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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): February 9, 2005

COMMERCE ENERGY GROUP, INC.

(Exact Name of registrant as specified in its charter)
         
Delaware
(State or other jurisdiction of
incorporation)
  001-32239
(Commission File Number)
  20-0501090
(IRS Employer
Identification No.)
     
600 Anton Blvd., Suite 2000
Costa Mesa, California
(Address of principal executive offices)
  92626
(Zip Code)

Registrant’s telephone number, including area code: (714) 258-0470

Not Applicable
(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o  Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o  Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o  Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2 (b))

o  Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 
 

 


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Item 1.01. Entry into a Material Definitive Agreement.
Item 2.01. Completion of Acquisition or Disposition of Assets.
Item 3.02. Unregistered Sales of Equity Securities.
Item 9.01. Financial Statements and Exhibits.
SIGNATURES
EXHIBIT INDEX
EXHIBIT 2.1
EXHIBIT 2.2
EXHIBIT 2.3
EXHIBIT 2.4
EXHIBIT 2.5
EXHIBIT 99.1


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Item 1.01. Entry into a Material Definitive Agreement.

See the disclosure under Item 2.01 of this report, which is incorporated by reference into this Item 1.01 in its entirety.

Item 2.01. Completion of Acquisition or Disposition of Assets.

On February 9, 2005, Commerce Energy Group, Inc., a Delaware corporation (“Commerce”), Commonwealth Energy Corporation, a California corporation and a wholly-owned subsidiary of Commerce (“Purchaser”), entered into an Asset Purchase Agreement (the “Purchase Agreement”) with American Communications Network, Inc., a Michigan corporation (“ACN”), ACN Utility Services, Inc., a Michigan corporation (“ACN Utility Services”), ACN Energy, Inc., a Michigan corporation (“ACN Energy”), and ACN Power, Inc., a Michigan corporation (“ACN Power”, and collectively with ACN Utility Services and ACN Energy, “Sellers”). Each of the Sellers is a wholly-owned subsidiary of ACN. Under the Purchase Agreement, Purchaser will acquire certain assets of the Sellers’ retail electric power and natural gas sales business (the “Retail Energy Business”), and assume specified liabilities of, the Sellers. The Sellers currently sell retail electric power in Texas and Pennsylvania and sell retail natural gas in California, Ohio, Georgia, New York, Pennsylvania and Maryland. The assets of the Sellers to be acquired include equipment, gas inventory associated with utility and pipeline storage and transportation agreements and electricity supply, scheduling and capacity contracts, software and other infrastructure plus approximately 80,000 residential and small commercial customers. Employees of ACN Energy will be offered employment with Purchaser.

Certain of the acquired assets were transferred to the Purchaser immediately upon the closing of the transaction on February 9, 2005. The remaining acquired assets, which are subject to regulatory approval or third party consent requirements, will be transferred to the Purchaser as such approvals and consents are obtained. The Sellers granted the Purchaser a security interest in the assets remaining to be transferred pursuant to a Security Agreement dated as of February 9, 2005.

As set forth in the Purchase Agreement, the initial consideration paid by Purchaser was (a) $6.5 million in cash, plus (b) 930,233 shares of Commerce Common Stock, valued at $2.0 million, based upon the market price for Commerce’s Common Stock as of February 8, 2005, the date immediately prior to the the closing date. The shares of Commerce Energy common stock will initially be placed in escrow and released upon satisfaction of certain performance targets related to customer growth. ACN was also paid at closing an estimated prepayment amount of approximately $5.5 million dollars as payment for certain working capital and prepayment items relating to the assets being acquired, and are subject to a final adjustment and settlement.

In connection with the Purchase Agreement, the parties executed a Transition Services Agreement dated as of February 9, 2005 (the “Transition Services Agreement”) under which the parties will provide certain transition services to each other in order to provide for the orderly transition of the Retail Energy Business and the employees of such Business from ACN and the Sellers to Purchaser.

In addition, Commerce, Purchaser and ACN entered into a Sales Agency Agreement dated as of February 9, 2005 (the “Sales Agency Agreement”), pursuant to which Purchaser will be permitted to utilize ACN’s network of independent sales representatives. Under the Sales Agency Agreement, Purchaser will pay ACN (a) an amount equal to sales representative commissions that are payable by ACN to its independent sales representatives in connection with customers acquired by Purchaser through such representatives, and (b) a per-customer acquisition fee for each customer acquired through the Sales Agency Agreement. Under the Sales Agency Agreement, Sales commissions due under the Sales Agency Agreement will be paid in cash, while customer acquisition fees will be paid by the issuance of Commerce Common Stock to ACN, based on the fair market value of the Commerce Common Stock when a customer acquisition fee is due.

The shares of Commerce Common Stock to be issued to ACN pursuant to the Purchase Agreement and the Sales Agency Agreement will be withheld and delivered to a third party escrow agent. The shares issued pursuant to the Purchase Agreement will be held in escrow and released to ACN as certain customer targets are achieved, as described in the Purchase Agreement. The shares issued pursuant to the Sales Agency Agreement will be held in

 


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escrow and released to ACN as customer acquisition fees are earned by ACN, as described in the Sales Agency Agreement. If the targets are not achieved in full and the shares are not earned under the Sales Agency Agreement, any shares not released to ACN will be returned to Commerce.

Until the earlier of (a) February 9, 2006 or (b) the date on which ACN has earned all 930,233 shares of Commerce Common Stock initially placed in escrow under the Purchase Agreement, all customer acquisition fees due to ACN will be paid through the release of shares of stock initially placed in escrow. The Sales Agency Agreement has an initial term of one year, and is subject to annual renewal unless terminated by either party upon at least 90 days prior written notice prior to the expiration of the initial term or any successive term. Should the parties extend the Sales Agency Agreement for successive annual or other mutually agreeable period(s) then, for such periods the customer acquisition fees will be paid by the issuance of additional shares of Commerce Common Stock to ACN, based on the fair market value of the Commerce Common Stock when a customer acquisition fee is due. The number of shares of Commerce Common Stock that can be issued to ACN under the Purchase Agreement and the Sales Agency Agreement (including any renewals thereof) is capped at 14.9% of Commerce’s outstanding Common Stock as of the closing date, or approximately 4,544,394 shares.

The description contained in this Item 2.01 of the transactions contemplated by the Purchase Agreement is qualified in its entirety by reference to the full text of the Purchase Agreement, the Transition Services Amendment, the Sales Agency Agreement, the Escrow Agreement and the Security Agreement, which are filed herewith as Exhibits 2.1 through 2.5, and are incorporated herein by reference.

A copy of the press release announcing the acquisition is attached as Exhibit 99.1 to this Current Report of Form 8-K and is incorporated herein by reference. The press release should be read in conjunction with the note regarding forward-looking statements, which is included in the text of the press release.

Item 3.02. Unregistered Sales of Equity Securities.

In connection with the Purchase Agreement, Commerce agreed to initially issue 930,233 shares of Commerce Common Stock pursuant to the terms and conditions of the Purchase Agreement and the Sales Agency Agreement. The shares will be issued into an escrow upon approval of the listing of the additional shares by the American Stock Exchange. The shares were issued pursuant to Section 4(2) of the Securities Act of 1933, as amended (“Securities Act”) and Rule 506 of Regulation D thereunder, as a transaction not involving a public offering, to an accredited investor pursuant to Rule 506.

Item 9.01. Financial Statements and Exhibits.

(a) Financial Statements of Business Acquired.

As permitted by Item 9.01(a)(4) of Form 8-K, Commerce will, if required, file the financial statements required by Item 9.01(a)(1) of Form 8-K pursuant to an amendment to this Current Report on Form 8-K not later than seventy one (71) calendar days after the date this current report must be filed.

(b) Pro Forma Financial Information.

As permitted by Item 9.01(b)(2) of Form 8-K, Commerce will, if required, file the pro forma financial information required by Item 9.01(b)(1) of Form 8-K pursuant to an amendment to this Current Report of Form 8-K not later than seventy one (71) calendar days after the date this current report must be filed.

 


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(c) Exhibits.

         
Exhibit No.   Description

 
 
  2.1*†    
Asset Purchase Agreement dated as of February 9, 2005 by and among Commonwealth Energy Corporation, ACN Utility Services, Inc., ACN Energy, Inc., ACN Power, Inc. and, as to certain sections thereof only, Commerce Energy Group, Inc. and American Communications Network, Inc.

 
 
  2.2†    
Transition Services Agreement dated as of February 9, 2005 by and between American Communications Network, Inc. and Commonwealth Energy Corporation.

 
 
  2.3†    
Sales Agency Agreement dated as of February 9, 2005 by and among Commonwealth Energy Corporation, Commerce Energy Group, Inc. and American Communications Network, Inc.

 
 
  2.4    
Escrow Agreement dated as of February 9, 2005 by and among Commonwealth Energy Corporation, ACN Utility Services, Inc., ACN Energy, Inc., ACN Power, Inc., Commerce Energy Group, Inc., American Communications Network, Inc. and Computershare Trust Company, Inc.

 
 
  2.5    
Security Agreement dated as of February 9, 2005 by and among Commonwealth Energy Corporation, ACN Utility Services, Inc., ACN Energy, Inc., ACN Power, Inc. and American Communications Network, Inc.

 
 
  99.1    
Press Release dated February 9, 2005.


*   Schedules and exhibits to the Asset Purchase Agreement have not been filed because Commerce Energy Group, Inc. does not believe that they contain information material to an investment decision which is not otherwise disclosed in the agreements. A list is attached to the Asset Purchase Agreement (as incorporated herein by reference) briefly identifying the contents of the omitted schedules and exhibits. Commerce Energy Group, Inc. hereby agrees to furnish supplementally a copy of omitted schedules or exhibits to the Securities and Exchange Commission upon its request.
 
  Confidential treatment is being sought with respect to certain portions of this agreement. Such portions have been omitted from this filing and have been filed separately with the Securities and Exchange Commission.

 


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SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, Commerce Energy Group, Inc. has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
         
  COMMERCE ENERGY GROUP, INC.
a Delaware corporation
 
 
Date: February 9, 2005  By:   /s/ RICHARD L. BOUGHRUM    
    Name:   Richard L. Boughrum   
    Title:   Senior Vice President and
Chief Financial Officer 
 
 

 


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EXHIBIT INDEX

         
Exhibit No.   Description

 
 
  2.1*†    
Asset Purchase Agreement dated as of February 9, 2005 by and among Commonwealth Energy Corporation, ACN Utility Services, Inc., ACN Energy, Inc., ACN Power, Inc. and, as to certain sections thereof only, Commerce Energy Group, Inc. and American Communications Network, Inc.

 
 
  2.2†    
Transition Services Agreement dated as of February 9, 2005 by and between American Communications Network, Inc. and Commonwealth Energy Corporation.

 
 
  2.3†    
Sales Agency Agreement dated as of February 9, 2005 by and among Commonwealth Energy Corporation, Commerce Energy Group, Inc. and American Communications Network, Inc.

 
 
  2.4    
Escrow Agreement dated as of February 9, 2005 by and among Commonwealth Energy Corporation, ACN Utility Services, Inc., ACN Energy, Inc., ACN Power, Inc., Commerce Energy Group, Inc., American Communications Network, Inc. and Computershare Trust Company, Inc.

 
 
  2.5    
Security Agreement dated as of February 9, 2005 by and among Commonwealth Energy Corporation, ACN Utility Services, Inc., ACN Energy, Inc., ACN Power, Inc. and American Communications Network, Inc.

 
 
  99.1    
Press Release dated February 9, 2005.


*   Schedules and exhibits to the Asset Purchase Agreement have not been filed because Commerce Energy Group, Inc. does not believe that they contain information material to an investment decision which is not otherwise disclosed in the agreements. A list is attached to the Asset Purchase Agreement (as incorporated herein by reference) briefly identifying the contents of the omitted schedules and exhibits. Commerce Energy Group, Inc. hereby agrees to furnish supplementally a copy of omitted schedules or exhibits to the Securities and Exchange Commission upon its request.
 
  Confidential treatment is being sought with respect to certain portions of this agreement. Such portions have been omitted from this filing and have been filed separately with the Securities and Exchange Commission.

 

EXHIBIT 2.1 ASSET PURCHASE AGREEMENT BY AND AMONG COMMONWEALTH ENERGY CORPORATION AS BUYER AND ACN UTILITY SERVICES, INC., ACN ENERGY, INC. AND ACN POWER, INC., AS SELLERS AND AMERICAN COMMUNICATIONS NETWORK, INC. AND COMMERCE ENERGY GROUP, INC. WITH RESPECT TO CERTAIN SPECIFIC PROVISIONS HEREIN DATED AS OF FEBRUARY 9, 2005

TABLE OF CONTENTS <TABLE> <CAPTION> Page ---- <S> <C> <C> SECTION 1. Certain Definitions .................................................. 5 SECTION 2. Transfer of Assets ................................................... 10 2.1 Assets To Be Transferred ............................................. 10 2.2 Consents and Novation ................................................ 11 2.3 Option Assets ........................................................ 12 SECTION 3. Consideration for Acquired Assets .................................... 12 3.1 Amount of Purchase Price ............................................. 12 3.2 Assumption of Liabilities ............................................ 13 3.3 Excluded Liabilities ................................................. 13 3.4 Accounts Receivables and Closing Prorations .......................... 14 3.5 Bulk Sales Law Compliance ............................................ 15 3.6 Allocation of Purchase Price ......................................... 15 SECTION 4. Representations and Warranties of Sellers ............................ 15 4.1 Good Standing ........................................................ 15 4.2 ACN Energy Entities .................................................. 15 4.3 Authorization; Consents .............................................. 16 4.4 Governmental Approvals ............................................... 16 4.5 Financial Statements; Liabilities; Books and Records of Account. ..... 16 4.6 Taxes ................................................................ 17 4.7 Title to Assets; Liens and Encumbrances .............................. 17 4.8 Trademarks, Service Marks, Trade Names, Patents and Copyrights ....... 17 4.9 Contracts ............................................................ 18 4.10 Purchase and Sales Commitments and Orders; Customers and Vendors ..... 18 4.11 Employees; Compensation; Labor Relations; Vacation Time, Bonuses, Etc 18 4.12 Employee Benefits .................................................... 19 4.13 Legal Proceedings .................................................... 20 4.14 Orders, Decrees, Etc ................................................. 20 4.15 Compliance With Law; Permits and Licenses ............................ 20 4.16 Actions Not in Ordinary Course; No Change ............................ 21 4.17 Reserved ............................................................. 21 4.18 Bank Accounts; Powers of Attorney .................................... 21 4.19 No Brokers ........................................................... 22 4.20 Arrangements with Related Parties .................................... 22 4.21 No Omissions ......................................................... 22 4.22 Stock Legend; Restricted Securities .................................. 22 SECTION 5. Representations and Warranties of Buyer .............................. 23 5.1 Good Standing ........................................................ 23 5.2 Authorization ........................................................ 23 </TABLE> 1

<TABLE> <S> <C> <C> 5.3 Governmental Approvals ............................................... 24 5.4 No Brokers ........................................................... 24 5.5 Authorization ........................................................ 24 5.6 Shares ............................................................... 24 5.7 SEC Rules ............................................................ 24 SECTION 6. Conduct Prior to the End of the Phase-Out Period ..................... 24 6.1 Investigation by Buyer ............................................... 24 6.2 Ongoing Operations ................................................... 25 6.3 Other Transactions ................................................... 26 6.4 Consents; Third-Party; Regulatory Approvals .......................... 26 6.5 Public Announcements ................................................. 27 6.6 Employees and Employee Benefit Plans ................................. 27 6.7 Notification ......................................................... 29 6.8 Transfer Documents ................................................... 29 6.9 Covenant to Satisfy Conditions ....................................... 29 6.10 Schedules ............................................................ 29 6.11 Schedule 4.2(A) Assets ............................................... 29 SECTION 7. Conditions of Buyer's Obligations to Close ........................... 30 7.1 Agreement and Conditions ............................................. 30 7.2 Representations and Warranties ....................................... 30 7.3 No Legal Proceeding .................................................. 30 7.4 Certificate .......................................................... 30 7.5 Lien Releases ........................................................ 30 7.6 Deliveries ........................................................... 30 7.7 Schedules ............................................................ 30 SECTION 8. Conditions of the Sellers' Obligations to Close ...................... 30 8.1 Agreement and Conditions ............................................. 31 8.2 Representations and Warranties ....................................... 31 8.3 Deliveries ........................................................... 31 8.4 Certificate .......................................................... 31 SECTION 9. Deliveries of Sellers on the Closing Date ............................ 31 9.1 Title to Acquired Assets ............................................. 31 9.2 Certificates ......................................................... 31 9.3 Secretary's Certificate .............................................. 31 9.4 Authorization ........................................................ 31 9.5 Escrow Agreement ..................................................... 31 9.6 Sales Agency Agreement ............................................... 31 9.7 Transition Agreement ................................................. 31 9.8 Security Agreement ................................................... 32 9.9 Energy Agreements .................................................... 32 9.10 Operating Agency Agreement ........................................... 32 </TABLE> 2

<TABLE> <S> <C> <C> 9.11 Other Deliveries ..................................................... 32 SECTION 10. Deliveries of Buyer on the Closing Date .............................. 32 10.1 Purchase Price ....................................................... 32 10.2 Secretary's Certificate .............................................. 32 10.3 Escrow Agreement ..................................................... 32 10.4 Sales Agency Agreement ............................................... 32 10.5 Transition Agreement ................................................. 32 10.6 Security Agreement ................................................... 32 10.7 Energy Agreements .................................................... 32 10.8 Operating Agency Agreement ........................................... 32 SECTION 11. Additional Covenants ................................................. 32 11.1 Mail ................................................................. 33 11.2 Further Assurances ................................................... 33 11.3 Notification to Customers ............................................ 33 11.4 Non-Transferred Assets ............................................... 33 11.5 Trading Restrictions ................................................. 33 SECTION 12. Confidentiality ...................................................... 33 SECTION 13. Indemnification ...................................................... 34 13.1 Indemnification by Sellers ........................................... 34 13.2 Indemnification by Buyer ............................................. 34 13.3 Procedures for Indemnification ....................................... 34 SECTION 14. Survival of Representations; Effect of Certificates .................. 35 SECTION 15. Fees and Disbursements ............................................... 35 SECTION 16. Notices .............................................................. 36 SECTION 17. Termination .......................................................... 36 SECTION 18. Miscellaneous ........................................................ 37 18.1 Entire Agreement ..................................................... 37 18.2 Taxes ................................................................ 37 18.3 Governing Law; Jurisdiction; Waiver of Jury Trial .................... 37 18.4 Severability ......................................................... 38 18.5 Waiver ............................................................... 38 18.6 Binding Effect; Assignment ........................................... 38 18.7 No Third-Party Beneficiaries ......................................... 38 18.8 Expenses Related to Audit Rights ..................................... 38 18.9 Pronouns ............................................................. 38 18.10 Counterparts ......................................................... 39 18.11 Headings ............................................................. 39 </TABLE> 3

EXHIBITS Exhibit A - Form of Escrow Agreement Exhibit B - Form of Sales Agency Agreement Exhibit C - Form of Transition Agreement Exhibit D - Form of Security Agreement Exhibit E - Form of NAESB Exhibit F - Form of EEI Exhibit G - Form of ISDA Exhibit H - Form of Operating Agency Agreements Exhibit I - Form of Letter Netting Letter SCHEDULES Schedule A Acquired Assets Schedule A-1 Assets with Closing Dates Cash Adjustments Schedule A-2 Assets with Future Cash Adjustments (upon Assignment) Schedule B Option Assets Schedule C Phase-Out-Addendum Schedule D Disbursement of Share Escrow Schedule 3.1(c) Estimated Closing Adjustment Schedule 4.2 Jurisdictions of Qualification Schedule 4.2A Activities conducted by ACN Energy's subsidiaries Schedule 4.3 Authorization; Consents Schedule 4.4 Seller Governmental Approvals Schedule 4.5A Financial Statements; Liabilities; Books and Records of Account Schedule 4.7A Title to Assets; Liens and Encumbrances Schedule 4.7B Material Assets Schedule 4.8 Trademarks, Service Marks, Trade Names, Patents and Copyrights Schedule 4.9A Material Contracts Schedule 4.9B Bonds, Deposits, Guarantees or other Credit Support Schedule 4.10 Purchase and Sales Commitments and Orders; Customers and Vendors Schedule 4.11 Employees of ACN Energy; Job Description Compensation Schedule 4.11C Vacation and Bonuses of Employees of ACN Energy Schedule 4.12A Employee Benefit Plans Schedule 4.14 Orders, Decrees, Etc Schedule 4.15B Permits; Notice of Violation Schedule 4.16A Actions Not in the Ordinary Course Schedule 4.18 Bank Accounts; Powers of Attorney Schedule 4.20 Contracts with Related Parties Schedule 5.3 Buyer Governmental Approvals Schedule 5.6 CEG's Shares of Common Stock Reserved for Issuance Schedule 6.6 Employee Information 4

AGREEMENT dated as of February 9, 2005 (the "Agreement") by and among Commonwealth Energy Corporation, a California corporation ("Buyer"), and ACN Utility Services, Inc., a Michigan corporation ("ACN Utility Services"), ACN Energy, Inc., a Michigan corporation ("ACN Energy"), and ACN Power, Inc., a Michigan corporation ("ACN Power", and collectively with ACN Utility Services and ACN Energy, "Sellers" or the "ACN Energy Entities"), and, as to Sections 3.1(b) & 4.22 only, Commerce Energy Group, Inc., a Delaware corporation ("CEG"), and as to Sections 4.22, 6.11 and Article 13 only, American Communications Network, Inc. ("Parent"). W I T N E S S E T H: WHEREAS, Sellers own and operate a retail electric power and natural gas sales business (the "Retail Energy Business"); and WHEREAS, Buyer desires to purchase from Sellers and Sellers desire to sell, convey, transfer, assign and deliver to Buyer, all of the assets, properties, rights and business of the Retail Energy Business, other than the Excluded Assets (as defined below), upon the terms and conditions and for the purchase price hereinafter set forth; NOW, THEREFORE, in consideration of the mutual covenants contained herein and for other good and valuable consideration set forth herein, the sufficiency of which is hereby acknowledged, and intending to be legally bound, the parties hereto agree as follows: SECTION 1...Certain Definitions. For purposes of this Agreement, the following terms shall have the respective meanings set forth below: "ACN Energy" means ACN Energy, Inc., a Michigan corporation and wholly owned subsidiary of Seller. "ACN Energy Entities" has the meaning set forth in the recitals. "ACN Power" means ACN Power, Inc., a Michigan corporation and wholly owned subsidiary of Seller. "ACN Utility Services" means ACN Utility Services, Inc., a Michigan corporation and wholly owned subsidiary of Seller. "Acquired Assets" means the assets of the Retail Energy Business set forth on Schedule A attached hereto and those of the Option Assets which Buyer elects to purchase pursuant to the terms hereof. "Action" means any claim, action, suit, proceeding or investigation, whether at law, in equity or in admiralty or before any court, arbitrator, arbitration panel or Governmental Authority. "Affiliate" of a party means any Person which, directly or indirectly, controls, is controlled by or is under common control with such party. 5

"AMEX" means the American Stock Exchange. "Assumed Liabilities" has the meaning specified in Section 3.2 hereof. "Balance Sheet" has the meaning specified in Section 4.5 hereof. "Balance Sheet Date" means December 31, 2004. "Buyer" has the meaning set forth in the preamble hereof. "Buyer Designee" has the meaning specified in Section 2.1(b) hereof. "Closing" means the closing of the transactions contemplated hereby, which shall take place at the offices of Jaffe Raitt Heuer & Weiss, P.C., on the Closing Date at 10:00 A.M., or at such other time or place as the parties may agree upon in writing. "Closing Date" means February 9, 2005 or such other date as the parties may agree upon in writing. "Code" means the United States Internal Revenue Code of 1986, as amended. "CEG" means Commerce Energy Group, Inc., a Delaware corporation and the parent of Buyer. "Contracts" mean contracts, agreements, mortgages, indentures, licenses, leases, commitments, plans, arrangements, sales orders, purchase orders and binding commitments of every kind, whether written or oral. "Counterparty" or "Counterparties" means any Person or Persons, as applicable, other than the Seller, that is a party or are parties, as applicable, to one or more of the Contracts. "Counterparty Consent" means, with respect to each Contract, an assignment and assumption agreement duly executed and delivered by the applicable assignor, the applicable assignee and one or more authorized officers of the sole Counterparty or all Counterparties to such Contract, as applicable which is reasonably satisfactory to the Buyer. "Customer Notification" has the meaning specified in Section 11.3. "Damages" mean all losses, liabilities, damages, deficiencies, obligations, fines, expenses, claims, demands, actions, suits, proceedings, judgments or settlements, including interest and penalties recovered by a third party with respect thereto and out-of-pocket expenses and reasonable attorneys' and accountants' fees and expenses incurred in the investigation or defense of any of the same or in asserting, preserving or enforcing any of the Indemnified Party's rights hereunder, suffered by an Indemnified Party. "EEI" means the EEI Master Power Purchase and Sale Agreement, dated January 31, 2005, between ACN Utility and Buyer. 6

"Employee Benefit Plan" has the meaning set forth in Section 3(3) of ERISA. "ERISA" means the Employee Retirement Income Security Act of 1974, as amended, and the rules and regulations promulgated thereunder. "ERISA Affiliate" means any other corporation or trade or business controlled by, controlling or under common control with a Seller within the meaning of Section 414(c) of the Code or Section 4001(a)(14) or Section 4001(b) of ERISA. "Escrow Agent" means Computershare Trust Company, Inc., 350 Indiana Street, Suite 800, Golden, Colorado 80401. "Escrow Agreement" means the escrow agreement in substantially the form of Exhibit A attached hereto to be entered into on the Closing Date among Parent, Buyer CEG and the Escrow Agent. "Estimated Prepayment Amount" has the meaning set for in Section 3.1(c). "Excluded Assets" mean those assets of Sellers not listed on Schedule A attached hereto and the Option Assets which Buyer does not elect to purchase pursuant to the terms hereof. "Excluded Liabilities" has the meaning specified in Section 3.3 hereof. "Financial Statements" has the meaning specified in Section 4.5 hereof. "GAAP" means United States generally accepted accounting principles. "Governmental Authority" means any agency, instrumentality, department, commission, court, tribunal or board of any government, whether foreign or domestic and whether national, federal, state, provincial or local, including any self-regulatory organization having jurisdiction over the Parties, the Parent's Subsidiaries, the Contracts set forth on Schedule 4.9, the Retail Energy Business, the Acquired Assets, the Option Assets, or otherwise relating in any way to the subject matter hereof. "Indemnified Party" has the meaning specified in Section 13.3 hereof. "Indemnifying Party" has the meaning specified in Section 13.3 hereof. "ISDA" means the International Swaps and Derivatives Association, Inc. 2002 Master Agreement and Credit Support Annex, dated January 31, 2005, between ACN Utility and Buyer. "Last Seller Pay Date" means March 4, 2005. "Laws" mean laws, rules, regulations, codes, orders, ordinances, judgments, injunctions, decrees and policies. 7

"Liabilities" mean debts, liabilities, obligations, duties and responsibilities of any kind and description, whether absolute or contingent, monetary or non-monetary, direct or indirect, known or unknown or matured, unmatured, or of any other nature. "Lien" means any security interest, lien, mortgage, claim, charge, pledge, restriction, equitable interest or encumbrance of any nature. "NAESB" means the NAESB Base Contract for Sale and Purchase of Natural Gas, dated January 31, 2005, between ACN Utility and Buyer. "Netting Letter" means the letter agreement between ACN Utility and Buyer, dated January 31, 2005, whereby the parties agree to enter into an EEI Master Netting Agreement. "Non-Transferred Contract" has the meaning specified in Section 2.2(a) hereof. "Option Assets" means those assets of the Retail Energy Business set forth on Schedule B attached hereto, which Buyer has an option to acquire on the terms set forth herein. To the extent any assets, property, rights or business of a Seller or any of Parent's Subsidiaries used in connection with or otherwise related to the Retail Energy Business as a going concern do not appear or Schedules A and B hereto, the general language shall govern and such assets, property, rights and business shall be deemed Option Assets. "Option Expiration Date" means the close of business on the 60th day after the Closing Date. "Parent" has the meaning set forth in the preamble hereof. "Parties" means, collectively, Buyer and Sellers. "Party" means any of such Persons. "Permits" has the meaning specified in Section 4.15(b) hereof. "Person" means any natural person, corporation, business trust, joint venture, association, company, firm, partnership, or other entity or government or Governmental Authority. "Pre-Closing Billed Receivables" has the meaning specified in Section 3.4(b) hereof. "Phase-Out Addendum" means Schedule C attached hereto. "Phase-Out Period" has the meaning specified in the Phase-Out Addendum. "Proprietary Right" means patents, patent applications, patent disclosures and inventions (whether or not patentable and whether or not reduced to practice); all registered and unregistered statutory and common law copyrights; all registered and unregistered trademarks, 8

service marks, licenses, logos, sales materials and trade names; all registrations, applications and renewals for any of the foregoing; all trade secrets, confidential information, know-how, customer lists, formulae, manufacturing and production processes and techniques, research and development information, product designations, quality standards, investigations, drawings, specifications, designs, plans, improvements, proposals, technical and computer data; all license agreements and sublicense agreements to and from third parties relating to any of the foregoing; all other proprietary rights (including, without limitation, all computer software and documentation); and all copies and tangible embodiments of the foregoing (in whatever form or medium). "Proration Time" means, as to Contracts relating to the sale, purchase, transportation or delivery of natural gas, 9:01 am Eastern Standard Time on February 1, 2005, and as to any other Acquired Assets, 12:01 am in the time zone of the Territory to which such Acquired Asset relates (or if such Acquired Asset relates to no particular Territory, 12:01 am Eastern Standard Time) on February 1, 2005. "PUC(s)" has the meaning specified in Section 11.3. "Purchase Price" has the meaning specified in Section 3.1 hereof. "Retail Energy Business" has the meaning set forth in the recitals. "Returns" mean all returns, declarations, reports, estimates, information returns and statements required to be filed with or supplied to any taxing authority in connection with any Taxes. "Sales Agency Agreement" means the Agency Agreement in substantially the form of Exhibit B attached hereto to be entered into on the Closing Date among Seller, Buyer and an entity designated by Buyer. "Securities Act" means the Securities Act of 1933, as amended. "Sellers" has the meaning set forth in the preamble hereof. "Seller Ancillary Documents" means all conveyances, covenants, warranties, deeds, assignments, bills of sale, confirmations, powers of attorney, approvals, consents and all further instruments as may be necessary, expedient or proper in order to complete any and all conveyances, transfers, and assignments provided for herein and to convey to Buyer such title to the Acquired Assets as Sellers are obligated hereunder to convey. "Shares" has the meaning specified in Section 3.1(b) hereof. "Subsidiary" means, with respect to any Person, (i) any corporation or other Person of which securities or other interests (other than securities or other interests having such power only upon the happening of a contingency that has not occurred) having the power (x) to elect a majority of that corporation's or other Person's board of directors or similar governing body or (y) to direct the business and policies of that corporation or other Person are held by 9

such Person or one or more of Subsidiaries of such Person (or a combination thereof) and (ii) any partnership or limited liability company (a) the sole general partner or the managing general partner or managing member of which is such Person or a Subsidiary of such Person or (b) the only general partners or managing members of which are such Person or one or more Subsidiaries of such Person (or a combination thereof). "Taxes" mean all taxes, charges, fees, levies or other assessments, including, without limitation, income, gross receipts, excise, real and personal property, sales, transfer, license, withholding, payroll and franchise taxes, taxes or other charges in the nature of excise, withholding, ad valorem, stamp, transfer, value added, or gains taxes, fuel taxes, environmental taxes, license, registration and documentation fees, and customs' duties, tariffs and similar charges, imposed by any Governmental Authority and shall include any interest, penalties or additions to tax attributable to any of the foregoing. "Transaction Documents" means this Agreement, the Sales Agency Agreement, Transition Agreement, Escrow Agreement, Security Agreement, NAESB, EEI, ISDA, Operating Agency Agreements, and each Seller Ancillary Document. "Transferred Contracts" means all Contracts included within the definition of Acquired Assets, and transactions outstanding under such Contracts, except for such Contracts or transactions, if any, with respect to which no Counterparty Consent has been received and such consent is required under the terms of such Contract or transaction for that assignment thereof. "Transferred Customers" means those customers of the Retail Energy Business for which regulatory approval, UDC approval and/or customers' approval with respect to such transfer to Buyer has been received and which are actually transferred to Buyer on and/or after the Closing. "Transferred Employee" has the meaning specified in Section 6.6 hereof. "Transition Agreement" means the Transition Services Agreement in substantially the form of Exhibit C attached hereto to be entered into on the Closing Date between Sellers and Buyer. "UDC(s)" has the meaning specified in Section 11.3 hereof. "Unbilled Receivables" has the meaning specified in Section 3.4 hereof. "WARN" has the meaning specified in Section 6.6 hereof. SECTION 2. Transfer of Assets. 2.1 Assets To Be Transferred. (a) Based upon and subject to the terms, agreements, warranties, representations and conditions of this Agreement, Sellers hereby agree to sell, convey, transfer, assign and deliver to Buyer on the Closing Date or from time to time thereafter as contemplated by Sections 2.2, 2.3 and 6.4, and Buyer hereby agrees to buy and 10

accept on the applicable date, for the Purchase Price, free and clear of all Liens, all of the Sellers' right, title and interest in and to the Acquired Assets. (b) Buyer may designate one or more of its Subsidiaries as the purchaser hereunder of all or any portion of the Acquired Assets (any such Subsidiary so designated being referred to herein as a "Buyer Designee"). Buyer's rights under this Agreement shall be deemed automatically assigned to any Buyer Designee with respect to the portion of the Acquired Assets to be acquired by such Buyer Designee, provided that any such assignment shall not relieve Buyer from any liability hereunder. 2.2 Consents and Novation. (a) This Agreement shall not constitute an agreement to assign any interest in any Contract or any claim, right or benefit arising thereunder or resulting therefrom if an assignment without the consent of a third party (including any Governmental Authority), or without novation of the same, would constitute a breach or violation thereof or affect adversely the rights of the Seller or the Buyer thereunder (any of such, a "Non-Transferred Contract"). If novation is required in order to transfer and assign any interest to the Buyer, or if the consent of a third party is required in order to assign any such interest and such consent is not obtained prior to the Closing Date, or if an attempted assignment would be ineffective or would adversely affect the Sellers' ability to convey the benefit of such Non-Transferred Contract to the Buyer, (i) the Buyer shall be entitled to the benefits of each such Non-Transferred Contract accruing after the Proration Time, (ii) the Buyer shall assume as Assumed Liabilities all obligations and liabilities relating to or arising out of or incurred in connection with such Non-Transferred Contract that relate to the period after the Proration Time, (iii) except as provided in Section 2.2(b), the Sellers shall continue to deal with the other contracting party(ies) as the prime contracting party and (iv) the Sellers will use their best efforts to cooperate with Buyer in obtaining all such consents and cooperate with the Buyer until such consent or novation is obtained or effected in any lawful and economically feasible arrangement so that the Buyer shall receive the interest of the Sellers in the benefits under any such Non-Transferred Contract, including performance by the Sellers or the Buyer as agent for the Sellers as set forth in Section 2.2(b). The Sellers shall promptly assign to the Buyer each such Non-Transferred Contract after receipt of the appropriate consent or novation. (b) From and after the Closing, Sellers authorize and appoint Buyer as their exclusive agent to take all actions and administer all Non-Transferred Contracts to the fullest extent allowed under the applicable contract and, to the extent within Buyer's reasonable control, to manage the Retail Energy Business for Sellers. Buyer shall indemnify and hold Sellers harmless from and against all Liabilities and Damages from third party claims relating to the period after the Proration Time relating to (x) such Non-Transferred Contract, or (y) Buyer's management of the Retail Energy Business as aforesaid, except to the extent arising out of the gross negligence, bad faith or willful misconduct of the Sellers or their Affiliates. All expenses reasonably incurred by Sellers with respect to the Non-Transferred Contracts utilized in the Retail Energy Business from and after the Proration Time shall be paid by Buyer. All revenues not associated with an unreimbursed expense paid by Sellers with respect to the Non-Transferred Contracts from and after the Proration Time shall be for the benefit of and paid to Buyer. Sellers shall take no action, nor cause any action to be taken under the contracts and arrangements for which Buyer has been appointed agent unless requested by Buyer to do so. Such Buyer- 11

requested Sellers actions shall not be considered actions of Seller for the purposes of expense or revenue recognition under this Agreement. 2.3 Option Assets. From the date hereof until the Option Expiration Date, Buyer shall have the option from time to time to designate any of the Option Assets as Acquired Assets by delivering notice of such election to Seller. If Buyer so elects, Buyer shall be required to pay to Sellers any cash prepayment amounts as set forth in Section 3.1(d); otherwise there shall be no purchase price adjustment. For purposes of this Agreement, all Option Assets which Buyer elects to purchase pursuant to this Section shall be deemed Acquired Assets and all Option Assets which Buyer does not elect to purchase on or before the Option Expiration Date pursuant to this Section shall be deemed Excluded Assets. Until the Option Expiration Date, any Option Assets which have not been acquired pursuant to the terms hereof shall be treated under this Agreement as Acquired Assets except insofar as doing so would obligate Buyer to acquire such assets, assume any Liabilities with respect to them or otherwise increase Buyer's Liabilities hereunder. SECTION 3. Consideration for Acquired Assets. 3.1 Amount of Purchase Price. The total consideration (the "Purchase Price") to be paid by Buyer for the Acquired Assets is as follows: (a) On the Closing Date, Buyer shall pay $6,500,000 plus the Estimated Prepayment Amount, subject to adjustment as set forth Section 3.1(c), to Sellers by means of a wire transfer of immediately available funds in such amount to an account number and depository designated by Sellers. (b) As soon as practicable following the approval by the AMEX of the listing of the Shares on the AMEX (CEG to promptly seek such approval), CEG shall deposit in escrow a number of shares (rounded down to the nearest whole number) (the "Shares") of CEG common stock, par value $.001 per share, equal to (i) $2,000,000 divided by (ii) the per-share closing price of CEG's common stock on the AMEX on the last trading day immediately prior to the Closing Date, (the "Purchase Price Stock Escrow"). In reliance on the representations of the Sellers in this Agreement, the Shares shall not be registered under the Securities Act. The Shares shall be issued in the name of the Escrow Agent and will be held by the Escrow Agent and released to Parent or CEG as applicable, in accordance with the provisions set forth in Schedule D hereto and the Escrow Agreement. Notwithstanding any provision of this Agreement or the Sales Agency Agreement, CEG shall have no obligation to issue any shares of CEG common stock pursuant to this Agreement or the Sales Agency Agreement, into escrow or otherwise, if the issuance of such shares of CEG common stock, together with all prior issuances under this Agreement and the Sales Agency Agreement in the aggregate, would result in the issuance of more than 14.9% of the shares of CEG Common Stock outstanding immediately prior to the execution of this Agreement. (c) On the Closing Date Buyer shall pay to the Sellers the estimated amount set forth in Schedule 3.1(c) in respect of certain cash prepayment items which relate to the period subsequent to the Proration Time, and which relate to those Acquired Assets set forth in 12

Schedule A-1 ("Estimated Prepayment Amount"). Within 30 days following the Closing, Sellers shall send to Buyer a statement in reasonable detail recalculating the prepayment amount. Buyer shall have 30 days after receipt to review such statement. On the 30th day, Buyer shall pay Sellers, or Sellers shall pay Buyer, as applicable, any final adjustment to the Estimated Prepayment Amount as shown on such schedule which has not been disputed by Buyer. If Buyer disputes Sellers' final adjustment, Buyer shall so notify Sellers, and following resolution of the dispute, Buyer shall pay Sellers, or Sellers shall pay Buyer, as applicable, the final adjustment. (d) With respect to the Acquired Assets set forth on Schedule A-2 or any Option Assets which Buyer has elected to purchase and which include prepayment amounts, upon the actual assignment of such Assets to Buyer, Buyer shall be responsible for paying Sellers the amount of any cash prepayment amount relating to the period after assignment. On a monthly basis, Seller shall send Buyer an invoice showing the prepayment amount, and Buyer shall have 30 days from receipt to review such invoice. Thereafter, the procedures of 3.1(c) shall apply. 3.2 Assumption of Liabilities. Subject to Sections 2.2, 2.3 and 6.4 with respect to the timing of transfer, the Acquired Assets will be sold, conveyed, transferred and assigned to the Buyer by Sellers on the Closing Date (or with respect to any later acquired Option Assets, the date of the applicable transfer thereof) free and clear of all liens, security interests, mortgages, claims, restrictions, charges and encumbrances (collectively, "Liens") whatsoever. The Buyer does not assume, accept or undertake any obligations, duties, debts or liabilities of the Sellers, their shareholders, subsidiaries or affiliates of any kind whatsoever, nor will Buyer provide any kind of credit support to the Sellers, their shareholders, subsidiaries or affiliates pursuant to this Agreement or otherwise, except as provided in Section 2.2 and except that Buyer hereby agrees to assume the Sellers' Liabilities with respect to the Acquired Assets from and after the Proration Time which are set forth on Schedule A hereto, but in each case only to the extent such Liabilities arose in the ordinary course of business, are to be performed after the Proration Time and not in violation of any of the terms, agreements, warranties and representations in this Agreement (collectively, the "Assumed Liabilities"); provided that if any Liability referred to in this sentence relates both to any time period prior to the Proration Time and on the Proration Time such Liability shall be prorated so that the Assumed Liabilities only include the portion thereof directly relating to the Acquired Assets and/or to the period from and after the Proration Time. Buyer is not assuming and shall not assume any Liabilities of Parent or its Subsidiaries other than the Assumed Liabilities. 3.3 Excluded Liabilities. Except as provided in Section 3.2 and notwithstanding anything else to the contrary contained herein, the Sellers shall retain, and Buyer is not assuming and shall not be liable for any Liabilities of Sellers or other Affiliates of Sellers, including, without limitation, any Liabilities (i) under Contracts which shall not have been assigned to Buyer pursuant to this Agreement (including, but not limited to, any union agreements); (ii) for indebtedness for borrowed money; (iii) by reason of or arising as the result of any default or breach by Sellers of any Contract, for any penalty assessed against Sellers under any Contract or relating to or arising out of any event which with the passage of time or after giving of notice, or both, would constitute or give rise to such a breach, default or penalty, whether or not such Contract is being assigned to and assumed by Buyer pursuant to this 13

Agreement; (iv) the existence of which would conflict with or constitute a breach of any representation, warranty, covenant or agreement of Sellers contained herein; (v) to any shareholder or any ERISA Affiliate of Sellers, to any present or former employee, officer or director of or consultant to Sellers or their Affiliates (or independent contractor retained by Seller), or to any Employee Benefit Plan sponsored or maintained by Sellers or any ERISA Affiliate, including, without limitation, any bonuses, vacation or sick pay, any termination or severance pay related to Sellers or Sellers' Affiliates' employees, and any post retirement medical benefits or other compensation or benefits; (vi) relating to the execution, delivery and consummation of this Agreement and the transactions contemplated hereby, including, without limitation, any and all Taxes incurred as a result of the sale contemplated by this Agreement; (vii) for any Taxes of the Sellers including federal, state or local taxes imposed as a result of being or having been a member of a group filing a combined, consolidated or affiliated return); (viii) relating to or arising out of any environmental matter, including, without limitation, any violation of any environmental law or any other law relating to health and safety of the public or the employees of Sellers or Sellers' Affiliates; (ix) relating to, or arising out of, services rendered by Sellers or Sellers' Affiliates, or the conduct or operation of the business of Sellers or Sellers' Affiliates, prior to the Closing Date; or (x) relating to the Excluded Assets (collectively, the "Excluded Liabilities"). 3.4 Accounts Receivables and Closing Prorations. (a) All prepaid contracts assumed by Buyer, all unbilled customer accounts receivables and all liabilities, including residual commissions, shall be prorated as of the Proration Time such that pursuant to and consistent with the provisions of the Phase-Out Addendum attached hereto as Schedule C, Sellers receive or are due all income and pay all expenses related to any period prior to the Proration Time. (b) As provided herein, to the extent Buyer has hired employees of Sellers performing such functions, Buyer shall collect receivables existing as of the Proration Time that were billed as of the Closing (the "Billed Receivables") and bill and collect (the "Unbilled Receivables"), as herein provided and in accordance with the Phase-Out Addendum. As also provided herein, to the extent Buyer has not yet hired employees of Sellers performing such functions, Sellers shall cause their and their Affiliates' employees, at the direction of Buyer, to collect the Billed Receivables and bill and collect the Unbilled Receivables, as herein provided and in accordance with the Phase-Out Addendum. With respect to all Billed Receivables, to the extent that Buyer has hired employees of Sellers performing such functions, Buyer agrees to use ordinary and customary industry efforts to collect the Billed Receivables, at Buyer's cost. ACN Energy will maintain its current lockbox to which Buyer agrees to direct payments of Billed Receivables in its ordinary course. Any payments received by Buyer in its lockbox(es) for Sellers' Billed Receivables shall be remitted to Sellers promptly, pursuant to the operation of the Phase-Out Addendum, that it has received collection of such Billed Receivables. With respect to all Unbilled Receivables, Buyer agrees to act as Sellers' agent and to use ordinary and customary industry effort to bill the Unbilled Receivables and to collect the Unbilled Receivables, at Buyer's cost. Buyer shall remit to Sellers Sellers' pro rata share (based on the operation of the Phase-Out Addendum) of each Unbilled Receivable which Buyer collects promptly pursuant to the operation of the Phase-Out Addendum that it has received collection of such Unbilled Receivables. In the event that any Billed Receivable or Unbilled Receivable remains unpaid 14

ninety (90) days after the date of the first invoice evidencing that Billed Receivable or Unbilled Receivable and the date on which Seller is entitled to exercise remedies under applicable Law, Buyer shall have no further obligations with respect to such Billed Receivable or Unbilled Receivable and Sellers shall be entitled to institute any such further collection efforts as Sellers deem appropriate, at Sellers' cost. In the event Sellers receive in their lockbox receivables attributable to the period following the Proration Time ("Buyer Receivables"), Sellers shall remit such amount(s) to Buyer promptly pursuant to the operation of the Phase-Out Addendum. 3.5 Bulk Sales Law Compliance. Sellers agree to pay and discharge all claims of creditors which may be asserted against Buyer by reason of Sellers and Sellers' Affiliates' noncompliance with the provisions of the bulk sales or transfer Law of any state, province or other applicable jurisdiction which may require such compliance on account of the provisions herein and the transactions contemplated hereby and to indemnify and hold Buyer harmless from and against claims suffered or incurred by Buyer by reason of or arising out of (a) the failure of Sellers or Sellers' Affiliates to pay or discharge the same when due or (b) such noncompliance with any applicable Bulk Sales Law. 3.6 Allocation of Purchase Price. As soon as reasonably practicable after the Closing Date, Buyer's and Sellers' independent auditors shall agree on an allocation of the Purchase Price and other consideration paid pursuant to this Agreement, and based on such allocation, Buyer and Sellers shall prepare Internal Revenue Service Form 8594, in accordance with Section 1060 of the Code and the regulations thereunder, and such forms with respect to other jurisdictions as may be required by all applicable laws relating to allocation of the Purchase Price. Any adjustment to the Purchase Price or other consideration paid pursuant to this Agreement shall result in an appropriate adjustment to such allocation. Sellers and Buyer shall timely file with the appropriate Governmental Authorities copies of said Form 8594 and any other such required form as prepared by Buyer and Sellers and shall utilize the allocation of the Purchase Price and other consideration paid pursuant to this Agreement contained on said Form 8594 in the preparation of any Returns and forms (including attachments thereto) which relate to the transactions contemplated hereby. Neither Sellers nor Buyer shall file any Return containing an allocation of the Purchase Price that differs from an allocation established pursuant to this Section 3.6. SECTION 4. Representations and Warranties of Sellers. Each Seller hereby warrants and represents to Buyer as of the date hereof and as of the Closing as follows: 4.1 Good Standing. Parent is a corporation duly organized, validly existing and in good standing under the laws of the State of Michigan and has all power and authority to own or lease its assets and to operate and carry on its business as presently conducted. 4.2 ACN Energy Entities. Except as listed in Schedule 4.2(A), all of the activities of the Retail Energy Business are currently conducted by or through the ACN Energy Entities, the ACN Energy Entities and all the Acquired Assets and Option Assets are owned by the ACN Energy Entities, Parent has no Subsidiaries involved in any aspect of the business of the Retail Energy Business and neither Parent nor any of its Subsidiaries of Parent has made any advances to or investments in, or owns any securities of or other interests in, any firm, 15

corporation, association, business organization, enterprise or entity, which are related to the Retail Energy Business or its assets, properties or business. Each ACN Energy Entity is duly organized, validly existing and in good standing under the laws of its state of incorporation or organization, has full corporate power and authority to conduct its business as it is presently being conducted and to own, lease and operate its properties and assets. Each ACN Energy Entity is duly qualified to do business as a foreign corporation and is in good standing in each jurisdiction where the ownership of property or nature of its business requires such qualification. Each jurisdiction in which each ACN Energy Entity is qualified to do business as a foreign corporation is listed on Schedule 4.2 hereto. There are no other jurisdictions where the failure of any ACN Energy Entity to be qualified as a foreign corporation would materially adversely affect the Acquired Assets, the business of the Retail Energy Business or the transactions contemplated herein. 4.3 Authorization; Consents. The execution and delivery of this Agreement and the other Transaction Documents and the consummation of the transactions contemplated hereby have been duly authorized by the Board of Directors of Parent and each Seller, to the extent required by applicable law, the shareholders of Sellers and all other corporate action of Parent and Sellers necessary to authorize the execution and delivery of this Agreement and the other Transaction Documents and the consummation of the transactions contemplated hereby and thereby have been taken. This Agreement and each Transaction Document constitutes the legal, valid and binding obligation of Parent and each Seller enforceable against them in accordance with its terms. Except as set forth on Schedule 4.3 hereto, no consent of any lender, trustee, security holder of Parent or any Seller, or other Person, is required for Parent or any Seller to enter into and deliver this Agreement and each Transaction Document or to consummate the transactions contemplated hereby, nor do the articles of incorporation or by-laws or any Material Contract or other instrument to which any Seller or Parent is bound, or affecting any of their respective properties, conflict with or restrict the execution and delivery of this Agreement or the other Transaction Documents or the consummation of the transactions contemplated hereby or thereby. 4.4 Governmental Approvals. Except as set forth in Schedule 4.4, no governmental authorization, approval, order, license, permit, franchise, or consent and no registration, declaration or filing by Parent or any Seller with any Governmental Authority (including, without limitation, any filing or registration pursuant to the Securities Act or the securities or blue sky laws of any state or territory) is required in connection with the execution and delivery of this Agreement and the other Transaction Documents and the consummation of the transactions contemplated hereby or thereby. 4.5 Financial Statements; Liabilities; Books and Records of Account. (a) Annexed hereto as Schedule 4.5A are the following financial statements (collectively, the "Financial Statements") with respect to the Retail Energy Business: (a) the audited consolidated financial statements of the Retail Energy Business for the years ended December 31, 2002 and 2003; and (b) the unaudited consolidated financial statements of the Retail Energy Business as of December 31, 2004 (the unaudited consolidated statement of net worth of the Retail Energy Business as of December 31, 2004 is referred to herein as the "Balance Sheet"). The Financial Statements, in each case, are true and complete with respect to each item therein and have been 16

prepared in conformity with GAAP heretofore adopted by, and applied consistently with the past practices of, Sellers and fairly present the financial position, results of operations and changes in financial position of the Retail Energy Business as at, or for the periods ended on, such dates in all material respects. All Financial Statements include all material elements of revenue and cost associated with the conduct of the business of the Retail Energy Business (whether direct or indirect and whether incurred at any of the leased premises or at any other locations), including, without limitation, the allocated or directly charged costs of any materially significant services provided to the Retail Energy Business by Sellers or any Affiliate of Sellers. Other than corporate overhead and rent, Schedule 4.5A reflects all group and division overhead charges and intercompany allocations attributed to the Retail Energy Business. Since December 31, 2002, the Retail Energy Business has conducted its accounting procedures in a consistent manner without material change of policy or procedure. (b) On the Balance Sheet Date, other than as listed on Schedule 4.5 there were no Liabilities of any Seller in connection with the Acquired Assets other than those Liabilities disclosed or provided for in the Balance Sheet. On the date hereof and on the Closing Date, there are no and will be no other Liabilities any Seller in connection with the Acquired Assets except those incurred since the Balance Sheet Date, in the ordinary course of the business of the Retail Energy Business, and not in material violation of or in conflict with any of the terms, agreements, warranties, representations and conditions of Sellers contained in this Agreement. (c) The records and books of account of each Seller in any way relating to the Retail Energy Business are complete and accurate in all material respects. Copies of all such books and records have been provided or made available to Buyer. 4.6 Taxes. With respect to Taxes relating to the Retail Energy Business, each Seller is in compliance with all applicable Laws, whether or not such Taxes are owed by Seller. 4.7 Title to Assets; Liens and Encumbrances. The ACN Energy Entities are the owners of, and except as set forth in Schedule 4.7A, have good and marketable title to, all of the Acquired Assets subject to no Liens. Except as set forth in Schedule 4.7B, the Acquired Assets constitute all of the material assets used in, related to or required by the Sellers for, the normal conduct of the Retail Energy Business's business. The Acquired Assets do not include any owned real property. 4.8 Trademarks, Service Marks, Trade Names, Patents and Copyrights. Schedule 4.8 hereto sets forth a true, correct and complete list of all Proprietary Rights used by the Retail Energy Business in the conduct of its business. Except as indicated on Schedule 4.8, each such Proprietary Right is owned by the Sellers and is not subject to any license, royalty arrangement or dispute. To Sellers' knowledge (a) no other Proprietary Rights are used in or are necessary for the conduct of the Retail Energy Business's business as now conducted, (b) none of such Proprietary Rights used by the Sellers nor the Retail Energy Business as now conducted infringes any Proprietary Right or other such right of any other Person and (c) no claim has been asserted or threatened by any Person with respect to the ownership, validity, license or use of, or any infringement resulting from, any of the Proprietary Rights used by the Retail Energy Business and there is no basis for any such claim. No shareholder, officer, director or employee 17

of Parent or any of its Subsidiaries owns or has any interest in any Proprietary Rights or any trade secret, invention or process, if any, used by the Retail Energy Business in connection with its business. 4.9 Contracts. (a) Schedule 4.9 hereto contains a true and complete list of each Material Contract, including all amendments and modifications thereto, to which any Seller is a party or to which it is subject or by which it is bound relating to, or in any way affecting, the Retail Energy Business or the Acquired Assets. As used herein, "Material Contract" means any contract that has involved in calendar year 2004, or is likely (absent any unforeseen change from the status quo) throughout calendar year 2005 or any year thereafter to involve an annualized revenue or expense of $50,000.00 or more. True, correct and complete copies of all Material Contracts listed on Schedule 4.9 have heretofore been delivered by Sellers to Buyer. Except as set forth on Schedule 4.9, no Material Contract requires the consent of any other Person or results in early termination or acceleration of any right or obligation by reason of the execution and delivery of this Agreement and the consummation of the transactions contemplated hereby. Each of the Material Contracts constitutes the legal, valid binding obligation of such Seller enforceable in accordance with its terms and, to Sellers' knowledge, is a valid and binding obligation of all of the other parties thereto enforceable against them in accordance with their terms and each such Material Contract is in full force and effect without modification. To Seller's knowledge, each Seller has performed all obligations required to be performed by it and is not in default under any Material Contract, and no event has occurred thereunder which, with or without the lapse of time or the giving of notice, or both, would constitute a default by it thereunder. To Sellers' knowledge, no other party is in default under any Material Contract. No shareholder, partner, member, officer, director or employee of Parent or any of its Subsidiaries is a party to or subject to or bound by any Material Contract or has any right which in any way relates to the Acquired Assets. (b) Schedule 4.9B sets forth a true and complete list of all bonds, deposits, guarantees or other credit support posted or accepted under any Material Contract or otherwise in connection with the Acquired Assets. 4.10 Purchase and Sales Commitments and Orders; Customers and Vendors. Schedule 4.10 hereto sets forth a true and complete description and number in accordance with the customary recordkeeping practices of the Seller of the customers of the Retail Energy Business broken down by UDC. To Sellers' knowledge, no Seller has received any oral or written notice from any Governmental Authority threatening or intending to take action that would be materially adverse to the Retail Energy Business, the Acquired Assets or with respect to more than 10% of the Retail Energy Business customer base. To Sellers' knowledge, no Seller has received any notice or has any knowledge that any existing, significant group or sub-group of customers of the Retail Energy Business (i) intends to terminate or is considering terminating its business relationship with the Retail Energy Business or (ii) has requested such group or sub-group be granted economic concessions, rebates or changes with respect to products or services provided by the Retail Energy Business that would be adverse to Buyer. 4.11 Employees; Compensation; Labor Relations; Vacation Time, Bonuses, Etc. (a) Schedule 4.11 hereto lists the names, title or job description, employer and total annual 18

compensation of all employees of ACN Energy, Inc. as of the date hereof (the "Existing Employees"). (b) There are no labor strikes, disputes, slow downs, work stoppages union organizing efforts or other labor troubles or grievances pending or, to any Sellers' knowledge, threatened against or involving the Retail Energy Business. No unfair labor practice complaint before the National Labor Relations Board or any similar or comparable state, local or foreign agency, no discharge or grievance before the Equal Employment Opportunity Commission and no complaint, charge or grievance of any nature before any similar or comparable state, local or foreign agency, in any case relating to the Retail Energy Business or the conduct of its business or the Acquired Assets is pending or, to Seller's knowledge, threatened. To Seller's knowledge, no Seller has received notice, nor has knowledge, of the intent of any Governmental Authority responsible for the enforcement of labor or employment laws to conduct any investigation of or relating to the Retail Energy Business or the conduct of its business or the Acquired Assets. To the knowledge of each Seller, no officer or key employee of the Retail Energy Business has any plans to terminate his or her employment with the Retail Energy Business. No Existing Employees are subject to any employment agreement or collective bargaining agreement. All such Existing Employees are "at will." (c) The vacation periods for the Existing Employees normally occur during the periods described on Schedule 4.11C hereto, which Schedule also sets forth the method for accruing vacation pay used by Sellers on their books and records. Except as set forth on such Schedule 4.11C, at the Balance Sheet Date there were, at the date hereof there are and on the Last Seller Payment Date there will be, no bonuses, profit sharing, incentives, commissions or other compensation of any kind with respect to work done prior to the Balance Sheet Date, the date hereof or the Last Seller Payment Date, respectively, due to or expected by the Existing Employees, not fully paid prior to such date or, with respect to compensation for work done prior to the Balance Sheet Date, not fully accrued on the Balance Sheet. Except as set forth on Schedule 4.11C, no bonuses, profit sharing or incentives and no increases in compensation have been paid, accrued or granted by any Seller to Existing Employees for any period after the Balance Sheet Date. The Existing Employees are employed by ACN Energy, Inc. All brochures, agreements and other documents setting forth personnel policies relating to the Existing Employees, including, without limitation, information concerning compensation, severance, termination and other employee perquisites and benefits, have been furnished to the Existing Employees by Seller's affiliates and have been furnished to Buyer and are listed in Schedule 4.11C hereof. 4.12 Employee Benefits. (a) Except for those plans set forth on Schedule 4.12A hereto (the "Plans"), Sellers do not maintain, contribute to or have or have had an obligation to contribute to any Employee Benefit Plan, whether or not such plan has been terminated and whether or not such plan is of a legally binding nature or in the form of an informal understanding in which former or present employees of the Retail Energy Business have participated or currently participate. (b) True, correct and complete copies of all the material documents embodying the Plans, including, without limitation, the plan and trust instruments and summary 19

plan description, have been furnished to Buyer. Each Plan which is intended to comply with Section 401(a) of the Code and each trust related thereto is qualified and exempt within the meaning of Sections 401 and 501 of the Code, respectively, and a determination letter has been received from the Internal Revenue Service with respect to each such Plan stating that such Plan and its related trust are qualified and exempt within the meaning of Sections 401 and 501 of the Code, respectively, and a copy of each such determination letter has been furnished to Buyer. To Seller's knowledge, nothing has occurred since the date of the most recent determination letter of each such Plan that could adversely affect the qualified status of such Plan or tax-exempt status of any related trust. (c) With respect to any group health plan, the group health plan continuation coverage requirements of Section 4980B of the Code and Part 6 of Title I of ERISA ("COBRA"), have been fulfilled in all material respects. (d) Neither any Seller nor any ERISA Affiliate has ever (i) terminated an Employment Benefit Plan subject to Title IV of ERISA or (ii) contributed to any "multiemployer plan," as such term is defined in Section 3(37) of ERISA, and neither any Seller nor any ERISA Affiliate has effected either a "complete withdrawal" or a "partial withdrawal," as those terms are defined in Sections 4203 and 4205, respectively, of ERISA, from any such multiemployer plan. (e) Sellers do not maintain or contribute to any "employee welfare benefit plan" (as such term is defined in Section 3(1) of ERISA), or other employee benefit plan or arrangement, providing post-employment or post-retirement benefits (other than an "employee pension benefit plan," as such term is defined in Section 3(2) of ERISA and other than COBRA continuation coverage) or, if any such plan exists, it is listed on Schedule 4.12A. There has been no written or oral communication to the Transferred Employees by the Parent or any of its Subsidiaries that would reasonably be expected to promise or guarantee such Transferred Employees retiree health or life insurance or other retiree death benefits on a permanent basis. 4.13 Legal Proceedings. To Sellers' knowledge, there are no material Actions pending or, to the knowledge of Sellers, threatened against any Seller respect to or otherwise affecting the Retail Energy Business or the Acquired Assets. To the best knowledge of each Seller, no Seller is in default with respect to any order, writ, injunction or decree of any Governmental Authority. 4.14 Orders, Decrees, Etc. To Sellers' knowledge, except as set forth in Schedule 4.14 hereto, there are no orders, decrees, injunctions, rulings, publications, decisions, directives, consents, pronouncements or regulations of any court or any Governmental Authority issued against, or binding on, any Seller in any way relating to the Acquired Assets or the Retail Energy Business's business which may have a material adverse effect over the Acquired Assets or the Retail Energy Business's method or manner of doing business. 4.15 Compliance With Law; Permits and Licenses. 20

(a) To Seller's knowledge, each Seller is in current compliance with all Laws of any Governmental Authority applicable to the Retail Energy Business, its assets, property, business, employees or operations in all material requests. (b) The Sellers presently hold, and will hold at the Closing Date or the time of transfer of the applicable Acquired Assets, all required permits, licenses, certificates and franchises from applicable Governmental Authorities (the "Permits") which are necessary for or material to the ownership or operation of the Acquired Assets or the conduct of the Retail Energy Business, each of which is listed in Schedule 4.15(b) hereto; all such Permits are in full force and effect and each Seller is in full compliance with the terms and provisions of its applicable Permit. Except as set forth in Schedule 4.15(b), no notice of violation of any Permit has been received. For any Permits which may expire during the Phase Out Period, which are set forth in Schedule 4.15(b), renewal applications have been or will be timely filed and prosecuted. 4.16 Actions Not in Ordinary Course; No Change. (a) Except as set forth on Schedule 4.16A hereto, since the Balance Sheet Date, the Sellers have not, relating to the Retail Energy Business or the Acquired Assets, (i) incurred any Liability, except current liabilities in the ordinary course of business and Liabilities incurred under Contracts entered into in the ordinary course of business of the Retail Energy Business; (ii) made with respect to the Retail Energy Business any capital expenditures or additional commitments for capital expenditures and none are planned; (iii) discharged any Liability, other than current liabilities shown on the Balance Sheet and current liabilities incurred since the Balance Sheet Date in the ordinary course of business of the Retail Energy Business; (iv) sold or transferred any assets or written off any receivables other than in the ordinary cause of the Retail Energy Business; (v) mortgaged, pledged or subjected to any other Lien any of its assets or properties; (vi) suffered any losses or waived any rights of substantial value; (vii) granted any material bonuses or commissions or materially increased the compensation payable to any of its employees, directors or officers or increased the aggregate payment of any fees; (viii) made any loans to any individuals, firms, corporations or other entities; (ix) made any change in any method of accounting or auditing practice; or (x) entered into any transaction not in the ordinary course of business or agreed (whether or not in writing) to do any of the foregoing. From the Balance Sheet Date to the Closing Date, the Retail Energy Business and the Acquired Assets has been and will be operated only in the regular and ordinary course. (b) Since the Balance Sheet Date, there has not been (i) any material adverse change (whether or not in the ordinary course of business) in the business, condition (financial or otherwise), prospects, operations, customer base, employee or vendor relations, assets or Liabilities of the Retail Energy Business or the Acquired Assets or (ii) any material damage, destruction or loss, whether or not covered by insurance, materially affecting the business, assets, properties or rights of the Retail Energy Business or the Acquired Assets. 4.17 Reserved. 4.18 Bank Accounts; Powers of Attorney. Set forth on Schedule 4.18 hereto is a list of each bank or other financial institution in which the Sellers maintain an account or safe 21

deposit box related to the Retail Energy Business, including the current lockbox, the corresponding number of each such account or safe deposit box and the names of all persons holding check-signing or withdrawal powers or other authority with respect thereto. Also set forth on Schedule 4.18 are the names of all persons, if any, holding powers of attorney from the Sellers and a summary statement of the terms thereof. 4.19 No Brokers. None of the Sellers or any Affiliate of Sellers has entered into any contract, agreement, arrangement or understanding with any Person or firm which will result in the obligation of Buyer or its Affiliate to pay any finder's fee or financial advisory fee, brokerage fee or commission or similar payment in connection with the transactions contemplated hereby. 4.20 Arrangements with Related Parties. Schedule 4.20 sets forth a true and complete list of all contracts or other arrangements relating to the Retail Energy Business among Parent or any of its Affiliates on one hand and any other Affiliate of the Parent on the other. Except as expressly provided herein, none of the Assumed Liabilities include any Liabilities owed to Sellers, their Affiliates or their respective stockholders, partners, members, directors, managers, officers, employees or agents. 4.21 No Omissions. Sellers do not know of any facts or circumstances not disclosed to Buyer which indicate that the Acquired Assets may be materially adversely affected or which otherwise should be disclosed to Buyer in order to make any of the representations or warranties made herein on the part of the Sellers not misleading. To Seller's knowledge, no representation or warranty by Sellers contained in this Agreement, and no statement contained in any Schedule, Exhibit, certificate or other instrument furnished to Buyer under or in connection with this Agreement, contains any untrue statement of any material fact, or omits to state any material fact necessary in order to make the statements contained herein or therein not misleading. 4.22 Stock Legend; Restricted Securities. Parent and Sellers represent and warrant to Buyer and CEG as follows: (a) Parent is acquiring the Shares, when and if released to Parent pursuant to Schedule D hereto and the Escrow Agreement, for its own account and not with a present view to, or for sale in connection with, any distribution thereof. Sellers consent to the placement of the following legend on each certificate representing the Shares and acknowledge that stop transfer instructions will be placed with CEG's transfer agent: "THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AND MAY NOT BE TRANSFERRED OR SOLD UNLESS (i) A REGISTRATION STATEMENT UNDER SUCH ACT (OR AN EXEMPTION FROM SUCH REGISTRATION) IS THEN IN EFFECT WITH RESPECT THERETO, (ii) A WRITTEN OPINION FROM COUNSEL FOR THE ISSUER OR OTHER COUNSEL FOR THE HOLDER REASONABLY ACCEPTABLE 22

TO THE ISSUER HAS BEEN OBTAINED TO THE EFFECT THAT NO SUCH REGISTRATION IS REQUIRED OR (iii) A `NO ACTION' LETTER OR ITS THEN EQUIVALENT HAS BEEN ISSUED BY THE STAFF OF THE SECURITIES AND EXCHANGE COMMISSION WITH RESPECT TO SUCH TRANSFER OR SALE." (b) Parent and Sellers understand that the Shares will not be registered under the Securities Act for the reason that the sale provided for in this Agreement is exempt pursuant to Section 4 of the Securities Act and that the reliance of CEG and the Buyer on such exemption is predicated in part on the Parent's and Sellers' representations set forth herein. Parent and each Seller represents that it is experienced in evaluating companies such as CEG, has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of its investment, and has the ability to suffer the total loss of its investment in the Shares. Parent and each Seller is an accredited investor within the meaning of Rule 501 of Regulation D promulgated under the Securities Act. Each Seller further represents that it has had access during the course of the transaction and prior to its acquisition of the Shares to such information relating to CEG as it has desired and that it has had the opportunity to ask questions of and receive answers from CEG concerning the transaction and to obtain additional information (to the extent CEG and the Buyer possessed such information or could acquire it without unreasonable effort or expense) necessary to verify the accuracy of any information furnished to it or to which it had access. (c) Parent and Sellers understand that the Shares may not be sold, transferred or otherwise disposed of without registration under the Securities Act or an exemption therefrom and that in the absence of an effective registration statement covering the Shares or an available exemption from registration under the Securities Act, the Shares must be held indefinitely. SECTION 5. Representations and Warranties of Buyer. Buyer warrants and represents to Sellers as of the date hereof and the Closing as follows: 5.1 Good Standing. Buyer is a corporation duly organized, validly existing and in good standing under the laws of the State of California. 5.2 Authorization. The execution and delivery of this Agreement and the other Transaction Documents and the consummation of the transactions contemplated hereby and thereby have been duly authorized by the Board of Directors of Buyer, and all other corporate action of Buyer, including all necessary shareholder approvals, authorizations and ratifications, necessary to authorize the execution and delivery of this Agreement and the consummation of the transactions contemplated hereby have been taken. This Agreement and the other Transaction Documents constitute the legal, valid and binding obligation of Buyer, enforceable against Buyer in accordance with its terms. No consents of any lender, trustee or security holder of Buyer or other Person is required for Buyer to enter into and deliver this Agreement and the other Transaction Documents and to consummate the transactions contemplated hereby and thereby. 23

5.3 Governmental Approvals. Except as set forth on Schedule 5.3, no authorization, approval, order, license, permit, franchise, or consent and no registration, declaration or filing by Buyer with any Governmental Authority is required in connection with the execution and delivery of this Agreement and the other Transaction Documents and the consummation of the transactions contemplated hereby. 5.4 No Brokers. Neither Buyer nor any of its Affiliates has entered into any contract, agreement, arrangement or understanding with any Person or firm which will result in the obligation of Sellers or their Affiliates to pay any finder's fee or financial advisory fee, brokerage fee or commission or similar payment in connection with the transactions contemplated hereby. 5.5 Authorization. No approval or authorization of this Agreement or any other agreement to be entered into in connection with the transactions contemplated by this Agreement is required by law or otherwise in order to make this Agreement or any other agreements entered into in connection herewith binding upon the Buyer, except for approval of the listing of the Shares on the AMEX. Upon the execution and delivery of this Agreement and any other agreement in connection therewith, such agreements will constitute legal, valid and binding obligations of Buyer, enforceable in accordance with their respective terms. 5.6 Shares. The authorized common equity capital of CEG consists of 150,000,000 shares of Common Stock , par value $.001 per share, of which 30,499,290 shares have been issued and are outstanding. Except for any shares of Common Stock reserved for issuance under CEG's equity incentive plans or as disclosed in CEG's SEC reports or Schedule 5.6 hereto, there are no options, warrants, conversion privileges, preemptive rights, subscription or other rights (or agreements for any such rights), commitments, arrangements or understandings of any kind obligating CEG to issue or sell any shares of capital stock of any class of CEG or any securities convertible into or exchangeable for any such shares. The Shares, when issued, sold and delivered in accordance with the terms and for the consideration set forth in this Agreement, will be validly issued, fully paid and nonassessable and free of any liens or restrictions on transfer other than restrictions on transfer under applicable state and federal securities laws. Assuming the accuracy of the representations of the Parent and Sellers in Section 4.22 of this Agreement, the Shares will be issued in compliance with all applicable federal and state securities laws. 5.7 SEC Rules. To Buyer's knowledge, CEG is in compliance with SEC and AMEX rules and regulations. SECTION 6. Conduct Prior to the End of the Phase-Out Period. 6.1 Investigation by Buyer. Buyer may, prior to the end of the Phase-Out Period (as defined in the Phase-Out Addendum), through its own representatives (including its counsel, accountants and consultants) make such reasonable inquiries and document reviews with respect to the Option Assets and general operations of the Retail Energy Business and such review of the financial records of the Retail Energy Business as it deems necessary or advisable in connection with the transactions contemplated hereby to familiarize itself with such Option 24

Assets and general operations and financial records; such activities shall not, however, affect Sellers' representations, warranties and agreements hereunder. Sellers shall permit Buyer and its authorized representatives to have, after the date hereof, reasonable access to the officers, employees and premises of each Seller and to all books and records of the Retail Energy Business or related to the Acquired Assets and Option Assets; and Buyer shall have the right to make copies thereof and excerpts therefrom. Sellers shall furnish Buyer with such financial and operating data and other information with respect to the Acquired Assets, Option Assets and the Retail Energy Business as Buyer may from time to time reasonably request. Sellers agree to permit Buyer and its authorized representatives to visit suppliers, customers and others having business relations with the Retail Energy Business. Sellers acknowledge that the rights set forth in this Section 6.1 are essential to Buyer as a means of evaluating the Acquired Assets and Option Assets and Sellers agree that in no event will Sellers seek to recover costs or damages of any kind incurred as a result of the exercise by Buyer of such rights and hereby waives any and all rights it might have to recover any such costs or damages. 6.2 Ongoing Operations. (a) From the date hereof until the date that all Transferred Customers and Acquired Assets have transferred to Buyer, Sellers shall take direction from Buyer as to the conduct and operation of the business of the Retail Energy Business and the Acquired Assets consistent with the requirements of law and regulation applicable to the Retail Energy Business and the Acquired Assets, conduct and operate the business of the Retail Energy Business and the Acquired Assets in the ordinary and usual course consistent with past practice, preserve intact the business organization of the Retail Energy Business, use commercially reasonable efforts to preserve for Buyer the present relationship between the Retail Energy Business on the one hand and its suppliers, customers and others having business relations with it on the other, and take directions from Buyer in conducting the Retail Energy Business in a manner which will safeguard and maintain the commercial value of the Acquired Assets in all material respects. From and after the Last Seller's Pay Day, Sellers' obligations as aforesaid shall be limited to matters within their control. From the date hereof until the date that all Transferred Employees have transferred to Buyer, Sellers shall use commercially reasonable efforts to keep available to Buyer the services of Existing Employees of the Retail Energy Business. (b) Without limiting the generality of Section 6.2(a), Seller and its Subsidiaries will not, in connection with the conduct of the business of the Retail Energy Business, without the prior written consent of Buyer: (i) change for 2004 any accounting practices which would have the effect of altering its calculation of EBITDA from that which would be computed using the policies and practices in place with respect to 2003; (ii) increase the rate of salary, benefits or other compensation of any employee or hire any employees other than to replace terminated employees or make any changes in any benefit plan; 25

(iii) enter into any agreement, Contract or commitment or incur any Liability other than in the ordinary course of business and consistent with its existing policies and having value of greater than $25,000.00 per annum; (iv) waive any rights of substantial value; (v) dispose of, permit to lapse, or otherwise fail to preserve any of its Proprietary Rights or other similar rights, dispose of or permit to lapse any license, permit or other form of authorization, or dispose of or disclose to any person, other than an authorized representative of Buyer, any customer list, trade secret, formula process or know-how; (vi) pay, loan or advance any amount to or in respect of, or sell, transfer or lease any assets (whether real, personal or mixed, tangible or intangible) to, or enter into any agreement, arrangement or transaction with, any of its officers or directors, any of its Affiliates or associates or any Person having any direct or indirect interest in it or in which it or any of its officers, directors, Affiliates or associates, has any direct or indirect interest; (vii) agree, whether in writing or otherwise, to take any action prohibited in this Section 6.2; or (viii) without limiting any of the foregoing, take or refrain from taking any action the result of which would render any representation or warranty made to Buyer in or in connection with this Agreement inaccurate. (c) Sellers shall inform Buyer of any material action taken or threatened to be taken by: (i) any party supplying energy or gas to Parent or any of its Subsidiaries, (ii) any Governmental Authority having jurisdiction over Parent or any of its Subsidiaries or any of their customers, (iii) any financial institution with which Parent or any of its Subsidiaries has a relationship, or (iv) any other party whose action or threatened action could reasonably be determined to be materially adverse to the interests of Buyer with respect to the Acquired Assets. 6.3 Other Transactions. Sellers will not, and will cause their Affiliates and their respective directors, officers, employees and agents not to, directly or indirectly, solicit or initiate any discussions or negotiations with, or encourage or respond to any inquiries or proposals by, or participate in any negotiations with, or provide any information to, or otherwise cooperate in any other way with, any corporation, partnership, person or other entity or group, other than Buyer and its representatives, concerning (A) any sale or other transfer of all or any substantial portion of the Retail Energy Business or the Acquired Assets; or (B) any joint venture, agency, or similar agreement that binds Sellers to sell or cause to be sold energy or energy-related products or services with any entity other than Buyer. 6.4 Consents; Third-Party; Regulatory Approvals. As soon as practicable following the execution of this Agreement, Buyer and Sellers shall work together to cause (a) the transfer of all state and federal licenses and other Permits to Buyer, to the extent required and allowed by law for Buyer to operate the Retail Energy Business, including any UDC and PUC notifications and/or approvals, (b) assignment of Contracts which are included as Acquired Assets to and assumption of such Contracts by Buyer, to the extent permissible under such 26

Contracts and by law, including any UDC and PUC notifications and/or approvals, to the extent required by law, and (c) any other consents or approvals required by law to transfer any of the Acquired Assets being acquired by Buyer pursuant to this Agreement and any other consents required by law with respect to approval of this Agreement. Buyer will take the lead with respect to all activities identified in this Section 6.4 and bear the costs associated with such activities with the exception of costs associated with obtaining the approval of Seller's and its Affiliates' lenders and other such financing parties. Sellers agree to assist in effectuating such approvals where requested by Buyer and will bear their reasonable costs associated with such assistance. In accordance with the foregoing, Buyer shall be responsible, and shall reimburse Sellers for, all direct out-of-pocket costs and expenses incurred or paid by them in connection with securing necessary approvals from, giving required notices to, or making required filings with any third parties, provided that any such costs and expenses incurred or paid by Sellers shall have been first approved by Buyer in its reasonable judgment. Notwithstanding the foregoing, Sellers will be unconditionally obligated at their expense to obtain any required consents and releases of liens from their Affiliates. 6.5 Public Announcements. Sellers and Buyer agree that they will consult with each other before issuing any press releases or otherwise making any public statements with respect to this Agreement or the transactions contemplated hereby and shall not issue any press release or make any public statement (including with respect to SEC reports and stock exchange disclosures where reasonably practicable) prior to such consultation, except as may be required by law. 6.6 Employees and Employee Benefit Plans. (a) Employment Offer. On or before the Last Seller Pay Date, Buyer will deliver a letter in form and substance satisfactory to it to each employee identified on Schedule 6.6 offering such employee employment with Buyer or an Affiliate of Buyer. The offer of employment will be: (a) at pay levels substantially equivalent to the levels in effect for such individuals immediately prior to the Closing Date, as disclosed in Schedule 6.6 hereto; (b) with benefits consistent with individuals in the employ of Buyer (which individuals are performing similar work and receiving similar pay); (c) conditioned on Buyer's usual terms and conditions with respect to offers of employment; and (d) effective as of the close of business on the Last Seller Pay Date. Those employees accepting such offer of employment shall be known as the "Transferred Employees." All employees listed on Schedule 6.6 who are not Transferred Employees shall be known as "Non-Transferred Employees." If Sellers, between the date hereof and the Last Seller Payment Date hire additional employees, Buyer is not required to hire or offer to hire such employees which were not previously identified on such Schedule 6.6. (b) Employee Benefits. Neither Buyer nor any of its Subsidiaries shall assume any Liabilities with respect to, and shall not receive any right or interest in, any Employee Benefit Plans of Sellers in which any of the Transferred Employees participate. The Sellers shall cause all Transferred Employees to be fully vested in their accrued benefits earned under any of Sellers' defined contribution or defined benefit plans as of the Last Seller Payment Date. Each Transferred Employee shall be credited with the period of service for which he/she was credited under the employee pension benefit and employee welfare benefit plans of Seller 27

for purposes of (i) eligibility to participate in Buyer's Employee Benefit Plans, and (ii) benefit accruals under each of Buyer's employee benefit plans that is a vacation or sick leave plan. Those Transferred Employees who were participants in Seller's employee welfare benefit plans (as defined in Section 3(1) of ERISA) as of the Closing Date shall participate in Buyer's employee welfare benefit plans immediately upon commencement of employment with Buyer. Transferred Employees shall not be subject to any waiting period or preexisting condition limitation under any employee benefit plan of Buyer that is an employee welfare benefit plan (as defined in Section 3(1) of ERISA), and any and all year-to-date deductibles and co-pays for 2005 under the employee welfare benefit plans of Seller shall be credited to the Transferred Employees for purposes of their applicable deductibles and co-pay limits for 2005 under each corresponding plan of Buyer. Transferring Employees who meet any applicable service requirements for any Employee Benefit Plan of Buyer that an employee pension benefit plan (as defined in Section 3(2) of ERISA) (after receiving credit for service with Seller) shall become a participant in such plan of Buyer no later than the last day of the month in which such Transferred Employee commences employment with Buyer. (c) Acceptance of Rollovers. Each employee benefit plan of Buyer that is a tax-qualified defined contribution plan (as defined in Section 3(34) of ERISA) that accepts rollover contributions shall accept qualifying rollover contributions of benefits distributed from each Plan of Seller that is a tax-qualified defined contribution plan, including to the extent possible notes attributable to loans to Transferred Employees that are outstanding as of the date of distribution from such Plan. (d) Payments to Transferred Employees. Sellers shall pay to Transferred Employees all accrued vacation owing to such Transferred Employees as of the Last Seller Payment Date as well as bonuses, profit sharing, incentive commissions or other compensation of any kind for periods prior to the Last Seller Payment Date. Buyer shall not assume any vacation or sick time Liabilities with respect to the Transferred Employees, nor shall Buyer assume any Liabilities for bonuses, profit sharing, incentive commissions or other compensation of any kind under any Seller plan or arrangement. (e) Sellers' Retention of Employment Related Liabilities. Buyer is not assuming any Liability of Parent or any of its Subsidiaries to their employees or former employees (i) for benefits (including health and welfare benefits), compensation (including vacation, holiday and overtime pay), worker's compensation, contributions, insurance premiums and administrative expenses incurred or accrued before the Closing Date, (ii) arising under the continuation coverage requirements of Section 4980B(f) of the Code and Section 601 et seq. of ERISA with respect to all United States employees of the Retail Energy Business (or any beneficiary or dependent of such employees) who, on or before the Last Seller Payment Date or otherwise, in connection with the transactions contemplated by this Agreement, have exercised or are eligible to exercise their right to such continuation coverage, (iii) to provide post-retirement health and life insurance benefits to employees (or any beneficiary or dependent of such employee) of the Retail Energy Business, or (iv) for any claims made by the employees of the Retail Energy Business, and any liability resulting from same, for events occurring on or before the Last Seller Payment Date. 28

(f) Payroll. Sellers shall continue to process payroll and to pay the Transferred Employees up to and including the Last Seller Pay Date. Buyer shall assume payroll processing responsibilities thereafter. Such payroll amounts (including taxes and benefits) as are paid by Sellers to such Transferred Employees allocable to the period after Closing shall be reimbursed by Buyer within 10 calendar days following receipt by Buyer of definitive records of payment of such amounts. (g) WARN Act. To the extent applicable, Sellers shall be responsible for all obligations under the Federal Worker Adjustment Retraining and Notification Act ("WARN") and/or analogous state and local laws, including, without limitation, the obligation to provide WARN notices, in connection with the transactions contemplated by this Agreement. (h) Mutual Cooperation. Each of the parties hereto shall cooperate with the other parties and provide the other parties with such records, information, documentation and assistance as such parties reasonably request in order to carry out the parties' respective obligations under this agreement. 6.7 Notification. Upon becoming aware of same, until the final transfer of the Acquired Assets, a party shall give prompt written notice to the other of (i) the existence of any fact or the occurrence of any event which constitutes, or with the giving of notice or the passage of time or both would constitute, a breach or default under any Contract within the definitions of Acquired Assets or Option Assets. The giving of any such notice shall not affect, modify or limit in any way any representation, warranty, agreement or covenant of a party made herein or pursuant hereto or the other party's right to rely thereon. 6.8 Transfer Documents. Sellers shall execute and deliver to Buyer and/or the Buyer Designees, on the Closing Date or thereafter as and when Buyer acquires any of the Acquired Assets not transferred as of the Closing or exercises its option to acquire Option Assets, all further instruments as may be reasonably necessary, expedient or proper in order to complete any and all conveyances, transfers, and assignments provided for herein and to convey to Buyer and the Buyer Designees such title to the Acquired Assets as Sellers are obligated hereunder to convey, all in form and substance reasonably satisfactory to Buyer. 6.9 Covenant to Satisfy Conditions. The Parties shall use commercially reasonable efforts to ensure that the conditions set forth herein are satisfied, and that all the Acquired Assets are transferred to Buyer, insofar as such matters are within their control. 6.10 Schedules. As of the date hereof, this Agreement does not have attached any Schedules other than Schedules A-D. Seller agrees to furnish all other contemplated Schedules not later than close of business, Pacific time, on February 2, 2005 ("Seller Disclosure Schedules"). 6.11 Schedule 4.2(A) Assets. With respect to any Acquired Assets or Option Assets which are listed on Schedule 4.2(A), Parent agrees to cause the applicable owner of such assets to (x) transfer same to Buyer as and when required under this Agreement as if such asset was owned by a Seller hereunder and under the same representations, warranties, terms and 29

conditions and (y) otherwise perform all obligations of a Seller hereunder with respect to such asset as if it were a party hereto. SECTION 7. Conditions of Buyer's Obligations to Close. The obligations of Buyer under this Agreement are subject to the satisfaction of the conditions set forth below, which conditions may be waived by Buyer without releasing or waiving any of its rights hereunder. 7.1 Agreement and Conditions. On or before the Closing Date, Sellers shall have complied with and duly performed all agreements and conditions on their part required to be complied with and performed pursuant to or in connection with this Agreement. 7.2 Representations and Warranties. The representations and warranties of Sellers contained in this Agreement, or otherwise made in writing in connection with the transactions contemplated hereby (including, without limitation, any representations and warranties in the Transaction Documents), shall be true and correct on and as of the date hereof and the Closing Date with the same force and effect as though such representations and warranties had been made on and as of the Closing Date. 7.3 No Legal Proceeding. No Action shall have been instituted or threatened before any court or Governmental Authority seeking to restrain or prohibit the acquisition by Buyer, or the conveyance by Parent and its Subsidiaries, of the Acquired Assets. 7.4 Certificate. Buyer shall have received a certificate dated the Closing Date and executed by a senior officer of each Seller on behalf of such Seller to the effect that the conditions expressed in Sections 7.1 and 7.2 have been fulfilled. 7.5 Lien Releases. US Bank shall have executed documentation terminating all security agreements and security interests, including related UCC filings, with respect to the Acquired Assets and the Option Assets, in form and substance reasonably acceptable to Buyer and the Acquired Assets and Option Assets shall be subject to no Liens other than in favor of Tenaska Power Services, Inc., pursuant to that certain Security Agreement dated March 17, 2003 and Buyer hereunder. 7.6 Deliveries. Buyer shall have received the deliveries to be made by Sellers pursuant to Section 9. 7.7 Schedules. Buyer shall have received Seller's Disclosure Schedules which shall be acceptable to Buyer in its sole discretion (it being understood that Buyer's acceptance thereof shall not be deemed a waiver of any right under Section 13.1 hereof). SECTION 8. Conditions of the Sellers' Obligations to Close. The obligations of Sellers under this Agreement are subject to the satisfaction of the conditions set forth below, which conditions may be waived by Sellers without releasing or waiving any of their rights hereunder. 30

8.1 Agreement and Conditions. On or before the Closing Date, Buyer shall have complied with and duly performed all agreements and conditions on its part required to be complied with and performed pursuant to or in connection with this Agreement on or before the Closing Date. 8.2 Representations and Warranties. The representations and warranties of Buyer contained in this Agreement, or otherwise made in writing in connection with the transactions contemplated hereby (including, without limitation, any representations and warranties in the Transaction Documents), shall be true and correct on and as of the date hereof and the Closing Date with the same force and effect as though such representations and warranties had been made on and as of the Closing Date. 8.3 Deliveries. Sellers shall have received the deliveries to be made by Buyer pursuant to Section 10. 8.4 Certificate. Sellers shall have received a certificate dated the Closing Date and executed by a senior officer of Buyer on behalf of Buyer to the effect that the conditions expressed in Section 8.1 and 8.2 have been fulfilled. SECTION 9. Deliveries of Sellers on the Closing Date. Sellers agree on the Closing Date to deliver to Buyer the following: 9.1 Title to Acquired Assets. Seller Ancillary Documents as are necessary to transfer the Acquired Assets to Buyer hereunder which are being transferred at the Closing. 9.2 Certificates. The certificates of Sellers referred to in Section 7.4 hereof. 9.3 Secretary's Certificate. A certificate of the Secretary or an Assistant Secretary of each Seller setting forth a copy of the resolutions adopted by the Board of Directors of each Seller authorizing and approving the execution and delivery of this Agreement and the consummation of the transactions contemplated hereby. 9.4 Authorization. Appropriate instruments authorizing Buyer to endorse in the name of Sellers all checks, drafts, notes and other instruments for the payment of money and to receive for the account of Buyer all proceeds thereof to which the Buyer is entitled under this Agreement. 9.5 Escrow Agreement. A copy of the Escrow Agreement duly executed by Sellers. 9.6 Sales Agency Agreement. A copy of the Sales Agency Agreement duly executed by Sellers. 9.7 Transition Agreement. A copy of the Transition Agreement duly executed by Sellers. 31

9.8 Security Agreement. A copy of the Security Agreement duly executed by Sellers. 9.9 Energy Agreements. Copies of the NAESB, EEI and ISDA duly executed by the ACN Energy Entities. 9.10 Operating Agency Agreement. Copies of the Operating Agency Agreements duly executed by each of the ACN Energy Entities. 9.11 Netting Letter. A copy of the Netting Letter duly executed by ACN Utility Services. 9.12 Other Deliveries. Such other documents or instruments as Buyer or its counsel may reasonably request. SECTION 10. Deliveries of Buyer on the Closing Date. Buyer agrees on the Closing Date to deliver to Seller the following: 10.1 Purchase Price. The cash portion of the Purchase Price to be delivered pursuant to Section 3.1 hereof. 10.2 Secretary's Certificate. A certificate of the Secretary or an Assistant Secretary of Buyer setting forth a copy of the resolutions adopted by the Board of Directors of Buyer authorizing and approving the execution and delivery of this Agreement and the consummation of the transactions contemplated hereby. 10.3 Escrow Agreement. A copy of the Escrow Agreement duly executed by Buyer. 10.4 Sales Agency Agreement. A copy of the Sales Agency Agreement duly executed by Buyer. 10.5 Transition Agreement. A copy of the Transition Agreement duly executed by Buyer. 10.6 Security Agreement. A copy of the Security Agreement duly executed by Buyer. 10.7 Energy Agreements. Copies of the NAESB, EEI and ISDA duly executed by Buyer. 10.8 Operating Agency Agreement. Copies of each of the Operating Agency Agreements delivered by the ACN Energy Entities pursuant to Section 9.10 duly executed by Buyer. 10.9 Netting Letter. A copy of the Netting Letter duly executed by Buyer. SECTION 11. Additional Covenants. 32

11.1 Mail. Sellers authorize and empower Buyer from and after the date hereof (i) to receive and open mail addressed to Parent or any of its Subsidiaries and (ii) to deal with the contents thereof in a manner consistent with the purpose of this Agreement and the other agreements described herein and contemplated hereby, provided such mail and the contents thereof relate to the Acquired Assets or otherwise to the business of the Retail Energy Business, as conducted by Buyer or to any of the Assumed Liabilities. Sellers agree to deliver to Buyer promptly upon receipt any mail, checks or other documents received by it pertaining to the Acquired Assets or otherwise to the business of the Retail Energy Business, as conducted by Buyer, or any of the Assumed Liabilities. Buyer agrees to deliver to Sellers promptly any mail which it receives to which it is not entitled by reason of this Agreement or otherwise and to which Sellers are entitled. 11.2 Further Assurances. Sellers agree at any time and from time to time after the Closing Date, upon the request of Buyer, to do, execute, acknowledge and deliver, or to cause to be done, executed, acknowledged and delivered, all such further acts, assignments, transfers, powers of attorney and assurances as may be reasonably required for the better assigning, transferring, conveying, and confirming to Buyer, or to its successors and assigns, of any or all of the Acquired Assets and to carry out the terms and conditions of this Agreement. 11.3 Notification to Customers. As soon as practicable following the Closing, and only to the extent required by applicable laws, regulations and tariffs, Sellers and Buyer will cause to be sent to Sellers' active customers a notice of the proposed transfer of the active customer from Sellers to Buyer, which notice will comply with all applicable requirements of the Public Utilities Commission(s) (the "PUC(s)"), the Local Utility Distribution Company(ies) ("UDC(s)") and all other relevant governmental agencies related to the transfer of electric and/or natural gas customers (the "Customer Notification"). The Customer Notification will contain such information concerning Buyer and Sellers as is required by law and approved by Buyer and Sellers, which approval will not be unreasonably withheld or delayed. 11.4 Non-Transferred Assets. Upon the expiration of the Phase-Out Period, the remaining Acquired Assets not transferred to Buyer shall be disposed of in a manner mutually agreed to by the Parties and if the Parties shall be unable to agree, such assets shall, to the extent applicable, be terminated or, if termination of any such asset is not possible, remain with the applicable Seller. In the event that the transfer of any asset listed on Schedule 4.15(b) remains pending in any particular jursidiction at the expiration of the Phase-Out Period, and the parties reasonably believe that permission for the transfer of such asset is likely to be granted, the Buyer may request in writing a 60-day extension of the Phase-Out Period from the Seller, which will not be unreasonably witheld or delayed. 11.5 Trading Restrictions. Sellers agree that neither they nor their Affiliates will in any manner, directly or indirectly, purchase or sell securities of CEG during any period or on any day for which the market value of the Shares is or will be determined for purposes of this Agreement, any attachment hereto or any Transaction Agreement. SECTION 12. Confidentiality. 33

12.1 Sellers agree not to, and to cause their officers, directors, employees, stockholders and Affiliates not to, directly or indirectly, without the prior written consent of Buyer, use or disclose to any person, firm or corporation, any information, trade secrets, confidential customer information, technical data or know-how relating to the products, processes, methods, equipment or business practices of the Retail Energy Business. 12.2 Buyer agrees not to, and to cause its officers, directors, employees, stockholders and Affiliates not to, directly or indirectly, without the prior written consent of Parent, use or disclose to any person, firm or corporation, any information, trade secrets, confidential customer information, technical data or know-how relating solely to any Acquired Assets or Option Assets which are not ultimately acquired by Buyer for any reason. 12.3 Each of the Parties acknowledges and agrees that any breach of this Section 12 is likely to result in irreparable injury to the other Party, that monetary damages will be an inadequate remedy of such breach and that, accordingly, in addition to any other remedy that such other Party may have, such other Party shall be entitled to enforce the specific performance of this Section 12 and to seek both permanent and temporary relief in the event of any breach hereof. 12.4 The foregoing shall not prevent any person from disclosing such information if already in the public domain, or if required by applicable law or stock exchange rule or if requested by a regulator. SECTION 13. Indemnification. 13.1 Indemnification by Sellers. Parent and Sellers shall jointly and severally indemnify, defend and hold harmless Buyer and its Affiliates from and against, and pay or reimburse Buyer and its Affiliates for, any and all Damages as incurred, relating to or arising from (i) noncompliance with any applicable bulk sales or transfer law, (ii) the Excluded Liabilities, (iii) any Liability or claim arising in any way from any action taken by, or relating to the operations or employees, including former employees of, Parent or any of its Subsidiaries prior to the Closing Date, or (iv) the breach or inaccuracy of or failure to comply with any of the warranties, representations, conditions, covenants or agreements of Sellers or Parent contained in this Agreement or in any agreement or document delivered pursuant hereto or in connection herewith (including, without limitation, the Transaction Documents), or arising out of the consummation of the transactions contemplated hereby. 13.2 Indemnification by Buyer. Buyer shall indemnify, defend and hold harmless Sellers from and against, and pay or reimburse Sellers for, any and all Damages as incurred, relating to or arising from (i) any Assumed Liability or (ii) the breach or inaccuracy of or failure to comply with any warranties, representations, conditions, covenants or agreements of Buyer contained in this Agreement or in any agreement, certificate or document delivered pursuant to or in connection with this Agreement or arising out of the closing of the transactions contemplated hereby. 13.3 Procedures for Indemnification. 34

(a) In the event that any claim is asserted against any party hereto, or any party hereto is made a party defendant in any action or proceeding, and such claim, action or proceeding involves a matter which is the subject of this indemnification, then such party (an "Indemnified Party") shall give written notice to the other party hereto (the "Indemnifying Party") of such claim, action or proceeding, and such Indemnifying Party shall have the right to join in the defense of said claim, action or proceeding at such Indemnifying Party's own cost and expense and, if the Indemnifying Party agrees in writing to be bound by and to promptly pay the full amount of any final judgment from which no further appeal may be taken and if the Indemnified Party is reasonably assured of the Indemnifying Party's ability to satisfy such agreement, then at the option of the Indemnifying Party, such Indemnifying Party may take over the defense of such claim, action or proceeding with counsel reasonably satisfactory to the Indemnified Party, except that, in such case, the Indemnified Party shall have the right to join in the defense of said claim, action or proceeding at its own cost and expense. The Indemnified Party may not settle any proceeding without the consent of the Indemnifying Party, not to be unreasonably withheld. (b) At Sellers' or Buyers' option, any indemnity payment shall be deemed to be an adjustment to the Purchase Price. SECTION 14. Survival of Representations; Effect of Certificates. 14.1 All representations, warranties, covenants and obligations in this Agreement or in any agreement, instrument or other document delivered in connection herewith shall survive the execution and delivery hereof and the Closing Date. Notwithstanding the preceding sentence, neither party may make or assert any claim under any representation or warranty of the other party contained herein later than one year after the Closing Date, except that the representations in Sections 4.6, 4.19 and 5.4 shall survive until 6 months after the statute of limitations with respect to the matters addressed therein has expired (including all waivers or extensions thereof); and provided that any claims made or asserted by a party within the applicable time period prescribed above shall survive such expiration until such claim is finally resolved and all obligations with respect thereto are fully satisfied. All statements contained in any officer's certificate delivered by or on behalf of any party hereto pursuant to this Agreement shall constitute and have the same force and effect as the representations and warranties of such party set forth herein. 14.2 Each statement contained in any certificate delivered in connection with this Agreement or the consummation of the transactions contemplated hereby shall constitute the representation, warranty and agreement of the party delivering such certificate and shall have the same force and effect as if it had been incorporated into this Agreement as a representation, warranty and agreement by such party. SECTION 15. Fees and Disbursements. Except as otherwise provided herein, each party will pay its own fees and expenses in connection with this Agreement and the completion of the transactions contemplated by this Agreement. 35

SECTION 16. Notices. All notices, requests, demands and other communications provided for by this Agreement shall be in writing and shall be deemed to have been given when hand delivered, when received if sent by telecopier or by same day or overnight recognized commercial courier service or three business days after being mailed in any general or branch office of the United States Postal Service, enclosed in a registered or certified postpaid envelope, addressed to the address of the parties stated below or to such changed address as such party may have fixed by notice: To Sellers: American Communications Network, Inc. 32991 Hamilton Court Farmington Hills, Michigan 48334 Attention: Chief Financial Officer Telecopier: (248) 489-8901 - copy to - Jaffe, Raitt, Heuer & Weiss, P.C. 27777 Franklin Road, Suite 2500 Southfield, Michigan 48034 Attention: Ralph R. Margulis Telecopier: (248) 351-3082 To Buyer: Commonwealth Energy Corporation c/o Commerce Energy Group 600 Anton Blvd., Suite 2000 Costa Mesa, CA 92626 Attention: General Counsel Telecopier: (714) 259-2575 - copy to - Stroock & Stroock & Lavan LLP 180 Maiden Lane New York, New York 10038 Attention: Michael S. Shenberg, Esq. Telecopier: 212-806-6006 provided that any notice of change of address shall be effective only upon receipt. SECTION 17. Termination. 17.1 This Agreement may be terminated at any time prior to the Closing by any of the following: (a) By mutual written agreement of Buyer and Sellers; or 36

(b) By either Buyer or Sellers, if the Closing has not occurred on or before the 10th day following the date hereof upon written notice by such terminating party, provided that at the time such notice is given a material breach of this Agreement by such terminating party shall not be the reason for the Closing's failure to occur. 17.2 If this Agreement is terminated as provided in Section 17.1, then this Agreement shall forthwith become void and there shall be no liability or obligation on the part of any party hereto (or any of their respective officers, directors or employees), except based upon the obligations set forth in Sections 12, 15, and 17.2, or for any breach thereof occuring prior to termination. SECTION 18. Miscellaneous. 18.1 Entire Agreement. This Agreement and the other Transaction Documents, including the Exhibits and Schedules hereto and thereto, sets forth the entire agreement and understanding between the parties and merges and supersedes all prior discussions, agreements and understandings of every kind and nature among them as to the subject matter hereof, and no party shall be bound by any condition, definition, warranty or representation other than as expressly provided for in this Agreement or as may be on a date on or subsequent to the date hereof duly set forth in writing signed by each party which is to be bound thereby. Unless otherwise expressly defined, terms defined in this Agreement shall have the same meanings when used in any Exhibit or Schedule and terms defined in any Exhibit or Schedule shall have the same meanings when used in this Agreement or in any other Exhibit or Schedule. This Agreement (including the Exhibits and Schedules hereto) shall not be changed, modified or amended except by a writing signed by each party to be charged and this Agreement may not be discharged except by performance in accordance with its terms or by a writing signed by each party to be charged. 18.2 Taxes. Any Taxes in the nature of a sales or transfer tax (including any realty transfer tax or realty gains transfer tax), and any stock transfer tax, payable on the sale or transfer of all or any portion of the Acquired Assets or Shares or the consummation of any other transaction contemplated hereby shall be paid by Sellers. 18.3 Governing Law; Jurisdiction; Waiver of Jury Trial. (a) This Agreement shall be governed by and construed in accordance with the laws of the State of New York, applicable to agreements made and to be performed entirely within such State, without regard to the conflict of laws principles thereof. (b) Any disputes or claims arising out of or in connection with this Agreement and the transactions contemplated or documents required hereby shall be submitted to the exclusive jurisdiction of the courts of the State of New York and the federal courts of the United States of America located in New York, New York, and appropriate appellate courts therefrom. The parties hereby irrevocably waive, to the fullest extent permitted by applicable Law, any objection which they may now or hereafter have to the laying of venue of any dispute arising out of or relating to this Agreement or any of the transactions contemplated hereby brought in such court or any defense of inconvenient forum for the maintenance of such dispute. Each of the 37

parties hereto agrees that a judgment in any such dispute may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by Law. This consent to jurisdiction is being given solely for purposes of this Agreement and is not intended to, and shall not, confer consent to jurisdiction with respect to any other dispute in which a party to this Agreement may become involved. Each of the parties hereto hereby consents to process being served by any party to this Agreement in any suit, action, or proceeding of the nature specified in this Section 18.3(b) by the mailing of a copy thereof in the manner specified by the provisions of Section 18.3. 18.4 Severability. If any provision of this Agreement is held to be unenforceable for any reason, it shall be adjusted rather than voided, if possible, in order to achieve the intent of the parties to this Agreement to the fullest extent possible. In any event, all other provisions of this Agreement shall be deemed valid and enforceable to the fullest extent possible. 18.5 Waiver. Waiver of any term or condition of this Agreement by any party hereto shall only be effective if in writing and shall not be construed as a waiver of any subsequent breach or failure of the same term or condition or any other term or condition of this Agreement. 18.6 Binding Effect; Assignment. This Agreement and all of the provisions hereof shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns, but neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned (whether voluntarily, involuntarily, by operation of law or otherwise) by any of the parties hereto without the prior written consent of the other parties; provided, however, that the Buyer may assign this Agreement, in whole or in any part, and from time to time, to a wholly owned, direct or indirect, Subsidiary of the Buyer or an Affiliate of the Buyer. 18.7 No Third-Party Beneficiaries. Nothing in this Agreement shall confer any rights upon any person or entity that is not a party to this Agreement except as expressly provided hereunder. 18.8 Expenses Related to Audit Rights. Wherever either party has an audit right, the party exercising its audit right shall be entitled to reimbursement of its reasonable and customary expenses associated with such audit from the other party in the event such audit results in a determination that there was a material inaccuracy adverse to the party conducting the audit. Further, the party being audited shall be entitled to reimbursement of its reasonable and customary expenses associated with supporting such audit from the party conducting the audit in the event such audit results in a determination that the subject matter audited was materially accurate. Any inaccuracies determined by any such audit shall be corrected in the favor of the party to whom the inaccuracy was adverse. 18.9 Pronouns. Whenever the context requires, the use in this Agreement of a pronoun of any gender shall be deemed to refer also to any other gender, and the use of the singular shall be deemed to refer also to the plural. 38

18.10 Counterparts. This Agreement may be signed in any number of counterparts with the same effect as if the signatures to each counterpart were upon a single instrument, and all such counterparts together shall be deemed an original of this Agreement. 18.11 Headings. The headings in the sections, paragraphs, Schedules and Exhibits of this Agreement are inserted for convenience of reference only and shall not constitute a part hereof. The words "herein," "hereof," "hereto" and "hereunder," as well as other words of similar import, refer to this Agreement as a whole and not to any particular provision of this Agreement. 39

IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed on the day and year first above written. COMMONWEALTH ENERGY CORPORATION By: /S/ PETER WEIGAND --------------------------- Name: Peter Weigand Title: President ACN UTILITY SERVICES, INC. By: /S/ JAMES F. MULCAHY ---------------------------- Name: James F. Mulcahy Title: Secretary/Treasurer ACN ENERGY, INC. By: /S/ JAMES F. MULCAHY ---------------------------- Name: James F. Mulcahy Title: Secretary/Treasurer ACN POWER, INC. By: /S/ JAMES F. MULCAHY ---------------------------- Name: James F. Mulcahy Title: Secretary/Treasurer As to Section 4.22, 6.11 and Article 13 only: AMERICAN COMMUNICATIONS NETWORK, INC. By: /S/ JAMES F. MULCAHY ----------------------------- Name: James F. Mulcahy Title: Secretary/Treasurer [Signature page to Asset Purchase Agreement]

As to Sections 3.1(b) and 4.22 only: COMMERCE ENERGY GROUP, INC. By: /S/ PETER WEIGAND ------------------------- Name: Peter Weigand Title: President [Signature page to Asset Purchase Agreement]

EXHIBIT - 2.2 EXECUTION COPY TRANSITION SERVICES AGREEMENT BY AND BETWEEN AMERICAN COMMUNICATIONS NETWORK, INC. A MICHIGAN CORPORATION AND COMMONWEALTH ENERGY CORPORATION A CALIFORNIA CORPORATION

TABLE OF CONTENTS <TABLE> <S> <C> <C> Section 1. Definitions:....................................................................................1 Section 2. Services to be Provided:........................................................................3 Section 3. Reserved........................................................................................8 Section 4. Term and Termination............................................................................8 Section 5. Billing and Payment of Costs of Services; Invoices for Services.................................8 Section 6. Administration of Agreement.....................................................................9 Section 7. Relationships Among the Parties.................................................................9 Section 8. Other Agreements...............................................................................10 Section 9. Indemnification; Release; Limit on Liability...................................................10 Section 10. Headings.......................................................................................11 Section 11. Schedules......................................................................................11 Section 12. Required Insurance.............................................................................11 Section 13. Force Majeure..................................................................................11 Section 14. Notices........................................................................................11 Section 15. Successors and Assigns.........................................................................13 Section 16. Signatures Counterparts........................................................................13 Section 17. Amendments.....................................................................................13 Section 18. Governing Law..................................................................................13 Section 19. Entire Agreement...............................................................................14 Section 20. Negotiated Agreement...........................................................................14 Section 21. Waiver.........................................................................................14 Section 22. Severability...................................................................................14 Section 23. Interpretation.................................................................................14 Section 24. No Third Party Beneficiaries...................................................................14 Section 25. Specific Performance and Other Equitable Rights................................................14 Section 26. Press Release..................................................................................15 Section 27. Further Assurance..............................................................................15 </TABLE> i

TRANSITION SERVICES AGREEMENT THIS TRANSITION SERVICES AGREEMENT (this "Agreement"), dated as of February 9, 2005, is by and between American Communications Network, Inc., a Michigan corporation ("ACN") and COMMONWEALTH ENERGY CORPORATION, a California corporation ("Buyer"). Recitals WHEREAS, ACN and Buyer have entered into an Asset Purchase Agreement, dated as of February 9, 2005 (the "Purchase Agreement"), under which ACN has agreed to sell the assets of ACN Energy, Inc, ACN Power, Inc. and ACN Utility Services, Inc. (the "Energy Companies") identified in the Purchase Agreement ("Energy Assets" or "Assets") and Buyer has agreed to purchase from ACN the Energy Assets identified in the Purchase Agreement; and WHEREAS, the parties are entering into this Agreement to provide for certain transition services following the Closing under the Purchase Agreement. NOW, THEREFORE, the parties hereto agree as follows: SECTION 1. Definitions: Capitalized terms used, but not otherwise defined, herein shall have the meanings given to them in the Purchase Agreement or as follows: "AAA" is defined in Section 18. "ACN Indemnified Party" is defined in Section 9(a). "ACN Representatives" means, collectively, the officers, employees, counsel, accountants, financial advisors, consultants and authorized representatives of ACN or its Affiliates. "ACN Service Providers" shall mean any Affiliate of ACN that on or prior to the Closing Date was providing or had provided to the Energy Companies any services that fall within the definition of Transition Services set out in Section 2(a) below, whether pursuant to a written or oral arrangement or otherwise. "ACN System" means the systems and equipment owned or leased by the Energy Companies and used by the Energy Companies from December 1, 2004 through the Closing Date in the conduct of the Business. "Business" means the business of owning, managing and operating the Energy Assets. "Buyer Indemnified Party" is defined in Section 9(a). "Buyer-Related Transition Services" is defined in Section 2(c).

"Buyer Representatives" means, collectively, the officers, employees, counsel, accountants, financial advisors, consultants and authorized representatives of the Buyer. "Call Center Services" means those customer care services provided by ACN for the Energy Companies during the period December 1, 2004 through the Closing Date. "Contract Administration Officers" is defined in Section 6. "FERC" means the Federal Energy Regulatory Commission and any Governmental Authority that succeeds to the jurisdiction now or hereafter vested in the FERC by applicable Laws. "Force Majeure Event" means an act of God; fire, flood, earthquake, storm, lightning or similar disaster; an act of Governmental Authority, or necessity for compliance with any court order, law, statute, ordinance or regulation promulgated by a Governmental Authority having jurisdiction with respect to the applicable subject matter; a strike, lockout or other industrial disturbance; an act of the public enemy, sabotage, war, act of terrorism, insurrection or blockade; riot or other civil disturbance; epidemic; explosions; or any other similar event that, in each such case, prevents, in whole or in part, the performance of a party's obligations under this Agreement, is not reasonably within the control of the affected party and which by the exercise of commercially reasonable efforts the affected party is unable to overcome or prevent, provided however that no party will be required to settle any labor dispute. "Governmental Approval" means any consent, authorization, certificate, permit, grant or approval of any Governmental Authority that is necessary for the operation of the Assets in accordance with applicable Laws. "Governmental Authority" means any court or tribunal in any jurisdiction or any federal, state, tribal, municipal or local government or other governmental body, agency, authority, department, commission, board, bureau, instrumentality, arbitrator or arbitral body or any quasi-governmental or private body lawfully exercising any regulatory or taxing authority, and shall include, without limitation, the FERC and state public utility commissions (however such commissions are named). "Interest Rate" shall mean the prime rate of interest as published in the Wall Street Journal on the date of overpayment.. "IT Assets" means those applications, hardware and related systems identified as the "Impacted Systems/Business Areas" to be set forth in the Migration Plan. "IT Services" means the information technology and data processing services of the same nature and quality, using the same or comparable levels of support, computer hardware, software and programs, as are being used and as are being provided to the Energy Companies in connection with the Assets by ACN or any ACN Service Provider from and after December 1, 2004 through the Closing Date. "Laws" means any applicable statute, common law, rule, regulation, judgment, order, ordinance, writ, injunction or decree issued or promulgated by any Governmental Authority. 2

"Loss" is defined in Section 9(a). "Migration Plan" means that detailed plan for migration of IT Assets to the Buyer to be developed by the parties pursuant to Section 2(a)(iii). "Reimbursable Costs" means, with respect to Call Center Services provided by ACN and the ACN Service Providers, $[CONFIDENTIAL TREATMENT REQUESTED] per full time equivalent employee performing Call Center Services per month and the out of pocket cost of providing the T-1 phone line and 800 numbers, and with respect to the Buyer-Related Transition Services provided by the Buyer, $0.00. "Service Period" means the term beginning immediately following the Closing on the Closing Date and ending at 12:00 midnight prevailing Eastern Time on July 31, 2005, subject to early termination, in whole or in part, in accordance with Section 4, provided that with respect to the Call Center Services, the Service Period shall be for the lesser of one year from the Closing Date or sixty days following notice from Buyer to Seller of Buyer's intent to terminate Call Center Services hereunder. "Service Provider" means, with respect to the Transition Services or the IT Services, each of ACN and the ACN Service Providers, and, with respect to the Buyer-Related Transition Services, the Buyer. "Services" means, when used in this Agreement, the Transition Services provided by ACN and the ACN Service Providers hereunder or the Buyer-Related Transition Services provided by the Buyer hereunder, as the case may be. "Transition Services" is defined in Section 2(a)(i). SECTION 2. Services to be Provided: (a) Transition Services. (i) Definition. ACN hereby agrees to provide or to cause the ACN Service Providers to provide to the Buyer the services (x) that ACN or any ACN Service Provider has provided to the Energy Companies during the period from December 1, 2004 through the Closing Date or are otherwise necessary for the conduct of the Business in the ordinary course and were being provided by ACN or any ACN Provider during such period and, in each case, have not been previously performed by the Transferred Employees of the Energy Companies and (y) consistent with ACN practices, such other services, including prosecution of the Migration Plan and employee training, as are reasonably required to enable ACN and the Buyer to separate or Buyer to operate the Assets (the "Transition Services"). Notwithstanding anything in this Agreement to the contrary, Transition Services shall not include providing legal or auditing services (without limiting Buyer's and the Energy Companies' rights to access legal or auditing records and to request assistance in transferring ongoing matters to new counsel) or procurement or maintenance of insurance or surety bonds. 3

(ii) Scope of Transition Services. During the Service Period, ACN and the Buyer agree to consult with each other at regular intervals and at such times as may be reasonably requested by the other party with respect to the performance by ACN and the ACN Service Providers of the Transition Services, the continued desirability of ACN and the ACN Service Providers providing specific Transition Services, the timing of the early termination of, or desirability for an extension of the Service Period with respect to any specific Transition Services, the occurrence of any events or circumstances negatively affecting ACN and the ACN Service Providers' continued ability to provide any specific Transition Service and other matters specifically relating to, or impacting, the provision of the Transition Services. (iii) Migration Plan. ACN shall, and shall cause the ACN Service Providers to, and Buyer shall, and shall cause the Buyer to, perform their respective obligations set forth in the Migration Plan. The parties shall cooperate with each other to develop a mutually acceptable Migration Plan by February 28, 2005. (b) ACN's Covenants. (i) ACN's Ability to Provide Transition Services. ACN shall maintain, and shall use its commercially reasonable efforts to cause the ACN Service Providers to maintain, sufficient personnel and facilities to provide the Transition Services at all times in accordance with this Agreement. (ii) Standards for the Provision of Transition Services. The Transition Services will be performed in a commercially reasonable manner and with at least the same standard of care and timeliness that the Transition Services were provided to the Energy Companies during the period between December 1, 2004 and the Closing Date. EXCEPT AS SET FORTH IN THIS SECTION 2(b)(ii), ACN AND THE ACN SERVICE PROVIDERS MAKE NO REPRESENTATION, WARRANTY OR GUARANTY, EXPRESS OR IMPLIED, OF ANY KIND CONCERNING THE TRANSITION SERVICES AND ANY RESULTS OR WORK PRODUCT AND SPECIFICALLY MAKE NO WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, AND NONE SHALL BE IMPLIED. ALL OTHER REPRESENTATIONS, WARRANTIES OR GUARANTEES, WRITTEN OR ORAL, EXPRESS OR IMPLIED IN FACT OR IN LAW, AND WHETHER OR NOT BASED ON STATUTE ARE EXCLUDED. (iii) Other. A. General. Systems, personnel, infrastructure and applications used by ACN or any ACN Service Provider to perform the Transition Services, including the IT Services and Call Center Services, shall be managed by ACN or any ACN Service Provider using substantially the same management practices as are currently in use by ACN or any ACN Service Provider. ACN shall use commercially reasonable efforts to ensure that any code written by ACN or any ACN Service Provider to be provided pursuant to this Agreement does not contain any disabling devices, or time bombs. 4

B. Technology Changes. Changes that add or revise services, functions or features affecting the Transition Services or the Business (a "Technology Change") shall be made only if such Technology Change will have no adverse affect on the Business or the cost of Transition Services. ACN and Buyer agree to the following general procedures and practices for managing and controlling Technology Changes: (I) before using new software or equipment in a production environment in order to provide the Transition Services, ACN shall use commercially reasonably efforts to verify that the item had been properly installed and tested, and is operating in accordance with its specifications, and (II) ACN shall use commercially reasonable efforts to document movement of programs from development and test environments to production environments. Notwithstanding the foregoing to the contrary, ACN shall have the right to move the Energy Companies' data and processing, if necessary, within functionally equivalent equipment owned by ACN or an ACN Service Provider so long as such movement does not adversely impact the Business or the performance of the Transition Services. Such movements shall not constitute Technology Changes. All Technology Changes which relate to the Assets shall be assigned to Buyer. C. Consents. ACN in cooperation with the Buyer shall use commercially reasonable efforts to obtain appropriate vendor consents for ACN and ACN Service Providers to use any software needed by Buyer to conduct the Business, provided; that, until the earlier to occur of (i) the consent of Excelergy is obtained or (ii) expiration of the Excelergy licenses, ACN shall provide Buyer with the use or benefit of such software in a mutually agreeable manner and at no cost. D. Security Measures. ACN shall continue existing security measures under the circumstances which restrict access to the Energy Companies' information, data and software used in the performance of the Transition Services to ACN and the ACN Service Providers' employees performing such services and any other individuals authorized by the Buyer in writing. E. Access. The Energy Companies shall provide access to its computer equipment, hardware, software and employees as reasonably necessary for ACN and the ACN Service Providers to provide the Transition Services. F. Assets Acquired in Connection with the IT Services and Call Center Services. Any assets that are acquired in connection with the provision of the IT Services, Call Center Services or other services described in the Migration Plan for the benefit of the Buyer (including any purchased hardware or software and any licenses to use software or other intellectual property) shall, to the extent the purchase price or acquisition costs thereof are included in the Migration Plan Costs or the assets are otherwise included in the Acquired Assets under the Purchase Agreement, be the property of the Buyer. ACN agrees that it shall, at the request of the Buyer, and at the sole cost of the Buyer, cooperate with the Buyer to ensure that the Buyer has good and valid title or a valid license to such assets. 5

G. Termination of IT Services. The Buyer may elect to terminate any of the IT Services in accordance with Section 4(b), if the Buyer will not require any of the functions within that IT Service and any Call Center Services on at least 60 days' prior notice. (c) Buyer-Related Transition Services. (i) Definition. Buyer hereby agrees to provide or cause to be provided to ACN and its Affiliates during the Service Period services requested by ACN or any of its Affiliates (A) that were provided to ACN or its Affiliates by the Energy Companies during the period from December 1, 2004 through the Closing Date, including, without limitation, services relating to financial and accounting services relating to ACN or its Affiliates' financial reporting obligations with respect to the Energy Companies and (B) Buyer is able to provide such services with employees hired by Buyer from ACN and the Acquired Assets (the "Buyer-Related Transition Services"). Notwithstanding anything in this Agreement to the contrary, Buyer-Related Transition Services shall not include providing legal or auditing services (without limiting ACN's and its Affiliates' rights to access legal records) or procurement or maintenance of insurance or surety bonds. (ii) Scope of Buyer-Related Transition Services. During the Service Period, ACN and the Buyer agree to consult with each other at regular intervals and at such times as may be reasonably requested by the other party with respect to the performance by the Energy Companies of the Buyer-Related Transition Services, the Energy Companies providing specific Buyer-Related Transition Services, the timing of the early termination of, or desirability for an extension of the Service Period with respect to any specific Buyer-Related Transition Services, the occurrence of any events or circumstances negatively affecting the Energy Companies' continued ability to provide any specific Buyer-Related Transition Service and other matters specifically relating to, or impacting, the provision of the Buyer-Related Transition Services. (d) Buyer Covenants. (i) Buyer's Ability to Provide Buyer-Related Transition Services. Buyer shall use commercially reasonable efforts to maintain sufficient personnel and facilities to provide the Buyer-Related Transition Services at all times in accordance with this Agreement. (ii) Standards for the Provision of Buyer-Related Transition Services. The Buyer-Related Transition Services will be performed in substantially the same manner and with at least the same standard of care and timeliness that the Buyer-Related Transition Services were provided by the Energy Companies to ACN and its Affiliates during the period between December 1, 2004 and the Closing Date. EXCEPT AS SET FORTH IN THIS SECTION 2(d)(ii), BUYER MAKES NO REPRESENTATION, WARRANTY OR GUARANTY, EXPRESS OR IMPLIED, OF ANY KIND CONCERNING THE BUYER-RELATED TRANSITION SERVICES AND ANY RESULTS OR WORK PRODUCT AND SPECIFICALLY MAKE NO WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, AND 6

NONE SHALL BE IMPLIED. ALL OTHER REPRESENTATIONS, WARRANTIES OR GUARANTEES, WRITTEN OR ORAL, EXPRESS OR IMPLIED IN FACT OR IN LAW, AND WHETHER OR NOT BASED ON STATUTE ARE EXCLUDED. (e) Certain Covenants. The parties agree to the following additional covenants: (i) Access and Record Retention. A. To the extent allowed by applicable Law, Buyer and its duly authorized representatives may inspect, review, copy and utilize at reasonable times and during regular business hours, ACN's and the ACN Service Providers' files, books, records, accounts, servicing practices, policies and procedures and quality control policies and procedures relating to the Energy Companies and to the Transition Services. ACN will, and will cause the ACN Service Providers to, maintain complete and accurate records relating to the Transition Services in accordance with ACN and the ACN Service Providers standard practices and for so long as required for tax and other regulatory purposes. B. To the extent allowed by applicable Law, ACN and its duly authorized representatives may inspect, review, copy and utilize at reasonable times and during regular business hours, the Buyer's and the Energy Companies' files, books, records, accounts, servicing practices, policies and procedures and quality control policies and procedures relating to the Buyer-Related Transition Services. Buyer will maintain complete and accurate records relating to the Buyer-Related Transition Services in accordance with Buyer's standard practices and for so long as required for tax and other regulatory purposes. C. Records Retention. Each party shall retain all records relating to this Agreement for so long as required by any governmental authority or regulatory authority having jurisdiction. (ii) No Breach. Notwithstanding anything to the contrary herein, no Service Provider shall be deemed to be in breach of its obligations hereunder by reason of any of the following: (a) the failure of a party to grant its consent to any matter requiring such consent prior to such Service Provider's performance of its obligations with respect to such matter; (b) the failure of a party to provide funds which are necessary for a Service Provider to perform its obligations with respect to such matter; (c) the failure of a party to enter into a contract or agreement with a third party which is necessary for such Service Provider to perform its obligations with respect to such matter; or (d) any acts of a Service Provider based in reliance upon a direction of, in the case of ACN or a ACN Service Provider, a Buyer Representative, and, in the case of Buyer, an ACN Representative. 7

SECTION 3. Reserved SECTION 4. Term and Termination. (a) Term. The term of this Agreement shall begin on the Closing Date and continue through the Service Period. (b) Option to Terminate Transition Services. Unless otherwise provided for hereunder, a party receiving Services hereunder may elect, by giving written notice to the Service Provider for such Services thirty (30) days in advance, to terminate the provision by such Service Provider of all or any item or category of such Services, or to have all or any item or category of such Services performed by its own employees or any other third party retained by such party prior to the expiration of the Service Period. (c) Right to Suspend Performance or to Terminate the Agreement. A Service Provider shall have the right to suspend the performance of its obligations under this Agreement in the event of the receiving parties' failure to make payments due, owing and not disputed in good faith pursuant to Section 5 hereof to such Service Provider as required under this Agreement, and such failure has not been cured within ten (10) days after written notice of such failure to such receiving party. If the receiving party cures such payment default, the Service Provider shall not be entitled to suspend performance hereunder. The Service Provider shall have the right to terminate this Agreement in the event such failure to make payment has not been cured within thirty (30) days after written notice of such failure to the receiving party and the party failing to make payment is not disputing the payment in good faith. (d) Effect of Termination. Upon termination of this Agreement, each Service Provider shall transfer to the party receiving Services hereunder all materials and supplies procured in connection with the provision of such Services, the cost of which has been included in Reimbursable Costs already paid by the receiving party for such Services. SECTION 5. Billing and Payment of Costs of Services; Invoices for Services. (a) Payment. Subject to the following sentence, on or before the fifteenth (15th) day of each month, ACN shall provide to Buyer one or more written invoices setting out the total amount due for Reimbursable Costs provided by ACN for the prior month, showing for each category the Reimbursable Costs for the period covered by such invoice, together with such supporting documentation for all such costs as shall be reasonably requested by Buyer. Items properly invoiced and not disputed in good faith by the owing party are due and payable within fifteen (15) days following the date of such invoice. No costs or fees shall be charged for Transition Services by either party except as provided in the definition of Reimbursable Costs, provided that if ACN reasonably anticipates significant software programming costs as part of the Migration Plan, the parties shall agree on reasonable compensation for ACN before ACN will be obligated to perform such significant software programming pursuant to the Migration Plan. (b) Audit Rights. The owing party on any invoice shall have the right, at any time within six (6) months after the date of any such invoice to audit those books and records of the invoicing party with respect to the Services reflected on such invoice, which books and records 8

relate to the Services covered by such invoice, to verify the Reimbursable Costs reflected on such invoice. Any such audit shall be conducted during normal business hours by the auditing party or its designated auditor after ten (10) days prior written notice to the invoicing party, at such auditing party's sole cost and expense, in the offices of the invoicing party or such other location as may be mutually agreed. The invoicing party shall cooperate with and provide reasonable assistance to the auditing party and/or its auditor in connection with the performance of any such audit. The auditing party shall assert any claim for refund of costs of Services under the audited invoice within sixty (60) days after the completion of the audit. The invoicing party shall have ninety (90) days from receipt of the auditing party's claim for refund to respond. If the invoicing party does not dispute the auditing party's refund claim, the invoicing party shall offset the overpayment against future invoices; or, if there are no additional invoices to be paid, the invoicing party shall pay such refund within such 90-day period; such offset or refund shall be credited or paid together with interest at the Interest Rate from the date of the auditing party's overpayment to the invoicing party until the date of such offset or refund of such overpayment is credited or paid. If the invoicing party disputes the claim and refuses to pay any refund claim by the auditing party resulting from the exercise of the auditing party's audit rights, each of the parties shall be entitled to seek any remedy with respect to such matter available at law or in equity. SECTION 6. Administration of Agreement. ACN and the Buyer shall each designate in writing person(s) to act as contract administration officers ("Contract Administration Officers"), who shall perform the following functions under this Agreement for their respective principals: (a) reporting to senior management of their respective principals with respect to matters relating to the administration of this Agreement, the provision of Services hereunder and any outstanding invoice disputes; (b) monitoring the costs of Services; and (c) serving as sole recipients of notices between the parties. (d) The initial Contract Administration Officers for each party shall be their respective Chief Financial Officers. Each party may replace its Contract Administration Officers from time to time upon written notice to the other party. SECTION 7. Relationships Among the Parties. Each Service Provider shall be an independent contractor with respect to the Services it performs hereunder. Nothing in this Agreement shall cause the relationship between ACN and the ACN Service Providers on the one hand, and Buyer on the other hand, to be deemed to constitute an agency, partnership or joint venture. The terms of this Agreement are not intended to constitute a joint employer for any purpose between any of the parties and their affiliates. No Service Provider shall have or hold itself out as having, any authority to enter into any contract or create any obligation or liability on behalf of, in the name of, or binding upon the party receiving Services from such Service Provider under this Agreement or such party's Affiliates except as provided in this Agreement. 9

SECTION 8. Other Agreements (a) ACN Regulatory Covenant. During the Service Period, ACN will cooperate, and will use its commercially reasonable efforts to cause the ACN Service Providers to cooperate, with the Buyer and any Governmental Authority that regulates the Buyer, solely at Buyer's cost and expense, to satisfy any regulatory requirements applicable to entities that provide services to Buyer or the Governmental Authority. (b) Buyer's Regulatory Covenant. During the Service Period, Buyer will cooperate with ACN and the ACN Service Providers and any Governmental Authority that regulates ACN and the ACN Service Providers, solely at ACN and the ACN Service Providers cost and expense, to satisfy any regulatory requirements applicable to entities that provide services to ACN or the Governmental Authority. SECTION 9. Indemnification; Release; Limit on Liability. (a) Transition Services. (i) Indemnification by ACN. ACN shall indemnify and hold harmless the Buyer, and each of its officers, directors, employees, agents, and affiliates (and the officers, directors, employees and agents of such affiliates) (each, a "Buyer Indemnified Party") if any such Buyer Indemnified Party shall at any time or from time to time suffer any damage, judgment, fine, penalty, demand, settlement, liability, loss, cost, expense (including reasonable attorneys', consultants' and experts' fees), claim or cause of action (each, a "Loss") arising out of, relating to or resulting from ACN's or ACN Service Providers' performance of Transition Services under this Agreement, to the extent such Loss results from the gross negligence or willful misconduct of ACN or a ACN Service Provider in performing the Transition Services. (ii) Indemnification by Buyer. Buyer shall indemnify and hold harmless ACN and ACN Service Providers, and each of their officers, directors, employees, agents, and affiliates (and the officers, directors, employees and agents of such affiliates) (each, an "ACN Indemnified Party") if any such ACN Indemnified Party shall at any time or from time to time suffer any Loss arising out of, relating to or resulting from Buyers' performance of Transition Services under this Agreement, to the extent any such losses result from the gross negligence or willful misconduct of Buyer in performing the Transition Services. (b) Survival. The provisions of this Article 9 shall survive the termination of this Agreement for a period of two (2) years. (c) Limit of Liability. Neither ACN nor the ACN Service Providers for their part nor Buyer nor the Buyer Service Parties for their part shall be liable to the other, and each hereby releases the other and their Affiliates, and each officer, director, employee and agent of the other and/or any of its Affiliates from, any Loss arising from any act, omission, or other fault of the other in connection with the Transition Services, except to the extent any such Loss results from gross negligence or willful misconduct. NOTWITHSTANDING ANYTHING IN THIS AGREEMENT TO THE CONTRARY, THE AGGREGATE LIABILITY OF A PARTY TO 10

THE OTHER UNDER THIS AGREEMENT SHALL NOT EXCEED THE AGGREGATE AMOUNT OF PAYMENTS RECEIVED HEREUNDER BY THE PARTY NOT EXPERIENCING THE LOSS. IN NO EVENT SHALL ANY PARTY BE LIABLE TO THE OTHER PARTY FOR SPECIAL, INDIRECT, INCIDENTAL CONSEQUENTIAL OR PUNITIVE LOSS, DAMAGES OR EXPENSES (INCLUDING LOST PROFITS OR SAVINGS) ("CONSEQUENTIAL DAMAGES") ARISING FROM THIS AGREEMENT OR THE PERFORMANCE OR NON-PERFORMANCE OF SERVICES HEREUNDER. SECTION 10. Headings. The headings in this Agreement are for reference only, and shall not affect the interpretation of this Agreement. SECTION 11. Schedules. All references herein to Articles, Sections, subsections, paragraphs, subparagraphs, clauses and Schedules shall be deemed references to such parts of this Agreement, unless the context shall otherwise require. SECTION 12. Required Insurance. (a) Until expiration of the Service Period, ACN or each ACN Service Provider, and Buyer shall maintain a level of insurance coverage substantially similar to that held by each prior to Closing with financially sound and reputable insurance companies. (b) Upon request of one party under this Agreement, certificates of insurance evidencing the above-required insurance shall be provided to the other party under this Agreement. SECTION 13. Force Majeure. If by reason of a Force Majeure Event either party is rendered unable, in whole or in part, to perform its obligations under this Agreement, other than the obligation to make payments of money then due, such party shall be excused from such performance to the extent it is prevented by, and during the continuance of, such Force Majeure Event. The party whose performance is affected by an Force Majeure Event shall (i) give the other party notice of the occurrence of such Force Majeure Event as soon as practicable and (ii) use all commercially reasonable efforts to remedy the cause(s) and effect(s) of such Force Majeure Event with all reasonable dispatch; provided, however, that the affected party shall not be obligated to undertake unreasonable costs or burdens in order to overcome the effects of the Force Majeure Event and reinstate full performance of its obligations under this Agreement. SECTION 14. Notices. (a) Any notice or other communication required or permitted hereunder shall be in writing and shall be deemed given if delivered personally, by facsimile (which is confirmed) or sent by first class notice certified mail or overnight courier (providing proof of delivery), to the parties at the following address: If to ACN: American Communications Network, Inc. 32991 Hamilton Court Farmington Hills, Michigan 48334 11

Facsimile: (284) 489-8901 Attention: Chief Financial Officer with a copy to: Jaffe, Raitt, Heuer & Weiss, P.C. 27777 Franklin Road, Suite 250 Southfield, Michigan 48034 Facsimile: (248) 351-3082 Attention: Ralph Margulis If to the Buyer: Commonwealth Energy Corporation 600 Anton Blvd, Ste 2000 Costa Mesa, CA 92626 Attention: Peter Weigand Facsimile: (714) 259-2575 with a copy to: Stroock & Stroock & Lavan LLP 180 Maiden Lane New York, New York 10038 Attention: Michael Shenberg, Esq. Facsimile: (212) 806-6006 (b) Any party may, by notice given in accordance with this Section 14 to the other parties, designate another address or person for receipt of notices hereunder, provided that notice of such a change shall be effective upon receipt. 12

SECTION 15. Successors and Assigns. This Agreement will be binding upon and inure to the benefit of ACN and Buyer and their respective successors, permitted assigns and legal representatives. No party may assign this Agreement or any right or obligation hereunder (whether by acquisition, merger, operation of law, other transaction constituting a change of control or otherwise) without the prior written consent of the other party, which consent shall not be unreasonably withheld, however; any assignment without such consent shall be void. SECTION 16. Signatures Counterparts. Facsimile transmission of any signed original document and/or retransmission of any signed facsimile transmission shall be the same as delivery of an original. At the request of Buyer or ACN, the parties will confirm facsimile transmission by signing a duplicate original document. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original and all of which together shall be considered one and the same agreement. SECTION 17. Amendments. This Agreement may be amended, modified or supplemented only by a written instrument executed by ACN and Buyer. SECTION 18. Governing Law. (a) This Agreement will be governed by the laws of the state of New York without regard to conflict of law principles (b) Any claim, controversy or dispute between the parties shall be resolved by binding arbitration of the issue in accordance with the following procedures: (i) Either party may request arbitration by giving the other involved party written notice, which notice shall describe, in reasonable detail, the nature of the dispute, controversy or claim. The arbitration shall be governed by the rules of the American Arbitration Association ("AAA") and held in Houston, Texas or other mutually agreed upon location. (ii) If both parties agree an arbitrator within 30 days after a request for arbitration is made hereunder, that arbitrator shall be selected to hear the dispute in accordance with AAA rules. If the parties are not able to agree upon an arbitrator within such 30 day period, then that party who requested arbitration may request that the AAA select an arbitrator who has business experience in the energy industry similar to the Business and the selected arbitrator shall hear the dispute in accordance with AAA rules. (iii) Each of the parties shall bear its own fees, costs and expenses of the arbitration and its own legal expenses, attorneys' fees and costs of all experts and witnesses; provided, however, that if the claim of either party is upheld by the arbitrator in all material respects, the arbitrator may apportion between the parties as the arbitrator may deem equitable the costs incurred by the prevailing party. The fees and expenses of the arbitration procedures, including the fees of the arbitrator, will be shared equally by the parties. 13

(iv) Any award rendered pursuant to an arbitration proceeding shall be final, conclusive, non-appealable and binding upon the parties, and any judgment thereon may be entered and enforced in any court of competent jurisdiction. SECTION 19. Entire Agreement. This Agreement and the Purchase Agreement and all Schedules attached thereto constitute the entire agreement between the parties hereto relating to the subject matter hereof and supersede all prior and contemporaneous agreements, understandings, negotiations and discussions, whether oral or written, of the parties, and there are no general or specific warranties, representations or other agreements by or among the parties in connection with the entering into of this Agreement or the subject matter hereof except as specifically set forth or contemplated herein or therein. SECTION 20. Negotiated Agreement. This Agreement has been negotiated by the parties and the fact that the initial and final draft will have been prepared by either party will not give rise to any presumption for or against any party to this Agreement or be used in any respect or forum in the construction or interpretation of this Agreement or any of its provisions. SECTION 21. Waiver. No consent or waiver, express or implied, by any party to or of any breach or default by any other party in the performance by such other party of its obligations hereunder shall be deemed or construed to be a consent or waiver to or of any other breach or default in the performance of obligations hereunder by such other party hereunder. Failure on the part of any party to complain of any act or failure to act of any other party or to declare any other party in default, irrespective of how long such failure continues, shall not constitute a waiver by such first party of any of its rights hereunder. SECTION 22. Severability. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, void or unenforceable, each of ACN and Buyer directs that such court interpret and apply the remainder of this Agreement in the manner that it determines most closely effectuates their intent in entering into this Agreement, and in doing so particularly take into account the relative importance of the term, provision, covenant or restriction being held invalid, void or unenforceable. SECTION 23. Interpretation. Whenever the words "include," "includes," or "including," are used in this Agreement, they shall be deemed to be followed by the words "without limitation." SECTION 24. No Third Party Beneficiaries. Except for Buyer and ACN Service Providers, which are intended third party beneficiaries, and except as set forth in Sections 9 and 15, nothing in this Agreement is intended or shall be construed to give any person, other than the parties hereto, their successors and permitted assigns, any legal or equitable right, remedy or claim under or in respect of this Agreement or any provision contained herein. SECTION 25. Specific Performance and Other Equitable Rights. (a) ACN recognizes and acknowledges that Buyer would not have entered into the Purchase Agreement unless ACN had agreed to execute this Agreement and perform the Transition Services in accordance herewith, and that a breach by ACN of any covenants or other commitments contained in this Agreement will cause Buyer to sustain injury for which it would not have an adequate remedy at law for money damages. Therefore ACN agrees that in the event 14

of any such breach, the Buyer shall be entitled to the remedy of specific performance of such covenants or commitments and preliminary and permanent injunctive and other equitable relief in addition to any other remedy to which Buyer may be entitled, at law or in equity. (b) Buyer recognizes and acknowledges that ACN would not have entered into the Purchase Agreement unless Buyer had agreed to execute this Agreement and perform the Transition Services in accordance herewith, and that a breach by Buyer of any covenants or other commitments contained in this Agreement will cause ACN to sustain injury for which it would not have an adequate remedy at law for money damages. Therefore Buyer agrees that in the event of any such breach, ACN shall be entitled to the remedy of specific performance of such covenants or commitments and preliminary and permanent injunctive and other equitable relief in addition to any other remedy to which ACN may be entitled, at law or in equity. SECTION 26. Press Release. Except as required by Laws or applicable stock exchange rules, neither party shall issue any press releases or any other public disclosure relating to or arising out of the performance of this Agreement without the prior written consent and approval of the content of such statement by the other party. The disclosing party shall notify the other party of any such requirement of Law to disclose and shall promptly provide a copy of the relevant disclosure to the other. SECTION 27. Further Assurance. Each of the parties agrees at any time and from time to time during the Service Period, upon the request of the other party, to do, or to cause to be done, all such further acts and assurances as may be required to carry out the terms and conditions of this Agreement. [Remainder of Page Intentionally Left Blank] 15

IN WITNESS WHEREOF, the parties have caused this Agreement to be executed and delivered by their duly authorized officers as of the date first above written. AMERICAN COMMUNICATIONS NETWORK, INC. a Michigan Corporation By: /S/ JAMES F. MULCAHY ---------------------------- Name: Name: James F. Mulcahy ---------------------------- Title: Title: Secretary/Treasurer ---------------------------- COMMONWEALTH ENERGY CORPORATION a California Corporation By: /S/ PETER WEIGAND ---------------------------- Name: Name: Peter Weigand ---------------------------- Title: Title: President ---------------------------- [Signature page to Transition Services Agreement]

EXHIBIT - 2.3 SALES AGENCY AGREEMENT AGREEMENT, dated as of February 9, 2005, by and between Commonwealth Energy Corporation, a California corporation ("Buyer"), and American Communications Network, Inc., a Michigan corporation ("ACN"), and, as to Section 8 only, Commerce Energy Group, Inc., a Delaware corporation ("CEG"). W I T N E S S E T H WHEREAS, Buyer, ACN and ACN Utility Services Inc., ACN Energy Inc. and ACN Power, Inc. (the "ACN Parties") have entered into that certain Asset Purchase Agreement, dated as of February 9, 2005 (the "Purchase Agreement"), pursuant to which the ACN Parties are selling substantially all of the assets, properties, rights and businesses of the Retail Energy Business to Buyer; WHEREAS, as a condition to entering into the Purchase Agreement, ACN has agreed that its network of independent sales representatives (the "Representatives") shall act as a limited agent for Buyer to sell electric commodity and natural gas products and related services of the Retail Energy Business (the "Energy Products") to retail residential and commercial consumers from and after the Closing Date, subject to the terms and conditions set forth herein; NOW, THEREFORE, in consideration of the mutual covenants contained herein and for other good and valuable consideration set forth herein, the sufficiency of which is hereby acknowledged, and intending to be legally bound, the parties hereto agree as follows: 1. Defined Terms. Terms used herein but not defined herein shall have the meaning ascribed to them in the Purchase Agreement. In addition, the following terms shall have the following meanings: "Accepted Customer" shall mean those customers of ACN which are accepted by Buyer pursuant to standards to be determined from time-to-time by Buyer in its sole discretion and applied by Buyer in a consistent manner as gauged on a same UDC market, same energy product or commodity, and same customer class basis. "ACN Call-Center-sourced Customers" shall mean those customers of ACN which have initiated contact with ACN, via an inbound call, to ACN's call center, and requested to become a customer of ACN and have ultimately purchased one or more Energy Products from ACN, which customers (a) are Accepted Customers and (b) have been or will be billed by Buyer during or as of the relevant measurement period. "ACN Commission Reports" shall have the meaning ascribed to such term in Schedule A attached hereto. "ACN Indemnified Person" shall have the meaning ascribed to such term in Section 10(c).

"ACN-Sourced Customers" shall mean those customers presented by ACN or the Representatives under this Agreement to Buyer which customers (a) are Accepted Customers and (b) have been or will be billed by Buyer during or as of the relevant measurement period. "Agency Customers" shall have the meaning ascribed to such term in Section 7(a). "Agency Period" shall have the meaning ascribed to such term in Section 3(a). "Average Closing Price" shall mean, for any date of determination, the average closing sale price per share of the Stock for the five (5) trading days immediately preceding the date of determination on the American Stock Exchange or, if not listed on such exchange, on such other national exchange or quotation system upon which the Stock is then listed or quoted. "Benchmark" shall have the meaning ascribed to such term in Section 7(a). "Billing Report" shall have the meaning ascribed to such term in Section 6(a)(ii). "Billing Report Date" shall have the meaning ascribed to such term in Section 8(b). "Buyer Indemnified Person" shall have the meaning ascribed to such term in Section 10(a). "Buyer RSG Liaison" shall have the meaning ascribed to such term in Section 4(g). "CAB's" shall have the meaning ascribed to such term in Schedule A attached hereto. "CEG" shall have the meaning ascribed to such term in the preamble. "CEG Common Stock" shall mean the common stock, $0.001 par value, of CEG. "Commencement Date" shall have the meaning ascribed to such term in Section 7(a). "Commission Notice" shall have the meaning ascribed to such term in Schedule A. "Commissions" shall have the meaning ascribed to such term in Section 6(a)(ii). "Confidential Information" shall have the meaning ascribed to such term in Section 9(a). "Customer Acquisition Fee" shall have the meaning ascribed to such term in Section 7(b). "Earned Level" shall have the meaning ascribed to such term in Schedule A attached hereto. "Energy Products" shall have the meaning ascribed to such term in the Whereas clause. "Initial Agency Period" shall have the meaning ascribed to such term in Section 3(a). -2-

"Month-End Period" shall have the meaning ascribed to such term in Section 7(a). "Post-Closing Call Center Customers" shall mean those ACN Call-Center-sourced Customers generated after the Closing Date. "Purchase Agreement" shall have the meaning ascribed to such term in the Whereas clause. "Rep" shall have the meaning ascribed to such term in Schedule A attached hereto. "Representatives" shall have the meaning ascribed to such term in the Whereas clause. "Representative-Sold Customer" shall have the meaning ascribed to such term in Section 6(a)(i). "Restrictive Period" shall have the meaning ascribed to such term in Section 9(c). "RVP" shall have the meaning ascribed to such term in Schedule A attached hereto. "Share Issuance Limitation" shall have the meaning ascribed to such term in Section 8(c). "Standards" shall have the meaning ascribed to such term in Section 2(a). "Stock" shall have the meaning ascribed to such term in Section 8(a). "SVP" shall have the meaning ascribed to such term in Schedule A attached hereto "Territory" means North America. 2. Sales Agency. (a) During the Agency Period, ACN shall provide, or cause to be provided, to Buyer its network of Representatives to act as the limited agent for Buyer to sell Energy Products on behalf and for the benefit of Buyer. ACN shall use its commercially reasonable efforts to cause the Representatives: (i) to sell Energy Products and otherwise promote the Retail Energy Business in a manner consistent with the manner in which such products were sold for the Retail Energy Business prior to the Closing Date, and (ii) to act as agent for the sale of Energy Products exclusively for or on behalf of Buyer. Buyer shall have the right to cause ACN to direct the Representatives with respect to sales of Energy Products, customer service and regulatory matters in accordance with Buyer's Licenses or Certificates, the statutes, rules, regulations, or policies of the applicable jurisdictions in which Buyer has authorized ACN and Representatives to conduct customer acquisition activities (the "Standards"), but in no event shall it have the right to cause ACN to take any actions (or inaction) with respect to management and oversight of, or the commissions or other fees paid or payable to, the Representatives. (b) ACN shall be responsible for directing the Representatives to adhere to the Standards in selling the Energy Products and otherwise in connection with the performance of -3-

any obligations of ACN or the Representatives under this Agreement. Neither ACN nor the Representatives nor their respective personnel shall have the power or authority to act as attorney-in-fact of Buyer or bind Buyer in any way without the prior written consent of Buyer. All customers acquired by the Representatives shall be subject to acceptance by Buyer to the extent permitted by law. (c) ACN's and Representatives' agency on behalf of Buyer shall be limited to the following acts: (i) solicitation of customers, (ii) the offering of Buyer's Energy Products as set forth in Buyers marketing materials, applications, and sales agreements, or (iii) recommending Buyer's Energy Products to retail customers. (d) ACN's and the Representatives' limited agency shall not include (i) the negotiation of prices or rates, terms or conditions of service for Buyer's Energy Products, (ii) taking title to Energy Products, (iii) arranging for the purchase, transportation, scheduling or delivery of Energy Products, (iv) interaction or transactions with pipelines, utilities, local distribution companies, other suppliers or marketers, or state or federal energy/utility regulators, or (v) execution of contracts or agreements on behalf of Buyer. (e) Buyer shall have the right to cause ACN to take appropriate actions with respect to the conduct of a Representative in order to comply with a notice or inquiry of any applicable Governmental Authority by providing at least 5 days' prior written notice (or such lesser period of notice as may be required by such Governmental Authority) to ACN specifying the applicable remedial or corrective actions required by the Governmental Authority. (f) ACN shall provide Buyer with true and complete copies of all independent representative form agreements and updates thereto from time to time. (g) In providing the Representatives hereunder, ACN agrees (i)(A) not to take any actions that it knows or, in the exercise of reasonable care, should know would be harmful in any material respect to the business and operations of the Buyer, (B) to use its commercially reasonable efforts to promote the Retail Energy Business and the interests of Buyer in the same manner as it promotes its own business, and (C) to comply with all applicable energy federal, state and local laws, the Standards, and Buyer's policies and procedures established in accordance with Section 5(a) hereof as in effect from time to time, and (ii) to use its commercially reasonable efforts to cause the Representatives to do (or not to do, as applicable) the same. 3. Agency Period; Termination. (a) The Agreement shall become effective as of the date hereof and continue for a period of one year (the "Initial Agency Period") or until earlier terminated as provided herein. Upon the expiration of such one-year period, this Agreement shall be automatically renewed on a year-to-year basis unless terminated by either Buyer or ACN by the giving of written notice of termination to the other party hereto at least 90 days' prior to the expiration of the initial term or any successive term. The Initial Agency Period and any successive term being collectively referred to herein as the "Agency Period." -4-

(b) This Agreement may be terminated at any time prior to the expiration of the Agency Period by any of the following: (i) by mutual written agreement of the parties; (ii) by either party upon the occurrence of a material breach by the other party that remains uncured for a period of thirty (30) days after such breaching party receives written notice describing the breach in reasonable detail from the non-breaching party. (c) In the case of termination other than as provided in Section 3(b)(ii), notwithstanding any other provision of this Agreement, any such termination shall be without liability to either party. Any termination as provided in Section 3(b)(ii) shall be without prejudice to the non-breaching party's rights to seek damages for such breach. 4. Duties of ACN. ACN will use its best efforts to cause the Representatives to sell standard offer contracts of the Retail Energy Business as approved by Buyer to pre-approved customer classes in electric and gas markets as designated by Buyer in which ACN-Sourced Customers are located; and will perform the following functions: (a) process, reconcile, and make payments to Representatives of commissions received from Buyer on each Representative-Sold Customer; (b) provide Buyer with information similar in all material respects to that set forth in Schedule A attached hereto for the purpose of identifying the amount of Commissions to be paid by Buyer to ACN in accordance with Section 6 hereof for ACN payment to Representatives; (c) at Buyer's option, ACN will perform all Representative-service functions; (d) ACN will use its best efforts to give Buyer access to ACN's Representative conventions and regional training and orientation sessions and regional and local level conferences, training sessions, meetings and gatherings at which ACN's other training and product/service familiarization is scheduled to occur so that Buyer may train the Representatives on products, processes, and procedures to sell Energy Products; (e) ACN and Buyer will agree from time to time to provide Representatives material to be provided by Buyer for presentation through ACN's website area(s) serving Representatives, including potential links to Buyer's website area(s) intended to inform the Representatives of Energy Products available for Representatives to sell; (f) ACN will use its commercially reasonable efforts to promote the agency relationship created hereunder to the Representatives; (g) ACN will permit a representative of Buyer (a "Buyer RSG Liaison") to work in ACN's offices housing its RSG (and provide an amount of enclosed office space with a locking door customary for a senior executive) for the purpose of assisting RSG management in -5-

understanding energy products, answering energy sales questions and generally assisting with the interface between the two organizations (ACN and Buyer) with respect to activities under this Agreement; and (h) ACN will obtain and maintain any licenses or certificates required to perform its obligations under this Agreement. 5. Duties of Buyer. Buyer shall provide Energy Products for the Representatives to sell in accordance with the following terms: (a) Buyer shall set all pricing and terms of service, as well as establish the policies and procedures for the Representatives to sell Energy Products for the Retail Energy Business; (b) Buyer shall undertake all business functions relating to customers generated by the Representatives pursuant to this Agreement, including, but not limited to, order entry, provisioning, billing, collections, energy supply and scheduling, utility interfaces, and customer tracking; (c) Buyer shall provide ACN with reports and/or electronic data reasonably satisfactory to ACN, at such times as are reasonably acceptable to ACN, in order for ACN to properly administer its incentive compensation and other programs for the Representatives and so that ACN may reconcile its records with those of Buyer; (d) Buyer shall be entitled to provide training for Representatives at such times as may be reasonably acceptable to ACN at ACN's Representative conventions, and regional training and orientation sessions and regional and local level conferences, training sessions, meetings and gatherings at which ACN's other training and product/service familiarization is scheduled to occur and Buyer shall provide all product literature, contractual forms, and any other materials needed for the Representatives (including web-based information) to be able to sell Buyer energy products and services; (e) Buyer may provide a Buyer RSG Liaison, which liaison shall be reasonably acceptable to ACN, to be co-located in the offices of ACN housing its RSG during the normal business hours of the RSG management; and (f) Buyer will comply with all applicable energy federal, state and local laws necessary to satisfy the purposes of this Agreement. 6. Commission Payment. (a) Buyer shall pay ACN commission payments for all sales generated by the Representatives in the following manner: (i) For each (A) Transferred Customer and (B) ACN-sourced Customer and ACN Call-Center-sourced Customer (i.e., excluding Post-Closing Call Center -6-

Customers) which (1) is an Accepted Customer and (2) has been billed by Buyer (each such customer hereinafter referred to as a "Representative-Sold Customer"), Buyer shall pay ACN amounts equivalent to the actual commissions (without taking into account any deduction by ACN from such commissions of ACN's customary out-of-pocket costs) and which ACN, using its policies and procedures as in effect on the date hereof (taking into account the deduction by Buyer of the 10% of commission deduction by ACN for presumed bad-debt), will in turn pay to the Representative(s) as such amounts are further defined and limited as specified in Section 6(a)(ii) hereof. Except with the prior written consent of Buyer, ACN shall direct the Representatives not to sell, and Buyer shall have no obligation to pay ACN any commissions with respect to, any Energy Products other than "standard offers". (ii) Within ten (10) days after the end of each month, Buyer shall provide ACN with a report (the "Billing Report") setting forth the billed revenue from the sale of Energy Products with respect to all Representative-Sold Customers during the prior month, and within ten (10) days after receiving the Billing Report, ACN shall send Buyer the Commission Notice. Buyer shall pay any undisputed commissions directly to ACN within sixty (60) days after the end of the month to which the Commission Notice applies, with any disputed commission paid, if necessary, promptly after resolution thereof by the parties. Each party shall be entitled to conduct audits of the other's books and records as it deems necessary or advisable in order to verify the information set forth in the Billing Report or the Commission Notice, as applicable. (b) All commission payments shall be made by Buyer directly to ACN. ACN shall be solely liable for the payment of any and all compensation of whatever kind to the Representatives, other out of pocket expenses incidental to the paying of the Representatives or the Representatives' sale of Energy Products and benefits received by such independent contractors (including the Representatives). To the extent required, ACN (and not Buyer under any circumstance) shall issue an IRS Form 1099 to each of the Representatives with respect to any commissions or fees that any of the Representatives earns for the Energy Products provided hereunder. (c) Prior to an ACN customer becoming a Transferred Customer, Buyer shall provide ACN the information necessary to calculate Representatives' commissions substantially as set forth on Schedule A attached hereto and thereafter ACN shall provide reports substantially as set forth on Schedule A attached hereto so that Buyer may remit to ACN amounts in accordance with this Section 6 which are commission amounts for ACN to pay to the Representatives. (d) Subsequent to an ACN customer becoming a Transferred Customer, and for all Representative-Sold Customers, Buyer shall provide ACN the information necessary to calculate Representatives' commissions substantially as set forth on Schedule A attached hereto and thereafter ACN shall provide reports substantially as set forth on Schedule A attached hereto so that Buyer may remit to ACN amounts in accordance with this Section 6 which are commission amounts for ACN to pay to the Representatives. -7-

7. Customer Acquisition Payment Structure. (a) During the Initial Agency Period, Buyer shall calculate, not less frequently than by each month-end and shall report such calculation to ACN within twenty (20) days after the end of each month, the sum of Transferred Customers, ACN-Sourced Customers and Post-Closing Call Center Customers which it has sent a bill to during the billing cycle ending as of the last day of the immediately preceding month (hereafter referred to as "Agency Customers"). Buyer shall have an obligation to pay ACN a Customer Acquisition Fee upon the earlier to occur of (i) the expiration of the Initial Agency Period, or (ii) the day immediately after the last day of the month during the Initial Agency Period on which Buyer has at least [CONFIDENTIAL TREATMENT REQUESTED] Agency Customers (the "Commencement Date"). The number of Agency Customers of Buyer on the Commencement Date and on any month-end anniversary of the Commencement Date which is greater than the highest prior Benchmark shall be referred to herein as a "Benchmark" for the succeeding calendar month-end period (any such period, a "Month-End Period"). A Customer Acquisition Fee, to the extent payable, shall be paid by Buyer to ACN within 30 days of the expiration of the prior Month-End Period, for each Agency Customer enrolled as of the end of the prior Month-End Period in excess of the applicable Benchmark. Each party shall be entitled to conduct audits of all reports, calculations and determinations made by the other party with respect to the Customer Acquisition Fee. (b) The "Customer Acquisition Fee" shall equal an amount calculated by multiplying (i) the number of Agency Customers at the end of the Month-End Period in excess of the applicable Benchmark by (ii) [CONFIDENTIAL TREATMENT REQUESTED]. 8. Payment of Customer Acquisition Fee(s) Post-Initial Period. (a) Subject to the Share Issuance Limitation, upon the Commencement Date, CEG shall place into escrow, pursuant to the Escrow Agreement, a number of shares of CEG Common Stock, rounded down to the nearest whole number, determined by dividing $1,250,000 by the Average Closing Price on the day immediately prior to the Commencement Date. (b) Within twenty (20) business days after the date of receipt of the Billing Report (such date of receipt being referred to as a "Billing Report Date") most closely following the conclusion of a Month-End Period, a number of shares of CEG Common Stock shall be released from the escrow to ACN equal to (i) the Customer Acquisition Fee payable by Buyer to ACN with respect to the immediately prior Month-End Period divided by (ii) the Average Closing Price as of the Billing Report Date. If there is no CEG Common Stock remaining on deposit in the escrow at the time a release is required in accordance with the prior sentence, subject to the Share Issuance Limitation, CEG shall promptly deposit in escrow not less than a number of additional shares of CEG Common Stock equal to (1) $1,250,000 divided by (2) the Average Closing Price as of the Billing Report Date; provided, however, CEG shall have no obligation to deposit additional shares of CEG Common Stock into escrow unless such shares have been duly approved for listing on the American Stock Exchange (or such other national exchange or quotation system upon which the CEG Common Stock is then listed or quoted), provided that Buyer and CEG have used commercially reasonable efforts to do so. -8-

(c) Notwithstanding any provision of this Agreement or the Purchase Agreement, CEG shall have no obligation to issue any shares of CEG Common Stock pursuant to this Agreement or the Purchase Agreement, into escrow or otherwise, if the issuance of such shares of CEG Common Stock, together with all prior issuances under the Purchase Agreement and this Agreement in the aggregate, would result in the issuance of more than 14.9% of the shares of CEG Common Stock outstanding immediately prior to the date of execution of the Purchase Agreement (the "Share Issuance Limitation"). (d) If (i) there is insufficient CEG Common Stock remaining on deposit in the escrow at the time a release is required pursuant to this Agreement due to the Share Issuance Limitation or (ii) there is any failure to have CEG Common Stock listed on the American Stock Exchange (or such other national exchange or quotation system upon which the CEG Common Stock is then listed or quoted) within the timeframe provided in Section 8(b), then, in lieu of such release of CEG Common Stock, ACN shall be entitled to, and Buyer shall make, such payment in cash within thirty (30) days. (e) The procedures for payment of Post-Initial Period Customer Acquisition Fees shall be reasonably similar to those procedures for payment of Customer Acquisition Fees applicable to the Initial Period. Upon expiration of the Agency Period or termination of this Agreement, after payment of all amounts to ACN pursuant to this Section 8, all shares of CEG Common Stock remaining in the escrow shall be released to Buyer. (f) Each party shall have the same right to audit the methods of calculating the number of Agency Customers used in the determination of the Customer Acquisition Fee in the Post-Initial Period as granted to the such party during or applicable to the Initial Period. (g) ACN represents and warrants to Buyer and CEG as follows: (i) ACN is acquiring the CEG Common Stock, when and if released to ACN pursuant to this Agreement and the Escrow Agreement, for its own account and not with a present view to, or for sale in connection with, any distribution thereof. ACN consents to the placement of the following legend on each certificate representing the shares of CEG Common Stock and acknowledges that stop transfer instructions will be placed with CEG's transfer agent: "THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AND MAY NOT BE TRANSFERRED OR SOLD UNLESS (i) A REGISTRATION STATEMENT UNDER SUCH ACT (OR AN EXEMPTION FROM SUCH REGISTRATION) IS THEN IN EFFECT WITH RESPECT THERETO, (ii) A WRITTEN OPINION FROM COUNSEL FOR THE ISSUER OR OTHER COUNSEL FOR THE HOLDER REASONABLY ACCEPTABLE TO THE ISSUER HAS BEEN OBTAINED TO THE EFFECT THAT NO SUCH REGISTRATION IS REQUIRED OR (iii) A 'NO ACTION' LETTER OR -9-

ITS THEN EQUIVALENT HAS BEEN ISSUED BY THE STAFF OF THE SECURITIES AND EXCHANGE COMMISSION WITH RESPECT TO SUCH TRANSFER OR SALE." (ii) ACN understands that the CEG Common Stock will not be registered under the Securities Act for the reason that the sale provided for in this Agreement is exempt pursuant to Section 4(2) of the Securities Act and that the reliance of CEG and the Buyer on such exemption is predicated in part on ACN's representations set forth herein. ACN represents that it is experienced in evaluating companies such as CEG and the Buyer, has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of its investment, and has the ability to suffer the total loss of its investment in the CEG Common Stock. ACN is an accredited investor within the meaning of Rule 501 of Regulation D promulgated under the Securities Act. ACN further represents that it has had access during the course of the transaction and prior to its acquisition of the shares of CEG Common Stock to such information relating to CEG and the Buyer as it has desired and that it has had the opportunity to ask questions of and receive answers from the CEG and the Buyer concerning the transaction and to obtain additional information (to the extent CEG and the Buyer possessed such information or could acquire it without unreasonable effort or expense) necessary to verify the accuracy of any information furnished to it or to which it had access. (iii) ACN understands that the shares of CEG Common Stock may not be sold, transferred or otherwise disposed of by ACN without registration under the Securities Act or an exemption therefrom and that in the absence of an effective registration statement covering the shares of CEG Common Stock or an available exemption from registration under the Securities Act, the shares of CEG Common Stock must be held indefinitely. (iv) At each time of delivery of the shares of CEG Common Stock from the escrow in accordance with this Section 8 and the Escrow Agreement, before any shares are released from escrow in accordance with the terms of this Agreement and the Escrow Agreement, ACN shall deliver to Buyer and CEG a certificate confirming that each of the representations and warranties set forth in this Section 8(g) continue to be true and correct in all respects. (h) ACN agrees that neither it nor its Affiliates will in any manner, directly or indirectly, purchase or sell securities of the CEG during any period during and within three trading days of the determination of the Average Closing Price. (i) Should any fractional share result from the calculations described in this Agreement, the number shares of CEG Common Stock released from escrow shall be rounded up -10-

to the next greater whole number if the fraction is greater or equal to one-half and rounded down to the next lesser whole number if the fraction is less than one-half; provided, however, that the number of shares to be released, as applicable, after giving effect to such rounding up shall not exceed the total number of shares of CEG Common Stock available and held by Escrow Agent. (j) Notwithstanding any other provision of this Agreement, the Purchase Agreement or the Escrow Agreement or any other agreement entered into by the parties in connection with the transactions contemplated hereby or thereby, if at any time ACN, together with its Affiliates, beneficially owns more than 9.9% of the outstanding common stock of CEG (any such period of time, a "10% Holder Period"), ACN shall provide Buyer and CEG with written notice thereof, and Buyer shall have the right to provide written notice to ACN electing to suspend the stock escrow payments under this Section 8 for the duration of the 10% Holder Period and, in lieu thereof, make any such required payments in cash. 9. Confidential Information; Return of Documents; Non-Competition; Non-Solicitation. (a) ACN agrees not to, and to cause its officers, directors, employees, stockholders, Affiliates and representatives (including, but not limited to, the Representatives) not to, directly or indirectly, without the prior written consent of Buyer, use or disclose to any Person any information, trade secrets, customer information, technical data or know-how relating to the products, processes, methods, equipment or business practices (collectively, "Confidential Information") of the Retail Energy Business. (b) Upon expiration of the Agency Period or termination of this Agreement, ACN shall, and shall cause its officers, directors, employees, stockholders, Affiliates and representatives (including, but not limited to, the Representatives) to, immediately deliver to Buyer all plans, designs, drawings, specifications, listings, manuals, memoranda, projections, minutes, records, notebooks, computer programs and files and similar repositories of or containing Confidential Information, including all copies, then in the possession or control of any of the foregoing persons or otherwise available to them, whether prepared by any of them or others, and none of the foregoing persons shall retain any copies or abstracts of any such documents, other than those copies ACN is required by law to retain. (c) During the Agency Period and for a period of one year following the earlier of the expiration thereof or the termination of this Agreement (the "Restrictive Period"), ACN agrees that: (i) neither ACN nor any of its Affiliates will, directly or indirectly, anywhere in the Territory, (A) engage in any business the same as or similar to, or engage in competition with, the Retail Energy Business as heretofore engaged in by ACN or any of its Subsidiaries or engaged in by Buyer or its Subsidiaries during the Restrictive Period, (B) render services to or have any interest, as a shareholder, owner, agent, consultant, lender or guarantor or any other interest, in any other Person (other than ACN) engaged in the manufacture or sale of energy-related products, or the rendering of energy-related services, which are currently being manufactured or sold or rendered by the Retail Energy Business, or similar energy-related -11-

products or services, or (C) engage in competition with, or manufacture or sell, such products or services as are referred to in clause (ii) of this Section 9(c)(i); and (ii) neither ACN nor any of its Affiliates or representatives will, directly or indirectly, (i) solicit or attempt to solicit (either for itself or as agent for another) for employment or induce, persuade or encourage any person to leave the employ of Buyer or any of its Affiliates who, prior to the Closing Date was, or during the Restrictive Period will be, employed or retained by Buyer or any of its Affiliates as a consultant, agent, employee or otherwise or (ii) divert or attempt to divert from Buyer or any of its Affiliates any business whatsoever by influencing or attempting to influence any existing or prospective customer or supplier of the Retail Energy Business or Buyer or any of its Affiliates. Notwithstanding the foregoing, ACN shall be permitted to hire or otherwise utilize any person terminated or not employed by Buyer. (d) During the Restrictive Period, except as set forth in the Purchase Agreement, this Agreement or in connection with the transactions contemplated hereby and thereby, Buyer agrees that neither it nor any of its Affiliates or representatives will, directly or indirectly, (i) solicit or attempt to solicit (either for itself or as agent for another) for employment or induce, persuade or encourage any person to leave the employ of ACN or any of its Affiliates who, prior to the Closing Date was, or during the Restrictive Period will be, employed or retained by ACN or any of its Affiliates as a consultant, agent, employee or otherwise or (ii) divert or attempt to divert from ACN or any of its Affiliates any business whatsoever by influencing or attempting to influence any existing or prospective customer or supplier of ACN or any of its Affiliates. Notwithstanding the foregoing, Buyer shall be permitted to hire or otherwise utilize any person terminated or not employed by ACN. (e) Each party acknowledges and agrees that any breach of this Section 9 is likely to result in irreparable injury to the other, that monetary damages will be an inadequate remedy of such breach and that, accordingly, in addition to any other remedy that such party may have, such party shall be entitled to enforce the specific performance of this Section 9 and to seek both permanent and temporary injunctive relief in the event of any breach hereof. All expenses, including, without limitation, attorney's fees and expenses incurred in connection with any legal proceeding arising as a result of a breach or threatened breach of this Section 9 shall be borne by the losing party to the fullest extent permitted by law and the losing party hereby agrees to indemnify and hold the other party harmless from and against all such expenses. (f) The parties acknowledge that the time, scope, geographic area and other provisions of this Section 9 have been specifically negotiated by sophisticated commercial parties and agree that all such provisions are reasonable under the circumstances of the transactions contemplated by this Agreement. If any portion of this Section 9 shall be determined to be invalid and unenforceable as written, each such portion shall be enforced to the extent reasonable under the circumstances and such determination shall not affect the validity or enforceability of the balance hereof, and such balance shall remain in full force and effect. It is understood that ACN is entering into the provisions of this Section 9 in order to induce Buyer to enter into the Purchase Agreement and consummate the transactions contemplated thereby. The parties acknowledge that the business of ACN is currently conducted throughout the Territory. -12-

In view of the statements made in the preceding sentence, the parties agree that the Territory is reasonable in scope. The provisions of this Section 9 shall survive the expiration of the Agency Period and any termination of this Agreement. 10. Waiver of Liability; Indemnification. (a) ACN hereby waives, releases and discharges Buyer and its directors, officers, employees, stockholders, Affiliates and agents (each, a "Buyer Indemnified Person" and collectively, the "Buyer Indemnified Persons") from any and all claims or demands which ACN may have or acquire against any of the Buyer Indemnified Persons with respect to any claim for any Damages incurred or sustained by any of the Buyer Indemnified Persons arising out of, resulting from or based upon the actions (or inactions) of ACN, its Affiliates or the Representatives in selling the Energy Products and otherwise performing their obligations hereunder, other than as a result of the breach of this Agreement or the gross negligence, bad faith, willful misconduct or criminal conduct of such Buyer Indemnified Person. (b) ACN hereby agrees to indemnify and hold each Buyer Indemnified Person harmless from and against all Damages which any Buyer Indemnified Person may sustain, incur or assume as a result of any allegation, claim, civil or criminal action, proceeding, charge or prosecution which may be alleged, made, instituted or maintained against any Buyer Indemnified Person arising out of, resulting from or based upon (i) any breach by ACN of any of its representations, warranties, covenants or agreements contained in this Agreement, or (ii) any claim asserted or threatened to be asserted by any third party in connection with ACN, its Affiliates or the Representatives, selling the Energy Products or serving or having served pursuant to this Agreement; provided, however, ACN shall not be liable to indemnify and hold any Buyer Indemnified Person harmless from any such Damages to the extent it is the result of the gross negligence, bad faith, willful misconduct or criminal conduct of, or the breach of this Agreement by, the party seeking indemnification hereunder. (c) Buyer hereby agrees to indemnify and hold ACN and its directors, officers, employees, stockholders, Affiliates and agents (each, an "ACN Indemnified Person" and collectively, the "ACN Indemnified Persons") harmless from and against all Damages which any ACN Indemnified Person may sustain, incur or assume as a result of any allegation, claim, civil or criminal action, proceeding, charge or prosecution which may be alleged, made, instituted or maintained against any ACN arising out of, resulting from or based upon (i) any breach by Buyer of any of its representations, warranties, covenants or agreements contained in this Agreement, or (ii) any claim asserted or threatened to be asserted by any third party in connection with Buyer's obligations pursuant to this Agreement, in each case solely to the extent that any such Damages is the direct result of the gross negligence, bad faith, willful misconduct or criminal conduct with respect to any training, sales materials, literature, forms or documents provided by Buyer for use by the Representatives of, or the breach of this Agreement by, any of the Buyer Indemnified Persons. 11. Independent Contractors. The parties acknowledge that they are entering into this Agreement as independent contractors and that this Agreement shall not create and shall not be construed to create a relationship of joint venturers, co-partners, employer and employee, master -13-

and servant or any similar relationship between the parties. 12. Expenses. Except as otherwise provided for herein, each party will pay its own expenses in connection with this Agreement and the completion of the transactions contemplated hereby. 13. Expenses Related to Audit Rights. Wherever either party has an audit right, the party exercising its audit right shall be entitled to reimbursement of its reasonable and customary expenses associated with such audit from the other party in the event such audit results in a determination that there was a material inaccuracy adverse to the party conducting the audit. Further, the party being audited shall be entitled to reimbursement of its reasonable and customary expenses associated with supporting such audit from the party conducting the audit in the event such audit results in a determination that the subject matter audited was materially accurate. Any inaccuracies determined by any such audit shall be corrected in the favor of the party to whom the inaccuracy was adverse. 14. Force Majeure. In the event that war, fire, explosion, flood, accident, strike, riot, act of governmental authority, act of terrorism, act of God or other contingency beyond the reasonable control of ACN causes cessation or interruption of ACN's or the Representatives' performance hereunder, performance by ACN shall be temporarily excused for the period of the disability, without liability, provided that ACN shall promptly after they have actual knowledge of the beginning of any excusable delay, notify Buyer of such delay, the reason therefor, and the probable duration and consequence thereof. ACN shall use its reasonable best efforts to resume performance of its and the Representatives' obligations hereunder with the least possible delay. 15. Miscellaneous. (a) Entire Agreement; Amendment; Waiver. This Agreement, together with the Purchase Agreement and the Schedules and Exhibits hereto and thereto, contains the entire understanding of the parties as to the subject matter hereof and fully supersedes all prior agreements and understandings between the parties as to such subject matter. This Agreement may not be amended, supplemented, canceled or discharged, except by a written instrument executed by the party as to whom enforcement is sought. No failure to exercise, and no delay in exercising, any right, power or privilege hereunder shall operate as a waiver thereof. No waiver of any breach of this Agreement shall be deemed to be a waiver of any preceding or succeeding breach of this Agreement. (b) Severability. The parties acknowledge that the terms of this Agreement are fair and reasonable at the date signed by them. However, in light of the possibility of a change of conditions or differing interpretations by a court of what is fair and reasonable, the parties stipulate as follows: if any one or more of the terms, provisions, covenants or restrictions of this Agreement shall be determined by a court of competent jurisdiction to be invalid, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions of this Agreement shall remain in full force and effect and shall in no way be affected, impaired or invalidated; further, if any one or more of the terms, provisions, covenants, and restrictions contained in this Agreement shall for any reason be determined by a court of competent -14-

jurisdiction to be excessively broad as to duration, geographical scope, activity or subject, it shall be construed, by limiting or reducing it, so as to be enforceable to the maximum extent compatible with then applicable law. (c) Notices. All notices, requests, demands and other communications provided for by this Agreement shall be in writing and mailed in the United States enclosed in a registered or certified post-paid envelope, return receipt requested, or transmitted by facsimile, or delivered by same-day or overnight courier service, and addressed to the addresses of the respective parties as set forth in Section 16 of the Purchase Agreement or to such changed addresses as such parties may fix by notice in accordance therewith. (d) Successors and Assigns. This Agreement is personal in its nature to ACN and ACN shall not, without the consent of Buyer, assign or transfer this Agreement or any rights or obligations hereunder. Buyer may freely transfer the Agreement to any Person then conducting the Retail Energy Business. This Agreement shall be binding upon and inure to the benefit of Buyer and its successors and assigns and upon ACN and its successors and permitted assigns. (e) Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of New York, without giving effect to principles of conflict of laws. (f) Arbitration. Any claim, controversy or dispute between the parties shall be resolved by binding arbitration of the issue in accordance with the following procedures: (i) Either party may request arbitration by giving the other involved party written notice, which notice shall describe, in reasonable detail, the nature of the dispute, controversy or claim. The arbitration shall be governed by the rules of the American Arbitration Association ("AAA") and held in New York, New York or other mutually agreed upon location. (ii) If both parties agree to an arbitrator within 30 days after a request for arbitration is made hereunder, that arbitrator shall be selected to hear the dispute in accordance with AAA rules. If the parties are not able to agree upon an arbitrator within such 30 day period, then that party who requested arbitration may request that the AAA select an arbitrator who has business experience in the sales industry and the selected arbitrator shall hear the dispute in accordance with AAA rules. (iii) Each of the parties shall bear its own fees, costs and expenses of the arbitration and its own legal expenses, attorneys' fees and costs of all experts and witnesses; provided, however, that if the claim of either party is upheld by the arbitrator in all material respects, the arbitrator may apportion between the parties as the arbitrator may deem equitable the costs incurred by the prevailing party. The fees and expenses of the arbitration procedures, including the fees of the arbitrator, will be shared equally by the parties. -15-

(iv) Any award rendered pursuant to an arbitration proceeding shall be final, conclusive, non-appealable and binding upon the parties, and any judgment thereon may be entered and enforced in any court of competent jurisdiction. (g) Headings. The headings in this Agreement are for convenience of reference only and shall not control or affect the meaning or construction of this Agreement. (h) Further Assurances. Each party agrees at any time, and from time to time, to execute, acknowledge, deliver and perform, and/or cause to be executed, acknowledged, delivered and performed, all such further acts, deeds, assignments, transfers, conveyances, powers of attorney and/or assurances as may be necessary, and/or proper to carry out the provisions and/or intent of this Agreement. Each party further agrees that if the standards applicable to oversight and responsibility of the Representatives is not acceptable to, or in compliance with, any applicable Governmental Authority, the standards shall be revised accordingly in a manner reasonably acceptable to the parties. (i) Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original and all such counterparts shall constitute one and the same instrument. -16-

IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed on the day and year first above written. COMMONWEALTH ENERGY CORPORATION By: /S/ PETER WEIGAND --------------------------- Name: Peter Weigand Title: President AMERICAN COMMUNICATIONS NETWORK, INC. By: /S/ JAMES F. MULCAHY --------------------------- Name: James F. Mulcahy Title: Secretary/Treasurer As to Section 8 only: COMMERCE ENERGY GROUP, INC. By: /S/ PETER WEIGAND --------------------------- Name: Peter Weigand Title: President [Signature page to Sales Agency Agreement]

SCHEDULE A REPRESENTATIVE COMMISSION CALCULATION PROCESS MODEL Commissions are processed on a monthly basis. The Buyer will provide a file of all billings of the ACN -Sourced Customers on a monthly basis, no later than the last business day of the month following the billing month (a Billing Month Report). Each record in such Billing Month Report will contain customer information including but not limited to the customer account number, Billed Energy Amount, and RepID (which ID will tie to the RepID in ACN's VIP system). In this file, there is no allowance made for the paid or outstanding status of any ACN -Sourced Customer account. ACN conducts at least a three-pass process with respect to calculating Representative Commissions for each monthly Billing Report prior to determining the actual Representative Commissions for each Representative for such Billing Month. The first of the three process passes against each Billing Month Report is called the Trial Preprocessing pass. The importance of the Daily Customer Reports to ACN is that the RVP's (RVP being a designation for one status level of an ACN Representative or "Rep") and SVP's (SVP being another designation for one status level of an ACN Rep) will have their commission amount change based upon "Earned Level." Earned Level also affects the Customer Acquisition Bonuses ("CAB's") paid to all applicable Reps (i.e., the selling Rep and all upline Reps). In addition to the Monthly Billing Report, the Buyer will provide ACN each Business Day a file containing customer records where the REPID Field contains a value associated with a Representative of ACN. Any new customer order received by the Buyer from an independent representative and accepted by Buyer pursuant to the Sales Agency Agreement by 2:00 PM ET each Business Day will be included in the daily customer file (Daily Customer Report). The Daily Customer Report will also include information on all ACN -Sourced Customers where the status of the customer has changed. The Daily Customer Reports are required daily since the compensation plan for the ACN's Representatives determines qualifications for bonuses and earned positions based on the number of active customers that an independent representative has either personally acquired or acquired through the other people in his/her sales organization. The status of each customer is displayed by the ACN to the independent representative on their personal customer list. The number of active personal customers is also used to determine eligibility for commission levels 1 through 7. CABs (Customer Acquisition Bonuses) are amounts paid to Reps by ACN independent of commissions and CAB payment amounts do not affect amounts paid by Buyer to ACN. Nevertheless, ACN requires the daily customer load files in order to calculate CAB amounts. Commissions are finalized for mailing and dated the third Friday of each month. The commissions are paid based on the billings from the third month prior to when commissions are paid. For example, commissions paid in April are based on billing in January. During the Trial

Preprocessing pass the billing files of all of ACN's services from all countries are loaded into the ACN's VIP system. The amounts are then verified to ensure that they match with the total billing for the applicable month. This step is completed the month prior to when commissions are paid. The second step in the Commission process is called the Preprocessing step. During this step the billing data is loaded into the VIP system and provided to the representatives on their reports. In addition, during Preprocessing any customers that are no longer active are removed and stop counting towards qualifications. Preprocessing occurs the last weekend of the month prior to the calculation of the commissions. Again, to support this Preprocessing ACN requires the Daily Customer Report. The third step in ACN's three-pass process is called the Processing step. The calculation of commissions to be paid is made during the Processing step which is a process conducted by ACN the weekend of the first Friday of each month. Those calculations are made based on customer billings (from the Applicable Billing Month Report), the commission level that each representative is qualified to receive and the qualifications of the Regional Vice Presidents (RVPs) and Senior Vice Presidents (SVPs). Each Rep's Personal Commission Percentage is calculated during the Processing step. Only one Personal Commission Percentage applies to a Rep for any given commission payment month. Each Rep's actual Upline Commission Percentage is calculated at the Processing Step. Commissions paid on levels one through seven are made if the representative is eligible by having the required number of customers active on the first Friday of the month. Representatives are eligible to receive RVP or SVP commissions if they are qualified as a RVP or SVP on the first Friday of the month. If a Rep moves up to RVP (or SVP) between billing month and payment month, their Upline Commission Percentage will change (upwards) before payment is made. Likewise, if a Rep moves down from an SVP (or RVP) between billing month and payment month, their Upline Commission Percentage will change (downwards) before payment is made. In addition, the promotion of a new RVP below an existing RVP will change the percentage commission of the existing upline RVP(s). An Open Line is defined as a downline progression of Reps and customers where, down to such level there is a Rep at the same position of higher. For example, the commission percentage on revenue along an RVP Open Line, (downline from an RVP, after level 7 through until the 7th level of the next RVP or SVP) is 1/4%. Whenever there is an RVP or higher (i.e., an SVP) below an RVP or higher, this lower-down RVP (or higher), referred to as the 1st generation RVP, stops the accumulation of Open Line RVP commissions until the Level 7 of the 1st generation RVP. If this 1st generation RVP (or SVP) "disappears", the levels below the higher up RVP (or SVP) are then reconstituted up to level 7; and then, below level 7, the downline progression is once again an Open line down from the higher RVP (or SVP as applicable) based upon who (i.e., the RVP or SVP) sat at the top. ACN reserves the right to modify its compensation plan, including earned positions and commissions, as it sees fit to enhance the business opportunity for its Reps; provided that it provides written notice to Buyer before the end of the month for which the

change is applicable; provided, further, that, Seller shall not make any such modification which would reasonably be expected to have a material adverse effect on the Retail Energy Business without the prior written consent of Buyer. Information to be Supplied by ACN to Buyer Under this Attachment 1 to the Sales Agency Agreement in Order to Provide Buyer with Commission Calculation and Commission Amount Information ("ACN Commission Reports"). Buyer shall provide to ACN a functional design specification for the ACN Commission Report that ACN will produce monthly to enable Buyer to reconcile and validate the Commission Notice, which design specifications and form of ACN Commission Report shall be mutually agreeable to Buyer and ACN, it being recognized by Buyer that the design specification shall be consistent with ACN's existing software capabilities. The actual cost of the first 40 hours of development work shall be borne by ACN and thereafter shared equally by Buyer and ACN. ACN will provide ACN Commission Reports to Buyer containing at least the following information in (an) electronic file(s) in a mutually agreed layout: 1) Billing revenue used in the calculation of commissions; 2) The amount of the billing revenue deemed to be commissionable (excludes non-commissionable services and includes a deduction of an allowance for bad debt); 3) Number of commissionable customers, the total commissionable revenue of billed customers and the total commissions generated at the Personal Commission Level. 4) Number of commissionable customers, the total commissionable revenue of the upline billed customers and the total commissions generated for Upline Commissions. 5) The amount of commissions generated by level. This will include the calculation of commissions on the personal commission volume, levels 1 through 7 and the RVP and SVP levels; and 6) The cash disbursements information on energy commissions which summarizes the amounts paid by ACN to representatives. Amounts generated in step #5 above may not all be paid in the same month. For example, if a representative has earned less than the minimum commission amount of $13.00 then the commissions will be held until the following month; provided, however, if the commission amount for a month is less than $13.00, such commissions shall be carried forward and paid at the time that the minimum commission amount for the representative equals or exceeds $13.00.

EXHIBIT 2.4 EXECUTION COPY ESCROW AGREEMENT ESCROW AGREEMENT, dated as of February 9, 2005, by and among Commonwealth Energy Corporation, a California corporation ("Buyer"), Commerce Energy Group, Inc., a Delaware corporation ("CEG"), American Communications Network, Inc., a Michigan corporation ("ACN"), ACN Utility Services, Inc., a Michigan corporation, ACN Energy, Inc., a Michigan corporation and ACN Power, Inc., a Michigan corporation (ACN, ACN Utility Services, Inc., ACN Energy, Inc., and ACN Power, Inc. are collectively referred to as "Sellers") and Computershare Trust Company, Inc., as escrow agent ("Escrow Agent"). W I T N E S S E T H: WHEREAS, Buyer, Sellers, ACN and CEG have entered into that certain Asset Purchase Agreement, dated as of February 9, 2005 (the "Asset Purchase Agreement"), pursuant to which Sellers are selling substantially all of the assets, properties, rights and business of the Retail Energy Business (as defined in the Asset Purchase Agreement) to Buyer; WHEREAS, as consideration for the purchase of the Retail Energy Business, Section 3.1(b) of the Asset Purchase Agreement provides for the delivery of 930,233shares (the "APA Shares") of common stock, par value $0.001 per share (the "CEG Common Stock") of CEG to the Escrow Agent on the Closing Date, such APA Shares to be delivered to and maintained by the Escrow Agent in accordance with the terms of this Agreement; WHEREAS, Buyer, CEG and ACN have entered into that certain Sales Agency Agreement, dated as of February 9, 2005 (the "Sales Agency Agreement"), pursuant to which ACN agreed that its network of independent sales representatives shall act as limited agents for Buyer to sell electric commodity and natural gas products and related services of the Retail Energy Business; and WHEREAS, Section 8(a) of the Sales Agency Agreement provides for the delivery, from time to time, of certain shares of common stock (the "SAA Shares" and, collectively with the APA Shares, the "Shares") of CEG, such SAA Shares to be delivered to and maintained by the Escrow Agent in accordance with the terms of this Agreement. NOW, THEREFORE, in consideration of the foregoing and the respective covenants and agreements hereinafter contained, the parties hereby agree as follows: SECTION 1. Definitions. Terms used herein but not defined herein shall have the meaning ascribed to them in the Purchase Agreement. In addition, the following terms shall have the following meanings: (a) "CEG Common Stock" shall have the meaning set forth in the recitals.

(b) "Proceeds" shall mean, as to any given APA Share or SAA Share, any stock or liquidating dividends, other distributions in property, return of capital or other distributions made on or in respect of such APA Share or the SAA Share (other than dividends payable out of the earnings of CEG), whether resulting from a subdivision, combination or reclassification of the outstanding capital stock of CEG or received in exchange for such Share or as a result of any merger, consolidation, acquisition or other exchange of assets to which CEG may be a party or otherwise. (c) "Shares" shall mean the APA Shares and the SAA Shares. SECTION 2. Deposit of Shares. (a) APA Shares. Upon receipt, the Escrow Agent shall acknowledge that it has received and deposited in a separate account maintained by the Escrow Agent hereunder (the "APA Escrow Account") the APA Shares delivered by CEG. Such APA Shares shall be held and dealt with by Escrow Agent subject to the terms and conditions of this Agreement. (b) SAA Shares. From time to time and as required by the Sales Agency Agreement, CEG may deliver to the Escrow Agent the SAA Shares which shall be acknowledged as received by the Escrow Agent to each party and deposited in a separate account maintained by the Escrow Agent hereunder (the "SAA Escrow Account"). Such SAA Shares shall be held and dealt with by Escrow Agent subject to the terms and conditions of this Agreement. SECTION 3. Use of Shares and Proceeds. The Shares and any Proceeds shall be held in escrow hereunder by Escrow Agent as herein provided. Escrow Agent shall not dispose of or distribute any of the Shares or Proceeds other than as provided in this Agreement. Unless the context otherwise requires, references in this Agreement to the Shares also shall be deemed to refer to any Proceeds. Each of CEG and ACN agree to cause all Proceeds received by it, prior to distribution of the Shares to which said distribution of Proceeds relates, to be deposited in the Escrow Account. SECTION 4. Dividends and Proxies with Respect to Shares. So long as any Shares are held by Escrow Agent hereunder: (a) CEG shall be entitled to exercise any and all voting and consensual rights and powers accruing to an owner of the APA Shares and the SAA Shares or any part thereof for any purposes not inconsistent with the terms of this Agreement, the Asset Purchase Agreement or the Sales Agency Agreement; provided, however, that Buyer shall give Escrow Agent and Seller at least five (5) business days' prior written notice of the manner in which he intends to exercise any such right or power. (b) Until such time as a joint written instruction from CEG and the Buyer, on the one hand, and ACN, on the other hand, is given with respect to any of the APA Shares and the SAA Shares, CEG shall be entitled to receive and retain any and all nonliquidating cash dividends payable in respect of the APA Shares and the SAA Shares. All Proceeds in respect of 2

the Shares held by Escrow Agent shall be retained by Escrow Agent and shall not be distributed except in accordance with the terms of this Agreement. (c) The APA Shares and the SAA Shares and any proceeds thereof shall not be commingled. Upon final disbursement of the APA Shares or the SAA Shares, the escrow relating thereto shall be terminated. (d) Escrow Agent, ACN and the Sellers shall execute and deliver to CEG, or cause to be executed and delivered to CEG, all such proxies, powers of attorney, dividend orders and other instruments for the purpose of enabling them to exercise the voting and consensual rights and powers which they are entitled to exercise pursuant to Section 4(a) and to receive the dividends which they are authorized to retain pursuant to Section 4(b). SECTION 5. Release from Escrow. (a) Upon joint written instruction from CEG and the Buyer, on the one hand, and ACN, on the other hand, the Escrow Agent shall release such amount of APA Shares or SAA Shares in accordance with such joint written instruction. In the absence of such joint written notice, the Escrow Agent shall release the Shares upon receipt of an order of a court of competent jurisdiction. (b) Each of the parties agree to join, at the request of the other party, in joint written notice authorizing the Escrow Agent to release the APA Shares or the SAA Shares when such shares are allowed to be released under the applicable agreement. (c) Any APA Shares remaining in escrow 14 months from the date hereof shall be released to CEG. (d) Any SAA Shares remaining in escrow following termination of the Sales Agency Agreement, as certified to Escrow Agent by CEG or ACN, shall be released to CEG. SECTION 6. Liability of Escrow Agent. The duties and obligations of Escrow Agent hereunder shall be determined solely by the express provisions of this Agreement, and Escrow Agent shall be under no obligation to refer to any other documents between or among the parties related in any way to this Agreement, it being specifically understood that the following provisions are accepted by all of the parties hereto: (a) Escrow Agent shall not be liable to anyone whomsoever by reason of any error of judgment or for any act done or step taken or omitted by it, or for any mistake of fact or law or anything which it may do or refrain from doing in connection herewith unless caused by or arising out of its own gross negligence or willful misconduct. CEG, the Buyer, ACN and Sellers shall jointly and severally indemnify and hold Escrow Agent harmless from and against any and all liability and expense which may arise out of any action taken or omitted by Escrow Agent in accordance with this Agreement, except such liability and expense as may result from the gross negligence or willful misconduct of Escrow Agent. 3

(b) Escrow Agent shall be entitled to rely on, and shall be protected in acting in reliance upon, any instructions or directions furnished to it in writing signed by CEG, the Buyer, ACN and Sellers pursuant to any provision of this Agreement and shall be entitled to treat as genuine, and as the document it purports to be, any letter, paper or other document furnished to it by CEG, the Buyer, ACN or Sellers, and believed by Escrow Agent to be genuine and to have been signed and presented by the proper party or parties. SECTION 7. Expenses. Any stock transfer taxes incurred in connection with the release and delivery of the Shares by Escrow Agent hereunder shall be borne by the Sellers.. Any fees or expenses charged by the Escrow Agent in connection with this agreement, including but not limited to the fees described on Exhibit A attached hereto, shall be borne 50% by Sellers and 50% by Buyer. SECTION 8. Settlement of Disputes. Any dispute which may arise under this Agreement with respect to the delivery and/or ownership or right of possession of the APA Shares and the SAA Shares, or the duties of the Escrow Agent hereunder, shall be settled either (i) by mutual agreement of CEG, the Buyer and ACN (evidenced by appropriate instructions in writing to the Escrow Agent, signed by such parties) or (ii) by binding arbitration of the issue in accordance with the following procedures: (a) Any party may request arbitration by giving the other involved party written notice, which notice shall describe, in reasonable detail, the nature of the dispute, controversy or claim. The arbitration shall be governed by the rules of the American Arbitration Association ("AAA") and held in New York, New York or other mutually agreed upon location. (b) If both parties agree an arbitrator within 30 days after a request for arbitration is made hereunder, that arbitrator shall be selected to hear the dispute in accordance with AAA rules. If the parties are not able to agree upon an arbitrator within such 30 day period, then that party who requested arbitration may request that the AAA select an arbitrator who has business experience in the energy industry similar to the Business and the selected arbitrator shall hear the dispute in accordance with AAA rules. (c) Each of the parties shall bear its own fees, costs and expenses of the arbitration and its own legal expenses, attorneys' fees and costs of all experts and witnesses; provided, however, that if the claim of either party is upheld by the arbitrator in all material respects, the arbitrator may apportion between the parties as the arbitrator may deem equitable the costs incurred by the prevailing party. The fees and expenses of the arbitration procedures, including the fees of the arbitrator, will be shared equally by the parties. (d) Any award rendered pursuant to an arbitration proceeding shall be final, conclusive, non-appealable and binding upon the parties, and any judgment thereon may be entered and enforced in any court of competent jurisdiction. (e) The Escrow Agent shall continue to hold any disputed funds hereunder until the Escrow Agent shall have received either of (i) or (ii) above; immediately following its receipt of (i) or (ii) above, the Escrow Agent shall distribute the amount in the Escrow Account, in accordance with such written instruction or certified copy of any such award, order, decree or 4

judgment. The Escrow Agent shall be under no duty whatsoever to institute or defend any such proceedings. Prior to the settlement of any such dispute, the Escrow Agent is authorized and directed to retain in its possession, without liability to anyone, the APA Shares and/or the SAA Shares which are the subject of such dispute. SECTION 9. Resignation and Removal of Escrow Agent. Escrow Agent may resign from the performance of its duties hereunder at any time by giving thirty (30) days' prior written notice to the parties or may be removed, with or without cause, by the parties, acting jointly, by furnishing a Joint Written Direction to Escrow Agent, at any time by the giving of ten (10) days' prior written notice to Escrow Agent as provided herein below. Such resignation or removal shall take effect upon the appointment of a successor Escrow Agent as provided herein below. Upon any such notice of resignation or removal, the parties, acting jointly, shall appoint a successor Escrow Agent hereunder. If the parties shall fail to appoint a successor Escrow Agent within thirty (30) days after such notice of resignation or removal, the Escrow Agent shall have the right to deposit the Escrow Funds with a court of competent jurisdiction and to petition such court for the appointment of a successor Escrow Agent. SECTION 10. Notices. All notices, requests, demands and other communications under this Agreement shall be in writing and shall be deemed to have been duly given (i) on the date of service if served personally on the party to whom notice is to be given; (ii) on the day of transmission if sent via facsimile transmission to the facsimile number given below, and telephonic confirmation of receipt is obtained promptly after completion of transmission; (iii) on the day after delivery to Federal Express or similar overnight courier or the Express Mail service maintained by the United States Postal Service; or (iv) on the fifth day after mailing, if mailed to the party to whom notice is to be given, by first class mail, registered or certified, postage prepaid and properly addressed, to the party as follows: If to the Buyer or CEG: Commerce Energy Group, Inc. Commonwealth Energy Corporation 600 Anton Blvd, Suite 2000 Costa Mesa, CA 92626 Attention: Peter Weigand Telecopier: (714) 259-2575 with a copy to: Stroock & Stroock & Lavan LLP 180 Maiden Lane New York, NY 10038-4982 Attn: Michael Shenberg, Esq. Telecopy: (212) 806-6006 If to ACN or Sellers: American Communications Network, Inc. 5

32991 Hamilton Court Farmington Hills, Michigan 48334 Facsimile: (284) 489-8901 Attention: Chief Financial Officer with a copy to: Jaffe, Raitt, Heuer & Weiss, P.C. 27777 Franklin Road, Suite 250 Southfield, Michigan 48034 Facsimile: (248) 351-3082 Attention: Ralph Margulis If to Escrow Agent: Computershare Trust Company, Inc. 350 Indiana Street, Suite 800 Golden, CO 80401 Attn: Corporate Trust Telecopy: (303) 262-0700 Any party may change its address for the purpose of this Section by giving the other party written notice of its new address in the manner set forth above. SECTION 11. Governing Law. This Agreement shall be construed, performed and enforced in accordance with, and governed by, the laws of the State of New York, without giving effect to the principles of conflicts of laws thereof. SECTION 12. Successors and Assigns. The rights and obligations of the parties under this Agreement shall not be assigned to any person or entity, without the written consent of the other parties. This Agreement shall be binding upon and shall inure to the benefit of the successors and assigns of the parties hereto. SECTION 13. Headings. Section headings contained herein have been inserted for reference purposes only and shall not be construed as part of this Agreement SECTION 14. Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which shall constitute the same instrument. 6

IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the date first above written. COMMERCE ENERGY GROUP, INC. By: /S/ PETER WEIGAND --------------------------------------- Name: Peter Weigand Title: President COMMONWEALTH ENERGY CORPORATION By: /S/ PETER WEIGAND --------------------------------------- Name: Peter Weigand Title: President AMERICAN COMMUNICATIONS NETWORK, INC. By: /S/ JAMES F. MULCAHY --------------------------------------- Name: James F. Mulcahy Title: Secretary/Treasurer ACN UTILITY SERVICES, INC. By: /S/ JAMES F. MULCAHY --------------------------------------- Name: James F. Mulcahy Title: Secretary/Treasurer [Signature page to Escrow Agreement]

ACN ENERGY, INC. By: /S/ JAMES F. MULCAHY --------------------------------------- Name: James F. Mulcahy Title: Secretary/Treasurer ACN POWER, INC. By: /S/ JAMES F. MULCAHY --------------------------------------- Name: James F. Mulcahy Title: Secretary/Treasurer COMPUTERSHARE TRUST COMPANY, INC. By: /s/ JOHN M. WAHL --------------------------------------- Name: John M. Wahl Title: Corporate Trust Officer By: /s/ ZACHARY DELISA --------------------------------------- Name: Zachary DeLisa Title: Operations Manager & Trust Officer [Signature page to Escrow Agreement]

EXHIBIT A Computershare Trust Company, Inc. Commonwealth Energy Group, Inc. / ACN Escrow <TABLE> <CAPTION> Escrow Agent Fee Schedule <S> <C> Account Acceptance Fee $2,500 Annual Administrative Fee $2,500 Overnight Delivery Charges At cost Out-of-Pocket Expenses At cost </TABLE> The acceptance and first year's annual fee are payable at closing. Annual administrative fees are due in advance of the period for which service is to be rendered. Special or extraordinary events, such as amendments to the documents or disputes are not included in the above fees, and we reserve the right to charge an additional amount based on the time incurred in handling such events should they occur. Late charges are 1 1/2% per month on outstanding balances owing 45 days from date of invoice.

EXHIBIT-2.5 EXECUTION COPY SECURITY AGREEMENT Security Agreement, dated as of February 9, 2005 and entered into by and among Commonwealth Energy Corporation, a California corporation (the "Secured Party") and ACN Utility Services, Inc., a Michigan corporation, ACN Energy, Inc., a Michigan corporation and ACN Power, Inc., a Michigan corporation (collectively, the "Debtors" and each a "Debtor"). RECITALS WHEREAS, the Secured Party and the Debtors have entered into that certain Asset Purchase Agreement dated as of February 9, 2005 (the "Purchase Agreement"), pursuant to which the Debtors, acting as Seller have agreed to sell and Secured Party, acting as Buyer, has agreed to buy the assets set forth therein; WHEREAS, as partial inducement to the Secured Party to purchase all of the assets, properties, rights and business of the Retail Energy Business (the "Acquired Assets"), the Debtors have agreed to grant a security interest in the Collateral (as defined herein) to the Secured Party to secure the performance of its Obligations (as defined herein) thereunder; and WHEREAS, it is a condition precedent to the purchase of the Acquired Assets under the Purchase Agreement that Debtors shall have granted the security interest in the Collateral and undertaken the obligations contemplated by this Agreement. NOW, THEREFORE, based upon the foregoing and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Secured Party and each of the Debtors hereby agree as follows: 1. Definitions All capitalized terms used but not defined herein shall have the meanings set forth in the Purchase Agreement or, if not so defined therein, in Article 9 of the UCC (as defined below). If a term is defined in Article 9 of the UCC differently than in another Article of the UCC, the term has the meaning assigned to it in Article 9. In addition, the following terms shall have the following meanings: "Collateral" shall have the meaning assigned to it in Section 2 hereof. "Collateral Records" shall mean books, records, computer software, computer printouts, customer lists, blueprints, technical specifications, manuals, and other items which provide information or records concerning any Collateral. "Event of Default" shall have the meaning set forth in Section 7 hereof. 1

"Lien" shall mean any mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or other), preference, priority or other security agreement of any kind or nature whatsoever, including, without limitation, any publicly available evidence of a lien, including the filing of any financing statement or similar instrument under the UCC or comparable law of any jurisdiction, domestic or foreign. "Obligations" shall mean all obligations, liabilities and indebtedness of every nature of each of the Debtors to the Secured Party, individually or collectively, whether direct or indirect, joint or several, absolute or contingent, due or to become due, now existing or hereafter incurred, arising under or in connection with the Transaction Documents, and this Security Agreement. "TPS" means Tenaska Power Services Co., a Nebraska corporation. "TPS Collateral" shall mean the Collateral subject to the TPS Security Agreement. "TPS Security Agreement" means that Security Agreement, dated as of March 17, 2003 by and between TPS and ACN Energy, Inc. "UCC" shall mean the Uniform Commercial Code as in effect from time to time in the State of New York. 2. Grant of Security Interests As security for the prompt and complete payment and performance in full of all the Obligations, each Debtor hereby grants to the Secured Party a security interest in and continuing lien on all of such Debtor's right, title and interest in and to all of the Acquired Assets and the Option Assets, whether tangible or intangible, whether now owned or hereafter acquired, including the proceeds from the sale or other disposition of any such property (but not including the Purchase Price or other sums due to Debtor under the Purchase Agreement), wherever the same may be located and whether or not subject to the Uniform Commercial Code (the "UCC") as it exists on the date of this Agreement, or as it may hereafter be amended in the State of New York (the "Collateral"), including, without limitation, but only to the extent the same are part of the Acquired Assets or the Option Assets: all Accounts Receivables; Inventory; Equipment; Fixtures; Software; all other Goods (including any software embedded in any good); Instruments (including promissory notes); Deposit Accounts; General Intangibles (including Payment Intangibles); and all cash and non-cash Proceeds of any and all of the foregoing; provided, that, the Secured Party shall not have a lien on the TPS Collateral until such time as such lien may be granted so as not to conflict with the TPS Security Agreement and the lien and security interest granted to TPS pursuant thereto. 3. Authorization to File Financing Statements Each Debtor hereby irrevocably authorizes the Secured Party at any time and from time to time to file in any jurisdiction in which the Uniform Commercial Code has been enacted (a "UCC Jurisdiction") any initial financing statements and amendments thereto identifying such Debtor as the "debtor" thereon including, but not limited to, such financing statements that: 2

3.1 describes the Collateral in reasonable details, and 3.2 contain any other information required by part 5 of Article 9 of the UCC for the sufficiency or filing office acceptance of any financing statement or amendment, including (i) whether such Debtor is an organization, the type of organization and any organization identification number issued to such Debtor and, (ii) in the case of a financing statement filed as a fixture filing, a sufficient description of real property to which the Collateral relates. Each Debtor (but solely to the extent applicable) agrees to furnish any such information to the Secured Party promptly upon the Secured Party's request. Each Debtor also ratifies its authorization for the Secured Party to have filed in any UCC Jurisdiction any like initial financing statements or amendments thereto if filed prior to the date hereof. 4. Representations and Warranties Each Debtor hereby represents and warrants to the Secured Party, which representations and warranties shall survive execution and delivery of this Security Agreement, as follows: 4.1 Title to, and Information Concerning, the Collateral. Such Debtor is the sole owner of, and has all rights in or power to transfer, the Collateral free from any right or claim of any Person, and no Lien exists upon such Collateral and the security interest created in favor of the Secured Party hereunder. All other information set forth in this Agreement pertaining to the Collateral is accurate and complete. 4.2 Nature of Collateral (a) None of the Collateral constitutes, or is the proceeds of, "farm products" as defined in Section 9-102(a)(34) of the UCC. (b) Except as set forth on Schedule 2, none of the account debtors or other persons obligated on any of the Collateral is a governmental authority covered by the Federal Assignment of Claims Act or like federal, state or local statute or rule in respect of such Collateral; provided, however, that the Debtors may, in the ordinary course of their business, enter into future arrangements with governmental authorities, whether or not listed on Schedule 2. (c) Such Debtor holds no commercial tort claim except as indicated herein. 4.3 [Reserved] 4.4 Name and Organization (a) The full and exact legal name, type of organization, jurisdiction of organization, organizational identification number or statement that such Debtor has no such number, and mailing address of such Debtor as of the date hereof are correctly set forth in Schedule 1 hereto. 3

(b) Schedule 1 correctly specifies the place of business of such Debtor or, if such Debtor has more than one place of business, the location of its chief executive office. (c) Such Debtor is duly organized and validly existing in good standing under the laws of the jurisdiction of its organization; and (d) Such Debtor has the power and authority to execute, deliver and carry out the terms and provisions of this Security Agreement and has taken all necessary action to authorize the execution, delivery and performance by it of this Security Agreement. Such Debtor has duly executed and delivered this Security Agreement, and this Security Agreement constitutes its legal, valid and binding obligation, enforceable against it in accordance with its terms. 4.5 Changes in Circumstances. Such Debtor has not (i) within the period of four months prior to the date hereof, changed its location (as defined in Section 9-307 of the UCC), (ii) except as specified in Schedule 1, heretofore changed its name, or (iii) heretofore become a "new debtor" (as defined in Section 9-102(a)(56) of the UCC) with respect to a currently effective security agreement previously entered into by any other Person. 4.6 Validity, Perfection and Priority The security interests in the Collateral granted to the Secured Party hereunder constitute valid and continuing first priority security interests in the Collateral and such Debtor has rights in or the power to transfer the Collateral superior and prior to all Liens, rights or claims of all other Persons. 4.7 No Liens; Other Financing Statements (a) No financing statement or other evidence of Lien covering or purporting to cover any of the Collateral is on file in any public office other than financing statements filed or to be filed in connection with the security interests granted to the Secured Party hereunder. 5. Further Covenants Each Debtor covenants and agrees with the Secured Party that from and after the date of this Security Agreement: 5.1 Further Assurances. Each Debtor will from time to time at the expense of such Debtor, promptly execute, deliver, file and record all further instruments, endorsements and other documents, and take such further action as the Security Party may determine to be necessary or useful in obtaining the full benefits of this Security Agreement and of the rights, remedies and powers herein granted, including, without limitation, the covenants set forth in this Section 5. 4

5.2 Ownership of Collateral. Each Debtor will continue to own each item of the Collateral free and clear of any and all Liens, rights or claims of all other Persons, except as contemplated in the Purchase Agreement, and each Debtor shall defend the Collateral against all claims and demands of all Persons at any time claiming the same or any interest therein adverse to the Secured Party. 5.3 Change of Name, Identity, Corporate Structure, or Chief Executive Office; Location of Inventory and Equipment. No Debtor will change its name, identity, corporate structure (including, without limitation, its jurisdiction of formation) or the location of its chief executive office or location of its Inventory or Equipment without (i) giving the Secured Party at least thirty (30) days' prior written notice clearly describing such new name, identity, corporate structure or new location and providing such other information in connection therewith as the Secured Party may reasonably request, and (ii) taking all action satisfactory to the Secured Party as the Secured Party may reasonably request to maintain the security interest of the Secured Party in the Collateral intended to be granted hereby at all times fully perfected with the same or better priority and in full force and effect. 5.4 Maintain Records. Each Debtor will keep and maintain at its own cost and expense satisfactory and complete records of the Collateral until transferred to the Secured Party. 5.5 Right of Inspection. The Secured Party shall have full and free access during normal business hours to all Collateral Records, including, without limitation, all books, correspondence and records of each Debtor, and the Secured Party and its representatives may examine the same, take extracts therefrom and make photocopies thereof, and each Debtor agrees to render the Secured Party at such Debtor's cost and expense, such clerical and other assistance as may be reasonable requested with regard thereto. The Secured Party and its representatives shall during normal business hours also have the right to enter into and upon any premises where any of the Inventory or Equipment is located for the purpose of inspecting the same, observing its use or otherwise protecting its interests therein. 5.6 Payment of Obligation. Each Debtor will pay promptly when due all taxes, assessments and governmental charges or levies imposed upon the Collateral, as well as all claims of any kind (including, without limitation, claims for labor, materials, supplies and services) against or with respect to, or incurred in connection with the use or operation of, the Collateral or incurred in connection with this Agreement, except that no such obligation need be paid if (i) the validity thereof is being contested in good faith by appropriate proceedings, (ii) such proceedings do not involve, in the sole opinion of the Secured Party, any material danger for the sale, forfeiture or loss of any of the Collateral or any interest therein, and (iii) such charge is adequately reserved against on such Debtor's books in accordance with generally accepted accounting principles; provided that Secured Party shall reimburse the Debtors for all payments made relating to periods following the Proration Time. 5

5.7 Negative Pledge. The Debtors will not create, incur or permit to exist, will defend the Collateral against, and will take such other action as is necessary to remove, any Lien or claim on or to the Collateral, other than the Liens created hereby. 5.8 Performance by the Secured Party of the Debtors' Obligations; Reimbursement. If any Debtor fails to perform or comply with any of its agreements contained herein, the Secured Party may, without notice to or consent by such Debtor, perform or comply or cause performance or compliance therewith and the expenses of the Secured Party incurred in connection with such performance or compliance shall be payable by such Debtor to the Secured Party on demand and such reimbursement obligation shall be secured hereby. 5.9 [Reserved] 6. Power of Attorney 6.1 General. Each Debtor hereby irrevocably constitutes and appoints the Secured Party and any officer or agent thereof, with full power of substitution, as its true and lawful attorney-in-fact with full irrevocable power and authority in the place and stead of such Debtor and in the name of such Debtor or in its own name, from time to time in the Secured Party's discretion, for the purpose of carrying out the terms of this Agreement, to take any and all appropriate action by any technologically available means, which may include, without limitation, any form of electronic data transmission, and to execute and authenticate in any appropriate manner, which may include, without limitation, using any symbol that the Secured Party may adopt to signify such Debtor's intent to authenticate, any and all documents and instruments which may be necessary or desirable to accomplish the purposes of this Agreement. 6.2 Specific Powers. Without limiting the generality of the foregoing, each Debtor hereby gives said attorneys the power and right, on behalf of such Debtor, without notice to or assent by such Debtor, to do the following: (a) upon the occurrence and during the continuance of an Event of Default, generally to sell, transfer, pledge, make any agreement with respect to or otherwise dispose of or deal with any of the Collateral as in such manner as is consistent with the UCC fully and completely as though the Secured Party were the absolute owner thereof for all purposes, and to do, at such Debtor's expense, at any time, or from time to time, all acts and things which the Secured Party determines, in its sole discretion, to be necessary or useful to protect, preserve or realize upon the Collateral and the Secured Party's security interest therein, in order to effect the intent of this Agreement, all at least as fully and effectively as such Debtor might do, including, without limitation, (i) the filing and prosecuting of registration and transfer applications with the appropriate federal, state, local or other agencies or authorities with respect to trademarks, copyrights and patentable inventions and processes, (ii) upon written notice to such Debtor, the exercise of voting rights with respect to voting securities, which rights may be exercised, if the Secured Party so elects, with a view to causing the liquidation of assets of the issuer of any such securities, and (iii) the execution, delivery and 6

recording, in connection with any sale or other disposition of any Collateral, of the endorsements, assignments or other instruments of conveyance or transfer with respect to such Collateral, and (b) to the extent that such Debtor's authorization given in Section 3 is not sufficient, to file such financing statements with respect hereto, as the Secured Party may deem appropriate. 6.3 Each Debtor hereby ratifies all that said attorneys shall lawfully do or cause to be done by virtue hereof. This power of attorney is a power coupled with an interest and shall be irrevocable. 6.4 The powers conferred on the Secured Party hereunder are solely to protect its interests in the Collateral and shall not impose any duty upon it to exercise any such powers. The Secured Party shall be accountable only for the amounts that it actually receives as a result of the exercise of such powers, and neither it nor any of its officers, directors, employees or agents shall be responsible to any Debtor for any act or failure to act, except for the Secured Party's own gross negligence or willful misconduct. 7. Events of Default The occurrence of any default by Debtor under this Agreement or any Transaction Documents shall, at the option of the Secured Party, constitute an "Event of Default". 8. Remedies; Rights Upon Default 8.1 Rights and Remedies Generally. If an Event of Default shall occur and be continuing, then and in every such case, the Secured Party shall have all the rights of a secured party under the UCC, shall have all rights now or hereafter existing under all other applicable laws, and, subject to any mandatory requirements of applicable law then in effect, shall have all the rights set forth in this Security Agreement and all the rights set forth with respect to the Collateral or this Security Agreement in any other security agreement between the parties. 8.2 Assembly of Collateral. If an Event of Default shall occur and be continuing, upon five days notice to the Debtors, each Debtor shall, at its own expense, assemble the Collateral (or from time to time any portion thereof) and make it available to the Secured Party at any place or places designated by the Secured Party which is reasonably convenient to both parties. 8.3 Disposition of Collateral. To the extent required by the UCC, the Secured Party will give the Debtors reasonable notice of the time and place of any public sale of the Collateral or any part thereof or of the time after which any private sale or any other intended disposition thereof is to be made. Each Debtor agrees that the requirements of reasonable notice to it shall be met if such notice is mailed, postage prepaid to its address specified in Section 10 of this Agreement (or such other address 7

that such Debtor may provide to the Secured Party in writing) at least ten (10) days before the time of any public sale or after which any private sale may be made. 8.4 Notification to Account Debtors and Other Persons Obligated on Collateral. If an Event of Default shall have occurred and be continuing, each Debtor shall, at the request of the Secured Party, notify account debtors and other persons obligated on any of the Collateral of the security interest of the Secured Party in any account, general intangible, instrument or other Collateral and that payment thereof is to be made directly to the Secured Party or to any financial institution designated by the Secured Party as the Secured Party's agent therefor, and the Secured Party may itself, if an Event of Default shall have occurred and be continuing, without notice to or demand upon the Debtors, so notify account debtors and other persons obligated on Collateral; it being agreed and understood that such notices may not be enforceable with respect to any such account debtors or other persons obligated on any of the Collateral that are governmental entities. After the making of such a request or the giving of any such notification, each Debtor shall hold any proceeds of collection of accounts, general intangibles, instruments and other Collateral received by such Debtor as trustee for the Secured Party without commingling the same with other funds of such Debtor and shall turn the same over to the Secured Party in the identical form received, together with any necessary endorsements or assignments. The Secured Party shall apply the proceeds of collection of accounts, general intangibles, instruments and other Collateral received by the Secured Party to the Obligations, such proceeds to be immediately entered after final payment in cash or other immediately available funds of the items giving rise to them. 8.5 Collateral Maintained with Secured Party Regardless of the adequacy of Collateral or any other security for the Obligations, any deposits or other sums at any time credited by or due from the Secured Party to any Debtor may at any time be applied to or set off against any of the Obligations then due and owing. 8.6 Recourse: The Debtors shall remain jointly and severally liable for any deficiency if the proceeds of any sale or other disposition of the Collateral are insufficient to satisfy the Obligations. The Debtors shall also be jointly and severally liable for all expenses of the Secured Party incurred in connection with collecting such deficiency, including, without limitation, the fees and disbursements of any attorneys employed by the Secured Party to collect such deficiency. 8.7 Expenses; Attorneys Fees; Proceeds of Disposition. The Debtors shall pay to the Secured Party on demand any and all expenses, including reasonable attorneys' fees and disbursements, incurred or paid by the Secured Party in protecting, preserving or enforcing the Secured Party's rights and remedies under or in respect of any of the Obligations or any of the Collateral. All such expenses shall also constitute Obligations. After deducting all of said expenses, the residue of any proceeds of collection or sale or other disposition of the Collateral shall, to the extent actually received in cash, be applied to the payment of the Obligations in such order or preference as the Secured Party may determine. 8

8.8 Limitation on Duties Regarding Preservation of Collateral (a) The Secured Party's sole duty with respect to the custody, safekeeping and physical preservation of the Collateral in its possession shall be to deal with it in the same manner as the Secured Party deals with similar property for its own account. (b) Neither the Secured Party nor any of its directors, officers, employees or agents shall be liable for failure to demand, collect or realize upon all or any part of the Collateral or for any delay in doing so or shall be under any obligation to sell or otherwise dispose of any Collateral upon the request of any Debtor or otherwise. 9. MISCELLANEOUS 9.1 Indemnity. Each Debtor agrees to indemnify, reimburse and hold the Secured Party and its officers, directors, employees, representatives, attorneys and agents ("Indemnitees") harmless from any and all liabilities, obligations, losses, damages, penalties, claims, actions, judgments, suits, costs or expenses or disbursements (including reasonable attorneys' fees and expenses) for whatsoever kind or nature which may be imposed on, asserted against or incurred by any of the Indemnitees in any way relating to or arising out of this Security Agreement or the transactions contemplated hereby. The obligations of Debtors under this Section shall be secured hereby and shall survive payment and performance or discharge of the Obligations and the termination of this Security Agreement. 9.2 Governing Law and Consent to Jurisdiction. THIS SECURITY AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK. Each Debtor agrees that any action or claim arising out of, or any dispute in connection with, this Agreement, any rights, remedies, obligations, or duties hereunder, or the performance or enforcement hereof or thereof, may be brought in the courts of the State of New York located in the County of New York or any federal court sitting therein and consents to the non-exclusive jurisdiction of such court and to service of process in any such suit being made upon the Debtors by mail at the address specified in Section 10.6 of this Agreement. Each Debtor hereby waives any objection that it may now or hereafter have to the venue of any such suit or any such court or that such suit is brought in an inconvenient court. 9.3 Waiver of Jury Trial. EACH PARTY HERETO WAIVES ITS RIGHT TO A JURY TRIAL WITH RESPECT TO ANY ACTION OR CLAIM ARISING OUT OF ANY DISPUTE IN CONNECTION WITH THIS AGREEMENT, ANY RIGHTS, REMEDIES, OBLIGATIONS, OR DUTIES HEREUNDER, OR THE PERFORMANCE OR ENFORCEMENT HEREOF OR THEREOF. Except as prohibited by law, each Debtor waives any right which it may have to claim or recover in any litigation referred to in the preceding sentence any special, exemplary, punitive or consequential damages or any damages other than, or in addition to, actual damages. Each Debtor: (i) certifies that neither the Secured Party nor any representative, agent or 9

attorney of the Secured Party has represented, expressly or otherwise, that the Secured Party would not, in the event of litigation, seek to enforce the foregoing waivers or other waivers contained in this Agreement. 9.4 Notices. Except as otherwise expressly provided herein, all notices, requests and demands to or upon the respective parties hereto to be effective shall be in writing (including by facsimile, telecopy, telex, or cable communication), and shall be deemed to have been duly given or made when delivered by hand, or five days after being deposited in the United States mail, postage prepaid, or in the case of telex notice, when sent, answer-back received, or in the case of telecopy notice, when sent, of in the case of facsimile, upon confirmed transmittal, or in the case of a nationally recognized overnight courier service, one business day after delivery to such courier service, addressed, in the case of each party hereto, at its address specified opposite its signature below, or to such other address as may be designated by any party in a written notice to the other party hereto. If to any of the Debtors: American Communication Network, Inc. 32991 Hamilton Court Farmington Hills, Michigan 48334 Facsimile: (284) 489-8901 Attention: Chief Financial Officer with a copy to: Jaffe, Raitt, Hener & Weiss, P.C. 27777 Franklin Road, Suite 250 Southfield, Michigan 48034 Facsimile: (248) 351-3082 Attention: Ralph Margulis If to the Secured Party: Commonwealth Energy Corporation 600 Anton Blvd, Suite 2000 Costa Mesa, CA 92626 Attention: Peter Weigand Facsimile: (714) 259-2575 with a copy to: Stroock & Stroock & Lavan LLP 180 Maiden Lane New York, New York 10038 Attention: Michael Shenberg, Esq. Facsimile: (212) 806-6006 10

9.5 Successors and Assigns This Security Agreement shall be binding upon and inure to the benefit of each of the Debtors, the Secured Party, all future holders of the Obligations and their respective successors and assigns, except that no Debtor may assign or transfer any of its rights or obligations under this Security Agreement without the prior written consent of the Secured Party. 9.6 Waivers and Amendments. None of the terms or provisions of this Security Agreement may be waived, amended, supplemented or otherwise modified except by a written instrument executed by the party against whom enforcement is sought. In the case of any waiver, each of the Debtors and the Secured Party shall be restored to their former position and rights hereunder and under the outstanding Obligations, and any Event of Default waived shall be deemed to be cured and not continuing, but no such waiver shall extend to any subsequent or other Event of Default, or impair any right consequent thereon. 9.7 No Waiver; Remedies Cumulative No failure or delay on the part of the Secured Party in exercising any right, power or privilege hereunder and no course of dealing between any Debtor and the Secured Party shall operate as a waiver thereof; nor shall any single or partial exercise of any right, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The Secured Party shall not be deemed to have waived any of its rights or remedies in respect of the Obligations or the Collateral unless such waiver shall be in writing and signed by the Secured Party. A waiver by the Secured Party of any right or remedy hereunder on any one occasion shall not be construed as a bar to any right or remedy which the Secured Party would otherwise have on any future occasion. The rights and remedies herein expressly provided are cumulative and may be exercised singly or concurrently and as often and in such order as the Secured Party deems expedient and are not exclusive of any rights or remedies which the Secured Party would otherwise have whether by security agreement or now or hereafter existing under applicable law. No notice to or demand on any Debtor in any case shall entitle such Debtor to any other or further notice or demand in similar or other circumstances or constitute a waiver of the rights of the Secured Party to any other or future action in any circumstances without notice or demand. 9.8 Termination; Release When the Obligations have been paid and performed in full this Security Agreement shall terminate, and the Secured Party, at the request and sole expense of the Debtors, will thereupon execute and deliver to the Debtors the proper instruments (including UCC termination statements) acknowledging the termination of this Security Agreement, and will duly assign, transfer and deliver to the Debtors, without recourse, representation or warranty of any kind whatsoever, such of the Collateral as may be in possession of the Secured Party and has not theretofore been disposed of, applied or released. 9.9 Headings Descriptive The headings of the several Sections and subsections of this Security Agreement are inserted for convenience only and shall not in any way affect the meaning or construction of any provision of this Security Agreement. 11

9.10 Severability In case any provision in or obligation under this Security Agreement or the Obligations shall be invalid, illegal or unenforceable in any jurisdiction, the validity, legality and enforceability of the remaining provisions or obligations, or of such provision or obligation in any other jurisdiction, shall not in any way be affected or impaired thereby. [SIGNATURE PAGE FOLLOWS] 12

In Witness Whereof, each of the Debtors and the Secured Party have caused this Security Agreement to be duly executed and delivered as of the date first above written. ACN UTILITY SERVICES, INC. By: /S/ JAMES F. MULCAHY ----------------------------------- Name: James F. Mulcahy Title: Secretary/Treasurer ACN ENERGY, INC. By: /S/ JAMES F. MULCAHY ----------------------------------- Name: James F. Mulcahy Title: Secretary/Treasurer ACN POWER, INC. By: /S/ JAMES F. MULCAHY ----------------------------------- Name: James F. Mulcahy Title: Secretary/Treasurer COMMONWEALTH ENERGY CORPORATION By: /S/ PETER WEIGAND ------------------------------------ Name: Peter Weigand Title: President [Signature page to Security Agreement]

SCHEDULE 1 DEBTOR NAMES AND CORPORATE JURISDICTIONS: ACN Utility Services, Inc., a Michigan corporation (MI Corporate Identification Number: 532765) ACN Energy, Inc., a Michigan corporation (MI Corporate Identification Number: 545052) ACN Power, Inc., a Michigan corporation (MI Corporate Identification Number: 547938) PRINCIPAL PLACE OF BUSINESS AND MAILING ADDRESS FOR ALL DEBTORS: 32991 Hamilton Court, Farmington Hills, MI 48334

SCHEDULE 2 Account Debtors covered by Federal Assignment of Claims Act or like federal or state statutes or rules NONE.

 

Exhibit 99.1

FOR IMMEDIATE RELEASE

Commerce Energy Group to Acquire ACN Energy and Form Strategic Sales
Alliance with ACN, Inc.

COSTA MESA, CA, February 9, 2005 — Commerce Energy Group, Inc. (AMEX: EGR) a leading U.S. electricity service provider, today announced it has entered into an agreement to acquire the assets of ACN Energy, a division of ACN, Inc., the world’s largest direct selling company serving the telecommunications and energy sectors.

As a result of this transaction, Commerce Energy Group will be rebranding its retail business unit, electricAmerica, as Commerce Energy, Inc and transitioning the ACN Energy licenses and customers to that entity. Upon completing the transition, Commerce Energy Inc.will have electricity customers in Texas, California, Pennsylvania, New Jersey, and Michigan, and natural gas customers in New York, California, Pennsylvania, Ohio, Georgia, and Maryland. Commerce Energy plans to cross sell and expand in each of these markets by offering customers in all markets both natural gas and electricity where regulations allow. Employees of ACN Energy will be offered employment with Commerce Energy.

The purchase price for the acquisition consists of $6.5 million in cash, plus 930,233 shares of Commerce Energy’s Common Stock, valued at $2.0 million, based upon the AMEX closing February 8, 2005 market price for Commerce’s Common Stock. The shares of Commerce Common Stock to be issued to ACN in the acquisition will be held in escrow and released to ACN as certain customer acquisition targets are achieved. If the targets are not achieved in full, any shares not released to ACN will be returned to Commerce Energy. ACN was also paid at closing approximately $5.5 million dollars for certain cash prepayment items relating to the assets being acquired.

In addition to the acquisition agreement, the parties have entered into a strategic sales alliance that enables ACN’s extensive sales force to continue selling energy products for Commerce Energy. The alliance expands both Commerce Energy and ACN’s market opportunities with additional energy markets and a more diversified product portfolio targeting both consumer and commercial customer segments in natural gas and electricity.

“The ACN Energy acquisition achieves several key objectives toward our corporate strategies of diversifying into natural gas and expanding our market footprint while lowering our regulatory risk profile. The added benefit of partnering with ACN’s impressive sales force and low cost customer acquisition model makes this a very compelling deal for all concerned,” said Peter Weigand, President of Commerce Energy Group.

“ACN is very excited about our alliance with Commerce Energy Group, as it significantly enhances the customer experience while simultaneously accelerating opportunities for our sales representatives,” said Robert Stevanovski, Co-Founder and Chairman of ACN. “As we continue our rapid expansion in the global telecommunications markets, aligning with Commerce Energy allows us to both to focus on what we do best.”

 


 

About ACN

ACN is a leading direct selling company offering highly competitive fixed and mobile telephone services, Internet access, gas and electricity services to consumers and small businesses in North America, Europe, and Australia. ACN markets directly to consumers and small businesses using thousands of commission-based Independent Business Representatives. ACN’s services are available in: Australia; Austria; Belgium; Canada: Denmark; Finland; France; Germany; Ireland; Italy; Netherlands; Norway; Portugal; Sweden; Switzerland; Spain; the United Kingdom and the United States. For more information visit www.acninc.com.

About Commerce Energy Group, Inc

Commerce Energy Group, Inc. is a provider of energy products and services to homeowners, commercial and industrial consumers, utilities, governments and energy asset owners. Operating since 1998 as Commonwealth Energy Corporation, Commerce Energy Group now operates through its subsidiaries including Commonwealth Energy Corporation, which holds FERC and state licenses for retail and wholesale energy commodities and is a retail electricity provider to homes and businesses in California, Michigan, Pennsylvania and New Jersey under the brand name “electricAmerica”; Skipping Stone, an energy consulting firm; and utiliHost, an outsourcing services and technology provider. For more information visit http://www.CommerceEnergy.com.

For more information contact:

ACN, Inc.
Director of Marketing, North America
Sheila Marcello
smarcell@acninc.com
704-632-3683

Commerce Energy Group
Investor Relations
Verna Ray
vray@electric.com
714-259-2500

Forward-Looking Statements: Certain statements contained within this press release including, without limitation, statements containing the words “believe,” “anticipate,” “expect,” “estimate,” “await,” “continue,” “intend,” “plan” and similar expressions are forward-looking statements that involve risks and uncertainties. These forward-looking statements, are not guarantees of future performance and involve certain risks, uncertainties and assumptions that are difficult to predict. Actual outcomes and results may differ materially from what is expressed in, or implied by, such forward-looking statements. The risks and uncertainties that could cause actual results to differ materially from those expressed in, or implied by, the forward-looking statements include, but are not limited to, the volatility of the energy market, competition, Commerce Energy’s ability to successfully integrate newly-acquired businesses, operating hazards, uninsured risks, changes in energy-related state legislation, failure of performance by suppliers and transmitters, uncertainties relating to litigation, changes in general economic conditions, increased or unexpected competition, and other matters disclosed in Commerce Energy’s filings with the Securities and Exchange Commission. Further, Commerce Energy undertakes no obligation to release publicly any revisions to these forward-looking statements that may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

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