Common use of INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE Clause in Contracts

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE. The following documents previously filed by the Company with the Securities and Exchange Commission (the “Commission”) are incorporated herein by reference: · The Company’s Annual Report on Form 10-K for the year ended July 31, 2005 filed with the Commission on October 31, 2005; · The Company’s Quarterly Report on Form 10-Q for the quarter ended October 31, 2005 filed with the Commission on December 15, 2005; · The Company’s Quarterly Report on Form 10-Q for the quarter ended January 31, 2006 filed with the Commission on March 16, 2006; · The Company’s amended Quarterly Report on Form 10-Q/A (Amendment No. 1) for the quarter ended October 31, 2004 filed with the Commission on October 31, 2005; · The Company’s amended Quarterly Report on Form 10-Q/A (Amendment No. 3) for the quarter ended January 31, 2005 filed with the Commission on October 31, 2005; · The Company’s amended Quarterly Report on Form 10-Q/A (Amendment No. 2) for the quarter ended April 30, 2005 filed with the Commission on October 31, 2005; · The Registrant’s Current Reports on Form 8-K, as filed with the Commission on August 2, 2005, August 5, 2005, August 30, 2005, September 30, 2005, October 13, 2005, October 31, 2005, November 14, 2005, November 17, 2005, November 23, 2005, December 2, 2005, December 6, 2005, December 8, 2005, December 15, 2005 (but specifically not incorporating by reference herein the Form 8-K filed on December 15, 2005 announcing the Company’s earnings for the quarter ended October 31, 2005), February 1, 2006, March 2, 2006 and April 18, 2006; · The Company’s amended Current Report on Form 8-K/A (Amendment No. 2) filed with the Commission on August 2, 2005; and · the description of the Common Stock, par value $.001 per share, of the Company and the common stock purchase rights, which is incorporated by reference into the Company’s registration statement on Form 8-A, filed with the Commission on July 6, 2004, pursuant to the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and any amendment or report filed for the purpose of updating such description. In addition, all documents filed by the Company with the Commission pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act, prior to the filing of a post-effective amendment which indicates that all securities offered have been sold or which de-registers all securities then remaining unsold, shall be deemed to be incorporated by reference into this Memorandum and to be a part hereof from the date of filing of such documents with the Securities and Exchange Commission. Any statement contained in a document incorporated or deemed to be incorporated by reference herein shall be deemed to be modified or superseded for purposes of this Memorandum to the extent that a statement contained herein or in any other subsequently filed document which also is or is deemed to be incorporated by reference herein modifies or supersedes such statement. Any statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Memorandum. Any proceeds that the Company receives from the sale of Common Stock pursuant to Awards will be used for general corporate purposes. Employment and withholding taxes will apply to the income arising from Awards. Participants will not be subject to any additional charges (other than payment of the exercise price for Options) in connection with their Awards. Nor does the Plan allow for any liens on any Awards, funds, or Common Stock that Participants hold or may receive pursuant to the Plan. Additional information about the Plan and its administrators may be obtained from, and copies of the following documents or reports will be furnished without charge upon written or oral request to the Secretary, Commerce Energy Group, Inc., 000 Xxxxx Xxxxxxxxx, Xxxxx 0000, Xxxxx Xxxx, Xxxxxxxxxx 00000; telephone number (000) 000-0000: · Documents or reports incorporated by reference in this Memorandum (excluding exhibits to such documents or reports unless such exhibits are specifically incorporated by reference into such documents or reports); · The Company’s annual report to shareholders for the latest fiscal year; and · All reports, proxy statements and other communications distributed to the shareholders of the Company. All participants shall receive, if they do not otherwise receive such materials, copies of all reports, proxy statements and other communications distributed to the Company’s security holders generally. Such materials shall be delivered not later than the time at which they are sent to the Company’s security holders. Attached is an Internal Revenue Code Section 83(b) Election Form. IF YOU WISH TO MAKE A SECTION 83(B) ELECTION, YOU MUST DO SO WITHIN 30 DAYS AFTER THE DATE THE RESTRICTED SHARES COVERED BY THE ELECTION WERE TRANSFERRED TO YOU. In order to make the election, you must completely fill out the attached form and file one copy with the Internal Revenue Service office where you file your tax return. In addition, one copy of the statement also must be submitted with your income tax return for the taxable year in which you make this election. Finally, you also must submit a copy of the election form to the Company within 10 days after filing that election with the Internal Revenue Service. A Section 83(b) election normally cannot be revoked. Pursuant to Section 83(b) of the Internal Revenue Code, I hereby elect within 30 days after receiving the property described herein to be taxed immediately on its value specified in item 5 below.

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE. The following documents previously filed by the Company AFC with the Securities Commission under the Act and the Exchange Commission (the “Commission”) Act are incorporated herein by reference: · (a) AFC's Annual Report on Form 10-K for the fiscal year ended December 31, 1996 (the "AFC Form 10-K"); (b) AFC's Annual Report on Form 10-K/A for the fiscal year ended December 31, 1996 (the "AFC Form 10-K/A"); (c) AFC's Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 1997 (the "AFC Form 10-Q"); (d) The Company’s description of AFC Common Stock contained in AFC's Registration Statement on Form S-1 (File No. 33-91766) which the Commission declared effective on October 10, 1995, and any amendment or report filed for the purpose of updating any such description (the "AFC Common Stock Description"); (e) AFC's Current Reports on Form 8-K dated February 5, 1997, February 19, 1997 and April 15, 1997 (the "AFC Form 8-Ks"); and (f) AFC's Annual Report to Stockholders for the fiscal year ended December 31, 1996 (collectively with the AFC Form 10-K, the AFC Form 10-K/A, the AFC Form 10-Q, the AFC Common Stock Description and the AFC Form 8-Ks, the "AFC Reports"). The following documents previously filed by APY with the Commission under the Act and the Exchange Act are incorporated herein by reference: (a) APY's Annual Report on Form 10-K for the year ended July December 31, 2005 filed with 1996 (the Commission "APY Form 10-K"); (b) APY's Annual Report on October Form 10-K/A for the year ended December 31, 20050000 (xxx "XXX Xxxx 00-X/X"); · The Company’s (c) APY's Quarterly Report on Form 10-Q for the fiscal quarter ended October March 31, 2005 filed with 1997 (the Commission on December 15, 2005; · The Company’s Quarterly Report on Form 10-Q for the quarter ended January 31, 2006 filed with the Commission on March 16, 2006; · The Company’s amended Quarterly Report on "APY Form 10-Q/A "); (Amendment d) The description of APY Common Stock contained in APY's Registration Statement on Form S-4 (File No. 133-51696) for the quarter ended October 31, 2004 filed with which the Commission declared effective on October 31September 4, 2005; · The Company’s amended Quarterly Report on Form 10-Q/A (Amendment No. 3) for the quarter ended January 311992, 2005 filed with the Commission on October 31, 2005; · The Company’s amended Quarterly Report on Form 10-Q/A (Amendment No. 2) for the quarter ended April 30, 2005 filed with the Commission on October 31, 2005; · The Registrant’s Current Reports on Form 8-K, as filed with the Commission on August 2, 2005, August 5, 2005, August 30, 2005, September 30, 2005, October 13, 2005, October 31, 2005, November 14, 2005, November 17, 2005, November 23, 2005, December 2, 2005, December 6, 2005, December 8, 2005, December 15, 2005 (but specifically not incorporating by reference herein the Form 8-K filed on December 15, 2005 announcing the Company’s earnings for the quarter ended October 31, 2005), February 1, 2006, March 2, 2006 and April 18, 2006; · The Company’s amended Current Report on Form 8-K/A (Amendment No. 2) filed with the Commission on August 2, 2005; and · the description of the Common Stock, par value $.001 per share, of the Company and the common stock purchase rights, which is incorporated by reference into the Company’s registration statement on Form 8-A, filed with the Commission on July 6, 2004, pursuant to the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and any amendment or report filed for the purpose purposes of updating any such description. In additiondescription (the "APY Common Stock Description"); and (e) APY's Current Report on Form 8-K dated February 19, all 1997 (collectively with the APY Form 10-K, the APY Form 10-K/A, the APY Form 10-Q and the APY Common Stock Description, the "APY Reports)." All documents filed by the Company with the Commission AFC or APY pursuant to Sections 13(a), 13(c), 14 and or 15(d) of the Exchange Act, Act after the date of this Information Statement/Prospectus and prior to the filing of a post-effective amendment which indicates that all securities offered have been sold or which de-registers all securities then remaining unsold, Effective Time shall be deemed to be incorporated by reference into this Memorandum Information Statement/Prospectus and to be a part hereof from the date of filing of such documents with documents. In addition, the Securities and Exchange CommissionMerger Agreement, a copy of which is attached as Appendix A-1 to this Information Statement/Prospectus, is incorporated herein by reference. Any statement contained in a document incorporated or deemed to be incorporated by reference herein shall be deemed to be modified or superseded for purposes of this Memorandum hereof to the extent that a statement contained herein (or in any other subsequently filed document which also that is or is deemed to be incorporated by reference herein herein) modifies or supersedes such previous statement. Any statement so modified or superseded shall not be deemed, deemed to constitute a part hereof except as so modified or superseded, to constitute a part of this Memorandum. Any proceeds that the Company receives from the sale of Common Stock pursuant to Awards will be used for general corporate purposes. Employment and withholding taxes will apply to the income arising from Awards. Participants will not be subject to any additional charges (other than payment of the exercise price for Options) in connection with their Awards. Nor does the Plan allow for any liens on any Awards, funds, or Common Stock that Participants hold or may receive pursuant to the Plan. Additional information about the Plan and its administrators may be obtained from, and copies of the following documents or reports will be furnished without charge upon written or oral request to the Secretary, Commerce Energy Group, Inc., 000 Xxxxx Xxxxxxxxx, Xxxxx 0000, Xxxxx Xxxx, Xxxxxxxxxx 00000; telephone number (000) 000-0000---------------- FOR NORTH CAROLINA INVESTORS: · Documents or reports incorporated by reference in this Memorandum (excluding exhibits to such documents or reports unless such exhibits are specifically incorporated by reference into such documents or reports); · The Company’s annual report to shareholders for the latest fiscal year; and · All reports, proxy statements and other communications distributed to the shareholders of the Company. All participants shall receive, if they do not otherwise receive such materials, copies of all reports, proxy statements and other communications distributed to the Company’s security holders generally. Such materials shall be delivered not later than the time at which they are sent to the Company’s security holders. Attached is an Internal Revenue Code Section 83(b) Election Form. IF YOU WISH TO MAKE A SECTION 83(B) ELECTION, YOU MUST DO SO WITHIN 30 DAYS AFTER THESE SECURITIES AND THE DATE THE RESTRICTED SHARES COVERED MERGER TRANSACTIONS HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE ELECTION WERE TRANSFERRED COMMISSIONER OF INSURANCE FOR THE STATE OF NORTH CAROLINA, NOR HAS THE COMMISSIONER PASSED UPON THE ACCURACY OR ADEQUACY OF THIS INFORMATION STATEMENT/PROSPECTUS. ---------------- STATE INSURANCE HOLDING COMPANY LAWS AND REGULATIONS APPLICABLE TO YOUAFC AND APY GENERALLY PROVIDE THAT NO PERSON MAY ACQUIRE CONTROL OF AFC, AND THUS INDIRECT CONTROL OF THEIR RESPECTIVE INSURANCE SUBSIDIARIES, UNLESS SUCH PERSON HAS PROVIDED CERTAIN REQUIRED INFORMATION TO, AND SUCH ACQUISITION IS APPROVED (OR NOT DISAPPROVED) BY THE APPROPRIATE INSURANCE REGULATORY AUTHORITIES. In order to make the electionGENERALLY, you must completely fill out the attached form and file one copy with the Internal Revenue Service office where you file your tax return. In addition, one copy of the statement also must be submitted with your income tax return for the taxable year in which you make this election. Finally, you also must submit a copy of the election form to the Company within 10 days after filing that election with the Internal Revenue Service. A Section 83(b) election normally cannot be revoked. Pursuant to Section 83(b) of the Internal Revenue Code, I hereby elect within 30 days after receiving the property described herein to be taxed immediately on its value specified in item 5 below.ANY PERSON WHO ACQUIRES BENEFICIAL 2

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE. The following documents previously filed by the Company with the Securities and Exchange Commission (the “Commission”) are incorporated herein by reference: · The Company’s Annual Report on Form 10-K for the year ended July 31, 2005 2007 filed with the Commission on October 3129, 2005; 2007. · The Company’s Quarterly Report on Form 10-Q for the quarter ended October 31, 2005 2007 filed with the Commission on December 1517, 2005; · The Company’s Quarterly Report on Form 10-Q for the quarter ended January 31, 2006 filed with the Commission on March 16, 2006; · The Company’s amended Quarterly Report on Form 10-Q/A (Amendment No2007. 1) for the quarter ended October 31, 2004 filed with the Commission on October 31, 2005; · The Company’s amended Quarterly Report on Form 10-Q/A (Amendment No. 3) for the quarter ended January 31, 2005 filed with the Commission on October 31, 2005; · The Company’s amended Quarterly Report on Form 10-Q/A (Amendment No. 2) for the quarter ended April 30, 2005 filed with the Commission on October 31, 2005; · The Registrant’s Current Reports on Form 8-K, as K filed with the Commission on August 2, 20052007; September 18, August 52007; September 25, 20052007; November 20, August 2007; December 4, 2007; January 30, 20052008; and February 26, September 30, 2005, October 13, 2005, October 31, 2005, November 14, 2005, November 17, 2005, November 23, 2005, December 2, 2005, December 6, 2005, December 8, 2005, December 15, 2005 (but specifically not incorporating by reference herein the Form 8-K filed on December 15, 2005 announcing the Company’s earnings for the quarter ended October 31, 2005), February 1, 2006, March 2, 2006 and April 18, 2006; 2008. · The Company’s amended Current Report on Form 8-K/A (Amendment No. 2) filed with the Commission on August 2, 2005; and · the description of the Common Stock, par value $.001 per share, of the Company and the common stock purchase rights, which is incorporated by reference into the Company’s registration statement on Form 8-A, filed with the Commission on July 6, 2004, pursuant to the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and any amendment or report filed for the purpose of updating such description. · The description of the Registrant’s common stock purchase rights and the related Series A Junior Participating Preferred Stock contained in the Registrant’s Registration Statement on Form 8-A filed on July 6, 2004 (File No. 001-32239), pursuant to Section 12(b) of the Exchange Act, including any amendment or report filed for the purpose of updating such description. In addition, all documents filed by the Company with the Commission pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act, prior to the filing of a post-effective amendment which indicates that all securities offered have been sold or which de-registers all securities then remaining unsold, shall be deemed to be incorporated by reference into this Memorandum and to be a part hereof from the date of filing of such documents with the Securities and Exchange Commission. Any statement contained in a document incorporated or deemed to be incorporated by reference herein shall be deemed to be modified or superseded for purposes of this Memorandum to the extent that a statement contained herein or in any other subsequently filed document which also is or is deemed to be incorporated by reference herein modifies or supersedes such statement. Any statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Memorandum. USE OF PROCEEDS, TAX WITHHOLDING AND NO LIENS Any proceeds that the Company receives from the sale of Common Stock pursuant to Awards will be used for general corporate purposes. Employment and withholding taxes will apply to the income arising from Awards. Participants will not be subject to any additional charges (other than payment of the exercise price for Options) in connection with their Awards. Nor does the Plan allow for any liens on any Awards, funds, or Common Stock that Participants hold or may receive pursuant to the Plan. ADDITIONAL INFORMATION Additional information about the Plan and its administrators may be obtained from, and copies of the following documents or reports will be furnished without charge upon written or oral request to the Secretary, Commerce Energy Group, Inc., 000 Xxxxx Xxxxxxxxx, Xxxxx 0000, Xxxxx Xxxx, Xxxxxxxxxx 00000; telephone number (000) 000-0000: · Documents or reports incorporated by reference in this Memorandum (excluding exhibits to such documents or reports unless such exhibits are specifically incorporated by reference into such documents or reports); · The Company’s annual report to shareholders for the latest fiscal year; and · All reports, proxy statements and other communications distributed to the shareholders of the Company. All participants shall receive, if they do not otherwise receive such materials, copies of all reports, proxy statements and other communications distributed to the Company’s security holders generally. Such materials shall be delivered not later than the time at which they are sent to the Company’s security holders. Attached is an Internal Revenue Code Section 83(bCommerce Energy Group, Inc. Attention: Fallquist Incentive Plan Committee 000 Xxxxx Xxxxxxxxx Costa Mesa, California 92626 Dear Sir or Madam: The undersigned elects to exercise his/her Incentive Stock Option to purchase shares of Common Stock of Commerce Energy Group, Inc. (the “Company”) Election Form. IF YOU WISH TO MAKE A SECTION 83(B) ELECTION, YOU MUST DO SO WITHIN 30 DAYS AFTER THE DATE THE RESTRICTED SHARES COVERED BY THE ELECTION WERE TRANSFERRED TO YOU. In order under and pursuant to make the election, you must completely fill out the attached form and file one copy with the Internal Revenue Service office where you file your tax return. In addition, one copy a Stock Option Agreement dated as of the statement also must be submitted with your income tax return for the taxable year in which you make this election. Finally, you also must submit a copy of the election form to the Company within 10 days after filing that election with the Internal Revenue Service. A Section 83(b) election normally cannot be revoked. Pursuant to Section 83(b) of the Internal Revenue Code, I hereby elect within 30 days after receiving the property described herein to be taxed immediately on its value specified in item 5 below.

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE. The following documents previously filed by the Company with the Securities and Exchange Commission (the “Commission”) are incorporated herein by reference: · The Company’s Annual Report on Form 10-K for the year ended July 31, 2005 2007 filed with the Commission on October 3129, 2005; 2007. · The Company’s Quarterly Report on Form 10-Q for the quarter ended October 31, 2005 2007 filed with the Commission on December 1517, 2005; · The Company’s Quarterly Report on Form 10-Q for the quarter ended January 31, 2006 filed with the Commission on March 16, 2006; · The Company’s amended Quarterly Report on Form 10-Q/A (Amendment No2007. 1) for the quarter ended October 31, 2004 filed with the Commission on October 31, 2005; · The Company’s amended Quarterly Report on Form 10-Q/A (Amendment No. 3) for the quarter ended January 31, 2005 filed with the Commission on October 31, 2005; · The Company’s amended Quarterly Report on Form 10-Q/A (Amendment No. 2) for the quarter ended April 30, 2005 filed with the Commission on October 31, 2005; · The Registrant’s Current Reports on Form 8-K, as K filed with the Commission on August 2, 20052007; September 18, August 52007; September 25, 20052007; November 20, August 2007; December 4, 2007; January 30, 20052008; and February 26, September 30, 2005, October 13, 2005, October 31, 2005, November 14, 2005, November 17, 2005, November 23, 2005, December 2, 2005, December 6, 2005, December 8, 2005, December 15, 2005 (but specifically not incorporating by reference herein the Form 8-K filed on December 15, 2005 announcing the Company’s earnings for the quarter ended October 31, 2005), February 1, 2006, March 2, 2006 and April 18, 2006; 2008. · The Company’s amended Current Report on Form 8-K/A (Amendment No. 2) filed with the Commission on August 2, 2005; and · the description of the Common Stock, par value $.001 per share, of the Company and the common stock purchase rights, which is incorporated by reference into the Company’s registration statement on Form 8-A, filed with the Commission on July 6, 2004, pursuant to the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and any amendment or report filed for the purpose of updating such description. · The description of the Registrant’s common stock purchase rights and the related Series A Junior Participating Preferred Stock contained in the Registrant’s Registration Statement on Form 8-A filed on July 6, 2004 (File No. 001-32239), pursuant to Section 12(b) of the Exchange Act, including any amendment or report filed for the purpose of updating such description. In addition, all documents filed by the Company with the Commission pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act, prior to the filing of a post-effective amendment which indicates that all securities offered have been sold or which de-registers all securities then remaining unsold, shall be deemed to be incorporated by reference into this Memorandum and to be a part hereof from the date of filing of such documents with the Securities and Exchange Commission. Any statement contained in a document incorporated or deemed to be incorporated by reference herein shall be deemed to be modified or superseded for purposes of this Memorandum to the extent that a statement contained herein or in any other subsequently filed document which also is or is deemed to be incorporated by reference herein modifies or supersedes such statement. Any statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Memorandum. USE OF PROCEEDS, TAX WITHHOLDING AND NO LIENS Any proceeds that the Company receives from the sale of Common Stock pursuant to Awards will be used for general corporate purposes. Employment and withholding taxes will apply to the income arising from Awards. Participants will not be subject to any additional charges (other than payment of the exercise price for Options) in connection with their Awards. Nor does the Plan allow for any liens on any Awards, funds, or Common Stock that Participants hold or may receive pursuant to the Plan. ADDITIONAL INFORMATION Additional information about the Plan and its administrators may be obtained from, and copies of the following documents or reports will be furnished without charge upon written or oral request to the Secretary, Commerce Energy Group, Inc., 000 Xxxxx Xxxxxxxxx, Xxxxx 0000, Xxxxx Xxxx, Xxxxxxxxxx 00000; telephone number (000) 000-0000: · Documents or reports incorporated by reference in this Memorandum (excluding exhibits to such documents or reports unless such exhibits are specifically incorporated by reference into such documents or reports); · The Company’s annual report to shareholders for the latest fiscal year; and · All reports, proxy statements and other communications distributed to the shareholders of the Company. All participants shall receive, if they do not otherwise receive such materials, copies of all reports, proxy statements and other communications distributed to the Company’s security holders generally. Such materials shall be delivered not later than the time at which they are sent to the Company’s security holders. Attached is an Internal Revenue Code Section 83(b) Election Form. IF YOU WISH TO MAKE A SECTION 83(B) ELECTION, YOU MUST DO SO WITHIN 30 DAYS AFTER THE DATE THE RESTRICTED SHARES COVERED BY THE ELECTION WERE TRANSFERRED TO YOU. In order to make the election, you must completely fill out the attached form and file one copy with the Internal Revenue Service office where you file your tax return. In addition, one copy of the statement also must be submitted with your income tax return for the taxable year in which you make this election. Finally, you also must submit a copy of the election form to the Company within 10 days after filing that election with the Internal Revenue Service. A Section 83(b) election normally cannot be revoked. Pursuant to Section 83(b) of the Internal Revenue Code, I hereby elect within 30 days after receiving the property described herein to be taxed immediately on its value specified in item 5 below.

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE. The following documents previously filed by the Company with the Securities and Exchange Commission (the “Commission”) are incorporated herein by reference: · The Company’s Annual Report on Form 10-K for the year ended July 31, 2005 filed with the Commission on October 31, 2005; · The Company’s Quarterly Report on Form 10-Q for the quarter ended October 31, 2005 filed with the Commission on December 15, 2005; · The Company’s Quarterly Report on Form 10-Q for the quarter ended January 31, 2006 filed with the Commission on March 16, 2006; · The Company’s amended Quarterly Report on Form 10-Q/A (Amendment No. 1) for the quarter ended October 31, 2004 filed with the Commission on October 31, 2005; · The Company’s amended Quarterly Report on Form 10-Q/A (Amendment No. 3) for the quarter ended January 31, 2005 filed with the Commission on October 31, 2005; · The Company’s amended Quarterly Report on Form 10-Q/A (Amendment No. 2) for the quarter ended April 30, 2005 filed with the Commission on October 31, 2005; · The Registrant’s Current Reports on Form 8-K, as filed with the Commission on August 2, 2005, August 5, 2005, August 30, 2005, September 30, 2005, October 13, 2005, October 31, 2005, November 14, 2005, November 17, 2005, November 23, 2005, December 2, 2005, December 6, 2005, December 8, 2005, December 15, 2005 (but specifically not incorporating by reference herein the Form 8-K filed on December 15, 2005 announcing the Company’s earnings for the quarter ended October 31, 2005), February 1, 2006, March 2, 2006 and April 18, 2006; · The Company’s amended Current Report on Form 8-K/A (Amendment No. 2) filed with the Commission on August 2, 2005; and · the description of the Common Stock, par value $.001 per share, of the Company and the common stock purchase rights, which is incorporated by reference into the Company’s registration statement on Form 8-A, filed with the Commission on July 6, 2004, pursuant to the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and any amendment or report filed for the purpose of updating such description. In addition, all documents filed by the Company with the Commission pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act, prior to the filing of a post-effective amendment which indicates that all securities offered have been sold or which de-registers all securities then remaining unsold, shall be deemed to be incorporated by reference into this Memorandum and to be a part hereof from the date of filing of such documents with the Securities and Exchange Commission. Any statement contained in a document incorporated or deemed to be incorporated by reference herein shall be deemed to be modified or superseded for purposes of this Memorandum to the extent that a statement contained herein or in any other subsequently filed document which also is or is deemed to be incorporated by reference herein modifies or supersedes such statement. Any statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Memorandum. Any proceeds that the Company receives from the sale of Common Stock pursuant to Awards will be used for general corporate purposes. Employment and withholding taxes will apply to the income arising from Awards. Participants will not be subject to any additional charges (other than payment of the exercise price for Options) in connection with their Awards. Nor does the Plan allow for any liens on any Awards, funds, or Common Stock that Participants hold or may receive pursuant to the Plan. Additional information about the Plan and its administrators may be obtained from, and copies of the following documents or reports will be furnished without charge upon written or oral request to the Secretary, Commerce Energy Group, Inc., 000 Xxxxx Xxxxxxxxx, Xxxxx 0000, Xxxxx Xxxx, Xxxxxxxxxx 00000; telephone number (000) 000-0000: · Documents or reports incorporated by reference in this Memorandum (excluding exhibits to such documents or reports unless such exhibits are specifically incorporated by reference into such documents or reports); · The Company’s annual report to shareholders for the latest fiscal year; and · All reports, proxy statements and other communications distributed to the shareholders of the Company. All participants shall receive, if they do not otherwise receive such materials, copies of all reports, proxy statements and other communications distributed to the Company’s security holders generally. Such materials shall be delivered not later than the time at which they are sent to the Company’s security holders. Attached is an Internal Revenue Code Section 83(bCommerce Energy Group, Inc. Attention: 2006 Stock Incentive Plan Committee 000 Xxxxx Xxxxxxxxx Costa Mesa, California 92626 Dear Sir or Madam: The undersigned elects to exercise his/her Stock Option to purchase shares of Common Stock of Commerce Energy Group, Inc. (the “Company”) Election Form. IF YOU WISH TO MAKE A SECTION 83(B) ELECTION, YOU MUST DO SO WITHIN 30 DAYS AFTER THE DATE THE RESTRICTED SHARES COVERED BY THE ELECTION WERE TRANSFERRED TO YOU. In order under and pursuant to make the election, you must completely fill out the attached form and file one copy with the Internal Revenue Service office where you file your tax return. In addition, one copy a Stock Option Agreement dated as of the statement also must be submitted with your income tax return for the taxable year in which you make this election. Finally, you also must submit a copy of the election form to the Company within 10 days after filing that election with the Internal Revenue Service. A Section 83(b) election normally cannot be revoked. Pursuant to Section 83(b) of the Internal Revenue Code, I hereby elect within 30 days after receiving the property described herein to be taxed immediately on its value specified in item 5 below.

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE. The following documents previously filed by the Company with the Securities and Exchange Commission (the “Commission”) are incorporated herein by reference: · The Company’s Annual Report on Form 10-K for the year ended July 31, 2005 filed with the Commission on October 31, 2005; · The Company’s Quarterly Report on Form 10-Q for the quarter ended October 31, 2005 filed with the Commission on December 15, 2005; · The Company’s Quarterly Report on Form 10-Q for the quarter ended January 31, 2006 filed with the Commission on March 16, 2006; · The Company’s amended Quarterly Report on Form 10-Q/A (Amendment No. 1) for the quarter ended October 31, 2004 filed with the Commission on October 31, 2005; · The Company’s amended Quarterly Report on Form 10-Q/A (Amendment No. 3) for the quarter ended January 31, 2005 filed with the Commission on October 31, 2005; · The Company’s amended Quarterly Report on Form 10-Q/A (Amendment No. 2) for the quarter ended April 30, 2005 filed with the Commission on October 31, 2005; · The Registrant’s Current Reports on Form 8-K, as filed with the Commission on August 2, 2005, August 5, 2005, August 30, 2005, September 30, 2005, October 13, 2005, October 31, 2005, November 14, 2005, November 17, 2005, November 23, 2005, December 2, 2005, December 6, 2005, December 8, 2005, December 15, 2005 (but specifically not incorporating by reference herein the Form 8-K filed on December 15, 2005 announcing the Company’s earnings for the quarter ended October 31, 2005), February 1, 2006, March 2, 2006 and April 18, 2006; · The Company’s amended Current Report on Form 8-K/A (Amendment No. 2) filed with the Commission on August 2, 2005; and · the description of the Common Stock, par value $.001 per share, of the Company and the common stock purchase rights, which is incorporated by reference into the Company’s registration statement on Form 8-A, filed with the Commission on July 6, 2004, pursuant to the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and any amendment or report filed for the purpose of updating such description. In addition, all documents filed by the Company with the Commission pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act, prior to the filing of a post-effective amendment which indicates that all securities offered have been sold or which de-registers all securities then remaining unsold, shall be deemed to be incorporated by reference into this Memorandum and to be a part hereof from the date of filing of such documents with the Securities and Exchange Commission. Any statement contained in a document incorporated or deemed to be incorporated by reference herein shall be deemed to be modified or superseded for purposes of this Memorandum to the extent that a statement contained herein or in any other subsequently filed document which also is or is deemed to be incorporated by reference herein modifies or supersedes such statement. Any statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Memorandum. Any proceeds that the Company receives from the sale of Common Stock pursuant to Awards will be used for general corporate purposes. Employment and withholding taxes will apply to the income arising from Awards. Participants will not be subject to any additional charges (other than payment of the exercise price for Options) in connection with their Awards. Nor does the Plan allow for any liens on any Awards, funds, or Common Stock that Participants hold or may receive pursuant to the Plan. Additional information about the Plan and its administrators may be obtained from, and copies of the following documents or reports will be furnished without charge upon written or oral request to the Secretary, Commerce Energy Group, Inc., 000 Xxxxx Xxxxxxxxx, Xxxxx 0000, Xxxxx Xxxx, Xxxxxxxxxx 00000; telephone number (000) 000-0000: · Documents or reports incorporated by reference in this Memorandum (excluding exhibits to such documents or reports unless such exhibits are specifically incorporated by reference into such documents or reports); · The Company’s annual report to shareholders for the latest fiscal year; and · All reports, proxy statements and other communications distributed to the shareholders of the Company. All participants shall receive, if they do not otherwise receive such materials, copies of all reports, proxy statements and other communications distributed to the Company’s security holders generally. Such materials shall be delivered not later than the time at which they are sent to the Company’s security holders. Attached is an Internal Revenue Code Section 83(b) Election Form. IF YOU WISH TO MAKE A SECTION 83(B) ELECTION, YOU MUST DO SO WITHIN 30 DAYS AFTER THE DATE THE RESTRICTED SHARES COVERED BY THE ELECTION WERE TRANSFERRED TO YOU. In order to make the election, you must completely fill out the attached form and file one copy with the Internal Revenue Service office where you file your tax return. In addition, one copy of the statement also must be submitted with your income tax return for the taxable year in which you make this election. Finally, you also must submit a copy of the election form to the Company within 10 days after filing that election with the Internal Revenue Service. A Section 83(b) election normally cannot be revoked. Pursuant to Section 83(b) of the Internal Revenue Code, I hereby elect within 30 days after receiving the property described herein to be taxed immediately on its value specified in item 5 below.

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE. The following documents previously filed by the Company with the Securities and Exchange Commission (the “"Commission”") are incorporated herein by reference: · - The Company’s 's Annual Report on Form 10-K for the year ended July 31, 2005 filed with the Commission on October 31, 2005; · - The Company’s 's Quarterly Report on Form 10-Q for the quarter ended October 31, 2005 filed with the Commission on December 15, 2005; · - The Company’s 's Quarterly Report on Form 10-Q for the quarter ended January 31, 2006 filed with the Commission on March 16, 2006; · - The Company’s 's amended Quarterly Report on Form 10-Q/A (Amendment No. 1) for the quarter ended October 31, 2004 filed with the Commission on October 31, 2005; · - The Company’s 's amended Quarterly Report on Form 10-Q/A (Amendment No. 3) for the quarter ended January 31, 2005 filed with the Commission on October 31, 2005; · - The Company’s 's amended Quarterly Report on Form 10-Q/A (Amendment No. 2) for the quarter ended April 30, 2005 filed with the Commission on October 31, 2005; · - The Registrant’s 's Current Reports on Form 8-K, as filed with the Commission on August 2, 2005, August 5, 2005, August 30, 2005, September 30, 2005, October 13, 2005, October 31, 2005, November 14, 2005, November 17, 2005, November 23, 2005, December 2, 2005, December 6, 2005, December 8, 2005, December 15, 2005 (but specifically not incorporating by reference herein the Form 8-K filed on December 15, 2005 announcing the Company’s 's earnings for the quarter ended October 31, 2005), February 1, 2006, March 2, 2006 and April 18, 2006; · - The Company’s 's amended Current Report on Form 8-K/A (Amendment No. 2) filed with the Commission on August 2, 2005; and · - the description of the Common Stock, par value $.001 per share, of the Company and the common stock purchase rights, which is incorporated by reference into the Company’s 's registration statement on Form 8-A, filed with the Commission on July 6, 2004, pursuant to the Securities Exchange Act of 1934, as amended (the “"Exchange Act”") and any amendment or report filed for the purpose of updating such description. In addition, all documents filed by the Company with the Commission pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act, prior to the filing of a post-effective amendment which indicates that all securities offered have been sold or which de-registers all securities then remaining unsold, shall be deemed to be incorporated by reference into this Memorandum and to be a part hereof from the date of filing of such documents with the Securities and Exchange Commission. Any statement contained in a document incorporated or deemed to be incorporated by reference herein shall be deemed to be modified or superseded for purposes of this Memorandum to the extent that a statement contained herein or in any other subsequently filed document which also is or is deemed to be incorporated by reference herein modifies or supersedes such statement. Any statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Memorandum. USE OF PROCEEDS, TAX WITHHOLDING AND NO LIENS Any proceeds that the Company receives from the sale of Common Stock pursuant to Awards will be used for general corporate purposes. Employment and withholding taxes will apply to the income arising from Awards. Participants will not be subject to any additional charges (other than payment of the exercise price for Options) in connection with their Awards. Nor does the Plan allow for any liens on any Awards, funds, or Common Stock that Participants hold or may receive pursuant to the Plan. ADDITIONAL INFORMATION Additional information about the Plan and its administrators may be obtained from, and copies of the following documents or reports will be furnished without charge upon written or oral request to the Secretary, Commerce Energy Group, Inc., 000 Xxxxx Xxxxxxxxx, Xxxxx 0000, Xxxxx Xxxx, Xxxxxxxxxx 00000; telephone number (000) 000-0000: · - Documents or reports incorporated by reference in this Memorandum (excluding exhibits to such documents or reports unless such exhibits are specifically incorporated by reference into such documents or reports); · - The Company’s 's annual report to shareholders for the latest fiscal year; and · - All reports, proxy statements and other communications distributed to the shareholders of the Company. All participants shall receive, if they do not otherwise receive such materials, copies of all reports, proxy statements and other communications distributed to the Company’s 's security holders generally. Such materials shall be delivered not later than the time at which they are sent to the Company’s 's security holders. Attached is an Internal Revenue Code Section 83(b) Election FormEXHIBIT C COMMERCE ENERGY GROUP, INC. IF YOU WISH TO MAKE A SECTION 83(B) ELECTION, YOU MUST DO SO WITHIN 30 DAYS AFTER THE DATE THE RESTRICTED SHARES COVERED BY THE ELECTION WERE TRANSFERRED TO YOU. In order to make the election, you must completely fill out the attached form and file one copy with the Internal Revenue Service office where you file your tax return. In addition, one copy of the statement also must be submitted with your income tax return for the taxable year in which you make this election. Finally, you also must submit a copy of the election form to the Company within 10 days after filing that election with the Internal Revenue Service. A Section 83(b) election normally cannot be revoked. Pursuant to Section 83(b) of the Internal Revenue Code, I hereby elect within 30 days after receiving the property described herein to be taxed immediately on its value specified in item 5 below.2006 STOCK INCENTIVE PLAN ----------

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE. The following documents previously filed by of the Company filed with the Securities and Exchange Commission (the “Commission”) are incorporated herein by reference: · : (a) The CompanyRegistrant’s Annual Report on Form 10-K for the year ended July 31, 2005 prospectus filed with the Commission on October 31August 12, 2005; · 2013 pursuant to Rule 424(b) under the Securities Act relating to the Registration Statement on Form S-1, as amended (Commission File No. 333-190258), that contains audited financial statements for the Registrant’s latest fiscal year for which such statements have been filed; (b) The CompanyRegistrant’s Quarterly Report on Form 10-Q for the its fiscal quarter ended October March 31, 2005 2013, filed with the Commission on December 15May 8, 2005; · The Company2013 (Commission File No. 001- 35784), and the Registrant’s Quarterly Report on Form 10-Q for the its fiscal quarter ended January 31June 30, 2006 2013, filed with the Commission on March 16July 30, 2006; · The Company’s amended Quarterly Report on Form 10-Q/A 2013 (Amendment Commission File No. 1001-35784); (c) for the quarter ended October 31, 2004 filed with the Commission on October 31, 2005; · The Company’s amended Quarterly Report on Form 10-Q/A (Amendment No. 3) for the quarter ended January 31, 2005 filed with the Commission on October 31, 2005; · The Company’s amended Quarterly Report on Form 10-Q/A (Amendment No. 2) for the quarter ended April 30, 2005 filed with the Commission on October 31, 2005; · The Registrant’s Current Reports on Form 8-K, as filed with the Commission on August 2, 2005, August 5, 2005, August January 30, 20052013, September February 8, 2013, February 25, 2013, May 30, 2005, October 13, 2005, October 31, 2005, November 14, 2005, November 17, 2005, November 23, 2005, December 2, 2005, December 6, 2005, December 8, 2005, December 15, 2005 2013 (but specifically not incorporating as amended by reference herein the Form 8-K filed on December 15, 2005 announcing the Company’s earnings for the quarter ended October 31, 2005), February 1, 2006, March 2, 2006 and April 18, 2006; · The Company’s amended Current Report on Form 8-K/A filed on July 11, 2013), June 7, 2013, and June 25, 2013 (Amendment Noas amended by Form 8-K/A filed on July 11, 2013) (Commission File Nos. 2001-35784); and (d) The description of the Registrant’s Ordinary Shares contained in its Registration Statement on Form 8-A filed with the Commission on August 2January 15, 2005; 2013 (Commission File No. 001-35784), and · any other amendment or report filed for the description purpose of the Common Stock, par value $.001 per share, of updating such description. All documents subsequently filed by the Company and the common stock purchase rights, which is incorporated by reference into the Company’s registration statement on Form 8-A, filed with the Commission on July 6, 2004, pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and any amendment or report filed for the purpose of updating such description. In addition, all documents filed by the Company with the Commission pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act, prior to the filing of a post-effective amendment which indicates that all securities offered hereby have been sold or which de-registers deregisters all securities then remaining unsold, shall be deemed to be incorporated by reference into this Memorandum Registration Statement and to be a part hereof from the date of filing of such documents; provided, however, that documents or information deemed to have been furnished and not filed in accordance with the Securities and Exchange CommissionCommission rules shall not be deemed incorporated by reference into this Registration Statement. Any statement contained herein or in a document document, all or a portion of which is incorporated or deemed to be incorporated by reference herein herein, shall be deemed to be modified or superseded for purposes of this Memorandum Registration Statement to the extent that a statement contained herein or in any other subsequently filed document which also is or is deemed to be incorporated by reference herein modifies or supersedes such statement. Any such statement so modified or superseded shall not be deemed, except as so modified or supersededamended, to constitute a part of this Memorandum. Any proceeds that the Company receives from the sale of Common Stock pursuant to Awards will be used for general corporate purposes. Employment and withholding taxes will apply to the income arising from Awards. Participants will not be subject to any additional charges (other than payment of the exercise price for Options) in connection with their Awards. Nor does the Plan allow for any liens on any Awards, funds, or Common Stock that Participants hold or may receive pursuant to the Plan. Additional information about the Plan and its administrators may be obtained from, and copies of the following documents or reports will be furnished without charge upon written or oral request to the Secretary, Commerce Energy Group, Inc., 000 Xxxxx Xxxxxxxxx, Xxxxx 0000, Xxxxx Xxxx, Xxxxxxxxxx 00000; telephone number (000) 000-0000: · Documents or reports incorporated by reference in this Memorandum (excluding exhibits to such documents or reports unless such exhibits are specifically incorporated by reference into such documents or reports); · The Company’s annual report to shareholders for the latest fiscal year; and · All reports, proxy statements and other communications distributed to the shareholders of the Company. All participants shall receive, if they do not otherwise receive such materials, copies of all reports, proxy statements and other communications distributed to the Company’s security holders generally. Such materials shall be delivered not later than the time at which they are sent to the Company’s security holders. Attached is an Internal Revenue Code Section 83(b) Election Form. IF YOU WISH TO MAKE A SECTION 83(B) ELECTION, YOU MUST DO SO WITHIN 30 DAYS AFTER THE DATE THE RESTRICTED SHARES COVERED BY THE ELECTION WERE TRANSFERRED TO YOU. In order to make the election, you must completely fill out the attached form and file one copy with the Internal Revenue Service office where you file your tax return. In addition, one copy of the statement also must be submitted with your income tax return for the taxable year in which you make this election. Finally, you also must submit a copy of the election form to the Company within 10 days after filing that election with the Internal Revenue Service. A Section 83(b) election normally cannot be revoked. Pursuant to Section 83(b) of the Internal Revenue Code, I hereby elect within 30 days after receiving the property described herein to be taxed immediately on its value specified in item 5 belowRegistration Statement.

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE. The following documents previously filed by of the Company filed with the Securities and Exchange Commission (the “Commission”) are incorporated herein by reference: · : (a) The CompanyRegistrant’s Annual Report on Form 10-K for the year ended July 31, 2005 prospectus filed with the Commission on October 31August 12, 2005; · 2013 pursuant to Rule 424(b) under the Securities Act relating to the Registration Statement on Form S-1, as amended (Commission File No. 333-190258), that contains audited financial statements for the Registrant’s latest fiscal year for which such statements have been filed; (b) The CompanyRegistrant’s Quarterly Report on Form 10-Q for the its fiscal quarter ended October March 31, 2005 2013, filed with the Commission on December 15May 8, 2005; · The Company2013 (Commission File No. 001-35784), and the Registrant’s Quarterly Report on Form 10-Q for the its fiscal quarter ended January 31June 30, 2006 2013, filed with the Commission on March 16July 30, 2006; · The Company’s amended Quarterly Report on Form 10-Q/A 2013 (Amendment Commission File No. 1001-35784); (c) for the quarter ended October 31, 2004 filed with the Commission on October 31, 2005; · The Company’s amended Quarterly Report on Form 10-Q/A (Amendment No. 3) for the quarter ended January 31, 2005 filed with the Commission on October 31, 2005; · The Company’s amended Quarterly Report on Form 10-Q/A (Amendment No. 2) for the quarter ended April 30, 2005 filed with the Commission on October 31, 2005; · The Registrant’s Current Reports on Form 8-K, as filed with the Commission on August 2, 2005, August 5, 2005, August January 30, 20052013, September February 8, 2013, February 25, 2013, May 30, 2005, October 13, 2005, October 31, 2005, November 14, 2005, November 17, 2005, November 23, 2005, December 2, 2005, December 6, 2005, December 8, 2005, December 15, 2005 2013 (but specifically not incorporating as amended by reference herein the Form 8-K filed on December 15, 2005 announcing the Company’s earnings for the quarter ended October 31, 2005), February 1, 2006, March 2, 2006 and April 18, 2006; · The Company’s amended Current Report on Form 8-K/A filed on July 11, 2013), June 7, 2013, and June 25, 2013 (Amendment Noas amended by Form 8-K/A filed on July 11, 2013) (Commission File Nos. 2001-35784); and (d) The description of the Registrant’s Ordinary Shares contained in its Registration Statement on Form 8-A filed with the Commission on August 2January 15, 2005; 2013 (Commission File No. 001-35784), and · any other amendment or report filed for the description purpose of the Common Stock, par value $.001 per share, of updating such description. All documents subsequently filed by the Company and the common stock purchase rights, which is incorporated by reference into the Company’s registration statement on Form 8-A, filed with the Commission on July 6, 2004, pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and any amendment or report filed for the purpose of updating such description. In addition, all documents filed by the Company with the Commission pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act, prior to the filing of a post-effective amendment which indicates that all securities offered hereby have been sold or which de-registers deregisters all securities then remaining unsold, shall be deemed to be incorporated by reference into this Memorandum Registration Statement and to be a part hereof from the date of filing of such documents; provided, however, that documents or information deemed to have been furnished and not filed in accordance with the Securities and Exchange CommissionCommission rules shall not be deemed incorporated by reference into this Registration Statement. Any statement contained herein or in a document document, all or a portion of which is incorporated or deemed to be incorporated by reference herein herein, shall be deemed to be modified or superseded for purposes of this Memorandum Registration Statement to the extent that a statement contained herein or in any other subsequently filed document which also is or is deemed to be incorporated by reference herein modifies or supersedes such statement. Any such statement so modified or superseded shall not be deemed, except as so modified or supersededamended, to constitute a part of this Memorandum. Any proceeds that the Company receives from the sale of Common Stock pursuant to Awards will be used for general corporate purposes. Employment and withholding taxes will apply to the income arising from Awards. Participants will not be subject to any additional charges (other than payment of the exercise price for Options) in connection with their Awards. Nor does the Plan allow for any liens on any Awards, funds, or Common Stock that Participants hold or may receive pursuant to the Plan. Additional information about the Plan and its administrators may be obtained from, and copies of the following documents or reports will be furnished without charge upon written or oral request to the Secretary, Commerce Energy Group, Inc., 000 Xxxxx Xxxxxxxxx, Xxxxx 0000, Xxxxx Xxxx, Xxxxxxxxxx 00000; telephone number (000) 000-0000: · Documents or reports incorporated by reference in this Memorandum (excluding exhibits to such documents or reports unless such exhibits are specifically incorporated by reference into such documents or reports); · The Company’s annual report to shareholders for the latest fiscal year; and · All reports, proxy statements and other communications distributed to the shareholders of the Company. All participants shall receive, if they do not otherwise receive such materials, copies of all reports, proxy statements and other communications distributed to the Company’s security holders generally. Such materials shall be delivered not later than the time at which they are sent to the Company’s security holders. Attached is an Internal Revenue Code Section 83(b) Election Form. IF YOU WISH TO MAKE A SECTION 83(B) ELECTION, YOU MUST DO SO WITHIN 30 DAYS AFTER THE DATE THE RESTRICTED SHARES COVERED BY THE ELECTION WERE TRANSFERRED TO YOU. In order to make the election, you must completely fill out the attached form and file one copy with the Internal Revenue Service office where you file your tax return. In addition, one copy of the statement also must be submitted with your income tax return for the taxable year in which you make this election. Finally, you also must submit a copy of the election form to the Company within 10 days after filing that election with the Internal Revenue Service. A Section 83(b) election normally cannot be revoked. Pursuant to Section 83(b) of the Internal Revenue Code, I hereby elect within 30 days after receiving the property described herein to be taxed immediately on its value specified in item 5 belowRegistration Statement.

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE. The following documents previously filed by the Company AFC with the Securities Commission under the Act and the Exchange Commission (the “Commission”) Act are incorporated herein by reference: · (a) AFC's Annual Report on Form 10-K for the fiscal year ended December 31, 1996 (the "AFC Form 10-K"); (b) AFC's Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 1997 (the "AFC Form 10-Q"); (c) The Company’s description of AFC Common Stock contained in AFC's Registration Statement on Form S-1 (File No. 33-91766) which the Commission declared effective on October 10, 1995, and any amendment or report filed for the purpose of updating any such description (the "AFC Common Stock Description"); (d) AFC's Current Reports on Form 8-K dated February 5, 1997, February 19, 1997 and April 15, 1997 (the "AFC Form 8-Ks"); and (e) AFC's Annual Report to Stockholders for the fiscal year ended December 31, 1996 (collectively with the AFC Form 10-K, the AFC Form 10-Q, the AFC Common Stock Description and the AFC Form 8-Ks, the "AFC Reports"). The following documents previously filed by APY with the Commission under the Act and the Exchange Act are incorporated herein by reference: (a) APY's Annual Report on Form 10-K for the year ended July December 31, 2005 filed with 1996 (the Commission on October 31, 2005"APY Form 10-K"); · The Company’s (b) APY's Quarterly Report on Form 10-Q for the fiscal quarter ended October March 31, 2005 filed with 1997 (the Commission on December 15, 2005; · The Company’s Quarterly Report on Form 10-Q for the quarter ended January 31, 2006 filed with the Commission on March 16, 2006; · The Company’s amended Quarterly Report on "APY Form 10-Q/A "); (Amendment c) The description of APY Common Stock contained in APY's Registration Statement on Form S-4 (File No. 133-51696) for the quarter ended October 31, 2004 filed with which the Commission declared effective on October 31September 4, 2005; · The Company’s amended Quarterly Report on Form 10-Q/A (Amendment No. 3) for the quarter ended January 311992, 2005 filed with the Commission on October 31, 2005; · The Company’s amended Quarterly Report on Form 10-Q/A (Amendment No. 2) for the quarter ended April 30, 2005 filed with the Commission on October 31, 2005; · The Registrant’s Current Reports on Form 8-K, as filed with the Commission on August 2, 2005, August 5, 2005, August 30, 2005, September 30, 2005, October 13, 2005, October 31, 2005, November 14, 2005, November 17, 2005, November 23, 2005, December 2, 2005, December 6, 2005, December 8, 2005, December 15, 2005 (but specifically not incorporating by reference herein the Form 8-K filed on December 15, 2005 announcing the Company’s earnings for the quarter ended October 31, 2005), February 1, 2006, March 2, 2006 and April 18, 2006; · The Company’s amended Current Report on Form 8-K/A (Amendment No. 2) filed with the Commission on August 2, 2005; and · the description of the Common Stock, par value $.001 per share, of the Company and the common stock purchase rights, which is incorporated by reference into the Company’s registration statement on Form 8-A, filed with the Commission on July 6, 2004, pursuant to the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and any amendment or report filed for the purpose purposes of updating any such description. In additiondescription (the "APY Common Stock Description"); and (d) APY's Current Report on Form 8-K dated February 19, all 1997 (collectively with the APY Form 10-K, the APY Form 10-Q and the APY Common Stock Description, the "APY Reports)." All documents filed by the Company with the Commission AFC or APY pursuant to Sections 13(a), 13(c), 14 and or 15(d) of the Exchange Act, Act after the date of this Information Statement/Prospectus and prior to the filing of a post-effective amendment which indicates that all securities offered have been sold or which de-registers all securities then remaining unsold, Effective Time shall be deemed to be incorporated by reference into this Memorandum Information Statement/Prospectus and to be a part hereof from the date of filing of such documents with documents. In addition, the Securities and Exchange CommissionMerger Agreement, a copy of which is attached as Appendix A-1 to this Information Statement/Prospectus, is incorporated herein by reference. Any statement contained in a document incorporated or deemed to be incorporated by reference herein shall be deemed to be modified or superseded for purposes of this Memorandum hereof to the extent that a statement contained herein (or in any other subsequently filed document which also that is or is deemed to be incorporated by reference herein herein) modifies or supersedes such previous statement. Any statement so modified or superseded shall not be deemed, deemed to constitute a part hereof except as so modified or superseded, to constitute a part of this Memorandum. Any proceeds that the Company receives from the sale of Common Stock pursuant to Awards will be used for general corporate purposes. Employment and withholding taxes will apply to the income arising from Awards. Participants will not be subject to any additional charges (other than payment of the exercise price for Options) in connection with their Awards. Nor does the Plan allow for any liens on any Awards, funds, or Common Stock that Participants hold or may receive pursuant to the Plan. Additional information about the Plan and its administrators may be obtained from, and copies of the following documents or reports will be furnished without charge upon written or oral request to the Secretary, Commerce Energy Group, Inc., 000 Xxxxx Xxxxxxxxx, Xxxxx 0000, Xxxxx Xxxx, Xxxxxxxxxx 00000; telephone number (000) 000-0000---------------- FOR NORTH CAROLINA INVESTORS: · Documents or reports incorporated by reference in this Memorandum (excluding exhibits to such documents or reports unless such exhibits are specifically incorporated by reference into such documents or reports); · The Company’s annual report to shareholders for the latest fiscal year; and · All reports, proxy statements and other communications distributed to the shareholders of the Company. All participants shall receive, if they do not otherwise receive such materials, copies of all reports, proxy statements and other communications distributed to the Company’s security holders generally. Such materials shall be delivered not later than the time at which they are sent to the Company’s security holders. Attached is an Internal Revenue Code Section 83(b) Election Form. IF YOU WISH TO MAKE A SECTION 83(B) ELECTION, YOU MUST DO SO WITHIN 30 DAYS AFTER THESE SECURITIES AND THE DATE THE RESTRICTED SHARES COVERED MERGER TRANSACTIONS HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE ELECTION WERE TRANSFERRED COMMISSIONER OF INSURANCE FOR THE STATE OF NORTH CAROLINA, NOR HAS THE COMMISSIONER PASSED UPON THE ACCURACY OR ADEQUACY OF THIS INFORMATION STATEMENT/PROSPECTUS. ---------------- STATE INSURANCE HOLDING COMPANY LAWS AND REGULATIONS APPLICABLE TO YOUAFC AND APY GENERALLY PROVIDE THAT NO PERSON MAY ACQUIRE CONTROL OF AFC, AND THUS INDIRECT CONTROL OF THEIR RESPECTIVE INSURANCE SUBSIDIARIES, UNLESS SUCH PERSON HAS PROVIDED CERTAIN REQUIRED INFORMATION TO, AND SUCH ACQUISITION IS APPROVED (OR NOT DISAPPROVED) BY THE APPROPRIATE INSURANCE REGULATORY AUTHORITIES. In order to make the electionGENERALLY, you must completely fill out the attached form and file one copy with the Internal Revenue Service office where you file your tax return. In addition, one copy of the statement also must be submitted with your income tax return for the taxable year in which you make this election. Finally, you also must submit a copy of the election form to the Company within 10 days after filing that election with the Internal Revenue Service. A Section 83(b) election normally cannot be revoked. Pursuant to Section 83(b) of the Internal Revenue Code, I hereby elect within 30 days after receiving the property described herein to be taxed immediately on its value specified in item 5 below.ANY PERSON WHO ACQUIRES BENEFICIAL 2

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE. The following documents previously filed by the Company with the Securities and Exchange Commission (the “"Commission”") are incorporated herein by reference: · - The Company’s 's Annual Report on Form 10-K for the year ended July 31, 2005 filed with the Commission on October 31, 2005; · - The Company’s 's Quarterly Report on Form 10-Q for the quarter ended October 31, 2005 filed with the Commission on December 15, 2005; · - The Company’s 's Quarterly Report on Form 10-Q for the quarter ended January 31, 2006 filed with the Commission on March 16, 2006; · - The Company’s 's amended Quarterly Report on Form 10-Q/A (Amendment No. 1) for the quarter ended October 31, 2004 filed with the Commission on October 31, 2005; · - The Company’s 's amended Quarterly Report on Form 10-Q/A (Amendment No. 3) for the quarter ended January 31, 2005 filed with the Commission on October 31, 2005; · - The Company’s 's amended Quarterly Report on Form 10-Q/A (Amendment No. 2) for the quarter ended April 30, 2005 filed with the Commission on October 31, 2005; · - The Registrant’s 's Current Reports on Form 8-K, as filed with the Commission on August 2, 2005, August 5, 2005, August 30, 2005, September 30, 2005, October 13, 2005, October 31, 2005, Commerce Energy Group, Inc. 2006 Stock Incentive Plan Prospectus Page 30 November 14, 2005, November 17, 2005, November 23, 2005, December 2, 2005, December 6, 2005, December 8, 2005, December 15, 2005 (but specifically not incorporating by reference herein the Form 8-K filed on December 15, 2005 announcing the Company’s 's earnings for the quarter ended October 31, 2005), February 1, 2006, March 2, 2006 and April 18, 2006; · - The Company’s 's amended Current Report on Form 8-K/A (Amendment No. 2) filed with the Commission on August 2, 2005; and · - the description of the Common Stock, par value $.001 per share, of the Company and the common stock purchase rights, which is incorporated by reference into the Company’s 's registration statement on Form 8-A, filed with the Commission on July 6, 2004, pursuant to the Securities Exchange Act of 1934, as amended (the “"Exchange Act”") and any amendment or report filed for the purpose of updating such description. In addition, all documents filed by the Company with the Commission pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act, prior to the filing of a post-effective amendment which indicates that all securities offered have been sold or which de-registers all securities then remaining unsold, shall be deemed to be incorporated by reference into this Memorandum and to be a part hereof from the date of filing of such documents with the Securities and Exchange Commission. Any statement contained in a document incorporated or deemed to be incorporated by reference herein shall be deemed to be modified or superseded for purposes of this Memorandum to the extent that a statement contained herein or in any other subsequently filed document which also is or is deemed to be incorporated by reference herein modifies or supersedes such statement. Any statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Memorandum. USE OF PROCEEDS, TAX WITHHOLDING AND NO LIENS Any proceeds that the Company receives from the sale of Common Stock pursuant to Awards will be used for general corporate purposes. Employment and withholding taxes will apply to the income arising from Awards. Participants will not be subject to any additional charges (other than payment of the exercise price for Options) in connection with their Awards. Nor does the Plan allow for any liens on any Awards, funds, or Common Stock that Participants hold or may receive pursuant to the Plan. ADDITIONAL INFORMATION Additional information about the Plan and its administrators may be obtained from, and copies of the following documents or reports will be furnished without charge upon written or oral request to the Secretary, Commerce Energy Group, Inc., 000 Xxxxx Xxxxxxxxx, Xxxxx 0000, Xxxxx Xxxx, Xxxxxxxxxx 00000; telephone number (000) 000-0000: · - Documents or reports incorporated by reference in this Memorandum (excluding exhibits to such documents or reports unless such exhibits are specifically incorporated by reference into such documents or reports); · - The Company’s 's annual report to shareholders for the latest fiscal year; and · - All reports, proxy statements and other communications distributed to the shareholders of the Company. All participants shall receive, if they do not otherwise receive such materials, copies of all reports, proxy statements and other communications distributed to the Company’s 's security holders generally. Such materials shall be delivered not later than the time at which they are sent to the Company’s 's security holders. Attached is an Internal Revenue Code Section 83(b) Election FormEXHIBIT C COMMERCE ENERGY GROUP, INC. IF YOU WISH TO MAKE A SECTION 83(B) ELECTION, YOU MUST DO SO WITHIN 30 DAYS AFTER THE DATE THE RESTRICTED SHARES COVERED BY THE ELECTION WERE TRANSFERRED TO YOU. In order to make the election, you must completely fill out the attached form and file one copy with the Internal Revenue Service office where you file your tax return. In addition, one copy of the statement also must be submitted with your income tax return for the taxable year in which you make this election. Finally, you also must submit a copy of the election form to the Company within 10 days after filing that election with the Internal Revenue Service. A Section 83(b) election normally cannot be revoked. Pursuant to Section 83(b) of the Internal Revenue Code, I hereby elect within 30 days after receiving the property described herein to be taxed immediately on its value specified in item 5 below.2006 STOCK INCENTIVE PLAN ----------

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE. The following documents previously filed by the Company with the Securities and Exchange Commission (the “"Commission”") are incorporated herein by reference: · - The Company’s 's Annual Report on Form 10-K for the year ended July 31, 2005 filed with the Commission on October 31, 2005; · - The Company’s 's Quarterly Report on Form 10-Q for the quarter ended October 31, 2005 filed with the Commission on December 15, 2005; · - The Company’s 's Quarterly Report on Form 10-Q for the quarter ended January 31, 2006 filed with the Commission on March 16, 2006; · - The Company’s 's amended Quarterly Report on Form 10-Q/A (Amendment No. 1) for the quarter ended October 31, 2004 filed with the Commission on October 31, 2005; · - The Company’s 's amended Quarterly Report on Form 10-Q/A (Amendment No. 3) for the quarter ended January 31, 2005 filed with the Commission on October 31, 2005; · - The Company’s 's amended Quarterly Report on Form 10-Q/A (Amendment No. 2) for the quarter ended April 30, 2005 filed with the Commission on October 31, 2005; · - The Registrant’s 's Current Reports on Form 8-K, as filed with the Commission on August 2, 2005, August 5, 2005, August 30, 2005, September 30, 2005, October 13, 2005, Commerce Energy Group, Inc. 2006 Stock Incentive Plan Prospectus Page 30 October 31, 2005, November 14, 2005, November 17, 2005, November 23, 2005, December 2, 2005, December 6, 2005, December 8, 2005, December 15, 2005 (but specifically not incorporating by reference herein the Form 8-K filed on December 15, 2005 announcing the Company’s 's earnings for the quarter ended October 31, 2005), February 1, 2006, March 2, 2006 and April 18, 2006; · - The Company’s 's amended Current Report on Form 8-K/A (Amendment No. 2) filed with the Commission on August 2, 2005; and · - the description of the Common Stock, par value $.001 per share, of the Company and the common stock purchase rights, which is incorporated by reference into the Company’s 's registration statement on Form 8-A, filed with the Commission on July 6, 2004, pursuant to the Securities Exchange Act of 1934, as amended (the “"Exchange Act”") and any amendment or report filed for the purpose of updating such description. In addition, all documents filed by the Company with the Commission pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act, prior to the filing of a post-effective amendment which indicates that all securities offered have been sold or which de-registers all securities then remaining unsold, shall be deemed to be incorporated by reference into this Memorandum and to be a part hereof from the date of filing of such documents with the Securities and Exchange Commission. Any statement contained in a document incorporated or deemed to be incorporated by reference herein shall be deemed to be modified or superseded for purposes of this Memorandum to the extent that a statement contained herein or in any other subsequently filed document which also is or is deemed to be incorporated by reference herein modifies or supersedes such statement. Any statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Memorandum. USE OF PROCEEDS, TAX WITHHOLDING AND NO LIENS Any proceeds that the Company receives from the sale of Common Stock pursuant to Awards will be used for general corporate purposes. Employment and withholding taxes will apply to the income arising from Awards. Participants will not be subject to any additional charges (other than payment of the exercise price for Options) in connection with their Awards. Nor does the Plan allow for any liens on any Awards, funds, or Common Stock that Participants hold or may receive pursuant to the Plan. ADDITIONAL INFORMATION Additional information about the Plan and its administrators may be obtained from, and copies of the following documents or reports will be furnished without charge upon written or oral request to the Secretary, Commerce Energy Group, Inc., 000 Xxxxx Xxxxxxxxx, Xxxxx 0000, Xxxxx Xxxx, Xxxxxxxxxx 00000; telephone number (000) 000-0000: · - Documents or reports incorporated by reference in this Memorandum (excluding exhibits to such documents or reports unless such exhibits are specifically incorporated by reference into such documents or reports); · - The Company’s 's annual report to shareholders for the latest fiscal year; and · - All reports, proxy statements and other communications distributed to the shareholders of the Company. All participants shall receive, if they do not otherwise receive such materials, copies of all reports, proxy statements and other communications distributed to the Company’s 's security holders generally. Such materials shall be delivered not later than the time at which they are sent to the Company’s 's security holders. Attached is an Internal Revenue Code Section 83(bEXHIBIT C COMMERCE ENERGY GROUP, INC. 2006 STOCK INCENTIVE PLAN ---------- FORM OF EXERCISE OF STOCK OPTION AWARD AGREEMENT ---------- Commerce Energy Group, Inc. Attention: 2006 Stock Incentive Plan Committee 000 Xxxxx Xxxxxxxxx Xxxxx Xxxx, Xxxxxxxxxx 00000 Dear Sir or Madam: The undersigned elects to exercise his/her Incentive Stock Option to purchase _____ shares of Common Stock of Commerce Energy Group, Inc. (the "Company") Election Form. IF YOU WISH TO MAKE A SECTION 83(B) ELECTION, YOU MUST DO SO WITHIN 30 DAYS AFTER THE DATE THE RESTRICTED SHARES COVERED BY THE ELECTION WERE TRANSFERRED TO YOU. In order under and pursuant to make the election, you must completely fill out the attached form and file one copy with the Internal Revenue Service office where you file your tax return. In addition, one copy a Stock Option Agreement dated as of the statement also must be submitted with your income tax return for the taxable year in which you make this election. Finally, you also must submit a copy of the election form to the Company within 10 days after filing that election with the Internal Revenue Service. A Section 83(b) election normally cannot be revoked. Pursuant to Section 83(b) of the Internal Revenue Code, I hereby elect within 30 days after receiving the property described herein to be taxed immediately on its value specified in item 5 below_________.

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE. The following documents previously filed by the Company with the Securities and Exchange Commission (the “Commission”) are incorporated herein by reference: · The Company’s Annual Report on Form 10-K for the year ended July 31, 2005 filed with the Commission on October 31, 2005; · The Company’s Quarterly Report on Form 10-Q for the quarter ended October 31, 2005 filed with the Commission on December 15, 2005; · The Company’s Quarterly Report on Form 10-Q for the quarter ended January 31, 2006 filed with the Commission on March 16, 2006; · The Company’s amended Quarterly Report on Form 10-Q/A (Amendment No. 1) for the quarter ended October 31, 2004 filed with the Commission on October 31, 2005; · The Company’s amended Quarterly Report on Form 10-Q/A (Amendment No. 3) for the quarter ended January 31, 2005 filed with the Commission on October 31, 2005; · The Company’s amended Quarterly Report on Form 10-Q/A (Amendment No. 2) for the quarter ended April 30, 2005 filed with the Commission on October 31, 2005; · The Registrant’s Current Reports on Form 8-K, as filed with the Commission on August 2, 2005, August 5, 2005, August 30, 2005, September 30, 2005, October 13, 2005, October 31, 2005, November 14, 2005, November 17, 2005, November 23, 2005, December 2, 2005, December 6, 2005, December 8, 2005, December 15, 2005 (but specifically not incorporating by reference herein the Form 8-K filed on December 15, 2005 announcing the Company’s earnings for the quarter ended October 31, 2005), February 1, 2006, March 2, 2006 and April 18, 2006; · The Company’s amended Current Report on Form 8-K/A (Amendment No. 2) filed with the Commission on August 2, 2005; and · the description of the Common Stock, par value $.001 per share, of the Company and the common stock purchase rights, which is incorporated by reference into the Company’s registration statement on Form 8-A, filed with the Commission on July 6, 2004, pursuant to the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and any amendment or report filed for the purpose of updating such description. In addition, all documents filed by the Company with the Commission pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act, prior to the filing of a post-effective amendment which indicates that all securities offered have been sold or which de-registers all securities then remaining unsold, shall be deemed to be incorporated by reference into this Memorandum and to be a part hereof from the date of filing of such documents with the Securities and Exchange Commission. Any statement contained in a document incorporated or deemed to be incorporated by reference herein shall be deemed to be modified or superseded for purposes of this Memorandum to the extent that a statement contained herein or in any other subsequently filed document which also is or is deemed to be incorporated by reference herein modifies or supersedes such statement. Any statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Memorandum. Any proceeds that the Company receives from the sale of Common Stock pursuant to Awards will be used for general corporate purposes. Employment and withholding taxes will apply to the income arising from Awards. Participants will not be subject to any additional charges (other than payment of the exercise price for Options) in connection with their Awards. Nor does the Plan allow for any liens on any Awards, funds, or Common Stock that Participants hold or may receive pursuant to the Plan. Additional information about the Plan and its administrators may be obtained from, and copies of the following documents or reports will be furnished without charge upon written or oral request to the Secretary, Commerce Energy Group, Inc., 000 Xxxxx Xxxxxxxxx, Xxxxx 0000, Xxxxx Xxxx, Xxxxxxxxxx 00000; telephone number (000) 000-0000: · Documents or reports incorporated by reference in this Memorandum (excluding exhibits to such documents or reports unless such exhibits are specifically incorporated by reference into such documents or reports); · The Company’s annual report to shareholders for the latest fiscal year; and · All reports, proxy statements and other communications distributed to the shareholders of the Company. All participants shall receive, if they do not otherwise receive such materials, copies of all reports, proxy statements and other communications distributed to the Company’s security holders generally. Such materials shall be delivered not later than the time at which they are sent to the Company’s security holders. Attached is an Internal Revenue Code Section 83(bCommerce Energy Group, Inc. Attention: 2006 Stock Incentive Plan Committee 000 Xxxxx Xxxxxxxxx Xxxxx Xxxx, Xxxxxxxxxx 00000 Dear Sir or Madam: The undersigned elects to exercise his/her Incentive Stock Option to purchase shares of Common Stock of Commerce Energy Group, Inc. (the “Company”) Election Form. IF YOU WISH TO MAKE A SECTION 83(B) ELECTION, YOU MUST DO SO WITHIN 30 DAYS AFTER THE DATE THE RESTRICTED SHARES COVERED BY THE ELECTION WERE TRANSFERRED TO YOU. In order under and pursuant to make the election, you must completely fill out the attached form and file one copy with the Internal Revenue Service office where you file your tax return. In addition, one copy a Stock Option Agreement dated as of the statement also must be submitted with your income tax return for the taxable year in which you make this election. Finally, you also must submit a copy of the election form to the Company within 10 days after filing that election with the Internal Revenue Service. A Section 83(b) election normally cannot be revoked. Pursuant to Section 83(b) of the Internal Revenue Code, I hereby elect within 30 days after receiving the property described herein to be taxed immediately on its value specified in item 5 below.

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE. The following documents previously filed by the Company with the Securities and Exchange Commission (the “"Commission”") are incorporated herein by reference: · - The Company’s 's Annual Report on Form 10-K for the year ended July 31, 2005 filed with the Commission on October 31, 2005; · - The Company’s 's Quarterly Report on Form 10-Q for the quarter ended October 31, 2005 filed with the Commission on December 15, 2005; · - The Company’s 's Quarterly Report on Form 10-Q for the quarter ended January 31, 2006 filed with the Commission on March 16, 2006; · - The Company’s 's amended Quarterly Report on Form 10-Q/A (Amendment No. 1) for the quarter ended October 31, 2004 filed with the Commission on October 31, 2005; · - The Company’s 's amended Quarterly Report on Form 10-Q/A (Amendment No. 3) for the quarter ended January 31, 2005 filed with the Commission on October 31, 2005; · - The Company’s 's amended Quarterly Report on Form 10-Q/A (Amendment No. 2) for the quarter ended April 30, 2005 filed with the Commission on October 31, 2005; · - The Registrant’s 's Current Reports on Form 8-K, as filed with the Commission on August 2, 2005, August 5, 2005, August 30, 2005, September 30, 2005, October 13, 2005, October 31, 2005, November 14, 2005, November 17, 2005, November 23, 2005, December 2, 2005, December 6, 2005, December 8, 2005, December 15, 2005 (but specifically not incorporating by reference herein the Form 8-K filed on December 15, 2005 announcing the Company’s 's earnings for the quarter ended October 31, 2005), February 1, 2006, March 2, 2006 and April 18, 2006; · - The Company’s 's amended Current Report on Form 8-K/A (Amendment No. 2) filed with the Commission on August 2, 2005; and · - the description of the Common Stock, par value $.001 per share, of the Company and the common stock purchase rights, which is incorporated by reference into the Company’s 's registration statement on Form 8-A, filed with the Commission on July 6, 2004, pursuant to the Securities Exchange Act of 1934, as amended (the “"Exchange Act”") and any amendment or report filed for the purpose of updating such description. In addition, all documents filed by the Company with the Commission pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act, prior to the filing of a post-effective amendment which indicates that all securities offered have been sold or which de-registers all securities then remaining unsold, shall be deemed to be incorporated by reference into this Memorandum and to be a part hereof from the date of filing of such documents with the Securities and Exchange Commission. Any statement contained in a document incorporated or deemed to be incorporated by reference herein shall be deemed to be modified or superseded for purposes of this Memorandum to the extent that a statement contained herein or in any other subsequently filed document which also is or is deemed to be incorporated by reference herein modifies or supersedes such statement. Any statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Memorandum. USE OF PROCEEDS, TAX WITHHOLDING AND NO LIENS Any proceeds that the Company receives from the sale of Common Stock pursuant to Awards will be used for general corporate purposes. Employment and withholding taxes will apply to the income arising from Awards. Participants will not be subject to any additional charges (other than payment of the exercise price for Options) in connection with their Awards. Nor does the Plan allow for any liens on any Awards, funds, or Common Stock that Participants hold or may receive pursuant to the Plan. ADDITIONAL INFORMATION Additional information about the Plan and its administrators may be obtained from, and copies of the following documents or reports will be furnished without charge upon written or oral request to the Secretary, Commerce Energy Group, Inc., 000 Xxxxx Xxxxxxxxx, Xxxxx 0000, Xxxxx Xxxx, Xxxxxxxxxx 00000; telephone number (000) 000-0000: · - Documents or reports incorporated by reference in this Memorandum (excluding exhibits to such documents or reports unless such exhibits are specifically incorporated by reference into such documents or reports); · - The Company’s 's annual report to shareholders for the latest fiscal year; and · - All reports, proxy statements and other communications distributed to the shareholders of the Company. All participants shall receive, if they do not otherwise receive such materials, copies of all reports, proxy statements and other communications distributed to the Company’s 's security holders generally. Such materials shall be delivered not later than the time at which they are sent to the Company’s 's security holders. Attached is an Internal Revenue Code Section 83(bEXHIBIT C COMMERCE ENERGY GROUP, INC. 2006 STOCK INCENTIVE PLAN ---------- FORM OF EXERCISE OF STOCK OPTION AWARD AGREEMENT ---------- Commerce Energy Group, Inc. Attention: 2006 Stock Incentive Plan Committee 000 Xxxxx Xxxxxxxxx Xxxxx Xxxx, Xxxxxxxxxx 00000 Dear Sir or Madam: The undersigned elects to exercise his/her Incentive Stock Option to purchase _____ shares of Common Stock of Commerce Energy Group, Inc. (the "Company") Election Form. IF YOU WISH TO MAKE A SECTION 83(B) ELECTION, YOU MUST DO SO WITHIN 30 DAYS AFTER THE DATE THE RESTRICTED SHARES COVERED BY THE ELECTION WERE TRANSFERRED TO YOU. In order under and pursuant to make the election, you must completely fill out the attached form and file one copy with the Internal Revenue Service office where you file your tax return. In addition, one copy a Stock Option Agreement dated as of the statement also must be submitted with your income tax return for the taxable year in which you make this election. Finally, you also must submit a copy of the election form to the Company within 10 days after filing that election with the Internal Revenue Service. A Section 83(b) election normally cannot be revoked. Pursuant to Section 83(b) of the Internal Revenue Code, I hereby elect within 30 days after receiving the property described herein to be taxed immediately on its value specified in item 5 below_____________.

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE. The following documents previously filed by the Company with the Securities and Exchange Commission (the “Commission”) are incorporated herein by reference: · The Company’s Annual Report on Form 10-K for the year ended July 31, 2005 2007 filed with the Commission on October 3129, 2005; 2007. · The Company’s Quarterly Report on Form 10-Q for the quarter ended October 31, 2005 2007 filed with the Commission on December 1517, 2005; · The Company’s Quarterly Report on Form 10-Q for the quarter ended January 31, 2006 filed with the Commission on March 16, 2006; · The Company’s amended Quarterly Report on Form 10-Q/A (Amendment No2007. 1) for the quarter ended October 31, 2004 filed with the Commission on October 31, 2005; · The Company’s amended Quarterly Report on Form 10-Q/A (Amendment No. 3) for the quarter ended January 31, 2005 filed with the Commission on October 31, 2005; · The Company’s amended Quarterly Report on Form 10-Q/A (Amendment No. 2) for the quarter ended April 30, 2005 filed with the Commission on October 31, 2005; · The Registrant’s Current Reports on Form 8-K, as K filed with the Commission on August 2, 20052007; September 18, August 52007; September 25, 20052007; November 20, August 2007; December 4, 2007; January 30, 20052008; and February 26, September 30, 2005, October 13, 2005, October 31, 2005, November 14, 2005, November 17, 2005, November 23, 2005, December 2, 2005, December 6, 2005, December 8, 2005, December 15, 2005 (but specifically not incorporating by reference herein the Form 8-K filed on December 15, 2005 announcing the Company’s earnings for the quarter ended October 31, 2005), February 1, 2006, March 2, 2006 and April 18, 2006; 2008. · The Company’s amended Current Report on Form 8-K/A (Amendment No. 2) filed with the Commission on August 2, 2005; and · the description of the Common Stock, par value $.001 per share, of the Company and the common stock purchase rights, which is incorporated by reference into the Company’s registration statement on Form 8-A, filed with the Commission on July 6, 2004, pursuant to the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and any amendment or report filed for the purpose of updating such description. · The description of the Registrant’s common stock purchase rights and the related Series A Junior Participating Preferred Stock contained in the Registrant’s Registration Statement on Form 8-A filed on July 6, 2004 (File No. 001-32239), pursuant to Section 12(b) of the Exchange Act, including any amendment or report filed for the purpose of updating such description. In addition, all documents filed by the Company with the Commission pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act, prior to the filing of a post-effective amendment which indicates that all securities offered have been sold or which de-registers all securities then remaining unsold, shall be deemed to be incorporated by reference into this Memorandum and to be a part hereof from the date of filing of such documents with the Securities and Exchange Commission. Any statement contained in a document incorporated or deemed to be incorporated by reference herein shall be deemed to be modified or superseded for purposes of this Memorandum to the extent that a statement contained herein or in any other subsequently filed document which also is or is deemed to be incorporated by reference herein modifies or supersedes such statement. Any statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Memorandum. Any proceeds that the Company receives from the sale of Common Stock pursuant to Awards will be used for general corporate purposes. Employment and withholding taxes will apply to the income arising from Awards. Participants will not be subject to any additional charges (other than payment of the exercise price for Options) in connection with their Awards. Nor does the Plan allow for any liens on any Awards, funds, or Common Stock that Participants hold or may receive pursuant to the Plan. Additional information about the Plan and its administrators may be obtained from, and copies of the following documents or reports will be furnished without charge upon written or oral request to the Secretary, Commerce Energy Group, Inc., 000 Xxxxx Xxxxxxxxx, Xxxxx 0000, Xxxxx Xxxx, Xxxxxxxxxx 00000; telephone number (000) 000-0000: · Documents or reports incorporated by reference in this Memorandum (excluding exhibits to such documents or reports unless such exhibits are specifically incorporated by reference into such documents or reports); · The Company’s annual report to shareholders for the latest fiscal year; and · All reports, proxy statements and other communications distributed to the shareholders of the Company. All participants shall receive, if they do not otherwise receive such materials, copies of all reports, proxy statements and other communications distributed to the Company’s security holders generally. Such materials shall be delivered not later than the time at which they are sent to the Company’s security holders. Attached is an Internal Revenue Code Section 83(b) Election Form. IF YOU WISH TO MAKE A SECTION 83(B) ELECTION, YOU MUST DO SO WITHIN 30 DAYS AFTER THE DATE THE RESTRICTED SHARES COVERED BY THE ELECTION WERE TRANSFERRED TO YOU. In order to make the election, you must completely fill out the attached form and file one copy with the Internal Revenue Service office where you file your tax return. In addition, one copy of the statement also must be submitted with your income tax return for the taxable year in which you make this election. Finally, you also must submit a copy of the election form to the Company within 10 days after filing that election with the Internal Revenue Service. A Section 83(b) election normally cannot be revoked. Pursuant to Section 83(b) of the Internal Revenue Code, I hereby elect within 30 days after receiving the property described herein to be taxed immediately on its value specified in item 5 below.

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE. The following documents previously filed by the Company with the Securities and Exchange Commission (the “Commission”) are incorporated herein by reference: · • The Company’s Annual Report on Form 10-K for the year ended July 31, 2005 filed with the Commission on October 31, 2005; · • The Company’s Quarterly Report on Form 10-Q for the quarter ended October 31, 2005 filed with the Commission on December 15, 2005; · • The Company’s Quarterly Report on Form 10-Q for the quarter ended January 31, 2006 filed with the Commission on March 16, 2006; · • The Company’s amended Quarterly Report on Form 10-Q/A (Amendment No. 1) for the quarter ended October 31, 2004 filed with the Commission on October 31, 2005; · • The Company’s amended Quarterly Report on Form 10-Q/A (Amendment No. 3) for the quarter ended January 31, 2005 filed with the Commission on October 31, 2005; · • The Company’s amended Quarterly Report on Form 10-Q/A (Amendment No. 2) for the quarter ended April 30, 2005 filed with the Commission on October 31, 2005; · • The Registrant’s Current Reports on Form 8-K, as filed with the Commission on August 2, 2005, August 5, 2005, August 30, 2005, September 30, 2005, October 13, 2005, October 31, 2005, November 14, 2005, November 17, 2005, November 23, 2005, December 2, 2005, December 6, 2005, December 8, 2005, December 15, 2005 (but specifically not incorporating by reference herein the Form 8-K filed on December 15, 2005 announcing the Company’s earnings for the quarter ended October 31, 2005), February 1, 2006, March 2, 2006 and April 18, 2006; · • The Company’s amended Current Report on Form 8-K/A (Amendment No. 2) filed with the Commission on August 2, 2005; and · • the description of the Common Stock, par value $.001 per share, of the Company and the common stock purchase rights, which is incorporated by reference into the Company’s registration statement on Form 8-A, filed with the Commission on July 6, 2004, pursuant to the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and any amendment or report filed for the purpose of updating such description. Commerce Energy Group, Inc. 2006 Stock Incentive Plan Prospectus Page 28 In addition, all documents filed by the Company with the Commission pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act, prior to the filing of a post-effective amendment which indicates that all securities offered have been sold or which de-registers all securities then remaining unsold, shall be deemed to be incorporated by reference into this Memorandum and to be a part hereof from the date of filing of such documents with the Securities and Exchange Commission. Any statement contained in a document incorporated or deemed to be incorporated by reference herein shall be deemed to be modified or superseded for purposes of this Memorandum to the extent that a statement contained herein or in any other subsequently filed document which also is or is deemed to be incorporated by reference herein modifies or supersedes such statement. Any statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Memorandum. Any proceeds that the Company receives from the sale of Common Stock pursuant to Awards will be used for general corporate purposes. Employment and withholding taxes will apply to the income arising from Awards. Participants will not be subject to any additional charges (other than payment of the exercise price for Options) in connection with their Awards. Nor does the Plan allow for any liens on any Awards, funds, or Common Stock that Participants hold or may receive pursuant to the Plan. Additional information about the Plan and its administrators may be obtained from, and copies of the following documents or reports will be furnished without charge upon written or oral request to the Secretary, Commerce Energy Group, Inc., 000 Xxxxx Xxxxxxxxx, Xxxxx 0000, Xxxxx Xxxx, Xxxxxxxxxx 00000; telephone number (000) 000-0000: · Documents or reports incorporated by reference in this Memorandum (excluding exhibits to such documents or reports unless such exhibits are specifically incorporated by reference into such documents or reports); · The Company’s annual report to shareholders for the latest fiscal year; and · All reports, proxy statements and other communications distributed to the shareholders of the Company. All participants shall receive, if they do not otherwise receive such materials, copies of all reports, proxy statements and other communications distributed to the Company’s security holders generally. Such materials shall be delivered not later than the time at which they are sent to the Company’s security holders. Attached is an Internal Revenue Code Section 83(b) Election Form. IF YOU WISH TO MAKE A SECTION 83(B) ELECTION, YOU MUST DO SO WITHIN 30 DAYS AFTER THE DATE THE RESTRICTED SHARES COVERED BY THE ELECTION WERE TRANSFERRED TO YOU. In order to make the election, you must completely fill out the attached form and file one copy with the Internal Revenue Service office where you file your tax return. In addition, one copy of the statement also must be submitted with your income tax return for the taxable year in which you make this election. Finally, you also must submit a copy of the election form to the Company within 10 days after filing that election with the Internal Revenue Service. A Section 83(b) election normally cannot be revoked. Pursuant to Section 83(b) of the Internal Revenue Code, I hereby elect within 30 days after receiving the property described herein to be taxed immediately on its value specified in item 5 below.