Document:

exv10w1

 

Exhibit 10.1

Convertible Note Hedge Transaction

	 	 	 
	Date:

	 	June 18, 2007
	
	 	 
	To:

	 	VeriFone Holdings, Inc.
	    

	 	2099 Gateway Place, Suite 600
	    

	 	San Jose, CA 95110
	    

	 	Attention: Barry Zwarenstein, Executive Vice President and Chief Financial Officer
	    
	 	 
	From:

	 	Lehman Brothers Inc., acting as Agent
	    

	 	Lehman Brothers OTC Derivatives Inc., acting as Principal
	    

	 	Andrew Yare — Transaction Management Group
	    

	 	Facsimile: 646-885-9546 (United States of America)
	    

	 	Telephone: 212-526-9986
	    
	 	 
	Ref. Numbers:

	 	Global Deal ID: 3000787

Dear Sir or Madam:

The purpose of this communication (this “Confirmation”) is to confirm the terms and conditions of
the above-referenced transaction (the “Transaction”) entered into between Lehman Brothers OTC
Derivatives Inc. (“Party A”) and VeriFone Holdings, Inc. (“Party B”) on the Trade Date specified
below. This Confirmation constitutes a “Confirmation” as referred to in the ISDA Master Agreement
specified below. This Confirmation is sent on behalf of both Party A and Lehman Brothers Inc.
(“LBI”). Lehman Brothers OTC Derivatives Inc. is not a member of the Securities Investor
Protection Corporation.

This Confirmation evidences a complete and binding agreement between Party A and Party B as to the
terms of the Transaction to which this Confirmation relates. This Confirmation supplements, forms
part of, and is subject to an agreement in the form of the 1992 ISDA Master Agreement
(Multicurrency—Cross Border) (the “Agreement”) as if we had executed an agreement in such form (but
without any Schedule except for the elections set forth herein) on the Trade Date specified below.
In the event of any inconsistency between the provisions of the Agreement and this Confirmation,
this Confirmation will prevail for the purpose of the Transaction. For the avoidance of doubt, the
Transaction shall be the only transaction subject to and governed by the Agreement.

The definitions and provisions contained in the 2002 ISDA Equity Derivatives Definitions (the
“Equity Definitions”) and the 2000 ISDA Definitions (the “Swap Definitions”, and, together with the
Equity Definitions, the “Definitions”), in each case as published by the International Swaps and
Derivatives Association, Inc., are incorporated into this Confirmation. References herein to
“Transaction” shall be deemed references to (i) “Swap Transaction” for purposes of the Swap
Definitions and (ii) Share Option Transaction for purposes of the Equity Definitions. In the event
of any inconsistency between the Equity Definitions and the Swap Definitions, the Equity
Definitions will govern. Certain defined terms used herein have the meanings assigned to them in
the Indenture to be dated on or about June 22, 2007 between Party B and U.S. Bank National
Association, as trustee (as may be amended or supplemented from time to time, but only if such
amendment or supplement is consented to by Party A in writing, the “Indenture”) relating to USD 275
million principal amount of 1.375% Senior Convertible Notes due 2012 (the “Convertible Notes”)
issued by Party B. In the event of any inconsistency between either set of Definitions and this
Confirmation, or between the Indenture and this Confirmation, this Confirmation will govern. The
parties further acknowledge that references herein to sections of the Indenture are based on the
draft of the

Lehman Brothers

745 SEVENTH AVENUE,

NEW YORK NY 10019

1

 

Indenture most recently reviewed by the parties at the time of this Confirmation. If any relevant
sections of the Indenture are changed, added or renumbered following execution of this
Confirmation, the parties will amend this Confirmation in good faith to preserve the economic
intent of the parties. For the avoidance of doubt, (i) the Indenture may be amended or supplemented
without the consent of Party A and (ii) references to the Indenture herein are references to the
Indenture as in effect on the date of its execution and if the Indenture is amended following its
execution, any such amendment will be disregarded for purposes of this Confirmation unless the
parties agree otherwise in writing.

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

	 	 	 
	General
Terms:
	 	 
	    
	 	 
	   Agent:

	 	LBI is acting as agent on
behalf of Party A and Party B
for the Transaction. LBI has
no obligations, by guarantee,
endorsement or otherwise, with
respect to the performance of
the Transaction by either
party.
	    
	 	 
	   Trade Date:

	 	June 18, 2007
	    
	 	 
	   Effective Date:

	 	June 22, 2007
	    
	 	 
	   Option Style:

	 	Modified American, as described under “Procedures for Exercise” below.
	    
	 	 
	   Option Type:

	 	Call
	    
	 	 
	   Seller:

	 	Party A
	    
	 	 
	   Buyer:

	 	Party B
	    
	 	 
	   Shares:

	 	The common stock of Party B, par value USD 0.01 per share (Ticker
Symbol: PAY).
	    
	 	 
	   Number of Options:

	 	The number of Convertible Notes in denominations of USD 1,000
principal amount issued by Party B on the closing date of initial
issuance of the Convertible Notes multiplied by the Applicable
Percentage; provided that the Number of Options shall be
automatically increased as of the date of exercise (the “Greenshoe
Exercise”) by LBI and J.P. Morgan Securities Inc., as the Initial
Purchasers (as defined in the Purchase Agreement), of their option
pursuant to Section 3(a) of the Purchase Agreement dated as of June
18, 2007 between Party B, LBI and J.P. Morgan Securities Inc., as the
Initial Purchasers thereto (the “Purchase Agreement”) by the number
of Convertible Notes in denominations of USD 1,000 principal amount
issued pursuant to such exercise (such Convertible Notes, the
“Additional Convertible Notes”) multiplied by the Applicable
Percentage (the “Additional Options”). Such increase in the Number of
Options shall be on substantially identical terms, including pricing,
as initially set forth in this Confirmation.
	    
	 	 
	   Option Entitlement:

	 	As of any date, a number of Shares per Option equal to the
“Conversion Rate” (as defined in the Indenture), but without regard
to any adjustments to the “Conversion Rate” pursuant to Sections
10.04(b) and 10.05(i) of the Indenture and assuming that Party B did
not make the election set forth in Section 10.12 of the Indenture in

Global Deal ID: 3000787

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	 	respect of a “Public Acquirer Change of Control” thereunder.
	    
	 	 
	   Number of Shares:

	 	The product of the Number of Options and the Option Entitlement.
	    
	 	 
	   Applicable Percentage:

	 	50%
	    
	 	 
	   Strike Price:

	 	As of any date, USD 1,000 divided by the Option Entitlement.
	    
	 	 
	   Premium:

	 	USD 34,885,000 (Premium Per Option USD 253.71); provided that if the
Number of Options is increased pursuant to the proviso to the
definition of “Number of Options” above, an additional Premium equal
to the product of the number of Additional Options and the Premium
Per Option shall be paid on the Additional Premium Payment Date.
	    
	 	 
	   Premium Payment Date:

	 	The Effective Date.
	    
	 	 
	   Additional Premium Payment Date:

	 	The closing date for the purchase and sale of Additional Convertible
Notes.
	    
	 	 
	   Exchange:

	 	New York Stock Exchange
	    
	 	 
	   Related Exchange(s):

	 	All Exchanges
	    
	 	 
	Procedures
for Exercise:
	 	 
	    
	 	 
	   Exercise Date:

	 	Each Conversion Date.
	    
	 	 
	   Expiration Time:

	 	The Valuation Time
	    
	 	 
	   Expiration Date:

	 	The earlier of (i) the last day on which any Convertible Notes remain
outstanding and (ii) the Scheduled Trading Day immediately preceding
the Maturity Date (as such term is defined in the Indenture).
	    
	 	 
	   Conversion Date:

	 	Each “Conversion Date” as defined in the Indenture.
	    
	 	 
	   Required Exercise on Conversion Dates:

	 	On each Conversion Date, a number of Options equal to the number of
Convertible Notes in denominations of USD 1,000 principal amount
submitted for conversion on such Conversion Date in accordance with
the terms of the Indenture shall be exercised by Party B, subject to
“Notice of Exercise” below.
	    
	 	 
	   Automatic Exercise:

	 	Applicable.
	    
	 	 
	   Multiple Exercise:

	 	Applicable.
	    
	 	 
	   Minimum Number of Options:

	 	One.
	    
	 	 
	   Maximum Number of Options:

	 	Number of Options.
	    
	 	 
	   Scheduled Trading Day:

	 	As defined in the Indenture.
	    
	 	 
	   Notice of Exercise:

	 	Notwithstanding anything to the contrary in the Equity Definitions,
in order to exercise any Options on any Exercise Date, Party B must
notify Party A (in writing, which can be by e-mail or facsimile)
before 5:00 PM New York City time at least one Scheduled Trading Day
prior to the first Scheduled Trading Day of the applicable
“Conversion Period” (as defined in the Indenture) for the Convertible
Notes being converted on that Exercise Date (the “Notice Deadline”)
of (i) the number of Options being exercised on

Global Deal ID: 3000787

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	 	that Exercise Date
and (ii) the scheduled commencement date of the Conversion Period and
settlement date under the Indenture for the Convertible Notes
converted on the Conversion Date corresponding to such Exercise Date;
provided, however, that with respect to Convertible Notes converted
during the period beginning on, and including, the 25th
Scheduled Trading Day prior to the Maturity Date (as such term is
defined in the Indenture) and ending on the Scheduled Trading Day
immediately preceding the Maturity Date (the “Final Conversion
Period”), the Notice Deadline shall be 5:00 PM New York City time on
the Scheduled Trading Day immediately preceding the Maturity Date.
For the avoidance of doubt, if Party B fails to give such notice when
due in respect of any exercise of Options hereunder, Party A’s
obligation to make any payment or delivery in respect of such
exercise shall be permanently extinguished, and late notice shall not
cure such failure; provided that, notwithstanding the foregoing, such
notice (and the related automatic exercise of Options) shall be
effective if given after the relevant Notice Deadline but prior to
5:00 PM New York City time, on the fifth Exchange Business Day of the
relevant Conversion Period, in which event the Calculation Agent
shall have the right to adjust the Delivery Obligation (as defined
below) as appropriate to reflect the additional actual out-of-pocket
costs (including, but not limited to, losses actually incurred as a
result of hedging mismatches and actual market losses) and reasonable
out-of-pocket expenses actually incurred by Party A or any of its
affiliates 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 applicable Notice Deadline;
provided further that the adjusted Delivery Obligation described in
the preceding proviso can never be less than zero and can never
require any payment by Party B.
	    
	 	 
	    

	 	For the purposes of this Confirmation, (1) Party B has authorized U.S
Bank National Association or any successor trustee appointed under
the Indenture (as notified in writing by Party B to Party A) (an
“Authorized Person”) to deliver any Notice of Exercise hereunder on
its behalf, and such Notice of Exercise will be valid as if delivered
by Party B and (2) for the avoidance of doubt, Party B (or an
Authorized Person on its behalf) may, by written notice given in the
manner required for a Notice of Exercise, modify or revoke any
Notice of Exercise previously delivered hereunder at any time prior
to the Notice Deadline applicable to such Notice of Exercise.
	    
	 	 
	Party A’s Telephone Number and
Telex and/or Facsimile Number and
Contact Details for purposes of
Notice:

	 	Lehman Brothers Inc., acting as Agent 

Lehman Brothers OTC Derivatives Inc., acting as Principal 

745 Seventh Avenue

New York, NY 10019

Andrew Yare — Transaction Management Group

Facsimile: 646-885-9546 (United States of America)

Telephone: 212-526-9986

E-mail: To be provided by Party A
	Settlement
Terms:
	 	 

Global Deal ID: 3000787

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	   Delivery Obligation:

	 	In respect of an Exercise Date occurring on a Conversion Date, Party
A will deliver to Party B on the related Settlement Date a number of
Shares equal to the product of the Applicable Percentage and the
aggregate number of Shares, if any (and cash in lieu of fractional
Shares, if any) that Party B is obligated to deliver to the holder(s)
of the Convertible Notes converted on such Conversion Date pursuant
to Section 10.11 of the Indenture; provided that such obligation
shall be determined excluding any Shares (and cash in lieu of
fractional Shares, if any) that Party B is obligated to deliver to
holder(s) of the Convertible Notes as a result of any adjustments to
the “Conversion Rate” pursuant to Sections 10.04(b) or 10.05(i) of
the Indenture and assuming that Party B did not make the election set
forth in Section 10.12 of the Indenture in respect of a “Public
Acquirer Change of Control” thereunder; provided further that if the
Volume Weighted Average Price (as defined in the Indenture) is not
available on the Bloomberg page, the Calculation Agent shall
determine Volume Weighted Average Price for purposes of calculating
the Delivery Obligation in a commercially reasonable manner based on
a volume weighted average price methodology.
	    
	 	 
	    

	 	To the extent Party A is required to deliver Shares hereunder, the
provisions of Sections 9.1(c), 9.8, 9.9, 9.10, 9.11 and 9.12 of the
Equity Definitions will be applicable, except that all references in
such provisions to “Physically-settled” shall be read as references
to “Net Share Settled.” “Net Share Settled” in relation to any
Option means that Party A is obligated to deliver Shares hereunder. 

Section 9.11 of the Equity Definitions shall be amended by excluding
any representations therein relating to restrictions, obligations,
limitations or requirements under applicable securities laws as a
result of the fact that Party B is the issuer of the Shares.
	    
	 	 
	   Notice of Delivery Obligation:

	 	No later than 5:00 PM New York City time on the Scheduled Trading Day
immediately following the last day of the relevant Conversion
Period), Party B shall give Party A notice of the final number of
Shares (and cash in lieu of fractional Shares, if any) comprising the
relevant Delivery Obligation; provided that, with respect to any
Exercise Date occurring during the Final Conversion Period, Party B
may provide Party A with a single notice of the aggregate number of
Shares (and cash in lieu of fractional Shares, if any) comprising the
Delivery Obligations for all Exercise Dates occurring during such
period no later than 5:00 PM New York City time on the Scheduled
Trading Day immediately preceding the Maturity Date.
	    
	 	 
	   Settlement Date:

	 	In respect of an Exercise Date occurring on a Conversion Date, the
settlement date for the Shares to be delivered under the related
Convertible Notes under the terms of the Indenture; provided that the
Settlement Date will not be prior to the Scheduled Trading Day
immediately following the date on which Party B gives notice to Party
A of such Settlement Date.
	    
	 	 
	Share
Adjustments:
	 	 

Global Deal ID: 3000787

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	   Method of Adjustment:

	 	Convertible Adjustment
	    
	 	 
	   Convertible Adjustment:

	 	The Calculation Agent will adjust the Strike Price, the Number of
Options, the Option Entitlement, the Delivery Obligation, the nature
of the Shares and/or any other variable relevant to the exercise,
valuation or settlement of the Transaction, as appropriate, to
reflect any Conversion Change to the extent an analogous adjustment
is made under the Indenture; provided that the Calculation Agent
shall not be required to make such adjustment until Party A has
received from Party B a notice of such Conversion Change; provided
further that the Calculation Agent, shall, promptly after receiving
such notice, notify Party A and Party B of such adjustments.
	    
	 	 
	    

	 	“Conversion Change” means any adjustment by Party B to the
“Conversion Price” (as defined in the Indenture), the “Conversion
Rate” and/or the nature of the Shares under the Convertible Notes
pursuant to the terms of the Indenture, other than an increase in the
“Conversion Rate” pursuant to Sections 10.04(b) or 10.05(i) of the
Indenture or a change to the Delivery Obligation as the result of
Party B’s election under Section 10.12 of the Indenture in respect of
a “Public Acquirer Change of Control.” Party B agrees that it will
notify Party A prior to the effectiveness of any Conversion Change
and, to the extent such Conversion Change requires an exercise of
discretion by Party B under the terms of the Indenture, it shall
consult with the Calculation Agent in order to achieve a commercially
reasonable adjustment, determination or calculation. For the
avoidance of doubt, Party B’s obligation to consult with Party A
described in the preceding sentence shall not be a condition to Party
B’s making of any Conversion Change pursuant to the Indenture.
	    
	 	 
	Extraordinary
Events:
	 	 
	    
	 	 
	   Merger Event:

	 	Notwithstanding Section 12.1(b) of the Equity Definitions, a “Merger
Event” means the occurrence of any event or condition set forth in
Section 10.06 of the Indenture.
	    
	 	 
	   Consequences of Merger Events:

	 	Notwithstanding Section 12.2 and Section 12.3 of the Equity
Definitions, upon the occurrence of a Merger Event, the Calculation
Agent shall make a corresponding adjustment in respect of any
adjustment made pursuant to the Indenture to any one or more of the
nature of the Shares, Strike Price, Number of Options, the Option
Entitlement, the Delivery Obligation and any other variable relevant
to the exercise, settlement or payment for the Transaction; provided,
however, that such adjustment shall be made without regard to any
adjustment to the Conversion Rate for the issuance of additional
shares as set forth in Sections 10.04(b) or 10.05(i) of the Indenture
and assuming that Party B did not make the election set forth in
Section 10.12 of the Indenture in respect of a “Public Acquirer
Change of Control” thereunder; provided further that if, with respect
to a Merger Event, the consideration for the Shares includes (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,” Cancellation and Payment shall
apply.

Global Deal ID: 3000787

6

 

	 	 	 
	   Composition of Combined
Consideration:

	 	Not Applicable
	    
	 	 
	   Notice of Merger Consideration and
Consequences:

	 	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), Party B shall reasonably promptly (but in any event prior
to such Merger Date) notify the Calculation Agent of (i) 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 and (ii) the
adjustment made under the Indenture in respect of such Merger Event.
	    
	 	 
	   Nationalization, Insolvency or
Delisting:

	 	Cancellation and Payment (Calculation Agent Determination). For the
avoidance of doubt, the occurrence of any event that is a Merger
Event and would also constitute a Delisting shall have the
consequences specified for the relevant Merger Event.
	    
	 	 
	   Delisting:

	 	The definition of “Delisting” in Section 12.6(a)(iii) of the Equity
Definitions shall be deleted in its entirety and replaced with the
following: “Delisting” means that the Exchange announces that
pursuant to the rules of such Exchange, the Shares cease (or will,
subject to no further conditions, cease) to be listed, traded or
publicly quoted on the Exchange for any reason (other than a Merger
Event) and are not immediately re-listed, re-traded or re-quoted on
the New York Stock Exchange, the American Stock Exchange, the NASDAQ
Global Select Market, the NASDAQ Global Market (or each of their
respective successors) or any other market agreed to in writing by
the parties; if the Shares are immediately re-listed, re-traded or
re-quoted on any such exchange or quotation system, such exchange or
quotation system shall thereafter be deemed to be the Exchange.”
	    
	 	 
	   Additional Termination Event:

	 	The occurrence of any of (i) a Repayment Event or (ii) an “Event of
Default” with respect to Party B under the terms of the Convertible
Notes as set forth in Section 6.01 of the Indenture, which results in
principal and interest related to the Convertible Notes being
declared immediately due and payable pursuant to the terms of the
Indenture shall be an Additional Termination Event with respect to
which (1) the Transaction is the sole Affected Transaction and (2)
Party B is the sole Affected Party; provided that in the case of a
Repayment Event the Transaction shall be subject to termination only
in respect of the number of Convertible Notes that cease to be
outstanding in connection with or as a result of such Repayment
Event.
	    
	 	 
	    

	 	For the avoidance of doubt, unless the parties agree otherwise in
writing, each Amendment Event, if any, shall be disregarded for the
purposes of determining the obligations of the parties hereunder,
including the obligations of Party A to deliver Shares.

Global Deal ID: 3000787

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	 	“Amendment Event” means that Party B amends, modifies, supplements or
obtains a waiver with respect to (i) any term of the Indenture or the
Convertible Notes governing the principal amount, coupon, maturity,
repurchase obligation of Party B or redemption right of Party B, or
any term relating to conversion of the Convertible Notes (including
changes to the conversion price, conversion settlement dates or
conversion conditions), or (ii) any term that would require consent
of the holders of not less than 100% of the principal amount of the
Convertible Notes to amend, in each case without the written consent
of Party A.
	    
	 	 
	    

	 	“Repayment Event” means that (A) any Convertible Notes are
repurchased (whether in connection with or as a result of a change of
control, howsoever defined, or for any other reason) by Party B or
any of its subsidiaries, (B) any Convertible Notes are delivered to
Party B in exchange for delivery of any property or assets of Party B
or any of its subsidiaries (howsoever described), (C) any principal
of any of the Convertible Notes is repaid prior to the final maturity
date of the Convertible Notes (whether following acceleration of the
Convertible Notes or otherwise), or (D) any Convertible Notes are
exchanged by or for the benefit of the holders thereof for any other
securities of Party B or any of its affiliates (or any other
property, or any combination thereof) pursuant to any exchange offer
or similar transaction; provided that, in the case of clause (B) and
clause (D), conversions of the Convertible Notes pursuant to the
terms of the Indenture as in effect on the date hereof shall not be
Repayment Events.
	    
	 	 
	    

	 	If, upon the occurrence of a “Public Acquirer Change of Control”
under the Indenture occurs, Party B makes an election provided in
Section 10.12 of the Indenture, an Additional Termination Event shall
occur in respect of which (1) Party B shall be the sole Affected
Party and (2) the Transaction shall be the sole Affected Transaction.
	    
	 	 
	Additional
Disruption Events:
	 	 
	    
	 	 
	   Change in Law:

	 	Applicable
	    
	 	 
	   Failure to Deliver:

	 	Not Applicable
	    
	 	 
	   Insolvency Filing:

	 	Applicable
	    
	 	 
	   Hedging Disruption:

	 	Applicable
	    
	 	 
	   Increased Cost of Hedging:

	 	Not Applicable
	    
	 	 
	   Loss of Stock Borrow:

	 	Not Applicable
	    
	 	 
	   Increased Cost of Stock Borrow:

	 	Not Applicable
	    
	 	 
	   Hedging Party:

	 	Party A shall be the Hedging Party for all Additional Disruption
Events.
	    
	 	 
	   Determining Party:

	 	Party A shall be the Determining Party for all Additional Disruption
Events.
	    
	 	 
	Acknowledgments:
	 	 

Global Deal ID: 3000787

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	   Non-Reliance:

	 	Applicable
	    
	 	 
	   Agreements and Acknowledgments

   Regarding Hedging Activities:

	 	Applicable; provided, however, that Agreements and Acknowledgements
Regarding Hedging Activities shall be subject to the other respective
representations, warranties and agreements set forth herein.
	    
	 	 
	   Additional Acknowledgments:

	 	Applicable
	    
	 	 
	Additional Representations,

Warranties and Agreements:

	 	In addition to the representations, warranties and agreements set
forth in the Agreement and elsewhere in this Confirmation, Party B
further represents, warrants and agrees that:
	    
	 	 
	    

	 	(a) (i) It is not entering into the Transaction on behalf of or for
the account of any other person or entity, and will not transfer or
assign its rights or obligations under the Transaction or any portion
of such obligations to any other person or entity except in
compliance with applicable laws and the terms of the Transaction;
(ii) it is authorized to enter into the Transaction and, after due
inquiry, such action does not violate any laws of its jurisdiction of
organization or residence or the terms of any agreement to which it
is a party; (iii) it has consulted with its advisors and has reached
its own conclusions about the Transaction, and any legal, regulatory,
tax, accounting, economic or other consequences arising from the
Transaction; and (iv) it has concluded that the Transaction is
suitable in light of its own investment objectives, financial
capabilities and expertise.
	    
	 	 
	    

	 	(b) Neither Party A nor any of its affiliates is acting as agent
(other than LBI as dual agent if specified above) or advisor for
Party B in connection with the Transaction.
	    
	 	 
	    

	 	(c) As of the Trade Date, all reports and other documents (i)
required to be filed by Party B under the Securities Exchange Act of
1934, as amended (the “Exchange Act”) since November 1, 2006 have
been filed and (ii) filed by Party B with the Securities and Exchange
Commission pursuant to the Exchange Act since November 1, 2006, when
considered as a whole (with the more recent such reports and
documents deemed to amend inconsistent statements contained in any
earlier such reports and documents), taken together with the
preliminary offering memorandum and pricing term sheet relating to
the Convertible Notes (collectively, the “Offering Memorandum”), do
not contain any untrue statement of a material fact or any omission
of a material fact necessary to make the statements therein, in the
light of the circumstances in which they were made (including the
date on which they were made), not misleading.
	    
	 	 
	    

	 	(d) As of the Trade Date, it has not entered into any obligation that
would contractually limit it from effecting settlement under the
Transaction.
	    
	 	 
	    

	 	(e) As of the Trade Date, it is not in possession of any material
non-public information concerning the business or operations of Party
B or the Shares. “Material” information for these purposes is any
information to which an investor would reasonably attach importance
in reaching a decision to buy, sell or hold Shares.

Global Deal ID: 3000787

9

 

	 	 	 
	    

	 	(f) The Transaction has been approved by its board of directors.
	    
	 	 
	    

	 	(g) It is not entering into the Transaction to create actual or
apparent trading activity in the Shares (or any security convertible
into or exchangeable for Shares), to raise, depress or otherwise
manipulate the price of the Shares (or any security convertible into
or exchangeable for Shares) or otherwise in violation of the Exchange
Act (it being understood that Party B makes no representation
pursuant to this clause with respect to any action or inaction of
Party A, LBI, any Initial Purchaser or any of their respective
affiliates).
	    
	 	 
	    

	 	(h) It is not as of the Trade Date, 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.
	    
	 	 
	    

	 	(i) It is not on the Trade Date engaged in a distribution, as such
term is used in Regulation M under the Securities Exchange Act of
1934, as amended, of any securities of Party B, other than a
distribution meeting the requirements of the exception set forth in
sections 101(b)(10) and 102(b)(7) of Regulation M. Party B shall not,
until the fifth Exchange Business Day immediately following the Trade
Date, engage in any such distribution (it being understood that Party
B makes no representation pursuant to this clause with respect to any
action or inaction of Party A, LBI, any Initial Purchaser or any of
their respective affiliates).
	    
	 	 
	    

	 	(j) As of the Trade Date, it is an “accredited investor” as defined
in Regulation D as promulgated under the Securities Act of 1933, as
amended (the “Securities Act”).
	    
	 	 
	    

	 	(k) On each of the Trade Date and the Premium Payment Date, it is not
“insolvent” (as such term is defined under Section 101(32) of the
U.S. Bankruptcy Code (Title 11 of the United States Code) (the
“Bankruptcy Code”)) and it would be able to purchase the Shares
hereunder in compliance with the laws of the jurisdiction of its
incorporation.
	    
	 	 
	    

	 	Each party agrees with and represents to the other that it is an
“eligible contract participant” as the term is defined in Section
1a(12) of the U.S. Commodity Exchange Act, as amended.
	    
	 	 
	    

	 	Each party acknowledges to the other that the offer and sale of the
Transaction to it is intended to be exempt from registration under
the Securities Act by virtue of Section 4(2) thereof.
	    
	 	 
	    

	 	Prior to the Effective Date, (x) Party B shall deliver to Party A an
executed U.S. Internal Revenue Service Form W-9 (or successor
thereto) (the “Party B Tax Form”) that eliminates U.S. federal backup
withholding tax on payments to Party B and (y) Party A shall deliver
to Party B an executed U.S. Internal Revenue Services Form W-8BEN,
W-8ECI or W-9 (as appropriate) (or successor thereto) (the “Party A
Tax Form”) that eliminates U.S. federal backup withholding tax on
payments to Party A. Party B shall deliver a new Party B Tax Form to
Party A promptly upon learning that any such form previously provided
by Party B to Party A has become obsolete

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	 	or incorrect. Party A shall
deliver a new Party A Tax Form to Party B promptly upon learning that
any such form previously provided by Party A to Party B has become
obsolete or incorrect.
	    
	 	 
	Other
Provisions:
	 	 
	    
	 	 
	   Calculation Agent:

	 	LBI; provided that whenever any act or the exercise of any judgment
by the Calculation Agent requires the Calculation Agent to make any
calculations, the Calculation Agent will provide Party B with
reasonable detail concerning its calculations (including any
assumptions used in making such calculations).
	    
	 	 
	   Notices:

	 	(a) Address for notices or communications to Party A:
	    
	 	 
	    

	 	Lehman Brothers Inc., acting as Agent
	    

	 	Lehman Brothers OTC Derivatives Inc., acting as Principal
	    

	 	Andrew Yare — Transaction Management Group
	    

	 	Facsimile: 646-885-9546 (United States of America)
	    

	 	Telephone: 212-526-9986
	    

	 	E-mail: To be provided by Party A
	    
	 	 
	    

	 	(b) Address for notices or communications to Party B:
	    
	 	 
	    

	 	VeriFone Holdings, Inc.
	    

	 	2099 Gateway Place, Suite 600
	    

	 	San Jose, CA 95110
	    

	 	Attention: Barry Zwarenstein, Executive Vice President and Chief
	    

	 	Financial Officer
	    

	 	Telephone: 408-232-7888
	    

	 	Facsimile: 408- 232-7889
	    

	 	Email: Barry_Zwarenstein@VERIFONE.com
	    
	 	 
	   Account Details:

	 	(a) Account for payments to Party A:
	    
	 	 
	    

	 	To be provided by Party A
	    
	 	 
	    

	 	Party A account for deliveries of Shares: To be provided by Party A
	    
	 	 
	    

	 	(b) Account for payments to Party B:
	    
	 	 
	    

	 	To be provided by Party B.
	    
	 	 
	   Alternative Calculations and
Payment on Early
   Termination and on
Certain Extraordinary Events:

	 	If, in respect of the Transaction, an amount is payable by Party A to
Party B, (i) pursuant to Sections 12.2, 12.3, 12.6, 12.7 or 12.9 of
the Equity Definitions (except in the event of a Nationalization,
Insolvency or a Merger Event, in each case, in which the
consideration to be paid to holders of Shares consists solely of
cash) or (ii) pursuant to Section 6(d)(ii) of the Agreement (except
in the event of an Event of Default in which Party B is the
Defaulting Party or a Termination Event in which Party B is the
Affected Party, in each case, that resulted from an event or events
within Party B’s control) (a “Payment Obligation”), Party B shall
have the right, in

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	 	its sole discretion, to require Party A to satisfy
any such Payment Obligation by the Share Termination Alternative (as
defined below) by giving irrevocable telephonic notice to Party A
(confirmed in writing within three Currency Business Days) no later
than 5:00 p.m. New York City time on the Merger Date, Announcement
Date, Early Termination Date or date of cancellation or termination
for an Additional Disruption Event, as applicable (“Notice of Share
Termination”); provided that if Party B does not validly request
Party A to satisfy its Payment Obligation by the Share Termination
Alternative, Party A shall have the right, in its sole discretion, to
satisfy its Payment Obligation by the Share Termination Alternative,
notwithstanding Party B’s election to the contrary. Upon Notice of
Share Termination the following provisions shall apply:
	    
	 	 
	   Share Termination Alternative:

	 	Applicable and means that Party A shall deliver to Party B the Share
Termination Delivery Property on the date when the Payment Obligation
would otherwise be due pursuant to Section 12.7 or 12.9 of the Equity
Definitions or Section 6(d)(ii) and 6(e) of the Agreement, as
applicable, or such later date as the Calculation Agent may
reasonably determine (the “Share Termination Payment Date”), to
properly effect such settlement in satisfaction of the Payment
Obligation.
	    
	 	 
	   Share Termination Delivery
Property:

	 	A number of Share Termination Delivery Units, as calculated by the
Calculation Agent, equal to the Payment Obligation divided by the
Share Termination Unit Price. The Calculation Agent shall adjust the
Share Termination Delivery Property by replacing any fractional
portion of a security therein with an amount of cash equal to the
value of such fractional security based on the values used to
calculate the Share Termination Unit Price.
	    
	 	 
	   Share Termination Unit Price:

	 	The value to Party A of property contained in one Share Termination
Delivery Unit on the date such Share Termination Delivery Units are
to be delivered as Share Termination Delivery Property, as determined
by Party A in its good faith discretion by commercially reasonable
means.
	    
	 	 
	   Share Termination Delivery Unit:

	 	In the case of a Termination Event, Event of Default, Delisting or
Additional Disruption Event, one Share or, in the case of
Nationalization, Insolvency or Merger Event, 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 Nationalization, Insolvency or Merger Event, as determined by
the Calculation Agent in its good faith discretion by commercially
reasonable means. If a Share Termination Delivery Unit consists of
property other than cash or New Shares and if Party B provides
irrevocable written notice to the Calculation Agent on or prior to
the Merger Date that it elects to have Party A deliver cash, New
Shares or a combination thereof (in such proportion as Party B
designates) in lieu of such other property, the Calculation Agent
will replace such property with cash, New Shares or a combination
thereof as components of a Share Termination Delivery Unit in such
amounts, as determined by the Calculation Agent in its good faith
discretion

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	 	by commercially reasonable means, as shall have a value
equal to the value of the property so replaced. If such
Nationalization, Insolvency or Merger Event 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.
	    
	 	 
	   Other Applicable Provisions:

	 	If the Transaction is to be Share Termination Settled, the provisions
of Sections 9.1(c), 9.8, 9.9, 9.10, 9.11 and 9.12 (each as modified
above) of the Equity Definitions will be applicable, except that all
references in such provisions to “Physically-settled” shall be read
as references to “Share Termination Settled” and all references to
“Shares” shall be read as references to “Share Termination Delivery
Units”. “Share Termination Settled” in relation to the Transaction
means that the Share Termination Alternative set forth above is
applicable to the Transaction.
	    
	 	 
	   Party B Payments in Shares:

	 	If, in respect of the Transaction, an amount is payable by Party B to
Party A as a result of a breach of this Agreement by Party B or
pursuant to “Early Unwind” below (a “Party B Payment Obligation”),
Party B shall have the right, in its sole discretion, to satisfy any
such Party B Payment Obligation by delivery to Party A of a number of
Shares (the “Party B Payment Shares”), as calculated by the
Calculation Agent, equal to the Party B Payment Obligation divided by
the Share Delivery Value (as defined below), on the date when the
Party B Payment Obligation would otherwise be due or as soon
thereafter as is practicable in the reasonable determination of Party
A, by giving irrevocable telephonic notice to Party A (confirmed in
writing within three Currency Business Days) no later than 4:00 p.m.
New York City time on the applicable Early Termination Date or Early
Unwind Date. If a Nationalization, Insolvency or Merger Event has
intervened, the provisions set forth above with respect to Share
Termination Delivery Units deliverable by Party A shall apply,
mutatis mutandis, to any Party B Payment Shares. The provisions set
forth below under “Registration” shall apply to Party B Payment
Shares as if they were Hedge Shares (as defined below) and without
regard to the first sentence thereof or judgment as to whether the
Party B Payment Shares require registration in order to be sold in
the public market.
	    
	 	 
	   Share Delivery Value:

	 	The value to Party A of one Share on the date the Shares are to be
delivered as Share Termination Delivery Property, as determined by
Party A in good faith by commercially reasonable means.
	    
	 	 
	   Payments on Early Termination:

	 	Party A and Party B agree that for the Transaction, for the purposes
of Section 6(e) of the Agreement, Loss and the Second Method will
apply. Notwithstanding anything in the Agreement, in the Definitions
or herein to the contrary, Party B shall have no obligation to make
any delivery or payment to Party A (i) pursuant to Sections 12.7 or
12.9 of the Equity Definitions or (ii) pursuant to Section 6(d)(ii)
of the Agreement, except as a result of a breach by Party B of the
Agreement or this Confirmation or pursuant to “Early Unwind” below.

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13

 

	 	 	 
	   Set-Off and Netting:

	 	Notwithstanding any provision of the Agreement (including without
limitation Section 6(f) thereof) and this Confirmation (including
without limitation this section or any other agreement between the
parties to the contrary), (A) Party B shall not net or set-off its
obligations under the Transaction, if any, against its rights against
Party A under any other transaction or instrument and (B) Party A
shall not net or set-off its obligations under the Transaction, if
any, against its rights against Party B under any other transaction
or instrument.
	    
	 	 
	   Bankruptcy Code Acknowledgments:

	 	The parties agree and
acknowledge that (i) this
Confirmation is of a type set
forth in Section 561(a)(1)–(5)
of the Bankruptcy Code; (ii)
Party A is a “master netting
agreement participant,” a
“financial institution,” a
“financial participant,” a
“forward contract merchant” and
a “swap participant” as defined
in the Bankruptcy Code; (iii)
the remedies provided herein
are the remedies referred to in
Section 561(a), Sections
362(b)(6), (7), (17) and (27),
and Section 362(o) of the
Bankruptcy Code; (iv) all
transfers of cash, securities
or other property under or in
connection with this
Confirmation are “transfers”
made “by or to (or for the
benefit of)” a “master netting
agreement participant,” a
“financial institution,” a
“financial participant,” a
“forward contract merchant” or
a “swap participant” (each as
defined in the Bankruptcy Code)
within the meaning of Sections
546(e), (f), (g) or (j) of the
Bankruptcy Code; and (v) all
obligations under or in
connection with this
Confirmation represent
obligations in respect of
“termination values,” “payment
amounts” or “other transfer
obligations” within the meaning
of Sections 362, 560 and 561 of
the Bankruptcy Code.
	    
	 	 
	   Early Unwind:

	 	In the event the sale of
Convertible Notes (or, in
respect of the Greenshoe
Exercise, the Additional
Convertible Notes) is not
consummated with the initial
purchasers thereof for any
reason by the close of business
in New York on June 22, 2007
(or, in respect of the
Greenshoe Exercise, the third
Clearance System Business Day
following the date of the
Greenshoe Exercise (the
“Additional Closing Date”)) (or
such later date as agreed upon
by the parties) (June 22, 2007
or such later date as agreed
upon being or, in respect of
the Greenshoe Exercise, the
Additional Closing Date, the
“Early Unwind Date”), the
Transaction (or, in respect of
the Greenshoe Exercise, the
Additional Options) shall
automatically terminate (the
“Early Unwind”), on the Early
Unwind Date and (i) the
Transaction (or, in respect of
the Greenshoe Exercise, the
Additional Options) and all of
the respective rights and
obligations of Party A and
Party B under the Transaction
(or, in respect of the
Greenshoe Exercise, the
Additional Options) shall be
cancelled and terminated, (ii)
any payments previously made
hereunder shall be returned to
the person making such payment,
including all payments of
premium (or, in respect of the
Greenshoe Exercise, the
additional Premium) and (iii)
Party B shall purchase from
Party A on the Early Unwind
Date all Shares purchased by
Party A or one or more of its
affiliates and pay to Party A,
other than in cases involving a
breach of the Purchase
Agreement by any of the initial
purchasers, an amount in cash
equal to the aggregate amount
of reasonable out-of-pocket
costs and

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	 	expenses actually
incurred by Party A relating to
the unwinding of Party A’s
hedging activities in respect
of the Transaction (or, in
respect of the Greenshoe
Exercise, the Additional
Options) (including any loss or
cost incurred as a result of
its terminating, liquidating,
obtaining or reestablishing any
hedge or related trading
position). Following such
termination, cancellation and
payment, each party shall be
released and discharged by the
other party from and agrees not
to make any claim against the
other party with respect to any
obligations or liabilities of
the other party arising out of
and to be performed in
connection with the Transaction
either prior to or after the
Early Unwind Date. Party A and
Party B represent and
acknowledge to the other that
upon an Early Unwind, all
obligations with respect to the
Transaction shall be deemed
fully and finally discharged.
	    
	 	 
	   Right to Extend:

	 	Party A may extend, for as long as it is reasonably necessary any
Settlement Date or any other date of delivery by Party A, with
respect to some or all of the Options hereunder, if Party A
determines, in its reasonable good faith discretion, that such
extension is reasonably necessary or advisable in light of market or
liquidity conditions in the cash market or stock loan market or to
enable Party A to effect purchases of Shares in connection with the
related settlement or delivery hereunder in a manner that would, if
Party A were Party B or an affiliated purchaser of Party B, be in
compliance with applicable legal and regulatory requirements.
	    
	 	 
	   Repurchase Notices:

	 	Party B shall, on any day on which Party B effects any repurchase of
Shares, promptly give Party A a written notice of such repurchase (a
“Repurchase Notice”) on such day if following such repurchase, the
Options Equity Percentage as determined on such day is (i) greater
than 7.5% and (ii) greater by 0.5% than the Options Equity Percentage
included in the immediately preceding Repurchase Notice (or, in the
case of the first such Repurchase Notice, greater than the Options
Equity Percentage as of the date hereof). The “Options Equity
Percentage” as of any day is the fraction (A) the numerator of which
is the Number of Shares and (B) the denominator of which is the
number of Shares outstanding on such day. In the event that Party B
fails to provide Party A with a Repurchase Notice in the manner
specified in this section, then Party B agrees to indemnify and hold
harmless Party A, its affiliates and their respective directors,
officers, employees, agents and controlling persons (Party A and each
such person being an “Indemnified Party”) from and against any and
all actual losses (including actual losses relating to Party A’s
hedging activities as a consequence of becoming a Section 16
“insider” under the Exchange Act, including without limitation, any
forbearance from hedging activities or cessation of hedging
activities and any actual losses in connection therewith with respect
to the Transaction), claims, damages and liabilities (or actions in
respect thereof), joint or several, to which such Indemnified Party
is subject to under applicable securities laws, including without
limitation, Section 16 of the Exchange Act, relating to or arising
out of such failure. If any suit, action, proceeding (including any
governmental or regulatory investigation),

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15

 

	 	 	 
	    

	 	claim or demand shall be
brought or asserted against the Indemnified Person in connection with
the matters specified in the preceding sentence, such Indemnified
Person shall promptly notify Party B in writing, and Party B, upon
request of the Indemnified Person, shall retain counsel reasonably
satisfactory to the Indemnified Person (any consent in respect of
which shall not be unreasonably withheld or delayed by the
Indemnified Person) to represent the Indemnified Person and any
others Party B may designate in such proceeding and shall pay the
reasonable out-of-pocket fees and expenses of such counsel related to
such proceeding. Party B 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,
Party B agrees to indemnify any Indemnified Person from and against
any loss or liability by reason of such settlement or judgment. If
for any reason the foregoing indemnification is unavailable to any
Indemnified Party or insufficient to hold harmless any Indemnified
Party, then Party B shall contribute, to the maximum extent permitted
by law, to the amount paid or payable by the Indemnified Party as a
result of such loss, claim, damage or liability. In addition, Party
B will reimburse any Indemnified Party for all reasonable
out-of-pocket expenses (including reasonable counsel fees and
expenses) as they are incurred and paid (after notice that includes
invoices detailing such reasonable out-of-pocket expenses to Party B)
in connection with the investigation of, preparation for or defense
or settlement of any pending or threatened claim or any action, suit
or proceeding arising therefrom, whether or not such Indemnified
Party is a party thereto and whether or not such claim, action, suit
or proceeding is initiated or brought by or on behalf of Party B. The
indemnity and contribution agreements contained in this paragraph
shall remain operative and in full force and effect regardless of the
completion or termination of the Transaction and any assignment of
the Transaction made pursuant to this Confirmation or the Agreement
shall inure to the benefit of any permitted assignee of Party A that
is an affiliate of Party A.
	    
	 	 
	   Transfer and Assignment:

	 	Neither party may transfer any of its rights or obligations under the
Transaction without the prior written consent of the non-transferring
party; provided that Party A may transfer or assign without any
consent of Party B its rights and obligations hereunder, in whole or
in part, to any affiliate of Party A, whose obligations hereunder are
guaranteed by Lehman Brothers Holdings Inc.; provided further that in
connection with any assignment or transfer pursuant to the first
proviso above, the guarantee of any guarantor of the relevant
transferee’s obligations under the Transaction shall constitute a
Credit Support Document under the Agreement. If at any time at which
the Equity Percentage exceeds 8.0% (an “Excess Ownership Position”),
if Party A, in its discretion, is unable to effect a transfer or
assignment to a third party within one Trading Day or such other
longer time period reasonably acceptable to Party A in accordance
with the requirements set forth above after using its commercially
reasonable efforts on pricing terms reasonably acceptable to Party A
such that an Excess Ownership Position no longer exists, Party A

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16

 

	 	 	 
	    

	 	may designate any Scheduled Trading Day as an Early Termination Date with
respect to a portion (the “Terminated Portion”) of the Transaction,
such that such Excess Ownership Position no longer exists. In the
event that Party A 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 “Alternative
Calculations and Payment on Early Termination and on Certain
Extraordinary Events” above 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) Party B 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 “Equity Percentage” as of any day is the fraction,
expressed as a percentage, (A) the numerator of which is the number
of Shares that Party A and any of its affiliates subject to
aggregation with Party A, for purposes of the “beneficial ownership”
test under Section 13 of the Exchange Act, beneficially own (within
the meaning of Section 13 of the Exchange Act) on such day and (B)
the denominator of which is the number of Shares outstanding on such
day. Notwithstanding any other provision in this Confirmation to the
contrary requiring or allowing Party A to purchase, sell, receive or
deliver any shares or other securities to or from Party B, Party A
may designate any of its affiliates to purchase, sell, receive or
deliver such shares or other securities and otherwise to perform
Party A’s obligations in respect of this Transaction and any such
designee may assume such obligations. Party A shall be discharged of
its obligations to Party B to the extent of any such performance.
	    
	 	 
	   Staggered Settlement:

	 	If the Staggered Settlement Equity Percentage as of any Exchange
Business Day during the relevant Conversion Period is greater than
4.5%, Party A may, by notice to Party B prior to the related
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, Party A will specify to Party B the related
Staggered Settlement Dates (which shall be on or prior to such
Nominal Settlement Date) 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 Party A will deliver to
Party B hereunder on all such Staggered Settlement Dates and delivery
times will equal the number of Shares that Party A would otherwise be
required to deliver on such Nominal Settlement Date.
	    
	 	 
	    

	 	The “Staggered Settlement Equity Percentage” as of any day is the
fraction, expressed as a percentage, (A) the numerator of which is
the sum of (i) the number of Shares “beneficially owned” (within the
meaning of Section 13 of the Exchange Act) on such day by Party A,
any of its affiliates subject to aggregation with Party A for the
purposes of the “beneficial ownership” test under Section 13 of

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17

 

	 	 	 
	    

	 	the Exchange Act and all persons who may form a “group” (within the
meaning of Rule 13d-5(b)(1) under the Exchange Act) with Party A with
respect to “beneficial ownership” of any Shares, plus (ii) the Number
of Shares and (B) the denominator of which is the number of Shares
outstanding on such day.
	    
	 	 
	   Registration:

	 	Party A intends to conduct its hedging activities in connection with
the Transaction in a manner that it believes, based on its good
faith, reasonable judgment, will not require Party B to register
under the Securities Act or any state securities laws the public
resale of Shares acquired by Party A for the purpose of hedging its
obligations pursuant to the Transaction. Nevertheless, Party B
hereby agrees that if, in the good faith reasonable judgment of Party
A based on advice of counsel, the Shares (“Hedge Shares”) acquired by
Party A for the purpose of hedging its obligations pursuant to the
Transaction cannot be sold in the public market by Party A without
registration under the Securities Act, Party B shall, at its
election, either (i) in order to allow Party A to sell the Hedge
Shares in a registered offering, make available to Party A an
effective registration statement under the Securities Act and enter
into an agreement, in form and substance satisfactory to Party A,
substantially in the form of a registration agreement; provided,
however, that if Party A, in its sole reasonable discretion, is not
satisfied with access to due diligence materials, the results of its
due diligence investigation, or the procedures and documentation for
the registered offering referred to above, then clause (ii) or clause
(iii) of this section shall apply at the election of Party B, (ii) in
order to allow Party A to sell the Hedge Shares in a private
placement, enter into and comply with a private placement agreement
substantially similar to private placement purchase agreements
customary for private placements of equity securities, in form and
substance satisfactory to Party A (in which case, the Calculation
Agent shall make any adjustments to the terms of the Transaction that
are necessary, in its commercially reasonable judgment, to compensate
Party A for any discount from the closing public market price of the
Shares on the date that the Hedge Shares are sold in the private
placement), or (iii) purchase the Hedge Shares from Party A at the
Volume Weighted Average Price on such Trading Days, and in the
amounts, requested by Party A.
	    
	 	 
	   ISDA Master Agreement Elections:

	 	(i) “Credit Support Document” shall mean (x) in relation to Party B,
not applicable, and (y) in relation to Party A, the Guarantee of
Lehman Brothers Holdings Inc., a form of which is attached hereto as
Annex A.
	    
	 	 
	    

	 	(ii) “Credit Support Provider” shall mean (x) in relation to Party B,
none, and (y) in relation to Party A, Lehman Brothers Holdings Inc.
	    
	 	 
	   Regulatory Provisions:

	 	(a) Party B represents and warrants that it has received and read and
understands the Notice of Regulatory Treatment and the OTC Option
Risk Disclosure Statement.
	    
	 	 
	    

	 	(b) The Agent will furnish Party B upon written request a statement
as to the source and amount of any remuneration received or to be
received by the Agent in connection with the Transaction evidenced
hereby.

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18

 

	 	 	 
	   Tax:

	 	Notwithstanding any other provision in this Confirmation, Party A
hereby confirms that no participant in this transaction shall be
limited from disclosing the U.S. tax treatment or U.S. tax structure
of the transaction.
	    
	 	 
	   Collateral:

	 	None.
	    
	 	 
	   Amendment of 6(d)(ii).

	 	Section 6(d)(ii) of the Agreement is modified by deleting the words
“on the day” in the second line thereof and substituting therefore
“on the day that is three Local Business Days after the day”.
	    
	 	 
	   Governing Law:

	 	The laws of the State of New York (without reference to choice of law
doctrine).
	    
	 	 
	   Termination Currency:

	 	USD.
	    
	 	 
	   Office:

	 	For the purposes of the Transaction, Party A is not a Multibranch
Party, and Party B is not a Multibranch Party.
	    
	 	 
	   Waiver of Jury Trial:

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

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19

 

THE SECURITIES REPRESENTED BY THIS CONFIRMATION HAVE BEEN ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN
REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933 OR ANY OTHER UNITED STATES FEDERAL OR
STATE SECURITIES LAWS; SUCH SECURITIES MAY NOT BE SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF
APPROPRIATE REGISTRATION UNDER SUCH SECURITIES LAWS OR EXCEPT IN A TRANSACTION EXEMPT FROM OR NOT
SUBJECT TO THE REGISTRATION REQUIREMENTS OF SUCH SECURITIES LAWS.

Please confirm your agreement with the foregoing by executing this Confirmation and returning such
Confirmation, in its entirety, to us at facsimile number 646-885-9546 (United States of America),
Attention: Documentation.

	 	 	 	 	 	 	 	 	 
	Yours sincerely,	 	Accepted and agreed to:	 	 
	    
	 	 	 	 	 	 	 	 
	Lehman Brothers OTC Derivatives Inc.	 	VeriFone Holdings, Inc.	 	 
	    
	 	 	 	 	 	 	 	 
	By: 

Name:

	 	/s/ Anatoly Kozlov
 

Anatoly Kozlov
	 	By:

Name:
	 	/s/ Barry Zwarenstein
 

Barry Zwarenstein
	 	 
	Title:

	 	Authorized Signatory
	 	Title:
	 	Executive Vice President and Chief
Financial Officer	 	 

Execution time will be furnished upon Party B’s written request.

Global Deal ID: 3000787

20

 

ANNEX A

GUARANTEE OF LEHMAN BROTHERS HOLDINGS INC.

     LEHMAN BROTHERS OTC DERIVATIVES INC. (“Party A”) and VERIFONE HOLDINGS, INC. (“Party B”) have
entered into a Confirmation dated as of June 18, 2007 (the “Confirmation”), pursuant to
which Party A and Party B have entered into a convertible bond hedge transaction (the
“Transaction”), which Confirmation supplements, forms part of, and will be read and construed as
one with, the ISDA Master Agreement referred to therein (collectively referred to as the
“Agreement”). This Guarantee is a Credit Support Document as contemplated in the Agreement. For
value received, and in consideration of the financial accommodation accorded to Party A by Party B
under the Agreement, LEHMAN BROTHERS HOLDINGS INC., a corporation organized and existing under the
laws of the State of Delaware (“Guarantor”), hereby agrees to the following:

     (a) Guarantor hereby unconditionally guarantees to Party B the due and punctual
payment of all amounts payable by Party A under each Transaction when and as Party A’s obligations
thereunder shall become due and payable in accordance with the terms of the Agreement. In case of
the failure of Party A to pay punctually any such amounts, Guarantor hereby agrees, upon written
demand by Party B, to pay or cause to be paid any such amounts punctually when and as the same
shall become due and payable.

     (b) Guarantor hereby agrees that its obligations under this Guarantee constitute a guarantee
of payment when due and not of collection.

     (c) Guarantor hereby agrees that its obligations under this Guarantee shall be
unconditional, irrespective of the validity, regularity or enforceability of the Agreement against
Party A (other than as a result of the unenforceability thereof against Party B), the absence of
any action to enforce Party A’s obligations under the Agreement, any waiver or consent by Party B
with respect to any provisions thereof, the entry by Party A and Party B into any amendments to the
Agreement, additional Transactions under the Agreement or any other circumstance which might
otherwise constitute a legal or equitable discharge or defense of a guarantor (excluding the
defense of payment or statute of limitations, neither of which is waived) provided, however, that
Guarantor shall be entitled to exercise any right that Party A could have exercised under the
Agreement to cure any default in respect of its obligations under the Agreement or to setoff,
counterclaim or withhold payment in respect of any Event of Default or Potential Event of Default
in respect of Party B or any Affiliate, but only to the extent such right is provided to Party A
under the Agreement. The Guarantor acknowledges that Party A and Party B may from time to time
enter into one or more Transactions pursuant to the Agreement and agrees that the obligations of
the Guarantor under this Guarantee will upon the execution of any such Transaction by Party A and
Party B extend to all such Transactions without the taking of further action by the Guarantor.

     (d) This Guarantee shall remain in full force and effect until such time as Party B shall
receive written notice of termination. Termination of this Guarantee shall not affect Guarantor’s
liability hereunder as to obligations incurred or arising out of Transactions entered into prior to
the termination hereof.

     (e) Guarantor further agrees that this Guarantee shall continue to be effective or
be reinstated, as the case may be, if at any time, payment, or any part thereof, of any obligation
or interest thereon is rescinded or must otherwise be restored by Party B upon an Event of Default
as set forth in Section 5(a)(vii) of the Master Agreement affecting Party A or Guarantor.

     (f) Guarantor hereby waives (i) promptness, diligence, presentment, demand of
payment, protest, order and, except as set forth in paragraph (a) hereof, notice of any kind in
connection with the Agreement and this Guarantee, or (ii) any requirement that Party B exhaust any
right to take any action against Party A or any other person prior to or contemporaneously with
proceeding to exercise any right against Guarantor under this Guarantee.

Global Deal ID: 3000787

21

 

     This Guarantee shall be governed by and construed in accordance with the laws of the State of
New York, without reference to choice of law doctrine. All capitalized terms not defined in this
Guarantee, but defined in the Agreement, shall have the meanings assigned thereto in the Agreement.

     IN WITNESS WHEREOF, Guarantor has caused this Guarantee to be executed in its corporate name
by its duly authorized officer as of the date of the Agreement.

	 	 	 	 	 
	LEHMAN BROTHERS HOLDINGS INC.	 	 
	    
	 	 	 	 
	BY:

	 	 
 

	 	 
	NAME:

	 	 
 

	 	 
	TITLE:

	 	 
 

	 	 
	DATE:

	 	 
 

	 	 

Global Deal ID: 3000787

22exv10w2

 

Exhibit 10.2

JPMorgan Chase Bank, National Association

London Branch

P.O. Box 161

60 Victoria Embankment

London EC4Y 0JP

England

June 18, 2007                    

			
	To:	 	VeriFone Holdings, Inc.

2099 Gateway Place, Suite 600

San Jose, CA 95110

Attention: Barry Zwarenstein, Executive Vice President and Chief Financial Officer

Re: Call Option Transaction

Dear Sir or Madam:

The purpose of this communication (this “Confirmation”) is to confirm the terms and conditions of
the above-referenced transaction (the “Transaction”) entered into between JPMorgan Chase Bank,
National Association, London Branch (“Party A”) and VeriFone Holdings, Inc. (“Party B”) on the
Trade Date specified below. This Confirmation constitutes a “Confirmation” as referred to in the
ISDA Master Agreement specified below.

This Confirmation evidences a complete and binding agreement between Party A and Party B as to the
terms of the Transaction to which this Confirmation relates. This Confirmation supplements, forms
part of, and is subject to an agreement in the form of the 1992 ISDA Master Agreement
(Multicurrency—Cross Border) (the “Agreement”) as if we had executed an agreement in such form (but
without any Schedule except for the elections set forth herein) on the Trade Date specified below.
In the event of any inconsistency between the provisions of the Agreement and this Confirmation,
this Confirmation will prevail for the purpose of the Transaction. For the avoidance of doubt, the
Transaction shall be the only transaction subject to and governed by the Agreement.

The definitions and provisions contained in the 2002 ISDA Equity Derivatives Definitions (the
“Equity Definitions”) and the 2000 ISDA Definitions (the “Swap Definitions”, and, together with the
Equity Definitions, the “Definitions”), in each case as published by the International Swaps and
Derivatives Association, Inc., are incorporated into this Confirmation. References herein to
“Transaction” shall be deemed references to (i) “Swap Transaction” for purposes of the Swap
Definitions and (ii) Share Option Transaction for purposes of the Equity Definitions. In the event
of any inconsistency between the Equity Definitions and the Swap Definitions, the Equity
Definitions will govern. Certain defined terms used herein have the meanings assigned to them in
the Indenture to be dated on or about June 22, 2007 between Party B and U.S. Bank National
Association, as trustee (as may be amended or supplemented from time to time, but only if such
amendment or supplement is consented to by Party A in writing, the “Indenture”) relating to USD 275
million principal amount of 1.375% Senior Convertible Notes due 2012 (the “Convertible Notes”)
issued by Party B. In the event of any inconsistency between either set of Definitions and this
Confirmation, or between the Indenture and this Confirmation, this Confirmation will govern. The
parties further acknowledge that references herein to sections of the Indenture are based on the
draft of the

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

1

 

Indenture most recently reviewed by the parties at the time of this Confirmation. If any relevant
sections of the Indenture are changed, added or renumbered following execution of this
Confirmation, the parties will amend this Confirmation in good faith to preserve the economic
intent of the parties. For the avoidance of doubt, (i) the Indenture may be amended or supplemented
without the consent of Party A and (ii) references to the Indenture herein are references to the
Indenture as in effect on the date of its execution and if the Indenture is amended following its
execution, any such amendment will be disregarded for purposes of this Confirmation unless the
parties agree otherwise in writing.

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

	 	 	 	 	 
	General
Terms:
	 	 	 	 
	 
	 	 	 	 
	Agent:

	 	Each party agrees and
acknowledges that (i) J.P.
Morgan Securities Inc., an
affiliate of Party A (“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.

	 
	 	 	 	 
	Trade Date:

	 	June 18, 2007

	 
	 	 	 	 
	Effective Date:

	 	June 22, 2007

	 
	 	 	 	 
	Option Style:

	 	Modified American, as described under “Procedures for Exercise” below.

	 
	 	 	 	 
	Option Type:

	 	Call

	 
	 	 	 	 
	Seller:

	 	Party A

	 
	 	 	 	 
	Buyer:

	 	Party B

	 
	 	 	 	 
	Shares:

	 	The common stock of Party B, par value USD 0.01 per share (Ticker
Symbol: PAY).

	 
	 	 	 	 
	Number of Options:

	 	The number of Convertible Notes in denominations of USD 1,000
principal amount issued by Party B on the closing date of initial
issuance of the Convertible Notes multiplied by the Applicable
Percentage; provided that the Number of Options shall be
automatically increased as of the date of exercise (the “Greenshoe
Exercise”) by Lehman Brothers Inc. and JPMSI, as the Initial
Purchasers (as defined in the Purchase Agreement), of their option
pursuant to Section 3(a) of the Purchase Agreement dated as of June
18, 2007 between Party B, Lehman Brothers Inc. and JPMSI, as the
Initial Purchasers thereto (the “Purchase Agreement”) by the number
of Convertible Notes in denominations of USD 1,000 principal amount
issued pursuant to such exercise (such Convertible Notes, the
“Additional Convertible Notes”) multiplied by the Applicable
Percentage (the “Additional Options”). Such increase in the Number of
Options shall be on substantially identical terms, including pricing,
as initially set forth in this Confirmation.

2

 

	 	 	 	 	 
	Option Entitlement:

	 	As of any date, a number of Shares per Option equal to the
“Conversion Rate” (as defined in the Indenture), but without regard
to any adjustments to the “Conversion Rate” pursuant to Sections
10.04(b) and 10.05(i) of the Indenture and assuming that Party B did
not make the election set forth in Section 10.12 of the Indenture in
respect of a “Public Acquirer Change of Control” thereunder.

	 
	 	 	 	 
	Number of Shares:

	 	The product of the Number of Options and the Option Entitlement.

	 
	 	 	 	 
	Applicable Percentage:

	 	50%
	 
	 	 	 	 
	Strike Price:

	 	As of any date, USD 1,000 divided by the Option Entitlement.

	 
	 	 	 	 
	Premium:

	 	USD 34,885,000 (Premium Per Option USD 253.71); provided that if the
Number of Options is increased pursuant to the proviso to the
definition of “Number of Options” above, an additional Premium equal
to the product of the number of Additional Options and the Premium
Per Option shall be paid on the Additional Premium Payment Date.

	 
	 	 	 	 
	Premium Payment Date:

	 	The Effective Date.

	 
	 	 	 	 
	Additional Premium Payment Date:

	 	The closing date for the purchase and sale of Additional Convertible
Notes.

	 
	 	 	 	 
	Exchange:

	 	New York Stock Exchange

	 
	 	 	 	 
	Related Exchange(s):

	 	All Exchanges

	 
	 	 	 	 
	Procedures
for Exercise:
	 	 	 	 
	 
	 	 	 	 
	Exercise Date:

	 	Each Conversion Date.

	 
	 	 	 	 
	Expiration Time:

	 	The Valuation Time

	 
	 	 	 	 
	Expiration Date:

	 	The earlier of (i) the last day on which any Convertible Notes remain
outstanding and (ii) the Scheduled Trading Day immediately preceding
the Maturity Date (as such term is defined in the Indenture).

	 
	 	 	 	 
	Conversion Date:

	 	Each “Conversion Date” as defined in the Indenture.

	 
	 	 	 	 
	Required Exercise on Conversion 

Dates:

	 	On each Conversion Date, a number of Options equal to the number of
Convertible Notes in denominations of USD 1,000 principal amount
submitted for conversion on such Conversion Date in accordance with
the terms of the Indenture shall be exercised by Party B, subject to
“Notice of Exercise” below.

	 
	 	 	 	 
	Automatic Exercise:

	 	Applicable.

	 
	 	 	 	 
	Multiple Exercise:

	 	Applicable.

	 
	 	 	 	 
	Minimum Number of Options:

	 	One.

	 
	 	 	 	 
	Maximum Number of Options:

	 	Number of Options.

	 
	 	 	 	 
	Scheduled Trading Day:

	 	As defined in the Indenture.

	 
	 	 	 	 
	Notice of Exercise:

	 	Notwithstanding anything to the contrary in the Equity Definitions,
in order to exercise any Options on any Exercise Date, Party B must
notify Party A (in writing, which can be by e-mail or facsimile)

3

 

	 	 	 	 	 
	 

	 	before 5:00 PM New York City time at least one Scheduled Trading Day
prior to the first Scheduled Trading Day of the applicable
“Conversion Period” (as defined in the Indenture) for the Convertible
Notes being converted on that Exercise Date (the “Notice Deadline”)
of (i) the number of Options being exercised on that Exercise Date
and (ii) the scheduled commencement date of the Conversion Period and
settlement date under the Indenture for the Convertible Notes
converted on the Conversion Date corresponding to such Exercise Date;
provided, however, that with respect to Convertible Notes converted
during the period beginning on, and including, the 25th
Scheduled Trading Day prior to the Maturity Date (as such term is
defined in the Indenture) and ending on the Scheduled Trading Day
immediately preceding the Maturity Date (the “Final Conversion
Period”), the Notice Deadline shall be 5:00 PM New York City time on
the Scheduled Trading Day immediately preceding the Maturity Date.
For the avoidance of doubt, if Party B fails to give such notice when
due in respect of any exercise of Options hereunder, Party A’s
obligation to make any payment or delivery in respect of such
exercise shall be permanently extinguished, and late notice shall not
cure such failure; provided that, notwithstanding the foregoing, such
notice (and the related automatic exercise of Options) shall be
effective if given after the relevant Notice Deadline but prior to
5:00 PM New York City time, on the fifth Exchange Business Day of the
relevant Conversion Period, in which event the Calculation Agent
shall have the right to adjust the Delivery Obligation (as defined
below) as appropriate to reflect the additional actual out-of-pocket
costs (including, but not limited to, losses actually incurred as a
result of hedging mismatches and actual market losses) and reasonable
out-of-pocket expenses actually incurred by Party A or any of its
affiliates 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 applicable Notice Deadline;
provided further that the adjusted Delivery Obligation described in
the preceding proviso can never be less than zero and can never
require any payment by Party B.

	 
	 	 	 	 
	 

	 	For the purposes of this Confirmation, (1) Party B has authorized U.S
Bank National Association or any successor trustee appointed under
the Indenture (as notified in writing by Party B to Party A) (an
“Authorized Person”) to deliver any Notice of Exercise hereunder on
its behalf, and such Notice of Exercise will be valid as if delivered
by Party B and (2) for the avoidance of doubt, Party B (or an
Authorized Person on its behalf) may, by written notice given in the
manner required for a Notice of Exercise, modify or revoke any
Notice of Exercise previously delivered hereunder at any time prior
to the Notice Deadline applicable to such Notice of Exercise.

	 
	 	 	 	 
	Party A’s Telephone Number and
Telex and/or Facsimile Number and
Contact Details for purposes of
Notice:

	 	JPMorgan Chase Bank, National Association

277 Park Avenue, 11th Floor

New York, NY 10172

Attention: Eric Stefanik

Title: Operations Analyst

EDG Corporate Marketing

4

 

	 	 	 	 	 
	 

	 	Telephone No: (212) 622-5814

Facsimile No: (212) 622-8534

E-mail: To be provided by Party A

	Settlement
Terms:
	 	 	 	 
	 
	 	 	 	 
	Delivery Obligation:

	 	In respect of an Exercise Date occurring on a Conversion Date, Party
A will deliver to Party B on the related Settlement Date a number of
Shares equal to the product of the Applicable Percentage and the
aggregate number of Shares, if any (and cash in lieu of fractional
Shares, if any) that Party B is obligated to deliver to the holder(s)
of the Convertible Notes converted on such Conversion Date pursuant
to Section 10.11 of the Indenture; provided that such obligation
shall be determined excluding any Shares (and cash in lieu of
fractional Shares, if any) that Party B is obligated to deliver to
holder(s) of the Convertible Notes as a result of any adjustments to
the “Conversion Rate” pursuant to Sections 10.04(b) or 10.05(i) of
the Indenture and assuming that Party B did not make the election set
forth in Section 10.12 of the Indenture in respect of a “Public
Acquirer Change of Control” thereunder; provided further that if the
Volume Weighted Average Price (as defined in the Indenture) is not
available on the Bloomberg page, the Calculation Agent shall
determine Volume Weighted Average Price for purposes of calculating
the Delivery Obligation in a commercially reasonable manner based on
a volume weighted average price methodology.

	 
	 	 	 	 
	 

	 	To the extent Party A is required to deliver Shares hereunder, the
provisions of Sections 9.1(c), 9.8, 9.9, 9.10, 9.11 and 9.12 of the
Equity Definitions will be applicable, except that all references in
such provisions to “Physically-settled” shall be read as references
to “Net Share Settled.” “Net Share Settled” in relation to any
Option means that Party A is obligated to deliver Shares hereunder.

	 
	 	 	 	 
	 

	 	Section 9.11 of the Equity Definitions shall be amended by excluding
any representations therein relating to restrictions, obligations,
limitations or requirements under applicable securities laws as a
result of the fact that Party B is the issuer of the Shares.

	 
	 	 	 	 
	Notice of Delivery Obligation:

	 	No later than 5:00 PM New York City time on the Scheduled Trading Day
immediately following the last day of the relevant Conversion
Period), Party B shall give Party A notice of the final number of
Shares (and cash in lieu of fractional Shares, if any) comprising the
relevant Delivery Obligation; provided that, with respect to any
Exercise Date occurring during the Final Conversion Period, Party B
may provide Party A with a single notice of the aggregate number of
Shares (and cash in lieu of fractional Shares, if any) comprising the
Delivery Obligations for all Exercise Dates occurring during such
period no later than 5:00 PM New York City time on the Scheduled
Trading Day immediately preceding the Maturity Date.

5

 

	 	 	 	 	 
	Settlement Date:

	 	In respect of an Exercise Date occurring on a Conversion Date, the
settlement date for the Shares to be delivered under the related
Convertible Notes under the terms of the Indenture; provided that the
Settlement Date will not be prior to the Scheduled Trading Day
immediately following the date on which Party B gives notice to Party
A of such Settlement Date.

	 
	 	 	 	 
	Share
Adjustments:
	 	 	 	 
	 
	 	 	 	 
	Method of Adjustment:

	 	Convertible Adjustment

	 
	 	 	 	 
	Convertible Adjustment:

	 	The Calculation Agent will adjust the Strike Price, the Number of
Options, the Option Entitlement, the Delivery Obligation, the nature
of the Shares and/or any other variable relevant to the exercise,
valuation or settlement of the Transaction, as appropriate, to
reflect any Conversion Change to the extent an analogous adjustment
is made under the Indenture; provided that the Calculation Agent
shall not be required to make such adjustment until Party A has
received from Party B a notice of such Conversion Change; provided
further that the Calculation Agent, shall, promptly after receiving
such notice, notify Party A and Party B of such adjustments.

	 
	 	 	 	 
	 

	 	“Conversion Change” means any adjustment by Party B to the
“Conversion Price” (as defined in the Indenture), the “Conversion
Rate” and/or the nature of the Shares under the Convertible Notes
pursuant to the terms of the Indenture, other than an increase in the
“Conversion Rate” pursuant to Sections 10.04(b) or 10.05(i) of the
Indenture or a change to the Delivery Obligation as the result of
Party B’s election under Section 10.12 of the Indenture in respect of
a “Public Acquirer Change of Control.” Party B agrees that it will
notify Party A prior to the effectiveness of any Conversion Change
and, to the extent such Conversion Change requires an exercise of
discretion by Party B under the terms of the Indenture, it shall
consult with the Calculation Agent in order to achieve a commercially
reasonable adjustment, determination or calculation. For the
avoidance of doubt, Party B’s obligation to consult with Party A
described in the preceding sentence shall not be a condition to Party
B’s making of any Conversion Change pursuant to the Indenture.

	 
	 	 	 	 
	Extraordinary
Events:
	 	 	 	 
	 
	 	 	 	 
	Merger Event:

	 	Notwithstanding Section 12.1(b) of the Equity Definitions, a “Merger
Event” means the occurrence of any event or condition set forth in
Section 10.06 of the Indenture.

	 
	 	 	 	 
	Consequences of Merger Events:

	 	Notwithstanding Section 12.2 and Section 12.3 of the Equity
Definitions, upon the occurrence of a Merger Event, the Calculation
Agent shall make a corresponding adjustment in respect of any
adjustment made pursuant to the Indenture to any one or more of the
nature of the Shares, Strike Price, Number of Options, the Option
Entitlement, the Delivery Obligation and any other variable relevant
to the exercise, settlement or payment for the Transaction; provided,
however, that such adjustment shall be made without regard to any
adjustment to the Conversion Rate for the issuance of additional

6

 

	 	 	 	 	 
	 

	 	shares as set forth in Sections 10.04(b) or 10.05(i) of the Indenture
and assuming that Party B did not make the election set forth in
Section 10.12 of the Indenture in respect of a “Public Acquirer
Change of Control” thereunder; provided further that if, with respect
to a Merger Event, the consideration for the Shares includes (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,” Cancellation and Payment shall
apply.

	 
	 	 	 	 
	Composition of Combined
Consideration:

	 	Not Applicable

	 
	 	 	 	 
	Notice of Merger Consideration and
Consequences:

	 	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), Party B shall reasonably promptly (but in any event prior
to such Merger Date) notify the Calculation Agent of (i) 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 and (ii) the
adjustment made under the Indenture in respect of such Merger Event.

	 
	 	 	 	 
	Nationalization, Insolvency or 

Delisting:

	 	Cancellation and Payment (Calculation Agent Determination). For the
avoidance of doubt, the occurrence of any event that is a Merger
Event and would also constitute a Delisting shall have the
consequences specified for the relevant Merger Event.

	 
	 	 	 	 
	Delisting:

	 	The definition of “Delisting” in Section 12.6(a)(iii) of the Equity
Definitions shall be deleted in its entirety and replaced with the
following: “Delisting” means that the Exchange announces that
pursuant to the rules of such Exchange, the Shares cease (or will,
subject to no further conditions, cease) to be listed, traded or
publicly quoted on the Exchange for any reason (other than a Merger
Event) and are not immediately re-listed, re-traded or re-quoted on
the New York Stock Exchange, the American Stock Exchange, the NASDAQ
Global Select Market, the NASDAQ Global Market (or each of their
respective successors) or any other market agreed to in writing by
the parties; if the Shares are immediately re-listed, re-traded or
re-quoted on any such exchange or quotation system, such exchange or
quotation system shall thereafter be deemed to be the Exchange.”

	 
	 	 	 	 
	Additional Termination Event:

	 	The occurrence of any of (i) a Repayment Event or (ii) an “Event of
Default” with respect to Party B under the terms of the Convertible
Notes as set forth in Section 6.01 of the Indenture, which results in
principal and interest related to the Convertible Notes being
declared immediately due and payable pursuant to the terms of the
Indenture shall be an Additional Termination Event with respect to
which (1) the Transaction is the sole Affected Transaction and (2)
Party B is the sole Affected Party; provided that in the case of a
Repayment Event the Transaction shall be subject to termination only
in respect

7

 

	 	 	 	 	 
	 

	 	of the number of Convertible Notes that cease to be
outstanding in connection with or as a result of such Repayment
Event.

	 
	 	 	 	 
	 

	 	For the avoidance of doubt, unless the parties agree otherwise in
writing, each Amendment Event, if any, shall be disregarded for the
purposes of determining the obligations of the parties hereunder,
including the obligations of Party A to deliver Shares.

“Amendment Event” means that Party B amends, modifies, supplements or
obtains a waiver with respect to (i) any term of the Indenture or the
Convertible Notes governing the principal amount, coupon, maturity,
repurchase obligation of Party B or redemption right of Party B, or
any term relating to conversion of the Convertible Notes (including
changes to the conversion price, conversion settlement dates or
conversion conditions), or (ii) any term that would require consent
of the holders of not less than 100% of the principal amount of the
Convertible Notes to amend, in each case without the written consent
of Party A.

“Repayment Event” means that (A) any Convertible Notes are
repurchased (whether in connection with or as a result of a change of
control, howsoever defined, or for any other reason) by Party B or
any of its subsidiaries, (B) any Convertible Notes are delivered to
Party B in exchange for delivery of any property or assets of Party B
or any of its subsidiaries (howsoever described), (C) any principal
of any of the Convertible Notes is repaid prior to the final maturity
date of the Convertible Notes (whether following acceleration of the
Convertible Notes or otherwise), or (D) any Convertible Notes are
exchanged by or for the benefit of the holders thereof for any other
securities of Party B or any of its affiliates (or any other
property, or any combination thereof) pursuant to any exchange offer
or similar transaction; provided that, in the case of clause (B) and
clause (D), conversions of the Convertible Notes pursuant to the
terms of the Indenture as in effect on the date hereof shall not be
Repayment Events.

If, upon the occurrence of a “Public Acquirer Change of Control”
under the Indenture occurs, Party B makes an election provided in
Section 10.12 of the Indenture, an Additional Termination Event shall
occur in respect of which (1) Party B shall be the sole Affected
Party and (2) the Transaction shall be the sole Affected Transaction.

	 
	 	 	 	 
	Additional
Disruption Events:
	 	 	 	 
	 
	 	 	 	 
	Change in Law:

	 	Applicable

	 
	 	 	 	 
	Failure to Deliver:

	 	Not Applicable

	 
	 	 	 	 
	Insolvency Filing:

	 	Applicable

	 
	 	 	 	 
	Hedging Disruption:

	 	Applicable

	 
	 	 	 	 
	Increased Cost of Hedging:

	 	Not Applicable

	 
	 	 	 	 
	Loss of Stock Borrow:

	 	Not Applicable

	 
	 	 	 	 
	Increased Cost of Stock Borrow:

	 	Not Applicable

8

 

	 	 	 	 	 
	Hedging Party:

	 	Party A shall be the Hedging Party for all Additional Disruption
Events.

	 
	 	 	 	 
	Determining Party:

	 	Party A shall be the Determining Party for all Additional Disruption
Events.

	 
	 	 	 	 
	Acknowledgments:
	 	 	 	 
	 
	 	 	 	 
	Non-Reliance:

	 	Applicable

	 
	 	 	 	 
	Agreements and Acknowledgments
Regarding Hedging Activities:

	 	Applicable; provided, however, that Agreements and Acknowledgements
Regarding Hedging Activities shall be subject to the other respective
representations, warranties and agreements set forth herein.

	 
	 	 	 	 
	Additional Acknowledgments:

	 	Applicable

	 
	 	 	 	 
	Additional Representations, 

Warranties and Agreements:

	 	In addition to the representations, warranties and agreements set
forth in the Agreement and elsewhere in this Confirmation, Party B
further represents, warrants and agrees that:

	 
	 	 	 	 
	 

	 	(a) (i) It is not entering into the Transaction on behalf of or for
the account of any other person or entity, and will not transfer or
assign its rights or obligations under the Transaction or any portion
of such obligations to any other person or entity except in
compliance with applicable laws and the terms of the Transaction;
(ii) it is authorized to enter into the Transaction and, after due
inquiry, such action does not violate any laws of its jurisdiction of
organization or residence or the terms of any agreement to which it
is a party; (iii) it has consulted with its advisors and has reached
its own conclusions about the Transaction, and any legal, regulatory,
tax, accounting, economic or other consequences arising from the
Transaction; and (iv) it has concluded that the Transaction is
suitable in light of its own investment objectives, financial
capabilities and expertise.

	 
	 	 	 	 
	 

	 	(b) Neither Party A nor any of its affiliates is acting as agent
(other than JPMSI as agent for Party A as specified above) or advisor
for Party B in connection with the Transaction.

	 
	 	 	 	 
	 

	 	(c) As of the Trade Date, all reports and other documents (i)
required to be filed by Party B under the Securities Exchange Act of
1934, as amended (the “Exchange Act”) since November 1, 2006 have
been filed and (ii) filed by Party B with the Securities and Exchange
Commission pursuant to the Exchange Act since November 1, 2006, when
considered as a whole (with the more recent such reports and
documents deemed to amend inconsistent statements contained in any
earlier such reports and documents), taken together with the
preliminary offering memorandum and pricing term sheet relating to
the Convertible Notes (collectively, the “Offering Memorandum”), do
not contain any untrue statement of a material fact or any omission
of a material fact necessary to make the statements therein, in the
light of the circumstances in which they were made (including the
date on which they were made), not misleading.

	 
	 	 	 	 
	 

	 	(d) As of the Trade Date, it has not entered into any obligation that
would contractually limit it from effecting settlement under the

9

 

	 	 	 	 	 
	 

	 	Transaction.

	 
	 	 	 	 
	 

	 	(e) As of the Trade Date, it is not in possession of any material
non-public information concerning the business or operations of Party
B or the Shares. “Material” information for these purposes is any
information to which an investor would reasonably attach importance
in reaching a decision to buy, sell or hold Shares.

	 
	 	 	 	 
	 

	 	(f) The Transaction has been approved by its board of directors.

	 
	 	 	 	 
	 

	 	(g) It is not entering into the Transaction to create actual or
apparent trading activity in the Shares (or any security convertible
into or exchangeable for Shares), to raise, depress or otherwise
manipulate the price of the Shares (or any security convertible into
or exchangeable for Shares) or otherwise in violation of the Exchange
Act (it being understood that Party B makes no representation
pursuant to this clause with respect to any action or inaction of
Party A, any Initial Purchaser or any of their respective
affiliates).

	 
	 	 	 	 
	 

	 	(h) It is not as of the Trade Date, 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.

	 
	 	 	 	 
	 

	 	(i) It is not on the Trade Date engaged in a distribution, as such
term is used in Regulation M under the Securities Exchange Act of
1934, as amended, of any securities of Party B, other than a
distribution meeting the requirements of the exception set forth in
sections 101(b)(10) and 102(b)(7) of Regulation M. Party B shall not,
until the fifth Exchange Business Day immediately following the Trade
Date, engage in any such distribution (it being understood that Party
B makes no representation pursuant to this clause with respect to any
action or inaction of Party A, any Initial Purchaser or any of their
respective affiliates).

	 
	 	 	 	 
	 

	 	(j) As of the Trade Date, it is an “accredited investor” as defined
in Regulation D as promulgated under the Securities Act of 1933, as
amended (the “Securities Act”).

	 
	 	 	 	 
	 

	 	(k) On each of the Trade Date and the Premium Payment Date, it is not
“insolvent” (as such term is defined under Section 101(32) of the
U.S. Bankruptcy Code (Title 11 of the United States Code) (the
“Bankruptcy Code”)) and it would be able to purchase the Shares
hereunder in compliance with the laws of the jurisdiction of its
incorporation.

	 
	 	 	 	 
	 

	 	Each party agrees with and represents to the other that it is an
“eligible contract participant” as the term is defined in Section
1a(12) of the U.S. Commodity Exchange Act, as amended.
Each party acknowledges to the other that the offer and sale of the
Transaction to it is intended to be exempt from registration under
the Securities Act by virtue of Section 4(2) thereof.

	 
	 	 	 	 
	 

	 	Prior to the Effective Date, (x) Party B shall deliver to Party A an
executed U.S. Internal Revenue Service Form W-9 (or successor
thereto) (the “Party B Tax Form”) that eliminates U.S. federal

10

 

	 	 	 	 	 
	 

	 	backup
withholding tax on payments to Party B and (y) Party A shall deliver
to Party B an executed U.S. Internal Revenue Services Form W-8BEN,
W-8ECI or W-9 (as appropriate) (or successor thereto) (the “Party A
Tax Form”) that eliminates U.S. federal backup withholding tax on
payments to Party A. Party B shall deliver a new Party B Tax Form to
Party A promptly upon learning that any such form previously provided
by Party B to Party A has become obsolete or incorrect. Party A shall
deliver a new Party A Tax Form to Party B promptly upon learning that
any such form previously provided by Party A to Party B has become
obsolete or incorrect.

	 
	 	 	 	 
	Other Provisions:
	 	 	 	 
	 
	 	 	 	 
	Calculation Agent:

	 	Party A; provided that whenever any act or the exercise of any
judgment by the Calculation Agent requires the Calculation Agent to
make any calculations, the Calculation Agent will provide Party B
with reasonable detail concerning its calculations (including any
assumptions used in making such calculations).

	 
	 	 	 	 
	Notices:

	 	(a) Address for notices or communications to Party A:

	 
	 	 	 	 
	 

	 	JPMorgan Chase Bank, National Association

277 Park Avenue, 11th Floor

New York, NY 10172

Attention: Eric Stefanik

Title: Operations Analyst

EDG Corporate Marketing

Telephone No: (212) 622-5814

Facsimile No: (212) 622-8534

E-mail: To be provided by Party A

	 
	 	 	 	 
	 

	 	(b) Address for notices or communications to Party B:

	 
	 	 	 	 
	 

	 	VeriFone Holdings, Inc.

2099 Gateway Place, Suite 600

San Jose, CA 95110

Attention: Barry Zwarenstein, Executive Vice President and Chief

Financial Officer

Telephone: 408-232-7888

Facsimile: 408- 232-7889

Email: Barry_Zwarenstein@VERIFONE.com

11

 

	 	 	 	 	 
	Account Details:

	 	(a) Account for payments to Party A:

	 
	 	 	 	 
	 

	 	JPMorgan Chase Bank, National Association, New York
ABA: 021 000 021

	 

	 	Favour: JPMorgan Chase Bank, National Association – London
A/C: 0010962009 CHASUS33

	 
	 	 	 	 
	 

	 	Party A account for deliveries of Shares: DTC 060

	 
	 	 	 	 
	 

	 	(b) Account for payments to Party B:

	 

	 	To be provided by Party B.

	 
	 	 	 	 
	Alternative Calculations and
Payment on Early Termination and on
Certain Extraordinary Events:

	 	If, in respect of the Transaction, an amount is payable by Party A to
Party B, (i) pursuant to Sections 12.2, 12.3, 12.6, 12.7 or 12.9 of
the Equity Definitions (except in the event of a Nationalization,
Insolvency or a Merger Event, in each case, in which the
consideration to be paid to holders of Shares consists solely of
cash) or (ii) pursuant to Section 6(d)(ii) of the Agreement (except
in the event of an Event of Default in which Party B is the
Defaulting Party or a Termination Event in which Party B is the
Affected Party, in each case, that resulted from an event or events
within Party B’s control) (a “Payment Obligation”), Party B shall
have the right, in its sole discretion, to require Party A to satisfy
any such Payment Obligation by the Share Termination Alternative (as
defined below) by giving irrevocable telephonic notice to Party A
(confirmed in writing within three Currency Business Days) no later
than 5:00 p.m. New York City time on the Merger Date, Announcement
Date, Early Termination Date or date of cancellation or termination
for an Additional Disruption Event, as applicable (“Notice of Share
Termination”); provided that if Party B does not validly request
Party A to satisfy its Payment Obligation by the Share Termination
Alternative, Party A shall have the right, in its sole discretion, to
satisfy its Payment Obligation by the Share Termination Alternative,
notwithstanding Party B’s election to the contrary. Upon Notice of
Share Termination the following provisions shall apply:

	 
	 	 	 	 
	Share Termination Alternative:

	 	Applicable and means that Party A shall deliver to Party B the Share
Termination Delivery Property on the date when the Payment Obligation
would otherwise be due pursuant to Section 12.7 or 12.9 of the Equity
Definitions or Section 6(d)(ii) and 6(e) of the Agreement, as
applicable, or such later date as the Calculation Agent may
reasonably determine (the “Share Termination Payment Date”), to
properly effect such settlement in satisfaction of the Payment
Obligation.

	 
	 	 	 	 
	Share Termination Delivery 

Property:

	 	A number of Share Termination Delivery Units, as calculated by the
Calculation Agent, equal to the Payment Obligation divided by the
Share Termination Unit Price. The Calculation Agent shall adjust the
Share Termination Delivery Property by replacing any fractional
portion of a security therein with an amount of cash equal to the
value of such fractional security based on the values used to

12

 

	 	 	 	 	 
	 

	 	calculate the Share Termination Unit Price.

	 
	 	 	 	 
	Share Termination Unit Price:

	 	The value to Party A of property contained in one Share Termination
Delivery Unit on the date such Share Termination Delivery Units are
to be delivered as Share Termination Delivery Property, as determined
by Party A in its good faith discretion by commercially reasonable
means.

	 
	 	 	 	 
	Share Termination Delivery Unit:

	 	In the case of a Termination Event, Event of Default, Delisting or
Additional Disruption Event, one Share or, in the case of
Nationalization, Insolvency or Merger Event, 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 Nationalization, Insolvency or Merger Event, as determined by
the Calculation Agent in its good faith discretion by commercially
reasonable means. If a Share Termination Delivery Unit consists of
property other than cash or New Shares and if Party B provides
irrevocable written notice to the Calculation Agent on or prior to
the Merger Date that it elects to have Party A deliver cash, New
Shares or a combination thereof (in such proportion as Party B
designates) in lieu of such other property, the Calculation Agent
will replace such property with cash, New Shares or a combination
thereof as components of a Share Termination Delivery Unit in such
amounts, as determined by the Calculation Agent in its good faith
discretion by commercially reasonable means, as shall have a value
equal to the value of the property so replaced. If such
Nationalization, Insolvency or Merger Event 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.

	 
	 	 	 	 
	Other Applicable Provisions:

	 	If the Transaction is to be Share Termination Settled, the provisions
of Sections 9.1(c), 9.8, 9.9, 9.10, 9.11 and 9.12 (each as modified
above) of the Equity Definitions will be applicable, except that all
references in such provisions to “Physically-settled” shall be read
as references to “Share Termination Settled” and all references to
“Shares” shall be read as references to “Share Termination Delivery
Units”. “Share Termination Settled” in relation to the Transaction
means that the Share Termination Alternative set forth above is
applicable to the Transaction.

	 
	 	 	 	 
	Party B Payments in Shares:

	 	If, in respect of the Transaction, an amount is payable by Party B to
Party A as a result of a breach of this Agreement by Party B or
pursuant to “Early Unwind” below (a “Party B Payment Obligation”),
Party B shall have the right, in its sole discretion, to satisfy any
such Party B Payment Obligation by delivery to Party A of a number of
Shares (the “Party B Payment Shares”), as calculated by the
Calculation Agent, equal to the Party B Payment Obligation divided by
the Share Delivery Value (as defined below), on the date when the
Party B Payment Obligation would otherwise be due or as soon
thereafter as is practicable in the reasonable determination of Party
A, by giving irrevocable telephonic notice to Party A (confirmed in
writing within three Currency Business Days) no later than 4:00 p.m.
New York City time on the applicable Early

13

 

	 	 	 	 	 
	 

	 	Termination Date or Early
Unwind Date. If a Nationalization, Insolvency or Merger Event has
intervened, the provisions set forth above with respect to Share
Termination Delivery Units deliverable by Party A shall apply,
mutatis mutandis, to any Party B Payment Shares. The provisions set
forth below under “Registration” shall apply to Party B Payment
Shares as if they were Hedge Shares (as defined below) and without
regard to the first sentence thereof or judgment as to whether the
Party B Payment Shares require registration in order to be sold in
the public market.

	 
	 	 	 	 
	Share Delivery Value:

	 	The value to Party A of one Share on the date the Shares are to be
delivered as Share Termination Delivery Property, as determined by
Party A in good faith by commercially reasonable means.

	 
	 	 	 	 
	Payments on Early Termination:

	 	Party A and Party B agree that for the Transaction, for the purposes
of Section 6(e) of the Agreement, Loss and the Second Method will
apply. Notwithstanding anything in the Agreement, in the Definitions
or herein to the contrary, Party B shall have no obligation to make
any delivery or payment to Party A (i) pursuant to Sections 12.7 or
12.9 of the Equity Definitions or (ii) pursuant to Section 6(d)(ii)
of the Agreement, except as a result of a breach by Party B of the
Agreement or this Confirmation or pursuant to “Early Unwind” below.

	 
	 	 	 	 
	Set-Off and Netting:

	 	Notwithstanding any provision of the Agreement (including without
limitation Section 6(f) thereof) and this Confirmation (including
without limitation this section or any other agreement between the
parties to the contrary), (A) Party B shall not net or set-off its
obligations under the Transaction, if any, against its rights against
Party A under any other transaction or instrument and (B) Party A
shall not net or set-off its obligations under the Transaction, if
any, against its rights against Party B under any other transaction
or instrument.

	 
	 	 	 	 
	Bankruptcy Code Acknowledgments:

	 	The parties agree and
acknowledge that (i) this
Confirmation is of a type set
forth in Section 561(a)(1)–(5)
of the Bankruptcy Code; (ii)
Party A is a “master netting
agreement participant,” a
“financial institution,” a
“financial participant,” a
“forward contract merchant” and
a “swap participant” as defined
in the Bankruptcy Code; (iii)
the remedies provided herein
are the remedies referred to in
Section 561(a), Sections
362(b)(6), (7), (17) and (27),
and Section 362(o) of the
Bankruptcy Code; (iv) all
transfers of cash, securities
or other property under or in
connection with this
Confirmation are “transfers”
made “by or to (or for the
benefit of)” a “master netting
agreement participant,” a
“financial institution,” a
“financial participant,” a
“forward contract merchant” or
a “swap participant” (each as
defined in the Bankruptcy Code)
within the meaning of Sections
546(e), (f), (g) or (j) of the
Bankruptcy Code; and (v) all
obligations under or in
connection with this
Confirmation represent
obligations in respect of
“termination values,” “payment
amounts” or “other transfer
obligations” within the meaning
of Sections 362, 560 and 561 of
the Bankruptcy Code.

	 
	 	 	 	 
	Early Unwind:

	 	In the event the sale of
Convertible Notes (or, in
respect of the

14

 

	 	 	 	 	 
	 

	 	Greenshoe
Exercise, the Additional
Convertible Notes) is not
consummated with the initial
purchasers thereof for any
reason by the close of business
in New York on June 22, 2007
(or, in respect of the
Greenshoe Exercise, the third
Clearance System Business Day
following the date of the
Greenshoe Exercise (the
“Additional Closing Date”)) (or
such later date as agreed upon
by the parties) (June 22, 2007
or such later date as agreed
upon being or, in respect of
the Greenshoe Exercise, the
Additional Closing Date, the
“Early Unwind Date”), the
Transaction (or, in respect of
the Greenshoe Exercise, the
Additional Options) shall
automatically terminate (the
“Early Unwind”), on the Early
Unwind Date and (i) the
Transaction (or, in respect of
the Greenshoe Exercise, the
Additional Options) and all of
the respective rights and
obligations of Party A and
Party B under the Transaction
(or, in respect of the
Greenshoe Exercise, the
Additional Options) shall be
cancelled and terminated, (ii)
any payments previously made
hereunder shall be returned to
the person making such payment,
including all payments of
premium (or, in respect of the
Greenshoe Exercise, the
additional Premium) and (iii)
Party B shall purchase from
Party A on the Early Unwind
Date all Shares purchased by
Party A or one or more of its
affiliates and pay to Party A,
other than in cases involving a
breach of the Purchase
Agreement by any of the initial
purchasers, an amount in cash
equal to the aggregate amount
of reasonable out-of-pocket
costs and expenses actually
incurred by Party A relating to
the unwinding of Party A’s
hedging activities in respect
of the Transaction (or, in
respect of the Greenshoe
Exercise, the Additional
Options) (including any loss or
cost incurred as a result of
its terminating, liquidating,
obtaining or reestablishing any
hedge or related trading
position). Following such
termination, cancellation and
payment, each party shall be
released and discharged by the
other party from and agrees not
to make any claim against the
other party with respect to any
obligations or liabilities of
the other party arising out of
and to be performed in
connection with the Transaction
either prior to or after the
Early Unwind Date. Party A and
Party B represent and
acknowledge to the other that
upon an Early Unwind, all
obligations with respect to the
Transaction shall be deemed
fully and finally discharged.

	 
	 	 	 	 
	Right to Extend:

	 	Party A may extend, for as long as it is reasonably necessary any
Settlement Date or any other date of delivery by Party A, with
respect to some or all of the Options hereunder, if Party A
determines, in its reasonable good faith discretion, that such
extension is reasonably necessary or advisable in light of market or
liquidity conditions in the cash market or stock loan market or to
enable Party A to effect purchases of Shares in connection with the
related settlement or delivery hereunder in a manner that would, if
Party A were Party B or an affiliated purchaser of Party B, be in
compliance with applicable legal and regulatory requirements.

	 
	 	 	 	 
	Repurchase Notices:

	 	Party B shall, on any day on which Party B effects any repurchase of
Shares, promptly give Party A a written notice of such repurchase (a
“Repurchase Notice”) on such day if following such repurchase, the
Options Equity Percentage as determined on such day is (i) greater

15

 

	 	 	 	 	 
	 

	 	than 7.5% and (ii) greater by 0.5% than the Options Equity Percentage
included in the immediately preceding Repurchase Notice (or, in the
case of the first such Repurchase Notice, greater than the Options
Equity Percentage as of the date hereof). The “Options Equity
Percentage” as of any day is the fraction (A) the numerator of which
is the Number of Shares and (B) the denominator of which is the
number of Shares outstanding on such day. In the event that Party B
fails to provide Party A with a Repurchase Notice in the manner
specified in this section, then Party B agrees to indemnify and hold
harmless Party A, its affiliates and their respective directors,
officers, employees, agents and controlling persons (Party A and each
such person being an “Indemnified Party”) from and against any and
all actual losses (including actual losses relating to Party A’s
hedging activities as a consequence of becoming a Section 16
“insider” under the Exchange Act, including without limitation, any
forbearance from hedging activities or cessation of hedging
activities and any actual losses in connection therewith with respect
to the Transaction), claims, damages and liabilities (or actions in
respect thereof), joint or several, to which such Indemnified Party
is subject to under applicable securities laws, including without
limitation, Section 16 of the Exchange Act, relating to or arising
out of such failure. If any suit, action, proceeding (including any
governmental or regulatory investigation), claim or demand shall be
brought or asserted against the Indemnified Person in connection with
the matters specified in the preceding sentence, such Indemnified
Person shall promptly notify Party B in writing, and Party B, upon
request of the Indemnified Person, shall retain counsel reasonably
satisfactory to the Indemnified Person (any consent in respect of
which shall not be unreasonably withheld or delayed by the
Indemnified Person) to represent the Indemnified Person and any
others Party B may designate in such proceeding and shall pay the
reasonable out-of-pocket fees and expenses of such counsel related to
such proceeding. Party B 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,
Party B agrees to indemnify any Indemnified Person from and against
any loss or liability by reason of such settlement or judgment. If
for any reason the foregoing indemnification is unavailable to any
Indemnified Party or insufficient to hold harmless any Indemnified
Party, then Party B shall contribute, to the maximum extent permitted
by law, to the amount paid or payable by the Indemnified Party as a
result of such loss, claim, damage or liability. In addition, Party
B will reimburse any Indemnified Party for all reasonable
out-of-pocket expenses (including reasonable counsel fees and
expenses) as they are incurred and paid (after notice that includes
invoices detailing such reasonable out-of-pocket expenses to Party B)
in connection with the investigation of, preparation for or defense
or settlement of any pending or threatened claim or any action, suit
or proceeding arising therefrom, whether or not such Indemnified
Party is a party thereto and whether or not such claim, action, suit
or proceeding is initiated or brought by or on behalf of Party B. The
indemnity and

16

 

	 	 	 	 	 
	 

	 	contribution agreements contained in this paragraph
shall remain operative and in full force and effect regardless of the
completion or termination of the Transaction and any assignment of
the Transaction made pursuant to this Confirmation or the Agreement
shall inure to the benefit of any permitted assignee of Party A that
is an affiliate of Party A.

	 
	 	 	 	 
	Transfer and Assignment:

	 	Neither party may transfer any of its rights or obligations under the
Transaction without the prior written consent of the non-transferring
party. If at any time at which the Equity Percentage exceeds 8.0% (an
“Excess Ownership Position”), if Party A, in its discretion, is
unable to effect a transfer or assignment to a third party within one
Trading Day or such other longer time period reasonably acceptable to
Party A in accordance with the requirements set forth above after
using its commercially reasonable efforts on pricing terms reasonably
acceptable to Party A such that an Excess Ownership Position no
longer exists, Party A may designate any Scheduled Trading Day as an
Early Termination Date with respect to a portion (the “Terminated
Portion”) of the Transaction, such that such Excess Ownership
Position no longer exists. In the event that Party A 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 “Alternative Calculations and Payment on Early
Termination and on Certain Extraordinary Events” above 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) Party B 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 “Equity
Percentage” as of any day is the fraction, expressed as a percentage,
(A) the numerator of which is the number of Shares that Party A and
any of its affiliates subject to aggregation with Party A, for
purposes of the “beneficial ownership” test under Section 13 of the
Exchange Act, beneficially own (within the meaning of Section 13 of
the Exchange Act) on such day and (B) the denominator of which is the
number of Shares outstanding on such day. Notwithstanding any other
provision in this Confirmation to the contrary requiring or allowing
Party A to purchase, sell, receive or deliver any shares or other
securities to or from Party B, Party A may designate any of its
affiliates to purchase, sell, receive or deliver such shares or other
securities and otherwise to perform Party A’s obligations in respect
of this Transaction and any such designee may assume such
obligations. Party A shall be discharged of its obligations to Party
B to the extent of any such performance.

	 
	 	 	 	 
	Staggered Settlement:

	 	If the Staggered Settlement Equity Percentage as of any Exchange
Business Day during the relevant Conversion Period is greater than
4.5%, Party A may, by notice to Party B prior to the related
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, Party A will specify to Party B the related
Staggered Settlement Dates (which shall be on or prior to such

17

 

	 	 	 	 	 
	 

	 	Nominal Settlement Date) 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 Party A will deliver to
Party B hereunder on all such Staggered Settlement Dates and delivery
times will equal the number of Shares that Party A would otherwise be
required to deliver on such Nominal Settlement Date.
The “Staggered Settlement Equity Percentage” as of any day is the
fraction, expressed as a percentage, (A) the numerator of which is
the sum of (i) the number of Shares “beneficially owned” (within the
meaning of Section 13 of the Exchange Act) on such day by Party A,
any of its affiliates subject to aggregation with Party A for the
purposes of the “beneficial ownership” test under Section 13 of the
Exchange Act and all persons who may form a “group” (within the
meaning of Rule 13d-5(b)(1) under the Exchange Act) with Party A with
respect to “beneficial ownership” of any Shares, plus (ii) the Number
of Shares and (B) the denominator of which is the number of Shares
outstanding on such day.

	 
	 	 	 	 
	Registration:

	 	Party A intends to conduct its hedging activities in connection with
the Transaction in a manner that it believes, based on its good
faith, reasonable judgment, will not require Party B to register
under the Securities Act or any state securities laws the public
resale of Shares acquired by Party A for the purpose of hedging its
obligations pursuant to the Transaction. Nevertheless, Party B
hereby agrees that if, in the good faith reasonable judgment of Party
A based on advice of counsel, the Shares (“Hedge Shares”) acquired by
Party A for the purpose of hedging its obligations pursuant to the
Transaction cannot be sold in the public market by Party A without
registration under the Securities Act, Party B shall, at its
election, either (i) in order to allow Party A to sell the Hedge
Shares in a registered offering, make available to Party A an
effective registration statement under the Securities Act and enter
into an agreement, in form and substance satisfactory to Party A,
substantially in the form of a registration agreement; provided,
however, that if Party A, in its sole reasonable discretion, is not
satisfied with access to due diligence materials, the results of its
due diligence investigation, or the procedures and documentation for
the registered offering referred to above, then clause (ii) or clause
(iii) of this section shall apply at the election of Party B, (ii) in
order to allow Party A to sell the Hedge Shares in a private
placement, enter into and comply with a private placement agreement
substantially similar to private placement purchase agreements
customary for private placements of equity securities, in form and
substance satisfactory to Party A (in which case, the Calculation
Agent shall make any adjustments to the terms of the Transaction that
are necessary, in its commercially reasonable judgment, to compensate
Party A for any discount from the closing public market price of the
Shares on the date that the Hedge Shares are sold in the private
placement), or (iii) purchase the Hedge Shares from Party A at the
Volume Weighted Average Price

18

 

	 	 	 	 	 
	Tax:

	 	on such Trading Days, and in the
amounts, requested by Party A.

Notwithstanding any other provision in this Confirmation, Party A
hereby confirms that no participant in this transaction shall be
limited from disclosing the U.S. tax treatment or U.S. tax structure
of the transaction.

	 
	 	 	 	 
	Collateral:

	 	None.

	 
	 	 	 	 
	Amendment of 6(d)(ii).

	 	Section 6(d)(ii) of the Agreement is modified by deleting the words
“on the day” in the second line thereof and substituting therefore
“on the day that is three Local Business Days after the day”.

	 
	 	 	 	 
	Governing Law:

	 	The laws of the State of New York (without reference to choice of law
doctrine).

	 
	 	 	 	 
	Termination Currency: 

Office:

	 	USD.

For the purposes of the Transaction, Party B is not a Multibranch
Party.

	 
	 	 	 	 
	

Waiver of Jury Trial:

	 	The Office of Party A for the Transaction is: London

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

19

 

THE SECURITIES REPRESENTED BY THIS CONFIRMATION HAVE BEEN ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN
REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933 OR ANY OTHER UNITED STATES FEDERAL OR
STATE SECURITIES LAWS; SUCH SECURITIES MAY NOT BE SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF
APPROPRIATE REGISTRATION UNDER SUCH SECURITIES LAWS OR EXCEPT IN A TRANSACTION EXEMPT FROM OR NOT
SUBJECT TO THE REGISTRATION REQUIREMENTS OF SUCH SECURITIES LAWS.

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.

	 	 	 	 	 	 	 
	 	 	Very truly yours,	 	 
	 
	 	 	 	 	 	 
	 	 	J.P. Morgan Securities Inc., as agent for	 	 
	 	 	JPMorgan Chase Bank, National Association	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Jason M. Wood	 	 
	 

	 	 	 	 	 	 
	 	 	Authorized Signatory	 	 
	 	 	Name: Jason M. Wood	 	 

     Accepted and confirmed
as of the Trade Date:

VeriFone Holdings, Inc.

	 	 	 	 	 
	By:

	 	/s/ Barry Zwarenstein
 

	 	 
	Name: Barry Zwarenstein	 	 
	Title: Executive Vice President and Chief Financial Officer	 	 

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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