Document:

Exhibit 10.3

TENNESSEE
COMMERCE BANK

AMENDED
and RESTATED

EMPLOYMENT
AGREEMENT

For H.
LAMAR COX

 

This Amended and Restated Employment Agreement (the
“Agreement”) is made as of this 30th day of December, 2008 (the “Effective Date”),
by and between Tennessee Commerce Bank, (the “Bank” or “Employer”), and H.
Lamar Cox (the “Executive”).

 

WITNESSETH:

 

WHEREAS, the Bank and the Executive were parties
to an Employment Agreement dated January 19, 2006 (the “Prior Employment
Agreement”);

 

WHEREAS, the Bank and the Executive wish to
amend and restate the Prior Employment Agreement; and

 

WHEREAS, the Bank desires to continue the
services of and employ the Executive, and the Executive desires to continue to
provide services to the Bank, pursuant to the terms and conditions of this
Agreement; and

 

WHEREAS this Amended and Restated Plan is
intended to comply with the requirements of Internal Revenue Code Section 409A.
Accordingly, the intent of the parties hereto is that the Plan shall be
operated and interpreted consistent with the requirements of Section 409A.

 

NOW, THEREFORE, in consideration of the promises,
covenants and agreements contained herein, the Bank and the Executive agree as
follows:

 

1.             Employment.
Upon the terms and subject to the conditions contained in this Agreement, the
Executive agrees to provide full-time services for the Employer during the term
of this Agreement, and the Executive hereby accepts such employment. Executive
agrees to devote his best efforts to the business of the Employer, and shall perform
his duties in a diligent, trustworthy, and business-like manner, all for the
purpose of advancing the business of the Employer. Notwithstanding the above,
the Executive may engage in other business interests or investments which do
not materially prevent the Executive from performing his contemplated services
hereunder on behalf of the Employer and which do not conflict with any duty or
obligation Executive owes to the Employer under this Agreement. The Executive
is currently serving as a director of each of the Employer. The Employer shall
nominate the Executive for election as a director at such times as necessary so
that the Executive will, if elected by stockholders, remain a director of the
Employer throughout the term of this Agreement. The Executive hereby consents
to serving as a director and to being named as a director of the Employer in
documents filed with the Securities and Exchange Commission. The board of
directors of each of the Employer and the Bank shall undertake every lawful
effort to ensure that the Executive continues throughout the term of employment
to be elected or reelected as a director of the Bank. The Executive shall be
deemed to have resigned as a director of each of the Employer and the Bank
effective immediately after termination of the Executive’s employment under Section 6
of this Agreement, regardless of whether the Executive submits a formal,
written resignation as director.

 

2.             Definitions.
For purposes of this Agreement, the following terms shall have the meanings specified
below.

 

“Change in Control” shall mean: a change in the
ownership or effective control of the Employer, or in the ownership of a
substantial portion of the assets of the Employer, as such change is defined in
Treasury Regulation §1.409A-3(i)(5) or any subsequently applicable
Treasury Regulation.

 

“Cause” shall mean (a) fraud; (b) embezzlement;
(c) conviction of the Executive of any felony; (d) a material breach
of, or the willful failure or refusal by the Executive to perform and discharge

 

 

the Executive’s duties, responsibilities and
obligations under this Agreement; (e) any act of moral turpitude or
willful misconduct by the Executive intended to result in personal enrichment
of the Executive at the expense of the Employer, or any of its affiliates or
which has a material adverse impact on the business or reputation of the
Employer or any of its affiliates (such determination to be made by the Board
in its reasonable judgment); (f) intentional material damage to the
property or business of the Employer; (g) gross negligence; or (h) the
ineligibility of the Executive to perform his duties because of a ruling,
directive or other action by any agency of the United States or any state of
the United States having regulatory authority over the Employer; but in each
case only if (1) the Executive has been provided with written notice of
any assertion that there is a basis for termination for cause which notice
shall specify in reasonable detail specific facts regarding any such assertion,
(2) such written notice is provided to the Executive a reasonable time
(and in any event no less than three business days) before the Board meets to
consider any possible termination for cause, (3) at or prior to the
meeting of the Board to consider the matters described in the written notice,
an opportunity is provided to the Executive and his counsel to be heard before
the Board with respect to the matters described in the written notice, (4) any
resolution or other Board action held with respect to any deliberation regarding
or decision to terminate the Executive for cause is duly adopted by a vote of
at least two-thirds of the entire Board (excluding the Executive) at a meeting
of the Board duly called and held, and (5) the Executive is promptly
provided with a copy of the resolution or other corporate action taken with
respect to such termination. No act or failure to act by the Executive shall be
considered willful unless done or omitted to be done by him not in good faith
and without reasonable belief that his action or omission was in the best
interests of the Employer. The unwillingness of the Executive to accept any or
all of a material change in the nature or scope of his position, authorities or
duties, a reduction in his total compensation or benefits, a relocation that he
deems unreasonable in light of his personal circumstances, or other action by
or request of the Employer in respect of his position, authority, or
responsibility that he reasonably deems to be contrary to this Agreement, may
not be considered by the Board to be a failure to perform or misconduct by the
Executive.

 

“Code” shall mean the Internal Revenue Code of 1986,
as amended, or any successor statute, rule or regulation of similar
effect.

 

“Confidential Information” shall mean all business and
other information relating to the business of the Employer, including without
limitation, technical or nontechnical data, programs, methods, techniques,
processes, financial data, financial plans, product plans, and lists of actual
or potential customers, which (i) derives economic value, actual or
potential, from not being generally known to, and not being readily
ascertainable by proper means by, other Persons, and (ii) is the subject
of efforts that are reasonable under the circumstances to maintain its secrecy
or confidentiality. Such information and compilations of information shall be
contractually subject to protection under this Agreement whether or not such
information constitutes a trade secret and is separately protectable at law or
in equity as a trade secret. Confidential Information does not include
confidential business information which does not constitute a trade secret
under applicable law two years after any expiration or termination of this
Agreement.

 

“Disability” or “Disabled” means the Executive suffers
a sickness, accident or injury that is determined by the carrier of any
individual or group disability insurance policy covering the Executive to be a
disability rendering the Executive totally and permanently disabled, as
certified by a physician chosen by the Employer and reasonably acceptable to
the Executive, or as later defined by the Internal Revenue Service in IRS
Notice 2005 -1.

 

“Exchange Act” shall mean the Securities Exchange Act
of 1934, as amended.

 

“Good Reason” shall mean (i) without the
Executive’s express written consent, a material diminution in authority, duties
or responsibilities; (ii) any reduction by the Employer in the Executive’s
Base Salary; (iii) a material diminution in the authority, duties, or
responsibilities of the supervisor to whom the Executive reports, including a
requirement to report to an officer or other employee, rather than directly to
the Board; (iv) a material diminution in the budget over which the
Executive retains authority; (iv) any failure of the Employer to obtain
the assumption of, or the agreement to perform, this Agreement by any successor
as contemplated in Section 13 hereof; or (v) the Employer requiring
the Executive to be

 

 

permanently assigned to a location other than the
current or future headquarters of the Employer, except for required travel on
the Employer business to an extent substantially consistent with the
Executive’s present business travel obligations and as described under Section 3,
or, in the event the Executive consents to any relocation, the failure by the
Employer to pay (or reimburse the Executive) for all reasonable moving expenses
incurred by the Executive relating to a change of the Executive’s principal
residence in connection with such relocation and to indemnify the Executive
against any loss realized on the sale of the Executive’s principal residence in
connection with any such change of residence. Good Reason shall be deemed to
occur only when Executive provides notice to the Employer of his judgment that
a Good Reason event has occurred within 90 days of such occurrence, and the
Employer will have at least 30 days during which it may remedy the condition.

 

“Person” shall mean any individual, corporation,
limited liability Employer, bank, partnership, joint venture, association,
joint-stock Employer, trust, unincorporated organization or other entity.

 

“Regulatory Body” refers to The Office of the
Comptroller of the Currency (OCC), the Board of Governors of the Federal
Reserve System (FRB), the Federal Deposit Insurance Corporation (FDIC), and the
Office of Thrift Supervision (OTS), also known as “the agencies”.

 

“Specified Employee” means an employee who at the time
of Termination of Employment is a key employee of the Bank, if any stock of the
Bank is publicly traded on an established securities market or otherwise. For
purposes of this Agreement, an employee is a key employee if the employee meets
the requirements of Code Section 416(i)(1)(A)(i), (ii), or (iii) (applied
in accordance with the regulations thereunder and disregarding section
416(i)(5)) at any time during the 12-month period ending on December 31
(the “identification period”). If the employee is a key employee during an
identification period, the employee is treated as a key employee for purposes of
this Agreement during the twelve (12) month period that begins on the first day
of April following the close of the identification period.

 

“Termination for Cause” and “Cause”  shall have the same definition specified
in any effective severance or employment agreement existing on the date hereof
or hereafter entered into between the Executive and the Bank. If the Executive
is not a party to a severance or employment agreement containing a definition
of termination for cause, Termination for Cause means the Bank terminates the
Executive’s employment because of:

 

(a)                                  the Executive’s gross negligence or gross
neglect of duties or intentional and material failure to perform stated duties
after written notice thereof, or

 

(b)                                 disloyalty or dishonesty by the Executive
in the performance of his duties, or a breach of the Executive’s fiduciary
duties for personal profit, in any case whether in his capacity as a director
or officer, or

 

(c)                                  embezzlement or misappropriation of funds
or property of the Bank or intentional wrongful damage by the Executive to the
business or property of the Bank or its affiliates, including without
limitation the reputation of the Bank, which in the judgment of the Bank causes
material harm to the Bank or affiliates, or

 

(d)                                 failure or refusal by the Participant to
devote full business time and attention to the performance of his or her duties
and responsibilities if such breach has not been cured within fifteen (15) days
after notice is given to the Participant; or

 

(e)                                  a willful violation by the Executive of
any applicable law or significant policy of the Bank or an affiliate that, in
the Bank’s judgment, results in an adverse effect on the Bank or the affiliate,
regardless of whether the violation leads to criminal prosecution or conviction.
For purposes of this Agreement, applicable laws include any statute, rule,
regulatory order, statement of policy, or final cease-

 

 

and-desist order of any
governmental agency or body having regulatory authority over the Bank, or

 

(f)                                    the occurrence of any event that results
in the Executive being excluded from coverage, or having coverage limited for
the Executive as compared to other executives of the Bank, under the Bank’s
blanket bond or other fidelity or insurance policy covering its directors, officers,
or employees, or

 

(g)                                 the Executive is removed from office or
permanently prohibited from participating in the Bank’s affairs by an order
issued under section 8(e) (4) or section 8(g) (1) of the
Federal Deposit Insurance Act, 12 U.S.C. 1818(e) (4) or (g)(1), or

 

(h)                                 conviction of the Executive for or plea
of nolo contendere to a felony or conviction of or plea of nolo contendere to a
misdemeanor involving moral turpitude, or the actual incarceration of the
Executive for 45 consecutive days or more.

 

“Termination of Employment”  with the Employer means that the Executive shall have
ceased to be employed by the Employer for reasons other than death, excepting a
leave of absence approved by the Employer. Whether a termination of employment
has occurred is determined based on whether the facts and circumstances
indicate that the Bank and the Executive reasonably anticipated that no further
services would be performed after a certain date or that the level of bona fide
services the Executive would perform after such date (whether as an employee or
as an independent contractor) would permanently decrease to no more than twenty
percent (20%) of the average level of bona fide services performed (whether as
an employee or an independent contractor) over the immediately preceding
twenty-four (24) month period (or the full period of services to the Bank if
the Executive has been providing services to the Bank less than twenty-four
(24) months).

 

“Voluntary Termination” shall mean the termination by
Executive of Executive’s employment following a Change in Control which is not
the result for Good Reason.

 

3.             Duties.
During the term hereof, the Executive shall hold the title of Chief
Administrative Officer of the Employer and the Bank, and shall report directly
to the Board. The Executive shall have such duties and authority as are typical
of the and Chief Administrative Officer of a Employer such as the Employer,
including, without limitation, those specific in the Employer’s bylaws. The
Executive shall also promote, by entertainment or otherwise, as and to the
extent permitted by law, the business of the Employer The Executive’s duties
may, from time to time, be changed or modified at the discretion of the Board;
provided however, except with his written consent, Executive shall not be
assigned to any position of lower professional status.

 

4.             Employment
Term. Unless earlier terminated as provided herein, the Employer agrees to
employ, and the Executive hereby accepts employment hereunder, for an initial
term of two (2) years commencing on the Effective Date, subject to the
terms of this Agreement. Thereafter, the term of this Agreement will
automatically renew each day after the Effective Date for one additional day so
that the term of the Agreement shall always be two (2) years unless
notified of intent not to renew by either party.

 

5.             Compensation
and Benefits. In consideration of Executive’s services and covenants
hereunder, Employer shall pay to Executive the compensation and benefits
described below (which compensation shall be paid in accordance with the normal
compensation practices of the Employer and shall be subject to such deductions
and withholdings as are required by law or policies of the Employer in effect
from time to time, provided that his salary pursuant to Section 5(a) below
shall be payable not less frequently than monthly):

 

(a)           Base
Salary. As of the Effective Date of this Agreement, the Employer agrees to
pay the Executive during the term of this Agreement an initial Base Salary at
the rate of $350,000 per annum,

 

 

payable in accordance with Employer’s normal payroll
practices with such payroll deductions and withholdings as are required by law.
The Executive’s Base Salary shall be reviewed no less frequently than annually
and may be increased (but not reduced) at the discretion of the Board (or a
committee thereof) and, as so increased, shall constitute the Executive’s “Base
Salary” hereunder.

 

(b)           Annual
Incentive Payment. During the term of this Agreement, provided that
Executive is a full-time Executive of the Employer on the final day of the
Employer’s fiscal year, in addition to other compensation to be paid under this
Section 5, the Executive shall receive a performance-based annual
incentive payment for the then completed fiscal year of the Employer (the
“Annual Incentive Payment”), which shall be a percent of Base Salary. The
amount actually awarded and paid to the Executive each fiscal year will be
determined by the Board and will be based on specific performance criteria to
be identified in writing in advance to Executive under a separate
communication. The total amount of the Annual Incentive Bonus to be paid
hereunder shall be calculated by the Employer and paid to the Executive within
60 days of the end of the Employer’s fiscal year to which the Annual Incentive
Bonus applies. The Employer’s calculation of the Annual Incentive Bonus amount
shall be conclusive and binding absent fraud or manifest and material error.

 

(c)           Executive
Benefits. The Executive shall be eligible for all employee related benefit
programs currently in place or as may be adopted for the benefit of the Bank’s
executives or employees.

 

(d)           Vacation.
The Executive shall be entitled to paid vacation of five (5) weeks, or
as specified in the Employer’s then current vacation policy, as amended from
time to time if greater.

 

(e)           Reimbursement
of Expenses. The Employer shall reimburse the Executive in accordance with
Employer’s expense reimbursement policies for all reasonable, ordinary and
necessary business expenses incurred by the Executive in the course of his
duties conducted on behalf of the Employer. In addition, the Employer shall pay
for the use of a Employer car and for the Executive’s annual dues at a local
country club, and expenses related to the Executive’s use of such country club
for matters related to the business of the Employer. The Employer shall also
reimburse Executive’s reasonable expenses for continuing education courses
necessary to maintain any certifications or licenses Executive may hold.

 

(f)            Other
Employee Benefits. The Executive shall be entitled to participate in any
employee benefit plans now existing or established hereafter generally
available to employees of the Employer or senior officers of the Employer, and
to all normal perquisites provided to senior officers of the Employer, provided
Executive is otherwise qualified to participate in such plans or programs. As
part of its normal course of business, the Employer may amend or terminate
employee benefits.

 

(g)           Benefits
Not in Lieu of Compensation. No benefit or perquisite provided to the
Executive shall be deemed to be in lieu of Base Salary, bonus, or other
compensation, provided that the reporting of any benefits shall be consistent
with the Code.

 

(h)           Insurance.
The Employer shall maintain or cause to be maintained director and officer
liability insurance covering the Executive throughout the term of this
Agreement.

 

6.             Termination.
Employment with the Employer hereunder may be terminated as follows:

 

(a)      The
Employer. The Employer shall have the right to terminate Executive’s
employment hereunder at any time during the term hereof (i) for Cause, (ii) if
the Executive becomes Disabled, (iii) upon the Executive’s death, or (iv) without
Cause.

 

(i)            If the Employer terminates
Executive’s employment under this Agreement for Cause pursuant to clause (i) of
Section 6(a) above, the Employer’s obligations under this Agreement,
including any obligations of the Employer under Section 5 hereof, shall
cease as of the date of termination.

 

 

(ii)           If the Employer terminates
Executive’s employment under this Agreement pursuant to clauses (ii) or (iii) of
Section 6(a) above, the Employer’s obligations hereunder, including
the obligations under Sections 5(a) above, shall cease on the date of
death or Disability, as appropriate. During the period of incapacity leading up
to the termination of the Executive’s employment under this provision, the
Employer shall continue to pay the full Base Salary at the rate then in effect
and all perquisites and other benefits (other than bonus) until Executive has
satisfied the “elimination period” specified under any disability plan or
insurance program maintained by the Employer, provided that the amount of the
Employer’s payments under this Section 6(a)(ii) to Executive shall be
reduced by the sum of the amounts, if any, payable to Executive for the same
period under any Employer sick pay, paid time off, or other leave program or
any disability benefit or pension plan covering Executive. In no event shall
the Employer be required to pay the Executive Base Salary or any other
compensation or benefits twelve (12) months after the onset of Executive’s
Disability. Furthermore, Executive shall receive any bonus earned or accrued
through the date of incapacity, including any unvested amounts awarded for
previous years.

 

(iii)         Subject to Section 6(c) below,
if the Employer terminates Executive’s employment without Cause pursuant to
clause (iv) of Section 6(a) above, Executive shall be entitled
to receive as severance, less applicable taxes and other deductions, a sum
equal to two times the aggregate cash compensation provided in Sections 5(a) and
5(b) being paid at the time of termination (the “Severance Payment”). For
purposes of determining compensation which is not fixed (such as a bonus), the
annual amount of such unfixed compensation shall be deemed to be equal to the
average of such compensation over the three year period immediately prior to
the termination. Subject to Section 6(c) below, the Severance Payment
shall be payable without interest in equal installments, but no less frequently
than monthly, with the final installment due on the second anniversary of the
date of the termination of Executive’s employment in accordance with this Section 6(a)(iii).

 

(iv)          Subject to Section 6(c) below,
in the event of termination without Cause pursuant to clause (iv) of Section 6(a),
(A) all rights of Executive pursuant to awards of share grants or options
granted by the Employer shall be deemed to have vested and shall be released
from all conditions and restrictions, except for restrictions on transfer
pursuant to the Securities Act of 1933, as amended, (B) the Executive
shall be deemed to be credited with service with the Employer for such
remaining Term for the purposes of the Employer’s benefit plans, (C) the
Executive shall be deemed to have retired from the Employer and shall be
entitled as of the termination date, or at such later time as he may elect (or
may have previously elected) to commence receiving the total combined qualified
and non-qualified retirement benefit to which he is entitled hereunder, and (D) if
any provision of this Section 6(a)(iv) cannot, in whole or in part,
be implemented and carried out under the terms of the applicable compensation,
benefit, or other plan or arrangement of the Employer because the Executive has
ceased to be an actual employee of the Employer, because the Executive has
insufficient or reduced credited service based upon his actual employment by
the Employer, because the plan or arrangement has been terminated or amended
after the effective date of this Agreement, or because of any other reason, the
Employer itself shall pay or otherwise provide the equivalent of such rights,
benefits and credits for such benefits to Executive, his dependents, beneficiaries
and estate. Notwithstanding the foregoing, the Employer shall be under no
obligation to provide life insurance coverage or long-term disability income
benefit coverage beyond the period otherwise available to employees after
termination of employment under the terms and conditions of such plans or
programs.

 

(b)           By
Executive. Except when Executive’s employment is terminated for Cause prior
to a Change in Control or for death or Disability under Sections 6(a)(i), (ii) or
(iii), Executive shall have the right to terminate his employment hereunder if (i) the
Executive at any time gives written notice of termination (for any reason) to
the Employer; (ii) there is a Voluntary Termination; (iii) there is
Good Reason, or (iv) the Employer materially breaches this Agreement and
such breach is not cured within 30 days after written notice of such breach is
given by the Executive to the Employer.

 

 

(i)            If Executive terminates his
employment hereunder pursuant to clauses (i) or (ii) of Section 6(b) above,
the Employer’s obligations under this Agreement, including any obligations of
the Employer under Section 5 hereof, shall cease as of the date of
termination.

 

(ii)           If Executive terminates his
employment hereunder pursuant to clauses (iii) or (iv) of Section 6(b),
Executive, subject to Section 14 below, shall be entitled to receive as
severance, less applicable taxes and other deductions, the Severance Payment as
defined in Section 6(a)(iii) above. Subject to Section 6(c) below,
the Severance Payment shall be payable without interest in equal installments,
but no less frequently than monthly, with the final installment due on the
second anniversary of the date of the termination of Executive’s employment in
accordance with this Section 6(b)(ii). The Employer may prepay any or all
of the Severance Payment without fee or penalty.

 

(iii)           Subject to Section 6(c) below,
in addition, in the event of termination pursuant to any of clauses (iii) or
(iv) of this Section 6(b), (A) all rights of Executive pursuant
to awards of share grants or options granted by the Employer shall be deemed to
have vested and shall be released from all conditions and restrictions, except
for restrictions on transfer pursuant to the Securities Act of 1933, as
amended, (B) the Executive shall be deemed to be credited with service
with the Employer for such remaining Term for the purposes of the Employer’s
benefit plans, (C) the Executive shall be deemed to have retired from the
Employer and shall be entitled as of the termination date, or at such later
time as he may elect (or may have previously elected) to commence receiving the
total combined qualified and non-qualified retirement benefit to which he is
entitled hereunder, and (D) if any provision of this Section 6(b) cannot,
in whole or in part, be implemented and carried out under the terms of the
applicable compensation, benefit, or other plan or arrangement of the Employer
because the Executive has ceased to be an actual employee of the Employer,
because the Executive has insufficient or reduced credited service based upon
his actual employment by the Employer, because the plan or arrangement has been
terminated or amended after the effective date of this Agreement, or because of
any other reason, the Employer itself shall pay or otherwise provide the
equivalent of such rights, benefits and credits for such benefits to Executive,
his dependents, beneficiaries and estate.

 

(c)              Payment
of Severance.

 

(i)            The Employer’s obligation to make
the severance benefit payments (Section 6(a)(iii) and 6(b)(ii)) and
to provide the other rights set forth in Sections 6(a)(iv) and 6(b)(iii) ,
any severance and other benefit due hereunder shall commence being paid to the
Executive within thirty (30) days following the Termination of Employment. Any
severance and other benefit earned hereunder shall be in lieu of any other
claim for compensation whether under this Agreement, or under any wage
continuation law or at common law or otherwise, and any and all claims to
severance or similar payments or benefits which the Executive may otherwise
have or make.

 

(ii)           Notwithstanding anything contained
herein to the contrary, in the event of a violation or breach by Executive of
any of the provisions of Sections 8 or 9, below, the Employer, in addition to,
and not in limitation of, any other rights, remedies, or damages available to
the Employer at law or in equity, shall be entitled to suspend, cease, and
terminate the Employer’s obligations to make the Severance Payment, and any
other benefits, reimbursements, or rights of the Executive arising under this
Agreement, and to recover from the Executive the Severance Payment, if any,
previously paid to the Executive. In addition, in the event that any legal
challenge to the validity or enforceability of any provision in Section 8
or 9 is asserted by or on behalf of the Executive, the Executive shall
immediately forfeit the Executive’s right to the Severance Payment and all
other benefits, reimbursements, and rights of Executive arising under this
Agreement. These remedies shall be in addition to, and not in limitation of,
any injunctive relief or other rights, remedies, or damages, to which the
Employer is or may be entitled as a result of this Agreement.

 

 

(iii)           Notwithstanding anything to the
contrary herein, if the Executive is suspended or temporarily prohibited from
participating in the conduct of the Employer’s affairs by a notice served under
section 8(e)(3) or (g)(1) of Federal Deposit Insurance Act (12 U.S.C.
1818 (e)(3) and (g)(1), the Employer’s obligations under this Agreement
shall be suspended as of the date of service unless stayed by appropriate
proceedings. If the charges in the notice are dismissed, the Employer may in
its discretion (i) pay the Executive all or part of the compensation
withheld while the obligations under this Agreement were suspended and (ii) reinstate
(in whole or in part) any of such obligations which were suspended.
Notwithstanding anything to the contrary herein, if the Executive is removed or
permanently prohibited from participating in the conduct of the Employer’s
affairs by an order issued under section 8 (e)(4) or (g)(1) of the
Federal Deposit Insurance Act (12 U.S.C. 1818 (e)(4) or (g)(1), all
obligations of the Executive under this Agreement shall terminate as of the
effective date of the order, but any vested rights of the parties hereto shall
not be affected. Notwithstanding anything to the contrary herein, if the
Employer is in default (as defined in section 3(x)(1) of the Federal
Deposit Insurance Act), all obligations under this Agreement shall terminate as
of the date of default, but this Section shall not affect any vested
rights of the parties hereto. Any payments made to the Executive pursuant to
this Agreement, or otherwise, are subject to and conditioned upon their compliance
with 12 U.S.C. Section 1828(k) and any regulations promulgated
thereunder.

 

7.             Change
in Control Benefit. Notwithstanding anything to the contrary in Section 6,
if a Change in Control of the Employer occurs, and the Executive’s employment
is terminated during the period beginning one (1) year prior to and ending
two (2) years following a Change in Control, the Employer shall pay to the
Executive a benefit as defined in Section 7(a) below in lieu of any
other payment or benefit whatsoever.

 

(a)            Amount.
Notwithstanding anything to the contrary in Section 6, upon a Change
in Control and termination of employment without Cause or for Good Reason
following a Change in Control, the Executive will receive a Change in Control
benefit equal to an amount that is one (1) dollar less than that amount
which would constitute an “excess parachute payment” as defined in IRC 280(G),
or as subsequently amended.

 

(b)           Payment.
The amount due under the above Subsection (a) shall be paid in a lump sum
within thirty (30) days of a Change in Control, and shall be in addition to any
other rights of the Executive under this Agreement with regard to termination
of the Executive without cause and under any other agreement between the
Executive and the Employer

 

8.             Confidential Information. The Executive
recognizes and acknowledges that he will have access to certain information of
the Employer and its subsidiaries and that such information is confidential and
constitutes valuable, special and unique property of the Employer. The Executive
agrees to maintain in strict confidence and, except as necessary to perform his
duties for the Employer, agrees not to use or disclose any Trade Secrets of the
Employer during or after his employment. “Trade Secret” means information,
including a formula, pattern, compilation, program, device, method, technique,
process, drawing, cost data or customer list, that: (i) derives economic
value, actual or potential, from not being generally known to, and not being
readily ascertainable by proper means by, other persons who can obtain economic
value from its disclosure or use; and (ii) is the subject of efforts that
are reasonable under the circumstances to maintain its secrecy. In addition,
the Executive agrees to maintain in strict confidence and, except as necessary
to perform his duties for the Employer, not to use or disclose any Confidential
Business Information of the Employer during his employment and for a period of
36 months following termination of the Executive’s employment (regardless of
whether this Agreement terminates or expires). “Confidential Business
Information” shall mean any internal, non-public information (other than Trade
Secrets already addressed above) concerning the Employer’s financial position
and results of operations (including revenues, assets, net income, etc.);
annual and long-range business plans; product or service plans; marketing plans
and methods; training, educational and administrative manuals; customer and
supplier information and purchase histories; and employee lists. The provisions
of this Section 8 shall also apply to protect Trade Secrets and
Confidential Business Information of third parties provided to the Employer
under an obligation of secrecy.

 

 

9.             Delivery
of Documents upon Termination. At the Employer’s request, the Executive
shall deliver to the Employer or its designee at the termination of the
Executive’s employment all correspondence, memoranda, notes, records, drawings,
sketches, plans, customer lists, product compositions, and other documents and
all copies thereof, made, composed or received by the Executive, solely or
jointly with others, that are in the Executive’s possession, custody, or
control at termination and that are related in any manner to the past, present,
or anticipated business of the Employer.

 

10.           Remedies.
The Executive acknowledges that a remedy at law for any breach or attempted
breach of the Executive’s obligations under Sections 8 and 9 may be inadequate,
agrees that the Employer may be entitled to specific performance and injunctive
and other equitable remedies in case of any such breach or attempted breach and
further agrees to waive any requirement for the securing or posting of any bond
in connection with the obtaining of any such injunctive or other equitable
relief. The Employer shall have the right to offset against amounts to be paid
to the Executive pursuant to the terms hereof any amounts from time to time
owing by the Executive to the Employer. The termination of the Agreement shall
not be deemed to be a waiver by the Employer of any breach by the Executive of
this Agreement or any other obligation owed the Employer, and notwithstanding
such a termination the Executive shall be liable for all damages attributable
to such a breach.

 

11.           Arbitration.
Any dispute or controversy arising under or in connection with this
Agreement shall be settled exclusively by arbitration pursuant to the Tennessee
law in Nashville, Tennessee. Judgment may be entered on the arbitrator’s award
in any court having jurisdiction.

 

12.           Indemnification.
The Executive shall be protected against any and all legal actions when he
is either a party, witness or a participant in any legal action brought against
the Employer or the Executive or a board member. He will be protected through
any programs that cover the outside directors or other executives of the
Employer.

 

13.           Miscellaneous
Provisions.

 

(a)           Successors
of the Employer. The Employer will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or substantially
all of the business and/or assets of the Employer, by agreement in form and
substance satisfactory to the Executive, expressly to assume and agree to
perform this Agreement in the same manner and to the same extent that the
Employer would be required to perform it if no such succession had taken place.
Failure of the Employer to obtain such agreement prior to the effectiveness of
any such succession shall be a breach of this Agreement and shall entitle the
Executive to compensation from the Employer in the same amount and on the same
terms as the Executive would be entitled hereunder if the Executive terminated
his employment for Good Reason (or, solely at the Executive’s option,
compensation from the Employer in the same amount and on the same terms as the
Executive would be entitled under Section 7 above), except that for
purposes of implementing the foregoing, the date on which any such succession
becomes effective shall be deemed the date of termination. As used in this
Agreement, “Employer” as hereinbefore defined shall include any successor to
its business and/or assets as aforesaid which executes and delivers the
agreement provided for in this Section 13 or which otherwise becomes bound
by all the terms and provisions of this Agreement by operation of law.

 

(b)           Executive’s
Heirs, etc. The Executive may not assign the Executive’s rights or delegate
the Executive’s duties or obligations hereunder without the written consent of
the Employer. This Agreement shall inure to the benefit of and be enforceable
by the Executive’s personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If the
Executive should die while any amounts would still be payable to the Executive
hereunder as if he had continued to live, all such amounts, unless otherwise
provided herein, shall be paid in accordance with the terms of this Agreement
to the Executive’s designee or, if there be no such designee, to the
Executive’s estate.

 

 

(c)           Notices.
Any notice, request, approval, consent, demand or other communication shall be
effective upon the first to occur of the following: (i) upon receipt by
the party to whom such notice, request, approval, consent, demand or other
communication is being given; or (ii) three (3) business days after
being duly deposited in the United States mail, registered or certified, return
receipt requested, and addressed as follows:

 

	
  Executive:

  	
  H. Lamar Cox

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Franklin, TN

  	
   

  
	
   

  	
   

  	
   

  
	
  Employer:

  	
  Tennessee Commerce Bank

  	
   

  

 

 

The parties hereto may change their respective
addresses by notice in writing given to the other party to this Agreement.

 

(d)           Amendment
or Waiver. No provisions of this Agreement may be modified, waived or
discharged unless such waiver, modification or discharge is agreed to in
writing signed by the Executive and such officer as may be specifically
designated by the Board (which shall not include the Executive). No waiver by
either party hereto at any time of any breach by the other party hereto of or
compliance with, any condition or provision of this Agreement to be performed
by such other party shall be deemed a waiver of similar or dissimilar
provisions or conditions at the same or at any prior or subsequent time. No
agreements or representations, oral or otherwise, express or implied, with
respect to the subject matter hereof have been made by either party that are
not set forth expressly in this Agreement.

 

(e)           Invalid
Provisions. Should any portion of this Agreement be adjudged or held to be
invalid, unenforceable or void, such holding shall not have the effect of
invalidating or voiding the remainder of this Agreement and the parties hereby
agree that the portion so held invalid, unenforceable or void shall if
possible, be deemed amended or reduced in scope, or otherwise be stricken from
this Agreement to the extent required for the purposes of validity and
enforcement thereof.

 

(f)            Survival
of the Executive’s Obligations. The Executive’s obligations under this
Agreement shall survive regardless of whether the Executive’s employment by the
Employer is terminated, voluntarily or involuntarily, by the Employer or the
Executive, with or without Cause.

 

(g)           Counterparts.
This Agreement may be executed in one or more counterparts, each of which
shall be deemed to be an original but all of which together will constitute one
and the same instrument.

 

(h)           Governing
Law. This Agreement and any action or proceeding related to it shall be
governed by and construed under the laws of the State of Tennessee.

 

(i)            Captions
and Gender. The use of Captions and Section headings herein is for
purposes of convenience only and shall not effect the interpretation or
substance of any provisions contained herein. Similarly, the use of the
masculine gender with respect to pronouns in this Agreement is for purposes of
convenience and includes either sex who may be a signatory.

 

(j)            Effect
on Prior Agreements. This Agreement, and any attachments, represent the
entire understanding between the parties hereto and supersedes in all respects
any other prior Agreement or understanding between the Employer and the
Executive regarding the Executive’s employment.

 

14.           Section 409A.
This Agreement. is intended to comply with the requirements of Section 409A
of the Code and regulations promulgated thereunder (together, “Section 409A”),
and shall, to the extent practicable, be construed in accordance therewith. If
any amount payable pursuant to this Agreement constitutes a “deferral of
compensation” subject to Section 409A and if, at the date of the
Executive’s “separation from service,” as such term is defined in Section 409A,
from the Employer (his “Separation

 

 

from Service”), the Executive is a “specified
employee”, within the meaning of Section 409A, of the Employer as
determined by the Employer from time to time, then each such payment that would
otherwise be payable to the Executive within the six (6) month period
following the Executive’s Separation from Service shall be delayed and paid to
the Executive without interest on the first business day of the seventh month
following the Executive’s Separation from Service. For the avoidance of doubt,
for purposes of this Agreement, any amount which would not be considered a
“deferral of compensation” within the meaning of Section 409A by reason of
Treas. Reg. Sections 1.409A-1(b)(4) or 1.409A1(b)(9) shall not be
considered a deferral of compensation for which payment shall be delayed in
accordance with the preceding sentence. For purposes of this Agreement, each
payment to which the Executive may be entitled pursuant to this Agreement,
including each of the severance payments, shall be considered a separate
payment within the meaning of Treas. Reg. Section 1.409A-2(b)(2).
Notwithstanding the foregoing, to the extent that this Agreement or any payment
or benefit hereunder shall be deemed not to comply with Section 409A, then
neither the Employer, nor any of its principals, employees, designees or
agents, shall be liable to the Executive or to any other person to the extent
such failure to comply results from any actions, decisions or determinations
made in good faith.

 

IN WITNESS WHEREOF, the
Executive and a duly authorized Employer officer have signed this Agreement to
be effective as of the Effective Date.

 

	
  EXECUTIVE

  	
   

  	
  TENNESSEE COMMERCE BANK

  
	
   

  	
   

  	
   

  
	
   /s/ H. Lamar Cox

  	
   

  	
   /s/ Darrel
  Reifschneider

  
	
  H. Lamar Coxexhibit10_1.htm

     

    Warrick
Unit #4

    COAL
SUPPLY AGREEMENT

    

    

    

    
      	
               
      

            	
              THIS COAL SUPPLY
      AGREEMENT (“Agreement”) is entered into effective the 1st
      day of January, 2009, between VECTREN FUELS, INC., an
      Indiana corporation (“Seller”), whose principal business address is One
      Vectren Square, Evansville, Indiana 47708, and SOUTHERN INDIANA GAS AND
      ELECTRIC COMPANY d/b/a VECTREN POWER SUPPLY,
      INC.  (“Buyer”), whose
      principal business address is One Vectren Square, Evansville, Indiana
      47708.

            

    

    

    
      	
               
      

            	
              WITNESSETH,
      That:

            

    

    

    
      	
               
      

            	
              WHEREAS, Buyer desires
      to secure to the extent of the quantities and for the period hereinafter
      stated, a supply of bituminous coal of the quality hereinafter set forth,
      for use in its Warrick Unit 4 generating plant (“Plant”);
    and

            

    

    

    
      	
               
      

            	
              WHEREAS, Seller
      represents that it is experienced in the commercial production and
      preparation of coal and that it owns, has leased, or controls the
      hereinafter mentioned reserves of bituminous coal which are assigned to
      its Cypress Creek, Prosperity and Oaktown Mines (“Seller’s Mines” or
      “Mines”); and

            

    

    

    
      	
               
      

            	
              WHEREAS, Seller desires
      to sell coal to Buyer and Buyer desires to buy coal from Seller, upon the
      terms and conditions hereinafter set
forth.

            

    

    

    
      	
               
      

            	
              NOW THEREFORE, in
      consideration of the mutual covenants contained herein, Seller agrees to
      sell and deliver coal to Buyer and Buyer agrees to purchase and accept
      delivery of coal from Seller, pursuant to the terms and conditions set
      forth as follows:

            

    

    

    
      	
               
      

            	
              ARTICLE
      I

            

    

    
      	
               
      

            	
              AGREEMENT OF SALE AND
      PURCHASE

            

    

    

    
      	
              1.1

            	
              Sale
      and Purchase; Source of Coal.   Seller agrees to
      sell and Buyer agrees to purchase, the quantity and quality of coal
      specified herein, on the terms and subject to the conditions hereinafter
      set forth.  The source of coal to be supplied under this
      Agreement shall be the Seller’s Mines.  Alternate Source Coal,
      as defined hereinafter, may be supplied by Seller, subject to the
      provisions of Section 6.5 of this
Agreement.

            

    

    

    
      	
              1.2

            	
              Dedication
      of Reserves.  Seller represents that it owns or has
      leased, and will dedicate and set aside for this Agreement, such quality
      and quantity of coal reserves at Seller’s Mines, as are required for full
      performance of Seller’s obligations hereunder.  Seller
      represents and warrants that it has the legal right to mine and sell such
      coal reserves.  Seller will not sell, nor contract to sell to
      others, coal from said reserves in such quantity as to jeopardize Seller’s
      ability to deliver the total quantity of coal Seller is obligated to
      deliver to Buyer under this
Agreement.

            

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      	
              1.3

            	
              Annual
      Delivery Plan.  Seller has dedicated and set aside for
      this Agreement such quality and quantity of coal reserves at Seller’s
      Mines as are required for full performance of Seller’s obligations
      hereunder.  Seller warrants that such reserves are assigned to
      Seller’s Cypress Creek, Prosperity and Oaktown Mines.  Because
      the availability of coal may vary from each of Seller’s Mines during
      certain periods, Buyer and Seller hereby agree, on an annual basis, to
      meet to discuss, coordinate, and agree to a plan (“Annual Delivery Plan”)
      for the delivery of coal to Buyer’s Plant.  The Annual Delivery
      Plan shall specify the source and volumes from each source to be delivered
      to the Plant under this Agreement.  Transportation charges for
      delivering coal to Buyer’s Plant from either of Seller’s Mines shall be
      determined in Accordance with Section 4.1 and Section 6.5.  When
      developing the Annual Delivery Plan, every attempt shall be made to
      deliver coal to Buyer in accordance with Buyer’s
      instructions.  Coal delivered according to the Annual Delivery
      Plan shall also meet the coal quality specifications outlined in Exhibit
      A.

            

    

    

    
      	
              1.4

            	
              Title
      and Risk of Loss.  The sale of coal under this Agreement
      shall occur, and ownership and risk of loss shall pass from Seller to
      Buyer, upon delivery of the coal at the
Plant.

            

    

    
      	
               
      

            	 

    

    
      	
              1.5
 	
               

            	
              Opening
      of Oaktown Mine.  Buyer acknowledges that Seller’s Oaktown
      Mine is still in the construction/development phase, that the Oaktown Mine
      is not forecast to commence production until May 2009, or be operating at
      full capacity (250,000 tons/mo.) until the first quarter of 2010, that
      Seller’s ability to deliver coal from Seller’s Oaktown Mine in the full
      quantities contemplated under the 2009 Annual Delivery Plan is
      contingent upon Seller’s Oaktown Mine phasing in 2009 monthly production,
      commencing May, 2009, at the following monthly rates (in
      000’s):

            

    

    

    May                 63

    June                 83

    July                 109

    August                   145

                    September              145

                    October                  146

                    November              219

                    December  
            219

     

    Seller’s ability to deliver coal at the
contemplated levels in 2010 and thereafter is contingent upon the Oaktown Mine
operating at its projected full capacity from and after January, 2010. 
Seller shall use commercially reasonable efforts to complete the
construction/development of the Oaktown Mine, so that the same is operational to
facilitate mining and delivery of coal as contemplated by the 2009 Annual
Delivery Plan.  Nonetheless, Buyer agrees that Seller shall have no
liability under this Agreement, notwithstanding any provision to the contrary,
for failure to deliver the full quantities of coal from Seller’s Oaktown Mine as
contemplated by the 2009 Annual Delivery Plan to the extent applicable to delays
in the opening or full operation of, or failure to open, the Oaktown Mine so
long as Seller has used commercially reasonable efforts to accomplish the
same.  In years subsequent to 2009,  in the event Seller is unable to
deliver the full quantities of coal as contemplated in the then effective Annual
Delivery Plan, or if Seller is unable to provide an acceptable Annual
Delivery Plan meeting the volumes contemplated hereunder, due to delays in
the opening or full operation of, or failure to open, Seller’s Oaktown Mine,
the termination provisions of Section 9.2, Force Majeure, shall apply,
whether or not such failure to open or operate at full production would
otherwise constitute a Force Majeure.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Commercially reasonable efforts mean
efforts equivalent to those that would be exercised by an owner/operator of a
mine/mining facility of similar size and complexity to the Oaktown Mine acting
in good faith and in a commercially reasonable manner.

    

    ARTICLE
II

    TERM

    

    2.1           Term.  The
term of this Agreement shall commence on January 1, 2009, and shall continue
until and including December 31, 2014 (the “Term”).  Provided,
however, Buyer and Seller agree only the first four (4) years of the price per
ton of coal commencing on January 1, 2009 and continuing until and including
December 31, 2012 (“Pricing Period”) shall be specified in this
Agreement.  Pricing for years 2013 and 2014 of this Agreement shall be
determined in accordance with Section 4.3, Price.  No suspension of an
obligation under this Agreement by reason of Force Majeure shall extend the Term
of this Agreement, except upon mutual agreement of Seller and
Buyer.

     

    ARTICLE
III

    QUANTITY

    

    3.1           Quantity.  Seller shall sell
and deliver, and Buyer shall purchase and accept delivery of, coal at the Plant
in the amount of 480,000 tons per year during the Term of this
Agreement.  This annual tonnage shall be scheduled at a rate of
approximately 40,000 tons per month with no more than 50,000 tons in any month
absent Buyer’s consent.  Buyer may adjust the tonnage to be delivered
in any year to any amount within a range of fifteen percent (15%) more or less
than the tons specified for delivery in a particular year, it being understood
that any such adjustment may be made only upon fifteen (15) days advance notice
to Seller.  Unless otherwise agreed by Buyer at least twenty-four (24)
hours in advance, no daily delivery of coal shall exceed 2,000
tons.

    

    

    

    ARTICLE
IV

    PRICE ADJUSTMENT; GOVERNMENT
IMPOSITION; RIGHT OF FIRST REFUSAL; INVOICING AND PAYMENT

    

    4.1           Price.   The
Pricing Period for the Term of this Agreement shall be years
2009-2012.  The price per ton, F.O.B. mine for the Pricing Period
shall be as listed below:

    

    Year                                $/Ton                                $/MMBTU

    2009                                $59.50                                $2.7045

    2010                                $61.88                                $2.8127

    2011                                $64.36                                $2.9255

    2012                                $66.93                                $3.0423

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    In
addition to the F.O.B. mine prices above, there will also be per ton
transportation charges to deliver the coal to the Plant.  The
transportation charges will include the base transportation rates plus a fuel
surcharge which shall be adjusted on a monthly basis to adjust for fluctuations
in the price of diesel fuel.  The transportation adjustment charge
made by Seller shall be identical to the transportation adjustment charge made
by Seller’s contract carrier under the contract carrier’s Coal Hauling Contract
with Seller.

    

    The prices shall be adjusted (upward or
downward, as the case may be) for changes in Seller’s cost which are prudently
incurred and paid in connection with Mine production, sale, processing,
reclamation and loading of the coal due to a change or changes after January 1,
2009 in local, state and federal laws or regulations, or verifiable changes by a
government body (having competent jurisdiction over the subject matter) in the
interpretation of existing laws or regulations (but excluding laws relating to
income taxes, real and personal property taxes; provided, however, any other
taxes, including, but not limited to severance, carbon or labor related taxes,
such as unemployment, social security, black lung and worker’s compensation
shall be included).  Seller shall exercise all reasonable efforts to
minimize its costs attributable to such changes in laws or
regulations.  Any claim by Seller for an increase in price due to a
change in costs caused by a change in laws or regulations (as permitted above),
shall be net of any benefits, credits, deductions, depletion allowances, or
other reductions in costs allowed or allowable which become available to Seller
in connection with the Mine production, sale, processing, reclamation and
loading of coal due to a change or changes after January 1, 2009 in local,
state, and federal laws or regulations, or verifiable changes by the government
body (having competent jurisdiction over the subject matter).  Any
such claim shall be made within 90 days of when such change in costs occurs,
shall be fully supported by Seller’s accounting records and other documents
establishing the basis for the change as soon as reasonably practicable, and is
subject to Buyer’s audit.

    

    4.2           Government
Imposition.  “Government Imposition” means
taxes, fees, or increases in Seller's operating costs resulting from any newly
adopted, promulgated, ordered, released, approved, enacted or amended statute,
regulation, rule, interpretation, decision, requirement (including without
limitation mine permit requirements and other regulatory requirements), standard
or method (collectively, "Requirements") imposed by any federal, state or local
government or government agency upon the mining, production, severance,
preparation or sale of Coal hereunder, including, but not limited to carbon tax,
severance taxes or fees on Coal produced or sold hereunder such as but not
limited to black lung tax, abandoned mine land fee, and any other state or
federal impositions imposed on a per ton basis or by reference to the mining,
production, severance, preparation or sale of coal, and ad valorem taxes on
Seller’s land, improvements, machinery, equipment and the like as well as
increases in Seller's taxes, fees or operating costs incurred as a result of a
change after the Effective Date in any such Requirements related to mine safety
or otherwise related to the manner and method of mining, production, severance,
preparation or sale of Coal hereunder.  The term does not include
federal or state income taxes; employee benefits or payroll taxes of general
application such as employer’s Social Security, unemployment or worker’s
compensation taxes or payments; any civil or criminal money fine or penalty
imposed as the result of failure to comply with any Law; or increases in
operating costs not related to any new or changed Requirements.

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Adjustment to the Contract Price shall
be made for changes in Seller’s costs per Ton of Coal sold hereunder caused
directly by increased or decreased Governmental Impositions adopted,
promulgated, ordered, released, approved, or enacted after the Effective
Date.  Seller shall give prompt notice to Buyer of the amount of any
such increased or decreased cost per Ton of Coal sold hereunder incurred by
reason of a change of Governmental Imposition along with detailed documentation
of such amount which shall be supported by Seller’s accounting records and other
documents establishing the basis for the change which are subject to Buyer’s
audit.

    

    In the event of an increase in cost,
Seller in such notice further shall indicate the increase in Contract Price that
Seller will require which increase may not exceed the increase in Seller’s cost
caused by Governmental Impositions enacted or otherwise effective after the
Effective Date.  Within thirty (30) Days of receipt of such notice of
increase in cost, Buyer will give notice (“Buyer’s Notice”) that Buyer at its
option will either pay the requested increased Contract Price or will terminate
this Agreement as of the date that is the effective date of such change in
Government Regulation or thirty (30) days from Buyer’s Notice, whichever is
later.  Upon receipt of a Buyer’s Notice electing termination, Seller
shall have the option of rescinding its increase in the Contract Price per the
applicable change in Government Impositions, in which case this Agreement shall
not terminate but shall continue in full force and effect.

    

    In the
event of a decrease in cost, the Contract Price will be decreased by an amount
equal to the decrease in Seller’s cost caused by Governmental Impositions
enacted after the Effective Date.  If there are both increases and
decreases in cost, such increases and decreases shall be netted one against the
other.

    

    Notwithstanding
any other provision of this Section 4.2, there shall be no change in the
Contract Price as a result of any noncompliance with any Government Impositions,
or any civil or criminal fines or penalties imposed for failure to comply with
any Governmental Imposition currently existing or hereafter
enacted.  Additionally, adjustments to the Contract Price shall be
made hereunder only if the adjustment is allocated evenly to all coal that is
produced from Seller’s Mines, so that Buyer is allocated only its proportionate
share of such cost.

    

    Any
adjustment to the Contract Price under this Section 4.2 will be effective as of the date the change
in Governmental Imposition is effective.

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    4.3           Right of
First Refusal.  The
Parties agree to negotiate in good faith, during
the period from April 1, 2012 to June 30, 2012, a new price for the
supply of coal for years five (5) and six (6).  Buyer shall have the
right, but not the obligation, to agree to the negotiated price and continue
receipt of the Agreement quantity during years 2013 and 2014.  In the
event Buyer and Seller are unable to agree on a price for years 2013 and 2014 by June 30, 2012, this Agreement shall
expire December 31, 2012 unless otherwise agreed
in writing by the parties.

    

    4.4           Invoicing.  Seller
shall invoice Buyer weekly on a $ per MMBTU basis, the calculation of which
shall be based on the weekly average of the “as received” coal at the
Plant.  Invoices shall be electronically delivered to Buyer promptly
after the last shipment of the pertinent period once corresponding quality data
has been accumulated.

    

    4.5           Payment.  Buyer
shall mail payment within ten (10) days following Buyer’s receipt of Seller’s
invoices.  In the event that Buyer does not make payment in accordance
with the terms of this Agreement, then delinquent payments shall bear interest
at the prime rate of interest reported in the “Money Rates” section of “The Wall
Street Journal” (the “Prime Rate”), as of the first day of any such
delinquency.

    

    4.6           Errors or
Omissions.  In the event that any Seller’s invoice can be
demonstrated by Buyer to contain a material error or omission which unavoidably
delays Buyer’s ability to process payment of such invoice in a timely manner,
Seller shall extend the payment due date for the portion of the invoiced amount
which is affected, by the same number of days (from the time Buyer first
notified Seller of the error or omission) as it takes Seller to provide the
corrected or additional data required by Buyer.

    

    4.7           Disputed
Amount.  If Buyer disagrees with the amount of any invoice for
reasonable cause, Buyer shall promptly notify Seller by facsimile transmission,
followed promptly by written confirmation which shall set forth the basis for
such disagreement, so that the dispute may be resolved before the payment due
date.  If any portion of an invoice is not reconciled prior to the
payment due date, the undisputed amount shall be paid when due and the disputed
portion shall be held in abeyance until the dispute is
resolved.  Buyer may, at its option, pay the disputed portion of any
invoice without thereby waiving its right to contest such disputed portion of
the invoice.  Upon final resolution of the dispute, any adjustment due
either Buyer or Seller shall bear interest at the Prime Rate in effect as of the
date upon which Buyer notifies Seller of the existence of a
dispute.

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    ARTICLE
V

    QUALITY

    

    5.1           Quality;
Specifications.   The coal supplied under this Agreement
shall meet the quality specifications set forth on Exhibit A on an “as received”
basis.  If Moisture %, Ash % or SO2 lb/mmbtu monthly weighted averages
specified in Exhibit A are not met for any reason, the Buyer shall be entitled
to impose penalties on the Seller as outlined in Exhibit
B.  Similarly, if Moisture %, Ash % or SO2 lb/mmbtu monthly weighted
averages specified in Exhibit A are overachieved, Seller shall be entitled to
impose a premium on Buyer as outlined in Exhibit B.  The term “as
received” for purposes of this Agreement shall have that meaning defined in
specifications promulgated by the American Society for Testing and Materials
(“ASTM”).    The coal supplied under this Agreement shall be
raw coal, crushed to two (2) inch maximum top size, and shall be substantially
free of impurities, such as bone, slate, rock, wood, tramp metal, and mine
debris.  In the event that the coal supplied hereunder contains
non-authorized components, Seller shall indemnify, defend and hold harmless
Buyer from and against any and all claims, liabilities, damages, fines,
penalties, costs and expenses, including reasonable attorney fees, that Buyer
may incur as a result of any non-conforming coal delivered
hereunder.  Such indemnification shall include, but shall not be
limited to, any costs, fines and penalties associated with environmental
remediation incurred by Buyer.

    

    Seller
recognizes that Buyer must comply with applicable state and federal
environmental regulations, including sulfur and particulate standards, and that
Buyer is required to receive a substantially uniform coal quality on a
day-to-day basis in order to comply with such regulations.  Seller
agrees to carefully utilize proper mining techniques and procedures, and to
properly maintain and operate the preparation plant at the Mine, so as to
minimize day-to-day deviations in quality.

    

    5.2           Weights.  The
weight of the coal delivered hereunder shall be determined by Buyer on the basis
of certified scales maintained at the Plant.  Empty and full truckload
weights shall be ascertained for each truckload delivery of
coal.  Buyer shall furnish to Seller the weight of each shipment of
coal to be received by Buyer within twenty-four (24) hours after delivery to the
Plant.

    

    5.3           Sampling
and
Analysis.                                                      Each
daily shipment of coal shall be sampled and analyzed within twenty-four (24)
hours of delivery to the Plant.  Such analysis of the coal designated
for delivery to Buyer shall be undertaken as a “quick analysis” by an
independent laboratory acceptable to Buyer.  Seller shall furnish the
results of such analysis by facsimile transmission to Warrick Power Plant at
(812) 491-4701, within twenty-four (24) hours of delivery to the Plant. Such
analyses shall govern for the purposes of determining compliance with the
quality specifications required under this Agreement, except as otherwise
provided herein below:

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      	
               
      

            	
              A.

            	
              All
      sampling and analysis shall meet ASTM Standards. Seller shall retain
      sample splits at Seller’s Mine for a period of ninety (90)
      days.  Upon Buyer’s request, the retained sample split shall be
      sent to an independent laboratory for analysis and the results of such
      analysis shall govern as to the quality of the coal shipment as to which
      such sample pertains.

            

    

    

    
      	
               
      

            	
              B.

            	
              Sampling
      and analysis shall be performed on not greater than 2,000 ton
      batches.

            

    

    

    
      	
               
      

            	
              C.

            	
              If
      it is determined that samples have been obtained incorrectly, Seller and
      Buyer shall attempt to determine the effect, if any, on quality
      determinations as the same may apply to the price for coal paid by Buyer
      with respect to samples previously used by Buyer and Seller in their
      analyses.  If required, a reasonable adjustment shall be made in
      amounts invoiced and payments made to compensate for any differences in
      the gross calorific value of coal tested versus that of the coal which
      should have been tested.  If it is determined that sample
      analyses are in error, whether due to improper preparation of samples to
      be analyzed, faulty analytical equipment, or faulty laboratory methods, an
      appropriate adjustment shall be made in amounts invoiced and payments made
      to correct for errors in gross calorific values determined by the sample
      analyses.  However, no adjustment hereunder shall be retroactive
      for a period in excess of ninety (90) days prior to either (i) the date
      that either party first questioned in writing the correctness of the
      sampling procedures or the accuracy of the sample analyses, or (ii) the
      date that the inaccuracy was first determined, whichever was the earlier
      date.

            

    

    

    
      	
               
      

            	
              D.

            	
              Coal
      not complying with the quality specifications set forth herein will not be
      accepted by Buyer unless authorized prior to shipment.  At the
      option of the Buyer, acceptance of non-conforming coal may be conditioned
      upon reductions in price which shall be agreed upon in writing prior to
      delivery of any such non-conforming
coal.

            

    

    

    5.4.           Limitation
of Seller’s Warranties.  Seller agrees to fully meet Buyer’s
specifications for all coal provided pursuant to this
Agreement.  Provided that Seller strictly complies with Buyer’s
specifications, then Buyer agrees that Seller makes no other warranty, express
or implied, including but not limited to, warranties of merchantability or of
fitness for a particular purpose.

    

    5.5           Buyer’s
Extraordinary Termination Rights.  If Buyer is suffering
damages at the Plant from (a) unit derating; (b) increased forced outage rates;
or (c) other abnormal operating conditions, solely due to characteristics of the
coal supplied by Seller, although the coal supplied by Seller hereunder may be
meeting the quality specifications set forth in Exhibit A, Buyer shall notify
Seller of the nature of the operating problem, and the specific coal
characteristic(s) that is (are) causing such problem.  Buyer and
Seller shall promptly undertake good faith efforts to determine if there are
practical methods to eliminate or substantially mitigate any such problem and,
with mutual agreement by Buyer and Seller, shall take appropriate corrective
action.  If, after a period of one (1) month from the date Buyer
notifies Seller of a problem with burning the coal of the quality being
supplied, the parties have not reached agreement and executed a document
defining a mutually acceptable way to eliminate or mitigate such problem, which
agreement and execution shall not be unreasonably withheld, Buyer shall have the
option of terminating this Agreement by giving written notice to Seller, with
such termination to be effective one (1) month after the giving of such
notice.

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    ARTICLE
VI

    DELIVERY

    

    6.1           Deliveries.  Coal
conforming to Buyer’s specifications shall be supplied to Buyer at the
Plant.  Truck delivery will normally be between the hours of 6:00 A.M.
and 6:00 P.M., Monday thru Friday, except during periods when the Plant is
closed due to scheduled vacations, holidays, or periods of Force Majeure, unless
special restricted or extended hours are mutually agreeable to Buyer and Seller.
Seller shall obtain all applicable tariffs or transportation contracts for the
truck movement of coal hereunder.  Buyer shall pay all transportation
costs per the terms specified in this Agreement, and Seller shall bear all risk
of loss until the coal is delivered to the Plant.

    

    6.2           Rejection.  Buyer
shall have the right to reject coal which does not conform to the specifications
set forth in Exhibit A, on a per shipment basis.  A “shipment” is the
quantity of coal delivered to Buyer on a given day, upon which ASTM sampling and
analysis have been performed.  A shipment shall not exceed 2,000 tons,
unless Buyer shall agree to the delivery of quantities in excess
thereof.  Any shipments rejected by Buyer shall be returned to Seller,
at Seller’s expense, and shall be credited against Buyer’s purchase requirements
hereunder.

    

    6.3           Redirection
of Deliveries.  Buyer shall have the right to redirect the
delivery of coal purchased under this Agreement to any destination other than to
the Plant, so long as Buyer agrees to reimburse Seller for any additional
transportation or handling costs incurred by Seller to effectuate such
redirected deliveries.

    

    6.4           Failure
of Seller’s Trucks to Perform.  In the event that any person
retained by Seller to deliver coal to the Plant fails to provide adequate
equipment and drivers to deliver coal purchased under this Agreement, and such
failure to perform shall continue for a period of thirty (30) days, Buyer may
arrange for an alternate trucker to provide trucking services to make-up
shortfall tonnage caused by Seller’s contracted trucker’s failure to
perform.  Seller shall reimburse Buyer for trucking costs incurred to
deliver such shortfall tonnage so long as the cost per ton incurred by Buyer’s
alternative trucker does not exceed the price paid to Seller’s contracted
trucker.

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    6.5           Alternate
Supply Source.  The source of coal subject to this Agreement
shall be determined according to the Annual Delivery Plan as detailed in Section
1.3.  Seller, with Buyer’s prior written approval, may however deliver
to Buyer coal conforming to the specifications set forth in Exhibit A, from an
alternate source (“Alternate Source Coal”).  Buyer shall retain the
right to revoke such approval at Buyer’s discretion upon providing Seller with
seven (7) days’ prior written notification.  The transportation cost
for delivering Alternate Source Coal shall be determined in accordance with
Section 4.1 provided that in no event will the transportation cost be greater
than the delivered cost per million BTU of coal from Seller’s Mines as provided
for in the Annual Delivery Plan, unless otherwise mutually agreed.

    

    Seller shall
use commercially reasonable efforts, as defined in Section 1.5, to comply with
the Annual Delivery Plan.  Seller shall provide Purchaser with
documentation supporting its inability to comply if such inability exceeds
15% of planned deliveries from a particular source Mine designated in
the Annual Delivery Plan and the deviation from the Annual Delivery Plan
results in increased transportation costs to Buyer (i.e. more deliveries
from Oaktown Mine or at the Oaktown Mine rate in substitution for planned
Prosperity Mine deliveries).  Without limiting the generality of the
foregoing, except for pro-rata reductions applicable to all buyers in the event
of a Force Majeure affecting the Prosperity Mine, Seller shall not be permitted
to deviate from the Annual Delivery Plan in order to ship to
another buyer all or any portion of the coal from the Prosperity Mine that
is contemplated under the Annual Delivery Plan to be delivered to Buyer, where
such deviation would result in any increase in overall cost to
Buyer.

    

    

    ARTICLE
VII

    MINING FACILITIES AND
PRACTICES

    

    7.1           Seller’s
Warranty.  Seller shall maintain at the Mines, efficient
machinery, equipment, and other facilities required to produce, prepare, supply
and deliver the quality and quantity of coal contemplated by this
Agreement.  Seller further agrees to operate and maintain the
machinery, equipment and facilities at the Mines in accordance with good mining
practices so as to efficiently produce, prepare and deliver the
coal.  In addition, Seller shall conduct all operations at the Mines
in compliance with any and all applicable federal, state and local laws, rules
and regulations, and Seller shall observe and perform all terms and provisions
of any contract or agreement with third parties relative to the recovery and
sale of coal from the reserves dedicated to this Agreement.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    ARTICLE
VIII

    FORCE
MAJEURE

    

    8.1.           General.  “Force Majeure”
shall mean acts of God, acts of the public enemy, insurrections, riots,
terrorism, labor disputes, strikes, lockouts, boycotts, labor and material
shortages, fires, explosions, landslides, earthquakes, storms, roof falls, rib
falls, cave-ins, floods, aquifers, floor conditions, breakdowns of or damage to
equipment or facilities, interruptions to transportation or shortages of
transportation equipment, embargoes, blockades, acts of military authorities,
inability to obtain permits or authorization from any government authority, any
laws, orders, rules, regulations, enforcement proceedings or other acts or
restraint of governmental authority, unexpected mining conditions including
unforeseen changes in the coal seam, or faults or sandstone intrusions in the
coal seam, and other cause including unsafe working conditions, whether of the
kind or character herein enumerated or otherwise, which is not within the
control of the Party claiming excuse, whether or not foreseen or foreseeable,
which wholly or partly renders the mining removal, processing or loading of all
or part, of the normal output of the mine impractical or unfeasible, or renders
the accepting, utilizing, unloading, or intended use of the Coal impossible,
impractical or unfeasible, and which are not caused by acts or omissions of the
Party failing to perform.  Settlement of labor disputes shall be
deemed beyond the control and without the fault or negligence of the party
experiencing such event.  A change in market conditions including the
ability of Seller to sell Coal at a higher price, or Buyer to buy Coal at a
lower price, whether or not foreseeable, shall not be a Force
Majeure.  If such Party promptly gives notice to the other Party of
the nature and estimated duration of such Force Majeure, then the obligations of
the Party giving such notice and the corresponding obligations of the other
Party shall be suspended to the extent made necessary by and during the
continuance of such Force Majeure; provided, however, that the affected Party
shall make all reasonable efforts to eliminate the cause of such Force Majeure
and shall keep the other Party informed as to the continuance of the Force
Majeure.  During the estimated period of time, the other Party may
make arrangements to sell or purchase the estimated quantity of coal so affected
for the estimated time period.

    

    8.2           Allocation
in Event of Reduced Capability.  If Force Majeure occurs and
results in, or is projected to result in, (i) a reduction or limitation of
Seller’s ability to supply coal from Seller’s Mine or (ii) the inability of
Buyer to accept or utilize coal at the Plant, then in the case of Seller, Seller
shall allocate available supplies of coal from Seller’s Mines on a pro-rata
basis among its customers, or others as required by law, to the extent that its
contracts with other customers give Seller the right to reduce its supply
obligations as a result of the Force Majeure.  In the case of Buyer,
it will spread its reduced ability to accept or utilize coal at the Plant among
all its suppliers to the Plant, committed at the time the Force Majeure
occurred, on a pro-rata basis to the extent that its contracts with other
suppliers give Buyer the right to reduce purchase obligations as a result of the
Force Majeure.  Any such allocation shall be determined on the basis
of the number of tons of coal which Seller is obligated to deliver to its
committed customers or Buyer are obligated to receive from its committed
suppliers at the time the Force Majeure occurred.

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        
ARTICLE
IX

    

    RIGHT TO TERMINATE
AGREEMENT; SPECIFIC PERFORMANCE

    

    9.1           Non-Exclusive
Remedy.  The rights of one party or the other, or of both, to
terminate this Agreement without liability, which are specifically stated in
this Article and in other parts of this Agreement, are not exclusive, but are in
addition to any other rights recognized at law or in equity which may accrue to
one party or the other by reason of circumstances and conditions not dealt with
in these specific provisions.

    

    9.2           Force
Majeure.  If a Force Majeure event prevents the delivery or
purchase of more than fifty percent (50%) of the minimum tons of coal to be
supplied or received during a three (3) month period or longer, then the party not
suffering the Force Majeure, may, on fifteen (15) days written notice, terminate
this Agreement; provided, that if the event of Force Majeure on which the right
of termination was based is eliminated prior to the effective date of
termination, the termination right is voided.

    

    9.3           Change in
Regulations.  In the event that Buyer determines that it either
is or will be at a future date unable to burn the coal supplied under this
Agreement due to the quality of the coal and legally imposed regulations, Buyer
shall promptly notify Seller in writing.  The parties agree to make a
good-faith effort to resolve the problem in a manner to allow Buyer to continue
using Seller’s coal.  If after thirty (30) days the parties have not
reached agreement on a mutually acceptable solution, then Buyer shall have the
right by written notice given as early as possible to terminate this Agreement
on the future date after which it cannot legally burn coal from Seller’s
Mine.  Nothing herein shall be construed as requiring Buyer to incur
any significant added expense or significant capital investment to (i) treat or
alter the characteristics of the coal, (ii) blend the coal with any other fuel
including other coal, or (iii) make any modifications to the Plant to utilize
Seller’s coal.

    

    9.4            Default.  Subject
to the provisions of Article XIX, in the event of the failure of either party to
comply with any material obligation of this Agreement, either party shall have
the right to terminate this Agreement at any time by giving to the other fifteen
(15) days’ notice in writing of its intention to so terminate, specifying in
reasonable detail the nature of the default.  At the expiration of
said fifteen (15) days, unless the party in default shall have cured such
default, the party not in default shall have the right at its election to
terminate this Agreement forthwith.  Such right to terminate shall be
in addition to any other remedies at law or equity that the non-defaulting party
may have against the defaulting party.

    

    9.5           Specific
Performance.  It is expressly recognized and understood between
the parties that prompt and full deliveries by the Seller in accordance with
this Agreement are essential to Buyer.  Therefore, the parties agree
that in addition to, and not in limitation of, any and all other remedies to
which Buyer may be entitled by law, Buyer shall have the right to require
specific performance of this Agreement by the Seller, and Buyer shall have the
right, if necessary, to enter any appropriate judicial forum and, without bond
or other security, to obtain injunctions or other appropriate remedies against
Seller to prevent deliveries of any coal by the Seller to any third parties
while Seller is in default of or threatens default in the delivery of coal in
quantities and of a quality conforming to the specifications provided in this
Agreement.

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

      ARTICLE
X

      INDEMNIFICATION

    

    

    10.1           Scope.  The
Seller agrees to indemnify, defend and hold harmless the Buyer, its affiliates,
and their agents and employees from any claims, demands, loss, cost damages,
expense or liability of any kind or nature, including attorneys’ fees, resulting
from the performance of this Agreement or arising in any manner from any product
supplied or activity required by this Agreement, unless such claim, demand,
loss, cost, damage, or liability arises from the sole negligence or intentional
misconduct of the Buyer.

    

    10.2           Effect of
Release.  If the Seller obtains a release from any person for
damages resulting from the performance of this Agreement, it shall not affect
the Buyer’s rights nor the Seller’s obligations herein.

    

    10.3           Notice.  The
Seller agrees to immediately notify the Buyer in the event any accident, injury,
or damage occurs during the course of performance of this Agreement, or in the
event that anyone makes any claim for damages alleged to have resulted from the
performance or nonperformance of this Agreement, or from the negligence of the
Seller, its agents, or employees.

     

    ARTICLE
XI

    NOTICES

    

    12.1           Notices.  Any
official notice, request for approval or other document required to be given
under this Agreement shall be in writing, unless otherwise provided herein, and
shall be deemed to have been sufficiently given (i) on the date of delivery in
person or transmitted by facsimile or other electronic media, (ii) one business
day after delivery to an established mail service for overnight delivery, or
(iii) two (2) business days after dispatch in the United States mail, postage
prepaid, for mailing by first class, certified, or registered mail, return
receipt requested, and addressed as follows:

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    If the
notice is to Seller:

    

    Randy
Beck

    Vectren
Fuels, Inc.

    One
Vectren Square

    Evansville,
IN 47708

    

    If the
notice is to Buyer:

    

    Southern
Indiana Gas and Electric Company

    Attn:  Ron
Jochum

    One
Vectren Square

    Evansville,
IN 47708

    

    With a
copy to:

    Ronald E.
Christian

    Senior
Vice President, Chief Administrative Officer, General Counsel and
Secretary

    Vectren
Corporation

    One
Vectren Square

    Evansville,
IN 47741

    

    ARTICLE
XII

    GOVERNING LAW;
FORUM

    

    13.1           Governing
Law.  This Agreement and any questions concerning its validity,
construction or performance shall be governed by the laws of the State of
Indiana without reference to any choice of law provisions.  Any action
which may be commenced based upon this Agreement, shall be brought only in the
Vanderburgh Superior Court or Circuit Court, in Evansville, Vanderburgh County,
Indiana.

    

    ARTICLE
XIII

    RELATIONSHIP OF THE
PARTIES

    

    14.1           Relationship.  The
Seller, and any person or entity performing on its behalf, shall not be an
employee of the Buyer, but shall operate as and have the status solely as that
of a vendor.  The Buyer shall not be required to withhold or pay FICA
tax, unemployment, workers’ compensation, or other insurance or tax on behalf of
the Seller, its agents or employees. The Seller shall not at any time hold
itself out as an employee of Buyer. This Agreement does not create, nor shall it
be deemed to create, as between Seller and Buyer any relationship other than
that of vendor and purchaser.

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    ARTICLE
XIV

    ASSIGNMENT

    

    15.1           Assignment.  Either
party may assign this Agreement and its rights hereunder to its parent company,
or any affiliate or subsidiary of its parent company or of itself, and only to
such a party, without the consent of the other party.  Otherwise, this
Agreement may not be assigned wholly or in part by either party without the
written consent of the other party, which consent shall not be unreasonably
withheld.  No assignment shall release the assignor from its financial
responsibility hereunder, unless expressly agreed to in writing by the other
party.  Subject to the foregoing limitations, all of the provisions of
this Agreement shall inure to the benefit of and be binding upon the parties
hereto, their successors, and assigns.  Nothing stated herein shall be
construed to limit Buyer’s unilateral right to resell, transfer, pledge or
assign the delivery right to any coal delivered under this Agreement after Buyer
takes title thereto.

    

    

    ARTICLE
XV

    BUYER’S INSPECTION
RIGHTS

    

    16.1           Inspection.  The
Buyer and its duly authorized representatives shall have the right during
regular business hours to make reasonable inspections of the Seller’s records
pertaining to this Agreement, which shall include Seller’s records pertaining to
the quantity and quality of the coal supplied hereunder, along with shipping
records relating to said coal. Buyer and its duly authorized representatives
shall also at all reasonable times have the right and privilege to inspect the
Mines and facilities.  The Buyer shall provide the Seller with
reasonable notice before exercising any of the foregoing inspection rights. Any
representative of Buyer visiting the Mines shall be safety trained, sign
appropriate waivers, and sign in at the Mines’ office.

    

    ARTICLE
XVI

    COMPLETE AGREEMENT AND
CONFIDENTIALITY

    

    17.1           Entire
Agreement.  This Agreement contains the entire agreement
between the parties hereto, and no alteration or modification thereof shall be
binding unless in writing and signed by Buyer and Seller.  The titles
of the Articles and Sections in this Agreement have been inserted as a matter of
convenience for reference only and shall not control or affect the meaning or
construction of the terms and provisions thereof.

    

    17.2           Confidentiality.  Buyer
and Seller agree to use reasonable efforts to maintain this Agreement (including
attachments) as confidential and not to disclose, without the consent of the
other party, the terms of this Agreement to any third parties (other than
consultants, legal counsel, and accountants retained by a party) except in
response to or to avoid the issuance of legal process; provided that the parties
may, without the consent of the other party, disclose this Agreement, with the
request that it be treated as confidential, in connection with securing or
maintaining any permits or license, in connection with any financing of
securities, complying with reporting or filing requirements with any local,
state, or federal agencies, or responding to any inquiries or requests by any
state, local, or federal agencies.  Neither party shall incur any
monetary damage or liability to the other party for failure of or breach of the
provisions of this Section 17.2.

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    ARTICLE
XVII

    HEADINGS

    

    18.1           Headings.  The
headings of the Articles and Sections of this Agreement are included only as
reference and shall not limit or alter the meaning or any of the terms and
conditions of this Agreement.

    

    ARTICLE
XVIII

    SEVERABILITY

    

    19.1           Severability.  The
provisions of this Agreement are severable, and the invalidity or
unenforceability of any one or more provision shall not affect or limit the
validity of the remaining provisions. Should any particular provision be held to
be unreasonable or unenforceable for any reason, then such provision shall be
given effect and enforced to whatever extent would be reasonable and enforceable
under the applicable law.

    

    ARTICLE
XIX

    DISPUTE
RESOLUTION;
TERMINATION

    

    20.1           Moratorium
on Actions.  Except as otherwise specifically provided in or
permitted by this Agreement, all disputes, differences of opinion, or
controversies arising in connection with this Agreement shall be resolved first,
by the use in good faith for a period of ten (10) days, of mutual best efforts
to arrive at an agreeable resolution.  If, after negotiating in good
faith for a period of ten (10) days, the parties are unable to agree upon a
resolution of any such dispute, difference or controversy,  then
either party shall have the right to pursue any remedies that such party may
have at law or in equity.

    

    

    

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    IN WITNESS WHEREOF, Seller and
Buyer have caused this Agreement to be signed in their respective corporate
names by their respective proper corporate officers, all as of the date first
written above.

    

    

                                                                  VECTREN FUELS,
INC.

    

    By:/s/ Randy L.
Beck                                       

    

    Its: Randy L. Beck,
President                         

    (Printed Name and Title)

    

    

    

    

    
      	
               
      

            	 	
              SOUTHERN
      INDIANA GAS AND 

              ELECTRIC
      COMPANY d/b/a VECTREN
      

              POWER SUPPLY,
      INC.

            

    

    

    By: /s/ Williams
Doty                            

    

    Its:William Doty,
President                  

    (Printed Name and Title)

    

    

    

    

    

    

    

    

    

    

    

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    EXHIBIT
A

    

    COAL
QUALITY SPECIFICATIONS

    

    

    The following coal quality
specifications must be met with respect to each shipment of coal prepared for
daily shipment during the Term of this Agreement.  All of the
following specifications are on an “as received” basis.

    

    
      	
              Coal
      Characteristics

            	
              Specifications

            	
              Monthly
      Weighted Average

            	
              Shipment
      Rejection Limits

            
	
              Calorific
      value,

              As
      received

            	
              Min.  10,400

              BTU/lb

            	
              11,000
      BTU/lb

            	
              <10,400
      BTU/lb

            
	
              %
      Moisture, as received

            	
              Max.
      17.0%

            	
              13.0%

            	
              >17.0%

            
	
              %
      Ash, as received

            	
              Max.
      15.0%

            	
              10.0%

            	
              >15.0%

            
	
              SO2
      (lb/mmBTU)

            	
              Max.
      7.5 lb

              SO2/mmBTU

            	
              6.00
      lb/mmBTU

            	
              >7.5
      lb SO2/mmBTU

            
	
              Ash
      Fusion, softening, H=W red

            	
              Min.
      2100 deg, F

            	
              <2100
      deg, F

            	
              **

            
	
              Hardgrove
      Grindability Index

            	
              Min.
      53

            	
              53

            	
              **

            
	
              Nominal
      Size

            	
              Max.
      2” x 0”

            	
              2”
      x 0”

            	
              **

            
	
              Percent
      passing 1⁄4 inch screen

            	
              Max.

            	
              >35%

            	
              **

            
	
              Mineral
      Analysis of Ash:  Ferric Oxide, Fe203

            	
              Max
      25%

            	
              >25%

            	
              **

            

    

    

    **  Seller
to provide coal analysis as requested by Buyer.

    

    The above
coal quality characteristics must be met with respect to each shipment of coal
prepared for daily shipment against this Agreement with such shipment not to
exceed 2,000 tons.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    EXHIBIT
B

    

    Penalties:

    
      	
              Monthly
      Weighted Average

            	
              Unit
      of Exceedance

            	
              Penalty
      per Unit for Exceedance

              or
      any portion thereof (Penalty per MMBTU)

            
	
              Moisture
      %

            	
              1%

            	
              $.01

            
	
              Ash
      %

            	
              1%

            	
              $.01

            
	
              SO2
      lb/MMBTU

            	
              .1
      lb

            	
              $.01

            

    

    

    

    Premiums:

    

    
      	
              Monthly
      Weighted Average

            	
              Unit
      of Overachievance

            	
              Premium
      per Unit for Overachievance or any portion thereof (Premium per
      MMBTU)

            
	
              Moisture
      %

            	
              1%

            	
              $.005

            
	
              Ash
      %

            	
              1%

            	
              $.005

            
	
              SO2
      lb/MMBTU

            	
              .1
      lb

            	
              $.005

            

    

    

    

    EXAMPLE
OF HOW PENALTIES WILL BE CALCULATED

    
      	 
      	 
      	
              1 –
      Moisture

            	
              2 –
      Ash

            	
              3 –
      SO2

            
	
              Hypothetical

              Monthly
      Weighted

              Average

            	
               

              A

            	
               

              13.4%

            	
               

              10.2%

            	
               

              6.10#

            
	
              Monthly
      Weighted Average Per Exhibit A

            	
              B

            	
              13.0%

            	
              10%

            	
              6.00#

            
	
              Exceedance

            	
              A-B

            	
              .4%

            	
              .2%

            	
              .1#

            
	
              #
      of Exceedance Units or Portion Thereof

            	
              C

            	
              .4

            	
              .2

            	
              1

            
	
              Penalty  Per
      Exceedance Units

            	
              D

            	
              .01

            	
              .01

            	
              .01

            
	
              Penalty
      Per MMBTU

            	
              C x
      D

            	
              .004

            	
              .002

            	
              .01

            
	
              Penalty
      on 3,000 tons (assumes 11,000 BTUs per lb)

            	 
      	
              $264.00

            	
              $132.00

            	
              $660.00

            

    

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    EXAMPLE
OF WHEN & HOW PREMIUMS WILL BE
CALCULATED

    
      	 
      	 
      	
              1 –
      Moisture

            	
              2 –
      Ash

            	
              3 –
      SO2

            
	
              Hypothetical

              Monthly
      Weighted

              Average

            	
               

              A

            	
               

              12.6%

            	
               

              9.8%

            	
               

              5.80#

            
	
              Monthly
      Weighted Average Per Exhibit A

            	
              B

            	
              13.0%

            	
              10.0%

            	
              6.00#

            
	
              Overachievance

            	
              B-A

            	
              .4%

            	
              .2%

            	
              .2#

            
	
              #
      of Overachievance Units or Portion Thereof

            	
              C

            	
              .4

            	
              .2

            	
              2

            
	
              Premium
      Per Overachievance Units

            	
              D

            	
              .005

            	
              .005

            	
              .005

            
	
              Premium
      Per MMBTU

            	
              C x
      D

            	
              .002

            	
              .001

            	
              .01

            
	
              Premium
      on 3,000 tons (assumes 11,000 BTUs per lb)

            	 
      	
              $132.00

            	
              $66.00

            	
              $660.00

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00151-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00151-of-00352.parquet"}]]