Exhibit
10.2




 


 





AMENDED AND RESTATED


GUARANTEE AND COLLATERAL
AGREEMENT


dated as of


June 1, 2007


among


HAWAIIAN TELCOM HOLDCO,
INC.,


HAWAIIAN TELCOM
COMMUNICATIONS, INC.,


THE SUBSIDIARIES OF HAWAIIAN
TELCOM COMMUNICATIONS, INC.

IDENTIFIED HEREIN


and


LEHMAN COMMERCIAL PAPER INC.,


as Collateral Agent


 




 




















TABLE OF CONTENTS


	
  ARTICLE I

  	
   

  	
   

  
	
  DEFINITIONS

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 1.01.

  	
   

  	
  Credit Agreement

  	
   

  	
  1

  
	
  SECTION 1.02.

  	
   

  	
  Other Defined Terms

  	
   

  	
  1

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE II

  	
   

  	
   

  
	
  GUARANTEE

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 2.01.

  	
   

  	
  Guarantee

  	
   

  	
  5

  
	
  SECTION 2.02.

  	
   

  	
  Guarantee of Payment

  	
   

  	
  5

  
	
  SECTION 2.03.

  	
   

  	
  No Limitations

  	
   

  	
  5

  
	
  SECTION 2.04.

  	
   

  	
  Reinstatement

  	
   

  	
  6

  
	
  SECTION 2.05.

  	
   

  	
  Agreement To Pay; Subrogation

  	
   

  	
  6

  
	
  SECTION 2.06.

  	
   

  	
  Information

  	
   

  	
  6

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE III

  	
   

  	
   

  
	
  PLEDGE OF
  SECURITIES

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 3.01.

  	
   

  	
  Pledge

  	
   

  	
  6

  
	
  SECTION 3.02.

  	
   

  	
  Delivery of the Pledged Collateral

  	
   

  	
  7

  
	
  SECTION 3.03.

  	
   

  	
  Representations, Warranties and Covenants

  	
   

  	
  7

  
	
  SECTION 3.04.

  	
   

  	
  Certification of Limited Liability Company and
  Limited Partnership Interests

  	
   

  	
  8

  
	
  SECTION 3.05.

  	
   

  	
  Registration in Nominee Name; Denominations

  	
   

  	
  8

  
	
  SECTION 3.06.

  	
   

  	
  Voting Rights; Dividends and Interest

  	
   

  	
  9

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE IV

  	
   

  	
   

  
	
  SECURITY
  INTERESTS IN PERSONAL PROPERTY

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 4.01.

  	
   

  	
  Security Interest

  	
   

  	
  10

  
	
  SECTION 4.02.

  	
   

  	
  Representations and Warranties

  	
   

  	
  12

  
	
  SECTION 4.03.

  	
   

  	
  Covenants

  	
   

  	
  13

  
	
  SECTION 4.04.

  	
   

  	
  Other Actions

  	
   

  	
  16

  
	
  SECTION 4.05.

  	
   

  	
  Covenants Regarding Patent, Trademark and Copyright
  Collateral

  	
   

  	
  17

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE V

  	
   

  	
   

  
	
  REMEDIES

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 5.01.

  	
   

  	
  Remedies Upon Default

  	
   

  	
  18

  
	
  SECTION 5.02.

  	
   

  	
  Application of Proceeds

  	
   

  	
  20

  
	
  SECTION 5.03.

  	
   

  	
  Grant of License to Use Intellectual Property

  	
   

  	
  20

  
	
  SECTION 5.04.

  	
   

  	
  Securities Act

  	
   

  	
  20

  
	
  SECTION 5.05.

  	
   

  	
  Registration

  	
   

  	
  21

  



 



 i
 








 


	
  ARTICLE VI

  	
   

  	
   

  
	
  INDEMNITY,
  SUBROGATION AND SUBORDINATION

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 6.01.

  	
   

  	
  Indemnity and Subrogation

  	
   

  	
  22

  
	
  SECTION 6.02.

  	
   

  	
  Contribution and Subrogation

  	
   

  	
  22

  
	
  SECTION 6.03.

  	
   

  	
  Subordination

  	
   

  	
  22

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VII

  	
   

  	
   

  
	
  MISCELLANEOUS

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 7.01.

  	
   

  	
  Notices

  	
   

  	
  23

  
	
  SECTION 7.02.

  	
   

  	
  Waivers; Amendment

  	
   

  	
  23

  
	
  SECTION 7.03.

  	
   

  	
  Collateral Agent’s Fees and Expenses;
  Indemnification

  	
   

  	
  23

  
	
  SECTION 7.04.

  	
   

  	
  Successors and Assigns

  	
   

  	
  24

  
	
  SECTION 7.05.

  	
   

  	
  Survival of Agreement

  	
   

  	
  24

  
	
  SECTION 7.06.

  	
   

  	
  Counterparts; Effectiveness; Several Agreement

  	
   

  	
  24

  
	
  SECTION 7.07.

  	
   

  	
  Severability

  	
   

  	
  24

  
	
  SECTION 7.08.

  	
   

  	
  Right of Set-Off

  	
   

  	
  24

  
	
  SECTION 7.09.

  	
   

  	
  Governing Law, Jurisdiction; Consent to Service of
  Process

  	
   

  	
  25

  
	
  SECTION 7.10.

  	
   

  	
  WAIVER OF JURY TRIAL

  	
   

  	
  25

  
	
  SECTION 7.11.

  	
   

  	
  Headings

  	
   

  	
  26

  
	
  SECTION 7.12.

  	
   

  	
  Security Interest Absolute

  	
   

  	
  26

  
	
  SECTION 7.13.

  	
   

  	
  Termination or Release

  	
   

  	
  26

  
	
  SECTION 7.14.

  	
   

  	
  Additional Subsidiaries

  	
   

  	
  26

  
	
  SECTION 7.15.

  	
   

  	
  Collateral Agent Appointed Attorney-in-Fact

  	
   

  	
  27

  
	
  SECTION 7.16.

  	
   

  	
  Compliance with Laws

  	
   

  	
  27

  
	
  SECTION 7.17.

  	
   

  	
  Termination of Shared Collateral Agreement

  	
   

  	
  27

  
	
  SECTION 7.18.

  	
   

  	
  Amendment and Restatement

  	
   

  	
  28

  



 



 ii
 








 


 


	
  Schedules

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Schedule I

  	
   

  	
  Subsidiary Loan Parties

  	
   

  	
   

  
	
  Schedule II

  	
   

  	
  Pledged Stock; Debt Securities

  	
   

  	
   

  
	
  Schedule III

  	
   

  	
  Intellectual Property

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Exhibits

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Exhibit I

  	
   

  	
  Form of Supplement

  	
   

  	
   

  
	
  Exhibit II

  	
   

  	
  Form of Perfection Certificate

  	
   

  	
   

  



 



 iii














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


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


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


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


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


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


ARTICLE I


Definitions


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


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


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



                 
 








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


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


“Collateral” means Article 9 Collateral and
Pledged Collateral.


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


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


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


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


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


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


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


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


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


“Guarantors” means Holdings and the
Subsidiary Loan Parties.


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



 2              
 








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


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


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


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


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


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


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



 3              
 








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


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


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


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


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


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


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


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


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


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


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


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



 4              
 








ARTICLE II


Guarantee


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


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


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


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



 5              
 








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


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


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


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


ARTICLE
III


Pledge of Securities


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



 6              
 








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


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


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


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


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


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


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


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



 7              
 








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


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


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


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


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


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


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


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



 8              
 








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


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


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


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


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


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



 9              
 








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


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


ARTICLE IV



Security Interests in Personal Property


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


(i)            all Accounts;


(ii)           all Chattel Paper;


(iii)          all Deposit Accounts;


(iv)          all Documents;


(v)           all Equipment;


(vi)          all General Intangibles;


(vii)         all Instruments;


(viii)        all Inventory;


(ix)           all Investment Property;


(x)            Letter-of-Credit rights;



 10              
 








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


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


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


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



 11              
 








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


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


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


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


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


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



 12              
 








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


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


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


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


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



 13              
 








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


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


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


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


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


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



 14              
 








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


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


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


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


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


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



 15              
 








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


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


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


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


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


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



 16              














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


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


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


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


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


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


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



 17            
 








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


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


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


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


ARTICLE V


Remedies


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



 18            
 








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


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



 19            
 








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


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


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


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


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


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


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




 20            
 








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


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



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ARTICLE VI


Indemnity, Subrogation and Subordination


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


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


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


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



 22            
 








ARTICLE
VII


Miscellaneous


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


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


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


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


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


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



 23            
 








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


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


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


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


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


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



 24            
 








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


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


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


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


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


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



 25            
 








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


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


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


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


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


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


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



 26            
 








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


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


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



 27            
 








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


SECTION 7.18.           Amendment and Restatement.


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


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


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


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



 28            
 








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


[Signature
Pages Follow]



 29            















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


	
  

  	
  HAWAIIAN TELCOM HOLDCO,
  INC.,

  
	
   

  	
   

  
	
   

  	
  By 

  	
  /s/ Michael S. Ruley

  	
   

  
	
   

  	
  Name: Michael S. Ruley

  
	
   

  	
  Title: Chief Executive Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  HAWAIIAN TELCOM
  COMMUNICATIONS, INC.,

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Michael S. Ruley

  	
   

  
	
   

  	
  Name: Michael S. Ruley

  
	
   

  	
  Title: Chief Executive Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  HAWAIIAN TELCOM, INC.,

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Michael S. Ruley

  	
   

  
	
   

  	
  Name: Michael S. Ruley

  
	
   

  	
  Title: Chief Executive Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  HAWAIIAN TELCOM SERVICES COMPANY, INC.,

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Michael S. Ruley

  	
   

  
	
   

  	
  Name: Michael S. Ruley

  
	
   

  	
  Title: Chief Executive Officer

  
	
   

  	
  :

  



 













 


	
  

  	
  LEHMAN COMMERCIAL PAPER INC.,

  
	
   

  	
  as Collateral Agent

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Laurie Perper

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Name: Laurie Perper

  
	
   

  	
  Title: Senior Vice President