Document:

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                                                                    EXHIBIT 10.3

                          PLEDGE AND SECURITY AGREEMENT

                           DATED AS OF AUGUST 22, 2002

                                      AMONG

                          ORBITAL SCIENCES CORPORATION

                          ORBITAL INTERNATIONAL, INC.,

                                   AS DEBTORS

                                       AND

                                U.S. BANK, N.A.,
                                AS SECURED PARTY

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                                TABLE OF CONTENTS

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                                                                                                          PAGE
<S>                                                                                                       <C>
1.       DEFINITIONS                                                                                        1
         1.1      GENERAL DEFINITIONS...................................................................    1
         1.2      DEFINITIONS; INTERPRETATION...........................................................    6

2.       GRANT OF SECURITY                                                                                  7
         2.1      GRANT OF SECURITY.....................................................................    7
         2.2      CERTAIN LIMITED EXCLUSIONS............................................................    8
         2.3      INTERCREDITOR AGREEMENT...............................................................    8

3.       SECURITY FOR OBLIGATIONS.                                                                          8
         3.1      SECURITY FOR OBLIGATIONS..............................................................    8
         3.2      OBLIGATIONS REMAIN....................................................................    8

4.       REPRESENTATIONS AND WARRANTIES AND COVENANTS.                                                      9
         4.1      GENERALLY.............................................................................    9
         4.2      EQUIPMENT AND INVENTORY...............................................................   12
         4.3      ACCOUNTS..............................................................................   12
         4.4      INVESTMENT PROPERTY...................................................................   13
         4.5      INTELLECTUAL PROPERTY.................................................................   18
         4.6      COMMERCIAL TORT CLAIMS................................................................   21

5.       FURTHER ASSURANCES; ADDITIONAL DEBTORS.                                                           21
         5.1      FURTHER ASSURANCES....................................................................   21
         5.2      ADDITIONAL DEBTORS....................................................................   23

6.       ATTORNEY-IN-FACT.                                                                                 24
         6.1      POWER OF ATTORNEY.....................................................................   24
         6.2      NO DUTY ON THE PART OF SECURED PARTY..................................................   25

7.       REMEDIES.                                                                                         25
         7.1      GENERALLY.............................................................................   25
         7.2      APPLICATION OF PROCEEDS...............................................................   27
         7.3      INVESTMENT PROPERTY...................................................................   27
         7.4      INTELLECTUAL PROPERTY.................................................................   28
         7.5      CASH PROCEEDS.........................................................................   29

8.       CONTINUING SECURITY INTEREST; TRANSFER OF NOTES.                                                  29

9.       STANDARD OF CARE; SECURED PARTY MAY PERFORM.                                                      30

10.      INDEMNITY AND EXPENSES.                                                                           30

11.      MISCELLANEOUS.                                                                                    30
         11.1     NOTICES...............................................................................   30
         11.2     EXPENSES..............................................................................   31
         11.3     AMENDMENTS AND WAIVERS................................................................   31
         11.4     SUCCESSORS AND ASSIGNS................................................................   32
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<S>                                                                                                        <C>
         11.5     INDEPENDENCE OF COVENANTS.............................................................   32
         11.6     SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS................................   32
         11.7     NO WAIVER; REMEDIES CUMULATIVE........................................................   32
         11.8     MARSHALING; PAYMENTS SET ASIDE........................................................   32
         11.9     SEVERABILITY..........................................................................   32
         11.10    HEADINGS..............................................................................   32
         11.11    APPLICABLE LAW........................................................................   32
         11.12    CONSENT TO JURISDICTION...............................................................   33
         11.13    WAIVER OF JURY TRIAL..................................................................   33
         11.14    COUNTERPARTS..........................................................................   34
         11.15    EFFECTIVENESS.........................................................................   34
         11.16    ENTIRE AGREEMENT......................................................................   34
         11.17    INDENTURE CONTROLS....................................................................   34
         11.18    TRUST INDENTURE ACT CONTROLS..........................................................   34
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<S>                     <C>
SCHEDULE 4.1  -         (A)    FULL LEGAL NAME/JURISDICTION OF ORGANIZATION/CHIEF EXECUTIVE OFFICE

                        (B)    OTHER NAMES

                        (C)    FINANCING STATEMENTS

SCHEDULE 4.2  -         LOCATION OF EQUIPMENT AND INVENTORY

SCHEDULE 4.4  -         INVESTMENT PROPERTY

SCHEDULE 4.5  -         INTELLECTUAL PROPERTY

SCHEDULE 4.6  -         COMMERCIAL TORT CLAIMS

EXHIBIT A - FORM OF PLEDGE SUPPLEMENT

EXHIBIT B - FORM OF PLEDGE JOINDER
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                  This PLEDGE AND SECURITY AGREEMENT, dated as of August 22,
2002 (this "AGREEMENT"), among ORBITAL SCIENCES CORPORATION, a Delaware
corporation ("ISSUER"), each of the undersigned Subsidiaries of Issuer (Issuer
and such Subsidiaries, together with each Subsidiary that subsequently becomes a
party hereto, each a "DEBTOR" and collectively, "DEBTORS"), and U.S. Bank, N.A.
(together with any successor Trustee pursuant to the terms of the Indenture,
"SECURED PARTY"), acting in the capacity of collateral agent for the benefit of
the holders of the Notes of Issuer issued under the Indenture referred to below.

                                R E C I T A L S:

                  WHEREAS, reference is made to that certain Indenture, dated as
of the date hereof (as it may be amended, restated, supplemented or otherwise
modified from time to time, the "INDENTURE"), by and among Issuer, the other
Debtors party thereto and Secured Party.

                  WHEREAS, in consideration of the extension of credit as set
forth in the Indenture each Debtor has agreed to secure all obligations under
the Indenture.

                  WHEREAS, Secured Party and Foothill Capital Corporation, as
agent, are parties to that certain Intercreditor and Subordination Agreement
dated as of August 22, 2002 (as amended, restated, modified or otherwise
supplemented from time to time, the "INTERCREDITOR AGREEMENT") pursuant to which
both parties, among other things, have established their relative priorities
with respect to the security interest granted in, and liens on, the Collateral
(as defined therein) and have agreed to the application of payment from the
disposition of the Collateral in the event of foreclosure upon or other
liquidation of such Collateral or in the event of bankruptcy of any of the
Debtors.

                  NOW, THEREFORE, in consideration of the premises and the
agreements, provisions and covenants herein contained, each Debtor and Secured
Party agree as follows:

1.       DEFINITIONS

         1.1 GENERAL DEFINITIONS.

         In this Agreement, the following terms shall have the following
         meanings:

                  "ACCOUNT DEBTOR" shall mean each Person who is obligated on an
Account or any Supporting Obligation related thereto.

                  "ACCOUNTS" shall mean all "accounts" as defined in Article 9
of the UCC.

                  "AGREEMENT" shall have the meaning set forth in the preamble.

                  "ADDITIONAL DEBTORS" shall mean those additional Persons that
may become parties to this Agreement as additional Debtors, by executing a
Pledge Joinder.

                  "BOOKS" shall mean books and records of Debtors (including all
of their Records indicating, summarizing, or evidencing assets (including the
Collateral) or liabilities, all Records relating to each Debtor's business
operations or financial conditions, and all of their goods or General
Intangibles related to such information, including, without limitation, (i)
original copies of all documents, instruments or other writings or electronic
records or other Records evidencing Accounts, (ii) all books, correspondence,
credit or other files, Records, ledger sheets or cards, invoices, and other
papers relating to Accounts, including, without limitation, all tapes, cards,
computer tapes, computer discs, computer

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runs, record keeping systems and other papers and documents relating to
Accounts, whether in the possession or under the control of Debtor or any
computer bureau or agent from time to time acting for Debtor or otherwise, (iii)
all evidences of the filing of financing statements and the registration of
other instruments in connection therewith, and amendments, supplements or other
modifications thereto, notices to other creditors or secured parties, and
certificates, acknowledgments, or other writings, including, without limitation,
lien search reports, from filing or other registration officers, (iv) all credit
information, reports and memoranda relating thereto and (v) all other written or
non-written forms of information related in any way to the foregoing or any
Account.

                  "CASH PROCEEDS" shall mean all proceeds of any Collateral
received by any Debtor consisting of cash, checks and cash equivalents.

                  "CHATTEL PAPER" shall mean all "chattel paper" as defined in
Article 9 of the UCC, including, without limitation, "electronic chattel paper"
or "tangible chattel paper", as each term is defined in Article 9 of the UCC.

                  "COLLATERAL" shall have the meaning set forth in Section 2.1.

                  "COMMERCIAL TORT CLAIMS" shall mean all "commercial tort
claims" as defined in the UCC, including, without limitation, the commercial
tort claims listed on Schedule 4.6 (as such schedule may be amended or
supplemented from time to time).

                  "COMMODITIES ACCOUNTS" (i) shall mean all "commodity accounts"
as defined in Article 9 of the UCC and (ii) shall include, without limitation,
all of the accounts listed on Schedule 4.4 under the heading "Commodities
Accounts" (as such schedule may be amended or supplemented from time to time).

                  "CONTROLLED FOREIGN CORPORATION" shall mean "controlled
foreign corporation" as defined in the United States Internal Revenue Code of
1986, as amended from time to time.

                  "COPYRIGHTS" shall mean (i) copyrights and copyright
registrations, including, without limitation, the copyright registrations listed
on Schedule 4.5(A) and (A) all renewals thereof, (B) all income, royalties,
damages and payments now and hereafter due or payable under and with respect
thereto, including, without limitation, payments under all licenses entered into
in connection therewith and damages and payments for past or future
infringements or dilutions thereof, (C) the right to sue for past, present and
future infringements and dilutions thereof, (D) the goodwill of any Debtor's
business symbolized by the foregoing and connected therewith, and (E) all of any
Debtor's rights corresponding thereto throughout the world; and (ii) all
proceeds of any and all of the foregoing, including, without limitation,
licensed royalties and proceeds of infringement suits.

                  "CREDIT AGREEMENT" shall mean the credit agreement, dated as
of March 1, 2002, by and among the Issuer, certain of its Subsidiaries, certain
financial institutions and Foothill Capital Corporation, as arranger and agent.
The term "Credit Agreement" shall include agreements in respect of Interest Swap
and Hedging Obligations and letter of credit facilities with lenders (or
Affiliates thereof) party to the Credit Agreement and shall also include any
amendment, amendment and restatement, renewal, extension, restructuring,
supplement or modification to any Credit Agreement and all refundings,
refinancings and replacements of any Credit Agreement, including any credit
agreement:

                  (1) extending the maturity of any Indebtedness incurred
thereunder or contemplated thereby,

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                  (2) adding or deleting borrowers or guarantors thereunder, so
long as borrowers and issuers include one or more of the Issuer and its
Subsidiaries and their respective successors and assigns,

                  (3) increasing the amount of Indebtedness incurred thereunder
or available to be borrowed thereunder; provided, that on the date such
Indebtedness is incurred it would not be prohibited by Section 4.7 of the
Indenture, or

                  (4) otherwise altering the terms and conditions thereof in a
manner not prohibited by the terms of the Indenture.

                  "CREDIT FACILITY DOCUMENTS" shall mean the Credit Agreement
and any related notes, guarantees, collateral documents, instruments and
agreements executed in connection therewith, as such credit agreement and/or
related documents may be amended, restated, supplemented, renewed, replaced or
otherwise modified from time to time, whether or not with the same agent,
trustee, representative lenders or holders, and, subject to the proviso in
clause (3) of the definition of "Credit Agreement," irrespective of any changes
in the terms and conditions thereof.

                  "CREDIT FACILITY SECURED PARTY" shall mean the agent or any
other Person acting on behalf and for the benefit of the lender(s) under the
Credit Agreement.

                  "DDA" shall mean any checking or other demand deposit account
maintained by any Debtor.

                  "DEPOSIT ACCOUNTS" (i) shall mean all "deposit accounts" as
defined in Article 9 of the UCC and (ii) shall include, without limitation, all
of the accounts listed on Schedule 4.4 under the heading "Deposit Accounts" and
all DDAs.

                  "EQUIPMENT" shall mean all equipment (including, without
limitation, the manufacturing equipment located at Issuer's Highbay facility
whether or not any such equipment is so attached to the real property that it
constitutes fixtures), machinery, machine tools, motors, furniture, furnishings,
vehicles (including motor vehicles), tools, parts, goods (other than consumer
goods, farm products, or Inventory), wherever located, including all
attachments, accessories, accessions, replacements, substitutions, additions,
and improvements to any of the foregoing, excluding assets described in clause
(a) of the definition of "Excluded Collateral."

                  "EXCLUDED COLLATERAL" shall mean all of Issuer's now owned
right, title, and interest in and to each of the following:

                  (a) that certain aircraft with Model Number L-1011-385-1-15,
Serial Number 193E-1067, and Registration Number N#140SC, and the engines and
all other parts attached thereto,

                  (b) the money, in an amount not to exceed $10,355,676 in the
aggregate, so long as such money is collateralizing the following existing
letters of credit: (i) (a) the letter of credit number M-12870/01G in the amount
of $1,847,500, the letter of credit number M-12974/02G in the amount of
$2,804,219, the letter of credit number M-12945/01G in the amount of $735,474,
which amount is being increased to $5,516,057, each of which were issued by the
International Commercial Bank of China in favor of the National Science Counsel,
the Executive Yuan of the Republic of China, (ii) the letter of credit number
930718 in the amount of $27,900 issued by Bank of America, N.A. (successor by
merger to NationsBank, N.A.) in favor of Hellenic Air Force Command, and (iii)
the letter of credit number SM416742C in the amount of $160,000 issued by
Wachovia Bank, N.A. (successor by merger to First Union National Bank) in favor
of Boston Properties Limited Partnership,

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                  (c) the common stock of ORBIMAGE that is owned or beneficially
held by Issuer,

                  (d) the outstanding capital stock of a Controlled Foreign
Corporation in excess of 65% of the voting power of all classes of capital stock
of such Controlled Foreign Corporation entitled to vote; provided that
immediately upon the amendment of the United States Internal Revenue Code of
1986, as amended, to allow the pledge of a greater percentage of the voting
power of capital stock in a Controlled Foreign Corporation without adverse tax
consequences, the Collateral shall include, and each Debtor shall be deemed to
have granted a security interest in, such greater percentage of capital stock of
each Controlled Foreign Corporation,

                  (e) assets secured by Purchase Money Obligations or Capital
Lease Obligations permitted to be incurred under the Indenture, and

                  (f) any assets, agreements, leases, permits or licenses or
other assets or property that cannot be subjected to a Lien hereunder without
the consent of third parties, to the extent that such consent is not obtained.

Upon any amendment to any of the Credit Facility Documents which results in a
narrowing of the definition of "Excluded Collateral" as set forth therein, the
definition of Excluded Collateral herein shall be automatically amended in the
same manner.

                  "FINANCIAL ASSET" shall mean "financial asset" as defined in
Article 8 of the UCC.

                  "GENERAL INTANGIBLES" shall mean all general intangibles
(including payment intangibles, contract rights, rights to payment, rights
arising under common law, statutes, or regulations, choses or things in action,
goodwill, patents, trade names, trademarks, servicemarks, copyrights,
blueprints, drawings, purchase orders, customer lists, monies due or recoverable
from pension funds, route lists, rights to payment and other rights under any
royalty or licensing agreements, infringement claims, computer programs,
information contained on computer disks or tapes, software, literature, reports,
catalogs, money, deposit accounts, insurance premium rebates, tax refunds, and
tax refund claims), and any other personal property other than goods, Accounts,
Investment Property, Negotiable Collateral and Chattel Paper.

                  "GOVERNMENTAL AUTHORITY" shall mean any federal, state,
municipal or other governmental department, commission, board, bureau, agency or
instrumentality, or any court, in each case whether of the United States or
foreign.

                  "INDEMNITEE" shall mean Secured Party and its Affiliates'
officers, partners, directors, trustees, employees, representatives and agents.

                  "INDENTURE" shall have the meaning set forth in the recitals
hereto.

                  "INDENTURE DOCUMENTS" shall mean the Purchase Agreement, the
Indenture, the Notes, the Guarantees, the Collateral Agreements, the Warrants,
the Warrant Agreement, the Note Registration Rights Agreement and the Warrant
Registration Rights Agreement, and such other agreements, instruments and
certificates executed and delivered (or issued) by Issuer or any other Debtor
pursuant to the Indenture or any of the foregoing, as any or all of the same may
be amended, restated, supplemented or otherwise modified from time to time.

                  "INTELLECTUAL PROPERTY" shall mean, collectively, the
Copyrights, the Patents, the Trademarks and the Intellectual Property Licenses.

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                  "INTELLECTUAL PROPERTY LICENSES" shall mean all rights under
or interest in any Patent, Trademark or Copyright license agreements with any
other party, whether a Debtor is a licensee or licensor under any such license
agreement, including, without limitation, the license agreements listed on
Schedule 4.5(E), and the right to use the foregoing in connection with the
enforcement of the Secured Party's rights under this Agreement or any other
Indenture Document, including without limitation, the right to prepare for sale
and sell any and all Inventory now or hereafter owned by any Debtor and now or
hereafter covered by such licenses, provided, however, that Intellectual
Property Licenses shall not include any license agreement in effect as of the
date hereof which by its terms prohibits the grant of the security interest
contemplated by this Agreement, except that upon the termination of such
prohibitions for any reason whatsoever, such license agreement shall be deemed
to be included in Intellectual Property Licenses.

                  "INVENTORY" shall mean all inventory, including goods held for
sale or lease or to be furnished under a contract of service, goods that are
leased by any Debtor as lessor, goods that are furnished by any Debtor under a
contract of service, and raw materials, work in process, or materials used or
consumed in any Debtor's business; including all accessions, additions,
attachments, improvements, substitutions and replacements thereto and therefor.

                  "INVESTMENT PROPERTY" shall mean all "investment property" as
defined in Article 9 of the UCC, including all Securities, Securities Accounts
and Commodities Accounts.

                  "ISSUE DATE" shall mean the date of first issuance of the 12%
Series A Second Priority Secured Notes due 2006 under the Indenture.

                  "MONEY" shall mean "money" as defined in the UCC.

                  "NEGOTIABLE COLLATERAL" shall mean all letters of credit,
letter of credit rights, instruments, promissory notes, drafts and documents (as
defined in Article 9 of the UCC).

                  "NOTES PROCEEDS ACCOUNT" shall mean account #33435500
maintained in the name of "Orbital Sciences Notes and Warrant Account" at U.S.
Bank, N.A. and all funds on deposit therein.

                  "ORBIMAGE" shall mean Orbital Imaging Corporation, a Delaware
corporation.

                  "PATENTS" shall mean all (i) patents and patent applications,
including, without limitation, the patents and patent applications listed on
Schedule 4.5(B), and (A) all extensions and adjustments thereof, (B) all income,
royalties, damages and payments now and hereafter due or payable under and with
respect thereto, including, without limitation, payments under all licenses
entered into in connection therewith and damages and payments for past or future
infringements thereof, (C) the right to sue for past, present and future
infringements thereof, and (D) all of any Debtor's rights corresponding thereto
throughout the world; and (ii) proceeds of any and all of the foregoing,
including, without limitation, license royalties and proceeds of infringement
suits.

                  "PLEDGE JOINDER" shall mean any joinder to this agreement in
substantially the form of Exhibit B.

                  "PLEDGE SUPPLEMENT" shall mean any supplement to this
agreement in substantially the form of Exhibit A.

                  "RECORD" shall mean information that is inscribed on a
tangible medium or that is stored in an electronic or other medium and is
retrievable in perceivable form.

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                  "REPLACEMENT CREDIT FACILITY SECURED PARTY" means the
collateral agent (or other agent serving in such capacity) pursuant to the
Credit Facility Documents or any other person or entity in whose favor any of
the Debtors may grant liens on and security interests in the Collateral in
connection with the replacement or refinancing of the Credit Agreement.

                  "SECURED OBLIGATIONS" shall have the meaning specified in
Section 3.1.

                  "SECURED PARTY" shall have the meaning set forth in the
preamble.

                  "SECURITIES" shall mean any stock, shares, partnership
interests, voting trust certificates, certificates of interest or participation
in any profit-sharing agreement or arrangement, options, warrants, bonds,
debentures, notes, or other evidences of indebtedness, secured or unsecured,
convertible, subordinated or otherwise, or in general any instruments commonly
known as "securities" or any certificates of interest, shares or participations
in temporary or interim certificates for the purchase or acquisition of, or any
right to subscribe to, purchase or acquire, any of the foregoing.

                  "SECURITIES ACCOUNTS" (i) shall mean all "securities accounts"
as defined in Article 8 of the UCC and (ii) shall include, without limitation,
all of the accounts listed on Schedule 4.4 under the heading "Securities
Accounts" (as such schedule may be amended or supplemented from time to time).

                  "SUPPORTING OBLIGATION" shall mean "supporting obligation" as
defined in Article 9 of the UCC.

                  "TRADEMARKS" shall mean (i) all trademarks, trade names,
registered trademarks, trademark applications, service marks, registered service
marks and service mark applications, including, without limitation, the trade
names, registered trademarks, trademark applications, registered service marks
and service mark applications listed on Schedule 4.5(D), and (A) all renewals
thereof, (B) all income, royalties, damages and payments now and hereafter due
or payable under and with respect thereto, including, without limitation,
payments under all licenses entered into in connection therewith and damages and
payments for past or future infringements or dilutions thereof, (C) the right to
sue for past, present and future infringements and dilutions thereof, (D) the
goodwill of any Debtor's business symbolized by the foregoing and connected
therewith, and (E) all of any Debtor's rights corresponding thereto throughout
the world; and (ii) all proceeds of any and all of the foregoing, including,
without limitation, license royalties and proceeds of infringement suits.

                  "UCC" shall mean the Uniform Commercial Code as in effect from
time to time in the State of New York or, when the context implies, the Uniform
Commercial Code as in effect from time to time in any other applicable
jurisdiction.

         1.2 DEFINITIONS; INTERPRETATION.

         All capitalized terms used herein (including the preamble and recitals
hereto) and not otherwise defined herein shall have the meanings ascribed
thereto in the Indenture or, if not defined therein, in the UCC. References to
"Sections," "Exhibits" and "Schedules" shall be to Sections, Exhibits and
Schedules, as the case may be, of this Agreement unless otherwise specifically
provided. Section headings in this Agreement are included herein for convenience
of reference only and shall not constitute a part of this Agreement for any
other purpose or be given any substantive effect. Any of the terms defined
herein may, unless the context otherwise requires, be used in the singular or
the plural, depending on the reference. The use herein of the word "include" or
"including", when following any general statement, term or matter, shall not be
construed to limit such statement, term or matter to the specific items or
matters set forth immediately following such word or to similar items or
matters, whether or not

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nonlimiting language (such as "without limitation" or "but not limited to" or
words of similar import) is used with reference thereto, but rather shall be
deemed to refer to all other items or matters that fall within the broadest
possible scope of such general statement, term or matter. If any conflict or
inconsistency exists between this Agreement and the Indenture, the Indenture
shall govern. All references herein to provisions of the UCC shall include all
successor provisions under any subsequent version or amendment to any Article of
the UCC.

2.       GRANT OF SECURITY

         2.1 GRANT OF SECURITY.

         Each Debtor hereby grants to Secured Party a security interest and
continuing lien on all of such Debtor's right, title and interest in, to and
under all property of such Debtor including, but not limited to the following,
in each case whether now owned or existing or hereafter acquired or arising and
wherever located (collectively, such Debtor's "COLLATERAL"):

                  (i)      Accounts;

                  (ii)     Books;

                  (iii)    Chattel Paper;

                  (iv)     Deposit Accounts, including any DDAs;

                  (v)      Equipment;

                  (vi)     Financial Assets;

                  (vii)    General Intangibles;

                  (viii)   Intellectual Property;

                  (ix)     Inventory;

                  (x)      Investment Property;

                  (xi)     Negotiable Collateral;

                  (xii)    The Notes Proceeds Account;

                  (xiii)   Commercial Tort Claims;

                  (xiv)    money, cash, Cash Equivalents, or other assets of any
                           Debtor that now or hereafter come into the
                           possession, custody, or control of Secured Party;

                  (xv)     to the extent not otherwise included above, all
                           Supporting Obligations relating to any of the
                           foregoing;

                  (xvi)    to the extent not otherwise included above, all of
                           the proceeds and products, whether tangible or
                           intangible, of any of the foregoing, including
                           proceeds of insurance or commercial tort claims,
                           covering any

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                           or all of the foregoing, and any and all Accounts,
                           Books, Chattel Paper, Deposit Accounts, Equipment,
                           Financial Assets, General Intangibles, Inventory,
                           Investment Property, Licenses, Negotiable Collateral,
                           Supporting Obligations, money, Deposit Accounts, or
                           other tangible or intangible property resulting from
                           the sale, lease, license, exchange, collection, or
                           other disposition of any of the foregoing, or any
                           portion thereof or interest therein, and the proceeds
                           thereof; and

                  (xvii)   to the extent not otherwise included above, all other
                           personal property of the Debtors of any kind or
                           description.

         2.2      CERTAIN LIMITED EXCLUSIONS.

         Notwithstanding anything herein to the contrary, in no event shall the
Collateral include any Excluded Collateral.

         2.3 INTERCREDITOR AGREEMENT.

         Notwithstanding anything herein to the contrary, the relative rights
and remedies of Secured Party hereunder and the Credit Facility Secured Party
shall be subject to and governed by the terms of the Intercreditor Agreement at
any time the Intercreditor Agreement is in effect. In the event of any
inconsistency between the terms hereof and the Intercreditor Agreement, the
Intercreditor Agreement shall control at any time the Intercreditor Agreement is
in effect. In the event that the obligations of any Debtor under this Agreement
conflict with the obligations of such Debtor under the Credit Facility
Documents, such Debtor shall be required to comply with the Credit Facility
Documents, and such compliance shall constitute compliance hereunder.

3.       SECURITY FOR OBLIGATIONS.

         3.1 SECURITY FOR OBLIGATIONS.

         With respect to each Debtor, this Agreement secures, and the Collateral
granted by such Debtor is collateral security for, the prompt and complete
payment or performance in full when due, whether at stated maturity, by required
prepayment, declaration, acceleration, demand or otherwise (including the
payment of amounts that would become due but for the operation of the automatic
stay under Section 362(a) of the Bankruptcy Code, 11 U.S.C. Section 362(a) (and
any successor provision thereof)), of all Obligations of such Debtor under the
Indenture Documents (the "SECURED OBLIGATIONS").

         3.2 OBLIGATIONS REMAIN.

         (a)      Anything contained herein to the contrary notwithstanding:

                  (i)      each Debtor shall remain liable under any partnership
                           agreement or limited liability company agreement
                           relating to any partnership interest or limited
                           liability company interest included in the Collateral
                           and any other contracts and agreements included in
                           the Collateral, to the extent set forth therein, to
                           perform all of its duties and obligations thereunder
                           to the same extent as if this Agreement had not been
                           executed;

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                  (ii)     the exercise by Secured Party of any of its rights
                           hereunder shall not release any Debtor from any of
                           its duties or obligations under the contracts and
                           agreements included in the Collateral; and

                  (iii)    Secured Party shall not have any obligation or
                           liability under any partnership agreement or limited
                           liability company agreement relating to any
                           partnership interest or limited liability company
                           interest included in the Collateral and any other
                           contracts and agreements included in the Collateral
                           by reason of this Agreement, nor shall Secured Party,
                           be obligated to perform any of the obligations or
                           duties of any Debtor thereunder or to take any action
                           to collect or enforce any claim for payment assigned
                           hereunder.

         (b) Neither Secured Party nor any purchaser at a foreclosure sale under
this Agreement shall be obligated to assume any obligation or liability under
any partnership agreement or limited liability company agreement relating to any
partnership interest or limited liability company interest included in the
Collateral or any other contracts and agreements included in the Collateral.

4.       REPRESENTATIONS AND WARRANTIES AND COVENANTS.

         4.1 GENERALLY.

         (a) Representations and Warranties. Each Debtor hereby represents and
warrants on the Issue Date that:

                  (i)      it owns the Collateral purported to be owned by it or
                           otherwise has the rights it purports to have in each
                           item of Collateral and, as to all Collateral whether
                           now existing or hereafter acquired, will continue to
                           own or have such rights in each item of the
                           Collateral, in each case free and clear of any and
                           all Liens, rights or claims of all other Persons
                           other than Permitted Liens, including, without
                           limitation, liens arising as a result of such Debtor
                           becoming bound (as a result of merger or otherwise)
                           as debtor under a security agreement entered into by
                           another Person;

                  (ii)     it has indicated on Schedule 4.1(A): (x) the type of
                           organization of such Debtor, (y) the jurisdiction of
                           organization of such Debtor and (z) the jurisdiction
                           where the chief executive office or its sole place of
                           business is, and for the lesser of the one-year
                           period preceding the date hereof or the period since
                           its formation or incorporation, as applicable, has
                           been, located;

                  (iii)    the full legal name of such Debtor is as set forth on
                           Schedule 4.1(A) and it has not done in the lesser of
                           the five-year period preceding the date hereof or the
                           period since its formation or incorporation, as
                           applicable, and does not do, business under any other
                           name (including any trade-name or fictitious business
                           name) except for those names set forth on Schedule
                           4.1(B);

                                       9
<PAGE>

                  (iv)     except for the Credit Facility Documents, such Debtor
                           has not within the lesser of the five-year period
                           preceding the date hereof or the period since its
                           formation or incorporation, as applicable, become
                           bound (whether as a result of merger or otherwise) as
                           debtor under a security agreement covering the
                           Collateral entered into by another Person as debtor,
                           which has not heretofore been terminated;

                  (v)      upon the filing of all UCC financing statements
                           naming each Debtor as "debtor" and Secured Party as
                           "Secured Party" and describing the Collateral in the
                           filing offices set forth opposite such Debtor's name
                           on Schedule 4.1(C) hereof and, to the extent not
                           subject to Article 9 of the UCC, upon the recordation
                           of the security interest granted hereunder in
                           Patents, Trademarks and Copyrights in the applicable
                           patent, trademark and copyright registries (including
                           the United States Patent and Trademark Office and the
                           United States Copyright Office), the registration of
                           all unregistered Copyrights and other filings
                           delivered by each Debtor, and the execution of the
                           agreements referred to in Section 4.4(c) by all
                           parties thereto, security interests granted to
                           Secured Party hereunder will constitute valid and
                           perfected Liens (subject in the case of priority only
                           to Permitted Liens and the Intercreditor Agreement);
                           provided, however, that the security interests with
                           respect to Deposit Accounts and Securities Accounts
                           shall be perfected only to the extent required
                           pursuant to Section 4.4(c);

                  (vi)     all actions and consents, including all filings,
                           notices, registrations and recordings necessary for
                           the exercise by Secured Party of the voting or other
                           rights provided for in this Agreement or the exercise
                           of remedies in respect of the Collateral have been
                           made or obtained except (i) for the landlord consents
                           referred to in Section 4.1(b)(vi) and such landlord
                           consents that are not otherwise required to be
                           delivered hereunder and (ii) to the extent any
                           consents or approvals are required under applicable
                           laws (including, without limitation, the Assignment
                           of Claims Act of 1940, as amended), the Intercreditor
                           Agreement, the Credit Facility Documents or any
                           Intellectual Property License, contract or agreement;

                  (vii)    other than the financing statements filed in favor of
                           Secured Party, no effective UCC financing statement,
                           fixture filing or other instrument similar in effect
                           under any applicable law covering all or any part of
                           the Collateral is on file in any filing or recording
                           office except for (x) financing statements which have
                           lapsed or for which proper termination statements
                           have been delivered to Secured Party for filing and
                           (y) financing statements filed in connection with
                           Permitted Liens;

                  (viii)   no authorization, approval or other action by, and no
                           notice to or filing with, any Governmental Authority
                           is required for either (i) the pledge or grant by any
                           Debtor of the Liens purported to be created in favor
                           of Secured Party hereunder or (ii) the exercise by
                           Secured Party of any rights or remedies in respect of
                           any Collateral (whether specifically granted or
                           created hereunder or created or provided for by
                           applicable law), except (A) for the filings
                           contemplated by clause (v) above, (B) as may be
                           required, in connection with the disposition of any
                           Investment

                                       10
<PAGE>

                           Property, by laws generally affecting the offering
                           and sale of Securities and (C) to the extent any
                           consents or approvals are required under applicable
                           laws (including, without limitation, the Assignment
                           of Claims Act of 1940, as amended), the Intercreditor
                           Agreement, the Credit Facility Documents or any
                           Intellectual Property License, contract or agreement;

                  (ix)     all information supplied by any Debtor with respect
                           to the Collateral taken as a whole is accurate and
                           complete in all material respects; and

                  (x)      none of the Collateral constitutes, or is the
                           proceeds (as defined in Article 9 of the UCC) of,
                           "farm products" (as defined in Article 9 of the UCC).

         (b) Covenants and Agreements. Each Debtor hereby covenants and agrees
that:

                  (i)      except for the security interest created by this
                           Agreement, it shall not create or suffer to exist any
                           Lien upon or with respect to any of the Collateral,
                           except Permitted Liens, and such Debtor shall defend
                           the Collateral against all Persons at any time
                           claiming any interest therein;

                  (ii)     it shall not produce, use or permit any Collateral to
                           be used unlawfully or in violation of any provision
                           of this Agreement or any applicable statute,
                           regulation or ordinance or any policy of insurance
                           covering the Collateral;

                  (iii)    it shall not change such Debtor's name, identity,
                           corporate structure, sole place of business, chief
                           executive office or jurisdiction of organization or
                           establish any trade names unless it shall have (a) if
                           such change would adversely affect the validity or
                           perfection of Secured Party's security interest in
                           the Collateral, notified Secured Party in writing, by
                           executing and delivering to Secured Party a completed
                           Pledge Supplement, substantially in the form of
                           Exhibit A attached hereto, together with Supplements
                           to Schedules 4.1(A), 4.1(B) or 4.1(C), as applicable,
                           at least thirty (30) days prior to any such change or
                           establishment, identifying such new proposed name,
                           identity, corporate structure, sole place of
                           business, chief executive office, jurisdiction of
                           organization or trade name and providing such other
                           information in connection therewith as Secured Party
                           may reasonably request and (b) taken all actions
                           necessary to maintain the continuous validity and
                           perfection of Secured Party's security interest in
                           the Collateral intended to be granted and agreed to
                           hereby;

                  (iv)     it shall pay promptly when due all property and other
                           taxes, assessments and governmental charges or levies
                           imposed upon, and all claims (including claims for
                           labor, materials and supplies) against, the
                           Collateral, except to the extent the validity thereof
                           is being contested in good faith; provided, such
                           Debtor shall in any event pay such taxes,
                           assessments, charges, levies or claims not later than
                           five (5) days prior to the date of any proposed sale
                           under any judgment, writ or warrant of

                                       11
<PAGE>

                           attachment entered or filed against such Debtor or
                           any of the Collateral as a result of the failure to
                           make such payment;

                  (v)      upon such Debtor or any officer of such Debtor
                           obtaining knowledge thereof, it shall promptly notify
                           Secured Party in writing of the levy of any legal
                           process against the Collateral or any portion
                           thereof; and

                  (vi)     it shall use reasonable best efforts (which will be
                           deemed not to include any obligation to pay money to
                           any third parties other than filing fees, reasonable
                           fees and expenses of the third party or other de
                           minimus payments) to deliver to Secured Party within
                           30 days after the Issue Date, or as soon as
                           practicable thereafter, landlord consents for the
                           properties located at: (i) 7170 Riverwood Drive,
                           Columbia, Maryland 21045, (ii) 3380 S. Price Road,
                           Chandler, Arizona 85248, (iii) 21700 Atlantic Blvd.,
                           Sterling, Virginia, (iv) 21829 Atlantic Blvd.,
                           Dulles, Virginia 20166 and (v) 21839 Atlantic Blvd.,
                           Dulles, Virginia 20166, to the extent it occupies and
                           has business activities on any of such premises as a
                           lessee under a lease, executed by the landlord in
                           respect of such lease the effect of which would
                           subordinate the claims of such landlord to the Liens
                           created under this Agreement and enable Secured Party
                           to access such premises without delay for the purpose
                           of enforcing such Liens.

         4.2 EQUIPMENT AND INVENTORY.

         (a) Representations and Warranties. Each Debtor represents and
warrants, on the Issue Date, that except for Inventory and Equipment temporarily
moved for the purpose of testing, conducting launches or otherwise fulfilling
contractual obligations in the ordinary course of business, all of the Equipment
and Inventory included in the Collateral is kept only at the locations specified
in Schedule 4.2.

         (b) Covenants and Agreements. Each Debtor covenants and agrees that:

                  (i)      it shall not deliver any Document (as defined in
                           Article 9 of the UCC) evidencing any Equipment and
                           Inventory to any Person other than the issuer of such
                           Document to claim the goods evidenced therefor or
                           Secured Party or the Credit Facility Secured Party or
                           any other holder or representative of a holder of a
                           Permitted Lien; and

                  (ii)     if any Collateral consisting of Equipment or
                           Inventory is in possession or control of any third
                           party which is a bailee or warehouseman, it shall, if
                           reasonably requested by Secured Party, notify such
                           third party of the Secured Party's security interest
                           and use its reasonable efforts in obtaining an
                           acknowledgment from such third party that it is
                           holding the Equipment and Inventory for the benefit
                           of the Secured Party or other holders of Permitted
                           Liens.

         4.3 ACCOUNTS.

                                       12

<PAGE>

         Covenants and Agreements: Each Debtor hereby covenants and agrees that:

         (a) it shall keep and maintain at its own cost and expense complete
records of the Accounts in a manner that enables such Debtor to produce
financial statements in accordance with GAAP;

         (b) it shall mark conspicuously all Chattel Paper and Negotiable
Collateral (other than any delivered to Secured Party as provided herein or to
Credit Facility Secured Party as provided in the Credit Facility Documents),
with an appropriate reference to the fact that Secured Party has a security
interest therein;

         (c) other than in the ordinary course of business as generally
conducted by it on and prior to the date hereof, and except as otherwise
provided in Section 4.3(e) below, following an Event of Default, such Debtor
shall not (w) grant any extension or renewal of the time of payment of any
Account, (x) compromise or settle any dispute, claim or legal proceeding with
respect to any Account for less than the total unpaid balance thereof, (y)
release, wholly or partially, any Person liable for the payment thereof, or (z)
allow any credit or discount thereon;

         (d) except as otherwise provided in this Section 4.3 and other than in
the ordinary course of business as generally conducted by it on and prior to the
date hereof, it shall continue to collect all amounts due or to become due to
such Debtor under the Accounts and any Supporting Obligation and diligently
exercise each material right it may have under any Account or any Supporting
Obligation, in each case, at its own expense and to the extent advisable in its
reasonable business judgment; and

         (e) it shall use reasonable efforts to keep in full force and effect
any Supporting Obligation relating to any Account to the extent advisable in its
reasonable business judgment.

         4.4 INVESTMENT PROPERTY.

         (a) Representations and Warranties. With respect to any capital stock
of Earthwatch, Inc., each Debtor hereby represents and warrants to the best of
such Debtor's knowledge, and with respect to all other Investment Property, each
Debtor hereby represents and warrants, that on the Issue Date:

                  (i)      Schedule 4.4 sets forth under the headings "Pledged
                           Stock, "Pledged LLC Interests," "Pledged Partnership
                           Interests" and "Pledged Trust Interests," all of the
                           equity interests owned by any Debtor included in the
                           Collateral and such equity interests constitute the
                           percentage of issued and outstanding shares of stock,
                           percentage of membership interests, percentage of
                           partnership interests or percentage of beneficial
                           interest of the respective issuers thereof to the
                           extent indicated on such Schedule;

                  (ii)     it is the record and beneficial owner of the equity
                           interests included in the Collateral free of all
                           Liens, rights or claims of other Persons other than
                           Permitted Liens;

                  (iii)    without limiting the generality of Section 4.1(a)(v),
                           no consent of any other general or limited partner of
                           a pledged partnership, any other member of a pledged
                           limited liability company or any other shareholder of
                           a pledged corporation is necessary in connection with
                           the creation or

                                       13
<PAGE>

                           perfection of the security interest of Secured Party
                           in any equity interests included in the Collateral or
                           (other than approvals required by applicable laws)
                           the exercise by Secured Party of the voting or other
                           rights provided for in this Agreement or the exercise
                           of remedies in respect thereof;

                  (iv)     as of the Issue Date, none of the equity interests
                           included in the Collateral are or represent interests
                           in issuers that are: (a) registered as investment
                           companies or (b) are dealt in or traded on securities
                           exchanges or markets;

                  (v)      Schedule 4.4 sets forth under the heading "Pledged
                           Debt" all of the issued and outstanding Indebtedness
                           evidenced by an instrument or certificated security
                           of the respective issuers thereof owing to such
                           Debtor and, to the best of such Debtor's knowledge,
                           none of such Pledged Debt is in default;

                  (vi)     Schedule 4.4 sets forth under the headings
                           "Securities Accounts" and "Commodities Accounts,"
                           respectively, all of the Securities Accounts and
                           Commodities Accounts in which each Debtor has an
                           interest. Each Debtor is the sole entitlement holder
                           of each such Securities Account and Commodities
                           Account, and such Debtor has not consented to, and is
                           not otherwise aware of, any Person (other than the
                           Credit Facility Secured Party) having "control" (as
                           defined in Section 9-115(e) of the UCC) over, or any
                           other interest in, any such Securities Account or
                           Commodity Account or any securities or other property
                           credited thereto;

                  (vii)    Schedule 4.4 sets forth under the heading "Deposit
                           Accounts" all of the Deposit Accounts in which each
                           Debtor has an interest and each Debtor is the sole
                           account holder of each such Deposit Account and such
                           Debtor has not consented to, and is not otherwise
                           aware of, any Person (other than Credit Facility
                           Secured Party) having either sole dominion and
                           control or "control" (within the meaning of Section
                           9-104 of Article 9 of the UCC) over, or any other
                           interest in, any such Deposit Account or any money or
                           other property deposited therein; and

                  (viii)   each Debtor has, to the extent required under Section
                           4.4(c), taken all actions necessary to: (a) establish
                           Secured Party's "control" (within the meaning of
                           Section 9-104 of the UCC) over all Deposit Accounts;
                           and (b) deliver all instruments (as defined in
                           Article 9 of the UCC) to Secured Party or Credit
                           Facility Secured Party pursuant to the terms of the
                           Credit Facility Documents and the Intercreditor
                           Agreement.

         (b) Covenants and Agreements. Each Debtor hereby covenants and agrees
             that:

                  (i)      it shall not vote to enable or take any other action
                           to: (a) amend or terminate any partnership agreement,
                           limited liability company agreement, certificate of
                           incorporation, by-laws or other organizational
                           documents in any way that adversely affects the
                           validity, perfection or priority of Secured Party's
                           security interest, (b) permit any of its Subsidiaries
                           to dispose of all or a material portion of their
                           assets in a manner which would be prohibited under
                           the Indenture or the Credit

                                       14
<PAGE>

                           Facility Documents, (c) waive any default under or
                           breach of any terms of any organizational document
                           relating to any of its Subsidiaries or the terms of
                           any Pledged Debt unless such waiver is deemed
                           advisable in such Debtor's reasonable business
                           judgment, or (d) cause any issuer of any partnership
                           interests or limited liability company interests
                           included in the Collateral which are not securities
                           (for purposes of the UCC) on the date hereof to elect
                           or otherwise take any action to cause such
                           partnership interests or limited liability company
                           interests to be treated as securities for purposes of
                           the UCC; unless such Debtor shall take all steps
                           necessary to establish Secured Party's "control"
                           thereof;

                  (ii)     in the event it acquires rights in any Investment
                           Property after the date hereof, it shall deliver to
                           Secured Party a completed Pledge Supplement,
                           substantially in the form of Exhibit A attached
                           hereto, together with a Supplement to Schedule 4.4,
                           reflecting such new Investment Property.
                           Notwithstanding the foregoing, it is understood and
                           agreed that the security interest of Secured Party
                           shall attach to all Investment Property immediately
                           upon any Debtor's acquisition of rights therein and
                           shall not be affected by the failure of any Debtor to
                           deliver a supplement to Schedule 4.4 as required
                           hereby;

                  (iii)    except as provided in the next sentence, in the event
                           such Debtor receives any dividends, interest or
                           distributions on any Investment Property, or any
                           securities or other property upon the merger,
                           consolidation, liquidation or dissolution of any
                           issuer of any Investment Property, then (a) such
                           dividends, interest or distributions and securities
                           or other property shall be included in the definition
                           of Collateral without further action and (b) except
                           with respect to Cash Proceeds, such Debtor shall
                           promptly take all steps, if any, necessary to ensure
                           the validity and perfection, priority and, if
                           applicable, control of the Credit Facility Secured
                           Party or the Secured Party over such Investment
                           Property (including, without limitation, delivery
                           thereof to Secured Party or Credit Facility Secured
                           Party in accordance with the terms of the
                           Intercreditor Agreement to the extent then in effect)
                           and pending any such action such Debtor shall be
                           deemed to hold such dividends, interest,
                           distributions, securities or other property in trust
                           for the benefit of the Secured Party and the Credit
                           Facility Secured Party and shall be segregated from
                           all other property of such Debtor. Notwithstanding
                           the foregoing, so long as no Event of Default shall
                           have occurred and be continuing, Secured Party
                           authorizes each Debtor to retain all ordinary and
                           extraordinary cash dividends and distributions paid
                           in the normal course of business and all payments of
                           principal and interest;

                  (iv)     it shall comply with all of its obligations under any
                           partnership agreement or limited liability company
                           agreement relating to partnership interests or
                           limited liability interests included in the
                           Collateral and shall enforce all of its material
                           rights with respect to any Investment Property, in
                           each case, as appropriate in such Debtor's reasonable
                           business judgment;

                                       15
<PAGE>

                  (v)      other than as permitted under the Indenture, it shall
                           not permit any of its Subsidiaries to merge or
                           consolidate unless (i) such Subsidiary creates a
                           security interest by executing a Pledge Joinder
                           pursuant to Section 5.2 that is perfected by a filed
                           financing statement (that is not effective solely
                           under section 9-508 of the UCC) in collateral in
                           which such new debtor has or acquires rights, in each
                           case, to the extent not created or perfected pursuant
                           to this Agreement and any financing statement in
                           effect at such time and (ii) all the outstanding
                           capital stock or other equity interests of the
                           surviving or resulting corporation, limited liability
                           company, partnership or other entity is, upon such
                           merger or consolidation, pledged hereunder; provided
                           that if the surviving or resulting company upon any
                           such merger or consolidation involving an issuer
                           which is a Controlled Foreign Corporation, then such
                           Debtor shall only be required to pledge equity
                           interests to the extent they are not Excluded
                           Collateral; and

                  (vi)     each Debtor consents to the grant by each other
                           Debtor of a security interest in all Investment
                           Property to Secured Party.

         (c) Delivery and Control. Each Debtor agrees that (i) with respect to
any Investment Property in which it has rights as of the Issue Date it shall
comply with the provisions of this Section 4.4(c) on or before the Issue Date;
and (ii) with respect to any Investment Property hereafter acquired by such
Debtor it shall comply with the provisions of this Section 4.4(c) promptly upon
acquiring rights therein. With respect to any Investment Property that is now or
hereafter represented by a certificate or that is an "instrument" (other than
any Investment Property credited to a Securities Account) it shall cause such
certificate or instrument to be delivered to the Credit Facility Secured Party
or the Secured Party (in accordance with the terms of the Intercreditor
Agreement to the extent then in effect), indorsed in blank by an "effective
indorsement" (as defined in Section 8-107 of the UCC), regardless of whether
such certificate constitutes a "certificated security" for purposes of the UCC.
In the event that at any time after the date of this Agreement any partnership
interest or limited liability company interest included in the Collateral is (i)
dealt in or traded on a securities exchange or in a securities market, (ii) by
its terms expressly provides that it is a security governed by Article 8 of the
UCC, (iii) is an investment company security or (iv) is held in a securities
account, the applicable Debtor will promptly notify Secured Party in writing of
such event, and will promptly execute such documents, and do such other acts or
things reasonably requested by Secured Party to deliver to Credit Facility
Secured Party or Secured Party (subject to the terms of the Intercreditor
Agreement to the extent then in effect) control (within the meaning of Article 8
of the UCC) of such partnership interest or limited liability company interest,
as applicable. Each Debtor represents and warrants that none of the events
described in clauses (i), (ii), (iii) or (iv) of the immediately preceding
sentence has occurred and is existing as of the date of this Agreement. No
Debtor will contest in any manner the perfection or priority of Secured Party's
lien on any partnership interest or limited liability company interest included
in the Collateral. With respect to any Investment Property consisting of
Securities Accounts or securities entitlements (as defined in Article 8 of the
UCC), to the extent required under the Credit Facility Documents, it shall use
its reasonable best efforts to cause the securities intermediary maintaining
such Securities Account or securities entitlement to enter into an agreement in
form and substance reasonably satisfactory to Secured Party pursuant to which it
shall, subject to the Intercreditor Agreement to the

                                       16
<PAGE>

extent then in effect, agree to comply with the Credit Facility Secured Party's
or the Secured Party's "entitlement orders" without further consent by such
Debtor. With respect to any material Investment Property that is a "Deposit
Account," to the extent required under the Credit Facility Documents, it shall
use its reasonable best efforts to cause the depositary institution maintaining
such account to enter into an agreement in form and substance reasonably
satisfactory to Secured Party, pursuant to which the Credit Agreement Secured
Party or the Secured Party, subject to the terms of the Intercreditor Agreement
to the extent then in effect and any agreements between Secured Party, Credit
Facility Secured Party and the depositary institution, shall have both dominion
and control over such Deposit Account (within the meaning of the common law) and
"control" (as defined in Section 9-104 of the UCC) over such Deposit Account. In
addition to the foregoing, if any issuer of any Investment Property is located
in a jurisdiction outside of the United States, each Debtor shall take such
additional actions within its power or control, including, without limitation,
causing the issuer to register the pledge on its books and records or making
such filings or recordings, in each case as the Secured Party may reasonably
request, under the laws of such issuer's jurisdiction to insure the validity,
perfection and priority of the security interest of Secured Party. Upon the
occurrence of an Event of Default, subject to the terms of the Credit Facility
Documents and the Intercreditor Agreement, in each case, to the extent then in
effect, any applicable laws (including, without limitation) and Section 7
hereof, Secured Party shall have the right to have all or any portion of the
partnership interests or limited liability company interests included in the
Collateral registered in its name or the name of a nominee or agent on the books
of the issuer, to the extent necessary to enforce its rights to receive
distributions with respect thereto or vote such partnership interests and
limited liability company interests; provided that no such registration shall
constitute a transfer of ownership and no Debtor shall be deemed to have waived
its rights under Section 9-610 of the UCC to have such partnership interests or
limited liability company interests sold in a public sale. In addition, Secured
Party (subject to and in accordance with the terms of the Intercreditor
Agreement to the extent then in effect) shall have the right at any time,
without notice to any Debtor, to exchange any certificates or instruments
representing any Investment Property for certificates or instruments of smaller
or larger denominations.

         (d) Voting and Distributions.

                  (i)      So long as no Event of Default shall have occurred
                           and be continuing, subject to applicable laws:

                           (A)      each Debtor shall be entitled to exercise or
                                    refrain from exercising any and all voting
                                    and other consensual rights pertaining to
                                    the Investment Property or any part thereof
                                    for any purpose not inconsistent with the
                                    terms of this Agreement or the Indenture;
                                    and

                           (B)      Secured Party shall promptly execute and
                                    deliver (or cause to be executed and
                                    delivered) to each Debtor all proxies, and
                                    other instruments as such Debtor may from
                                    time to time reasonably request for the
                                    purpose of enabling such Debtor to exercise
                                    the voting and other consensual rights when
                                    and to the extent which it is entitled to
                                    exercise pursuant to clause (A) above; and

                  (ii)     Upon the occurrence and during the continuation of an
                           Event of Default subject to Section 7.6(a),
                           applicable laws and the terms of the Credit Facility
                           Documents and the Intercreditor Agreement, in each
                           case, to the extent then in effect:

                           (A)      all rights of each Debtor to exercise or
                                    refrain from exercising the voting and other
                                    consensual rights which it would otherwise
                                    be entitled to exercise pursuant hereto
                                    shall cease and all such rights shall
                                    thereupon become vested in Secured Party who
                                    shall thereupon have the sole right to
                                    exercise such voting and other consensual
                                    rights; and

                                       17
<PAGE>

                           (B)      in order to permit Secured Party to exercise
                                    the voting and other consensual rights which
                                    it may be entitled to exercise pursuant
                                    hereto and to receive all dividends and
                                    other distributions which it may be entitled
                                    to receive hereunder: (1) each Debtor shall
                                    promptly execute and deliver (or cause to be
                                    executed and delivered) to Secured Party all
                                    proxies, dividend payment orders and other
                                    instruments as necessary or as Secured Party
                                    may from time to time reasonably request and
                                    (2) each Debtor acknowledges that Secured
                                    Party may utilize the power of attorney set
                                    forth in Section 6.

         4.5 INTELLECTUAL PROPERTY.

         (a) Representations and Warranties. Except with respect to the patents
listed on Schedule 4.5(C), each Debtor hereby represents and warrants, on the
Issue Date, that:

                  (i)      Schedule 4.5 sets forth a true and complete list of
                           (i) all United States, state and foreign
                           registrations of and applications for Patents,
                           Trademarks, and registered copyrights owned by each
                           Debtor and material to the business of such Debtor
                           and (ii) all Intellectual Property Licenses material
                           to the business of such Debtor;

                  (ii)     it is the sole and exclusive owner of the entire
                           right, title, and interest in and to all Intellectual
                           Property on Schedule 4.5 (other than Intellectual
                           Property Licenses where such Debtor is a
                           non-exclusive licensee), and owns or has the valid
                           right to use all other Intellectual Property
                           necessary to conduct its business, free and clear of
                           all Liens, claims, encumbrances and licenses, except
                           for Permitted Liens;

                  (iii)    all Intellectual Property material to the business of
                           each Debtor is subsisting and has not been adjudged
                           invalid or unenforceable, in whole or in part, and
                           each Debtor has performed all acts and has paid all
                           renewal, maintenance, and other fees and taxes
                           required to maintain each and every registration and
                           application of Intellectual Property material to the
                           business of such Debtor in full force and effect;

                  (iv)     all Intellectual Property material to the business of
                           each Debtor is valid and enforceable; no holding,
                           decision, or judgment has been rendered in any action
                           or proceeding before any court or administrative
                           authority challenging the validity of such Debtor's
                           right to register, or such Debtor's rights to own or
                           use, any Intellectual Property material to the
                           business of such Debtor and no such action or
                           proceeding is pending or, to the best of such
                           Debtor's knowledge, threatened;

                  (v)      all registrations and applications for Copyrights,
                           Patents and Trademarks material to the business of
                           such Debtor are standing in the name of each Debtor,
                           and other than in the ordinary course of such
                           Debtor's business, none of the Trademarks, Patents,
                           Copyrights or Trade Secret Collateral has been
                           licensed by any Debtor to any affiliate or third
                           party;

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<PAGE>

                  (vi)     each Debtor has been using appropriate statutory
                           notice of registration in connection with its use of
                           registered Trademarks, proper marking practices in
                           connection with the use of Patents, and appropriate
                           notice of copyright in connection with the
                           publication of Copyrights material to the business of
                           such Debtor;

                  (vii)    each Debtor uses adequate standards of quality in the
                           manufacture, distribution, and sale of all products
                           sold and in the provision of all services rendered
                           under or in connection with all Trademark Collateral
                           and has taken all action necessary to ensure that all
                           licensees of the Trademark Collateral owned by such
                           Debtor use such adequate standards of quality;

                  (viii)   to the best of such Debtor's knowledge, the conduct
                           of such Debtor's business does not infringe upon any
                           trademark, patent, copyright, trade secret or similar
                           intellectual property right owned or controlled by a
                           third party;

                  (ix)     to the best of such Debtor's knowledge, no third
                           party is infringing upon any material Intellectual
                           Property owned or used by such Debtor;

                  (x)      no settlement or consents, covenants not to sue,
                           nonassertion assurances, or releases have been
                           entered into by any Debtor or to which any Debtor is
                           bound that adversely affects such Debtor's rights to
                           own or use any Intellectual Property material to the
                           business of such Debtor; and

                  (xi)     except in connection with Permitted Liens, each
                           Debtor has not made a previous assignment, sale,
                           transfer or agreement constituting a present or
                           future assignment, sale, transfer or agreement of any
                           Intellectual Property material to the business of
                           such Debtor as currently conducted that has not been
                           terminated or released. There is no effective
                           financing statement or other document or instrument
                           now executed, or on file or recorded in any public
                           office, granting a security interest in or otherwise
                           encumbering any part of such Intellectual Property,
                           other than Permitted Liens and a security interest in
                           favor of Secured Party.

         (b) Covenants and Agreements. Each Debtor hereby covenants and agrees
as follows:

                  (i)      it shall not do any act or omit to do any act whereby
                           any of the Intellectual Property which is material to
                           the business of Debtor may lapse, or become
                           abandoned, dedicated to the public, or unenforceable,
                           or which would adversely affect the validity, grant,
                           or enforceability of the security interest granted
                           therein;

                  (ii)     with respect to any Trademarks which are material to
                           the business of any Debtor, each Debtor shall take
                           all commercially reasonable steps (as determined by
                           such Debtor in the exercise of its reasonable
                           business judgment) to require that licensees of such
                           Trademarks use standards of

                                       19
<PAGE>

                           quality consistent with the quality of products sold
                           and services rendered under any of such Trademarks as
                           of the date hereof;

                  (iii)    it shall take all reasonable steps in the United
                           States Patent and Trademark Office and the United
                           States Copyright Office, and, if reasonably requested
                           by the Secured Party, any state registry or any
                           foreign counterpart of the foregoing, to pursue any
                           application and maintain any registration of each
                           Trademark, Patent, and Copyright owned by any Debtor
                           and material to its business which is now or shall
                           become included in the Collateral constituting
                           Intellectual Property (except for such works with
                           respect to which such Debtor has determined in the
                           exercise of its commercially reasonable judgment that
                           it shall not seek registration) including, but not
                           limited to, those items on Schedule 4.5(A), (B) and
                           (D) (as each may be amended or supplemented from time
                           to time);

                  (iv)     in the event that any Intellectual Property owned by
                           or exclusively licensed to any Debtor that is
                           material to such Debtor's business is infringed,
                           misappropriated, or diluted by a third party, such
                           Debtor shall promptly take all reasonable actions (as
                           determined by such Debtor in the exercise of its
                           reasonable business judgment) to seek a remedy for
                           such infringement, misappropriation, or dilution and
                           protect its exclusive rights in such Intellectual
                           Property;

                  (v)      on such periodic basis as Secured Party shall
                           reasonably require and in any event no less
                           frequently than quarterly, not later than the
                           thirtieth day after the end of each quarter, it shall
                           report to Secured Party (i) the filing of any
                           application to register any Intellectual Property
                           with the United States Patent and Trademark Office,
                           the United States Copyright Office, or any state
                           registry or foreign counterpart of the foregoing
                           (whether such application is filed by such Debtor or
                           through any agent, employee, licensee, or designee
                           thereof) and (ii) the registration of any
                           Intellectual Property by any such office, in each
                           case by executing and delivering to Secured Party a
                           completed Pledge Supplement, substantially in the
                           form of Exhibit A attached hereto, together with a
                           Supplement to Schedule 4.5;

                  (vi)     in connection with the actions required pursuant to
                           Section 4.5(b)(v), it shall promptly execute and
                           deliver to Secured Party any document required to
                           acknowledge, confirm, register, record, or perfect
                           Secured Party's interest in any part of the
                           Intellectual Property, whether now owned or hereafter
                           acquired;

                  (vii)    except as permitted under the Indenture, no Debtor
                           shall execute, and there will not be on file in any
                           public office, any financing statement or other
                           document or instruments, except financing statements
                           or other documents or instruments filed or to be
                           filed in favor of creditors under Permitted Liens,
                           Secured Party or the Credit Facility Secured Party,
                           and no Debtor shall create or suffer to exist any
                           Lien upon or with respect to the Intellectual
                           Property, except for Permitted Liens, the Lien
                           created by

                                       20
<PAGE>

                           and under this Security Agreement and the other
                           Indenture Documents and the Lien in favor of the
                           Credit Facility Secured Party;

                  (viii)   it shall hereafter use commercially reasonable
                           efforts consistent with industry practice (as
                           determined by such Debtor in the exercise of its
                           reasonable business judgment) so as not to permit the
                           inclusion in any contract to which it hereafter
                           becomes a party of any provision that could
                           reasonably be expected to in any way materially
                           impair or prevent the creation of a security interest
                           in, or the assignment of, such Debtor's rights and
                           interests in any material property included within
                           the definitions of any Intellectual Property acquired
                           under such contracts;

                  (ix)     it shall use proper statutory notice in connection
                           with its use of any material Intellectual Property;
                           and

                  (x)      it shall continue to collect, at its own expense, all
                           amounts due or to become due to such Debtor in
                           respect of the Intellectual Property or any portion
                           thereof as it deems advisable in its reasonable
                           business judgment. In connection with such
                           collections, each Debtor may take such action as such
                           Debtor may deem reasonably necessary or advisable to
                           enforce collection of such amounts. Notwithstanding
                           the foregoing, subject to the Credit Facility
                           Documents and the Intercreditor Agreement as then in
                           effect, Secured Party shall have the right at any
                           time following an Event of Default, to notify, or
                           require any Debtor to notify, any obligors with
                           respect to any such amounts of the existence of the
                           security interest created hereby.

         4.6 COMMERCIAL TORT CLAIMS.

         (a) Representations and Warranties. Each Debtor hereby represents and
warrants, on the Issue Date, that Schedule 4.6 sets forth all Commercial Tort
Claims of each Debtor against third parties; and

         (b) Covenants and Agreements. Each Debtor hereby covenants and agrees
that with respect to any Commercial Tort Claim of it against third parties
hereafter arising it shall deliver to Secured Party a completed Pledge
Supplement, substantially in the form of Exhibit A attached hereto, together
with a Supplement to Schedule 4.6, identifying such new Commercial Tort Claims.

5.       FURTHER ASSURANCES; ADDITIONAL DEBTORS.

         5.1 FURTHER ASSURANCES.

         (a) Each Debtor agrees that from time to time, at the expense of such
Debtor, it shall promptly execute and deliver all further instruments and
documents, and take all further action, that may be necessary or reasonably
requested in order to create and/or maintain the validity, perfection or
priority of and protect any security interest granted or purported to be granted
hereby or to enable Secured Party to exercise and enforce its rights and
remedies hereunder with respect to any Collateral, in each case, to

                                       21
<PAGE>

the extent required hereunder and consistent with its obligations under the
Credit Facility Documents. Without limiting the generality of the foregoing,
each Debtor shall:

                  (i)      execute and file such financing or continuation
                           statements, or amendments thereto, and execute and
                           deliver such other agreements, instruments,
                           endorsements, powers of attorney or notices, as may
                           be necessary or desirable, in order to perfect and
                           preserve the security interests granted or purported
                           to be granted hereby;

                  (ii)     take all actions necessary to ensure the recordation
                           of appropriate evidence of the liens and security
                           interest granted hereunder in the Intellectual
                           Property with any intellectual property registry in
                           which said Intellectual Property is registered or in
                           which an application for registration is pending
                           including, without limitation, the United States
                           Patent and Trademark Office, the United States
                           Copyright Office, the various Secretaries of State,
                           and the foreign counterparts on any of the foregoing;

                  (iii)    at any reasonable time, upon request by Secured
                           Party, exhibit the Collateral to and allow inspection
                           of the Collateral by Secured Party, or persons
                           designated by Secured Party; and

                  (iv)     appear in and defend any action or proceeding that
                           may affect such Debtor's title to or Secured Party's
                           security interest in all or any part of the
                           Collateral.

         (b) Each Debtor hereby authorizes Secured Party to file a Record or
Records, including, without limitation, financing or continuation statements,
and amendments thereto, in all jurisdictions and with all filing offices as are
necessary or advisable to perfect the security interest granted to Secured Party
herein. Such financing statements may describe the Collateral in the same manner
as described herein or may contain an indication or description of collateral
that describes such property in any other manner as is necessary, advisable or
prudent to ensure the perfection of the security interest in the Collateral
granted to Secured Party herein. Each Debtor shall, if requested by the Secured
Party, furnish to Secured Party from time to time statements and schedules
further identifying and describing the Collateral, all in reasonable detail.

         (c) Each Debtor hereby authorizes Secured Party to modify this
Agreement after obtaining such Debtor's approval of or signature to such
modification by amending Schedule 4.5 to include reference to any right, title
or interest in any existing Intellectual Property or any Intellectual Property
acquired or developed by any Debtor after the execution hereof or to delete any
reference to any right, title or interest in any Intellectual Property in which
any Debtor no longer has or claims any right, title or interest.

         (d) The Issuer covenants and agrees that, upon the satisfaction or
termination of that certain Credit Line Deed of Trust, executed by the Issuer
and recorded in the land records of Loudoun County, Virginia on March 5, 2002,
in Deed Book 2125, Page 2255 (the "SENIOR DEED OF TRUST"), and all indebtedness
and other rights or interests (collectively, the "SENIOR INDEBTEDNESS")
evidenced or created by the Credit Facility Documents being Fully Paid (as
defined in the Intercreditor Agreement), the lien created by that certain Deed
of Trust and Security Agreement, dated as of the date hereof (the "DEED OF
TRUST"), executed by the Issuer, as grantor, in favor of Walker Title & Escrow
Company, Inc., a Virginia corporation, as trustee, for the benefit of Secured
Party, as beneficiary, shall be a first priority

                                       22
<PAGE>

lien on the "Secured Property" (as defined in the Deed of Trust), and the value
of such lien shall be the then fair market value of the Secured Property;
provided, however, that the foregoing provisions of this Section 5.1(d) shall
not become effective in the event that the Senior Deed of Trust is replaced upon
the satisfaction or termination of the Senior Deed of Trust with a new deed of
trust on the same property securing indebtedness incurred pursuant to any
refinancing or replacement of the Credit Facility Documents permitted under the
Indenture; provided, further, that, notwithstanding the Deed of Trust becoming a
first priority lien at any time pursuant to this Section 5.1(d), in connection
with any subsequent refinancing or replacement of Credit Facility indebtedness
permitted under the Indenture, the Secured Party shall, if requested by the
Issuer, subordinate its lien on the Secured Property to any such lien granted in
favor of the Credit Facility Secured Party and shall take such actions as may be
reasonably requested by the Issuer to evidence such subordination.

         (e) Upon the Deed of Trust becoming a first priority Lien on the
Secured Property and at the reasonable request of Secured Party, the Issuer, at
its sole cost and expense, shall have delivered to Secured Party the following
documents:

                  (i)      one or more endorsements to the mortgagee policies of
                           title insurance delivered to Secured Party in
                           connection with the Deed of Trust insuring that,
                           after giving effect to such satisfaction, (A) the
                           insured amounts under such mortgagee policies is
                           increased to the then fair market value of the
                           Secured Property insured thereunder (together with
                           any updated endorsements as may be required pursuant
                           to such increased insured amount, including without
                           limitation, updated tie-in endorsements), and (B)
                           that each such policy is in full force and effect and
                           unaffected by such satisfaction of the Senior Deed of
                           Trust, and

                  (ii)     any other documents, instruments or deliveries as may
                           reasonably be required by Secured Party, including,
                           without limitation, any amendments or modifications
                           to the Deed of Trust.

         (f) If, at any time, the Trustee obtains possession or control of items
of Collateral, upon a replacement or refinancing of the Credit Agreement, the
Trustee shall deliver such items to the Replacement Credit Facility Secured
Party if such Replacement Credit Facility Secured Party has entered into an
intercreditor agreement as contemplated by Section 7.1(i) of the Indenture.

         (g) Secured Party acknowledges that Issuer is required under the Credit
Facility Documents to enter into a new control agreement with respect to a
Deposit Account or a Securities Account within 30 days following the date hereof
and, in connection therewith, agrees to reasonably cooperate with the Debtors
and the Credit Facility Secured Party to implement the control agreement
contemplated by Section 4.4(c) hereof within such time period.

         5.2 ADDITIONAL DEBTORS.

         From time to time subsequent to the date hereof, additional Guarantors
may become Additional Debtors pursuant to the terms of the Indenture, by
executing a Pledge Joinder substantially in the form attached hereto as Exhibit
B. Upon delivery of any such counterpart agreement to Secured Party, notice of
which is hereby waived by Debtors, (a) each Additional Debtor shall be a Debtor
and shall be as fully a party hereto as if such Additional Debtor were an
original signatory hereto and (b) the supplemental schedules thereto shall be
incorporated into and become a part of and supplement the respective schedules
to this Agreement; and each reference to such Schedules shall mean and be a
reference to such Schedules as supplemented pursuant to each Pledge Supplement.
Each Debtor expressly agrees that its obligations

                                       23
<PAGE>

arising hereunder shall not be affected or diminished by the addition or release
of any other Debtor hereunder, nor by any election of Secured Party not to cause
any Subsidiary of Issuer to become an Additional Debtor hereunder. This
Agreement shall be fully effective as to any Debtor that is or becomes a party
hereto regardless of whether any other Person becomes or fails to become or
ceases to be a Debtor hereunder.

6.       ATTORNEY-IN-FACT.

         6.1 POWER OF ATTORNEY.

         Each Debtor hereby irrevocably appoints Secured Party (such appointment
being coupled with an interest) as such Debtor's attorney-in-fact, with full
authority in the place and stead of such Debtor and in the name of such Debtor,
Secured Party or the Credit Facility Secured Party (subject to the Intercreditor
Agreement to the extent then in effect), from time to time in its discretion to
take any action permitted under the Credit Facility Documents and to execute any
instrument that it may deem reasonably necessary or advisable to accomplish the
purposes of this Agreement (subject to the Intercreditor Agreement to the extent
then in effect), including, without limitation, the following:

                  (a) upon the occurrence and during the continuance of any
Event of Default, to obtain and adjust insurance required to be maintained by
such Debtor pursuant to the Indenture;

                  (b) upon the occurrence and during the continuance of any
Event of Default, to ask for, demand, collect, sue for, recover, compound,
receive and give acquittance and receipts for moneys due and to become due under
or in respect of any of the Collateral;

                  (c) upon the occurrence and during the continuance of any
Event of Default, to receive, endorse and collect any drafts or other
instruments, documents and chattel paper in connection with clause (b) above,
subject in all respects to the rights of any lender under the Credit Agreement
to receive, endorse and collect the same;

                  (d) upon the occurrence and during the continuance of any
Event of Default, to file any claims or take any action or institute any
proceedings necessary or desirable for the collection of any of the Collateral
or otherwise to enforce the rights of Secured Party with respect to any of the
Collateral;

                  (e) to prepare and file any UCC financing statements against
such Debtor as debtor;

                  (f) to prepare, sign, and file for recordation in any
intellectual property registry, appropriate evidence of the lien and security
interest granted herein in the Intellectual Property in the name of such Debtor
as assignor;

                  (g) to take or cause to be taken all actions necessary to
perform or comply or cause performance or compliance with the terms of this
Agreement, including, without limitation, access to pay or discharge taxes or
Liens (other than Permitted Liens) levied or placed upon or threatened against
the Collateral, the legality or validity thereof and the amounts necessary to
discharge the same, any such payments made by Secured Party to become
obligations of such Debtor to Secured Party, due and payable immediately without
demand; and

                  (h) upon the occurrence and during the continuance of any
Event of Default and subject to the provisions of the UCC, generally to sell,
transfer, pledge, make any agreement with respect to or otherwise deal with any
of the Collateral as fully and completely as though Secured Party were the
absolute owner thereof for all purposes, and to do, at Secured Party's option
and such Debtor's expense, at

                                       24
<PAGE>

any time or from time to time, all acts and things necessary to protect,
preserve or realize upon the Collateral and Secured Party's security interest
therein in order to effect the intent of this Agreement, all as fully and
effectively as such Debtor might do.

         6.2 NO DUTY ON THE PART OF SECURED PARTY.

         The powers conferred on Secured Party hereunder are solely to protect
the interests of Secured Party in the Collateral and shall not impose any duty
upon Secured Party to exercise any such powers. Secured Party shall be
accountable only for amounts that it actually receives as a result of the
exercise of such powers, and neither it nor any of its officers, directors,
employees or agents shall be responsible to any Debtor for any act or failure to
act hereunder, except for their own gross negligence or willful misconduct.

7.       REMEDIES.

         7.1 GENERALLY.

         (a) If any Event of Default shall have occurred and be continuing,
subject to applicable laws and the provisions of the Intercreditor Agreement to
the extent then in effect, Secured Party may exercise in respect of the
Collateral, in addition to all other rights and remedies provided for herein or
otherwise available to it at law or in equity, all the rights and remedies of
Secured Party on default under the UCC (whether or not the UCC applies to the
affected Collateral) to collect, enforce or satisfy any Secured Obligations then
owing, whether by acceleration or otherwise, and also may pursue any of the
following separately, successively or simultaneously:

                  (i)      require any Debtor to, and each Debtor hereby agrees
                           that it shall at its expense and promptly upon
                           request of Secured Party forthwith, assemble all or
                           part of the Collateral as directed by Secured Party
                           and make it available to Secured Party at a place to
                           be designated by Secured Party that is reasonably
                           convenient to both parties;

                  (ii)     enter onto the property where any Collateral is
                           located and take possession thereof with or without
                           judicial process;

                  (iii)    prior to the disposition of the Collateral, store,
                           process, repair or recondition the Collateral or
                           otherwise prepare the Collateral for disposition in
                           any manner to the extent Secured Party deems
                           appropriate;

                  (iv)     without notice except as specified below or under the
                           UCC, sell, assign, lease, license (on an exclusive or
                           nonexclusive basis) or otherwise dispose of the
                           Collateral or any part thereof in one or more parcels
                           at public or private sale, at any of Secured Party's
                           offices or elsewhere, for cash, on credit or for
                           future delivery, at such time or times and at such
                           price or prices and upon such other terms as Secured
                           Party may deem commercially reasonable; and

                  (v)      subject to the terms of the Intercreditor Agreement,
                           apply the balance from any Deposit Account or
                           instruct the bank at which any Deposit

                                       25
<PAGE>

                           Account is maintained to pay the balance of any
                           Deposit Account to or for the benefit of Secured
                           Party.

         (b) Secured Party may be a purchaser of any or all of the Collateral at
any public or private (to the extent permitted by applicable law) sale in
accordance with the UCC and Secured Party, as Secured Party for and
representative of the Holders, shall be entitled, for the purpose of bidding and
making settlement or payment of the purchase price for all or any portion of the
Collateral sold at any such sale made in accordance with the UCC, to use and
apply any of the Secured Obligations as a credit on account of the purchase
price for any Collateral payable by Secured Party at such sale. Each purchaser
at any such sale shall hold the property sold absolutely free from any claim or
right on the part of any Debtor, and each Debtor 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 Debtor agrees that, to the
extent notice of sale shall be required by law, at least ten (10) days notice to
such Debtor 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. Secured
Party shall not be obligated to make any sale of Collateral regardless of notice
of sale having been given. Secured Party 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. Each Debtor agrees that it would not be commercially unreasonable
for Secured Party to dispose of the Collateral or any portion thereof by using
Internet sites that provide for the auction of assets of the types included in
the Collateral or that have the reasonable capability of doing so, or that match
buyers and sellers of assets. Each Debtor hereby waives any claims against
Secured Party 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 Secured Party accepts
the first offer received and does not offer such Collateral to more than one
offeree. If the proceeds of any sale or other disposition of the Collateral are
insufficient to pay all the Secured Obligations, each Debtor shall be liable for
the deficiency and the fees of any attorneys employed by Secured Party to
collect such deficiency. Each Debtor further agrees that a breach of any of the
covenants contained in this Section will cause irreparable injury to Secured
Party, that Secured Party has no adequate remedy at law in respect of such
breach and, as a consequence, that each and every covenant contained in this
Section shall be specifically enforceable against such Debtor, and such Debtor
hereby waives and agrees not to assert any defenses against an action for
specific performance of such covenants except for a defense that no default has
occurred giving rise to the Secured Obligations becoming due and payable prior
to their stated maturities. Nothing in this Section shall in any way alter the
rights of Secured Party hereunder.

         (c) Secured Party may sell the Collateral without giving any warranties
as to the Collateral. Secured Party may specifically disclaim or modify any
warranties of title or the like. This procedure will not be considered to
adversely affect the commercial reasonableness of any sale of the Collateral.

         (d) If Secured Party sells any of the Collateral on credit, the Secured
Obligations will be credited only with payments actually made by the purchaser
and received by Secured Party and applied to the indebtedness of the purchaser.
In the event the purchaser fails to pay for the Collateral, Secured Party may
resell the Collateral, subject to applicable laws.

         (e) Secured Party shall have no obligation to marshal any of the
Collateral.

         (f) Subject to the Credit Facility Documents and the Intercreditor
Agreement, all amounts and proceeds (including checks and other instruments)
received by any Debtor in respect of amounts due to such Debtor in respect of
the Collateral or any portion thereof following the occurrence

                                       26
<PAGE>

and during the continuance of an Event of Default shall be received in trust for
the benefit of Secured Party or the Credit Facility Secured Party, shall be
segregated from other funds of such Debtor and shall be forthwith paid over or
delivered to Secured Party in the same form as so received (with any necessary
endorsement) to be held as cash Collateral and applied as provided by Section
7.5 following the occurrence and during the continuance of an Event of Default.
Upon demand from Secured Party, Debtors shall not adjust, settle or compromise
the amount or payment of any such amount or release wholly or partly any obligor
with respect thereto or allow any credit or discount thereon.

         7.2 APPLICATION OF PROCEEDS.

         Except as expressly provided elsewhere in this Agreement and in the
Intercreditor Agreement to the extent then in effect, all proceeds received by
Secured Party in respect of any sale, any collection from, or other realization
upon all or any part of the Collateral shall be applied in full or in part by
Secured Party against the Secured Obligations in the following order of
priority: first, to the payment of all costs and expenses of such sale,
collection or other realization, including reasonable compensation to Secured
Party and its agents and counsel, and all other expenses, liabilities and
advances made or incurred by Secured Party in connection therewith, and all
amounts for which Secured Party is entitled to indemnification hereunder and all
advances made by Secured Party hereunder for the account of the applicable
Debtor, and to the payment of all costs and expenses paid or incurred by Secured
Party in connection with the exercise of any right or remedy hereunder or under
the Indenture, all in accordance with the terms hereof or thereof; second, to
the extent of any excess of such proceeds, to the payment of all other Secured
Obligations for the ratable benefit of the Holders; and third, to the extent of
any excess of such proceeds, to the payment to or upon the order of such Debtor
or to whomsoever may be lawfully entitled to receive the same as a court of
competent jurisdiction may direct.

         7.3 INVESTMENT PROPERTY.

         Each Debtor recognizes that, by reason of certain prohibitions
contained in the Securities Act and applicable state securities laws, Secured
Party may be compelled, with respect to any sale of all or any part of the
Investment Property conducted without prior registration or qualification of
such Investment Property under the Securities Act and/or such state securities
laws, to limit purchasers to those who will agree, among other things, to
acquire the Investment Property for their own account, for investment and not
with a view to the distribution or resale thereof and to comply with applicable
laws. Each Debtor acknowledges that any such sale may be at prices and on terms
less favorable than those obtainable through a sale without such restrictions
(including a public offering made pursuant to a registration statement under the
Securities Act) and each Debtor agrees that any such sale shall not be deemed to
have not been made in a commercially reasonable manner by reason of such
circumstances and that Secured Party shall have no obligation to engage in
public sales and no obligation to delay the sale of any Investment Property for
the period of time necessary to permit the issuer thereof to register it for a
form of public sale requiring registration under the Securities Act or under
applicable state securities laws, even if such issuer would, or should, agree to
so register it. If Secured Party determines to exercise its right to sell any or
all of the Investment Property, upon written request, each Debtor shall and
shall cause each issuer of any stock included in the Collateral to be sold
hereunder, each partnership and each limited liability company from time to time
to furnish to Secured Party all such information as Secured Party may request in
order to determine the number and nature of interests, shares or other
instruments included in the Investment Property which may be sold by Secured
Party in exempt transactions under the Securities Act and the rules and
regulations of the Securities and Exchange Commission thereunder, as the same
are from time to time in effect.

                                       27
<PAGE>

         7.4 INTELLECTUAL PROPERTY.

         (a) Anything contained herein to the contrary notwithstanding, upon the
occurrence and during the continuation of an Event of Default and subject to the
Credit Facility Documents and the Intercreditor Agreement to the extent then in
effect:

                  (i)      Secured Party shall have the right (but not the
                           obligation) to bring suit or otherwise commence any
                           action or proceeding in the name of any Debtor,
                           Secured Party or otherwise, in Secured Party's sole
                           discretion, to enforce any Intellectual Property
                           which is material to any Debtor's business, in which
                           event such Debtor shall, at the request of Secured
                           Party, do any and all lawful acts and execute any and
                           all documents required by Secured Party in aid of
                           such enforcement and such Debtor shall promptly, upon
                           demand, reimburse and indemnify Secured Party as
                           provided in Section 10 hereof in connection with the
                           exercise of its rights under this Section, and, to
                           the extent that Secured Party shall elect not to
                           bring suit to enforce any Intellectual Property which
                           is material to any Debtor's business as provided in
                           this Section, each Debtor agrees to use all
                           reasonable measures, whether by action, suit,
                           proceeding or otherwise, to prevent the infringement
                           of any such Intellectual Property by others and for
                           that purpose agrees to diligently maintain any
                           action, suit or proceeding against any Person so
                           infringing as shall be necessary to prevent such
                           infringement;

                  (ii)     upon written demand from Secured Party, each Debtor
                           shall grant, assign, convey or otherwise transfer to
                           Secured Party all of such Debtor's right, title and
                           interest in and to the Intellectual Property and
                           shall execute and deliver to Secured Party such
                           documents as are necessary or appropriate to carry
                           out the intent and purposes of this Agreement;

                  (iii)    each Debtor agrees that such an assignment and/or
                           recording shall be applied to reduce the Secured
                           Obligations outstanding only to the extent that
                           Secured Party receives cash proceeds in respect of
                           the sale of, or other realization upon, the
                           Intellectual Property; and

                  (iv)     Secured Party shall have the right to notify, or
                           require each Debtor to notify, any obligors with
                           respect to amounts due or to become due to such
                           Debtor in respect of the Intellectual Property, of
                           the existence of the security interest created
                           herein, to direct such obligors to make payment of
                           all such amounts directly to Secured Party, and, upon
                           such notification and at the expense of such Debtor,
                           to enforce collection of any such amounts and to
                           adjust, settle or compromise the amount or payment
                           thereof, in the same manner and to the same extent as
                           such Debtor might have done.

         (b) If (i) an Event of Default shall have occurred and, by reason of
cure, waiver, modification, amendment or otherwise, no longer be continuing,
(ii) no other Event of Default shall have occurred and be continuing, (iii) an
assignment or other transfer to Secured Party of any rights, title and interests
in and to the Intellectual Property shall have been previously made and shall
have become

                                       28
<PAGE>

absolute and effective, and (iv) the Secured Obligations shall not have become
immediately due and payable, upon the written request of any Debtor, Secured
Party shall promptly execute and deliver to such Debtor, at such Debtor's sole
cost and expense, such assignments or other transfer as may be necessary to
reassign to such Debtor any such rights, title and interests as may have been
assigned to Secured Party as aforesaid, subject to any disposition thereof that
may have been made by Secured Party; provided, after giving effect to such
reassignment, Secured Party's security interest granted pursuant hereto, as well
as all other rights and remedies of Secured Party granted hereunder, shall
continue to be in full force and effect; and provided further, the rights, title
and interests so reassigned shall be free and clear of any Liens granted by or
on behalf of Secured Party.

         (c) Solely for the purpose of enabling Secured Party to exercise rights
and remedies under this Section 7 and at such time as Secured Party shall be
lawfully entitled to exercise such rights and remedies, each Debtor hereby
grants to Secured Party, to the extent it has the right to do so (including,
without limitation, pursuant to the Credit Facility Documents and the
Intercreditor Agreement to the extent then in effect), an irrevocable,
nonexclusive license (exercisable without payment of royalty or other
compensation to such Debtor), subject, in the case of Trademarks, to sufficient
rights to quality control and inspection in favor of such Debtor to avoid the
risk of invalidation of said Trademarks, to use, operate under, license, or
sublicense any Intellectual Property now owned or hereafter acquired by such
Debtor, and wherever the same may be located.

         7.5 CASH PROCEEDS.

         Subject to the Credit Facility Documents and the Intercreditor
Agreement as then in effect, in addition to the rights of Secured Party
specified in Section 4.3 with respect to payments of Accounts, Cash Proceeds
shall be held by such Debtor in trust for Secured Party, segregated from other
funds of such Debtor, and shall, forthwith upon receipt by such Debtor, unless
otherwise provided pursuant to Section 4.4, be turned over to Secured Party in
the exact form received by such Debtor (duly indorsed by such Debtor to Secured
Party, if required). Subject to the Intercreditor Agreement as then in effect,
if an Event of Default shall have occurred and be continuing, any Cash Proceeds
received by Secured Party (whether from a Debtor or otherwise) may, in the sole
discretion of Secured Party, (i) be held by Secured Party for the ratable
benefit of the Holders, as collateral security for the Secured Obligations
(whether matured or unmatured) and/or (ii) then or at any time thereafter may be
applied by Secured Party against the Secured Obligations then due and owing.

8.       CONTINUING SECURITY INTEREST; TRANSFER OF NOTES.

         This Agreement shall create a continuing security interest in the
Collateral and shall remain in full force and effect until the payment in full
of all Secured Obligations, be binding upon each Debtor, its successors and
assigns (except to the extent otherwise provided in the Indenture), and inure,
together with the rights and remedies of Secured Party hereunder, to the benefit
of Secured Party and its successors, transferees and assigns. Without limiting
the generality of the foregoing, but subject to the terms of the Indenture, any
Holder may assign or otherwise transfer any Note held by it to any other Person,
and such other Person shall thereupon become vested with all the benefits in
respect thereof granted to Holders herein or otherwise. Upon the payment in full
of all Secured Obligations, the security interest granted hereby shall terminate
hereunder and of record and all rights to the Collateral granted hereunder shall
revert to Debtors. Upon the sale or other disposition of any Collateral
permitted by the Indenture, the security interest granted hereby with respect to
such sold or disposed Collateral shall terminate hereunder and of record. Upon
any such termination Secured Party shall, at Debtors' expense and upon documents
provided by them, execute and deliver to Debtors such documents as Debtors shall
reasonably request to evidence such termination.

                                       29
<PAGE>

9.       STANDARD OF CARE; SECURED PARTY MAY PERFORM.

         The powers conferred on Secured Party hereunder are solely to protect
its interest in the Collateral and shall not impose any duty upon it to exercise
any such powers. Except for the exercise of reasonable care in the custody of
any Collateral in its possession and the accounting for moneys actually received
by it hereunder, Secured Party shall have no duty as to any Collateral or as to
the taking of any necessary steps to preserve rights against prior parties or
any other rights pertaining to any Collateral. Secured Party shall be deemed to
have exercised reasonable care in the custody and preservation of Collateral in
its possession if such Collateral is accorded treatment substantially equal to
that which Secured Party accords its own property. Neither Secured Party nor any
of its directors, officers, employees or agents shall be liable for failure to
demand, collect or realize upon all or any part 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 Debtor or otherwise. If any Debtor
fails to perform any agreement contained herein, Secured Party may itself
perform, or cause performance of, such agreement, and the expenses of Secured
Party incurred in connection therewith shall be payable by each Debtor under
Section 11.2 hereof.

10.      INDEMNITY AND EXPENSES.

         (a)      Each Debtor agrees:

                  (i)      to defend (subject to Indemnitees' selection of
                           counsel), indemnify, pay and hold harmless each
                           Indemnitee, from and against any and all claims,
                           losses, damages, expenses (including reasonable legal
                           fees and expenses) and liabilities in any way
                           relating to, growing out of or resulting from this
                           Agreement and the transactions contemplated hereby
                           (including without limitation enforcement of this
                           Agreement), except to the extent such claims, losses
                           or liabilities result from such Indemnitee's own
                           gross negligence or willful misconduct as finally and
                           unappeallably determined by a court of competent
                           jurisdiction; and

                  (ii)     to pay to Secured Party promptly following written
                           demand the amount of any and all costs and expenses,
                           including the reasonable fees and expenses of its
                           counsel and of any experts and agents in accordance
                           with the terms and conditions of the Indenture.

         (b) The obligations of each Debtor in this Section 10 shall survive the
termination of this Agreement and the discharge of such Debtor's other
obligations under this Agreement and the Indenture.

11.      MISCELLANEOUS.

         11.1 NOTICES.

         Unless otherwise specifically provided herein, any notice or other
communication herein required or permitted to be given to a Debtor or Secured
Party shall be sent to such Person's address as set forth in the Indenture. Each
notice hereunder shall be in writing and may be personally served or sent by
telefacsimile or United States mail or courier service and shall be deemed to
have been given when delivered in person or by courier service and signed for
against receipt thereof, upon receipt of telefacsimile or three Business Days
after depositing it in the United States mail with postage prepaid and

                                       30
<PAGE>

properly addressed; provided, no notice to Secured Party shall be effective
until received by Secured Party.

         11.2 EXPENSES.

         Debtors agree to pay promptly all the costs and expenses of preparation
of the Collateral Agreements and any consents, amendments, waivers or other
modifications thereto; all the costs of furnishing all opinions by counsel for
Debtors; the reasonable fees, expenses and disbursements of counsel to Secured
Party (in each case including allocated costs of internal counsel) in connection
with the negotiation, preparation, execution and administration of the
Collateral Agreements and any consents, amendments, waivers or other
modifications thereto and any other documents or matters requested by Debtors;
all the actual costs and reasonable expenses of creating and perfecting Liens in
favor of Secured Party, for the benefit of Holders pursuant hereto, including
filing and recording fees, expenses and taxes, stamp or documentary taxes,
search fees, title insurance premiums and reasonable fees, expenses and
disbursements of counsel to Secured Party and of counsel providing any opinions
in respect of the Collateral or the Liens created pursuant to the Collateral
Agreements; all the actual costs and reasonable fees, expenses and disbursements
of any auditors, accountants, consultants or appraisers to the extent that any
audit or appraisal is permitted under the Indenture Documents prior to the
occurrence of an Event of Default; all the actual costs and reasonable expenses
(including the reasonable fees, expenses and disbursements of any appraisers,
consultants, advisors and agents employed or retained by Secured Party and its
counsel) in connection with the custody or preservation of any of the Collateral
to the extent that any audit, inspection or appraisal is permitted under the
Indenture Documents prior to the occurrence of an Event of Default; and after
the occurrence of a Default or an Event of Default, all the actual costs and
reasonable fees, expenses and disbursements of any auditors, accountants,
consultants or appraisers, all the actual costs and reasonable expenses
(including the reasonable fees, expenses and disbursements of any appraisers,
consultants, advisors and agents employed or retained by Secured Party and its
counsel) in connection with the custody or preservation of any of the
Collateral, all costs and expenses, including reasonable attorneys' fees
(including allocated costs of internal counsel) and costs of settlement,
incurred by Secured Party in enforcing any Secured Obligations of or in
collecting any payments due from any Debtor hereunder or under the other
Indenture Documents by reason of such Default or Event of Default (including in
connection with the sale of, collection from, or other realization upon any of
the Collateral) or in connection with any refinancing or restructuring of the
credit arrangements provided hereunder in the nature of a "work-out" or pursuant
to any insolvency or bankruptcy cases or proceedings.

         11.3 AMENDMENTS AND WAIVERS.

         (a) Secured Party's Consent. Subject to Section 11.3(b) and 11.3(c) and
the terms of the Indenture, no amendment, modification, termination or waiver of
any provision of this Agreement, or consent to any departure by any Debtor
therefrom, shall in any event be effective without the written concurrence of
Secured Party.

         (b) Other Consents. No amendment, modification, termination or waiver
of any provision of this Agreement, or consent to any departure by any Debtor
therefrom, shall amend, modify, terminate or waive any provision herein as the
same applies to Secured Party without the consent of Secured Party except as
provided in accordance with the Indenture.

         (c) Waiver. Any waiver or consent shall be effective only in the
specific instance and for the specific purpose for which it was given. No notice
to or demand on any Debtor in any case shall entitle any Debtor to any other or
further notice or demand in similar or other circumstances.

                                       31
<PAGE>

         11.4 SUCCESSORS AND ASSIGNS.

         This Agreement shall be binding upon the parties hereto and their
respective successors and assigns including all persons who become bound as
debtor to this Agreement. No Debtor shall, except as permitted under the
Indenture, assign any right, duty or obligation hereunder.

         11.5 INDEPENDENCE OF COVENANTS.

         Without limiting the effect of the last sentence of Section 2.3, all
covenants hereunder shall be given independent effect so that if a particular
action or condition is not permitted by any of such covenants, the fact that it
would be permitted by an exception to, or would otherwise be within the
limitations of, another covenant shall not avoid the occurrence of a Default or
an Event of Default if such action is taken or condition exists.

         11.6 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS.

         All representations, warranties and agreements made herein shall
survive the execution and delivery hereof. Notwithstanding anything herein or
implied by law to the contrary, the agreements of each Debtor set forth in
Sections 10 and 11.2 shall survive the payment of the Obligations under the
Indenture and the termination hereof.

         11.7 NO WAIVER; REMEDIES CUMULATIVE.

         No failure or delay on the part of Secured Party in the exercise of any
power, right or privilege hereunder or under any other Indenture Document shall
impair such power, right or privilege or be construed to be a waiver of any
default or acquiescence therein, nor shall any single or partial exercise of any
such power, right or privilege preclude other or further exercise thereof or of
any other power, right or privilege. All rights, powers and remedies existing
under this Agreement and the other Indenture Documents are cumulative, and not
exclusive of, any rights or remedies otherwise available. Any forbearance or
failure to exercise, and any delay in exercising, any right, power or remedy
hereunder shall not impair any such right, power or remedy or be construed to be
a waiver thereof, nor shall it preclude the further exercise of any such right,
power or remedy.

         11.8 MARSHALING; PAYMENTS SET ASIDE.

         Secured Party shall not be under any obligation to marshal any assets
in favor of any Debtor or any other Person or against or in payment of any or
all of the Secured Obligations.

         11.9 SEVERABILITY.

         In case any provision in or obligation hereunder shall be invalid,
illegal or unenforceable in any jurisdiction, the validity, legality and
enforceability of the remaining provisions or obligations, or of such provision
or obligation in any other jurisdiction, shall not in any way be affected or
impaired thereby.

         11.10 HEADINGS.

         Section headings herein are included herein for convenience of
reference only and shall not constitute a part hereof for any other purpose or
be given any substantive effect.

         11.11 APPLICABLE LAW.

                                       32
<PAGE>

         THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER
SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF NEW YORK (INCLUDING WITHOUT LIMITATION SECTIONS 5-1401
AND 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW).

         11.12 CONSENT TO JURISDICTION.

         ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST ANY DEBTOR ARISING OUT OF OR
RELATING HERETO OR ANY OTHER INDENTURE DOCUMENT, OR ANY OF THE OBLIGATIONS, MAY
BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION IN THE STATE,
COUNTY AND CITY OF NEW YORK. BY EXECUTING AND DELIVERING THIS AGREEMENT, EACH
DEBTOR, FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES, IRREVOCABLY ACCEPTS
GENERALLY AND UNCONDITIONALLY THE NONEXCLUSIVE JURISDICTION AND VENUE OF SUCH
COURTS; WAIVES ANY DEFENSE OF FORUM NON CONVENIENS; AGREES THAT SERVICE OF ALL
PROCESS IN ANY SUCH PROCEEDING IN ANY SUCH COURT MAY BE MADE BY REGISTERED OR
CERTIFIED MAIL, RETURN RECEIPT REQUESTED, TO THE APPLICABLE DEBTOR AT ITS
ADDRESS PROVIDED IN ACCORDANCE WITH SECTION 11.1; AGREES THAT SERVICE AS
PROVIDED ABOVE IS SUFFICIENT TO CONFER PERSONAL JURISDICTION OVER THE APPLICABLE
DEBTOR IN ANY SUCH PROCEEDING IN ANY SUCH COURT, AND OTHERWISE CONSTITUTES
EFFECTIVE AND BINDING SERVICE IN EVERY RESPECT; AND AGREES SECURED PARTY RETAINS
THE RIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO BRING
PROCEEDINGS AGAINST ANY DEBTOR IN THE COURTS OF ANY OTHER JURISDICTION.

         11.13 WAIVER OF JURY TRIAL.

         EACH OF THE PARTIES HERETO HEREBY AGREES TO WAIVE ITS RESPECTIVE RIGHTS
TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING HEREUNDER.
THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL-ENCOMPASSING OF ANY AND ALL
DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATTER OF
THIS TRANSACTION, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS
AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS. EACH PARTY HERETO ACKNOWLEDGES
THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS RELATIONSHIP,
THAT EACH HAS ALREADY RELIED ON THIS WAIVER IN ENTERING INTO THIS AGREEMENT, AND
THAT EACH WILL CONTINUE TO RELY ON THIS WAIVER IN ITS RELATED FUTURE DEALINGS.
EACH PARTY HERETO FURTHER WARRANTS AND REPRESENTS THAT IT HAS REVIEWED THIS
WAIVER WITH ITS LEGAL COUNSEL AND THAT IT KNOWINGLY AND VOLUNTARILY WAIVES ITS
JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. THIS WAIVER IS
IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING
(OTHER THAN BY A MUTUAL WRITTEN WAIVER SPECIFICALLY REFERRING TO THIS SECTION
11.13 AND EXECUTED BY EACH OF THE PARTIES HERETO), AND THIS WAIVER SHALL APPLY
TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS HERETO. IN
THE EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A
TRIAL BY THE COURT.

                                       33
<PAGE>

         11.14 COUNTERPARTS.

         This Agreement may be executed in any number of counterparts, each of
which when so executed and delivered shall be deemed an original, but all such
counterparts together shall constitute but one and the same instrument.

         11.15 EFFECTIVENESS.

         This Agreement shall become effective upon the execution of a
counterpart hereof by each of the parties hereto and receipt by Secured Party of
written or telephonic notification of such execution and authorization of
delivery thereof.

         11.16 ENTIRE AGREEMENT.

         This Agreement and the other Indenture Documents embody the entire
agreement and understanding between Debtors and Secured Party and supersede all
prior agreements and understandings between such parties relating to the subject
matter hereof and thereof. Accordingly, the Indenture Documents may not be
contradicted by evidence of prior, contemporaneous or subsequent oral agreements
of the parties. There are no unwritten oral agreements between the parties.

         11.17 INDENTURE CONTROLS.

         All terms, covenants, conditions, provisions and requirements of the
Indenture, including without limitation Article VII, are incorporated by
reference in this Agreement. In the event of any conflict or inconsistency
between the provisions of this Agreement and those of the Indenture, including,
without limitation, any conflicts or inconsistencies in any definitions herein
or therein, the provisions or definitions of the Indenture shall govern.

         11.18 TRUST INDENTURE ACT CONTROLS.

         If any provision of this Agreement limits, qualifies or conflicts with
the duties imposed by the Trust Indenture Act of 1939 as in effect on the date
of this Agreement, the imposed duties shall control.

     [Remainder of page intentionally left blank; signature page follows.]

                                       34
<PAGE>
         IN WITNESS WHEREOF, each Debtor and Secured Party have caused this
Agreement to be duly executed and delivered by their respective officers
thereunto duly authorized as of the date first written above.

                         ORBITAL SCIENCES CORPORATION

                         By: /s/ MICHAEL R. WILLIAMS
                            -------------------------------------
                                  Name:  Michael R. Williams
                                  Title: Senior Vice President and Treasurer

                         ORBITAL INTERNATIONAL, INC.

                         By: /s/ MICHAEL R. WILLIAMS
                            -------------------------------------
                                  Name:  Michael R. Williams
                                  Title: Vice President and Treasurer

                         U.S. BANK, N.A.,
                         as Secured Party

                         By: /s/ FRANK P. LESLIE
                            -------------------------------------
                                  Name:  Frank P. Leslie
                                  Title: Vice President

<PAGE>
                                                                       EXHIBIT A
                                                TO PLEDGE AND SECURITY AGREEMENT

                            FORM OF PLEDGE SUPPLEMENT

    This PLEDGE SUPPLEMENT, dated [MM/DD/YY] (the "SUPPLEMENT"), is delivered
pursuant to the Pledge and Security Agreement, dated as of August 22, 2002 (as
it may be from time to time amended, restated, modified or supplemented, the
"SECURITY AGREEMENT"), among Orbital Sciences Corporation, the other Debtors
named therein, and U.S. Bank, N.A., as Secured Party. Capitalized terms used
herein not otherwise defined herein shall have the meanings ascribed thereto in
the Security Agreement. This Supplement is being delivered pursuant to Section
[__](1) of the Security Agreement.

    Debtor hereby confirms, as of the date first written above, the grant to
Secured Party set forth in the Security Agreement of, does hereby grant to
Secured Party, a security interest in all of Debtor's right, title and interest
in and to all Collateral to secure the Secured Obligations, in each case whether
now or hereafter existing or in which Debtor now has or hereafter acquires an
interest and wherever the same may be located and hereby agrees, as of the date
first above written, to continue to be bound as a Debtor by all of the terms and
provisions of the Security Agreement, as supplemented by this Pledge Supplement.
Debtor hereby represents and warrants that the attached Supplements to Schedules
accurately and completely set forth all additional information currently
required pursuant to the Security Agreement and hereby agrees that such
Supplements to Schedules shall constitute part of the Schedules to the Security
Agreement.

        IN WITNESS WHEREOF, Debtor has caused this Pledge Supplement to be duly
executed and delivered by its duly authorized officer as of [mm/dd/yy].

                                       [NAME OF DEBTOR]

                                       By: _____________________________
                                           Name:
                                           Title:

--------
(1) Insert Section 4.1(b)(iii), 4.4(b)(ii), 4.5(b)(v) or 4.6(b), as applicable.
<PAGE>
                                                                       EXHIBIT B
                                                TO PLEDGE AND SECURITY AGREEMENT

                             FORM OF PLEDGE JOINDER

    This PLEDGE JOINDER, dated [MM/DD/YY], is delivered pursuant to the Pledge
and Security Agreement, dated as of August 22, 2002 (as it may be from time to
time amended, restated, modified or supplemented, the "SECURITY AGREEMENT"),
among Orbital Sciences Corporation, the other Debtors named therein, and U.S.
Bank, N.A., as Secured Party. Capitalized terms used herein not otherwise
defined herein shall have the meanings ascribed thereto

    SECTION 1. GRANT OF SECURITY INTEREST. The undersigned hereby grants to
Secured Party a security interest and continuing lien on all of its right, title
and interest in, to and under all personal property of the undersigned that may
be perfected by the filing of UCC financing statements in the appropriate
jurisdictions, including without limitation, the property and assets of the
undersigned set forth on the attached supplemental schedules to the Schedules to
the Security Agreement, in each case whether now owned or existing or hereafter
acquired or arising and wherever located (the undersigned's "COLLATERAL"),
subject to the same limited exclusions set forth in the Security Agreement.

    SECTION 2. SECURITY FOR OBLIGATIONS. The grant of security interest and
continuing lien under this Pledge Joinder secures, and the Collateral is
collateral security for, the prompt and complete payment or performance in full
when due, whether at stated maturity, by required prepayment, declaration,
acceleration, demand or otherwise (including the payment of amounts that would
become due but for the operation of the automatic stay under Section 362(a) of
the Bankruptcy Code, 11 U.S.C. Section 362(a) (and any successor provision
thereof)), of all Obligations of each Debtor.

    SECTION 3. SUPPLEMENTS TO SECURITY AGREEMENT SCHEDULES. The undersigned has
attached hereto supplemental Schedules 4.1, 4.2, 4.4, 4.5, and 4.6 to Schedules
4.1, 4.2, 4.4, 4.5, and 4.6, respectively, to the Security Agreement, and the
undersigned hereby certifies, as of the date first above written, that such
supplemental schedules have been prepared by the undersigned in substantially
the form of the equivalent Schedules to the Security Agreement and are complete
and correct in all material respects.

    SECTION 4. REPRESENTATIONS AND WARRANTS AND COVENANTS. As of the date
hereof, the undersigned hereby makes each representation and warranty and
covenant set forth in Section 4 of the Security Agreement (as supplemented by
the attached supplemental schedules) to the same extent as each other Debtor.

    SECTION 5. OBLIGATIONS UNDER THE SECURITY AGREEMENT. The undersigned hereby
agrees, as of the date first above written, to be bound as a Debtor by all of
the terms and provisions of the Security Agreement to the same extent as each of
the other Debtors. The undersigned further agrees, as of the date first above
written, that each reference in the Security Agreement to an "Additional Debtor"
or a "Debtor" shall also mean and be a reference to the undersigned.

    The terms of Sections 11.11, 11.12, 11.13 and 11.14 of the Security
Agreement are hereby incorporated by reference.
<PAGE>
        IN WITNESS WHEREOF, the undersigned has caused this Pledge Joinder to be
duly executed and delivered by its duly authorized officer as of [mm/dd/yy].

                                       [NAME OF ADDITIONAL DEBTOR]

                                       By:_____________________________
                                          Name:
                                          Title:<PAGE>
                                                                     EXHIBIT 4.1

                             SOUTHWEST AIRLINES CO.

                            2002 SWAPA NON-QUALIFIED
                                STOCK OPTION PLAN

         SOUTHWEST AIRLINES CO., a Texas corporation (the "Company"), hereby
formulates and adopts the following 2002 SWAPA Non-Qualified Stock Option Plan.

         1. PURPOSE. This Plan is adopted pursuant to proposed Letter of
Agreement No. 26, to the Collective Bargaining Agreement (the "Agreement")
between the Company and the Southwest Airlines Pilots Association ("SWAPA")
ratified on January 12, 1995.

         2. ADMINISTRATION. This Plan shall be administered by an Administrative
Committee (the "Committee") consisting of not more than five (5) persons
designated from time to time by the Chief Executive Officer of the Company,
including as one of its members the President of SWAPA or his or her designee.
Members of the Committee (except the President of SWAPA or his designee) may be
removed or replaced at any time by the Chief Executive Officer of the Company.
The Administrative Committee shall select one of its members as Chairman and
shall adopt such rules and regulations as it shall deem appropriate concerning
the holding of its meetings, the transaction of its business and the
administration of this Plan. A majority of the whole Committee shall constitute
a quorum, and the act of a majority of the members of the Committee present at a
meeting at which a quorum is present shall be the act of the Committee; any
decision or determination reduced to writing and signed by a majority of the
members of the Administrative Committee shall be fully as effective as if made
by a majority vote at a meeting duly called and held.

         3. GRANT OF OPTIONS; PERSONS ELIGIBLE. The Stock Option Committee of
the Board of Directors of the Company, or such other committee as may be
appointed by the Board, shall have the authority and responsibility, within the
limitations of this Plan, to grant options from time to time to persons employed
as Pilots (including Pilots in management positions retaining seniority numbers
("Management Pilots") by the Company pursuant to the Agreement and as set forth
in the schedule attached as Exhibit A and made a part hereof. Options shall be
granted at an exercise price equal to the fair market value of the Common Stock
of the Company on the date of the grant of the option with initial grants on the
date of ratification of Letter of Agreement No. 26. Only persons who are
employed as Pilots of the Company, including Management

================================================================================
2002 SWAPA NON-QUALIFIED STOCK OPTION PLAN                                Page 1

<PAGE>

Pilots on the date of the grant may be granted options under this Plan; under no
circumstances shall officers of the Company be eligible to receive options
hereunder.

         4. DEFINITIONS. An employee receiving any option under this Plan is
hereinafter referred to as an "Optionee." Any reference herein to the employment
of an Optionee with the Company shall include only employment with the Company.
The fair market value of the Common Stock on any day shall be the mean between
the highest and lowest quoted selling prices of the Common Stock on such day as
reported by the primary national stock exchange on which such stock is listed.
If no sale shall have been made on that day, or if the Common Stock is not
listed on a national exchange at that time, fair market value will be determined
by the Committee. If the date of grant is not a business day, the grant price
will be calculated using the immediately preceding business day.

         5. STOCK SUBJECT TO OPTIONS. Subject to the provisions of paragraph 12,
the number of shares of the Company's Common Stock subject at any one time to
options, plus the number of such shares then outstanding pursuant to exercises
of options, granted under this Plan, shall not exceed 32,000,000 shares. If, and
to the extent the options granted under this Plan terminate or expire without
having been exercised, new options may be granted with respect to the shares
covered by such terminated or expired options; provided that the granting and
terms of such new options shall in all respects comply with the provisions of
this Plan.

         Shares sold or distributed upon the exercise of any option granted
under this Plan may be shares of the Company's authorized and unissued Common
Stock, shares of the Company's issued Common Stock held in the Company's
treasury, or both.

         There shall be reserved at all times for sale or distribution under
this Plan a number of shares of Common Stock (either authorized and unissued
shares or shares held in the Company's treasury, or both) equal to the maximum
number of shares which may be purchased or distributed upon the exercise of
options granted under this Plan.

         Exercise of an Option in any manner shall result in a decrease in the
number of shares of Common Stock which may thereafter be available, both for
purposes of this Plan and for sale to any one individual, by the number of
shares as to which the Option is exercised.

         6. EXPIRATION AND TERMINATION OF THE PLAN. This Plan will expire on
December 31, 2006, except as to any options then outstanding under this Plan,
which shall remain in effect until they have been exercised or expired.

         No modification, extension, renewal or other change in any option
granted under this Plan shall be made after the grant of such option unless the
same is consistent with the provisions of this Plan.

================================================================================
2002 SWAPA NON-QUALIFIED STOCK OPTION PLAN                                Page 2

<PAGE>

         7.  EXERCISABILITY AND DURATION OF OPTIONS.

         (a) Exercisability. Options granted under this Plan shall become
exercisable pursuant to the vesting schedule and requirements set forth in
Exhibit A attached hereto.

         (b) Duration. The unexercised portion of any option granted under this
Plan shall automatically and without notice terminate and become null and void
at the time of the earliest to occur of the following:

                  (1) the expiration of eight years from the date of grant;

                  (2) The expiration of three months from the date of
termination of the Optionee's employment with the Company (unless such
termination was as a result of the circumstances set forth in subparagraphs (3)
or (4) below); provided that if the Optionee shall die during such 3-month
period the provisions of subparagraph (3) below shall apply;

                  (3) The expiration of 12 months from the Optionee's death, if
the Optionee's death occurs either during his employment with the Company,
during the three-month period following the date of termination of such
employment, or during the 24-month period following retirement as a result of
FAA-imposed mandatory retirement age; or

                  (4) The expiration of 24 months following the retirement of
the Optionee as a result of FAA-imposed mandatory retirement age; provided that
if the Optionee shall die during such 24-month period, the provisions of
subparagraph (3) above shall apply.

                  In the case of subparagraphs (2), (3) and (4) above, the
Optionee shall have the right to exercise any Option prior to such expiration to
the extent it was exercisable at the date of such termination of employment and
shall not have been exercised.

         8.  EXERCISE OF OPTIONS.

         (a) Procedure. The option granted herein shall be exercised by the
Optionee (or by the person who acquires such options by will or the laws of
descent and distribution or otherwise by reason of the death of the Optionee) as
to all or part of the shares covered by the option by giving notice of the
exercise thereof (the "Notice") to the Company. From time to time the Committee
may establish procedures relating to effecting such exercises. No fractional
shares shall be issued as a result of exercising an Option.

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2002 SWAPA NON-QUALIFIED STOCK OPTION PLAN                                Page 3

<PAGE>

         (b) Payment. In the Notice, the Optionee shall elect whether he or she
is to pay for his or her shares in cash or in Common Stock of the Company, or
both. If payment is to be made in cash, the Optionee shall deliver to the
Company funds in the amount of the exercise price on or before the exercise
date. If payment is to be made in Common Stock, (a) it shall be valued at its
fair market value on the date of such notice, as determined pursuant to
Paragraph 4 hereof; (b) such Common Stock must have been owned by the Optionee
for at least six months prior to the exercise date; and (c) the Notice shall be
accompanied by documentation as proof of ownership for the number of shares of
Common Stock to be used as payment.

         (c) Irrevocable Election. The giving of such notice to the Company
shall constitute an irrevocable election to purchase the number of shares
specified in the notice on the date specified in the notice.

         (d) Withholding Taxes. To the extent that the exercise of any Option
granted pursuant to this Plan or the disposition of shares of Common Stock
acquired by exercise of an Option results in compensation income to the Optionee
for federal or state income tax purposes, the Optionee shall deliver to the
Company at the time of such exercise or disposition such amount of money as the
Company may require to meet its obligation under applicable tax laws or
regulations, and, if the Optionee fails to do so, the Company is authorized to
(a) withhold delivery of certificates upon exercise and (b) withhold from
remuneration then or thereafter payable to Optionee any tax required to be
withheld by reason of such resulting compensation income.

         (e) Delivery of Shares. The Company shall cause shares to be delivered
to the Optionee (or the person exercising the Optionee's options in the event of
death) as soon as practicable after the exercise date.

         9. NONTRANSFERABILITY OF OPTIONS. No option granted under this Plan or
any right evidenced thereby shall be transferable by the Optionee other than by
will or the laws of descent and distribution. During the lifetime of an
Optionee, only the Optionee (or his or her guardian or legal representative) may
exercise his or her options.

         In the event of the Optionee's death during his or her employment with
the Company, during the three-month period following the date of termination of
such employment, or during the 24-month period following FAA-mandated
retirement, the Optionee's options shall thereafter be exercisable by his or her
executor or administrator, or by the person who acquires such options by will or
the laws of descent and distribution or otherwise by reason of the death of the
Optionee.

         10. RIGHTS OF OPTIONEE. Neither the Optionee nor his or her executors,
administrators, or legal representatives shall have any of the rights of a
shareholder of the Company with respect to the shares subject to an option
granted under this Plan until certificates for such shares shall have been
issued upon the exercise of such option.

================================================================================
2002 SWAPA NON-QUALIFIED STOCK OPTION PLAN                                Page 4

<PAGE>

         11. RIGHT TO TERMINATE EMPLOYMENT. Nothing in this Plan or in any
option granted under this Plan shall confer upon any Optionee the right to
continue in the employment of the Company or affect the right of the Company or
any of its subsidiaries to terminate the Optionee's employment at any time;
subject, however, to the provisions of the Agreement.

         12.  ADJUSTMENT UPON CHANGES IN CAPITALIZATION, ETC.

         (a) The existence of the Plan and the options granted hereunder shall
not affect in any way the right or power of the Board of Directors or the
shareholders of the Company to make or authorize any adjustment,
recapitalization, reorganization or other change in the Company's capital
structure or its business, any merger or consolidation of the Company, any issue
of debt or equity securities ahead of or affecting Common Stock or the rights
thereof, the dissolution or liquidation of the Company or any sale, lease,
exchange or other disposition of all or any part of its assets or business or
any other corporate act or proceeding.

         (b) The shares with respect to which options may be granted are shares
of Common Stock as presently constituted, but if, and whenever, prior to the
expiration of an option theretofore granted, the Company shall effect a
subdivision or consolidation of shares of Common Stock or the payment of a stock
dividend on Common Stock without receipt of consideration by the Company, the
number of shares of Common Stock with respect to which such option may
thereafter be exercised (i) in the event of an increase in the number of
outstanding shares shall be proportionately increased, and the purchase price
per share shall be proportionately reduced, and (ii) in the event of a reduction
in the number of outstanding shares shall be proportionately reduced, and the
purchase price per share shall be proportionately increased; likewise, the
number of shares to be granted pursuant to the schedule set forth in Exhibit A
shall be appropriately adjusted. In the event of any such change in the
outstanding Common Stock, the aggregate number of shares available under the
Plan shall be appropriately adjusted by the Board of Directors of the Company,
whose determination shall be conclusive.

         (c) If the Company recapitalizes or otherwise changes its capital
structure, thereafter upon any exercise of an option theretofore granted the
Optionee shall be entitled to purchase under such option, in lieu of the number
of shares of Common Stock as to which such option shall then be exercisable, the
number and class of shares of stock and securities to which the Optionee would
have been entitled pursuant to the terms of the recapitalization if, immediately
prior to such recapitalization, the Optionee had been the holder of record of
the number of shares of Common Stock as to which such option is then
exercisable. If the Company shall not be the surviving entity in any merger or
consolidation (or survives only as a subsidiary of an entity other than a
previously wholly-owned subsidiary of the Company) or if the Company is to be
dissolved or liquidated, then unless a surviving corporation assumes or
substitutes new options for Options then outstanding hereunder (i) the time at

================================================================================
2002 SWAPA NON-QUALIFIED STOCK OPTION PLAN                                Page 5

<PAGE>

which such Options may be exercised shall be accelerated and such Options shall
become exercisable in full on or before a date fixed by the Company prior to the
effective date of such merger or consolidation or such dissolution or
liquidation, and (ii) upon such effective date Options shall expire.

         (d) Except as hereinbefore expressly provided, the issuance by the
Company of shares of stock of any class or securities convertible into shares of
stock of any class, property, labor or services, upon direct sale, upon the
exercise of rights or warrants to subscribe therefor, or upon conversion of
shares or obligations of the Company convertible into such shares or other
securities, and in any case whether or not for fair value, shall not affect, and
no adjustment by reason thereof shall be made with respect to, the number of
shares of Common Stock subject to options theretofore granted or to be granted
or the purchase price per share.

         13. PURCHASE FOR INVESTMENT AND LEGALITY. The Optionee, by acceptance
of any option granted under this Plan, shall represent and warrant to the
Company that the purchase or receipt of shares of Common Stock upon the exercise
thereof shall be for investment and not with a view to distribution, provided
that such representation and warranty shall be inoperative if, in the opinion of
counsel to the Company, a proposed sale or distribution of such shares is
pursuant to an applicable effective registration statement under the Securities
Act of 1933 or is, without such representation and warranty, exempt from
registration under such Act. The Company shall file a Registration Statement on
Form S-8 pursuant to the Securities Act of 1933, as amended, covering the shares
to be offered pursuant to the Plan and will use its best efforts to maintain
such registration at all times necessary to permit holders of options to
exercise them.

         The obligation of the Company to issue shares upon the exercise of an
option shall also be subject as conditions precedent to compliance with
applicable provisions of the Securities Act of 1933, the Securities Exchange Act
of 1934, state securities laws, rules and regulations under any of the foregoing
and applicable requirements of any securities exchange upon which the Company's
securities shall be listed.

         The Company may endorse an appropriate legend referring to the
foregoing restrictions upon the certificate or certificates representing any
shares issued or transferred to the Optionee upon the exercise of any option
granted under this Plan.

         14. EFFECTIVE DATE OF PLAN. This Plan shall become effective upon its
adoption by the Board of Directors of the Company; provided, however, if the
Agreement is not ratified by SWAPA on or before August 20, 2002, this Plan shall
be null and void.

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2002 SWAPA NON-QUALIFIED STOCK OPTION PLAN                                Page 6

<PAGE>

                                    Exhibit A

STOCK OPTION GRANTS

         On the date of ratification of Letter Agreement No. 26 to the
Agreement, options will be granted to persons employed as Pilots by the Company
(including Management Pilots) according to the following schedule. Pilots hired
subsequent to August 19, 2002 will be granted options on their date of hire.

<Table>
<Caption>

    MONTH OF      TOTAL     MONTH OF     TOTAL     MONTH OF     TOTAL     MONTH OF     TOTAL     MONTH OF     TOTAL
      HIRE        GRANT       HIRE       GRANT       HIRE       GRANT       HIRE       GRANT       HIRE       GRANT
---------------------------------------------------------------------------------------------------------------------

      Before       7,728

<S>              <C>      <C>           <C>        <C>        <C>        <C>          <C>      <C>           <C>
      Sep-93       7,728     May-96       7,548     Jan-99       7,328     Sep-01       4,452     May-04       3,052

      Oct-93       7,725     Jun-96       7,542     Feb-99       7,321     Oct-01       4,417     Jun-04       2,979

      Nov-93       7,722     Jul-96       7,536     Mar-99       7,314     Nov-01       4,382     Jul-04       2,906

      Dec-93       7,719     Aug-96       7,530     Apr-99       7,307     Dec-01       4,347     Aug-04       2,833

      Jan-94       7,716     Sep-96       7,524     May-99       7,300     Jan-02       4,312     Sep-04       2,760

      Feb-94       7,713     Oct-96       7,516     Jun-99       7,293     Feb-02       4,277     Oct-04       2,617

      Mar-94       7,710     Nov-96       7,508     Jul-99       7,286     Mar-02       4,242     Nov-04       2,474

      Apr-94       7,707     Dec-96       7,500     Aug-99       7,279     Apr-02       4,207     Dec-04       2,331

      May-94       7,704     Jan-97       7,492     Sep-99       7,272     May-02       4,172     Jan-05       2,188

      Jun-94       7,701     Feb-97       7,484     Oct-99       7,163     Jun-02       4,137     Feb-05       2,045

      Jul-94       7,698     Mar-97       7,476     Nov-99       7,054     Jul-02       4,102     Mar-05       1,902

      Aug-94       7,695     Apr-97       7,468     Dec-99       6,945     Aug-02       4,067     Apr-05       1,759

      Sep-94       7,692     May-97       7,460     Jan-00       6,836     Sep-02       4,032     May-05       1,616

      Oct-94       7,684     Jun-97       7,452     Feb-00       6,727     Oct-02       3,999     Jun-05       1,473

      Nov-94       7,676     Jul-97       7,444     Mar-00       6,618     Nov-02       3,966     Jul-05       1,330

      Dec-94       7,668     Aug-97       7,436     Apr-00       6,509     Dec-02       3,933     Aug-05       1,187

      Jan-95       7,660     Sep-97       7,428     May-00       6,400     Jan-03       3,900     Sep-05       1,044

      Feb-95       7,652     Oct-97       7,422     Jun-00       6,291     Feb-03       3,867     Oct-05         957

      Mar-95       7,644     Nov-97       7,416     Jul-00       6,182     Mar-03       3,834     Nov-05         870

      Apr-95       7,636     Dec-97       7,410     Aug-00       6,073     Apr-03       3,801     Dec-05         783

      May-95       7,628     Jan-98       7,404     Sep-00       5,964     May-03       3,768     Jan-06         696

      Jun-95       7,620     Feb-98       7,398     Oct-00       5,838     Jun-03       3,735     Feb-06         609

      Jul-95       7,612     Mar-98       7,392     Nov-00       5,712     Jul-03       3,702     Mar-06         522

      Aug-95       7,604     Apr-98       7,386     Dec-00       5,586     Aug-03       3,669     Apr-06         435

      Sep-95       7,596     May-98       7,380     Jan-01       5,460     Sep-03       3,636     May-06         348

      Oct-95       7,590     Jun-98       7,374     Feb-01       5,334     Oct-03       3,563     Jun-06         261

      Nov-95       7,584     Jul-98       7,368     Mar-01       5,208     Nov-03       3,490     Jul-06         174

      Dec-95       7,578     Aug-98       7,362     Apr-01       5,082     Dec-03       3,417     Aug-06          87

      Jan-96       7,572     Sep-98       7,356     May-01       4,956     Jan-04       3,344     Sep-06          --

      Feb-96       7,566     Oct-98       7,349     Jun-01       4,830     Feb-04       3,271

      Mar-96       7,560     Nov-98       7,342     Jul-01       4,704     Mar-04       3,198

      Apr-96       7,554     Dec-98       7,335     Aug-01       4,578     Apr-04       3,125

</Table>

================================================================================
2002 SWAPA NON-QUALIFIED STOCK OPTION PLAN                                Page 1

<PAGE>
Vesting Requirements

         Options will vest on the last day of the month of each month beginning
September 2004 through August 2006 for Optionees who are on paid status on the
first day of that month and none other. The number of options vesting each month
will be determined in accordance with the following schedule:

                            Monthly Vesting Schedule

<Table>
<Caption>

                                Twelve months beginning                 Twelve months beginning
 Step*                                 9/30/04                                 9/30/05
-------                         -----------------------                 -----------------------

<S>                             <C>                                     <C>
  12                                     315                                     329
  11                                     312                                     325
  10                                     308                                     322
   9                                     305                                     318
   8                                     301                                     315
   7                                     298                                     311
   6                                     295                                     308
   5                                     189                                     198
   4                                     173                                     180
   3                                     156                                     163
   2                                     140                                     147
   1                                      83                                      87
</Table>

* Years of Service as of date of monthly vesting

For example, in September 2004, a 12- year Captain would vest in 315 options on
September 2004.

For further example, a Pilot hired on February 1, 2002 would be granted a total
of 4,277 options. On September 30, 2004, that Pilot will be a third-year First
Officer. He will vest in 156 options per month from September 30, 2004 through
January 31, 2005. Beginning February 28, 2005, and on the last day of each month
through August 31, 2005, that Pilot will vest in 173 options per month,
increasing on September 30, 2005 to 180 options per month through January 31,
2006. In

================================================================================
2002 SWAPA NON-QUALIFIED STOCK OPTION PLAN                                Page 2

<PAGE>

February 2006, the Pilot becomes a 5th-year First Officer. Accordingly, he will
now vest in 198 options per month from February 28, 2006 through August 31,
2006. The example assumes the Pilot was on paid status on the first day of the
month.

New Hire Vesting

         Pilots hired in or before August 2003 will vest in options starting in
September 2004, since these Pilots will have successfully completed probation by
that time. Pilots hired after August 2003 will receive an option on their date
of hire, and will begin vesting on the first vesting date after successful
completion of probation (one year after date of hire). The first month of
vesting will include the number of shares as calculated in the above vesting
schedule, plus all options eligible to be accumulated during probation. In
subsequent months, options will vest according to the above vesting schedule.

         For example, a Pilot hired in October 2004 will be granted 2,617
options in October 2004. From October 2004 to August 2005, the Pilot will
accumulate 83 options per month (the step 1 First Officer rate), totaling 913
options. In September 2005, the monthly amount increases to 87 options, so that
by the Pilots' anniversary date in October 2005, he will have accumulated 1,000
options while on probation. In October 2005, the Pilot will be off probation and
will vest in his 1,000 options earned during probation, plus the 147 options
earned at the step 2 First Officer rate in the month of October 2005. The Pilot
will then vest in 147 options per month from November 2005 through August 2006.

         For further example, a Pilot hired in July 2004 will be granted 2,906
options in July 2004. From September 30, 2004, through June 30, 2005, the Pilot
will accumulate 83 options per month (the step 1 First Officer rate), totaling
830 options. On July 31, 2005, the Pilot will vest in 830 options accumulated
during probation, plus 140 options for one month (July 2005) at step 2 First
Officer rates, totaling 970. The Pilot will then vest in 140 options for the
month of August on August 31, 2005. Beginning in September 2005, the Pilot will
vest in 147 step 2 First Officer options through June 30, 2006. On July 1, 2006,
the Pilot becomes a step 3 First Officer, and begins vesting in 163 options per
month from July 2006 through August 31, 2006. The examples shown above assume
the Pilots were on paid status on the first day of the month.

Retiring Pilots

         Pilots who retire due to the FAA's mandatory retirement rule will vest
in the options attributable to the month they retire, assuming they are on paid
status on the first day of the month. Pilots retiring early will not vest in
their final month of employment unless they are an Employee on the last day of
that month (the vesting date) and were on paid status on the first day of the
month.

================================================================================
2002 SWAPA NON-QUALIFIED STOCK OPTION PLAN                                Page 3

<PAGE>

Military Leave

         Notwithstanding the foregoing, Pilots on active duty military leave,
upon returning to paid status, will, on the last day of the first month during
which they were on paid status on the first day of the month, vest in all
options for which they would have vested had they not been on military leave.

================================================================================
2002 SWAPA NON-QUALIFIED STOCK OPTION PLAN                                Page 4

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