in the participant's
account for the subsequent Purchase Period, subject to earlier withdrawal by the
participant as provided in Section 10 below. Any other amounts left over in a
participant's account after a Purchase Date shall be returned to the
participant. The Shares purchased upon exercise of an option hereunder shall be
deemed to be transferred to the participant on the Purchase Date. During his or
her lifetime, a participant's option to purchase Shares hereunder is exercisable
only by him or her.
9. DELIVERY. As promptly as practicable after each Purchase Date of
each Purchase Period, the number of Shares purchased by each participant upon
exercise of his or her option shall be deposited into an account established in
the participant's name with a Designated Broker.
10. VOLUNTARY WITHDRAWAL; TERMINATION OF EMPLOYMENT.
(a) Subject to applicable securities law restrictions (e.g., the
Company's insider trading policy), a participant may withdraw all but not less
than all the Contributions credited to his or her account under the Plan at any
time prior to each Purchase Date by giving written notice to the Company or the
Designated Broker, in the form and manner as directed by the Company, at least
five (5) days prior to the Purchase Date. All of the participant's Contributions
credited to his or her account will be paid to him or her promptly after receipt
of his or her notice of withdrawal and his or her option for the current period
will be automatically terminated, and no further Contributions for the purchase
of Shares will be made during the Purchase Period.
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(b) Upon termination of the participant's Continuous Status as an
Employee prior to the Purchase Date of a Purchase Period for any reason,
including retirement or death, the Contributions credited to his or her account
will be returned to him or her or, in the case of his or her death, to the
person or persons entitled thereto under Section 13, and his or her option will
be automatically terminated. A participant will have up to 30 days to transfer,
to himself, to a designated beneficiary, or to a designated broker, any Shares
that the Company or the Designated Broker holds for the benefit of the
Participant (using a form that the Administrator provides). If within 30 days,
the participant's Shares are not transferred, the Administrator may, but shall
not be obligated to, issue and mail a stock certificate for the Shares to the
participant.
(c) In the event an Employee fails to remain in Continuous Status as
an Employee of the Company for at least twenty (20) hours per week during the
Purchase Period in which the employee is a participant, he or she will be deemed
to have elected to withdraw from the Plan and the Contributions credited to his
or her account will be returned to him or her and his or her option terminated.
(d) If a participant's withdraws from a Purchase Period, the
participant may enroll in a subsequent purchase period but only once within the
same calendar year for this Plan or any succeeding employee stock purchase plan
or any similar plan which may hereafter be adopted by the Company and for which
such participant is otherwise eligible, subject to applicable securities law
restrictions (e.g., the Company's insider trading policy). If a participant
withdraws from a Purchase Period, payroll deductions shall not resume at the
beginning of any succeeding Purchase Period for which the participant is
eligible to enroll unless the participant delivers a new subscription agreement
to the Company.
11. INTEREST. No interest shall accrue on the Contributions of a
participant in the Plan.
12. SHARES.
(a) The Designated Broker shall purchase all Shares on the open
market. To the extent the Purchase Price for Shares is below Fair Market Value
for any Purchase Period, the Company shall pay the Designated Broker such
amounts as are necessary to subsidize the Purchase Price for Shares purchased on
the open market.
(b) The participant shall have no interest (including no right to
receive any dividends) or voting right in Shares covered by his or her option
until such option has been exercised.
(c) Shares to be delivered to a participant under the Plan will be
registered in the name of the participant or, if directed by the participant in
writing, in the name of the participant and his or her spouse.
13. ADMINISTRATION. The Administrator shall supervise and administer
the Plan, and shall have full and exclusive discretionary authority to construe,
interpret, and apply the terms of the Plan, to determine eligibility, to
adjudicate all disputed claims under the Plan, to adopt, amend and rescind any
rules deemed appropriate for the administration of the Plan, and to make all
other determinations necessary or advisable for the administration of the Plan.
Every finding, decision, and determination made by the Administrator shall, to
the full extent permitted by law, be final and
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binding upon all parties. No person acting individually or jointly as the
Administrator shall be liable for any action or determination made in good faith
with respect to the Plan or any participant.
14. DESIGNATION OF BENEFICIARY.
(a) A participant may designate a beneficiary who is to receive any
Shares and cash, if any, from the participant's account under the Plan in the
event of such participant's death subsequent to the end of a Purchase Period but
prior to delivery to him or her of such Shares and cash. In addition, a
participant may designate a beneficiary who is to receive any cash from the
Participant's account under the Plan in the event of such participant's death
prior to the Purchase Date. If a participant is married and the designated
beneficiary is not the spouse, spousal consent shall be required for such
designation to be effective. Beneficiary designations under this Section 14(a)
shall be made in the form and in the manner as directed by the Company's Human
Resources Department.
(b) Such designation of beneficiary may be changed by the
participant (and his or her spouse, if any) at any time by written notice in
accordance with Section 14(a). In the event of the death of a participant and in
the absence of a beneficiary validly designated under the Plan who is living at
the time of such participant's death, the Company shall deliver such Shares
and/or cash to the executor or administrator of the estate of the participant,
or if no such executor or administrator has been appointed (to the knowledge of
the Company), the Company, in its discretion, may deliver such Shares and/or
cash to the spouse or to any one or more dependents or relatives of the
participant, or if no spouse, dependent or relative is known to the Company,
then to such other person as the Company may designate.
15. TRANSFERABILITY. Neither Contributions credited to a participant's
account nor any rights with regard to the exercise of an option or to receive
Shares under the Plan may be assigned, transferred, pledged or otherwise
disposed of in any way (other than by will, the laws of descent and
distribution, or as provided in Section 14) by the participant. Any such attempt
at assignment, transfer, pledge or other disposition shall be without effect,
except that the Company may treat such act as an election to withdraw funds in
accordance with Section 10.
16. USE OF FUNDS. All Contributions received or held by the Company
under the Plan may be used by the Company for any corporate purpose, and the
Company shall not be obligated to segregate such Contributions.
17. REPORTS. Individual recordkeeping accounts will be maintained for
each participant in the Plan. Statements of account will be provided to
participating Employees at least annually by the Designated Broker, which
statements will set forth the amounts of Contributions, the per Share Purchase
Price, the number of Shares purchased, and the remaining cash balance, if any.
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18. ADJUSTMENTS UPON CORPORATE TRANSACTIONS. In the event of a proposed
dissolution or liquidation of the Company, any Purchase Period then in progress
will terminate immediately prior to the consummation of such action, unless
otherwise provided by the Board. In the event of a Corporate Transaction, each
option outstanding under the Plan shall be assumed or an equivalent option shall
be substituted by the successor corporation or a parent or Subsidiary of such
successor corporation. In the event that the successor corporation refuses to
assume or substitute for outstanding options, each Purchase Period then in
progress shall be shortened and a new Purchase Date shall be set (the "New
Purchase Date"), as of which date any Purchase Period then in progress will
terminate. The New Purchase Date shall be on or before the date of consummation
of the transaction and the Board shall notify each participant in writing, at
least ten (10) days prior to the New Purchase Date, that the Purchase Date for
his or her option has been changed to the New Purchase Date and that his or her
option will be exercised automatically on the New Purchase Date, unless prior to
such date he or she has withdrawn from the Purchase Period as provided in
Section 10.
For purposes of this Section 18, an option granted under the Plan
shall be deemed to be assumed, without limitation, if, at the time of issuance
of the stock or other consideration upon a Corporate Transaction, each holder of
an option under the Plan would be entitled to receive upon exercise of the
option the same number and kind of shares of stock or the same amount of
property, cash or securities as such holder would have been entitled to receive
upon the occurrence of the transaction if the holder had been, immediately prior
to the transaction, the holder of the number of Shares covered by the option at
such time (after giving effect to any adjustments in the number of Shares
covered by the option as provided for in this Section 18); provided, however,
that if the consideration received in the transaction is not solely common stock
of the successor corporation or its parent (as defined in Section 424(e) of the
Code), the Board may, with the consent of the successor corporation, provide for
the consideration to be received upon exercise of the option to be solely common
stock of the successor corporation or its parent equal in Fair Market Value to
the per Share consideration received by holders of Common Shares in the
transaction.
The Board may, if it so determines in the exercise of its sole
discretion, also make provision for adjusting the Common Share reserves of the
Company, as well as the price per Common Share covered by each outstanding
option, in the event that the Company effects one or more reorganizations,
recapitalizations, rights offerings, or other increases or reductions of its
outstanding Common Shares, and in the event of the Company's being consolidated
with or merged into any other corporation.
19. AMENDMENT OR TERMINATION.
(a) The Board may at any time and for any reason terminate or amend
the Plan. Except as provided in Section 18, no such termination of the Plan may
affect options previously granted, provided that the Plan or a Purchase Period
may be terminated by the Board on a Purchase Date or by the Board's setting a
new Purchase Date with respect to a Purchase Period then in progress if the
Board determines that termination of the Plan and/or the Purchase Period is in
the best interests of the Company and the shareholders, or if continuation of
the Plan and/or the Purchase Period would cause the Company to incur adverse
accounting charges as a result of a change after the effective date of the Plan
in the generally accepted accounting rules applicable to the Plan. Except as
provided in Section 18 and in this Section 19, no amendment to the Plan shall
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make any change in any option previously granted that adversely affects the
rights of any participant. In addition, to the extent the Administrator
considers it appropriate to conform the Plan with Rule 16b-3 under the Exchange
Act, Section 423 of the Code, or any other applicable law, regulation, or stock
exchange rule, the Company shall obtain stockholder approval in such a manner
and to such a degree as so required.
(b) Without shareholder consent and without regard to whether any
participant rights may be considered to have been adversely affected, the Board
(or its committee) shall be entitled to change the Purchase Periods, to limit
the frequency and/or number of changes in the amount withheld during a Purchase
Period, to establish the exchange ratio applicable to amounts withheld in a
currency other than U.S. dollars, to permit payroll withholding in excess of the
amount designated by a participant in order to adjust for delays or mistakes in
the Company's processing of properly completed withholding elections, to
establish reasonable waiting and adjustment periods and/or accounting and
crediting procedures to ensure that amounts applied toward the purchase of
Common Shares for each participant properly correspond with amounts withheld
from the participant's Compensation, and to establish such other limitations or
procedures as the Board (or its committee) determines in its sole discretion
advisable that are consistent with the Plan.
(c) The Company may adopt rules or procedures relating to the
operation and administration of the Plan to accommodate the specific
requirements of local laws and procedures. Without limiting the generality of
the foregoing, the Company specifically authorizes the Administrator to adopt
rules and procedures regarding handling of payroll deductions, payment of
interest, conversion of local currency, payroll tax, withholding procedures and
handling of stock certificates which vary with local requirements.
(d) The Administrator may also adopt sub-plans applicable to the
Company or to particular Subsidiaries, or locations, which sub-plans may be
designed to be outside the scope of Code Section 423. Such a sub-plan may cover
non-employee directors of the Company or its Designated Subsidiaries and may
permit directors to purchase Shares with all or part of their cash
consideration. The rules of such sub-plans may take precedence over other
provisions of this Plan, but unless otherwise superseded by the specific terms
of such sub-plan, the provisions of this Plan shall govern the operation of such
sub-plan. In addition, the Administrator may adopt rules or procedures relating
to the operation and administration of the Plan to accommodate the specific
requirements of local laws and procedures. Without limiting the generality of
the foregoing, the Company is specifically authorized to adopt rules and
procedures regarding handling of payroll deductions, payment of interest,
conversion of local currency, payroll tax, withholding procedures and handling
of stock certificates which vary with local requirements.
20. NOTICES. All notices or other communications by a participant to
the Company under or in connection with the Plan shall be deemed to have been
duly given when received in the form specified by the Company at the location,
or by the person, designated by the Company for the receipt thereof.
21. CONDITIONS UPON ISSUANCE OF SHARES. Shares shall not be issued with
respect to an option unless the exercise of such option and the issuance and
delivery of such Shares pursuant thereto shall comply with all applicable
provisions of law, domestic or foreign, including, without limitation, the
Securities Act of 1933, as amended, the Exchange Act, the rules and regulations
promulgated thereunder, applicable state securities laws, and the requirements
of any stock exchange
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upon which the Shares may then be listed, and shall be further subject to the
approval of counsel for the Company with respect to such compliance.
As a condition to the exercise of an option, the Company may require
the person exercising such option to represent and warrant at the time of any
such exercise that the Shares are being purchased only for investment and
without any present intention to sell or distribute such Shares if, in the
opinion of counsel for the Company, such a representation is required by any of
the aforementioned applicable provisions of law.
22. TERM OF PLAN; EFFECTIVE DATE. The Plan shall become effective on
the date on which it has received approval by a vote of a majority of the votes
cast at a duly held annual meeting of the Company's shareholders (or by such
other shareholder vote that the Administrator determines to be sufficient for
the issuance of Shares or stock options according to the Company's governing
documents and applicable state law). The Plan shall continue in effect for a
term of ten (10) years unless sooner terminated under Section 19.
23. ADDITIONAL RESTRICTIONS OF RULE 16B-3. The terms and conditions of
options granted hereunder to, and the purchase of Shares by, persons subject to
Section 16 of the Exchange Act shall comply with the applicable provisions of
Rule 16b-3. This Plan shall be deemed to contain, and such options shall
contain, and the Shares issued upon exercise thereof shall be subject to, such
additional conditions and restrictions as may be required by Rule 16b-3 to
qualify for the maximum exemption from Section 16 of the Exchange Act with
respect to Plan transactions.
24. NOTICE OF DISQUALIFYING DISPOSITIONS. By electing to participate in
the Plan, each participant agrees to notify the Company in writing immediately
after the participant sells, transfers or otherwise disposes of any Shares
acquired under the Plan, if such disposition occurs within the earlier of (i)
two (2) years of the Offering Date, or (ii) one (1) year of the Purchase Date,
associated with such Shares. Each participant further agrees to provide any
information about a disposition of Shares as may be requested by the Company to
assist it in complying with any applicable tax laws.
25. WITHHOLDING OF TAXES. Each participant must make adequate provision
for all applicable federal, state, or other tax withholding obligations which
may arise upon the exercise of any option or the disposition of any Shares.
26. NO EMPLOYMENT RIGHTS. The Plan does not create, directly or
indirectly, any right for the benefit of any employee or class of employees to
purchase any Shares from the Company (other than as expressly provided in, and
subject to the terms and conditions of, the Plan), or create in any employee or
class of employees any right with respect to continuation of employment by the
Company or any Subsidiary, and it shall not be deemed to interfere in any way
with the Company's or any Subsidiary's right to terminate, or otherwise modify,
an employee's employment at any time.
27. OFFSETS. To the extent permitted by law, the Company shall have the
absolute right to withhold any amounts payable to any participant under the
terms of the Plan to the extent of any amount owed for any reason by such
participant to the Company or any Subsidiary and to set off and apply the
amounts so withheld to payment of any such amount owed to the Company or any
Subsidiary, whether or not such amount shall then be immediately due and payable
and in such order or priority as among such amounts owed as the Board or its
committee, in its sole discretion, shall determine.
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28. CAPTIONS. The captions of the sections and paragraphs of this Plan
have been inserted solely as a matter of convenience and in no way define or
limit the scope or intent of any provision of the Plan. References to sections
herein are to the specified sections of this Plan unless another reference is
specifically stated. Wherever used herein, a singular number shall be deemed to
include the plural unless a different meaning is required by the context.
29. GOVERNING LAW. The internal laws of the State of Delaware shall
govern all matters relating to this Plan except to the extent superseded by the
laws of the United States.
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EXHIBIT A
COMMERCE ENERGY GROUP, INC.
2005 EMPLOYEE STOCK PURCHASE PLAN
SUBSCRIPTION AGREEMENT
____ Original Application Enrollment Date:______
____ Change in Payroll Deduction Rate
____ Change of Beneficiary(ies)
1. _____________________________________ hereby elects to participate
in the Commerce Energy Group, Inc. 2005 Employee Stock Purchase Plan (the "2005
Employee Stock Purchase Plan"), and subscribes to purchase Common Shares of the
Company in accordance with this Subscription Agreement and the 2005 Employee
Stock Purchase Plan.
2. I hereby authorize payroll deductions from each paycheck in the
amount of _____% of my Compensation on each payday (not to exceed 10%) during
the Purchase Period in accordance with the 2005 Employee Stock Purchase Plan.
(Please note that no fractional percentages are permitted.) I acknowledge that,
notwithstanding my foregoing election, the amount that will be deducted from my
Compensation on each payday during the Purchase Period may not exceed $1,000.00
3. I understand that said payroll deductions shall be accumulated for
the purchase of Common Shares at the applicable Purchase Price determined in
accordance with the 2005 Employee Stock Purchase Plan. I understand that if I do
not withdraw from a Purchase Period, any accumulated payroll deductions will be
used to automatically exercise my option.
4. I have received a copy of the complete "2005 Employee Stock Purchase
Plan." I understand that my participation in the 2005 Employee Stock Purchase
Plan is in all respects subject to the terms of the Plan. I understand that the
grant of the option by the Company under this Subscription Agreement may be
subject to obtaining stockholder approval of the 2005 Employee Stock Purchase
Plan.
5. Shares purchased for me under the 2005 Employee Stock Purchase Plan
should be issued in the name(s) of (Employee or Employee and Spouse Only):
____________________________________________.
6. I understand that if I dispose of any shares received by me pursuant
to the Plan within 2 years after the Enrollment Date (the first day of the
Purchase Period during which I purchased such shares), I will be treated for
Federal income tax purposes as having
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received ordinary income at the time of such disposition in an amount equal to
the excess of the fair market value of the shares at the time such shares were
purchased by me over the price which I paid for the shares.
I HEREBY AGREE TO NOTIFY THE COMPANY IN WRITING WITHIN 30 DAYS AFTER
THE DATE OF ANY DISPOSITION OF SHARES AND I WILL MAKE ADEQUATE PROVISION FOR
FEDERAL, STATE OR OTHER TAX WITHHOLDING OBLIGATIONS, IF ANY, WHICH ARISE UPON
THE DISPOSITION OF THE COMMON STOCK. The Company may, but will not be obligated
to, withhold from my compensation the amount necessary to meet any applicable
withholding obligation including any withholding necessary to make available to
the Company any tax deductions or benefits attributable to sale or early
disposition of Common Shares by me. If I dispose of such shares at any time
after the expiration of the 2-year holding period, I understand that I will be
treated for Federal income tax purposes as having received income only at the
time of such disposition, and that such income will be taxed as ordinary income
only to the extent of an amount equal to the lesser of (1) the excess of the
fair market value of the shares at the time of such disposition over the
purchase price which I paid for the shares, or (2) 85% of the fair market value
of the shares on the last day of the Purchase Period. The remainder of the gain,
if any, recognized on such disposition will be taxed as capital gain. I
UNDERSTAND THAT NOTHING IN THIS AGREEMENT CONSTITUTES TAX ADVICE, AND I
ACKNOWLEDGE THAT THE COMPANY HAS ENCOURAGED ME TO CONSULT MY OWN TAX ADVISOR
WITH REGARD TO THE TAX CONSEQUENCES OF PARTICIPATING IN THE 2005 EMPLOYEE STOCK
PURCHASE PLAN.
7. I hereby agree to be bound by the terms of the 2005 Employee Stock
Purchase Plan. The effectiveness of this Subscription Agreement is dependent
upon my eligibility to participate in the 2005 Employee Stock Purchase Plan.
8. In the event of my death, I hereby designate the following as my
beneficiary(ies) to receive all payments and Shares due me under the 2005
Employee Stock Purchase Plan:
NAME:
-----------------------------------
(First) (Middle) (Last)
- --------------------- -----------------------------------
Relationship
-----------------------------------
(Address)
NAME:
-----------------------------------
(First) (Middle) (Last)
- --------------------- -----------------------------------
Relationship
-----------------------------------
(Address)
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I UNDERSTAND THAT THIS SUBSCRIPTION AGREEMENT SHALL REMAIN IN EFFECT
THROUGHOUT SUCCESSIVE PURCHASE PERIODS UNLESS TERMINATED BY ME AND CONFIRM THAT
THE FOLLOWING INFORMATION IS TRUE AND CORRECT.
Employee's Social
Security Number: ___________________________________
Employee's Address: ___________________________________
___________________________________
___________________________________
Dated: ________________ ___________________________________
Signature of Employee
___________________________________
Spouse's Signature
(If beneficiary other than spouse)
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EXHIBIT B
2005 EMPLOYEE STOCK PURCHASE PLAN
NOTICE OF WITHDRAWAL
The undersigned participant in the Purchase Period of the Commerce
Energy Group, Inc. 2005 Employee Stock Purchase Plan which began on ___________,
20__ (the "Enrollment Date") hereby notifies the Company that he or she hereby
withdraws from the participation in the 2005 Employee Stock Purchase Plan for
the Purchase Period. He or she hereby directs the Company to pay to the
undersigned as promptly as practicable all the payroll deductions credited to
his or her account with respect to such Purchase Period. The undersigned
understands and agrees that his or her option for such Purchase Period will be
automatically terminated.
The undersigned understands further that no further payroll deductions
will be made for the purchase of shares in the current Purchase Period and the
undersigned shall be eligible to participate in succeeding Purchase Periods only
by delivering to the Company a new Subscription Agreement for a Purchase Period
beginning for a Purchase Period beginning after the date of this withdrawal,
subject to the restrictions set forth in Section 10 (d) of the Plan.
Name and Address of Participant:
-------------------------------
-------------------------------
-------------------------------
Signature:
-------------------------------
Date: _________________________
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