Document:

ex10-18.htm

    
      
         

      

      
         

        
          

        

      

      
         

        
          Exhibit
10.18

        

      

    

    BLOCKED
ACCOUNT CONTROL AGREEMENT

     

    (WITH
LOCKBOX SERVICES)

     

    U.S. Bank
National Association

     

    US Bank
Business Credit

    209 S.
LaSalle Street, 4th Floor

     

    Chicago,
IL 60604

     

    Ladies
and Gentlemen:

     

    Please be
advised that pursuant to certain agreements between Commerce Energy, Inc., a
California corporation (“Company”) and Wachovia Capital Finance Corporation
(Western), as agent (“Lender”), Company will cause all checks, drafts and other
orders of payments made payable to Company to be mailed to a lockbox (the
“Lockbox”) maintained at U.S. Bank National Association (“Depositary
Bank”).  All payments mailed to the Lockbox shall be deposited to
deposit account number(s) [*] (such account(s), together with all substitutions
and replacements therefor, the “Deposit Account”) located at Depositary Bank,
and subject to the terms of the Deposit Agreements (defined below).

     

    1. Deposit
Agreements.  The terms and conditions of this Agreement are in
addition to any deposit account agreements and other related agreements that
Company has with Depositary Bank, including without limitation all agreements
concerning banking products and services, treasury management documentation,
account booklets containing the terms and conditions of the Deposit Account,
signature cards, fee schedules, disclosures, specification sheets and change of
terms notices (collectively, the “Deposit Agreements”).  The
provisions of this Agreement shall supersede the provisions of the Deposit
Agreements only to the extent the provisions herein are inconsistent with the
Deposit Agreements, and in all other respects, the Deposit Agreements shall
remain in full force and effect.  All items received at the Lockbox
and deposited into the Deposit Account shall be processed according to the
provisions of the Deposit Agreements, as amended by this Agreement.

     

    2. Security
Interest.  Company has granted to Lender a security interest
in, among other property, the Lockbox, the Deposit Account and all credits or
proceeds thereto and all monies, checks and other instruments held or deposited
therein (all of which shall be included in the definition of the “Deposit
Account”).  Company represents and warrants that there are no
perfected liens or encumbrances with respect to the Deposit Account and
covenants with Lender that it shall not enter into any acknowledgment or
agreement that gives any other person or entity except Lender control over, or
any other security interest, lien or title in, the Deposit Account.

     

    3. Control.  In order
to provide Lender with control over the Deposit Account, Company agrees that
Depositary Bank may comply with any and all orders, notices, requests and other
instructions originated by Lender directing disposition of the funds in the
Deposit Account without any further consent from Company, even if such
instructions are contrary to any of Company’s instructions or demands or result
in Depositary Bank dishonoring items which may be presented for
payment.  Company agrees that instructions from Lender may include the
giving of stop payment orders for any items presented to the Deposit Account
instructions to transfer funds to or for the benefit of Lender or any other
person or entity, and instructions to close the Deposit Account.

     

    4. Access
to Deposit Account [CHECK ONE BOX ONLY]

     

    
      	 
      	
               ̈

            	
              (a) The
      Deposit Account shall be under the sole dominion and control of
      Lender.  Neither Company, nor any other person or entity, acting
      through or under Company, shall have any control over the use of, or any
      right to withdraw any amount from, the Deposit
      Account.  Depositary Bank is hereby authorized and instructed to
      transfer all available funds (subject to Depositary Bank’s funds
      availability policy) in the Deposit Account to such account and at such
      times as Lender may direct in writing to Depositary Bank.

               

            
	 
      	
              ý

            	
              (b) The
      Deposit Account shall be under the control of Lender; provided, that unless and until Depositary
      Bank receives Lender’s written notice that Company’s access to the funds
      in the Deposit Account is terminated.  Depositary Bank shall
      honor Company’s instructions, notices and directions with respect to the
      transfer or withdrawal of funds from the Deposit Account, including paying
      or transferring the funds to Company or any other person or
      entity.

               

            
	 
      	 
      	
              Upon
      receipt of a written notice from Lender instructing Depositary Bank to
      terminate Company’s access to funds in the Deposit Account, Depositary
      Bank shall transfer all available funds (subject to Depositary Bank’s
      funds availability policy) in the Deposit Account in accordance with
      Lender’s written instructions.

            
	 
      	 
      	 
      
	 
      	 
      	
              As
      for any such written notice sent under this subsection (b) to
      Depositary Bank, Depositary Bank shall endeavor to promptly transfer to
      Lender the available funds as referenced above, but Depositary Bank shall
      not be obligated to do so until it provides written confirmation to Lender
      that it received Lender’s notice of direction.

            
	 
      	 
      	 
      

    

    5. Subordination by Depositary
Bank.  Company and Depositary Bank acknowledge notice of and
recognize Lender’s continuing security interest In the Deposit Account and in
all items deposited in the Deposit Account and in the proceeds thereof
Depositary Bank hereby subordinates any statutory or contractual right or claim
of offset or lien resulting from any transaction which involves the Deposit
Account if Section 4(a) is checked above or upon 

     

    
      
        
          [*]=
Information redacted pursuant to a confidential treatment
request.  Such omitted information has been filed separately with the
Securities and Exchange Commission.

           

        

      

      
         

        
          

        

      

      
         

      

    

     

    Depositary
Bank’s confirmation of receipt of Lender’s notice under Section
4(b).  Notwithstanding the preceding sentence, in the event any fees
and expenses (“Fees”) related to the Deposit Account go unpaid or any checks or
other items which were deposited or credited to the Deposit Account are
returned, reversed, refunded or charged back for insufficient funds or for any
other reason (“Returned Items”), Depositary Bank may charge the Deposit Account
or other accounts of Company maintained at Depositary Bank.  If there
are insufficient funds in the Deposit Account or any of Company’s other accounts
to cover the Fees and Returned Items, Company agrees to immediately reimburse
Depositary Bank for the amount of such shortfall.  If Company fails to
pay the amount demanded by Depositary Bank, Lender agrees to reimburse
Depositary Bank within three (3) business days of demand thereof by
Depositary Bank for any Returned Items to the extent Lender received payment in
respect thereof pursuant to section 4

     

    6. Indemnity.  Company
agrees to defend, indemnify and hold Depositary Bank and its directors,
officers, employees, attorneys, successors and assigns (collectively “Depositary
Bank”) harmless from and against any and all claims, losses, liabilities, costs,
damages and expenses, including, without limitation, reasonable legal and
accounting fees (collectively, “Claims”), arising out of or in any way related
to this Agreement, excepting only liability arising out of Depositary Bank’s
gross negligence or willful misconduct.  Without regard to Company’s
indemnification obligations to Depositary Bank, Lender agrees
to:  (I) reimburse Depositary Bank for any Returned Items (the
proceeds of which were received by Lender) and (II) defend, indemnify and
hold Depositary Bank harmless from and against any and all Claims arising out of
Depositary Bank’s compliance with Lender’s instruction.  Lender’s
obligations to Depositary Bank hereunder shall in no way operate to release
Company from its obligations to Lender and shall not impair any rights or
remedies of Lender to collect any such amounts from Company.  IN NO
EVENT WILL DEPOSITARY BANK BE LIABLE FOR ANY INDIRECT DAMAGES, LOST PROFITS,
SPECIAL, PUNITIVE, OR CONSEQUENTIAL DAMAGES WHICH ARISE OUT OF OR IN CONNECTION
WITH THE SERVICES CONTEMPLATED BY THIS AGREEMENT EVEN IF DEPOSITARY BANK HAS
BEEN INFORMED OF THE POSSIBILITY OF SUCH DAMAGES.

     

    7. Depositary’s Bank’s
Responsibility.  The duties of Depositary Bank are strictly
limited to those set forth in this Agreement and Depositary Bank is not acting
as a fiduciary for any party hereto.  Depositary Bank shall be
protected in relying on any form of instruction or other notice purporting to be
from Lender which Depositary Bonk, in good faith, believes to be genuine and
what it purports to be.  Depositary Bank shall have no duty to inquire
as to the genuineness, validity, or enforceability of any such instruction or
notice even if Company notifies Depositary Bank that Lender is not legally
entitled to originate any such instruction or notice.  The Deposit
Account and all actions and undertakings by Depositary Bank shall be subject to
all rules and regulations relating to the Deposit Account and to applicable
law.

     

    8. Termination.  This
Agreement shall not be terminable by Company so long as any obligations of
Company to Lender are outstanding and unpaid.  This Agreement may be
terminated by Depositary Bank upon thirty (30) days prior written notice to
all parties; provided, however, that Depositary Bank may terminate this
Agreement immediately in the event Lender fails to make payments to Depositary
Bank in accordance with section 5 above.  This Agreement may be
terminated by Lender in a writing sent to Depositary Bank in which Lender
releases Depositary Bank from any further obligation to comply with instructions
originated by Lender with respect to the Deposit Account.  Any
available funds remaining in the Deposit Account upon termination or deposited
in thereafter shell be transferred in accordance with the provisions of section
4 above after deduction for any amounts otherwise reimbursable to Depositary
Bank as provided hereunder.  Termination shall not affect the rights
end obligations of any party hereto with respect to any period prior to such
termination.

     

    9. Legal Promise and
Insolvency.  In the event Depositary Bank receives any form of
legal process concerning the Deposit Account, including, without limitation,
court orders, levies, garnishments, attachments, and writs of execution, or in
the event Depositary Bank learns of any insolvency proceeding concerning
Company, including, without limitation, bankruptcy, receivership, and assignment
for the benefit of creditors, Depositary Bank will respond to such legal process
or knowledge of insolvency in the normal course or as required by
law.

     

    10. Governing Law.  This
Agreement shall be governed by and construed in accordance with the laws of the
State of Minnesota.  The parties agree that Minnesota is the “bank’s
jurisdiction” for purposes of the Uniform Commercial Code.

     

    11. Notices.  Except as
otherwise provided in this Agreement, all notices and other communications
required under this Agreement shall be in writing and may be personally served
or sent by United States Mail or courier or by facsimile, and shall be deemed
given when delivered in parson or received by facsimile or upon deposit in the
United States Mail or with such courier at the address specified
below.  Any party may change its address for notices hereunder by
notice to all other parties given in accordance with this section
11.

     

    
      	
              Company:

            	
              Commerce
      Energy, Inc.

              600
      Anton Blvd., Suite 2000

              Costa
      Mesa, CA 92626

              Attn:
      Chief Financial Officer

              Facsimile:
      714-481-6567

              Telephone:
      714-259-2500

            
	 
      	 
      
	
              Lender:

            	
              Wachovia
      Capital Finance Corporation (Western)

              251
      South Lake Avenue, Suite 900

              Pasadena,
      CA 91101

              Attn:
      Portfolio Manager

              Facsimile:
      626-304-4989

              Telephone:
      626-304-4900

            
	 
      	 
      
	
              Depositary
      Bank:

            	
              U.S.
      Bank National Association

              U.S.
      Bank Business Credit

              209
      S. LaSalle Street, 4th Floor

              Chicago,
      IL 60604

              Attn:
      Jeffrey A. Kessler

              Facsimile:
      312-325-8997

              Telephone:
      312-325-8754

            
	 
      	 
      

    

    12. Miscellaneous.  This
Agreement shall bind and benefit the parties and their respective successors and
assigns.  This Agreement may be amended only with the prior written
consent of all parties hereto.  None of the terms of this Agreement
may be waived except as Depositary Bank may consent thereto in
writing.  No delay on the part of Depositary Bank in exercising any
right, power or privilege hereunder shall operate as a waiver hereof, nor shall
any single or partial exercise of any right, power or privilege hereunder
preclude other or further exercise thereof or the exercise of any right, power
or privilege.  The rights and remedies specified herein are cumulative
and are not exclusive of any rights or remedies which Depositary Bank would
otherwise have.

     

    13. Counterparts.  This
Agreement may be executed in any number of counterparts and by the different
parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all of which shall together constitute one
and the same instrument

     

    14. Jury Trial
Waiver.  COMPANY, LENDER AND DEPOSITARY BANK HEREBY WAIVE ALL
RIGHTS TO TRIAL BY JURY IN ANY JUDICIAL PROCEEDING ARISING OUT OF, OR RELATING
TO, THIS AGREEMENT OR SERVICES RENDERED IN CONNECTION WITH THIS
AGREEMENT.

     

    Dated as
of:  April 15, 2008

    Very
truly yours,

     

    Commerce
Energy, Inc.

     

    COMPANY

     

    By: /s/ C. Douglas
Mitchell                                                                

    Name:
C. Douglas
Mitchell                                                                

    Title:
Chief Financial
Officer (Interim)

    

     

    LENDER

     

    Wachovia
Capital Finance Corporation (Western), as agent

     

    By: /s/ Carlos
Valles                                                                

    Name:
Carlos
Valles                                                                

    Title:
Director                                                                

    

    

    ACCEPTED:                                                                U.S.
BANK NATIONAL ASSOCIATION

    DEPOSITARY BANK

    

    By: /s/ Jeffrey A.
Kessler                                                                

    Name:
Jeffrey A.
Kessler                                                                

    Title:
Vice
President                                                                

    

    

      

    

      
       

       

    

    
      
        
          LEGAL_US_W # 59144636.1
                                                                
- -ex10-19.htm

    
      
         

      

      
         

        
          

        

      

      
         

        
          Exhibit
10.19

        

      

    

    RELEASE
AGREEMENT

     

    This
Release Agreement is entered into this 16th day of April 2008 by and among
Commerce Energy, Inc., a California corporation (“Commerce”), Tenaska
Power Services Co., a Nebraska corporation (“Tenaska”) and
Wachovia Capital Finance Corporation (Western) (“Wachovia”) as agent
for the lenders party to that certain Loan and Security Agreement dated
June 8, 2006 as amended (the “Loan Agreement”) with
respect to the following facts:

     

    A.           Pursuant
to the Loan Agreement, Wachovia is providing various credit facilities to
Commerce secured by the personal property of Commerce;

     

    B.           Tenaska
is supplying energy to Commerce, and to secure its obligations and liabilities
to Tenaska in connection therewith, Commerce granted Tenaska a security interest
in certain personal property as described in the Security Agreement dated
August 1, 2005 as amended (the “Security Agreement”);
and

     

    C.           The
parties hereto now desire that pursuant to the Loan Agreement, Wachovia arrange
for the issuance by Wachovia Bank, National Association of a standby letter of
credit for the original face amount of $7,000,000 in favor of Tenaska (as
beneficiary) and in the form of Exhibit A attached
hereto and incorporated herein by reference (the “LC”), as well as
$3,000,000 collateral in the form of cash wired to Tenaska, both in substitution
of the collateral provided under the Security Agreement.

     

    NOW
THEREFORE, Tenaska hereby agrees that one (1) business day after
receipt by Tenaska of the original LC signed by duly authorized representatives
of Wachovia Bank, National Association and cash and in consideration
thereof:  (a) Tenaska shall be deemed to have released and
terminated and shall have released and terminated any and all of its security
interests in the assets and property of Commerce, including without limitation
the collateral provided under the Security Agreement; (b) Commerce and
Wachovia together with their agents shall be authorized to file UCC termination
statements for any and all UCC financing statements naming Commerce as debtor
and Tenaska as secured party, including without limitation those filed with the
California Secretary of State on July 15, 2005 as filing number
05-7034378774 and on August 5, 2005 as filing number 05-7036775585;
(c) one (1) business day after receipt by Tenaska of the original
LC signed by duly authorized representatives of Wachovia Bank, National
Association, Tenaska shall deliver to U.S. Bank National Association a written
instrument releasing and terminating any and all of its rights, remedies and
interests with respect to deposit account number [*] and post office lockbox
number 644010, Cincinnati, Ohio 45264-4010; and (d) Tenaska shall execute
and deliver such further documents and take such further action as may be
reasonably requested by Commerce or Wachovia to effectuate or evidence the
foregoing release and termination by Tenaska of its security interests in the
assets and property of Commerce.

     

    
      	
              COMMERCE
      ENERGY, INC.

               

              By:
      /s/ Kenneth L.
      Robinson                                                                

              Name:
      Kenneth L.
      Robinson                                                                

              Title:
      Asst
      Treasurer                                                                

               

            	
              TENASKA
      POWER SERVICES CO.

               

              By:
      /s/ Trudy
      Harper                                                                

              Name:
      Trudy
      Harper                                                                

              Title:
      President                                                                

            
	 
      	 
      
	
              WACHOVIA
      CAPITAL FINANCE Corporation  (WESTERN), as
  agent

            
	
               

              By:
      /s/ Carlos
      Valles                                                                

              Name:
      Carlos
      Valles                                                                

              Title:
      Director                                                                

               

            	 
      

    

    

      

    

      
      [*] =
Information redacted pursuant to a confidential treatment
request.  Such omitted information has been filed separately with the
Securities and Exchange Commission.

       

    

    
      
        
          LEGAL_US_W # 59144342.1
                                                                
- - 

        

         

      

      
         

        
          

        

      

      
         

      

    

    EXHIBIT
A

     

    IRREVOCABLE
STANDBY LETTER OF CREDIT NUMBER

     

    
      	
              LETTER
      OF CREDIT AMOUNT

            	
              ISSUE
      DATE

            	
              EXPIRY
      DATE

            
	
              USD                                7,000,000.00

            	 
      	 
      

    

     

    BENEFICIARY:                                                                                APPLICANT:

    TENASKA
POWER SERVICES
CO.                                                                                COMMERCE
ENERGY, INC.

    1701 E.
LAMAR BLVD., SUITE
100                                                                                600
ANTON BLVD., SUITE 2000

    ARLINGTON,
TX
76006                                                                                      COSTA MESA, CA 92626

     

    WE HEREBY
OPEN OUR IRREVOCABLE STANDBY LETTER OF CREDIT IN YOUR FAVOR FOR THE ACCOUNT OF
THE ABOVE REFERENCED APPLICANT IN THE AGGREGATE AMOUNT OF (SEVEN MILLION AND
00/100 U.S. DOLLARS) USD 7,000,000.00 WHICH IS AVAILABLE BY PAYMENT UPON
PRESENTATION OF THE FOLLOWING DOCUMENTS:

     

    1.           A
DRAFT AT SIGHT DRAWN ON WACHOVIA BANK, NATIONAL ASSOCIATION, DULY ENDORSED ON
ITS REVERSE SIDE THEREOF BY THE BENEFICIARY, AND BEARING THE CLAUSE, “DRAWN
UNDER WACHOVIA BANK, NATIONAL ASSOCIATION STANDBY LETTER OF CREDIT
NO.             .”

     

    2.           THE
ORIGINAL LETTER OF CREDIT AND ANY AMENDMENTS ATTACHED THERETO.  (IF
YOUR DEMAND DRAFT REPRESENTS A PARTIAL DRAWING HEREUNDER, WE WILL ENDORSE THE
ORIGINAL.  IF, HOWEVER, YOUR DEMAND REPRESENTS A FULL DRAWING OR IF
SUCH DRAWING IS PRESENTED ON THE DAY OF THE RELEVANT EXPIRATION DATE HEREOF, WE
WILL HOLD THE ORIGINAL FOR OUR FILES AND REMOVE SAME FROM
CIRCULATION.)

     

    3.           A
DATED STATEMENT ISSUED ON THE LETTERHEAD OF THE BENEFICIARY AND PURPORTEDLY
SIGNED BY AN AUTHORIZED REPRESENTATIVE STATING:  THE UNDERSIGNED
HEREBY REPRESENTS AND WARRANTS THAT THE AMOUNT OF THE ACCOMPANYING DRAFT
REPRESENTS AND COVERS CERTAIN UNPAID INVOICES OWED BY APPLICANT TO
BENEFICIARY.  WE THEREFORE DEMAND PAYMENT IN THE AMOUNT OF (INSERT
AMOUNT) AS SAME IS DUE AND OWING.

     

    4.           COPY(IES)
OF INVOICE(S) MARKED “UNPAID”.

     

    PARTIAL
DRAWINGS ARE PERMITTED.

     

    IT IS A
CONDITION OF THIS LETTER OF CREDIT THAT IT SHALL BE DEEMED AUTOMATICALLY
EXTENDED WITHOUT WRITTEN AMENDMENT FOR ONE YEAR PERIODS FROM THE PRESENT OR ANY
FUTURE EXPIRY DATE UNLESS AT LEAST SIXTY (60) DAYS PRIOR TO SUCH EXPIRATION
DATE, WE SEND THE BENEFICIARY NOTICE AT THE ABOVE STATED ADDRESS BY OVERNIGHT
COURIER THAT WE ELECT NOT TO EXTEND THIS LETTER OF CREDIT BEYOND THE INITIAL OR
ANY EXTENDED EXPIRY DATE THEREOF.

     

    ALL BANK
CHARGES ARE FOR THE ACCOUNT OF THE APPLICANT.

     

    THIS
IRREVOCABLE LETTER OF CREDIT SETS FORTH IN FULL THE TERMS OF OUR
UNDERTAKING.  THIS UNDERTAKING IS INDEPENDENT OF AND SHALL NOT IN ANY
WAY BE MODIFIED, AMENDED, AMPLIFIED, OR INCORPORATED BY REFERENCE TO ANY
DOCUMENT, CONTRACT, OR AGREEMENT REFERENCED HEREIN.

     

    CONTINUED
ON NEXT PAGE WHICH FORMS AN INTEGRAL PART OF

     

    THIS
LETTER OF CREDIT

     

    
      
        
          LEGAL_US_W # 59144342.1

        

         

      

      
         

        
          

        

      

      
         

      

    

    IRREVOCABLE
STANDBY LETTER OF CREDIT NO. PAGE NO. 2

     

    WE HEREBY
AGREE WITH YOU THAT DRAFT(S) DRAWN UNDER AND IN COMPLIANCE WITH THE TERMS AND
CONDITIONS OF THIS CREDIT SHALL BE DULY HONORED IF PRESENTED TOGETHER WITH
DOCUMENT(S) AS SPECIFIED AT OUR OFFICE LOCATED AT 401 LINDEN STREET, MAIL CODE
NC6034, WINSTON SALEM, NC 27101, ATTENTION:  STANDBY LETTERS OF CREDIT
ON OR BEFORE THE ABOVE STATED EXPIRY DATE, OR ANY EXTENDED EXPIRY DATE IF
APPLICABLE.

     

    EXCEPT AS
OTHERWISE EXPRESSLY STATED HEREIN, THIS LETTER OF CREDIT IS SUBJECT TO THE
UNIFORM CUSTOMS AND PRACTICE FOR DOCUMENTARY CREDITS, (2007 REVISION) THE
INTERNATIONAL CHAMBER OF COMMERCE PUBLICATION NO. 600.

     

    SINCERELY,

     

    _________________________

     

    AUTHORIZED
SIGNATURE

     

    THE
ORIGINAL OF THIS LETTER OF CREDIT CONTAINS AN EMBOSSED SEAL OVER THE AUTHORIZED
SIGNATURE.

     

    PLEASE
DIRECT ANY CORRESPONDENCE INCLUDING DRAWING OR INQUIRY QUOTING OUR REFERENCE
NUMBER TO:

     

    WACHOVIA
BANK, NATIONAL ASSOCIATION

     

    401
LINDEN STREET, MAIL CODE NC6034

     

    WINSTON
SALEM, NORTH CAROLINA 27101

     

    OUR
CUSTOMER CARE PHONE NUMBER FOR ANY QUERIES IS 800-776-3862

     

    OUR FAX
NUMBER IS 336-735-0950

     

    
      
        
          LEGAL_US_W # 59144342.1

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