EX-10.4



 Exhibit 10.4 
  





 
 JPMorgan Chase Bank, National Association 

London Branch 
 25 Bank Street 

Canary Wharf 
 London E14 5JP 

England 
 April 28,
2016                                         
    
  

			
	To:	  	Knowles Corporation
		  	1151 Maplewood Drive
		  	Itasca, Illinois 60143
		  	Attention:            Nilson Rodrigues
		  	Title:                    VP & Treasurer
		  	Telephone No.:    ###-###-####

 Re:    Base Call Option Transaction 

The purpose of this letter agreement (this “Confirmation”) is to confirm the terms and conditions of the call option
transaction entered into between JPMorgan Chase Bank, National Association, London Branch (“Dealer”) and Knowles Corporation (“Counterparty”) as of the Trade Date specified below (the
“Transaction”). This letter agreement constitutes a “Confirmation” as referred to in the ISDA Master Agreement specified below. Each party further agrees that this Confirmation together with the Agreement evidence a
complete binding agreement between Counterparty and Dealer as to the subject matter and terms of the Transaction to which this Confirmation relates, and shall supersede all prior or contemporaneous written or oral communications with respect
thereto. 
 The definitions and provisions contained in 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. In the event of any inconsistency between the Equity Definitions and this
Confirmation, this Confirmation shall govern. Certain defined terms used herein are based on terms that are defined in the Offering Memorandum dated April 28, 2016 (the “Offering Memorandum”) relating to the 3.25% Convertible
Senior Notes due 2021 (as originally issued by Counterparty, the “Convertible Notes” and each USD 1,000 principal amount of Convertible Notes, a “Convertible Note”) issued by Counterparty in an aggregate initial
principal amount of USD 150,000,000 (as increased by up to an aggregate principal amount of USD 22,500,000 if and to the extent that the Initial Purchaser (as defined herein) exercises its option to purchase additional Convertible Notes pursuant to
the Purchase Agreement (as defined herein)) pursuant to an Indenture to be dated May 4, 2016 between Counterparty and U.S. Bank National Association, as trustee (the “Indenture”). In the event of any inconsistency between the
terms defined in the Offering Memorandum, the Indenture and this Confirmation, this Confirmation shall govern. The parties acknowledge that this Confirmation is entered into on the date hereof with the understanding that (i) definitions set
forth in the Indenture which are also defined herein by reference to the Indenture and (ii) sections of the Indenture that are referred to herein will conform to the descriptions thereof in the Offering Memorandum. If any such definitions in
the Indenture or any such sections of the Indenture differ from the descriptions thereof in the Offering Memorandum, the descriptions thereof in the Offering Memorandum will govern for purposes of this Confirmation. The parties further acknowledge
that the Indenture section numbers used herein are based on the draft of the Indenture last reviewed by Dealer as of the date of this Confirmation, and if any such section numbers are changed in the Indenture as executed, the parties will amend this
Confirmation in good faith to preserve the intent of the parties. Subject to the foregoing, references to the Indenture herein are references to the Indenture as in effect on the date of its execution, and if the Indenture is amended or supplemented
following such date (other than 

  
 JPMorgan Chase Bank,
National Association 
 Organised under the laws of the United States as a National Banking Association. 

Main Office 1111 Polaris Parkway, Columbus, Ohio 43240 

Registered as a branch in England & Wales branch No. BR000746 

Registered Branch Office 25 Bank Street, Canary Wharf, London E14 5JP 

Authorised by the Office of the Comptroller of the Currency in the jurisdiction of the USA. 

Authorised by the Prudential Regulation Authority. Subject to regulation by the Financial Conduct 

Authority and to limited regulation by the Prudential Regulation Authority. Details about the 

extent of our regulation by the Prudential Regulation Authority are available from us on request. 








 
any amendment or supplement (x) pursuant to Section 10.01(h) of the Indenture that, as determined by the Calculation Agent, conforms the Indenture to the description of Convertible
Notes in the Offering Memorandum or (y) pursuant to Section 14.07 of the Indenture, subject, in the case of this clause (y), to the second paragraph under “Method of Adjustment” in Section 3), any such amendment or supplement
will be disregarded for purposes of this Confirmation unless the parties agree otherwise in writing. 
 Each party is hereby advised, and
each such party acknowledges, that the other party has engaged in, or refrained from engaging in, substantial financial transactions and has taken other material actions in reliance upon the parties’ entry into the Transaction to which this
Confirmation relates on the terms and conditions set forth below. 
 1. This Confirmation evidences a complete and binding agreement between Dealer and
Counterparty 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 Dealer and Counterparty had executed an agreement in such form (but without any Schedule except for the election of the laws of the State of New York as the governing law (without reference to choice of law doctrine)) on the Trade Date. In the
event of any inconsistency between provisions of the 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. 
 2. The terms of the particular Transaction to which this Confirmation
relates are as follows: 
  

			
	    General Terms.	  	 
		
	            Trade Date:	  	April 28, 2016
		
	            Effective Date:	  	The third Exchange Business Day immediately prior to the Premium Payment Date
		
	            Option Style:	  	“Modified American”, as described under “Procedures for Exercise” below
		
	            Option Type:	  	Call
		
	            Buyer:	  	Counterparty
		
	            Seller:	  	Dealer
		
	            Shares:	  	The common stock of Counterparty, par value USD 0.01 per share (Exchange symbol “KN”).
		
	            Number of Options:	  	150,000. For the avoidance of doubt, the Number of Options shall be reduced by any Options exercised by Counterparty. In no event will the Number of Options be less than zero.
		
	            Applicable Percentage:	  	50%
		
	            Option Entitlement:	  	A number equal to the product of the Applicable Percentage and 54.2741.
		
	            Strike Price:	  	USD 18.4250
		
	            Premium:	  	USD 19,327,500
		
	            Premium Payment Date:	  	May 4, 2016
		
	            Exchange:	  	The New York Stock Exchange
		
	            Related Exchange(s):	  	All Exchanges


  
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	            Excluded Provisions:	  	Section 14.04(h) and Section 14.03 of the Indenture.
		
	    Procedures for Exercise.	  	
		
	            Conversion Date:	  	With respect to any conversion of a Convertible Note, the date on which the Holder (as such term is defined in the Indenture) of such Convertible Note satisfies all of the requirements for conversion thereof as set forth in
Section 14.02(b) of the Indenture.
		
	            Free Convertibility Date:	  	August 1, 2021
		
	            Expiration Time:	  	The Valuation Time
		
	            Expiration Date:	  	November 1, 2021, subject to earlier exercise.
		
	            Multiple Exercise:	  	Applicable, as described under “Automatic Exercise” below.
		
	            Automatic Exercise:	  	Notwithstanding Section 3.4 of the Equity Definitions, on each Conversion Date in respect of which a “Notice of Conversion” (as defined in the Indenture) that is effective as to Counterparty has been delivered by the
relevant converting Holder, a number of Options equal to the number of Convertible Notes in denominations of USD 1,000 as to which such Conversion Date has occurred shall be deemed to be automatically exercised; provided that such Options
shall be exercised or deemed exercised only if Counterparty has provided a Notice of Exercise to Dealer in accordance with “Notice of Exercise” below.
		
		  	Notwithstanding the foregoing, in no event shall the number of Options that are exercised or deemed exercised hereunder exceed the Number of Options.
		
	            Notice of Exercise:	  	Notwithstanding anything to the contrary in the Equity Definitions or under “Automatic Exercise” above, in order to exercise any Options, Counterparty must notify Dealer in writing before 5:00 p.m. (New York City time)
on the Scheduled Valid Day immediately preceding the scheduled first day of the Settlement Averaging Period for the Options being exercised of (i) the number of such Options, (ii) the scheduled first day of the Settlement Averaging Period and the
scheduled Settlement Date, (iii) the Relevant Settlement Method for such Options, and (iv) if the settlement method for the related Convertible Notes is not Settlement in Shares or Settlement in Cash (each as defined below), the maximum amount of
cash per Convertible Note that Counterparty has elected to pay to Holders (as such term is defined in the Indenture) of the related Convertible Notes (the “Specified Cash Amount”); provided that in respect of any Options
relating to Convertible Notes with a Conversion Date occurring on or after the Free Convertibility Date, (A) such notice may be given on or prior to the second Scheduled Valid Day immediately preceding the Expiration Date and need only specify the
information


  
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		  	required in clause (i) above, and (B) if the Relevant Settlement Method for such Options is (x) Net Share Settlement and the Specified Cash Amount is not USD 1,000, (y) Cash Settlement or (z) Combination Settlement, Dealer shall
have received a separate notice (the “Notice of Final Settlement Method”) in respect of all such Convertible Notes before 5:00 p.m. (New York City time) on the Free Convertibility Date specifying the information required in clauses
(iii) and (iv) above. Counterparty acknowledges its responsibilities under applicable securities laws, and in particular Section 9 and Section 10(b) of the Exchange Act (as defined below) and the rules and regulations thereunder, in respect of any
election of a settlement method with respect to the Convertible Notes.
		
	            Valuation Time:	  	At the close of trading of the regular trading session on the Exchange; provided that if the principal trading session is extended, the Calculation Agent shall determine the Valuation Time in its reasonable
discretion.
		
	            Market Disruption Event:	  	Section 6.3(a) of the Equity Definitions is hereby replaced in its entirety by the following:
		
		  	“‘Market Disruption Event’ means, in respect of a Share, (i) a failure by the primary United States national or regional securities exchange or market on which the Shares are listed or admitted for trading to
open for trading during its regular trading session or (ii) the occurrence or existence prior to 1:00 p.m. (New York City time) on any Scheduled Valid Day for the Shares for more than one half-hour period in the aggregate during regular trading
hours of any suspension or limitation imposed on trading (by reason of movements in price exceeding limits permitted by the relevant stock exchange or otherwise) in the Shares or in any options contracts or futures contracts relating to the
Shares.”
		
	    Settlement Terms.	  	
		
	            Settlement Method:	  	For any Option, Net Share Settlement; provided that if the Relevant Settlement Method set forth below for such Option is not Net Share Settlement, then the Settlement Method for such Option shall be such Relevant
Settlement Method, but only if Counterparty shall have notified Dealer of the Relevant Settlement Method in the Notice of Exercise or Notice of Final Settlement Method, as applicable, for such Option.
		
	            Relevant Settlement Method:	  	In respect of any Option:
		
		  	(i) if Counterparty has elected to settle its conversion obligations in respect of the related Convertible Note (A) entirely in Shares pursuant to Section 14.02(a)(iv)(A) of the Indenture (together with cash in lieu of fractional
Shares) (such settlement method, “Settlement in Shares”), (B) in a combination of cash and Shares


  
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		  	pursuant to Section 14.02(a)(iv)(C) of the Indenture with a Specified Cash Amount less than USD 1,000 (such settlement method, “Low Cash Combination Settlement”) or (C) in a combination of cash and Shares
pursuant to Section 14.02(a)(iv)(C) of the Indenture with a Specified Cash Amount equal to USD 1,000, then, in each case, the Relevant Settlement Method for such Option shall be Net Share Settlement;
		
		  	(ii) if Counterparty has elected to settle its conversion obligations in respect of the related Convertible Note in a combination of cash and Shares pursuant to Section 14.02(a)(iv)(C) of the Indenture with a Specified Cash
Amount greater than USD 1,000, then the Relevant Settlement Method for such Option shall be Combination Settlement; and
		
		  	(iii) if Counterparty has elected to settle its conversion obligations in respect of the related Convertible Note entirely in cash pursuant to Section 14.02(a)(iv)(B) of the Indenture (such settlement method, “Settlement
in Cash”), then the Relevant Settlement Method for such Option shall be Cash Settlement.
		
	            Net Share Settlement:	  	If Net Share Settlement is applicable to any Option exercised or deemed exercised hereunder, Dealer will deliver to Counterparty, on the relevant Settlement Date for each such Option, a number of Shares (the “Net Share
Settlement Amount”) equal to the sum, for each Valid Day during the Settlement Averaging Period for each such Option, of (i) (a) the Daily Option Value for such Valid Day, divided by (b) the Relevant Price on such Valid Day,
divided by (ii) the number of Valid Days in the Settlement Averaging Period; provided that in no event shall the Net Share Settlement Amount for any Option exceed a number of Shares equal to the Applicable Limit for such
Option divided by the Applicable Limit Price on the Settlement Date for such Option.
		
		  	Dealer will pay cash in lieu of delivering any fractional Shares to be delivered with respect to any Net Share Settlement Share Amount valued at the Relevant Price for the last Valid Day of the Settlement Averaging
Period.
		
	            Combination Settlement:	  	If Combination Settlement is applicable to any Option exercised or deemed exercised hereunder, Dealer will pay or deliver, as the case may be, to Counterparty, on the relevant Settlement Date for each such Option:
		
		  	 (i)     cash (the “Combination Settlement Cash
Amount”) equal to the sum, for each Valid Day during the Settlement Averaging Period for such Option, of (A) an amount (the “Daily Combination Settlement Cash Amount”) equal to the lesser of (1) the product of (x) the
Applicable Percentage and (y) the Specified Cash Amount minus USD 1,000 and (2) the Daily Option Value,



  
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		  	 divided by (B) the number of Valid Days in the Settlement Averaging Period; provided that if the
calculation in clause (A) above results in zero or a negative number for any Valid Day, the Daily Combination Settlement Cash Amount for such Valid Day shall be deemed to be zero; and

		
		  	 (ii)    Shares (the “Combination Settlement Share Amount”)
equal to the sum, for each Valid Day during the Settlement Averaging Period for such Option, of a number of Shares for such Valid Day (the “Daily Combination Settlement Share Amount”) equal to (A) (1) the Daily Option Value on
such Valid Day minus the Daily Combination Settlement Cash Amount for such Valid Day, divided by (2) the Relevant Price on such Valid Day, divided by (B) the number of Valid Days in the Settlement Averaging Period;
provided that if the calculation in sub-clause (A)(1) above results in zero or a negative number for any Valid Day, the Daily Combination Settlement Share Amount for such Valid Day shall be deemed to be zero;

		
		  	provided that in no event shall the sum of (x) the Combination Settlement Cash Amount for any Option and (y) the Combination Settlement Share Amount for such Option multiplied by the Applicable Limit Price
on the Settlement Date for such Option, exceed the Applicable Limit for such Option.
		
		  	Dealer will pay cash in lieu of delivering any fractional Shares to be delivered with respect to any Combination Settlement Share Amount valued at the Relevant Price for the last Valid Day of the Settlement Averaging
Period.
		
	            Cash Settlement:	  	If Cash Settlement is applicable to any Option exercised or deemed exercised hereunder, in lieu of Section 8.1 of the Equity Definitions, Dealer will pay to Counterparty, on the relevant Settlement Date for each such Option, an
amount of cash (the “Cash Settlement Amount”) equal to the sum, for each Valid Day during the Settlement Averaging Period for such Option, of (i) the Daily Option Value for such Valid Day, divided by (ii) the number of Valid
Days in the Settlement Averaging Period.
		
	            Daily Option Value:	  	For any Valid Day, an amount equal to (i) the Option Entitlement on such Valid Day, multiplied by (ii) the Relevant Price on such Valid Day less the Strike Price on such Valid Day; provided that if the calculation
contained in clause (ii) above results in a negative number, the Daily Option Value for such Valid Day shall be deemed to be zero. In no event will the Daily Option Value be less than zero.
		
	            Make-Whole Adjustment:	  	Notwithstanding anything to the contrary herein, in respect of any exercise of Options relating to a conversion of Convertible Notes for which additional Shares will be



  
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	 	  	added to the “Conversion Rate” (as defined in the Indenture) as determined
pursuant to Section 14.03 of the Indenture, the Daily Option Value shall be
calculated as if the Option Entitlement included the
Applicable Percentage of the
number of such additional Shares as determined with reference to the adjustment set
forth in such Section 14.03 of the Indenture; provided that if the sum of (i) the
product of (a) the number of Shares
(if any) deliverable by Dealer to Counterparty
per exercised Option and (b) the Applicable Limit Price on the Settlement Date and
(ii) the amount of cash (if any) payable by Dealer to Counterparty per exercised
Option would otherwise
exceed the amount per Option, as determined by the
Calculation Agent, that would be payable by Dealer under Section 6 of the
Agreement if (x) the relevant Conversion Date were an Early Termination Date
resulting from an Additional
Termination Event with respect to which the
Transaction was the sole Affected Transaction and Counterparty was the sole
Affected Party and (y) Section 14.03 of the Indenture were deleted, then each Daily
Option Value shall be
proportionately reduced to the extent necessary to eliminate
such excess.
		
	            Applicable Limit:	  	For any Option, an amount of cash equal to the Applicable Percentage multiplied by the excess of (i) the aggregate of (A) the amount of cash, if any, paid to the Holder of the related Convertible Note upon
conversion of such Convertible Note, as determined by reference to Section 14.02(a)(iv) of the Indenture, and (B) the number of Shares, if any, delivered to the Holder of the related Convertible Note upon conversion of such Convertible Note, as
determined by reference to Section 14.02(a)(iv) of the Indenture, multiplied by the Applicable Limit Price on the Settlement Date for such Option, over (ii) USD 1,000.
		
	            Applicable Limit Price:	  	On any day, the opening price as displayed under the heading “Op” on Bloomberg page KN <equity> (or any successor thereto).
		
	            Valid Day:	  	A day on which (i) there is no Market Disruption Event and (ii) trading in the Shares generally occurs on the Exchange or, if the Shares are not then listed on the Exchange, on the principal other United States national or
regional securities exchange on which the Shares are then listed or, if the Shares are not then listed on a United States national or regional securities exchange, on the principal other market on which the Shares are then listed or admitted for
trading. If the Shares are not so listed or admitted for trading, “Valid Day” means a Business Day.
		
	            Scheduled Valid Day:	  	A day that is scheduled to be a Valid Day on the principal United States national or regional securities exchange or market on which the Shares are listed or admitted for trading. If the Shares are not so listed or admitted for
trading, “Scheduled Valid Day” means a day that is scheduled to be a Business Day.


  
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	            Business Day:	  	Any day other than a Saturday, a Sunday or a day on which the Federal Reserve
Bank of New York is authorized or required by law or executive order to close or
be closed.
		
	            Relevant Price:	  	On any Valid Day, the per Share volume-weighted average price as displayed under the heading “Bloomberg VWAP” on Bloomberg page KN <equity> AQR (or its equivalent successor if such page is not available) in
respect of the period from the scheduled opening time of the Exchange to the Scheduled Closing Time of the Exchange on such Valid Day (or if such volume-weighted average price is unavailable at such time, the market price of one Share on such Valid
Day, as determined by the Calculation Agent using, if practicable, a volume-weighted average method). The Relevant Price will be determined without regard to after-hours trading or any other trading outside of the regular trading session trading
hours.
		
	            Settlement Averaging Period:	  	For any Option and regardless of the Settlement Method applicable to such Option:
		
		  	 (i)     if the related Conversion Date occurs prior to the Free
Convertibility Date, the 20 consecutive Valid Days commencing on, and including, the second Valid Day following such Conversion Date; provided that if the Notice of Exercise for such Option specifies that Settlement in Shares or Low Cash
Combination Settlement applies to the related Convertible Note, the Settlement Averaging Period shall be the 40 consecutive Valid Day period commencing on, and including, the second Valid Day immediately following such Conversion Date;
or

		
		  	 (ii)    if the related Conversion Date occurs on or following the Free
Convertibility Date, the 20 consecutive Valid Days commencing on, and including, the 22nd Scheduled Valid Day immediately prior to the Expiration Date; provided that if the Notice of
Exercise or Notice of Final Settlement Method, as applicable, for such Option specifies that Settlement in Shares or Low Cash Combination Settlement applies to the related Convertible Note, the Settlement Averaging Period shall be the 40 consecutive
Valid Days commencing on, and including, the 42nd Scheduled Valid Day immediately prior to the Expiration Date.

		
	            Settlement Date:	  	For any Option, the third Business Day immediately following the final Valid Day of the Settlement Averaging Period for such Option.
		
	            Settlement Currency:	  	USD


  
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	            Other Applicable Provisions:	  	The provisions of Sections 9.1(c), 9.8, 9.9 and 9.11 of the Equity Definitions will be
applicable, except that all references in such provisions to “Physically-settled” shall
be read as references to “Share
Settled”. “Share Settled” in relation to any Option
means that Net Share Settlement or Combination Settlement is applicable to that
Option.
		
	            Representation and Agreement:	  	Notwithstanding anything to the contrary in the Equity Definitions (including, but not limited to, Section 9.11 thereof), the parties acknowledge that (i) any Shares delivered to Counterparty shall be, upon delivery, subject to
restrictions and limitations arising from Counterparty’s status as issuer of the Shares under applicable securities laws, (ii) Dealer may deliver any Shares required to be delivered hereunder in certificated form in lieu of delivery through the
Clearance System and (iii) any Shares delivered to Counterparty may be “restricted securities” (as defined in Rule 144 under the Securities Act of 1933, as amended (the “Securities Act”)).
	
	
3.      Additional Terms applicable to the
Transaction.

	
	 Adjustments applicable to the Transaction:

		
	            Potential Adjustment Events:	  	Notwithstanding Section 11.2(e) of the Equity Definitions, a “Potential Adjustment Event” means an occurrence of any event or condition, as set forth in any Dilution Adjustment Provision, that would result in an
adjustment under the Indenture to the “Conversion Rate” or the composition of a “unit of Reference Property” or to any “Last Reported Sale Price” , “Daily VWAP,” “Daily Conversion Value” or
“Daily Settlement Amount” (each as defined in the Indenture). For the avoidance of doubt, Dealer shall not have any delivery or payment obligation hereunder in respect of any distribution of cash, property or securities by Counterparty to
holders of the Convertible Notes pursuant to the fourth sentence of Section 14.04(c) of the Indenture or any payment obligation in respect of any cash paid by Counterparty to holders of the Convertible Notes pursuant to the fourth sentence of
Section 14.04(d) of the Indenture (collectively, the “Conversion Rate Adjustment Fallback Provisions”), and no adjustment shall be made to the terms of the Transaction, on account of (x) any event or condition described in the
Conversion Rate Adjustment Fallback Provisions or (y) any other transaction in which holders of the Convertible Notes are entitled to participate, in each case, in lieu of an adjustment under the Indenture of the type referred to in the immediately
preceding sentence (including, without limitation, pursuant to the Conversion Rate Adjustment Fallback Provisions).
		
	            Method of Adjustment:	  	Calculation Agent Adjustment, which means that, notwithstanding Section 11.2(c) of the Equity Definitions, upon any Potential Adjustment Event, the Calculation Agent shall make an adjustment to any one or more of the Strike
Price, Number of Options and Option Entitlement that corresponds to the adjustment required to be made pursuant to the Indenture.


  
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	 	  	Notwithstanding the foregoing and “Consequences of Merger Events / Tender
Offers” below, if the Calculation Agent in good faith disagrees with any adjustment
to the Convertible Notes that involves an exercise of
discretion by Counterparty or
its board of directors (including, without limitation, pursuant to Section 14.05 of the
Indenture, Section 14.07 of the Indenture or any supplemental indenture entered
into thereunder or in connection with any
proportional adjustment or the
determination of the fair value of any securities, property, rights or other assets),
then in each such case, the Calculation Agent will determine the adjustment to be
made to any one or more of the nature of
the Shares (in the case of a Merger Event),
Strike Price, Number of Options and Option Entitlement in a commercially
reasonable manner; provided that, notwithstanding the foregoing, if any Potential
Adjustment Event occurs during the
Settlement Averaging Period but no adjustment
was made to any Convertible Note under the Indenture because the relevant Holder
(as such term is defined in the Indenture) was deemed to be a record owner of the
underlying Shares on the
related Conversion Date, then the Calculation Agent shall
make an adjustment, as determined by it, to the terms hereof in order to account for
such Potential Adjustment Event.
		
	            Dilution Adjustment Provisions:	  	Sections 14.04(a), (b), (c), (d) and (e) and Section 14.05 of the Indenture.
	
	Extraordinary Events applicable to the Transaction:
		
	            Merger Events:	  	Applicable; provided that notwithstanding Section 12.1(b) of the Equity Definitions, a “Merger Event” means the occurrence of any event or condition set forth in the definition of “Merger Event” in
Section 14.07 of the Indenture.
		
	            Tender Offers:	  	Applicable; provided that notwithstanding Section 12.1(d) of the Equity Definitions, a “Tender Offer” means the occurrence of any event or condition set forth in Section 14.04(e) of the Indenture.
		
	            Consequences of Merger Events             / Tender Offers:	  	Notwithstanding Section 12.2 and Section 12.3 of the Equity Definitions, upon the occurrence of a Merger Event or a Tender Offer, the Calculation Agent shall make, to the extent an analogous adjustment is required to be made
pursuant to the Indenture, a corresponding adjustment in respect of any such adjustment under the Indenture to any one or more of the nature of the Shares (in the case of a Merger Event), Strike Price, Number of Options and Option Entitlement,
subject to the second


  
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	 	  	paragraph under “Method of Adjustment”; provided, however, that such adjustment
shall be made without regard to any adjustment to the Conversion Rate pursuant to
any Excluded Provision; provided
further that if, with respect to a Merger Event or
a Tender Offer, (i) the consideration for the Shares includes (or, at the option of a
holder of Shares, may include) shares of an entity or person that is not a corporation
or is not
organized under the laws of the United States, any State thereof or the
District of Columbia or (ii) the Counterparty to the Transaction following such
Merger Event or Tender Offer will not be a corporation, then, in either
case,
Cancellation and Payment (Calculation Agent Determination) may apply at
Dealer’s sole election.
		
	Nationalization, Insolvency or Delisting:	  	Cancellation and Payment (Calculation Agent Determination); provided that, in addition to the provisions of Section 12.6(a)(iii) of the Equity Definitions, 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); if the Shares are 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), such exchange or quotation system shall thereafter 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 word “Shares” with the phrase “Hedge Positions” in clause (X) thereof and
(ii) inserting the parenthetical “(including, for the avoidance of doubt and without limitation, adoption or promulgation of new regulations authorized or mandated by existing statute)” at the end of clause (A) thereof.
		
	            Failure to Deliver:	  	Applicable
		
	            Hedging Disruption:	  	Applicable; provided that:
		
		  	 (i)     Section 12.9(a)(v) of the Equity Definitions is hereby amended
by (a) inserting the following words at the end of clause (A) thereof: “in the manner contemplated by the Hedging Party on the Trade Date” and (b) inserting the following language at the end of such Section:

 
 “(provided that any such inability that occurs solely due
to the deterioration of the creditworthiness of the Hedging Party, as determined by the Calculation Agent, shall not be deemed a Hedging Disruption). For the avoidance of doubt, the term “equity price risk” shall
be



  
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		  	 deemed to include, but shall not be limited to, stock price and volatility risk. And, for the further avoidance of
doubt, any such transactions or assets referred to in phrases (A) or (B) above must be available on commercially reasonable pricing terms.”; and

		
		  	 (ii)    Section 12.9(b)(iii) of the Equity Definitions is hereby amended by
inserting in the third line thereof, after the words “to terminate the Transaction”, the words “or a portion of the Transaction affected by such Hedging Disruption”.

		
	            Increased Cost of Hedging:	  	Applicable
		
	            Hedging Party:	  	For all applicable Additional Disruption Events, Dealer.
		
	 Determining Party:
	  	For all applicable Extraordinary Events, Dealer.
		
	 Non-Reliance:
	  	Applicable.
		
	 Agreements and Acknowledgments
	  	
	 Regarding Hedging Activities:
	  	Applicable
		
	 Additional Acknowledgments:
	  	Applicable
		
	 4.      Calculation Agent.
	  	Dealer; provided that, following the occurrence and during the continuation of an Event of Default pursuant to Section 5(a)(vii) of the Agreement with respect to which Dealer is the Defaulting Party, Counterparty shall
have the right to select a leading dealer in the market for U.S. corporate equity derivatives reasonably acceptable to Dealer to replace Dealer as Calculation Agent, and the parties shall work in good faith to execute any appropriate documentation
required by such replacement Calculation Agent.
		
	 5.      Account Details.
	  	

  

	 	(a)	Account for payments to Counterparty: 


Bank:                 JP Morgan Chase Bank NA 

ABA#:               ######### 

Acct No.:           ######### 

Beneficiary:       Knowles Corporation 

SWIFT Code:    ####### 

Account for delivery of Shares to Counterparty: 

Computershare, Transfer Co # ##### 
  

	 	(b)	Account for payments to Dealer: 


Bank:                 JPMorgan Chase Bank, N.A. 

ABA#:               ######### 

Acct No.:           ######### 

Beneficiary:       JPMorgan Chase Bank, N.A. New York 

  
 12 








 Ref: Derivatives 

Account for delivery of Shares from Dealer: 

DTC #### 
  

	6.	Offices. 

  

	 	(a)	The Office of Counterparty for the Transaction is: Inapplicable, Counterparty is not a Multibranch Party. 

  

	 	(b)	The Office of Dealer for the Transaction is: London 

 JPMorgan Chase Bank, National Association

 London Branch 
 25 Bank
Street 
 Canary Wharf 
 London
E14 5JP 
 England 
  

	7.	Notices. 

  

	 	(a)	Address for notices or communications to Counterparty: 

 Knowles Corporation 

1151 Maplewood Drive 
 Itasca,
Illinois 60143 
 Attention:            Nilson Rodrigues 

Title:                   VP & Treasurer 

Telephone No.:    ###-###-#### 
  

	 	(b)	Address for notices or communications to Dealer: 

 JPMorgan Chase Bank, National Association

 EDG Marketing Support 

Email:                  edg_notices@jpmorgan.com 

                        
     edg.us.flow.corporates.mo@jpmorgan.com 
 Facsimile No:       #-###-###-####

 With a copy to: 

Attention:            Sudheer Tegulapalle 

Title:                    Executive
Director 
 Telephone No:     ###-###-#### 

Email:                   
############################# 
  

	8.	Representations and Warranties of Counterparty. 

 Each of the representations and
warranties of Counterparty set forth in Section 3 of the Purchase Agreement (the “Purchase Agreement”) dated as of April 28, 2016, between Counterparty and J.P. Morgan Securities LLC, as representative of the initial
purchasers party thereto (the “Initial Purchaser”), are true and correct and are hereby deemed to be repeated to Dealer as if set forth herein. Counterparty hereby further represents and warrants to Dealer on the date hereof and on
and as of the Premium Payment Date that: 
  

	 	(a)	 Counterparty has all necessary corporate power and authority to execute, deliver and perform its obligations in
respect of the Transaction; such execution, delivery and performance have been duly authorized by all necessary corporate action on Counterparty’s part; and this Confirmation has been duly and validly executed and delivered by Counterparty and
constitutes its valid and 



  
 13 









	 	
binding obligation, enforceable against Counterparty in accordance with its terms, subject to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and similar laws
affecting creditors’ rights and remedies generally, and subject, as to enforceability, to general principles of equity, including principles of commercial reasonableness, good faith and fair dealing (regardless of whether enforcement is sought
in a proceeding at law or in equity) and except that rights to indemnification and contribution hereunder may be limited by federal or state securities laws or public policy relating thereto. 


 

	 	(b)	Neither the execution and delivery of this Confirmation nor the incurrence or performance of obligations of Counterparty hereunder will conflict with or result in a breach of the certificate of incorporation or by-laws (or any equivalent documents) of Counterparty, or any applicable law or regulation, or any order, writ, injunction or decree of any court or governmental authority or agency, or any agreement or instrument
to which Counterparty or any of its subsidiaries is a party or by which Counterparty or any of its subsidiaries is bound or to which Counterparty or any of its subsidiaries is subject, or constitute a default under, or result in the creation of any
lien under, any such agreement or instrument. 

  

	 	(c)	No consent, approval, authorization, or order of, or filing with, any governmental agency or body or any court is required in connection with the execution, delivery or performance by Counterparty of this Confirmation,
except such as have been obtained or made and such as may be required under the Securities Act or state securities laws. 

  

	 	(d)	Counterparty is not and, after consummation of 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. 

  

	 	(e)	Counterparty is an “eligible contract participant” (as such term is defined in Section 1a(18) of the Commodity Exchange Act, as amended, other than a person that is an eligible contract participant under
Section 1a(18)(C) of the Commodity Exchange Act). 

  

	 	(f)	Each of it and its affiliates is not, on the date hereof, in possession of any material non-public information with respect to Counterparty or the Shares. 


 

	 	(g)	No state or local (including any non-U.S. jurisdiction’s) law, rule, regulation or regulatory order applicable to the Shares would give rise to any reporting, consent, registration or other requirement (including
without limitation a requirement to obtain prior approval from any person or entity) as a result of Dealer or its affiliates owning or holding (however defined) Shares. 


 

	 	(h)	Counterparty (A) is capable of evaluating investment risks independently, both in general and with regard to all transactions and investment strategies involving a security or securities; (B) 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 (C) has total assets of at least $50 million. 


 

	9.	Other Provisions. 

  

	 	(a)	Opinions. Counterparty shall deliver to Dealer an opinion of counsel, dated as of the Trade Date, with respect to the matters set forth in Sections 8(a) through (c) of this Confirmation. Delivery of such
opinion to Dealer shall be a condition precedent for the purpose of Section 2(a)(iii) of the Agreement with respect to each obligation of Dealer under Section 2(a)(i) of the Agreement. 


 

	 	(b)	 Repurchase Notices. Counterparty shall, on any day on which Counterparty effects any repurchase of
Shares, promptly give Dealer a written notice of such repurchase (a “Repurchase Notice”) on such day if following such repurchase, the number of outstanding Shares as determined on such day is (i) less than 80.9 million
(in the case of the first such notice) or (ii) thereafter more than 6.4 million less than the number of Shares included in the immediately preceding Repurchase Notice. Counterparty agrees to indemnify and hold harmless Dealer and its
affiliates and their respective officers, directors, employees, affiliates, advisors, agents and 



  
 14 









	 	
controlling persons (each, an “Indemnified Person”) from and against any and all losses (including losses relating to Dealer’s hedging activities as a consequence of
becoming, or of the risk of becoming, a Section 16 “insider”, including without limitation, any forbearance from hedging activities or cessation of hedging activities and any losses in connection therewith with respect to the
Transaction), claims, damages, judgments, liabilities and expenses (including reasonable attorney’s fees), joint or several, which an Indemnified Person may become subject to, as a result of Counterparty’s failure to provide Dealer with a
Repurchase Notice on the day and in the manner specified in this paragraph, and to reimburse, within 30 days, upon written request, each of such Indemnified Persons for any reasonable legal or other expenses incurred in connection with
investigating, preparing for, providing testimony or other evidence in connection with or defending any of the foregoing. If any suit, action, proceeding (including any governmental or regulatory investigation), claim or demand shall be brought or
asserted against the Indemnified Person as a result of Counterparty’s failure to provide Dealer with a Repurchase Notice in accordance with this paragraph, such Indemnified Person shall promptly notify Counterparty in writing, and Counterparty,
upon request of the Indemnified Person, shall retain counsel reasonably satisfactory to the Indemnified Person to represent the Indemnified Person and any others Counterparty may designate in such proceeding and shall pay the fees and expenses of
such counsel related to such proceeding. Counterparty shall not be liable for any settlement of any proceeding contemplated by this paragraph that is effected without its written consent, but if settled with such consent or if there be a final
judgment for the plaintiff, Counterparty agrees to indemnify any Indemnified Person from and against any loss or liability by reason of such settlement or judgment. Counterparty shall not, without the prior written consent of the Indemnified Person,
effect any settlement of any pending or threatened proceeding contemplated by this paragraph that is in respect of which any Indemnified Person is or could have been a party and indemnity could have been sought hereunder by such Indemnified Person,
unless such settlement includes an unconditional release of such Indemnified Person from all liability on claims that are the subject matter of such proceeding on terms reasonably satisfactory to such Indemnified Person. If the indemnification
provided for in this paragraph is unavailable to an Indemnified Person or insufficient in respect of any losses, claims, damages or liabilities referred to therein, then Counterparty hereunder, in lieu of indemnifying such Indemnified Person
thereunder, shall contribute to the amount paid or payable by such Indemnified Person as a result of such losses, claims, damages or liabilities. The remedies provided for in this paragraph (b) are not exclusive and shall not limit any rights or
remedies which may otherwise be available to any Indemnified Person at law or in equity. The indemnity and contribution agreements contained in this paragraph shall remain operative and in full force and effect regardless of the termination of the
Transaction. 

  

	 	(c)	Regulation M. Counterparty is not on the Trade Date engaged in a distribution, as such term is used in Regulation M under the Securities Exchange Act of 1934, as amended (the “Exchange
Act”), of any securities of Counterparty, other than a distribution meeting the requirements of the exception set forth in Rules 101(b)(10) and 102(b)(7) of Regulation M. Counterparty shall not, until the second Scheduled Trading Day
immediately following the Effective Date, engage in any such distribution. 

  

	 	(d)	No Manipulation. Counterparty is not entering into the Transaction to create actual or apparent trading activity in the Shares (or any security convertible into or exchangeable for the Shares) or to raise
or depress or otherwise manipulate the price of the Shares (or any security convertible into or exchangeable for the Shares) or otherwise in violation of the Exchange Act. 


 

	 	(e)	Transfer or Assignment.  

  

	 	(i)	Counterparty shall have the right to transfer or assign its rights and obligations hereunder with respect to all, but not less than all, of the Options hereunder (such Options, the “Transfer Options”);
provided that such transfer or assignment shall be subject to reasonable conditions that Dealer may impose, including but not limited, to the following conditions: 


  
 15 









	 	(A)	With respect to any Transfer Options, Counterparty shall not be released from its notice and indemnification obligations pursuant to Section 9(b) or any obligations under Section 9(o) or 9(t) of this Confirmation;


  

	 	(B)	Any Transfer Options shall only be transferred or assigned to a third party that is a United States person (as defined in the Internal Revenue Code of 1986, as amended); 


 

	 	(C)	Such transfer or assignment shall be effected on terms, including any reasonable undertakings by such third party (including, but not limited to, an undertaking with respect to compliance with applicable securities laws
in a manner that, in the reasonable judgment of Dealer, will not expose Dealer to material risks under applicable securities laws) and execution of any documentation and delivery of legal opinions with respect to securities laws and other matters by
such third party and Counterparty, as are requested and reasonably satisfactory to Dealer; 

  

	 	(D)	Dealer will not, as a result of such transfer and assignment, be required to pay the transferee on any payment date an amount under Section 2(d)(i)(4) of the Agreement greater than an amount that Dealer would have
been required to pay to Counterparty in the absence of such transfer and assignment; 

  

	 	(E)	An Event of Default, Potential Event of Default or Termination Event will not occur as a result of such transfer and assignment; 

  

	 	(F)	Without limiting the generality of clause (B), Counterparty shall cause the transferee to make such Payee Tax Representations and to provide such tax documentation as may be reasonably requested by Dealer to permit
Dealer to determine that results described in clauses (D) and (E) will not occur upon or after such transfer and assignment; and 

  

	 	(G)	Counterparty shall be responsible for all reasonable costs and expenses, including reasonable counsel fees, incurred by Dealer in connection with such transfer or assignment. 


 

	 	(ii)	 Dealer may not transfer any of its rights or obligations under the Transaction without the prior written consent
of Counterparty, except that Dealer may transfer or assign all or any part of its rights or obligations under the Transaction (x) without Counterparty’s consent, to any affiliate of Dealer (1) that has a long-term issuer rating or a
rating for its long term, unsecured and unsubordinated indebtedness that is equal to or better than Dealer’s credit rating at the time of such transfer or assignment, or (2) whose obligations hereunder will be guaranteed, pursuant to the
terms of a customary guarantee in a form used by Dealer generally for similar transactions, by Dealer or Dealer’s ultimate parent or (y) with Counterparty’s consent (such consent not to be unreasonably withheld or delayed) (i) to
any financial institution or (ii) solely for the purpose of avoiding an Excess Ownership Position, to any other third party. If at any time at which (A) the Section 16 Percentage exceeds 9.0%, (B) the Option Equity Percentage
exceeds 14.5%, or (C) the Share Amount exceeds the Applicable Share Limit (if any applies) (any such condition described in clauses (A), (B) or (C), an “Excess Ownership Position”), Dealer is unable after using its
commercially reasonable efforts to effect a transfer or assignment of Options to a third party reasonably acceptable to Counterparty in accordance with the terms hereof on pricing terms reasonably acceptable to Dealer and within a time period
reasonably acceptable to Dealer such that no Excess Ownership Position exists, then Dealer may designate any Exchange Business Day as an Early Termination Date with respect to a portion of the Transaction (the “Terminated Portion”),
such that following such partial termination no Excess Ownership Position exists. In the event that Dealer so designates an Early Termination Date with respect to a portion of the Transaction, a




  
 16 









	 	
payment shall be made pursuant to Section 6 of the Agreement as if (1) an Early Termination Date had been designated in respect of a Transaction having terms identical to the
Transaction and a Number of Options equal to the number of Options underlying the Terminated Portion, (2) Counterparty were the sole Affected Party with respect to such partial termination and (3) the Terminated Portion were the sole
Affected Transaction (and, for the avoidance of doubt, the provisions of Section 9(m) shall apply to any amount that is payable by Dealer to Counterparty pursuant to this sentence as if Counterparty was not the Affected Party). The “Section
16 Percentage” as of any day is the fraction, expressed as a percentage, (A) the numerator of which is the number of Shares that Dealer and any of its affiliates or any other person subject to aggregation with Dealer for purposes of
the “beneficial ownership” test under Section 13 of the Exchange Act, or any “group” (within the meaning of Section 13 of the Exchange Act) of which Dealer is or may be deemed to be a part beneficially owns (within the
meaning of Section 13 of the Exchange Act), without duplication, on such day (or, to the extent that for any reason the equivalent calculation under Section 16 of the Exchange Act and the rules and regulations thereunder results in a
higher number, such higher number) and (B) the denominator of which is the number of Shares outstanding on such day. The “Option Equity Percentage” as of any day is the fraction, expressed as a percentage, (A) the
numerator of which is the sum of (1) the product of the Number of Options and the Option Entitlement and (2) the aggregate number of Shares underlying any other call option transaction sold by Dealer to Counterparty, and (B) the
denominator of which is the number of Shares outstanding. The “Share Amount” as of any day is the number of Shares that Dealer and any person whose ownership position would be aggregated with that of Dealer (Dealer or any such
person, a “Dealer Person”) under any law, rule, regulation, regulatory order or organizational documents or contracts of Counterparty that are, in each case, applicable to ownership of Shares (“Applicable
Restrictions”), owns, beneficially owns, constructively owns, controls, holds the power to vote or otherwise meets a relevant definition of ownership under any Applicable Restriction, as determined by Dealer in its reasonable discretion.
The “Applicable Share Limit” means a number of Shares equal to (A) the minimum number of Shares that could give rise to reporting or registration obligations or other requirements (including obtaining prior approval from any
person or entity) of a Dealer Person, or could result in an adverse effect on a Dealer Person, under any Applicable Restriction, as determined by Dealer in its reasonable discretion, minus (B) 1% of the number of Shares outstanding.


  

	 	(iii)	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, or make or receive any payment in cash, to or
from Counterparty, Dealer may designate any of its affiliates to purchase, sell, receive or deliver such Shares or other securities, or to make or receive such payment in cash, 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. 


 

	 	(f)	Staggered Settlement. If upon advice of counsel with respect to applicable legal and regulatory requirements, including any requirements relating to Dealer’s commercially reasonable hedging activities
hereunder, Dealer reasonably determines that it would not be practicable or advisable to deliver, or to acquire Shares to deliver, any or all of the Shares to be delivered by Dealer on any Settlement Date for the Transaction, Dealer may, by notice
to Counterparty on or prior to any Settlement Date (a “Nominal Settlement Date”), elect to deliver the Shares on two or more dates (each, a “Staggered Settlement Date”) as follows: 


 

	 	(i)	in such notice, Dealer will specify to Counterparty the related Staggered Settlement Dates (each of which shall be on or prior to such Nominal Settlement Date) and the number of Shares that it will deliver on each
Staggered Settlement Date; 


  
 17 









	 	(ii)	the aggregate number of Shares that Dealer will deliver to Counterparty hereunder on all such Staggered Settlement Dates will equal the number of Shares that Dealer would otherwise be required to deliver on such Nominal
Settlement Date; and 

  

	 	(iii)	if the Net Share Settlement terms or the Combination Settlement terms set forth above were to apply on the Nominal Settlement Date, then the Net Share Settlement terms or the Combination Settlement terms, as the case
may be, will apply on each Staggered Settlement Date, except that the Shares otherwise deliverable on such Nominal Settlement Date will be allocated among such Staggered Settlement Dates as specified by Dealer in the notice referred to in clause
(i) above. 

  

	 	(g)	[Reserved] 

  

	 	(h)	Role of Agent. Each party agrees and acknowledges that (i) J.P. Morgan Securities LLC, an affiliate of Dealer (“JPMS”), has acted solely as agent and not as principal with respect to
the Transaction and (ii) JPMS has no obligation or liability, by way of guaranty, endorsement or otherwise, in any manner in respect of the Transaction (including, if applicable, in respect of the settlement thereof). Each party agrees it will
look solely to the other party (or any guarantor in respect thereof) for performance of such other party’s obligations under the Transaction. 

  

	 	(i)	[Reserved] 

  

	 	(j)	Additional Termination Events. 

  

	 	(i)	Notwithstanding anything to the contrary in this Confirmation, if an event of default with respect to Counterparty occurs under the terms of the Convertible Notes as set forth in Section 6.01 of the Indenture that
results in the acceleration of Counterparty’s payment obligations under the Convertible Notes pursuant to the terms of the Indenture, then such event of default shall constitute an Additional Termination Event applicable to the Transaction and,
with respect to such Additional Termination Event, (A) Counterparty shall be deemed to be the sole Affected Party, (B) the Transaction shall be the sole Affected Transaction and (C) Dealer shall be the party entitled to designate an
Early Termination Date pursuant to Section 6(b) of the Agreement. 

  

	 	(ii)	Notwithstanding anything to the contrary in this Confirmation: 

  

	 	(A)	Promptly following any Repayment Event (as defined below) (but, in any event, within five Scheduled Valid Days following settlement thereof), Counterparty may notify Dealer (any such notice, a “Repayment
Notice”) of such Repayment Event and the aggregate principal amount of Convertible Notes subject to such Repayment Event (the “Repayment Convertible Notes”). The receipt by Dealer from Counterparty of any Repayment Notice
shall constitute an Additional Termination Event as provided in this Section 9(j)(ii). 

  

	 	(B)	Upon receipt of any such Repayment Notice, Dealer shall designate an Exchange Business Day following receipt of such Repayment Notice (which Exchange Business Day shall be on or as promptly as reasonably practicable
after the related settlement date for the relevant Repayment Event) as an Early Termination Date with respect to a portion (the “Repayment Terminated Portion”) of the Transaction consisting of a number of Options (the
“Repayment Options”) equal to the lesser of (A) the number of Repayment Convertible Notes in denominations of USD1,000 that are subject to the relevant Repayment Event and (B) the Number of Options as of the date Dealer
designates such Early Termination Date (prior to giving effect to a reduction thereto on such date pursuant to the immediately following sentence). As of any such Early Termination Date, the Number of Options shall be reduced by the applicable
number of Repayment Options. 


  
 18 









	 	(C)	Any payment or delivery in respect of such termination of the Repayment Terminated Portion of the Transaction shall be made pursuant to Section 6 of the Agreement as if an Early Termination Date had been designated
in respect of a Transaction having terms identical to the Transaction and a Number of Options equal to the number of Repayment Options. Counterparty shall be the sole Affected Party with respect to such Additional Termination Event and the Repayment
Terminated Portion of the Transaction shall be the sole Affected Transaction. “Repayment Event” means that (i) any Convertible Notes are repurchased by Counterparty or any of its subsidiaries, (ii) any Convertible Notes
are delivered to Counterparty in exchange for delivery of any property or assets of Counterparty or any of its subsidiaries (however described), (iii) any principal of any of the Convertible Notes is repaid prior to the final maturity date of
the Convertible Notes (other than upon acceleration following an event of default under the Convertible Notes), or (iv) any Convertible Notes are exchanged by or for the benefit of the “Holders” (as defined in the Indenture) thereof
for any other securities of Counterparty or any of its “Affiliates” (as defined in the Indenture) (or any other property, or any combination thereof) pursuant to any exchange offer or similar transaction. For the avoidance of doubt,
conversion of Convertible Notes (whether into cash, Shares, “Reference Property” (as defined in the Indenture) or any combination thereof) pursuant to the terms of the Indenture shall not constitute a Repayment Event. 


 

	 	(D)	Counterparty shall cause any Convertible Notes subject to a Repayment Event to be promptly cancelled and no longer outstanding and acknowledges and agrees that, except to the extent provided above in this Section
9(j)(ii), all such Convertible Notes subject to a Repayment Event will be deemed for all purposes under the Transaction to be cancelled and no longer outstanding. 


 

	 	(k)	Amendments to Equity Definitions. 

  

	 	(i)	Section 12.6(a)(ii) of the Equity Definitions is hereby amended by (1) deleting from the fourth line thereof the word “or” after the word “official” and inserting a comma therefor, and
(2) deleting the semi-colon at the end of subsection (B) thereof and inserting the following words therefor “or (C) the occurrence of any of the events specified in Section 5(a)(vii)(1) through (9) of the ISDA Master
Agreement with respect to that Issuer.” 

  

	 	(ii)	Section 12.9(b)(i) of the Equity Definitions is hereby amended by (1) replacing “either party may elect” with “Dealer may elect” and (2) replacing “notice to the other party”
with “notice to Counterparty” in the first sentence of such section. 

  

	 	(iii)	Section 12.9(b)(vi) of the Equity Definitions is hereby amended by (1) adding the word “or” immediately before subsection “(B)”, (2) deleting the comma at the end of subsection (A),
(3) deleting subsection (C) in its entirety, (4) deleting the word “or” immediately preceding subsection (C) and (5) replacing the words “either party” in the last sentence of such Section with
“Dealer”. 

  

	 	(l)	No Setoff. Each party waives any and all rights it may have to setoff, whether arising under any agreement, applicable law or otherwise. 


 

	 	(m)	 Alternative Calculations and Payment on Early Termination and on Certain Extraordinary Events. If,
in respect of the Transaction, an amount is payable by Dealer to Counterparty (A) pursuant to Section 12.7 or Section 12.9 of the Equity Definitions or (B) pursuant to Section 6(d)(ii) of the Agreement, in each case, as a
result of an event or events outside Counterparty’s control (any such amount, a “Payment Obligation”), then Dealer shall satisfy the Payment Obligation by the Share Termination Alternative (as defined below), unless
(a) Counterparty gives irrevocable telephonic notice to Dealer, confirmed in writing within one Scheduled Trading Day, no later than 12:00 p.m. (New York City time) on the Merger Date, Tender Offer Date,




  
 19 









	 	
Announcement Date (in the case of a Nationalization, Insolvency or Delisting), Early Termination Date or date of cancellation, as applicable, of its election that the Share Termination
Alternative shall not apply, (b) Counterparty remakes the representation set forth in Section 8(f) as of the date of such election and (c) Dealer agrees, in its sole discretion, to such election, in which case the provisions of
Section 12.7 or Section 12.9 of the Equity Definitions, or the provisions of Section 6(d)(ii) of the Agreement, as the case may be, shall apply. 

  

			
	Share Termination Alternative:	  	If applicable, Dealer shall deliver to Counterparty the Share
Termination Delivery Property on, or within a commercially
reasonable period of time after, the date when the relevant
Payment Obligation would otherwise be
due pursuant to
Section 12.7 or 12.9 of the Equity Definitions or Section
6(d)(ii) and 6(e) of the Agreement, as applicable, in
satisfaction of such Payment Obligation in the manner
reasonably requested by Counterparty free of
payment.
		
	Share Termination Delivery Property:	  	A number of Share Termination Delivery Units, as calculated by the Calculation Agent, equal to the Payment Obligation divided by the Share Termination Unit Price. The Calculation Agent shall adjust the Share Termination Delivery
Property by replacing any fractional portion of a security therein with an amount of cash equal to the value of such fractional security based on the values used to calculate the Share Termination Unit Price.
		
	Share Termination Unit Price:	  	The value to Dealer of property contained in one Share Termination Delivery Unit, as determined by the Calculation Agent in its discretion by commercially reasonable means and notified by the Calculation Agent to Dealer at the
time of notification of the Payment Obligation. For the avoidance of doubt, the parties agree that in determining the Share Termination Delivery Unit Price the Calculation Agent may consider the purchase price paid in connection with the purchase of
Share Termination Delivery Property to the extent doing so would be commercially reasonable.
		
	Share Termination Delivery Unit:	  	One Share or, if the Shares have changed into cash or any other property or the right to receive cash or any other property as the result of a Nationalization, Insolvency or Merger Event (any such cash or other property, the
“Exchange Property”), a unit consisting of the type and amount of such Exchange Property received by a holder of one Share (without consideration of any requirement to pay cash or other consideration in lieu of fractional amounts of
any securities) in such Nationalization, Insolvency or Merger Event, as determined by the Calculation Agent.
		
	Failure to Deliver:	  	Applicable
		
	Other applicable provisions:	  	If Share Termination Alternative is applicable, the provisions of Sections 9.8, 9.9 and 9.11 (as modified


  
 20 









			
	 	  	above) of the Equity Definitions and the provisions set forth
opposite the caption “Representation and Agreement” in
Section 2 will be applicable, except that all references in such
provisions to
“Physically-settled” shall be read as references to
“Share Termination Settled” and all references to “Shares”
shall be read as references to “Share Termination Delivery
Units”. “Share
Termination Settled” in relation to the
Transaction means that the Share Termination Alternative is
applicable to the Transaction.

  

	 	(n)	Waiver of Jury Trial. 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 the
Transaction. Each party (i) certifies that no representative, agent or attorney of either 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 the Transaction, as applicable, by, among other things, the mutual waivers and certifications provided herein. 


 

	 	(o)	Registration. Counterparty hereby agrees that if, in the good faith reasonable judgment of Dealer based on the advice of counsel, the Shares (“Hedge Shares”) acquired by Dealer for the
purpose of hedging its obligations pursuant to the Transaction cannot be sold in the public market by Dealer without registration under the Securities Act, Counterparty shall, at its election, either (i) in order to allow Dealer to sell the
Hedge Shares in a registered offering, make available to Dealer an effective registration statement under the Securities Act and enter into an agreement, in form and substance satisfactory to Dealer, substantially in the form of an underwriting
agreement for a registered secondary offering of similar size; provided, however, that if Dealer, in its sole reasonable discretion, is not satisfied with access to due diligence materials, the results of its due diligence
investigation, or the procedures and documentation for the registered offering referred to above, then clause (ii) or clause (iii) of this paragraph shall apply at the election of Counterparty, (ii) in order to allow Dealer to sell
the Hedge Shares in a private placement, enter into a private placement agreement substantially similar to private placement purchase agreements customary for private placements of equity securities of similar size, in form and substance reasonably
satisfactory to Dealer (in which case, the Calculation Agent shall make any adjustments to the terms of the Transaction that are necessary, in its commercially reasonable judgment, to compensate Dealer for any discount from the public market price
of the Shares incurred on the sale of Hedge Shares in a private placement), or (iii) purchase the Hedge Shares from Dealer at the Relevant Price on such Exchange Business Days, and in the amounts, requested by Dealer. 


 

	 	(p)	Tax Disclosure. Effective from the date of commencement of discussions concerning the Transaction, Counterparty and each of its employees, representatives, or other agents may disclose to any and all
persons, 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 to Counterparty relating to such tax treatment and tax
structure. 

  

	 	(q)	 Right to Extend. Dealer may postpone or add, in whole or in part, any Valid Day or Valid Days
during the Settlement Averaging Period or any other date of valuation, payment or delivery by Dealer, with respect to some or all of the Options hereunder, if Dealer reasonably determines, based on the advice of counsel in the case of the
immediately following clause (ii), that such action is reasonably necessary or appropriate (i) to preserve Dealer’s commercially reasonable hedging or hedge unwind activity hereunder in light of existing liquidity conditions or
(ii) to enable Dealer to effect transactions in Shares in connection with its commercially reasonable hedging, hedge unwind or settlement activity hereunder in a manner that would, if Dealer were Counterparty or an affiliated purchaser of
Counterparty, be in compliance with applicable legal, regulatory or self-regulatory requirements, or with related policies and procedures applicable to Dealer (so long as such policies and procedures would generally be applicable to counterparties




  
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similar to Counterparty and transactions similar to the Transaction); provided that no such Valid Day or other date of valuation, payment or delivery may be postponed or extended more than
40 Valid Days after the final day in the original Settlement Averaging Period or original other date of valuation, payment or delivery, as the case may be. 

  

	 	(r)	Status of Claims in Bankruptcy. Dealer acknowledges and agrees that this Confirmation is not intended to convey to Dealer rights against Counterparty with respect to the Transaction that are senior to the
claims of common stockholders of Counterparty in any United States 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 obligations and agreements with respect to the Transaction; provided further that nothing herein shall limit or shall be deemed to limit Dealer’s rights in respect of any transactions other than the Transaction.


  

	 	(s)	Securities Contract; Swap Agreement. The parties hereto intend for (i) the Transaction to be a “securities contract” and a “swap agreement” as defined in the Bankruptcy Code (Title
11 of the United States Code) (the “Bankruptcy Code”), and the parties hereto to be entitled to the protections afforded by, among other Sections, Sections 362(b)(6), 362(b)(17), 546(e), 546(g), 555 and 560 of the Bankruptcy Code,
(ii) a party’s right to liquidate the 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 described
in the Bankruptcy Code, and (iii) each payment and delivery of cash, securities or other property hereunder to constitute a “margin payment” or “settlement payment” and a “transfer” as defined in the Bankruptcy
Code. 

  

	 	(t)	Notice of Certain Other Events. Counterparty covenants and agrees that: 

  

	 	(i)	promptly following the public announcement of the results of any election by the holders of Shares with respect to the consideration due upon consummation of any Merger Event, Counterparty shall give Dealer written
notice of (x) the weighted average of the types and amounts of consideration that holders of Shares have elected to receive upon consummation of such Merger Event or (y) if no holders of Shares affirmatively make such election, the types
and amounts of consideration actually received by holders of Shares (the date of such notification, the “Consideration Notification Date”); provided that in no event shall the Consideration Notification Date be later than the
date on which such Merger Event is consummated; and 

  

	 	(ii)	promptly following any adjustment to the Convertible Notes in connection with any Potential Adjustment Event, Merger Event or Tender Offer, Counterparty shall give Dealer written notice of the details of such
adjustment. 

  

	 	(u)	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 Equity Definitions incorporated herein, or
the Agreement (including, but not limited to, rights arising from Change in Law, Hedging Disruption, Increased Cost of Hedging, an Excess Ownership Position, or Illegality (as defined in the Agreement)). 


 

	 	(v)	 Agreements and Acknowledgements Regarding Hedging. Counterparty understands, acknowledges and
agrees that: (A) at any time on and prior to the Expiration Date, 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
adjust its hedge position with respect to the Transaction; (B) Dealer and its affiliates also may be active in the market for Shares other than in connection with hedging activities in relation to the Transaction; (C) Dealer shall make its
own determination as to whether, when or in what manner any hedging or market activities in securities of Issuer shall 



  
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be conducted and shall do so in a manner that it deems appropriate to hedge its price and market risk with respect to the Relevant Prices; and (D) any market activities of Dealer and its
affiliates with respect to Shares may affect the market price and volatility of Shares, as well as the Relevant Prices, each in a manner that may be adverse to Counterparty. 


 

	 	(w)	Early Unwind. In the event the sale of the “Underwritten Securities” (as defined in the Purchase Agreement) is not consummated with the Initial Purchaser for any reason, or Counterparty fails to
deliver to Dealer opinions of counsel as required pursuant to Section 9(a), in each case by 5:00 p.m. (New York City time) on the Premium Payment Date, or such later date as agreed upon by the parties (the Premium Payment Date or such later date,
the “Early Unwind Date”), the Transaction shall automatically terminate (the “Early Unwind”) on the Early Unwind Date and (i) the Transaction and all of the respective rights and obligations of Dealer and
Counterparty under the Transaction shall be cancelled and terminated and (ii) each party shall be released and discharged by the other party from and agrees not to make any claim against the other party with respect to any obligations or
liabilities of the other party arising out of and to be performed in connection with the Transaction either prior to or after the Early Unwind Date. Each of Dealer and Counterparty represents and acknowledges to the other that, upon an Early Unwind,
all obligations with respect to the Transaction shall be deemed fully and finally discharged. 

  

	 	(x)	Payment by Counterparty. In the event that, following payment of the Premium, (i) an Early Termination Date occurs or is designated with respect to the Transaction as a result of a Termination Event
or an Event of Default (other than an Event of Default arising under Section 5(a)(ii) or 5(a)(iv) of the Agreement) and, as a result, Counterparty owes to Dealer an amount calculated under Section 6(e) of the Agreement, or
(ii) Counterparty owes to Dealer, pursuant to Section 12.7 or Section 12.9 of the Equity Definitions, an amount calculated under Section 12.8 of the Equity Definitions, such amount shall be deemed to be zero. 


 

	 	(y)	Determinations; Adjustments. All calculations, adjustments and determinations made by Dealer hereunder, whether as Calculation Agent, Determining Party or Hedging Party or following the occurrence of an
Early Termination Date, shall be made in good faith, and all such calculations and adjustments shall be made in a commercially reasonable manner. Following any determination, adjustment or calculation by Dealer hereunder in its capacity as
Calculation Agent or Determining Party, Dealer shall deliver to Counterparty, within five Exchange Business Days after a written request by Counterparty, a report in a commonly used file format for the storage and manipulation of financial data
(including the methodology, interest rates, quotations and market data (including volatility) but without disclosing any proprietary or confidential models or other proprietary or confidential information) displaying in reasonable detail the basis
for such determination, adjustment or calculation, as the case may be. For the avoidance of doubt, whenever the Calculation Agent or Determining Party, as the case may be, is called upon to make an adjustment pursuant to the terms of this
Confirmation or the Equity Definitions to take into account the effect of an event, the Calculation Agent or Determining Party, as the case may be, shall make such adjustment by reference to the effect of such event on the Hedging Party, assuming
that the Hedging Party maintains a commercially reasonable hedge position. 

  

	 	(z)	Tax Matters. 

 (i) Tax documentation. For the purpose of
Section 4(a)(i) of the Agreement, each party shall provide to the other party a valid U.S. Internal Revenue Service Form W-9, or any successor thereto, (i) on or before the date of execution of this Confirmation, (ii) promptly upon
reasonable demand by the other party, and (iii) promptly upon learning that any such tax form previously provided by such party has become obsolete or incorrect. Additionally, each party shall, promptly upon request by the other party, provide
such other tax forms and documents reasonably requested by such other party. 
 (ii) Tax Representations. For the purpose of
Section 3(f) of the Agreement, (i) each party represents that it is (x) a corporation for U.S. federal income tax purposes, (y) a “U.S. person” (as that term is used in Section 1.1441-4(a)(3)(ii) of the United
States Treasury Regulations) for U.S. 

  
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federal income tax purposes, and (z) an “exempt recipient” under Section 1.6049-4(c)(1)(ii) of the United States Treasury Regulations; (ii) Counterparty additionally
represents that it is organized under the laws of the State of Delaware; and (iii) Dealer additionally represents that it is a national banking association organized and existing under the laws of the United States of America and its federal
taxpayer identification number is ##-#######. 

  
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 Please confirm that the foregoing correctly sets forth the terms of our agreement by
executing this Confirmation and returning it to J.P. Morgan Securities LLC, 383 Madison Ave, New York, NY 10179, and by email to EDG_Notices@jpmorgan.com and edg.us.flow.corporates.mo@jpmorgan.com. 

Very truly yours, 
  

			
	J.P. Morgan Securities LLC, as agent for
JPMorgan Chase Bank, National Association
		
	By:	 	 /s/ Jeffrey Zajkowski

	Authorized Signatory
	Name: Jeffrey Zajkowski


 Accepted and confirmed 
 as
of the Trade Date: 
  

			
	Knowles Corporation
		
	By:	 	 /s/ Nilson Rodrigues

	Authorized Signatory
	Name: Nilson Rodrigues

 JPMorgan Chase Bank, National Association 

Organised under the laws of the United States as a National Banking Association. 

Main Office 1111 Polaris Parkway, Columbus, Ohio 43240 

Registered as a branch in England & Wales branch No. BR000746 

Registered Branch Office 25 Bank Street, Canary Wharf, London E14 5JP 

Authorised by the Office of the Comptroller of the Currency in the jurisdiction of the USA. 

Authorised by the Prudential Regulation Authority. Subject to regulation by the Financial Conduct 

Authority and to limited regulation by the Prudential Regulation Authority. Details about the 

extent of our regulation by the Prudential Regulation Authority are available from us on request.