Exhibit 10.2

 

 

 

GUARANTEE AND COLLATERAL AGREEMENT

 

dated as of

 

February 29, 2012

 

among

 

HAWAIIAN TELCOM HOLDCO, INC.,

 

HAWAIIAN TELCOM COMMUNICATIONS, INC.,

 

THE SUBSIDIARIES OF HAWAIIAN TELCOM COMMUNICATIONS, INC.
IDENTIFIED HEREIN

 

and

 

CREDIT SUISSE AG, CAYMAN ISLANDS BRANCH,

 

as Collateral Agent

 

 

 

--------------------------------------------------------------------------------

 

TABLE OF CONTENTS

 

 

 

 

Page

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

 

6

SECTION 2.03

No Limitations

 

6

SECTION 2.04

Reinstatement

 

7

SECTION 2.05

Agreement to Pay; Subrogation

 

8

SECTION 2.06

Information

 

8

SECTION 2.07

Guarantee Absolute and Unconditional

 

8

SECTION 2.08

Payments

 

9

 

 

 

 

ARTICLE III

PLEDGE OF SECURITIES

 

 

 

 

SECTION 3.01

Pledge

 

9

SECTION 3.02

Delivery of the Pledged Collateral

 

10

SECTION 3.03

Representations, Warranties and Covenants

 

10

SECTION 3.04

[RESERVED]

 

12

SECTION 3.05

Registration in Nominee Name; Denominations

 

12

SECTION 3.06

Voting Rights; Dividends and Interest

 

12

 

 

 

 

ARTICLE IV

SECURITY INTERESTS IN PERSONAL PROPERTY

 

 

 

 

SECTION 4.01

Security Interest

 

13

SECTION 4.02

Representations and Warranties

 

16

SECTION 4.03

Covenants

 

18

SECTION 4.04

Other Actions

 

23

SECTION 4.05

Covenants Regarding Patent, Trademark and Copyright Collateral

 

24

 

 

 

 

ARTICLE V

REMEDIES

 

 

 

 

SECTION 5.01

Remedies Upon Default

 

26

SECTION 5.02

Proceeds to be Turned Over to Collateral Agent

 

27

SECTION 5.03

Application of Proceeds

 

27

SECTION 5.04

Grant of License to Use Intellectual Property

 

28

SECTION 5.05

Securities Act

 

28

SECTION 5.06

Code and Other Remedies

 

29

 

i

--------------------------------------------------------------------------------

 

SECTION 5.07

Registration Rights

 

31

SECTION 5.08

Deficiency

 

32

 

 

 

 

ARTICLE VI

INDEMNITY, SUBROGATION AND SUBORDINATION

 

 

 

 

SECTION 6.01

Indemnity and Subrogation

 

32

SECTION 6.02

Contribution and Subrogation

 

32

SECTION 6.03

Subordination

 

33

 

 

 

 

ARTICLE VII

MISCELLANEOUS

 

 

 

 

SECTION 7.01

Notices

 

33

SECTION 7.02

Waivers; Amendment

 

33

SECTION 7.03

Collateral Agent’s Fees and Expenses; Indemnification

 

34

SECTION 7.04

Successors and Assigns

 

34

SECTION 7.05

Survival of Agreement

 

35

SECTION 7.06

Counterparts; Effectiveness; Several Agreement

 

35

SECTION 7.07

Severability

 

35

SECTION 7.08

Right of Set-Off

 

35

SECTION 7.09

Governing Law, Jurisdiction; Consent to Service of Process

 

36

SECTION 7.10

WAIVER OF JURY TRIAL

 

36

SECTION 7.11

Headings

 

37

SECTION 7.12

Security Interest Absolute

 

37

SECTION 7.13

Termination or Release

 

37

SECTION 7.14

Additional Subsidiaries

 

38

SECTION 7.15

Collateral Agent Appointed Attorney-in-Fact

 

38

SECTION 7.16

Compliance with Laws

 

39

SECTION 7.17

Intercreditor Agreement

 

39

SECTION 7.18

The Mortgages

 

40

 

ii

--------------------------------------------------------------------------------

 

Schedules

 

Schedule I

Subsidiary Guarantors

Schedule II

Pledged Stock; Debt Securities

Schedule III

Intellectual Property

Schedule IV

Jurisdiction of Organization, Identification Number and Location of Chief
Executive Office

 

Exhibits

 

Exhibit I

Form of Supplement

Exhibit II

Form of Perfection Certificate

 

iii

--------------------------------------------------------------------------------

 

GUARANTEE AND COLLATERAL AGREEMENT (this “Agreement”) dated as of February 29,
2012, among HAWAIIAN TELCOM HOLDCO, INC. (“Holdings”, HAWAIIAN TELCOM
COMMUNICATIONS, INC. (“Borrower”), the Subsidiaries of HAWAIIAN TELCOM
COMMUNICATIONS, INC. identified herein and CREDIT SUISSE AG, CAYMAN ISLANDS
BRANCH, as collateral agent (in such capacity, and together with its successors
and assigns, the “Collateral Agent”).

 

WHEREAS, Holdings, Borrower, the Lenders from time to time party thereto, Credit
Suisse AG, Cayman Islands Branch (“Credit Suisse”), as administrative agent (in
such capacity, the “Administrative Agent”) for such Lenders and the Collateral
Agent have entered into that certain Credit Agreement, dated as of February 29,
2012 (as amended, restated, amended and restated, supplemented or otherwise
modified from time to time, the “Credit Agreement”), pursuant to which the
Lenders will extend to the Borrower new senior secured term loans in an
outstanding aggregate principal amount of $300,000,000 as set forth therein, and
it is a condition precedent to the obligations of the Lenders under the Credit
Agreement and the entry into Secured Hedge Agreements (as defined herein) (if
any) by the Hedge Banks (as defined herein) from time to time, among other
things, that the Grantors shall execute and deliver this Agreement on behalf of
and for the ratable benefit of the Secured Parties;

 

WHEREAS, pursuant to the Credit Agreement, the Grantors are entering into this
Agreement in order to grant to the Collateral Agent for the ratable benefit of
the Secured Parties a security interest in the Collateral (as hereinafter
defined);

 

WHEREAS, Holdings and the Subsidiary Guarantors are affiliates of the Borrower
and will derive substantial benefits from the transactions contemplated by the
Credit Agreement;

 

NOW, THEREFORE, in consideration of the premises and to induce the Lenders, the
Administrative Agent and the Collateral Agent to enter into the Credit
Agreement, to induce the Hedge Banks to enter into Secured Hedge Agreements, and
for other good, fair and valuable consideration and reasonably equivalent value,
the receipt and sufficiency of which are hereby acknowledged by each Grantor,
each Grantor hereby agrees with the Collateral Agent, on behalf of and for the
ratable benefit of the Secured Parties, 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 1.02 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:

 

--------------------------------------------------------------------------------

 

“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 (including, without limitation,
those listed in Schedule III), 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.

 

“Deposit Account” has the meaning assigned to such term in the New York UCC and,
in any event, including, without limitation, any demand, time, savings, passbook
or like account maintained with a depositary institution.

 

“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 5.05.

 

“General Intangibles” means all choses 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, Hedging
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.

 

2

--------------------------------------------------------------------------------

 

“Grantors” means Holdings, the Borrower and the Subsidiary Guarantors.

 

“Guarantors” means Holdings and the Subsidiary Guarantors.

 

“Hedge Bank” shall mean any Person that is an Administrative Agent, the
Collateral Agent, or a Lender or an Affiliate of any of the foregoing (or was an
Administrative Agent, the Collateral Agent or a Lender or an Affiliate of any of
the foregoing at the time it entered into a Secured Hedge Agreement), in its
capacity as a party to a Secured Hedge Agreement.

 

“Intellectual Property” means all intellectual and similar intangible property
of every kind and nature now owned or hereafter acquired by any Grantor,
including inventions, designs, Patents, Copyrights, Licenses, Trademarks, rights
in Technology, trade secrets, internet domain names, confidential or proprietary
technical and business information, know-how, show-how or other data or
information, software and databases, and all additions, improvements and
accessions to any of the foregoing.

 

“License” means any Patent License, Trademark License, Copyright License or
other license or sublicense agreement granting any right to any third party
under any Intellectual Property 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 Intellectual Property now or hereafter owned by any third
party, and all rights of such Grantor under any such agreement.

 

“Loan Document Obligations” means (a) the due and punctual payment by the
Borrower of (i) the unpaid principal of and interest (including interest
accruing at the then applicable rate provided in the Credit Agreement after the
maturity of the Loans and interest accruing at the then applicable rate provided
in the Credit Agreement after the filing of any petition in bankruptcy, or the
commencement of any insolvency, reorganization, receivership or other similar
proceeding, regardless of whether a claim for post-filing or post-petition
interest is allowed 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 and (ii) all other monetary obligations and liabilities of the
Borrower to any of the Secured Parties under the Credit Agreement, each of the
other Loan Documents and each other document made, delivered or given in
connection therewith, including obligations to pay fees, disbursements, costs,
expenses, reimbursement obligations and indemnification obligations or
otherwise, whether primary, secondary, direct, contingent, fixed, due or to
become due, or now existing or hereinafter incurred or otherwise (including
monetary obligations incurred during the pendency of any petition in bankruptcy,
or the commencement of any insolvency, reorganization, receivership or other
similar proceeding, regardless of whether a claim for post-filing or
post-petition interest is allowed or allowable in such proceeding), (b) all
other obligations and liabilities of each Grantor, whether direct or indirect,
absolute or contingent, due or to become due, or now existing or hereafter
incurred, which may arise under, out of, or in connection with, this Agreement
(including, without limitation, all fees and disbursements of counsel to the
Collateral Agent or to the Secured Parties that are required to be paid by any
Grantor pursuant to the terms of the Loan Documents) and (c) the due and
punctual performance of all other obligations of each Loan Party under or
pursuant to the Credit Agreement and each of the other Loan Documents.

 

3

--------------------------------------------------------------------------------

 

“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 Secured
Hedge Agreement; provided, that for purposes of this Agreement, the amount of
any obligations under any Secured Hedge Agreement shall be reduced by the amount
of cash deposits, if any, securing such Secured Hedge Agreement and which are
held by the counterparty to such Secured Hedge 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,
design, idea, concept, method, technique, technology or process 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, design, idea, concept, method, technique,
technology or process 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, re-examinations, continuations, divisions,
continuations-in-part, renewals or extensions thereof, supplemental perfection
certificates relating thereto and 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 Hedge Agreement” shall mean any Hedging Agreement permitted under
Article VI of the Credit Agreement which is entered into between any Hedge Bank
and any Loan Party.

 

4

--------------------------------------------------------------------------------

 

“Secured Parties” means (a) the Lenders, (b) the Administrative Agent, (c) the
Collateral Agent, (d) each Hedge Bank, (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 Guarantors” means (a) the Subsidiaries identified on Schedule I and
(b) each other Subsidiary that becomes a party to this Agreement as a Subsidiary
Guarantor after the Closing Date.

 

“Technology” means all software, information, designs, formulae, algorithms,
procedures, methods, techniques, ideas, know-how, research and development,
technical data, programs, models, routines, data, databases, information,
subroutines, tools, materials, specifications, processes, inventions (whether
patentable or unpatentable and whether or not reduced to practice), apparatus,
creations, improvements, works of authorship, compilations, manuals, memoranda,
documentation, marketing materials, customer lists, recordings, graphs,
drawings, schematics, blueprints, prototypes, flow charts, charts, graphics,
reports, manuscripts, pictorial materials, analyses and all tangible embodiments
of the foregoing, in any form whether or not specifically listed herein, and all
related technology, that is used in, incorporated in, embodied in, displayed by
or related to the foregoing.

 

“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, 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.

 

ARTICLE II
GUARANTEE

 

SECTION 2.01                                  Guarantee.  (a)  Each Guarantor
guarantees, jointly and severally, unconditionally and irrevocably, as primary
obligor and not merely as surety, with the other Guarantors, to the Collateral
Agent for the ratable benefit of the Secured Parties and their respective
successors, indorsees, transferees and assigns, the due and punctual payment and

 

5

--------------------------------------------------------------------------------

 

performance of the Obligations (whether at stated maturity, by acceleration or
otherwise).  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.

 

(b)                                 Anything herein or in any other Loan
Document to the contrary notwithstanding, (i) the maximum liability of each
Guarantor hereunder and under the other Loan Documents and any Secured Hedge
Agreements shall in no event exceed the amount which can be guaranteed by such
Guarantor under applicable federal and state laws relating to fraudulent
conveyances or transfers or the insolvency of debtors and (ii) the maximum
liability of the Borrower under this Section 2 shall in no event exceed the
amount which can be guaranteed by the Borrower under applicable federal and
state laws relating to fraudulent conveyances or transfers or the insolvency of
debtors.

 

(c)                                  Each Guarantor agrees that the Borrower’s
Obligations may at any time and from time to time exceed the amount of the
liability of such Guarantor hereunder without impairing the guarantee of such
Guarantor contained in this Section 2 or affecting the rights and remedies of
the Administrative Agent or any Secured Party hereunder.

 

(d)                                 The guarantee contained in this Section 2
shall remain in full force and effect until all the Obligations shall have been
satisfied by full and final payment in cash.

 

(e)                                  No payment made by the Borrower, any of the
Guarantors, any other guarantor or any other Person or received or collected by
the Collateral Agent or any Secured Party from the Borrower, any of the
Guarantors, any other guarantor or any other Person by virtue of any action or
proceeding or any set-off or appropriation or application at any time or from
time to time in reduction of or in payment of the Obligations shall be deemed to
modify, reduce, release or otherwise affect the liability of the Borrower or any
Guarantor under this Section 2 which shall, notwithstanding any such payment
(other than any payment made by the Borrower or such Guarantor in respect of the
Obligations or any payment received or collected from the Borrower or such
Guarantor in respect of the Obligations), remain liable for the Obligations up
to the maximum liability of the Borrower or such Guarantor hereunder until the
Obligations are fully and finally paid in cash.

 

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

 

6

--------------------------------------------------------------------------------

 

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 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.

 

7

--------------------------------------------------------------------------------

 

 

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.

 

SECTION 2.07                                  Guarantee Absolute and
Unconditional.  Each Guarantor waives any and all notice of the creation,
renewal, extension or accrual of any of the Obligations and notice of or proof
of reliance by the Collateral Agent or any Secured Party upon the guarantee
contained in this Section 2 or acceptance of the guarantee contained in this
Section 2; the Obligations, and any of them, shall conclusively be deemed to
have been created, contracted or incurred, or renewed, extended, amended or
waived, in reliance upon the guarantee contained in this Section 2; and all
dealings between the Borrower and any of the Guarantors, on the one hand, and
the Collateral Agent and the Secured Parties, on the other hand, likewise shall
be conclusively presumed to have been had or consummated in reliance upon the
guarantee contained in this Section 2.  Each Guarantor waives diligence,
presentment, protest, demand for payment and notice of default or nonpayment to
or upon the Borrower or any of the Guarantors with respect to the Obligations.
 Each Guarantor understands and agrees that the guarantee of such Guarantor
contained in this Section 2 shall be construed as a continuing, absolute and
unconditional guarantee of payment without regard to (i) the validity or
enforceability of the Credit Agreement or any other Loan Document, any of the
Obligations or any collateral security therefor or guarantee or right of offset
with respect thereto or the lack of perfection or failure of priority of any
security for the Obligations or any part thereof at any time or from time to
time held by the Collateral Agent or any Secured Party, (ii) any defense,
set-off or counterclaim (other than a defense of payment or performance) which
may at any time be available to or be asserted by the Borrower or any other
Person against the Collateral Agent or any Secured Party, or (iii) any other
circumstance whatsoever (with or without notice to or knowledge of the Borrower
or such Guarantor) which constitutes, or might be construed to constitute, an
equitable or legal discharge of the Borrower for the Obligations, or of such
Guarantor under the guarantee of such Guarantor contained in this Section 2, in
bankruptcy or in any other instance.  When making any demand hereunder or
otherwise pursuing its rights and remedies hereunder against any Guarantor, the
Collateral Agent or any Secured Party may, but shall be under no obligation to,
make a similar demand on or otherwise pursue such rights and remedies as it may
have against

 

8

--------------------------------------------------------------------------------

 

the Borrower, any other Guarantor or any other Person or against any collateral
security or guarantee for the Obligations or any right of offset with respect
thereto, and any failure by the Collateral Agent or any Secured Party to make
any such demand, to pursue such other rights or remedies or to collect any
payments from the Borrower, any other Guarantor or any other Person or to
realize upon any such collateral security or guarantee or to exercise any such
right of offset, or any release of the Borrower, any other Guarantor or any
other Person or any such collateral security, guarantee or right of offset,
shall not relieve any Guarantor of any obligation or liability under this
Section 2, and shall not impair or affect the rights and remedies, whether
express, implied or available as a matter of law, of the Collateral Agent or any
Secured Party against any Guarantor.  For the purposes hereof “demand” shall
include the commencement and continuance of any legal proceedings.

 

SECTION 2.08                                  Payments.  The Borrower and each
Guarantor hereby guarantees that payments by it hereunder will be paid to the
Collateral Agent without set-off or counterclaim in Dollars and otherwise in
accordance with Section 2.19 of the Credit Agreement.

 

ARTICLE III
PLEDGE OF SECURITIES

 

SECTION 3.01                                  Pledge.  As collateral security
for the payment or performance, as the case may be, in full of the Obligations
(whether at stated maturity, by acceleration or otherwise), each Grantor hereby
delivers, mortgages, hypothecates, pledges, assigns and transfers, as
appropriate, 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 lien on and first priority 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 (x) to the extent applicable law requires that a
subsidiary of such Grantor issue directors’ qualifying shares, such qualifying
shares and (y) to the extent (but only to the extent) reasonably expected to
cause adverse tax consequences to the Borrower, any Equity Interests in any
Foreign Subsidiary to the extent resulting in more than 66% of the total
combined voting power of all classes of stock in such Foreign Subsidiary
entitled to vote (within the meaning of Treasury Regulation
Section 1.956-2(c)(2) promulgated under the Internal Revenue Code) (on a fully
diluted basis) being pledged to the Collateral Agent, on behalf of the Grantors,
under this Agreement (it being understood that all of the Equity Interests in
any Foreign Subsidiary not entitled to vote (within the meaning of Treasury
Regulation Section 1.956-2(c)(2) promulgated under the Internal Revenue Code)
shall be Collateral pledged hereunder); (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 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

 

9

--------------------------------------------------------------------------------

 

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 $250,000, 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 or under the Credit
Agreement;

 

(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;

 

10

--------------------------------------------------------------------------------

 

(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 Pledged Securities free and clear of
all Liens, other than Liens created by this Agreement, Liens expressly permitted
under Section 6.02(c), (d), (f), (k) or (q) or (to the extent relating to the
Liens securing obligations under the Revolving Facility Agreement or any
Refinancing thereof) Section 6.02(a) of the Credit Agreement 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, Liens expressly permitted under Section 6.02(c), (d), (f), (k) or
(q) or (to the extent relating to the Liens securing obligations under the
Revolving Facility Agreement or any Refinancing thereof) Section 6.02(a) of the
Credit Agreement and any assignment or transfer expressly permitted under the
Credit Agreement, and (iv) subject to any right of such Grantor under the Loan
Documents to dispose of Pledged Collateral, as to any material portion 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 Liens expressly permitted under Section 6.02(c),
(d), (f), (k) or (q) or (to the extent relating to the Liens securing
obligations under the Revolving Facility Agreement or any Refinancing thereof)
Section 6.02(a) of the Credit Agreement), however arising, of all Persons
whomsoever;

 

(d)                                 except for restrictions and limitations
imposed by the Loan Documents and the Revolving Facility Agreement 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 the State of New York, 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

 

11

--------------------------------------------------------------------------------

 

(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 and in the
Intercreditor Agreement.

 

SECTION 3.04                                  [RESERVED]

 

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 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 not less than five Business
Days’ prior written 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,

 

12

--------------------------------------------------------------------------------

 

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 given
not less than five Business Days’ prior written notice to 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 such money or other property and shall be applied in accordance with
the provisions of Section 5.03.  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 given
not less than five Business Days’ prior written notice to 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
collateral security for the payment or performance, as the case may be, in full
of the Obligations (whether at stated maturity, by acceleration or otherwise),
each Grantor hereby mortgages, pledges, hypothecates, grants,

 

13

--------------------------------------------------------------------------------

 

assigns and transfers to the Collateral Agent, its successors and permitted
assigns, for the ratable benefit of the Secured Parties, a lien on and a first
priority 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;

 

(xi)                                Commercial Tort Claims;

 

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

 

(xiii)                          all Goods (including, without limitation,
Fixtures) and other personal property not otherwise described above;

 

(xiv)                         the non-exclusive cable franchise referred to in
that certain Decision and Order No. 352 issued by the Department of Commerce and
Consumer Affairs of the State of Hawaii, dated June 24, 2011; and

 

(xv)                            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 Intellectual Property to the
extent that the Communications Act or other applicable law prohibits the
granting of a security interest therein or the grant of a security interest
therein could result in the cancellation, voidance or invalidity of such
Intellectual Property, (ii) any contract, General Intangible, Copyright License,
Patent License or Trademark License (“Intangible Assets”), in each case to the
extent the grant by the relevant Grantor of a security interest pursuant to this
Agreement in such Grantor’s right, title and interest in such

 

14

--------------------------------------------------------------------------------

 

Intangible Asset (A) is prohibited by legally enforceable provisions of any
contract, agreement, instrument or indenture governing such Intangible Asset,
(B) would give any other party to such contract, agreement, instrument or
indenture a legally enforceable right to terminate its obligations thereunder or
(C) is permitted only with the consent of another party, if the requirement to
obtain such consent is legally enforceable and such consent has not been
obtained; provided, that in any event any Account or any money or other amounts
due or to become due under any such contract, agreement, instrument or indenture
shall not be excluded from the Collateral to the extent that any of the
foregoing is (or if it contained a provision limiting the transferability or
pledge thereof would be) subject to Section 9-406 of the New York UCC and
(iii) (A) any property excluded from the definition of Pledged Stock by virtue
of the proviso to Section 3.01 hereof and (B) to the extent prohibited by law or
regulatory restriction or so long as Hawaiian Telcom Insurance
Company, Incorporated does not engage in any business or activity other than
maintaining insurance for workers compensation and related matters and
maintaining its corporate existence, participating in tax, accounting and other
administrative activities, and activities incidental thereto, the Equity
Interests in Hawaiian Telcom Insurance Company, Incorporated or (iv) 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 9-409, 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 (collectively,
“Excluded Assets”).  If and when such property shall cease to be Excluded
Assets, such property shall be deemed at all times from and after the date
hereof to constitute Article 9 Collateral.

 

(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 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)
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

 

15

--------------------------------------------------------------------------------

 

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 Closing 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, 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, 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
consisting of Patents, Trademarks and

 

16

--------------------------------------------------------------------------------

 

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 United States Patents, 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 (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.  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.

 

(e)                                  On the date hereof, such Grantor’s
jurisdiction of organization, identification number from the jurisdiction of
organization (if any), and the location of such Grantor’s chief executive office
or sole place of business or principal residence, as the case may be, are
specified on Schedule IV.  Such Grantor has furnished to the Collateral Agent a
certified charter, certificate of incorporation or other organization document
and long-form good standing certificate as of a date which is recent to the date
hereof.

 

17

--------------------------------------------------------------------------------

 

 

SECTION 4.03                                  Covenants.  Each Grantor covenants
and agrees with the Collateral Agent and the Secured Parties that, from and
after the date of this Agreement until the Obligations shall have been paid in
full:

 

(a)                                  In the case of each Guarantor, such
Guarantor shall take, or shall refrain from taking, as the case may be, each
action that is necessary to be taken or not taken, as the case may be, so that
no Default or Event of Default is caused by the failure to take such action or
to refrain from taking such action by such Guarantor or any of its Subsidiaries.

 

(b)                                 If any amount payable under or in connection
with any of the Collateral shall be or become evidenced by any Instrument,
Certificated Security or Chattel Paper, such Instrument, Certificated Security
or Chattel Paper shall be promptly delivered to the Collateral Agent, duly
indorsed in a manner satisfactory to the Collateral Agent, to be held as
Collateral pursuant to this Agreement; provided, that the Grantors shall not be
obligated to deliver to the Collateral Agent any Instruments or Chattel Paper
held by any Grantor at any time to the extent that the aggregate face amount of
all such Instruments and Chattel Paper held by all Grantors at such time does
not exceed $250,000.

 

(c)                                  Such Grantor will maintain, with
financially sound and reputable companies, insurance policies in accordance with
the requirements of Section 5.02 of the Credit Agreement.

 

(d)                                 Such Grantor will pay and discharge or
otherwise satisfy at or before maturity or before they become delinquent, as the
case may be, all material taxes, assessments and governmental charges or levies
imposed upon the Collateral in accordance with Section 5.03 of the Credit
Agreement or in respect of income or profits therefrom, as well as all material
claims of any kind (including, without limitation, claims for labor, materials
and supplies) against or with respect to the Collateral, except that no such
charge need be paid if the amount or validity thereof is currently being
contested in good faith by appropriate proceedings, reserves in conformity with
GAAP with respect thereto have been provided on the books of such Grantor and
such proceedings could not reasonably be expected to result in the sale,
forfeiture or loss of any material portion of the Collateral or any interest
therein.

 

(e)                                  (i)  Such Grantor shall maintain the
security interest created by this Agreement as a perfected security interest
having at least the priority described in Section 4.02 and shall defend such
security interest against the claims and demands of all Persons whomsoever in
accordance with Section 4.03(l).

 

(ii)                                  At any time and from time to time, upon
the written request of the Collateral Agent, and at the sole expense of such
Grantor, such Grantor will promptly and duly execute and deliver, and have
recorded, such further instruments and documents and take such further actions
as the Collateral Agent may request for the purpose of obtaining or preserving
the full benefits of this Agreement and of the rights and powers herein granted,
including, without limitation, (A) the filing of any financing or continuation
statements under the

 

18

--------------------------------------------------------------------------------

 

Uniform Commercial Code (or other similar laws) in effect in any jurisdiction
with respect to the security interests created hereby and (B) in the case of
Investment Property, Deposit Accounts and Letter-of-Credit Rights, taking any
actions necessary to enable the Collateral Agent to obtain “control” (within the
meaning of the applicable Uniform Commercial Code) with respect thereto.

 

(f)                                    Each Grantor will not, except upon prior
notice to the Collateral Agent and delivery to the Collateral Agent of any
additional documents reasonably requested by the Collateral Agent that are
necessary to maintain the validity, perfection and priority of the security
interests provided for herein, effect 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 security
interest (with the same priority as immediately before such change) in all the
Article 9 Collateral.

 

(g)                                 [RESERVED]

 

(h)                                 (i)  If such Grantor shall become entitled
to receive or shall receive any certificate (including, without limitation, any
certificate representing a dividend or a distribution in connection with any
reclassification, increase or reduction of capital or any certificate issued in
connection with any reorganization), option or rights in respect of the Equity
Interests of any issuer thereof (each, an “Issuer”), whether in addition to, in
substitution of, as a conversion of, or in exchange for, any shares of the
Pledged Stock, or otherwise in respect thereof, such Grantor shall accept the
same as the agent of the Collateral Agent and the Secured Parties, hold the same
in trust for the Collateral Agent and the Secured Parties and deliver the same
forthwith to the Collateral Agent in the exact form received, duly indorsed by
such Grantor to the Collateral Agent, if required, together with an undated
stock power covering such certificate duly executed in blank by such Grantor and
with, if the Collateral Agent so requests, signature guaranteed, to be held by
the Collateral Agent, subject to the terms hereof, as additional collateral
security for the Obligations.  Any sums paid upon or in respect of the
Investment Property upon the liquidation or dissolution of any Issuer shall be
paid over to the Collateral Agent to be held by it hereunder as additional
collateral security for the Obligations, and in case any distribution of capital
shall be made on or in respect of the Investment Property, or any property shall
be distributed upon or with respect to the Investment Property pursuant to the
recapitalization or reclassification of the capital of any Issuer or pursuant to
the reorganization thereof, the property so distributed shall, unless otherwise
subject to a perfected security interest in favor of the Collateral Agent, be
delivered to the Collateral Agent to be held by it hereunder as additional
collateral security for the Obligations.  If any sums of money or property so
paid or distributed in respect of the Investment Property shall be received by
such Grantor, such Grantor shall, until such money or property is paid or
delivered to the Collateral Agent, hold such money or property in trust

 

19

--------------------------------------------------------------------------------

 

for the Secured Parties, segregated from other funds of such Grantor, as
additional collateral security for the Obligations.  Notwithstanding the
foregoing, the Grantors shall not be required to pay over to the Collateral
Agent or deliver to the Collateral Agent as Collateral any proceeds of any
liquidation or dissolution of any Issuer, or any distribution of capital or
property in respect of any Investment Property, to the extent that (A) such
liquidation, dissolution or distribution would be permitted by the Credit
Agreement and (B) the proceeds thereof are applied toward prepayment of Loans to
the extent required by the Credit Agreement.

 

(ii)                                  Without the prior written consent of the
Collateral Agent, such Grantor will not (A) vote to enable, or take any other
action to permit, any Issuer to issue any stock or other equity securities of
any nature or to issue any other securities convertible into or granting the
right to purchase or exchange for any stock or other equity securities of any
nature of any Issuer, unless such securities are delivered to the Collateral
Agent, concurrently with the issuance thereof, to be held by the Collateral
Agent as Collateral, (B) sell, assign, transfer, exchange, or otherwise dispose
of, or grant any option with respect to, the Investment Property or Proceeds
thereof (except pursuant to a transaction expressly permitted by the Credit
Agreement), (C) create, incur or permit to exist any Lien or option in favor of,
or any claim of any Person with respect to, any of the Investment Property or
Proceeds thereof, or any interest therein, except for the security interests
created by this Agreement or (D) enter into any agreement or undertaking
restricting the right or ability of such Grantor or the Collateral Agent to
sell, assign or transfer any of the Pledged Securities or Proceeds thereof, in
each case except to the extent permitted under the Credit Agreement.

 

(iii)                               In the case of each Grantor which is an
Issuer, such Issuer agrees that (A) it will be bound by the terms of this
Agreement relating to the Pledged Securities issued by it and will comply with
such terms insofar as such terms are applicable to it, (B) it will notify the
Collateral Agent promptly in writing of the occurrence of any of the events
described in Section 5.8(a) with respect to the Pledged Securities issued by it
and (C) the terms of Section 5.07 shall apply to it, mutatis mutandis, with
respect to all actions that may be required of it pursuant to Section 5.07 with
respect to the Pledged Securities issued by it.

 

(iv)                              Each Issuer that is a Grantor and is a
partnership or a limited liability company (i) confirms that none of the terms
of any equity interest issued by it provides that such equity interest is a
“security” within the meaning of Sections 8-102 and 8-103 of the New York UCC (a
“Security”), (ii) agrees that it will take no action to cause or permit any such
equity interest to become a Security, (iii) agrees that it will not issue any
certificate representing any such equity interest and (iv) agrees that if,
notwithstanding the foregoing, any such equity interest shall be or become a
Security, such Issuer will (and the Grantor that holds such equity interest
hereby instructs such Issuer to) comply with instructions originated by the
Collateral Agent without further consent by such Grantor.

 

20

--------------------------------------------------------------------------------

 

(i)                                     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 that would
not reasonably be expected to have a Material Adverse Effect.

 

(j)                                     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.

 

(k)                                  Upon the request of the Collateral Agent
(not to be made more frequently than once per fiscal year so long as no Event of
Default has occurred and is continuing), 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 Closing Date or the date of the most recent
Perfection Certificate delivered pursuant to this paragraph.

 

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

 

(m)                               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 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, in each case necessary for such preservation,
protection and perfection.

 

Without limiting the generality of the foregoing, each Grantor may 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

 

21

--------------------------------------------------------------------------------

 

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.

 

(n)                                 [RESERVED]

 

(o)                                 At its option and following not less than 30
days’ prior written notice to the Borrower, 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 5.03 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.

 

(p)                                 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.

 

(q)                                 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.

 

(r)                                    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

 

22

--------------------------------------------------------------------------------

 

engaged and for similarly sized and positioned companies and otherwise in
accordance with the requirements set forth in Section 5.02 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 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.

 

(s)                                  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 $250,000.

 

(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

 

23

--------------------------------------------------------------------------------

 

“transferable record” evidencing an amount not in excess of $50,000 on an
individual basis or $250,000 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 New York 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 $250,000 now or hereafter issued in favor of such Grantor, 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 $250,000, 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, except as
otherwise deemed necessary or advisable by such Grantor in the exercise of its
reasonable business judgment, it will not do any act or knowingly 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 owned by such
Grantor that is material to the conduct of such Grantor’s business is reasonably
expected to become prematurely invalidated, forefeited, unenforceable 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 preserve its rights under applicable patent laws.

 

(b)                                 Each Grantor (either itself or through its
licensees or its sublicensees) will, for each Trademark owned by such Grantor
that is material to the conduct of such Grantor’s business, (i) except as
otherwise deemed necessary or advisable by such Grantor in the exercise of its
reasonable business judgment, maintain such Trademark in full force free from
any abandonment or invalidity for non-use, (ii) display such Trademark with
notice of Federal or

 

24

--------------------------------------------------------------------------------

 

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 owned by
such Grantor 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 owned by such
Grantor that is material to the conduct of its business is reasonably likely to
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 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 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

 

25

--------------------------------------------------------------------------------

 

a third party, such Grantor shall promptly 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)                                 Each Grantor owns, licenses or otherwise has
the right to use all material Intellectual Property used in the operations of
such Grantor’s respective business, without infringement upon or conflict with
the rights of any other Person with respect thereto, except, in each case, for
any matters that, individually or in the aggregate, would not reasonably be
expected to result in a Material Adverse Effect, and no claim or litigation
regarding any of the foregoing is pending or threatened.

 

(i)                                     Such Grantor (either itself or through
licensees) will not do any act, or knowingly omit to do any act, whereby any
material trade secret owned by such Grantor may become publicly available,
available to any third party without obligation of confidentiality or otherwise
unprotectable.

 

(j)                                     Each Grantor takes commercially
reasonable steps to maintain and protect its rights in and to Intellectual
Property owned by such Grantor that is material to the conduct of its business.

 

(k)                                  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 under 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 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

 

26

--------------------------------------------------------------------------------

 

Collateral Agent shall have the right, subject to the mandatory requirements of
applicable law (including requirements under the Uniform Commercial Code), to
sell, license, sublicense, assign 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.

 

SECTION 5.02                                  Proceeds to be Turned Over to
Collateral Agent.  If an Event of Default shall occur and be continuing:

 

(a)                                  upon written demand by the Collateral
Agent, all Proceeds received by any Grantor consisting of cash, checks and
Instruments shall be held by such Grantor in trust for the Collateral Agent and
the Secured Parties, segregated from other funds of such Grantor, and shall,
forthwith upon receipt by such Grantor, be turned over to the Collateral Agent
in the exact form received by such Grantor (duly indorsed by such Grantor to the
Collateral Agent, if required);

 

(b)                                 all Proceeds received by the Collateral
Agent hereunder shall be held by the Collateral Agent in a collateral account
maintained under its sole dominion and control; and

 

(c)                                  all Proceeds while held by the Collateral
Agent in a collateral account (or by such Grantor in trust for the Collateral
Agent and the Secured Parties) shall continue to be held as collateral security
for all the Obligations and shall not constitute payment thereof until applied
pursuant to Section 5.03.

 

So long as no Event of Default shall have occurred and be continuing, Proceeds
held in such collateral account shall be released to such Grantor.

 

SECTION 5.03                                  Application of Proceeds.  If any
Event of Default shall have occurred and be continuing, any cash proceeds in
respect of any collection or sale of all or any part of the Collateral may, in
the discretion of the Collateral Agent, be held by the Collateral Agent as
collateral for, and/or applied in whole or in part by the Collateral Agent in
the following manner:

 

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, the
payment of all advances made by the Collateral Agent

 

27

--------------------------------------------------------------------------------

 

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 of 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 5.04                                  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.

 

SECTION 5.05                                  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 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

 

28

--------------------------------------------------------------------------------

 

 

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 5.05 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 5.06                                  Code and Other Remedies.  If an
Event of Default shall occur and be continuing, the Collateral Agent, on behalf
of the Secured Parties, may exercise, in addition to all other rights and
remedies granted to them in this Agreement and in any other instrument or
agreement securing, evidencing or relating to the Obligations, all rights and
remedies of a secured party under the New York UCC or any other applicable law. 
Without limiting the generality of the foregoing, the Collateral Agent, without
demand of performance or other demand, presentment, protest, advertisement or
notice of any kind (except any notice required by law referred to below) to or
upon any Grantor or any other Person (all and each of which demands, defenses,
advertisements and notices are hereby waived), may in such circumstances
forthwith collect, receive, appropriate and realize upon the Collateral, or any
part thereof, and/or may forthwith sell, lease, assign, give option or options
to purchase, or otherwise dispose of and deliver the Collateral or any part
thereof (or contract to do any of the foregoing), in one or more parcels at
public or private sale or sales, at any exchange, broker’s board or office of
the Collateral Agent or any Secured Party or elsewhere upon such terms and
conditions as it may deem advisable and at such prices as it may deem best, for
cash or on credit or for future delivery without assumption of any credit risk. 
The Collateral Agent or any Secured Party shall have the right upon any such
public sale or sales, and, to the extent permitted by law, upon any such private
sale or sales, to purchase the whole or any part of the Collateral so sold, free
of any right or equity of redemption in any Grantor, which right or equity is
hereby waived and released.  Each Grantor further agrees, at the Collateral
Agent’s request, to assemble the Collateral and make it available to the
Collateral Agent at places which the Collateral Agent shall reasonably select,
whether at such Grantor’s premises or elsewhere.  The Collateral Agent shall
apply the net proceeds of any action taken by it pursuant to this Section 5.06
with respect to any Grantor’s Collateral, after deducting all reasonable costs
and expenses of every kind incurred in connection therewith or incidental to the
care or safekeeping of any of the Collateral of such

 

29

--------------------------------------------------------------------------------

 

Grantor or in any way relating to the Collateral of such Grantor or the rights
of the Collateral Agent and the Secured Parties hereunder with respect thereto,
including, without limitation, reasonable attorneys’ fees and disbursements, to
the payment in whole or in part of the Obligations of such Grantor, in the order
specified in Section 5.03, and only after such application and after the payment
by the Collateral Agent of any other amount required by any provision of law,
including, without limitation, Section 9-615(a)(3) of the New York UCC, need the
Collateral Agent account for the surplus, if any, to any Grantor.  To the extent
permitted by applicable law, each Grantor waives all claims, damages and demands
it may acquire against the Collateral Agent or any Secured Party arising out of
the exercise by them of any rights hereunder.  If any notice of a proposed sale
or other disposition of Collateral shall be required by law, such notice shall
be deemed reasonable within Section 9-611 of the New York UCC and proper if
given at least 10 days before such sale or other disposition.

 

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

 

30

--------------------------------------------------------------------------------

 

jurisdiction or pursuant to a proceeding by a court-appointed receiver.  Any
sale pursuant to the provisions of this Section 5.06 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.

 

SECTION 5.07                                  Registration Rights.  (a)  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, such Grantor will, at any time and from
time to time, upon the written request of the Collateral Agent, cause the issuer
of such Pledged Collateral to (i) take such action and prepare, distribute
and/or file such documents, as are required or advisable in the sole opinion of
the Collateral Agent or the counsel for the Collateral Agent to permit the
public sale of such Pledged Collateral, (ii) use its commercially reasonable
efforts to cause the registration statement relating thereto to become effective
and to remain effective for a period of one year from the date of the first
public offering of the Pledged Stock, or that portion thereof to be sold,
(iii) make all amendments thereto and/or to the related prospectus which, in the
opinion of the Collateral Agent, are necessary or advisable, all in conformity
with the requirements of the Federal Securities Laws and the rules and
regulations of the Securities and Exchange Commission applicable thereto and
(iv) comply with the provisions of the securities or “Blue Sky” laws of any and
all jurisdictions which the Collateral Agent shall designate and to make
available to its security holders, as soon as practicable, an earnings statement
(which need not be audited) which will satisfy the provisions of
Section 11(a) of the Securities Act of 1933.  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 5.07.  Each Grantor acknowledges that there is no adequate remedy
at law for failure by it to comply with the provisions of this Section 5.07 and
that such failure would not be adequately compensable in damages, and therefore
agrees that its agreements contained in this Section 5.07 may be specifically
enforced.

 

(b)                                 Each Grantor recognizes that the Collateral
Agent may be unable to effect a public sale of any or all the Pledged
Collateral, by reason of certain prohibitions contained in the Federal
Securities Laws and applicable state securities laws or otherwise, and may be

 

31

--------------------------------------------------------------------------------

 

compelled to resort to one or more private sales thereof to a restricted group
of purchasers which will be obliged to agree, among other things, to acquire
such securities for their own account for investment and not with a view to the
distribution or resale thereof.  Each Grantor acknowledges and agrees that any
such private sale may result in prices and other terms less favorable than if
such sale were a public sale and, notwithstanding such circumstances, agrees
that any such private sale shall be deemed to have been made in a commercially
reasonable manner.  The Collateral Agent shall be under no obligation to delay a
sale of any of the Pledged Collateral for the period of time necessary to permit
the Issuer thereof to register such securities for public sale under the Federal
Securities Laws, or under applicable state securities laws, even if such Issuer
would agree to do so.

 

(c)                                  Each Grantor agrees to use its best efforts
to do or cause to be done all such other acts as may be necessary to make such
sale or sales of all or any portion of the Pledged Stock pursuant to this
Section 5.07 valid and binding and in compliance with any and all other
applicable laws.  Each Grantor further agrees that a breach of any of the
covenants contained in this Section 5.07 will cause irreparable injury to the
Collateral Agent and the Secured Parties, that the Collateral Agent and the
Secured Parties have no adequate remedy at law in respect of such breach and, as
a consequence, that each and every covenant contained in this Section 5.07 shall
be specifically enforceable against such Grantor, and such Grantor hereby waives
and agrees not to assert any defenses against an action for specific performance
of such covenants except for a defense that no Event of Default has occurred
under the Credit Agreement.

 

SECTION 5.08                                  Deficiency.  Each Grantor shall
remain liable for any deficiency if the proceeds of any sale or other
disposition of the Collateral are insufficient to pay its Obligations and the
fees and disbursements of any attorneys employed by the Collateral Agent or any
Secured Party to collect such deficiency.

 

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
Guarantors 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 Guarantor under this
Agreement, the Borrower and Holdings, jointly and severally, shall indemnify
such Subsidiary Guarantor for the full amount of such payment and such
Subsidiary Guarantor 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 Guarantor 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 Guarantor 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 Guarantor (a “Contributing Party”) agrees (subject to
Section 6.03) that, in the event a payment shall be made by any other Subsidiary
Guarantor hereunder in respect of any Obligation or assets of any other

 

32

--------------------------------------------------------------------------------

 

Subsidiary Guarantor shall be sold pursuant to any Security Document to satisfy
any Obligation owed to any Secured Party and such other Subsidiary Guarantor
(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 Guarantors on the date hereof (or,
in the case of any Subsidiary Guarantor becoming a party hereto pursuant to
Section 7.14, the date of the supplement hereto executed and delivered by such
Subsidiary Guarantor).  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.

 

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 Guarantor 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 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 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

 

33

--------------------------------------------------------------------------------

 

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 shall not
be construed as a waiver of any Default, regardless of whether the Collateral
Agent or any Lender 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 9.08 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 9.05 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 9.05 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 primarily from
such Indemnitee’s gross negligence or willful misconduct.

 

(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 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.

 

34

--------------------------------------------------------------------------------

 

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 the
Hedge Banks and shall survive the execution and delivery of the Loan Documents
and the making of any Loans, regardless of any investigation made by any Lender
or Hedge Bank on its behalf and notwithstanding that the Collateral Agent, any
Hedge 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 any
Obligations are 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 or other electronic means of 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, 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 Guarantor against any of and all the
obligations of such Subsidiary Guarantor 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

 

35

--------------------------------------------------------------------------------

 

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 governed 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.

 

(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.

 

36

--------------------------------------------------------------------------------

 

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 (i) all the Loan Document
Obligations have been indefeasibly paid in full and (ii) either (x) all
Obligations under clause (b) of the definition thereof shall have been
indefeasibly paid in full or (y) the occurrence of the termination, expiration
or cash collateralization (on terms acceptable to the applicable Hedge Banks) of
all Secured Hedge Agreements.

 

(b)                                 A Subsidiary Guarantor shall automatically
be released from its obligations hereunder and the Security Interest in the
Collateral of such Subsidiary Guarantor shall be automatically released upon the
consummation of any transaction permitted by the Credit Agreement as a result of
which such Subsidiary Guarantor 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 9.08 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) above, 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.

 

37

--------------------------------------------------------------------------------

 

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 5.12 of the Credit Agreement shall become a
Subsidiary Guarantor hereunder with the same force and effect as if originally
named as a Subsidiary Guarantor 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.

 

SECTION 7.15                                  Collateral Agent Appointed
Attorney-in-Fact.  (a)  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 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.

 

(b)                                 The Collateral Agent’s sole duty with
respect to the custody, safekeeping and physical preservation of the Collateral
in its possession, under Section 9-207 of the New York UCC or otherwise, shall
be to deal with it in the same manner as the Collateral Agent deals with similar
property for its own account.  Neither the Collateral Agent, any Secured Party
nor any of their respective officers, directors, employees or agents shall be
liable for failure to demand, collect or realize upon any of the Collateral or
for any delay in doing so or shall be under any obligation to sell or otherwise
dispose of any Collateral upon the request of any Grantor or any other Person or
to take any other action whatsoever with regard to the Collateral

 

38

--------------------------------------------------------------------------------

 

or any part thereof.  The powers conferred on the Collateral Agent and the
Secured Parties hereunder are solely to protect the Collateral Agent’s and the
Secured Parties’ interests in the Collateral and shall not impose any duty upon
the Collateral Agent or any Secured Party to exercise any such powers.  The
Collateral Agent and the Secured Parties shall be accountable only for amounts
that they actually receive as a result of the exercise of such powers, and
neither they nor any of 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.

 

(c)                                  Pursuant to any applicable law, each
Grantor authorizes the Collateral Agent to file or record financing statements
and other filing or recording documents or instruments with respect to the
Collateral without the signature of such Grantor in such form and in such
offices as the Collateral Agent determines appropriate to perfect the security
interests of the Collateral Agent under this Agreement.  Each Grantor authorizes
the Collateral Agent to use the collateral description “all personal property”
or “all assets” or “All Assets of the Debtor” in any such financing statements. 
Each Grantor hereby ratifies and authorizes the filing by the Collateral Agent
of any financing statement with respect to the Collateral made prior to the date
hereof.

 

(d)                                 Each Grantor acknowledges that the rights
and responsibilities of the Collateral Agent under this Agreement with respect
to any action taken by the Collateral Agent or the exercise or non-exercise by
the Collateral Agent of any option, voting right, request, judgment or other
right or remedy provided for herein or resulting or arising out of this
Agreement shall, as between the Collateral Agent and the Secured Parties, be
governed by the Credit Agreement and by such other agreements with respect
thereto as may exist from time to time among them, but, as between the
Collateral Agent and the Grantors, the Collateral Agent shall be conclusively
presumed to be acting as agent for the Secured Parties with full and valid
authority so to act or refrain from acting, and no Grantor shall be under any
obligation, or entitlement, to make any inquiry respecting such authority.

 

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 Parties 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                                  Intercreditor Agreement. 
Notwithstanding anything herein or in any of the Loan Documents to the contrary,
the lien and security interest granted to the Collateral Agent pursuant to this
Agreement and the exercise of any right or remedy by the Collateral Agent
hereunder or under any other Security Document are subject to the provisions

 

39

--------------------------------------------------------------------------------

 

of the Intercreditor Agreement.  In the event of any conflict between the terms
of the Intercreditor Agreement, this Agreement and any other Security Document,
the terms of the Intercreditor Agreement shall govern and control.

 

SECTION 7.18                                  The Mortgages.  In the event that
any of the Collateral hereunder is also subject to a valid and enforceable Lien
under the terms of any Mortgage and the terms of such Mortgage are inconsistent
with the terms of this Agreement, then with respect to such Collateral, the
terms of such Mortgage shall be controlling in the case of fixtures and real
estate leases, letting and licenses of, and contracts and agreements relating to
the lease of, real property, and the terms of this Agreement shall be
controlling in the case of all other Collateral.

 

[Signature Pages Follow]

 

40

--------------------------------------------------------------------------------

 

 

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/ Robert Reich

 

 

Name: Robert Reich

 

 

Title: SVP & CFO

 

 

 

 

 

HAWAIIAN TELCOM COMMUNICATIONS, INC.

 

 

 

By:

/s/ Robert Reich

 

 

Name: Robert Reich

 

 

Title: SVP & CFO

 

 

 

 

 

HAWAIIAN TELCOM, INC.

 

 

 

By:

/s/ Robert Reich

 

 

Name: Robert Reich

 

 

Title: SVP & CFO

 

 

 

 

 

HAWAIIAN TELCOM SERVICES COMPANY, INC.

 

 

 

By:

/s/ Robert Reich

 

 

Name: Robert Reich

 

 

Title: SVP & CFO

 

[SIGNATURE PAGE TO GUARANTEE AND COLLATERAL AGREEMENT]

 

--------------------------------------------------------------------------------

 

 

 

CREDIT SUISSE AG, CAYMAN ISLANDS BRANCH, as Collateral Agent

 

 

 

 

 

By:

/s/ Judith E. Smith

 

 

Name: Judith E. Smith

 

 

Title: Managing Director

 

 

 

By:

/s/ Tyler R. Smith

 

 

Name: Tyler R. Smith

 

 

Title: Associate

 

[SIGNATURE PAGE TO GUARANTEE AND COLLATERAL AGREEMENT]

 

--------------------------------------------------------------------------------

 

Exhibit I to the
Guarantee and
Collateral Agreement

 

SUPPLEMENT NO.           dated as of           , to the Guarantee and Collateral
Agreement dated as of February 29, 2012 (the “Collateral Agreement”), among
HAWAIIAN TELCOM COMMUNICATIONS, INC., a Delaware corporation (the “Borrower”),
HAWAIIAN TELCOM HOLDCO, INC., a Delaware corporation (“Holdings”), each
subsidiary of the Borrower listed on Schedule I thereto (each such subsidiary
individually a “Subsidiary Guarantor” and collectively, the “Subsidiary
Guarantors”; the Subsidiary Guarantors, Holdings and the Borrower are referred
to collectively herein as the “Grantors”) and CREDIT SUISSE AG, CAYMAN ISLANDS
BRANCH (“Credit Suisse”), as Collateral Agent (in such capacity, the “Collateral
Agent”).

 

A.                                   Reference is made to the Credit Agreement
dated as of February 29, 2012 (as amended, supplemented or otherwise modified
from time to time, the “Credit Agreement”), among the Borrower, Holdings, the
lenders from time to time party thereto (the “Lenders”) and Credit Suisse, as
Administrative Agent (in such capacity, the “Administrative Agent”) and
Collateral Agent for the Lenders.

 

B.                                     Capitalized terms used herein and not
otherwise defined herein shall have the meanings assigned to such terms in the
Credit Agreement and the Collateral Agreement referred to therein, as
applicable.

 

C.                                     The Grantors have entered into the
Collateral Agreement in order to induce the Lenders to make Loans and to induce
the Hedge Banks to enter into Secured Hedge Agreements.  Section 7.14 of the
Collateral Agreement provides that additional Subsidiaries of the Borrower may
become Subsidiary Guarantors under the Collateral Agreement by execution and
delivery of an instrument in the form of this Supplement.  The undersigned
Subsidiary (the “New Subsidiary”) is executing this Supplement in accordance
with the requirements of the Credit Agreement to become a Subsidiary Guarantor
under the Collateral Agreement in order to induce the Lenders to make additional
Loans and the Hedge Banks to enter into Secured Hedge Agreements and as
consideration for Loans previously made and any Secured Hedge Agreements
previously entered into:

 

Accordingly, the Collateral Agent and the New Subsidiary agree as follows:

 

SECTION 1.                                In accordance with Section 7.14 of the
Collateral Agreement, the New Subsidiary by its signature below becomes a
Subsidiary Guarantor (and accordingly, becomes a Guarantor and a Grantor),
Grantor and Guarantor under the Collateral Agreement with the same force and
effect as if originally named therein as a Subsidiary Guarantor and the New
Subsidiary hereby (a) agrees to all the terms and provisions of the Collateral
Agreement applicable to it as a Subsidiary Guarantor, Grantor and Guarantor
thereunder and (b) represents and warrants that the representations and
warranties made by it as a Grantor and Guarantor thereunder are true and correct
on and as of the date hereof.  In furtherance of the foregoing, the New
Subsidiary, as security for the payment and performance in full of the
Obligations (as defined in the Collateral Agreement), does hereby create and
grant to the Collateral Agent, its

 

--------------------------------------------------------------------------------

 

successors and assigns, for the benefit of the Secured Parties, their successors
and assigns, a security interest in and lien on all of the New Subsidiary’s
right, title and interest in and to the Collateral (as defined in the Collateral
Agreement) of the New Subsidiary.  Each reference to a “Guarantor” or “Grantor”
in the Collateral Agreement shall be deemed to include the New Subsidiary.  The
Collateral Agreement is hereby incorporated herein by reference.

 

SECTION 2.                                The New Subsidiary represents and
warrants to the Collateral Agent and the other Secured Parties that this
Supplement has been duly authorized, executed and delivered by it and
constitutes its legal, valid and binding obligation, enforceable against it in
accordance with its terms.

 

SECTION 3.                                This Supplement may be executed in
counterparts (and by different parties hereto on different counterparts), each
of which shall constitute an original, but all of which when taken together
shall constitute a single contract.  This Supplement shall become effective when
the Collateral Agent shall have received a counterpart of this Supplement that
bears the signature of the New Subsidiary and the Collateral Agent has executed
a counterpart hereof.  Delivery of an executed signature page to this Supplement
by facsimile transmission shall be as effective as delivery of a manually signed
counterpart of this Supplement.

 

SECTION 4.                                The New Subsidiary hereby represents
and warrants that (a) set forth on Schedule I attached hereto is a true and
correct schedule of the location of any and all Collateral of the New Subsidiary
and (b) set forth under its signature hereto, is the true and correct legal name
of the New Subsidiary, its jurisdiction of formation and the location of its
chief executive office.

 

SECTION 5.                                Except as expressly supplemented
hereby, the Collateral Agreement shall remain in full force and effect.

 

SECTION 6.                            THIS SUPPLEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

 

SECTION 7.                                In case any one or more of the
provisions contained in this Supplement should be held invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein and in the Collateral Agreement shall not
in any way be affected or impaired thereby (it being understood that the
invalidity of a particular provision in a particular jurisdiction shall not in
and of itself affect the validity of such provision in any other jurisdiction). 
The parties hereto 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 8.                                All communications and notices
hereunder shall be in writing and given as provided in Section 7.01 of the
Collateral Agreement.

 

SECTION 9.                                The New Subsidiary agrees to reimburse
the Collateral Agent for its reasonable out-of-pocket expenses in connection
with this Supplement, including the reasonable fees, other charges and
disbursements of counsel for the Collateral Agent.

 

--------------------------------------------------------------------------------

 

IN WITNESS WHEREOF, the New Subsidiary and the Collateral Agent have duly
executed this Supplement to the Collateral Agreement as of the day and year
first above written.

 

 

[NAME OF NEW SUBSIDIARY],

 

 

 

By

 

 

 

Name:

 

 

Title

 

 

 

 

 

Legal Name:

 

 

Jurisdiction of Formation:

 

 

 

 

 

CREDIT SUISSE AG, CAYMAN ISLANDS BRANCH,

 

as Collateral Agent

 

 

 

By

 

 

 

Name:

 

 

Title:

 

 

 

 

By

 

 

 

Name:

 

 

Title:

 

--------------------------------------------------------------------------------

 

Schedule I
to the Supplement No        to the
Guarantee and
Collateral Agreement

 

LOCATION OF COLLATERAL

 

Description

 

Location

 

 

 

 

 

 

 

 

 

 

EQUITY INTERESTS

 

Issuer

 

Number of
Certificate

 

Registered
Owner

 

Number and
Class of
Equity Interests

 

Percentage
of Equity
Interests

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

DEBT SECURITIES

 

Issuer

 

Principal
Amount

 

Date of Note

 

Maturity Date

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

INTELLECTUAL PROPERTY

 

--------------------------------------------------------------------------------

 

 

Exhibit II to the
Guarantee and
Collateral Agreement

 

[FORM OF] PERFECTION CERTIFICATE

 

Reference is made to the Credit Agreement dated as of February 29, 2012 (as
amended, supplemented or otherwise modified from time to time, the “Loan
Agreement”), among Hawaiian Telcom Communications, Inc. (the “Borrower”),
Hawaiian Telcom Holdco, Inc. (“Holdings”), the lenders from time to time party
thereto (the “Lenders”) and Credit Suisse AG, Cayman Islands Branch, as
Administrative Agent (in such capacity, the “Administrative Agent”) and
Collateral Agent for the Lenders.  Capitalized terms used but not defined herein
have the meanings assigned in the Loan Agreement or the Collateral Agreement
referred to therein, as applicable.

 

The undersigned, a Financial Officer of the Borrower and Holdings, hereby
certifies to the Administrative Agent and each other Secured Party as follows:

 

1.                                       Names.  (a)  The exact legal name of
each Grantor(1), as such name appears in its respective certificate of
formation, is as follows:

 

See Schedule 1(a)

 

(b)  Set forth below is each other legal name each Grantor has had in the past
five years, together with the date of the relevant change:

 

See Schedule 1(b)

 

(c)  Except as set forth in Schedule 1 hereto, no Grantor has changed its
identity or corporate structure in any way within the past five years.  Changes
in identity or corporate structure would include mergers, consolidations and
acquisitions, as well as any change in the form, nature or jurisdiction of
organization.  If any such change has occurred, include in Schedule 1 the
information required by Sections 1 and 2 of this certificate as to each acquiree
or constituent party to a merger or consolidation.

 

See Schedule 1(c)

 

(d)  The following is a list of all other names (including trade names or
similar appellations) used by each Grantor or any of its divisions or other
business units in connection with the conduct of its business or the ownership
of its properties at any time during the past five years:

 

See Schedule 1(d)

 

--------------------------------------------------------------------------------

(1)                                  The term “Grantors” shall include Holdings,
the Borrower and each of their Subsidiaries that are organized under the laws of
the United States or any State thereof.

 

Exh. II-1

--------------------------------------------------------------------------------

 

(e)  Set forth below is the Organizational Identification Number, if any, issued
by the jurisdiction of formation of each Grantor that is a registered
organization:

 

See Schedule 1(e)

 

(f)  Set forth below is the Federal Taxpayer Identification Number of each
Grantor:

 

See Schedule 1(f)

 

2.                                       Current Locations.  (a)  The chief
executive office of each Grantor is located at the address set forth opposite
its name below:

 

Grantor

 

Mailing Address

 

County

 

State

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

See Schedule 2(a)

 

(b)  The jurisdiction of formation of each Grantor that is a registered
organization is set forth opposite its name below:

 

Grantor:

 

Jurisdiction:

 

 

 

 

 

 

 

 

 

 

See Schedule 2(b)

 

(c)  Set forth below opposite the name of each Grantor are all the locations
where such Grantor maintains Equipment or other tangible Collateral (other than
the network equipment and telephone poles, telephone lines and other similar
equipment owned by Hawaiian Telcom, Inc. situated throughout the State of
Hawaii) which are not identified above, and all such Equipment and other
tangible Collateral having a fair market value in excess of $100,000 is included
in such list:

 

Grantor

 

Mailing Address

 

County

 

State

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

See Schedule 2(c)

 

(d)  Set forth below is a list of all real property held by each Grantor, the
name of the Grantor that owns said property and the fair market value
apportioned to such site:

 

Address

 

Owned/Leased

 

Entity

 

Value

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

See Schedule 2(d)

 

(e)  Set forth below opposite the name of each Grantor are the names and
addresses of all Persons other than such Grantor that have possession of any of
the Collateral of

 

Exh. II-2

--------------------------------------------------------------------------------

 

such Grantor (other than the network equipment and telephone poles, telephone
lines and other similar equipment owned by Hawaiian Telcom, Inc. situated
throughout the State of Hawaii) which are not identified above, and all such
Equipment and other tangible Collateral having a fair market value in excess of
$100,000 is included in such list:

 

Grantor

 

Mailing Address

 

County

 

State

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

See Schedule 2(e)

 

3.                                       Unusual Transactions.  All Accounts
have been originated by the Grantors and all Inventory has been acquired by the
Grantors in the ordinary course of business.

 

4.                                       File Search Reports.  File search
reports have been obtained from each Uniform Commercial Code filing office
identified with respect to such Grantor in Section 2 hereof, and such search
reports reflect no liens against any of the Collateral other than those
permitted under the Credit Agreement.

 

5.                                       UCC Filings.  Financing statements in
substantially the form of Schedule 5 hereto have been prepared for filing in the
proper Uniform Commercial Code filing office in the jurisdiction in which each
Grantor is located and, to the extent any of the collateral is comprised of
fixtures, timber to be cut or as extracted collateral from wellhead or minehead,
in the proper local jurisdiction, in each case as set forth with respect to such
Grantor in Section 2 hereof.

 

6.                                       Schedule of Filings.  Attached hereto
as Schedule 6 is a schedule setting forth, with respect to the filings described
in Section 5 above, each filing and the filing office in which such filing is to
be made.

 

7.                                       Stock Ownership and other Equity
Interests.  Attached hereto as Schedule 7 is a true and correct list of all the
issued and outstanding stock, partnership interests, limited liability company
membership interests or other equity interest of the Borrower and each
Subsidiary and the record and beneficial owners of such stock, partnership
interests, membership interests or other equity interests.  Also set forth on
Schedule 7 is each equity investment of Holdings, the Borrower or any Subsidiary
that represents 50% or less of the equity of the entity in which such investment
was made.

 

8.                                       Debt Instruments.  Attached hereto as
Schedule 8 is a true and correct list of all promissory notes and other evidence
of indebtedness held by Holdings, the Borrower and each Subsidiary that are
required to be pledged under the Collateral Agreement, including all
intercompany notes between Holdings and each Subsidiary of Holdings and each
Subsidiary of Holdings and each other such Subsidiary.

 

9.                                       Mortgage Filings.  Attached hereto as
Schedule 9 is a schedule setting forth, with respect to each Mortgaged Property,
(a) the exact name of the Person that owns such property as such name appears in
its certificate of incorporation or other organizational document, (b) if
different from the name identified pursuant to clause (a), the exact name of the
current record owner of such property reflected in the records of the filing
office for such

 

Exh. II-3

--------------------------------------------------------------------------------

 

property identified pursuant to the following clause and (c) the filing office
in which a Mortgage with respect to such property must be filed or recorded in
order for the Administrative Agent to obtain a perfected security interest
therein.

 

10.                                 Intellectual Property.  Attached hereto as
Schedule 10(A) in proper form for filing with the United States Patent and
Trademark Office is a schedule setting forth all of each Grantor’s:  (i) Patents
and Patent applications, including the name of the registered owner, type,
registration or application number and the expiration date (if already
registered) of each Patent and Patent application owned by any Grantor;
(ii) Trademarks and Trademark applications, including the name of the registered
owner, the registration or application number and the expiration date (if
already registered) of each Trademark and Trademark application owned by any
Grantor.  Attached hereto as Schedule 10(B) in proper form for filing with the
United States Copyright Office is a schedule setting forth all of each Grantor’s
Copyrights and Copyright applications, including the name of the registered
owner, title, the registration number or application number and the expiration
date (if already registered) of each Copyright or Copyright application owned by
any Grantor.

 

11.                                 Bank Accounts.  Attached hereto as Schedule
11 is a list of all depositary and other accounts (including securities and
commodities accounts) maintained by each Grantor, including as to each such
account, the account number, the account bank, the name of the account holder,
the type or purpose of the account and the account balance as of January 31,
2012.

 

12.                                 Commercial Tort Claims.  Attached hereto as
Schedule 12 is a list of all Commercial Tort Claims with an estimated recovery
value in excess of $100,000 held by each Grantor as of the date hereof.

 

Exh. II-4

--------------------------------------------------------------------------------

 

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

 

 

HAWAIIAN TELCOM COMMUNICATIONS, INC.

 

 

 

By

 

 

 

Name:

 

 

Title:

 

 

 

HAWAIIAN TELCOM HOLDCO, INC.

 

 

 

By

 

 

 

Name:

 

 

Title:

 

Exh. II-5

--------------------------------------------------------------------------------

 

Schedule I to
the Guarantee and
Collateral Agreement

 

SUBSIDIARY GUARANTORS

 

Hawaiian Telcom, Inc.

 

Hawaiian Telecom Services Company, Inc.

 

--------------------------------------------------------------------------------

 

Schedule II to
the Guarantee and
Collateral Agreement

 

EQUITY INTERESTS

 

Issuer

 

Number of
Certificate

 

Registered
Owner

 

Number and
Class of
Equity Interests

 

Percentage
of Equity
Interests

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

DEBT SECURITIES

 

Issuer

 

Principal
Amount

 

Date of Note

 

Maturity Date

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

--------------------------------------------------------------------------------

 

Schedule III to
Guarantee and
Collateral Agreement

 

INTELLECTUAL PROPERTY

 

U.S. Copyright Registrations

 

--------------------------------------------------------------------------------

 

Schedule III to
Guarantee and
Collateral Agreement
(continued)

 

U.S. Patents

 

Patent Numbers

 

Issue Date

 

 

 

 

 

 

 

 

 

 

U.S. Patent Applications

 

Patent Application No.

 

Filing Date

 

 

 

 

 

 

 

 

 

 

Non-U.S. Patents

 

Country

 

Issue Date

 

Patent No.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-U.S. Patent Applications

 

Country

 

Issue Date

 

Patent No.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

--------------------------------------------------------------------------------

 

Schedule III to
Guarantee and
Collateral Agreement
(continued)

 

U.S. Trademark Registrations

 

Mark

 

Reg. Date

 

Reg. No.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Trademark Applications

 

Mark

 

Filing Date

 

Ser. No.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-U.S. Trademark Registrations

 

Country

 

Mark

 

Reg. Date

 

Reg. No.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-U.S. Trademark Applications

 

Country

 

Mark

 

Application Date

 

Application No.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

--------------------------------------------------------------------------------

 

Schedule III to
Guarantee and
Collateral Agreement
(continued)

 

 

Trademark/Trade Names owned by the Grantors

 

--------------------------------------------------------------------------------

 

Schedule IV to
Guarantee and
Collateral Agreement

 

Jurisdiction of Organization, Identification Number and Location of Chief
Executive Office

 

--------------------------------------------------------------------------------