Exhibit 10.12


 


	
  Virginia
  Power Energy Marketing, Inc.

  	
  

  
	
  120 Tredegar Street, Clearinghouse
  Building, Richmond, VA 23219

  	
  [Dominion Logo]

  



 


February 28, 2006


 


MXENERGY INC.


595 Summer St.


Suite 300


Stamford, CT  06901


Telephone: 203 356 1318


Fax: 203 425 9562


Attn.: Jeffrey Mayer, President


 


Dear Jeff,


 


RE:                              That
certain Amended and Restated Energy Marketing Agreement for Natural Gas (“MX
Agreement”) between Virginia Power Energy Marketing, Inc. (“VPEM”) and
MXENERGY INC. (“MXENERGY”) dated as of the 15th day of December 2005;
Hedge Extension (All capitalized terms not otherwise defined in this side
letter shall have the meaning assigned such terms in the MX Agreement)


 


MXENERGY has requested that VPEM permit
MXENERGY to enter into financial and physical hedge transactions on or after
the date first mentioned above (“Hedges”) with terms beyond June 30, 2007,
which date represents the expiration of the initial term of the MX Agreement. VPEM
hereby agrees to sell Hedges to MXENERGY upon the following terms and conditions:


 


•                                          MXENERGY
shall not buy Hedges with terms that expire more than thirty-six (36) months
beyond June 30, 2007;


 


•                                          MXENERGY
may enter into Hedges up to June 30, 2007, unless prohibited sooner
pursuant to the following:


 


•                  upon
June 30, 2006 MXENERGY shall be subject to margin obligations (“Margin
Obligations”) in respect of the Hedges pursuant to VPEM’s credit support
policies and procedures, including without limitation the VPEM credit support
annex to be incorporated into Exhibit 1;


 

















 


•                  MXENERGY
may allocate the Credit Amount between the (i) current payables
obligations to VPEM and (ii) mark-to-market(1) exposure of VPEM to
MXENERGY as calculated by VPEM;


 


•                  MXENERGY
may transfer its Margin Obligations to a third party, which meets VPEM’s
credit requirements; and


 


•                  if
MXENERGY is unable by June 30, 2006 to (i) meet its Margin
Obligations or (ii) have a third party satisfy the Margin Obligations,
then VPEM may terminate, accelerate and liquidate the Hedges pursuant to
the applicable Exhibits 1 and 2 of the MX Agreement as the non-defaulting
party; and


 


•                                          Notwithstanding
the foregoing, in the event that VPEM’s exposure to MXENERGY reaches an
exposure that VPEM is unwilling to accept, VPEM may terminate MXENERGY’s
ability to put on additional Hedges.


 


This side letter,
including the MX Agreement, constitute the entire agreement among the parties
hereto with respect to the subject matter of such documents and supersede all
prior agreements, understandings and negotiations, both oral and written,
between the parties with respect to the subject matter of such documents. All
terms of the MX Agreement not modified by this side letter shall remain in full
force and effect as expressly set forth in the MX Agreement. No representation,
inducement, promise, understanding, condition or warranty not set forth in this
side letter has been made or relied upon by the parties in executing this side
letter or in undertaking the commitments and obligations expressly contemplated
in this side letter.


 


[SIGNATURES FOLLOW ON NEXT PAGE]


 


 






(1)  One of the bases in calculating the mark-to-market exposure
is referencing third party sources as set forth in Exhibits 1 and 2 of the MX
Agreement.


 

















 


This side letter may be
signed in counterpart, each of which shall be an original, with the same effect
as if the signatures were upon the same instrument.


 


If MXENERGY is in agreement with the
foregoing, please execute and return.


 


	
   

  	
  Sincerely,

  
	
   

  	
   

  
	
   

  	
  Virginia Power Energy Marketing, Inc.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Charles
  E. Roberts

  	
   

  
	
   

  	
  Charles E. Roberts

  
	
   

  	
  President

  



 


Acknowledged and agreed as to form and content


on the 28th day of February 2006


 


	
  MXENERGY INC.

  
	
   

  
	
   

  
	
  /s/ Jeffrey
  Mayer

  	
   

  
	
  Jeffrey Mayer

  
	
  President