exv10w76



 





Exhibit 10.76




SECOND AMENDMENT

TO THE

SECURITY AGREEMENT




     Commerce Energy, Inc. (“Customer”) and Tenaska Power Services Co. (“TPS”) are Parties to the
Security Agreement effective August 1, 2005 (“Agreement”). Customer and TPS enter into this Second
Amendment to the Agreement (“Second Amendment”) effective June 22, 2007 (“Effective Date”).



     WHEREAS, Customer and TPS are Parties to the Agreement;



     WHEREAS, the Parties desire to amend the Agreement by adding and revising language to the
Covenants section; and



     Now, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged by both Parties, Customer and TPS hereby agree as follows:



SECOND AMENDMENT





	1.	 	Unless otherwise defined in this Second Amendment, capitalized terms used in this Second
Amendment shall have the same meaning as that given to such terms in the Agreement.
	 
	2.	 	After Section 2(g), the Parties agree to insert a new paragraph in Section 2 as follows:






(h) “Customer may be allowed by TPS to exempt any of its customers that exceed an average
on-peak load of one (1) MWh per hour for any calendar month (“Large Retail Load”) from
Collateral in (a) – (g) above if Customer has purchased energy to meet such Large Retail
Load’s expected full requirements from a wholesale energy supplier other than TPS
(“Alternative Supplier”) and so informs TPS in writing of such circumstance, and in such
notice, informs TPS of the duration of Customer’s sales arrangement with the Alternative
Supplier to supply such Large Retail Supplier. Customer shall provide confirming
documentation of the supply arrangement from the Alternative Supplier or cause the
Alternative Supplier to provide written confirmation directly to TPS. In the event Customer
grants, or intends to grant, a security interest to the Alternative Supplier or other third
party in the receivables from the Large Retail Load, Customer shall cause the Alternative
Supplier or other third party to enter into a reasonable intercreditor agreement with TPS
concerning the respective security interest rights of TPS and Alternative Supplier or other
third party. TPS agrees that once such a notice is received, and a reasonable intercreditor
agreement is entered, TPS will (i) refrain from enforcing, and waive for the duration of
such sales arrangement with the Alternative Supplier to supply the Large Retail Load, any
Security Interest that it may have in receivables from such Large Retail Load, (ii) no
longer consider such as part of the Collateral for the duration of the term of Customer’s
sales arrangement with the Alternative Supplier to supply the Large Retail Load, and (iii)
in any intercreditor agreement entered with an Alternative Supplier or other third party
shall subordinate its Security Interest in receivables from the Large Retail Load to that of
the Alternative Supplier or other third party for the duration of Customer’s sales
arrangement with the Alternative Supplier to supply the Large Retail Load. In the Collateral
Balance Report furnished to TPS



 









 






pursuant to Section 6(e), Customer shall show TPS a line item subtracting any exempted Large
Retail Load receivables from the Credit Amount”




	3.	 	The Parties agree to amend Section 6(e)(ii)(1) of Section 6 of the Agreement to:






(a) delete the number “100%” in line 1 thereof, and replace it with “80%”, and




(b) delete the phrase “ninety (90)” in line two thereof, and replace it with “thirty (30)”.




	4.	 	The Parties agree to amend Section 6(e)(ii) of the Agreement to add a new subsection (2)
as follows:






     “(2) 50% of all Accounts which have been billed by Commerce Energy to the account
debtor, the payment of which is not less than thirty-one (31) days, and not more than sixty
(60) days past due; plus”.




	5.	 	The Parties agree to renumber the remaining subsections of Section 6 following the newly
inserted subsection (2), and to add the word “plus” to the end of such renumbered subsections
(3), (4), (5), and (6).
	 
	6.	 	The Parties agree to amend the renumbered subsection (4) of Section 6(e)(ii) to add the
phrase “,up to, but not to exceed, the minimum Lockbox Balance requirement of One Hundred
Thousand Dollars (“$100,000”) after the phrase “other than Non-ERCOT Funds” in line one.
	 
	7.	 	The Parties agree to amend the renumbered subsection (7) of Section 6(e)(ii) by






(a) striking “100%” in line one, and substituting therefore “80%;” and




(b) deleting the period at the end of the subsection, converting it to a semicolon, and
inserting thereafter the phrase:




“provided that the contribution of (1), (2), (3) and (7) above shall not exceed fifteen
million dollars ($15,000,000.00) (“Credit Limit”) for purposes of calculating the Credit
Amount in 6(e)(ii), for the period commencing with the Effective Date of this Second
Amendment through June 1, 2008; provided that TPS will raise the Credit Limit to twenty two
million ($22,000,000.00) for the limited term of July 1 through September 20, 2007 as long as
there has not been a material adverse change, or occurrence of a circumstance which could
result in material adverse change, to Customer’s credit worthiness in TPS’s sole reasonable
opinion. The Parties mutually agree that on or before May I of each year, they will begin
discussions to determine if the Credit Limit should be adjusted and will agree, in writing as
an amendment to the Security Agreement, on any such adjustments to the Credit Limit for the
next twelve months ending June 1 of the following year. The Parties shall reach agreement no
later than May 15 (or if May 15 is not a Business Day, the next Business Day) . Absent mutual
agreement, the existing Credit Limit shall remain in effect.”




	8.	 	The Parties agree to amend Section 6(f) by adding the phrase
“excluding Non-ERCOT Funds” after “the balance of the Lockbox” in line one.
	 
	9.	 	After Section 6(1), the Parties agree to insert the following language as section (m):





 









 






pursuant to Section 6(e), Customer shall show TPS a line item subtracting any exempted Large
Retail Load receivables from the Credit Amount.”




	3.	 	The Parties agree to amend Section 6(e)(ii)(1) of Section 6 of the Agreement to:






(a) delete the number “100%” in line 1 thereof, and replace it with “80%”, and




(b) delete the phrase “ninety (90)” in line two thereof, and replace it with “thirty (30)”.




	4.	 	The Parties agree to amend Section 6(e)(ii) of the Agreement to add a new subsection (2)
as follows:






     “(2) 50% of all Accounts which have been billed by Commerce Energy to the account
debtor, the payment of which is not less than thirty-one (31) days, and not more than sixty
(60) days past due; plus”.




	5.	 	The Parties agree to renumber the remaining subsections of Section 6 following the newly
inserted subsection (2), and to add the word “plus” to the end of such renumbered subsections
(3), (4), (5), and (6).






	6.	 	The Parties agree to amend the renumbered subsection (4) of Section 6(e)(ii) to add the
phrase “,up to, but not to exceed, the minimum Lockbox Balance requirement of One Hundred
Thousand Dollars (“$100,000”) after the phrase “other than Non-ERCOT Funds” in line one.






	7.	 	The Parties agree to amend the renumbered subsection (7) of Section 6(e)(ii) by






(a) striking “100%” in line one, and substituting therefore “80%;” and




(b) deleting the period at the end of the subsection, converting it to a semicolon, and
inserting thereafter the phrase:




“provided that the contribution of (1), (2), (3) and (7) above shall not exceed fifteen
million dollars ($15,000,000.00) (“Credit Limit”) for purposes of calculating the Credit
Amount in 6(e)(ii), for the period commencing with the Effective Date of this Second
Amendment through June 1, 2008; provided that TPS will raise the Credit Limit to twenty two
million ($22,000,000.00) for the limited term of July 1 through September 20, 2007 as long
as there has not been a material adverse change, or occurrence of a circumstance which could
result in material adverse change, to Customer’s credit worthiness in TPS’s sole reasonable
opinion. The Parties mutually agree that on or before May 1 of each year, they will begin
discussions to determine if the Credit Limit should be adjusted and will agree, in writing
as an amendment to the Security Agreement, on any such adjustments to the Credit Limit for
the next twelve months ending June 1 of the following year. The Parties shall reach
agreement no later than May 15 (or if May 15 is not a Business Day, the next Business Day) .
Absent mutual agreement, the existing Credit Limit shall remain in effect.”




	8.	 	The Parties agree to amend Section 6(f) by adding the phrase “excluding Non-ERCOT
Funds” after “the balance of the Lockbox” in line one.






	9.	 	After Section 6(1), the Parties agree to insert the following language as section (m):





 









 






“(m) Notice. The Parties agree that Customer will provide TPS at least one Business
Day advance notice that Customer desires for TPS to provide an executable wholesale energy
supply quote to supply energy to a new or existing customer where the wholesale supply
sought by Customer is either: (i) for quantities which exceed 10 MWh per hour average during
the on-peak hours for a month, or (ii) for a term duration greater than twelve consecutive
months, or (iii) the commencement of energy delivery exceeds twelve consecutive months in
the future.”




	10.	 	Unless expressly changed by this Second Amendment, all other terms of the Agreement shall
remain in full force and effect.






	11.	 	This Second Amendment may be executed in multiple counterparts, including facsimile
counterparts, each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
	 
	12.	 	This Second Amendment contains the entire agreement between the Parties with respect to the
subject matter of this Second Amendment and supersedes any previous understandings,
commitments, or agreements, oral or written, with respect to such subject matter of this
Second Amendment.








     WHEREFORE, the Parties acknowledge and agree to this Second Amendment effective as of the
Effective Date.



	 	 	 	 	 	 	 	 	 	 	 
	TENASKA POWER SERVICES CO.	 	 	 	COMMERCE ENERGY, INC.	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By:

	 	/s/ Trudy Harper
	 	 	 	By:
	 	/s/ R. Nick Cioll	 	 
	 

	 	 
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Name:

	 	Trudy Harper
	 	 	 	Name:
	 	R. Nick Cioll	 	 
	Title:

	 	President
	 	 	 	Title:
	 	Chief Risk Officer