Document:

Exhibit 10.5

 

LITIGATION TRUST AGREEMENT

 

Idearc Inc. et al. Litigation Trust

 

This Litigation Trust Agreement, effective as of December 31, 2009
(as from time and time amended, supplemented, or otherwise modified in
accordance with the terms hereof, this “Litigation Trust Agreement”), by
Idearc Inc. (“Idearc”) and its affiliated debtors and
debtors-in-possession (together with Idearc, the “Debtors”)(1) for
the benefit of the Beneficiaries (as defined herein) entitled to the Trust
Assets (as defined herein), and U.S. Bank National Association, as the initial
litigation trustee (the “Litigation Trustee”).

 

RECITALS

 

WHEREAS, on March 31, 2009, each of the Debtors filed with the
United States Bankruptcy Court for the Northern District of Texas, Dallas
Division, a voluntary petition for relief under chapter 11 of the Bankruptcy
Code (collectively, the “Cases”);

 

WHEREAS, on May 15, 2009, the Debtors filed the Joint Plan of
Reorganization of Idearc Inc., et al.,
Debtors, as amended and modified, including pursuant to the First Amended Joint
Plan of Reorganization of Idearc Inc., et al.,
Debtors, dated September 9, 2009 and the First Amended Joint Plan of
Reorganization of Idearc Inc., et al., Debtors
(as Modified on November 25, 2009), dated November 25, 2009 (as further
amended, modified or supplemented, the “Plan”), which Plan was confirmed
by the Bankruptcy Court on December 22, 2009 pursuant to the Order
Confirming Plan of Reorganization for the Debtors, (the “Confirmation Order”);

 

WHEREAS, this Litigation Trust Agreement is the “Litigation Trust
Agreement” under the Plan that is executed in order to facilitate
implementation of the Plan; and

 

WHEREAS, under the terms of the Plan and Confirmation Order, the “Trust
Assets” (as defined herein) are to be transferred free and clear of all liens,
charges, claims, encumbrances and interests to the Trust created and evidenced
by this Litigation Trust Agreement so that (i) the Trust Assets can be
held in trust for the benefit of the Beneficiaries entitled thereto as a liquidating
trust in accordance with Treasury Regulation Section 301.7701-4(d) for
the objectives and purposes set forth herein and in the Plan; (ii) the
Litigation Trust Rights (as defined in the Plan) can be prosecuted, settled,
abandoned, or resolved as may determined by the Litigation Trustee in
accordance with the terms of this Litigation Trust Agreement; (iii) the
Trust Assets can be liquidated; (iv) distributions may be made to
Beneficiaries in accordance with the Plan and this Litigation Trust Agreement;
and (v) administrative services relating to the activities of the Trust
and relating to the implementation of the Plan can be performed by the
Litigation Trustee.

 

(1)        In addition to Idearc
Inc., the following entities are debtors in these related cases: Idearc
Information Services LLC, Idearc Media LLC, Idearc Media Services — East Inc.,
Idearc Media Services — West Inc., Idearc Media Sales — West Inc., Idearc Media
Sales — East LLC, Idearc Media Sales — East Co., License Application
Corporation, and Second License Application Corporation.

 

 

DECLARATION OF TRUST

 

NOW, THEREFORE, in order to declare the terms and conditions hereof,
and in consideration of the premises and mutual agreements herein contained,
the confirmation of the Plan and of other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Debtors and the
Litigation Trustee have executed this Litigation Trust Agreement for the
benefit of the Beneficiaries entitled to share in the Trust Assets and, at the
direction of such Beneficiaries (because the Transfer of title to undivided
interests in each of the Trust Assets to such Beneficiaries, and the transfer
of such interests by such Beneficiaries to the Trust, would be impractical),
absolutely and irrevocably hereby assign to the Litigation Trustee and its
successors or assigns in trust, all right, title and interest in and to the
Trust Assets, free and clear of any liens, charges, claims, encumbrances and
interests, as provided for in the Plan.

 

TO HAVE AND TO HOLD unto the Litigation Trustee and its successors or
assigns in trust, under and subject to the terms and conditions set forth
herein and for the benefit of the Beneficiaries, and for the performance of and
compliance with the terms hereof and of the Plan; provided, however, that upon
termination of the Trust in accordance with Article XII hereof, this
Litigation Trust Agreement shall cease, terminate, and be of no further force
and effect, unless otherwise specifically provided for herein.

 

IT IS FURTHER COVENANTED AND DECLARED that the Trust Assets conveyed
hereby are to be strictly held and applied by the Litigation Trustee subject to
the specific terms set forth below.

 

ARTICLE 1

Definition and Terms

 

1.1           Certain Definitions.  Unless the context
shall otherwise require and except as contained in this Section 1.1 or as
otherwise defined herein, the capitalized terms used herein shall have the
respective meanings assigned thereto in the “Definitions,” Section 1.1 of
the Plan or if not defined therein, shall have the meanings assigned thereto in
the applicable Section of the Plan. 
For all purposes of this Litigation Trust Agreement, the following terms
shall have the following meanings:

 

(a)           “Bankruptcy Court” means the United States
Bankruptcy Court for the Northern District of Texas, Dallas Division, presiding
over the Debtors’ bankruptcy cases, or such other court as may obtain
jurisdiction over the Cases.

 

(b)           “Beneficial Interests” means the beneficial
interests in the Trust Assets that shall be allocated to the Beneficiaries
pursuant to Article VI of this Litigation Trust Agreement.

 

(c)           “Beneficiaries” means the Credit Facility
Beneficiaries and the Non-Credit Facility Beneficiaries, collectively.

 

(d)           “Beneficiary Sharing Ratio” shall have the
meaning set forth in Section 6.1 of this Litigation Trust Agreement.

 

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(e)           “Credit Facility Beneficiaries” means holders
of Beneficial Interests allocated to Allowed Unsecured Credit Facility Claims.

 

(f)            “Claims Register” means a listing (i) which
shall be provided to the Litigation Trustee by and certified by the Reorganized
Debtors, from time to time (including whenever requested by the Litigation
Trustee), setting forth the name, address, taxpayer identification number and
Allowed Claim amount for each holder of an Allowed General Unsecured Claim that
is a Non-Credit Facility Beneficiary, (ii) which shall be provided to the
Litigation Trustee by the Administrative Agent, within ten (10) days of
the effective date of this Litigation Trust Agreement, setting forth the name,
address, type of Person (e.g., individual, corporation, governmental unit,
etc.), taxpayer identification number (to the extent available to the
Administrative Agent, it being understood that no distribution will be made to
a holder of an Allowed Unsecured Credit Facility Claim until such taxpayer
identification number is provided to the Litigation Trustee) and Allowed Claim
amount for each holder of an Allowed Unsecured Credit Facility Claim, and (iii) which
shall list the Indenture Trustee as the sole holder of the Beneficial Interests
of Unsecured Note Beneficiaries.

 

(g)           “Court” means the Bankruptcy Court, or, if (i) the
Bankruptcy Court declines to exercise jurisdiction or (ii) the Cases have
been closed and are not reopened and such closure prevents the Bankruptcy Court
from hearing and deciding a matter, then any other court of competent
jurisdiction to which any such matter is presented.

 

(h)           “Exchange Act” shall have the meaning set forth
in Section 6.5 of this Litigation Trust Agreement.

 

(i)            “Future Distributions” shall have the meaning
set forth in Section 6.3(a) of this Litigation Trust Agreement.

 

(j)            “Initial Distribution Amount” shall have the
meaning set forth in Section 7.2(b) of this Litigation Trust
Agreement.

 

(k)           “Investment Company Act” shall have the meaning
set forth in Section 6.5 of this Litigation Trust Agreement.

 

(l)            “Litigation Trust Advisory Committee” means a
committee comprised of three (3) members, of which two (2) such
members shall be appointed by the Creditors’ Committee, and one (1) member
shall be appointed by the Administrative Agent. 
The initial members of the Litigation Trust Advisory Committee are Ahab
Capital Management, Inc (through its representative, Rebwar Berzinji) and
MatlinPatterson Global Advisers LLC (through its representative, Mark Palmer),
both appointed by the Creditors’ Committee, and JPMorgan Chase Bank, N.A.
(through its representative, Neil Boylan), appointed by the Administrative
Agent.

 

(m)          “Litigation Trust Agreement” means this
Agreement.

 

(n)           “Litigation Trustee” shall mean the initial “Litigation
Trustee” which is U.S. Bank National Association, and any successor Litigation
Trustee pursuant to this Litigation Trust Agreement.

 

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(o)           “LTAC Members” means the members of the
Litigation Trust Advisory Committee.

 

(p)           “Non-Credit Facility Beneficiaries” means (i) holders
of Beneficial Interests allocated to Allowed Unsecured Note Claims that have
not elected treatment of such claims as Convenience Claims and (ii) holders
of Beneficial Interests allocated to Allowed General Unsecured Claims that have
elected to receive the Sub-Class 1 Distribution and have not elected
treatment of such claims as Convenience Claims.

 

(q)           “Non-Credit Facility Beneficiary Sharing Ratio”
shall have the meaning set forth in Section 6.1 of this Litigation Trust
Agreement.

 

(r)            “Operating Reserve” means that certain reserve
of Trust Cash to be established and maintained by the Litigation Trustee
pursuant to this Litigation Trust Agreement.

 

(s)           “SEC” shall have the meaning set forth in Section 6.5
of this Litigation Trust Agreement.

 

(t)            “TIA” shall have the meaning set forth in Section 6.5
of this Litigation Trust Agreement.

 

(u)           “Transfer” and “Transfer Form” shall
have the meanings set forth for such terms in Section 6.6 of this
Litigation Trust Agreement.

 

(v)           “Trust” means Idearc Inc. et al.
Litigation Trust under the Plan, which is the Trust established by this
Litigation Trust Agreement.

 

(w)          “Trust Assets” means all property, rights, and
privileges conveyed, assigned or otherwise transferred to the Trust or
succeeded to by the Trust, including the “Litigation Trust Rights” under the
Plan, plus all Trust Cash and any other payment deposited or required to be
deposited with the Litigation Trustee and any investments of any such amounts.

 

(x)            “Trust Cash” means all cash deposited by the
Debtors into the Trust on the Effective Date of the Plan, and any cash
generated on or after the Effective Date of the Plan by the liquidation of the
Trust Assets.

 

(y)           “Trust Cost” means (i) the costs,
expenses, liabilities and obligations incurred by the Trust and/or the
Litigation Trustee in accordance with the Plan or this Litigation Trust
Agreement in administering and conducting the affairs of the Trust, and
otherwise carrying out the terms of the Trust and the Plan on behalf of the
Trust, including without any limitation, any taxes owed by the Trust, the fees
and expenses of the Litigation Trustee and professional Persons retained by the
Trust or Litigation Trustee in accordance with this Litigation Trust Agreement
and the expenses and obligations otherwise defined as Trust Costs in this
Litigation Trust Agreement and (ii) the reasonable, documented
out-of-pocket costs and expenses incurred by the LTAC Members in the course of
performing their advisory role as LTAC Members; provided, however, that Trust
Costs shall not include the fees and expenses of any attorneys, advisors,
consultants or other professionals retained or employed by the LTAC Members.

 

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(z)            “Trust Register” shall have the meaning set
forth in Section 6.3(a) of this Litigation Trust Agreement.

 

(aa)         “Unsecured Note Beneficiaries” means holders of
Beneficial Interests allocated to Allowed Unsecured Note Claims that have not
elected treatment of such claims as Convenience Claims.

 

(bb)         “Website” shall have the meaning set forth in Section 5.5(a) of
this Litigation Trust Agreement.

 

1.2           General Construction.  As used in
this Litigation Trust Agreement, the masculine, feminine and neuter genders,
and the plural and singular numbers shall be deemed to include the others in
all cases where they would apply.  “Includes”
and “including” are not limiting and “or” is not exclusive.  References to “Articles,” “Sections” and
other subdivisions, unless referring specifically to the Plan or provisions of
the Bankruptcy Code, the Bankruptcy Rules, or other law, statute or regulation,
refer to the corresponding Articles, Sections and other subdivisions of this
Litigation Trust Agreement, and the words “herein,” “hereafter” and words of
similar import refer to this Litigation Trust Agreement as a whole and not to
any particular Article, Section, or subdivision of this Litigation Trust
Agreement.

 

1.3           Incorporation of the Plan; Inconsistencies. 
The Plan is hereby incorporated into this Litigation Trust Agreement and
made a part hereof by this reference.  In
the event any provision of this Litigation Trust Agreement is inconsistent with
any provision of the Plan, this Litigation Trust Agreement shall control.

 

ARTICLE
2

THE
TRUST

 

2.1           Creation of Name of Trust. 
The Trust is hereby created and shall be called the “Idearc Litigation
Trust.”  The Litigation Trustee shall be
empowered to conduct all business and hold all property constituting the Trust
Assets in such name.

 

2.2           Objectives.  The Trust
established pursuant to this Litigation Trust Agreement is for the purpose of
partially satisfying Allowed Unsecured Note Claims (who did not elect treatment
of such claims as Convenience Claims), Allowed Unsecured Credit Facility Claims
and those Allowed General Unsecured Claims who have elected to receive the Sub-Class 1
Distribution under the Plan, by liquidating the Trust Assets transferred to it
and making distributions to the Beneficiaries as set forth herein and in the
Plan.  The Trust shall have no objective
of continuing or engaging in any trade or business except to the extent
reasonably necessary to, and consistent with, the liquidating purpose of the
Trust.  The purpose of the Trust is to
provide a mechanism for the liquidation of the Trust Assets, and to distribute
the proceeds thereof, net of all claims, expenses, charges, liabilities, and
obligations of the Trust, to the Beneficiaries in accordance with the terms of
the Plan and this Litigation Trust Agreement. 
No business activities will be conducted by the Trust other than those associated
with or related to the liquidation of the Trust Assets.  It is intended that the Trust be classified
for federal income tax purposes as a “liquidating trust” within the meaning of
section 301.7701-4(d) of the Treasury Regulations.  In furtherance of this objective, the
Litigation Trustee shall, in its business 

 

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judgment, make continuing best efforts to (i) dispose
of or liquidate the Trust Assets and resolve claims, (ii) make timely
distributions as determined by the Litigation Trustee and approved, if
required, by the Court, and (iii) not unduly prolong the duration of the
Trust, in accordance with this Litigation Trust Agreement.

 

2.3           Purposes of the Trust.  The purposes
of the Trust include, but are not limited to, the following:

 

(a)           To make payments to the Beneficiaries as are required
under the terms of the Plan and this Litigation Trust Agreement;

 

(b)           To marshal, liquidate, sell, abandon, and distribute
Trust Assets and proceeds thereof in an expeditious but orderly manner in accordance
with the terms of the Plan and this Litigation Trust Agreement;

 

(c)           To perform the functions and take actions provided for
or permitted by this Litigation Trust Agreement and the Plan and in any other
agreement executed by the Litigation Trustee for the Trust pursuant to the Plan
or this Litigation Trust Agreement; and

 

(d)           To prosecute, settle, release, or abandon Litigation
Trust Rights (as defined in the Plan) and other causes of action transferred
and assigned to the Trust under the Plan as Trust Assets and to distribute the
proceeds of any recoveries thereon in accordance with the terms of the Plan and
this Litigation Trust Agreement.

 

2.4           Principal Office.  The principal
office of the Trust shall be maintained by the Litigation Trustee at the following
address, or such other address as the Litigation Trustee shall determine from
time to time:  U.S. Bank National
Association, Litigation Trustee of Idearc Litigation Trust, 1420 Fifth Avenue,
7th Floor, Seattle, WA 98101.

 

2.5           Title to Trust Assets.  Until the
Trust terminates pursuant to the terms hereof, legal title to the Trust Assets
and all property contained therein shall be vested at all times in the Trust as
a separate legal entity, except where applicable law in any jurisdiction
requires title to any part of the Trust Assets to be vested in the Litigation
Trustee, in which case title shall be deemed to be vested in the Litigation
Trustee, solely in its capacity as Litigation Trustee.  For purposes of such jurisdictions, the term
Trust, as used herein or in the Plan, shall be read to mean the Litigation
Trustee.

 

2.6           Acceptance.  The
Litigation Trustee accepts the Trust imposed by this Litigation Trust Agreement
and agrees to observe and perform that Trust, on and subject to the terms and
conditions set forth herein and in the Plan.

 

2.7           Further Assurances.  The Debtors
and any successor thereof will, upon reasonable request of the Litigation
Trustee, execute, acknowledge and deliver such further instruments and do such
further acts as may be necessary or proper to transfer to the Litigation
Trustee any portion of the Trust Assets intended to be conveyed hereby in the
form and manner provided for in the Plan and to vest in the Litigation Trustee
the powers, instruments or funds in trust hereunder.

 

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2.8           Incidents of Ownership.  The
Beneficiaries shall be the sole beneficiaries of the Trust and the Litigation
Trustee shall retain only such incidents of ownership as are necessary to
undertake the actions and transactions authorized herein.

 

2.9           Access to Debtors’ Books, Records and Other
Information.  The Debtors and any successors thereof will (a) comply
in good faith with any reasonable information requests made by the Litigation
Trustee or its professionals, (b) provide the Litigation Trustee and its
professionals with reasonable access to the Debtors’ books and records
(including electronically stored information), and (c) will take all steps
reasonably necessary to preserve the Debtors’ books and records (including
electronically stored information).

 

ARTICLE
3

THE
LITIGATION TRUSTEE

 

3.1           Number and Qualification. 
There is one Litigation Trustee of the Trust.  The initial Litigation Trustee is U.S. Bank
National Association, the Person appointed by the Bankruptcy Court as
Litigation Trustee in the Confirmation Order. 
U.S. Bank National Association, as the initial Litigation Trustee, shall
serve without bond.  The Litigation
Trustee shall be entitled to engage in such other activities as the Litigation
Trustee deems appropriate that are not in conflict with the interests of the
Trust or the Beneficiaries.

 

3.2           Action by Litigation Trustee. 
The Trust shall be managed by the Litigation Trustee as set forth in
this Litigation Trust Agreement.

 

3.3           Binding Nature of Litigation Trustee’s Actions. 
All actions taken and determinations made by the Litigation Trustee in
accordance with the provisions of the Plan or this Litigation Trust Agreement
shall be final and binding upon any and all Beneficiaries.

 

3.4           Term of Service.  The
Litigation Trustee shall serve as the Litigation Trustee for the duration of
the Trust, subject to death, resignation or removal.

 

3.5           Resignation.  The
Litigation Trustee may resign as Litigation Trustee of the Trust by an instrument
in writing delivered to the Litigation Trust Advisory Committee and the
Beneficiaries at least sixty (60) days before the proposed effective date of
resignation.  The Litigation Trustee
shall continue to serve as Litigation Trustee after delivery of the Litigation
Trustee’s resignation until the proposed effective date of such resignation,
unless the Litigation Trustee and a majority of the LTAC Members consent to an
earlier effective date, which earlier effective date shall be no earlier than
the date of appointment of a successor Litigation Trustee in accordance with Section 3.7
hereof becomes effective.

 

3.6           Removal.  The
Litigation Trustee may be removed from office (i) for gross negligence,
willful misconduct or breach of fiduciary duty in connection with the affairs
of the Trust, (ii) in the event the Litigation Trustee is an individual,
for such physical or mental disability as substantially prevents the Litigation
Trustee from performing the duties of Litigation Trustee hereunder, or (iii) by
a vote of a majority of the LTAC Members, and in each of (i) and (ii),
upon Order and finding of the Court.

 

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3.7           Appointment of Successor Litigation Trustee.

 

(a)           Appointment of Successor Litigation Trustee. 
In the event of a vacancy by reason of the death or removal of the
Litigation Trustee or prospective vacancy by reason of resignation, a successor
Litigation Trustee shall be selected by a vote of the majority of the LTAC
Members.  The successor Litigation
Trustee shall be appointed as soon as practicable, but in any event within
sixty (60) days after the occurrence of the vacancy or, in the case of
resignation, at least forty (40) days before the proposed resignation of the
then acting Litigation Trustee; provided that an interim Litigation Trustee may
be appointed by a vote of the majority of the LTAC Members to take any
immediate or urgent actions on behalf of the Litigation Trust.

 

(b)           Vesting of Rights in Successor Litigation Trustee. 
Every successor Litigation Trustee appointed hereunder shall execute,
acknowledge, and deliver to the Trust, the retiring Litigation Trustee, and the
Beneficiaries an instrument accepting such appointment subject to the terms and
provisions hereof.  The successor Litigation
Trustee shall provide a bond or surety to the extent required by a majority of
the LTAC Members.  The successor
Litigation Trustee, without any further act, deed, or conveyance shall become
vested with all the rights, powers, trusts and duties of the retiring
Litigation Trustee, except that the successor Litigation Trustee shall not be
liable for the acts or omissions of the retiring Litigation Trustee and any
predecessor Litigation Trustee(s) shall retain their rights hereunder to
compensation, reimbursement of expenses and indemnification to the extent set
forth herein in respect of any actions taken or omitted to be taken by any
predecessor Litigation Trustee(s) while acting as Litigation Trustee.  In no event shall the retiring Litigation
Trustee be liable for the acts or omissions of the successor Litigation
Trustee.

 

3.8           Continuance of Trust.  The death,
resignation, or removal of the Litigation Trustee shall not operate to
terminate the Trust created by this Litigation Trust Agreement or to revoke any
existing agency (other than any agency of the Litigation Trustee as the
Litigation Trustee) created pursuant to the terms of this Litigation Trust
Agreement or invalidate any action taken by the Litigation Trustee.  In the event of the resignation or removal of
the Litigation Trustee, the Litigation Trustee shall promptly (i) execute
and deliver by the effective date of resignation or removal such documents,
instruments, records, and other writings as may be reasonably requested by the
successor Litigation Trustee to effect termination of the resigning or removed
Litigation Trustee’s capacity under this Litigation Trust Agreement and the
conveyance of the Trust Assets then held by the resigning or removed Litigation
Trustee to the successor Litigation Trustee; (ii) deliver to the successor
Litigation Trustee all non-privileged documents, instruments, records, and
other writings relating to the Trust as may be in the possession or under the
control of the resigning or removed Litigation Trustee, provided, the resigning
or removed Litigation Trustee shall have the right to make and retain copies of
such documents, instruments, records and other writings delivered to the
successor Litigation Trustee and the cost of making such copies shall be a
Trust Cost to be paid by the Trust; and (iii) otherwise assist and
cooperate in effecting the assumption of the resigning or removed Litigation
Trustee’s obligations and functions by the successor Litigation Trustee,
provided the fees and expenses of such assistance and cooperation shall be paid
to the resigning or removed Litigation Trustee by the Trust as a Trust Cost.

 

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ARTICLE 4

Powers of Litigation Trustee

 

4.1                                 Management Power. 
The Litigation Trustee shall have control and authority over the Trust
Assets, over the management and disposition thereof, and over the management of
the Trust to the same extent as if the Litigation Trustee were the sole owner
thereof in its own right.

 

4.2                                 Payment of Trust Costs. 
The Litigation Trustee is authorized to pay any Trust Cost without
further order of the Court, except as provided in section 4.6 hereof.

 

4.3                                 Court Approval of Litigation Trustee’s
Actions.

 

(a)                                  Except as provided in the Plan or
otherwise specified in this Litigation Trust Agreement, the Litigation Trustee
need not obtain approval of the Bankruptcy Court or any other court in the
exercise of any power, rights, or discretion conferred hereunder, or account to
the Bankruptcy Court or any other court. 
The Litigation Trustee shall exercise its reasonable business judgment
for the benefit of the Beneficiaries in order to maximize the value of the
Trust Assets and distributions, giving due regard to the cost, risk and delay
of any course of action.

 

(b)                                 Notwithstanding the foregoing, the
Litigation Trustee, in its sole discretion, shall have the right to submit to
the Bankruptcy Court, or any other court of competent jurisdiction, any
question or questions regarding which the Litigation Trustee may desire to have
explicit approval of the Bankruptcy Court or such other court for the taking or
refraining from taking of any specific action proposed to be taken by the
Litigation Trustee with respect to the Trust Assets, this Trust, this
Litigation Trust Agreement, the Plan, or the administration and distribution of
the Trust Assets.  The Bankruptcy Court
shall retain jurisdiction for such purposes and shall approve or disapprove any
such proposed action upon motion by the Litigation Trustee.

 

(c)                                  Unless otherwise directed by the Court,
notice of any motion by the Litigation Trustee under any provision of this
Litigation Trust Agreement need only be given to the Litigation Trust Advisory
Committee, the twenty (20) largest Beneficiaries as determined by the
Litigation Trustee from the Trust Register; and any Person named in the motion;
provided further that the Litigation Trustee also shall post such notice and
motion on the Website.  Any such proposed
action submitted to the Court for approval by motion may be approved by the
Court if no Person having standing to do so objects to such motion within 20
days of the service of the motion.  If
there are objections by any Person having standing to object to such action by
the Litigation Trustee, the Court shall approve or disapprove such action after
hearing.  Upon approval of a proposed
action by the Court, the Litigation Trustee shall be authorized to take the
proposed action without any liability with respect thereto.  If such action is disapproved by the Court,
the Litigation Trustee shall not take such action, without any liability with
respect thereto.

 

4.4                                 Other Powers of the Litigation Trustee. 
In connection with the management and use of the Trust Assets and
administration of the Trust, the Litigation Trustee’s powers, except as
otherwise expressly limited in this Litigation Trust Agreement or the Plan,
shall include, but not be limited, to the following:

 

(a)                                  To accept, preserve and protect the Trust
Assets;

 

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(b)                                 To investigate, evaluate (based on the
merits, cost, and potential benefits of the claims and causes of actions and
the delays in and ability to collect on the claims and causes of actions) and
if appropriate, prosecute, settle, or abandon the claims or causes of action
transferred to the Trust under the Plan, including without limitation, the
Litigation Trust Rights;

 

(c)                                  To make or cause to be made distributions
of Trust Cash in accordance with the terms of this Litigation Trust Agreement,
the Plan, and any Order of any Court;

 

(d)                                 To manage, liquidate, sell, assign,
transfer, or deal in any other manner with the Trust Assets or any part thereof
or any interest therein;

 

(e)                                  To purchase insurance with such coverage
and limits as he deems desirable, including, without limitation, insurance
covering liabilities of the Litigation Trustee or employees, agents, and
professionals of the Trust incurred in connection with their services to the
Trust with insurance coverage during the term of the Trust and after
termination of the Trust;

 

(f)                                    To, on behalf of the Trust and the
Litigation Trustee, appoint, engage, employ, supervise, and compensate
employees, and other Persons as may be necessary or desirable, including
managers, consultants, accountants, technical, financial, real estate, or
investment advisors or managers, attorneys, agents or brokers, corporate
fiduciaries, or depositories (“Professionals”);

 

(g)                                 To open and take all actions with respect
to bank accounts on behalf of, and in the name of, the Trust;

 

(h)                                 To invest and reinvest Trust Cash,
pending distribution, and to liquidate such investments;

 

(i)                                     To engage in all acts that would
constitute ordinary performance of the obligations of a trustee under a
liquidating trust, to cause the Trust to comply with applicable laws and to
file all returns of the Trust as a grantor trust for the Beneficiaries pursuant
to Treasury Regulation Section 1.671-4(a) or (b) and any other
tax returns that may be required with respect to the Trust;

 

(j)                                     To determine the manner of ascertainment
of income and principal, and the apportionment of income and principal, and the
apportionment between income and principal of all receipts and disbursements,
and to select an annual accounting period for the Trust;

 

(k)                                  To appear and to participate in any
proceeding before any Court with respect to any matter regarding or relating to
the Trust or the Trust Assets;

 

(l)                                     To establish such funds, reserves, and
accounts within the Trust Assets, as deemed by the Litigation Trustee in its
discretion to be useful in carrying out the purposes of the Trust;

 

(m)                               To sue, defend and participate, as a
party or otherwise in any judicial, administrative, arbitrative or other
proceeding;

 

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(n)                                 To object to any General Unsecured Claims
of any holders who have elected to receive the Sub-Class 1 Distribution to
the extent that (i) the Litigation Trustee reasonably determines that such
claim objection is necessary or warranted and (ii) the Debtors or the
Reorganized Debtors have not objected, or have advised the Litigation Trustee
that they do not intend to object, to such claim on or before the date that is
the 90th day after the Effective Date of the Plan;

 

(o)                                 To seek to equitably subordinate any
Claims against the Debtors in Sub-Class 1 of Class 4 of the Plan to
other Claims of Sub-Class 1 of Class 4 of the Plan; provided,
however, that the Litigation Trustee shall not seek to subordinate any Allowed
Unsecured Note Claims (other than claims held by Verizon or subject to section
510(b) of the Bankruptcy Code) or any Allowed Credit Facility Claim (other
than claims held by Verizon);

 

(p)                                 To pay all fees, expenses, debts and
liabilities of the Trust, including Trust Costs;

 

(q)                                 To execute, deliver, and perform such
other agreements and documents and to take or cause to be taken any and all
such other actions as he may deem necessary or desirable to effectuate and
carry out the purposes of this Litigation Trust Agreement;

 

(r)                                    To undertake any action or perform any
obligation provided for or required of the Litigation Trustee by the Plan or
this Litigation Trust Agreement;

 

(s)                                  To terminate this Trust upon the earlier
of (i) the disposition of all the Trust Assets or (ii) the
fulfillment of the Trust purposes as determined by the Litigation Trustee and
evidenced by the approval in writing of a majority of the Litigation Trust
Advisory Committee;

 

(t)                                    To borrow funds to finance the
investigation or prosecution of any of the Litigation Trust Rights or finance
the activities of the Litigation Trustee or any other Trust Costs; and

 

(u)                                 To exercise such other powers and duties
as necessary or appropriate in the discretion of the Litigation Trustee to
accomplish the purposes of the Trust as set forth herein and in the Plan.

 

4.5                                 Litigation Trustee as “Representative of
the Estate”.  The Litigation Trustee will directly and
indirectly be a “representative of the estate” as that phrase is used in
section 1123(b)(3)(B) of the Bankruptcy Code with respect to the Trust
Assets, with all rights and powers attendant thereto, in addition to all rights
and powers granted in the Plan and in this Litigation Trust Agreement.  The Litigation Trustee will be the
successor-in-interest to the Debtors and the Estates with respect to any action
pertaining to Trust Assets, which was or could have been commenced by the
Debtors or the Estates prior to the Effective Date, except as otherwise
provided in the Plan.  All actions,
claims, rights or interest constituting Trust Assets are preserved and retained
and may be enforced by the Litigation Trustee as a representative of the
estate.

 

4.6                                 Costs and Compensation; Engagement of
Professionals.

 

(a)                                  Costs and Compensation.

 

11

 

(i)                                     Compensation of the Litigation Trustee. 
As compensation for services as Litigation Trustee hereunder, and any
other services rendered by the Litigation Trustee in connection with the Plan or
this Litigation Trust Agreement, the Litigation Trustee shall receive
compensation as provided in Exhibit A attached hereto, subject to subpart (c) below.

 

(ii)                                  Compensation of Successor Litigation Trustee. 
Any Successor Litigation Trustee shall be compensated at its normal
hourly rate for the amount of time actually worked, or as otherwise agreed to
between such Successor Litigation Trustee and a majority of the LTAC Members,
and it shall be reimbursed for actual out of pocket expenses at cost, subject
to subpart (c) below.

 

(iii)                               Expense Reimbursements.  All
reasonable expenses of the Litigation Trustee in the performance of its
respective duties hereunder, shall be reimbursed as a Trust Cost paid by the
Trust, subject to subpart (c) below.

 

(b)                                 Fees and Expenses of Professionals. 
The Litigation Trustee shall pay the reasonable fees and expenses of
Professionals as a Trust Cost, subject to subpart (c) below.

 

(c)                                  Procedure for Payment of Litigation
Trustee and Litigation Trustee’s Professionals.  The fees and
expenses of the Litigation Trustee and the Litigation Trustee’s professionals
shall be subject to review for reasonableness by the Litigation Trust Advisory
Committee.  The Litigation Trustee and
its professionals shall provide invoices for their fees and expenses to the
Litigation Trust Advisory Committee. 
Invoices may be, but are not required to be, provided as frequently as
monthly.  If no objection is received
within ten (10) days of the invoice being provided to the Litigation Trust
Advisory Committee, the Litigation Trustee shall pay the fees and the expenses
contained within such invoice.  Any
disputes regarding the reasonableness of the Litigation Trustee’s or its
professionals’ fees and expenses that are not resolved consensually shall be adjudicated
by the Court.  All reasonable fees and
expenses of the Litigation Trustee and its professionals shall be a Trust Cost.

 

(d)                                 LTAC Member’s Expenses. 
The reasonable, documented out-of-pocket costs and expenses incurred by
the LTAC Members incurred in the course of performing their advisory role shall
be reimbursed as Trust Costs by the Trust; provided, however, that the LTAC
Members shall not be reimbursed for any fees and expenses of any attorneys,
advisors, consultants or other professionals retained or employed by the LTAC
Members.  The fees and expenses of each
LTAC Member shall be subject to review for reasonableness by the Litigation
Trustee and the other LTAC Members.  Each
LTAC Member may provide an invoice with evidence of its costs and expenses to
the Litigation Trustee and the other LTAC Members as frequently as
monthly.  If no objection is received
within ten (10) days of the invoice being provided to the Litigation
Trustee and the other LTAC Members, the Litigation Trustee shall pay the costs
and expenses contained within such invoice. 
Any disputes regarding the reasonableness of any LTAC Member’s costs and
expenses that are not resolved consensually shall be adjudicated by the Court.

 

4.7                                 Reliance by Litigation Trustee and the
LTAC Members.  The Litigation Trustee and each LTAC Member
may rely, and shall be fully protected in acting or refraining from 

 

12

 

acting, on any resolution, statement, certificate,
instrument, opinion, report, notice, request, consent, order or other
instrument or document that the Litigation Trustee or LTAC Member has no reason
to believe (x) to be other than genuine and (y) to not have been
signed or presented by the proper party or parties or, in the case of facsimiles,
to not have been sent by the proper party or parties, and the Litigation
Trustee and the LTAC Member may conclusively rely as to the truth of the
statements and correctness of the opinions expressed therein.  The Litigation Trustee may consult with
counsel and any other advisor or professional advisor, and any advice or
opinion of counsel or any such advisor shall constitute full and complete
authorization and protection in respect of any action taken or not taken by the
Litigation Trustee in accordance therewith. 
The Litigation Trustee shall have the right, pursuant to Section 4.3(b),
at any time to seek instructions from the Court concerning the Trust Assets,
this Litigation Trust Agreement, the Plan, any other document executed in
connection therewith, any rights, powers, or duties of the Litigation Trustee,
or any action taken or to be taken or not taken or not to be taken by the
Litigation Trustee; and such instructions given shall be full and complete
authorization in respect of any action taken or not taken by the Litigation
Trustee in accordance therewith.

 

ARTICLE 5

OBLIGATIONS OF THE LITIGATION TRUSTEE

 

5.1                                 Consultation with Litigation Trust
Advisory Committee and Beneficiaries.  The
Litigation Trustee shall consult with the Litigation Trust Advisory Committee
regarding all material issues affecting the Trust, including the prosecution,
settlement, or resolution of litigation, including without limitation the
Litigation Trust Rights, and the disposition of Trust Assets, and shall provide
the Litigation Trust Advisory Committee with periodic reports regarding the
foregoing, the balances of the Operating Reserve and the Trust Cash and other
related matters; provided, that (i) the timing, frequency and manner of
such consultations and reports shall be mutually agreed to by the Litigation
Trustee and the Litigation Trust Advisory Committee promptly following the
creation of the Trust; and (ii) the Litigation Trustee shall retain sole
and absolute discretion to make decisions on behalf of, and to carry out the
terms of, the Trust, including, without limitation, in respect of the
prosecution, settlement or resolution of any litigation brought by the Trust;
provided that the Litigation Trustee shall consult with the Litigation Trust
Advisory Committee prior to the settlement of any material litigation.  The Litigation Trustee also shall have the
right, but not the obligation, to consult in good faith with the Beneficiaries
regarding the matters identified in this Section 5.1.

 

5.2                                 Commingling of Trust Assets. 
The Litigation Trustee shall not commingle any of the Trust Assets with
its own property or the property of any other Person.

 

5.3                                 Books, Records and Tax Returns. 
The Litigation Trustee shall be responsible for the keeping of
appropriate books and records relating to the receipt and disbursement of all
monies under this Litigation Trust Agreement. 
The Litigation Trustee shall maintain records and books of account
relating to the Trust Assets, the management thereof, and all transactions
undertaken by the Litigation Trustee. 
The Litigation Trustee shall also maintain records and books of account
relating to all distributions contemplated under the Plan and this Litigation
Trust Agreement.

 

13

 

5.4                                 Investment Guidelines. 
Trust Cash held pending distribution, including Trust Cash held in
reserves, shall, to the extent permitted by applicable law, be invested by the
Litigation Trustee in (i) direct obligations of, or obligations guaranteed
by, or obligations secured by, the United States of America (including without
limitation United States Treasury Bills), (ii) obligations of any agency
or corporation that is or may hereafter be created by or pursuant to an Act of
the Congress of the United States as an agency or instrumentality thereof, or (iii) demand
deposits, money market deposit accounts or short-term certificates of deposit
at any bank or financial institution (which may include the Litigation Trustee
if it is a bank or a financial institution) that meets certain financial
standards as reasonably determined by the Litigation Trustee.  However, the scope of any such permissible
investments shall be limited to include only those investments, or shall be
expanded  to include any additional
investments, as the case may be, that a liquidating trust, within the meaning
of Treasury Regulation section 301.7701-4(d) may be permitted to hold,
pursuant to any amendment or addition to the Internal Revenue Code or to the
Treasury Regulations, or any modification in IRS guidelines whether set forth
in IRS rulings, other IRS pronouncements, or otherwise.  Such investments shall mature in such amounts
and at such times as, in the judgment of the Litigation Trustee at the times
such investments are made, are necessary or desirable with a view to providing
funds when needed to make payments from the Trust Assets.  Any investment purchased with the Trust
Assets shall be deemed a part of the Trust Assets.  All interest distributions, dividends and
proceeds received by the Litigation Trustee in respect to such investments
shall be a part of the Trust Assets.

 

5.5                                 Access to Information by Beneficiaries.

 

(a)                                  The Litigation Trustee will establish and
maintain a public website to make certain information available to the LTAC
Members and the Beneficiaries (the “Website”).  The information available or to become
available on the Website will include (i) the balance of the Trust Cash
(but excluding the balance of the Operating Reserve) and (ii) a summary of
the status of any claims, causes of action, lawsuits or other matters that the
Litigation Trustee is pursuing, provided, that the Litigation Trustee will not
be required to disclose any confidential or privileged information or any other
information that may impact the ability of the Litigation Trustee and its
professionals to pursue such claims, causes of action, lawsuits or other
matters.  The Litigation Trustee will
update the information on the Website on a monthly basis through June 30,
2010, and thereafter no less frequently than on a quarterly basis, and at any
other time that the Litigation Trustee reasonably determines that there have
been material developments in any of the matters, claims, causes of action,
lawsuits or other matters that the Litigation Trustee is pursuing.

 

(b)                                 Subject to the last sentence of this Section 5.5(b),
if any Beneficiary desires access to any other non-confidential and
non-privileged business records of the Trust for the purpose of obtaining
information relating to the management of Trust Assets, or for any purpose
reasonably related to interests generally of Beneficiaries, such Beneficiary
shall file with the Court and serve upon the Litigation Trustee a motion
seeking such access.  If granted by the Court,
such access shall be reasonably exercised during normal business hours (after
at least three business days’ notice to the Litigation Trustee), shall be
conditioned upon the Litigation Trustee’s fees and costs associated with
providing access or information being paid by such Beneficiary, and shall be
subject to such other terms and conditions as the Court may order.  Notwithstanding the foregoing, in the event
of any dispute or controversy between a Beneficiary 

 

14

 

and the Litigation Trustee or the Trust, such
Beneficiary must follow the discovery provisions provided by the Bankruptcy
Rules, and may not exercise the rights provided by this section in lieu of
legal discovery.  Nothing herein
contained is intended to restrict any Beneficiary from access to the business
records of the Litigation Trustee, which the Litigation Trustee in its
discretion elects to provide without a Court order.

 

5.6                                 United States Trustee Fees and Reports. 
After the Effective Date, the Trust shall pay as a Trust Cost, all fees
incurred under 28 U.S.C. § 1930(a)(6), if applicable and the Trust is
required to pay them, by reason of the Trust’s disbursements until the Cases
are closed.  After the Effective Date,
the Trust shall prepare and serve on the Office of the United States Trustee
such quarterly disbursement reports for the Trust as required by the Office of
the United States Trustee for as long as the Cases remain open.

 

5.7                                 No Implied Obligations. 
No other or further covenants or obligations of the Litigation Trustee
shall be implied into this Litigation Trust Agreement.  The Litigation Trustee shall not be
responsible in any manner whatsoever for the correctness of any recital,
statement, representation, or warranty herein, or in any documents or
instrument evidencing or otherwise constituting a part of the Trust Assets.

 

5.8                                 Unknown Property and Liabilities. 
The Litigation Trustee shall be responsible for only that property
delivered to him, and shall have no duty to make, nor incur any liability for
failing to make, any search for unknown property or unknown claims of
Beneficiaries.

 

5.9                                 Trust Costs. 
Except as otherwise provided in paragraph 4.6 of this Litigation Trust
Agreement, the Litigation Trustee shall pay from Trust Assets all Trust Costs
in full when due, or provide for payment of all Trust Costs in full through
reserve, prior to making distributions to any Beneficiaries.  If the Litigation Trustee establishes reserve(s) in
good faith, neither the Litigation Trustee nor its Professionals shall have any
liability if any such reserve proves to be excessive or insufficient.

 

5.10                           Discharge of Litigation Trustee.

 

(a)                                  Statement of Discharge. 
The Litigation Trustee shall, upon termination of the Trust or upon the
Litigation Trustee’s resignation or removal, render a statement of discharge
containing the following information: (i) the Trust Assets originally
charged under the Litigation Trustee’s control, (ii) a summarized
accounting of the Trust’s activities during the Litigation Trustee’s term of
service, (iii) the ending balance of all assets and funds of the Trust as
of the date of discharge, and (iv) a status report of all pending
litigation involving the Trust.

 

(b)                                 Approval of Statement of Discharge. 
The statement of discharge required by Section 5.10(a) hereof
shall be presented to the Litigation Trust Advisory Committee, and upon such
presentation, the Litigation Trustee (in the case of a termination of the
Trust) or the withdrawing Litigation Trustee (in the case of resignation or
removal of the Litigation Trustee) shall be discharged from all liability
(except liability arising out of the Litigation Trustee’s gross negligence or
willful misconduct) to the Trust, Beneficiaries, and all Persons for acts or
omissions in the Litigation Trustee’s capacity as the Litigation Trustee or in
any other capacity contemplated by this Litigation Trust Agreement or the
Plan.  The expenses of preparation of the

 

15

 

statement of discharge, including, but not
limited to, any accounting expenses incurred in connection with preparation of
the statement of discharge, shall be a Trust Cost.

 

5.11                           Personal Funds of Litigation Trustee. 
The Litigation Trustee shall have no obligation to expend or risk its
own funds or otherwise incur personal financial liability in the performance of
any of its duties or the exercise of any of its rights or powers under this
Litigation Trust Agreement.  The
Litigation Trustee shall also have no duty to investigate or prosecute claims
unless the Litigation Trustee determines there is adequate funding from Trust
Assets for such investigation or prosecution.

 

ARTICLE 6

BENEFICIARIES AND BENEFICIAL INTERESTS

 

6.1                                 Allocation of Beneficial Interests to
Credit Facility Beneficiaries and Non-Credit Facility Beneficiaries.

 

(a)                                  The Litigation Trustee shall allocate to
each of the Beneficiaries a beneficial interest (“Beneficial Interest”)
in the Trust equal to the ratio that the amount of each Beneficiary’s Allowed
Claim bears to the aggregate amount of the Allowed Claims held by the
Beneficiaries in Class 4 under the Plan (the “Beneficiary Sharing Ratio”);
provided that for the purposes of the Initial Distribution Amount set forth in Section 7.2(b) herein,
the Beneficiary Sharing Ratio for each Non-Credit Facility Beneficiary shall
equal the ratio that the amount of such Non-Credit Facility Beneficiary’s
Allowed Claim bears to the aggregate amount of the Allowed Claims held by the
Non-Credit Facility Beneficiaries in Class 4 under the Plan (the “Non-Credit
Facility Beneficiary Sharing Ratio”). 
The Debtors shall cause (i) a fully complete Claims Register to be
delivered to the Litigation Trustee within ten (10) days of the effective
date of this Litigation Trust Agreement, and (ii) an updated Claims
Register with respect to subsequently allowed claims of holders of Allowed
General Unsecured Claims that are Non-Credit Facility Beneficiaries within ten (10) days
of the date of the allowance of such claims under the Plan.

 

(b)                                 On or prior to
the effective date of this Litigation Trust Agreement, the Debtors shall
certify to the Litigation Trustee and the Indenture Trustee (i) the amount
of Unsecured Notes that have elected Convenience Class treatment under the
Plan, (ii) that the Debtors made arrangements through the Depository Trust Clearing Corporation
and/or the Depository Trust Company (together, the “DTC”)
to identify the holders of such Unsecured Notes that elected Convenience Class Treatment
and will cause DTC to create a new contra-CUSIP number for this Litigation
Trust Agreement in order to permit the Litigation Trustee to identify the
remaining holders of Allowed Unsecured Note Claims that are the ultimate
beneficiaries of this Litigation Trust Agreement.

 

6.2                                 Representation
of Beneficial Interest.  The Beneficial
Interests shall be uncertificated.  The
Beneficial Interests shall be represented by appropriate book entries in the
Trust Register.

 

16

 

6.3                                 Trust Register.

 

(a)                                  Register of
Beneficial Interests.  The
Litigation Trustee shall maintain a register (the “Trust Register”),
which shall (i) be based on the Claims Register (upon which the Litigation
Trustee may conclusively rely, without inquiry or investigation, in preparing the Trust Register),
(ii) set forth the name, address, taxpayer identification number, allowed
claim amount, and any other information desired by the Litigation Trustee for
each of the Beneficiaries, and (iii) permit the Litigation Trustee to
determine each Beneficiary’s Beneficiary Sharing Ratio (and Non-Credit Facility
Beneficiary Sharing Ratio, if applicable) for distributions to be made to
Beneficiaries pursuant to this Litigation Trust Agreement.  For  subsequently
Allowed claims of holders of Allowed General Unsecured Claims that are
Non-Credit Facility Beneficiaries which are set forth in an updated Claims
Register delivered by the Debtors to the Litigation Trustee, the Litigation
Trustee, in making any distribution to Beneficiaries pursuant to this
Litigation Trust Agreement after such claims have been Allowed (such
distributions, “Future Distributions”), shall make up for, to the extent
possible from such Future Distribution, any prior distributions the holders of
such subsequently Allowed claims would have received had such claims been
Allowed as of the effective date of this Litigation Trust Agreement.  The Litigation Trustee shall not be required
to reserve for any such subsequently Allowed claims.  In the Trust Register, the Indenture Trustee
shall be reflected as the sole holder of the Beneficial Interests of Unsecured
Note Beneficiaries until the Indenture Trustee notifies the Litigation Trustee
to reflect the Beneficial Interests of Unsecured Note Beneficiaries differently
in the Trust Register.

 

(b)                                 Location of Trust Register. 
The Litigation Trustee shall cause the Trust Register to be kept at the
office of the Litigation Trustee or at such other place or places that shall be
designated by the Litigation Trustee from time to time.

 

(c)                                  Access to Register by Beneficiaries.  The LTAC Members and the Beneficiaries and
their duly authorized representatives shall have the right, upon reasonable
prior written notice to the Litigation Trustee, and in accordance with
reasonable regulations prescribed by the Litigation Trustee, to inspect and at
the expense of the Beneficiary make copies of the public portions of the Trust
Register that are not protected from disclosure by applicable privacy or other
laws or regulations, in each case for a purpose reasonably related to such
Beneficiary’s Beneficial Interest in the Trust.

 

(d)                                 Absolute Owners. 
The Litigation Trustee may deem and treat the Beneficiary of record in
the Trust Register as the absolute owner of such Beneficial Interests for the
purpose of receiving distributions and payment thereon or on account thereof
and for all other purposes whatsoever.

 

6.4                                 Limitations of Liability of the
Beneficiaries.  The Beneficiaries shall not have any
liability for the performance of this Litigation Trust Agreement or for the
actions or inaction of the Litigation Trustee or the Trust.

 

6.5                                 Securities Law Registration. 
Although it is intended that the Beneficial Interests shall not
constitute “securities,” to the extent the Beneficial Interests are deemed to
be “securities,” the issuance of Beneficial Interests to the Beneficiaries
under the Plan and hereunder shall be exempt, pursuant to section 1145 of the
Bankruptcy Code, from registration 

 

17

 

under
the Securities Act of 1933, as amended and any applicable state and local laws
requiring registration of securities.  If
the Litigation Trustee determines, with the advice of counsel, that the
Litigation Trust is required to comply with registration and reporting
requirements of the Securities Exchange Act of 1934, as amended (the “Exchange
Act”), the Trust Indenture Act of 1939, as amended (the “TIA”), or
the Investment Company Act of 1940, as amended (the “Investment Company Act”),
then the Litigation Trustee shall, after consultation with the Litigation Trust
Advisory Committee, take any and all actions to comply with such registration
and reporting requirements, if any, and file periodic reports with the
Securities and Exchange Commission (the “SEC”) to the extent required by
law.

 

6.6                                 Transfer of Beneficial Interests. 
Subject to compliance with the terms of this Section 6.6, each
Beneficiary shall be permitted to transfer or assign its Beneficial Interest
(each, a “Transfer”); provided that a Beneficiary shall not transfer its
Beneficial Interest to any Person that, at the time of such Transfer, is a
defendant in any pending action or suit that is being pursued by the Litigation
Trustee.  A Transfer shall only be
effective upon the execution and delivery to the Litigation Trustee of a
properly completed Transfer form for the Transfer of Beneficial Interests in
the Trust (substantially in the form attached hereto as Exhibit B,
together with any additional information reasonably requested by the Litigation
Trustee, the “Transfer Form”). 
Upon receipt of such properly completed Transfer Form, the Litigation
Trustee shall amend and update the Trust Register to reflect such Transfer.

 

ARTICLE 7

DISTRIBUTION OF THE TRUST ASSETS

 

7.1                                 Establishment of a Reserve. 
The Litigation Trustee shall establish an Operating Reserve funded
initially in an amount of $2,500,000. 
The Operating Reserve may be modified, from time to time, in the
reasonable discretion of the Litigation Trustee, with Trust Cash, in an amount
determined by the Litigation Trustee to be reasonably necessary to pay existing
and anticipated Trust Costs, to fund litigation, to fund contingent
liabilities, and to otherwise conduct the affairs and to satisfy existing and
anticipated liabilities and obligations of the Trust.  If the amount of the Operating Reserve to be
established or maintained is determined in good faith by the Litigation
Trustee, neither the Litigation Trustee nor its Professionals shall have any
liability if such Operating Reserve proves to be excessive or insufficient.

 

7.2                                 Distributions to Beneficiaries.

 

(a)                                  Distributions Generally. 
The Litigation Trustee shall only make distributions from available
Trust Cash and not from any other form of Trust Assets.  The Litigation Trustee shall make such
distributions at such time or times as the Litigation Trustee believes there is
sufficient Trust Cash available for distribution to Beneficiaries to warrant a
distribution and may establish a record date for each distribution so that only
Beneficiaries of record in the Trust Register on the established record date
are entitled to receive such distribution. 
The Litigation Trustee may withhold from amounts distributable to any
Person any and all amounts, determined in the Litigation Trustee’s reasonable
sole discretion, to be required by law, regulation, ruling, directive or other
governmental requirement.

 

18

 

(b)                                 Distributions to Beneficiaries. 
Each Beneficiary shall be entitled to receive on a distribution date its
share of Trust Cash distributed by the Litigation Trustee to Beneficiaries
based on such Beneficiary’s Beneficiary Sharing Ratio in effect at the time of
the distribution, provided that (i) the first $30,000,000 of Trust Cash
made available for distribution (the “Initial Distribution Amount”)
shall be allocated and payable only to the Non-Credit Facility Beneficiaries,
and (ii) each Non-Credit Facility Beneficiary shall receive its share of
the Initial Distribution Amount based on its respective Non-Credit Facility
Beneficiary Sharing Ratio in effect at the time of distributions of any part or
all of the Initial Distribution Amount. 
For the avoidance of doubt, the Credit Facility Beneficiaries will not
be entitled to receive any portion of the Initial Distribution Amount.  Each Beneficiary, including each Credit
Facility Beneficiary, shall be entitled to receive its share of distributions
to Beneficiaries in excess of the Initial Distribution Amount based on such
Beneficiary’s Beneficiary Sharing Ratio in effect at the time of the
distribution.

 

(c)                                  Place and Manner of Payments or
Distributions.  On a distribution date, the Litigation
Trustee shall make distributions to the Beneficiaries  as follows:

 

(i)                                     All distributions to Unsecured Note Beneficiaries (“Note
Distributions”) shall be made (x) to the Indenture Trustee, or (y) if
the Indenture Trustee consents, by payment to the Indenture Trustee of any fees
and expenses of the Indenture Trustee or its counsel, and by payment of the
remainder of the Note Distributions (after deducting any such amount paid to
the Indenture Trustee) by the Litigation Trustee directly to the DTC, or any
successor thereto, for distribution to Unsecured Note Beneficiaries; and

 

(ii)                                  All distributions to any other Beneficiary shall be
made by the Litigation Trustee based upon the Trust Register in effect at the
time of the distribution.

 

(d)                                 Unclaimed Distributions.

 

(i)                                     If a distribution to any Beneficiary is returned as
undeliverable, the Litigation Trustee shall use the following procedure to
determine such Beneficiary’s then current address: (i) send the
distribution twice to the last known address of the Beneficiary; (ii) if
the distribution is returned, to contact the post office of the last known
address to determine if such Beneficiary has left a forwarding address, and if
so, to send the distribution to such forwarding address.

 

(ii)                                  If such Beneficiary cannot be located within 6 months
after the foregoing procedures have been followed, (a) such Person shall
no longer be deemed to be a Beneficiary, (b) any Trust Assets, Trust Cash
and interest and proceeds thereon allocable to such Person, net of any
allocable portion of taxes paid by the Trust, shall become part of the Trust
Assets free and clear of and from any claim to such property by or on behalf of
such Person (who shall be deemed to have released such claim or interest) and
shall be distributed to the other Beneficiaries as provided in this Litigation
Trust Agreement, and (c) the Trust Register shall be amended and updated
to reflect the removal of such Person as a Beneficiary.

 

19

 

ARTICLE 8

TAX MATTERS

 

8.1                                 Tax Treatment and Tax Returns. 
It is intended for the initial transfer of the Trust Assets to the Trust
to be treated for federal income tax purposes (and foreign, state, local tax
purposes where applicable) as if the Debtors transferred the Trust Assets to the
Beneficiaries and then, immediately thereafter, the Beneficiaries transferred
the Trust Assets to the Trust. 
Consistent with such treatment, (i) it is intended that the Trust
will be treated as a grantor trust for federal income tax purposes (and foreign,
state, and local income tax purposes where applicable), (ii) it is
intended that the Beneficiaries will be treated as the grantors (i.e., owners)
of the Trust for federal income tax purposes (and foreign, state, and local
income tax purposes where applicable), and (iii) the Litigation Trustee
shall file all federal income tax returns (and foreign, state, and local income
tax returns where applicable) for the Trust as a grantor trust pursuant to
Treasury Regulation Section 1.671-4(a).

 

8.2                                 Withholding.  The
Litigation Trustee may withhold from any amount distributed from the Trust to
any Beneficiary such sum or sums as are required to be withheld under the
income tax laws of the United States or of any state or political subdivision
thereof.

 

ARTICLE 9

STANDARD OF CARE, INDEMNIFICATION OF THE LITIGATION
TRUSTEE

AND MEMBERS OF THE LITIGATION TRUST ADVISORY COMMITTEE

 

9.1                                 Standard of Care. 
The Litigation Trustee, acting in the capacity as the Litigation Trustee
or in any other capacity contemplated by this Litigation Trust Agreement or the
Plan, and each LTAC Member shall not be personally liable to the Trust or to
any Person (including Beneficiaries) in connection with the affairs of the
Trust, unless it is ultimately determined by order of the Court that the
Litigation Trustee’s or the LTAC Member’s, as applicable, respective acts or
omissions constituted willful misconduct or gross negligence.  The employees, agents and Professionals
retained by the Trust or the Litigation Trustee shall not be personally liable
to the Trust or any other Person in connection with the affairs of the Trust,
unless it is ultimately determined by order of the Court that such acts or
omissions by such employee, agent, or Professional constituted willful
misconduct or gross negligence.  The
Litigation Trustee shall not be personally liable to the Trust or to any Person
for the acts or omissions of any employee, agent or Professional of the Trust
or the Litigation Trustee, unless it is ultimately determined by order of the
Court that the Litigation Trustee acted with gross negligence or willful
misconduct in the selection, retention, or supervision of such employee, agent
or Professional of the Trust.

 

9.2                                 Indemnification. 
The Litigation Trustee (including each former Litigation Trustee) and
each LTAC Member shall be indemnified by the Trust against and held harmless by
the Trust from any losses, claims, damages, liabilities or expenses (including,
without limitation, attorneys’ fees, disbursements, and related expenses) to
which the Litigation Trustee or LTAC Member may become subject or may incur in
connection with any action, suit, proceeding, claim or investigation brought or
threatened against the Litigation Trustee in the Litigation Trustee’s capacity
as Litigation Trustee or against the LTAC Member in the LTAC Member’s capacity
as a LTAC Member, or in connection with any matter arising out of or related to
the Plan, this Litigation Trust Agreement, or the affairs of the Trust, unless
it is ultimately determined by order 

 

20

 

of
the Court that the Litigation Trustee’s or the LTAC Member’s, as applicable,
respective acts or omissions constituted willful misconduct or gross
negligence.  If the Litigation Trustee or
LTAC Member becomes involved in, or there is brought or threatened against the
Litigation Trustee or LTAC Member, any action, suit, proceeding, claim or
investigation in the Litigation Trustee’s capacity as Litigation Trustee or
against the LTAC Member in the LTAC Member’s capacity as an LTAC Member, or in
connection with any matter arising out of or related to the Plan, this
Litigation Trust Agreement or the affairs of the Trust, for which an
indemnification obligation could arise, the Litigation Trustee or LTAC Member,
as applicable, shall promptly notify the Beneficiaries.  The Trust shall periodically advance or
otherwise reimburse on demand the Litigation Trustee’s or the LTAC Member’s, as
applicable, reasonable legal and other expenses (including, without limitation,
the cost of any investigation and preparation and attorney fees, disbursements,
and related expenses) incurred in connection therewith as a Trust Cost, but the
Litigation Trustee or the LTAC Member, as applicable, shall be required to
repay promptly to the Trust the amount of any such advanced or reimbursed
expenses paid to the Litigation Trustee or the LTAC Member, as applicable, to
the extent that it shall be ultimately determined by Final Order that the
Litigation Trustee or LTAC Member, as applicable, engaged in willful misconduct
or gross negligence in connection with the affairs of the Trust with respect to
which such expenses were paid.  The Trust
shall indemnify and hold harmless the employees, agents and Professionals of
the Trust, the Litigation Trust Advisory Committee and the Litigation Trustee
to the same extent as provided in this Section 9.2 for the Litigation
Trustee.  The provisions of this Section 9.2
shall remain available to any former Litigation Trustee (and its employees,
agents and Professionals), LTAC Member and the estate of any decedent
Litigation Trustee, LTAC Member or any employees, agents or Professionals of
the Litigation Trustee (or of any former Litigation Trustee).  The indemnification provided hereby shall be
a Trust Cost.

 

ARTICLE 10

SUPPLEMENTS AND AMENDMENTS TO LITIGATION TRUST
AGREEMENT

 

10.1                           Supplements and Amendments. 
This Litigation Trust Agreement may not be amended, supplemented or
otherwise modified, except by an instrument in writing signed by the Litigation
Trustee and (i) by a written consent of the majority in dollar amount, or
the affirmative vote of the majority in dollar amount of those voting, of the
Beneficiaries approving any such amendment, supplement or modification, or (ii) an
order entered by the Court, after notice and hearing, approving such amendment,
supplement or modification; provided, that, any non-material amendments,
supplement or modifications may be implemented by an instrument in writing
signed by the Litigation Trustee and a majority of the LTAC Members.  The Litigation Trustee may amend this
Litigation Trust Agreement, in accordance with and subject to the procedures of
this Section 10.1, to make such changes as are deemed necessary or
appropriate by the Litigation Trustee, with the advice of counsel, to ensure
that the Litigation Trust is not subject to registration or reporting
requirements of the Exchange Act, the TIA or the Investment Company Act;
provided that no such amendments shall restrict or limit the ability of a
Beneficiary to transfer or assign its Beneficial Interest in accordance with
and subject to the procedures of Section 6.6.  This Litigation Trust Agreement may not be
amended to alter the allocation of the Beneficial Interests, the calculation of
the Beneficiary Sharing Ratio or the Non-Credit Facility Beneficiary Sharing
Ratio, or the rights to distributions of Trust Cash on account of the
Beneficial Interests.

 

21

 

10.2                           Discretion as to Execution of Documents. 
Prior to executing any document required to be executed by it pursuant
to the terms of Section 10.1 hereof, the Litigation Trustee shall be
entitled to receive an opinion of its counsel reasonably acceptable to the
Litigation Trustee to the effect that the execution of such document is
authorized hereunder and that the conditions set forth in Section 10.1
have been satisfied.  If in the
reasonable opinion of the Litigation Trustee any such document adversely
affects any right, duty, immunity or indemnity in favor of the Litigation
Trustee hereunder, the Litigation Trustee may in its discretion decline to
execute such document.

 

10.3                           Distribution of Documents. 
Promptly after the execution by the Litigation Trustee of any document
entered into pursuant to Section 10.1 hereof, the Litigation Trustee shall
deliver a copy thereof to the Beneficiaries, but the failure of the Litigation
Trustee to deliver such a copy shall not impair or affect the validity of such
document.

 

ARTICLE 11

TERMINATION

 

11.1                           Duration.  The Trust
shall terminate upon the earlier of (i) the disposition of all the Trust
Assets; or (ii) fulfillment of the Trust purposes as determined by the
Litigation Trustee and evidenced by the approval in writing of a majority of
the Litigation Trust Advisory Committee.

 

11.2                           Distribution of Trust Assets. 
If permitted under the applicable law and not contrary to the
classification of the Trust as a liquidating trust and a pass-through entity
under applicable income tax law, the Litigation Trustee may distribute interests
in the Trust Assets, or contribute the Trust Assets to another Person and then
distribute interest in such Person to the Beneficiaries.  After all liabilities of the Trust have been
satisfied or duly provided for, such remaining Trust Assets shall be distributed
to Beneficiaries as a final distribution in accordance with the terms of this
Litigation Trust Agreement.

 

ARTICLE 12

MISCELLANEOUS

 

12.1                           Trust Irrevocable. 
Except as set forth in this Litigation Trust Agreement, establishment of
the Trust by this Litigation Trust Agreement shall be irrevocable and shall not
be subject to revocation, cancellation or rescission by the Beneficiaries.

 

12.2                           Bankruptcy of Beneficiaries. 
The dissolution, termination, bankruptcy, insolvency or other similar
incapacity of any Beneficiary shall not (i) operate to terminate this
Litigation Trust Agreement or dissolve the Trust, (ii) entitle any
Beneficiary’s legal representatives to take any action in any court for winding
up of the Trust, or (iii) otherwise affect the rights, obligations, and
liabilities of the parties hereto.  No
creditor or any Beneficiary shall have the right to obtain possession of, or
exercise legal or equitable remedies with respect to, the Trust Assets.  Nothing in Section 12.2 shall prevent
the transfer of any Beneficiary’s interest in the Trust.

 

12.3                           Beneficiaries have No Legal Title to
Trust Assets.  No Beneficiary shall have legal title to any
part of the Trust Assets; provided, however, that the Beneficiaries
shall have the 

 

22

 

beneficial
interest in the Trust Assets.  Nothing in
this section 12.3 shall operate to terminate this Litigation Trust Agreement or
the Trust hereunder or entitle any successors or transferees of such
Beneficiary to an accounting or to the transfer of legal title to any part of
the Trust Assets.

 

12.4                           Litigation Trust Agreement for Benefit of
Parties Only.  Nothing herein, whether expressed or implied,
shall be construed to give any Person other than the Litigation Trustee, the
Litigation Trust Advisory Committee, the LTAC Members and the Beneficiaries any
legal or equitable right, remedy or claim under or in respect of this
Litigation Trust Agreement.  The Trust
Assets shall be held for the sole and exclusive benefit of the Beneficiaries.

 

12.5                           Preservation of Privilege. 
In connection with the rights, claims, and causes of action that
constitute the Trust Assets, any attorney-client privilege, work-product
privilege, or other privilege or immunity attaching to any documents or
communications (whether written or oral) shall vest in the Litigation Trustee
and its representatives, and the Debtors, the Reorganized Debtors and the
Litigation Trustee are authorized to take all necessary actions to effectuate
the transfer of such privilege.  The
Trustee and the Litigation Trust Advisory Committee shall have a joint and
common interest, and, as such, all communications (whether written or oral)
among the Litigation Trustee and each LTAC Member, and/or their respective
representatives or advisors, shall be protected from disclosure.  The Trustee, the Litigation Trust Advisory
Committee, and the Debtors and Reorganized Debtors also shall have a joint and
common interest with respect to the Litigation Trust Rights, and, as such, all
communications (whether written or oral) among any or all of the Litigation
Trustee, any LTAC Member and any Debtor or Reorganized Debtor, and/or their
respective representatives or advisors, related to the Litigation Trust Rights
shall be protected from disclosure.

 

12.6                           Notices.  All notices,
directions, instructions, confirmations, consents and requests required or
permitted by the terms hereof shall, unless otherwise specifically provided
herein, be in writing and may be sent by first class mail, facsimile, overnight
mail or in the case of mailing to a non-United States address, air mail,
postage prepaid, addressed to:

 

(a)                                  If to the Litigation Trustee:

 

U.S. Bank National Association

1420 Fifth Avenue, 7th Floor

Seattle, WA 98101

Attn: Ms. Diana Jacobs

Facsimile:  (206) 344-4632

 

(b)                                 If to Beneficiaries, to the addresses
contained in the Trust Register.

 

(c)                                  If to the Debtors:

 

Idearc Inc.

Attn:  General Counsel

2200 West Airfield Drive

DFW Airport, TX  75261

Facsimile: (972) 453-6829)

 

23

 

with a copy to:

 

Fulbright & Jaworski L.L.P.

Attn: Toby L. Gerber

2200 Ross Avenue - Suite 2800

Dallas, Texas  75201

Facsimile: (214) 855-8200

 

(d)                                 If to the LTAC Members appointed by the
Creditors’ Committee:

 

Ahab Capital Management, Inc.

Attn: Rebwar Berzinji

299 Park Avenue, 17th Floor

New York, NY  10171

Facsimile: (212) 653-1099

 

and

 

MattlinPatterson Global Advisers LLC

Attn: Mark Palmer

520 Madison Avenue, 35th Floor

New York, NY  10022

Facsimile: (212) 651-4011

 

(e)                                  If to the LTAC Member appointed by the
Administrative Agent:

 

JPMorgan Chase Bank, N.A.

Attn:  Neil Boylan

277 Park Avenue, 8th Floor

New York, NY  10017

Facsimile: (212) 622-4556

 

with a copy to:

 

Simpson Thacher & Bartlett LLP

Attn:  Steven M. Fuhrman, Esq.

425 Lexington Avenue

New York, NY  10017

Facsimile: (212) 455-2502

 

Notice mailed shall be effective on the date mailed or sent.  Any Person may change the address at which it
is to receive notices under this Litigation Trust Agreement by furnishing written
notice pursuant to the provisions of this Section 12.6 to the entity to be
charged with knowledge of such change; provided, however, that distributions to
Beneficiaries shall nonetheless be made as specified in Section 7.2(c) hereof
without regard to any such notice.

 

24

 

12.7                           Severability. 
Any provision hereof which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provisions in
another jurisdiction.

 

12.8                           Amendments, Waivers, etc. 
No term or provision hereof may be amended, waived, discharged or
terminated orally.  A term or provision
hereof may be amended, waived, discharged or terminated only by an instrument
in writing entered into in compliance with the terms hereof, and any waiver of
the terms hereof shall be effective only in the specific instance and for the
specific purpose given.

 

12.9                           Counterparts. 
This Litigation Trust Agreement may be executed by the parties hereto in
separate counterparts, each of which when so executed and delivered shall be an
original, but all such counterparts shall together constitute but one and the
same instrument.

 

12.10                     Binding Effect, etc. 
All covenants and agreements contained herein shall be binding upon, and
inure to the benefit of, the Trust, the Litigation Trustee, and the
Beneficiaries, and their respective successors and assigns.  Any notice, direction, consent, waiver or
other instrument or action by any Beneficiary shall bind its successors and
assigns.

 

12.11                     Headings; References. 
The headings of the various Sections herein are for convenience of
reference only and shall not define or limit any of the terms or provisions
hereof.

 

12.12                     Governing Law. 
This Litigation Trust Agreement shall in all respects be governed by and
construed in accordance with the laws of the State of Texas, including all
matters of construction, validity and performance.

 

12.13                     Consent to Jurisdiction. 
Each of the parties hereto (and each LTAC Member from time to time, by
accepting such position, and each Beneficiary from time to time, by accepting a
Beneficial Interest) consents and submits to the exclusive jurisdiction of the
Bankruptcy Court for any action or proceeding instituted for the enforcement
and construction of any right, remedy, obligation, or liability arising under
or by reason of this Litigation Trust Agreement or the Plan.

 

12.14                     Transferee Liabilities. 
The Trust shall have no liability for, and the Trust Assets shall not be
subject to, any claim arising by, through or under the Debtors except as expressly
set forth in the Plan or in this Litigation Trust Agreement.  In no event shall the Litigation Trustee or
the Beneficiaries have any personal liability for such claims.  If any liability shall be asserted against
the Trust or the Litigation Trustee as the transferee of the Trust Assets on
account of any claimed liability of, through or under the Debtor, the
Litigation Trustee may use such part of the Trust Assets as may be necessary to
contest any such claimed liability and to pay, compromise, settle or discharge
same on terms reasonably satisfactory to the Litigation Trustee as a Trust
Cost.

 

12.15                     Resignation of and Successors to LTAC
Members.  Each LTAC Member may resign as a LTAC Member
by an instrument in writing delivered to the Litigation Trustee and the other
LTAC Members at least fifteen (15) days before the proposed effective date of
resignation.  In the event that an LTAC
Member resigns, (i) if the resigning LTAC Member was appointed by 

 

25

 

the
Creditors’ Committee (or is the ultimate successor to the Creditors’ Committee’s
appointee), then the remaining LTAC Member appointed by the Creditors’
Committee (or its successor) shall designate the successor to such resigning
LTAC Member; and (ii) if the resigning LTAC Member was appointed by the
Administrative Agent (or is the ultimate successor to the Administrative Agent’s
appointee), then JPMorgan Chase Bank, N.A. shall designate its successor.  In the event that JPMorgan Chase Bank, N.A.
does not designate a successor, the Litigation Trustee shall nominate a
representative of a Credit Facility Beneficiary as the successor LTAC Member
and such nominee shall become the successor LTAC Member if such nominee agrees
to serve in such capacity and such nominee is approved by a written consent of
the majority in dollar amount, or the affirmative vote of the majority in
dollar amount of those voting, of the Credit Facility Beneficiaries.  In the event that both of the LTAC Members
appointed by the Creditors’ Committee (or their ultimate successors)
simultaneously resign or no longer are able to serve as LTAC Members, (a) the
Litigation Trustee shall nominate two representatives of Unsecured Note
Beneficiaries as the successor LTAC Members, and (b) such nominees shall
become the LTAC Members if approved by a written consent of the majority in
dollar amount, or the affirmative vote of the majority in dollar amount of
those voting, of the Non-Credit Facility Beneficiaries.

 

26

 

IN WITNESS HEREOF, the parties hereto have caused this Litigation Trust
Agreement to be duly executed by their respective officers thereunto duly
authorized on the day and year first written above.

 

	
   

  	
  Idearc
  Inc. 

  
	
   

  	
  Idearc
  Information Services LLC

  
	
   

  	
  Idearc
  Media LLC

  
	
   

  	
  License
  Application Corporation

  
	
   

  	
  Second
  License Application Corporation

  
	
   

  	
  Idearc
  Media Sales-East Co.

  
	
   

  	
  Idearc
  Media Sales-East LLC

  
	
   

  	
  Idearc
  Media Sales-West Inc.

  
	
   

  	
  Idearc
  Media Services-East Inc.

  
	
   

  	
  Idearc
  Media Services-West Inc.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Samuel D. Jones

  
	
   

  	
   

  	
  Samuel
  D. Jones,

  
	
   

  	
   

  	
  Executive
  Vice President, Chief Financial Officer and Treasurer, Idearc Inc.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  U.S.
  Bank National Association, as Litigation Trustee

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Diana Jacobs

  
	
   

  	
   

  	
  Diana
  Jacobs, Vice President

  

 

27

 

EXHIBIT A

 

 

Corporate
Trust Services Fee Schedule

 

	
  Description:

  	
   

  	
  Idearc, Inc. Litigation Trust

  
	
  Dated:

  	
   

  	
  December 12, 2009

  

 

Schedule Detail*

 

ACCEPTANCE FEE  (One-Time Fee) - $25,000.00

Covers review, consideration,
establishment and acceptance of the trust and relevant documents. Assumes
manual transfer of lender claimant records. 
Legal expense billed at cost.

 

ANNUAL ADMINISTRATION FEE
- $25,000.00

Covers the normal administration
of the trust accounts, including the maintenance of proper records and
performance of the duties and functions required under the terms and provisions
of the trust documents Billed annually in advance.

 

TRANSACTIONAL FEES

Distribution processing fee per
distribution/per beneficiary.  Assumes
manual entry of lender claims data. - $10.00

W9 solicitation and processing,
if necessary (per beneficiary/claimant). - $4.00

 

OTHER FEES

 

Administrative Time -current administrative time
billing rate =
$425.00

Administrative time charges will
be billed at U.S. Bank’s administrative time billing rate as it is adjusted
from time to time

 

· Review and preparation of court filings, proceedings, documents, cash
flows, reporting.

· Research of trust files, documents, records, cash flows, reports.

· Communication with beneficiaries, claimants, debtors, legal counsel,
others.

· Attendance at meetings, hearings, conference calls.

 

Direct Out of Pocket Expenses - billed at cost

Reimbursement of direct expenses
associated with the performance of our duties including, but not limited to,
publications, legal and travel expenses, filing fees, and tax
preparation/reporting.

 

Other Services - varies

Charges for duties or
responsibilities of an unusual nature or not provided for in this schedule — a
reasonable charge will be made based on the nature of the service and the 

 

 

responsibility involved and these
charges will be billed as a flat fee or our hourly rate then in effect, at our
option.

 

Incentive Fees - varies

An incentive to promptly recover
funds and resolve claims at reasonable amounts. 
Calculated as a percentage of the recovery amounts distributed to
beneficiaries (and paid at the time distributions are made) as follows:

 

First $100 million — 0.5%

Next $400 million — 0.45%

Next $500 million — 0.35%

Amounts over $1 billion — 0.2%

 

Termination
Fee -
$7,500.00

 

* Final account acceptance is
subject to review of documents.  Fees are
based on our understanding of the transaction and are subject to revision if
the structure or situation is changed.

* Fees and charges are subject to
adjustment by U.S. Bank Corporate Trust Services from time to time.

* Closing of the transaction
constitutes agreement to this fee schedule, as does payment of the invoice.

* Fee schedule does not include
charges for investment services outside of Trustee’s money market funds.

* Acceptance Fee and Annual
Administration Fee are due at time of closing.

* All fees are nonrefundable and
will not be prorated in the event of an early termination of the Trust.

 

2

 

EXHIBIT B

 

Transfer Form

 

 

 

Corporate Trust Services

Attn: Default Processing (JWH)

EP-MN-WS2N

60 Livingston Avenue

St. Paul, MN 55107-2292

 

Idearc
Litigation Trust

TRANSFER
INSTRUCTIONS

 

The undersigned transferor,
(print full name)
                                                          
(must match with Trust Register), a holder of beneficial interests in the
Idearc Litigation Trust, hereby instructs U.S. Bank National Association, as
Litigation Trustee of Idearc Litigation Trust, to transfer the beneficial
interests set forth below as follows:

 

o Transferor (as currently
held):

 

Street Address:

 

City, State, Zip:

 

Phone number: 
(              )

 

SSN or tax identification
number:

 

Beneficial Interest Amount
Transferred:  $

 

	
  Type of Entity:

  	
   

  
	
   

  	
  (investment fund, national
  bank, state bank, corporation, LLC, limited partnership, individual, etc.)

  

 

o Transferee (new holder)*:

 

Name:

 

Street Address:

 

City, State, Zip:

 

SSN or tax identification
number:

 

	
  Type of Entity:

  	
   

  
	
   

  	
  (investment fund, national
  bank, state bank, corporation, LLC, limited partnership, individual, etc.)

  

 

o Payment Instructions:

(If not completed,
distributions will be made directly to Transferee at above address.)

 

Name of
bank/broker/custodian:

 

Bank/broker/custodian tax
ID:

 

Street Address:

 

City, State, Zip:

 

ABA routing number:

 

Account number:

 

2

 

*Please provide W-9 for Transferee.

 

Signature
of Transferor:

 

 

	
   

  	
   

  	
  (date)

  

 

 

	
  SIGNATURE GUARANTEE (Your
  signature must

  be Medallion
  guaranteed  by an eligible financial

  institution.)

  	
   

  

 

3Exhibit 10.6

 

IDEARC INC.

2009 LONG-TERM INCENTIVE PLAN

 

 

	
  ARTICLE I

  	
   

  	
  ESTABLISHMENT, PURPOSE AND DURATION

  	
   

  	
  1

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1.1

  	
   

  	
  Establishment

  	
   

  	
  1

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1.2

  	
   

  	
  Purpose of the Plan

  	
   

  	
  1

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1.3

  	
   

  	
  Duration of Plan

  	
   

  	
  1

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE II

  	
   

  	
  DEFINITIONS

  	
   

  	
  1

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.1

  	
   

  	
  “Affiliate”

  	
   

  	
  1

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.2

  	
   

  	
  “Annual Incentive Award”

  	
   

  	
  1

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.3

  	
   

  	
  “Award”

  	
   

  	
  1

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.4

  	
   

  	
  “Award Agreement”

  	
   

  	
  1

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.5

  	
   

  	
  “Beneficial Owner” or “Beneficial Ownership”

  	
   

  	
  2

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.6

  	
   

  	
  “Board”

  	
   

  	
  2

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.7

  	
   

  	
  “Cash-Based Award”

  	
   

  	
  2

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.8

  	
   

  	
  “Change in Control of the Company”

  	
   

  	
  2

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.9

  	
   

  	
  “Code”

  	
   

  	
  3

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.10

  	
   

  	
  “Committee”

  	
   

  	
  3

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.11

  	
   

  	
  “Company”

  	
   

  	
  3

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.12

  	
   

  	
  “Corporate Change”

  	
   

  	
  3

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.13

  	
   

  	
  “Covered Employee”

  	
   

  	
  3

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.14

  	
   

  	
  “Director”

  	
   

  	
  3

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.15

  	
   

  	
  “Director Award”

  	
   

  	
  3

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.16

  	
   

  	
  “Disability”

  	
   

  	
  3

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.17

  	
   

  	
  “Dividend Equivalent”

  	
   

  	
  4

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.18

  	
   

  	
  “Employee”

  	
   

  	
  4

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.19

  	
   

  	
  “Equity Interests”

  	
   

  	
  4

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.20

  	
   

  	
  “Exchange Act”

  	
   

  	
  4

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.21

  	
   

  	
  “Fair Market Value”

  	
   

  	
  4

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.22

  	
   

  	
  “Fiscal Year”

  	
   

  	
  4

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.23

  	
   

  	
  “Freestanding SAR”

  	
   

  	
  4

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.24

  	
   

  	
  “Full Value Award”

  	
   

  	
  4

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.25

  	
   

  	
  “Holder”

  	
   

  	
  4

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.26

  	
   

  	
  “Incentive Stock Option” or “ISO”

  	
   

  	
  4

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.27

  	
   

  	
  “Insider”

  	
   

  	
  4

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.28

  	
   

  	
  “Institutional Holder”

  	
   

  	
  4

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.29

  	
   

  	
  “Institutional Holder Affiliate”

  	
   

  	
  5

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.30

  	
   

  	
  “Institutional Holder Equity Interest”

  	
   

  	
  5

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.31

  	
   

  	
  “Minimum Statutory Tax Withholding Obligation”

  	
   

  	
  5

  

 

i

 

	
  2.32

  	
   

  	
  “Nonqualified Stock Option” or “NQSO”

  	
   

  	
  5

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.33

  	
   

  	
  “Option”

  	
   

  	
  5

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.34

  	
   

  	
  “Option Price”

  	
   

  	
  5

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.35

  	
   

  	
  “Other Stock-Based Award”

  	
   

  	
  5

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.36

  	
   

  	
  “Participant”

  	
   

  	
  5

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.37

  	
   

  	
  “Performance-Based Compensation”

  	
   

  	
  5

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.38

  	
   

  	
  “Performance Goals”

  	
   

  	
  5

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.39

  	
   

  	
  “Performance Stock Award”

  	
   

  	
  5

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.40

  	
   

  	
  “Performance Unit Award”

  	
   

  	
  5

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.41

  	
   

  	
  “Period of Restriction”

  	
   

  	
  5

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.42

  	
   

  	
  “Permissible under Section 409A”

  	
   

  	
  5

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.43

  	
   

  	
  “Plan”

  	
   

  	
  5

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.44

  	
   

  	
  “Restricted Stock”

  	
   

  	
  6

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.45

  	
   

  	
  “Restricted Stock Award”

  	
   

  	
  6

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.46

  	
   

  	
  “RSU”

  	
   

  	
  6

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.47

  	
   

  	
  “RSU Award”

  	
   

  	
  6

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.48

  	
   

  	
  “SAR”

  	
   

  	
  6

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.49

  	
   

  	
  “Section 409A”

  	
   

  	
  6

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.50

  	
   

  	
  “Separation from Service”

  	
   

  	
  6

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.51

  	
   

  	
  “Stock”

  	
   

  	
  6

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.52

  	
   

  	
  “Substantial Risk of Forfeiture”

  	
   

  	
  6

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.53

  	
   

  	
  “Tandem SAR”

  	
   

  	
  6

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.54

  	
   

  	
  “Ten Percent Stockholder”

  	
   

  	
  6

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.55

  	
   

  	
  “Third Party Service Provider”

  	
   

  	
  6

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE III

  	
   

  	
  ELIGIBILITY

  	
   

  	
  6

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE IV

  	
   

  	
  GENERAL PROVISIONS RELATING TO AWARDS

  	
   

  	
  7

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.1

  	
   

  	
  Authority to Grant Awards

  	
   

  	
  7

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.2

  	
   

  	
  Dedicated Shares; Maximum Awards

  	
   

  	
  7

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.3

  	
   

  	
  Non-Transferability

  	
   

  	
  8

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.4

  	
   

  	
  Requirements of Law

  	
   

  	
  8

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.5

  	
   

  	
  Changes in the Company’s Capital Structure

  	
   

  	
  9

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.6

  	
   

  	
  Election Under Section 83(b) of the Code

  	
   

  	
  11

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.7

  	
   

  	
  Forfeiture for Cause

  	
   

  	
  11

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.8

  	
   

  	
  Forfeiture Events

  	
   

  	
  11

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.9

  	
   

  	
  Award Agreements

  	
   

  	
  11

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.10

  	
   

  	
  Amendments of Award Agreements

  	
   

  	
  12

  

 

ii

 

	
  4.11

  	
   

  	
  Rights as Stockholder

  	
   

  	
  12

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.12

  	
   

  	
  Issuance of Shares of Stock

  	
   

  	
  12

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.13

  	
   

  	
  Restrictions on Stock Received

  	
   

  	
  12

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.14

  	
   

  	
  Compliance With Section 409A

  	
   

  	
  12

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.15

  	
   

  	
  Date of Grant

  	
   

  	
  12

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.16

  	
   

  	
  Impact of Separation from Service

  	
   

  	
  12

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.17

  	
   

  	
  Dividend Equivalents

  	
   

  	
  13

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE V

  	
   

  	
  OPTIONS

  	
   

  	
  13

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5.1

  	
   

  	
  Authority to Grant Options

  	
   

  	
  13

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5.2

  	
   

  	
  Option Price

  	
   

  	
  13

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5.3

  	
   

  	
  Duration of Option

  	
   

  	
  13

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5.4

  	
   

  	
  Amount Exercisable

  	
   

  	
  13

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5.5

  	
   

  	
  Exercise of Option

  	
   

  	
  13

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5.6

  	
   

  	
  Transferability—Incentive Stock Options

  	
   

  	
  14

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5.7

  	
   

  	
  Notification of Disqualifying Disposition

  	
   

  	
  14

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5.8

  	
   

  	
  $100,000 Limitation on ISOs

  	
   

  	
  14

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VI

  	
   

  	
  STOCK APPRECIATION RIGHTS

  	
   

  	
  14

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6.1

  	
   

  	
  Authority to Grant SAR Awards

  	
   

  	
  14

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6.2

  	
   

  	
  General Terms

  	
   

  	
  14

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6.3

  	
   

  	
  Term of SAR

  	
   

  	
  14

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6.4

  	
   

  	
  Exercise of SAR

  	
   

  	
  15

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6.5

  	
   

  	
  Payment of SAR Amount

  	
   

  	
  15

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VII

  	
   

  	
  RESTRICTED STOCK AWARDS

  	
   

  	
  15

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  7.1

  	
   

  	
  Restricted Stock Awards

  	
   

  	
  15

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  7.2

  	
   

  	
  Holder’s Rights as Stockholder

  	
   

  	
  15

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VIII

  	
   

  	
  RESTRICTED STOCK UNIT AWARDS

  	
   

  	
  16

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  8.1

  	
   

  	
  Authority to Grant RSU Awards

  	
   

  	
  16

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  8.2

  	
   

  	
  RSU Award

  	
   

  	
  16

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  8.3

  	
   

  	
  Form of Payment Under RSU Award

  	
   

  	
  16

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  8.4

  	
   

  	
  Time of Payment Under RSU Award

  	
   

  	
  16

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE IX

  	
   

  	
  PERFORMANCE STOCK AWARDS AND PERFORMANCE UNIT AWARDS

  	
   

  	
  16

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  9.1

  	
   

  	
  Authority to Grant Performance Stock Awards and Performance Unit
  Awards

  	
   

  	
  16

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  9.2

  	
   

  	
  Performance Goals

  	
   

  	
  16

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  9.3

  	
   

  	
  Time of Establishment of Performance Goals

  	
   

  	
  17

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  9.4

  	
   

  	
  Form of Payment Under Performance Unit Award

  	
   

  	
  17

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  9.5

  	
   

  	
  Time of Payment Under Performance Unit Award

  	
   

  	
  17

  

 

iii

 

	
  9.6

  	
   

  	
  Holder’s Rights as Stockholder With Respect to a Performance Stock
  Award

  	
   

  	
  17

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  9.7

  	
   

  	
  Increases Prohibited

  	
   

  	
  17

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE X

  	
   

  	
  DIRECTOR AWARDS

  	
   

  	
  18

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE XI

  	
   

  	
  ANNUAL INCENTIVE AWARDS

  	
   

  	
  18

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  11.1

  	
   

  	
  Authority to Grant Annual Incentive Awards

  	
   

  	
  18

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  11.2

  	
   

  	
  Covered Employees

  	
   

  	
  18

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  11.3

  	
   

  	
  Form of Payment Under Annual Incentive Award

  	
   

  	
  18

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  11.4

  	
   

  	
  Time of Payment Under Annual Incentive Award

  	
   

  	
  18

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE XII

  	
   

  	
  OTHER STOCK-BASED AWARDS

  	
   

  	
  18

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  12.1

  	
   

  	
  Authority to Grant Other Stock-Based Awards

  	
   

  	
  18

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  12.2

  	
   

  	
  Value of Other Stock-Based Award

  	
   

  	
  18

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  12.3

  	
   

  	
  Payment of Other Stock-Based Award

  	
   

  	
  19

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  12.4

  	
   

  	
  Time of Payment of Other Stock-Based Award

  	
   

  	
  19

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE XIII

  	
   

  	
  CASH-BASED AWARDS

  	
   

  	
  19

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  13.1

  	
   

  	
  Authority to Grant Cash-Based Awards

  	
   

  	
  19

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  13.2

  	
   

  	
  Value of Cash-Based Award

  	
   

  	
  19

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  13.3

  	
   

  	
  Payment of Cash-Based Award

  	
   

  	
  19

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  13.4

  	
   

  	
  Time of Payment of Cash-Based Award

  	
   

  	
  19

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE XIV

  	
   

  	
  SUBSTITUTION AWARDS

  	
   

  	
  19

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE XV

  	
   

  	
  CHANGE IN CONTROL OF THE COMPANY

  	
   

  	
  19

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  15.1

  	
   

  	
  Change in Control of the Company

  	
   

  	
  19

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  15.2

  	
   

  	
  Delay of Payment due to Section 409A

  	
   

  	
  21

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE XVI

  	
   

  	
  ADMINISTRATION

  	
   

  	
  21

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  16.1

  	
   

  	
  Awards

  	
   

  	
  21

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  16.2

  	
   

  	
  Authority of the Committee

  	
   

  	
  21

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  16.3

  	
   

  	
  Decisions Binding

  	
   

  	
  22

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  16.4

  	
   

  	
  No Liability

  	
   

  	
  22

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE XVII

  	
   

  	
  AMENDMENT OR TERMINATION OF PLAN

  	
   

  	
  22

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  17.1

  	
   

  	
  Amendment, Modification, Suspension, and Termination

  	
   

  	
  22

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  17.2

  	
   

  	
  Awards Previously Granted

  	
   

  	
  22

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE XVIII

  	
   

  	
  MISCELLANEOUS

  	
   

  	
  22

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  18.1

  	
   

  	
  Unfunded Plan/No Establishment of a Trust Fund

  	
   

  	
  22

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  18.2

  	
   

  	
  No Employment Obligation

  	
   

  	
  23

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  18.3

  	
   

  	
  Tax Withholding

  	
   

  	
  23

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  18.4

  	
   

  	
  Gender and Number

  	
   

  	
  23

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  18.5

  	
   

  	
  Severability

  	
   

  	
  24

  

 

iv

 

	
  18.6

  	
   

  	
  Headings

  	
   

  	
  24

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  18.7

  	
   

  	
  Other Compensation Plans

  	
   

  	
  24

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  18.8

  	
   

  	
  Retirement and Welfare Plans

  	
   

  	
  24

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  18.9

  	
   

  	
  Other Awards

  	
   

  	
  24

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  18.10

  	
   

  	
  Successors

  	
   

  	
  24

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  18.11

  	
   

  	
  Law Limitations/Governmental Approvals

  	
   

  	
  24

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  18.12

  	
   

  	
  Delivery of Title

  	
   

  	
  24

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  18.13

  	
   

  	
  Inability to Obtain Authority

  	
   

  	
  24

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  18.14

  	
   

  	
  Investment Representations

  	
   

  	
  24

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  18.15

  	
   

  	
  Persons Residing Outside of the United States

  	
   

  	
  24

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  18.16

  	
   

  	
  Arbitration of Disputes

  	
   

  	
  25

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  18.17

  	
   

  	
  Governing
  Law

  	
   

  	
  25

  

 

v

 

ARTICLE I

 

ESTABLISHMENT,
PURPOSE AND DURATION

 

1.1                                       Establishment.  The Company hereby establishes an incentive
compensation plan, to be known as the “Idearc Inc. 2009 Long-Term
Incentive Plan,” as set forth in this document.  The Plan permits the grant of Incentive Stock
Options, Nonqualified Stock Options, SARs, Restricted Stock, RSUs, Performance
Stock Awards, Performance Unit Awards, Annual Incentive Awards, Dividend
Equivalents, Cash-Based Awards and Other Stock-Based Awards.  The Plan will become effective as of December 31,
2009 (the “Effective Date”), the
effective date of the Company’s confirmed plan of reorganization under Chapter
11 of the U.S. Bankruptcy Code.

 

1.2                                       Purpose of the Plan.  The Plan is intended to advance the best interests of
the Company, its Affiliates and its stockholders by providing those persons who
have substantial responsibility for the management and growth of the Company
and its Affiliates with additional performance incentives and an opportunity to
obtain or increase their proprietary interest in the Company, thereby
encouraging them to continue in their employment or affiliation with the
Company or its Affiliates.

 

1.3                                       Duration of Plan. 
Unless sooner terminated as provided herein, the Plan shall terminate
ten years from the Effective Date.  After
the Plan is terminated, no Awards may be granted but Awards previously granted
shall remain outstanding in accordance with their applicable terms and
conditions and the Plan’s terms and conditions. Notwithstanding the foregoing,
no Incentive Stock Options may be granted more than ten years after the earlier
of (a) adoption of the Plan by the Board, and (b) the Effective Date.

 

ARTICLE II

 

DEFINITIONS

 

The words and phrases
defined in this Article shall have the meaning set out below throughout
the Plan, unless the context in which any such word or phrase appears
reasonably requires a broader, narrower or different meaning.

 

2.1                                       “Affiliate” means any corporation,
partnership, limited liability company or association, trust or other entity or
organization which, directly or indirectly, controls, is controlled by, or is
under common control with, the Company. 
For purposes of the preceding sentence, “control” (including, with
correlative meanings, the terms “controlled by” and “under common control with”),
as used with respect to any entity or organization, shall mean the possession,
directly or indirectly, of the power (a) to vote more than fifty percent
(50%) of the securities having ordinary voting power for the election of
directors of the controlled entity or organization, or (b) to direct or
cause the direction of the management and policies of the controlled entity or
organization, whether through the ownership of voting securities or by contract
or otherwise.

 

2.2                                       “Annual Incentive Award” means an
Award granted to a Holder pursuant to Article XI.

 

2.3                                       “Award” means, individually or
collectively, a grant under the Plan of Incentive Stock Options, Nonqualified
Stock Options, SARs, Restricted Stock, RSUs, Performance Stock Awards, Performance
Unit Awards, Annual Incentive Awards, Dividend Equivalents, Cash-Based Awards
and Other Stock-Based Awards, in each case subject to the terms and provisions
of the Plan.

 

2.4                                       “Award Agreement” means a written or
electronic agreement that sets forth the terms and conditions applicable to an
Award granted under the Plan.

 

1

 

2.5                                       “Beneficial Owner”
or “Beneficial Ownership” shall have the
meaning ascribed to such term in Rule 13d-3 of the General Rules and
Regulations under the Exchange Act.

 

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

 

2.7                                       “Cash-Based Award” means an Award
granted pursuant to Article XIII.

 

2.8                                       “Change in Control of the
Company” means “Change in Control of the Company” as defined in
an Award Agreement or if such term is not defined therein, means any of the
following events occurring after the Effective Date:

 

(a)                                  The acquisition by any individual, entity
or group (within the meaning of Section 13(d)(3) or 14(d)(2) of
the Exchange Act (a “Covered Person”)
of beneficial ownership (within the meaning of rule 13d-3 promulgated
under the Exchange Act) of more than 35% of either (i) the then
outstanding shares of the common stock of the Company (the “Outstanding Company Common Stock”),
or (ii) the combined voting power of the then outstanding voting
securities of the Company entitled to vote generally in the election of
directors (the “Outstanding Company Voting Securities”),
excluding from such calculation of Outstanding Company Common Stock or
Outstanding Company Voting Securities held by such Covered Person any
Institutional Holder Equity Interests held by any Institutional Holder so long
as no Institutional Holder is part of a “group” (within the meaning of the
Exchange Act and the rules of the Securities and Exchange Commission
thereunder as in effect on the Effective Date) that includes Covered Persons
that are not Institutional Holders; provided, however, that for purposes of this subsection (a) of
this Section 2.8, the following acquisitions shall not constitute a Change
in Control of the Company: (1) any acquisition of shares of the Company
directly from the Company, (2) any acquisition of shares of the Company by
the Company, (3) any acquisition of shares of the Company by any employee
benefit plan (or related trust) sponsored or maintained by the Company or any
entity controlled by the Company, or (4) any acquisition of shares of the
Company by any corporation pursuant to a transaction which complies with
clauses (1), (2) and (3) of subsection (c) of this Section 2.8;

 

(b)                                 Individuals who, as of the Effective
Date, constitute the Board (the “Incumbent Board”)
cease for any reason to constitute at least a majority  of
the Board; provided, however,
that any individual becoming a director subsequent to the Effective Date whose
election, or nomination for election by the Company’s shareholders, was
approved by a vote of at least two-thirds of the directors then comprising the
Incumbent Board shall be considered as though such individual were a member of
the Incumbent Board, but excluding, for this purpose, any such individual whose
initial assumption of office occurs as a result of an actual or threatened
election contest with respect to the election or removal of directors or other actual
or threatened solicitation of proxies or consents by or on behalf of a Covered
Person other than the Board;

 

(c)                                  Consummation of (xx) a
reorganization, merger or consolidation or sale of the Company or any
subsidiary of the Company, or (yy) a disposition of all or substantially
all of the assets of the Company (a “Business Combination”),
in each case, unless, following such Business Combination, (1) all or
substantially all of the individuals and entities who were the beneficial
owners, respectively, of the Outstanding Company Common Stock and Outstanding
Company Voting Securities immediately prior to such Business Combination
beneficially own, direct or indirectly, more than 50% of, respectively, the
then outstanding shares of common stock and the combined voting power of the
then outstanding voting securities entitled to vote generally in the election
of directors, as the case may be, of the corporation resulting from such
Business Combination (including, without limitation, a corporation which as a result
of such transaction owns the Company or all or substantially all of the Company’s
assets either directly or through one or more subsidiaries) in substantially
the same proportions as their ownership immediately prior to such Business
Combination of the Outstanding Company Common Stock and 

 

2

 

Outstanding Company Voting Securities, as the case may
be, (2) no Covered Person (excluding any employee benefit plan (or related
trust) of the Company or such corporation resulting from such Business
Combination) beneficially owns, directly or indirectly, 50% or more of,
respectively, the then outstanding shares of common stock of the corporation
resulting from such Business Combination or the combined voting power of the
then outstanding voting securities of such corporation, except to the extent
that such ownership existed prior to the Business Combination, and (3) at
least a majority of the members of the board of directors of the corporation
resulting from such Business Combination were members of the Incumbent Board at
the time of the execution of the initial agreement, or of the action of the
Board of Directors, providing for such Business Combination;

 

(d)                                 The liquidation or dissolution of the
Company; or

 

(e)                                  The acquisition by the Institutional
Holders and its Institutional Holder Affiliates of beneficial ownership (within
the meaning of rule 13d-3 promulgated under the Exchange Act) of more than
45% of either (i) the Outstanding Company Common Stock, or (ii) the
Outstanding Company Voting Securities; provided, however, that for purposes of this subsection (e) of
this Section 2.8, the following acquisitions shall not constitute a Change
in Control of the Company: (1) any acquisition of shares of the Company directly
from the Company, or (2) any acquisition of shares of the Company by any
corporation pursuant to a transaction which complies with clauses (1), (2) and
(3) of subsection (c) of this Section 2.8.

 

2.9                                       “Code” means the United States
Internal Revenue Code of 1986, as amended from time to time.

 

2.10                                 “Committee” means the Human Resources
Committee of the Board.  Unless otherwise
determined by the Board, the Committee shall be comprised solely of at least
two individuals who are intended to qualify as “Non-Employee Directors” within
the meaning of Rule 16b-3 under the Exchange Act (or any successor rule thereto),
“independent directors” within the meaning of the NASDAQ listed-company rules and
“outside directors” within the meaning of section 162(m) of the Code.

 

2.11                                 “Company” means Idearc Inc., a
Delaware corporation, or any successor (by reincorporation, merger or
otherwise).

 

2.12                                 “Corporate Change” shall have the
meaning ascribed to that term in Section 4.5(c).

 

2.13                                 “Covered Employee”
means an Employee who is a “covered employee,” as defined in section 162(m) of
the Code and the regulations or other guidance promulgated by the Internal
Revenue Service under section 162(m) of the Code, or any successor
statute.

 

2.14                                 “Director” means a director of the Company who is
not an Employee.

 

2.15                                 “Director Award”
means any NQSO, SAR, or Full Value Award granted to a Director pursuant to such
applicable terms, conditions, and limitations as the Board or Committee may
establish in accordance with this Plan.

 

2.16                                 “Disability” means as determined by
the Committee in its discretion exercised in good faith, any medically
determinable physical or mental impairment of the Holder that can be expected
to result in death or can be expected to last for a continuous period of no
less than 12 months and that would entitle the Holder to payment of disability
income payments under the Company’s long-term disability insurance policy or
plan for Employees as then in effect for a period of not less than three
months; or in the event that the Holder is not covered, for whatever reason,
under the Company’s long-term disability insurance policy or plan for Employees
or in the event the Company does not maintain such a long-term disability
insurance policy, “Disability” means the Holder is unable to engage in any
substantial gainful activity by reason of any medically determinable physical
or mental 

 

3

 

impairment
which can be expected to result in death or can be expected to last for a continuous
period of not less than 12 months.  A
determination of Disability may be made by a physician selected or approved by
the Committee and, in this respect, the Holder shall submit to an examination
by such physician upon request by the Committee.

 

2.17                                 “Dividend
Equivalent”  means a payment equivalent in amount to dividends paid
to the Company’s stockholders.

 

2.18                                 “Employee” means a person employed by
the Company or any Affiliate as a common law employee.

 

2.19                                 “Equity Interests” means any shares
of capital stock, partnership interests, membership interests in a limited
liability company, beneficial interests in a trust or other equity ownership
interests in an entity of whatever nature, and any warrants, options or other
rights entitling the holder thereof to purchase or acquire any of the
foregoing, but excluding any debt security that is convertible into, or
exchangeable for, any of the foregoing.

 

2.20                                 “Exchange Act”  means the Securities Exchange Act of
1934, as amended from time to time.

 

2.21                                 “Fair Market Value”  of the Stock as of any particular
date means (1) if the Stock is traded on a stock exchange, the closing
sale price of the Stock on that date as reported on the principal securities
exchange on which the Stock is traded, or (2) if the Stock is traded in
the over-the-counter market, the average between the high bid and low asked
price on that date as reported in such over-the-counter market; provided that (a) if
the Stock is not so traded, (b) if no closing price or bid and asked
prices for the stock was so reported on that date or (c) if, in the
discretion of the Committee, another means of determining the fair market value
of a share of Stock at such date shall be necessary or advisable, the Committee
may provide for another method or means for determining such fair market value,
which method or means shall comply with the requirements of a reasonable
valuation method as described under Section 409A.

 

2.22                                 “Fiscal Year” means the calendar
year.

 

2.23                                 “Freestanding SAR”
means an SAR that is granted independently of any Options, as described in Article VI.

 

2.24                                 “Full Value Award”  means an Award other than in the form of an ISO, NQSO, or SAR, and which is settled by the issuance of
shares of Stock.

 

2.25                                 “Holder”
means a person who has been granted an Award or any person who is entitled to
receive shares of Stock or cash under an Award.

 

2.26                                 “Incentive Stock Option”
or “ISO” means an option to purchase
Stock granted pursuant to Article V that is designated as an Incentive
Stock Option and that is intended to satisfy the requirements of
section 422 of the Code.

 

2.27                                 “Insider”
shall mean an individual who is, on the relevant date, an officer, a Director,
or more than ten percent (10%) Beneficial Owner of any class of the
Company’s equity securities that is registered pursuant to Section 12 of
the Exchange Act, as determined by the Board in accordance with Section 16
of the Exchange Act.

 

2.28                                 “Institutional Holder”
means an institutional investor, and its Institutional Holder Affiliates, as
described on Schedule A hereto.

 

4

 

2.29                                 “Institutional Holder
Affiliate” means, with respect to an Institutional Holder,
another person or entity that directly, or indirectly through one or more
intermediaries, controls or is controlled by or is under common control with
the Institutional Holder specified. For purposes of the preceding sentence, “control”
means the possession, directly or indirectly, of the power to direct or cause
the direction of the management or policies of a person or entity, whether
through the ability to exercise voting power, by contract or otherwise.

 

2.30                                 “Institutional Holder
Equity Interest” means any Equity Interest in the Company
acquired by an Institutional Holder under any one or more agreements executed
on or prior to the Effective Date between such Institutional Holder and the
Company.

 

2.31                                 “Minimum Statutory Tax Withholding Obligation” means,
with respect to an Award, the amount the Company or an Affiliate is required to
withhold for federal, state, local and foreign taxes based upon the applicable
minimum statutory withholding rates required by the relevant tax authorities.

 

2.32                                 “Nonqualified Stock Option” or “NQSO” means a “nonqualified stock
option” to purchase Stock granted pursuant to Article V that does not
satisfy the requirements of section 422 of the Code.

 

2.33                                 “Option” means an Incentive Stock
Option or a Nonqualified Stock Option.

 

2.34                                 “Option Price” shall have the meaning
ascribed to that term in Section 5.2.

 

2.35                                 “Other Stock-Based Award” means an
equity-based or equity-related Award not otherwise described by the terms and
provisions of the Plan that is granted pursuant to Article XII.

 

2.36                                 “Participant”
means any eligible person as set forth in Article III to whom an Award is
granted.

 

2.37                                 “Performance-Based
Compensation” means compensation under an Award that is intended
to satisfy the requirements of section 162(m) of the Code for
deductibility of remuneration paid to Covered Employees.

 

2.38                                 “Performance Goals” means one or more
of the criteria described in Section 9.2 on which the
performance goals applicable to an Award are based.

 

2.39                                 “Performance Stock Award” means an
Award designated as a performance stock award granted to a Holder pursuant to Article IX.

 

2.40                                 “Performance Unit Award” means an
Award designated as a performance unit award granted to a Holder pursuant to Article IX.

 

2.41                                 “Period of Restriction”
means the period during which Restricted Stock is subject to a substantial risk
of forfeiture (based on the passage of time, the achievement of performance
goals, or upon the occurrence of other events as determined by the Committee,
in its discretion), as provided in Article VII.

 

2.42                                 “Permissible under Section 409A”
means with respect to a particular action (such as, the grant, payment,
vesting, settlement or deferral of an amount or award under the Plan) that such
action shall not subject the compensation at issue to be subject to the
additional tax or interest applicable under Section 409A.

 

2.43                                 “Plan” means the Idearc Inc. 2009
Long-Term Incentive Plan, as set forth in this document as it may be amended
from time to time.

 

5

 

2.44                                 “Restricted Stock” means shares of
restricted Stock issued or granted under the Plan pursuant to Article VII.

 

2.45                                 “Restricted Stock Award” means an
authorization by the Committee to issue or transfer Restricted Stock to a
Holder.

 

2.46                                 “RSU” means a restricted stock unit
credited to a Holder’s ledger account maintained by the Company pursuant to Article VIII.

 

2.47                                 “RSU Award” means an Award granted
pursuant to Article VIII.

 

2.48                                 “SAR” means a stock appreciation right granted
under the Plan pursuant to Article VI.

 

2.49                                 “Section 409A” means section 409A of the Code and
Department of Treasury rules and regulations issued thereunder.

 

2.50                                 “Separation from Service”
means the termination of the Award recipient’s employment or service
relationship with the Company and all Affiliates as determined under Section 409A.

 

2.51                                 “Stock” means the common stock of the
Company, $0.01 par value per share (or such other par value as may be
designated by act of the Company’s stockholders).

 

2.52                                 “Substantial
Risk of Forfeiture”  shall have the meaning ascribed to that term in Section 409A.

 

2.53                                 “Tandem SAR”
means an SAR that is granted in connection with a related Option pursuant to Article VI
herein, the exercise of which shall require forfeiture of the right to purchase
a share of Stock under the related Option (and when a share of Stock is
purchased under the Option, the Tandem SAR shall similarly be canceled).

 

2.54                                 “Ten Percent Stockholder”  means an individual, who, at the time the applicable Option
is granted, owns stock possessing more than ten percent (10%) of the total
combined voting power of all classes of stock of the Company or any Affiliate.
An individual shall be considered as owning the stock owned, directly or
indirectly, by or for his brothers and sisters (whether by the whole or half
blood), spouse, ancestors, and lineal descendants; and stock owned, directly or
indirectly, by or for a corporation, partnership, estate, or trust, shall be
considered as being owned proportionately by or for its stockholders, partners,
or beneficiaries.

 

2.55                                 “Third Party Service
Provider”  means any
consultant, agent, representative, advisor, or independent contractor who
renders services to the Company or an Affiliate that (a) are not in
connection with the offer and sale of the Company’s securities in a capital
raising transaction, and (b) do not directly or indirectly promote or
maintain a market for the Company’s securities.

 

ARTICLE III

 

ELIGIBILITY

 

The persons who are eligible to receive Awards under
the Plan are Employees, Directors and Third Party Service Providers.  The persons who are eligible to receive
Annual Incentive Awards under the Plan are Employees who, by the nature and
scope of their positions, regularly directly make or influence policy decisions
which significantly impact the overall results or success of the Company. Directors
and Third Party Service Providers are only eligible to receive NQSO, SAR or
Full Value Awards.

 

6

 

ARTICLE IV

 

GENERAL PROVISIONS
RELATING TO AWARDS

 

4.1                                       Authority to Grant Awards. 
The Committee may grant Awards to those Employees, Directors and
Third Party Service Providers as the Committee shall from time to time determine,
under the terms and conditions of the Plan. 
Subject only to any applicable limitations set out in the Plan, the
number of shares of Stock or other value to be covered by any Award to be
granted under the Plan shall be as determined by the Committee in its sole
discretion.

 

4.2                                       Dedicated
Shares; Maximum Awards.

 

(a)                                  Number of Shares of Stock
Dedicated under the Plan for Awards.  The aggregate
number of shares of Stock with respect to which Awards may be granted under the
Plan is 1,500,000.

 

(b)                                 Annual Award Limits. Unless and until the Committee
determines that an Award to a Covered Employee shall not be designed to qualify
as Performance-Based Compensation, the following limits (each an “Annual Award Limit” and,
collectively, “Annual Award Limits”) shall
apply to grants of such Awards under the Plan:

 

(i)                                     The maximum number of shares of Stock
with respect to which Options may be granted to a Participant during a Fiscal
Year is 750,000, plus the amount of the Participant’s unused applicable Annual Award
Limit for Options (if any) as of the close of the previous Plan Year.

 

(ii)                                  The maximum number of shares of Stock
with respect to which SARs may be granted to a Participant during a Fiscal Year
is 750,000, plus
the amount of the Participant’s unused applicable Annual Award Limit for SARs
(if any) as of the close of the previous Plan Year.

 

(iii)                               The maximum number of shares of Stock
with respect to which Full Value Awards may be granted to a Participant during
a Fiscal Year is 375,000, plus the amount of the Participant’s unused
applicable Annual Award Limit for Full Value Awards (if any) as of the close of
the previous Plan Year.

 

(iv)                              The maximum
number of shares of Stock with respect to which Performance Stock Awards may be
granted to an Employee during a Fiscal Year is 375,000.

 

(v)                                 The maximum
number of shares of Stock with respect to which Performance Unit Awards payable
in Stock may be granted to an Employee during a Fiscal Year is 375,000.

 

(vi)                              The maximum
value of cash with respect to which Performance Unit Awards payable in cash may
be granted to an Employee during a Fiscal Year, determined as of the dates of
Grants of the Performance Unit Awards, is $7,500,000.

 

(vii)                           The maximum
amount that may be paid to an Employee under Annual Incentive Award(s) granted
to an Employee during a Fiscal Year is $3,000,000.

 

(c)                                  Share Usage. 
Each of the foregoing numerical limits stated in this Section 4.2
shall be subject to adjustment in accordance with the provisions of Section 4.5.  The number of shares of Stock stated in this Section 4.2
shall also be increased by such number of shares of Stock as become subject to 

 

7

 

substitute Awards granted pursuant to Article XIV;
provided, however, that such increase
shall be conditioned upon the approval of the stockholders of the Company to
the extent stockholder approval is required by law or applicable stock exchange
rules.  Unless otherwise determined by
the Committee, if shares of Stock are withheld from payment of an Award to
satisfy tax obligations with respect to the Award, such shares of Stock will
not count against the aggregate number of shares of Stock with respect to which
Awards may be granted under the Plan and may again be subject to an Award
granted under the Plan.  Unless otherwise
determined by the Committee, if shares of Stock are tendered in payment of an
Option Price of an Option, such shares of Stock will be added to the aggregate
number of shares of Stock with respect to which Awards may be granted under the
Plan and may again be subject to an Award granted under the Plan.  To the extent that any outstanding Award is
forfeited or cancelled for any reason or is settled in cash in lieu of shares
of Stock, the shares of Stock allocable to such portion of the Award may again
be subject to an Award granted under the Plan. 
Unless otherwise determined by the Committee, when a SAR is settled in
shares of Stock, the number of shares of Stock used to settle the SAR upon
exercise will be counted against the aggregate number of shares of Stock with
respect to which Awards may be granted under the Plan as one share for every
share used to settle the SAR upon exercise, and any remaining shares of Stock
subject to the SAR that are settled in cash, if any, will not be counted
against the aggregate number of shares of Stock with respect to which Awards
may be granted under the Plan and may again be subject to an Award granted
under the Plan.  The maximum number of
shares of Stock available for issuance under the Plan shall not be reduced to
reflect any dividends or Dividend Equivalents that are reinvested into additional
shares of Stock or credited as additional Restricted Stock, Restricted Stock
Units, Performance Shares, or other Stock-Based Awards.

 

4.3                                       Non-Transferability.  Except
as specified in the applicable Award Agreements or in domestic relations court
orders, an Award shall not be transferable by the Holder other than by will or
under the laws of descent and distribution, and shall be exercisable, during
the Holder’s lifetime, only by him or her. 
Any attempted assignment of an Award in violation of this Section shall
be null and void.  In the discretion of
the Committee, any attempt to transfer an Award other than under the terms of
the Plan and the applicable Award Agreement may terminate the Award.

 

4.4                                       Requirements
of Law.  The Company
shall not be required to sell or issue any shares of Stock under any Award if
issuing those shares of Stock would constitute or result in a violation by the
Holder or the Company of any provision of any law, statute or regulation of any
governmental authority.  Specifically, in
connection with any applicable statute or regulation relating to the
registration of securities, upon exercise of any Option or pursuant to any
other Award, the Company shall not be required to issue any shares of Stock
unless the Committee has received evidence satisfactory to it to the effect
that the Holder will not transfer the shares of Stock except in accordance with
applicable law, including receipt of an opinion of counsel satisfactory to the
Company to the effect that any proposed transfer complies with applicable law.  The determination by the Committee on this
matter shall be final, binding and conclusive. The Company may, but shall in no
event be obligated to, register any shares of Stock covered by the Plan
pursuant to applicable securities laws of any country or any political subdivision.  In the event the shares of Stock issuable on
exercise of an Option or pursuant to any other Award are not registered, the
Company may imprint on the certificate evidencing the shares of Stock any
legend that counsel for the Company considers necessary or advisable to comply
with applicable law, or, should the shares of Stock be represented by book or
electronic entry rather than a certificate, the Company may take such steps to
restrict transfer of the shares of Stock as counsel for the Company considers
necessary or advisable to comply with applicable law.  The Company shall not be obligated to take
any other affirmative action in order to cause or enable the exercise of an
Option or any other Award, or the issuance of shares of Stock pursuant thereto,
to comply with any law or regulation of any governmental authority.

 

8

 

4.5                                       Changes
in the Company’s Capital Structure.

 

(a)                                  The existence
of outstanding Awards shall not affect in any way the right or power of the
Company or its stockholders to make or authorize any or all adjustments,
recapitalizations, reorganizations or other changes in the Company’s capital
structure or its business, any merger or consolidation of the Company, any
issue of bonds, debentures, preferred or prior preference shares ahead of or
affecting the Stock or Stock rights, the dissolution or liquidation of the
Company, any sale or transfer of all or any part of its assets or business or
any other corporate act or proceeding, whether of a similar character or
otherwise.

 

(b)                                 If the Company
shall effect a subdivision or consolidation of Stock or other capital
readjustment, the payment of a Stock dividend, or other increase or reduction
of the number of shares of Stock outstanding, without receiving compensation
therefor in money, services or property, then (1) the number, class or
series and per share price of Stock subject to outstanding Options or other
Awards under the Plan shall be appropriately adjusted in such a manner as to entitle
a Holder to receive upon exercise of an Option or other Award, for the same
aggregate cash consideration, the equivalent total number and class or series
of Stock the Holder would have received had the Holder exercised his or her
Option or other Award in full immediately prior to the event requiring the
adjustment, and (2) the number and class or series of Stock then reserved
to be issued under the Plan shall be adjusted by substituting for the total
number and class or series of Stock then reserved, that number and class or
series of Stock that would have been received by the owner of an equal number
of outstanding shares of Stock of each class or series of Stock as the result
of the event requiring the adjustment.

 

(c)                                  If while
unexercised Options or other Awards remain outstanding under the Plan (1) the
Company shall not be the surviving entity in any merger, consolidation or other
reorganization (or survives only as a subsidiary of an entity other than an
entity that was wholly-owned by the Company immediately prior to such merger,
consolidation or other reorganization), (2) the Company sells, leases or
exchanges or agrees to sell, lease or exchange all or substantially all of its
assets to any other person or entity (other than an entity wholly-owned by the
Company), (3) the Company is to be dissolved or (4) the Company is a
party to any other corporate transaction (as defined under section 424(a) of
the Code and applicable Department of Treasury regulations) that is not
described in clauses (1), (2) or (3) of this sentence (each such
event is referred to herein as a “Corporate Change”),
then, except as otherwise provided in an Award Agreement or another agreement
between the Holder and the Company (provided that such exceptions shall not
apply in the case of a reincorporation merger), or as a result of the Committee’s
effectuation of one or more of the alternatives described below, there shall be
no acceleration of the time at which any Award then outstanding may be
exercised, and no later than ten days after the approval by the stockholders of
the Company of such Corporate Change, the Committee, acting in its sole and
absolute discretion without the consent or approval of any Holder, shall act to
effect one or more of the following alternatives, which may vary among
individual Holders and which may vary among Awards held by any individual
Holder (provided that, with respect to a reincorporation merger in which
Holders of the Company’s ordinary shares will receive one ordinary share of the
successor corporation for each ordinary share of the Company, none of such
alternatives shall apply and, without Committee action, each Award shall
automatically convert into a similar award of the successor corporation
exercisable for the same number of ordinary shares of the successor as the
Award was exercisable for ordinary shares of Stock of the Company):

 

(1)                                  accelerate the
time at which some or all of the Awards then outstanding may be exercised so
that such Awards may be exercised in full for a limited period of time on or
before a specified date (before or after such Corporate Change) fixed by the
Committee, after which specified date all such Awards that remain unexercised
and all rights of Holders thereunder shall terminate;

 

9

 

(2)                                  require the
mandatory surrender to the Company by all or selected Holders of some or all of
the then outstanding Awards held by such Holders (irrespective of whether such
Awards are then exercisable under the provisions of the Plan or the applicable
Award Agreement evidencing such Award) as of a date, before or after such
Corporate Change, specified by the Committee, in which event the Committee
shall thereupon cancel such Award and the Company shall pay to each such Holder
an amount of cash per share equal to the excess, if any, of the per share price
offered to stockholders of the Company in connection with such Corporate Change
over the exercise prices under such Award for such shares;

 

(3)                                  with respect to
all or selected Holders, have some or all of their then outstanding Awards
(whether vested or unvested) assumed or have a new award of a similar nature
substituted for some or all of their then outstanding Awards under the Plan
(whether vested or unvested) by an entity which is a party to the transaction
resulting in such Corporate Change and which is then employing such Holder or
which is affiliated or associated with such Holder in the same or a
substantially similar manner as the Company prior to the Corporate Change, or a
parent or subsidiary of such entity, provided that (A) such assumption or
substitution is on a basis where the excess of the aggregate fair market value
of the Stock subject to the Award immediately after the assumption or
substitution over the aggregate exercise price of such Stock is equal to the
excess of the aggregate fair market value of all Stock subject to the Award
immediately before such assumption or substitution over the aggregate exercise
price of such Stock, and (B) the assumed rights under such existing Award
or the substituted rights under such new Award, as the case may be, will have
the same terms and conditions as the rights under the existing Award assumed or
substituted for, as the case may be;

 

(4)                                  provide that
the number and class or series of Stock covered by an Award (whether vested or
unvested) theretofore granted shall be adjusted so that such Award when
exercised shall thereafter cover the number and class or series of Stock or
other securities or property (including, without limitation, cash) to which the
Holder would have been entitled pursuant to the terms of the agreement or plan
relating to such Corporate Change if, immediately prior to such Corporate
Change, the Holder had been the holder of record of the number of shares of
Stock then covered by such Award; or

 

(5)                                  make such
adjustments to Awards then outstanding as the Committee deems appropriate to
reflect such Corporate Change (provided, however, that the Committee may
determine in its sole and absolute discretion that no such adjustment is
necessary to reflect such Corporate Change).

 

Any adjustment effected by the Committee under Section 4.5 shall
be designed to provide the Holder with the intrinsic value of his or her Award,
as determined prior to the Corporate Change, or, if applicable, equalize the
Fair Market Value of the Award before and after the Corporate Change.

 

In effecting one or more of the alternatives
set out in paragraphs (3), (4) or (5) immediately above, and
except as otherwise may be provided in an Award Agreement, the Committee, in
its sole and absolute discretion and without the consent or approval of any
Holder, may accelerate the time at which some or all Awards then outstanding
may be exercised.

 

(d)                                 In the event of
changes in the outstanding Stock by reason of 
recapitalizations, reorganizations, mergers, consolidations,
combinations, exchanges or other relevant changes in capitalization occurring
after the date of the grant of any Award and not otherwise provided for by this

 

10

 

Section 4.5, any
outstanding Award and any Award Agreement evidencing such Award shall be
subject to adjustment by the Committee in its sole and absolute discretion as
to the number and price of Stock or other consideration subject to such Award.  In the event of any such change in the
outstanding Stock, the aggregate number of shares of Stock available under the
Plan may be appropriately adjusted by the Committee, whose determination shall
be conclusive.

 

(e)           After a merger of one or
more corporations into the Company or after a consolidation of the Company and
one or more corporations in which the Company shall be the surviving
corporation, each Holder shall be entitled to have his Restricted Stock
appropriately adjusted based on the manner in which the shares of Stock were
adjusted under the terms of the agreement of merger or consolidation.

 

(f)            The issuance by the Company
of stock of any class or series, or securities convertible into, or
exchangeable for, stock of any class or series, for cash or property, or for
labor or services either upon direct sale or upon the exercise of rights or
warrants to subscribe for them, or upon conversion or exchange of stock or
obligations of the Company convertible into, or exchangeable for, stock or
other securities, shall not affect, and no adjustment by reason of such
issuance shall be made with respect to, the number, class or series, or price
of shares of Stock then subject to outstanding Options or other Awards.

 

4.6           Election
Under Section 83(b) of the Code. 
Unless
otherwise permitted or required under the terms of an Award Agreement, no
Holder shall exercise the election permitted under section 83(b) of
the Code with respect to any Award without the written approval of the Board or
the Committee.

 

4.7           Forfeiture
for Cause. 
Notwithstanding any other provision of the Plan or an Award Agreement,
if the Committee finds by a majority vote that a Holder, before or after his
Separation from Service (a) committed fraud, embezzlement, theft, felony
or an act of dishonesty in the course of his employment by the Company or an
Affiliate which conduct damaged the Company or an Affiliate or (b) disclosed
trade secrets of the Company or an Affiliate, then as of the date the Committee
makes its finding, any Awards awarded to the Holder that have not been
exercised by the Holder (including all Awards that have not yet vested) will be
forfeited to the Company.  The findings
and decision of the Committee or the Board, if applicable, with respect to such
matter, including those regarding the acts of the Holder and the damage done to
the Company, will be final for all purposes. 
No decision of the Committee, however, will affect the finality of the
discharge of the individual by the Company or an Affiliate.

 

4.8           Forfeiture Events.  The Committee may specify in an Award
Agreement that the Holder’s rights, payments, and benefits with respect to an
Award shall be subject to reduction, cancellation, forfeiture, or recoupment
upon the occurrence of certain specified events, in addition to any otherwise
applicable vesting or performance conditions of an Award.  Such events may include, but shall not be
limited to, Separation from Service for cause, termination of the Holder’s
provision of services to the Company or its Affiliates, violation of material
policies of the Company and its Affiliates, breach of noncompetition,
confidentiality, or other restrictive covenants that may apply to the Holder,
or other conduct by the Holder that is detrimental to the business or
reputation of the Company and its Affiliates.

 

4.9           Award Agreements.  Each Award shall be embodied in a written or
electronic agreement that shall be subject to the terms and conditions of the
Plan.  The Award Agreement shall be
signed by an executive officer of the Company, other than the Holder, on behalf
of the Company, and may be signed by the Holder to the extent required by the
Committee.  The Award Agreement may
contain any other provisions that the Committee in its discretion shall deem advisable
which are not inconsistent with the terms and provisions of the Plan.

 

Each Award granted under the Plan shall be evidenced
by an Award Agreement that contains, as applicable, any vesting and termination
provisions, grant price, the term of the Award, number of shares of Stock 

 

11

 

to which the Award
pertains, exercise restrictions, transferability restrictions and such other
provisions as the Committee shall determine that are not inconsistent with the
terms and provisions of the Plan.  Each
Award of Options shall also specify whether the Option is intended to be an ISO
or a NQSO.

 

4.10         Amendments of Award Agreements.  The terms of any outstanding Award under
the Plan may be amended from time to time by the Committee in its discretion in
any manner that it deems appropriate and that is consistent with the terms of
the Plan.  However, no such amendment
shall adversely affect in a material manner any right of a Holder without his
or her written consent with respect to a previously granted Award.  Except as specified in Section 4.5(b),
the Committee may not directly or indirectly lower the exercise price of a
previously granted Option or the grant price of a previously granted SAR.

 

4.11         Rights
as Stockholder.  A Holder shall
not have any rights as a stockholder with respect to Stock covered by an
Option, a SAR, an RSU, a Performance Stock Unit, or an Other Stock-Based Award
until the date, if any, such Stock is issued by the Company; and, except as
otherwise provided in Section 4.5, no adjustment for dividends, or
otherwise, shall be made if the record date therefor is prior to the date of
issuance of such Stock.

 

4.12         Issuance
of Shares of Stock.  Shares of
Stock, when issued, may be represented by a certificate or by book or
electronic entry.

 

4.13         Restrictions on Stock Received.  The Committee
may impose such conditions and/or restrictions on any shares of Stock issued
pursuant to an Award as it may deem advisable or desirable.  These restrictions may include, but shall not
be limited to, a requirement that the Holder hold the shares of Stock for a
specified period of time.

 

4.14         Compliance With Section 409A.  Awards shall
be designed and operated in such a manner that they are either exempt from the
application of, or comply with, the requirements of Section 409A.  The Plan and each Award Agreement under the
Plan is intended to meet the requirements of Section 409A shall be
construed and interpreted in accordance with such intent.  To the extent that an Award or payment, or
the settlement or deferral thereof, is subject to Section 409A the Award
shall be granted, paid, settled or deferred in a manner that will meet the
requirements of Section 409A of the Code, including regulations or other
guidance issued with respect thereto, such that the grant, payment, settlement
or deferral shall not be subject to the additional tax or interest applicable
under Section 409A.  If pursuant to
the provisions of Section 409A any distribution or payment is required to
be delayed as a result of a Participant being deemed to be a “specified
employee” within the meaning of that term under section 409A(a)(2)(B) of
the Code, then any such distributions or payments under the Plan shall not be
made or provided prior to the earlier of (A) the expiration of the six-month
period measured from the date of the Participant’s Separation from Service or (B) the
date of the Participant’s death.  The
Company shall use commercially reasonable efforts to implement the provisions
of this Section 4.14 in good faith; provided that neither the Company, the
Committee nor any of the Company’s employees, directors or representatives
shall have any liability to Participants with respect to this Section 4.14.

 

4.15         Date of Grant.  The date on which an option or
SAR is granted shall be the date the Company completes the corporate action
constituting an offer of stock for sale to a Holder under the terms and
conditions of the Option or SAR; provided that
such corporate action shall not be considered complete until the date on which
the maximum number of shares that
can be purchased under the Option and the minimum Option price are fixed or
determinable.  If the corporate action
contemplates an immediate offer of stock for sale to a class of individuals, then
the date of the granting of an Option is the time or date of that corporate
action, if the offer is to be made immediately. 
If the corporate action contemplates a particular date on which the
offer is to be made, then the date of grant is the contemplated date of the
offer.

 

4.16         Impact of Separation from Service. The Committee shall
determine the extent to which a Holder’s rights with respect to Awards shall be
affected by the Holder’s Separation from Service.  Such 

 

12

 

provisions
shall be determined in the sole discretion of the Committee and need not be
uniform among all Awards issued pursuant to the Plan.

 

4.17         Dividend Equivalents.  Any eligible
person selected by the Committee may be granted Dividend Equivalents based on
the dividends declared on shares of Stock that are subject to any Award, to be
credited as of dividend payment dates, during the period between the date the
Award is granted and the date the Award is exercised, vests or expires, as
determined by the Committee. Such Dividend Equivalents shall be converted to
cash or additional shares by such formula and at such time and subject to such
limitations as may be determined by the Committee.

 

ARTICLE V

 

OPTIONS

 

5.1           Authority to Grant Options.  Subject to the terms and provisions of the Plan, the
Committee, at any time, and from time to time, may grant Options under the Plan
to eligible persons in such number and upon such terms as the Committee shall
determine;  provided that
ISOs may be granted only to eligible Employees of the Company or of any parent
or subsidiary corporation (as permitted by section 422 of the Code and the
regulations thereunder).

 

5.2           Option
Price.  The price at which shares of
Stock may be purchased under an Option (the “Option
Price”) shall not be less than one hundred percent (100%) of the
Fair Market Value of the shares of Stock on the date the Option is granted; provided, however,
if the Option is an ISO granted to a Ten Percent Stockholder, the Option Price
must not be less than one hundred ten percent (110%) of the Fair Market Value
of the shares of stock on the date of grant.  Subject to the limitations set forth in the
preceding sentences of this Section 5.2, the Committee shall determine the
Option Price for each grant of an Option under the Plan.

 

5.3           Duration of Option.  An Option shall not be exercisable after the earlier
of (i) the general term of the Option specified in the applicable Award
Agreement (which shall not exceed ten years, or, in the case of a Ten Percent
Stockholder, no ISO shall be exercisable later than the fifth (5th) anniversary of the date of its grant) or (ii) the
period of time specified in the applicable Award Agreement that follows the
Holder’s Separation from Service or severance of affiliation relationship with
the Company.

 

5.4           Amount Exercisable.  Each Option may be exercised at the time, in the
manner and subject to the conditions the Committee specifies in the Award
Agreement in its sole discretion.

 

5.5           Exercise
of Option.

 

(a)           General Method of Exercise. Subject to the terms and provisions of
the Plan and the applicable Award Agreement, Options may be exercised in whole
or in part from time to time by the delivery of written notice in the manner
designated by the Committee stating (1) that the Holder wishes to exercise
such Option on the date such notice is so delivered, (2) the number of
shares of Stock with respect to which the Option is to be exercised and (3) the
address to which a stock certificate, if any, representing such shares of Stock
should be mailed.  Except in the case of
exercise by a third party broker as provided below, in order for the notice to
be effective the notice must be accompanied by payment of the Option Price by
any combination of the following: (a) cash, certified check, bank draft or
postal or express money order for an amount equal to the Option Price under the
Option, (b) an election to make a cashless exercise through a registered
broker-dealer (if approved in advance by the Committee or an executive officer
of the Company) or (c) any other form of payment (including net settlement
in shares of Stock) which is acceptable to the Committee.

 

13

 

(b)           Exercise Through Third-Party Broker. 
The Committee may permit a Holder to elect to pay the Option Price and
any applicable tax withholding resulting from such exercise by authorizing a
third-party broker to sell all or a portion of the shares of Stock acquired
upon exercise of the Option and remit to the Company a sufficient portion of
the sale proceeds to pay the Option Price and any applicable tax withholding
resulting from such exercise.

 

5.6           Transferability—Incentive Stock
Options.
Notwithstanding anything in the Plan or an Award Agreement to the contrary, no
ISO granted under the Plan may be sold, transferred, pledged, assigned, or
otherwise alienated or hypothecated, other than by will or by the laws of
descent and distribution, and all ISOs granted to an Employee under this Article V
shall be exercisable during his or her lifetime only by such Employee.

 

5.7           Notification
of Disqualifying Disposition. If any Employee shall make any
disposition of shares of Stock issued pursuant to the exercise of an ISO under
the circumstances described in section 421(b) of the Code (relating
to certain disqualifying dispositions), such Employee shall notify the Company
of such disposition within ten (10) days thereof.

 

5.8           $100,000 Limitation on ISOs.  To the extent
that the aggregate Fair Market Value of shares of Stock with respect to which
ISOs first become exercisable by a Holder in any calendar year exceeds
$100,000, taking into account both shares of Stock subject to ISOs under the
Plan and Stock subject to ISOs under all other plans of the Company, such
Options shall be treated as NQSOs.  For
this purpose, the “Fair Market Value” of the shares of Stock subject to Options
shall be determined as of the date the Options were awarded.  In reducing the number of Options treated as
ISOs to meet the $100,000 limit, the most recently granted Options shall be
reduced first.  To the extent a reduction
of simultaneously granted Options is necessary to meet the $100,000 limit, the
Committee may, in the manner and to the extent permitted by law, designate
which shares of Stock are to be treated as shares acquired pursuant to the
exercise of an ISO.

 

ARTICLE VI

 

STOCK
APPRECIATION RIGHTS

 

6.1           Authority to Grant SAR Awards.  Subject to the terms and provisions of
the Plan, the Committee, at any time, and from time to time, may grant SARs
under the Plan to eligible persons in such number and upon such terms as the
Committee shall determine.  Subject to
the terms and conditions of the Plan, the Committee shall have complete
discretion in determining the number of SARs granted to each Holder and,
consistent with the provisions of the Plan, in determining the terms and
conditions pertaining to such SARs.  The
Committee may grant Freestanding SARs, Tandem SARs, or any combination of these
forms of SARs.

 

6.2           General
Terms.  Subject to the terms and
conditions of the Plan, a SAR granted under the Plan shall confer on the
recipient a right to receive, upon exercise thereof, an amount equal to the
excess of (a) the Fair Market Value of one share of the Stock on the date
of exercise over (b) the grant price of the SAR, which shall not be less
than one hundred percent (100%) of the Fair Market Value of one share of the
Stock on the date of grant of the SAR.  The grant price of Tandem SARs shall be
equal to the Option Price of the related Option.

 

6.3           Term of SAR.  The term of a SAR granted under the Plan
shall be determined by the Committee, in its sole discretion; provided that no
SAR shall be exercisable on or after the tenth anniversary date of its
grant.  Notwithstanding any other
provision of this Plan to the contrary, with respect to a Tandem SAR granted in
connection with an ISO: (a) the Tandem SAR will expire no later than the
expiration of the underlying ISO; (b) the value of the payout with respect
to the Tandem SAR may be for no more than one hundred percent (100%) of
the excess of the Fair Market Value of the shares of Stock subject to the
underlying ISO at the time the Tandem 

 

14

 

SAR is exercised over the
Option Price of the underlying ISO; and (c) the Tandem SAR may be
exercised only when the Fair Market Value of the shares of Stock subject to the
ISO exceeds the Option Price of the ISO.

 

6.4           Exercise
of SAR.  A SAR may be exercised upon
whatever terms and conditions the Committee, in its sole discretion, imposes; provided, however, that Tandem SARs may be exercised for all or part of the
shares of stock subject to the related Option upon the surrender of the right
to exercise the equivalent portion of the related Option and may be exercised
only with respect to the shares of Stock for which its related Option is then
exercisable.

 

6.5           Payment of SAR Amount.  Upon the
exercise of a SAR, a Holder shall be entitled to receive payment from the
Company in an amount determined by multiplying the excess of the Fair Market
Value of a share of Stock on the date of exercise over the grant price of the
SAR by the number of
shares of Stock with respect to which the SAR is exercised.  At the discretion of the
Committee, the payment upon SAR exercise may be in cash, in Stock of equivalent
value, in some combination thereof or in any other manner approved by the
Committee in its sole discretion.  The
Committee’s determination regarding the form of SAR payout shall be set forth
in the Award Agreement pertaining to the grant of the SAR.

 

ARTICLE VII

 

RESTRICTED STOCK AWARDS

 

7.1           Restricted Stock Awards.  The
Committee may make Awards of Restricted Stock to eligible persons selected by
it.  The amount of, the vesting and the
transferability restrictions applicable to any Restricted Stock Award shall be determined
by the Committee in its sole discretion. 
If the Committee imposes vesting or transferability restrictions on a
Holder’s rights with respect to Restricted Stock, the Committee may issue such
instructions to the Company’s share transfer agent in connection therewith as
it deems appropriate.  The Committee may
also cause the certificate for shares of Stock issued pursuant to a Restricted
Stock Award to be imprinted with any legend which counsel for the Company
considers advisable with respect to the restrictions or, should the shares of
Stock be represented by book or electronic entry rather than a certificate, the
Company may take such steps to restrict transfer of the shares of Stock as
counsel for the Company considers necessary or advisable to comply with
applicable law.

 

7.2           Holder’s
Rights as Stockholder. 
Subject to the terms and conditions of the Plan, each recipient of a
Restricted Stock Award shall have all the rights of a stockholder with respect
to the shares of Restricted Stock included in the Restricted Stock Award during
the Period of Restriction established for the Restricted Stock Award.  Dividends paid with respect to Restricted
Stock in cash or property other than shares of Stock or rights to acquire
shares of Stock shall be paid to the recipient of the Restricted Stock Award
currently.  Dividends paid in shares of
Stock or rights to acquire shares of Stock shall be added to and become a part
of the Restricted Stock.  During the
Period of Restriction, certificates representing the Restricted Stock shall be
registered in the Holder’s name and bear a restrictive legend to the effect
that ownership of such Restricted Stock, and the enjoyment of all rights
appurtenant thereto, are subject to the restrictions, terms, and conditions
provided in the Plan and the applicable Award Agreement.  Such certificates shall be deposited by the
recipient with the Secretary of the Company or such other officer of the
Company as may be designated by the Committee, together with all stock powers
or other instruments of assignment, each endorsed in blank, which will permit
transfer to the Company of all or any portion of the Restricted Stock which
shall be forfeited in accordance with the Plan and the applicable Award
Agreement.

 

15

 

ARTICLE VIII

 

RESTRICTED STOCK UNIT AWARDS

 

8.1           Authority
to Grant RSU Awards.  Subject to
the terms and provisions of the Plan, the Committee, at any time, and from time
to time, may grant RSU Awards under the Plan to eligible persons in such
amounts and upon such terms as the Committee shall determine.  The amount of, the vesting and the
transferability restrictions applicable to any RSU Award shall be determined by
the Committee in its sole discretion. 
The Committee shall maintain a bookkeeping ledger account which reflects
the number of RSUs credited under the Plan for the benefit of a Holder.

 

8.2           RSU
Award.  An RSU Award shall be similar
in nature to a Restricted Stock Award except that no shares of Stock are
actually transferred to the Holder until a later date specified in the
applicable Award Agreement.  Each RSU
shall have a value equal to the Fair Market Value of a share of Stock.

 

8.3           Form of
Payment Under RSU Award. 
Payment under an RSU Award shall be made in either cash or shares of
Stock as specified in the applicable Award Agreement.

 

8.4           Time of
Payment Under RSU Award.  A
Holder’s payment under an RSU Award shall be made at such time as is specified
in the applicable Award Agreement.  The
Award Agreement shall specify that the payment will be made (1) by a date
that is no later than the date that is two and one-half (2 1/2) months after
the end of the Fiscal Year in which the RSU Award payment is no longer subject
to a Substantial Risk of Forfeiture or (2) at a time that is Permissible
under Section 409A.

 

ARTICLE IX

 

PERFORMANCE STOCK AWARDS AND PERFORMANCE UNIT AWARDS

 

9.1           Authority
to Grant Performance Stock Awards and Performance Unit Awards.  Subject to the terms and provisions of the
Plan, the Committee, at any time, and from time to time, may grant Performance
Stock Awards and Performance Unit Awards under the Plan to eligible persons in
such amounts and upon such terms as the Committee shall determine.  The amount of, the vesting and the
transferability restrictions applicable to any Performance Stock Award or
Performance Unit Award shall be based upon the attainment of such Performance
Goals as the Committee may determine.  If
the Committee imposes vesting or transferability restrictions on a Holder’s
rights with respect to Performance Stock or Performance Unit Awards, the
Committee may issue such instructions to the Company’s share transfer agent in
connection therewith as it deems appropriate. 
The Committee may also cause the certificate for shares of Stock issued
pursuant to a Performance Stock or Performance Unit Award to be imprinted with
any legend which counsel for the Company considers advisable with respect to
the restrictions or, should the shares of Stock be represented by book or
electronic entry rather than a certificate, the Company may take such steps to
restrict transfer of the shares of Stock as counsel for the Company considers
necessary or advisable to comply with applicable law.

 

9.2           Performance Goals.  Unless and until the Committee proposes for
shareholder vote and the shareholders approve a change in the general
Performance Goals set forth in this Article IX, the Performance Goals upon
which the payment or vesting of an Award to a Covered Employee (or a
Participant who may become a Covered Employee) that is intended to qualify as
Performance-Based Compensation shall be limited to one or more of the following
Performance Goals, which may be based on one or more business criteria
that apply to the Holder, one or more business units of the Company, or the
Company as a whole:  earnings per share; total shareholder
return; increased revenue; revenue ratios (per employee or per customer); net
earnings or net income (before or after taxes, depreciation and amortization);
net sales or revenue growth; net operating profit; return measures (including,
but not limited to, return on assets, capital, invested capital, capital
employed, capital 

 

16

 

compared to cost of
capital, equity, sales or revenue); cash flow (including, but not limited to,
operating cash flow, free cash flow, cash flow return on equity, investment,
capitalization); stock price; market share; shareholder value; net cash flow;
gross profit; operating income before interest, taxes, depreciation and
amortization; earnings before or after interest, taxes, depreciation and
amortization; gross or operating margins; productivity ratios; expense targets;
cost reductions; cost ratios (per employee or per customer); debt measures
(including, but not limited to, debt multiples); margins; operating efficiency;
customer satisfaction; working capital targets and change in working capital;
economic value added or EVA (net operating profit after tax minus the sum of
capital multiplied by the cost of capital); market value added.  Goals may also be based on performance
relative to a peer group of companies.

 

Unless otherwise stated, such a Performance Goal need
not be based upon an increase or positive result under a particular business
criterion and could include, for example, maintaining the status quo or
limiting economic losses (measured, in each case, by reference to specific
business criteria).  In interpreting Plan
provisions applicable to Performance Goals and Performance Stock or Performance
Unit Awards, it is intended that the Plan will conform with the standards of
section 162(m) of the Code and Treasury Regulations
§ 1.162-27(e)(2)(i), and the Committee in establishing such goals and
interpreting the Plan shall be guided by such provisions.  Prior to the payment of any compensation
based on the achievement of Performance Goals, the Committee must certify in
writing that applicable Performance Goals and any of the material terms thereof
were, in fact, satisfied.  Subject to the
foregoing provisions, the terms, conditions and limitations applicable to any
Performance Stock or Performance Unit Awards made pursuant to the Plan shall be
determined by the Committee.

 

9.3           Time of Establishment of Performance Goals.  With respect to a Covered Employee, a Performance Goal
for a particular Performance Stock Award or Performance Unit Award must be
established by the Committee prior to the earlier to occur of (a) 90 days
after the commencement of the period of service to which the Performance Goal
relates or (b) the lapse of 25 percent of the period of service, and
in any event while the outcome is substantially uncertain.

 

9.4           Form of Payment Under
Performance Unit Award.  Payment under a Performance
Unit Award shall be made in cash and/or shares of Stock as specified in the
Holder’s Award Agreement.

 

9.5           Time of
Payment Under Performance Unit Award.  A Holder’s payment under a Performance Unit
Award shall be made at such time as is specified in the applicable Award
Agreement.  The Award Agreement shall
specify that the payment will be made (1) by a date that is no later than
the date that is two and one-half (2 1/2) months after the end of the calendar
year in which the Performance Unit Award payment is no longer subject to a
Substantial Risk of Forfeiture or (2) at a time that is Permissible under Section 409A.

 

9.6           Holder’s
Rights as Stockholder With Respect to a Performance Stock Award.  Subject to
the terms and conditions of the Plan, each Holder of a Performance Stock Award
shall have all the rights of a stockholder with respect to the shares of Stock
issued to the Holder pursuant to the Award during any period in which such
issued shares of Stock are subject to forfeiture and restrictions on transfer,
including without limitation, the right to vote such shares of Stock.

 

9.7           Increases Prohibited.  None of the Committee or the Board may
increase the amount of compensation payable under a Performance Stock or
Performance Unit Award.  If the time at
which a Performance Stock or Performance Unit Award will vest or be paid is
accelerated for any reason, the number of shares of Stock subject to, or the
amount payable under, the Performance Stock or Performance Unit Award shall be
reduced (if necessary) pursuant to Department of Treasury Regulation
section 1.162-27(e)(2)(iii) to reasonably reflect the time value of
money.

 

17

 

ARTICLE X

 

DIRECTOR
AWARDS

 

All Awards to Directors shall be determined by the
Board or Committee.

 

ARTICLE XI

 

ANNUAL
INCENTIVE AWARDS

 

11.1         Authority to Grant Annual
Incentive Awards.  Subject to
the terms and provisions of the Plan, the Committee, at any time, and from time
to time, may grant Annual Incentive Awards under the Plan to Employees who, by
the nature and scope of their positions, regularly directly make or influence
policy decisions which significantly impact the overall results or success of
the Company in such amounts and upon such terms as the Committee shall
determine.  Subject to the following provisions
in this Article XI, the amount of any Annual Incentive Awards shall be
based on the attainment of such Performance Goals as the Committee may
determine.

 

11.2         Covered Employees.  The Performance Goals upon which the payment or vesting
of an Annual Incentive Award to a Covered Employee that is intended to qualify
as Performance-Based Compensation must meet the requirements of Sections 9.2,
9.3, and 9.7 as applied to such Annual Incentive Award.  In interpreting Plan
provisions applicable to Performance Goals with respect to Covered Employees,
it is intended that the Plan will conform with the standards of
section 162(m) of the Code and Treasury Regulations
§ 1.162-27(e)(2)(i), and the Committee in establishing such goals and
interpreting the Plan shall be guided by such provisions.  Prior to the payment of any compensation to a
Covered Employee based on the achievement of Performance Goals, the Committee
must certify in writing that applicable Performance Goals and any of the
material terms thereof were, in fact, satisfied.

 

11.3         Form of Payment Under Annual
Incentive Award.  Payment under an Annual Incentive Award shall be made in cash.

 

11.4         Time of Payment Under Annual
Incentive Award.  A Holder’s
payment under an Annual Incentive Award shall be made at such time as is
specified in the applicable Award Agreement. 
The Award Agreement shall specify that the payment will be made (1) by
a date that is no later than the date that is two and one-half (2 1/2) months
after the end of the calendar year in which the Annual Incentive Award payment is
no longer subject to a Substantial Risk of Forfeiture or (2) at a time
that is Permissible under Section 409A.

 

ARTICLE XII

 

OTHER STOCK-BASED AWARDS

 

12.1         Authority
to Grant Other Stock-Based Awards.  The Committee may grant to eligible persons
other types of equity-based or equity-related Awards not otherwise described by
the terms and provisions of the Plan (including the grant or offer for sale of
unrestricted shares of Stock) in such amounts and subject to such terms and
conditions, as the Committee shall determine. Such Awards may involve the
transfer of actual shares of Stock to Holders, or payment in cash or otherwise
of amounts based on the value of shares of Stock and may include, without
limitation, Awards designed to comply with or take advantage of the applicable
local laws of jurisdictions other than the United States.

 

12.2         Value
of Other Stock-Based Award.  Each Other Stock-Based Award shall be
expressed in terms of shares of Stock or units based on shares of Stock, as
determined by the Committee.

 

18

 

12.3         Payment
of Other Stock-Based Award.  Payment, if any, with respect to an Other
Stock-Based Award shall be made in accordance with the terms of the Award, in
cash or shares of Stock as the Committee determines.

 

12.4         Time of Payment of Other
Stock-Based Award.  A Holder’s
payment under an Other Stock-Based Award shall be made at such time as is
specified in the applicable Award Agreement. 
The Award Agreement shall specify that the payment will be made (1) by
a date that is no later than the date that is two and one-half (2 1/2) months
after the end of the calendar year in which the Annual Incentive Award payment
is no longer subject to a Substantial Risk of Forfeiture or (2) at a time
that is Permissible under Section 409A.

 

ARTICLE XIII

 

CASH-BASED
AWARDS

 

13.1         Authority to Grant Cash-Based Awards.  Subject to
the terms and provisions of the Plan, the Committee, at any time, and from time
to time, may grant Cash-Based Awards under the Plan to eligible persons in such
amounts and upon such terms as the Committee shall determine.

 

13.2         Value of Cash-Based Award.  Each
Cash-Based Award shall specify a payment amount or payment range as determined
by the Committee.

 

13.3         Payment of Cash-Based Award.  Payment, if
any, with respect to a Cash-Based Award shall be made in accordance with the
terms of the Award, in cash.

 

13.4         Time of Payment of Cash-Based
Award.  Payment under a Cash-Based Award
shall be made at such time as is specified in the applicable Award
Agreement.  The Award Agreement shall
specify that the payment will be made (1) by a date that is no later than
the date that is two and one-half (2 1/2) months after the end of the calendar
year in which the Annual Incentive Award payment is no longer subject to a
Substantial Risk of Forfeiture or (2) at a time that is Permissible under Section 409A.

 

ARTICLE XIV

 

SUBSTITUTION AWARDS

 

Awards may be granted under
the Plan from time to time in substitution for stock options and other awards
held by employees of other entities who are about to become Employees, or whose
employer is about to become an Affiliate as the result of a merger or
consolidation of the Company with another corporation, or the acquisition by
the Company of substantially all the assets of another corporation, or the
acquisition by the Company of at least fifty percent (50%) of the issued and
outstanding stock of another corporation as the result of which such other
corporation will become a subsidiary of the Company.  The terms and conditions of the substitute
Awards so granted may vary from the terms and conditions set forth in the Plan
to such extent as the Board at the time of grant may deem appropriate to
conform, in whole or in part, to the provisions of the Award in substitution
for which they are granted.

 

ARTICLE XV

 

CHANGE
IN CONTROL OF THE COMPANY

 

15.1         Change in Control of the Company. Upon the occurrence of a Change in Control of the
Company, unless otherwise specifically prohibited under applicable laws or by
the rules and regulations of any 

 

19

 

governing governmental
agencies or national securities exchanges, or unless the Committee shall
determine otherwise in the Award Agreement:

 

(a)           Any and all Options and SARs granted hereunder shall
become immediately vested and exercisable to the extent that their Option Price
or grant price, as adjusted pursuant to Section 4.5 is less than the Fair
Market Value of a share of stock on such date and the Participant shall have
until the earlier of: (i) twelve (12) months following such termination
date, or (ii) the expiration of the Option or SAR term, to exercise any
such Option or SAR;

 

(b)           any Period of Restriction and restrictions imposed on
Restricted Stock or Restricted Stock Units shall lapse;

 

(c)           the target payout opportunities attainable under all
outstanding Awards of performance-based Restricted Stock, performance-based
Restricted Stock Units, Performance Units, and Performance Shares, shall be
deemed to have been fully earned based on targeted performance being attained
as of the effective date of the Change in Control of the Company;

 

(i)            The vesting of all Awards denominated in shares of
Stock shall be accelerated as of the effective date of the Change in Control of
the Company, and shall be paid out to Participants within thirty (30) days
following the effective date of the Change in Control of the Company. The
Committee has the authority to pay all or any portion of the value of the
shares of stock in cash;

 

(ii)           Awards denominated in cash shall be paid to
Participants in cash within thirty (30) days following the effective date of
the Change in Control of the Company; and

 

(d)           unless otherwise specifically provided in a written
agreement entered into between the Participant and the Company, the Committee
shall pay out all Other Stock-Based Awards.

 

(e)           Subject to the acceleration of vesting of outstanding
Options, the Committee, in its discretion, may provide that in the event of a
Change in Control of the Company pursuant to Section 2.8(b) or (c),
no later than ten (10) days after the approval by the shareholders of the
Company of such merger, consolidation, reorganization, sale, lease, or exchange
or assets or dissolution or such election of directors, or in the event of a
Change in Control of the Company pursuant to Section 2.8(a), no later than
thirty (30) days after the occurrence of such Change in Control of the Company,
that (i) Options may be exercised in full only for a limited period of
time on or before a specified date (before or after such Change in Control of
the Company) fixed by the Committee, after which specified date all unexercised
Options and all rights of the Participants thereunder shall terminate, or (ii) require
the mandatory surrender to the Company by selected Participants of some or all
of the outstanding Options held by such Participants as of a date, before or
after such Change in Control of the Company, specified by the Committee, in
which event the Committee shall thereupon cancel such Options and the Company
shall pay to each Participant an amount of cash per share of stock equal to the
excess, if any of the “Change in Control of the
Company Value” of the shares of stock subject to such Option
over the Option Price(s) under such Options for such shares of stock.

 

For the purpose of this Section 15.1(e), “Change in Control of the Company Value”
shall equal the amount determined in clause (i), (ii), or (iii), whichever is
applicable, as follows: (i) the per share price of the Stock offered to
shareholders of the Company in any such merger, consolidation, reorganization,
sale of assets, or dissolution transaction, (ii) the per share price of
the Stock offered to shareholders of the Company in any tender offer or
exchange offer whereby a Change in Control of the Company takes place, or (iii) if
such Change in Control of the Company occurs other than pursuant to a

 

20

 

tender or exchange offer,
the Fair Market Value per share of the shares in which such Options being
surrendered are exercisable, as determined by the Committee as of the date
determined by the Committee to be the date of cancellation and surrender of such
Options. In the event that the consideration offered to shareholders of the
Company in any transaction consists of anything other than cash, the Committee
shall determine the fair cash equivalent of the portion of the consideration
offered which is other than cash.

 

15.2         Delay of Payment due to Section 409A.   Notwithstanding Section 16.1,
if a payment under an Award Agreement is subject to Section 409A and if
the Change of Control definition contained in the Award Agreement does not
comply with the definition of “change of control” for purposes of a
distribution under Section 409A, then any payment of an amount that is
otherwise accelerated under this Article shall be delayed until the
earliest time that such payment would be Permissible under Section 409A.

 

ARTICLE XVI

 

ADMINISTRATION

 

16.1         Awards.  The Plan shall be administered by the
Committee or, in the absence of the Committee, the Plan shall be administered
by the Board.  The members of the
Committee shall serve at the discretion of the Board.  The Committee shall have full and exclusive
power and authority to administer the Plan and to take all actions that the
Plan expressly contemplates or are necessary or appropriate in connection with
the administration of the Plan with respect to Awards granted under the Plan.

 

16.2         Authority of the Committee. 
The Committee shall have full and exclusive power to interpret and apply
the terms and provisions of the Plan and Awards made under the Plan, and to
adopt such rules, regulations and guidelines for implementing the Plan as the
Committee may deem necessary or proper, all of which powers shall be exercised
in the best interests of the Company and in keeping with the objectives of the
Plan.  A majority of the members of the
Committee shall constitute a quorum for the transaction of business relating to
the Plan or Awards made under the Plan, and the vote of a majority of those
members present at any meeting shall decide any question brought before that
meeting.  Any decision or determination
reduced to writing and signed by a majority of the members shall be as
effective as if it had been made by a majority vote at a meeting properly
called and held.  All questions of
interpretation and application of the Plan, or as to Awards granted under the
Plan, shall be subject to the determination, which shall be final and binding,
of a majority of the whole Committee.  No
member of the Committee shall be liable for any act or omission of any other
member of the Committee or for any act or omission on his own part, including
but not limited to the exercise of any power or discretion given to him under
the Plan, except those resulting from his own gross negligence or willful
misconduct.  In carrying out its
authority under the Plan, the Committee shall have full and final authority and
discretion, including but not limited to the following rights, powers and
authorities to (a) determine the persons to whom and the time or times at
which Awards will be made; (b) determine the number and
exercise price of shares of Stock covered in each Award subject to the terms
and provisions of the Plan; (c) determine the terms, provisions and conditions of
each Award, which need not be identical and need not match the default terms
set forth in the Plan; (d) accelerate the
time at which any outstanding Award will vest; (e) prescribe, amend and rescind
rules and regulations relating to administration of the Plan; and (f) make all other
determinations and take all other actions deemed necessary, appropriate or
advisable for the proper administration of the Plan.

 

The Committee may correct any defect or supply any
omission or reconcile any inconsistency in the Plan or in any Award to a Holder
in the manner and to the extent the Committee deems necessary or desirable to
further the Plan’s objectives. Further, the Committee shall make all other
determinations that may be necessary or advisable for the administration of the
Plan.  As permitted by law, exchange
listing requirements and the terms and provisions of the Plan, the Committee
may delegate to one or more of its members or to one or more officers of the
Company, and/or its Affiliates or to one or more agents or advisors such
administrative duties or powers as 

 

21

 

it may deem advisable,
and the Committee or any person to whom it has delegated duties or powers as
aforesaid may employ one or more persons to render advice with respect to any
responsibility the Committee or such person may have under the Plan.  The Committee may, by resolution, authorize
one or more officers of the Company to do one or both of the following on the
same basis as can the Committee: (a) designate Employees, Directors or
Third Party Service Providers to be recipients of Awards; (b) designate
Third Party Service Providers to be recipients of Awards; and (c) determine
the size of any such Awards; provided, however,
(i) the Committee shall not delegate such responsibilities to any such
officer for Awards granted to an Employee that is considered an Insider or for
an Award intended to qualify as Performance-Based Compensation; (ii) the
resolution providing such authorization sets forth the total number of Awards
such officer(s) may grant; and (iii) the officer(s) shall report
periodically to the Committee regarding the nature and scope of the Awards
granted pursuant to the authority delegated. 
The Committee may employ attorneys, consultants, accountants, agents,
and other persons, any of whom may be an Employee, and the Committee, the Company,
and its officers and Board shall be entitled to rely upon the advice, opinions,
or valuations of any such persons.

 

16.3         Decisions
Binding.  All determinations
and decisions made by the Committee or the Board, as the case may be, pursuant
to the provisions of the Plan and all related orders and resolutions of the
Committee or the Board, as the case may be, shall be final, conclusive and
binding on all persons, including the Company, its Affiliates, its
stockholders, Holders and the estates and beneficiaries of Holders.

 

16.4         No Liability.  Under no circumstances shall the Company, its
Affiliates, the Board or the Committee incur liability for any indirect,
incidental, consequential or special damages (including lost profits) of any
form incurred by any person, whether or not foreseeable and regardless of the
form of the act in which such a claim may be brought, with respect to the Plan
or the Company’s, its Affiliates’, the Committee’s or the Board’s roles in
connection with the Plan.

 

ARTICLE XVII

 

AMENDMENT OR TERMINATION OF PLAN

 

17.1         Amendment,
Modification, Suspension, and Termination.  Subject to Section 17.2, the Committee
may, at any time and from time to time, alter, amend, modify, suspend, or
terminate the Plan and any Award Agreement in whole or in part; provided,
however, that, without the prior approval of the Company’s stockholders and
except as provided in Section 4.5, the Committee shall not directly or
indirectly lower the Option Price of a previously granted Option, and no
amendment of the Plan shall be made without stockholder approval if stockholder
approval is required by applicable law or stock exchange rules.

 

17.2         Awards
Previously Granted. 
Notwithstanding any other provision of the Plan to the contrary, no
termination, amendment, suspension, or modification of the Plan or an Award
Agreement shall adversely affect in any material way any Award previously
granted under the Plan, without the written consent of the Holder holding such
Award.

 

ARTICLE XVIII

 

MISCELLANEOUS

 

18.1         Unfunded
Plan/No Establishment of a Trust Fund.  Holders
shall have no right, title, or interest whatsoever in or to any investments
that the Company or any of its Affiliates may make to aid in meeting
obligations under the Plan.  Nothing
contained in the Plan, and no action taken pursuant to its provisions, shall
create or be construed to create a trust of any kind, or a fiduciary
relationship between the Company and any Holder, beneficiary, legal
representative, or any other person.  To
the extent that any person acquires a right to receive payments from the
Company under the Plan, such right shall be no greater than the right of an
unsecured 

 

22

 

general
creditor of the Company.  All payments to
be made hereunder shall be paid from the general funds of the Company and no
special or separate fund shall be established and no segregation of assets
shall be made to assure payment of such amounts, except as expressly set forth
in the Plan.  No property shall be set aside
nor shall a trust fund of any kind be established to secure the rights of any
Holder under the Plan.  The Plan is not
intended to be subject to the Employee Retirement Income Security Act of 1974,
as amended.

 

18.2         No
Employment Obligation.  The
granting of any Award shall not constitute an employment contract, express or
implied, nor impose upon the Company or any Affiliate any obligation to employ
or continue to employ, or utilize the services of, any Holder.  The right of the Company or any Affiliate to
terminate the employment of any person shall not be diminished or affected by
reason of the fact that an Award has been granted to him, and nothing in the
Plan or an Award Agreement shall interfere with or limit in any way the right
of the Company or its Affiliates to terminate any Holder’s employment at any
time or for any reason not prohibited by law.

 

18.3         Tax
Withholding.  The Company or
any Affiliate shall be entitled to deduct from other compensation payable to
each Holder any sums required by federal, state, local or foreign tax law to be
withheld with respect to the vesting or exercise of an Award or lapse of
restrictions on an Award.  In the
alternative, the Company may require the Holder (or other person validly
exercising the Award) to pay such sums for taxes directly to the Company or any
Affiliate in cash or by check within one day after the date of vesting,
exercise or lapse of restrictions. In the discretion of the Committee, and with
the consent of the Holder, the Company may reduce the number of shares of Stock
issued to the Holder upon such Holder’s exercise of an Option to satisfy the
tax withholding obligations of the Company or an Affiliate; provided that the Fair Market Value of the shares of Stock
held back shall not exceed the Company’s or the Affiliate’s Minimum Statutory
Tax Withholding Obligation.

 

The Committee may, in its discretion, permit a Holder
to satisfy any Minimum Statutory Tax Withholding Obligation arising upon the
vesting of an Award by delivering to the Holder a reduced number of shares of
Stock in the manner specified herein.  If
permitted by the Committee and acceptable to the Holder, at the time of vesting
of shares under the Award, the Company shall (a) calculate the amount of
the Company’s or an Affiliate’s Minimum Statutory Tax Withholding Obligation on
the assumption that all such shares of Stock vested under the Award are made
available for delivery, (b) reduce the number of such shares of Stock made
available for delivery so that the Fair Market Value of the shares of Stock
withheld on the vesting date approximates the Company’s or an Affiliate’s
Minimum Statutory Tax Withholding Obligation and (c) in lieu of the
withheld shares of Stock, remit cash to the United States Treasury and/or other
applicable governmental authorities, on behalf of the Holder, in the amount of
the Minimum Statutory Tax Withholding Obligation.  The Company shall withhold only whole shares
of Stock to satisfy its Minimum Statutory Tax Withholding Obligation.  Where the Fair Market Value of the withheld
shares of Stock does not equal the amount of the Minimum Statutory Tax
Withholding Obligation, the Company shall withhold shares of Stock with a Fair
Market Value slightly less than the amount of the Minimum Statutory Tax
Withholding Obligation and the Holder must satisfy the remaining minimum
withholding obligation in some other manner permitted under this Section 18.3.  The withheld shares of Stock not made
available for delivery by the Company shall be retained as treasury shares or
will be cancelled and the Holder’s right, title and interest in such shares of
Stock shall terminate.

 

The Company shall have no obligation upon vesting or
exercise of any Award or lapse of restrictions on an Award until the Company or
an Affiliate has received payment sufficient to cover the Minimum Statutory Tax
Withholding Obligation with respect to that vesting, exercise or lapse of
restrictions.  Neither the Company nor
any Affiliate shall be obligated to advise a Holder of the existence of the tax
or the amount which it will be required to withhold.

 

18.4         Gender
and Number.  If the
context requires, words of one gender when used in the Plan shall include the
other and words used in the singular or plural shall include the other.

 

23

 

18.5         Severability.  In the event any
provision of the Plan shall be held illegal or invalid for any reason, the
illegality or invalidity shall not affect the remaining parts of the Plan, and
the Plan shall be construed and enforced as if the illegal or invalid provision
had not been included.

 

18.6         Headings.  Headings of Articles and Sections are
included for convenience of reference only and do not constitute part of the
Plan and shall not be used in construing the terms and provisions of the Plan.

 

18.7         Other Compensation Plans.  The adoption of the Plan shall not affect any
other option, incentive or other compensation or benefit plans in effect for
the Company or any Affiliate, nor shall the Plan preclude the Company from
establishing any other forms of incentive compensation arrangements for
Employees, Directors or Third Party Service Providers.

 

18.8         Retirement and Welfare
Plans. Neither Awards made under the Plan nor shares of Stock or
cash paid pursuant to such Awards, may be included as “compensation” for
purposes of computing the benefits payable to any Participant under the Company’s
or any Affiliate’s retirement plans (both qualified and non-qualified) or
welfare benefit plans unless such other plan expressly provides that such
compensation shall be taken into account in computing a participant’s benefit.

 

18.9         Other
Awards.  The grant of an Award
shall not confer upon the Holder the right to receive any future or other
Awards under the Plan, whether or not Awards may be granted to similarly
situated Holders, or the right to receive future Awards upon the same terms or
conditions as previously granted.

 

18.10       Successors.  All obligations of the Company
under the Plan with respect to Awards granted hereunder shall be binding on any
successor to the Company, whether the existence of such successor is the result
of a direct or indirect purchase, merger, consolidation, or otherwise, of all
or substantially all of the business and/or assets of the Company.

 

18.11       Law
Limitations/Governmental Approvals.  The granting of Awards and the
issuance of shares of Stock under the Plan shall be subject to all applicable
laws, rules, and regulations, and to such approvals by any governmental
agencies or national securities exchanges as may be required.

 

18.12       Delivery of Title.  The Company shall have no
obligation to issue or deliver evidence of title for shares of Stock issued
under the Plan prior to (a) obtaining any approvals from governmental
agencies that the Company determines are necessary or advisable; and (b) completion of any
registration or other qualification of the Stock under any applicable national
or foreign law or ruling of any governmental body that the Company determines
to be necessary or advisable.

 

18.13       Inability to
Obtain Authority.  The inability of the Company to
obtain authority from any regulatory body having jurisdiction, which authority
is deemed by the Company’s counsel to be necessary to the lawful issuance and
sale of any shares of Stock hereunder, shall relieve the Company of any
liability in respect of the failure to issue or sell such shares of Stock as to
which such requisite authority shall not have been obtained.

 

18.14       Investment
Representations.  The Committee may require any
person receiving Stock pursuant to an Award under the Plan to represent and
warrant in writing that the person is acquiring the shares of Stock for
investment and without any present intention to sell or distribute such Stock.

 

18.15       Persons Residing Outside of the
United States.  Notwithstanding any provision of the Plan to the
contrary, in order to comply with the laws in other countries in which the
Company or any of its Affiliates operates or has Employees, the Committee, in
its sole discretion, shall have the power and authority to (a) determine
which Affiliates shall be covered by the Plan; (b) determine which
persons employed outside the United States are eligible to participate in the
Plan; (c) amend or vary
the terms and provisions of the Plan and the 

 

24

 

terms
and conditions of any Award granted to persons who reside outside the United
States; (d) establish
subplans and modify exercise procedures and other terms and procedures to the
extent such actions may be necessary or advisable — any subplans and
modifications to Plan terms and procedures established under this Section 18.15
by the Committee shall be attached to the Plan document as Appendices; and (e) take any action, before or
after an Award is made, that it deems advisable to obtain or comply with any
necessary local government regulatory exemptions or approvals. Notwithstanding
the above, the Committee may not take any actions hereunder, and no Awards
shall be granted, that would violate the Securities Exchange Act of 1934, as
amended, the Code, any securities law or governing statute or any other
applicable law.

 

18.16       Arbitration
of Disputes.  Any controversy
arising out of or relating to the Plan or an Award Agreement shall be resolved
by arbitration conducted pursuant to the arbitration rules of the American
Arbitration Association.  The arbitration
shall be final and binding on the parties.

 

18.17       Governing
Law.  The provisions of the
Plan and the rights of all persons claiming thereunder shall be construed,
administered and governed under the laws of the State of Delaware, excluding any conflicts or choice of
law rule or principle that might otherwise refer construction or
interpretation of the Plan to the substantive law of another jurisdiction.
Unless otherwise provided in the Award Agreement, recipients of an Award under
the Plan are deemed to submit to the exclusive jurisdiction and venue of the
federal or state courts of Texas, to resolve any and all issues that may arise
out of or relate to the Plan or any related Award Agreement.

 

25

 

SCHEDULE
A

 

INSTITUTIONAL HOLDERS

 

Investment funds and
accounts managed by Paulson & Co., Inc., including:

 

Paulson Advantage Master
Ltd.

Paulson Advantage Plus
Master Ltd.

Paulson Advantage Select
Master Ltd.

Paulson Recovery Master Fund
Ltd.

Paulson Credit Opportunities
Master Ltd.

BLT
8 LLC

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