Document:

Exhibit 10.1

SETTLEMENT AGREEMENT

THIS SETTLEMENT AGREEMENT (this “Agreement”) is
made and entered into effective as of February 6, 2007 (the “Effective Date”) by and among Hawaiian Telcom
Communications, Inc, a Delaware corporation (“HT”),
TC Group III, L.P. (“Carlyle”) (as to Sections 12,
13, 15 and 17 through 24  only) and
BearingPoint, Inc., a Delaware corporation (“BE”).

	
  Recitals:

  	
   

  	
  Effective as of August 2, 2004, HT and BE entered
  into a Master Services Agreement (together with any amendments thereto or
  change requests executed thereunder, the “MSA”),
  pursuant to which BE agreed to provide certain information technology and
  other services to HT.

  

  The parties hereto have executed and delivered this Agreement to resolve
  certain disputes that have arisen between HT and BE under or in connection
  with the MSA.

  

  Certain of the payments to be made pursuant to this Settlement Agreement will
  be made by certain of BE’s insurers (the “Insurers”).

  
	
   

  	
   

  	
   

  
	
  1.     Cash Deliveries:

  	
   

  	
  On or before the Closing Date (as defined below), BE
  shall cause the Insurers to deliver to their respective counsel or other
  designee (other than BE) to be held in trust for the benefit of HT
  immediately available funds by wire transfer as set forth in Exhibit A.

  

  The amounts due from the Insurers are referred to as the “Insurer Payments.”

  

  BE shall deliver the portion of the Settlement Payment identified in Exhibit A to be paid by it (the “BE Payment”)
  directly to HT on the Closing Date as contemplated in Section 2
  below.  Together, the BE Payment and
  the Insurer Payments are referred to as the “Settlement
  Payments.”

  

  The aggregate amount of the Settlement Payments will be Fifty-two Million
  Dollars ($52,000,000.00).

  
	
   

  	
   

  	
   

  
	
  2.     Closing:

  	
   

  	
  After the date that all Insurer Payments required
  under Section 1 have been received by the respective counsel of the Insurers
  (or other designee other than BE), but in any event on or before March 27,
  2007 (the “Closing Date”), BE shall
  coordinate the simultaneous delivery of the Settlement Payments to HT by wire
  transfer to an account designated by HT.

  

 

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  3.     Forgiveness
  of BE Invoices:

  	
   

  	
  Effective as of the Closing Date, BE hereby
  waives,  releases and forgives HT from
  any liability for the BE invoices previously submitted to HT and listed in Exhibit B.  This
  forgiveness specifically extends to all invoices for operate services
  provided by BE to HT from the initiation of such services through the
  Effective Date.

  

  Except as otherwise provided in the Transition Agreement (as defined below)
  or otherwise agreed in writing by BE and HT, all other BE invoices and any
  charges, costs, expenses or other amounts that have not been invoiced with
  respect to services provided to HT on or prior to the Effective Date, are
  also hereby forgiven and deemed to be waived and released in their entirety,
  effective as of the Closing Date.

  
	
   

  	
   

  	
   

  
	
  4.     Release to BE:

  	
   

  	
  Effective as of the Closing Date, except for the
  Reserved Claims (as defined below), HT (on behalf of itself and its former,
  present and future subsidiaries, parents, affiliates, representatives,
  successors and assigns and all persons acting by, through, under or in
  concert with them or any of them) hereby fully and forever irrevocably and unconditionally
  releases, acquits and discharges BE, together with its former, present and
  future subsidiaries, affiliates, successors, assigns, representatives, their
  respective directors, officers and employees and all persons acting by,
  through, under or in concert with them or any of them, and their respective
  insurers and reinsurers (collectively, the “BE
  Released Parties”) from, and agrees not to sue regarding, any and
  all actions, causes of action, claims or demands (whether at law or in
  equity), liabilities, losses, damages, or any other form of claim or
  compensation for known or unknown acts or omissions taken or suffered by any
  of the BE Released Parties on or before the Closing Date.

  

  It is expressly understood and agreed that the forgoing release does not
  extend to and does not release any Reserved Claims.

  
	
   

  	
   

  	
   

  
	
  5.     Release to HT:

  	
   

  	
  Effective as of the Closing Date, except for the
  Reserved Claims, BE (on behalf of itself and its former, present and future
  subsidiaries, parents, affiliates, representatives, successors and assigns
  and all persons acting by, through, under or in concert with them or any of
  them) hereby fully and forever irrevocably and unconditionally releases,
  acquits and discharges HT,

  

 

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  together with its former, present and future
  subsidiaries, affiliates, successors, assigns, representatives, their
  respective directors, officers and employees and all persons acting by,
  through, under or in concert with them or any of them (collectively, the “HT Released Parties”) from, and agrees not to sue
  regarding, any and all actions, causes of action, claims or demands (whether
  at law or in equity), liabilities, losses, damages, or any other form of
  claim or compensation for known or unknown acts or omissions taken or
  suffered by any of the HT Released Parties on or before the Closing Date.

  

  It is expressly understood and agreed that the forgoing release does not
  extend to and does not release any Reserved Claims.

  
	
   

  	
   

  	
   

  
	
  6.     Transition Agreement:

  	
   

  	
  For the avoidance of doubt, the releases set forth
  above shall have no effect on the obligation of HT and BE to perform their
  respective obligations under the Transition Agreement (as defined below), all
  of which shall be subject to the terms and conditions of the Transition
  Agreement.

  
	
   

  	
   

  	
   

  
	
  7.     Termination of MSA:

  	
   

  	
  In recognition of the transactions contemplated by
  this Agreement and the respective obligations of HT and BE under the
  Transition Agreement, from and after the Effective Date and until the earlier
  of the Closing Date or the date of termination of this Agreement in
  accordance with Section 16 below, the MSA shall be deemed suspended and
  neither HT nor BE shall be obligated to perform their respective obligations
  thereunder.

  

  Except as provided in the immediately following paragraph and in Section 8,
  effective as of the Closing Date, the MSA shall be terminated in its entirety
  and shall be deemed to be of no further force or effect, and neither HT nor
  BE shall have any further liability, obligation or responsibility thereunder.

  

  Notwithstanding the provisions of Section 22.14 of the MSA, no provision,
  article or section of the MSA will survive such termination except as set
  forth in this Section 7 and Section 8. 
  The following provisions (the “Surviving Provisions”)
  of the MSA will survive the termination of the MSA and remain in full force
  and effect:

  1.     Section 9.4.2 (b) (License
  to Supplier Technical Elements);

  2.     Section 9.4.3 (License to
  Supplier Third Party Technical Elements); and

  3.     Section 11.2 (Ownership)
  (other than Subsections 11.2.5 and 11.2.6 thereof).

   

  For the avoidance of doubt, BE’s provision of
  Transition Services (as defined below) will be subject to the terms and
  conditions of the Transition Agreement and not the MSA.

  

 

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  8.     Reserved
  Claims:

  	
   

  	
  The following provisions (the “Reserved
  Provisions”) of the MSA will survive the termination of the MSA
  and remain in full force and effect: 
  Subsections 18.1.5, 18.1.9, 18.2.2 and 18.2.3 (IP Infringement).

  

  In addition, if a claim is made under any of the Reserved Provisions,
  Sections 18.4, 18.7 and 18.8 of the MSA will apply to such claims (but only
  as to the manner of the making of such claim and not as a Reserved Claim).

  

  “Reserved Claims” means any and all
  actions, causes of action, claims or demands (whether at law or in equity),
  liabilities, losses, damages, or any other form of claim or compensation for
  known or unknown acts or omissions arising under the Reserved Provisions.

  

  HT represents and warrants to BE that as of the date hereof it has no
  knowledge of any matter which would reasonably be expected to result in a
  claim by HT against BE for infringement or misappropriation under the
  Reserved Provisions hereunder.

  

  BE represents and warrants to HT that as of the date hereof it has no
  knowledge of any matter which would reasonably be expected to result in a
  claim by BE against HT for infringement or misappropriation under the
  Reserved Provisions hereunder.

  
	
   

  	
   

  	
   

  
	
  9.     Transition Assistance:

  	
   

  	
  Contemporaneously with the execution and delivery of
  this Agreement, BE and HT shall execute and deliver a Transition Agreement,
  pursuant to which BE shall provide certain transition assistance services (“Transition Services”) to HT (the “Transition
  Agreement”).  The
  effectiveness of this Agreement shall be subject to the prior execution and
  delivery of the Transition Agreement.

  
	
   

  	
   

  	
   

  
	
  10.  Acknowledgement:

  	
   

  	
  By executing and delivering this Agreement, neither
  HT nor BE shall be deemed to have admitted to the performance or suffering of
  any improper action in connection with the subject matter hereof.

  
	
   

  	
   

  	
   

  
	
  11.  Bankruptcy Provision:

  	
   

  	
  In the event a BE Bankruptcy Event (as defined
  below) occurs prior to the Closing Date, if BE does not assume this Agreement
  

  

 

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  within 60 days of such Bankruptcy Event, HT may file
  a precautionary claim in any bankruptcy proceeding of BE regarding the
  matters settled herein (not limited to the amount of the Settlement
  Payments), but agrees to withdraw such claim if the bankruptcy court
  subsequently enters an order authorizing and directing assumption of this
  Agreement and payment in full of the Settlement Payments and such Settlement
  Payments are received by HT.  Nothing
  set forth in this paragraph shall be deemed an admission by any party hereto
  that this Agreement is or shall be an executory contract on or after the
  occurrence of a BE Bankruptcy Event.

  

  In the event a BE Bankruptcy Event occurs after the Closing Date, HT may file
  a precautionary claim in any bankruptcy proceeding of BE regarding the
  matters settled herein (not limited to the amount of the Settlement
  Payments), but (a) HT agrees to withdraw such claim if (i) HT receives the
  Settlement Payments and (ii) either (A) no proceedings are brought to recover
  the Settlement Payments within the applicable limitations time period in
  which a trustee or debtor-in-possession may bring causes of action under
  Chapter 5 of Title 11 of the United States Code, or (B) upon entry of a final
  and non-appealable order finding that HT has no liability to BE’s estate
  under Chapter 5 of Title 11 of the United States Code, and (b) although the
  total amount of such claim is not limited to the amount of the Settlement
  Payments, HT agrees to reduce such claim by the difference between the amount
  of the Settlement Payments and the Disgorged Amount (defined below) upon
  entry of a final and non-appealable order establishing HT’s liability under
  Chapter 5 of Title 11 of the United States Code and requiring HT to disgorge
  an amount equal to such liability (the “Disgorged Amount”)
  to BE’s estate.

  

  “BE Bankruptcy Event” means the entry of an order of relief stemming from an
  involuntary or voluntary petition in bankruptcy under Title 11 of the United
  States Code.

  
	
   

  	
   

  	
   

  
	
  12.  Confidentiality:

  	
   

  	
  Each of HT, Carlyle and BE shall keep the terms and
  conditions of this Agreement strictly confidential, and no party hereto shall
  disclose such terms and conditions to any third party except: (1) with
  the prior written consent of each of the other parties, (2) to the extent
  required by applicable law or regulation or by order of a court of competent
  jurisdiction, (3) in confidence to the professional legal and financial
  counsel representing such party, (4) in confidence to any party covered
  or potentially covered by the releases granted herein, or (5) as required by
  agreements

  

 

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  with a party’s existing and potential financing
  sources, provided that such sources are bound by existing confidentiality
  obligations.  With respect to a
  disclosure by HT or BE pursuant to the foregoing clause (2), HT or BE, as the
  case may be, shall, except as may be prohibited by applicable law, provide BE
  or HT, as the case may be, with prior written notice as early as practicable
  prior to such disclosure pursuant to such applicable law, regulation or order
  so as to permit the other an opportunity to object or seek confidential
  treatment of such material, as applicable and such disclosing party shall (i)
  reasonably assist the other objecting to such disclosure in its efforts (a)
  to interpose an objection to such disclosure, (b) to take action to seek to
  assure confidential handling of such information or (c) to take such other
  action as it deems reasonably appropriate to protect such information, and
  (ii) at the request of the party objecting to such disclosure, use
  commercially reasonable efforts, at the expense of the objecting party, to
  limit the disclosure of the terms and conditions of this Agreement to the
  extent permitted by applicable law. 
  With respect to the U.S. Federal Communications Commission, the U.S.
  Securities and Exchange Commission and Hawaii Public Utilities Commission,
  nothing herein shall restrict a party’s ability to disclose terms and conditions
  of this agreement to the extent legally required, in the sole good faith
  judgment of the disclosing party.

  

  Any provisions of this Agreement that become publicly available as a result
  of disclosures made in compliance with the terms of this Section 12 shall
  thereafter not be subject to the terms of this provision.

  

  BE shall cause the Insurers to agree to maintain the confidentiality of this
  Agreement and the Transition Agreement pursuant to customary confidentiality
  obligations.

  
	
   

  	
   

  	
   

  
	
  13.  Non-Disparagement:

  	
   

  	
  From and after the date hereof, each of HT (on
  behalf of itself and its subsidiaries, parent, affiliates, successors,
  assigns, directors and officers) and Carlyle hereby agrees not to make any
  written or oral statement to a person not subject to Section 12 above or
  Section 2.9 of the Transition Agreement or, in the case of statements to
  persons or entities that are portfolio companies controlled by Carlyle or in
  which Carlyle has a substantial economic interest, or that are affiliates of
  Carlyle, not subject to similar confidentiality obligations to Carlyle, HT or
  an affiliate of either,  concerning
  BE’s performance under the MSA, the Services provided by BE under the MSA or
  the

  

 

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  management of such performance or Services that
  would negatively comment on, disparage, or call into question the business,
  operations, policies or conduct of BE, or to act in any way with respect to
  such business, operations, policies or conduct that would damage BE’s
  reputation, business relationships or present or future business, or the
  reputation of any past or present subsidiaries, affiliates, successors,
  assigns, directors, officers or employees of BE, except to the extent:  (1) required by law, (2) in HT’s or Carlyle’s
  sole good faith discretion, necessary for HT or Carlyle to defend itself in
  any civil, criminal, administrative, judicial, arbitral, regulatory, or
  administrative proceeding, or (3) in HT’s or Carlyle’s sole good faith
  discretion, necessary to respond to requests for information submitted by
  existing and potential financing sources of HT or Carlyle, provided that such
  sources are bound by existing confidentiality obligations.

  

  From and after the date hereof, BE (on behalf of itself and its subsidiaries,
  parent, affiliates, successors, assigns, directors and officers) hereby
  agrees not to make any written or oral statement to a person not subject to
  Section 12 above or Section 2.9 of the Transition Agreement, concerning HT’s
  performance under the MSA or utilization of the Services provided by BE under
  the MSA or the management of HT in connection with HT’s receipt or
  utilization of the Services that would negatively comment on, disparage, or
  call into question the business, operations, policies or conduct of HT, or to
  act in any way with respect to such business, operations, policies or conduct
  that would damage HT’s reputation, business relationships or present or
  future business, or the reputation of any past or present subsidiaries,
  affiliates, successors, assigns, directors, officers or employees of HT,
  except to the extent: (1) required by law, 
  (2) in BE’s sole good faith discretion, necessary for BE to defend
  itself in any civil, criminal, administrative, judicial, arbitral,
  regulatory, or administrative proceeding, or (3) in BE’s sole good faith
  discretion, necessary to respond to requests for information submitted by
  existing and potential financing sources of BE, provided that such sources
  are bound by existing confidentiality obligations.

  
	
   

  	
   

  	
   

  
	
  14.  Press Release:

  	
   

  	
  Attached hereto as Exhibit C
  is a form of press release to be issued by HT and BE promptly following the
  execution and delivery of this Agreement.

  
	
   

  	
   

  	
   

  
	
  15.  Binding Agreement:

  	
   

  	
  It is the intention of the parties hereto that, upon
  execution and delivery of this Agreement by all of the parties hereto, this
  Agreement shall be binding and enforceable against each such party.

  

 

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  16.  Termination:

  	
   

  	
  HT in its sole discretion, by written notice to BE,
  may terminate this Agreement if HT does not receive the Settlement Payments
  in full by 4:00 p.m., Eastern Time, on March 30, 2007; provided however,
  termination under this provision shall not in and of itself relieve any Party
  from liability regarding the matters settled herein (including but not
  limited to costs, expenses and damages, whether consequential or
  otherwise).  If HT so elects to
  terminate this Agreement under this Section 16, (a) such termination shall
  constitute HT’s sole and exclusive remedy under this Agreement and (b) the
  Parties shall be restored to the status quo ante (it being expressly
  understood that no releases contemplated by this Agreement shall have any
  force or effect in the event of such termination), including that (i) the MSA
  shall be deemed reinstated to full force and effect as of the Effective Date
  (as if it had never terminated), (ii) all invoices previously submitted to HT
  shall not be waived and all amounts with respect to services provided to HT
  but not yet invoiced shall not be waived, (iii) the Transition Agreement
  shall be terminated as of the date of the termination of this Agreement and
  shall be void ab initio (with the express
  understanding that, notwithstanding any provision of the Transition
  Agreement, no provisions of the Transition Agreement shall survive and the
  relationship of the Parties shall be governed by the MSA as if it had never
  been suspended or terminated as the case may be), (iv) promptly (but in any
  event within two business days) after any such termination of this Agreement
  by HT, HT shall return, by wire transfer of immediately available funds, any
  portion of the Settlement Payment previously received by HT to the entity
  that paid the same, and (v) this Agreement may not be relied on or referred to
  for any purpose, other than to enforce this Agreement.

  

  Furthermore, (i) none of the releases granted under this Agreement shall be
  valid if HT terminates this Agreement as provided in the previous paragraph,
  (ii) the release of BE under this Agreement shall not be valid if HT is
  required to return to BE or to pay to BE’s bankruptcy estate or other
  creditors, and in fact returns or pays, any portion of the Settlement Payment
  as a result of such payment being determined by a court of competent
  jurisdiction in a final and non-appealable order to be a “preference,” “fraudulent
  conveyance,” or otherwise recoverable by BE in connection with its bankruptcy
  or insolvency and (iii) the termination of the Transition Agreement shall
  have no effect on the terms or enforceability of this Agreement, including
  the terms of the releases set forth herein.

  

 

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  17.  Amendment;
  Waiver:

  	
   

  	
  The terms and provisions of this Agreement,
  including any Exhibit hereto, may be modified or amended only by a written
  instrument executed by each of the parties hereto, and compliance with any
  term or provision hereof may be waived only by a written instrument executed
  by each party entitled to the benefits of the same.  Except as expressly provided herein to the
  contrary, no failure to exercise any right, power or privilege hereunder
  shall operate as a waiver thereof, nor shall any single or partial exercise
  thereof preclude any other or further exercise thereof or the exercise of any
  other right, power or privilege granted hereunder.

  
	
   

  	
   

  	
   

  
	
  18.  Construction:

  	
   

  	
  The section headings contained in this Agreement are
  for convenience of reference only and shall in no way define, limit, extend
  or describe the scope or intent of any provisions of this Agreement.  As used in this Agreement, unless otherwise
  provided to the contrary, (a) all references to days shall be deemed
  references to calendar days and (b) any reference to a “Section” or “Exhibit”
  shall be deemed to refer to a section of this Agreement or an exhibit
  attached to this Agreement.  The words
  “include,” “includes” or “including” shall be deemed to be followed by the
  words “without limitation.”  The
  portions of the MSA that are not Surviving Provisions or Reserved Provisions
  may be used to the extent necessary to interpret the meaning of the Surviving
  Provisions and the Reserved Provisions, but only for such purpose and for no
  other purpose.

  
	
   

  	
   

  	
   

  
	
  19.  Severability:

  	
   

  	
  If any provision of this Agreement is held to be
  illegal, invalid or unenforceable, such provision shall be fully severable,
  and this Agreement shall be construed and enforced as if such illegal,
  invalid or unenforceable provision had never comprised a part hereof, and the
  remaining provisions hereof shall remain in full force and effect and shall
  not be affected by the illegal, invalid or unenforceable provision or by its
  severance from this Agreement; provided, however,
  that if such illegal, invalid or unenforceable provision may be made legal,
  valid and enforceable by limitation thereof, then the provision shall be
  revised and reformed to make it legal, valid and enforceable to the maximum
  extent permitted by law.

  
	
   

  	
   

  	
   

  
	
  20.  Entire Agreement:

  	
   

  	
  This Agreement, together with the Transition
  Agreement, constitutes the entire agreement of the parties with respect to
  the subject matter hereof and supersedes all prior and contemporaneous oral
  or written agreements and understandings with respect to the subject matter
  hereof.

  

 

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  21.  Dispute Resolution;
  Venue:

  	
   

  	
  Any dispute among the parties arising out of or
  relating to this Agreement shall be solely and exclusively resolved by
  confidential, binding arbitration before the Honorable Nicholas Politan.  The arbitrator shall have the right to
  award, or include in any award, injunctive relief.  Any arbitrator’s award shall be final and
  binding on the parties thereto, and judgment thereon may be entered in any
  court of competent jurisdiction.  The
  arbitrator may, in the arbitrator’s sole discretion, award attorneys’ fees to
  the prevailing Party in any dispute. 
  In the event of the arbitrator’s death, disability or extended
  absence, the parties to such dispute will mutually agree to name a
  replacement arbitrator.

  

  The binding arbitration provision above shall be the sole and exclusive
  manner in which any disputes among the parties arising out of or relating to
  this Agreement shall be resolved; provided, however, that any party may
  institute formal proceedings in a bankruptcy court of competent jurisdiction at
  any time to preserve a superior position with respect to creditors.

  

  Notwithstanding the foregoing, the parties agree that any dispute concerning
  a breach of Sections 1 or 2 of this Agreement, to the extent concerning a
  failure of one or more of the Insurers to fund the Settlement Payment, shall
  be solely and exclusively resolved by the same alternative dispute resolution
  (“ADR”) process applicable to the resolution of such dispute between BE and
  the Insurers as provided in BE’s applicable professional insurance policies a
  true and correct copy of which has been provided to HT by BE.  BE agrees that it will select arbitration
  (rather than mediation) as the applicable ADR process to resolve such dispute
  under such policies.  The parties
  acknowledge that such ADR process may be commenced in New York, New York;
  Atlanta, Georgia; Chicago, Illinois; Denver, Colorado; or Virginia.

  
	
   

  	
   

  	
   

  
	
  22.
  Governing Law:

  	
   

  	
  This Agreement shall be governed by and construed in
  accordance with the laws of the State of Hawaii without giving effect to
  principles of conflicts of law.

  
	
   

  	
   

  	
   

  
	
  23.  Counterparts:

  	
   

  	
  This Agreement may be executed in one or more
  counterparts, each of which shall be deemed an original, but all of which
  together shall constitute one and the same instrument.

  

 

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  24.  Notices:

  	
   

  	
  All notices required or permitted by this Agreement
  will be in writing with a copy sent by email and will be deemed duly given
  (a) when delivered by hand, (b) on the designated day of delivery after being
  timely given to an express overnight courier with a reliable system for
  tracking delivery, (c) when sent by confirmed facsimile with a copy sent by
  another means (other than email) specified in this Section or (d) five
  (5) Business Days after the day of mailing, when mailed by United States
  mail, registered or certified mail, return receipt requested and postage
  prepaid, and addressed as follows:

  

 

	
  

  	
   

  	
  In the case of HT:

  

  David Torline

  Senior VP and Chief Information Officer

  Hawaiian Telcom, Inc.

  1177 Bishop Street

  Honolulu, HI 96813

  Fax: +1 (808) 546-8956

  Email: David.Torline@hawaiiantel.com

  

  With a copy to:

  

  Alan Oshima

  General Counsel

  Hawaiian Telcom Communications, Inc.

  1177 Bishop Street

  Honolulu, HI 96813

  Fax: +1 (808) 546-8956

  Email: Alan.Oshima@hawaiiantel.com

  

  In the case of BE:

  

  Paul Ciandrini

  Executive Vice President

  BearingPoint, Inc.

  500 E. Middlefield Rd.

  Mountain View, CA  94043

  Fax:  +1 (650) 968-1064

  Email: Paul.Ciandrini@bearingpoint.com

  

  With a copy to:

  

  John Eichenberger

  BearingPoint, Inc.

  1676 International Drive

  McLean, VA 22102-4828

  Fax:  +1 (703) 991-2669

  Email: John.Eichenberger@bearingpoint.com

  

 

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  In the case of Carlyle:

  

  Matthew P. Boyer

  Managing Director

  The Carlyle Group

  520 Madison Avenue

  New York, NY 10022

  Fax: +1 (212) 381-4901

  Email: Matthew.Boyer@carlyle.com

  

  With a copy to:

  

  Jeffrey W. Ferguson

  Managing Director and General Counsel

  The Carlyle Group

  1001 Pennsylvania Avenue, N.W.

  Washington, DC 20004-2505

  Fax: +1 (202) 347-1818

  Email: Jeffrey.Ferguson@carlyle.com

  

 

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IN WITNESS WHEREOF, the parties hereto have caused
their duly authorized representatives to execute and deliver this Agreement to
be binding and effective as of the Effective Date.

	
  Hawaiian Telecom Communications, Inc.

  	 

	
   

  	 

	
   

  	 

	
  By:

  	
  /s/ Michael S. Ruley

  	
   

  	 

	
   

  	
  Name:

  	
  Michael S. Ruley

  	
   

  	 

	
   

  	
  Title:

  	
  Chief Executive Officer

  	
   

  
	
   

  	 

	
   

  	 

	
  TC Group III, L.P. (as
  to Sections 12, 13, 15 and 17 through 24 only)

  	 

	
   

  	 

	
  By:

  	
  TC Group III,
  L.L.C., its General Partner

  	 

	
   

  	
  By:

  	
  TC Group,
  L.L.C., its Managing Member

  	 

	
   

  	
  By:

  	
  TCG Holdings,
  L.L.C., its Managing Member

  	 

	
   

  	 

	
   

  	 

	
   

  	
  By:

  	
  /s/ Matthew P. Boyer

  	
   

  	 

	
   

  	
   

  	
  Name:

  	
  Matthew P. Boyer

  	
   

  	 

	
   

  	
   

  	
  Title:

  	
  Managing Director

  	
   

  	 

	
   

  	 

	
   

  	 

	
  BearingPoint, Inc.

  	 

	
   

  	 

	
   

  	 

	
  By:

  	
  /s/ Harry L. You

  	
   

  	 

	
   

  	
  Name:

  	
  Harry L. You

  	
   

  	 

	
   

  	
  Title:

  	
  Chief Executive Officer

  	
   

  
																

 

 13Exhibit 10.2

TRANSITION AGREEMENT

THIS TRANSITION AGREEMENT (this “Transition
Agreement”) is made and entered into effective as of February 6, 2007 (the “Effective
Date”) by and between Hawaiian Telcom Communications, Inc, a Delaware
corporation (“HT”), and BearingPoint, Inc., a Delaware corporation (“BE”).  HT and BE are collectively referred to herein
as the “Parties.”

RECITALS

WHEREAS,
effective as of the Effective Date, HT and BE have executed and delivered a
Settlement Agreement (the “Settlement Agreement”) providing, among other
things, for the resolution of certain disputes between the Parties, including
those under and in connection with the Master Services Agreement, effective as
of August 2, 2004 (together with any amendments thereto or change requests
executed thereunder, the “MSA”), between HT and BE;

WHEREAS,
as part of the Settlement Agreement, HT and BE desire to document their
agreement for the provision by BE of certain transition assistance services
(the “Transition Services”) during the disengagement and transition of
the services provided under the MSA to HT’s successor service provider (the “Transition”);

WHEREAS,
certain capitalized terms used in this Transition Agreement shall have the
respective meanings set forth in Article X and other capitalized terms
are defined in the context in which they are used in this Transition Agreement;
and

WHEREAS,
any capitalized terms used in this Transition Agreement that are not otherwise
defined in this Transition Agreement shall have the respective meanings (1) set
forth in the Settlement Agreement, or (2) to the extent not defined in the
Settlement Agreement, set forth in the MSA.

NOW,
THEREFORE, in consideration of the premises, the terms and
conditions set forth herein and of the mutual covenants of the parties
hereinafter expressed, the Parties hereby agree as follows:

ARTICLE I.

TERM

1.1.                              Initial
Term.  The initial term of this
Transition Agreement will commence on the Effective Date and end at midnight on
May 2, 2007 (the “Initial Term”).

1.2.                              Renewal
Term.  HT may renew this Transition
Agreement to provide for continuing support personnel for one additional period
of up to 60 additional days (a “Renewal Term” and, together with the
Initial Term, the “Term”).  No
less than 21 days before the scheduled expiration of the Initial Term, HT will
notify BE in writing if HT desires to renew this Transition Agreement as to
part or all of the Transition Services. 
If HT gives such notice of renewal of this Transition Agreement, the
term of this Transition Agreement

will renew as to the
Transition Services and the BE personnel identified in the Personnel Plan (as
defined below), all as specified in the renewal notice for the time period
specified in the renewal notice.  This
Transition Agreement may not be renewed for any additional periods after the
first Renewal Term.

ARTICLE II.

TRANSITION SERVICES

2.1.                              Transition
Services.  Subject to Section 2.2,
BE shall provide certain Transition Services for HT or its designated successor
service provider (the “Successor Provider”) consisting of the following:

(a)                                  those functions listed in the IM Services
SOW, ADM Services SOW and Cross Functional SOW set forth as Attachments 1,
2 and 3 hereto (collectively, the “Operate Services”);

(b)                                 those activities listed on the Knowledge
Transfer Plans attached as Attachment 4 (collectively, the “Knowledge
Transfer Services”); and

(c)                                  those activities listed on the Remediation
Priority List attached as Attachment 5 (collectively, the “Remediation
Services”).

In no event will BE provide any Build Services during the Term (other
than any task expressly set forth in the Remediation Priority List as a
Remediation Service).

2.2.                              Nature
of Obligation to Provide Transition Services.

(a)                                  BE will provide the Operate Services in
accordance with the terms of this Transition Agreement.

(b)                                 BE will provide the Knowledge Transfer
Services in accordance with the terms of this Transition Agreement.

(c)                                  BE will provide the Remediation Services only
on a “level of effort” basis, such that to the extent that adequate numbers of
BE personnel included in the Personnel Plan are available after providing
Operate Services and Knowledge Transfer Services on a priority basis, BE will
provide the Remediation Services in the order of their priority reflected on the
Remediation Priority List. 
Notwithstanding anything to the contrary in this Transition Agreement,
BE will undertake only those Remediation activities that BE can reasonably
complete using the level of support contemplated by the Personnel Plan after providing
Operate Services and Knowledge Transfer Services.  The Parties acknowledge that BE may not
complete all the items on the Remediation Priority List.  BE will provide all such Remediation Services
in accordance with the terms of this Transition Agreement.

(d)                                 BE will provide Transition Services to HT
keeping work hours that are consistent with general industry standards or as
otherwise provided in this paragraph

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(d) with respect to BE personnel with a principal work location in
Denver.  BE personnel with a principal
work location in Denver and a home city outside the Denver area (the “Traveling
Resources”) will generally work in accordance with the following schedule,
subject to normal and customary fluctuations and contingencies.  Traveling Resources will travel to Denver on
an early flight on Monday morning, targeted to arrive in BE’s Denver office
prior to 12:00 noon, Mountain Time. 
Traveling Resources will depart BE’s Denver office no earlier than 4:00
p.m., Mountain Time on Thursdays. 
Traveling Resources will work until 5:00 p.m. Mountain Time on Mondays,
from 8:30 a.m. until 6:00 p.m. Mountain Time on Tuesdays and Wednesdays, and
will work from their home city locations on Fridays from 8:30 until 6:00 p.m.
Local Time.  BE personnel living in the
Denver area will work professional workdays, Monday to Friday, in BE’s Denver
office.  The foregoing will be
appropriately adjusted if any week during the Term is not composed of five
business days.

(e)                                  On each Wave Transition Date, HT (directly,
through one or more Successor Providers or through some combination of the
foregoing), will assume plenary responsibility for the software and platforms
to be transitioned from BE on such Wave Transition Date.  BE’s obligation to provide Transition
Services (including Remediation Services) relating to the software and
platforms constituting each Service Wave shall cease on the applicable Wave
Transition Date.  On and after each Wave
Transition Date, BE’s sole obligation for the Transition Services to be
performed in respect of the software and platforms transitioned in the
applicable Service Wave shall be to provide personnel resources in accordance
with Section 3.1(b), if any, at the direction of HT or the Successor
Provider.  Notwithstanding the foregoing,
the Parties agree that prior to the occurrence of any Wave Transition Date, the
applicable Knowledge Transfer Services to be performed prior to the transition
of such Service Wave shall have been completed unless HT elects to transition
such Service Wave prior to the completion thereof.  If HT elects to transition any Service Wave
prior to the completion of the associated Knowledge Transfer Services, BE will
cooperate with HT or the Successor Provider to complete such Knowledge Transfer
Services during the Term of this Transition Agreement.

(f)                                    In order to better coordinate the transition
activities before HT assumes responsibility for each Service Wave, as
contemplated in paragraph (e) above, the Parties agree that prior to
introducing any change or modification in software utilized in HT’s production
environment and constituting part of such Service Wave, each of BE and HT will
give their respective written approval of such change or modification.

2.3.                              Reprioritization;
Other Tasks.

(a)                                  HT (or the Successor Provider) will establish
priorities for BE personnel and may reprioritize the activities to be performed
by such personnel to the extent such work activities can be performed with the
same level of support contemplated by the Personnel Plan and provided that any
such activities constitute Transition Services. 
Without BE’s prior written consent, no such reprioritization may

 3
 

require BE to incur additional costs or to devote additional or
different resources to provide the Transition Services.

(b)                                 Unless otherwise agreed in writing by the
Parties, BE shall have no obligation to perform any services, tasks or
functions not constituting Transition Services or set forth in this Transition
Agreement, even if directed to do so by HT or the Successor Provider.

2.4.                              Contract
Executives.  Each of HT and BE will
designate and maintain one or two individual(s) to serve as a principal point
of contact for the other Party and to whom the other Party may address contract
and operational communications regarding this Transition Agreement (each, a “Contract
Executive”).  The initial Contract
Executive for HT is David Torline and the initial Contract Executives for BE
are Tom McKelvey and Paul Ciandrini (it being understood that HT may direct
communications to either and rely on the determinations of either with respect
to matters that are to be handled by the Contract Executive).

2.5.                              Third-Party
Agreements.  BE will provide to HT
complete copies of those third-party agreements to be assigned pursuant to the
MSA to HT or the Successor Provider.  To
the extent HT elects to assume or have the Successor Provider assume such
agreements,  BE will have the financial
and administrative responsibility to assign such Third-Party Agreements to HT
or the Successor provider as designated by HT, but BE shall not be obligated to
(and without HT’s consent, will not) renegotiate any terms of such agreements.

2.6.                              Account
Documentation.

(a)                                  As part of the Transition Assistance, BE has
provided, or will provide, to HT or the Successor Provider the items identified
in Attachment 6 hereto (the “Account Documentation”).

(b)                                 The Account Documentation will be provided to
HT in the state they presently exist and on an “AS IS, WHERE IS’ basis.  BE makes no representations or warranties,
express or otherwise, with respect to the Account Documentation, including with
respect to the condition, state of repair, quality, fitness for particular
purpose, or merchantability of such items. 
BE will provide to HT all Account Documentation in existence as of the
Effective Date and will cooperate with HT and the Successor Provider as part of
the Knowledge Transfer Services to provide information and other documentation
in its possession, if any, to assist the Successor Provider in its completion
of the Account Documentation in accordance with the Transition Plan.

(c)                                  Set forth on Attachment 6A are the
items of documentation that the Parties have agreed BE will complete during the
Transition.  BE acknowledges that nothing
in this Section 2.6 shall be construed to limit BE’s obligations as set
forth in Section 2.1 of this Transition Agreement.

2.7.                              Transition Plan.  HT
agrees that it will and will require the Successor Provider to:

 4
 

(i)                                     perform tasks and services on a timely basis
in accordance with the Transition Plan set forth hereto as Attachment 7
with the goal to reasonably complete the Transition Services in each of the
Wave Transitions on or before the applicable Wave Transition Dates set forth
therein; and

(ii)                                  use adequate numbers of qualified individuals
with suitable training, education, experience and skill to perform the
Knowledge Transfer Services and to complete the Transition.

BE will provide
the Transition Services with the same goal as expressed in clause (i) above.

2.8.                              Record Retention; Audit Rights 

(a)                                  Audit Rights.

(i)                                     Subject to Section 2.8(a)(v), BE will
provide HT, and any HT auditors (including internal audit staff and external
auditors), inspectors, regulators or other representatives as HT may from time
to time designate in writing (collectively, “Auditors”), with access,
subject to the conditions specified in Section 2.8(a)(v) to any of the
following for the purpose of performing audits (“Audits”):  (i) any facility or part of a facility,
including data centers, at which any Transition Services are provided; (ii)
Supplier Personnel; or (iii) data and records relating to the Services and the
Transition Services (which after the Term shall consist of data and records to
be retained by BE pursuant to Section 2.8(b) below).

(ii)                                  HT will have the right to conduct such Audits
during the Term of this Transition Agreement and for the period BE is required
to maintain records pursuant to Section 2.8(b) below; provided, however, that
HT will not conduct any Audit (other than an audit undertaken by Regulators as
provided for herein) more frequently than one time per calendar year. Audits
may be undertaken by Regulators as and when determined by such Regulators.

(iii)                               Audits may be conducted for the purpose of confirming:

a.                                       the accuracy of charges and invoices under
this Transition Agreement;

b.                                      exemptions, deductions, credits or incentives
related to Taxes relating to the Transition Services;

c.                                       BE’s compliance in its relevant operations
with the requirements of this Transition Agreement, including with respect to security,
privacy, contractual obligations (including compliance with Law and Hawaiian
Telcom Policies) and other such matters; or

d.                                      Audits and such other matters as are required
by any of HT’s regulators or other government entities having jurisdiction over

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any of the Transition Services or over HT (collectively, the “Regulators”).

(iv)                              BE will provide the Regulators with access to Supplier Personnel,
Supplier Equipment, Supplier Software, Supplier Facilities, and data and
records relating to the Services and the Transition Services, for the purpose
of performing the Audits.

(v)                                 Unless otherwise required pursuant to Section
2.8(a)(iv):

a.                                       BE will be provided a minimum of three
Business Days’ notice of Audits to be performed pursuant to this Section
2.8(a);

b.                                      Audits will be conducted during business
hours (except with respect to Transition Services that are performed during
off-hours) and in such a fashion so as not to unreasonably interfere with BE’s
ability to perform the Transition Services or any activities for other BE
customers;

c.                                       Auditors must comply with all applicable
reasonable BE security and confidentiality requirements including, where
appropriate, execution of a confidentiality agreement in the form formerly
attached as of Exhibit M (Form of Confidentiality Agreement) to the MSA or a
non-disclosure agreement supplied by the Auditor that is reasonably acceptable
to BE.  Subject to the foregoing, HT’s
Auditors will be provided access to shared systems or shared BE facilities used
in the performance of the Transition Services, provided that nothing in this Section
2.8(a)(v)(c) will be construed to give Auditors access to any data of any
customer of BE other than HT;

d.                                      Auditors will not have access to BE’s
underlying costs except for timesheets and similar substantiating data relating
to charges for Transition Services which are charged on a Time and Materials
Basis; and

e.                                       Auditors will comply with reasonable facility
use regulations applicable to the Supplier Facilities accessed during the
course of Audits.

(vi)                              All Audit rights of HT set forth in this Section 2.8 will apply
to any subcontractor (including any Affiliate of BE that is then providing
Transition Services).

No Auditors selected by
HT to perform any Audits in connection with this Transition Agreement may be
compensated on a contingency basis.

(b)                                 Records Retention. 
Until the three-year anniversary of the expiration or termination of
this Transition Agreement, BE will maintain and, subject to the next

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sentences, provide access to, upon request, all records, data,
documents and reports maintained in the ordinary course by HT’s program
management office for the HT engagement (the “PMO”).  Notwithstanding the foregoing, BE shall not
be obligated to provide to HT, any Auditor or any Regulator with access to, any
of the following: (i) any document or information that is protected under the
attorney — client privilege, (ii) any information relating to BE’s costs, (iii)
any information relating to BE’s relationship with any other customer, and (iv)
any information which BE is prohibited, by contract or law, from providing to
any such entities.  In addition, BE shall
not be required to save or provide to HT or to any Auditor or any Regulator any
document that has been previously provided to HT or the Successor Provider
during the Transition or otherwise.

(c)                                  Costs.  During the Initial Term, any
support, assistance and documents to be provided under this Section 2.8
shall be provided at no cost.  During any
Renewal Term, such support shall be provided by BE at the rates set forth in Attachment
10 hereto, together with reimbursement of BE’s reasonable, actual
out-of-pocket costs and expenses incurred in connection with the provision of
such support, assistance and documents. 
After the expiration or termination of this Transition Agreement, such
support shall be provided at BE’s standard commercial rates, together with
reimbursement of BE’s reasonable, actual out-of-pocket costs and expenses
incurred in connection with the provision of such support, assistance and
documents.

2.9.                              Confidentiality.  Sections 15.2 and 15.3 of the
MSA shall be deemed to be incorporated herein by reference (mutatis mutandis) and shall be deemed to apply both (i) with
respect to the Parties’ performance of their respective obligations under this
Transition Agreement from and after the Effective Date and (ii) with respect to
the information obtained by each Party during the term of the MSA.

2.10.                        Disabling Code.  As
of the date hereof, BE represents and warrants to HT that, BE did not, during
the term of the MSA, maliciously insert into the Software any code whose
intended purpose was to disable or otherwise shut down all or any portion of
the Services.

2.11.                        Cooperation
with Regulatory Investigations.  BE
will reasonably cooperate with HT until May 30, 2007 (the scheduled expiration
of the initial discovery period as proposed by the parties to the Hawaii Public
Utilities Commission (the “HPUC”) in Docket No. 2006-0400, “In the
Matter of the Public Utilities Commission Instituting a Proceeding Regarding
Hawaiian Telcom, Inc.’s Service Quality and Performance Levels and Standards of
Performance in Relation To Its Retail and Wholesale Customers”) by (a)
responding to requests for information and documentation filed by other parties
and the HPUC and (b) assisting HT in its development of factual responses to
such information requests, as reasonably required by HT in order to respond in
an accurate and timely manner. BE’s cooperation with HT shall be at no cost
during the Initial Term.  Thereafter, BE
shall provide such cooperation at the rates set forth in Attachment 10
hereto, together with reimbursement of BE’s reasonable, actual out-of-pocket
costs and expenses incurred in connection therewith.  For the avoidance of doubt, the Parties agree
that BE’s cooperation with HT pursuant to this Section 2.11 shall not
require BE personnel to travel (including to Hawaii) or to present

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testimony or to attend
any hearing, deposition or meeting of the HPUC. 
This Section 2.11 does not affect in any way BE’s individual
obligations to respond to any subpoenae or other lawful requests made by the
HPUC directly to BE in conducting its investigation and review in this Docket.

2.12.                        Insurance and Risk of Loss.

(a)                                  BE will, during the Term of this Transition
Agreement, maintain in full force and effect at least the following insurance
coverages, on behalf of itself and its Affiliates:

(i)                                     Workers’ Compensation and Employers’
Liability, including coverage for occupational injury, illness and disease, and
other similar social insurance in accordance with Law (including the Law of any
location in which any BE employee provides Transition Services to the extent
such location exercise jurisdiction over the BE employee) with Workers’
Compensation coverage as required by Law and, with respect to Employers’
Liability coverage, minimum limits per BEemployee
and per event (after self-insuring the first $500,000) of one million dollars
($1,000,000) and a minimum aggregate limit of ten million dollars ($10,000,000)
or the minimum limits required by Law, whichever are greater.

(ii)                                  Commercial General Liability Insurance,
including Products and Completed Operations, Premise and Operational liability,
Personal and Advertising Injury, Contractual Liability and Broad Form Property
Damage Liability coverages, on an occurrence basis, with a minimum combined
single limit per occurrence of five million dollars ($5,000,000) and a minimum
annual aggregate limit of five million dollars ($5,000,000). This coverage will
be endorsed to name HT as additional insured.

(iii)                               Property Insurance, including Extra Expense and Business Income
coverage, for “All Risks” of physical loss of or damage to, including caused by
terrorism, of BE’s business property and equipment used in connection with the
Transition Services. Such insurance will have a minimum limit adequate to cover
risks on a replacement costs basis and time element insurance on an actual loss
sustained basis.

(iv)                              Automotive Liability Insurance covering use of all owned, non-owned and
hired automobiles for bodily injury, property damage, uninsured motorist and
underinsured motorist liability with a minimum combined single limit per
accident of two million dollars ($2,000,000)or the minimum
limit required by applicable law, whichever limit is greater. This coverage
will be endorsed to name HT as additional insured

(v)                                 Crime Insurance with a minimum combined
single limit per occurrence of five million dollars ($5,000,000).

 8
 

The
limits specified above may be satisfied by BE using a single policy or a
combination of primary and umbrella and/or excess policies.

(b)                                 The insurance coverages under Sections 2.12(a)(i)
through 2.12(a)(v) will be primary, as it relates to any BE performance
on HT premises where BE is not in control of the premises), and all coverage
will be non-contributing with respect to any other insurance or self insurance
which may be maintained by HT. All coverage required by Section 2.12(a)
will include a waiver of subrogation and, with respect to the coverages under Sections
2.12(a)(ii) and 2.12(a)(iv), will be endorsed for cross-liability
coverage. To the extent any coverage is written on a claims-made basis, it will
have a retroactive date prior to the Effective Date and will allow for
reporting of claims for at least one year after the Term.

(c)                                  BE will cause its insurers to issue
certificates of insurance or other similar forms evidencing that the coverages
and policy endorsements required under this Transition Agreement are maintained
in force within 30 days after the Effective Date and thereafter on an annual
basis (unless BE has previously done so during the term of the MSA). The
insurers selected by BE will have (unless HT, acting reasonably, agrees
otherwise) an A.M. Best rating of A-VII or better, or, if such ratings are no
longer available, with a comparable rating from a recognized insurance rating
agency; provided, however, that BE uses a single-owner, captive insurance
company to re-insure its property. In the United States of America, the captive
issues the certificate and is not A.M. Best rated.  BE will assure that its subcontractors, if
any, maintain insurance coverages as specified in this Section 2.12
naming BE as an additional insured or loss payee where relevant.

(d)                                 In the case of loss or damage or other event
that requires notice or other action under the terms of any insurance coverage
specified in this Section 2.12, BE will be solely responsible to
take such action. BE will provide HT with contemporaneous notice and with such
other information as HT may reasonably request regarding the event.

(e)                                  BE will promptly inform HT during the Term
each time a minimum limit in one or more of the coverages in Section
2.12(a)(i) through 2.12(a)(iv) is reduced.

(f)                                    None of BE’s obligations specified in this Section 2.12
as to types, limits and approval of insurance coverage to be maintained by BE
are intended to, and will not in any manner, limit or expand the liabilities
and obligations assumed by BE under this Transition Agreement.

2.13.                        Assistance with Source Code and IP Ownership
Matters.

(a)                                  To the extent BE has not provided certain
information required to be provided by it to HT pursuant to Section 11.2.5
of the MSA, BE shall provide such information through the 18-month anniversary
of the Final Wave Transition Date to

 9
 

the extent it exists and is in BE’s possession or control within a
reasonable period of time in response to reasonably specific requests from HT
to provide such information.

(b)                                 To the extent BE has not provided certain
source code required to be provided by it to HT pursuant to Section 11.2.6
of the MSA, BE shall provide such source code through the 18-month anniversary
of the Final Wave Transition Date to the extent it exists and is in BE’s
possession or control within a reasonable period of time in response to
reasonably specific requests from HT to provide such information.

(c)                                  Nothing in Sections 2.13(a) or (b)
above shall be construed to limit BE’s obligations to provide such information
as elsewhere required by this Transition Agreement.

ARTICLE III.

PERSONNEL MATTERS

3.1.                              Personnel.

(a)                                  Attached hereto as Attachment 8, is a
plan (the “Personnel Plan”) reflecting the planned deployment of a
specified number of BE personnel and contractors, categorized by relevant area
of expertise, for a scheduled period of time. 
Subject to Section 3.1(c), BE may withdraw or re-assign each of the BE
personnel and contractors set forth on the Personnel Plan, only after the
applicable duration commitment set forth in the Personnel Plan (or such later
date as may become applicable as a result of any Holdover Period).

(b)                                 No less than 14 days before the scheduled
redeployment of personnel off the HT account, as such scheduled redeployment
dates are set forth in the Personnel Plan (as such date may be extended in
connection with any extension of a related Wave Transition Date as permitted in
the definition of Wave Transition Date), HT may notify BE in writing if HT
desires for BE to retain such personnel on the HT account for an additional
period (for so long as each such retention continues, a “Holdover Period”)
as specified in such notice.  No Holdover
Period may extend beyond the expiration of the then-existing Initial Term or if
applicable, Renewal Term.  If HT issues
one or more Holdover Notices during the Initial Term or upon any Renewal Term,
the notice for the Renewal Term may extend the Holdover Period on an
employee-by-employee basis. Upon receipt of any such request with respect to
individuals who are BE employees, BE shall not redeploy such personnel to a
different account until the earlier of (i) the expiration of the Holdover
Period so requested by HT, or (ii) the expiration of the then-existing Initial
Term, or if applicable, Renewal Term.

(c)                                  With respect to individuals identified in the
Personnel Plan, BE will initially staff the Personnel Plan with the personnel
identified therein.  Without HT’s prior
written consent, BE will not withdraw or re-assign any of such personnel during
the Term before their respective planned redeployment dates as reflected in the
Personnel Plan (or such later date as may become applicable as a result of any

 10
 

Holdover Period).  The previous
sentence will not apply where any such personnel (1) voluntarily resigns from
BE, (2) is dismissed by BE for misconduct, (3) fails to perform his or her
assigned duties and responsibilities, (4) dies or is unable to work due to
disability, or (5) is placed on an approved leave of absence for documented
health or extenuating circumstances that require the employee to devote his or
her time to other unanticipated personal or family matters that are outside of
the reasonable control of the individual involved.  In any such event, BE will have no
responsibility therefor other than to use commercially reasonable efforts to
expeditiously identify and deploy replacement personnel having similar or
better qualifications than the departing personnel.  The foregoing sentence shall not affect BE’s
continuing obligation to perform the Transition Services in accordance with
this Transition Agreement.  If any
personnel that depart the project are rehired by BE prior to the expiration of
the Initial Term or, if applicable, the Renewal Term, BE shall promptly inform
HT (to the extent either BE Contract Executive becomes aware of such rehiring)
and, upon HT’s request (without regard to how HT learns of such rehiring),
return such personnel to the project.

3.2.                              Employee
Solicitation.  HT (or the Successor
Provider) will have the right to extend offers of employment to any or all of
BE personnel identified in Attachment 9 hereto subject to the terms set
forth in Attachment 9.

3.3.                              Incentive
Program.  The Parties will cooperate
to encourage retention and performance of BE personnel on the HT account during
the Transition.  As part of these
efforts, each Party will:

(a)                                  Cooperate to implement the Transition Bonus
plan described in Attachment 9.

(b)                                 Designate an executive sponsor to oversee
matters related to personnel retention during the Transition and make such
executive sponsor available periodically to discuss personnel and retention
issues.  The initial executive sponsor
for HT is Loren Tobey and the initial executive sponsor for BE is David Frey;

(c)                                  Coordinate communications to BE personnel
regarding Transition and the Transition Bonus, including communications made at
the time the Transition Bonus is announced; and

(d)                                 Participate in periodic meetings with BE
personnel to discuss issues of morale and other matters.

ARTICLE IV. 

PAYMENT

4.1.                              Payment

(a)                                  In consideration for the mutual covenants set
forth in the Settlement Agreement and this Transition Agreement, BE will
provide the Transition Services, as specified herein, at no charge during the
Initial Term.

(b)                                 After the expiration of the Initial Term,
except to the extent set forth in Section 4.1(c) any Transition Services will
be provided at the applicable rates set forth

 11
 

in Attachment 10 hereto, together with reimbursement of BE’s
reasonable, actual out-of-pocket costs and expenses incurred in connection
therewith.

(c)                                  If, as contemplated under Section 3.1
above, HT requests BE to retain any BE personnel for a Holdover Period, HT
shall compensate BE therefor at the applicable rates set forth in Attachment
10 hereto, together with reimbursement of BE’s reasonable, actual
out-of-pocket costs and expenses incurred in connection therewith; provided, however, to the
extent and only to the extent that a Holdover Period is necessary as a result
of BE’s failure to perform the Knowledge Transfer Services required to be
performed by BE prior to such Wave Transition Date, then the Knowledge Transfer
Services as well as any other Operate Services that were contemplated to be
continued until the Wave Transition supported by the applicable Knowledge
Transfer Services was completed shall be performed by such BE personnel and/or
subcontractors (as applicable) during such Holdover Period at no charge to HT
and with no reimbursement of out-of-pocket expenses.

(d)                                 BE will seek HT’s prior approval for any
individual item of reimbursable expense over $750; provided,
however, that any reimbursement for
travel to Hawaii will require the prior consent of HT.

4.2.                              Timing
of Payment.  Prior to the
commencement of each month of any Renewal Term or Holdover Period, HT shall pay
one-half of the amount of the charges for such month (or such shorter period if
less than one full month) of any such Renewal Term or Holdover Period estimated
by BE (the “Prepaid Amount”). 
Notwithstanding anything to the contrary in this Transition Agreement,
BE shall have no obligation to provide any Transition Services during the
Renewal Term or retain any BE personnel during any Holdover Period, if HT has
not paid the Prepaid Amount prior to any such Renewal Term or Holdover
Period.  Thereafter, HT shall pay all
amounts due to BE under this Transition Agreement on a monthly basis, 50% in
arrears and 50% in advance.  BE will
invoice HT for the most recent preceding month no later than five days after
the end of such month.  BE shall show as
a credit on the invoice the applicable pro rata portion of the Prepaid Amount
for such period.  HT shall pay each
invoice within 15 days of receipt.

4.3.                              No Other Charges.  BE
will not invoice HT, and HT will not be required to pay (even if invoiced), any
amounts except as permitted in this Transition Agreement or as otherwise agreed
in writing by the Parties.

4.4.                              Invoices.  Any invoice submitted by BE
pursuant to this Transition Agreement shall include with respect to the
following billing categories (to the extent being charged in the invoice) the
following information:

(a)                                  With respect to personnel charges: For each
individual, the name, applicable billing category from Attachment 10, the
number of hours worked and the total charge for that person.

(b)                                 With respect to any taxes: The taxing
authority paid or to be paid, the nature of the tax, the payment date and the
amount.

 12
 

(c)                                  With respect to reimbursable expenses: The
person incurring the expense, the category (e.g., lodging), the date of the
expense and the amount.

ARTICLE V.

THE MSA

5.1.                              Suspension
of MSA.  In recognition of the
transactions contemplated by the Settlement Agreement and the Parties’
respective obligations under this Transition Agreement, from and after the
Effective Date and until the earlier of the Closing Date of the Settlement
Agreement or the date of termination of the Settlement Agreement in accordance
with Section 16 of the Settlement Agreement, the MSA shall be deemed suspended
and, except as otherwise provided in the Settlement Agreement, the Parties
shall not be obligated to perform their respective obligations thereunder.  As provided in the Settlement Agreement, the
MSA shall be terminated as of the Closing Date of the Settlement
Agreement.  If the Settlement Agreement
is terminated in accordance with the terms thereof, (i) the MSA shall be deemed
reinstated in accordance with Section 16 (Termination) of the Settlement
Agreement and (ii) this Transition Agreement shall be deemed terminated in
accordance with Section 9.1.

5.2.                              Incorporation
of Certain MSA Provisions.  The
following provisions of the MSA shall be deemed to be incorporated herein by
reference (mutatis mutandis) and shall be deemed to
apply solely with respect to the Parties’ performance of their respective
obligations under this Transition Agreement (including BE’s performance of the
Transition Services hereunder) from and after the Effective Date (with the
references in such incorporated provisions to “Services” and “this Agreement”
to be deemed to refer respectively to the Transition Services and this
Transition Agreement):

(a)                                  Section 5.5.3 (Subcontracts);

(b)                                 Section 7.6 (Taxes);

(c)                                  Section 9 (Supplier Resources);

(d)                                 Section 10.1.4 (Disclaimer);

(e)                                  Section 11 (Developments);

(f)                                    Sections 15.1.1 and 15.1.2 (HT Information);

(g)                                 Section 15.4 (Residual Knowledge);

(h)                                 Sections 16.1, 16.2.1, 16.3, 16.5, 16.7, 16.8
and 16.9 (Representations and Warranties);

(i)                                     Section 18.7 (Indemnification Procedures);

(j)                                     Section 18.8 (Subrogation);

 13
 

(k)                                  Section 19.4 (Force Majeure);

(l)                                     Exhibit A (Definitions), but only to the
extent a definition therein is used in any other provision incorporated by
reference herein or in this Transition Agreement; provided, however, that in
the case of any term defined herein that is also defined in Exhibit A, such
term shall be deemed to have the meaning given herein; and

(m)                               Exhibit Y (BE Technical Elements as of the Execution Date).

For the avoidance of
doubt, the incorporation by reference of the foregoing provisions of the MSA is
intended to solely apply to BE’s performance of the Transition Services and the
Parties’ other respective obligations to be performed under this Transition
Agreement from and after the Effective Date and shall not diminish the scope of
the terms of the releases set forth in the Settlement Agreement.

5.3.                              Certain
Representations.  Each Party
represents and warrants to the other that:

(a)                                  it has the requisite corporate power and
authority to enter into this Transition Agreement and to fulfill all of its
obligations under this Transition Agreement, including, in the case of BE,
performing the Transition Services;

(b)                                 the execution, delivery and performance of
this Transition Agreement does not violate any judgment, order or decree
applicable to such Party; and the execution, delivery and performance of this
Transition Agreement does not constitute a material default under any material
contract by which such Party or its Affiliates or any of its material assets
are bound, or an event of default that would, with notice or lapse of time or
both, constitute such a default; and

(c)                                  to the knowledge of such Party, there is no
claim, litigation, proceeding, arbitration, investigation or material
controversy pending, threatened or contemplated, which would have a material
adverse effect on such Party’s ability to enter into this Transition Agreement
and perform its obligations hereunder.

5.4.                              Additional Undertakings. 
Certain additional undertakings of the Parties are set forth in
Attachment 11.

ARTICLE VI.

INDEMNITIES

6.1.                              Indemnity
by BE.  BE agrees to indemnify,
defend and hold harmless HT and its Affiliates including their officers,
directors, employees, agents, successors, and assigns, from Third Party claims
(including all associated Losses) arising out of or related to any of the
following:

(a)                                  any failure by BE to perform its obligations
on or after the time of the transfer of responsibility or assignment to BE and
until the time of the transfer back of

 14
 

responsibility or assignment to HT (or the Successor Provider) under
any (i) Managed Third Party Contracts, (ii) contracts assigned to BE from HT or
(iii) any other contracts for which HT has retained legal responsibility but
for which BE has assumed financial, administrative or operational
responsibility;

(b)                                 to the extent not related to any wrongful
acts or omissions committed or alleged to have been committed by HT, any HT
Affiliates, the Successor Provider (except when acting as a subcontractor of
BE) or any Authorized Users, any claim brought by any supplier or subcontractor
of BE arising under or in connection with an agreement between BE and such
supplier or subcontractor;

(c)                                  except to the extent, and only to the extent,
addressed by HT’s indemnification obligations under Section 6.2(b) or 6.2(c)
below, infringement of Intellectual Property Rights enforceable under the Laws
of the United States of America (or any of its constituent political units) or
any other jurisdiction where Transition Services are preformed (i) because of
Software, Systems, Equipment, Developments, other BE Resources or other
resources provided by BE or on behalf of BE by BE’s Affiliates or
subcontractors (excluding the HT Provided Equipment, HT Provided Technical
Elements and other HT Resources but including the Developments), or (ii) based
upon performance of the Transition Services by or on behalf of BE, or use of
the Transition Services by HT as contemplated by this Transition Agreement;
provided that BE will have no obligation under this Section 6.1(c) in
the case of BE Third Party Technical Elements for which (x) BE has obtained the
non-infringement warranty permitted by Section 6.6 hereunder and (y) has
otherwise complied with Section 6.6 (without derogating from BE’s
obligations under Section 6.1(d) under the circumstances set forth in Section
6.1(d));

(d)                                 the failure of the licensor of any BE Third
Party Technical Elements to satisfy those of its defense, indemnification and
hold harmless obligations owed to HT under agreements of the type contemplated
in Section 6.6 that would otherwise be BE’s obligations under this
Transition Agreement if Section 6.6 had not been included in this
Transition Agreement;

(e)                                  any claim arising under or
in connection with any third party contracts that are assigned by BE to HT (or
the Successor Provider) in connection with this Transition Agreement or the MSA
to the extent relating to the period of time prior to such contract’s
assignment to HT (or the Successor Provider); or

(f)                                    any claim by any former employee of BE who
becomes employed by HT or the Successor Provider which arises or is alleged to
arise as a result of any act or omission by BE relating to his or her
employment before the date that such individual becomes an employee of HT or
the Successor Provider, as applicable.

6.2.                              Indemnity
by HT.  HT agrees to indemnify,
defend and hold harmless BE (but not its Approved Subcontractors or other
subcontractors) and its Affiliates (whether or not any such Affiliates are BE
subcontractors)including their respective
officers, directors,

 15

employees, agents,
successors or assigns, from Third Party claims (including all associated
Losses) arising out of or related to any of the following:

(a)                                  any failure by HT (or the Successor Provider)
to perform its obligations under any Managed Third Party Contract before the
time of the transfer of responsibility for such obligations to BE and from the
time of the transfer back of responsibility or assignment to HT (or the
Successor Provider), any failure by HT (or the Successor Provider) to perform
any obligations under any Managed Third Party Contract which obligations are
not specifically transferred to BE, any breach of a Managed Third Party
Contract arising from BE’s actions that are directed by HT (or the Successor
Provider) after BE has notified HT in writing that such actions are likely to
cause BE to breach the Managed Third Party Contract, any failure by HT (or the
Successor Provider) to perform its obligations under any agreements assigned to
BE before the time of such assignment and from the time of the assignment back
to HT (or the Successor Provider), and
any failure by HT (or the Successor Provider) to
perform a responsibility retained by HT under any Managed Third Party Contract
before the time of the transfer of responsibility of such obligations to BE and
after the time of the transfer of responsibility for such obligations to BE;

(b)                                 infringement of Intellectual Property Rights
enforceable under the Laws of the United States of America (or any of its
constituent political units) or any other jurisdiction where Transition
Services are performed because of HT Provided Equipment, HT Provided Technical
Elements or other HT Resources provided by HT or on behalf of HT by HT’s
Affiliates, Authorized
Users or the Successor Provider , or (ii) use of the Transition Services by HT
or the Successor Provider in a manner not contemplated by this Transition
Agreement;

(c)                                  infringement of Intellectual Property Rights
by or in connection with any of the Transferred Verizon Assets or Conveyed
Software, which Intellectual Property Rights are enforceable under the Laws of
the United States of America:

(i)                                     to the extent such infringement is alleged to
have occurred because of BE’s use of the Transferred Verizon Assets or Conveyed
Software to provide the Services or the Transition Services and such Losses do
not arise out of or are in connection with modifications made by BE to the
Transferred Verizon Assets or Conveyed Software; and

(ii)                                  provided that BE has complied with all
conditions imposed by (i) the First Sublicense Agreement for Verizon
Proprietary Software, and (ii) the Second Sublicense Agreement for Verizon
Proprietary Software relating to BE’s use of the Transferred Verizon Assets or
Conveyed Software;

(d)                                 claims by any Managed Third Party to the
extent relating to HT’s or the Successor Provider’s acts or omissions with
respect to such Managed Third Party except to the extent the act or omission is
attributable to a failure by BE to fulfill its obligations under this
Transition Agreement with respect to the Managed Third Party;

 16
 

(e)                                  any claim arising under or
in connection with any third party contracts that are assigned by BE to HT or
any other Successor Providers in connection with this Transition Agreement or
the MSA to the extent relating to the period of time after such contract’s
assignment to HT (or the Successor Provider); or

(f)                                    any claim by any former employee of BE who
becomes employed by HT or the Successor Provider which arises or is alleged to
arise as a result of any act or omission by HT or the Successor Provider
relating to his or her employment after the date that such individual becomes
an employee of HT or the Successor Provider, as applicable.

6.3.                              Additional
Indemnities.  BE and HT each agree to
indemnify, defend and hold harmless the other, and the other’s Affiliates, and
their (but not their Affiliate’s) respective officers, directors, employees,
agents, and successors from Third Party claims (including all associated
Losses) arising out of or related to any of the following:

(a)                                  the death or bodily injury of any person
caused by the Indemnitor, its Affiliates, officers, directors, employees,
agents, successors, and, where BE is the Indemnitor, caused by BE’s
subcontractors and, where HT is the Indemnitor, caused by the Authorized Users or
the Successor Provider, including in both cases the respective officers,
directors, employees, agents, and successors of such subcontractors and of such
Authorized Users;

(b)                                 damage, loss or destruction of any real or
tangible personal property caused by the Indemnitor, its Affiliates, officers,
directors, employees, agents, successors and where BE is the Indemnitor, caused
by BE’s subcontractors and where HT is the Indemnitor, caused by BE’s
Authorized Users or the Successor Provider, including in both cases the
respective officers, directors, employees, agents, and successors of such
subcontractors and of such Authorized Users; provided that the Parties
acknowledge that the reference herein to “real or tangible personal property”
does not include software, data or other intangible items; or

(c)                                  any act or omission of the Indemnitor, its
Affiliates, officers, directors, employees, agents, successors and where BE is
the Indemnitor, of BE’s subcontractors, and where HT is the Indemnitor, of any
Authorized Users or the Successor Provider, including in both cases the
respective officers, directors, employees, agents, and successors of such
subcontractors and of such Authorized Users, in each such case, in its or their
capacity as an employer of a person.

6.4.                              Survival
of Indemnities.  The ability of any
person entitled to receive indemnification under this Article VI shall
survive the expiration or termination of the Term and terminate on the 18-month
anniversary of the Final Wave Transition Date, except for (i) the
indemnifications set forth in Sections 6.1(a), 6.1(b) and 6.1(e)
and Sections 6.2(a), 6.2(d) and 6.2(e) which shall survive
until the expiration of the applicable statute of limitations and (ii) the
indemnifications set forth in Sections 6.1(c) and 6.1(d) and Sections
6.2(b) and 6.2(c) which shall survive indefinitely.  If an Indemnitee makes a valid claim for
indemnification pursuant to this Article VI and in accordance with Section
18.7 (Indemnification Procedures)

 17
 

of the MSA incorporated
herein by reference pursuant to Section 5.2 above prior to the
applicable termination date, then such claim shall not be extinguished by the
passage of any deadline herein.

6.5.                              Infringement.  Without limiting BE’s indemnity set forth in Section
6.1, if any item used by BE to provide the Transition Services becomes, or
in BE’s reasonable opinion is likely to become, the subject of an infringement
or misappropriation claim or proceeding, then BE will promptly notify HT of
such claim or proceeding and, at BE’s expense, take the following actions in
the following priority order: (i) secure the right to continue using the item;
(ii) replace or modify the item to make it non-infringing, provided that any
such replacement or modification will not degrade the performance or quality of
the Transition Services in any material way; or (iii) if neither (i) nor (ii)
is available to BE, remove the item from the Transition Services and the fees
to be paid hereunder or other economic rights of the Parties will be equitably
adjusted to adequately reflect the reduction in value to HT resulting from such
removal.

6.6.                              Exclusion.  BE’s indemnification obligations under Section
6.1 will not apply with respect to any Third Party Technical Elements for
which BE obtains an equivalent or more protective infringement indemnity for
the direct benefit of HT from the third party providing such Third Party
Technical Elements provided that (i) such third party’s financial condition is
similar to or better than BE’s and (ii) BE gives notice to HT (or has given
notice to HT during the term of the MSA) of its desire to be relieved of its
indemnification obligation above in Section 6.1 and provides (or has
provided) HT with a copy of the relevant agreement with such third party.

ARTICLE VII.

LIMITATION OF LIABILITY

7.1.                              Limitation
of Liability.

(a)                                  Except as expressly provided in Section
7.3 below, each Party’s maximum, aggregate liability to the other Party,
whether in contract or in tort (including breach of warranty, negligence, gross
negligence and strict liability in tort) or otherwise arising out of or
relating to this Transition Agreement, including any liabilities to any Third
Parties, will be limited to an amount equal to:

(i)                                     with respect to any and all claims arising
out of any acts or omissions occurring before the Final Wave Transition Date,
$5,000,000; and

(ii)                                  with respect to any and all claims arising
out of any acts or omissions occurring after the Final Wave Transition Date,
the lesser of (a) $2,000,000 or (b) the aggregate amount of charges paid by HT
during the Renewal Term (which amount shall not include any out-of-pocket costs
and expenses).

(iii)                               With respect to any reduction of a Party’s remaining aggregate
liability pursuant to clause (i) or (ii) above (as a result of (x) any agreement
or

 18
 

settlement between the Parties, (y) any arbitration or court decision,
judgment or ruling or (z) otherwise), such reduction shall be deemed a
dollar-for-dollar reduction of such Party’s remaining aggregate liability for
damages pursuant to clause (i) or clause (ii), respectively.

(b)                                 In no event shall BE be liable for any claim
arising as a result of any delays in the Transition not caused by BE.

7.2.                              Exclusion
of Consequential Damages.  EXCEPT AS
EXPRESSLY PROVIDED IN SECTION 7.3 BELOW, IN NO EVENT, WHETHER IN
CONTRACT OR IN TORT (INCLUDING BREACH OF WARRANTY, NEGLIGENCE, GROSS NEGLIGENCE
AND STRICT LIABILITY IN TORT), WILL EITHER PARTY BE OTHERWISE LIABLE FOR
INDIRECT OR CONSEQUENTIAL, EXEMPLARY, PUNITIVE OR SPECIAL DAMAGES EVEN IF SUCH
PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES IN ADVANCE.

7.3.                              Exclusions.  The limitations and
exclusions set forth in Section 7.1 and Section 7.2 above will
not apply with respect to (i) damages resulting from fraud or willful
misconduct committed by a Party; (ii) claims resulting from a breach of Section
2.9; (iii) claims resulting from a breach of Section 2.10 where it
is shown by clear and convincing evidence that the malicious insertion of
disabling code was done with the actual knowledge of BE’s management; and (iv)
Third Party claims that are the subject of indemnification under Section 6.1,
Section 6.2 or Section 6.3.

7.4.                              BE
Deductible.  Subject to Section
7.1 and Section 7.2, BE will be liable to HT for any direct damages
incurred by HT as a result of BE’s breach of its obligations under this
Transition Agreement; provided, however,
that BE shall have no such liability except to the extent that the aggregate
amount of all such direct damages incurred by HT pursuant to this Transition
Agreement exceeds $1,000,000, and then only for amounts in excess of $1,000,000
(the “BE Deductible”).  For the
avoidance of doubt, the Parties acknowledge and agree that the BE Deductible
shall not apply to claims covered by Section 7.3.

7.5.                              Survival
of Direct Claims.  The ability of a
Party to recover any damages from the other Party pursuant to this Transition
Agreement shall survive the expiration or termination of the Term and terminate
on the 18-month anniversary of the Final Wave Transition Date, except for any claim
arising under Section 2.10 or Section 16.8 of the MSA as incorporated by
reference pursuant to Section 5.2(g), which shall terminate on the
five-year anniversary of the Final Wave Transition Date.  If a Party shall have suffered or incurred
direct damages as a result of the other Party’s breach of its obligations under
this Transition Agreement and made a valid claim in writing to recover the same
pursuant to this Transition Agreement prior to the applicable termination date,
then such claim shall not be extinguished by the passage of any deadline
herein.

7.6.                              Preservation
of Settlement Agreement Releases. 
Notwithstanding any provision of this Transition Agreement to the
contrary, neither Party shall be liable for any actions, causes of action,
claims or demands (whether at law or in equity), liabilities losses, damages or
any other form or claim or compensation arising out of or related to acts or

 19
 

omissions, whether known
or unknown, latent or obvious on the Effective Date, that are the subject of
the releases granted pursuant to the Settlement Agreement.

7.7.                              Mitigation.  Each Party, and each Person entitled to
indemnification hereunder, shall take all reasonable steps to mitigate any and
all damages for which such Party or person may be entitled to indemnification
hereunder after becoming aware of any event which could reasonable be expected
to give rise to any claims that are indemnifiable or recoverable hereunder or
in connection herewith.

7.8.                              Acknowledgment.  Each Party hereto acknowledges that it
understands the legal and economic ramifications of the foregoing.  Each Party acknowledges that (i) the Parties
are sophisticated commercial enterprises, (ii) the foregoing provisions were
the subject of active and complete negotiation and constitute an essential
element of the benefit of the bargain reflected in this Transition Agreement
and the Settlement Agreement, (iii) such provisions, together with the other
provisions of this Transition Agreement and the Settlement Agreement set out
the bargained-for allocation of risk hereunder and thereunder, (iv) such Party
actively considered such provisions in determining the specific risks that it
assumed in agreeing to its obligations hereunder and thereunder, (v) the
Parties had meaningful choices with respect to such provisions, and (vi) such
provisions are not unreasonably favorable to either Party.  Each Party irrevocable accepts the
limitations and exclusions set forth herein, and neither Party may avoid the
limitations and exclusions set forth in this Article VII.

ARTICLE VIII.

DISPUTE RESOLUTION

8.1.                              Internal
Dispute Resolution.

(a)                                  Any claim or dispute between HT and BE
arising out of or relating to this Transition Agreement (a “Dispute”) will be resolved as set forth below:

(b)                                 Neither Party may initiate formal proceedings
with respect to a Dispute until it has taken the following steps in order to
attempt to resolve the Dispute informally:

(i)                                     One of the BE Contract Executives and HT
Contract Executive will discuss the Dispute. 
The initial BE Contract Executive handling a Dispute shall continue to
handle that Dispute.  If the BE Contract
Executive and HT Contract Executive do not resolve the Dispute within 5
business days after a Party received a written notice from the other Party
invoking these procedures, either Party may at any time thereafter refer the
Dispute for resolution pursuant to the following paragraph by giving written
notice to the other Party.

(ii)                                  Within 5 business days after a Party’s
receipt of the written notice under the preceding paragraph, each Party will
appoint a senior management representative who does not devote substantially
all of his or her time to performance under this Transition Agreement.  Within ten business days after a Party’s receipt
of the written notice under the preceding paragraph

 20
 

such representatives will meet discuss the Dispute.  They will meet as often as they mutually
agree.  If these individuals do not
resolve the Dispute within 5 business days after the receipt of the written
notice under the preceding paragraph, either Party may at any time thereafter
refer the Dispute to formal proceedings under the next section below by giving
written notice to the other Party.

(c)                                  During the informal dispute resolution
process under this section all reasonable requests made by one Party to the
other for non-privileged information reasonably related to the Dispute will
promptly be honored.

(d)                                 The specific format for the discussions will
be left to the discretion of the participants.

8.2.                              Arbitration.  Any Dispute not resolved
pursuant to the preceding section shall be solely and exclusively resolved by
confidential, binding arbitration before the Honorable Nicholas Politan.  The arbitrator shall also have the right to
use a special technical master if, in the arbitrator’s sole discretion, such
special technical master will facilitate the arbitrator’s understanding and
resolution of the Dispute.  If the
arbitrator deems it necessary to involve a special technical master in the
resolution of a Dispute, the Parties shall work in good faith to suggest a
mutually agreeable special technical master. 
If the Parties are unable to so agree, the arbitrator shall have the
right to select a special technical master without further agreement or consent
by the Parties.  The arbitrator shall
have the right to award, or include in any award, injunctive relief.  Any arbitrator’s award shall be final and
binding on the Parties thereto, and judgment thereon may be entered in any
court of competent jurisdiction.  The
arbitrator may, in the arbitrator’s sole discretion, award attorney’s fees to
the prevailing Party in any dispute.  In
the event of the arbitrator’s death, disability or extended absence, the
Parties will mutually agree to name a replacement arbitrator.

 21
 

ARTICLE IX.

TERMINATION

9.1.                              Termination
as Result of Termination of Settlement Agreement.  If the Settlement Agreement is terminated in
accordance with the terms thereof before the occurrence of the Settlement
Closing Date, this Transition Agreement will be deemed to be immediately
terminated and void ab initio (with
the express understanding that, notwithstanding any other provision of this
Transition Agreement, no provisions of this Transition Agreement shall survive
and the relationship of the Parties shall be governed by the MSA as if it had
never been suspended or terminated as the case may be) upon the date of any
such termination of the Settlement Agreement.

9.2.                              HT
Termination.  HT may, by giving
written notice to BE identifying the basis for such notice, terminate this Transition
Agreement in whole or in part as of the date specified in the notice of
termination, if:

(a)                                  BE commits a material breach of this
Transition Agreement, which breach is not cured within 15 days after receipt
from HT of written notice of the breach specifying in reasonable detail the
nature of the breach; or

(b)                                 BE commits a material breach of this
Transition Agreement that is not capable of being cured within 15 days.

9.3.                              BE
Termination.  If HT fails to pay
charges owed to BE when due under this Transition Agreement, then BE may, after
giving HT written notice specifically identifying that such notice is given
under this Section 9.3 and seven days to cure after receipt of such
notice, terminate this Transition Agreement in whole but not in part.  The Parties acknowledge that for purposes of
this Section 9.3 any calculation or other manifest errors reflected on
an invoice shall not be considered charges due under this Transition Agreement.

9.4.                              Effect
of Termination.  Notwithstanding any
provision in this Transition Agreement to the contrary, any termination of this
Transition Agreement shall have no effect on the terms or enforceability of the
Settlement Agreement, including the releases granted thereunder.

ARTICLE X.

DEFINITIONS

10.1.                        Definitions.

(a)                                  As used in this Transition Agreement, the
terms set forth below shall have the following respective meanings:

“BE Competitor” means an entity that
offers or proposes to offer services that are similar to or competitive with
the services offered, proposed to be offered or anticipated to be offered by
BE.

 22
 

“Final Wave Transition Date” means
the date upon which Service Wave 3 is to be transitioned from BE to HT or the
Successor Provider.

“HT Competitor” means an entity that offers or proposes to offer
services that are similar to or competitive with the services offered, proposed
to be offered or anticipated to be offered by HT from time to time.

“HT Transferred Consultant Personnel” means those BE employees
having the title of Senior Consultant or Consultant who become HT or Successor
Provider employees as a result of the Transition.

“HT Transferred Manager Personnel” means those BE employees
having a title of Managing Director, Senior Manager or Manger who become HT or
Successor Provider employees as a result of the Transition.

“Service Wave” means any of Service Wave 1a, Service Wave 1b,
Service Wave 2 or Service Wave 3.

“Service Wave 1a” means IVR/CTI (Call Center), End to End
Testing, Webforms and Release Management

“Service Wave 1b” means Point of Sale, Wholesale (NeuStar and
CABs Components), AWAS and Dispatch.

“Service Wave 2” means Finance and Supply Chain, Human
Resources, Network Engineering and Planning, Volt Delta System, EPM Reporting
and Queue Management.

“Service Wave 3” means CRM, CRM Support, Billing, GCOMMS,
Outside Plant, Tibco, Web Portal, Wholesale Dispatcher and All System Support
Tools.

“Telcom Entity” means any entity that is primarily engaged in
the provision of telecommunication services.

“Transition Plan” means the HT Transition Plan for the
Transition set forth as Attachment 7 hereto.

“Wave Transition Date” means for each Service Wave the date that
the software and platforms constituting such Service Wave is transitioned from
BE to HT or the Successor Provider, which shall be the earlier of (i) the date
that HT or the Successor Provider elects to transition such Service Wave or
(ii) the date which is the later of (x) the dates set forth in Attachment
7-A or (y) the date on which the Knowledge Transfer Services for such
Service Wave have been completed.

 23
 

(b)                                 Each of the terms set forth below has the
meaning found in the provision set forth opposite such term in the following
table:

	
  Definition

  	
   

  	
  Section

  
	
   

  	
   

  	
   

  
	
  Account
  Documentation

  	
   

  	
  2.6(a)

  
	
  Auditors

  	
   

  	
  2.8(a)(i)

  
	
  Audits

  	
   

  	
  2.8(a)(i)

  
	
  BE

  	
   

  	
  Preamble

  
	
  BE Deductible

  	
   

  	
  7.4

  
	
  Contract
  Executive

  	
   

  	
  2.4

  
	
  Dispute

  	
   

  	
  8.1(a)

  
	
  Effective Date

  	
   

  	
  Preamble

  
	
  HT

  	
   

  	
  Preamble

  
	
  Holdover Period

  	
   

  	
  3.1(b)

  
	
  HPUC

  	
   

  	
  2.11

  
	
  Initial Term

  	
   

  	
  1.1

  
	
  Knowledge
  Transfer Services

  	
   

  	
  2.1(b)

  
	
  Letter Agreement

  	
   

  	
  3.4

  
	
  MSA

  	
   

  	
  Recitals

  
	
  Operate Services

  	
   

  	
  2.1(a)

  
	
  Parties

  	
   

  	
  Preamble

  
	
  Personnel Plan

  	
   

  	
  3.1(a)

  
	
  PMO

  	
   

  	
  2.8(b)(i)

  
	
  Prepaid Amount

  	
   

  	
  4.2

  
	
  Regulators

  	
   

  	
  2.8(a)(iii)(c)

  
	
  Remediation
  Services

  	
   

  	
  2.1(c)

  
	
  Renewal Term

  	
   

  	
  1.2

  
	
  Settlement
  Agreement

  	
   

  	
  Recitals

  
	
  Successor
  Provider

  	
   

  	
  2.1

  
	
  Term

  	
   

  	
  1.2

  
	
  Transition

  	
   

  	
  Recitals

  
	
  Transition
  Agreement

  	
   

  	
  Preamble

  
	
  Transition Bonus

  	
   

  	
  3.3(a)

  
	
  Transition
  Services

  	
   

  	
  Recitals

  
	
  Traveling
  Resources

  	
   

  	
  2.2(d)

  

 

ARTICLE XI.

MISCELLANEOUS

11.1.                        No Joint Employer Relationship  Nothing in this Transition Agreement shall
operate or be construed as making HT and BE either partners, joint venturers,
principals, joint employers, fiduciaries, agents or employees of the
other.  The relationship between HT and
BE will be that of an independent contractor relationship. No employee, agent,
affiliate or contractor retained by BE to perform work on behalf of HT or its

 24
 

affiliates under this
Transition Agreement will be deemed to be an employee, agent, or contractor of
HT or its affiliates.  Neither Party will
have any right, power, or authority, express or implied, to bind the
other.  BE is solely responsible for
payment of (1) all income, disability, withholding, and other employment taxes
as well as (2) all medical benefit premiums, vacation pay, sick pay, or other
fringe benefits resulting from BE’s retention of any of its officers,
directors, employees, agents, or independent contractors.

11.2.                        Binding Agreement.  It is the intention of the Parties hereto
that, upon execution and delivery of this Transition Agreement by all of the
Parties hereto, this Transition Agreement shall be binding and enforceable
against each such Party.

11.3.                        Assignment.  Neither Party may assign this Transition
Agreement without the prior written consent of the other Party, except that:

(a)                                  HT may assign its rights and obligations
under this Transition Agreement without the approval of BE to (1) an entity
which acquires all or substantially all of the assets of HT and which is not a
BE Competitor; (2) any affiliate in connection with a reorganization or
consolidation; or (3) any subsidiary or affiliate or successor in a merger or
acquisition involving HT which is not a BE Competitor; and

(b)                                 BE may assign its rights and obligations
under this Transition Agreement without the approval of the HT to (1) an entity
which acquires all or substantially all of the assets of BE and which is not a
HT Competitor; (2) any affiliate in connection with a reorganization or
consolidation or (3) any subsidiary or affiliate or successor in a merger or
acquisition involving BE which is not a HT Competitor.

(c)                                  Without HT’s consent, BE will not subcontract
or delegate any of its material obligations under this Transition Agreement
except pursuant to an Approved Subcontract (it being understood that any
Approved Subcontract in effect under the MSA as of the Effective Date shall be
an Approved Subcontract under this Transition Agreement).  A subcontractor of a subcontractor, directly
or indirectly, of BE will be deemed to be a subcontractor of BE for purposes of
this Subsection 11.3(c).

Neither Party will
be relieved of its obligations under this Transition Agreement as a result of
any such assignment.

11.4.                        Notices.

(a)                                  All notices, requests, demands and
determinations under this Transition Agreement (other than routine operational
communications), will be in writing with a copy sent by email and will be
deemed duly given (a) when delivered by hand, (b) on the designated day of
delivery after being timely given to an express overnight courier with a
reliable system for tracking delivery, (c) when sent by confirmed facsimile
with a copy sent by another means (other than email) specified in this section,
or (d) five business days after the day of mailing, when mailed by United
States mail, registered or certified mail, return receipt requested and postage
prepaid, and addressed as follows:

 25
 

In the
case of HT:

David Torline

Senior VP and Chief Information Officer

Hawaiian Telcom, Inc.

1177 Bishop Street

Honolulu, HI 96813

Fax:  +1 (808) 546-0956

Email: David.Torline@hawaiiantel.com

With a
copy to:

Alan Oshima

General Counsel

Hawaiian Telcom Communications, Inc.

1177 Bishop Street

Honolulu, HI 96813

Fax:  +1 (808) 546-0956

Email: Alan.Oshima@hawaiiantel.com

In the
case of BE:

Paul Ciandrini

Executive Vice President

BearingPoint, Inc.

500 E. Middlefield Rd.

Mountain View, CA  94043

Fax:  (650) 968-1064

Email: Paul.Ciandrini@bearingpoint.com

With a
copy to:

John Eichenberger

BearingPoint, Inc.

1676 International Drive

McLean, VA 22102-4828

Fax:  (703) 991-2669

Email: John.Eichenberger@bearingpoint.com

A Party may from time to time change its address or
designee for notification purposes by giving the other Party prior written
notice of the new address or designee and the date upon which it will become
effective.

11.5.                        Publicity.  Each Party shall keep the terms and
conditions of this Transition Agreement strictly confidential, and no party
hereto shall disclose such terms and conditions to any third party except:
(1) with the prior written consent of the other Party, (2) to the extent

 26
 

required by applicable
law, regulation or order of a court of competent jurisdiction, (3) in
confidence to the professional legal and financial counsel representing such
party, or (4) as required by agreements with a party’s existing and potential
financing sources, provided that such sources are bound by existing
confidentiality obligations.  With
respect to a disclosure by a Party pursuant to the foregoing clause (2), such
Party shall, except as may be prohibited by applicable law, provide the other
Party with prior written notice as early as practicable prior to such
disclosure pursuant to such applicable law, regulation or order so as to permit
such Party an opportunity to object or seek confidential treatment of such
material, as applicable, and such disclosing Party shall (i) reasonably assist
the other Party objecting to such disclosure in its efforts (a) to interpose an
objection to such disclosure, (b) to take action to seek to assure confidential
handling of such information or (c) to take such other action as it deems reasonably
appropriate to protect such information, and (ii) at the request of the Party
objecting to such disclosure, use commercially reasonable efforts, at the
expense of the objecting Party, to limit the disclosure of the terms and
conditions of this Transition Agreement to the extent permitted by applicable
law.  With respect to the U.S. Federal
Communications Commission, the U.S. Securities and Exchange Commission and
Hawaii Public Utilities Commission, nothing herein shall restrict a Party’s
ability to disclose terms and conditions of this Transition Agreement to the
extent legally required, in the sole good faith judgment of the disclosing
party.

11.6.                        Amendment; Waiver.  The
terms and provisions, including any Attachment hereto, of this Transition Agreement
may be modified or amended only by a written instrument executed by each of the
Parties hereto, and compliance with any term or provision hereof may be waived
only by a written instrument executed by each Party entitled to the benefits of
the same.  Except as expressly provided
herein to the contrary, no failure to exercise any right, power or privilege
hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise thereof preclude any other or further exercise thereof or the exercise
of any other right, power or privilege granted hereunder.

11.7.                        Construction.  The section headings and parenthetical
explanations of referenced sections contained in this Transition Agreement are
for convenience of reference only and shall in no way define, limit, extend or
describe the scope or intent of any provisions of this Transition
Agreement.  As used in this Transition
Agreement, unless otherwise provided to the contrary, (a) all references to
days shall be deemed references to calendar days and (b) any reference to a
“Section” or “Attachment” shall be deemed to refer to a section of this
Transition Agreement or an attachment attached to this Transition
Agreement.  The words “include,”
“includes” or “including” shall be deemed to be followed by the words “without
limitation.”

11.8.                        Severability.  If any provision of this Transition Agreement
is held to be illegal, invalid or unenforceable, such provision shall be fully
severable, and this Transition Agreement shall be construed and enforced as if
such illegal, invalid or unenforceable provision had never comprised a part
hereof, and the remaining provisions hereof shall remain in full force and
effect and shall not be affected by the illegal, invalid or unenforceable
provision or by its severance from this Transition Agreement; provided, however, that if such illegal, invalid or
unenforceable provision may be made legal, valid and enforceable by

 27
 

limitation thereof, then
the provision shall be revised and reformed to make it legal, valid and enforceable
to the maximum extent permitted by law.

11.9.                        Liens.  BE agrees to keep HT, all of the real and
personal property of HT, and the Transition Services and Services, free and
clear of all liens or lien claims arising as a result of BE’s conduct under
this Transition Agreement or the MSA. Should any lien or lien claim be asserted
for any reason arising out of BE’s conduct under this Transition Agreement or
the MSA,HT may at its sole
discretion (i) pay the amount of such lien or lien claim; (ii) deduct such
amounts from payments due to BE; and (iii) require the BE to obtain a properly
executed release of lien reasonably satisfactory to HT.

11.10.                  Further Assurances. 
The Parties will, and will use its commercially reasonable efforts to
cause their Affiliates, agents, employees and subcontractors to, do all things
reasonably necessary, including executing any additional documents and
instruments, to give full effect to this Transition Agreement.

11.11.                  Compliance with
Law.  Each Party will (and HT will cause the
Authorized Users as relevant and BE will cause its subcontractors as relevant
to) perform such Party’s obligations under this Transition Agreement in a
manner that complies with the applicable laws in respect of its obligations
(including identifying and procuring any required permits, certificates,
approvals or inspections).  If a charge
occurs of non-compliance of a Party (or, in the case of BE, an Affiliate of BE
that is providing any of the Transition Services) with any Laws, such Party
will promptly notify the other Party of the charges in writing and provide the
other Party with a written plan to address and correct the charge of
non-compliance and will comply with such plan.

11.12.                  Consents and
Approvals.  Except as otherwise provided herein, with
regard to consents, approvals or similar actions required under this Transition
Agreement, the relevant Party will not unreasonably withhold or delay the
same.  An approval or consent given by a
Party under this Transition Agreement will not relieve the other Party from
responsibility for complying with the requirements of this Transition
Agreement, nor will it be construed as a waiver of any rights under this
Transition Agreement, except as and to the extent otherwise expressly provided
in such approval or consent.

11.13.                  Governing Law.  This Transition Agreement shall be governed
by and construed in accordance with the laws of the State of Hawaii without
giving effect to principles of conflicts of law.

11.14.                  Entire Agreement.  This Transition Agreement, together with the
Settlement Agreement, constitutes the entire agreement of the Parties with
respect to the subject matter hereof and supersedes all prior and
contemporaneous oral or written agreements and understandings with respect to
the subject matter hereof.

11.15.                  Counterparts.  This Transition Agreement may be executed in
one or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.

 28
 

***Remainder of Page
Intentionally Left Blank; Signature Pages Follow***

 29
 

IN
WITNESS WHEREOF, the Parties hereto have caused their duly authorized
representatives to execute and deliver this Transition Agreement to be binding
and effective as of the date set forth in the first paragraph above.

	
  

  	
  Hawaiian Telcom Communications, Inc.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
         /s/
  Michael S. Ruley

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  	
  Michael S. Ruley

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  	
  Chief Executive Officer

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  BearingPoint, Inc.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
         /s/ Harry
  L. You

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  	
  Harry L. You

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  	
  Chief Executive Officer

  	
   

  
							

 

 30

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