Document:

exv10w3

 

Exhibit 10.3

Warrant 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: 3000789

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 under 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. In the event of any inconsistency between either set of Definitions and
this Confirmation, this Confirmation will govern. For purposes of the Equity Definitions, each
reference herein to a Warrant shall be deemed to be a reference to a Call Option or an Option, as
the context requires.

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

Lehman Brothers
745 SEVENTH AVENUE,
NEW YORK NY 10019

 

 

	 	 	 	 	 
	 

	 	Effective Date:
	 	June 22, 2007
	 
	 	 	 	 
	 

	 	Components:
	 	The Transaction will be divided into individual Components, each with the
terms set forth in this Confirmation, and, in particular, with the Number
of Warrants and Expiration Date set forth in this Confirmation. The
payments and deliveries to be made upon settlement of the Transaction will
be determined separately for each Component as if each Component were a
separate Transaction under the Agreement.
	 
	 	 	 	 
	 

	 	Warrant Style:
	 	European
	 
	 	 	 	 
	 

	 	Warrant Type:
	 	Call
	 
	 	 	 	 
	 

	 	Seller:
	 	Party B
	 
	 	 	 	 
	 

	 	Buyer:
	 	Party A
	 
	 	 	 	 
	 

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

	 	Number of Warrants:
	 	For each Component of the Transaction, as provided in a schedule (the
“Schedule”) delivered by Party A to Party B contemporaneously with the
execution of this Confirmation.
	 
	 	 	 	 
	 

	 	Warrant Entitlement:
	 	One (1) Share per Warrant.
	 
	 	 	 	 
	 

	 	Number of Shares:
	 	The number of Shares obtained by multiplying the Number of Warrants by the
Warrant Entitlement.
	 
	 	 	 	 
	 

	 	Strike Price:
	 	The greater of (i) USD 62.356 and (ii) 1.70 times the average of the
volume weighted average prices per Share for each of the fifteen Trading
Days commencing on November 28, 2007 (as published by Bloomberg on
Bloomberg page “PAY.N <Equity> AQR” (or any successor thereto) at
4:15 P.M. New York City time on such Trading Day, or, in the event such
price is not so reported on such Trading Day for any reason, as determined
in good faith by the Calculation Agent in a commercially reasonable manner
and, to the extent practicable, based on a volume weighted average price
methodology).
	 
	 	 	 	 
	 

	 	Trading Day:
	 	A Scheduled Trading Day that is not a Disrupted Day.
	 
	 	 	 	 
	 

	 	Premium:
	 	USD 13,560,000
	 
	 	 	 	 
	 

	 	Premium Payment Date:
	 	The Effective Date.
	 
	 	 	 	 
	 

	 	Exchange:
	 	New York Stock Exchange
	 
	 	 	 	 
	 

	 	Related Exchange(s):
	 	All Exchanges
	 
	 	 	 	 
	Procedures for Exercise:	 	 
	In respect of any Component:	 	 
	 
	 	 	 	 
	 

	 	Expiration Time:
	 	The Valuation Time
	 
	 	 	 	 
	 

	 	Expiration Date:
	 	As provided in the Schedule (or, if such date is not a Scheduled Trading
Day, the next following Scheduled Trading Day that is not already an
Expiration Date for another Component); provided that if that date is a
Disrupted Day, the Expiration Date for such Component shall be the first
succeeding Scheduled Trading Day that is not a Disrupted Day and is not or
is not deemed to be an Expiration Date in respect of any other Component
of the Transaction hereunder; and provided, further that if the Expiration
Date has not occurred pursuant to the preceding proviso as

Global Deal ID: 3000789

2

 

	 	 	 	 	 
	 

	 	 	 	of the Final
Disruption Date, the Final Disruption Date shall be the Expiration Date
(irrespective of whether such date is a Disrupted Day or an Expiration
Date in respect of any other Component for the Transaction) and the
Settlement Price for the Final Disruption Date shall be determined by the
Calculation Agent in a commercially reasonable manner based on a volume
weighted average price methodology. Notwithstanding the foregoing and
anything to the contrary in the Equity Definitions, if a Market Disruption
Event occurs on any Expiration Date, the Calculation Agent may determine
that such Expiration Date is a Disrupted Day only in part, in which case
the Calculation Agent shall make adjustments to the Number of Warrants for
the relevant Component for which such day shall be the Expiration Date and
shall designate the Scheduled Trading Day determined in the manner
described in the immediately preceding sentence as the Expiration Date for
the remaining Warrants for such Component. Section 6.6 of the Equity
Definitions shall not apply to any Valuation Date occurring on an Expiration Date.
	 
	 	 	 	 
	 

	 	Exercise Date:
	 	Each Expiration Date.
	 
	 	 	 	 
	 

	 	Automatic Exercise:
	 	Applicable with respect to the Warrants included in any Component;
provided that Section 3.4(b) of the Equity Definitions shall apply to Cash
Settlement and Net Share Settlement; provided further that “In-the-Money”
means the Settlement Price is greater than the Strike Price.
	 
	 	 	 	 
	 

	 	Disrupted Day:
	 	The definition of “Disrupted Day” in Section 6.4 of the Equity Definitions
shall be amended by adding the following sentence after the first
sentence: “A Scheduled Trading Day on which a Related Exchange fails to
open for trading during its regular trading session will not be a
Disrupted Day if the Calculation Agent determines that such failure will
not have a material impact on Party A’s ability to unwind any hedging
transactions related to the Transaction.”
	 
	 	 	 	 
	 

	 	Final Disruption Date:
	 	February 25, 2014
	 
	 	 	 	 
	 

	 	Market Disruption Event:
	 	Section 6.3(a) of the Equity Definitions is hereby amended by deleting the
words “during the one hour period that ends at the relevant Valuation
Time, Latest Exercise Time, Knock-in Valuation Time or Knock-out Valuation
Time, as the case may be,” in clause (ii) thereof, and by amending and
restating clause (iii) thereof in its entirety to read as follows: “(iii)
an Early Closure that the Calculation Agent determines is material.”
	 
	 	 	 	 
	Settlement Terms:	 	 
	 
	 	 	 	 
	In respect of any Component:	 	 
	 
	 	 	 	 
	 

	 	Settlement Currency:
	 	USD
	 
	 	 	 	 
	 

	 	Settlement Method Election:
	 	Applicable; provided that the same Settlement Method shall apply to all
Components; and provided further that references in the Equity Definitions
to “Physical Settlement” shall be deemed to be references to “Net Share
Settlement” as defined herein; and provided further that Party B may elect
Cash Settlement only if at the time of such election it provides to Party
A a written statement that the representations contained in paragraphs (f)
and (h) of “Additional Representations, Warranties and Agreements of Party
B:” below are true and correct as of and as if made on the date of such
election.

Global Deal ID: 3000789

3

 

	 	 	 	 	 
	 

	 	Electing Party:
	 	Party B
	 
	 	 	 	 
	 

	 	Settlement Method Election Date:
	 	Five Scheduled Trading Days prior to, and including, the scheduled
Expiration Date for the Component with the earliest scheduled Expiration
Date.
	 
	 	 	 	 
	 

	 	Default Settlement Method:
	 	Net Share Settlement
	 
	 	 	 	 
	 

	 	Settlement Price:
	 	For any Valuation Date, the volume weighted average price per Share for
all Rule 10b-18 eligible transactions on the Exchange in the Shares for
such Valuation Date (without regard to pre-open or after hours trading
outside of any regular trading session), as published by Bloomberg on
Bloomberg page “PAY.N <Equity> AQR_SEC” at 4:15 P.M. New York City
time on such Valuation Date, or, in the event such price is not so
reported on such Valuation Date for any reason, as determined in good
faith by the Calculation Agent in a commercially reasonable manner and, to
the extent practicable, based on a volume weighted average price
methodology.
	 
	 	 	 	 
	Cash Settlement Terms:	 	 
	 
	 	 	 	 
	In respect of any Component:	 	 
	 
	 	 	 	 
	 
	 	 	 	 
	 

	 	Settlement Currency:
	 	USD
	 
	 	 	 	 
	 

	 	Cash Settlement Payment Date:
	 	With respect to each Valuation Date, three (3) full Exchange Business Days
after the final Valuation Date.
	 
	 	 	 	 
	Net Share Settlement Terms:	 	 
	 
	 	 	 	 
	In respect of any Component:	 	 
	 
	 	 	 	 
	 

	 	Net Share Settlement:
	 	In the event that Party B elects to settle this Transaction by Net Share
Settlement, on each Settlement Date, Party B will deliver to Party A the
Net Share Amount for such Settlement Date (rounded down to the nearest
whole Share) and will pay to Party A the Fractional Share Amount, if any,
in respect of the Net Share Amount.
	 
	 	 	 	 
	 

	 	 	 	The provisions of Sections 9.1(c), 9.8, 9.9, 9.10, 9.11 (except that the
Representation and Agreement contained in Section 9.11 of the Equity
Definitions shall be modified 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) 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 Warrant means that Net Share
Settlement is applicable to such Warrant.
	 
	 	 	 	 
	 

	 	Net Share Amount:
	 	In respect of any Exercise Date, subject to the last sentence of Section
9.5 of the Equity Definitions, the product of (i) the number of Warrants
exercised or deemed exercised on such Exercise Date, (ii) the Warrant
Entitlement and (iii) (A) the excess of the Settlement Price on the
Valuation Date occurring on such Exercise Date over the Strike Price
divided by (B) such Settlement Price.
	 
	 	 	 	 
	 

	 	Settlement Date:
	 	The Settlement Date, determined as if Physical Settlement applied.

Global Deal ID: 3000789

4

 

	 	 	 	 	 
	Adjustments:	 	 
	 
	 	 	 	 
	In respect of any Component:	 	 
	 
	 	 	 	 
	 

	 	Dividend Adjustment:
	 	If at any time during the period from but excluding the Trade Date, to and
including an Expiration Date an ex-dividend date for a cash dividend
occurs with respect to the Shares, and that dividend, combined with any
previous cash dividend for which the ex-dividend date occurs within the
same regular quarterly dividend period of Party B, is more than the
Regular Dividend on a per share basis, then the Calculation Agent will
adjust the Strike Price, the Number of Warrants, the Warrant Entitlement,
the Number of Shares or any other variable relevant to the exercise,
settlement, payment or other terms of such Component to reflect the impact
of such excess dividend on the theoretical value of such Component.
“Regular Dividend” shall mean USD 0.00 per Share per quarter.
	 
	 	 	 	 
	 

	 	Share Adjustment:	 	 
	 
	 	 	 	 
	 

	 	     Method of Adjustment:
	 	Calculation Agent Adjustment; provided that the Equity Definitions shall
be amended by replacing the words “diluting or concentrative” in Sections
11.2(a), 11.2(c) (in two instances) and 11.2(e)(vii) with the word
“material” and by adding the words “or the Transactions” after the words
“theoretical value of the relevant Shares” in Sections 11.2(a), 11.2(c)
and 11.2(e)(vii); provided that (A) adjustments may be made to account for
changes in volatility and liquidity relative to the relevant Shares or the
Transaction, (B) no adjustments will be made to account for changes in
expected dividends or stock loan rate and (C) in the event an adjustment
is made or proposed to be made to the Number of Warrants or the Warrant
Entitlement, Party B may, at its option, elect to pay cash, as determined
by the Calculation Agent in its good faith discretion by commercially
reasonable means, on the Potential Adjustment Date in lieu of such
adjustment, with notice of such election to be given to Party A at least
five Scheduled Trading Days prior to such Potential Adjustment Date.
	 
	 	 	 	 
	Extraordinary Events:	 	 	 	 
	 
	 	 	 	 
	 
	 	Tender Offer Date;
Announcement
 Date:	 	The definitions of “Tender
Offer Date” and “Announcement Date” in Section 12.1 of
the Equity Definitions will be amended by replacing the words
“voting shares” in the first and fifth line thereof,
respectively, with the word “Shares”.
	 
	 	 	 	 
	 

	 	Consequences of Merger Events:	 	 
	 
	 	 	 	 
	 

	 	     Share-for-Share:
	 	Modified Calculation Agent Adjustment
	 
	 	 	 	 
	 

	 	     Share-for-Other:
	 	Cancellation and Payment (Calculation Agent Determination)
	 
	 	 	 	 
	 

	 	     Share-for-Combined:
	 	Component Adjustment
	 
	 	 	 	 
	 

	 	Tender Offer:
	 	Applicable; provided however that if an event occurs that constitutes both
a Tender Offer under Section 12.1(d) of the Equity Definitions and
Additional Termination Event under clause (ii) of Additional Termination
Events (as defined herein), Party A may elect, in its commercially
reasonable judgment, whether the provisions of Section 12.3 of the Equity
Definitions or clause (ii) of Additional Termination Events will apply.
	 
	 	 	 	 
	 

	 	 	 	The definition of “Tender Offer” in Section 12.1 of the Equity Definitions
will be amended by (1) replacing “10%” in the third line

Global Deal ID: 3000789

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	 	 	 	thereof with
“20%” and (2) replacing the phrase “outstanding voting shares of the
Issuer” in the fourth line thereof with “outstanding Shares of the
Issuer”.
	 
	 	 	 	 
	 

	 	Consequences of Tender Offers:	 	 
	 
	 	 	 	 
	 

	 	     Share-for-Share:
	 	Modified Calculation Agent Adjustment
	 
	 	 	 	 
	 

	 	     Share-for-Other:
	 	Modified Calculation Agent Adjustment
	 
	 	 	 	 
	 

	 	     Share-for-Combined:
	 	Modified Calculation Agent Adjustment
	 
	 	 	 	 
	 

	 	New Shares:
	 	The definition of “New Shares” in Section 12.1 of the Equity Definitions
shall be amended by deleting subsection (i) in its entirety and replacing
it with the following: “(i) publicly quoted, traded or listed on any of
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.”
	 
	 	 	 	 
	 

	 	Composition of Combined
Consideration:
	 	Not Applicable
	 
	 	 	 	 
	 

	 	Nationalization, Insolvency or

Delisting:
	 	Cancellation and Payment (Calculation Agent Determination)
	 
	 	 	 	 
	 

	 	Delisting:
	 	The definition of “Delisting” in Section 12.6 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 or Tender Offer) 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 Disruption Events:	 	 
	 
	 	 	 	 
	 

	 	Change in Law:
	 	Applicable
	 
	 	 	 	 
	 

	 	Failure to Deliver:
	 	Applicable
	 
	 	 	 	 
	 

	 	Insolvency Filing:
	 	Applicable
	 
	 	 	 	 
	 

	 	Hedging Disruption:
	 	Not Applicable
	 
	 	 	 	 
	 

	 	Increased Cost of Hedging:
	 	Not Applicable
	 
	 	 	 	 
	 

	 	Loss of Stock Borrow:
	 	Applicable
	 
	 	 	 	 
	 

	 	Maximum Stock Loan Rate:
	 	200 basis points
	 
	 	 	 	 
	 

	 	Increased Cost of Stock Borrow:
	 	Applicable
	 
	 	 	 	 
	 

	 	Initial Stock Loan Rate:
	 	25 basis points
	 
	 	 	 	 
	 

	 	Amendment to Section 12.9(b)(i)
of Equity Definitions:
	 	Section 12.9(b)(i) of the Equity Definitions is hereby amended by adding
the following sentence at the end: “If neither party elects to terminate
the

Global Deal ID: 3000789

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	 	 	 	Transaction, the Calculation Agent may adjust the terms of the
Transaction upon the occurrence of such an event pursuant to Modified
Calculation Agent Adjustment (as if such event were a Tender Offer).”
	 
	 	 	 	 
	 

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

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

	 	Acknowledgments:	 	 
	 
	 	 	 	 
	 

	 	Non-Reliance:
	 	Applicable
	 
	 	 	 	 
	 

	 	Agreements and Acknowledgments Regarding Hedging Activities:
	 	Applicable
	 
	 	 	 	 
	 

	 	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) Any Shares, when delivered in accordance with all of the terms of the
Transaction, will be duly authorized and validly issued, fully paid and
nonassessable, and the issuance thereof will not be subject to any
preemptive or similar rights.
	 
	 	 	 	 
	 

	 	 	 	(c) 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.
	 
	 	 	 	 
	 

	 	 	 	(d) 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), 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.
	 
	 	 	 	 
	 

	 	 	 	(e) As of the Trade Date, it has not entered into any obligation that
would contractually limit it from effecting Cash Settlement or Net Share

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	 	 	 	Settlement under the Transaction.
	 
	 	 	 	 
	 

	 	 	 	(f) 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.
	 
	 	 	 	 
	 

	 	 	 	(g) It shall not take any action to decrease the number of Available
Shares below the Capped Number (each as defined below).
	 
	 	 	 	 
	 

	 	 	 	(h) It is not entering into the Transaction nor is it making an election
hereunder 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 to facilitate a
distribution of Shares (or any security convertible into or exchangeable
for Shares) within the meaning of Regulation M, or otherwise in violation
of the Exchange Act, including Regulation M thereunder (it being
understood that Party B makes no representation pursuant to this clause
with respect to any action or inaction of Party A, LBI or any of their
respective affiliates or any other person other than Party B).
	 
	 	 	 	 
	 

	 	 	 	(i) 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.
	 
	 	 	 	 
	 

	 	 	 	(j) (A) During the period starting on the first Expiration Date and ending
on the last Expiration Date (the “Settlement Period”), the Shares or
securities that are convertible into, or exchangeable or exercisable for
Shares, are not, and shall not be, subject to a “restricted period,” as
such term is defined in Regulation M under the Exchange Act (“Regulation
M”) and (B) Party B shall not engage in any “distribution,” as such term
is defined in Regulation M, other than a distribution meeting the
requirements of the exceptions set forth in sections 101(b)(10) and
102(b)(7) of Regulation M, until the second Exchange Business Day
immediately following the Settlement Period (it being understood that
Party B makes no representation pursuant to this clause with respect to
any action or inaction of Party A, LBI or any of their respective
affiliates or any other person other than Party B).
	 
	 	 	 	 
	 

	 	 	 	(k) During the Settlement Period, neither Party B nor any “affiliate” or
“affiliated purchaser” (each as defined in Rule 10b-18 of the Exchange
Act) shall directly or indirectly (including, without limitation, by means
of any cash-settled or other derivative instrument) purchase, offer to
purchase, place any bid or limit order that would effect a purchase of, or
commence any tender offer relating to, any Shares (or an equivalent
interest, including a unit of beneficial interest in a trust or limited
partnership or a depository share) or any security convertible into or
exchangeable or exercisable for Shares, except through Party A or its
affiliates.
	 
	 	 	 	 
	 

	 	 	 	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

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	 	 	 	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 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
	 

	 	 	 	Attn: Barry Zwarenstein, Chief Financial Officer
	 

	 	 	 	Tel: (408) 232-7888
	 

	 	 	 	Fax: (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
	 	If, in respect of the Transaction, an amount is payable by Party B to
Party A, (i) pursuant to Sections 12.2, 12.3, 12.6, 12.7 or 12.9 of the
Equity

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	 	Extraordinary Events:
	 	Definitions (except in the event of a Nationalization, Insolvency,
Tender Offer 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 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, Tender Offer 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 elect to satisfy its Payment Obligation
by the Share Termination Alternative, Party A shall have the right to
require Party B to satisfy its Payment Obligation by the Share Termination
Alternative. Upon Notice of Share Termination the following provisions
shall apply:
	 
	 	 	 	 
	 

	 	Share Termination Alternative:
	 	Applicable and means that Party B shall deliver to Party A 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, Merger Event or Tender Offer, 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, Merger Event or Tender Offer, 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 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

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	 	 	 	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, Merger Event or Tender Offer 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 9.8, 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.
	 
	 	 	 	 
	 

	 	Additional Termination Events:
	 	(i) If at any time Party A reasonably determines in its good faith based
on advice of counsel that it is advisable to terminate a portion of the
Transaction so that Party A’s related hedging activities will comply with
applicable securities laws, rules or regulations, an Additional
Termination Event shall occur with respect to which (1) Party B shall be
the sole Affected Party and (2) the Transaction shall be the sole Affected
Transaction.
	 
	 	 	 	 
	 

	 	 	 	(ii) If any transaction (other than a Merger Event) is consummated the
result of which is that any “person” becomes the “beneficial owner” (as
these terms are defined in Rule 13d-3 and Rule 13d-5 under the Exchange
Act), directly or indirectly, of more than 50% of Party B’s outstanding
capital stock that is at the time entitled to vote by the holder thereof
in the election of Party B board of directors (or comparable body), Party
A shall have the right to designate such event an Additional Termination
Event and designate an Early Termination Date pursuant to Section 6(b) of
the Agreement, and (1) Party B shall be the sole Affected Party, (2) the
Transaction shall be the sole Affected Transaction and (3) notwithstanding
anything to the contrary in this Confirmation, Cancellation and Payment
(Calculation Agent Determination) shall apply as the payment measure in
lieu of Loss for the purposes of Section 6(e) of the Agreement.
	 
	 	 	 	 
	 

	 	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. Any
determination of an amount payable pursuant to Section 6 of the Agreement
or Article 12 of the Equity Definitions shall assume that the Capped
Number (as defined below) shall have been increased to the aggregate
Number of Shares for all Components as contemplated by “Maximum Share
Delivery” below. Automatic Early Termination will not apply to either
party.
	 
	 	 	 	 
	 

	 	 	 	For the avoidance of doubt and notwithstanding any provision of the
Agreement or the Definitions to the contrary:
	 
	 	 	 	 
	 

	 	 	 	(i) Party A shall in no event be obligated to (a) terminate or cancel the
Transaction at any time or (b) make any payment or delivery to Party B (1)
pursuant to Sections 12.7 or 12.9 of the Equity Definitions or (2)
pursuant to Section 6(d)(ii) of the Agreement, except as a result of a
breach by Party A of the Agreement or this Confirmation; and

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	 	 	 	(ii) a party having the right to designate an Early Termination Date or
other date of termination or cancellation of the Transaction may choose as
such date any date on or after the first date that may be chosen as such
date under the Agreement or the Definitions.
	 
	 	 	 	 
	 

	 	Status of Claims in Bankruptcy:
	 	Party A acknowledges and agrees that this Confirmation is not intended to
convey to it rights with respect to the Transaction that are senior to the
claims of common stockholders in any U.S. bankruptcy proceedings of Party
B; provided that nothing herein shall limit or shall be deemed to limit
Party A’s right to pursue remedies in the event of a breach by Party B of
its obligations and agreements with respect to the Transaction; and
provided further that nothing herein shall limit or shall be deemed to
limit Party A’s rights in respect of any transactions other than the
Transaction. For the avoidance of doubt, the parties acknowledge that this
Confirmation is not secured by any collateral that would otherwise secure
the obligations of Party B herein under or pursuant to any other
agreement.
	 
	 	 	 	 
	 

	 	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 U.S. Bankruptcy Code (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.
	 
	 	 	 	 
	 

	 	Limit on Beneficial Ownership:
	 	Notwithstanding any other provisions hereof, Party A may not exercise any
Warrant hereunder, Automatic Exercise shall not apply with respect
thereto, and any delivery pursuant to “Alternative Calculations and
Payment on Early Termination and on Certain Extraordinary Events” above
shall not be made to the extent (but

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	 	 	 	only to the extent) that, after such
receipt of any Shares upon the exercise of such Warrant or otherwise
hereunder, Lehman Brothers Holdings Inc. (“Holdings”) would directly or
indirectly beneficially own (as such term is defined for purposes of
Section 13(d) of the Securities Exchange Act of 1934, as amended) in
excess of 8.0% of the outstanding Shares. Any purported delivery hereunder
shall be void and have no effect to the extent (but only to the extent)
that such delivery would result in Holdings directly or indirectly so
beneficially owning in excess of 8.0% of the outstanding Shares. If any
delivery owed to Party A hereunder is not made, in whole or in part, as a
result of this provision, Party B’s obligation to make such delivery and
Party A’s right to exercise a Warrant shall not be extinguished and Party
B shall make such delivery as promptly as practicable after, but in no
event later than one Clearance System Business Day after, Party A gives
notice to Party B that such exercise or delivery would not result in
Holdings directly or indirectly so beneficially owning in excess of 8.0%
of the outstanding Shares; provided however that, if such notice is
delivered by Party A after 12:00 PM New York City time on an Exchange
Business Day, Party B shall make such delivery no later than two Clearance
System Business Days after Party A gives such notice to Party B.
	 
	 	 	 	 
	 

	 	Status of New Delivered Securities:
	 	If, in the reasonable judgment of Party A based on advice of counsel, for
any reason, any Shares or Share Termination Delivery Units, as the case
may be (either, “Delivered Securities”), deliverable to Party A hereunder
would not be immediately freely transferable by Party A under Rule 144
under the Securities Act, then Party A may elect to either (x) accept
delivery of such Delivered Securities notwithstanding any restriction on
transfer or (y) have the provisions set forth below apply:
	 
	 	 	 	 
	 

	 	 	 	At the election of Party B, which election shall be in writing and shall
be delivered to Party A no later than the date five Scheduled Trading Days
prior to the date such Delivered Securities are required to be delivered
(if Party B makes no election by such date, Party B shall be deemed to
have made the election described in clause (ii) below), either:
	 
	 	 	 	 
	 

	 	 	 	(i) All Delivered Securities, delivered by Party B to Party A shall be, at
the time of such delivery, covered by an effective registration statement
of the Issuer for immediate resale by Party A (such registration statement
and the corresponding prospectus (the “Prospectus”) (including, without
limitation, any sections describing the plan of distribution) in form and
content commercially reasonably satisfactory to Party A); or
	 
	 	 	 	 
	 

	 	 	 	(ii) Party B shall deliver Delivered Securities that are not so registered.
	 
	 	 	 	 
	 

	 	 	 	If Party B makes the election described in clause (i) above:
	 
	 	 	 	 
	 

	 	 	 	(a) Party A (or an Affiliate of Party A designated by Party A) shall be
afforded a reasonable opportunity to conduct a due diligence investigation
with respect to the Issuer that is customary in scope for underwritten
offerings of equity securities and that yields results that are
commercially reasonably satisfactory to Party A or such Affiliate, as the
case may be, in its discretion, and if requested by the Issuer, subject to
execution by such recipients of customary confidentiality agreements
reasonably acceptable to the Issuer; and
	 
	 	 	 	 
	 

	 	 	 	(b) Party A (or an Affiliate of Party A designated by Party A) and the
Issuer shall enter into an agreement (a “Registration Agreement”) on
commercially reasonable terms in connection with the public resale of such
Delivered Securities by Party A or such Affiliate substantially similar to
underwriting agreements customary for underwritten offerings of equity
securities, in form and substance commercially reasonably satisfactory to
Party A or such Affiliate and the Issuer (provided that for the avoidance
of doubt, neither Party A nor any of its Affiliates nor any other person
shall be entitled to any fees for such underwritten offering

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	 	 	 	including,
without limitation, any underwriting discounts or commissions from the
Issuer or any of its subsidiaries), which Registration Agreement shall
include, without limitation, provisions substantially similar to those
contained in such underwriting agreements relating to the indemnification
of, and contribution in connection with the liability of, Party A and its
Affiliates, and the Issuer shall provide for the payment of all
registration costs, filing fees and its own accounting and legal fees and
expenses and, provide for the reimbursement of all reasonable
out-of-pocket expenses of Party A in connection with such resale,
including all reasonable fees and expenses of counsel for Party A (such
out-of-pocket expenses for Party A subject to a cap of USD 100,000 in the
aggregate (including any amounts previously paid pursuant to this
section); provided that Party B shall not be obligated to pay any of such
out-of-pocket expenses until it receives reasonably detailed invoices
documenting such out-of-pocket expenses including evidence that such
out-of-pocket expenses have been incurred and paid)), and shall provide
for the delivery of accountants’ “comfort letters” to Party A or such
Affiliate with respect to the financial statements and certain financial
information contained in or incorporated by reference into the Prospectus.
	 
	 	 	 	 
	 

	 	 	 	If Party B makes the election described in clause (ii) above:
	 
	 	 	 	 
	 

	 	 	 	(a) All Delivered Securities shall be delivered to Party A (or any
Affiliate of Party A designated by Party A) pursuant to the exemption from
the registration requirements of the Securities Act provided by Section
4(2) thereof;
	 
	 	 	 	 
	 

	 	 	 	(b) Party A (or an Affiliate of Party A designated by Party A) and any
potential institutional purchaser of any such Delivered Securities from
Party A or such Affiliate identified by Party A shall be afforded a
commercially reasonable opportunity to conduct a due diligence
investigation in compliance with applicable law with respect to the Issuer
customary in scope for private placements of equity securities (including,
without limitation, the right to have made available to them for
inspection all financial and other records, pertinent corporate documents
and other information reasonably requested by them), and if requested by
the Issuer, subject to execution by such recipients of customary
confidentiality agreements reasonably acceptable to the Issuer;
	 
	 	 	 	 
	 

	 	 	 	(c) Party A (or an Affiliate of Party A designated by Party A) and the
Issuer shall enter into an agreement (a “Private Placement Agreement”) on
commercially reasonable terms in connection with the private placement of
such Delivered Securities by the Issuer to Party A or such Affiliate and
the private resale of such shares by Party A or such Affiliate,
substantially similar to private placement purchase agreements customary
for private placements of equity securities, in form and substance
commercially reasonably satisfactory to Party A and the Issuer (provided
that, for the avoidance of doubt, neither Party A nor any of its
Affiliates nor any other person shall be entitled to any fees under such
private placement including, without limitation, any discounts or
commissions from the Issuer or any of its subsidiaries), which Private
Placement Agreement shall include, without limitation, provisions
substantially similar to those contained in such private placement
purchase agreements relating to the indemnification of, and contribution
in connection with the liability of, Party A and its Affiliates, and the

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	 	 	 	Issuer shall provide for the reimbursement by the Issuer of all reasonable
out-of-pocket expenses of Party A in connection with such resale,
including all reasonable fees and expenses of counsel for Party A (such
out-of-pocket expenses for Party A subject to a cap of USD 100,000 in the
aggregate (including any amounts previously paid pursuant to this
section); provided that Party B shall not be obligated to pay any of such
out-of-pocket expenses until it receives reasonably detailed invoices
documenting such out-of-pocket expenses including evidence that such
out-of-pocket expenses have been incurred and paid)) and, shall contain
representations, warranties and agreements of the Issuer reasonably
necessary or advisable to establish and maintain the availability of an
exemption from the registration requirements of the Securities Act for
such resales;
	 
	 	 	 	 
	 

	 	 	 	(d) Party B agrees that any Delivered Securities so delivered to Party A
or its Affiliates, unless otherwise prohibited by law, may be transferred
by and among Party A and its Affiliates, and the Issuer shall effect such
transfer without any further action by Party A; and
	 
	 	 	 	 
	 

	 	 	 	(e) Party B shall be required to deliver an additional number of Delivered
Securities so that the aggregate value of the Delivered Securities, as
determined by the Calculation Agent to reflect an appropriate and
commercially reasonable liquidity discount, equals the value of the number
of Delivered Securities that would otherwise be deliverable if such
Delivered Securities were freely tradable upon receipt by Party A (the
“Settlement Value”).
	 
	 	 	 	 
	 

	 	 	 	(For the avoidance of doubt, as used in this section only, the term
“Issuer” shall mean the issuer of the relevant securities, as the context
shall require.)
	 
	 	 	 	 
	 

	 	Make-Whole Shares:
	 	If Party B makes the election described in clause (ii) under “Status of
New Delivered Securities” above, then in either case Party A or its
affiliate may sell such Shares or Share Termination Delivery Units, as the
case may be, during a period (the “Resale Period”) commencing on the
Exchange Business Day following delivery of such Shares or Share
Termination Delivery Units, as the case may be, and ending on the Exchange
Business Day on which Party A completes the sale of all such Shares or
Share Termination Delivery Units, as the case may be, or a sufficient
number of Shares or Share Termination Delivery Units, as the case may be,
so that the realized net proceeds of such sales exceed the amount of the
Settlement Value. If any of such delivered Shares or Share Termination
Delivery Units remain after such realized net proceeds exceed the
Settlement Value, Party A shall return such remaining Shares or Share
Termination Delivery Units to Party B. If the Settlement Value exceeds
the realized net proceeds from such resale, Party B shall transfer to
Party A by the open of the regular trading session on the Exchange on the
Exchange Trading Day immediately following the last day of the Resale
Period the amount of such excess (the “Additional Amount”) in cash or in a
number of additional Shares or Share Termination Delivery Units, as the
case may be (“Make-whole Shares”), in an amount that, based on the fair
market value of such Make-whole Shares, as determined by the Calculation
Agent, on the last day of the Resale Period, has a dollar value equal to
the Additional Amount. The Resale Period shall continue to enable the
sale of the Make-whole Shares in the

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	 	 	 	manner contemplated by this section.
This provision shall be applied successively until the Additional Amount
is equal to zero, subject to “Maximum Share Delivery” below.
	 
	 	 	 	 
	 

	 	Extension of Settlement:
	 	Party A may divide any Component into additional Components and designate
the Expiration Date and the Number of Warrants for each such Component if
Party A determines, in its good faith reasonable discretion, that such
further division is reasonably necessary or advisable to preserve Party
A’s hedging activities in light of market or existing liquidity conditions
in the cash market or stock loan market or to enable Party A to effect
purchases of Shares in connection with its hedging activity 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.
	 
	 	 	 	 
	 

	 	Maximum Share Delivery:
	 	Notwithstanding any provision of this Confirmation to the contrary, the
maximum number of Shares that may be delivered by Party B hereunder will
be limited to 500,000 Shares (as such number may be adjusted from time to
time) (the “Capped Number”). Party B represents and warrants (which
representation and warranty shall be deemed to be repeated on each day
that the Transaction is outstanding) that the Capped Number is equal to or
less than the number of authorized but unissued Shares of Party B that are
not reserved for future issuance in connection with transactions in the
Shares (other than the Transaction) on the date of the determination of
the Capped Number (such Shares, the “Available Shares”). For the avoidance
of doubt, the parties agree that (i) any Shares reserved pursuant to
equity options plans, employee benefit plans and convertible notes, and
(ii) any restricted Shares held by employees that are subject to
repurchase on or before October 31, 2007 shall not be considered Available
Shares. If at any time the number of Available Shares less 200,000 Shares
(such difference, the “Lesser Available Shares”) exceeds two times the
Capped Number, Party B shall so notify Party A, and the Capped Number
shall be automatically increased to equal 50% of the Lesser Available
Shares, provided that the Capped Number shall not exceed 1.2 times the
aggregate Number of Shares for all Components. Party B agrees to use its
reasonable best efforts to seek approval from its shareholders at its next
annual meeting of shareholders, or, if necessary, a subsequent annual
meeting of shareholders, to increase the number of authorized but unissued
Shares such that 50% of the Lesser Available Shares shall be equal to, and
the Capped Number shall be increased to, 1.2 times the aggregate Number of
Shares for all Components. If Party B does not succeed in obtaining such
approval for such an increase at or prior to its second annual meeting of
shareholders following the Trade Date, (i) the Number of Shares for each
Component shall be automatically increased by 10% and (ii) an Additional
Termination Event shall occur with respect to which the Transaction shall
be the sole Affected Transaction and Party B shall be the sole Affected
Party; provided however that if such approval is obtained after Party B’s
second annual meeting of shareholders but before the earlier of the
Expiration Date for such Component and any earlier date that Party A has
designated as an Early Termination Date or other date for cancellation or
termination of the Transaction, the Number of Shares for each Component
will revert back to the number prior to such 10% increase under clause (i)
above. For the avoidance of doubt Party A shall have no obligation to
exercise its right pursuant to such Additional

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	 	 	 	Termination Event, such
right will be an ongoing right until Party B has obtained such approval
from its shareholders for such an increase in the number of Available
Shares and such right will automatically terminate upon Party B obtaining
such approval for such an increase. In the event Party B shall not have
delivered the full number of Shares otherwise deliverable as a result of
this section (the resulting deficit, the “Deficit Shares”), Party B shall
be continually obligated to deliver, from time to time until the full
number of Deficit Shares have been delivered pursuant to this section,
Shares when, and to the extent, that (i) Shares are repurchased, acquired
or otherwise received by Party B or any of its subsidiaries from any
persons (other than any restricted Shares held by employees that are
subject to repurchase on or before October 31, 2007) (whether or not in
exchange for cash, fair value or any other consideration, and including,
for the avoidance of doubt, any Shares received in settlement of any
option or other derivative transaction) (such Shares, “Acquired Shares”),
(ii) authorized and unissued Shares reserved for issuance in respect of
other transactions prior to the Trade Date which prior to the relevant
date become no longer so reserved or (iii) Party B additionally authorizes
any unissued Shares that are not reserved for other transactions. Party B
shall promptly notify Party A of the occurrence of any of the foregoing
events (including the number of Shares subject to clause (i), (ii) or
(iii) and the corresponding number of Shares to be delivered) and promptly
deliver such Shares thereafter. Unless and until the Capped Number has
been increased to 1.2 times the aggregate Number of Shares for all
Components, Party B shall not retire any Acquired Shares or issue or
deliver or agree to issue or deliver any Acquired Shares to any person
other than Party B. For the avoidance of doubt, under no circumstances
shall Party B be required to pay cash to Party A in respect of any Deficit
Shares.
	 
	 	 	 	 
	 

	 	Transfer:
	 	Notwithstanding Section 7 of the Agreement, Party A may assign its rights
and obligations under the Transaction and under the Agreement, in whole
and not in part, at any time to any person or entity whatsoever without
the consent of Party B. 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.
	 
	 	 	 	 
	 

	 	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.
	 
	 	 	 	 
	 

	 	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.

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	 	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 therefor “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.
	 
	 	 	 	 
	 

	 	Effectiveness:
	 	If, prior to the Premium Payment Date, Party A reasonably determines in
its good faith discretion that it is advisable to cancel the Transaction
because of concerns that Party A’s related hedging activities could be
viewed as not complying with applicable securities laws, rules or
regulations, the Transaction shall be cancelled and shall not become
effective, and neither party shall have any obligation to the other party
in respect of the Transaction.
	 
	 	 	 	 
	 

	 	Opinion:
	 	Party B shall deliver to Party A a written opinion or written opinions of
counsel, reasonably acceptable to Party A in form and substance, on or
before the Effective Date, to the effect that: (a) Party B has been duly
incorporated, validly exists as a corporation and is in good standing in
the jurisdiction of its incorporation; (b) the execution, delivery and
performance of this Confirmation is within the powers of Party B, and has
been duly authorized by all necessary corporate or other action; (c) this
Confirmation has been duly executed and delivered by Party B; (d) the
execution, delivery and performance of this Confirmation by Party B does
not contravene or constitute a default under any provision of the articles
of incorporation or bylaws or other constitutive documents, if any, of
Party B; (e) this Confirmation constitutes a valid and binding agreement
of Party B, enforceable against Party B in accordance with its terms; and
(f) Party B is not, and, after giving effect to the transactions
contemplated hereby will not be on the date of the opinion, an “investment
company” as such term is defined in the Investment Company Act of 1940, as
amended.

Global Deal ID: 3000789

18

 

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:

	 	/s/ Anatoly Kozlov
 

	 	 
	 	By:
	 	/s/ Barry Zwarenstein
 

	 	 
	Name: Anatoly Kozlov	 	 	 	Name: Barry Zwarenstein	 	 
	Title: Authorized Signatory	 	 	 	Title: Executive Vice President and Chief Financial Officer

Execution time will be furnished upon Party B’s written request.exv10w4

 

Exhibit 10.4

JPMorgan Chase Bank, National Association

London Branch

P.O. Box 161

60 Victoria Embankment

London EC4Y 0JP

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: Warrants

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 under 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. In the event of any inconsistency between either set of Definitions and
this Confirmation, this Confirmation will govern. For purposes of the Equity Definitions, each
reference herein to a Warrant shall be deemed to be a reference to a Call Option or an Option, as
the context requires.

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

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

 

	 	 	 
	 

	 	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
	 
	 	 
	     Components:

	 	The Transaction will be divided into individual Components, each with the
terms set forth in this Confirmation, and, in particular, with the Number
of Warrants and Expiration Date set forth in this Confirmation. The
payments and deliveries to be made upon settlement of the Transaction will
be determined separately for each Component as if each Component were a
separate Transaction under the Agreement.
	 
	 	 
	     Warrant Style:

	 	European
	 
	 	 
	     Warrant Type:

	 	Call
	 
	 	 
	     Seller:

	 	Party B
	 
	 	 
	     Buyer:

	 	Party A
	 
	 	 
	     Shares:

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

	 	For each Component of the Transaction, as provided in a schedule (the
“Schedule”) delivered by Party A to Party B contemporaneously with the
execution of this Confirmation.
	 
	 	 
	     Warrant Entitlement:

	 	One (1) Share per Warrant.
	 
	 	 
	     Number of Shares:

	 	The number of Shares obtained by multiplying the Number of Warrants by the
Warrant Entitlement.
	 
	 	 
	     Strike Price:

	 	The greater of (i) USD 62.356 and (ii) 1.70 times the average of the
volume weighted average prices per Share for each of the fifteen Trading
Days commencing on November 28, 2007 (as published by Bloomberg on
Bloomberg page “PAY.N <Equity> AQR” (or any successor thereto) at
4:15 P.M. New York City time on such Trading Day, or, in the event such
price is not so reported on such Trading Day for any reason, as determined
in good faith by the Calculation Agent in a commercially reasonable manner
and, to the extent practicable, based on a volume weighted average price
methodology).
	 
	 	 
	     Trading Day:

	 	A Scheduled Trading Day that is not a Disrupted Day.
	 
	 	 
	     Premium:

	 	USD 13,560,000
	 
	 	 
	     Premium Payment Date:

	 	The Effective Date.
	 
	 	 
	     Exchange:

	 	New York Stock Exchange
	 
	 	 
	     Related Exchange(s):

	 	All Exchanges
	 
	 	 
	Procedures for Exercise:
	 	 
	 
	 	 
	In respect of any Component:
	 	 
	 
	 	 
	     Expiration Time:

	 	The Valuation Time

2

 

	 	 	 
	     Expiration Date:

	 	As provided in the Schedule (or, if such date is not a Scheduled Trading
Day, the next following Scheduled Trading Day that is not already an
Expiration Date for another Component); provided that if that date is a
Disrupted Day, the Expiration Date for such Component shall be the first
succeeding Scheduled Trading Day that is not a Disrupted Day and is not or
is not deemed to be an Expiration Date in respect of any other Component
of the Transaction hereunder; and provided, further that if the Expiration
Date has not occurred pursuant to the preceding proviso as of the Final
Disruption Date, the Final Disruption Date shall be the Expiration Date
(irrespective of whether such date is a Disrupted Day or an Expiration
Date in respect of any other Component for the Transaction) and the
Settlement Price for the Final Disruption Date shall be determined by the
Calculation Agent in a commercially reasonable manner based on a volume
weighted average price methodology. Notwithstanding the foregoing and
anything to the contrary in the Equity Definitions, if a Market Disruption
Event occurs on any Expiration Date, the Calculation Agent may determine
that such Expiration Date is a Disrupted Day only in part, in which case
the Calculation Agent shall make adjustments to the Number of Warrants for
the relevant Component for which such day shall be the Expiration Date and
shall designate the Scheduled Trading Day determined in the manner
described in the immediately preceding sentence as the Expiration Date for
the remaining Warrants for such Component. Section 6.6 of the Equity
Definitions shall not apply to any Valuation Date occurring on an
Expiration Date.
	 
	 	 
	     Exercise Date:

	 	Each Expiration Date.
	 
	 	 
	     Automatic Exercise:

	 	Applicable with respect to the Warrants included in any Component;
provided that Section 3.4(b) of the Equity Definitions shall apply to Cash
Settlement and Net Share Settlement; provided further that “In-the-Money”
means the Settlement Price is greater than the Strike Price.
	 
	 	 
	     Disrupted Day:

	 	The definition of “Disrupted Day” in Section 6.4 of the Equity Definitions
shall be amended by adding the following sentence after the first
sentence: “A Scheduled Trading Day on which a Related Exchange fails to
open for trading during its regular trading session will not be a
Disrupted Day if the Calculation Agent determines that such failure will
not have a material impact on Party A’s ability to unwind any hedging
transactions related to the Transaction.”
	 
	 	 
	     Final Disruption Date:

	 	February 25, 2014
	 
	 	 
	     Market Disruption Event:

	 	Section 6.3(a) of the Equity Definitions is hereby amended by deleting the
words “during the one hour period that ends at the relevant Valuation
Time, Latest Exercise Time, Knock-in Valuation Time or Knock-out Valuation
Time, as the case may be,” in clause (ii) thereof, and by amending and
restating clause (iii) thereof in its entirety to read as follows: “(iii)
an Early Closure that the Calculation Agent determines is material.”
	 
	 	 
	Settlement Terms:
	 	 
	 
	 	 
	In respect of any Component:
	 	 
	 
	 	 
	     Settlement Currency:

	 	USD
	 
	 	 
	     Settlement Method Election:

	 	Applicable; provided that the same Settlement Method shall apply to all
Components; and provided further that references in the Equity

3

 

	 	 	 
	 

	 	Definitions
to “Physical Settlement” shall be deemed to be references to “Net Share
Settlement” as defined herein; and provided further that Party B may elect
Cash Settlement only if at the time of such election it provides to Party
A a written statement that the representations contained in paragraphs (f)
and (h) of “Additional Representations, Warranties and Agreements of Party
B:” below are true and correct as of and as if made on the date of such
election.
	 
	 	 
	     Electing Party:

	 	Party B
	 
	 	 
	     Settlement Method Election
Date:

	 	Five Scheduled Trading Days prior to, and including, the scheduled
Expiration Date for the Component with the earliest scheduled Expiration
Date.
	 
	 	 
	     Default Settlement Method:

	 	Net Share Settlement
	 
	 	 
	     Settlement Price:

	 	For any Valuation Date, the volume weighted average price per Share for
all Rule 10b-18 eligible transactions on the Exchange in the Shares for
such Valuation Date (without regard to pre-open or after hours trading
outside of any regular trading session), as published by Bloomberg on
Bloomberg page “PAY.N <Equity> AQR_SEC” at 4:15 P.M. New York City
time on such Valuation Date, or, in the event such price is not so
reported on such Valuation Date for any reason, as determined in good
faith by the Calculation Agent in a commercially reasonable manner and, to
the extent practicable, based on a volume weighted average price
methodology.
	 
	 	 
	Cash Settlement Terms:
	 	 
	 
	 	 
	In respect of any Component:
	 	 
	 
	 	 
	     Settlement Currency:

	 	USD
	 
	 	 
	     Cash Settlement Payment Date:

	 	With respect to each Valuation Date, three (3) full Exchange Business Days
after the final Valuation Date.
	 
	 	 
	Net Share Settlement Terms:
	 	 
	 
	 	 
	In respect of any Component:
	 	 
	 
	 	 
	     Net Share Settlement:

	 	In the event that Party B elects to settle this Transaction by Net Share
Settlement, on each Settlement Date, Party B will deliver to Party A the
Net Share Amount for such Settlement Date (rounded down to the nearest
whole Share) and will pay to Party A the Fractional Share Amount, if any,
in respect of the Net Share Amount.
	 
	 	 
	 

	 	The provisions of Sections 9.1(c), 9.8, 9.9, 9.10, 9.11 (except that the
Representation and Agreement contained in Section 9.11 of the Equity
Definitions shall be modified 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) 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 Warrant means that Net Share
Settlement is applicable to such Warrant.
	 
	 	 
	     Net Share Amount:

	 	In respect of any Exercise Date, subject to the last sentence of Section
9.5 of the Equity Definitions, the product of (i) the number of Warrants
exercised or deemed exercised on such Exercise Date, (ii) the Warrant

4

 

	 	 	 
	 

	 	Entitlement and (iii) (A) the excess of the Settlement Price on the
Valuation Date occurring on such Exercise Date over the Strike Price
divided by (B) such Settlement Price.
	 
	 	 
	     Settlement Date:

	 	The Settlement Date, determined as if Physical Settlement applied.
	 
	 	 
	Adjustments:
	 	 
	 
	 	 
	In respect of any Component:
	 	 
	 
	 	 
	     Dividend Adjustment:

	 	If at any time during the period from but excluding the Trade Date, to and
including an Expiration Date an ex-dividend date for a cash dividend
occurs with respect to the Shares, and that dividend, combined with any
previous cash dividend for which the ex-dividend date occurs within the
same regular quarterly dividend period of Party B, is more than the
Regular Dividend on a per share basis, then the Calculation Agent will
adjust the Strike Price, the Number of Warrants, the Warrant Entitlement,
the Number of Shares or any other variable relevant to the exercise,
settlement, payment or other terms of such Component to reflect the impact
of such excess dividend on the theoretical value of such Component.
“Regular Dividend” shall mean USD 0.00 per Share per quarter.
	 
	 	 
	     Share Adjustment:
	 	 
	 
	 	 
	          Method of Adjustment:

	 	Calculation Agent Adjustment; provided that the Equity Definitions shall
be amended by replacing the words “diluting or concentrative” in Sections
11.2(a), 11.2(c) (in two instances) and 11.2(e)(vii) with the word
“material” and by adding the words “or the Transactions” after the words
“theoretical value of the relevant Shares” in Sections 11.2(a), 11.2(c)
and 11.2(e)(vii); provided that (A) adjustments may be made to account for
changes in volatility and liquidity relative to the relevant Shares or the
Transaction, (B) no adjustments will be made to account for changes in
expected dividends or stock loan rate and (C) in the event an adjustment
is made or proposed to be made to the Number of Warrants or the Warrant
Entitlement, Party B may, at its option, elect to pay cash, as determined
by the Calculation Agent in its good faith discretion by commercially
reasonable means, on the Potential Adjustment Date in lieu of such
adjustment, with notice of such election to be given to Party A at least
five Scheduled Trading Days prior to such Potential Adjustment Date.
	 
	 	 
	Extraordinary Events:
	 	 
	 
	     Tender Offer Date; Announcement
Date:

	 	The definitions of “Tender Offer Date” and “Announcement Date” in Section
12.1 of the Equity Definitions will be amended by replacing the words
“voting shares” in the first and fifth line thereof, respectively, with
the word “Shares”.
	 
	 	 
	     Consequences of Merger Events:
	 	 
	 
	 	 
	          Share-for-Share:

	 	Modified Calculation Agent Adjustment
	 
	 	 
	          Share-for-Other:

	 	Cancellation and Payment (Calculation Agent Determination)
	 
	 	 
	          Share-for-Combined:

	 	Component Adjustment
	 
	 	 
	     Tender Offer:

	 	Applicable; provided however that if an event occurs that constitutes both
a Tender Offer under Section 12.1(d) of the Equity Definitions and
Additional Termination Event under clause (ii) of Additional

5

 

	 	 	 
	 

	 	Termination
Events (as defined herein), Party A may elect, in its commercially
reasonable judgment, whether the provisions of Section 12.3 of the Equity
Definitions or clause (ii) of Additional Termination Events will apply.
	 
	 	 
	 

	 	The definition of “Tender Offer” in Section 12.1 of the Equity Definitions
will be amended by (1) replacing “10%” in the third line thereof with
“20%” and (2) replacing the phrase “outstanding voting shares of the
Issuer” in the fourth line thereof with “outstanding Shares of the
Issuer”.
	 
	 	 
	     Consequences of Tender Offers:
	 	 
	 
	 	 
	          Share-for-Share:

	 	Modified Calculation Agent Adjustment
	 
	 	 
	          Share-for-Other:

	 	Modified Calculation Agent Adjustment
	 
	 	 
	          Share-for-Combined:

	 	Modified Calculation Agent Adjustment
	 
	 	 
	     New Shares:

	 	The definition of “New Shares” in Section 12.1 of the Equity Definitions
shall be amended by deleting subsection (i) in its entirety and replacing
it with the following: “(i) publicly quoted, traded or listed on any of
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.”
	 
	 	 
	     Composition of Combined 

     Consideration:

	 	Not Applicable
	 
	 	 
	     Nationalization, Insolvency or 

     Delisting:

	 	Cancellation and Payment (Calculation Agent Determination)
	 
	 	 
	     Delisting:

	 	The definition of “Delisting” in Section 12.6 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 or Tender Offer) 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 Disruption Events:
	 	 
	 
	 	 
	     Change in Law:

	 	Applicable
	 
	 	 
	     Failure to Deliver:

	 	Applicable
	 
	 	 
	     Insolvency Filing:

	 	Applicable
	 
	 	 
	     Hedging Disruption:

	 	Not Applicable
	 
	 	 
	     Increased Cost of Hedging:

	 	Not Applicable
	 
	 	 
	     Loss of Stock Borrow:

	 	Applicable

6

 

	 	 	 
	     Maximum Stock Loan Rate:

	 	200 basis points
	 
	 	 
	     Increased Cost of Stock Borrow:

	 	Applicable
	 
	 	 
	     Initial Stock Loan Rate:

	 	25 basis points
	 
	 	 
	     Amendment to Section 12.9(b)(i)
of 

     Equity Definitions:

	 	Section 12.9(b)(i) of the Equity Definitions is hereby amended by adding
the following sentence at the end: “If neither party elects to terminate
the Transaction, the Calculation Agent may adjust the terms of the
Transaction upon the occurrence of such an event pursuant to Modified
Calculation Agent Adjustment (as if such event were a Tender Offer).”
	 
	 	 
	     Hedging Party:

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

	 	Party A shall be the Determining Party for all applicable Additional
Disruption Events.
	 
	 	 
	      Acknowledgments:
	 	 
	 
	 	 
	     Non-Reliance:

	 	Applicable
	 
	 	 
	     Agreements and Acknowledgments
	 	 
	     Regarding Hedging Activities:

	 	Applicable
	 
	 	 
	     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) Any Shares, when delivered in accordance with all of the terms of the
Transaction, will be duly authorized and validly issued, fully paid and
nonassessable, and the issuance thereof will not be subject to any
preemptive or similar rights.

(c) 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.

(d) 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

7

 

	 	 	 
	 

	 	documents), 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.

(e) As of the Trade Date, it has not entered into any obligation that
would contractually limit it from effecting Cash Settlement or Net Share
Settlement under the Transaction.

(f) 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.

(g) It shall not take any action to decrease the number of Available
Shares below the Capped Number (each as defined below).

(h) It is not entering into the Transaction nor is it making an election
hereunder 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 to facilitate a
distribution of Shares (or any security convertible into or exchangeable
for Shares) within the meaning of Regulation M, or otherwise in violation
of the Exchange Act, including Regulation M thereunder (it being
understood that Party B makes no representation pursuant to this clause
with respect to any action or inaction of Party A, JPMSI or any of their
respective affiliates or any other person other than Party B).

(i) 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.

(j) (A) During the period starting on the first Expiration Date and ending
on the last Expiration Date (the “Settlement Period”), the Shares or
securities that are convertible into, or exchangeable or exercisable for
Shares, are not, and shall not be, subject to a “restricted period,” as
such term is defined in Regulation M under the Exchange Act (“Regulation
M”) and (B) Party B shall not engage in any “distribution,” as such term
is defined in Regulation M, other than a distribution meeting the
requirements of the exceptions set forth in sections 101(b)(10) and
102(b)(7) of Regulation M, until the second Exchange Business Day
immediately following the Settlement Period (it being understood that
Party B makes no representation pursuant to this clause with respect to
any action or inaction of Party A, JPMSI or any of their respective
affiliates or any other person other than Party B).

(k) During the Settlement Period, neither Party B nor any “affiliate” or
“affiliated purchaser” (each as defined in Rule 10b-18 of the Exchange
Act) shall directly or indirectly (including, without limitation, by means
of any cash-settled or other derivative instrument) purchase, offer to
purchase, place any bid or limit order that would effect a purchase of, or
commence any tender offer relating to, any Shares (or an equivalent
interest, including a unit of beneficial interest in a trust or limited
partnership or a depository share) or any security convertible into or
exchangeable or exercisable for Shares, except through Party A or its
affiliates.

8

 

	 	 	 
	 

	 	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 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
	 

	 	Attn: Barry Zwarenstein, Chief Financial Officer
	 

	 	Tel: (408) 232-7888
	 

	 	Fax: (408) 232-7889
	 

	 	Email: Barry_Zwarenstein@VERIFONE.com
	 
	 	 
	     Account Details:

	 	(a) Account for payments to Party A:
	 
	 	 
	 

	 	JPMorgan Chase Bank, National Association, New York
	 

	 	ABA: 021 000 021

9

 

	 	 	 
	 

	 	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 B to
Party A, (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,
Tender Offer 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 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, Tender Offer 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 elect to satisfy its Payment Obligation
by the Share Termination Alternative, Party A shall have the right to
require Party B to satisfy its Payment Obligation by the Share Termination
Alternative. Upon Notice of Share Termination the following provisions
shall apply:
	 
	 	 
	Share Termination Alternative:

	 	Applicable and means that Party B shall deliver to Party A 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, Merger Event or Tender Offer, a unit consisting of the

10

 

	 	 	 
	 

	 	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, Merger Event or Tender Offer, 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 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, Merger Event or Tender Offer 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 9.8, 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.
	 
	 	 
	Additional Termination Events:

	 	(i) If at any time Party A reasonably determines in its good faith based
on advice of counsel that it is advisable to terminate a portion of the
Transaction so that Party A’s related hedging activities will comply with
applicable securities laws, rules or regulations, an Additional
Termination Event shall occur with respect to which (1) Party B shall be
the sole Affected Party and (2) the Transaction shall be the sole Affected
Transaction.
	 
	 	 
	 

	 	(ii) If any transaction (other than a Merger Event) is consummated the
result of which is that any “person” becomes the “beneficial owner” (as
these terms are defined in Rule 13d-3 and Rule 13d-5 under the Exchange
Act), directly or indirectly, of more than 50% of Party B’s outstanding
capital stock that is at the time entitled to vote by the holder thereof
in the election of Party B board of directors (or comparable body), Party
A shall have the right to designate such event an Additional Termination
Event and designate an Early Termination Date pursuant to Section 6(b) of
the Agreement, and (1) Party B shall be the sole Affected Party, (2) the
Transaction shall be the sole Affected Transaction and (3) notwithstanding
anything to the contrary in this Confirmation, Cancellation and Payment
(Calculation Agent Determination) shall apply as the payment measure in
lieu of Loss for the purposes of Section 6(e) of the Agreement.
	 
	 	 
	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. Any
determination of an amount payable pursuant to Section 6 of the Agreement
or Article 12 of the Equity Definitions shall assume that the

11

 

	 	 	 
	 

	 	Capped
Number (as defined below) shall have been increased to the aggregate
Number of Shares for all Components as contemplated by “Maximum Share
Delivery” below. Automatic Early Termination will not apply to either
party.
	 
	 	 
	 

	 	For the avoidance of doubt and notwithstanding any provision of the
Agreement or the Definitions to the contrary:
	 
	 	 
	 

	 	(i) Party A shall in no event be obligated to (a) terminate or cancel the
Transaction at any time or (b) make any payment or delivery to Party B (1)
pursuant to Sections 12.7 or 12.9 of the Equity Definitions or (2)
pursuant to Section 6(d)(ii) of the Agreement, except as a result of a
breach by Party A of the Agreement or this Confirmation; and
	 
	 	 
	 

	 	(ii) a party having the right to designate an Early Termination Date or
other date of termination or cancellation of the Transaction may choose as
such date any date on or after the first date that may be chosen as such
date under the Agreement or the Definitions.
	 
	 	 
	Status of Claims in Bankruptcy:

	 	Party A acknowledges and agrees that this Confirmation is not intended to
convey to it rights with respect to the Transaction that are senior to the
claims of common stockholders in any U.S. bankruptcy proceedings of Party
B; provided that nothing herein shall limit or shall be deemed to limit
Party A’s right to pursue remedies in the event of a breach by Party B of
its obligations and agreements with respect to the Transaction; and
provided further that nothing herein shall limit or shall be deemed to
limit Party A’s rights in respect of any transactions other than the
Transaction. For the avoidance of doubt, the parties acknowledge that this
Confirmation is not secured by any collateral that would otherwise secure
the obligations of Party B herein under or pursuant to any other
agreement.
	 
	 	 
	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 U.S. Bankruptcy Code (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

12

 

	 	 	 
	 

	 	meaning of Sections 362, 560 and 561 of the Bankruptcy Code.
	 
	 	 
	Limit on Beneficial Ownership:

	 	Notwithstanding any other provisions hereof, Party A may not exercise any
Warrant hereunder, Automatic Exercise shall not apply with respect
thereto, and any delivery pursuant to “Alternative Calculations and
Payment on Early Termination and on Certain Extraordinary Events” above
shall not be made to the extent (but only to the extent) that, after such
receipt of any Shares upon the exercise of such Warrant or otherwise
hereunder, JPMorgan Chase & Co. would directly or indirectly beneficially
own (as such term is defined for purposes of Section 13(d) of the
Securities Exchange Act of 1934, as amended) in excess of 8.0% of the
outstanding Shares. Any purported delivery hereunder shall be void and
have no effect to the extent (but only to the extent) that such delivery
would result in JPMorgan Chase & Co. directly or indirectly so
beneficially owning in excess of 8.0% of the outstanding Shares. If any
delivery owed to Party A hereunder is not made, in whole or in part, as a
result of this provision, Party B’s obligation to make such delivery and
Party A’s right to exercise a Warrant shall not be extinguished and Party
B shall make such delivery as promptly as practicable after, but in no
event later than one Clearance System Business Day after, Party A gives
notice to Party B that such exercise or delivery would not result in
JPMorgan Chase & Co. directly or indirectly so beneficially owning in
excess of 8.0% of the outstanding Shares; provided however that, if such
notice is delivered by Party A after 12:00 PM New York City time on an
Exchange Business Day, Party B shall make such delivery no later than two
Clearance System Business Days after Party A gives such notice to Party B.
	 
	 	 
	Status of New Delivered Securities:

	 	If, in the reasonable judgment of Party A based on advice of counsel, for
any reason, any Shares or Share Termination Delivery Units, as the case
may be (either, “Delivered Securities”), deliverable to Party A hereunder
would not be immediately freely transferable by Party A under Rule 144
under the Securities Act, then Party A may elect to either (x) accept
delivery of such Delivered Securities notwithstanding any restriction on
transfer or (y) have the provisions set forth below apply:
	 
	 	 
	 

	 	At the election of Party B, which election shall be in writing and shall
be delivered to Party A no later than the date five Scheduled Trading Days
prior to the date such Delivered Securities are required to be delivered
(if Party B makes no election by such date, Party B shall be deemed to
have made the election described in clause (ii) below), either:
	 
	 	 
	 

	 	(i) All Delivered Securities, delivered by Party B to Party A shall be, at
the time of such delivery, covered by an effective registration statement
of the Issuer for immediate resale by Party A (such registration statement
and the corresponding prospectus (the “Prospectus”) (including, without
limitation, any sections describing the plan of distribution) in form and
content commercially reasonably satisfactory to Party A); or
	 
	 	 
	 

	 	(ii) Party B shall deliver Delivered Securities that are not so registered. 

If Party B makes the election described in clause (i) above:
	 
	 	 
	 

	 	(a) Party A (or an Affiliate of Party A designated by Party A) shall be
afforded a reasonable opportunity to conduct a due diligence investigation
with respect to the Issuer that is customary in scope for underwritten
offerings of equity securities and that yields results that are
commercially reasonably satisfactory to Party A or such Affiliate, as the

13

 

	 	 	 
	 

	 	case may be, in its discretion, and if requested by the Issuer, subject to
execution by such recipients of customary confidentiality agreements
reasonably acceptable to the Issuer; and
	 
	 	 
	 

	 	(b) Party A (or an Affiliate of Party A designated by Party A) and the
Issuer shall enter into an agreement (a “Registration Agreement”) on
commercially reasonable terms in connection with the public resale of such
Delivered Securities by Party A or such Affiliate substantially similar to
underwriting agreements customary for underwritten offerings of equity
securities, in form and substance commercially reasonably satisfactory to
Party A or such Affiliate and the Issuer (provided that for the avoidance
of doubt, neither Party A nor any of its Affiliates nor any other person
shall be entitled to any fees for such underwritten offering including,
without limitation, any underwriting discounts or commissions from the
Issuer or any of its subsidiaries), which Registration Agreement shall
include, without limitation, provisions substantially similar to those
contained in such underwriting agreements relating to the indemnification
of, and contribution in connection with the liability of, Party A and its
Affiliates, and the Issuer shall provide for the payment of all
registration costs, filing fees and its own accounting and legal fees and
expenses and, provide for the reimbursement of all reasonable
out-of-pocket expenses of Party A in connection with such resale,
including all reasonable fees and expenses of counsel for Party A (such
out-of-pocket expenses for Party A subject to a cap of USD 100,000 in the
aggregate (including any amounts previously paid pursuant to this
section); provided that Party B shall not be obligated to pay any of such
out-of-pocket expenses until it receives reasonably detailed invoices
documenting such out-of-pocket expenses including evidence that such
out-of-pocket expenses have been incurred and paid)), and shall provide
for the delivery of accountants’ “comfort letters” to Party A or such
Affiliate with respect to the financial statements and certain financial
information contained in or incorporated by reference into the Prospectus.
	 
	 	 
	 
	 	 
	 

	 	If Party B makes the election described in clause (ii) above:
	 
	 	 
	 

	 	(a) All Delivered Securities shall be delivered to Party A (or any
Affiliate of Party A designated by Party A) pursuant to the exemption from
the registration requirements of the Securities Act provided by Section
4(2) thereof;
	 
	 	 
	 

	 	(b) Party A (or an Affiliate of Party A designated by Party A) and any
potential institutional purchaser of any such Delivered Securities from
Party A or such Affiliate identified by Party A shall be afforded a
commercially reasonable opportunity to conduct a due diligence
investigation in compliance with applicable law with respect to the Issuer
customary in scope for private placements of equity securities (including,
without limitation, the right to have made available to them for
inspection all financial and other records, pertinent corporate documents
and other information reasonably requested by them), and if requested by
the Issuer, subject to execution by such recipients of customary
confidentiality agreements reasonably acceptable to the Issuer;
	 
	 	 
	 

	 	(c) Party A (or an Affiliate of Party A designated by Party A) and the
Issuer shall enter into an agreement (a “Private Placement Agreement”) on
commercially reasonable terms in connection with the private placement of
such Delivered Securities by the Issuer to Party A or such

14

 

	 	 	 
	 

	 	Affiliate and the private resale of such shares by Party A or such Affiliate,
substantially similar to private placement purchase agreements customary
for private placements of equity securities, in form and substance
commercially reasonably satisfactory to Party A and the Issuer (provided
that, for the avoidance of doubt, neither Party A nor any of its
Affiliates nor any other person shall be entitled to any fees under such
private placement including, without limitation, any discounts or
commissions from the Issuer or any of its subsidiaries), which Private
Placement Agreement shall include, without limitation, provisions
substantially similar to those contained in such private placement
purchase agreements relating to the indemnification of, and contribution
in connection with the liability of, Party A and its Affiliates, and the
Issuer shall provide for the reimbursement by the Issuer of all reasonable
out-of-pocket expenses of Party A in connection with such resale,
including all reasonable fees and expenses of counsel for Party A (such
out-of-pocket expenses for Party A subject to a cap of USD 100,000 in the
aggregate (including any amounts previously paid pursuant to this
section); provided that Party B shall not be obligated to pay any of such
out-of-pocket expenses until it receives reasonably detailed invoices
documenting such out-of-pocket expenses including evidence that such
out-of-pocket expenses have been incurred and paid)) and, shall contain
representations, warranties and agreements of the Issuer reasonably
necessary or advisable to establish and maintain the availability of an
exemption from the registration requirements of the Securities Act for
such resales;
	 
	 	 
	 

	 	(d) Party B agrees that any Delivered Securities so delivered to Party A
or its Affiliates, unless otherwise prohibited by law, may be transferred
by and among Party A and its Affiliates, and the Issuer shall effect such
transfer without any further action by Party A; and
	 
	 	 
	 

	 	(e) Party B shall be required to deliver an additional number of Delivered
Securities so that the aggregate value of the Delivered Securities, as
determined by the Calculation Agent to reflect an appropriate and
commercially reasonable liquidity discount, equals the value of the number
of Delivered Securities that would otherwise be deliverable if such
Delivered Securities were freely tradable upon receipt by Party A (the
“Settlement Value”).
	 
	 	 
	 

	 	(For the avoidance of doubt, as used in this section only, the term
“Issuer” shall mean the issuer of the relevant securities, as the context
shall require.)
	 
	 	 
	Make-Whole Shares:

	 	If Party B makes the election described in clause (ii) under “Status of
New Delivered Securities” above, then in either case Party A or its
affiliate may sell such Shares or Share Termination Delivery Units, as the
case may be, during a period (the “Resale Period”) commencing on the
Exchange Business Day following delivery of such Shares or Share
Termination Delivery Units, as the case may be, and ending on the Exchange
Business Day on which Party A completes the sale of all such Shares or
Share Termination Delivery Units, as the case may be, or a sufficient
number of Shares or Share Termination Delivery Units, as the case may be,
so that the realized net proceeds of such sales exceed the amount of the
Settlement Value. If any of such delivered Shares or Share Termination
Delivery Units remain after such realized net proceeds

15

 

	 	 	 
	 

	 	exceed the
Settlement Value, Party A shall return such remaining Shares or Share
Termination Delivery Units to Party B. If the Settlement Value exceeds
the realized net proceeds from such resale, Party B shall transfer to
Party A by the open of the regular trading session on the Exchange on the
Exchange Trading Day immediately following the last day of the Resale
Period the amount of such excess (the “Additional Amount”) in cash or in a
number of additional Shares or Share Termination Delivery Units, as the
case may be (“Make-whole Shares”), in an amount that, based on the fair
market value of such Make-whole Shares, as determined by the Calculation
Agent, on the last day of the Resale Period, has a dollar value equal to
the Additional Amount. The Resale Period shall continue to enable the
sale of the Make-whole Shares in the manner contemplated by this section.
This provision shall be applied successively until the Additional Amount
is equal to zero, subject to “Maximum Share Delivery” below.
	 
	 	 
	Extension of Settlement:

	 	Party A may divide any Component into additional Components and designate
the Expiration Date and the Number of Warrants for each such Component if
Party A determines, in its good faith reasonable discretion, that such
further division is reasonably necessary or advisable to preserve Party
A’s hedging activities in light of market or existing liquidity conditions
in the cash market or stock loan market or to enable Party A to effect
purchases of Shares in connection with its hedging activity 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.
	 
	 	 
	Maximum Share Delivery:

	 	Notwithstanding any provision of this Confirmation to the contrary, the
maximum number of Shares that may be delivered by Party B hereunder will
be limited to 500,000 Shares (as such number may be adjusted from time to
time) (the “Capped Number”). Party B represents and warrants (which
representation and warranty shall be deemed to be repeated on each day
that the Transaction is outstanding) that the Capped Number is equal to or
less than the number of authorized but unissued Shares of Party B that are
not reserved for future issuance in connection with transactions in the
Shares (other than the Transaction) on the date of the determination of
the Capped Number (such Shares, the “Available Shares”). For the avoidance
of doubt, the parties agree that (i) any Shares reserved pursuant to
equity options plans, employee benefit plans and convertible notes, and
(ii) any restricted Shares held by employees that are subject to
repurchase on or before October 31, 2007 shall not be considered Available
Shares. If at any time the number of Available Shares less 200,000 Shares
(such difference, the “Lesser Available Shares”) exceeds two times the
Capped Number, Party B shall so notify Party A, and the Capped Number
shall be automatically increased to equal 50% of the Lesser Available
Shares, provided that the Capped Number shall not exceed 1.2 times the
aggregate Number of Shares for all Components. Party B agrees to use its
reasonable best efforts to seek approval from its shareholders at its next
annual meeting of shareholders, or, if necessary, a subsequent annual
meeting of shareholders, to increase the number of authorized but unissued
Shares such that 50% of the Lesser Available Shares shall be equal to, and
the Capped Number shall be increased to, 1.2 times the aggregate Number of
Shares for all Components. If Party B does not succeed in obtaining such
approval for such an increase at or prior to its second annual meeting of
shareholders

16

 

	 	 	 
	 

	 	following the Trade Date, (i) the Number of Shares for each
Component shall be automatically increased by 10% and (ii) an Additional
Termination Event shall occur with respect to which the Transaction shall
be the sole Affected Transaction and Party B shall be the sole Affected
Party; provided however that if such approval is obtained after Party B’s
second annual meeting of shareholders but before the earlier of the
Expiration Date for such Component and any earlier date that Party A has
designated as an Early Termination Date or other date for cancellation or
termination of the Transaction, the Number of Shares for each Component
will revert back to the number prior to such 10% increase under clause (i)
above. For the avoidance of doubt Party A shall have no obligation to
exercise its right pursuant to such Additional Termination Event, such
right will be an ongoing right until Party B has obtained such approval
from its shareholders for such an increase in the number of Available
Shares and such right will automatically terminate upon Party B obtaining
such approval for such an increase. In the event Party B shall not have
delivered the full number of Shares otherwise deliverable as a result of
this section (the resulting deficit, the “Deficit Shares”), Party B shall
be continually obligated to deliver, from time to time until the full
number of Deficit Shares have been delivered pursuant to this section,
Shares when, and to the extent, that (i) Shares are repurchased, acquired
or otherwise received by Party B or any of its subsidiaries from any
persons (other than any restricted Shares held by employees that are
subject to repurchase on or before October 31, 2007) (whether or not in
exchange for cash, fair value or any other consideration, and including,
for the avoidance of doubt, any Shares received in settlement of any
option or other derivative transaction) (such Shares, “Acquired Shares”),
(ii) authorized and unissued Shares reserved for issuance in respect of
other transactions prior to the Trade Date which prior to the relevant
date become no longer so reserved or (iii) Party B additionally authorizes
any unissued Shares that are not reserved for other transactions. Party B
shall promptly notify Party A of the occurrence of any of the foregoing
events (including the number of Shares subject to clause (i), (ii) or
(iii) and the corresponding number of Shares to be delivered) and promptly
deliver such Shares thereafter. Unless and until the Capped Number has
been increased to 1.2 times the aggregate Number of Shares for all
Components, Party B shall not retire any Acquired Shares or issue or
deliver or agree to issue or deliver any Acquired Shares to any person
other than Party B. For the avoidance of doubt, under no circumstances
shall Party B be required to pay cash to Party A in respect of any Deficit
Shares.
	 
	 	 
	Transfer:

	 	Notwithstanding Section 7 of the Agreement, Party A may assign its rights
and obligations under the Transaction and under the Agreement, in whole
and not in part, at any time to any person or entity whatsoever without
the consent of Party B. 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.
	 
	 	 
	Tax:

	 	Notwithstanding any other provision in this Confirmation, Party A

17

 

	 	 	 
	 

	 	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 therefor “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 B is not a Multibranch Party.
The Office of Party A for the Transaction is: London
	 
	 	 
	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.
	 
	 	 
	Effectiveness:

	 	If, prior to the Premium Payment Date, Party A reasonably determines in
its good faith discretion that it is advisable to cancel the Transaction
because of concerns that Party A’s related hedging activities could be
viewed as not complying with applicable securities laws, rules or
regulations, the Transaction shall be cancelled and shall not become
effective, and neither party shall have any obligation to the other party
in respect of the Transaction.
	 
	 	 
	Opinion:

	 	Party B shall deliver to Party A a written opinion or written opinions of
counsel, reasonably acceptable to Party A in form and substance, on or
before the Effective Date, to the effect that: (a) Party B has been duly
incorporated, validly exists as a corporation and is in good standing in
the jurisdiction of its incorporation; (b) the execution, delivery and
performance of this Confirmation is within the powers of Party B, and has
been duly authorized by all necessary corporate or other action; (c) this
Confirmation has been duly executed and delivered by Party B; (d) the
execution, delivery and performance of this Confirmation by Party B does
not contravene or constitute a default under any provision of the articles
of incorporation or bylaws or other constitutive documents, if any, of
Party B; (e) this Confirmation constitutes a valid and binding agreement
of Party B, enforceable against Party B in accordance with its terms; and
(f) Party B is not, and, after giving effect to the transactions
contemplated hereby will not be on the date of the opinion, an “investment
company” as such term is defined in the Investment Company Act of 1940, as
amended.

18

 

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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