Document:

Exhibit 10.3

 

STANDSTILL AGREEMENT

 

This Standstill Agreement
(this “Agreement”)
is made as of December 31, 2009 by and between (a) Idearc Inc., a
Delaware corporation (the “Company”),
and (b) Paulson & Co. Inc., a Delaware corporation  (“Paulson & Co.”), for its own account
for the limited purposes set forth herein, and on behalf of the investment
funds and accounts managed by Paulson & Co. listed on Schedule A
to this Agreement (the “Standby Purchasers”
and together with Paulson & Co., “Paulson”).

 

R
E C I T A L S

 

WHEREAS, the Company and Paulson & Co.
(on behalf of the Standby Purchasers) are parties to that certain Standby
Purchase Agreement dated as of November 18, 2009 and that certain First
Amendment to the Standby Purchase Agreement dated as of December 31, 2009
(collectively, the “Purchase
Agreement”);

 

WHEREAS,
pursuant to the
Purchase Agreement, the Company agreed to offer pursuant to its Chapter 11 plan
of reorganization of the Company and its subsidiaries, dated as of September 9,
2009, as supplemented as of December 21, 2009 (the “Plan”), to each
holder of Class 3 and Class 4 claims under the Plan other than
Paulson (“Eligible
Subscribers”) the right to receive, in lieu of any and all
shares of common stock, par value $0.01, of the Company (“New Common Stock”) to
be issued pursuant to the Plan, cash in an amount determined as set forth in
the Plan (the “Plan
Election”), subject to the Ownership Limitation (as defined in
the Purchase Agreement);

 

WHEREAS, pursuant to the Purchase Agreement, the
Standby Purchasers agreed to subscribe for and purchase from the Company, and
the Company agreed to issue and sell to the Standby Purchasers, the number of
shares of New Common Stock for which the Eligible Subscribers have elected
under the Plan Election to receive cash, subject to the Ownership Limitation;

 

WHEREAS, the cash proceeds of the sale of such
shares of New Common Stock to the Standby Purchasers pursuant to the Purchase
Agreement will be used by the Company to fund the cash payments to the Eligible
Subscribers under the Plan Election; and

 

WHEREAS, Paulson and the Company are entering
into this Agreement to define certain agreements between Paulson and the
Company.

 

NOW,
THEREFORE, in
consideration of the foregoing recitals and the mutual promises, representations,
warranties and covenants herein contained, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties hereto agree as follows:

 

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1.                                      Board
Representation.

 

(a)                                  The Company agrees that if Paulson
beneficially owns 20% or more of the then issued and outstanding shares of New
Common Stock at any time during the period commencing on the Effective Date and
ending on the 180th day after the Effective Date, Paulson shall be
entitled during such period to nominate one (1) individual (such
individual, and any successor to such individual as contemplated in Section 1(a)(iii),
the “Paulson Nominee”)
for election as a member of the Board of Directors of the Company (the “Board”); and specifically the
Company agrees to:

 

(i)                                     as promptly as practicable and in no
event later than 10 days following the nomination of the Paulson Nominee as
contemplated in this Section 1,
(i) increase the size of the Board by one seat and (ii) appoint the
Paulson Nominee as a director of the Company whose term shall expire on the
earlier of (A) such time, if any, as Paulson ceases to beneficially own
20% or more of the issued and outstanding shares of New Common Stock for a
period of 30 consecutive days and (B) at the annual meeting of
stockholders to be held in 2011, subject to re-election or re-appointment of
the Paulson Nominee as provided in Sections 1(a)(ii) and 1(a)(iii) below,
respectively;

 

(ii)                                  unless Paulson has at any time prior to
the Termination Date ceased to beneficially own 20% or more of the issued and
outstanding shares of New Common Stock for a period of 30 consecutive days, at
each annual meeting of stockholders of the Company to be held prior to the Termination
Date, the Company (1) will cause the slate of nominees standing for
election, and recommended by the Board, at each such meeting to include the
Paulson Nominee, (2) will nominate and reflect in the proxy statement on
Schedule 14A for each such meeting the nomination of the Paulson Nominee for
election as a director of the Company at each such meeting, and (3) cause
all proxies received by the Company to be voted in the manner specified by such
proxies and, to the extent permitted under applicable law and stock exchange
rules, cause all proxies for which a vote is not specified to be voted for the
Paulson Nominee; and

 

(iii)                               if the Paulson Nominee ceases to be a
director of the Company other than due to Paulson ceasing to beneficially own
20% or more of the issued and outstanding shares of New Common Stock for a
period of 30 consecutive days at any time prior to the Termination Date,
Paulson may propose to the Company a replacement nominee for election as a
director of the Company, in which event such individual shall be appointed to
fill the vacancy created as a result of the prior Paulson Nominee ceasing to be
a director of the Company.

 

(b)                                 The Company agrees that promptly
following the appointment or election of the Paulson Nominee, the Company will,
upon written request by Paulson, cause the Paulson Nominee to be included as a
member of any committee of the Board on which the Paulson Nominee is eligible
to serve under applicable law or stock exchange or market policy; provided,
that Paulson and the Company agree that the following actions will require
approval of a majority of directors of the Company who are independent of 

 

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Paulson and management of the Company, which
independent directors may comprise a committee of the Board: (i) the
amendment or waiver of any provision of this Agreement, (ii) consent to
the assignment of Paulson’s rights under this Agreement or consent to the
relief of Paulson’s obligations under this Agreement, (iii) the amendment
or waiver of any provision of the Rights Agreement (defined in Section 4(a)) or the
Registration Rights Agreement between the Company, Paulson and the holders of
New Common Stock named therein and dated as of the date of this Agreement, in
each case to the extent any such amendment or waiver affects Paulson, and (iv) redemption
of the rights issued under the Rights Agreement.

 

(c)                                  Paulson will provide, as promptly as
reasonably practicable, all information relating to the Paulson Nominee (and
other information, if any) to the extent required under applicable law to be
included in any proxy statement of the Company and in any other solicitation
materials to be delivered to stockholders of the Company in connection with a
stockholders meeting as contemplated by Section 1(a)(ii).

 

2.                                      Voting. 
Paulson agrees that effective as of the Commencement Date and continuing
until the Termination Date:

 

(a)                                  it will cause to be present, in person or
represented by proxy, all Voting Securities that Paulson beneficially owns at
all stockholder meetings of the Company so that all Voting Securities that
Paulson beneficially owns may be counted for the purposes of determining the
presence of a quorum at such meetings;

 

(b)                                 if and for so long as Paulson
beneficially owns in excess of 25% of the then issued and outstanding shares of
New Common Stock, on any and all matters submitted to a vote of the holders of
New Common Stock Paulson (1) may vote up to 25% of the shares of New
Common Stock then issued and outstanding in its discretion, and (2) shall
vote, or cause to be voted, any shares of New Common Stock that Paulson
beneficially owns in excess of such 25% in the same proportion as the other
holders of New Common Stock vote their shares of New Common Stock with
respect to such matters; provided, that notwithstanding the foregoing:

 

(i)                                     with respect to the election of nominees
to the Board, Paulson (1) may vote up to 15%
of the then issued and outstanding shares of New Common Stock in its discretion at the
annual meeting of the stockholders of the Company to be held in 2011, (2) may vote up to 20% of the then issued and outstanding shares of New Common Stock in its
discretion at each annual meeting of the stockholders of the Company to be held
prior to the Termination Date (other than the annual meeting to be held in
2011), and (3) shall vote, or cause to be voted, any shares of New Common
Stock that Paulson beneficially owns in excess of such 15% and 20%, as
applicable, in the same proportion as other holders of shares of New Common
Stock vote their shares of New Common Stock with respect to the election of
nominees to the Board at each annual meeting of the stockholders of the Company
held prior to the Termination Date; provided, that in all cases, Paulson may
vote all of its shares of New Common Stock in favor of the election of the
Paulson Nominee;

 

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(ii)                                  with respect to a proposed Change of
Control Transaction that Paulson desires to vote in favor of, Paulson may vote
all shares of New Common Stock that Paulson beneficially owns in favor of such
Change of Control Transaction if such Change of Control Transaction treats
Paulson and its Affiliates the same as all other holders of New Common Stock
and if pursuant to such Change of Control Transaction Paulson will dispose of
its shares of New Common Stock;

 

(iii)                               with respect to a proposed Change of
Control Transaction that Paulson does not desire to vote in favor of, but which
Change of Control Transaction has been recommended by the Board for approval by
the Company’s stockholders, Paulson (1) may vote up to 30% of the then
issued and outstanding shares of New Common Stock in respect of such Change of
Control Transaction in its sole discretion, and (2) shall vote, or cause
to be voted, any shares of New Common Stock that Paulson beneficially owns in
excess of such 30% in the same proportion as the other holders of New Common
Stock vote their shares of New Common Stock with respect to such Change of
Control Transaction; and

 

(iv)                              notwithstanding Sections 2(b)(ii) and (iii),
except as provided in the immediately succeeding sentence, if Paulson or an
Affiliate of Paulson has any interest in the Person or Persons (other than the
Company) that is a party in a Change of Control Transaction (other than a Debt
Interest) or if such Change of Control Transaction treats Paulson or its
Affiliates differently than all other holders of New Common Stock, then Paulson
shall vote, or cause to be voted, all shares of New Common Stock that Paulson
beneficially owns in the same proportion as the holders of New Common Stock who
do not have an interest in any Person or Persons (other than the Company) that
is a party in such Change of Control Transaction vote their shares of New
Common Stock with respect to such Change of Control Transaction.  Notwithstanding the foregoing, Paulson shall
not be subject to the restrictions set forth in this Section 2(b)(iv) prior
to the Termination Date at such time, if any, as Paulson shall beneficially own
less than 20% of the then issued and outstanding shares of New Common Stock for
a period of 30 consecutive days.

 

(c)                                  Paulson agrees that with respect to the
voting of shares of its New Common Stock over which Paulson has discretion as
contemplated in Section 2(b), Paulson
shall vote contemporaneously with the voting by other stockholders of the
Company.  Paulson agrees that with
respect to the voting of shares of its New Common Stock over which Paulson does
not have discretion as contemplated in Section 2(b),
Paulson shall take such action as may be necessary to cause such shares of New
Common Stock to be automatically voted in accordance with the terms of Section 2(b).

 

(d)                                 Paulson hereby revokes any and all other
proxies and voting agreements given by Paulson with respect to the Voting
Securities and will cause its Affiliates to revoke any and all proxies and
voting agreements given by any such Affiliate with respect to the Voting
Securities.

 

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3.                                      Standstill.

 

(a)                                  Paulson hereby agrees that effective as
of the Commencement Date and continuing until the earlier of (x) such
time, if any, as Paulson beneficially owns less than 20% of the then issued and
outstanding shares of New Common Stock for a period of 30 consecutive days and (y) the
Termination Date, neither Paulson nor any of its Affiliates will, acting alone,
as part of a “group” (within the meaning of Section 13(d)(3) of the
Exchange Act) or otherwise in concert with any other Person, unless
specifically requested in writing by the Board on an unsolicited basis:

 

(i)                                     after the Purchase Period (as defined
below), acquire, or agree to acquire, offer to acquire, or seek or propose to
acquire beneficial ownership of any New Common Stock or any rights or options
to acquire any New Common Stock (including from a third Person); or

 

(ii)                                  initiate, propose, finance, negotiate,
seek to effect, guarantee the financing of, assist any other Person  in obtaining financing for, or knowingly
cause (1) any proxy contest or other proposal to obtain board
representation, (2) any stockholder proposal, whether made pursuant to Rule 14a-8
or Rule 14a-4 under the Exchange Act or otherwise or (3) any Change
of Control Transaction, except that Paulson may do any of the foregoing with
respect to a proposed Change of Control Transaction if such proposed Change of
Control Transaction is subject to the voting requirements set forth in Section 2(b); or

 

(iii)                               except with respect to a proposed Change
of Control Transaction expressly subject to the voting requirements set forth
in Section 2(b), “solicit” (within
the meaning of Rule 14a-1(l) under the Exchange Act) any proxies to
vote, or seek to influence any other Person with respect to the voting of any
Voting Securities on any of the matters set forth in Section 3(a)(ii);
or

 

(iv)                              except with respect to a proposed Change
of Control Transaction expressly subject to the voting requirements set forth
in Section 2(b), take any action
that would require the Company under applicable law, rule or stock exchange
policy to make a public announcement regarding any of the matters set forth in Section 3(a)(ii); or

 

(v)                                 except with respect to a proposed Change
of Control Transaction expressly subject to the voting requirements set forth
in Section 2(b), form, join or
participate in any “group” (within the meaning of Section 13(d)(3) of
the Exchange Act) with respect to any Voting Securities; or

 

(vi)                              nominate an individual or individuals for
election to the Board at any meeting (or by written consent in lieu of a meeting)
of stockholders of the Company, other than as expressly provided in this
Agreement with respect to the Paulson Nominee, or effect or attempt to effect
the removal of any members of the Board (other than the Paulson Nominee);
provided, that compliance by 

 

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Paulson with the provisions of Sections 1 or 2(b) shall
not constitute a violation of this provision; or

 

(vii)                           other than as expressly provided in this
Agreement with respect to the Paulson Nominee, directly or indirectly seek to
elect, appoint or otherwise place (or seek to have elected, appointed or
otherwise placed) a representative of Paulson on the Board, it being the
express agreement of Paulson and the Company that Paulson shall be entitled to only
one seat on the Board, subject to the conditions set forth in this Agreement,
prior to the Termination Date; or

 

(viii)                        seek to call, or to request the call of,
a special meeting of the stockholders of the Company; or

 

(ix)                                deposit any securities of the Company
into a voting trust, or subject any securities of the Company to any agreement
or arrangement with respect to the voting of such securities (other than
pursuant to Section 2
of this Agreement), or other agreement or arrangement having similar effect
to which, in each case, a Person who is not an Affiliate of Paulson is a party;
or

 

(x)                                   execute any written stockholder consent
with respect to the Company, except in accordance with Section 2  of
this Agreement; or

 

(xi)                                except with respect to a proposed Change
of Control Transaction expressly subject to the voting requirements set forth
in Section 2(b), seek or request
permission to do any of the foregoing, make, initiate, take or participate in
any demand, request, action (legal or otherwise) or proposal to amend, waive or
terminate any provision of this Agreement; or

 

(xii)                             disclose any intention, plan or
arrangement inconsistent with the foregoing.

 

(b)                                 Notwithstanding the foregoing provisions
of this Section 3,
the parties to this Agreement acknowledge and agree that:

 

(i)                                     on the Effective Date or at any time
during the period from the Effective Date to the date that is 270 days after
the Effective Date (the “Purchase
Period”), Paulson may acquire beneficial ownership of additional
shares of New Common Stock; provided, that in no event, before, during or after
the Purchase Period, may Paulson acquire or beneficially own in excess of 45%
of the shares of New Common Stock then issued and outstanding (inclusive of the
shares of New Common Stock issued to Paulson by the Company on the Effective
Date in exchange for all of the Class 3 and Class 4 claims of Paulson
pursuant to the Plan); provided further, that Paulson may acquire beneficial
ownership of additional shares of New Common Stock (including after the
Purchase Period) pursuant to Paulson’s exercise of its preemptive rights set
forth in Section 11, subject to
the 45% beneficial ownership limitation set forth above in this Section 3(b)(i);

 

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(ii)                                  the provisions of Section 3(a) shall
not restrict the actions of Paulson taken in respect of a Change of Control
Transaction the terms of which require as a condition to consummation of such
Change of Control Transaction compliance with the applicable voting restrictions
set forth in Sections
2(b)(ii), (iii) and (iv) (and which condition is not
waived); and

 

(iii)                               the provisions of Section 3(a) will
not limit in any respect Paulson’s ability to privately make proposals to the
Board with respect to any of the actions, activities, or matters otherwise
restricted by Section 3(a).

 

4.                                      Non-Interference.

 

(a)                                  The Company will not, by amendment of its
Amended and Restated Certificate of Incorporation (the “Charter”),
its Amended and Restated Bylaws (the “Bylaws”),
or its Rights Agreement (together, the “Rights Agreement”),
or through any other means, circumvent or seek to circumvent the observance or
performance by the Company of any of its obligations under the terms of this
Agreement, including, without limitation, by challenging in any manner the
terms of the Charter, the Bylaws, or the Rights Agreement or the validity or
enforceability of this Agreement on any grounds (including as being against
public policy, as having been improperly induced or otherwise), whether by the
initiation of any legal proceeding for such purpose, or by the intervention,
participation or attempted intervention or participation in any manner in any
other legal proceeding initiated by another Person or otherwise.

 

(b)                                 Paulson will not by any means, circumvent
or seek to circumvent the observance or performance by Paulson of any of its
obligations under the terms of this Agreement, including, without limitation,
by challenging in any manner the terms of the 
Charter, the Bylaws, or the Rights Agreement or the validity or
enforceability of this Agreement on any grounds (including as being against
public policy, as having been improperly induced or otherwise), whether by the
initiation of any legal proceeding for such purpose, or by the intervention,
participation or attempted intervention or participation in any manner in any
other legal proceeding initiated by another Person or otherwise.

 

(c)                                  Notwithstanding the foregoing, the
Company and Paulson each acknowledges and agrees that the invalidity or
unenforceability of any provision of the Charter or the Bylaws will not
constitute or give rise to a breach of Section 1(a)(i) of
this Agreement or a right of either the Company or Paulson to terminate this
Agreement based on such breach.

 

(d)                                 The Company agrees that until the earlier
of (x) such time, if any, as Paulson beneficially owns less than 20% of
the then issued and outstanding shares of New Common Stock for a period of 30
consecutive days and (y) the Termination Date, without the prior written consent
of Paulson & Co., if Paulson (as defined in the Rights Agreement) has
not become an Acquiring Person (as defined in the Rights Agreement), neither
the Company nor the Rights Agent (as defined in the Rights Agreement) shall
modify, supplement or amend Section 1(t) of the Rights Agreement or
otherwise modify, 

 

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supplement or amend the Rights Agreement in any manner
that would adversely affect the rights, interests, duties or obligations of
Paulson (as defined in the Rights Agreement) under the Rights Agreement in a
manner that relates to the determination as to whether Paulson (as defined in
the Rights Agreement) is a “Grandfathered Person” (as defined in the Rights
Agreement) or “Acquiring Person” (as defined in the Rights Agreement) under the
Rights Agreement.

 

5.                                      Publicity.

 

(a)                                  Neither the Company nor Paulson will,
directly or indirectly, make or issue or cause to be made or issued any
disclosure, announcement or statement (including without limitation the filing
of any document or report with the SEC or any other governmental agency or any
disclosure to any journalist, member of the media or securities analyst)
concerning the other party or any of its respective past, present or future
general partners, managers, directors, officers or employees, which disparages
any of such party’s respective past, present or future general partners,
managers, directors, officers or employees as individuals (recognizing that
each party will be free to (i) comment in good faith regarding the
business of the other party, provided any such comment shall not otherwise
violate the terms of this Agreement, and (ii) after consultation with
counsel, make any disclosure that it determines in good faith is required to be
made under applicable law).

 

6.                                      Paulson’s
Representations and Warranties.  Paulson
represents and warrants to the Company that:

 

(a)                                  the execution, delivery and performance
of this Agreement by Paulson have been duly and validly authorized by all
necessary corporate action on the part of Paulson; this Agreement has been duly
executed by Paulson, is a valid and binding agreement of Paulson, and is
enforceable against Paulson in accordance with its terms, except as
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium and other similar laws relating to or affecting creditors’ rights
generally or by general equitable principles (regardless of whether such
enforceability is considered in a proceeding in equity or at law); and

 

(b)                                 the execution, delivery and performance
by Paulson of this Agreement does not violate or conflict with or result in a
breach of or constitute (or with notice or lapse of time or both constitute) a
default or result in the creation or imposition of, or give rise to, any lien,
charge, restriction, claim, encumbrance or adverse penalty of any nature
whatsoever under Paulson’s organizational documents or under any agreement or
instrument to which Paulson is a party or by which any of its properties or
assets is bound or under any law or any order of any court or other agency of
government.

 

7.                                      Company’s
Representations and Warranties.  The Company
represents and warrants to Paulson that:

 

(a)                                  the execution, delivery and performance
of this Agreement by the Company have been duly and validly authorized by all
necessary corporate action on the

 

8

 

part of the Company; this Agreement has been duly
executed by the Company, is a valid and binding agreement of the Company, and
is enforceable against the Company in accordance with its terms, except as
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium and other similar laws relating to or affecting creditors’ rights
generally or by general equitable principles (regardless of whether such
enforceability is considered in a proceeding in equity or at law);

 

(b)                                 the execution, delivery and performance
by the Company of this Agreement does not violate or conflict with or result in
a breach of or constitute (or with notice or lapse of time or both constitute)
a default or result in the creation or imposition of, or give rise to, any
lien, charge, restriction, claim, encumbrance or adverse penalty of any nature
whatsoever under the Charter, the Bylaws or under any agreement or instrument
to which the Company is a party or by which any of its properties or assets is
bound or under any law or any order of any court or other agency of government;
and

 

(c)                                  upon confirmation of the Plan, the New
Common Stock will be the only authorized and outstanding class of capital stock
of the Company.

 

8.                                      Certain
Definitions.  As used in this Agreement, the following
terms have the meanings indicated:

 

(a)                                  The term “Accredited
Investor” means an “Accredited Investor,” as such term is
defined in Regulation D promulgated under the Securities Act of 1933, as
amended.

 

(b)                                 The term “Affiliate” means, with respect to any
Person, any other Person, directly or indirectly, controlling, controlled by,
or under common control with, such Person. 
For purposes of this definition, the term “control” (including the
correlative terms “controlling”, “controlled by” and “under common control with”)
means the possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of a Person, whether through the
ownership of voting securities, by contract or otherwise.

 

(c)                                  Whether a Person “beneficially owns” or
“beneficially owned,” is the “beneficial owner” of
or has “beneficial
ownership” of securities for the purposes of this Agreement
shall be determined in the same manner as that set forth for determining a
beneficial owner of a security under Rule 13d-3 of the Exchange Act,
except that a Person will also be deemed to be the beneficial owner of all
securities which such Person has the right to acquire pursuant to the exercise
of any rights in connection with any securities or any agreement, regardless of
when such rights may be exercised and whether they are conditional.

 

(d)                                 The term “Change of Control Transaction” means any
transaction or series of related transactions that results in any of the
following: (i) any Person or “group” (within the meaning of Section 13(d)(3) of
the Exchange Act) is or becomes the beneficial owner, directly or indirectly,
of Voting Securities of the Company representing at least a majority of the
combined voting power of the Company’s then outstanding 

 

9

 

securities; (ii) during any period of two (2) consecutive
years (not including any period prior to the execution of this Agreement),
individuals who at the beginning of such period constitute the Board (together
with any new director whose election by the Board or nomination for election by
the Company’s stockholders was approved by a vote of at least two-thirds of the
directors then still in office who either were directors at the beginning of the
period or whose election or nomination for election was previously so approved)
cease for any reason to constitute at least a majority of the members of the
Board; and (iii) a sale or disposition by the Company of all or
substantially all of the assets of the Company and its subsidiaries taken as a
whole (including the stock of any subsidiaries of the Company).

 

(e)                                  The terms “Commencement Date” means the date during
the Purchase Period when Paulson’s beneficial ownership of New Common Stock
first reaches at least 20% of the then issued and outstanding shares of New
Common Stock.

 

(f)                                    The term “Debt Interest” means an interest as a
holder of indebtedness, which indebtedness (1) is not convertible or
exchangeable for equity, (2) has no voting rights on matters submitted to
the stockholders of the issuer of such indebtedness (including the election of
directors), and (3) does not result in Paulson or its Affiliates being
deemed to be an Affiliate of the issuer of such indebtedness.

 

(g)                                 The term “Effective Date” means the effective date
of the Plan pursuant to the terms thereof.

 

(h)                                 The term “Equity
Securities” means New Common Stock or equity securities
convertible into or exercisable or exchangeable for New Common Stock, but
excluding Exempted Securities.

 

(i)                                     The term “Exchange Act” means the Securities
Exchange Act of 1934, as amended.

 

(j)                                     The term “Exempted
Securities” means New Common Stock or equity securities
convertible into or exercisable or exchangeable for New Common Stock issued (i) as
consideration for any asset, right, entity or business acquired by the Company
or any of its subsidiaries, including in connection with a merger, exchange
offer, joint venture, license transaction or exchange of shares, (ii) in
accordance with any stock option or other equity-based compensation plan of the
Company or its subsidiaries or upon exercise, conversion or exchange of any
stock option or other equity interest issued thereunder, (iii) as a
dividend or other distribution to equityholders of the Company generally, (iv) in
connection with a stock split or (v) in connection with the exchange,
exercise or conversion of any equity interest that is outstanding (1) immediately
upon the date of this Agreement, (2) thereafter, so long as Paulson had an
opportunity to exercise the preemptive rights granted to Paulson with respect
to the underlying equity interest or (3) thereafter, to the extent that
such equity interest was issued pursuant to any of clauses (i), (ii), (iii) or
(iv).

 

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(k)                                  The term “Person” will be interpreted broadly to
include, without limitation, any corporation, company, “group” (within the
meaning of Section 13(d)(3) of the Exchange Act), partnership,
limited liability company, other entity or individual.

 

(l)                                     The term “Termination Date” means the fourth
anniversary of the Effective Date.

 

(m)                               The term “Voting Securities” means securities of
the Company with the power to vote with respect to the election of directors
generally, including, without limitation, the New Common Stock.

 

9.                                      Notices. 
All notices, demands or other communications to be given or delivered
under or by reason of the provisions of this Agreement shall be in writing and
shall be deemed to have been given when delivered personally to the recipient
or sent to the recipient by facsimile (if sent by facsimile prior to 5:00 p.m.
local time of the recipient on a business day or, if not, on the next business
day), or one (1) business day after deposit with a reputable overnight
courier service (charges prepaid), or three (3) business days after being
mailed to the recipient by certified or registered mail, return receipt
requested and postage prepaid.  Such
notices, demands and other communications shall be sent to the Company and
Paulson at the following addresses:

 

If to the Company:

 

Idearc Inc.

2200 West Airfield Drive

P. O. Box 619810

DFW Airport, Texas 75261

Attention: Cody Wilbanks

Facsimile: (972) 453
-6869

 

with copies to (which
shall not constitute notice):

 

Fulbright &
Jaworski L.L.P.

2200 Ross Avenue, Suite 2800

Dallas, Texas 75201

Attention: Glen J.
Hettinger

Facsimile: (214) 855-8200

 

If to Paulson:

 

Paulson & Co.
Inc.

1251 Avenue of the
Americas, 50th Floor

New York, New York  10020

Attention: Daniel B.
Kamensky

Facsimile: (212) 977-9505

 

11

 

with copies to (which
shall not constitute notice):

 

Akin Gump Strauss Hauer &
Feld LLP

One Bryant Park

New York, New York 10036

Attention:                                                   Andrew Hulsh

Fred Hodara

Facsimile:                                                   (212) 872-1002

 

10.                               Expiration.  This Agreement shall expire on the
Termination Date, subject to Section 12(a).

 

11.                               Preemptive Rights.

 

(a)                                  So long as Paulson and its controlled
Affiliates beneficially own in excess of 20% of the shares of New Common Stock
then outstanding, and subject to the terms and conditions of Section 11(b), the Company
shall not issue additional Equity Securities (an “Issuance”)
unless, prior to such Issuance, the Company notifies Paulson in writing of the
proposed Issuance and grants to Paulson, or at Paulson’s election, one or more
of its Affiliates, the right (the “Right”) to
subscribe for and purchase in whole or in part, at the same price and upon the
same terms and conditions as set forth in the notice of such Issuance, a
portion of such additional Equity Securities proposed to be issued in the
Issuance such that immediately after giving effect to the Issuance and the
exercise of the Right (including, for purposes of this calculation, the
issuance of shares of New Common Stock upon conversion, exchange or exercise of
any Equity Security issued in the Issuance and subject to the Right), the
shares of New Common Stock that Paulson and its Affiliates beneficially own
(rounded to the nearest whole share) shall represent the same percentage of the
aggregate number of shares of New Common Stock outstanding as was beneficially
owned by Paulson and its Affiliates immediately prior to the Issuance.  In the event Equity Securities are issued as
part of a unit with other securities, the Right will apply to such unit and not
separately to any component of such unit.

 

(b)                                 The Right may be exercised by Paulson,
or, at Paulson’s election, one or more of its Affiliates, as the case may be,
provided that the Person exercising the Right must (i) be an Accredited Investor
and (ii) deliver written notice to the Company of such exercise of the
Right which is received by the Company within twenty (20) business days after
the date on which Paulson receives notice from the Company of the proposed
Issuance.  The closing of the purchase
and sale pursuant to the exercise of the Right shall occur on the date
scheduled by the Company for the Issuance, which may not be earlier than ten (10) business
days and no later than sixty (60) business days after the Company receives
notice of the exercise of the Right.

 

(c)                                  Nothing in this
Section 11 shall be deemed to
prevent any Person from purchasing for cash or the Company from issuing any
additional Equity Securities without first complying with the provisions of
this Section 11; provided that, (i) the
Board has determined in good faith that (a) the Company needs a prompt
cash investment, (b) no alternative financing on terms no less favorable
to the Company in the 

 

12

 

aggregate than such purchase
is available on a no less timely basis, and (c) the delay caused by
compliance with the provisions of this Section 11
in connection with such investment would be reasonably likely to materially
adversely affect the Company; (ii) the Company gives prompt notice to
Paulson of such investment as soon as practicable, and in any event at least
five (5) business days prior to the consummation of such investment; and (iii) the
purchasing holder or the Company enables Paulson to exercise its rights to purchase
its pro rata share as promptly as practicable following the initial prompt cash
investment.  For purposes of this Section 11(c), the term “pro
rata share” shall be based on Paulson’s and its Affiliates’ beneficial
ownership of outstanding Equity Securities relative to the total number of
outstanding Equity Securities, in each case prior to the issuance by the
Company of Equity Securities in the transaction contemplated by this Section 11(c).

 

12.                               Miscellaneous.

 

(a)                                  Survival.  The representations and warranties, covenants and
agreements contained in this Agreement shall survive the execution of this
Agreement and any investigation at any time by or on behalf of Paulson or the
Company.  The provisions of Section 11 and, to the extent necessary for the
interpretation or enforcement of Section 11,
Sections 8, 9 and 12,
of this Agreement shall survive the expiration of this Agreement.

 

(b)                                 Entire Agreement. 
This Agreement contains the entire agreement between the parties hereto
concerning the subject matter hereof and supersedes all prior written and prior
or contemporaneous oral agreements between the parties with respect to such
matters.

 

(c)                                  Amendment. 
The agreements set forth in this Agreement may be modified or waived
only by a separate writing by the Company and Paulson expressly so modifying or
waiving such agreements.

 

(d)                                 No Waiver. 
No failure or delay by the Company in exercising any right, power or
privilege hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any right, power or privilege hereunder.

 

(e)                                  Assignment. 
Any assignment or attempted assignment of this Agreement by Paulson
without the prior written consent of the Company shall be void.

 

(f)                                    Severability. 
If any term, provision, covenant or restriction of this Agreement is
held by a court of competent jurisdiction to be invalid, void or unenforceable,
the remainder of the terms, provisions, covenants and restrictions of this Agreement
shall remain in full force and effect and shall in no way be affected, impaired
or invalidated.

 

(g)                                 Specific Performance. 
The parties hereto agree that money damages would not be a sufficient
remedy for any breach of this Agreement and that each of the parties hereto
shall be entitled to specific performance and injunctive or other equitable 

 

13

 

relief as a remedy for any such breach, and each party
further agrees to waive any requirement for the security or posting of any bond
in connection with such remedy.  Such
remedy shall not be deemed to be the exclusive remedy for breach of this
Agreement but shall be in addition to all other remedies available at law or
equity.

 

(h)                                 THIS AGREEMENT SHALL BE GOVERNED BY,
CONSTRUED IN ACCORDANCE WITH, AND ENFORCED BY THE LAWS OF THE STATE OF
DELAWARE, REGARDLESS OF THE LAWS THAT MIGHT OTHERWISE GOVERN UNDER APPLICABLE
PRINCIPLES OF CONFLICTS OF LAWS THEREOF. THE PARTIES HERETO (I) IRREVOCABLY
CONSENT TO THE EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF DELAWARE
FOR ANY SUITS, ACTIONS OR PROCEEDINGS ARISING OUT OF OR RELATED TO THIS
AGREEMENT AND IRREVOCABLY WAIVE ALL OBJECTIONS TO SUCH JURISDICTION, INCLUDING,
WITHOUT LIMITATION, ANY CLAIM THAT ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT
IN SUCH A COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM, (II) AGREE THAT
THIS AGREEMENT HAS BEEN ENTERED INTO IN EXPRESS RELIANCE UPON 6 DEL. C. SS.
2708, AND (III) IRREVOCABLY AND UNCONDITIONALLY CONSENT TO SERVICE OF PROCESS
IN, SUBMIT TO THE EXCLUSIVE JURISDICTION OF, AND AGREE TO APPEAR IN, THE COURT
OF CHANCERY IN THE STATE OF DELAWARE IN WILMINGTON, DELAWARE, WITH RESPECT TO
ALL ACTIONS AND PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AGREEMENT AND
THE TRANSACTIONS CONTEMPLATED HEREBY.

 

*   *  
*   *

 

14

 

IN
WITNESS WHEREOF,
the parties hereto have executed this Agreement on the date first written
above.

 

	
   

  	
  IDEARC
  INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Samuel D. Jones

  
	
   

  	
   

  
	
   

  	
  Name: Samuel D. Jones

  
	
   

  	
   

  
	
   

  	
  Title: Executive Vice
  President, Chief Financial Officer and Treasurer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  PAULSON &
  CO. INC.

  
	
   

  	
  FOR
  ITS OWN ACCOUNT FOR THE LIMITED PURPOSE OF AGREEING TO BE BOUND SOLELY BY
  SECTIONS 2, 3, 4(B), 4(C) AND, TO THE EXTENT NECESSARY FOR THE INTERPRETATION
  OR ENFORCEMENT OF ANY OF THE FOREGOING, SECTIONS 8, 9, 10 AND 12 OF THIS
  AGREEMENT

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Stuart Merzer

  
	
   

  	
   

  
	
   

  	
  Name: Stuart Merzer

  
	
   

  	
   

  
	
   

  	
  Title: Authorized
  Signatory

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  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 Standstill Agreement]

 

 

SCHEDULE A

 

Paulson
Recovery Master Fund Ltd.

c/o
Paulson & Co. Inc.

1251
Ave of the Americas

New
York, NY  10020  USAExhibit 10.4

 

	
   

  

 

REGISTRATION
RIGHTS AGREEMENT

 

by
and among

 

IDEARC
INC.

 

and

 

THE
HOLDERS NAMED HEREIN

 

 

Dated as of December 31, 2009

 

 

	
   

  

 

 

TABLE OF CONTENTS

 

	
   

  	
  Page

  
	
   

  	
   

  
	
  1.   Definitions

  	
  1

  
	
   

  	
   

  
	
  2.   Securities Act Shelf Registration

  	
  4

  
	
   

  	
   

  
	
  (a)   Shelf Registration

  	
  4

  
	
   

  	
   

  
	
  (b)   Effective Registration
  Statement

  	
  5

  
	
   

  	
   

  
	
  3.   Securities Act Registration on
  Request

  	
  6

  
	
   

  	
   

  
	
  (a)   Request

  	
  6

  
	
   

  	
   

  
	
  (b)   Registration of Other
  Securities

  	
  7

  
	
   

  	
   

  
	
  (c)   Registration Statement Form

  	
  7

  
	
   

  	
   

  
	
  (d)   Effective Registration Statement

  	
  8

  
	
   

  	
   

  
	
  (e)   Selection of Underwriters

  	
  8

  
	
   

  	
   

  
	
  (f)   Priority in Registration

  	
  9

  
	
   

  	
   

  
	
  (g)   Shelf Registrations

  	
  9

  
	
   

  	
   

  
	
  4.   Piggyback Registration

  	
  10

  
	
   

  	
   

  
	
  5.   Expenses

  	
  11

  
	
   

  	
   

  
	
  6.   Registration Procedures

  	
  11

  
	
   

  	
   

  
	
  7.   Underwritten Offerings

  	
  16

  
	
   

  	
   

  
	
  (a)   Requested Underwritten
  Offerings

  	
  16

  
	
   

  	
   

  
	
  (b)   Piggyback Underwritten
  Offerings: Priority

  	
  16

  
	
   

  	
   

  
	
  (c)   Selling Holders to be Parties
  to Underwriting Agreement

  	
  17

  
	
   

  	
   

  
	
  (d)   Holdback Agreements

  	
  18

  
	
   

  	
   

  
	
  8.   Preparation: Reasonable
  Investigation

  	
  18

  
	
   

  	
   

  
	
  (a)   Registration Statements

  	
  18

  
	
   

  	
   

  
	
  (b)   Confidentiality

  	
  19

  

 

i

 

	
   

  	
  Page

  
	
   

  	
   

  
	
  9.   Postponements

  	
  19

  
	
   

  	
   

  
	
  10.   Indemnification

  	
  20

  
	
   

  	
   

  
	
  (a)   Indemnification by the
  Company

  	
  20

  
	
   

  	
   

  
	
  (b)   Indemnification by the
  Offerors and Sellers

  	
  21

  
	
   

  	
   

  
	
  (c)   Notices of Losses, etc.

  	
  22

  
	
   

  	
   

  
	
  (d)   Contribution

  	
  22

  
	
   

  	
   

  
	
  (e)   Indemnification Payments

  	
  23

  
	
   

  	
   

  
	
  11.   Registration Rights to Others

  	
  23

  
	
   

  	
   

  
	
  12.   Adjustments Affecting Registrable
  Common Stock

  	
  23

  
	
   

  	
   

  
	
  13.   Exchange Act Reports

  	
  23

  
	
   

  	
   

  
	
  14.   Rule 144 and Rule 144A

  	
  23

  
	
   

  	
   

  
	
  15.   Amendments and Waivers

  	
  24

  
	
   

  	
   

  
	
  16.   Nominees for Beneficial Owners

  	
  24

  
	
   

  	
   

  
	
  17.   Assignment

  	
  24

  
	
   

  	
   

  
	
  18.   Calculation of Percentage or
  Number of Shares of Registrable Common Stock

  	
  25

  
	
   

  	
   

  
	
  19.   Termination of Registration Rights

  	
  25

  
	
   

  	
   

  
	
  20.   Miscellaneous

  	
  25

  
	
   

  	
   

  
	
  (a)   Further Assurances

  	
  25

  
	
   

  	
   

  
	
  (b)   Headings

  	
  25

  
	
   

  	
   

  
	
  (c)   Conflicting Instructions

  	
  25

  
	
   

  	
   

  
	
  (d)   Remedies

  	
  25

  
	
   

  	
   

  
	
  (e)   Entire Agreement

  	
  26

  
	
   

  	
   

  
	
  (f)   Notices

  	
  26

  
	
   

  	
   

  
	
  (g)   Governing Law

  	
  26

  
	
   

  	
   

  
	
  (h)   Venue; No Jury Trial

  	
  26

  

 

ii

 

	
   

  	
  Page

  
	
   

  	
   

  
	
  (i)   Severability

  	
  26

  
	
   

  	
   

  
	
  (j)   Counterparts

  	
  27

  
	
   

  	
   

  
	
  SCHEDULES:

  	
   

  
	
   

  	
   

  
	
  SCHEDULE
  A — ORIGINAL HOLDERS

  	
   

  
	
  SCHEDULE
  B — NOTICES

  	
   

  
	
   

  	
   

  
	
  EXHIBIT:

  	
   

  
	
   

  	
   

  
	
  EXHIBIT A — FORM OF
  SELLING STOCKHOLDER QUESTIONNAIRE

  	
   

  

 

iii

 

REGISTRATION RIGHTS
AGREEMENT

 

This REGISTRATION RIGHTS
AGREEMENT, dated as of December 31, 2009 (this “Agreement”), is
entered into by and among (i) Idearc Inc., a Delaware corporation (the “Company”),
(ii) Paulson & Co. Inc., a Delaware corporation, on behalf of the
several investment funds and accounts managed by it (“Paulson”), and (iii) each
other holder of Registrable Common Stock (as hereinafter defined) of the
Company which, together with its Affiliates (as defined below), beneficially
owns as of the Effective Date (as defined below) at least five percent (5%) of
the shares of Registrable Common Stock issued pursuant to the Plan (as defined
below) on the Effective Date (the “Other Holders”, each of which shall
be deemed a party hereto pursuant to the Plan without the necessity of
executing this Agreement; each of Paulson and, for so long as the ownership
requirement set forth in clause (iii) is satisfied, each Other Holder,
individually, a “Holder” and, collectively, the “Holders”).

 

This Agreement is being
entered into in connection with the acquisition of Common Stock (as hereinafter
defined) on the date hereof by Paulson and the Other Holders (collectively, the
“Original Holders”) pursuant to the Plan (as hereinafter defined) and,
with respect to Paulson, pursuant to that certain Standby Purchase Agreement,
dated as of November 18, 2009,
by and between Paulson and the Company and that certain First Amendment to the
Standby Purchase Agreement dated as of December 31, 2009.  The Original Holders are listed on Schedule A
hereto.

 

To induce the Original
Holders to vote in favor of the Plan, and to accept the issuance of Common
Stock by the Company under the Plan, the Company has undertaken to register
Registrable Common Stock under the Securities Act (as hereinafter defined) and
to take certain other actions with respect to the Registrable Common
Stock.  This Agreement sets forth the
terms and conditions of such undertaking.

 

In consideration of the
premises and the mutual agreements set forth herein, the parties hereto hereby
agree as follows:

 

1.   Definitions.  Unless otherwise defined herein, capitalized
terms used herein and in the recitals above shall have the following meanings:

 

“Affiliate” of a
Person means any Person that directly, or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common control with,
such other Person.  For purposes of this
definition, “control” means the ability of one Person to direct the management
and policies of another Person.

 

“Agreement” has the
meaning set forth in the preamble hereto.

 

“beneficial ownership”
(and related terms such as “beneficially owned” or “beneficial owner”) has the
meaning set forth in Rule 13d-3 under the Exchange Act.

 

“Board of Directors”
means the board of directors of the Company.

 

“Business Day” means
any day except a Saturday, Sunday or other day on which commercial banks in New
York City are authorized or required by law to be closed.

 

 

“Commission” means
the U.S. Securities and Exchange Commission.

 

“Common Stock” means
the common stock, par value $0.01 per share, of the Company.

 

“Company” has the
meaning set forth in the preamble hereto.

 

“Company Indemnitee”
has the meaning set forth in Section 10(a) hereof.

 

“Effective Date”
means the effective date of the Plan pursuant to the terms thereof.

 

“Exchange Act” means
the Securities Exchange Act of 1934, as amended, and the rules and
regulations thereunder, or any similar or successor statute.

 

“Expenses” means all
expenses incident to the Company’s performance of or compliance with its
obligations under this Agreement, including, without limitation, all
registration, filing, listing, stock exchange and FINRA fees (including,
without limitation, all fees and expenses of any “qualified independent underwriter”
required by the rules of FINRA), all fees and expenses of complying with
state securities or blue sky laws (including, without limitation, the fees,
disbursements and other charges of counsel for the underwriters in connection
with blue sky filings), all word processing, duplicating and printing expenses,
messenger, telephone and delivery expenses, all rating agency fees, the fees,
disbursements and other charges of counsel for the Company and of its
independent public accountants, including, without limitation, the expenses
incurred in connection with “cold comfort” letters required by or incident to
such performance and compliance, the fees and expenses incurred in connection
with the listing of the securities to be registered on each securities exchange
or national market system on which similar securities issued by the Company are
then listed, any fees and disbursements of underwriters customarily paid by
issuers or sellers of securities, the reasonable fees, disbursements and other
charges of one firm of counsel in each applicable jurisdiction (per
registration statement prepared) to the Holders making a request pursuant to Section 2(a),
3(a) or 4 hereof (selected by the Holders beneficially owning a majority
of the shares of Registrable Common Stock covered by such registration), the
fees and expenses of any special experts retained by the Company in connection
with such registration, and the fees and expenses of other Persons retained by
the Company, but excluding underwriting discounts and commissions and
applicable transfer taxes, if any, in each case relating to the shares of
Registrable Common Stock sold by the Selling Holders, which discounts,
commissions and transfer taxes shall be borne by the seller or Selling Holders;
provided, that, if the Company shall, in accordance with Section 4
or Section 9 hereof, not register any securities with respect to which it
had given written notice of its intention to register to Holders,
notwithstanding anything to the contrary in the foregoing, all reasonable
out-of-pocket expenses incurred by such requesting Holders in connection with
such registration (other than the reasonable fees, disbursements and other
charges of counsel other than the one firm of counsel referred to above) shall
be deemed to be Expenses.

 

“FINRA” shall mean
the Financial Industry Regulatory Authority.

 

“Holder” and “Holders”
have the meanings set forth in the preamble hereto.

 

2

 

“Initial Shelf” has
the meaning set forth in Section 3(a) hereof.

 

“Initiating Holder”
has the meaning set forth in Section 3(a) hereof.

 

“Initiating Request”
has the meaning set forth in Section 3(a) hereof.

 

“Loss” and “Losses”
have the meanings set forth in Section 10(a) hereof.

 

“Minimum Ownership Trigger”
has the meaning set forth in Section 2(a) hereof.

 

“Offering Documents”
has the meaning set forth in Section 10(a) hereof.

 

“Original Holders”
has the meaning set forth in the preamble hereto.

 

“Other Holders” has
the meaning set forth in the preamble hereto.

 

“Person” means any
individual, corporation, partnership, limited liability company, firm, joint
venture, association, joint stock company, trust, unincorporated organization,
governmental or regulatory body or subdivision thereof or other entity.

 

“Piggyback Requesting
Holder” has the meaning set forth in Section 4 hereof.

 

“Plan” means the Plan
of Reorganization, dated December 21, 2009, confirmed by order of the
United States Bankruptcy Court for the Northern District of Texas, Dallas
Division, dated December 22, 2009, in the chapter 11 case commenced by the
Company and certain of its Subsidiaries.

 

“Public Offering”
means a public offering and sale of Common Stock pursuant to an effective
registration statement under the Securities Act.

 

“Questionnaire” has
the meaning set forth in Section 2(a) hereof.

 

“Registrable Common Stock”
means any share of Common Stock beneficially owned by the Holders from time to
time, provided, however, that a share of Common Stock will cease
to be Registrable Common Stock (i) after it has been sold under a
registration statement effected pursuant hereto, (ii) after it has been
sold to the public in compliance with Rule 144 promulgated under the
Securities Act, or (iii) if it may be sold to the public in compliance
with Rule 144 promulgated under the Securities Act; provided that,
in the case of clause (iii), a share of Common Stock beneficially owned by a
Holder from time to time will cease to be Registrable Common Stock only at such
time, if any, as all shares of Registrable Common Stock beneficially owned by
such Holder are able to be sold in a single transaction under Rule 144.

 

“Securities Act”
means the Securities Act of 1933, as amended, and the rules and
regulations thereunder, or any similar or successor statute.

 

“Selling Holder
Indemnitee” has the meaning set forth in Section 10(b) hereof.

 

“Selling Holders”
means the Holders requesting to be registered pursuant hereto.

 

3

 

“Shelf Filing Date”
has the meaning set forth in Section 2(a) hereof.

 

“Shelf Registration”
has the meaning set forth in Section 2(a) hereof.

 

“Shelf Registration
Statement” has the meaning set forth in Section 2(a) hereof.

 

“Subsidiary” shall
mean, with respect to any Person, any corporation, limited liability company,
partnership, association or other business entity of which fifty percent (50%)
or more of the total voting power of shares of capital stock entitled (without
regard to the occurrence of any contingency) to vote generally in the election
of directors, managers or trustees thereof, or fifty percent (50%) or more of
the equity interest therein, is at the time owned or controlled, directly or
indirectly, by any Person or one or more of the other Subsidiaries of such
Person or a combination thereof.

 

“Transfer” means any
direct or indirect transfer, sale, offer, assignment, exchange, distribution,
mortgage, pledge, hypothecation or other disposition.  “Transferor” and “Transferee”
have correlative meanings.

 

2.  
Securities Act Shelf Registration.

 

(a)          Shelf Registration. 
Subject to Paulson and its Affiliates beneficially owning more than 20%
of the then outstanding Registrable Common Stock on the Effective Date or at
any time between the Effective Date and the date that is 270 days after the
Effective Date (the “Minimum Ownership Trigger”), within thirty (30)
days after the Company is eligible to file a registration statement on Form S-3
(the “Shelf Filing Date”), the Company shall file a shelf registration
statement (as it may be amended or supplemented from time to time, a “Shelf
Registration Statement”) pursuant to Rule 415 promulgated under the
Securities Act (a “Shelf Registration”) providing for the sale by
Paulson and its Affiliates (in accordance with the requirements of this Section 2(a))
of any and all  of the Registrable Common Stock
beneficially owned by Paulson and its Affiliates and for the sale of any and
all of the Registrable Common Stock beneficially owned by the Other Holders who
comply with the requirements of this Section 2(a).  The Company shall use its best efforts to
have such Shelf Registration Statement declared effective by the Commission as
soon as practicable.  Subject to Section 9(b),
the Company agrees to use its reasonable best efforts to keep the Shelf
Registration Statement continuously effective under Rule 415 of the
Securities Act until the earliest to occur of (i) the third anniversary of
the date such Shelf Registration Statement initially is declared effective by
the Commission (plus a number of Business Days equal to the number of Business
Days, if any, that the Shelf Registration Statement is not kept effective
(including any days for which the use of the prospectus is suspended pursuant
to Section 9(b)) after the initial date of its effectiveness and prior to
the third anniversary thereof), (ii) the day after the date on which all
of the Registrable Common Stock covered by the Shelf Registration Statement has
been sold pursuant to the Shelf Registration Statement or (iii) the first
date on which there shall cease to be any Registrable Common Stock covered by
such Shelf Registration Statement.  The
Company further agrees, if necessary, to supplement or amend the Shelf
Registration Statement, if required by the rules, regulations or instructions
applicable to the registration form used by the Company for such Shelf
Registration or by the Securities Act or by any other rules and
regulations thereunder for shelf registration, and the Company agrees to
furnish to the Holders whose Registrable

 

4

 

Common Stock is included in such Shelf Registration
Statement copies of any such supplement or amendment promptly after its being
issued or filed with the Commission.

 

Notwithstanding
any other provision hereof, no Selling Holders’ Registrable Common Stock shall
be included in the Shelf Registration Statement unless and until such Selling
Holder furnishes to the Company a fully completed notice and questionnaire
substantially in the form attached hereto as Exhibit A (the “Questionnaire”)
and such other information in writing as the Company may reasonably request in
writing for use in connection with the Shelf Registration Statement and any
related application to be filed with or under state securities laws.  At
least thirty (30) days prior to the filing of the Shelf Registration Statement,
the Company will provide to the Holders notice of its intention to file the
Shelf Registration Statement, the form of Questionnaire and such other
information the Company may reasonably request to be provided by the Holders.
 In order to be named as a selling stockholder in the Shelf Registration
Statement at the time of effectiveness of the Shelf Registration Statement and
to include in the Shelf Registration Statement all Registrable Common Stock
requested to be included for sale by the Selling Holders, each Selling Holder
must no later than twenty (20) days following its receipt of notice sent by the
Company as set forth in the previous sentence, furnish to the Company in
writing the completed Questionnaire and such other information reasonably
requested by the Company and the Company will include information in the
completed Questionnaire and such other information, if any, in the Shelf
Registration Statement, as necessary and in a manner so that upon effectiveness
of the Shelf Registration Statement, the Selling Holder will be permitted to
deliver the Shelf Registration Statement to purchasers of the Seller Holder’s
Registrable Common Stock.  From and after
the date that the Shelf Registration Statement becomes effective, upon receipt
of a completed Questionnaire and such other information that the Company may
reasonably request in writing, if any, the Company shall (i) as promptly
as practicable after the date on which the Questionnaire is delivered, and in
any event within the later of (x) 10 Business Days after receipt of such
Questionnaire or (y)  10 Business Days after the expiration of any
suspension pursuant to Section 9(b) in effect when the Questionnaire
is delivered, file any amendments or supplements to the Shelf Registration
Statement necessary for such Selling Holder to be named as a selling
stockholder and to include in the Shelf Registration Statement all Registrable
Common Stock requested to be included for sale by such Selling Holder or, if
not permitted to name such Selling Holder as a selling stockholder by
supplement, file any necessary post-effective amendment to the Shelf
Registration Statement or prepare and, if required by applicable law, file any
amendment or supplement to any document so that such Selling Holder is named as
a selling stockholder, and use its reasonable best efforts to cause such
post-effective amendment to be declared effective as promptly as practicable; provided
that the Company shall not be obligated to file more than one (1) post-effective
amendment for Paulson and one (1) post-effective amendment for Other
Holders in any ninety (90) day period.

 

(b)         Effective Registration Statement. 
A Shelf Registration pursuant to Section 2(a) hereof shall not
be deemed to have been effected

 

(i)                                     unless a registration statement with respect thereto has
been declared effective by the Commission and remains effective in compliance
with the provisions of the Securities Act and the laws of any state or other
jurisdiction applicable to the disposition of Registrable Common Stock covered
by such registration statement until such time as all of such Registrable
Common Stock have been disposed of in

 

5

 

accordance with such registration
statement or there shall cease to be any Registrable Common Stock covered by
such Shelf Registration Statement (provided that such period need not exceed
the applicable period provided for in Section 2(a)), or

 

(ii)                                  if, after it has become effective, such registration is
subject to any stop order, injunction or other order or requirement of the
Commission or other governmental or regulatory agency or court preventing the
sale of securities under such registration statement for any reason (other than
a violation of applicable law solely by any Selling Holder and has not
thereafter become effective).

 

3.  
Securities Act Registration on Request.

 

(a)          Request.  At any time
and from time to time when a Shelf Registration Statement filed by the Company
pursuant to Section 2(a) hereof (the “Initial Shelf”) is not
effective, any Holder (the “Initiating Holder”) may make a written
request (the “Initiating Request”) to the Company for the registration
with the Commission under the Securities Act (on Form S-3 or, if Form S-3
is not then available to the Company, Form S-1 or any other appropriate
form) covering the sale  of all or part
of the Registrable Common Stock then held by the Initiating Holder, which
request shall specify the number of shares to be disposed of by the Initiating
Holder, the proposed plan of distribution therefor and whether or not a Shelf
Registration Statement is being requested. 
Upon the receipt of any Initiating Request for registration pursuant to
this Section 3(a), the Company promptly shall notify in writing all other
Holders of the receipt of such request and will use its reasonable best efforts
to effect, at the earliest practicable date, such registration under the
Securities Act of

 

(i)                                     the Registrable Common Stock which the Company has been so
requested to register by the Initiating Holder, and

 

(ii)                                  all other Registrable Common Stock which the Company has
been requested to register by any other Holders by written request given to the
Company within twenty (20) days after the giving of written notice by the
Company to such other Holders of the Initiating Request (or ten (10) days
if the Company states in such written notice or gives telephonic notice to such
other Holders, with written confirmation to follow promptly thereafter, stating
that (i) such registration will be on Form S-3 (or, if Form S-3
is not then available to the Company, Form S-1 or any other appropriate
form) and (ii) such shorter period of time is required because of a
planned filing date),

 

all to the extent necessary
to permit the disposition (in accordance with Section 3(c) hereof) of
the Registrable Common Stock to be so registered; provided, that,

 

(A)                              the Company
shall not be required to effect more than a total of six (6) registrations
pursuant to this Section 3(a) requested by Paulson (if the Minimum
Ownership Trigger has been met; otherwise three (3) registrations) and
three (3) registrations requested by all Other Holders,

 

(B)                                if the intended
method of distribution is an underwritten Public Offering, the Company shall
not be required to effect such registration

 

6

 

pursuant
to this Section 3(a) unless such underwriting shall be conducted on a
“firm commitment” basis,

 

(C)                                the Company
shall not be required to effect any registration pursuant to this Section 3(a) more
than two times in any 12-month period,

 

(D)                               any Selling
Holder whose Registrable Common Stock was to be included in any such
registration pursuant to this Section 3(a), by written notice to the Company,
may withdraw such request, and the Company shall not effect such registration
in the event that the Selling Holders that have not elected to withdraw
beneficially own, in the aggregate, less than the percentage of the shares of
Registrable Common Stock required to initiate a request under this Section 3(a),

 

(E)                                 the Company
shall not be required to effect any registration to be effected pursuant to
this Section 3(a) unless either (x) at least five percent (5%)
of the shares of Common Stock outstanding at the time of such request are to be
included in such registration or (y) the market value of the shares of
Common Stock to be included in such registration statement (measured as of the
date of the Initiating Request) is at least ten million dollars ($10,000,000),
and

 

(F)                                 a Shelf
Registration effected under this Section 3(a) shall comply with the
procedures set forth in the second paragraph of Section 2(a).

 

(b)         Registration of Other Securities. 
Whenever the Company shall effect a registration pursuant to Section 3(a) hereof,
no securities other than (i) Registrable Common Stock and (ii) subject
to Section 3(f), Common Stock to be sold by the Company for its own
account shall be included among the securities covered by such registration
unless the Selling Holders beneficially owning not less than a majority of the
shares of Registrable Common Stock to be covered by such registration shall
have consented in writing to the inclusion of such other securities.

 

(c)          Registration Statement Form. 
Except as provided in Section 3(a), registrations under Section 3(a) hereof
shall be on such appropriate registration statement form prescribed by the
Commission under the Securities Act as shall be selected by the Company and as
shall permit the disposition of the Registrable Common Stock pursuant to an
underwritten offering unless the Selling Holders beneficially owning at least a
majority of the shares of Registrable Common Stock requested to be included in
such registration statement determine otherwise, in which case pursuant to the
method of distribution determined by such Selling Holders.  The Company agrees to include in any such
registration statement filed pursuant to Section 3(a) hereof all
information which the Selling Holders beneficially owning at least a majority
of shares of the Registrable Common Stock covered by such registration
statement effected pursuant hereto, upon advice of counsel, shall reasonably
request.  The Company shall use its
reasonable best efforts to become eligible to use Form S-3 and, after
becoming eligible to use Form S-3, shall use its reasonable best efforts
to remain eligible to use Form S-3.

 

7

 

(d)         Effective Registration Statement. 
A registration requested pursuant to Section 3(a) hereof shall
not be deemed to have been effected

 

(i)                                     unless a registration statement with respect thereto has
been declared effective by the Commission and remains effective in compliance
with the provisions of the Securities Act and the laws of any state or other
jurisdiction applicable to the disposition of Registrable Common Stock covered
by such registration statement until such time as all of such Registrable
Common Stock have been disposed of in accordance with such registration
statement or there shall cease to be any Registrable Common Stock covered by
such registration statement, provided, that, except with respect
to any Shelf Registration, such period need not exceed ninety (90) days (plus a
number of Business Days equal to the number of Business Days, if any, that the
registration statement is not kept effective (including any days for which the
use of the prospectus is suspended pursuant to Section 9(b)) after the
initial date of its effectiveness and prior to the expiration of such ninety
(90) day period), and, provided, further, that with respect to
any Shelf Registration, such period need not extend beyond the period provided
for in Section 3(g) hereof,

 

(ii)                                  if, after it has become effective, such registration is
subject to any stop order, injunction or other order or requirement of the
Commission or other governmental or regulatory agency or court preventing the
sale of securities under such registration statement for any reason (other than
a violation of applicable law solely by any Selling Holder  and has not thereafter
become effective) or

 

(iii)                               if, in the case of an underwritten offering, the conditions
to closing specified in an underwriting agreement to which the Company is a
party are not satisfied or waived other than by reason of any breach or failure
by any Selling Holder.

 

The Selling Holders to be
included in a registration statement pursuant to Section 3(a) may at
any time terminate such request for registration in accordance with Section 3(a)(ii)(D).

 

(e)          Selection of Underwriters. 
Notwithstanding anything to the contrary set forth in this Agreement, in
connection with any registration requested by Paulson pursuant to Section 3(a) or
any registration pursuant to which Paulson exercises its piggyback rights
pursuant to Section 4 hereof (other than in the case of any offering or
registration initiated by the Company for its own account), Paulson shall have
the right in its sole discretion to require that the sale of its Registrable
Common Stock included in such registration be made in an underwritten offering
on a “firm commitment” basis.  The
underwriter or underwriters of each underwritten offering, if any, of the
Registrable Common Stock to be registered pursuant to Section 2(a) or
3(a) hereof shall be selected by Paulson or, if Paulson and its Affiliates
do not beneficially own a majority of the shares of Registrable Common Stock to
be registered, then the Selling Holders beneficially owning at least a majority
of the shares of Registrable Common Stock to be registered.  In the case of any offering or registration
initiated by the Company for its own account or any other offering not effected
pursuant to Section 2(a) or 3(a) hereof, including any offering
pursuant to which the Holders shall have piggyback rights pursuant to Section 4
hereof, the Company shall select a nationally recognized underwriter (or
underwriters) for such offering in its sole

 

8

 

discretion; provided that, the Company shall
not identify any Holder or subsequent purchaser of Registrable Common Stock as
an underwriter in any public disclosure with the Commission or any trading
market without the prior written consent of such Holder or such subsequent
purchaser, as the case may be.  If the
Company is required by law to identify any such party as an underwriter in any
public disclosure or filing with the Commission or any trading market, it must
notify such party in advance and such party shall have the option, in its sole
discretion, to consent to such identification as an underwriter within five (5) Business
Days or such party shall be deemed to have consented to have its Registrable
Common Stock removed from the applicable registration statement.

 

(f)            Priority in Registration. 
If a registration pursuant to Section 2(a) or 3(a) hereof
involves an underwritten Public Offering, and the managing underwriter of such
underwritten offering shall advise the Company in writing (with a copy to each
Selling Holder requesting that Registrable Common Stock be included in such registration
statement) that, in its opinion, the number of shares of Registrable Common
Stock requested to be included in such registration exceeds the number of such
securities that can be sold in such offering within a price range stated to
such managing underwriter by Selling Holders beneficially owning at least a
majority of the shares of Registrable Common Stock requested to be included in
such registration to be acceptable to such Selling Holders (such writing to
state the basis of such opinion and the approximate number of securities which
the managing underwriter believes may be included in such offering without such
effect), then the Company shall include in such registration, to the extent of
the number of shares which the Company is so advised the managing underwriter
believes can be sold in such offering, (i) first, all Registrable Common
Stock requested to be registered or included in an underwritten Public Offering
pursuant to Section 2(a) or 3(a) by Paulson and its Affiliates
(if the Minimum Ownership Trigger has been met), if any, (ii) second, all
Registrable Common Stock requested to be registered or included in an
underwritten Public Offering pursuant to Section 2(a) or 3(a) pro
rata among the Other Holders (or the Holders if clause (i) is not operable
because the Minimum Ownership Trigger has not been met) on the basis of the
number of shares of Registrable Common Stock requested to be registered by all
such Other Holders (or such Holders if clause (i) is not operable because
the Minimum Ownership Trigger has not been met), if any, (iii) third,
securities that the Company proposed to issue and sell for its own account, if
any, and (iv) fourth, other securities, if any.

 

(g)         Shelf Registrations. 
If one or more demands made pursuant to Section 3(a) hereof
are for a Shelf Registration, the period for which the Shelf Registration
Statement in connection with the first Shelf Registration requested pursuant to
Section 3(a) must remain effective need not extend beyond one (1) year
from the date on which such Shelf Registration Statement initially was declared
effective by the Commission and the period for which any subsequent Shelf
Registration Statement in connection with the subsequent Shelf Registration
requested pursuant to Section 3(a) must remain effective need not
extend beyond nine (9) months from the date on which such Shelf
Registration Statement initially was declared effective by the Commission
(plus, in each case, a number of Business Days equal to the number of Business
Days, if any, that the Shelf Registration Statement is not kept effective
(including any days for which the use of the prospectus is suspended pursuant
to Section 9(b)) after the initial date of its effectiveness and prior to
such first-year or nine-month, as the case may be, anniversary thereof). The
Company further agrees, if necessary, to supplement or amend the Shelf
Registration Statement, if required by the rules, regulations or instructions
applicable to the registration form

 

9

 

used by the Company for such Shelf Registration or by
the Securities Act or by any other rules and regulations thereunder for
shelf registration, and the Company agrees to furnish to the Holders whose
Registrable Common Stock is included in such Shelf Registration Statement
copies of any such supplement or amendment promptly after its being issued or
filed with the Commission.

 

4.   Piggyback Registration.  If the Company, at any time when a Shelf
Registration Statement covering all outstanding shares of Registrable Common
Stock is not effective, proposes to register Common Stock under the Securities
Act by registration on any forms (other than Form S-4 or S-8 or any
successor or similar form(s)), whether or not pursuant to registration rights
granted to other holders of its securities and whether or not for sale for its
own account, it shall give prompt written notice to all of the Holders of its
intention to do so and of such Holders’ rights under this Section 4, which
notice, in any event, shall be given at least 30 days prior to such proposed
registration.  Upon the written request
of any Holder receiving notice of such proposed registration (each, a “Piggyback
Requesting Holder”) made within 20 days after the receipt of any such
notice (or 10 days if the Company states in such written notice or gives
telephonic notice to the Holders, with written confirmation to follow promptly
thereafter, stating that (i) such registration will be on Form S-3
(or, if Form S-3 is not then available to the Company, Form S-1 or
any other appropriate form) and (ii) such shorter period of time is
required because of a planned filing date), which request shall specify the
Registrable Common Stock intended to be disposed of by such Piggyback
Requesting Holder and the minimum offering price per share at which such
Piggyback Requesting Holder is willing to sell its Registrable Common Stock,
the Company shall, subject to Section 7(b) hereof, effect the
registration under the Securities Act of all Registrable Common Stock which the
Company has been so requested to register by the Piggyback Requesting Holders
thereof; provided that,

 

(A)                              prior to the
effective date of the registration statement filed in connection with such
registration or, in the case of a Shelf Registration Statement, prior to the
delivery of a preliminary prospectus related to such offering, and, in any
event, promptly following receipt of notification by the Company from the
managing underwriter (if an underwritten offering) of a range of prices at
which such securities are likely to be sold, the Company shall so advise each
Piggyback Requesting Holder of such price, and if such price is below the
minimum price which shall be acceptable to such Piggyback Requesting Holder,
such Piggyback Requesting Holder shall then have the right irrevocably to
withdraw its request to have its Registrable Common Stock included in such
registration statement, by delivery of written notice of such withdrawal to the
Company within five (5) Business Days of its being advised of such price,
without prejudice to the rights of any such Piggyback Requesting Holder to
include Registrable Common Stock in any future registration (or registrations)
pursuant to this Section 4 or to cause such registration to be effected as
a registration under Section 3(a) hereof, as the case may be;

 

(B)                                if at any time
after giving written notice of its intention to register the offer for sale of
any securities and prior to the effective date of the registration statement
filed in connection with such registration or, in the case of a Shelf
Registration Statement, prior to the consummation of such offering, the

 

10

 

Company shall determine for
any reason not to register or to delay registration of such securities, the
Company may, at its election, give written notice of such determination to each
Piggyback Requesting Holder and (i) in the case of a determination not to
register, the Company shall be relieved of its obligation to register any
Registrable Common Stock in connection with such registration (but not from any
obligation of the Company to pay the Expenses in connection therewith), without
prejudice, however, to the rights of any Piggyback Requesting Holder to include
Registrable Common Stock in any future registration (or registrations) pursuant
to this Section 4 or, if applicable, to cause such registration to be
effected as a registration under Section 3(a) hereof, as the case may
be, and (ii) in the case of a determination to delay registering, shall be
permitted to delay registering any Registrable Common Stock, for the same
period as the delay in registering such other securities; and

 

(C)                                if such registration
was initiated by the Company for its own account and involves an underwritten
offering, each Piggyback Requesting Holder shall sell its Registrable Common
Stock on the same terms and conditions as those that apply to the Company, and
the underwriters of each such underwritten offering shall be a nationally
recognized underwriter (or underwriters) selected by the Company in its sole
discretion.

 

No registration effected under this Section 4
shall relieve the Company of its obligation to effect any registration upon
request under Section 3(a) hereof and no registration effected
pursuant to this Section 4 shall be deemed to have been effected pursuant
to Section 3(a) hereof.

 

5.   Expenses. 
Except as provided in the last paragraph of Section 6, the Company
shall pay all Expenses in connection with any registration initiated pursuant
to Sections 2(a), 3(a) or 4 hereof, whether or not such registration shall
become effective and whether or not all or any portion of the Registrable
Common Stock originally requested to be included in such registration are
ultimately included in such registration.

 

6.   Registration
Procedures.  If and whenever the Company is required to
effect any registration under the Securities Act as provided in Sections 2(a),
3(a) and 4 hereof, the Company shall, as expeditiously as possible:

 

(a)                                  prepare and
file with the Commission (promptly and, in the case of any registration
pursuant to Section 3(a), in any event on or before the date that is (i) thirty
(30) days after the date of any Initiating Request or (ii) if, as of such
thirtieth (30th) day, the
Company does not have the audited financial statements required to be included
in the registration statement, ten (10) days after the receipt by the
Company from its independent public accountants of such audited financial
statements, which the Company shall use its reasonable best efforts to obtain
as promptly as practicable) the requisite registration statement to effect such
registration and thereafter use its reasonable best efforts to cause such
registration statement to become and remain effective; provided, however, that the Company may
discontinue any registration of its securities that are not shares of
Registrable Common Stock (and, pursuant to, and under the circumstances 

 

11

 

specified in, Sections 4 and
9(b) hereof, its securities that are shares of Registrable Common Stock)
at any time prior to the effective date of the registration statement relating
thereto;

 

(b)                                 prepare and
file with the Commission such amendments and supplements to such registration
statement and the prospectus used in connection therewith as may be necessary
to keep such registration statement effective and to comply with the provisions
of the Securities Act and the Exchange Act with respect to the disposition of
all Registrable Common Stock covered by such registration statement until such
time as all of such Registrable Common Stock has been disposed of in accordance
with the method of disposition set forth in such registration statement; provided,
that, except with respect to any Shelf Registration, such period need
not extend beyond ninety (90) days after the effective date of the registration
statement (plus a number of Business Days equal to the number of Business Days,
if any, that the registration statement is not kept effective (including any
days for which the use of the prospectus is suspended pursuant to Section 9(b))
after the initial date of its effectiveness and prior to the expiration of such
ninety- (90) day period); and provided, further, that with
respect to the Initial Shelf, such period need not extend beyond the applicable
period provided for  in Section 2(a) hereof
and, with respect to any Shelf Registration other than the Initial Shelf, such
period need not exceed the applicable period provided for in Section 3(g) hereof;

 

(c)                                  furnish to each
seller of Registrable Common Stock covered by such registration statement and
their representatives designated pursuant to Section 8(a), if any, and
each underwriter, if any, such number of copies of such drafts and final
conformed versions of such registration statement and of each such amendment
and supplement thereto (in each case including all exhibits and any documents
incorporated by reference), such number of copies of such drafts and final
versions of the prospectus contained in such registration statement (including
each preliminary prospectus and any summary prospectus) and any other
prospectus filed under Rule 424 under the Securities Act, in conformity
with the requirements of the Securities Act, and such other documents,
including without limitation notification of whether such registration
statement or amendment or supplement thereto will be reviewed by the Commission
or any other regulatory authority, as such seller of Registrable Common Stock
covered by such registration statement or any underwriter may reasonably
request in writing; provided, that all drafts of such registration
statement or amendment or supplement thereto shall be furnished to each seller
of Registrable Common Stock covered by such registration statement and their
representatives designated pursuant to Section 8(a) whether or not so
requested;

 

(d)                                 use its
reasonable best efforts (i) to register or qualify all Registrable Common
Stock and other securities, if any, covered by such registration statement
under such other securities or blue sky laws of such states or other
jurisdictions of the United States of America as the Selling Holders covered by
such registration statement shall reasonably request in writing, (ii) to
keep such registration or qualification in effect for so long as such
registration statement remains in effect and (iii) to take any other
action that may be necessary or reasonably advisable to enable such sellers to
consummate the disposition in such jurisdictions of the securities to be sold
by such sellers, except that the 

 

12

 

Company shall not for any
such purpose be required to qualify generally to do business as a foreign
corporation in any jurisdiction wherein it would not but for the requirements
of this subsection (d) be obligated to be so qualified, to subject itself
to taxation in such jurisdiction or to consent to general service of process in
any such jurisdiction;

 

(e)                                  use its
reasonable best efforts to cause all Registrable Common Stock covered by such
registration statement to be registered with or approved by such other federal
or state governmental agencies or authorities as may be necessary upon the
advice of counsel to the Company or counsel to the seller of Registrable Common
Stock or Selling Holders to enable the seller or sellers thereof to consummate
the disposition of such Registrable Common Stock;

 

(f)                                    use its best
efforts to obtain and, if obtained, furnish to each seller of Registrable
Common Stock, and each such seller’s underwriters, if any, a signed

 

(i)                                     opinion of counsel for the Company, dated the effective date
of such registration statement (and, if such registration involves an
underwritten offering, dated the date of the closing under the underwriting
agreement and addressed to the underwriters), reasonably satisfactory (based on
the customary form and substance of opinions of issuers’ counsel customarily
given in such an offering) in form and substance to such seller, and

 

(ii)                                  “cold comfort” letter, dated the effective date of such
registration statement (and, if such registration involves an underwritten
offering, dated the date of the closing under the underwriting agreement and
addressed to the underwriters) and signed by the independent public accountants
who have certified the Company’s financial statements included or incorporated
by reference in such registration statement, reasonably satisfactory (based on
the customary form and substance of “cold comfort” letters of issuers’
independent public accountant customarily given in such an offering) in form
and substance to such seller,

 

in each case, covering substantially the same matters with respect to
such registration statement (and the prospectus included therein) and, in the
case of the accountants’ comfort letter, with respect to events subsequent to
the date of such financial statements, as are customarily covered in opinions
of issuer’s counsel and in accountants’ comfort letters delivered to
underwriters in such types of offerings of securities;

 

(g)                                 notify each
seller of Registrable Common Stock and other securities covered by such
registration statement, if any, at any time when a prospectus relating thereto
is required to be delivered under the Securities Act, upon discovery that, or
upon the happening of any event as a result of which, the prospectus included
in such registration statement, as then in effect, includes an untrue statement
of a material fact or omits to state any material fact required to be stated
therein or necessary to make the statements therein not misleading in the light
of the circumstances under which they were made and for which the Company
chooses to suspend the use of the registration statement and prospectus
pursuant to Section 9(b), and, in accordance with Section 9(b), at
the written request of any such seller of Registrable Common Stock, promptly
prepare and 

 

13

 

furnish to it a reasonable
number of copies of a supplement to or an amendment of such prospectus as may
be necessary so that, as thereafter delivered to the purchasers of such
securities, such prospectus, as supplemented or amended, shall not include an
untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein not misleading
in the light of the circumstances under which they were made;

 

(h)                                 use its
reasonable best efforts to obtain the withdrawal of any order suspending the
effectiveness of a registration statement relating to the Registrable Common
Stock at the earliest possible moment;

 

(i)                                     otherwise
comply with all applicable rules and regulations of the Commission and any
other governmental agency or authority having jurisdiction over the offering,
and make available to its stockholders, as soon as reasonably practicable, an
earnings statement covering the period of at least twelve (12) months, but not
more than eighteen (18) months, beginning with the first full calendar month
after the effective date of such registration statement, which earnings
statement shall satisfy the provisions of Section 11(a) of the
Securities Act and Rule 158 promulgated thereunder, and furnish to each
seller of Registrable Common Stock and to the managing underwriter, if any, at
least ten (10) days prior to the filing thereof (or such shorter time
period reasonably necessary in light of applicable legal requirements) a copy
of any amendment or supplement to such registration statement or prospectus;

 

(j)                                     use its
reasonable best efforts to cause all Registrable Common Stock covered by a
registration statement (i) to be listed on a national securities exchange
on which similar securities issued by the Company are then listed, if the
listing of such Registrable Common Stock is then permitted under the rules of
such exchange, or (ii) if the Company is not required pursuant to clause (i) above
to list Registrable Common Stock on a specific national securities exchange, use
its reasonable best efforts to list the Registrable Common Stock on a national
securities exchange and, without limiting the generality of the foregoing, use
its reasonable best efforts to arrange for at least two (2) market makers
to register with FINRA as such with respect to such Registrable Common Stock;

 

(k)                                  provide a
transfer agent and registrar for the Registrable Common Stock covered by a
registration statement no later than the effective date thereof;

 

(l)                                     enter into such
agreements (including an underwriting agreement in customary form) and take
such other actions as the Selling Holders beneficially owning at least a
majority of the shares of Registrable Common Stock covered by such registration
statement shall reasonably request in order to expedite or facilitate the
disposition of such Registrable Common Stock, including customary
indemnification;

 

(m)                               if requested by
the managing underwriter(s) or the Selling Holders beneficially owning at
least a majority of the shares of Registrable Common Stock being sold in
connection with an underwritten offering, promptly incorporate in a prospectus
supplement or post-effective amendment such information provided to the Company
in 

 

14

 

writing as the managing
underwriter(s) and the Selling Holders beneficially owning at least a
majority of the Registrable Common Stock being sold agree should be included
therein relating to the plan of distribution with respect to such Registrable
Common Stock, including without limitation, information with respect to the
number of shares of Registrable Common Stock being sold to such underwriters,
the purchase price being paid therefor by such underwriters and with respect to
any other terms of the underwritten offering of the Registrable Common Stock to
be sold in such offering, and make all required filings of such prospectus
supplement or post-effective amendment as soon as notified of the matters to be
incorporated in such prospectus supplement or post-effective amendment; and

 

(n)                                 cooperate with
the Selling Holders and the managing underwriter(s), if any, to facilitate the
timely preparation and delivery of certificates representing Registrable Common
Stock to be sold and not bearing any restrictive legends, and enable such
Registrable Common Stock to be in such share amounts and registered in such
names as the managing underwriter(s) or, if none, the Selling Holders
beneficially owning at least a majority of the shares of Registrable Common
Stock being offered for sale, may request at least three Business Days prior to
any sale of Registrable Common Stock to the underwriters.

 

As a condition to the obligations of the Company to
complete any registration pursuant to this Agreement with respect to the
Registrable Common Stock of a Selling Holder, such Selling Holder must furnish
to the Company in writing such information regarding itself, the Registrable
Common Stock held by it and the intended methods of disposition of the
Registrable Common Stock held by it as is necessary to effect the registration
of such Selling Holders’ Registrable Common Stock and is requested in writing
by the Company.  Except as otherwise
required by Section 2(a), at least thirty (30) days prior to the first
anticipated filing date of a registration statement for any registration under
this Agreement, the Company will notify in writing each Holder of the
information referred to in the preceding sentence which the Company is
requesting from such Holder whether or not such Holder has elected to have any of
its Registrable Common Stock included in the registration statement.  If, within ten (10) days prior to the
anticipated filing date, the Company has not received the requested information
from such Holder, then the Company may file the registration statement without
including Registrable Common Stock of such Holder if, in the opinion of the
Company’s counsel, such information is required to be included in such
registration statement.

 

Each Holder agrees that as of the date that a final
prospectus is made available to it for distribution to prospective purchasers
of Registrable Common Stock it shall cease to distribute copies of any
preliminary prospectus prepared in connection with the offer and sale of such
Registrable Common Stock.  Each Holder
further agrees that, upon receipt of any notice from the Company of the
happening of any event of the kind described in Section 6(g) and a
suspension of the use of the registration statement and prospectus pursuant to Section 9(b),
such Holder shall forthwith discontinue such Holder’s disposition of
Registrable Common Stock pursuant to the registration statement and prospectus
relating to such Registrable Common Stock until such Holder’s receipt of the
copies of the supplemented or amended prospectus contemplated by Section 6(g) and,
if so directed by the Company, shall deliver to the Company (at the Company’s
expense) all copies, other than permanent file copies, then in such Holder’s 

 

15

 

possession of the prospectus
relating to such Registrable Common Stock at the time of receipt of such
notice.  If any event of the kind
described in Section 6(g) occurs and such event is the fault solely
of a Holder (or Holders), such Holder (or Holders) shall pay all Expenses
attributable to the preparation, filing and delivery of any supplemented or
amended prospectus contemplated by Section 6(g).

 

7.   Underwritten Offerings.

 

(a)          Requested Underwritten Offerings. 
If requested by the underwriters in connection with a request for a registration
(that is not a Shelf Registration) under Section 2(a) or 3(a) hereof
or any underwritten “takedown” of securities under a Shelf Registration
Statement filed pursuant to Section 2(a) or 3(a), the Company shall
enter into a firm commitment underwriting agreement with such underwriters for
such offering, such agreement to be reasonably satisfactory in substance and
form to the Company, a majority of the Selling Holders whose Registrable Common
Stock is to be included in such registration and the underwriters and to
contain such representations and warranties by the Company and the Selling
Holders and such other terms as are customary in agreements of that type,
including, without limitation, indemnification and contribution to the effect
and to the extent provided in Section 10 hereof.

 

(b)         Piggyback Underwritten Offerings: Priority.

 

(i)                                     If the Company proposes to register any of its securities
under the Securities Act for its own account as contemplated by Section 4
hereof and such securities are to be distributed by or through one or more
underwriters, and if the managing underwriter of such underwritten offering
shall advise the Company in writing (with a copy to the Piggyback Requesting
Holders) that if all the Registrable Common Stock requested to be included in
such registration were so included, in its opinion, the number and type of
securities proposed to be included in such registration would exceed the number
and type of securities which the managing underwriter believes could be sold in
such offering within a price range acceptable to the Company (such writing to
state the basis of such opinion and the approximate number and type of
securities which the managing underwriter believes may be included in such
offering without such effect), then the Company shall include in such
registration pursuant to Section 4, to the extent of the number of
securities which the Company is so advised the managing underwriter believes
can be sold in such offering, (x) first, securities that the Company
proposes to issue and sell for its own account, (y) second, Registrable
Common Stock requested to be registered by Piggyback Requesting Holders
pursuant to Section 4 hereof, pro  rata
among the Piggyback Requesting Holders on the basis of the number of shares of
Registrable Common Stock requested to be registered by all such Piggyback
Requesting Holders, if any, and (z) third , other securities, if any.

 

(ii)                                  If the Company proposes to register any of its securities
under the Securities Act other than for its own account as contemplated by Section 4
hereof and such securities are to be distributed by or through one or more
underwriters, and if the managing underwriter of such underwritten offering
shall advise the Company in writing (with a copy to the Piggyback Requesting
Holders) that if all Registrable Common Stock requested to be included in such
registration were so included, in its opinion, the number

 

16

 

and
type of securities proposed to be included in such registration would exceed
the number and type of securities which the managing underwriter believes could
be sold in such offering within a price range stated to such managing
underwriter by Selling Holders beneficially owning at least a majority of the
shares of Registrable Common Stock requested to be included in such
registration to be acceptable to such Selling Holders (such writing to state
the basis of such opinion and the approximate number and type of securities
which the managing underwriter believes may be included in such offering
without such effect), then the Company shall include in such registration
pursuant to Section 4, to the extent of the number of securities which the
Company is so advised the managing underwriter believes can be sold in such
offering, (w) first, Registrable Common Stock requested to be registered
by Paulson and its Affiliates pursuant to Section 4 hereof (if the Minimum
Ownership Trigger has been met), if any, (x) second, Registrable Common
Stock requested to be registered by Piggyback Requesting Holders (other than
Paulson and its Affiliates where clause (w) is operable because the
Minimum Ownership Trigger has been met but including Paulson and its Affiliates
where clause (w) is not operable because the Minimum Ownership Trigger has
not been met) pursuant to Section 4 hereof, pro  rata
among the Piggyback Requesting Holders (other than Paulson and its Affiliates
where clause (w) is operable because the Minimum Ownership Trigger has
been met but including Paulson and its Affiliates where clause (w) is not
operable because the Minimum Ownership Trigger has not been met) on the basis
of the number of shares of Registrable Common Stock requested to be registered
by all such Piggyback Requesting Holders (other than Paulson and its Affiliates
where clause (w) is operable because the Minimum Ownership Trigger has
been met but including Paulson and its Affiliates where clause (w) is not
operable because the Minimum Ownership Trigger has not been met), if any, (y) third,
securities that the Company proposed to issue and sell for its own account, if
any, and (z) fourth, other securities, if any.

 

Any Selling Holder may withdraw its request to have
all or any portion of its Registrable Common Stock included in any such
offering by notice to the Company within ten (10) Business Days after
receipt of a copy of a notice from the managing underwriter pursuant to this Section 7(b).

 

(c)          Selling Holders to be Parties to Underwriting
Agreement.  Each Selling Holder whose Registrable Common
Stock is to be distributed by underwriters in an underwritten offering
contemplated by subsections (a) or (b) of this Section 7 shall
be a party to the underwriting agreement between the Company, such underwriters
and any such Selling Holder in form and substance reasonably satisfactory to
such Selling Holder and, at its option, may reasonably require that any or all
of the representations and warranties by, and the other agreements on the part
of, the Company to and for the benefit of such underwriters shall also be made
to and for the benefit of such Selling Holder (except to the extent any such
provision contradicts the terms of this Agreement) and that any or all of the
conditions precedent to the obligations of such underwriters under such
underwriting agreement be conditions precedent to the obligations of such
Selling Holder.  No such Selling Holder
shall be required to make any representations or warranties to or agreements
with the Company or the underwriters other than representations, warranties or
agreements regarding such Selling Holder, such Selling Holder’s Registrable
Common Stock and such Selling Holder’s intended method of distribution.

 

17

 

(d)         Holdback Agreements.  Each Holder
agrees, unless otherwise agreed to by the managing underwriter for any
underwritten offering pursuant to this Agreement, not to effect any sale or
distribution of any equity securities of the Company or securities convertible
into or exchangeable or exercisable for equity securities of the Company,
including any sale under Rule 144 under the Securities Act, during the ten
(10) days prior to the date on which an underwritten registration of
Registrable Common Stock pursuant to Section 2(a), 3 or 4 hereof has
become effective and until the earlier of (a) the date on which all
Registrable Common Stock to be sold pursuant to such underwritten registration
has been sold by the underwriters and (b) ninety (90) days after the
effective date of such underwritten registration or such shorter period of time
acceptable to the managing underwriter of such underwritten offering, if any,
except as part of such underwritten registration or to the extent that such
Holder is prohibited by applicable law from agreeing to withhold securities
from sale or is acting in its capacity as a fiduciary or an investment
adviser.  Without limiting the scope of
the term “fiduciary,” a Holder shall be deemed to be acting as a fiduciary or
an investment adviser if its actions or the securities proposed to be sold are
subject to the Employee Retirement Income Security Act of 1974, as amended, the
Investment Company Act of 1940, as amended, or the Investment Advisers Act of
1940, as amended, or if such securities are held in a separate account under
applicable insurance law or regulation.

 

The Company agrees (i) not to effect any sale
or distribution of any equity securities of the Company, or securities
convertible into or exchangeable or exercisable for equity securities of the
Company (except pursuant to registrations on Form S-4 or Form S-8 or
any successor thereto), during the ten (10) days prior to the date on
which an underwritten registration of Registrable Common Stock pursuant to Section 2(a),
3 or 4 hereof has become effective and until the earlier of (a) the date
on which all Registrable Common Stock to be sold pursuant to such underwritten
registration has been sold by the underwriters and (b) ninety (90) days
after the effective date of such underwritten registration or such shorter
period of time approved in writing by the managing underwriter of such
underwritten offering, if any, except as part of such underwritten
registration, and (ii) to cause each holder of any equity securities, or
securities convertible into or exchangeable or exercisable for equity
securities, in each case, acquired from the Company at any time on or after the
date of this Agreement (other than in a Public Offering or sale under Rule 144
promulgated under the Securities Act), who is a director or employee of or a
consultant to the Company or who has received registration rights from the
Company, to agree not to effect any sale or distribution of such securities
during the applicable period (or such shorter period of time approved in
writing by the managing underwriter of such underwritten offering, if any).

 

8.   Preparation: Reasonable
Investigation.

 

(a)          Registration Statements.  In connection
with the preparation and filing of each registration statement under the
Securities Act pursuant to this Agreement, the Company shall (i) give
representatives (designated to the Company in writing) of each Selling Holder
or group of Selling Holders, the underwriters, if any, and one firm of counsel,
one firm of accountants and one firm of other agents retained on behalf of all
underwriters and one firm of counsel, one firm of accountants and one firm of
other agents retained by Selling Holders beneficially owning a majority of the
shares of Registrable Common Stock covered by such registration statement on
behalf of all Selling Holders, the reasonable opportunity to participate in the
preparation of such

 

18

 

registration statement, each prospectus included
therein or filed with the Commission, and each amendment thereof or supplement
thereto, (ii) upon reasonable advance notice to the Company, give each of
them such reasonable access to all financial and other records, corporate
documents and properties of the Company and its Subsidiaries, as shall be
necessary, in the reasonable opinion of such Selling Holders’ and such
underwriters’ counsel, to conduct a reasonable due diligence investigation for
purposes of the Securities Act, and (iii) upon reasonable advance notice
to the Company, provide such reasonable opportunities to discuss the business
of the Company with its officers, directors, employees and the independent
public accountants who have certified its financial statements as shall be
necessary, in the reasonable opinion of such Selling Holders’ and such
underwriters’ counsel, to conduct a reasonable due diligence investigation for
purposes of the Securities Act.

 

(b)         Confidentiality.  Each Selling
Holder shall maintain the confidentiality of any confidential information
received from or otherwise made available by the Company to such Selling Holder
in its capacity as such.  Information
that (i) is or becomes available to a Selling Holder from a public source
other than as a result of a disclosure by such Selling Holder or any of its
Affiliates, (ii) is disclosed to a Selling Holder by a third-party source
who the Selling Holder reasonably believes is not bound by an obligation of
confidentiality to the Company or (iii) is or becomes required to be
disclosed by a Selling Holder by law, including by court order, shall not be
deemed to be confidential information for purposes of this Agreement.  The Selling Holders shall not grant access,
and the Company shall not be required to grant access, to information under
this Section 8 to any Person who will not agree to maintain the
confidentiality (to the same extent a Selling Holder is required to maintain
confidentiality) of any confidential information received from or otherwise
made available to it by the Company or the Selling Holders under this
Agreement.

 

9.   Postponements.

 

(a)  Without limiting any other rights of the
Holders under this Agreement, if the Company shall fail to file any
registration statement to be filed pursuant to a request for registration under
Section 3(a) hereof within the time prescribed therefor, (i) any
Selling Holder whose Registrable Common Stock was to be included in such
registration shall have the right to withdraw such request and (ii) one or
more Selling Holders requesting registration shall have the right to withdraw
such request to file a registration statement if and only if the Selling
Holders that have not elected to withdraw beneficially own, in the aggregate,
less than the percentage of shares of Registrable Common Stock required to
initiate a request under Section 3(a). 
Any withdrawal shall be made by giving written notice to the Company
within twenty (20) days after the date on which a registration statement would
otherwise have been required to have been filed with the Commission under
clause (i) of Section 6(a) hereof (i.e., 20 days after the date
that is thirty (30) days after the date of the relevant Initiating Request, or,
if, as of such thirtieth (30th) day, the Company does not have the audited financial statements
required to be included in the registration statement, thirty (30) days after
the receipt by the Company from its independent public accountants of such
audited financial statements).  In the
event of a withdrawal described in clause (ii) of this Section 9(a),
the request for registration shall not be counted for purposes of determining
the number of registrations to which the Holders are entitled pursuant to Section 3(a) hereof.  The Company shall pay all Expenses incurred
in connection with any withdrawal described in clauses (i) and (ii) of
this Section 9(a).

 

19

 

(b)  The Company shall not be obligated to file
any registration statement, or file any amendment or supplement to any
registration statement, and may suspend the registration process and/or any
Selling Holder’s ability to use a prospectus, at any time (but not to exceed
one time in any twelve-month period) when the Company, in the good faith
judgment of its Board of Directors, reasonably believes that (i) the
continuation of the registration process thereof at the time requested would
adversely affect a pending or proposed material financing or a material
acquisition, merger, recapitalization, consolidation, reorganization or similar
transaction, or negotiations, discussions or pending proposals with respect
thereto or (ii) the registration statement and any prospectus contains or
would contain a material misstatement of fact or omission as a result of an
event that has occurred or is continuing. 
The filing of a registration statement, or any amendment or supplement
thereto, by the Company cannot be deferred, and the Selling Holders’ rights to
make sales pursuant to an effective registration statement cannot be suspended,
pursuant to the provisions of the preceding sentence, (x) in the case of
clause (i) above, for more than ten (10) days after the abandonment
or consummation of any of the proposals or transactions set forth in such
clause (i), (y) in the case of clause (ii) above, following such time
as the Company no longer believes, in its good faith judgment, that the
registration statement and any prospectus contains or would contain a material
misstatement of fact or omission as a result of an event that has occurred or
is continuing; provided that the Company will use its reasonable best
efforts to update the disclosure in such registration statement and prospectus
(whether by amendment or by incorporation by reference) as soon as practicable
such that the registration statement and prospectus will not contain a material
misstatement of fact or omission, or (z) in any event, in the case of
either clause (i) or clause (ii) above, for more than one hundred
twenty (120) days after the date of the Board of Directors’ determination; provided
that the Company may not suspend any Selling Holder’s ability to use a
prospectus pursuant to this Section 9(b) (including but not limited
to as set forth in Section 6(g)) for more than an aggregate of ninety (90)
days in any 365-day period.  The Company
shall give notice to the Selling Holders that the registration process has been
suspended and upon notice duly given pursuant to Section 20(f) hereof,
each Selling Holder agrees not to sell any Registrable Common Stock pursuant to
any registration statement until such Selling Holder’s receipt of copies of the
supplemented or amended prospectus, or until it is advised in writing by the
Company that the prospectus may be used, and has received copies of any
additional or supplemental filings that are incorporated or deemed incorporated
by reference in such prospectus.  The
Company shall not specify the nature of the event giving rise to a suspension
in any notice to the Selling Holders of the existence of such a suspension. If
the Company suspends the Selling Holders’ rights to make sales pursuant hereto,
the applicable registration period shall be extended by the number of days of
such suspension.

 

10.   Indemnification.

 

(a)          Indemnification by the Company. 
In connection with any registration statement filed by the Company
pursuant to Section 2(a), 3(a) or 4 hereof, to the fullest extent
permitted by law the Company shall, and hereby agrees to, indemnify and hold
harmless, each Holder and seller of any Registrable Common Stock covered by
such registration statement and each other Person who participates as an
underwriter in the offering or sale of such securities and each other Person,
if any, who controls (within the meaning of the Exchange Act) such Holder or
seller or any such underwriter, and their respective stockholders, directors,
managers, officers, employees, partners, agents and Affiliates (each, a “Company
Indemnitee” for purposes of this

 

20

 

Section 10(a)), against any losses, claims,
damages, liabilities (or actions or proceedings, whether commenced or
threatened, in respect thereof and whether or not such indemnified party is a
party thereto), joint or several, and expenses, including, without limitation,
the reasonable fees, disbursements and other charges of legal counsel and
reasonable costs of investigation, to which such Company Indemnitee may become
subject under the Securities Act or otherwise (collectively, a “Loss” or
“Losses”), insofar as such Losses arise out of, are based upon or relate
to (i) any breach of any representation or warranty made by the Company in
this Agreement or any other certificate, instrument or document contemplated
hereby, (ii) any breach of any covenant, agreement or obligation of the
Company contained in this Agreement or any other certificate, instrument or
document contemplated hereby, or (iii) any untrue statement or alleged
untrue statement of any material fact contained in any registration statement
under which such securities were registered or otherwise offered or sold under
the Securities Act or otherwise, any preliminary prospectus, final prospectus
or summary prospectus related thereto, or any amendment or supplement thereto
(or in any document incorporated by reference in any of the foregoing)
(collectively, “Offering Documents”), or any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein in the light of the circumstances in
which they were made not misleading or any violation by the Company of any
federal or state law, rule or regulation applicable to the Company and
relating to action required of or inaction by the Company in connection with
any such registration; provided that, in the case of the foregoing
clause (iii), the Company shall not be liable to any Company Indemnitee in any
such case to the extent that any such Loss arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged omission
made in such Offering Documents in reliance upon and in conformity with
information furnished to the Company in a writing duly executed by such Company
Indemnitee specifically stating that it is expressly for use therein.  Such indemnity shall remain in full force and
effect regardless of any investigation made by or on behalf of such Company
Indemnitee and shall survive the transfer of such securities by such Company
Indemnitee.

 

(b)   Indemnification by the Offerors and
Sellers.  In connection with any
registration statement filed by the Company pursuant to Section 2(a), 3(a) or
4 hereof in which a Selling Holder has registered for sale Registrable Common
Stock, each such Selling Holder or seller of Registrable Common Stock shall,
and hereby agrees to, on a several and not joint basis, indemnify and hold
harmless to the fullest extent permitted by law the Company and each of its
directors, officers, employees, agents, partners, stockholders, Affiliates and
each other Person, if any, who controls (within the meaning of the Exchange
Act) the Company and each other seller and such seller’s employees, directors,
managers, officers, stockholders, partners, agents and Affiliates (each, a “Selling
Holder Indemnitee” for purposes of this Section 10(b)), against all
Losses insofar as such Losses arise out of, are based upon or relate to any
untrue statement or alleged untrue statement of a material fact contained in
any Offering Documents or any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein in the light of circumstances in which they were made not misleading,
but only to the extent that such untrue statement or alleged untrue statement
or omission or alleged omission was made in reliance upon and in conformity
with information furnished to the Company in a writing duly executed by such
Selling Holder or seller of Registrable Common Stock expressly for use therein;
provided, however, that the liability of such indemnifying
party under this Section 10(b) shall be limited to the amount of the
net proceeds received by such indemnifying party in the sale of Registrable
Common Stock giving 

 

21

 

rise to such liability.  Such indemnity shall remain in full force and
effect, regardless of any investigation made by or on behalf of the Selling
Holder Indemnitee and shall survive the transfer of such securities by such
indemnifying party.

 

(c)   Notices of Losses, etc.  Promptly after receipt by an indemnified
party of written notice of the commencement of any action or proceeding
involving a Loss referred to in the preceding subsections of this Section 10,
such indemnified party will, if a claim in respect thereof is to be made against
an indemnifying party, give written notice to the latter of the commencement of
such action; provided, however, that the failure of any indemnified
party to give notice as provided herein shall not relieve the indemnifying
party of its obligations under the preceding subsections of this Section 10,
except to the extent that the indemnifying party is materially and actually
prejudiced by such failure to give notice. 
In case any such action is brought against an indemnified party, the
indemnifying party shall be entitled to participate in and, unless in such
indemnified party’s reasonable judgment a conflict of interest between such
indemnified and indemnifying parties may exist in respect of such Loss, to
assume and control the defense thereof, in each case at its own expense,
jointly with any other indemnifying party similarly notified, to the extent
that it may wish, with counsel reasonably satisfactory to such indemnified
party, and after its assumption of the defense thereof, the indemnifying party
shall not be liable to such indemnified party for any legal or other expenses
subsequently incurred by the latter in connection with the defense thereof
other than reasonable costs of investigation, unless in such indemnified party’s
reasonable judgment a conflict of interest between such indemnified and
indemnifying parties arises in respect of such claim after the assumption of
the defense thereof.  No indemnifying
party shall be liable for any settlement of any such action or proceeding
effected without its written consent, which shall not be unreasonably
withheld.  No indemnifying party shall,
without the consent of the indemnified party, consent to entry of any judgment
or enter into any settlement which does not include as an unconditional term
thereof the giving by the claimant or plaintiff to such indemnified party of a
release from all liability in respect of such Loss or which requires action on
the part of such indemnified party or otherwise subjects the indemnified party
to any obligation or restriction to which it would not otherwise be subject.

 

(d)   Contribution.  If the indemnification provided for in this Section 10
shall for any reason be unavailable to an indemnified party under subsection (a) or
(b) of this Section 10 in respect of any Loss, then, in lieu of the
amount paid or payable under subsection (a) or (b) of this Section 10,
the indemnified party and the indemnifying party under subsection (a) or (b) of
this Section 10 shall contribute to the aggregate Losses (including legal
or other expenses reasonably incurred in connection with investigating the
same) (i) in such proportion as is appropriate to reflect the relative
fault of the Company and the prospective Selling Holders covered by the
registration statement which resulted in such Loss or action in respect
thereof, with respect to the statements, omissions or action which resulted in
such Loss or action in respect thereof, as well as any other relevant equitable
considerations, or (ii) if the allocation provided by clause (i) above
is not permitted by applicable law, in such proportion as shall be appropriate
to reflect the relative benefits received by the Company, on the one hand, and
such prospective sellers, on the other hand, from their sale of Registrable
Common Stock; provided that, for purposes of this clause (ii), the
relative benefits received by the prospective sellers shall be deemed not to
exceed the net proceeds received by such sellers.  No Person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be 

 

22

 

entitled to contribution from any Person who was not
guilty of such fraudulent misrepresentation. 
The obligations, if any, of the Selling Holders to contribute as provided
in this subsection (d) are several in proportion to the relative value of
their respective Registrable Common Stock covered by such registration
statement and not joint.  In addition, no
Person shall be obligated to contribute hereunder any amounts in payment for
any settlement of any action or Loss effected without such Person’s consent,
which shall not be unreasonably withheld.

 

(e)   Indemnification Payments.  The indemnification and contribution required
by this Section 10 shall be made by periodic payments of the amount
thereof during the course of any investigation or defense, as and when any Loss
is incurred and is due and payable.

 

11.   Registration
Rights to Others.

 

If the Company shall at any time hereafter provide
to any holder of any securities of the Company rights with respect to the
registration of such securities under the Securities Act or the Exchange Act,
such rights shall not be in conflict with or adversely affect any of the rights
provided to the Holders in, or conflict (in a manner that adversely affects the
Holders) with any other provisions included in, this Agreement.

 

12.   Adjustments
Affecting Registrable Common Stock.

 

Without the written consent of the Holders
beneficially owning a majority of the outstanding shares of Registrable Common
Stock, the Company shall not effect or permit to occur any combination,
subdivision or reclassification of Registrable Common Stock that would
materially adversely affect the ability of the Holders to include such
Registrable Common Stock in any registration of its securities under the
Securities Act contemplated by this Agreement or the marketability of such
Registrable Common Stock under any such registration or other offering.

 

13.   Exchange
Act Reports.

 

So long as any Holder beneficially owns Registrable
Common Stock, if the Company is not required to file reports pursuant to Section 13(a) or
Section 15(d) of the Exchange Act, it will prepare and furnish to the
Holders and make publicly available in accordance with Rule 144(c) promulgated
under the Securities Act annual and quarterly financial statements, together
with a  discussion and analysis of such
financial statements in form and substance similar to those that would
otherwise be required to be included in reports required by Section 13(a) or
Section 15(d) of the Exchange Act, as well as any other information
required thereby, in the time period that such filings would have been required
to have been made under the Exchange Act.

 

14.   Rule 144
and Rule 144A.

 

If the Company has a class of equity securities
registered under the Exchange Act, the Company shall take all actions
reasonably necessary to enable the Holders to sell Registrable Common Stock
without registration under the Securities Act to the maximum extent permitted
by the exemptions provided by (a) Rule 144 under the Securities Act,
as such Rule may be amended from time to time, (b) Rule 144A
under the Securities Act, as such Rule may be 

 

23

 

amended from time to time,
or (c) any similar rules or regulations hereafter adopted by the
Commission, including, without limiting the generality of the foregoing, filing
on a timely basis all reports required to be filed under the Exchange Act.  Upon the written request of any Holder, the
Company shall deliver to such Holder a written statement as to whether it has
complied with such requirements.

 

15.   Amendments
and Waivers.

 

Any provision of this Agreement may be amended,
modified or waived if, but only if, the written consent to such amendment,
modification or waiver has been obtained (i) except as provided in clauses
(ii), (iii) and (iv) below, from the Holders of at least two-thirds
of the shares of Registrable Common Stock affected by such amendment,
modification or waiver, (ii) in the case of any amendment, modification or
waiver of any provision of Section 5, 9 or 10 hereof or this Section 15
or any provisions as to the number of requests for registration to which
Paulson and its Affiliates are entitled under Section 3 hereof, from Paulson,
(iii) in the case of any amendment, modification or waiver of any
provision of Section 5, 9 or 10 hereof or this Section 15 or any
provisions as to the number of requests for registration to which the Other
Holders are entitled under Section 3 hereof, from the Other Holders
beneficially owning at least a majority of the outstanding shares of
Registrable Common Stock held by the Other Holders, and (iv) in the case
of any other amendment, modification or waiver of any provision of this
Agreement which adversely affects any right and/or obligation under this
Agreement of Paulson and its Affiliates or the Other Holders, from Paulson or
the Other Holders beneficially owning at least a majority of the outstanding
shares of Registrable Common Stock held by the Other Holders,
respectively.  Any amendment,
modification or waiver of any provision of this Agreement requires the approval
of the Company, and any amendment, modification or waiver of any provision of
this Agreement that affects Paulson shall be approved by a majority of the
directors of the Company independent of Paulson and management of the Company.

 

16.   Nominees
for Beneficial Owners.

 

In the event that any Registrable Common Stock is
held by a nominee for the beneficial owner thereof, the beneficial owner
thereof may, at its election in writing delivered to the Company, be treated as
the holder of such Registrable Common Stock for purposes of any request or
other action by any Holder or Holders pursuant to this Agreement or any
determination of the number or percentage of shares of Registrable Common Stock
held by any Holder or Holders contemplated by this Agreement.  If the beneficial owner of any Registrable
Common Stock so elects, the Company may require assurances reasonably
satisfactory to it of such owner’s beneficial ownership of such Registrable
Common Stock.

 

17.   Assignment.

 

The provisions of this Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective heirs,
successors and permitted assigns.  Any Holder
may Transfer to any Transferee (and any transferee of such Holder may Transfer
to any subsequent Transferee) (in each case as permitted under applicable law)
its Registrable Common Stock and its rights and obligations under this
Agreement, provided that such Transferee shall agree in writing prior to
the assignment to be bound by this Agreement as if it were an original party 

 

24

 

hereto, whereupon such
Transferee shall for all purposes be deemed to be a Holder under this Agreement
but only if the Transferor Transfers to such Transferee at least five percent
(5%) of the shares of Registrable Common Stock outstanding as of the date of
this Agreement.  Except as provided above
or otherwise permitted by this Agreement, neither this Agreement nor any right,
remedy, obligation or liability arising hereunder or by reason hereof shall be
assignable by any Holder without the prior written consent of the other parties
hereto.  The Company may not assign this
Agreement or any right, remedy, obligation or liability arising hereunder or by
reason hereof without the consent of Paulson and the Holders beneficially
owning a majority of the outstanding shares of Registrable Common Stock.

 

18.   Calculation of Percentage or Number
of Shares of Registrable Common Stock.

 

For purposes of this Agreement, all references to a
percentage or number of shares of Registrable Common Stock or Common Stock
shall be calculated based upon the number of shares of Registrable Common Stock
or Common Stock, as the case may be, outstanding at the time such calculation
is made and shall exclude any Registrable Common Stock or Common Stock, as the
case may be, beneficially owned by the Company or any Subsidiary of the
Company.  For the purposes of calculating
any percentage or number of shares of Registrable Common Stock or Common Stock
as contemplated by the previous sentence, the terms “Holder”, “Original Holder”
and “Initiating Holder” shall include all Affiliates thereof (other than the
Company and its Subsidiaries) beneficially owning any shares of Registrable
Common Stock or Common Stock.

 

19.   Termination of Registration Rights.  This Agreement, including, without
limitation, the Company’s obligations under Sections 2(a), 3(a) and 4
hereof to register Common Stock for sale under the Securities Act shall
terminate on the first date on which there are no Holders parties this
Agreement.  Notwithstanding any
termination of this Agreement pursuant to this Section 19, the parties’
obligations under Section 5 and Section 10 hereof shall continue in
full force and effect.

 

20.   Miscellaneous.

 

(a)   Further Assurances.  The Company shall execute such documents and
other papers and perform such further acts as may be reasonably required or
advisable to carry out the provisions of this Agreement and the transactions
contemplated hereby.

 

(b)   Headings.  The headings in this Agreement are for
convenience of reference only and shall not control or affect the meaning or
construction of any provisions hereof.

 

(c)   Conflicting Instructions.  A Person is deemed to be a holder of
Registrable Common Stock whenever such Person owns of record Registrable Common
Stock.  If the Company receives
conflicting instructions, notices or elections from two or more Persons with
respect to the same Registrable Common Stock, the Company will act upon the
basis of instructions, notice or election received from the registered owner of
such Registrable Common Stock.

 

(d)   Remedies.  Each Holder, in addition to being entitled to
exercise all rights granted by law, including recovery of damages, will be
entitled to specific performance of its 

 

25

 

rights under this Agreement.  The Company agrees that monetary damages
would not be adequate compensation for any loss incurred by reason of a breach
by it of the provisions of this Agreement and the Company hereby agrees to
waive the defense in any action for specific performance that a remedy at law
would be adequate.

 

(e)   Entire Agreement.  This Agreement constitutes the entire
agreement and understanding of the parties hereto in respect of the subject
matter contained herein, and there are no restrictions, promises,
representations, warranties, covenants, or undertakings with respect to the subject
matter hereof, other than those expressly set forth or referred to herein.  This Agreement supersedes all prior
agreements and understandings between the parties hereto with respect to the
subject matter hereof.

 

(f)    Notices.  All notices, requests and demands to or upon
the respective parties hereto to be effective shall be in writing (including by
telecopy), and, unless otherwise expressly provided herein, shall be deemed to
have been duly given or made when delivered by hand, or two Business Days after
being delivered to a recognized courier (whose stated terms of delivery are two
Business Days or less to the destination of such notice), or five calendar days
after being deposited in the mail, postage prepaid, or, in the case of telecopy
notice, when received, addressed as set forth on Schedule B hereto to the
parties hereto, or to such other address as may be hereafter notified by the
respective parties hereto.

 

(g)   Governing Law.  This Agreement shall be governed by and
construed in accordance with the laws of the State of New York applicable to
contracts made and to be performed therein.

 

(h)   Venue; No Jury Trial.  The parties agree that any action or
proceeding with respect to any controversy, claim or dispute arising out of or
relating to this Agreement or any other agreement entered into in connection
herewith 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 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 AGREEMENT 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.

 

(i)    Severability.  Notwithstanding any provision of this
Agreement, neither the Company nor any other party hereto shall be required to
take any action which would be in violation of any applicable federal or state
securities law.  The invalidity or
unenforceability of any provision of this Agreement in any jurisdiction shall
not affect the validity, legality or enforceability of any other provision of
this Agreement in such jurisdiction or the validity, legality or 

 

26

 

enforceability of this Agreement, including any such
provision, in any other jurisdiction, it being intended that all rights and
obligations of the parties hereunder shall be enforceable to the fullest extent
permitted by law.

 

(j)    Counterparts.  This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which shall
constitute one and the same Agreement.

 

[Remainder of this page intentionally left
blank.]

 

27

 

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

 

	
   

  	
  IDEARC
  INC.

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:
  

  	
  /s/
  Samuel D. Jones

  
	
   

  	
   

  	
  Name:
  Samuel D. Jones

  
	
   

  	
   

  	
  Title:
  Executive Vice President, Chief Financial Officer and Treasurer

  

 

[Signature Page to
Registration Rights Agreement]

 

 

	
   

  	
  PAULSON &
  CO. INC., on behalf of the several investment funds and accounts managed by
  it

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:
  

  	
  /s/
  Stuart Merzer

  
	
   

  	
   

  	
  Name:
  Stuart Merzer

  
	
   

  	
   

  	
  Title:
  Authorized Signatory

  

 

 

SCHEDULE A

 

Original Holders

 

BLT
8 LLC

 

Paulson
Advantage Master Ltd.

 

Paulson
Advantage Plus Master Ltd.

 

Paulson
Advantage Select Master Ltd.

 

Paulson
Credit Opportunities Master Ltd.

 

Paulson
Recovery Master Fund Ltd.

 

 

SCHEDULE B

 

NOTICES

 

If to the Company, to:

 

Idearc
Inc.

2200
West Airfield Drive

P.O. Box
619810

DFW
Airport, Texas 75261-9810

Tel:  972-453-3718

Fax:  972-453-6869

Attention:  Cody Wilbanks

 

with
a copy to (which shall not constitute notice):

 

Fulbright &
Jaworski L.L.P.

2200
Ross Avenue, Suite 2800

Dallas,
Texas 75201-2784

Fax:  214-855-8200

Attention:  Glen Hettinger

 

If
to Paulson, to:

 

Paulson &
Co. Inc.

1251
Avenue of the Americas, 50th Floor

New
York, NY  10020

Fax:
(212) 977-9505

Attention:  Daniel B. Kamensky

 

with
a copy to (which shall not constitute notice):

 

Akin
Gump Strauss Hauer & Feld LLP

One
Bryant Park

New
York, New York 10036

Fax:  (212) 872-1002

Attention:  Andrew Hulsh

    Fred Hodara

 

If
to the Other Holders, to:

 

such Holder, at such Holder’s address or to
such Holder’s telephone or telecopy number reflected in the Company’s books and
records,

 

and, with respect to the Original Holders and
their permitted Transferees, with a copy to (which shall not constitute
notice):

 

 

Simpson
Thacher & Bartlett LLP

425
Lexington Avenue

New York, New York 10017

Attention:  Peter J. Gordon, Esq.

Fax:    (212) 455-2502

 

 

EXHIBIT A

 

FORM OF SELLING STOCKHOLDER QUESTIONNAIRE

 

The undersigned
beneficial owner (the “Selling Stockholder”) of shares (the “Registrable
Common Stock”) of common stock, par value $0.01 per share, of Idearc Inc.
(the “Company”), hereby gives notice to the Company of its intention to
sell or otherwise dispose of Registrable Common Stock beneficially owned by it
and listed below in Item 3 (unless otherwise specified under Item 3)
pursuant to the Shelf Registration Statement. 
The undersigned, by signing and returning this Selling Stockholder
Questionnaire, understands that it will be bound by the terms and conditions of
this Selling Stockholder Questionnaire and the Registration Rights Agreement,
dated as of December 31, 2009, among the Company and the Holders named
therein (the “Registration Rights Agreement”).  Capitalized terms used and not defined herein
shall have the meaning ascribed to them in the Registration Rights Agreement.

 

In accordance with
the Registration Rights Agreement, Selling Stockholders that do not complete
this Selling Stockholder Questionnaire and deliver it to the Company as
provided below will not be named selling stockholders in the prospectus and
therefore will not be permitted to sell any Registrable Common Stock pursuant
to the Shelf Registration Statement.

 

Pursuant to the
Registration Rights Agreement, the undersigned has agreed to indemnify and hold
harmless the Company’s directors, the Company’s officers and each person, if
any, who controls the Company within the meaning of either Section 15 of
the Securities Act or Section 20 of the Exchange Act from and against
certain losses arising in connection with statements concerning the undersigned
made in the Shelf Registration Statement or the related prospectus in reliance
upon the information provided in this Selling Stockholder Questionnaire.  The undersigned hereby acknowledges its
obligations under the Registration Rights Agreement to indemnify and hold
harmless certain persons set forth therein.

 

Certain legal
consequences arise from being named a selling stockholder in the Shelf
Registration Statement and the related prospectus.  Accordingly, holders and beneficial owners
are advised to consult their own securities law counsel regarding the
consequences of being named or not named as a selling stockholder in the Shelf
Registration Statement and the related prospectus.

 

The undersigned
hereby provides the following information to the Company and represents and
warrants that such information is accurate and complete:

 

	
  (1)

  	
  (a)

  	
  Full Legal Name of Selling Stockholder:

  
	
   

  	
   

  	
   

  
	
   

  	
  (b)

  	
  Full Legal Name of
  Registered Holder (if not the same as (a) above) through which
  Registrable Common Stock listed in (3) below is held:

  
	
   

  	
   

  	
   

  
	
   

  	
  (c)

  	
  Full Legal Name of DTC
  Participant  (if applicable and if not
  the same as (b) above) through which Registrable Common Stock listed in (3) below
  is held:

  
	
   

  	
   

  	
   

  
	
  (2)

  	
  Address for Notices to
  Selling Stockholder:

  

 

A-1

 

	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Telephone (including area
  code):

  	
   

  
	
   

  	
  Fax (including area code):

  	
   

  
	
   

  	
  Contact Person:

  	
   

  
	
  (3)

  	
  Beneficial Ownership of
  Registrable Common Stock:

  
	
   

  	
   

  
	
   

  	
  (a)

  	
  Type and Principal
  Amount/Number of Registrable Common Stock beneficially owned:

  
	
   

  	
   

  	
   

  
	
   

  	
  (b)

  	
  CUSIP No(s). of such
  Registrable Common Stock beneficially owned:

  
	
   

  	
   

  	
   

  
	
  (4)

  	
  Beneficial Ownership of
  Other Securities of the Company Owned by the Selling Stockholder:

  
	
   

  	
  Except as set forth below in
  this Item (4), the undersigned is not the beneficial or registered owner
  of any securities of the Company other than the Registrable Common Stock
  listed above in Item (3).

  
	
   

  	
  (a)

  	
  Type and Amount of Other
  Securities beneficially owned by the Selling Stockholder:

  
	
   

  	
   

  	
   

  
	
   

  	
  (b)

  	
  CUSIP No(s). of such Other
  Securities beneficially owned:

  
	
   

  	
   

  	
   

  
	
  (5)

  	
  Relationship with the
  Company:

  
	
   

  	
  Except as set forth below,
  neither the undersigned nor any of its affiliates, officers, directors or
  principal equity holders (5% or more) has held any position or office or has
  had any other material relationship with the Company (or its predecessors or
  affiliates) during the past three years.

  
	
   

  	
  State any exceptions here:

  	
   

  
	
  (6)

  	
  Is the Selling Stockholder
  a registered broker-dealer?

  
	
   

  	
  Yes

  	
  o

  
	
   

  	
  No

  	
  o

  
	
   

  	
  If “Yes”, please answer subsection (a) and
  subsection (b):

  	
   

  
	
   

  	
   

  	
  (a)

  	
  Did the Selling
  Stockholder acquire the Registrable Common Stock as compensation for underwriting/broker-dealer
  activities to the Company?

  
	
   

  	
   

  	
  Yes

  	
  o

  
	
   

  	
   

  	
  No

  	
  o

  
	
   

  	
   

  	
  (b)

  	
  If you answered “No” to
  question 6(a), please explain your reason for acquiring the Registrable
  Common Stock:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  (7)

  	
  Is the Selling Stockholder an affiliate of
  a registered broker-dealer?

  
	
   

  	
  Yes

  	
  o

  
	
   

  	
  No

  	
  o

  
	
   

  	
  If “Yes”, please identify the registered
  broker-dealer(s), describe the nature of the affiliation(s) and answer
  subsection (a) and subsection (b):

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (a)

  	
  Did the Selling Stockholder purchase the
  Registrable Common Stock in the ordinary course of business (if no, please
  explain)?

  
	
   

  	
   

  	
  Yes

  	
  o

  
	
   

  	
   

  	
  No

  	
  o

  	
  Explain:

  	
   

  	
   

  
																

 

A-2

 

	
   

  	
   

  	
  (b)

  	
  Did the Selling Stockholder have an
  agreement or understanding, directly or indirectly, with any person to
  distribute the Registrable Common Stock at the same time the Registrable
  Common Stock were originally purchased (if yes, please explain)?

  
	
   

  	
   

  	
  Yes

  	
  o

  	
  Explain:

  	
   

  	
   

  
	
   

  	
   

  	
  No

  	
  o

  	
   

  	
   

  	
   

  
	
  (8)

  	
  Is the Selling Stockholder
  a non-public entity?

  
	
   

  	
  Yes

  	
  o

  
	
   

  	
  No

  	
  o

  
	
   

  	
  If “Yes”, please answer subsection (a):

  
	
   

  	
   

  	
  (a)

  	
  Identify the natural person or persons that
  have voting or investment control over the Registrable Common Stock that the
  non-public entity owns:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  (9)

  	
  Plan of Distribution:

  
	
   

  	
  Except as set forth below, the
  undersigned Selling Stockholder (including its donees and pledgees) intends
  to distribute the Registrable Common Stock listed above in Item (3) pursuant
  to the Shelf Registration Statement only as follows (if at all):  Such Registrable Common Stock may be sold
  from time to time directly by the undersigned Selling Stockholder or,
  alternatively, in accordance with the Registration Rights Agreement, through
  underwriters, broker-dealers or agents. 
  If the Registrable Common Stock is sold through underwriters or
  broker-dealers, the Selling Stockholders will be responsible for underwriting
  discounts or commissions or agent commissions.  Such Registrable Common Stock may be sold
  in one or more transactions at fixed prices, at prevailing market prices at
  the time of sale, at varying prices determined at the time of sale, or at
  negotiated prices.  Such sales may be
  effected in transactions (which may involve cross or block transactions) (i) on
  any national securities exchange or quotation service on which the
  Registrable Common Stock may be listed or quoted at the time of sale, (ii) in
  the over-the-counter market, (iii) in transactions otherwise than on
  such exchanges or services or in the over-the-counter market, or (iv) through
  the writing of options.  In connection
  with sales of the Registrable Common Stock or otherwise, the undersigned
  Selling Stockholder may enter into hedging transactions with broker-dealers,
  which may in turn engage in short sales of the Registrable Common Stock in
  the course of hedging positions they assume. 
  The undersigned Selling Stockholder may also sell Registrable Common
  Stock short and deliver Registrable Common Stock to close out short
  positions, or loan or pledge Registrable Common Stock to broker-dealers that
  in turn may sell such securities.

  
	
   

  	
  State any exceptions here:

  	
   

  
										

 

The undersigned
Selling Stockholder acknowledges that it understands its obligations to comply
with the provisions of the Exchange Act, and the rules thereunder relating
to stock manipulation, particularly Regulation M thereunder (or any
successor rules or regulations), in connection with any offering of
Registrable Common Stock pursuant to the Shelf Registration Agreement.  The undersigned agrees that neither it nor
any person acting on its behalf will engage in any transaction in violation of
such provisions.

 

Pursuant to the
Registration Rights Agreement, the Company has agreed under certain
circumstances to indemnify the Selling Stockholder against certain liabilities.

 

A-3

 

In the event the
undersigned transfers all or any portion of the Registrable Common Stock listed
in Item (3) above after the date on which such information is
provided to the Company other than pursuant to the Shelf Registration
Statement, the undersigned agrees to notify the transferee(s) at the time
of the transfer of its rights and obligations under this Selling Stockholder
Questionnaire and the Registration Rights Agreement.

 

In accordance with
the undersigned’s obligation under the Registration Rights Agreement to provide
such information as may be required by law or by the staff of the Commission
for inclusion in the Shelf Registration Statement, the undersigned agrees to
promptly notify the Company of any inaccuracies or changes in the information
provided herein that may occur subsequent to the date hereof at any time while
the Shelf Registration Statement remains effective.  All notices hereunder and pursuant to the
Registration Rights Agreement shall be made in writing, by hand-delivery,
first-class mail, or air courier guaranteeing overnight delivery to the address
set forth below.

 

By signing below,
the undersigned consents to the disclosure of the information contained herein
in its answers to Items (1) through (9) above and the inclusion
of such information in the Shelf Registration Statement and the related
prospectus.  The undersigned understands
that such information will be relied upon by the Company in connection with the
preparation or amendment of the Shelf Registration Statement and the related
prospectus.

 

By signing below,
the undersigned agrees that if the Company notifies the undersigned in
accordance with and pursuant to the Registration Rights Agreement that Shelf
Registration Statement is not available, the undersigned will in accordance
with and pursuant to the Registration Rights Agreement suspend use of the
prospectus until notice from the Company that the prospectus is again
available.

 

Once this Selling
Stockholder Questionnaire is executed by the undersigned and received by the
Company, the terms of this Selling Stockholder Questionnaire, and the
representations, warranties and agreements contained herein, shall be binding
on, shall inure to the benefit of and shall be enforceable by the respective
successors, heirs, personal representatives and assigns of the Company and the
undersigned with respect to the Registrable Common Stock beneficially owned by
the undersigned and listed in Item (3) above.  This Selling Stockholder Questionnaire shall
be governed in all respects by the laws of the State of New York.

 

IN WITNESS
WHEREOF, the undersigned, by authority duly given, has caused this Selling
Stockholder Questionnaire to be executed and delivered either in person or by
its duly authorized agent.

 

	
  Dated:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Beneficial
  Owner

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  

 

A-4

 

	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  

 

PLEASE RETURN THE COMPLETED AND EXECUTED 

SELLING STOCKHOLDER QUESTIONNAIRE TO THE COMPANY AT:

 

Idearc Inc.

2200 West Airfield Drive

P.O. Box 619810

DFW Airport, Texas 75261-9810

Tel: 
972-453-3718

Fax: 
972-453-6869

Attention: 
Cody Wilbanks

 

A-5

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