Exhibit 10.4

 

JPMorgan Chase Bank,

National Association,

London Branch

25 Bank Street

Canary Wharf

London E14 5JP

England

 

DATE:

March 7, 2018

 

 

TO:

Duke Energy Corporation

 

 

ATTENTION:

550 South Tryon Street
Charlotte, North Carolina 28202-1803

 

 

TELEPHONE:

 

 

 

FROM:

JPMorgan Chase Bank, National Association, London Branch

 

 

SUBJECT:

Issuer Forward Transaction

 

The purpose of this letter agreement (this “Confirmation”) is to confirm the
terms and conditions of the Transaction entered into between JPMorgan Chase
Bank, National Association, London Branch (“Dealer”) and Duke Energy Corporation
(“Counterparty”), on the Trade Date specified below (the “Transaction”).  This
Confirmation constitutes a “Confirmation” as referred to in the Agreement
specified below.  This Confirmation is a confirmation for purposes of
Rule 10b-10 promulgated under the Securities Exchange Act of 1934, as amended
(the “Exchange Act”).

 

This Confirmation evidences a complete and binding agreement between Dealer and
Counterparty as to the terms of the Transaction to which this Confirmation
relates and supersedes all prior or contemporaneous written or oral
communications with respect thereto. This Confirmation shall supplement, form a
part of, and be subject to an agreement (the “Agreement”) in the form of the
1992 ISDA Master Agreement (Multicurrency — Cross Border) as if Dealer and
Counterparty had executed an agreement in such form (without any Schedule but
with the elections set forth in this Confirmation) on the Trade Date. The
Transaction hereunder shall be the sole Transaction under the Agreement.  If
there exists any ISDA Master Agreement between Dealer and Counterparty or any
confirmation or other agreement between Dealer and Counterparty pursuant to
which an ISDA Master Agreement is deemed to exist between Dealer and
Counterparty then notwithstanding anything to the contrary in such ISDA Master
Agreement, such confirmation or agreement or any other agreement to which Dealer
and Counterparty are parties, the Transaction shall not be considered a
Transaction under, or otherwise governed by, such existing or deemed ISDA Master
Agreement.

 

The definitions and provisions contained in the 2006 ISDA Definitions (the “Swap
Definitions”) and the 2002 ISDA Equity Derivatives Definitions (the “Equity
Definitions”) as published by the International Swaps and Derivatives
Association, Inc. (“ISDA”) are incorporated into this Confirmation.  Any
reference to a currency shall have the meaning contained in Section 1.7 of the
2006 ISDA Definitions as published by ISDA.

 

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THIS CONFIRMATION AND THE AGREEMENT WILL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO CHOICE
OF LAW DOCTRINE THAT WOULD APPLY THE LAWS OF ANOTHER JURISDICTION. 
NOTWITHSTANDING THE FOREGOING, OR ANYTHING TO THE CONTRARY IN THIS CONFIRMATION
OR THE AGREEMENT, COUNTERPARTY DOES NOT BY THIS CONFIRMATION OR THE TRANSACTION
HEREUNDER SUBMIT TO THE JURISDICTION OF ANY FOREIGN NATION OR FOREIGN
SUPRANATIONAL ORGANIZATION OR SUCH ENTITY’S LAWS OR REGULATIONS, INCLUDING
WITHOUT LIMITATION THE EUROPEAN MARKET INFRASTRUCTURE REGULATION.  THIS
CONFIRMATION, THE AGREEMENT AND THE TRANSACTION ARE INTENDED TO BE GOVERNED BY
THE INTERNAL LAWS OF THE STATE OF NEW YORK AND NOT THE LAWS, RULES OR
REGULATIONS OF ANY FOREIGN JURISDICTION.

 

THE PARTIES HERETO IRREVOCABLY SUBMIT TO THE EXCLUSIVE JURISDICTION OF THE
COURTS OF THE STATE OF NEW YORK AND THE UNITED STATES DISTRICT COURT LOCATED IN
THE BOROUGH OF MANHATTAN IN NEW YORK CITY IN CONNECTION WITH ALL MATTERS
RELATING HERETO AND WAIVE ANY OBJECTION TO THE LAYING OF VENUE IN, AND ANY CLAIM
OF INCONVENIENT FORUM WITH RESPECT TO, THESE COURTS.

 

The time of dealing for the Transaction will be confirmed by Dealer upon written
request by Counterparty.

 

1.                                      In the event of any inconsistency among
this Confirmation, the Swap Definitions, the Equity Definitions or the
Agreement, the following will prevail for purposes of the Transaction in the
order of precedence indicated: (i) this Confirmation; (ii) the Equity
Definitions; (iii) the Swap Definitions and (iv) the Agreement.

 

2.                                      Each party will make each payment
specified in this Confirmation as being payable by such party not later than the
specified due date, for value on that date in the place of the account specified
below or otherwise specified in writing, in freely transferable funds and in a
manner customary for payments in the required currency.

 

3.                                      General Terms:

 

Buyer:

 

Dealer.

 

 

 

Seller:

 

Counterparty.

 

 

 

Trade Date:

 

March 7, 2018.

 

 

 

Effective Date:

 

March 9, 2018, or such later date on which the conditions set forth in Section 4
of this Confirmation have been satisfied.

 

 

 

Number of Shares:

 

Initially, (x) if no Initial Hedging Disruption (as defined in Section 4(b))
occurs, 1,387,500 Shares (the “Full Number of Shares”) or (y) if an Initial
Hedging Disruption occurs, the Reduced Number of Shares (as defined in
Section 4(b)).

 

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Maturity Date:

 

December 27, 2018 (or, if such date is not a Clearance System Business Day, the
next following Clearance System Business Day).

 

 

 

Daily Forward Price:

 

On the Effective Date, the Initial Forward Price, and on any other day, the
Daily 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 (including, for the avoidance of doubt, any Forward
Price Reduction Date occurring from the Trade Date to a date on or before the
Effective Date), the Daily Forward Price in effect on such date shall be the
Daily Forward Price otherwise in effect on such date, minus the Forward Price
Reduction Amount for such Forward Price Reduction Date.

 

 

 

Initial Forward Price:

 

USD $74.0720 per Share.

 

 

 

Daily Rate:

 

For any day, (i)(A) Overnight Bank Rate for such day, minus (B) the Spread,
divided by (ii) 365. For the avoidance of doubt, the Daily Rate may be negative.

 

 

 

Overnight Bank Rate

 

For any day, the rate set forth for such day opposite the caption “Overnight
bank funding rate”, as such rate is displayed on the page “OBFR01 <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:

 

65 basis points.

 

 

 

Forward Price Reduction Date:

 

Each ex-dividend date for the Shares as set forth in Schedule I hereto.

 

 

 

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, $0.001 par value per share, of Counterparty (Exchange identifier:
“DUK”).

 

 

 

Exchange:

 

New York Stock Exchange.

 

 

 

Related Exchange(s):

 

All Exchanges.

 

 

 

Clearance System:

 

The Depository Trust Company.

 

 

 

Valuation:

 

 

 

 

 

Designated Valuation:

 

Subject to Section 9 of this Confirmation, Counterparty shall have the right to
designate a date (a “Designated Date”) occurring on or prior to the Maturity
Date for a valuation and settlement of the Transaction with respect to all or a
portion of the Undesignated Shares as of the Designated Date by written notice
to Dealer delivered no later than the applicable Settlement Method Election
Date; provided that Counterparty may not designate a Designated Date occurring
during an Unwind Period

 

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related to a different Designated Date. The portion of the Undesignated Shares
designated for valuation and settlement in respect of a Designated Date shall be
the “Designated Shares” for such Designated Date. If the number of Undesignated
Shares on the Maturity Date is greater than zero, then the Maturity Date will be
a Designated Date for a Physical Settlement with a number of Designated Shares
equal to such number of Undesignated Shares.

 

 

 

Valuation Date:

 

With respect to any Physical Settlement, the relevant Designated Date. With
respect to any Cash Settlement or Net Share Settlement, the last day of the
related Unwind Period.

 

 

 

Undesignated Shares:

 

At any time, the Number of Shares minus the aggregate number of Designated
Shares for all Designated Dates occurring prior to such time.

 

 

 

Unwind Period:

 

For any Cash Settlement or Net Share Settlement, a period beginning on, and
including, the Designated Date and ending on the date on which Dealer or its
affiliates finishes unwinding Dealer’s Hedge Positions in respect of such
Designated Date.

 

 

 

Market Disruption Event:

 

Section 6.3(a) of the Equity Definitions shall be amended by deleting the words
“at any time during the one hour period that ends at the relevant Valuation
Time, Latest Exercise Time, Knock-in Valuation Time or Knock-out Valuation Time,
as the case may be” and replacing them with the words “at any time during the
regular trading session on the Exchange, without regard to after hours or any
other trading outside of the regular trading session hours”, and by replacing
“or (iii) an Early Closure” with: “(iii) an Early Closure, or (iv) a Regulatory
Disruption.”

 

 

 

 

 

Section 6.3(d) of the Equity Definitions is hereby amended by deleting the
remainder of the provision following the term “Scheduled Closing Time” in the
fourth line thereof.

 

 

 

 

 

Any Exchange Business Day on which, as of the date hereof, the Exchange is
scheduled to close prior to its normal close of trading shall be deemed not to
be an Exchange Business Day; if a closure of the Exchange prior to its normal
close of trading on any Exchange Business Day is scheduled following the date
hereof, then such Exchange Business Day shall be deemed to be a Disrupted Day in
full.

 

 

 

 

 

A “Regulatory Disruption” shall occur if Dealer determines in good faith and in
its reasonable discretion, based on advice of counsel, that it is appropriate in
light of legal, regulatory or self-regulatory requirements or related policies
or procedures (so long as such requirements, policies or procedures, if
voluntarily adopted by Dealer, generally are applicable in similar circumstances
and are not arbitrarily or capriciously applied) for Dealer (or its agent or
affiliate) to refrain from all or any part of the market activity in which it
would otherwise engage in

 

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connection with the Transaction.

 

 

 

Consequences of Disrupted Days:

 

As set forth in Section 9 of this Confirmation.

 

 

 

Settlement:

 

 

 

 

 

Settlement Date:

 

The date one Settlement Cycle following each Valuation Date, except that in the
case of Physical Settlement, the date two Clearance System Business Days
following the relevant Designated Date.

 

 

 

Settlement Method Election:

 

Applicable; provided that:

 

 

 

 

 

(i)                  Net Share Settlement shall be deemed to be included as an
additional potential settlement method under Section 7.1 of the Equity
Definitions;

 

 

 

 

 

(ii)               Counterparty may elect Cash Settlement or Net Share
Settlement only if Counterparty represents and warrants to Dealer in writing
that, as of the date of such election,

 

 

 

 

 

(A)                     Counterparty is not aware of any material nonpublic
information concerning itself or the Shares;

 

 

 

 

 

(B)                     Counterparty is electing the settlement method and
designating the related Designated Date in good faith and not as part of a plan
or scheme to evade compliance with Rule 10b-5 under the Exchange Act
(“Rule 10b-5”) or any other provision of the federal securities laws;

 

 

 

 

 

(C)                     Counterparty is not “insolvent” (as such term is defined
under Section 101(32) of the U.S. Bankruptcy Code (Title 11 of the United States
Code) (the “Bankruptcy Code”));

 

 

 

 

 

(D)                     Counterparty would be able to purchase, in open market
transactions, a number of Shares equal to the number of related Designated
Shares (or, if greater in the case of a Net Share Settlement, a number of Shares
with a value as of the date of such election equal to the product of (I) such
number of Designated Shares and (II) the then-current Daily Forward Price) in
compliance with the laws of Counterparty’s jurisdiction of organization;

 

 

 

 

 

(E)                      Counterparty is not electing Cash Settlement or Net
Share Settlement to create actual or apparent trading activity in the Shares (or
any security convertible into or exchangeable for Shares) or to raise or depress
or otherwise manipulate the price of the Shares (or any security convertible
into or exchangeable for Shares) in violation of the Exchange Act or any other
applicable securities laws; and

 

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(F)                       such election, and settlement in accordance therewith,
does not and will not violate or conflict with any law, regulation or
supervisory guidance applicable to Counterparty, or any order or judgment of any
court or other agency of government applicable to it or any of its assets, and
any governmental consents that are required to have been obtained by
Counterparty with respect to such election or settlement have been obtained and
are in full force and effect and all conditions of any such consents have been
complied with.

 

 

 

 

 

(iii)            Notwithstanding any election to the contrary as of any
Settlement Method Election Date, Physical Settlement shall be applicable:

 

 

 

 

 

(A)                     to all of the Designated Shares for the relevant
Designated Date if, on the relevant Settlement Method Election Date, (I) the
trading price per Share on the Exchange (as determined by Dealer) is below
fifty percent (50%) of the Initial Forward Price (the “Threshold Price”) or
(II) Dealer determines, in its good faith and reasonable judgment, that it would
be unable to purchase a number of Shares in the market sufficient to unwind its
hedge position in respect of the Transaction and satisfy its delivery obligation
hereunder, if any, by the Maturity Date (x) in a manner that (A) would, if
purchases by Dealer were considered purchases by Counterparty or by an
affiliated purchaser of Counterparty, be compliant with the safe harbor provided
by Rule 10b-18(b) under the Exchange Act and (B) based on the advice of counsel,
would not raise material risks under applicable securities laws or (y) due to
the lack of sufficient liquidity in the Shares (each, a “Trading Condition”); or

 

 

 

 

 

(B)                     to all or a portion of the Designated Shares for the
relevant Designated Date if, on any day during the relevant Unwind Period,
(I) the trading price per Share on the Exchange (as determined by Dealer) is
below the Threshold Price or (II) Dealer determines, in its good faith and
reasonable judgment, that a Trading Condition has occurred, in which case the
provisions set forth below in Section 9(c) shall apply as if such day were the
“Early Valuation Date” and (x) for purposes of clause (i) of such paragraph,
such day shall be the last Unwind Date of such Unwind Period and the “Unwound
Shares” shall be calculated to, and including, such day and (y) for purposes of
clause (ii) of such paragraph, the “Remaining Amount” shall be equal to the
number of Designated Shares for the

 

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relevant Designated Date minus the Unwound Shares determined in accordance with
clause (x) of this sentence.

 

 

 

Electing Party:

 

Counterparty.

 

 

 

Settlement Method Election Date:

 

The second Scheduled Trading Day immediately preceding the relevant Designated
Date, except that in the case of Physical Settlement, the date specified in
writing by Counterparty no later than 5:00 p.m., New York City time, on the
relevant Designated Date.

 

 

 

Default Settlement Method:

 

Physical Settlement.

 

 

 

Physical Settlement:

 

If Physical Settlement is applicable, then on the relevant Settlement Date,
Dealer will pay to Counterparty an amount equal to the product of (x) the number
of Designated Shares for the related Designated Date and (y) the Daily Forward
Price on such Settlement Date and Counterparty will deliver to Dealer a number
of Shares equal to such number of Designated Shares. Section 9.2 of the Equity
Definitions (other than the last sentence thereof) will not apply to any
Physical Settlement.

 

 

 

Prepayment:

 

Not Applicable.

 

 

 

Variable Obligation:

 

Not Applicable.

 

 

 

Cash Settlement Payment Date:

 

The second Currency Business Day following each Valuation Date.

 

 

 

Forward Cash Settlement Amount:

 

The aggregate sum, for all Unwind Dates in the relevant Unwind Period, of the
Daily Cash Settlement Amounts.

 

 

 

Daily Cash Settlement Amount:

 

For any Unwind Date, the product of (i) the Daily Share Number of such Unwind
Date and (ii)(A) the Settlement Price for such Unwind Date minus (B) the Daily
Forward Price on the day that is one Settlement Cycle immediately following such
Unwind Date.

 

 

 

Unwind Date:

 

Each Exchange Business Day during the Unwind Period on which Dealer or its
affiliates unwind any portion of Dealer’s Hedge Positions in respect of the
relevant Designated Date.

 

 

 

Daily Share Number:

 

For any Unwind Date, the number of Designated Shares with respect to which
Dealer or its affiliates unwind any portion of Dealer’s Hedge Positions in
respect of the relevant Designated Date.

 

 

 

Settlement Price:

 

For any Unwind Date, the weighted average price per Share at which Dealer or its
affiliates unwind any portion of Dealer’s Hedge Positions on such Unwind Date in
respect of the relevant Designated Date.

 

 

 

Net Share Settlement:

 

If Net Share Settlement is applicable, then on the relevant Net Share Settlement
Date:

 

 

 

 

 

(i)                           if the Net Share Settlement Number is positive,
then

 

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Counterparty will deliver to Dealer a number of Shares equal to the Net Share
Settlement Number; and

 

 

 

 

 

(ii)                        if the Net Share Settlement Number is negative, then
Dealer will deliver to Counterparty a number of Shares equal to the absolute
value of the Net Share Settlement Number;

 

 

 

 

 

in either case in accordance with Section 9.2 (last sentence only), 9.4 (with
the Net Share Settlement Date deemed to be a “Settlement Date” for purposes of
such Section 9.4), 9.8, 9.9, 9.11 (as modified herein) and 9.12 of the Equity
Definitions as if Physical Settlement were applicable.

 

 

 

Net Share Settlement Number:

 

A number of Shares equal to the sum of (i) the Aggregate Net Share Number as of
the last Unwind Date in any Unwind Period and (ii) the sum of the quotients
(rounded to the nearest whole number), for each Unwind Adjustment Amount for
such Unwind Period, obtained by dividing (x) such Unwind Adjustment Amount by
(y) the Settlement Price on the Forward Price Reduction Date relating to such
Unwind Adjustment Amount.

 

 

 

Aggregate Net Share Number:

 

As of any date, the aggregate sum, for all Unwind Dates in the relevant Unwind
Period occurring on or prior to such date, of the quotient (rounded to the
nearest whole number) obtained by dividing (x) the Daily Cash Settlement Amount
for such Unwind Date by (y) the Settlement Price for such Unwind Date.

 

 

 

Net Share Settlement Date:

 

The date one Settlement Cycle following each Valuation Date.

 

 

 

Unwind Adjustment Amount:

 

For any Unwind Period, for any Forward Price Reduction Date that occurs during
the period from, and including, the date one Settlement Cycle immediately
following the relevant Designated Date to, and including, the date one
Settlement Cycle immediately following the relevant Valuation Date, an amount
equal to the product of (i) the relevant Forward Price Reduction Amount
multiplied by (ii)(A) if the Aggregate Net Share Number as of the date
immediately prior to the date one Settlement Cycle immediately preceding the
relevant Forward Price Reduction Date is a positive number, such Aggregate Net
Share Number or (B) otherwise, zero.

 

 

 

Unwound Shares:

 

For any Unwind Period at any time, the aggregate sum of the Daily Share Numbers
for all Unwind Dates in such Unwind Period that have occurred prior to such
time.

 

 

 

Delivery of Shares:

 

Notwithstanding anything to the contrary herein, either party may, by prior
notice to the other party, satisfy its obligation to deliver any Shares or other
securities on any date due (an “Original Delivery Date”) by making separate
deliveries of Shares or such securities, as the case may be, at more than one
time on or prior to such Original Delivery Date, so long as the aggregate number
of Shares and other securities so delivered on or prior to such Original
Delivery Date is equal to the number

 

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required to be delivered on such Original Delivery Date.

 

 

 

Consequences of Late Delivery:

 

Without limiting the generality of this Confirmation, the Agreement and the
Equity Definitions, if for any reason Counterparty fails to deliver when due any
Shares required to be delivered hereunder and a Forward Price Reduction Date
occurs on or after the date such Shares are due and on or before the date such
Shares are delivered, Counterparty acknowledges and agrees that, in addition to
any other amounts for which Counterparty may be liable hereunder or under law
(but without duplication), Counterparty shall be liable to Dealer for an amount
equal to the product of the number of Shares so due but not yet delivered on or
prior to such Forward Price Reduction Date and the Forward Price Reduction
Amount for such Forward Price Reduction Date.

 

 

 

Representation and Agreement:

 

Section 9.11 of the Equity Definitions is hereby modified to exclude any
representations therein relating to restrictions, obligations, limitations or
requirements under applicable securities laws that exist or arise as a result of
the fact that Counterparty is the Issuer of the Shares.

 

 

 

Share Adjustments:

 

 

 

 

 

Method of Adjustment:

 

Calculation Agent Adjustment; provided that Section 11.2(e)(iii) shall be
deleted and that the issuance of stock options, restricted stock or restricted
stock units in the ordinary course pursuant to Counterparty’s employee incentive
plans shall not constitute a Potential Adjustment Event.

 

 

 

Extraordinary Dividend:

 

Any dividend or distribution on the Shares which is not a Special Dividend and
which has an ex-dividend date occurring on any day following the Trade Date
(other than (i) any dividend or distribution of the type described in
Section 11.2(e)(i) or Section 11.2(e)(ii)(A) of the Equity Definitions or (ii) a
regular, quarterly cash dividend in an amount per Share equal to or less than
the Forward Price Reduction Amount corresponding to the relevant quarter that
has an ex-dividend date no earlier than the Forward Price Reduction Date
corresponding to the relevant quarter).

 

 

 

Extraordinary Events:

 

 

 

 

 

Merger Event:

 

Section 12.1(b) of the Equity Definitions shall be amended by deleting the
remainder of such Section following the definition of “Reverse Merger” therein.

 

 

 

Tender Offer:

 

Applicable; provided that Section 12.1(d) of the Equity Definitions shall be
amended by replacing “10%” in the third line thereof with “15%.”

 

 

 

Delisting:

 

In addition to the provisions of Section 12.6(a)(iii) of the Equity Definitions,
it shall 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

 

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Exchange, NYSE MKT, The NASDAQ Global Select Market or The NASDAQ Global Market
(or their respective successors); if the Shares are immediately re-listed,
re-traded or re-quoted on any such exchange or quotation system, such exchange
or quotation system shall be deemed to be the Exchange.

 

 

 

Additional Disruption Events:

 

 

 

 

 

Change in Law:

 

Applicable; provided that Section 12.9(a)(ii) of the Equity Definitions is
hereby amended by (i) replacing the phrase “the interpretation” in the third
line thereof with the phrase “, or public announcement of the formal
interpretation”; and (ii) replacing the word “Shares” where it appears in clause
(X) with the words “Hedge Position.”

 

 

 

Failure to Deliver:

 

Applicable if Dealer is required to deliver Shares hereunder; otherwise, Not
Applicable.

 

 

 

Hedging Disruption:

 

Not applicable.

 

 

 

Increased Cost of Hedging:

 

Not applicable.

 

 

 

Increased Cost of Stock Borrow:

 

Applicable; provided that clause (C) of Section 12.9(b)(v) and the third, fourth
and fifth sentences therein shall be deleted.

 

 

 

Initial Stock Loan Rate:

 

50 basis points per annum.

 

 

 

Loss of Stock Borrow:

 

Applicable.

 

 

 

Maximum Stock Loan Rate:

 

300 basis points per annum.

 

 

 

Hedging Party:

 

For all applicable Additional Disruption Events, Dealer.

 

 

 

Determining Party:

 

For all applicable Extraordinary Events, Dealer.

 

 

 

Consequences of Extraordinary Events:

 

The consequences that would otherwise apply under Article 12 of the Equity
Definitions to any applicable Extraordinary Event (excluding any Failure to
Deliver, Increased Cost of Stock Borrow or any event that also constitutes a
Bankruptcy Termination Event, but including, for the avoidance of doubt, any
other applicable Additional Disruption Event) shall not apply, and instead, the
consequences specified in Section 9 of this Confirmation shall apply.

 

 

 

Acknowledgements:

 

 

 

 

 

Non-Reliance:

 

Applicable.

 

 

 

Agreements and Acknowledgements Regarding Hedging Activities:

 

Applicable.

 

 

 

Additional

 

Applicable.

 

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Acknowledgements:

 

 

 

 

 

Calculation Agent:

 

Dealer; provided that following the occurrence and during the continuance of an
Event of Default of the type provided in Section 5(a)(vii) of the Agreement with
respect to which Dealer is the Defaulting Party, Counterparty shall have the
right to designate a leading dealer in the over-the-counter equity derivatives
market to act as the Calculation Agent.

 

 

 

Account Details:

 

 

 

 

 

Payments to Dealer:

 

Bank:
ABA:
Account:
Beneficiary:
REF:

 

 

 

Payments to Counterparty:

 

Bank:
Account
Name:
Account Number:
ABA:

 

 

 

Delivery of Shares to Dealer:

 

DTC Securities:

 

 

 

Delivery of Shares to Counterparty:

 

DTC LPA Number:

 

4.                                      Conditions to Effectiveness:

 

(a)                                 The effectiveness of this Confirmation on
the Effective Date shall be subject to the following conditions:

 

(i)                                     The representations and warranties of
Counterparty contained in the Underwriting Agreement dated March 6, 2018 and
made by it with Dealer and the specified representatives of the underwriters
named therein, among others (the “Underwriting Agreement”), and any certificate
delivered pursuant thereto by Counterparty shall be true and correct on the
Effective Date as if made as of the Effective Date;

 

(ii)                                  Counterparty shall have performed all of
the obligations required to be performed by it under the Underwriting Agreement
on or prior to the Effective Date;

 

(iii)                               All of the conditions set forth in Section 8
of the Underwriting Agreement shall have been satisfied;

 

(iv)                              The Option Time of Delivery (as defined in the
Underwriting Agreement) shall have occurred as provided in the Underwriting
Agreement;

 

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(v)                                 All of the representations and warranties of
Counterparty hereunder and under the Agreement shall be true and correct on the
Effective Date as if made as of the Effective Date;

 

(vi)                              Counterparty shall have performed all of the
obligations required to be performed by it hereunder and under the Agreement on
or prior to the Effective Date, including without limitation its obligations
under Sections 5, 6 and 11 hereof; and

 

(vii)                           Counterparty shall have delivered to Dealer an
opinion of counsel in form and substance reasonably satisfactory to Dealer with
respect to matters set forth in Section 3(a) of the Agreement and that the
Shares initially issuable hereunder have been duly authorized and, upon issuance
pursuant to the terms of the Transaction, will be validly issued, fully paid and
nonassessable (subject to customary exceptions, limitations and other
qualifications).

 

(b)                                 Notwithstanding the foregoing or any other
provision of this Confirmation, if (x) on or prior to 9:00 a.m, New York City
time, on the date the Option Time of Delivery (as defined in the Underwriting
Agreement) is scheduled to occur, Dealer, in its good faith and commercially
reasonable judgment, is unable to borrow and deliver for sale the Full Number of
Shares or (y) in Dealer’s good faith and commercially reasonable judgment, it
would incur a stock loan cost of more than 50 basis points per annum with
respect to all or any portion of the Full Number of Shares (in each case, an
“Initial Hedging Disruption”), the effectiveness of this Confirmation and the
Transaction shall be limited to the number of Shares Dealer may borrow at a cost
of not more than 50 basis points per annum (such number of Shares, the “Reduced
Number of Shares”), which, for the avoidance of doubt, may be zero.

 

5.                                      Representations and Agreements of
Counterparty:  Counterparty represents and warrants to, and agrees with, Dealer
as of the date hereof that:

 

(a)                                 Counterparty shall promptly provide written
notice to Dealer upon obtaining knowledge of (i) the occurrence or announcement
of any event that would constitute an Event of Default as to which it is the
Defaulting Party or a Potential Adjustment Event or (ii) any Announcement Date
in respect of an Extraordinary Event; provided that should Counterparty be in
possession of material non-public information regarding Counterparty,
Counterparty shall not communicate such information to Dealer;

 

(b)                                 Counterparty will keep available at all
times, for the purpose of issuance upon settlement of the Transaction as herein
provided, the maximum number of Shares of Counterparty as may be issuable upon
settlement of

 

12

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the Transaction.  The Shares of Counterparty issuable from time to time upon
settlement of the Transaction have been duly authorized and, when delivered as
contemplated by the terms of the Transaction upon settlement of the Transaction,
will be validly issued, fully-paid and non-assessable, and the issuance of such
Shares will not be subject to any pre-emptive or similar rights;

 

(c)                                  [RESERVED]

 

(d)                                 Counterparty shall not take any action to
reduce or decrease the number of authorized and unissued Shares below the sum of
(i) the maximum number of Shares of Counterparty as may be issuable upon
settlement of the Transaction plus (ii) the total number of Shares issuable upon
settlement (whether by net share settlement or otherwise) of any other
transaction or agreement to which it is a party (or, if greater, the number of
Shares reserved by Counterparty for settlement of or delivery under such
transaction or agreement);

 

(e)                                  Counterparty will not repurchase any Shares
if, immediately following such repurchase, the Number of Shares plus the “Number
of Shares” under the letter agreement (the “Base Confirmation”), dated March 6,
2018, between Dealer and Counterparty, relating to the forward sale of Shares,
would be equal to or greater than 8.5% of the number of then-outstanding Shares
and it will notify Dealer promptly upon the announcement or consummation of any
repurchase of Shares that, taken together with the amount of all repurchases
since the date of the last such notice (or, if no such notice has been given,
the Trade Date for the Base Confirmation), would increase such percentage by
more than 1% of the number of then-outstanding Shares;

 

(f)                                   As of the Trade Date and as of the date of
any payment or delivery by Counterparty or Dealer hereunder, it is not and will
not be “insolvent” (as such term is defined under Section 101(32) of the
Bankruptcy Code);

 

(g)                                  Neither Counterparty nor any of its
“affiliated purchasers” (as defined by Rule 10b-18 under the Exchange Act
(“Rule 10b-18”)) shall take any action that would cause any purchases of Shares
by Dealer or any of its affiliates in connection with any Cash Settlement or Net
Share Settlement not to meet the requirements of the safe harbor provided by
Rule 10b-18 if such purchases were made by Counterparty.  Without limiting the
generality of the foregoing, during any Unwind Period, except with the prior
written consent of Dealer, Counterparty will not, and will cause its affiliated
purchasers (as defined in Rule 10b-18) not to, directly or indirectly
(including, without limitation, by means of a derivative instrument) purchase,
offer to purchase, place any bid or limit order that would effect a purchase of,
or announce or commence any tender offer relating to, any Shares (or equivalent
interest, including a unit of

 

13

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beneficial interest in a trust or limited partnership or a depository share) or
any security convertible into or exchangeable for the Shares.  However, the
foregoing shall not (a) limit Counterparty’s ability, pursuant to any issuer
“plan” (as defined in Rule 10b-18), to re-acquire Shares from employees in
connection with such plan or program, (b) limit Counterparty’s ability to
withhold Shares to cover tax liabilities associated with such a plan,
(c) prohibit any purchases effected by or for an issuer “plan” by an “agent
independent of the issuer” (each as defined in Rule 10b-18), (d) otherwise
restrict Counterparty’s or any of its affiliates’ ability to repurchase Shares
under privately negotiated, off-exchange transactions with any of its employees,
officers, directors, affiliates or any third party that are not expected to
result in market transactions or (e) limit Counterparty’s ability to grant stock
and options to “affiliated purchasers” (as defined in Rule 10b-18) or the
ability of such affiliated purchasers to acquire such stock or options in
connection with any issuer “plan” (as defined in Rule 10b-18) for directors,
officers and employees or any agreements with respect to any such plan for
directors, officers or employees of any entities that are acquisition targets of
Counterparty, and in connection with any such purchase under (a) through
(e) above, Counterparty will be deemed to represent to Dealer that such purchase
does not constitute a “Rule 10b-18 purchase” (as defined in Rule 10b-18);

 

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

 

(i)                                     During any Unwind Period, Counterparty
shall: (i) prior to the opening of trading in the Shares on any day on which
Counterparty makes, or expects to be made, any public announcement (as defined
in Rule 165(f) under the Securities Act) of any Merger Transaction, to the
extent permitted by applicable law but in no event later than the time such
announcement is first made, notify Dealer of such public announcement;
(ii) promptly notify Dealer following any such announcement that such
announcement has been made; (iii) promptly (but in any event prior to the next
opening of the regular trading session on the Exchange) provide Dealer with
written notice specifying (A) Counterparty’s average daily Rule 10b-18 Purchases
(as defined in Rule 10b-18) during the three full calendar months immediately
preceding the related announcement date that were not effected through Dealer or
its affiliates, if any, and (B) the number of Shares, if any, purchased pursuant
to the proviso in Rule 10b-18(b)(4) under the Exchange Act for the three full
calendar months preceding such announcement date.  Such written notice shall be
deemed to be a certification by Counterparty to Dealer that such information is
true and correct.  In addition, Counterparty shall promptly notify Dealer of the
earlier to occur of the completion of such transaction and the completion of the
vote by target shareholders.  Counterparty acknowledges that any

 

14

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such notice may result in a Regulatory Disruption or may affect the length of
any ongoing Unwind Period; accordingly, Counterparty acknowledges that its
delivery of such notice must comply with the standards set forth in
Section 11(c) of this Confirmation.  “Securities Act” means the Securities Act
of 1933, as amended.  “Merger Transaction” means any merger, acquisition or
similar transaction involving a recapitalization as contemplated by
Rule 10b-18(a)(13)(iv) under the Exchange Act;

 

(j)                                    Counterparty is an “eligible contract
participant” (as such term is defined in the Commodity Exchange Act, as amended)
and an “accredited investor” (as defined in Section 2(a)(15)(ii) of the
Securities Act);

 

(k)                                 Counterparty is not entering into the
Transaction, and will not elect Cash Settlement or Net Share Settlement, to
create actual or apparent trading activity in the Shares (or any security
convertible into or exchangeable for Shares) or to raise or depress or otherwise
manipulate the price of the Shares (or any security convertible into or
exchangeable for Shares), in either case in violation of the Exchange Act or any
other applicable securities laws;

 

(l)                                     Counterparty (i) is capable of
evaluating investment risks independently, both in general and with regard to
all transactions and investment strategies involving a security or securities;
(ii) will exercise independent judgment in evaluating the recommendations of any
broker-dealer or its associated persons, unless it has otherwise notified the
broker-dealer in writing; and (iii) has total assets of at least $50 million as
of the date hereof;

 

(m)                             Without limiting the generality of Section 13.1
of the Equity Definitions, Counterparty acknowledges that Dealer is not making
any representations or warranties with respect to the treatment of the
Transaction, including without limitation ASC Topic 260, Earnings Per Share, ASC
Topic 815, Derivatives and Hedging, FASB Statements 128, 133, as amended, 149 or
150, EITF 00-19, 01-6, 03-6 or 07-5, ASC Topic 480, Distinguishing Liabilities
from Equity, ASC 815-40, Derivatives and Hedging — Contracts in Entity’s Own
Equity (or any successor issue statements) or under the Financial Accounting
Standards Board’s Liabilities & Equity Project;

 

(n)                                 Counterparty is in compliance with its
reporting obligations under the Exchange Act and its most recent Annual Report
on Form 10-K, together with all reports subsequently filed or furnished by it
pursuant to the Exchange Act and all public statements by it, taken together and
as amended and supplemented to the date of this representation, do not, as of
their respective dates, contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary to

 

15

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make the statements therein, in the light of the circumstances under which they
were made, not misleading;

 

(o)                                 Counterparty is not aware of any material
non-public information regarding itself or the Shares; Counterparty is entering
into this Confirmation and will provide any settlement method election notice in
good faith and not as part of a plan or scheme to evade compliance with
Rule 10b-5 or any other provision of the federal securities laws; and
Counterparty has consulted with its own advisors as to the legal aspects of its
adoption and implementation of this Confirmation under Rule 10b5-1 under the
Exchange Act (“Rule 10b5-1”);

 

(p)                                 [RESERVED]

 

(q)                                 Counterparty is not, and after giving effect
to the transactions contemplated hereby will not be, required to register as an
“investment company” as such term is defined in the Investment Company Act of
1940, as amended;

 

(r)                                    Counterparty understands, agrees and
acknowledges that no obligations of Dealer to it hereunder shall be entitled to
the benefit of deposit insurance and that such obligations shall not be
guaranteed by any affiliate of Dealer or any governmental agency;

 

(s)                                   Counterparty: (i) is an “institutional
account” as defined in FINRA Rule 4512(c); and (ii) is capable of evaluating
investment risks independently, both in general and with regard to all
transactions and investment strategies involving a security or securities, and
will exercise independent judgment in evaluating any recommendations of Dealer
or its associated persons; and

 

(t)                                    COUNTERPARTY UNDERSTANDS THAT THE
TRANSACTION IS SUBJECT TO COMPLEX RISKS WHICH MAY ARISE WITHOUT WARNING AND
MAY AT TIMES BE VOLATILE AND THAT LOSSES MAY OCCUR QUICKLY AND IN UNANTICIPATED
MAGNITUDE AND IS WILLING TO ACCEPT SUCH TERMS AND CONDITIONS AND ASSUME
(FINANCIALLY AND OTHERWISE) SUCH RISKS.

 

6.                                      Issuance of Shares by Counterparty: 
Counterparty acknowledges and agrees that any Shares delivered by Counterparty
to Dealer on any Settlement Date or Net Share Settlement Date will be newly
issued. Counterparty further acknowledges and agrees that, except to the extent
that the Private Placement Procedures in Annex A apply, any Shares delivered by
Counterparty to Dealer on any Settlement Date or Net Share Settlement Date will
be (i) approved for listing or quotation on the Exchange, subject to official
notice of issuance and (ii) registered under the Exchange Act.  On the basis of
the Forward Letter (as hereinafter defined), such Shares, when delivered by
Dealer (or an affiliate of Dealer) to securities lenders from whom

 

16

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Dealer (or an affiliate of Dealer) borrowed Shares in connection with hedging
its exposure to the Transaction, will be freely saleable without further
registration or other restrictions under the Securities Act in the hands of
those securities lenders, irrespective of whether any such stock loan is
effected by Dealer or an affiliate of Dealer.  Accordingly, Counterparty agrees
that, except to the extent that the Private Placement Procedures in Annex A
apply, any Shares so delivered will not bear a restrictive legend and will be
deposited in, and the delivery thereof shall be effected through the facilities
of, the Clearance System.

 

7.                                      Termination on Bankruptcy:  The parties
hereto agree that, notwithstanding anything to the contrary in the Agreement or
the Equity Definitions, the Transaction constitutes a contract to issue a
security of Counterparty as contemplated by Section 365(c)(2) of the Bankruptcy
Code (as defined below) and that the Transaction and the obligations and rights
of Counterparty and Dealer (except for any liability as a result of breach of
any of the representations or warranties provided by Counterparty in Section 5
above) shall immediately terminate, without the necessity of any notice, payment
(whether directly, by netting or otherwise) or other action by Counterparty or
Dealer, if, on or prior to the final Settlement Date, Cash Settlement Payment
Date or Net Share Settlement Date, an Insolvency Filing occurs (a “Bankruptcy
Termination Event”).

 

8.                                      Special Dividends:  If an ex-dividend
date for a Special Dividend occurs on or after the Trade Date and on or prior to
the Maturity Date (or, if later, the last date on which Shares are delivered by
Counterparty to Dealer in settlement of the Transaction), Counterparty shall pay
to Dealer on the earlier of (i) the date on which such Special Dividend is paid
by the Issuer to holders of record of the Shares, (ii) the Designated Date where
the Undesignated Shares become equal to zero and (iii) the Maturity Date an
amount, as determined by the Calculation Agent, in cash equal to the product of
(a) per Share amount of such Special Dividend, and (b) the Remaining Amount on
such ex-dividend date.  “Special Dividend” means any cash dividend or
distribution declared by the Issuer with respect to the Shares that is specified
by the board of directors of the Issuer as an “extraordinary” dividend and that
Counterparty designates as a Special Dividend hereunder by written notice given
to Dealer promptly after the declaration of such dividend or distribution.
“Remaining Amount” means, at any time, the sum of (i) the number of Undesignated
Shares as of such time, (ii)(A) if any, the number of Designated Shares for any
Designated Date occurring prior to such time for which the related Unwind Period
has not been completed at such time minus (B) the number of Unwound Shares for
such Unwind Period at such time and (iii) if any Aggregate Net Share Number or
Net Share Settlement Number, as applicable, as of such time is (A) a positive
number and (B) has not been delivered by Counterparty to Dealer pursuant to “Net
Share Settlement” above, such Aggregate Net Share Number or Net Share Settlement
Number, as applicable.

 

9.                                      Acceleration Events:

 

(a)                                 Notwithstanding anything to the contrary
herein, in the Agreement or in the Equity Definitions, at any time following the
occurrence and during the continuation of an Acceleration Event, Dealer (or, in
the case of an Acceleration Event that is an Event of Default or a Termination
Event, the party that would be entitled to designate an Early Termination Date
in respect of such event pursuant to Section 6 of the Agreement) shall, by not

 

17

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more than 20 days’ notice to the other party, have the right to designate by
notice to the other party any Scheduled Trading Day not earlier than the day
such notice is effective to be the “Early Valuation Date” but which, in the case
of an Acceleration Event that results from the commencement of any proceeding
with respect to Counterparty under the Bankruptcy Code other than in a
Bankruptcy Termination Event, shall be the Scheduled Trading Day on which such
proceeding is commenced (or, if not commenced on such a day, the following
Scheduled Trading Day), in which case the provisions set forth in this Section 9
shall apply in lieu of Section 6 of the Agreement or Article 12 of the Equity
Definitions.

 

(b)                                 If the Early Valuation Date occurs on a date
that is not during an Unwind Period, then the Early Valuation Date shall be
deemed to be a Designated Date for a Physical Settlement, and the number of
Designated Shares for such Designated Date shall be the number of Undesignated
Shares on the Early Valuation Date; provided that in the case of an Acceleration
Event of the type described in paragraph (e)(iii) or (iv) below, the number of
Designated Shares for such Designated Date shall be only such number of
Designated Shares necessary so that such Acceleration Event shall no longer
exist after such Physical Settlement, as determined by the Calculation Agent;
and, provided, further, that in the case of an Acceleration Event of the type
described in paragraph (e)(i) below and resulting from the commencement of any
proceeding with respect to Counterparty under the Bankruptcy Code other than in
a Bankruptcy Termination Event, the Early Valuation Date shall be deemed to be
the last Unwind Date for a Cash Settlement and in such case the aggregate net
loss or cost reasonably determined by Dealer as of the related Early Valuation
Date in connection with unwinding its Hedge Positions shall be added to the
Forward Cash Settlement Amount (or, if an aggregate net gain is so determined,
such gain shall be subtracted therefrom).

 

(c)                                  If the Early Valuation Date occurs during
an Unwind Period, then (i) (A) the last Unwind Date of such Unwind Period shall
occur on the Early Valuation Date, (B) a settlement shall occur in respect of
such Unwind Period, and the settlement method elected by Counterparty in respect
of such settlement shall apply, and (C) the number of Designated Shares for such
settlement shall be deemed to be the number of Unwound Shares for such Unwind
Period on the Early Valuation Date, and (ii) (A) the Early Valuation Date shall
be deemed to be an additional Designated Date for a Physical Settlement and
(B) the number of Designated Shares for such additional Designated Date shall be
the Remaining Amount on the Early Valuation Date; provided that in the case of
an Acceleration Event of the type described in paragraph (e)(iii) or (iv) below,
the number of Designated Shares for such additional Designated Date shall be
only such number of Designated Shares necessary so that such Acceleration Event
shall no longer exist after such Physical Settlement, as determined by the
Calculation Agent; and, provided, further, that in the case of an

 

18

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Acceleration Event of the type described in paragraph (e)(i) below and resulting
from the commencement of any proceeding with respect to Counterparty under the
Bankruptcy Code other than in a Bankruptcy Termination Event, the Early
Valuation Date shall be deemed to be the last Unwind Date of an additional
Unwind Period for a Cash Settlement and the number of Designated Shares for such
settlement shall be deemed to be the Remaining Amount on the Early Valuation
Date and in such case the aggregate net loss or cost reasonably determined by
Dealer as of the related Early Valuation Date in connection with unwinding its
Hedge Positions shall be added to the Forward Cash Settlement Amount (or, if an
aggregate net gain is so determined, such gain shall be subtracted therefrom).

 

(d)                                 Notwithstanding the foregoing, in the case
of an Early Valuation Date that occurs due to an announcement of a
Nationalization or a Merger Event, if at the time of the related Settlement Date
or Net Share Settlement Date, as applicable, the Shares have changed into cash
or any other property or the right to receive cash or any other property, such
cash, other property or right shall be deliverable instead of such Shares.

 

(e)                                  “Acceleration Event” means:

 

(i)                                     any Event of Default or Termination
Event, other than an Event of Default or Termination Event that also constitutes
a Bankruptcy Termination Event, that would give rise to the right of either
party to designate an Early Termination Date pursuant to Section 6 of the
Agreement;

 

(ii)                                  the announcement of any event or
transaction that, if consummated, would result in a Merger Event, Tender Offer,
Nationalization, Delisting or Change in Law, in each case, as determined by the
Calculation Agent;

 

(iii)                               a Loss of Stock Borrow;

 

(iv)                              the declaration or payment by Counterparty of
any Extraordinary Dividend;

 

(v)                                 the occurrence of a Market Disruption Event
during an Unwind Period and the continuance of such Market Disruption Event for
at least eight Scheduled Trading Days;

 

(vi)                              the occurrence of an Excess Section 13
Ownership Position or Excess Regulatory Ownership Position; or

 

(vii)                           the occurrence of the Maturity Date during an
Unwind Period.

 

19

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10.                               Private Placement Procedures:  If either
Dealer or Counterparty reasonably determines in good faith, based on the advice
of counsel, that Counterparty will be unable to comply with the covenant set
forth in the second sentence of Section 6 of this Confirmation because of a
change in law or a change in the policy of the Securities and Exchange
Commission (“SEC”) or its staff (the “Staff”), or Dealer otherwise reasonably
determines, based on the advice of counsel, that in its reasonable opinion any
Shares to be delivered to Dealer by Counterparty hereunder may not be freely
returned by Dealer or its affiliates to securities lenders as contemplated by
Section 6 of this Confirmation (in either case without regard to exceptions
therein), then delivery of any such Shares (the “Restricted Shares”) shall be
effected pursuant to Annex A hereto, unless waived by Dealer.

 

11.                               Rule 10b5-1; Share Purchases by Dealer

 

(a)                                 The parties acknowledge that, following any
election of Cash Settlement or Net Share Settlement by Counterparty, this
Confirmation is intended to constitute a binding contract satisfying the
requirements of Rule 10b5-1(c) of the Exchange Act and agree that this
Confirmation shall be interpreted to comply with such requirements.

 

(b)                                 The times and prices at which Dealer (or its
agent or affiliate) purchases any Shares during any Unwind Period shall be at
Dealer’s good faith and commercially reasonable discretion.  Counterparty
acknowledges that during any Unwind Period Counterparty does not have, and shall
not attempt to exercise, any influence over how, when or whether to effect
purchases of Shares or any other transactions by Dealer (or its agent or
affiliate) in connection with this Confirmation. Counterparty agrees that during
any Unwind Period it will not enter into or alter any corresponding or hedging
transaction or position with respect to the Shares.

 

(c)                                  Counterparty hereby agrees with Dealer that
during any Unwind Period Counterparty shall not communicate, directly or
indirectly, any material non-public information (within the meaning of such term
under Rule 10b5-1) to any employee of Dealer (or its agents or affiliates) who
is directly involved with the hedging of, and trading with respect to, the
Transaction.  Counterparty acknowledges and agrees that any amendment,
modification, waiver or termination of the Transaction must be effected in
accordance with the requirements for the amendment or termination of a contract,
instruction or plan under Rule 10b5-1(c). Without limiting the generality of the
foregoing, any such amendment, modification, waiver or termination shall be made
in good faith and not as part of a plan or scheme to evade the prohibitions of
Rule 10b-5 under the Exchange Act, and no such amendment, modification or waiver
shall be made at any time at which Counterparty or any officer, director,
manager or similar person of Counterparty is aware of any material non-public
information regarding Counterparty or the Shares.

 

20

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(d)                                 Following any election of Cash Settlement or
Net Share Settlement by Counterparty, in addition to the representations,
warranties and covenants in the Agreement and elsewhere in this Confirmation,
Dealer represents, warrants and covenants to Counterparty that Dealer shall use
commercially reasonable efforts, during any Unwind Period, to make all purchases
of Shares in connection with such election in a manner that would comply with
the limitations set forth in clauses (b)(1), (b)(2), (b)(3) and (b)(4) and
(c) of Rule 10b-18, as if such rule were applicable to such purchases (and
considering only such purchases when determining compliance with the foregoing
provisions), after taking into account any applicable SEC no-action letters as
appropriate, subject to any delays between the execution and reporting of a
trade of the Shares on the Exchange and other circumstances beyond Dealer’s
control; provided that, during any Unwind Period, the foregoing agreement shall
not apply to purchases made to dynamically hedge for Dealer’s own account or the
account of its affiliate(s) the optionality arising under in connection with
such Settlement (including, for the avoidance of doubt, timing optionality); and
provided, further, that, without limiting the generality of the first sentence
of this paragraph (d), Dealer shall not be responsible for any failure to comply
with Rule 10b-18(b)(3) to the extent any transaction that was executed (or
deemed to be executed) by or on behalf of Counterparty or an “affiliated
purchaser” (as defined under Rule 10b-18) pursuant to a separate agreement is
not deemed to be an “independent bid” or an “independent transaction” for
purposes of Rule 10b-18(b)(3).

 

12.                               Capped Number of Shares:  Notwithstanding any
other provision of the Agreement or this Confirmation, in no event will
Counterparty be required to deliver in the aggregate in respect of all
Settlement Dates, Net Share Settlement Dates or other dates on which Shares are
delivered in respect of any amount owed under this Confirmation a number of
Shares greater than the product of 1.5 and the Number of Shares (the “Capped
Number”). Counterparty represents and warrants to Dealer (which representation
and warranty shall be deemed to be repeated on each day that the Transaction is
outstanding) that the Capped Number is equal to or less than the number of
authorized but unissued Shares that are not reserved for future issuance in
connection with transactions in the Shares (other than the Transaction) on the
date of the determination of the Capped Number (such Shares, the “Available
Shares”).  In the event Counterparty shall not have delivered the full number of
Shares otherwise deliverable as a result of this Section 12 (the resulting
deficit, the “Deficit Shares”), Counterparty shall be obligated to deliver
Shares, from time to time until the full number of Deficit Shares have been
delivered pursuant to this paragraph, when, and to the extent, that (A) Shares
are repurchased, acquired or otherwise received by Counterparty or any of its
subsidiaries after the Trade Date (whether or not in exchange for cash, fair
value or any other consideration) and are not required to be used for any other
purpose, (B) authorized and unissued Shares reserved for issuance in respect of
other transactions as of the Trade Date become no longer so reserved and (C) 
Counterparty authorizes any additional unissued Shares that are not reserved for
other transactions (such events as set forth in clauses (A), (B) and (C) above,
collectively, the “Share Issuance Events”).  Counterparty shall promptly notify
Dealer of the occurrence of any of the Share Issuance Events (including the
number of Shares subject to clause (A), (B) or (C) and the corresponding number

 

21

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of Shares to be delivered) and, as promptly as reasonably practicable after such
Share Issuance Event (or, if later, on the Settlement Date or the date of any
Private Placement Settlement for which there are Deficit Shares), deliver such
Shares. Counterparty shall not, until Counterparty’s obligations under the
Transaction have been satisfied in full, use any Shares that become available
for potential delivery to Dealer as a result of any Share Issuance Event for the
settlement or satisfaction of any transaction or obligation other than the
Transaction, the “Transaction” under the Base Confirmation or any other forward
transaction under a confirmation entered into by the Counterparty and another
dealer pursuant to the Underwriting Agreement or pursuant to any other equity
distribution agreement related to the Shares (each, an “Other Dealer’s
Transaction”) or reserve any such Shares for future issuance for any purpose
other than to satisfy Counterparty’s obligations to Dealer under the
Transaction, the “Transaction” under the Base Confirmation or any Other Dealer’s
Transaction.  Allocation of any Shares that become available for potential
delivery to Dealer or any dealer party to an Other Dealer’s Transaction as a
result of any Share Issuance Event shall be allocated to the Transaction, the
“Transaction” under the Base Confirmation and any Other Dealer’s Transaction on
a ratable basis in accordance with the respective remaining Share delivery
obligations thereunder.

 

13.                               Transfer, Assignment and Designation:

 

(a)                                 Notwithstanding any provision of the
Agreement to the contrary, Dealer may assign, transfer and set over all rights,
title and interest, powers, privileges and remedies of Dealer under the
Transaction, in whole or part, to an affiliate of Dealer without the consent of
Counterparty; provided that (i) no Event of Default, Potential Event of Default
or Termination Event with respect to which Dealer or such affiliate is the
Defaulting Party or an Affected Party, as the case may be, exists or would
result therefrom, (ii) no Acceleration Event or other event giving rise to a
right or responsibility to designate an Early Valuation Date or otherwise
terminate or cancel the Transaction or to make an adjustment to the terms of the
Transaction would result therefrom, and (iii) Counterparty shall not, as a
result of such assignment or transfer, (A) be required to pay to Dealer or such
affiliate an additional amount in respect of an Indemnifiable Tax, (B) receive a
payment from which an amount is required to be deducted or withheld for or on
account of a Tax as to which no additional amount is required to be paid, or
(C) become subject to the jurisdiction of any state or country other than the
United States of America.

 

(b)                                 Notwithstanding any other provision in this
Confirmation to the contrary requiring or allowing Dealer to purchase, sell,
receive or deliver any Shares or other securities to or from Counterparty,
Dealer may designate any of its affiliates to purchase, sell, receive or deliver
such Shares or other securities and otherwise to perform Dealer’s obligations in
respect of the Transaction and any such designee may assume such obligations. 
Dealer shall be discharged of its obligations to Counterparty to the extent of
any such performance.

 

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14.                               Indemnity:  Counterparty agrees to indemnify
Dealer and its affiliates and their respective directors, officers, agents and
controlling parties (Dealer 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, that arise out of, are in connection with, or relate to, a breach of any
covenant or representation made by Counterparty in this Confirmation or the
Agreement, and Counterparty will reimburse any Indemnified Party for all
reasonable expenses (including reasonable legal fees and expenses) 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. Counterparty will not be liable under
this Indemnity paragraph to the extent that any such loss, claim, damage,
liability or expense results from an Indemnified Party’s gross negligence, bad
faith or willful misconduct or Dealer’s breach of this Confirmation or the
Agreement. If for any reason the foregoing indemnification is unavailable to any
Indemnified Party or insufficient to hold harmless any Indemnified Party, then
Counterparty shall contribute, to the maximum extent permitted by law, to the
amount paid or payable by the Indemnified Party as a result of such loss, claim,
damage or liability not resulting from its gross negligence, bad faith or
willful misconduct, provided that no person guilty of fraudulent
misrepresentation shall be entitled to contribution.

 

15.                               No Collateral; Netting; Setoff:

 

(a)                                 Notwithstanding any provision of the
Agreement or any other agreement between the parties to the contrary, the
obligations of Counterparty hereunder are not secured by any collateral.

 

(b)                                 If on any date any Shares would otherwise be
deliverable under the Transaction or the Base Confirmation by Counterparty to
Dealer and by Dealer to Counterparty, then, on such date, each party’s
obligations to make delivery of such Shares will be automatically satisfied and
discharged and, if the aggregate number of Shares that would otherwise have been
deliverable by one party exceeds the aggregate number of Shares that would have
otherwise been deliverable by the other party, replaced by an obligation upon
the party by whom the larger aggregate number of Shares would have been
deliverable to deliver to the other party the excess of the larger aggregate
number over the smaller aggregate number.

 

(c)                                  The parties agree that upon the occurrence
of an Event of Default or Termination Event with respect to a party who is the
Defaulting Party or the Affected Party (“X”), the other party (“Y”) will have
the right (but not be obliged) without prior notice to X or any other person to
set-off or apply any obligation of X owed to Y (or any affiliate of Y) (whether
or not matured or contingent and whether or not arising under the Agreement, and
regardless of the currency, place of payment or booking office of the
obligation) against any obligation of Y (or any affiliate of Y) owed to X
(whether or not matured or contingent and whether or not arising under the
Agreement, and regardless of the currency, place of payment or booking

 

23

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office of the obligation).  Y will give notice to the other party of any set-off
effected under this Section 15.

 

(d)                                 Amounts (or the relevant portion of such
amounts) subject to set-off may be converted by Y into the Termination Currency
or into Shares, at the election of Y, at the rate of exchange at which such
party would be able, acting in a reasonable manner and in good faith, to
purchase the relevant amount of such currency or Shares.  If any obligation is
unascertained, Y may in good faith estimate that obligation and set-off in
respect of the estimate, subject to the relevant party accounting to the other
when the obligation is ascertained.  Nothing in this Section 15 shall be
effective to create a charge or other security interest.  This Section 15 shall
be without prejudice and in addition to any right of set-off, combination of
accounts, lien or other right to which any party is at any time otherwise
entitled (whether by operation of law, contract or otherwise).

 

(e)                                  Notwithstanding anything to the contrary in
the foregoing, Dealer agrees not to set off or net amounts due from Counterparty
with respect to the Transaction against amounts due from Dealer (or its
affiliate) to Counterparty with respect to contracts or instruments that are not
Equity Contracts; provided, however, that, and notwithstanding any provision to
the contrary set forth in this Confirmation or in the Agreement, Dealer may not
use this provision or any other set-off or recoupment right under this
Confirmation or the Agreement as a basis for any action under or nonperformance
of its obligations under any loan, letter of credit or other borrowing
arrangement with Counterparty as borrower and to which Dealer or any affiliate
of Dealer is a participating lender, with respect to which the terms of such
loan, letter of credit or other borrowing arrangement shall control.  “Equity
Contract” means any transaction or instrument that does not convey to Dealer
rights, or the ability to assert claims, that are senior to the rights and
claims of common stockholders in the event of Counterparty’s bankruptcy.

 

16.                               Delivery of Cash:  For the avoidance of doubt,
nothing in this Confirmation shall be interpreted as requiring Counterparty to
deliver cash in respect of the settlement of the Transaction, except (i) as set
forth under Section 8 above or (ii) in circumstances where the cash settlement
thereof is within Counterparty’s control (including, without limitation, where
Counterparty so elects to deliver cash or fails timely to deliver Shares in
respect of such settlement).  For the avoidance of doubt, the preceding sentence
shall not be construed as limiting any damages that may be payable by
Counterparty as a result of a breach of or an indemnity under this Confirmation
or the Agreement.

 

17.                               Status of Claims in Bankruptcy:  Dealer
acknowledges and agrees that this Confirmation is not intended to convey to
Dealer rights with respect to the transactions contemplated hereby that are
senior to the claims of common stockholders in any U.S. bankruptcy proceedings
of Counterparty; provided that nothing herein shall limit or shall be deemed to
limit Dealer’s right to pursue remedies in the event of a breach by Counterparty
of its

 

24

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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
Dealer’s rights in respect of any transaction other than the Transaction.

 

18.                               Limit on Beneficial Ownership: 
Notwithstanding anything to the contrary in the Agreement or this Confirmation,
in no event shall Dealer be entitled to receive, or be deemed to receive, Shares
to the extent that, upon such receipt of such Shares, and after taking into
account any Shares concurrently delivered by Seller under the Base
Confirmation,  (i) the “beneficial ownership” (within the meaning of Section 13
of the Exchange Act and the rules promulgated thereunder) of Shares by Dealer,
any of its affiliates’ business units subject to aggregation with Dealer for
purposes of the “beneficial ownership” test under Section 13 of the Exchange Act
and all persons who may form a “group” (within the meaning of
Rule 13d-5(b)(1) under the Exchange Act) with Dealer with respect to “beneficial
ownership” of any Shares (collectively, “Dealer Group”) would be equal to or
greater than 8.5% of the outstanding Shares (an “Excess Section 13 Ownership
Position”) or (ii) Dealer, Dealer Group or any person whose ownership position
would be aggregated with that of Dealer or Dealer Group (Dealer, Dealer Group or
any such person, a “Dealer Person”) under Section 203 of the Delaware General
Corporation Law (the “DGCL Takeover Statute”) or any state or federal bank
holding company or banking laws, or other federal, state or local laws
(including, without limitation, the Federal Power Act), regulations or
regulatory orders applicable to ownership of Shares (“Applicable Laws”), would
own, beneficially own, constructively own, control, hold the power to vote or
otherwise meet a relevant definition of ownership in excess of a number of
Shares equal to (x) the lesser of (A) the maximum number of Shares that would be
permitted under Applicable Laws and (B) the number of Shares that would give
rise to reporting or registration obligations or other requirements (including
obtaining prior approval by a state or federal regulator, such as a state or
federal banking regulator or the Federal Energy Regulatory Commission) of a
Dealer Person under Applicable Laws (including, without limitation, “interested
stockholder” or “acquiring person” status under the DGCL Takeover Statute) and
with respect to which such requirements have not been met or the relevant
approval has not been received or that would give rise to any consequences under
the constitutive documents of Counterparty or any contract or agreement to which
Counterparty is a party, in each case minus (y) 1% of the number of Shares
outstanding on the date of determination (such condition described in clause
(ii), an “Excess Regulatory Ownership Position”).  Dealer shall notify
Counterparty promptly if, at any time, an Excess Section 13 Ownership Position
or an Excess Regulatory Ownership Position has occurred or would occur as a
result of a delivery by Counterparty to Dealer.  If any delivery owed to Dealer
hereunder is not made, in whole or in part, as a result of this provision,
Counterparty’s obligation to make such delivery shall not be extinguished and
Counterparty shall make such delivery as promptly as practicable after, but in
no event later than one Exchange Business Day after, Dealer gives notice to
Counterparty that such delivery would not result in (x) Dealer Group directly or
indirectly so beneficially owning in excess of 8.5% of the outstanding Shares or
(y) the occurrence of an Excess Regulatory Ownership Position.

 

19.                               Acknowledgements:

 

(a)                                 Counterparty acknowledges that:

 

25

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(i)                                     During the term of the Transaction,
Dealer and its affiliates may buy or sell Shares or other securities or buy or
sell options or futures contracts or enter into swaps or other derivative
securities in order to establish, adjust or unwind its hedge position with
respect to the Transaction.

 

(ii)                                  Dealer and its affiliates may also be
active in the market for the Shares and derivatives linked to the Shares other
than in connection with hedging activities in relation to the Transaction,
including acting as agent or as principal and for its own account or on behalf
of customers.

 

(iii)                               Dealer shall make its own determination as
to whether, when or in what manner any hedging or market activities in
Counterparty’s securities shall be conducted and shall do so in a manner that it
deems appropriate to hedge its price and market risk with respect to the
Settlement Price.

 

(iv)                              Any market activities of Dealer and its
affiliates with respect to the Shares may affect the market price of the Shares,
as well as any Settlement Price, each in a manner that may be adverse to
Counterparty.

 

(v)                                 The Transaction is a derivative transaction;
Dealer and its affiliates may purchase or sell Shares for their own account at
prices that may be greater than, or less than, the prices paid or received by
Counterparty under the terms of the Transaction.

 

(b)                                 The parties intend for this Confirmation to
constitute a “Contract” as described in the letter dated October 6, 2003
submitted on behalf of GS&Co. to Paula Dubberly of the Staff to which the Staff
responded in an interpretive letter dated October 9, 2003 (the “Forward
Letter”).

 

(c)                                  The parties hereto intend for:

 

(i)                                     this Transaction to be a “securities
contract” as defined in Section 741(7) of the Bankruptcy Code, qualifying for
the protections under Sections 362(b)(6), 362(b)(27), 362(o), 546(e), 546(j),
548(d)(2), 555 and 561 of the Bankruptcy Code;

 

(ii)                                  the rights given to Dealer pursuant to
“Acceleration Events” in Section 9 above to constitute “contractual rights” to
cause the liquidation of a “securities contract” and to set off mutual debts and
claims in connection with a “securities contract”, as such terms are used in
Sections 555 and 362(b)(6) of the Bankruptcy Code;

 

(iii)                               Dealer to be a “financial institution”
within the meaning of Section 101(22) of the Bankruptcy Code;

 

26

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(iv)                              any cash, securities or other property
provided as performance assurance, credit support or collateral with respect to
the Transaction to constitute “margin payments” and “transfers” under a
“securities contract” as defined in the Bankruptcy Code;

 

(v)                                 all payments for, under or in connection
with the Transaction, all payments for Shares and the transfer of Shares to
constitute “settlement payments” and “transfers” under a “securities contract”
as defined in the Bankruptcy Code; and

 

(vi)                              any or all obligations that either party has
with respect to this Confirmation or the Agreement to constitute property held
by or due from such party to margin, guaranty or settle obligations of the other
party with respect to the transactions under the Agreement (including the
Transaction) or any other agreement between such parties.

 

(d)                                 In addition to the representations and
warranties in the Agreement and elsewhere in this Confirmation, Dealer
represents and warrants to Counterparty that it is an “eligible contract
participant” (as such term is defined in the Commodity Exchange Act, as amended)
and an “accredited investor” (as defined in Section 2(a)(15)(ii) of the
Securities Act) and that it is entering into the Transaction as principal and
not for the benefit of any third party.

 

20.                               Wall Street Transparency and Accountability
Act.  In connection with Section 739 of the Wall Street Transparency and
Accountability Act of 2010 (“WSTAA”), the parties hereby agree that neither the
enactment of WSTAA or any regulation under the WSTAA, nor any requirement under
WSTAA or an amendment made by WSTAA, shall limit or otherwise impair either
party’s otherwise applicable rights to terminate, renegotiate, modify, amend or
supplement this Confirmation or the Agreement, as applicable, arising from a
termination event, force majeure, illegality, increased costs, regulatory change
or similar event under this Confirmation, the Swap Definitions or Equity
Definitions incorporated herein or the Agreement (including, but not limited to,
rights arising from an Acceleration Event, Increased Cost of Stock Borrow, any
condition described in clause (i) of Section 18, an Excess Regulatory Ownership
Position or Illegality (as defined in the Agreement)).

 

27

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21.                               London Branch.  Dealer is entering into this
Confirmation and the Agreement through its London Branch.  Notwithstanding the
foregoing, Dealer represents to Counterparty that the obligations of Dealer are
the same as if it had entered into this Confirmation and the Agreement through
its head or home office in New York.

 

22.                               Communications with Employees of J.P. Morgan
Securities LLC. If Counterparty interacts with any employee of J.P. Morgan
Securities LLC with respect to the Transaction, Counterparty is hereby notified
that such employee will act solely as an authorized representative of Dealer
(and not as a representative of J.P. Morgan Securities LLC) in connection with
the Transaction.

 

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

 

(a)                                 Address for notices or communications to
Dealer:

 

JPMorgan Chase Bank, National Association, London Branch

Attention:  EDG Marketing Support
Email:

 

with a copy to:

 

J.P. Morgan Securities LLC

Attention:  Santosh Sreenivasan, Managing Director
Telephone:
Email:

 

(b)                                 Address for notices or communications to
Counterparty:

 

Address:                                                 Jack Sullivan
Corporate Finance Director and Assistant Treasurer
Duke Energy Corporation
550 South Tryon Street
Charlotte, NC 28202
Telephone: 
Email:

 

(c)                                  Section 12(a) of the Agreement hereby is
amended by adding, immediately before the comma, the words “or, in the case of
e-mail, on the date it is delivered.”

 

24.                               Waiver of Right to Trial by Jury:  EACH OF
COUNTERPARTY AND DEALER HEREBY IRREVOCABLY WAIVES (ON SUCH PARTY’S OWN BEHALF
AND, TO THE EXTENT PERMITTED BY APPLICABLE LAW, ON BEHALF OF SUCH PARTY’S
STOCKHOLDERS) ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR
RELATING TO THIS CONFIRMATION OR THE ACTIONS OF COUNTERPARTY AND DEALER OR ANY
OF THEIR AFFILIATES IN THE NEGOTIATION, PERFORMANCE OR ENFORCEMENT HEREOF.

 

28

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25.                               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 the Agreement; provided 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 of the Agreement 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.

 

26.                               Tax Disclosure:  Notwithstanding anything to
the contrary herein, in the Equity Definitions or in the Agreement, and
notwithstanding any express or implied claims of exclusivity or proprietary
rights, the parties (and each of their employees, representatives or other
agents) are authorized to disclose to any and all persons, beginning immediately
upon commencement of their discussions and without limitation of any kind, the
tax treatment and tax structure of the Transaction, and all materials of any
kind (including opinions or other tax analyses) that are provided by either
party to the other relating to such tax treatment and tax structure.

 

27.                               Schedule Provisions:

 

(a)                                 For so long as the Agreement is in the form
of the 1992 ISDA Master Agreement, for purposes of Section 6(e) of the Agreement
and this Transaction:

 

(i)                                     Loss will apply.

 

(ii)                                  The Second Method will apply.

 

(b)                                 The Termination Currency shall be USD.

 

(c)                                  Other:

 

The text beginning with the word “if” in Section 5(a)(i) of the Agreement shall
be amended to read as follows: “if such failure is not remedied on or before the
second Local Business Day after notice of such failure is given to the party.”

 

Cross Default: The provisions of Section 5(a)(vi) of the Agreement will apply to
Dealer and will apply to Counterparty with a Threshold Amount of 3% of
shareholders equity for each of Dealer and Counterparty (provided that, in each
case, (a) the text “, or becoming capable at such time of being declared,” shall
be deleted from Section 5(a)(vi)(1) of the Agreement, (b) the following
provision shall be added to the end of Section 5(a)(vi) of the Agreement: “but a
default under clause (2) above

 

29

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shall not constitute an Event of Default if (x) the default was caused solely by
error or omission of an administrative or operational nature, (y) funds were
available to enable the party to make the payment when due and (z) the payment
is made within two Local Business Days of such party’s receipt of written notice
of its failure to pay” and (c) the term “Specified Indebtedness” shall have the
meaning specified in Section 14 of the Agreement, except that such term shall
not include obligations in respect of deposits received in the ordinary course
of a party’s banking business).

 

The “Automatic Early Termination” provision of Section 6(a) of the Agreement
will not apply to Dealer and will not apply to Counterparty.

 

(d)                                 Part 2(b) of the ISDA Schedule — Payee
Representation:

 

For the purpose of Section 3(f) of the Agreement, Counterparty makes the
following representation to Dealer:

 

Counterparty is a corporation established under the laws of the State of
Delaware and is a U.S. person (as that term is defined in Section 7701(a)(30) of
the United States Internal Revenue Code of 1986, as amended).

 

For the purpose of Section 3(f) of the Agreement, Dealer makes the following
representation to Counterparty:

 

Dealer is a national banking association organized or formed under the laws of
the United States and is an exempt recipient under U.S. Treasury Regulation
Section 1.6049-4(c)(1)(ii)(M).

 

(e)                                  Part 3(a) of the ISDA Schedule — Tax Forms:

 

Party Required to Deliver Document

 

 

 

Form/Document/Certificate

 

Date by which to be Delivered

Counterparty

 

A complete and duly executed United States Internal Revenue Service Form W-9 (or
successor thereto.)

 

(i) Upon execution and delivery of the Agreement; (ii) promptly upon reasonable
demand by Dealer; and (iii) promptly upon learning that any such Form previously
provided by Counterparty has become obsolete or incorrect.

Dealer

 

A complete and duly executed United States Internal Revenue Service Form W-9 (or
successor thereto.)

 

(i) Upon execution and delivery of the Agreement; and (ii) promptly upon
learning that any such Form previously provided by Dealer has become obsolete or
incorrect.

 

(f)                                   Section 2(c) will not apply to the
Transaction.

 

30

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(g)                                  Section 12(a)(ii) of the Agreement hereby
is amended by deleting the text thereof and inserting “[Reserved]” in place of
such text.  Section 12(b) of the Agreement hereby is amended by striking the
word “telex” and the comma immediately preceding such word.  For the avoidance
of doubt, the text “electronic messaging system” as used in Section 12 of the
Agreement shall mean only electronic mail (also known as e-mail).

 

28.                               Any calculation, adjustment, judgment or other
determination made hereunder by Dealer or any of its affiliates with respect to
the Transaction (including, for the avoidance of doubt, in its capacity as
Calculation Agent) shall be furnished to Counterparty by Dealer as soon as is
reasonably practicable, together with a report (in a commonly used file format
for storage and manipulation of financial data but without disclosing any
proprietary models of the Calculation Agent or other information that may be
proprietary or subject to contractual, legal or regulatory obligations to not
disclose such information) displaying in reasonable detail such calculation,
adjustment judgment or other determination, as the case may be, and the basis
therefor; provided, that, in the case of determinations that are not
calculations, adjustments or other amounts, such a report shall be required only
to the extent that such a report is reasonably necessary to show such
determination or the basis therefor because such determination or basis is not
apparent and such a report shall not be required where such determination is
stated to be at Dealer’s sole election or discretion.

 

29.                               “Tax” and “Indemnifiable Tax” as defined in
Section 14 of the Agreement shall not include (i) any tax imposed on payments
treated as dividends from sources within the United States under
Section 871(m) of the United States Internal Revenue Code of 1986, as amended
(the “Code”), or any regulations issued thereunder (a “Section 871(m) Tax”) or
(ii) any U.S. federal withholding tax imposed or collected pursuant to Sections
1471 through 1474 of the Code, any current or future regulations or official
interpretations thereof, any agreement entered into pursuant to
Section 1471(b) of the Code, or any fiscal or regulatory legislation, rules or
practices adopted pursuant to any intergovernmental agreement entered into in
connection with the implementation of such Sections of the Code (a “FATCA
Withholding Tax”).  For the avoidance of doubt, each of a Section 871(m) Tax and
a FATCA Withholding Tax is a Tax the deduction or withholding of which is
required by applicable law for the purposes of Section 2(d) of the Agreement.

 

30.                               Other Forward Transactions.  Counterparty
agrees that it shall not cause to occur, or permit to exist, an Unwind Period at
any time that there is an “Unwind Period” (or equivalent term) under any Other
Dealer’s Transaction.

 

[Signature page to follow.  Remainder of page intentionally left blank.]

 

31

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Yours sincerely,

 

 

 

 

 

JPMORGAN CHASE BANK,
NATIONAL ASSOCIATION,
LONDON BRANCH

 

 

 

By:

/s/ Kevin Cheng

 

Name:

Kevin Cheng

 

Title:

Vice President

 

--------------------------------------------------------------------------------

 

Confirmed as of the date first above written:

 

DUKE ENERGY CORPORATION

 

 

 

By:

/s/ John L. Sullivan, III

 

 

Name: John L. Sullivan, III

 

 

Title: Assistant Treasurer

 

 

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SCHEDULE I

 

FORWARD PRICE REDUCTION DATES AND AMOUNTS

 

Schedule I-1

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ANNEX A

 

PRIVATE PLACEMENT PROCEDURES

 

If Counterparty delivers Restricted Shares pursuant to Section 10 above (a
“Private Placement Settlement”), then:

 

(a)                                 the delivery of Restricted Shares by
Counterparty shall be effected in accordance with customary private placement
procedures for issuers comparable to Counterparty with respect to such
Restricted Shares reasonably acceptable to Dealer.  Counterparty shall not take,
or cause 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
Counterparty to Dealer (or any affiliate designated by Dealer) of the Restricted
Shares or the exemption pursuant to Section 4(a)(1) or Section 4(a)(3) of the
Securities Act for resales of the Restricted Shares by Dealer (or any such
affiliate of Dealer);

 

(b)                                 as of or prior to the date of delivery,
Dealer and any potential purchaser of any such Restricted Shares from Dealer (or
any affiliate of Dealer designated by Dealer) identified by Dealer shall be
afforded a commercially reasonable opportunity to conduct a due diligence
investigation with respect to Counterparty customary in scope for
similarly-sized private placements of equity securities for issuers comparable
to Counterparty (including, without limitation, the right to have made available
to them for inspection all financial and other records, pertinent corporate
documents and other information reasonably requested by them); provided that,
prior to receiving or being granted access to any such information, any such
potential purchaser may be required by Counterparty to enter into a customary
non-disclosure agreement with Counterparty in respect of any such due diligence
investigation;

 

(c)                                  as of the date of delivery, Counterparty
shall enter into an agreement (a “Private Placement Agreement”) with Dealer (or
any affiliate of Dealer designated by Dealer) in connection with the private
placement of such Restricted Shares by Counterparty to Dealer (or any such
affiliate) and the private resale of such Restricted Shares by Dealer (or any
such affiliate), substantially similar to private placement purchase agreements
customary for private placements of equity securities of similar size for
issuers comparable to Counterparty, in form and substance commercially
reasonably satisfactory to Dealer, which Private Placement Agreement shall
include, without limitation, provisions substantially similar to those contained
in such private placement purchase agreements relating, without limitation, to
the mutual indemnification of, and contribution in connection with the liability
of the parties and the provision of customary opinions, accountants’ comfort
letters and lawyers’ negative assurance

 

Annex A - 1

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letters, and shall provide for the payment by Counterparty of all reasonable
fees and expenses in connection with such resale, including all reasonable fees
and expenses of counsel for Dealer, and shall contain representations,
warranties, covenants and agreements of Counterparty customary for issuers
comparable to Counterparty and reasonably necessary or advisable to establish
and maintain the availability of an exemption from the registration requirements
of the Securities Act for such resales; and

 

(d)                                 in connection with the private placement of
such Restricted Shares by Counterparty to Dealer (or any such affiliate) and the
private resale of such Restricted Shares by Dealer (or any such affiliate),
Counterparty shall, if so requested by Dealer, prepare, in cooperation with
Dealer, a private placement memorandum customary for comparable private
placements and issuers comparable to Counterparty and otherwise in form and
substance reasonably satisfactory to Dealer.

 

In the case of a Private Placement Settlement, Dealer shall, in its good faith
discretion, adjust the amount of Restricted Shares to be delivered to Dealer
hereunder and/or the applicable Daily Forward Price(s) in a commercially
reasonable manner to reflect the fact that such Restricted Shares may not be
freely returned to securities lenders by Dealer and may only be saleable by
Dealer at a discount to reflect the lack of transferability and liquidity in
Restricted Shares based on actual charges incurred or discounts given.

 

If Counterparty delivers any Restricted Shares in respect of the Transaction,
Counterparty agrees that (i) such Shares may be transferred by and among Dealer
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, Counterparty shall (so long as Dealer or any such affiliate is
not an “affiliate” of Counterparty 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 transfer restrictions from such Shares upon
delivery by Dealer (or such affiliate of Dealer) to Counterparty or such
transfer agent of seller’s and broker’s representation letters customarily
delivered 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 Dealer (or such affiliate of Dealer).

 

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