Document:

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                                                                    Exhibit 10.4

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                               SECURITY AGREEMENT

                                      among

                CONSOLIDATED COMMUNICATIONS TEXAS HOLDINGS, INC.
               CONSOLIDATED COMMUNICATIONS ILLINOIS HOLDINGS, INC.
                        CONSOLIDATED COMMUNICATIONS, INC.
              CONSOLIDATED COMMUNICATIONS ACQUISITION TEXAS, INC.,
                     the Subsidiary Guarantors named herein,

                                       and

                               Each Other Grantor
                         From Time to Time Party Hereto,

                                  as Grantors,

                                       and

                          CITICORP NORTH AMERICA, INC.,
                               as Collateral Agent

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

                           Dated as of April 14, 2004

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                               TABLE OF CONTENTS

<TABLE>
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                                                                ARTICLE I

                                                               Definitions
<S>                                                                                                                      <C>
SECTION 1.01.     Uniform Commercial Code Defined Terms................................................................   2
SECTION 1.02.     Credit Agreement Defined Terms.......................................................................   2
SECTION 1.03.     Definition of Certain Terms Used Herein..............................................................   2
SECTION 1.04.     Rules of Construction................................................................................   9

                                                               ARTICLE II

                                                            Security Interest

SECTION 2.01.     Security Interest....................................................................................  10
SECTION 2.02.     No Assumption of Liability...........................................................................  10

                                                               ARTICLE III

                                                     Representations and Warranties

SECTION 3.01.     Title and Authority..................................................................................  10
SECTION 3.02.     Perfection Certificate; UCC Filings..................................................................  10
SECTION 3.03.     Validity of Security Interest........................................................................  11
SECTION 3.04.     Limitations on and Absence of Other Liens............................................................  11
SECTION 3.05.     Other Actions........................................................................................  12
SECTION 3.06.     No Conflicts, Consents, etc..........................................................................  15
SECTION 3.07.     No Claims............................................................................................  15
SECTION 3.08.     Special Property.....................................................................................  15

                                                               ARTICLE IV

                                                                Covenants

SECTION 4.01.     Change of Name; Location of Collateral; Records; Place of Business...................................  15
SECTION 4.02.     Protection of Security...............................................................................  16
SECTION 4.03.     Further Assurances...................................................................................  16
SECTION 4.04.     Inspection and Verification..........................................................................  16
SECTION 4.05.     Taxes; Encumbrances..................................................................................  17
SECTION 4.06.     Assignment of Security Interest......................................................................  17
SECTION 4.07.     Continuing Obligations of the Grantors...............................................................  17
SECTION 4.08.     Use and Disposition of Collateral....................................................................  17
SECTION 4.09.     Limitation on Modification of Accounts...............................................................  17
SECTION 4.10.     Legend...............................................................................................  17
SECTION 4.11.     Certain Covenants and Provisions Regarding Patent, Trademark and Copyright Collateral................  18
</TABLE>

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<TABLE>
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                                                                ARTICLE V

                                                                Remedies
<S>                                                                                                                      <C>
SECTION 5.01.     Remedies upon Default................................................................................  19
SECTION 5.02.     Application of Proceeds..............................................................................  22
SECTION 5.03.     Collateral Agent's Calculations......................................................................  23
SECTION 5.04.     Grant of License to Use Intellectual Property........................................................  23

                                                               ARTICLE VI

                                                           Collateral Account

SECTION 6.01.     Establishment of Collateral Account..................................................................  24

                                                               ARTICLE VII

                                                              Miscellaneous

SECTION 7.01.     Notices..............................................................................................  24
SECTION 7.02.     Security Interest Absolute...........................................................................  24
SECTION 7.03.     Survival of Agreement................................................................................  25
SECTION 7.04.     Binding Effect.......................................................................................  25
SECTION 7.05.     Successors and Assigns...............................................................................  25
SECTION 7.06.     Collateral Agent's Fees and Expenses; Indemnification................................................  25
SECTION 7.07.     Filings..............................................................................................  26
SECTION 7.08.     Collateral Agent Appointed Attorney-in-Fact..........................................................  26
SECTION 7.09.     GOVERNING LAW........................................................................................  27
SECTION 7.10.     Waivers; Amendment; Several Agreement................................................................  27
SECTION 7.11.     WAIVER OF JURY TRIAL.................................................................................  27
SECTION 7.12.     Severability.........................................................................................  28
SECTION 7.13.     Counterparts.........................................................................................  28
SECTION 7.14.     Headings.............................................................................................  28
SECTION 7.15.     Jurisdiction; Consent to Service of Process..........................................................  28
SECTION 7.16.     Termination..........................................................................................  29
SECTION 7.17.     Additional Grantors..................................................................................  29
</TABLE>

                                    SCHEDULES

Schedule I        Domestic Subsidiaries
Schedule II       Commercial Tort Claims

                                     ANNEXES

Annex I           Form of Joinder Agreement
Annex II          Form of Perfection Certificate
Annex III         Form of Bailee Letter

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                               SECURITY AGREEMENT

      SECURITY AGREEMENT (as amended, amended and restated, supplemented or
otherwise modified from time to time, this "Agreement") dated as of April 14,
2004 among CONSOLIDATED COMMUNICATIONS TEXAS HOLDINGS, INC. ("CCI Texas
Holdings"), a Delaware corporation, CONSOLIDATED COMMUNICATIONS ILLINOIS
HOLDINGS, INC. ("CCI Illinois Holdings"), a Delaware corporation, CONSOLIDATED
COMMUNICATIONS, INC. (the "CCI Borrower"), an Illinois corporation, CONSOLIDATED
COMMUNICATIONS ACQUISITION TEXAS, INC. (the "TXU Borrower" and together with the
CCI Borrower, the "Borrowers"), a Delaware corporation, each Subsidiary of
either Borrower listed on Schedule I hereto (collectively, together with each
Subsidiary of either Borrower that becomes a party hereto pursuant to Section
7.17 of this Agreement, the "Subsidiary Guarantors" and, together with CCI Texas
Holdings, CCI Illinois Holdings and the Borrowers, the "Grantors") and CITICORP
NORTH AMERICA, INC., as collateral agent (in such capacity, and together with
any successors in such capacity, the "Collateral Agent") for the Secured Parties
(as defined herein).

                                 R E C I T A L S

      A. CCI Texas Holdings, CCI Illinois Holdings and the Borrowers, Homebase
Acquisition, LLC ("Homebase"), a Delaware corporation, Citicorp North America,
Inc., as administrative agent (in such capacity and together with any successors
in such capacity, the "Administrative Agent"), Credit Suisse First Boston
("CSFB") and Deutsche Bank Securities Inc., as Co-Syndication Agents, CSFB and
Citigroup Global Markets Inc., as joint lead arrangers and lead bookrunners,
CoBank, ACB, as documentation agent, and each lending institution from time to
time party thereto in the capacity of a Lender (the "Lenders") have, in
connection with the execution and delivery of this Agreement, entered into that
certain credit agreement, dated as of April 14, 2004 (as amended, amended and
restated, supplemented or otherwise modified from time to time, the "Credit
Agreement"), providing for the making of Loans to the Borrowers and the issuance
of, and participations in, Letters of Credit for the account of the Borrowers,
pursuant to, and upon the terms and subject to the conditions specified in, the
Credit Agreement.

      B. CCI Illinois Holdings, the CCI Borrower and each Subsidiary of the CCI
Borrower that is a Subsidiary Guarantor have, pursuant to the CCI Illinois
Borrower Group Guarantee Agreement (the "CCI Illinois Guarantee Agreement"),
dated as of the date hereof, among other things, unconditionally guaranteed the
Guaranteed Obligations;

      C. CCI Texas Holdings, the TXU Borrower and each Subsidiary of the TXU
Borrower that is a Subsidiary Guarantor has, pursuant to the CCI Texas Borrower
Group Guarantee Agreement (the "CCI Texas Guarantee Agreement"), dated as of the
date hereof, among other things, unconditionally guaranteed the Guaranteed
Obligations;

      D. CCI Texas Holdings, CCI Illinois Holdings and the Borrowers and each
Subsidiary Guarantor will receive substantial benefits from the execution,
delivery and performance of the obligations under the Credit Agreement and is,
therefore, willing to enter into this Agreement.

      E. Certain of the Lenders and Affiliates of Lenders (the "Existing Hedging
Exchangers") on the Effective Date are parties to the Hedging Agreements
specified on Section 3.21(a) of the Credit Agreement and it is contemplated
that, to the extent permitted by the Credit Agreement, one or more

<PAGE>

of the Grantors may enter into one or more Hedging Agreements relating to the
Loans with one or more Persons that were Lenders or Affiliates of a Lender at
the time such Hedging Agreements were entered into (together with the Existing
Hedging Exchangers, collectively, the "Hedging Exchangers").

      F. Contemporaneously with the execution and delivery of this Agreement,
the Grantors have executed and delivered to the Collateral Agent a Pledge
Agreement (as amended, amended and restated, supplemented or otherwise modified
from time to time, the "Pledge Agreement").

      G. This Agreement is given by each Grantor in favor of the Collateral
Agent for the benefit of the Secured Parties to secure the payment and
performance of all of its Obligations (as hereinafter defined).

      NOW THEREFORE, in consideration of the foregoing and other benefits
accruing to each Grantor, the receipt and sufficiency of which are hereby
acknowledged, each Grantor hereby makes the following representations and
warranties to the Collateral Agent for the benefit of the Secured Parties (and
each of their respective successors and assigns), as follows:

                                    ARTICLE I

                                   Definitions

      SECTION 1.01. Uniform Commercial Code Defined Terms. Unless otherwise
defined herein, terms used herein that are defined in the UCC shall have the
meanings assigned to them in the UCC, including the following which are
capitalized herein:

            "Accounts"; "Bank"; "Certificates of Title"; "Chattel Paper";
      "Commercial Tort Claim"; "Commodity Account"; "Commodity Contract";
      "Commodity Customer"; "Commodity Intermediary"; "Deposit Accounts";
      "Documents"; "Electronic Chattel Paper"; "Entitlement Holder";
      "Entitlement Order"; "Equipment"; "Financial Asset"; "Fixtures"; "Goods";
      "Instruments" (as defined in Article 9 rather than Article 3);
      "Inventory"; "Investment Property"; "Letter-of-Credit Rights"; "Letters of
      Credit"; "Securities"; "Securities Account"; "Securities Intermediary";
      "Security Entitlement"; "Supporting Obligations"; and "Tangible Chattel
      Paper".

      SECTION 1.02. Credit Agreement Defined Terms. Capitalized terms used but
not otherwise defined herein that are defined in the Credit Agreement shall have
the meanings given to them in the Credit Agreement.

      SECTION 1.03. Definition of Certain Terms Used Herein. As used herein, the
following terms shall have the following meanings:

      "Account Debtor" shall mean any Person who is or who may become obligated
to any Grantor under, with respect to or on account of an Account.

      "Accounts Receivable" shall mean all Accounts and all right, title and
interest in any returned goods, together with all rights, titles, securities and
guarantees with respect thereto, including any rights to stoppage in transit,
replevin, reclamation and resales, and all related security interests, liens

                                      -2-
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and pledges, whether voluntary or involuntary, in each case whether now existing
or owned or hereafter arising or acquired.

      "Bailee Letter" shall be an agreement in form substantially similar to
Annex III hereto.

      "Books and Records" shall mean all instruments, files, records, ledger
sheets and documents evidencing, covering or relating to any of the Collateral.

      "Borrowers" shall have the meaning assigned to such term in the Recitals
of this Agreement.

      "Charges" shall mean any and all property and other taxes, assessments and
special assessments, levies, fees and all governmental charges imposed upon or
assessed against, and all claims (including, without limitation, landlords',
carriers', mechanics', maritime, workmen's, repairmen's, laborers',
materialmen's, suppliers' and warehousemen's Liens and other claims arising by
operation of law) against, all or any portion of the Collateral.

      "Collateral" shall mean with respect to each of the Grantors all of the
following, in each case, whether now owned or hereafter acquired:

            (a)   Accounts Receivable;

            (b)   Books and Records;

            (c)   cash and Deposit Accounts;

            (d)   Chattel Paper;

            (e)   Collateral Account and Collateral Account Funds;

            (f)   Commercial Tort Claims described on Schedule II annexed
                  hereto;

            (g)   Documents;

            (h)   Equipment;

            (i)   Fixtures;

            (j)   General Intangibles;

            (k)   Goods;

            (l)   Instruments;

            (m)   Inventory;

            (n)   Investment Property;

            (o)   Letter-of-Credit Rights;

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            (p)   Letters of Credit;

            (q)   Transaction Documents;

            (r)   Supporting Obligations;

            (s)   Intellectual Property;

            (t)   to the extent not covered by clauses (a) through (s) of this
                  definition, all other personal property, whether tangible or
                  intangible; and

            (u)   Proceeds of any and all of the foregoing;

provided that, for purposes of this Agreement, "Collateral" shall not include
(i) any Securities Collateral or (ii) any Excluded Property.

      "Collateral Account" shall mean that collateral account established
pursuant to Section 6.01 of this Agreement.

      "Collateral Account Funds" shall mean, collectively, the following from
time to time on deposit in the Collateral Account: all funds, investments
(including, without limitation, all Permitted Investments) and all certificates
and instruments from time to time representing or evidencing such investments;
all notes, certificates of deposit, checks and other instruments from time to
time hereafter delivered to or otherwise possessed by the Collateral Agent for
or on behalf of any Grantor in substitution for, or in addition to, any or all
of the Collateral; and all interest, dividends, cash, instruments and other
property from time to time received, receivable or otherwise distributed in
respect of or in exchange for any or all of the items constituting Collateral.

      "Collateral Agent Fees" means all fees and expenses of the Collateral
Agent payable by the Grantors pursuant to Section 7.06.

      "Control" shall mean (i) in the case of each Deposit Account, "control,"
as such term is defined in Section 9-104 of the UCC, (ii) in the case of any
Security Entitlement, "control," as such term is defined in Section 8-106(d) of
the UCC, and (iii) in the case of any Commodity Contract, "control," as such
term is defined in Section 9-106(b) of the UCC.

      "Control Agreement" shall mean an agreement in form and substance
reasonably acceptable to the Collateral Agent for the purpose of effecting
Control with respect to any Deposit Account or Securities Account.

      "Copyright License" shall mean each 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 which such Grantor otherwise has the right to
license, or granting any right to such Grantor under any Copyright now or
hereafter owned by any third party, and all rights of such Grantor under any
such agreement.

      "Copyrights" shall mean, collectively, with respect to each Grantor, all
copyrights (whether statutory or common law, whether established or registered
in the United States by a Grantor or established or registered in any other
country or any political subdivision thereof by a Grantor if the beneficial
interest is owned by such Grantor, whether registered or unregistered and
whether published or

                                      -4-
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unpublished) and all copyright registrations and applications made by such
Grantor, in each case, whether now owned or hereafter created or acquired by or
assigned to such Grantor, including, without limitation, the copyrights,
registrations and applications listed in Schedule 14(b) of the Perfection
Certificate, together with any and all (i) rights and privileges arising under
applicable law with respect to such Grantor's use of such copyrights, (ii)
reissues, renewals, continuations and extensions thereof, (iii) income, fees,
royalties, damages, claims and payments now or hereafter due and/or payable with
respect thereto, including, without limitation, damages and payments for past,
present or future infringements thereof, (iv) rights corresponding thereto
throughout the world and (v) rights to sue for past, present or future
infringements thereof.

      "Credit Agreement" shall have the meaning assigned to such term in the
Recitals of this Agreement.

      "Distribution Date" shall mean, upon the occurrence and during the
continuance of an Event of Default, each date fixed by the Collateral Agent in
its sole discretion for a distribution to the Secured Parties of funds held in
the Collateral Account.

      "Equipment" shall mean collectively, with respect to each Grantor, all
"equipment," as such term is defined in the UCC, and, in any event shall
include, without limitation, all machinery, apparatus, equipment, office
machinery, electronic data-processing equipment, computers and computer hardware
and software (whether owned or licensed), furniture, conveyors, tools,
materials, storage and handling equipment, automotive equipment, motor vehicles,
tractors, trailers and other like property, whether or not the title thereto is
governed by a certificate of title or ownership, and all other equipment of
every kind and nature owned by such Grantor or in which such Grantor may have
any interest (to the extent of such interest) and all modifications, renewals,
improvements, alterations, repairs, substitutions, attachments, additions,
accessions and other property now or hereafter affixed thereto or used in
connection therewith, all replacements and all parts therefor and together with
all substitutes for any of the foregoing.

      "Excluded Accounts" means any Deposit Account which is (i) a "zero balance
account" (i.e., funds are only placed on deposit in such Deposit Account when a
substantially concurrent drawing is expected to be made on such account),
provided that the average daily balance of all such accounts does not exceed at
any time $500,000 for any 10 day period, (ii) used exclusively for holding
amounts withheld from employee wages for medical benefit plans, (iii) used
exclusively to fund workmen's compensation or other disability payments to
employees consistent with past practice or (iv) JPMorgan Chase Bank Account No.
323-2-48861, for so long as such account does not have an average daily balance
of more than $200,000 for any 10 day period.

      "Excluded Property" means Special Property other than the following:

            (a) the right to receive any payment of money (including, without
      limitation, any rights referred to in Sections 9-406(d), 9-407(a),
      9-408(a) or 9-409(a) of the UCC to the extent that sections of the UCC are
      effective to limit the prohibitions which make such property "Special
      Property"); and

            (b) any proceeds, products, accessions, rents, profits, income,
      benefits, substitutions or replacements of any Special Property (unless
      such proceeds, products, accessions, rents, profits, income, benefits,
      substitutions or replacements themselves would constitute Special
      Property).

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      "FCC" means the Federal Communications Commission, or any other similar or
successor agency of the federal government administering the Communications Act
of 1934, as amended, or any similar or successor federal statute, and the rules
and regulations thereunder.

      "General Intangibles" shall mean, collectively, all "general intangibles,"
as such term is defined in the UCC, and in any event shall include, without
limitation, all choses in action and causes of action and all other intangible
personal property of any Grantor of every kind and nature now owned or hereafter
acquired by any Grantor, including all rights and interests in partnerships,
limited partnerships, limited liability companies and other unincorporated
entities, corporate or other business records, indemnification claims, contract
rights (including rights under leases, whether entered into as lessor or lessee,
Hedging Agreements and other agreements), Intellectual Property, goodwill,
registrations, franchises and tax refund claims.

      "Guaranteed Obligations" has the meaning given such term (i) with respect
to CCI Illinois Holdings, the CCI Borrrower and the Subsidiary Guarantors that
are Subsidiaries of the CCI Borrower, in the CCI Illinois Guarantee Agreement
and (ii) with respect to CCI Texas Holdings, the TXU Borrower and each
Subsidiary Guarantor that is a Subsidiary of the TXU Borrower, in the CCI Texas
Guarantee Agreement.

      "Hedging Exchangers" shall have the meaning assigned to such term in the
Recitals of this Agreement.

      "Intellectual Property" shall mean all intellectual and similar property
of any Grantor of every kind and nature now owned in the United States by a
Grantor, or with respect to any country other than the United States,
established, registered or recorded by a Grantor and beneficially owned by such
Grantor, or hereafter acquired by any Grantor, including inventions, designs,
Patents, Copyrights, Licenses, Trademarks, trade secrets, confidential or
proprietary technical and business 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.

      "Lenders" shall have the meaning assigned to such term in the Recitals of
this Agreement.

      "License" shall mean any Patent License, Trademark License, Copyright
License or other license or sublicense to which any Grantor is a party,
including, without limitation, those listed on Schedules 14(a) and 14(b) of the
Perfection Certificate.

      "Net Loss Proceeds" means the aggregate cash proceeds received by either
Borrower or any or its Subsidiaries in respect of any event of loss (including,
without limitation, any Destruction or Taking) triggering the obligation of
either Borrower to repay or offer to repay Obligations under the Loan Documents
for so long as any are outstanding with such Net Loss Proceeds, as determined by
the Collateral Agent.

      "Obligations" means (1) with respect to each Borrower, (a) the unpaid
principal of and interest on (including interest accruing after the maturity of
the Loans made to such Borrower and interest accruing after the filing of any
petition in bankruptcy, or the commencement of any insolvency, reorganization or
like proceeding, relating to such Borrower, whether or not a claim for
post-filing or post-petition interest is allowed in such proceeding) the Loans
made to or LC Disbursements made pursuant

                                      -6-
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to Letters of Credit issued for the account of such Borrower and all other
obligations and liabilities of such Borrower to any Agent, the Joint Lead
Arrangers, the Joint Lead Bookrunners, the Sydication Agent, the Swingline
Lender, the Issuing Bank or to any Lender, whether direct or indirect, absolute
or contingent, due or to become due, or now existing or hereafter incurred,
which may arise under, out of, or in connection with, the Credit Agreement or
any other document made, delivered or given in connection therewith, whether on
account of principal, interest, fees, indemnities, costs or expenses (including,
without limitation, all reasonable fees, charges and disbursements of counsel),
or otherwise, (b) the due and punctual payment and performance by such Borrower
under each Hedging Agreement relating to the Loans entered into with any Hedging
Exchanger and (c) (i) with respect to the TXU Borrower, its Guaranteed
Obligations under the CCI Texas Guarantee Agreement and (ii) with respect to the
CCI Borrower, its Guaranteed Obligations under the CCI Illinois Guarantee
Agreement; (2) with respect to CCI Illinois Holdings and each Grantor that is a
Subsidiary of the CCI Borrower, its Guaranteed Obligations under the CCI
Illinois Guarantee Agreement; and (3) with respect to CCI Texas Holdings and
each Grantor that is a Subsidiary of the TXU Borrower, its Guaranteed
Obligations under the CCI Texas Guarantee Agreement.

      "Operative Agreement" shall mean (i) in the case of any limited liability
company or partnership or other non-corporate entity, any membership or
partnership agreement or other organizational agreement or document thereof and
(ii) in the case of any corporation, any charter or certificate of incorporation
and by-laws thereof.

      "Patent License" shall mean 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 which 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" shall mean all of the following now owned in the United States
by a Grantor, or with respect to any country other than the United States,
registered or recorded by a Grantor and beneficially owned by such Grantor, or
hereafter acquired by any Grantor: (a) all letters patent of the United States
or any other country, all registrations and recordings thereof, and all
applications for letters patent of the United States or any other country,
including registrations, recordings and pending applications in the United
States Patent and Trademark Office or any other country, including those listed
on Schedule 14(a) of the Perfection Certificate, and (b) all reissues,
continuations, divisions, continuations-in-part, renewals or extensions thereof,
and the inventions disclosed or claimed therein, including the right to make,
use and/or sell the inventions disclosed or claimed therein.

      "Pledge Agreement" shall have the meaning assigned to such term in the
recitals of this Agreement.

      "Proceeds" shall mean, collectively, all "proceeds," as such term is
defined in the UCC, and in any event shall include, without limitation, any
consideration received from the sale, exchange, license, lease or other
disposition of any asset or property that constitutes Collateral, any value
received as a consequence of the possession of any Collateral and any payment
received from any insurer or other Person or entity as a result of the
destruction, loss, theft, damage or other involuntary conversion of whatever
nature of any asset or property that constitutes Collateral, and shall include
(a) all cash and negotiable instruments received by or held on behalf of the
Collateral Agent, and (b) any claim of any Grantor against any third party for
(and the right to sue and recover for and the rights to damages or profits due
or accrued arising out of or in connection with) (i) past, present or future
infringement of

                                      -7-
<PAGE>

any Patent now or hereafter owned by any Grantor, or licensed under a Patent
License, (ii) past, present or future infringement or dilution of any Trademark
now or hereafter owned by any Grantor or licensed under a Trademark License or
injury to the goodwill associated with or symbolized by any Trademark now or
hereafter owned by any Grantor, (iii) past, present or future breach of any
License and (iv) past, present or future infringement of any Copyright now or
hereafter owned by any Grantor or licensed under a Copyright License and (c) any
and all other amounts from time to time paid or payable under or in connection
with any of the Collateral.

      "PUC" means any state, provincial or other local regulatory agency or body
that exercises jurisdiction over the rates or services or the ownership,
construction or operation of any Telecommunications System or over Persons who
own, construct or operate a Telecommunications System, including without
limitation, the Illinois Commerce Commission and the Public Utility Commission
of Texas, in each case by reason of the nature or type of the business subject
to regulation and not pursuant to laws and regulations of general applicability
to Persons conducting business in any such jurisdiction.

      "Secured Parties" means each Agent, the Joint Lead Arrangers, the Joint
Lead Bookrunners, the Syndication Agent, the Documentation Agent, the Swingline
Lender, the Issuing Bank, each Lender and each Hedging Exchanger.

      "Securities Collateral" shall have the meaning assigned to such term in
the Pledge Agreement.

      "Security Interest" shall have the meaning assigned to such term in
Section 2.01.

      "Special Property" means:

            (a) any permit, lease, license, license agreement or General
      Intangible (including FCC licenses and PUC licenses) held by any Grantor
      that validly prohibits the creation by such Grantor of a security interest
      therein;

            (b) any permit, lease, license, license agreement or other personal
      property held by any Grantor to the extent that any Requirement of Law
      applicable thereto prohibits the creation of a security interest therein;

            (c) Property owned by any Grantor that is subject to a Lien securing
      a Capital Lease Obligation (in each case permitted by the Indenture) if
      the contract or other agreement pursuant to which such Lien is granted (or
      the documentation providing for such Capital Lease Obligation) validly
      prohibits the creation of any other Lien on such Property;

      in each case, only to the extent, and for so long as, such Property, or
      Requirement of Law applicable thereto, validly prohibits the creation of a
      Lien on such Property in favor of the Collateral Agent (and upon the
      termination of such prohibition (howsoever occurring) such Property shall
      cease to be "Special Property").

      "Subsidiary Guarantors" shall have the meaning assigned to such term in
the Recitals of this Agreement.

      "Telecommunications System" means a telephone, long distance, internet,
data services, video and satellite services, wireless telecommunications,
telephone directories, fiber and cable leasing, telecommunications

                                      -8-
<PAGE>

equipment, including hand sets, rental, leasing, installation, selling or
maintenance system or business and shall include a microwave system or a paging
system operated in connection with (and in the same general service area as) any
of the foregoing systems, and businesses related thereto.

      "Trademark License" shall mean 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" shall mean all of the following now owned in the United
States by a Grantor, or with respect to any country other than the United
States, registered or recorded by a Grantor and beneficially owned by such
Grantor, 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, including
registrations and registration applications in the United States Patent and
Trademark Office, any State of the United States or any similar offices in any
other country or any political subdivision thereof, and all extensions or
renewals thereof, including those listed on Schedule 14(a) of the Perfection
Certificate, (b) all goodwill associated therewith or symbolized thereby and (c)
all other assets, rights and interests that uniquely reflect or embody such
goodwill.

      "UCC" shall mean the Uniform Commercial Code as in effect on the date
hereof in the State of New York; provided, however, that if by reason of
mandatory provisions of law, any or all of the attachment, perfection or
priority of the Collateral Agent's and the Secured Parties' security interest in
any item or portion of the Collateral is governed by the Uniform Commercial Code
as in effect in a jurisdiction other than the State of New York, the term "UCC"
shall mean the Uniform Commercial Code as in effect on the date hereof in such
other jurisdiction for purposes of the provisions hereof relating to such
attachment, perfection or priority and for purposes of definitions relating to
such provisions.

      SECTION 1.04. Rules of Construction. Unless the context otherwise
requires:

            (1) a term has the meaning assigned to it;

            (2) an accounting term not otherwise defined has the meaning
      assigned to it in accordance with GAAP;

            (3) "or" is not exclusive;

            (4) words in the singular include the plural, and in the plural
      include the singular; or

            (5) provisions apply to successive events and transactions.

                                      -9-
<PAGE>

                                   ARTICLE II

                                Security Interest

      SECTION 2.01. Security Interest. (a) Each Grantor hereby bargains, sells,
conveys, assigns, sets over, mortgages, pledges, hypothecates and transfers to
the Collateral Agent and its successor and assigns, for the ratable benefit of
the Secured Parties, and hereby grants to the Collateral Agent for the ratable
benefit of the Secured Parties, as security for the payment or performance, as
the case may be, in full of the Obligations of such Grantor, a first priority
security interest in, all of such Grantor's right, title and interest in, to and
under the Collateral, subject to Permitted Liens. The Liens granted hereunder to
secure the Obligations are referred to herein as the "Security Interest".

            (b) Without limiting the foregoing, the Collateral Agent is hereby
authorized to file one or more financing statements (including fixture filings),
continuation statements, filings 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) or other documents 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.

      SECTION 2.02. No Assumption of Liability. 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 Collateral.

                                  ARTICLE III

                         Representations and Warranties

      Each Grantor represents and warrants to the Collateral Agent and the
Secured Parties, as to itself and as to the Collateral owned by it, that:

      SECTION 3.01. Title and Authority. Such Grantor as of the date hereof has
full power and authority to grant to the Collateral Agent the Security Interest
in such 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 which has
been obtained except for FCC and PUC approvals required in connection with the
exercise of certain remedies by the Collateral Agent hereunder.

      SECTION 3.02. Perfection Certificate; UCC Filings (a) All information
set forth herein and in the Perfection Certificate which would affect the
creation or perfection of liens contemplated hereby and by the other Loan
Documents, has been duly prepared, completed and executed and the information
set forth herein and therein is correct and complete in all material respects.
Except with regard to foreign Intellectual Property, the Collateral described on
the Schedules annexed to the Perfection Certificate constitutes all of the
property of such type of Collateral owned or held by such Grantor on the date
hereof.

            (b) Fully completed UCC financing statements (including fixture
filings, as applicable) or other appropriate filings, recordings or
registrations containing a description of the Collateral have been delivered to
the Collateral Agent for filing in each governmental, municipal or other

                                      -10-
<PAGE>

office specified in Schedule 7 to the Perfection Certificate, which, except with
regard to foreign Intellectual Property, are all the filings, recordings and
registrations 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
Collateral in which the Security Interest may be perfected by filing, recording
or registration under Article 9 of the UCC in the United States (or any
political subdivision thereof) and, with respect to any Instruments and
certificated Securities, possessions, and, no further or subsequent filing,
refiling, recording, rerecording, registration or reregistration under Article 9
of the UCC is necessary in any such jurisdiction, except as provided under
applicable law with respect to the filing of continuation statements.

            (c) Such Grantor represents and warrants that fully executed
security agreements in the form hereof or in a short form acceptable to the
Collateral Agent and containing a description of all Collateral consisting of
United States Patents, United States registered Trademarks (and Trademarks for
which United States registration applications are pending) and with respect to
United States registered Copyrights have been delivered to the Collateral Agent
for registration with the United States Patent and Trademark Office and for
recordation with the United States Copyright Office pursuant to 35 U.S.C.
Section 261, 15 U.S.C. Section 1060 or 17 U.S.C. Section 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 interest in favor of the Collateral Agent
for the benefit of the Secured Parties in respect of all 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, except
with regard to foreign Intellectual Property, no further or subsequent filing,
refiling, recording, prerecording, registration or preregistration is necessary
(other than such actions as are necessary to perfect the Security Interest with
respect to any Collateral consisting of Patents, Trademarks and Copyrights (or
registration or application for registration thereof) acquired or developed
after the date hereof).

      SECTION 3.03. Validity of Security Interest. The Security Interest
constitutes (a) a legal and valid security interest in all the Collateral
securing the payment and performance of the Obligations, (b) subject to the
filings described in Section 3.02(b) and (c) above, a perfected security
interest in all 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, with respect to
any Instruments and certificated Securities, possessions pursuant to the UCC in
such jurisdictions, (c) a security interest that shall be perfected in all
Collateral in which a security interest may be perfected upon the receipt and
registering and recording of this Agreement with the United States Patent and
Trademark Office and the United States Copyright Office, as applicable, and (d)
a perfected Security Interest in all Collateral in which a security interest may
be perfected by possession or control by the Collateral Agent, in each case, to
the extent required pursuant to the provisions hereof. The Security Interest is
and shall be prior to any other Lien on any of the Collateral, other than
Permitted Liens.

      SECTION 3.04. Limitations on and Absence of Other Liens. The Collateral is
owned by such Grantor free and clear of any Lien, except for Permitted Liens.
Such Grantor has not filed or consented to the filing of (a) any financing
statement or analogous document under the UCC or any other applicable laws
covering any Collateral, (b) any assignment in which such Grantor assigns any
Collateral or any security agreement or similar instrument covering any
Collateral with the United States Patent and Trademark Office and the United
States Copyright Office or (c) any assignment in

                                      -11-
<PAGE>

which such Grantor assigns any Collateral or any security agreement or similar
instrument covering any 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 Permitted Liens.

      SECTION 3.05. Other Actions. In order to further ensure the attachment,
perfection and priority of, and the ability of the Collateral Agent to enforce,
the Collateral Agent's security interest in the Collateral, such Grantor agrees,
in each case at its own expense, to take the following actions with respect to
the following Collateral:

            (a) Instruments and Tangible Chattel Paper. As of the date hereof,
      each Grantor hereby represents and warrants as to itself that (i) no
      amount individually or in the aggregate in excess of $100,000 payable
      under or in connection with any of the Collateral is evidenced by any
      Instrument or Tangible Chattel Paper other than such Instruments and
      Tangible Chattel Paper listed in Schedule 12 of the Perfection Certificate
      and (ii) each such Instrument and each such item of Tangible Chattel Paper
      has been properly endorsed, assigned and delivered to the Collateral
      Agent, accompanied by instruments of transfer or assignment duly executed
      in blank. If any amount individually or in the aggregate in excess of
      $100,000 payable under or in connection with any of the Collateral shall
      be evidenced by any Instrument or Tangible Chattel Paper, 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 specify;
      provided, however, that so long as no Event of Default shall have occurred
      and be continuing, the Collateral Agent shall return such Instrument or
      Tangible Chattel Paper to such Grantor from time to time, to the extent
      necessary for collection in the ordinary course of such Grantor's
      business.

            (b) Deposit Accounts. Each Grantor hereby represents, warrants and
      agrees, as to itself, that (i) it has neither opened nor maintains any
      Deposit Accounts other than the Collateral Account established and
      maintained pursuant to this Agreement and the accounts listed in Schedule
      16 of the Perfection Certificate, (ii) the Collateral Agent has a
      perfected first priority security interest in the Collateral Account and,
      except for the Excluded Accounts, each Deposit Account listed in Schedule
      III hereto by Control and (iii) it shall not hereafter establish and
      maintain any Deposit Account unless (1) the applicable Grantor shall have
      given the Collateral Agent 30 days' prior written notice of its intention
      to establish such new Deposit Account with a Bank, and (2) such Bank and
      such Grantor shall have duly executed and delivered to the Collateral
      Agent a Control Agreement with respect to such Deposit Account. The
      Collateral Agent agrees with each Grantor that the Collateral Agent shall
      not give any instructions directing the disposition of funds from time to
      time credited to any Deposit Account or withhold any withdrawal rights
      from such Grantor with respect to funds from time to time credited to any
      Deposit Account unless an Event of Default has occurred and is continuing
      or, after giving effect to any withdrawal, would occur. No Grantor shall
      grant Control of any Deposit Account to any Person other than the
      Collateral Agent.

            (c) Investment Property. (i) Each Grantor hereby represents and
      warrants, as to itself, that it (1) has neither opened nor maintains any
      Securities Accounts or Commodity Accounts other than those listed in
      Schedule 16 of the Perfection Certificate and the Collateral Agent will
      have within the time periods specified in and to the extent required by
      the Credit Agreement, a perfected first priority security interest in such
      Securities Accounts and Commodity Accounts by Control and (2) does not
      hold, own or have any interest in any certificated

                                      -12-
<PAGE>

      securities or uncertificated securities other than those constituting
      Securities Collateral under the Pledge Agreement and those maintained in
      Securities Accounts or Commodity Accounts listed in Schedule 16 of the
      Perfection Certificate.

            (ii) If any Grantor shall at any time hold or acquire any
      certificated securities constituting Investment Property that are not
      Securities Collateral under the Pledge Agreement, such Grantor shall
      immediately endorse, assign and deliver the same to the Collateral Agent,
      accompanied by such instruments of transfer or assignment duly executed in
      blank, all in form and substance reasonably satisfactory to the Collateral
      Agent; provided, that in no event shall the Grantors be required to pledge
      more than 65% of the voting stock of any non-U.S. Subsidiary. If any
      securities now or hereafter acquired by any Grantor constituting
      Investment Property that are not Securities Collateral under the Pledge
      Agreement are uncertificated, such Grantor shall immediately notify the
      Collateral Agent thereof and pursuant to an agreement in form and
      substance satisfactory to the Collateral Agent, either (a) cause the
      issuer to agree to comply with instructions from the Collateral Agent as
      to such securities, without further consent of such Grantor or such
      nominee, or (b) arrange for the Collateral Agent to become the registered
      owner of the securities. No Grantor shall hereafter establish and maintain
      any Securities Account or Commodity Account unless (1) such Grantor shall
      have given the Collateral Agent 30 days' prior written notice of its
      intention to establish such new Securities Account or Commodity Account
      with such Securities Intermediary or Commodity Intermediary, (2) such
      Securities Intermediary or Commodity Intermediary, as the case may be, and
      such Grantor shall have duly executed and delivered a Control Agreement
      with respect to such Securities Account or Commodity Account, as the case
      may be. Each Grantor shall accept any Investment Property (not subject to
      the Pledge Agreement) in trust for the benefit of the Collateral Agent and
      within one (1) Business Day of actual receipt thereof, deposit any
      Investment Property and any new securities, instruments, documents or
      other property by reason of ownership of the Investment Property received
      by it into a Securities Account or Commodity Account subject to a Control
      Agreement in favor of the Collateral Agent. The Collateral Agent agrees
      with each Grantor that the Collateral Agent shall not give any Entitlement
      Orders or instructions or directions to any issuer of uncertificated
      securities, Securities Intermediary or Commodity Intermediary, and shall
      not withhold its consent to the exercise of any withdrawal or dealing
      rights by such Grantor, unless an Event of Default has occurred and is
      continuing, or, after giving effect to the excercise of such withdrawal or
      dealing rights, would occur. No Grantor shall grant control over any
      Investment Property to any Person other than the Collateral Agent.

            (iii) As between the Collateral Agent and the Grantors, each Grantor
      shall bear the investment risk with respect to its Investment Property,
      and the risk of loss of, damage to or the destruction of its Investment
      Property, whether in the possession of, or maintained as a security
      entitlement or deposit by, or subject to the control of, the Collateral
      Agent, a Securities Intermediary, a Commodity Intermediary, such Grantor
      or any other Person; provided, however, that nothing contained in this
      Section 3.05(c) shall release or relieve any Securities Intermediary or
      Commodity Intermediary of its duties and obligations to any Grantor or any
      other Person under any Control Agreement or under applicable law.

            (iv) Each Grantor shall promptly pay all Charges and fees with
      respect to the Investment Property pledged by it under this Agreement. In
      the event any Grantor shall fail to make such payment contemplated in the
      immediately preceding sentence, the Collateral Agent

                                      -13-
<PAGE>

      may do so for the account of such Grantor and such Grantor shall promptly
      reimburse and indemnify the Collateral Agent from all costs and expenses
      incurred by the Collateral Agent under this Section 3.05(c).

            (d) Electronic Chattel Paper and Transferable Records. If any amount
      individually or in the aggregate in excess of $100,000 payable under or in
      connection with any of the Collateral shall be evidenced by 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, the Grantor acquiring such
      Electronic Chattel Paper or transferable record shall promptly notify the
      Collateral Agent thereof and shall, on an annual basis (unless earlier
      requested by the Collateral Agent), take such action as the Collateral
      Agent may reasonably request to vest in the Collateral Agent control under
      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. The Collateral Agent agrees with such Grantor that
      the Collateral Agent will arrange, pursuant to procedures 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 of 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.

            (e) Letter-of-Credit Rights. If any Grantor is at any time a
      beneficiary under a Letter of Credit now or hereafter issued in favor of
      such Grantor in an amount individually in excess of $100,000 or in the
      aggregate in excess of $500,000, such Grantor shall promptly notify the
      Collateral Agent thereof and such Grantor shall, annually (unless the
      Collateral Agent requests otherwise) pursuant to an agreement in form and
      substance 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 such Letter of Credit.

            (f) Commercial Tort Claims. As of the date hereof each Grantor
      hereby represents and warrants that it holds no Commercial Tort Claims
      other than those listed in Schedule II hereto. If any Grantor shall at any
      time hold or acquire a Commercial Tort Claim having a value in excess of
      $100,000, such Grantor shall immediately notify the Collateral Agent in
      writing signed by such Grantor of the brief details thereof and, on an
      annual basis (unless earlier requested by the Collateral Agent) 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 satisfactory to the Collateral Agent.

            (g) Motor Vehicles. Upon the request of the Collateral Agent, each
      Grantor shall deliver to the Collateral Agent originals of the
      certificates of title or ownership for the motor vehicles (and any other
      Equipment covered by Certificates of Title or ownership) owned by it with
      the Collateral Agent listed as a lienholder therein except to the extent
      such motor vehicles

                                      -14-
<PAGE>

      or Equipment constitutes inventory as contemplated by Section 9-311(d) of
      the UCC and the Collateral Agent has obtained a perfected Security
      Interest therein pursuant to Section 3.02(b), in which case such material
      need not be provided. Such requirement shall apply to the Grantors if any
      such motor vehicle (or any such other Equipment) is valued over $50,000,
      provided that the value of all such motor vehicles (and such Equipment) as
      to which any Grantor has not delivered a Certificate of Title or ownership
      is over $500,000.

            (h) Landlord's Access Agreements/Bailee Letters. Upon request from
      the Collateral Agent, each Grantor shall use its commercially reasonable
      efforts to obtain a Bailee Letter or a Landlord Access Agreement, as
      applicable, from all such bailees and landlords, as applicable, who from
      time to time have possession of Collateral in excess of $500,000.

      SECTION 3.06. No Conflicts, Consents, etc. In the event that the
Collateral Agent desires to exercise any remedies, voting or consensual rights
or attorney-in-fact powers set forth in this Agreement and determines it
necessary to obtain any approvals or consents of any Governmental Authority or
any other Person therefor, then, upon the reasonable request of the Collateral
Agent, such Grantor agrees to use commercially reasonable efforts to assist and
aid the Collateral Agent to obtain as soon as practicable any necessary
approvals or consents for the exercise of any such remedies, rights and powers.

      SECTION 3.07. No Claims. The use by such Grantor of the Collateral and all
such rights with respect to the foregoing do not infringe on the right of any
Person. No claim has been made and remains outstanding that such Grantor's use
of any Collateral does or may violate the rights of any third Person.

      SECTION 3.08. Special Property. Each Grantor shall from time to time at
the request of the Collateral Agent give written notice to the Collateral Agent
identifying in reasonable detail the Special Property (and stating in such
notice that such Special Property constitutes "Excluded Property") and shall
provide to the Collateral Agent such other information regarding the Special
Property as the Collateral Agent may reasonably request and from and after the
Closing Date, no Grantor shall permit to become effective in any document
creating, governing or providing for any permit, lease or license, a provision
that would prohibit the creation of a Lien on such permit, lease or license in
favor of the Collateral Agent unless such Grantor believes, in its reasonable
judgment, that such prohibition is usual and customary in transactions of such
type.

                                   ARTICLE IV

                                    Covenants

      SECTION 4.01. Change of Name; Location of Collateral; Records; Place of
Business. (a) Each Grantor will furnish to the Collateral Agent prompt written
notice of any change (i) in such Grantor's corporate name or in any trade name
or business name used to identify it in the conduct of its business or in the
ownership of its Properties, (ii) in the location of any Grantor's chief
executive office, its principal place of business, its domicile, any office in
which it maintains books or records relating to Collateral owned by it or any
office or facility at which Collateral owned by it is located (including the
establishment of any such new office or facility), (iii) in any Grantor's
identity or corporate structure, (iv) in any Grantor's Federal Taxpayer
Identification Number or its organizational identification number, if any, or
(v) in any Grantor's jurisdiction of organization. Each Grantor agrees

                                      -15-
<PAGE>

not to effect or permit any change referred to in the preceding sentence unless
(i) it shall have given the Collateral Agent thirty (30) days' prior written
notice (or such shorter notice as may be agreed to by the Collateral Agent) and
(ii) all filings have been made under the UCC or otherwise that are required in
order for the Collateral Agent to continue at all times following such change to
have a valid, legal and perfected security interest in all the Collateral.

            (b) Each Grantor agrees to maintain, at its own cost and expense,
such complete and accurate records with respect to the 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 or schedules in form and detail reasonably
satisfactory to the Collateral Agent showing the identity, amount and location
of any and all Collateral.

      SECTION 4.02. Protection of Security. Each Grantor shall, at its own cost
and expense, take any and all actions necessary to defend title to the
Collateral against all Persons and to defend the Security Interest of the
Collateral Agent in the Collateral and the priority thereof against any Lien
other than Permitted Liens.

      SECTION 4.03. Further Assurances. 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 Collateral shall be or become evidenced by any
promissory note or other instrument that is not a Pledged Security under the
Pledge Agreement having a value in excess of $100,000, such note or instrument
shall be immediately pledged and promptly delivered to the Collateral Agent,
duly endorsed in a manner satisfactory to the Collateral Agent.

      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 Schedules 14(a) and 14(b) of the
Perfection Certificate or adding additional schedules to the Perfection
Certificate to specifically identify any asset or item that may constitute
Copyrights, Licenses, Patents or Trademarks; provided, however, that any Grantor
shall have the right, exercisable within 45 days after it has been notified by
the Collateral Agent of the specific identification of such Intellectual
Property, to advise the Collateral Agent in writing of any inaccuracy of the
representations and warranties made by such Grantor hereunder with respect to
such Intellectual Property. Each Grantor agrees that it will use its
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 Intellectual Property within 45 days after the date
it has been notified by the Collateral Agent of the specific identification of
such Collateral.

      SECTION 4.04. Inspection and Verification. The Collateral Agent and such
Persons as the Collateral Agent may reasonably designate shall have the right,
at the Grantors' own cost and expense, to at all reasonable times and intervals
and upon reasonable notice under the circumstances inspect the Collateral, all
records related thereto (and to make extracts and copies from such records) and
the premises upon which any of the Collateral is located, to discuss the
Grantors' affairs with the officers

                                      -16-
<PAGE>

of the Grantors and their independent accountants and to verify under reasonable
procedures, the validity, amount, quality, quantity, value, condition and status
of, or any other matter relating to, the Collateral, including, in the case of
Accounts or Collateral in the possession of any third person, by contacting
Account Debtors or the third person possessing such Collateral for the purpose
of making such a verification. The Collateral Agent shall have the absolute
right to share any information it gains from such inspection or verification
with any Secured Party.

      SECTION 4.05. Taxes; Encumbrances. 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 Collateral except to
the extent the same constitute Permitted Liens, and may pay for the maintenance
and preservation of the Collateral to the extent any Grantor fails to do so as
required by this Agreement, and each Grantor agrees to reimburse the Collateral
Agent on demand for any payment made or any expense incurred by the Collateral
Agent pursuant to the foregoing authorization; provided, however, that nothing
in this Section 4.05 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.

      SECTION 4.06. Assignment of Security Interest. If at any time any Grantor
shall take a security interest in any property of an Account Debtor or any other
Person to secure payment and performance of an Account in excess of $100,000,
such Grantor shall promptly assign such security interest to the Collateral
Agent. Such assignment need not be filed of public record unless necessary to
continue the perfected status of the security interest against creditors of and
transferees from the Account Debtor or other Person granting the security
interest.

      SECTION 4.07. Continuing Obligations of the Grantors. 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 Collateral, all in accordance with the terms and conditions
thereof, and each Grantor agrees to indemnify and hold harmless the Collateral
Agent and the Secured Parties from and against any and all liability for such
performance.

      SECTION 4.08. Use and Disposition of Collateral. None of the Grantors
shall make or permit to be made an assignment for security, pledge or
hypothecation of the Collateral or shall grant any other Lien in respect of the
Collateral other than Liens securing the Obligations and Permitted Liens. None
of the Grantors shall make or permit to be made any transfer of the Collateral
and each Grantor shall remain at all times in possession of the Collateral owned
by it, except that Collateral may be sold as permitted by the Credit Agreement
or any other Loan Document.

      SECTION 4.09. Limitation on Modification of Accounts. None of the Grantors
will, without the Collateral Agent's prior written consent, grant any extension
of the time of payment of any of the Accounts Receivable, 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, credits, discounts,
compromises, settlements or other modifications granted that would not,
individually or in the aggregate, result in a Material Adverse Effect.

      SECTION 4.10. Legend. Each Grantor shall legend, in form and manner
satisfactory to the Collateral Agent, its Accounts Receivable and its books,
records and documents evidencing or pertaining

                                      -17-
<PAGE>

to thereto with an appropriate reference to the fact that such Accounts
Receivable have been assigned to the Collateral Agent for the benefit of the
Secured Parties and that the Collateral Agent has a security interest therein.

      SECTION 4.11. Certain Covenants and Provisions Regarding Patent, Trademark
and Copyright Collateral. (a) Other than Patents determined by the Grantor, in
the exercise of its reasonable business judgment, to be no longer material to
the conduct of the business, each Grantor agrees that it will not, nor will it
permit any of its licensees to, do any act, or omit to do any act, whereby any
Patent which is material to the conduct of such Grantor's business may become
invalidated or dedicated to the public, and agrees that it shall continue to
mark any products covered by a Patent with the relevant patent number as
necessary and sufficient to establish and preserve its maximum rights under
applicable patent laws.

            (b) Other than Trademarks determined by the Grantor, in the exercise
of its reasonable business judgment, to be no longer material to the conduct of
the business, each Grantor (either itself or through its licensees or its
sublicenses) will, for each Trademark material to the conduct of such Grantor's
business, use its commercially reasonable efforts to (i) maintain such Trademark
in full force free from any claim of abandonment or invalidity for nonuse, (ii)
maintain the quality of products and services offered under such Trademark,
(iii) display such Trademark with notice of Federal or foreign registration to
the extent necessary and sufficient to establish and preserve its rights under
applicable law and (iv) not knowingly use or knowingly permit the use of such
Trademark in violation of any third party rights.

            (c) Other than Copyrights determined by the Grantor, in the exercise
of its reasonable business judgment, to be no longer material to the conduct of
the business, each Grantor (either itself or through licensees) will, for each
work covered by a material Copyright, publish, reproduce, display, adopt and
distribute such work with such appropriate copyright notice as necessary and
sufficient to establish and preserve its maximum rights under applicable
copyright laws.

            (d) Each Grantor shall notify the Collateral Agent as soon as
practicable if it knows or has reason to know that any Patent, Trademark or
Copyright material to the conduct of its business may become abandoned, lost or
dedicated to the public, or of any 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 or United States
Copyright Office (or any court or similar office of any country) regarding such
Grantor's ownership of any Patent, Trademark or Copyright, or its right to
register the same, or to keep and maintain the same.

            (e) Where 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, such Grantor shall within 30
days of receipt of any certificate of issuance of registration, inform the
Collateral Agent of such filing, and upon the request of the Collateral Agent,
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 or application
therefor, and each Grantor hereby appoints the Collateral Agent as its
attorney-in-fact to execute and file such writings solely for the foregoing
purposes, all acts of such attorney being hereby ratified and confirmed; such
power, being coupled with an interest, is irrevocable.

                                      -18-
<PAGE>

            (f) Each Grantor will take all necessary steps that are consistent
with its reasonable business judgment and 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
material application relating to the Patents, Trademarks, and/or Copyrights (and
to obtain the relevant grant or registration) and to maintain each issued Patent
and each registration of the Trademarks or 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 consistent with commercially 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
Collateral consisting of a Patent, Trademark or Copyright that is material to
the conduct of the business has been or is about to be infringed,
misappropriated or diluted by a third party, such Grantor promptly shall notify
the Collateral Agent and shall, if consistent with 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 reasonably appropriate under the circumstances to
protect such Collateral.

            (h) To each Grantor's knowledge, on and as of the date hereof, there
is no material violation by others of any right of such Grantor with respect to
any Copyright, Patent or Trademark listed in Schedules 14(a) and 14(b) of the
Perfection Certificate, respectively, pledged by it under the name of such
Grantor, (ii) such Grantor is not infringing upon any Copyright, Patent or
Trademark of any other Person other than such infringement that, individually or
in the aggregate, would not (or would not reasonably be expected to) result in a
material adverse effect on the value or utility of the Collateral consisting of
Intellectual Property or any portion thereof material to the use and operation
of the Collateral and (iii) no proceedings have been instituted or are pending
against such Grantor or, to such Grantor's knowledge, threatened, and no claim
against such Grantor has been received by such Grantor, alleging any such
violation.

            (i) Upon and during the continuance of an Event of Default, each
Grantor shall upon the written request of the Collateral Agent use its
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 of such Grantor's right, title and interest
thereunder to the Collateral Agent or its designee.

      Notwithstanding anything herein to the contrary, any Grantor may, for (i)
commercially reasonable cause, or (ii) in the exercise of its reasonable
judgment, abandon or allow to become lost or dedicated to the public any Patent,
Trademark or Copyright.

                                    ARTICLE V

                                    Remedies

      SECTION 5.01. Remedies upon Default. (a) Upon the occurrence and during
the continuance of an Event of Default, each Grantor agrees to make available
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: (i) with respect to any Collateral
consisting of Intellectual Property, on demand, to cause the Security Interest
to become an assignment, transfer and

                                      -19-
<PAGE>

conveyance of any of or all such 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
Collateral throughout the world on such terms and conditions and in such manner
as the Collateral Agent shall determine (other than in violation of applicable
law or any then existing licensing arrangements to the extent that waivers
cannot be obtained), and (ii) with or without legal process and with or without
prior notice or demand for performance, to take possession of the Collateral and
without liability for trespass to enter any premises where the Collateral may be
located for the purpose of taking possession of or removing the Collateral and,
generally, to exercise any and all rights afforded to a Secured Party under the
UCC 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 of applicable law, to sell or otherwise dispose of
all or any part of the Collateral, at 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 (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 such sale 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.

      (b) The Collateral Agent shall give a Grantor ten days' prior written
notice (which each Grantor agrees is reasonable notice within the meaning of
Section 9-611 of the UCC) of the Collateral Agent's intention to make any sale
or other disposition of such Grantor's 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 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 may 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 Section 5.01, 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), the Collateral or any part
thereof offered for sale and may make payment on account thereof by using any
Obligation of such Grantor then due and payable to such Secured Party as a
credit against the purchase price, and such Secured Party may,

                                      -20-
<PAGE>

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 shall be deemed to conform to the
commercially reasonable standards as provided in Section 9-611 of the UCC.

      (c) Notwithstanding anything to the contrary in this Agreement, any
foreclosure on, sale, transfer or other disposition of, or the exercise or
relinquishment of any right to vote or consent with respect to, any of the
Collateral by the Collateral Agent shall, to the extent required, be in
conformance with Sections 214 and 310(d) of the Communications Act of 1934, as
amended, and the applicable rules and regulations thereunder, and, if and only
to the extent required thereby, subject to the prior approval or notice to and
non-opposition of the FCC or any PUC.

      (d) If an Event of Default shall have occurred and be continuing, each
Grantor shall take any action which the Collateral Agent may reasonably request
in order to transfer or assign, or both, to the Collateral Agent, or to such one
or more third parties as the Collateral Agent may designate, or to a combination
of the foregoing, any FCC or PUC license, permit, certificate or other
authorization (each a "Permit") held or utilized by such Grantor or its
Subsidiaries, subject to the prior approval of the FCC or any PUC, if required.
The Collateral Agent is empowered, to the extent permitted by applicable
Requirements of Law, to request the appointment of a receiver from any court of
competent jurisdiction. Such receiver may be instructed by Secured Party to seek
from the FCC or any PUC consent to an involuntary transfer of control of the
Grantors or assignment, or both, of each such FCC or PUC Permit for the purpose
of seeking a bona fide purchaser to whom control of assets used in the provision
of telecommunications or related services will ultimately be transferred or
assigned. Each Grantor hereby agrees to authorize such an involuntary transfer
of control or assignment, or both, upon the request of the receiver so appointed
and, if any Grantor shall refuse to authorize the transfer, its approval may be
required by the court. Upon the occurrence and during the continuance of an
Event of Default, each Grantor agrees to use its best efforts to assist in
obtaining approval of the FCC or any PUC and any other state regulatory bodies,
if required, for any action or transactions contemplated by this Agreement,
including, without limitation, the preparation, execution and filing with the
FCC or any PUC and any other state regulatory bodies of the assignor's or
transferor's portion of any application or applications for consent to the
assignment of any FCC or PUC license, permit, certificate or other authorization
or right to use any FCC or PUC license, permit, certificate or other
authorization or transfer of control necessary or appropriate under the rules
and regulations of the FCC or PUC or any other state regulatory body for
approval or non-opposition of the transfer or assignment of any portion of the
Collateral, together with any FCC or PUC license, permit, certificate or other
authorization.

      (e) Each Grantor acknowledges that the assignment or transfer of any FCC
or PUC license, permit, certificate or other authorization or right to use any
FCC or PUC license, permit, certificate or other authorization of the Grantors
is integral to Secured Parties ability to realize the value of the Collateral,
that there is no adequate remedy at law for failure by any Grantor to comply
with the

                                      -21-
<PAGE>

provisions of this Section 5 and that such failure would not be adequately
compensable in damages, and therefore agrees, without limiting the right of the
Collateral Agent to seek and obtain specific performance of other obligations of
the Grantors contained in this Agreement, that the agreements contained in this
Section 5 may be specifically enforced.

      SECTION 5.02. Application of Proceeds. All Proceeds received by the
Collateral Agent in respect of any sale of, collection from or other realization
upon all or any part of the Collateral of any Grantor pursuant to the exercise
by the Collateral Agent of its remedies, together with any other moneys then
held by the Collateral Agent in the Collateral Account shall, to the extent
available for distribution (it being understood that the Collateral Agent may
liquidate investments in the Collateral Account in order to make a distribution
on any Distribution Date), be distributed in the following order of priority:

            First: to the Collateral Agent for any unpaid amounts owing to the
      Collateral Agent on such Distribution Date pursuant to Section 7.06,
      (including, the payment of the costs and expenses, fees, commissions and
      taxes relating to such sale, collection or other realization including
      reasonable fees and expenses of the Collateral Agent and its agents and
      counsel, and all expenses, liabilities and advances made or incurred by
      Collateral Agent in connection therewith and all amounts for which the
      Collateral Agent is entitled to indemnification pursuant to the provisions
      of any Loan Document, together with interest on each such amount at the
      highest rate then in effect under the Credit Agreement from and after the
      date such amount is due, owing or unpaid until paid in full);

            Second: without duplication of amounts applied pursuant to clause
      First above, to any other Secured Party which has theretofore advanced or
      paid any Collateral Agent Fees constituting administrative expenses
      allowable under Section 503(b) of the Bankruptcy Code, an amount equal to
      the amount thereof so advanced or paid by such Secured Party and for which
      such Secured Party has not been reimbursed prior to such Distribution
      Date, and, if such moneys shall be insufficient to pay such amounts in
      full, then ratably (without priority of any one over any other) to such
      Secured Parties in proportion to the amounts of such Collateral Agent Fees
      advanced by the respective Secured Parties and remaining unpaid on such
      Distribution Date;

            Third: without duplication of the amounts applied pursuant to clause
      First and Second above, to any Secured Party which has theretofore
      advanced or paid any Collateral Agent Fees other than such administrative
      expenses, an amount equal to the amount thereof so advanced or paid by
      such Secured Party and for which such Secured Party has not been
      reimbursed prior to such Distribution Date, and, if such moneys shall be
      insufficient to pay such amounts in full, then ratably (without priority
      of any one over any other) to such Secured Parties in proportion to the
      amounts of such advanced by the respective Secured Parties and remaining
      unpaid on such Distribution Date;

            Fourth: without duplication of the amounts applied pursuant to
      clauses First, Second and Third above, to the Secured Parties, in an
      amount equal to all unpaid Obligations of such Grantor, whether or not
      then due and payable, and, if such moneys shall be insufficient to pay
      such amounts in full, then ratably (without priority of any one over any
      other) to such Secured Parties in proportion to the unpaid amounts thereof
      on such Distribution Date;

                                      -22-
<PAGE>

            Fifth: without duplication of the amounts applied pursuant to
      clauses First, Second, Third and Fourth above, any surplus then remaining
      shall be paid to such Grantor or its successors or assigns or to
      whomsoever may be lawfully entitled to receive the same or as a court of
      competent jurisdiction may direct.

            In the event that any such proceeds are insufficient to pay in full
      the items described in clauses First through Fourth of this Section 5.02,
      the Grantor shall remain liable for any deficiency.

            The term "unpaid" as used in clause Third of Section 5.02 refers:

            (i) in the absence of a bankruptcy proceeding with respect to the
      relevant Grantor(s), to all amounts of the relevant Obligations
      outstanding as of a Distribution Date, and

            (ii) during the pendency of a bankruptcy proceeding with respect to
      the relevant Grantor(s), to all amounts allowed by the bankruptcy court in
      respect of the relevant Obligations as a basis for distribution (including
      estimated amounts, if any, allowed in respect of contingent claims), to
      the extent that prior distributions have not been made in respect thereof.

      SECTION 5.03. Collateral Agent's Calculations. In making the
determinations and allocations required by Section 5.02, the Collateral Agent
may conclusively rely upon information supplied by the Administrative Agent or
any Secured Party as to the amounts of unpaid principal and interest and other
amounts outstanding with respect to any Obligations of any Grantor, and the
Collateral Agent shall have no liability to any of the Secured Parties for
actions taken in reliance on such information; provided that nothing in this
sentence shall prevent any Grantor from contesting any amounts claimed by the
Collateral Agent or any Secured Party in any information so supplied. The
Collateral Agent shall supply copies of any final calculations received to the
Grantors promptly upon receipt thereof. In addition, for purposes of making the
allocations required by Section 5.02 with respect to any amount that is
denominated in any currency other than Dollars, the Collateral Agent shall, on
the applicable Distribution Date, convert such amount into an amount of Dollars
based upon the relevant exchange rate as of a recent date specified by the
Collateral Agent in its reasonable discretion. All distributions made by the
Collateral Agent pursuant to Section 5.02 shall be (subject to any decree of any
court of competent jurisdiction) final (absent manifest error), and the
Collateral Agent shall have no duty to inquire as to the application by the
Administrative Agent of any amounts distributed to it for distribution to any
Lenders

      SECTION 5.04. Grant of License to Use Intellectual Property. For the
purpose of enabling the Collateral Agent to exercise rights and remedies under
this Article V 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 an irrevocable, nonexclusive license (exercisable without
payment of royalty or other compensation to the Grantors) to use, license or
sublicense any of the Collateral, consisting of Intellectual Property now owned
or hereafter acquired by such Grantor, and wherever the same may be located, and
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 shall be exercised, at the option of the Collateral
Agent, upon the occurrence and 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.

                                      -23-
<PAGE>

                                   ARTICLE VI

                               Collateral Account

      SECTION 6.01. Establishment of Collateral Account. (a) The Collateral
Agent is hereby authorized to establish and maintain at its office at 390
Greenwich Street, New York, New York 10013, in the name of the Collateral Agent
and pursuant to a Control Agreement, a restricted deposit account designated
"CCI Illinois/CCI Texas Collateral Account." Each Grantor shall deposit into the
Collateral Account from time to time all amounts required to be deposited in the
Collateral Account by the Credit Agreement and any amounts specifically required
to be deposited therein by any other Loan Documents.

            (b) The balance from time to time in the Collateral Account shall
constitute part of the Collateral and shall not constitute payment of the
Obligations of any Grantor until applied as hereinafter provided. At any time
following the occurrence and during the continuance of an Event of Default, the
Collateral Agent may in its discretion apply or cause to be applied (subject to
collection) the balance from time to time outstanding to the credit of the
Collateral Account to the payment of the Obligations of the Grantor which has
deposited such amounts.

            (c) Amounts on deposit in the Collateral Account shall be invested
from time to time in Permitted Investments as the applicable Grantor (or, after
the occurrence and during the continuance of an Event of Default, the Collateral
Agent) shall determine, which Permitted Investments shall be held in the name
and be under the control of the Collateral Agent (or any subagent); provided,
that at any time after the occurrence and during the continuance of an Event of
Default, the Collateral Agent may in its discretion at any time and from time to
time elect to liquidate any such Permitted Investments and to apply or cause to
be applied the proceeds thereof to the payment of the Obligations of the Grantor
which has deposited such amounts.

                                   ARTICLE VII

                                  Miscellaneous

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

      SECTION 7.02. Security Interest Absolute. All rights of the Collateral
Agent hereunder, the Security Interest and all obligations of the Grantors
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 of the Grantors 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 of the Grantors, 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 nonperfection 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 of the Grantors, or (d) any other circumstance that might otherwise
constitute a defense available to, or a discharge of, any Grantor in respect of
its Obligations or this Agreement.

                                      -24-
<PAGE>

      SECTION 7.03. Survival of Agreement. All covenants, agreements,
representations and warranties made by any Grantor herein and in the
certificates or other instruments prepared or delivered in connection with or
pursuant to this Agreement or any other Loan Document shall be considered to
have been relied upon by the Collateral Agent and the other Secured Parties and
shall survive the making by the Lenders of the Loans and the Lenders' issuance
of and participations in Letters of Credit, regardless of any investigation made
by the Secured Parties or on their behalf, and shall continue in full force and
effect until this Agreement shall terminate.

      SECTION 7.04. Binding Effect. This Agreement shall become effective as to
any Grantor when a counterpart hereof executed on behalf of such Grantor 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 Grantor and the Collateral Agent and their respective successors and
assigns, and shall inure to the benefit of such Grantor, the Collateral Agent
and the other Secured Parties and their respective successors and assigns,
except that no Grantor 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 permitted by each of
the other Loan Documents.

      SECTION 7.05. Successors and Assigns. Whenever in this Agreement any of
the parties hereto is referred to, such reference shall be deemed to include the
successors and assigns of such party; and all covenants, promises and agreements
by or on behalf of any 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 7.06. Collateral Agent's Fees and Expenses; Indemnification. (a)
The parties hereto agree that the Collateral Agent shall be entitled to
reimbursement of its expenses incurred hereunder as provided in Section 9.05 of
the Credit Agreement including (including, the payment of the costs and
expenses, fees, commissions and taxes relating to any sale, collection or other
realization on the Collateral, including reasonable fees and expenses of its
agents and counsel, and all expenses, liabilities and advances made or incurred
by Collateral Agent in connection therewith and all amounts for which the
Collateral Agent is entitled to indemnification pursuant to the provisions of
any Loan Document, together with interest on each such amount at the highest
rate then in effect under the Credit Agreement from and after the date such
amount is due, owing or unpaid until paid in full).

            (b) Without limitation of its indemnification obligations under the
other Loan Documents, each Grantor agrees to indemnify the Collateral Agent and
the other Indemnitees (as defined in Section 9.05 of the Credit Agreement)
against, and hold each Indemnitee harmless from, any and all losses, claims,
damages, liabilities and related expenses, including reasonable counsel fees,
charges and disbursements, incurred by or asserted against any Indemnitee
arising out of, in connection with, or as a result of, (i) the execution,
delivery or performance of this Agreement or any other Loan Document or any
agreement or instrument contemplated hereby or thereby, the performance by the
parties hereto and thereto of their respective obligations thereunder or the
consummation of the Transactions and other transactions contemplated hereby,
(ii) the use of proceeds of the Loans or the use of any Letter of Credit or
(iii) any claim, litigation, investigation or proceeding relating to any of the
foregoing, 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 the gross negligence or willful
misconduct of such Indemnitee.

                                      -25-
<PAGE>

            (c) Any such amounts payable as provided hereunder shall be
additional Obligations of each Grantor secured hereby and by the other Security
Documents. The provisions of this Section 7.06 shall remain operative and in
full force and effect regardless of the termination of this Agreement or any
other Loan Document, the consummation of the transactions contemplated hereby,
the repayment of any of the Obligations, the invalidity or unenforceability of
any term or provision of this Agreement or any other Loan Document, or any
investigation made by or on behalf of the Collateral Agent or any other Secured
Party. All amounts due under this Section 7.06 shall be payable on written
demand therefor.

      SECTION 7.07. Filings. (a) 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) and
amendments thereto that 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 relating to the Collateral, including (i)
whether such Grantor is an organization, the type of organization and any
organizational identification number issued to such Grantor, (ii) any financing
or continuation statements or other documents without the signature of such
Grantor where permitted by law, including the filing of a financing statement
describing the Collateral as "all assets in which the Grantor now owns or
hereafter acquires rights" and (iii) in the case of a financing statement filed
as a fixture filing or covering Collateral constituting minerals or the like to
be extracted or timber to be cut, a sufficient description of the real property
to which such Collateral relates. Each Grantor agrees to provide all information
described in the immediately preceding sentence to the Collateral Agent promptly
upon request.

            (b) Each Grantor hereby ratifies its authorization for the
Collateral Agent to file in any relevant jurisdiction any initial financing
statements or amendments thereto relating to the Collateral if filed prior to
the date hereof.

      SECTION 7.08. 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. Without limiting the generality of the foregoing,
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 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 ask for, demand,
sue for, collect, receive and give acquittance for any and all moneys due or to
become due under and by virtue of any Collateral; (d) to sign the name of any
Grantor on any invoice or bill of lading relating to any of the Collateral; (e)
to send verifications of Accounts to any Account Debtor; (f) 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; (g) to
settle, compromise, compound, adjust or defend any actions, suits or proceedings
relating to all or any of the Collateral; (h) to notify, or to require any
Guarantor to notify, Account Debtors to make payment directly to the Collateral
Agent; and (i) 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

                                      -26-
<PAGE>

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 7.09. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.

      SECTION 7.10. Waivers; Amendment; Several Agreement. (a) No failure or
delay of the Collateral Agent in exercising any power or right hereunder 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 hereunder and of the other Secured Parties 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 provisions of this Agreement or any other Loan
Document or consent to any departure by any Grantor therefrom shall in any event
be effective unless the same shall be permitted by paragraph (b) below, and then
such waiver or consent shall be effective only in the specific instance and for
the purpose for which given. No notice to or demand on any Grantor in any case
shall entitle such Grantor or any other Grantor 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 Grantor or Grantors with respect to
which such waiver, amendment or modification is to apply.

            (c) This Agreement shall be construed as a separate agreement with
respect to each Grantor and may be amended, modified, supplemented, waived or
released with respect to any Grantor without the approval of any other Grantor
and without affecting the obligations of any other Grantor hereunder.

      SECTION 7.11. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO
THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL
BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF,
UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS.
EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY
OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD
NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B)
ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER
INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS, AS APPLICABLE, BY, AMONG OTHER
THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 7.11.

                                      -27-
<PAGE>

      SECTION 7.12. Severability. In the event any one or more of the provisions
contained in this Agreement should be held invalid, illegal or unenforceable in
any respect, the validity, legality and enforceability of the remaining
provisions contained herein shall not in any way be affected or impaired thereby
(it being understood that the invalidity of a particular provision in a
particular jurisdiction shall not in and of itself affect the validity of such
provision in any other jurisdiction). The parties shall endeavor in good-faith
negotiations to replace the invalid, illegal or unenforceable provisions with
valid provisions the economic effect of which comes as close as possible to that
of the invalid, illegal or unenforceable provisions. It is understood and agreed
among the parties that this Agreement shall create separate security interests
in the Collateral securing the Obligations as provided in Section 2.01, and that
any determination by any court with jurisdiction that the security interest
securing any Obligation or class of Obligations is invalid for any reason shall
not in and of itself invalidate the Security Interest securing any other
Obligations hereunder.

      SECTION 7.13. Counterparts. This Agreement may be executed in
counterparts, each of which shall constitute an original but all of which when
taken together shall constitute a single contract and shall become effective as
provided in Section 7.04. Delivery of an executed signature page to this
Agreement by facsimile transmission shall be effective as delivery of a manually
executed counterpart hereof.

      SECTION 7.14. Headings. Article and Section headings used herein are for
the purpose 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 7.15. Jurisdiction; Consent to Service of Process. (a) Each party
hereto hereby irrevocably and unconditionally submits, for itself and its
property, to the nonexclusive jurisdiction of any New York State court or
Federal court of the United States of America sitting in New York City, and any
appellate court from any thereof, in any action or proceeding arising out of or
relating to this Agreement or the other Loan Documents, or for recognition or
enforcement of any judgment, and each of the parties hereto hereby irrevocably
and unconditionally agrees that all claims in respect of any such action or
proceeding may be heard and determined in such New York State court or, to the
extent permitted by law, in such Federal court. Each of the parties hereto
agrees that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment or
in any other manner provided by law. Nothing in this Agreement shall affect any
right that the Collateral Agent or any other Secured Party may otherwise have to
bring any action or proceeding relating to this Agreement or the other Loan
Documents against any Grantor or its properties in the courts of any
jurisdiction.

            (b) Each party hereto hereby irrevocably and unconditionally waives,
to the fullest extent it may legally and effectively do so, any objection which
it may now or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to this Agreement or the other Loan
Documents in any New York State or Federal court referred to in paragraph (a) of
this Section 7.15. Each of the parties hereto hereby irrevocably waives, to the
fullest extent permitted by law, the defense of an inconvenient forum to the
maintenance of such action or proceeding in any such court.

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

                                      -28-
<PAGE>

      SECTION 7.16. Termination. (a) This Agreement and the Security Interest
with respect to a Grantor (i) shall terminate when all the Obligations of such
Grantor have been indefeasibly paid in full, the Lenders have no further
commitment to lend under the Credit Agreement or to issue or participate in
Letters of Credit and the LC Exposure has been reduced to zero (at which time
the Collateral Agent shall execute and deliver to the Grantors, at the Grantors'
expense, all UCC termination statements and other documents which the Grantors
shall reasonably request to evidence such termination) and (ii) shall continue
to be effective or shall be reinstated, as the case may be, if at any time any
payment in respect of any Obligation is rescinded or must otherwise be restored
by any Secured Party upon any bankruptcy or reorganization of any Grantor or
otherwise. Any execution and delivery of termination statements or documents
pursuant to this Section 7.16(a) shall be without recourse to or warranty by the
Collateral Agent. A Subsidiary Guarantor shall automatically be released from
its obligations hereunder and the Security Interest in the Collateral of such
Subsidiary Guarantor shall be automatically released in the event such
Subsidiary Guarantor shall be released from the CCI Illinois Guarantee Agreement
or the CCI Texas Guarantee Agreement, as the case may be, in accordance with the
terms thereof.

            (b) Upon any sale or other transfer by any Grantor of any Collateral
that is permitted under each Loan Document or, upon the effectiveness of any
written consent to the release of the security interest granted hereby in any
Collateral pursuant to Section 9.08 of the Credit Agreement, that security
interest in such Collateral shall be automatically released. In connection with
such release, the Collateral Agent shall execute and deliver to any Grantor, at
such Grantor's expense, all UCC termination statements and other documents that
such Grantor shall reasonably request to evidence such termination or release.
Any execution and delivery of UCC termination statements and similar documents
pursuant to this Section 7.16(b) shall be without recourse to or warranty by the
Collateral Agent.

      SECTION 7.17. Additional Grantors. To the extent any Subsidiary of either
Borrower shall be required to become a Grantor pursuant to Section 5.16 of the
Credit Agreement, upon execution and delivery by the Collateral Agent and such
Subsidiary of an instrument in the form of Annex I hereto, such Subsidiary shall
become a Grantor hereunder with the same force and effect as if originally named
as a Grantor herein. The execution and delivery of any such instrument shall not
require the consent of any other Grantor hereunder. The rights and obligations
of each Grantor thereunder shall remain in full force and effect notwithstanding
the addition of any new Grantor as a party to this Agreement.

                                      -29-
<PAGE>

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

                          CONSOLIDATED COMMUNICATIONS TEXAS HOLDINGS, INC.

                          By: /s/ Robert J. Currey
                              --------------------------------------------
                              Name:  Robert J. Currey
                              Title: President and Chief Executive Officer

                          CONSOLIDATED COMMUNICATIONS ILLINOIS HOLDINGS, INC.

                          By: /s/ Robert J. Currey
                              --------------------------------------------
                              Name:  Robert J. Currey
                              Title: President and Chief Executive Officer

                          CONSOLIDATED COMMUNICATIONS, INC.

                          By: /s/ Robert J. Currey
                              --------------------------------------------
                              Name:  Robert J. Currey
                              Title: President and Chief Executive Officer

                          CONSOLIDATED COMMUNICATIONS ACQUISITION TEXAS, INC.

                          By: /s/ Robert J. Currey
                              --------------------------------------------
                              Name:  Robert J. Currey
                              Title: President and Chief Executive Officer

                          CONSOLIDATED COMMUNICATIONS MARKET RESPONSE, INC.

                          By: /s/ Robert J. Currey
                              --------------------------------------------
                              Name:  Robert J. Currey
                              Title: President and Chief Executive Officer

                                       S-1
<PAGE>

                          CONSOLIDATED COMMUNICATIONS PUBLIC SERVICES, INC.

                          By: /s/ Robert J. Currey
                              --------------------------------------------
                              Name:  Robert J. Currey
                              Title: President and Chief Executive Officer

                          CONSOLIDATED COMMUNICATIONS OPERATOR SERVICES, INC.

                          By: /s/ Robert J. Currey
                              --------------------------------------------
                              Name:  Robert J. Currey
                              Title: President and Chief Executive Officer

                          CONSOLIDATED COMMUNICATIONS MOBILE SERVICES, INC.

                          By: /s/ Robert J. Currey
                              --------------------------------------------
                              Name:  Robert J. Currey
                              Title: President and Chief Executive Officer

                          CONSOLIDATED COMMUNICATIONS BUSINESS SYSTEMS, INC.

                          By: /s/ Robert J. Currey
                              --------------------------------------------
                              Name:  Robert J. Currey
                              Title: President and Chief Executive Officer

                          CONSOLIDATED COMMUNICATIONS NETWORK SERVICES, INC.

                          By: /s/ Robert J. Currey
                              --------------------------------------------
                              Name:  Robert J. Currey
                              Title: President and Chief Executive Officer

                          TXU COMMUNICATIONS VENTURES COMPANY

                          By: /s/ Robert J. Currey
                              --------------------------------------------
                              Name:  Robert J. Currey
                              Title: President and Chief Executive Officer

<PAGE>

                          TXU COMMUNICATIONS SERVICES COMPANY

                          By: /s/ Robert J. Currey
                              --------------------------------------------
                              Name:  Robert J. Currey
                              Title: President and Chief Executive Officer

                          TXU COMMUNICATIONS TRANSPORT COMPANY

                          By: /s/ Robert J. Currey
                              --------------------------------------------
                              Name:  Robert J. Currey
                              Title: President and Chief Executive Officer

                          FORT BEND LONG DISTANCE COMPANY

                          By: /s/ Robert J. Currey
                              --------------------------------------------
                              Name:  Robert J. Currey
                              Title: President and Chief Executive Officer

                          TXU COMMUNICATIONS TELECOM SERVICES COMPANY

                          By: /s/ Robert J. Currey
                              --------------------------------------------
                              Name:  Robert J. Currey
                              Title: President and Chief Executive Officer

                          FORT BEND TELEPHONE COMPANY

                          By: /s/ Robert J. Currey
                              --------------------------------------------
                              Name:  Robert J. Currey
                              Title: President and Chief Executive Officer

                          TXU COMMUNICATIONS TELEPHONE COMPANY

                          By: /s/ Robert J. Currey
                              --------------------------------------------
                              Name:  Robert J. Currey
                              Title: President and Chief Executive Officer

<PAGE>

                          FORT BEND WIRELESS COMPANY

                          By: /s/ Robert J. Currey
                              --------------------------------------------
                              Name:  Robert J. Currey
                              Title: President and Chief Executive Officer

                          FBCIP, INC.

                          By: /s/ Robert J. Currey
                              --------------------------------------------
                              Name:  Robert J. Currey
                              Title: President and Chief Executive Officer

                          FORT BEND CELLULAR, INC.

                          By: /s/ Robert J. Currey
                              --------------------------------------------
                              Name:  Robert J. Currey
                              Title: President and Chief Executive Officer

                          TELCON, INC.

                          By: /s/ Robert J. Currey
                              --------------------------------------------
                              Name:  Robert J. Currey
                              Title: President and Chief Executive Officer

<PAGE>

                          CITICORP NORTH AMERICA, INC., as Collateral
                             Agent,

                          By: /s/ Caesar Wyszomirski
                              --------------------------------------------
                              Name:  Caesar Wyszomirski
                              Title: Director

<PAGE>

                                                                      SCHEDULE I
                                                              Security Agreement

                              DOMESTIC SUBSIDIARIES

Name

<PAGE>

                                                                     SCHEDULE II
                                                              Security Agreement

                             COMMERCIAL TORT CLAIMS

<PAGE>

                                                                    Schedule III

<PAGE>

                                                                  ANNEX I TO THE
                                                              SECURITY AGREEMENT

                            Form of Joinder Agreement

      SUPPLEMENT NO. ___ dated as of [     ], among [     ], a [     ] (the "New
Grantor"), and CITICORP NORTH AMERICA, INC., as collateral agent (in such
capacity, and together with any successors in such capacity, the "Collateral
Agent") for the Secured Parties (as defined herein).

      A. Reference is made to (a) the Credit Agreement dated as of April 14,
2004 (as amended, supplemented or otherwise modified from time to time, the
"Credit Agreement"), among Homebase Acquisition, LLC, the Grantors, the lenders
party thereto (the "Lenders") and the Administrative Agent, the Syndication
Agent and the Joint Lead Arrangers (b) the [CCI Texas Guarantee Agreement] [CCI
Illinois Guarantee Agreement] dated as of April 14, 2004 (as amended,
supplemented or otherwise modified from time to time, the "Guarantee
Agreement"), among [      ] and the Administrative Agent, and (c) the Pledge
Agreement dated as of April 14, 2004 (as amended, supplemented or otherwise
modified from time to time, the "Pledge Agreement") and, together with the
Security Agreement and Guarantee Agreement, (the "Collateral Documents") among
the Grantors, and the Collateral Agent.

      B. Capitalized terms used herein and not otherwise defined herein shall
have the meanings assigned to such terms in the Security Agreement.

      C. The Grantors have entered into the Security Agreement in order to
induce the Lenders to make Loans. Pursuant to Section 5.16 of the Credit
Agreement, in the event that any Person becomes a 90% Subsidiary after the
Effective Date, the applicable Borrower will promptly notify the Administrative
Agent of that fact and cause such Subsidiary to execute and deliver to the
Administrative Agent a counterpart of the Security Agreement. Section 7.17 of
the Security Agreement provides that such Subsidiaries may become Grantors under
the Security Agreement by execution and delivery of an instrument in the form of
this Supplement. The undersigned Subsidiary (the "New Grantor") is executing
this Supplement in accordance with the requirements of the Credit Agreement to
become a Grantor under the Security Agreement.

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

            SECTION 1.In accordance with Section 5.16 of the Credit Agreement,
      the New Grantor by its signature below becomes a Domestic Subsidiary under
      each of the Collateral Documents with the same force and effect as if
      originally named therein as a party thereto and hereby (a) agrees to all
      terms and provisions of the Security Agreement applicable to it as a
      Domestic Subsidiary thereunder and (b) represents and warrants that the
      representations and warranties made by it as a Domestic Subsidiary
      thereunder are true and correct on and as of the date hereof. In
      furtherance of the foregoing, the New Grantor, as security for the payment
      and performance in full of the Obligations (as defined in the Security
      Agreement), does hereby create and grant to the Collateral Agent, its
      successors and assigns, for the benefit of the Secured Parties, their
      successors and assigns, a security interest in and lien on all of the New
      Grantor's right, title and interest in and to the Collateral (as defined
      in the Security Agreement)

<PAGE>

      of the New Grantor. Each of the Collateral Documents is hereby
      incorporated herein by reference.

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

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

            SECTION 4. The New Grantor hereby represents and warrants that (a)
      set forth on Schedule II attached hereto is a true and correct schedule of
      the location of any and all Collateral of the New Grantor, (b) set forth
      under its signature hereto, is the true and correct location of the chief
      executive office of the New Grantor and (c) set forth on Schedule III
      attached hereto is a true and correct schedule describing the securities
      of the New Grantor being pledged hereunder.

            SECTION 5. Except as expressly supplemented thereby, each of the
      Collateral Documents shall remain in full force and effect.

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

            SECTION 7. In case any one or more of the provisions contained in
      this Supplement should be held invalid, illegal or unenforceable in any
      respect, the validity, legality and enforceability of the remaining
      provisions contained herein and in the Collateral Documents shall not in
      any way be affected or impaired thereby (it being understood that the
      invalidity a particular provision in a particular jurisdiction shall not
      in and of itself affect the validity of such provision in any other
      jurisdiction). The parties hereto shall endeavor in good-faith
      negotiations to replace the invalid, illegal or unenforceable provisions
      with valid provisions the economic effect of which comes as close as
      possible to that of the invalid, illegal or unenforceable provisions.

            SECTION 8. All communications and notices hereunder shall be in
      writing and given as provided in Section 7.01 of the Security Agreement.
      All communications and notices hereunder of the New Grantor shall be given
      to it at the address set forth under its signature below.

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

                                       -2-
<PAGE>

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

                                      -3-
<PAGE>

                          [NAME OF NEW GRANTOR]

                          By: ____________________________________________
                              Name:
                              Title:
                              Address:

                          CITICORP NORTH AMERICA, INC.,
                          as Collateral Agent

                          By: ____________________________________________
                              Name:
                              Title:

                                       S-1
<PAGE>

                                                                      SCHEDULE I
                                                        TO THE JOINDER AGREEMENT

                                   Guarantors

<PAGE>

                                                                     SCHEDULE II
                                                        TO THE JOINDER AGREEMENT

                             Location of Collateral

Description                          Location

<PAGE>

                                                                    SCHEDULE III
                                                        TO THE JOINDER AGREEMENT

                    Securities Collateral of the New Grantor

                                  PLEDGED STOCK

<TABLE>
<CAPTION>
             Number of                             Number and        Percentage
Issuer      Certificate     Registered Owner     Class of Shares     of Shares
------      -----------     ----------------     ---------------     ---------
<S>         <C>             <C>                  <C>                 <C>
</TABLE>

                             PLEDGED DEBT SECURITIES

<TABLE>
<CAPTION>
Issuer      Principal Amount      Date of Note      Maturity Date
------      ----------------      ------------      -------------
<S>         <C>                   <C>               <C>
</TABLE>

<PAGE>

                                                                 ANNEX II TO THE
                                                              SECURITY AGREEMENT

                                  See Attached

<PAGE>

                                                                ANNEX III TO THE
                                                              SECURITY AGREEMENT

           FORM OF NOTICE TO BAILEE OF SECURITY INTEREST IN COLLATERAL

CERTIFIED MAIL -- RETURN RECEIPT REQUESTED

                                                     [     ], 200[ ]

TO:   [Bailee's Name]
      [Bailee's Address]

                        Re: [Borrower]

Ladies and Gentlemen:

      In connection with that certain Security Agreement, dated as of April 14,
2004 (the "Security Agreement"), made by Borrowers, the other Grantors party
thereto and Citicorp North America, Inc. ("Citicorp") as Collateral Agent, we
have granted to Citicorp a security interest in substantially all of our
personal property, including our inventory.

      This letter constitutes notice to you, and your signature below will
constitute your acknowledgment, of Citicorp's continuing first priority security
interest in all goods with respect to which you are acting as bailee. Until you
are notified in writing to the contrary by Citicorp, however, you may continue
to accept instructions from us regarding the delivery of goods stored by you.

      Your acknowledgment also constitutes a waiver and release, for Citicorp's
benefit, of any and all claims, liens, including bailee's liens, and demands of
every kind which you have or may later have against such property (including any
right to include such property in any secured financing to which you may become
party).

      In order to complete our records, kindly have a duplicate of this letter
signed by an officer of your company and return same to us at your earliest
convenience.

                                                  Very truly yours,

Receipt acknowledged, confirmed and
approved:

[BAILEE]                                          [APPLICABLE GRANTOR]

By: ________________________________              By: __________________________
    Name:                                             Name:
    Title:                                            Title:

cc:   Citicorp North America, Inc.<PAGE>
                                                                    Exhibit 10.5

                      CCI ILLINOIS BORROWER GROUP GUARANTEE

      CCI ILLINOIS BORROWER GROUP GUARANTEE (as amended, supplemented or
otherwise modified from time to time, this "Guarantee"), dated as of April 14,
2004, made by Consolidated Communications Illinois Holdings, Inc. ("CCI Illinois
Holdings"), Consolidated Communications, Inc. (the "CCI Borrower") and by each
of the Subsidiaries of the CCI Borrower that are signatories hereto or which
become parties hereto pursuant to Section 18, in accordance with Section 5.16 of
the Credit Agreement dated as of April 14, 2004 (as amended, amended and
restated, supplemented or otherwise modified from time to time, the "Credit
Agreement") among CCI Illinois Holdings, the CCI Borrower, Consolidated
Communications Acquisition Texas, Inc. (the "TXU Borrower"), Homebase
Acquisition, LLC ("Homebase"), Consolidated Communications Texas Holdings, Inc.
("CCI Texas Holdings") and the Lenders, Citicorp North America, Inc., as
administrative agent (in such capacity, the "Administrative Agent"), Credit
Suisse First Boston and Deutsche Bank Securities Inc. as co-syndication agents,
Credit Suisse First Boston and Citigroup Global Markets Inc. as joint lead
arrangers and joint bookrunners and CoBank, ACB, as documentation agent.

                              W I T N E S S E T H :

      WHEREAS, pursuant to the terms of the Credit Agreement, the Lenders
severally agreed to make certain extensions of credit to the Borrowers;

      WHEREAS, the CCI Borrower is a direct Wholly Owned Subsidiary of CCI
Illinois Holdings and each Subsidiary Guarantor that is a party hereto is a
direct or indirect Subsidiary of the CCI Borrower (CCI Illinois Holdings, the
CCI Borrower and each Subsidiary Guarantor that is a party hereto being
collectively referred to as the "CCI Borrower Group" and each member of the CCI
Borrower Group being referred to individually as a "Guarantor");

      WHEREAS, it is a condition precedent to the making of Loans and the
issuance of, and participation in, Letters of Credit under the Credit Agreement,
that each member of the CCI Borrower Group shall have executed and delivered
this Guarantee; and

      WHEREAS, each Guarantor will obtain benefits from the incurrence of Loans
by the Borrowers and the issuance of, and participation in, Letters of Credit
for the account of the Borrowers under the Credit Agreement, and desires to
execute this Guarantee in order to satisfy the condition precedent described in
the preceding paragraph and to induce the Lenders to maintain and make Loans to
the Borrowers and issue Letters of Credit for the account of the Borrowers;

      NOW, THEREFORE, in consideration of the premises and to induce the Lenders
to enter into the Credit Agreement and to make their respective extensions of
credit to the Borrowers under the Credit Agreement, the Guarantors hereby agree
with and for the benefit of the Agents and the Lenders as follows:

      1. Defined Terms. As used in this Guarantee, terms defined in the Credit
Agreement or in the preamble or recitals hereto are used herein as therein
defined, and the following terms shall have the following meaning:

            "CCI Borrower Obligations" shall mean (a) the unpaid principal of
      and interest on (including interest accruing after the maturity of the
      Loans made to the CCI Borrower and interest accruing after the filing of
      any petition in bankruptcy, or the commencement of any insolvency,
      reorganization or like proceeding, relating to the CCI Borrower, whether
      or not a claim for post-

<PAGE>

      filing or post-petition interest is allowed in such proceeding) the Loans
      made to or LC Disbursements made pursuant to Letters of Credit issued for
      the account of the CCI Borrower and all other obligations and liabilities
      of any member of the CCI Borrower Group to any Agent, the Joint Lead
      Arrangers, the Joint Bookrunners, the Documentation Agent, the Issuing
      Bank, the Swingline Lender or to any Lender, whether direct or indirect,
      absolute or contingent, due or to become due, or now existing or hereafter
      incurred, which may arise under, out of, or in connection with, the Credit
      Agreement, any other Loan Document or any other document made, delivered
      or given in connection therewith, whether on account of principal,
      interest, fees, indemnities, costs or expenses (including, without
      limitation, all reasonable fees, charges and disbursements of counsel), or
      otherwise, and (b) the due and punctual payment and performance by the CCI
      Borrower under each Hedging Agreement relating to the Loans entered into
      with any counterparty that was a Lender or an Affiliate of a Lender at the
      time such Hedging Agreement was entered into and each Hedging Agreement
      set forth on Schedule 3.21(a) of the Credit Agreement.

            "Guaranteed Obligations" means with respect to each Guarantor, its
      obligations pursuant to this Guarantee with respect to the CCI Borrower
      Obligations and the TXU Borrower Obligations.

            "TXU Borrower Group" means CCI Texas Holdings, the TXU Borrower and
      each Subsidiary Guarantor that is not a member of the CCI Borrower Group.

            "TXU Borrower Obligations" shall mean (a) the unpaid principal of
      and interest on (including interest accruing after the maturity of the
      Loans made to the TXU Borrower and interest accruing after the filing of
      any petition in bankruptcy, or the commencement of any insolvency,
      reorganization or like proceeding, relating to the TXU Borrower, whether
      or not a claim for post-filing or post-petition interest is allowed in
      such proceeding) the Loans made to or LC Disbursements made pursuant to
      Letters of Credit issued for the account of the TXU Borrower and all other
      obligations and liabilities of any member of the TXU Borrower Group to any
      Agent, the Joint Lead Arrangers, the Joint Bookrunners, the Documentation
      Agent, the Issuing Bank, the Swingline Lender or to any Lender, whether
      direct or indirect, absolute or contingent, due or to become due, or now
      existing or hereafter incurred, which may arise under, out of, or in
      connection with, the Credit Agreement, any other Loan Document or any
      other document made, delivered or given in connection therewith, whether
      on account of principal, interest, fees, indemnities, costs or expenses
      (including, without limitation, all reasonable fees, charges and
      disbursements of counsel), or otherwise, and (b) the due and punctual
      payment and performance by each member of the CCI Borrower Group (other
      than the CCI Borrower) and each member of the TXU Borrower Group under
      each Hedging Agreement relating to the Loans entered into with any
      counterparty that was a Lender or an Affiliate of a Lender at the time
      such Hedging Agreement was entered into.

      2. Guarantee. (a) Each Guarantor other than the CCI Borrower, hereby,
jointly and severally, unconditionally and irrevocably, guarantees to the
Administrative Agent, for the benefit of the Agents and the Lenders and their
respective successors, indorsees, transferees and assigns, the prompt and
complete payment and performance by the CCI Borrower when due (the "CCI
Guarantee") (whether at the stated maturity, by acceleration or otherwise) of
the CCI Borrower Obligations, and each such Guarantor further agrees, jointly
and severally, to pay any and all reasonable expenses (including, without
limitation, all reasonable fees and disbursements of counsel) which may be paid
or incurred by the Administrative Agent or the Collateral Agent in enforcing, or
obtaining advice of counsel in respect of, any rights with respect to, or
collecting, any or all of the CCI Borrower Obligations and/or enforcing any
rights with respect to, or collecting against, the Guarantors under the CCI
Guarantee.

                                      -2-
<PAGE>

            (b) Each Guarantor hereby, jointly and severally, unconditionally
and irrevocably, guarantees to the Administrative Agent, for the benefit of the
Administrative Agent, the Agents and the Lenders and their respective
successors, indorsees, transferees and assigns, the prompt and complete payment
and performance by the TXU Borrower Group when due (the "TXU Guarantee")
(whether at the stated maturity, by acceleration or otherwise) of the TXU
Borrower Obligations, and each such Guarantor further agrees to pay any and all
reasonable expenses (including, without limitation, all reasonable fees and
disbursements of counsel) which may be paid or incurred by the Administrative
Agent or the Collateral Agent in enforcing, or obtaining advice of counsel in
respect of, any rights with respect to, or collecting, any or all of the TXU
Borrower Obligations and/or enforcing any rights with respect to, or collecting
against, the Guarantors under the TXU Guarantee.

            (c) Anything herein or in any other Loan Document to the contrary
notwithstanding, the maximum liability of each Guarantor hereunder shall in no
event exceed the amount which can be guaranteed by such Guarantor under
applicable federal and state laws relating to the insolvency of debtors, after
giving effect to all other contingent and fixed liabilities of such Guarantor
and after giving effect to any collections from or payments made by or on behalf
of any other Guarantor in support of the obligations of such Guarantor under its
Guarantee or pursuant to Section 2(g).

            (d) Each Guarantor agrees that the Guaranteed Obligations may at any
time and from time to time exceed the amount of the liability of such Guarantor
hereunder without impairing this Guarantee or affecting the rights of the
Administrative Agent or any Lender hereunder.

            (e) No payment or payments made by the CCI Borrower, the Guarantors,
any other guarantor or any other Person or received or collected by the
Administrative Agent or any Lender from the CCI Borrower, the Guarantors, any
other guarantor or any other Person by virtue of any action or proceeding or any
set-off or appropriation or application at any time or from time to time in
reduction of or in payment of the Guaranteed Obligations shall be deemed to
modify, reduce, release or otherwise affect the liability of any Guarantor
hereunder which shall, notwithstanding any such payment or payments other than
payments made by such Guarantor in respect of the Guaranteed Obligations or
payments received or collected from such Guarantor in respect of the Guaranteed
Obligations, remain liable for the Guaranteed Obligations up to the maximum
liability of such Guarantor hereunder until the Guaranteed Obligations are paid
in full, the Commitments are terminated and either no Letters of Credit are
outstanding or each outstanding Letter of Credit has been cash collateralized.

            (f) Each Guarantor agrees that whenever, at any time, or from time
to time, it shall make any payment to the Administrative Agent or any Lender on
account of its liability hereunder, it will notify the Administrative Agent in
writing that such payment is made under this Guarantee for such purpose.

            (g) In order to provide for just and equitable contribution among
the Guarantors, the Guarantors that are obligors under the CCI Guarantee agree,
inter se, that in the event any payment or distribution is made by any Guarantor
other than CCI Illinois Holdings (a "CCI Funding Guarantor") under the CCI
Guarantee, such CCI Funding Guarantor shall be entitled to a contribution from
all other Guarantors that are obligors under the CCI Guarantee in a pro rata
amount based on the Adjusted Net Assets of each such Guarantor (including the
CCI Funding Guarantor) for all payments, damages and expenses incurred by that
CCI Funding Guarantor in discharging the CCI Borrower Obligations or any other
Guarantor's obligations with respect to the CCI Guarantee. In order to provide
for just and equitable contribution among the Guarantors, the Guarantors agree,
inter se, that in the event any payment or distribution is made by any Guarantor
(a "TXU Funding Guarantor") under the TXU Guarantee, such TXU Funding Guarantor
shall be entitled to a contribution from all other Guarantors in a pro rata
amount based on the Adjusted Net Assets of each Guarantor (including the TXU
Funding Guarantor) for all payments,

                                      -3-
<PAGE>

damages and expenses incurred by that TXU Funding Guarantor in discharging the
TXU Borrower Obligations or any other Guarantor's obligations with respect to
the Guarantee. "Adjusted Net Assets" of any Guarantor at any date shall mean the
lesser of the amount by which (x) the fair value of the property of such
Guarantor exceeds the total amount of liabilities, including, without
limitation, contingent liabilities (after giving effect to all other fixed and
contingent liabilities incurred or assumed on such date and after giving effect
to any collection from any other Subsidiary of the Guarantor in respect of the
obligations of the CCI Guarantee or the TXU Guarantee), but excluding
liabilities under the CCI Guarantee or the TXU Guarantee, of such Guarantor at
such date and (y) the present fair salable value of the assets of such Guarantor
at such date exceeds the amount that will be required to pay the probable
liability of such Guarantor on its debts (after giving effect to all other fixed
and contingent liabilities incurred or assumed on such date and after giving
effect to any collection from any other Guarantor in respect of the obligations
of such Guarantor under the CCI Guarantee or the TXU Guarantee), excluding debt
in respect of the CCI Guarantee or the TXU Guarantee of such Guarantor, as they
become absolute and matured.

      3. Right of Set-Off. Upon the occurrence and during the continuance of any
Event of Default, each Guarantor hereby irrevocably authorizes each Lender at
any time and from time to time without notice to such Guarantor or any other
guarantor, any such notice being expressly waived by each Guarantor, to set-off
and appropriate and apply any and all deposits (general or special, time or
demand, provisional or final), in any currency, and any other credits,
indebtedness or claims, in any currency, in each case whether direct or
indirect, absolute or contingent, matured or unmatured, at any time held or
owing by such Lender to or for the credit or the account of the Guarantor, or
any part thereof in such amounts as such Lender may elect, against and on
account of the obligations and liabilities of such Guarantor to such Lender
hereunder or under the Credit Agreement or the other Loan Documents, as such
Lender may elect, whether or not the Administrative Agent or any Lender has made
any demand for payment and although such obligations, liabilities and claims may
be contingent or unmatured. Each Lender agrees to notify such Guarantor promptly
of any such set-off and the application made by such Lender; provided that the
failure to give such notice shall not affect the validity of such set-off and
application. The rights of each Lender under this paragraph are in addition to
other rights and remedies (including, without limitation, other rights of
set-off) which such Lender may have.

      4. Deferral of Subrogation. Notwithstanding any payment or payments made
by any of the Guarantors hereunder or any set-off or application of funds of any
of the Guarantors by any Lender, no Guarantor shall be entitled to be subrogated
to any of the rights of the Agents or any Lender against any Loan Party or any
collateral security or guarantee or right of offset held by any Lender for the
payment of the Guaranteed Obligations, nor shall any Guarantor seek or be
entitled to seek any contribution or reimbursement from any Loan Party in
respect of payments made by such Guarantor hereunder, and any such rights of
subrogation and reimbursement of the Guarantors are hereby waived, in each case,
until all amounts owing to the Agents and the Lenders on account of the
Guaranteed Obligations are paid in full, the Commitments are terminated and
either no Letters of Credit are outstanding or each outstanding Letter of Credit
has been cash collateralized ("Discharge of the Obligations"); provided,
however, that following the Discharge of Obligations, each Guarantor shall be
entitled to enforce any and all rights at law or in equity to subrogation that
may otherwise be available to such Guarantor.

      5. Amendments, etc., with Respect to the Guaranteed Obligations; Waiver of
Rights. Each Guarantor shall remain obligated hereunder notwithstanding that,
without any reservation of rights against any Guarantor and without notice to or
further assent by any Guarantor, (a) any demand for payment of any of the
Guaranteed Obligations made by the Administrative Agent, the Collateral Agent or
any Lender may be rescinded by such party and any of the Guaranteed Obligations
continued, (b) the Guaranteed Obligations, or the liability of any other Person
upon or for any part thereof, or any collateral security or guarantee therefor
or right of offset with respect thereto, may, from time to time, in whole or in
part, be renewed, extended, amended, modified, accelerated, compromised, waived,
surrendered or released by

                                      -4-
<PAGE>

any Agent or any Lender, (c) the Credit Agreement, the other Loan Documents, any
Letter of Credit, any Hedging Agreement under which there are Guaranteed
Obligations and any other collateral security document or other guarantee or
document in connection therewith may be amended, modified, supplemented or
terminated, in whole or in part, as any Agent and/or any Lender may deem
advisable from time to time, or (d) any collateral security, guarantee or right
of offset at any time held by any Agent or any Lender for the payment of the
Obligations may be sold, exchanged, waived, surrendered or released. No Agent
nor any Lender shall have any obligation to protect, secure, perfect or insure
any Lien at any time held by it as security for the Guaranteed Obligations or
for this Guarantee or any property subject thereto. When making any demand
hereunder against any particular Guarantor, the Administrative Agent or any
Lender may, but shall be under no obligation to, make a similar demand on any
other Guarantor or guarantor, and any failure by the Administrative Agent or any
Lender to make any such demand or to collect any payments from any such other
Guarantor or guarantor or any release of any such other Guarantor or guarantor,
shall not relieve such Guarantor in respect of which a demand or collection is
not made or any of the Guarantors not so released of their several obligations
or liabilities hereunder, and shall not impair or affect the rights and
remedies, express or implied, or as a matter of law, of the Administrative Agent
or any Lender against any of the Guarantors. For the purposes hereof "demand"
shall include the commencement and continuance of any legal proceedings.

      6. Guarantee Absolute and Unconditional. Each Guarantor waives any and all
notice of the creation, renewal, extension or accrual of any of the Guaranteed
Obligations and notice of or proof of reliance by the Administrative Agent or
any Lender upon this Guarantee or acceptance of this Guarantee; the Guaranteed
Obligations, and any of them, shall conclusively be deemed to have been created,
contracted or incurred, or renewed, extended, amended or waived, in reliance
upon this Guarantee; and all dealings between the Borrowers or any of the
Guarantors and the Administrative Agent or any Lender shall likewise be
conclusively presumed to have been had or consummated in reliance upon this
Guarantee. Each Guarantor waives diligence, presentment, protest, demand for
payment and notice of default or nonpayment to or upon the Borrowers or any of
the Guarantors with respect to the Guaranteed Obligations. Each Guarantor
understands and agrees that this Guarantee shall be construed as a continuing,
absolute and unconditional guarantee of payment without regard to (a) the
validity, regularity or enforceability of the Credit Agreement, the Notes, any
other Loan Document, the Letters of Credit, any Hedging Agreements under which
there are Guaranteed Obligations, any of the Guaranteed Obligations or any other
collateral security therefor or guarantee or right of offset with respect
thereto at any time or from time to time held by the Administrative Agent or any
Lender, (b) any defense, set-off or counterclaim (other than a defense of
payment or performance) which may at any time be available to or be asserted by
any Loan Party or any other person against the Administrative Agent or any
Lender, or (c) any other circumstance whatsoever (with or without notice to or
knowledge of such Guarantor) which constitutes, or might be construed to
constitute, an equitable or legal discharge of any Loan Party, in bankruptcy or
in any other instance. When pursuing its rights and remedies hereunder against
any Guarantor, the Administrative Agent and/or any Lender may, but shall be
under no obligation to, pursue such rights and remedies as it may have against
Homebase or any member of the TXU Borrower Group or any other person or against
any collateral security or guarantee for the Guaranteed Obligations or any right
of offset with respect thereto, and any failure by the Administrative Agent or
any Lender to pursue such other rights or remedies or to collect any payments
from any Loan Party or any such other Person or to realize upon any such
collateral security or guarantee or to exercise any such right of offset, or any
release of any Loan Party or any such other person or any such collateral
security, guarantee or right of offset, shall not relieve such Guarantor of any
liability hereunder, and shall not impair or affect the rights and remedies,
whether express, implied or available as a matter of law, of the Administrative
Agent or any Lender against such Guarantor. This Guarantee shall remain in full
force and effect and be binding in accordance with and to the extent of its
terms upon each Guarantor and the successors and assigns thereof, and shall
inure to the benefit of the Administrative Agent and the Lenders, and their
respective successors, indorsees, transferees and assigns, until all the
Guaranteed Obligations and the obligations of each Guarantor under this
Guarantee shall have been satisfied by payment in full, either no Letters of

                                      -5-
<PAGE>

Credit are outstanding or each outstanding Letter of Credit has been cash
collateralized and the Commitments shall be terminated, notwithstanding that
from time to time during the term of the Credit Agreement the Borrowers may be
free from any Guaranteed Obligations.

      7. Reinstatement. This Guarantee shall continue to be effective, or be
reinstated, as the case may be, if at any time payment, or any part thereof, of
the Guaranteed Obligations is rescinded or must otherwise be restored or
returned by the Administrative Agent or any Lender upon the insolvency,
bankruptcy, dissolution, liquidation or reorganization of any Loan Party, or
upon or as a result of the appointment of a receiver, intervenor or conservator
of, or trustee or similar officer for, any Loan Party or any substantial part of
its property, or otherwise, all as though such payments had not been made.

      8. Payments. Each Guarantor hereby guarantees that payments hereunder will
be paid in Dollars to the Administrative Agent without set-off or counterclaim
at the office of the Administrative Agent identified in Section 9.01 of the
Credit Agreement, or at such other office as the Administrative Agent may notify
to the Guarantor in accordance with Section 15.

      9. Representations and Warranties. Upon the date of execution of a
counterpart hereof by any Guarantor, each Guarantor that is a Subsidiary
Guarantor executing such counterpart on such date makes the representations and
warranties as to itself in Article III of the Credit Agreement (as to itself) as
if such Article III were herein.

      10. Covenants. Each Guarantor hereby covenants and agrees with the
Administrative Agent and the Lenders that, from and after the date of this
Guarantee until the Guaranteed Obligations are paid in full and the Commitments
are terminated and either no Letter of Credit is outstanding or each outstanding
Letter of Credit has been cash collateralized, each Guarantor will comply with
Articles V and VI of the Credit Agreement to the extent such provisions apply to
such Guarantor.

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

      12. Section Headings. The section headings used in this Guarantee are for
convenience of reference only and are not to affect the construction hereof or
be taken into consideration in the interpretation hereof.

      13. No Waiver; Cumulative Remedies. Neither the Administrative Agent nor
any Lender shall by any act (except by a written instrument pursuant to Section
14 hereof), delay, indulgence, omission or otherwise be deemed to have waived
any right or remedy hereunder or to have acquiesced in any default or event of
default under any Loan Document or in any breach of any of the terms and
conditions hereof. No failure to exercise, nor any delay in exercising, on the
part of the Administrative Agent or any Lender, any right, power or privilege
hereunder shall operate as a waiver thereof. No single or partial exercise of
any right, power or privilege hereunder shall preclude any other or further
exercise thereof or the exercise of any other right, power or privilege. A
waiver by the Administrative Agent or any Lender of any right or remedy
hereunder on any one occasion shall not be construed as a bar to any right or
remedy which the Administrative Agent or such Lender would otherwise have on any
future occasion. The rights and remedies herein provided are cumulative, may be
exercised singly or concurrently and are not exclusive of any rights or remedies
provided by law.

                                      -6-
<PAGE>

      14. Integration; Waivers and Amendments; Successors and Assigns; Governing
Law. This Guarantee represents the entire agreement of each Guarantor with
respect to the subject matter hereof and there are no promises or
representations by the Administrative Agent or any Lender relative to the
subject matter hereof not reflected herein or in the other Loan Documents. None
of the terms or provisions of this Guarantee may be waived, amended,
supplemented or otherwise modified except by a written instrument executed by
each Guarantor and the Administrative Agent; provided that any provision of this
Guarantee may be waived by the Administrative Agent in accordance with the
Credit Agreement in a letter or agreement executed by the Administrative Agent
or by telex or facsimile transmission from the Administrative Agent. This
Guarantee shall be binding upon the successors and assigns of each Guarantor and
shall inure to the benefit of the Administrative Agent and the Lenders and their
respective successors and assigns. THIS GUARANTEE SHALL BE GOVERNED BY, AND BE
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

      15. Notices. All notices, requests, demands and other communications
provided for herein shall be in writing and shall be delivered by hand or
overnight courier service, mailed by certified or registered mail or sent by
telecopy, as follows:

            (a)   if to any Guarantor, to it at:

                  c/o Consolidated Communications, Inc.
                  121 South 17th Street
                  Mattoon, IL 61938
                  Attention: Steve Childers
                  Telecopy No. (217) 223-9934
                  Email: steve.childers@consolidated.com

                  with a copy to:

                  Richard A. Lumpkin
                  121 South 17th Street
                  Mattoon, IL 61938
                  Telecopy No. (217) 234-9934
                  Email: Richard.lumpkin@consolidated.com

                  Robert J. Currey
                  121 South 17th Street
                  Mattoon, IL 61938
                  Telecopy No. (217) 234-9934
                  Email: Bob.currey@consolidated.com

                  Providence Equity
                  50 Kennedy Plaza
                  Providence, RI 02903
                  Attention: Mark Noble
                  Telecopy No. (401) 751-1790
                  Email: m.noble@provequity.com

                  Spectrum Equity

                                      -7-
<PAGE>

                  One International Place, 29th Floor
                  Boston, MA 02110
                  Attention: Jim Quagliaroli
                  Telecopy: (617) 464-4601
                  Email: Jim@spectrumequity.com

                  King & Spalding LLP
                  1185 Avenue of the Americas
                  New York, NY 10036
                  Attention: John Graham, Esq.
                  Telecopy: (212) 556-2222
                  Email: jgraham@kslaw.com

                  Edwards & Angell
                  101 Federal St.
                  Boston, MA 02110
                  Attention: John Casais, Esq.
                  Telecopy: (617) 439-4170
                  Email: jcasais@edwardsangell.com

            (b)   if to the Administrative Agent, to it at:

                  Citicorp North America, Inc.
                  2 Penn's Way, Suite 110
                  New Castle, DE 19720
                  Attention: Elizabeth Wier
                  Telecopy No: (302) 994-0961
                  Email: Elizabeth.j.wier@citigroup.com

                  with a copy to:

                  Cahill Gordon & Reindel LLP
                  80 Pine St.
                  New York, NY 10005
                  Attention: Jonathan A. Schaffzin, Esq.
                  Telecopy: (212) 269-5420
                  Email: jschaffzin@cahill.com

      All notices and other communications given to any party hereto in
accordance with the provisions of this Guarantee shall be deemed to have been
given on the date of receipt if delivered by hand or overnight courier service
or sent by telecopy or by certified or registered mail, in each case delivered,
sent or mailed (properly addressed) to such party as provided in this Section 15
or in accordance with the latest unrevoked direction from such party given in
accordance with this Section 15.

      16. Counterparts. This Guarantee may be executed by one or more of the
parties hereto on any number of separate counterparts and all of said
counterparts taken together shall be deemed to constitute one and the same
instrument.

                                      -8-
<PAGE>

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

      18. Additional Guarantors. Each Subsidiary of the CCI Borrower that is
required to become a party to this Agreement pursuant to Section 5.16 of the
Credit Agreement shall become a Guarantor for all purposes of this Agreement
upon execution and delivery by such Subsidiary of a Guarantee Agreement in the
form of Annex I to this Agreement

      19. Submission to Jurisdiction; Waivers. (a) Each Guarantor hereby
irrevocably and unconditionally submits, for itself and its assets, to the
nonexclusive jurisdiction of any New York State court or federal court of the
United States of America sitting in New York City, and any appellate court from
any thereof, in any action or proceeding arising out of or relating to this
Guarantee, or for recognition or enforcement of any judgment, and 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 Guarantor 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 Guarantee shall affect any right that any
Lender may otherwise have to bring any action or proceeding relating to this
Guarantee against any Guarantor or its properties in the courts of any
jurisdiction.

            (b) Each Guarantor hereby irrevocably and unconditionally waives, to
the fullest extent it may legally and effectively do so, any objection which it
may now or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to this Agreement or the other Loan
Documents in any New York State or federal court. Each Guarantor hereby
irrevocably waives, to the fullest extent permitted by Law, the defense of an
inconvenient forum to the maintenance of such action or proceeding in any such
court.

            (c) Each Guarantor irrevocably consents to service of process in the
manner provided for notices in Section 15. Nothing in this Agreement will affect
the right of the Agents, any Lender or the Issuing Bank to serve process in any
other manner permitted by Law.

            (d) Each Guarantor and the Administrative Agent, on behalf of the
Lenders, hereby waive, to the fullest extent permitted by applicable law, any
right they may have to a trial by jury in respect of any litigation directly or
indirectly arising out of, under or in connection with this Guarantee. Each of
the Guarantors and the Administrative Agent, on behalf of the Lenders, (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
Guarantee by, among other things, the mutual waivers and certifications in this
Section 19.

      20. Release of Guarantors. In the event that all of the Equity Interests
of one or more Guarantors that are Subsidiary Guarantors is sold or otherwise
disposed of or liquidated in compliance with the requirements of the Credit
Agreement (or such sale or other disposition has been approved in writing in
accordance with Section 9.08 of the Credit Agreement), such Guarantor shall upon
consummation of such

                                      -9-
<PAGE>

sale or other disposition (except to the extent that such sale or disposition is
to the Borrowers or any of their Subsidiaries) be released from this Guarantee
automatically and without further action and this Guarantee shall, as to each
such Guarantor or Guarantors, terminate and have no further force or effect (it
being understood and agreed that the sale of one or more persons (other than
Homebase, any Intermediate Holdco, CCI Illinois Holdings or the CCI Borrower)
that own, directly or indirectly, all of the Equity Interests of any Guarantor
shall be deemed to be a sale of such Guarantor for purposes of this Section 20).

                                      -10-
<PAGE>

      IN WITNESS WHEREOF, each of the undersigned has caused this Guarantee to
be duly executed and delivered by its duly authorized officer as of the day and
year first above written.

                                    CONSOLIDATED COMMUNICATIONS ILLINOIS
                                        HOLDINGS, INC.

                                    By: /s/ Robert J. Currey
                                        ---------------------------------------
                                        Name:  Robert J. Currey
                                        Title: President and Chief Executive
                                               Officer

                                    CONSOLIDATED COMMUNICATIONS, INC.

                                    By: /s/ Robert J. Currey
                                        ---------------------------------------
                                        Name:  Robert J. Currey
                                        Title: President and Chief Executive
                                               Officer

                                    CONSOLIDATED COMMUNICATIONS MARKET RESPONSE,
                                        INC.

                                    By: /s/ Robert J. Currey
                                        ---------------------------------------
                                        Name:  Robert J. Currey
                                        Title: President and Chief Executive
                                               Officer

                                    CONSOLIDATED COMMUNICATIONS PUBLIC SERVICES,
                                        INC.

                                    By: /s/ Robert J. Currey
                                        ---------------------------------------
                                        Name:  Robert J. Currey
                                        Title: President and Chief Executive
                                               Officer

                                    CONSOLIDATED COMMUNICATIONS OPERATOR
                                        SERVICES, INC.

                                    By: /s/ Robert J. Currey
                                        ---------------------------------------
                                        Name:  Robert J. Currey
                                        Title: President and Chief Executive
                                               Officer

                                      -11-
<PAGE>

                                    CONSOLIDATED COMMUNICATIONS MOBILE SERVICES,
                                        INC.

                                    By: /s/ Robert J. Currey
                                        ---------------------------------------
                                        Name:  Robert J. Currey
                                        Title: President and Chief Executive
                                               Officer

                                    CONSOLIDATED COMMUNICATIONS BUSINESS
                                        SYSTEMS, INC.

                                    By: /s/ Robert J. Currey
                                        ---------------------------------------
                                        Name:  Robert J. Currey
                                        Title: President and Chief Executive
                                               Officer

                                    CONSOLIDATED COMMUNICATIONS NETWORK
                                        SERVICES, INC.

                                    By: /s/ Robert J. Currey
                                        ---------------------------------------
                                        Name:  Robert J. Currey
                                        Title: President and Chief Executive
                                               Officer

                                      -12-
<PAGE>

Accepted and agreed to:

CITICORP NORTH AMERICA, INC,
as Administrative Agent

By: /s/ Caesar Wyszomirski
    ------------------------------------
    Name:  Caesar Wyszomirski
    Title: Director

                                      -13-
<PAGE>

                   SUPPLEMENTAL SUBSIDIARY GUARANTEE AGREEMENT

      Reference is made to the CCI Illinois Borrower Group Guarantee Agreement
dated as of April 14, 2004 (as amended, amended and restated, supplemented or
otherwise modified from time to time, the "CCI Illinois Guarantee Agreement")
among Citicorp North America, Inc., as Administrative Agent (the "Administrative
Agent"), and each of the Guarantors (such term and each other capitalized term
used but not defined herein having the meaning given it in the CCI Illinois
Guarantee Agreement).

                              W I T N E S S E T H :

      WHEREAS, pursuant to Section 5.16 of the Credit Agreement, each 90%
Subsidiary that is a Subsidiary of the CCI Borrower that was not in existence on
the date of the Credit Agreement is required to become a Guarantor under the CCI
Illinois Guarantee Agreement by executing a Subsidiary Guarantee Agreement. The
undersigned Subsidiary (the "New Guarantor") is executing this supplemental
subsidiary guarantee agreement (the "Supplemental Subsidiary Guarantee
Agreement") to the CCI Illinois Guarantee Agreement in order to induce the
Lenders to make additional Revolving Loans and as consideration for the Loans
previously made.

      NOW, THEREFORE, the Administrative Agent and the New Guarantor hereby
agree as follows:

      1. Guarantee. In accordance with Section 5.16 of the Credit Agreement, the
New Guarantor by its signature below becomes a Guarantor under the CCI Illinois
Guarantee Agreement with the same force and effect as if originally named
therein as a Guarantor.

      2. Representations and Warranties. The New Guarantor hereby (a) agrees to
all the terms and provisions of the Credit Agreement and the other Loan
Documents applicable to it as a Guarantor thereunder and (b) makes the
representations and warranties in the Credit Agreement applicable to it. Each
reference to a Guarantor in the Credit Agreement shall be deemed to include the
New Guarantor.

      3. Severability. Any provision of this Supplemental Subsidiary Guarantee
Agreement which is prohibited or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.

      4. Counterparts. This Supplemental Subsidiary Guarantee Agreement may be
executed in counterparts, each of which shall constitute an original. Delivery
of an executed signature page to this Supplemental Subsidiary Guarantee
Agreement by facsimile transmission shall be as effective as delivery of a
manually executed counterpart of this Supplemental Subsidiary Guarantee
Agreement.

      5. No Waiver. Except as expressly supplemented hereby, the CCI Illinois
Guarantee Agreement shall remain in full force and effect.

      6. Notices. All notices, requests and demands to or upon the New
Guarantor, any Agent or any Lender shall be governed by the terms of Section 15
of the CCI Illinois Guarantee Agreement.

      7. Governing Law. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAW
OF THE STATE OF NEW YORK.

                            [Signature Pages Follow]

                                      -14-
<PAGE>

        IN WITNESS WHEREOF, the undersigned has caused this Supplemental
Subsidiary Guarantee Agreement to be duly executed and delivered by its duly
authorized officer as of the day and year first above written.

                                    [NEW GUARANTOR]

                                    By: _______________________________________
                                        Name:
                                        Title:

                                    Address for Notices:

                                    CITICORP NORTH AMERICA, INC.,
                                        as Administrative Agent

                                    By: _______________________________________
                                        Name:
                                        Title:

                                      -15-

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