Exhibit 10.2

 

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CONFIRMATION

April 9, 2012

 

To:   

PPL Corporation

Two North Ninth Street

   Allentown, PA 18101-1179 From:    Merrill Lynch International    BofA Merrill
Lynch Financial Centre    2 King Edward Street    London EC1A 1HQ

 

 

Dear Sirs,

The purpose of this letter agreement (this “Confirmation”) is to confirm the
terms and conditions of the transaction entered into between Merrill Lynch
International (“Party A” or “Dealer”), acting through its agent Merrill Lynch,
Pierce, Fenner & Smith Incorporated (the “Agent”), and PPL Corporation (“Party
B” or “Counterparty”) on the Trade Date specified below (this
“Transaction”). This Confirmation constitutes a “Confirmation” as referred to in
the ISDA Master Agreement specified below.

 

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

This Confirmation evidences a complete and binding agreement between Party A and
Party B as to the terms of the Transaction to which this Confirmation relates.
This Confirmation shall supplement, form a part of, and be subject to an
agreement in the form of the 2002 ISDA Master Agreement (the “Agreement”) as if
Party A and Party B had executed an agreement in such form on the Trade Date
(but without any Schedule except for the election of the laws of the State of
New York as the governing law, without regard to New York’s choice of laws
doctrine other than Title 14 of Article 5 of the New York General Obligations
Law). In the event of any inconsistency between provisions of that Agreement and
this

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Confirmation, this Confirmation will prevail for the purpose of the Transaction
to which this Confirmation relates. The parties hereby agree that no Transaction
other than the Transaction to which this Confirmation relates shall be governed
by the Agreement. For purposes of the 2002 Definitions, this Transaction is a
Share Forward Transaction.

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

 

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

General Terms:

 

Party A:    Merrill Lynch International Party B:    PPL Corporation Trade Date:
   April 10, 2012 Effective Date:    April 13, 2012 Base Amount:    Initially,
4,950,000 Shares, subject to the provisions set forth under “Conditions to
Effectiveness” below. On each Settlement Date, the Base Amount shall be reduced
by the number of Settlement Shares for such Settlement Date. Maturity Date:   
The earlier of (i) April 10, 2013 (or, if such date is not a Scheduled Trading
Day, the next following Scheduled Trading Day) and (ii) the date on which the
Base Amount is reduced to zero. Forward Price:    On the Effective Date, the
Initial Forward Price, and on any other day, the Forward Price as of the
immediately preceding calendar day multiplied by the sum of (i) 1 and (ii) the
Daily Rate for such day; provided that on each Forward Price Reduction Date, the
Forward Price in effect on such date shall be the Forward Price otherwise in
effect on such date minus the Forward Price Reduction Amount for such Forward
Price Reduction Date. Initial Forward Price:    USD $27.02 per Share. Daily
Rate:    For any day, (i)(A) USD-Federal Funds Rate for

 

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   such day minus (B) the Spread divided by (ii) 365. USD-Federal Funds Rate:   
For any day, the rate set forth for such day opposite the caption “Federal
funds”, as such rate is displayed on the page “FedsOpen <Index> <GO>” on the
BLOOMBERG Professional Service, or any successor page; provided that if no rate
appears for any day on such page, the rate for the immediately preceding day for
which a rate appears shall be used for such day. Spread:    0.75% Forward Price
Reduction Dates:    As set forth in Schedule I. Forward Price Reduction Amount:
   For each Forward Price Reduction Date, the Forward Price Reduction Amount set
forth opposite such date on Schedule I. Shares:    Common Stock, $.01 par value
per share, of Party B (also referred to herein as the “Issuer”) (Exchange
identifier: “PPL”). Exchange:    The New York Stock Exchange. Related
Exchange(s):    All Exchanges. Clearance System:    DTC. Calculation Agent:   
Merrill Lynch International. Following any determination or calculation by the
Calculation Agent hereunder, in its capacity as such, upon a written request by
Party B, the Calculation Agent will provide to Party B, by e-mail to the e-mail
address provided by Party B in such written request, a report (in a commonly
used file format for the storage and manipulation of financial data) displaying,
in reasonable detail, the basis for such determination or calculation, it being
understood that the Calculation Agent shall not be obligated to disclose any
proprietary models or other confidential or proprietary information used by it
for such determination or calculation.

 

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Settlement Terms:

 

Settlement Date:    Any Scheduled Trading Day following the Effective Date and
up to and including the Maturity Date, as designated by (a) Party A pursuant to
“Termination Settlement” below or (b) Party B in a written notice (a “Settlement
Notice”) that satisfies the Settlement Notice Requirements and is delivered to
Party A at least (i) three Scheduled Trading Days prior to such Settlement Date,
which may be the Maturity Date, if Physical Settlement applies, and (ii) 20
Scheduled Trading Days (or other period of time as agreed between Party A and
Party B) prior to such Settlement Date, which may be the Maturity Date, if Cash
Settlement or Net Share Settlement applies; provided that (x) the Maturity Date
shall be a Settlement Date if on such date the Base Amount is greater than zero,
(y) if Physical Settlement (or, subject to clause (z) below, Net Share
Settlement) applies and the relevant Settlement Date specified above (including
a Settlement Date occurring on the Maturity Date) (or, with respect to Net Share
Settlement, the Settlement Date specified pursuant to clause (z) below, if
applicable) is not a Clearance System Business Day, the Settlement Date shall be
the next following Clearance System Business Day, and (z) if Cash Settlement or
Net Share Settlement applies and Party A shall have fully unwound its hedge
during an Unwind Period by a date that is more than three Scheduled Trading Days
prior to the relevant Settlement Date specified above, Party A may, by written
notice to Party B, specify any Scheduled Trading Day prior to such originally
specified Settlement Date as the Settlement Date. Settlement Shares:    With
respect to any Settlement Date, a number of Shares, not to exceed the Base
Amount, designated as such by Party B in the related Settlement Notice or by
Party A pursuant to “Termination Settlement” below; provided that on the
Maturity Date the number of Settlement Shares shall be equal to the Base Amount
on such date. Settlement Method:    Physical Settlement, Cash Settlement or Net
Share Settlement.

 

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Settlement Method Election:    Applicable, at the election of Party B as set
forth in a Settlement Notice that satisfies the Settlement Notice Requirements;
provided that Physical Settlement shall apply (i) if no Settlement Method is
validly selected, (ii) with respect to any Settlement Shares in respect of which
Party A is unable, in its commercially reasonable judgment, to unwind its hedge
by the end of the relevant Unwind Period in compliance with Rule 10b-18 under
the Exchange Act (as defined below) (assuming that purchases of Shares, in
connection with such Settlement Notice, by Party A on each Unwind Day during
such Unwind Period were instead made by Party B) or due to the lack of
sufficient liquidity in the Shares on any Unwind Day during such Unwind Period;
provided that Party A shall notify Party B of such Settlement Shares to be
subject to Physical Settlement no later than 8:00 P.M., New York City time, on
the last Unwind Day of such Unwind Period; (iii) to any Termination Settlement
Date (as defined below under “Termination Settlement”) or (iv) if the Maturity
Date is a Settlement Date and no notice of Cash Settlement or Net Share
Settlement has been validly delivered in accordance with the provisions
described above under “Settlement Date”, in respect of such Settlement Date. Net
Share Settlement shall be deemed to be included as an additional settlement
method under Section 7.1 of the 2002 Definitions. Settlement Notice
Requirements:    Notwithstanding any other provision hereof, a Settlement Notice
delivered by Party B that specifies Cash Settlement or Net Share Settlement will
not be effective to establish a Settlement Date or require Cash Settlement or
Net Share Settlement unless Party B delivers to Party A with such Settlement
Notice a representation signed by Party B substantially in the following form:
“As of the date of this Settlement Notice, Party B is not aware of any material
nonpublic information concerning itself or the Shares, and is designating the
date contained herein as a Settlement Date in good faith and not as part of a
plan or scheme to evade compliance with the federal securities laws.” Unwind
Day:    In respect of each Settlement Notice and related Settlement Date, each
Exchange Business Day that

 

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is not a Suspension Day during the period (the “Unwind Period”) from, and
including, the first Exchange Business Day following the date Party B validly
elects Cash Settlement or Net Share Settlement in respect of such Settlement
Date to, and including, the date that precedes such Settlement Date by one
Settlement Cycle, subject to “Termination Settlement” below. If any Unwind Day
is a Disrupted Day, the Calculation Agent shall make commercially reasonable
adjustments to the terms of this Transaction (including, without limitation, the
Cash Settlement Amount and the 10b-18 VWAP) to account for the occurrence of
such Disrupted Day, with such adjustments to be based, in the Calculation
Agent’s commercially reasonable judgment, on, among other factors, the duration
of any Market Disruption Event, if any, giving rise to such Disrupted Day and
the volume, historical trading patterns and trading price of the Shares.

 

For greater clarity, with respect to any Settlement Date (x) in respect of which
Cash Settlement applies, Party A shall be deemed to have completed unwinding its
hedge in respect of the portion of this Transaction to be settled on such
Settlement Date when it purchases (or, to the extent applicable, unwinds
derivative positions (including, but not limited to, swaps or options related to
the Shares), resulting in Party A’s synthetic purchase of) an aggregate number
of Shares equal to the number of Settlement Shares for such Settlement Date; and
(y) in respect of which Net Share Settlement applies, Party A shall be deemed to
have completed unwinding its hedge in respect of the portion of this Transaction
to be settled on such Settlement Date when it purchases (or, to the extent
applicable, unwinds derivative positions (including, but not limited to, swaps
or options related to the Shares), resulting in Party A’s synthetic purchase of)
an aggregate number of Shares having an aggregate purchase price equal to the
Net Share Purchase Price for such Settlement Date.

Suspension Day:    Any Exchange Business Day on which Party A reasonably
determines based on the advice of counsel that it is appropriate or necessary in
light of

 

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   legal, regulatory or self-regulatory requirements or related policies or
procedures for Party A to refrain from the market activity in which it would
otherwise engage in connection its hedge positions with respect to this
Transaction on such day. Party A shall notify Party B if it receives such advice
from its counsel. Market Disruption Event:    Section 6.3(a)(ii) of the 2002
Definitions is hereby amended by replacing clause (ii) in its entirety with
“(ii) an Exchange Disruption, or” and inserting immediately following clause
(iii) the phrase “; in each case that the Calculation Agent determines is
material.” Exchange Act:    The Securities Exchange Act of 1934, as amended from
time to time. Physical Settlement:    On any Settlement Date in respect of which
Physical Settlement applies, Party B shall deliver to Party A through the
Clearance System the Settlement Shares for such Settlement Date, and Party A
shall deliver to Party B, by wire transfer of immediately available funds to an
account designated by Party B, an amount in cash equal to the Physical
Settlement Amount for such Settlement Date, on a delivery versus payment
basis. If, on any Settlement Date, the Shares to be delivered by Party B to
Party A hereunder are not so delivered (the “Deferred Shares”), and a Forward
Price Reduction Date occurs during the period from, and including, such
Settlement Date to, but excluding, the date such Shares are actually delivered
to Party A, then, at Party A’s election in its sole and absolute discretion, the
portion of the Physical Settlement Amount payable by Party A to Party B in
respect of the Deferred Shares shall be reduced by an amount equal to the
Forward Price Reduction Amount for such Forward Price Reduction Date, multiplied
by the number of Deferred Shares. For the avoidance of doubt, no Forward Price
Reduction Amount for a Forward Price Reduction Date shall be applied to reduce
the Forward Price more than once. Physical Settlement Amount:    For any
Settlement Date in respect of which Physical Settlement applies, an amount in
cash equal to the product of (i) the Forward Price on such

 

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   Settlement Date and (ii) the number of Settlement Shares for such Settlement
Date. Cash Settlement:    On any Settlement Date in respect of which Cash
Settlement applies, if the Cash Settlement Amount for such Settlement Date is a
positive number, Party A will pay such Cash Settlement Amount to Party B by wire
transfer of immediately available funds to an account designated by Party B. If
the Cash Settlement Amount is a negative number, Party B will pay the absolute
value of such Cash Settlement Amount to Party A by wire transfer of immediately
available funds to an account designated by Party A. Such amounts shall be paid
on the Settlement Date. Cash Settlement Amount:    For any Settlement Date in
respect of which Cash Settlement applies, an amount determined by the
Calculation Agent equal to (1) the product of (i) (A) the arithmetic average of
the Forward Prices on each Unwind Day in the relevant Unwind Period (calculated
assuming no reduction to the Forward Price for any Forward Price Reduction Date
that occurs during such Unwind Period, it being understood, for the avoidance of
doubt, that the related Forward Price Reduction Amount(s) shall be accounted for
pursuant to clause (2) below) minus (B) the arithmetic average of the 10b-18
VWAPs on each Unwind Day in such Unwind Period, and (ii) the number of
Settlement Shares for such Settlement Date, minus (2) the product of (i) the
Forward Price Reduction Amount for each Forward Price Reduction Date that occurs
during such Unwind Period, and (ii) the number of Settlement Shares with respect
to which Party A has not unwound its hedge as of such Forward Price Reduction
Date. Net Share Settlement:    On any Settlement Date in respect of which Net
Share Settlement applies, if the number of Net Share Settlement Shares is a (i)
negative number, Party A shall deliver a number of Shares to Party B equal to
the absolute value of the Net Share Settlement Shares, or (ii) positive number,
Party B shall deliver to Party A the Net Share Settlement Shares; provided that
if Party A determines in its good faith, reasonable judgment that it would be

 

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   required to deliver Net Share Settlement Shares to Party B, Party A may elect
to deliver a portion of such Net Share Settlement Shares on one or more dates
prior to the applicable Settlement Date. In no event will Party B be required to
return any Net Share Settlement Shares Party A has delivered to it pursuant to
the proviso to the immediately preceding sentence. Net Share Settlement Shares:
   For any Settlement Date in respect of which Net Share Settlement applies, a
number of Shares equal to (a) the number of Settlement Shares for such
Settlement Date minus (b) the number of Shares Party A actually purchases during
the relevant Unwind Period for a total purchase price (the “Net Share Purchase
Price”) equal to (1) the product of (i) the arithmetic average of the Forward
Prices on each Unwind Day in such Unwind Period (calculated assuming no
reduction to the Forward Price for any Forward Price Reduction Date that occurs
during such Unwind Period, it being understood, for the avoidance of doubt, that
the related Forward Price Reduction Amount(s) shall be accounted for pursuant to
clause (2) below) and (ii) the number of Settlement Shares for such Settlement
Date, minus (2) the product of (i) the Forward Price Reduction Amount for each
Forward Price Reduction Date that occurs during such Unwind Period and (ii) the
number of Shares with respect to which Party A has not unwound its hedge as of
such Forward Price Reduction Date. 10b-18 VWAP:    For any Unwind Day, the
volume-weighted average price per Share at which the Shares trade as reported in
the composite transactions for the Exchange on such Unwind Day, excluding (i)
trades that do not settle regular way, (ii) opening (regular way) reported
trades on the Exchange on such Unwind Day, (iii) trades that occur in the last
ten minutes before the scheduled close of trading on the Exchange on such Unwind
Day and ten minutes before the scheduled close of the primary trading session in
the market where the trade is effected, and (iv) trades on such Unwind Day that
do not satisfy the requirements of Rule 10b-18(b)(3) under the Exchange Act, as
quoted on Bloomberg Page “PPL <Equity> AQR SEC” (or any successor

 

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   thereto), or if such price is not so reported on such Exchange Business Day
for any reason or the reported price is manifestly erroneous, such price shall
be as reasonably determined by the Calculation Agent. Settlement Currency:   
USD. Failure to Deliver:    Inapplicable. Other Applicable Provisions:    To the
extent Party B is obligated to deliver Shares to Party A pursuant hereto, the
provisions of Sections 9.2 (last sentence only), 9.8, 9.9, 9.10 and 9.11 of the
2002 Definitions will be applicable as if “Physical Settlement” applied to the
Transaction; provided that each representation in Section 9.11 of the 2002
Definitions relating to restrictions, obligations, limitations or requirements
under applicable securities laws that exist as a result of the fact that Party B
is the issuer of the Shares shall be deemed to be deleted. Adjustments:   
Potential Adjustment Event:    For purposes hereof, the definition of “Potential
Adjustment Event” shall not include clause (iii) thereof. Method of Adjustment:
   Calculation Agent Adjustment, subject to the provisions set forth in clause
(b) under “Acceleration Events” below. Notwithstanding anything in the 2002
Definitions to the contrary, the Calculation Agent may make an adjustment
pursuant to Calculation Agent Adjustment to any one or more of the Base Amount,
the Forward Price and any other variable relevant to the settlement or payment
terms of this Transaction to account for the diluting or concentrative effect of
the applicable Potential Adjustment Event on the theoretical value of the
Shares. Additional Adjustment:    If the Calculation Agent determines that the
actual cost to Party A, over any one-month period, of borrowing a number of
Shares equal to the Base Amount to hedge its exposure to this Transaction
exceeds a weighted average rate equal to 25 basis

 

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   points per annum, the Calculation Agent shall reduce the Forward Price in
order to compensate Party A for the amount by which such cost exceeded a
weighted average rate equal to 25 basis points per annum during such period. The
Calculation Agent shall notify Party B prior to making any such adjustment to
the Forward Price and, upon the request of Party B, Party A shall provide
adequate detail of its stock loan costs for the applicable one month period.
Account Details:    Payments to Party A:    To be advised under separate cover
or telephone confirmed prior to each Settlement Date. Payments to Party B:    To
be advised under separate cover or telephone confirmed prior to each Settlement
Date. Delivery of Shares to Party A:    To be advised.
Delivery of Shares to Party B:    To be advised.

 

3. Other Provisions:

Conditions to Effectiveness:

The effectiveness of this Confirmation on the Effective Date shall be subject to
(i) the condition that the representations and warranties of Party B contained
in the Underwriting Agreement dated the date hereof among Party B, Party A,
Morgan Stanley & Co. LLC, as Forward Counterparty, and Morgan Stanley & Co. LLC
and Merrill Lynch, Pierce, Fenner & Smith Incorporated, as Representatives of
the Several Underwriters (the “Underwriting Agreement”) and any certificate
delivered pursuant thereto by Party B are true and correct on the Effective Date
as if made as of the Effective Date, (ii) the condition that Party B has
performed all of the obligations required to be performed by it under the
Underwriting Agreement on or prior to the Effective Date, (iii) the condition
that Party B has delivered to Party A an opinion of counsel dated as of the
Effective Date with respect to matters set forth in Section 3(a) of the
Agreement (subject to customary exceptions and limitations), (iv) the
satisfaction or waiver of all of the conditions set forth in Section 5 of the
Underwriting Agreement, (v) the condition that the Underwriting Agreement has
not been terminated pursuant to Section 6, Section 7 or Section 9 thereof, and
(vi) the condition that neither of the following has occurred (A) in the
commercially reasonable judgment of Party A, Party A is unable to borrow and

 

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deliver for sale a number of Shares equal to the Base Amount, or (B) in the
commercially reasonable judgment of the Calculation Agent, the Calculation Agent
determines either it is impracticable for Party A to do so or Party A would
incur a stock loan cost of more than a rate equal to 200 basis points per annum
to do so (in which event set forth in each of subclause (A) and (B) of this
clause (vi), this Confirmation shall be effective, but the Base Amount for this
Transaction shall be the number of Shares Party A is able to so borrow at or
below a stock loan cost of 200 basis points per annum. Party B’s obligations
hereunder shall be subject to the condition precedent that each of Party A and
each Affiliate of Party A that is a Forward Seller or Underwriter (as such terms
are defined in the Underwriting Agreement) and any other Forward Seller and
Underwriter shall have performed, on or prior to the Effective Date, all of the
obligations required to be performed by it prior to the Effective Date under the
Underwriting Agreement.

Representations and Agreements of Party B:

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

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

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

Additional Representations, Warranties and Agreements of Party B:

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

 

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

 

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

 

  (c)

Party B agrees to provide Party A at least 5 days’ written notice (an “Issuer
Repurchase Notice”) prior to executing any repurchase of Shares

 

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  by Party B or any of its subsidiaries (or entering into any contract that
would require, or give the option to, Party B or any of its subsidiaries, to
purchase or repurchase Shares), whether out of profits or capital or whether the
consideration for such repurchase is cash, securities or otherwise (an “Issuer
Repurchase”), that alone or in the aggregate would result in the Base Amount
Percentage (as defined below) being (i) equal to or greater than 8.0% of the
outstanding Shares or (ii) greater by 0.5% or more than the Base Amount
Percentage at the time of the immediately preceding Issuer Repurchase Notice (or
in the case of the first such Issuer Repurchase Notice, greater than the Base
Amount Percentage as of the later of the date hereof or the immediately
preceding Settlement Date, if any). The “Base Amount Percentage” as of any day
is the fraction (1) the numerator of which is the Base Amount and (2) the
denominator of which is the number of Shares outstanding on such day.

 

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

 

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

 

  (f) Party B shall not, and shall refrain from taking, and shall cause its
affiliated purchasers (within the meaning of Rule 10b-18 under the Exchange Act)
to refrain from taking any action (including, without limitation, any direct
purchases by Party B or any of its affiliated purchasers or any purchases by a
party to a derivative transaction with Party B or any of its affiliated
purchasers), either under this Confirmation, under an agreement with another
party or otherwise, that would cause any purchases of Shares by Party A or any
of its affiliates in connection with any Cash Settlement or Net Share Settlement
of this Transaction not to meet the requirements of the safe harbor provided by
Rule 10b-18 under the Exchange Act if such purchases were made by Party B.

 

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

 

  (h)

In addition to any other requirements set forth herein, Party B agrees not to
elect Cash Settlement or Net Share Settlement if, in the reasonable

 

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  judgment of Party B (or if in the reasonable judgment of Party A, as
previously notified in writing to Party B), such settlement or Party A’s related
market activity would result in a violation of the U.S. federal securities laws
or any other federal or state law or regulation applicable to Party B.

Agreements of the Parties and Covenant of Party B:

The parties acknowledge and agree that any Shares delivered by Party B to Party
A on any Settlement Date will be newly issued Shares and when delivered by Party
A (or an affiliate of Party A) to securities lenders from whom Party A (or an
affiliate of Party A) borrowed Shares in connection with hedging its exposure to
this Transaction will be freely saleable without further registration or other
restrictions under the Securities Act, in the hands of those securities lenders,
irrespective of whether such stock loan is effected by Party A or an affiliate
of Party A (provided that such Shares may be subject to resale restrictions if
the status of any such securities lender would cause any such resale
restrictions to apply by virtue of its share ownership in Party B, status as an
“affiliate” of Party B or otherwise). Accordingly, subject to the provisions set
forth below under the heading “Private Placement Procedures,” Party B agrees
that the Shares that it delivers to Party A on each Settlement Date will not
bear a restrictive legend and that such Shares will be deposited in, and the
delivery thereof shall be effected through the facilities of, the Clearance
System.

Covenants of Party A:

 

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

 

  (b) In connection with bids and purchases of Shares in connection with any
Cash Settlement or Net Share Settlement of this Transaction, Party A shall, and
shall cause its affiliates to, execute such purchases to unwind its hedge of its
exposure to this Transaction in compliance with the requirements of the safe
harbor provided by Rule 10b-18 under the Exchange Act, as if such provisions
were applicable to such purchases; provided that Party A’s obligations under
this clause (b) shall be subject to applicable Securities and Exchange
Commission or Staff no-action letters or interpretations as appropriate and
subject to any delays between execution and reporting of a trade of the Shares
on the applicable securities exchange or quotation system and other
circumstances reasonably beyond Party A’s or such affiliates’ control.

 

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Insolvency Filing:

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

The parties hereto agree and acknowledge that (1) at any point prior to any
Insolvency Filing in respect of the Issuer, Party B shall have the unilateral
right to elect Physical Settlement of this Transaction pursuant to the
provisions set forth above under the heading “Settlement Terms”; and (2) this
Transaction shall automatically terminate on the date of any Insolvency Filing
pursuant the provisions set forth in the immediately preceding paragraph solely
to the extent that Party B failed to elect Physical Settlement of this
Transaction pursuant to the provisions set forth above under the heading
“Settlement Terms” prior to the relevant Insolvency Filing.

Extraordinary Dividends:

If a record date for an Extraordinary Dividend occurs during the period from,
and including, the Effective Date to, but excluding, the Maturity Date (or, if
later, the last date on which Shares are delivered by Party B to Party A in
settlement of this Transaction), then, on the date on which Party B pays such
Extraordinary Dividend to holders of record of the Shares, Party B shall pay, to
Party A, an amount in cash equal to the product of such Extraordinary Dividend
and the Base Amount as of such record date. “Extraordinary Dividend” means the
per Share amount of any cash dividend or distribution declared by the Issuer
with respect to the Shares that is specified by the board of directors of Party
B as an “extraordinary” dividend.

Acceleration Events:

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

 

  (a) Stock Borrow Events. The Calculation Agent determines that (A) Party A (or
an affiliate of Party A) is unable to hedge Party A’s exposure to this
Transaction because of the lack of sufficient Shares being made available for
Share borrowing by lenders, or (B) Party A (or an affiliate of Party A) would
incur a cost to borrow Shares to hedge its exposure to this Transaction that is
greater than a rate equal to 200 basis points per annum (a “Stock Borrow
Event”);

 

  (b)

Dividends and Other Distributions. On any day occurring after the Trade Date and
prior to the Maturity Date Party B declares a distribution, issue or dividend to
existing holders of the Shares of (i) any cash dividend (other than an
Extraordinary Dividend) to the extent the sum of all cash dividends having an
ex-dividend date during the period from and including any Forward Price
Reduction Date (with the Trade Date being a Forward Price Reduction Date for
purposes of this clause (b) only) to but

 

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  excluding the next subsequent Forward Price Reduction Date (with the Maturity
Date being the final Forward Price Reduction Date for purposes of this clause
(b)(i) only) exceeds, on a per Share basis, the Forward Price Reduction Amount
set forth opposite the relevant Forward Price Reduction Date on Schedule I or
(ii) share capital or securities of another issuer acquired or owned (directly
or indirectly) by Party B as a result of a spin-off or other similar
transaction, for which the related record date occurs during the period from,
and including, the Effective Date to, but excluding, the Maturity Date (or, if
later, the last date on which Shares are delivered by Party B to Party A in
settlement of this Transaction) or (iii) any other type of securities (other
than Shares), rights, warrants or other assets, for payment (cash or other
consideration) at less than the prevailing market price as determined by the
Calculation Agent for which the related record date occurs during the period
from, and including, the Effective Date to, but excluding, the Maturity Date
(or, if later, the last date on which Shares are delivered by Party B to Party A
in settlement of this Transaction). To the extent the declaration of a
distribution, issue or dividend contemplated by this paragraph (b) would also be
considered to be the type of event to which Calculation Agent Adjustment would
apply as specified under “Adjustments – Method of Adjustment” above, the
provisions of this paragraph (b) will apply and Calculation Agent Adjustment
shall not apply;

 

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

 

  (d)

Other ISDA Events. The date of the announcement of a firm intention to pursue a
transaction that, if consummated, would result in an Extraordinary Event (other
than a Nationalization, Insolvency or Delisting) (and, for the avoidance of
doubt, no Additional Disruption Event shall be applicable with respect to the
definition of Extraordinary Event contained in the 2002 Definitions) or the
occurrence of any Change in Law, Insolvency, Nationalization or Delisting;
provided that the definition of “Tender Offer” provided in Section 12.1(d) of
the 2002 Definitions is hereby amended by replacing “10%” in the third line
thereof with “20%”; provided further that in case of a Delisting, in addition to
the provisions of Section 12.6(a)(iii) of the 2002 Definitions, (x) it will also
constitute a Delisting if the Exchange is located in the United States and the
Shares are not immediately re-listed, re-traded or re-quoted on any of the New
York Stock Exchange, the NASDAQ Global Select Market or the NASDAQ Global Market
(or their respective successors) and (y) if the Shares are immediately
re-listed, re-traded or re-quoted on any such exchange, then such exchange or
quotation system shall be deemed to be the Exchange; provided further that the
definition of “Change in Law” provided in Section 12.9(a)(ii) of the 2002
Definitions is hereby amended by replacing the phrase “the interpretation” in
the third line thereof with the phrase “or public announcement of the formal or
informal interpretation”; and provided further that “any applicable law or

 

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  regulation”, as used in Section 12.9(a)(ii) of the 2002 Definitions shall
include the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010,
any rules and regulations promulgated thereunder and any similar law or
regulation, without regard to Section 739 of the Dodd-Frank Wall Street Reform
and Consumer Protection Act of 2010 or any similar legal certainty provision in
any legislation enacted or rule or regulation promulgated, and the consequences
set forth below under “Termination Settlement” shall apply to any Change in Law
arising from any such act, rule or regulation; or

 

  (e) Ownership Event. The Calculation Agent determines that, on any day, as a
result of this Transaction, the Share Amount (as defined below) for such day is
equal to or exceeds the Post-Effective Limit (as defined below) for such day (if
any applies).

For purposes of clause (e) above, the “Share Amount” as of any day is the number
of Shares that Party A and any person whose ownership position would be
aggregated with that of Party A (Party A or any such person, a “Party A Person”)
under any law, rule, regulation or regulatory order that for any reason becomes
applicable to ownership of Shares after the Trade Date (“Applicable Laws”),
owns, beneficially owns, constructively owns, controls, holds the power to vote
or otherwise meets a relevant definition of ownership of under the Applicable
Laws, as determined by the Calculation Agent. The “Post-Effective Limit” means
(x) the minimum number of Shares that would give rise to reporting or
registration obligations or other requirements (including obtaining prior
approval from any person or entity) of a Party A Person, or would result in an
adverse effect on a Party A Person, under the Applicable Laws, as determined by
the Calculation Agent, minus (y) 0.5% of the number of Shares outstanding.

Party A represents and warrants to and agrees with Party B that (i) Party A does
not know, as of the Trade Date, of any event or circumstance that will cause the
Share Amount to exceed the Post-Effective Limit on any day during the term of
this Transaction and (ii) Party A will not knowingly cause the Share Amount to
equal or exceed the Post-Effective Limit on any day during the term of this
Transaction.

For the avoidance of doubt, if any of the above events also constitutes an
Insolvency Filing, then the consequences set forth under “Insolvency Filing”
above shall apply.

Termination Settlement:

Upon the occurrence of any Acceleration Event, Party A shall have the right to
designate, upon at least one Scheduled Trading Day’s notice, any Scheduled
Trading Day following such occurrence to be a Settlement Date hereunder (a
“Termination Settlement Date”) to which Physical Settlement shall apply, and to
select the number of Settlement Shares relating to such Termination Settlement
Date; provided in the case of an Acceleration Event arising out of an Ownership
Event, the number of Settlement Shares so designated by Party A shall not exceed
the number of Shares necessary to reduce the Share Amount to the Post-Effective
Limit and (ii) in the case of an Acceleration Event arising out of a Stock
Borrow Event the number of Settlement Shares so designated by Party A shall not

 

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exceed the number of Shares as to which such Stock Borrow Event exists. If, upon
designation of a Termination Settlement Date by Party A pursuant to the
preceding sentence, Party B fails to deliver the Settlement Shares relating to
such Termination Settlement Date when due or otherwise fails to perform
obligations within its control in respect of this Transaction, it shall be an
Event of Default with respect to Party B and Section 6 of the Agreement shall
apply. If an Acceleration Event occurs during an Unwind Period, then, on the
Termination Settlement Date relating to such Acceleration Event, notwithstanding
any election to the contrary by Party B, (i) the Settlement Date for such Unwind
Period shall be the Termination Settlement Date; and (ii) Cash Settlement or Net
Share Settlement shall apply to the portion of the Settlement Shares relating to
such Unwind Period as to which Party A has unwound its hedge and Physical
Settlement shall apply in respect of (x) the remainder (if any) of such
Settlement Shares relating to such Unwind Period and (y) the Settlement Shares
designated by Party A in respect of such Termination Settlement Date. UNDER NO
CIRCUMSTANCES WILL THE SETTLEMENT AMOUNT UPON EARLY TERMINATION OR AN
ACCELERATION EVENT INCLUDE AN ADJUSTMENT FOR THE EFFECTS OF AN EXTRAORDINARY
DIVIDEND OR A CHANGE IN EXPECTED DIVIDENDS.

Private Placement Procedures:

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

Rule 10b5-1:

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

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

Party B hereby agrees with Party A that during any Unwind Period Party B shall
not communicate, directly or indirectly, any Material Non-Public Information (as
defined herein) to any Trading Personnel (as defined below). For purposes of
this Transaction, “Material Non-Public Information” means information relating
to Party B or the Shares

 

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that (a) has not been widely disseminated by wire service, in one or more
newspapers of general circulation, by communication from Party B to its
shareholders or in a press release, or contained in a public filing made by
Party B with the Securities and Exchange Commission and (b) a reasonable
investor might consider to be of importance in making an investment decision to
buy, sell or hold Shares. For the avoidance of doubt and solely by way of
illustration, information should be presumed “material” if it relates to such
matters as dividend increases or decreases, earnings estimates, changes in
previously released earnings estimates, significant expansion or curtailment of
operations, a significant increase or decline of orders, significant merger or
acquisition proposals or agreements, significant new products or discoveries,
extraordinary borrowing, major litigation, liquidity problems, extraordinary
management developments, purchase or sale of substantial assets, or other
similar information. For purposes of this Transaction, “Trading Personnel” means
any employee on the trading side of Merrill Lynch International, including
Francois Lu and Yury Mulman and does not include Jeffrey Kulik, David McShane,
Jake Mendelsohn or John Servidio.

Maximum Share Delivery:

Notwithstanding any other provision of this Confirmation, in no event will Party
B be required to deliver on any Settlement Date, whether pursuant to Physical
Settlement, Net Share Settlement, Termination Settlement or any Private
Placement Settlement, more than a number of Shares equal to 1.75, multiplied by
the initial Base Amount to Party A, subject to reduction by the aggregate number
of Shares, if any, delivered by Party B on any prior Settlement Date.

Transfer and Assignment:

Party A may assign or transfer any of its rights or delegate any of its duties
hereunder, without the prior written consent of Party B, to any affiliate of
Party A whose obligations hereunder and under the Agreement are guaranteed by
Bank of America Corporation, so long as (a) such assignee or transferee is
organized under the laws of the United States, any State thereof or the District
of Columbia; (b) Party B will not be required to pay to such assignee or
transferee an amount in respect of an Indemnifiable Tax under Section 2(d)(i)(4)
of the Agreement greater than the amount in respect of which Party B would have
been required to pay Party A in the absence of such assignment or transfer;
(c) Party B will not receive a payment from which an amount has been withheld or
deducted on account of a Tax under Section 2(d)(i) of the Agreement in excess of
that which Party A would have been required to so withhold or deduct in the
absence of such assignment or transfer; and (d) no Event of Default, Potential
Event of Default or Termination Event will occur as a result of such assignment
or transfer. Notwithstanding any other provision in this Confirmation to the
contrary requiring or allowing Party A to purchase, sell, receive or deliver any
Shares or other securities to or from Party B, Party A may designate any of its
affiliates to purchase, sell, receive or deliver such Shares or other securities
and otherwise to perform Party A’s obligations in respect of this Transaction,
and any such designee may assume such obligations. Party A shall be discharged
of its obligations to Party B to the extent of any such performance.

 

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Role of Agent:

In connection with the Transaction confirmed hereby, the Agent, a broker-dealer
registered under the Exchange Act, will be responsible for: (a) effecting the
Transaction (though the Agent shall not be responsible for negotiating the terms
of the Transaction), (b) issuing all required confirmations and statements to
Counterparty relating to the Transaction, (c) as between Dealer and the Agent,
extending or arranging for the extension of any credit to Counterparty in
connection with the Transaction, (d) maintaining required books and records
relating to the Transaction, (e) complying, to the extent applicable, with Rule
15c3-1 under the Exchange Act and (f) unless otherwise permitted under
applicable law or applicable interpretations thereof, receiving, delivering and
safeguarding funds and securities in compliance with Rule 15c3-3 under the
Exchange Act. The Agent is acting hereunder solely in its capacity as agent (and
not as principal or guarantor) in connection with the Transaction entered into
between Counterparty and Dealer, pursuant to instructions received from
Counterparty and Dealer, and shall have no responsibility or liability to
Counterparty or Dealer arising from any failure by either of them to pay or
perform any obligation hereunder. Each of Counterparty and Dealer acknowledges
the foregoing and agrees that it will proceed solely against the other to
collect or recover any funds or securities owing to it in connection with or
arising from the Transaction. The Agent shall not be deemed to have endorsed or
guaranteed the Transaction confirmed hereby and shall have no responsibility or
liability to either Counterparty or Dealer except for gross negligence or
willful misconduct in the performance of its duties as agent. Dealer is
regulated by the Financial Services Authority and is a member of the London
Stock Exchange, the Irish Stock Exchange, Virt-x and ISMA. Dealer has entered
into the Transaction as principal. The time of the Transaction shall be notified
to Counterparty upon request.

Indemnity:

Party B agrees to indemnify Party A and its affiliates and their respective
directors, officers, agents and controlling parties (Party A and each such
affiliate or person being an “Indemnified Party”) from and against any and all
losses, claims, damages and liabilities, joint and several, incurred by or
asserted against such Indemnified Party arising out of any breach of any
covenant or representation made by Party B in this Confirmation or the
Agreement, and Party B will reimburse any Indemnified Party for all reasonable
expenses (including reasonable legal fees and expenses) as they are incurred in
connection with the investigation of, preparation for, or defense of any pending
or threatened claim or any action or proceeding arising therefrom, whether or
not such Indemnified Party is a party thereto. Party B will not be liable under
this Indemnity paragraph to the extent that any such loss, claim, damage,
liability or expense is found in a final and nonappealable judgment by a court
to have resulted from Party A’s negligence or willful misconduct.

Notice:

 

Non-Reliance:   Applicable

 

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Additional Acknowledgments:   Applicable Agreements and Acknowledgments
Regarding Hedging Activities:   Applicable

 

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

No Collateral or Setoff:

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

Delivery of Cash:

For the avoidance of doubt, nothing in this Confirmation shall be interpreted as
requiring Party B to deliver cash in respect of the settlement of this
Transaction, except in circumstances where the required cash settlement thereof
is permitted for classification of the contract as equity by ASC Topic 815,
Derivatives and Hedging as in effect on the Trade Date (including, without
limitation, where Party B so elects to deliver cash or fails timely to elect to
deliver Shares in respect of such settlement).

Status of Claims in Bankruptcy:

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

Limit on Beneficial Ownership:

Notwithstanding any other provisions hereof, Party A shall not be entitled to
take delivery of any Shares deliverable hereunder (whether in connection with
the purchase of

 

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Shares on any Settlement Date or any Termination Settlement Date, any Private
Placement Settlement or otherwise) to the extent (but only to the extent) that,
after such receipt of any Shares hereunder, (i) the Share Amount would exceed
the Post-Effective Limit, (ii) Party A’s ultimate parent entity would purchase,
acquire or take (as such terms are used in the Federal Power Act) at any time on
the relevant date in excess of 8.0% of the outstanding Shares or (iii) Party A
and each person subject to aggregation of Shares with Party A under Section 13
or Section 16 of the Exchange Act and rules promulgated thereunder (the “Party A
Group”) would directly or indirectly beneficially own (as such term is defined
for purposes of Section 13 or Section 16 of the Exchange Act and rules
promulgated thereunder) in excess of 8.0% of the then outstanding Shares (each
of such events in clauses (i), (ii) and (iii), an “Excess Ownership Position”).
Any purported delivery hereunder shall be void and have no effect to the extent
(but only to the extent) that, after such delivery, an Excess Ownership Position
would exist. If any delivery owed to Party A hereunder is not made, in whole or
in part, as a result of this provision, Party B’s obligation to make such
delivery shall not be extinguished and Party B shall make such delivery as
promptly as practicable after, but in no event later than one Exchange Business
Day after, Party A gives notice to Party B that, after such delivery, an Excess
Ownership Position would not exist. Party A shall use its commercially
reasonable efforts to eliminate the existence of an Excess Ownership Position
prior to any Settlement Date.

In addition, notwithstanding anything herein to the contrary, if any delivery
owed to Party A hereunder is not made, in whole or in part, as a result of the
immediately preceding paragraph, Party A shall be permitted to make any payment
due in respect of such Shares to Party B in two or more tranches that correspond
in amount to the number of Shares delivered by Party B to Party A pursuant to
the immediately preceding paragraph.

Miscellaneous:

 

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

Address for notices or communications to Party A:

 

Address:    Merrill Lynch International    BofA Merrill Lynch Financial Centre
   2 King Edward Street    London EC1A 1HQ With a copy to its Agent:    Merrill
Lynch, Pierce, Fenner & Smith Incorporated    One Bryant Park    New York, NY
10036

 

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   Attention: John Servidio, Assistant General Counsel    Telephone No.:
646-855-7127    Facsimile No.: 704-208-2869 Address for notices or
communications to Party B: Address:    PPL Corporation    Two North Ninth Street
   Allentown, PA 18101-1179    Attention: Treasurer    Telephone No.:
(610) 774-5151    Facsimile No.: (610) 774-5235 With a copy to:    Simpson
Thacher & Bartlett LLP    425 Lexington Avenue    New York, NY 10017   
Attention: Joyce Xu, Esq.    Telephone No.: (212) 455-3680    Facsimile No:
(212) 455-2502

 

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

Acknowledgements:

The parties hereto intend for:

 

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

 

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

 

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

 

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

If Party A is a bank regulated by the Federal Deposit Insurance Corporation,
(i) Party A recognizes and intends that this Transaction is, and shall
constitute, a “qualified financial contract” as that term is defined in 12
U.S.C. 1821(e)(8)(d)(i), as the same may be amended, modified, or supplemented
from time to time; and (ii) Party A represents and warrants that it is
authorized by appropriate corporate action under applicable law to enter into
this Transaction as evidenced by the execution hereof by an officer of Party A
at the level of vice president or higher.

Other Forward:

Party A acknowledges that Party B has entered into a substantially identical
forward transaction for its Shares on the date hereof (the “Other Forward”) with
Morgan Stanley & Co. LLC. Party A and Party B agree that if Party B designates a
Settlement Date with respect to the Other Forward and for which Cash Settlement
or Net Share Settlement is applicable, and the resulting Unwind Period for the
Other Forward coincides for any period of time with an Unwind Period for this
Transaction (each, an “Overlap Unwind Period”), Party B shall notify Party A
prior to the commencement of each such Overlap Unwind Period, and Party A shall
only be permitted to purchase Shares to unwind its hedge in respect of this
Transaction on every second Exchange Business Day that is not a Suspension Day
during such Overlap Unwind Period, commencing on the first day of such Overlap
Unwind Period.

Severability:

If any term, provision, covenant or condition of this Confirmation, or the
application thereof to any party or circumstance, shall be held to be invalid or
unenforceable in whole or in part for any reason, the remaining terms,
provisions, covenants, and conditions hereof shall continue in full force and
effect as if this Confirmation had been executed with the invalid or
unenforceable provision eliminated, so long as this Confirmation as so modified
continues to express, without material change, the original intentions of the
parties as to the subject matter of this Confirmation and the deletion of such
portion of this Confirmation will not substantially impair the respective
benefits or expectations of parties to this Agreement; provided, however, that
this severability provision shall not be applicable if any provision of
Section 2, 5, 6 or 13 of the Agreement (or any definition or provision in
Section 14 to the extent that it relates to, or is used in or in connection with
any such Section) shall be so held to be invalid or unenforceable.

[Remainder of page intentionally left blank]

 

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

 

Yours faithfully, MERRILL LYNCH INTERNATIONAL By:  

/s/ Elayne H. Wilson

Name:  

Elayne H. Wilson

Title:   Vice President

MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED (solely as Agent for Dealer)

By:  

/s/ Jake Mendelsohn

Name:  

Jake Mendelsohn

Title:   Managing Director

 

Confirmed as of the date first written above: PPL CORPORATION By:  

/s/ Russell R. Clelland

Name:  

Russell R. Clelland

Title:   Assistant Treasurer

 

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ANNEX A

PRIVATE PLACEMENT PROCEDURES

 

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

 

(ii)

If Party B delivers any Restricted Shares in respect of this Transaction, Party
B agrees that (i) such Shares may be transferred by and among Party A and its
affiliates and (ii) after the minimum “holding period” within the meaning of
Rule 144(d) under the Securities Act has elapsed after the applicable Settlement
Date, Party B shall (so long as Party A or any such affiliate is not an
“affiliate” of Party B within the meaning of Rule 144 under the Securities Act)
promptly remove, or cause the transfer agent for the Shares to remove, any
legends referring to any

 

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  transfer restrictions from such Shares upon delivery by Party A (or such
affiliate of Party A) to Party B or such transfer agent of seller’s and broker’s
representation letters customarily delivered by Party A or its affiliates in
connection with resales of restricted securities pursuant to Rule 144 under the
Securities Act, each without any further requirement for the delivery of any
certificate, consent, agreement, opinion of counsel, notice or any other
document, any transfer tax stamps or payment of any other amount or any other
action by Party A (or such affiliate of Party A).

 

A-2