Exhibit 10.6
MASTER TERMS AND CONDITIONS FOR CONVERTIBLE BOND HEDGING TRANSACTIONS
BETWEEN WACHOVIA BANK, NATIONAL ASSOCIATION AND PHH CORPORATION
          The purpose of this Master Terms and Conditions for Convertible Bond
Hedging Transactions (this “Master Confirmation”), dated as of March 27, 2008,
is to set forth certain terms and conditions for convertible bond hedging
transactions to be entered into between Wachovia Bank, National Association
(“Dealer”), acting through the agency of Wachovia Capital Markets, LLC (the
“Agent”), and PHH Corporation (“Counterparty”). Each such transaction (a
“Transaction”) entered into between Dealer and Counterparty that is to be
subject to this Master Confirmation shall be evidenced by a written confirmation
substantially in the form of Exhibit A hereto, with such modifications thereto
as to which Counterparty and Dealer mutually agree (a “Confirmation”). This
Master Confirmation and each Confirmation together constitute a “Confirmation”
as referred to in the Agreement specified below.
          This Master Confirmation and a Confirmation evidence a complete
binding agreement between you and us as to the terms of the Transaction to which
this Master Confirmation and such Confirmation relates. This Master Confirmation
and each Confirmation hereunder shall supplement, form a part of, and be subject
to an agreement in the form of the 1992 ISDA Master Agreement
(Multicurrency-Cross Border) as if we had executed an agreement in such form on
the Trade Date of the first such Transaction (but without any Schedule except
for the election of (i) the laws of the State of New York as the governing law
and (ii) United States dollars as the Termination Currency) between Dealer and
Counterparty, and such agreement shall be considered the “Agreement” hereunder.
          The definitions and provisions contained in the 2002 ISDA Equity
Derivatives Definitions (the “Definitions”) as published by ISDA are
incorporated into this Master Confirmation. For the purposes of the Definitions,
each reference herein or in any Confirmation hereunder to a Unit shall be deemed
to be a reference to a Call Option or an Option, as context requires.
          THIS MASTER CONFIRMATION WILL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO CHOICE
OF LAW DOCTRINE. THE PARTIES HERETO IRREVOCABLY SUBMIT TO THE EXCLUSIVE
JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK AND THE UNITED STATES COURT
FOR THE SOUTHERN DISTRICT OF NEW YORK IN CONNECTION WITH ALL MATTERS RELATING
HERETO AND WAIVE ANY OBJECTION TO THE LAYING OF VENUE IN, AND ANY CLAIM OF
INCONVENIENT FORUM WITH RESPECT TO, THESE COURTS.
          The Transactions under this Master Confirmation shall be the sole
Transactions under the Agreement. If there exists any ISDA Master Agreement
between Dealer and Counterparty or any confirmation or other between Dealer and
Counterparty pursuant to which an ISDA Master Agreement is deemed to exist
between Dealer and Counterparty, then notwithstanding anything to the contrary
in such ISDA Master Agreement, such confirmation or agreement or any other
agreement to which Dealer and Counterparty are parties, the Transactions under
this Master Confirmation and the Agreement shall not be considered Transactions
under, or otherwise governed by, such existing or deemed ISDA Master Agreement.
          1. In the event of any inconsistency between this Master Confirmation,
on the one hand, and the Definitions or the Agreement, on the other hand, this
Master Confirmation will control for the purpose of the Transaction to which a
Confirmation relates. In the event of any inconsistency between the Definitions,
the Agreement and this Master Confirmation, on the one hand, and a Confirmation,
on the other hand, the Confirmation will govern. With respect to a Transaction,
capitalized terms used herein that are not otherwise defined shall have the
meaning assigned to them in the Confirmation relating to such Transaction.

 

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          2. Each party will make each payment specified in this Master
Confirmation or a Confirmation as being payable by such party, not later than
the due date for value on that date in the place of the account specified below
or otherwise specified in writing, in freely transferable funds and in a manner
customary for payments in the required currency.
          3. Confirmations and General Terms:
          This Master Confirmation and the Agreement, together with the
Confirmation relating to a Transaction, shall constitute the written agreement
between Counterparty and Dealer with respect to such Transaction.
          Each Transaction to which a Confirmation relates is a Convertible Bond
Hedging Transaction, which shall be considered a Share Option Transaction for
purposes of the Definitions, and shall have the following terms:

         
 
  Trade Date:   As set forth in the Confirmation for such Transaction
 
       
 
  Effective Date:   As set forth in the Confirmation for such Transaction
 
       
 
  Option Type:   Call
 
       
 
  Option Style:   Modified American (as described below)
 
       
 
  Seller:   Dealer
 
       
 
  Buyer:   Counterparty
 
       
 
  Shares:   The Common Stock of Counterparty, par value USD 0.0001 per share
(Ticker Symbol: “PHH”).
 
       
 
  Convertible Notes:   As set forth in the Confirmation for such Transaction
 
       
 
  Indenture:   As set forth in the Confirmation for such Transaction
 
       
 
  Number of Units:   As set forth in the Confirmation for such Transaction.
 
       
 
  Unit Entitlement:   As set forth in the Confirmation for such Transaction
 
       
 
  Strike Price:   As set forth in the Confirmation for such Transaction
 
       
 
  Applicable Percentage:   As set forth in the Confirmation for such Transaction
 
       
 
  Number of Shares:   As set forth in the Confirmation for such Transaction
 
       
 
  Premium:   As set forth in the Confirmation for such Transaction
 
       
 
  Premium Payment Date:   As set forth in the Confirmation for such Transaction
 
       
 
  Exchange:   New York Stock Exchange
 
       
 
  Related Exchange:   All Exchanges
 
       
 
  Calculation Agent:   Dealer.

          4. Procedure for Exercise:

         
 
  Potential Exercise Dates:   Each Conversion Date.
 
       
 
  Conversion Date:   Each “Conversion Date”, as defined in the Indenture, of
Convertible Notes, subject to the provisions of Section

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      11(e)(ii) hereof; provided that in no event shall a Conversion Date be
deemed to occur hereunder (and no exercise of any Units shall occur) with
respect to Convertible Notes as to which Counterparty makes the election to
designate a financial institution as described in Section 5.17 of the Indenture,
and such financial institution accepts such Convertible Notes (regardless of
whether such financial institution delivers any required amounts due upon
exchange, or whether such Convertible Notes are resubmitted to Counterparty for
conversion following a failure by such financial institution to deliver amounts
due upon exchange or otherwise), unless on or prior to the fifth Exchange
Business Day following such acceptance, such financial institution informs
Counterparty that it will not honor such exchange and Counterparty shall be
obligated, pursuant to the Indenture, to deliver the amounts due upon
conversion, in which case such Conversion Date shall be a Conversion Date
hereunder upon the Counterparty’s delivery of a Notice of Exercise as described
below (but with the Notice Deadline being, for this purpose, such fifth Exchange
Business Day) and the Calculation Agent shall have the right to adjust the
Delivery Obligation as appropriate to reflect the additional costs (including,
but not limited to, hedging mismatches and market losses) and expenses incurred
by Dealer in connection with its hedging activities (including the unwind of any
hedge position).
 
       
 
  Required Exercise on Conversion Dates:   On each Conversion Date, a number of
Units equal to the number of Convertible Notes in denominations of USD1,000
principal amount satisfying all of the requirements for conversion on such
Conversion Date in accordance with the terms of the Indenture shall be
automatically exercised, subject to “Notice of Exercise” below.
 
       
 
  Expiration Date:   As set forth in the Confirmation for such Transaction
 
       
 
  Multiple Exercise:   Applicable, as provided above under “Required Exercise on
Conversion Dates”.
 
       
 
  Minimum Number of Units:   Zero
 
       
 
  Maximum Number of Units:   Number of Units
 
       
 
  Integral Multiple:   Not Applicable
 
       
 
  Automatic Exercise:   As provided above under “Required Exercise on Conversion
Dates”.
 
       
 
  Notice of Exercise:   Notwithstanding anything to the contrary in the
Definitions, in order to exercise any Units, Counterparty must notify Seller in
writing prior to 5:00 PM, New York City time, on the Scheduled Trading Day prior
to the first day of the “Observation Period”, as defined in the Indenture,
relating to the Convertible Notes converted on the Conversion Date relating to
the relevant Exercise Date (the “Notice Deadline”) of (i) the number of Units
being exercised on such Exercise

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      Date, (ii) the scheduled settlement date under the Indenture for the
Convertible Notes converted on the Conversion Date corresponding to such
Exercise Date and (iii) the “Cash Percentage” (as such term is defined in the
Indenture) for the Convertible Notes converted on the Conversion Date relating
to the relevant Exercise Date; provided that if the Conversion Date for such
Units occurs on or after the 65th Scheduled Trading Day (as defined in the
Indenture) immediately preceding the Expiration Date, the Notice Deadline solely
with respect to the information described in clause (i) and clause (ii) above
shall be 5:00 PM, New York City time, on the Scheduled Trading Day (as defined
in the Indenture) immediately preceding the Expiration Date (it being understood
and agreed that Counterparty shall, subject to the immediately succeeding
paragraph, be required to notify Dealer in writing prior to 5:00 PM, New York
City time, on the Scheduled Trading Day prior to the first day of the relevant
“Observation Period” of the information described in clause (iii) above);
provided, further, that, notwithstanding the foregoing (except in the case of an
Observation Period that commences on or after the 65th Scheduled Trading Day
immediately preceding the Expiration Date), such notice shall be effective so
long the notice is given after the Notice Deadline but prior to 5:00 PM (New
York City time) on the fifth Exchange Business Day of such “Observation Period”,
in which event the Calculation Agent shall have the right to adjust the Delivery
Obligation as appropriate to reflect the additional costs (including, but not
limited to, hedging mismatches and market losses) and expenses incurred by
Dealer in connection with its hedging activities (including the unwinding of any
hedge position) as a result of its not having received such notice prior to the
Notice Deadline.
 
       
 
      Notwithstanding anything to the contrary in the Indenture or the Notice of
Exercise, for purposes of the Transactions hereunder, Counterparty shall be
deemed to have designated a “Cash Percentage” (as such term is defined in the
Indenture) for the Convertible Notes pursuant to clause (iii) above equal to
100%, unless on the date of its election of something other than “Cash
Percentage” under the Indenture equal to 100%, Counterparty shall represent to
Dealer that, as of such date, (i) it is not in possession of any material
non-public information with respect to itself or the Shares and (ii) it has
obtained the requisite shareholder vote for the issuance of any Shares in
settlement of such Convertible Notes pursuant to the Indenture.

          5. Settlement Terms:

         
 
  Settlement Date:   In respect of an Exercise Date occurring on a Conversion
Date, the settlement date for the Shares to be delivered under the Convertible
Notes converted on such Conversion Date

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      under the terms of the Indenture; provided that the Settlement Date will
not be prior to the date one Settlement Cycle following the final day of the
“Observation Period”, as defined in the Indenture.
 
       
 
  Delivery Obligation:   In lieu of the obligations set forth in Sections 8.1
and 9.1 of the Definitions, and subject to “Notice of Exercise” above, in
respect of an Exercise Date occurring on a Conversion Date, Seller will deliver
to Counterparty, on the related Settlement Date, the product of the Applicable
Percentage and a number of Shares and/or amount of cash in USD equal to the
aggregate number of Shares and/or amount of cash in USD that Counterparty is
obligated to deliver to the holder(s) of the Convertible Notes converted on such
Conversion Date pursuant to the Net Share Provision of the Indenture (the
“Convertible Obligation”); provided that such obligation shall be determined
excluding any Shares (or cash) that Counterparty is obligated to deliver to
holder(s) of the Convertible Notes as a result of any adjustments to the
Conversion Rate pursuant to the Excluded Provisions of the Indenture and the
Seller shall have no delivery obligation hereunder with respect to the “Daily
Principal Return” (as defined in the Indenture). For the avoidance of doubt, if
the aggregate “Daily Conversion Value” (as defined in the Indenture) in respect
of each USD1,000 principal amount of Convertible Notes is less than or equal to
USD1,000, Seller will have no delivery obligation hereunder.
 
       
 
  Net Share Provision:   As set forth in the Confirmation for such Transaction.
 
       
 
  Excluded Provisions:   As set forth in the Confirmation for such Transaction.
 
       
 
  Notice of Delivery Obligation:   No later than the Scheduled Trading Day
immediately following the last day of the “Observation Period”, as defined in
the Indenture, Counterparty shall give Seller notice of the final number of
Shares and/or amount of cash comprising the Convertible Obligation; provided,
that with respect to any Exercise Date occurring on or after the 65th Scheduled
Trading Day (as defined in the Indenture) immediately preceding the Expiration
Date, Counterparty may provide Dealer with a single notice of the aggregate
number of Shares and/or the amount of cash comprising the Convertible Obligation
for all Exercise Dates occurring on or after such Scheduled Trading Day (it
being understood, for the avoidance of doubt, that the requirement of
Counterparty to deliver such notice shall not limit Counterparty’s obligations
with respect to Notice of Exercise, as set forth above, in any way).
 
       
 
  Other Applicable Provisions:   To the extent Seller is obligated to deliver
Shares hereunder, the provisions of Sections 9.1(c), 9.8, 9.9, 9.11 and 9.12 of
the Definitions will be applicable as if Physical Settlement were applicable to
the Transaction; provided that the Representation and Agreement contained in
Section 9.11 of the Definitions shall be modified by excluding any
representations therein relating to restrictions, obligations, limitations or
requirements

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      under applicable securities laws arising as a result of the fact that
Buyer is the issuer of the Shares. In addition, notwithstanding anything to the
contrary in the Equity Definitions, Seller may, in whole or in part, deliver
Shares in certificated form representing the Delivery Obligation to Counterparty
in lieu of delivery through the Clearance System.

          6. Adjustments:

         
 
  Method of Adjustment:   Notwithstanding Section 11.2 of the Definitions, upon
the occurrence of any event or condition set forth in the Dilution Provisions of
the Indenture, the Calculation Agent shall make the corresponding adjustment in
respect of any one or more of the Strike Price, Number of Units, the Unit
Entitlement and any other variable relevant to the exercise, settlement or
payment of such Transaction, to the extent an analogous adjustment is made under
the Indenture. For the avoidance of doubt, in no event shall there be any
adjustment hereunder as a result of an adjustment to the “Conversion Rate” (as
defined in the Indenture) pursuant to the Excluded Provisions.

          7. Extraordinary Events:

         
 
  Merger Events:   Notwithstanding Section 12.1(b) of the Definitions, a “Merger
Event” means the occurrence of any event or condition set forth in the Merger
Provision of the Indenture.
 
       
 
      Immediately upon the occurrence of any Merger Event, Counterparty shall
notify the Calculation Agent of such Merger Event; and once the adjustments to
be made to the terms of the Indenture and the Convertible Notes in respect of
such Merger Event have been determined, Counterparty shall immediately notify
the Calculation Agent in writing of the details of such adjustments.
 
       
 
  Notice of Merger Consideration:   Upon the occurrence of a Merger Event that
causes the Shares to be converted into the right to receive more than a single
type of consideration (determined based in part upon any form of stockholder
election), Counterparty shall promptly (but in any event prior to the Merger
Date) notify the Calculation Agent of the weighted average of the types and
amounts of consideration received by the holders of Shares entitled to receive
cash, securities or other property or assets with respect to or in exchange for
such Shares in any Merger Event who affirmatively make such an election or if no
holders of Shares affirmatively make such an election, the types and amount of
consideration actually received by such holders.
 
       
 
  Tender Offer:   Applicable. Notwithstanding Section 12.1(d) of the
Definitions, a “Tender Offer” means the occurrence of any event or condition set
forth in the Tender Offer Provision of the Indenture.

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  Consequences of Merger Events and Tender Offers:   Notwithstanding
Sections 12.2 and 12.3 of the Definitions, upon the occurrence of a Merger Event
or Tender Offer, the Calculation Agent shall make a corresponding adjustment in
respect of any adjustment under the Indenture to any one or more of the nature
of the Shares, the Strike Price, the Number of Units, the Unit Entitlement and
any other variable relevant to the exercise, settlement or payment of the
Transaction, to the extent an analogous adjustment is made under the Indenture;
provided that (i) such adjustment shall be made without regard to any adjustment
to the Conversion Rate for the issuance of additional shares as set forth in the
Excluded Provisions of the Indenture; and (ii) if such adjustment would (but for
this clause (ii)) result in the Shares including (or, at the option of a holder
of Shares, may include) shares of an entity or person not organized under the
laws of the United States, any State thereof or the District of Columbia, no
such adjustment shall be made and instead such Merger Event or Tender Offer
shall be an Additional Termination Event with respect to which (1) the
Transaction is the sole Affected Transaction and (2) Counterparty shall be the
sole Affected Party.
 
       
 
  Dilution Provisions:   As set forth in the Confirmation for such Transaction.
 
       
 
  Merger Provision:   As set forth in the Confirmation for such Transaction.
 
       
 
  Tender Offer Provision:   As set forth in the Confirmation for such
Transaction.
 
       
 
  Make-Whole Provisions:   As set forth in the Confirmation for such
Transaction.
 
       
 
  Nationalization, Insolvency or Delisting:   Cancellation and Payment
(Calculation Agent Determination). In addition to the provisions of
Section 12.6(a)(iii) of the Definitions, it will also constitute a Delisting if
the Exchange is located in the United States and the Shares are not immediately
re-listed or re-traded on any of the New York Stock Exchange, the American Stock
Exchange, The NASDAQ Global Select Market or The NASDAQ Global Market (or their
respective successors); if the Shares are immediately re-listed or re-traded on
any such exchange, such exchange shall thereafter be deemed to be the Exchange
and the Calculation Agent shall make any adjustments it deems necessary to the
terms of the Transaction, as if Modified Calculation Agent Adjustment were
applicable to such event.

          8. Additional Disruption Events:

         
 
  Change in Law:   Applicable; provided that Section 12.9(a)(ii) of the
Definitions is hereby amended by (i) replacing the phrase “the interpretation”
in the third line thereof with the phrase “or public announcement of the formal
or informal interpretation” and (ii) immediately following the word
“Transaction” in clause (X) thereof, adding the phrase “in the manner
contemplated by the Hedging Party on the Trade Date”.

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  Failure to Deliver:   Applicable
 
       
 
  Insolvency Filing:   Applicable
 
       
 
  Hedging Disruption:   Not Applicable
 
       
 
  Increased Cost of Hedging:   Not Applicable
 
       
 
  Determining Party   For all applicable Additional Disruption Events, Dealer.

          9. Acknowledgements:

         
 
  Non-Reliance:   Applicable
 
       
 
  Agreements and Acknowledgments Regarding Hedging Activities:   Applicable
 
       
 
  Additional Acknowledgments:   Applicable

          10. Representations, Warranties and Agreements:
          (a) In connection with this Master Confirmation, each Confirmation,
each Transaction to which a Confirmation relates and any other documentation
relating to the Agreement, each party to this Master Confirmation represents and
warrants to, and agrees with, the other party that:
     (i) it is an “accredited investor” as defined in Section 2(a)(15)(ii) of
the Securities Act of 1933, as amended (the “Securities Act”); and
     (ii) it is an “eligible contract participant” as defined in Section 1a(12)
of the Commodity Exchange Act, as amended (the “CEA”), and this Master
Confirmation and each Transaction hereunder are subject to individual
negotiation by the parties and have not been executed or traded on a “trading
facility” as defined in Section 1a(33) of the CEA.
          (b) Counterparty hereby repeats the representations and warranties of
Counterparty set forth in Section 1 of the Purchase Agreement (the “Purchase
Agreement”) dated as of March 27, 2008 between, among others, Counterparty and
Dealer as a representative of the Initial Purchasers (as defined in the Purchase
Agreement), and, in addition, represents and warrants to, and agrees with,
Dealer on the Trade Date of each Transaction that:
     (i) its financial condition is such that it has no need for liquidity with
respect to its investment in such Transaction and no need to dispose of any
portion thereof to satisfy any existing or contemplated undertaking or
indebtedness;
     (ii) its investments in and liabilities in respect of such Transaction,
which it understands are not readily marketable, are not disproportionate to its
net worth, and it is able to bear any loss in connection with such Transaction,
including the loss of its entire investment in such Transaction;
     (iii) it understands that Dealer has no obligation or intention to register
such Transaction under the Securities Act or any state securities law or other
applicable federal securities law;
     (iv) it understands that no obligations of Dealer to it hereunder will be
entitled to the benefit of deposit insurance and that such obligations will not
be guaranteed by any Affiliate of Dealer or any governmental agency;

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     (v) IT UNDERSTANDS THAT SUCH TRANSACTION IS SUBJECT TO COMPLEX RISKS THAT
MAY ARISE WITHOUT WARNING AND MAY AT TIMES BE VOLATILE AND THAT LOSSES MAY OCCUR
QUICKLY AND IN UNANTICIPATED MAGNITUDE AND IS WILLING TO ACCEPT SUCH TERMS AND
CONDITIONS AND ASSUME (FINANCIALLY AND OTHERWISE) SUCH RISKS;
     (vi) it is not on the date hereof, in possession of material non-public
information with respect to Counterparty or the Shares;
     (vii) it is not entering into any Transaction to create, and will not
engage in any other securities or derivatives transactions to create, actual or
apparent trading activity in the Shares (or any security convertible into or
exchangeable for Shares) or to raise or depress or to manipulate the price of
the Shares (or any security convertible into or exchangeable for Shares);
     (viii) it is not on the date hereof 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 sixth Scheduled Trading Day immediately following the Trade Date, engage in
any such distribution;
     (ix) on the Trade Date (A) its assets at their fair valuation exceed its
liabilities, including contingent liabilities, (B) its capital is adequate to
conduct its business and (C) it has the ability to pay its debts and obligations
as such debts mature and does not intend to, or does not believe that it will,
incur debt beyond its ability to pay as such debts mature;
     (x) such Transaction, any repurchase of the Shares by Counterparty in
connection with such Transaction and the issuance of Convertible Notes with
respect to such Transaction were approved by its board of directors and publicly
announced, solely for the purposes stated in such board resolution and public
disclosure;
     (xi) there is no internal policy, whether written or oral, of Counterparty
that would prohibit it from entering into any aspect of such Transaction,
including, but not limited to, the purchases of Shares to be made pursuant
thereto;
     (xii) it is not, and after giving effect to the transactions contemplated
hereby will not be, an “investment company” as such term is defined in the
Investment Company Act of 1940, as amended;
     (xiii) without limiting the generality of Section 13.1 of the Definitions,
Counterparty acknowledges that Dealer is not making any representations or
warranties with respect to the treatment of the Transaction under FASB
Statements 128, 133, as amended, 149 or 150, EITF Issue No. 00-19, Issue
No. 01-6, Issue No. 03-6 (or any successor issue statements) or Issue No. 07-5
or under FASB’s Liabilities & Equity Project; and
     (xiv) without limiting the generality of Section 3(a)(iii) of the
Agreement, the Transaction will not violate Rule 13e-1 or Rule 13e-4 under the
Exchange Act.
          (c) Counterparty shall deliver to Dealer an opinion of counsel, dated
as of the Effective Date for each Transaction hereunder and reasonably
acceptable to Dealer in form and substance, with respect to the matters set
forth in Section 3(a) of the Agreement with respect to such Transaction.
          11. Miscellaneous:

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          (a) Early Termination. The parties agree that Second Method and Loss
will apply to each Transaction under this Master Confirmation as such terms are
defined under the 1992 ISDA Master Agreement (Multicurrency—Cross Border).
          (b) Alternative Calculations and Dealer Payment on Early Termination
and on Certain Extraordinary Events. If, Dealer owes Counterparty any amount in
connection with a Transaction hereunder pursuant to Section 12.7 or 12.9 of the
Definitions (except in the case of an Extraordinary Event in which the
consideration or proceeds to be paid to holders of Shares as a result of such
event consists solely of cash) or pursuant to Section 6(d)(ii) of the Agreement
(except in the case of an Event of Default in which Counterparty is the
Defaulting Party or a Termination Event in which Counterparty is the Affected
Party, other than an (x) Event of Default of the type described in
Section 5(a)(iii), (v), (vi) or (vii) of the Agreement or (y) a Termination
Event of the type described in Section 5(b) of the Agreement that in the case of
either (x) or (y) resulted from an event or events outside Counterparty’s
control) (a “Dealer Payment Obligation”), Counterparty shall have the right, in
its sole discretion, to require Dealer to satisfy any such Dealer Payment
Obligation by delivery of Termination Delivery Units (as defined below) by
giving irrevocable telephonic notice to Dealer, confirmed in writing within one
Scheduled Trading Day, between the hours of 9:00 a.m. and 4:00 p.m. New York
time on the Merger Date, the Announcement Date (in the case of Nationalization,
Insolvency or Delisting), Early Termination Date or date of cancellation, as
applicable (“Notice of Dealer Termination Delivery”); provided that (i) if
Counterparty does not validly request Dealer to satisfy its Dealer Payment
Obligation by Termination Delivery Units, Dealer shall have the right, in its
sole discretion, to satisfy its Dealer Payment Obligation by Termination
Delivery Units, notwithstanding Counterparty’s election to the contrary and
(ii) Counterparty shall not have the right, notwithstanding any notice to the
contrary, to request Dealer to satisfy its Dealer Payment Obligation by
Termination Delivery Units unless on the date of any such notice, Counterparty
represents to Dealer that, as of such date, it is not in possession of any
material non-public information with respect to itself or the Shares. Within a
commercially reasonable period of time following receipt of a Notice of Dealer
Termination Delivery, Dealer shall deliver to Counterparty a number of
Termination Delivery Units having a cash value equal to the amount of such
Dealer Payment Obligation (such number of Termination Delivery Units to be
delivered to be determined by the Calculation Agent as the number of whole
Termination Delivery Units that could be purchased over a commercially
reasonable period of time with the cash equivalent of such payment obligation).
“Termination Delivery Unit” means (i) in the case of a Termination Event, an
Event of Default or an Extraordinary Event (other than an Insolvency or
Nationalization), one Share or (ii) in the case of an Insolvency or
Nationalization, a unit consisting of the number or amount of each type of
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 Insolvency or Nationalization. If a Termination Delivery
Unit consists of property other than cash and Counterparty provides irrevocable
written notice to the Calculation Agent on or prior to the Closing Date or the
date of such Termination Event, Event of Default or an Additional Disruption
Event, as the case may be, that it elects to have Dealer deliver cash in lieu of
such other property, the Calculation Agent will replace such property with cash
as a component of a Termination Delivery Unit in such amount, as determined by
the Calculation Agent in its discretion by commercially reasonable means, as
shall have a value equal to the value of the property so replaced. If such
Insolvency or Nationalization involves a choice of consideration to be received
by holders, such holder shall be deemed to have elected to receive the maximum
possible amount of cash.
          (c) Set-Off and Netting. Neither party under any circumstances shall
have the right to set off or net any obligation that it may have to the other
party under this Transaction against any obligation such other party may have to
it, whether arising under the Agreement, this Master Confirmation or any other
agreement between the parties hereto, by operation of law or otherwise.
          (d) Transfer or Assignment. (i) Counterparty shall have the right to
transfer or assign its rights and obligations hereunder to persons who are
broker-dealers, banks, investment advisors, investment banks or other persons in
the derivatives industry with respect to all, but not less than all, of the
Options hereunder (such

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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:
          (A) With respect to any Transfer Options, Counterparty shall not be
released from its notice and indemnification obligations to Dealer pursuant to
Section 11(o) or any obligations under Section 11(q) of this Master
Confirmation;
          (B) Any Transfer Options shall only be transferred or assigned to a
third party that is a U.S. 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 transfer or assign its rights and obligations
hereunder and under the Agreement, in whole or in part, to any of its affiliates
without the consent of Counterparty, provided that Counterparty shall have
recourse to Dealer in the event of the failure by the transferee to perform any
of such obligations hereunder. If at any time at which (1) Dealer’s “beneficial
ownership” (within the meaning of Section 13 of the Exchange Act and rules
promulgated thereunder) exceeds 8.0% of Counterparty’s outstanding Shares,
(2) the Units Equity Percentage (as defined below) is at or exceeds 14.5%, or
(3) the quotient of (x) the number of “control shares” (as such term is used in
Section 3-701(d) of the Maryland Control Share Acquisition Act) owned by Dealer
divided by (y) the number of Counterparty’s outstanding Shares (the “Control
Share Percentage”) exceeds 8.0%, Dealer, in its discretion, is unable to effect
a transfer or assignment to a third party after using commercially reasonable
efforts on pricing terms reasonably acceptable to Dealer and within a time
period reasonably acceptable to Dealer such that (1) Dealer’s “beneficial
ownership” (within the meaning of Section 13 of the Exchange Act and rules
promulgated thereunder) is reduced to 8.0% of Counterparty’s outstanding Shares
or less, (2) the Units Equity Percentage is reduced to 14.5% or less or (3) the
Control Share Percentage is reduced to 8.0% or less, Dealer may designate any
Scheduled Trading Day as an Early Termination Date with respect to a portion
(the “Terminated Portion”) of the Transaction, such that (1) its “beneficial
ownership” following such partial termination will be equal to or less than
8.0%, (2) the Units Equity Percentage following such partial termination will be
less than 14.5% or (3) the Control Share Percentage following such partial
termination will be equal to or less than 8.0%. In the event that Dealer so
designates an Early Termination Date with respect to a portion of the
Transaction, a payment or delivery shall be made pursuant to Section 6 of the
Agreement and Section 11(b) of this Master Confirmation as if (i) an Early
Termination Date had been designated in respect of a Transaction having terms
identical to the Terminated Portion

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of the Transaction, (ii) Counterparty shall be the sole Affected Party with
respect to such partial termination and (iii) such portion of the Transaction
shall be the only Terminated Transaction.
          (e) Additional Termination Events. (i) For any Transaction, the
occurrence of (A) an event of default with respect to Counterparty under the
terms of the Convertible Notes for such Transaction that results in an
acceleration of such Convertible Notes pursuant to the terms of the Indenture or
(B) an Amendment Event shall be an Additional Termination Event with respect to
which such Transaction is the sole Affected Transaction and Counterparty shall
be the sole Affected Party. In the case of clause (A), either party shall be
entitled to designate an Early Termination Date pursuant to Section 6(b) of the
Agreement; provided that (1) Counterparty shall not be entitled to designate an
Early Termination Date unless it is has represented to Seller that, on the date
of its election, it is not in possession of any material non-public information
with respect to itself or the Shares and (2) no Early Termination Date
designated by Counterparty shall be effective unless it is at least 10 Exchange
Business Days following notice from Counterparty or the Trustee (as defined in
the Indenture) of the occurrence of such event of default. In the case of clause
(B), Seller shall be the party entitled to designate an Early Termination Date
pursuant to Section 6(b) of the Agreement; provided that Seller may designate an
Early Termination Date following such Amendment Event only if (1) Seller
provides prior written notice to Counterparty proposing that for purposes of the
Transactions hereunder “Indenture” shall mean the Indenture as in effect
immediately prior to the effectiveness of any such Amendment Event and
(2) Counterparty does not agree to such proposal (or does not provide a written
response) within three Exchange Business Days following such notice. If a
Conversion Date occurs prior to such third Exchange Business Day or prior to the
Early Termination Date designated by Seller as a result of such Amendment Event,
the “Indenture” shall be deemed to be the Indenture as in effect immediately
prior to the effectiveness of any such Amendment Event.
     “Amendment Event” means, for any Transaction, that Counterparty amends,
modifies, supplements or waives any term of the Indenture for such Transaction
or the Convertible Notes for such Transaction governing the principal amount,
coupon, maturity, repurchase obligation of Counterparty, redemption right of
Counterparty, any term relating to conversion of the Convertible Notes for such
Transaction (including changes to the Conversion Rate, conversion price,
conversion settlement dates or conversion conditions), or any term that would
require consent of the holders of not less than 100% of the principal amount of
the Convertible Notes for such Transaction to amend, in each case without the
prior consent of Seller, such consent not to be unreasonably withheld.
          (ii) Notwithstanding anything to the contrary in this Master
Confirmation, for any Transaction, in respect of the Convertible Notes that are
converted in compliance with the Make-Whole Provisions of the Indenture, the
delivery of a “Conversion Notice” (as defined in the Indenture) to Counterparty
relating to such Convertible Notes shall constitute an Additional Termination
Event hereunder with respect to the number of Units relating to such number of
Convertible Notes in USD 1,000 principal amount set forth in such “Conversion
Notice.” Upon receipt of such “Conversion Notice”, Counterparty shall promptly
(but in any event no later than the Notice Deadline of such “Conversion Notice”)
forward such “Conversion Notice” (along with information with respect to such
conversion described above opposite the caption “Notice of Exercise” above) to
Dealer and upon receipt thereof, Dealer shall promptly designate an Exchange
Business Day as an Early Termination Date (such date to occur on or as closely
as practicable, in the Calculation Agent’s commercially reasonable judgment, to
the final day of the “Observation Period” for the conversion of the relevant
Convertible Notes) with respect to all or a portion of such Transaction, as the
case may be, corresponding to such number of Units. As a result of the
occurrence of an Additional Termination Event as described in this clause (ii),
any payment hereunder shall be calculated by the Calculation Agent pursuant to
Section 6 of the Agreement; provided that, for the purposes of such calculation,
(A) Counterparty shall be the sole Affected Party with respect to such
Additional Termination Event, (B) Dealer shall be the party entitled to
designate an Early Termination Date pursuant to Section 6(b) of the Agreement;
and (C) for the avoidance of doubt, in determining the amount payable pursuant
to Section 6 of the Agreement, the Calculation Agent shall take into account
(i) the time value of this Transaction assuming an Expiration Date occurring on
the “Stated Maturity Date” (as defined in the Indenture for such Transaction),
without regard to any requirement for the occurrence of a Conversion Date or
delivery of a Notice of Exercise as conditions to the exercise of the Units and

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(ii) shall not take into account any adjustments to the Unit Entitlement that
result from corresponding adjustments to the Conversion Rate pursuant to the
Make-Whole Provisions of the Indenture. Notwithstanding the foregoing, (x) in
case of a partial termination, an Early Termination Date shall be designated in
respect of a Transaction having terms identical to this Transaction and a number
of Units equal to the terminated portion, and such Transaction shall be the only
Terminated Transaction, and (y) if any amount is payable by Dealer to
Counterparty in connection with such Additional Termination Event, payment of
such amount shall be satisfied by delivery by Dealer to Counterparty of an
amount of cash and/or a number of Shares or Termination Delivery Units, in such
percentages as notified to Dealer in writing at the time the relevant
“Conversion Notice” is forwarded by Counterparty to Dealer, such that the
aggregate value of such cash, Shares and/or Termination Delivery Units,
determined by the Calculation Agent in good faith and in a commercially
reasonable manner, is equal to the amount payable by Dealer to Counterparty in
connection with such Additional Termination Event.
          (f) Status of Claims in Bankruptcy. Dealer acknowledges and agrees
that this Master Confirmation, together with any Confirmation, is not intended
to convey to Dealer rights with respect to any Transaction that are senior to
the claims of common stockholders in any U.S. bankruptcy proceedings of
Counterparty; provided that nothing herein shall limit or shall be deemed to
limit Dealer’s right to pursue remedies in the event of a breach by Counterparty
of its obligations and agreements with respect to any Transaction; and provided,
further, that nothing herein shall limit or shall be deemed to limit Dealer’s
rights in respect of any transactions other than the Transactions.
          (g) No Collateral. Notwithstanding any provision of this Master
Confirmation, any Confirmation or the Agreement, or any other agreement between
the parties, to the contrary, the obligations of Counterparty under the
Transactions are not secured by any collateral. Without limiting the generality
of the foregoing, if this Master Confirmation, the Agreement or any other
agreement between the parties includes an ISDA Credit Support Annex or other
agreement pursuant to which Counterparty collateralizes obligations to Dealer,
then the obligations of Counterparty hereunder will not be considered to be
obligations under such Credit Support Annex or other agreement pursuant to which
Counterparty collateralizes obligations to Dealer, and any Transactions
hereunder shall be disregarded for purposes of calculating any Exposure, Market
Value or similar term thereunder.
          (h) Delegation of Share Delivery to Affiliates. Dealer has the right
to delegate any or all of its rights and obligations under a Transaction to
deliver or accept delivery of Shares to any of its Affiliates; provided that
Counterparty shall have recourse to Dealer in the event of failure by the
assignee to perform any of such obligations hereunder. Notwithstanding the
foregoing, the recourse to Dealer shall be limited to recoupment of
Counterparty’s monetary damages and Counterparty hereby waives any right to seek
specific performance by Dealer of its obligations hereunder. Such failure after
any applicable grace period shall be deemed to be an Additional Termination
Event, such Transaction shall be the only Affected Transaction and Dealer shall
be the only Affected Party.
          (i) Severability; Illegality. If compliance by either party with any
provision of a Transaction would be unenforceable or illegal, (i) the parties
shall negotiate in good faith to resolve such unenforceability or illegality in
a manner that preserves the economic benefits of the transactions contemplated
hereby and (ii) the other provisions of the Transaction shall not be
invalidated, but shall remain in full force and effect.
          (j) Waiver of Trial by Jury. EACH OF COUNTERPARTY AND DEALER HEREBY
IRREVOCABLY WAIVES (ON ITS OWN BEHALF AND, TO THE EXTENT PERMITTED BY APPLICABLE
LAW, ON BEHALF OF ITS STOCKHOLDERS) ALL RIGHT TO TRIAL BY JURY IN ANY ACTION,
PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE)
ARISING OUT OF OR RELATING TO ANY TRANSACTION HEREUNDER OR THE ACTIONS OF DEALER
OR ITS AFFILIATES IN THE NEGOTIATION, PERFORMANCE OR ENFORCEMENT HEREOF.
          (k) Confidentiality. Notwithstanding any provision in this Master
Confirmation, any Confirmation or the Agreement, in connection with
Section 1.6011-4 of the Treasury Regulations, the parties hereby

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agree that each party (and each employee, representative, or other agent of such
party) may disclose to any and all persons, without limitation of any kind, the
U.S. tax treatment and U.S. tax structure of the Transaction and all materials
of any kind (including opinions or other tax analyses) that are provided to such
party relating to such U.S. tax treatment and U.S. tax structure, other than any
information for which nondisclosure is reasonably necessary in order to comply
with applicable securities laws.
          (l) Securities Contract; Swap Agreement. The parties hereto intend
for: (i) each Transaction hereunder to be a “securities contract” as defined in
Section 741(7) of the Bankruptcy Code (Title 11 of the United States Code, as
amended) (the “Bankruptcy Code”) and a “swap agreement” as defined in
Section 101(53B) of the Bankruptcy Code, and the parties hereto to be entitled
to the protections afforded by, among other Sections, Sections 362(b)(6),
362(b)(27), 362(o), 546(e), 546(g), 546(j), 548(d)(2), 555, 560 and 561 of the
Bankruptcy Code; (ii) the Agreement to be a “master netting agreement” as
defined in Section 101(38A) of the Bankruptcy Code; (iii) a party’s right to
liquidate, terminate or accelerate any Transaction, offset, net or net out
termination values, payment amounts or other transfer obligations, and to
exercise any other remedies upon the occurrence of any Event of Default or
Termination Event under the Agreement with respect to the other party or any
Extraordinary Event that results in the termination or cancellation of any
Transaction to constitute a “contractual right” within the meaning of Sections
555, 560 and 561 of the Bankruptcy Code; (iv) any cash, securities or other
property provided as performance assurance, credit support or collateral with
respect to each Transaction to constitute “margin payments” and “transfers”
“under” or “in connection with” each Transaction and the Agreement, in each case
within the meaning of the Bankruptcy Code; and (v) all payments or deliveries
for, under or in connection with each Transaction, all payments for the Shares
and the transfer of such Shares to constitute “settlement payments” and
“transfers” “under” or “in connection with” each Transaction and the Agreement,
in each case within the meaning of the Bankruptcy Code.
          (m) Extension of Settlement. Dealer may postpone any Potential
Exercise Date or any other date of valuation or delivery by Dealer, with respect
to some or all of the relevant Units (in which event the Calculation Agent shall
make appropriate adjustments to the Delivery Obligation), if Dealer determines,
in its reasonable discretion, that such extension is reasonably necessary or
advisable to preserve Dealer hedging activity hereunder in light of existing
liquidity conditions or to enable Dealer to effect purchases of Shares in
connection with its hedging 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 and regulatory requirements or with
related internal policies or procedures of Dealer.
          (n) Staggered Settlement. If upon advice of counsel with respect to
applicable legal and regulatory requirements, including any requirements
relating to Dealer’s 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 the Settlement
Date for the Transaction, Dealer may, by notice to the Counterparty prior to any
Settlement Date (a “Nominal Settlement Date”), elect to deliver the Shares on
two or more dates (each, a “Staggered Settlement Date”) or at two or more times
on the Nominal Settlement Date as follows:
     (i) in such notice, Dealer will specify to Counterparty the related
Staggered Settlement Dates (each of which will be on or prior to such Nominal
Settlement Date, but not prior to the beginning of such “Observation Period,” as
defined in the Indenture) or delivery times and how it will allocate the Shares
it is required to deliver under “Delivery Obligation” (above) among the
Staggered Settlement Dates or delivery times; and
     (ii) the aggregate number of Shares that Dealer will deliver to
Counterparty hereunder on all such Staggered Settlement Dates and delivery times
will equal the number of Shares that Dealer would otherwise be required to
deliver on such Nominal Settlement Date.
          (o) 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

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if, following such repurchase, the Units Equity Percentage as determined on such
day is (i) equal to or greater than 8.0% and (ii) greater by 0.5% than the Units
Equity Percentage included in the immediately preceding Repurchase Notice (or,
in the case of the first such Repurchase Notice, greater by 0.5% than the Units
Equity Percentage as of the date hereof). The “Units Equity Percentage” as of
any day is the fraction the numerator of which is the aggregate Number of Shares
for all Transactions hereunder and the denominator of which is the number of
Shares outstanding on such day. Counterparty agrees to indemnify and hold
harmless Dealer and its Affiliates and their respective officers, directors and
controlling persons (each, a “Section 16 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, subject to the reporting
and profit disgorgement provisions of Section 16 of the Exchange Act, including
without limitation, any forbearance from hedging activities or cessation of
hedging activities and any losses in connection therewith with respect to any
Transaction), claims, damages, judgments, liabilities and expenses (including
reasonable attorney’s fees), joint or several, to which a Section 16 Indemnified
Person may become subject, 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 (o), and to reimburse, upon written request, each such Section 16
Indemnified Person 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 any Section 16 Indemnified
Person, such Section 16 Indemnified Person shall promptly notify Counterparty in
writing, and Counterparty, upon request of such Section 16 Indemnified Person,
shall retain counsel reasonably satisfactory to such Section 16 Indemnified
Person to represent such Section 16 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 be
relieved from liability to the extent that such Section 16 Indemnified Person
fails to promptly notify Counterparty of any action commenced against it in
respect of which indemnity may be sought hereunder; provided, that failure to
notify Counterparty (i) shall not relieve Counterparty from any liability
hereunder to the extent it is not materially prejudiced as a result thereof and
(ii) shall not, in any event, relieve Counterparty from any liability that it
may have otherwise than on account of this paragraph (o). Counterparty shall not
be liable for any settlement of any proceeding 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 Section 16 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 each
Section 16 Indemnified Person, effect any settlement of any pending or
threatened proceeding in respect of which any Section 16 Indemnified Person is
or could have been a party and indemnity could have been sought hereunder by any
such Section 16 Indemnified Person, unless such settlement includes an
unconditional release of each such Section 16 Indemnified Person from all
liability on claims that are the subject matter of such proceeding on terms
reasonably satisfactory to each such Section 16 Indemnified Person. If the
indemnification provided for in this paragraph (o) is unavailable to a
Section 16 Indemnified Person or insufficient in respect of any losses, claims,
damages or liabilities referred to therein, then Counterparty, in lieu of
indemnifying such Section 16 Indemnified Person thereunder, shall contribute to
the amount paid or payable by such Section 16 Indemnified Person as a result of
such losses, claims, damages or liabilities. The remedies provided for in this
paragraph (o) are not exclusive and shall not limit any rights or remedies that
may otherwise be available to any Section 16 Indemnified Person at law or in
equity. The indemnity and contribution agreements contained in this paragraph
(o) shall remain operative and in full force and effect regardless of the
termination of any Transaction.
          (p) Early Unwind. In the event the sale of Convertible Notes for any
Transaction hereunder is not consummated with the initial purchasers thereof for
any reason by the close of business in New York City on the Early Unwind Date
set forth in the Confirmation for such Transaction, such Transaction shall
automatically terminate on such Early Unwind Date and (i) such Transaction and
all of the respective rights and obligations of Dealer and Counterparty under
such 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 such
Transaction either prior to or after such Early Unwind Date. The purchase price
paid by Counterparty shall be Dealer’s actual cost of such Shares and
derivatives as Dealer informs Counterparty and shall be paid in immediately
available funds on such Early Unwind Date.

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          (q) Registration. Counterparty hereby agrees that if the Shares (the
“Hedge Shares”) acquired by Dealer for the purpose of hedging its obligations
pursuant to the Transaction, in Dealer’s good faith and reasonable judgment,
cannot be sold in the U.S. public market by Dealer without registration under
the Securities Act, Counterparty shall, at its election: (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 to cover the
resale of such Hedge Shares and (A) enter into an agreement, in form and
substance satisfactory to Dealer and Counterparty, substantially in the form of
an underwriting agreement for a registered secondary offering, (B) provide
accountant’s “comfort” letters in customary form for registered offerings of
equity securities, (C) provide disclosure opinions of nationally recognized
outside counsel to Counterparty reasonably acceptable to Dealer, (D) provide
other customary opinions, certificates and closing documents customary in form
for registered offerings of equity securities and (E) afford Dealer a reasonable
opportunity to conduct a “due diligence” investigation with respect to
Counterparty customary in scope for underwritten offerings of equity securities;
provided 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) of this section 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 Underwriting Agreements customary for private
placements of equity securities, in form and substance satisfactory to Dealer
and Counterparty, including customary representations, covenants, blue sky and
other governmental filings and/or registrations, indemnities to Dealer, due
diligence rights (for Dealer or any designated buyer of the Hedge Shares from
Dealer), opinions and certificates and such other documentation as is customary
for private placements agreements, all reasonably acceptable to Dealer (in which
case, the Calculation Agent shall make any adjustments to the terms of the
Transaction that are necessary, in its 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 price displayed under the heading “Bloomberg VWAP” on Bloomberg
page PHH.N <equity> AQR (or any successor thereto) 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, the market value of one Share on such Valid Day, as determined by
the Calculation Agent using a volume-weighted method) on such Exchange Business
Days, and in the amounts, requested by Dealer; provided, that, for the avoidance
of doubt, Counterparty shall not be required to purchase the Hedge Shares
pursuant to this clause (iii) unless it makes the election to do so hereunder.
          (r) Conversion Rate Adjustments. Counterparty shall provide to Dealer
written notice (such notice, a “Conversion Rate Adjustment Notice”),
concurrently with a public announcement of any transaction or event (a
“Conversion Rate Adjustment Event”) (and at least five Scheduled Trading Days
(as such term is defined in the Indenture) prior to the date the related
adjustment to the Conversion Rate (as such term is defined in the Indenture)
would be effective under the Indenture) that is reasonably expected to lead to
an increase in the Conversion Rate (as such term is defined in the Indenture),
which Conversion Rate Adjustment Notice shall set forth the new, adjusted
Conversion Rate after giving effect to such Conversion Rate Adjustment Event
(the “New Conversion Rate”). In connection with the delivery of any Conversion
Rate Adjustment Notice to Dealer, if prior to public announcement,
(x) Counterparty shall, concurrently with or prior to such delivery, publicly
announce and disclose the Conversion Rate Adjustment Event or (y) Counterparty
shall, concurrently with such delivery, represent and warrant that the
information set forth in such Conversion Rate Adjustment Notice does not
constitute material non-public information with respect to Counterparty or the
Shares.
          (s) 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) at Dealer’s option, 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.”

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          (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.
          (t) Amendment. If the Initial Purchasers (as defined in the Purchase
Agreement) exercise their right to purchase additional Convertible Notes as set
forth therein (the “Additional Convertible Notes”), then on the closing date for
the purchase and sale of the Additional Convertible Notes, (i) the Number of
Units will be automatically increased by additional Units (the “Additional
Units”) equal to the number of Additional Convertible Notes in denominations of
USD 1,000 principal amount purchased pursuant to such exercise by the Initial
Purchaser affiliated with Dealer; and (ii) Counterparty shall pay to Dealer, on
the closing date for such Additional Convertible Notes, an additional premium in
USD equal to the product of the Additional Units and a fraction, the numerator
of which is the Premium and the denominator of which is the Number of Units
(prior to any such increase).
          (u) Role of Agent. (i) The Agent is registered as a broker-dealer with
the U.S. Securities and Exchange Commission and the National Association of
Securities Dealers, is acting hereunder for and on behalf of Dealer solely in
its capacity as agent for Dealer pursuant to instructions from Dealer, and is
not and will not be acting as the Counterparty’s agent, broker, advisor or
fiduciary in any respect under or in connection with this Transaction.
          (ii) In addition to acting as Dealer’s agent in executing this
Transaction, the Agent is authorized from time to time to give written payment
and/or delivery instructions to the Counterparty directing it to make its
payments and/or deliveries under this Transaction to an account of the Agent for
remittance to Dealer (or its designee), and for that purpose any such payment or
delivery by the Counterparty to the Agent shall be treated as a payment or
delivery to Dealer.
          (iii) Except as otherwise provided herein, any and all notices,
demands, or communications of any kind transmitted in writing by either Dealer
or the Counterparty under or in connection with this Transaction will be
transmitted exclusively by such party to the other party through the Agent at
the following address:
Wachovia Capital Markets, LLC
201 South College Street, 6th Floor
Charlotte, NC 28288-0601
Facsimile No.: (704) 383-8425
Telephone No.: (704) 715-8086
Attention: Equity Derivatives
          (iv) The Agent shall have no responsibility or liability to Dealer or
the Counterparty for or arising from (i) any failure by either Dealer or the
Counterparty to perform any of their respective obligations under or in
connection with this Transaction, (ii) the collection or enforcement of any such
obligations, or (iii) the exercise of any of the rights and remedies of either
Dealer or the Counterparty under or in connection with this Transaction. Each of
Dealer and the Counterparty agrees to proceed solely against the other to
collect or enforce any such obligations, and the Agent shall have no liability
in respect of this Transaction except for its gross negligence or willful
misconduct in performing its duties as the agent of Dealer.
          (v) Upon written request, the Agent will furnish to Dealer and the
Counterparty the date and time of the execution of this Transaction and a
statement as to the source and amount of any remuneration received or to be
received by the Agent in connection with this Transaction.
          12. Addresses for Notice:

         
 
  If to Dealer:   Wachovia Bank, National Association
 
      375 Park Avenue

17

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      New York, NY 10152
 
      Attention: Head of Documentation,
 
      Telephone No.: 212-214-6100
 
      Facsimile No.: 212-214-5913
 
       
 
  If to Counterparty:   PHH Corporation
 
      3000 Leadenhall Road,
 
      Mt. Laurel New Jersey 08054
 
      Fax: (856) 917-4278
 
      Attention: Treasurer
 
       
 
  with a copy to:   Wm. David Chalk, Esq.,
 
      DLA Piper US LLP
 
      6225 Smith Avenue
 
      Baltimore, Maryland 21209-3600,
 
      Fax: (410) 580-3120

          13. Accounts for Payment:

         
 
  To Dealer:   ABA: 053-000-219
 
      Wachovia Bank, National Association
 
      Charlotte, NC
 
      A/C: 04659360009768
 
      Attn: Equity Derivatives
 
       
 
  To Counterparty:   JP Morgan Chase
 
      ABA 021 000 021
 
      PHH Corporation
 
      Account number 323018688

          14. Delivery Instructions:
          Unless otherwise directed in writing, any Share to be delivered
hereunder shall be delivered as follows:

         
 
  To Counterparty:   Counterparty to advise.

18

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                      Yours sincerely,                
 
                    WACHOVIA CAPITAL MARKETS, LLC,
acting solely in its capacity as Agent of Wachovia Bank, National Association  
    WACHOVIA BANK, NATIONAL ASSOCIATION
By:  Wachovia Capital Markets, LLC, acting solely
        in its capacity as its Agent    
 
                   
By:
  /s/ Mary Lou Guttmann       By:   /s/ Mary Lou Guttmann    
 
                   
 
  Name: Mary Lou Guttman
Title:   Senior Vice President           Name: Mary Lou Guttman
Title:    Senior Vice President    
 
                   
 
                    Confirmed as of the date first above written:              
 
 
                    PHH CORPORATION                
 
                   
By:
  /s/ Mark E. Johnson                
 
                   
 
  Name: Mark E. Johnson
Title:   Vice President & Treasurer                

 

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EXHIBIT A
CONFIRMATION

     
Date:
  March 27, 2008  
To:
  PHH Corporation (“Counterparty”)  
Facsimile:
  (856) 917-4278  
Attention:
  Treasurer  
From:
  Wachovia Bank, National Association (“Dealer”)  
Facsimile:
  212-214-5913

Transaction Reference Number:
          The purpose of this communication (this “Confirmation”) is to set
forth the terms and conditions of the above-referenced Transaction entered into
on the Trade Date specified below between you and us. This Confirmation
supplements, forms a part of, and is subject to the Master Terms and Conditions
for Convertible Bond Hedging Transactions between Wachovia Bank, National
Association, acting through the agency of Wachovia Capital Markets, LLC (the
“Agent”), and PHH Corporation dated as of March 27, 2008 (as amended from time
to time, the “Master Confirmation”).
          1. The definitions and provisions contained in the Definitions (as
such term is defined in the Master Confirmation) and in the Master Confirmation
are incorporated into this Confirmation. In the event of any inconsistency
between those definitions and provisions and this Confirmation, this
Confirmation will govern.
          2. The particular Transaction to which this Confirmation relates is
entered into as part of an integrated hedging transaction of the Convertible
Notes pursuant to the provisions of Treasury Regulation Section 1.1275-6.
          3. The particular Transaction to which this Confirmation relates shall
have the following terms:

      Trade Date:   March 27, 2008       Effective Date:   The closing date for
the initial issuance of the Convertible Notes       Premium:   USD 18,117,195.32
      Premium Payment Date:   The Effective Date       Convertible Notes:   4.0%
Convertible Senior Notes due 2012, offered pursuant to an Offering Memorandum to
be dated as of March 27, 2008 and issued pursuant to the Indenture.       Number
of Units:   The number of Convertible Notes in denominations of USD1,000
principal amount issued by Counterparty on the closing date for the initial
issuance of the Convertible Notes.

A-1

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      Strike Price:   As of any date, an amount in USD, rounded to the nearest
cent (with 0.5 cents being rounded upwards), equal to USD1,000 divided by the
Unit Entitlement.       Applicable Percentage:   40%       Number of Shares:  
The product of the Number of Units, the Unit Entitlement and the Applicable
Percentage.       Expiration Date:   April 15, 2012       Unit Entitlement:   As
of any date, a number of Shares per Unit equal to the Conversion Rate (as
defined in the Indenture, but without regard to any adjustments to the
Conversion Rate pursuant to the Excluded Provisions of the Indenture).      
Indenture:   Indenture to be dated as of April 2, 2008 by and between
Counterparty and The Bank of New York, as trustee, pursuant to which the
Convertible Notes are to be issued. For the avoidance of doubt, references
herein to sections of the Indenture are based on the draft of the Indenture most
recently reviewed by the parties at the time of execution of this Confirmation.
If any relevant sections of the Indenture are changed, added or renumbered
following execution of this Confirmation but prior to the execution of the
Indenture, the parties will amend this Confirmation in good faith to preserve
the economic intent of the parties.       Net Share Provision:   Section
5.04(a)(ii) and Section 5.04(b) (without duplication) of the Indenture      
Excluded Provisions:   Sections 5.06(g), 5.02 and 5.17 of the Indenture      
Dilution Provisions:   Sections 5.06(a), (b), (c), (d), (e) and (i) of the
Indenture       Merger Provision:   Section 5.12 of the Indenture       Tender
Offer Provision:   Section 5.12 of the Indenture       Make-Whole Provisions:  
Section 5.02(a) of the Indenture       Early Unwind Date:   April 2, 2008, or
such later date as agreed by the parties hereto.

A-2

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          3. Counterparty hereby agrees (a) to check this Confirmation promptly
upon receipt so that errors or discrepancies can be promptly identified and
rectified and (b) to confirm that the foregoing correctly sets forth the terms
of the agreement between us with respect to the particular Transaction to which
this Confirmation relates, by manually signing this Confirmation and providing
any other information requested herein or in the Master Confirmation and
immediately returning an executed copy by facsimile at 212-214-5913 (Attention:
Equity Division Documentation Unit, by telephone contact 212-214-6100).
Yours sincerely,

                      WACHOVIA CAPITAL MARKETS, LLC, acting solely in its
capacity as Agent of Wachovia Bank, National Association       WACHOVIA BANK,
NATIONAL ASSOCIATION
By:  Wachovia Capital Markets, LLC, acting solely
         in its capacity as its Agent    
 
                   
By:
          By:        
 
                   
 
  Name:           Name:    
 
  Title:           Title:    
 
                    Confirmed as of the date first above written:              
 
 
                    PHH CORPORATION                
 
                   
By:
                   
 
                   
 
  Name:                
 
  Title: