Document:

Exhibit 10.1

Exhibit 10.1

16 December 2009

Mr. Douglas E Godshall

c/o HeartWare, Inc.

205 Newbury St., Suite 101

Framingham, MA 01701

Dear Doug:

We are pleased to offer you revised terms and conditions of your continuing employment with
HeartWare International, Inc. (the “Company”):

1. Position. Your title will be President & Chief Executive Officer of the Company. As such,
you will be responsible for, among other things, directing and leading Company and its executive
management team and otherwise perform such duties and responsibilities as are customarily assigned
to individuals serving in similar positions of other public companies. Without limitation, this
includes ultimate responsibility for the strategic direction, performance and execution of the
Company’s plans and strategies. You shall report directly to the Chairman of the Board of
Directors (the “Board”) of the Company. Your usual place of business will be at the Company’s
offices in Framingham, Massachusetts.

2. Compensation. Your base salary shall be at the annual rate of $425,000, payable in
accordance with the Company’s payroll policies as from time to time in effect (“Base Salary”).
Your Base Salary will be reviewed annually by the Board and may be increased by the Board in its
discretion. Your Base Salary shall not be subject to reduction without your prior written consent
except that if the Board reduces the salary of all senior managers of the Company, the Base Salary
shall be reduced by the same percentage as the percentage reduction in salary of such senior
managers.

3. Annual Bonus. The Company may pay you an annual cash bonus based on your performance
(which may be measured by specific goals), as determined by the Board in its discretion. The
Company shall pay the annual cash bonus for a calendar year, if at all, on or after January 1st,
but by no later than March 15th, of the next year. No annual cash bonus is guaranteed. Payment of
all annual bonuses rests in the sole discretion of the Board regardless of the achievement of
pre-specified goals, and you must be employed with the Company on the payment date in order to be
eligible to receive any such annual bonus.

 

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4. Vacation, Insurance and Benefits; Expenses.

(a) You shall be entitled to all legal holidays recognized by the Company, and 20 days of paid
vacation per annum. Any unused vacation shall be subject to Company policy as from time to time in
effect. Vacation days for the first fiscal year of your employment will be prorated.

(b) You shall be eligible for participation in any health, dental, and other insurance plans
that may be established and maintained by the Company from time to time for its employees of your
level, all as determined by the Board in its discretion. You shall also be entitled to participate
in any employee benefit programs that the Board may establish for Company employees generally,
including but not limited to health insurance, 401(k) Plan and
stock purchase or option plans. The Company’s employee benefit programs will be discussed
during your orientation.

(c) The Company shall reimburse you for all usual and ordinary business expenses incurred by
you in the scope of your employment hereunder in accordance with the Company’s expense
reimbursement policy as from time to time in effect. In addition, the Company shall reimburse you,
on a monthly basis after receipt of appropriate documentation of the expense, for the cost of your
personal cell phone service.

5. Severance Pay.

(a) If your employment is terminated by the Company without “Cause” (as defined below) or by
you for “Good Reason” (as defined below) other than in connection with a Change in Control (as
described below), and subject to the notice and release requirements described below, the Company
shall pay, beginning within 15 days after your termination of employment, (i) your Base Salary for
a period of 12 months, payable in accordance with the standard payroll practices then in effect for
active senior executives; and (ii) the employee portion of your COBRA continuation coverage (to the
extent that you elect coverage) for a period of 12 months or, if earlier, until you become entitled
to participate in another employer’s health plan.

(b) If your employment is terminated by the Company without “Cause” (as defined below) or by
you for “Good Reason” (as defined below) coincident with or within 18 months after a Change in
Control (as defined below), and subject to the notice and release requirements described below, the
Company shall cause to be paid, on or beginning within 15 days after your termination of
employment, (i) a lump-sum cash payment in an amount equal to 2 times your Total Salary; and (ii)
the employee portion of your COBRA continuation coverage (to the extent that you elect coverage)
for a period of 24 months or, if earlier, until you become entitled to participate in another
employer’s health plan. The severance pay provided under this Section 5(b) shall
supersede, and not be in duplication of, the severance pay provided under Section 5(a).
“Total Salary” means your then current Base Salary plus the most recent amount paid to you as your
Annual Bonus.

 

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(c) “Cause” means your: (i) material or persistent breach of this letter agreement; (ii)
engaging in any act that constitutes serious misconduct, theft, fraud, material misrepresentation,
serious dereliction of fiduciary obligations or duty of loyalty to the Company; (iii) conviction of
a felony, or a plea of guilty or nolo contendere to a felony charge or any criminal act involving
moral turpitude or which in the reasonable opinion of the Board brings you, the Board, the Company
or any affiliate into disrepute; (iv) neglect of or negligent performance of your duties under this
letter agreement; (v) willful, unauthorized disclosure of material confidential information
belonging to the Company, or entrusted to the Company by a client, customer, or other third party;
(vi) repeatedly being under the influence of drugs or alcohol (other than prescription medicine or
other medically related drugs to the extent that they are taken in accordance with their
directions) during the performance of your duties under this letter agreement, or, while under the
influence of such drugs or alcohol, engaging in grossly inappropriate conduct during the
performance of your duties under this letter agreement; (vii) repeated failure to comply with the
lawful directions of your immediate supervisor or the Board
that are not inconsistent with the terms of this letter agreement; or (viii) actual engagement
in conduct that violates applicable state or federal laws governing the workplace that could
reasonably be expected to bring the Company or any affiliate into disrepute. In order for the
Company to terminate your employment for Cause under any of clauses (i), (iv), (vi) or (vii) in the
preceding sentence, the Company must provide you with written notice of its intention to terminate
employment for Cause and describing the acts or omissions upon which such termination for Cause is
based, and you shall be provided a 30-day period from the date of such notice within which to cure
or correct such acts or omissions if they are reasonably susceptible of cure or correction.

(d) “Good Reason” means the occurrence of any of the following without your consent:

(i) a material diminution in your Base Salary;

(ii) a material diminution in your authority, duties, or responsibilities;

(iii) a requirement that you report to a corporate officer or employee instead
of the Board;

(iv) a material diminution in the budget over which you retain authority.

Notwithstanding the above, no “Good Reason” exists unless (I) you notify the Company in writing
within 90 days after the initial existence of any condition listed above, and the Company fails to
cure the condition within 30 days after receiving notice, and (II) you terminate employment by no
later than 2 years after the initial existence of any condition listed above.

(e) A “Change in Control” means the earliest to occur of any of the following events,
construed in accordance with section 409A of the Internal Revenue Code:

(i) Any one Person or more than one Person Acting as a Group (each as defined
below) acquires, or has acquired during the 12-month period ending on the date of
the most recent acquisition by such Person or Group, beneficial ownership of more
than a majority of the total fair market value or total voting power of the
then-outstanding securities of the Company;

 

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(ii) Any one Person or more than one Person Acting as a Group (each as defined
below) acquires, or has acquired during the 12-month period ending on the date of
the most recent acquisition by such Person or Group, the assets of the Company that
have a total gross fair market value (as determined by the Board) of more than 50%
of the total gross fair market value of all of the assets of, as applicable, the
Company immediately prior to the initiation of the acquisition; or

(iii) A majority of the members of the board of directors of the Company is
replaced during any 12-month period by directors whose appointment or election is
not endorsed or approved by a majority of the members of the board who were members
of the board prior to the initiation of the replacement.

For purposes of this Section 5(e), a “Person” means any individual, entity or group within
the meaning of section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended,
other than (A) the Company, (B) any trustee or other fiduciary holding securities under an employee
benefit plan of the Company, or (C) any corporation owned, directly or indirectly, by the
stockholders of the Company in substantially the same proportions as their ownership of stock of
the Company. Persons will be considered to be “Acting as a Group” (or a “Group”) if they are
owners of a corporation that enters into a merger, consolidation, purchase or acquisition of stock,
or similar business transaction with the corporation. If a Person owns stock in both corporations
that enter into a merger, consolidation, purchase or acquisition of stock, or similar transaction,
such stockholder is considered to be Acting as a Group with other stockholders only with respect to
the ownership in that corporation before the transaction giving rise to the change and not with
respect to the ownership interest in the other corporation. Persons will not be considered to be
Acting as a Group solely because they purchase assets of the same corporation at the same time or
purchase or own stock of the same corporation at the same time, or as a result of the same public
offering.

For purposes of this Section 5(e), section 318(a) of the Internal Revenue Code applies to
determine stock ownership. Stock underlying a vested option is considered owned by the individual
who holds the vested option (and the stock underlying an unvested option is not considered owned by
the individual who holds the unvested option). For purposes of the preceding sentence, however, if
a vested option is exercisable for stock that is not substantially vested (as defined by Treasury
regulation section 1.83 3(b) and (j)), the stock underlying the option is not treated as owned by
the individual who holds the option.

(f) Your right to receive severance pay under this Section 5 is conditioned upon (i)
your signing and delivering to the Company, before any payment is due or scheduled to begin, a
general release of claims, in form and substance reasonably acceptable to the Company, by which you
release the Company from any claim arising from your employment by, or termination of employment
with, the Company, in consideration for the payment; and (ii) your compliance with Sections
7, 8, and 9 of this letter agreement. The Company shall make no payment before
the general release becomes effective upon the expiration of any applicable revocation period.

 

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(g) Although your employment may be terminated immediately by the Company at any time for any
reason, if your employment is terminated by the Company other than for Cause upon less than 90
days’ prior written notice of such termination, the Company agrees to pay you that portion of your
compensation attributable to the period for which the Company fails to satisfy the 90 day notice
requirement described above. Any such payment of compensation in lieu of notice will be paid in
accordance with the provisions of Section 5(a) or 5(b), as applicable. Any
termination of employment by you for any reason shall require 90 days’ prior written notice.

(h) Notwithstanding the above, on termination of your employment (for whatever reason) you
shall be entitled to receive the pro rata portion of your Base Salary through the date of your
termination, together with such compensation or benefits to which you may be entitled by law or
under the terms of the Company’s compensation and benefit plans in effect
including, without limitation, amounts owed to you for unpaid vacation leave accrued during
the course of your employment with the Company.

6. At Will Employment.

(a) This letter agreement describes the compensation and benefits that you are entitled to
receive for so long as you remain employed by the Company, but is not a contract or guarantee of
employment for any particular period of time. At all times you will remain an employee at will,
and you and the Company are free to terminate your employment at any time for any reason.

(b) Should your employment with the Company be terminated by the Company for Cause, by you
without Good Reason, or as a result of your death or permanent disability or other physical or
mental incapacity, you shall be entitled to receive only the prorated portion of your Base Salary
through the date of your termination of employment, together with such other compensation or
benefits to which you may be entitled by law, the terms of this letter agreement, or under the
terms of the Company’s compensation and benefit plans then in effect.

(c) Upon termination of your employment you shall at the request of the Board immediately
resign without claim for compensation from any directorship and / or office which you hold of the
Company or its subsidiaries or any affiliates. If you fail to provide such resignation, you
irrevocably appoint the Chairman of the Board as your attorney with the irrevocable right to sign
any document on your behalf for the purposes of, or to give effect to, your resignation under this
clause.

7. Noncompetition.

(a) You will not without the prior written consent of the Company during your employment
either directly or indirectly in any capacity (including without limitation as principal, agent,
partner, employee, stockholder, unit holder, joint venturer, director, trustee, beneficiary,
manager, consultant, or advisor) carry on, advise, provide services to or be engaged, concerned or
interested in or associated with any Competitive Business (as defined below), or be engaged or
interested in any public or private work or duties which in the reasonable opinion of the Board or
the Company, may hinder or otherwise interfere with the performance of your duties.

 

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(b) You will not at any time in the 12 months after the termination of your employment (for
whatever reason) without the written consent of the Company:

(i) on a worldwide basis directly or indirectly in any capacity (whether as
principal, agent, partner, employee, stockholder, unit holder, joint venturer,
director, trustee, beneficiary, manager, consultant, or advisor) carry on, advise,
provide services to or be engaged, concerned or interested in or associated with any
Competitive Business (as defined below); or

(ii) counsel, procure, or otherwise assist any person to do any of the acts
referred to in Section 7(b)(i).

Given that the business of the Company is and is expected to continue to be conducted on a
worldwide basis, and you will be actively involved with and intimately familiar with the business
of the Company on a worldwide basis, you acknowledge and agree that more narrow geographical
limitations of any nature on this noncompetition covenant (and the nonsolicitation covenant below)
are therefore not appropriate and would not adequately protect the Company.

Nothing in this Section 7(b) prohibits you (whether directly or through nominees) of
holding shares listed on a recognized stock exchange, provided you do not hold more than 5% of the
issued capital of a company.

(c) “Competitive Business” means any business or activity which is involved in the research,
development, sale, distribution and/or marketing of mechanical circulatory assist devices.

8. Nonsolicitation. During your employment with the Company and for 12 months after your
termination of employment (for whatever reason), you shall not, directly or indirectly, on your own
behalf or on behalf of any third party, without the express written consent of the Company:

(a) canvass, solicit, target, induce or entice or endeavor to solicit, target, induce or
entice away from the Company, or attempt to divert, reduce or take away, the business or patronage
(with respect to products or services of the kind or type developed, produced, marketed, furnished
or sold by the Company with which you were substantively involved during the course of your
employment with the Company) of, of any of the clients, customers, vendors, suppliers or accounts,
or prospective clients, customers, suppliers, vendors or accounts of the Company that you
contacted, solicited or served while employed by the Company or supplier to or in the habit of
dealing with the Company;

(b) target, recruit, solicit, hire away, or otherwise interfere with the employment
relationship of, or endeavor to entice away, any employee of the Company, or otherwise induce any
such employee to cease their relationship with the Company; or

(c) counsel, procure or otherwise assist any person to do any of the acts referred to in
Section 8(a) or (b).

 

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9. Nondisparagement. You shall not, while employed by the Company or at any time after your
termination of employment, directly, or through any other personal entity, make any public or
private statements that are disparaging of the Company, their respective businesses or employees,
officers, directors, or stockholders. The Company agrees that, after your termination of
employment with the Company for any reason, it will refrain from making any public statements that
disparage you. The Company’s obligations under this Section 9 extend only to the
then-current officers and members of the Board, and only for so long as those individuals are
officers or directors of the Company. Nothing herein shall be deemed to prevent you or the Company
from complying with their respective legal obligations or responding to a subpoena or other court
order.

10. Proprietary Information. Both during and after your employment with the Company, you will
treat all proprietary or other confidential information as strictly confidential. Further, you
agree to sign and comply with the terms and conditions of the enclosed Proprietary Information,
Confidentiality, and Inventions Assignment Agreement, which is incorporated by reference into
this letter agreement. This offer of continued employment is contingent upon your signing that
agreement.

11. Injunctive Relief: Clawback. You recognize and acknowledge that it would be difficult to
ascertain the damages arising from a breach or threatened breach of the covenants set forth in
Sections 7 (noncompetition), 8 (nonsolicitation), 9 (nondisparagement), and
10 (proprietary information) and that any such breach or threatened breach could result in
irreparable harm to the Company. You therefore agree that, notwithstanding anything in this letter
agreement to the contrary, including but not limited to the forfeiture and clawback provision
below, the Company shall have the right to an injunction or other equitable relief in any court of
competent jurisdiction, enjoining any such breach, without prior notice to you and without the
posting of a bond or other guarantee, to enforce this letter agreement. You hereby waive any and
all defenses you may have on the ground of lack of jurisdiction or competence of the court to grant
such an injunction or other equitable relief. The existence of this right shall not preclude any
other rights and remedies at law or in equity that the Company may have. The provisions of
Section 11 shall survive termination of this letter agreement and/or your employment with
the Company. The existence of a claim or cause of action of any kind by you against the Company
shall not constitute a defense to the enforcement by the Company of the rights provided in this
Section 11 and shall not be a defense to any injunction proceeding. In addition,
notwithstanding anything herein to the contrary, if the Board, in its discretion, determines that
you have engaged in any activity that contravenes any covenant set forth in Section 7,
8, 9 or 10, you shall forfeit any amount payable under Section 5
(severance pay), and you agree to repay the Company, within 30 days after you receive notice of the
Board’s determination, any amount previously paid by the Company under Section 5.

12. Blue Pencil; Severability. If any provision of this letter agreement is construed by a
court of competent jurisdiction to be invalid or unenforceable, that construction does not affect
the remainder of this agreement, which is to be given full force and effect without regard to the
invalid or unenforceable provision. Any invalid or unenforceable provision is to be reformed to
the maximum time, geographic and/or business limitations permitted by applicable laws, so as to be
valid and enforceable.

 

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13. Waivers. No delay or omission by the Company in exercising any right under this letter
agreement operates as a waiver of that or any other right. The Company’s waiver or consent on any
one occasion is effective only for that occasion and is not be construed as a bar or waiver of any
right on any other occasion.

14. Federal Employment Law. Please note that Federal law requires you to provide the Company
with documentation of your identity and eligibility to work in the United States. In addition, the
Company verifies the validity of social security numbers. Accordingly, this offer is further
conditioned upon your providing the required documentation to the Company within three business
days after your start date. A list of the required documentation will be provided during your
orientation.

15. Prior Employers. By accepting this offer of employment, you are representing that you are
not party to any agreement with any prior employer that prevents your working for the Company or
that would prevent you from performing your assigned duties for the Company.

16. Background Check. The Company reserves the right to conduct a background check of its
employees, and your employment may be conditioned on satisfactory results.

17. Tax Withholding. The Company may withhold from any amounts payable under this letter
agreement such federal, state, local or foreign income and employment taxes as shall be required to
be withheld under applicable law.

18. Section 409A Compliance. The following rules relate to section 409A of the Internal
Revenue Code of 1986 and any regulations and Treasury guidance promulgated thereunder (“Section
409A”), which govern deferred compensation:

(a) This letter agreement is intended to comply with, or otherwise be exempt from, Section
409A.

(b) The Company shall undertake to administer, interpret, and construe this letter agreement
in a manner that does not result in the imposition on you of any additional tax, penalty, or
interest under Section 409A.

(c) The Company and you agree to execute any and all amendments to this letter agreement
permitted under applicable law, as mutually agreed in good faith, as may be necessary to ensure
that this letter agreement complies with Section 409A.

(d) The preceding provisions, however, shall not be construed as a guarantee by the Company of
any particular tax effect to you under this letter agreement. The Company shall not be liable to
you for any payment made under this letter agreement that is determined to result in an additional
tax, penalty, or interest under Section 409A, nor for reporting in good faith any payment made
under this letter agreement as an amount includible in gross income under Section 409A.

 

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(e) For purposes of Section 409A, the right to a series of installment payments under this
letter agreement shall be treated as a right to a series of separate payments.

(f) With respect to any reimbursement of expenses of, or any provision of in-kind benefits to,
you, as specified under this letter agreement, such reimbursement of expenses or provision of
in-kind benefits shall be subject to the following conditions: (i) the expenses eligible for
reimbursement or the amount of in-kind benefits provided in one taxable year shall not affect the
expenses eligible for reimbursement or the amount of in-kind benefits provided in any other taxable
year, except for any medical reimbursement arrangement providing for the reimbursement of expenses
referred to in section 105(b) of the Internal Revenue Code; (ii) the reimbursement of an eligible
expense shall be made no later than the end of the year after the year in which such expense was
incurred; and (iii) the right to reimbursement or in-kind benefits shall not be subject to
liquidation or exchange for another benefit.

(g) “Termination of employment,” or words of similar import, as used in this letter agreement
means, for purposes of any payments under this letter agreement that are payments of deferred
compensation subject to Section 409A, your “separation from service” as defined in Section 409A.

(h) If a payment obligation under this letter agreement arises on account of your separation
from service while you are a “specified employee” (as defined under Section 409A and determined in
good faith by the Board), any payment of “deferred compensation” (as defined under Treasury
regulation section 1.409A-1(b)(1), after giving effect to the exemptions in Treasury regulation
sections 1.409A-1(b)(3) through (b)(12)) that is scheduled to be paid within six months after such
separation from service shall accrue without interest and shall be paid within 15 days after the
end of the six-month period beginning on the date of such separation from service or, if earlier,
within 15 days after the appointment of the personal representative or executor of your estate
following your death.

19. Indemnification. Except in the case of negligence, fraud, embezzlement or
misrepresentation the Company hereby agrees to indemnify and hold harmless Executive to the fullest
extent permitted by Section 145 of the Delaware General Corporation Law and to cause any parent or
subsidiary of the Company to indemnify and hold you harmless to the fullest extent permitted by the
provisions of the laws of the jurisdiction of its incorporation against any liability, loss or
expense (including reasonable attorney’s fees and costs incurred in defense of such claims)
incurred in connection with the your services as an officer or director of the Company or any of
its subsidiaries or affiliates, if in each of the foregoing cases, (i) you acted in good faith and
in a manner you believed to be in, or not opposed to, the best interests of the Company, and, with
respect to any criminal proceeding, had no reasonable cause to believe your conduct was unlawful,
and (ii) your conduct did not constitute gross negligence or willful or wanton misconduct. Without
limitation of the foregoing, this Section 19 shall be deemed to grant to the you the rights to
indemnification provided by the Company’s certificate of incorporation and by-laws, as currently
constituted, regardless of any subsequent amendment or modification of the applicable provisions of
such instruments, with such provisions being deemed incorporated herein by reference. The Company
shall advance or cause its subsidiaries to advance all expenses (including all reasonable legal
fees and expenses) reasonably incurred by you in defending any such claim, action or proceeding,
whether civil, administrative, criminal or otherwise, brought against you in your capacity as an
officer of director of the Company or any of its subsidiaries or affiliates, to the fullest extent
permitted under applicable law, provided Executive provides an undertaking pursuant to which he
agrees to repay all such advances if it is ultimately determined that you are not entitled to
indemnification under the circumstances.

 

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Notwithstanding anything else contained in this letter agreement, the above shall not apply
where the liability, loss or expense (including reasonable attorney’s fees and costs incurred in
defense of such claims) incurred by you arise as a result, directly or indirectly, of any claim or
action taken against you by the Company or any of their respective subsidiaries or affiliates.

20. Successors, Binding Agreement. This letter agreement shall not be assignable by you.
This letter agreement may be assigned by the Company to any affiliate or to any other person that
is a successor in interest to all or substantially all of the business operations of the
Company. This letter agreement shall be binding upon, and inure to the benefit of, the
parties hereto and their respective successors, heirs and permitted assigns.

21. Governing Law. This letter agreement shall be governed in all respects, including as to
validity, interpretation and effect, by the laws of the Commonwealth of Massachusetts, without
regard to its conflict of laws principles.

22. Entire Agreement, Amendments. This letter agreement, including the proprietary
information, confidentiality, and inventions assignment agreement incorporated herein by reference,
sets forth the entire agreement between you and the Company regarding your employment with the
Company and supersedes all prior agreements or other understandings, whether written or oral,
express or implied, between the parties to the extent that such agreements or understandings
contain provisions addressed herein. This letter agreement may not be amended or modified except
by a written agreement executed by the parties hereto or their respective successors and legal
representatives.

* * * *

To indicate your acceptance of these updated terms and conditions of your employment, please sign
and return the following to me no later than date that is one week after date of offer letter:

	 	•	 	one copy of this letter, and

	 	•	 	one copy of the Company’s standard Proprietary Information, Confidentiality, and
Inventions Assignment Agreement, the form of which is annexed hereto as Exhibit
A.

 

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This is a great opportunity for both you and the Company, and we look forward to having you
continue as a member on our team.

	 	 	 	 	 
	 	Sincerely,

HEARTWARE, INC.

 	 
	 	By:  	/s/ David McIntyre
 	 
	 	 	Name:  	David McIntyre 	 
	 	 	Title:  	Corporate Secretary, Chief Operating Officer & 

Chief Financial Officer 	 

Agreed to and accepted:

	 	 	 
	/s/ Douglas Godshall
	 	 
	 

Douglas E Godshall

	 	 

Dated: December 16, 2009

 

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Exhibit A

PROPRIETARY INFORMATION, CONFIDENTIALITY

AND INVENTIONS ASSIGNMENT AGREEMENT

The undersigned, Douglas Godshall, in consideration of and as a condition of my engagement as
an employee of HeartWare Inc., a Delaware corporation (the “Company”), does hereby agree with the
Company as follows:

1. I will not, whether during or after the termination or for a period of five (5) years after
cessation of my employment, reveal to any person, association or company any of the trade secrets
or confidential information concerning the organization, business or finances of the Company so far
as they have come or may come to my knowledge, except as may be necessary in the course of my
duties for the Company or to the extent that such trade secrets or confidential information come to
be in the public domain through no fault of mine, or I am required to disclose such information as
a matter of law, including pursuant to court order, and I shall keep secret all matters entrusted
to me and shall not use or attempt to use any such information in any manner which could reasonably
be expected to injure or cause loss or may be calculated to injure or cause loss whether directly
or indirectly to the Company or for any purpose other than the performance of my duties on behalf
of the Company.

Further, I agree that during the period of my employment I shall not make, use or permit to be
used, even if not in the nature of a trade secret or otherwise marked confidential, any notes,
memoranda, drawings, specifications, programs, data, know how, trade secrets, or other materials of
any nature relating to any matter within the scope of the business of the Company or concerning any
of its dealings or affairs otherwise than for the benefit of the Company. I further agree that I
shall not, for a period of five (5) years after the termination of my employment, use or permit to
be used, even if not in the nature of a trade secret or otherwise marked confidential, any such
notes, memoranda, drawings, specifications, programs, data, know how, trade secrets, or other
materials, it being agreed that any of the foregoing shall be and remain the sole and exclusive
property of the Company and that immediately upon the termination or cessation of my employment I
shall deliver all of the foregoing, and all copies thereof, to the Company, at its main office.

2. If at any time or times during my employment, I shall (either alone or with others) make,
conceive, discover, reduce to practice or become possessed of any invention, modification,
discovery, design, development, improvement, process, formula, data, technique, know-how, secret or
intellectual property right whatsoever or any interest therein (whether or not patentable or
registrable under copyright or similar statutes or subject to analogous protection) (herein called
“Inventions”) in any application that relates to the business of the Company or any of the products
or services being developed, manufactured, marketed, sold or otherwise provided by the Company or
which may conveniently be used in relation therewith, or results from tasks assigned me by the
Company or results from the use of premises, equipment, supplies, facilities or confidential
information owned, leased or contracted for by the Company (“Company Inventions”), such Company
Inventions and the benefits thereof shall, from the moment of their creation or fixation in
tangible media, immediately become the sole and absolute property of the Company, and I shall
promptly disclose to the Company (or any persons
designated by it) each such Company Invention and hereby irrevocably and perpetually assign
any rights, including without limitation any patent, copyright or other intellectual property
rights, I may have or acquire in the Company Inventions and benefits and/or rights resulting
therefrom to the Company without compensation and shall communicate, without cost or delay, and
without publishing the same, all available information relating thereto (with all necessary plans
and models) to the Company. I hereby further represent and acknowledge that any and all such
Company Inventions made, conceived, discovered or reduced to practice prior to the date hereof,
whether or not I am the named inventor, are owned solely by the Company, and that I have no right,
title or interest therein, and I agree that upon the request of the Company, and without any
compensation to me, I will take such action and execute such documents as the Company may request
to evidence and perfect the Company’s ownership of such Company Inventions.

 

 

 

I will also promptly disclose to the Company any Invention made, conceived, discovered,
reduced to practice or possessed by me (either alone or with others) at any time or times during my
employment for the purpose of determining whether they constitute “Company Inventions,” as defined
herein.

Upon disclosure of each Company Invention to the Company, I will, at the request and cost of
the Company, sign, execute, make and do all such deeds, documents, acts and things as the Company
and its duly authorized agents may reasonably require:

(a) to apply for, obtain and vest in the name of the Company alone (unless the Company
otherwise directs) letters patent, copyrights or other analogous protection for any such
Company Invention in any country throughout the world and when so obtained or vested to renew
and restore the same; and

(b) to defend any opposition proceedings in respect of such applications and any
opposition proceedings or petitions or applications for revocation of such letters patent,
copyright or other analogous protection.

In the event the Company is unable, after reasonable effort, to secure my signature on any
letters patent, copyright or other analogous protection relating to a Company Invention, whether
because of my physical or mental incapacity or for any other reason whatsoever, I hereby
irrevocably designate and appoint the Company and its duly authorized officers and agents as my
agent and attorney-in-fact (which designation and appointment shall be (i) deemed coupled with an
interest and (ii) irrevocable, and shall survive my death or incapacity), to act for and in my
behalf and stead to execute and file any such application or applications and to do all other
lawfully permitted acts to further the prosecution and issuance of letters patent, copyright or
other analogous protection thereon with the same legal force and effect as if executed by me.

In addition to the foregoing assignment of Company Inventions to the Company, I hereby
irrevocably transfer and assign to the Company: (i) all worldwide patents, patent applications,
copyrights, mask works, trade secrets and other intellectual property rights in any Company
Invention; and (ii) any and all “Moral Rights” (as defined below) that I may have in or with
respect to any Company Invention. I also hereby forever waive and agree never to assert any and
all Moral Rights I may have in or with respect to any Company Invention, even after termination of
my work on behalf of the Company. “Moral Rights” mean any rights to claim authorship of an
Invention, to object to or prevent the modification of any Invention, or to withdraw from
circulation or control the
publication or distribution of any Invention, and any similar right, existing under judicial
or statutory law of any country in the world, or under any treaty, regardless of whether or not
such right is denominated or generally referred to as a “moral right.”

 

 

 

3. I agree that any breach, or threatened breach, of this Agreement by me could cause
irreparable damage and that in the event of such breach, or threatened breach, the Company shall
have, in addition to any and all remedies of law, the right to an injunction, specific
performance as well as all other equitable relief, to prevent the violation of my obligations
hereunder without the necessity of any proof of actual damages or the posting of a bond or other
security.

4. I understand that this Agreement, by itself, does not create an employment agreement with
the Company or other obligation on the part of the Company to retain my services as an employee.

5. I represent that the Inventions identified in the pages, if any, attached hereto comprise
all the Inventions which I have made or conceived prior to my engagement by the Company, which
Inventions are excluded from this Agreement. I understand that it is only necessary to list the
title of such Inventions and the purpose thereof but not details of the Invention itself. IF THERE
ARE ANY SUCH UNPATENTED INVENTIONS TO BE EXCLUDED, THE UNDERSIGNED SHOULD INITIAL HERE. OTHERWISE
IT WILL BE DEEMED THAT THERE ARE NO SUCH EXCLUSIONS.      

I further represent that I am free to enter into an employment relationship with the Company,
and my performance of all the terms of this Agreement, and my performance as an employee of the
Company, does not and will not breach any agreement with a third party, including but not limited
to any agreement to keep in confidence proprietary information acquired by me in confidence or in
trust prior to my engagement by the Company. I have not entered into, and I agree I will not enter
into, any agreement either written or oral in conflict herewith. I further agree to indemnify the
Company to the extent it is made a party to any lawsuit based upon my violation of any such
agreement.

I further represent that if the representations set forth in the preceding paragraph are
inapplicable, I have attached hereto a copy of each agreement, if any, which presently affects my
compliance with the terms of this Agreement (such copy specifies the other contracting party or
employer, the date of such agreement, the date of termination of any employment.) IF THERE ARE ANY
SUCH AGREEMENTS, THE UNDERSIGNED SHOULD INITIAL HERE. OTHERWISE IT WILL BE DEEMED THAT THERE ARE
NO SUCH AGREEMENTS.      

I further represent that I have or will return all property, including documents,
memoranda, software or other record containing information belonging to my former employer(s) and
will not bring any such materials to the Company’s premises or otherwise use any such material in
performing work for the Company. I further agree to indemnify the Company to the extent it is made
a party to any lawsuit based upon my violation of this representation.

6. Any waiver by the Company of a breach of any provisions of this Agreement shall not operate
or be construed as a waiver of any subsequent breach hereof.

 

 

 

7. I hereby agree that each provision herein shall be treated as a separate and independent
clause, and the unenforceability of any one clause shall in no way impair the enforceability of any
of the other clauses herein. Moreover, if one or more of the provisions contained in this
Agreement shall for any reason be held to be excessively broad as to scope, activity or subject so
as to be unenforceable at law, such provision or provisions shall be construed by the appropriate
judicial body by limiting and reducing it or them, so as to be enforceable to the extent compatible
with the applicable law as it shall then appear.

8. My obligations under this Agreement shall survive the termination or cessation of my
employment regardless of the manner of such termination or cessation and shall be binding upon my
heirs, executors and administrators.

9. This Agreement shall be governed by, and construed in accordance with, the laws of the
Commonwealth of Massachusetts.

10. For purposes of this Agreement, the term “employment” shall also mean any period of
consultancy with the Company that may follow formal employment by the Company.

11. The term “Company” shall include HeartWare Inc., a Delaware corporation, HeartWare
Limited, as Australian corporation, and any of their predecessors, successors, parents,
subsidiaries, subdivisions, affiliates or assigns. The parties agree that the Company shall have
the right to assign this Agreement to its successors and assigns, and all covenants and agreements
hereunder shall inure to the benefit of and be enforceable by said successors or assigns, without
requiring Executive to renew this Agreement or execute a new Agreement reflecting the terms
contained herein.

IN WITNESS WHEREOF, the undersigned has executed this Agreement as of the 16th day of
December, 2009.

	 	 	 	 	 
	 	HEARTWARE INC.

 	 
	 	By:  	/s/ David McIntyre
 	 
	 	 	Title:	Chief Operating Officer & Chief Financial Officer 	 
	 	 	Name: 	David McIntyre 	 

	 	 	 	 	 
	 	EMPLOYEE:

 	 
	 	Name: 	 /s/ Douglas Godshall
 	 
	 	 	Name:  	Douglas Godshallexv4w1

Exhibit 4.1

 

 

DUKE ENERGY OHIO, INC.

(FORMERLY NAMED “THE CINCINNATI GAS & ELECTRIC COMPANY”)

TO

THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A.,

AS TRUSTEE

(SUCCESSOR TRUSTEE TO THE BANK OF NEW YORK MELLON

AND TO IRVING TRUST COMPANY)

 

FORTY-FIRST SUPPLEMENTAL INDENTURE

DATED AS OF DECEMBER 17, 2009

TO

FIRST MORTGAGE

DATED AS OF AUGUST 1, 1936

 

Creating First Mortgage Bonds, 2.10% Series, Due June 15, 2013

 

 

 

 

TABLE OF CONTENTS

	 	 	 	 	 
	ARTICLE ONE. DEFINITIONS
	 	 	2	 
	 
	 	 	 	 
	SECTION 1.01. DEFINITIONS
	 	 	2	 
	 
	 	 	 	 
	ARTICLE TWO. FIRST MORTGAGE BONDS, 2.10% SERIES, DUE JUNE 15, 2013
	 	 	2	 
	 
	 	 	 	 
	SECTION 2.01. CREATION AND DESIGNATION OF BONDS OF SERIES DUE 2013
	 	 	2	 
	 
	 	 	 	 
	SECTION 2.02. AGGREGATE PRINCIPAL AMOUNT OF BONDS OF SERIES DUE 2013 ISSUABLE
	 	 	2	 
	 
	 	 	 	 
	SECTION 2.03. BOOK-ENTRY SYSTEM
	 	 	3	 
	 
	 	 	 	 
	SECTION 2.04. DATE OF BONDS OF SERIES DUE 2013
	 	 	6	 
	 
	 	 	 	 
	SECTION 2.05. MATURITY DATES, INTEREST RATES, INTEREST PAYMENT DATES AND
REGULAR RECORD DATES FOR BONDS OF SERIES DUE 2013
	 	 	6	 
	 
	 	 	 	 
	SECTION 2.06. PLACE AND MANNER OF PAYMENT OF BONDS OF SERIES DUE 2013
	 	 	7	 
	 
	 	 	 	 
	SECTION 2.07. DENOMINATIONS AND NUMBERING OF DEFINITIVE BONDS OF SERIES DUE 2013
	 	 	7	 
	 
	 	 	 	 
	SECTION 2.08. TEMPORARY BONDS OF SERIES DUE 2013 AND EXCHANGE THEREOF
	 	 	7	 
	 
	 	 	 	 
	SECTION 2.09. REDEMPTION PROVISIONS OF THE BONDS OF SERIES DUE 2013
	 	 	7	 
	 
	 	 	 	 
	SECTION 2.10. FORM OF THE BONDS OF SERIES DUE 2013
	 	 	9	 
	 
	 	 	 	 
	ARTICLE THREE. MISCELLANEOUS
	 	 	14	 
	 
	 	 	 	 
	SECTION 3.01. INDENTURE RATIFIED AND CONFIRMED
	 	 	14	 
	 
	 	 	 	 
	SECTION 3.02. EXECUTION IN COUNTERPARTS
	 	 	14	 
	 
	 	 	 	 
	SECTION 3.03. EFFECT OF HEADINGS AND TABLE OF CONTENTS
	 	 	14	 
	 
	 	 	 	 
	SECTION 3.04. SUCCESSORS AND ASSIGNS
	 	 	14	 
	 
	 	 	 	 
	SECTION 3.05. SEPARABILITY CLAUSE
	 	 	14	 
	 
	 	 	 	 
	SECTION 3.06. BENEFITS OF INDENTURE
	 	 	14	 
	 
	 	 	 	 
	SECTION 3.07. GOVERNING LAW
	 	 	15	 
	 
	 	 	 	 
	SECTION 3.08. TRUSTEE NOT RESPONSIBLE FOR RECITALS, ETC.
	 	 	15	 

 

 

     FORTY-FIRST SUPPLEMENTAL INDENTURE, dated as of December 17, 2009, between DUKE ENERGY OHIO,
INC. (hereinafter sometimes referred to as the “Company”), a corporation organized and existing
under the laws of the State of Ohio, formerly named The Cincinnati Gas & Electric Company, and THE
BANK OF NEW YORK MELLON TRUST COMPANY, N.A., a national banking association, and the successor
trustee to The Bank of New York Mellon and Irving Trust Company (hereinafter sometimes referred to
as the “Trustee”), whose mailing address is 525 Vine Street, Suite 900, Cincinnati, Oh 45202.

RECITALS OF THE COMPANY

     The Indenture, dated as of August 1, 1936 (the “Original Indenture”) was authorized, executed
and delivered by the Company to provide for the issuance from time to time of its bonds, to be
issued in one or more series as contemplated therein, and to provide security for the payment of
the principal of and premium, if any, and interest, if any, on the bonds.

     The Company has heretofore executed and delivered to the Trustee forty supplemental indentures
for the purposes recited therein, including creating series of Securities and otherwise amending,
restating and supplementing the Original Indenture (the Original Indenture, as so amended, restated
and supplemented, being hereinafter called the “Indenture”).

     The Company, by appropriate corporate action in conformity with the terms of the Indenture,
has duly determined to make, execute and deliver to the Trustee this Forty-first Supplemental
Indenture to the Indenture as permitted by Sections 2.01, 3.01, 13.01 and 16.02 of the Indenture in
order to establish the form or terms of, and to provide for the creation and issuance of, a new
series of Securities under the Indenture in an aggregate principal amount of $250,000,000 to be
designated as “First Mortgage Bonds, 2.10% Series, Due June 15, 2013”) (hereinafter referred to as
the “Bonds of Series Due 2013”).

     All things necessary to make the Bonds of Series Due 2013 herein described, when duly
authenticated by the Trustee and issued by the Company, valid, binding, and legal obligations of
the Company, and to make this Forty-first Supplemental Indenture a valid and binding agreement
supplemental to the Indenture, have been done and performed.

THIS FORTY-FIRST SUPPLEMENTAL INDENTURE WITNESSETH:

     In consideration of the premises and of the acceptance and purchase of the Bonds of Series Due
2013, the Company hereby covenants and agrees to and with the Trustee as follows:

 [The remainder of this page has been left blank intentionally.]

 

 

ARTICLE ONE.

DEFINITIONS

SECTION 1.01. DEFINITIONS.

     Each capitalized term that is used herein and is defined in the Indenture shall have the
meaning specified in the Indenture unless such term is otherwise defined herein.

ARTICLE TWO.

FIRST MORTGAGE BONDS, 2.10% SERIES, DUE JUNE 15, 2013

SECTION 2.01. CREATION AND DESIGNATION OF BONDS OF SERIES DUE 2013.

     There is hereby created a series of Securities to be issued under and secured by the
Indenture, to be designated as “First Mortgage Bonds, 2.10% Series, Due June 15, 2013 (herein
sometimes referred to as the “Bonds of Series Due 2013”).

SECTION 2.02. AGGREGATE PRINCIPAL AMOUNT OF BONDS OF SERIES DUE 2013 ISSUABLE.

     (a) The principal amount of Bonds of Series Due 2013 which may be authenticated and delivered
hereunder is limited to the aggregate principal amount of Two Hundred Fifty Million Dollars
($250,000,000) (except for Bonds of Series Due 2013 authenticated and delivered upon registration
of transfer of, or in exchange for, or in lieu of, other Bonds of Series Due 2013 pursuant to
Section 3.04, 3.05, 3.06, 5.06 or 13.06 of the Indenture and except for any Bonds of Series Due
2013 which, pursuant to Section 3.03 of the Indenture, are deemed never to have been authenticated
and delivered hereunder).

     (b) The Bonds of Series Due 2013 in the aggregate principal amount of Two Hundred Fifty
Million Dollars ($250,000,000) may at any time subsequent to the execution hereof be executed by
the Company and delivered to the Trustee and shall be authenticated by the Trustee and delivered
(either before or after the recording hereof) upon the basis of Property Additions issued and
delivered to the Trustee for such purpose, pursuant to a Company Order referred to in Section 16.02
of the Indenture and upon receipt by the Trustee of the opinions and other documents required by
said Section 16.02.

-2-

 

SECTION 2.03. BOOK-ENTRY SYSTEM.

     The following provisions shall apply to the Bonds of Series Due 2013.

     (a) The Bonds of Series Due 2013 shall be issued in fully registered form only. However,
except as provided elsewhere in this Section, the registered owner of all of the Bonds of Series
Due 2013 initially shall be The Depository Trust Company (“DTC”) or its nominee, and such Bonds of
Series Due 2013 initially shall be registered in the name of DTC or its nominee. Payment of the
principal or Redemption Price of or interest on Bonds of Series Due 2013 registered in the name of
DTC or its nominee shall be made in the manner specified in DTC’s rules and by-laws. DTC (and any
successor securities depository) and its (or their) participating institutions (collectively
“Participants”) shall maintain a book-entry registration and transfer system with respect to
ownership of beneficial interests in the Bonds of Series Due 2013 (the “Book-Entry System”).

     (b) The Bonds of Series Due 2013 initially shall be issued in the form of one or more
authenticated, fully registered bonds for such series (each a “Global Security”) which (i) need not
be in the form of a lithographed or engraved certificate, but may be typewritten or printed on
ordinary paper or such paper as the Trustee may reasonably request, (ii) shall represent and be
denominated in an amount equal to 100% of the aggregate principal amount of the Bonds of Series Due
2013 issued under the Indenture and this Forty-first Supplemental Indenture, (iii) shall be
executed by the Company and authenticated by the Trustee in accordance with the provisions of the
Indenture and this Forty-first Supplemental Indenture, (iv) shall be registered in the name of DTC
or its nominee, and delivered to DTC or its nominee or a custodian therefor, and (v) shall contain
the following legend on the face thereof:

Unless this certificate is presented by an authorized representative of The
Depository Trust Company, a New York corporation (“DTC”), to issuer or its
agent for registration of transfer, exchange or payment, and any certificate
issued is registered in the name of Cede & Co. or in such other name as is
requested by an authorized representative of DTC (and any payment is made to
Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE
OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered
holder hereof, Cede & Co., has an interest herein.

     Unless and until it is exchanged in whole or in part for Bonds of Series Due 2013 in
definitive certificated form, each Global Security representing the Bonds of Series Due 2013 may
not be transferred except as a whole by DTC to a nominee of DTC or by a nominee of DTC

-3-

 

to DTC or
another nominee of DTC or by DTC or any such nominee to a successor securities depository or a
nominee of any such successor securities depository.

     (c) The Trustee and the Company may treat DTC or its nominee, or any successor securities
depository or nominee thereof (collectively, the “Depository”) as the sole and exclusive owner of
the Bonds of Series Due 2013, registered in its name for the purposes of payment of the principal
or Redemption Price of or interest on the Bonds of Series Due 2013, giving any notice permitted or
required to be given to Holders of the Bonds of Series Due 2013, under the Indenture or this
Forty-first Supplemental Indenture, registering the transfer of the Bonds of Series Due 2013,
obtaining any consent or other action to be taken by Holders of the Bonds of Series Due 2013, and
for all other purposes whatsoever and neither the Trustee nor the Company shall be affected by any
notice to the contrary. Neither the Company nor the Trustee nor any Security Registrar nor any
Paying Agent shall have any responsibility or obligation to any Participant, any Person claiming a
beneficial ownership interest in the Bonds of Series Due 2013 under or through the Depository or
any Participant, or any other Person which is not shown on the Security Register as being a Holder
of the Bonds of Series Due 2013 with respect to (i) the accuracy of any records maintained by the
Depository or any Participant; (ii) the payment by the Depository to any Participant of any amount
in respect of the principal or Redemption Price of or interest on the Bonds of Series Due 2013;
(iii) the payment by any Participant to any owner of a beneficial ownership interest in the Bonds
of Series Due 2013, in respect of the principal or Redemption Price of or interest on the Bonds of
Series Due 2013 or (iv) any consent or other action taken by the Depository as owner of the Bonds
of Series Due 2013. The Trustee shall pay all principal or Redemption Price of and interest on the
Bonds of Series Due 2013 only to or upon the order of the registered Holder or Holders of the Bonds
of Series Due 2013, as shown on the Security Register, and all such payments shall be valid and
effective to fully satisfy and discharge the Company’s obligations with respect to the principal or
Redemption Price of and interest on the Bonds of Series Due 2013, to the extent of the sum or sums
so paid. Except as hereinafter provided, no Person other than a Holder of the Bonds of Series Due
2013, as shown on the Security Register, shall receive an authenticated Bond evidencing the
obligation of the Company to make payment of the principal or Redemption Price of and interest on
the Bonds of Series Due 2013, pursuant to the Indenture or this Forty-first Supplemental Indenture.
Upon delivery by DTC to the Trustee of written notice to the effect that DTC has determined to
substitute a new nominee for Cede & Co, and subject to the provisions of the Indenture, the word
“Cede & Co.”, as used in this Forty-first Supplemental Indenture, shall refer to each new nominee
of DTC.

     (d) In the event that after the occurrence of an Event of Default that has not been cured or
waived, holders of a majority in aggregate principal amount of the beneficial interests in the
Bonds of Series Due 2013, as reflected in the books and records of the Depository, notify the
Trustee, through the Depository or any Participant, that the continuation of the Book-Entry

-4-

 

System is no longer in the best interests of such holders of beneficial interests in the Bonds of such
Series, then the Trustee shall notify the Depository and the Company, and the Depository will
notify the Participants of the availability through the Depository of definitive certificated Bonds
of such Series. In such event, the Company shall execute, and the Trustee, upon receipt of a
Company Order, for the authentication and delivery of definitive certificated Bonds of
Series Due 2013, will authenticate and deliver Bonds of such Series in definitive certificated
form, in any authorized denominations, all pursuant to the provisions of the Indenture and this
Forty-first Supplemental Indenture, to the Person or Persons specified to the Trustee in writing by
the Depository in the aggregate principal amount of the applicable Global Security or Securities
and in exchange for such Global Security or Securities.

     (e) If at any time the Depository notifies the Company that it is unwilling or unable to
continue as Depository for the Bonds of Series Due 2013, or if at any time the Depository shall no
longer be registered as a clearing agency in good standing under the Exchange Act or other
applicable statute or regulation, the Company may appoint a successor Depository with respect to
the Bonds of such Series. If a successor Depository for the Bonds of such Series is not appointed
by the Company within 90 days after the Company receives such notice or becomes aware of such
condition, the Company will execute, and the Trustee, upon receipt of a Company Order for the
authentication and delivery of definitive certificated Bonds of Series Due 2013, will authenticate
and deliver Bonds of such Series in definitive certificated form, in any authorized denominations,
all pursuant to the provisions of the Indenture and this Forty-first Supplemental Indenture, to the
Person or Persons specified to the Trustee in writing by the Depository in the aggregate principal
amount of the applicable Global Security or Global Securities and in exchange for such Global
Security or Global Securities.

     (f) The Company may at any time and in its sole discretion and subject to the procedures of
the Depository determine that the Bonds of Series Due 2013 shall no longer be represented by a
Global Security or Global Securities. In such event the Company will execute, and the Trustee,
upon receipt of a Company Order for the authentication and delivery of definitive certificated
Bonds of Series Due 2013, will authenticate and deliver Bonds of Series Due 2013 in definitive
certificated form, in any authorized denominations, all pursuant to the provisions of the Indenture
and this Forty-first Supplemental Indenture, to the Person or Persons specified to the Trustee in
writing by the Depository in the aggregate principal amount of the Global Security or Global
Securities and in exchange for such Global Security or Global Securities.

     (g) Upon the exchange of any Global Security for the Bonds of Series Due 2013 in definitive
certificated form, in authorized denominations, the Global Security or Global Securities shall be
cancelled by the Trustee.

-5-

 

     (h) Whenever the Depository requests the Company and the Trustee to do so, the Trustee and the
Company will cooperate with the Depository in taking appropriate action after reasonable notice to
(i) make available one or more separate Global Securities evidencing the Bonds of Series Due 2013
to any Participant having such Bonds of Series Due 2013 credited to its account at the Depository,
or (ii) arrange for another Depository to maintain custody of the Global Security or Securities
evidencing the Bonds of Series Due 2013.

     (i) In connection with any notice or other communication to be provided to Holders of the
Bonds of Series Due 2013 pursuant to the Indenture or this Forty-first Supplemental Indenture by
the Company or the Trustee with respect to any consent or other action to be taken by Holders of
such Bonds of Series Due 2013, the Company or the Trustee, as the case may be, shall establish a
record date for such consent or other action and give the Depository notice of such record date not
less than 15 calendar days in advance of such record date to the extent possible. Such notice to
the Depository shall be given only so long as a Depository or its nominee is the sole Holder of the
Bonds of Series Due 2013.

SECTION 2.04. DATE OF BONDS OF SERIES DUE 2013.

     Each Bond of Series Due 2013 issued prior to the first Interest Payment Date therefor shall be
dated as of December 17, 2009, and otherwise shall be dated as provided in Section 3.03 of the
Indenture.

SECTION 2.05. MATURITY DATES, INTEREST RATES, INTEREST PAYMENT DATES AND REGULAR RECORD DATES FOR
BONDS OF SERIES DUE 2013.

     All Bonds of Series Due 2013 shall be due and payable on June 15, 2013, and shall bear
interest from December 17, 2009 or the last date to which interest has been paid or duly provided
for at the rate of 2.10% per annum, payable semi-annually on the fifteenth day of June and December
in each year, commencing June 15, 2010 (each such date being an Interest Payment Date for Bonds of
Series Due 2013).

     Subject to certain exceptions provided in the Indenture or this Forty-first Supplemental
Indenture, the interest payable on any Interest Payment Date for Bonds of Series Due 2013 shall be
paid to the Person in whose name a Bond of Series Due 2013 shall be registered at the close of
business on the Regular Record Date for the Bonds of Series Due 2013 (as defined in the form of the
Bonds of Series Due 2013 set forth in Section 2.10) or, in the case of any Defaulted Interest
therefor, in the manner and to the Person as provided in Section 3.07 of the Indenture. If any
Interest Payment Date for Bonds of Series Due 2013 should fall on a day that is not a Business Day,
then the interest payment shall be made on the next succeeding Business Day and no interest shall
accrue for the intervening period with respect to the payment so deferred.

-6-

 

SECTION 2.06. PLACE AND MANNER OF PAYMENT OF BONDS OF SERIES DUE 2013.

     Subject to agreements with or the rules of the Depository or any successor book-entry security
system or similar system with respect to Global Securities, the principal or Redemption Price of
and interest on the Bonds of Series Due 2013 shall be payable in any coin or currency of the United
States of America which at the time of payment is legal tender for the payment of public and
private debts, at the office or agency of the Company in Cincinnati, Ohio, or, at the option of the
Holder thereof, at the office or agency of the Company in the Borough of Manhattan, the City of New
York, State of New York, except that interest on the Bonds of Series Due 2013 may be paid, at the
option of the Company, by check or draft mailed to the address of the Person entitled thereto as it
appears on the Security Register.

SECTION 2.07. DENOMINATIONS AND NUMBERING OF DEFINITIVE BONDS OF SERIES DUE 2013.

     Definitive Bonds of Series Due 2013 shall be issuable in denominations of $2,000 and multiples
of $1,000 in excess thereof, numbered consecutively from “R-1” upward.

SECTION 2.08. TEMPORARY BONDS OF SERIES DUE 2013 AND EXCHANGE THEREOF.

     Pursuant to the provisions of Section 3.04 of the Indenture, Bonds of Series Due 2013 may be
issued in temporary form, and if temporary bonds be issued, the Company shall, with all reasonable
dispatch, at its own expense and without charge to the holders of the temporary bonds, prepare and
execute definitive Bonds of Series Due 2013 and exchange the temporary bonds for such definitive
bonds in the manner provided for in said Section, provided, however, no presentation or surrender
of temporary Bonds of Series Due 2013 shall be necessary in order for the Holders entitled to
interest thereon to receive such interest.

SECTION 2.09. REDEMPTION PROVISIONS OF THE BONDS OF SERIES DUE 2013.

     (a) The Bonds of Series Due 2013 may be redeemed at the option of the Company, as a whole or
in part at any time, at a Redemption Price equal to the greater of (1) 100% of the principal amount
of the Bonds of Series Due 2013 to be redeemed and (2) the sum of the present values of the
remaining scheduled payments of principal and interest thereon (exclusive of interest accrued to
the Redemption Date), discounted to the Redemption Date on a semiannual basis (assuming a 360-day
year consisting of twelve 30-day months) at the Treasury Rate plus 0.15% (15 basis points), plus,
in each case, accrued interest to the Redemption Date. For the avoidance of doubt, interest that is
due and payable on an Interest Payment Date for the Bonds of Series Due 2013 falling on or prior to
a Redemption Date therefor will be payable on such

-7-

 

Interest Payment Date in accordance with the
Bonds of Series Due 2013 and this Indenture. The Company shall notify the Trustee of the
Redemption Price with respect to any redemption
pursuant to this paragraph promptly after the calculation thereof. The Trustee shall not be
responsible for calculating said Redemption Price.

     (b) For purposes of this Section, except as otherwise expressly provided or unless the context
otherwise requires:

     “Business Day” means any day other than a day on which banks in New York City are required or
authorized to be closed.

     “Comparable Treasury Issue” means the United States Treasury security or securities selected
by the Quotation Agent as having an actual or interpolated maturity comparable to the remaining
term of the Bonds of Series Due 2013 to be redeemed that would be utilized, at the time of
selection and in accordance with customary financial practice, in pricing new issues of corporate
debt securities of a comparable maturity to the remaining term of the Bonds of Series Due 2013.

     “Comparable Treasury Price” means, with respect to any Redemption Date for the Bonds of Series
Due 2013, (A) the average of the Reference Treasury Dealer Quotations for such Redemption Date,
after excluding the highest and lowest such Reference Treasury Dealer Quotations, or (B) if the
Quotation Agent obtains fewer than four such Reference Treasury Dealer Quotations, the average of
all such quotations.

     “Quotation Agent” means one of the Reference Treasury Dealers appointed by the Company.

     “Reference Treasury Dealer” means each of Barclays Capital Inc. and RBS Securities Inc., plus
three other financial institutions appointed by the Company at the time of any redemption or their
affiliates which are primary U.S. Government securities dealers, and their respective successors;
provided, however, that if any of the foregoing or their affiliates shall cease to be a primary
U.S. Government securities dealer in the United States (a “Primary Treasury Dealer”), the Company
shall substitute therefor another Primary Treasury Dealer.

     “Reference Treasury Dealer Quotations” means, with respect to each Reference Treasury Dealer
and any Redemption Date, the average, as determined by the Quotation Agent, of the bid and asked
prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal
amount) quoted in writing to the Quotation Agent by the Reference Treasury Dealers at 3:30 p.m.,
New York time, on the third Business Day preceding such Redemption Date.

-8-

 

     “Treasury Rate” means, with respect to any Redemption Date, the rate per annum equal to the
semiannual equivalent yield to maturity or interpolated maturity (on a day count basis) of the
Comparable Treasury Issue, assuming a price for the Comparable Treasury Issue (expressed
as a percentage of its principal amount) equal to the Comparable Treasury Price for such
Redemption Date.

     (c) Notice of any redemption by the Company will be mailed at least thirty (30) days but not
more than sixty (60) days before any Redemption Date to each Holder of Bonds of Series Due 2013 to
be redeemed. If less than all the Bonds of Series Due 2013 are to be redeemed at the option of the
Company, the Trustee shall select, in such manner as it shall deem fair and appropriate, the Bonds
of Series Due 2013 to be redeemed in whole or in part.

     (d) Unless the Company defaults in payment of the Redemption Price therefor, on and after any
Redemption Date therefor, interest will cease to accrue on the Bonds of Series Due 2013 or portions
thereof called for redemption.

     (e) The Company shall indemnify and hold harmless the Trustee from any and all losses, costs,
damages, expenses, fees (including reasonable attorneys’ fees), court costs, judgments, penalties,
obligations, suits, disbursements and liabilities of any kind or character whatsoever which may at
any time be imposed upon, incurred by or asserted against the Trustee by reason of or arising out
of or caused, directly or indirectly, by any act or omission of the Trustee with respect to this
Section 2.09, except for such that would arise out of the gross negligence, willful misconduct or
bad faith of the Trustee and except for costs and expenses arising in the ordinary course of the
Trustee’s business.

SECTION 2.10. FORM OF THE BONDS OF SERIES DUE 2013.

     The Bonds of Series Due 2013 and the Trustee’s certificate to be endorsed thereon shall be
substantially in the following form:

[The remainder of this page has been left blank intentionally.]

-9-

 

(Form of Bond of Series Due 2013)

[Unless this certificate is presented by an authorized representative of The Depository Trust
Company, a New York corporation (“DTC”), to issuer or its agent for registration of transfer,
exchange or payment, and any certificate issued is registered in the name of Cede & Co. or in such
other name as is requested by an authorized representative of DTC (and any payment is made to Cede
& Co. or to such other entity as is requested by an authorized representative of DTC), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL
inasmuch as the registered holder hereof, Cede & Co., has an interest herein.]1

			
	 	 	 
	No. R-

CUSIP No: 26442E AB 6

ISIN: US26442EAB65
	 	$                    

Duke Energy Ohio, Inc.

First Mortgage Bond, 2.10% Series,

Due June 15, 2013

     Duke Energy Ohio, Inc., an Ohio corporation (hereinafter called the “Company”), for value
received, hereby promises to pay to                     , or registered assigns, the principal sum of
                                         Dollars ($        ) on the fifteenth day of June, 2013 and to pay interest
on said sum from December 17, 2009 or from the most recent date to which interest has been paid or
duly provided for, until said principal sum is paid or made available for payment, at the rate of
2.10% per annum, payable semi-annually on the fifteenth day of June and December in each year,
commencing June 15, 2010 (each such date herein called an “Interest Payment Date”). The principal
of and premium, if any, and interest on this bond shall be payable in any coin or currency of the
United States of America which at the time of payment is legal tender for the payment of public and
private debts at the office or agency of the Company in Cincinnati, Ohio, or, at the option of the
registered owner hereof, at the office or agency of the Company in the Borough of Manhattan, the
City of New York, State of New York, except that interest on this bond may be paid, at the option
of the Company, by check or draft mailed to the address of the Person entitled thereto as it
appears on the Security Register.

     This bond is one of the Securities of the Company issued and to be issued from time to time
under and in accordance with and all secured by a First Mortgage Indenture, dated as of August 1,
1936, from the Company to The Bank of New York Mellon Trust Company, N.A., as successor Trustee
(which indenture as amended and as amended and restated by all supplemental

 

			
	1	 	This should be included only if the Bonds of Series
Due 2013 are being issued in global form.

-10-

 

indentures is
hereinafter referred to as the “Indenture”). Said Trustee or its successor in trust under the
Indenture is hereinafter sometimes referred to as the “Trustee.” Reference is hereby
made to the Indenture for a description of the property mortgaged and pledged and the nature
and extent of the security for said Securities. Capitalized terms not otherwise defined herein have
the meanings specified therefor in the Indenture. By the terms of the Indenture, the Securities
secured thereby are issuable in series which may vary as to date, amount, date of maturity, rate of
interest and in other respects as in the Indenture provided.

     This bond is one of a series designated as “First Mortgage Bonds, 2.10% Series, Due June 15,
2013” (hereinafter referred to as the “Bonds of Series Due 2013”) of the Company issued under and
secured by the Indenture and created by a Forty-first Supplemental Indenture, dated as of December
17, 2009.

     Subject to certain exceptions provided in the Indenture, the interest payable on any Interest
Payment Date shall be paid to the Person in whose name this bond shall be registered at the close
of business on the Regular Record Date (hereinafter defined) or, in the case of Defaulted Interest
therefor, in the manner and to the person as provided in the Indenture. If any Interest Payment
Date should fall on a day that is not a Business Day, then the interest payment shall be made on
the next succeeding Business Day and no interest shall accrue for the intervening period with
respect to the payment so deferred.

     The term “Regular Record Date” shall mean, with respect to any Interest Payment Date for any
Bonds of Series Due 2013, the close of business on the fifteenth (15th) calendar day next preceding
the respective Interest Payment Date (whether or not a Business Day); provided, however, that so
long as the Bonds of Series Due 2013 are held by a Depository in the form of one or more Global
Securities, the Regular Record Date with respect to each Interest Payment Date will be the close of
business on the Business Day before the applicable Interest Payment Date.

     The Bonds of Series Due 2013 may be redeemed at the option of the Company, as a whole or in
part at any time, at a Redemption Price equal to the greater of (1) 100% of the principal amount of
the Bonds of Series Due 2013 to be redeemed and (2) the sum of the present values of the remaining
scheduled payments of principal and interest thereon (exclusive of interest accrued to the
Redemption Date), discounted to the Redemption Date on a semiannual basis (assuming a 360-day year
consisting of twelve 30-day months) at the Treasury Rate plus 0.15% (15 basis points), plus, in the
case of each of clause (1) and (2), accrued and unpaid interest, if any, to the Redemption Date.
For the avoidance of doubt, interest that is due and payable on an Interest Payment Date falling on
or prior to a Redemption Date therefor will be payable on such Interest Payment Date in accordance
with the Bonds of Series Due 2013 and the Indenture.

-11-

 

     Notice of any redemption by the Company will be mailed at least thirty (30) days but not more
than sixty (60) days before any Redemption Date to each Holder of Bonds of Series Due 2013 to be
redeemed. If less than all the Bonds of Series Due 2013 are to be redeemed at the
option of the Company, the Trustee shall select, in such manner as it shall deem fair and
appropriate, the Bonds of Series Due 2013 to be redeemed..

     The Bonds of Series Due 2013 are not otherwise redeemable prior to their maturity.

     Unless the Company defaults in payment of the Redemption Price, on and after any Redemption
Date for the Bonds of Series Due 2013, interest will cease to accrue on the Bonds of Series Due
2013 or portions thereof called for redemption.

     In the case of any of certain Events of Default specified in the Indenture, the principal of
this bond may be declared or may become due and payable prior to the stated date of maturity hereof
in the manner and with the effect provided in the Indenture.

     No recourse shall be had for the payment of the principal or Redemption Price of or interest
on this bond, or for any claim based hereon, or otherwise in respect hereof or of the Indenture, to
or against any incorporator, shareholder, officer or director, past, present or future, of the
Company or of any predecessor or successor company, either directly or through the Company or such
predecessor or successor company, under any constitution or statute or rule of law, or by the
enforcement of any assessment or penalty, or otherwise, all such liability of incorporators,
shareholders, directors and officers being waived and released by the registered owner hereof by
the acceptance of this bond and being likewise waived and released by the terms of the Indenture.

     The Bonds of Series Due 2013 are issuable only in registered form without coupons. This bond
is transferable by the registered owner hereof, in person or by an attorney duly authorized, at the
Corporate Trust Office of The Bank of New York Mellon Trust Company, N.A., the Trustee, or its
successor in trust under the Indenture, or, at the option of the registered owner, at the office or
agency of the Company in the Borough of Manhattan, the City of New York, State of New York, upon
the surrender and cancellation of this bond, and upon any such transfer a new registered Security
or Securities of the same series and maturity date and for the same aggregate principal amount will
be issued to the transferee in exchange herefor.

     The Bonds of Series Due 2013 are issuable in denominations of $2,000 and multiples of $1,000
in excess thereof. In the manner and subject to the limitations provided in the Indenture, Bonds of
Series Due 2013 are exchangeable as between authorized denominations, upon presentation thereof for
such purpose by the registered owner, at the Corporate Trust Office of

-12-

 

The Bank of New York Mellon
Trust Company, N.A., the Trustee, or its successor in trust under the Indenture, or, at the option
of the registered owner, at the office or agency of the Company in the Borough of Manhattan, the
City of New York, State of New York.

     No service charge will be made for any transfer or exchange of this bond, but the Company may
require a sum sufficient to cover any tax or other governmental charge payable in connection
therewith.

     This bond shall not be valid or become obligatory for any purpose unless and until it shall
have been authenticated by the execution by the Trustee, or its successor in trust under the
Indenture, of the certificate endorsed hereon.

     In Witness Whereof, Duke Energy Ohio, Inc. has caused this bond to be executed in its
name by the manual or facsimile signature of an Authorized Officer.

Dated as of:

	 	 	 	 	 
	 	Duke Energy Ohio, Inc.

 	 
	 	By  	 	 
	 	 	Authorized Officer 	 
	 	 	 	 
	 

TRUSTEE’S CERTIFICATE OF AUTHENTICATION

     This is one of the Securities of the series designated therein referred to in the
within-mentioned Indenture.

	 	 	 	 	 
	 	The Bank of New York Mellon Trust Company, N.A., as Trustee

 	 
	 	By  	 	 
	 	 	Authorized Officer 	 
	 	 	 	 
	 

 [End of Article Two.]

-13-

 

ARTICLE THREE.

MISCELLANEOUS

SECTION 3.01. INDENTURE RATIFIED AND CONFIRMED.

     The Indenture, as supplemented by this Forty-first Supplemental Indenture, is in all respects
ratified and confirmed and shall be read, taken and construed as one and the same instrument.

SECTION 3.02. EXECUTION IN COUNTERPARTS

     This Forty-first Supplemental Indenture may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such counterparts shall together
constitute but one and the same instrument.

SECTION 3.03. EFFECT OF HEADINGS AND TABLE OF CONTENTS.

     The Article and Section headings in this Forty-first Supplemental Indenture and the Table of
Contents are for convenience only and shall not affect the construction hereof.

SECTION 3.04. SUCCESSORS AND ASSIGNS.

     All covenants and agreements in this Forty-first Supplemental Indenture by the Company and the
Trustee shall bind their respective successors and assigns, whether so expressed or not.

SECTION 3.05. SEPARABILITY CLAUSE.

     In case any provision in this Forty-first Supplemental Indenture shall be held to be invalid,
illegal or unenforceable, the validity, legality and enforceability of the remaining provisions
shall not in any way be affected or impaired thereby.

SECTION 3.06. BENEFITS OF INDENTURE.

     Nothing in this Forty-first Supplemental Indenture or the Bonds of Series Due 2013, express or
implied, shall give to any Person, other than the parties hereto, their successors hereunder and
the Holders of any Bonds of Series Due 2013, any benefit or any legal or equitable right, remedy or
claim under this Forty-first Supplemental Indenture.

-14-

 

SECTION 3.07. GOVERNING LAW.

     This Forty-first Supplemental Indenture and the Bonds of Series Due 2013 shall be governed by
and construed in accordance with the laws of the State of Ohio, except (a) to the extent that the
Trust Indenture Act shall be applicable, and (b) that the rights, duties, obligations, privileges,
immunities and standard of care of the Trustee shall be governed by the laws of the State of New
York.

SECTION 3.08. TRUSTEE NOT RESPONSIBLE FOR RECITALS, ETC.

     The recitals contained herein are made by the Company and not by the Trustee, and the Trustee
assumes no responsibility for the correctness thereof. The Trustee shall not be responsible in any
manner whatsoever for or in respect of the validity or sufficiency of this Forty-first Supplemental
Indenture.

 

[Execution pages follow.]

-15-

 

     IN WITNESS WHEREOF, the parties hereto have caused this Forty-first Supplemental Indenture to
be duly executed as of the day and year first above written.

	 	 	 	 	 
	 	Duke Energy Ohio, Inc.

 	 
	 	By  	/s/ M. Allen Carrick
 	 
	 	 	M. Allen Carrick 	 
	 	 	Assistant Treasurer 	 

-16-

 

	 	 	 	 	 

	 	 	 	 	 
	 	The Bank of New York Mellon Trust

Company, N.A., as Trustee

 	 
	 	By  	/s/ Theresa Crawford
 	 
	 	 	Theresa Crawford 	 
	 	 	Senior Associate 	 

-17-

 

	 	 	 	 	 

	 	 	 
	State of North Carolina

	 	)
	 

	 	) ss:
	County of Mecklenburg 

	 	)

     Be It Remembered, that on this 16th day of December, 2009, before me, the
undersigned, a notary public in and for the County and State aforesaid, duly commissioned and
qualified, personally appeared M. Allen Carrick, personally known to me to be the same person whose
name is subscribed to the foregoing instrument, and personally known to me to be an Assistant
Treasurer of Duke Energy Ohio, Inc., an Ohio corporation, and acknowledged that he signed and
delivered said instrument as his free and voluntary act as such Assistant Treasurer, and as the
free and voluntary act of said Duke Energy Ohio, Inc., for the uses and purposes therein set forth;
in pursuance of the power and authority granted to him by resolution of the Board of Directors of
said Company.

     In Witness Whereof, I have hereunto set my hand and affixed my notarial seal the day
and year aforesaid.

(Notarial Seal)

	 	 	 	 	 
	 	 	 
	 	            /s/ Phoebe P. Elliott
 	 
	 	Notary Public 	 
	 	 	 
	 	Name: Phoebe P. Elliott

Commission Expiration: June 26, 2011 	 

-18-

 

	 	 	 	 	 

	 	 	 	 	 
	State of Ohio

	 	)
	 

	 	) ss:

	County of Hamilton

	 	)

     Be It Remembered, that on this 15th day of December, 2009, before me, the
undersigned, a notary public in and for the County and State aforesaid, duly commissioned and
qualified, personally appeared Theresa Crawford, personally known to me to be the same person whose
name is subscribed to the foregoing instrument, and personally known to me to be a Senior Associate
of The Bank of New York Mellon Trust Company, N.A., a national banking association, and
acknowledged that she signed and delivered said instrument as her free and voluntary act as such
Senior Associate, and as the free and voluntary act of said The Bank of New York Mellon Trust
Company, N.A., for the uses and purposes therein set forth; in pursuance of the power and authority
granted to her by the bylaws of said association.

     In Witness Whereof, I have hereunto set my hand and affixed my notarial seal the day
and year aforesaid.

(Notarial Seal)

	 	 	 	 	 
	 	 	 
	 	            /s/ Jacqueline M. Dever
 	 
	 	Notary Public 	 
	 	 	 
	 	Name:  Jacqueline M. Dever

Commission Expiration: 10-08-2013 	 

-19-

 

	 	 	 	 	 

This instrument was prepared by:

Bradley C. Arnett, Esq.

Frost Brown Todd LLC

2200 PNC Center

201 East Fifth Street

Cincinnati, Ohio 45202

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