Document:

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                                                                    EXHIBIT 10.2

                                                               EXECUTION VERSION

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                       GUARANTEE AND COLLATERAL AGREEMENT

                            Dated as of July 1, 2004

                                      among

                                HOLLY CORPORATION

                         and certain of its Subsidiaries

                                   in favor of

                             BANK OF AMERICA, N.A.,
                             as Administrative Agent

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                                TABLE OF CONTENTS

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SECTION 1.     DEFINED TERMS .........................................................        1

         1.1.  Definitions ...........................................................        1
         1.2.  Other Definitional Provisions .........................................        6

SECTION 2.     GUARANTEE .............................................................        6

         2.1.  Guarantee .............................................................        6
         2.2.  Rights of Reimbursement, Contribution and Subrogation .................        7
         2.3.  Amendments, etc. with respect to the Borrower Obligations .............        9
         2.4.  Guarantee Absolute and Unconditional ..................................        9
         2.5.  Reinstatement .........................................................       10
         2.6.  Payments ..............................................................       10

SECTION 3.     GRANT OF SECURITY INTEREST; CONTINUING LIABILITY UNDER COLLATERAL .....       11

SECTION 4.     REPRESENTATIONS AND WARRANTIES ........................................       12

         4.1.  Representations in Credit Agreement ...................................       12
         4.2.  Title; No Other Liens .................................................       12
         4.3.  Perfected First Priority Liens ........................................       12
         4.4.  Name; Jurisdiction of Organization, etc ...............................       13
         4.5.  Inventory .............................................................       13
         4.6.  Farm Products .........................................................       13
         4.7.  Deposit Accounts ......................................................       13
         4.8.  Receivables ...........................................................       14
         4.9.  Intellectual Property .................................................       14
         4.10. Transmitting Utilities ................................................       15

SECTION 5.     COVENANTS .............................................................       15

         5.1.  Covenants in Credit Agreement .........................................       15
         5.2.  Delivery and Control of Instruments, Chattel Paper, Negotiable
               Documents and Deposit Accounts ........................................       15
         5.3.  Maintenance of Insurance ..............................................       16
         5.4.  Payment of Obligations ................................................       16
         5.5.  Maintenance of Perfected Security Interest; Further Documentation .....       16
         5.6.  Changes in Locations, Name, Jurisdiction of Incorporation, etc ........       17
         5.7.  Notices ...............................................................       17
         5.8.  Receivables ...........................................................       18
         5.9.  Intellectual Property .................................................       18

SECTION 6.     REMEDIAL PROVISIONS ...................................................       18

         6.1.  Certain Matters Relating to Receivables and the Collateral Account ....       18
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         6.2.  Communications with Obligors; Grantors Remain Liable ..................       20
         6.3.  Proceeds to be Turned Over to Administrative Agent ....................       20
         6.4.  Application of Proceeds ...............................................       21
         6.5.  Code and Other Remedies ...............................................       21
         6.6.  Waiver; Deficiency ....................................................       22

SECTION 7.     THE ADMINISTRATIVE AGENT ..............................................       22

         7.1.  Administrative Agent's Appointment as Attorney-in-Fact, etc ...........       22
         7.2.  Duty of Administrative Agent ..........................................       24
         7.3.  Authorization of Financing Statements .................................       24
         7.4.  Authority of Administrative Agent .....................................       25
         7.5.  Appointment of Co-Collateral Agents ...................................       25

SECTION 8.     MISCELLANEOUS .........................................................       25

         8.1.  Amendments in Writing .................................................       25
         8.2.  Notices ...............................................................       25
         8.3.  No Waiver by Course of Conduct; Cumulative Remedies ...................       25
         8.4.  Enforcement Expenses; Indemnification .................................       26
         8.5.  Successors and Assigns ................................................       27
         8.6.  Set-Off ...............................................................       27
         8.7.  Counterparts ..........................................................       27
         8.8.  Severability ..........................................................       27
         8.9.  Section Headings ......................................................       28
         8.10. Integration ...........................................................       28
         8.11. GOVERNING LAW .........................................................       28
         8.12. Submission to Jurisdiction; Waivers ...................................       28
         8.13. Acknowledgments .......................................................       28
         8.14. Additional Grantors ...................................................       29
         8.15. Releases ..............................................................       29
         8.16. WAIVER OF JURY TRIAL ..................................................       29
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SCHEDULES

         Schedule 1      Notice Addresses of Guarantors
         Schedule 2      Deposit Accounts
         Schedule 3      Filings and Other Actions Required to Perfect Security
                              Interests
         Schedule 4      Exact Legal Name, Location of Jurisdiction of
                              Organization and Chief Executive Office
         Schedule 5      Location of Inventory
         Schedule 6      Bailees and Warehousemen
         Schedule 7      Transmitting Utilities

EXHIBITS

         Exhibit A       Form of Perfection Certificate
         Exhibit B-1     Form of Assignment
         Exhibit B-2     Form of Notice of Assignment
         Exhibit C       Form of Control Agreement

ANNEX

         Annex I         Assumption Agreement

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                       GUARANTEE AND COLLATERAL AGREEMENT

            GUARANTEE AND COLLATERAL AGREEMENT, dated as of July 1, 2004, made
by each of the signatories hereto (together with any other entity that may
become a party hereto as provided herein, the "Grantors"), in favor of BANK OF
AMERICA, N.A., as Administrative Agent (in such capacity, the "Administrative
Agent") for (i) the banks and other financial institutions or entities (the
"Lenders") from time to time party to the Credit Agreement, dated as of July 1,
2004 (as amended, supplemented or otherwise modified from time to time, the
"Credit Agreement"), among HOLLY CORPORATION, a Delaware corporation (the
"Borrower"), the Lenders and the Administrative Agent and (ii) the other Secured
Parties (as hereinafter defined).

                              W I T N E S S E T H:

            WHEREAS, pursuant to the Credit Agreement, the Lenders have
severally agreed to make extensions of credit to the Borrower upon the terms and
subject to the conditions set forth therein;

            WHEREAS, the Borrower is a member of an affiliated group of
companies that includes each other Grantor;

            WHEREAS, the proceeds of the extensions of credit under the Credit
Agreement will be used in part to enable the Borrower to make valuable transfers
to one or more of the other Grantors in connection with the operation of their
respective businesses;

            WHEREAS, the Borrower and the other Grantors are engaged in related
businesses, and each Grantor will derive substantial direct and indirect benefit
from the making of the extensions of credit under the Credit Agreement; and

            WHEREAS, it is a condition precedent to the obligation of the
Lenders to make their respective extensions of credit to the Borrower under the
Credit Agreement that the Grantors shall have executed and delivered this
Agreement to the Administrative Agent for the ratable benefit of the Secured
Parties;

            NOW, THEREFORE, in consideration of the premises and to induce the
Administrative Agent and the Lenders to enter into the Credit Agreement and to
induce the Lenders to make their respective extensions of credit to the Borrower
thereunder, each Grantor hereby agrees with the Administrative Agent, for the
ratable benefit of the Secured Parties, as follows:

                            SECTION 1. DEFINED TERMS

            1.1. Definitions.
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            (a) Unless otherwise defined herein, terms defined in the Credit
Agreement and used herein shall have the meanings given to them in the Credit
Agreement, and the following terms which are defined in the Uniform Commercial
Code in effect in the State of New York on the date hereof are used herein as so
defined: Account Debtor, Accounts, Chattel Paper, Deposit Account, Documents,
Farm Products, Goods, Instruments, Payment Intangibles, and Supporting
Obligations.

            (b) The following terms shall have the meanings set forth below:

            "Agreement" means this Guarantee and Collateral Agreement, as the
      same may be amended, supplemented or otherwise modified from time to time.

            "Borrower Obligations" means the collective reference to the
      Obligations (as defined in the Credit Agreement).

            "Cash Collateral Investments" means:

            (i) marketable direct or guaranteed obligations of the United States
      of America or any agency thereof which mature within one year from the
      date of purchase by or on behalf of Borrower (including without limitation
      repurchase transactions with respect thereto which are effected through
      banks);

            (ii) certificates of deposit, bankers acceptances and time deposits
      of any of the Lenders, or any other United States banks, in each case
      maturing within one year after the date of acquisition thereof by or on
      behalf of the Borrower; provided that such Lenders and such other banks
      have a Thompson Bank Watch rating of "B" or better at the time of
      acquisition and at any time such certificates of deposit, bankers
      acceptance and time deposit are included in the Borrowing Base and such
      other banks shall also have total assets in excess of $20,000,000,000;

            (iii) certificates of deposit, bankers acceptances and time deposits
      of First National Bank of Artesia up to an aggregate amount of $600,000
      which are fully insured by the Federal Deposit Insurance Corporation and
      which mature within one year after the date of acquisition thereof by or
      on behalf of the Borrower; and

            (iv) interests in money market mutual funds that invest at least 95%
      of its assets in so- called "money market" instruments maturing not more
      than 13 months after the acquisition thereof by or on behalf of the
      Borrower, which funds are managed by Persons having, or which are members
      of holding company groups having, capital and surplus in excess of
      $100,000,000.

            "Collateral" has the meaning specified in Section 3.

            "Collateral Account" means (i) any collateral account established
      and maintained as provided in Section 6.1 or (ii) any other cash
      collateral account established and maintained as provided in the Credit
      Agreement, including for purposes of designating cash or cash equivalents
      as "Pledged Cash" thereunder.

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            "Copyright Licenses" means any written agreement naming any Grantor
      as licensor or licensee, granting any right under any Copyright,
      including, without limitation, the grant of rights to manufacture, print,
      publish, copy, import, export, distribute, exploit and sell materials
      derived from any Copyright.

            "Copyrights" means (i) all domestic copyrights, whether or not the
      underlying works of authorship have been published, including but not
      limited to copyrights in software and databases, all Mask Works (as
      defined in 17 U.S.C. 901 of the U.S. Copyright Act) and all works of
      authorship and other intellectual property rights therein, all copyrights
      of works based on, incorporated in, derived from or relating to works
      covered by such copyrights, all right, title and interest to make and
      exploit all derivative works based on or adopted from works covered by
      such copyrights, and all copyright registrations and copyright
      applications, mask works registrations, and mask works applications, and
      any renewals or extensions thereof, (ii) the rights to print, publish and
      distribute any of the foregoing, (iii) the right to sue or otherwise
      recover for any and all past, present and future infringements and
      misappropriations thereof, (iv) all income, royalties, damages and other
      payments now and hereafter due and/or payable with respect thereto
      (including, without limitation, payments under all Copyright Licenses
      entered into in connection therewith, payments arising out of any other
      sale, lease, license or other disposition thereof and damages and payments
      for past, present or future infringements thereof), and (v) all other
      rights of any kind whatsoever accruing thereunder or pertaining thereto.

            "General Intangibles" means all "general intangibles" as such term
      is defined in Section 9-102(a)(42) of the New York UCC in effect as of the
      date hereof and, in any event, including, without limitation, with respect
      to any Grantor, all rights of such Grantor to receive any tax refunds, all
      Swap Contracts and all contracts, agreements, instruments and indentures
      and all licenses, permits, concessions, franchises and authorizations
      issued by Governmental Authorities in any form, and portions thereof, to
      which such Grantor is a party or under which such Grantor has any right,
      title or interest or to which such Grantor or any property of such Grantor
      is subject, as the same may from time to time be amended, supplemented,
      replaced or otherwise modified, including, without limitation, (i) all
      rights of such Grantor to receive moneys due and to become due to it
      thereunder or in connection therewith, (ii) all rights of such Grantor to
      receive proceeds of any insurance, indemnity, warranty or guaranty with
      respect thereto, (iii) all rights of such Grantor to damages arising
      thereunder, and (iv) all rights of such Grantor to terminate and to
      perform, compel performance and to exercise all remedies thereunder.

            "Guarantor Obligations" means with respect to any Guarantor, all
      obligations and liabilities of such Guarantor which may arise under or in
      connection with this Agreement (including, without limitation, Section 2)
      or any other Loan Document to which such Guarantor is a party, in each
      case whether on account of Guarantee obligations, reimbursement
      obligations, fees, indemnities, costs, expenses or otherwise (including,
      without limitation, all fees and disbursements of counsel to any Secured
      Party that are required to be paid by such Guarantor pursuant to the terms
      of this Agreement or any other Loan Document).

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            "Guarantors" means the collective reference to each Grantor other
      than the Borrower.

            "Indemnified Liabilities" has the meaning specified in Section 8.4.

            "Indemnitee" has the meaning specified in Section 8.4.

            "Intellectual Property" means the collective reference to all
      rights, priorities and privileges relating to intellectual property,
      whether arising under United States, multinational or foreign laws or
      otherwise, including, without limitation, the Copyrights, the Copyright
      Licenses, the Patents, the Patent Licenses, the Trademarks, the Trademark
      Licenses, the Trade Secrets and the Trade Secret Licenses, and all rights
      to sue at law or in equity for any past, present and future infringement
      or other impairment thereof, including the right to receive all proceeds
      and damages therefrom.

            "Inventory" means all "inventory" as such term is defined in Section
      9-102(a)(48) of the New York UCC in effect as of the date hereof now owned
      or hereafter acquired by the Borrower (including, but not limited to, all
      (i) petroleum products, raw materials and work in process therefor, and
      materials used or consumed in the manufacture of production thereof, (ii)
      goods in which the Borrower has an interest in mass or a joint or other
      interest or right of any kind, and (iii) goods which are returned to or
      repossessed by the Borrower, and all accessions thereto and products
      thereof and documents therefor wherever located).

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

            "Obligations" means (i) in the case of the Borrower, the Borrower
      Obligations, and (ii) in the case of each Guarantor, its Guarantor
      Obligations.

            "Patent License" means all agreements, whether written or oral,
      providing for the grant by or to any Grantor of any right to manufacture,
      use, import, export, distribute or sell any invention covered in whole or
      in part by a Patent.

            "Patents" means (i) all domestic patents, patent applications and
      patentable inventions, all certificates of invention or similar property
      rights, (ii) all inventions and improvements described and claimed
      therein, (iii) the right to sue or otherwise recover for any and all past,
      present and future infringements and misappropriations thereof, (iv) all
      income, royalties, damages and other payments now and hereafter due and/or
      payable with respect thereto (including, without limitation, payments
      under all Patent Licenses entered into in connection therewith, payments
      arising out of any other sale, lease, license or other disposition thereof
      and damages and payments for past, present or future infringement
      thereof), and (v) all reissues, divisions, continuations,
      continuations-in-part, substitutes, renewals, and extensions thereof, all
      improvements thereon and all other rights of any kind whatsoever accruing
      thereunder or pertaining thereto.

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            "Perfection Certificate" means that certain Perfection Certificate
      dated as of July 1, 2004, executed by the Borrower, as may be supplemented
      from time to time in accordance with the terms hereof.

            "Proceeds" means all "proceeds" as such term in defined in Section
      9-102(a)(64) of the New York UCC in effect as of the date hereof and, in
      any event, shall include, without limitation, all other profits, rentals.
      accessions or receipts, in whatever form, arising from the collection,
      sale, lease, exchange, assignment, licensing or other disposition of, or
      realization upon, Collateral, including, without limitation, all claims of
      the Borrower against third parties for loss of, damage to or destruction
      of, or for proceeds payable under, or unearned premiums with respect to,
      policies of insurance in respect of, any Collateral, rights to any
      returned or repossessed goods relating to any Collateral, and any
      condemnation or requisition payments with respect to any Collateral, in
      each case whether now existing or hereafter arising.

            "Qualified Counterparty" means, with respect to any Swap Contract,
      any counterparty thereto that, at the time such Swap Contract was entered
      into, was a Lender or an Affiliate of a Lender.

            "Receivable" means all Accounts and any other right to payment for
      Goods or other property sold, leased, licensed or otherwise disposed of or
      for services rendered, whether or not such right is evidenced by an
      Instrument or Chattel Paper or classified as a Payment Intangible and
      whether or not it has been earned by performance. References herein to
      Receivables shall include any Supporting Obligation or collateral securing
      such Receivable.

            "Secured Parties" means collectively, the Administrative Agent, the
      Co-Documentation Agents, the Syndication Agent, the L/C Issuer, the other
      Lenders and, with respect to any interest rate protection Swap Contract
      entered into in accordance with the terms of Section 7.03(d) of the Credit
      Agreement, any Qualified Counterparty that has agreed to be bound by the
      provisions of Article IX of the Credit Agreement at all times as if it
      were a Lender party thereto; provided that no such Qualified Counterparty
      shall have any rights in connection with the management or release of any
      Collateral or any Guarantor Obligations under this Agreement.

            "Trademark License" means any agreement, whether written or oral,
      providing for the grant by or to any Grantor of any right to use any
      Trademark.

            "Trademarks" means (i) all domestic trademarks, service marks, trade
      names, corporate names, company names, business names, trade dress, trade
      styles, logos, or other indicia of origin or source identification,
      Internet domain names, trademark and service mark registrations, and
      applications for trademark or service mark registrations and any renewals
      thereof, (ii) the right to sue or otherwise recover for any and all past,
      present and future infringements and misappropriations thereof, (iii) all
      income, royalties, damages and other payments now and hereafter due and/or
      payable with respect thereto (including, without limitation, payments
      under all Trademark Licenses entered into in connection therewith, and
      damages and payments for past, present or future

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      infringements thereof), and (iv) all other rights of any kind whatsoever
      accruing thereunder or pertaining thereto, together in each case with the
      goodwill of the business connected with the use of, and symbolized by,
      each of the above.

            "Trade Secret License" means any agreement, whether written or oral,
      providing for the grant by or to any Grantor of any right to use any Trade
      Secret.

            "Trade Secrets" means (i) all trade secrets and all confidential and
      proprietary information, including know-how, manufacturing and production
      processes and techniques, inventions, research and development
      information, technical data, financial, marketing and business data,
      pricing and cost information, business and marketing plans, and customer
      and supplier lists and information, (ii) the right to sue or otherwise
      recover for any and all past, present and future infringements and
      misappropriations thereof, (iii) all income, royalties, damages and other
      payments now and hereafter due and/or payable with respect thereto
      (including, without limitation, payments arising out of the sale, lease,
      license, assignment or other disposition thereof, and damages and payments
      for past, present or future infringements thereof), and (iv) all other
      rights of any kind whatsoever of any Grantor accruing thereunder or
      pertaining thereto.

            "UCC" means the New York UCC; provided that if by reason of
      mandatory provisions of law, the perfection or the effect of perfection or
      non-perfection of the security interest in any Collateral is governed by
      the Uniform Commercial Code as in effect in a jurisdiction other than New
      York, "UCC" means the Uniform Commercial Code as in effect in such other
      jurisdiction for purposes of the provisions hereof relating to such
      perfection or effect of perfection or non-perfection.

            1.2. Other Definitional Provisions.

            (a) Unless otherwise provided herein, the rules of interpretation
set forth in Article I of the Credit Agreement shall apply to this Agreement.

            (b) Where the context requires, terms relating to the Collateral or
any part thereof, when used in relation to a Grantor, shall refer to such
Grantor's Collateral or the relevant part thereof.

            (c) The expressions "payment in full," "paid in full" and any other
similar terms or phrases when used herein with respect to the Borrower
Obligations or the Guarantor Obligations shall mean the unconditional, final and
irrevocable payment in full, in immediately available funds, of all of the
Borrower Obligations or the Guarantor Obligations, as the case may be.

                              SECTION 2. GUARANTEE

            2.1. Guarantee.

            (a) Each of the Guarantors hereby, jointly and severally,
unconditionally and irrevocably, Guarantees to the Administrative Agent, for the
ratable benefit of the Secured Parties and their respective successors,
indorsees, transferees and assigns, the prompt and

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complete payment and performance by the Borrower when due (whether at the stated
maturity, by acceleration or otherwise) of the Borrower Obligations.

            (b) If and to the extent required in order for the Guarantor
Obligations to be enforceable under applicable federal, state and other Debtor
Relief Laws, the maximum liability of such Guarantor hereunder shall be limited
to the greatest amount which can lawfully be Guaranteed by such Guarantor under
such Debtor Relief Laws after giving effect to any rights of contribution,
reimbursement and subrogation arising under Section 2.2. Each Guarantor
acknowledges and agrees that, to the extent not prohibited by applicable law,
(i) such Guarantor (as opposed to its creditors, representatives of creditors or
bankruptcy trustee, including such Guarantor in its capacity as debtor in
possession exercising any powers of a bankruptcy trustee) has no personal right
under such laws to reduce, or request any judicial relief that has the effect of
reducing, the amount of its liability under this Agreement, (ii) such Guarantor
(as opposed to its creditors, representatives of creditors or bankruptcy
trustee, including such Guarantor in its capacity as debtor in possession
exercising any powers of a bankruptcy trustee) has no personal right to enforce
the limitation set forth in this Section 2.1(b) or to reduce, or request
judicial relief reducing, the amount of its liability under this Agreement, and
(iii) the limitation set forth in this Section 2.1(b) may be enforced only to
the extent required under such laws in order for the obligations of such
Guarantor under this Agreement to be enforceable under such laws and only by or
for the benefit of a creditor, representative of creditors or bankruptcy trustee
of such Guarantor or other Person entitled, under such laws, to enforce the
provisions thereof.

            (c) Each Guarantor agrees that the Borrower Obligations may at any
time and from time to time be incurred or permitted in an amount exceeding the
maximum liability of such Guarantor under Section 2.1(b) without impairing the
Guarantee contained in this Section 2 or affecting the rights and remedies of
any Secured Party hereunder.

            (d) The Guarantee contained in this Section 2 shall remain in full
force and effect until payment in full of the Obligations, notwithstanding that
from time to time during the term of the Credit Agreement the Borrower may be
free from any Borrower Obligations.

            (e) No payment made by the Borrower, any of the Guarantors, any
other guarantor or any other Person or received or collected by any Secured
Party from the Borrower, any of the Guarantors, any other guarantor or any other
Person by virtue of any action or proceeding or any set-off or appropriation or
application at any time or from time to time in reduction of or in payment of
the Borrower Obligations shall be deemed to modify, reduce, release or otherwise
affect the liability of any Guarantor hereunder which shall, notwithstanding any
such payment (other than any payment made by such Guarantor in respect of the
Borrower Obligations or any payment received or collected from such Guarantor in
respect of the Borrower Obligations), remain liable for the Borrower Obligations
up to the maximum liability of such Guarantor hereunder until the Borrower
Obligations (other than in respect of any Swap Contract) are paid in full, no
Letter of Credit shall be outstanding and the Commitments are terminated or have
expired.

            2.2. Rights of Reimbursement, Contribution and Subrogation.

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            In case any payment is made on account of the Obligations by any
Grantor or is received or collected on account of the Obligations from any
Grantor or its property:

            (a) If such payment is made by the Borrower or from its property,
then, if and to the extent such payment is made on account of Obligations
arising from or relating to a Loan made to the Borrower or a Letter of Credit
issued for account of the Borrower, the Borrower shall not be entitled (i) to
demand or enforce reimbursement or contribution in respect of such payment from
any other Grantor or (ii) to be subrogated to any claim, interest, right or
remedy of any Secured Party against any other Person, including any other
Grantor or its property.

            (b) If such payment is made by a Guarantor or from its property,
such Guarantor shall be entitled, subject to and upon payment in full of the
Obligations, (i) to demand and enforce reimbursement for the full amount of such
payment from the Borrower and (ii) to demand and enforce contribution in respect
of such payment from each other Guarantor which has not paid its fair share of
such payment, as necessary to ensure that (after giving effect to any
enforcement of reimbursement rights provided hereby) each Guarantor pays its
fair share of the unreimbursed portion of such payment. For this purpose, the
fair share of each Guarantor as to any unreimbursed payment shall be determined
based on an equitable apportionment of such unreimbursed payment among all
Guarantors based on the relative value of their assets and any other equitable
considerations deemed appropriate by a court of competent jurisdiction.

            (c) If and whenever (after payment in full of the Obligations) any
right of reimbursement or contribution becomes enforceable by any Guarantor
against any other Grantor under Section 2.2(b), such Grantor shall be entitled,
subject to and upon payment in full of the Obligations, to be subrogated
(equally and ratably with all other Grantors entitled to reimbursement or
contribution from any other Grantor as set forth in this Section 2.2) to any
security interest that may then be held by the Administrative Agent, for the
ratable benefit of the Secured Parties, upon any Collateral granted to it in
this Agreement. Such right of subrogation shall be enforceable solely against
the Grantors, and not against the Secured Parties, and neither the
Administrative Agent nor any other Secured Party shall have any duty whatsoever
to warrant, ensure or protect any such right of subrogation or to obtain,
perfect, maintain, hold, enforce or retain any Collateral for any purpose
related to any such right of subrogation. If subrogation is demanded by any
Grantor, then (after payment in full of the Obligations) the Administrative
Agent shall deliver to the Grantors making such demand, or to a representative
of such Grantors or of the Grantors generally, an instrument satisfactory to the
Administrative Agent transferring, on a quitclaim basis without any recourse,
representation, warranty or obligation whatsoever, whatever security interest
the Administrative Agent then may hold in whatever Collateral may then exist
that was not previously released or disposed of by the Administrative Agent.

            (d) All rights and claims arising under this Section 2.2 or based
upon or relating to any other right of reimbursement, indemnification,
contribution or subrogation that may at any time arise or exist in favor of any
Grantor as to any payment on account of the Obligations made by it or received
or collected from its property shall be fully subordinated in all respects to
the prior payment in full of all of the Obligations. Until payment in full of
the Obligations, no Grantor shall demand or receive any collateral security,
payment or distribution whatsoever (whether in cash, property or securities or
otherwise) on account of any such right or claim. If any such payment or
distribution is made or becomes available to any Grantor in any bankruptcy

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case or receivership, insolvency or liquidation proceeding, such payment or
distribution shall be delivered by the Person making such payment or
distribution directly to the Administrative Agent, for application to the
payment of the Obligations. If any such payment or distribution is received by
any Grantor, it shall be held by such Grantor in trust, as trustee of an express
trust for the benefit of the Secured Parties, and shall forthwith be transferred
and delivered by such Grantor to the Administrative Agent, in the exact form
received and, if necessary, duly endorsed.

            (e) The obligations of the Grantors under the Loan Documents,
including their liability for the Obligations and the enforceability of the
security interests granted thereby, are not contingent upon the validity,
legality, enforceability, collectibility or sufficiency of any right of
reimbursement, contribution or subrogation arising under this Section 2.2. The
invalidity, insufficiency, unenforceability or uncollectibility of any such
right shall not in any respect diminish, affect or impair any such obligation or
any other claim, interest, right or remedy at any time held by any Secured Party
against any Guarantor or its property. The Secured Parties make no
representations or warranties in respect of any such right and shall have no
duty to assure, protect, enforce or ensure any such right or otherwise relating
to any such right.

            (f) Each Grantor reserves any and all other rights of reimbursement,
contribution or subrogation at any time available to it as against any other
Grantor, but (i) the exercise and enforcement of such rights shall be subject to
Section 2.2(d) and (ii) neither the Administrative Agent nor any other Secured
Party shall ever have any duty or liability whatsoever in respect of any such
right, except as provided in Section 2.2(c).

            2.3. Amendments, etc. with respect to the Borrower Obligations.

            Each Guarantor shall remain obligated hereunder notwithstanding
that, without any reservation of rights against any Guarantor and without notice
to or further assent by any Guarantor, any demand for payment of any of the
Borrower Obligations made by any Secured Party may be rescinded by such Secured
Party and any of the Borrower Obligations continued, and the Borrower
Obligations, or the liability of any other Person upon or for any part thereof,
or any collateral security or Guarantee therefor or right of offset with respect
thereto, may, from time to time, in whole or in part, be renewed, increased,
extended, amended, modified, accelerated, compromised, waived, surrendered or
released by any Secured Party, and the Credit Agreement and the other Loan
Documents and any other documents executed and delivered in connection therewith
may be amended, modified, supplemented or terminated (to the extent provided by
the terms of the Credit Agreement and the other Loan Documents), in whole or in
part, as the Administrative Agent (or the requisite Lenders under the Credit
Agreement or all Lenders, as the case may be) may deem advisable from time to
time, and any collateral security, Guarantee or right of offset at any time held
by any Secured Party for the payment of the Borrower Obligations may be sold,
exchanged, waived, surrendered or released. No Secured Party shall have any
obligation to protect, secure, perfect or insure any Lien at any time held by it
as security for the Borrower Obligations or for the Guarantee contained in this
Section 2 or any property subject thereto.

            2.4. Guarantee Absolute and Unconditional.

                                       9
<PAGE>
            Each Guarantor waives any and all notice of the creation, renewal,
extension or accrual of any of the Borrower Obligations and notice of or proof
of reliance by any Secured Party upon the Guarantee contained in this Section 2
or acceptance of the Guarantee contained in this Section 2; the Borrower
Obligations, and any of them, shall conclusively be deemed to have been created,
contracted or incurred, or renewed, extended, amended or waived, in reliance
upon the Guarantee contained in this Section 2; and all dealings between the
Borrower and any of the Guarantors, on the one hand, and the Secured Parties, on
the other hand, likewise shall be conclusively presumed to have been had or
consummated in reliance upon the Guarantee contained in this Section 2. Each
Guarantor waives diligence, presentment, protest, demand for payment and notice
of default or nonpayment to or upon the Borrower or any of the Guarantors with
respect to the Borrower Obligations. Each Guarantor understands and agrees that
the Guarantee contained in this Section 2 shall be construed as a continuing,
absolute and unconditional Guarantee of payment and performance without regard
to (a) the validity or enforceability of the Credit Agreement or any other Loan
Document, any of the Borrower Obligations or any other collateral security
therefor or Guarantee or right of offset with respect thereto at any time or
from time to time held by any Secured Party, (b) any defense, set-off or
counterclaim (other than a defense of payment or performance hereunder) which
may at any time be available to or be asserted by the Borrower or any other
Person against any Secured Party, or (c) any other circumstance whatsoever (with
or without notice to or knowledge of the Borrower or such Guarantor) which
constitutes, or might be construed to constitute, an equitable or legal
discharge of the Borrower for the Borrower Obligations, or of such Guarantor
under the Guarantee contained in this Section 2, in bankruptcy or in any other
instance. When making any demand hereunder or otherwise pursuing its rights and
remedies hereunder against any Guarantor, any Secured Party may, but shall be
under no obligation to, make a similar demand on or otherwise pursue such rights
and remedies as it may have against the Borrower, any other Guarantor or any
other Person or against any collateral security or Guarantee for the Borrower
Obligations or any right of offset with respect thereto, and any failure by any
Secured Party to make any such demand, to pursue such other rights or remedies
or to collect any payments from the Borrower, any other Guarantor or any other
Person or to realize upon any such collateral security or Guarantee or to
exercise any such right of offset, or any release of the Borrower, any other
Guarantor or any other Person or any such collateral security, Guarantee or
right of offset, shall not relieve any Guarantor of any obligation or liability
hereunder, and shall not impair or affect the rights and remedies, whether
express, implied or available as a matter of law, of any Secured Party against
any Guarantor. For the purposes hereof "demand" shall include the commencement
and continuance of any legal proceedings.

            2.5. Reinstatement.

            The Guarantee contained in this Section 2 shall continue to be
effective, or be reinstated, as the case may be, if at any time payment, or any
part thereof, of any of the Borrower Obligations is rescinded or must otherwise
be restored or returned by any Secured Party upon the insolvency, bankruptcy,
dissolution, liquidation or reorganization of the Borrower or any Guarantor, or
upon or as a result of the appointment of a receiver, intervenor or conservator
of, or trustee or similar officer for, the Borrower or any Guarantor or any
substantial part of its property, or otherwise, all as though such payments had
not been made.

            2.6. Payments.

                                       10
<PAGE>
            Each Guarantor hereby Guarantees that payments hereunder will be
paid to the Administrative Agent without set-off or counterclaim in Dollars in
immediately available funds at the Administrative Agent's Office.

                     SECTION 3. GRANT OF SECURITY INTEREST;
                      CONTINUING LIABILITY UNDER COLLATERAL

            (a) Each Grantor hereby assigns and transfers to the Administrative
Agent, and hereby grants to the Administrative Agent, for the ratable benefit of
the Secured Parties, a security interest in all of the following property, in
each case, wherever located and now owned or at any time hereafter acquired by
such Grantor or in which such Grantor now has or at any time in the future may
acquire any right, title or interest (collectively, the "Collateral"), as
collateral security for the prompt and complete payment and performance when due
(whether at the stated maturity, by acceleration or otherwise) of such Grantor's
Obligations:

                  (i) all Accounts, including, without limitation, any
      Collateral Account, all cash deposited therein from time to time and the
      Cash Collateral Investments made pursuant to Section 6.1(d);

                  (ii) all Inventory;

                  (iii) all Documents;

                  (iv) all Instruments;

                  (v) all General Intangibles relating to any Collateral
      including, without limitation, all rights against the owners or operators
      of any pipeline or storage facility with respect to any Inventory or other
      Collateral;

                  (vi) all books, records, ledger cards, files, correspondence,
      customer lists, blueprints, technical specifications, manuals, computer
      software, computer printouts, tapes, disks and other electronic storage
      media and related data processing software and similar items that at any
      time evidence or contain information relating to any of the Collateral or
      are otherwise necessary in the collection thereof or realization
      thereupon; and

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

            (b) Notwithstanding anything herein to the contrary, (i) each
Grantor shall remain liable for all obligations under the Collateral and nothing
contained herein is intended or shall be a delegation of duties to the
Administrative Agent or any other Secured Party, (ii) each Grantor shall remain
liable under and each of the agreements included in the Collateral, to use
commercially reasonable efforts to perform the obligations undertaken by it
thereunder and neither the Administrative Agent nor any other Secured Party
shall have any obligation or liability under any of such agreements by reason of
or arising out of this Agreement or any other document related thereto nor shall
the Administrative Agent nor any other Secured Party have

                                       11
<PAGE>
any obligation to make any inquiry as to the nature or sufficiency of any
payment received by it or have any obligation to take any action to collect or
enforce any rights under any agreement included in the Collateral, and (iii) the
exercise by the Administrative Agent of any of its rights hereunder shall not
release any Grantor from any of its duties or obligations under the contracts
and agreements included in the Collateral.

                   SECTION 4. REPRESENTATIONS AND WARRANTIES

            To induce the Administrative Agent, the L/C Issuer and the Lenders
to enter into the Credit Agreement and to induce the Lenders to make their
respective extensions of credit to the Borrower thereunder, each Grantor hereby
represents and warrants to the Secured Parties that:

            4.1. Representations in Credit Agreement.

            In the case of each Guarantor, the representations and warranties
set forth in Article V of the Credit Agreement as they relate to such Guarantor
or to the Loan Documents to which such Guarantor is a party, each of which is
hereby incorporated herein by reference, are true and correct, in all material
respects, except for representations and warranties expressly stated to relate
to a specific earlier date, in which case such representations and warranties
shall be true and correct in all material respects as of such earlier date, and
the Secured Parties shall be entitled to rely on each of them as if they were
fully set forth herein, provided that each reference in each such representation
and warranty to the Borrower's knowledge shall, for the purposes of this Section
4.l, be deemed to be a reference to such Guarantor's knowledge.

            4.2. Title; No Other Liens.

            Such Grantor owns its respective items of the Collateral free and
clear of any and all Liens or claims, including, without limitation, Liens
arising as a result of such Grantor becoming bound (as a result of merger or
otherwise) as a grantor under a security agreement entered into by another
Person, except for Permitted Liens. No financing statement, mortgage or other
public notice with respect to all or any part of the Collateral is on file or of
record in any public office, except (a) such as have been filed in favor of the
Administrative Agent, for the ratable benefit of the Secured Parties, pursuant
to this Agreement or as are permitted by the Credit Agreement, (b) such as have
been filed in connection with Permitted Liens, or (c) financing statements which
remain on file or of record in a public office notwithstanding the effective
termination, release or expiration thereof.

            4.3. Perfected First Priority Liens.

            The security interests granted pursuant to this Agreement (a) upon
completion of the filings and other actions specified on Schedule 3 (which, in
the case of all filings and other documents referred to on said Schedule, have
been delivered to the Administrative Agent in completed and, as applicable, duly
executed form, and may be filed by the Administrative Agent at any time) and
payment of all filing fees, will constitute valid perfected security interests
in all of the Collateral in favor of the Administrative Agent, for the ratable
benefit of the Secured Parties, as collateral security for such Grantor's
Obligations, enforceable in accordance with the terms hereof and (b) are prior
to all other Liens on the Collateral except for Permitted Liens.

                                       12
<PAGE>
Without limiting the foregoing, each Grantor has taken all actions necessary or
desirable, including without limitation those specified in Section 5.2 to
establish the Administrative Agent's "control" (within the meaning of Section
9-104 of the UCC) over all Deposit Accounts that are Collateral Accounts.

            4.4. Name; Jurisdiction of Organization, etc.

            On the date hereof, such Grantor's exact legal name (as indicated on
the public record of such Grantor's jurisdiction of formation or organization),
jurisdiction of organization, organizational i.d. number, if any, and the
location of such Grantor's chief executive office or sole place of business are
specified on Schedule 4. Each Grantor is organized solely under the law of the
jurisdiction so specified and has not filed any certificates of domestication,
transfer or continuance in any other jurisdiction. Except as otherwise indicated
on Schedule 4, the jurisdiction of each such Grantor's organization of formation
is required to maintain a public record showing the Grantor to have been
organized or formed. Except as specified on Schedule 4, it has not changed its
name, jurisdiction of organization, chief executive office or sole place of
business or its corporate structure in any way (e.g. by merger, consolidation,
change in corporate form or otherwise) within the five years preceding the date
hereof and has not within such five-year period become bound (whether as a
result of merger or otherwise) as a grantor under a security agreement entered
into by another Person, which has not heretofore been (or which is concurrently
herewith being) terminated.

            4.5. Inventory.

            (a) On the date hereof, the Inventory is kept at the locations
listed on Schedule 5;

            (b) any Inventory now or hereafter produced by any Grantor included
in the Collateral has been and will be produced in compliance with the
requirements of all applicable laws and regulations, including the Fair Labor
Standards Act, as amended; and

            (c) except as set forth on Schedule 6, no portion of the Inventory
that has a fair market value in excess of $500,000 is in the possession of an
issuer of a Negotiable Document (as defined in Section 7-104 of the UCC)
therefor or otherwise in the possession of any bailee or warehousemen.

            4.6. Farm Products.

            No portion of the Collateral that has a fair market value in excess
of $500,000 constitutes, or is the Proceeds of, Farm Products.

            4.7. Deposit Accounts.

            Schedule 2 hereto (as such schedule may be amended from time to
time) sets forth all of the Deposit Accounts in which each Grantor has an
interest. Each Grantor is the sole entitlement holder or customer of each such
account, and such Grantor has not consented to, and is not otherwise aware of,
any Person (other than the Administrative Agent pursuant hereto) having
"control" (within the meanings of Sections 8-106, 9-106 and 9-104 of the UCC)
over, or

                                       13
<PAGE>
any other interest in, any such Deposit Account or any securities, commodities
or other property credited thereto.

            4.8. Receivables.

            (a) Upon the delivery to the Administrative Agent of assignments and
notices of assignment substantially in the forms of Exhibits B-1 and B-2, or
such other form as may be required by the applicable Governmental Authority, and
the filing of each such notice with the Governmental Authority or agency or
other office described therein, the security interests granted hereunder shall
constitute valid assignments of the Receivables due under Eligible Government
Contracts to the extent that such assignment is governed by the Assignment of
Claims Act of 1940 (31 U.S.C. 3727, 41 U.S.C 15) (the "Assignment of Claims
Act").

            (b) As of the date hereof, such Grantor is not aware of any material
Receivable included in the Collateral that (i) is not and will not be the legal,
valid and binding obligation of the Account Debtor in respect thereof,
representing an unsatisfied obligation of such Account Debtor, (ii) is not and
will not be enforceable in accordance with its terms, (iii) is or will be
subject to any setoffs, defenses, taxes, counterclaims (except with respect to
refunds, returns and allowances in the ordinary course of business with respect
to damaged merchandise) and (iv) is not and will not be in compliance with all
applicable laws and regulations.

            4.9. Intellectual Property.

            (a) Each Grantor is the exclusive owner of the entire and
unencumbered right, title and interest in and to such items of Intellectual
Property as are reasonably necessary in the operation of such Grantor's business
and is otherwise entitled to use all such Intellectual Property, without
limitation, subject only to the license terms of applicable licensing or
franchise agreements.

            (b) As of the date hereof, all material Intellectual Property
reasonably necessary in the operation of such Grantor's business is valid,
subsisting, unexpired and enforceable, has not, to such Grantor's knowledge,
been abandoned and neither the operation of such Grantor's business as currently
conducted or as contemplated to be conducted nor the use of such Intellectual
Property in connection therewith would reasonably be expected to conflict with,
infringe, misappropriate, dilute, misuse or otherwise violate the intellectual
property rights of any other Person.

            (c) As of the date hereof none of the Collateral is the subject of
any licensing or franchise agreement pursuant to which the applicable Grantor is
the licensor or franchisor.

            (d) The rights of such Grantor in or to any Intellectual Property
would not reasonably be expected to conflict with or infringe upon the rights of
any third party, and, to such Grantor's knowledge, no claim has been asserted
that the use of such Intellectual Property does or may infringe upon the rights
of any third party, in either case, which conflict or infringement could
reasonably be expected to have a Material Adverse Effect. As of the date hereof,
there is no infringement or unauthorized use of any item of Intellectual
Property of such Grantor that would reasonably be expected to have a Material
Adverse Effect.

                                       14
<PAGE>
            (e) To such Grantor's knowledge, no holding, decision or judgment
has been rendered by any Governmental Authority which would limit, cancel or
question the validity or enforceability of, or such Grantor's rights in, any
Intellectual Property in any respect that would reasonably be expected to have a
Material Adverse Effect.

            (f) No action or proceeding is pending, or, to the knowledge of such
Grantor, threatened, on the date hereof (i) seeking to limit, cancel or question
the validity of any Intellectual Property or such Grantor's ownership interest
therein, (ii) alleging that any services provided by, processes used by, or
products manufactured or sold by such Grantor infringe any patent, trademark,
copyright, or any other right of any third party, or (iii) alleging that any
material Intellectual Property is being licensed, sublicensed or used in
violation of any patent, trademark, copyright or any other right of any third
party, in each case, which if adversely determined, would reasonably be expected
to have a Material Adverse Effect.

            4.10. Transmitting Utilities.

            Except as set forth on Schedule 7 hereto, no Grantor is a
"Transmitting Utility" as defined in Article 9 of the UCC.

                              SECTION 5. COVENANTS

            Each Grantor covenants and agrees with the Secured Parties that,
from and after the date of this Agreement until the Obligations (other than
Obligations in respect of any Swap Contracts) shall have been paid in full, no
Letter of Credit shall be outstanding and the Commitments shall have terminated
or expired:

            5.1. Covenants in Credit Agreement.

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

            5.2. Delivery and Control of Instruments, Chattel Paper, Negotiable
Documents and Deposit Accounts.

            (a) If any of the Collateral is or shall become evidenced or
represented by any Instrument, Negotiable Document or Tangible Chattel Paper, in
an amount in excess of $500,000, such Instrument (other than checks received in
the ordinary course of business), Negotiable Document or Tangible Chattel Paper
shall be promptly delivered to the Administrative Agent, duly endorsed in a
manner reasonably satisfactory to the Administrative Agent, to be held as
Collateral pursuant to this Agreement. With respect to any such Instrument,
Negotiable Document or Tangible Chattel Paper as of the Closing Date, the
Borrower shall as soon as reasonably as practicable after the Closing Date, and
in any event not to exceed 10 Business Days after the Closing Date, deliver such
Instrument, Negotiable Document or Tangible Chattel Paper to the Administrative
Agent in accordance with this Section 5.2(a).

                                       15
<PAGE>
            (b) If any of the Collateral is or shall become "Electronic Chattel
Paper" in an amount in excess of $500,000, such Grantor shall ensure that (i) a
single authoritative copy exists which is unique, identifiable, unalterable
(except as provided in clauses (iii), (iv) and (v) of this paragraph), (ii) that
such authoritative copy identifies the Administrative Agent as the assignee and
is communicated to and maintained by the Administrative Agent or its designee,
(iii) that copies or revisions that add or change the assignee of the
authoritative copy can only be made with the participation of the Administrative
Agent, (iv) that each copy of the authoritative copy and any copy of a copy is
readily identifiable as a copy and not the authoritative copy and (v) any
revision of the authoritative copy is readily identifiable as an authorized or
unauthorized revision.

            (c) Each Grantor shall maintain each Deposit Account that is a
Collateral Account only with financial institutions that have agreed to comply
with instructions issued or originated by the Administrative Agent without
further consent of such Grantor, such agreement to be substantially in the form
of Exhibit C or in another form reasonably acceptable to the Administrative
Agent.

            (d) Each Grantor shall ensure that all amounts received in respect
of Eligible Receivables shall at all times be deposited into a Deposit Account
that is a Collateral Account prior to distribution to any other account.

            5.3. Maintenance of Insurance.

            To the extent required by Section 6.07 of the Credit Agreement, such
Grantor will maintain with financially sound and reputable insurance companies
not Affiliates of the Borrower, in such amounts, with such deductibles and
covering such risks as are customarily carried by companies engaged in similar
businesses and owning similar properties in localities where such Grantor
operates.

            5.4. Payment of Obligations.

            Such Grantor will pay and discharge as the same shall become due and
payable, all its obligations and liabilities, including (a) all Federal and
state income taxes and other material taxes, assessments, fees and other
governmental charges levied or imposed upon it or its properties, income or
assets otherwise due and payable, except (i) those which are being contested in
good faith by appropriate proceedings diligently conducted and for which
adequate reserves have been provided in accordance with GAAP or (ii) to the
extent that a failure to do so would not reasonably be expected to result in a
Material Adverse Effect; (b) all lawful claims which, if unpaid, would by law
become a Lien upon its property; and (c) all Indebtedness, as and when due and
payable, but subject to any subordination provisions contained in any instrument
or agreement evidencing such Indebtedness.

            5.5. Maintenance of Perfected Security Interest; Further
Documentation.

            (a) Such Grantor shall maintain the security interest created by
this Agreement as a perfected security interest having at least the priority
described in Section 4.3 and shall defend such security interest against the
claims and demands of all Persons whomsoever.

                                       16
<PAGE>
            (b) To the extent required by Section 6.15 of the Credit Agreement,
such Grantor will furnish to the Administrative Agent from time to time (but no
more than once per fiscal year unless an Event of Default shall have occurred
and is continuing, in which case such Grantor will furnish such reports to the
Administrative Agent as often as the Administrative Agent may reasonably
request) statements and schedules further identifying and describing the
Collateral and such other reports in connection with the assets and property of
such Grantor as the Administrative Agent may reasonably request, all in
reasonable detail.

            (c) At any time and from time to time, upon the written request of
the Administrative Agent, and at the sole expense of such Grantor, such Grantor
will promptly and duly authorize, execute and deliver, and have recorded, such
further instruments and documents and take such further actions as the
Administrative Agent may reasonably request for the purpose of obtaining or
preserving the full benefits of this Agreement and of the rights and powers
herein granted, including, without limitation, (i) the filing of any financing
or continuation statements under the UCC (or other similar laws) in effect in
any jurisdiction with respect to the security interests created hereby
(including, without limitation, any such document or action in respect of the
Assignment of Claims Act; provided that the Borrower shall not be required at
any time to file any document or take any action in respect of the Assignment of
Claims Act if at such time no Receivables created pursuant to an Eligible
Government Contract are included in the Borrowing Base) and (ii) in the case of
each Deposit Account that is a Collateral Account, taking any actions reasonably
necessary to enable the Administrative Agent to obtain "control" (within the
meaning of the applicable UCC) with respect thereto, including, without
limitation, executing and delivering and causing the relevant depositary bank to
execute and deliver a Control Agreement substantially in the form attached
hereto as Exhibit C, or in another form reasonably acceptable to the
Administrative Agent.

            5.6. Changes in Locations, Name, Jurisdiction of Incorporation, etc.

            (a) Such Grantor will not permit a material portion of the Inventory
to be kept at a location other than those listed on Schedule 5, except upon 30
days' prior written notice to the Administrative Agent and delivery to the
Administrative Agent of duly authorized and, where required, executed copies of
(i) all additional financing statements and other documents reasonably requested
by the Administrative Agent to maintain the validity, perfection and priority of
the security interests provided for herein and (ii) if applicable, a written
supplement to Schedule 5 showing any additional location at which Inventory
shall be kept.

            (b) Without limiting the prohibitions on mergers involving the
Grantors contained in the Credit Agreement, such Grantor will not change its
name, reincorporate, reform or otherwise reorganize, or change its jurisdiction
of organization without having given the Administrative Agent not less than 30
days' prior written notice thereof and after having executed and delivered to
the Administrative Agent such further instruments and documents in connection
therewith as may be reasonably required by the Administrative Agent.

            5.7. Notices.

            Upon acquiring knowledge thereof, such Grantor will advise the
Secured Parties promptly, in reasonable detail, of:

                                       17
<PAGE>
            (a) any Lien (other than any Permitted Lien) on any of the
Collateral which would reasonably be expected to materially and adversely affect
the ability of the Administrative Agent to exercise any of its remedies
hereunder; and

            (b) the occurrence of any other event which would reasonably be
expected to have a material adverse effect on the aggregate value of the
Collateral or on the security interests created hereby.

            5.8. Receivables.

            (a) Other than in the ordinary course of business and so long as no
Event of Default shall have occurred and be continuing, such Grantor will not
(i) grant any extension of the time of payment of any Receivable, (ii)
compromise or settle any Receivable for less than the full amount thereof, (iii)
release, wholly or partially, any Person liable for the payment of any
Receivable, (iv) allow any credit or discount whatsoever on any Receivable or
(v) amend, supplement or modify any Receivable in any manner that would
reasonably be expected to adversely affect the value thereof.

            (b) Such Grantor will deliver to the Administrative Agent a copy of
each material demand, notice or document received by it that questions or calls
into doubt the validity or enforceability of more than 5% of the aggregate
amount of the then outstanding Receivables.

            (c) Each Grantor shall use commercially reasonable efforts to
perform and comply in all material respects with all of its obligations with
respect to the Receivables.

            (d) Each Grantor will take all steps necessary to comply with the
Assignment of Claims Act for all Receivables due under any Eligible Government
Contract, including, without limitation, obtaining assignments and notices of
assignment substantially in the forms of Exhibits B-1 and B-2, or such other
form as may be required by the applicable Governmental Authority, and filing
each such notice with the Governmental Authority or agency or other office
described therein.

            5.9. Intellectual Property.

            Such Grantor hereby gives a nonexclusive license and further agrees
to execute such documents and take such actions as may be reasonably requested
by the Administrative Agent in order to ensure that the Secured Parties may use,
without any charge or expense, any item of Intellectual Property useful or
necessary in connection with the exercise of any rights or remedies in respect
of the Collateral.

                         SECTION 6. REMEDIAL PROVISIONS

            6.1. Certain Matters Relating to Receivables and the Collateral
Account.

            (a) The Administrative Agent shall have the right to make test
verifications of the Receivables in accordance with, and to the extent permitted
by, the Credit Agreement, and each applicable Grantor shall furnish all such
assistance and information as the Administrative Agent may reasonably require in
connection with such test verifications.

                                       18
<PAGE>
            (b) Upon the occurrence and continuation of an Account Control
Default, and if requested by the Administrative Agent in writing, the Borrower
shall (without limiting the obligations of the Borrower under Section 5.2(d))
instruct all Account Debtors to make all payments in respect of Receivables
either (i) directly to the Administrative Agent (by instructing that such
payments be remitted to a post office box which shall be in the name and under
the control of the Administrative Agent) or (ii) to one or more other banks in
any state (other than Louisiana) in the United States (by instructing that such
payments be remitted to a post office box which shall be in the name and under
the control of such bank) under a Control Agreement substantially in the form of
Exhibit C hereto (or in another form reasonably acceptable to the Administrative
Agent) duly executed by the Borrower and such bank or under other arrangements,
in form and substance reasonably satisfactory to the Administrative Agent,
pursuant to which the Borrower shall have irrevocably instructed such other bank
(and such other bank shall have agreed) to remit all Proceeds of such payments
directly to the Administrative Agent for deposit into the Collateral Account
designated by the Administrative Agent or as the Administrative Agent may
otherwise instruct such bank. All such payments made to the Administrative Agent
shall be deposited in such Collateral Account. In addition to the foregoing, the
Borrower agrees that if the Proceeds of any Collateral hereunder (including the
payments made in respect of Accounts) shall be received by it upon or after the
occurrence and continuation of an Event of Default, the Borrower shall as
promptly as possible deposit such Proceeds into the Collateral Account
designated by the Administrative Agent. Until so deposited, all such Proceeds
shall be held in trust by the Borrower for the Administrative Agent and the
other Secured Parties and shall not be commingled with any other funds or
property of the Borrower.

            (c) There shall be deposited from time to time into the Collateral
Account designated by the Administrative Agent (i) the cash proceeds of the
Collateral required to be delivered to the Administrative Agent pursuant to
subsection (b) of this Section 6 (if any) or any other provision of this
Agreement and (ii) at the discretion of the Borrower, any other cash. Any income
received by the Administrative Agent with respect to the balance from time to
time standing to the credit of any Collateral Account, including any interest or
capital gains on Cash Collateral Investments, shall remain, or be deposited, in
such Collateral Account. The cash amounts on deposit from time to time in any
Collateral Account shall constitute part of the Collateral hereunder and shall
not constitute payment of the Obligations until applied thereto as hereinafter
provided.

            (d) Amounts on deposit in any Collateral Account shall be invested
and re-invested from time to time in such Cash Collateral Investments as the
Borrower shall determine, which Cash Collateral Investments shall be under the
control of the Administrative Agent, provided that, if an Account Control
Default has occurred and is continuing, the Administrative Agent shall, if
instructed by the Supermajority Lenders, liquidate any such Cash Collateral
Investment and apply or cause to be applied the proceeds thereof to the payment
of the Obligations in the manner specified in Section 6.4.

            (e) At the Administrative Agent's reasonable request, each Grantor
shall deliver to the Administrative Agent copies of all original and other
documents evidencing, and relating to, the agreements and transactions which
gave rise to the Receivables to the extent such documents are in the possession
of such Grantor or are otherwise reasonably capable of being

                                       19
<PAGE>
obtained by such Grantor, including, without limitation, copies of all original
orders, invoices and shipping receipts.

            6.2. Communications with Obligors; Grantors Remain Liable.

            (a) The Administrative Agent in its own name or in the name of
others may at any time after the occurrence and during the continuance of an
Event of Default communicate with obligors under the Receivables and parties to
any contract or other agreement to verify with them to the Administrative
Agent's reasonable satisfaction the existence, amount and terms of any
Receivables.

            (b) The Administrative Agent may at any time notify, or require any
Grantor to so notify, the Account Debtor or counterparty in respect of any
Receivable of the security interest of the Administrative Agent therein. In
addition, after the occurrence and during the continuance of an Event of
Default, the Administrative Agent may (i) upon written notice to the applicable
Grantor, notify, or require any Grantor to notify, the Account Debtor or
counterparty to make all payments under the Receivables directly to the
Administrative Agent, or (ii) in the case of any Collateral in the possession or
control of any warehouseman, bailee or any of the Borrower's agents or
processors, promptly upon request of the Administrative Agent at the request of
any Lender, the Borrower shall notify such warehouseman, bailee, agent or
processor of the security interests created hereby and to hold all such
Collateral for the Administrative Agent's account subject to the Administrative
Agent's instructions.

            (c) Anything herein to the contrary notwithstanding, each Grantor
shall remain liable under each of the Receivables to observe and perform all the
conditions and obligations to be observed and performed by it thereunder, all in
accordance with the terms of any agreement giving rise thereto. No Secured Party
shall have any obligation or liability under any Receivable (or any agreement
giving rise thereto) by reason of or arising out of this Agreement or the
receipt by any Secured Party of any payment relating thereto, nor shall any
Secured Party be obligated in any manner to perform any of the obligations of
any Grantor under or pursuant to any Receivable (or any agreement giving rise
thereto), to make any payment, to make any inquiry as to the nature or the
sufficiency of any payment received by it or as to the sufficiency of any
performance by any party thereunder, to present or file any claim, to take any
action to enforce any performance or to collect the payment of any amounts which
may have been assigned to it or to which it may be entitled at any time or
times.

            6.3. Proceeds to be Turned Over to Administrative Agent.

            In addition to the rights of the Secured Parties specified in
Section 6.1 with respect to payments of Receivables, if an Account Control
Default shall occur and be continuing, all Proceeds received by any Grantor
consisting of cash, Cash Equivalents, checks and other near-cash items shall be
held by such Grantor in trust for the Secured Parties, segregated from other
funds of such Grantor, and shall, forthwith upon receipt by such Grantor, be
turned over to the Administrative Agent in the exact form received by such
Grantor (duly endorsed by such Grantor to the Administrative Agent, if
required). All Proceeds while held by the Administrative Agent (or by such
Grantor in trust for the Secured Parties) shall continue to be held as
collateral

                                       20
<PAGE>
security for all the Obligations and shall not constitute payment thereof until
applied as provided in Section 6.5.

            6.4. Application of Proceeds.

            If an Event of Default shall have occurred and be continuing, the
Administrative Agent may, at any time, apply all or any part of the net Proceeds
(after deducting fees and expenses as provided in Section 6.6) constituting
Collateral realized through the exercise by the Administrative Agent of its
remedies hereunder or under any other Loan Document, whether or not held in any
Collateral Account, and any proceeds of the Guarantee set forth in Section 2, in
payment of the Obligations in the manner provided by Section 8.03 of the Credit
Agreement.

            6.5. Code and Other Remedies.

            (a) If an Event of Default shall occur and be continuing, the
Administrative Agent, on behalf of the Secured Parties, may exercise, in
addition to all other rights and remedies granted to them in this Agreement and
in any other instrument or agreement securing, evidencing or relating to the
Obligations, all rights and remedies of a secured party under the New York UCC
(whether or not the New York UCC applies to the affected Collateral) or its
rights under any other applicable law or in equity. Without limiting the
generality of the foregoing, the Administrative Agent, while an Event of Default
has occurred and is continuing, without demand of performance or other demand,
presentment, protest, advertisement or notice of any kind (except any notice
required by law referred to below) to or upon any Grantor or any other Person
(all and each of which demands, defenses, advertisements and notices are hereby
waived), may in such circumstances forthwith collect, receive, appropriate and
realize upon the Collateral, or any part thereof, and/or may forthwith sell,
lease, license, assign, give option or options to purchase, or otherwise dispose
of and deliver the Collateral or any part thereof (or contract to do any of the
foregoing), in one or more parcels at public or private sale or sales, at any
exchange, broker's board or office of any Secured Party or elsewhere upon such
terms and conditions as it may deem advisable and at such prices as it may deem
best, for cash or on credit or for future delivery without assumption of any
credit risk. Each Secured Party shall have the right upon any such public sale
or sales, and, to the extent permitted by law, upon any such private sale or
sales, to purchase the whole or any part of the Collateral so sold, free of any
right or equity of redemption in any Grantor, which right or equity is hereby
waived and released. Each purchaser at any such sale shall hold the property
sold absolutely free from any claim or right on the part of any Grantor, and
each Grantor hereby waives (to the extent permitted by applicable law) all
rights of redemption, stay and/or appraisal which it now has or may at any time
in the future have under any rule of law or statute now existing or hereafter
enacted. Each Grantor agrees that, to the extent notice of sale shall be
required by law, at least ten (10) days notice to such Grantor of the time and
place of any public sale or the time after which any private sale is to be made
shall constitute reasonable notification. The Administrative Agent shall not be
obligated to make any sale of Collateral regardless of notice of sale having
been given. The Administrative Agent may adjourn any public or private sale from
time to time by announcement at the time and place fixed therefor, and such sale
may, without further notice, be made at the time and place to which it was so
adjourned. The Administrative Agent may sell the Collateral without giving any
warranties as to the Collateral. The Administrative Agent may specifically
disclaim or modify any warranties of title or the like. To the extent permitted
by applicable law, each Grantor

                                       21
<PAGE>
hereby waives any claims against the Administrative Agent arising by reason of
the fact that the price at which any Collateral may have been sold at such a
private sale was less than the price which might have been obtained at a public
sale, even if the Administrative Agent accepts the first offer received and does
not offer such Collateral to more than one offeree. Each Grantor further agrees,
at the Administrative Agent's request, to assemble its Collateral and make it
available to the Administrative Agent at places which the Administrative Agent
shall reasonably select, whether at such Grantor's premises or elsewhere. The
Administrative Agent shall have the right to enter onto the property where any
Collateral is located and take possession thereof with or without judicial
process and shall be entitled to use or employ, without charge, all items of
Intellectual Property used or employed by any Grantor.

            (b) The Administrative Agent shall apply the net proceeds of any
action taken by it pursuant to this Section 6.5, after deducting all reasonable
costs and expenses of every kind incurred in connection therewith or incidental
to the care or safekeeping of any of the Collateral or in any way relating to
the Collateral or the rights of the Secured Parties hereunder, including,
without limitation, reasonable attorneys' fees and disbursements, to the payment
in whole or in part of the Obligations and only after such application and after
the payment by the Administrative Agent of any other amount required by any
provision of law, including, without limitation, Section 9-615(a) of the New
York UCC. If the Administrative Agent sells any of the Collateral upon credit,
the applicable Grantor will be credited only with payments actually made by the
purchaser and received by the Administrative Agent. In the event the purchaser
fails to pay for the Collateral, the Administrative Agent may resell the
Collateral and the applicable Grantor shall be credited with proceeds of the
sale. To the extent permitted by applicable law, each Grantor waives all claims,
damages and demands it may acquire against any Secured Party arising out of the
exercise by them of any rights hereunder.

            6.6. Waiver; Deficiency.

            Subject to the terms of Section 2.1(b), each Grantor shall remain
liable for any deficiency if the proceeds of any sale or other disposition of
the Collateral are insufficient to pay its Obligations and any Attorney Costs
incurred by any Secured Party to collect such deficiency.

                      SECTION 7. THE ADMINISTRATIVE AGENT

            7.1. Administrative Agent's Appointment as Attorney-in-Fact, etc.

            (a) Each Grantor hereby irrevocably constitutes and appoints the
Administrative Agent and any officer or agent thereof, with full power of
substitution, as its true and lawful attorney-in-fact with full irrevocable
power and authority in the place and stead of such Grantor and in the name of
such Grantor or in its own name, for the purpose of carrying out the terms of
this Agreement, to take any and all appropriate action and to execute any and
all documents and instruments which may be reasonably necessary or desirable to
accomplish the purposes of this Agreement, and, without limiting the generality
of the foregoing, each Grantor hereby gives the Administrative Agent the power
and right, on behalf of such Grantor, without notice to or assent by such
Grantor, to do any or all of the following:

                                       22
<PAGE>
                  (i) in the name of such Grantor or its own name, or otherwise,
      take possession of and endorse and collect any checks, drafts, notes,
      acceptances or other instruments for the payment of moneys due under any
      of its Receivables or with respect to any of its other Collateral and file
      any claim or take any other action or proceeding in any court of law or
      equity or otherwise deemed appropriate by the Administrative Agent for the
      purpose of collecting any and all such moneys due under any of its
      Receivables or with respect to any of its other Collateral whenever
      payable;

                  (ii) pay or discharge taxes and Liens levied or placed on or
      threatened against any of its Collateral, effect any repairs or any
      insurance called for by the terms of this Agreement and pay all or any
      part of the premiums therefor and the costs thereof;

                  (iii) execute, in connection with any sale provided for in
      Section 6.5, any endorsements, assignments or other instruments of
      conveyance or transfer with respect to any of its Collateral; and

                  (iv) (1) direct any party liable for any payment under any of
      its Collateral to make payment of any and all moneys due or to become due
      thereunder directly to the Administrative Agent or as the Administrative
      Agent shall direct; (2) ask or demand for, collect, and receive payment of
      and receipt for, any and all moneys, claims and other amounts due or to
      become due at any time in respect of or arising out of any Collateral; (3)
      sign and endorse any invoices, freight or express bills, bills of lading,
      storage or warehouse receipts, drafts against debtors, assignments,
      verifications, notices and other documents in connection with any of its
      Collateral; (4) commence and prosecute any suits, actions or proceedings
      at law or in equity in any court of competent jurisdiction to collect any
      of its Collateral or any portion thereof and to enforce any other right in
      respect of any of its Collateral; (5) defend any suit, action or
      proceeding brought against such Grantor with respect to any of its
      Collateral; (6) settle, compromise or adjust any such suit, action or
      proceeding and, in connection therewith, give such discharges or releases
      as the Administrative Agent may deem appropriate; and (7) generally, sell,
      transfer, pledge and make any agreement with respect to or otherwise deal
      with any of its Collateral as fully and completely as though the
      Administrative Agent were the absolute owner thereof for all purposes, and
      do, at the Administrative Agent's option and such Grantor's expense, at
      any time, or from time to time, all acts and things which the
      Administrative Agent deems necessary to protect, preserve or realize upon
      any of such Collateral and the Administrative Agent's security interests
      therein and to effect the intent of this Agreement, all as fully and
      effectively as such Grantor might do.

            Anything in this Section 7.1(a) to the contrary notwithstanding, the
Administrative Agent agrees that, except as provided in Section 7.1(b), it will
not exercise any rights under the power of attorney provided for in this Section
7.1(a) unless an Event of Default shall have occurred and be continuing.

            (b) If any Grantor fails to perform or comply with any of its
covenants contained herein, the Administrative Agent, at its option, but without
any obligation so to do, may perform or comply, or otherwise cause performance
or compliance, with such agreement; provided, however, that unless and Event of
Default has occurred and is continuing, the Administrative

                                       23
<PAGE>
Agent shall not exercise this power without first making demand on the Grantor
and the Grantor failing to promptly comply therewith.

            (c) The expenses of the Administrative Agent incurred in connection
with actions undertaken as provided in this Section 7.1, together with interest
thereon at a rate per annum equal to the rate per annum at which interest would
then be payable on past due Base Rate Loans under the Credit Agreement, from the
date of payment by the Administrative Agent to the date reimbursed by the
relevant Grantor, shall be payable by such Grantor to the Administrative Agent
on written demand.

            (d) Each Grantor hereby ratifies all that said attorneys shall
lawfully do or cause to be done by virtue hereof. All powers, authorizations and
agencies contained in this Agreement are coupled with an interest and are
irrevocable until this Agreement is terminated and the security interests
created hereby are released.

            7.2. Duty of Administrative Agent.

            The Administrative Agent's sole duty with respect to the custody,
safekeeping and physical preservation of the Collateral in its possession, under
Section 9-207 of the New York UCC or otherwise, shall be to deal with it in the
same manner as the Administrative Agent deals with similar property for its own
account. To the extent permitted under applicable law, neither the
Administrative Agent, nor any other Secured Party nor any of their respective
officers, directors, partners, employees, agents, attorneys and other advisors,
attorneys-in-fact or affiliates shall be liable for failure to demand, collect
or realize upon any of the Collateral or for any delay in doing so or shall be
under any obligation to sell or otherwise dispose of any Collateral upon the
request of any Grantor or any other Person or to take any other action
whatsoever with regard to the Collateral or any part thereof. The powers
conferred on the Secured Parties hereunder are solely to protect the Secured
Parties' interests in the Collateral and shall not impose any duty upon any
Secured Party to exercise any such powers. The Secured Parties shall be
accountable only for amounts that they actually receive as a result of the
exercise of such powers, and neither they nor any of their officers, directors,
partners, employees, agents, attorneys and other advisors, attorneys-in-fact or
affiliates shall be responsible to any Grantor for any act or failure to act
hereunder, except to the extent that any such act or failure to act is found by
a final and nonappealable decision of a court of competent jurisdiction to have
resulted from their own gross negligence or willful misconduct.

            7.3. Authorization of Financing Statements.

            Each Grantor acknowledges that pursuant to Section 9-509(b) of the
New York UCC and any other applicable law, the Administrative Agent is
authorized to file or record financing or continuation statements, and
amendments thereto, and other filing or recording documents or instruments with
respect to the Collateral in such form and in such offices as the Administrative
Agent reasonably determines appropriate to perfect or maintain the perfection of
the security interests of the Administrative Agent under this Agreement. Each
Grantor agrees that such financing statements may describe the collateral in the
same manner as described herein, or such other description as the Administrative
Agent, in its sole judgment, determines is necessary or advisable. A
photographic or other reproduction of this Agreement shall be

                                       24
<PAGE>
sufficient as a financing statement or other filing or recording document or
instrument for filing or recording in any jurisdiction.

            7.4. Authority of Administrative Agent.

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

            7.5. Appointment of Co-Collateral Agents.

            At any time or from time to time, in order to comply with any
requirement of law, the Administrative Agent may appoint another Secured Party,
either to act as co-agent or agents on behalf of the Secured Parties with such
power and authority as may be necessary for the effectual operation of the
provisions hereof and which may be specified in the instrument of appointment
(which may, in the discretion of the Administrative Agent, include provisions
for indemnification and similar protections of such co-agent or separate agent).

                            SECTION 8. MISCELLANEOUS

            8.1. Amendments in Writing.

            None of the terms or provisions of this Agreement may be waived,
amended, supplemented or otherwise modified except in accordance with Section
10.01 of the Credit Agreement.

            8.2. Notices.

            All notices, requests and demands to or upon the Administrative
Agent or any Grantor hereunder shall be effected in the manner provided for in
Section 10.02 of the Credit Agreement; provided that any such notice, request or
demand to or upon any Guarantor shall be addressed to such Guarantor at its
notice address set forth on Schedule 1.

            8.3. No Waiver by Course of Conduct; Cumulative Remedies.

            No Secured Party shall by any act (except by a written instrument
pursuant to Section 8.1), delay, indulgence, omission or otherwise be deemed to
have waived any right or remedy hereunder or to have acquiesced in any Default
or Event of Default. No failure to exercise, nor any delay in exercising, on the
part of any Secured Party, any right, power or privilege hereunder shall operate
as a waiver thereof. No single or partial exercise of any right, power or
privilege hereunder shall preclude any other or further exercise thereof or the
exercise

                                       25
<PAGE>
of any other right, power or privilege. A waiver by any Secured Party of any
right or remedy hereunder on any one occasion shall not be construed as a bar to
any right or remedy which such Secured Party would otherwise have on any future
occasion. The rights and remedies herein provided are cumulative, may be
exercised singly or concurrently and are not exclusive of any other rights or
remedies provided by law.

            8.4. Enforcement Expenses; Indemnification.

            (a) Each Grantor agrees (i) to pay or reimburse the Administrative
Agent for all reasonable costs and expenses incurred in connection with the
development, preparation, negotiation and execution of this Agreement and the
other Loan Documents and any amendment, waiver, consent or other modification of
the provisions hereof and thereof, and the consummation and administration of
the transactions contemplated hereby and thereby, including all Attorney Costs,
and (ii) to pay or reimburse the Administrative Agent and each Lender for all
costs and expenses incurred in connection with the enforcement, attempted
enforcement, or preservation of any rights or remedies under this Agreement or
the other Loan Documents (including all such costs and expenses incurred during
any "workout" or restructuring in respect of the Obligations and during any
legal proceeding, including any proceeding under any Debtor Relief Law),
including all Attorney Costs. The foregoing costs and expenses shall include all
search, filing, recording and appraisal charges and fees and taxes related
thereto, and other out-of-pocket expenses incurred by the Administrative Agent
and the cost of independent public accountants and other outside experts
retained by the Administrative Agent or any Lender. All amounts due under this
Section 8.4 shall be payable within thirty days after written demand therefor.
The agreements in this Section shall survive the termination of this Agreement.

            (b) Each Grantor shall indemnify and hold harmless each
Agent-Related Person, each Lender and their respective Affiliates, directors,
officers, employees, counsel, agents and attorneys-in-fact (collectively the
"Indemnitees") from and against any and all liabilities, obligations, losses,
damages, penalties, claims, demands, actions, judgments, suits, costs, expenses
and disbursements (including Attorney Costs) of any kind or nature whatsoever
which may at any time be imposed on, incurred by or asserted against any such
Indemnitee in any way relating to or arising out of or in connection with (i)
the execution, delivery, enforcement, performance or administration of any Loan
Document or any other agreement, letter or instrument delivered in connection
with the transactions contemplated thereby or the consummation of the
transactions contemplated thereby, (ii) any actual or alleged presence or
release of Hazardous Materials on or from any property currently or formerly
owned or operated by the Borrower, any Subsidiary or any other Loan Party, or
any Environmental Liability related in any way to the Borrower, any Subsidiary
or any other Loan Party, or (iii) any actual or prospective claim, litigation,
investigation or proceeding relating to any of the foregoing, whether based on
contract, tort or any other theory (including any investigation of, preparation
for, or defense of any pending or threatened claim, investigation, litigation or
proceeding) and regardless of whether any Indemnitee is a party thereto (all the
foregoing, collectively, the "Indemnified Liabilities"), IN ALL CASES, WHETHER
OR NOT CAUSED BY OR ARISING, IN WHOLE OR IN PART, OUT OF THE NEGLIGENCE OF THE
INDEMNITEE; provided that such indemnity shall not, as to any Indemnitee, be
available to the extent that such liabilities, obligations, losses, damages,
penalties, claims, demands, actions, judgments, suits, costs, expenses or
disbursements are determined by a

                                       26
<PAGE>
court of competent jurisdiction by final and nonappealable judgment to have
resulted from the gross negligence or willful misconduct of such Indemnitee. No
Indemnitee shall be liable for any damages arising from the use by others of any
information or other materials obtained through IntraLinks or other similar
information transmission systems in connection with the Credit Agreement, nor
shall any Indemnitee have any liability for any indirect or consequential
damages relating to this Agreement or any other Loan Document or arising out of
its activities in connection herewith or therewith (whether before or after the
Closing Date). All amounts due under this Section 8.4 shall be payable within
ten Business Days after written demand therefor. The agreements in this Section
shall survive the resignation of the Administrative Agent, the replacement of
any Lender, the termination of this Agreement.

            8.5. Successors and Assigns.

            This Agreement shall be binding upon the successors and assigns of
each Grantor and shall inure to the benefit of the Secured Parties and their
successors and assigns; provided that no Grantor may assign, transfer or
delegate any of its rights or obligations under this Agreement without the prior
written consent of the Administrative Agent.

            8.6. Set-Off.

            In addition to any rights and remedies of the Secured Parties
provided by law, upon the occurrence and during the continuance of any Event of
Default, each Secured Party is authorized at any time and from time to time,
without prior notice to each Grantor, any such notice being waived by the
Borrower (on its own behalf and on behalf of each Guarantor) to the fullest
extent permitted by law, to set off and apply any and all deposits (general or
special, time or demand, provisional or final) at any time held by, and other
indebtedness at any time owing by, such Secured Party to or for the credit or
the account of the respective Grantors against any and all Obligations owing to
such Secured Party hereunder or under any other Loan Document, now or hereafter
existing, irrespective of whether or not the Administrative Agent or such other
Secured Party shall have made demand under the this Agreement or any other Loan
Document and although such Obligations may be contingent or unmatured or
denominated in a currency different from that of the applicable deposit or
indebtedness. Each Secured Party agrees promptly to notify the Borrower and the
Administrative Agent after any such set-off and application made by such Secured
Party; provided, however, that the failure to give such notice shall not affect
the validity of such set-off and application.

            8.7. Counterparts.

            This Agreement may be executed by one or more of the parties to this
Agreement on any number of separate counterparts (including by telecopy), and
all of said counterparts taken together shall be deemed to constitute one and
the same instrument.

            8.8. Severability.

            Any provision of this Agreement which is prohibited or unenforceable
in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent
of such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition

                                       27
<PAGE>
or unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.

            8.9. Section Headings.

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

            8.10. Integration.

            This Agreement and the other Loan Documents represent the agreement
of the Grantors, the Administrative Agent and the other Secured Parties with
respect to the subject matter hereof and thereof, and there are no promises,
undertakings, representations or warranties by any Secured Party relative to
subject matter hereof and thereof not expressly set forth or referred to herein
or in the other Loan Documents.

            8.11. GOVERNING LAW.

            THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE
WITH, THE LAW OF THE STATE OF NEW YORK; PROVIDED THAT EACH SECURED PARTY SHALL
RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW.

            8.12. Submission to Jurisdiction; Waivers.

            Any legal action or proceeding with respect to this Agreement or any
other Loan Document may be brought in the courts of the State of New York
sitting in the County of New York or of the United States for the Southern
District of New York, and by execution and delivery of this Agreement, the
Administrative Agent and each Grantor consents, for itself and in respect of its
property, to the non-exclusive jurisdiction of those courts. The Administrative
Agent and each Grantor irrevocably waives any objection, including any objection
to the laying of venue or based on the grounds of forum non conveniens, which it
may now or hereafter have to the bringing of any action or proceeding in such
jurisdiction in respect of any Loan Document or other document related thereto.
Each Grantor and each Secured Party waives personal service of any summons,
complaint or other process, which may be made by any other means permitted by
the Law of such state.

            8.13. Acknowledgments.

            Each Grantor hereby acknowledges that:

            (a) it has been advised by counsel in the negotiation, execution and
delivery of this Agreement and the other Loan Documents to which it is a party;

            (b) no Secured Party has any fiduciary relationship with or duty to
any Grantor arising out of or in connection with this Agreement or any of the
other Loan Documents, and the

                                       28
<PAGE>
relationship between the Grantors, on the one hand, and the Secured Parties, on
the other hand, in connection herewith or therewith is solely that of debtor and
creditor; and

            (c) no joint venture is created hereby or by the other Loan
Documents or otherwise exists by virtue of the transactions contemplated hereby
among the Secured Parties or among the Grantors and the Secured Parties.

            8.14. Additional Grantors.

            Each Subsidiary of the Borrower that is required to become a party
to this Agreement pursuant to Section 6.12 of the Credit Agreement shall become
a Grantor for all purposes of this Agreement upon execution and delivery by such
Subsidiary of an Assumption Agreement in the form of Annex 1 hereto.

            8.15. Releases.

            (a) At such time as the Loans and the other Obligations shall have
been paid in full, the Commitments have been terminated or expired and no
Letters of Credit shall be outstanding, the Collateral shall be released from
the Liens created hereby, and this Agreement and all obligations (other than
those expressly stated to survive such termination) of the Administrative Agent
and each Grantor hereunder shall terminate, all without delivery of any
instrument or performance of any act by any party, and all rights to the
Collateral shall revert to the Grantors. At the request and sole expense of any
Grantor following any such termination, the Administrative Agent shall promptly
deliver to such Grantor any Collateral held by the Administrative Agent
hereunder, and execute and deliver to such Grantor such documents as such
Grantor shall reasonably request to evidence such termination.

            (b) If any of the Collateral shall be sold or otherwise disposed of
by any Grantor in a transaction permitted by the Credit Agreement, then the
Administrative Agent, at the request and sole expense of such Grantor, shall
promptly execute and deliver to such Grantor all releases or other documents
reasonably necessary or desirable for the release of the Liens created hereby on
such Collateral. At the request and sole expense of the Borrower, a Guarantor
shall be released from its obligations hereunder in the event that all the
capital stock of such Guarantor shall be disposed of in a transaction permitted
by the Credit Agreement; provided that the Borrower shall have delivered to the
Administrative Agent, at least five Business Days prior to the date of the
proposed release, a written request for release identifying the relevant
Guarantor and the terms of the disposition in reasonable detail, including the
price thereof and any expenses in connection therewith, together with a
certification by the Borrower stating that such transaction is in compliance
with the Credit Agreement and the other Loan Documents and that the Proceeds of
such disposition will be applied in accordance therewith.

            (c) Each Grantor acknowledges that it is not authorized to file any
financing statement or amendment or termination statement with respect to any
financing statement originally filed in connection herewith without the prior
written consent of the Administrative Agent subject to such Grantor's rights
under Section 9-509(d)(2) of the New York UCC.

            8.16. WAIVER OF JURY TRIAL.

                                       29
<PAGE>
            EACH GRANTOR AND THE ADMINISTRATIVE AGENT HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING
TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.

                  [Remainder of Page Intentionally Left Blank]

                                       30
<PAGE>
            IN WITNESS WHEREOF, each of the undersigned has caused this
Guarantee and Collateral Agreement to be duly executed and delivered as of the
date first above written.

                                        HOLLY CORPORATION

                                        By: /s/ Stephen J. McDonnell
                                           -------------------------------------
                                           Name:  Stephen J. McDonnell
                                           Title: Vice President and Chief
                                                  Financial Officer

                                        BLACK EAGLE, INC.
                                        HOLLYCORP AVIATION, LLC
                                        HOLLY REFINING & MARKETING COMPANY
                                        HOLLY PETROLEUM, INC.
                                        HOLLY REFINING COMMUNICATIONS, INC.
                                        LEA REFINING COMPANY
                                        LOREFCO, INC.
                                        MONTANA REFINING COMPANY, A PARTNERSHIP
                                             By: BLACK EAGLE, INC. and
                                                 NAVAJO NORTHERN, INC., its
                                                 partners
                                        MONTANA RETAIL CORPORATION
                                        NAVAJO CRUDE OIL PURCHASING, INC.
                                        NAVAJO HOLDINGS, INC.
                                        NAVAJO PIPELINE CO., L.P.
                                             By: NAVAJO PIPELINE GP, L.L.C., its
                                                 general partner
                                        NAVAJO PIPELINE GP, L.L.C.
                                        NAVAJO REFINING COMPANY, L.P.
                                             By: NAVAJO REFINING GP, L.L.C., its
                                                 general partner
                                        NAVAJO REFINING GP, L.L.C.
                                        NAVAJO WESTERN ASPHALT COMPANY
                                        WOODS CROSS REFINING COMPANY, L.L.C.

                                        By: /s/ Stephen J. McDonnell
                                           -------------------------------------
                                           Name:  Stephen J. McDonnell
                                           Title: Vice President and Chief
                                                  Financial Officer

                                       31
<PAGE>
                                        NAVAJO PIPELINE LP, L.L.C.

                                        By: /s/ James G. Townsend
                                           -------------------------------------
                                           Name:  James G. Townsend
                                           Title: President

                                        NAVAJO REFINING LP, L.L.C.

                                        By: /s/ James G. Townsend
                                           -------------------------------------
                                           Name:  James G. Townsend
                                           Title: Vice President
<PAGE>
                                        BANK OF AMERICA, N.A.,
                                        as Administrative Agent

                                        By: /s/ Claire Liu
                                           -------------------------------------
                                           Name:  Claire Liu
                                           Title: Managing Director<PAGE>
                                                                    EXHIBIT 10.1

                         SCICLONE PHARMACEUTICALS, INC.
                             2004 STOCK OPTION PLAN

      1.    ESTABLISHMENT, PURPOSE AND TERM OF PLAN.

            1.1 ESTABLISHMENT. The SciClone Pharmaceuticals, Inc. 2004 Stock
Option Plan (the "PLAN") is established effective as of May 26 2004, the date on
which it is approved by the stockholders of the Company (the "EFFECTIVE DATE").

            1.2 PURPOSE. The purpose of the Plan is to advance the interests of
the Participating Company Group and its stockholders by providing an incentive
to attract, retain and reward persons performing services for the Participating
Company Group and by motivating such persons to contribute to the growth and
profitability of the Participating Company Group.

            1.3 TERM OF PLAN. The Plan shall continue in effect until the
earlier of its termination by the Board or the date on which all of the shares
of Stock available for issuance under the Plan have been issued and all
restrictions on such shares under the terms of the Plan and the agreements
evidencing Options granted under the Plan have lapsed. However, all Options
shall be granted, if at all, within ten (10) years from the Effective Date.

      2.    DEFINITIONS AND CONSTRUCTION.

            2.1 DEFINITIONS. Whenever used herein, the following terms shall
have their respective meanings set forth below:

                  (a) "AFFILIATE" means (i) an entity, other than a Parent
Corporation, that directly, or indirectly through one or more intermediary
entities, controls the Company or (ii) an entity, other than a Subsidiary
Corporation, that is controlled by the Company directly, or indirectly through
one or more intermediary entities. For this purpose, the term "control"
(including the term "controlled by") means the possession, direct or indirect,
of the power to direct or cause the direction of the management and policies of
the relevant entity, whether through the ownership of voting securities, by
contract or otherwise; or shall have such other meaning assigned such term for
the purposes of registration on Form S-8 under the Securities Act.

                  (b) "BOARD" means the Board of Directors of the Company. If
one or more Committees have been appointed by the Board to administer the Plan,
"BOARD" also means such Committee(s).

                  (c) "CODE" means the Internal Revenue Code of 1986, as
amended, and any applicable regulations promulgated thereunder.

                  (d) "COMMITTEE" means the compensation committee or other
committee of the Board duly appointed to administer the Plan and having such
powers as shall be specified by the Board. Unless the powers of the Committee
have been specifically limited, the Committee shall have all of the powers of
the Board granted herein, including, without

<PAGE>

limitation, the power to amend or terminate the Plan at any time, subject to the
terms of the Plan and any applicable limitations imposed by law.

                  (e) "COMPANY" means SciClone Pharmaceuticals, Inc., a Delaware
corporation, or any successor corporation thereto.

                  (f) "CONSULTANT" means a person engaged to provide consulting
or advisory services (other than as an Employee or a Director) to a
Participating Company, provided that the identity of such person, the nature of
such services or the entity to which such services are provided would not
preclude the Company from offering or selling securities to such person pursuant
to the Plan in reliance on registration on a Form S-8 Registration Statement
under the Securities Act.

                  (g) "DIRECTOR" means a member of the Board or of the board of
directors of any other Participating Company.

                  (h) "DISABILITY" means the permanent and total disability of
the Optionee within the meaning of Section 22(e)(3) of the Code.

                  (i) "EMPLOYEE" means any person treated as an employee
(including an Officer or a Director who is also treated as an employee) in the
records of a Participating Company and, with respect to any Incentive Stock
Option granted to such person, who is an employee for purposes of Section 422 of
the Code; provided, however, that neither service as a Director nor payment of a
director's fee shall be sufficient to constitute employment for purposes of the
Plan. The Company shall determine in good faith and in the exercise of its
discretion whether an individual has become or has ceased to be an Employee and
the effective date of such individual's employment or termination of employment,
as the case may be. For purposes of an individual's rights, if any, under the
Plan as of the time of the Company's determination, all such determinations by
the Company shall be final, binding and conclusive, notwithstanding that the
Company or any court of law or governmental agency subsequently makes a contrary
determination.

                  (j) "EXCHANGE ACT" means the Securities Exchange Act of 1934,
as amended.

                  (k) "FAIR MARKET VALUE" means, as of any date, the value of a
share of Stock or other property as determined by the Board, in its discretion,
or by the Company, in its discretion, if such determination is expressly
allocated to the Company herein, subject to the following:

                        (i) If, on such date, the Stock is listed on a national
or regional securities exchange or market system, the Fair Market Value of a
share of Stock shall be the closing price of a share of Stock (or the mean of
the closing bid and asked prices of a share of Stock if the Stock is so quoted
instead) as quoted on the Nasdaq National Market, The Nasdaq SmallCap Market or
such other national or regional securities exchange or market system
constituting the primary market for the Stock, as reported in The Wall Street
Journal or such other source as the Company deems reliable. If the relevant date
does not fall on a day on which the Stock has traded on such securities exchange
or market system, the date on which the Fair Market Value shall be established
shall be the last day on which the Stock was so traded prior to

<PAGE>

the relevant date, or such other appropriate day as shall be determined by the
Board, in its discretion.

                        (ii) If, on such date, the Stock is not listed on a
national or regional securities exchange or market system, the Fair Market Value
of a share of Stock shall be as determined by the Board in good faith without
regard to any restriction other than a restriction which, by its terms, will
never lapse.

                  (l) "INCENTIVE STOCK OPTION" means an Option intended to be
(as set forth in the Option Agreement) and which qualifies as an incentive stock
option within the meaning of Section 422(b) of the Code.

                  (m) "INSIDER" means an Officer, a Director of the Company or
other person whose transactions in Stock are subject to Section 16 of the
Exchange Act.

                  (n) "NONSTATUTORY STOCK OPTION" means an Option not intended
to be (as set forth in the Option Agreement) or which does not qualify as an
Incentive Stock Option.

                  (o) "OFFICER" means any person designated by the Board as an
officer of the Company.

                  (p) "OPTION" means a right to purchase Stock pursuant to the
terms and conditions of the Plan. An Option may be either an Incentive Stock
Option or a Nonstatutory Stock Option.

                  (q) "OPTION AGREEMENT" means a written agreement between the
Company and an Optionee setting forth the terms, conditions and restrictions of
the Option granted to the Optionee and any shares acquired upon the exercise
thereof. An Option Agreement may consist of a form of "Notice of Grant of Stock
Option" and a form of "Stock Option Agreement" incorporated therein by
reference, or such other form or forms as the Board may approve from time to
time.

                  (r) "OPTIONEE" means a person who has been granted one or more
Options.

                  (s) "PARENT CORPORATION" means any present or future "parent
corporation" of the Company, as defined in Section 424(e) of the Code.

                  (t) "PARTICIPATING COMPANY" means the Company or any Parent
Corporation, Subsidiary Corporation or Affiliate.

                  (u) "PARTICIPATING COMPANY GROUP" means, at any point in time,
all corporations collectively which are then Participating Companies.

                  (v) "RULE 16b-3" means Rule 16b-3 under the Exchange Act, as
amended from time to time, or any successor rule or regulation.

                  (w) "SECTION 162(m)" means Section 162(m) of the Code.

                  (x) "SECURITIES ACT" means the Securities Act of 1933, as
amended.

<PAGE>

                  (y) "SERVICE" means an Optionee's employment or service with
the Participating Company Group, whether in the capacity of an Employee, a
Director or a Consultant. An Optionee's Service shall not be deemed to have
terminated merely because of a change in the capacity in which the Optionee
renders Service to the Participating Company Group or a change in the
Participating Company for which the Optionee renders such Service, provided that
there is no interruption or termination of the Optionee's Service. Furthermore,
an Optionee's Service shall not be deemed to have terminated if the Optionee
takes any military leave, sick leave, or other bona fide leave of absence
approved by the Company; provided, however, that if any such leave exceeds
ninety (90) days, on the one hundred eighty-first (181st) day following the
commencement of such leave any Incentive Stock Option held by the Optionee shall
cease to be treated as an Incentive Stock Option and instead shall be treated
thereafter as a Nonstatutory Stock Option unless the Optionee's right to return
to Service is guaranteed by statute or contract. Notwithstanding the foregoing,
unless otherwise designated by the Company or required by law, a leave of
absence shall not be treated as Service for purposes of determining vesting
under the Optionee's Option Agreement. An Optionee's Service shall be deemed to
have terminated either upon an actual termination of Service or upon the
corporation for which the Optionee performs Service ceasing to be a
Participating Company. Subject to the foregoing, the Company, in its discretion,
shall determine whether an Optionee's Service has terminated and the effective
date of such termination.

                  (z) "STOCK" means the common stock of the Company, as adjusted
from time to time in accordance with Section 4.2.

                  (aa) "SUBSIDIARY CORPORATION" means any present or future
"subsidiary corporation" of the Company, as defined in Section 424(f) of the
Code.

                  (bb) "TEN PERCENT STOCKHOLDER" means a person who, at the time
an Option is granted to such person, owns stock possessing more than ten percent
(10%) of the total combined voting power of all classes of stock of a
Participating Company within the meaning of Section 422(b)(6) of the Code.

            2.2 CONSTRUCTION. Captions and titles contained herein are for
convenience only and shall not affect the meaning or interpretation of any
provision of the Plan. Except when otherwise indicated by the context, the
singular shall include the plural and the plural shall include the singular. Use
of the term "or" is not intended to be exclusive, unless the context clearly
requires otherwise.

      3.    ADMINISTRATION.

            3.1 ADMINISTRATION BY THE BOARD. The Plan shall be administered by
the Board. All questions of interpretation of the Plan or of any Option shall be
determined by the Board, and such determinations shall be final and binding upon
all persons having an interest in the Plan or such Option.

            3.2 AUTHORITY OF OFFICERS. Any Officer shall have the authority to
act on behalf of the Company with respect to any matter, right, obligation,
determination or election which is the responsibility of or which is allocated
to the Company herein, provided the Officer has apparent authority with respect
to such matter, right, obligation, determination or election. The Board may, in
its discretion, delegate to a committee comprised of one or more Officers the

<PAGE>

authority to grant one or more Options, without further approval of the Board or
the Committee, to any person eligible pursuant to Section 5, other than a person
who, at the time of such grant, is an Insider; provided, however, that (i) such
Options shall not be granted for shares in excess of the maximum aggregate
number of shares of Stock authorized for issuance pursuant to Section 4.1, (ii)
the exercise price per share of each Option shall be not less than the Fair
Market Value per share of the Stock on the effective date of grant (or, if the
Stock has not traded on such date, on the last day preceding the effective date
of grant on which the Stock was traded), and (iii) each such Option shall be
subject to the terms and conditions of the appropriate standard form of Stock
Option Agreement approved by the Board or the Committee and shall conform to the
provisions of the Plan and such other guidelines as shall be established from
time to time by the Board or the Committee.

            3.3 POWERS OF THE BOARD. In addition to any other powers set forth
in the Plan and subject to the provisions of the Plan, the Board shall have the
full and final power and authority, in its discretion:

                  (a) to determine the persons to whom, and the time or times at
which, Options shall be granted and the number of shares of Stock to be subject
to each Option;

                  (b) to designate Options as Incentive Stock Options or
Nonstatutory Stock Options;

                  (c) to determine the Fair Market Value of shares of Stock or
other property;

                  (d) to determine the terms, conditions and restrictions
applicable to each Option (which need not be identical) and any shares acquired
upon the exercise thereof, including, without limitation, (i) the exercise price
of the Option, (ii) the method of payment for shares purchased upon the exercise
of the Option, (iii) the method for satisfaction of any tax withholding
obligation arising in connection with the Option or such shares, including by
the withholding or delivery of shares of stock, (iv) the timing, terms and
conditions of the exercisability of the Option or the vesting of any shares
acquired upon the exercise thereof, (v) the time of the expiration of the
Option, (vi) the effect of the Optionee's termination of Service on any of the
foregoing, and (vii) all other terms, conditions and restrictions applicable to
the Option or such shares not inconsistent with the terms of the Plan;

                  (e) to approve one or more forms of Option Agreement;

                  (f) to amend, modify, extend, cancel or renew any Option or to
waive any restrictions or conditions applicable to any Option or any shares
acquired upon the exercise thereof;

                  (g) to accelerate, continue, extend or defer the
exercisability of any Option or the vesting of any shares acquired upon the
exercise thereof, including with respect to the period following an Optionee's
termination of Service with the Participating Company Group;

                  (h) to prescribe, amend or rescind rules, guidelines and
policies relating to the Plan, or to adopt supplements to, or alternative
versions of, the Plan, including,

<PAGE>

without limitation, as the Board deems necessary or desirable to comply with the
laws of, or to accommodate the tax policy or custom of, foreign jurisdictions
whose citizens may be granted Options; and

                  (i) to correct any defect, supply any omission or reconcile
any inconsistency in the Plan or any Option Agreement and to make all other
determinations and take such other actions with respect to the Plan or any
Option as the Board may deem advisable to the extent not inconsistent with the
provisions of the Plan or applicable law.

            3.4 ADMINISTRATION WITH RESPECT TO INSIDERS. With respect to
participation by Insiders in the Plan, at any time that any class of equity
security of the Company is registered pursuant to Section 12 of the Exchange
Act, the Plan shall be administered in compliance with the requirements, if any,
of Rule 16b-3.

            3.5 COMMITTEE COMPLYING WITH SECTION 162(m). If the Company is a
"publicly held corporation" within the meaning of Section 162(m) of the Code,
the Board may establish a Committee of "outside directors" within the meaning of
Section 162(m) to approve the grant of any Option which might reasonably be
anticipated to result in the payment of employee remuneration that would
otherwise exceed the limit on employee remuneration deductible for income tax
purposes pursuant to Section 162(m).

            3.6 INDEMNIFICATION. In addition to such other rights of
indemnification as they may have as members of the Board or officers or
employees of the Participating Company Group, members of the Board and any
officers or employees of the Participating Company Group to whom authority to
act for the Board or the Company is delegated shall be indemnified by the
Company against all reasonable expenses, including attorneys' fees, actually and
necessarily incurred in connection with the defense of any action, suit or
proceeding, or in connection with any appeal therein, to which they or any of
them may be a party by reason of any action taken or failure to act under or in
connection with the Plan, or any right granted hereunder, and against all
amounts paid by them in settlement thereof (provided such settlement is approved
by independent legal counsel selected by the Company) or paid by them in
satisfaction of a judgment in any such action, suit or proceeding, except in
relation to matters as to which it shall be adjudged in such action, suit or
proceeding that such person is liable for gross negligence, bad faith or
intentional misconduct in duties; provided, however, that within sixty (60) days
after the institution of such action, suit or proceeding, such person shall
offer to the Company, in writing, the opportunity at its own expense to handle
and defend the same.

      4.    SHARES SUBJECT TO PLAN.

            4.1 MAXIMUM NUMBER OF SHARES ISSUABLE. Subject to adjustment as
provided in Section 4.2, the maximum aggregate number of shares of Stock that
may be issued under the Plan shall be two million five hundred thousand
(2,500,000). Shares issuable under the Plan shall consist of authorized but
unissued or reacquired shares of Stock or any combination thereof. If an
outstanding Option for any reason expires or is terminated or canceled without
having been exercised in full, the shares of Stock allocable to the unexercised
portion of such Option shall again be available for issuance under the Plan.
However, except as adjusted

<PAGE>

pursuant to Section 4.2, in no event shall more than two million five hundred
thousand (2,500,000) shares of Stock be available for issuance pursuant to the
exercise of Incentive Stock Options (the "ISO SHARE ISSUANCE LIMIT"). Shares of
Stock shall not be deemed to have been issued pursuant to the Plan to the extent
such shares are withheld in satisfaction of tax withholding obligations pursuant
to Section 9.2. If the exercise price of an Option is paid by tender to the
Company, or attestation to the ownership, of shares of Stock owned by the
Participant, the number of shares available for issuance under the Plan shall be
reduced by the gross number of shares for which the Option is exercised.

            4.2 ADJUSTMENTS FOR CHANGES IN CAPITAL STRUCTURE. Subject to any
required action by the stockholders of the Company, in the event of any change
in the Stock effected without receipt of consideration by the Company, whether
through merger, consolidation, reorganization, reincorporation,
recapitalization, reclassification, stock dividend, stock split, reverse stock
split, split-up, split-off, spin-off, combination of shares, exchange of shares,
or similar change in the capital structure of the Company, or in the event of
payment of a dividend or distribution to the stockholders of the Company in a
form other than Stock (excepting normal cash dividends) that has a material
effect on the Fair Market Value of shares of Stock, appropriate and
proportionate adjustments shall be made in the number and class of shares
subject to the Plan and to any outstanding Options, in the ISO Share Issuance
Limit set forth in Section 4.1, in the Section 162(m) Grant Limit set forth in
Section 5.4 and in the exercise price per share of any outstanding Options in
order to prevent dilution or enlargement of Optionees' rights under the Plan.
For purposes of the foregoing, conversion of any convertible securities of the
Company shall not be treated as "effected without receipt of consideration by
the Company." Any fractional share resulting from an adjustment pursuant to this
Section 4.2 shall be rounded down to the nearest whole number, and in no event
may the exercise price of any Option be decreased to an amount less than the par
value, if any, of the stock subject to the Option. Such adjustments shall be
determined by the Board, and its determination shall be final, binding and
conclusive.

      5.    ELIGIBILITY AND OPTION LIMITATIONS.

            5.1 PERSONS ELIGIBLE FOR OPTIONS. Options may be granted only to
Employees, Consultants and Directors. For purposes of the foregoing sentence,
"Employees," "Consultants"and "Directors" shall include prospective Employees,
prospective Consultants and prospective Directors to whom Options are granted in
connection with written offers of an employment or other service relationship
with the Participating Company Group; provided, however, that no Stock subject
to any such Option shall vest, become exercisable or be issued prior to the date
on which such person commences Service.

            5.2 PARTICIPATION. Options are granted solely at the discretion of
the Board. Eligible persons may be granted more than one (1) Option. However,
eligibility in accordance with this Section shall not entitle any person to be
granted an Option, or, having been granted an Option, to be granted an
additional Option.

            5.3 INCENTIVE STOCK OPTION LIMITATIONS.

                  (a) PERSONS ELIGIBLE. An Incentive Stock Option may be granted
only to a person who, on the effective date of grant, is an Employee of the
Company, a Parent

<PAGE>

Corporation or a Subsidiary Corporation (each being an "ISO-QUALIFYING
CORPORATION"). Any person who is not an Employee of an ISO-Qualifying
Corporation on the effective date of the grant of an Option to such person may
be granted only a Nonstatutory Stock Option. An Incentive Stock Option granted
to a prospective Employee upon the condition that such person become an Employee
of an ISO-Qualifying Corporation shall be deemed granted effective on the date
such person commences Service with an ISO-Qualifying Corporation, with an
exercise price determined as of such date in accordance with Section 6.1.

                  (b) FAIR MARKET VALUE LIMITATION. To the extent that options
designated as Incentive Stock Options (granted under all stock option plans of
the Participating Company Group, including the Plan) become exercisable by an
Optionee for the first time during any calendar year for stock having a Fair
Market Value greater than One Hundred Thousand Dollars ($100,000), the portions
of such options which exceed such amount shall be treated as Nonstatutory Stock
Options. For purposes of this Section 5.3(b), options designated as Incentive
Stock Options shall be taken into account in the order in which they were
granted, and the Fair Market Value of stock shall be determined as of the time
the option with respect to such stock is granted. If the Code is amended to
provide for a different limitation from that set forth in this Section 5.3(b),
such different limitation shall be deemed incorporated herein effective as of
the date and with respect to such Options as required or permitted by such
amendment to the Code. If an Option is treated as an Incentive Stock Option in
part and as a Nonstatutory Stock Option in part by reason of the limitation set
forth in this Section 5.3(b), the Optionee may designate which portion of such
Option the Optionee is exercising. In the absence of such designation, the
Optionee shall be deemed to have exercised the Incentive Stock Option portion of
the Option first. Separate certificates representing each such portion shall be
issued upon the exercise of the Option.

            5.4 SECTION 162(m) GRANT LIMIT. Subject to adjustment as provided in
Section 4.2, at any such time as the Company is a "publicly held corporation"
within the meaning of Section 162(m) of the Code, no Employee shall be granted
one or more Options within any fiscal year of the Company which in the aggregate
are for the purchase of more than one million two hundred fifty thousand
(1,250,000) shares (the "SECTION 162(m) GRANT LIMIT").

      6.    TERMS AND CONDITIONS OF OPTIONS.

            Options shall be evidenced by Option Agreements specifying the
number of shares of Stock covered thereby, in such form as the Board shall from
time to time establish. No Option or purported Option shall be a valid and
binding obligation of the Company unless evidenced by a fully executed Option
Agreement. Option Agreements may incorporate all or any of the terms of the Plan
by reference and shall comply with and be subject to the following terms and
conditions:

            6.1 EXERCISE PRICE. The exercise price for each Option shall be
established in the discretion of the Board; provided, however, that (a) the
exercise price per share for an Option shall be not less than the Fair Market
Value of a share of Stock on the effective date of grant of the Option and (b)
no Incentive Stock Option granted to a Ten Percent Stockholder shall have an
exercise price per share less than one hundred ten percent (110%) of the Fair
Market Value of a share of Stock on the effective date of grant of the Option.
Notwithstanding the foregoing, an Option (whether an Incentive Stock Option or a
Nonstatutory Stock Option) may be granted with

<PAGE>

an exercise price lower than the minimum exercise price set forth above if such
Option is granted pursuant to an assumption or substitution for another option
in a manner qualifying under the provisions of Section 424(a) of the Code.

            6.2 EXERCISABILITY AND TERM OF OPTIONS. Options shall be exercisable
at such time or times, or upon such event or events, and subject to such terms,
conditions, performance criteria and restrictions as shall be determined by the
Board and set forth in the Option Agreement evidencing such Option; provided,
however, that (a) no Incentive Stock Option shall be exercisable after the
expiration of ten (10) years after the effective date of grant of such Option
and (b) no Incentive Stock Option granted to a Ten Percent Stockholder shall be
exercisable after the expiration of five (5) years after the effective date of
grant of such Option. Subject to the foregoing, unless otherwise specified by
the Board in the grant of an Option, any Option granted hereunder shall
terminate ten (10) years after the effective date of grant of the Option, unless
earlier terminated in accordance with its provisions.

            6.3 PAYMENT OF EXERCISE PRICE.

                  (a) FORMS OF CONSIDERATION AUTHORIZED. Except as otherwise
provided below, payment of the exercise price for the number of shares of Stock
being purchased pursuant to any Option shall be made (i) in cash, by check or
cash equivalent, (ii) by tender to the Company, or attestation to the ownership,
of shares of Stock owned by the Optionee having a Fair Market Value not less
than the exercise price, (iii) by delivery of a properly executed notice
together with irrevocable instructions to a broker providing for the assignment
to the Company of the proceeds of a sale or loan with respect to some or all of
the shares being acquired upon the exercise of the Option (including, without
limitation, through an exercise complying with the provisions of Regulation T as
promulgated from time to time by the Board of Governors of the Federal Reserve
System) (a "CASHLESS EXERCISE"), (iv) by such other consideration as may be
approved by the Board from time to time to the extent permitted by applicable
law, or (v) by any combination thereof. The Board may at any time or from time
to time, by approval of or by amendment to the standard forms of Option
Agreement described in Section 7, or by other means, grant Options which do not
permit all of the foregoing forms of consideration to be used in payment of the
exercise price or which otherwise restrict one or more forms of consideration.

                  (b) LIMITATIONS ON FORMS OF CONSIDERATION.

                        (i) TENDER OF STOCK. Notwithstanding the foregoing, an
Option may not be exercised by tender to the Company, or attestation to the
ownership, of shares of Stock to the extent such tender or attestation would
constitute a violation of the provisions of any law, regulation or agreement
restricting the redemption of the Company's stock. Unless otherwise provided by
the Board, an Option may not be exercised by tender to the Company, or
attestation to the ownership, of shares of Stock unless such shares either have
been owned by the Optionee for more than six (6) months (and not used for
another Option exercise by attestation during such period) or were not acquired,
directly or indirectly, from the Company.

                        (ii) CASHLESS EXERCISE. The Company reserves, at any and
all times, the right, in the Company's sole and absolute discretion, to
establish, decline to approve or terminate any program or procedures for the
exercise of Options by means of a Cashless Exercise, including with respect to
one or more Optionees specified by the Company notwithstanding that such program
or procedures may be available to other Optionees.

<PAGE>

            6.4   EFFECT OF TERMINATION OF SERVICE.

                  (a) OPTION EXERCISABILITY. Subject to earlier termination of
the Option as otherwise provided herein and unless otherwise provided by the
Board in the grant of an Option and set forth in the Option Agreement, an Option
shall be exercisable after an Optionee's termination of Service only during the
applicable time period determined in accordance with this Section 6.4 and
thereafter shall terminate:

                        (i) DISABILITY. If the Optionee's Service terminates
because of the Disability of the Optionee, the Option, to the extent unexercised
and exercisable on the date on which the Optionee's Service terminated, may be
exercised by the Optionee (or the Optionee's guardian or legal representative)
at any time prior to the expiration of twelve (12) months (or such longer period
of time as determined by the Board, in its discretion) after the date on which
the Optionee's Service terminated, but in any event no later than the date of
expiration of the Option's term as set forth in the Option Agreement evidencing
such Option (the "OPTION EXPIRATION DATE").

                        (ii) DEATH. If the Optionee's Service terminates because
of the death of the Optionee, the Option, to the extent unexercised and
exercisable on the date on which the Optionee's Service terminated, may be
exercised by the Optionee's legal representative or other person who acquired
the right to exercise the Option by reason of the Optionee's death at any time
prior to the expiration of twelve (12) months (or such longer period of time as
determined by the Board, in its discretion) after the date on which the
Optionee's Service terminated, but in any event no later than the Option
Expiration Date. The Optionee's Service shall be deemed to have terminated on
account of death if the Optionee dies within three (3) months (or such longer
period of time as determined by the Board, in its discretion) after the
Optionee's termination of Service.

                        (iii) OTHER TERMINATION OF SERVICE. If the Optionee's
Service terminates for any reason, other than Disability or death, the Option,
to the extent unexercised and exercisable by the Optionee on the date on which
the Optionee's Service terminated, may be exercised by the Optionee at any time
prior to the expiration of three (3) months (or such longer period of time as
determined by the Board, in its discretion) after the date on which the
Optionee's Service terminated, but in any event no later than the Option
Expiration Date.

                  (b) EXTENSION IF EXERCISE PREVENTED BY LAW. Notwithstanding
the foregoing, other than termination of Service for Cause, if the exercise of
an Option within the applicable time periods set forth in Section 6.4(a) is
prevented by the provisions of Section 11 below, the Option shall remain
exercisable until thirty (30) days (or such longer period of time as determined
by the Board, in its discretion) after the date the Optionee is notified by the
Company that the Option is exercisable, but in any event no later than the
Option Expiration Date.

                  (c) EXTENSION IF OPTIONEE SUBJECT TO SECTION 16(b).
Notwithstanding the foregoing, other than termination of Service for Cause, if a
sale within the applicable time periods set forth in Section 6.4(a) of shares
acquired upon the exercise of the Option would subject the Optionee to suit
under Section 16(b) of the Exchange Act, the Option shall remain exercisable
until the earliest to occur of (i) the tenth (10th) day following the date on
which a sale of such shares by the Optionee would no longer be subject to such
suit, (ii) the one hundred

<PAGE>

and ninetieth (190th) day after the Optionee's termination of Service, or (iii)
the Option Expiration Date.

            6.5 TRANSFERABILITY OF OPTIONS. During the lifetime of the Optionee,
an Option shall be exercisable only by the Optionee or the Optionee's guardian
or legal representative. No Option shall be assignable or transferable by the
Optionee, except by will or by the laws of descent and distribution.
Notwithstanding the foregoing, to the extent permitted by the Board, in its
discretion, and set forth in the Option Agreement evidencing such Option, a
Nonstatutory Stock Option shall be assignable or transferable subject to the
applicable limitations, if any, described in the General Instructions to Form
S-8 Registration Statement under the Securities Act.

      7.    STANDARD FORMS OF OPTION AGREEMENT.

            7.1 OPTION AGREEMENT. Unless otherwise provided by the Board at the
time the Option is granted, an Option shall comply with and be subject to the
terms and conditions set forth in the appropriate form of Option Agreement
approved by the Board concurrently with its adoption of the Plan and as amended
from time to time.

            7.2 AUTHORITY TO VARY TERMS. The Board shall have the authority from
time to time to vary the terms of any standard form of Option Agreement
described in this Section 7 either in connection with the grant or amendment of
an individual Option or in connection with the authorization of a new standard
form or forms; provided, however, that the terms and conditions of any such new,
revised or amended standard form or forms of Option Agreement are not
inconsistent with the terms of the Plan.

      8.    CHANGE IN CONTROL.

            8.1 DEFINITIONS.

            (a) An "OWNERSHIP CHANGE EVENT" shall be deemed to have occurred if
any of the following occurs with respect to the Company: (i) the direct or
indirect sale or exchange in a single or series of related transactions by the
stockholders of the Company of more than fifty percent (50%) of the voting stock
of the Company; (ii) a merger or consolidation in which the Company is a party;
(iii) the sale, exchange, or transfer of all or substantially all of the assets
of the Company; or (iv) a liquidation or dissolution of the Company.

            (b) A "CHANGE IN CONTROL" shall mean an Ownership Change Event or a
series of related Ownership Change Events (collectively, a "TRANSACTION")
wherein the stockholders of the Company immediately before the Transaction do
not retain immediately after the Transaction, in substantially the same
proportions as their ownership of shares of the Company's voting stock
immediately before the Transaction, direct or indirect beneficial ownership of
more than fifty percent (50%) of the total combined voting power of the
outstanding voting securities of the Company or, in the case of a Transaction
described in Section 8.1(a)(iii), the corporation or other business entity to
which the assets of the Company were transferred (the "TRANSFEREE"), as the case
may be. For purposes of the preceding sentence, indirect beneficial ownership
shall include, without limitation, an interest resulting from ownership of the
voting securities of one or more corporations or other business entities which
own the Company or the Transferee, as the case may be, either directly or
through one or

<PAGE>

more subsidiary corporations or other business entities. The Board shall have
the right to determine whether multiple sales or exchanges of the voting
securities of the Company or multiple Ownership Change Events are related, and
its determination shall be final, binding and conclusive.

            8.2   EFFECT OF CHANGE IN CONTROL ON OPTIONS.

                  (a) ACCELERATED VESTING. Notwithstanding any other provision
of the Plan to the contrary, the Board, in its sole discretion, may provide in
any Option Agreement or, in the event of a Change in Control, may take such
actions as it deems appropriate to provide for the acceleration of the
exercisability and vesting in connection with such Change in Control of any or
all outstanding Options and shares acquired upon the exercise of such Options.

                  (b) ASSUMPTION OR SUBSTITUTION OF OPTIONS. In the event of a
Change in Control, the surviving, continuing, successor, or purchasing
corporation or other business entity or parent thereof, as the case may be (the
"ACQUIROR"), may, without the consent of any Optionee, either assume the
Company's rights and obligations under outstanding Options or substitute for
outstanding Options substantially equivalent options for the Acquiror's stock.
Any Options which are not assumed by the Acquiror in connection with the Change
in Control shall, to the extent not exercised as of the date of the Change in
Control, terminate and cease to be outstanding effective as of the date of the
Change in Control. Notwithstanding the foregoing, if the corporation the stock
of which is subject to the outstanding Options immediately prior to an Ownership
Change Event described in Section 8.1(a)(i) constituting a Change in Control is
the surviving or continuing corporation and immediately after such Ownership
Change Event less than fifty percent (50%) of the total combined voting power of
its voting stock is held by another corporation, the outstanding Options shall
not terminate unless the Board otherwise provides in its discretion. For the
purposes of this Section 8.2(b), an Option shall be considered assumed if, for
every share of Stock subject thereto immediately prior to the Change in Control,
the Optionee has the right, following the Change in Control, to acquire in
accordance with the terms and conditions of the assumed Option the consideration
(whether stock, cash or other securities or property) received in the Change in
Control transaction by holders of shares of Stock for each share held
immediately prior to such transaction (and if holders were offered a choice of
consideration, the type of consideration chosen by the holders of a majority of
the outstanding shares of Stock); provided, however, that if such consideration
received in the Change in Control transaction was not solely common stock of the
Acquiror, the Board may, with the consent of the Acquiror, provide for the
consideration to be acquired to be solely common stock of the Acquiror equal in
Fair Market Value to the per share consideration received by holders of Stock in
the Change in Control transaction.

                  (c) CASH-OUT OF OPTIONS. The Board may, in its sole discretion
and without the consent of any Optionee, determine that, upon the occurrence of
a Change in Control, each or any Option outstanding immediately prior to the
Change in Control shall be canceled in exchange for a payment with respect to
each vested share of Stock subject to such canceled Option in (i) cash, (ii)
stock of the Company or of a corporation or other business entity a party to the
Change in Control, or (iii) other property which, in any such case, shall be in
an amount having a Fair Market Value equal to the Fair Market Value of the
consideration to be paid per share of Stock in the Change in Control over the
exercise price per share under such Option (the "SPREAD"). In the event such
determination is made by the Board, the Spread

<PAGE>

(reduced by applicable withholding taxes, if any) shall be paid to Optionees in
respect of their canceled Options as soon as practicable following the date of
the Change in Control.

      9.    TAX WITHHOLDING.

            9.1 TAX WITHHOLDING IN GENERAL. The Company shall have the right to
deduct from any and all payments made under the Plan, or to require the
Optionee, through payroll withholding, cash payment or otherwise, including by
means of a Cashless Exercise of an Option, to make adequate provision for, the
federal, state, local and foreign taxes, if any, required by law to be withheld
by the Participating Company Group with respect to an Option or the shares
acquired pursuant thereto. The Company shall have no obligation to deliver
shares of Stock until the Participating Company Group's tax withholding
obligations have been satisfied by the Optionee.

            9.2 WITHHOLDING IN SHARES. The Company shall have the right, but not
the obligation, to deduct from the shares of Stock issuable to an Optionee upon
the exercise of an Option, or to accept from the Optionee the tender of, a
number of whole shares of Stock having a Fair Market Value, as determined by the
Company, equal to all or any part of the tax withholding obligations of the
Participating Company Group. The Fair Market Value of any shares of Stock
withheld or tendered to satisfy any such tax withholding obligations shall not
exceed the amount determined by the applicable minimum statutory withholding
rates.

      10.   COMPLIANCE WITH SECURITIES LAW.

            The grant of Options and the issuance of shares of Stock upon
exercise of Options shall be subject to compliance with all applicable
requirements of federal, state and foreign law with respect to such securities.
Options may not be exercised if the issuance of shares of Stock upon exercise
would constitute a violation of any applicable federal, state or foreign
securities laws or other law or regulations or the requirements of any stock
exchange or market system upon which the Stock may then be listed. In addition,
no Option may be exercised unless (a) a registration statement under the
Securities Act shall at the time of exercise of the Option be in effect with
respect to the shares issuable upon exercise of the Option or (b) in the opinion
of legal counsel to the Company, the shares issuable upon exercise of the Option
may be issued in accordance with the terms of an applicable exemption from the
registration requirements of the Securities Act. The inability of the Company to
obtain from any regulatory body having jurisdiction the authority, if any,
deemed by the Company's legal counsel to be necessary to the lawful issuance and
sale of any shares hereunder shall relieve the Company of any liability in
respect of the failure to issue or sell such shares as to which such requisite
authority shall not have been obtained. As a condition to the exercise of any
Option, the Company may require the Optionee to satisfy any qualifications that
may be necessary or appropriate, to evidence compliance with any applicable law
or regulation and to make any representation or warranty with respect thereto as
may be requested by the Company.

      11.   TERMINATION OR AMENDMENT OF PLAN.

            The Board may terminate or amend the Plan at any time. However,
subject to changes in applicable law, regulations or rules that would permit
otherwise, without the approval of the Company's stockholders, there shall be
(a) no increase in the maximum aggregate number of shares of Stock that may be
issued under the Plan (except by operation of the provisions of

<PAGE>

Section 4.2), (b) no change in the class of persons eligible to receive
Incentive Stock Options, and (c) no other amendment of the Plan that would
require approval of the Company's stockholders under any applicable law,
regulation or rule. No termination or amendment of the Plan shall affect any
then outstanding Option unless expressly provided by the Board. In any event, no
termination or amendment of the Plan may adversely affect any then outstanding
Option without the consent of the Optionee, unless such termination or amendment
is required to enable an Option designated as an Incentive Stock Option to
qualify as an Incentive Stock Option or is necessary to comply with any
applicable law, regulation or rule.

      12.   MISCELLANEOUS PROVISIONS.

            12.1 PROVISION OF INFORMATION. Each Optionee shall be given access
to information concerning the Company equivalent to that information generally
made available to the Company's common stockholders.

            12.2 RIGHTS AS EMPLOYEE OR CONSULTANT. No person, even though
eligible pursuant to Section 5, shall have a right to be selected as a Optionee,
or, having been so selected, to be selected again as a Optionee. Nothing in the
Plan or any Option granted under the Plan shall confer on any Optionee a right
to remain an Employee or Consultant, or interfere with or limit in any way any
right of a Participating Company to terminate the Optionee's Service at any
time. To the extent that an Employee of a Participating Company other than the
Company receives an Option under the Plan, that Option shall in no event be
understood or interpreted to mean that the Company is the Employee's employer or
that the Employee has an employment relationship with the Company.

            12.3 RIGHTS AS A STOCKHOLDER. An Optionee shall have no rights as a
stockholder with respect to any shares covered by an Option until the date of
the issuance of such shares (as evidenced by the appropriate entry on the books
of the Company or of a duly authorized transfer agent of the Company). No
adjustment shall be made for dividends, distributions or other rights for which
the record date is prior to the date such shares are issued, except as provided
in Section 4.2 or another provision of the Plan.

            12.4 FRACTIONAL SHARES. The Company shall not be required to issue
fractional shares upon the exercise of any Option.

            12.5 BENEFICIARY DESIGNATION. Subject to local laws and procedures,
each Optionee may file with the Company a written designation of a beneficiary
who is to receive any benefit under the Plan to which the Optionee is entitled
in the event of such Optionee's death before he or she receives any or all of
such benefit. Each designation will revoke all prior designations by the same
Optionee, shall be in a form prescribed by the Company, and will be effective
only when filed by the Optionee in writing with the Company during the
Optionee's lifetime. If a married Optionee designates a beneficiary other than
the Optionee's spouse, the effectiveness of such designation may be subject to
the consent of the Optionee's spouse. If a Optionee dies without an effective
designation of a beneficiary who is living at the time of the Optionee's death,
the Company will pay any remaining unpaid benefits to the Optionee's legal
representative.

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