Vectren Corporation Note Purchase Agreement

To Each of the Purchasers Listed in

Ladies and Gentlemen:

Vectren Capital, Corp., an Indiana corporation (the “Company” ), and Vectren Corporation, an Indiana corporation ( “Vectren” and, together with the Company, the “Obligors” ), agree with each of the purchasers whose names appear at the end hereof (each, a “Purchaser” and, collectively, the “Purchasers” ) as follows:

The Company will authorize the issue and sale, in three series, of $150,000,000 aggregate principal amount of its senior notes, of which $30,000,000 aggregate principal amount shall be its 6.37% Guaranteed Senior Notes, Series A due March 11, 2014 (the “Series A Notes” ), $60,000,000 aggregate principal amount shall be its 6.92% Guaranteed Senior Notes, Series B due March 11, 2016 (the “ Series B Notes ”) and $60,000,000 aggregate principal amount shall be its 7.30% Guaranteed Senior Notes, Series C due March 11, 2019 (the “ Series C Notes ”, and together with the Series A Notes and the Series B Notes, the “ Notes ”, such term to include any such notes issued in substitution therefor pursuant to Section 14).  The Series A Notes, the Series B Notes and the Series C Notes shall be substantially in the forms set out in Exhibits 1-A, 1-B and 1-C, respectively.  Due and punctual payment of the Guaranteed Obligations (as defined herein) will be unconditionally guaranteed by Vectren (the “ Guarantee ”) as set forth in this Agreement.  Certain capitalized terms used in this Agreement are defined in Schedule B; references to a “Schedule” or an “Exhibit” are, unless otherwise specified, to a Schedule or an Exhibit attached to this Agreement.

Subject to the terms and conditions of this Agreement, the Company will issue and sell to each Purchaser, and each Purchaser will purchase from the Company, at the Closing provided for

The sale and purchase of the Notes to be purchased by each Purchaser shall occur at the offices of Chapman and Cutler LLP, 111 W. Monroe Street, Chicago, Illinois 60603 at 10:00 a.m., Chicago time, at a closing (the “Closing” ) on March 11, 2009 or on such other Business Day thereafter as may be agreed upon by the Company and the Purchasers.  At the Closing the Company will deliver to each Purchaser the Notes to be purchased by such Purchaser in the form of a single Note for each series to be purchased by such Purchaser (or such greater number of Notes in denominations of at least $1,000,000, or any amount in excess thereof which is an integral multiple of $250,000, as such Purchaser may request) dated the date of the Closing and registered in such Purchaser’s name (or in the name of its nominee), against delivery by such Purchaser to the Company or its order of immediately available funds in the amount of the purchase price therefor by wire transfer of immediately available funds for the account of the Company to account number 5800169103 at Bank of America, N.A., New York, New York, ABA No. 026009593.   If at the Closing the Company shall fail to tender such Notes to any Purchaser as provided above in this Section 3, or any of the conditions specified in Section 4 shall not have been fulfilled to such Purchaser’s satisfaction, such Purchaser shall, at its election, be relieved of all further obligations under this Agreement, without thereby waiving any rights such Purchaser may have by reason of such failure or such nonfulfillment.

Each Purchaser’s obligation to purchase and pay for the Notes to be sold to such Purchaser at the Closing is subject to the fulfillment to such Purchaser’s satisfaction, prior to or at the Closing, of the following conditions:

Section 4.1.  Representations and Warranties .  The representations and warranties of the Obligors in this Agreement shall be correct when made and at the time of the Closing, except for failures to be so correct which individually or in the aggregate could not reasonably be expected to result in a Material Adverse Effect; provided, however, that representations and warranties containing a Material Adverse Effect or other materiality qualifier shall be correct in all respects.

Section 4.2.  Performance; No Default .  Each Obligor shall have performed and complied with all agreements and conditions contained in this Agreement required to be performed or complied with by it prior to or at the Closing and after giving effect to the issue and sale of the Notes (and the application of the proceeds thereof as contemplated by Section 5.14) no Default or Event of Default shall have occurred and be continuing.  Neither the Company nor Vectren (as applicable) shall have entered into any transaction since the date of the Memorandum (as defined herein) that would have been prohibited by Section 10.1, 10.2, 10.5, 10.6, 10.7 or 10.8 hereof had such Sections applied since such date.

Section 4.3.Compliance Certificates .

(a)  Officer’s Certificate .  Each Obligor shall have delivered to such Purchaser an Officer’s Certificate, dated the date of the Closing, certifying that the conditions specified in Sections 4.1, 4.2 and 4.9 have been fulfilled.

(b)  Secretary’s Certificate .  Each Obligor shall have delivered to such Purchaser a certificate of its Secretary or Assistant Secretary, dated the date of the Closing, certifying as to the resolutions attached thereto and other corporate proceedings relating to the authorization, execution and delivery of this Agreement and the Notes (in the case of the Company) and of this Agreement and the Guarantee (in the case of Vectren).

Section 4.4.  Opinions of Counsel .  Such Purchaser shall have received opinions in form and substance satisfactory to such Purchaser, dated the date of the Closing (a) from (i) Barnes & Thornburg LLP, Indiana counsel for the Obligors and (ii) Kegler, Brown, Hill and Ritter, Ohio counsel for the Obligors, or other law firm reasonably acceptable to Purchasers, covering the matters set forth in Exhibits 4.4(a)(i), and (ii), respectively, and covering such other matters incident to the transactions contemplated hereby as such Purchaser or its counsel may reasonably request (and the Obligors hereby instruct their counsel to deliver such opinions to the Purchasers) and (b) from Chapman and Cutler LLP, the Purchasers’ special counsel in connection with such transactions, substantially in the form set forth in Exhibit 4.4(b) and covering such other matters incident to such transactions as such Purchaser may reasonably request.

Section 4.5.  Purchase Permitted By Applicable Law, Etc .  On the date of the Closing such Purchaser’s purchase of Notes shall (i) be permitted by the laws and regulations of each jurisdiction to which such Purchaser is subject, without recourse to provisions (such as section 1405(a)(8) of the New York Insurance Law) permitting limited investments by insurance companies without restriction as to the character of the particular investment, (ii) not violate any applicable law or regulation (including, without limitation, Regulation T, U or X of the Board of Governors of the Federal Reserve System) and (iii) not subject such Purchaser to any tax, penalty or liability under or pursuant to any applicable law or regulation, which law or regulation was not in effect on the date hereof.  If requested by such Purchaser, such Purchaser shall have received an Officer’s Certificate from Vectren certifying as to such matters of fact as such Purchaser may reasonably specify to enable such Purchaser to determine whether such purchase is so permitted.

Section 4.6.  Sale of Other Notes .  Contemporaneously with the Closing the Company shall sell to each other Purchaser and each other Purchaser shall purchase the Notes to be purchased by it at the Closing as specified in Schedule A.

Section 4.7.  Payment of Special Counsel Fees .  Without limiting the provisions of Section 16.1, the Company shall have paid on or before the Closing the fees, charges and disbursements of the Purchasers’ special counsel referred to in Section 4.4 to the extent reflected in a statement of such counsel rendered to the Company at least one Business Day prior to the Closing.

Section 4.8.  Private Placement Numbers .  A Private Placement Number issued by Standard & Poor’s CUSIP Service Bureau (in cooperation with the Securities Valuation Office of the National Association of Insurance Commissioners) shall have been obtained for each series of Notes.

Section 4.9.  Changes in Corporate Structure .  Neither Obligor shall have changed its jurisdiction of incorporation or been a party to any merger or consolidation or succeeded to all or any substantial part of the liabilities of any other entity, at any time following the date hereof.

Section 4.10.  Funding Instructions..   At least three Business Days prior to the date of the Closing, each Purchaser shall have received written instructions signed by a Responsible Officer on letterhead of the Company confirming the information specified in Section 3 including (i) the name and address of the transferee bank, (ii) such transferee bank’s ABA number and (iii) the account name and number into which the purchase price for the Notes is to be deposited.

Section 4.11.  Proceedings and Documents .  All corporate and other proceedings in connection with the transactions contemplated by this Agreement and all documents and instruments incident to such transactions shall be reasonably satisfactory to such Purchaser and its special counsel, and such Purchaser and its special counsel shall have received all such counterpart originals or certified or other copies of such documents as such Purchaser or such special counsel may reasonably request.

Each of the Company and Vectren represents and warrants to each Purchaser (only to the extent applicable to itself and, if specified, its Subsidiaries) as follows as of the date hereof or, if the representation or warranty speaks as of a different date, as of such date:

Section 5.1.  Organization; Power and Authority .  Each of the Company and Vectren is a corporation duly organized and validly existing under the laws of its jurisdiction of incorporation, and is duly qualified as a foreign corporation and is in good standing in each jurisdiction in which such qualification is required by law, other than those jurisdictions as to which the failure to be so qualified or in good standing could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.  Each of the Company and Vectren has the corporate power and authority to own or hold under lease the properties it purports to own or hold under lease, to transact the business it transacts and proposes to transact, to execute and deliver this Agreement and the Notes (in the case of the Company) and this Agreement and the Guarantee (in the case of Vectren), and to perform the provisions hereof and thereof.

Section 5.2.  Authorization, Etc .  This Agreement and the Notes have been duly authorized by all necessary corporate action on the part of the Company, and this Agreement constitutes, and upon execution and delivery thereof each Note will constitute, a legal, valid and binding obligation of the Company enforceable against the Company in accordance with its terms, and this Agreement and the Guarantee have been duly authorized by all necessary corporate action on the part of Vectren and constitute legal, valid and binding obligations of

Section 5.3.  Disclosure .  The Company and Vectren, through their agent, Banc of America Securities LLC, have delivered to each Purchaser a copy of a Private Placement Memorandum, dated February 2009 (including the SEC Reports incorporated by reference therein, the “Memorandum” ), relating to the transactions contemplated hereby.  The Memorandum fairly describes, in all material respects, the general nature of the business and principal properties of the Company, Vectren and the Restricted Subsidiaries.  This Agreement, the Memorandum (including the financial statements contained in the SEC Reports) and the documents, certificates or other writings delivered to the Purchasers by or on behalf of the Company or Vectren, as applicable, in connection with the transactions contemplated hereby (this Agreement, the Memorandum and such documents, certificates or other writings delivered to each Purchaser being referred to, collectively, as the “Disclosure Documents” ), taken as a whole, do not contain any untrue statement of a material fact or omit to state any material fact necessary to make the statements therein not misleading in light of the circumstances under which they were made.  Except as disclosed in the Disclosure Documents delivered to the Purchasers on or prior to the date of this Agreement, since December 31, 2008, there has been no change in the financial condition, operations, business, properties or prospects of the Company, Vectren or any Restricted Subsidiary except changes that individually or in the aggregate would not reasonably be expected to have a Material Adverse Effect.  There is no fact known to the Company or Vectren that would reasonably be expected to have a Material Adverse Effect that has not been set forth herein or in the Disclosure Documents.

Section 5.4.  Organization and Ownership of Shares of Subsidiaries; Affiliates .  (a) Schedule 5.4 contains (except as noted therein) complete and correct lists of (i) Vectren’s Subsidiaries, showing, as to each Subsidiary, the correct name thereof, the jurisdiction of its organization, and the percentage of shares of each class of its capital stock or similar equity interests outstanding owned by Vectren and each other Subsidiary and whether such Subsidiary is a Restricted Subsidiary or an Unrestricted Subsidiary, (ii) Vectren’s Affiliates, other than Subsidiaries, and (iii) Vectren’s directors and senior officers.

(b)  All of the outstanding shares of capital stock or similar equity interests of each Subsidiary shown in Schedule 5.4 as being owned by Vectren and its Subsidiaries have been validly issued, are fully paid and nonassessable and are owned by Vectren or another Subsidiary free and clear of any Lien (except as otherwise disclosed in Schedule 5.4).

(c)  Each Subsidiary identified in Schedule 5.4 is a corporation or other legal entity duly organized, validly existing and in good standing (to the extent applicable) under the laws of its jurisdiction of organization, and is duly qualified as a foreign corporation or other legal entity and is in good standing in each jurisdiction in which such qualification is required by law, other than those jurisdictions as to which the failure to be so qualified or in good standing could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.  Each

such Subsidiary has the corporate or other power and authority to own or hold under lease the properties it purports to own or hold under lease and to transact the business it transacts and proposes to transact.

(d)  No Subsidiary is a party to, or otherwise subject to any legal, regulatory, contractual, or other restriction (other than the agreements listed on Schedule 5.4 and customary limitations imposed by corporate law and fraudulent conveyance statutes or similar statutes and applicable restrictions contained in section 305(a) of the Federal Power Act, as amended), restricting the ability of such Subsidiary to pay dividends out of profits or make any other similar distributions of profits to Vectren or any of its Subsidiaries that owns outstanding shares of capital stock or similar equity interests of such Subsidiary.

Section 5.5.  Financial Statements .  Vectren has delivered to each Purchaser copies of the audited financial statements of Vectren for the years ended December 31, 2004 through December 31, 2008, inclusive.  All of said financial statements and all of the financial statements included in the SEC Reports (including in each case the related schedules and notes) fairly present in all material respects the consolidated financial position of Vectren and its Subsidiaries as of the respective dates specified in such financial statements and the consolidated results of their operations and cash flows for the respective periods so specified and have been prepared in accordance with U.S. GAAP consistently applied throughout the periods involved except as set forth in the notes thereto (subject, in the case of any interim financial statements, to normal year-end adjustments).  Vectren and its Subsidiaries do not have any Material liabilities that are not disclosed on such financial statements or otherwise disclosed in the Disclosure Documents.

Section 5.6.  Compliance with Laws, Other Instruments, Etc .  The execution, delivery and performance by the Company of this Agreement and the Notes and by Vectren of this Agreement and the Guarantee will not (i) contravene, result in any breach of, or constitute a default under, or result in the creation of any Lien in respect of any property of the Company or Vectren, as the case may be, or any Subsidiary, under any indenture, mortgage, deed of trust, loan, purchase or credit agreement, lease, corporate charter or by-laws, or any other agreement or instrument to which the Company, Vectren or any Subsidiary is bound or by which the Company, Vectren or any Subsidiary or any of their respective properties may be bound or affected, (ii) conflict with or result in a breach of any of the terms, conditions or provisions of any order, judgment, decree, or ruling of any court, arbitrator or Governmental Authority applicable to the Company, Vectren or any Subsidiary or (iii) violate any provision of any statute or other rule or regulation of any Governmental Authority applicable to the Company, Vectren or any Subsidiary (including, without limitation, PUHCA or the Federal Power Act, as amended).

Section 5.7.  Governmental Authorizations, Etc .  No consent, approval or authorization of, or registration, filing or declaration with, any Governmental Authority is required in connection with the execution, delivery or performance by the Company of this Agreement or the Notes or by Vectren of this Agreement or the Guarantee (including, without limitation, any thereof under PUHCA, the Natural Gas Act or the Federal Power Act, each as amended).

Section 5.8.  Litigation; Observance of Agreements, Statutes and Orders .  (a) There are no actions, suits, investigations or proceedings pending or, to the knowledge of the Company or

(b)  None of the Company, Vectren or any Restricted Subsidiary is in default under any term of any agreement or instrument to which it is a party or by which it is bound, or any order, judgment, decree or ruling of any court, arbitrator or Governmental Authority or is in violation of any applicable law, ordinance, rule or regulation (including without limitation Environmental Laws or the USA Patriot Act) of any Governmental Authority, which default or violation, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect.

Section 5.9.  Taxes .  Vectren and each Subsidiary have filed all tax returns that are required to have been filed in any jurisdiction, and have paid all taxes shown to be due and payable on such returns and all other taxes and assessments levied upon them or their properties, assets, income or franchises, to the extent such taxes and assessments have become due and payable and before they have become delinquent, except for any taxes and assessments (i) the amount of which is not individually or in the aggregate Material or (ii) the amount, applicability or validity of which is currently being contested in good faith by appropriate proceedings and with respect to which Vectren or a Subsidiary, as the case may be, has established adequate reserves in accordance with U.S. GAAP.  Vectren does not know of any basis for any other tax or assessment that would have a Material Adverse Effect.  The charges, accruals and reserves on the books of Vectren and its Subsidiaries in respect of taxes for all fiscal periods are adequate.  The Federal income tax liabilities of Vectren and its Subsidiaries have been finally determined (whether by reason of completed audits or the statute of limitations having run) for all fiscal years up to and including the fiscal year ended December 31, 2005.

Section 5.10.  Title to Property; Leases.   Vectren and each Restricted Subsidiary have good and sufficient title to their respective properties that individually or in the aggregate are Material, including all such properties reflected in the most recent audited balance sheets referred to in Section 5.5 or purported to have been acquired by Vectren or any Restricted Subsidiary after said date (except as sold or otherwise disposed of in the ordinary course of business), in each case free and clear of Liens prohibited by this Agreement.  All leases that Vectren or any Restricted Subsidiary is party to as lessee and that individually or in the aggregate are Material are valid and subsisting and are in full force and effect in all material respects.

Section 5.11.  Licenses, Permits, Etc .  Except as disclosed in Schedule 5.11, (a) Vectren and each Restricted Subsidiary own or possess all licenses, permits, franchises, authorizations, patents, copyrights, proprietary software, service marks, trademarks and trade names, or rights thereto, that individually or in the aggregate are Material, without known conflict with the rights of others;

(b)  to the best knowledge of Vectren, no product or service of Vectren or any Restricted Subsidiary infringes in any material respect any license, permit, franchise, authorization, patent, copyright, proprietary software, service mark, trademark, trade name or other right owned by any other Person; and

(c)  to the best knowledge of Vectren, there is no Material violation by any Person of any right of Vectren or any Restricted Subsidiary with respect to any patent, copyright, proprietary software, service mark, trademark, trade name or other right owned or used by Vectren or any Restricted Subsidiary.

Section 5.12.  Compliance with ERISA .  (a) Vectren and each ERISA Affiliate have operated and administered each Plan in compliance with all applicable laws except for such instances of noncompliance as have not resulted in and could not reasonably be expected to result in a Material Adverse Effect.  Neither Vectren nor any ERISA Affiliate has incurred any liability pursuant to Title I or IV of ERISA or the penalty or excise tax provisions of the Code relating to employee benefit plans (as defined in section 3 of ERISA), and no event, transaction or condition has occurred or exists that could reasonably be expected to result in the incurrence of any such liability by Vectren or any ERISA Affiliate, or in the imposition of any Lien on any of the rights, properties or assets of Vectren or any ERISA Affiliate, in either case pursuant to Title I or IV of ERISA or to such penalty or excise tax provisions or to section 436 or 430 of the Code or section 4068 of ERISA, other than such liabilities or Liens as would not be individually or in the aggregate Material.

(b)  The present value of the aggregate benefit liabilities under each of the Plans (other than Multiemployer Plans), determined as of the end of such Plan’s most recently ended plan year on the basis of the assumptions used in preparing the audited financial statements included in Vectren’s Form 10-K for the fiscal year ending December 31, 2008, did not exceed the aggregate current value of the assets of such Plan allocable to such benefit liabilities by more than $100,000,000.  The term “benefit liabilities” has the meaning specified in section 4001 of ERISA and the terms “current value” and “present value” have the meaning specified in section 3 of ERISA.

(c)  Vectren and its ERISA Affiliates have not incurred withdrawal liabilities (and are not subject to contingent withdrawal liabilities) under section 4201 or 4204 of ERISA in respect of Multiemployer Plans that individually or in the aggregate are Material.

(d)  The expected postretirement benefit obligation (determined as of the last day of Vectren’s most recently ended fiscal year in accordance with Financial Accounting Standards Board Statement No. 106, without regard to liabilities attributable to continuation coverage mandated by section 4980B of the Code) of Vectren and its Subsidiaries is not in an amount which could reasonably be expected to result in a Material Adverse Effect.

(e)  The execution and delivery of this Agreement and the issuance and sale of the Notes hereunder will not involve any transaction that is subject to the prohibitions of section 406 of ERISA or in connection with which a tax could be imposed pursuant to section 4975(c)(1)(A)-(D) of the Code.  The representation by Vectren to each Purchaser in the first sentence of this Section 5.12(e) is made in reliance upon and subject to the accuracy of such Purchaser’s representation in Section 6.2 as to the sources of the funds used to pay the purchase price of the Notes to be purchased by such Purchaser.

Section 5.13.  Private Offering by the Company .  Neither the Company nor anyone acting on its behalf has offered the Notes or any similar securities for sale to, or solicited any offer to buy any of the same from, or otherwise approached or negotiated in respect thereof with, any Person other than the Purchasers and not more than 50 other Institutional Investors, each of which has been offered the Notes at a private sale for investment.  Neither the Company nor anyone acting on its behalf has taken, or will take, any action that would subject the issuance or sale of the Notes to the registration requirements of section 5 of the Securities Act or to the registration requirements of any securities or blue sky laws of any applicable jurisdiction.

Section 5.14.  Use of Proceeds; Margin Regulations .  The Company will apply the proceeds of the sale of the Notes to repay certain existing indebtedness of the Company and for general corporate purposes.  No part of the proceeds from the sale of the Notes hereunder will be used, directly or indirectly, for the purpose of buying or carrying any margin stock within the meaning of Regulation U of the Board of Governors of the Federal Reserve System (12 CFR 221), or for the purpose of buying or carrying or trading in any securities under such circumstances as to involve the Company in a violation of Regulation X of said Board (12 CFR 224) or to involve any broker or dealer in a violation of Regulation T of said Board (12 CFR 220).  Margin stock does not constitute more than 10% of the value of the consolidated assets of Vectren and its Subsidiaries and Vectren does not have any present intention that margin stock will constitute more than 10% of the value of such assets.  As used in this Section, the terms “margin stock” and “purpose of buying or carrying” shall have the meanings assigned to them in said Regulation U.

Section 5.15.  Existing Indebtedness; Future Liens .  (a) Vectren’s annual report on Form 10-K for the year ended December 31, 2008 sets forth a complete and correct list of all outstanding Indebtedness of Vectren and its Restricted Subsidiaries as of its date (including a description of the obligors and obligees, principal amount outstanding and collateral therefor, if any, and Guaranty thereof, if any).  Since December 31, 2008 there has been no Material change in the amounts, interest rates, sinking funds, installment payments or maturities of the Indebtedness of Vectren or its Restricted Subsidiaries, except as disclosed in Schedule 5.15.  None of the Company, Vectren or any Restricted Subsidiary is in default, and no waiver of default is currently in effect, in the payment of any principal or interest on any Indebtedness of the Company, Vectren or such Restricted Subsidiary and no event or condition exists with respect to any Indebtedness of the Company, Vectren or any Restricted Subsidiary that would permit (or that with notice or the lapse of time, or both, would permit) one or more Persons to cause such Indebtedness to become due and payable before its stated maturity or before its regularly scheduled dates of payment.

(b)  Except as disclosed in Schedule 5.15, none of the Company, Vectren or any Restricted Subsidiary has agreed or consented to cause or permit in the future (upon the happening of a contingency or otherwise) any of its property, whether now owned or hereafter acquired, to be subject to a Lien not permitted by Section 10.5.

(c)  Neither the Company, Vectren nor any Subsidiary is a party to, or otherwise subject to any provision contained in, any instrument evidencing Indebtedness of the Company, Vectren or such Subsidiary, as applicable, any agreement relating thereto or any other agreement

(including, but not limited to, its charter or other organizational document) which limits the amount of, or otherwise imposes restrictions on the incurring of, Indebtedness of the Company or Vectren, as applicable, except as specifically indicated in Schedule 5.15.

Section 5.16.  Foreign Assets Control Regulations and Foreign or Enemy Status .  (a) Neither the sale of the Notes by the Company hereunder nor the Company’s use of the proceeds thereof nor the issuance by Vectren of the Guarantee will violate the Trading with the Enemy Act, as amended, or any of the foreign assets control regulations of the United States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended) or any enabling legislation or executive order relating thereto.  

(b)  None of the Company, Vectren or any Subsidiary (i) is a Person described or designated in the Specially Designated Nationals and Blocked Persons List of the Office of Foreign Assets Control or in section 1 of the Anti-Terrorism Order or (ii) engages in any dealings or transactions with any such Person.  The Company, Vectren and its Subsidiaries are in compliance, in all material respects, with the USA Patriot Act.

(c) No part of the proceeds from the sale of the Notes hereunder will be used, directly or indirectly, for any payments to any governmental official or employee, political party, official of a political party, candidate for political office, or anyone else acting in an official capacity, in order to obtain, retain or direct business or obtain any improper advantage, in violation of the United States Foreign Corrupt Practices Act of 1977, as amended, assuming in all cases that such Act applies to the Company and Vectren and its Subsidiaries.

Section 5.17.  Status under Certain Statutes .  Neither Vectren nor any Restricted Subsidiary is an “investment company” registered or required to be registered under the Investment Company Act of 1940, as amended, or is subject to regulation under PUHCA, the ICC Termination Act of 1995, as amended, or the Federal Power Act, as amended, other than Southern Indiana Gas & Electric Company, which is subject to regulation under the Federal Power Act.

Section 5.18.  Environmental Matters .  (a) Neither Vectren nor any Restricted Subsidiary has knowledge of any claim or has received any notice of any claim, and no proceeding has been instituted raising any claim against Vectren or any Restricted Subsidiary or any of their respective real properties now or formerly owned, leased or operated by any of them or other assets, alleging any damage to the environment or violation of any Environmental Laws, except, in each case, such as could not reasonably be expected to result in a Material Adverse Effect.  

(b)  Neither Vectren nor any Restricted Subsidiary has knowledge of any facts which would give rise to any claim, public or private, of violation of Environmental Laws or damage to the environment emanating from, occurring on or in any way related to real properties now or formerly owned, leased or operated by any of them or to other assets or their use, except, in each case, such as could not reasonably be expected to result in a Material Adverse Effect;

(c)  Neither Vectren nor any Restricted Subsidiary has stored any Hazardous Materials on real properties now or formerly owned, leased or operated by any of them and has not

(d)  All buildings on all real properties now owned, leased or operated by Vectren or any Subsidiary are in compliance with applicable Environmental Laws, except where failure to comply could not reasonably be expected to result in a Material Adverse Effect.

Section 5.19.  Ranking .  All liabilities of the Company under the Notes constitute direct, unconditional and general obligations of the Company and rank in right of payment either pari passu with or senior to all other unsecured Indebtedness of the Company.  All liabilities of Vectren under the Guarantee constitute direct, unconditional and general obligations of Vectren and rank in right of payment either pari passu with or senior to all other unsecured Indebtedness of Vectren.

Section 6.1.  Purchase for Investment .  Each Purchaser severally represents that it is purchasing the Notes for its own account or for one or more separate accounts maintained by such Purchaser or for the account of one or more pension or trust funds and not with a view to the distribution thereof, provided that the disposition of such Purchaser’s or their property shall at all times be within such Purchaser’s or their control.  Each Purchaser understands that the Notes have not been registered under the Securities Act and may be resold only if registered pursuant to the provisions of the Securities Act or if an exemption from registration is available, except under circumstances where neither such registration nor such an exemption is required by law, and that neither Obligor is required to register the Notes.

Section 6.2.  Source of Funds .  Each Purchaser severally represents that at least one of the following statements is an accurate representation as to each source of funds (a “Source”) to be used by such Purchaser to pay the purchase price of the Notes to be purchased by such Purchaser hereunder:

(a)  the Source is an “insurance company general account” (as the term is defined in the United States Department of Labor’s Prohibited Transaction Exemption ( “PTE” ) 95-60 (issued July 12, 1995)) in respect of which the reserves and liabilities (as defined by the annual statement for life insurance companies approved by the National Association of Insurance Commissioners (the “NAIC Annual Statement” )) for the general account contract(s) held by or on behalf of any employee benefit plan together with the amount of the reserves and liabilities for the general account contract(s) held by or on behalf of any other employee benefit plans maintained by the same employer (or affiliate thereof as defined in PTE 95-60) or by the same employee organization in the general account do not exceed 10% of the total reserves and liabilities of the general account (exclusive of separate account liabilities) plus surplus as set forth in the NAIC Annual Statement filed with such Purchaser’s state of domicile; or

(b)  the Source is a separate account that is maintained solely in connection with such Purchaser’s fixed contractual obligations under which the amounts payable, or

credited, to any employee benefit plan (or its related trust) that has any interest in such separate account (or to any participant or beneficiary of such plan (including any annuitant)) are not affected in any manner by the investment performance of the separate account; or

(c)  the Source is either (i) an insurance company pooled separate account, within the meaning of PTE 90-1 or (ii) a bank collective investment fund, within the meaning of the PTE 91-38 and, except as disclosed by such Purchaser to the Company in writing pursuant to this clause (c), no employee benefit plan or group of plans maintained by the same employer or employee organization beneficially owns more than 10% of all assets allocated to such pooled separate account or collective investment fund; or

(d)  the Source constitutes assets of an “investment fund” (within the meaning of Part V of PTE 84-14 (the “QPAM Exemption” )) managed by a “qualified professional asset manager” or “QPAM” (within the meaning of Part V of the QPAM Exemption), no employee benefit plan’s assets that are included in such investment fund, when combined with the assets of all other employee benefit plans established or maintained by the same employer or by an affiliate (within the meaning of section V(c)(1) of the QPAM Exemption) of such employer or by the same employee organization and managed by such QPAM, exceed 20% of the total client assets managed by such QPAM, the conditions of Part I(c) and (g) of the QPAM Exemption are satisfied, as of the last day of its most recent calendar quarter, the QPAM does not own a 10% or more interest in the Company and no person controlling or controlled by the QPAM (applying the definition of ÒcontrolÓ in section V(e) of the QPAM Exemption) owns a 20% or more interest in the Company (or less than 20% but greater than 10%, if such person exercises control over the management or policies of the Company by reason of its ownership interest) and (i) the identity of such QPAM and (ii) the names of all employee benefit plans whose assets are included in such investment fund have been disclosed to the Company in writing pursuant to this clause (d); or

(e)  the Source constitutes assets of a “plan(s)” (within the meaning of section IV of PTE 96-23 (the “INHAM Exemption” )) managed by an “in-house asset manager” or “INHAM” (within the meaning of Part IV of the INHAM Exemption), the conditions of Part I(a), (g) and (h) of the INHAM Exemption are satisfied, neither the INHAM nor a person controlling or controlled by the INHAM (applying the definition of “control” in section IV(d) of the INHAM Exemption) owns a 5% or more interest in the Company and (i) the identity of such INHAM and (ii) the name(s) of the employee benefit plan(s) whose assets constitute the Source have been disclosed to the Company in writing pursuant to this clause (e); or

(f)  the Source is a governmental plan; or

(g)  the Source is one or more employee benefit plans, or a separate account or trust fund comprised of one or more employee benefit plans, each of which has been identified to the Company in writing pursuant to this clause (g); or

(h)  the Source does not include assets of any employee benefit plan, other than a plan exempt from the coverage of ERISA.

As used in this Section 6.2, the terms “employee benefit plan”, “governmental plan”, “party in interest” and “separate account” shall have the respective meanings assigned to such terms in section 3 of ERISA.

Section 7.1.  Financial and Business Information .  Each of the Company and Vectren, as applicable, shall deliver to each Holder of Notes:

(a)  Quarterly Statements — within 60 days after the end of each quarterly fiscal period in each fiscal year of Vectren and its Subsidiaries (other than the last quarterly fiscal period of each such fiscal year), as the case may be, duplicate copies of,

(i)  a consolidated unaudited balance sheet of Vectren and its Subsidiaries (if any) as at the end of such quarter, and

(ii)  consolidated statements of income, retained earnings and cash flows (and, in the case of Vectren, common shareholders’ equity) of Vectren and its Subsidiaries (if any), for such quarter and (in the case of the second and third quarters) for the portion of the fiscal year ending with such quarter,

setting forth in each case in comparative form the figures for the corresponding periods in the previous fiscal year, all in reasonable detail, prepared in accordance with U.S. GAAP applicable to quarterly financial statements generally, and certified by Vectren’s  Chief Financial Officer or Treasurer as fairly presenting, in all material respects, the financial position of the companies being reported on and their results of operations and cash flows (and, in the case of Vectren, common shareholders’ equity), subject to changes resulting from year-end adjustments, provided that delivery within the time period specified above of copies of Vectren’s Quarterly Report on Form 10-Q prepared in compliance with the requirements therefor and filed with the Securities and Exchange Commission shall be deemed to satisfy the requirements of this Section 7.1(a).  The documents required pursuant to this Section 7.1(a) may be delivered electronically and, if so delivered, shall be deemed to have been delivered on the date on which Vectren posts such documents, or provides a link thereto, on EDGAR or a similar service or on its Website at http://www.vectren.com; provided that (x) upon request of any Holder, Vectren shall deliver paper copies of such documents to the Holder (until a written request to cease delivering paper copies is given by the Holder) and (y) Vectren shall notify (which may be by facsimile or electronic mail) each Holder of the posting of any documents;

(b)  Annual Statements — within 120 days after the end of each fiscal year of Vectren, duplicate copies of,

(i)   a consolidated balance sheet of Vectren and its Subsidiaries (if any), as at the end of such year, and

(ii)  consolidated statements of income, retained earnings and cash flows (and, in the case of Vectren, common shareholders’ equity) of Vectren and its Subsidiaries (if any), for such year,

setting forth in each case in comparative form the figures for the previous fiscal year, all in reasonable detail, prepared in accordance with U.S. GAAP, and accompanied by an opinion thereon of independent registered public accountants of recognized national standing, which opinion shall state that such financial statements present fairly, in all material respects, the financial position of the companies being reported upon and their results of operations and cash flows (and, in the case of Vectren, common shareholders’ equity) and have been prepared in conformity with U.S. GAAP, and that the examination of such accountants in connection with such financial statements has been made in accordance with generally accepted auditing standards, and that such audit provides a reasonable basis for such opinion in the circumstances. The delivery within the time period specified above of Vectren’s Annual Report on Form 10-K for such fiscal year (together with Vectren’s annual report to shareholders, if any, prepared pursuant to Rule 14a-3 under the Exchange Act) prepared in accordance with the requirements therefor and filed with the Securities and Exchange Commission shall be deemed to satisfy the requirements of this Section 7.1(b).  The documents required pursuant to this Section 7.1(b) may be delivered electronically and, if so delivered, shall be deemed to have been delivered on the date on which Vectren posts such documents, or provides a link thereto, on EDGAR or a similar service or on its Website at http://www.vectren.com; provided that (x) upon request of any Holder, Vectren shall deliver paper copies of such documents to the Holder (until a written request to cease delivering paper copies is given by the Holder) and (y) Vectren shall notify (which may be by facsimile or electronic mail) each Holder of the posting of any documents;

(c)  Unrestricted Subsidiaries — In the event that one or more Unrestricted Subsidiaries shall (i) own more than 10% of the total consolidated assets of Vectren and its Subsidiaries determined as of the end of each fiscal quarter in accordance with U.S. GAAP, and (ii) account for more than 10% of the consolidated total revenues of Vectren and its Subsidiaries determined as of the end of each fiscal quarter for the four (4) consecutive fiscal periods then ended in accordance with U.S. GAAP, then, within the respective periods provided in Section 7.1(a) and (b) above, Vectren shall deliver to each Holder of Notes that is an Institutional Investor, unaudited financial statements of the character and for the dates and periods as in said Sections 7.1(a) and (b) covering such group of Unrestricted Subsidiaries (on a consolidated basis), together with a consolidating statement reflecting eliminations or adjustments required to reconcile the financial statements of such group of Unrestricted Subsidiaries to the financial statements delivered pursuant to Sections 7.1(a) and (b);

(d)  Compliance Certificate — together with the financial statements required under Sections 7.1(a) and (b), a compliance certificate, signed by its Chief Financial

Officer or Treasurer, showing the calculations necessary to determine compliance with Sections 10.5, 10.6, 10.7 and 10.8 of this Agreement;

(e)  SEC and Other Reports — promptly upon the filing thereof, one copy of (i) each financial statement, report, notice or proxy statement sent by Vectren or any Subsidiary to public securities holders generally, and (ii) each regular or periodic report, each registration statement (without exhibits except as expressly requested by such Holder), except for registration statements relating to employee benefit plans or dividend reinvestment plans, and each prospectus and all amendments thereto filed by Vectren or any Subsidiary with the Securities and Exchange Commission.  The documents required pursuant to this Section 7.1(e) may be delivered electronically and, if so delivered, shall be deemed to have been delivered on the date on which Vectren posts such documents, or provides a link thereto, on EDGAR or a similar service or on its Website at http://www.vectren.com; provided that (x) upon request of any Holder, Vectren shall deliver paper copies of such documents to the Holder (until a written request to cease delivering paper copies is given by the Holder) and (y) Vectren shall notify (which may be by facsimile or electronic mail) each Holder of the posting of any documents;

(f)  Notice of Default or Event of Default -- promptly, and in any event within ten Business Days after a Responsible Officer becoming aware of the existence of any Default or Event of Default which could reasonably be expected to have a Material Adverse Effect, written notice specifying the nature and period of existence thereof;

(g)  ERISA Matters — promptly, and in any event within ten Business Days after a Responsible Officer becoming aware that a Reportable Event has occurred with respect to any Plan, a written notice, signed by the Chief Financial Officer or Treasurer of Vectren, setting forth the nature thereof and the action, if any, that Vectren proposes to take with respect thereto;

(h)  Notices from Governmental Authorit y — promptly, and in any event within 30 Business Days of receipt thereof, copies of (a) any notice or claim to the effect that Vectren or any of its Subsidiaries is or may be liable to any Person as a result of the release by Vectren, any of its Subsidiaries, or any other Person of any Hazardous Material into the environment, and (b) any notice alleging any violation of any Environmental Law by Vectren or any of its Subsidiaries, which, in either case, could reasonably be expected to have a Material Adverse Effect; and

(i)  Requested Information — with reasonable promptness, such other data and information relating to the business, operations, affairs, financial condition, assets or properties of the Company, Vectren or any Subsidiary or relating to the ability of the Obligors to perform their respective obligations hereunder and under the Notes and the Guarantee as from time to time may be reasonably requested by any such Holder of Notes.

Section 7.2.  Officer’s Certificate .  Each set of financial statements delivered to a Holder of Notes pursuant to Section 7.1(a) or Section 7.1(b) hereof shall be accompanied by a certificate

of the Chief Financial Officer or Treasurer of Vectren setting forth a statement that such officer has reviewed the relevant terms hereof and has made, or caused to be made, under his or her supervision, a review of the transactions and conditions of the Company or of Vectren and its Subsidiaries, as the case may be, from the beginning of the quarterly or annual period covered by the statements then being furnished to the date of the certificate and that such review shall not have disclosed the existence during such period of any condition or event that constitutes a Default or an Event of Default or, if any such condition or event existed or exists (including, without limitation, any such event or condition resulting from the failure of the Company, Vectren or any Subsidiary to comply with any Environmental Law), specifying the nature and period of existence thereof.

Section 7.3.  Inspection .  The Company and Vectren shall permit the representatives of each Holder of Notes that is an Institutional Investor:

(a)  No Default — if no Default or Event of Default then exists, at the expense of such Holder and upon reasonable prior notice to Vectren to visit the principal executive office of Vectren, to discuss the affairs, finances and accounts of Vectren and the Company and their Subsidiaries with Vectren’s officers, and (with the consent of Vectren or the Company, as the case may be, which consent will not be unreasonably withheld) to visit the other offices and properties of Vectren and its Subsidiaries, all at such reasonable times and as often as may be reasonably requested in writing; and

(b)  Default — if a Default or Event of Default then exists, at the expense of Vectren, to visit and inspect any of the offices or properties of Vectren, the Company or any of their respective Subsidiaries, to examine all their respective books of account, records, reports and other papers, to make copies and extracts therefrom, and to discuss their respective affairs, finances and accounts with their respective officers, all at such times and as often as may be requested.

Section 7.4.  Information Required by Rule 144A .  The Company will, upon the request of the Holder of any Note, provide such Holder, and any qualified institutional buyer designated by such Holder, such financial and other information as such Holder may reasonably determine to be necessary in order to permit compliance with the information requirements of Rule 144A under the Securities Act in connection with the resale of Notes, except at such times as the Company is subject to the reporting requirements of sections 13 or 15(d) of the Exchange Act.  For the purpose of this Section 7.4, the term “qualified institutional buyer” shall have the meaning specified in Rule 144A under the Securities Act.

Section 8.1.  Maturit y.  As provided therein, the entire unpaid principal amount of the Series A Notes, the Series B Notes and the Series C Notes shall be due and payable on March 11, 2014, March 11, 2016, and March 11, 2019, respectively.

Section 8.2.  Optional Prepayments with Make-Whole Amoun t.  The Company may, at its option, upon notice as provided below, prepay at any time all, or from time to time any part of,

any series of the Notes, in an amount not less than 5% of the aggregate principal amount of the Notes then outstanding in the case of a partial prepayment (or such lesser amount as shall be required to effect a partial prepayment resulting from an offer of prepayment pursuant to Section 10.6), at 100% of the principal amount so prepaid, and the Make-Whole Amount determined for the prepayment date with respect to such principal amount.  The Company will give each Holder of Notes written notice of each optional prepayment under this Section 8.2 not less than 30 days and not more than 60 days prior to the date fixed for such prepayment.  Each such notice shall specify such date (which shall be a Business Day), the aggregate principal amount of the Notes of such series to be prepaid on such date, the principal amount of each Note held by such Holder to be prepaid (determined in accordance with Section 8.3), and the interest to be paid on the prepayment date with respect to such principal amount being prepaid, and shall be accompanied by a certificate of a Senior Financial Officer as to the estimated applicable Make-Whole Amounts due in connection with such prepayment (calculated as if the date of such notice were the date of the prepayment), setting forth the details of such computation.  Two Business Days prior to such prepayment, the Company shall deliver to each Holder of Notes a certificate of a Senior Financial Officer specifying the calculation of such Make-Whole Amounts as of the specified prepayment date.

Section 8.3.  Allocation of Certain Partial Prepayments .  In the case of each partial prepayment of any series of the Notes pursuant to Section 8.2, the principal amount of the Notes to be prepaid shall be allocated among all of the Notes (of such series) at the time outstanding in proportion, as nearly as practicable, to the respective unpaid principal amounts thereof not theretofore called for prepayment.

Section 8.4.  Maturity; Surrender, Etc .  In the case of each prepayment of Notes pursuant to this Section 8, the principal amount of each Note to be prepaid shall mature and become due and payable on the date fixed for such prepayment (which shall be a Business Day), together with interest on such principal amount accrued to such date and the applicable Make-Whole Amount, if any.  From and after such date, unless the Company shall fail to pay such principal amount when so due and payable, together with the interest and Make-Whole Amount, if any, as aforesaid, interest on such principal amount shall cease to accrue.  Any Note paid or prepaid in full shall be surrendered to the Company and cancelled and shall not be reissued, and no Note shall be issued in lieu of any prepaid principal amount of any Note.

Section 8.5.  Purchase of Notes .  Neither Obligor will nor will either Obligor permit any Affiliate to purchase, redeem, prepay or otherwise acquire, directly or indirectly, any of the outstanding Notes except upon the payment or prepayment of the Notes in accordance with the terms of this Agreement and the Notes.  The Company will promptly cancel all Notes acquired by either Obligor or any such Affiliate pursuant to any payment or prepayment of Notes pursuant to any provision of this Agreement and no Notes may be issued in substitution or exchange for any such Notes.

Section 8.6.  Make-Whole Amount .  The term “Make-Whole Amount” means, with respect to any Note, an amount equal to the excess, if any, of the Discounted Value of the Remaining Scheduled Payments with respect to the Called Principal of such Note over the amount of such Called Principal, provided that the Make-Whole Amount may in no event be less

than zero.  For the purposes of determining the Make-Whole Amount, the following terms have the following meanings:

“Called Principal” means, with respect to any Note, the principal of such Note that is to be prepaid pursuant to Section 8.2 or has become or is declared to be immediately due and payable pursuant to Section 13.1, as the context requires.

“Discounted Value” means, with respect to the Called Principal of any Note, the amount obtained by discounting all Remaining Scheduled Payments with respect to such Called Principal from their respective scheduled due dates to the Settlement Date with respect to such Called Principal, in accordance with accepted financial practice and at a discount factor (applied on the same periodic basis as that on which interest on the Notes is payable) equal to the Reinvestment Yield with respect to such Called Principal.

“Reinvestment Yield” means, 0.50% plus the yield to maturity calculated by using (i) the yields reported, as of 10:00 A.M. (New York City time) on the second Business Day preceding the Settlement Date on screen “PX-1” on the Bloomberg Financial Market Service (or such other display as may replace Page PX1) on Bloomberg for the most recently issued actively traded on the run U.S. Treasury securities having a maturity equal to the Remaining Average Life of such Called Principal as of such Settlement Date, or (ii) if such yields are not reported as of such time or the yields reported as of such time are not ascertainable (including by way of interpolation), the Treasury Constant Maturity Series Yields reported, for the latest day for which such yields have been so reported as of the second Business Day preceding the Settlement Date, in Federal Reserve Statistical Release H.15 (519) (or any comparable successor publication) for actively traded U.S. Treasury securities having a constant maturity equal to the Remaining Average Life of such Called Principal as of such Settlement Date.

In the case of each determination under clause (i) or clause (ii), as the case may be, of the preceding paragraph, such implied yield will be determined, if necessary, by (a) converting U.S. Treasury bill quotations to bond-equivalent yields in accordance with accepted financial practice and (b) interpolating linearly between (1) the applicable U.S. Treasury security with the maturity closest to and greater than such Remaining Average Life and (2) the applicable U.S. Treasury security with the maturity closest to and less than such Remaining Average Life.  The Reinvestment Yield shall be rounded to the number of decimal places as appears in the interest rate of the applicable Note.

“Remaining Average Life” means, with respect to any Called Principal, the number of years (calculated to the nearest one-twelfth year) obtained by dividing (i) such Called Principal into (ii) the sum of the products obtained by multiplying (a) the principal component of each Remaining Scheduled Payment with respect to such Called Principal by (b) the number of years (calculated to the nearest one-twelfth year) that will elapse between the Settlement Date with respect to such Called Principal and the scheduled due date of such Remaining Scheduled Payment.

“Remaining Scheduled Payments” means, with respect to the Called Principal of any Note, all payments of such Called Principal and interest thereon that would be due after the Settlement Date with respect to such Called Principal if no payment of such Called Principal were made prior to its scheduled due date, provided that if such Settlement Date is not a date on which interest payments are due to be made under the terms of the Notes, then the amount of the next succeeding scheduled interest payment will be reduced by the amount of interest accrued to such Settlement Date and required to be paid on such Settlement Date pursuant to Section 8.2 or 13.1.

“Settlement Date” means, with respect to the Called Principal of any Note, the date on which such Called Principal is to be prepaid pursuant to Section 8.2 or has become or is declared to be immediately due and payable pursuant to Section 13.1, as the context requires.

Section 8.7.  Change in Control .   (a)  Notice of Change in Control or Control Event. The Company will, within 15 Business Days after any Responsible Officer has knowledge of the occurrence of any Change in Control or Control Event, give written notice of such Change in Control or Control Event to each Holder of Notes unless notice in respect of such Change in Control (or the Change in Control contemplated by such Control Event) shall have been given pursuant to subparagraph (b) of this Section 8.7.  If a Change in Control has occurred, such notice shall contain and constitute an offer to prepay Notes as described in subparagraph (c) of this Section 8.7 and shall be accompanied by the certificate described in subparagraph (g) of this Section 8.7.

(b)  Condition to Company Action.   The Company will not take any action that consummates or finalizes a Change in Control unless (i) at least 15 Business Days prior to such action it shall have given to each Holder of Notes written notice containing and constituting an offer to prepay Notes as described in subparagraph (c) of this Section 8.7, accompanied by the certificate described in subparagraph (g) of this Section 8.7, and (ii) contemporaneously with such action, it prepays all Notes required to be prepaid in accordance with this Section 8.7.

(c)  Offer to Prepay Notes.   The offer to prepay Notes contemplated by subparagraphs (a) and (b) of this Section 8.7 shall be an offer to prepay, in accordance with and subject to this Section 8.7, all, but not less than all, the Notes held by each holder (in this case only, “holder” in respect of any Note registered in the name of a nominee for a disclosed beneficial owner shall mean such beneficial owner) on a date specified in such offer (the “Proposed Prepayment Date” ).  If such Proposed Prepayment Date is in connection with an offer contemplated by subparagraph (a) of this Section 8.7, such date shall be not less than 20 days and not more than 30 days after the date of such offer (if the Proposed Prepayment Date shall not be specified in such offer, the Proposed Prepayment Date shall be the 20th day after the date of such offer).

(d)  Acceptance; Rejection.   A Holder of Notes may accept or reject the offer to prepay made pursuant to this Section 8.7 by causing a notice of such acceptance or rejection to be delivered to the Company at least 5 Business Days prior to the Proposed Prepayment Date.  A failure by a Holder of Notes to respond to an offer to prepay made pursuant to this Section 8.7 shall be deemed to constitute a rejection of such offer by such Holder.

(e)  Prepayment.   Prepayment of the Notes to be prepaid pursuant to this Section 8.7 shall be at 100% of the principal amount of such Notes, but without the payment of the Make-Whole Amount, together with interest on such Notes accrued to the date of prepayment.  The prepayment shall be made on the Proposed Prepayment Date except as provided in subparagraph (f) of this Section 8.7.

(f)  Deferral Pending Change in Control.   The obligation of the Company to prepay Notes pursuant to the offers required by subparagraph (b) and accepted in accordance with subparagraph (d) of this Section 8.7 is subject to the occurrence of the Change in Control in respect of which such offers and acceptances shall have been made.  In the event that such Change in Control does not occur on the Proposed Prepayment Date in respect thereof, the prepayment shall be deferred until and shall be made on the date on which such Change in Control occurs.  The Company shall keep each Holder of Notes reasonably and timely informed of (i) any such deferral of the date of prepayment, (ii) the date on which such Change in Control and the prepayment are expected to occur, and (iii) any determination by the Company that efforts to effect such Change in Control have ceased or been abandoned (in which case the offers and acceptances made pursuant to this Section 8.7 in respect of such Change in Control shall be deemed rescinded).

(g)  Officer’s Certificate. Each offer to prepay the Notes pursuant to this Section 8.7 shall be accompanied by a certificate, executed by a Senior Financial Officer of the Company and dated the date of such offer, specifying: (i) the Proposed Prepayment Date; (ii) that such offer is made pursuant to this Section 8.7; (iii) the principal amount of each Note offered to be prepaid; (iv) the interest that would be due on each Note offered to be prepaid, accrued to the Proposed Prepayment Date; (v) that the conditions of this Section 8.7 have been fulfilled; and (vi) in reasonable detail, the nature and date or proposed date of the Change in Control.

(h)  “Change in Control” Defined.    “Change in Control” means (i) the acquisition by any Person, or two or more Persons acting in concert, of beneficial ownership (within the meaning of Rule 13d-3 of the Securities and Exchange Commission under the Exchange Act) of 30% or more of the outstanding shares of voting stock of Vectren, (ii) the occurrence during any period of twelve (12) consecutive months, commencing before or after the date of this Agreement, pursuant to which individuals who on the first day of such period were directors of Vectren (together with any replacement or additional directors who were nominated or elected by a majority of directors then in office) cease to constitute a majority of the Board of Directors of Vectren or (iii) Vectren shall cease to own, free and clear of any Lien, 100% of the issued and outstanding capital stock of the Company.

(i)  “Control Event” Defined.    “Control Event” means:

(i)  the execution of any written agreement which, when fully performed by the parties thereto, would result in a Change in Control, or

(ii)  the making of any written offer by any Person, or two or more Persons acting in concert, to the holders of the common stock of Vectren, which offer, if accepted by the requisite number of Holders, would result in a Change in Control.

Each of the Company and Vectren covenants (only to the extent applicable to itself and, if specified, its Subsidiaries) that from and after the Closing and for so long as any of the Notes are outstanding:

Section 9.1.  Compliance with Law .  The Obligors will, and Vectren will cause each of its Subsidiaries to, comply with all laws, ordinances or governmental rules or regulations to which each of them is subject, including, without limitation, ERISA, the USA Patriot Act, Environmental Laws, and will obtain and maintain in effect all licenses, certificates, permits, franchises and other governmental authorizations necessary to the ownership of their respective properties or to the conduct of their respective businesses, in each case to the extent necessary to ensure that non-compliance with such laws, ordinances or governmental rules or regulations or failures to obtain or maintain in effect such licenses, certificates, permits, franchises and other governmental authorizations would not reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect.

Section 9.2.  Insuranc e.  The Obligors will, and Vectren will cause each of its Restricted Subsidiaries to, maintain, with financially sound and reputable insurers, insurance with respect to their respective properties and businesses against such casualties and contingencies, of such types, on such terms and in such amounts (including deductibles, co-insurance and self-insurance, if adequate reserves are maintained with respect thereto) as is customary in the case of entities of established reputations engaged in the same or a similar business and similarly situated.

Section 9.3.  Maintenance of Properties .  The Obligors will, and Vectren will cause each of its Restricted Subsidiaries to, maintain and keep, or cause to be maintained and kept, their respective properties in good repair, working order and condition (other than ordinary wear and tear), so that the business carried on in connection therewith may be properly conducted at all times, provided that this Section shall not prevent either Obligor or any such Restricted Subsidiary from discontinuing the operation and the maintenance of any of its properties if such discontinuance is desirable in the conduct of its business and Vectren has concluded that such discontinuance would not reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect.

Section 9.4.  Payment of Taxes and Claims .   The Obligors will, and Vectren will cause each of its Subsidiaries to, file all tax returns required to be filed in any jurisdiction and to pay and discharge all taxes shown to be due and payable on such returns and all other taxes, assessments, governmental charges, or levies imposed on them or any of their properties, assets, income or franchises, to the extent such taxes, assessments, charges and levies have become due and payable and before they have become delinquent and all claims for which sums have become due and payable that have or might become a Lien on properties or assets of the Company, Vectren or any Subsidiary, provided that neither of the Obligors nor any such Subsidiary need pay any such tax, assessment, charge, levy or claim if (i) the amount, applicability or validity thereof is contested by such Obligor or such Subsidiary on a timely basis in good faith and in appropriate proceedings, and such Obligor or such Subsidiary has established adequate reserves

therefor in accordance with U.S. GAAP on the books of such Obligor or such Subsidiary or (ii) the nonpayment of all such taxes, assessments, charges, levies and claims in the aggregate would not have a Material Adverse Effect.

Section 9.5.  Entity Existence, Et c.  Subject to Section 10.2, the Obligors will at all times preserve and keep in full force and effect their existences as a corporation, partnership or limited liability company, and Vectren will at all times preserve and keep in full force and effect the existence of each of its Restricted Subsidiaries as a corporation, partnership or limited liability company (unless merged into Vectren or a Wholly-Owned Subsidiary) and all rights and franchises of the Obligors and such Restricted Subsidiaries unless, in the good faith judgment of Vectren, the termination of or failure to preserve and keep in full force and effect the existence of any such Restricted Subsidiary (other than the Company), or any such right or franchise would not, individually or in the aggregate, have a Material Adverse Effect.

Section 9.6.  Books and Records .  Vectren will, and will cause each of its Subsidiaries to, maintain proper books of record and account in conformity with U.S. GAAP and all applicable requirements of any Governmental Authority having legal or regulatory jurisdiction over Vectren or such Subsidiary, as the case may be.

Section 9.7.  Ranking .  The Company will ensure that, at all times, all liabilities of the Company under the Notes will rank in right of payment either pari passu with or senior to the obligations under the Bank Credit Agreements and with all other unsecured Indebtedness of the Company.  Vectren will ensure that, at all times, all liabilities of Vectren under the Guarantee will rank in right of payment either pari passu with or senior to all other unsecured Indebtedness of Vectren.

Section 9.8.  Designation of Subsidiaries.   Vectren may from time to time cause any Subsidiary (other than any Permanent Restricted Subsidiary) to be designated as an Unrestricted Subsidiary or any Unrestricted Subsidiary to be designated a Restricted Subsidiary; provided, however, that at the time of such designation and immediately after giving effect thereto, (a) no Default or Event of Default would exist under the terms of this Agreement, (b) Vectren could incur $1.00 of additional Indebtedness under the limitations in Section 10.7 hereof, and (c) Vectren and its Restricted Subsidiaries would be in compliance with all of the covenants set forth in this Section 9 and Section 10 if tested on the date of such action and provided, further, that once a Subsidiary has been designated an Unrestricted Subsidiary, it shall not thereafter be redesignated as a Restricted Subsidiary on more than one occasion and once a Subsidiary has been designated a Restricted Subsidiary, it shall not thereafter be redesignated as an Unrestricted Subsidiary on more than one occasion.  Within ten (10) days following any designation described above, Vectren will deliver each Holder a notice of such designation accompanied by a certificate signed by a Senior Financial Officer of Vectren certifying compliance with all requirements of this Section 9.8 and setting forth all information required in order to establish such compliance.

Section 9.9.  Subsidiary Guarantors .   (a) The Company will cause any Subsidiary which becomes obligated for, or otherwise guarantees, Indebtedness in respect of the Bank Credit

Agreements, to deliver to each of the Holders of the Notes (concurrently with the incurrence of any such obligation) the following items:

(i)  a duly executed guaranty agreement (the “Subsidiary Guaranty” ) in scope, form and substance reasonably satisfactory to the Required Holders;

(ii)  an amendment to this Agreement, duly executed by an authorized officer of the Company, that is satisfactory in scope, form and substance to the Required Holders, incorporating customary events of default for the Subsidiary Guarantors and the Subsidiary Guaranty;

(iii)  a certificate signed by an authorized Responsible Officer of the Company making representations and warranties to the effect of those contained in Sections 5.2, 5.4(c) and (d), 5.6 and 5.7, with respect to such Subsidiary and the Subsidiary Guaranty, as applicable; and

(iv)  an opinion of counsel (who may be in-house counsel for the Company) addressed to each of the Holders of the Notes satisfactory to the Required Holders, to the effect that the Subsidiary Guaranty by such Person has been duly authorized, executed and delivered and that the Subsidiary Guaranty constitutes the legal, valid and binding contract and agreement of such Person enforceable in accordance with its terms, except as an enforcement of such terms may be limited by bankruptcy, insolvency, fraudulent conveyance and similar laws affecting the enforcement of creditors’ rights generally and by general equitable principles.

(b)  The Holders of the Notes agree to discharge and release any Subsidiary Guarantor from the Subsidiary Guaranty upon the written request of the Company, provided that (i) such Subsidiary Guarantor has been released and discharged (or will be released and discharged concurrently with the release of such Subsidiary Guarantor under the Subsidiary Guaranty) as an obligor and guarantor under and in respect of the Bank Credit Agreements and the Company so certifies to the Holders of the Notes in a certificate of a Responsible Officer, (ii) at the time of such release and discharge, the Company shall deliver a certificate of a Responsible Officer to the Holders of the Notes stating that no Default or Event of Default exists, and (iii) if any fee or other form of consideration is given to any holder of Indebtedness of the Company for the purpose of such release, Holders of the Notes shall receive equivalent consideration.

Section 10.      Negative Covenants.

Each of the Company and Vectren covenants (only to the extent applicable to itself and, if specified, its Subsidiaries) that from and after the Closing and for so long as any of the Notes are outstanding:

Section 10.1.  Transactions with Affiliates .  Vectren and the Company will not enter into directly or indirectly any transaction or group of related transactions (including without limitation the purchase, lease, sale or exchange of properties of any kind or the rendering of any service) with any Affiliate, except in the ordinary course and pursuant to the reasonable

requirements of such Obligor’s business and upon fair and reasonable terms no less favorable to such Obligor than would be obtainable in a comparable arm’s length transaction with a Person not an Affiliate; provided that nothing in this Section 10.1 shall limit (i) the making of capital contributions by Vectren or any Subsidiary or Affiliate of Vectren to any other Affiliate or Subsidiary of Vectren, (ii) the payment of dividends or distributions by any Subsidiary or Affiliate of Vectren to Vectren or any other Affiliate or Subsidiary of Vectren, or (iii) the Company in the ordinary course of its business advancing funds to other Subsidiaries of Vectren.

Section 10.2  Merger, Consolidation, Etc .  Neither Obligor shall, nor, except as otherwise permitted under Section 10.6, shall any Obligor permit any Restricted Subsidiary of Vectren to, consolidate with or merge with any other Person or convey, transfer, or lease all or substantially all of its assets in a single transaction or series of transactions to any Person unless:

(a)  the successor formed by such consolidation or the survivor of such merger, or the Person that acquires by conveyance, transfer or lease all or substantially all of such assets as an entirety, as the case may be (the “Successor Corporation” ), shall be a solvent business entity organized and existing under the laws of the United States or any State thereof (including the District of Columbia), and, if such Obligor is a party to such transaction and is not the Successor Corporation, such Successor Corporation shall have executed and delivered to each Holder of any Notes its assumption of the due and punctual performance and observance of each covenant and condition of this Agreement, an opinion of nationally recognized independent counsel, to the effect that all agreements or instruments effecting such assumption are enforceable in accordance with their terms, the Guarantee and the Notes, as applicable; and

(b)  prior to and immediately after giving effect to such transaction, no Default or Event of Default shall have occurred and be continuing;

provided, however, that, notwithstanding the provisions of this Section 10.2, a Restricted Subsidiary may merge with and into Vectren or another Restricted Subsidiary of Vectren.

No such conveyance, transfer or lease of all or substantially all of the assets of any Obligor shall have the effect of releasing such Obligor or any Successor Corporation that shall theretofore have become such in the manner prescribed in this Section 10.2 from its liability under this Agreement or the Guarantee.

The provisions of this Section 10.2 shall not limit the rights of the Holders of Notes under Section 8.7.

Section 10.3.  Line of Business .  Vectren will not and will not permit any Restricted Subsidiary to engage in any business if, as a result, the general nature of the business in which Vectren and its Restricted Subsidiaries, taken as a whole, would then be engaged would be substantially changed from the general nature of the business in which Vectren and its Restricted Subsidiaries, taken as a whole, are engaged on the date of this Agreement as described as of the date hereof in the Memorandum.

Section 10.4.  Terrorism Sanctions Regulations .  Vectren will not and will not permit any Subsidiary to (a) become a Person described or designated in the Specially Designated Nationals and Blocked Persons List of the Office of Foreign Assets Control or in section 1 of the Anti-Terrorism Order or (b) engage in any dealings or transactions with any such Person.

Section 10.5.  Liens .  Neither Obligor will, or permit any Restricted Subsidiary to, create, assume, incur or suffer to exist any Lien upon or with respect to any Property of the Company, Vectren or any Restricted Subsidiaries except:

(a)  Liens for taxes, assessments or governmental charges or levies on its Property if the same shall not at the time be delinquent or thereafter can be paid without penalty, or are being contested in good faith and by appropriate proceedings and for which adequate reserves in accordance with U.S. GAA