Exhibit 10.2

 

 

AMENDED AND RESTATED

GUARANTEE AND COLLATERAL AGREEMENT

dated as of

June 1, 2007

among

HAWAIIAN TELCOM HOLDCO, INC.,

HAWAIIAN TELCOM COMMUNICATIONS, INC.,

THE SUBSIDIARIES OF HAWAIIAN TELCOM COMMUNICATIONS, INC.
IDENTIFIED HEREIN

and

LEHMAN COMMERCIAL PAPER INC.,

as Collateral Agent

 

 

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TABLE OF CONTENTS

ARTICLE I

 

 

DEFINITIONS

 

 

 

 

 

SECTION 1.01.

 

Credit Agreement

 

1

SECTION 1.02.

 

Other Defined Terms

 

1

 

 

 

 

 

ARTICLE II

 

 

GUARANTEE

 

 

 

 

 

SECTION 2.01.

 

Guarantee

 

5

SECTION 2.02.

 

Guarantee of Payment

 

5

SECTION 2.03.

 

No Limitations

 

5

SECTION 2.04.

 

Reinstatement

 

6

SECTION 2.05.

 

Agreement To Pay; Subrogation

 

6

SECTION 2.06.

 

Information

 

6

 

 

 

 

 

ARTICLE III

 

 

PLEDGE OF SECURITIES

 

 

 

 

 

SECTION 3.01.

 

Pledge

 

6

SECTION 3.02.

 

Delivery of the Pledged Collateral

 

7

SECTION 3.03.

 

Representations, Warranties and Covenants

 

7

SECTION 3.04.

 

Certification of Limited Liability Company and Limited Partnership Interests

 

8

SECTION 3.05.

 

Registration in Nominee Name; Denominations

 

8

SECTION 3.06.

 

Voting Rights; Dividends and Interest

 

9

 

 

 

 

 

ARTICLE IV

 

 

SECURITY INTERESTS IN PERSONAL PROPERTY

 

 

 

 

 

SECTION 4.01.

 

Security Interest

 

10

SECTION 4.02.

 

Representations and Warranties

 

12

SECTION 4.03.

 

Covenants

 

13

SECTION 4.04.

 

Other Actions

 

16

SECTION 4.05.

 

Covenants Regarding Patent, Trademark and Copyright Collateral

 

17

 

 

 

 

 

ARTICLE V

 

 

REMEDIES

 

 

 

 

 

SECTION 5.01.

 

Remedies Upon Default

 

18

SECTION 5.02.

 

Application of Proceeds

 

20

SECTION 5.03.

 

Grant of License to Use Intellectual Property

 

20

SECTION 5.04.

 

Securities Act

 

20

SECTION 5.05.

 

Registration

 

21

 

i

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ARTICLE VI

 

 

INDEMNITY, SUBROGATION AND SUBORDINATION

 

 

 

 

 

SECTION 6.01.

 

Indemnity and Subrogation

 

22

SECTION 6.02.

 

Contribution and Subrogation

 

22

SECTION 6.03.

 

Subordination

 

22

 

 

 

 

 

ARTICLE VII

 

 

MISCELLANEOUS

 

 

 

 

 

 

 

SECTION 7.01.

 

Notices

 

23

SECTION 7.02.

 

Waivers; Amendment

 

23

SECTION 7.03.

 

Collateral Agent’s Fees and Expenses; Indemnification

 

23

SECTION 7.04.

 

Successors and Assigns

 

24

SECTION 7.05.

 

Survival of Agreement

 

24

SECTION 7.06.

 

Counterparts; Effectiveness; Several Agreement

 

24

SECTION 7.07.

 

Severability

 

24

SECTION 7.08.

 

Right of Set-Off

 

24

SECTION 7.09.

 

Governing Law, Jurisdiction; Consent to Service of Process

 

25

SECTION 7.10.

 

WAIVER OF JURY TRIAL

 

25

SECTION 7.11.

 

Headings

 

26

SECTION 7.12.

 

Security Interest Absolute

 

26

SECTION 7.13.

 

Termination or Release

 

26

SECTION 7.14.

 

Additional Subsidiaries

 

26

SECTION 7.15.

 

Collateral Agent Appointed Attorney-in-Fact

 

27

SECTION 7.16.

 

Compliance with Laws

 

27

SECTION 7.17.

 

Termination of Shared Collateral Agreement

 

27

SECTION 7.18.

 

Amendment and Restatement

 

28

 

ii

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Schedules

 

 

 

 

 

 

 

 

 

Schedule I

 

Subsidiary Loan Parties

 

 

Schedule II

 

Pledged Stock; Debt Securities

 

 

Schedule III

 

Intellectual Property

 

 

 

 

 

 

 

Exhibits

 

 

 

 

 

 

 

 

 

Exhibit I

 

Form of Supplement

 

 

Exhibit II

 

Form of Perfection Certificate

 

 

 

iii

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AMENDED AND RESTATED GUARANTEE AND COLLATERAL AGREEMENT (this “Agreement”) dated
as of June 1, 2007, among HAWAIIAN TELCOM HOLDCO, INC., HAWAIIAN TELCOM
COMMUNICATIONS, INC., the Subsidiaries of HAWAIIAN TELCOM COMMUNICATIONS, INC.
identified herein and LEHMAN COMMERCIAL PAPER INC., as Collateral Agent.

WHEREAS, reference is made to the Amended and Restated Credit Agreement dated as
of June 1, 2007 (as amended, supplemented or otherwise modified from time to
time, the “Credit Agreement”), among Hawaiian Telcom Communications, Inc. (the
“Borrower”), Hawaiian Telcom Holdco, Inc. (“Holdings”), the Lenders party
thereto, Lehman Commercial Paper Inc., as Administrative Agent and Collateral
Agent, JPMorgan Chase Bank, N.A., as Syndication Agent, and CoBank, ACB and
Wachovia Bank, N.A., as Co-Documentation Agents; and

WHEREAS, the Lenders have agreed to extend credit to the Borrower subject to the
terms and conditions set forth in the Credit Agreement, and the obligations of
the Lenders to extend such credit are conditioned upon, among other things, the
execution and delivery of this Agreement; and

WHEREAS, Holdings and the Subsidiary Loan Parties are affiliates of the Borrower
and will derive substantial benefits from the extension of credit to the
Borrower pursuant to the Credit Agreement; and

WHEREAS, (i) the Grantors (as defined below) have previously entered into that
certain Guarantee and Collateral Agreement, dated as of May 2, 2005 (as amended,
supplemented or otherwise modified from time to time, the “Existing Guarantee
and Collateral Agreement”) and (ii) Hawaiian Telcom, Inc., a Grantor, has
previously entered into that certain Shared Collateral Agreement, dated as of
May 2, 2005 (as amended, supplemented or otherwise modified from time to time,
the “Shared Collateral Agreement”); and

WHEREAS, the Grantors are willing to execute and deliver this Agreement in order
to (i) amend and restate the terms of the Existing Guarantee and Collateral
Agreement, (ii) evidence the termination of the Shared Collateral Agreement and
(iii) induce the Lenders to extend credit to the Borrower under the Credit
Agreement as referenced above.  Accordingly, the parties hereto agree as
follows:

ARTICLE I

Definitions

SECTION 1.01.           Credit Agreement.  (a)  Capitalized terms used in this
Agreement and not otherwise defined herein have the meanings specified in the
Credit Agreement.  All terms defined in the New York UCC (as defined herein) and
not defined in this Agreement have the meanings specified therein; the term
“instrument” shall have the meaning specified in Article 9 of the New York UCC.

(b)           The rules of construction specified in Section 1.03 of the Credit
Agreement also apply to this Agreement.

SECTION 1.02.           Other Defined Terms.  As used in this Agreement, the
following terms have the meanings specified below:

               

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“Account Debtor” means any Person who is or who may become obligated to any
Grantor under, with respect to or on account of an Account.

“Article 9 Collateral” has the meaning assigned to such term in Section 4.01.

“Collateral” means Article 9 Collateral and Pledged Collateral.

“Communications Act” means the Communications Act of 1934 and any successor
Federal statute, and the rules, regulations and published policies of the FCC
thereunder, all as amended and in effect from time to time.

“Copyright License” means any written agreement, now or hereafter in effect,
granting any right to any third party under any copyright now or hereafter owned
by any Grantor or that such Grantor otherwise has the right to license, or
granting any right to any Grantor under any copyright now or hereafter owned by
any third party, and all rights of such Grantor under any such agreement.

“Copyrights” means all of the following now owned or hereafter acquired by any
Grantor:  (a) all copyright rights in any work subject to the copyright laws of
the United States or any other country, whether as author, assignee, transferee
or otherwise, and (b) all registrations and applications for registration of any
such copyright in the United States or any other country, including
registrations, recordings, supplemental registrations and pending applications
for registration in the United States Copyright Office, including those listed
on Schedule III.

“Credit Agreement” has the meaning assigned to such term in the preliminary
statement of this Agreement.

“FCC” means the Federal Communications Commission and any successor agency of
the Federal government administering the Communications Act.

“FCC Licenses” means all licenses, certificates, permits or other authorizations
granted by the FCC pursuant to the Communications Act which are required for the
conduct of any business or activity subject thereto.

“Federal Securities Laws” has the meaning assigned to such term in Section 5.04.

“General Intangibles” means all chooses in action and causes of action and all
other intangible personal property of every kind and nature (other than
Accounts) now owned or hereafter acquired by any Grantor, including corporate or
other business records, indemnification claims, contract rights (including
rights under leases, whether entered into as lessor or lessee, Swap Agreements
and other agreements), FCC Licenses, Intellectual Property, goodwill,
registrations, franchises, tax refund claims and any letter of credit,
guarantee, claim, security interest or other security held by or granted to any
Grantor to secure payment by an Account Debtor of any of the Accounts.

“Grantors” means Holdings, the Borrower and the Subsidiary Loan Parties.

“Guarantors” means Holdings and the Subsidiary Loan Parties.

“Intellectual Property” means all intellectual and similar property of every
kind and nature now owned or hereafter acquired by any Grantor, including
inventions, designs, Patents, Copyrights, Licenses, Trademarks, trade secrets,
confidential or proprietary technical and business

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information, know-how, show-how or other data or information, software and
databases and all embodiments or fixations thereof and related documentation,
registrations and franchises, and all additions, improvements and accessions to,
and books and records describing or used in connection with, any of the
foregoing.

“License” means any Patent License, Trademark License, Copyright License or
other license or sublicense agreement to which any Grantor is a party.

“Loan Document Obligations” means (a) the due and punctual payment by the
Borrower of (i) the unpaid principal of and interest (including interest
accruing during the pendency of any bankruptcy, insolvency, receivership or
other similar proceeding, regardless of whether allowed or allowable in such
proceeding) on the Loans, when and as due, whether at maturity, by acceleration,
upon one or more dates set for prepayment or otherwise, (ii) each payment
required to be made by the Borrower under the Credit Agreement in respect of any
Letter of Credit, when and as due, including payments in respect of
reimbursement of disbursements, interest thereon and obligations to provide cash
collateral, and (iii) all other monetary obligations of the Borrower to any of
the Secured Parties under the Credit Agreement and each of the other Loan
Documents, including obligations to pay fees, expense reimbursement obligations
and indemnification obligations, whether primary, secondary, direct, contingent,
fixed or otherwise (including monetary obligations incurred during the pendency
of any bankruptcy, insolvency, receivership or other similar proceeding,
regardless of whether allowed or allowable in such proceeding), (b) the due and
punctual performance of all other obligations of the Borrower under or pursuant
to the Credit Agreement and each of the other Loan Documents, and (c) the due
and punctual payment and performance of all the obligations of each other Loan
Party under or pursuant to this Agreement and each of the other Loan Documents.

“New York UCC” means the Uniform Commercial Code as from time to time in effect
in the State of New York.

“Obligations” means (a) Loan Document Obligations and (b) the due and punctual
payment and performance of all obligations of each Loan Party under each Swap
Agreement that (i) is in effect on the Effective Date with a counterparty that
is a Lender or an Affiliate of a Lender as of the Effective Date or (ii) is
entered into after the Effective Date with any counterparty that is a Lender or
an Affiliate of a Lender at the time such Swap Agreement is entered into,
provided, that for purposes of this Agreement, the amount of any obligations
under any Swap Agreement shall be reduced by the amount of cash deposits, if
any, securing the Swap Agreement and which are held by the counterparty to such
Swap Agreement.

“Patent License” means any written agreement, now or hereafter in effect,
granting to any third party any right to make, use or sell any invention on
which a patent, now or hereafter owned by any Grantor or that any Grantor
otherwise has the right to license, is in existence, or granting to any Grantor
any right to make, use or sell any invention on which a patent, now or hereafter
owned by any third party, is in existence, and all rights of any Grantor under
any such agreement.

“Patents” means all of the following now owned or hereafter acquired by any
Grantor:  (a) all letters patent of the United States or the equivalent thereof
in any other country, all registrations and recordings thereof, and all
applications for letters patent of the United States or the equivalent thereof
in any other country, including registrations, recordings and pending
applications in the United States Patent and Trademark Office or any similar
offices in any other country, including those listed on Schedule III, and (b)
all reissues, continuations, divisions, continuations-in-part, renewals or
extensions

3             

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thereof, and the inventions disclosed or claimed therein, including the right to
make, use and/or sell the inventions disclosed or claimed therein.

“Perfection Certificate” means a certificate substantially in the form of
Exhibit II, completed and supplemented with the schedules and attachments
contemplated thereby, and duly executed by a Financial Officer and the chief
legal officer of the Borrower.

“Pledged Collateral” has the meaning assigned to such term in Section 3.01.

“Pledged Debt Securities” has the meaning assigned to such term in Section 3.01.

“Pledged Securities” means any promissory notes, stock certificates or other
certificated securities now or hereafter included in the Pledged Collateral,
including all certificates, instruments or other documents representing or
evidencing any Pledged Collateral.

“Pledged Stock” has the meaning assigned to such term in Section 3.01.

“Proceeds” has the meaning specified in Section 9-102 of the New York UCC.

“Secured Parties” means (a) the Lenders, (b) the Collateral Agent, (c) the
Issuing Banks, (d) each counterparty to any Swap Agreement with a Loan Party the
obligations under which constitute Obligations, (e) the beneficiaries of each
indemnification obligation undertaken by any Loan Party under any Loan Document
and (f) the permitted successors and assigns of each of the foregoing.

“Security Interest” has the meaning assigned to such term in Section 4.01.

“Subsidiary Loan Parties” means (a) the Subsidiaries identified on Schedule I
and (b) each other Subsidiary that becomes a party to this Agreement as a
Subsidiary Loan Party after the Effective Date.

“Trademark License” means any written agreement, now or hereafter in effect,
granting to any third party any right to use any trademark now or hereafter
owned by any Grantor or that any Grantor otherwise has the right to license, or
granting to any Grantor any right to use any trademark now or hereafter owned by
any third party, and all rights of any Grantor under any such agreement.

“Trademarks” means all of the following now owned or hereafter acquired by any
Grantor:  (a) all trademarks, service marks, trade names, corporate names,
company names, business names, fictitious business names, trade styles, trade
dress, logos, other source or business identifiers, designs and general
intangibles of like nature, now existing or hereafter adopted or acquired, all
registrations and recordings thereof, and all registration and recording
applications filed in connection therewith (excluding intent-to-use
applications), including registrations and registration applications in the
United States Patent and Trademark Office (excluding intent-to-use applications)
or any similar offices in any State of the United States or any other country or
any political subdivision thereof, and all extensions or renewals thereof,
including those listed on Schedule III, (b) all goodwill associated therewith or
symbolized thereby and (c) all other assets, rights and interests that uniquely
reflect or embody such goodwill.

4             

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ARTICLE II

Guarantee

SECTION 2.01.           Guarantee.  Each Guarantor unconditionally guarantees,
jointly with the other Guarantors and severally the due and punctual payment and
performance of the Obligations.  Each of the Guarantors further agrees that the
Obligations may be extended or renewed, in whole or in part, without notice to
or further assent from it, and that it will remain bound upon its guarantee
notwithstanding any extension or renewal of any Obligation.  Each of the
Guarantors waives presentment to, demand of payment from and protest to the
Borrower or any other Loan Party of any of the Obligations, and also waives
notice of acceptance of its guarantee and notice of protest for nonpayment.

SECTION 2.02.           Guarantee of Payment.  Each of the Guarantors further
agrees that its guarantee hereunder constitutes a guarantee of payment when due
and not of collection, and waives any right to require that any resort be had by
the Collateral Agent or any other Secured Party to any security held for the
payment of the Obligations or to any balance of any deposit account or credit on
the books of the Collateral Agent or any other Secured Party in favor of the
Borrower or any other Person.

SECTION 2.03.           No Limitations.  (a)  Except for termination of a
Guarantor’s obligations hereunder as expressly provided in Section 7.13, the
obligations of each Guarantor hereunder shall not be subject to any reduction,
limitation, impairment or termination for any reason, including any claim of
waiver, release, surrender, alteration or compromise, and shall not be subject
to any defense or set-off, counterclaim, recoupment or termination whatsoever by
reason of the invalidity, illegality or unenforceability of the Obligations or
otherwise (other than defense of payment or performance).  Without limiting the
generality of the foregoing, the obligations of each Guarantor hereunder, to the
fullest extent permitted by applicable law, shall not be discharged or impaired
or otherwise affected by (i) the failure of the Collateral Agent or any other
Secured Party to assert any claim or demand or to enforce any right or remedy
under the provisions of any Loan Document or otherwise; (ii) any rescission,
waiver, amendment or modification of, or any release from any of the terms or
provisions of, any Loan Document or any other agreement, including with respect
to any other Guarantor under this Agreement; (iii) the release of any security
held by the Collateral Agent or any other Secured Party for the Obligations or
any of them; (iv) any default, failure or delay, willful or otherwise, in the
performance of the Obligations; or (v) any other act or omission that may or
might in any manner or to any extent vary the risk of any Guarantor or otherwise
operate as a discharge of any Guarantor as a matter of law or equity (other than
the payment in full in cash or immediately available funds of all the
Obligations).  Each Guarantor expressly authorizes the Secured Parties to take
and hold security for the payment and performance of the Obligations, to
exchange, waive or release any or all such security (with or without
consideration), to enforce or apply such security and direct the order and
manner of any sale thereof in their sole discretion or to release or substitute
any one or more other guarantors or obligors upon or in respect of the
Obligations, all without affecting the obligations of any Guarantor hereunder.

(b)           To the fullest extent permitted by applicable law, each Guarantor
waives any defense based on or arising out of any defense of the Borrower or any
other Loan Party or the unenforceability of the Obligations or any part thereof
from any cause, or the cessation from any cause of the liability of the Borrower
or any other Loan Party, other than the payment in full in cash or immediately
available funds of all the Obligations (other than indemnification obligations
for which no claim giving rise thereto has been asserted).  The Collateral Agent
and the other Secured Parties may, at their election, foreclose on any security
held by one or more of them by one or more judicial or nonjudicial sales, accept
an assignment of any such security in lieu of foreclosure, compromise or adjust
any part of the Obligations, make any other accommodation with the Borrower or
any other Loan Party or

5             

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exercise any other right or remedy available to them against the Borrower or any
other Loan Party, without affecting or impairing in any way the liability of any
Guarantor hereunder except to the extent the Obligations have been paid in full
in cash or immediately available funds.  To the fullest extent permitted by
applicable law, each Guarantor waives any defense arising out of any such
election even though such election operates, pursuant to applicable law, to
impair or to extinguish any right of reimbursement or subrogation or other right
or remedy of such Guarantor against the Borrower or any other Loan Party, as the
case may be, or any security.

SECTION 2.04.           Reinstatement.  Each of the Guarantors agrees that its
guarantee hereunder shall continue to be effective or be reinstated, as the case
may be, if at any time payment, or any part thereof, of any Obligation is
rescinded or must otherwise be restored by the Collateral Agent or any other
Secured Party upon the bankruptcy or reorganization of the Borrower, any other
Loan Party or otherwise.

SECTION 2.05.           Agreement To Pay; Subrogation.  In furtherance of the
foregoing and not in limitation of any other right that the Collateral Agent or
any other Secured Party has at law or in equity against any Guarantor by virtue
hereof, upon the failure of the Borrower or any other Loan Party to pay any
Obligation when and as the same shall become due, whether at maturity, by
acceleration, after notice of prepayment or otherwise, each Guarantor hereby
promises to and will forthwith pay, or cause to be paid, to the Collateral Agent
for distribution to the applicable Secured Parties in cash the amount of such
unpaid Obligation.  Upon payment by any Guarantor of any sums to the Collateral
Agent as provided above, all rights of such Guarantor against the Borrower or
any other Loan Party arising as a result thereof by way of right of subrogation,
contribution, reimbursement, indemnity or otherwise shall in all respects be
subject to Article VI.

SECTION 2.06.           Information.  Each Guarantor assumes all responsibility
for being and keeping itself informed of the Borrower’s and each other Loan
Party’s financial condition and assets, and of all other circumstances bearing
upon the risk of nonpayment of the Obligations and the nature, scope and extent
of the risks that such Guarantor assumes and incurs hereunder, and agrees that
none of the Collateral Agent or the other Secured Parties will have any duty to
advise such Guarantor of information known to it or any of them regarding such
circumstances or risks.

ARTICLE III

Pledge of Securities

SECTION 3.01.           Pledge.  As security for the payment or performance, as
the case may be, in full of the Obligations, each Grantor hereby pledges to the
Collateral Agent, its successors and permitted assigns, for the ratable benefit
of the Secured Parties, and hereby grants to the Collateral Agent, its
successors and assigns, for the ratable benefit of the Secured Parties, a
security interest in, all of such Grantor’s right, title and interest in, to and
under (a) the shares of capital stock and other Equity Interests of the Borrower
and each Subsidiary owned by it and listed on Schedule II and any other Equity
Interests or the Borrower and each Subsidiary obtained in the future by such
Grantor and the certificates representing all such Equity Interests (the
“Pledged Stock”); provided that the Pledged Stock shall not include (i) more
than 65% of the issued and outstanding voting Equity Interests of any “first
tier” Foreign Subsidiary directly owned by such Grantor, (ii) to the extent
applicable law requires that a subsidiary of such Grantor issue directors’
qualifying shares, such qualifying shares and (iii) any Equity Interests
described in Section 5.12(c)(iii) of the Credit Agreement; (b)(i) the debt
securities listed opposite the name of such Grantor on Schedule II, (ii) any
debt securities in the future issued to such Grantor by Holdings, the Borrower
or any Subsidiary and (iii) the certificates, promissory notes and any other

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instruments evidencing such debt securities (the “Pledged Debt Securities”); (c)
all other property that may be delivered to and held by the Collateral Agent
pursuant to the terms of this Section 3.01; (d) subject to Section 3.06, all
payments of principal or interest, dividends, cash, instruments and other
property from time to time received, receivable or otherwise distributed in
respect of, in exchange for or upon the conversion of, and all other Proceeds
received in respect of, the securities referred to in clauses (a) and (b) above;
(e) subject to Section 3.06, all rights and privileges of such Grantor with
respect to the securities and other property referred to in clauses (a), (b),
(c) and (d) above; and (f) all Proceeds of any of the foregoing (the items
referred to in clauses (a) through (f) above being collectively referred to as
the “Pledged Collateral”).

TO HAVE AND TO HOLD the Pledged Collateral, together with all right, title,
interest, powers, privileges and preferences pertaining or incidental thereto,
unto the Collateral Agent, its successors and assigns, for the ratable benefit
of the Secured Parties, forever, subject, however, to the terms, covenants and
conditions hereinafter set forth.

SECTION 3.02.           Delivery of the Pledged Collateral.  (a)  Each Grantor
agrees promptly to deliver or cause to be delivered to the Collateral Agent any
and all Pledged Securities.

(b)           Each Grantor will cause any Indebtedness for borrowed money owed
to such Grantor by Holdings, the Borrower or any Subsidiary to be evidenced by a
duly executed promissory note and, if in an amount in excess if $1,000,000,
pledged and delivered to the Collateral Agent pursuant to the terms hereof.

(c)           Upon delivery to the Collateral Agent, (i) any Pledged Securities
shall be accompanied by stock powers or note powers, as applicable, duly
executed in blank or other instruments of transfer reasonably satisfactory to
the Collateral Agent and by such other instruments and documents as the
Collateral Agent may reasonably request and (ii) all other property comprising
part of the Pledged Collateral delivered pursuant to the terms of this Agreement
shall be accompanied, to the extent necessary or reasonably required to perfect
the security interest in or allow realization on the Pledged Collateral, by
proper instruments of assignment duly executed by the applicable Grantor and
such other instruments or documents as the Collateral Agent may reasonably
request.  Each delivery of Pledged Securities shall be accompanied by a schedule
describing the securities, which schedule shall be attached hereto as Schedule
II and made a part hereof; provided that failure to attach any such schedule
hereto shall not affect the validity of such pledge of such Pledged Securities.
 Each schedule so delivered shall supplement any prior schedules so delivered.

SECTION 3.03.           Representations, Warranties and Covenants.  The Grantors
jointly and severally represent, warrant and covenant to and with the Collateral
Agent, for the benefit of the Secured Parties, that:

(a)           Schedule II correctly sets forth the percentage of the issued and
outstanding shares of each class of the Equity Interests of the issuer thereof
represented by the Pledged Stock and includes all Equity Interests, debt
securities and promissory notes or other instruments evidencing Indebtedness
required to be pledged hereunder in order to satisfy the Collateral and
Guarantee Requirement;

(b)           the Pledged Stock and Pledged Debt Securities have been duly and
validly authorized and issued by the issuers thereof and (i) in the case of
Pledged Stock, are fully paid and nonassessable and (ii) in the case of Pledged
Debt Securities, are legal, valid and binding obligations of the issuers
thereof;

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(c)           except for the security interests granted hereunder, each of the
Grantors (i) is and, subject to any transfers made in compliance with the Credit
Agreement, will continue to be the direct owner, beneficially and of record, of
the Pledged Securities indicated on Schedule II as owned by such Grantor, (ii)
holds the same free and clear of all Liens, other than Liens created by this
Agreement, Permitted Encumbrances and transfers made in compliance with the
Credit Agreement, (iii) will make no assignment, pledge, hypothecation or
transfer of, or create or permit to exist any security interest in or other Lien
on, the Pledged Collateral, other than Liens created by this Agreement,
Permitted Encumbrances and transfers made in compliance with the Credit
Agreement, and (iv) subject to any right of such Grantor under the Loan
Documents to dispose of Pledged Collateral, will use commercially reasonable
efforts to defend its title or interest thereto or therein against any and all
Liens (other than the Lien created by this Agreement and Permitted
Encumbrances), however, arising, of all Persons whomsoever;

(d)           except for restrictions and limitations imposed by the Loan
Documents or securities laws generally, the Pledged Collateral is and will
continue to be freely transferable and assignable, and none of the Pledged
Collateral (other than limited liability company or partnership interests) is or
will be subject to any option, right of first refusal, shareholders agreement,
charter or by-law provisions or contractual restriction of any nature that might
prohibit, impair, delay or otherwise affect the pledge of such Pledged
Collateral hereunder, the sale or disposition thereof pursuant hereto or the
exercise by the Collateral Agent of rights and remedies hereunder;

(e)           each of the Grantors has the power and authority to pledge the
Pledged Collateral pledged by it hereunder in the manner hereby done or
contemplated;

(f)            no consent or approval of any Governmental Authority, any
securities exchange or any other Person was or is necessary to the validity of
the pledge effected hereby (other than such as have been obtained and are in
full force and effect);

(g)           by virtue of the execution and delivery by the Grantors of this
Agreement, when any Pledged Securities are delivered to the Collateral Agent in
accordance with this Agreement, the Collateral Agent will obtain a legal, valid
and perfected first priority lien upon and security interest in such Pledged
Securities as security for the payment and performance of the Obligations; and

(h)           the pledge effected hereby is effective to vest in the Collateral
Agent, for the benefit of the Secured Parties, the rights of the Collateral
Agent in the Pledged Collateral as set forth herein.

SECTION 3.04.              Certification of Limited Liability Company and
Limited Partnership Interests.  Each interest in any limited liability company
or limited partnership controlled by any Grantor and pledged hereunder shall be
represented by a certificate, shall be a “security” within the meaning of
Article 8 of the New York UCC and shall be governed by Article 8 of the New York
UCC.

SECTION 3.05.              Registration in Nominee Name; Denominations.  The
Collateral Agent, on behalf of the Secured Parties, shall have the right (in its
sole and absolute discretion) to hold the Pledged Securities in its own name as
pledgee or the name of its nominee (as pledgee or as sub-agent) if an Event of
Default shall have occurred and be continuing or in the name of the applicable
Grantor, endorsed or assigned in blank or in favor of the Collateral Agent.
 Each Grantor will promptly give to the Collateral Agent copies of any notices
or other communications received by it with respect to Pledged Securities
registered in the name of such Grantor.  If an Event of Default shall have
occurred and be continuing the Collateral Agent shall have the right to exchange
the certificates representing Pledged

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Securities for certificates of smaller or larger denominations for any purpose
consistent with this Agreement.

SECTION 3.06.           Voting Rights; Dividends and Interest.  (a)  Unless and
until an Event of Default shall have occurred and be continuing and the
Collateral Agent shall have given notice to the Grantors that their rights under
this Section 3.06 are being suspended:

(i)            Each Grantor shall be entitled to exercise any and all voting
and/or other consensual rights and powers inuring to an owner of Pledged
Securities or any part thereof for any purpose consistent with the terms of this
Agreement, the Credit Agreement and the other Loan Documents, provided that such
rights and powers shall not be exercised in any manner that could materially and
adversely affect the rights inuring to a holder of any Pledged Securities or the
rights and remedies of any of the Collateral Agent or the other Secured Parties
under this Agreement or the Credit Agreement or any other Loan Document or the
ability of the Secured Parties to exercise the same.

(ii)           The Collateral Agent shall execute and deliver to each Grantor,
or cause to be executed and delivered to such Grantor, all such proxies, powers
of attorney and other instruments as such Grantor may reasonably request for the
purpose of enabling such Grantor to exercise the voting and/or consensual rights
and powers it is entitled to exercise pursuant to subparagraph (i) above.

(iii)          Each Grantor shall be entitled to receive and retain any and all
dividends, interest, principal and other distributions paid on or distributed in
respect of the Pledged Securities to the extent and only to the extent that such
dividends, interest, principal and other distributions are permitted by, and
otherwise paid or distributed in accordance with, the terms and conditions of
the Credit Agreement, the other Loan Documents and applicable laws; provided
that any noncash dividends, interest, principal or other distributions that
would constitute Pledged Stock or Pledged Debt Securities, whether resulting
from a subdivision, combination or reclassification of the outstanding Equity
Interests of the issuer of any Pledged Securities or received in exchange for
Pledged Securities or any part thereof, or in redemption thereof, or as a result
of any merger, consolidation, acquisition or other exchange of assets to which
such issuer may be a party or otherwise, shall be and become part of the Pledged
Collateral, and, if received by any Grantor, shall not be commingled by such
Grantor with any of its other funds or property but shall be held separate and
apart therefrom, shall be held in trust for the benefit of the Collateral Agent
and shall be forthwith delivered to the Collateral Agent in the same form as so
received (with any necessary endorsement).

(b)           Upon the occurrence and during the continuance of an Event of
Default, after the Collateral Agent shall have notified the Grantors of the
suspension of their rights under this Section 3.06, all rights of any Grantor to
dividends, interest, principal or other distributions that such Grantor is
authorized to receive pursuant to paragraph (a)(iii) of this Section 3.06 shall
cease, and all such rights shall thereupon become vested in the Collateral
Agent, which shall have the sole and exclusive right and authority to receive
and retain such dividends, interest, principal or other distributions.  All
dividends, interest, principal or other distributions received by any Grantor
contrary to the provisions of this Section 3.06 shall be held in trust for the
benefit of the Collateral Agent, shall be segregated from other property or
funds of such Grantor and shall be forthwith delivered to the Collateral Agent
upon demand in the same form as so received (with any necessary endorsement).
 Any and all money and other property paid over to or received by the Collateral
Agent pursuant to the provisions of this paragraph (b) shall be retained by the
Collateral Agent in an account to be established by the Collateral Agent upon
receipt of

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such money or other property and shall be applied in accordance with the
provisions of Section 5.02.  After all Events of Default have been cured or
waived, the Collateral Agent shall promptly repay to each Grantor (without
interest) all dividends, interest, principal or other distributions that such
Grantor would otherwise be permitted to retain pursuant to the terms of
paragraph (a)(iii) of this Section 3.06 and that remain in such account.

(c)           Upon the occurrence and during the continuance of an Event of
Default, after the Collateral Agent shall have notified the Grantors of the
suspension of their rights under this Section 3.06, all rights of any Grantor to
exercise the voting and consensual rights and powers it is entitled to exercise
pursuant to paragraph (a)(i) of this Section 3.06, and the obligations of the
Collateral Agent under paragraph (a)(ii) of this Section 3.06, shall cease, and
all such rights shall thereupon become vested in the Collateral Agent, which
shall have the sole and exclusive right and authority to exercise such voting
and consensual rights and powers; provided that, unless otherwise directed by
the Required Lenders, the Collateral Agent shall have the right from time to
time following and during the continuance of an Event of Default to permit the
Grantors to exercise such rights.  After all Events of Default have been cured
or waived, each Grantor will have the right to exercise the voting and
consensual rights and powers that such Grantor would otherwise be entitled to
exercise pursuant to the terms of paragraph (a)(i) above.

ARTICLE IV

Security Interests in Personal Property

SECTION 4.01.           Security Interest.  (a)  As security for the payment or
performance when due, as the case may be, in full of the Obligations, each
Grantor hereby pledges to the Collateral Agent, its successors and permitted
assigns, for the benefit of the Secured Parties, and hereby grants to the
Collateral Agent, its successors and permitted assigns, for the benefit of the
Secured Parties, a security interest (the “Security Interest”) in, all right,
title or interest in or to any and all of the following assets and properties
now owned or at any time hereafter acquired by such Grantor or in which such
Grantor now has or at any time in the future may acquire any right, title or
interest (collectively, the “Article 9 Collateral”):

(i)            all Accounts;

(ii)           all Chattel Paper;

(iii)          all Deposit Accounts;

(iv)          all Documents;

(v)           all Equipment;

(vi)          all General Intangibles;

(vii)         all Instruments;

(viii)        all Inventory;

(ix)           all Investment Property;

(x)            Letter-of-Credit rights;

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(xi)           all books and records pertaining to the Article 9 Collateral; and

(xii)          to the extent not otherwise included, all Proceeds and products
of any and all of the foregoing and all collateral security and guarantees given
by any Person with respect to any of the foregoing.

(b)           Notwithstanding the foregoing, no security interest shall be
granted in (i) any FCC License or other Intellectual Property to the extent that
the Communications Act or other applicable law prohibits the granting of a
security interest therein, (ii) any Intellectual Property to the extent that
such grant of a security interest constitutes or results in the abandonment,
invalidation or unenforceability of any right, title or interest of the
applicable Grantor in such Intellectual Property (other than to the extent that
any contractual provision giving rise to such abandonment, invalidation or
unenforceability would be rendered ineffective pursuant to Section 9-406, 9-408
or 9-409 of the New York UCC or any other applicable law (including, without
limitation, Title 11 of the United States Code) or principles of equity);
provided, that immediately upon the ineffectiveness, lapse or termination of any
provision giving rise to such abandonment, invalidation or unenforceability, the
Collateral shall include, and the applicable Grantor shall be deemed to have
granted a security interest in, such Intellectual Property as if such provision
had never been in effect; provided further that the applicable Grantor shall use
commercially reasonable efforts to have such provision waived or eliminated,
(iii) any property excluded from the definition of Pledged Stock by virtue of
the proviso to Section 3.01(a) hereof, (iv) any assets with respect to which the
Collateral and Guarantee Requirement need not be satisfied as a result of
Section 5.12(c) of the Credit Agreement; provided that upon the reasonable
request of the Administrative Agent, the applicable Grantor shall use
commercially reasonable efforts to have waived or eliminated any contractual
obligation of the types described in clauses (iii) and (iv) of Section 5.12(c)
of the Credit Agreement, (v) any Letter of Credit rights to the extent the
applicable Grantor is required by applicable law to apply the proceeds of a
drawing of such Letter of Credit for a specific purpose or (vi) any Grantor’s
right, title or interest in any license, contract or agreement to which such
Grantor is a party or any of its right, title or interest thereunder to the
extent, but only to the extent, that such a grant would, under the terms of such
license, contract or agreement, result in a breach of the terms of, or
constitute a default under, any license, contract or agreement evidencing or
giving rise to such property (other than to the extent that any such term would
be rendered ineffective pursuant to Section 9-406, 9-408 or 9-409 of the New
York UCC or any other applicable law (including, without limitation, Title 11 of
the United States Code) or principles of equity); provided, that immediately
upon the ineffectiveness, lapse or termination of any such provision, the
Collateral shall include, and such Grantor shall be deemed to have granted a
security interest in, all such rights and interests as if such provision had
never been in effect; provided further that the applicable Grantor shall use
commercially reasonable efforts to have such provision waived or eliminated.
 Any property in which a security interest is not granted pursuant to this
paragraph shall not be considered “Article 9 Collateral” for purposes of this
Agreement.

(c)           Each Grantor hereby irrevocably authorizes the Collateral Agent at
any time and from time to time to file in any relevant jurisdiction any initial
financing statements (including fixture filings) with respect to the Article 9
Collateral or any part thereof and amendments thereto that (i) indicate the
Collateral as all assets of such Grantor or words of similar effect as being of
an equal or lesser scope or with greater detail, and (ii) contain the
information required by Article 9 of the Uniform Commercial Code of each
applicable jurisdiction for the filing of any financing statement or amendment,
including (a) whether such Grantor is an organization, the type of organization
and any organizational identification number issued to such Grantor and (b) in
the case of a financing statement filed as a fixture filing or covering Article
9 Collateral constituting minerals or the like to be extracted or timber to be
cut, a

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sufficient description of the real property to which such Article 9 Collateral
relates.  Each Grantor agrees to provide such information to the Collateral
Agent promptly upon request.

The Collateral Agent is further authorized to file with the United States Patent
and Trademark Office or United States Copyright Office (or any successor office
or any similar office in any other country) such documents as may be reasonably
necessary or advisable for the purpose of perfecting, confirming, continuing,
enforcing or protecting the Security Interest granted by each Grantor, without
the signature of any Grantor, and naming any Grantor or the Grantors as debtors
and the Collateral Agent as secured party.

(d)           The Security Interest is granted as security only and shall not
subject the Collateral Agent or any other Secured Party to, or in any way alter
or modify, any obligation or liability of any Grantor with respect to or arising
out of the Article 9 Collateral.

SECTION 4.02.              Representations and Warranties.  The Grantors jointly
and severally represent and warrant to the Collateral Agent and the Secured
Parties that:

(a)           Each Grantor has good and valid rights in and title to the Article
9 Collateral with respect to which it has purported to grant a Security Interest
hereunder and has full power and authority to grant to the Collateral Agent the
Security Interest in such Article 9 Collateral pursuant hereto and to execute,
deliver and perform its obligations in accordance with the terms of this
Agreement, without the consent or approval of any other Person other than any
consent or approval that has been obtained and is in full force and effect.

(b)           The Perfection Certificate has been duly prepared, completed and
executed and the information set forth therein, including the exact legal name
of each Grantor, is correct and complete in all material respects as of the
Effective Date.  The Uniform Commercial Code financing statements (including
fixture filings, as applicable) or other appropriate filings, recordings or
registrations prepared by the Collateral Agent based upon the information
provided to the Collateral Agent in the Perfection Certificate for filing in
each governmental, municipal or other office specified in Schedule 2 to the
Perfection Certificate (or specified by notice from the Borrower to the
Collateral Agent after the Effective Date in the case of filings, recordings or
registrations required by Section 5.03(a) or 5.12 of the Credit Agreement), are
all the filings, recordings and registrations (other than filings that may be
required to be made in the United States Patent and Trademark Office and the
United States Copyright Office in order to perfect the Security Interest in
Article 9 Collateral consisting of United States Patents, United States
Trademarks and United States Copyrights) that are necessary to publish notice of
and protect the validity of and to establish a legal, valid and perfected
security interest in favor of the Collateral Agent (for the benefit of the
Secured Parties) in respect of all Article 9 Collateral in which the Security
Interest may be perfected by filing, recording or registration in the United
States (or any political subdivision thereof) and its territories and
possessions, and no further or subsequent filing, refiling, recording,
rerecording, registration or reregistration is necessary in any such
jurisdiction, except as provided under applicable law with respect to the filing
of continuation statements.  Each Grantor represents and warrants that a fully
executed agreement in the form hereof (or a short form hereof) and containing a
description of all Article 9 Collateral consisting of Intellectual Property with
respect to United States Patents and United States registered Trademarks (and
Trademarks for which United States registration applications are pending and in
which a security interest is granted hereunder) and United States registered
Copyrights have been delivered to the Collateral Agent for recording by the
United States Patent and Trademark Office and the United States Copyright Office
pursuant to 35 U.S.C. § 261, 15 U.S.C. § 1060 or 17 U.S.C. § 205 and the
regulations thereunder, as applicable, and otherwise as may be required pursuant
to the laws of any other necessary jurisdiction, to protect the validity of and
to establish a legal, valid and perfected security

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interest in favor of the Collateral Agent (for the benefit of the Secured
Parties) in respect of all Article 9 Collateral consisting of Patents,
Trademarks and Copyrights in which a security interest may be perfected by
filing, recording or registration in the United States (or any political
subdivision thereof) and its territories and possessions, and no further or
subsequent filing, refiling, recording, rerecording, registration or
reregistration is necessary (other than such actions as are necessary to perfect
the Security Interest with respect to any Article 9 Collateral consisting of
Patents, Trademarks and Copyrights (or registration or application for
registration thereof) acquired or developed after the date hereof).

(c)           The Security Interest constitutes (i) a legal and valid security
interest in all the Article 9 Collateral securing the payment and performance of
the Obligations, (ii) subject to the filings described in Section 4.02(b), a
perfected security interest in all Article 9 Collateral in which a security
interest may be perfected by filing, recording or registering a financing
statement or analogous document in the United States (or any political
subdivision thereof) and its territories and possessions pursuant to the Uniform
Commercial Code or other applicable law in such jurisdictions and (iii) a
security interest that shall be perfected in all Article 9 Collateral in which a
security interest may be perfected upon the receipt and recording of this
Agreement (or a short form hereof) with the United States Patent and Trademark
Office and the United States Copyright Office, as applicable and otherwise as
may be required pursuant to the laws of any other necessary jurisdiction.  The
Security Interest is and shall be prior to any other Lien on any of the Article
9 Collateral, other than Liens expressly permitted to be prior to the Security
Interest pursuant to Section 6.02 of the Credit Agreement or arising by
operation of law.

(d)           The Article 9 Collateral is owned by the Grantors free and clear
of any Lien, except for Liens expressly permitted pursuant to Section 6.02 of
the Credit Agreement or arising by operation of law.  None of the Grantors has
filed or consented to the filing of (i) any financing statement or analogous
document under the Uniform Commercial Code or any other applicable laws covering
any Article 9 Collateral, (ii) any assignment in which any Grantor assigns any
Article 9 Collateral or any security agreement or similar instrument covering
any Article 9 Collateral with the United States Patent and Trademark Office or
the United States Copyright Office or (iii) any assignment in which any Grantor
assigns any Article 9 Collateral or any security agreement or similar instrument
covering any Article 9 Collateral with any foreign governmental, municipal or
other office, which financing statement or analogous document, assignment,
security agreement or similar instrument is still in effect, except, in each
case, for Liens expressly permitted pursuant to Section 6.02 of the Credit
Agreement.

SECTION 4.03.              Covenants.  (a)  Each Grantor agrees promptly to
notify the Collateral Agent in writing of any change (i) in name, (ii) in its
identity or type of organization or corporate structure, (iii) in its Federal
Taxpayer Identification Number or organizational identification number or (iv)
in its jurisdiction of organization.  Each Grantor agrees to promptly provide
the Collateral Agent with certified organizational documents reflecting any of
the changes described in the first sentence of this paragraph.  Each Grantor
agrees not to effect or permit any change referred to in the preceding sentence
unless all filings have been made under the Uniform Commercial Code or otherwise
that are required in order for the Collateral Agent to continue at all times
following such change to have a valid, legal and perfected first priority
security interest in all the Article 9 Collateral.  Each Grantor agrees promptly
to notify the Collateral Agent if any material portion of the Article 9
Collateral owned or held by such Grantor is damaged or destroyed.

(b)           Each Grantor agrees to maintain, at its own cost and expense, such
complete and accurate records with respect to the Article 9 Collateral owned by
it as is consistent with its current practices and in accordance with such
prudent and standard practices used in industries that are the same as or
similar to those in which such Grantor is engaged, and, at such time or times as
the Collateral Agent may reasonably request, promptly to prepare and deliver to
the Collateral Agent a duly certified schedule

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or schedules in form and detail satisfactory to the Collateral Agent showing the
identity, amount and location of any material Article 9 Collateral.

(c)           Upon the request of the Collateral Agent, the Borrower shall
deliver to the Collateral Agent an updated Perfection Certificate certified by a
Financial Officer of the Borrower reflecting all changes since the date of the
Perfection Certificate delivered on the Effective Date or the date of the most
recent Perfection Certificate delivered pursuant to this paragraph.

(d)           Subject to the rights of such Grantor under the Loan Documents to
dispose of Collateral, each Grantor shall, at its own expense, use commercially
reasonable efforts to defend title to the Article 9 Collateral against all
Persons and to defend the Security Interest of the Collateral Agent in the
Article 9 Collateral and the priority thereof against any Lien not expressly
permitted pursuant to Section 6.02 of the Credit Agreement.

(e)           Each Grantor agrees, at its own expense, to execute, acknowledge,
deliver and cause to be duly filed all such further instruments and documents
and take all such actions as the Collateral Agent may from time to time
reasonably request to better assure, preserve, protect and perfect the Security
Interest and the rights and remedies created hereby, including the payment of
any fees and taxes required in connection with the execution and delivery of
this Agreement, the granting of the Security Interest and the filing of any
financing statements (including fixture filings) or other documents in
connection herewith or therewith.  If any amount payable under or in connection
with any of the Article 9 Collateral shall be or become evidenced by any
promissory note or other instrument (other than a check), such note or
instrument shall be promptly pledged and delivered to the Collateral Agent, duly
endorsed in a manner reasonably satisfactory to the Collateral Agent; provided
that this sentence shall not apply to any promissory note or other instrument
evidencing an amount not in excess of $3,000,000 other than any promissory note
evidencing intercompany indebtedness.

Without limiting the generality of the foregoing, each Grantor hereby authorizes
the Collateral Agent, with prompt notice thereof to the Grantors, to supplement
this Agreement by supplementing Schedule III or adding additional schedules
hereto to specifically identify any asset or item that may constitute registered
Copyrights, Patents or registered Trademarks, or applications for the foregoing,
and which is material to the conduct of the Grantor’s business; provided that
any Grantor shall have the right, exercisable within 30 days after it has been
notified by the Collateral Agent of the specific identification of such
Collateral, to advise the Collateral Agent in writing of any inaccuracy of the
representations and warranties made by such Grantor hereunder with respect to
such Collateral.  Each Grantor agrees that it will use commercially reasonable
efforts to take such action as shall be necessary in order that all
representations and warranties hereunder shall be true and correct with respect
to such Collateral within 30 days after the date it has been notified by the
Collateral Agent of the specific identification of such Collateral.

(f)            The Collateral Agent and such Persons as the Collateral Agent may
reasonably designate shall have the right, at the Grantors’ own cost and
expense, at reasonable times and upon reasonable prior notice, to inspect the
Article 9 Collateral, all records related thereto (and to make extracts and
copies from such records) and the premises upon which any of the Article 9
Collateral is located, to discuss the Grantors’ affairs with the officers of the
Grantors and their independent accountants and to verify, in accordance with
Section 5.08 of the Credit Agreement, the validity, amount, quality, quantity,
value, condition and status of, or any other matter relating to, the Article 9
Collateral, including, in the case of Accounts or Article 9 Collateral in the
possession of any third person, by contacting Account Debtors or the third
person possessing such Article 9 Collateral for the purpose of making such a

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verification.  The Collateral Agent shall have the absolute right to share any
information it gains from such inspection or verification with any Secured
Party.

(g)           At its option, the Collateral Agent may discharge past due taxes,
assessments, charges, fees, Liens, security interests or other encumbrances at
any time levied or placed on the Article 9 Collateral and not permitted pursuant
to Section 6.02 of the Credit Agreement unless properly contested in good faith
pursuant to Section 5.05 of the Credit Agreement, and may pay for the
maintenance and preservation of the Article 9 Collateral to the extent any
Grantor fails to do so as required by the Credit Agreement or this Agreement,
and each Grantor jointly and severally agrees to reimburse the Collateral Agent
on demand for any reasonable payment made or any reasonable expense incurred by
the Collateral Agent pursuant to the foregoing authorization; provided that
nothing in this paragraph shall be interpreted as excusing any Grantor from the
performance of, or imposing any obligation on the Collateral Agent or any
Secured Party to cure or perform, any covenants or other promises of any Grantor
with respect to taxes, assessments, charges, fees, Liens, security interests or
other encumbrances and maintenance as set forth herein or in the other Loan
Documents.

(h)           Each Grantor shall remain liable to observe and perform all the
conditions and obligations to be observed and performed by it under each
contract, agreement or instrument relating to the Article 9 Collateral, all in
accordance with the terms and conditions thereof, and each Grantor jointly and
severally agrees to indemnify and hold harmless the Collateral Agent and the
Secured Parties from and against any and all liability for such performance.

(i)            None of the Grantors shall make or permit to be made an
assignment, pledge or hypothecation of the Article 9 Collateral or shall grant
any other Lien in respect of the Article 9 Collateral, except as permitted by
the Credit Agreement.  None of the Grantors shall make or permit to be made any
transfer of the Article 9 Collateral and each Grantor shall remain at all times
in possession of the Article 9 Collateral owned by it, except that unless and
until the Collateral Agent shall notify the Grantors that an Event of Default
shall have occurred and be continuing and that during the continuance thereof
the Grantors shall not sell, convey, lease, assign, transfer or otherwise
dispose of any Article  9 Collateral (which notice may be given by telephone if
promptly confirmed in writing), the Grantors may use and dispose of the Article
9 Collateral in any lawful manner not inconsistent with the provisions of this
Agreement, the Credit Agreement or any other Loan Document.

(j)            None of the Grantors will, without the Collateral Agent’s prior
written consent, not to be unreasonably withheld, grant any extension of the
time of payment of any Accounts included in the Article 9 Collateral,
compromise, compound or settle the same for less than the full amount thereof,
release, wholly or partly, any Person liable for the payment thereof or allow
any credit or discount whatsoever thereon, other than extensions, compromises,
settlements, releases, credits or discounts granted or made in the ordinary
course of business and consistent with its current practices or in accordance
with such prudent and standard practice used in industries that are the same as
or similar to those in which such Grantor is engaged.

(k)           The Grantors, at their own expense, shall maintain or cause to be
maintained insurance covering physical loss or damage to the Inventory and
Equipment consistent with its current practices and in accordance with such
prudent and standard policies used in industries that are the same or similar to
those in which the Grantors are engaged and otherwise in accordance with the
requirements set forth in Section 5.07 of the Credit Agreement.  Each Grantor
irrevocably makes, constitutes and appoints the Collateral Agent (and all
officers, employees or agents designated by the Collateral Agent) as such
Grantor’s true and lawful agent (and attorney-in-fact) for the purpose, during
the continuance of an Event of Default, of making, settling and adjusting claims
in respect of Article 9 Collateral under policies of

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insurance, endorsing the name of such Grantor on any check, draft, instrument or
other item of payment for the proceeds of such policies of insurance and for
making all determinations and decisions with respect thereto.  In the event that
any Grantor at any time or times shall fail to obtain or maintain any of the
policies of insurance required hereby or to pay any premium in whole or part
relating thereto, the Collateral Agent may, without waiving or releasing any
obligation or liability of the Grantors hereunder or any Event of Default, in
its sole discretion, obtain and maintain such policies of insurance and pay such
premium and take any other actions with respect thereto as the Collateral Agent
reasonably deems advisable.  All sums disbursed by the Collateral Agent in
connection with this paragraph, including reasonable attorneys’ fees, court
costs, expenses and other charges relating thereto, shall be payable, upon
demand, by the Grantors to the Collateral Agent and shall be additional
Obligations secured hereby.

(l)            Each Grantor shall maintain, in form and manner reasonably
satisfactory to the Collateral Agent, records of its Chattel Paper and its
books, records and documents evidencing or pertaining thereto.

SECTION 4.04.              Other Actions.  In order to further insure the
attachment, perfection and priority of, and the ability of the Collateral Agent
to enforce, the Security interest, each Grantor agrees, in each case at such
Grantor’s own expense, to take the following actions with respect to the
following Article 9 Collateral:

(a)           Instruments.  If any Grantor shall at any time hold or acquire any
Instruments, such Grantor shall forthwith endorse, assign and deliver the same
to the Collateral Agent, accompanied by such instruments of transfer or
assignment duly executed in blank as the Collateral Agent may from time to time
reasonably request; provided that, notwithstanding the foregoing, this sentence
shall not apply to any Instrument evidencing an amount not in excess of
$3,000,000, other than any Instrument issued by the Borrower, Holdings or a
subsidiary thereof.

(b)           Electronic Chattel Paper and Transferable Records.  If any Grantor
at any time holds or acquires an interest in any electronic chattel paper or any
“transferable record,” as that term is defined in Section 201 of the Federal
Electronic Signatures in Global and National Commerce Act, or in Section 16 of
the Uniform Electronic Transactions Act as in effect in any relevant
jurisdiction, such Grantor shall promptly notify the Collateral Agent thereof
and, at the request of the Collateral Agent, shall take such action as the
Collateral Agent may reasonably request to vest in the Collateral Agent control
under New York UCC Section 9-105 of such electronic chattel paper or control
under Section 201 of the Federal Electronic Signatures in Global and National
Commerce Act or, as the case may be, Section 16 of the Uniform Electronic
Transactions Act, as so in effect in such jurisdiction, of such transferable
record; provided that, notwithstanding the foregoing, this sentence shall not
apply to any electronic chattel paper or other “transferable record” evidencing
an amount not in excess of $50,000 on an individual basis or $1,000,000 on an
aggregate basis.  The Collateral Agent agrees with such Grantor that the
Collateral Agent will arrange, pursuant to procedures reasonably satisfactory to
the Collateral Agent and so long as such procedures will not result in the
Collateral Agent’s loss of control, for the Grantor to make alterations to the
electronic chattel paper or transferable record permitted under UCC Section
9-105 or, as the case may be, Section 201 of the Federal Electronic Signatures
in Global and National Commerce Act or Section 16 of the Uniform Electronic
Transactions Act for a party in control to allow without loss of control, unless
an Event of Default has occurred and is continuing or would occur after taking
into account any action by such Grantor with respect to such electronic chattel
paper or transferable record.

(c)           Letter-of-Credit Rights.  If any Grantor is at any time a
beneficiary under a letter of credit with a face amount in excess of $3,000,000
now or hereafter issued in favor of such Grantor,

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such Grantor shall promptly notify the Collateral Agent thereof and, at the
request and option of the Collateral Agent, such Grantor shall use commercially
reasonable efforts to, pursuant to an agreement in form and substance reasonably
satisfactory to the Collateral Agent, either (i) arrange for the issuer and any
confirmer of such letter of credit to consent to an assignment to the Collateral
Agent of the proceeds of any drawing under the letter of credit or (ii) arrange
for the Collateral Agent to become the transferee beneficiary of the letter of
credit, with the Collateral Agent agreeing, in each case, that the proceeds of
any drawing under the letter of credit are to be paid to the applicable Grantor
unless an Event of Default has occurred or is continuing.

(d)           Commercial Tort Claims.  If any Grantor shall at any time hold or
acquire a commercial tort claim in an amount reasonably estimated to exceed
$3,000,000, the Grantor shall promptly notify the Collateral Agent thereof in a
writing signed by such Grantor including a summary description of such claim and
grant to the Collateral Agent in such writing a security interest therein and in
the proceeds thereof, all upon the terms of this Agreement, with such writing to
be in form and substance reasonably satisfactory to the Collateral Agent.

SECTION 4.05.           Covenants Regarding Patent, Trademark and Copyright
Collateral.  (a)  Each Grantor agrees that it will not do any act or omit to do
any act (and will exercise commercially reasonable efforts to prevent its
licensees from doing any act as omitting to do any act) whereby any Patent that
is material to the conduct of such Grantor’s business may become prematurely
invalidated or dedicated to the public, and agrees that it shall take
commercially reasonable steps with respect to any products covered by any such
Patent as necessary and sufficient to establish and preserve its rights under
applicable patent laws.

(b)           Each Grantor (either itself or through its licensees or its
sublicensees) will, for each Trademark material to the conduct of such Grantor’s
business, (i) maintain such Trademark in full force free from any abandonment or
invalidity for non-use, (ii) display such Trademark with notice of Federal or
foreign registration or claim of trademark or service mark as required to
establish and preserve its rights under applicable law and (iii) not knowingly
use or knowingly permit the use of such Trademark in violation of any third
party rights.

(c)           Each Grantor (either itself or through its licensees or
sublicensees) will, for each work covered by a Copyright that is material to the
conduct of any Grantor’s business, continue to publish, reproduce, display,
adopt and distribute the work with appropriate copyright notice as required to
establish and preserve its rights under applicable copyright laws.

(d)           Each Grantor shall notify the Collateral Agent promptly if it
knows that any Patent, Trademark or Copyright material to the conduct of its
business may become imminently abandoned or lost or prematurely dedicated to the
public, or of any materially adverse determination or development (including the
institution of, or any such determination or development in, any proceeding in
the United States Patent and Trademark Office, United States Copyright Office or
any court or similar office of any country) regarding such Grantor’s ownership
of any Patent, Trademark or Copyright, its right to register the same, or its
right to keep and maintain the same.

(e)           In the event that any Grantor, either itself or through any agent,
employee, licensee or designee, files an application for any Patent, Trademark
or Copyright (or for the registration of any Trademark or Copyright) with the
United States Patent and Trademark Office, United States Copyright Office or any
office or agency in any political subdivision of the United States or in any
other country or any political subdivision thereof, or receives notification
that an intent-to-use Trademark application has been approved, such Grantor
shall promptly inform the Collateral Agent, and, upon

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request of the Collateral Agent, shall execute and deliver any and all
agreements, instruments, documents and papers as the Collateral Agent may
reasonably request to evidence the Collateral Agent’s security interest in such
Patent, Trademark or Copyright, and each Grantor hereby appoints the Collateral
Agent as its attorney-in-fact to file such writings for the foregoing purposes,
all acts of such attorney being hereby ratified and confirmed; such power, being
coupled with an interest, is irrevocable.

(f)            Each Grantor will take all necessary steps that are consistent
with the practice in any proceeding before the United States Patent and
Trademark Office, United States Copyright Office or any office or agency in any
political subdivision of the United States or in any other country or any
political subdivision thereof, to maintain and pursue each application relating
to the Patents, Trademarks and/or Copyrights which are material to the conduct
of any Grantor’s business (and to obtain the relevant grant or registration) and
to maintain each issued Patent and each registration of the Trademarks and
Copyrights that is material to the conduct of any Grantor’s business, including
timely filings of applications for renewal, affidavits of use, affidavits of
incontestability and payment of maintenance fees, and, if such Grantor believes
it necessary in its reasonable business judgment, to initiate opposition,
interference and cancellation proceedings against third parties.

(g)           In the event that any Grantor has reason to believe that any
Article 9 Collateral consisting of a Patent, Trademark or Copyright material to
the conduct of any Grantor’s business has been or is about to be materially
infringed, misappropriated or diluted by a third party, such Grantor promptly
shall notify the Collateral Agent and shall, if such Grantor believes it
necessary in its reasonable business judgment, promptly sue for infringement,
misappropriation or dilution and to recover any and all damages for such
infringement, misappropriation or dilution, and take such other actions as are
appropriate under the circumstances to protect such Article 9 Collateral.

(h)           Upon and during the continuance of an Event of Default, each
Grantor shall use commercially reasonable efforts to obtain all requisite
consents or approvals by the licensor of each Copyright License, Patent License
or Trademark License to effect the assignment of all such Grantor’s right, title
and interest thereunder to the Collateral Agent or its designee.

ARTICLE V

Remedies

SECTION 5.01.           Remedies Upon Default.  Upon the occurrence and during
the continuance of an Event of Default, each Grantor agrees to deliver each item
of Collateral to the Collateral Agent on demand, and it is agreed that the
Collateral Agent shall have the right to take any of or all the following
actions at the same or different times:  (a) with respect to any Article 9
Collateral consisting of Intellectual Property, on demand, to cause the Security
Interest to become an assignment, transfer and conveyance of any of or all such
Article 9 Collateral by the applicable Grantors to the Collateral Agent, or to
license or sublicense, whether general, special or otherwise, and whether on an
exclusive or nonexclusive basis, any such Article 9 Collateral throughout the
world on such terms and conditions and in such manner as the Collateral Agent
shall determine (other than in violation of any then-existing licensing
arrangements to the extent that waivers cannot be obtained), and (b) with or
without legal process and with or without prior notice or demand for
performance, to take possession of the Article 9 Collateral and without
liability for trespass to the applicable Grantor to enter any premises where the
Article 9 Collateral may be located for the purpose of taking possession of or
removing the Article 9 Collateral and, generally, to exercise any and all rights
afforded to a secured party under the Uniform Commercial Code or other
applicable law.  Without limiting the generality of the foregoing, each Grantor
agrees that the Collateral Agent shall have the right, subject to the mandatory
requirements

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of applicable law, to sell or otherwise dispose of all or any part of the
Collateral at a public or private sale or at any broker’s board or on any
securities exchange, for cash, upon credit or for future delivery as the
Collateral Agent shall deem appropriate.  The Collateral Agent shall be
authorized at any such sale of securities (if it deems it advisable to do so) to
restrict the prospective bidders or purchasers to Persons who will represent and
agree that they are purchasing the Collateral for their own account for
investment and not with a view to the distribution or sale thereof, and upon
consummation of any such sale the Collateral Agent shall have the right to
assign, transfer and deliver to the purchaser or purchasers thereof the
Collateral so sold.  Each such purchaser at any sale of Collateral shall hold
the property sold absolutely, free from any claim or right on the part of any
Grantor, and each Grantor hereby waives (to the extent permitted by law) all
rights of redemption, stay and appraisal which such Grantor now has or may at
any time in the future have under any rule of law or statute now existing or
hereafter enacted.

The Collateral Agent shall give the applicable Grantors 10 days’ written notice
(which each Grantor agrees is reasonable notice within the meaning of Section
9-611 of the New York UCC or its equivalent in other jurisdictions) of the
Collateral Agent’s intention to make any sale of Collateral.  Such notice, in
the case of a public sale, shall state the time and place for such sale and, in
the case of a sale at a broker’s board or on a securities exchange, shall state
the board or exchange at which such sale is to be made and the day on which the
Collateral, or portion thereof, will first be offered for sale at such board or
exchange.  Any such public sale shall be held at such time or times within
ordinary business hours and at such place or places as the Collateral Agent may
fix and state in the notice (if any) of such sale.  At any such sale, the
Collateral, or portion thereof, to be sold may be sold in one lot as an entirety
or in separate parcels, as the Collateral Agent may (in its sole and absolute
discretion) determine.  The Collateral Agent shall not be obligated to make any
sale of any Collateral if it shall determine not to do so, regardless of the
fact that notice of sale of such Collateral shall have been given.  The
Collateral Agent may, without notice or publication, adjourn any public or
private sale or cause the same to be adjourned from time to time by announcement
at the time and place fixed for sale, and such sale may, without further notice,
be made at the time and place to which the same was so adjourned.  In case any
sale of all or any part of the Collateral is made on credit or for future
delivery, the Collateral so sold shall be retained by the Collateral Agent until
the sale price is paid by the purchaser or purchasers thereof, but the
Collateral Agent shall not incur any liability in case any such purchaser or
purchasers shall fail to take up and pay for the Collateral so sold and, in case
of any such failure, such Collateral may be sold again upon like notice.  At any
public (or, to the extent permitted by law, private) sale made pursuant to this
Agreement, any Secured Party may bid for or purchase, free (to the extent
permitted by law) from any right of redemption, stay, valuation or appraisal on
the part of any Grantor (all said rights being also hereby waived and released
to the extent permitted by law), the Collateral or any part thereof offered for
sale and may make payment on account thereof by using any claim then due and
payable to such Secured Party from any Grantor as a credit against the purchase
price, and such Secured Party may, upon compliance with the terms of sale, hold,
retain and dispose of such property without further accountability to any
Grantor therefor.  For purposes hereof, a written agreement to purchase the
Collateral or any portion thereof shall be treated as a sale thereof; the
Collateral Agent shall be free to carry out such sale pursuant to such agreement
and no Grantor shall be entitled to the return of the Collateral or any portion
thereof subject thereto, notwithstanding the fact that after the Collateral
Agent shall have entered into such an agreement all Events of Default shall have
been remedied and the Obligations paid in full.  As an alternative to exercising
the power of sale herein conferred upon it, the Collateral Agent may proceed by
a suit or suits at law or in equity to foreclose this Agreement and to sell the
Collateral or any portion thereof pursuant to a judgment or decree of a court or
courts having competent jurisdiction or pursuant to a proceeding by a
court-appointed receiver.  Any sale pursuant to the provisions of this Section
5.01 shall be deemed to conform to the commercially reasonable standards as
provided in Section 9-610(b) of the New York UCC or its equivalent in other
jurisdictions.

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SECTION 5.02.           Application of Proceeds.  The Collateral Agent shall
promptly apply the proceeds of any collection or sale of Collateral; including
any Collateral consisting of cash, as follows:

FIRST, to the payment of all costs and expenses incurred by the Collateral Agent
in connection with such collection or sale or otherwise in connection with this
Agreement, any other Loan Document or any of the Obligations, including all
court costs and the fees and expenses of its agents and legal counsel, there
payment of all advances made by the Collateral Agent hereunder or under any
other Loan Document on behalf of any Grantor and any other costs or expenses
incurred in connection with the exercise of any right or remedy hereunder or
under any other Loan Document;

SECOND, to the payment in full of the Obligations (the amounts so applied to be
distributed among the Secured Parties pro rata in accordance with the amounts of
the Obligations owed to them on the date of any such distribution); and

THIRD, to the Grantors, their successors or assigns, or as a court o competent
jurisdiction may otherwise direct.

The Collateral Agent shall have absolute discretion as to the time of
application of any such proceeds, moneys or balances in accordance with this
Agreement.  Upon any sale of Collateral by the Collateral Agent (including
pursuant to a power of sale granted by statute or under a judicial proceeding),
the receipt by the Collateral Agent or by the officer making the sale of such
proceeds shall be a sufficient discharge to the purchaser or purchasers of the
Collateral so sold and such purchaser or purchasers shall not be obligated to
see to the application of any part of the purchase money paid over to the
Collateral Agent or such officer or be answerable in any way for the
misapplication thereof.

SECTION 5.03.           Grant of License to Use Intellectual Property.  For the
purpose of enabling the Collateral Agent to exercise rights and remedies under
this Agreement at such time as the Collateral Agent shall be lawfully entitled
to exercise such rights and remedies, each Grantor hereby grants to the
Collateral Agent a nonexclusive license (which shall be irrevocable during the
term of this Agreement and exercisable without payment of royalty or other
compensation to the Grantors) to use, license or sublicense, provided that the
Collateral Agent comply with the terms of any applicable License, solely to the
extent necessary to properly exercise its remedies during such Event of Default,
any of the Article 9 Collateral consisting of Intellectual Property now owned or
hereafter acquired by such Grantor, and wherever the same may be located, and
provided that the Collateral Agent comply with the terms of any applicable
License, including in such license reasonable access to all media in which any
of the licensed items may be recorded or stored and to all computer software and
programs used for the compilation or printout thereof.  The use of such license
by the Collateral Agent may be exercised, at the option of the Collateral Agent,
upon the occurrence and solely during the continuation of an Event of Default;
provided that any license, sublicense or other transaction entered into by the
Collateral Agent in accordance herewith shall be binding upon the Grantors
notwithstanding any subsequent cure of an Event of Default.

SECTION 5.04.           Securities Act.  In view of the position of the Grantors
in relation to the Pledged Collateral, or because of other current or future
circumstances, a question may arise under the Securities Act of 1933, as now or
hereafter in effect, or any similar federal statute hereafter enacted analogous
in purpose or effect (such Act and any such similar statute as from time to time
in effect being called the “Federal Securities Laws”) with respect to any
disposition of the Pledged Collateral permitted hereunder.  Each Grantor
understands that compliance with the Federal Securities Laws might very

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strictly limit the course of conduct of the Collateral Agent if the Collateral
Agent were to attempt to dispose of all or any part of the Pledged Collateral,
and might also limit the extent to which or the manner in which any subsequent
transferee of any Pledged Collateral could dispose of the same.  Similarly,
there may be other legal restrictions or limitations affecting the Collateral
Agent in any attempt to dispose of all or part of the Pledged Collateral under
applicable Blue Sky or other state securities laws or similar laws analogous in
purpose or effect.  Each Grantor recognizes that in light of such restrictions
and limitations the Collateral Agent may, with respect to any sale of the
Pledged Collateral, limit the purchasers to those who will agree, among other
things, to acquire such Pledged Collateral for their own account, for
investment, and not with a view to the distribution or resale thereof.  Each
Grantor acknowledges and agrees that in light of such restrictions and
limitations, the Collateral Agent, in its sole and absolute discretion (a) may
proceed to make such a sale whether or not a registration statement for the
purpose of registering such Pledged Collateral or part thereof shall have been
filed under the Federal Securities Laws and (b) may approach and negotiate with
a single potential purchaser to effect such sale.  Each Grantor acknowledges and
agrees that any such sale might result in prices and other terms less favorable
to the seller than if such sale were a public sale without such restrictions.
 In the event of any such sale, the Collateral Agent shall incur no
responsibility or liability for selling all or any part of the Pledged
Collateral at a price that the Collateral Agent, in its sole and absolute
discretion, may in good faith deem reasonable under the circumstances,
notwithstanding the possibility that a substantially higher price might have
been realized if the sale were deferred until after registration as aforesaid or
if more than a single purchaser were approached.  The provisions of this Section
5.04 will apply notwithstanding the existence of a public or private market upon
which the quotations or sales prices may exceed substantially the price at which
the Collateral Agent sells.

SECTION 5.05.           Registration.  Each Grantor agrees that, upon the
occurrence and during the continuance of an Event of Default, if for any reason
the Collateral Agent desires to sell any of the Pledged Collateral at a public
sale, it will, at any time and from time to time, upon the written request of
the Collateral Agent, use its commercially reasonable efforts to take or to
cause the issuer of such Pledged Collateral to take such action and prepare,
distribute and/or file such documents, as are required or advisable in the
reasonable opinion of counsel for the Collateral Agent to permit the public sale
of such Pledged Collateral.  Each Grantor further agrees to indemnify, defend
and hold harmless the Collateral Agent, each other Secured Party, any
underwriter and their respective officers, directors, affiliates and controlling
persons from and against all loss, liability, expenses, costs of counsel
(including; without limitation, reasonable fees and expenses to the Collateral
Agent of legal counsel), and claims (including the costs of investigation) that
they may incur insofar as such loss, liability, expense or claim arises out of
or is based upon any alleged untrue statement of a material fact contained in
any prospectus (or any amendment or supplement thereto) or in any notification
or offering circular, or arises out of or is based upon any alleged omission to
state a material fact required to be stated therein or necessary to make the
statements in any thereof not misleading, except insofar as the same may have
been caused by any untrue statement or omission based upon information furnished
in writing to such Grantor or the issuer of such Pledged Collateral by the
Collateral Agent or any other Secured Party expressly for use therein.  Each
Grantor further agrees, upon such written request referred to above, to use its
commercially reasonable efforts to qualify, file or register, or cause the
issuer of such Pledged Collateral to qualify, file or register, any of the
Pledged Collateral under the Blue Sky or other securities laws of such states as
may be requested by the Collateral Agent and keep effective, or cause to be kept
effective, all such qualifications, filings or registrations.  Each Grantor will
bear all costs and expenses of carrying out its obligations under this Section
5.05.  Each Grantor acknowledges that there is no adequate remedy at law for
failure by it to comply with the provisions of this Section 5.05 and that such
failure would not be adequately compensable in damages, and therefore agrees
that its agreements contained in this Section 5.05 may be specifically enforced.

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ARTICLE VI

Indemnity, Subrogation and Subordination

SECTION 6.01.           Indemnity and Subrogation.  In addition to all such
rights of indemnity and subrogation as the Subsidiary Loan Parties may have
under applicable law (but subject to Section 6.03), the Borrower and Holdings,
jointly and severally, agree that (a) in the event a payment of an obligation
shall be made by any Subsidiary Loan Party under this Agreement, the Borrower
and Holdings, jointly and severally, shall indemnify such Subsidiary Loan Party
for the full amount of such payment and such Subsidiary Loan Party shall be
subrogated to the rights of the Person to whom such payment shall have been made
to the extent of such payment and (b) in the event any assets of any Subsidiary
Loan Party shall be sold pursuant to this Agreement or any other Security
Document to satisfy in whole or in part an Obligation owed to any Secured Party,
the Borrower and Holdings, jointly and severally, shall indemnify such
Subsidiary Loan Party in an amount equal to the greater of the book value or the
fair market value of the assets so sold.

SECTION 6.02.           Contribution and Subrogation.  Each Subsidiary Loan
Party (a “Contributing Party”) agrees (subject to Section 6.03) that, in the
event a payment shall be made by any other Subsidiary Loan Party hereunder in
respect of any Obligation or assets of any other Subsidiary Loan Party shall be
sold pursuant to any Security Document to satisfy any Obligation owed to any
Secured Party and such other Subsidiary Loan Party (the “Claiming Party”) shall
not have been fully indemnified by the Borrower and Holdings as provided in
Section 6.01, the Contributing Party shall indemnify the Claiming Party in an
amount equal to the amount of such payment or the greater of the book value or
the fair market value of such assets, as the case may be, in each case
multiplied by a fraction of which the numerator shall be the net worth of the
Contributing Party on the date hereof and the denominator shall be the aggregate
net worth of all the Subsidiary Loan Parties on the date hereof (or, in the case
of any Subsidiary Loan Party becoming a party hereto pursuant to Section 7.14,
the date of the supplement hereto executed and delivered by such Subsidiary Loan
Party).  Any Contributing Party making any payment to a Claiming Party pursuant
to this Section 6.02 shall be subrogated to the rights of such Claiming Party
under Section 6.01 to the extent of such payment.

SECTION 6.03.           Subordination.  (a)  Notwithstanding any provision of
this Agreement to the contrary, all rights of the Guarantors and Grantors under
Sections 6.01 and 6.02 and all other rights of indemnity, contribution or
subrogation under applicable law or otherwise shall be fully subordinated to the
indefeasible payment in full in cash or immediately available funds of the
Obligations.  No failure on the part of the Borrower, Holdings or any Guarantor
or Grantor to make the payments required by Sections 6.01 and 6.02 (or any other
payments required under applicable law or otherwise) shall in any respect limit
the obligations and liabilities of any Guarantor or Grantor with respect to its
obligations hereunder, and each Guarantor and Grantor shall remain liable for
the full amount of the obligations of such Guarantor or Grantor hereunder.

(b)           Each Guarantor and Grantor hereby agrees that all Indebtedness and
other monetary obligations owed by it to any other Guarantor, Grantor or any
other Subsidiary shall be fully subordinated to the indefeasible payment in full
in cash or immediately available funds of the Obligations.

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ARTICLE VII

Miscellaneous

SECTION 7.01.           Notices.  All communications and notices hereunder shall
(except as otherwise expressly permitted herein) be in writing and given as
provided in Section 9.01 of the Credit Agreement.  All communications and
notices hereunder to any Subsidiary Loan Party shall be given to it in care of
the Borrower as provided in Section 9.01 of the Credit Agreement.

SECTION 7.02.           Waivers; Amendment.  (a)  No failure or delay by the
Collateral Agent, any Issuing Bank or any Lender in exercising any right or
power hereunder or under any other Loan Document shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right or power, or
any abandonment or discontinuance of steps to enforce such a right or power,
preclude any other or further exercise thereof or the exercise of any other
right or power.  The rights and remedies of the Collateral Agent, the Issuing
Banks and the Lenders hereunder and under the other Loan Documents are
cumulative and are not exclusive of any rights or remedies that they would
otherwise have.  No waiver of any provision of this Agreement or consent to any
departure by any Loan Party therefrom shall in any event be effective unless the
same shall be permitted by paragraph (b) of this Section 7.02, and then such
waiver or consent shall be effective only in the specific instance and for the
purpose for which given.  Without limiting the generality of the foregoing, the
making of a Loan or issuance of a Letter of Credit shall not be construed as a
waiver of any Default, regardless of whether the Collateral Agent, any Lender or
Issuing Bank may have had notice or knowledge of such Default at the time.  No
notice or demand on any Loan Party in any case shall entitle any Loan Party to
any other or further notice or demand in similar or other circumstances.

(b)           Neither this Agreement nor any provision hereof may be waived,
amended or modified except pursuant to an agreement or agreements in writing
entered into by the Collateral Agent and the Loan Party or Loan Parties with
respect to which such waiver, amendment or modification is to apply, subject to
any consent required in accordance with Section 9.02 of the Credit Agreement.

SECTION 7.03.           Collateral Agent’s Fees and Expenses; Indemnification. 
(a)  The parties hereto agree that the Collateral Agent shall be entitled to
reimbursement of its expenses incurred hereunder as provided in Section 9.03 of
the Credit Agreement.

(b)           Without limitation of its indemnification obligations under the
other Loan Documents, each Grantor and each Guarantor jointly and severally
agrees to indemnify the Collateral Agent and the other Indemnitees (as defined
in Section 9.03 of the Credit Agreement) against, and hold each Indemnitee
harmless from, any and all losses, claims, damages, liabilities and related
expenses, including the reasonable fees, charges and disbursements of any
counsel for any Indemnitee, incurred by or asserted against any Indemnitee
arising out of, in connection with, or as a result of, the execution, delivery
or performance of this Agreement or any claim, litigation, investigation or
proceeding relating to any of the foregoing agreement or instrument contemplated
hereby, or to the Collateral, whether or not any Indemnitee is a party thereto;
provided that such indemnity shall not, as to any Indemnitee, be available to
the extent that such losses, claims, damages, liabilities or related expenses
are determined by a court of competent jurisdiction by final and nonappealable
judgment to have resulted from such Indemnitee’s breach of its obligations under
the Loan Documents or from the gross negligence or willful misconduct of such
Indemnitee.

(c)           Any such amounts payable as provided hereunder shall be additional
Obligations secured hereby and by the other Security Documents.  The provisions
of this Section 7.03 shall remain

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operative and in full force and effect regardless of the termination of this
Agreement or any other Loan Document, the consummation of the transactions
contemplated hereby, the repayment of any of the Obligations, the invalidity or
unenforceability of any term or provision of this Agreement or any other Loan
Document, or any investigation made by or on behalf of the Collateral Agent or
any other Secured Party.  All amounts due under this Section 7.03 shall be
payable on written demand therefor.

SECTION 7.04.           Successors and Assigns.  Whenever in this Agreement any
of the parties hereto is referred to, such reference shall be deemed to include
the permitted successors and assigns of such party; and all covenants, promises
and agreements by or on behalf of any Guarantor, Grantor or the Collateral Agent
that are contained in this Agreement shall bind and inure to the benefit of
their respective successors and assigns.

SECTION 7.05.           Survival of Agreement.  All covenants, agreements,
representations and warranties made by the Loan Parties in the Loan Documents
and in the certificates or other instruments prepared or delivered in connection
with or pursuant to this Agreement or any other Loan Document shall be
considered to have been relied upon by the Lenders and shall survive the
execution and delivery of the Loan Documents and the making of any Loans and
issuance of any Letters of Credit, regardless of any investigation made by any
Lender or on its behalf and notwithstanding that the Collateral Agent, any
Issuing Bank or any Lender may have had notice or knowledge of any Default or
incorrect representation or warranty at the time any credit is extended under
the Credit Agreement, and shall continue in full force and effect as long as the
principal of or any accrued interest on any Loan or any fee or any other amount
payable under any Loan Document is outstanding and unpaid or any Letter of
Credit is outstanding and so long as the Commitments have not expired or
terminated.

SECTION 7.06.           Counterparts; Effectiveness; Several Agreement.  This
Agreement may be executed in counterparts, each of which shall constitute an
original but all of which when taken together shall constitute single contract.
 Delivery of an executed signature page to this Agreement by facsimile
transmission shall be as effective as delivery of a manually signed counterpart
of this Agreement.  This Agreement shall become effective as to any Loan Party
when a counterpart hereof executed on behalf of such Loan Party shall have been
delivered to the Collateral Agent and a counterpart hereof shall have been
executed on behalf of the Collateral Agent, and thereafter shall be binding upon
such Loan Party and the Collateral Agent and their respective permitted
successors and assigns, and shall inure to the benefit of such Loan Party, the
Collateral Agent and the other Secured Parties and their respective successors
and assigns, except that no Loan Party shall have the right to assign or
transfer its rights or obligations hereunder or any interest herein or in the
Collateral (and any such assignment or transfer shall be void) except as
expressly contemplated by this Agreement or the Credit Agreement.  This
Agreement shall be construed as a separate agreement with respect to each Loan
Party and may be amended, modified, supplemented, waived or released with
respect to any Loan Party without the approval of any other Loan Party and
without affecting the obligations of any other Loan Party hereunder.

SECTION 7.07.           Severability.  Any provision of this Agreement held to
be invalid, illegal or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such invalidity, illegality or
unenforceability without affecting the validity, legality and enforceability of
the remaining provisions hereof; and the invalidity of a particular provision in
a particular jurisdiction shall not invalidate such provision in any other
jurisdiction.  The parties shall endeavor in good-faith negotiations to replace
the invalid, illegal or unenforceable provisions with valid provisions the
economic effect of which comes as close as possible to that of the invalid,
illegal or unenforceable provisions.

SECTION 7.08.           Right of Set-Off.  If an Event of Default shall have
occurred and be continuing, each Lender and each of its Affiliates is hereby
authorized at any time and from time to time,

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to the fullest extent permitted by law, to set off and apply any and all
deposits (general or special, time or demand, provisional or final) at any time
held and other obligations at any time owing by such Lender or Affiliate to or
for the credit or the account of any Subsidiary Loan Party against any of and
all the obligations of such Subsidiary Loan Party now or hereafter existing
under this agreement owed to such Lender, irrespective of whether or not such
Lender shall have made any demand under this Agreement and although such
obligations may be unmatured.  The rights of each Lender under this Section 7.08
are in addition to other rights and remedies (including other rights of set-off)
which such Lender may have.

SECTION 7.09.           Governing Law, Jurisdiction; Consent to Service of
Process.  (a)  This Agreement shall be construed in accordance with and govern
ed by the law of the State of New York.

(b)           Each of the Loan Parties hereby irrevocably and unconditionally
submits, for itself and its property, to the nonexclusive jurisdiction of the
Supreme Court of the State of New York sitting in New York County and of the
United States District Court of the Southern District of New York, and any
appellate court from any thereof, in any action or proceeding arising out of or
relating to this Agreement or any other Loan Document, or for recognition or
enforcement of any judgment, and each of the parties hereto hereby irrevocably
and unconditionally agrees that all claims in respect of any such action or
proceeding may be heard and determined in such New York State or, to the extent
permitted by law, in such Federal court.  Each of the parties hereto agrees that
a final judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law.  Nothing in this Agreement or any other Loan Document shall
affect any right that the Collateral Agent, any Issuing Bank or any Lender may
otherwise have to bring any action or proceeding relating to this Agreement or
any other Loan Document against any Grantor or Guarantor, or its properties in
the courts of any jurisdiction.

(c)           Each of the Loan Parties hereby irrevocably and unconditionally
waives, to the fullest extent it may legally and effectively do so, any
objection which it may now or hereafter have to the laying of venue of any suit,
action or proceeding arising out of or relating to this Agreement or any other
Loan Document in any court referred to in paragraph (b) of this Section 7.09.
 Each of the parties hereto hereby irrevocably waives, to the fullest extent
permitted by law, the defense of an inconvenient forum to the maintenance of
such action or proceeding in any such court.

(d)           Each party to this Agreement irrevocably consents to service of
process in the manner provided for notices in Section 7.01.  Nothing in this
Agreement or any other Loan Document will affect the right of any party to this
Agreement to serve process in any other manner permitted by law.

SECTION 7.10.           WAIVER OF JURY TRIAL.  EACH PARTY HERETO HEREBY WAIVES,
TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A
TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR
RELATING TO THIS AGREEMENT, ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY).  EACH
PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY
OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD
NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B)
ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER
INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION 7.10.

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SECTION 7.11.           Headings.  Article and Section headings and the Table of
Contents used herein are for convenience of reference only, are not part of this
Agreement and are not to affect the construction of, or to be taken into
consideration in interpreting, this Agreement.

SECTION 7.12.           Security Interest Absolute.  All rights of the
Collateral Agent hereunder, the Security Interest, the grant of a security
interest in the Pledged Collateral and all obligations of each Grantor and
Guarantor hereunder shall be absolute and unconditional irrespective of (a) any
lack of validity or enforceability of the Credit Agreement, any other Loan
Document, any agreement with respect to any of the Obligations or any other
agreement or instrument relating to any of the foregoing, (b) any change in the
time, manner or place of payment of, or in any other term of, all or any of the
Obligations, or any other amendment or waiver of or any consent to any departure
from the Credit Agreement, any other Loan Document or any other agreement or
instrument, (c) any exchange, release or non-perfection of any Lien on other
collateral, or any release or amendment or waiver of or consent under or
departure from any guarantee, securing or guaranteeing all or any of the
Obligations, or (d) any other circumstance that might otherwise constitute a
defense available to, or a discharge of, any Grantor or Guarantor in respect of
the Obligations or this Agreement (other than a defense of payment or
performance).

SECTION 7.13.           Termination or Release.  (a)  This Agreement, the
Guarantees made herein, the Security Interest and all other security interests
granted hereby shall terminate when all the Loan Document Obligations have been
indefeasibly paid in full and the Lenders have no further commitment to lend
under the Credit Agreement, the LC Exposure has been reduced to zero and the
Issuing Bank has no further obligations to issue Letters of Credit under the
Credit Agreement.

(b)           A Subsidiary Loan Party shall automatically be released from its
obligations hereunder and the Security Interest in the Collateral of such
Subsidiary Loan Party shall be automatically released upon the consummation of
any transaction permitted by the Credit Agreement as a result of which such
Subsidiary Loan Party ceases to be a Subsidiary of the Borrower (or otherwise
ceases to be a Guarantor); provided that the Required Lenders shall have
consented to such transaction (to the extent required by the Credit Agreement)
and the terms of such consent did not provide otherwise.

(c)           Upon any sale or other transfer by any Grantor of any Collateral
that is permitted under the Credit Agreement, or upon the effectiveness of any
written consent to the release of the security interest granted hereby in any
Collateral pursuant to Section 9.02 of the Credit Agreement, the security
interest in such Collateral shall be automatically released.

(d)           In connection with any termination or release pursuant to
paragraph (a), (b) or (c), the Collateral Agent shall execute and deliver to any
Grantor, at such Grantor’s expense, all documents that such Grantor shall
reasonably request to evidence such termination or release.  Any execution and
delivery of documents pursuant to this Section 7.13 shall be without recourse to
or warranty by the Collateral Agent.

SECTION 7.14.           Additional Subsidiaries.  Upon execution and delivery by
the Collateral Agent and a Subsidiary of an instrument in the form of Exhibit I
hereto, such Subsidiary that is required to become a party hereto pursuant to
Section 5.11 of the Credit Agreement shall become a Subsidiary Loan Party
hereunder with the same force and effect as if originally named as a Subsidiary
Loan Party herein.  The execution and delivery of any such instrument shall not
require the consent of any other Loan Party hereunder.  The rights and
obligations of each Loan Party hereunder shall remain in full force and effect
notwithstanding the addition of any new Loan Party as a parry to this Agreement.

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SECTION 7.15.           Collateral Agent Appointed Attorney-in-Fact.  Each
Grantor hereby appoints the Collateral Agent the attorney-in-fact of such
Grantor for the purpose of carrying out the provisions of this Agreement and
taking any action and executing any instrument that the Collateral Agent may
deem necessary or advisable to accomplish the purposes hereof, which appointment
is irrevocable and coupled with an interest.  The Collateral Agent shall have
the right, upon the occurrence and during the continuance of an Event of
Default, with full power of substitution either in the Collateral Agent’s name
or in the name of such Grantor (a) to receive, endorse, assign and/or deliver
any and all notes, acceptances, checks, drafts, money orders or other evidences
of payment relating to the Collateral or any part thereof; (b) to demand,
collect, receive payment of, give receipt for and give discharges and releases
of all or any of the Collateral; (c) to sign the name of any Grantor on any
invoice or bill of lading relating to any of the Collateral; (d) to send
verifications of Accounts Receivable to any Account Debtor; (e) to commence and
prosecute any and all suits, actions or proceedings at law or in equity in any
court of competent jurisdiction to collect or otherwise realize on all or any of
the Collateral or to enforce any rights in respect of any Collateral; (f) to
settle, compromise, compound, adjust or defend any actions, suits or proceedings
relating to all or any of the Collateral; (g) to notify, or to require any
Grantor to notify, Account Debtors to make payment directly to the Collateral
Agent; and (h) to use, sell, assign, transfer, pledge, make any agreement with
respect to or otherwise deal with all or any of the Collateral, and to do all
other acts and things necessary to carry out the purposes of this Agreement, as
fully and completely as though the Collateral Agent were the absolute owner of
the Collateral for all purposes; provided that nothing herein contained shall be
construed as requiring or obligating the Collateral Agent to make any commitment
or to make any inquiry as to the nature or sufficiency of any payment received
by the Collateral Agent, or to present or file any claim or notice, or to take
any action with respect to the Collateral or any part thereof or the moneys due
or to become due in respect thereof or any property covered thereby.  The
Collateral Agent and the other Secured Parties shall be accountable only for
amounts actually received as a result of the exercise of the powers granted to
them herein, and neither they nor their officers, directors, employees or agents
shall be responsible to any Grantor for any act or failure to act hereunder,
except for their own gross negligence or willful misconduct.

SECTION 7.16.           Compliance with Laws.  Notwithstanding anything herein
which may be construed to the contrary, no action shall be taken by any of the
Collateral Agent and the Secured.  Parties with respect to the Licenses or any
license, permit, certificate or authorization of the FCC or any other federal,
state or local regulatory or governmental bodies applicable to or having
jurisdiction over any Grantor unless and until any required approval under the
Communications Act or any other applicable communications law, and any
applicable rules and regulations thereunder, requiring the consent to or
approval of such action by the FCC or any governmental or other communications
authority, have been satisfied and, to the extent applicable, any action taken
with respect to, concerning or affecting the Collateral, directly or indirectly,
or any Security Interest granted therein by the Collateral Agent and the Secured
Parries shall be subject to any required approval of the FCC and any state or
local communications regulatory authority and all applicable communications
laws.

SECTION 7.17.           Termination of Shared Collateral Agreement.  Each of
Hawaiian Telcom, Inc. and the Collateral Agent hereby agree that on the
Effective Date, the Shared Collateral Agreement shall be terminated, and
Hawaiian Telcom, Inc. hereby represents and warrants to the Collateral Agent
that (i) the Debenture Obligations (as defined in the Shared Collateral
Agreement) have been indefeasibly paid and satisfied in full and (ii) the
Trustee and the Debenture Holders (each as defined in the Shared Collateral
Agreement), are no longer secured parties entitled to the benefits of the Shared
Collateral Agreement.  The Shared Collateral Agreement shall hereafter be of no
further force and effect, except to evidence (i) the representations and
warranties made by Hawaiian Telcom, Inc. thereunder prior to the Effective Date
and (ii) any action or omission performed or required to be

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performed by Hawaiian Telcom, Inc. pursuant to such Shared Collateral Agreement
prior to the Effective Date (including any failure, prior to the Effective Date,
to comply with the covenants contained in such Shared Collateral Agreement). 
The termination provided for in this Section 7.17 shall not cure any breach of
the Shared Collateral Agreement or any “Default” or “Event of Default” under and
as defined in the Shared Collateral Agreement existing prior to the Effective
Date.  This Agreement and the termination provided for in this Section 7.17 is
not in any way intended to constitute a novation of the obligations and
liabilities existing under the Shared Collateral Agreement in favor of the
Collateral Agent and the Lenders or evidence payment of all or any portion of
such obligations and liabilities, and all such obligations and liabilities
existing under the Shared Collateral Agreement in favor of the Collateral Agent
and the Lenders shall hereafter be considered obligations and liabilities
pursuant to this Agreement.

SECTION 7.18.           Amendment and Restatement.

(a)           On the Effective Date, the Existing Guarantee and Collateral
Agreement shall be amended and restated in its entirety by this Agreement, and
the Existing Guarantee and Collateral Agreement shall thereafter be of no
further force and effect, except to evidence (i) the representations and
warranties made by the Grantors prior to the Effective Date and (ii) any action
or omission performed or required to be performed pursuant to such Existing
Guarantee and Collateral Agreement prior to the Effective Date (including any
failure, prior to the Effective Date, to comply with the covenants contained in
such Existing Guarantee and Collateral Agreement).  The amendments and
restatements set forth herein shall not cure any breach thereof or any “Default”
or “Event of Default” under and as defined in the Existing Guarantee and
Collateral Agreement existing prior to the Effective Date.  This Agreement is
not in any way intended to constitute a novation of the obligations and
liabilities existing under the Existing Guarantee and Collateral Agreement or
evidence payment of all or any portion of such obligations and liabilities.

(b)           The terms and conditions of this Agreement and the Collateral
Agent’s and the Lenders’ rights and remedies under this Agreement and the other
Loan Documents shall apply to (i) all of the Obligations incurred under the
Credit Agreement and all obligations of the Guarantors incurred under the Loan
Documents and (ii) all of the “Obligations” incurred under and as defined in the
Existing Credit Agreement and all obligations of the Guarantors incurred under
the Loan Documents (as defined in the Existing Credit Agreement) (the “Existing
Loan Documents”).

(c)           Each Grantor and each Guarantor hereby reaffirms the Liens granted
pursuant to the Existing Loan Documents to the Collateral Agent for the benefit
of the Secured Parties (as defined in the Existing Credit Agreement), which
Liens shall continue in full force and effect during the term of this Agreement
and any renewals thereof and shall continue to secure the Obligations.  Each of
Grantors and the Guarantors hereby consents to the execution, delivery and
performance of the Credit Agreement and all of the other Loan Documents executed
in connection therewith.

(d)           On and after the Effective Date, (i) all references to the
Existing Guarantee and Collateral Agreement in the Loan Documents (other than
this Agreement) shall be deemed to refer to the Existing Guarantee and
Collateral Agreement, as amended and restated hereby, (ii) all references to any
Article, Section or sub-clause of the Existing Guarantee and Collateral
Agreement in any Loan Document (other than this Agreement) shall be deemed to be
references to the corresponding provisions of this Agreement and (iii) except as
the context otherwise provides, on or after the Effective Date, all references
to this Agreement herein (including for purposes of indemnification and
reimbursement of fees) shall be deemed to be references to the Existing
Guarantee and Collateral Agreement, as amended and restated hereby.

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(e)           This amendment and restatement is limited as written and is not a
consent to any other amendment, restatement or waiver, whether or not similar
and, except as expressly provided herein or in any other Loan Document, all
terms and conditions of the Loan Documents remain in full force and effect
unless otherwise specifically amended hereby or amended by any other Loan
Document.

[Signature Pages Follow]

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IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of
the day and year first above written.

HAWAIIAN TELCOM HOLDCO, INC.,

 

 

 

By

/s/ Michael S. Ruley

 

 

Name: Michael S. Ruley

 

Title: Chief Executive Officer

 

 

 

 

 

HAWAIIAN TELCOM COMMUNICATIONS, INC.,

 

 

 

By

/s/ Michael S. Ruley

 

 

Name: Michael S. Ruley

 

Title: Chief Executive Officer

 

 

 

 

 

HAWAIIAN TELCOM, INC.,

 

 

 

By

/s/ Michael S. Ruley

 

 

Name: Michael S. Ruley

 

Title: Chief Executive Officer

 

 

 

 

 

HAWAIIAN TELCOM SERVICES COMPANY, INC.,

 

 

 

By

/s/ Michael S. Ruley

 

 

Name: Michael S. Ruley

 

Title: Chief Executive Officer

 

:

 

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LEHMAN COMMERCIAL PAPER INC.,

 

as Collateral Agent

 

 

 

 

 

By

/s/ Laurie Perper

 

 

 

 

 

 

Name: Laurie Perper

 

Title: Senior Vice President

 

                       

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