Exhibit 10.2

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February 22, 2007

 

To:

   Vectren Corporation    One Vectren Square    Evansville, Indiana 47708 From:
   JPMorgan Chase Bank, National Association    125 London Wall    London EC2Y
5AJ    England From:   

J.P. Morgan Securities Inc.,

Solely as Agent

   tel: (212) 622-5270    fax: (212) 622-0105

Dear Sirs,

The purpose of this letter agreement (this “Confirmation”) is to confirm the
terms and conditions of the transaction entered into between us on the Trade
Date specified below (the “Transaction”). This Confirmation constitutes a
“Confirmation” as referred to in the ISDA Master Agreement specified below.

 

1. The definitions and provisions contained in the 2000 ISDA Definitions (the
“2000 Definitions”) and the 2002 ISDA Equity Derivatives Definitions (the “2002
Definitions” and, together with the 2000 Definitions, the “Definitions”), each
as published by the International Swaps and Derivatives Association, Inc., are
incorporated into this Confirmation. In the event of any inconsistency between
the 2002 Definitions and the 2000 Definitions, the 2002 Definitions will govern.
In the event of any inconsistency between the Definitions and this Confirmation,
this Confirmation will govern.

This Confirmation evidences a complete and binding agreement between Party A and
Party B as to the terms of the Transaction to which this Confirmation relates.
This Confirmation shall supplement, form a part of, and be subject to an
agreement in the form of the 2002 ISDA Master Agreement (the “Agreement”) as if
Party A and Party B had executed an agreement in such form on the Trade Date
(but without any Schedule except for the election of the laws of the State of
New York as the governing law. In the event of any inconsistency between
provisions of that Agreement and this Confirmation, this Confirmation will
prevail for the purpose of the Transaction to which this Confirmation relates.
The parties hereby agree that no Transaction other than the Transaction to which
this Confirmation relates shall be governed by the Agreement. For purposes of
the 2002 Definitions, the Transaction is a Share Forward Transaction.

JPMorgan Chase Bank, National Association

Organized under the laws of the United States as a National Banking Association.

Main Office 1111 Polaris Parkway, Columbus, Ohio 43271

Registered as a branch in England & Wales branch No. BR000746.

Registered Branch Office 125 London Wall, London EC2Y 5AJ

Authorized and regulated by the Financial Services Authority

 

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Party A and Party B each represents to the other that it has entered into this
Transaction in reliance upon such tax, accounting, regulatory, legal, and
financial advice as it deems necessary and not upon any view expressed by the
other.

 

2. The terms of the particular Transaction to which this Confirmation relates
are as follows:

General Terms:

 

Party A:

  JPMorgan Chase Bank, National Association, London Branch

Party B:

  Vectren Corporation

Trade Date:

  February 22, 2007

Effective Date:

  February 28, 2007

Base Amount:

  Initially, 4,600,000 Shares; provided that the parties shall increase the Base
Amount on any Date of Delivery (as defined in the Underwriting Agreement defined
in Section 3 hereof) by the Option Securities (as defined in the Underwriting
Agreement) purchased from Party A pursuant to Section 2(b) of the Underwriting
Agreement. On each Settlement Date, the Base Amount shall be reduced by the
number of Settlement Shares for such Settlement Date.

Maturity Date:

  February 28, 2009 (or, if such date is not a Scheduled Trading Day, the next
following Scheduled Trading Day).

Forward Price:

 

On the Effective Date, the Initial Forward Price, and on any other day, the
Forward Price as of the immediately preceding calendar day multiplied by the sum
of (i) 1 and (ii) the Daily Rate for such day; provided that on each Forward
Price Reduction Date, the Forward Price in effect on such date shall be the
Forward Price otherwise in effect on such date minus the Forward Price Reduction
Amount for such Forward Price Reduction Date; provided further that if the
Underwriters (as such term is defined in the Underwriting Agreement) purchase
any Option Securities from the Forward Seller pursuant to Section 2(b) of the
Underwriting Agreement, on such Date of Delivery, the Forward Price on such date
shall be the result of the following formula:

 

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where:

 

 

BA’    

  =   the Base Amount prior to increase thereof as described opposite the
caption “Base Amount” above;  

FP       

  =   the Forward Price on the date immediately preceding such Date of Delivery;
 

DR     

  =   the Daily Rate for such day;

 

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  OS  

=

  the number of Option Securities so purchased from the Forward Seller;    

IFP

 

=

  the Initial Forward Price (subject to reduction by the Forward Price Reduction
amount on
any Forward Price Reduction Date occurring on or prior to such Date of
Delivery);    

BA”

 

=

  the Base Amount after increase thereof as described above opposite the caption
“Base
Amount” above.            

Initial Forward Price:

  USD $27.34 per Share.

Daily Rate:

  For any day, (i)(A) USD-Federal Funds Rate for such day minus (B) the Spread
divided by (ii) 365.

USD-Federal Funds Rate

  For any day, the rate set forth for such day opposite the caption “Federal
funds”, as such rate is displayed on the page “FedsOpen <Index> <GO>“ on the
BLOOMBERG Professional Service, or any successor page; provided that if no rate
appears for any day on such page, the rate for the immediately preceding day for
which a rate appears shall be used for such day.

Spread:

  0.35%

Forward Price Reduction Date:

  May 11, 2007, August 13, 2007, November 13, 2007, February 13, 2008, May 13,
2008, August 13, 2008, November 12, 2008 and February 11, 2009.

Forward Price Reduction Amount:

  For each Forward Price Reduction Date, the Forward Price Reduction Amount set
forth opposite such date on Schedule I.

Shares:

  Common Stock, without par value, of Party B (also referred to herein as the
“Issuer”) (Exchange identifier: “VVC”).

Exchange:

  The New York Stock Exchange.

Related Exchange(s):

  All Exchanges.

Clearance System:

  DTC.

Calculation Agent:

  JPMorgan Chase Bank, National Association. Settlement Terms:  

Settlement Date:

  Any Scheduled Trading Day following the Effective Date and up to and including
the Maturity Date, as designated by (a) Party A pursuant to “Termination
Settlement” below or (b) Party B in a written notice (a “Settlement Notice”)
that satisfies the Settlement Notice Requirements and is delivered to Party A at
least (i) three Scheduled Trading Days prior to such Settlement Date, which may
be the Maturity Date, if Physical Settlement applies, and (ii) 130 Scheduled
Trading Days prior to such Settlement Date, which may be the Maturity

 

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     Date, if Cash Settlement applies; provided that (i) the Maturity Date shall
be a Settlement
Date if on such date the Base Amount is greater than zero and (ii) if Cash
Settlement applies
and Party A shall have fully unwound its hedge during an Unwind Period by a date
that is
more than three Scheduled Trading Days prior to a Settlement Date specified
above, Party A
may, by written notice to Party B, specify any Scheduled Trading Day prior to
such originally
specified Settlement Date as the Settlement Date.

Settlement Shares:

   With respect to any Settlement Date, a number of Shares, not to exceed the
Base Amount, designated as such by Party B in the related Settlement Notice or
by Party A pursuant to “Termination Settlement” below; provided that on the
Maturity Date the number of Settlement Shares shall be equal to the Base Amount
on such date.

Settlement:

   Physical Settlement or Cash Settlement, at the election of Party B as set
forth in a Settlement Notice that satisfies the Settlement Notice Requirements;
provided that Physical Settlement shall apply (i) if no Settlement Method is
validly selected, (ii) with respect to any Settlement Shares in respect of which
Party A is unable, in its judgment, to unwind its hedge by the end of the Unwind
Period in a manner that, in the judgment of Party A, is consistent with the
requirements for qualifying for the safe harbor provided by Rule 10b-18 under
the Exchange Act or due to the lack of sufficient liquidity in the Shares on any
Exchange Business Day during the Unwind Period or (iii) to any Termination
Settlement Date (as defined below under “Termination Settlement”).

Settlement Notice Requirements:

   Notwithstanding any other provision hereof, a Settlement Notice delivered by
Party B that specifies Cash Settlement will not be effective to establish a
Settlement Date or require Cash Settlement unless Party B delivers to Party A
with such Settlement Notice a representation signed by Party B substantially in
the following form: “As of the date of this Settlement Notice, Party B is not
aware of any material nonpublic information concerning itself or the Shares, and
is designating the date contained herein as a Settlement Date in good faith and
not as part of a plan or scheme to evade compliance with the federal securities
laws.”

Unwind Period:

   Each Exchange Business Day that is not a Suspension Day during the period
from and including the first Exchange Business Day following the date Party B
validly elects Cash Settlement in respect of a Settlement Date through the third
Scheduled Trading Day preceding such Settlement Date (or the immediately
preceding Exchange Business Day if such Scheduled Trading Day is not an Exchange
Business Day); subject to “Termination Settlement” below. If any Exchange
Business Day during an Unwind Period is a Disrupted Day, the Calculation Agent
shall make commercially reasonable

 

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     adjustments to the terms of the Transaction (including, without limitation,
the Cash
Settlement Amount and the 10b-18 VWAP) to account for the occurrence of such
Disrupted
Day.

Suspension Day:

   Any Exchange Business Day on which Party A determines based on the advice of
counsel that Cash Settlement may violate applicable securities laws. Party A
shall notify Party B if it receives such advice from its counsel.

Market Disruption Event:

   Section 6.3(a)(ii) of the 2002 Definitions is hereby amended by replacing
clause (ii) in its entirety with “(ii) an Exchange Disruption, or” and inserting
immediately following clause (iii) the phrase “; in each case that the
Calculation Agent determines is material.”

Exchange Act:

   The Securities Exchange Act of 1934, as amended from time to time.

Physical Settlement:

   On any Settlement Date in respect of which Physical Settlement applies, Party
B shall deliver to Party A through the Clearance System the Settlement Shares
for such Settlement Date, and Party A shall deliver to Party B, by wire transfer
of immediately available funds to an account designated by Party B, an amount in
cash equal to the Physical Settlement Amount for such Settlement Date, on a
delivery versus payment basis.

Physical Settlement Amount:

   For any Settlement Date in respect of which Physical Settlement applies, an
amount in cash equal to the product of (i) the Forward Price on such Settlement
Date and (ii) the number of Settlement Shares for such Settlement Date.

Cash Settlement:

   On any Settlement Date in respect of which Cash Settlement applies, if the
Cash Settlement Amount for such Settlement Date is a positive number, Party A
will pay such Cash Settlement Amount to Party B. If the Cash Settlement Amount
is a negative number, Party B will pay the absolute value of such Cash
Settlement Amount to Party A. Such amounts shall be paid on the Settlement Date.

Cash Settlement Amount:

   For any Settlement Date in respect of which Cash Settlement applies, an
amount determined by the Calculation Agent equal to the difference between (1)
the product of (i) (A) the Forward Price on the first day of the applicable
Unwind Period minus (B) the average of the 10b-18 VWAP prices per Share on each
Exchange Business Day during such Unwind Period, multiplied by (ii) the number
of Settlement Shares for such Settlement Date, minus (2) the product of (i) the
Forward Price Reduction Amount for any Forward Price Reduction Date that occurs
during such Unwind Period multiplied by (ii) the number of Settlement Shares
with respect to which Party A has not unwound its hedge as of such Forward Price
Reduction Date.

 

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10b-18 VWAP:

   For any Exchange Business Day during the Unwind Period which is not a
Suspension Day, the volume-weighted average price at which the Shares trade as
reported in the composite transactions for the Exchange on such Exchange
Business Day, excluding (i) trades that do not settle regular way, (ii) opening
(regular way) reported trades on the Exchange on such Exchange Business Day,
(iii) trades that occur in the last ten minutes before the scheduled close of
trading on the Exchange on such Exchange Business Day and ten minutes before the
scheduled close of the primary trading session in the market where the trade is
effected, and (iv) trades on such Exchange Business Day that do not satisfy the
requirements of Rule 10b-18(b)(3), as determined in good faith by the
Calculation Agent. Party B acknowledges that Party A may refer to the Bloomberg
Page “VVC <Equity> AQR SEC” (or any successor thereto), in its discretion, for
such Exchange Business Day to determine the 10b-18 VWAP.

Settlement Currency:

   USD.

Failure to Deliver:

   Inapplicable. Adjustments:   

Method of Adjustment:

   Calculation Agent Adjustment; notwithstanding anything in the 2002
Definitions to the contrary, the Calculation Agent may make an adjustment
pursuant to Calculation Agent Adjustment to any one or more of the Base Amount,
the Forward Price and any other variable relevant to the settlement or payment
terms of the Transaction.

Additional Adjustment:

   If, in Party A’s sole judgment, the actual cost to Party A, over any one
month period, of borrowing a number of Shares equal to the Base Amount to hedge
its exposure to the Transaction exceeds a weighted average rate equal to 35
basis points per annum, the Calculation Agent shall reduce the Forward Price in
order to compensate Party A for the amount by which such cost exceeded a
weighted average rate equal to 35 basis points per annum during such period. The
Calculation Agent shall notify Party B prior to making any such adjustment to
the Forward Price and, upon the request of Party B, Party A shall provide an
itemized list of its stock loan costs for the applicable one month period.
Account Details:   

Payments to Party A:

   To be advised under separate cover or telephone confirmed prior to each
Settlement Date.

Payments to Party B:

   To be advised under separate cover or telephone confirmed prior to each
Settlement Date.

Delivery of Shares to Party A:

   To be advised.

 

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Delivery of Shares to Party B:

   To be advised.

 

3. Other Provisions:

Conditions to Effectiveness:

The effectiveness of this Confirmation on the Effective Date shall be subject to
(i) the condition that the representations and warranties of Party B contained
in the Purchase Agreement dated the date hereof among Party B and J.P. Morgan
Securities Inc. and Merrill Lynch, Pierce, Fenner & Smith Incorporated, as
Representatives of the Several Underwriters (the “Underwriting Agreement”) and
any certificate delivered pursuant thereto by Party B are true and correct on
the Effective Date as if made as of the Effective Date, (ii) the condition that
Party B have performed all of the obligations required to be performed by it
under the Underwriting Agreement on or prior to the Effective Date, (iii) the
satisfaction of all of the conditions set forth in Section 5 of the Underwriting
Agreement and (iv) the condition that neither of the following has occurred
(A) Party A is unable to borrow and deliver for sale a number of Shares equal to
the Base Amount, or (B) in Party A’s sole judgment either it is impracticable to
do so or Party A would incur a stock loan cost of more than a rate equal to 35
basis points per annum to do so (in which event this Confirmation shall be
effective but the Base Amount for this Transaction shall be the number of Shares
Party A is required to deliver in accordance with Section 2(a) of the
Underwriting Agreement).

Representations and Agreements of Party B:

Party B (i) has such knowledge and experience in financial and business affairs
as to be capable of evaluating the merits and risks of entering into this
Transaction; (ii) has consulted with its own legal, financial, accounting and
tax advisors in connection with this Transaction; and (iii) is entering into
this Transaction for a bona fide business purpose.

Party B is not and has not been the subject of any civil proceeding of a
judicial or administrative body of competent jurisdiction that could reasonably
be expected to impair materially Party B’s ability to perform its obligations
hereunder.

Party B will by the next succeeding New York Business Day notify Party A upon
obtaining knowledge of the occurrence of any event that would constitute an
Event of Default, a Potential Event of Default or a Potential Adjustment Event.

Additional Representations, Warranties and Agreements of Party B: Party B hereby
represents and warrants to, and agrees with, Party A as of the date hereof that:

 

  (a) Any Shares, when issued and delivered in accordance with the terms of the
Transaction, will be duly authorized and validly issued, fully paid and
nonassessable, and the issuance thereof will not be subject to any preemptive or
similar rights.

 

  (b) Party B has reserved and will keep available at all times, free from
preemptive rights, out of its authorized but unissued Shares, solely for the
purpose of issuance upon settlement of the Transaction as herein provided, the
full number of Shares as shall be issuable at such time upon settlement of the
Transaction. All Shares so issuable shall, upon such issuance, be accepted for
listing or quotation on the Exchange.

 

  (c)

Party B agrees to provide Party A at least 30 days’ written notice (an “Issuer
Repurchase Notice”) prior to executing any repurchase of Shares by Party B or
any of its subsidiaries (or entering into any contract that would require, or
give the option to, Party B or any of its subsidiaries, to purchase or
repurchase Shares), whether out of profits or capital or whether the
consideration for such repurchase is cash, securities or otherwise (an “Issuer
Repurchase”), that

 

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alone or in the aggregate would result in the Base Amount Percentage (as defined
below) being (i) equal to or greater than 7.5% of the outstanding Shares and
(ii) greater by 0.5% or more than the Base Amount Percentage at the time of the
immediately preceding Issuer Repurchase Notice (or in the case of the first such
Issuer Repurchase Notice, greater than the Base Amount Percentage as of the
later of the date hereof or the immediately preceding Settlement Date, if any).
The “Base Amount Percentage” as of any day is the fraction (1) the numerator of
which is the Base Amount and (2) the denominator of which is the number of
Shares outstanding on such day.

 

  (d) No filing with, or approval, authorization, consent, license registration,
qualification, order or decree of, any court or governmental authority or
agency, domestic or foreign, is necessary or required for the execution,
delivery and performance by Party B of this Confirmation and the consummation of
the Transaction (including, without limitation, the issuance and delivery of
Shares on any Settlement Date) except (i) such as have been obtained under the
Securities Act of 1933, as amended (the “Securities Act”), and (ii) as may be
required to be obtained under state securities laws.

 

  (e) Party B agrees not to make any Issuer Repurchase if, immediately following
such Issuer Repurchase, the Base Amount Percentage would be equal to or greater
than 8.0%.

 

  (f) Party B is not insolvent, nor will Party B be rendered insolvent as a
result of this Transaction.

 

  (g) Neither Party B nor any of its affiliates shall take or refrain from
taking any action (including, without limitation, any direct purchases by Party
B or any of its affiliates or any purchases by a party to a derivative
transaction with Party B or any of its affiliates), either under this
Confirmation, under an agreement with another party or otherwise, that might
cause any purchases of Shares by Party A or any of its affiliates in connection
with any Cash Settlement of this Transaction not to meet the requirements of the
safe harbor provided by Rule 10b-18 under the Exchange Act if such purchases
were made by Party B.

 

  (h) Party B will not engage in any “distribution” (as defined in Regulation M
under the Exchange Act (“Regulation M”)) that would cause a “restricted period”
(as defined in Regulation M) to occur during any Unwind Period.

 

  (i) Party B is an “eligible contract participant” (as such term is defined in
Section 1a(12) of the Commodity Exchange Act, as amended).

 

  (j) In addition to any other requirements set forth herein, Party B agrees not
to elect Cash Settlement if, in the reasonable judgment of either Party A or
Party B, such settlement or Party A’s related market activity would result in a
violation of the U.S. federal securities laws or any other federal or state law
or regulation applicable to Party B.

Covenant of Party B:

The parties acknowledge and agree that any Shares delivered by Party B to Party
A on any Settlement Date will be newly issued Shares and when delivered by Party
A (or an affiliate of Party A) to securities lenders from whom Party A (or an
affiliate of Party A) borrowed Shares in connection with hedging its exposure to
the Transaction will be freely saleable without further registration or other
restrictions under the Securities Act, in the hands of those securities lenders,
irrespective of whether such stock loan is effected by Party A or an affiliate
of Party A. Accordingly, Party B agrees that the Shares that it delivers to
Party A on each Settlement Date will not bear a restrictive legend and that such
Shares will be deposited in, and the delivery thereof shall be effected through
the facilities of, the Clearance System.

 

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Covenants of Party A:

 

  (a) Unless the provisions set forth below under “Private Placement Procedures”
shall be applicable, Party A shall use any Shares delivered by Party B to Party
A on any Settlement Date to return to securities lenders to close out open Share
loans created by Party A or an affiliate of Party A in the course of Party A’s
or such affiliate’s hedging activities related to Party A’s exposure under this
Confirmation.

 

  (b) In connection with bids and purchases of Shares in connection with any
Cash Settlement of this Transaction, Party A shall use its commercially
reasonable efforts to conduct its activities, or cause its affiliates to conduct
their activities, in a manner consistent with the requirements of the safe
harbor provided by Rule 10b-18 under the Exchange Act, as if such provisions
were applicable to such purchases.

Insolvency Filing:

Notwithstanding anything to the contrary herein, in the Agreement or in the
Definitions, upon any Insolvency Filing in respect of the Issuer, the
Transaction shall automatically terminate on the date thereof without further
liability of either party to this Confirmation to the other party (except for
any liability in respect of any breach of representation or covenant by a party
under this Confirmation prior to the date of such Insolvency Filing).

Extraordinary Dividends:

If an ex-dividend date for an Extraordinary Dividend occurs on or after the
Trade Date and on or prior to the Maturity Date, Party B shall pay an amount, as
determined by the Calculation Agent, in cash equal to the product of such
Extraordinary Dividend and the Base Amount to Party A on the earlier of (i) the
date on which such Extraordinary Dividend is paid by the Issuer to holders of
record of the Shares or (ii) the Maturity Date. “Extraordinary Dividend” means
the per Share amount of any cash dividend or distribution declared by the Issuer
with respect to the Shares that is specified by the board of directors of the
Issuer as an “extraordinary” dividend.

Acceleration Events:

The following events shall each constitute an “Acceleration Event”:

 

  (a) Stock Borrow Events. In the sole judgment of Party A (i) Party A is unable
to hedge Party A’s exposure to the Transaction because (A) of the lack of
sufficient Shares being made available for Share borrowing by lenders, or (B) it
is otherwise commercially impracticable (a “Stock Borrow Event”);

 

  (b) Dividends and Other Distributions. On any day occurring after the Trade
Date Party B declares a distribution, issue or dividend to existing holders of
the Shares of (i) any cash dividend (other than an Extraordinary Dividend) to
the extent all cash dividends having an ex-dividend date during the period from
and including any Forward Price Reduction Date (with each of the Trade Date and
the Maturity Date being a Forward Price Reduction Date for purposes of this
clause (b) only) to but excluding the next subsequent Forward Price Reduction
Date exceeds, on a per Share basis, the Forward Price Reduction Amount set forth
opposite the first date of any such period on Schedule I or (ii) share capital
or securities of another issuer acquired or owned (directly or indirectly) by
Party B as a result of a spin-off or other similar transaction or (iii) any
other type of securities (other than Shares), rights or warrants or other
assets, for payment (cash or other consideration) at less than the prevailing
market price as determined by Party A;

 

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  (c) ISDA Early Termination Date. Either Party A or Party B has the right to
designate an Early Termination Date pursuant to Section 6 of the Agreement;

 

  (d) Other ISDA Events. The announcement of any event that if consummated,
would result in an Extraordinary Event, or the occurrence of any Change in Law
or Delisting; provided that in case of a Delisting, in addition to the
provisions of Section 12.6(a)(iii) of the 2002 Definitions, it will also
constitute a Delisting if the Exchange is located in the United States and the
Shares are not immediately re-listed, re-traded or re-quoted on any of the New
York Stock Exchange, the American Stock Exchange, the NASDAQ Global Select
Market or the NASDAQ Global Market (or their respective successors); and
provided further that the definition of “Change in Law” provided in
Section 12.9(a)(ii) of the Equity Definitions is hereby amended by (i) replacing
the phrase “the interpretation” in the third line thereof with the phrase “or
public announcement of the formal or informal interpretation” and
(ii) immediately following the word “Transaction” in clause (X) thereof, adding
the phrase “in the manner contemplated by Party A on the Trade Date”; or

 

  (e) Issuer Repurchases. Party B publicly announces or discloses any Issuer
Repurchase (whether or not subsequently amended) that alone, or in the
aggregate, results in, or could result in, the Base Amount representing more
than 8.0% of the total outstanding Shares (assuming the consummation of such
proposed Issuer Repurchase).

Termination Settlement:

Upon the occurrence of any Acceleration Event, Party A shall have the right to
designate, upon at least one Scheduled Trading Day’s notice, any Scheduled
Trading Day following such occurrence to be a Settlement Date hereunder (a
“Termination Settlement Date”) to which Physical Settlement shall apply, and to
select the number of Settlement Shares relating to such Termination Settlement
Date; provided that in the case of an Acceleration Event arising out of a Stock
Borrow Event the number of Settlement Shares so designated by Party A shall not
exceed the number of Shares as to which such Stock Borrow Event exists; provided
further that in the case of the announcement of an event that if consummated
would result in a Merger Event, Party A shall not have the right to designate a
Termination Settlement Date until on or after the date three months prior to the
earliest anticipated Merger Date, as determined by the Calculation Agent in its
commercially reasonable judgment, for such Acceleration Event. If, upon
designation of a Termination Settlement Date by Party A pursuant to the
preceding sentence, Party B fails to deliver the Settlement Shares relating to
such Termination Settlement Date when due or otherwise fails to perform
obligations within its control in respect of this Transaction, it shall be an
Event of Default with respect to Party B and Section 6 of the Agreement shall
apply. If an Acceleration Event occurs during an Unwind Period relating to a
number of Settlement Shares to which Cash Settlement applies, then on the
Termination Settlement Date relating to such Acceleration Event, notwithstanding
any election to the contrary by Party B, Cash Settlement shall apply to the
portion of the Settlement Shares relating to such Unwind Period as to which
Party A has unwound its hedge and Physical Settlement shall apply in respect of
(x) the remainder (if any) of such Settlement Shares and (y) the Settlement
Shares designated by Party A in respect of such Termination Settlement Date.

Private Placement Procedures

If Party B is unable to comply with the provisions of “Covenant of Party B”
above because of a change in law or a change in the policy of the Securities and
Exchange Commission or its staff, or Party A otherwise determines that in its
reasonable opinion any Settlement Shares to be delivered to Party A by Party B
may not be freely returned by Party A or its affiliates to securities lenders as
described under “Covenant of Party B” above, then delivery of any such
Settlement Shares (the “Restricted Shares”) shall be effected pursuant to Annex
A hereto, unless waived by Party A.

 

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Rule 10b5-1:

It is the intent of Party A and Party B that following any election of Cash
Settlement by Party B, the purchase of Shares by Party A during any Unwind
Period comply with the requirements of Rule 10b5-1(c)(1)(i)(B) of the Exchange
Act and that this Confirmation shall be interpreted to comply with the
requirements of Rule 10b5-1(c).

Party B acknowledges that (i) during any Unwind Period Party B does not have,
and shall not attempt to exercise, any influence over how, when or whether to
effect purchases of Shares by Party A (or its agent or affiliate) in connection
with this Confirmation and (ii) Party B is entering into the Agreement and this
Confirmation in good faith and not as part of a plan or scheme to evade
compliance with federal securities laws including, without limitation, Rule
10b-5 promulgated under the Exchange Act.

Party B hereby agrees with Party A that during any Unwind Period Party B shall
not communicate, directly or indirectly, any Material Non-Public Information (as
defined herein) to any EDG Personnel (as defined below). For purposes of this
Transaction, “Material Non-Public Information” means information relating to
Party B or the Shares that (a) has not been widely disseminated by wire service,
in one or more newspapers of general circulation, by communication from Party B
to its shareholders or in a press release, or contained in a public filing made
by Party B with the Securities and Exchange Commission and (b) a reasonable
investor might consider to be of importance in making an investment decision to
buy, sell or hold Shares. For the avoidance of doubt and solely by way of
illustration, information should be presumed “material” if it relates to such
matters as dividend increases or decreases, earnings estimates, changes in
previously released earnings estimates, significant expansion or curtailment of
operations, a significant increase or decline of orders, significant merger or
acquisition proposals or agreements, significant new products or discoveries,
extraordinary borrowing, major litigation, liquidity problems, extraordinary
management developments, purchase or sale of substantial assets, or other
similar information For purposes of this Transaction, “EDG Personnel” means any
employee on the trading side of the Equity Derivatives Group of J.P. Morgan
Securities, Inc. and does not include Messrs. David Aidelson, Santosh Nabar,
James Rothschild, Elliot Chalom and Ms. Bernadette Barnard (or any other person
or persons designated from time to time by the Compliance Group of Party).

Maximum Share Delivery:

Notwithstanding any other provision of this Confirmation, in no event will Party
B be required to deliver on any Settlement Date, whether pursuant to Physical
Settlement, Termination Settlement or any Private Placement Settlement, more
than 10,580,000 Shares to Party A, subject to reduction by the amount of any
Shares delivered by Party B on any prior Settlement Date.

Assignment:

Party A may assign or transfer any of its rights or delegate any of its duties
hereunder to any affiliate of Party A or any entity organized or sponsored by
Party A without the prior written consent of Party B. Notwithstanding any other
provision of this Confirmation to the contrary requiring or allowing Party A to
purchase or receive any Shares from Party B, Party A may designate any of its
affiliates to purchase or receive such Shares or otherwise to perform Party A’s
obligations in respect of this Transaction and any such designee may assume such
obligations, and Party A shall be discharged of its obligations to Party B
solely to the extent of any such performance.

 

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Matters Relating to Agent:

Each party agrees and acknowledges that (i) J.P. Morgan Securities Inc., as
agent, (the “Agent”) acts solely as agent on a disclosed basis with respect to
the transactions contemplated hereunder, and (ii) the Agent has no obligation,
by guaranty, endorsement or otherwise, with respect to the obligations of either
Party B or Party A hereunder, either with respect to the delivery of cash or
Shares, either at the beginning or the end of the transactions contemplated
hereby. In this regard, each of Party A and Party B acknowledges and agrees to
look solely to the other for performance hereunder, and not to the Agent.

Indemnity

Party B agrees to indemnify and hold harmless Party A, its affiliates, their
respective directors, officers, agents and controlling parties (Party A and each
such affiliate or person being an “Indemnified Party”) against any third-party
losses, claims, damages, liabilities (whether direct or indirect, in contract,
tort or otherwise) or expenses, joint or several, to which any Indemnified Party
may become subject under the Securities Act, the Exchange Act or other federal
or state statutory law or regulation, at common law or otherwise, insofar as
such third-party losses, claims, damages, liabilities or expenses (or actions,
claims, investigations or proceedings in respect thereof, whether commenced or
threatened) (i) arise out of or relate to (A) actions or failures to act by
Party B or (B) actions or failures to act by an Indemnified Party with the
consent or upon the direction of Party B or (ii) otherwise arise out of or
relate to the Transaction or any related transactions, provided that this clause
(ii) shall not apply to the extent, but only to the extent, that any losses,
claims, damages, liabilities or expenses of an Indemnified Party have resulted
primarily from the gross negligence or willful misconduct of such Indemnified
Party. Party B agrees to reimburse promptly each such Indemnified Party for any
legal or other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damages, liability, expense or
action.

Notice

 

Non-Reliance:

   Applicable

Additional Acknowledgments:

   Applicable

Agreements and Acknowledgments

Regarding Hedging Activities:

   Applicable

 

4. The Agreement is further supplemented by the following provisions:

No Collateral or Setoff.:

Notwithstanding Section 6(f) or any other provision of the Agreement or any
other agreement between the parties to the contrary, the obligations of Party B
hereunder are not secured by any collateral. Obligations under this Transaction
shall not be set off against any other obligations of the parties, whether
arising under the Agreement, this Confirmation, under any other agreement
between the parties hereto, by operation of law or otherwise, and no other
obligations of the parties shall be set off against obligations under this
Transaction, whether arising under the Agreement, this Confirmation, under any
other agreement between the parties hereto, by operation of law or otherwise,
and each party hereby waives any such right of setoff. In calculating any
amounts under Section 6(e) of the Agreement, notwithstanding anything to the
contrary in the Agreement, (a) separate amounts shall be calculated as set forth
in such Section 6(e) with respect to (i) this Transaction and (ii) all other
Transactions, and (b) such separate amounts shall be payable pursuant to
Section 6(d)(ii) of the Agreement.

 

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Status of Claims in Bankruptcy:

Party A acknowledges and agrees that this confirmation is not intended to convey
to Party A rights with respect to the transactions contemplated hereby that are
senior to the claims of common stockholders in any U.S. bankruptcy proceedings
of Party B; provided, however, that nothing herein shall limit or shall be
deemed to limit Party A’s right to pursue remedies in the event of a breach by
Party B of its obligations and agreements with respect to this Confirmation and
the Agreement; and provided further, that nothing herein shall limit or shall be
deemed to limit Party A’s rights in respect of any transaction other than the
Transaction.

Limit on Beneficial Ownership:

Notwithstanding any other provisions hereof, Party A shall not be entitled to
receive Shares hereunder (whether in connection with the purchase of Shares on
any Settlement Date or any Termination Settlement Date, any Private Placement
Settlement or otherwise) to the extent (but only to the extent) that after such
receipt (a) Party A’s ultimate parent entity would, directly or indirectly,
beneficially own (as such term is defined for purposes of Section 13(d) of the
Exchange Act) in excess of 8.0% of the outstanding Shares or (b) Party A’s
ultimate parent entity would purchase, acquire or take (as such terms are used
in the Federal Power Act) at any time on the relevant date in excess of 8.0% of
the outstanding Shares. Any purported delivery of Shares by Party B hereunder
shall be void and have no effect to the extent (but only to the extent) that
after receipt of such Shares by Party A, Party A’s ultimate parent entity would,
directly or indirectly, individually or in the aggregate, so beneficially own,
or purchase, acquire or take, as applicable, in excess of 8.0% of the
outstanding Shares. If, on any day, any delivery of Shares by Party B is not
effected, in whole or in part, as a result of this provision, Party B’s
obligation to make such delivery shall not be extinguished, and Party B shall
make such delivery as promptly as practicable after, but in no event within one
Exchange Business Day after, Party A gives notice to Party B that after receipt
of such delivery, Party A’s ultimate parent entity would not, directly or
indirectly, individually or in the aggregate, beneficially own, or purchase,
acquire or take, as applicable, in excess of 8.0% of the outstanding Shares.

Miscellaneous:

 

  (a) Addresses for Notices. For the purpose of Section 12(a) of the Agreement:

Address for notices or communications to Party A:

 

 

Address:

   JPMorgan Chase Bank, National Association    277 Park Avenue    9th Floor   
New York, NY 10172

Attention:

   Equity Derivatives Group

Telephone No.:

   (212) 622-5270

Facsimile No.:

   (212) 622-0105

With a copy to:

Address:

   JPMorgan Chase Bank, National Association    277 Park Avenue    11th Floor   
New York, NY 10172

Attention:

   Equity Derivatives Group – Marketing Support

Telephone No.:

   (212) 622-6707

 

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Facsimile No.:

   (212) 622-8534

Address for notices or communications to Party B:

 

Address:

   Vectren Corporation    One Vectren Square    Evansville, Indiana 47708

Attention:

   General Counsel

 

  (b) Waiver of Right to Trial by Jury. Each party waives, to the fullest extent
permitted by applicable law, any right it may have to a trial by jury in respect
of any suit, action or proceeding relating to this Confirmation. Each party
(i) certifies that no representative, agent or attorney of the other party has
represented, expressly or otherwise, that such other party would not, in the
event of such a suit action or proceeding, seek to enforce the foregoing waiver
and (ii) acknowledges that it and the other party have been induced to enter
into this Confirmation by, among other things, the mutual waivers and
certifications herein.

 

  (c) London Branch. Party A is entering into this Confirmation and the
Agreement through its London branch. Notwithstanding the foregoing, Party A
represents to Party B that the obligations of Party A are the same as if it had
entered into this Confirmation and the Agreement through its head or home office
in New York.

Acknowledgements.

The parties hereto intend for:

 

  (a) this Transaction to be a “securities contract” as defined in
Section 741(7) of Title 11 of the United States Code (the “Bankruptcy Code”),
qualifying for the protections under Section 555 of the Bankruptcy Code;

 

  (b) a party’s right to liquidate this Transaction and to exercise any other
remedies upon the occurrence of any Event of Default under the Agreement with
respect to the other party to constitute a “contractual right” as defined in the
Bankruptcy Code;

 

  (c) Party A to be a “financial institution” within the meaning of
Section 101(22) of the Bankruptcy Code; and

 

  (d) all payments for, under or in connection with this Transaction, all
payments for the Shares and the transfer of such Shares to constitute
“settlement payments” as defined in the Bankruptcy Code.

Severability.

If any term, provision, covenant or condition of this Confirmation, or the
application thereof to any party or circumstance, shall be held to be invalid or
unenforceable in whole or in part for any reason, the remaining terms,
provisions, covenants, and conditions hereof shall continue in full force and
effect as if this Confirmation had been executed with the invalid or
unenforceable provision eliminated, so long as this Confirmation as so modified
continues to express, without material change, the original intentions of the
parties as to the subject matter of this Confirmation and the deletion of such
portion of this Confirmation will not substantially impair the respective
benefits or expectations of parties to this Agreement; provided, however, that
this severability provision shall not be applicable if any provision of
Section 2, 5, 6 or 13 of the Agreement (or any

 

14

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definition or provision in Section 14 to the extent that it relates to, or is
used in or in connection with any such Section) shall be so held to be invalid
or unenforceable.

[Remainder of page intentionally left blank]

 

15

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Please confirm that the foregoing correctly sets forth the terms of our
agreement by signing and returning this Confirmation.

 

Yours faithfully,    

J.P. MORGAN SECURITIES INC.,

as agent for JPMorgan Chase Bank, National Association

  By:  

/s/ Sudheer Tegulapalle

  Name:   Sudheer Tegulapalle   Title:   Executive Director  

Confirmed as of the date first written above:

 

VECTREN CORPORATION    

By:

 

/s/ Robert L. Goocher

 

Name:

  Robert L. Goocher  

Title:

  Vice President and Treasurer  

JPMorgan Chase Bank, National Association

Organized under the laws of the United States as a National Banking Association.

Main Office 1111 Polaris Parkway, Columbus, Ohio 43271

Registered as a branch in England & Wales branch No. BR000746.

Registered Branch Office 125 London Wall, London EC2Y 5AJ

Authorized and regulated by the Financial Services Authority

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ANNEX A

PRIVATE PLACEMENT PROCEDURES

 

(i) If Party B delivers the Restricted Shares pursuant to this clause (i) (a
“Private Placement Settlement”), then delivery of Restricted Shares by Party B
shall be effected in customary private placement procedures with respect to such
Restricted Shares reasonably acceptable to Party A; provided that if, on or
before the date that a Private Placement Settlement would occur, Party B has
taken, or caused to be taken, any action that would make unavailable either the
exemption pursuant to Section 4(2) of the Securities Act for the sale by Party B
to Party A (or any affiliate designated by Party A) of the Restricted Shares or
the exemption pursuant to Section 4(1) or Section 4(3) of the Securities Act for
resales of the Restricted Shares by Party A (or any such affiliate of Party A)
or Party B fails to deliver the Restricted Shares when due or otherwise fails to
perform obligations within its control in respect of a Private Placement
Settlement, it shall be an Event of Default with respect to Party B and
Section 6 of the Agreement shall apply. The Private Placement Settlement of such
Restricted Shares shall include customary representations, covenants, blue sky
and other governmental filings and/or registrations, indemnities to Party A, due
diligence rights (for Party A or any designated buyer of the Restricted Shares
by Party A), opinions and certificates, and such other documentation as is
customary for private placement agreements, all reasonably acceptable to Party
A. In the case of a Private Placement Settlement, Party A shall, in its good
faith discretion, adjust the amount of Restricted Shares to be delivered to
Party A hereunder in a commercially reasonable manner to reflect the fact that
such Restricted Shares may not be freely returned to securities lenders by Party
A and may only be saleable by Party A at a discount to reflect the lack of
liquidity in Restricted Shares. Notwithstanding the Agreement or this
Confirmation, the date of delivery of such Restricted Shares shall be the
Clearance System Business Day following notice by Party A to Party B of the
number of Restricted Shares to be delivered pursuant to this clause (i). For the
avoidance of doubt, delivery of Restricted Shares shall be due as set forth in
the previous sentence and not be due on the Settlement Date or Termination
Settlement Date that would otherwise be applicable.

 

(ii) If Party B delivers any Restricted Shares in respect of the Transaction,
Party B agrees that (i) such Shares may be transferred by and among JPMorgan
Chase Bank, National Association and its affiliates and (ii) after the minimum
“holding period” within the meaning of Rule 144(d) under the Securities Act has
elapsed after the applicable Settlement Date, Party B shall promptly remove, or
cause the transfer agent for the Shares to remove, any legends referring to any
transfer restrictions from such Shares upon delivery by Party A (or such
affiliate of Party A) to Party B or such transfer agent of seller’s and broker’s
representation letters customarily delivered by Party A or its affiliates in
connection with resales of restricted securities pursuant to Rule 144 under the
Securities Act, each without any further requirement for the delivery of any
certificate, consent, agreement, opinion of counsel, notice or any other
document, any transfer tax stamps or payment of any other amount or any other
action by Party A (or such affiliate of Party A).

 

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