INDEMNIFICATION
AGREEMENT
This
Indemnification Agreement (this “Agreement”) is made
and entered into as of December 1, 2005 and is effective as of
August 1, 2005, by and between Commerce Energy Group, Inc., a
Delaware corporation (the “Corporation”), and Lawrence
Clayton, Jr., an individual (“Indemnitee”).
A. Indemnitee
performs a valuable service to the Corporation in his capacity as
an officer of the Corporation.
B. The
Amended and Restated Certificate of Incorporation (the
“Certificate”) and the Bylaws (the
“Bylaws”) of the Corporation provide for the
indemnification of the officers and directors of the Corporation as
authorized by the Delaware General Corporation Law, as amended (the
“DGCL”).
C. The
Certificate, the Bylaws and the DGCL, by their non-exclusive
nature, permit contracts between the Corporation and its directors,
officers, employees and other agents with respect to
indemnification of such persons.
D. In
accordance with the authorization provided by the Certificate, the
Bylaws and the DGCL, the Corporation is entitled to purchase a
policy or policies of directors’ and officers’
liability insurance covering certain liabilities which may be
incurred by its directors and officers in the performance of their
duties to the Corporation.
E. As a
result of developments affecting the terms, scope and availability
of such insurance, there exists general uncertainty as to the
extent of protection afforded such persons by such Insurance and by
statutory and bylaw indemnification provisions.
F. In order
to induce Indemnitee to continue to serve as an officer of the
Corporation, the Corporation has determined and agreed to enter
into this Agreement with Indemnitee.
1. Indemnity of
Indemnitee . The Corporation shall hold harmless, indemnify and
advance expenses to Indemnitee as provided in this Agreement and to
the fullest extent authorized, permitted or required by the
provisions of the Certificate, the Bylaws and the DGCL, as the same
may be amended from time to time (but, only to the extent that such
amendment permits the Corporation to provide broader
indemnification rights than were permitted by the Certificate, the
Bylaws or the DGCL prior to adoption of such amendment); provided,
however, that the Corporation shall not indemnify Indemnitee in
connection with any proceeding, (or part thereof) initiated by
Indemnitee, or any proceeding by Indemnitee against the Corporation
or its directors, officers, employees or other agents, unless
(i) such indemnification is expressly required to be made by
law, (ii) the proceeding, was authorized by the Board of
Directors of the Corporation, (iii) such indemnification is
provided by the Corporation, in its sole discretion, pursuant to
the powers vested in the Corporation under the DGCL, or
(iv) the proceeding is
initiated with
respect to a proceeding to enforce rights to indemnification
pursuant to Section 8 hereof. The rights of Indemnitee
provided under the preceding sentence shall include, but shall not
be limited to, the rights set forth in the other sections of this
Agreement.
2.
Additional Indemnity . In addition to and not in limitation
of the indemnification otherwise provided for herein, and subject
only to the exclusions set forth in Section 3 hereof, the
Corporation hereby further agrees to hold harmless and indemnify
Indemnitee:
(a) Against
all liabilities, losses, expenses (including attorney’s
fees), judgments, fines, ERISA excise taxes or penalties and
amounts paid in settlement actually and reasonably incurred or
suffered by Indemnitee in connection with any threatened, pending
or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative, to which he is a party or a
witness, by reason of the fact that Indemnitee is or was a director
or officer of the Corporation or is or was serving at the request
of the Corporation as a director or officer of another corporation
or of a partnership, joint venture, trust, enterprise or non-profit
entity, including service with respect to employee benefit plans,
whether the basis of such proceeding is alleged action in an
official capacity as a director, officer, employee or agent or in
any other capacity while serving as a director, officer, employee
or agent.
(b) Otherwise
to the fullest extent as may be provided to Indemnitee by the
Corporation under the non-exclusivity provisions of the
DGCL.
3.
Limitations on Additional Indemnity . No indemnity pursuant
to Section 2 hereof shall be paid by the
Corporation:
(a) On
account of any claim against Indemnitee for an accounting of
profits made from the purchase or sale by Indemnitee of securities
of the Corporation pursuant to the provisions of Section 16(b) of
the Securities Exchange Act of 1934 and amendments thereto or
similar provisions of any federal, state or local statutory
law;
(b) On
account of Indemnitee’s conduct that was knowingly fraudulent
or deliberately dishonest, or that constituted willful
misconduct;
(c) On
account of, or attributable to, Indemnitee’s conduct that
constituted a breach of Indemnitee’s duty of loyalty to the
Corporation or resulted in any personal profit or advantage to
which Indemnitee was not legally entitled;
(d) For
which payment has actually been made to Indemnitee under a valid
and collectible insurance policy or under a valid and enforceable
indemnity clause, bylaw or agreement, except in respect of any
excess beyond payment under such insurance, clause, bylaw or
agreement;
(e) The
payment of which by the Corporation under this Agreement is not
permitted by applicable law;
(f) If
indemnification is not lawful (and, in this respect, both the
Corporation and Indemnitee have been advised that the Securities
and Exchange Commission believes that indemnification for
liabilities arising under the federal securities laws is against
public policy
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and is,
therefore, unenforceable and that claims for indemnification should
be submitted to appropriate courts for adjudication) or is
prohibited by any applicable state securities laws with respect to
any violation of applicable federal or state securities laws;
or
(g) In
connection with any proceeding, (or part thereof) initiated by
Indemnitee, or any proceeding by Indemnitee against the Corporation
or its directors, officers, employees or other agents, unless
(i) such indemnification is expressly required to be made by
law, (ii) the proceeding, was authorized by the Board of
Directors of the Corporation, (iii) such indemnification is
provided by the Corporation, in its sole discretion, pursuant to
the powers vested in the Corporation under the DGCL, or
(iv) the proceeding is initiated pursuant to Section 8
hereof.
4.
Continuation of Indemnity . All agreements and obligations
of the Corporation contained herein shall continue during the
period Indemnitee is a director, officer, employee or other agent
of the Corporation (or is or was serving at the request of the
Corporation as a d
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