Exhibit 10.1

CONFIRMATION

April 20, 2012

 

To:    PPL Corporation    Two North Ninth Street    Allentown, PA 18101-1179
From:    Morgan Stanley & Co. LLC    1585 Broadway    New York, NY 10036-8293

 

 

Dear Sirs,

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

 

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

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

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

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

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

 

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

General Terms:

 

Party A:    Morgan Stanley & Co. LLC Party B:    PPL Corporation Trade Date:   
April 20, 2012 Effective Date:    April 25, 2012 Base Amount:    Initially,
295,440 Shares, subject to the provisions set forth under “Conditions to
Effectiveness” below. On each Settlement Date, the Base Amount shall be reduced
by the number of Settlement Shares for such Settlement Date. Maturity Date:   
The earlier of (i) July 10, 2013 (or, if such date is not a Scheduled Trading
Day, the next following Scheduled Trading Day) and (ii) the date on which the
Base Amount is reduced to zero. Forward Price:    On the Effective Date, the
Initial Forward Price, and on any other day, the Forward Price as of the
immediately preceding calendar day multiplied by the sum of (i) 1 and (ii) the
Daily Rate for such day; provided that on each Forward Price Reduction Date, the
Forward Price in effect on such date shall be the Forward Price otherwise in
effect on such date minus the Forward Price Reduction Amount for such Forward
Price Reduction Date. Initial Forward Price:    USD $27.02 per Share. Daily
Rate:    For any day, (i)(A) USD-Federal Funds Rate for such day minus (B) the
Spread divided by (ii) 365.

 

-2-

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

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

 

-3-

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

Settlement Terms:

 

Settlement Date:

  

 

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

Settlement Shares:    With respect to any Settlement Date other than the
Maturity Date, a number of Shares, not to exceed the Base Amount, designated as
such by Party A pursuant to “Termination Settlement” below, or with respect to
the Maturity Date, the Base Amount on such date. Settlement Method:    Physical
Settlement, Cash Settlement or Net Share Settlement. Settlement Method Election:
   Applicable, at the election of Party B as set forth in a Settlement Notice
that satisfies the Settlement Notice Requirements; provided that Physical
Settlement shall apply (i) if no Settlement Method is validly selected, (ii)
with respect to any Settlement

 

-4-

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

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

 

-5-

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

  

and including, the date that precedes such Settlement Date by one Settlement
Cycle, subject to “Termination Settlement” below. If any Unwind Day is a
Disrupted Day, the Calculation Agent shall make commercially reasonable
adjustments to the terms of this Transaction (including, without limitation, the
Cash Settlement Amount and the 10b-18 VWAP) to account for the occurrence of
such Disrupted Day, with such adjustments to be based, in the Calculation
Agent’s commercially reasonable judgment, on, among other factors, the duration
of any Market Disruption Event, if any, giving rise to such Disrupted Day and
the volume, historical trading patterns and trading price of the Shares.

 

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

Suspension Day:    Any Exchange Business Day on which Party A reasonably
determines based on the advice of counsel that it is appropriate or necessary in
light of legal, regulatory or self-regulatory requirements or related policies
or procedures for Party A to refrain from the market activity in which it would
otherwise engage in connection its hedge positions with respect to this
Transaction on such day. Party A shall notify Party B if it receives such advice
from its counsel.

 

-6-

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

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

 

-7-

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

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

 

-8-

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

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

 

-9-

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

Settlement Currency:    USD. Failure to Deliver:    Inapplicable. Other
Applicable Provisions:    To the extent Party B is obligated to deliver Shares
to Party A pursuant hereto, the provisions of Sections 9.2 (last sentence only),
9.8, 9.9, 9.10 and 9.11 of the 2002 Definitions will be applicable as if
“Physical Settlement” applied to the Transaction; provided that each
representation in Section 9.11 of the 2002 Definitions relating to restrictions,
obligations, limitations or requirements under applicable securities laws that
exist as a result of the fact that Party B is the issuer of the Shares shall be
deemed to be deleted.

Adjustments:

 

Potential Adjustment Event:

 

Method of Adjustment:

  

For purposes hereof, the definition of “Potential Adjustment Event” shall not
include clause (iii) thereof.

 

Calculation Agent Adjustment, subject to the provisions set forth in clause (b)
under “Acceleration Events” below. Notwithstanding anything in the 2002
Definitions to the contrary, the Calculation Agent may make an adjustment
pursuant to Calculation Agent Adjustment to any one or more of the Base Amount,
the Forward Price and any other variable relevant to the settlement or payment
terms of this Transaction to account for the diluting or concentrative effect of
the applicable Potential Adjustment Event on the theoretical value of the
Shares.

 

Additional Adjustment:    If the Calculation Agent determines that the actual
cost to Party A, over any one-month period, of borrowing a number of Shares
equal to the Base Amount to hedge its exposure to this Transaction exceeds a
weighted average rate equal to 25 basis points per annum, the Calculation Agent
shall reduce the Forward Price in order to compensate Party A for the amount by
which such cost exceeded a weighted average rate equal to 25 basis

 

-10-

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

   points per annum during such period. The Calculation Agent shall notify Party
B prior to making any such adjustment to the Forward Price and, upon the request
of Party B, Party A shall provide adequate detail of its stock loan costs for
the applicable one month period.

Account Details:

 

Payments to Party A:    To be advised under separate cover or telephone
confirmed prior to each Settlement Date. Payments to Party B:    To be advised
under separate cover or telephone confirmed prior to each Settlement Date.
Delivery of Shares to Party A:    To be advised. Delivery of Shares to Party B:
   To be advised.

 

3. Other Provisions:

Conditions to Effectiveness:

The effectiveness of this Confirmation on the Effective Date shall be subject to
(i) the condition that the representations and warranties of Party B contained
in the Underwriting Agreement dated April 9, 2012 among Party B, Party A,
Merrill Lynch International, as Forward Counterparty, and Morgan Stanley & Co.
LLC and Merrill Lynch, Pierce, Fenner & Smith Incorporated, as Representatives
of the Several Underwriters (the “Underwriting Agreement”) and any certificate
delivered pursuant thereto by Party B are true and correct on the Effective Date
as if made as of the Effective Date, (ii) the condition that Party B has
performed all of the obligations required to be performed by it under the
Underwriting Agreement on or prior to the Effective Date, (iii) the condition
that Party B has delivered to Party A an opinion of counsel dated as of the
Effective Date with respect to matters set forth in Section 3(a) of the
Agreement (subject to customary exceptions and limitations), (iv) the
satisfaction or waiver of all of the conditions set forth in Section 5 of the
Underwriting Agreement, (v) the condition that the Underwriting Agreement has
not been terminated pursuant to Section 6, Section 7 or Section 9 thereof, and
(vi) the condition that neither of the following has occurred (A) in the
commercially reasonable judgment of Party A, Party A is unable to borrow and
deliver for sale a number of Shares equal to the Base Amount, or (B) in the
commercially reasonable judgment of the Calculation Agent, the Calculation Agent
determines either it is impracticable for Party A to do so or Party A would
incur a stock loan cost of more than a rate equal to 200 basis points per annum
to do so (in which event set forth in each

 

-11-

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

of subclause (A) and (B) of this clause (vi), this Confirmation shall be
effective, but the Base Amount for this Transaction shall be the number of
Shares Party A is able to so borrow at or below a stock loan cost of 200 basis
points per annum. Party B’s obligations hereunder shall be subject to the
condition precedent that each of Party A and each Affiliate of Party A that is a
Forward Seller or Underwriter (as such terms are defined in the Underwriting
Agreement) and any other Forward Seller and Underwriter shall have performed, on
or prior to the Effective Date, all of the obligations required to be performed
by it prior to the Effective Date under the Underwriting Agreement.

Representations and Agreements of Party B:

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

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

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

Additional Representations, Warranties and Agreements of Party B:

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

 

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

 

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

 

  (c)

Party B agrees to provide Party A at least 5 days’ written notice (an “Issuer
Repurchase Notice”) prior to executing any repurchase of Shares by Party B or
any of its subsidiaries (or entering into any contract that would require, or
give the option to, Party B or any of its subsidiaries, to purchase or
repurchase Shares), whether out of profits or capital or whether the
consideration for such repurchase is cash, securities or

 

-12-

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

  otherwise (an “Issuer Repurchase”), that alone or in the aggregate would
result in the Base Amount Percentage (as defined below) being (i) equal to or
greater than 8.0% of the outstanding Shares or (ii) greater by 0.5% or more than
the Base Amount Percentage at the time of the immediately preceding Issuer
Repurchase Notice (or in the case of the first such Issuer Repurchase Notice,
greater than the Base Amount Percentage as of the later of the date hereof or
the immediately preceding Settlement Date, if any). The “Base Amount Percentage”
as of any day is the fraction (1) the numerator of which is the sum of (a) the
Base Amount hereunder and (b) the “Base Amount” as such term is defined in
substantially identical forward transaction with respect to 4,950,000 Shares
pursuant to a confirmation between Party A and Party B dated April 9, 2012 (the
“Base Confirmation”), and (2) the denominator of which is the number of Shares
outstanding on such day.

 

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

 

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

 

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

 

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

 

  (h)

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

 

-13-

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

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

Agreements of the Parties and Covenant of Party B:

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

Covenants of Party A:

 

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

 

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

 

-14-

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

Insolvency Filing:

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

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

Extraordinary Dividends:

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

Acceleration Events:

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

 

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

 

  (b)

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

 

-15-

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

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

 

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

 

  (d)

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

 

-16-

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

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

 

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

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

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

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

Termination Settlement:

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

 

-17-

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

Stock Borrow Event the number of Settlement Shares so designated by Party A
shall not exceed the number of Shares as to which such Stock Borrow Event
exists. If, upon designation of a Termination Settlement Date by Party A
pursuant to the preceding sentence, Party B fails to deliver the Settlement
Shares relating to such Termination Settlement Date when due or otherwise fails
to perform obligations within its control in respect of this Transaction, it
shall be an Event of Default with respect to Party B and Section 6 of the
Agreement shall apply. If an Acceleration Event occurs during an Unwind Period,
then, on the Termination Settlement Date relating to such Acceleration Event,
notwithstanding any election to the contrary by Party B, (i) the Settlement Date
for such Unwind Period shall be the Termination Settlement Date; and (ii) Cash
Settlement or Net Share Settlement shall apply to the portion of the Settlement
Shares relating to such Unwind Period as to which Party A has unwound its hedge
and Physical Settlement shall apply in respect of (x) the remainder (if any) of
such Settlement Shares relating to such Unwind Period and (y) the Settlement
Shares designated by Party A in respect of such Termination Settlement Date.
UNDER NO CIRCUMSTANCES WILL THE SETTLEMENT AMOUNT UPON EARLY TERMINATION OR AN
ACCELERATION EVENT INCLUDE AN ADJUSTMENT FOR THE EFFECTS OF AN EXTRAORDINARY
DIVIDEND OR A CHANGE IN EXPECTED DIVIDENDS.

Private Placement Procedures:

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

Rule 10b5-1:

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

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

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

 

-18-

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

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

Maximum Share Delivery:

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

Transfer and Assignment:

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

 

-19-

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

Indemnity:

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

Notice:

 

Non-Reliance:    Applicable Additional Acknowledgments:    Applicable

Agreements and Acknowledgments

Regarding Hedging Activities:

   Applicable

 

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

No Collateral or Setoff:

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

Delivery of Cash:

For the avoidance of doubt, nothing in this Confirmation shall be interpreted as
requiring Party B to deliver cash in respect of the settlement of this
Transaction, except in circumstances where the required cash settlement thereof
is permitted for classification of

 

-20-

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

the contract as equity by ASC Topic 815, Derivatives and Hedging as in effect on
the Trade Date (including, without limitation, where Party B so elects to
deliver cash or fails timely to elect to deliver Shares in respect of such
settlement).

Status of Claims in Bankruptcy:

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

Limit on Beneficial Ownership:

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

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

 

-21-

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

Miscellaneous:

 

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

 

Address for notices or communications to Party A: Address:    Morgan Stanley &
Co. LLC    1585 Broadway    New York, NY 10036-8293    Attention: Angela Proske
   Telephone Number: (212) 537-1572    Facsimile Number: (212) 507-0483 Address
for notices or communications to Party B: Address:    PPL Corporation    Two
North Ninth Street    Allentown, PA 18101-1179    Attention: Treasurer   
Telephone No.: (610) 774-5151    Facsimile No.: (610) 774-5235 With a copy to:
  

Simpson Thacher & Bartlett LLP

425 Lexington Avenue

New York, NY 10017

Attention: Joyce Xu, Esq.

Telephone No.: (212) 455-3680

Facsimile No: (212) 455-2502

 

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

 

-22-

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

Acknowledgements:

The parties hereto intend for:

 

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

 

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

 

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

 

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

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

Other Forward:

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

Severability:

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

 

-23-

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

parties to this Agreement; provided, however, that this severability provision
shall not be applicable if any provision of Section 2, 5, 6 or 13 of the
Agreement (or any definition or provision in Section 14 to the extent that it
relates to, or is used in or in connection with any such Section) shall be so
held to be invalid or unenforceable.

[Remainder of page intentionally left blank]

 

-24-

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

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

 

Yours faithfully, MORGAN STANLEY & CO. LLC By:  

/s/ Serkan Savasoglu

Name:   Serkan Savasoglu Title:   Managing Director

 

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

/s/ Russell R. Clelland

Name:   Russell R. Clelland Title:   Assistant Treasurer

 

 

-25-

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

ANNEX A

PRIVATE PLACEMENT PROCEDURES

 

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

 

(ii)

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

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

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

 

 

-27-

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

LOGO [g340097img001.jpg]      

1585 BROADWAY

NEW YORK, NY 10036-8293

April 20, 2012

To:

PPL CORPORATION

TWO N NINTH STREET

ALLENTOWN, PA 18101-1139

Ladies and Gentlemen:

In consideration of PPL CORPORATION (hereinafter “Counterparty”) having entered
into or entering into that certain trade dated as of April 20, 2012, Confirm
Number 3223828 with Morgan Stanley & Co. LLC (hereinafter “Obligor”) (such
confirmation exchanged between the parties hereinafter the “Confirmation”),
Morgan Stanley, a Delaware corporation (hereinafter “Guarantor”), hereby
irrevocably and unconditionally guarantees to Counterparty, with effect from the
date of the Confirmation, the due and punctual payment of all amounts payable by
Obligor under the Confirmation when the same shall become due and payable,
whether on scheduled payment dates, upon demand, upon declaration of termination
or otherwise, in accordance with, and subject to, the terms of the Confirmation
and giving effect to any applicable grace period. Upon failure of Obligor
punctually to pay any such amounts, and upon written demand by Counterparty to
Guarantor at its address set forth in the signature block of this guarantee (the
“Guarantee”) (or to such other address as Guarantor may specify in writing),
Guarantor agrees to pay or cause to be paid such amounts; provided that delay by
Counterparty in giving such demand shall in no event affect Guarantor’s
obligations under this Guarantee. This Guarantee is of payment and not of
collection.

Guarantor hereby agrees that its obligations hereunder shall be continuing and
unconditional and will not be discharged except by complete payment of the
amounts payable under the Confirmation, irrespective of (1) any claim as to the
Confirmation’s validity, regularity or enforceability or the lack of authority
of Obligor to execute or deliver the Confirmation; or (2) any change in or
amendment to the Confirmation; or (3) any waiver or consent by Counterparty with
respect to any provisions thereof; or (4) the absence or existence of any action
to enforce the Confirmation, or the recovery of any judgment against Obligor or
of any action to enforce a judgment against Obligor under the Confirmation; or
(5) the dissolution, winding up, liquidation or insolvency of Obligor, including
any discharge of obligations therefrom; or (6) any similar circumstance which
might otherwise constitute a legal or equitable discharge or defense of a
guarantor generally.

 

A-1

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

Guarantor hereby waives diligence, presentment, demand on Obligor for payment or
otherwise (except as provided hereinabove), filing of claims, requirement of a
prior proceeding against Obligor and protest or notice, except as provided for
in the Confirmation with respect to amounts payable by Obligor. If at any time
payment under the Confirmation is rescinded or must be otherwise restored or
returned by Counterparty upon the insolvency, bankruptcy or reorganization of
Obligor or Guarantor or otherwise, Guarantor’s obligations hereunder with
respect to such payment shall be reinstated upon such restoration or return
being made by Counterparty.

Guarantor represents to Counterparty, as of the date hereof, that:

1. it is duly organized and validly existing under the laws of the jurisdiction
of its incorporation and has full power and legal right to execute and deliver
this Guarantee and to perform the provisions of this Guarantee on its part to be
performed;

2. its execution, delivery and performance of this Guarantee have been and
remain duly authorized by all necessary corporate action and do not contravene
any provision of its certificate of incorporation or by-laws or any law,
regulation or contractual restriction binding on it or its assets;

3. all consents, authorizations, approvals and clearances (including, without
limitation, any necessary exchange control approval) and notifications, reports
and registrations requisite for its due execution, delivery and performance of
this Guarantee have been obtained from or, as the case may be, filed with the
relevant governmental authorities having jurisdiction and remain in full force
and effect and all conditions thereof have been duly complied with and no other
action by, and no notice to or filing with, any governmental authority having
jurisdiction is required for such execution, delivery or performance; and

4. this Guarantee is its legal, valid and binding obligation enforceable against
it in accordance with its terms except as enforcement hereof may be limited by
applicable bankruptcy, insolvency, reorganization or other similar laws
affecting the enforcement of creditors’ right or by general equity principles.

Each of the provisions contained in this Guarantee shall be severable and
distinct from one another and if one or more of such provisions are now or
hereafter becomes invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions of this Guarantee shall not in any
way be affected, prejudiced or impaired thereby.

By accepting this Guarantee and executing the Confirmation, Counterparty agrees
that Guarantor shall be subrogated to all rights of Counterparty against Obligor
in respect of any amounts paid by Guarantor pursuant to this Guarantee, provided
that Guarantor shall be entitled to enforce or to receive any payment arising
out of or based upon such right of subrogation only to the extent that it has
paid all amounts payable by Obligor under the Confirmation.

 

A-2

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

This Guarantee shall expire on July 10, 2013, however, this guarantee may be
terminated upon 15 days prior written notice to that effect actually received by
Counterparty. Such expiration or termination shall not, however, affect or
reduce Guarantor’s obligation hereunder for any liability of Obligor incurred
with respect to transactions entered into by Obligor prior to such expiration.

This Guarantee shall be governed by and construed in accordance with the laws of
the State of New York, without reference of its choice of law doctrine. All
capitalized terms not otherwise defined herein shall have the respective
meanings assigned to them in the Confirmation.

[THE REMAINDER OF THIS PAGE IS LEFT INTENTIONALLY BLANK]

 

A-3

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

MORGAN STANLEY

 

By:  

/s/ Anita Rios

Name:   Anita Rios Title:   Authorized Signatory Address:   1585 Broadway   New
York, NY 10036 Attn:   Treasurer Fax No.:   212-762-0337 Phone:   212-761-4000

Signature page to Morgan Stanley Guarantee issued to PPL CORPORATION

and dated April 20, 2012

 

A-4