OF RESTRICTED STOCK AGREEMENT (Time Vesting)
Exhibit 99.2
FORM
OF
(Time Vesting)
This Restricted Stock Agreement (this “Agreement”), is
entered into effective as of the Grant Date (as defined in
paragraph 1), by and between COMMERCE ENERGY GROUP, INC., a
Delaware corporation (the “Company”),
and (“Recipient”).
Recitals
A. The Company maintains the Commonwealth Energy
Corporation 1999 Equity Incentive Plan, as amended (the
“Plan”), which is incorporated into and forms a part
of this Agreement;
B. The Compensation Committee of the Company’s Board
of Directors (the “Committee”) administers the
Plan; and
C. Recipient has been selected by the Committee to receive
a stock bonus award in the form of restricted shares of the
Company’s common stock, $0.001 par value per share
(the “Common Stock”), under the Plan.
Agreement
1. Award and Consideration. On the terms and conditions set
forth in this Agreement, the Company, hereby issues to Recipient
on ,
200 (the “Grant Date”), for past services
rendered to the
Company ( )
shares (the “Restricted Shares”) of Common Stock. All
of the Restricted Shares issued hereunder shall be deemed issued
to Recipient as fully paid and nonassessable shares, and
Recipient shall have all rights of a stockholder with respect
thereto, including the right to vote, receive dividends
(including stock dividends), participate in stock splits or
other recapitalizations, and exchange such shares in a merger,
consolidation or other reorganization. The Company shall pay any
applicable stock transfer taxes.
2. Escrow and Repurchase Right.
(a) Escrow. For purposes of facilitating the
enforcement of the provisions of this Section 2, Recipient
agrees, immediately upon receipt of the certificate(s) for all
the Restricted Shares, to deliver such certificate(s), together
with a “Stock Assignment Separate from Certificate” in
the form attached hereto as Exhibit A, executed in
blank by Recipient (and Recipient’s spouse if required for
transfer) with respect to each such stock certificate issued
hereunder, to the Secretary or Assistant Secretary of the
Company or their designee (the “Escrow Holder”) to
hold in escrow for so long as such Restricted Shares remains
subject to any Repurchase Right (as defined below), and granting
the Company the authority to take all actions necessary to
effectuate all transfers and/or releases (including releasing
such shares of Common Stock with respect to which the
restrictions have lapsed) as may be necessary or appropriate to
accomplish the objectives of this Agreement in accordance with
the terms hereof. Recipient hereby acknowledges that such
appointment of the Escrow Holder with such stated authorities is
a material inducement to the Company to enter into this
Agreement, and such appointment is accordingly irrevocable.
Recipient agrees that neither the Company nor such Escrow Holder
shall be liable to the Recipient or any Permitted Transferee for
any actions or omissions unless such Escrow Holder is grossly
negligent or engages in willful misconduct relative thereto. The
Recipient agrees that the Escrow Holder may rely upon any
letter, notice or other document executed by any signature
purported to be genuine and may resign at any time.
(b) Scope of Repurchase Right.
(i) If Recipient’s employment by the Company is
terminated before the Restricted Shares and Additional
Securities (as defined below) are released from the
Company’s Repurchase Right (as defined below), the Company
shall, upon the date of such termination, have the right to
repurchase all or any portion
of the Restricted Shares and Additional Securities for
$0.001 per share (the “Repurchase Right”). The
Company may exercise the Repurchase Right by delivering written
notice to Recipient within ninety (90) days after the date
of termination.
(ii) If the requisite periods of time (each, a
“Vesting Period”) are not met, the Company shall have
the right to repurchase the Restricted Shares and any Additional
Securities allocated to the Vesting Period for $0.001 per
share (the “Repurchase Right”). The Company may
exercise its first Repurchase Right by delivering written notice
to Recipient within ninety (90) days after the first
anniversary of the Grant Date in the case
of Restricted
Shares, and may exercise its second Repurchase Right by
delivering written notice to Recipient within ninety
(90) days after the second anniversary of the Grant Date in
the case
of Restricted
Shares. [Modify to address time of vesting.]
(iii) Upon delivery of a repurchase notice pursuant to this
Section 2(b), the Company shall become the legal and
beneficial owner of the Restricted Shares being repurchased and
all rights and interests therein or relating thereto, and the
Company shall have the right to retain and transfer to its own
name the number of Restricted Shares being repurchased by the
Company. Recipient shall forfeit the right to all cash or other
property from time to time received, receivable, or otherwise
distributed in respect of or in exchange for all or any part of
the Restricted Shares and Additional Securities that are
repurchased by the Company pursuant hereto.
(c) Termination of the Repurchase Right. The first
Repurchase Right shall terminate and cease to be exercisable
with respect
to shares
on the first anniversary of the Grant Date if Recipient has been
an employee of the Company or one of its subsidiaries
continuously from the Grant Date to and including the first
anniversary of the Grant Date and the second Repurchase Right
shall terminate and cease to be exercisable with respect
to on
the second anniversary of the Grant Date if Recipient has been
an employee of the Company or one of its subsidiaries
continuously from the Grant Date to and including the second
anniversary of the Grant Date. [Modify to address time of
vesting.]
(d) Additional Securities. For purposes of this
Section 2, Restricted Shares shall include all securities
received in replacement of the Restricted Shares, as a stock
dividend or as a result of any stock split, recapitalization,
merger, reorganization, exchange or the like, and all new or
additional securities or other properties to which Recipient is
entitled by reason of Recipient’s ownership of the
Restricted Shares (hereinafter called “Additional
Securities”). Recipient shall be entitled to direct the
Company to exercise any warrant or option received as Additional
Securities upon supplying the funds necessary to do so, in which
event the securities so purchased shall constitute Additional
Securities, but Recipient may not direct the Company to sell any
such warrant or option. If Additional Securities consist of a
convertible security, Recipient may exercise any conversion
right, and any securities so acquired shall be deemed Additional
Securities. All Restricted Shares, including Additional
Securities, shall be subject to the restrictions contained in
this Agreement.
(e) Transfer Restrictions. Until the respective
Right of Repurchase lapses, Recipient shall not transfer,
assign, encumber or otherwise dispose of or xxxxx x xxxx in or
to any Restricted Shares or Additional Securities (with respect
to which the respective Right of Repurchase has not lapsed),
without the prior written consent of the Company. Prior to the
Right of Repurchase lapsing, Recipient may transfer Restricted
Shares and Additional Securities (a) by beneficiary
designation, will or intestate succession, or (b) to
Recipient’s spouse, children or grandchildren or to a trust
established by Recipient for the benefit of Recipient or
Recipient’s spouse, children or grandchildren (each, a
“Permitted Transfer”). If Recipient makes such a
Permitted Transfer of any Restricted Shares or Additional
Securities, then this Section 2 shall apply to the
transferee to the same extent as to Recipient. The Company shall
not be required (i) to transfer on its books any Restricted
Shares or Additional Securities which have been sold or
transferred in violation of the provisions of this Agreement
(and the Company may issue appropriate “stop transfer”
instructions to its transfer agent accordingly) or (ii) to
treat as the owner of the Restricted Shares or Additional
Securities, or otherwise to accord voting, dividend or
liquidation rights to, any transferee to whom the Restricted
Shares or Additional
2
Securities have been transferred in contravention of this
Agreement. All certificates representing the Restricted Shares
or Additional Securities shall have endorsed thereon the
following legend:
| “The shares represented by this certificate are subject to potential forfeiture and to restrictions upon transfer, including certain options to purchase such shares, set forth in an agreement between the issuer and the registered holder, a copy of which is on file at the principal office of the issuer corporation and will be furnished upon request to such registered holder.” |
3. Representations and Warranties of Recipient.
Recipient represents and warrants to the Company each of the
following matters:
| (a) Authorization. Recipient has full power and authority to enter into this Agreement and this Agreement constitutes its valid and legally binding obligation, enforceable in accordance with its terms. | |
| (b) Purchase Entirely for Own Account. This Agreement is made with Recipient in reliance upon Recipient’s representation to the Company, which by Recipient’s execution of this Agreement Recipient hereby confirms, that the Restricted Shares will be acquired for investment for Recipient’s own account, not as a nominee or agent, and not with a view to the resale or distribution of any part thereof, and that Recipient has no present intention of selling, granting any participation in, or otherwise distributing the same. By executing this Agreement, Recipient further represents that he does not have any contract, undertaking, agreement or arrangement with any person to sell, transfer or grant participations to such person or to any third person, with respect to any of the Restricted Shares. |
(c) Investment Experience. Recipient acknowledges
that he has such knowledge and experience in financial or
business matters that he is capable of evaluating the merits and
risks of the investment in the Restricted Shares.
4. Compliance With Securities Laws.
(a) In addition to the restrictions contained in this
Agreement, the Company at its discretion may impose restrictions
upon the sale, pledge or other transfer of the Restricted Shares
and Additional Securities (including the placement of
appropriate legends on stock certificates or the imposition of
stop-transfer instructions) if, in the judgment of the Company,
such restrictions are necessary or desirable in order to achieve
compliance with the Act, the securities laws of any state or any
other law.
(b) THE SALE OF THE SECURITIES THAT ARE THE SUBJECT OF THIS
AGREEMENT HAS NOT BEEN QUALIFIED WITH THE COMMISSIONER OF
CORPORATIONS OF THE STATE OF CALIFORNIA AND THE ISSUANCE OF SUCH
SECURITIES OR THE PAYMENT OR RECEIPT OF ANY PART OF THE
CONSIDERATION FOR SUCH SECURITIES PRIOR TO SUCH QUALIFICATION IS
UNLAWFUL, UNLESS THE SALE OF SECURITIES IS EXEMPT FROM
QUALIFICATION BY SECTION 25100, 25102 OR 25105 OF THE
CALIFORNIA CORPORATIONS CODE. THE RIGHTS OF ALL PARTIES TO THIS
AGREEMENT ARE EXPRESSLY CONDITIONED UPON SUCH QUALIFICATION
BEING OBTAINED, UNLESS THE SALE IS SO EXEMPT.
(c) All certificates representing the Restricted Shares or
Additional Securities and all certificates issued in transfer
thereof or substitution therefor shall, where applicable, have
endorsed thereon the following legends:
| (i) “The securities represented by this certificate have not been registered under the Securities Act of 1933, as amended. These securities have been acquired for investment and not with a view to distribution and may not be offered for sale, sold, pledged or otherwise transferred in the absence of an effective registration statement for such securities under the Securities Act of 1933 or an opinion of counsel reasonably satisfactory in form and content to the issuer that such registration is not required under such Act.” | |
| (ii) Any legend required to be placed thereon by any applicable state securities law. |
3
5. Section 83(b) Election. Recipient hereby
represents that he/she understands (a) the contents and
requirements of a timely election made pursuant to
Section 83(b) of the Internal Revenue Code or similar
provision of state law (collectively, an “83(b)
Election”), (b) the application of Section 83(b)
to the grant of the Restricted Shares by Recipient pursuant to
this Agreement, (c) the nature of the election to be made
by Recipient under Section 83(b), and (d) the effect
and requirements of the 83(b) Election under relevant state and
local tax laws. Recipient further understands that he/she may
file an election pursuant to Section 83(b), the form of
which election is attached hereto as Exhibit B, with
the Internal Revenue Service within thirty (30) days
following the grant of the Restricted Shares hereunder, and a
copy of such election must be filed with his federal tax return
for the calendar year in which the date of this Agreement falls.
Recipient covenants to inform the Company of any change in
Recipient’s state of residency. Recipient shall provide the
Company with a copy of any timely 83(b) Election. If Recipient
makes a timely 83(b) Election, Recipient shall immediately pay
to the Company the amount necessary to satisfy any applicable
federal, state, and local income and employment tax withholding
requirements. If Recipient does not make a timely 83(b)
Election, Recipient shall, either at the time that the
restrictions lapse under this Agreement or at the time
withholding is otherwise required by any applicable law, pay the
Company the amount necessary to satisfy any applicable federal,
state, and local income and employment tax withholding
requirements. The Company may require Recipient to remit to the
Company an amount sufficient to satisfy federal, state and local
withholding tax requirements prior to the delivery of any
certificate or certificates for the Restricted Shares. Recipient
hereby represents that he has had an opportunity to consult a
tax advisor.
6. Distributions. The Company shall disburse to
Recipient all dividends, interest and other distributions paid
or made in cash or property (other than Additional Securities)
with respect to the Restricted Shares and Additional Securities,
less any applicable federal or state withholding taxes.
7. Not An Employment Contract. The grant of
Restricted Shares will not confer on Recipient any right with
respect to continuance of employment or other service with the
Company or any Subsidiary, nor will it interfere in any way with
any right the Company or any Subsidiary would otherwise have to
terminate or modify the terms of the Recipient’s employment
or other service at any time.
8. Amendment. Except as otherwise provided herein,
any provision of this Agreement may be amended or waived only
with the prior written consent of Recipient and the Board of
Directors of the Company or the Committee.
9. Assignment; Successors. Recipient shall not
transfer, assign or encumber any of his rights, privileges,
duties or obligations under this Agreement without the prior
written consent of the Company, and any attempt to so transfer,
assign or encumber shall be void. The Company may transfer,
assign or encumber its rights, privileges, duties or obligations
under this Agreement (including, without limitation, the right
to maintain the escrow for the Restricted Shares or Additional
Securities and the Repurchase Right), to any of its subsidiaries
or affiliates. Subject to the foregoing, this Agreement shall be
binding upon and shall inure to the benefit of the parties
hereto and their respective heirs, executors, administrators,
successors and assigns.
10. Entire Agreement. The Agreement, together with
the Plan, constitutes the entire agreement of the parties and
supercedes any and all agreements, either oral or in writing,
between the parties with respect to the subject matter hereof.
The terms of this Agreement shall be subject to the terms of the
Plan, a copy of which may be obtained by Recipient from the
office of the Secretary of the Company; and this Agreement is
subject to all interpretations, amendments, rules and
regulations promulgated by the Board or the Committee from time
to time pursuant to the Plan.
11. Choice of Law. This Agreement shall be governed
by, and construed in accordance with, the laws of the State of
California as such laws are applied to contracts entered into
and performed in such State.
[SIGNATURE PAGE FOLLOWS]
4
IN WITNESS WHEREOF, the parties have executed this Agreement as
of ,
200 to
reflect the grant which was authorized on the Grant Date as
first above written.
| “COMPANY” | |
| COMMERCE ENERGY GROUP, INC. |
| By: | [Signature] |
|
|
|
| [Print Name] | |
| [Print Title] | |
| “RECIPIENT” |
| By: | [Signature of Recipient] |
|
|
|
| [Print name of Recipient] | |
| Address: | |
|
|
|
|
|
|
|
|
|
|
|
5
EXHIBIT A
STOCK ASSIGNMENT SEPARATE FROM CERTIFICATE
FOR VALUE RECEIVED and pursuant to that certain Restricted Stock
Agreement between the undersigned and Commerce Energy Group,
Inc., a Delaware corporation (the “Company”), dated as
of ,
200 (the “Agreement”), the undersigned hereby
sells, assigns and transfers unto the
Company ( )
shares of the Common Stock of the Company, standing in his name
on the books of the Company, represented by Certificate
No.(s) herewith,
and does hereby irrevocably constitute and
appoint attorney
to transfer the said stock in the books of the Company with full
power of substitution.
|
Dated: |
|
|
By: |
|
|
Print
name: |
Instruction: Please do not fill in any blanks other than the
signature line. The purpose of this assignment is to enable the
Company to exercise its repurchase option set forth in the
Agreement without requiring additional signatures.
EXHIBIT B
ELECTION TO INCLUDE SHARES OF RESTRICTED COMMON STOCK IN
GROSS
INCOME PURSUANT TO SECTION 83(b) OF THE
INTERNAL REVENUE CODE
The undersigned received shares of restricted common stock (the
“Restricted Shares”) of Commerce Energy Group, Inc.
(the “Company”)
on ,
200 . Under certain circumstances, the Restricted Shares
are subject to forfeiture should the undersigned cease to be
employed by the Company and its subsidiaries. Hence, the
Restricted Shares are subject to a substantial risk of
forfeiture and are nontransferable.
The undersigned desires to make an election to have the
Restricted Shares taxed under the provisions of Section 83
of the United States Internal Revenue Code of 1986, as amended
(the “Code”) at the time the undersigned received the
Restricted Shares.
Therefore, pursuant to Code §83(b) and Treasury Regulation
§1.83-2 promulgated thereunder, the undersigned hereby
makes an election, with respect to the Restricted Shares
(described below), to report as taxable income for calendar year
200 the excess (if any) of the Restricted Shares’ fair
market value
on ,
200 , the date of grant, over the purchase price thereof.
The following information is supplied in accordance with
Treasury Regulation §1.83-2(e):
| 1. | The name, address and social security number of the undersigned: |
| 2. A description of the property with respect to which the election is being made: Restricted Shares. | |
| 3. The date on which the property was transferred: , 200 . The taxable year for which such election is made: calendar 200 . | |
| 4. The restrictions to which the property is subject: If the undersigned’s employment with the Company is terminated for any reason, including resignation, retirement, termination without cause or disability, then the unvested portion of the Restricted Shares shall be forfeited for no consideration, subject to the option of the Company to repurchase such Restricted Shares at $0.001 per share. The undersigned’s Restricted Shares vest % per year commencing on the date hereof. | |
| 5. The fair market value on , 200 of the property with respect to which the election is being made, determined without regard to any lapse restrictions: $[ ] per Restricted Share. | |
| 6. The amount paid for such property: $[ ] per Restricted Share. |
A copy of this election has been furnished to the Secretary of
the Company pursuant to Treasury Regulations §1.83-2(d).
Dated: ,
200
|
|
|
|
|
