Document:

Exhibit 10.2

 

JUNIOR PARTICIPATION AGREEMENT

 

JUNIOR
PARTICIPATION AGREEMENT (“Agreement”), is entered into as of February 22,
2010 by and among The Christopher John Kliefoth Revocable Trust
UA 07-10-2007 and Richard Horowitz (collectively or individually, “you” or
the “Junior Participants”), financial institutions set forth on the signature page hereto
(each a “Lender” and collectively, “Lenders”) and PNC Bank, National
Association (“PNC”), as agent for Lenders (in such capacity, the “Agent”).

 

1.             This Agreement will confirm your
participation with Agent and Lenders in the Revolving Advances made pursuant
to, and as such term is defined in, that certain Revolving Credit, Term Loan
and Security Agreement by and among Agent, Lenders and WM Coffman LLC (“Borrower”)
dated as of June 8, 2009 as heretofore and hereafter amended, supplemented
and/or otherwise modified, including without limitation by that certain
Forbearance and Amendment Agreement dated as of February 12, 2010 (the
“Loan Agreement”).  All capitalized terms
used but not otherwise defined in this Agreement shall have the meanings
ascribed to such terms in the Loan Agreement.

 

2.             Your participation in the Revolving
Advances is without recourse to Agent and Lenders and is subject to the terms
and provisions of this Agreement, the Loan Agreement and the Other Documents.

 

3.             Upon your remittance to Agent of
the sum of Two Hundred Fifty Thousand Dollars ($250,000), consisting of
$125,000 from each of the Junior Participants, Agent and Lenders shall sell to
you and you shall be deemed to have purchased from Agent and Lenders, on the
terms and conditions set forth in this Agreement, a junior and subordinate
“last out” participation (the “Junior Participation”) in the Revolving Advances
in such amount, but only in the manner and to the extent set forth in this
Agreement.

 

4.             You shall at all times have an
undivided but subordinated interest, to the extent of your Junior
Participation, in all Collateral heretofore or hereafter granted and/or
assigned to Agent and Lenders by Borrower from time to time or held by Agent
and Lenders pursuant to the Loan Agreement and the Other Documents.  You agree that Agent may from time to time,
in its sole discretion and without consulting or giving you any notice thereof,
amend, modify and/or renew the Loan Agreement and the Other Documents as Agent
determines in its sole and absolute discretion, and your Junior Participation
shall continue notwithstanding and such amendment, modification and/or renewal.  Agent shall provide to you promptly after the
execution and delivery thereof by the applicable parties, copies of any
amendments, modifications, supplements or other revisions to the Loan Agreement
and the Other Documents.  Notwithstanding
the foregoing, Agent shall provide you with not less than three (3) business
days written notice (unless such notice period is impracticable under any
applicable exigent circumstances, in which case Agent shall provide you with
such notice as is reasonably practicable) prior to taking any action, including
without limitation amending, modifying or supplementing the Loan Agreement
and/or the Other Documents, that is materially adverse to your interests.

 

5.             It is understood and agreed that
your Junior Participation shall constitute a junior and subordinate
participation in the outstanding Revolving Advances.

 

 

 

6.             All amounts payable to you (whether
regarding principal, interest or otherwise) shall be repayable by Agent and
Lenders to you only on the termination of all of the transactions of Borrower
with Agent and Lenders, and only out of any surplus received by Agent and
Lenders remaining after the payment in full in cash to Agent and Lenders of all
Obligations owing to us under the Loan Agreement and the Other Documents
(exclusive of your Junior Participation), including expenses, interest and
charges, and owing to any senior participant of all monies owing to it under
its participation with Agent and Lenders. 
Such surplus, if any, shall be turned over to you, but in no event shall
the amount so turned over exceed the amount of your Junior Participation plus
accrued interest.  Other than the
principal amount of your Junior Participation plus accrued interest, you shall
not be entitled to any compensation or other payment with respect to your Junior
Participation.  By your confirmation and
acceptance of this Agreement, you represent that you are entitled to receive
any payments to be made to you hereunder without the withholding of any tax and
that, upon Agent’s request, you will furnish to Agent such certifications,
statements and other documents deemed necessary or appropriate by Agent to
evidence your exemption from the withholding of any tax imposed by any
applicable jurisdiction or to enable Agent to comply with any applicable laws
or regulations relating thereto.

 

7.             The amount of accrued interest owed
to you with respect to your Junior Participation (the “Junior Participant’s
Interest Amount”) shall by calculated at the Contract Rate, adjusted when said
interest rate changes.  The calculation
of the Junior Participant’s Interest Amount interest shall be made by Agent and
such calculation shall be binding on all parties absent manifest error.  The Junior Participant’s Interest Amount
shall merely be a calculation of the amount to be paid to you out of the
surplus (if any) described above, and neither Agent nor Borrower shall be
obligated to pay, collect or segregate such Junior Participant’s Interest
Amount in a deposit account or similar account. 
If the amount of Revolving Advances is less than the amount of your
Junior Participation, you shall not receive any accrued interest on the amount
by which your Junior Participation exceeds the outstanding amount of Revolving
Advances.

 

8.             The Junior Participation shall be
acquired by you without recourse to Agent and Lenders and for your own account
and risk.  You hereby acknowledge that
you have, independently and without reliance upon us and based on such other
documents and information as you have deemed appropriate, made your own
commercial analysis and decision to enter into this Agreement, are not relying
and will not rely in the future upon any financial projections, estimates,
appraisals, financial summaries or credit memoranda prepared by or on behalf of
Agent and Lenders and given directly or indirectly to you to assist you in
making your own independent credit analysis. 
You further represent that (a) you have such knowledge and
experience in financial and business matters as to be capable of evaluating the
merits and risks of your Junior Participation; and (b) you have the
ability to bear the economic risks of the Junior Participation and can afford
the complete loss of such Junior Participation.

 

9.             The account of Borrower and all
transactions in connection therewith shall be conducted solely in Agent’s and
Lenders’ names, without charge for administration or clerical expenses except
to the extent same may be chargeable to Borrower under the Loan Agreement and
the Other Documents.  You acknowledge
that Agent and Lenders have made no representations or warranties, express or
implied, as to Borrower, the Loan Agreement, the Other Documents, the
transactions or the Collateral, or the legal validity, enforceability or
collectability thereof, and that you are fully familiar with all of the details
thereof.  You hereby acknowledge 

 

 

 

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that
you have received copies of the Loan Agreement and the Other Documents.  In giving or withholding consents or
approvals, taking, holding, permitting substitutions for or releasing
Collateral, obtaining or releasing the primary or secondary liability of any
party with respect to the Advances, or any Collateral granted as security
therefor, and otherwise in exercising, refraining from exercising, or waiving
any of Agent’s and Lenders’ rights under the Loan Agreement and the Other
Documents (all of which Agent and Lenders may do in their sole and absolute
discretion without notice to or consent by you), Agent and Lenders will
endeavor to use the same care as if the Advances were solely for their own
accounts, but Agent and Lenders shall be under no fiduciary duty to you and
they shall be liable to you only for their own willful misconduct or gross
negligence.  Agent and Lenders may make
such other Advances and enter into such other agreements and transactions with
Borrower as Agent and Lenders may, in their our sole and absolute judgment,
deem advisable, without notice to or consent from you.

 

10.           All attorneys’ fees, court costs,
collection expenses and other legal or extraordinary expenses, if advanced or
paid by Agent and Lenders to or for the account of Borrower or for the care,
preservation or collection of the Collateral shall be recovered by agent and
Lenders from the Collateral.  All sums
collected by Agent and Lenders upon the Collateral shall be applied first to
the payment to Agent and Lenders of the aforesaid expenses, then to interest
and fees and, finally, to the principal indebtedness owing to Agent and
Lenders.  Agent and Lenders shall have
the right to incur such expenses in their sole and absolute discretion as they
deem advisable.  You shall promptly repay
to Agent any sum paid by Agent to you under this Agreement in the event that
Agent or Lenders must repay the same to Borrower or its representatives for any
reason whatsoever, with interest thereon from the date Agent or Lenders repay
the same to Borrower or its representatives until you repay the same to Agent
in full at the rate of interest payable to you under this Agreement.

 

11.           Agent and Lenders shall have the
exclusive right to (i) service and manage the Loan Agreement, the Other
Documents, the Collateral and all transactions contemplated under the Loan
Agreement and Other Documents and (ii) exercise any and all remedies
available to Agent and Lenders therein and at law or in equity, or forbear from
exercising such remedies, all in Agent’s and Lenders’ sole and absolute
discretion.  It is specifically
understood and agreed that Agent and Lenders may from time to time make
Advances to Borrowers under the Loan Agreement and Other Documents without
regard to the Collateral.  Agent and
Lenders may make substantial over-advances to Borrower relying upon your
participation, notwithstanding the fact that in Agent’s and Lenders’ opinion
they may not have sufficient Collateral. 
You hereby agree to Agent’s and Lenders’ making such Advances.  Agent and Lenders do not assume and shall
have no responsibility or liability, express or implied, for the
collectability, enforceability, genuineness or validity of the transactions or
the Collateral, or the financial condition of Borrower or any obligation on
Borrower’s account, or credit or other information furnished by Agent and
Lenders to you.

 

12.           Agent and Lenders may, upon five (5) Business
Days notice, repurchase your Junior Participation, at any time, for a
repurchase price equal to your investment plus all accrued (but unpaid)
earnings thereon.  Upon such repurchase,
each party to this Agreement shall be released of any liability to the other
parties arising out of subsequent transactions with Borrower.  You may not terminate your Junior
Participation since Agent and Lenders are relying on the same in making
Advances to Borrower.

 

 

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13.           Nothing contained in this Agreement
shall confer upon any party to this Agreement any interest in, or subject any
party to this Agreement to any liability for, the business, assets, profits,
losses or obligations of the other parties to this Agreement, except to the
extent set forth in this Agreement.

 

14.           EACH PARTY HERETO DOES HEREBY
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT TO TRIAL BY JURY IN
ANY ACTION OR PROCEEDING BASED ON OR WITH RESPECT TO THIS AGREEMENT OR ANY OF
THE TRANSACTIONS CONTEMPLATED HEREBY OR RELATING OR INCIDENTAL HERETO.  EACH PARTY HERETO DOES HEREBY CERTIFY THAT NO
REPRESENTATIVE OR AGENT OF THEIRS HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT
IT WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THIS WAIVER OF RIGHT
TO JURY TRIAL PROVISION.

 

15.           THIS AGREEMENT SHALL BE GOVERNED,
CONSTRUED AND INTERPRETED AS TO VALIDITY, ENFORCEMENT AND IN ALL OTHER RESPECTS
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.  EACH PARTY HERETO EXPRESSLY CONSENTS TO THE
JURISDICTION AND VENUE OF ANY COURT OF THE STATE OF NEW YORK, COUNTY OF NEW
YORK AND OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW
YORK FOR ALL PURPOSES IN CONNECTION HEREWITH. 
ANY JUDICIAL PROCEEDING BY A PARTY HERETO AGAINST THE OTHER INVOLVING,
DIRECTLY OR INDIRECTLY ANY MATTER OR CLAIM IN ANY WAY ARISING OUT OF, RELATED
TO OR CONNECTED HEREWITH SHALL BE BROUGHT ONLY IN THE SUPREME COURT OF THE
STATE OF NEW YORK, COUNTY OF NEW YORK OR THE UNITED STATES DISTRICT COURT FOR
THE SOUTHERN DISTRICT OF NEW YORK.  EACH
PARTY HERETO FURTHER CONSENTS THAT ANY SUMMONS, SUBPOENA OR OTHER PROCESS OR
PAPERS (INCLUDING, WITHOUT LIMITATION, ANY NOTICE OR MOTION OR OTHER
APPLICATION TO EITHER OF THE AFOREMENTIONED COURTS OR A JUDGE THEREOF) OR ANY
NOTICE IN CONNECTION WITH ANY PROCEEDINGS HEREUNDER, MAY BE SERVED INSIDE
OR OUTSIDE OF THE STATE OF NEW YORK OR THE SOUTHERN DISTRICT OF NEW YORK BY
REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT REQUESTED, OR BY PERSONAL SERVICE
PROVIDED A REASONABLE TIME FOR APPEARANCE IS PERMITTED, OR IN SUCH OTHER MANNER
AS MAY BE PERMISSIBLE UNDER THE RULES OF SAID COURTS.  EACH PARTY HERETO WAIVES ANY OBJECTION TO
JURISDICTION AND VENUE OF ANY ACTION INSTITUTED HEREON AND SHALL NOT ASSERT ANY
DEFENSE BASED ON LACK OF JURISDICTION OR VENUE OR BASED UPON FORUM NON
CONVENIENS.

 

16.           To the extent permitted by applicable
law, any provision of this Agreement which is prohibited or unenforceable in
any jurisdiction shall, as to such jurisdiction, be ineffective to the extent
of such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.

 

17.           No amendment or waiver of any
provision of this Agreement, nor consent to any departure by you therefrom
shall in any event be effective unless the same shall be in writing executed by
all parties hereto.

 

 

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18.           This Agreement may be executed by the
parties hereto in one or more counterparts, each of which taken together shall
be deemed to constitute one and the same instrument.  Any signature delivered by telecopy or by
electronic transmission in a “pdf” format shall be deemed to be an original
signature hereto.

 

19.           This Agreement contains the entire
understanding between the parties hereto and shall bind our respective
representatives, successors and assigns. 
The parties hereto agree to endeavor to maintain the confidentiality of
the terms of the Junior Participation.

 

20.           All notices, requests and demands to
or upon the respective parties shall be in writing or by telecopy and shall be
deemed to have been duly given or made (a) when delivered, if by hand, (b) three
(3) days after being deposited in the mail, postage prepaid, if by mail,
or (c) when confirmed, if by telecopy or, (d) one (1) Business
Day after being sent by a recognized overnight delivery service.

 

IN
WITNESS WHEREOF, this Agreement has been duly executed as of the day and year
first written above.

 

 

	
   

  	
  THE
  CHRISTOPHER JOHN KLIEFOTH REVOCABLE TRUST UA 07-10-2007

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:
  

  	
   /s/ Christopher John Kliefoth, Trustee

  
	
   

  	
  Christopher
  John Kliefoth, Trustee

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/
  Richard Horowitz

  
	
   

  	
  Richard
  Horowitz

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  PNC
  BANK, NATIONAL ASSOCIATION, as Agent and Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:
  

  	
   /s/ Bryan Shia

  
	
   

  	
   

  	
  Name:
  Bryan Shia

  
	
   

  	
   

  	
  Title:
  Vice President

  
				

 

 

5Exhibit
10.9

 

FIRST AMENDMENT TO STANDBY PURCHASE AGREEMENT

 

This FIRST AMENDMENT TO
STANDBY PURCHASE AGREEMENT (this “Amendment”),
is dated to be effective as of December 31, 2009, among Idearc Inc.,
Debtor and Debtor-in-Possession, a Delaware corporation (the “Company”), and the investment funds and accounts
managed by Paulson & Co. Inc. set forth on Schedule
1 (the “Standby Purchasers”).

 

RECITALS

 

A.            The Company and the Standby
Purchasers are parties to that certain Standby Purchase Agreement, dated as of November 18,
2009 (the “Original Agreement”), and the Company and the Standby
Purchasers desire to amend the Original Agreement as set forth herein.  All capitalized terms used herein have the
meanings ascribed to such terms in the Original Agreement unless otherwise
defined herein.

 

B.            Pursuant to the Original
Agreement, the Standby Purchasers have agreed, severally, but not jointly, to
subscribe for and purchase from the Company, and the Company has agreed to
issue and sell to the Standby Purchasers, the Standby Purchase Shares at the
Closing as further described in the Original Agreement.

 

C.            It is not expected that all Class 4
General Unsecured Claims held by Class 4 Holders making the Plan Election
will be Allowed Claims as of the Effective Date.  Subject to the terms of the Plan, such Class 4
General Unsecured Claims may be determined to be Allowed General Unsecured
Claims subsequent to the Effective Date (the “Post Effective Allowed Claims”).  Upon such determination, the holders of Post
Effective Allowed Claims will be entitled to receive their pro rata share of
New Common Stock to be issued to the Class 4 Holders of General Unsecured
Claims pursuant to the Plan.  Certain of
these Class 4 Holders have elected to receive cash in lieu of their pro
rata share of New Common Stock for their Allowed Claims pursuant to the Plan
Election.

 

D.            To the extent there are Class 4
General Unsecured Claims held by Class 4 Holders making the Plan Election
that are not finally determined to be Allowed Claims as of the Effective Date,
the number of shares of New Common Stock to be issued to each Class 4
Holder of Allowed General Unsecured Claims and the number of Standby Purchase
Shares to be issued for such shares pursuant to the Plan Election will be
undeterminable as of the Effective Date. 
Such numbers will only be determinable when all General Unsecured Class 4
Claims held by Class 4 Holders who have made the Plan Election have been
either Allowed or Rejected pursuant to the Plan, which is expected to be after
the Effective Date.

 

E.             The Company has requested,
and the Standby Purchasers have agreed, that subject to the terms and
conditions hereof, (i) at the Closing the 

 

 

Standby
Purchasers shall purchase the Closing Date Standby Purchase Shares (as defined
below) from the Company, and (ii) subsequent to the Closing, the Standby
Purchasers shall purchase the Post Effective Standby Purchase Shares (as
defined below) from the Company.

 

Accordingly, in
consideration of the foregoing and the mutual covenants and agreements
contained herein, the parties hereby agree as follows:

 

1.             Definitions.

 

(a)           The Original Agreement shall
be amended to add the following capitalized terms defined in this Amendment
thereto:

 

“Closing Date Standby
Purchase Shares” is defined in Section 2.1, as amended by the
First Amendment.

 

“First Amendment”
means the First Amendment to Standby Purchase Agreement, dated as of December 31,
2009, by and among the Company, Paulson and the Standby Purchasers.

 

“Original Agreement”
is defined in the Recitals of the First Amendment.

 

“Post Effective Allowed
Claims” is defined in the Recitals of the First Amendment.

 

“Post Effective Standby
Purchase” is defined in Section 2.1, as amended by the First
Amendment.

 

“Post Effective Standby
Purchase Shares” is defined in Section 2.1, as amended by the
First Amendment.

 

“Post Effective Closing”
is defined in Section 2.1, as amended by the First Amendment.

 

(b)           The following terms defined
in the Original Agreement are hereby amended and restated in full as follows:

 

“Agreement” means the
Standby Purchase Agreement, dated as of November 18, 2009 by and among the
Company and the Standby Purchasers, as amended by the First Amendment as may be
further amended or modified.

 

“Subscription Price”
means $17.3333 per share, which is the per share subscription price for the New
Common Stock in each of the Plan Election, the Standby Purchase and the Post
Effective Standby Purchase, which amount is equal to: (i) $260,000,000 divided
by; (ii) the aggregate number of shares of New Common Stock to be 

 

2

 

issued and outstanding
pursuant to the Plan on the Closing Date, which number of shares is 15,000,013
and includes both the Closing Date Standby Purchase Shares and the Post Effective
Standby Purchase Shares.

 

2.             Standby Commitment and
Purchase.  Section 2
of the Original Agreement is hereby amended and restated in full as follows:

 

“2.1  Standby Commitment and Purchase.

 

(a)           Promptly after
the Plan Election Deadline, Paulson shall notify the Company in writing as to (i) the
amount of Claims owned of record and beneficially by Paulson, each Standby
Purchaser and their respective Affiliates and (ii) the Claims for which
Paulson, each Standby Purchaser and their respective Affiliates have signed a
confirmation to purchase such Claims, each as of the Plan Election Deadline.

 

(b)           Promptly after
the Plan Election Deadline, the Company shall notify each Standby Purchaser in
writing as to each of the following with respect to only
the Class 3 Holders of Secured Claims and the Class 4 Holders of
Unsecured Note Claims: (i) the aggregate number of Cash-Out Shares, (ii) the
aggregate number of shares of New Common Stock to be issued to the Standby
Purchasers in their capacity as Claim 3 Holders and Claim 4 Holders, (iii) the
aggregate number of Retained Shares, (iv) the aggregate number of Standby
Purchase Shares (the “Closing Date Standby Purchase Shares”), (v) the
number of Closing Date Standby Purchase Shares to be purchased by each Standby
Purchaser and its respective Standby Percentage, and (vi) the aggregate
Subscription Price payable by each Standby Purchaser to the Company for its
Closing Date Standby Purchase Shares.

 

(c)           Upon the terms and subject to the conditions
contained in this Agreement, at the Closing the Company shall issue and sell to
each Standby Purchaser, and each Standby Purchaser shall subscribe for and
purchase from the Company (independent of the obligation of any other Standby
Purchaser) its Standby Percentage of the Closing Date Standby Purchase Shares
(the “Standby Purchase”).

 

(d)           On or before the fifth Business Day after the
earlier of (x) 180 days after the Effective Date, and (y) the date
that all General Unsecured Claims held by Class 4 Holders who have made
the Plan Election are finally determined to be either Allowed or Rejected
Claims, the Company shall notify each Standby

 

3

 

Purchaser in writing as to each of the following with respect to only the Class 4 Holders of Allowed General Unsecured
Claims: (i) the aggregate number of Cash-Out Shares, (ii) the
aggregate number of Retained Shares, (iii) the aggregate number of Standby
Purchase Shares (the “Post Effective Standby Purchase Shares”), (iv) the
number of Post Effective Standby Purchase Shares to be purchased by each
Standby Purchaser and its respective Standby Percentage, and (v) the
aggregate Subscription Price payable by each Standby Purchaser to the Company
for its Post Effective Standby Purchase Shares.

 

(e)           Upon the terms and subject to the conditions
contained in this Agreement, within five Business Days after the Standby
Purchasers receipt of the notification pursuant to Section 2.1(d),
the Company shall issue and sell to each Standby Purchaser, and each Standby
Purchaser shall subscribe for and purchase from the Company (independent of the
obligation of any other Standby Purchaser) its Standby Percentage of the Post
Effective Standby Shares (the “Post Effective Standby Purchase”).

 

2.2           Closing; Payments.

 

(a)           The completion
of the Standby Purchase (the “Closing”) shall take place at the offices
of Akin Gump Strauss Hauer & Feld LLP in New York, New York, on the
date on which all of the conditions to the occurrence of the Effective Date
(other than the condition of receipt of payment from the Standby Purchasers of
the Purchase Price in
respect of the Standby Purchase) have been satisfied or waived and all of the
conditions set forth under Sections 6 and 7 have been satisfied or waived by the
Company or the Standby Purchasers (as applicable), or at such other location or
on such other date as may be mutually agreed by the Company and the Standby
Purchasers (the day on which the Closing takes place being the “Closing Date”). 
The Closing shall be deemed to be effective on the Closing Date and all
documents and instruments related to the Closing will be deemed to have been
delivered simultaneously on the Closing Date. 
The completion of the Post Effective Standby Purchase (the “Post
Effective Closing”) shall take place at the offices of Akin Gump Strauss
Hauer & Feld LLP in New York, New York within five Business Days after
the Standby Purchasers’ receipt of the notification pursuant to Section 2.1(d) or
at such other location or on such other date as may be mutually agreed by the
Company and the Standby Purchasers.

 

(b)           At each of the
Closing and the Post Effective Closing, each Standby Purchaser hereby agrees,
severally, but not jointly, to pay 

 

4

 

the Company the aggregate Subscription Price for its Standby Percentage
of the Standby Purchase Shares or Post Effective Standby Purchase Shares, as
applicable, to be purchased by such Standby Purchaser hereunder (the aggregate
of such payments by all of the Standby Purchasers, the “Purchase
Price”) by wire transfer of immediately available funds to an
account designated by the Company at least three Business Days prior to the
scheduled payment date.

 

(c)           At each of the
Closing and the Post Effective Closing, upon receipt in full of the aggregate
Subscription Price for each Standby Purchaser’s Standby Percentage of the
Standby Purchase Shares or Post Effective Standby Purchase Shares to be
purchased, as the case may be, by each Standby Purchaser hereunder, the Company
shall deliver to such Standby Purchaser (or its designees) stock certificates
or evidence of book-entry record ownership representing the Standby Purchase
Shares or Post Effective Standby Purchase Shares, as the case may be, to be
issued by the Company to such Standby Purchaser pursuant to this Agreement,
free and clear of any Liens, except Liens created by or otherwise resulting
from actions by such Standby Purchaser.”

 

3.             Capital Structure.

 

(a)           The second sentence of Section 3.4(a) of
the Original Agreement is hereby amended and restated in full as follows:

 

“As of the Closing Date,
1,500,000 shares of New Common Stock will be reserved for issuance pursuant to
an equity incentive plan as described in the Disclosure Statement.”

 

(b)           The lead in to the second
sentence of Section 3.4(c) of the Original Agreement is hereby
amended and restated in full as follows:

 

“As of the Closing Date,
except for the Post Effective Standby Purchase Shares and as set forth in the
second sentence of Section 3.4(a)...”

 

4.             Claims Ownership.  Section 4.4 of the Original Agreement is
hereby amended and restated in full as follows:

 

“4.4         Claims
Ownership.  As of the
date of the Original Agreement, and for clarification not as of the Closing
Date, (i) such Standby Purchaser and its Affiliates owns of record and
beneficially the Claims of the Debtors, and has trade date confirmations as to
the Claims of the Debtors, as separately disclosed in writing by the Standby
Purchasers to the Company

 

5

 

and (ii) except as to any Claims of the Debtors subject to such
trade date confirmations, such Standby Purchaser or such Affiliates has the
right to vote such Claims in the Chapter 11 Cases and does not own of record or
beneficially or have the right to vote any other Claims or other securities of
the Debtors in the Chapter 11 Cases or otherwise.  As of two Business Days prior to the Closing
Date, the Standby Purchasers will disclose in writing all Claims of the Debtors
that they beneficially own and any Claims of the Debtors which are subject to
trade confirmations as of such date.”

 

5.             Acquisitions of Interests.  Section 5.12 of the Original Agreement
is hereby amended and restated in full as follows:

 

“5.12       Acquisitions of
Interests.  From the
date of this Agreement to and including the Closing Date, neither Paulson nor
any Standby Purchaser nor any of their respective Affiliates shall, directly or
indirectly, purchase, acquire, or enter into any agreement, arrangement or
understanding with respect to the purchase or acquisition by Paulson, any
Standby Purchaser or any of their respective Affiliates of, any Claims of any
Debtor or any New Common Stock, except pursuant to this Agreement, unless (i) such
purchase, acquisition or entry into any such agreement, arrangement or
understanding would not cause the Standby Purchasers to exceed the Ownership
Limitation and (ii) such transaction has been disclosed to the Company in
writing prior to the date of the First Amendment.  Nothing in this Agreement shall restrict or
prohibit Paulson or any Standby Purchaser or any of their respective Affiliates
from (a) financing, pledging in connection with any financing transaction,
selling, or contracting to sell any Claims of the Debtors or (b) entering
into any swap or other arrangement that transfers to another Person, in whole
or in part, any of the voting or economic consequences of ownership of any
Claims of the Debtors.”

 

6.             Conditions to Post Effective Closing.  The obligation of the Standby Purchasers to
consummate the Post Effective Closing shall be subject to (i) the Post
Effective Standby Purchase Shares being, when issued, (A) duly authorized,
validly issued, fully paid and nonassessable, (B) not issued in violation
of any purchase option, call option, right of first refusal, preemptive right,
subscription right or any similar right under any provision of the Delaware
General Corporation Law, the Amended and Restated Certificate of Incorporation
or the Amended and Restated Bylaws or any Contract to which the Company or any
of its subsidiaries is a party or by which any of its or their respective
assets are bound and (C) delivered by the Company free and clear of all
Liens, except for Liens created by, or otherwise resulting from actions by, the
recipient of such 

 

6

 

shares and (ii) the Post Effective
Standby Purchase Shares being listed and authorized for trading on the NASDAQ
Global Market.

 

7.             Entire Agreement.  The Original Agreement as amended by this
Amendment, including the terms of the agreements contemplated thereby and
hereby, contain the entire agreement by and between the Company and the Standby
Purchasers with respect to the transactions contemplated by the Original
Agreement, as amended by this Amendment, and supersede all prior written and
prior or contemporaneous oral, agreements and representations with respect
thereto.  Except as expressly set forth
in this Amendment, the Original Agreement is not amended or modified nor any
provision thereof waived.

 

8.             Governing Law;
Jurisdiction; Venue; No Jury Trial.  This Amendment and any claim related directly
or indirectly to this Amendment shall be governed by and construed in
accordance with the laws of the State of New York, without regard to the
principles of conflicts of law thereof that would defer to the substantive laws
of any other jurisdiction.  The parties
agree that, during Bankruptcy Period, the
Bankruptcy Court shall have exclusive jurisdiction to resolve any controversy,
claim or dispute arising out of or relating to this Amendment or any other
agreement entered into in connection herewith. 
The parties further agree that, following the Bankruptcy Period, any
action or proceeding with respect to such controversy, claim or dispute shall
be brought against any of the parties exclusively in either the United States
District Court for the Southern District of New York or any state court of the
State of New York located in such district, and each of the parties hereby
consents to the personal jurisdiction of such court and the Bankruptcy Court
(and to the appropriate appellate courts) in any such action or proceeding and
waives any objection, including, without limitation, any objection to the
laying of venue or on the grounds of forum non conveniens, which any of them
may now or hereafter have to the bringing of such action or proceeding in such
respective jurisdictions.  Each party
hereby irrevocably consents to the service of process of any of the aforesaid
courts in any such action or proceeding by the mailing of copies thereof by
registered or certified mail, postage prepaid, to the other parties to such
action or proceeding.  EACH PARTY
ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS
AMENDMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE
EACH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE
TO A TRIAL BY JURY.

 

9.             Third Party
Beneficiaries.  This
Amendment is for the sole benefit of the parties hereto and their permitted
assigns and nothing herein expressed or implied shall give or be construed to
give to any Person, other than the parties hereto and such permitted assigns,
any legal or equitable rights hereunder.

 

7

 

10.           Counterparts.  This Amendment may be executed in two or more
counterparts, each of which will be deemed an original but all of which
together will constitute one and the same instrument.  All such counterparts will be deemed an
original, will be construed together and will constitute one and the same
instrument.

 

[Signature page follows]

 

8

 

IN WITNESS WHEREOF, the
parties have duly executed this Amendment as of the date first above written.

 

	
   

  	
  THE COMPANY:

  
	
   

  	
   

  
	
   

  	
  IDEARC
  INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Samuel D. Jones

  
	
   

  	
   

  	
  Name:
  Samuel D. Jones

  
	
   

  	
   

  	
  Title:
  Executive Vice President, Chief Financial Officer and Treasurer

  
	
   

  	
   

  
	
   

  	
  THE
  STANDBY PURCHASERS:

  
	
   

  	
   

  
	
   

  	
  PAULSON &
  CO. INC.,

  
	
   

  	
  on
  behalf of investment funds and accounts managed by it

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Stuart Merzer

  
	
   

  	
   

  	
  Name: Stuart Merzer

  Title: Authorized Signatory

  
				

 

[Signature
Page to First Amendment to Standby Purchase Agreement]

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