Exhibit 10.1

 

* CERTAIN INFORMATION, MARKED BY BRACKETS AND AN ASTERISK, IN THIS EXHIBIT HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. 
CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

 

 

 

CREDIT AGREEMENT

 

dated as of

 

February 29, 2012

 

among

 

HAWAIIAN TELCOM COMMUNICATIONS, INC.,

as Borrower,

 

HAWAIIAN TELCOM HOLDCO, INC.,

 

THE LENDERS PARTY HERETO

 

and

 

CREDIT SUISSE AG, CAYMAN ISLANDS BRANCH,

as Administrative Agent and Collateral Agent

 

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CREDIT SUISSE SECURITIES (USA) LLC,

as Sole Bookrunner and Sole Lead Arranger

 

 

 

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Table of Contents

 

 

 

Page

 

 

 

ARTICLE I Definitions

 

1

 

 

 

SECTION 1.01. Defined Terms

 

1

SECTION 1.02. Terms Generally

 

25

SECTION 1.03. Pro Forma Calculations

 

25

SECTION 1.04. Classification of Loans and Borrowings

 

26

 

 

 

ARTICLE II The Credits

 

26

 

 

 

SECTION 2.01. Commitments

 

26

SECTION 2.02. Loans

 

26

SECTION 2.03. Borrowing Procedure

 

27

SECTION 2.04. Evidence of Debt; Repayment of Loans

 

28

SECTION 2.05. Administrative Agent Fees

 

28

SECTION 2.06. Interest on Loans

 

28

SECTION 2.07. Default Interest

 

29

SECTION 2.08. Alternate Rate of Interest

 

29

SECTION 2.09. Termination of Commitments

 

29

SECTION 2.10. Conversion and Continuation of Borrowings

 

30

SECTION 2.11. Repayment of Term Borrowings

 

31

SECTION 2.12. Voluntary Prepayment

 

32

SECTION 2.13. Mandatory Prepayments

 

32

SECTION 2.14. Reserve Requirements; Change in Circumstances

 

33

SECTION 2.15. Change in Legality

 

34

SECTION 2.16. Breakage

 

35

SECTION 2.17. Pro Rata Treatment

 

35

SECTION 2.18. Sharing of Setoffs

 

36

SECTION 2.19. Payments

 

36

SECTION 2.20. Taxes

 

37

SECTION 2.21. Assignment of Commitments Under Certain Circumstances; Duty to
Mitigate

 

39

SECTION 2.22. Incremental Term Loans

 

40

 

 

 

ARTICLE III Representations and Warranties

 

43

 

 

 

SECTION 3.01. Organization; Powers

 

43

SECTION 3.02. Authorization

 

43

SECTION 3.03. Enforceability

 

43

SECTION 3.04. Governmental Approvals

 

43

SECTION 3.05. Financial Statements

 

44

SECTION 3.06. No Material Adverse Change

 

44

SECTION 3.07. Title to Properties; Possession Under Leases

 

44

SECTION 3.08. Subsidiaries

 

45

 

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SECTION 3.09. Litigation; Compliance with Laws

 

45

SECTION 3.10. Agreements

 

46

SECTION 3.11. Federal Reserve Regulations

 

46

SECTION 3.12. Investment Company Act

 

46

SECTION 3.13. Use of Proceeds

 

46

SECTION 3.14. Tax Returns

 

46

SECTION 3.15. No Material Misstatements

 

46

SECTION 3.16. Employee Benefit Plans

 

47

SECTION 3.17. Environmental Matters

 

47

SECTION 3.18. Insurance

 

47

SECTION 3.19. Security Documents

 

47

SECTION 3.20. Location of Real Property and Leased Premises

 

48

SECTION 3.21. Labor Matters

 

48

SECTION 3.22. Solvency

 

49

SECTION 3.23. Senior Indebtedness

 

49

SECTION 3.24. Sanctioned Persons

 

49

SECTION 3.25. USA PATRIOT Act; FCPA

 

49

SECTION 3.26. Licenses; Tariffs.

 

49

 

 

 

ARTICLE IV Conditions of Lending

 

50

 

 

 

SECTION 4.01. Credit Event

 

51

 

 

 

ARTICLE V Affirmative Covenants

 

54

 

 

 

SECTION 5.01. Existence; Compliance with Laws; Businesses and Properties

 

54

SECTION 5.02. Insurance

 

55

SECTION 5.03. Obligations and Taxes

 

56

SECTION 5.04. Financial Statements, Reports, etc.

 

56

SECTION 5.05. Litigation and Other Notices

 

58

SECTION 5.06. Information Regarding Collateral

 

59

SECTION 5.07. Maintaining Records; Access to Properties and Inspections;
Maintenance of Ratings

 

59

SECTION 5.08. Use of Proceeds

 

60

SECTION 5.09. Employee Benefits

 

60

SECTION 5.10. Compliance with Environmental Laws

 

60

SECTION 5.11. Preparation of Environmental Reports

 

60

SECTION 5.12. Further Assurances

 

60

SECTION 5.13. Post-Closing Covenants

 

61

 

 

 

ARTICLE VI Negative Covenants

 

62

 

 

 

SECTION 6.01. Indebtedness

 

62

SECTION 6.02. Liens

 

64

SECTION 6.03. Sale and Lease-Back Transactions

 

66

SECTION 6.04. Investments, Loans and Advances

 

66

SECTION 6.05. Mergers, Consolidations, Sales of Assets and Acquisitions

 

68

 

ii

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SECTION 6.06. Restricted Payments; Restrictive Agreements

 

69

SECTION 6.07. Transactions with Affiliates

 

70

SECTION 6.08. Business of Holdings, Borrower and Subsidiaries

 

71

SECTION 6.09. Other Indebtedness and Agreements

 

71

SECTION 6.10. Capital Expenditures

 

72

SECTION 6.11. Interest Coverage Ratio

 

72

SECTION 6.12. Maximum Leverage Ratio

 

73

SECTION 6.13. Fiscal Year

 

73

SECTION 6.14. Certain Equity Securities

 

73

 

 

 

ARTICLE VII Events of Default

 

73

 

 

 

ARTICLE VIII The Administrative Agent and the Collateral Agent; Etc.

 

76

 

 

 

ARTICLE IX Miscellaneous

 

79

 

 

 

SECTION 9.01. Notices; Electronic Communications

 

79

SECTION 9.02. Survival of Agreement

 

81

SECTION 9.03. Binding Effect

 

81

SECTION 9.04. Successors and Assigns

 

82

SECTION 9.05. Expenses; Indemnity

 

85

SECTION 9.06. Right of Setoff

 

87

SECTION 9.07. Applicable Law

 

87

SECTION 9.08. Waivers; Amendment

 

87

SECTION 9.09. Interest Rate Limitation

 

88

SECTION 9.10. Entire Agreement

 

88

SECTION 9.11. WAIVER OF JURY TRIAL

 

89

SECTION 9.12. Severability

 

89

SECTION 9.13. Counterparts

 

89

SECTION 9.14. Headings

 

89

SECTION 9.15. Jurisdiction; Consent to Service of Process

 

89

SECTION 9.16. Confidentiality

 

90

SECTION 9.17. Lender Action

 

90

SECTION 9.18. USA PATRIOT Act Notice

 

91

 

iii

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SCHEDULES

 

Schedule 1.01(a)

-

Refinanced Indebtedness

Schedule 1.01(b)

-

Subsidiary Guarantors

Schedule 1.01(c)

-

Mortgaged Property

Schedule 1.01(d)

-

Anticipated Tower Lease-Back

Schedule 1.01(e)

-

Designated Entities

Schedule 1.01(f)

-

Specified Facilities

Schedule 2.01

-

Lenders and Commitments

Schedule 3.08

-

Subsidiaries

Schedule 3.09

-

Litigation

Schedule 3.17

-

Environmental Matters

Schedule 3.18

-

Insurance

Schedule 3.19(a)

-

UCC Filing Offices

Schedule 3.19(c)

-

Mortgage Filing Offices

Schedule 3.20(a)

-

Owned Real Property

Schedule 3.20(b)

-

Leased Real Property

Schedule 4.02(a)

-

Local Counsel

Schedule 5.13

-

Post-Closing Covenants

Schedule 6.01

-

Existing Indebtedness

Schedule 6.02

-

Existing Liens

Schedule 6.04(j)

-

Investments

 

EXHIBITS

 

Exhibit A

-

Form of Administrative Questionnaire

Exhibit B

-

Form of Assignment and Acceptance

Exhibit C

-

Form of Borrowing Request

Exhibit D

-

Form of Guarantee and Collateral Agreement

Exhibit E

-

Form of Mortgage

Exhibit F

-

Form of Compliance Certificate

Exhibit G-1

-

Form of Opinion of Kirkland & Ellis LLP

Exhibit G-2

-

Form of Local and Regulatory Counsel Opinion

Exhibit G-3

-

Form of Local and Regulatory Counsel Opinion

Exhibit G-4

-

Form of Local and Regulatory Counsel Opinion

Exhibit H

-

Form of Affiliate Subordination Agreement

 

iv

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CREDIT AGREEMENT dated as of February 29, 2012 among HAWAIIAN TELCOM
COMMUNICATIONS, INC., a Delaware corporation (the “Borrower”), HAWAIIAN TELCOM
HOLDCO, INC., a Delaware corporation (“Holdings”), the Lenders (such term and
each other capitalized term used but not defined in this introductory statement
having the meaning given it in Article I), and CREDIT SUISSE AG, CAYMAN ISLANDS
BRANCH (“Credit Suisse”), as administrative agent (in such capacity, including
any successor thereto, the “Administrative Agent”) and as collateral agent (in
such capacity, including any successor thereto, the “Collateral Agent”) for the
Lenders.

 

The Borrower has requested the Lenders to extend credit in the form of Term
Loans on the Closing Date, in an aggregate principal amount not in excess of
$300,000,000.  The proceeds of the Term Loans will be used solely to refinance
the Refinanced Indebtedness and to pay fees and expenses incurred connection
herewith and therewith and, to the extent of any excess, for working capital and
general corporate purposes.

 

The Lenders are willing to extend such credit to the Borrower on the terms and
subject to the conditions set forth herein.  Accordingly, the parties hereto
agree as follows:

 

ARTICLE I

 

Definitions

 

SECTION 1.01.  Defined Terms.  As used in this Agreement, the following terms
shall have the meanings specified below:

 

“ABR”, when used in reference to any Loan or Borrowing, refers to whether such
Loan, or the Loans comprising such Borrowing, are bearing interest at a rate
determined by reference to the Alternate Base Rate.

 

“Acquired Entity” shall have the meaning assigned to such term in
Section 6.04(g).

 

“Adjusted LIBO Rate” shall mean, with respect to any Eurodollar Borrowing for
any Interest Period, an interest rate per annum equal to the greater of (a)
1.25% per annum and (b) the product of (i) the LIBO Rate in effect for such
Interest Period and (ii) Statutory Reserves.

 

“Administrative Agent” shall have the meaning assigned to such term in the
introductory statement to this Credit Agreement.

 

“Administrative Agent Fees” shall have the meaning assigned to such term in
Section 2.05.

 

“Administrative Questionnaire” shall mean an Administrative Questionnaire in the
form of Exhibit A, or such other form as may be supplied from time to time by
the Administrative Agent.

 

“Affiliate” shall mean, when used with respect to a specified Person, another
Person that directly, or indirectly through one or more intermediaries, Controls
or is Controlled by or is under common Control with the Person specified.

 

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

 

“Affiliate Subordination Agreement” shall mean an Affiliate Subordination
Agreement in the form of Exhibit H pursuant to which intercompany obligations
and advances owed by any Loan Party are subordinated to the Obligations.

 

“Agents” shall have the meaning assigned to such term in Article VIII.

 

“Agreement Value” shall mean, for each Hedging Agreement, on any date of
determination, the maximum aggregate amount (giving effect to any netting
agreements) that Holdings, the Borrower or such Subsidiary would be required to
pay if such Hedging Agreement were terminated on such date.

 

“All-in Yield” shall mean, as to any Indebtedness, the yield thereon as
reasonably determined by the Administrative Agent, which equals the sum of (x)
the margin then in effect for such Indebtedness (which shall be the sum of the
applicable margin then in effect for such Indebtedness, increased by the amount
that any “LIBOR floor” applicable to such Indebtedness on the date such
Indebtedness is incurred would exceed the Adjusted LIBO Rate (without giving
effect to clause (a) of the definition thereof) that would be in effect for a
three-month Interest Period commencing on such date) plus (y) the higher of (i)
one-fourth or (ii) the number obtained by dividing one by the average life to
maturity of such Indebtedness, in each case multiplied by the amount of the OID
paid in respect of such Indebtedness.

 

“Alternate Base Rate” shall mean, for any day, a rate per annum equal to the
greatest of (a) the Prime Rate in effect on such day, (b) the Federal Funds
Effective Rate in effect on such day plus 1/2 of 1% and (c) the Adjusted LIBO
Rate based on an Interest Period of one month plus 1.00%; provided that, for the
avoidance of doubt, the Adjusted LIBO Rate for any day shall be based on the
rate determined on such day at approximately 11 a.m. (London time) by reference
to the British Bankers’ Association Interest Settlement Rates for deposits in
dollars (as set forth by any service selected by the Administrative Agent that
has been nominated by the British Bankers’ Association as an authorized vendor
for the purpose of displaying such rates).  If the Administrative Agent shall
have determined (which determination shall be conclusive absent manifest error)
that it is unable to ascertain the Federal Funds Effective Rate for any reason,
including the inability or failure of the Administrative Agent to obtain
sufficient quotations in accordance with the terms of the definition thereof,
the Alternate Base Rate shall be determined without regard to clause (b) of the
preceding sentence until the circumstances giving rise to such inability no
longer exist.  Any change in the Alternate Base Rate due to a change in the
Prime Rate or the Federal Funds Effective Rate shall be effective on the
effective date of such change in the Prime Rate or the Federal Funds Effective
Rate, as the case may be.

 

“Anticipated Tower Lease-Back” shall mean the sale and lease-back by any Loan
Party of the cell towers described on Schedule 1.01(d).

 

“Applicable Margin” shall mean, for any day (a) with respect to any Eurodollar
Term Loan, 5.75% per annum and (b) with respect to any ABR Term Loan, 4.75% per
annum.

 

“Asset Sale” shall mean the sale, transfer or other disposition (by way of
merger, casualty, condemnation or otherwise) by Holdings, the Borrower or any of
the Subsidiaries to any Person other than the Borrower or any Subsidiary
Guarantor of (a) any Equity Interests of

 

2

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any of the Subsidiaries (other than (x) directors’ qualifying shares and Equity
Interests sold, transferred or disposed of, in each case, under
Section 6.06(a)(v) and (y) the issuance of Equity Interests by Holdings to its
shareholders, by the Borrower to Holdings or by any other Subsidiary to a Loan
Party) or (b) any other assets of the Borrower or any of the Subsidiaries (other
than (i) inventory, damaged, obsolete, surplus, excess, non-useful or worn out
assets, scrap and Permitted Investments, in each case disposed of in the
ordinary course of business, (ii) (x) dispositions between or among Subsidiaries
that are not Subsidiary Guarantors and (y) dispositions between or among
Subsidiaries that are Subsidiary Guarantors (or between or among the Borrower
and Subsidiaries that are Subsidiary Guarantors), (iii) defaulted receivables
sold in the ordinary course of business and not as part of an accounts
receivables financing transaction, (iv) licensing and cross-licensing
arrangements involving any technology or other Intellectual Property Collateral
of the Borrower or any Subsidiary in the ordinary course of business, (v) to the
extent constituting dispositions, transactions entered into by any Subsidiaries
that are not Guarantors and which are expressly permitted by Section 6.04 and
(vi) any other sales, transfers or other dispositions or series of related
sales, transfers or other dispositions having an aggregate value per transfer or
series of related transfers not in excess of $750,000); provided that, in the
case of any casualty or other insured damage to, or any taking under power of
eminent domain or by condemnation or similar proceeding of, property of
Holdings, the Borrower or any Subsidiary, such event shall only constitute an
“Asset Sale” to the extent that (x) the Net Cash Proceeds therefrom, on an
aggregate basis, exceed $5,000,000 in any fiscal year and (y) the application of
the Net Cash Proceeds of such event to the prepayment of Term Loans hereunder
would not violate any applicable laws or applicable regulations.

 

“Assignment and Acceptance” shall mean an assignment and acceptance entered into
by a Lender and an Eligible Assignee, and accepted by the Administrative Agent,
in the form of Exhibit B or such other form as shall be approved by the
Administrative Agent.

 

“Board” shall mean the Board of Governors of the Federal Reserve System of the
United States of America.

 

“Borrower” shall have the meaning assigned to such term in the introductory
statement to this Credit Agreement.

 

“Borrower Materials” shall have the meaning assigned to such term in
Section 9.01.

 

“Borrowing” shall mean Loans of the same Class and Type made, converted or
continued on the same date and, in the case of Eurodollar Loans, as to which a
single Interest Period is in effect.

 

“Borrowing Request” shall mean a request by the Borrower in accordance with the
terms of Section 2.03 and substantially in the form of Exhibit C, or such other
form as shall be approved by the Administrative Agent.

 

“Breakage Event” shall have the meaning assigned to such term in Section 2.16.

 

“Business Day” shall mean any day other than a Saturday, Sunday or day on which
banks in New York City are authorized or required by law to close; provided,
however, that when used

 

3

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

 

in connection with a Eurodollar Loan, the term “Business Day” shall also exclude
any day on which banks are not open for dealings in Dollar deposits in the
London interbank market.

 

“Capital Expenditures” shall mean, for any period, (a) the additions to
property, plant and equipment and other capital expenditures of the Holdings,
Borrower and its consolidated Subsidiaries that are (or should be) set forth in
a consolidated statement of cash flows of the Holdings for such period prepared
in accordance with GAAP and (b) Capital Lease Obligations or Synthetic Lease
Obligations incurred by Holdings, the Borrower and its consolidated Subsidiaries
during such period, but excluding in each case (i) any such expenditure made to
restore, replace or rebuild property to the condition of such property
immediately prior to any damage, loss, destruction or condemnation of such
property, to the extent such expenditure is made with insurance proceeds,
condemnation awards or damage recovery proceeds relating to any such damage,
loss, destruction or condemnation, (ii) expenditures for leasehold improvements
from which reimbursement or credit is received and (iii) expenditures of funds
received as grants (and not as loans) pursuant to any federal stimulus funding
on projects approved by the board of directors of the Borrower.

 

“Capital Lease Obligations” of any Person shall mean the obligations of such
Person to pay rent or other amounts under any lease of (or other arrangement
conveying the right to use) real or personal property, or a combination thereof,
which obligations are required to be classified and accounted for as capital
leases on a balance sheet of such Person under GAAP, and the amount of such
obligations shall be the capitalized amount thereof determined in accordance
with GAAP.

 

“Central Office Consolidation” shall mean the Borrower’s consolidation of its
central office operations.

 

A “Change in Control” shall be deemed to have occurred if after the Closing Date
(a) any “person” or “group” (within the meaning of Rule 13d-5 of the Securities
Exchange Act of 1934 as in effect on the date hereof) shall own, directly or
indirectly, beneficially or of record, shares representing more than 35% of the
aggregate ordinary voting power represented by the issued and outstanding
capital stock of Holdings, (b) a majority of the seats (other than vacant seats)
on the board of directors of Holdings shall at any time be occupied by persons
who were neither (i) nominated by the board of directors of Holdings on the
Closing Date nor (ii) appointed by directors so nominated, (c) any change in
control (or similar event, however denominated) with respect to Holdings, the
Borrower or any Subsidiary shall occur under and as defined in the Revolving
Facility Agreement, or (d) Holdings shall cease to directly own, beneficially
and of record, 100% of the issued and outstanding Equity Interests of the
Borrower.

 

“Change in Law” shall mean (a) the adoption of any law, rule or regulation after
the date of this Agreement, (b) any change in any law, rule or regulation or in
the interpretation or application thereof by any Governmental Authority after
the date of this Agreement or (c) compliance by any Lender (or, for purposes of
Section 2.14, by any lending office of such Lender or by such Lender’s holding
company, if any) with any request, guideline or directive (whether or not having
the force of law) of any Governmental Authority made or issued after the date of
this Agreement; provided, that notwithstanding anything herein to the contrary,
(x) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all
requests, rules, guidelines

 

4

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

 

or directives thereunder or issued in connection therewith and (y) all requests,
rules, guidelines or directives promulgated by the Bank for International
Settlements, the Basel Committee on Banking Supervision (or any successor or
similar authority) for the United States or foreign regulatory authorities, in
each case pursuant to Basel III shall in each case be deemed to be a “Change in
Law”, regardless of the date enacted, adopted or issued.

 

“Chapter 11 Cases” shall mean the voluntary petitions for relief under chapter
11 of the United States Code (as amended) filed by Holdings, the Borrower and
certain of their Subsidiaries on December 1, 2008 with the United States
Bankruptcy Court for the District of Delaware, which were transferred on
December 22, 2008 to the United States Bankruptcy Court for the District of
Hawaii.

 

“Charges” shall have the meaning assigned to such term in Section 9.09.

 

“Class”, when used in reference to any Loan or Borrowing, refers to whether such
Loan, or the Loans comprising such Borrowing, are Term Loans or Other Term Loans
and, when used in reference to any Commitment, refers to whether such Commitment
is a Term Loan Commitment or an Incremental Term Loan Commitment.

 

“Closing Date” shall mean February 29, 2012.

 

“CoBank” shall mean CoBank, ACB.

 

“Code” shall mean the Internal Revenue Code of 1986, as amended from time to
time.

 

“Collateral” shall mean all the “Collateral” as defined in any Security Document
and shall also include the Mortgaged Properties.

 

“Collateral Agent” shall have the meaning assigned to such term in the
introductory statement to this Credit Agreement.

 

 “Commitment” shall mean, with respect to any Lender, such Lender’s Term Loan
Commitment and Incremental Term Loan Commitment.

 

“Communications” shall have the meaning assigned to such term in Section 9.01.

 

“Communications Act” shall mean 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.

 

“Confidential Information Memorandum” shall mean the Confidential Information
Memorandum of the Borrower dated February 2012.

 

“Consolidated EBITDA” shall mean, for any period, Consolidated Net Income for
such period plus (a) without duplication and to the extent deducted in
determining such Consolidated Net Income, the sum of (i) consolidated interest
expense and costs incurred in connection with any Hedging Agreement permitted
hereunder for such period (net of interest income received in connection with a
Hedging Agreement for such period), (ii) consolidated income tax expense for

 

5

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such period, including state franchise and similar taxes, (iii) all amounts
attributable to depreciation and amortization for such period, (iv) any
extraordinary or non-cash charges for such period (provided, however, that any
cash payment or expenditure made with respect to any such non-cash charge shall
be subtracted in computing Consolidated EBITDA during the period in which such
cash payment or expenditure is made), including, without limitation, any
non-cash compensation charge arising from any grant of stock, stock options or
other equity-based awards and non-cash pension and post-employment benefit
expenses, (v) non-recurring or unusual charges, expenses or losses, if
applicable, related to (A) severance, including associated retirement benefits,
(B) facility and office closure costs, (C) contract cancellation costs, (D)
network reconfiguration costs or (E) costs with respect to acts of god or force
majeure (in each case, to the extent that any such charges, expenses or losses
are not reimbursed from the proceeds of insurance that increased Consolidated
Net Income for such period), (vi) other non-recurring or unusual charges,
expenses or losses in an amount not to exceed $5,000,000 in the aggregate for
any four consecutive fiscal quarters, (vii) costs and expenses incurred in
connection with the Chapter 11 Cases and related regulatory approvals, including
fees and expenses of professionals, (viii) compensation expense arising from
deemed dividends, the payment of dividends or the equivalent issued under any
incentive stock plans related to restricted and/or unvested stock and (ix)
customary non-recurring fees and expenses of the Borrower and the Subsidiaries
payable in connection with the Revolving Facility Agreement and any amendments,
modifications or waivers thereto, any Permitted Acquisition or attempted
acquisitions, any permitted dispositions, the incurrence of Long-Term
Indebtedness permitted hereunder or the Refinancing of the Refinanced
Indebtedness and (x) fees, costs and expenses payable or reimbursable to any
Lender or the Administrative Agent pursuant to any Loan Document and minus (b)
without duplication and to the extent included in determining such Consolidated
Net Income, the sum of any non-cash gains or other non-cash items of income for
such period (provided that any cash received in a subsequent period in respect
of any such non-cash gain shall be included in Consolidated EBITDA for the
period in which received), all determined on a consolidated basis in accordance
with GAAP; provided that for purposes of calculating the Leverage Ratio (for any
period) and the Interest Coverage Ratio (for the first three quarters ended
after the Closing Date), (A) the Consolidated EBITDA of any Acquired Entity
acquired by the Borrower or any Subsidiary pursuant to a Permitted Acquisition
during such period shall be included on a pro forma basis for such period
(assuming the consummation of such acquisition and the incurrence or assumption
of any Indebtedness in connection therewith occurred as of the first day of such
period) and (B) the Consolidated EBITDA attributable to any Asset Sale by the
Borrower or any Subsidiary during such period for shall be excluded for such
period (assuming the consummation of such sale or other disposition and the
repayment of any Indebtedness in connection therewith occurred as of the first
day of such period).  For purposes of determining the Interest Coverage Ratio
and the Leverage Ratio as of or for the periods ended on June 30, 2012 and
September 30, 2012, Consolidated EBITDA will be deemed to be equal to, for the
fiscal quarter ended September 30, 2011, $31,472,000.  It is agreed that the
calculations of pension impact on Consolidated EBITDA shall be made on a GAAP
(not cash) basis.

 

“Consolidated Interest Expense” shall mean, for any period, the sum of (a) the
interest expense (including imputed interest expense in respect of Capital Lease
Obligations and Synthetic Lease Obligations) of Holdings, the Borrower and the
Subsidiaries for such period, determined on a consolidated basis in accordance
with GAAP, plus (b) any interest accrued

 

6

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during such period in respect of Indebtedness of Holdings, the Borrower or any
Subsidiary that is required to be capitalized rather than included in
consolidated interest expense for such period in accordance with GAAP. For
purposes of the foregoing, interest expense shall be determined after giving
effect to any net payments made or received by Holdings, the Borrower or any
Subsidiary with respect to interest rate Hedging Agreements.  For purposes of
determining the Interest Coverage Ratio (i) for the period of four consecutive
quarters ended June 30, 2012, Consolidated Interest Expense shall be deemed to
be equal to the Consolidated Interest Expense for the fiscal quarter ended June
30, 2012, multiplied by 4, (ii) for the period of four consecutive quarters
ended September 30, 2012, Consolidated Interest Expense shall be deemed to be
equal to the Consolidated Interest Expense for the two consecutive fiscal
quarters ended September 30, 2012, multiplied by 2, (iii) for the period of four
consecutive quarters ended December 31, 2012, Consolidated Interest Expense
shall be deemed to be equal to the Consolidated Interest Expense for the three
consecutive fiscal quarters ended December 31, 2012, multiplied by 4/3.

 

“Consolidated Net Income” shall mean, for any period, the net income or loss of
Holdings, the Borrower and the Subsidiaries for such period determined on a
consolidated basis in accordance with GAAP; provided that:

 

(a)   (A)  net income for such period of any Person that is not a subsidiary of
such Person, or that is accounted for by the equity method of accounting, shall
be included only to the extent of the amount of dividends or distributions paid
in cash (or to the extent converted into cash) to the referent Person or a
subsidiary thereof in respect of such period and (B) the net income for such
period shall include any ordinary course dividend distribution or other payment
in cash received from any Person in excess of the amounts included in
clause (A); and

 

(b)   there shall be excluded: (i) accruals and reserves that are established
within twelve months after the Closing Date and that are so required to be
established in accordance with GAAP; provided that any such accruals or reserves
paid in cash shall be deducted from Consolidated Net Income for the period in
which paid unless excluded pursuant to another clause of this definition;

 

(ii) the income or loss of any Person accrued prior to the date it becomes a
Subsidiary or is merged into or consolidated with the Borrower or any Subsidiary
or the date that such Person’s assets are acquired by the Borrower or any
Subsidiary;

 

(iii) the cumulative effect of any change in accounting principles during such
period;

 

(iv) any gain or loss realized upon the sale or other disposition of any assets
of the Borrower or its Subsidiaries that are not sold or otherwise disposed of
in the ordinary course of business and any gain or loss realized upon the sale
or other disposition of any Equity Interests of any Person;

 

(v) any non-cash SFAS 133 income (or loss) related to hedging activities;

 

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(vi) all deferred financing costs written off, premiums paid and other net gains
or losses in connection with any early extinguishment of Indebtedness;

 

(vii) any non-cash impairment charges resulting from the application of
SFAS Nos. 142 and 144 and the amortization of intangibles arising pursuant to
SFAS No. 141;

 

(viii) any non-cash expense or gain related to recording of the fair market
value of Hedging Agreements, in each case entered into in the ordinary course of
business and not for speculative purposes; and

 

(ix) unrealized gains and losses relating to hedging transactions and
mark-to-market of Indebtedness denominated in foreign currencies resulting from
the applications of FAS 52.

 

“Control” shall mean the possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of a Person, whether
through the ownership of voting securities, by contract or otherwise, and the
terms “Controlling” and “Controlled” shall have meanings correlative thereto.

 

“Credit Facilities” shall mean the term loan facilities provided for by this
Agreement.

 

“Current Assets” shall mean, at any time, the consolidated current assets (other
than cash and Permitted Investments) of Holdings, the Borrower and the
Subsidiaries.

 

“Current Liabilities” shall mean, at any time, the consolidated current
liabilities of Holdings, the Borrower and the Subsidiaries at such time, but
excluding, without duplication, the current portion of any long-term
Indebtedness.

 

“DCCA” shall mean the Department of Commerce and Consumer Affairs of the State
of Hawaii and any successor agency thereto.

 

“DCCA Decision and Order” shall mean 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, relating to the granting of a non-exclusive cable
franchise to Hawaiian Telecom Services Company, Inc.

 

“Default” shall mean any event or condition which upon notice, lapse of time or
both, would constitute an Event of Default.

 

“Designated Entity” shall mean any Person set forth on Schedule 1.01(e).

 

“Disqualified Stock” shall mean any Equity Interest that, by its terms (or by
the terms of any security into which it is convertible or for which it is
exchangeable), or upon the happening of any event, (a) matures (excluding any
maturity as the result of an optional redemption by the issuer thereof) or is
mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or
is redeemable at the option of the holder thereof, in whole or in part, or
requires the payment of any cash dividend or any other scheduled payment
constituting a return of capital, in each case

 

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at any time on or prior to the first anniversary of the Term Loan Maturity Date,
or (b) is convertible into or exchangeable (unless at the sole option of the
issuer thereof) for (i) debt securities or (ii) any Equity Interest referred to
in clause (a) above, in each case at any time prior to the first anniversary of
the Term Loan Maturity Date.

 

“Dollars” or “$” shall mean lawful money of the United States of America.

 

“Domestic Subsidiaries” shall mean all Subsidiaries incorporated or organized
under the laws of the United States of America, any State thereof or the
District of Columbia.

 

“Eligible Assignee” shall mean any Person (other than a natural person) approved
by the Administrative Agent; provided that notwithstanding the foregoing,
“Eligible Assignee” shall not include the Borrower or any of the Borrower’s
Affiliates; provided, that no Designated Entity shall be an Eligible Assignee.

 

“Engagement Letter” shall mean the Engagement Letter dated February 7, 2012,
between the Borrower, the Administrative Agent and Credit Suisse Securities
(USA) LLC.

 

“Environmental Laws” shall mean all applicable Federal, state, local and foreign
laws (including common law), treaties, regulations, rules, ordinances, codes,
decrees, judgments, directives, orders (including consent orders), and binding
agreements with any Governmental Authority, in each case, relating to protection
of the environment, natural resources or human health and safety from exposure
to Hazardous Materials or the presence, Release of, or exposure to, Hazardous
Materials, or the generation, manufacture, processing, distribution, use,
treatment, storage, transport, recycling or handling of, or the arrangement for
such activities with respect to, Hazardous Materials.

 

“Environmental Liability” shall mean all liabilities, obligations, damages,
losses, claims, actions, suits, judgments, orders, fines, penalties, fees,
expenses and costs (including administrative oversight costs, natural resource
damages and remediation costs), whether contingent or otherwise, arising out of
or relating to (a) compliance or non-compliance with any Environmental Law,
(b) the generation, use, handling, transportation, storage, treatment or
disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials,
(d) the Release of any Hazardous Materials or (e) any contract, agreement or
other consensual arrangement pursuant to which liability is assumed or imposed
with respect to any of the foregoing.

 

“Equity Interests” shall mean shares of capital stock, partnership interests,
membership interests in a limited liability company, beneficial interests in a
trust or other equity interests in any Person, and any option, warrant or other
right entitling the holder thereof to purchase or otherwise acquire any such
equity interest.

 

“Equity Issuance” shall mean any issuance or sale by Holdings, the Borrower or
any of their respective subsidiaries of any Equity Interests of Holdings, the
Borrower or any such subsidiary, as applicable, except in each case for (a) any
issuance or sale to Holdings, the Borrower or any Subsidiary, (b) any issuance
of directors’ qualifying shares and (c) sales or issuances of common stock of
Holdings to management or employees of Holdings, the Borrower or any Subsidiary
under any employee stock option or stock purchase plan or employee benefit plan
in existence from time to time.

 

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“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as the
same may be amended from time to time.

 

“ERISA Affiliate” shall mean any trade or business (whether or not incorporated)
that, together with the Borrower, is treated as a single employer under
Section 414(b) or (c) of the Code, or solely for purposes of Section 302 of
ERISA and Section 412 of the Code, is treated as a single employer under
Section 414 of the Code.

 

“ERISA Event” shall mean (a) any “reportable event”, as defined in Section 4043
of ERISA or the regulations issued thereunder, with respect to a Plan (other
than an event for which the 30-day notice period is waived), (b) a determination
that any Plan is in “at risk” status (within the meaning of Section 303 of
ERISA), (c) the filing pursuant to Section 412(d) of the Code or
Section 303(d) of ERISA of an application for a waiver of the minimum funding
standard with respect to any Plan, (d) the incurrence by the Borrower or any of
its ERISA Affiliates of any liability under Title IV of ERISA with respect to
the termination of any Plan or the withdrawal or partial withdrawal of the
Borrower or any of its ERISA Affiliates from any Plan or Multiemployer Plan,
(e) the receipt by the Borrower or any of its ERISA Affiliates from the PBGC or
a plan administrator of any notice relating to the intention to terminate any
Plan or Plans or to appoint a trustee to administer any Plan, (f) the adoption
of any amendment to a Plan that would require the provision of security pursuant
to Section 401(a)(29) of the Code or Section 307 of ERISA, (g) the receipt by
the Borrower or any of its ERISA Affiliates of any notice, or the receipt by any
Multiemployer Plan from the Borrower or any of its ERISA Affiliates of any
notice, concerning the imposition of Withdrawal Liability or a determination
that a Multiemployer Plan is, or is expected to be, insolvent or in
reorganization, within the meaning of Title IV of ERISA, or (h) the occurrence
of a “prohibited transaction” with respect to which the Borrower or any of the
Subsidiaries is a “disqualified person” (within the meaning of Section 4975 of
the Code) or with respect to which the Borrower or any such Subsidiary could
otherwise be liable.

 

“Eurodollar”, when used in reference to any Loan or Borrowing, refers to whether
such Loan, or the Loans comprising such Borrowing, are bearing interest at a
rate determined by reference to the Adjusted LIBO Rate.

 

“Events of Default” shall have the meaning assigned to such term in Article VII.

 

“Excess Cash Flow” shall mean, for any fiscal year beginning with the fiscal
year ended December 31, 2012, an amount determined as of the last day of such
fiscal year, equal to the sum (without duplication) of: (a) Consolidated Net
Income for such fiscal year, adjusted to exclude any gains or losses
attributable to events requiring the prepayment of Loans pursuant to
Section 2.13(a) or (d); plus (b) to the extent deducted in determining such
Consolidated Net Income for such fiscal year, (i) depreciation, amortization and
other non-cash charges, losses or other items that reduce Consolidated Net
Income for such fiscal year and (ii) non-cash and/or stock-based compensation
expense for such fiscal year; plus (c) the sum of (i) the amount, if any, by
which Net Working Capital decreased during such fiscal year, (ii) the net
amount, if any, by which the deferred income taxes of Holdings, the Borrower and
its consolidated Subsidiaries increased during such fiscal year and (iii) cash
received upon the redemption, sale or other disposition during such fiscal year
of (A) any equity interests or patronage certificates of the

 

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Rural Utilities Service, CoBank, or RTFC, or (B) any subordinated capital
certificates of RTFC or any Equity Interests in CoBank; minus (d) the sum of
(i) any non-cash gains included in determining such Consolidated Net Income for
such fiscal year, (ii) the amount, if any, by which Net Working Capital
increased during such fiscal year and (iii) the net amount, if any, by which the
deferred income taxes of Holdings, the Borrower and its consolidated
Subsidiaries decreased during such fiscal year; minus (e) Capital Expenditures;
minus (f) Taxes for which reserves have been established and funded, to the
extent not reflected in the computation of Consolidated Net Income for such
fiscal year, provided that any amount so deducted shall be added to Excess Cash
Flow in respect of any subsequent fiscal year in which such Taxes reduced
Consolidated Net Income; minus (g) cash expenditures made in respect of Hedging
Agreements during such fiscal year, to the extent not reflected in the
computation of Consolidated Net Income; plus (h) cash payments received in
respect of Hedging Agreements during such fiscal year to the extent not included
in the computation of Consolidated Net Income for such fiscal year; minus
(i) the aggregate principal amount of Long-Term Indebtedness and Indebtedness
under the Revolving Facility Agreement (but only to the extent there is a
corresponding reduction in the commitment thereunder) repaid or prepaid (but
excluding any prepayment of Loans pursuant to Section 2.13) by the Borrower and
its Subsidiaries during such fiscal year (except to the extent deducted in a
prior fiscal year) or in the first fiscal quarter of the immediately succeeding
fiscal year, and the aggregate amount of fees, costs and expenses paid in cash
during such period with respect to any such Indebtedness; minus (j) amounts paid
in cash during such fiscal year on account of items that were accounted for as
non-cash reductions in determining Consolidated Net Income in a prior fiscal
year and were added back in determining Excess Cash Flow in respect of such
prior fiscal year; minus (k) cash paid for pension and other post-employment
benefit liabilities to the extent not already included in Consolidated Net
Income for such fiscal year; minus (l) all other non-cash income (including the
accrual of the non-cash portion of any Rural Utilities Service, CoBank or RTFC
patronage capital allocation); minus (m) fees and expenses to the extent added
to the determination of Consolidated EBITDA pursuant to clauses (a)(ix) or
(a)(x) of the definition thereof; minus (n) Net Cash Proceeds of Asset Sales
with respect to which the Borrower is exercising its reinvestment rights to the
extent such amounts where included in the computation of Consolidated Net Income
for such fiscal year; minus (o) cash paid by Holdings, the Borrower or any of
its consolidated Subsidiaries in connection with partial exercises of warrants
issued by Holdings; and minus (p) fees, costs and expenses paid to any Lender or
the Administrative Agent pursuant to any Loan Document to the extent such
amounts were not included in the computation of Consolidated Net Income for such
fiscal year.

 

“Excluded Domestic Subsidiary” shall mean any Domestic Subsidiary which is
classified as a “disregarded entity” for United States Federal Income tax
purposes and substantially all the assets of which are the capital stock of one
or more Foreign Subsidiaries.

 

“Excluded Taxes” shall mean, with respect to the Administrative Agent, any
Lender or any other recipient of any payment to be made by or on account of any
obligation of the Borrower hereunder, (a) income or franchise taxes imposed on
(or measured by) its net income by the United States of America, or by the
jurisdiction under the laws of which such recipient is organized or in which its
principal office is located or, in the case of any Lender, in which its
applicable lending office is located, (b) any branch profits taxes imposed by
the United States of America or any similar tax imposed by any other
jurisdiction described in clause (a) above, (c) in the case of a Foreign Lender
(other than an assignee pursuant to a request by the Borrower under

 

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Section 2.21(a)), any United States withholding tax that is imposed on amounts
payable to such Foreign Lender by the jurisdiction in which the Borrower is
organized (in the case of a Borrower organized in the United States shall
include United States Federal withholding taxes) at the time such Foreign Lender
becomes a party to this Agreement (or designates a new lending office) or is
attributable to such Foreign Lender’s failure to comply with Section 2.20(e) or
(f), except to the extent that such Foreign Lender (or its assignor, if any) was
entitled, at the time of designation of a new lending office (or assignment), to
receive additional amounts from the Borrower with respect to such withholding
tax pursuant to Section 2.20(a), (d) any U.S. withholding tax that is imposed on
amounts payable resulting from the failure of the Administrative Agent to comply
with the provisions of Section 2.20(f), and (e) any U.S. withholding taxes
imposed on a recipient as a result of such recipient’s failure to comply with
the applicable requirements of FATCA.

 

“FATCA” shall mean sections 1471, 1472, 1473 and 1474 of the Code and any
amended or successor provisions that are substantially similar, the United
States Treasury Regulations promulgated thereunder and published guidance with
respect thereto.

 

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

 

“FCC Licenses” shall mean 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 thereunder.

 

“Federal Funds Effective Rate” shall mean, for any day, the weighted average of
the rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published on the next
succeeding Business Day by the Federal Reserve Bank of New York, or, if such
rate is not so published for any day that is a Business Day, the average of the
quotations for the day for such transactions received by the Administrative
Agent from three Federal funds brokers of recognized standing selected by it.

 

“Financial Officer” of any Person shall mean the chief financial officer,
principal accounting officer, treasurer or controller of such Person.

 

“Foreign Lender” shall mean any Lender that is organized under the laws of a
jurisdiction other than the United States.  For purposes of this definition, the
United States, each State thereof and the District of Columbia shall be deemed
to constitute a single jurisdiction.

 

“Foreign Subsidiary” shall mean any Subsidiary that is not a Domestic
Subsidiary.

 

“GAAP” shall mean United States generally accepted accounting principles as in
effect as of any date of determination hereunder and applied on a basis
consistent with the financial statements delivered pursuant to
Section 4.02(l) provided, however, that the Borrower may, pursuant to
Section 5.04(a) or (b), elect to apply IFRS accounting principles in lieu of
GAAP and, upon any such election, references herein to GAAP shall thereafter be
construed to mean IFRS (except as the context otherwise requires); provided,
further, that, notwithstanding the Borrower’s election to apply IFRS in lieu of
GAAP, (i) any financial statements delivered under Section 5.04(a) or (b) prior
to such election shall not be required to be restated in IFRS and

 

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(ii) the calculation of the covenants set forth in Section 6.10, 6.11 and 6.12
and all terms of a financial or accounting nature relating to compliance with
any other covenant shall continue to be computed and construed, respectively, in
accordance with GAAP, subject to Section 1.02.

 

“Governmental Authority” shall mean any Federal, state, local or foreign court
or governmental agency, authority, instrumentality or regulatory body.

 

“Granting Lender” shall have the meaning assigned to such term in
Section 9.04(i).

 

“Guarantee” of or by any Person shall mean any obligation, contingent or
otherwise, of such Person guaranteeing or having the economic effect of
guaranteeing any Indebtedness or other obligation of any other Person (the
“primary obligor”) in any manner, whether directly or indirectly, and including
any obligation of such Person, direct or indirect, (a) to purchase or pay (or
advance or supply funds for the purchase or payment of) such Indebtedness or
other obligation or to purchase (or to advance or supply funds for the purchase
of) any security for the payment of such Indebtedness or other obligation,
(b) to purchase or lease property, securities or services for the purpose of
assuring the owner of such Indebtedness or other obligation of the payment of
such Indebtedness or other obligation or (c) to maintain working capital, equity
capital or any other financial statement condition or liquidity of the primary
obligor so as to enable the primary obligor to pay such Indebtedness or other
obligation; provided, however, that the term “Guarantee” shall not include
endorsements for collection or deposit in the ordinary course of business or
customary and reasonable indemnity obligations in effect on the Closing Date or
provided in connection with any acquisition or disposition of assets permitted
under this Agreement.

 

“Guarantee and Collateral Agreement” shall mean the Guarantee and Collateral
Agreement, substantially in the form of Exhibit D, made by the Guarantors party
thereto for the benefit of the Secured Parties.

 

“Guarantors” shall mean Holdings and the Subsidiary Guarantors.

 

“Hazardous Materials” shall mean (a) any petroleum products or byproducts and
all other hydrocarbons, coal ash, radon gas, asbestos, urea formaldehyde foam
insulation, polychlorinated biphenyls, chlorofluorocarbons and all other
ozone-depleting substances and (b) any chemical, material, substance or waste
that is prohibited, limited or regulated by or pursuant to any applicable
Environmental Law.

 

“Hedging Agreement” shall mean any interest rate protection agreement, foreign
currency exchange agreement, commodity price protection agreement or other
interest or currency exchange rate or commodity price hedging arrangement.

 

“Holdings” shall have the meaning assigned to such term in the introductory
statement to this Credit Agreement.

 

“HPUC” shall mean the Hawaii Public Utilities Commission and any successor
agency thereto.

 

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“HPUC Decision and Order” shall mean that certain Decision and Order issued by
the Public Utilities Commission of the State of Hawaii, filed in Docket
No. 2010-0001, on September 22, 2010, relating to the Application by Hawaiian
Telcom, Inc., and Hawaiian Telcom Services Company, Inc., for an Order Approving
the Joint Chapter 11 Plan of Reorganization of Hawaiian Telcom
Communications, Inc., and its Debtor Affiliates, Including Certain Security
Arrangements, as modified or clarified by that certain Decision and Order filed
in Docket No. 2011-0124 on June 17, 2011 and Order Approving Parties’ Joint
Motion, filed August 31, 2011, on September 2, 2011.

 

“IFRS” shall mean the International Financial Reporting Standards adopted by the
International Accounting Standards Board and in effect from time to time.

 

“Incremental Term Borrowing” shall mean a Borrowing comprised of Incremental
Term Loans.

 

“Incremental Term Lender” shall mean a Lender with an Incremental Term Loan
Commitment or an outstanding Incremental Term Loan.

 

“Incremental Term Loan Amount” shall mean, at any time, the excess, if any, of
(a) $50,000,000 over (b) the aggregate amount of all Incremental Term Loan
Commitments established prior to such time pursuant to Section 2.22.

 

“Incremental Term Loan Assumption Agreement” shall mean an Incremental Term Loan
Assumption Agreement among, and in form and substance reasonably satisfactory
to, the Borrower, the Administrative Agent and one or more Incremental Term
Lenders.

 

“Incremental Term Loan Commitment” shall mean the commitment of any Lender,
established pursuant to Section 2.22, to make Incremental Term Loans to the
Borrower.

 

“Incremental Term Loan Maturity Date” shall mean the final maturity date of any
Incremental Term Loan, as set forth in the applicable Incremental Term Loan
Assumption Agreement.

 

“Incremental Term Loan Repayment Dates” shall mean the dates scheduled for the
repayment of principal of any Incremental Term Loan, as set forth in the
applicable Incremental Term Loan Assumption Agreement.

 

“Incremental Term Loans” shall mean Term Loans made by one or more Lenders to
the Borrower pursuant to Section 2.01(b).  Incremental Term Loans may be made in
the form of additional Term Loans or, to the extent permitted by Section 2.22
and provided for in the relevant Incremental Term Loan Assumption Agreement,
Other Term Loans.

 

“Indebtedness” of any Person shall mean, without duplication, (a) all
obligations of such Person for borrowed money or with respect to deposits or
advances of any kind, (b) all obligations of such Person evidenced by bonds,
debentures, notes or similar instruments, (c) all obligations of such Person
under conditional sale or other title retention agreements relating to property
or assets purchased by such Person, (d) all obligations of such Person issued or
assumed as the deferred purchase price of property or services (excluding trade
accounts payable and

 

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accrued obligations incurred in the ordinary course of business), (e) all
Indebtedness of others secured by (or for which the holder of such Indebtedness
has an existing right, contingent or otherwise, to be secured by) any Lien on
property owned or acquired by such Person, whether or not the obligations
secured thereby have been assumed; provided, that to the extent such
Indebtedness has been assumed, only the lesser of the amount of such
Indebtedness and the value of the property over which such Lien is granted shall
constitute Indebtedness, (f) all Guarantees by such Person of Indebtedness of
others, (g) all Capital Lease Obligations of such Person, (h) all Synthetic
Lease Obligations of such Person, (i) net obligations of such Person under any
Hedging Agreements, valued at the Agreement Value thereof, (j) all obligations
of such Person to purchase, redeem, retire, defease or otherwise make any
payment in respect of any Equity Interests of such Person or any other Person on
or prior to 180 days following the Term Loan Maturity Date or any warrants,
rights or options to acquire such Equity Interests, valued, in the case of
redeemable preferred interests, at the greater of its voluntary or involuntary
liquidation preference plus accrued and unpaid dividends, (k) all obligations of
such Person as an account party in respect of letters of credit and (l) all
obligations of such Person in respect of bankers’ acceptances.  The Indebtedness
of any Person shall include the Indebtedness of any partnership in which such
Person is a general partner.

 

“Indemnified Taxes” shall mean Taxes other than Excluded Taxes.

 

“Indemnitee” shall have the meaning assigned to such term in Section 9.05(b).

 

“Information” shall have the meaning assigned to such term in Section 9.16.

 

“Intellectual Property Collateral” shall have the meaning assigned to such term
in the Guarantee and Collateral Agreement.

 

“Intercreditor Agreement” shall mean that certain Intercreditor and Collateral
Agency Agreement, dated as of the date hereof, among the Loan Parties, the
Administrative Agent, the Collateral Agent and the administrative agent for the
lenders under the Revolving Facility Agreement.

 

“Interest Coverage Ratio” shall mean, for any period, the ratio of
(a) Consolidated EBITDA for such period to (b) Consolidated Interest Expense for
such period.

 

“Interest Payment Date” shall mean (a) with respect to any ABR Loan, the last
Business Day of each March, June, September and December, and (b) with respect
to any Eurodollar Loan, the last day of the Interest Period applicable to the
Borrowing of which such Loan is a part and, in the case of a Eurodollar
Borrowing with an Interest Period of more than three months’ duration, each day
that would have been an Interest Payment Date had successive Interest Periods of
three months’ duration been applicable to such Borrowing.

 

“Interest Period” shall mean, with respect to any Eurodollar Borrowing, the
period commencing on the date of such Borrowing and ending on the numerically
corresponding day (or, if there is no numerically corresponding day, on the last
day) in the calendar month that is 1, 2, 3 or 6 months thereafter, as the
Borrower may elect; provided, however, that (a) if any Interest Period would end
on a day other than a Business Day, such Interest Period shall be extended to
the next succeeding Business Day unless such next succeeding Business Day would

 

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fall in the next calendar month, in which case such Interest Period shall end on
the next preceding Business Day, (b) any Interest Period that begins on the last
Business Day of a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest Period)
shall end on the last Business Day of the calendar month at the end of such
Interest Period and (c) no Interest Period for any Loan shall extend beyond the
maturity date of such Loan.  Interest shall accrue from and including the first
day of an Interest Period to but excluding the last day of such Interest
Period.  For purposes hereof, the date of a Borrowing initially shall be the
date on which such Borrowing is made and thereafter shall be the effective date
of the most recent conversion or continuation of such Borrowing.

 

“Joint Venture” shall mean any Subsidiary that is not a wholly-owned Subsidiary
and any Subsidiary of such Subsidiary that is not a wholly-owned Subsidiary.

 

“Lenders” shall mean (a) the Persons listed on Schedule 2.01 (other than any
such Person that has ceased to be a party hereto pursuant to an Assignment and
Acceptance) and (b) any Person that has become a party hereto pursuant to an
Assignment and Acceptance.

 

“Leverage Ratio” shall mean, on any date, the ratio of Total Debt on such date
to Consolidated EBITDA for the period of four consecutive fiscal quarters most
recently ended on or prior to such date.

 

“LIBO Rate” shall mean, with respect to any Eurodollar Borrowing for any
Interest Period, the rate per annum determined by the Administrative Agent at
approximately 11:00 a.m. (London time) on the date that is two Business Days
prior to the commencement of such Interest Period by reference to the British
Bankers’ Association Interest Settlement Rates for deposits in Dollars (as set
forth by any service selected by the Administrative Agent that has been
nominated by the British Bankers’ Association as an authorized information
vendor for the purpose of displaying such rates) for a period equal to such
Interest Period; provided that, to the extent that an interest rate is not
ascertainable pursuant to the foregoing provisions of this definition, the “LIBO
Rate” shall be the interest rate per annum determined by the Administrative
Agent to be the average of the rates per annum at which deposits in Dollars are
offered for such relevant Interest Period to major banks in the London interbank
market in London, England by the Administrative Agent at approximately
11:00 a.m. (London time) on the date that is two Business Days prior to the
beginning of such Interest Period.

 

“Lien” shall mean, with respect to any asset, (a) any mortgage, deed of trust,
lien, pledge, encumbrance, charge or security interest in or on such asset,
(b) the interest of a vendor or a lessor under any conditional sale agreement,
capital lease or title retention agreement (or any financing lease having
substantially the same economic effect as any of the foregoing) relating to such
asset and (c) in the case of securities, any purchase option, call or similar
right of a third party with respect to such securities.  For the avoidance of
doubt, it is understood and agreed that Holdings and any Subsidiary may, as part
of its business, grant in the ordinary course licenses to third parties to use
Intellectual Property Collateral owned or developed by, or licensed to, such
entity.  For purposes of this Agreement and the other Loan Documents, such
licensing activity shall not constitute a “Lien” on such intellectual property. 
Each of the Administrative Agent and each Lender understands that any such
licenses may be exclusive to the applicable licensees, and such exclusivity
provisions may limit the ability of the Administrative Agent to utilize, sell,

 

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lease, license or transfer the related intellectual property or otherwise
realize value from such Intellectual Property Collateral pursuant hereto.

 

“Loan Documents” shall mean this Agreement, the Security Documents, each
Incremental Term Loan Assumption Agreement, the promissory notes, if any,
executed and delivered pursuant to Section 2.04(e), the Intercreditor Agreement
and any other document executed in connection with, including any amendment of,
the foregoing.

 

“Loan Parties” shall mean Holdings, the Borrower and the Subsidiary Guarantors.

 

“Loans” shall mean the Term Loans.

 

“Long-term Indebtedness” shall mean any Indebtedness that, in accordance with
GAAP, constitutes (or, when incurred, constituted) a long-term liability.  For
purposes of determining the Long-Term Indebtedness of Holdings, the Borrower and
the Subsidiaries, Indebtedness of Holdings, the Borrower or any Subsidiary owed
to Holdings, the Borrower or a Subsidiary shall be excluded.

 

“Margin Stock” shall have the meaning assigned to such term in Regulation U.

 

“Material Adverse Effect” shall mean (a) a materially adverse effect on the
business, assets, liabilities, operations, financial condition or operating
results of the Borrower and the Subsidiaries, taken as a whole, (b) a material
impairment of the ability of Holdings and its Subsidiaries Parties (taken as a
whole) to perform their respective obligations under any Loan Document to which
they are parties or (c) a material impairment of the rights and remedies of or
benefits available to the Lenders under any Loan Document.

 

“Material Indebtedness” shall mean Indebtedness (other than the Loans), or
obligations in respect of one or more Hedging Agreements, of any one or more of
Holdings, the Borrower or any Subsidiary in an aggregate principal amount
exceeding $7,500,000.  For purposes of determining Material Indebtedness, the
“principal amount” of the obligations of Holdings, the Borrower or any
Subsidiary in respect of any Hedging Agreement at any time shall be the
Agreement Value of such Hedging Agreement at such time.

 

“Maximum Rate” shall have the meaning assigned to such term in Section 9.09.

 

“Moody’s” shall mean Moody’s Investors Service, Inc., or any successor thereto.

 

“Mortgaged Properties” shall mean, initially, the owned real properties and
leasehold and subleasehold interests of the Loan Parties specified on
Schedule 1.01(c), and shall include each other parcel of real property and
improvements thereto with respect to which a Mortgage is granted pursuant to
Section 5.12.

 

“Mortgages” shall mean the mortgages, deeds of trust, leasehold mortgages,
assignments of leases and rents, modifications and other security documents
delivered pursuant to clause (i) of Section 4.01(h) or pursuant to Section 5.12
or Section 5.13, each substantially in the form of Exhibit E.

 

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“Multiemployer Plan” shall mean a multiemployer plan as defined in
Section 4001(a)(3) of ERISA.

 

“Net Cash Proceeds” shall mean (a) with respect to any Asset Sale, the cash
proceeds (including cash proceeds subsequently received (as and when received)
in respect of noncash consideration initially received), net of (i) selling
expenses (including broker’s fees or commissions, legal fees, transfer and
similar taxes and the Borrower’s good faith estimate of income taxes paid or
payable in connection with such sale), (ii) amounts provided as a reserve, in
accordance with GAAP (to the extent applicable), against any liabilities under
any indemnification obligations or purchase price adjustment associated with
such Asset Sale (provided that, to the extent and at the time any such amounts
are released from such reserve, such amounts shall constitute Net Cash Proceeds)
and (iii) the principal amount, premium or penalty, if any, interest and other
amounts on any Indebtedness for borrowed money which is secured by the asset
sold in such Asset Sale and which is required to be repaid with such proceeds
(other than any such Indebtedness assumed by the purchaser of such asset);
provided, however, that, unless such Asset Sale is a sale and lease-back
transaction described in Section 6.03, if (x) the Borrower shall deliver a
certificate of a Financial Officer to the Administrative Agent at the time of
receipt thereof setting forth the Borrower’s intent to reinvest such proceeds in
assets of a kind then used or usable in the business of the Borrower and its
Subsidiaries within 365 days of receipt of such proceeds or commit to reinvest
such proceeds within 365 days of receipt of such proceeds and such actual
investment occurs no later than eighteen months after such receipt and (y) no
Event of Default shall have occurred and shall be continuing at the time of such
certificate and no Event of Default shall have occurred and be continuing at the
proposed time of the application of such proceeds, then such proceeds shall not
constitute Net Cash Proceeds except to the extent not so used at the end of such
365-day period (or, in the case of a commitment in writing to reinvest such
proceeds entered into within such 365-day period, not so used within eighteen
months of receipt of such proceeds), at which time such proceeds shall be deemed
to be Net Cash Proceeds; and (b) with respect to any issuance or incurrence of
Indebtedness (other than Incremental Term Loans, Other Term Loans and loans
under the Revolving Facility Agreement) or any Equity Issuance, the cash
proceeds thereof, net of all taxes and fees, commissions, costs and other
expenses incurred in connection therewith (including legal fees and expenses).

 

“Net Leverage Ratio” shall mean, on any date, the ratio of Total Debt on such
date, minus Unrestricted Cash, to Consolidated EBITDA for the period of four
consecutive fiscal quarters most recently ended on or prior to such date.

 

“Net Working Capital” shall mean, at any date, (a) the consolidated current
assets of Holdings, the Borrower and its consolidated Subsidiaries as of such
date (excluding cash, Permitted Investments and current deferred income taxes)
minus (b) the consolidated current liabilities of Holdings, the Borrower and its
consolidated Subsidiaries as of such date (excluding current liabilities in
respect of Indebtedness and current deferred income taxes).  Net Working Capital
at any date may be a positive or negative number.  Net Working Capital increases
when it becomes more positive or less negative and decreases when it becomes
less positive or more negative.

 

“Operating Licenses” shall have the meaning assigned to such term in
Section 3.26.

 

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“Obligations” shall mean all obligations defined as “Obligations” in the
Guarantee and Collateral Agreement.

 

“OFAC” shall have the meaning assigned to such term in Section 3.25.

 

“OID” shall mean original issue discount.

 

“Other Taxes” shall mean any and all present or future stamp or documentary
taxes or any other excise or property taxes, charges or similar levies arising
from any payment made under any Loan Document or from the execution, delivery or
enforcement of, or otherwise with respect to, any Loan Document.

 

“Other Term Loans” shall have the meaning assigned to such term in
Section 2.22(a).

 

“Patronage Certificates” shall mean patronage certificates and/or capital
allocation of any of (a) the Rural Utilities Service, (b) CoBank or (c) RTFC.

 

“PBGC” shall mean the Pension Benefit Guaranty Corporation referred to and
defined in ERISA and any successor entity performing similar functions.

 

“Permitted Acquisition” shall have the meaning assigned to such term in
Section 6.04(g).

 

“Permitted Investments” shall mean:

 

(a) direct obligations of, or obligations the principal of and interest on which
are unconditionally guaranteed by, the United States of America (or by any
agency thereof to the extent such obligations are backed by the full faith and
credit of the United States of America), in each case maturing or allowing for
liquidation at the original par value at the option of the holder within one
year from the date of acquisition thereof;

 

(b) investments in commercial paper maturing within one year from the date of
acquisition thereof and having, at such date of acquisition, the highest credit
rating obtainable from S&P or from Moody’s;

 

(c) investments in certificates of deposit, banker’s acceptances, time deposits
or overnight bank deposits maturing within one year from the date of acquisition
thereof issued or guaranteed by or placed with, and money market deposit
accounts issued or offered by, the Administrative Agent or any domestic office
of any commercial bank organized under the laws of the United States of America
or any State thereof that has a combined capital and surplus and undivided
profits of not less than $250,000,000 and that issues (or the parent of which
issues) commercial paper rated at least “Prime-1” (or the then equivalent grade)
by Moody’s or “A-1” (or the then equivalent grade) by S&P;

 

(d) fully collateralized repurchase agreements with a term of not more than 180
days for securities described in clause (a) above and entered into with a
financial institution satisfying the criteria of clause (c) above;

 

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(e) investments in “money market funds” within the meaning of Rule 2a-7 of the
Investment Company Act of 1940, as amended, substantially all of whose assets
are invested in investments of the type described in clauses (a) through
(d) above;

 

(f) securities with maturities of one year or less from the date of acquisition
issued or fully guaranteed by any State, commonwealth or territory of the United
States, or by any political subdivision or taxing authority thereof, and rated
at least “A” by S&P or “A” by Moody’s;

 

(g) shares of restricted mutual funds whose investment guidelines restrict 95%
of such funds’ investments to those satisfying the provisions of clauses
(a) through (f) above; and

 

(h) other short-term investments utilized by Foreign Subsidiaries in accordance
with normal investment practices for cash management in investments of a type
analogous to the foregoing.

 

“Person” shall mean any natural person, corporation, business trust, joint
venture, association, company, limited liability company, partnership,
Governmental Authority or other entity.

 

“Plan” shall mean any “employee pension benefit plan” within the meaning of
Section 3(2) of ERISA (other than a Multiemployer Plan) that is subject to the
provisions of Title IV of ERISA or Section 412 of the Code or Section 307 of
ERISA, and in respect of which the Borrower or any ERISA Affiliate is (or, if
such plan were terminated, would under Section 4069 of ERISA be deemed to be) an
“employer” as defined in Section 3(5) of ERISA.

 

“Platform” shall have the meaning assigned to such term in Section 9.01.

 

“Prime Rate” shall mean the rate of interest per annum determined from time to
time by Credit Suisse as its prime rate in effect at its principal office in
New York City and notified to the Borrower.  The prime rate is a rate set by
Credit Suisse based upon various factors including Credit Suisse’s costs and
desired return, general economic conditions and other factors, and is used as a
reference point for pricing some loans, which may be priced at, above, or below
such rate.

 

“Public Lender” shall have the meaning assigned to such term in Section 9.01.

 

“Qualified Capital Stock” of any Person shall mean any Equity Interest of such
Person that is not Disqualified Stock.

 

“Refinanced Indebtedness” shall mean the Indebtedness represented by the
documents, instruments and other agreements listed on Schedule 1.01(a).

 

“Refinancing” shall mean, in respect of any Indebtedness, a refinancing, renewal
or extension of such Indebtedness that (a) has an aggregate outstanding
principal amount plus OID (together with all accrued interest, fees, prepayment
premiums and other amounts payable in respect of such Indebtedness) not greater
than the aggregate principal amount of such Indebtedness (together with all
accrued and capitalized interest, fees, prepayment premiums and other amounts
payable in respect of such Indebtedness) outstanding at the time of such

 

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refinancing, renewal or extension, (b) has a weighted average life to maturity
(measured as of the date of such refinancing, renewal or extension) and maturity
no shorter than that of such Indebtedness, (c) is not secured by any property or
any Lien other than that (if any) securing such Indebtedness, (d) is not
guaranteed by or secured by any property of any guarantor or other obligor which
is not also a guarantor or obligor of such Indebtedness, (e) if such
Indebtedness is subordinated in right of payment to the Obligations, is
subordinated in right of payment to the Obligations on terms at least as
favorable to the Lenders as those contained in the documentation governing such
Indebtedness, (f) does not have covenants or events of default that, taken as a
whole, are less favorable to Holdings and its Subsidiaries than those of such
Indebtedness (as determined in good faith by the board of directors of the
Borrower) and (g) at the time of the incurrence thereof, except with respect to
a refinancing of Indebtedness permitted under Section 6.01(d), no Event of
Default has occurred and is continuing.

 

“Register” shall have the meaning assigned to such term in Section 9.04(d).

 

“Regulation T” shall mean Regulation T of the Board as from time to time in
effect and all official rulings and interpretations thereunder or thereof.

 

“Regulation U” shall mean Regulation U of the Board as from time to time in
effect and all official rulings and interpretations thereunder or thereof.

 

“Regulation X” shall mean Regulation X of the Board as from time to time in
effect and all official rulings and interpretations thereunder or thereof.

 

“Related Fund” shall mean, with respect to any Lender that is a fund or
commingled investment vehicle that invests in bank loans, any other fund that
invests in bank loans and is managed or advised by the same investment advisor
as such Lender or by an Affiliate of such investment advisor.

 

“Related Parties” shall mean, with respect to any specified Person, such
Person’s Affiliates and the respective directors, trustees, officers, employees,
agents and advisors of such Person and such Person’s Affiliates.

 

“Release” shall mean any release, spill, emission, leaking, dumping, injection,
pouring, deposit, disposal, discharge, dispersal, leaching or migration into or
through the environment or within or upon any building, structure, facility or
fixture.

 

“Repayment Date” shall have the meaning given such term in Section 2.11(a).

 

“Required Lenders” shall mean, at any time, Lenders having Loans and unused Term
Loan Commitments representing more than 50% of the sum of all Loans outstanding
and Term Loan Commitments at such time.

 

“Responsible Officer” of any Person shall mean any executive officer or
Financial Officer of such Person and any other officer or similar official
thereof responsible for the administration of the obligations of such Person in
respect of this Agreement.

 

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“Restricted Indebtedness” shall mean Indebtedness of Holdings, the Borrower or
any Subsidiary, the payment, prepayment, repurchase or defeasance of which is
restricted under Section 6.09(b).

 

“Restricted Payment” shall mean any dividend or other distribution (whether in
cash, securities or other property) with respect to any Equity Interests (other
than dividends and distributions on Equity Interests payable solely by the
issuance or vesting of additional shares of Equity Interests of the Person
paying such dividends or distributions and other than non-cash dividends or
distributions in connection with the grant of equity based awards and the
issuance of Equity Interests, in each case, under employee benefit plans) in
Holdings, the Borrower or any Subsidiary, or any payment (whether in cash,
securities or other property), including any sinking fund or similar deposit, on
account of the purchase, redemption, retirement, acquisition, cancellation or
termination of any Equity Interests in Holdings, the Borrower or any Subsidiary.

 

“Retained Excess Cash Flow Amount” shall mean, at any time, the aggregate amount
of Excess Cash Flow of Holdings and its Subsidiaries for all fiscal years ended
prior to such time (commencing with the fiscal year ended December 31, 2012)
that is not or not required to be applied to prepay the Loans in accordance with
Section 2.13(c), less any amount thereof that has been used or otherwise applied
under Section 6.06(a)(i)(B) or 6.10(i) at such time.

 

“Revolving Facility Agreement” shall mean that certain Amended and Restated
Revolving Line of Credit Agreement dated as of October 3, 2011 among Hawaiian
Telcom Communications, Inc., First Hawaiian Bank, as agent, and the lenders from
time to time party thereto, as the same may be amended, restated, modified,
waived or Refinanced from time to time subject to the provisions of this
Agreement.

 

“RTFC” shall mean Rural Telephone Finance Cooperative, a District of Columbia
cooperative association.

 

“Rural Utilities Service” shall mean the Rural Utilities Service Agency of the
U.S. Department of Agriculture.

 

“S&P” shall mean Standard & Poor’s Ratings Service, or any successor thereto.

 

“Secured Hedge Agreement” shall have the meaning assigned to such term in the
Guarantee and Collateral Agreement.

 

“Secured Parties” shall have the meaning assigned to such term in the Guarantee
and Collateral Agreement.

 

“Security Documents” shall mean the Mortgages, the Guarantee and Collateral
Agreement and each of the security agreements, mortgages and other instruments
and documents executed and delivered pursuant to any of the foregoing or
pursuant to Section 5.12.

 

“Specified Facilities” shall mean the facilities set forth in Schedule 1.01(f).

 

“SPV” shall have the meaning assigned to such term in Section 9.04(i).

 

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“Statutory Reserves” shall mean a fraction (expressed as a decimal), the
numerator of which is the number one and the denominator of which is the number
one minus the aggregate of the maximum reserve percentages (including any
marginal, special, emergency or supplemental reserves) expressed as a decimal
established by the Board and any other banking authority, domestic or foreign,
to which the Administrative Agent or any Lender (including any branch, Affiliate
or other fronting office making or holding a Loan) is subject for Eurocurrency
Liabilities (as defined in Regulation D of the Board).  Eurodollar Loans shall
be deemed to constitute Eurocurrency Liabilities (as defined in Regulation D of
the Board) and to be subject to such reserve requirements without benefit of or
credit for proration, exemptions or offsets that may be available from time to
time to any Lender under such Regulation D.  Statutory Reserves shall be
adjusted automatically on and as of the effective date of any change in any
reserve percentage.

 

“subsidiary” shall mean, with respect to any Person (herein referred to as the
“parent”), any corporation, partnership, limited liability company, association
or other business entity (a) of which securities or other ownership interests
representing more than 50% of the equity or more than 50% of the ordinary voting
power or more than 50% of the general partnership interests are, at the time any
determination is being made, owned, Controlled or held, or (b) that is, at the
time any determination is made, otherwise Controlled, by the parent or one or
more subsidiaries of the parent or by the parent and one or more subsidiaries of
the parent.

 

“Subsidiary” shall mean any subsidiary of Holdings.

 

“Subsidiary Guarantor” shall mean each Subsidiary listed on Schedule 1.01(b),
and each other Subsidiary that is or becomes a party to the Guarantee and
Collateral Agreement.

 

“Synthetic Lease” shall mean, as to any Person, any lease (including leases that
may be terminated by the lessee at any time) of any property (whether real,
personal or mixed) (a) that is accounted for as an operating lease under GAAP
and (b) in respect of which the lessee retains or obtains ownership of the
property so leased for United States Federal income tax purposes, other than any
such lease under which such Person is the lessor.

 

“Synthetic Lease Obligations” shall mean, as to any Person, an amount equal to
the capitalized amount of the remaining lease payments under any Synthetic Lease
that would appear on a balance sheet of such person in accordance with GAAP if
such obligations were accounted for as Capital Lease Obligations.

 

“Synthetic Purchase Agreement” shall mean any swap, derivative or other
agreement or combination of agreements pursuant to which Holdings, the Borrower
or any Subsidiary is or may become obligated to make (a) any payment in
connection with a purchase by any third party from a Person other than Holdings,
the Borrower or any Subsidiary of any Equity Interest or Restricted Indebtedness
or (b) any payment (other than on account of a permitted purchase by it of any
Equity Interest or Restricted Indebtedness) the amount of which is determined by
reference to the price or value at any time of any Equity Interest or Restricted
Indebtedness; provided that no phantom stock or similar plan providing for
payments only to current or former directors, officers or employees of Holdings,
the Borrower or the Subsidiaries (or to their heirs or estates) shall be deemed
to be a Synthetic Purchase Agreement.

 

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“Taxes” shall mean any and all present or future taxes, levies, imposts, duties,
deductions, charges or withholdings imposed by any Governmental Authority.

 

“Term Borrowing” shall mean a Borrowing comprised of Term Loans.

 

“Term Lender” shall mean a Lender with a Term Loan Commitment or an outstanding
Term Loan.

 

“Term Loan Commitment” shall mean, with respect to each Lender, the commitment
of such Lender to make Term Loans hereunder as set forth on Schedule 2.01, or in
the Assignment and Acceptance pursuant to which such Lender assumed its Term
Loan Commitment, as applicable, as the same may be reduced or increased from
time to time pursuant to assignments by or to such Lender pursuant to
Section 9.04.  Unless the context shall otherwise require, the term “Term Loan
Commitments” shall include the Incremental Term Commitments.

 

“Term Loan Maturity Date” shall mean the date that is five years after the
Closing Date; provided that is any such date is not a Business Day, the Term
Loan Maturity Date shall be the Business Day immediately preceding such date.

 

“Term Loan Repayment Dates” shall mean the Repayment Dates and the Incremental
Term Loan Repayment Dates.

 

“Term Loans” shall mean the term loans made by the Lenders to the Borrower
pursuant to Section 2.01.  Unless the context shall otherwise require, the term
“Term Loans” shall include any Incremental Term Loans.

 

“Total Debt” shall mean, at any time, the total Indebtedness of the Borrower and
the Subsidiaries at such time.

 

“Transactions” shall mean, collectively, (a) the execution, delivery and
performance by the Loan Parties of the Loan Documents to which they are a party
and the making of the Borrowings to be made hereunder on the Closing Date,
(b) the repayment of all amounts due or outstanding under or in respect of, and
the termination of, the Refinanced Indebtedness and (c) the payment of fees and
expenses related to the foregoing.

 

“Type”, when used in respect of any Loan or Borrowing, shall refer to the Rate
by reference to which interest on such Loan or on the Loans comprising such
Borrowing is determined.  For purposes hereof, the term “Rate” shall mean the
Adjusted LIBO Rate and the Alternate Base Rate.

 

“Unrestricted Cash” shall mean domestic cash and Permitted Investments of
Holdings, the Borrower and its Domestic Subsidiaries that are free and clear of
all Liens (other than Liens created under the Security Documents and the
Security Agreements (as defined in the Revolving Facility Agreement) and other
than Liens permitted under Section 6.02(n) or (o)) and not subject to any
restrictions on the use thereof to pay Indebtedness and other obligations of any
of the Loan Parties or any of their respective Subsidiaries.

 

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“USA PATRIOT Act” shall mean The Uniting and Strengthening America by Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001
(Title III of Pub. L. No. 107-56 (signed into law October 26, 2001)).

 

“Wholly Owned Subsidiary” of any Person shall mean a subsidiary of such Person
of which securities (except for directors’ qualifying shares) or other ownership
interests representing 100% of the Equity Interests are, at the time any
determination is being made, owned, Controlled or held by such Person or one or
more wholly owned Subsidiaries of such Person or by such Person and one or more
wholly owned Subsidiaries of such Person.

 

“Withdrawal Liability” shall mean liability to a Multiemployer Plan as a result
of a complete or partial withdrawal from such Multiemployer Plan, as such terms
are defined in Part I of Subtitle E of Title IV of ERISA.

 

“Yield Differential” shall have the meaning assigned to such term in
Section 2.22(b).

 

SECTION 1.02.  Terms Generally.  The definitions in Section 1.01 shall apply
equally to both the singular and plural forms of the terms defined.  Whenever
the context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms.  The words “include”, “includes” and “including”
shall be deemed to be followed by the phrase “without limitation”.  The word
“will” shall be construed to have the same meaning and effect as the word
“shall”; and the words “asset” and “property” shall be construed as having the
same meaning and effect and to refer to any and all tangible and intangible
assets and properties, including cash, securities, accounts and contract
rights.  All references herein to Articles, Sections, Exhibits and Schedules
shall be deemed references to Articles and Sections of, and Exhibits and
Schedules to, this Agreement unless the context shall otherwise require.  Except
as otherwise expressly provided herein, (a) any reference in this Agreement to
any Loan Document shall mean, unless otherwise specified herein or therein, such
agreement as amended, restated, supplemented or otherwise modified from time to
time, in each case, in accordance with the express terms of this Agreement,
(b) any reference in this Agreement to any statute or applicable law, decision,
ruling or order shall mean and be a reference to such statute or applicable law,
decision, ruling or order as modified from time to time and any successor
legislation or applicable law, decision, ruling or order, in each case as in
effect at the time any such reference is operative, (c) any reference to an
anniversary of the Closing Date falling in any year shall mean and be a
reference to February 28 of such year and (d) all terms of an accounting or
financial nature shall be construed in accordance with GAAP, as in effect from
time to time; provided, however, that if the Borrower notifies the
Administrative Agent that the Borrower wishes to amend any covenant in
Article VI or any related definition to eliminate the effect of any change in
GAAP occurring after the date of this Agreement on the operation of such
covenant (or if the Administrative Agent notifies the Borrower that the Required
Lenders wish to amend Article VI or any related definition for such purpose),
then the Borrower’s compliance with such covenant shall be determined on the
basis of GAAP in effect immediately before the relevant change in GAAP became
effective, until either such notice is withdrawn or such covenant is amended in
a manner satisfactory to the Borrower and the Required Lenders.

 

SECTION 1.03.  Pro Forma Calculations.  All pro forma calculations permitted or
required to be made by the Borrower or any Subsidiary pursuant to this Agreement
shall include

 

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only those adjustments that would be (a) permitted or required by Regulation S-X
under the Securities Act of 1933, as amended, together with those adjustments
that (i) have been certified by a Financial Officer of the Borrower as having
been prepared in good faith based upon reasonable assumptions and (ii) are based
on reasonably detailed written assumptions reasonably acceptable to the
Administrative Agent and (b) required by the definition Consolidated EBITDA.

 

SECTION 1.04.  Classification of Loans and Borrowings.  For purposes of this
Agreement, Loans may be classified and referred to by Class (e.g., a “Term
Loan”) or by Type (e.g., a “Eurodollar Loan”) or by Class and Type (e.g., a
“Eurodollar Term Loan”).  Borrowings also may be classified and referred to by
Class (e.g., a “Term Loan Borrowing”) or by Type (e.g., a “Eurodollar
Borrowing”) or by Class and Type (e.g., a “Eurodollar Term Loan Borrowing”).

 

ARTICLE II

 

The Credits

 

SECTION 2.01.  Commitments.  (a)    Subject to the terms and conditions and
relying upon the representations and warranties herein set forth, each Lender
agrees, severally and not jointly, to make a Term Loan to the Borrower on the
Closing Date in a principal amount equal to its Term Loan Commitment.  Amounts
paid or prepaid in respect of Term Loans may not be reborrowed.

 

(b)   Each Lender having an Incremental Term Loan Commitment, severally and not
jointly, hereby agrees, subject to the terms and conditions and relying upon the
representations and warranties set forth herein and in the applicable
Incremental Term Loan Assumption Agreement, to make Incremental Term Loans to
the Borrower, in an aggregate principal amount equal to its Incremental Term
Loan Commitment.  Amounts paid or prepaid in respect of Incremental Term Loans
may not be reborrowed.

 

SECTION 2.02.  Loans.  (a)  Each Loan shall be made as part of a Borrowing
consisting of Loans made by the Lenders ratably in accordance with their
applicable Commitments; provided, however, that the failure of any Lender to
make any Loan shall not in itself relieve any other Lender of its obligation to
lend hereunder (it being understood, however, that no Lender shall be
responsible for the failure of any other Lender to make any Loan required to be
made by such other Lender).

 

(b)   Subject to Sections 2.08 and 2.15 each Borrowing shall be comprised
entirely of ABR Loans or Eurodollar Loans as the Borrower may request pursuant
to Section 2.03.  Each Lender may at its option make any Eurodollar Loan by
causing any domestic or foreign branch or Affiliate of such Lender to make such
Loan; provided that any exercise of such option shall not affect the obligation
of the Borrower to repay such Loan in accordance with the terms of this
Agreement.  Borrowings of more than one Type may be outstanding at the same
time; provided, however, that the Borrower shall not be entitled to request any
Borrowing that, if made, would result in more than six Eurodollar Borrowings
outstanding hereunder at any time.  For purposes of the foregoing, Borrowings
having different Interest Periods, regardless of whether they commence on the
same date, shall be considered separate Borrowings.

 

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(c)   Each Lender shall make each Loan to be made by it hereunder on the date of
this Agreement, in the case of the Term Loans contemplated by
Section 2.01(a) hereof, and on the proposed date thereof, in the case of any
Incremental Term Loan or any Other Term Loan, by wire transfer of immediately
available funds to such account in New York City as the Administrative Agent may
designate not later than 1:00 p.m., New York City time, and the Administrative
Agent shall promptly credit the amounts so received to an account designated by
the Borrower in the applicable Borrowing Request or, if a Borrowing shall not
occur on such date because any condition precedent herein specified shall not
have been met, return the amounts so received to the respective Lenders.

 

(d)   Unless the Administrative Agent shall have received notice from a Lender
prior to the date of any Borrowing that such Lender will not make available to
the Administrative Agent such Lender’s portion of such Borrowing, the
Administrative Agent may assume that such Lender has made such portion available
to the Administrative Agent on the date of such Borrowing in accordance with
paragraph (c) above and the Administrative Agent may, in reliance upon such
assumption, make available to the Borrower on such date a corresponding amount. 
If the Administrative Agent shall have so made funds available then, to the
extent that such Lender shall not have made such portion available to the
Administrative Agent, such Lender and the Borrower severally agree to repay to
the Administrative Agent forthwith on demand such corresponding amount together
with interest thereon, for each day from the date such amount is made available
to the Borrower to but excluding the date such amount is repaid to the
Administrative Agent at (i) in the case of the Borrower, a rate per annum equal
to the interest rate applicable at the time to the Loans comprising such
Borrowing and (ii) in the case of such Lender, a rate determined by the
Administrative Agent to represent its cost of overnight or short-term funds
(which determination shall be conclusive absent manifest error).  If such Lender
shall repay to the Administrative Agent such corresponding amount, such amount
shall constitute such Lender’s Loan as part of such Borrowing for purposes of
this Agreement.

 

SECTION 2.03.  Borrowing Procedure.  In order to request a Borrowing, the
Borrower shall notify the Administrative Agent of such request by telephone
(a) in the case of a Eurodollar Borrowing, not later than 2:00 p.m., New
York City time, three Business Days before a proposed Borrowing, and (b) in the
case of an ABR Borrowing, not later than 2:00 p.m., New York City time, one
Business Day before a proposed Borrowing.  Each such telephonic Borrowing
Request shall be irrevocable, and shall be confirmed promptly by hand delivery,
electronic mail or fax to the Administrative Agent of a written Borrowing
Request and shall specify the following information: (i) whether the Borrowing
then being requested is to be a Term Borrowing or an Incremental Term Borrowing
and whether such Borrowing is to be a Eurodollar Borrowing or an ABR Borrowing
(provided that, until the Administrative Agent shall have notified the Borrower
that the primary syndication of the Commitments has been completed (which notice
shall be given as promptly as practicable and, in any event, within 30 days
after the Closing Date), the Borrower shall not be permitted to request a
Eurodollar Borrowing) with an Interest Period in excess of one month; (ii) the
date of such Borrowing (which shall be a Business Day); (iii) the number and
location of the account to which funds are to be disbursed; (iv) the amount of
such Borrowing; and (v) if such Borrowing is to be a Eurodollar Borrowing, the
Interest Period with respect thereto; provided, however, that, notwithstanding
any contrary specification in any Borrowing Request, each requested Borrowing
shall comply with the requirements set forth in Section 2.02.  If no election as
to the Type of Borrowing is specified in any such notice, then the

 

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requested Borrowing shall be an ABR Borrowing.  If no Interest Period with
respect to any Eurodollar Borrowing is specified in any such notice, then the
Borrower shall be deemed to have selected an Interest Period of one month’s
duration.  The Administrative Agent shall promptly advise the applicable Lenders
of any notice given pursuant to this Section 2.03 (and the contents thereof),
and of each Lender’s portion of the requested Borrowing.

 

SECTION 2.04.  Evidence of Debt; Repayment of Loans.  (a)  The Borrower hereby
unconditionally promises to pay to the Administrative Agent for the account of
each Lender the principal amount of each Term Loan of such Lender as provided in
Section 2.11.

 

(b)   Each Lender shall maintain in accordance with its usual practice an
account or accounts evidencing the indebtedness of the Borrower to such Lender
resulting from each Loan made by such Lender from time to time, including the
amounts of principal and interest payable and paid to such Lender from time to
time under this Agreement.

 

(c)   The Administrative Agent shall maintain accounts in which it will record
(i) the amount of each Loan made hereunder, the Class and Type thereof and, if
applicable, the Interest Period applicable thereto, (ii) the amount of any
principal or interest due and payable or to become due and payable from the
Borrower to each Lender hereunder and (iii) the amount of any sum received by
the Administrative Agent hereunder from the Borrower or any Guarantor and each
Lender’s share thereof.

 

(d)   The entries made in the accounts maintained pursuant to
paragraphs (b) and (c) above shall be prima facie evidence of the existence and
amounts of the obligations therein recorded; provided, however, that the failure
of any Lender or the Administrative Agent to maintain such accounts or any error
therein shall not in any manner affect the obligations of the Borrower to repay
the Loans in accordance with their terms.

 

(e)   Any Lender may request that Loans made by it hereunder be evidenced by a
promissory note.  In such event, the Borrower shall execute and deliver to such
Lender a promissory note payable to such Lender and its registered assigns and
in a form and substance reasonably acceptable to the Administrative Agent and
the Borrower.  Notwithstanding any other provision of this Agreement, in the
event any Lender shall request and receive such a promissory note, the interests
represented by such note shall at all times (including after any assignment of
all or part of such interests pursuant to Section 9.04) be represented by one or
more promissory notes payable to the payee named therein or its registered
assigns.

 

SECTION 2.05.  Administrative Agent Fees.  The Borrower agrees to pay to the
Administrative Agent, for its own account, the administrative fees set forth in
the Engagement Letter at the times and in the amounts specified therein (the
“Administrative Agent Fees”).  All Administrative Agent Fees shall be paid on
the dates due, in immediately available funds, to the Administrative Agent.

 

SECTION 2.06.  Interest on Loans.  (a)   Subject to the provisions of
Section 2.07, the Loans comprising each ABR Borrowing shall bear interest
(computed on the basis of the actual number of days elapsed over a year of 365
or 366 days, as the case may be, when the Alternate Base Rate is determined by
reference to the Prime Rate and over a year of 360 days at all other

 

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times and calculated from and including the date of such Borrowing to but
excluding the date of repayment thereof) at a rate per annum equal to the
Alternate Base Rate plus the Applicable Margin.

 

(b)   Subject to the provisions of Section 2.07, the Loans comprising each
Eurodollar Borrowing shall bear interest (computed on the basis of the actual
number of days elapsed over a year of 360 days) at a rate per annum equal to the
Adjusted LIBO Rate for the Interest Period in effect for such Borrowing plus the
Applicable Margin.

 

(c)   Interest on each Loan shall be payable on the Interest Payment Dates
applicable to such Loan except as otherwise provided in this Agreement.  The
applicable Alternate Base Rate or Adjusted LIBO Rate for each Interest Period or
day within an Interest Period, as the case may be, shall be determined by the
Administrative Agent, and such determination shall be conclusive absent manifest
error.

 

SECTION 2.07.  Default Interest.  If (i) the Borrower shall default in the
payment of any principal of or interest on any Loan or any other amount due
hereunder or under any other Loan Document, by acceleration or otherwise, or
(ii) if any Event of Default under Article VII (other than paragraphs (b), (c),
(g) or (h) thereunder) has occurred and is continuing and the Required Lenders
so vote, then, in the case of clause (i) above, until such defaulted amount
shall have been paid in full or, in the case of clause (ii) above, from the date
such vote has been exercised by the Required Lenders and for so long as such
Event of Default is continuing, to the extent permitted by law, all amounts
outstanding under this Agreement and the other Loan Documents shall bear
interest (after as well as before judgment), payable on demand, (a) in the case
of principal, at the rate otherwise applicable to such Loan pursuant to
Section 2.06 plus 2.00% per annum and (b) in all other cases, at a rate per
annum (computed on the basis of the actual number of days elapsed over a year of
365 or 366 days, as the case may be, when determined by reference to the Prime
Rate and over a year of 360 days at all other times) equal to the rate that
would be applicable to an ABR Loan plus 2.00% per annum.

 

SECTION 2.08.  Alternate Rate of Interest.  In the event, and on each occasion,
that on the day two Business Days prior to the commencement of any Interest
Period for a Eurodollar Borrowing the Administrative Agent shall have determined
that Dollar deposits in the principal amounts of the Loans comprising such
Borrowing are not generally available in the London interbank market, or that
the rates at which such Dollar deposits are being offered will not adequately
and fairly reflect the cost to the majority of Lenders of making or maintaining
Eurodollar Loans during such Interest Period, or that reasonable means do not
exist for ascertaining the Adjusted LIBO Rate, the Administrative Agent shall,
as soon as practicable thereafter, give written or fax notice of such
determination to the Borrower and the Lenders.  In the event of any such
determination, until the Administrative Agent shall have advised the Borrower
and the Lenders that the circumstances giving rise to such notice no longer
exist, any request by the Borrower for a Eurodollar Borrowing pursuant to
Section 2.03 or 2.10 shall be deemed to be a request for an ABR Borrowing.  Each
determination by the Administrative Agent under this Section 2.08 shall be
conclusive absent manifest error.

 

SECTION 2.09.  Termination of Commitments.  The Term Loan Commitments (other
than any Incremental Term Loan Commitments, which shall terminate as provided in
the related

 

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Incremental Term Loan Assumption Agreement) shall automatically terminate upon
the making of the Term Loans on the Closing Date.

 

SECTION 2.10.  Conversion and Continuation of Borrowings.  The Borrower shall
have the right at any time upon prior irrevocable notice to the Administrative
Agent (a) not later than 2:00 p.m., New York City time, one Business Day prior
to conversion, to convert any Eurodollar Borrowing into an ABR Borrowing,
(b) not later than 2:00 p.m., New York City time, three Business Days prior to
conversion or continuation, to convert any ABR Borrowing into a Eurodollar
Borrowing or to continue any Eurodollar Borrowing as a Eurodollar Borrowing for
an additional Interest Period, and (c) not later than 2:00 p.m., New York City
time, three Business Days prior to conversion, to convert the Interest Period
with respect to any Eurodollar Borrowing to another permissible Interest Period,
subject in each case to the following:

 

(i)  until the Administrative Agent shall have notified the Borrower that the
primary syndication of the Commitments has been completed (which notice shall be
given as promptly as practicable and, in any event, within 30 days after the
Closing Date), no ABR Borrowing may be converted into a Eurodollar Borrowing
with an Interest Period in excess of one month;

 

(ii)  each conversion or continuation shall be made pro rata among the Lenders
in accordance with the respective principal amounts of the Loans comprising the
converted or continued Borrowing;

 

(iii)  if less than all the outstanding principal amount of any Borrowing shall
be converted or continued, then each resulting Borrowing shall satisfy the
minimum principal amount of $2,000,000 and multiple of $1,000,000 and the
limitations specified in Sections 2.02(a) and 2.02(b) regarding maximum number
of Borrowings of the relevant Type;

 

(iv)  each conversion shall be effected by each Lender and the Administrative
Agent by recording for the account of such Lender the new Loan of such Lender
resulting from such conversion and reducing the Loan (or portion thereof) of
such Lender being converted by an equivalent principal amount; accrued interest
on any Eurodollar Loan (or portion thereof) being converted shall be paid by the
Borrower at the time of conversion;

 

(v)  if any Eurodollar Borrowing is converted at a time other than the end of
the Interest Period applicable thereto, the Borrower shall pay, upon demand, any
amounts due to the Lenders pursuant to Section 2.16;

 

(vi)  any portion of a Borrowing maturing or required to be repaid in less than
one month may not be converted into or continued as a Eurodollar Borrowing;

 

(vii)  any portion of a Eurodollar Borrowing that cannot be converted into or
continued as a Eurodollar Borrowing by reason of the immediately preceding
clause shall be automatically converted at the end of the Interest Period in
effect for such Borrowing into an ABR Borrowing;

 

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(viii)  no Interest Period may be selected for any Eurodollar Term Borrowing
that would end later than a Term Loan Repayment Date occurring on or after the
first day of such Interest Period if, after giving effect to such selection, the
aggregate outstanding amount of (A) the Eurodollar Term Borrowings comprised of
Term Loans or Other Term Loans, as applicable, with Interest Periods ending on
or prior to such Term Loan Repayment Date and (B) the ABR Term Borrowings
comprised of Term Loans or Other Term Loans, as applicable, would not be at
least equal to the principal amount of Term Borrowings to be paid on such Term
Loan Repayment Date; and

 

(ix)  upon notice to the Borrower from the Administrative Agent given at the
request of the Required Lenders, after the occurrence and during the continuance
of an Event of Default, no outstanding Loan may be converted into, or continued
as, a Eurodollar Loan.

 

Each notice pursuant to this Section 2.10 shall be irrevocable and shall refer
to this Agreement and specify (i) the identity and amount of the Borrowing that
the Borrower requests be converted or continued, (ii) whether such Borrowing is
to be converted to or continued as a Eurodollar Borrowing or an ABR Borrowing,
(iii) if such notice requests a conversion, the date of such conversion (which
shall be a Business Day) and (iv) if such Borrowing is to be converted to or
continued as a Eurodollar Borrowing, the Interest Period with respect thereto. 
If no Interest Period is specified in any such notice with respect to any
conversion to or continuation as a Eurodollar Borrowing, the Borrower shall be
deemed to have selected an Interest Period of one month’s duration.  The
Administrative Agent shall advise the Lenders of any notice given pursuant to
this Section 2.10 and of each Lender’s portion of any converted or continued
Borrowing.  If the Borrower shall not have given notice in accordance with this
Section 2.10 to continue any Borrowing into a subsequent Interest Period (and
shall not otherwise have given notice in accordance with this Section 2.10 to
convert such Borrowing), such Borrowing shall, at the end of the Interest Period
applicable thereto (unless repaid pursuant to the terms hereof), automatically
be continued as an ABR Borrowing.

 

SECTION 2.11.  Repayment of Term Borrowings.  (a)  (i)  The Borrower shall pay
to the Administrative Agent, for the account of the Lenders, on the last day of
each calendar quarter commencing with respect to the last calendar quarter in
2012, or if any such date is not a Business Day, on the next preceding Business
Day (each such date being called a “Repayment Date”), a principal amount of the
Term Loans (other than Other Term Loans) (as adjusted from time to time pursuant
to Sections 2.12, 2.13(e) and 2.22(d)) equal to 0.25% of the principal amount of
the Term Loans as of the Closing Date (or, in the case of an Incremental Term
Loan, as of the date such Incremental Term Loan was extended), together in each
case with accrued and unpaid interest on the principal amount to be paid to but
excluding the date of such payment.

 

(ii)   The Borrower shall pay to the Administrative Agent, for the account of
the Incremental Term Lenders, on each Incremental Term Loan Repayment Date, a
principal amount of the Other Term Loans (as adjusted from time to time pursuant
to Sections 2.12 and 2.13(e)) equal to the amount set forth for such date in the
applicable Incremental Term Loan Assumption Agreement (which amount may be
zero), together in each case with accrued and unpaid interest on the principal
amount to be paid to but excluding the date of such payment.

 

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(b)   To the extent not previously paid, all Term Loans and Other Term Loans
shall be due and payable on the Term Loan Maturity Date and the Incremental Term
Loan Maturity Date, respectively, together with accrued and unpaid interest on
the principal amount to be paid to but excluding the date of payment.

 

(c)   All repayments pursuant to this Section 2.11 shall be subject to
Section 2.16, but shall otherwise be without premium or penalty.

 

SECTION 2.12.  Voluntary Prepayment.  (a)  The Borrower shall have the right at
any time and from time to time to prepay any Borrowing, in whole or in part,
upon at least three Business Days’ prior written or fax notice (or telephone
notice promptly confirmed by written or fax notice) in the case of Eurodollar
Loans, or written or fax notice (or telephone notice promptly confirmed by
written or fax notice) at least one Business Day prior to the date of prepayment
in the case of ABR Loans, to the Administrative Agent before 2:00 p.m., New York
City time; provided, however, that each partial prepayment shall be in an amount
that is an integral multiple of $1,000,000 and not less than $2,000,000.

 

(b)   Voluntary prepayments of Term Loans shall be applied as directed by the
Borrower against the remaining scheduled installments of principal due in
respect of (x) the Term Loans under Section 2.11 or (y) any Other Term Loans
under the applicable amortization schedule set forth in the applicable
Incremental Term Loan Assumption Agreement.

 

(c)   Each notice of prepayment shall specify the prepayment date and the
principal amount of each Borrowing (or portion thereof) to be prepaid, shall be
irrevocable and shall commit the Borrower to prepay such Borrowing by the amount
stated therein on the date stated therein; provided, however, that if such
prepayment is for all of the then outstanding Loans, then the Borrower may
revoke such notice and/or extend the prepayment date by not more than five
Business Days; provided further, however, that the provisions of Section 2.16
shall apply with respect to any such revocation or extension.  All prepayments
under this Section 2.12 shall be subject to Sections 2.12(d) and 2.16 but
otherwise without premium or penalty.  All prepayments under this Section 2.12
shall be accompanied by accrued and unpaid interest on the principal amount to
be prepaid to but excluding the date of payment.

 

(d)   In the event that, prior to the second anniversary of the Closing Date,
all or any portion of the Term Loans are prepaid as required pursuant to
Section 2.13(d) or voluntarily prepaid pursuant to Section 2.12(a), in each
case, such prepayment shall be accompanied by a premium such that the aggregate
amount of such prepayment shall be equal to (x) 102% of the principal amount of
Term Loans so prepaid, in the case of any such prepayment that is made on or
prior to the first anniversary of the Closing Date and (y) 101% of the principal
amount of Term Loans so prepaid, in the case of any such prepayment that is made
after the first anniversary of the Closing Date but on or prior to the second
anniversary of the Closing Date.

 

SECTION 2.13.  Mandatory Prepayments.  (a)    Not later than the third Business
Day following the receipt of Net Cash Proceeds (including, without limitation,
insurance proceeds and condemnation awards) in respect of any Asset Sale (other
than proceeds from any disposition, pursuant to one or more transactions, of any
Specified Facility), the Borrower shall

 

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apply 100% of the Net Cash Proceeds received with respect thereto to prepay
outstanding Term Loans in accordance with Section 2.13(e).

 

(b)   [Intentionally Omitted].

 

(c)   No later than the earlier of (i) 10 days after the Borrower is or would be
required to file a report Form 10-K with the Securities and Exchange Commission
in compliance with the reporting requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, as amended (whether or not the Borrower is
subject to such reporting requirements), and (ii) 95 days after the end of each
fiscal year of the Borrower, commencing with the fiscal year ending on
December 31, 2012, the Borrower shall prepay outstanding Term Loans in an
aggregate principal amount equal to (1) if the Borrower’s Leverage Ratio as at
the end of such fiscal year is greater than 1.75:1.00, 50% of Excess Cash Flow
for such fiscal year, or (2) if the Borrower’s Leverage Ratio as at the end of
such fiscal year is 1.75:1.00 or less, 25% of Excess Cash Flow for such fiscal
year.

 

(d)   In the event that any Loan Party or any subsidiary of a Loan Party shall
receive Net Cash Proceeds from the issuance or incurrence of Indebtedness for
money borrowed of any Loan Party or any subsidiary of a Loan Party (other than
any cash proceeds from the issuance of Indebtedness for money borrowed permitted
pursuant to Section 6.01), the Borrower shall, substantially simultaneously with
(and in any event not later than the third Business Day next following) the
receipt of such Net Cash Proceeds by such Loan Party or such subsidiary, apply
an amount equal to 100% of such Net Cash Proceeds to prepay outstanding Term
Loans in accordance with Section 2.13(e).

 

(e)   Mandatory prepayments of outstanding Term Loans under this Agreement shall
be allocated pro rata between the Term Loans and the Other Term Loans and
applied, first to reduce the amortization obligations for the current year and
then in order of maturity against the remaining scheduled installments of
principal due in respect of the Term Loans and the Other Term Loans under
Sections 2.11(a)(i) and (ii), respectively.

 

(f)   The Borrower shall deliver to the Administrative Agent, at the time of
each prepayment required under this Section 2.13, (i) a certificate signed by a
Financial Officer of the Borrower setting forth in reasonable detail the
calculation of the amount of such prepayment and (ii) to the extent practicable,
at least three days prior written notice of such prepayment to the extent then
known.  Each notice of prepayment shall specify the prepayment date, the Type of
each Loan being prepaid and the principal amount of each Loan (or portion
thereof) to be prepaid.  All prepayments of Borrowings under this Section 2.13
shall be subject to Section 2.16, but shall otherwise be without premium or
penalty, and shall be accompanied by accrued and unpaid interest on the
principal amount to be prepaid to but excluding the date of payment.

 

SECTION 2.14.  Reserve Requirements; Change in Circumstances.  (a) 
Notwithstanding any other provision of this Agreement, if any Change in Law
shall impose, modify or deem applicable any reserve, special deposit or similar
requirement against assets of, deposits with or for the account of or credit
extended by any Lender (except any such reserve requirement which is reflected
in the Adjusted LIBO Rate) or shall impose on such Lender or the London
interbank market any other condition affecting this Agreement or Eurodollar
Loans

 

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made by such Lender, and the result of any of the foregoing shall be to increase
the cost to such Lender of making or maintaining any Eurodollar Loan or to
reduce the amount of any sum received or receivable by such Lender hereunder
(whether of principal, interest or otherwise) by an amount deemed by such Lender
to be material, then the Borrower will pay to such Lender upon demand such
additional amount or amounts as will compensate such Lender for such additional
costs incurred or reduction suffered.

 

(b)   If any Lender shall have determined that any Change in Law regarding
capital adequacy has or would have the effect of reducing the rate of return on
such Lender’s capital or on the capital of such Lender’s or holding company, if
any, as a consequence of this Agreement or the Loans made pursuant hereto to a
level below that which such Lender or such Lender’s holding company could have
achieved but for such Change in Law (taking into consideration such Lender’s
policies and the policies of such Lender’s holding company with respect to
capital adequacy) by an amount deemed by such Lender to be material, then from
time to time the Borrower shall pay to such Lender such additional amount or
amounts as will compensate such Lender or such Lender’s holding company for any
such reduction suffered.

 

(c)   A certificate of a Lender setting forth the amount or amounts necessary to
compensate such Lender or its holding company, as applicable, as specified in
paragraph (a) or (b) above shall be delivered to the Borrower and shall be
conclusive absent manifest error.  The Borrower shall pay such Lender the amount
shown as due on any such certificate delivered by it within 10 days after its
receipt of the same.

 

(d)   Failure or delay on the part of any Lender to demand compensation for any
increased costs or reduction in amounts received or receivable or reduction in
return on capital shall not constitute a waiver of such Lender’s right to demand
such compensation; provided that the Borrower shall not be under any obligation
to compensate any Lender under paragraph (a) or (b) above with respect to
increased costs or reductions with respect to any period prior to the date that
is 120 days prior to such request if such Lender knew or could reasonably have
been expected to know of the circumstances giving rise to such increased costs
or reductions and of the fact that such circumstances would result in a claim
for increased compensation by reason of such increased costs or reductions;
provided further that the foregoing limitation shall not apply to any increased
costs or reductions arising out of the retroactive application of any Change in
Law within such 120-day period.  The protection of this Section shall be
available to each Lender regardless of any possible contention of the invalidity
or inapplicability of the Change in Law that shall have occurred or been
imposed.

 

SECTION 2.15.  Change in Legality.  (a)  Notwithstanding any other provision of
this Agreement, if any Change in Law shall make it unlawful for any Lender to
make or maintain any Eurodollar Loan or to give effect to its obligations as
contemplated hereby with respect to any Eurodollar Loan, then, by written notice
to the Borrower and to the Administrative Agent:

 

(i) such Lender may declare that Eurodollar Loans will not thereafter (for the
duration of such unlawfulness) be made by such Lender hereunder (or be continued
for additional Interest Periods) and ABR Loans will not thereafter (for such
duration) be converted into Eurodollar Loans, whereupon any request for a
Eurodollar Borrowing (or to convert an ABR Borrowing to a Eurodollar Borrowing
or to continue a Eurodollar

 

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Borrowing for an additional Interest Period) shall, as to such Lender only, be
deemed a request for an ABR Loan (or a request to continue an ABR Loan as such
for an additional Interest Period or to convert a Eurodollar Loan into an ABR
Loan, as the case may be), unless such declaration shall be subsequently
withdrawn; and

 

(ii) such Lender may require that all outstanding Eurodollar Loans made by it be
converted to ABR Loans, in which event all such Eurodollar Loans shall be
automatically converted to ABR Loans as of the effective date of such notice as
provided in paragraph (b) below.

 

In the event any Lender shall exercise its rights under (i) or (ii) above, all
payments and prepayments of principal that would otherwise have been applied to
repay the Eurodollar Loans that would have been made by such Lender or the
converted Eurodollar Loans of such Lender shall instead be applied to repay the
ABR Loans made by such Lender in lieu of, or resulting from the conversion of,
such Eurodollar Loans.

 

(b)   For purposes of this Section 2.15, a notice to the Borrower by any Lender
shall be effective as to each Eurodollar Loan made by such Lender, if lawful, on
the last day of the Interest Period then applicable to such Eurodollar Loan; in
all other cases such notice shall be effective on the date of receipt by the
Borrower.

 

SECTION 2.16.  Breakage.  The Borrower shall indemnify each Lender against any
loss or expense that such Lender may sustain or incur as a consequence of
(a) any event, other than a default by such Lender in the performance of its
obligations hereunder, which results in (i) such Lender receiving or being
deemed to receive any amount on account of the principal of any Eurodollar Loan
prior to the end of the Interest Period in effect therefor, (ii) the conversion
of any Eurodollar Loan to an ABR Loan, or the conversion of the Interest Period
with respect to any Eurodollar Loan, in each case other than on the last day of
the Interest Period in effect therefor, or (iii) any Eurodollar Loan to be made
by such Lender (including any Eurodollar Loan to be made pursuant to a
conversion or continuation under Section 2.10) not being made after notice of
such Loan shall have been given by the Borrower hereunder (any of the events
referred to in this clause (a) being called a “Breakage Event”) or (b) any
default in the making of any payment or prepayment required to be made
hereunder.  In the case of any Breakage Event, such loss shall include an amount
equal to the excess, as reasonably determined by such Lender, of (i) its cost of
obtaining funds for the Eurodollar Loan that is the subject of such Breakage
Event for the period from the date of such Breakage Event to the last day of the
Interest Period in effect (or that would have been in effect) for such Loan over
(ii) the amount of interest likely to be realized by such Lender in redeploying
the funds released or not utilized by reason of such Breakage Event for such
period.  A certificate of any Lender setting forth any amount or amounts which
such Lender is entitled to receive pursuant to this Section 2.16 shall be
delivered to the Borrower and shall be conclusive absent manifest error.

 

SECTION 2.17.  Pro Rata Treatment.  Except as required under Section 2.12(b) or
2.15 and except as otherwise provided herein, each Borrowing, each payment or
prepayment of principal of any Borrowing, each payment of interest on the Loans
and each conversion of any Borrowing to or continuation of any Borrowing as a
Borrowing of any Type shall be allocated pro rata among the Lenders in
accordance with their respective applicable Commitments (or, if

 

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such Commitments shall have expired or been terminated, in accordance with the
respective principal amounts of their outstanding Loans).  Each Lender agrees
that in computing such Lender’s portion of any Borrowing to be made hereunder,
the Administrative Agent may, in its discretion, round each Lender’s percentage
of such Borrowing to the next higher or lower whole Dollar amount.

 

SECTION 2.18.  Sharing of Setoffs.  Each Lender agrees that if it shall, through
the exercise of a right of banker’s lien, setoff or counterclaim against the
Borrower or any other Loan Party, or pursuant to a secured claim under
Section 506 of Title 11 of the United States Code or other security or interest
arising from, or in lieu of, such secured claim, received by such Lender under
any applicable bankruptcy, insolvency or other similar law or otherwise, or by
any other means, obtain payment (voluntary or involuntary) in respect of any
Loan or Loans as a result of which the unpaid principal portion of its Loans
shall be proportionately less than the unpaid principal portion of the Loans of
any other Lender, it shall be deemed simultaneously to have purchased from such
other Lender at face value, and shall promptly pay to such other Lender the
purchase price for, a participation in the Loans of such other Lender, so that
the aggregate unpaid principal amount of the Loans and participations in Loans
held by each Lender shall be in the same proportion to the aggregate unpaid
principal amount of all Loans then outstanding as the principal amount of its
Loans prior to such exercise of banker’s lien, setoff or counterclaim or other
event was to the principal amount of all Loans outstanding prior to such
exercise of banker’s lien, setoff or counterclaim or other event; provided,
however, that (i) if any such purchase or purchases or adjustments shall be made
pursuant to this Section 2.18 and the payment giving rise thereto shall
thereafter be recovered, such purchase or purchases or adjustments shall be
rescinded to the extent of such recovery and the purchase price or prices or
adjustment restored without interest, and (ii) the provisions of this
Section 2.18 shall not be construed to apply to any payment made by the Borrower
pursuant to and in accordance with the express terms of this Agreement or any
payment obtained by a Lender as consideration for the assignment of or sale of a
participation in any of its Loans to any assignee or participant, other than to
Holdings or any of its Affiliates (as to which the provisions of this
Section 2.18 shall apply).  The Borrower and Holdings expressly consent to the
foregoing arrangements and agree that any Lender holding a participation in a
Loan deemed to have been so purchased may exercise any and all rights of
banker’s lien, setoff or counterclaim with respect to any and all moneys owing
by the Borrower and Holdings to such Lender by reason thereof as fully as if
such Lender had made a Loan directly to the Borrower in the amount of such
participation.

 

SECTION 2.19.  Payments.  (a)  The Borrower shall make each payment (including
principal of or interest on any Borrowing or any Administrative Agent Fees or
other amounts) hereunder and under any other Loan Document not later than
2:00 p.m., New York City time, on the date when due in immediately available
Dollars, without setoff, defense or counterclaim.  Each such payment shall be
made to the Administrative Agent at its offices at Eleven Madison Avenue, New
York, NY 10010.  The Administrative Agent shall promptly distribute to each
Lender any payments received by the Administrative Agent on behalf of such
Lender.

 

(b)   Except as otherwise expressly provided herein, whenever any payment
(including principal of or interest on any Borrowing or any Administrative Agent
Fees or other amounts) hereunder or under any other Loan Document shall become
due, or otherwise would occur, on a day that is not a Business Day, such payment
may be made on the next succeeding Business

 

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Day, and such extension of time shall in such case be included in the
computation of interest or Administrative Agent Fees, if applicable.

 

SECTION 2.20.  Taxes.  (a)  Any and all payments by or on account of any
obligation of the Borrower or any other Loan Party hereunder or under any other
Loan Document shall be made free and clear of and without deduction for any
Indemnified Taxes or Other Taxes; provided that, if the Borrower or any other
Loan Party shall be required to deduct any Indemnified Taxes or Other Taxes from
such payments, then (i) the sum payable shall be increased as necessary so that
after making all required deductions (including deductions applicable to
additional sums payable under this Section) the Administrative Agent and each
Lender (as the case may be) receives an amount equal to the sum it would have
received had no such deductions been made, (ii) the Borrower or such Loan Party
shall make such deductions and (iii) the Borrower or such Loan Party shall pay
the full amount deducted to the relevant Governmental Authority in accordance
with applicable law.

 

(b)   In addition, the Borrower shall pay any Other Taxes to the relevant
Governmental Authority in accordance with applicable law.

 

(c)   The Borrower shall indemnify the Administrative Agent and each Lender,
within 10 days after written demand therefor, for the full amount of any
Indemnified Taxes or Other Taxes paid by the Administrative Agent or such
Lender, as the case may be, on or with respect to any payment by or on account
of any obligation of the Borrower or any other Loan Party hereunder or under any
other Loan Document (including Indemnified Taxes or Other Taxes imposed or
asserted on or attributable to amounts payable under this Section) and any
penalties, interest and reasonable expenses arising therefrom or with respect
thereto, whether or not such Indemnified Taxes or Other Taxes were correctly or
legally imposed or asserted by the relevant Governmental Authority; provided
that the Borrower shall not be required to indemnify the Administrative Agent or
any Lender pursuant to this Section 2.20(c) for any amounts incurred more than
365 days prior to the date the Administrative Agent, such Lender, as applicable,
notifies the Borrower of its intention to claim compensation therefor; provided,
further, that if the circumstance giving rise to such request for
indemnification is retroactive, then the 365-day period referred to above shall
be extended to include the period of retroactive effect thereof.  A certificate
as to the amount of such payment or liability delivered to the Borrower by a
Lender or by the Administrative Agent on behalf of itself or a Lender shall be
conclusive absent manifest error.

 

(d)   As soon as practicable after any payment of Indemnified Taxes or Other
Taxes by the Borrower or any other Loan Party to a Governmental Authority, the
Borrower shall deliver to the Administrative Agent the original or a certified
copy of a receipt issued by such Governmental Authority evidencing such payment,
a copy of the return reporting such payment or other evidence of such payment
reasonably satisfactory to the Administrative Agent.

 

(e)   The Administrative Agent and any Lender that is entitled to an exemption
from or reduction of withholding tax under the law of the jurisdiction in which
the Borrower is located, or any treaty to which such jurisdiction is a party,
with respect to payments under this Agreement if requested by the Borrower or
the Administrative Agent (with 30 days prior written notice) shall deliver to
the Borrower (with a copy to the Administrative Agent), at the time or times

 

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prescribed by applicable law, such properly completed and executed documentation
prescribed by applicable law or reasonably requested by the Borrower as will
permit such payments to be made without withholding or at a reduced rate but
only to the extent such Lender or the Administrative Agent is lawfully able to
do so.  In addition, any Lender, if requested by the Borrower or the
Administrative Agent (with 30 days prior written notice), shall deliver such
other documentation prescribed by applicable law or reasonably requested by the
Borrower or the Administrative Agent as will enable the Borrower or the
Administrative Agent to determine whether or not such Lender is subject to
backup withholding or information reporting requirements.

 

(f)   Without limiting the generality of the foregoing, in the event that the
Borrower is resident for tax purposes in the United States of America, any
Foreign Lender and the Administrative Agent shall deliver to the Borrower and
the Administrative Agent (in such number of copies as shall be reasonably
requested by the recipient) on or prior to the date on which such Foreign Lender
and the Administrative Agent becomes a party under this Agreement (and from time
to time thereafter upon the request of the Borrower or the Administrative
Agent), but only if such Foreign Lender is legally entitled to do so, whichever
of the following is applicable:

 

(i) duly completed copies of Internal Revenue Service Form W-8BEN claiming
eligibility for benefits of an income tax treaty to which the United States of
America is a party,

 

(ii) duly completed copies of Internal Revenue Service Form W-8ECI,

 

(iii) in the case of a Foreign Lender or the Administrative Agent claiming the
benefits of the exemption for portfolio interest under section 881(c) of the
Code, (x) a certificate to the effect that such Foreign Lender or Administrative
Agent is not (A) a “bank” within the meaning of section 881(c)(3)(A) of the
Code, (B) a “10 percent shareholder” of the Borrower within the meaning of
section 881(c)(3)(B) of the Code, or (C) a “controlled foreign corporation”
described in section 881(c)(3)(C) of the Code and (y) duly completed copies of
Internal Revenue Service Form W-8BEN, or

 

(iv) any other form prescribed by applicable law as a basis for claiming
exemption from or a reduction in United States Federal withholding tax duly
completed together with such supplementary documentation as may be prescribed by
applicable law to permit the Borrower or the Administrative Agent to determine
the withholding or deduction required to be made.

 

In addition, if a payment made to a recipient hereunder or any Note would be
subject to United States Federal withholding tax imposed by FATCA if such
recipient fails to comply with the applicable reporting requirements of FATCA
(including those contained in section 1471(b) or 1472(b) of the Code, as
applicable), such recipient shall use commercially reasonable efforts to deliver
to the Administrative Agent and Borrower at the time or times prescribed by law
and at such time or times reasonably requested by the Borrower or the
Administrative Agent such other documentation as is reasonably required for
Administrative Agent and Borrower to comply with their obligations under FATCA
and to determine whether such recipient has complied with such

 

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applicable reporting requirements of FATCA so that payments made to such
recipient hereunder would not be subject to United States Federal withholding
taxes under FATCA, or, if necessary, to determine the amount to deduct and
withhold from such payment.

 

(g)   If the Administrative Agent or a Lender determines, in its sole
discretion, that it has received a refund of any Taxes or Other Taxes as to
which it has been indemnified by the Borrower or with respect to which the
Borrower has paid additional amounts pursuant to this Section, it shall pay to
the Borrower an amount equal to such refund (but only to the extent of indemnity
payments made, or additional amounts paid, by the Borrower under this
Section with respect to the Taxes or Other Taxes giving rise to such refund),
net of all out-of-pocket expenses of the Administrative Agent or such Lender, as
the case may be, and without interest (other than any interest paid by the
relevant Governmental Authority with respect to such refund), provided that the
Borrower, upon the request of the Administrative Agent or such Lender, agrees to
repay the amount paid over to the Borrower (plus any penalties, interest or
other charges imposed by the relevant Governmental Authority) to the
Administrative Agent or such Lender in the event the Administrative Agent or
such Lender is required to repay such refund to such Governmental Authority. 
This paragraph shall not be construed to require the Administrative Agent or any
Lender to make available its tax returns (or any other information relating to
its taxes that it deems confidential) to the Borrower or any other Person.

 

SECTION 2.21.  Assignment of Commitments Under Certain Circumstances; Duty to
Mitigate.  (a)  In the event (i) any Lender delivers a certificate requesting
compensation pursuant to Section 2.14, (ii) any Lender delivers a notice
described in Section 2.15, (iii) the Borrower is required to pay any additional
amount to any Lender or any Governmental Authority on account of any Lender
pursuant to Section 2.20 or (iv) any Lender has failed timely to provide its
consent to any amendment, waiver or other modification of any Loan Document
requested by the Borrower that requires the consent of at least the Required
Lenders and such amendment, waiver or other modification is consented to by the
Required Lenders, then, in each case, the Borrower may, at its sole expense and
effort (including with respect to the processing and recordation fee referred to
in Section 9.04(b)), upon notice to such Lender and the Administrative Agent,
require such Lender to transfer and assign, without recourse (in accordance with
and subject to the restrictions contained in Section 9.04), all of its
interests, rights and obligations under this Agreement (or, in the case of
clause (iv) above, all of its interests, rights and obligation with respect to
the Class of Loans or Commitments that is the subject of the related consent,
amendment, waiver or other modification) to an Eligible Assignee that shall
assume such assigned obligations and, with respect to clause (iv) above, shall
consent to such requested amendment, waiver or other modification of any Loan
Documents (which assignee may be another Lender, if a Lender accepts such
assignment); provided that (x) such assignment shall not conflict with any law,
rule or regulation or order of any court or other Governmental Authority having
jurisdiction, (y) the Borrower shall have received the prior written consent of
the Administrative Agent, which consent shall not unreasonably be withheld or
delayed, and (z) the Borrower or such assignee shall have paid to the affected
Lender in immediately available funds an amount equal to the sum of the
principal of and interest accrued to the date of such payment on the outstanding
Loans of such Lender plus all other amounts accrued for the account of such
Lender hereunder with respect thereto (including any amounts under Sections 2.14
and 2.16 and, if applicable, the prepayment fee pursuant to
Section 2.12(d) (with such assignment being deemed to be an voluntary prepayment
for purposes of determining the applicability of

 

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Section 2.12(d), such amount to be payable by the Borrower)); provided further
that, if prior to any such transfer and assignment the circumstances or event
that resulted in such Lender’s claim for compensation under Section 2.14, notice
under Section 2.15 or the amounts paid pursuant to Section 2.20, as the case may
be, cease to cause such Lender to suffer increased costs or reductions in
amounts received or receivable or reduction in return on capital, or cease to
have the consequences specified in Section 2.15, or cease to result in amounts
being payable under Section 2.20, as the case may be (including as a result of
any action taken by such Lender pursuant to paragraph (b) below), or if such
Lender shall waive its right to claim further compensation under Section 2.14 in
respect of such circumstances or event or shall withdraw its notice under
Section 2.15 or shall waive its right to further payments under Section 2.20 in
respect of such circumstances or event or shall consent to the proposed
amendment, waiver, consent or other modification, as the case may be, then such
Lender shall not thereafter be required to make any such transfer and assignment
hereunder.  Each Lender hereby grants to the Administrative Agent an irrevocable
power of attorney (which power is coupled with an interest) to execute and
deliver, on behalf of such Lender as assignor, any Assignment and Acceptance
necessary to effectuate any assignment of such Lender’s interests hereunder in
the circumstances contemplated by this Section 2.21(a).

 

(b)   If (i) any Lender shall request compensation under Section 2.14, (ii) any
Lender delivers a notice described in Section 2.15 or (iii) the Borrower is
required to pay any additional amount to any Lender or any Governmental
Authority on account of any Lender, pursuant to Section 2.20, then such Lender
shall use reasonable efforts (which shall not require such Lender to incur an
unreimbursed loss or unreimbursed cost or expense or otherwise take any action
inconsistent with its internal policies or legal or regulatory restrictions or
suffer any disadvantage or burden deemed by it to be significant) (x) to file
any certificate or document reasonably requested in writing by the Borrower or
(y) to assign its rights and delegate and transfer its obligations hereunder to
another of its offices, branches or affiliates, if such filing or assignment
would reduce its claims for compensation under Section 2.14 or enable it to
withdraw its notice pursuant to Section 2.15 or would reduce amounts payable
pursuant to Section 2.20, as the case may be, in the future.  The Borrower
hereby agrees to pay all reasonable costs and expenses incurred by any Lender in
connection with any such filing or assignment, delegation and transfer.

 

SECTION 2.22.  Incremental Term Loans.  (a)  The Borrower may, by written notice
to the Administrative Agent from time to time, request Incremental Term Loan
Commitments in an amount not to exceed the Incremental Term Loan Amount from one
or more Incremental Term Lenders, all of which must be either existing Lenders
or Eligible Assignees.  Such notice shall set forth (i) the amount of the
Incremental Term Loan Commitments being requested (which shall be in minimum
increments of $1,000,000 and a minimum amount of $5,000,000 or such lesser
amount equal to the remaining Incremental Term Loan Amount), (ii) the date on
which such Incremental Term Loan Commitments are requested to become effective
(which shall not be less than 10 Business Days nor more than 60 days after the
date of such notice), and (iii) whether such Incremental Term Loan Commitments
are commitments to make additional Term Loans or commitments to make term loans
with terms different from the Term Loans (“Other Term Loans”).

 

(b)   The Borrower may seek Incremental Term Loan Commitments from existing
Lenders (each of which shall be entitled to agree or decline to participate in
its sole discretion)

 

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and additional banks, financial institutions and other institutional lenders who
will become Incremental Term Lenders in connection therewith.  The Borrower and
each Incremental Term Lender shall execute and deliver to the Administrative
Agent an Incremental Term Loan Assumption Agreement and such other documentation
as the Administrative Agent shall reasonably specify to evidence the Incremental
Term Loan Commitment of each Incremental Term Lender.  The terms and provisions
of the Incremental Term Loans shall be identical to those of the Term Loans
except as otherwise set forth herein or in the Incremental Term Loan Assumption
Agreement.  Without the prior written consent of the Required Lenders, (i) the
final maturity date of any Other Term Loans shall be no earlier than the Term
Loan Maturity Date, (ii) the average life to maturity of the Other Term Loans
shall be no shorter than the remaining average life to maturity of the Term
Loans and (iii) if the All-in Yield applicable to such Other Term Loans (as
determined by the Administrative Agent, which determination shall be conclusive
absent manifest error) exceeds the sum of (x) the margin then in effect for
Eurodollar Term Loans (which shall be the sum of the Applicable Margin then in
effect for Eurodollar Term Loans increased by the amount that any “LIBOR floor”
applicable to such Eurodollar Term Loans on the date such Other Term Loans are
made would exceed the Adjusted LIBO Rate (without giving effect to the
clause (a) of the definition thereof) that would be in effect for a three-month
Interest Period commencing on such date) plus (y) one-fourth of the amount of
the OID paid in respect of the Term Loans by more than 50 basis points (the
amount of such excess above 50 basis points being referred to herein as the
“Yield Differential”), then the Applicable Margin then in effect for Term Loans
shall automatically be increased by the Yield Differential, effective upon the
making of the Other Term Loans.  Any Incremental Term Loans and Other Term Loans
shall have the benefit of the same guarantees of the Guarantors under the
Guarantee and Collateral Agreement as the Term Loans, and the Collateral shall
secure any such Incremental Term Loans and Other Term Loans on a pari passu
basis with the Credit Facilities.  The Administrative Agent shall promptly
notify each Lender as to the effectiveness of each Incremental Term Loan
Assumption Agreement.  Each of the parties hereto hereby agrees that, upon the
effectiveness of any Incremental Term Loan Assumption Agreement, this Agreement
shall be deemed amended to the extent (but only to the extent) necessary to
reflect the existence and terms of the Incremental Term Loan Commitment and the
Incremental Term Loans evidenced thereby, and the Administrative Agent and the
Borrower may revise this Agreement to evidence such amendments.

 

(c)   Notwithstanding the foregoing, no Incremental Term Loan Commitment shall
become effective under this Section 2.22 unless (i) the definitive documentation
in respect of such Incremental Term Loan Commitment, to the extent not
consistent with the Loan Documents, is reasonably satisfactory to the
Administrative Agent, (ii) on the date of such effectiveness, (x) the
representations and warranties set forth in Article III and in each other Loan
Document shall be true and correct in all material respects, both before and
after giving effect to such Incremental Term Loan Commitment, with the same
effect as though made on and as of such date, except to the extent such
representations and warranties expressly relate to an earlier date and except
for representations and warranties qualified by materiality, in which case such
representations and warranties shall be accurate in all respects, (y) at the
time of and immediately following the effectiveness of such Incremental Term
Loan Commitment, no Event of Default shall have occurred and be continuing and
(z) the Borrower shall have received all approvals, consents, exemptions and
authorizations from any Governmental Authority (including, without limitation,
HPUC and DCCA) necessary or required in connection with the

 

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incurrence of such Incremental Term Loan Commitment and the contemplated
borrowings in respect thereof and, in each case, the Administrative Agent shall
have received a certificate to such effect dated such date and executed by a
Financial Officer of the Borrower, (iii) all fees, costs and expenses required
to be paid by any Loan Party under any Loan Document or under the definitive
documentation relating to such Incremental Term Loan Commitment on or prior to
the effectiveness of such Incremental Term Loan Commitment shall have been paid
prior to or substantially concurrently with the incurrence of such Incremental
Term Loan Commitments, (iv) the covenants set forth in Sections 6.11 and 6.12
would be satisfied on a pro forma basis (calculated assuming, without
duplication, that such Incremental Term Loan Commitments have been fully
utilized and giving effect to any other customary and appropriate pro forma
adjustment events, including any acquisitions or dispositions which occurred
after the beginning of the relevant period and prior to or simultaneously with
the incurrence of such Incremental Term Loan Commitments), (v) the Leverage
Ratio, on a pro forma basis (calculated assuming, without duplication, that such
Incremental Term Loan Commitments have been fully utilized and giving effect to
any other customary and appropriate pro forma adjustment events, including any
acquisitions or dispositions which occurred after the beginning of the relevant
period and prior to or simultaneously with the incurrence of such Incremental
Term Loan Commitments), shall not be greater than (1) until financial statements
for the first fiscal quarter ending after the Closing Date are delivered
pursuant to Section 5.04(b), 3.00:1.00 and thereafter (2) 0.25:1.00 less than
the then applicable covenant level set forth in Section 6.12, and (vi) except as
otherwise specified in the applicable Incremental Term Loan Assumption
Agreement, the Administrative Agent shall have received (with sufficient copies
for each of the Incremental Term Lenders) legal opinions, board resolutions and
other closing certificates reasonably requested by the Administrative Agent and
consistent with those delivered on the Closing Date under Section 4.01.

 

(d)   Each of the parties hereto hereby agrees that the Administrative Agent
may, in consultation with the Borrower, take any and all action as may be
reasonably necessary to ensure that all Incremental Term Loans (other than Other
Term Loans), when originally made, are included in each Borrowing of outstanding
Term Loans on a pro rata basis.  This may be accomplished by requiring each
outstanding Eurodollar Term Borrowing to be converted into an ABR Term Borrowing
on the date of each Incremental Term Loan, or by allocating a portion of each
Incremental Term Loan to each outstanding Eurodollar Term Borrowing on a pro
rata basis.  Any conversion of Eurodollar Term Loans to ABR Term Loans required
by the preceding sentence shall be subject to Section 2.16.  If any Incremental
Term Loan is to be allocated to an existing Interest Period for a Eurodollar
Term Borrowing, then the interest rate thereon for such Interest Period and the
other economic consequences thereof shall be as set forth in the applicable
Incremental Term Loan Assumption Agreement.  In addition, to the extent any
Incremental Term Loans are not Other Term Loans, the scheduled amortization
payments under Section 2.11(a)(i) required to be made after the making of such
Incremental Term Loans shall be ratably increased by the aggregate principal
amount of such Incremental Term Loans and shall be further increased for all
Lenders on a pro rata basis to the extent necessary to avoid any reduction in
the amortization payments to which the Term Lenders were entitled before such
recalculation.

 

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ARTICLE III

 

Representations and Warranties

 

Each of Holdings and the Borrower represents and warrants to the Administrative
Agent, the Collateral Agent and each of the Lenders that:

 

SECTION 3.01.  Organization; Powers.  Holdings, the Borrower and each of the
Subsidiaries (a) is duly organized, validly existing and in good standing under
the laws of the jurisdiction of its organization, (b) has all requisite power
and authority to own its property and assets and to carry on its business as now
conducted and as proposed to be conducted except where the failure to do so,
individually or in the aggregate, could not reasonably be expected to result in
a Material Adverse Effect, (c) is qualified to do business in, and is in good
standing in, every jurisdiction where such qualification is required, except
where the failure so to qualify could not reasonably be expected to result in a
Material Adverse Effect, and (d) has the power and authority to execute, deliver
and perform its obligations under each of the Loan Documents and each other
agreement or instrument contemplated thereby to which it is or will be a party
and, in the case of the Borrower, to borrow hereunder.

 

SECTION 3.02.  Authorization.  The Transactions (a) have been duly authorized by
all requisite corporate and, if required, stockholder action and (b) will not
(i) violate (A) any provision of law, statute, rule or regulation, or of the
certificate or articles of incorporation or other constitutive documents or
by-laws of Holdings, the Borrower or any Subsidiary, (B) any order of any
Governmental Authority, (C) any provision of any indenture, agreement or other
instrument to which Holdings, the Borrower or any Subsidiary is a party or by
which any of them or any of their property is or may be bound, except, in each
case, the failure to do so, individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect, (D) the HPUC
Decision and Order, or (E) the DCCA Decision and Order, (ii) be in conflict
with, result in a breach of or constitute (alone or with notice or lapse of time
or both) a default under, or give rise to any right to accelerate or to require
the prepayment, repurchase or redemption of any obligation under any such
indenture, agreement or other instrument except, in each case, the failure to do
so, individually or in the aggregate, could not reasonably be expected to result
in a Material Adverse Effect, or (iii) result in the creation or imposition of
any Lien upon or with respect to any property or assets now owned or hereafter
acquired by Holdings, the Borrower or any Subsidiary (other than any Lien
created hereunder or under the Security Documents) other than such Liens as may
be permitted hereunder.

 

SECTION 3.03.  Enforceability.  This Agreement has been duly executed and
delivered by Holdings and the Borrower and constitutes, and each other Loan
Document when executed and delivered by the each Loan Party party thereto will
constitute, a legal, valid and binding obligation of such Loan Party enforceable
against such Loan Party in accordance with its terms.

 

SECTION 3.04.  Governmental Approvals.  No action, consent or approval of,
registration or filing with or any other action by any Governmental Authority
(including, without limitation, the FCC, the HPUC and the DCCA) is or will be
required in connection with the Transactions, except for (a) the filing of
Uniform Commercial Code financing statements and filings with the United States
Patent and Trademark Office and the United States Copyright

 

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Office, (b) recordation of the Mortgages, (c) regulatory filings relating to a
transfer of control or transfer of ownership of any of the assets of Holdings,
Borrower or any Subsidiary or a discontinuance of any of their operations as a
result of any enforcement action taken or proposed to be taken under any
Security Documents and (d) such as have been made or obtained and are in full
force and effect.

 

SECTION 3.05.  Financial Statements.  (a)  The Borrower has heretofore furnished
to the Lenders its consolidated balance sheets and related statements of income,
stockholder’s equity and cash flows (i) as of and for the fiscal year ended
December 31, 2010, audited by and accompanied by the opinion of Deloitte &
Touche LLP, independent public accountants, and (ii) as of and for the fiscal
quarter and the portion of the fiscal year ended December 31, 2010, certified by
its chief financial officer.  Such financial statements present fairly the
financial condition and results of operations and cash flows of the Borrower and
its consolidated Subsidiaries as of such dates and for such periods.  Such
balance sheets and the notes thereto disclose all material liabilities, direct
or contingent, of the Borrower and its consolidated Subsidiaries as of the dates
thereof.  Such financial statements were prepared in accordance with GAAP
applied on a consistent basis, subject, in the case of unaudited financial
statements, to year-end audit adjustments and the absence of footnotes.

 

(b)   The Borrower has heretofore delivered to the Lenders its unaudited pro
forma consolidated balance sheet and related statements of income, stockholder’s
equity and cash flows as of September 30, 2011, prepared giving effect to the
Transactions as if they had occurred, with respect to such balance sheet, on
such date and, with respect to such other financial statements, on the first day
of the 9-month period ending on such date.  Such pro forma financial statements
have been prepared in good faith by the Borrower, based on the assumptions used
to prepare the pro forma financial information contained in the Confidential
Information Memorandum (which assumptions are believed by the Borrower on the
date hereof and on the Closing Date to be reasonable), are based on the best
information available to the Borrower as of the date of delivery thereof,
accurately reflect all adjustments required to be made to give effect to the
Transactions and present fairly on a pro forma basis the estimated consolidated
financial position of the Borrower and its consolidated Subsidiaries as of such
date and for such period, assuming that the Transactions had actually occurred
at such date or at the beginning of such period, as the case may be.

 

SECTION 3.06.  No Material Adverse Change.  No event, change or condition has
occurred that has had, or could reasonably be expected to have, a material
adverse effect on the business, assets, liabilities, operations, financial
condition or operating results of Holdings, the Borrower and the Subsidiaries,
taken as a whole, since September 30, 2011.

 

SECTION 3.07.  Title to Properties; Possession Under Leases.  (a)  Each of
Holdings, the Borrower and the Subsidiaries has good and marketable title to, or
valid leasehold interests in, all its material properties and assets (including
all Mortgaged Property), except for minor defects in title that do not interfere
with its ability to conduct its business as currently conducted or to utilize
such properties and assets for their intended purposes.  All such material
properties and assets are free and clear of Liens, other than Liens expressly
permitted by Section 6.02.

 

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(b)   Each of Holdings, the Borrower and the Subsidiaries has complied with all
obligations under all material leases to which it is a party and all such leases
are in full force and effect.  Each of Holdings, the Borrower and the
Subsidiaries enjoys peaceful and undisturbed possession under all such material
leases.

 

(c)   As of the Closing Date, neither Holdings nor the Borrower has received any
notice of, nor has any knowledge of, any pending or contemplated condemnation
proceeding affecting the Mortgaged Properties or any sale or disposition thereof
in lieu of condemnation.

 

(d)   As of the Closing Date, none of Holdings, the Borrower or any of the
Subsidiaries is obligated under any right of first refusal, option or other
contractual right to sell, assign or otherwise dispose of any Mortgaged Property
or any interest therein.

 

(e)   Holdings, the Borrower and each of the Subsidiaries owns, or is licensed
to use, all Intellectual Property Collateral that is material to its business,
and the use thereof by Holdings, the Borrower and the Subsidiaries does not
infringe upon the rights of any other Person, except for any such infringements
that, individually or in the aggregate, could not reasonably be expected to
result in a Material Adverse Effect.  No material claim is now pending or, to
the knowledge of Holdings, the Borrower or any Subsidiary, has been asserted by
any Person challenging the use of any Intellectual Property Collateral of
Holdings, the Borrower or any Subsidiary or the validity or effectiveness of any
such Intellectual Property Collateral nor does Holdings, the Borrower or any
Subsidiary know of any valid basis for any such claim.

 

SECTION 3.08.  Subsidiaries.  Schedule 3.08 sets forth as of the Closing Date a
list of all Subsidiaries and the percentage ownership interest of Holdings or
the Borrower therein.  The shares of capital stock or other ownership interests
so indicated on Schedule 3.08 are fully paid and non-assessable and are owned by
Holdings or the Borrower, directly or indirectly, free and clear of all Liens
(other than Liens created under the Security Documents).

 

SECTION 3.09.  Litigation; Compliance with Laws.  (a)  Except as set forth on
Schedule 3.09, there are no actions, investigations, suits or proceedings at law
or in equity or by or before any Governmental Authority now pending or, to the
knowledge of Holdings or the Borrower, threatened against or affecting Holdings
or the Borrower or any Subsidiary or any business, property or rights of any
such Person (i) that involve any Loan Document or the Transactions or (ii) as to
which there is a reasonable possibility of an adverse determination and that, if
adversely determined, could reasonably be expected, individually or in the
aggregate, to result in a Material Adverse Effect.

 

(b)   Since the date of this Agreement, there has been no change in the status
of the matters disclosed on Schedule 3.09 that, individually or in the
aggregate, has resulted in, or materially increased the likelihood of, a
Material Adverse Effect.

 

(c)   None of Holdings, the Borrower or any of the Subsidiaries or any of their
respective material properties or assets is in violation of, nor will the
continued operation of their material properties and assets as currently
conducted violate, any law, rule or regulation (including, without limitation,
the Communications Act, the regulations or orders of FCC or HPUC or DCCA or any
zoning, building, Environmental Law, ordinance, code or approval or any building

 

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permits) or any restrictions of record or agreements affecting the Mortgaged
Property, or is in default with respect to any judgment, writ, injunction,
decree or order of any Governmental Authority, where such violation or default
could reasonably be expected to result in a Material Adverse Effect.

 

(d)   Certificates of occupancy and permits are in effect for each Mortgaged
Property as currently constructed, and true and complete copies of such
certificates of occupancy have been delivered to the Collateral Agent as
mortgagee with respect to each Mortgaged Property.

 

SECTION 3.10.  Agreements.  (a)  None of Holdings, the Borrower or any of the
Subsidiaries is a party to any agreement or instrument or subject to any
corporate restriction that has resulted or could reasonably be expected to
result in a Material Adverse Effect.

 

(b)   None of Holdings, the Borrower or any of the Subsidiaries is in default in
any manner under any provision of any indenture or other agreement or instrument
evidencing Indebtedness, or any other material agreement or instrument to which
it is a party or by which it or any of its properties or assets are or may be
bound, where such default could reasonably be expected to result in a Material
Adverse Effect.

 

SECTION 3.11.  Federal Reserve Regulations.  (a)  None of Holdings, the Borrower
or any of the Subsidiaries is engaged principally, or as one of its important
activities, in the business of extending credit for the purpose of buying or
carrying Margin Stock.

 

(b)   No part of the proceeds of any Loan will be used, whether directly or
indirectly, and whether immediately, incidentally or ultimately, for any purpose
that entails a violation of, or that is inconsistent with, the provisions of the
Regulations of the Board, including Regulation T, U or X.

 

SECTION 3.12.  Investment Company Act.  None of Holdings, the Borrower or any
Subsidiary is an “investment company” as defined in, or subject to regulation
under, the Investment Company Act of 1940.

 

SECTION 3.13.  Use of Proceeds.  The Borrower will (a) use the proceeds of the
Loans solely for the Transactions and (b) use the proceeds of Incremental Term
Loans solely for the purposes specified in the applicable Incremental Term Loan
Assumption Agreement.

 

SECTION 3.14.  Tax Returns.  Each of the Holdings, the Borrower and the
Subsidiaries has filed or caused to be filed all United States Federal and other
material tax returns required to have been filed by it and has paid or caused to
be paid all material taxes due and payable by it and all assessments received by
it, except taxes that are being contested in good faith by appropriate
proceedings and for which Holdings, the Borrower or such Subsidiary, as
applicable, shall have set aside on its books adequate reserves.

 

SECTION 3.15.  No Material Misstatements.  None of (a) the Confidential
Information Memorandum or (b) any other information, report, financial
statement, exhibit or schedule furnished by or on behalf of Holdings or the
Borrower to the Administrative Agent or any Lender in connection with the
negotiation of any Loan Document or included therein or delivered pursuant
thereto contained (as of the date thereof and as modified or supplemented by

 

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other information so furnished), contains or will contain any material
misstatement of fact or omitted, omits or will omit to state any material fact
necessary to make the statements therein, in the light of the circumstances
under which they were, are or will be made, not misleading; provided that to the
extent any such information, report, financial statement, exhibit or schedule
was based upon or constitutes a forecast or projection, each of Holdings and the
Borrower represents only that it acted in good faith and utilized reasonable
assumptions (based upon accounting principles consistent with the historical
audited financial statements of the Borrower) and due care in the preparation of
such information, report, financial statement, exhibit or schedule.

 

SECTION 3.16.  Employee Benefit Plans.  Except as could not reasonably be
expected to result in a Material Adverse Effect, each of the Borrower and its
ERISA Affiliates is in compliance in all respects with the applicable provisions
of ERISA and the Code and the regulations and published interpretations
thereunder with respect to each Plan.  No ERISA Event has occurred or is
reasonably expected to occur that, when taken together with all other such ERISA
Events, could reasonably be expected to result in liability of the Borrower or
any of its ERISA Affiliates in an aggregate amount in excess of $7,500,000.

 

SECTION 3.17.  Environmental Matters.  (a)  Except as set forth in Schedule 3.17
and except with respect to any other matters that, individually or in the
aggregate, could not reasonably be expected to result in a Material Adverse
Effect, none of Holdings, the Borrower or any of the Subsidiaries (i) has failed
to comply with any Environmental Law or to obtain, maintain or comply with any
permit, license or other approval required under any Environmental Law, (ii) has
become subject to any Environmental Liability, (iii) has received notice of any
claim with respect to any Environmental Liability or (iv) knows of any basis for
any Environmental Liability.

 

(b)   Since the date of this Agreement, there has been no change in the status
of the matters disclosed on Schedule 3.17 that, individually or in the
aggregate, has resulted in, or materially increased the likelihood of, a
Material Adverse Effect.

 

SECTION 3.18.  Insurance.  Schedule 3.18 sets forth a true, complete and correct
description of all material insurance policies maintained by the Borrower or by
the Borrower for its Subsidiaries as of the date hereof and the Closing Date. 
As of each such date, such insurance is in full force and effect and all
premiums have been duly paid.  The Borrower and its Subsidiaries believe they
have adequate insurance.

 

SECTION 3.19.  Security Documents.  (a)  The Guarantee and Collateral Agreement,
upon execution and delivery thereof by the parties thereto, will create in favor
of the Collateral Agent, for the ratable benefit of the Secured Parties, a
legal, valid and enforceable security interest in the Collateral (as defined in
the Guarantee and Collateral Agreement) and the proceeds thereof and (i) when
the Pledged Securities (as defined in the Guarantee and Collateral Agreement)
are delivered to the Collateral Agent, the Lien created under Guarantee and
Collateral Agreement shall constitute a fully perfected first priority Lien on,
and security interest in, all right, title and interest of the Loan Parties in
such Pledged Securities, in each case prior and superior in right to any other
Person, and (ii) when financing statements in appropriate form are filed in the
offices specified on Schedule 3.19(a), the Lien created under the Guarantee and

 

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Collateral Agreement will constitute a fully perfected Lien on, and security
interest in, all right, title and interest of the Loan Parties in such
Collateral (other than Intellectual Property, as defined in the Guarantee and
Collateral Agreement), in each case prior and superior in right to any other
Person, other than with respect to Liens expressly permitted by Section 6.02.

 

(b)   Upon the recordation of a short-form security agreement in form and
substance reasonably satisfactory to the Borrower and the Collateral Agent with
the United States Patent and Trademark Office and the United States Copyright
Office, together with the financing statements in appropriate form filed in the
offices specified on Schedule 3.19(a), the Lien created under the Guarantee and
Collateral Agreement shall constitute a fully perfected Lien on, and security
interest in, all right, title and interest of the Loan Parties in the
Intellectual Property Collateral (as defined in the Guarantee and Collateral
Agreement) in which a security interest may be perfected by filing in the United
States and its territories and possessions, in each case prior and superior in
right to any other Person (it being understood that subsequent recordings in the
United States Patent and Trademark Office and the United States Copyright Office
may be necessary to perfect a Lien on registered trademarks and patents,
trademark and patent applications and registered copyrights acquired by the Loan
Parties after the date hereof).

 

(c)   The Mortgages are effective to create in favor of the Collateral Agent,
for the ratable benefit of the Secured Parties, a legal, valid and enforceable
Lien on all of the Loan Parties’ right, title and interest in and to the
Mortgaged Property thereunder and the proceeds thereof, and when the Mortgages
are filed in the offices specified on Schedule 3.19(c), the Mortgages shall
constitute a fully perfected Lien on, and security interest in, all right, title
and interest of the Loan Parties in such Mortgaged Property and the proceeds
thereof, in each case prior and superior in right to any other Person, other
than with respect to the rights of Persons pursuant to Liens expressly permitted
by Section 6.02.

 

SECTION 3.20.  Location of Real Property and Leased Premises.  (a) 
Schedule 3.20(a) lists completely and correctly as of the Closing Date all real
property owned by the Borrower and the Subsidiaries and the addresses thereof. 
The Borrower and the Subsidiaries own in fee all the real property set forth on
Schedule 3.20(a).

 

(b)   Schedule 3.20(b) lists completely and correctly as of the Closing Date all
real property leased by the Borrower and the Subsidiaries and the addresses
thereof.  The Borrower and the Subsidiaries have valid leases in all the real
property set forth on Schedule 3.20(b).

 

SECTION 3.21.  Labor Matters.  As of the date hereof and the Closing Date, there
are no strikes, lockouts or slowdowns against Holdings, the Borrower or any
Subsidiary pending or, to the knowledge of Holdings or the Borrower,
threatened.  Except as could not reasonably be expected to result in a Material
Adverse Effect, the hours worked by and payments made to employees of Holdings,
the Borrower and the Subsidiaries have not been in violation of the Fair Labor
Standards Act or any other applicable Federal, state, local or foreign law
dealing with such matters.  Except as could not reasonably be expected to result
in a Material Adverse Effect, all payments due from Holdings, the Borrower or
any Subsidiary, or for which any claim may be made against Holdings, the
Borrower or any Subsidiary, on account of wages and employee health and welfare
insurance and other benefits, have been paid or accrued as a liability on the
books of Holdings, the Borrower or such Subsidiary.  The consummation of the
Transactions

 

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will not give rise to any right of termination or right of renegotiation on the
part of any union under any collective bargaining agreement to which Holdings,
the Borrower or any Subsidiary is bound.

 

SECTION 3.22.  Solvency.  Immediately after the consummation of the Transactions
to occur on the Closing Date and immediately following the making of each Loan
and after giving effect to the application of the proceeds of each Loan, (a) the
fair value of the assets of the Loan Parties (on a consolidated basis), at a
fair valuation, will exceed their debts and liabilities, subordinated,
contingent or otherwise; (b) the present fair saleable value of the property of
the Loan Parties (on a consolidated basis) will be greater than the amount that
will be required to pay the probable liability of their debts and other
liabilities, subordinated, contingent or otherwise, as such debts and other
liabilities become absolute and matured; (c) the Loan Parties (on a consolidated
basis) will be able to pay their debts and liabilities, subordinated, contingent
or otherwise, as such debts and liabilities become absolute and matured; and
(d) the Loan Parties (on a consolidated basis) will not have unreasonably small
capital with which to conduct the business in which they are engaged as such
business is now conducted and is proposed to be conducted following the Closing
Date.

 

SECTION 3.23.  Senior Indebtedness.  The Obligations and the obligations under
the Revolving Facility Agreement constitute the sole “Senior Debt”  (or any
similar term) permitted under the terms of any Indebtedness which is expressly
subordinated in right of payment to the Obligations and the obligations under
the Revolving Facility Agreement.

 

SECTION 3.24.  Sanctioned Persons.  None of Holdings, the Borrower or any
Subsidiary nor, to the knowledge of the Borrower, any director, officer, agent,
employee or Affiliate of Holdings, the Borrower or any Subsidiary is currently
subject to any U.S. sanctions administered by the Office of Foreign Assets
Control of the U.S.  Treasury Department (“OFAC”); and the Borrower will not
directly or indirectly use the proceeds of the Loans or otherwise make available
such proceeds to any Person, for the purpose of financing the activities of any
Person currently subject to any U.S. sanctions administered by OFAC.

 

SECTION 3.25.  USA PATRIOT Act; FCPA.  Each Loan Party is in compliance, in all
material respects, with the (a) Trading with the Enemy Act, as amended, and each
of the foreign assets control regulations of the United States Treasury
Department (31 CFR, Subtitle B, Chapter V, as amended) and any other
regulations, enabling legislation or executive orders relating thereto and
(b) USA PATRIOT Act.  No part of the proceeds of any Loan shall be used,
directly or indirectly, for any payments to any governmental official or
employee, political party, official of a political party, candidate for
political office, or anyone else acting in an official capacity, in order to
obtain, retain or direct business or obtain any improper advantage, in violation
of the United States Foreign Corrupt Practices Act of 1977, as amended.

 

SECTION 3.26.  Licenses; Tariffs.

 

(a)   The Borrower and its Subsidiaries hold all FCC Licenses that are necessary
for the operation of their businesses as currently conducted.  Each such FCC
License is in full force and effect and such FCC Licenses are not subject to any
material restriction or material conditions

 

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that limit the operation of the businesses of the Borrower and its Subsidiaries,
other than restrictions or conditions generally applicable to licenses of that
type.

 

(b)   Holdings, the Borrower and the Subsidiaries hold all permits, licenses,
waivers, orders, approvals, concessions, registrations and other authorizations
issued or provided by any Governmental Authority (other than the FCC), including
HPUC and the DCCA, under all applicable laws, that are material to and necessary
for Holdings, the Borrower and each of the Subsidiaries to own its assets and
conduct the businesses currently conducted by it (“Operating Licenses”), except
to the extent that failure to hold any such Operating Licenses, individually or
in the aggregate, would not reasonably be expected to result in a Material
Adverse Effect.

 

(c)   HPUC or DCCA or such other Governmental Authority having jurisdiction
thereof has approved all material regulatory tariffs required to permit each of
the Borrower and the Subsidiaries to operate its businesses as currently
operated, all such regulatory tariffs are in full force and effect and neither
the Borrower nor any Subsidiary has failed to materially comply with the terms
of any such tariff, except in each case any lack of approvals or failures which,
individually or in the aggregate, would not reasonably be expected to have a
Material Adverse Effect.

 

(d)   Neither Holdings nor the Borrower has knowledge of any investigation,
notice of apparent liability, violation, forfeiture or other order or complaint
issued by or before the FCC or HPUC or DCCA, or of any other proceedings (other
than proceedings relating to the telecommunications industries generally) of or
before the FCC or HPUC or DCCA, which would reasonably be expected to have a
Material Adverse Effect.

 

(e)   To the best knowledge of Holdings and the Borrower, no event has occurred
which (i) has resulted in, or after notice or lapse of time or both would result
in, revocation, suspension, adverse modification, non-renewal, impairment,
restriction or termination of, or order of forfeiture with respect to, any FCC
License or Operating License in any respect which could reasonably be expected
to have a Material Adverse Effect or (ii) affects or could reasonably be
expected in the future to affect any of the rights of Holdings, the Borrower or
any Subsidiary under any FCC License or Operating License held by it in any
respect which would reasonably be expected to have a Material Adverse Effect.

 

(f)   Each of Holdings, the Borrower and the Subsidiaries has duly filed in a
timely manner all material filings, reports, applications, documents,
instruments and information required to be filed by it under the Communications
Act, and all such filings were when made true, correct and complete in all
material respects.  Holdings and the Borrower have no reason to believe that any
material FCC License or Operating License held by the Borrower or any Subsidiary
will not be renewed in the ordinary course.

 

ARTICLE IV

 

Conditions of Lending

 

The obligations of the Lenders to make Loans hereunder are subject to the
satisfaction of the following conditions:

 

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SECTION 4.01.  Credit Event.  On the Closing Date:

 

(a)   The Administrative Agent shall have received, on behalf of itself and the
Lenders, a favorable written opinion of (i) Kirkland & Ellis LLP, counsel for
Holdings and the Borrower, substantially to the effect set forth in Exhibit G-1,
and (ii) each local counsel and regulatory counsel listed on Schedule 4.02(a),
substantially to the effect set forth in Exhibits G-2, G-3 and G-4,
respectively, in each case (A) dated the Closing Date, (B) addressed to the
Administrative Agent and the Lenders, and (C) covering such other matters
relating to the Loan Documents and the Transactions as the Administrative Agent
shall reasonably request, and Holdings and the Borrower hereby request such
counsel to deliver such opinions.

 

(b)   All legal matters incident to this Agreement, the Borrowings and
extensions of credit hereunder and the other Loan Documents shall be
satisfactory to the Lenders and to the Administrative Agent.

 

(c)   The Administrative Agent shall have received (i) a copy of the certificate
or articles of incorporation, including all amendments thereto, of each Loan
Party, certified as of a recent date by the Secretary of State of the state of
its organization, and a certificate as to the good standing of each Loan Party
as of a recent date, from such Secretary of State; (ii) a certificate of the
Secretary or Assistant Secretary of each Loan Party dated the Closing Date and
certifying (A) that attached thereto is a true and complete copy of the by-laws
of such Loan Party as in effect on the Closing Date and at all times since a
date prior to the date of the resolutions described in clause (B) below,
(B) that attached thereto is a true and complete copy of resolutions duly
adopted by the Board of Directors of such Loan Party authorizing the execution,
delivery and performance of the Loan Documents to which such Person is a party
and, in the case of the Borrower, the borrowings hereunder, and that such
resolutions have not been modified, rescinded or amended and are in full force
and effect, (C) that the certificate or articles of incorporation of such Loan
Party have not been amended since the date of the last amendment thereto shown
on the certificate of good standing furnished pursuant to clause (i) above, and
(D) as to the incumbency and specimen signature of each officer executing any
Loan Document or any other document delivered in connection herewith on behalf
of such Loan Party; (iii) a certificate of another officer as to the incumbency
and specimen signature of the Secretary or Assistant Secretary executing the
certificate pursuant to clause (ii) above; and (iv) such other documents as the
Lenders or the Administrative Agent may reasonably request.

 

(d)   The Administrative Agent shall have received a certificate, dated the
Closing Date and signed by a Financial Officer of the Borrower, certifying that
(i) the representations and warranties set forth in Article III and in each
other Loan Document are be true and correct in all material respects, both
before and after giving effect to this Agreement and the Borrowing to be made
hereunder on the Closing Date, except for representations and warranties
qualified by materiality, in which case such representations and warranties
shall be accurate in all respects, and (ii) at the time of and immediately
following the effectiveness of this Agreement and the Borrowing to be made
hereunder on the Closing Date, no Default or Event of Default has occurred or is
continuing.

 

(e)   The Administrative Agent shall have received all Administrative Agent Fees
and other amounts due and payable on or prior to the Closing Date, including,
the upfront fees

 

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payable to each Lender equal to 1.50% of the principal amount of Loans held by
such Lender as of the Closing Date and to the extent invoiced, reimbursement or
payment of all out-of-pocket expenses required to be reimbursed or paid by the
Borrower hereunder or under any other Loan Document.

 

(f)   The Guarantee and Collateral Agreement and the other Security Documents
shall have been duly executed by each Loan Party that is to be a party thereto
and shall be in full force and effect on the Closing Date.  The Collateral Agent
on behalf of the Secured Parties shall have a security interest in the
Collateral of the type and priority described in each Security Document.

 

(g)   The Collateral Agent shall have received the results of a search of the
Uniform Commercial Code filings (or equivalent filings) made with respect to the
Loan Parties in the states (or other jurisdictions) of formation of such
Persons, in which the chief executive office of each such Person is located and
in the other jurisdictions in which such Persons maintain property, together
with copies of the financing statements (or similar documents) disclosed by such
search, and accompanied by evidence satisfactory to the Collateral Agent that
the Liens indicated in any such financing statement (or similar document) would
be permitted under Section 6.02 or have been or will be contemporaneously
released or terminated.

 

(h)   Except for actions required to be taken under Section 5.13, (i)  each of
the Security Documents, in form and substance satisfactory to the Lenders,
relating to each of the Mortgaged Properties shall have been duly executed by
the parties thereto and delivered to the Collateral Agent and shall be in full
force and effect, (ii) each of such Mortgaged Properties shall not be subject to
any Lien other than those permitted under Section 6.02, (iii) each of such
Security Documents shall have been filed and recorded in the recording office as
specified on Schedule 3.19(c) (or a lender’s title insurance policy, in form and
substance acceptable to the Collateral Agent, insuring such Security Document as
a first lien on such Mortgaged Property (subject to any Lien permitted by
Section 6.02) shall have been received by the Collateral Agent) and, in
connection therewith, the Collateral Agent shall have received evidence
satisfactory to it of each such filing and recordation, (iv) the Collateral
Agent shall have received such other documents, including evidence of a policy
or policies of title insurance issued by a nationally recognized title insurance
company, together with such endorsements, coinsurance and reinsurance as may be
requested by the Collateral Agent and the Lenders, insuring the Mortgages as
valid first liens on the Mortgaged Properties, free of Liens other than those
permitted under Section 6.02, together with such surveys, abstracts, appraisals
and legal opinions required to be furnished pursuant to the terms of the
Mortgages or as reasonably requested by the Collateral Agent or the Lenders and
(v) the Collateral Agent shall have received, for each Mortgaged Property, a
“life of the loan” Standard Flood Hazard Determination and, if such Standard
Flood Hazard Determination indicates that such Mortgaged Property is located in
a “flood hazard area” (in any Flood Insurance Rate Map published by the Federal
Emergency Management Agency (or any successor agency)), the Collateral Agent
shall have received documentation satisfactory to it evidencing the mortgagor of
such Mortgaged Property’s receipt of notice from the Collateral Agent notifying
the mortgagor that such Mortgaged Property is located in a “flood hazard area” 
and indicating whether flood insurance coverage under the National Flood
Insurance Program (as set forth in the Flood Disaster Protection Act of 1973, as
it may be amended from time to time) is available and, if such flood insurance
is available, the Collateral Agent also shall have been provided access to (and
to the extent requested by the Collateral Agent and not prohibited by law

 

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or contractual or regulatory restriction, received) a copy of the applicable
flood insurance policy (which shall (x) provide for a minimum coverage of no
less than the lesser of (1) the aggregate principal amount of the Loans and
(2) the maximum amount available under the National Flood Insurance Program and
(y) to the extent agreed to by the applicable insurer, obligate the provider of
such insurance policy to notify the Collateral Agent in the event of any
non-payment or non-renewal of such policy) naming the Collateral Agent as loss
payee and a certificate as to coverage under such policy.

 

(i)   The Administrative Agent shall have received a copy of, or a certificate
as to coverage under, the insurance policies required by Section 5.02 and the
applicable provisions of the Security Documents, each of which shall be endorsed
or otherwise amended to include a customary lender’s loss payable endorsement
and to name the Collateral Agent as additional insured, all in form and
substance satisfactory to the Administrative Agent.

 

(j)   Each of Holdings, the Borrower and their respective Subsidiaries have
provided to the Administrative Agent true and correct copies of the reports,
assessments and investigations dated on or after June 1, 2007 which came within
their possession, custody or control regarding environmental matters and have
given the Administrative Agent access to all other such reports within their
possession.

 

(k)   All principal, premium, if any, interest, fees and other amounts due or
outstanding under the Refinanced Indebtedness shall have been paid in full, the
commitments thereunder terminated and all guarantees and security in support
thereof discharged and released, and the Administrative Agent shall have
received reasonably satisfactory evidence thereof.  Immediately after giving
effect to the Transactions and the other transactions contemplated hereby,
Holdings, the Borrower and the Subsidiaries shall have outstanding no
Indebtedness or preferred stock other than Indebtedness outstanding under this
Agreement and Indebtedness set forth on Schedule 6.01.

 

(l)   The Lenders shall have received the financial statements and opinion
referred to in Section 3.05, none of which shall demonstrate a material adverse
change in the financial condition of the Borrower from (and shall not otherwise
be materially inconsistent with) the financial statements or forecasts
previously provided to the Lenders.

 

(m)   The Administrative Agent shall have received a certificate from the chief
financial officer of Holdings certifying that each of the Loan Parties after
giving effect to the Transactions to occur on the Closing Date, is solvent.

 

(n)   The Lenders shall be reasonably satisfied in all respects with any tax
sharing arrangements among Holdings and its subsidiaries after giving effect to
the Transactions.

 

(o)   All requisite Governmental Authorities and third parties shall have
approved or consented to the Transactions and the other transactions
contemplated hereby to the extent required, all applicable appeal periods shall
have expired and there shall not be any pending or threatened litigation,
governmental, administrative or judicial action that could reasonably be
expected to restrain, prevent or impose burdensome conditions on the
Transactions or the other transactions contemplated hereby.

 

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(p)   The Lenders shall have received, at least 5 Business Days prior to the
Closing Date, all requested documentation and other information required by
regulatory authorities under applicable “know your customer” and anti-money
laundering rules and regulations, including the USA PATRIOT Act.

 

(q)   The Administrative Agent shall have received a notice of such Borrowing as
required by Section 2.03.

 

(r)   The Administrative Agent shall have received a copy of the Revolving
Facility Agreement and all amendments thereto, which shall have been certified
by a Financial Officer as being complete and correct.

 

(s)   The Borrower, the Guarantors, the Administrative Agent, the Collateral
Agent and the administrative agent for the lenders under the Revolving Facility
Agreement shall have entered into the Intercreditor Agreement on terms and
subject to conditions reasonably satisfactory to the Administrative Agent.

 

ARTICLE V

 

Affirmative Covenants

 

Each of Holdings and the Borrower covenants and agrees with each Lender that so
long as this Agreement shall remain in effect and until the Commitments have
been terminated and the principal of and interest on each Loan, all
Administrative Agent Fees and all other expenses or amounts (other than
unasserted, contingent indemnities) payable under any Loan Document shall have
been paid in full, unless the Required Lenders shall otherwise consent in
writing, each of Holdings and the Borrower will, and will cause each of the
Subsidiaries to:

 

SECTION 5.01.  Existence; Compliance with Laws; Businesses and Properties.  (a) 
Do or cause to be done all things necessary to preserve, renew and keep in full
force and effect its legal existence, except to the extent that the failure to
do so (other than in the case of maintaining the Borrower’s existence) could not
reasonably be expected to result in a Material Adverse Effect and except as
otherwise expressly permitted under Section 6.05.

 

(b)   Do or cause to be done all things necessary to obtain, preserve, renew,
extend and keep in full force and effect the rights, licenses, permits,
franchises, authorizations, patents, copyrights, trademarks and trade names
material to the conduct of its business except to the extent that the failure to
do so could not reasonably be expected to result in a Material Adverse Effect;
comply in all material respects with all applicable laws, rules, regulations and
decrees and orders of any Governmental Authority (including, without limitation,
the FCC, the HPUC and the DCCA), whether now in effect or hereafter enacted
except to the extent that the failure to do so could not reasonably be expected
to result in a Material Adverse Effect, and comply in all material respects with
the HPUC Decision and Order and the DCCA Decision and Order; and at all times
maintain and preserve all property material to the conduct of such business and
keep such property in good repair, working order and condition and from time to
time make, or cause to be made, all needful and proper repairs, renewals,
additions, improvements and replacements thereto necessary in order that the
business carried on in connection therewith may be properly

 

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conducted at all times except, in each case, to the extent that the failure to
do so could not reasonably be expected to result in a Material Adverse Effect.

 

SECTION 5.02.  Insurance.  (a)  Keep its insurable properties adequately insured
at all times by financially sound and reputable insurers; maintain such other
insurance, to such extent and against such risks, including fire and other risks
insured against by extended coverage, as is customary with companies in the same
or similar businesses operating in the same or similar locations, including
public liability insurance against claims for personal injury or death or
property damage occurring upon, in, about or in connection with the use of any
properties owned, occupied or controlled by it; and maintain such other
insurance as may be required by law.

 

(b)   Cause all insurance policies (i) in the case of property and liability
insurance, to be endorsed or otherwise amended to name the Collateral Agent as
insured party or loss payee, and (ii) in the case of other insurance policies
(excluding directors and officers liability insurance), to the extent applicable
and permitted pursuant to their terms, to be endorsed or otherwise amended to
name the Collateral Agent as insured party or loss payee, which endorsements or
amendments shall be in form and substance reasonably satisfactory to the
Administrative Agent and the Collateral Agent, and shall provide that, in the
case of any property or liability policy and to the extent permitted pursuant by
the terms of the policy and agreed to by the applicable insurer from and after
the Closing Date, if the insurance carrier shall have received written notice
from the Administrative Agent or the Collateral Agent of the occurrence of an
Event of Default, the insurance carrier shall pay all proceeds otherwise payable
to the Borrower or the Loan Parties under such policies directly to the
Collateral Agent; cause all such property and liability policies to provide that
none of the Borrower, the Administrative Agent, the Collateral Agent or any
other party shall be a coinsurer thereunder; cause all such property and
liability policies to contain a valuation on a replacement cost basis and, to
the extent agreed to by the applicable insurer, such other provisions as the
Administrative Agent or the Collateral Agent may reasonably require from time to
time to protect their interests; provide evidence of coverage under such
policies and provide access to (and to the extent requested by the Collateral
Agent and not prohibited by law or contractual or regulatory restriction,
provide) original or certified copies of all such policies to the Collateral
Agent; to the extent agreed to by the applicable insurer, cause each such policy
to provide that it shall not be canceled, modified or not renewed (i) by reason
of nonpayment of premium upon not less than 10 days’ prior written notice
thereof by the insurer to the Administrative Agent and the Collateral Agent
(giving the Administrative Agent and the Collateral Agent the right to cure
defaults in the payment of premiums) or (ii) for any other reason upon not less
than 30 days’ prior written notice thereof by the insurer to the Administrative
Agent and the Collateral Agent; provide evidence of coverage under, and provide
access to (and to the extent requested by the Collateral Agent and not
prohibited by law or contractual or regulatory restriction, provide to) the
Administrative Agent and the Collateral Agent, prior to the cancellation,
modification or nonrenewal of any such policy of insurance, a copy of a renewal
or replacement policy (or other evidence of renewal of a policy previously
delivered to the Administrative Agent and the Collateral Agent) together with
evidence satisfactory to the Administrative Agent and the Collateral Agent of
payment of the premium therefor.

 

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(c)   If at any time the area in which the Premises (as defined in the
Mortgages) are located is designated (i) a “flood hazard area” in any Flood
Insurance Rate Map published by the Federal Emergency Management Agency (or any
successor agency), obtain flood insurance (the policy in respect of which, to
the extent agreed to by the applicable insurer, shall require the insurer to
notify the Collateral Agent in the event of any non-payment or non-renewal of
such policy) in such total amount as the Administrative Agent, the Collateral
Agent or the Required Lenders may from time to time require, and otherwise
comply with the National Flood Insurance Program as set forth in the Flood
Disaster Protection Act of 1973, as it may be amended from time to time, or
(ii) a “Zone 1” area, obtain earthquake insurance in such total amount as the
Administrative Agent, the Collateral Agent or the Required Lenders may from time
to time require.

 

(d)   With respect to any Mortgaged Property, carry and maintain commercial
general liability insurance and coverage on an occurrence basis against claims
made for personal injury (including bodily injury, death and property damage)
and umbrella liability insurance against any and all claims, in no event for a
combined single limit of less than that which is customary for companies in the
same or similar businesses operating in the same or similar locations, naming
the Collateral Agent as an additional insured, on forms satisfactory to the
Collateral Agent.

 

(e)   Notify the Administrative Agent and the Collateral Agent promptly whenever
any separate insurance concurrent in form or contributing in the event of loss
with that required to be maintained under this Section 5.02 is taken out by any
Loan Party; and promptly deliver to the Collateral Agent a certificate as to
coverage under such policy or policies and provide access to (and to the extent
requested by the Collateral Agent and not prohibited by law or contractual or
regulatory restriction, provide) duplicate original copy of such policy or
policies to the Collateral Agent.

 

SECTION 5.03.  Obligations and Taxes.  Except to the extent that failure to do
so could not reasonably be expected to result in a Material Adverse Effect, pay
its Indebtedness and other obligations promptly and in accordance with their
terms and pay and discharge promptly when due all taxes, assessments and
governmental charges or levies imposed upon it or upon its income or profits or
in respect of its property, before the same shall become delinquent or in
default, as well as all lawful claims for labor, materials and supplies or
otherwise that, if unpaid, might give rise to a Lien upon such properties or any
part thereof; provided, however, that such payment and discharge shall not be
required with respect to any such tax, assessment, charge, levy or claim so long
as the validity or amount thereof shall be contested in good faith by
appropriate proceedings and the Borrower shall have set aside on its books
adequate reserves with respect thereto in accordance with GAAP and such contest
operates to suspend collection of the contested obligation, tax, assessment or
charge and enforcement of a Lien and, in the case of a Mortgaged Property, there
is no risk of forfeiture of such property.

 

SECTION 5.04.  Financial Statements, Reports, etc.  Furnish to the
Administrative Agent, which shall furnish to each Lender:

 

(a)   no later than the earlier of (i) 10 days after the Borrower is or would be
required to file a report Form 10-K with the Securities and Exchange Commission
in compliance with the reporting requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, as

 

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amended (whether or not the Borrower is subject to such reporting requirements),
and (ii) 95 days after the end of each fiscal year of the Borrower, the
consolidated balance sheet of Holdings and related statements of income,
stockholders’ equity and cash flows showing the financial condition of Holdings
and its consolidated Subsidiaries as of the close of such fiscal year and the
results of its operations and the operations of such Subsidiaries during such
year, together with comparative figures for the immediately preceding fiscal
year, all audited by Deloitte & Touche LLP or other independent public
accountants of recognized national standing and accompanied by an opinion of
such accountants (which opinion shall be without a “going concern” or like
qualification or exception and without any qualification or exception as to the
scope of such audit) to the effect that such consolidated financial statements
fairly present the financial condition and results of operations of Holdings and
its consolidated Subsidiaries on a consolidated basis in accordance with GAAP
consistently applied, together with a customary “management discussion and
analysis” provision; provided, that if Holdings elects to furnish such
consolidated balance sheet and related statements of income, stockholders’
equity and cash flows prepared in accordance with IFRS consistently applied then
Holdings shall also furnish a reconciliation of the same to the corresponding
financial statements prepared in accordance with GAAP consistently applied;
provided, further, that if Holdings elects, pursuant to the immediately
preceding proviso or the first proviso in Section 5.04(b), to furnish financial
statements prepared in accordance with IFRS, then Holdings may not thereafter
elect to furnish the financial statements required by this Section 5.04(a)
prepared in accordance with GAAP;

 

(b)   no later than the earlier of (i) 10 days after the date that the Borrower
is or would be required to file a report on Form 10-Q with the Securities and
Exchange Commission in compliance with the reporting requirements of Section 13
or 15(d) of the Securities Exchange Act of 1934, as amended (whether or not the
Borrower is subject to such reporting requirements), and (ii) 50 days after the
end of each of the first three fiscal quarters of each fiscal year, the
consolidated balance sheet of Holdings and related statements of income,
stockholders’ equity and cash flows showing the financial condition of Holdings
and its consolidated Subsidiaries as of the close of such fiscal quarter and the
results of its operations and the operations of such Subsidiaries during such
fiscal quarter and the then elapsed portion of the fiscal year, and, other than
with respect to quarterly reports during the remainder of the first fiscal year
after the Closing Date, comparative figures for the same periods in the
immediately preceding fiscal year, all certified by one of its Financial
Officers as fairly presenting the financial condition and results of operations
of Holdings and its consolidated Subsidiaries on a consolidated basis in
accordance with GAAP consistently applied, subject to normal year-end audit
adjustments, together with a customary “management discussion and analysis”
provision; provided, that if Holdings elects to furnish such consolidated
balance sheet and related statements of income, stockholders’ equity and cash
flows prepared in accordance with IFRS consistently applied then Holdings shall
also furnish a reconciliation of the same to the corresponding financial
statements prepared in accordance with GAAP consistently applied; provided,
further, that if Holdings elects, pursuant to the immediately preceding proviso
or the first proviso in Section 5.04(a), to furnish financial statements
prepared in accordance with IFRS, then Holdings may not thereafter elect to
furnish the financial statements required by this Section 5.04(b) prepared in
accordance with GAAP;

 

(c)   concurrently with any delivery of financial statements under paragraph
(a) or (b) above, a certificate of a Financial Officer in the form of Exhibit F
(i) certifying that no Event

 

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of Default or Default has occurred or, if such an Event of Default or Default
has occurred, specifying the nature and extent thereof and any corrective action
taken or proposed to be taken with respect thereto and (ii) setting forth
computations in reasonable detail satisfactory to the Administrative Agent
demonstrating compliance with the covenants contained in Sections 6.10, 6.11 and
6.12 and, in the case of a certificate delivered with the financial statements
required by paragraph (a) above, setting forth the Borrower’s calculation of
Excess Cash Flow;

 

(d)   concurrently with any delivery of financial statements under
clause (a) above, to the extent made available to the Borrower by its auditors,
a certificate of the accounting firm that reported on such statements (which
certificate may be limited to accounting matters and disclaim responsibility for
legal interpretations) certifying that as of the last day of the immediately
preceding fiscal year no Event of Default or Default has occurred with respect
to Sections 6.10 or 6.11 or, if such an Event of Default or Default has
occurred, specifying the extent thereof in reasonable detail.

 

(e)   within 90 days after the beginning of each fiscal year of the Borrower, a
detailed consolidated budget for such fiscal year (including a projected
consolidated balance sheet and related statements of projected operations and
cash flows as of the end of and for such fiscal year and setting forth the
assumptions used for purposes of preparing such budget) and, promptly when
available, any significant revisions of such budget;

 

(f)   promptly after the same become publicly available, copies of all periodic
and other reports, proxy statements and other materials filed by Holdings, the
Borrower or any Subsidiary with the Securities and Exchange Commission, or any
Governmental Authority succeeding to any or all of the functions of said
Commission, or with any national securities exchange, or distributed to its
shareholders, as the case may be;

 

(g)   promptly after the receipt thereof by Holdings or the Borrower or any of
their respective subsidiaries, a copy of any “management letter” received by any
such Person from its certified public accountants and the management’s response
thereto;

 

(h)   promptly after the request by any Lender, all documentation and other
information that such Lender reasonably requests in order to comply with its
ongoing obligations under applicable “know your customer” and anti-money
laundering rules and regulations, including the USA PATRIOT Act; and

 

(i)   promptly, from time to time, such other information regarding the
operations, business affairs and financial condition of Holdings, the Borrower
or any Subsidiary, or compliance with the terms of any Loan Document, as the
Administrative Agent or any Lender may reasonably request.

 

SECTION 5.05.  Litigation and Other Notices.  Furnish to the Administrative
Agent and each Lender prompt written notice of the following:

 

(a)   any Event of Default or Default, specifying the nature and extent thereof
and the corrective action (if any) taken or proposed to be taken with respect
thereto;

 

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(b)   the filing or commencement of, or any threat or notice of intention of any
Person to file or commence, any action, suit or proceeding, whether at law or in
equity or by or before any Governmental Authority, against the Borrower or any
Affiliate thereof that could reasonably be expected to result in a Material
Adverse Effect;

 

(c)   the occurrence of any ERISA Event that, alone or together with any other
ERISA Events that have occurred, could reasonably be expected to result in
liability of the Borrower and the Subsidiaries in an aggregate amount exceeding
$7,500,000;

 

(d)   any development that has resulted in, or could reasonably be expected to
result in, a Material Adverse Effect; and

 

(e)   any change in the Borrower’s corporate rating by S&P, in the Borrower’s
corporate family rating by Moody’s or in the ratings of the Credit Facilities by
S&P or Moody’s, or any notice from either such agency indicating its intent to
effect such a change or to place the Borrower or the Credit Facilities on a
“CreditWatch” or “WatchList” or any similar list, in each case with negative
implications, or its cessation of, or its intent to cease, rating the Borrower
or the Credit Facilities.

 

SECTION 5.06.  Information Regarding Collateral.  (a)  Furnish to the
Administrative Agent prompt written notice of any change (i) in any Loan Party’s
corporate name, (ii) in the jurisdiction of organization or formation of any
Loan Party, (iii) in any Loan Party’s identity or corporate structure or (iv) in
any Loan Party’s Federal Taxpayer Identification Number.  Holdings and the
Borrower agree 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 in all the Collateral.  Holdings and the Borrower also agree promptly
to notify the Administrative Agent if any material portion of the Collateral is
damaged or destroyed.

 

(b)   In the case of the Borrower, at the request of the Administrative Agent,
together with the annual financial statements delivered pursuant to
Section 5.04(a), deliver to the Administrative Agent a certificate of a
Financial Officer setting forth the information required pursuant to Schedules
I, II and IV of the Guarantee and Collateral Agreement or confirming that there
has been no change in such information since the date of the Guarantee and
Collateral Agreement or the date of the most recent certificate delivered
pursuant to this Section 5.06.

 

SECTION 5.07.  Maintaining Records; Access to Properties and Inspections;
Maintenance of Ratings.  (a)  Keep proper books of record and account in which
full, true and correct entries in conformity with GAAP (or IFRS, if the Borrower
elects to furnish financial statements prepared in accordance with IFRS pursuant
to Section 5.04(a) or (b)) and all requirements of law are made of all dealings
and transactions in relation to its business and activities.  Each Loan Party
will, and will cause each of its subsidiaries to, permit any representatives
designated by the Administrative Agent or any Lender, upon reasonable prior
notice, to visit and inspect the financial records and the properties of such
Person at reasonable times and as often as reasonably requested and to make
extracts from and copies of such financial records, and permit any
representatives designated by the Administrative Agent or any

 

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Lender to discuss the affairs, finances and condition of such Person with the
officers thereof and independent accountants therefor.

 

(b)   In the case of Holdings and the Borrower, use commercially reasonable
efforts to cause the Credit Facilities to maintain a public rating by S&P and
Moody’s, and in the case of the Borrower, use commercially reasonable efforts to
maintain a corporate rating from S&P and a corporate family rating from Moody’s,
in each case in respect of the Borrower.

 

SECTION 5.08.  Use of Proceeds.  Use the proceeds of the Loans only for the
purposes specified in the introductory statement to this Agreement.

 

SECTION 5.09.  Employee Benefits.  (a) Comply in all material respects with the
applicable provisions of ERISA and the Code with respect to each Plan and the
laws applicable to any foreign pension plan and (b) furnish to the
Administrative Agent as soon as possible after, and in any event within ten days
after any responsible officer of Holdings, the Borrower or any ERISA Affiliate
knows or has reason to know that, any ERISA Event has occurred that, alone or
together with any other ERISA Event could reasonably be expected to result in
liability of Holdings, the Borrower or any ERISA Affiliate in an aggregate
amount exceeding $7,500,000, a statement of a Financial Officer of Holdings or
the Borrower setting forth details as to such ERISA Event and the action, if
any, that Holdings or the Borrower proposes to take with respect thereto.

 

SECTION 5.10.  Compliance with Environmental Laws.  Comply, and cause all
lessees and other Person occupying its properties to comply, in all material
respects with all Environmental Laws applicable to its operations and
properties; obtain and renew all material environmental permits necessary for
its operations and properties; and conduct any remedial action in accordance
with Environmental Laws; provided, however, that none of Holdings, the Borrower
or any Subsidiary shall be required to undertake any remedial action required by
Environmental Laws to the extent that its obligation to do so is being contested
in good faith and by proper proceedings and appropriate reserves are being
maintained with respect to such circumstances in accordance with GAAP.

 

SECTION 5.11.  Preparation of Environmental Reports.  If a Default caused by
reason of a breach of Section 3.17 or Section 5.10 shall have occurred and be
continuing for more than 20 days without Holdings, the Borrower or any
Subsidiary commencing activities reasonably likely to cure such Default, at the
written request of the Required Lenders through the Administrative Agent,
provide to the Lenders within 45 days after such request, at the expense of the
Loan Parties, an environmental site assessment report regarding the matters
which are the subject of such Default prepared by an environmental consulting
firm reasonably acceptable to the Administrative Agent and indicating the
presence or absence of Hazardous Materials and the estimated cost of any
compliance or remedial action in connection with such Default.

 

SECTION 5.12.  Further Assurances.  Execute any and all further documents,
financing statements, agreements and instruments, and take all further action
(including filing Uniform Commercial Code and other financing statements,
mortgages and deeds of trust) that may be required under applicable law, or that
the Required Lenders, the Administrative Agent or the Collateral Agent may
reasonably request, in order to effectuate the transactions contemplated by

 

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the Loan Documents and in order to grant, preserve, protect and perfect the
validity and first priority (subject to Liens permitted by Section 6.02 having
priority by operation of law over the Liens created by the Security Documents)
of the security interests created or intended to be created by the Security
Documents.  The Borrower will cause any subsequently acquired or organized
Domestic Subsidiary (other than an Excluded Domestic Subsidiary and a Domestic
Subsidiary owned by a Foreign Subsidiary) to become a Loan Party by executing
the Guarantee and Collateral Agreement, the Guarantee and Collateral Agreement
and each other applicable Security Document in favor of the Collateral Agent. 
In addition, from time to time, the Borrower will, at its cost and expense,
promptly secure the Obligations by pledging or creating, or causing to be
pledged or created, perfected security interests with respect to such of its
assets and properties as may be required by the Guarantee and Collateral
Agreement, it being understood that it is the intent of the parties that the
Obligations shall be secured by substantially all of the Equity Interests of the
Borrower and substantially all the tangible and intangible assets of the
Borrower and the Subsidiary Guarantors, including but not limited to Equity
Interests, accounts receivable, inventory, equipment, general intangibles,
investment property, intellectual property, real property, cash, deposit and
securities accounts, commercial tort claims, intercompany notes and the proceeds
of the foregoing, in each case, whether existing on the date hereof of
thereafter acquired, but excluding (i) the Equity Interests of any Joint Venture
which are prohibited by the terms of the constitutive documents of such Joint
Venture from being pledged as security for the Obligations without the consent
of a third party, provided that such prohibition was not created in
contemplation of this Section 5.12, (ii) assets as to which the Administrative
Agent reasonably determines that the cost of obtaining a security interest
therein outweighs the collateral value thereof and (iii) assets with an
aggregate fair market value of less than $2,000,000; provided that, solely to
the extent the pledge of any greater percentage of Equity Interests would result
in adverse tax consequences to the Borrower, the Collateral shall, in the case
of Equity Interests of Foreign Subsidiaries and Excluded Domestic Subsidiaries,
be limited to 100% of the non-voting Equity Interests (if any) of such Foreign
Subsidiaries and Excluded Domestic Subsidiaries and 66% of the voting Equity
Interests of such Foreign Subsidiaries and Excluded Domestic Subsidiaries.  Such
security interests and Liens will be created under the Security Documents and
other security agreements, mortgages, deeds of trust and other instruments and
documents in form and substance satisfactory to the Collateral Agent, and the
Borrower shall deliver or cause to be delivered to the Lenders all such
instruments and documents (including legal opinions, title insurance policies
and lien searches) as the Collateral Agent shall reasonably request to evidence
compliance with this Section.  The Borrower agrees to provide such evidence as
the Collateral Agent shall reasonably request as to the perfection and priority
status of each such security interest and Lien.  In furtherance of the
foregoing, the Borrower will give prompt notice to the Administrative Agent of
the acquisition by it or any of the Subsidiaries of any real property (or any
interest in real property) having a value in excess of $2,000,000.

 

SECTION 5.13.  Post-Closing Covenants.  The Borrower hereby agrees to deliver to
Administrative Agent, in form and substance reasonably satisfactory to
Administrative Agent, the items described on Schedule 5.13 hereof on or before
the dates specified with respect to such items, or such later dates as may be
agreed to by Administrative Agent in its sole discretion.  All representations
and warranties (and conditions and covenants) contained in this Agreement and
the other Loan Documents shall be deemed modified to the extent necessary to
permit the taking of the actions described above within the time periods
required above and in Schedule 5.13,

 

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rather than as otherwise provided in the Loan Documents; provided that to the
extent any representation and warranty would not be true (or any covenant would
not be complied with) because the foregoing actions were not taken on the
Closing Date, the respective representation and warranty shall be required to be
true and correct in all material respects (and such covenant shall be required
to be complied with) at the time the respective action is taken (or was required
to be taken) in accordance with the foregoing provisions of this Section 5.13
(and Schedule 5.13).

 

ARTICLE VI

 

Negative Covenants

 

Each of Holdings and the Borrower covenants and agrees with each Lender that, so
long as this Agreement shall remain in effect and until the Commitments have
been terminated and the principal of and interest on each Loan, all
Administrative Agent Fees and all other expenses or amounts payable under any
Loan Document (other than unasserted, contingent indemnity claims) have been
paid in full, unless the Required Lenders shall otherwise consent in writing,
neither Holdings nor the Borrower will, nor will they cause or permit any of the
Subsidiaries to:

 

SECTION 6.01.  Indebtedness.  Incur, create, assume or permit to exist any
Indebtedness, except:

 

(a) Indebtedness existing on the date hereof and set forth in Schedule 6.01 and
any Refinancing thereof;

 

(b) Indebtedness created hereunder and under the other Loan Documents;

 

(c) intercompany Indebtedness of the Borrower and any Subsidiary or Joint
Venture to the extent permitted by Section 6.04(c) so long as such Indebtedness
is subordinated to the Obligations pursuant to an Affiliate Subordination
Agreement;

 

(d) Indebtedness of the Borrower or any Subsidiary initially incurred to finance
the acquisition, construction or improvement of any fixed or capital assets,
telecom equipment in the nature of inventory, and extensions, renewals,
replacements and Refinancings of any such Indebtedness that do not increase the
outstanding principal amount thereof; provided that (i) such Indebtedness
initially is incurred prior to or within 180 days after such acquisition or the
completion of such construction or improvement and (ii) the aggregate principal
amount of Indebtedness permitted by this Section 6.01(d), when combined with the
aggregate principal amount of all Capital Lease Obligations incurred pursuant to
Section 6.01(e) shall not exceed $37,500,000 at any time outstanding (plus OID
and other amounts permitted to be added to principal pursuant to the definition
of Refinancing);

 

(e) Capital Lease Obligations in an aggregate principal amount, when combined
with the aggregate principal amount of all Indebtedness incurred pursuant to
Section 6.01(d), not in excess of $37,500,000 at any time outstanding (plus OID
and other amounts permitted to be added to principal pursuant to the definition
of Refinancing);

 

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(f) Indebtedness, directly or indirectly, under performance bonds, bid bonds,
appeal bonds, surety bonds, financial assurances and completion guarantees and
similar obligations, in each case incurred in the ordinary course of business,
including those incurred to secure health, safety and workers’ compensation and
environmental obligations and property, casualty and liability insurance in the
ordinary course of business; and

 

(g) Indebtedness (and any Refinancing thereof) of any Person that becomes a
Subsidiary after the date hereof; provided that (i) such Indebtedness exists at
the time such Persons becomes a Subsidiary and is not created in contemplation
of or in connection with such Person becoming a Subsidiary, (ii) immediately
before and after such Person becomes a Subsidiary, no Event of Default shall
have occurred and be continuing and (iii) the aggregate principal amount of
Indebtedness permitted by this Section 6.01(g) shall not exceed $37,500,000 at
any time outstanding (plus OID and other amounts permitted to be added to
principal pursuant to the definition of Refinancing);

 

(h) Indebtedness in respect of those Hedging Agreements incurred in the ordinary
course of business and consistent with Borrower’s business practice;

 

(i) other Indebtedness of the Borrower or the Subsidiaries in an aggregate
principal amount not exceeding $15,000,000 at any time outstanding;

 

(j) Indebtedness arising from the honoring by a bank or other financial
institution of a check, draft or similar instrument drawn against insufficient
funds in the ordinary course of business or other cash management services in
the ordinary course of business; provided that (i) such Indebtedness (other than
credit or purchase cards) is extinguished within 10 Business Days of its
incurrence and (ii) such Indebtedness in respect of credit or purchase cards is
extinguished within 45 days from its incurrence;

 

(k) Indebtedness (and any Refinancing thereof) arising from agreements of the
Borrower or any Subsidiary providing for indemnification, adjustment of purchase
or acquisition price or similar obligations, in each case, incurred or assumed
in connection with the disposition of any business, assets or Subsidiary
permitted hereunder, other than Guarantees of Indebtedness incurred by any
Person acquiring all or any of such business assets or a Subsidiary for the
purpose of financing such acquisition;

 

(l) Cash management obligations and other Indebtedness in respect of netting
services, overdraft protection and similar arrangements, in each case, in
connection with cash management and deposit account arrangements entered into in
the ordinary course of business;

 

(m) Indebtedness in respect of letters of credit incurred in the ordinary course
of business in an aggregate principal amount not to exceed $16,000,000 at any
time outstanding;

 

(n) Indebtedness owed to the Rural Utilities Service in an aggregate principal
amount not to exceed $5,000,000 at any time outstanding and any Refinancing
thereof; and

 

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(o) the financing of insurance premiums in customary amounts.

 

SECTION 6.02.  Liens.  Create, incur, assume or permit to exist any Lien on any
property or assets (including Equity Interests or other securities of any
Person, including the Borrower or any Subsidiary) now owned or hereafter
acquired by it or on any income or revenues or rights in respect of any thereof,
except:

 

(a) Liens on property or assets of the Borrower and its Subsidiaries existing on
the date hereof and set forth in Schedule 6.02; provided that such Liens shall
secure only those obligations which they secure on the date hereof and any
Refinancing of the underlying obligations;

 

(b) any Lien created under the Loan Documents;

 

(c) any Lien existing on any property or asset prior to the acquisition thereof
by the Borrower or any Subsidiary or existing on any property or assets of any
Person that becomes a Subsidiary after the date hereof prior to the time such
Person becomes a Subsidiary, as the case may be and any Refinancing of the
underlying obligations; provided that (i) such Lien is not created in
contemplation of or in connection with such acquisition or such Person becoming
a Subsidiary, (ii) such Lien does not apply to any other property or assets of
Holdings, the Borrower or any Subsidiary and (iii) such Lien secures only those
obligations which it secures on the date of such acquisition or the date such
Person becomes a Subsidiary, as the case may be and any Refinancing of such
obligations;

 

(d) Liens for taxes, assessments or other governmental charges or levies that
are not yet due or which are being contested in compliance with Section 5.03;

 

(e) Statutory Liens of landlords, carriers, warehousemen, mechanics, repairmen,
workmen and materialmen, and other Liens imposed by law (other than any such
Lien imposed pursuant to Section 430(k) of the Code or ERISA), in each case
arising in the ordinary course of business (i) for amounts not yet overdue or
(ii) for amounts that are overdue and that (in the case of amounts overdue for a
period in excess of 45 days) are being contested in compliance with
Section 5.03;

 

(f) Liens incurred in connection with worker’s compensation, unemployment
insurance and other types of social security;

 

(g) Liens securing the performance of tenders, statutory obligations, surety and
appeal bonds, bids, leases (other than Capital Lease Obligations), government
contracts, trade contracts, performance and return-of-money bonds and any other
similar obligations, in each case entered into in the ordinary course of
business and exclusive of obligations in respect of Indebtedness for borrowed
money, so long as no foreclosure, sale or similar proceedings have been
commenced with respect to any portion of the Collateral on account thereof;

 

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(h) Liens solely on cash earnest money deposits made by Holdings or any of its
Subsidiaries in connection with any letter of intent or purchase agreement in
connection with any acquisition not prohibited hereunder;

 

(i) zoning restrictions, easements, rights-of-way, encroachments, restrictions
on use of real property and other similar encumbrances imposed by law or arising
in the ordinary course of business which, in the aggregate, do not materially
detract from the value of the property subject thereto or interfere with the
ordinary conduct of the business of the Borrower or any of its Subsidiaries;

 

(j) purchase money security interests in real property, improvements thereto or
equipment (including telecom equipment in the nature of inventory) or capital
assets hereafter acquired (or, in the case of improvements, constructed), in
each case, by the Borrower or any Subsidiary and any Refinancing of the
underlying obligations; provided that (i) such security interests secure
Indebtedness permitted by Section 6.01, (ii) such security interests are
incurred, and the Indebtedness secured thereby is created, within 120 days after
such acquisition (or construction), (iii) the Indebtedness secured thereby does
not exceed the lesser of the cost or the fair market value of such real
property, improvements or equipment at the time of such acquisition (or
construction) and (iv) such security interests do not apply to any other
property or assets of the Borrower or any Subsidiary;

 

(k) judgment Liens securing judgments not constituting an Event of Default under
Article VII;

 

(l) other Liens securing liabilities and Indebtedness hereunder in an aggregate
amount not to exceed $10,000,000 at any time outstanding;

 

(m) any interest or title of a lessor under any leases or subleases entered into
by the Borrower or any Subsidiary in the ordinary course of business;

 

(n) Liens that are contractual rights of set-off (i) relating to the
establishment of depository relations with banks not given in connection with
the issuance of Indebtedness, (ii) relating to pooled deposit or sweep accounts
to permit satisfaction of overdraft or similar obligations incurred in the
ordinary course of business or (iii) relating to purchase orders and other
agreements entered into with customers of the Borrower or any Subsidiary in the
ordinary course of business;

 

(o) Liens arising solely by virtue of any statutory or common law provision
relating to bankers’ liens, rights of set-off or similar rights, and Liens in
favor of CoBank on the Borrower’s Equity Interests in CoBank or Patronage
Certificates;

 

(p) Liens arising or purporting to arise from precautionary UCC financing
statements in connection with operating leases, sale lease-back transactions or
any permitted factoring or accounts receivable sales;

 

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(q) Liens on securities that are the subject of repurchase agreements
constituting Permitted Investments under clause (d) of the definition thereof
and Liens securing obligations permitted under Section 6.01(h);

 

(r) Liens in favor of customs and revenue authorities arising as a matter of law
to secure payment of customs duties in connection with the importation of goods;

 

(s) Liens on cash and Permitted Investments securing letters of credit permitted
under Section 6.01(m) in an amount not exceeding 105% of the aggregate stated
amount of such letters of credit;

 

(t) Liens securing Indebtedness owed to the Rural Utilities Service permitted
under Section 6.01(n);

 

(u) licenses of intellectual property granted in the ordinary course of business
in the ordinary course of business in a manner consistent with past practices;

 

(v) Liens securing obligations permitted under Section 6.01(e); and

 

(w) Liens on insurance policies and the proceeds thereof and unearned premiums
securing the financing of premiums with respect thereto as provided in
Section 6.01(o).

 

SECTION 6.03.  Sale and Lease-Back Transactions.  Enter into any arrangement,
directly or indirectly, with any Person whereby it shall sell or transfer any
property, real or personal, used or useful in its business, whether now owned or
hereafter acquired, and thereafter rent or lease such property or other property
which it intends to use for substantially the same purpose or purposes as the
property being sold or transferred unless (a) such transaction constitutes the
Anticipated Tower Lease-Back, (b) the sale or transfer of such property is
permitted by Section 6.05, or (b) the resulting any Capital Lease Obligations or
Liens arising in connection therewith are permitted by Sections 6.01 and 6.02,
as the case may be.

 

SECTION 6.04.  Investments, Loans and Advances.  Purchase, hold or acquire any
Equity Interests, evidences of indebtedness or other securities of, make or
permit to exist any loans or advances to, or make or permit to exist any
investment or any other interest in, any other Person, except:

 

(a) (i) investments by Holdings, the Borrower and the Subsidiaries existing on
the date hereof in the Equity Interests of the Borrower and the Subsidiaries and
(ii) additional investments by Holdings, the Borrower and the Subsidiaries in
the Equity Interests of the Borrower, the Subsidiaries and Joint Ventures;
provided that (A) any such Equity Interests held by a Loan Party shall be
pledged pursuant to the Guarantee and Collateral Agreement (subject to the
limitations applicable to the Equity Interests of Joint Ventures and the voting
stock of Foreign Subsidiaries referred to therein), and (B) the aggregate amount
of investments by Loan Parties in, and loans and advances made after the Closing
Date by Loan Parties to, Subsidiaries that are not Loan Parties (determined
without regard to any write-downs or write-offs of such investments, loans and
advances) shall not exceed $20,000,000 at any time outstanding;

 

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(b) Permitted Investments;

 

(c) loans or advances made by the Borrower to any Subsidiary or Joint Venture
and made by any Subsidiary or Joint Venture to Holdings, the Borrower or any
other Subsidiary; provided that (i) any such loans and advances made by a Loan
Party shall be evidenced by a promissory note pledged to the Collateral Agent
for the ratable benefit of the Secured Parties pursuant to the Guarantee and
Collateral Agreement, (ii) such loans and advances shall be unsecured and
subordinated to the Obligations pursuant to an Affiliate Subordination Agreement
and (iii) the amount of such loans and advances made by Loan Parties to
Subsidiaries that are not Loan Parties shall be subject to the limitation set
forth in clause (a) above;

 

(d) investments received in connection with the bankruptcy or reorganization of,
or settlement of delinquent accounts and disputes with, customers and suppliers;

 

(e) the Borrower and the Subsidiaries may make loans and advances in the
ordinary course of business to the employees of Holdings and its Subsidiaries so
long as the aggregate principal amount thereof at any time outstanding
(determined without regard to any write-downs or write-offs of such loans and
advances) shall not exceed $5,000,000;

 

(f) the Borrower and the Subsidiaries may enter into Hedging Agreements that are
not speculative in nature;

 

(g) the Borrower or any Subsidiary may acquire (x) all or substantially all the
assets of any Person or line of business, division or product line of such
Person, or not less than 100% of the Equity Interests (other than directors’
qualifying shares) of a Person or (y) any interest in a Joint Venture (any
Person referred to in clause (x) or (y) being referred to herein as the
“Acquired Entity”); provided that (i) such acquisition was not preceded by an
unsolicited tender offer for such Equity Interests by, or proxy contest
initiated by, Holdings, the Borrower or any Subsidiary; (ii) the Acquired Entity
shall be in a similar, related, incidental or ancillary line of business as that
of the Borrower and the Subsidiaries as conducted during the current and most
recent calendar year; and (iii) at the time of such transaction (A) both before
and after giving effect thereto, no Event of Default shall have occurred and be
continuing; (B) the Borrower would be in compliance with the covenants set forth
in Sections 6.11 and 6.12 as of the most recently completed period of four
consecutive fiscal quarters ending prior to such transaction for which the
financial statements and certificates required by Section 5.04(a) or 5.04(b), as
the case may be, and 5.04(c) have been delivered or for which comparable
financial statements have been filed with the Securities and Exchange
Commission, after giving pro forma effect to such transaction and to any other
event occurring after such period as to which pro forma recalculation is
appropriate (including any other transaction described in this
Section 6.04(g) occurring after such period) as if such transaction had occurred
as of the first day of such period (assuming, for purposes of pro forma
compliance with Section 6.12, that the maximum Leverage Ratio permitted at the
time by such Section was in fact 0.25 to 1.00 less than the ratio actually
provided for in such Section at such time); (C) the Borrower shall have
delivered a certificate of a Financial

 

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Officer, certifying as to the foregoing and containing reasonably detailed
calculations in support thereof, in form reasonably satisfactory to the
Administrative Agent, and (D) the Borrower shall comply, and shall cause the
Acquired Entity (other than any Joint Venture) to comply, with the applicable
provisions of Section 5.12 and the Security Documents (any acquisition of an
Acquired Entity meeting all the criteria of this Section 6.04(g) being referred
to herein as a “Permitted Acquisition”);

 

(h) [RESERVED]

 

(i) additional investments, loans and advances by the Borrower and the
Subsidiaries so long as the aggregate amount invested, loaned or advanced
pursuant to this paragraph (i) (determined without regard to any write-downs or
write-offs of such investments, loans and advances) does not exceed at any time
outstanding $20,000,000 in the aggregate;

 

(j) investments existing on or contractually committed to be made as of the
Closing Date and set forth on Schedule 6.04(j) and any Refinancings, renewals,
extensions or continuations thereof;

 

(k) accounts receivable, security deposits and prepayments arising and
extensions of trade credit in the ordinary course of business and any assets and
securities received in satisfaction or partial satisfaction thereof from
financially troubled account debtors to the extent reasonably necessary to
prevent or limit loss and any prepayments and other credits to suppliers in the
ordinary course of business;

 

(l) investments consisting of non-cash consideration received in respect of
sales, transfers or other dispositions of assets to the extent permitted by
Section 6.05;

 

(m) investments from pledges and deposits referred to in Section 6.02(f) and
(g);

 

(n) the Borrower’s investments in Equity Interests of CoBank and Patronage
Certificates; and

 

(o) Guarantees constituting Indebtedness permitted by Section 6.01.

 

SECTION 6.05.  Mergers, Consolidations, Sales of Assets and Acquisitions.  (a) 
Merge into or consolidate with any other Person, or permit any other Person to
merge into or consolidate with it, or sell, transfer, lease or otherwise dispose
of (in one transaction or in a series of transactions) all or substantially all
the assets (whether now owned or hereafter acquired) of the Borrower or less
than all the Equity Interests of any Subsidiary, or purchase, lease or otherwise
acquire (in one transaction or a series of transactions) all or any substantial
part of the assets of any other Person, except that (i) the Borrower and any
Subsidiary may purchase and sell inventory in the ordinary course of business,
(ii) Holdings and its Subsidiaries may permit to occur any casualty or
condemnation event and (iii) if at the time thereof and immediately after giving
effect thereto no Event of Default shall have occurred and be continuing,
(A) any Wholly Owned Subsidiary may merge into the Borrower in a transaction in
which the Borrower is the surviving corporation, (B) any Wholly Owned Subsidiary
may merge into or consolidate with any other Wholly Owned Subsidiary in a
transaction in which the surviving entity is a Wholly

 

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Owned Subsidiary and no Person other than the Borrower or a Wholly Owned
Subsidiary receives any consideration (provided that if any party to any such
transaction is a Loan Party, the surviving entity of such transaction shall be a
Loan Party), (C) and Subsidiary that is not a Wholly Owned Subsidiary may merge
into any Wholly Owned Subsidiary or into any other Subsidiary that is not a
Wholly Owned Subsidiary, (D) any Subsidiary may liquidate or dissolve if the
Borrower determines in good faith that such liquidation or dissolution is in the
best interests of the Borrower and is not disadvantageous to the Lenders, and
(E) the Borrower and the Subsidiaries may make Permitted Acquisitions.

 

(b)   Make any Asset Sale otherwise permitted under paragraph (a) above unless
(i) such Asset Sale is for consideration at least 75% of which is cash,
(ii) such consideration is at least equal to the aggregate book value of the
assets being sold, transferred, leased or disposed of and (iii) the fair market
value of all assets sold, transferred, leased or disposed of pursuant to this
paragraph (b) shall not exceed (x) in the case of sale and leaseback
transactions, $5,000,000 and (y) in the case of any other Asset Sale,
$40,000,000 in the aggregate; provided that the foregoing limitations on the
aggregate book value of assets sold, transferred, leased or disposed shall not
apply to (I) the Anticipated Tower Lease-Back, (II) sales, transfers and other
dispositions of the Specified Facilities and (III) sales, transfers and other
dispositions of assets related to the implementation of the Central Office
Consolidation.

 

SECTION 6.06.  Restricted Payments; Restrictive Agreements.  (a)  Declare or
make, or agree to declare or make, directly or indirectly, any Restricted
Payment (including pursuant to any Synthetic Purchase Agreement), or incur any
obligation (contingent or otherwise) to do so; provided, however, that
(i) Holdings may, provided that no Default or Event of Default has occurred and
is continuing, declare and pay dividends or other distributions to holders of
its Equity Interests and/or repurchase shares of its Equity Interests (and the
Borrower may make any Restricted Payments to Holdings which constitute dividends
paid by Holdings or consideration for the repurchase of the Equity Interests of
Holdings, in each case, pursuant to this clause (i)) (A) in an aggregate amount
not to exceed $5,000,000 if after giving effect to such payment or repurchase,
the covenants set forth in Sections 6.11 and 6.12 would be satisfied on a pro
forma basis and (B) in an aggregate amount at any time not to exceed the
Retained Excess Cash Flow Amount at such time if after giving effect to such
payment or repurchase on a pro forma basis, the Net Leverage Ratio would not be
in excess of 1.75:1.00, (ii) any Subsidiary may declare and pay dividends or
make other distributions ratably (or in a manner more favorable to the Borrower
or the Loan Parties) to its equity holders, (iii) so long as no Event of Default
or Default shall have occurred and be continuing or would result therefrom, the
Borrower may, or the Borrower may make distributions to Holdings so that
Holdings may, repurchase its Equity Interests owned by employees of Holdings,
the Borrower or the Subsidiaries or make payments to employees of Holdings, the
Borrower or the Subsidiaries upon termination of employment in connection with
the exercise of stock options, stock appreciation rights or similar equity
incentives or equity based incentives pursuant to management incentive plans or
in connection with the death or disability of such employees in an aggregate
amount not to exceed $5,000,000 in any fiscal year less the aggregate amount of
Restricted Payments made pursuant to clause (v) of this Section 6.06(a) during
such fiscal year, (iv) the Borrower may make Restricted Payments to Holdings at
any time (x) in an amount as may be necessary to pay general corporate and
overhead expenses incurred by Holdings in the ordinary course of business and
(y) for so long as Holdings files tax returns on a consolidated or combined
basis with the Borrower and its

 

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Subsidiaries, in an amount necessary to pay such consolidated or combined Tax
liabilities of Holdings (or its direct or indirect parent entity) which are
allocable or attributable to (or arising as a result of) the operations of the
Borrower and the Subsidiaries; provided, however, that (A) the amount of such
dividends shall not exceed the amount that the Borrower and the Subsidiaries
would be required to pay in respect of United States Federal, State and local
taxes were the Borrower and the Subsidiaries to file their own consolidated or
combined group and (B) all Restricted Payments made to Holdings (or its direct
or indirect parent entity) pursuant to this clause (iv) are used by Holdings (or
its direct or indirect parent entity) for the purposes specified herein within
20 days of the receipt thereof and (v) Holdings, the Borrower and the
Subsidiaries may make up to $5,000,000 of Restricted Payments in any fiscal year
to their directors, officers or employees in connection with directors’
qualifying shares, incentive shares, management or employee compensation, stock
option or other benefit plans permitted hereunder, including non-cash
repurchases of Equity Interests deemed to occur upon exercise of stock options
if such Equity Interests represent a portion of the purchase price of such
options.

 

(b)   Enter into, incur or permit to exist any agreement or other arrangement
that prohibits, restricts or imposes any condition upon (i) the ability of
Holdings, the Borrower or any Subsidiary to create, incur or permit to exist any
Lien upon any of its property or assets, or (ii) the ability of any Subsidiary
or Joint Venture to pay dividends or other distributions with respect to any of
its Equity Interests or to make or repay loans or advances to the Borrower or
any other Subsidiary or to Guarantee Indebtedness of the Borrower or any other
Subsidiary; provided that (A) the foregoing shall not apply to restrictions and
conditions imposed by law, by the HPUC Decision and Order or by any Loan
Document, (B) the foregoing shall not apply to customary restrictions and
conditions contained in agreements relating to the sale of a Subsidiary pending
such sale, provided such restrictions and conditions apply only to the
Subsidiary that is to be sold and such sale is permitted hereunder, (C) the
foregoing shall not apply to restrictions and conditions imposed on any Foreign
Subsidiary by the terms of any Indebtedness of such Foreign Subsidiary permitted
to be incurred hereunder, (D) clause (i) of the foregoing shall not apply to
restrictions or conditions imposed by any agreement relating to secured
Indebtedness permitted by this Agreement if such restrictions or conditions
apply only to the property or assets securing such Indebtedness and
(E) clause (i) of the foregoing shall not apply to customary provisions in
leases and other contracts restricting the assignment thereof.

 

SECTION 6.07.  Transactions with Affiliates.  Except for transactions between or
among Loan Parties, sell or transfer any property or assets to, or purchase or
acquire any property or assets from, or otherwise engage in (a) any other
transactions with, any of its Affiliates, except that the Borrower or any
Subsidiary may engage in any of the foregoing transactions (i) in the ordinary
course of business at prices and on terms and conditions not less favorable to
the Borrower or such Subsidiary than could be obtained on an arm’s-length basis
from unrelated third parties, or (ii) that have been either (x) approved by a
majority of the independent members of the board of directors of the Borrower
having no, direct or indirect, personal stake or economic interest in such
transactions and certified by a Financial Officer or executive officer of the
Borrower as being on terms and conditions not less favorable to the Borrower or
its Subsidiaries than could be obtained on an arm’s-length basis from a Person
who is not such an Affiliate or (y) have been determined by a nationally
recognized independent appraisal or investment banking firm to be fair, from a
financial standpoint, to the Borrower and its Subsidiaries and are on terms and
conditions not less favorable to the Borrower and its

 

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Subsidiaries than could be obtained on an arm’s-length basis from a Person who
is not such an Affiliate; and (b), without duplication, (i) any Restricted
Payment permitted by Section 6.06; (ii) any employment agreements entered into
by the Borrower or any of its Subsidiaries in the ordinary course of business
and any issuance of securities, or other payments, awards or grants in cash,
securities or otherwise pursuant to, or the funding of, employment arrangements,
stock options and stock ownership plans or similar employee benefit plans
approved in good faith by the board of directors of the Borrower or of a
Subsidiary, as appropriate; provided, that any such issuance, payment, award or
grant constituting a Restricted Payment is otherwise permitted by Section 6.06;
(iii) the grant of stock options or similar rights to employees and directors of
the Borrower pursuant to plans approved by the board of directors of the
Borrower; (iv) loans or advances to employees in the ordinary course of business
which are approved by a majority of the board of directors of the Borrower in
good faith, to the extent permitted by Section 6.04(e); (v) the payment of
customary compensation and reasonable fees to, and indemnity provided on behalf
of, directors, officers, consultants and employees of Holdings, of the Borrower
and of the Subsidiaries; provided, that any such payment constituting a
Restricted Payment is otherwise permitted by Section 6.06; (vi) any purchase by
Holdings of Equity Interests of the Borrower or contributions by Holdings to the
equity capital of the Borrower; provided that any Equity Interests of the
Borrower purchased by Holdings shall be pledged to the Collateral Agent pursuant
to the Collateral Agreement; (vii) transactions with wholly owned Subsidiaries
for the purchase or sale of goods, products, parts and services entered into in
the ordinary course of business in a manner consistent with past practice and
(viii) the entry into and performance of any tax sharing agreement permitted by
Section 6.06.

 

SECTION 6.08.  Business of Holdings, Borrower and Subsidiaries.  (a)  With
respect to Holdings, engage in any business activities or have any assets or
liabilities other than its ownership of the Equity Interests of the Borrower or
any Acquired Entity and the liabilities incidental thereto, including its
liabilities pursuant to the Guarantee and Collateral Agreement.

 

(b)   With respect to the Borrower and its Subsidiaries, engage at any time in
any business or business activity other than the business currently conducted by
it and business activities reasonably incidental thereto.

 

SECTION 6.09.  Other Indebtedness and Agreements.  (a)  Permit (i) any waiver,
supplement, modification, amendment, termination or release of any indenture,
instrument or agreement pursuant to which any Material Indebtedness of Holdings,
the Borrower or any of the Subsidiaries is outstanding if the effect of such
waiver, supplement, modification, amendment, termination or release would
materially increase the obligations of the obligor or confer additional material
rights on the holder of such Indebtedness in a manner adverse to the Lenders or
(ii) any waiver, supplement, modification or amendment of its certificate of
incorporation, by-laws, operating, management or partnership agreement or other
organizational documents to the extent any such waiver, supplement, modification
or amendment would be adverse to the Lenders in any material respect.

 

(b)   Make any distribution, whether in cash, property, securities or a
combination thereof, other than regular scheduled payments of principal and
interest as and when due (to the extent not prohibited by applicable
subordination provisions), in respect of, or pay, or commit to pay, or directly
or indirectly (including pursuant to any Synthetic Purchase Agreement) redeem,

 

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repurchase, retire or otherwise acquire for consideration, or set apart any sum
for the aforesaid purposes, any Indebtedness except (A) the payment of the
Indebtedness created hereunder, (B) refinancings of Indebtedness to the extent
permitted by Section 6.01, (C) the payment of fees and expenses in respect of
any Indebtedness permitted under Section 6.01, other than payments in respect of
Indebtedness prohibited by the subordination provisions hereof, and (D) the
payment of secured Indebtedness that becomes due as a result of the voluntary
sale or transfer of the property or assets securing such Indebtedness.

 

SECTION 6.10.  Capital Expenditures.  Permit the aggregate amount of Capital
Expenditures made by the Borrower and the Subsidiaries in any fiscal year of the
Borrower to exceed $105,000,000.  The amount of permitted Capital Expenditures
set forth in the immediately preceding sentence in respect of any fiscal year
commencing with the fiscal year ending on December 31, 2012 (such amount for any
such Fiscal Year, the “Capital Expenditure Base Amount”), shall be increased
(but not decreased) by (i) any Retained Excess Cash Flow Amount at such time,
(ii) 25% of the revenues attributable to any Permitted Acquisitions occurring
during such fiscal year and (iii) up to 100% of the Capital Expenditure Base
Amount in respect of the immediately preceding fiscal year (and solely the
immediately preceding fiscal year) which was not expended during such fiscal
year (the “Capital Expenditure Carryover Amount”); provided that any Capital
Expenditures made in a particular fiscal year shall first be deemed to have been
made with any available Capital Expenditure Base Amount before any Capital
Expenditure Carryover Amount for such fiscal year is applied.

 

SECTION 6.11.  Interest Coverage Ratio.  Permit the Interest Coverage Ratio for
any period of four consecutive fiscal quarters, in each case taken as one
accounting period, ending on a date set forth below to be less than the ratio
set forth opposite such date or period below:

 

Date or Period

 

Ratio

 

 

 

June 30, 2012

 

4.00:1.00

September 30, 2012

 

4.00:1.00

December 31, 2012

 

4.25:1.00

March 31, 2013

 

4.25:1.00

June 30, 2013

 

4.25:1.00

September 30, 2013

 

4.25:1.00

December 31, 2013

 

4.50:1.00

March 31, 2014

 

4.50:1.00

June 30, 2014

 

4.50:1.00

September 30, 2014

 

4.50:1.00

December 31, 2014

 

4.50:1.00

March 31, 2015

 

4.50:1.00

June 30, 2015

 

4.50:1.00

September 30, 2015

 

4.50:1.00

December 31, 2015

 

4.50:1.00

March 31, 2016

 

4.50:1.00

June 30, 2016

 

4.50:1.00

September 30, 2016

 

4.50:1.00

 

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Date or Period

 

Ratio

 

 

 

December 31, 2016

 

4.50:1.00

March 31, 2017

 

4.50:1.00

 

SECTION 6.12.  Maximum Leverage Ratio.  Permit the Leverage Ratio as of the date
specified below to be greater than the ratio set forth opposite such date below
for the period of four consecutive fiscal quarters ending on such date:

 

Date

 

Ratio

 

 

 

June 30, 2012

 

3.25:1.00

September 30, 2012

 

3.25:1.00

December 31, 2012

 

3.00:1.00

March 31, 2013

 

3.00:1.00

June 30, 2013

 

3.00:1.00

September 30, 2013

 

3.00:1.00

December 31, 2013

 

2.75:1.00

March 31, 2014

 

2.75:1.00

June 30, 2014

 

2.75:1.00

September 30, 2014

 

2.75:1.00

December 31, 2014

 

2.75:1.00

March 31, 2015

 

2.50:1.00

June 30, 2015

 

2.50:1.00

September 30, 2015

 

2.50:1.00

December 31, 2015

 

2.50:1.00

March 31, 2016

 

2.50:1.00

June 30, 2016

 

2.50:1.00

September 30, 2016

 

2.50:1.00

December 31, 2016

 

2.25:1.00

March 31, 2017

 

2.25:1.00

 

SECTION 6.13.  Fiscal Year.  With respect to Holdings and the Borrower, change
their fiscal year-end to a date other than December 31.

 

SECTION 6.14.  Certain Equity Securities.  Issue any Equity Interest that is not
Qualified Capital Stock.

 

ARTICLE VII

 

Events of Default

 

In case of the happening of any of the following events (“Events of Default”):

 

(a) any representation or warranty made or deemed made in or in connection with
any Loan Document or the borrowings hereunder, or any representation, warranty,

 

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statement or information contained in any report, certificate, financial
statement or other instrument furnished in connection with or pursuant to any
Loan Document, shall prove to have been incorrect in any material respect when
so made, deemed made or furnished;

 

(b) default shall be made in the payment of any principal of any Loan when and
as the same shall become due and payable, whether at the due date thereof or at
a date fixed for prepayment thereof or by acceleration thereof or otherwise;

 

(c) default shall be made in the payment of any interest on any Loan or the
Administrative Agent Fee or any other amount (other than an amount referred to
in (b) above) due under any Loan Document, when and as the same shall become due
and payable, and such default shall continue unremedied for a period of three
Business Days;

 

(d) default shall be made in the due observance or performance by Holdings, the
Borrower or any Subsidiary of any covenant, condition or agreement contained in
Section 5.01(a), 5.02, 5.05 or 5.08 or in Article VI;

 

(e) default shall be made in the due observance or performance by Holdings, the
Borrower or any Subsidiary of any covenant, condition or agreement contained in
any Loan Document (other than those specified in (b), (c) or (d) above) and such
default shall continue unremedied for a period of 30 days after notice thereof
from the Administrative Agent to the Borrower (which notice shall also be given
at the request of any Lender);

 

(f) (i)  Holdings, the Borrower or any Subsidiary shall fail to pay any
principal or interest, regardless of amount, due in respect of any Material
Indebtedness, when and as the same shall become due and payable (after giving
effect to any applicable grace period specified in the agreement or instrument
governing such Indebtedness), (ii) any other event or condition occurs that
results in any Material Indebtedness becoming due prior to its scheduled
maturity or that enables or permits (with or without the giving of notice but
after giving effect to any applicable grace period specified in the agreement or
instrument governing such Indebtedness) the holder or holders of any Material
Indebtedness or any trustee or agent on its or their behalf to cause any
Material Indebtedness to become due, or to require the prepayment, repurchase,
redemption or defeasance thereof, prior to its scheduled maturity; provided that
this clause (ii) shall not apply to secured Indebtedness that becomes due as a
result of the voluntary sale or transfer of the property or assets securing such
Indebtedness or (iii) an “Event of Default” (as defined in the Revolving
Facility Agreement) shall have occurred;

 

(g) an involuntary proceeding shall be commenced or an involuntary petition
shall be filed in a court of competent jurisdiction seeking (i) relief in
respect of Holdings, the Borrower or any Subsidiary, or of a substantial part of
the property or assets of Holdings, the Borrower or a Subsidiary, under Title 11
of the United States Code, as now constituted or hereafter amended, or any other
Federal, state or foreign bankruptcy, insolvency, receivership or similar law,
(ii) the appointment of a receiver, trustee, custodian, sequestrator,
conservator or similar official for Holdings, the Borrower or any

 

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Subsidiary or for a substantial part of the property or assets of Holdings, the
Borrower or a Subsidiary or (iii) the winding-up or liquidation of Holdings, the
Borrower or any Subsidiary; and such proceeding or petition shall continue
undismissed for 60 days or an order or decree approving or ordering any of the
foregoing shall be entered;

 

(h) Holdings, the Borrower or any Subsidiary shall (i) voluntarily commence any
proceeding or file any petition seeking relief under Title 11 of the United
States Code, as now constituted or hereafter amended, or any other Federal,
state or foreign bankruptcy, insolvency, receivership or similar law,
(ii) consent to the institution of, or approve, acquiesce to or take any action
in furtherance of, any proceeding or the filing of any petition described in
(g) above, (iii) apply for or consent to the appointment of a receiver, trustee,
custodian, sequestrator, conservator or similar official for Holdings, the
Borrower or any Subsidiary or for a substantial part of the property or assets
of Holdings, the Borrower or any Subsidiary, (iv) file an answer admitting the
material allegations of a petition filed against it in any such proceeding that
would entitle the other party or parties to an order for relief, (v) make a
general assignment for the benefit of creditors, or (vi) become unable, admit in
writing its inability or fail generally to pay its debts as they become due;

 

(i) one or more judgments shall be rendered against Holdings, the Borrower, any
Subsidiary or any combination thereof and the same shall remain undischarged for
a period of 45 consecutive days during which execution shall not be effectively
stayed, or any action shall be legally taken by a judgment creditor to levy upon
assets or properties of Holdings, the Borrower or any Subsidiary to enforce any
such judgment and such judgment (i) is for the payment of money in an aggregate
amount in excess of $7,500,000 or (ii) could reasonably be expected to result in
a Material Adverse Effect;

 

(j) an ERISA Event shall have occurred that, in the opinion of the Required
Lenders, when taken together with all other such ERISA Events, could reasonably
be expected to result in liability of the Borrower and its ERISA Affiliates in
an aggregate amount exceeding $7,500,000;

 

(k) any Guarantee under the Guarantee and Collateral Agreement for any reason
shall cease to be in full force and effect (other than in accordance with its
terms), or any Guarantor shall deny in writing that it has any further liability
under the Guarantee and Collateral Agreement (other than as a result of the
discharge of such Guarantor in accordance with the terms of the Loan Documents);

 

(l) any security interest purported to be created by any Security Document shall
cease to be, or shall be asserted by the Borrower or any other Loan Party not to
be, a valid, perfected, first priority (except as otherwise expressly provided
in this Agreement or such Security Document) security interest in a material
portion of the securities, assets or properties covered thereby, except as a
result of the sale or other disposition of the applicable Collateral in a
transactions permitted under the Loan Documents; or

 

(m) there shall have occurred a Change in Control;

 

(n) the HPUC shall have removed its approval of the Borrower’s consummation of
the Transactions or placed conditions upon its approval that are materially
different

 

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from those set forth in the HPUC Decision and Order and could reasonably be
expected to have a Material Adverse Effect; or

 

(o) the DCCA shall have removed its approval of the Borrower’s consummation of
the Transactions or placed conditions upon its approval that are materially
different from those set forth in the DCCA Decision and Order and could
reasonably be expected to have a Material Adverse Effect;

 

then, and in every such event (other than an event with respect to Holdings or
the Borrower described in paragraph (g) or (h) above) the Commitments shall
automatically terminate and, at any time thereafter during the continuance of
such event, the Administrative Agent may, and at the request of the Required
Lenders shall, by notice to the Borrower, declare the Loans then outstanding to
be forthwith due and payable in whole or in part, whereupon the principal of the
Loans so declared to be due and payable, together with accrued interest thereon
and any unpaid accrued Administrative Agent Fees and all other liabilities of
the Borrower accrued hereunder and under any other Loan Document, shall become
forthwith due and payable, without presentment, demand, protest or any other
notice of any kind, all of which are hereby expressly waived by the Borrower,
anything contained herein or in any other Loan Document to the contrary
notwithstanding; and in any event with respect to Holdings or the Borrower
described in paragraph (g) or (h) above, the Commitments shall automatically
terminate and the principal of the Loans then outstanding, together with accrued
interest thereon and any unpaid accrued Administrative Agent Fees and all other
liabilities of the Borrower accrued hereunder and under any other Loan Document,
shall automatically become due and payable, without presentment, demand, protest
or any other notice of any kind, all of which are hereby expressly waived by the
Borrower, anything contained herein or in any other Loan Document to the
contrary notwithstanding.

 

ARTICLE VIII

 

The Administrative Agent and the Collateral Agent; Etc.

 

Each Lender hereby irrevocably appoints the Administrative Agent and the
Collateral Agent (for purposes of this Article VIII, the Administrative Agent
and the Collateral Agent are referred to collectively as the “Agents”) its agent
and authorizes the Agents to take such actions on its behalf and to exercise
such powers as are delegated to such Agent by the terms of the Loan Documents,
together with such actions and powers as are reasonably incidental thereto. 
Without limiting the generality of the foregoing, the Agents are hereby
expressly authorized to (i) execute any and all documents (including releases)
with respect to the Collateral and the rights of the Secured Parties with
respect thereto, as contemplated by and in accordance with the provisions of
this Agreement and the Security Documents and (ii) negotiate, enforce or the
settle any claim, action or proceeding affecting the Lenders in their capacity
as such, at the direction of the Required Lenders, which negotiation,
enforcement or settlement will be binding upon each Lender.

 

The institution serving as the Administrative Agent and/or the Collateral Agent
hereunder shall have the same rights and powers in its capacity as a Lender as
any other Lender and may exercise the same as though it were not an Agent, and
such bank and its Affiliates may accept

 

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deposits from, lend money to and generally engage in any kind of business with
Holdings, the Borrower or any Subsidiary or other Affiliate thereof as if it
were not an Agent hereunder.

 

Neither Agent shall have any duties or obligations except those expressly set
forth in the Loan Documents.  Without limiting the generality of the foregoing,
(a) neither Agent shall be subject to any fiduciary or other implied duties,
regardless of whether a Default has occurred and is continuing, (b) neither
Agent shall have any duty to take any discretionary action or exercise any
discretionary powers, except discretionary rights and powers expressly
contemplated hereby that such Agent is instructed in writing to exercise by the
Required Lenders (or such other number or percentage of the Lenders as shall be
necessary under the circumstances as provided in Section 9.08), and (c) except
as expressly set forth in the Loan Documents, neither Agent shall have any duty
to disclose, nor shall it be liable for the failure to disclose, any information
relating to Holdings, the Borrower or any of the Subsidiaries that is
communicated to or obtained by the bank serving as Administrative Agent and/or
Collateral Agent or any of its Affiliates in any capacity. Neither Agent shall
be liable for any action taken or not taken by it with the consent or at the
request of the Required Lenders (or such other number or percentage of the
Lenders as shall be necessary under the circumstances as provided in
Section 9.08) or in the absence of its own gross negligence or willful
misconduct.  Neither Agent shall be deemed to have knowledge of any Default
unless and until written notice thereof is given to such Agent by Holdings, the
Borrower or a Lender, and neither Agent shall be responsible for or have any
duty to ascertain or inquire into (i) any statement, warranty or representation
made in or in connection with any Loan Document, (ii) the contents of any
certificate, report or other document delivered thereunder or in connection
therewith, (iii) the performance or observance of any of the covenants,
agreements or other terms or conditions set forth in any Loan Document, (iv) the
validity, enforceability, effectiveness or genuineness of any Loan Document or
any other agreement, instrument or document, or (v) the satisfaction of any
condition set forth in Article IV or elsewhere in any Loan Document, other than
to confirm receipt of items expressly required to be delivered to such Agent.

 

Each Agent shall be entitled to rely upon, and shall not incur any liability for
relying upon, any notice, request, certificate, consent, statement, instrument,
document or other writing believed by it to be genuine and to have been signed
or sent by the proper Person.  Each Agent may also rely upon any statement made
to it orally or by telephone and believed by it to have been made by the proper
Person, and shall not incur any liability for relying thereon.  Each Agent may
consult with legal counsel (who may be counsel for the Borrower), independent
accountants and other experts selected by it, and shall not be liable for any
action taken or not taken by it in accordance with the advice of any such
counsel, accountants or experts.

 

Each Agent may perform any and all its duties and exercise its rights and powers
by or through any one or more sub-agents appointed by it.  Each Agent and any
such sub-agent may perform any and all its duties and exercise its rights and
powers by or through their respective Related Parties.  The exculpatory
provisions of the preceding paragraphs shall apply to any such sub-agent and to
the Related Parties of each Agent and any such sub-agent, and shall apply to
their respective activities in connection with the syndication of the Credit
Facilities as well as activities as Agent.

 

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Subject to the appointment and acceptance of a successor Agent as provided
below, either Agent may resign at any time by notifying the Lenders and the
Borrower.  Upon any such resignation, the Required Lenders shall have the right
to appoint a successor subject, except after the occurrence and during the
continuance of a Default or an Event of Default, to the consent of the Borrower
(such consent not to be unreasonably withheld or delayed).  If no successor
shall have been so appointed by the Required Lenders and shall have accepted
such appointment within 30 days after the retiring Agent gives notice of its
resignation, then the retiring Agent may, on behalf of the Lenders, appoint a
successor Agent which shall be a bank with an office in New York, New York, or
an Affiliate of any such bank.  If no successor Agent has been appointed
pursuant to the immediately preceding sentence by the 30th day after the date
such notice of resignation was given by such Agent, such Agent’s resignation
shall become effective and the Required Lenders shall thereafter perform all the
duties of such Agent hereunder and/or under any other Loan Document until such
time, if any, as the Required Lenders appoint a successor Administrative Agent
and/or Collateral Agent, as the case may be.  Upon the acceptance of its
appointment as Agent hereunder by a successor, such successor shall succeed to
and become vested with all the rights, powers, privileges and duties of the
retiring Agent, and the retiring Agent shall be discharged from its duties and
obligations hereunder.  The fees payable by the Borrower to a successor Agent
shall be the same as those payable to its predecessor unless otherwise agreed
between the Borrower and such successor.  After an Agent’s resignation
hereunder, the provisions of this Article and Section 9.05 shall continue in
effect for the benefit of such retiring Agent, its sub-agents and their
respective Related Parties in respect of any actions taken or omitted to be
taken by any of them while acting as Agent.

 

Each Lender acknowledges that it has, independently and without reliance upon
the Agents or any other Lender and based on such documents and information as it
has deemed appropriate, made its own credit analysis and decision to enter into
this Agreement.  Each Lender also acknowledges that it will, independently and
without reliance upon the Agents or any other Lender and based on such documents
and information as it shall from time to time deem appropriate, continue to make
its own decisions in taking or not taking action under or based upon this
Agreement or any other Loan Document, any related agreement or any document
furnished hereunder or thereunder.

 

Notwithstanding any other provision of this Agreement or any provision of any
other Loan Document, the Lead Arranger is named as such for recognition purposes
only, and in its capacity as such shall have no duties, responsibilities or
liabilities with respect to this Agreement or any other Loan Document; it being
understood and agreed that the Lead Arranger shall be entitled to all
indemnification and reimbursement rights in favor of the Agents provided herein
and in the other Loan Documents.  Without limitation of the foregoing, the Lead
Arranger in its capacity as such shall, by reason of this Agreement or any other
Loan Document, have any fiduciary relationship in respect of any Lender, Loan
Party or any other Person.

 

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ARTICLE IX

 

Miscellaneous

 

SECTION 9.01.  Notices; Electronic Communications.  Notices and other
communications provided for herein shall be in writing and shall be delivered by
hand or overnight courier service, mailed by certified or registered mail or
sent by fax, as follows:

 

(a)   if to the Borrower, Holdings, any other Guarantor or any Grantor (as
defined in he Guarantee and Collateral Agreement), to it at 1177 Bishop Street,
Honolulu, Hawaii 96813, Attention of Robert Reich, Chief Financial Officer (Fax
No. 808-546-8957) with a copy to Leonard Klingbaum, Kirkland & Ellis LLP, 601
Lexington Avenue, New York, New York 10022 (Fax No. 212-446-6460, Email:
leonard.klingbaum@kirkland.com);

 

(b)   if to the Administrative Agent, to Credit Suisse, Agency Manager, One
Madison Avenue, New York, NY 10010, Fax No. 212-322-2291, Email: 
agency.loanops@credit-suisse.com; and

 

(c)   if to a Lender, to it at its address (or fax number) set forth on Schedule
2.01 or in the Assignment and Acceptance pursuant to which such Lender shall
have become a party hereto.

 

All notices and other communications given to any party hereto in accordance
with the provisions of this Agreement shall be deemed to have been given on the
date of receipt if delivered by hand or overnight courier service or sent by fax
or on the date five Business Days after dispatch by certified or registered mail
if mailed, in each case delivered, sent or mailed (properly addressed) to such
party as provided in this Section 9.01 or in accordance with the latest
unrevoked direction from such party given in accordance with this Section 9.01. 
As agreed to among Holdings, the Borrower, the Administrative Agent and the
applicable Lenders from time to time, notices and other communications may also
be delivered by e-mail to the e-mail address of a representative of the
applicable Person provided from time to time by such Person.

 

The Borrower hereby agrees, unless directed otherwise by the Administrative
Agent or unless the electronic mail address referred to below has not been
provided by the Administrative Agent to the Borrower, that it will, or will
cause its Subsidiaries to, provide to the Administrative Agent all information,
documents and other materials that it is obligated to furnish to the
Administrative Agent pursuant to the Loan Documents or to the Lenders under
Article 5, including all notices, requests, financial statements, financial and
other reports, certificates and other information materials, but excluding any
such communication that (i) is or relates to a Borrowing Request or a notice
pursuant to Section 2.10, (ii) relates to the payment of any principal or other
amount due under this Agreement prior to the scheduled date therefor,
(iii) provides notice of any Default or Event of Default under this Agreement or
any other Loan Document or (iv) is required to be delivered to satisfy any
condition precedent to the effectiveness of this Agreement and/or any Borrowing
or other extension of credit hereunder (all such non-excluded communications
being referred to herein collectively as “Communications”), by transmitting the
Communications in an electronic/soft medium that is properly identified in a
format acceptable to the Administrative Agent to an electronic mail address as
directed by the Administrative Agent.  In addition, the Borrower agrees, and
agrees to cause its Subsidiaries, to

 

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continue to provide the Communications to the Administrative Agent or the
Lenders, as the case may be, in the manner specified in the Loan Documents but
only to the extent requested by the Administrative Agent.

 

The Borrower hereby acknowledges that (a) the Administrative Agent will make
available to the Lenders materials and/or information provided by or on behalf
of the Borrower hereunder (collectively, the “Borrower Materials”) by posting
the Borrower Materials on Intralinks or another similar electronic system (the
“Platform”) and (b) certain of the Lenders may be “public-side” Lenders (i.e.,
Lenders that do not wish to receive material non-public information with respect
to the Borrower or its securities) (each, a “Public Lender”).  The Borrower
hereby agrees that (w) all Borrower Materials that are to be made available to
Public Lenders shall be clearly and conspicuously marked “PUBLIC” which, at a
minimum, shall mean that the word “PUBLIC” shall appear prominently on the first
page thereof; (x) by marking Borrower Materials “PUBLIC,” the Borrower shall be
deemed to have authorized the Administrative Agent and the Lenders to treat such
Borrower Materials as not containing any material non-public information with
respect to the Borrower or its securities for purposes of United States federal
and state securities laws (provided, however, that to the extent such Borrower
Materials constitute Information, they shall be treated as set forth in
Section 11.07); (y) all Borrower Materials marked “PUBLIC” are permitted to be
made available through a portion of the Platform designated as “Public
Investor;” and (z) the Administrative Agent shall be entitled to treat any
Borrower Materials that are not marked “PUBLIC” as being suitable only for
posting on a portion of the Platform not marked as “Public Investor.”
Notwithstanding the foregoing, the following Borrower Materials shall be marked
“PUBLIC”, unless the Borrower notifies the Administrative Agent promptly that
any such document contains material non-public information: (1) the Loan
Documents and (2) notification of changes in the terms of the Facilities.

 

Each Public Lender agrees to cause at least one individual at or on behalf of
such Public Lender to at all times have selected the “Private Side Information”
or similar designation on the content declaration screen of the Platform in
order to enable such Public Lender or its delegate, in accordance with such
Public Lender’s compliance procedures and applicable law, including United
States Federal and state securities laws, to make reference to Communications
that are not made available through the “Public Side Information” portion of the
Platform and that may contain material non-public information with respect to
the Borrower or its securities for purposes of United States Federal or state
securities laws.

 

THE PLATFORM IS PROVIDED “AS IS” AND “AS AVAILABLE”.  NEITHER THE ADMINISTRATIVE
AGENT NOR ANY OF ITS RELATED PARTIES WARRANTS THE ACCURACY OR COMPLETENESS OF
THE COMMUNICATIONS OR THE ADEQUACY OF THE PLATFORM AND EACH EXPRESSLY DISCLAIMS
LIABILITY FOR ERRORS OR OMISSIONS IN THE COMMUNICATIONS.  NO WARRANTY OF ANY
KIND, EXPRESS, IMPLIED OR STATUTORY, INCLUDING ANY WARRANTY OF MERCHANTABILITY,
FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT OF THIRD PARTY RIGHTS OR
FREEDOM FROM VIRUSES OR OTHER CODE DEFECTS IS MADE BY THE ADMINISTRATIVE AGENT
OR ANY OF ITS RELATED PARTIES IN

 

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CONNECTION WITH THE COMMUNICATIONS OR THE PLATFORM.  IN NO EVENT SHALL THE
ADMINISTRATIVE AGENT OR ANY OF ITS RELATED PARTIES HAVE ANY LIABILITY TO ANY
LOAN PARTY, ANY LENDER OR ANY OTHER PERSON FOR DAMAGES OF ANY KIND, WHETHER OR
NOT BASED ON STRICT LIABILITY AND INCLUDING DIRECT OR INDIRECT,
SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES, LOSSES OR EXPENSES (WHETHER IN
TORT, CONTRACT OR OTHERWISE) ARISING OUT OF ANY LOAN PARTY’S OR THE
ADMINISTRATIVE AGENT’S TRANSMISSION OF COMMUNICATIONS THROUGH THE INTERNET,
EXCEPT TO THE EXTENT THE LIABILITY OF ANY SUCH PERSON IS FOUND IN A FINAL RULING
BY A COURT OF COMPETENT JURISDICTION TO HAVE RESULTED PRIMARILY FROM SUCH
PERSON’S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT.

 

The Administrative Agent agrees that the receipt of the Communications by the
Administrative Agent at its e-mail address set forth above shall constitute
effective delivery of the Communications to the Administrative Agent for
purposes of the Loan Documents.  Each Lender agrees that receipt of notice to it
(as provided in the next sentence) specifying that the Communications have been
posted to the Platform shall constitute effective delivery of the Communications
to such Lender for purposes of the Loan Documents.  Each Lender agrees to notify
the Administrative Agent in writing (including by electronic communication) from
time to time of such Lender’s e-mail address to which the foregoing notice may
be sent by electronic transmission and that the foregoing notice may be sent to
such e-mail address.

 

SECTION 9.02.  Survival of Agreement.  Nothing herein shall prejudice the right
of the Administrative Agent or any Lender to give any notice or other
communication pursuant to any Loan Document in any other manner specified in
such Loan Document. All covenants, agreements, representations and warranties
made by the Borrower or Holdings herein and in the certificates or other
instruments prepared or delivered in connection with or pursuant to this
Agreement or any other Loan Document shall be considered to have been relied
upon by the Lenders and shall survive the making by the Lenders of the Loans,
regardless of any investigation made by the Lenders or on their behalf, and
shall continue in full force and effect as long as the principal of or any
accrued interest on any Loan or any Administrative Agent Fee or any other amount
payable under this Agreement or any other Loan Document is outstanding and
unpaid and so long as the Commitments have not been terminated.  The provisions
of Sections 2.14, 2.16, 2.20 and 9.05 shall remain operative and in full force
and effect regardless of the expiration of the term of this Agreement, the
consummation of the transactions contemplated hereby, the repayment of any of
the Loans, the expiration of the Commitments, 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 Administrative Agent, the Collateral
Agent or any Lender.

 

SECTION 9.03.  Binding Effect.  This Agreement shall become effective when it
shall have been executed by the Borrower, Holdings and the Administrative Agent
and when the Administrative Agent shall have received counterparts hereof which,
when taken together, bear the signatures of each of the other parties hereto.

 

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SECTION 9.04.  Successors and Assigns.  (a)  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 the Borrower, Holdings, the Administrative Agent,
the Collateral Agent or the Lenders that are contained in this Agreement shall
bind and inure to the benefit of their respective successors and assigns.

 

(b)   Each Lender may assign to one or more Eligible Assignees all or a portion
of its interests, rights and obligations under this Agreement (including all or
a portion of its Commitment and the Loans at the time owing to it), with notice
to the Borrower (failure to provide or delay in providing such notice shall not
invalidate such assignment) and, unless the assignment is to a Lender, an
Affiliate of a Lender or a Related Fund, with the prior written consent of the
Administrative Agent (not to be unreasonably withheld or delayed); provided,
however, that (i) the amount of the Commitment or Loans of the assigning Lender
subject to each such assignment (determined as of the date the Assignment and
Acceptance with respect to such assignment is delivered to the Administrative
Agent) shall be in an integral multiple of, and not less than, $1,000,000 (or,
if less, the entire remaining amount of such Lender’s Commitment or Loans of the
relevant Class); provided that simultaneous assignments by two or more Related
Funds shall be combined for purposes of determining whether the minimum
assignment requirement is met, (ii) the parties to each assignment shall
(A) execute and deliver to the Administrative Agent an Assignment and Acceptance
via an electronic settlement system acceptable to the Administrative Agent or
(B) if previously agreed with the Administrative Agent, manually execute and
deliver to the Administrative Agent an Assignment and Acceptance, and, in each
case, shall pay to the Administrative Agent a processing and recordation fee of
$3,500 (which fee may be waived or reduced in the sole discretion of the
Administrative Agent), and (iii) the assignee, if it shall not be a Lender,
shall deliver to the Administrative Agent an Administrative Questionnaire (in
which the assignee shall designate one or more credit contacts to whom all
syndicate-level information (which may contain material non-public information
about the Loan Parties and their Related Parties or their respective securities)
will be made available and who may receive such information in accordance with
the assignee’s compliance procedures and applicable laws, including Federal and
state securities laws) and all applicable tax forms.  Upon acceptance and
recording pursuant to paragraph (e) of this Section 9.04, from and after the
effective date specified in each Assignment and Acceptance, (A) the assignee
thereunder shall be a party hereto and, to the extent of the interest assigned
by such Assignment and Acceptance, have the rights and obligations of a Lender
under this Agreement and (B) the assigning Lender thereunder shall, to the
extent of the interest assigned by such Assignment and Acceptance, be released
from its obligations under this Agreement (and, in the case of an Assignment and
Acceptance covering all or the remaining portion of an assigning Lender’s rights
and obligations under this Agreement, such Lender shall cease to be a party
hereto but shall continue to be entitled to the benefits of Sections 2.14, 2.16,
2.20 and 9.05).

 

(c)   By executing and delivering an Assignment and Acceptance, the assigning
Lender thereunder and the assignee thereunder shall be deemed to confirm to and
agree with each other and the other parties hereto as follows:  (i) such
assigning Lender warrants that it is the legal and beneficial owner of the
interest being assigned thereby free and clear of any adverse claim and that its
Term Loan Commitment, and the outstanding balances of its Term Loans without
giving

 

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effect to assignments thereof which have not become effective, are as set forth
in such Assignment and Acceptance, (ii) except as set forth in (i) above, such
assigning Lender makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or representations
made in or in connection with this Agreement, or the execution, legality,
validity, enforceability, genuineness, sufficiency or value of this Agreement,
any other Loan Document or any other instrument or document furnished pursuant
hereto, or the financial condition of the Borrower or any Subsidiary or the
performance or observance by the Borrower or any Subsidiary of any of its
obligations under this Agreement, any other Loan Document or any other
instrument or document furnished pursuant hereto; (iii) such assignee represents
and warrants that it is legally authorized to enter into such Assignment and
Acceptance and that it is not a Designated Entity; (iv) such assignee confirms
that it has received a copy of this Agreement, together with copies of the most
recent financial statements referred to in Section 3.05(a) or delivered pursuant
to Section 5.04 and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into such
Assignment and Acceptance; (v) such assignee will independently and without
reliance upon the Administrative Agent, the Collateral Agent, such assigning
Lender or any other Lender and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit decisions in
taking or not taking action under this Agreement; (vi) such assignee appoints
and authorizes the Administrative Agent and the Collateral Agent to take such
action as agent on its behalf and to exercise such powers under this Agreement
as are delegated to the Administrative Agent and the Collateral Agent,
respectively, by the terms hereof, together with such powers as are reasonably
incidental thereto; and (vii) such assignee agrees that it will perform in
accordance with their terms all the obligations which by the terms of this
Agreement are required to be performed by it as a Lender.

 

(d)   The Administrative Agent, acting for this purpose as an agent of the
Borrower, shall maintain at one of its offices in The City of New York a copy of
each Assignment and Acceptance delivered to it and a register for the
recordation of the names and addresses of the Lenders, and the Commitment of,
and principal amount of the Loans owing to, each Lender pursuant to the terms
hereof from time to time (the “Register”).  The entries in the Register shall be
conclusive and the Borrower, the Administrative Agent, the Collateral Agent and
the Lenders may treat each Person whose name is recorded in the Register
pursuant to the terms hereof as a Lender hereunder for all purposes of this
Agreement, notwithstanding notice to the contrary.  The Register shall be
available for inspection by the Borrower, the Collateral Agent and any Lender,
at any reasonable time and from time to time upon reasonable prior notice.

 

(e)   Upon its receipt of, and consent to, a duly completed Assignment and
Acceptance executed by an assigning Lender and an assignee, an Administrative
Questionnaire completed in respect of the assignee (unless the assignee shall
already be a Lender hereunder), the processing and recordation fee referred to
in paragraph (b) above, if applicable, and the written consent of the
Administrative Agent to such assignment and any applicable tax forms, the
Administrative Agent shall (i) accept such Assignment and Acceptance and
(ii) record the information contained therein in the Register. No assignment
shall be effective unless it has been recorded in the Register as provided in
this paragraph (e).

 

(f)   Each Lender may without the consent of the Borrower or the Administrative
Agent sell participations to one or more banks or other Persons in all or a
portion of its rights and

 

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obligations under this Agreement (including all or a portion of its Commitment
and the Loans owing to it); provided, however, that (i) such Lender’s
obligations under this Agreement shall remain unchanged, (ii) such Lender shall
remain solely responsible to the other parties hereto for the performance of
such obligations, (iii) the participating banks or other Persons shall be
entitled to the benefit of the cost protection provisions contained in
Sections 2.14, 2.16 and 2.20 to the same extent as if they were Lenders (but,
with respect to any particular participant, to no greater extent than the Lender
that sold the participation to such participant) and (iv) the Borrower, the
Administrative Agent and the Lenders shall continue to deal solely and directly
with such Lender in connection with such Lender’s rights and obligations under
this Agreement, and such Lender shall retain the sole right to enforce the
obligations of the Borrower relating to the Loans and to approve any amendment,
modification or waiver of any provision of this Agreement (other than
amendments, modifications or waivers decreasing any fees payable to such
participating bank or Person hereunder or the amount of principal of or the rate
at which interest is payable on the Loans in which such participating bank or
Person has an interest, extending any scheduled principal payment date or date
fixed for the payment of interest on the Loans in which such participating bank
or Person has an interest, increasing or extending the Commitments in which such
participating bank or Person has an interest or releasing any Guarantor (other
than in connection with the sale of such Guarantor in a transaction permitted by
Section 6.05) or all or substantially all of the Collateral).  To the extent
permitted by law, each participating bank or other Person also shall be entitled
to the benefits of Section 9.06 as though it were a Lender, provided such
participating bank or other Person agrees to be subject to Section 2.18 as
though it were a Lender.  Each Lender that sells a participation, acting solely
for this purpose as an agent of the Borrower, shall maintain a register on which
it enters the name and address of each participant and the principal amounts
(and stated interest) of each participant’s interest in the Loans or other
obligations under this Agreement (the “Participant Register”); provided that no
Lender shall have any obligation to disclose all or any portion of the
Participant Register to any Person (including the identity of any Participant or
any information relating to a Participant’s interest in any Loans or its other
obligations under any Loan Document) except to the extent that such disclosure
is necessary to establish that such Loan or other obligation is in registered
form under Section 5f.103-1(c) of the United States Treasury Regulations.

 

(g)   Any Lender or participant may, in connection with any assignment or
participation or proposed assignment or participation pursuant to this
Section 9.04, disclose to the assignee or participant or proposed assignee or
participant any information relating to the Borrower furnished to such Lender by
or on behalf of the Borrower; provided that, prior to any such disclosure of
information designated by the Borrower as confidential, each such assignee or
participant or proposed assignee or participant shall execute an agreement
whereby such assignee or participant shall agree (subject to customary
exceptions) to preserve the confidentiality of such confidential information on
terms no less restrictive than those applicable to the Lenders pursuant to
Section 9.16.

 

(h)   Any Lender may at any time assign all or any portion of its rights under
this Agreement to secure extensions of credit to such Lender or in support of
obligations owed by such Lender; provided that no such assignment shall release
a Lender from any of its obligations hereunder or substitute any such assignee
for such Lender as a party hereto.

 

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(i)   Notwithstanding anything to the contrary contained herein, any Lender (a
“Granting Lender”) may grant to a special purpose funding vehicle (an “SPV”),
identified as such in writing from time to time by the Granting Lender to the
Administrative Agent and the Borrower, the option to provide to the Borrower all
or any part of any Loan that such Granting Lender would otherwise be obligated
to make to the Borrower pursuant to this Agreement; provided that (i) nothing
herein shall constitute a commitment by any SPV to make any Loan and (ii) if an
SPV elects not to exercise such option or otherwise fails to provide all or any
part of such Loan, the Granting Lender shall be obligated to make such Loan
pursuant to the terms hereof.  The making of a Loan by an SPV hereunder shall
utilize the Commitment of the Granting Lender to the same extent, and as if,
such Loan were made by such Granting Lender.  Each party hereto hereby agrees
that no SPV shall be liable for any indemnity or similar payment obligation
under this Agreement (all liability for which shall remain with the Granting
Lender).  In furtherance of the foregoing, each party hereto hereby agrees
(which agreement shall survive the termination of this Agreement) that, prior to
the date that is one year and one day after the payment in full of all
outstanding commercial paper or other senior indebtedness of any SPV, it will
not institute against, or join any other Person in instituting against, such SPV
any bankruptcy, reorganization, arrangement, insolvency or liquidation
proceedings under the laws of the United States or any State thereof.  In
addition, notwithstanding anything to the contrary contained in this
Section 9.04, any SPV may (i) with notice to, but without the prior written
consent of, the Borrower and the Administrative Agent and without paying any
processing fee therefor, assign all or a portion of its interests in any Loans
to the Granting Lender or to any financial institutions (consented to by the
Borrower and Administrative Agent) providing liquidity and/or credit support to
or for the account of such SPV to support the funding or maintenance of Loans
and (ii) disclose on a confidential basis any non-public information relating to
its Loans to any rating agency, commercial paper dealer or provider of any
surety, guarantee or credit or liquidity enhancement to such SPV.

 

(j)   Neither Holdings nor the Borrower shall assign or delegate any of its
rights or duties hereunder without the prior written consent of the
Administrative Agent and each Lender, and any attempted assignment without such
consent shall be null and void.

 

SECTION 9.05.  Expenses; Indemnity.  (a)   The Borrower and Holdings agree,
jointly and severally, to pay all reasonable out-of-pocket expenses incurred by
the Lead Arranger, the Administrative Agent and the Collateral Agent in
connection with the syndication of the Credit Facilities and the preparation and
administration of this Agreement and the other Loan Documents or in connection
with any amendments, modifications or waivers of the provisions hereof or
thereof (whether or not the transactions hereby or thereby contemplated shall be
consummated), and all reasonable out-of-pocket expenses incurred by the Lead
Arranger, the Administrative Agent, the Collateral Agent or any Lender in
connection with the enforcement or protection of its rights in connection with
this Agreement and the other Loan Documents or in connection with the Loans made
hereunder, including the reasonable fees, charges and disbursements of
Shearman & Sterling LLP, counsel for the Administrative Agent and the Collateral
Agent, and, in connection with any such enforcement or protection, the
reasonable and documented fees, charges and disbursements of one primary
counsel, one local counsel and one special counsel for the Administrative Agent,
the Collateral Agent and the Lenders, collectively (except that, in the case of
an actual or perceived conflict among any of the Lenders, the Lead Arranger, the
Administrative Agent or the Collateral Agent, the fees and expenses of one

 

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separate counsel for all persons similarly situated as required to address such
conflict shall also be reimbursed).

 

(b)   The Borrower and Holdings agree, jointly and severally, to indemnify the
Lead Arranger, the Administrative Agent, the Collateral Agent, each Lender and
each Related Party of any of the foregoing Persons (each such Person being
called an “Indemnitee”) against, and to hold each Indemnitee harmless from, any
and all losses, claims, damages, liabilities and related expenses, including
reasonable and documented counsel fees, charges and disbursements, incurred by
or asserted against any Indemnitee arising out of, in any way connected with, or
as a result of any actions, judgments, suits, litigations or investigations of
any kind or nature whatsoever, arising out of or in connection with (i) the
execution or delivery of this Agreement or any other Loan Document or any
agreement or instrument contemplated thereby, the performance by the parties
thereto of their respective obligations thereunder or the consummation of the
Transactions and the other transactions contemplated thereby (including the
syndication of the Credit Facilities), (ii) the use of the proceeds of the
Loans, (iii) any claim, litigation, investigation or proceeding relating to any
of the foregoing, whether or not any Indemnitee is a party thereto (and
regardless of whether such matter is initiated by a third party or by the
Borrower, any other Loan Party or any of their respective Affiliates), or
(iv) any actual or alleged presence or Release of Hazardous Materials on any
property currently or formerly owned or operated by the Borrower or any of the
Subsidiaries, or any Environmental Liability related in any way to the Borrower
or the Subsidiaries; 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
the gross negligence or willful misconduct of such Indemnitee.

 

(c)   To the extent that Holdings and the Borrower fail to pay any amount
required to be paid by them to the Lead Arranger, the Administrative Agent or
the Collateral Agent under paragraph (a) or (b) of this Section, each Lender
severally agrees to pay to the Lead Arranger, the Administrative Agent or the
Collateral Agent, as the case may be, such Lender’s pro rata share (determined
as of the time that the applicable unreimbursed expense or indemnity payment is
sought) of such unpaid amount; provided that the unreimbursed expense or
indemnified loss, claim, damage, liability or related expense, as the case may
be, was incurred by or asserted against the Lead Arranger, the Administrative
Agent or the Collateral Agent in its capacity as such.  For purposes hereof, a
Lender’s “pro rata share” shall be determined based upon its share of the
outstanding Term Loans and unused Commitments at the time.

 

(d)   To the extent permitted by applicable law, neither Holdings nor the
Borrower shall assert, and each hereby waives, any claim against any Indemnitee,
on any theory of liability, for special, indirect, consequential or punitive
damages (as opposed to direct or actual damages) arising out of, in connection
with, or as a result of, this Agreement or any agreement or instrument
contemplated hereby, the Transactions, any Loan or the use of the proceeds
thereof.

 

The provisions of this Section 9.05 shall remain operative and in full force and
effect regardless of the expiration of the term of this Agreement, the
consummation of the transactions contemplated hereby, the repayment of any of
the Loans, the expiration of the Commitments, the invalidity or unenforceability
of any other term or provision of this Agreement or any other Loan

 

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Document, or any investigation made by or on behalf of the Administrative Agent,
the Collateral Agent or any Lender.  All amounts due under this Section 9.05
shall be payable not later than 10 days after written demand therefor
accompanied by reasonable documentation with respect to any amount so requested.

 

SECTION 9.06.  Right of Setoff.  If an Event of Default shall have occurred and
be continuing, each Lender is hereby authorized at any time and from time to
time, except to the extent prohibited 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 indebtedness at any time owing by such Lender to or for the
credit or the account of the Borrower or Holdings against any of and all the
obligations of the Borrower or Holdings now or hereafter existing under this
Agreement and other Loan Documents held by such Lender, irrespective of whether
or not such Lender shall have made any demand under this Agreement or such other
Loan Document and although such obligations may be unmatured.  The rights of
each Lender under this Section 9.06 are in addition to other rights and remedies
(including other rights of setoff) which such Lender may have.

 

SECTION 9.07.  Applicable Law.  THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS
(OTHER THAN AS EXPRESSLY SET FORTH IN OTHER LOAN DOCUMENTS) SHALL BE CONSTRUED
IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.

 

SECTION 9.08.  Waivers; Amendment.  (a)  No failure or delay of the
Administrative Agent, the Collateral Agent or any Lender in exercising any power
or right 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 Administrative Agent, 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 any other Loan
Document or consent to any departure by the Borrower or any other Loan Party
therefrom shall in any event be effective unless the same shall be permitted by
paragraph (b) below, and then such waiver or consent shall be effective only in
the specific instance and for the purpose for which given.  No notice or demand
on the Borrower or Holdings in any case shall entitle the Borrower or Holdings
to any other or further notice or demand in similar or other circumstances.

 

(b)   Neither this Agreement, any Loan Document nor any provision hereof or
thereof may be waived, amended or modified except pursuant to an agreement or
agreements in writing entered into by the Borrower, Holdings and the Required
Lenders; provided, however, that no such agreement shall (i) decrease the
principal amount of, or extend the maturity of or any scheduled principal
payment date or date for the payment of any interest on any Loan, or waive or
excuse any such payment or any part thereof, or decrease the rate of interest on
any Loan, without the prior written consent of each Lender directly adversely
affected thereby, (ii) increase or extend the Commitment of any Lender without
the prior written consent of such Lender, (iii) amend or modify the pro rata
requirements of Section 2.17, the provisions of Section 9.04(j) or the
provisions of this Section or release all or substantially all of the value of
the guarantees of the Guarantors under the Guarantee and Collateral Agreement or
all or

 

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substantially all of the Collateral, without the prior written consent of each
Lender (unless such transaction is permitted pursuant to the terms
hereof), (iv) change the provisions of any Loan Document in a manner that by its
terms adversely affects the rights in respect of payments due to Lenders holding
Loans of one Class differently from the rights of Lenders holding Loans of any
other Class without the prior written consent of Lenders holding a majority in
interest of the outstanding Loans and unused Commitments of each adversely
affected Class, (v) modify the protections afforded to an SPV pursuant to the
provisions of Section 9.04(i) without the written consent of such SPV,
(vi) amend or modify Section 9.04 to impose any additional restrictions on any
Lender’s ability to assign its rights and obligations hereunder without the
prior written consent of each Lender or (vii) reduce the percentage contained in
the definition of the term “Required Lenders” without the prior written consent
of each Lender (it being understood that with the consent of the Required
Lenders, additional extensions of credit pursuant to this Agreement may be
included in the determination of the Required Lenders on substantially the same
basis as the Term Loan Commitments on the date hereof); provided further that no
such agreement shall amend, modify or otherwise affect the rights or duties of
the Administrative Agent or the Collateral Agent hereunder or under any other
Loan Document without the prior written consent of the Administrative Agent or
the Collateral Agent.

 

(c)   The Administrative Agent and the Borrower may amend any Loan Document to
correct administrative errors or omissions, or to effect administrative changes
that are not adverse to any Lender; provided that the Lenders shall have been
given at least five Business Day’s prior written notice and the Required Lenders
shall not have raised an objection thereto.  Notwithstanding anything to the
contrary contained herein, such amendment shall become effective without any
further consent of any other party to such Loan Document.

 

SECTION 9.09.  Interest Rate Limitation.  Notwithstanding anything herein to the
contrary, if at any time the interest rate applicable to any Loan, together with
all fees, charges and other amounts which are treated as interest on such Loan
under applicable law (collectively the “Charges”), shall exceed the maximum
lawful rate (the “Maximum Rate”) which may be contracted for, charged, taken,
received or reserved by the Lender holding such Loan or participation in
accordance with applicable law, the rate of interest payable in respect of such
Loan or participation hereunder, together with all Charges payable in respect
thereof, shall be limited to the Maximum Rate and, to the extent lawful, the
interest and Charges that would have been payable in respect of such Loan or
participation but were not payable as a result of the operation of this
Section 9.09 shall be cumulated and the interest and Charges payable to such
Lender in respect of other Loans or participations or periods shall be increased
(but not above the Maximum Rate therefor) until such cumulated amount, together
with interest thereon at the Federal Funds Effective Rate to the date of
repayment, shall have been received by such Lender.

 

SECTION 9.10.  Entire Agreement.  This Agreement, the Engagement Letter and the
other Loan Documents constitute the entire contract between the parties relative
to the subject matter hereof.  Any other previous agreement among the parties
with respect to the subject matter hereof is superseded by this Agreement and
the other Loan Documents.  Nothing in this Agreement or in the other Loan
Documents, expressed or implied, is intended to confer upon any Person (other
than the parties hereto and thereto, their respective successors and assigns
permitted hereunder and, to the extent expressly contemplated hereby, the
Related Parties of

 

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each of the Administrative Agent, the Collateral Agent and the Lenders) any
rights, remedies, obligations or liabilities under or by reason of this
Agreement or the other Loan Documents.

 

SECTION 9.11.  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 RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER
OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS.  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 AND THE OTHER LOAN DOCUMENTS, AS APPLICABLE, BY, AMONG OTHER
THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 9.11.

 

SECTION 9.12.  Severability.  In the event any one or more of the provisions
contained in this Agreement or in any other Loan Document should be held
invalid, illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein and therein 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 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 9.13.  Counterparts.  This Agreement 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, and shall become effective as provided in Section 9.03. 
Delivery of an executed signature page to this Agreement by facsimile
transmission shall be as effective as delivery of a manually signed counterpart
of this Agreement.

 

SECTION 9.14.  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 9.15.  Jurisdiction; Consent to Service of Process.  (a)  Each of
Holdings and the Borrower hereby irrevocably and unconditionally submits, for
itself and its property, to the exclusive jurisdiction of any New York State
court or Federal court of the United States of America sitting in New York City,
and any appellate court from any thereof, in any action or proceeding arising
out of or relating to this Agreement or the other Loan Documents, 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

 

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other manner provided by law.  Nothing in this Agreement shall affect any right
that the Administrative Agent, the Collateral Agent or any Lender may otherwise
have to bring any action or proceeding relating to this Agreement or the other
Loan Documents against the Borrower, Holdings or their respective properties in
the courts of any jurisdiction.

 

(b)   Each of Holdings and the Borrower 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 the other
Loan Documents in any New York State or Federal court.  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.

 

(c)   Each party to this Agreement irrevocably consents to service of process in
the manner provided for notices in Section 9.01.  Nothing in this Agreement will
affect the right of any party to this Agreement to serve process in any other
manner permitted by law.

 

SECTION 9.16.  Confidentiality.  Each of the Administrative Agent, the
Collateral Agent and the Lenders agrees to maintain the confidentiality of the
Information (as defined below), except that Information may be disclosed (a) to
its and its Affiliates’ officers, directors, employees and agents, including
accountants, legal counsel, other advisors and numbering, administration and
settlement service providers (it being understood that the Persons to whom such
disclosure is made will be informed of the confidential nature of such
Information and obligated to keep such Information confidential), (b) to the
extent requested by any regulatory authority or quasi-regulatory authority (such
as the National Association of Insurance Commissioners), (c) to the extent
required by applicable laws or regulations or by any subpoena or similar legal
process, (d) in connection with the exercise of any remedies hereunder or under
the other Loan Documents or any suit, action or proceeding relating to the
enforcement of its rights hereunder or thereunder, (e) subject to an agreement
containing provisions substantially the same as those of this Section 9.16, to
(i) any actual or prospective assignee of or participant in any of its rights or
obligations under this Agreement and the other Loan Documents or (ii) any actual
or prospective counterparty (or its advisors) to any swap or derivative
transaction relating to the Borrower or any Subsidiary or any of their
respective obligations, (f) with the consent of the Borrower or (g) to the
extent such Information becomes publicly available other than as a result of a
breach of this Section 9.16.  For the purposes of this Section, “Information”
shall mean all information received from the Borrower or Holdings and related to
the Borrower or Holdings or their business, other than any such information that
was available to the Administrative Agent, the Collateral Agent or any Lender on
a nonconfidential basis prior to its disclosure by the Borrower or Holdings;
provided that, in the case of Information received from the Borrower or Holdings
after the date hereof, such information is clearly identified at the time of
delivery as confidential.  Any Person required to maintain the confidentiality
of Information as provided in this Section 9.16 shall be considered to have
complied with its obligation to do so if such Person has exercised the same
degree of care to maintain the confidentiality of such Information as such
Person would accord its own confidential information.

 

SECTION 9.17.  Lender Action.  Each Lender agrees that it shall not take or
institute any actions or proceedings, judicial or otherwise, for any right or
remedy against any Loan Party or any other obligor under any of the Loan
Documents (including the exercise of any right of setoff,

 

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rights on account of any banker’s lien or similar claim or other rights of
self-help), or institute any actions or proceedings, or otherwise commence any
remedial procedures, with respect to any Collateral or any other property of any
such Loan Party, unless expressly provided for herein or in any other Loan
Document, without the prior written consent of the Administrative Agent.  The
provisions of this Section 9.17 are for the sole benefit of the Lenders and
shall not afford any right to, or constitute a defense available to, any Loan
Party.

 

SECTION 9.18.  USA PATRIOT Act Notice.  Each Lender and the Administrative Agent
(for itself and not on behalf of any Lender) hereby notifies Holdings and the
Borrower that pursuant to the requirements of the USA PATRIOT Act, it is
required to obtain, verify and record information that identifies Holdings and
the Borrower, which information includes the name and address of Holdings and
the Borrower and other information that will allow such Lender or the
Administrative Agent, as applicable, to identify Holdings and the Borrower in
accordance with the USA PATRIOT Act.

 

[Signature pages follow.]

 

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

 

 

HAWAIIAN TELCOM
COMMUNICATIONS, INC.,
as Borrower

 

 

 

By:

/s/ Robert Reich

 

 

Name: Robert Reich

 

 

Title: SVP – CFO

 

 

 

 

 

HAWAIIAN TELCOM HOLDCO, INC.,
as Guarantor

 

 

 

By:

/s/ Robert Reich

 

 

Name: Robert Reich

 

 

Title: SVP – CFO

 

[Signature Page to Credit Agreement]

 

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CREDIT SUISSE AG, CAYMAN
ISLANDS BRANCH,
as Administrative Agent and
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 Credit Agreement]

 

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CREDIT SUISSE AG, CAYMAN
ISLANDS BRANCH,
as a Lender

 

 

 

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 Credit Agreement]

 

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Schedules to Senior Secured Loan Agreement

 

Schedule 1.01(a)
Refinanced Indebtedness

 

Senior Secured Loan Agreement dated as of October 28, 2010 among the Borrower,
Holdings, the lenders party thereto and Wilmington Trust FSB, as administrative
agent and collateral agent

 

1

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Schedule 1.01(b)
Subsidiary Guarantors

 

Hawaiian Telcom Communications, Inc.

 

Hawaiian Telcom, Inc.

 

Hawaiian Telcom Services Company, Inc.

 

2

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Schedule 1.01(c)
Mortgaged Property

 

The following real property is owned by the Borrower and its Subsidiaries:

 

See Annex A.

 

The following real property is leased by the Borrower and its Subsidiaries:

 

See Annex B.

 

3

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Schedule 1.01(d)
Anticipated Tower Lease-Back

 

Disposition of certain transmission towers utilized for attaching radio,
microwave and cellular transmission equipment having an estimated realizable
value of approximately $4 million.

 

4

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Schedule 1.01(e)
Designated Entities

 

Sandwich Isles Communications, Inc.

 

Wavecom Solutions Corporation

 

TW Telecom, Inc.

 

Time Warner Cable, Inc.

 

5

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Schedule 1.01(f)
Specified Facilities

 

Consolidation, rationalization and disposition of certain baseyard and warehouse
facilities having an estimated realizable value of approximately $20 million.

 

6

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Schedule 2.01
Lenders and Commitments

 

On file with Administrative Agent.

 

7

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Schedule 3.08
Subsidiaries

 

Subsidiary

 

Jurisdiction of
Incorporation

 

Ownership Interest

 

Subsidiary Loan
Party

Hawaiian Telcom Communications, Inc.

 

Delaware

 

100% of common stock owned by Hawaiian Telcom Holdco, Inc.

 

N/A

Hawaiian Telcom, Inc.

 

Hawaii

 

100% of common stock owned by Hawaiian Telcom Communications, Inc.

 

Yes

Hawaiian Telcom Services Company, Inc.

 

Delaware

 

100% of common stock owned by Hawaiian Telcom Communications, Inc.

 

Yes

Hawaiian Telcom Insurance Company, Incorporated

 

Hawaii

 

100% of common stock owned by Hawaiian Telcom, Inc.

 

No

 

8

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Schedule 3.09
Litigation

 

None

 

9

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Schedule 3.17
Environmental Matters

 

None

 

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Schedule 3.18
Insurance

 

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Schedule 3.19(a)
UCC Filing Offices

 

Loan Party: 

 

Filing Office:

 

 

 

 

 

Hawaiian Telcom Holdco, Inc.

 

Delaware Secretary of State

 

 

 

 

 

Hawaiian Telcom Communications, Inc.

 

Delaware Secretary of State

 

 

 

 

 

Hawaiian Telcom, Inc.

 

Hawaii Bureau of Conveyances

 

 

 

 

 

Hawaiian Telcom Services Company, Inc.

 

Delaware Secretary of State

 

 

18

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Schedule 3.19(c)
Mortgage Filing Offices

 

The place of filing for each Mortgaged Property is the Bureau of Conveyances of
the State of Hawaii.

 

See Annex A.  Each parcel of real property set forth therein is a Mortgaged
Property except where otherwise noted.  Hawaiian Telcom, Inc., a Hawaii
corporation, is the Person that owns each Mortgaged Property set forth on Annex
A.  Annex A sets forth the current record owner of each Mortgaged Property
listed therein as set forth in the records of the filing office for such
property.

 

19

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Schedule 3.20(a)
Owned Real Property

 

The following real property is owned by the Borrower and its Subsidiaries:

 

See Annex A.

 

20

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Schedule 3.20(b)
Leased Real Property

 

The following real property is leased by the Borrower and its Subsidiaries:

 

See Annex B.

 

21

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Schedule 4.02(a)
Local and Regulatory Counsel

 

Local Counsel:

Law Offices of Wesley Y. S. Chang

 

 

Local Regulatory Counsel:

Morihara Lau & Fong LLP

 

 

FCC Regulatory Counsel:

Law Offices of Gregory J. Vogt, PLLC

 

22

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Schedule 5.13
Post-Closing Covenants

 

(a)           The Borrower shall use commercially reasonable efforts to obtain,
on or prior to the date that is 270 days after the Closing Date (or such later
date as may be determined by the Collateral Agent in its sole discretion),
(i) landlord consents, in form and substance reasonably satisfactory to the
Collateral Agent, required for the granting of a leasehold mortgage in favor of
the Collateral Agent with respect to the Mortgaged Property which constitutes a
lease and which is not encumbered by a Mortgage on the date hereof, and (ii) all
consents, in form and substance reasonably satisfactory to the Collateral Agent,
required for the granting of a mortgage in favor of the Collateral Agent with
respect to any easement which constitutes Mortgaged Property and which is not
encumbered by a Mortgage on the date hereof.

 

(b)           The Borrower shall, on or prior to the date that is 60 days
following the Closing Date (or such later date as may be determined by the
Collateral Agent in its sole discretion), deliver to the Collateral Agent (A) a
Mortgage with respect to each “Regular System” and each “Land Court System”
Mortgaged Property (other than the Mortgaged Property referred to in clauses
(c) and (d) of this Schedule 5.13) which is not encumbered by a Mortgage on the
date hereof and (B) a customary legal opinion with respect to the same from the
Borrower’s counsel, in form and substance satisfactory to the Collateral Agent.

 

(c)           The Borrower shall, on or prior to the date that is 90 days
following the Closing Date (or, in relation to the consents obtained pursuant to
clause (a) of this Schedule 5.13, following the date such consent is obtained,
or, in either case, such later date as the Collateral Agent may agree in its
sole discretion), deliver to the Collateral Agent (A) a leasehold Mortgage with
respect to each “Regular System” and each “Land Court System” Mortgaged Property
which constitutes a lease which is not encumbered by a Mortgage on the date
hereof and (B) a customary legal opinion with respect to the same from the
Borrower’s counsel, in form and substance satisfactory to the Collateral Agent.

 

(d)           The Borrower shall, (i) on or prior to the date that is 90 days
following the Closing Date (or, in relation to the consents obtained pursuant to
clause (a) of this Schedule 5.13, following the date such consent is obtained,
or, in either case, such later date as the Collateral Agent may agree in its
sole discretion), deliver to the Collateral Agent (A) a Mortgage with respect to
each easement which constitutes a “Regular System” Mortgaged Property which is
not encumbered by a Mortgage on the date hereof and (B) a customary legal
opinion with respect to the same from the Borrower’s counsel, in form and
substance satisfactory to the Collateral Agent and (ii) on or prior to the date
that is 180 days following the Closing Date (or, in relation to the consents
obtained pursuant to clause (a) of this Schedule 5.13, following the date such
consent is obtained, or, in either case, such later date as the Collateral Agent
may agree in its sole discretion), deliver to the Collateral Agent (A) a
Mortgage with respect to each easement which constitutes a “Land Court System”
Mortgaged Property which is not encumbered by a Mortgage on the date hereof and
(B) a customary legal opinion with respect to the same from the Borrower’s
counsel, in form and substance satisfactory to the Collateral Agent.

 

Notwithstanding the foregoing, with respect to any easement which constitutes a
“Land Court System” Mortgaged Property intended to be mortgaged pursuant to
clause (a) or (d) above that

 

23

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the Administrative Agent determines in its sole discretion (after receiving
written information in reasonable detail from the Borrower with respect to the
feasibility of obtaining and/or historical or anticipated costs required to
obtain a mortgage thereon in connection with the Revolving Facility Agreement
and the Senior Secured Loan Agreement dated as of October 28, 2010) that the
costs of obtaining a mortgage thereon are excessive in relation to the value
thereof to the Secured Parties, so long as such easement is not mortgaged to
secure obligations under the Revolving Facility Agreement (or any Refinancing
thereof), the requirements to deliver any mortgage, consent or opinion with
respect to such easement pursuant to clause (a) or (d) above shall not apply;
provided that such easement shall not be mortgaged to secure the obligations
under the Revolving Facility Agreement (or any Refinancing thereof) unless such
easement shall also be mortgaged (with the delivery of each mortgage, consent or
opinion described above) to secure the Obligations.

 

Notwithstanding the foregoing, with respect to any of the easements which
constitute “Land Court System” Mortgaged Property intended to be mortgaged
pursuant to clause (a) or (d) above, so long as such easements are owned by a
Guarantor all of the Equity Interests of which are pledged under the Guarantee
and Collateral Agreement, which Guarantor is a special purpose entity that has
no Indebtedness and engages in no business or activity other than
(i) maintaining its corporate existence, participating in tax, accounting and
other administrative activities as the holder, transferor and transferee of such
easements, (ii) the performance of obligations under the Loan Documents to which
it is a party and (iii) activities incidental to the businesses or activities
described in clauses (i) and (ii) above, the requirements to deliver any
mortgage, consent or opinion with respect to such easement pursuant to clause
(a) or (d) above shall not apply.

 

(e)           The Borrower shall, on or prior to the date that is 60 days
following the Closing Date (or such later date as may be determined by the
Collateral Agent in its sole discretion), deliver to the Collateral Agent a copy
of, or a certificate as to coverage under, the property insurance policies
required by Section 4.01(i) or 5.02 of the Credit Agreement and the applicable
provisions of the Security Documents, each of which shall be endorsed or
otherwise amended to include a customary lender’s loss payable endorsement, all
in form and substance satisfactory to the Administrative Agent.

 

(f)            The Borrower shall, on or prior to the date that is 5 Business
Days following the Closing Date (or such later date as may be determined by the
Collateral Agent in its sole discretion), deliver to the Collateral Agent a copy
of, or a certificate as to coverage under, the liability insurance policies
required by Section 4.01(i) or 5.02 of the Credit Agreement and the applicable
provisions of the Security Documents, each of which shall be endorsed or
otherwise amended to name the Collateral Agent as additional insured, all in
form and substance satisfactory to the Administrative Agent.

 

(g)           The Borrower shall, on or prior to the date that is 45 days
following the Closing Date (or such later date as may be determined by the
Collateral Agent in its sole discretion), deliver to the Collateral Agent a copy
of, or a certificate as to coverage under, the insurance policies (other than
liability insurance policies, property insurance policies, and insurance
policies as referenced below in clause (h)) required by Section 4.01(i) or 5.02
of the Credit Agreement and the applicable provisions of the Security Documents,
each of which shall be

 

24

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endorsed or otherwise amended to name the Collateral Agent as additional insured
or loss payee, as applicable, all in form and substance satisfactory to the
Administrative Agent.

 

(h)           The Borrower shall, on or prior to the date that is 90 days
following the Closing Date (or such later date as may be determined by the
Collateral Agent in its sole discretion), deliver to the Collateral Agent a copy
of the policies of title insurance, the Standard Flood Hazard Determinations and
the flood insurance and other documentation referred to in clauses (iv) and
(v) of Section 4.01(h) and in Section 5.02(c) of the Credit Agreement.

 

(i)            The Borrower shall, on or prior to the date that is 5 Business
Days following the Closing Date (or such later date as may be determined by the
Collateral Agent in its sole discretion), deliver to the Collateral Agent
deposit account control agreements and securities account control agreements
with respect to the Investment Property and Deposit Accounts constituting (or
intended to constitute) Collateral necessary to enable the Collateral Agent to
obtain “control” (within the meaning of the applicable Uniform Commercial Code)
with respect thereto.

 

25

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Schedule 6.01
Existing Indebtedness

 

Indebtedness under the Revolving Facility Agreement.

 

Also, see Annex C.

 

26

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Schedule 6.02
Existing Liens*

 

Liens securing Indebtedness under the Revolving Facility Agreement.

 

Also, see Annex C.

 

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*  The recordation of the termination of certain mortgages securing the
Refinanced Indebtedness will not be completed on the Closing Date.

 

27

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Schedule 6.04(j)
Investments

 

a.               Hawaiian Telcom, Inc. owns 100% of the outstanding common stock
of Hawaiian Telcom Insurance Company, Incorporated

 

26

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Annex A

 

Owned Real Property

 

On file with Administrative Agent.

 

27

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Annex B

 

Leased Real Property

 

On file with Administrative Agent.

 

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Annex C

 

Surety Bond Schedule

 

[*]

 

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Annex D

 

Additional Property Insurance Information

 

[*]

 

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EXHIBIT A

 

FORM OF

ADMINISTRATIVE QUESTIONNAIRE

 

ARTICLE I.Administrative Details Reply Form

 

I.                                        GENERAL INFORMATION

 

Deal Name:

 

 

 

 

 

Lender Institution’s Legal Name for Documentation Purposes:

 

 

 

 

 

Name, Phone and Fax Number of

 

Phone:

Individual(s) to Receive Draft(s):

 

Fax:

 

 

 

 

 

 

Number of Signature Lines Required:

 

 

 

 

 

 

II.                                   LENDER CONTACT INFORMATION

 

 

 

CREDIT CONTACT

 

CLOSING CONTACT

Primary Contact Name:

 

 

 

 

Back-up Name:

 

 

 

 

Street Address (for courier purposes):

 

 

 

 

Primary Contact Phone Number:

 

 

 

 

Back-up Contact Phone Number:

 

 

 

 

Primary Contact Fax Number:

 

 

 

 

Back-up Contact Fax Number:

 

 

 

 

Primary Contact E-mail Address:

 

 

 

 

Back-up Contact E-mail Address:

 

 

 

 

* Please list any special function contacts on a separate sheet (i.e. L/C’s,
Foreign Currency, Bid Loans, etc.)

 

A-1

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DEAL ADMINISTRATOR

 

 

Primary Contact Name:

 

 

 

 

Back-up Name:

 

 

 

 

Street Address (for courier purposes):

 

 

 

 

Primary Contact Phone Number:

 

 

 

 

Primary Contact Fax Number:

 

 

 

 

Primary Contact E-mail Address:

 

 

 

 

* Please list any special function contacts on a separate sheet (i.e. L/C’s,
Foreign Currency, Bid Loans, etc.)

 

III.                              FINANCIAL INFORMATION, COMPLIANCE, INTRALINKS,
EXECUTED CLOSING DOCUMENTS, ETC.

 

Bank Name:

 

 

Address:

 

 

Department:

 

 

Contact Name:

 

 

Contact Phone:

 

 

Contact Fax:

 

 

Contact Email:

 

 

* Please list any additional or non-Fed payment instructions on a separate
sheet.

 

IV.                               LENDER FED PAYMENT INSTRUCTIONS*

 

Bank Name:

 

 

City and State:

 

 

ABA Routing Number:

 

 

Account Name:

 

 

Account Number:

 

 

Re:

 

 

Attention:

 

 

Ref:

 

 

* Please list any additional or non-Fed payment instructions on a separate
sheet.

 

V.                                    TAX REPORTING INFORMATION

 

 

A-2

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EXHIBIT B

 

FORM OF

ASSIGNMENT AND ACCEPTANCE

 

Reference is made to that certain Credit Agreement dated as of
[                    ], 2012 (as the same may be amended, restated, amended and
restated, supplemented or otherwise modified, to date, the “Credit Agreement”),
among HAWAIIAN TELCOM COMMUNICATIONS, INC., a Delaware corporation (the
“Borrower”), HAWAIIAN TELCOM HOLDCO, INC., a Delaware corporation (“Holdings”),
the Lenders, and CREDIT SUISSE AG, CAYMAN ISLANDS BRANCH, as administrative
agent (in such capacity, including any successor thereto, the “Administrative
Agent”) and as collateral agent (in such capacity, including any successor
thereto, the “Collateral Agent”) for the Lenders. Terms used herein without
definition shall have the meanings assigned to such terms in the Credit
Agreement.

 

Each “Assignor” referred to on Schedule 1 hereto (each, an “Assignor”) and each
“Assignee” referred to on Schedule 1 hereto (each, an “Assignee”) agrees
severally with respect to all information relating to it and its assignment
hereunder and on Schedule 1 hereto as follows:

 

1.             Such Assignor hereby sells and assigns, without recourse except
as to the representations and warranties made by it herein, to such Assignee,
and such Assignee hereby purchases and assumes from such Assignor, an interest
in and to such Assignor’s rights and obligations under the Credit Agreement as
of the Effective Date (as defined herein) equal to the percentage interest
specified on Schedule 1 hereto of all outstanding rights and obligations under
the Credit Agreement.  After giving effect to such sale and assignment, such
Assignee’s Commitments and the amount of the Loans owing to such Assignee will
be as set forth on Schedule 1 hereto.

 

2.             Such Assignor (i) warrants that it is the legal and beneficial
owner of the interest being assigned thereby free and clear of any adverse claim
and that its Term Loan Commitment, and the outstanding balances of its Term
Loans without giving effect to assignments thereof which have not become
effective, are as set forth on Schedule 1 hereto; (ii) acknowledges that the
Administrative Agent has no duty to confirm whether the Assignee is an Eligible
Assignee; and (iii) except as set forth in (i) above, makes no representation or
warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with this Agreement, or
the execution, legality, validity, enforceability, genuineness, sufficiency or
value of this Agreement, any other Loan Document or any other instrument or
document furnished pursuant hereto, or the financial condition of the Borrower
or any Subsidiary or the performance or observance by the Borrower or any
Subsidiary of any of its obligations under this Agreement, any other Loan
Document or any other instrument or document furnished pursuant hereto.

 

B-1

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3.             The Assignee (i) represents and warrants that it is legally
authorized to enter into such Assignment and Acceptance and that it is not a
Designated Entity or any of its Affiliates; (ii) confirms that it has received a
copy of the Credit Agreement, together with copies of the most recent financial
statements referred to in Section 3.05(a) of the Credit Agreement or delivered
pursuant to Section 5.04 of the Credit Agreement and such other documents and
information as it has deemed appropriate to make its own credit analysis and
decision to enter into such Assignment and Acceptance; (iii) independently and
without reliance upon the Administrative Agent, the Collateral Agent, such
assigning Lender or any other Lender and based on such documents and information
as it deems appropriate, continues to make its own credit decisions in taking or
not taking action under the Credit Agreement; (iv) confirms that it is an
Eligible Assignee and acknowledges that the Administrative Agent has no duty to
confirm whether the Assignee is an Eligible Assignee; (v) appoints and
authorizes the Administrative Agent and the Collateral Agent to take such action
as agent on its behalf and to exercise such powers under the Credit Agreement as
are delegated to the Administrative Agent and the Collateral Agent,
respectively, by the terms therein, together with such powers as are reasonably
incidental thereto; (vi) agrees that it will perform in accordance with their
terms all the obligations which by the terms of the Credit Agreement are
required to be performed by it as a Lender; and (viii) attaches any U.S.
Internal Revenue Service forms required under Section 2.20 of the Credit
Agreement (and undertakes to deliver to the Administrative Agent originals of
any such U.S. Internal Revenue Service form) and a completed Administrative
Questionnaire required to be provided pursuant to Section 9.04(b).

 

4.             Following the execution of this Assignment and Acceptance
Agreement, it will be delivered to the Administrative Agent for acceptance and
recording by the Administrative Agent.  The effective date for this Assignment
and Acceptance (the “Effective Date”) shall be the date of acceptance hereof by
the Administrative Agent.

 

5.             Upon such acceptance and recording by the Administrative Agent,
as of the Effective Date, (i) such Assignee shall be a party to the Credit
Agreement and, to the extent provided in this Assignment and Acceptance, have
the rights and obligations of a Lender thereunder and (ii) such Assignor shall,
to the extent provided in this Assignment and Acceptance, relinquish its rights
and be released from its obligations under the Credit Agreement (other than its
rights and obligations under the Loan Documents that are specified under the
terms of such Loan Documents to survive the payment in full of the Obligations
of the Loan Parties under the Loan Documents to the extent any claim thereunder
relates to an event arising prior to the Effective Date of this Assignment and
Acceptance) and, if this Assignment and Acceptance covers all of the remaining
portion of the rights and obligations of such Assignor under the Credit
Agreement, such Assignor shall cease to be a party thereto.

 

6.             Upon such acceptance and recording by the Administrative Agent,
from and after the Effective Date, the Administrative Agent shall make all
payments under the

 

B-2

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Credit Agreement and the other Loan Documents in respect of the interest
assigned hereby (including, without limitation, all payments of principal,
interest and commitment fees with respect thereto) to such Assignee for amounts
which have accrued from and after the Effective Date and to the Assignor for
amounts which have accrued to but excluding the Effective Date.

 

7.             This Assignment and Acceptance shall be governed by, and
construed in accordance with, the laws of the State of New York.

 

8.             This Assignment and Acceptance may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.  Delivery of an executed
counterpart of Schedule 1 to this Assignment and Acceptance by telecopier shall
be effective as delivery of an original executed counterpart of this Assignment
and Acceptance.

 

[The Remainder of This Page Has Been Intentionally Left Blank]

 

B-3

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

 

IN WITNESS WHEREOF, each Assignor and each Assignee have caused Schedule 1 to
this Assignment and Acceptance to be executed by their officers thereunto duly
authorized as of the date specified thereon.

 

Effective Date:

 

 

 

                 , 20

 

 

 

 

Assignors

 

 

 

                   , as Assignor

 

 

 

[Type or print legal name of Assignor]

 

 

 

 

 

By

 

 

Title:

 

 

 

 

 

Dated:                      , 20

 

 

 

 

 

                   , as Assignor

 

 

 

[Type or print legal name of Assignor]

 

 

 

 

 

By

 

 

Title:

 

 

 

 

 

Dated:                      , 20

 

 

 

 

 

                   , as Assignor

 

 

 

[Type or print legal name of Assignor]

 

 

 

 

 

By

 

 

Title:

 

 

 

 

 

Dated:                      , 20

 

B-4

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

 

 

Assignees

 

 

 

                   , as Assignee

 

 

 

[Type or print legal name of Assignee]

 

 

 

 

 

By

 

 

Title:

 

 

 

 

 

Dated:                      , 20

 

 

 

Domestic Lending Office:

 

 

 

Eurodollar Lending Office:

 

 

 

 

 

                   , as Assignee

 

 

 

[Type or print legal name of Assignee]

 

 

 

 

 

By

 

 

Title:

 

 

 

 

 

Dated:                      , 20

 

 

 

Domestic Lending Office:

 

 

 

Eurodollar Lending Office:

 

B-5

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

 

Accepted and Approved this          day of                     , 20

 

CREDIT SUISSE AG, CAYMAN ISLANDS BRANCH(1)

as Administrative Agent

 

By

 

 

 

Title:

 

 

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

(1)  The consent of the Administrative Agent is required unless the assignment
is to a Lender, an Affiliate of a Lender or a Related Fund.

 

B-6

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

 

SCHEDULE 1
TO
ASSIGNMENT AND ACCEPTANCE

 

ASSIGNORS:

 

 

 

 

 

 

 

 

 

 

 

Term Loan and Term Loan Commitment

 

 

 

 

 

 

 

 

 

 

 

Percentage interest assigned

 

 

%

 

%

 

%

 

%

 

%

Commitment assigned

 

 $

 

 $

 

 $

 

 $

 

 $

 

Outstanding principal amount of  Loan assigned

 

 $

 

 $

 

 $

 

 $

 

 $

 

 

B-7

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

 

EXHIBIT C

 

FORM OF

BORROWING REQUEST

 

To:

Credit Suisse AG, Cayman Islands Branch

 

as Administrative Agent for the Lenders

 

One Madison Avenue

 

New York, NY 10010

 

Attention:  Manager — Agency

 

[Insert Date]

 

Ladies and Gentlemen:

 

Reference is made to that certain Credit Agreement dated as of
[                    ], 2012 (as the same may be amended, restated, amended and
restated, supplemented or otherwise modified, to date, the “Credit Agreement”),
among HAWAIIAN TELCOM COMMUNICATIONS, INC., a Delaware corporation (the
“Borrower”), HAWAIIAN TELCOM HOLDCO, INC., a Delaware corporation (“Holdings”),
the Lenders, and CREDIT SUISSE AG, CAYMAN ISLANDS BRANCH, as administrative
agent (in such capacity, including any successor thereto, the “Administrative
Agent”) and as collateral agent (in such capacity, including any successor
thereto, the “Collateral Agent”) for the Lenders. Terms used herein without
definition shall have the meanings assigned to such terms in the Credit
Agreement.

 

Pursuant to Section 2.03 of the Credit Agreement, the Borrower hereby gives you
notice that it requests a Borrowing under the Credit Agreement, and in that
connection sets forth below the terms on which such Borrowing is requested to be
made:

 

(A)

Date of Borrowing

 

 

 

(which is a Business Day)

 

 

 

 

 

 

 

 

(B)

Principal amount of Borrowing

 

$

 

 

 

 

 

 

 

(C)

Funds are requested to be disbursed to the following account(s) of Borrower: (2)

 

 

 

 

 

 

 

(D)

The requested Borrowing is a [Term Borrowing] [Incremental Term Borrowing]

(E)

The requested Borrowing is [a Eurodollar Borrowing] [an ABR Borrowing].

 

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

(2)           Specify the location and number of the Borrower’s account to which
funds are to be disbursed, which shall comply with the requirements of the
Credit Agreement.

 

C-1

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

 

 

 

 

 

[(F)

The Interest Period with respect to such Eurodollar Borrowing is:

 

 

](3)

 

 

 

HAWAIIAN TELCOM COMMUNICATIONS, INC., as Borrower

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

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

(3)           For Eurodollar Borrowings only.

 

C-2

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

 

EXHIBIT D

 

FORM OF

GUARANTEE AND COLLATERAL AGREEMENT

 

See attached.

 

D-1

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

 

 

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

 

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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.

 

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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

 

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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

 

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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;

 

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(c)   except for the security interests granted hereunder, each of the Grantors
(i) is and, subject to any transfers made in compliance with the Credit
Agreement, will continue to be the direct owner, beneficially and of record, of
the Pledged Securities indicated on Schedule II as owned by such Grantor,
(ii) holds the 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

 

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(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,

 

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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,

 

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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

 

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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

 

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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

 

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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.

 

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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

 

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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

 

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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.

 

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(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

 

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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

 

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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

 

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“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

 

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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

 

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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

 

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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

 

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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

 

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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

 

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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

 

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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

 

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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

 

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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

 

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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.

 

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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

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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.

 

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

 

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

 

SECTION 7.13                    Termination or Release.  (a)  This Agreement,
the Guarantees made herein, the Security Interest and all other security
interests granted hereby shall terminate when (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.

 

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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

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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

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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

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

 

 

HAWAIIAN TELCOM HOLDCO, INC.

 

 

 

By

 

 

 

Name:

 

 

Title:

 

 

 

HAWAIIAN TELCOM COMMUNICATIONS, INC.

 

 

 

By

 

 

 

Name:

 

 

Title:

 

 

 

HAWAIIAN TELCOM, INC.

 

 

 

By

 

 

 

Name:

 

 

Title:

 

 

 

HAWAIIAN TELCOM SERVICES COMPANY, INC.

 

 

 

By

 

 

 

Name:

 

 

Title:

 

[SIGNATURE PAGE TO GUARANTEE AND COLLATERAL AGREEMENT]

 

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CREDIT SUISSE AG, CAYMAN ISLANDS BRANCH, as Collateral Agent

 

 

 

 

 

 

 

By

 

 

 

Name:

 

 

Title:

 

 

 

 

By

 

 

 

Name:

 

 

Title:

 

[SIGNATURE PAGE TO GUARANTEE AND COLLATERAL AGREEMENT]

 

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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

 

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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:

 

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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

 

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

 

EXHIBIT E

 

FORM OF

MORTGAGE

 

See attached.

 

E-1

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LAND COURT SYSTEM

 

REGULAR SYSTEM

Return by Mail o Pickup o          To:

 

 

 

 

 

 

 

Total Pages:

Tax Map Key No.: See Exhibits A, B and C

 

 

 

MORTGAGE, ASSIGNMENT OF LEASES AND RENTS, SECURITY AGREEMENT, FINANCING
STATEMENT AND FIXTURE FILING

 

THIS MORTGAGE, ASSIGNMENT OF LEASES AND RENTS, SECURITY AGREEMENT, FINANCING
STATEMENT AND FIXTURE FILING is dated as of                       , 2012 (this
“Mortgage”), by HAWAIIAN TELCOM, INC., a Hawaii corporation, having an office at
1177 Bishop Street, Honolulu, Hawaii 96813 (the “Mortgagor”), to CREDIT SUISSE
AG, CAYMAN ISLANDS BRANCH, the Cayman Islands branch of Credit Suisse AG, a bank
organized under the laws of Switzerland, whose address is c/o Credit Suisse,
Agency Manager, One Madison Avenue, New York, New York 10010, as Administrative
Agent and Collateral Agent for the Secured Parties (as such terms are defined
below) (in its capacity as Administrative Agent and Collateral Agent, herein
called the “Mortgagee”).

 

WITNESSETH THAT:

 

WHEREAS, Hawaiian Telcom Communications, Inc., a Delaware corporation
(“Borrower”) and Hawaiian Telcom Holdco, Inc., a Delaware corporation (“Holdco”)
entered into that certain Credit Agreement dated as of February 29, 2012, with
the lenders from time to time party thereto, and Mortgagee, as administrative
agent and collateral agent for such lenders party thereto (as amended,
supplemented or otherwise modified from time to time, the “Credit Agreement”);

 

WHEREAS, pursuant to the Credit Agreement, the Lenders have agreed to extend
credit to the Borrower in the form of Term Loans in an aggregate principal
amount not in excess of

 

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

 

$300,000,000 (the “Loans”) pursuant to, upon the terms, and subject to the
conditions specified in, the Credit Agreement;

 

WHEREAS, Mortgagor is a wholly owned Subsidiary of the Borrower and will derive
substantial benefit from the making of the Loans by the Lenders.  In order to
induce the Lenders to make Loans, Mortgagor has agreed to guarantee, among other
things, the due and punctual payment and performance of all of the obligations
of each Loan Party under each Secured Hedge Agreement pursuant to the terms of
the Guarantee and Collateral Agreement dated as of even date hereof (as amended,
supplemented or otherwise modified from time to time, the “Guarantee and
Collateral Agreement”) among Holdco, the Borrower, the subsidiaries of the
Borrower identified therein (including but not limited to the Mortgagor) and
Mortgagee as Collateral Agent for the Secured Parties (as such term is defined
in the Guarantee and Collateral Agreement);

 

WHEREAS, pursuant to the terms of the Credit Agreement, Mortgagor is granting
this Mortgage creating a lien on and a security interest in the Mortgaged
Properties (as hereinafter defined) to secure the performance and payment by the
Mortgagor of the Mortgage-Secured Obligations (as hereinafter defined).  Section
5.12 of the Credit Agreement also requires the granting of security agreements,
mortgages and/or deeds of trust (the “Other Mortgages”) that create liens on and
security interests in certain real and personal property to secure the
performance of the Obligations (as defined in the Guarantee and Collateral
Agreement);

 

WHEREAS, the obligations of the Lenders to make Loans are conditioned upon,
among other things, the execution and delivery by the Mortgagor of this Mortgage
in the form hereof to secure the obligations of the Mortgagor under the
Guarantee and Collateral Agreement, which include, without limitation, payment
of the Loans and any renewals, extensions or modifications thereof (the
“Guaranty Obligations”), and the payment of all other sums agreed or provided to
be paid by the Mortgagor under this Mortgage or any other Loan Document (as
defined in the Credit Agreement), and the observance and performance of all
other covenants, provisions, terms and agreements on the part of the Mortgagor
to be observed or performed under this Mortgage or any Loan Document (the “Other
Obligations”).  This Mortgage secures moneys to be advanced from time to time
subsequent to the date of this Mortgage.  The maximum aggregate principal amount
of the future advances is $300,000,000.  The maximum Guaranty Obligations and
the Other Obligations are hereinafter collectively referred to as the
“Mortgage-Secured Obligations”; and

 

WHEREAS, as used in this Mortgage, the term “Secured Parties” means (a) the
Lenders, (b) the Mortgagee, in its capacity as the Administrative Agent as
defined in the Credit Agreement, (c) the Mortgagee, in its capacity as the
Collateral Agent as defined in the Credit Agreement, (d) each Hedge Bank as
defined in the Guarantee and Collateral Agreement, (e) the beneficiaries of each
indemnification obligation undertaken by any Loan Party under any Loan Document,
(f) Credit Suisse Securities (USA), LLC (in its capacity as sole lead arranger
and sole bookrunner under the Credit Agreement), and (g) the permitted
successors and assigns of each of the foregoing.

 

Capitalized terms used but not defined herein have the meanings given to them in
the Credit Agreement and the Guarantee and Collateral Agreement

 

2

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

 

Granting Clauses

 

NOW, THEREFORE, IN CONSIDERATION OF the foregoing and in order to secure the due
and punctual payment and performance of the Mortgage-Secured Obligations for the
benefit of the Secured Parties, Mortgagor hereby grants, conveys, mortgages,
assigns and pledges to the Mortgagee and its successors and assigns (for the
benefit of the Secured Parties), a mortgage lien on and a security interest in,
all of Mortgagor’s right, title and interest in or to the following described
property (the “Mortgaged Properties”) whether now owned or held or hereafter
acquired:

 

(1)           the land more particularly described on Exhibit A attached hereto,
together with all rights appurtenant thereto, including the easements over
certain other adjoining land granted by any easement agreements, covenants or
restrictive agreements and all air rights, water rights, oil and gas rights and
development rights, if any, relating thereto, and also together with all of the
other easements, rights, privileges, interests, hereditaments and appurtenances
thereunto belonging or in any way appertaining and all of the estate, right,
title, interest, claim or demand whatsoever of Mortgagor therein, either in law
or in equity, in possession or expectancy, now or hereafter acquired (the
“Land”);

 

(2)           all leases (under which Mortgagor is tenant), all subleases (under
which Mortgagor is subtenant), and other agreements more particularly described
on Exhibit B attached hereto, together with all rights and privileges created
thereunder and all appurtenances relating thereto, including without limitation,
all modifications, extensions, and renewals of the leases and subleases and all
rights to renew or extend the term thereof, all other options, privileges and
rights granted and demised to Mortgagor, all of the right and privilege of
Mortgagor to terminate, cancel, abridge, surrender, merge, modify or amend the
leases and subleases, and any and all possessory rights of Mortgagor and other
rights or privileges of possession, including Mortgagor’s right to elect to
remain in possession of the demised premises pursuant to Section 365(h)(1) of
the Bankruptcy Code (the “Leases”);

 

(3)           all grants, easements, easements in gross, rights of way,
licenses, permits and other interests granted, conveyed or assigned to Mortgagor
by the instruments filed in the Office of the Assistant Registrar of the Land
Court of the State of Hawaii whose Document Numbers and Transfer Certificates of
Title are listed in Exhibit C attached hereto, the instruments recorded in the
Bureau of Conveyances of the State of Hawaii whose Liber and Page Number or
Document Numbers are listed in Exhibit C or the unrecorded instruments listed in
Exhibit C, and all other grants, easements, easements in gross, rights of way,
licenses, permits, franchises, rights, privileges, interests, hereditaments, and
appurtenances granted to, owned, or held by Mortgagor (the “Easements” and
together with the Land and the Leases, collectively the “Premises”);

 

(4)           all buildings, improvements, structures, towers, paving, parking
areas, walkways and landscaping now or hereafter erected or located upon the
Premises, and all fixtures of every kind and type affixed to the Premises or
attached to or forming part of

 

3

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

 

any structures, buildings or improvements and replacements thereof now or
hereafter erected or located upon the Premises (the “Improvements”);

 

(5)           all apparatus, movable appliances, building materials, equipment,
fittings, furniture, machinery and other articles of tangible personal property
of every kind and nature, and replacements thereof, now or at any time hereafter
placed upon or used in any way in connection with the use, enjoyment, occupancy
or operation of the Improvements or the Premises, including all of Mortgagor’s
books and records relating thereto and including all pumps, tanks, goods,
machinery, tools, equipment, lifts (including fire sprinklers and alarm systems,
fire prevention or control systems, cleaning rigs, air conditioning, heating,
boilers, refrigerating, electronic monitoring, water, loading, unloading,
lighting, power, sanitation, waste removal, entertainment, communications,
computers, recreational, window or structural, maintenance, truck or car repair
and all other equipment of every kind), restaurant, bar and all other indoor or
outdoor furniture (including tables, chairs, booths, serving stands, planters,
desks, sofas, racks, shelves, lockers and cabinets), bar equipment, glasses,
cutlery, uniforms, linens, memorabilia and other decorative items, furnishings,
appliances, supplies, inventory, rugs, carpets and other floor coverings,
draperies, drapery rods and brackets, awnings, venetian blinds, partitions,
chandeliers and other lighting fixtures, freezers, refrigerators, walk-in
coolers, signs (indoor and outdoor), computer systems, cash registers and
inventory control systems, and all other apparatus, equipment, furniture,
furnishings, and articles used in connection with the use or operation of the
Improvements or the Premises, it being understood that the enumeration of any
specific articles of property shall in no way result in or be held to exclude
any items of property not specifically mentioned (the property referred to in
this subparagraph (5), the “Personal Property”);

 

(6)           all general intangibles owned by Mortgagor and relating to design,
development, operation, management and use of the Premises or the Improvements,
all certificates of occupancy, zoning variances, building, use or other permits,
approvals, authorizations and consents obtained from and all materials prepared
for filing or filed with any governmental agency in connection with the
development, use, operation or management of the Premises and Improvements,
including, without limitation, the franchise granted by the State of Hawaii to
Mortgagor and included in its Charter, all construction, service, engineering,
consulting, leasing, architectural and other similar contracts concerning the
design, construction, management, operation, occupancy and/or use of the
Premises and Improvements, all architectural drawings, plans, specifications,
soil tests, feasibility studies, appraisals, environmental studies, engineering
reports and similar materials relating to any portion of or all of the Premises
and Improvements, and all payment and performance bonds or warranties or
guarantees relating to the Premises or the Improvements, all to the extent
assignable (the “Permits, Plans and Warranties”);

 

(7)           all now or hereafter existing leases or licenses (under which
Mortgagor is landlord or licensor) and subleases (under which Mortgagor is
sublandlord), concession, management, mineral or other agreements of a similar
kind that permit the use or occupancy of the Premises or the Improvements for
any purpose in return for any payment, or the extraction or taking of any gas,
oil, water or other minerals from the Premises in return for payment of any fee,
rent or royalty (collectively, “Tenant Leases”),

 

4

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

 

and all agreements or contracts for the sale or other disposition of all or any
part of the Premises or the Improvements, now or hereafter entered into by
Mortgagor, together with all charges, fees, income, issues, profits, receipts,
rents, revenues or royalties payable thereunder (“Rents”);

 

(8)           all real estate tax refunds and all proceeds of the conversion,
voluntary or involuntary, of any of the Mortgaged Properties into cash or
liquidated claims (“Proceeds”), including Proceeds of insurance maintained by
the Mortgagor and condemnation awards, any awards that may become due by reason
of the taking by eminent domain or any transfer in lieu thereof of the whole or
any part of the Premises or Improvements or any rights appurtenant thereto, and
any awards for change of grade of streets, together with any and all moneys now
or hereafter on deposit for the payment of real estate taxes, assessments or
common area charges levied against the Mortgaged Properties, unearned premiums
on policies of fire and other insurance maintained by the Mortgagor covering any
interest in the Mortgaged Properties or required by the Credit Agreement; and

 

(9)           all extensions, improvements, betterments, renewals, substitutes
and replacements of and all additions and appurtenances to, the Premises, the
Improvements, the Personal Property, the Permits, Plans and Warranties and the
Tenant Leases, hereinafter acquired by or released to the Mortgagor or
constructed, assembled or placed by the Mortgagor on the Premises or the
Improvements, and all conversions of the security constituted thereby,
immediately upon such acquisition, release, construction, assembling, placement
or conversion, as the case may be, and in each such case, without any further
mortgage, deed of trust, conveyance, assignment or other act by the Mortgagor,
all of which shall become subject to the lien of this Mortgage as fully and
completely, and with the same effect, as though now owned by the Mortgagor and
specifically described herein.

 

TO HAVE AND TO HOLD the Mortgaged Properties unto the Mortgagee, its successors
and assigns, for the ratable benefit of the Secured Parties, forever, subject
only to those Liens permitted under Section 6.02 of the Credit Agreement (the
“Permitted Encumbrances”) and all liens or other matters disclosed on Schedule B
of the title policy concerning the Mortgaged Properties and to satisfaction and
release as provided in Section 3.04.

 

Notwithstanding the foregoing granting clause or any other provision to the
contrary herein, such grant of security interest and assignment contained herein
shall not extend to, and the Mortgaged Properties shall not include, any Lease,
Tenant Lease, or Easement that is held by the Grantor as lessee, lessor,
licensee, licensor, or otherwise, to the extent that such Lease, Tenant Lease,
or Easement (i) is not assignable or capable of being encumbered as a matter of
law or under the terms of the lease, license, easement or other agreement
applicable thereto (but solely to the extent that any such restriction shall be
enforceable under applicable law), without the consent of the lessor, lessee,
licensor, licensee, grantor, or grantee thereof or other applicable party
thereto and such consent has not been obtained; provided, however, that if the
consent of such lessor, lessee, licensor, licensee, grantor, or grantee or other
applicable party is subsequently obtained, upon the granting of such consent and
without any further action on the part of the Mortgagor or the Mortgagee, the
grant of security interest and assignment contained

 

5

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

 

herein shall extend to, and the Mortgaged Properties shall include, such lease,
license, easement or other agreement, (ii) has been partially or completely
cancelled or terminated prior to the date hereof, or (iii) constitutes an
unpermitted subdivision under, or is otherwise prohibited by, the Subdivision
Ordinance for (A) the City and County of Honolulu, (B) the County of Hawaii, (C)
the County of Kauai, or (D) the County of Maui, or any other applicable law.

 

ARTICLE I

 

Representations, Warranties and Covenants of Mortgagor

 

Mortgagor agrees, covenants, represents and/or warrants as follows:

 

SECTION 1.01.    Title, Mortgage Lien.  (a) Mortgagor (i) has good and
marketable fee simple title to the Land and the Improvements located thereon,
subject only to Permitted Encumbrances and all liens or other matters disclosed
on Exhibit A, (ii) has a valid leasehold interest in the Leases and the
Improvements located thereon and a valid licensee or grantee interest in the
Easements, and (iii) has good title to the Personal Property, the Permits, Plans
and Warranties, and the Rents, and the other Mortgaged Properties.

 

(b)  The execution and delivery of this Mortgage is within Mortgagor’s corporate
powers and has been duly authorized by all necessary corporate and, if required,
stockholder action.  This Mortgage has been duly executed and delivered by
Mortgagor and constitutes a legal, valid and binding obligation of Mortgagor,
enforceable in accordance with its terms, subject to applicable bankruptcy,
insolvency, reorganization, moratorium or other laws affecting creditors’ rights
generally and subject to general principles of equity, regardless of whether
considered in a proceeding in equity or at law.

 

(c)  The execution, delivery and recordation of this Mortgage (i) do not require
any consent or approval of, registration or filing with, or any other action by,
any Governmental Authority, except such as have been obtained or made and are in
full force and effect and except filings necessary to perfect the lien of this
Mortgage, (ii) will not violate any applicable law or regulation or the charter,
by-laws or other organizational documents of Mortgagor or any order of any
Governmental Authority, (iii) will not violate or result in a default under any
indenture, agreement or other instrument binding upon Mortgagor or its assets,
or give rise to a right thereunder to require any payment to be made by
Mortgagor, and (iv) will not result in the creation or imposition of any Lien on
any asset of Mortgagor, except the lien of this Mortgage.

 

(d)  This Mortgage and the Uniform Commercial Code Financing Statements
described in Section 1.09 of this Mortgage, when duly recorded in the public
records identified in the Perfection Certificate will create a valid, perfected
and enforceable lien upon and security interest in all of the Mortgaged
Properties.

 

(e)  Mortgagor will forever warrant and defend its title to the Mortgaged
Properties, the rights of Mortgagee therein under this Mortgage and the validity
and priority of the lien of this

 

6

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

 

Mortgage thereon against the claims of all persons and parties except those
having rights under Permitted Encumbrances, to the extent of those rights.

 

SECTION 1.02.  Credit Agreement.  This Mortgage is given pursuant to the Credit
Agreement.  Mortgagor expressly covenants and agrees to pay when due, and to
timely perform, the Guaranty Obligations in accordance with the terms of the
Credit Agreement and the other Loan Documents.

 

SECTION 1.03.  Payment of Taxes and Other Obligations.  (a) Mortgagor will pay
and discharge from time to time prior to the time when the same shall become
delinquent, and before any interest or penalty accrues thereon or attaches
thereto, all Taxes and other obligations with respect to the Mortgaged
Properties or any part thereof or upon the Rents from the Mortgaged Properties
or arising in respect of the occupancy, use or possession thereof.

 

(b)  In the event of the passage of any state, federal, municipal or other
governmental law, order, rule or regulation subsequent to the date hereof (i)
deducting from the value of real property for the purpose of taxation any lien
or encumbrance thereon or in any manner changing or modifying the laws now in
force governing the taxation of this Mortgage or debts secured by mortgages or
deeds of trust (other than laws governing income, franchise and similar taxes
generally) or the manner of collecting taxes thereon and (ii) imposing a tax to
be paid by Mortgagee, either directly or indirectly, on this Mortgage or any of
the Loan Documents, or requiring an amount of taxes to be withheld or deducted
therefrom, Mortgagor will promptly (i) notify Mortgagee of such event, (ii)
enter into such further instruments as Mortgagee may determine are reasonably
necessary to obligate Mortgagor to make any additional payments necessary to put
the Secured Parties in the same financial position they would have been if such
law, order, rule or regulation had not been passed, and (iii) make such
additional payments to Mortgagee for the benefit of the Secured Parties.

 

SECTION 1.04.  Maintenance of Mortgaged Properties.  Mortgagor will maintain the
Improvements and the Personal Property in the manner required by the Credit
Agreement.

 

SECTION 1.05.  Insurance.  Mortgagor will keep or cause to be kept the
Improvements and Personal Property insured against such risks as may be required
from time to time pursuant to Section 5.02 of the Credit Agreement.  Federal
Emergency Management Standard Flood Hazard Determination Forms will be purchased
by Mortgagor for each of the Mortgaged Properties on which Improvements are
located.  If any portion of Improvements constituting part of the Mortgaged
Properties is located in an area identified as a special flood hazard area by
Federal Emergency Management Agency or other applicable government agency,
Mortgagor will purchase flood insurance in an amount reasonably satisfactory to
Mortgagee, but in no event less than the maximum limit of coverage available
under the National Flood Insurance Act of 1968, as amended.  Mortgagor is not
required to obtain insurance from or through any particular insurer, agent or
broker, and is free to obtain insurance through any insurer, agent or broker.

 

SECTION 1.06.  Casualty Condemnation/Eminent Domain.  Mortgagor shall give
Mortgagee prompt written notice of any casualty or other material damage to the
Mortgaged

 

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Properties or any proceeding for the taking of the Mortgaged Properties or any
material portion thereof or interest therein under power of eminent domain or by
condemnation or any similar proceeding.  Any Net Cash Proceeds received by or on
behalf of the Mortgagor in respect of any such casualty, damage or taking shall
be applied in accordance with Section 2.13 of the Credit Agreement.

 

SECTION 1.07.  Assignment of Tenant Leases and Rents.  (a) Mortgagor hereby
irrevocably and absolutely grants, transfers and assigns all of its right, title
and interest in all Tenant Leases, together with any and all extensions and
renewals thereof for purposes of securing and discharging the performance by
Mortgagor of the Mortgage-Secured Obligations.  Mortgagor has not assigned or
executed any assignment of, and will not assign or execute any assignment of,
any Tenant Leases or the Rents payable thereunder to anyone other than
Mortgagee.

 

(b)  All Tenant Leases shall be subordinate to the lien of this Mortgage. 
Mortgagor will not enter into, modify or amend any Tenant Lease if such Tenant
Lease, as entered into, modified or amended, will not be subordinate to the lien
of this Mortgage.

 

(c)  Subject to Section 1.07(d), Mortgagor has assigned and transferred to
Mortgagee all of Mortgagor’s right, title and interest in and to the Rents now
or hereafter arising from each Tenant Lease heretofore or hereafter made or
agreed to by Mortgagor, it being intended that this assignment establish,
subject to Section 1.07(d), an absolute transfer and assignment of all Rents and
all Tenant Leases to Mortgagee and not merely to grant a security interest
therein.  Subject to Section 1.07(d), Mortgagee may in Mortgagor’s name and
stead (with or without first taking possession of any of the Mortgaged
Properties personally or by receiver as provided herein) operate the Mortgaged
Properties and rent, lease or let all or any portion of the Mortgaged Properties
to any party or parties at such rental and upon such terms as Mortgagee shall,
in its sole discretion, determine, and may collect and have the benefit of all
of said Rents arising from or accruing at any time thereafter or that may
thereafter become due under any Tenant Lease.

 

(d)  So long as an Event of Default shall not have occurred and be continuing,
Mortgagee will not exercise any of its rights under Section 1.07(c), and
Mortgagor shall receive and collect the Rents accruing under any Tenant Lease;
but after the happening and during the continuance of any Event of Default,
Mortgagee may, at its option, receive and collect all Rents and enter upon the
Premises and Improvements through its officers, agents, employees or attorneys
for such purpose and for the operation and maintenance thereof.  Mortgagor
hereby irrevocably authorizes and directs each tenant, if any, and each
successor, if any, to the interest of any tenant under any Tenant Lease,
respectively, to rely upon any notice of a claimed Event of Default sent by
Mortgagee to any such tenant or any of such tenant’s successors in interest, and
thereafter to pay Rents to Mortgagee without any obligation or right to inquire
as to whether an Event of Default actually exists and even if some notice to the
contrary is received from the Mortgagor, who shall have no right or claim
against any such tenant or successor in interest for any such Rents so paid to
Mortgagee.  Each tenant or any of such tenant’s successors in interest from whom
Mortgagee or any officer, agent, attorney or employee of Mortgagee shall have
collected any Rents, shall be authorized to pay Rents to Mortgagor only after
such tenant or any of their successors in interest shall have received written
notice from Mortgagee that the Event of

 

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Default is no longer continuing, unless and until a further notice of an Event
of Default is given by Mortgagee to such tenant or any of its successors in
interest.

 

(e)  Mortgagee will not become a mortgagee in possession so long as it does not
enter or take actual possession of the Mortgaged Properties.  In addition,
Mortgagee shall not be responsible or liable for performing any of the
obligations of the landlord under any Tenant Lease, for any waste by any tenant,
or others, for any dangerous or defective conditions of any of the Mortgaged
Properties, for negligence in the management, upkeep, repair or control of any
of the Mortgaged Properties or any other act or omission by any other person,
except to the extent any of the foregoing are caused by Mortgagee or its agents.

 

(f)  Mortgagor shall furnish to Mortgagee, within 30 days after a request by
Mortgagee to do so, but in no event more than once in any 12 month period, a
written statement containing the names of all tenants, subtenants and
concessionaires of the Premises or Improvements, the term (and any extension
options) for each Tenant Lease, the space occupied and the base rental payable
thereunder.

 

SECTION 1.08.  Restrictions on Transfers and Encumbrances.  Mortgagor shall not
directly or indirectly sell, convey, alienate, assign, mortgage, pledge,
encumber or otherwise transfer, create, consent to or suffer the creation of any
lien, charge or other form of encumbrance upon any interest in or any part of
the Mortgaged Properties, or be divested of its title to the Mortgaged
Properties or any interest therein in any manner or way, whether voluntarily or
involuntarily (other than resulting from a condemnation), or engage in any
common, cooperative, joint, time-sharing or other congregate ownership of all or
part thereof, except in each case in accordance with and to the extent permitted
by the Credit Agreement; provided, that Mortgagor may, in the ordinary course of
business and in accordance with reasonable commercial standards, enter into,
amend and/or cancel easement or covenant agreements that relate to and/or
benefit the operation of the Mortgaged Properties and that do not materially and
adversely affect the value, use or operation of the Mortgaged Properties.  If
any of the foregoing transfers or encumbrances results in an Asset Sale, any Net
Cash Proceeds received by or on behalf of the Mortgagor in respect thereof shall
be applied in accordance with Section 2.13 of the Credit Agreement.

 

SECTION 1.09.  Security Agreement.  This Mortgage is both a mortgage of real
property and a grant of a security interest in personal property, and shall
constitute and serve as a “Security Agreement” within the meaning of the uniform
commercial code as adopted in the state wherein the Premises are located
(“UCC”).  Mortgagor has hereby granted unto Mortgagee a security interest in and
to all the Mortgaged Properties described in this Mortgage that is not real
property, and simultaneously with the recording of this Mortgage, Mortgagor has
filed or will file UCC financing statements, and will file continuation
statements prior to the lapse thereof, at the appropriate offices in the
jurisdiction of formation of the Mortgagor to perfect the security interest
granted by this Mortgage in all the Mortgaged Properties that are not real
property.  Mortgagor hereby appoints Mortgagee as its true and lawful
attorney-in-fact and agent, for Mortgagor and in its name, place and stead, in
any and all capacities, to execute any document and to file the same in the
appropriate offices (to the extent it may lawfully do so), and to perform each
and every act and thing reasonably requisite and necessary to be done to perfect
the security interest contemplated by the

 

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preceding sentence.  Mortgagee shall have all rights with respect to the part of
the Mortgaged Properties that is the subject of a security interest afforded by
the UCC in addition to, but not in limitation of, the other rights afforded
Mortgagee hereunder.

 

SECTION 1.10.  Filing and Recording.  Mortgagor will cause this Mortgage, the
UCC financing statements referred to in Section 1.09, any other security
instrument creating a security interest in or evidencing the lien hereof upon
the Mortgaged Properties and each UCC continuation statement and instrument of
further assurance to be filed, registered or recorded and, if necessary,
refiled, rerecorded and reregistered, in such manner and in such places as may
be required by any present or future law in order to publish notice of and fully
to perfect the lien hereof upon, and the security interest of Mortgagee in, the
Mortgaged Properties until this Mortgage is terminated and released in full in
accordance with Section 3.04 hereof.  Mortgagor will pay all filing,
registration and recording fees, all federal, state, county and municipal
recording documentary or intangible taxes and other taxes, duties, imposts,
assessments and charges, and all reasonable expenses incidental to or arising
out of or in connection with the execution, delivery and recording of this
Mortgage, UCC continuation statements, any mortgage supplemental hereto, any
security instrument with respect to the Personal Property, Permits, Plans and
Warranties and Proceeds or any instrument of further assurance.

 

SECTION 1.11.  Further Assurances.  Upon demand by Mortgagee, Mortgagor will, at
the cost of Mortgagor and without expense to Mortgagee, do, execute, acknowledge
and deliver all such further acts, deeds, conveyances, mortgages, assignments,
notices of assignment, transfers and assurances as Mortgagee shall from time to
time reasonably require for the better assuring, conveying, assigning,
transferring and confirming unto Mortgagee the property and rights hereby
conveyed or assigned or intended now or hereafter so to be, or which Mortgagor
may be or may hereafter become bound to convey or assign to Mortgagee, or for
carrying out the intention or facilitating the performance of the terms of this
Mortgage, or for filing, registering or recording this Mortgage, and on demand,
Mortgagor will also execute and deliver and hereby appoints Mortgagee as its
true and lawful attorney-in-fact and agent, for Mortgagor and in its name, place
and stead, in any and all capacities, to execute and file to the extent it may
lawfully do so, one or more financing statements, chattel mortgages or
comparable security instruments reasonably requested by Mortgagee to evidence
more effectively the lien hereof upon the Personal Property and to perform each
and every act and thing requisite and necessary to be done to accomplish the
same.

 

SECTION 1.12.  Additions to Mortgaged Properties.  All right, title and interest
of Mortgagor in and to all extensions, improvements, betterments, renewals,
substitutes and replacements of, and all additions and appurtenances to, the
Mortgaged Properties hereafter acquired by or released to Mortgagor or
constructed, assembled or placed by Mortgagor upon the Premises or the
Improvements, and all conversions of the security constituted thereby,
immediately upon such acquisition, release, construction, assembling, placement
or conversion, as the case may be, and in each such case without any further
mortgage, conveyance, assignment or other act by Mortgagor, shall become subject
to the lien and security interest of this Mortgage as fully and completely and
with the same effect as though now owned by Mortgagor and specifically described
in the grant of the Mortgaged Properties above, but at any and all times
Mortgagor will execute and deliver to Mortgagee any and all

 

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such further assurances, mortgages, conveyances or assignments thereof as
Mortgagee may reasonably require for the purpose of expressly and specifically
subjecting the same to the lien and security interest of this Mortgage.

 

SECTION 1.13.  No Claims Against Mortgagee.  Nothing contained in this Mortgage
shall constitute any consent or request by Mortgagee, express or implied, for
the performance of any labor or services or the furnishing of any materials or
other property in respect of the Mortgaged Properties or any part thereof, nor
as giving Mortgagor any right, power or authority to contract for or permit the
performance of any labor or services or the furnishing of any materials or other
property in such fashion as would permit the making of any claim against
Mortgagee in respect thereof.

 

SECTION 1.14.  Fixture Filing.  (a) Certain portions of the Mortgaged Properties
are or will become “fixtures” (as that term is defined in the UCC) on the Land,
and this Mortgage, upon being filed for record in the Bureau of Conveyances of
the State of Hawaii and the Office of the Assistant Registrar of the Land Court
of the State of Hawaii, wherein such fixtures are situated, shall operate also
as a financing statement filed as a fixture filing in accordance with the
applicable provisions of said UCC upon such portions of the Mortgaged Properties
that are or become fixtures.

 

(b)  The real property to which the fixtures relate is described in Exhibit A. 
The record owner of the real property described in Exhibit A is Mortgagor.  The
name, type of organization and jurisdiction of organization of the debtor for
purposes of this financing statement are the name, type of organization and
jurisdiction of organization of the Mortgagor set forth in the first paragraph
of this Mortgage, and the name of the secured party for purposes of this
financing statement is the name of the Mortgagee set forth in the first
paragraph of this Mortgage.  The mailing address of the Mortgagor/debtor is the
address of the Mortgagor set forth in the first paragraph of this Mortgage.  The
mailing address of the Mortgagee/secured party from which information concerning
the security interest hereunder may be obtained is the address of the Mortgagee
set forth in the first paragraph of this Mortgage.  Mortgagor’s organizational
identification number is 99-0049500.

 

ARTICLE II

 

Defaults and Remedies

 

SECTION 2.01.  Events of Default.  Any Event of Default under the Credit
Agreement (as such term is defined therein) shall constitute an Event of Default
under this Mortgage.

 

SECTION 2.02.  Demand for Payment.  If an Event of Default shall occur and be
continuing, then, upon written demand of Mortgagee, Mortgagor will pay to
Mortgagee all amounts due hereunder and under the Credit Agreement, the
Guarantee and Collateral Agreement, and the other Loan Documents and such
further amount as shall be sufficient to cover the costs and expenses of
collection, including reasonable attorneys’ fees, disbursements and expenses
incurred by Mortgagee, and Mortgagee shall be entitled and empowered to
institute an action or proceedings at law or in equity for the collection of the
sums so due and unpaid, to prosecute any such action or proceedings to judgment
or final

 

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decree, to enforce any such judgment or final decree against Mortgagor and to
collect, in any manner provided by law, all moneys adjudged or decreed to be
payable.

 

SECTION 2.03.  Rights To Take Possession, Operate and Apply Revenues.  (a) If an
Event of Default shall occur and be continuing, Mortgagor shall, upon demand of
Mortgagee, forthwith surrender to Mortgagee actual possession of the Mortgaged
Properties and, if and to the extent permitted by applicable law, Mortgagee
itself, or by such officers or agents as it may appoint, may then enter and take
possession of all the Mortgaged Properties without the appointment of a receiver
or an application therefor, exclude Mortgagor and its agents and employees
wholly therefrom, and have access to the books, papers and accounts of
Mortgagor.

 

(b)  If Mortgagor shall for any reason fail to surrender or deliver the
Mortgaged Properties or any part thereof after such demand by Mortgagee,
Mortgagee may, to the extent permitted by applicable law, obtain a judgment or
decree conferring upon Mortgagee the right to immediate possession or requiring
Mortgagor to deliver immediate possession of the Mortgaged Properties to
Mortgagee, to the entry of which judgment or decree Mortgagor hereby
specifically consents.  Mortgagor will pay to Mortgagee, upon demand, all
reasonable expenses of obtaining such judgment or decree, including reasonable
compensation to Mortgagee’s attorneys and agents with interest thereon at the
rate per annum applicable to overdue amounts under the Credit Agreement as
provided in Section 2.07 of the Credit Agreement (the “Default Interest Rate”);
and all such expenses and compensation shall, until paid, be secured by this
Mortgage.

 

(c)  Upon every such entry or taking of possession, Mortgagee may, to the extent
permitted by applicable law, hold, store, use, operate, manage and control the
Mortgaged Properties, conduct the business thereof and, from time to time, (i)
make all necessary and proper maintenance, repairs, renewals, replacements,
additions, betterments and improvements thereto and thereon, (ii) purchase or
otherwise acquire additional fixtures, personalty and other property, (iii)
insure or keep the Mortgaged Properties insured, (iv) manage and operate the
Mortgaged Properties and exercise all the rights and powers of Mortgagor to the
same extent as Mortgagor could in its own name or otherwise with respect to the
same, or (v) enter into any and all agreements with respect to the exercise by
others of any of the powers herein granted Mortgagee, all as may from time to
time be directed or determined by Mortgagee to be in its best interest and
Mortgagor hereby appoints Mortgagee as its true and lawful attorney-in-fact and
agent, for Mortgagor and in its name, place and stead, in any and all
capacities, to perform any of the foregoing acts.  Mortgagee may collect and
receive all the Rents, issues, profits and revenues from the Mortgaged
Properties, including those past due as well as those accruing thereafter, and,
after deducting (i) all expenses of taking, holding, managing and operating the
Mortgaged Properties (including reasonable compensation for the services of all
persons employed for such purposes), (ii) the costs of all such maintenance,
repairs, renewals, replacements, additions, betterments, improvements, purchases
and acquisitions, (iii) the costs of insurance, (iv) such taxes, assessments and
other similar charges as Mortgagee may at its option pay, (v) other proper
charges upon the Mortgaged Properties or any part thereof and (vi) the
reasonable compensation, expenses and disbursements of the attorneys and agents
of Mortgagee, Mortgagee shall apply the remainder of the moneys and proceeds so
received first to the payment of the Mortgagee for the satisfaction of the
Mortgage-Secured Obligations, and second, if there is any surplus, to Mortgagor,
subject to the entitlement of others thereto under applicable law.

 

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(d)  Whenever, before any sale of the Mortgaged Properties under Section 2.06,
all Mortgage-Secured Obligations that are then due shall have been paid and all
Events of Default fully cured, Mortgagee will surrender possession of the
Mortgaged Properties back to Mortgagor, its successors or assigns.  The same
right of taking possession shall, however, arise again if any subsequent Event
of Default shall occur and be continuing.

 

SECTION 2.04.  Right To Cure Mortgagor’s Failure to Perform.  Should Mortgagor
fail in the payment, performance or observance of any term, covenant or
condition required by this Mortgage or the Credit Agreement (with respect to the
Mortgaged Properties), Mortgagee may pay, perform or observe the same, and all
payments made or costs or expenses incurred by Mortgagee in connection therewith
shall be secured hereby and shall be, without demand, promptly repaid by
Mortgagor to Mortgagee with interest thereon at the Default Interest Rate. 
Mortgagee shall be the judge using reasonable discretion of the necessity for
any such actions and of the amounts to be paid.  Mortgagee is hereby empowered
to enter and to authorize others to enter upon the Premises or the Improvements
or any part thereof for the purpose of performing or observing any such
defaulted term, covenant or condition without having any obligation to so
perform or observe and without thereby becoming liable to Mortgagor, to any
person in possession holding under Mortgagor or to any other person except for
Mortgagee’s or its agent’s gross negligence or willful misconduct.

 

SECTION 2.05.  Right to a Receiver.  If an Event of Default shall occur and be
continuing, Mortgagee, upon application to a court of competent jurisdiction,
shall be entitled as a matter of right to the appointment of a receiver to take
possession of and to operate the Mortgaged Properties and to collect and apply
the Rents.  The receiver shall have all of the rights and powers permitted under
the laws of the state wherein the Mortgaged Properties are located.  Mortgagor
shall pay to Mortgagee upon demand all reasonable expenses, including receiver’s
fees, reasonable attorneys’ fees and disbursements, costs and agent’s
compensation incurred pursuant to the provisions of this Section 2.05; and all
such expenses shall be secured by this Mortgage and shall be, without demand,
promptly repaid by Mortgagor to Mortgagee with interest thereon at the Default
Interest Rate.

 

SECTION 2.06.  Foreclosure and Sale.  (a) If an Event of Default shall occur and
be continuing, Mortgagee may elect to sell the Mortgaged Properties or any part
of the Mortgaged Properties by exercise of the power of foreclosure or of sale
granted to Mortgagee by applicable law or this Mortgage.  In such case,
Mortgagee may commence a civil action to foreclose this Mortgage, or it may
proceed and sell the Mortgaged Properties to satisfy any Mortgage-Secured
Obligation.  Mortgagee or an officer appointed to sell the Mortgaged Properties,
may sell all or such parts of the Mortgaged Properties as may be chosen by
Mortgagee at the time and place of sale fixed by it in a notice of sale, either
as a whole or in separate lots, parcels or items as Mortgagee shall deem
expedient, and in such order as it may determine, at public auction to the
highest bidder.  Mortgagee or an officer appointed to sell the Mortgaged
Properties may postpone any foreclosure or other sale of all or any portion of
the Mortgaged Properties by public announcement at such time and place of sale,
and from time to time thereafter may postpone such sale by public announcement
or subsequently noticed sale.  Without further notice, Mortgagee or an officer
appointed to sell the Mortgaged Properties may make such sale at the time fixed
by the last postponement, or may, in its

 

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discretion, give a new notice of sale.  Any person, including Mortgagor or
Mortgagee or any designee or affiliate thereof, may purchase at such sale.

 

(b)  The Mortgaged Properties may be sold subject to unpaid taxes and Permitted
Encumbrances, and, after deducting all costs, fees and expenses of Mortgagee
(including costs of evidence of title in connection with the sale), Mortgagee or
an officer that makes any sale shall apply the proceeds of sale in the manner
set forth in Section 2.08.

 

(c)  Any foreclosure or other sale of less than the whole of the Mortgaged
Properties or any defective or irregular sale made hereunder shall not exhaust
the power of foreclosure or of sale provided for herein; and subsequent sales
may be made hereunder until the Mortgage-Secured Obligations have been
satisfied, or the entirety of the Mortgaged Properties has been sold.

 

(d)  If an Event of Default shall occur and be continuing, Mortgagee may instead
of, or in addition to, exercising the rights described in Section 2.06(a) above
and either with or without entry or taking possession as herein permitted,
proceed by a suit or suits in law or in equity or by any other appropriate
proceeding or remedy (i) to specifically enforce payment of some or all of the
Mortgage-Secured Obligations, or the performance of any term, covenant,
condition or agreement of this Mortgage or any other Loan Document or any other
right, or (ii) to pursue any other remedy available to Mortgagee, all as
Mortgagee shall determine most effectual for such purposes.

 

SECTION 2.07.  Other Remedies.  (a) In case an Event of Default shall occur and
be continuing, Mortgagee may also exercise, to the extent not prohibited by law,
any or all of the remedies available to a secured party under the UCC.

 

(b)  In connection with a sale of the Mortgaged Properties or any Personal
Property and the application of the proceeds of sale as provided in Section
2.08, Mortgagee shall be entitled to enforce payment of and to receive up to the
principal amount of the Mortgage-Secured Obligations, plus all other charges,
payments and costs due under this Mortgage, and to recover a deficiency judgment
for any portion of the aggregate principal amount of the Mortgage-Secured
Obligations remaining unpaid, with interest.

 

SECTION 2.08.  Application of Sale Proceeds and Rents.  After any foreclosure
sale of all or any of the Mortgaged Properties, unless otherwise required by the
Credit Agreement or applicable law, Mortgagee shall receive and apply the
proceeds of the sale together with any Rents that may have been collected and
any other sums that then may be held by Mortgagee under this Mortgage as
follows:

 

FIRST, to the payment of all costs and expenses actually incurred by the
Mortgagee in connection with such collection or sale or otherwise in connection
with this Mortgage or the Guarantee and Collateral Agreement, any other Loan
Document, or any of the Mortgage-Secured Obligations, including all court costs
and the reasonable fees and expenses of its agents and legal counsel, the
repayment of all advances made by the Mortgagee hereunder or under any other
Loan Document on behalf of the Mortgagor and any other costs or expenses
actually incurred in

 

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connection with the exercise of any right or remedy hereunder or under any other
Loan Document;

 

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

 

THIRD, to the Mortgagor, its successors and assigns, or as a court of competent
jurisdiction may otherwise direct.

 

The Mortgagee shall have absolute discretion as to the time of application of
any such proceeds, moneys or balances in accordance with this Mortgage or the
Guarantee and Collateral Agreement.  Upon any sale of Mortgaged Properties by
the Mortgagee (including pursuant to a power of sale granted by statute or under
a judicial proceeding), the receipt of the Mortgagee or of the officer making
the sale shall be a sufficient discharge to the purchaser or purchasers of the
Mortgaged Properties 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 Mortgagee or such officer or be answerable in any way for the
misapplication thereof.

 

SECTION 2.09.  Mortgagor as Tenant Holding Over.  If Mortgagor remains in
possession of any of the Mortgaged Properties after any foreclosure sale by
Mortgagee, at Mortgagee’s election, Mortgagor shall be deemed a tenant holding
over and shall forthwith surrender possession to the purchaser or purchasers at
such sale or be summarily dispossessed or evicted according to provisions of law
applicable to tenants holding over.

 

SECTION 2.10.  Waiver of Appraisement, Valuation Stay, Extension and Redemption
Law.  Mortgagor waives, to the extent permitted by law, (i) the benefit of all
laws now existing or that hereafter may be enacted (x) providing for any
appraisement or valuation of any portion of the Mortgaged Properties and/or (y)
in any way extending the time for the enforcement or the collection of amounts
due under any of the Mortgage-Secured Obligations or creating or extending a
period of redemption from any sale made in collecting said debt or any other
amounts due Mortgagee, (ii) any right to at any time insist upon, plead, claim
or take the benefit or advantage of any law now or hereafter in force providing
for any homestead exemption, stay, statute of limitations, extension or
redemption, or sale of the Mortgaged Properties as separate tracts, units or
estates or as a single parcel in the event of foreclosure or notice of
deficiency, and (iii) all rights of redemption, valuation, appraisement, stay of
execution, notice of election to mature or declare due the whole of or each of
the Mortgage-Secured Obligations and marshaling in the event of foreclosure of
this Mortgage.

 

SECTION 2.11.  Discontinuance of Proceedings.  In case Mortgagee shall proceed
to enforce any right, power or remedy under this Mortgage by foreclosure, entry
or otherwise, and such proceedings shall be discontinued or abandoned for any
reason, then and in every such case Mortgagor and Mortgagee shall be restored to
their former positions and rights hereunder, and all rights, powers and remedies
of Mortgagee shall continue as if no such proceeding had been taken.

 

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SECTION 2.12.  Suits To Protect the Mortgaged Properties.  After the occurrence
and during the continuance of an Event of Default, Mortgagee shall have power
(a) to institute and maintain suits and proceedings to prevent any impairment of
the Mortgaged Properties by any acts that may be unlawful or in violation of
this Mortgage, (b) to preserve or protect its interest in the Mortgaged
Properties and in the Rents arising therefrom and (c) to restrain the
enforcement of or compliance with any legislation or other governmental
enactment, rule or order that may be unconstitutional or otherwise invalid if
the enforcement of or compliance with such enactment, rule or order would impair
the security or be prejudicial to the interest of Mortgagee hereunder.

 

SECTION 2.13.  Filing Proofs of Claim.  In case of any receivership, insolvency,
bankruptcy, reorganization, arrangement, adjustment, composition or other
proceedings affecting Mortgagor, Mortgagee shall, to the extent permitted by
law, be entitled to file such proofs of claim and other documents as may be
necessary or advisable in order to have the claims of Mortgagee allowed in such
proceedings for the Mortgage-Secured Obligations secured by this Mortgage at the
date of the institution of such proceedings and for any interest accrued, late
charges and additional interest or other amounts due or that may become due and
payable hereunder after such date.

 

SECTION 2.14.  Possession by Mortgagee.  Notwithstanding the appointment of any
receiver, liquidator or trustee of Mortgagor, any of its property or the
Mortgaged Properties, Mortgagee shall be entitled, to the extent permitted by
law, to remain in possession and control of all parts of the Mortgaged
Properties now or hereafter granted under this Mortgage to Mortgagee in
accordance with the terms hereof and applicable law.

 

SECTION 2.15.  Waiver.  (a) To the extent permitted by law, no delay or failure
by Mortgagee to exercise any right, power or remedy accruing upon any breach or
Event of Default shall exhaust or impair any such right, power or remedy or be
construed to be a waiver of any such breach or Event of Default or acquiescence
therein; and every right, power and remedy given by this Mortgage to Mortgagee
may be exercised from time to time and as often as may be deemed expedient by
Mortgagee.  No consent or waiver by Mortgagee to or of any breach or Event of
Default by Mortgagor in the performance of the Mortgage-Secured Obligations
shall be deemed or construed to be a consent or waiver to or of any other breach
or Event of Default in the performance of the same or of any other
Mortgage-Secured Obligations by Mortgagor hereunder.  No failure on the part of
Mortgagee to complain of any act or failure to act or to declare an Event of
Default, irrespective of how long such failure continues, shall constitute a
waiver by Mortgagee of its rights hereunder or impair any rights, powers or
remedies consequent on any future Event of Default by Mortgagor.

 

(b)  Even if Mortgagee (i) grants some forbearance or an extension of time for
the payment of any sums secured hereby, (ii) takes other or additional security
for the payment of any sums secured hereby, (iii) waives or does not exercise
some right granted herein or under the Loan Documents, (iv) releases a part of
the Mortgaged Properties from this Mortgage, (v) agrees to change some of the
terms, covenants, conditions or agreements of any of the Loan Documents, (vi)
consents to the filing of a map, plat or replat affecting the Premises, (vii)
consents to the granting of an easement or other right affecting the Premises or
(viii) makes or consents to an agreement subordinating Mortgagee’s lien on the
Mortgaged Properties hereunder, no such act or

 

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omission shall preclude Mortgagee from exercising any other right, power or
privilege herein granted or intended to be granted in the event of any breach or
Event of Default then made or of any subsequent default; nor, except as
otherwise expressly provided in an instrument executed by Mortgagee, shall this
Mortgage be altered thereby.  In the event of the sale or transfer by operation
of law or otherwise of all or part of the Mortgaged Properties, Mortgagee is
hereby authorized and empowered to deal with any vendee or transferee with
reference to the Mortgaged Properties secured hereby, or with reference to any
of the terms, covenants, conditions or agreements hereof; as fully and to the
same extent as it might deal with the original parties hereto and without in any
way releasing or discharging any liabilities, obligations or undertakings.

 

SECTION 2.16.  Waiver of Trial by Jury.  To the fullest extent permitted by
applicable law, Mortgagor and Mortgagee each hereby irrevocably and
unconditionally waive trial by jury in any action, claim, suit or proceeding
relating to this Mortgage and for any counterclaim brought therein.  Mortgagor
hereby waives all rights to interpose any counterclaim in any suit brought by
Mortgagee hereunder and all rights to have any such suit consolidated with any
separate suit, action or proceeding.

 

SECTION 2.17.  Remedies Cumulative.  No right, power or remedy conferred upon or
reserved to Mortgagee by this Mortgage is intended to be exclusive of any other
right, power or remedy, and each and every such right, power and remedy shall be
cumulative and concurrent and in addition to any other right, power and remedy
given hereunder or now or hereafter existing at law or in equity or by statute.

 

ARTICLE III

 

Miscellaneous

 

SECTION 3.01.  Partial Invalidity.  In the event any one or more of the
provisions contained in this Mortgage shall for any reason be held to be
invalid, illegal or unenforceable in any respect, such validity, illegality or
unenforceability shall, at the option of Mortgagee, not affect any other
provision of this Mortgage, and this Mortgage shall be construed as if such
invalid, illegal or unenforceable provision had never been contained herein or
therein.

 

SECTION 3.02.  Notices.   All notices and communications hereunder shall be in
writing and given to Mortgagor in accordance with the terms of the Credit
Agreement at the address set forth on the first page of this Mortgage and to the
Mortgagee as provided in the Credit Agreement.

 

SECTION 3.03.  Successors and Assigns.  All of the grants, covenants, terms,
provisions and conditions herein shall run with the Premises and the
Improvements and shall apply to, bind and inure to, the benefit of the permitted
successors and assigns of Mortgagor and the successors and assigns of Mortgagee.

 

SECTION 3.04.  Satisfaction and Cancellation.  (a) This Mortgage and all other
security interests granted hereby shall terminate when all the Mortgaged-Secured
Obligations have been indefeasibly paid in full and the Lenders have no further
commitment to lend under the Credit Agreement.

 

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(b)  Mortgagor shall automatically be released from its obligations hereunder
upon the consummation of any transaction permitted by the Credit Agreement as a
result of which Mortgagor ceases to be a Subsidiary of the Borrower; 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 Mortgagor of the Mortgaged Properties
that is permitted under the Credit Agreement or Section 1.08, or upon the
effectiveness of any written consent to the release of the security interest
granted hereby in any Mortgaged Properties pursuant to Section 9.08 of the
Credit Agreement, the security interest in such Mortgaged Properties shall be
automatically released.  Mortgagor shall give Mortgagee written notice of any
sale or transfer of the Mortgaged Properties prior to the closing of such sale
or transfer.

 

(d)  In connection with any termination or release pursuant to paragraph (a),
(b) or (c) of this Section 3.04, the Mortgagee shall execute and deliver to the
Mortgagor, at the Mortgagor’s expense, all documents that the Mortgagor shall
reasonably request to evidence such termination or release and Mortgagor will
pay all costs and expenses, including reasonable attorneys’ fees, disbursements
and other charges, incurred by Mortgagee in connection with the preparation and
execution of such documents.  Any execution and delivery of documents pursuant
to this Section 3.04 shall be without recourse to or warranty by the Mortgagee.

 

SECTION 3.05.  Definitions.  The rules of construction specified in Section 1.02
of the Credit Agreement also apply to this Mortgage.  As used in this Mortgage,
the singular shall include the plural as the context requires and the following
words and phrases shall have the following meanings:  (a) “including” shall mean
“including but not limited to”; (b) “provisions” shall mean “provisions, terms,
covenants and/or conditions”; (c) “lien” shall mean “lien, charge, encumbrance,
security interest, mortgage or deed of trust”; (d) “obligation” shall mean
“obligation, duty, covenant and/or condition”; and (e) “any of the Mortgaged
Properties” shall mean “the Mortgaged Properties or any part thereof or interest
therein”.  Any act that Mortgagee is permitted to perform hereunder may be
performed at any time and from time to time by Mortgagee or any person or entity
designated by Mortgagee.  Any act that is prohibited to Mortgagor hereunder is
also prohibited to all lessees of any of the Mortgaged Properties.  Each
appointment of Mortgagee as attorney-in-fact for Mortgagor under the Mortgage is
irrevocable, with power of substitution and coupled with an interest.  Subject
to the applicable provisions hereof, Mortgagee has the right to refuse to grant
its consent, approval or acceptance or to indicate its satisfaction, in its sole
discretion, whenever such consent, approval, acceptance or satisfaction is
required hereunder.

 

SECTION 3.06.  Multisite Real Estate Transaction.  Mortgagor acknowledges that
this Mortgage is one of a number of Mortgages and Security Documents that secure
the Obligations (as defined in the Guarantee and Collateral Agreement). 
Mortgagor agrees that the lien of this Mortgage shall be absolute and
unconditional and shall not in any manner be affected or impaired by any acts or
omissions whatsoever of Mortgagee, and without limiting the generality of the
foregoing, the lien hereof shall not be impaired by any acceptance by the
Mortgagee of any security for or guarantees of any of the Mortgage-Secured
Obligations hereby secured, or by any failure, neglect or omission on the part
of Mortgagee to realize upon or protect any Mortgage-Secured Obligation or
indebtedness hereby secured or any

 

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collateral security therefor including the Other Mortgages and other Security
Documents.  Subject to Section 3.04 of this Mortgage, the lien hereof shall not
in any manner be impaired or affected by any release (except as to the property
released), sale, pledge, surrender, compromise, settlement, renewal, extension,
indulgence, alteration, changing, modification or disposition of any of the
Mortgage-Secured Obligations secured or of any of the collateral security
therefor, including the Other Mortgages and other Security Documents or of any
guarantee thereof, and Mortgagee may at its discretion foreclose, exercise any
power of sale, or exercise any other remedy available to it under any or all of
the Other Mortgages and other Security Documents without first exercising or
enforcing any of its rights and remedies hereunder.  Such exercise of
Mortgagee’s rights and remedies under any or all of the Other Mortgages and
other Security Documents shall not in any manner impair the indebtedness hereby
secured or the lien of this Mortgage and any exercise of the rights or remedies
of Mortgagee hereunder shall not impair the lien of any of the Other Mortgages
and other Security Documents or any of Mortgagee’s rights and remedies
thereunder.  Mortgagor specifically consents and agrees that Mortgagee may
exercise its rights and remedies hereunder and under the Other Mortgages and
other Security Documents separately or concurrently and in any order that it may
deem appropriate and waives any rights of subrogation.

 

SECTION 3.07.  No Oral Modification.  This Mortgage may not be changed or
terminated orally.  Any agreement made by Mortgagor and Mortgagee after the date
of this Mortgage relating to this Mortgage shall be superior to the rights of
the holder of any intervening or subordinate mortgage, lien or encumbrance.

 

SECTION 3.08.  Counterparts.  The parties hereto agree that this instrument may
be executed in counterparts, each of which shall be deemed an original, and said
counterparts shall together constitute one and the same agreement, binding all
of the parties hereto, notwithstanding all of the parties are not signatory to
the original or same counterparts.  For all purposes, including, without
limitation, recordation, filing and delivery of this instrument, duplicate
unexecuted and unacknowledged pages of the counterparts may be discarded and the
remaining pages assembled as one document.

 

SECTION 3.09. Priority of Lien.  Notwithstanding any provisions of this Mortgage
to the contrary, it is understood and agreed that the lien, terms, covenants and
conditions of this Mortgage are and shall be first priority, pari passu in all
respects, to that certain Real Property Mortgage and Financing Statement dated
October 28, 2010, by and between First Hawaiian Bank, a Hawaii corporation, and
Mortgagor.

 

ARTICLE IV

 

The Leases

 

SECTION 4.01. The Leases.

 

(a)                                 Mortgagor shall (i) pay all rents,
additional rents and other sums required to be paid by Mortgagor under and
pursuant to the provisions of the Leases as and when the same shall become due,
(ii) promptly and faithfully observe, perform and comply with all of the terms,

 

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covenants and provisions of the Leases on the part of Mortgagor to be observed,
performed and complied with, at the times set forth in the Leases, and do all
things necessary to preserve unimpaired its rights under the Leases, and (iii)
promptly notify Mortgagee of the giving of any notice by the landlord under any
of the Leases to Mortgagor of any default by Mortgagor in the performance or
observance of any of the terms, covenants or conditions of any of the Leases on
the part of Mortgagor to be performed or observed and shall deliver to Mortgagee
a true copy of each such notice.

 

(b)                                 Mortgagor shall not, without the prior
written consent of Mortgagee, surrender the leasehold estates created by any of
the Leases or terminate or cancel the Leases or modify, change, supplement,
alter or amend the Leases, in any respect, either orally or in writing, and
Mortgagor hereby assigns to Mortgagee, as further security for the payment of
the Mortgage-Secured Obligations and for the performance and observance of the
terms, covenants and conditions of this Mortgage, all of the rights, privileges
and prerogatives of Mortgagor, as tenant under the Leases, to surrender the
leasehold estates created by any of the Leases and/or to terminate, cancel,
modify, change, supplement, alter or amend the Leases, and any such surrender of
the leasehold estates created by any of the Leases or termination, cancellation,
modification, change, supplement, alteration or amendment of the Leases without
the prior written consent of Mortgagee shall be void and of no force and effect.

 

(c)                                  Mortgagor shall, within fifteen (15) days
after written request by Mortgagee, furnish to Mortgagee an estoppel certificate
signed by Mortgagor, (and request an estoppel certificate signed by the
landlords under the Leases, if required by Mortgagee) together with such
supporting information and evidence as Mortgagee may reasonably require which is
in the possession or control of Mortgagor, concerning Mortgagor’s due
observance, performance and compliance with the terms, covenants and provisions
of the Leases.

 

(d)                                 If Mortgagor shall default in the
performance or observance of any term, covenant or condition of any Lease on the
part of Mortgagor to be performed or observed, including, without limitation,
any default in the payment of rent, additional rent and other charges and
impositions made payable by the tenant under the Lease, then, in each and every
case, without limiting the generality of the other provisions of this Mortgage
or the Credit Agreement and without waiving or releasing Mortgagor from any of
its obligations hereunder, Mortgagee shall have the right, but shall be under no
obligation, at its option and without notice, to pay any sums or perform any act
or take any action as may be appropriate to remedy the default or defaults and
all of the terms, covenants and conditions of the Lease on the part of Mortgagor
to be performed or observed, to the end that the rights of Mortgagor in, to and
under the Lease shall be kept unimpaired and free from default, even though the
existence of such event of default or the nature thereof be questioned or denied
by Mortgagor or by any party on behalf of Mortgagor.  In any such event, subject
to the rights of tenants, subtenants and other occupants under any Leases,
Mortgagee and any person designated by Mortgagee shall have, and are hereby
granted, the right to enter upon the property demised by the Lease (the “Demised
Premises”) at any time and from time to time for the purpose of taking any such
action.  Mortgagor shall, on demand, reimburse Mortgagee for all advances made
and reasonable expenses incurred by Mortgagee in curing any such default
(including, without limitation, reasonable attorneys’ fees, disbursements, and
any other reasonable expense related thereto), together with interest thereon at
the Default Interest Rate from the date that an advance is made

 

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or expense is incurred to and including the date the same is paid, and such
monies so expended by Mortgagee with interest thereon shall be secured by this
Mortgage and by all of the other Loan Documents securing all or any part of the
Guaranty Obligations.  If the landlord under any Lease shall deliver to
Mortgagee a copy of any notice of default sent by said landlord to Mortgagor, as
tenant under a Lease, such notice shall constitute full authority and protection
to Mortgagee for any action taken or omitted to be taken by Mortgagee, in good
faith, in reliance thereon.

 

(e)                                  Mortgagor shall exercise each individual
option, if any, to extend or renew the term of the Leases upon demand by
Mortgagee made at any time within one (1) year of the last day upon which any
such option may be exercised, and Mortgagor hereby expressly authorizes and
appoints Mortgagee its attorney-in-fact to exercise any such option in the name
of and upon behalf of Mortgagor, which power of attorney shall be irrevocable
and shall be deemed to be coupled with an interest.

 

(f)                                   Mortgagor will not subordinate or consent
to the subordination of the Leases to any mortgage, security deed, lease or
other interest on or in the landlords’ interest in all or any part of the
Demised Premises, unless, in each such case, the written consent of Mortgagee
shall have been first had and obtained.

 

(g)                                  If any Lease is for any reason whatsoever
terminated prior to the natural expiration of its term, and if, pursuant to any
provisions of said Lease or otherwise, Mortgagee or its designee shall acquire
from the landlord thereunder another lease of the Demised Premises, then
Mortgagor shall have no right, title or interest in or to such other lease or
the leasehold estate created thereby.

 

(h)                                 Mortgagor shall use its diligent efforts to
obtain and deliver to Mortgagee from time to time within twenty (20) days after
written demand by Mortgagee, an estoppel certificate from the landlords under
the Leases, as requested by Mortgagee, setting forth (i) the name of the
landlords under the Leases, (ii) that the Leases have not been modified or, if
they have been modified, the date of each modification (together with copies of
each such modification), (iii) the basic rent and additional rent payable under
the Leases, (iv) the date to which all rental charges have been paid by the
tenant under the Leases, (v) whether there are any alleged defaults of the
tenant under the Leases or if there are any events which have occurred which
with notice, passage of time or both, would constitute a default under the
Leases, and, if there are, setting forth the nature thereof in reasonable
detail, and (vi) the commencement and termination dates under the Leases.

 

(i)                                     Mortgagee shall have no liability or
obligation under the Leases by reason of its acceptance of this Mortgage. 
Mortgagee shall be liable for the obligations of the tenant arising under the
Leases for only that period of time which Mortgagee is in possession of the
Demised Premises or has acquired, by foreclosure or otherwise, and is holding
all of Mortgagor’s right, title and interest therein.

 

(j)                                    No release or forbearance of any of
Mortgagor’s obligations under the Leases, pursuant to the Leases or otherwise,
shall release Mortgagor from any of its obligations under this Mortgage or the
other Loan Documents.

 

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(k)                                 Mortgagor shall enforce the obligations of
the landlords under the Leases to the extent that Mortgagor may enjoy all of the
rights granted to it under the Leases.  Mortgagor will promptly notify Mortgagee
in writing of any default by a landlord under the Leases of which it is aware in
the performance or observance of any of the terms, covenants and conditions on
the part of such landlord to be performed or observed under the Leases.

 

(l)                                     Mortgagor shall give Mortgagee prompt
notice of the commencement of any arbitration or appraisal proceeding to which
Mortgagor is a party or of which Mortgagor has been otherwise notified
concerning the provisions of the Leases.  Mortgagee shall have the right to
intervene and participate in any such proceeding if such proceeding, if
adversely determined, would be reasonably expected to have a material adverse
effect on Mortgagor or any of the Mortgaged Properties and Mortgagor shall
confer with Mortgagee and its attorneys and experts and cooperate with them to
the extent which Mortgagee deems reasonably necessary for the protection of
Mortgagee.  Upon the request of Mortgagee, Mortgagor will exercise all rights of
arbitration conferred upon it by the Leases.  If at any time such proceeding
shall have commenced, Mortgagor shall be in material default in the performance
or observance of any covenant, condition or other requirement of the Leases on
the part of Mortgagor to be performed or observed or a default shall have
occurred hereunder, Mortgagee shall have, and is hereby granted, the sole and
exclusive right to designate and appoint on behalf of Mortgagor, the arbitrator
or arbitrators, or appraiser, in such proceeding.

 

(m)                             Mortgagor will, promptly after the execution and
delivery of this Mortgage, notify the landlords under the Leases, in writing, of
the execution and delivery of this Mortgage and, to the extent required under
the Leases, deliver to the landlord a copy of this Mortgage.

 

SECTION 4.02.  No Merger of Fee and Leasehold Estates.  So long as any portion
of the Mortgage-Secured Obligations shall remain unpaid, unless Mortgagee shall
otherwise consent in writing, the fee title to the Demised Premises and the
leasehold estate therein created pursuant to the provisions of the Leases shall
not merge but shall always be kept separate and distinct, notwithstanding the
union of such estates in Mortgagor, Mortgagee, or in any other person by
purchase, operation of law or otherwise.

 

SECTION 4.03.  Mortgagor’s Acquisition of Fee Estate.  In the event that
Mortgagor shall become the owner and holder of the fee title to any of the
Demised Premises or any other estate, title or interest in the property demised
by any of the Leases, or any part thereof, the lien of this Mortgage shall
attach to, cover and be a lien upon such fee title to the Demised Premises or
other acquired estate, title or interest and the same shall thereupon be and
become a part of the Premises with the same force and effect as if specifically
encumbered herein.  Mortgagor agrees, at its sole cost and expense, including,
without limitation, payment by Mortgagor of Mortgagee’s reasonable attorneys’
fees, to (i) execute any and all documents or instruments which Mortgagee may
reasonably require to subject the fee title to the Demised Premises or such
other acquired estate, title or interest to the lien of this Mortgage; and (ii)
provide a title insurance policy which shall insure that the lien of this
Mortgage is a first lien on the fee title to the Demised Premises or such other
acquired estate, title or interest.  Furthermore, Mortgagor hereby appoints
Mortgagee its true and lawful attorney-in-fact to execute and deliver all such
instruments and documents in the name and on behalf of Mortgagor.  This power,
being coupled with an interest, shall be irrevocable as long as the

 

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Mortgage-Secured Obligations remain unpaid.  Mortgagor shall not purchase the
Demised Premises, or any part thereof, or acquire the interest of the landlord
in such premises, or any part thereof, or sell its interest in the leasehold
estates created by the Leases, or any part thereof, without Mortgagee’s prior
written consent.

 

SECTION 4.04. Bankruptcy Rights.

 

(a)                                 The lien of this Mortgage shall attach to
all of Mortgagor’s rights and remedies at any time arising under or pursuant to
Subsection 365(h) of the Bankruptcy Code, 11 U.S.C. § 101, et seq., as the same
may be amended (the “Bankruptcy Code”), including, without limitation, all of
Mortgagor’s rights to remain in possession of the Demised Premises.

 

(b)                                 If any Lease is terminated for any reason in
the event of the rejection or disaffirmance of the Lease pursuant to the
Bankruptcy Code or any other law affecting creditor’s rights, (i) Mortgagor,
immediately after obtaining notice thereof, shall give written notice thereof to
Mortgagee, (ii) Mortgagor, without the prior written consent of Mortgagee, shall
not elect to treat the Lease as terminated pursuant to Section 365(h) of the
Bankruptcy Code or any comparable federal or state statute or law, and any
election by Mortgagor made without such consent shall be void, and (iii) this
Mortgage and all the liens, terms, covenants and conditions of this Mortgage
shall extend to and cover Mortgagor’s possessory rights under Section 365(h) of
the Bankruptcy Code and to any claim for damages due to the rejection of the
Lease or other termination of the Lease.  In addition, Mortgagor hereby
irrevocably assigns to Mortgagee, Mortgagor’s rights to remain in possession of
the Demised Premises and to offset against the rent reserved in the Lease under
Section 365(h) of the Bankruptcy Code the amount of any damages caused by the
nonperformance by the landlord of any of its obligations under the Lease in the
event any case, proceeding or other action is commenced by or against the
landlord under the Lease under the Bankruptcy Code or any comparable federal or
state statute or law, provided that Mortgagee shall not exercise such rights and
shall permit Mortgagor to exercise such rights with the prior written consent of
Mortgagee, not to be unreasonably withheld or delayed, unless an Event of
Default shall have occurred and be continuing.

 

(c)                                  Mortgagor hereby assigns to Mortgagee, (i)
Mortgagor’s right to reject any Lease under Section 365 of the Bankruptcy Code
or any comparable federal or state statute or law with respect to any case,
proceeding or other action commenced by or against Mortgagor under the
Bankruptcy Code or comparable federal or state statute or law, and (ii)
Mortgagor’s right to seek an extension of the sixty (60) day period within which
Mortgagor must accept or reject the Lease under Section 365 of the Bankruptcy
Code or any comparable federal or state statute or law; provided that Mortgagee
shall not exercise any such right, and shall permit Mortgagor to exercise such
rights with the prior written consent of Mortgagee, not to be unreasonably
withheld or delayed, unless an Event of Default shall have occurred and be
continuing.  Further, if Mortgagor shall desire to so reject the Lease,
Mortgagor shall give Mortgagee not less than ten (10) days prior written notice
of the date on which Mortgagor shall apply to the bankruptcy court for authority
to reject the Lease.  Mortgagee shall have the right, but not the obligation, to
serve upon Mortgagor within such 10-day period a notice stating that (i)
Mortgagee demands that Mortgagor assume and assign the Lease to Mortgagee
pursuant to Section 365 of the Bankruptcy Code, and (ii) Mortgagee covenants to
cure or provide adequate assurance of prompt cure of all defaults and provide
adequate assurance of future performance

 

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under the Lease.  If Mortgagee serves upon Mortgagor the notice described in the
preceding sentence, Mortgagor shall not seek to reject the Lease and shall
comply with the demand provided for in clause (i) of the preceding sentence
within thirty (30) days after the notice shall have been given, subject to the
performance by Mortgagee of the covenant provided for in clause (ii) of the
preceding sentence.

 

(d)                                 Mortgagor hereby agrees that if any Lease is
terminated for any reason in the event of the rejection or disaffirmance of the
Lease pursuant to the Bankruptcy Code or any other law affecting creditor’s
rights, any property not removed by Mortgagor as permitted or required by the
Lease, shall at the option of Mortgagee be deemed abandoned by Mortgagor,
provided that Mortgagee may remove any such property required to be removed by
Mortgagor pursuant to the Lease and all costs and expenses associated with such
removal shall be paid by Mortgagor within five (5) days of receipt by Mortgagor
of an invoice for such removal costs and expenses.

 

ARTICLE V

 

Particular Provisions

 

This Mortgage is subject to the following provisions relating to the particular
laws of the state wherein the Premises are located:

 

SECTION 5.01.  Applicable Law; Certain Particular Provisions.  This Mortgage
shall be governed by and construed in accordance with the internal law of the
state where the Mortgaged Properties is located, except that Mortgagor expressly
acknowledges that by their terms, the Credit Agreement and other Loan Documents
(aside from those Other Mortgages to be rendered outside New York) shall be
governed by the internal law of the State of New York, without regard to
principles of conflict of law.  Mortgagor and Mortgagee agree to submit to
jurisdiction and the laying of venue for any suit on this Mortgage in the state
where the Mortgaged Properties are located.

 

[The remainder of this page is intentionally left blank.  Signature page
follows.]

 

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IN WITNESS WHEREOF, this Mortgage has been duly executed and delivered to
Mortgagee by Mortgagor on the date first above written.

 

 

 

HAWAIIAN TELCOM, INC.,

 

 

a Hawaii corporation

 

 

 

 

 

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

 

 

 

 

Attest:

 

 

 

 

 

by:

 

 

 

 

 

 

 

 

Name:

 

 

 

 

Title:

 

 

 

 

 

 

[Corporate Seal]

 

 

 

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STATE OF HAWAII

)

 

) ss.:

CITY AND COUNTY OF HONOLULU

)

 

On this                    day of                            , 2012, before me
personally appeared                                                , to me
personally known, who, being by me duly sworn or affirmed, did say that such
person executed the foregoing instrument as the free act and deed of such
person, and if applicable, in the capacity shown, having been duly authorized to
execute such instrument in such capacity.

 

 

 

 

(Print or Type Name of Notary)

 

 

 

 

 

(Signature of Notary)

 

 

 

Notary Public, State of Hawaii

 

My Commission Expires:

 

 

NOTARY CERTIFICATION STATEMENT

 

 

 

Document Identification or Description:

 

 

 

Doc. Date:

or  ¨ Undated at time of notarization.

 

 

No. of Pages:

Jurisdiction:                                  Circuit

 

(in which notarial act is performed)

 

 

 

 

 

 

Signature of Notary

 

Date of Notarization and

 

 

Certification Statement

 

 

 

 

 

 

(Official Stamp or Seal)

Printed Name of Notary

 

 

 

ACKNOWLEDGEMENT PAGE TO MORTGAGE

 

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

 

Exhibit A

 

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

 

Exhibit B

 

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

 

Exhibit C

 

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

 

EXHIBIT F

 

[FORM OF]

COMPLIANCE CERTIFICATE

 

To:                           Credit Suisse AG, Cayman Islands Branch

as Administrative Agent for the Lenders

One Madison Avenue

New York, NY 10010

 

Attention:  Manager - Agency

 

HAWAIIAN TELCOM COMMUNICATIONS, INC.

 

This Compliance Certificate is being delivered pursuant to Section 5.04(c) of
the Credit Agreement dated as of [                    ], 2012 (as the same may
be amended, restated, amended and restated, supplemented or otherwise modified
to date, the “Credit Agreement”), among HAWAIIAN TELCOM COMMUNICATIONS, INC., a
Delaware corporation (the “Borrower”), HAWAIIAN TELCOM HOLDCO, INC., a Delaware
corporation (“Holdings”), the Lenders, and CREDIT SUISSE AG, CAYMAN ISLANDS
BRANCH, as administrative agent (in such capacity, including any successor
thereto, the “Administrative Agent”) and as collateral agent (in such capacity,
including any successor thereto, the “Collateral Agent”) for the Lenders. Terms
used herein without definition shall have the meanings assigned to such terms in
the Credit Agreement.

 

The Borrower hereby certifies, represents and warrants that as of
[                   ] (the “Test Date”):(1)

 

(a)                                 The Capital Expenditures made by the
Borrower and the Subsidiaries in the fiscal year ending on the Test Date was
$                 , which amount (i) includes (A) $                 of Capital
Expenditures attributable to clause (i) of Section 6.10 of the Credit Agreement,
(B) $                 of Capital Expenditures attributable to clause (ii) of
Section 6.10 of the Credit Agreement and (C) $                     of Capital
Expenditures attributable to the Capital Expenditure Carryover Amount applicable
to the fiscal year ending on the Test Date and (ii) [complies] [does not comply]
with the provisions of Section 6.10 of the Credit Agreement;

 

(b)                                 The Interest Coverage Ratio for the four
consecutive fiscal quarters ending on the Test Date was [      ]:1.0, as
computed on Attachment 1 hereto, and such ratio [complies] [does not comply]
with the provisions of Section 6.11 of the Credit Agreement;

 

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

(1)                                 Test Date should be date of most recent
financial statements delivered under Section 5.04(a) and (b) of the Credit
Agreement.

 

F-1

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

 

(c)                                  The Leverage Ratio for the four consecutive
fiscal quarters ending on the Test Date was [      ]:1.0, as computed on
Attachment 2 hereto, and such ratio [complies] [does not comply] with the
provisions of Section 6.12 of the Credit Agreement;

 

[(d)                             Excess Cash Flow for the fiscal year ending on
the Test Date was $                 as computed on Attachment 3 hereto; ](2)

 

(e)                                  No Default or Event of Default has occurred
and is continuing [other than                                  as follows:].

 

[The Remainder of This Page Has Been Intentionally Left Blank]

 

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

(2)                                 In the case of Financial Statements
delivered under Section 5.04(a).

 

F-2

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

 

IN WITNESS WHEREOF, the Borrower has caused this Compliance Certificate to be
executed and delivered by its duly authorized Financial Officer on this [    ]
the day of [          ], 20[    ].

 

 

HAWAIIAN TELCOM COMMUNICATIONS, INC.

 

 

 

By:

 

 

Name:

 

Title:

 

F-3

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

 

ATTACHMENT 1

 

 

 

Leverage Ratio

 

 

 

 

 

 

 

1.

 

Total Debt:  Total Indebtedness of Holdings, the Borrower and its Subsidiaries
(without duplication).

 

$                

 

 

 

 

 

 

 

Determination of Consolidated EBITDA

 

 

 

 

 

 

 

 

 

(A) Consolidated Net Income

 

plus

 

$                

 

 

 

 

 

 

 

(B) The sum of (without duplication, including for purposes of determining
Consolidated Net Income), to the extent deducted in determining Consolidated Net
Income for such period:

 

 

 

 

 

 

 

 

 

(i)                             consolidated interest expense and costs incurred
in connection with any permitted Hedging Agreement for such period (net of
interest income received in connection with a Hedging Agreement for such period)

 

$                

 

 

 

 

 

 

 

(ii)                          consolidated income tax expense for such period,
including state franchise and similar taxes

 

$                

 

 

 

 

 

 

 

(iii)                       all amounts attributable to depreciation and
amortization for such period

 

$                

 

 

 

 

 

 

 

(iv)                      any extraordinary or non-cash charges for such period
(provided, however, that any cash payment or expenditure made with respect to
any such non-cash charge shall be subtracted in computing Consolidated EBITDA
during the period in which such cash payment or expenditure is made), including,
without limitation, any non-cash compensation charge arising from any grant of
stock, stock options or other equity-based awards and non-cash pension and
post-employment benefit expenses

 

$                

 

 

 

 

 

 

 

(v)                         non-recurring or unusual charges, expenses or
losses, (in each case, to the extent that any such charges, expenses or losses
are not reimbursed from the proceeds of insurance that increased Consolidated
Net Income for such period) if applicable, related to

 

 

 

 

 

 

 

 

 

(A) severance, including associated retirement benefits

 

$                

 

F-4

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

 

 

 

(B) facility and office closure costs

 

$                

 

 

 

 

 

 

 

(C) contract cancellation costs

 

$                

 

 

 

 

 

 

 

(D) network reconfiguration costs

 

$                

 

 

 

 

 

 

 

(E) costs with respect to acts of god or force majeure

 

$                

 

 

 

 

 

 

 

(vi)                      other non-recurring or unusual charges, expenses or
losses(6)

 

$                

 

 

 

 

 

 

 

(vii)                   costs and expenses incurred in connection with the
Chapter 11 Cases and related regulatory approvals, including fees and expenses
of professionals

 

$                

 

 

 

 

 

 

 

(viii)                compensation expense arising from deemed dividends, the
payment of dividends or the equivalent issued under any incentive stock plans
related to restricted and/or unvested stock

 

$                

 

 

 

 

 

 

 

(ix)                      customary non-recurring fees and expenses of the
Borrower and the Subsidiaries payable in connection with the Revolving Facility
Agreement and any amendments, modifications or waivers thereto, any Permitted
Acquisition or attempted acquisitions, and permitted dispositions, the
incurrence of Long-Term Indebtedness permitted hereunder or the Refinancing of
the Refinanced Indebtedness

 

$                

 

 

 

 

 

 

 

(x)                         fees, costs and expenses payable or reimbursable to
any Lender or the Administrative Agent pursuant to any Loan Document

 

$                

 

 

 

 

 

 

 

Minus

 

 

 

 

 

 

 

 

 

(C) The sum of (without duplication and to the extent included in determining
such Consolidated Net Income) any non-cash gains or other non-cash items of
income for such period (provided that any cash received in a subsequent period
in respect of any such non-cash gain shall be included in Consolidated EBITDA
for the period in which received), all determined on a consolidated basis in
accordance with GAAP; provided that for purposes of calculating the

 

$                

 

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

(6)                                 In an amount not to exceed $5,000,000 in the
aggregate for any four consecutive fiscal quarters.

 

F-5

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

 

 

 

Leverage Ratio (for any period), (A) the Consolidated EBITDA of any Acquired
Entity acquired by the Borrower or any Subsidiary pursuant to a Permitted
Acquisition during such period shall be included on a pro forma basis for such
period (assuming the consummation of such acquisition and the incurrence or
assumption of any Indebtedness in connection therewith occurred as of the first
day of such period) and (B) the Consolidated EBITDA attributable to any Asset
Sale by the Borrower or any Subsidiary during such period for shall be excluded
for such period (assuming the consummation of such sale or other disposition and
the repayment of any Indebtedness in connection therewith occurred as of the
first day of such period)

 

 

 

 

 

 

 

2.

 

Consolidated EBITDA ((A) plus (B) minus (C))(7)

 

$                

 

 

 

 

 

3.

 

LEVERAGE RATIO: The ratio of Item 1 to Item 2

 

[        ]:1.00

 

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

(7)  For purposes of determining the Interest Coverage Ratio and the Leverage
Ratio as of or for the periods ended on June 30, 2012, September 30, 2012 and
December 31, 2012, Consolidated EBITDA will be deemed to be equal to, for the
fiscal year ended September 30, 2011, $[            ].

 

F-6

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

 

ATTACHMENT 2

 

 

 

Interest Coverage Ratio

 

 

 

1.

 

Consolidated EBITDA (from Item 2 above)

 

$                

 

 

 

 

 

2.

 

Consolidated Interest Expense consists of the sum of (a) the interest expense
(including imputed interest expense in respect of Capital Lease Obligations and
Synthetic Lease Obligations) of Holdings, the Borrower and the Subsidiaries for
such period, determined on a consolidated basis in accordance with GAAP, plus
(b) any interest accrued during such period in respect of Indebtedness of
Holdings, the Borrower or any Subsidiary that is required to be capitalized
rather than included in consolidated interest expense for such period in
accordance with GAAP.

 

$                

 

 

 

 

 

3.

 

INTEREST COVERAGE RATIO: The ratio of Item 1 to Item 2

 

[        ]:1.00

 

F-7

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

 

ATTACHMENT 3

 

 

 

Excess Cash Flow

 

 

 

 

 

 

 

 

 

The sum of (without duplication):

 

 

 

 

 

 

 

 

 

(a) Consolidated Net Income for such fiscal year, adjusted to exclude any gains
or losses attributable to events requiring the prepayment of Loans pursuant to
Section 2.13(a) or (d) of the Credit Agreement

 

plus

 

 

$                

 

 

 

 

 

 

 

 

 

(b) to the extent deducted in determining such Consolidated Net Income for such
fiscal year:

 

 

 

 

 

 

 

 

 

(i)                             depreciation, amortization and other non-cash
charges, losses or other items that reduce Consolidated Net Income for such
fiscal year

 

$                

 

 

 

 

 

 

 

(ii)                          non-cash and/or stock-based compensation expense
for such fiscal year

 

plus

 

$                

 

 

 

 

 

 

 

(c) The sum of

 

 

 

 

 

 

 

 

 

(i)                             the amount, if any, by which Net Working Capital
decreased during such fiscal year

 

$                

 

 

 

 

 

 

 

(ii)                          the net amount, if any, by which the deferred
income taxes of Holdings, the Borrower and its consolidated Subsidiaries
increased during such fiscal year

 

$                

 

 

 

 

 

 

 

(iii)                       cash received upon the redemption, sale or other
disposition during such fiscal year of (A) any equity interests or patronage
certificates of the Rural Utilities Service, CoBank, or RTFC, or (B) any
subordinated capital certificates of RTFC or any Equity Interests in CoBank

 

$                

 

 

 

 

 

 

 

Minus

 

 

 

 

 

 

 

 

 

(d) The sum of

 

 

 

 

 

 

 

 

 

(i)                             any non-cash gains included in determining such

 

$                

 

F-8

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

 

 

 

Consolidated Net Income for such fiscal year

 

 

 

 

 

 

 

 

 

(ii)                          the amount, if any, by which Net Working Capital
increased during such fiscal year

 

$                

 

 

 

 

 

 

 

(iii)                       the net amount, if any, by which the deferred income
taxes of Holdings, the Borrower and its consolidated Subsidiaries decreased
during such fiscal year

 

$                

 

 

 

 

 

 

 

Minus

 

 

 

 

 

 

 

 

 

(e) Capital Expenditures

 

$                

 

 

 

 

 

 

 

Minus

 

 

 

 

 

 

 

 

 

(f) Taxes for which reserves have been established and funded, to the extent not
reflected in the computation of Consolidated Net Income for such fiscal year,
provided that any amount so deducted shall be added to Excess Cash Flow in
respect of any subsequent fiscal year in which such Taxes reduced Consolidated
Net Income

 

$                

 

 

 

 

 

 

 

Minus

 

 

 

 

 

 

 

 

 

(g) cash expenditures made in respect of Hedging Agreements during such fiscal
year, to the extent not reflected in the computation of Consolidated Net Income

 

$                

 

 

 

 

 

 

 

Plus

 

 

 

 

 

 

 

 

 

(h) cash payments received in respect of Hedging Agreements during such fiscal
year to the extent not included in the computation of Consolidated Net Income
for such fiscal year

 

$                

 

 

 

 

 

 

 

Minus

 

 

 

 

 

 

 

 

 

(i) the aggregate principal amount of Long-Term Indebtedness and Indebtedness
under the Revolving Facility Agreement (but only to the extent there is a
corresponding reduction in the commitment thereunder) repaid or prepaid  (but
excluding any prepayment of Loans pursuant to Section 2.13 of the Credit
Agreement) by the Borrower and its Subsidiaries during such fiscal year (except
to the extent deducted in a prior fiscal year) or in the first fiscal quarter of
the immediately succeeding fiscal year, and the aggregate amount of fees, costs
and expenses paid in cash during

 

$                

 

F-9

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

 

 

 

such period with respect to any such Indebtedness

 

 

 

 

 

 

 

 

 

Minus

 

 

 

 

 

 

 

 

 

(j) amounts paid in cash during such fiscal year on account of items that were
accounted for as non-cash reductions in determining Consolidated Net Income in a
prior fiscal year and were added back in determining Excess Cash Flow in respect
of such prior fiscal year

 

$                

 

 

 

 

 

 

 

Minus

 

 

 

 

 

 

 

 

 

(k) cash paid for pension and other post-employment benefit liabilities to the
extent not already included in Consolidated Net Income for such fiscal year

 

$                

 

 

 

 

 

 

 

Minus

 

 

 

 

 

 

 

 

 

(l) all other non-cash income (including the accrual of the non-cash portion of
any Rural Utilities Service, CoBank or RTFC patronage capital allocation)

 

$                

 

 

 

 

 

 

 

Minus

 

 

 

 

 

 

 

 

 

(m) fees and expenses to the extent added to the determination of Consolidated
EBITDA pursuant to clauses (a)(ix) or (a)(x) of the definition thereof

 

$                

 

 

 

 

 

 

 

Minus

 

 

 

 

 

 

 

 

 

(n) Net Cash Proceeds of Asset Sales with respect to which the Borrower is
exercising its reinvestment rights to the extent such amounts where included in
the computation of Consolidated Net Income for such fiscal year

 

$                

 

 

 

 

 

 

 

Minus

 

 

 

 

 

 

 

 

 

(o) cash paid by Holdings, the Borrower or any of its consolidated Subsidiaries
in connection with partial exercises of warrants issued by Holdings

 

$                

 

F-10

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

 

 

 

Minus

 

 

 

 

 

 

 

 

 

(p) fees, costs and expenses paid to any Lender or the Administrative Agent
pursuant to any Loan Document to the extent such amounts were not included in
the computation of Consolidated Net Income for such fiscal year

 

$                

 

 

 

 

 

 

 

Excess Cash Flow:

 

$                

 

F-11

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

 

EXHIBIT G-1

 

FORM OF

OPINION OF KIRKLAND & ELLIS LLP

 

See attached.

 

G-1-1

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

 

GRAPHIC [g85961ke41i001.jpg]

 

601 Lexington Avenue
New York, New York 10022

 

(212) 446-4800

 

www.kirkland.com

 

February 29, 2012

 

To the Administrative Agent, the Collateral Agent

and each of the Lenders party to

the Credit Agreement referred to below:

 

Ladies and Gentlemen:

 

We are issuing this opinion letter in our capacity as special New York legal
counsel to Hawaiian Telcom Holdco, Inc., a Delaware corporation (“Holdings”),
Hawaiian Telcom Communications, Inc., a Delaware corporation (the “Borrower”),
Hawaiian Telcom Services Company, Inc., a Delaware corporation (together with
the Borrower and Holdings, the “Delaware Loan Parties”) and Hawaiian
Telcom, Inc., a Hawaiian corporation (together with the Delaware Loan Parties,
the “Loan Parties”) in response to the requirement in Section 4.01(a)(i) of that
certain Credit Agreement dated as of the date hereof (the “Credit Agreement”),
by and among the Loan Parties, the several banks and other financial
institutions or entities from time to time parties thereto (the “Lenders”), and
Credit Suisse AG, Cayman Islands Branch, as administrative agent and collateral
agent (in such capacities, the “Agent”).  Each Delaware Loan Party is referred
to herein as an “Opinion Party” and collectively as the “Opinion Parties”.  The
Agent and the Lenders are hereinafter collectively referred to as “you”.  Unless
otherwise indicated, capitalized terms used herein but not otherwise defined
herein have the respective meanings set forth in the Credit Agreement.

 

We have reviewed executed counterparts of the (i) the Credit Agreement and
(ii) each of the other documents and instruments identified on the Schedule of
Other Loan Documents attached hereto as Schedule E (the “Other Loan Documents”),
each in the form executed and delivered on this date.  For purposes hereof, the
Credit Agreement and the Other Loan Documents, each in the form reviewed by us
on the date hereof for purposes of this opinion letter, are called the “Loan
Documents.”  We have also reviewed copies of the UCC Form-1 financing statements
attached hereto as Schedule F, authorized as of the date hereof naming,
respectively, each Opinion Party, as debtor, and the Administrative Agent, as
secured party, which are to be filed with the Secretary of State of the State of
Delaware (the “Financing Statements”).

 

G-1-2

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

 

The term “Organization Documents” whenever it is used in this letter means the
certificate of incorporation or articles of incorporation, as applicable, and
the bylaws, of the relevant entity, in each case, as amended through the date
hereof.  References in this opinion letter to the “New York UCC” mean the
Uniform Commercial Code as in effect on the date hereof in the State of New
York.

 

Subject to the assumptions, qualifications, exclusions and other limitations
which are identified in this letter and in the schedules attached to this
letter, we advise you, and with respect to each legal issue addressed in the
opinion paragraphs of this letter, it is our opinion, that:

 

1.             Each of the Opinion Parties is a corporation existing and in good
standing under the Delaware General Corporation Law, as in effect on the date
hereof (the “DGCL”).

 

2.             Each Opinion Party has the corporate power to execute and deliver
each Loan Document to which it is a party and perform its obligations under each
Loan Document to which it is a party.

 

3.             The board of directors of each Opinion Party has duly authorized
the execution and delivery of the Loan Documents to which it is a party and the
performance of its respective obligations under the Loan Documents to which it
is a party.

 

4.             Each Opinion Party has duly executed and delivered the Loan
Documents to which it is a party.

 

5.             Each of the Loan Documents is a valid and binding obligation of
each Loan Party that is a party thereto and is enforceable against each such
Loan Party in accordance with its terms.

 

6.             The execution and delivery by each Opinion Party of the Loan
Documents to which it is a party and the performance by such Opinion Party of
its obligations under the Loan Documents to which it is a party will not
(a) violate any existing provisions of such Opinion Party’s Organization
Documents or the Revolving Facility Agreement  or (b) based on existing facts of
which we are aware, constitute a violation by such Opinion Party of any
applicable provision of existing New York or United States federal statutory law
or governmental regulation applicable to such Opinion Party, in each case to the
extent covered by this letter.

 

7.             Assuming application of the proceeds of the Loans as contemplated
by the Credit Agreement, and assuming further that none of such proceeds will be
used for the purpose of purchasing or carrying “margin securities” (within the
meaning of Regulations U and X of the Board of Governors of the Federal Reserve
System), the borrowings by the

 

G-1-3

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

 

Borrower under the Credit Agreement will not, in and of themselves, result in a
violation of Regulation U or Regulation X of the Board of Governors of the
Federal Reserve System.

 

8.             None of the Opinion Parties is required to obtain any consent,
approval, authorization or order of, or make any filings with, any United States
federal or State of New York court or governmental or regulatory agency (other
than filings necessary to perfect liens granted by the Opinion Parties to the
Collateral Agent pursuant to the Loan Documents), to authorize its execution,
delivery and performance of, or to make valid and binding, the Loan Documents to
which such Opinion Party is a party, or is otherwise presently required in
connection with the consummation of the transactions contemplated by the Loan
Documents which have occurred or are occurring under the Loan Documents on or
prior to the date of this letter, except for:  (a) those obtained or made prior
to the date hereof, (b) any actions or filings to perfect the liens and security
interests granted under the Loan Documents to which such Opinion Party is a
party or to release existing liens, if any, and (c) any consents, approvals,
authorizations, orders, actions and filings as may be required under the
Communications Act of 1934 and any related laws, rules, regulations or orders
and any state or federal law governing interstate or intrastate
telecommunications and cable communications systems and any related laws, rules,
regulations or orders (as to which we express no opinion).

 

9.             The Guarantee and Collateral Agreement, executed and delivered by
the Loan Parties party thereto in favor of the Collateral Agent (the “Security
Agreement”), creates valid security interests in favor of the Collateral Agent,
for the benefit of the Secured Parties, in each Loan Party’s collateral
described therein with respect to which such Loan Party has rights or has the
power to transfer rights (the “Collateral”) and which constitutes property in
which a security interest can be granted under Article 9 of the New York UCC to
secure the Obligations (as defined in the Credit Agreement).  Such Collateral is
referred to herein as the “Code Collateral.”

 

10.           (a)           Under the New York UCC, the perfection of the
Collateral Agent’s security interests in the Code Collateral (i) will, as a
general matter and except as otherwise provided in Sections 9-301 through 9-307
of the New York UCC, be governed by the local law of the jurisdiction in which
the applicable grantor is located (which in the case of (A) a registered
organization (as defined in the New York UCC) such as a corporation or limited
liability company that is organized under the laws of a State (as defined in the
New York UCC) is the State under whose laws such registered organization is
organized, (B) an organization that is not a registered organization, at its
chief executive office, or (C) an organization whose chief executive office is
located in a jurisdiction whose law does not generally require information
concerning the existence of a nonpossessory security interest to be made
generally available in a filing, recording, or registration

 

G-1-4

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

 

system, the District of Columbia), (ii) will, in the case of a possessory
security interest, generally be governed by the local law of the jurisdiction in
which the collateral is located, (iii) which constitutes certificated
securities, will be governed by the local law of the jurisdiction in which the
security certificates are located (other than perfection by filing, which is
governed by the local law of the jurisdiction in which the applicable grantor is
located) as specified in Section 9-305(a)(1) of the New York UCC, (iv) which
constitutes uncertificated securities, will be governed by the local law of the
issuer’s jurisdiction as specified in Section 8-110(d) of the New York UCC
pursuant to Section 9-305(a)(2) of the New York UCC (other than perfection by
filing, which is governed by the local law of the jurisdiction in which the
applicable grantor is located), (v) which constitutes a security entitlement or
a securities account, will be governed by the local law of the securities
intermediary’s jurisdiction as specified in Section 8-110(e) of the New York UCC
pursuant to Section 9-305(a)(3) of the New York UCC (other than perfection by
filing, which is governed by the local law of the jurisdiction in which the
applicable grantor is located), (vi) which constitutes goods covered by a
certificate of title, will be governed by the local law of the jurisdiction
under whose certificate of title the goods are covered as specified in
Section 9-303 of the New York UCC, (vii) which constitutes deposit accounts,
will be governed by the local law of the depositary bank’s jurisdiction as
specified in Section 9-304 of the New York UCC, (viii) which constitutes
letter-of-credit rights, will generally be governed by the local law of the
issuer’s or nominated person’s jurisdiction as specified in Section 9-306 of the
New York UCC, and (ix) which constitutes other categories, will be governed by
the laws of the jurisdiction or jurisdictions specified in Sections 9-301
through 9-307 of the New York UCC.

 

(b)           Under the principles described in the preceding subparagraph
(a)(i) of paragraph 10 and, with respect to perfection by filing, in the
preceding subparagraphs (a)(iii), (a)(iv) and (a)(v) of paragraph 10, the
perfection of the Collateral Agent’s security interests in the Code Collateral
as to which such subparagraphs apply (the “Filing Code Collateral”) is governed
by the laws of the jurisdiction of organization of the Opinion Parties: to wit,
the State of Delaware.  When the Financing Statements naming the Opinion Parties
as debtors are duly filed in the filing office of the Secretary of State of the
State of Delaware, the Collateral Agent’s security interests under the Security
Agreement in the Filing Code Collateral will be perfected to the extent such
security interests can be perfected by the filing of Uniform Commercial Code
financing statements.  For purposes of our opinions herein regarding the filing
of Financing Statements naming the Opinion Parties as debtors and the perfection
and effect of perfection of the security interests granted by the Opinion
Parties, we have reviewed the provisions of the Uniform Commercial Code as in
effect on the date hereof in the State of Delaware as set forth in the Commerce
Clearing House, Inc. Secured Transactions Guide as supplemented through
January 31, 2012 (the “Delaware Guide”), and such respective opinions are based
solely on such review.

 

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(c)           Upon the delivery of the certificates representing the shares of
stock identified on the Schedule of Pledged Securities attached hereto as
Schedule G (in each case, to the extent such stock or membership interests
constitute “securities” under Article 8 of the applicable Uniform Commercial
Code, as to which we express no opinion) (the “Pledged Securities”) to the
Collateral Agent in the State of New York, endorsed in blank or to the
Collateral Agent, and the retention by the Collateral Agent of possession of
such certificates in such state, the security interest in the Pledged Securities
represented by such certificates and granted under the Security Agreement in
favor of the Collateral Agent will be perfected under the New York UCC. 
Assuming that the Collateral Agent has no notice (actual or constructive) of any
adverse claim (as such term is used in the New York UCC), such security interest
in such Pledged Securities will have been acquired free of any adverse claim.

 

11.           No Loan Party is an “investment company” required to be registered
as such within the meaning of the Investment Company Act of 1940, as amended.

 

Each opinion in this letter is subject to the General Qualifications that are
recited in Schedule A to this letter to the extent relevant to that opinion.  In
preparing this letter, we have relied without any independent verification upon
the assumptions recited in Schedule B to this letter and upon: (i) information
contained in certificates obtained from governmental authorities; (ii) factual
information represented in the Loan Documents; (iii) factual information
provided to us in a support certificate executed by one or more of the Loan
Parties; and (iv) factual information we have obtained from such other sources
as we have deemed reasonable.  We have examined the originals or copies
certified to our satisfaction, of such other corporate records of the Loan
Parties as we deem necessary for or relevant to this letter, certificates of
public officials and other officers of the Loan Parties and we have assumed
without investigation that there has been no relevant change or development
between the dates as of which the information cited in the preceding sentence
was given and the date of this letter and that the information upon which we
have relied is accurate and does not omit disclosures necessary to prevent such
information from being misleading.

 

While we have not conducted any independent investigation to determine facts
upon which our opinions are based or to obtain information about which this
letter advises you, we confirm that we do not have any actual knowledge which
has caused us to conclude that our reliance and assumptions cited in the
preceding paragraph are unwarranted or that any information supplied to us in
connection with the preparation of this letter is wrong.  The terms “actual
knowledge,” “knowledge,” “awareness” or similar terms wherever they are used in
this letter with respect to our firm mean conscious awareness at the time this
letter is delivered on the date it bears by the following Kirkland & Ellis LLP
lawyers who have had significant involvement with negotiation or preparation of
the Loan Documents and the due diligence

 

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associated therewith (herein called our “Designated Transaction Lawyers”):
Leonard Klingbaum and Sara Whyte.

 

Our advice on every legal issue addressed in this letter is based exclusively on
the internal laws of New York or the federal law of the United States, which, in
each case, is in our experience normally applicable to general business entities
not engaged in regulated business activities and to transactions of the type
contemplated between the Loan Parties, on the one hand, and you, on the other
hand, in the Loan Documents, but without our having made any special
investigation as to any other laws, except that (i) the opinions in paragraphs
2, 3, 4 and 6(a), are based on the DGCL and (ii) our opinions in paragraph
10(b) are based exclusively upon our review of the Delaware Guide (without
regard to judicial interpretation thereof or regulation promulgated thereunder)
and on the assumption that such statutory provisions are given the same
interpretation and application in such state as the corresponding provisions of
the New York UCC are given in New York.  With respect to our opinions in opinion
paragraphs 2, 3, 4, and 6(a) based on the DGCL, we advise you that we do not
practice law under such state, and, with your permission, we have rendered such
opinions based exclusively on our review of the statutory provisions of such
statutes as published by Aspen Law & Business, as supplemented through
February 15, 2012, without regard to any regulations promulgated thereunder or
any judicial or administrative interpretations thereof.  Furthermore, we
expressly disclaim any opinion regarding the contract or general law of any
state (other than the State of New York) that may be incorporated by reference
into the relevant statutory scheme governing partnerships or limited liability
companies in such state, or into any limited liability company agreement,
limited or general partnership agreement or similar governing document
(howsoever denominated) entered into pursuant thereto.  We advise you that we
are not Delaware attorneys, and do not practice the law of such jurisdiction. 
For purposes of the opinions in paragraph 1, we have relied exclusively upon
certificates issued by a governmental authority in each relevant jurisdiction
and such opinions are not intended to provide any conclusion or assurance beyond
that conveyed by such certificates.  We advise you that issues addressed by this
letter may be governed in whole or in part by other laws, but we express no
opinion as to whether any relevant difference exists between the laws upon which
our opinions are based and any other laws which may actually govern.  We express
no opinion or advice as to any law (x) to which the Loan Parties may be subject
as a result of your legal or regulatory status, your sale or transfer of any
Loans or other obligations or interests therein or your (as opposed to any other
lender’s) involvement in the transactions contemplated by the Loan Documents or
(y) which might be violated by any misrepresentation or omission or a fraudulent
act.  Our opinions are subject to all qualifications in Schedule A and do not
cover or otherwise address any law or legal issue which is identified in the
attached Schedule C or any provision in the Loan Documents of any type
identified in Schedule D.  Provisions in the Loan Documents which are not
excluded by Schedule D or any other part of this letter or its attachments are
called the “Relevant Agreement Terms.”

 

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Except to the extent set forth in the preceding paragraph, our advice on each
legal issue addressed in this letter represents our opinion as to how that issue
would be resolved were it to be considered by the highest court of the
jurisdiction upon whose law our opinion on that issue is based.  The manner in
which any particular issue would be treated in any actual court case would
depend in part on facts and circumstances particular to the case, and this
letter is not intended to guarantee the outcome of any legal dispute which may
arise in the future.  It is possible that some Relevant Agreement Terms of a
remedial nature contained in the Loan Documents may not prove enforceable for
reasons other than those cited in this letter should an actual enforcement
action be brought, but (subject to all the exceptions, qualifications,
exclusions and other limitations contained in this letter) such unenforceability
would not in our opinion prevent you from realizing the principal benefits
purported to be provided by the Relevant Agreement Terms of a remedial nature
contained in the Loan Documents, as the case may be.

 

This opinion letter speaks as of the time of its delivery on the date it bears. 
We do not assume any obligation to provide you with any subsequent opinion or
advice by reason of any fact about which our Designated Transaction Lawyers did
not have actual knowledge at that time, by reason of any change subsequent to
that time in any law covered by any of our opinions, or for any other reason. 
The attached schedules are an integral part of this letter, and any term defined
in this letter or any schedule has that defined meaning wherever it is used in
this letter or in any schedule to this letter.

 

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You may rely upon this letter only for the purpose served by the satisfaction of
the condition precedent to the initial financing under Section 4.01(a)(i) of the
Credit Agreement.  Without our written consent:  (i) subject to the immediately
succeeding sentence, no person other than you may rely on this letter for any
purpose; (ii) this letter may not be cited or quoted in any financial statement,
prospectus, private placement memorandum or other similar document; (iii) this
letter may not be cited or quoted in any other document or communication which
might encourage reliance upon this letter by any person or for any purpose
excluded by the restrictions in this paragraph; and (iv) copies of this letter
or any portion thereof may not be furnished to anyone for purposes of
encouraging such reliance.  Notwithstanding the foregoing, persons who are or
who subsequently become Lenders in accordance with Section 9.04 of the Credit
Agreement may rely on this letter as of the time of its delivery on the date
hereof as if this letter were addressed to them.

 

 

Sincerely,

 

 

 

 

 

Kirkland & Ellis LLP

 

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Schedule A

 

General Qualifications

 

All of our opinions (“our opinions”) in the letter to which this Schedule is
attached (“our letter”) are subject to each of the qualifications set forth in
this Schedule.

 

1.             Bankruptcy and Insolvency Exception.  Each of our opinions in
opinion paragraphs 5, 9 and 10 in our letter as to the validity, binding effect
or enforceability of any of the Loan Documents or to the availability of
injunctive relief and other equitable remedies (“Specified Opinions”) is subject
to the effect of bankruptcy, insolvency, reorganization, receivership,
moratorium and other similar laws relating to or affecting creditors’ rights. 
This exception includes:

 

(a)           the federal Bankruptcy Code and thus comprehends, among others,
matters of turn-over, automatic stay, avoiding powers, fraudulent transfer,
preference, discharge, conversion of a non-recourse obligation into a recourse
claim, limitations on ipso facto and anti-assignment clauses and the coverage of
pre-petition security agreements applicable to property acquired after a
petition is filed;

 

(b)           all other federal and state bankruptcy, insolvency,
reorganization, receivership, moratorium, arrangement and assignment for the
benefit of creditors laws that affect the rights of creditors generally or that
have reference to or affect only creditors of specific types of debtors;

 

(c)           state fraudulent transfer and conveyance laws; and

 

(d)           judicially developed doctrines in this area, such as substantive
consolidation of entities and equitable subordination.

 

2.             Equitable Principles Limitation.  Each of our Specified Opinions
is subject to the effect of general principles of equity, whether applied by a
court of law or equity.  This limitation includes principles:

 

(a)           governing the availability of specific performance, injunctive
relief or other equitable remedies, which generally place the award of such
remedies, subject to certain guidelines, in the discretion of the court to which
application for such relief is made;

 

(b)           affording equitable defenses (e.g., waiver, laches and estoppel)
against a party seeking enforcement;

 

(c)           requiring good faith and fair dealing in the performance and
enforcement of a contract by the party seeking its enforcement;

 

(d)           requiring reasonableness in the performance and enforcement of an
agreement by the party seeking enforcement of the contract;

 

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(e)           requiring consideration of the materiality of (i) a breach and
(ii) the consequences of the breach to the party seeking enforcement;

 

(f)            requiring consideration of the impracticability or impossibility
of performance at the time of attempted enforcement; and

 

(g)           affording defenses based upon the unconscionability of the
enforcing party’s conduct after the parties have entered into the contract.

 

3.             Other Common Qualifications.  Each of our Specified Opinions is
subject to the effect of rules of law that:

 

(a)           limit or affect the enforcement of provisions of a contract that
purport to waive, or to require waiver of, the obligations of good faith, fair
dealing, diligence and reasonableness;

 

(b)           provide that forum selection clauses in contracts are not
necessarily binding on the court(s) in the forum selected;

 

(c)           limit the availability of a remedy under certain circumstances
where another remedy has been elected;

 

(d)           provide a time limitation after which a remedy may not be
enforced;

 

(e)           limit the right of a creditor to use force or cause a breach of
the peace in enforcing rights;

 

(f)            relate to the sale or disposition of collateral by a secured
creditor or the requirements of a commercially reasonable sale;

 

(g)           limit the enforceability of provisions releasing, exculpating or
exempting a party from, or requiring indemnification of a party for, liability
for its own action or inaction, to the extent the action or inaction involves
negligence, bad faith, recklessness, willful misconduct, unlawful conduct,
violation of public policy, or for strict product liability or litigation
against another party determined adversely to such party or for liabilities
arising under the securities laws, or which limit the enforceability of
provisions requiring indemnification of a party with respect to litigation
between such party and another party from whom indemnification is sought which
is determined adversely to the party seeking indemnification;

 

(h)           may, where less than all of a contract may be unenforceable, limit
the enforceability of the balance of the contract to circumstances in which the
unenforceable portion is not an essential part of the agreed exchange;

 

(i)            govern and afford judicial discretion regarding the determination
of damages and entitlement to attorneys’ fees and other costs;

 

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(j)            may permit a party that has materially failed to render or offer
performance required by the contract to cure that failure unless (i) permitting
a cure would unreasonably hinder the aggrieved party from making substitute
arrangements for performance or (ii) it was important in the circumstances to
the aggrieved party that performance occur by the date stated in the contract;

 

(k)           limit the enforceability of requirements in the Loan Documents
that provisions therein may only be waived or amended in writing, to the extent
that an oral agreement or an implied agreement by trade practice or course of
conduct has been created modifying any such provision;

 

(l)            may render guaranties or other similar instruments or agreements
unenforceable under circumstances where your actions, failures to act or
waivers, amendments or replacement of the Loan Documents (i) so radically change
the essential nature of the terms and conditions of the guaranteed obligations
and the related transactions that, in effect, a new relationship has arisen
between you and the Loan Parties which is substantially and materially different
from that presently contemplated by the Loan Documents, (ii) release the primary
obligor, or (iii) impair the guarantor’s recourse against the primary obligor;
and

 

(m)          we express no opinion with respect to the adequacy of waivers set
forth in any guaranty or similar instrument or agreement insofar as they might
not be broad enough for all situations which might arise for which you would
find a waiver desirable, and we express no opinion as to whether the guaranty
would remain enforceable if you release the primary obligor either directly or
by electing a remedy which precludes you from proceeding directly against the
obligor.

 

4.             Referenced Provision Qualification.  Each opinion regarding the
validity, binding effect or enforceability of a provision (the “First
Provision”) in any of the Loan Documents requiring any Loan Party to perform its
obligations under, or to cause any other person to perform its obligations
under, any other provision (a “Second Provision”) of any Loan Document or
stating that any action will be taken as provided in or in accordance with such
Second Provision are subject to the same qualifications as the corresponding
opinion in this letter relating to the validity, binding effect and
enforceability of such Second Provision.

 

5.             Collateral Qualifications.  Terms used herein which are defined
in the New York UCC or any other applicable Uniform Commercial Code have the
meanings for purposes hereof given to them therein.  The opinions and advice
contained in our letter are subject to the following advice:

 

(a)           rights of debtors and obligors and duties of secured parties
referred to in Sections 1-102(3) and 9-602 of the New York UCC (and the
corresponding sections of any other applicable Uniform Commercial Code) may not
be waived, released, varied or disclaimed by agreement prior to a default, and
our opinions regarding any such waivers, releases, variations and disclaimers
are limited accordingly;

 

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(b)           our opinions regarding the creation and perfection of security
interests are subject to the effect of (i) the limitations on the existence and
perfection of security interests in proceeds resulting from the operation of
Section 9-315 of any applicable Uniform Commercial Code; (ii) the limitations in
favor of buyers, licensees and lessees imposed by Sections 9-320, 9-321 and
9-323 of any applicable Uniform Commercial Code; (iii) the limitations with
respect to documents, instruments and securities imposed by Section(s) 9-331 and
8-303 of any applicable Uniform Commercial Code; (iv) other rights of persons in
possession of money, instruments and proceeds constituting certificated or
uncertificated securities; and (v) Section 547 of the Bankruptcy Code with
respect to preferential transfers and Section 552 of the Bankruptcy Code with
respect to any Collateral acquired by any of the Loan Parties subsequent to the
commencement of a case against or by any of the Loan Parties under the
Bankruptcy Code;

 

(c)           Article 9 of each applicable Uniform Commercial Code requires the
filing of continuation statements within specified periods in order to maintain
the effectiveness of the filings referred to in our letter;

 

(d)           additional filings or actions may be necessary if any Loan Party
changes its name, identity or corporate or organization structure, to the extent
any Loan Party ceases to be a registered organization, its chief executive
office or the jurisdiction in which it is organized or in which any Collateral
referred to in opinion paragraph 10(c) of our letter is located;

 

(e)           we express no opinion regarding the perfection of any lien or
security interest in any property (whether real, personal or mixed, and whether
such perfection be accomplished or purport to be accomplished by filing, by
possession, by control or otherwise) except as specifically set forth in opinion
paragraph 10 of our letter; we express no opinion regarding the continued
perfection of any possessory security interests in any Collateral (or other
security interest the perfection of which depends upon the location of such
Collateral) upon or following the removal of such Collateral to another
jurisdiction; we express no opinion regarding the perfection of any security
interests in deposit accounts, money or letter of credit rights or regarding the
perfection of any possessory security interests in Collateral in possession of a
person other than the secured party or the Collateral Agent on behalf of the
Secured Parties; we express no opinion with respect to the perfection by filing
of any security interests with respect to Collateral as to which the filing of a
UCC Form-1 financing statement has not been authorized by the debtor either in
an authenticated record pursuant to Section 9-509(a), (b) or (c) of the New York
UCC; and except as expressly set forth in opinion paragraph 10(c) of our letter
(regarding certain security interests being acquired free of adverse claims), we
express no opinion regarding the priority of any lien or security interest;

 

(f)            the assignment of or creation of a security interest in any
contract, lease, license, permit, healthcare insurance receivable or other
general intangible or account,

 

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chattel paper or promissory note may require the approval of the issuer thereof
or the other parties thereto, except to the extent that restrictions on the
creation, attachment, perfection or enforcement of a security interest therein
are unenforceable under Sections 9-406 and 9-408 of the New York UCC;

 

(g)           we express no opinion with respect to any self-help remedies with
respect to the Collateral to the extent they vary from those available under the
New York UCC or other applicable Uniform Commercial Code or with respect to any
remedies otherwise inconsistent with the New York UCC (to the extent that the
New York UCC is applicable thereto) or other applicable law (including, without
limitation, any other applicable Uniform Commercial Code);

 

(h)           a substantial body of case law treats guarantors as “debtors”
under the New York UCC, thereby according guarantors rights and remedies of
debtors established by the New York UCC;

 

(i)            we express no opinion with respect to (i) the creation,
perfection or enforceability of agricultural liens or (ii) the creation,
perfection or enforceability of security interests in: property in which it is
illegal or violative of governmental rules or regulations to grant a security
interest (such as, for example, governmental permits and licenses); general
intangibles which terminate or become terminable if a security interest is
granted therein (except to the extent that restrictions on the creation,
attachment, perfection or enforcement of a security interest therein are
unenforceable under Section 9-406 and 9-408 of the New York UCC); property
subject to negative pledge clauses of which you have knowledge; vehicles, ships,
vessels, barges, boats, railroad cars, locomotives and other rolling stock,
aircraft, aircraft engines, propellers and related parts, and other property for
which a state or federal statute or treaty (including without limitation any
applicable Uniform Commercial Code) provides for registration or certification
of title or specifies a place of filing different from that specified in
Section 9-501 of any applicable Uniform Commercial Code (other than our opinions
in opinion paragraph 10(d) of our letter); commercial tort claims; crops, farm
products, equipment used in farming operations and accounts or general
intangibles arising from or relating to the sale of farm products by a farmer;
timber to be cut; fixtures; “as-extracted collateral” (including without
limitation oil, gas or other minerals and accounts arising out of the sale at
the wellhead or minehead of oil, gas or other minerals); consumer goods;
healthcare insurance receivables; property identified to a contract with, or in
the possession of, the United States of America or any state, county, city,
municipality or other governmental body or agency; goods for which a negotiable
document of title has been issued; and (other than to the extent covered by our
opinions in opinion paragraph 10(b) of our letter) copyrights, patents and
trademarks, other literary property rights, service marks, know-how, processes,
trade secrets, undocumented computer software, unrecorded and unwritten data and
information, and rights and licenses thereunder;

 

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(j)            we note that your remedies under the Security Agreement with
regard to the sale or after the sale of any securities or other interest subject
to any security interest are subject to compliance with state and federal
securities laws;

 

(k)           we express no opinion regarding the enforceability of any security
interest in any accounts, chattel paper, documents, instruments or general
intangibles with respect to which the account debtor or obligor is the United
States of America, any state, county, city, municipality or other governmental
body, or any department, agency or instrumentality thereof;

 

(l)            we express no opinion with respect to the enforceability of any
provision of any Loan Document which purports to authorize you to file financing
statements under circumstances not authorized under the applicable Uniform
Commercial Code;

 

(m)          we express no opinion regarding the enforceability of any provision
of any Loan Document which purports to authorize you to purchase at a private
sale Collateral which is not subject to widely distributed standard price
quotations or sold on a recognized market;

 

(n)           we express no opinion regarding any Loan Party’s rights in or
title to, or power to transfer any of its rights in or title to its properties
including, without limitation, any of the Collateral;

 

(o)           we express no opinion regarding the characterization of a
transaction as one involving the creation of a lien on real property, the
characterization of a contract as one in a form sufficient to create a lien or a
security interest in real property, the creation, perfection, priority or
enforcement of a lien on real property or matters involving ownership or title
to any real property;

 

(p)           we note that the perfection of any security interest may be
terminated as to Collateral otherwise disposed of by any Loan Party if such
disposition is authorized in the Loan Documents or otherwise by you;

 

(q)           we express no opinion regarding the enforceability of any
pre-default waiver of notification of disposition of Collateral, mandatory
disposition of Collateral or redemption rights;

 

(r)            we express no opinion regarding the enforceability of any
provisions asserting that Collateral is owned by or is property of a secured
party prior to such secured party’s foreclosure of such Collateral in accordance
with the applicable Uniform Commercial Code or, in the case of cash Collateral,
the application of such cash Collateral in payment of the secured obligations;

 

(s)           we note that our opinions as to the validity, binding effect and
enforceability of any Loan Document do not constitute opinions as to the
creation, perfection, effect of perfection or priority of any lien or security
interest purported to be granted thereunder; opinions as to the creation,
perfection, effect of perfection or

 

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priority of any lien or security interest are given, if any at all, only in
opinion paragraphs 9 and 10 of our letter;

 

(t)            as to the (i) shares of stock or other equity interests issued by
any issuer thereof  and (ii) assets of any entity, in each case which is
organized under the laws of or located in any jurisdiction other than the United
States of America or a State thereof, we note that the creation, perfection and
enforceability of security interests therein may require actions in addition to
those referenced in opinion paragraphs 9 and 10 of our letter, and we express no
opinion regarding such actions or the effect that the failure to take any such
actions may have on the creation, perfection and enforceability of any security
interests therein created and perfected or purported to be created and perfected
under any pledge or security agreement and any applicable Uniform Commercial
Code;

 

(u)           we express no opinion as to the enforceability of cumulative
remedies to the extent such cumulative remedies purport to or would have the
effect of compensating the party entitled to the benefits thereof in amounts in
excess of the actual loss suffered by such party or would violate applicable
laws concerning real estate or mixed collateral foreclosures or elections of
remedies; and

 

(v)           we express no opinion regarding the creation, attachment,
perfection, effect of perfection or enforceability of any security interest
created in Collateral described in the Security Agreement, the Trademark
Security Agreements, the Patent Security Agreements and the Copyright Security
Agreements as “any property or assets whatsoever”, “all other tangible and
intangible personal property”, “all assets”, “all personal property” or words of
similar import, or any other use therein of a supergeneric description of the
collateral, but we advise you that pursuant to Section 9-504 of any applicable
Uniform Commercial Code, a financing statement sufficiently indicates the
collateral that it covers if the financing statement provides (i) a description
of the collateral pursuant to Section 9-108 of any applicable Uniform Commercial
Code or (ii) an indication that the financing statement covers all assets or all
personal property.

 

6.             Lender’s Regulatory Qualification.  We express no opinion with
respect to, and all our opinions are subject to, the effect of the compliance or
noncompliance of each of you with any state or federal laws or regulations
applicable to you because of your legal or regulatory status or the nature of
your business or requiring you to qualify to conduct business in any
jurisdiction.

 

7.             Usury Qualification.  We express no opinion with regard to usury
or other laws limiting or regulating the maximum amount of interest that may be
charged, collected, received or contracted for other than the internal laws of
the State of New York, and without limiting the foregoing, we expressly disclaim
any opinion as to the usury or other such laws of any other jurisdiction
(including laws of other states made applicable through principles of federal
preemption or otherwise) which may be applicable to the transactions
contemplated by the Loan Documents.

 

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8.             Fraudulent Conveyance.  We express no opinion regarding the
enforceability of any so-called “fraudulent conveyance” or “fraudulent savings
clause” (and any similar provision in any other document or agreement) in any of
the Loan Documents to the extent such provisions purport to limit the amount of
the obligations of any party or the right to contribution of any party with
respect to such obligations.

 

9.             Limited Liability Company Qualification.  We expressly disclaim
any opinion regarding the contract or general law of any state (other than the
State of New York) that may be incorporated by reference into the relevant
statutory scheme generally governing limited liability companies in such state,
or into any limited liability company agreement or similar governing document of
a limited liability company (howsoever denominated) entered into pursuant
thereto.

 

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Schedule B

 

Assumptions

 

For purposes of our letter, we have relied, without investigation, upon each of
the following assumptions:

 

1.             Each of the Loan Parties (other than the Opinion Parties) is in
good standing or equivalent concept under the laws of its jurisdiction of
organization and has the full power and authority (including, without
limitation, under its Organization Documents and the laws of its jurisdiction of
organization) to execute and deliver the Loan Documents to which it is a party
and to perform its obligations under the Loan Documents to which it is a party. 
The execution and delivery of the Loan Documents to which it is a party by each
of the Loan Parties (other than the Opinion Parties) has been duly authorized by
the board of directors, board of managers, manager or managing member, as
applicable, of each Loan Party (other than the Opinion Parties).  Each of the
Loan Parties (other than the Opinion Parties) has duly executed and delivered
the Loan Documents to which it is a party.

 

2.             Each of the Loan Parties (a) has the requisite title and rights
to any property involved in the transactions effected under the Loan Documents
(herein called the “Transactions”) including without limiting the generality of
the foregoing, each item of Collateral existing on the date hereof and (b) will
have the requisite title and rights to each item of Collateral arising after the
date hereof.

 

3.             You are existing and in good standing in your jurisdiction of
organization.

 

4.             You have the corporate power, or if you are not a corporation,
other requisite power (including, without limitation, under the laws of your
jurisdiction of organization) to execute, deliver and to perform your
obligations under each of the Loan Documents, and each of the Loan Documents to
which you are a party has been duly authorized by all necessary action on your
part and, to the extent you are a party, has been duly executed and duly
delivered by you.

 

5.             The Loan Documents to which you are party constitute valid and
binding obligations of yours and are enforceable against you in accordance with
their terms (subject to qualifications, exclusions and other limitations similar
to those applicable to this letter).

 

6.             You have satisfied those legal requirements that are applicable
to you to the extent necessary to make the Loan Documents to which you are a
party enforceable against you.

 

7.             You have complied with all legal requirements pertaining to your
status as such status relates to your rights to enforce the Loan Documents
against the Loan Parties, as applicable.

 

8.             Each document submitted to us for review is accurate and
complete, each such document that is an original is authentic, each such
document that is a copy conforms to an authentic original, and all signatures on
each such document are genuine.

 

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9.             There has not been any mutual mistake of fact or
misunderstanding, fraud, duress or undue influence among you and the Loan
Parties.

 

10.           The conduct of the parties to the Loan Documents has complied with
any requirement of good faith, fair dealing and conscionability.

 

11.           You have acted in good faith and without notice of any defense
against the enforcement of any rights created by, or adverse claim to any
property or security interest transferred or created as part of, the
Transactions.

 

12.           There are no agreements or understandings among the parties,
written or oral (other than the Loan Documents), and there is no usage of trade
or course of prior dealing among the parties that would, in either case, define,
supplement or qualify the terms of the Loan Documents.

 

13.           The constitutionality or validity of a relevant statute, rule,
regulation or agency action is not in issue.

 

14.           For purposes of our opinions in opinion paragraphs 6 and 8 of our
letter, all parties to the Loan Documents will act in accordance with, and will
refrain from taking any action that is forbidden by, the terms and conditions of
the Loan Documents.

 

15.           All agreements other than the Loan Documents (if any) with respect
to which we have provided an opinion or advice in our letter or reviewed in
connection with our letter would be enforced as written.

 

16.           For purposes of our opinions in opinion paragraphs 6 and 8 of our
letter, no Loan Party will in the future take any discretionary action
(including a decision not to act) permitted under the Loan Documents that would
result in a violation of law or constitute a breach or default under any other
agreements or court orders to which such Loan Party may be subject.

 

17.           Each natural person who is executing any Loan Document on behalf
of any Loan Party has sufficient legal capacity to enter into such Loan
Document, and we have no actual knowledge of any such incapacity.

 

18.           Each certificate obtained from a governmental authority relied on
by us is accurate, complete and authentic and all relevant official public
records to which each such certificate relates are accurate and complete.

 

19.           No Lender or Agent is subject to Regulation T of the Board of
Governors of the Federal Reserve System; and no proceeds of the Loans will be
used for any purpose which would violate or be inconsistent with terms of the
Credit Agreement.

 

20.           For purposes of our opinions in opinion paragraphs 6 and 8 of our
letter, each Loan Party will in the future obtain all permits and governmental
approvals required, and will in the future take all actions required, relevant
to the consummations of the Transactions or performance of the Loan Documents.

 

B-2

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21.           Any information required to be disclosed in connection with any
consent or approval by the Loan Parties’ respective board of directors, board of
managers, manager, managing member or general partner, as applicable, or their
stockholders (or equivalent governing or ownership group) and all other
information required to be disclosed in connection with any issue relevant to
our opinions or any matter relevant to any legal issue covered by our opinions
has been fully and fairly disclosed to such Persons and no such disclosure
contains any relevant error or omission.

 

22.           Each person who has taken any action relevant to any of our
opinions in the capacity of director, manager, management committee member, or
officer was duly elected to that director, management committee member, or
officer position and held that position when such action was taken (except that
this assumption is limited to those of the preceding items with respect to the
adoption of which we did not have involvement).

 

23.           Each Loan Party’s certificate of incorporation, formation or
partnership (or equivalent governing instrument), all amendments to that
instrument, all resolutions adopted establishing classes or series of stock or
other equity interests under that instrument, each Loan Party’s bylaws, limited
liability agreement or limited partnership agreement (or equivalent governing
instrument) and all amendments to its bylaws or limited liability agreement (or
equivalent governing instrument) have been adopted in accordance with all
applicable legal requirements (except that this assumption is limited to those
of the preceding items with respect to the adoption of which we did not have
involvement).

 

24.           The transactions contemplated by the Loan Documents are directly
or indirectly related to the business interests of each Loan Party thereto and
the transactions were fair and reasonable to each such entity at the time each
such transaction was authorized by such Loan Party.

 

25.                                 Collateral Assumptions.  The opinions and
advice contained in our letter are subject to the following assumptions:

 

(a)           Each Loan Party which grants or purports to grant any lien or
security interest in any property or Collateral (i) has the requisite title and
rights to each item of Collateral existing on the date hereof and (ii) will have
the requisite title and rights to each item of Collateral arising after the date
hereof.

 

(b)           Value (as defined in Section 1-201(44) of the New York UCC) has
been given by the Lenders to each Loan Party for the security interests and
other rights in and assignments of Collateral described in or contemplated by
the Loan Documents.

 

(c)           The descriptions of Collateral in the Security Agreement and all
Financing Statements reasonably describe the property intended to be described
as Collateral.

 

(d)           The representations made by each Loan Party in the Loan Documents
to which it is a party with respect to its jurisdiction of organization and
chief executive office are true and correct.

 

B-3

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(e)           The information regarding the secured party listed on each
Financing Statement is accurate and complete in all respects.

 

B-4

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Schedule C

 

Excluded Law and Legal Issues

 

None of the opinions or advice contained in our letter covers or otherwise
addresses any of the following laws, regulations or other governmental
requirements or legal issues:

 

1.             except with respect to the Investment Company Act of 1940, as
amended, to the extent of our opinion in opinion paragraph 11 of our letter, and
federal securities laws and regulations (including all other laws and
regulations administered by the United States Securities and Exchange
Commission), state “Blue Sky” and other securities laws and regulations
(including all rules and regulations administered by NYSE, FINRA and any other
securities or other regulatory authorities), and laws and regulations relating
to commodity (and other) futures and indices and other similar instruments;

 

2.             pension and employee benefit laws and regulations (e.g., ERISA);

 

3.             other than to the extent of our opinions in opinion paragraph 10
of our letter, federal and state laws and regulations concerning filing and
notice requirements (such as the Hart-Scott-Rodino Antitrust Improvements Act of
1986, as amended, and the Exon-Florio Act, as amended) other than requirements
applicable to charter-related documents such as a certificate of merger;

 

4.             federal and state antitrust and unfair competition laws and
regulations;

 

5.             compliance with fiduciary duty requirements;

 

6.             the statutes and ordinances, the administrative decisions and the
rules and regulations of counties, towns, municipalities and special political
subdivisions (whether created or enabled through legislative action at the
federal, state or regional level—e.g., water agencies, joint power districts,
turnpike and tollroad authorities, rapid transit districts or authorities, and
port authorities), applicable zoning and building laws, ordinances, code,
rules or regulations and judicial decisions to the extent that they deal with
any of the foregoing;

 

7.             fraudulent transfer and fraudulent conveyance laws;

 

8.             federal and state environmental, tax, land use and subdivision,
racketeering laws and regulations (e.g., RICO), health and safety (e.g. OSHA)
and labor laws and regulations;

 

9.             federal patent, trademark and copyright, state trademark, and
other federal and state intellectual property laws and regulations;

 

10.           federal and state laws, regulations and policies concerning
(i) national and local emergency, (ii) possible judicial deference to acts of
sovereign states, and (iii) criminal and civil forfeiture laws;

 

C-1

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11.           other than to the extent of our opinions in opinion paragraph 7 of
our letter with respect to Regulations U and X of the Federal Reserve Board,
Federal Reserve Board Regulations;

 

12.           other federal and state statutes of general application to the
extent they provide for criminal prosecution (e.g., mail fraud and wire fraud
statutes);

 

13.           any laws, regulations, directives and executive orders that
prohibit or limit the enforceability of obligations based on attributes of the
party seeking enforcement (e.g., the Trading with the Enemy Act and the
International Emergency Economic Powers Act);

 

14.           the effect of any law, regulation or order which hereafter is
enacted, promulgated or issued;

 

15.           title to any property;

 

16.           the Anti-Terrorism Order, including Executive Order No. 13224 on
Terrorism Financing, effective September 24, 2001 and the United and
Strengthening America by Providing Appropriate Tools Required to Intercept and
Obstruct Terrorism Act of 2001 (together, the “Anti-Terrorism Order”) as
amended, all rules and regulations promulgated thereunder and all federal, state
and local laws, statutes, ordinances, orders, governmental rules, regulations,
licensing requirements and policies relating to the Anti-Terrorism Order, the
foreign assets control regulations of the United States Treasury Department, and
to the extent the following relate to any Anti-Terrorism Law such anti-terrorism
law or regulation (including without limitation the Executive Order of
September 23, 2001 Blocking Property and Prohibiting Transactions and Persons
Who Commit and Threaten to Commit or Support Terrorism) or the Anti-Terrorism
Order: the ownership and operation of, or otherwise regulation of, companies
which conduct, operate or otherwise pursue the business or businesses now and in
the future conducted, operated or otherwise pursued by the Borrower including,
without limitation, the importation, transportation, manufacturing, dealing,
purchase, use or storage of explosive materials;

 

17.           the Federal Power Act, as amended, and the regulations
implementing the Federal Power Act, all rules and regulations promulgated under
any of the foregoing statutes, the rules, regulations and policies of the
Federal Energy Regulatory Commission and any other federal or any state or local
regulatory authority, and all other federal, state and local laws, orders,
regulations, licensing requirements and policies regulating, public utilities,
electric utilities or energy facilities or services (and including without
limitation any requirement under any such federal, state or local law or
regulation that any Loan Party obtain any consent, approval, authorization or
order in order to enter into the Loan Documents and perform the transactions
contemplated thereby or the effect of any failure to obtain any such consent,
approval authorization or order);

 

18.           federal, state and local liquor licensing laws and regulations;

 

C-2

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19.           the USA Patriot Act of 2001 and the rules, regulations and
policies promulgated thereunder and any foreign assets control regulations of
the United States Treasury Department or any enabling legislation or orders
relating thereto.

 

20.           any insurance, HMO, health insurance laws, regulations, directives
or executive orders;

 

21.           federal, state and local laws, regulations, licensing requirements
and policies relating to health care, Medicare, Medicaid or CHAMPUS (including
those of any state regulatory agency or Centers for Medicare and Medicaid
Services);

 

22.           federal, state, or local regulation or order, of any authority,
which relates to or otherwise imposes liability or standards of conduct
concerning the licensure, certification, qualification, or operation of a
clinical or pathology laboratory, medical practice or other aspect of a Person’s
business subject to such laws, including but not limited to laws governing
Medicare and Medicaid laboratories, laws regarding the professional standards of
health care professionals; laws governing patient confidentiality and privacy;
laws governing the corporate practice of medicine; laws governing laboratories;
laws relating to kickbacks, self-referrals and access to health care, as well as
the Employee Health Care Access Act; 21 U.S.C. 301-392, the Federal Food Drug
and Cosmetic Act; 21 U.S.C. 821 et seq., the Federal Drug Abuse Act; Sections
1128, 1128A and 1128B of the Social Security Act; The Clinical Laboratory
Improvement Amendments of 1988; 42 U.S.C. 1320a-7b, 42 C.F.R. Part 1001, 42 CFR
Chapter IV, Subchapter C; Sections 1876 or 1903 of the Social Security Act; 45
CFR, Part 74; 45 CFR, Part 92; 42 CFR 455.109, Section 306 of the Clean Air Act;
42 U.S.C. 1857(h) et seq., Section 508 of the Clean Water Act; 33 U.S.C. 1368 et
seq., Executive Order 11738 and Environmental Protection Agency regulations; 40
CFR Part 15, Title VI of the Civil Rights Act of 1964; 42 U.S.C. 2000 d et seq.,
Section 504 of the Rehabilitation Act of 1933; 29 U.S.C. 7940; Title IX of the
Education Amendments of 1972, 20 U.S.C. 1681 et seq., the Age Discrimination Act
of 1975; 42 U.S.C. 6101 et seq., Section 654 of OBRA ‘81; 42 U.S.C. 9849 and the
Americans with Disabilities Act of 1990; P.L. 101-336, OBRAs 1986 through 1993,
as amended, the Health Insurance Portability and Accountability Act, as amended,
and any other similar federal, state or local Regulations;

 

23.           the enforceability of any purported obligation to reimburse an
issuer of a letter of credit to the extent inconsistent with Section 5-103(c) of
the Uniform Commercial Code; and

 

24.           the Communications Act of 1934 and any related laws, rules,
regulations or orders and any state or federal law governing interstate or
intrastate telecommunications and cable communications systems and any related
laws, rules, regulations or orders.

 

We have not undertaken any research for purposes of determining whether any Loan
Party or any of the Transactions which may occur in connection with the Loan
Documents is subject to any law or other governmental requirement other than to
those laws and requirements which in our experience would generally be
recognized as applicable to the general business entities which are engaged in
transactions of the type contemplated by the Loan Documents in the absence of
research by lawyers in the State of New York, and none of our opinions covers
any such law or other requirement unless (i) one of our Designated Transaction
Lawyers had

 

C-3

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actual knowledge of its applicability at the time our letter was delivered on
the date it bears and (ii) it is not excluded from coverage by other provisions
in our letter or in any Schedule to our letter.

 

C-4

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Schedule D

 

Excluded Provisions

 

None of the opinions in the letter to which this Schedule is attached covers or
otherwise addresses any of the following types of provisions which may be
contained in the Loan Documents:

 

1.             Covenants not to compete including, without limitation, covenants
not to interfere with business or employee relations, covenants not to solicit
customers, and covenants not to solicit or hire employees.

 

2.             Indemnification for gross negligence, bad faith, willful
misconduct or other wrongdoing or strict product liability or any
indemnification for liabilities arising under securities laws.

 

3.             Provisions mandating contribution towards judgments or
settlements among various parties.

 

4.             Waivers of (i) legal or equitable defenses, (ii) rights to
damages, (iii) rights to counter-claim or set-off, (iv) statutes of limitations,
(v) rights to notice, (vi) the benefits of statutory, regulatory, or
constitutional rights, unless and to the extent the statute, regulation, or
constitution explicitly allows waiver, (vii) broadly or vaguely stated rights,
and (viii) other benefits to the extent they cannot be waived under applicable
law.

 

5.             Provisions providing for forfeitures or the recovery of amounts
deemed to constitute penalties, or for liquidated damages, acceleration of
future amounts due (other than principal) without appropriate discount to
present value, interest upon interest and, late charges, prepayment charges, and
increased interest rates upon default.

 

6.             Time-is-of-the-essence clauses.

 

7.             Provisions which provide a time limitation after which a remedy
may not be enforced.

 

8.             Confession of judgment clauses.

 

9.             Except with respect to submission to the jurisdiction of the
courts of the State of New York to the extent provided for in Section 5-1402 of
the New York General Obligations Law, agreements to submit to the jurisdiction
of any particular court or other governmental authority (either as to personal
jurisdiction or subject matter jurisdiction); provisions restricting access to
courts; waiver of the right to jury trial; waiver of service of process
requirements which would otherwise be applicable; and provisions otherwise
purporting to affect the jurisdiction and venue of courts.

 

10.           Provisions that attempt to change or waive rules of evidence or
fix the method or quantum of proof to be applied in litigation or similar
proceedings.

 

D-1

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11.           Provisions appointing one party as an attorney-in-fact for an
adverse party or providing that the decision of any particular person will be
conclusive or binding on others.

 

12.           Provisions purporting to limit rights of third parties who have
not consented thereto or purporting to grant rights to third parties.

 

13.           Provisions which purport to award attorneys’ fees solely to one
party.

 

14.           Provisions purporting to create a trust or constructive trust
without compliance with applicable trust law.

 

15.           Provisions relating to the application of insurance proceeds and
condemnation awards.

 

16.           Provisions that provide for the appointment of a receiver.

 

17.           Provisions or agreements regarding proxies, shareholders
agreements, shareholder voting rights, voting trusts, and the like.

 

18.           Confidentiality agreements.

 

19.           Provisions in any of the Loan Documents requiring any Loan Party
to perform its obligations under, or to cause any other person to perform its
obligations under, or stating that any action will be taken as provided in or in
accordance with, any agreement or other document that is not a Loan Document.

 

20.           Provisions, if any, which are contrary to the public policy of any
jurisdiction.

 

21.           Arbitration agreements.

 

22.           Provisions of the Loan Documents insofar as they authorize you or
your affiliates to set off and apply deposits at any time held, and any other
indebtedness at any time owing, by you to or for the account of any Loan Party.

 

23.           Choice-of-law provisions (other than the selection, under the
statutory choice of law rules of New York, of the internal law of the State of
New York as the governing law of the Loan Documents).

 

D-2

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Schedule E

 

Schedule of Other Loan Documents

 

1.             Guarantee and Collateral Agreement executed and delivered by the
Loan Parties party thereto in favor of the Collateral Agent (the “Security
Agreement”).

 

2.             Intercreditor and Collateral Agency Agreement executed by the
Borrower, Holdings, the Collateral Agent and First Hawaiian Bank.

 

E-1

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Schedule F

 

Financing Statements

 

See attached.

 

F-1

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Schedule G

 

Schedule of Pledged Securities

 

Issuer

 

Number of
Certificate

 

Registered
Owner

 

Number and
Class of
Equity Interests

 

Percentage of
Equity Interests

Hawaiian Telcom Communication, Inc.

 

1

 

Hawaiian Telcom Holdco, Inc.

 

1,000 shares of Common Stock

 

100%

Hawaiian Telcom, Inc.

 

HT-0005 - HT-0010

 

Hawaiian Telcom Communications, Inc.

 

10,000,000 shares of Common Stock

 

100%

Hawaiian Telcom Services Company, Inc.

 

1

 

Hawaiian Telcom Communications, Inc.

 

1 share of Common Stock

 

100%

 

G-1

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EXHIBIT G-2

 

FORM OF

LOCAL AND REGULATORY

COUNSEL OPINION

 

See attached.

 

 

G-2-1

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[Letterhead of Morihara Lau & Fong LLP]

 

February 29, 2012

 

CREDIT SUISSE AG, CAYMAN ISLANDS BRANCH

One Madison Avenue

New York, New York  10010

and each of the Lenders party to

the Credit Agreement referred to below

 

Ladies and Gentlemen:

 

We have acted as special Hawaii counsel to Hawaiian Telcom Communications, Inc.,
a Delaware corporation (the “Borrower”), Hawaiian Telcom Holdco, Inc., a
Delaware corporation  (“Holdings”), and each of the entities identified on
Schedule A attached hereto, (collectively, the “Other Loan Parties”, and
together with the Borrower and Holdings, the “Loan Parties”) with respect to the
refinancing of an existing $300 million senior secured 5-year term loan (the
“Refinancing Action”).  This opinion is being delivered to you at the request of
the Loan Parties in connection with that certain Credit Agreement, dated as of
the date hereof (the “Credit Agreement”), by and among the Borrower, Holdings,
and Credit Suisse AG, Cayman Islands Branch, as Administrative Agent and
Collateral Agent for the Lenders.  Capitalized terms used but not otherwise
defined herein shall have the respective meanings given such terms in the Credit
Agreement.  This opinion letter is being delivered pursuant to
Section 4.01(a) of the Credit Agreement.

 

Our opinion with respect to intrastate telecommunications matters is limited to
state statutes governing intrastate telecommunications in the State of Hawaii,
including Chapter 269 of the Hawaii Revised Statutes, and the applicable rules,
regulations and orders of the Public Utilities Commission of the State of Hawaii
(the “HPUC”) (collectively, the “State Telecommunications Laws”).  With respect
to cable communications systems, we express no opinion and assume no
responsibility for the same.  However, the statements contained in this opinion
concerning cable communications systems are derived from the representations and
statements made in a letter dated February 24, 2012 from Donn A. Yabusaki, Cable
Television Administrator (the “Cable Letter”), Department of Commerce and
Consumer Affairs of the State of Hawaii (the “DCCA”) with regard to the state
statutes governing cable communications systems in the State of Hawaii,
including Chapter 440G of the Hawaii Revised Statutes, and the applicable rules,
regulations and orders of the DCCA (collectively, the “Cable Communications
Laws”) and the Officer’s Certificate provided to us by Hawaiian Telcom Service
Company, Inc. (“HTSC”).  We have not independently undertaken any research or
due diligence with respect to any statements contained in this opinion
concerning the cable communications systems and the Cable Communications Laws
and have relied solely on the Cable Letter and the Officer’s Certificate
described herein.  We express no opinion and assume no responsibility as to the
applicability of any U.S. or other state, or any local, foreign, supranational,
or regional laws or regulations, including, but not limited to, laws governing
the corporate organization, authority to transact business, or tax liability of
any of the Loan Parties.  We note that certain opinions are addressed in the
separate opinion letters of the law firm of Kirkland & Ellis LLP, Law Offices of
Gregory J. Vogt, PLLC, and Law Office of Wesley Y.S. Chang.  We understand that
these letters are being provided to you separately, and we express no opinion
with respect to the matters covered in those letters.

 

G-2-2

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For purposes of this opinion letter, we have reviewed executed counterparts of
(a) the Credit Agreement, (b) the Intercreditor Agreement, (c) the Mortgage,
(d) the Guarantee and Collateral Agreement, (e) the Affiliate Subordination
Agreement (collectively, the “Operative Documents”), and (f) the Cable Letter,
and such other documents as we have deemed necessary or appropriate to form the
basis for the opinions hereinafter expressed.  In our review, we have assumed
without independent investigation (i) the genuineness of all signatures;
(ii) that where any signature purports to have been made in a corporate,
governmental, fiduciary, or other capacity, the person who affixed such
signature to such document had authority to do so; (iii) the authenticity of all
documents submitted to us as originals; (iv) the conformity to authentic
original documents of all documents submitted to us as certified, conformed, or
photostatic copies; and (v) the conformity of all provisions, terms, and
conditions contained in documents submitted to us in draft form with the
provisions, terms, and conditions contained in the executed final versions of
such documents.  In addition, we have, without independent investigation (except
as otherwise set forth herein), relied upon the truth and accuracy of factual
representations contained in or made by the parties pursuant to the Operative
Documents.

 

Subject to the assumptions and qualifications set forth in this letter, it is
our opinion as of the date hereof that:

 

1.             The execution, delivery and performance of the Operative
Documents by each of the Loan Parties thereto, and the financing, guaranties and
associated security arrangements to be entered into for the purpose of
effectuating the Credit Agreement, as set forth in the Operative Documents
(collectively, the “Transactions”) will not violate the State Telecommunications
Laws or, to our Actual Knowledge, any judgment, order or decree of any court or
governmental or regulatory authority having jurisdiction pursuant to the State
Telecommunications Laws.  “Actual Knowledge” shall mean the conscious awareness
of facts or other information, after due inquiry, by the lawyers in our
organization who have active involvement in the subject transaction or in the
preparation of this letter.

 

2.             Subject to the Loan Parties’ compliance with the terms and
conditions set forth in the approvals/authorizations listed in Schedule B, the
HPUC has granted all consents and authorizations necessary for the
Transactions.  Pursuant to the Cable Letter, HTSC is not required to obtain
DCCA’s approval, authorization, or order for the Loan Parties to consummate the
Refinancing Action.(1)  Schedule B is an accurate list of the applications,
requests for and notifications of the Transactions that have been filed with the
HPUC and DCCA and further includes the approvals and authorizations given by the
HPUC with respect to the Transactions and that are necessary for (a) Hawaiian
Telcom, Inc. to continue operations as a local exchange carrier in the State of
Hawaii; and (b) for HTSC to provide telecommunications services pursuant to its
Certificate of Authority and

 

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

(1)   The statements that (a) the HPUC granted all consents and authorizations
and (b) no DCCA approval, authorization, or order is required applies only to
the refinancing of the $300 million senior secured term loan and does not extend
to the option for the Loan Parties to borrow up to an additional $50 million
under the Credit Agreement, which may require further regulatory approvals.

 

G-2-3

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Certificate of Registration issued by the HPUC.  Additionally, the Cable Letter
provides that HTSC has all DCCA approvals and authorizations to provide and
operate a cable system on the island of Oahu pursuant to a cable franchise
issued by the DCCA.  The authorizations listed in Schedule B are in full force
and effect.  The time within which any party or participant may seek
administrative or judicial reconsideration, review or appeal of the approval of
the Transactions has expired, and no petition for reconsideration, review or
appeal was filed with the HPUC or with the appropriate court.

 

3.             No further consent, approval, authorization, license,
certificate, permit or order of the HPUC under State Telecommunications or
applicable Hawaii laws is necessary for the execution, delivery and performance
of the Operative Documents by any of the Loan Parties.  Pursuant to the Cable
Letter, HTSC is not required to obtain DCCA approval, authorization, or order
for the Loan Parties to consummate the Refinancing Action.  All applicable HPUC
regulatory appeal periods have expired.  However, our opinion does not address
whether additional HPUC approval is or may be required in order to further
transfer any properties or assets that may be subject to the security
arrangements, following a default under the Operative Documents, all of which
must be considered on a case-by-case basis.

 

4.             There are no proceedings, complaints or investigations pending or
threatened under State Telecommunications against any of the Loan Parties by or
before the HPUC that seek the revocation, non-renewal, or any material adverse
modification of the approvals/authorizations listed in Schedule B.  Pursuant to
the Cable Letter, the DCCA is not aware of any proceedings, complaints or
investigations pending or threatened against HTSC under Cable Communication Laws
that seek the revocation, non-renewal, or any material adverse modification to
HTSC’s cable franchise.

 

This letter is furnished only to you and is solely for your benefit in
connection with the Transactions covered hereby, except that copies of this
opinion letter may be furnished to, but not relied upon:  (i) by your attorneys,
or (ii) in response to a court order.  This letter may not be relied upon by you
for any other purpose, or furnished to, assigned to, quoted to or relied upon by
any other person, firm or entity for any purpose, without our prior written
consent, which may be granted or withheld in our discretion.  At your request,
we hereby consent to reliance hereon by any future assignee of any Lender’s
interest in loans under the Credit Agreement pursuant to an assignment that is
made in accordance with the express provisions of the Credit Agreement, on the
condition and understanding that (i) this letter speaks only as of the date
hereof, (ii) we have no responsibility or obligation to update this letter, to
consider its applicability or correctness to other than its addressee(s), or to
take into account changes in law, facts or any other developments of which we
may later become aware, and (iii) any such reliance by a future assignee must be
actual and reasonable under the circumstances existing at the time of
assignment, including any changes in law, facts or any other developments known
to or reasonably knowable by the assignee at such time.

 

 

Very truly yours,

 

 

 

 

 

MORIHARA LAU & FONG LLP

 

G-2-4

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Schedule A

 

Schedule of Other Loan Parties

 

ITEM

 

NAME

 

JURISDICTION

1.

 

Hawaiian Telcom, Inc.

 

Hawaii

2.

 

Hawaiian Telcom Services Company, Inc.

 

Delaware

 

A-1

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Schedule B

 

Applications, Consents, Authorizations, Etc.

 

1.             In the Matter of the Application of Hawaiian Telcom, Inc. and
Hawaiian Telcom Services Company, Inc. for an Order Approving the Joint Chapter
11 Plan of Reorganization of Hawaiian Telcom Communications, Inc. and its Debtor
Affiliates, Including Certain Security Arrangements, HPUC Docket No. 2010-0001:

 

a.             Application filed January 4, 2010; and

 

b.             Decision and Order filed September 22, 2010.

 

2.             In the Matter of the Application of Hawaiian Telcom, Inc. and
Hawaiian Telcom Services Company, Inc. for an Order Approving Modified Financing
Arrangements Without Increasing Loan Amounts and Without Changing Security
Obligations, HPUC Docket No. 2011-0124:

 

a.             Application filed May 26, 2011;

 

b.             Decision and Order dated June 17, 2011;

 

c.             Joint Motion to Amend Decision and Order to Clarify the Time to
Complete the Term Loan Refinancing Arrangements and Relevant Terms and
Conditions filed August 31, 2011; and

 

d.             Order Approving Parties’ Joint Motion, filed on August 31, 2011.

 

3.             In the Matter of the Application for a Cable Franchise for
Hawaiian Telcom Services Company, Inc., with the Cable Television Division of
the DCCA:

 

a.             Application for Oahu initially submitted on November 5, 2010, as
supplemented by additional requested information, and accepted by the DCCA on
March 16, 2011; and

 

b.             Decision and Order No. 352 dated June 24, 2011.

 

B-1

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EXHIBIT G-3

 

FORM OF

LOCAL AND REGULATORY

COUNSEL OPINION

See attached.

 

G-3-1

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Law Offices of Gregory J. Vogt, PLLC

 

 

Gregory J. Vogt

 

703.838.0115 (office)

 

703.684.3620 (fax)

 

gvogt@vogtlawfirm.com

 

2121 EISENHOWER AVENUE

SUITE 200

ALEXANDRIA, VA 22314

 

www.vogtlawfirm.com

 

March 8, 2012

 

To:  Credit Suisse AG, Cayman Islands Branch,

as Administrative Agent and Collateral

Agent, and Lenders party to the Credit Agreement

referred to below

 

Re:                               Credit Agreement dated as of  February 29,
2012 (the “Credit Agreement”) among Hawaiian Telcom Holdco, Inc., Hawaiian
Telcom Communications, Inc., the lenders parties thereto, and Credit Suisse AG,
Cayman Islands Branch, as administrative and collateral agent (the “Agent”)

 

Ladies and Gentlemen:

 

This letter is a supplement to the letter I sent to Credit Suisse AG dated
February 29, 2012, with respect to that certain Credit Agreement, dated as of
February 29, 2012, among Hawaiian Telcom Holdco, Inc., Hawaiian Telcom
Communications, Inc., and Credit Suisse AG, Cayman Islands Branch. Holdco, the
Borrower and Hawaiian Telcom Services are each referred to herein as a “Delaware
Credit Party” and, collectively, the “Delaware Credit Parties.” The Delaware
Credit Parties, and Hawaiian Telcom are each referred to herein as a “Loan
Party” and, collectively, the “Loan Parties.”

 

This supplemental letter is furnished pursuant to Section 4.01(a) and Schedule
4.02(a) of the Credit Agreement.  Capitalized terms defined in the Credit
Agreement, used herein and not otherwise defined herein, shall have the meanings
given them in the Credit Agreement. Nothing in this supplemental letter
supersedes or amends the statements and opinions contained in my February 29,
2012, letter to you.

 

As such counsel, we have examined such matters of fact and questions of law as
we have considered appropriate for purposes of this letter, except where a
specified fact confirmation procedure is stated to have been performed (in which
case we have, with your consent, performed the stated procedure), and except
where a statement is qualified as to knowledge (in which case we have, with your
consent, made no or limited inquiry as specified below).  We have examined,
among other things, the following:  (a) Credit Agreement; and (b) the Collateral
and Guarantee Agreement (the “Security Agreement”), dated as of the date hereof,
by and among the Loan Parties and the Agent.  Items (a) and (b) are collectively
referred to herein as the “Loan Documents.”

 

G-3-2

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In our examination, we have assumed the genuineness of all signatures, the legal
capacity of all natural persons executing documents, the authenticity of all
documents submitted to us as originals, and the conformity to authentic original
documents of all documents submitted to us as copies. With respect to factual
matters relating to this opinion, we have with your consent relied only upon
(i) an examination of the public files and the electronic databases of the
Federal Communications Commission (“FCC”) in Washington, D.C. relating to the
FCC Licenses (as such term is defined below) publicly available on February 26,
2012 (the “FCC Records”) and (ii) the representations and warranties of the Loan
Parties in the Loan Documents.  We have not made any independent review or
investigation of factual matters for purposes of rendering this opinion.  We
have also assumed the accuracy, completeness, and authenticity of the foregoing
information.  We have not examined the records of any court or governmental
agency other than the FCC Records.

 

We are opining herein as to the effect on the subject loan transactions only of
the Communications Act of 1934, as amended (the “Act”), and the published
rules and regulations of the FCC promulgated pursuant to the Act (the
“Communications Laws”).  We express no opinion with respect to the applicability
thereto, or the effect thereon, of any other federal law, the laws of any other
jurisdiction, or as to any matters of municipal law or the laws of any other
local agencies within any state.

 

Whenever a statement herein is qualified by “to the best of our knowledge” or a
similar phrase, it is intended to indicate that those attorneys in this firm who
have rendered legal services in connection with the Loan Documents do not have
current actual knowledge of the inaccuracy of such statement.  However, except
as otherwise expressly indicated, we have not undertaken any independent
investigation to determine the accuracy of any such statement, and no inference
that we have any knowledge of any matters pertaining to such statement should be
drawn from our representation of the Loan Parties.

 

Subject to the foregoing and the other matters set forth herein, and in reliance
thereon, it is our opinion that, as of the date hereof:

 

1. To the best of our knowledge, and except as set forth on Schedule A,
(i) there are no adjudicatory proceedings pending or threatened under the
Communications Laws against any of the Loan Parties by or before the FCC that
seek the revocation, non-renewal, or any material adverse modification of any of
the FCC Licenses and (ii), except as set forth on Schedule A, there is not now
pending, issued, outstanding or threatened in writing by or before the FCC any
order to show cause, cease and desist order, notice of violation, notice of
apparent liability or notice of forfeiture with respect to any of the Loan
Parties or the FCC licenses.

 

G-3-3

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2. There are no proceedings pending or, to the best of our knowledge, threatened
by or before the FCC, that involve the Loan Documents.

 

This letter is furnished only to you and is solely for your benefit in
connection with the transactions referenced in the first paragraph. This letter
may not be relied upon by you for any other purpose, or furnished to, assigned
to, quoted to or relied upon by any other person, firm or entity for any
purpose, without our prior written consent, which may be granted or withheld in
our discretion.  At your request, we hereby consent to reliance hereon by any
future assignee of your interest in the loans under the Credit Agreement
pursuant to an assignment that is made and consented to in accordance with the
express provisions of Section 9.04 of the Credit Agreement, on the condition and
understanding that (i) this letter speaks only as of the date hereof, (ii) we
have no responsibility or obligation to update this letter, to consider its
applicability or correctness to any Person other than its addressees, or to take
into account changes in law, facts, or any other developments of which we may
later become aware, and (iii) any such reliance by a future assignee must be
actual and reasonable under the circumstances existing at the time of
assignment, including any changes in law, facts or any other developments known
to or reasonably knowable by the assignee at such time.

 

Sincerely,

 

G-3-4

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Schedule A

 

Pending Proceedings

 

1.                                       On December 27, 2004, Sandwich Isles
Communications, Inc. (“SIC”) filed a petition with the FCC seeking a waiver of
the definition of the term “Study Area” in order to remove portions of the
Hawaiian Home Lands from Verizon Hawaii, Inc.’s study area and to create a new
study area in the state of Hawaii.(1)  On May 16, 2005, the FCC, on delegated
authority, issued an order (the “Order”) granting a waiver of the definition of
“Incumbent LEC” to the extent necessary for SIC to receive universal service
support based on its own costs and granting SIC a limited waiver of the study
area boundary definition.(2)  On June 15, 2005, Hawaiian Telcom
Communications, Inc. filed an application for review by the full Commission of
the Order. Hawaiian Telcom Communications, Inc. asked that the Commission either
reverse the Order or in the alternative determine with specificity the
geographic boundaries and rights and obligations of SIC within its new study
area, and clarify that Hawaiian Telcom, Inc. continues to have the right to
serve the portions of the Hawaiian Home Lands already served by, or adjacent to
areas served by, Hawaiian Telcom, Inc. That matter remains pending.

 

Forfeiture Proceedings

 

1.                                       On February 15, 2012, the Enforcement
Bureau of the Federal Communications Commission adopted and issued a Notice of
Apparent Liability for Forfeiture (“Notice”) to Hawaiian Telcom concerning the
unauthorized transfer of control of a submarine cable landing license from
Verizon Hawaii, Inc. in 2004, and again in 2010 when the company exited
bankruptcy.  The Notice admitted that the violations were inadvertent.  The
proposed fine was $16,000.  The company paid the proposed forfeiture in
accordance with the Notice, within the 30 day time limit established in the
Notice.

 

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

(1)                                  Sandwich Isles Communications, Inc. Seeks
Waiver Nunc Pro Tune of the Definition of  “Study Area “ in Part 36 and Sections
36.611 and 69.2(hh) Commission’s Rules, Public Notice, CC Docket No. 96-45, DA
05-105 (rel. Jan. 18, 2005).

 

(2)                                  Sandwich Isles Communications, Inc.,
Petition for Waiver of the Definition of “Study Area “ Contained in Part 36,
Appendix-Glossary and Sections 36.611. and 69.2(hh) of the Commission’s Rules,
Order, CC Docket No. 96-45, DA 05-1355 (Wireline Comp. Bur. rel. May 16, 2005)
(“Order”).

 

A-1

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EXHIBIT G-4

 

FORM OF

LOCAL AND REGULATORY

COUNSEL OPINION

 

See attached.

 

G-4-1

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

 

 

Law Offices of

 

WESLEY Y. S. CHANG

 

 

Wesley Y. S. Chang, Esq.
Direct Phone:  (808) 534-4807
Email:  wchang@lowysc.com

Harbor Court
55 Merchant Street, Suite 2800
Honolulu, Hawaii 96813

 

 

 

General Phone:  (808) 521-0087
General Fax:  (808) 521-0088

 

February 29, 2012

 

Credit Suisse AG, Cayman Islands Branch
as Administrative Agent and Collateral Agent
Agency Manager

One Madison Avenue

New York, NY 10010

 

Each Lender Party from time to time party to the Credit Agreement referred to
below (all of the Addressees, collectively, the “Lenders”)

 

Ladies and Gentlemen:

 

The undersigned has acted as special counsel in the State of Hawaii (the
“State”) to Hawaiian Telcom, Inc., a Hawaii corporation (“HTI”) in connection
with that certain Credit Agreement (“Credit Agreement”) being made this day by
and among Hawaiian Telcom Communications, Inc., a Delaware corporation, Hawaiian
Telcom Holdco, Inc., a Delaware corporation, the Lenders party thereto, Credit
Suisse AG, Cayman Islands Branch, as administrative agent and collateral agent
(“Credit Suisse AG”), and Credit Suisse Securities (USA) LLC, as Sole Bookrunner
and Sole Lead Arranger.

 

This opinion is delivered at the request of HTI pursuant to section
4.01(a)(ii) of the Credit Agreement.

 

This Opinion Letter is governed by, and shall be interpreted in accordance with,
the Legal Opinion Accord of the ABA Section of Business Law (1991) (“Accord”).
As a consequence, except as provided to the contrary herein, and to the extent
said assumptions, qualifications, exceptions, definitions and limitations are
applicable, this Opinion Letter is subject to a number of assumptions,
qualifications, exceptions, definitions, limitations on coverage, and other
limitations, all as more particularly described in the Accord.

 

Definitions: Terms used herein and not otherwise defined herein shall have the
respective meanings set forth in the Credit Agreement, the Accord, and Articles
1, 8  and 9 of the Uniform

 

G-4-2

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

 

Commercial Code (the “UCC”) as currently in effect in the State of Hawaii under
Chapter 490 of the Hawaii Revised Statutes (the “Hawaii UCC”).  As used herein,
the following term shall have the following meaning:

 

“Opinion Party” means HTI.

 

Opinions:

 

We have reviewed the following:

 

(a)           The Loan Documents.

 

(b)           An unfiled copy of financing statements in the form attached as
Exhibit A (the “Financing Statements”) naming the Opinion Party as debtor and
the Collateral Agent as secured party, to be filed in the Bureau of Conveyances
of the State of Hawaii (the “Filing Office”).We are of the opinion that:

 

1.     The Opinion Party is a corporation duly incorporated, validly existing
and in good standing under the laws of the State of Hawaii.

 

2.     The Opinion Party (a) has the corporate power to execute, deliver and
perform each Loan Document to which it is a party, (b) has taken all corporate
action necessary to authorize the execution, delivery and performance of each
Loan Document to which it is a party, and (c) has duly executed and delivered
each Loan Document to which it is a party.

 

3.     The execution and delivery by the Opinion Party of each Loan Document to
which it is a party do not, and the performance by the Opinion Party of its
obligations thereunder and the borrowings and issuances of letters of credit
thereunder, as applicable, on the date hereof will not, (a) result in a
violation of the Opinion Party’s articles of incorporation or by-laws or
(b) result in a violation of the laws of Hawaii or Regulation X of the Board of
Governors of the Federal Reserve System, or any order, writ, judgment,
injunction, decree, determination or award.

 

4.     Except as set forth in the last sentence of this paragraph, to the
undersigned’s knowledge, no authorization, approval or other action by, and no
notice to or filing with, any United States federal or Hawaii governmental
authority or regulatory body, or any third party that is a party to any
agreement or document, is required for the due execution, delivery or
performance by any Loan Party of any Loan Document to which it is a party or the
exercise of rights or remedies by the other parties under any Loan Document.
 Notwithstanding the foregoing, the undersigned makes no opinion as to any
consents that may be required by the Public Utilities Commission of the State of
Hawaii for the Opinion Party’s execution, delivery or performance of the Loan
Documents to which it is a party, and it is the undersigned’s understanding that
a separate opinion regarding such consent will be provided to you by Morihara
Lau & Fong LLP.

 

5.     Upon the filing of the Financing Statements in the Filing Office, the
Security Interest in that portion of the Collateral (the “Filing Collateral”) in
which a security

 

G-4-3

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interest may be perfected by the filing of a financing statement in Hawaii under
the Hawaii UCC will be perfected.  We observe that with respect to the Financing
Statements that are not filed for a “transmitting utility” as defined in
Section 490:9-102 of the Hawaii Revised Statutes, periodic continuation
statements must be filed in accordance with the requirements of
Section 490:9-515 of the Hawaii Revised Statutes to maintain the effectiveness
of said Financing Statements and that, with respect to all such Financing
Statements, other filings may be required to maintain such perfection if certain
events occur (e.g. a change in the name of the debtor).

 

6.     In any action or proceeding arising out of or relating to the Loan
Documents in any court of the State of Hawaii or in any federal court sitting in
the State of Hawaii, such court would recognize and give effect to the
provisions of the Loan Documents relating to the parties’ choice of New York law
as governing the Loan Documents.

 

The undersigned is admitted to practice in the State.  The undersigned
expresses  no opinion as to matters under or involving the laws of any
jurisdiction (including the laws of the United States) other than laws of the
State and its political subdivisions.

 

The undersigned specifically expresses no opinion with respect to the priority
of a lien on any Real Property and Personal Property.

 

The phrase “Primary Lawyer Group”, as used in the Accord, is hereby modified and
for purposes of applying the Accord to this Opinion Letter, the Primary Group
means the lawyers in this firm who have given substantive legal attention to the
representation of the Borrower in connection with the Transaction, including the
undersigned and Jennifer Chiu.

 

The undersigned hereby consents to reliance hereon by any future Eligible
Assignee of any Lender’s interest in loans under the Credit Agreement pursuant
to an assignment that is made in accordance with the express provisions of
Section 9.04 of the Credit Agreement, on the condition and understanding that
(i) this letter speaks only as of the date hereof, (ii) the undersigned has no
responsibility or obligation to update this letter, to consider its
applicability or correctness to other than its addressee(s), or to take into
account changes in law, facts or any other developments of which the undersigned
may later become aware, and (iii) any such reliance by a future assignee must be
actual and reasonable under the circumstances existing at the time of
assignment, including any changes in law, facts or any other developments known
to or reasonably knowable by such Eligible Assignee at such time.

 

 

 

Very truly yours,

 

 

 

 

 

Wesley Y.S. Chang

 

G-4-4

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EXHIBIT H

 

FORM OF

AFFILIATE SUBORDINATION
AGREEMENT

 

See attached.

 

H-1

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AFFILIATE SUBORDINATION AGREEMENT

 

AFFILIATE SUBORDINATION AGREEMENT dated as of February 29, 2012 (this
“Agreement”), among the subordinated lenders listed on Schedule I hereto (each a
“Subordinated Lender” and collectively, the “Subordinated Lenders”), HAWAIIAN
TELCOM HOLDCO, INC., a Delaware corporation (“Holdings”), HAWAIIAN TELCOM
COMMUNICATIONS, INC., a Delaware corporation (the “Borrower”) and each
Subsidiary listed on Schedule II hereto (together with Holdings and the
Borrower, each a “Subordinated Borrower” and collectively, the “Subordinated
Borrowers”) and CREDIT SUISSE AG, CAYMAN ISLANDS BRANCH, in its capacity as
administrative agent (the “Administrative Agent”) under the Credit Agreement (as
defined below), for the benefit of the Senior Lenders (as defined below).

 

Reference is made to the Credit Agreement dated as of February 29, 2012 (as
amended, supplemented, increased, extended or otherwise modified from time to
time, the “Credit Agreement”) among Holdings, the Borrower, the lenders from
time to time parties thereto (the “Senior Lenders”), the Administrative Agent
and the other Agents party thereto.  Capitalized terms used herein and not
otherwise defined herein shall have the meanings assigned to such terms in the
Credit Agreement.

 

The ability under the Credit Agreement of any Subordinated Borrower to incur
Indebtedness to any Subordinated Lender is conditioned upon the execution and
delivery by such Subordinated Lender and each Subordinated Borrower of an
agreement in the form hereof pursuant to which such Subordinated Lender agrees
to subordinate its rights with respect to the Subordinated Obligations (as
defined below) to the rights of the Senior Lenders under the Credit Agreement,
all on the terms set forth herein.

 

Accordingly, each Subordinated Lender, each Subordinated Borrower and the
Administrative Agent, on behalf of itself and each Senior Lender (and each of
their respective successors or assigns), hereby agrees as follows:

 

1.             Subordination.  (a)  Each Subordinated Lender hereby agrees that
all its right, title and interest in and to the Subordinated Obligations (as
defined below) shall be subordinate and junior in right of payment to the rights
of the Senior Lenders in respect of the Obligations of the Borrower arising
under the Credit Agreement or the other Loan Documents, including, without
limitation, the payment of principal, premium (if any), interest (including
interest accruing on or after the filing of any petition in bankruptcy or for
reorganization relating to Holdings, the Borrower or any Subsidiary whether or
not a claim for post-filing interest is allowed or allowable in any such
proceeding), fees, charges, expenses, indemnities, reimbursement obligations,
Guarantees and all other amounts payable thereunder or in respect thereof
(collectively, the “Senior Obligations”).  For purposes hereof, “Subordinated
Obligations” means all obligations of each Subordinated Borrower to each
Subordinated Lender in respect of loans, advances, extensions of credit or other
Indebtedness, including in respect of principal, premium (if any), interest,
fees, charges, expenses, indemnities, reimbursement obligations and other
amounts payable in respect thereof.

 

H-2

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(b)           Each Subordinated Borrower and each Subordinated Lender agrees (in
each case solely with respect to the Subordinated Obligations in respect of
which it is the obligor or obligee, as the case may be, and solely with respect
to each Subordinated Borrower or Subordinated Lender that is its counterparty
with respect to such Subordinated Obligations) that no payment (whether
directly, by purchase, redemption or exercise of any right of setoff or
otherwise) in respect of the Subordinated Obligations, whether as principal,
interest or otherwise, and whether in cash, securities or other property, shall
be made by or on behalf of any Subordinated Borrower or received, accepted or
demanded, directly or indirectly, by or on behalf of any Subordinated Lender at
any time when an “Event of Default” exists as defined under the Credit Agreement
and the Borrower has received a written notice from the Administrative Agent
prohibiting any further payment in respect of the Subordinated Obligations so
long as any such Event of Default is continuing (provided that such notice shall
not be required to be given (and no such payment may be made) if the Event of
Default is of the type set forth in clauses (b), (c), (g) or (h) of Article VII
of the Credit Agreement).

 

(c)           Upon any distribution of the assets of any Subordinated Borrower
or upon any dissolution, winding up, liquidation or reorganization of any
Subordinated Borrower, whether in bankruptcy, insolvency, reorganization,
arrangement or receivership proceedings or otherwise, or upon any assignment for
the benefit of creditors or any other marshalling of the assets and liabilities
of any Subordinated Borrower, or otherwise:

 

(i)            the Senior Lenders shall first be entitled to receive payment in
full in cash or immediately available funds of the Senior Obligations (whenever
arising) (other than indemnification obligations and other contingent
obligations not then due and payable) before any Subordinated Lender shall be
entitled to receive any payment on account of the Subordinated Obligations of
such Subordinated Borrower, whether of principal, interest or otherwise; and

 

(ii)           any payment by, or on behalf of, or distribution of the assets
of, such Subordinated Borrower of any kind or character, whether in cash,
securities or other property, to which any Subordinated Lender would be entitled
except for the provisions of this Section 1 shall be paid or delivered by the
person making such payment or distribution (whether a trustee in bankruptcy, a
receiver, custodian or liquidating trustee or otherwise) directly to the
Administrative Agent, for the benefit of the Senior Lenders (pro rata, in
accordance with the respective amounts of the Senior Obligations owed to each of
the Senior Lenders), until the payment in full of all Senior Obligations (other
than indemnification obligations and other contingent obligations not then due
and payable).

 

At any time when an Event of Default has occurred and is continuing, each
Subordinated Lender agrees not to ask, demand, sue for or take or receive from
any Subordinated Borrower in cash, securities or other property or by setoff,
purchase or redemption (including, without limitation, from or by way of
collateral), payment of all or any part of the Subordinated Obligations and
agrees that in connection with any proceeding involving any Subordinated
Borrower under any bankruptcy, insolvency, reorganization, arrangement,
receivership or similar law (i) the Administrative Agent is irrevocably
authorized and empowered (in its own name or in the name of such Subordinated
Lender or otherwise), but shall have no obligation, to demand, sue for, collect
and receive every payment or distribution referred to in the preceding sentence
and give

 

H-3

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acquittance therefor and to file claims and proofs of claim and take such other
action (including, without limitation, voting the applicable Subordinated
Obligations and enforcing any security interest or other lien securing payment
of such Subordinated Obligations) as the Administrative Agent may deem necessary
or advisable for the exercise or enforcement of any of the rights or interest of
the Senior Lenders and (ii) such Subordinated Lender shall duly and promptly
take such action as the Administrative Agent may request to (A) collect amounts
in respect of the applicable Subordinated Obligations for the account of the
Senior Lenders and to file appropriate claims or proofs of claim in respect of
such Subordinated Obligations, (B) execute and deliver to the Administrative
Agent such irrevocable powers of attorney, assignments or other instruments as
the Administrative Agent may request in order to enable the Administrative Agent
to enforce any and all claims with respect to, and any security interests and
other liens securing payment of, the applicable Subordinated Obligations and
(C) collect and receive any and all payments or distributions which may be
payable or deliverable upon or with respect to the applicable Subordinated
Obligations.  A copy of this Agreement may be filed with any court as evidence
of the Senior Lenders’ right, power and authority hereunder.

 

(d)           In the event that any payment by, or on behalf of, or distribution
of the assets of, any Subordinated Borrower of any kind or character, whether in
cash, securities or other property, and whether directly, by purchase,
redemption, exercise of any right of setoff or otherwise, shall be received by
or on behalf of any Subordinated Lender or any Affiliate thereof at a time when
such payment is prohibited by this Agreement, such payment or distribution shall
be held by such Subordinated Lender in trust (segregated from other property of
such Subordinated Lender) for the benefit of, and shall forthwith be paid over
to, the Administrative Agent, for the benefit of the Senior Lenders (pro rata,
in accordance with the respective amounts of the Senior Obligations owed to each
of the Senior Lenders), until the payment in full in cash or immediately
available funds of all Senior Obligations (other than indemnification
obligations and other contingent obligations not then due and payable).

 

(e)           Subject to the prior payment in full in cash or immediately
available funds of the Senior Obligations (other than indemnification
obligations and other contingent obligations not then due and payable), each
applicable Subordinated Lender shall be subrogated to the rights of the Senior
Lenders to receive payments or distributions in cash, securities or other
property of each applicable Subordinated Borrower applicable to the Senior
Obligations until all amounts owing on the Senior Obligations shall be paid in
full in cash or immediately available funds, and, as between and among a
Subordinated Borrower, its creditors (other than the Senior Lenders) and the
applicable Subordinated Lenders, no such payment or distribution made to the
Senior Lenders by virtue of this Agreement that otherwise would have been made
to any applicable Subordinated Lender shall be deemed to be a payment by the
applicable Subordinated Borrower on account of the Subordinated Obligations, it
being understood that the provisions of this paragraph (e) are intended solely
for the purpose of defining the relative rights of the Subordinated Lenders and
the Senior Lenders.

 

(f)            Without the prior written consent of the Administrative Agent, no
Subordinated Borrower shall give, or permit to be given, and no Subordinated
Lender shall receive, accept or demand, (i) any security of any nature
whatsoever for any Subordinated Obligations on any property or assets, whether
now existing or hereafter acquired, of any Subordinated Borrower or any
subsidiary of any Subordinated Borrower, unless such security

 

H-4

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shall by its terms be subject to enforcement and collection by the
Administrative Agent in connection with any action in respect of enforcement or
collection taken under paragraph (c) above or (ii) any Guarantee, of any nature
whatsoever, by any Subordinated Borrower or any subsidiary of any Subordinated
Borrower, of any Subordinated Obligations other than any Guarantee subordinated
to the Senior Obligations on terms substantially identical to (and no less
favorable in any significant respect to the Senior Lenders than) those hereof. 
Each Subordinated Lender agrees that all the proceeds of any such security or
Guarantee shall be subject to the provisions hereof with respect to payments and
other distributions in respect of the Subordinated Obligations.

 

(g)           Any and all instruments or records now or hereafter creating or
evidencing the Subordinated Obligations, whether upon refunding, extension,
renewal, refinancing, replacement or otherwise, shall contain the following
legend:

 

“Notwithstanding anything contained herein to the contrary, neither the
principal of nor the interest on, nor any other amounts payable in respect of,
the indebtedness created or evidenced by this instrument or record shall become
due or be paid or payable, except to the extent permitted under the Affiliate
Subordination Agreement dated [            ], 2012, among, inter alia, Hawaiian
Telcom Holdco, Inc., Hawaiian Telcom Communications, Inc., Hawaiian
Telcom, Inc., Hawaiian Telcom Services Company, Inc. and Credit Suisse AG,
Cayman Islands Branch, as Administrative Agent for the Senior Lenders, which
Affiliate Subordination Agreement is incorporated herein with the same effect as
if fully set forth herein.”

 

(h)           Each Subordinated Lender agrees that, except for claims submitted
in any proceeding contemplated by Section 1(c) hereof, it will not take any
action to cause any Subordinated Obligations to become payable prior to their
scheduled maturity (which, in the case of any demand notes, shall be the date
demand is made thereunder) or exercise any remedies or take any action or
proceeding to enforce any Subordinated Obligation if the payment of such
Subordinated Obligation is then prohibited by this Agreement, and each
Subordinated Lender further agrees not to file, or to join with any other
creditors of any Subordinated Borrower in filing, any petition commencing any
bankruptcy, insolvency, reorganization, arrangement or receivership proceeding
or any assignment for the benefit of creditors against or in respect of such
Subordinated Borrower or any other marshalling of the assets and liabilities of
such Subordinated Borrower (provided, that this prohibition shall in no event be
construed so as to limit any Subordinated Lender’s right to cause any
Subordinated Obligations to become payable prior to their scheduled maturity if
all the outstanding Loans under the Credit Agreement have been declared due and
payable prior to their scheduled maturity dates).  Each Subordinated Lender
further agrees, to the fullest extent permitted under applicable law, that it
will not cause any Subordinated Borrower to file any such petition, commence any
such proceeding or make any such assignment referred to above until all Senior
Obligations have been paid in full in cash or immediately available funds.

 

2.             Waivers and Consents.  (a)  Each Subordinated Lender waives the
right to compel that the Collateral or any other assets of property of any
Subordinated Borrower or the assets of property of any guarantor of the Senior
Obligations or any other Person be applied in

 

H-5

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any particular order to discharge the Senior Obligations.  Each Subordinated
Lender expressly waives the right to require the Senior Lenders to proceed
against any Subordinated Borrower, the Collateral or any guarantor of the Senior
Obligations or any other Person, or to pursue any other remedy in any Senior
Lender’s power which such Subordinated Lender cannot pursue and which would
lighten such Subordinated Lender’s burden, notwithstanding that the failure of
any Senior Lender to do so may thereby prejudice such Subordinated Lender.  Each
Subordinated Lender agrees that it shall not be discharged, exonerated or have
its obligations hereunder to the Senior Lenders reduced by any Senior Lender’s
delay in proceeding against or enforcing any remedy against any Subordinated
Borrower, the Collateral or any guarantor of the Senior Obligations or any other
Person; by any Senior Lender releasing any Subordinated Borrower, the Collateral
or any other guarantor of the Senior Obligations or any other Person from all or
any part of the Senior Obligations; or by the discharge of any Subordinated
Borrower, the Collateral or any guarantor of the Senior Obligations or any other
Person by an operation of law or otherwise, with or without the intervention or
omission of a Senior Lender.  Any Senior Lender’s vote to accept or reject any
plan of reorganization relating to any Subordinated Borrower, the Collateral, or
any guarantor of the Senior Obligations or any other Person, or any Senior
Lender’s receipt on account of all or part of the Senior Obligations of any
cash, securities or other property distributed in any bankruptcy,
reorganization, or insolvency case, shall not discharge, exonerate, or reduce
the obligations of any Subordinated Lender hereunder to the Senior Lenders.

 

(b)           Each Subordinated Lender waives all rights and defenses arising
out of an election of remedies by the Senior Lenders, even though that election
of remedies, including, without limitation, any nonjudicial foreclosure with
respect to security for the Senior Obligations, has impaired the value of such
Subordinated Lender’s rights of subrogation, reimbursement, or contribution
against any Subordinated Borrower or any other guarantor of the Senior
Obligations or any other Person.  Each Subordinated Lender expressly waives any
rights or defenses it may have by reason of protection afforded to any
Subordinated Borrower or any other guarantor of the Senior Obligations or any
other Person with respect to the Senior Obligations pursuant to any
anti-deficiency laws or other laws of similar import which limit or discharge
the principal debtor’s indebtedness upon judicial or nonjudicial foreclosure of
real property or personal property Collateral for the Senior Obligations.

 

(c)           Each Subordinated Lender agrees that, without the necessity of any
reservation of rights against it, and without notice to or further assent by it,
any demand for payment of any Senior Obligations made by a Senior Lender may be
rescinded in whole or in part by the Senior Lender, and any Senior Obligation
may be continued, and the Senior Obligations, or the liability of the applicable
Subordinated Borrower or any other guarantor or any other party upon or for any
part thereof, or any Collateral or Guarantee therefor or right of offset with
respect thereto, may, from time to time, in whole or in part, be renewed,
extended, modified, accelerated, compromised, waived, surrendered, or released
by the Senior Lenders, in each case without notice to or further assent by any
Subordinated Lender, which will remain bound under this Agreement and without
impairing, abridging, releasing or affecting the subordination and other
agreements provided for herein.

 

(d)           Each Subordinated Lender waives any and all notice of the
creation, renewal, extension or accrual of any of the Senior Obligations and
notice of or proof of reliance by the Senior Lenders upon this Agreement.  The
Senior Obligations, and any of them, shall be

 

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deemed conclusively to have been created, contracted or incurred and the consent
given to create the obligations of each Subordinated Borrower in respect of the
Subordinated Obligations in reliance upon this Agreement, and all dealings
between each Subordinated Borrower and the Senior Lenders shall be deemed to
have been consummated in reliance upon this Agreement.  Each Subordinated Lender
acknowledges and agrees that the Senior Lenders have relied upon the
subordination and other agreements provided for herein in consenting to the
Subordinated Obligations.  Each Subordinated Lender waives notice of or proof of
reliance on this Agreement and protest, demand for payment and notice of
default.

 

3.             Transfers.  Each Subordinated Lender shall not sell, assign or
otherwise transfer or dispose of, in whole or in part, all or any part of the
Subordinated Obligations or any interest therein to any other Person (a
“Transferee”) or create, incur or suffer to exist any security interest, Lien,
charge or other encumbrance whatsoever upon all or any part of the Subordinated
Obligations or any interest therein in favor of any Transferee, except in a
transaction permitted under the Credit Agreement, unless (i) such action is made
expressly subject to this Agreement and (ii) the Transferee expressly
acknowledges to the Administrative Agent, by a writing in form and substance
satisfactory to the Administrative Agent, the subordination and other agreements
provided for herein and in such writing agrees to be bound by all of the terms
of this Agreement, including without limitation this Section 3, as if such
Person were the Subordinated Lender.

 

4.             Senior Obligations Unconditional.  All rights and interests of
the Senior Lenders hereunder, and all agreements and obligations of the
Subordinated Lenders and the Subordinated Borrowers hereunder, shall remain in
full force and effect irrespective of:

 

(a)           any lack of validity or enforceability of the Credit Agreement or
any other Loan Document;

 

(b)           any change in the time, manner or place of payment of, or in any
other term of, all or any of the Senior Obligations, or any amendment or waiver
or other modification, whether by course of conduct or otherwise, of, or consent
to departure from, the Credit Agreement or any other Loan Document;

 

(c)           any exchange, release or nonperfection of any Lien in any
collateral, or any release, amendment, waiver or other modification, whether in
writing or by course of conduct or otherwise, of, or consent to departure from,
any Guarantee of any of the Senior Obligations; or

 

(d)           any other circumstances that might otherwise constitute a defense
available to, or a discharge of, any Subordinated Borrower in respect of the
Senior Obligations, or of the Subordinated Lender or any Subordinated Borrower
in respect of this Agreement.

 

5.             Representations and Warranties.  Each Subordinated Lender
represents and warrants to the Administrative Agent, for the benefit of the
Senior Lenders that:

 

(a)           It has the power and authority and the legal right to execute and
deliver and to perform its obligations under this Agreement and has taken all
necessary action to authorize its execution, delivery and performance of this
Agreement.

 

H-7

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(b)           This Agreement has been duly executed and delivered by such
Subordinated Lender and constitutes a legal, valid and binding obligation of
such Subordinated Lender, enforceable against it in accordance with its terms,
subject to applicable bankruptcy, insolvency, reorganization, moratorium or
other laws affecting creditors’ rights generally and subject to general
principles of equity, regardless of whether considered in a proceeding in equity
or at law.

 

(c)           The execution, delivery and performance of this Agreement will not
violate any provision of any requirement of law applicable to such Subordinated
Lender or of any contractual obligation of such Subordinated Lender.

 

(d)           No consent or authorization of, filing with, or other act by or in
respect of, any arbitrator or regulatory body or Governmental Authority and no
consent of any other Person, is required in connection with the execution,
delivery, performance, validity or enforceability of this Agreement.

 

6.             Waiver of Claims.  (a)  To the maximum extent permitted by law,
each Subordinated Lender waives any claim it might have against any Senior
Lender with respect to, or arising out of, any action or failure to act or any
error of judgment, negligence, or mistake or oversight whatsoever on the part of
any Senior Lender or its directors, officers, employees, agents or affiliates
with respect to any exercise of rights or remedies under the Loan Documents or
any transaction relating to the Collateral.  Neither the Senior Lenders nor any
of their respective directors, officers, employees, agents or affiliates shall
be liable for failure to demand, collect or realize upon any of the Collateral
or any Guarantee 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
Subordinated Borrower or any Subordinated Lender or any other Person or to take
any other action whatsoever with regard to the Collateral Agreement or any part
thereof.

 

(b)           Each Subordinated Lender, for itself and on behalf of its
successors and assigns, hereby waives any and all now existing or hereafter
arising rights it may have to require the Senior Lenders to marshal assets for
the benefit of such Subordinated Lender, or to otherwise direct the timing,
order or manner of any sale, collection or other enforcement of the Collateral
or enforcement of the Loan Documents.  The Senior Lenders are under no duty or
obligation, and each Subordinated Lender hereby waives any right it may have to
compel the Senior Lenders, to pursue any guarantor or other Person who may be
liable for the Senior Obligations, or to enforce any Lien or security interest
in any Collateral.

 

(c)           Each Subordinated Lender hereby waives and releases all rights
which a guarantor or surety with respect to the Senior Obligations could
exercise.

 

(d)           Each Subordinated Lender hereby waives any duty on the part of the
Senior Lenders to disclose to it any fact known or hereafter known by the Senior
Lenders relating to the operation or financial condition of any Subordinated
Borrower or any guarantor of the Senior Obligations, or their respective
businesses.  Each Subordinated Lender enters into this Agreement based solely
upon its independent knowledge of the applicable Subordinated Borrower’s,
results of operations, financial condition and business and the Subordinated
Lender

 

H-8

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assumes full responsibility for obtaining any further or future information with
respect to the applicable Subordinated Borrower or its, results of operations,
financial condition or business.

 

7.             Further Assurances.  Each Subordinated Lender and each
Subordinated Borrower, at their own expense and at any time from time to time,
upon the written request of the Administrative Agent will promptly and duly
execute and deliver such further instruments and documents and take such further
actions as the Administrative Agent reasonably may request for the purposes of
obtaining or preserving the full benefits of this Agreement and of the rights
and powers herein granted.

 

8.             Expenses.  (a)  Each Subordinated Borrower will pay or reimburse
the Administrative Agent and the Senior Lenders, upon demand, for all their
costs and expenses in connection with the enforcement or preservation of any
rights under this Agreement, including, without limitation, reasonable fees and
disbursements of counsel to the Administrative Agent and the Senior Lenders, in
accordance with the provisions of Section 9.05(a) of the Credit Agreement.

 

(b)           Without limitation of its indemnification obligations under the
other Loan Documents, each Subordinated Borrower and Subordinated Lender jointly
and severally agrees to indemnify the Administrative 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, 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.

 

9.             Provisions Define Relative Rights.  This Agreement is intended
solely for the purpose of defining the relative rights of the Senior Lenders on
the one hand and the Subordinated Lenders and the Subordinated Borrowers on the
other, and no other Person shall have any right, benefit or other interest under
this Agreement.

 

10.           Powers Coupled with an Interest.  All powers, authorizations and
agencies contained in this Agreement are coupled with an interest and are
irrevocable until the Senior Obligations are indefeasibly paid in full in cash.

 

11.           Notices.  All notices, requests and demands to or upon any party
hereto shall be in writing and shall be given in the manner provided in
Section 9.01 of the Credit Agreement.

 

12.           Counterparts.  This Agreement may be executed by one or more of
the parties on any number of separate counterparts, each of which shall
constitute an original, but all of which taken together shall be deemed to
constitute but one instrument.

 

H-9

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

 

14.           Integration.  This Agreement represents the agreement of the
Subordinated Borrowers, the Senior Lenders and the Subordinated Lenders with
respect to the subject matter hereof and there are no promises or
representations by any Subordinated Borrower, the Senior Lenders or any
Subordinated Lender relative to the subject matter hereof not reflected herein.

 

15.           Amendments in Writing; No Waiver; Cumulative Remedies.  (a)  None
of the terms or provisions of this Agreement may be waived, amended,
supplemented or otherwise modified except by a written instrument executed by
the Administrative Agent, each affected Subordinated Borrower and each affected
Subordinated Lender; provided that any provision of this Agreement may be waived
by the Senior Lenders in a letter or agreement executed by the Required Lenders
and each affected Subordinated Lender.

 

(b)           No failure to exercise, nor any delay in exercising, on the part
of the Senior Lenders, any right, power or privilege hereunder shall operate as
a waiver thereof.  No single or partial exercise of any right, power or
privilege hereunder shall preclude any other or further exercise thereof or the
exercise of any other right, power or privilege.

 

(c)           The rights and remedies herein provided are cumulative, may be
exercised singly or concurrently and are not exclusive of any other rights or
remedies provided by law.

 

16.           Section Headings.  The section headings used in this Agreement are
for convenience of reference only and are not to affect the construction hereof
or be taken into consideration in the interpretation hereof.

 

17.           Successors and Assigns.  (a)  This Agreement shall be binding upon
the successors and permitted assigns of each of the Subordinated Borrowers and
each of the Subordinated Lenders and shall inure to the benefit of the Senior
Lenders and their respective successors and assigns.

 

(b)           Notwithstanding the provisions of Section 17(a) above, nothing
herein shall be construed to limit or relieve the obligations of any
Subordinated Lender pursuant to Section 3 of this Agreement, and no Subordinated
Lender shall assign its obligations hereunder to any Person (except as otherwise
specifically permitted under Section 3 of this Agreement).

 

18.           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 Subordinated Borrower and Subordinated Lender hereby
irrevocably and unconditionally submits, for itself and its property, to the
exclusive jurisdiction of any New York State court or Federal court of the
United States of America sitting in New York City, and any appellate court from
any thereof, in any action or proceeding arising out of or relating to this

 

H-10

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Agreement, or for recognition or enforcement of any judgment, and each of the
parties hereto hereby irrevocably and unconditionally agrees that all claims in
respect of any such action or proceeding may be heard and determined in such New
York State or, to the extent permitted by law, in such Federal court.  Each of
the parties hereto agrees that a final judgment in any such action or proceeding
shall be conclusive and may be enforced in other jurisdictions by suit on the
judgment or in any other manner provided by law.  Nothing in this Agreement
shall affect any right that the Administrative Agent or any Lender may otherwise
have to bring any action or proceeding relating to this Agreement or the other
Loan Documents against any Subordinated Borrower or Subordinated Lender or their
respective properties in the courts of any jurisdiction.

 

(c)           Each Subordinated Borrower and Subordinated Lender 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 in any New York State or Federal court.  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 Subordinated Lender hereby irrevocably consents to service of
process in the manner provided for notices in Section 11.  Nothing in this
Agreement, the Credit 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.

 

19.           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, THE CREDIT AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (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.

 

20.           Additional Subordinated Lenders.  Upon execution and delivery by
the Administrative Agent and a Subsidiary of an instrument in the form of Annex
1 attached hereto, such Subsidiary shall become a Subordinated Lender hereunder
with the same force and effect as if originally named as a Subordinated Lender
herein.  The execution and delivery of any such instrument shall not require the
consent of any other Subordinated Lender hereunder.  The rights and obligations
of each Subordinated Borrower and each Subordinated Lender herein shall remain
in full force and effect notwithstanding the addition of any Subordinated Lender
as a party to this Agreement.

 

H-11

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

 

 

HAWAIIAN TELCOM HOLDCO, INC.

 

 

 

 

 

by

 

 

 

Name:

 

 

Title:

 

 

 

HAWAIIAN TELCOM COMMUNICATIONS, INC.

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

 

 

 

 

HAWAIIAN TELCOM INC.

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

 

 

HAWAIIAN TELCOM SERVICES COMPANY, INC.

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

[SIGNATURE PAGE TO AFFILIATE SUBORDINATION AGREEMENT]

 

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

 

 

CREDIT SUISSE AG, CAYMAN ISLANDS BRANCH

 

as Administrative Agent

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

[SIGNATURE PAGE TO AFFILIATE SUBORDINATION AGREEMENT]

 

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Schedule I

 

Hawaiian Telcom Holdco, Inc.

Hawaiian Telcom Communication Services, Inc.

Hawaiian Telcom, Inc.

Hawaiian Telcom Services Company, Inc.

 

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

 

Schedule II

 

Hawaiian Telcom, Inc.

Hawaiian Telcom Services Company, Inc.

 

[SIGNATURE PAGE TO AFFILIATE SUBORDINATION AGREEMENT]

 

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Annex 1
to
Affiliate Subordination Agreement

 

SUPPLEMENT NO. [     ] dated as of [     ], to the Affiliate Subordination
Agreement dated as of [            ], 2012 (the “Affiliate Subordination
Agreement”), among the subordinated lenders named therein (the “Subordinated
Lenders”), the subordinated borrowers named therein (the “Subordinated
Borrowers”) and Credit Suisse AG, Cayman Islands Branch, as administrative agent
(in such capacity, the “Administrative Agent”) for the Senior Lenders.

 

A.            Reference is made to the Affiliate Subordination Agreement.

 

B.            Capitalized terms used herein and not otherwise defined herein
shall have the meanings assigned to such terms in the Affiliate Subordination
Agreement.

 

C.            Each of the Subordinated Lenders and each of the Subordinated
Borrowers have entered into the Affiliate Subordination Agreement in order to
induce the Senior Lenders to make loans under the Credit Agreement and the other
Loan Documents.  Section 20 of the Affiliate Subordination Agreement provides
that subsidiaries of Holdings may become Subordinated Lenders under the
Affiliate Subordination Agreement by execution and delivery of an instrument in
the form of this Supplement.  The undersigned Subsidiary (the “New Subordinated
Lender”) is executing this Supplement to become a Subordinated Lender under the
Affiliate Subordination Agreement in accordance with the terms of the Credit
Agreement as consideration for loans previously made under the Credit Agreement.

 

Accordingly, the Administrative Agent and the New Subordinated Lender agree as
follows:

 

SECTION 1.           In accordance with Section 20 of the Affiliate
Subordination Agreement, the New Subordinated Lender by its signature below
becomes a Subordinated Lender under the Affiliate Subordination Agreement with
the same force and effect as if originally named therein as a Subordinated
Lender and the New Subordinated Lender hereby (a) agrees to all the terms and
provisions of the Affiliate Subordination Agreement applicable to it as a
Subordinated Lender thereunder and (b) represents and warrants that the
representations and warranties made by it as a Subordinated Lender thereunder
are true and correct on and as of the date hereof except for representations and
warranties which by their terms refer to a specific date.  Each reference to a
“Subordinated Lender” in the Affiliate Subordination Agreement shall be deemed
to include the New Subordinated Lender.  The Affiliate Subordination Agreement
is hereby incorporated herein by reference.

 

SECTION 2.           The New Subordinated Lender represents and warrants to the
Administrative Agent and the other Senior Lenders 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,
subject to applicable bankruptcy, insolvency, moratorium or other laws affecting
creditors’ rights generally and subject to general principles of equity
regardless of whether considered in a proceeding in equity or at law.

 

A-1

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SECTION 3.           This Supplement may be executed in 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
Administrative Agent shall have received counterparts of this Supplement that,
when taken together, bear the signatures of the New Subordinated Lender and the
Administrative Agent.  Delivery of an executed signature page to this Supplement
by facsimile transmission shall be as effective as delivery of a manually
executed counterpart of this Supplement.

 

SECTION 4.           Except as expressly supplemented hereby, the Affiliate
Subordination Agreement shall remain in full force and effect.

 

SECTION 5.           THIS SUPPLEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

 

SECTION 6.           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 Affiliate Subordination Agreement shall not in any way be
affected or impaired thereby (it being understood that the invalidity of a
particular provision hereof 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 7.           All communications and notices hereunder shall be in
writing and given as provided in Section 11 of the Affiliate Subordination
Agreement.  All communications and notices hereunder to the New Subordinated
Lender shall be given to it at the address set forth under its signature below,
with a copy to the Borrower.

 

SECTION 8.           The New Subordinated Lender agrees to reimburse the
Administrative Agent for its reasonable and documented out-of-pocket expenses in
connection with this Supplement, including the reasonable and documented fees,
disbursements and other charges of counsel for the Administrative Agent.

 

A-2

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IN WITNESS WHEREOF, the New Subordinated Lender and the Administrative Agent
have duly executed this Supplement to the Affiliate Subordination Agreement as
of the day and year first above written.

 

 

[NAME OF NEW SUBORDINATED LENDER],

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

 

Address:

 

 

 

 

 

CREDIT SUISSE AG, CAYMAN ISLANDS BRANCH

 

as Administrative Agent

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title

 

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