Document:

exv10w1

Exhibit 10.1

PHH CORPORATION

U.S.$220,000,000 4.00% Convertible Senior Notes Due 2014*

Purchase Agreement

September 23, 2009

J.P. Morgan Securities Inc.

Citigroup Global Markets Inc.

Wells Fargo Securities, LLC

As Representatives of the Initial Purchasers

c/o

J.P. Morgan Securities Inc.

383 Madison Avenue

New York, New York 10179

and

Citigroup Global Markets Inc.

388 Greenwich Street

New York, New York 10013

Ladies and Gentlemen:

     PHH Corporation, a corporation organized under the laws of Maryland (the “Company”), proposes
to issue and sell to the several parties named in Schedule I hereto (the “Initial Purchasers”), for
whom you (the “Representatives”) are acting as representatives, U.S. $220,000,000 principal amount
of its 4.00% Convertible Senior Notes due 2014 (the “Firm Securities”). The Company also proposes
to grant to the Initial Purchasers an option to purchase up to U.S.$30,000,000 additional principal
amount of such Senior Notes to cover over-allotments, if any (the “Option Securities” and, together
with the Firm Securities, the “Securities”). The Securities are convertible into shares of Common
Stock, par value U.S.$0.01 per share (the “Common Stock”), of the Company at the conversion price
set forth herein. The Securities are to be issued under an indenture (the “Indenture”), to be
dated as of the Closing Date, between the Company and The Bank of New York Mellon, as trustee (the
“Trustee”). To the extent there are no additional parties listed on Schedule I other than you, the
term Representatives as used herein shall mean you as the Initial Purchasers, and the terms
Representatives and Initial Purchasers shall mean either the singular or plural as the context

 

		
	*	 Plus an option to purchase up to U.S.$30,000,000
additional principal amount from the Company to cover over-allotments.

 

 

requires. The use of the neuter in this Agreement shall include the feminine and masculine
wherever appropriate. Certain terms used herein are defined in Section 24 hereof.

     The sale of the Securities to the Initial Purchasers will be made without registration of the
Securities or the Common Stock issuable upon conversion thereof under the Act in reliance upon
exemptions from the registration requirements of the Act.

     In connection with the sale of the Securities, the Company has prepared a preliminary offering
memorandum, dated September 23, 2009 (as amended or supplemented through the date hereof, including
any and all exhibits thereto and any information incorporated by reference therein, the
“Preliminary Memorandum”), and a final offering memorandum, to be dated September 23, 2009 (as
amended or supplemented through the Execution Time, including any and all exhibits thereto and any
information incorporated by reference therein, the “Final Memorandum”). Each of the Preliminary
Memorandum and the Final Memorandum sets forth certain information concerning the Company, the
Securities and the Common Stock issuable upon conversion thereof. The Company hereby confirms that
it has authorized the use of the Disclosure Package, the Preliminary Memorandum and the Final
Memorandum, and any amendment or supplement thereto, in connection with the offer and sale of the
Securities by the Initial Purchasers. Unless stated to the contrary, any references herein to the
terms “amend”, “amendment” or “supplement” with respect to the Final Memorandum shall be deemed to
refer to and include any information filed under the Exchange Act subsequent to the Execution Time
that is incorporated by reference therein.

     1. Representations and Warranties. The Company represents and warrants to, and agrees
with, each Initial Purchaser as set forth below in this Section 1.

     (a) The Preliminary Memorandum, at the date thereof, did not contain any untrue statement of a
material fact or omit to state any material fact necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading. At the Execution Time, on
the Closing Date and on any settlement date, the Final Memorandum did not and will not (and any
amendment or supplement thereto, at the date thereof, at the Closing Date and on any settlement
date, will not) contain any untrue statement of a material fact or omit to state any material fact
necessary to make the statements therein, in the light of the circumstances under which they were
made, not misleading; provided, however, that the Company makes no representation
or warranty as to the information contained in or omitted from the Preliminary Memorandum or the
Final Memorandum, or any amendment or supplement thereto, in reliance upon and in conformity with
information furnished in writing to the Company by or on behalf of the Initial Purchasers through
the Representatives specifically for inclusion therein, it being understood and agreed that the
only such information furnished by or on behalf of any Initial Purchaser consists of the
information described as such in Section 8(b) hereof.

     (b) (i) The Disclosure Package, and (ii) each electronic road show when taken together as a
whole with the Disclosure Package, as of the Execution Time, does not contain any untrue statement
of a material fact or omit to state any material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not misleading. The
preceding sentence does not apply to statements in or omissions from the Disclosure Package based
upon and in conformity with written information furnished to the

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Company by any Initial Purchaser through the Representatives specifically for use therein, it
being understood and agreed that the only such information furnished by or on behalf of any Initial
Purchaser consists of the information described as such in Section 8(b) hereof.

     (c) None of the Company, its Affiliates, or any person acting on its or their behalf has
directly or indirectly, made offers or sales of any security, or solicited offers to buy, any
security under circumstances that would require the registration of the Securities or the Common
Stock issuable upon conversion thereof under the Act.

     (d) None of the Company, its Affiliates, or any person acting on its or their behalf has: (i)
engaged in any form of general solicitation or general advertising (within the meaning of
Regulation D) in connection with any offer or sale of the Securities or (ii) engaged in any
directed selling efforts (within the meaning of Regulation S) with respect to the Securities or the
Common Stock issuable upon conversion thereof.

     (e) The Securities satisfy the eligibility requirements of Rule 144A(d)(3) under the Act.

     (f) Intentionally omitted.

     (g) Assuming the accuracy of the representations and warranties of the Initial Purchasers
contained in Section 4 and their compliance with their agreements set forth herein, no registration
under the Act of the Securities or the Common Stock issuable upon conversion thereof is required
for the offer and sale of the Securities to or by the Initial Purchasers in the manner contemplated
herein, in the Disclosure Package and the Final Memorandum.

     (h) The Company is not, and after giving effect to the offering and sale of the Securities and
the application of the proceeds thereof as described in the Disclosure Package and the Final
Memorandum will not be, an “investment company” as defined in the Investment Company Act.

     (i) The Company is subject to and in compliance in all material respects with the reporting
requirements of Section 13 or Section 15(d) of the Exchange Act.

     (j) The Company has not paid or agreed to pay to any person any compensation for soliciting
another to purchase any of the Securities (except as contemplated in this Agreement).

     (k) The Company has not taken, directly or indirectly, any action designed to or that has
constituted or that might reasonably be expected to cause or result, under the Exchange Act or
otherwise, in stabilization or manipulation of the price of any security of the Company to
facilitate the sale or resale of the Securities.

     (l) Each of the Company and its significant subsidiaries (as listed in Annex A hereto) has
been duly incorporated and is validly existing as a corporation or other entity in good standing
under the laws of the jurisdiction in which it is incorporated or formed with full corporate or
other power and authority to own or lease, as the case may be, and to operate its properties and
conduct its business as described in the Disclosure Package and the Final

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Memorandum, and is duly qualified to do business as a foreign corporation and is in good
standing under the laws of each jurisdiction that requires such qualification, except for such
jurisdictions where the failure to so qualify or to be in good standing would not result in a
Material Adverse Effect (as defined below in Section 1(t)).

     (m) All the outstanding shares of capital stock or other equity or ownership interests of each
significant subsidiary have been duly authorized and validly issued and are fully paid and
nonassessable, and, except as otherwise set forth in the Disclosure Package and the Final
Memorandum (exclusive of any amendment or supplement thereto) and except for the equity or
ownership interests of the Company’s significant subsidiaries with Securitization Indebtedness (as
defined in the Preliminary Memorandum and Final Memorandum), all outstanding shares of capital
stock or other equity or ownership interests of the significant subsidiaries that are owned by the
Company either directly or through a subsidiary controlled by the Company are free and clear of any
security interest, claim, lien or encumbrance.

     (n) The Company’s authorized capital stock is as set forth in the Disclosure Package and the
Final Memorandum as of the dates set forth therein; the capital stock of the Company conforms in
all material respects to the description thereof contained in the Disclosure Package and the Final
Memorandum; the outstanding shares of Common Stock have been duly authorized and validly issued
and are fully paid and nonassessable; the shares of Common Stock initially issuable upon conversion
of the Securities have been duly authorized and, when issued upon conversion of the Securities,
will be validly issued, fully paid and nonassessable; the Board of Directors of the Company has
duly and validly adopted resolutions reserving such shares of Common Stock for issuance upon
conversion of the Securities; the holders of outstanding shares of capital stock of the Company are
not entitled to preemptive or other rights to subscribe for the Securities or the shares of Common
Stock issuable upon conversion thereof; and, except as set forth in the Disclosure Package and the
Final Memorandum (exclusive of any amendment or supplement thereto), no options, warrants or other
rights to purchase, agreements or other obligations to issue, or rights to convert any obligations
into or exchange any securities for, shares of capital stock of or ownership interests in the
Company are outstanding other than for subsequent issuances, if any, pursuant to employee benefit
plans described in the Disclosure Package and the Final Memorandum or upon exercise of outstanding
options described in the Disclosure Package and the Final Memorandum.

     (o) Intentionally omitted.

     (p) This Agreement has been duly authorized, executed and delivered by the Company; the
Indenture has been duly authorized and, assuming due authorization, execution and delivery thereof
by the Trustee, when executed and delivered by the Company, will constitute a legal, valid, binding
instrument enforceable against the Company in accordance with its terms (subject to applicable
bankruptcy, reorganization, insolvency, moratorium or other laws affecting creditors’ rights
generally from time to time in effect and to general principles of equity); the Securities have
been duly authorized, and, when executed and authenticated in accordance with the provisions of the
Indenture and delivered to and paid for by the Initial Purchasers as provided herein, will have
been duly executed and delivered by the Company and will constitute the legal, valid and binding
obligations of the Company entitled to the benefits of the Indenture (subject, as to enforcement,
to applicable bankruptcy, reorganization, insolvency,

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moratorium or other laws affecting creditors’ rights generally from time to time in effect and
to general principles of equity) and will be convertible into Common Stock in accordance with their
terms;

     (q) No consent, approval, authorization, filing with or order of any court or governmental
agency or body is required in connection with the transactions contemplated herein or in the
Indenture, except (i) such as may be required under the Act, the Trust Indenture Act and the rules
and regulations promulgated thereunder and (ii) such as have been obtained or made by the Company
and are in full force and effect under the Act, applicable state securities or blue sky laws and
from FINRA.

     (r) None of the execution and delivery of the Indenture or this Agreement, the issuance and
sale of the Securities or the issuance of the Common Stock upon conversion thereof, or the
consummation of any other of the transactions herein or therein contemplated, or the fulfillment of
the terms hereof or thereof will conflict with, result in a breach or violation or imposition of
any lien, charge or encumbrance upon any property or assets of the Company or any of its
subsidiaries pursuant to, (i) the charter or by-laws or comparable constituting documents of the
Company or any of its subsidiaries; (ii) the terms of any material indenture, contract, lease,
mortgage, deed of trust, note agreement, loan agreement or other material agreement, obligation,
condition, covenant or instrument to which the Company or any of its subsidiaries is a party or
bound or to which its or their property is subject; or (iii) any statute, law, rule, regulation,
judgment, order or decree of any court, regulatory body, administrative agency, governmental body,
arbitrator or other authority having jurisdiction over the Company or any of its subsidiaries or
any of its or their properties except in the case of this clause (iii) for any such default or
violation that would not, individually or in the aggregate, have a Material Adverse Effect or a
material adverse effect upon the consummation of the transactions contemplated hereby.

     (s) The consolidated historical financial statements and schedules of the Company and its
consolidated subsidiaries included or incorporated by reference in the Disclosure Package and the
Final Memorandum present fairly in all material respects the financial condition, results of
operations and cash flows of the Company and its consolidated subsidiaries as of the dates and for
the periods indicated, comply as to form with the applicable accounting requirements of Regulation
S-X and have been prepared in conformity with generally accepted accounting principles in the
United States (U.S. GAAP) applied on a consistent basis throughout the periods involved (except as
otherwise noted therein); and the selected financial data set forth under the caption “SELECTED
CONSOLIDATED FINANCIAL DATA” in the Preliminary Memorandum and the Final Memorandum fairly present,
on the basis stated in the Preliminary Memorandum and the Final Memorandum, the information
included or incorporated by reference therein.

     (t) No action, suit or proceeding by or before any court or governmental agency, authority or
body or any arbitrator involving the Company or any of its subsidiaries or its or their property is
pending or, to the knowledge of the Company, threatened that (i) could reasonably be expected to
have a material adverse effect on the performance of this Agreement or the Indenture, or the
consummation of any of the transactions contemplated hereby or thereby or (ii) could reasonably be
expected to have a material adverse effect on the condition (financial or

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otherwise), prospects, earnings, business or properties of the Company and its subsidiaries,
taken as a whole, whether or not arising from transactions in the ordinary course of business (a
“Material Adverse Effect”), except as set forth in or contemplated in the Disclosure Package and
the Final Memorandum (exclusive of any amendment or supplement thereto).

     (u) Each of the Company and its significant subsidiaries owns or leases all such properties as
are necessary to the conduct of its operations as presently conducted, except where such failure
would not have a Material Adverse Effect.

     (v) Neither the Company nor any of its significant subsidiaries is in violation or default of
(i) any provision of its charter or bylaws or comparable constituting documents; (ii) the terms of
any indenture, contract, lease, mortgage, deed of trust, note agreement, loan agreement or other
agreement, obligation, condition, covenant or instrument to which the Company or any of its
significant subsidiaries is a party or bound or to which its or their property is subject; or (iii)
any statute, law, rule, regulation, judgment, order or decree applicable to the Company or any of
its significant subsidiaries of any court, regulatory body, administrative agency, governmental
body, arbitrator having jurisdiction over the Company or such significant subsidiary or any of its
properties, as applicable, except, with respect to clauses (ii) and (iii), as would not result in a
Material Adverse Effect.

     (w) Deloitte & Touche LLP, which has audited certain financial statements of the Company and
its consolidated subsidiaries and delivered their report with respect to the audited consolidated
financial statements and schedules included or incorporated by reference in the Disclosure Package
and the Final Memorandum, is an independent registered public accounting firm with respect to the
Company within the meaning of the Act.

     (x) There are no stamp or other issuance or transfer taxes or duties or other similar fees or
charges required to be paid in connection with the execution and delivery of this Agreement or the
issuance or sale of the Securities or upon the issuance of Common Stock upon the conversion
thereof.

     (y) The Company has filed all applicable tax returns that are required to be filed or has
requested extensions thereof (except in any case in which the failure so to file would not,
individually or in the aggregate, have a Material Adverse Effect and except as set forth in or
contemplated in the Disclosure Package and the Final Memorandum (exclusive of any amendment or
supplement thereto)) and has paid all taxes due and any other assessment, fine or penalty levied
against it, to the extent that any of the foregoing is due and payable, except for any such tax or
assessment, fine or penalty that is currently being contested in good faith or as would not,
individually or in the aggregate, have a Material Adverse Effect or except as set forth in or
contemplated in the Disclosure Package and the Final Memorandum (exclusive of any amendment or
supplement thereto).

     (z) No labor problem or dispute with the employees of the Company or any of its subsidiaries
exists or, to the Company’s knowledge, is threatened, except as would not have a Material Adverse
Effect, and except as set forth in or contemplated in the Disclosure Package and the Final
Memorandum (exclusive of any amendment or supplement thereto).

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     (aa) The Company and each of its subsidiaries is insured against such losses and risks and in
such amounts as are customary in the businesses in which they are engaged; all material policies of
insurance and fidelity or surety bonds insuring the Company or any of its subsidiaries or their
respective businesses, assets, employees, officers and directors are in full force and effect; the
Company and its subsidiaries are in compliance in all material respects with the terms of such
policies and instruments; there are no material claims by the Company or any of its significant
subsidiaries under any such policy or instrument as to which any insurance company is denying
liability or defending under a reservation of rights clause; neither the Company nor any of its
subsidiaries has been refused any insurance coverage sought or applied for; and neither the Company
nor any of its subsidiaries has any reason to believe that it will not be able to renew its
existing insurance coverage as and when such coverage expires or to obtain similar coverage from
similar insurers as may be necessary to continue its business at a cost that would not have a
Material Adverse Effect except as set forth in or contemplated in the Disclosure Package and the
Final Memorandum (exclusive of any amendment or supplement thereto).

     (bb) Except for generally applicable restrictions arising under applicable corporate law, no
subsidiary of the Company is currently prohibited, directly or indirectly, from paying any
dividends to the Company, from making any other distribution on such subsidiary’s capital stock,
from repaying to the Company any loans or advances to such subsidiary from the Company or from
transferring any of such subsidiary’s property or assets to the Company or any other subsidiary of
the Company, except as described in or contemplated in the Disclosure Package and the Final
Memorandum (exclusive of any amendment or supplement thereto).

     (cc) The Company and its subsidiaries possess all licenses, certificates, permits and other
authorizations issued by all applicable authorities necessary to conduct their respective
businesses, except as would not result in a Material Adverse Effect or as set forth in or
contemplated in the Disclosure Package and the Final Memorandum (exclusive of any amendment or
supplement thereto). Neither the Company nor any of its subsidiaries has received any notice of
proceedings relating to the revocation or modification of any such certificate, authorization or
permit which, singly or in the aggregate, if the subject of an unfavorable decision, ruling or
finding, would have a Material Adverse Effect, except as set forth in or contemplated in the
Disclosure Package and the Final Memorandum (exclusive of any amendment or supplement thereto).

     (dd) The Company and each of its subsidiaries maintains a system of internal accounting
controls sufficient to provide reasonable assurance that (i) transactions are executed in
accordance with management’s general or specific authorizations; (ii) transactions are recorded as
necessary to permit preparation of financial statements in conformity with U.S. GAAP and to
maintain asset accountability; (iii) access to assets is permitted only in accordance with
management’s general or specific authorization; and (iv) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and appropriate action is taken with
respect to any differences. The Company and its subsidiaries’ internal controls over financial
reporting were effective as of December 31, 2008, and to the Company’s knowledge, are effective as
of the date hereof and the Company is not aware of any material weakness in their internal control
over financial reporting.

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     (ee) The Company and its subsidiaries maintain “disclosure controls and procedures” (as such
term is defined in Rule 13a-15(e) under the Exchange Act); such disclosure controls and procedures
were effective as of June 30, 2009, and, to the Company’s knowledge, are effective as of the date
hereof.

     (ff) The Company and its subsidiaries are (i) in compliance with any and all applicable laws
and regulations relating to the protection of human health and safety, the environment or hazardous
or toxic substances or wastes, pollutants or contaminants (“Environmental Laws”); (ii) have
received and are in compliance with all permits, licenses or other approvals required of them under
applicable Environmental Laws to conduct their respective businesses; and (iii) have not received
notice of any actual or potential liability under any Environmental Law, except where such
non-compliance with Environmental Laws, failure to receive required permits, licenses or other
approvals, or liability would not, individually or in the aggregate, have a Material Adverse
Effect, except as set forth in or contemplated in the Disclosure Package and the Final Memorandum
(exclusive of any amendment or supplement thereto). Except as set forth in the Disclosure Package
and the Final Memorandum (exclusive of any amendment or supplement thereto), neither the Company
nor any of its subsidiaries has been named as a “potentially responsible party” under the
Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended.

     (gg) Intentionally omitted.

     (hh) The subsidiaries listed on Annex A attached hereto are the only “significant
subsidiaries” of the Company (as defined in Rule 1-02 of Regulation S-X).

     (ii) None of the Company, its subsidiaries or, to the knowledge of the Company, any director,
officer, agent, employee or Affiliate of the Company or any of its subsidiaries is aware of or has
taken any action, directly or indirectly, that would result in a violation by such persons of the
Foreign Corrupt Practices Act of 1977, as amended, and the rules and regulations thereunder (the
“FCPA”), including, without limitation, making use of the mails or any means or instrumentality of
interstate commerce corruptly in furtherance of an offer, payment, promise to pay or authorization
of the payment of any money, or other property, gift, promise to give, or authorization of the
giving of anything of value to any “foreign official” (as such term is defined in the FCPA) or any
foreign political party or official thereof or any candidate for foreign political office, in
contravention of the FCPA.

     (jj) The operations of the Company and its subsidiaries are and have been conducted at all
times in compliance with applicable financial recordkeeping and reporting requirements and money
laundering statutes and the rules and regulations thereunder and any related or similar rules,
regulations or guidelines, issued, administered or enforced by any governmental agency
(collectively, the “Money Laundering Laws”) and no action, suit or proceeding by or before any
court or governmental agency, authority or body or any arbitrator involving the Company or any of
its subsidiaries with respect to the Money Laundering Laws is pending or, to the knowledge of the
Company, threatened.

     (kk) None of the Company, any of its subsidiaries or, to the knowledge of the Company, any
director, officer, agent, employee or Affiliate of the Company or any of its

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subsidiaries is currently subject to any sanctions administered by the Office of Foreign
Assets Control of the U.S. Department of the Treasury (“OFAC”); and the Company will not directly
or indirectly use the proceeds of the offering of the Securities hereunder, or lend, contribute or
otherwise make available such proceeds to any subsidiary, joint venture partner or other person or
entity, for the purpose of financing the activities of any person currently subject to any U.S.
sanctions administered by OFAC.

     (ll) There is and has been no failure on the part of the Company and any of the Company’s
directors or officers, in their capacities as such, to comply with any provision of the
Sarbanes-Oxley Act of 2002 and the rules and regulations promulgated in connection therewith (the
“Sarbanes-Oxley Act”), including Section 402 related to loans and Sections 302 and 906 related to
certifications, except where the failure to be in compliance, would not individually or in the
aggregate, have a Material Adverse Effect.

     (mm) Prior to the date hereof, the Company has furnished to the Representatives letters, each
substantially in the form of Exhibit A hereto, duly executed by each officer and director of the
Company listed in Annex B and addressed to the Representatives.

     Any certificate signed by any officer of the Company and delivered to the Representatives or
counsel for the Initial Purchasers in connection with the offering of the Securities shall be
deemed a representation and warranty by the Company, as to matters covered thereby, to each Initial
Purchaser.

     2. Purchase and Sale. (a) Subject to the terms and conditions and in reliance upon
the representations and warranties herein set forth, the Company agrees to sell to each Initial
Purchaser, and each Initial Purchaser agrees, severally and not jointly, to purchase from the
Company, at a purchase price of 97.0% of the principal amount thereof, plus accrued interest, if
any, from September 29, 2009 to the Closing Date, the principal amount of Firm Securities set forth
opposite such Initial Purchaser’s name in Schedule I hereto.

     (b) Subject to the terms and conditions and in reliance upon the representations and
warranties herein set forth, the Company hereby grants an option to the several Initial Purchasers
to purchase, severally and not jointly, the Option Securities at the same purchase price as Initial
Purchasers shall pay for the Firm Securities, plus accrued interest, if any, from September 29,
2009 to the settlement date for the Option Securities. The option may be exercised only to cover
over-allotments in the sale of the Firm Securities by the Initial Purchasers. The option may be
exercised in whole or in part at any time (but not more than once) on or before the 25th day after
the date on which the first Firm Security is issued to a person other than a bond house, broker, or
similar person or organization acting in the capacity of an underwriter, placement agent, or
wholesaler (the “Firm Security Date”) upon written or telegraphic notice by the Representatives to
the Company setting forth the principal amount of Option Securities as to which the several Initial
Purchasers are exercising the option and the settlement date; provided, however, that
either (i) the Option Securities settle no later than the 12th day after the Firm Security Date or
(ii) the Option Securities settle at a price that would not cause the Option Securities to have
more than a “de minimis” amount of original issue discount (determined under Section 1273 of the
Internal Revenue Code of 1986, as amended, and applicable Treasury Department regulations) if the
Option Securities were a separate issue for

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such purposes. Delivery of the Option Securities, and payment therefor, shall be made as
provided in Section 3 hereof. The principal amount of Option Securities to be purchased by each
Initial Purchaser shall be the same percentage of the total principal amount of Option Securities
to be purchased by the several Initial Purchasers as such Initial Purchaser is purchasing of the
Firm Securities, subject to such adjustments as you in your absolute discretion shall make to
eliminate any fractional Securities.

     3. Delivery and Payment. (a) Delivery of and payment for the Firm Securities and the
Option Securities (if the option provided for in Section 2(b) hereof shall have been exercised on
or before the first Business Day immediately preceding the Closing Date) shall be made at 10:00
A.M., New York City time, on September 29, 2009, or at such time on such later date not more than
three Business Days after the foregoing date as the Representatives shall designate, which date and
time may be postponed by agreement between the Representatives and the Company or as provided in
Section 9 hereof (such date and time of delivery and payment for the Securities being herein called
the “Closing Date”). Delivery of the Securities shall be made to the Representatives for the
respective accounts of the several Initial Purchasers against payment by the several Initial
Purchasers through the Representatives of the purchase price thereof to or upon the order of the
Company by wire transfer payable in same-day funds to the account specified by the Company.
Delivery of the Securities shall be made through the facilities of The Depository Trust Company
unless the Representatives shall otherwise instruct.

     (b) If the option provided for in Section 2(b) hereof is exercised after the first Business
Day immediately preceding the Closing Date, the Company will deliver the Option Securities (at the
expense of the Company) to the Representatives on the date specified by the Representatives (which
shall be within three Business Days after exercise of said option) for the respective accounts of
the several Initial Purchasers, against payment by the several Initial Purchasers through the
Representatives of the purchase price thereof to or upon the order of the Company by wire transfer
payable in same-day funds to the account specified by the Company. If settlement for the Option
Securities occurs after the Closing Date, the Company will deliver to the Representatives on the
settlement date for the Option Securities, and the obligation of the Initial Purchasers to purchase
the Option Securities shall be conditioned upon receipt of, supplemental opinions, certificates and
letters confirming as of such date the opinions, certificates and letters delivered on the Closing
Date pursuant to Section 6 hereof.

     4. Offering by Initial Purchasers. (a) Each Initial Purchaser acknowledges that the
Securities and the Common Stock issuable upon conversion thereof have not been and will not be
registered under the Act and may not be offered or sold within the United States or to, or for the
account or benefit of, U.S. persons, except pursuant to an exemption from, or in a transaction not
subject to, the registration requirements of the Act.

     (b) Each Initial Purchaser, severally and not jointly, represents and warrants to and agrees
with the Company that:

          (i) it has not offered or sold, and will not offer or sell, any Securities
within the United States except to those it reasonably believes to be “qualified
institutional buyers” (as defined in Rule 144A under the Act);

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          (ii) neither it nor any person acting on its behalf has made or will make
offers or sales of the Securities in the United States by means of any form of
general solicitation or general advertising (within the meaning of Regulation D) in
the United States;

          (iii) in connection with each sale pursuant to Section 4(b)(i)(A), it has taken
or will take reasonable steps to ensure that the purchaser of such Securities is
aware that such sale may be made in reliance on Rule 144A;

          (iv) it is an “accredited investor” (as defined in Rule 501(a) of Regulation
D); and

          (v) neither it nor any person acting on its behalf, without the prior written
consent of the Company, has given or will give to any prospective purchaser of the
Securities any written information concerning the offering of the Securities other
than materials contained in the Disclosure Package, the Final Memorandum or any
other offering materials consented to in writing by the Company.

     5. Agreements. The Company agrees with each Initial Purchaser that:

     (a) The Company will furnish to each Initial Purchaser and to counsel for the Initial
Purchasers, without charge, during the period referred to in Section 5(c) below, as many copies of
the materials contained in the Disclosure Package and the Final Memorandum and any amendments and
supplements thereto as they may reasonably request.

     (b) The Company will not amend or supplement the Disclosure Package or the Final Memorandum,
other than by filing documents under the Exchange Act that are incorporated by reference therein,
without the prior written consent of the Representatives, which shall not be unreasonably withheld,
delayed or conditioned; provided, however, that prior to the completion of the
distribution of the Securities by the Initial Purchasers (as reasonably determined by the Initial
Purchasers), the Company will not file any document under the Exchange Act that is incorporated by
reference in the Disclosure Package or the Final Memorandum unless, prior to such proposed filing,
the Company has furnished the Representatives with a copy of such document for their review and the
Representatives have not reasonably objected to the filing of such document. The Company will
promptly advise the Representatives when any document filed under the Exchange Act that is
incorporated by reference in the Disclosure Package or the Final Memorandum shall have been filed
with the Commission.

     (c) If at any time prior to the completion of the sale of the Securities by the Initial
Purchasers (as determined by the Representatives), any event occurs as a result of which the
Disclosure Package or the Final Memorandum, as then amended or supplemented, would include any
untrue statement of a material fact or omit to state any material fact necessary to make the
statements therein, in the light of the circumstances under which they were made or the
circumstances then prevailing, not misleading, or if it should be necessary to amend or supplement
the Disclosure Package or the Final Memorandum to comply with applicable law,

11

 

the Company will promptly (i) notify the Representatives of any such event; (ii) subject to
the requirements of Section 5(b), prepare an amendment or supplement that will correct such
statement or omission or effect such compliance; and (iii) supply any supplemented or amended
Disclosure Package or Final Memorandum to the several Initial Purchasers and counsel for the
Initial Purchasers without charge in such quantities as they may reasonably request.

     (d) Without the prior written consent of the Representatives, the Company has not given and,
during the period referred to in Section 5(c) above, will not give to any prospective purchaser of
the Securities any written information concerning the offering of the Securities other than
materials contained in the Disclosure Package, the Final Memorandum or any other offering materials
prepared by or with the prior written consent of the Representatives.

     (e) The Company will arrange, if necessary, for the qualification of the Securities for sale
by the Initial Purchasers under the laws of such jurisdictions as the Representatives may designate
and will maintain such qualifications in effect so long as required for the sale of the Securities;
provided that in no event shall the Company be obligated to qualify to do business in any
jurisdiction where it is not now so qualified or to take any action that would subject it to
service of process in suits, other than those arising out of the offering or sale of the
Securities, in any jurisdiction where it is not now so subject. The Company will promptly advise
the Representatives of the receipt by the Company of any notification with respect to the
suspension of the qualification of the Securities for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose.

     (f) The Company will not, and will not permit any of its Affiliates to, resell any Securities
or Shares of Common Stock issued upon conversion thereof that have been acquired by any of them.

     (g) None of the Company, its Affiliates, or any person acting on its or their behalf will,
directly or indirectly, make offers or sales of any security, or solicit offers to buy any
security, under circumstances that would require the registration of the Securities or Common Stock
issuable upon conversion thereof under the Act.

     (h) Any information provided by the Company, its Affiliates or any person acting on its or
their behalf to publishers of publicly available databases about the terms of the Securities shall
include a statement that the Securities have not been registered under the Act and are subject to
restrictions under Rule 144A under the Act and Regulation S;

     (i) None of the Company, its Affiliates, or any person acting on its or their behalf will
engage in any form of general solicitation or general advertising (within the meaning of Regulation
D) in connection with any offer or sale of the Securities in the United States.

     (j) For so long as any of the Securities or the Common Stock issuable upon the conversion
thereof are “restricted securities” within the meaning of Rule 144(a)(3) under the Act, the Company
will, during any period in which it is not subject to and in compliance with Section 13 or 15(d) of
the Exchange Act, provide to each holder of such restricted securities and to each prospective
purchaser (as designated by such holder) of such restricted securities, upon the request of such
holder or prospective purchaser, any information required to be provided by Rule

12

 

144A(d)(4) under the Act. This covenant is intended to be for the benefit of the holders, and
the prospective purchasers designated by such holders, from time to time of such restricted
securities.

     (k) None of the Company, its Affiliates, or any person acting on its or their behalf will
engage in any directed selling efforts with respect to the Securities. Terms used in this
paragraph have the meanings given to them by Regulation S.

     (l) The Company will cooperate with the Representatives and use its reasonable best efforts to
permit the Securities to be eligible for clearance and settlement through The Depository Trust
Company.

     (m) The Company will reserve and keep available at all times, free of pre-emptive rights, the
full number of shares of Common Stock issuable upon conversion of the Securities.

     (n) Each of the Securities and the shares of Common Stock issuable upon conversion thereof
will bear, to the extent applicable, the legend contained in “NOTICE TO INVESTORS” in the
Preliminary Memorandum and the Final Offering Memorandum for the time period and upon the other
terms stated therein.

     (o) The Company will not for a period of 90 days following the Execution Time, without the
prior written consent of J.P. Morgan Securities Inc. and Citigroup Global Markets Inc., directly or
indirectly, offer, sell, contract to sell, pledge, otherwise dispose of, enter into any transaction
which is designed to, or might reasonably be expected to, result in the disposition (whether by
actual disposition or effective economic disposition due to cash settlement or otherwise) by the
Company or any Affiliate of the Company or any person in privity with the Company or any Affiliate
of the Company of, file (or participate in the filing of) a registration statement with the
Commission in respect of, or establish or increase a put equivalent position or liquidate or
decrease a call equivalent position within the meaning of Section 16 of the Exchange Act in respect
of, any shares of capital stock of the Company or any securities convertible into, or exercisable
or exchangeable for, shares of capital stock of the Company (other than the Securities), or
publicly announce an intention to effect any such transaction (other than as contemplated by this
Agreement); provided, however, that the Company may issue and sell Common Stock or
securities convertible into or exchangeable for Common Stock pursuant to any employee benefit plan,
stock ownership plan or dividend reinvestment plan of the Company described in the Disclosure
Package and the Final Memorandum and in effect at the Execution Time, and the Company may issue
Common Stock issuable upon the conversion of securities or the exercise of warrants outstanding at
the Execution Time and described in the Disclosure Package and the Final Memorandum.

     (p) The Company will not take, directly or indirectly, any action designed to or that has
constituted, or that might reasonably be expected to cause or result, under the Exchange Act or
otherwise, in stabilization or manipulation of the price of any security of the Company to
facilitate the sale or resale of the Securities.

13

 

     (q) Between the date hereof and the Closing Date, the Company will not do or authorize any act
or thing that would result in an adjustment of the conversion price of the Securities.

     (r) The Company will, for a period of twelve months following the Execution Time, furnish to
the Representatives all reports or other communications (financial or other) generally made
available to stockholders, and deliver such reports and communications to the Representatives as
soon as they are available, unless such documents are furnished to or filed with the Commission or
any securities exchange on which any class of securities of the Company is listed and generally
made available to the public.

     (s) Prior to the completion of the distribution of the Securities by the Initial Purchasers,
the Company will comply with all applicable securities and other laws, rules and regulations,
including, without limitation, the Sarbanes-Oxley Act, and use its best efforts to cause the
Company’s directors and officers, in their capacities as such, to comply with such laws, rules and
regulations, including, without limitation, the provisions of the Sarbanes-Oxley Act.

     (t) The Company will prepare a final term sheet, containing solely a description of the
Securities and the offering thereof, in the form approved by you and attached as Schedule II
hereto.

     (u) Prior to the completion of the distribution of the Securities by the Initial Purchasers,
the Company agrees to pay the reasonable costs and expenses relating to the following matters: (i)
the preparation of the Indenture, which will not include the expenses of Davis Polk & Wardwell LLP,
the issuance of the Securities, the fees of the Trustee and the issuance of the Common Stock upon
conversion of the Securities; (ii) the preparation, printing or reproduction of the materials
contained in the Disclosure Package and the Final Memorandum and each amendment or supplement to
either of them; (iii) the printing (or reproduction) and delivery (including postage, air freight
charges and charges for counting and packaging) of such copies of the materials contained in the
Disclosure Package and the Final Memorandum, and all amendments or supplements to either of them,
as may, in each case, be reasonably requested for use in connection with the offering and sale of
the Securities; (iv) the preparation, printing, authentication, issuance and delivery of the
Securities; (v) any stamp or transfer taxes in connection with the original issuance and sale of
the Securities; (vi) the printing (or reproduction) and delivery of this Agreement, any blue sky
memorandum and all other agreements or documents printed (or reproduced) and delivered in
connection with the offering of the Securities; (vii) any registration or qualification of the
Securities for offer and sale under the securities or blue sky laws of the several states and any
other jurisdictions specified pursuant to Section 5(e) (including filing fees and the reasonable
fees and expenses of counsel for the Initial Purchasers relating to such registration and
qualification); (viii) any filings made with FINRA (including filing fees and reasonable fees and
expenses of counsel for the Initial Purchasers related to such filings or contemplated filings
which shall not exceed $20,000); (ix) the transportation and other expenses incurred by or on
behalf of Company representatives in connection with presentations to prospective purchasers of the
Securities; (x) the fees and expenses of the Company’s accountants and the fees and expenses of
counsel (including local and special counsel) for the Company; and (xi) all other costs and
expenses incident to the performance by the Company of its obligations hereunder. Except as
provided in this Section 5,

14

 

Section 7 and Section 8 hereof, the Initial Purchasers shall pay their own expenses, including
the fees and disbursements of counsel.

     6. Conditions to the Obligations of the Initial Purchasers. The obligations of the
Initial Purchasers to purchase the Firm Securities and the Option Securities, as the case may be,
shall be subject to the accuracy of the representations and warranties of the Company contained
herein at the Execution Time, the Closing Date and any settlement date pursuant to Section 3
hereof, to the accuracy of the statements of the Company made in any certificates pursuant to the
provisions hereof, to the performance by the Company of its obligations hereunder and to the
following additional conditions:

     (a) The Company shall have requested and caused each of Skadden, Arps, Slate, Meagher & Flom
LLP and DLA Piper LLP (US), counsel for the Company, to furnish to the Representatives its opinion,
dated the Closing Date and addressed to the Representatives substantially in the form set forth in
Annex C, Annex D and Annex E herein.

     In rendering such opinion, such counsel may rely (A) as to matters involving the application
of laws of any jurisdiction other than the jurisdiction of incorporation of the Company, the State
of New York or the federal laws of the United States, to the extent they deem proper and specified
in such opinion, upon the opinion of other counsel of good standing whom they believe to be
reliable and who are satisfactory to counsel for the Initial Purchasers and (B) as to matters of
fact, to the extent they deem proper, on certificates of responsible officers of the Company and
public officials.

     (b) The Representatives shall have received from Davis Polk & Wardwell LLP, counsel for the
Initial Purchasers, such opinion or opinions, dated the Closing Date and addressed to the
Representatives, with respect to the issuance and sale of the Securities, the Indenture, the
Disclosure Package, the Final Memorandum (as amended or supplemented at the Closing Date) and other
related matters as the Representatives may reasonably require, and the Company shall have furnished
to such counsel such documents as they request for the purpose of enabling them to pass upon such
matters.

     (c) The Company shall have furnished to the Representatives a certificate of the Company,
signed by (x) the Chairman of the Board or the Chief Executive Officer and (y) the principal
financial or accounting officer of the Company, dated the Closing Date, to the effect that:

          (i) the representations and warranties of the Company in this Agreement are
true and correct on and as of the Closing Date in all material respects with the
same effect as if made on the Closing Date, and the Company has complied with all
the agreements and satisfied all the conditions on its part to be performed or
satisfied hereunder at or prior to the Closing Date; and

          (ii) since the date of the most recent financial statements included or
incorporated by reference in the Disclosure Package and the Final Memorandum
(exclusive of any amendment or supplement thereto), there has been no material
adverse change in the condition (financial or otherwise), prospects, earnings,

15

 

     business or properties of the Company and its subsidiaries, taken as a whole,
whether or not arising from transactions in the ordinary course of business, except
as set forth in or contemplated in the Disclosure Package and the Final Memorandum
(exclusive of any amendment or supplement thereto).

     (d) At the Execution Time and at the Closing Date, the Company shall have requested and caused
Deloitte & Touche LLP to furnish to the Representatives letters, dated respectively as of the
Execution Time and as of the Closing Date, in substantially the form previously delivered to the
Representatives, which is in form and substance satisfactory to the Representatives.

     All references in this Section 6(d) to the Preliminary Memorandum and the Final Memorandum
include any amendment or supplement thereto at the date of the applicable letter.

     (e) Subsequent to the Execution Time or, if earlier, the dates as of which information is
given in the Disclosure Package (exclusive of any amendment or supplement thereto) and the Final
Memorandum (exclusive of any amendment or supplement thereto), there shall not have been (i) any
change or decrease specified in the letter or letters referred to in paragraph (d) of this Section
6; or (ii) any change, or any development involving a prospective change, in or affecting the
condition (financial or otherwise), prospects, earnings, business or properties of the Company and
its subsidiaries taken as a whole, whether or not arising from transactions in the ordinary course
of business, except as set forth in or contemplated in the Disclosure Package and the Final
Memorandum (exclusive of any amendment or supplement thereto), the effect of which, in any case
referred to in clause (i) or (ii) above, is, in the sole judgment of the Representatives, so
material and adverse as to make it impractical or inadvisable to proceed with the offering or
delivery of the Securities as contemplated in the Disclosure Package and the Final Memorandum
(exclusive of any amendment or supplement thereto).

     (f) The Securities shall be eligible for clearance and settlement through The Depository Trust
Company.

     (g) Subsequent to the Execution Time, there shall not have been any decrease in the rating
accorded to the Notes or any of the Company’s debt securities by any “nationally recognized
statistical rating organization” (as defined for purposes of Rule 436(g) under the Act) or any
notice given of any intended or potential decrease in any such rating or of a possible change in
any such rating that does not indicate the direction of the possible change.

     (h) Prior to the Execution Time, the Company shall have furnished to the Representatives a
letter substantially in the form of Exhibit A hereto from each officer and director of the Company,
listed in Annex B, and addressed to the Representatives.

     (i) Each Representative shall have received the relevant counterpart of each of the Bond Hedge
Confirm and the Warrant Confirm that has been executed by a duly authorized officer of the Company;
and

     (j) Prior to the Closing Date, the Company shall have furnished to the Representatives such
further information, certificates and documents as the Representatives may reasonably request.

16

 

     If any of the conditions specified in this Section 6 shall not have been fulfilled when and as
provided in this Agreement, or if any of the opinions and certificates mentioned above or elsewhere
in this Agreement shall not be reasonably satisfactory in form and substance to the Representatives
and counsel for the Initial Purchasers, this Agreement and all obligations of the Initial
Purchasers hereunder may be cancelled at, or at any time prior to, the Closing Date by the
Representatives. Notice of such cancellation shall be given to the Company in writing or by
telephone or facsimile confirmed in writing.

     The documents required to be delivered by this Section 6 will be delivered at the office of
counsel for the Initial Purchasers, at Davis Polk & Wardwell LLP, 450 Lexington Avenue New York, NY
10017, on the Closing Date.

     7. Reimbursement of Expenses. If the sale of the Securities provided for herein is
not consummated because any condition to the obligations of the Initial Purchasers set forth in
Section 6 hereof is not satisfied, because of any termination pursuant to Section 10 hereof or
because of any refusal, inability or failure on the part of the Company to perform any agreement
herein or comply with any provision hereof other than by reason of a default by any of the Initial
Purchasers, the Company will reimburse the Initial Purchasers severally through J.P. Morgan
Securities Inc. and Citigroup Global Markets Inc. on demand for all expenses (including reasonable
fees and disbursements of counsel) that shall have been incurred by them in connection with the
proposed purchase and sale of the Securities.

     8. Indemnification and Contribution. (a) The Company agrees to indemnify and hold
harmless each Initial Purchaser, the directors, officers, employees, Affiliates and agents of each
Initial Purchaser and each person who controls any Initial Purchaser within the meaning of either
the Act or the Exchange Act against any and all losses, claims, damages or liabilities, joint or
several, to which they or any of them may become subject under the Act, the Exchange Act or other
U.S. federal or state statutory law or regulation, at common law or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based
upon any untrue statement or alleged untrue statement of a material fact contained in the
Preliminary Memorandum, the Disclosure Package, the Final Memorandum, any other written information
used by or on behalf of the Company in connection with the offer or sale of the Securities, or in
any amendment or supplement thereto, or in any electronic road show or arise out of or are based
upon the omission or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein, in the light of the circumstances under which
they were made, not misleading, and agrees to reimburse each such indemnified party, as incurred,
for any legal or other expenses reasonably incurred by it in connection with investigating or
defending any such loss, claim, damage, liability or action; provided, however,
that the Company will not be liable in any such case to the extent that any such loss, claim,
damage or liability arises out of or is based upon any such untrue statement or alleged untrue
statement or omission or alleged omission made in the Preliminary Memorandum, the Disclosure
Package, the Final Memorandum, or in any amendment thereof or supplement thereto, in reliance upon
and in conformity with written information furnished to the Company by or on behalf of any Initial
Purchaser through the Representatives specifically for inclusion therein. This indemnity agreement
will be in addition to any liability that the Company may otherwise have.

17

 

     (b) Each Initial Purchaser severally, and not jointly, agrees to indemnify and hold harmless
the Company, each of its directors, each of its officers, and each person who controls the Company
within the meaning of either the Act or the Exchange Act, to the same extent as the foregoing
indemnity to each Initial Purchaser, but only with reference to written information relating to
such Initial Purchaser furnished to the Company by or on behalf of such Initial Purchaser through
the Representatives specifically for inclusion in the Preliminary Memorandum, the Disclosure
Package, the Final Memorandum or in any amendment or supplement thereto. This indemnity agreement
will be in addition to any liability that any Initial Purchaser may otherwise have. The Company
acknowledges that (i) the statements set forth in the 13th paragraph of the cover page
regarding delivery of the Securities and (ii), under the heading “PLAN OF DISTRIBUTION”, (A) the
1st sentence of the 10th paragraph regarding the delivery of the Securities,
and (B) the 11th paragraph related to stabilization, syndicate covering transactions and
penalty bids in the Preliminary Memorandum and the Final Memorandum constitute the only information
furnished in writing by or on behalf of the Initial Purchasers for inclusion in the Preliminary
Memorandum, the Disclosure Package, the Final Memorandum or in any amendment or supplement thereto.

     (c) Promptly after receipt by an indemnified party under this Section 8 of notice of the
commencement of any action, such indemnified party will, if a claim in respect thereof is to be
made against the indemnifying party under this Section 8, notify the indemnifying party in writing
of the commencement thereof; but the failure so to notify the indemnifying party (i) will not
relieve it from liability under paragraph (a) or (b) above unless and to the extent it did not
otherwise learn of such action and such failure results in the forfeiture by the indemnifying party
of substantial rights and defenses and (ii) will not, in any event, relieve the indemnifying party
from any obligations to any indemnified party other than the indemnification obligation provided in
paragraph (a) or (b) above. The indemnifying party shall be entitled to appoint counsel (including
local counsel) of the indemnifying party’s choice at the indemnifying party’s expense to represent
the indemnified party in any action for which indemnification is sought (in which case the
indemnifying party shall not thereafter be responsible for the fees and expenses of any separate
counsel, other than local counsel if not appointed by the indemnifying party, retained by the
indemnified party or parties except as set forth below); provided, however, that
such counsel shall be satisfactory to the indemnified party. Notwithstanding the indemnifying
party’s election to appoint counsel (including local counsel) to represent the indemnified party in
an action, the indemnified party shall have the right to employ separate counsel (including local
counsel), and the indemnifying party shall bear the reasonable fees, costs and expenses of such
separate counsel if (i) the use of counsel chosen by the indemnifying party to represent the
indemnified party would present such counsel with a conflict of interest; (ii) the actual or
potential defendants in, or targets of, any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably concluded that there may be
legal defenses available to it and/or other indemnified parties that are different from or
additional to those available to the indemnifying party; (iii) the indemnifying party shall not
have employed counsel satisfactory to the indemnified party to represent the indemnified party
within a reasonable time after notice of the institution of such action; or (iv) the indemnifying
party shall authorize the indemnified party to employ separate counsel at the expense of the
indemnifying party. An indemnifying party will not, without the prior written consent of the
indemnified parties, settle or compromise or consent to the entry of any judgment with respect to
any pending or threatened claim, action, suit or proceeding in respect of which indemnification or
contribution may be

18

 

sought hereunder (whether or not the indemnified parties are actual or potential parties to
such claim or action) unless such settlement, compromise or consent includes an unconditional
release of each indemnified party from all liability arising out of such claim, action, suit or
proceeding.

     (d) In the event that the indemnity provided in paragraph (a) or (b) of this Section 8 is
unavailable to or insufficient to hold harmless an indemnified party for any reason, the Company
and the Initial Purchasers severally agree to contribute to the aggregate losses, claims, damages
and liabilities (including legal or other expenses reasonably incurred in connection with
investigating or defending any loss, claim, damage, liability or action) (collectively “Losses”) to
which the Company and one or more of the Initial Purchasers may be subject in such proportion as is
appropriate to reflect the relative benefits received by the Company on the one hand and by the
Initial Purchasers on the other from the offering of the Securities; provided,
however, that in no case shall any Initial Purchaser be responsible for any amount in
excess of the purchase discount or commission applicable to the Securities purchased by such
Initial Purchaser hereunder. If the allocation provided by the immediately preceding sentence is
unavailable for any reason, the Company and the Initial Purchasers severally shall contribute in
such proportion as is appropriate to reflect not only such relative benefits but also the relative
fault of the Company on the one hand and the Initial Purchasers on the other in connection with the
statements or omissions that resulted in such Losses, as well as any other relevant equitable
considerations. Benefits received by the Company shall be deemed to be equal to the total net
proceeds from the offering (before deducting expenses) received by it, and benefits received by the
Initial Purchasers shall be deemed to be equal to the total purchase discounts and commissions.
Relative fault shall be determined by reference to, among other things, whether any untrue or
alleged untrue statement of a material fact or the omission or alleged omission to state a material
fact relates to information provided by the Company on the one hand or the Initial Purchasers on
the other, the intent of the parties and their relative knowledge, access to information and
opportunity to correct or prevent such untrue statement or omission. The Company and the Initial
Purchasers agree that it would not be just and equitable if contribution were determined by pro
rata allocation or any other method of allocation that does not take account of the equitable
considerations referred to above. Notwithstanding the provisions of this paragraph (d), no person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent misrepresentation.
For purposes of this Section 8, each person who controls an Initial Purchaser within the meaning of
either the Act or the Exchange Act and each director, officer, employee, Affiliate and agent of an
Initial Purchaser shall have the same rights to contribution as such Initial Purchaser, and each
person who controls the Company within the meaning of either the Act or the Exchange Act and each
officer and director of the Company shall have the same rights to contribution as the Company,
subject in each case to the applicable terms and conditions of this paragraph (d).

     9. Default by an Initial Purchaser. If any one or more Initial Purchasers shall fail
to purchase and pay for any of the Securities agreed to be purchased by such Initial Purchaser
hereunder at the Closing Date or any settlement date and such failure to purchase shall constitute
a default in the performance of its or their obligations under this Agreement, the remaining
Initial Purchasers shall be obligated severally to take up and pay for (in the respective
proportions which the principal amount of Securities set forth opposite their names in Schedule I
hereto bears to the aggregate principal amount of Securities set forth opposite the names of all
the remaining

19

 

Initial Purchasers) the Securities which the defaulting Initial Purchaser or Initial
Purchasers agreed but failed to purchase; provided, however, that in the event that
the aggregate principal amount of Securities which the defaulting Initial Purchaser or Initial
Purchasers agreed but failed to purchase shall exceed 10% of the aggregate principal amount of
Securities set forth in Schedule I hereto, the remaining Initial Purchasers shall have the right to
purchase all, but shall not be under any obligation to purchase any, of the Securities, and if such
nondefaulting Initial Purchasers do not purchase all the Securities, this Agreement will terminate
without liability to any nondefaulting Initial Purchaser or the Company. In the event of a default
by any Initial Purchaser as set forth in this Section 9, the Closing Date or any such settlement
date shall be postponed for such period, not exceeding five Business Days, as the Representatives
shall determine in order that the required changes in the Final Memorandum or in any other
documents or arrangements may be effected. Nothing contained in this Agreement shall relieve any
defaulting Initial Purchaser of its liability, if any, to the Company or any nondefaulting Initial
Purchaser for damages occasioned by its default hereunder.

     10. Termination. This Agreement shall be subject to termination in the reasonable
discretion of the Representatives, by notice given to the Company prior to delivery of, and payment
for, the Securities, if at any time prior to such delivery and payment (i) trading in the Company’s
Common Stock shall have been suspended by the Commission or trading in securities generally on the
New York Stock Exchange shall have been suspended or limited or minimum prices shall have been
established on such exchange; (ii) a banking moratorium shall have been declared either by U.S.
federal or New York State authorities or by the authorities of Maryland; or (iii) there shall have
occurred any outbreak or escalation of hostilities, declaration by the United States of a national
emergency or war or other calamity or crisis the effect of which on financial markets is such as to
make it, in the sole judgment of the Representatives, impractical or inadvisable to proceed with
the offering or delivery of the Securities as contemplated in the Disclosure Package and the Final
Memorandum (exclusive of any amendment or supplement thereto).

     11. Representations and Indemnities to Survive. The respective agreements,
representations, warranties, indemnities and other statements of the Company or its officers and of
the Initial Purchasers set forth in or made pursuant to this Agreement will remain in full force
and effect, regardless of any investigation made by or on behalf of the Initial Purchasers or the
Company or any of the indemnified persons referred to in Section 8 hereof, and will survive
delivery of and payment for the Securities. The provisions of Sections 7 and 8 hereof shall
survive the termination or cancellation of this Agreement.

     12. Notices. All communications hereunder will be in writing and effective only on
receipt, and, if sent to the Representatives, will be mailed, delivered or telefaxed to J.P. Morgan
Securities Inc., 383 Madison Avenue, New York, New York 10179 (fax: (212) 622-8358); Attention:
Equity Syndicate Desk and to Citigroup Global Markets Inc. at 388 Greenwich Street, New York, New
York 10013, Attention: General Counsel or, if sent to the Company, will be mailed, delivered or
telefaxed to (856) 917-0950 and confirmed to it at PHH Corporation, 3000 Leadenhall Road, Mt.
Laurel New Jersey 08054. Attention: General Counsel, with a copy (which copy shall not constitute
notice) to Skadden, Arps, Slate, Meagher & Flom LLP, 4 Times Square, New York, New York 10036 (fax:
(212) 735-2000); Attention: Michael Zeidel.

20

 

     13. Successors. This Agreement will inure to the benefit of and be binding upon the
parties hereto and their respective successors and the indemnified persons referred to in Section 8
hereof and their respective successors, and, except as expressly set forth in Section 5(j) hereof,
no other person will have any right or obligation hereunder.

     14. Jurisdiction. The Company agrees that any suit, action or proceeding against the
Company brought by any Initial Purchaser, the directors, officers, employees and agents of any
Initial Purchaser, or by any person who controls any Initial Purchaser, arising out of or based
upon this Agreement or the transactions contemplated hereby may be instituted in any State or U.S.
federal court in The City of New York and County of New York, and waives any objection which it may
now or hereafter have to the laying of venue of any such proceeding, and irrevocably submits to the
non-exclusive jurisdiction of such courts in any suit, action or proceeding.

     15. Internet Document Service. The Company hereby agrees that J.P. Morgan Securities
Inc. and Citigroup may provide copies of the Preliminary Memorandum and Final Memorandum and any
other agreement or document relating to the offer and sale of the Securities, including, without
limitation, the Indenture, to Xtract Research LLC (“Xtract”) following the Closing Date for
inclusion in an online research service sponsored by Xtract, access to which is restricted to
“qualified institutional buyers” (as defined in Rule 144A under the Act).

     16. Integration. This Agreement supersedes all prior agreements and understandings
(whether written or oral) between the Company and the Initial Purchasers, or any of them, with
respect to the subject matter hereof.

     17. Applicable Law. This Agreement will be governed by and construed in accordance
with the laws of the State of New York applicable to contracts made and to be performed within the
State of New York.

     18. Waiver of Jury Trial. The Company hereby irrevocably waives, to the fullest
extent permitted by applicable law, any and all right to trial by jury in any legal proceeding
arising out of or relating to this Agreement or the transactions contemplated hereby.

     19. No Fiduciary Duty. The Company hereby acknowledges that (a) the purchase and sale
of the Securities pursuant to this Agreement is an arm’s-length commercial transaction between the
Company, on the one hand, and the Initial Purchasers and any Affiliate through which it may be
acting, on the other, (b) the Initial Purchasers are acting as principal and not as an agent or
fiduciary of the Company and (c) the Company’s engagement of the Initial Purchasers in connection
with the offering and the process leading up to the offering is as independent contractors and not
in any other capacity. Furthermore, the Company agrees that it is solely responsible for making
its own judgments in connection with the offering (irrespective of whether any of the Initial
Purchasers has advised or is currently advising the Company on related or other matters). The
Company agrees that it will not claim that the Initial Purchasers have rendered advisory services
of any nature or respect, or owe an agency, fiduciary or similar duty to the Company in connection
with such transaction or the process leading thereto.

21

 

     20. Intentionally omitted.

     21. Waiver of Tax Confidentiality. Notwithstanding anything herein to the contrary,
purchasers of the Securities (and each employee, representative or other agent of a purchaser) may
disclose to any and all persons, without limitation of any kind, the U.S. tax treatment and U.S.
tax structure of any transaction contemplated herein and all materials of any kind (including
opinions or other tax analyses) that are provided to the purchasers of the Securities 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.

     22. Counterparts. This Agreement may be signed in one or more counterparts, each of
which shall constitute an original and all of which together shall constitute one and the same
agreement.

     23. Headings. The section headings used herein are for convenience only and shall not
affect the construction hereof.

     24. Definitions. The terms that follow, when used in this Agreement, shall have the
meanings indicated.

     “Act” shall mean the U.S. Securities Act of 1933, as amended, and the rules and regulations of
the Commission promulgated thereunder.

     “Affiliate” shall have the meaning specified in Rule 501(b) of Regulation D but shall not
include any individual or entity who may be deemed an Affiliate as a result of such individuals or
entities beneficial ownership of Company securities.

     “Bond Hedge Confirm” shall mean the master terms and conditions for convertible bond hedging
transactions and related confirmations between the Company and each of the Representatives, dated
September 23, 2009.

     “Business Day” shall mean any day other than a Saturday, a Sunday or a legal holiday or a day
on which banking institutions or trust companies are authorized or obligated by law to close in The
City of New York.

     “Commission” shall mean the Securities and Exchange Commission.

     “Disclosure Package” shall mean (i) the Preliminary Memorandum, as amended or supplemented at
the Execution Time, and (ii) the final term sheet prepared pursuant to Section 5(t) hereto and in
the form attached as Schedule II hereto.

     “Exchange Act” shall mean the U.S. Securities Exchange Act of 1934, as amended, and the rules
and regulations of the Commission promulgated thereunder.

     “Execution Time” shall mean the date and time that this Agreement is executed and delivered by
the parties hereto.

22

 

     “FINRA” shall mean the Financial Industry Regulatory Authority, Inc.

     “Investment Company Act” shall mean the U.S. Investment Company Act of 1940, as amended, and
the rules and regulations of the Commission promulgated thereunder.

     “Master Confirmations” shall mean the Bond Hedge Confirm and the Warrant Confirm.

     “Maximum Delivery Amount” shall have the meaning specified in the Warrant Confirm.

     “Regulation D” shall mean Regulation D under the Act.

     “Regulation S” shall mean Regulation S under the Act.

     “Regulation S-X” shall mean Regulation S-X under the Act.

     “Trust Indenture Act” shall mean the U.S. Trust Indenture Act of 1939, as amended, and the
rules and regulations of the Commission promulgated thereunder.

     “Warrant Confirm” shall mean the master terms and conditions for warrants and related
confirmations between the Company and each of the Representatives, dated September 23, 2009.

23

 

     If the foregoing is in accordance with your understanding of our agreement, please sign
and return to us the enclosed duplicate hereof, whereupon this letter and your acceptance shall
represent a binding agreement between the Company and the several Initial Purchasers.

	 	 	 	 	 
	 	Very truly yours,

PHH Corporation

 	 
	 	By:  	/s/ Sandra Bell
 	 
	 	 	Name:  	Sandra Bell 	 
	 	 	Title:  	EVP & CFO 	 
	 

The foregoing Agreement is hereby confirmed

and accepted as of the date first above written.

J.P. Morgan Securities Inc.

Citigroup Global Markets Inc.

Wells Fargo Securities, LLC

By: J.P. Morgan Securities Inc.

	 	 	 	 	 
	By:

	 	/s/ Santosh Sreenivasan
	 	 
	 

	 	 	 	 
	 

	 	Name: Santosh Sreenivasan	 	 
	 

	 	Title: Managing Director	 	 
	 
	 	 	 	 
	By: Citigroup Global Markets Inc.
	 
	 	 	 	 
	By:

	 	/s/ Robert B. Goldstein	 	 
	 

	 	 	 	 
	 

	 	Name: Robert B. Goldstein	 	 
	 

	 	Title: Managing Director	 	 
	 
	 	 	 	 
	By: Wells Fargo Securities, LLC
	 
	 	 	 	 
	By:

	 	/s/ Tuyen V. Do	 	 
	 

	 	 	 	 
	 

	 	Name: Tuyen V. Do	 	 
	 

	 	Title: Director	 	 

For themselves and the other several

Initial Purchasers named in Schedule I

to the foregoing Agreement.

 

 

SCHEDULE I

	 	 	 	 	 
	 	 	Principal Amount	 
	 	 	of Firm	 
	 	 	Securities to be	 
	Initial Purchasers	 	Purchased	 
	J.P. Morgan Securities Inc.
	 	U.S. $	77,000,000	 
	 
	 	 	 	 
	Citigroup Global Markets Inc.
	 	 	77,000,000	 
	 
	 	 	 	 
	Wells Fargo Securities, LLC
	 	 	50,600,000	 
	 
	 	 	 	 
	Barclays Capital Inc.
	 	 	7,700,000	 
	RBS Securities Inc.
	 	 	7,700,000	 
	Total
	 	U.S. $	220,000,000	 

 

 

SCHEDULE II

PRICING TERM SHEET

Dated September 23, 2009

PHH Corporation

4.00% Convertible Senior Notes due 2014

The information in this pricing term sheet supplements PHH Corporation’s preliminary offering
memorandum, dated September 23, 2009 (the “Preliminary Offering Memorandum”), and supersedes the
information in the Preliminary Offering Memorandum to the extent inconsistent with the information
in the Preliminary Offering Memorandum. In all other respects, this term sheet is qualified in its
entirety by reference to the Preliminary Offering Memorandum. Terms used herein but not defined
herein shall have the respective meanings as set forth in the Preliminary Offering Memorandum. All
references to dollar amounts are references to U.S. dollars.

	 	 	 
	Issuer:

	 	PHH Corporation (“PHH”)

	 
	 	 
	Ticker / Exchange:

	 	PHH / The New York Stock Exchange (“NYSE”)

	 
	 	 
	Title of securities:

	 	4.00% Convertible Senior Notes due 2014 (the “Notes”)

	 
	 	 
	Aggregate principal 

amount offered:

	 	$220,000,000
	 
	 	 
	Offering price:

	 	The Notes will be issued at a price of 100% of their
principal amount plus accrued interest, if any, from
September 29, 2009.

	 
	 	 
	Over-allotment option:

	 	$30,000,000 of Notes

	 
	 	 
	Annual interest rate:

	 	The Notes will bear interest at a rate equal to 4.00% per
annum from September 29, 2009.

	 
	 	 
	NYSE Last Reported Sale
Price on September 23,
2009:

	 	$19.85 per share of PHH common stock

	 
	 	 
	Conversion premium:

	 	Approximately 30% above the NYSE Last Reported Sale Price
on September 23, 2009

	 
	 	 
	Initial conversion price:

	 	Approximately $25.805 per share of PHH common stock

	 
	 	 
	Initial conversion rate:

	 	38.7522 shares of PHH common stock per $1,000 principal
amount of Notes

	 
	 	 
	Interest payment dates:

	 	March 1 and September 1, commencing on March 1, 2010

	 
	 	 
	Maturity date:

	 	September 1, 2014

	 
	 	 
	Trade date:

	 	September 24, 2009

	 
	 	 
	Settlement date:

	 	September 29, 2009

	 
	 	 
	CUSIP:

	 	693320 AJ2

	 
	 	 
	ISIN NUMBER:

	 	US693320AJ20

	 
	 	 
	Convertible
Note Hedge
and Warrant
Transactions:

	 	In connection with the offering of the Notes, PHH entered
into convertible note hedge transactions with affiliates of
certain of the

 

 

	 	 	 
	 

	 	initial purchasers. The convertible note
hedge transactions will cover, subject to adjustments
substantially similar to those in the Notes, approximately
8,525,484 shares of PHH common stock. Concurrently with
entering into the convertible note hedge transactions, PHH
also entered into warrant transactions whereby PHH sold to
the counterparties warrants to purchase, subject to
adjustments, up to approximately 8,525,484 shares of PHH
common stock. PHH intends to use approximately $27.5
million of the net proceeds of the Notes offering to pay
the cost of the convertible note hedge transactions, taking
into account the proceeds to PHH of the warrant
transactions. If the initial purchasers exercise their
over-allotment option to purchase additional Notes, PHH may
sell additional warrants and use a portion of the proceeds
from the sale of the additional Notes and from the sale of
additional warrants to enter into additional convertible
note hedge transactions.

	 
	 	 
	Use of proceeds:

	 	PHH estimates that the net proceeds to it from the Notes
offering, after deducting the initial purchasers’ discounts
and estimated offering expenses, will be approximately
$212.7 million (before giving effect to any exercise by the
initial purchasers of their over-allotment option). PHH
intends to use approximately $27.5 million of the net
proceeds from the issuance of the Notes to pay the cost of
the convertible note hedge transactions that it has entered
into with affiliates of certain of the initial purchasers,
taking into account the proceeds to PHH of the warrant
transactions described above. If the initial purchasers
exercise their over-allotment option to purchase additional
Notes solely to cover over-allotments, PHH may sell
additional warrants and use a portion of the net proceeds
from the sale of the additional Notes and from the sale of
the additional warrants to increase the size of the
convertible note hedge transactions.

PHH intends to use the remainder of the net proceeds from
the issuance of the Notes and from the sale of the warrants
to affiliates of certain of the initial purchasers,
approximately $185.2 million, to reduce the principal
balance under the “Amended Credit Facility” (as defined in
the Preliminary Offering Memorandum).

	 
	 	 
	Adjustment to conversion
rate upon a
Make-Whole
Fundamental Change:

	 	The following table sets
forth the number of
additional shares to be
added to the conversion
rate per $1,000 principal
amount of the Notes in
connection with a
Make-Whole Fundamental
Change as described in the
Preliminary Offering
Memorandum, based on the
stock price and effective
date of the Make-Whole
Fundamental Change.

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Effective date	 	$19.85	 	 	$22.00	 	 	$24.00	 	 	$26.00	 	 	$28.00	 	 	$30.00	 	 	$35.00	 	 	$40.00	 	 	$45.00	 	 	$50.00	 	 	$60.00	 	 	$70.00	 	 	$80.00	 	 	$90.00	 	 	$100.00	 
	9/29/2009
	 	 	11.6256	 	 	 	10.0594	 	 	 	8.6327	 	 	 	7.4929	 	 	 	6.5680	 	 	 	5.8073	 	 	 	4.4058	 	 	 	3.4644	 	 	 	2.7994	 	 	 	2.3103	 	 	 	1.6479	 	 	 	1.2265	 	 	 	0.9382	 	 	 	0.7305	 	 	 	0.5750	 
	9/1/2010
	 	 	11.6256	 	 	 	10.1348	 	 	 	8.5783	 	 	 	7.3490	 	 	 	6.3634	 	 	 	5.5626	 	 	 	4.1172	 	 	 	3.1750	 	 	 	2.5277	 	 	 	2.0632	 	 	 	1.4522	 	 	 	1.0748	 	 	 	0.8215	 	 	 	0.6408	 	 	 	0.5062	 
	9/1/2011
	 	 	11.6256	 	 	 	9.9150	 	 	 	8.2136	 	 	 	6.8904	 	 	 	5.8470	 	 	 	5.0142	 	 	 	3.5563	 	 	 	2.6494	 	 	 	2.0536	 	 	 	1.6432	 	 	 	1.1289	 	 	 	0.8267	 	 	 	0.6296	 	 	 	0.4909	 	 	 	0.3880	 
	9/1/2012
	 	 	11.6256	 	 	 	9.4371	 	 	 	7.5426	 	 	 	6.1017	 	 	 	4.9943	 	 	 	4.1349	 	 	 	2.7056	 	 	 	1.8868	 	 	 	1.3916	 	 	 	1.0758	 	 	 	0.7146	 	 	 	0.5202	 	 	 	0.3983	 	 	 	0.3133	 	 	 	0.2497	 
	9/1/2013
	 	 	11.6256	 	 	 	8.4119	 	 	 	6.2217	 	 	 	4.6226	 	 	 	3.4562	 	 	 	2.6055	 	 	 	1.3518	 	 	 	0.7725	 	 	 	0.4953	 	 	 	0.3546	 	 	 	0.2292	 	 	 	0.1722	 	 	 	0.1363	 	 	 	0.1099	 	 	 	0.0890	 
	9/1/2014
	 	 	11.6256	 	 	 	6.7024	 	 	 	2.9145	 	 	 	0.0000	 	 	 	0.0000	 	 	 	0.0000	 	 	 	0.0000	 	 	 	0.0000	 	 	 	0.0000	 	 	 	0.0000	 	 	 	0.0000	 	 	 	0.0000	 	 	 	0.0000	 	 	 	0.0000	 	 	 	0.0000	 

 

 

The exact stock prices and effective dates may not be set forth in the table above, in which
case:

	 	•	 	If the stock price is between two stock price amounts in the table or the date is
between two dates in the table, the number of additional shares will be determined by a
straight-line interpolation between the number of additional shares set forth for the
higher and lower stock price amounts and the two dates, as applicable, based on a 365-day
year.
	 
	 	•	 	If the stock price is greater than $100.00 per share, subject to adjustment, no
adjustments will be made in the conversion rate.
	 
	 	•	 	If the stock price is less than $19.85 per share, subject to adjustment, no adjustments
will be made in the conversion rate.

Notwithstanding the foregoing, in no event will the conversion rate exceed 50.3778 per $1,000 in
principal amount of Notes, subject to adjustments in the same manner as the conversion rate as set
forth under “Description of the Notes — Conversion Rate Adjustments” in the Preliminary Offering
Memorandum.

Capitalization

The following replaces in its entirety the text, table and related footnote set forth under
“Capitalization” on pages 35 and 36 of the Preliminary Offering Memorandum:

The following table sets forth PHH’s cash and cash equivalents, restricted cash and consolidated
capitalization as
of June 30, 2009 on (i) an actual basis and (ii) as adjusted to give effect to the issuance of the
Notes and the application of the net proceeds from the offering of the Notes as described under the “Use of
Proceeds” section of
the Preliminary Offering Memorandum, after deducting the initial purchasers’ discounts and
estimated offering expenses and assuming that the initial purchasers have not exercised their
over-allotment option. You should read this table along with PHH’s consolidated financial
statements and related notes incorporated by reference in the Preliminary Offering Memorandum. The
following table assumes that the initial purchasers have not exercised their over-allotment option.

Amounts representing the number of shares of PHH common stock outstanding exclude:

	 	•	 	options outstanding on June 30, 2009 to purchase 2,899,990 shares of PHH common stock,
at a weighted exercise price of $18.69 per share;
	 
	 	•	 	restricted stock units outstanding on June 30, 2009 which are convertible into 2,030,881
shares of PHH common stock, at a weighted-average grant date fair value of $16.88 per
share;
	 
	 	•	 	3,997,220 shares of PHH common stock reserved for future awards under the PHH
Corporation Amended and Restated 2005 Equity and Incentive Plan;
	 
	 	•	 	12,195,125 shares of PHH common stock, net, subject to adjustment, that are issuable in
connection with PHH’s 4.0% Convertible Senior Notes due 2012 and certain related bond hedge
and warrant transactions entered into in connection with such notes; and
	 
	 	•	 	8,525,484 shares of PHH common stock, net, subject to adjustment, that are issuable in
connection with the Notes and certain related bond hedge and warrant transactions entered
into in connection with such Notes.

 

 

	 	 	 	 	 	 	 	 	 
	 	 	As of June 30, 2009	 
	 	 	Actual	 	 	As Adjusted	 
	 	 	(in millions)	 
	Cash and cash equivalents
	 	$	146	 	 	 	146	 
	 
	 	 	 	 	 	 
	Restricted Cash
	 	$	734	 	 	 	734	 
	 
	 	 	 	 	 	 
	Debt:
	 	 	 	 	 	 	 	 
	Vehicle Management Asset-Backed Debt:
	 	 	 	 	 	 	 	 
	Variable funding notes
	 	$	2,141	 	 	$	2,141	 
	Term notes
	 	 	1,000	 	 	 	1,000	 
	Other
	 	 	35	 	 	 	35	 
	 
	 	 	 	 	 	 
	Total vehicle management asset-backed debt
	 	 	3,176	 	 	 	3,176	 
	Mortgage Warehouse Asset-Backed Debt:
	 	 	 	 	 	 	 	 
	Floating rate repurchase facilities
	 	 	1,332	 	 	 	1,332	 
	Other
	 	 	8	 	 	 	8	 
	 
	 	 	 	 	 	 
	Total mortgage warehouse asset-backed debt
	 	 	1,340	 	 	 	1,340	 
	Unsecured Debt:
	 	 	 	 	 	 	 	 
	Term notes
	 	 	440	 	 	 	440	 
	Borrowings under credit facilities
	 	 	1,039	 	 	 	854	 
	Convertible senior notes due 2012
	 	 	215	 	 	 	215	 
	Convertible senior notes, offered hereby(1)
	 	 	—	 	 	 	220	 
	 
	 	 	 	 	 	 
	Total unsecured debt
	 	 	1,694	 	 	 	1,729	 
	 
	 	 	 	 	 	 
	Total debt
	 	 	6,210	 	 	 	6,245	 
	 
	 	 	 	 	 	 
	Stockholders’ Equity
	 	 	 	 	 	 	 	 
	Preferred stock, $0.01 par value;
1,090,000 shares authorized at June 30,
2009; 1,090,000 shares authorized as
adjusted; none issued or outstanding as at
June 30, 2009 or as adjusted
	 	 	—	 	 	 	—	 
	Common Stock, $0.01 par value; 273,910,000
shares authorized at June 30, 2009;
273,910,000 shares authorized as adjusted;
54,447,356 issued and outstanding as at
June 30, 2009 or as adjusted
	 	 	1	 	 	 	1	 
	Additional paid-in capital
	 	 	1,011	 	 	 	1,042	 
	Retained earnings
	 	 	371	 	 	 	371	 
	Accumulated other comprehensive income
	 	 	3	 	 	 	3	 
	 
	 	 	 	 	 	 
	Total PHH Corporation stockholders’ equity
	 	 	1,386	 	 	 	1,417	 
	 
	 	 	 	 	 	 
	Noncontrolling Interest
	 	 	5	 	 	 	5	 
	 
	 	 	 	 	 	 
	Total equity
	 	 	1,391	 	 	 	1,422	 
	 
	 	 	 	 	 	 
	Total Capitalization
	 	$	7,601	 	 	$	7,667	 
	 
	 	 	 	 	 	 

 

			
	(1)	 	PHH expects that the embedded conversion option of the Notes offered hereby will be
bifurcated and accounted for as a derivative, as defined by ASC 815. The value of
such derivative at the time of issuance, $58.2 million, is included in the Notes
above for presentation purposes. For financial reporting purposes, PHH expects to
reduce the face value of the Notes by the value of such derivative to reflect an
original discount on the Notes and increase other liabilities to record the value of
such derivative. PHH expects to record interest expense in addition to the stated
interest rate during the term of the Notes to accrete the Note to face value.

General

This communication is intended for the sole use of the person to whom it is provided by the sender.

This communication shall not constitute an offer to sell or the solicitation of an offer to buy
securities nor shall there be any sale of these securities in any state in which such solicitation
or sale would be unlawful prior to registration or qualification of these securities under the laws
of any such state.

The Notes and the PHH common stock issuable upon conversion of the Notes, if any, have not been
registered under the Securities Act of 1933, as amended (the “Securities Act”), or any state
securities laws. Accordingly, the Notes are being offered and sold only to “qualified institutional
buyers” as defined in Rule 144A promulgated under the Securities Act. The Notes and the PHH common
stock issuable upon conversion of the Notes, if any, are not transferable except in accordance with
the restrictions described under “Notice to Investors” in the Preliminary Offering Memorandum.

 

 

EXHIBIT A

September 23, 2009

J.P. Morgan Securities Inc.

Citigroup Global Markets Inc.

Wells Fargo Securities, LLC

As Representatives of the Initial Purchasers

c/o

J.P. Morgan Securities Inc.

383 Madison Avenue

New York, New York 10179

and

Citigroup Global Markets Inc.

388 Greenwich Street

New York, New York 10013

     Ladies and Gentlemen:

     This letter is being delivered to you in connection with a proposed Purchase Agreement (the
“Purchase Agreement”) between PHH Corporation , a Maryland corporation (the “Company”) and each of
you as representatives of a group of Initial Purchasers named therein, relating to an offering of
4.00% Convertible Senior Notes due 2014, which will be convertible into common stock, $0.01 par
value (the “Common Stock”), of the Company.

     In order to induce you and the other Initial Purchasers to enter into the Purchase Agreement,
the undersigned will not, without the prior written consent of J.P. Morgan Securities Inc. and
Citigroup Global Markets Inc., directly or indirectly, offer, sell, contract to sell, pledge or
otherwise dispose of, enter into any transaction which is designed to, or might reasonably be
expected to, result in the disposition (whether by actual disposition or effective economic
disposition due to cash settlement or otherwise) by the undersigned or any affiliate of the
undersigned or any person in privity with the undersigned or any affiliate of the undersigned of,
file (or participate in the filing of) a registration statement with the U.S. Securities and
Exchange Commission in respect of, or establish or increase a put equivalent position or liquidate
or decrease a call equivalent position within the meaning of Section 16 of the Securities Exchange
Act of 1934 as amended, (the “Exchange Act”), and the rules
and regulations of the U.S. Securities and Exchange Commission promulgated thereunder in respect of, any shares of capital
stock of the Company or any securities convertible into, or exercisable or exchangeable for such

 

 

capital stock, or publicly announce an intention to effect any such transaction, for a period of 90
days after the date of the Purchase Agreement, other than (a) shares of Common Stock disposed of as
bona fide gifts or charitable contributions approved by J.P. Morgan Securities Inc. and Citigroup
Global Markets Inc., which approval shall not be unreasonably withheld, delayed or conditioned, (b)
transfers of Common Stock by will or intestacy, including, without limitation, transfers by will or
intestacy to your family members or to a settlement trust established under the laws of any country
(provided that the transferee shall enter into a lock-up agreement substantially in the form of
this letter covering the remainder of the 90-day period referred to herein), (c) the exercise by
you of options or other rights to purchase Common Stock held by you (provided, however, that shares
of Common Stock acquired upon such exercise shall be subject to this letter) or (d) transactions
pursuant to a trading plan established pursuant to Rule 10b5-1 under the Exchange Act, in existence
as of the date hereof.

     If for any reason the Purchase Agreement shall be terminated prior to the Closing Date (as
defined in the Purchase Agreement), the agreement set forth above shall likewise be terminated.

	 	 	 	 	 
	 	Very truly yours,

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 

 

 

	 	 	 	 	 

ANNEX A

Significant Subsidiaries

	 
	Chesapeake Finance Holdings LLC

	 

	Chesapeake Funding LLC

	 

	D. L. Peterson Trust

	 

	PHH Broker Partner Corporation

	 

	PHH Home Loans, LLC

	 

	PHH Mortgage Corporation

	 

	PHH Solutions and Technologies, LLC

	 

	PHH Vehicle Management Services, LLC (d/b/a PHH Arval)

 

 

ANNEX B

George J. Kilroy

Sandra E. Bell

Mark R. Danahy

William F. Brown

Mark E. Johnson

Michael D. Orner

James W. Brinkley

James O. Egan

Ann D. Logan

Allan Z. Loren

Jonathan D. Mariner

Gregory J. Parseghian

 

 

ANNEX C

FORM OF OPINION AND NEGATIVE ASSURANCE OF SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP

     1. The Purchase Agreement has been duly executed and delivered by the Company, to the extent
such execution and delivery are governed by the laws of the State of New York.

     2. The Indenture has been duly executed and delivered by the Company, respectively, to the
extent such execution and delivery are governed by the laws of the State of New York, and is a
valid and binding agreement of the Company, enforceable against the Company in accordance with its
terms.

     3. The execution and delivery by the Company of each of the Transaction Documents, and the
consummation by the Company of the transactions contemplated thereby, including the issuance and
sale of the Securities, will not (i) conflict with the Certificates of Incorporation/Formation or
By-laws, (ii) constitute a violation of, or a breach or default under, the terms of any Applicable
Contract or (iii) violate or conflict with, or result in any contravention of, any Applicable Law
or any Applicable Order. We do not express any opinion, however, as to whether the execution and
delivery by the Company or performance by the Company of each of the Transaction Documents will
constitute a violation of, or a default under, any covenant, restriction or provision with respect
to financial ratios or tests or any aspect of the financial condition or results of operations of
the Company or any of its subsidiaries.

     4. No Governmental Approval, which has not been obtained or taken and is not in full force and
effect, is required to authorize, or is required for, (i) the execution or delivery of each of the
Transaction Documents by the Company or (ii) the consummation by the Company of the transactions
contemplated thereby.

     5. The Securities have been duly executed by the Company to the extent such execution is
governed by the laws of the State of New York, and when duly authenticated by the Trustee and
issued and delivered by the Company against payment therefor in accordance with the terms of the
Purchase Agreement and the Indenture, the Securities will constitute valid and binding obligations
of the Company entitled to the benefits of the Indenture and enforceable against the Company in
accordance with their terms.

     6. The statements in the General Disclosure Package and the Final Memorandum under the
captions “DESCRIPTION OF DEBT SECURITIES”, “DESCRIPTION OF THE NOTES,” and “DESCRIPTION OF THE
CONVERTIBLE HEDGE WARRANT TRANSACTIONS” insofar as such statements purport to summarize certain
provisions of the Indenture, the Securities, the Note Hedge Confirmations and the Warrant
Confirmations, fairly summarize such provisions in all material respects.

     7. The Company is not and, solely after giving effect to the offering and sale of the
Securities and the application of the proceeds thereof as described in the General Disclosure

 

 

Package and the Final Memorandum, will not be an “investment company” as such term is defined
in the Investment Company Act of 1940.

     8. Each of the DE Subsidiaries is validly existing in good standing under the laws of the
jurisdiction in which it is incorporated or formed.

     9. To our knowledge, there are no legal or governmental proceedings pending to which the
Company or any of its subsidiaries is a party or to which any property of the Company or any of its
subsidiaries is subject that would be required to be disclosed in a registration statement on Form
S-1, pursuant to Item 103 of Regulation S-K of the Rules and Regulations under the Securities Act
of 1933, as amended, that are not so disclosed in the General Disclosure Package and the Final
Memorandum, except that we do not express any opinion in this paragraph with respect to legal or
governmental proceedings relating to regulatory matters of the type referred to in the General
Disclosure Package and the Final Memorandum under the caption “RISK FACTORS — Risks Related to our
Business.”

     10. Assuming (i) the accuracy of the representations and warranties of the Company set forth
in Sections 1(c) and 1(d) of the Purchase Agreement and of you in Section 4 of the Purchase
Agreement, (ii) the due performance by the Company of the covenants and agreements set forth in
Sections 5(g), 5(i) and 5(k) of the Purchase Agreement, (iii) your compliance with the offering and
transfer procedures and restrictions described in the Final Memorandum, (iv) the accuracy of the
representations and warranties made in accordance with the Purchase Agreement and the Final
Memorandum by purchasers to whom you initially resell the Securities and (v) that purchasers to
whom you initially resell the Securities receive a copy of the Final Memorandum prior to
confirmation of such sale, the offer, sale and delivery of the Securities to you in the manner
contemplated by the Purchase Agreement and the Final Memorandum and the initial resale of the
Securities by you in the manner contemplated in the Final Memorandum and the Purchase Agreement, do
not require registration under the Securities Act or qualification of the Indenture under the Trust
Indenture Act of 1933, it being understood that we do not express any opinion as to the Company’s
Common Stock, par value $0.01 per share, issuable upon conversion of any Security or any subsequent
reoffer or resale of any Security.

     On the basis of the foregoing, no facts have come to such counsel’s attention that have caused
such counsel to believe that the Final Memorandum, as of its date and as of the date hereof,
contained or contains an untrue statement of a material fact or omitted or omits to state a
material fact necessary in order to make the statements therein, in the light of the circumstances
under which they were made, not misleading (except that in each case such counsel does not express
any view as to the financial statements, schedules and other financial information included or
incorporated by reference therein or excluded therefrom, the report of management’s assessment of
the effectiveness of internal controls over financial reporting or the auditors’ attestation report
thereon).

     In addition, on the basis of the foregoing, no facts have come to such counsel’s attention
that have caused such counsel to believe that the General Disclosure Package, as of the Applicable
Time, contained an untrue statement of a material fact or omitted to state a material fact
necessary in order to make the statements therein, in the light of the circumstances under

C-2

 

which they were made, not misleading (except that such counsel does not express any view as to the
financial statements, schedules and other financial information included or incorporated by
reference therein or excluded therefrom, the report of management’s assessment of the effectiveness
of internal controls over financial reporting or the auditors’ attestation report thereon).

C-3

 

ANNEX D

FORM OF TAX OPINION OF SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP

     Based upon and subject to the foregoing, such counsel is of the opinion that under current
U.S. federal income tax law, although the discussion set forth in the Disclosure Package (as
defined in the Purchase Agreement) and the Final Memorandum under the heading “CERTAIN UNITED
STATES. FEDERAL INCOME TAX CONSIDERATIONS” does not purport to discuss all possible U.S. federal
income tax consequences of the purchase, ownership or disposition of the Securities, such
discussion constitutes, in all material respects, a fair and accurate summary of the U.S. federal
income tax considerations to holders who purchase the Securities pursuant to the Final Memorandum,
subject to the qualifications set forth in such discussion.

 

 

ANNEX E

FORM OF OPINION OF DLA PIPER LLP (US)

     1. Each of the Company, PHH Mortgage Corporation, a New Jersey corporation (“PHH Mortgage”),
and PHH Broker Partner Corporation, a Maryland Corporation (“PHH Broker Partner”), has been duly
incorporated and is validly existing as a corporation under the laws of its jurisdiction of
incorporation, with corporate power and authority to own or lease, as the case may be, its
properties and conduct its business as and if described in the Disclosure Package and the Final
Memorandum.

     2. The Purchase Agreement has been duly authorized, executed and delivered by the Company.

     3. The Indenture has been duly authorized, executed and delivered by the Company.

     4. The authorized capital stock of the Company is as set forth in or incorporated by reference
in the Disclosure Package and the Final Memorandum and the description of the authorized capital
stock of the Company conforms in all material respects to the description thereof contained in or
incorporated by reference into the Disclosure Package and the Final Memorandum.

     5. All of the outstanding shares of Common Stock have been duly authorized and validly issued
and are fully paid and nonassessable.

     6. The Securities have been duly authorized by all necessary corporate action of the Company.

     7. The shares of Common Stock initially issuable upon conversion of the Securities have been
duly authorized and, when issued upon conversion of the Securities in accordance with the terms of
the Indenture, will be validly issued, fully paid and non-assessable, and the Board of Directors of
the Company or a committee thereof has duly and validly adopted resolutions reserving such shares
of Common Stock for issuance upon conversion of the Securities.

     8. The holders of the outstanding shares of Common Stock of the Company are not entitled to
any preemptive or other rights to subscribe for the Securities or the shares of Common Stock
issuable upon conversion thereof pursuant to the Charter (as defined on Exhibit A), the Bylaws (as
defined on Exhibit A) or the Maryland General Corporation Law.

     9. The statements incorporated by reference in the Preliminary Memorandum and the Final
Memorandum under the caption “Item 1. Description of Registrant’s Securities to be Registered”,
insofar as such statements constitute matters of law, summaries of legal matters, the Charter or
Bylaws or documents or legal conclusions, have been reviewed by us and fairly present and
summarize, in all material respects, the matters referred to therein.

 

 

     10. The execution and delivery of the Indenture and the Purchase Agreement by the Company, the
issue and sale of the Securities by the Company pursuant to the Purchase Agreement and the
performance by the Company of its obligations under the Indenture, the Purchase Agreement and the
Securities do not (i) conflict with, result in any breach or violation of, or imposition of any
lien, charge or encumbrance upon any property or asset of the Company, PHH Mortgage or PHH Broker
Partner pursuant to the Charter or Bylaws or the Certificate of Incorporation of PHH Mortgage (as
defined on Exhibit A) or the Bylaws of PHH Mortgage (as defined on Exhibit A) or the Charter of PHH
Broker Partner (as defined on Exhibit A) or the Bylaws of PHH Broker Partner (as defined on Exhibit
A); (ii) constitute a violation of, or a breach or default under, the terms of any Applicable
Document ; or (iii) violate any Maryland statute, law, rule or regulation applicable to the
Company, PHH Mortgage or PHH Broker Partner or, to our knowledge, any judgment, order or decree
applicable to the Company, PHH Mortgage or PHH Broker Partner of any Maryland court, regulatory
body, administrative agency, governmental body, arbitrator or other governmental authority having
jurisdiction over the Company, PHH Mortgage or PHH Broker Partner or any of their respective
properties.

     11. No consent, approval, authorization or order of any Maryland court or governmental agency
or authority, is required for the Company’s execution, delivery and performance of its obligations
under the Purchase Agreement and the Indenture and consummation of the transactions contemplated
thereby, except such as may be required under Maryland blue sky laws.

E-2

 

Exhibit A

	 	 	 
	1.

	 	The Purchase Agreement;
	 
	 	 
	2.

	 	The Indenture;
	 
	 	 
	3.

	 	The Disclosure Package;
	 
	 	 
	4.

	 	The Final Memorandum;
	 
	 	 
	5.

	 	The Officers’ Certificate;
	 
	 	 
	6.

	 	The following records of the Company, PHH Mortgage and PHH Broker Partner:

     (a) PHH Corporation:

          (i) Articles of Amendment and Restatement of PHH Corporation effective as of
January 31, 2005, Articles Supplementary of PHH Corporation effective as of March
27, 2008 and Articles of Amendment of PHH Corporation effective as of June 12, 2009
(collectively, the “Charter”);

          (ii) Amended and Restated By-Laws of PHH Corporation effective as of March 30,
2009 (the “Bylaws”);

          (iii) Minutes of proceedings of the Board of Directors of the Company and
certain committees thereof as certified in the Officers’ Certificate;

          (iv) Good Standing Certificate dated as of September 18, 2009;

     (b) PHH Mortgage Corporation:

          (i) Certificate of Incorporation of United States Mortgage Corporation filed
with the Secretary of State of the State of New Jersey and effective October 28,
1977 as amended or supplemented by the Amendment to Certificate of Incorporation of
United States Mortgage Corporation filed with the Secretary of State of the State
of New Jersey and effective August 15, 1978, the Certificate of Amendment to the
Certificate of Incorporation of United States Mortgage Corporation filed on January
16, 1980 with the Secretary of State of the State of New Jersey and effective
February 1, 1980, the Certificate of Amendment to the Certificate of Incorporation
of US Mortgage Corporation filed on February 1, 1980 with the Secretary of State of
the State of New Jersey and dated September 12, 1979, the Certificate of Amendment
to the Certificate of Incorporation of US Mortgage Corporation filed on January 21,
1981 with the Secretary of State of the State of New Jersey and dated October 31,
1980, the Certificate of Amendment to the Certificate of Incorporation of US
Mortgage Corporation filed on April 25, 1988 with the Secretary of State of the
State of New Jersey and effective May 1, 1988, the Certificate of Amendment to the

 

 

Certificate of Incorporation of PHH US Mortgage Corporation filed on May 15,
1995 with the Secretary of State of the State of New Jersey and effective July 1,
1995, the Certificate of Merger of US Mortgage Corporation and PHH Mortgage
Services Corporation filed with the Secretary of State of the State of Delaware and
effective April 1, 1996, the Statement of Address of PHH Mortgage Services
Corporation filed June 8, 1996, the Certificate of Amendment to the Certificate of
Incorporation of PHH Mortgage Services Corporation filed on November 24, 1997 with
the Secretary of State of the State of New Jersey and effective January 1, 1998,
the Certificate of Correction of PHH Mortgage Services Corporation filed on
December 8, 1997 with the Secretary of State of the State of New Jersey and dated
December 5, 1997, the Certificate of Merger/Consolidation of American West
Mortgage Company of Colorado and Cendant Mortgage Corporation filed on December 17,
2001 with the Secretary of State of the State of New Jersey and effective December
31, 2001 and attachments thereto, and the Certificate of Amendment to the
Certificate of Incorporation filed on January 7, 2005 with the Secretary of State
of the State of New Jersey and effective February 1, 2005 (collectively, the
“Certificate of Incorporation of PHH Mortgage”);

          (ii) By-Laws of US Mortgage Corporation (the “Bylaws of PHH Mortgage”);

          (iii) Good Standing Certificate dated as of September 18, 2009;

(c) PHH Broker Partner:

          (i) Articles of Incorporation of PHH Lawsuit Claims, Inc. filed with the State
Department of Assessments and Taxation of the State of Maryland filed July 26, 1990
and effective July 26, 1990, as amended or supplemented by the Articles of
Amendment of PHH Lawsuit Claims, Inc. filed with the State Department of
Assessments and Taxation of the State of Maryland filed March 4, 1997 and effective
March 4, 1997 (the “Charter of PHH Broker Partner”);

          (ii) Bylaws of PHH Broker Partner Corporation (the “Bylaws of PHH Broker
Partner”);

          (iii) Good Standing Certificate dated as of September 21, 2009.

 

 

Exhibit B

Applicable Documents

     1. Agreement and Plan of Merger dated as of March 15, 2007 by and among General Electric
Capital Corporation, a Delaware corporation, Jade Merger Sub, Inc., a Maryland corporation, and PHH
Corporation, a Maryland corporation.

     2. Rights Agreement, dated as of January 28, 2005, by and between PHH Corporation and The Bank
of New York;

     3. PHH Corporation Non-Employee Directors Deferred Compensation Plan;

     4. Form of PHH Corporation 2005 Equity Incentive Plan Non-Qualified Stock Option Agreement;

     5. Form of PHH Corporation 2005 Equity and Incentive Plan Non-Qualified Stock Option
Agreement, as amended;

     6. Form of PHH Corporation 2005 Equity and Incentive Plan Non-Qualified Stock Option
Conversion Award Agreement;

     7. Form of PHH Corporation 2003 Restricted Stock Unit Conversion Award Agreement;

     8. Form of PHH Corporation 2004 Restricted Stock Unit Conversion Award Agreement;

     9. Form of PHH Corporation 2005 Equity and Incentive Plan Non-Qualified Stock Option Award
Agreement, as revised June 28, 2005;

     10. Form of PHH Corporation 2005 Equity and Incentive Plan Restricted Stock Unit Award
Agreement, as revised June 28, 2005;

     11. Release and Restrictive Covenants Agreement, dated September 20, 2006, by and between PHH
Corporation and Neil J. Cashen;

     12. Form of PHH Corporation Amended and Restated Severance Agreement for Certain Executive
Officers as approved by the PHH Corporation Compensation Committee on January 10, 2008;

     13. Form of 2009 Performance Unit Award Notice and Agreement for Certain Executive Officers,
as approved by the Compensation Committee on March 25, 2009;

     14. Amended and Restated 2005 Equity and Incentive Plan (as amended and restated through June
17, 2009);

     15. Transition Services and Separation Agreement, dated August 5, 2009, by and between PHH
Corporation and Terrence W. Edwards (as amended on September 11, 2009).exv10w2

EXHIBIT 10.2

MASTER TERMS AND CONDITIONS FOR CONVERTIBLE BOND HEDGING TRANSACTIONS

BETWEEN JPMORGAN CHASE BANK, NATIONAL ASSOCIATION, LONDON BRANCH AND PHH

CORPORATION

     The purpose of this Master Terms and Conditions for Convertible Bond Hedging Transactions
(this “Master Confirmation”), dated as of September 23, 2009, is to set forth certain terms
and conditions for convertible bond hedging transactions to be entered into between JPMorgan Chase
Bank, National Association, London Branch (“Dealer”) 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

JPMorgan Chase Bank, National Association

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

Main Office 1111 Polaris Parkway, Columbus, Ohio 43271

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

Registered Branch Office 125 London Wall, London EC2Y 5AJ

Authorised and regulated by the Financial Services Authority

 

 

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.

          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 0.01 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.

2

 

	 	 	 
	     Conversion Date:

	 	Each “Conversion Date”, as defined in the Indenture, of Convertible Notes,
subject to the provisions of Section 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”)

3

 

	 	 	 
	 

	 	of (i) the number of Units being exercised on such Exercise 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), if applicable, 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, if applicable);
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 equal to 100% pursuant to clause
(iii) above, unless on the date of its election of a
“Cash Percentage” under the Indenture of less than
100%, Counterparty shall represent 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.

          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 under the terms of the Indenture; provided that the
Settlement Date will not be prior to the date one Settlement Cycle

4

 

	 	 	 
	 

	 	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 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 Definitions,

5

 

	 	 	 
	 

	 	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.
	 
	 	 
	     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

6

 

	 	 	 
	 

	 	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.
	 
	 	 
	     Fundamental Change 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”.
	 
	 	 
	     Failure to Deliver:

	 	Applicable
	 
	 	 
	     Insolvency Filing:

	 	Applicable

7

 

	 	 	 
	     Hedging Disruption:

	 	Applicable; provided that Section 12.9(a)(v) of the Definitions
is hereby modified by inserting the following two phrases at the end of such Section:
	 
	 	 
	 

	 	“For the avoidance of doubt, the term “equity price
risk” shall be deemed to include, but shall not be
limited to, stock price and volatility risk. And, for
the further avoidance of doubt, any such transactions
or assets referred to in phrases (A) or (B) above
must be available on commercially reasonable pricing
terms (considered in the aggregate across all such
transactions).”
	 
	 	 
	     Increased Cost of Hedging:

	 	Not Applicable
	 
	 	 
	     Hedging Party:

	 	Dealer for all applicable Additional Disruption Events
	 
	 	 
	     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 September 23,
2009 between, among others, Counterparty and J.P. Morgan Securities Inc., Citigroup Global Markets
Inc. and Wells Fargo Securities, LLC, as representatives of the Initial Purchasers (as defined in
the Purchase Agreement), on the Trade Date and the Effective Date for each Transaction, and, in
addition, represents and warrants to, and agrees with, Dealer on the Trade Date and the Effective
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;

8

 

     (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;

     (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

9

 

     (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:

          (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.

10

 

          (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 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 with the consent of Counterparty (which
consent shall not be unreasonably withheld); 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 Group’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%, (3) if at any time any of Sections 3-701 to 3-709 of the Maryland Control Share
Acquisition Act are, or would be, applicable to Counterparty in the reasonable judgment of Dealer, and 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%, or (4) the Share Amount exceeds the
Applicable Share Limit, 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 Group’s
“beneficial ownership” (within the meaning

11

 

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, (3) the Control Share Percentage is reduced to 8.0% or less, or (4) the Share Amount is
reduced to the Applicable Share Limit 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) Dealer Group’s “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%, (3) the Control Share Percentage following such partial
termination will be equal to or less than 8.0%, or (4) the Share Amount will be equal to or less
than the Applicable Share Limit. 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 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. The “Dealer Group” means Dealer and each person subject to
aggregation of Shares with Dealer under Section 13 or Section 16 of the Exchange Act and rules
promulgated thereunder. The “Share Amount” as of any day is the number of Shares that
Dealer and any person whose ownership position would be aggregated with that of Dealer (Dealer or
any such person, a “Dealer Person”) under any insurance or other law, rule, regulation or
regulatory order applicable to ownership of Shares (“Applicable Laws”), owns, beneficially
owns, constructively owns, controls, holds the power to vote or otherwise meets a relevant
definition of ownership of under the Applicable Laws, as determined by Dealer in its reasonable
discretion. The “Applicable Share Limit” means a number of Shares equal to (A) the minimum
number of Shares that would give rise to reporting or registration obligations or other
requirements (including obtaining prior approval from any person or entity) of a Dealer Person, or
would result in an adverse effect on a Dealer Person, under the Applicable Laws, as determined by
Dealer in its reasonable discretion, minus (B) 1% of the number of Shares outstanding.

          (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.

12

 

          (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 (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.

          (iii) Notwithstanding anything to the contrary in this Master Confirmation, if any Convertible
Notes are repurchased and cancelled in accordance with their terms pursuant to the Fundamental
Change Provisions, then an Additional Termination Event shall be deemed to occur upon delivery of a
notice of such repurchase and cancellation by Counterparty to Dealer no later than 10 Exchange
Business Days following such repurchase and cancellation. Upon receipt of any such notice, Dealer
shall designate an Exchange Business Day as an Early Termination Date with respect to a portion of
the Transaction corresponding to a number of Units (the “Cancelled Units”) equal to the
number of such Convertible Notes repurchased and cancelled and, as of such date, the Number of
Units shall be reduced by the number of Cancelled Units. In the event that such an Early
Termination is designated with respect to a portion of a Transaction, a payment shall be made
pursuant to Section 6 of the Agreement as if (A) an Early Termination Date had been designated in
respect of a Transaction having terms identical to this Transaction and a Number of Units equal to
the number of Cancelled Units, (B) Counterparty shall be the sole Affected Party with respect to
such partial termination and (C) such terminated portion of such Transaction shall be the only
Terminated Transaction.

          (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.

13

 

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

          (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 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.

14

 

          (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 and taking into account any Dealer
hedging and settlement activity in connection with the 2008 Bond Hedge (as defined below), 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 if, following such repurchase, the Units Equity Percentage
as determined on such day is (i) equal to or greater than 13.0% 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 (i) the numerator of
which is the aggregate Number of Shares for all Transactions hereunder plus the aggregate
“Number of Shares” for all “Transactions” (as such terms are defined in the Master Terms and
Conditions for Convertible Bond Hedging Transactions dated March 27, 2008 between Dealer and
Counterparty (the “2008 Bond Hedge”)) and (ii) 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

15

 

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.

          (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 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

16

 

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 Definitions. (i) Section 12.6(a)(ii) of the 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.”

          (ii) Section 12.9(b)(i) of the 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) Role of Agent. Each party agrees and acknowledges that (i) J.P. Morgan Securities
Inc., an affiliate of the Dealer (“JPMSI”), has acted solely as agent and not as principal with
respect to this Transaction and (ii) JPMSI has no obligation or liability, by way of guaranty,
endorsement or otherwise, in any manner in respect of this Transaction (including, if applicable,
in respect of the settlement thereof). Each party agrees it will look solely to the other party (or
any guarantor in respect thereof) for performance of such other party’s obligations under this
Transaction.

          12. Addresses for Notice:

	 	 	 	 	 
	 

	 	If to Dealer:
	 	JPMorgan Chase Bank, National Association
	 

	 	 	 	4 New York Plaza, Floor 18
	 

	 	 	 	New York, NY 10004-2413
	 

	 	 	 	Attention: Mariusz Kwasnik 

	 

	 	 	 	Title: Operations Analyst, EDG Corporate Marketing
	 

	 	 	 	Telephone No: (212) 623-7223
	 

	 	 	 	Facsimile No: (212) 623-7719
	 
	 	 	 	 
	 

	 	If to Counterparty:
	 	PHH Corporation
	 

	 	 	 	3000 Leadenhall Road,
	 

	 	 	 	Mt. Laurel New Jersey 08054
	 

	 	 	 	Fax: (856) 917-4278
	 

	 	 	 	Attention: Treasurer

17

 

          13. Accounts for Payment:

	 	 	 	 
	 	 To Dealer:
	 	JPMorgan Chase Bank, National Association, New York
	 	 	 	ABA: 021 000 021
	 	 	 	Favour: JPMorgan Chase Bank, National Association – London
	 	 	 	A/C: 0010962009 CHASUS33
	 	 	 
	 	 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

 

	 	 	 	 	 
	 	Yours sincerely,

J.P. MORGAN SECURITIES INC., AS AGENT
 FOR
JPMORGAN CHASE BANK, NATIONAL 

ASSOCIATION

 	 
	 	By:  	/s/ Santosh Sreenivasan
 	 
	 	 	Authorized Signatory 	 
	 	 	Name: Santosh Sreenivasan 	 
	 

	 	 	 	 	 
	Confirmed as of the

date first above written:

PHH CORPORATION

 	 
	By:  	/s/ Sandra E. Bell
 	 
	 	Name:  	Sandra E. Bell 	 
	 	Title:  	EVP & CFO 	 
	 

JPMorgan Chase Bank, National Association

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

Main Office 1111 Polaris Parkway, Columbus, Ohio 43271

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

Registered Branch Office 125 London Wall, London EC2Y 5AJ

Authorised and regulated by the Financial Services Authority

 

 

EXHIBIT A

CONFIRMATION

	 	 	 
	Date:

	 	[                    ], 20[___]
	 
	 	 
	To:

	 	PHH Corporation (“Counterparty”)
	 
	 	 
	Facsimile:

	 	(856) 917-4278
	 
	 	 
	Attention:

	 	Treasurer
	 
	 	 
	From:

	 	JPMorgan Chase Bank, National Association, London Branch (“Dealer”)
	 
	 	 
	Facsimile:

	 	(212) 622-8534

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 JPMorgan Chase Bank,
National Association, London Branch and PHH Corporation dated as of September 23, 2009 (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:
	 	[                    ], 20[_____]
	 
	 	 
	Effective Date:
	 	The closing date for the initial issuance of the Convertible Notes
	 
	 	 
	Premium:
	 	USD [__________]
	 
	 	 
	Premium Payment Date:
	 	The Effective Date
	 
	 	 
	Convertible Notes:
	 	4.00% Convertible Senior Notes due 2014, offered
	 
	 	pursuant to a Preliminary Offering Memorandum dated
	 
	 	as of September 23, 2009 and issued pursuant to the
	 
	 	Indenture.

JPMorgan Chase Bank, National Association

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

Main Office 1111 Polaris Parkway, Columbus, Ohio 43271

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

Registered Branch Office 125 London Wall, London EC2Y 5AJ

Authorised and regulated by the Financial Services Authority

A-1

 

	 	 	 
	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.
	 
	 	 
	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:
	 	44%
	 
	 	 
	Number of Shares:
	 	The product of the Number of Units, the Unit Entitlement and the Applicable Percentage.
	 
	 	 
	Expiration Date:
	 	September 1, 2014
	 
	 	 
	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 September 29, 2009 by and between Counterparty and The Bank of New
	 
	 	York Mellon, 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 5.02, 5.06(g) and 5.17 of the Indenture.
	 
	 	 
	Dilution Provisions:
	 	Sections 5.06(a), (b), (c), (d), (e) and (l) of the Indenture
	 
	 	 
	Merger Provision:
	 	Section 5.12 of the Indenture
	 
	 	 
	Tender Offer Provision:
	 	Section 5.06(e) of the Indenture.
	 
	 	 
	Make-Whole Provisions:
	 	Section 5.02 of the Indenture.
	 
	 	 
	Fundamental Change Provisions:
	 	Section 4.01 of the Indenture.
	 
	 	 
	Early Unwind Date:
	 	September 29, 2009, or such later date as agreed by the parties hereto.

A-2

 

          3. Please confirm that the foregoing correctly sets forth the terms of our agreement by
executing this Confirmation and returning it to EDG Confirmation Group, J.P. Morgan Securities
Inc., 277 Park Avenue, 11th Floor, New York, NY 10172-3401, or by fax to (212) 622 8519.

	 	 	 	 	 
	 	Yours sincerely,

J.P. MORGAN SECURITIES INC., AS AGENT

FOR JPMORGAN CHASE BANK, NATIONAL

ASSOCIATION

 	 
	 	By:  	 	 
	 	 	Authorized Signatory 	 
	 	 	Name: 	 
	 

	 	 	 	 	 
	Confirmed as of the

date first above written:

PHH CORPORATION

 	 
	By:  	 	 
	 	Name:  	 	 
	 	Title:  	 	 
	 

JPMorgan Chase Bank, National Association

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

Main Office 1111 Polaris Parkway, Columbus, Ohio 43271

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

Registered Branch Office 125 London Wall, London EC2Y 5AJ

Authorised and regulated by the Financial Services Authority

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