Document:

exhibit10-1.htm

    
      

    

    LOAN AND SECURITY
AGREEMENT

     

    By
and Among

     

    HOOPER
HOLMES, INC.,

     

    HOOPER
INFORMATION SERVICES, INC.,

     

    MID-AMERICA
AGENCY SERVICES, INCORPORATED,

     

    TEG
ENTERPRISES, INC.,

     

    HERITAGE
LABS INTERNATIONAL, LLC,

     

    HOOPER
DISTRIBUTION SERVICES, LLC

     

    and

     

    TD
BANK, N.A., as Agent

     

    and

     

    the
Lenders described herein

     

    Dated:
March 9, 2009

     

    
      
        
          · 

        

         

      

      
         

        
          

        

      

      
         

      

    

    TABLE OF CONTENTS

     

    Page

     

     

    
      	
              1.

            	
              DEFINITIONS

            	
               1

            

    

     

    
      	
               
      

            	
              1.1

            	
              Defined
      Terms

            	
                1

            

    

     

    
      	
               
      

            	
              1.2

            	
              Accounting
      Terms

            	
              10

            

    

     

    
      	
               
      

            	
              1.3

            	
              UCC
      Terms

            	
              11

            

    

     

    
      	
              2.

            	
              THE
      LINE; USE OF PROCEEDS

            	
              11

            

    

     

    
      	
               
      

            	
              2.1

            	
              Line of
      Credit

            	
              11

            

    

     

    
      	
               
      

            	
              2.2

            	
              Use of
      Proceeds

            	
              11

            

    

     

    
      	
               
      

            	
              2.3

            	
              Method of
      Advances.

            	
              11

            

    

     

    
      	
               
      

            	
              2.4

            	
              Letters of
      Credit

            	
              12

            

    

     

    
      	
              3.

            	
              INTEREST
      RATE

            	
              13

            

    

     

    
      	
               
      

            	
              3.1

            	
              Interest on the
      Line

            	
              13

            

    

     

    
      	
               
      

            	
              3.2

            	
              Request for LIBOR
      Rate

            	
              13

            

    

     

    
      	
               
      

            	
              3.3

            	
              Certain
      Provisions Regarding LIBOR Rates

            	
              13

            

    

     

    
      	
               
      

            	
              3.4

            	
              Fall Back
      Rate

            	
              13

            

    

     

    
      	
               
      

            	
              3.5

            	
              LIBOR Based Rate
      Borrowings

            	
              13

            

    

     

    
      	
               
      

            	
              3.6

            	
              LIBOR
      Unlawful

            	
              14

            

    

     

    
      	
               
      

            	
              3.7

            	
              LIBOR
      Based Rate Unascertainable or Unavailable

            	
              14

            

    

     

    
      	
               
      

            	
              3.8

            	
              Default
      Interest

            	
              14

            

    

     

    
      	
               
      

            	
              3.9

            	
              Post Judgment
      Interest

            	
              14

            

    

     

    
      	
               
      

            	
              3.10

            	
              Calculation

            	
              14

            

    

     

    
      	
               
      

            	
              3.11

            	
              Limitation
      of Interest to Maximum Lawful Rate

            	
              14

            

    

     

    
      	
              4.

            	
              PAYMENTS
      AND FEES

            	
              14

            

    

     

    
      	
               
      

            	
              4.1

            	
              Interest Payments on
      the Line

            	
              14

            

    

     

    
      	
               
      

            	
              4.2

            	
              Principal Payments on
      the Line

            	
              15

            

    

     

    
      	
               
      

            	
              4.3

            	
              Letter of Credit
      Fees

            	
              15

            

    

     

    
      	
               
      

            	
              4.4

            	
              Loan
      Fee

            	
              15

            

    

     

    
      	
               
      

            	
              4.5

            	
              Usage
      Fee

            	
              15

            

    

     

    
      	
               
      

            	
              4.6

            	
              Collateral Management
      Fee

            	
              15

            

    

     

    
      	
               
      

            	
              4.7

            	
              Late
      Charge

            	
              15

            

    

     

    
      	
               
      

            	
              4.8

            	
              Termination of
      Line.

            	
              16

            

    

     

    
      	
               
      

            	
              4.9

            	
              Payment
      Method

            	
              16

            

    

     

    
      	
               
      

            	
              4.10

            	
              Application of
      Payments

            	
              16

            

    

     

    
      	
               
      

            	
              4.11

            	
              Loan
      Account

            	
              16

            

    

     

    
      	
               
      

            	
              4.12

            	
              Loss of
      Margin

            	
              17

            

    

     

    
      	
               
      

            	
              4.13

            	
              LIBOR
      Indemnity

            	
              17

            

    

     

    
      	
              5.

            	
              SECURITY;
      COLLECTION OF RECEIVABLES AND PROCEEDS OF COLLATERAL

            	
              17

            

    

     

    
      	
               
      

            	
              5.1

            	
              Personal
      Property

            	
              18

            

    

     

    
      	
               
      

            	
              5.2

            	
              Real
      Property

            	
              19

            

    

     

    
      	
               
      

            	
              5.3

            	
              Pledge

            	
              19

            

    

     

    
      	
               
      

            	
              5.4

            	
              Surety

            	
              19

            

    

     

    
      	
               
      

            	
              5.5

            	
              General

            	
              19

            

    

     

    
      	
               
      

            	
              5.6

            	
              Collection
      of Receivables; Proceeds of Collateral.

            	
              20

            

    

     

    
      	
              6.

            	
              REPRESENTATIONS
      AND WARRANTIES

            	
              20

            

    

     

    
      	
               
      

            	
              6.1

            	
              Valid
      Organization, Good Standing and Qualification

            	
              20

            

    

     

    
      	
               
      

            	
              6.2

            	
              Licenses

            	
              22

            

    

     

    
      	
               
      

            	
              6.3

            	
              Ownership
      Interests

            	
              22

            

    

     

    
      	
               
      

            	
              6.4

            	
              Subsidiaries

            	
              22

            

    

     

    
      	
               
      

            	
              6.5

            	
              Financial
      Statements

            	
              22

            

    

     

    
      	
               
      

            	
              6.6

            	
              No
      Material Adverse Change in Financial Condition

            	
              22

            

    

     

    
      	
               
      

            	
              6.7

            	
              Pending Litigation or
      Proceedings

            	
              22

            

    

     

    
      	
               
      

            	
              6.8

            	
              Due
      Authorization; No Legal Restrictions

            	
              22

            

    

     

    
      	
               
      

            	
              6.9

            	
              Enforceability

            	
              23

            

    

     

    
      	
               
      

            	
              6.10

            	
              No
      Default Under Other Obligations, Orders or Governmental
      Regulations

            	
              23

            

    

     

    
      	
               
      

            	
              6.11

            	
              Governmental
      Consents

            	
              23

            

    

     

    
      	
               
      

            	
              6.12

            	
              Taxes

            	
              23

            

    

     

    
      	
               
      

            	
              6.13

            	
              Title to
      Collateral

            	
              23

            

    

     

    
      	
               
      

            	
              6.14

            	
              Names;
      Addresses

            	
              23

            

    

     

    
      	
               
      

            	
              6.15

            	
              Current
      Compliance

            	
              24

            

    

     

    
      	
               
      

            	
              6.16

            	
              Pension
      Plans

            	
              24

            

    

     

    
      	
               
      

            	
              6.17

            	
              Leases and
      Contracts

            	
              24

            

    

     

    
      	
               
      

            	
              6.18

            	
              Intellectual
      Property

            	
              24

            

    

     

    
      	
               
      

            	
              6.19

            	
              Eligible Account
      Warranties

            	
              24

            

    

     

    
      	
               
      

            	
              6.20

            	
              Commercial Tort
      Claims

            	
              25

            

    

     

    
      	
               
      

            	
              6.21

            	
              Deposit
      Accounts

            	
              25

            

    

     

    
      	
               
      

            	
              6.22

            	
              Accuracy
      of Representations and Warranties

            	
              25

            

    

     

    
      	
               
      

            	
              6.23

            	
              Interrelatedness
      of Borrower and Guarantors

            	
              25

            

    

     

    
      	
               
      

            	
              6.24

            	
              Allegiance

            	
              26

            

    

     

    
      	
              7.

            	
              GENERAL
      COVENANTS

            	
              26

            

    

     

    
      	
               
      

            	
              7.1

            	
              Payment
      of Principal, Interest and Other Amounts Due

            	
              26

            

    

     

    
      	
               
      

            	
              7.2

            	
              Limitation on Sale and
      Leaseback

            	
              26

            

    

     

    
      	
               
      

            	
              7.3

            	
              Limitation on
      Indebtedness

            	
              26

            

    

     

    
      	
               
      

            	
              7.4

            	
              Investments and
      Loans

            	
              26

            

    

     

    
      	
               
      

            	
              7.5

            	
              Guaranties

            	
              27

            

    

     

    
      	
               
      

            	
              7.6

            	
              Disposition of
      Assets

            	
              27

            

    

     

    
      	
               
      

            	
              7.7

            	
              Merger;
      Consolidation; Business Acquisitions; Subsidiaries

            	
              27

            

    

     

    
      	
               
      

            	
              7.8

            	
              Taxes; Claims for
      Labor and Materials

            	
              27

            

    

     

    
      	
               
      

            	
              7.9

            	
              Liens

            	
              27

            

    

     

    
      	
               
      

            	
              7.10

            	
              Existence;
      Approvals; Qualification; Business Operations; Compliance with
      Laws

            	
              28

            

    

     

    
      	
               
      

            	
              7.11

            	
              Maintenance
      of Properties, Intellectual Property

            	
              28

            

    

     

    
      	
               
      

            	
              7.12

            	
              Insurance

            	
              29

            

    

     

    
      	
               
      

            	
              7.13

            	
              Inspections;
      Examinations

            	
              30

            

    

     

    
      	
               
      

            	
              7.14

            	
              Default Under Other
      Indebtedness

            	
              30

            

    

     

    
      	
               
      

            	
              7.15

            	
              Pension
      Plans

            	
              30

            

    

     

    
      	
               
      

            	
              7.16

            	
              Bank of
      Account

            	
              31

            

    

     

    
      	
               
      

            	
              7.17

            	
              Maintenance of
      Management

            	
              32

            

    

     

    
      	
               
      

            	
              7.18

            	
              Amendment
      to Certificate or Articles of Incorporation

            	
              32

            

    

     

    
      	
               
      

            	
              7.19

            	
              Dividends

            	
              32

            

    

     

    
      	
               
      

            	
              7.20

            	
              Transactions with
      Affiliates

            	
              32

            

    

     

    
      	
               
      

            	
              7.21

            	
              Restrictions on
      Interest Transfer

            	
              32

            

    

     

    
      	
               
      

            	
              7.22

            	
              Change of
      Control.

            	
              32

            

    

     

    
      	
               
      

            	
              7.23

            	
              Name;
      Address or State of Organization Change

            	
              33

            

    

     

    
      	
               
      

            	
              7.24

            	
              Notices

            	
              33

            

    

     

    
      	
               
      

            	
              7.25

            	
              Additional Documents
      and Future Actions

            	
              33

            

    

     

    
      	
               
      

            	
              7.26

            	
              Title to
      Equipment

            	
              33

            

    

     

    
      	
               
      

            	
              7.27

            	
              Accounts
      Receivable

            	
              33

            

    

     

    
      	
               
      

            	
              7.28

            	
              Material Adverse
      Contracts

            	
              33

            

    

     

    
      	
               
      

            	
              7.29

            	
              Restrictions on Use of
      Proceeds

            	
              34

            

    

     

    
      	
               
      

            	
              7.30

            	
              Commercial Tort
      Claims

            	
              34

            

    

     

    
      	
               
      

            	
              7.31

            	
              Possessory
      Collateral

            	
              35

            

    

     

    
      	
               
      

            	
              7.32

            	
              Electronic Chattel
      Paper

            	
              35

            

    

     

    
      	
               
      

            	
              7.33

            	
              Fiscal Year;
      Accounting Changes

            	
              35

            

    

     

    
      	
               
      

            	
              7.34

            	
              Allegiance

            	
              35

            

    

     

    
      	
              8.

            	
              FINANCIAL
      COVENANTS

            	
              35

            

    

     

    
      	
               
      

            	
              8.1

            	
              Fixed Charge Coverage
      Ratio

            	
              35

            

    

     

    
      	
              9.

            	
              ACCOUNTING
      RECORDS, REPORTS AND FINANCIAL STATEMENTS

            	
              35

            

    

     

    
      	
               
      

            	
              9.1

            	
              Annual
      Statements

            	
              35

            

    

     

    
      	
               
      

            	
              9.2

            	
              Projections and Cash
      Flow

            	
              36

            

    

     

    
      	
               
      

            	
              9.3

            	
              Monthly
      Statements

            	
              36

            

    

     

    
      	
               
      

            	
              9.4

            	
              Accounts
      Receivable and Accounts Payable Statements

            	
              37

            

    

     

    
      	
               
      

            	
              9.5

            	
              Borrowing
      Base Certifications and Related Documents

            	
              37

            

    

     

    
      	
               
      

            	
              9.6

            	
              Audit
      Reports

            	
              37

            

    

     

    
      	
               
      

            	
              9.7

            	
              Reports
      to Governmental Agencies and Other Creditors

            	
              37

            

    

     

    
      	
               
      

            	
              9.8

            	
              Compliance
      Certificates

            	
              37

            

    

     

    
      	
               
      

            	
              9.9

            	
              Accountant's
      Certificate

            	
              37

            

    

     

    
      	
               
      

            	
              9.10

            	
              Shareholder, Member
      and SEC Reports

            	
              38

            

    

     

    
      	
               
      

            	
              9.11

            	
              Requested
      Information

            	
              38

            

    

     

    
      	
              10.

            	
              ENVIRONMENTAL
      REPRESENTATIONS AND COVENANTS.

            	
              38

            

    

     

    
      	
               
      

            	
              10.1

            	
              Representations

            	
              38

            

    

     

    
      	
               
      

            	
              10.2

            	
              Real
      Property

            	
              38

            

    

     

    
      	
               
      

            	
              10.3

            	
              Covenant Regarding
      Compliance

            	
              33

            

    

     

    
      	
               
      

            	
              10.4

            	
              Notices

            	
              39

            

    

     

    
      	
               
      

            	
              10.5

            	
              Indemnity

            	
              39

            

    

     

    
      	
               
      

            	
              10.6

            	
              Testing

            	
              39

            

    

     

    
      	
               
      

            	
              10.7

            	
              Survival

            	
              40

            

    

     

    
      	
              11.

            	
              CONDITIONS
      OF CLOSING

            	
              40

            

    

     

    
      	
               
      

            	
              11.1

            	
              Loan
      Documents

            	
              40

            

    

     

    
      	
               
      

            	
              11.2

            	
              Representations and
      Warranties

            	
              40

            

    

     

    
      	
               
      

            	
              11.3

            	
              No
      Default

            	
              40

            

    

     

    
      	
               
      

            	
              11.4

            	
              Proceedings and
      Documents

            	
              40

            

    

     

    
      	
               
      

            	
              11.5

            	
              Waiver
      Agreements

            	
              41

            

    

     

    
      	
               
      

            	
              11.6

            	
              Delivery of Other
      Documents

            	
              41

            

    

     

    
      	
               
      

            	
              11.7

            	
              Undrawn
      Availability

            	
              41

            

    

     

    
      	
               
      

            	
              11.8

            	
              Non-Waiver of
      Rights

            	
              41

            

    

     

    
      	
              12.

            	
              CERTAIN
      CONDITIONS TO SUBSEQUENT ADVANCES

            	
              42

            

    

     

    
      	
               
      

            	
              12.1

            	
              Representations and
      Warranties

            	
              42

            

    

     

    
      	
               
      

            	
              12.2

            	
              No
      Default

            	
              42

            

    

     

    
      	
               
      

            	
              12.3

            	
              Other
      Requirements

            	
              42

            

    

     

    
      	
              13.

            	
              DEFAULT
      AND REMEDIES.

            	
              42

            

    

     

    
      	
               
      

            	
              13.1

            	
              Events of
      Default

            	
              42

            

    

     

    
      	
               
      

            	
              13.2

            	
              Remedies

            	
              44

            

    

     

    
      	
               
      

            	
              13.3

            	
              Sale or Other
      Disposition of Collateral

            	
              45

            

    

     

    
      	
               
      

            	
              13.4

            	
              Actions with Respect
      to Accounts

            	
              45

            

    

     

    
      	
               
      

            	
              13.5

            	
              Set-Off

            	
              47

            

    

     

    
      	
               
      

            	
              13.6

            	
              Turnover of Property
      Held by Agent

            	
              47

            

    

     

    
      	
               
      

            	
              13.7

            	
              Delay or Omission Not
      Waiver

            	
              47

            

    

     

    
      	
               
      

            	
              13.8

            	
              Remedies Cumulative;
      Consents

            	
              47

            

    

     

    
      	
               
      

            	
              13.9

               

              13.10

               

              13.11

            	
              Certain
      Fees, Costs, Expenses, Expenditures and Indemnification

               

              Time is of
      the Essence

               

              Acknowledgement of Confession of Judgment
Provisions

            	
              48

               

              49

               

              49

            

    

     

    
      	
              14.

            	
              COMMUNICATIONS
      AND NOTICES.

            	
              49

            

    

     

    
      	
               
      

            	
              14.1

            	
              Communications and
      Notices

            	
              49

            

    

     

    
      	
              15.

            	
              WAIVERS.

            	
              50

            

    

     

    
      	
               
      

            	
              15.1

            	
              Waivers

            	
              50

            

    

     

    
      	
               
      

            	
              15.2

            	
              Forbearance

            	
              50

            

    

     

    
      	
               
      

            	
              15.3

            	
              Limitation on
      Liability

            	
              51

            

    

     

    
      	
              16.

            	
              SUBMISSION
      TO JURISDICTION.

            	
              51

            

    

     

    
      	
               
      

            	
              16.1

            	
              Submission to
      Jurisdiction

            	
              51

            

    

     

    
      	
              17.

            	
              USA
      Patriot Act Provisions.

            	
              51

            

    

     

    
      	
               
      

            	
              17.1

            	
              USA Patriot Act
      Notice

            	
              51

            

    

     

    
      	
               
      

            	
              17.2

            	
              Collateral
      Provisions.

            	
              51

            

    

     

    
      	
               
      

            	
              17.3

            	
              OFAC
      Compliance

            	
              52

            

    

     

    
      	
              18.

            	
              SETTLEMENT
      AMONG LENDERS.

            	
              52

            

    

     

    
      	
               
      

            	
              18.1

            	
              Between Settlement
      Dates

            	
              52

            

    

     

    
      	
               
      

            	
              18.2

            	
              Settlement
      Date

            	
              52

            

    

     

    
      	
               
      

            	
              18.3

            	
              Remittance to
      Agent

            	
              53

            

    

     

    
      	
               
      

            	
              18.4

            	
              Alternate
      Procedures

            	
              53

            

    

     

    
      	
               
      

            	
              18.5

            	
              Failure to
      Advance

            	
              53

            

    

     

    
      	
               
      

            	
              18.6

            	
              Defaulting
      Lender

            	
              53

            

    

     

    
      	
              19.

            	
              AGENT.

            	
              54

            

    

     

    
      	
               
      

            	
              19.1

            	
              Appointment of
      Agent

            	
              54

            

    

     

    
      	
               
      

            	
              19.2

            	
              Holding of Collateral
      and Collections

            	
              54

            

    

     

    
      	
               
      

            	
              19.3

            	
              Fees

            	
              54

            

    

     

    
      	
               
      

            	
              19.4

            	
              Collections and
      Disbursements

            	
              54

            

    

     

    
      	
               
      

            	
              19.5

            	
              Delegation
      of Duties; Discretion; Instructions

            	
              55

            

    

     

    
      	
               
      

            	
              19.6

            	
              Nature of
      Duties

            	
              55

            

    

     

    
      	
               
      

            	
              19.7

            	
              Lack of Reliance on
      the Agent

            	
              56

            

    

     

    
      	
               
      

            	
              19.8

            	
              Resignation

            	
              56

            

    

     

    
      	
               
      

            	
              19.9

               

              19.10

               

              19.11

               

              19.12

               

              19.13

               

              19.14

               

              19.15

               

              19.16

               

              19.17

               

              19.18

               

              19.19

               

              19.20

               

              19.21

            	
              Certain Rights of
      Agent

               

               Reliance 

               

               Notice of
      Default 

               

               The Agent in its Capacity as
      Lender 

               

               OtherLoans  

               

               Disclosure of Information;
      Audits 

               

               Actions by Agent;
      Amendments;
      Waivers 

               

               Sharing of Risk; Indemnification;
      Expenses 

               

               Consultation with
      Cousel 

               

               Documents 

               

               Several Obligations 

               

               No Third Party
      Beneficiary 

               

               Participations and
      Assignments 

            	
              56

               

              56

               

              56

               

              57

               

              57

               

              57

               

              57

               

              59

               

              59

               

              59

               

              60

               

              60

               

              60

            

    

     

    
      	
              20.

            	
              SUBROGATION

            	
              60

            

    

     

    
      	
               
      

            	
              20.1

            	
              Subrogation

            	
              60

            

    

     

    
      	
              21.

            	
              MISCELLANEOUS.

            	
              61

            

    

     

    
      	
               
      

            	
              21.1

            	
              Brokers

            	
              61

            

    

     

    
      	
               
      

            	
              21.2

            	
              Use of Agent's
      Name

            	
              61

            

    

     

    
      	
               
      

            	
              21.3

            	
              No Joint
      Venture

            	
              61

            

    

     

    
      	
               
      

            	
              21.4

            	
              Survival

            	
              61

            

    

     

    
      	
               
      

            	
              21.5

            	
              No Assignment by
      Obligor

            	
              61

            

    

     

    
      	
               
      

            	
              21.6

            	
              Binding
      Effect

            	
              61

            

    

     

    
      	
               
      

            	
              21.7

            	
              Severability

            	
              61

            

    

     

    
      	
               
      

            	
              21.8

            	
              No Third Party
      Beneficiaries

            	
              62

            

    

     

    
      	
               
      

            	
              21.9

               

              21.10

               

              21.11

               

              21.12

               

              21.13

               

              21.14

               

              21.15

               

              21.16

               

              21.17

               

              21.18

            	
              Modifications

               

               Holidays 

               

               LawGoverning 

               

               Integration 

               

               Exhibits and
      Schedules 

               

               Headings 

               

               Counterparts 

               

               Waiver of Right to Trial by
      Jury 

               

               Marketing
      Release 

               

               Credit Inquiries 

            	
              62

               

              62

               

              62

               

              62

               

              62

               

              62

               

              62

               

              62

               

              63

               

              63

            

    

    

      
        
           

        

        
           

          
            

          

        

        
           

        

      

    LOAN
AND SECURITY AGREEMENT

     

    THIS LOAN AND SECURITY AGREEMENT
(the "Agreement")
is made effective the 9th day of March, 2009 by and among HOOPER HOLMES, INC., a New
York corporation ("Borrower"), HOOPER INFORMATION SERVICES,
INC., a New Jersey corporation ("Information"), MID-AMERICA AGENCY SERVICES,
INCORPORATED, a Nebraska corporation ("Mid America"), TEG ENTERPRISES, INC., a Nebraska corporation
("TEG"),  HERITAGE LABS INTERNATIONAL,
LLC, a Kansas limited liability company ("Heritage"), HOOPER DISTRIBUTION SERVICES,
LLC, a New Jersey limited liability company ("Distribution", and collectively with
Information, Mid America, TEG and Heritage, the "Guarantors" and each a "Guarantor"), TD BANK, N.A. in its capacity
as Agent ("Agent") and
the financial institutions listed on Schedule
A attached hereto (as such Schedule may be amended, modified or replaced
from time to time), in their capacity as Lenders (collectively, the "Lenders" and each a "Lender"). Borrower and
Guarantors are referred to herein jointly, severally and collectively as "Obligors" and each as an
"Obligor".

     

    BACKGROUND

     

    A. Borrower
has requested that Lenders extend a certain credit facility to Borrower, which
Lenders are willing to do on the terms set forth herein.

     

    B. Capitalized
terms used herein will have the meanings set forth therefor in Section 1 of
this Agreement.

     

    NOW, THEREFORE, in
consideration of the terms and conditions contained herein, and of any
extensions of credit now or hereafter made to or for the benefit of Borrower by
Lenders, the parties hereto, intending to be legally bound hereby, agree as
follows:

     

    1. DEFINITIONS

     

    1.1 Defined
Terms

     

    .  The
following words and phrases as used in capitalized form in this Agreement,
whether in the singular or plural, shall have the meanings
indicated:

     

    (a) "Advance" means any loan or extension
of credit by Lenders to Borrower including, without limitation, Line Advances
and the undrawn face amount of any letter of credit issued by any Lender or any
Affiliate of any Lender for the account of Borrower.

     

    (b) "Affiliate", as to any Person, means (a)
each other Person that directly or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common control with,
the Person in question and (b) any person who is an officer, director, member,
manager or partner of (i) such Person, (ii) any Subsidiary of such Person, or
(iii) any Person described in the preceding clause (i).

     

    (c) "Agent" shall have the meaning given
such term in the introductory paragraph of this Agreement and shall include all
permitted successors and assigns of such Person.

     

    (d) "Allegiance" shall mean Allegiance
Health, P.C., a New York professional corporation.

     

    (e) "Borrower" shall have the meaning given
such terms in the

     

    
      
        
          · 
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        1

        
          

        

      

      
         

      

    

    (f) introductory
paragraph of this Agreement and shall include all permitted successors and
assigns of Borrower.

     

    (g) "Borrowing
Base Amount"
means, at any time, an amount up to eighty-five percent (85%) of the amount of
Borrower's Eligible Receivables.

     

    (h) "Business
Day" means any
day except a Saturday, Sunday or other day on which banks in Philadelphia,
Pennsylvania are authorized by law to close.

     

    (i) "Capital
Expenditures"
means any expenditure that would be classified as a capital expenditure on a
statement of cash flow of Obligors prepared in accordance with
GAAP.

     

    (j) "Capitalized
Leases" means all
lease obligations which have been or should be, in accordance with GAAP,
capitalized on the books of the lessee.

     

    (k) "Capitalized
Lease Obligations" means all amounts payable
with respect to a Capitalized Lease.

     

    (l) "Collateral" shall have the meaning given
such term in Section
5.5 of this Agreement.

     

    (m) "Contract
Period" means the
period of time commencing on the date hereof and continuing through and
including March 8, 2012.

     

    (n) "Corporation" means a corporation,
partnership, limited liability company, trust, unincorporated organization,
association or joint stock company.

     

    (o) "Default" means any event which with
the giving of notice, passage of time or both, would constitute an Event of
Default.

     

    (p) "Defaulting
Lender" shall
have the meaning given such term in Section
18.6 hereof.

     

    (q) "Default
Rate" shall have
the meaning given such term in Section  3.8
hereof.

     

    (r) "EBITDA" means, for any period, Net
Income of Obligors for such period, plus the aggregate
amounts deducted in determining such Net Income in respect of (i) Interest
Expense for such period, (ii) income taxes for such period, (iii) depreciation
for such period, and (iv) amortization for such period, all as determined in
accordance with GAAP on a consolidated basis.

     

    (s) "Eligible
Receivables"
means accounts receivable of Borrower in which Agent, for the pro rata benefit
of Lenders, has a prior, perfected first priority lien, which have been
outstanding no more than sixty (60) days from the due date and no more than
ninety (90) days from the original invoice date with respect to account debtors
other than Increased Account Debtors, or one hundred and twenty (120) days from
the original invoice date with respect to Increased Account Debtors, are not
subject to offset, deduction, counterclaim, discount, credit, charge back,
freight claim, allowance or adjustment, comply with the representations set
forth in Section
6.19 and meet all specifications established by Agent in its sole
discretion from time to time.  Eligible

     

    
      
        
          · 
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        2

        
          

        

      

      
         

      

    

    (t) Receivables
shall not include: (i) non-trade receivables; (ii) foreign accounts receivable
other than those fully secured by a letter of credit issued by a financial
institution acceptable to Agent in its sole discretion or covered by credit
insurance acceptable to Agent in its sole discretion in each case assigned to
Agent, for the pro rata benefit of Lenders, or with respect to which Agent has
been named loss payee, as applicable; (iii) contra-accounts; (iv) customer
deposits; (v) bill and hold amounts; (vi) accounts originating from account
debtors which are insolvent, bankrupt or whose accounts are under collection
process; (vii) intercompany accounts or accounts from other affiliated
corporations, organizations or individuals; (viii) accounts receivable from the
United States government or any of its agencies which have not been assigned to
Agent, for the pro rata benefit of Lenders, under the Assignment of Claims Act;
(ix) finance charges; (x) lease receivables; (xi) accounts receivable owed by a
Person if fifty percent (50%) or more of such Person's accounts receivable owed
to Borrower, collectively, have been outstanding more than sixty (60) days from
the due date, more than ninety (90) days from the original invoice date with
respect to account debtors other than Increased Account Debtors or more than one
hundred and twenty (120) days from the original invoice date with respect to
Increased Account Debtors;  (xii) accounts receivable of poor credit
quality as determined by Agent in its sole discretion; (xiii) that portion of
accounts receivable concentrated in individual account debtors in excess of
fifteen percent (15%) (or in such other amounts or percentages as may be
established by Agent from time to time) of all Eligible Receivables; (xiv) any
account with respect to which the account debtor is located in a state which
requires Borrower, as a precondition to commencing or maintaining an action in
the courts of that state, either to (A) receive a certificate of authority to do
business and be in good standing in such state; or (B) file a notice of business
activities report or similar report with such state's taxing authority, unless
(I) Borrower has taken one of the actions described in clauses (A) or (B), (II)
the failure to take one of the actions described in either clause (A) or (B) may
be cured retroactively by Borrower at its election, or (III) Borrower has
proven, to Agent's satisfaction, that it is exempt from any such requirements
under any such state's laws and (xv) any account where the account debtor is a
Sanctioned Person.  Borrower shall immediately notify Agent if any
account receivable previously scheduled, listed or referred to in any
certificate, statement or report by Borrower and upon which Borrower is basing
availability under the Line ceases to be an Eligible Receivable.

     

    (u) "End
Date" means each
"End Date" set forth in the chart contained in the definition of Required Cash
Deposit.

     

    (v) "Environmental
Affiliate" means
each Obligor, and any other Person for whom any Obligor at any time has any
liability (contingent or otherwise) with respect to any claims arising out of
the failure of such Obligor or such Person to comply with all applicable
Environmental Requirements.

     

    (w) "Environmental
Cleanup Site"
means any location which is listed or proposed for listing on the National
Priorities List, on CERCLIS or on any similar state list of sites requiring
investigation or cleanup, or which is the subject of any pending or threatened
action, suit, proceeding or investigation related to or arising from any alleged
violation of any Environmental Requirements.

     

    (x) "Environmental
Consultants" has
the meaning given such term in Section
10.6 hereof.

     

    (y) "Environmental
Requirements"
means any and all applicable federal, state or local laws, statutes, ordinances,
regulations or standards, administrative or court orders or decrees, common law
doctrines or private agreements, relating to (i) pollution or
protection

     

    
      
        
          · 
                                                                      -  -

        

         

      

      
        3

        
          

        

      

      
         

      

    

    (z) of the
environment and natural resources, (ii) exposure of employees or other persons
to Special Materials, (iii) protection of the public health and welfare from the
effects of Special Materials and their products, by-products, wastes, emissions,
discharges or releases, and (iv) regulation, licensing, approval or
authorization of the manufacture, generation, use, formulation, packaging,
labeling, transporting, distributing, handling, storing or disposing of any
Special Materials.

     

    (aa) "ERISA" has the meaning given such
term in Section
6.16 hereof.

     

    (bb) "Event of
Default" means
each of the events specified in Section 13.1.

     

    (cc) "Federal
Funds Rate"
means, for any day, the rate per annum (based on a year of 360 days and
actual days elapsed and rounded upward to the nearest 1/100 of 1%) announced by
the Federal Reserve Bank of New York (or any successor) on such day as being the
weighted average of the rates on overnight federal funds transactions arranged
by federal funds brokers on the previous trading day, as computed and announced
by such Federal Reserve Bank (or any successor) in substantially the same manner
as such Federal Reserve Bank computes and announces the weighted average it
refers to as the "Federal Funds Effective Rate" as of the date of this
Agreement; provided, if such Federal Reserve Bank (or its successor) does not
announce such rate on any day, the "Federal Funds Effective Rate" for such day
shall be the Federal Funds Effective Rate for the last day on which such rate
was announced.

     

    (dd) "Fixed
Charge Coverage Ratio" means the ratio of Obligors'
(a) EBITDA to (b) Fixed Charges determined on a consolidated basis.

     

    (ee) "Fixed
Charges" means,
for any period, the greater of (i) one (1) or (ii) the sum of (A) Obligors'
Interest Expense for such period, plus (B) principal
payments paid or due on Obligors' long-term Indebtedness and Capitalized Lease
Obligations for such period, plus (C) Unfinanced
Capital Expenditures of Obligors for such period, plus (D) income taxes
paid or due by Obligors during such period, plus (E) dividends
and distributions paid by Obligors during such period, all as determined in
accordance with GAAP on a consolidated basis.

     

    (ff) "GAAP" means generally accepted
accounting principles in the United States of America, in effect from time to
time, consistently applied and maintained.

     

    (gg) "Good
Business Day"
means any day except a Saturday, Sunday or other day on which commercial banks
in New York and London, England are authorized by law to close.

     

    (hh) "Guarantor" and "Guarantors" shall have the meanings
given such terms in the introductory paragraph of this Agreement and shall
include all permitted successors and assigns of such Persons.

     

    (ii) "Hedging
Agreements" means
any interest rate protection agreement, swap agreement (as defined in 11 U.S.C.
§ 101), foreign currency exchange agreement, commodity purchase or option
agreement or other interest or exchange rate or commodity price hedging
agreements between any Borrower and Agent or any Lender or any Affiliate of
Agent or any Lender.

     

    
      
        
          · 
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        4

        
          

        

      

      
         

      

    

    (jj) "Increased
Account Debtor"  means each of the
account debtors listed on Schedule
1.1(ff) hereof.

     

    (kk) "Indebtedness", as applied to a Person,
means:

     

    (1) all items
(except items of capital stock or of surplus) which in accordance with GAAP
would be included in determining total liabilities as shown on the liability
side of a balance sheet of such Person as at the date as of which Indebtedness
is to be determined;

     

    (2) to the
extent not included in the foregoing, all indebtedness, obligations, and
liabilities secured by any mortgage, pledge, lien, conditional sale or other
title retention agreement or other security interest to which any property or
asset owned or held by such Person is subject, whether or not the indebtedness,
obligations or liabilities secured thereby shall have been assumed by such
Person; and

     

    (3) to the
extent not included in the foregoing, all indebtedness, obligations and
liabilities of others which such Person has directly or indirectly guaranteed,
endorsed (other than for collection or deposit in the ordinary course of
business), sold with recourse, or agreed (contingently or otherwise) to purchase
or repurchase or otherwise acquire or in respect of which such Person has agreed
to supply or advance funds (whether by way of loan, stock purchase, capital
contribution or otherwise) or otherwise to become directly or indirectly
liable.

     

    (ll) "Interest
Expense", as
applied to Obligors, means for any period, the amount of interest paid or due on
Indebtedness by Obligors for such period, determined in accordance with
GAAP.

     

    (mm) "IP
Security Agreement" means that certain
Intellectual Property Security Agreement executed by Borrower in favor of Agent
dated of even dated herewith.

     

    (nn) "Issuing
Bank" means
TD.

     

    (oo) "Lender" and "Lenders" shall have the meaning given
such terms in the introductory paragraph of this Agreement and shall include all
permitted successors and assigns of such Person.

     

    (pp) "Lender
Indebtedness"
means all obligations and Indebtedness of any Obligor to Agent or any Lender or
any Affiliate of Agent or any Lender, whether now or hereafter owing or
existing, including, without limitation, all obligations under the Loan
Documents, all obligations to reimburse Agent or any Lender or any Affiliate of
Agent or any Lender for payments made by Agent or any Lender or any such
Affiliate pursuant to any letter of credit issued for the account or benefit of
any Obligor by Agent, Issuing Bank or any Lender or any Affiliate of Agent,
Issuing Bank or any Lender, all obligations to Agent or any Lender or any
Affiliate of Agent or any Lender under any Hedging Agreements, all other
obligations or undertakings now or hereafter made by or for the benefit of any
Obligor to or for the benefit of Agent or any Lender or any Affiliate of Agent
or any Lender under any other agreement, promissory note or undertaking now
existing or hereafter entered into by any Obligor with Agent or any Lender or
any such Affiliate, including, without limitation, all obligations of each
Obligor to Agent or any Lender or any Affiliate of Agent or any Lender under any
guaranty or surety agreement and all obligations of each Obligor to immediately
pay to Agent or any Lender or any Affiliate of Agent or any Lender the amount of
any overdraft on any deposit account maintained with Agent or any Lender or any
Affiliate of Agent or

     

    
      
        
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        5

        
          

        

      

      
         

      

    

    (qq) any
Lender, together with all interest and other sums payable in connection with any
of the foregoing.

     

    (rr) "Letter of
Credit Sublimit"
means an amount up to One Million Five Hundred Thousand Dollars
($1,500,000.00).

     

    (ss) "LIBOR
Based Rate" means
the LIBOR Rate, plus the LIBOR Rate Margin.

     

    (tt) "LIBOR
Market Index Based Rate"
means the LIBOR Market Index Rate, plus the LIBOR Market Index Rate
Margin.

     

    (uu) "LIBOR
Market Index Rate" means greater of (i) one
percent (1%) per annum and (ii) the LIBOR Rate for a one (1) month Rate Period
as determined on the first Good Business Day of each month, which rate shall
remain in effect until, and shall be reset on, the first Good Business Day of
each successive month.

     

    (vv) "LIBOR
Market Index Rate Advance" means any Advance accruing
interest at the LIBOR Market Index Based Rate.

     

    (ww) "LIBOR
Market Index Rate Margin" means three hundred fifty
(350) basis points.

     

    (xx) "LIBOR
Rate" means, for
any proposed or existing LIBOR Rate Advances, the greater of (i) one percent
(1%) per annum and (ii) the quotient obtained by dividing (A) the offered rate
for deposits in United States dollars for a period equal to such Rate Period
which appears on Reuters Screen LIBOR 01 Page as of 11:00 a.m., London time, two
Good Business Days prior to the first day of such Rate Period; provided, that if
such rate does not appear on Reuters Screen LIBOR 01 Page, the rate will be the
arithmetic mean of the rates quoted by major banks in London, selected by Agent
for such Rate Period, as of 11:00 a.m (London time) two Good Business Days prior
to the first day of such Rate Period, by (B) a number equal to 1.0 minus the
maximum reserve percentages (expressed as a decimal fraction) including, without
limitation, basic supplemental, marginal and emergency reserves under any
regulations of the Board of Governors of the Federal Reserve System or other
governmental authority having jurisdiction with respect thereto, as now and from
time to time in effect, for Eurocurrency funding (currently referred to as
"Eurocurrency Liabilities" in Regulation D of such Board) which are required to
be maintained by Agent by the Board of Governors of the Federal Reserve
System.  The LIBOR Rate shall be adjusted automatically on and as of
the effective date of any change in such reserve percentage.

     

    (yy) "LIBOR
Rate Advance"
means any Advance accruing interest at the LIBOR Based Rate.

     

    (zz) "LIBOR
Rate Margin"
means three hundred fifty (350) basis points.

     

    (aaa) "LIBOR
Rate Notification" means an irrevocable written
notice in form acceptable to Agent requesting the LIBOR Based Rate, which notice
must be provided to Agent prior to 10:00 a.m. Philadelphia time on a Business
Day which is at least three (3) Good Business Days prior to the date on which
such rate is requested to take effect, specifying:

     

    
      
        
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        6

        
          

        

      

      
         

      

    

    (bbb) the
principal amount which is to accrue interest at such rate;

     

    (1) the date
on which such rate is to take effect and the Rate Period; and

     

    (2) whether
such principal amount is a new advance, a conversion from another interest rate
or a renewal of another interest rate.

     

    (ccc) "Line" shall have the meaning given
such term in Section
2.1 hereof.

     

    (ddd) "Line
Advances" means
all Advances under the Line other than Letters of Credit.

     

    (eee) "Line
Note" shall have
the meaning given such term in Section
2.1 hereof.

     

    (fff) "Loan" means the Line.

     

    (ggg) "Loan
Account" has the
meaning given such term in Section
4.11 hereof.

     

    (hhh) "Loan
Fee" has the
meaning given such term in Section
4.4 hereof.

     

    (iii) "Loan
Documents" means
this Agreement, the Line Note, the Surety Agreement, the Pledge Agreement, the
Mortgage, the Rent Assignment, the IP Security Agreement and all other
documents, executed or delivered by any Obligor or any other Person pursuant to
this Agreement or in connection herewith, as they may be amended, modified or
restated from time to time.

     

    (jjj) "Material
Adverse Effect"
means a material adverse effect, as determined by Agent in its sole discretion
(i) on the business, operations, assets, management, liabilities or condition of
any Obligor, (ii) in the value of or the perfection or priority of Agent's lien
upon the Collateral, or (iii) in the ability of any Obligor to perform its
obligations under the Loan Documents

     

    (kkk) "Maximum
Line Amount"
means an amount up to Fifteen Million Dollars ($15,000,000.00).

     

    (lll) "Mortgage" means that certain Mortgage
and Security Agreement executed by Borrower in favor of Agent dated
of even date herewith.

     

    (mmm) "Mortgaged
Property" shall
have the meaning given such term in Section
5.2 hereof.

     

    (nnn) "Net
Income" means
income (or loss) of Obligors after income and franchise taxes and shall have the
meaning given such term by GAAP, provided that there shall be specifically
excluded therefrom (i) gains or losses from the sale of capital assets, (ii) net
income of any Person in which any Obligor has an ownership interest, unless
received by such Obligor in a cash distribution, and (iii) any gains arising
from extraordinary items, all as determined in accordance with GAAP on a
consolidated basis.

     

    
      
        
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        7

        
          

        

      

      
         

      

    

    (ooo) "Note" means the Line
Note.

     

    (ppp) "OFAC" means the U.S. Department of
the Treasury's Office of Foreign Assets Control.

     

    (qqq) "Out-Of-Formula
Advance" means
the amount by which (i) the sum of (a) the then outstanding Line Advances, plus (b) the face
amount of all outstanding Letters of Credit exceeds (ii) the Borrowing Base
Amount, subject to such restrictions on Advances as are set forth in this
Agreement.

     

    (rrr) "Participations" shall have the meaning given
such term in Section
19.21(a) hereof.

     

    (sss) "Participants" shall have the meaning given
such term in Section
19.21(a) hereof.

     

    (ttt) "PBGC" has the meaning given such
term in Section
6.16 below.

     

    (uuu) "Person" means an individual, a
Corporation or a government or any agency or subdivision thereof, or any other
entity.

     

    (vvv) "Plan" has the meaning given such
term in Section
6.16 below.

     

    (www) "Pledge
Agreement" shall
have the meaning given such term in Section
5.3 hereof.

     

    (xxx) "Prime
Based Rate" means
the Prime Rate, plus the Prime Rate
Margin (such interest rate to change immediately upon any change in the Prime
Rate).

     

    (yyy) "Prime
Rate" means the
greater of (1) the "Prime Rate" of interest as published in the "Money Rates"
section of The Wall
Street Journal on the applicable date (or the highest "Prime Rate" if
more than one is published) as such rate may change from time to time; (2) the
Federal Funds Rate plus fifty (50) basis points; and (C) the LIBOR Rate for a
one month Rate Period plus one hundred (100) basis points.  If The Wall Street
Journal ceases to be published or goes on strike or is otherwise not
published, Agent may use a similar published prime or base rate.  The
Prime Rate is not necessarily the lowest or best rate of interest offered by
Agent to any borrower or class of borrowers.

     

    (zzz) "Prime
Rate Advance"
means any Advance accruing interest at the Prime Based Rate.

     

    (aaaa) "Prime
Rate Margin"
means one hundred fifty (150) basis points.

     

    (bbbb) "Pro Rata
Percentages"
means, as to each Lender, the percentage set forth next to such Lender's name on
Schedule
A hereof.

     

    (cccc) "Pro Rata
Share" means, as
to each Lender, the amount set forth next to such Lender's name on Schedule
A hereto with respect to the Loan.

     

    (dddd) "Rate
Period" means,
for any principal portion of the Line for which Borrower elects the LIBOR Based
Rate, the period of time for which such rate shall apply to such

     

    
      
        
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        8

        
          

        

      

      
         

      

    

    (eeee) principal
portion.

     

    (ffff) "Real
Property" had the
meaning given such term in Section
10.2 below.

     

    (gggg) "Rent
Assignment" means
that certain Assignment of Rents and Leases executed by Borrower in favor of
Agent of even date herewith.

     

    (hhhh) "Requested
Advance Date" has
the meaning given such term in Section
2.5(b) hereof.

     

    (iiii) "Required
Cash Deposit"
means for each ninety (90) day period ending on each End Date set forth below an
average amount equal to the Required Cash Deposit set forth below, in each case,
minus the
average amount of Line Advances outstanding during such ninety (90) day
period:

     

    
      	
              End
      Date

            	
              Required
      Cash Deposit

            
	
              1/31/2010

            	
              $3,500,000

            
	
              3/31/2010

            	
              $4,000,000

            
	
              6/30/2010

            	
              $4,500,000

            
	
              9/30/2010

            	
              $5,000,000

            
	
              12/31/2010

            	
              $5,500,000

            
	
              3/31/2011

            	
              $6,000,000

            
	
              6/30/2011

            	
              $6,500,000

            
	
              9/30/2011

            	
              $7,000,000

            
	
              12/31/2011

            	
              $7,500,000

            
	
              3/31/2012

            	
              $8,000,000

            

    

    

     

    (jjjj) "Required
Lenders" means
Lenders holding at least fifty-one percent (51%) of the Advances and, if no
Advances are outstanding, means Lenders holding fifty-one percent (51%) of the
Pro Rata Percentages; provided, however, if there are fewer than three (3)
Lenders, Required Lenders means all Lenders.

     

    (kkkk) "Sanctioned
Country" means a
country subject to a sanctions program identified on the list maintained by OFAC
and available at http://www.treas.gov/offices/eotffc/ofac/sanctions/index.html,
or as otherwise published from time to time.

     

    (llll) "Sanctioned
Person" means (i)
a person named on the list of Specially Designated Nationals or Blocked Persons
maintained by OFAC available at http://www.treas.gov/offices/eotffc/ofac/sdn/index.html,
or as otherwise published from time to time, or (ii) (A) an agency of the
government of a Sanctioned Country, (B) an organization controlled by a
Sanctioned Country, or (C) a person resident in a Sanctioned Country, to the
extent subject to a sanctions program administered by OFAC.

     

    (mmmm) "Special
Materials" means
any and all materials which, under Environmental Requirements, require special
handling in use, generation, collection, storage, treatment or disposal, or
payment of costs associated with responding to the lawful directives of any
court or agency of competent jurisdiction.  Special Materials shall
include, without limitation:  (i) any

     

    
      
        
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    (nnnn) flammable
substance, explosive, radioactive material, hazardous material, hazardous waste,
toxic substance, solid waste, pollutant, contaminant or any related material,
raw material, substance, product or by-product of any substance specified in or
regulated or otherwise affected by any Environmental Requirements (including but
not limited to any "hazardous substance" as defined in the Comprehensive
Environmental Response, Compensation and Liability Act of 1980 as amended or any
similar state or local law), (ii) any toxic chemical or other substance from or
related to industrial, commercial or institutional activities, and (iii)
asbestos, gasoline, diesel fuel, motor oil, waste and used oil, heating oil and
other petroleum products or compounds, polychlorinated biphenyls, radon, urea
formaldehyde and lead-containing materials.

     

    (oooo) "Subsidiary" means a Corporation (i)
which is organized under the laws of the United States or any State thereof, or
any other county or jurisdiction, (ii) which conducts substantially all of its
business and has substantially all of its assets within the United States and
(iii) of which more than fifty percent (50%) of its outstanding voting stock of
every class (or other voting equity interest) is owned by any Obligor or one or
more of their Subsidiaries.

     

    (pppp) "Surety
Agreement" shall
have the meaning given such term in Section
 5.4 hereof.

     

    (qqqq) "TD" means TD Bank,
N.A.

     

    (rrrr) "Test
Period" shall
mean each ninety (90) day period ending on an End Date.

     

    (ssss) "Undrawn
Availability" at
a particular date means an amount equal to (i) the lesser of (A) the Borrowing
Base Amount or (B) the Maximum Line Amount, minus (ii) the sum of
(A) the outstanding amount of Advances under the Line, plus (B) the face
amount of all outstanding Letters of Credit, plus (C) all amounts
due and owing to each Obligor's trade creditors which are outstanding beyond
normal trade terms.

     

    (tttt) "Unfinanced
Capital Expenditures" means all Capital
Expenditures of any Obligor which are not funded with borrowed money; provided
that, as long as the Obligors, collectively, maintain on deposit with Agent an
amount equal to at least the Required Cash Deposit for each Test Period
contained in each twelve (12) month period ending on an End Date, then for each
such twelve (12) month period, up to Five Million Five Hundred Thousand Dollars
($5,500,000.00) of Obligors Capital Expenditures shall be considered "financed"
for the purposes of calculating the Fixed Charge Coverage Ratio, and further
provided that all Capital Expenditures funded with Line Advances shall be deemed
"Unfinanced Capital Expenditures".

     

    (uuuu) "Waiver
Agreement" means
an agreement in form and content satisfactory to Agent in its sole discretion
executed by a landlord of a leased location of an Obligor or a warehouseman of a
warehouse location of an Obligor pursuant to which, inter alia, such landlord or
warehouseman waives any and all rights against any Collateral at such location
and permits Agent access to such location for the purpose of selling and taking
possession of any Collateral at such location.

     

    1.2 Accounting
Terms

     

    .  As
used in this Agreement, or any certificate, report or other document made or
delivered pursuant to this Agreement, accounting terms not defined elsewhere in
this Agreement shall have the respective meanings given to them under
GAAP.

     

    
      
        
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            1.3
UCC Terms

     

    .  All
terms used herein and defined in the Uniform Commercial Code as in effect in the
State of New Jersey from time to time shall have the meanings given therein
unless otherwise defined herein.

     

    2. THE LINE; USE OF
PROCEEDS

     

    2.1 Line of
Credit

     

    (a) Each
Lender will establish for Borrower for and during the Contract Period, subject
to the terms and conditions hereof, a revolving line of credit (the "Line") pursuant to which
Lender will from time to time in accordance with their respective Pro Rata
Percentage, severally and not jointly, make Advances to Borrower in an aggregate
amount not exceeding at any time the lesser of:  (a) the Borrowing
Base Amount or (b) the Maximum Line Amount.  Agent, in its sole
discretion, may from time to time (x) establish certain reserves in respect of
the Borrowing Base Amount and/or (y) increase or decrease the advance rates
contained in the Borrowing Base Amount.  Borrower consents to any such
implementation of reserves or increase or decrease of advance rates and
acknowledge that Agent's decrease of advance rates or implementation of reserves
may limit or restrict Advances available to Borrower.  Within the
limitations set forth above, Borrower may borrow, repay and reborrow under the
Line.  The Line shall be subject to all terms and conditions set forth
in all of the Loan Documents, which terms and conditions are incorporated
herein.  Borrower's obligation to repay Advances under the Line shall
be evidenced by Borrower's promissory note (the "Line Note") delivered to each
Lender, which shall be in the respective principal amounts of each Lenders' Pro
Rata Share of the Line and which shall be in the form attached hereto as Exhibit "A",
with the blanks appropriately filled in.

     

    (b) Subject
to the terms and conditions of this Agreement, each Lender agrees to lend to
Borrower the amount equal to such Lender's respective Pro Rata Percentage of
each advance requested by Borrower under the Line.  The outstanding
amount of the advances by each Lender shall not exceed such Lender's Pro Rata
Share of the Line (as such amount may change from time to time in accordance
with the terms of this Agreement).

     

    (c) The
obligations of each Lender under this Agreement are several and not joint with
each other Lender.  The failure of any Lender to make any Advance to
be made by it hereunder shall not relieve any other Lender of its obligation to
do so; provided; however, no Lender shall be responsible for the failure of any
other Lender to make any Advance to be made by such Lender
hereunder.

     

    2.2 Use of
Proceeds

     

    .  Borrower
agrees to use Line Advances to refinance obligations of Borrower to Citicorp
USA, Inc. ("Citicorp")
and for proper working capital purposes.

     

    2.3 Method of
Advances.

     

    (a) Line
Advances.  On any Business Day, Borrower may request a Line
Advance by delivering to the bank officer designated by Agent no later than 11:00 A.M.,
Philadelphia, Pennsylvania time, three (3) Good Business Days prior to the first
day of the selected Rate Period a written request for a Line Advance and a
completed and executed borrowing base certificate together with such collateral
and back-up documentation as Agent may from time to time require and a LIBOR
Rate Notification. Each request for an
Advance under the Line shall be conclusively presumed to be made by a Person
authorized by Borrower to do so and, once received by Agent, shall be deemed
irrevocable.  However, Agent may require that specified officers
of

     

    
      
        
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    (b) Borrower
sign each borrowing base certificate

     

    (c) Funding
of Advances.  Subject to the terms and conditions of this
Agreement, Agent may make the proceeds of an Advance available to Borrower by
crediting such proceeds to Borrower's deposit account with Agent.

     

    2.4 Letters of
Credit

     

    .  Issuing
Bank, at its reasonable discretion, may issue for the account of Borrower
standby letters of credit in form and content satisfactory to Issuing Bank, at
its sole discretion, with a term not to exceed the earlier to occur of (a)
twelve (12) months, or (b) the last day of the Contract
Period.  Notwithstanding the foregoing, at no time shall the (i)
aggregate face amount of all outstanding letters of credit issued under the Line
exceed the Letter of Credit Sublimit; and (ii) principal balance of the Line,
plus the
aggregate face amount of all outstanding letters of credit issued under the
Line, exceed the lesser of the (A) Borrowing Base Amount or (B) Maximum Line
Amount.  In addition, no letter of credit issued under this Agreement
shall have any "evergreen" or other automatic renewal provisions.

     

    Borrower
will execute a letter of credit application and letter of credit agreement, and
such other documents as may be required by Issuing Bank in connection with the
issuance of letters of credit hereunder.  The outstanding face amount
of all letters of credit issued by Issuing Bank pursuant hereto will reduce
Borrower's ability to borrow under the Line as if such face amount were a Line
Advance.  In the event that any Lender pays any sums due pursuant to
such letters of credit for any reason, such payment shall be deemed to be a Line
Advance under the Line repayable by Borrower pursuant to the terms
hereof.

     

    In the
event that the Line is terminated for any reason or demand is made thereunder,
Borrower will deposit with Agent an amount equal to one hundred five percent
(105%) of the face amount of all letters of credit then outstanding which have
been issued hereunder, plus all fees related
thereto or to accrue thereunder.  Such funds will be held by Agent as
cash collateral to secure the Lender Indebtedness.

     

    Borrower
hereby assume all risks of the acts or omissions of Agent and any beneficiary of
any letter of credit issued by Issuing Bank, Lenders and
Agent.  Without limiting the generality of the foregoing, Borrower
hereby indemnifies and holds harmless Issuing Bank, Lenders and Agent and any
Affiliate, shareholder, officer, director, official, agent, employee and
attorney of Agent and any of their respective heirs, executors, administrators,
successors and assigns (collectively, for this paragraph, the "Indemnitees") from and
against any and all claims, damages, losses, liabilities, costs or expenses
whatsoever by reason of or in connection with the execution and delivery or
transfer of, or payment or failure to pay under, any letter of credit issued by
Issuing Bank, Lenders or Agent or any Indemnitee entering into any transaction
described herein provided, however, Borrower shall not be required to indemnify
any Indemnitee for any claims, damages, losses, liabilities, costs or expenses
to the extent, but only to the extent, caused by the willful misconduct or gross
negligence of such Indemnitee.

     

    Immediately
upon the issuance of any letter of credit, Issuing Bank is deemed to have
granted to each Lender, and each Lender is deemed to have acquired from Issuing
Bank, an undivided participating interest (without recourse to or warranty by
Issuing Bank), in accordance with each such Lender's respective Pro Rata
Percentage of the Line, in all of Issuing Bank's rights and liabilities with
respect to such letter of credit.  Each Lender shall be directly and
unconditionally obligated without deduction or setoff of any kind, to Issuing
Bank, according to such Lender's Pro Rata Percentage of the Line, to reimburse
Issuing Bank for draws honored or paid by Issuing Bank at

     

    
      
        
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    any time
(including, without limitation, following commencement of any bankruptcy,
reorganization, receivership or dissolution proceeding with respect to Borrower)
under any such letter of credit.

     

    3. INTEREST
RATE

     

    3.1 Interest on the
Line

     

    (a) .  Interest
on outstanding Line Advances will accrue from the date of advance until final
payment thereof at the rate per annum which is the LIBOR Based
Rate.

     

    3.2 Request for LIBOR
Rate

     

    .  If
Borrower desires that all or part of the Line Advances accrue interest at the
LIBOR Based Rate, Borrower shall give Agent a LIBOR Rate
Notification.  Upon delivery of a LIBOR Rate Notification, that
portion of the principal balance outstanding under the Line identified in such
LIBOR Rate Notification shall accrue interest at the LIBOR Based Rate as
follows:  (a) with respect to the principal amount of any new Line
Advance from the
date of such Advance until the end of the Rate Period specified in such LIBOR
Rate Notification; and/or (b) with respect to all or any portion of Line
Advances outstanding and accruing interest at another LIBOR Based Rate at the
time of the LIBOR Rate Notification related to such Advances, from the
expiration of the then current Rate Period related to such Advances until the
end of the Rate Period specified in such LIBOR Rate Notification; and/or (c)
with respect to all or any portion of the Line Advances outstanding and accruing
interest at the Prime Based Rate or the LIBOR Market Index Based Rate at the
time of the LIBOR Rate Notification related to such Advances, from the date set
forth in such LIBOR Rate Notification until the end of the Rate Period specified
in such LIBOR Rate Notification.  If Borrower fails to deliver a LIBOR
Rate Notification with respect to any new Line Advance or fails to deliver a
LIBOR Rate Notification with respect to any existing Line Advance at least three
(3) Good Business Days prior to the last day of the applicable Rate Period, such
Line Advance shall accrue interest automatically at the LIBOR Market Index Based
Rate from the date of advance or the date of expiration of such Rate Period, as
applicable, until paid in full, unless and until receipt by Agent of a request
for another interest rate in accordance with the terms of this
Agreement.

     

    3.3 Certain Provisions Regarding
LIBOR Rates

     

    .  Borrower
understands and agrees that:  (a) subject to the provisions of this
Agreement, the LIBOR Based Rate may apply simultaneously to different portions
of the outstanding principal of the Line; (b) the LIBOR Based Rate may apply
simultaneously to various portions of the outstanding principal of the Line for
various Rate Periods; (c) the Rate Periods for the LIBOR Based Rate shall be
either one (1), two (2), or three (3) months; (d) the LIBOR Based Rate
applicable to any portion of the outstanding principal of the Line may be
different from the LIBOR Based Rate applicable to any other portion of the
outstanding principal of the Line; (e) individual portions of the Line accruing
interest at the LIBOR Based Rate must be in amounts of at least One Million
Dollars ($1,000,000.00) each and in increments of One Hundred Thousand Dollars
($100,000.00); and (f) the LIBOR Based Rate shall not be available at any time
during the continuation of an Event of Default.

     

    3.4 Fall Back Rate

     

    .  After
expiration of any Rate Period, any principal portion of the Line corresponding
to such Rate Period which has not been converted or renewed in accordance with
the terms of this Agreement shall accrue interest automatically at the LIBOR
Market Index Based Rate in accordance with the last sentence of Section
3.2 hereof.

     

    3.5 LIBOR Based Rate
Borrowings

     

    .  No
more than three (3) separate borrowings in the aggregate accruing interest at
the LIBOR Based Rate may be outstanding at any

     

    
      
        
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    one time
under the Line.

     

    3.6 LIBOR
Unlawful

     

    .  In
the event that, as a result of any changes in applicable law or regulation or
the interpretation thereof, it becomes unlawful for any Lender to maintain or
fund any Advance at the LIBOR Based Rate and/or the LIBOR Market Index Based
Rate, then such Lender shall immediately notify Agent who shall immediately
notify Borrower thereof and such Lender's obligation to make, convert to, or
maintain any Advance at the LIBOR Based Rate and/or LIBOR Market
Index Based Rate shall be suspended until such time as such Lender advises Agent
that it may again cause the LIBOR Based Rate and/or the LIBOR Market Index Based
Rate to be applicable and, until such time, Advances subject to the LIBOR Based
Rate or LIBOR Market Index Based Rate shall accrue interest at the Prime Based
Rate.  Promptly after becoming aware that it is no longer unlawful for
such Lender to maintain or fund Advances at the LIBOR Based Rate or LIBOR Market
Index Based Rate, such Lender shall notify Agent who shall notify Borrower
thereof and such suspension shall cease to exist.

     

    3.7 LIBOR Based Rate
Unascertainable or Unavailable

     

    .  If,
at any time, any Lender in good faith shall determine (which determination shall
be conclusive) that the LIBOR Based Rate and/or LIBOR Market Index Based Rate is
unavailable or adequate means for ascertaining the LIBOR Based Rate and/or LIBOR
Market Index Based Rate do not exist, such Lender shall promptly notify Agent
who shall promptly notify Borrower of such determination.  Upon such
determination, the right of Borrower to select, maintain and/or convert to the
LIBOR Based Rate and/or the LIBOR Market Index Based Rate shall be suspended
until notice from such Lender to Agent that the LIBOR Based Rate and/or LIBOR
Market Index Based Rate is again available or ascertainable and, until such
time, all outstanding Advances under the Line shall accrue interest at the Prime
Based Rate.

     

    3.8 Default
Interest

     

    .  Interest
will accrue on the principal balance of the Line after the occurrence of an
Event of Default or expiration of the Contract Period at a rate which is three
percent (3%) in excess of the applicable rate of interest in effect for the Line
from time to time (the "Default
Rate").

     

    3.9 Post Judgment
Interest

     

    .  Any
judgment obtained for sums due hereunder or under the Loan Documents will accrue
interest at the applicable default rate set forth above until paid.

     

    3.10 Calculation

     

    .  Interest
will be computed on the basis of a year of 360 days and paid for the actual
number of days elapsed.

     

    3.11 Limitation of Interest to
Maximum Lawful Rate

     

    .  In
no event will the rate of interest payable hereunder exceed the maximum rate of
interest permitted to be charged by applicable law (including the choice of law
rules) and any interest paid in excess of the permitted rate will be refunded to
Borrower.  Such refund will be made by application of the excessive
amount of interest paid against any sums outstanding hereunder and will be
applied in such order as Agent may determine.  If the excessive amount
of interest paid exceeds the sums outstanding, the portion exceeding the sums
outstanding will be refunded in cash by Agent.  Any such crediting or
refunding will not cure or waive any default by Borrower.  Borrower
agrees, however, that in determining whether or not any interest payable
hereunder exceeds the highest rate permitted by law, any non-principal payment,
including without limitation prepayment fees and late charges, will be deemed to
the extent permitted by law to be an expense, fee, premium or penalty rather
than interest.

     

    
      
        
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    4.    
 PAYMENTS AND FEES

     

       4.1 Interest Payments on the
Line

     

    .  Borrower
will pay interest on: (a) outstanding LIBOR Rate Advances on the last day of
each Rate Period; (b) LIBOR Market Index Rate Advances monthly in arrears on the
first day of each calendar month commencing the first day of the first calendar
month following the date hereof; and (c) Prime Rate Advances monthly in arrears
on the first day of each calendar month commencing the first day of the first
calendar month following the date hereof.

     

    4.2 Principal Payments on
the Line

     

    .  Borrower
will pay the outstanding Advances under the Line, together with any accrued and
unpaid interest thereon, and any other sums due pursuant to the terms hereof, ON
DEMAND after the occurrence of an Event of Default or after expiration of the
Contract Period.  If any Out-Of-Formula Advance arises or exists under
the Line for any reason whatsoever, including accounts becoming ineligible,
Agent decreasing advance rates or Agent establishing reserves, Borrower will
repay such Out-Of-Formula Advance immediately, without demand.

     

     4.3 Letter of Credit
Fees

     

    .  For
each issuance or renewal of a standby letter of credit hereunder, Borrower will
pay to Agent an issuance or renewal fee in an amount equal to three and one-half
percent (3.5%) per annum of the face amount of such standby letter of credit,
payable coincident with and as a condition of the issuance or renewal of such
standby letter of credit.  In addition, Borrower shall pay such other
fees and charges in connection with each standby letter of credit as may be
customarily charged by Agent.  Such fees shall be computed on the
basis of a year of 360 days.

     

    4.3 Loan
Fee

     

    .  In
consideration of Agent's and Lenders' agreements contained herein, Borrower
shall pay to Agent an annual loan fee in the amount of One Hundred Thousand Five
Hundred Dollars ($100,500.00) (the "Loan Fee"), which fee may be
charged as a Line Advance or charged to any bank account of Borrower maintained
with Agent.  The Loan Fee shall be due and payable by Borrower on the
date hereof and annually thereafter on each anniversary of the date hereof (each
such date being referred to herein as a "Due Date").  The
Loan Fee is in addition to the interest and other amounts which Borrower is
required to pay under the Loan Documents and is fully earned and nonrefundable
on and as of each applicable Due Date.

     

    4.5 Usage
Fee

     

    .  So
long as the Line is outstanding and has not been terminated, and the Lender
Indebtedness has not been satisfied in full, Borrower shall unconditionally pay
to Agent a fee equal to one percent (1%) per annum of the daily unused portion
of the Line (which shall be calculated as the Maximum Line Amount, minus the sum of (a)
the average outstanding principal balance of cash advances under the Line for
the applicable month, plus (b) the average
daily aggregate undrawn portion of all outstanding Letters of Credit for the
applicable month), which fee shall be computed on a monthly basis in arrears and
shall be due and payable on the first day of each month commencing on the first
day of the first full month after the date hereof.

     

    4.6 Collateral Management
Fee

     

    .  So
long as the Line has not been terminated pursuant to the terms hereof, and the
Lender Indebtedness has not been satisfied in full, Borrower shall
unconditionally pay to Agent a non-refundable monthly collateral management fee
of Two Thousand Five Hundred Dollars ($2,500.00), payable on the date hereof and
on the first day of each calendar month hereafter.

     

    4.7 Late
Charge

     

    .  In
the event that Borrower fails to pay any principal, interest

     

    
      
        
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    or other
fees or expenses payable hereunder for a period of at least fifteen (15) days
after any such payment is first due, in addition to paying such sums, Borrower
will pay to Agent a late charge equal to five percent (5%) of such past due
payment as compensation for the expenses incident to such past due
payment.

     

    4.8 Termination of
Line.

     

    (a) Right to
Terminate.  Borrower may terminate the Line upon ninety (90)
days prior written notice to Agent.

     

    (b) Termination
Fee.  In the event that (i) the Line is terminated by Borrower
for any reason, including without limitation prepayment or refinancing of the
Line with another lender or from any other source, or (ii) an Event of Default
occurs and the Line is terminated, Borrower shall pay to Agent a termination fee
calculated as follows:

     

    (1) if the
termination date is on or prior to the first anniversary of the date hereof, the
termination fee will be equal to two percent (2%) of the Maximum Line
Amount;

     

    (2) if the
termination date is after the first anniversary of the date hereof but on or
prior to the second anniversary of the date hereof, the termination fee will be
equal to one percent (1%) of the Maximum Line Amount; and

     

    (3) if the
termination date is after the second anniversary of the date hereof but prior to
the last day of the Contract Period, the termination fee will be equal to
one-half percent (.5%) of the Maximum Line Amount.

     

    4.9 Payment
Method

     

    .  Borrower
irrevocably authorizes Agent to debit all payments required to be made by
Borrower hereunder or under the Loan on the date due from any deposit account
maintained by Borrower with Agent or any Lender or to charge any or all of such
payments as a Line Advance.  Otherwise, Borrower will be obligated to
make such payments directly to Agent.  All payments are to be made in
immediately available funds.  If Agent accepts payment in any other
form, such payment shall not be deemed to have been made until the funds
comprising such payment have actually been received by or made available to
Agent.

     

    4.10 Application of
Payments

     

    .  Any
and all payments on account of the Loan will be applied to accrued and unpaid
interest, outstanding principal and other sums due hereunder or under the Loan
Documents, in such order as Agent, in its discretion, elects.  If any
Obligor makes a payment or payments and such payment or payments, or any part
thereof, are subsequently invalidated, declared to be fraudulent or
preferential, set aside or are required to be repaid to a trustee, receiver, or
any other person under any bankruptcy act, state or federal law, common law or
equitable cause, then to the extent of such payment or payments, the obligations
or part thereof hereunder intended to be satisfied shall be revived and
continued in full force and effect as if said payment or payments had not been
made.

     

    4.11 Loan
Account

     

    .  Agent
will open and maintain on its books a loan account (the "Loan
Account") with
respect to Advances made, repayments, prepayments, the computation and payment
of interest and fees and the computation and final payment of all other amounts
due and sums paid to Agent under this Agreement.  Except in the case
of manifest error in computation, the Loan Account will be conclusive and
binding on Borrower as to the amount at any time due to Agent from Borrower
under this Agreement or the Line Note.

     

    
      
        
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    4.12
Loss of Margin

     

    .  In
the event that any present or future law, rule, regulation, treaty or official
directive or the interpretation or application thereof by any central bank,
monetary authority or governmental authority, or the compliance with any
guideline or request of any central bank, monetary authority or governmental
authority (whether or not having the force of law):

     

    (a) subjects
Agent or any Lender to any tax with respect to any amounts payable under this
Agreement or the other Loan Documents by any Obligor or otherwise with respect
to the transactions contemplated under this Agreement or the other Loan
Documents (except for taxes on the overall net income of Agent or any Lender
imposed by the United States of America or any political subdivision thereof);
or

     

    (b) imposes,
modifies or deems applicable any deposit insurance, reserve, special deposit,
capital maintenance, capital adequacy, or similar requirement against assets
held by, or deposits in or for the account of, or loans or Advances or
commitment to make loans or Advances by, or letters of credit issued or
commitment to issue letters of credit by, the Agent or any Lender;
or

     

    (c) imposes
upon Agent or any Lender any other condition with respect to Advances or
extensions of credit or the commitment to make Advances or extensions of credit
under this Agreement, or

     

    the
result of any of the foregoing is to increase the costs of Agent or any Lender,
reduce the income receivable by or return on equity of Agent or any Lender or
impose any expense upon Agent or any Lender with respect to any Advances or
extensions of credit or commitments to make Advances or extensions of credit
under this Agreement, Agent shall so notify Borrower in
writing.  Borrower agrees to pay Agent, for the benefit of Agent and
Lenders, the amount of such increase in cost, reduction in income, reduced
return on equity or capital, or additional expense within ten (10) days after
presentation by Agent of a statement concerning such increase in cost, reduction
in income, reduced return on equity or capital, or additional
expense.  Such statement shall set forth a brief explanation of the
amount and Agent's calculation of the amount (in determining such amount the
Agent may use any reasonable averaging and attribution methods), which statement
shall be conclusively deemed correct absent manifest error.  If the
amount set forth in such statement is not paid within ten (10) days after such
presentation of such statement, interest will be payable on the unpaid amount at
the highest default rate payable hereunder from the due date until paid, both
before and after judgment.

     

    4.13 LIBOR
Indemnity

     

    .  Borrower
shall indemnify Agent and Lender against any loss or expense (including loss of
margin) which Agent or any Lender has sustained or incurred as a consequence of
(a) payment, prepayment or conversion of any portion of any LIBOR Rate Advances
on a day other than the last day of the corresponding Rate Period (even if such
payment is pursuant to demand by Agent pursuant to this Agreement and whether or
not any such payment, prepayment or conversion is consented to by Agent); or (b)
attempt by Borrower to revoke in whole or in part any irrevocable LIBOR Rate
Notification pursuant to this Agreement.

     

    If any
such loss is sustained, Agent shall from time to time notify Borrower of the amount determined
in good faith by Agent (which determination shall be conclusive) to be necessary
to indemnify Agent and Lenders for such loss or expense.  Such amount
shall be due and payable by Borrower on demand.

     

    5. SECURITY; COLLECTION OF
RECEIVABLES AND PROCEEDS OF COLLATERAL

     

    
      
        
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    5. Personal
Property

     

    .  As
security for the full and timely payment and performance of all Lender
Indebtedness, each Obligor hereby grants to Agent, for the pro rata benefit of
Lenders, a security interest in all existing and after-acquired property of such
Obligor of any nature including, without limitation:

     

    (a) All
present and future accounts, contract rights, chattel paper, instruments and
documents and all other rights to the payment of money whether or not yet
earned, for services rendered or goods sold, consigned, leased or furnished by
such Obligor or otherwise, together with (i) all goods (including any returned,
rejected, repossessed or consigned goods), the sale, consignment, lease or other
furnishing of which shall be given or may give rise to any of the foregoing,
(ii) all of such Obligor's rights as a consignor, consignee, unpaid vendor or
other lienor in connection therewith, including stoppage in transit, set-off,
detinue, replevin and reclamation, (iii)  all general intangibles
related thereto, (iv) all guaranties, mortgages, security interests,
assignments, and other encumbrances on real or personal property, leases and
other agreements or property securing or relating to any accounts, (v)
choses-in-action, claims and judgments, and (vi) any returned or unearned
premiums, which may be due upon cancellation of any insurance
policies.

     

    (b) All
present and future inventory of such Obligor (including but not limited to goods
held for sale or lease or furnished or to be furnished under contracts for
service, raw materials, work-in-process, finished goods and goods used or
consumed in such Obligor's business) whether owned, consigned or held on
consignment, together with all merchandise, component materials, supplies,
packing, packaging and shipping materials, and all returned, rejected or
repossessed goods sold, consigned, leased or otherwise furnished by such Obligor
and all embedded software related thereto.

     

    (c) All
present and future general intangibles (including but not limited to payment
intangibles, tax refunds and rebates, manufacturing and processing rights,
designs, patents, patent rights and applications therefor, trademarks and
registration or applications therefor, tradenames, brand names, logos,
inventions, copyrights and all applications and registrations therefor),
licenses, permits, approvals, software and computer programs, license rights,
royalties, trade secrets, methods, processes, know-how, formulas, drawings,
specifications, descriptions, label designs, plans, blueprints, patterns and all
memoranda, notes and records with respect to any research and
development.

     

    (d) All
present and future machinery, equipment, furniture, fixtures, motor vehicles,
tools, dies, jigs, molds and other articles of tangible personal property of
every type together with all parts, substitutions, accretions, accessions,
attachments, accessories, additions, components and replacements thereof, and
all manuals of operation, maintenance or repair, and all embedded software
related thereto.

     

    (e) All
present and future general ledger sheets, files, books and records, customer
lists, books of account, invoices, bills, certificates or documents of
ownership, bills of sale, business papers, correspondence, credit files, tapes,
cards, computer runs and all other data and data storage systems whether in the
possession of such Obligor or any service bureau.

     

    (f) All
present and future letter of credit rights and supporting obligations, including
without limitation, all letters of credit and letter of credit rights now
existing or hereafter issued naming such Obligor as a beneficiary or assigned to
such Obligor, including the right to receive payment thereunder, and all
documents and records associated therewith.

     

    
      
        
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    (g) All
present and future deposit accounts of such Obligor.  With respect to
any deposit accounts not maintained with Agent or any Lender, such Obligor shall
enter into a control agreement satisfactory to Agent for each such deposit
account.

     

    (h) All
present and future financial assets and investment property of such
Obligor.

     

    (i) All of
such Obligor's commercial tort claims from time to time listed on Schedule
5.1(i) hereto.  Each amendment adding commercial tort claims to
such Schedule 5.1(i)
pursuant to the provisions of Section
7.30 below shall constitute a contemporaneous grant by such Obligor of a
security interest in all of such Obligor's rights and interests in such
commercial tort claims.

     

    (j) All
funds, instruments, documents, policies and evidence and certificates of
insurance and rights thereunder, securities, chattel paper and other assets of
such Obligor or in which such Obligor has an interest and all proceeds thereof,
now or at any time hereafter on deposit with or in the possession or control of
Agent or any Lender or owing by Agent or any Lender to Obligor or in transit by
mail or carrier to Agent or any Lender or in the possession of any other Person
acting on Agent's or any Lender's behalf, without regard to whether Agent or any
Lender received the same in pledge, for safekeeping, as agent for collection or
otherwise, or whether Agent or any Lender has conditionally released the same,
and in all assets of such Obligor in which Agent or any Lender now has or may at
any time hereafter obtain a lien, mortgage, or security interest for any
reason.

     

    (k) All
products and proceeds of each of the items described in the foregoing subparagraphs
(a)-(j) and all supporting obligations related thereto.

     

    5.2 Real
Property

     

    .  As
further security for the Lender Indebtedness, Borrower shall grant to Agent a
first priority mortgage lien encumbering the premises situated at 170 Mount Airy
Road, Basking Ridge, New Jersey and all improvements thereon and all rights,
licenses, permits and approvals relating thereto, together with an assignment of
all rents and leases related thereto (collectively, the "Mortgaged
Property").

     

    5.3 Pledge

     

    .  As
further security for all Lender Indebtedness, Borrower shall execute and deliver
to Agent a Pledge Agreement (the "Pledge
Agreement") in
form and content satisfactory to Agent pursuant to which Borrower pledges to
Agent, for the pro rata benefit of Lenders, all right, title and interest of
Borrower in each of its Subsidiaries.

     

    5.4 Surety

     

    .  As
further security for the Lender Indebtedness, Borrower shall cause to be
executed and delivered to Agent the absolute, unconditional, unlimited surety
agreement (the "Surety
Agreement") of Guarantors in form and content satisfactory to
Agent.

     

    5.5 General

     

    .  The
collateral described above in Sections
5.1, 5.2, 5.3 and 5.4 is collectively referred to herein as the "Collateral".  The
above-described security interests, assignments, liens and guarantees shall not
be rendered void by the fact that no Lender Indebtedness exists as of any
particular date, but shall continue in full force and effect until the Lender
Indebtedness has been repaid, neither Agent nor any Lender has any agreement or
commitment outstanding pursuant to which Agent or any Lender may extend credit
to or on behalf of any Obligor and Agent and Lenders have executed termination
statements or releases with respect thereto.  IT IS THE EXPRESS INTENT OF THE
OBLIGORS THAT ALL OF THE COLLATERAL

     

    
      
        
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    SHALL
SECURE NOT ONLY THE OBLIGATIONS UNDER THE LOAN DOCUMENTS, BUT ALSO ALL OTHER
PRESENT AND FUTURE OBLIGATIONS OF EACH OBLIGOR TO AGENT OR ANY
LENDER.

     

    5.6 Collection
of Receivables; Proceeds of Collateral.

     

    (a) Borrower
will collect its accounts receivable only in the ordinary course of
business.  Borrower will notify all of its account debtors to forward
all accounts receivable collections owed to Borrower to a lockbox maintained by
Agent, and will execute such lockbox agreements as may be required by Agent and
will pay to Agent all customary fees in connection with such lockbox
arrangement.  Immediately upon receipt, Borrower will forward to Agent
all other checks, drafts and other monies received by any Borrower which are
proceeds of the Collateral.

     

    (b) All
accounts receivable collections of Borrower and all checks, drafts and other
monies received by any Borrower which are proceeds of the Collateral will be
deposited in a non interest bearing cash collateral account maintained at Agent
(the "Cash Collateral
Account").  Agent will have sole dominion and control over all
items and funds in the Cash Collateral Account and such items and funds may be
withdrawn only by Agent.  Agent will have the right to apply all or
any part of such funds towards payment of any of the Lender
Indebtedness.

     

    (c) Solely
for purposes of calculating interest on the balance of the Line and availability
thereunder, all items deposited into the Cash Collateral Account will be
credited by Agent as payments of the principal balance of the Line on the
Business Day on which such items are deposited into the Cash Collateral
Account.  As compensation for the foregoing arrangement, Borrower will
pay to Agent, for the pro rata benefit of Lenders, on the first day of each
month for the month then ended, a sum equal to two (2) days interest on all
collected funds at the interest rate set forth in Section 3.1.  Borrower
will reimburse Agent on demand for the amount of any items credited as provided
above and subsequently returned unpaid.  Agent may terminate the
foregoing arrangement upon notice to Borrower.

     

    (d) Borrower
agrees that all monies, checks, notes, instruments, drafts or other payments
relating to or constituting proceeds of any accounts receivable or other
Collateral of Borrower which come into the possession or under the control of
Borrower or any employees, agents or other persons acting for or in concert with
Borrower, shall be received and held in trust for Lenders and such items shall
be the sole and exclusive property of Lenders.  Immediately upon
receipt thereof, Borrower and such other persons shall remit the same or cause
the same to be remitted, in kind, to Agent.  Borrower shall deliver or
cause to be delivered to Agent, with appropriate endorsement and assignment to
Agent with full recourse to Borrower, all instruments, notes and chattel paper
constituting an account receivable or proceeds thereof or other
Collateral.  Agent is hereby authorized to open all mail addressed to
Borrower and endorse all checks, drafts or other items for payment on behalf of
Borrower.  Agent is granted a power of attorney by Borrower with full
power of substitution to execute on behalf of Borrower and in Borrower's name or
to endorse Borrower's name on any check, draft, instrument, note or other item
of payment or to take any other action or sign any document in order to
effectuate the foregoing.  Such power of attorney being coupled with
an interest is irrevocable.

     

    6. REPRESENTATIONS AND
WARRANTIES

     

    .  Each
Obligor represents and warrants as follows:

     

    6.1 Valid Organization, Good
Standing and Qualification

     

    .

     

    
      
        
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    Borrower
is a corporation duly incorporated, validly existing and in good standing under
the laws of the State of New York, has full power and authority to execute,
deliver and comply with the Loan Documents, and to carry on its business as it
is now being conducted and is duly licensed or qualified as a foreign
corporation in good standing under the laws of each jurisdiction in which the
character or location of the properties owned by it or the business transacted
by it requires such licensing or qualification.  Schedule
6.1 lists Borrower's jurisdiction of incorporation, each jurisdiction of
foreign qualification and the organizational identification number of Borrower
(if any) issued by each such jurisdiction.

     

    (a) Information
is a corporation duly incorporated, validly existing and in good standing under
the laws of the State of New Jersey, has full power and authority to execute,
deliver and comply with the Loan Documents, and to carry on its business as it
is now being conducted and is duly licensed or qualified as a foreign
corporation in good standing under the laws of each jurisdiction in which the
character or location of the properties owned by it or the business transacted
by it requires such licensing or qualification, except where the failure to be
so licensed or qualified could not reasonably be expected to have a Material
Adverse Effect.  Schedule
6.1 lists Information's jurisdiction of incorporation, each jurisdiction
of foreign qualification and the organizational identification number of
Information (if any) issued by each such jurisdiction.

     

    (b) Mid
America is a corporation duly incorporated, validly existing and in good
standing under the laws of the State of Nebraska, has full power and authority
to execute, deliver and comply with the Loan Documents, and to carry on its
business as it is now being conducted and is duly licensed or qualified as a
foreign corporation in good standing under the laws of each jurisdiction in
which the character or location of the properties owned by it or the business
transacted by it requires such licensing or qualification, except where the
failure to be so licensed or qualified could not reasonably be expected to have
a Material Adverse Effect.  Schedule
6.1 lists Mid America's jurisdiction of incorporation, each jurisdiction
of foreign qualification and the organizational identification number of Mid
America (if any) issued by each such jurisdiction.

     

    (c) TEG is a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of Nebraska, has full power and authority to execute, deliver
and comply with the Loan Documents, and to carry on its business as it is now
being conducted and is duly licensed or qualified as a foreign corporation in
good standing under the laws of each jurisdiction in which the character or
location of the properties owned by it or the business transacted by it requires
such licensing or qualification, except where the failure to be so licensed or
qualified could not reasonably be expected to have a Material Adverse
Effect.  Schedule
6.1 lists TEG's jurisdiction of incorporation, each jurisdiction of
foreign qualification and the organizational identification number of TEG (if
any) issued by each such jurisdiction.

     

    (d) Heritage
is a limited liability company duly formed, validly existing and in good
standing under the laws of the State of Kansas, has full power and authority to
execute, deliver and comply with the Loan Documents, and to carry on its
business as it is now being conducted and is duly licensed or qualified as a
foreign limited liability company in good standing under the laws of each
jurisdiction in which the character or location of the properties owned by it or
the business transacted by it requires such licensing or qualification, except
where the failure to be so licensed or qualified could not reasonably be
expected to have a Material Adverse Effect.  Schedule
6.1 lists Heritage's jurisdiction of formation, each jurisdiction of
foreign qualification and the organizational identification number of Heritage
(if any) issued by each such jurisdiction.

     

    
      
        
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    (e) Distribution
is a limited liability company duly formed, validly existing and in good
standing under the laws of the State of New Jersey, has full power and authority
to execute, deliver and comply with the Loan Documents, and to carry on its
business as it is now being conducted and is duly licensed or qualified as a
foreign limited liability company in good standing under the laws of each
jurisdiction in which the character or location of the properties owned by it or
the business transacted by it requires such licensing or qualification, except
where the failure to be so licensed or qualified could not reasonably be
expected to have a Material Adverse Effect.  Schedule
6.1 lists Distribution's jurisdiction of formation, each jurisdiction of
foreign qualification and the organizational identification number of
Distribution (if any) issued by each such jurisdiction.

     

    6.2 Licenses

     

    .  Each
Obligor and their respective employees, servants and agents have all licenses,
registrations, approvals and other authority as may be necessary to enable such
Obligor to own and operate its business and perform all services and business
which such Obligor has agreed to perform in any state, municipality or other
jurisdiction.

     

    6.3 Ownership
Interests

     

    .  The
ownership of all stock, membership interests, debentures, options, warrants,
bonds and other securities (debt and equity) of each Guarantor and all pledges,
proxies, voting trusts, powers of attorney and other agreements affecting the
ownership or voting rights of said interests is as set forth on Schedule
6.3 attached hereto.

     

    6.4 Subsidiaries

     

    .  Except
as set forth on Schedule
6.4 attached hereto and in Section
6.24 hereof, no Obligor owns any shares of stock or other equity
interests in any Person, directly or indirectly (by any Subsidiary or
otherwise).

     

    6.5 Financial
Statements

     

    .  Obligors
have furnished to Agent (a) the audited financial statements of Obligors for
their fiscal year ended December 31, 2007 certified without qualification by
independent public accountants and all management and comment letters in
connection therewith and (b) its internally prepared interim financial
statements for Obligors fiscal year ended December 31, 2008 and for the month
ended January 31, 2009.  Such financial statements of Obligors
(together with the related notes and comments), are correct and complete, fairly
present the financial condition and the assets and liabilities of Obligors at
such dates, and have been prepared in accordance with GAAP.  With
respect to the interim statements, such statements are subject to year-end
adjustment and any accompanying footnotes.

     

    6.6 No Material Adverse Change
in Financial Condition

     

    .  There
has been no material adverse change in the financial condition of any Obligor
since the date of the most recent financial statements of Obligors delivered to
Agent.

     

    6.7 Pending Litigation or
Proceedings

     

    .  Except
as set forth on Schedule
6.7 attached hereto, there are no judgments outstanding or actions, suits
or proceedings pending or, to the best of each Obligor's knowledge, threatened
against or affecting any Obligor, at law or in equity or before or by any
federal, state, municipal or other governmental department, commission, board,
bureau, agency or instrumentality, domestic or foreign.

     

    6.8 Due Authorization; No Legal
Restrictions

     

    .  The
execution and delivery by each Obligor of the Loan Documents, the consummation
of the transactions contemplated by the Loan Documents and the fulfillment and
compliance with the respective terms, conditions and provisions of the Loan
Documents:  (a) have been duly authorized by all requisite corporate
and limited liability company action, as applicable, of each Obligor, (b) will
not conflict with or result in

     

    
      
        
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    a breach
of, or constitute a default (or might, upon the passage of time or the giving of
notice or both, constitute a default) under, any of the terms, conditions or
provisions of any applicable statute, law, rule, regulation or ordinance, or any
Obligor's certificate or articles of incorporation,
by-laws,  certificate of formation or organization, operating
agreement or any indenture, mortgage, loan, credit agreement or other document
or instrument to which any Obligor is a party or by which any Obligor may be
bound or affected, or any judgment or order of any court or governmental
department, commission, board, bureau, agency or instrumentality, domestic or
foreign, and (c) will not result in the creation or imposition of any lien,
charge or encumbrance of any nature whatsoever upon any of the property or
assets of any Obligor under the terms or provisions of any such agreement or
instrument, except liens in favor of Agent, for the benefit of
Lenders.

     

    6.9 Enforceability

     

    .  The
Loan Documents have been duly executed by each Obligor and delivered to Agent
and constitute legal, valid and binding obligations of each Obligor, enforceable
in accordance with their terms, except as enforceability may be limited by any
bankruptcy, insolvency, reorganization, moratorium or other laws or equitable
principles affecting creditors' rights generally.

     

    6.10 No Default Under Other
Obligations, Orders or Governmental Regulations

     

    .  No
Obligor is in violation of its certificates or articles of incorporation,
by-laws certificate of formation or organization or operating agreement, as
applicable, and no Obligor is in default in the performance or observance of any
of its obligations, covenants or conditions contained in any indenture or other
agreement creating, evidencing or securing any Indebtedness or pursuant to which
any such Indebtedness is issued or in violation of or in default under any other
agreement or instrument or any judgment, decree, order, statute, rule or
governmental regulation, applicable to it or by which its properties may be
bound or affected.

     

    6.11 Governmental
Consents

     

    .  No
consent, approval or authorization of or designation, declaration or filing with
any governmental authority on the part of any Obligor is required in connection
with the execution, delivery or performance by such Obligor of the Loan
Documents or the consummation of the transactions contemplated
thereby.

     

    6.12 Taxes

     

    .  Each
Obligor has filed all tax returns which it is required to file and has paid, or
made provision for the payment of, all taxes which have or may have become due
pursuant to such returns or pursuant to any assessment received by such
Obligor.  Such tax returns are complete and accurate in all
respects.  No Obligor knows of any proposed additional assessment or
basis for any assessment of additional taxes.

     

    6.13 Title to
Collateral

     

    .  The
Collateral is and will be owned by each Obligor free and clear of all liens and
other encumbrances of any kind (including liens or other encumbrances upon
properties acquired or to be acquired under conditional sales agreements or
other title retention devices), excepting only liens in favor of the Agent, for
the benefit of Lenders, and those liens and encumbrances permitted under Section
7.9 below.  Each Obligor will defend the Collateral against any
claims of all persons or entities other than the Agent.

     

    6.14 Names;
Addresses

     

    .  During
the past five (5) years, no Obligor has been known by any names (including trade
names) other than those set forth in Schedule
6.14 attached hereto and has not been located at any addresses other than
those set forth on Schedule
6.14 attached hereto.  The portions of the Collateral which are
tangible property and each Obligor's books and records (both pertaining to the
Collateral and otherwise) will at all times be located at the
addresses

     

    
      
        
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    set forth
on Schedule
6.14; or such other location determined by such Obligor after prior
notice to Agent and delivery to Agent of any items requested by Agent to
maintain perfection and priority of Agent's security interests and access to
each Obligor's books and records.  Schedule
6.14 identifies the chief executive office of each Obligor.

     

    6.15 Current
Compliance

     

    .  Each
Obligor is currently in compliance with all of the terms and conditions of the
Loan Documents.

     

    6.16 Pension
Plans

     

    .  Except
as disclosed on Schedule
6.16 hereto, (a) no Obligor has any obligations with respect to any
employee pension benefit plan ("Plan") (as such term is
defined in the Employee Retirement Income Security Act of 1974, as amended
("ERISA")), (b) no
events, including, without limitation, any "Reportable Event" or "Prohibited Transaction" (as
those terms are defined under ERISA), have occurred in connection with any Plan
of any Obligor which might constitute grounds for the termination of any such
Plan by the Pension Benefit Guaranty Corporation ("PBGC") or for the appointment by
any United States District Court of a trustee to administer any such Plan, (c)
all of each Obligor's Plans meet with the minimum funding standards of Section
302 of ERISA, and (d) no Obligor has any existing liability to the
PBGC.  No Obligor is subject to or bound to make contributions to any
"multi-employer plan" as such term is defined in Section 4001(a)(3) of
ERISA.

     

    6.17 Leases and
Contracts

     

    .  Each
Obligor has complied with the provisions of all material leases, contracts,
agreements or commitments of any kind (such as employment agreements, collective
bargaining agreements, powers of attorney, distribution agreements, patent
license agreements, contracts for future purchase or delivery of goods or
rendering of services, bonus, pension and retirement plans or accrued vacation
pay, insurance and welfare agreements) to which it is a party and is not in
default thereunder.  No other party is in default under any such
leases, contracts or other commitments and no event has occurred which, but for
the giving of notice or the passage of time or both, would constitute an event
of default thereunder.  Schedule
6.17 sets forth an accurate list of all material leases, contracts,
agreements and commitments to which each Obligor is a party or by which it is
found, including, without limitation, any real or personal property leases to
which such Obligor is a party.

     

    6.18 Intellectual
Property

     

    .  Each
Obligor owns or possesses the irrevocable right to use all of the patents,
trademarks, service marks, trade names, copyrights, licenses, franchises and
permits and rights with respect to the foregoing necessary to own and operate
such Obligor's properties and to carry on its business as presently conducted
and presently planned to be conducted without conflict with the rights of
others.  Schedule
6.18 sets forth an accurate list and description of each such patent,
trademark, service mark, trade name, copyright, license, franchise and permit
and right with respect to the foregoing, together with all registration or
application numbers or information with respect thereto.

     

    6.19 Eligible Account
Warranties

     

    .  With
respect to all Eligible Receivables from time to time scheduled, listed or
referred to in any certificate, statement or report prepared by or for Borrower
and delivered to Agent and upon which Borrower is basing availability under the
Line, Borrower warrants and represents that (a) the accounts arose in the
ordinary course of Borrower's business; (b) the accounts are genuine, are in all
respects what they purport to be, and are not evidenced by any chattel paper,
note, instrument or judgment; (c) Borrower has absolute title to such accounts
and the accounts represent undisputed, bona fide transactions completed in
accordance with the terms thereof and as represented to Agent; (d) such accounts
are not subject to any lien whatsoever except for the prior, perfected security
interest granted to Agent, for the benefit of

     

    
      
        
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    Lenders;
(e) no payments have been or will be made thereon, except payments immediately
delivered to Agent pursuant to the Loan Documents; (f) there are no setoffs,
counterclaims, disputes, discounts, credits, charge backs, freight claims,
allowances or adjustments existing or asserted with respect thereto and Borrower
has not made any agreement with any account debtor for any deduction therefrom;
(g) there are no facts, events or occurrences which impair the validity or
enforcement thereof or may reduce the amount payable thereunder as shown on any
certificates, statements or reports, prepared by or for Borrower and delivered
to Agent, Borrower's books and records and all invoices and statements delivered
to Agent with respect thereto; (h) to the best of Borrower's knowledge, all
account debtors have the capacity to contract and are solvent; (i) the goods
sold giving rise thereto are not subject to any lien, claim, encumbrance or
security interest except that of Agent; (j) to the best of Borrower's knowledge,
there are no proceedings or actions which are threatened or pending against any
account debtor which might result in any material adverse change in such account
debtor's financial condition; (k) the account is not an account with respect to
which the account debtor is an Affiliate of Borrower or a director, officer of
employee of Borrower or its Affiliates; (l) the account does not arise with
respect to goods which have been returned, rejected, lost or damaged, or which
have not been shipped or arise with respect to services which have not been
fully performed and accepted as satisfactory by the account debtor; (m) the
account is not an account with respect to which the account debtor's obligation
to pay the account is conditional upon the account debtor's approval or is
otherwise subject to any repurchase obligation or return right, as with sales
made on a consignment, bill-and-hold, guaranteed sale, sale-and-return, or sale
on approval basis; (n) the amounts shown on the applicable certificates,
statements, on Borrower's books and records and all invoices and statements
which may be delivered to Agent with respect to such accounts are actually and
absolutely owing to Borrower and are not in any way contingent; and (o) the
accounts have not been sold, assigned or transferred to any other Person, and no
Person except Borrower has any claim thereto or (with the exception of the
applicable account debtor) any claims to the goods sold.

     

    6.20 Commercial Tort
Claims

     

    .  Schedule
5.1(i) attached hereto, as it may be amended from time to time pursuant
to Section
7.30 below, lists all now existing commercial tort claims in favor of
each Obligor.

     

    6.21 Deposit
Accounts

     

    .  Schedule
6.21 attached hereto contains a list of all bank accounts maintained by
each Obligor with any Person other than Agent.

     

    6.22 Accuracy of Representations
and Warranties

     

    .  No
representation or warranty by any Obligor contained herein or in any certificate
or other document furnished by any Obligor pursuant hereto or in connection
herewith fails to contain any statement of material fact necessary to make such
representation or warranty not misleading in light of the circumstances under
which it was made.  There is no fact which any Obligor knows or should
know and has not disclosed to Agent, which does or may materially and adversely
affect any Obligor, or any of its operations.

     

    6.23 Interrelatedness of Borrower
and Guarantors

     

    .  The
business operations of Borrower and each Guarantor are interrelated and
complement one another, and such entities have a common business purpose, with
intercompany bookkeeping and accounting adjustments used to separate their
respective properties, liabilities, and transactions.  To permit their
uninterrupted and continuous operations, such entities now require and will from
time to time hereafter require funds and credit accommodations for general
business purposes.  The proceeds of the Loan and other credit
facilities extended hereunder will directly and indirectly benefit Borrower and
each Guarantor hereunder, severally and jointly.

     

    
      
        
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    Allegiance

     

    6.24 .  Allegiance
is a wholly owned Subsidiary of Borrower.  Allegiance has no assets,
liabilities or Indebtedness and does not operate.  Allegiance does not
receive any loans or advances from any Obligor, and no Obligor pays any expenses
on behalf of Allegiance.  Borrower is actively engaged in the process
of dissolving Allegiance.

     

    7. GENERAL
COVENANTS

     

    Each
Obligor will comply with the following:

     

    7.1 Payment of Principal,
Interest and Other Amounts Due

     

    .  Each
Obligor will pay when due all Lender Indebtedness and all other amounts payable
by it hereunder.

     

    7.2 Limitation on Sale and
Leaseback

     

    .  No
Obligor will enter into any arrangement whereby it will sell or transfer any
real property or improvements thereon or other fixed assets owned by it and then
or thereafter rent or lease as lessee such property, improvements or assets or
any part thereof, or other property which such Obligor shall intend to use for
substantially the same purposes as the property sold or
transferred.

     

    7.3 Limitation on
Indebtedness

     

    .  No
Obligor will have at any time outstanding to any Person other than Lenders, any
Indebtedness for borrowed money, Capitalized Lease Obligations, or any
outstanding letters of credit, except:

     

    (a) Current
accounts payable incurred in the ordinary course of such Obligor's business,
accrued expenses and other current items arising out of transactions (other than
borrowings) in the ordinary course of Obligor's business;

     

    (b) Existing
Indebtedness for borrowed money and Capitalized Lease Obligations described on
Schedule
7.3; and

     

    (c) Future
purchase money Indebtedness and Capitalized Lease Obligations in respect of
specific items of equipment, in an aggregate amount not to exceed Two Hundred
Fifty Thousand Dollars ($250,000.00), provided, however, that any liens granted
by Obligors in connection with such future purchase money Indebtedness or
Capitalized Lease must also be permitted under Section
7.9.

     

    Any of
such existing permitted Indebtedness may not be refinanced or replaced without
the consent of Agent.

     

    7.4 Investments and
Loans

     

    . No
Obligor will have or make any investments in all or a material portion of the
capital stock or securities of any Person, or any loans, advances or extensions
of credit to any Person, except:

     

    (a) Investments
in direct or indirect obligations of, or obligations unconditionally guaranteed
by, the United States of America and maturing within twelve (12) months from the
date of acquisition;

     

    (b) Investments
in commercial paper of Agent or commercial paper rated "Prime-1" by Moody's
Investors Services or "A-1" by Standard & Poor's Corporation, or with an
equivalent rating by another rating agency of nationally recognized standing,
maturing within three hundred sixty-five (365) days from the date of
acquisition;

     

    
      
        
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    (c) Certificates
of deposit maturing within twelve (12) months from the date of acquisition
issued by the Agent;

     

    (d) Intercompany
loans extended by Borrower to Guarantors in the ordinary course of business for
the payment of various expenses of Guarantors consistent with Borrower's
practices as in effect on the date hereof;

     

    (e) In
addition to the intercompany loans described in the foregoing subpart
(d), intercompany loans among Borrower and Guarantors in the ordinary
course of business incurred after the date hereof in an aggregate amount not to
exceed One Million Dollars ($1,000,000.00) outstanding at any time;
and

     

    (f) Investments
and loans listed on Schedule
7.4 attached hereto.

     

    7.5 Guaranties

     

    .  Except
with respect to the Lender Indebtedness, no Obligor will directly or indirectly
guarantee, endorse (other than for collection or deposit in the ordinary course
of business), discount, sell with recourse or for less than the face value or
agree (contingently or otherwise) to purchase or repurchase or otherwise
acquire, or otherwise become directly or indirectly liable for, or agree
(contingently or otherwise) to supply or advance funds (whether by loan, stock
purchase, capital contribution or otherwise) in respect of, any Indebtedness,
obligations or liabilities of any Person.

     

    7.6 Disposition of
Assets

     

    .  No
Obligor will sell, lease, transfer or otherwise dispose of any of its property
or assets, except for the sale for fair consideration of obsolete equipment
having a book value of not more than Two Hundred Thousand Dollars ($200,000.00)
in the aggregate.

     

    7.7 Merger; Consolidation;
Business Acquisitions; Subsidiaries

     

    .  No
Obligor will merge into or consolidate with any Person, acquire any material
portion of the stock, ownership interests, assets or business of any Person,
permit any Person to merge into it, or form any new Subsidiaries.

     

    7.8 Taxes; Claims for Labor and
Materials

     

    .  Each
Obligor will pay or cause to be paid when due all taxes, assessments,
governmental charges or levies imposed upon it or its income, profits, payroll
or any property belonging to it, including without limitation all withholding
taxes, and all claims for labor, materials and supplies which, if unpaid, might
become a lien or charge upon any of its properties or assets.  No Obligor will file or
consent to the filing of, any consolidated income tax return with any Person
other than a Subsidiary.

     

    7.9 Liens

     

    .  No
Obligor will create, incur or permit to exist any mortgage, pledge, encumbrance,
lien, security interest or charge of any kind (including liens or charges upon
properties acquired or to be acquired under conditional sales agreements or
other title retention devices) on its property or assets, whether now owned or
hereafter acquired, or upon any income, profits or proceeds therefrom,
except:

     

    (a) Security
interests and mortgages held by Agent, for the pro rata benefit of
Lenders;

     

    (b) Liens
incurred or deposits made in the ordinary course of business (i) in
connection with worker's compensation, unemployment insurance, social security
and other like

     

    
      
        
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    (c) laws or
(ii) to secure the performance of statutory obligations, not incurred in
connection with either (A) the borrowing of money or (B) the deferred purchase
price of goods or inventory;

     

    (d) Encumbrances
consisting of zoning restrictions, easements, restrictions on the use of real
property or minor irregularities of title thereto, none of which impairs the use
of such property by such Obligor in the operation of its business;

     

    (e) Liens and
security interests listed on Schedule
7.9 attached
hereto; and

     

    (f) Purchase
money liens or Capitalized Leases, provided that:

     

    (1) the
property subject to any of the foregoing is acquired or leased by such Obligor
in the ordinary course of its business and the lien on any such property is
created contemporaneously with such acquisition;

     

    (2) purchase
money Indebtedness or Capitalized Lease Obligations so created shall not exceed
100% of the lesser of cost or fair market value as of the time of acquisition or
lease of the property covered thereby; and

     

    (g) the
purchase money Indebtedness or Capitalized Lease Obligations shall only be
secured by the property so acquired or leased.

     

    No
Obligor shall enter into any agreement with any other Person which shall
prohibit such Obligor from granting, creating or suffering to exist, or
otherwise restrict in any way (whether by covenant, by identifying such event as
a default under such agreement or otherwise) the ability of the such Obligor to
grant, create or suffer to exist, any lien, security interest or other charge or
encumbrance upon or with respect to any of its assets in favor of the Agent, for
the pro rata benefit of Lenders.

     

    No
Obligor will apply for or obtain any letters of credit for the payment of or to
secure the payment for any inventory or other assets to be acquired by such
Obligor, except letters of credit issued by Issuing Bank, at its
discretion.

     

    7.10 Existence; Approvals;
Qualification; Business Operations; Compliance with Laws

     

    .  Each
Obligor will (a) obtain, preserve and keep in full force and effect its separate
corporate or limited liability company existence, as applicable, and all rights,
licenses, registrations and franchises necessary to the proper conduct of its
business or affairs; (b) qualify and remain qualified as a foreign corporation
or limited liability company, as applicable, in each jurisdiction in which the
character or location of the properties owned by it or the business transacted
by it requires such qualification; and (c) continue to
operate its business as presently operated and will not engage in any new
businesses without the prior written consent of Agent.  Each Obligor
will comply with the requirements of all applicable laws and all rules,
regulations (including environmental regulations) and orders of regulatory
agencies and authorities having jurisdiction over it.

     

    7.11 Maintenance of Properties,
Intellectual Property

     

    .  Each
Obligor will maintain, preserve, protect and keep or cause to be maintained,
preserved, protected and kept its real and personal property used or useful in
the conduct of its business in good working order and condition, reasonable wear
and tear excepted, and will pay and discharge when due the cost of

     

    
      
        
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    repairs
to and maintenance of the same.

     

    With
respect to any and all trademarks, registrations, copyrights, patents, patent
rights and applications for any of the foregoing, each Obligor shall maintain
and protect the same and shall take and assert any and all remedies available to
such Obligor to prevent any other Person from infringing upon or claiming any
interest in any such trademarks, registrations, copyrights, patents, patent
rights or application for any of the foregoing.

     

    Each
Obligor will notify Agent immediately of (a) the creation by such Obligor or any
of its employees of any inventions; (b) any changes or improvements made to an
invention created or owned by such Obligor or any of its employees; (c) the
filing of any patent or trademark application, whether domestic or foreign, by
such Obligor or any of its employees; (d) the grant of any patent or trademark,
whether domestic or foreign, to such Obligor or any of its employees; or (e)
such Obligor's intent to abandon a patent or trademark.

     

    Each
Obligor will, if requested by Agent, (i) execute and deliver to Agent
assignments, financing statements, patent mortgages or such other documents, in
form and substance acceptable to Agent, necessary to perfect and maintain
Agent's security interest in all existing and future patents, patent
applications, trademarks, trademark applications, and other general intangibles
owned by such Obligor; (ii) furnish Agent with evidence satisfactory to Agent,
in its sole discretion, that all actions necessary to maintain and protect each
trademark and patent owned by such Obligor or its employees have been taken in a
timely manner; and (iii) execute and deliver to Agent an agreement permitting
Agent to exercise all of such Obligor's rights in, to and under any patent or
trademark owned by such Obligor or any of its employees.

     

    7.12 Insurance

     

    .  Each
Obligor will carry adequate insurance issued by an insurer acceptable to Agent,
in amounts acceptable to Agent (at least adequate to comply with any
co-insurance provisions) and against all such liability and hazards as are
usually carried by entities engaged in the same or a similar business similarly
situated or as may be required by Agent, and in addition, will carry business
interruption insurance in such amounts as may be required by
Agent.  In the case of insurance on any of the Collateral, each
Obligor shall carry insurance in the full insurable value thereof and cause
Agent to be named as insured mortgagee with respect to all real property, loss
payee (with a lender's loss payable endorsement) with respect to all personal
property, and additional insured with respect to all liability insurance, as its
interests may appear with thirty (30) days' notice to be given Agent by the
insurance carrier prior to cancellation or material modification of such
insurance coverage.

     

    Each
Obligor shall cause to be delivered to Agent the insurance policies therefor or,
in the alternative, evidence of insurance and at least thirty (30) business days
prior to the expiration of any such insurance, additional policies or duplicates
thereof or, in the alternative, evidence of insurance evidencing the renewal of
such insurance and payment of the premiums therefor.  Each Obligor
shall direct all insurers that in the event of any loss thereunder or the
cancellation of any insurance policy, the insurers shall make payments for such
loss and pay all returned or unearned premiums directly to Agent and not to such
Obligor and Agent jointly.

     

    In the
event of any loss, each Obligor will give Agent immediate notice thereof and
Agent may make proof of loss whether the same is done by such
Obligor.  Agent is granted a power of attorney by each Obligor with
full power of substitution to file any proof of loss in such Obligor's or
Agent's name, to endorse such Obligor's name on any check, draft or other
instrument evidencing insurance proceeds, and to take any action or sign any
document to pursue any insurance loss claim.

     

    
      
        
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    Such
power being coupled with an interest is irrevocable.

     

    In the
event of any loss, Agent, at its option, may (a) retain and apply all or any
part of the insurance proceeds to reduce, in such order and amounts as Agent may
elect, the Lender Indebtedness, or (b) disburse all or any part of such
insurance proceeds to or for the benefit of Obligors for the purpose of
repairing or replacing Collateral after receiving proof satisfactory to Agent of
such repair or replacement, in either case without waiving or impairing the
Lender Indebtedness or any provision of this Agreement.  Any
deficiency thereon shall be paid by Obligors to Agent upon demand.  No
Obligor shall take out any insurance without having Agent named as loss payee or
additional insured thereon.  Each Obligor shall bear the full risk of
loss from any loss of any nature whatsoever with respect to the
Collateral.

     

    7.13 Inspections;
Examinations

     

    .  Each
Obligor hereby irrevocably authorizes and directs all accountants and auditors
employed by such Obligor at any time to exhibit and deliver to Agent copies of
any and all of such Obligor's financial statements, trial balances or other
accounting records of any sort in the accountant's or auditor's possession and
copies of all reports submitted to such Obligor by such accountants or auditors,
including management letters, "comment" letters and audit reports, and to
disclose to Agent any information they may have concerning such Obligor's
financial status and business operations.  Each Obligor further
authorizes all federal, state and municipal authorities to furnish to Agent
copies of reports or examinations relating to such Obligor, whether made by such
Obligor or otherwise.

     

    The
officers of Agent, or such Persons as any of them may designate, may, at
Obligors' sole cost and expense, visit and inspect any of the properties of each
Obligor, examine (either by Agent's employees or by independent accountants) any
of the Collateral or other assets of each Obligor, including the books of
account of each Obligor, and discuss the affairs, finances and accounts of each
Obligor with its officers and with its independent accountants, at such times as
Agent may desire.  Additionally, Agent may obtain updated appraisals
of the Collateral at any time at Obligors' sole cost and expense.

     

    Agent may
conduct at any time and from time to time, and Obligors will fully cooperate
with, field examinations of the inventory, accounts receivable and business
affairs of each Obligor.  Obligors will reimburse Agent for all costs,
expenses and charges as may be required by Agent in connection with all field
examinations, at the standard rates charged by Agent for such activities
(currently, Eight Hundred Fifty Dollars ($850.00) per person, per day for each
field examination), plus Agent's out-of-pocket expenses in connection with such
examinations.  At Agent's option all costs, expenses and charges owing
under this Section
7.13 may be charged as a Line Advance.

     

    7.14 Default Under Other
Indebtedness

     

    .  No
Obligor will permit any of its Indebtedness which individually or in the
aggregate exceeds One Hundred Thousand Dollars ($100,000.00) to be in
default.  If any Indebtedness of any Obligor is declared or becomes
due and payable before its expressed maturity by reason of default or otherwise
or, to the knowledge of any Obligor, the holder of any such Indebtedness shall
have the right (or upon the giving of notice or the passage of time, or both,
shall have the right) to declare such Indebtedness to be so due and payable,
such Obligor will immediately give Agent written notice of such declaration,
acceleration or right of declaration.

     

    7.15 Pension
Plans

     

    .  Each
Obligor will (a) keep in full force and effect any and all Plans which are
presently in existence or may, from time to time, come into existence under
ERISA,

     

    
      
        
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    unless
such Plans can be terminated without material liability to such Obligor in
connection with such termination (as distinguished from any continuing funding
obligation); (b)  make contributions to all of such Obligor's Plans in
a timely manner and in a sufficient amount to comply with the requirements of
ERISA; (c) comply with all material requirements of ERISA which relate to such
Plans so as to preclude the occurrence of any Reportable Event, Prohibited
Transaction or material "accumulated funding deficiency" as such term is defined
in ERISA; and (d) notify Agent immediately upon receipt by such Obligor of any
notice of the institution of any proceeding or other action which may result in
the termination of any Plan and deliver to Agent, promptly after the filing or
receipt thereof, copies of all reports or notices which such Obligor files or
receives under ERISA with or from the Internal Revenue Service, the PBGC, or the
U.S. Department of Labor.

     

    7.16 Bank of
Account

     

    .

     

    (a) Borrower
will maintain Agent as its primary bank of account.  Notwithstanding
the foregoing, (1) Borrower shall be permitted to maintain the accounts with
Wachovia Bank, N.A. listed on Schedule
7.16 hereof (collectively, the "Wachovia Accounts") and its
existing lockbox with Wachovia (the "Wachovia Lockbox") until the
earlier of the following (the "Wachovia Trigger Date"): (A)
the date an Advance is requested hereunder (other than a request for a Letter of
Credit in a face amount not in excess of One Million Dollars ($1,000,000.00));
(B) the occurrence of a Default or Event of Default; and (C) June 8, 2009 and (2) Borrower shall
be permitted to maintain the accounts with Bank of America, N.A. listed on Schedule
7.16 hereof (collectively, the "Bank of America Accounts")
until the earlier of the following (the "Bank of America Trigger
Date"):  (A) the occurrence of a Default or Event of Default;
and (B) September 3, 2009.  On or before the Wachovia Trigger Date,
Borrower shall provide Agent with evidence that the Wachovia Lockbox and the
Wachovia Accounts have been closed and that all funds therein have been
transferred to the Cash Collateral Account, except that, if there are any checks
written on a Wachovia Account that have not cleared by the Wachovia Trigger Date
(each such Wachovia Account with checks that have not cleared being referred to
herein as a "Remaining Wachovia
Account"), such Remaining Wachovia Account may remain open until the
earlier of (A) the occurrence of a Default or Event of Default; (B) the date on
which all such outstanding checks have cleared and (C) September 4, 2009 (the
"Final Wachovia Account
Date").  On or before the Final Wachovia Account Date, Borrower
shall provide Agent with evidence that each Remaining Wachovia Account has been
closed and that all funds therein have been transferred to the Cash Collateral
Account.  On or before the Bank of America Trigger Date, Borrower
shall provide Agent with evidence that the Bank of America Accounts have been
closed and that all funds therein have been transferred to the Cash Collateral
Account.  On or before the date hereof and from time to time
thereafter, Borrower shall transfer to an account maintained with Agent all sums
in the Wachovia Account identified on Schedule
7.16 as the "Evergreen Investments" account (the "Evergreen Account") so that
sums on deposit in the Evergreen Account shall not exceed the amount from time
to time reasonably necessary to effectuate a commercially reasonable transition
of the Wachovia Accounts to Agent.

     

    (b) Borrower
will notify Agent in writing on a continuing basis of all accounts (including,
without limitation, all deposit accounts, securities accounts and certificates
of deposit) maintained with any Person other than Agent and, prior to opening
any such account, will cause such Person to enter into a control agreement
regarding each such account in form and content satisfactory to
Agent.  Notwithstanding the foregoing, prior to the Wachovia Trigger
Date, Borrower shall not be required to deliver to Agent control agreements with
respect to the Wachovia Accounts,

     

    
      
        
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    (c) and prior
to the Bank of America Trigger Date, Borrower shall not be required to deliver
to Agent control agreements with respect to the Bank of America
Accounts.

     

    (d) Borrower
will not issue any instruction to Citicorp with respect to its existing lockbox
with Citicorp other than the forwarding instructions contained in that certain
payoff letter issued by Citicorp of even date herewith.

     

    (e) Each
Guarantor will notify Agent in writing on a continuing basis of all accounts
(including, without limitation, all deposit accounts, securities accounts and
certificates of deposit) maintained with any Person other than Agent
(collectively, the "Guarantor
Non-Agent Accounts") and will cause each such Person to enter into a
control agreement, in form and content satisfactory to
Agent,  regarding each account maintained with such Person to the
extent necessary so that sums in Guarantor Non-Agent Accounts not subject to
control agreements do not exceed Five Hundred Thousand Dollars ($500,000.00) in
the aggregate.

     

    7.17 Maintenance of
Management

     

    .  Each
Obligor will cause its business to be continuously managed by its present
management or such other persons (serving in such management positions) as may
be reasonably satisfactory to Agent.  Each Obligor will notify Agent
promptly in writing of any change in its board of directors or executive
officers.

     

    7.18 Amendment to Certificate or
Articles of Incorporation

     

    .  No
Obligor shall make any amendment to its certificate or articles of
incorporation, by-laws, certificate of formation or organization  or
operating agreement, as applicable, without providing Agent with thirty (30)
day's prior notice thereof.  Each Obligor will provide Agent with a
copy of any proposed amendments to its certificate or articles of incorporation,
by-laws, certificate of formation or organization  or operating
agreement, as applicable, prior to adoption.  No Obligor will cause or
permit any corporate division or similar event with respect to such
Obligor.

     

    7.19 Dividends

     

    . No
Obligor will (i) redeem, repurchase or otherwise make any payment, distribution,
or dividend to acquire any of its equity interests or (ii) pay dividends or
distributions on account of its stock equity interests; provided however, that
each Guarantor shall declare and pay dividends on account of its capital stock
or other equity interests as frequently as, and to the fullest extent, permitted
by applicable law.

     

    7.20 Transactions with
Affiliates

     

    .  No
Obligor will enter into or conduct any transaction with any Affiliate except on
terms that would be usual and customary in a similar transaction between Persons
not affiliated with each other and except as disclosed to Agent.  No
Obligor will make any loans or extensions of credit to any of its Affiliates,
shareholders, directors or officers, except for intercompany loans permitted by
Section
7.4(d), the existing loans described in Schedule
7.20 attached hereto.  Each Obligor will cause all of its
Indebtedness at any time owed to its Affiliates, shareholders, directors and
officers to be subordinated in all respects to all present and future Lender
Indebtedness and will not make any payments thereon, except as approved by Agent
in writing.

     

    7.21 Restrictions on Interest
Transfer

     

    .  Borrower
will not transfer, sell or otherwise dispose of, or part with control of, or
permit the transfer of, any equity interest in any Guarantor.

     

    7.22 Change of
Control.  At
all times, a majority of the members of the board of directors (or similar
governing body) of Borrower shall consist of Persons who are members of
such

     

    
      
        
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    7.23 board of
directors (or similar governing body) on the date hereof or who were either
nominated by such members or appointed by members so nominated.

     

    7.24 Name; Address or State of
Organization Change

     

    .  No
Obligor will change its name or change or add any address or location except
upon thirty (30) days prior written notice to Agent and delivery to Agent of any
items requested by Agent to maintain perfection and priority of Agent's security
interests and access to such Obligor's books and records.  No Obligor
shall change its state of organization or take any action which would result in
a change in such Obligor's state of organization without Agent's prior written
consent.

     

    7.25 Notices

     

    .  Each
Obligor will immediately notify Agent of (a) any action or proceeding brought
against such Obligor wherein such action or proceeding would, if determined
adversely to such Obligor have a Material Adverse Effect, or (b) the occurrence
of any Default or Event of Default

     

    7.26 Additional Documents and
Future Actions

     

    .  Each
Obligor will, at its sole cost, take such actions and provide Agent from time to
time with such agreements, financing statements and additional instruments,
documents or information as the Agent may in its discretion deem necessary or
advisable to perfect, protect, maintain or enforce the security interests in the
Collateral, to permit Agent to protect or enforce its interest in the
Collateral, or to carry out the terms of the Loan Documents.  Each
Obligor hereby authorizes and appoints Agent as its attorney-in-fact, with full
power of substitution, to take such actions as Agent may deem advisable to
protect the Collateral and its interests therein and its rights hereunder, to
execute on such Obligor's behalf and file at Obligors' expense financing
statements, and amendments thereto, in those public offices deemed necessary or
appropriate by Agent to establish, maintain and protect a continuously perfected
security interest in the Collateral, and to execute on such Obligor's behalf
such other documents and notices as Agent may deem advisable to protect the
Collateral and its interests therein and its rights hereunder.  Such
power being coupled with an interest is irrevocable.

     

    7.27 Title to
Equipment

     

    .  Each
Obligor will within thirty (30) days of acquisition of any equipment, have
Agent's lien noted on any and all evidence of ownership, certificates of title,
or applications for title for any such equipment and provide Agent with all
original certificates of title or other evidence of ownership.

     

    7.28 Accounts
Receivable

     

    .  Borrower
will (a) inform Agent immediately of the rejection of goods, claims made or
delay in delivery or performance in regard to any account or contract right upon
which Borrower has based availability for Line Advances or if any account
receivable previously scheduled, listed or referred to in any certificate,
statement or report by Borrower and upon which Borrower is basing availability
for Advances under the Line ceases to be an Eligible Receivable; (b) adjust the
borrowing base calculation under the Line to reduce the availability for
Advances under the Line by the amount of any account with respect to which
Borrower is required to give Agent notice pursuant to the foregoing subsection
(a) and repay any Out-Of-Formula Advance resulting therefrom; (c) make no
change in any account upon which Borrower has based availability for Advances
under the Line, unless such change is contemporaneously reflected in the
borrowing base calculation; (d) furnish to Agent all information received by
Borrower affecting the financial standing of any account debtor whose account or
contract right has been specifically assigned to Agent; (e) pay Agent the amount
loaned against any account or contract right if the goods are returned by
purchaser or the contract is canceled or terminated or adjust the borrowing base
calculation to reduce the availability for Advances under the Line by the amount
of such account and repay any Out-Of-Formula Advance resulting therefrom;
(f)

     

    
      
        
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    immediately
notify Agent if any of its accounts arise out of contracts with the United
States or any department, agency or instrumentality thereof, and execute any
instruments and take any steps required by Agent in order that all monies due
and to become due under such contract shall be assigned to Agent and notice
thereof given to the Government under the Federal Assignment of Claims Act; (g)
deliver to Agent, with appropriate endorsement or assignment, any instrument or
chattel paper representing an account or contract right; (h) furnish to Agent
satisfactory evidence of the shipment and receipt of any goods specified by
Agent and the performance of any services or obligations covered by accounts or
contracts in which Agent has a security interest; and (i) pay Agent the unpaid
portion of any account or contract right upon which Borrower has based
availability for Advances under the Line if (1) such account is not paid
promptly after its maturity, (2) an account debtor does not accept the goods or
services, (3) any petition under the Bankruptcy Code or any similar federal or
state statute is filed by or against a purchaser, or (4) Agent shall at any time
reject the account as unsatisfactory; and until such payment is made by
Borrower, Agent may retain any such account or contract right as security and
may charge any deposit account of Borrower for any such amounts.  Any
permission granted to Borrower by Agent to omit any of the requirements of this
Section 7.27
may be revoked by Agent at any time.

     

    Each
Obligor will, if requested by Agent, (a) give Agent assignments, in form
acceptable to Agent, of specific accounts or groups of accounts and monies due
and to become due under specific contracts and specific general intangibles; (b)
furnish to Agent a copy, with such duplicate copies as Agent may request, of the
invoice applicable to each account specifically assigned to Agent or arising out
of a contract right, bearing a statement that such account has been assigned to
Agent and such additional statements as Agent may require; (c) mark its records
evidencing its accounts in a manner satisfactory to Agent so as to show which
accounts have been assigned to Agent; (d) join with Agent in executing a
financing statement, notice, affidavit, security agreement, assignment or
similar instrument, in form satisfactory to Agent, and such continuation
statements and other instruments as Agent may from time to time request and pay
the cost of filing the same in any public office deemed advisable by Agent to
perfect the liens and security interests granted therein; (e) give Agent such
financial statements, reports, certificates, lists of purchasers (showing names,
addresses, and amounts owing) and other data concerning its accounts, contracts,
collections, inventory, general intangibles and other matters as Agent may from
time to time request; (f) segregate cash proceeds of Collateral so that they may
be identified readily, and deliver the same to the Agent at such time or times
and in such manner and form as the Agent may direct; (g) furnish such witnesses
as may be necessary to establish legal proof of the Collateral or records
relating to the Collateral; and (h) obtain from any owner, encumbrancer,
processor, or other person having an interest in the property where any
Collateral is located, written consent to Agent's removal of the Collateral
therefrom, without liability on the part of the Agent to such owner,
encumbrancer, processor or other person, or from any such owner, encumbrancer,
processor or other person such waivers of any interest in the Collateral as the
Agent may require.

     

    7.29 Material Adverse
Contracts

     

    .  No
Obligor will become or be a party to any contract or agreement which has or
could have a Material Adverse Effect.  Each Obligor will deliver to
Agent immediately after execution, copies of each new material lease, contract
agreement or commitment to which it is a party and any amendment to any material
lease, contract, commencement or agreement to which such Obligor is a
party.

     

    7.30 Restrictions on Use of
Proceeds

     

    .  No
Obligor will carry or purchase with the proceeds of any of the Loan any "margin
security" within the meaning of Regulations U, G, T or X of the Board of
Governors of the Federal Reserve System.

     

    
      
        
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    Commercial
Tort Claims

     

    .  Each
Obligor shall immediately notify Agent in writing of each commercial tort claim
from time to time in favor of such Obligor and provide Agent with full
descriptions for each such claim and such additional information regarding such
claim as may be required by Agent.  Each Obligor authorizes the
amendment to Schedule
5.1(i) hereto as necessary from time to time to reflect the current
status of each Obligor's commercial tort claims.

     

    7.31 Possessory
Collateral

     

    .  Immediately
upon any Obligor's receipt of any portion of the Collateral evidenced by an
agreement, instrument or document, including, without limitation, any tangible
chattel paper, letter of credit, note, draft, instrument, investment property or
financial asset, such Obligor shall deliver the original thereof to Agent
together with an appropriate endorsement, stock power or other specific evidence
of assignment thereof to Agent (in form and substance acceptable to
Agent).  If an endorsement or assignment of any such items shall not
be made for any reason, Agent is hereby irrevocably authorized, as each
Obligor's attorney and agent-in-fact, to endorse or assign the same on such
Obligor's behalf.

     

    7.32 Electronic Chattel
Paper

     

    .  To
the extent that any Obligor obtains or maintains any electronic chattel paper,
such Obligor shall create, store and assign the record or records comprising the
electronic chattel paper in such a manner that (i) a single authoritative copy
of the record or records exists which is unique, identifiable and, except as
otherwise provided in clauses
(iv), (v) and (vi) below, unalterable, (ii) the authoritative copy
identifies Agent as the assignee of the record or records, (iii) the
authoritative copy is communicated to and maintained by Agent or its designated
custodian, (iv) copies or revisions that add or change an identified assignee of
the authoritative copy can only be made with the participation of Agent, (v)
each copy of the authoritative copy and any copy of a copy is readily
identifiable as a copy that is not the authoritative copy and (vi) any revision
of the authoritative copy is readily identifiable as an authorized or
unauthorized revision.

     

    7.33 Fiscal Year; Accounting
Changes

     

    .  No
Obligor will change its fiscal year from a year ending December
31.  No Obligor will at any time make any change in accounting
policies or reporting procedures, except as required by GAAP.

     

    7.34 Allegiance

     

    Borrower
shall not permit Allegiance to own any assets or incur any liabilities or
Indebtedness.  Borrower shall not permit Allegiance to engage in any
business operations.  No Obligor shall extend any loans or advances to
Allegiance or pay any expenses on behalf of Allegiance.  By July 7,
2009, Borrower shall provide evidence reasonably satisfactory to Agent that
Allegiance has been dissolved.

     

    8. FINANCIAL
COVENANTS

     

    .  Obligors
will comply with the following:

     

    8.1 Fixed Charge Coverage
Ratio

     

    .  Obligors
shall maintain a Fixed Charge Coverage Ratio measured on a rolling twelve (12)
month basis of not less than 1.1 to 1.0 as of January 31, 2010 and as of the end
of each fiscal quarter of Obligors ending thereafter.

     

    9. ACCOUNTING RECORDS, REPORTS
AND FINANCIAL STATEMENTS

     

    .  Obligors
will maintain books of record and account in which full, correct and current
entries in accordance with GAAP will be made of all of its dealings, business
and affairs, and Obligors will deliver to Agent the following:

     

    9.1 Annual
Statements

     

    .  As
soon as available and in any event within ninety (90) days after the end of each
fiscal year of Obligors:

     

    
      
        
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    the
audited consolidated income and
retained earnings statements of Obligors for such fiscal year,

     

    (a) the
audited consolidated balance
sheet of Obligors as of the end of such fiscal year, and

     

    (b) the
audited consolidated statement
of cash flow of Obligors for such fiscal year

     

    setting
forth in comparative form the corresponding figures as at the end of the
previous fiscal year, all in reasonable detail, including all supporting
schedules and comments.  The foregoing statements and balance sheets
shall be prepared in accordance with GAAP and shall be audited by independent
certified public accountants of recognized standing acceptable to Agent in the
reasonable exercise of its discretion (the "Accountants") with respect to
which such Accountants shall deliver their unqualified opinion.

     

    In
addition, contemporaneous with the delivery of the foregoing statements and
balance sheets, Obligors shall deliver to Agent the consolidating income
statements and balance sheets of Obligors for such fiscal year setting forth in
comparative form the corresponding figures as at the end of the previous fiscal
year, all in reasonable detail, subject to year-end adjustments, and certified
by the chief financial officer of each Obligor to be accurate and to have been
prepared in accordance with GAAP.

     

    9.2 Projections and Cash
Flow

     

    .  As
soon as available and in any event within thirty (30) days prior to the end of
each fiscal year of Obligors, projections and cash flows on a month by month
basis for the next succeeding twelve (12) months, prepared by the chief
financial officer of such Borrower.  Obligors have previously
furnished initial projections to Agent containing the information required by
this Section
9.2 (the "Initial
Projections").  Obligors represent and covenant that (a) the
Initial Projections have been and all projections required by this Section
9.2 shall be prepared by the chief financial officer of each Borrower and
represent, and in the future shall represent, the best available good faith
estimate of Obligors regarding the course of each Obligor's business for the
annual periods covered thereby; (b) the assumptions set forth in the Initial
Projections are and the assumptions set forth in the future projections
delivered hereafter shall be reasonable and realistic based on then current
economic conditions; (c) Obligors know of no reason why Obligors should not be
able to achieve the annual performance levels set forth in the Initial
Projections and Obligors shall have no knowledge at the time of delivery of
future projections of any reason why Obligors shall not be able to meet the
performance levels set forth in said projections; and (d) Obligors have
sufficient capital as may be required for their ongoing business and to pay
their existing and anticipated debts as they mature.

     

    9.3 Monthly
Statements

     

    .  As
soon as available and in any event within thirty (30) days after the end of each
calendar month:

     

    (a) the
consolidated and consolidating income and retained earnings statements of
Obligors for such month,

     

    (b) the
consolidated and consolidating balance sheet of Obligors as of the end of such
month, and

     

    (c) the
consolidated statement of cash flow of Obligors for such month

     

    
      
        
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    (d) setting
forth in comparative form the corresponding figures as at the end of the
corresponding month of the previous fiscal year (if applicable) and the
projected figures based upon the projections required under Section
9.2, all in reasonable detail, subject to year-end adjustments, and
certified by the chief financial officer of each Obligor to be accurate and to
have been prepared in accordance with GAAP.

     

    9.4 Accounts Receivable and
Accounts Payable Statements

     

    .

     

    (a) Within
fifteen (15) days after the end of each calendar month, a schedule of each
Borrower's accounts receivable identifying all Eligible Receivables and the
aging thereof by open invoice of each customer of each Borrower and a
preliminary schedule of Borrower's accounts payable and the aging thereof, all
certified as to accuracy by the chief financial officer of each
Borrower.  Obligors will also provide Agent with all information
requested by Agent with respect to any account debtor.

     

    (b) Contemporaneous
with the delivery of the monthly financial statements required by Section
9.3, a final schedule of Borrower's accounts payable and the aging
thereof, certified as to accuracy by the chief financial officer of each
Borrower.

     

    9.5 Borrowing Base
Certifications and Related Documents

     

    .  Within
fifteen (15) days after the end of each calendar month if there are no
outstanding Line Advances during such month and at least once every seven (7)
days at any time Line Advances are outstanding, as a condition of each Advance
under the Line and otherwise as requested by Agent, a borrowing base certificate
in the form of Exhibit
"B" attached hereto, together with such additional information as may be
requested by Agent, certified as to accuracy by the chief financial officer of
Borrower.

     

    9.6 Audit
Reports

     

    .  Promptly
upon receipt thereof, one copy of each other report submitted to any Obligor by
independent accountants, including management letters, "comment" letters, in
connection with any annual, interim or special audit report made by them of the
books of Obligors.

     

    9.7 Reports to Governmental
Agencies and Other Creditors

     

    .  With
reasonable promptness, copies of all such financial reports, statements and
returns which any Obligor shall file with any federal or state department,
commission, board, bureau, agency or instrumentality and any report or statement
delivered by any Obligor to any supplier or other creditor in connection with
any payment restructuring; provided that, copies of state tax returns need only
be provided upon request by Agent.

     

    9.8 Compliance
Certificates

     

    .  Within
the periods provided in Sections
9.1 and 9.3
above, a certificate of the chief financial officer of each Obligor: (a) stating
that Obligors have observed, performed and complied with each and every
undertaking contained herein, (b) setting forth the information and computations
(in sufficient detail) required in order to establish whether Obligors were
operating in compliance with the financial covenants in Section
8 of this Agreement, and (c) certifying that as of the date of such
certification, there does not exist any Default or Event of
Default.  Such certificate will be in the form of Exhibit
"C" attached hereto.

     

    9.9 Accountant's
Certificate

     

    .  Within
the period provided in Section
9.1, a report of the independent public accountants who render an opinion
with respect to the financial statements referred to therein, stating that they
have reviewed the terms of this Agreement and that in making the examinations
necessary to their certification mentioned in Section
9.1, they have

     

    
      
        
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    reviewed
the accounts and condition of Obligors during the accounting period covered by
their certificate and that such review did not disclose the existence of any
condition or event which indicates that any Obligor failed to comply with the
terms, covenants, provisions, or conditions set forth in this Agreement, insofar
as they relate to accounting matters, including, without limitation, those
covenants that impact financial statement assertions and disclosures (e.g.,
repayment terms, credit availability, dividend distributions, lease terms, etc.)
and that relate to underlying components that have been subjected to audit
procedures applied in the audit of the financial statements (e.g., ratios based
on amounts presented in the financial statements, issuance of capital stock,
etc.).

     

    9.10 Shareholder, Member and SEC
Reports

     

    .  As
soon as available, but not later than five (5) days after the same are sent or
filed, as the case may be, a notice to Agent of the filing of any financial
statements or reports that any Obligor files with the Securities and Exchange
Commission or any other federal or state department, commission, board, bureau,
agency or instrumentality and, within five (5) days of written request by Agent,
a copy of each such financial statement or report as requested by
Agent.  In addition, as soon as available, but not later than five (5)
days after the same are sent, each Obligor shall deliver to Agent copies of all
material reports that any Obligor sends to any of its shareholders or members,
as the case may be, including without limitation annual reports.

     

    9.11 Requested
Information

     

    .  With
reasonable promptness, all such other data and information (including, without
limitation, updated customer address lists and contact information) in form and
content satisfactory to Agent in respect of the condition, operation and affairs
of Obligors as
Agent may reasonably request from time to time.

     

    10. ENVIRONMENTAL
REPRESENTATIONS AND COVENANTS.

     

    10.1 Representations

     

    .  Each
Obligor represents to Agent as follows:  (a) the Environmental
Affiliates are in compliance with all Environmental Requirements and such
Obligor has no knowledge of any circumstances which may prevent or interfere
with such compliance in the future; (b) the Environmental Affiliates have all
licenses, permits, approvals and authorizations required under applicable
Environmental Requirements; (c) there are no pending or threatened claims
against any of the Environmental Affiliates or any of their assets related to
the failure to comply with any Environmental Requirements, or any facts or
circumstances which could give rise to such a claim; (d) no facility or property
now or previously owned, operated or leased by any Environmental Affiliate is an
Environmental Cleanup Site; (e) no Environmental Affiliate has treated, stored,
transported, handled or disposed of Special Materials at or adjacent to any
Environmental Cleanup Site; (f) there are no liens or claims for cost
reimbursement outstanding or threatened against any Environmental Affiliate or
any of their assets, or any facts or circumstances which could give rise to such
a lien or claim; and (g) there are no facts or circumstances which, under the
provisions of any Environmental Requirements, could restrict the use, occupancy
or transferability of any of the Collateral or any of the facilities owned,
leased or operated by any Environmental Affiliate.

     

    10.2 Real
Property

     

    .  Each
Obligor represents and warrants to Agent that there are no Special Materials
presently located on or, to the best of its knowledge, near any real property
owned, leased or operated by any Environmental Affiliate (collectively, "Real Property") except for
Special Materials which are and have at all times been treated, stored,
transported, handled and disposed of in compliance with all Environmental
Requirements.  Each Obligor represents to Agent that the Real Property
is not now being used nor, to the best of its knowledge, has it ever been used
in the past for activities involving Special Materials, including but not
limited to the use, generation,

     

    
      
        
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    collection,
storage, treatment, or disposal of any Special Materials except for Special
Materials which are and have at all times been treated, stored, transported,
handled and disposed of in compliance with all Environmental
Requirements.  Without limiting the generality of the foregoing, the
Real Property is not being used nor, to the best of each Obligor's knowledge,
has it ever been used in the past for a landfill, surface impoundment or other
area for the treatment, storage or disposal of solid waste (including solid
waste such as sludge).

     

    10.3 Covenant Regarding
Compliance

     

    .  Each
Obligor shall take or cause all Environmental Affiliates to take, at Obligors'
and such Environmental Affiliate's sole expense, such actions as may be
necessary to comply with all Environmental Requirements, as hereinafter
defined.  If any Environmental Affiliate shall fail to take such
action, Agent may make advances or payments towards performance or satisfaction
of the same but shall be under no obligation to do so.  All sums so
advanced or paid, including all sums advanced or paid by Agent in connection
with any judicial or administrative investigation or proceeding relating
thereto, including, without limitation, attorney's fees, fines, or other penalty
payments, shall be at once repayable by Obligors and all sums so advanced or
paid shall become a part of the Lender Indebtedness.

     

    The
Environmental Affiliates will maintain all licenses, permits, approvals and
authorizations required under applicable Environmental
Requirements.  In connection with off-site treatment, storage,
handling, transportation or disposal of Special Materials, the Environmental
Affiliates will conduct such activities only at facilities and with carriers who
operate in compliance with all Environmental Requirements and will obtain
certificates of compliance or disposal from all contractors retained in
connection with such activities.

     

    10.4 Notices

     

    .  In
the event any Obligor becomes aware of any past, present or future facts or
circumstances which have given rise or could give rise to a claim against any
Environmental Affiliate related to a failure to comply with any Environmental
Requirements, such Obligor will promptly give Agent notice thereof, together
with a written statement of an officer of such Obligor setting forth the details
thereof and the action with respect thereto taken or proposed to be taken by the
Environmental Affiliates.

     

    10.5 Indemnity

     

    .  Each
Obligor agrees to indemnify, defend and hold harmless Agent, its parents,
subsidiaries, successors and assigns, and any officer, director, shareholder,
employee, Affiliate or agent of Agent, for all loss, liability, damage, cost and
expenses, including, without limitation, attorney's fees and disbursements
(including the reasonable allocated cost of in-house counsel and staff) arising
from or related to (a) the release of any Special Materials at any facility at
any time owned, leased or operated by any Obligor or any Environmental
Affiliate, (b) the release of any Special Materials treated, stored,
transported, handled, generated or disposed of by or on behalf of any Obligor or
any Environmental Affiliate at any third party owned site, (c) any claim against
any Obligor or any Environmental Affiliate that they have failed to comply with
all Environmental Requirements, and (d) the breach by any Obligor of any
representation or covenant in this Section
10.

     

    10.6 Testing

     

    .  Agent
shall have the right from time to time to designate such persons ("Environmental Consultants")
as Agent may select to visit, inspect, examine and test all properties owned,
leased or operated by and all products and wastes generated, treated, stored,
transported, handled or disposed of by or on behalf of any Environmental
Affiliate, for the purpose of investigating compliance with Environmental
Requirements, any actual or potential claims related thereto, and any condition
which could result in potential liability, cost or expenses to the
Agent.  Each Obligor will permit, and will cause all Environmental
Affiliates to permit, such Environmental

     

    
      
        
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    Consultants
to have access to all of such properties, products and wastes and all books,
records and reports related to compliance by the Environmental Affiliates with
all Environmental Requirements.  Each Obligor will supply, and will
cause all Environmental Affiliates to supply, Agent or the Environmental
Consultants with all information, records, correspondence, audits, reviews and
materials related to compliance by the Environmental Affiliates with all
Environmental Requirements and will make available to Agent or the Environmental
Consultants appropriate personnel employed by or consultants retained by the
Environmental Affiliates having knowledge of such matters.

     

    Provided
that an Event of Default has occurred, or Agent has a good faith belief that any
Environmental Affiliate has failed to comply with any Environmental
Requirements, the cost of such tests, examinations and inspections shall be
borne by Obligors and in the event Agent pays such costs, such sums shall be at
once repayable by Obligors and all sums so advanced or paid by Agent shall
become part of the Lender Indebtedness.  Notwithstanding the
foregoing, the Agent shall have no obligation to perform any tests, examinations
or inspections or to monitor the Environmental Affiliates' compliance with all
Environmental Requirements.

     

    10.7 Survival

     

    .  The
representations and covenants of Obligors contained in this Section
10, including without limitation the indemnification obligation of
Obligors, shall survive the occurrence of any event whatsoever, including the
payment of the Lender Indebtedness or any investigation by or knowledge of
Agent.

     

    11. CONDITIONS OF
CLOSING

     

    .  The
obligation of Lenders to make available the Line and the obligation of Issuing
Bank to issue letters of credit is subject to the performance by Obligors of all
of their agreements to be performed hereunder and to the following further
conditions (any of which may be waived by Agent):

     

    11.1 Loan
Documents

     

    .  Obligors
and all other required persons will have executed and delivered to Agent the
Loan Documents.

     

    11.2 Representations and
Warranties

     

    .  All
representations and warranties of each Obligor set forth in the Loan Documents
will be true at and as of the date hereof.

     

    11.3 No
Default

     

    .  No
condition or event shall exist or have occurred which would constitute a Default
or Event of Default hereunder.

     

    11.4 Proceedings and
Documents

     

    .  All
proceedings taken by each Obligor in connection with the transactions
contemplated by this Agreement and all documents incident to such transactions
shall be satisfactory in form and substance to Agent and Agent's counsel, and
Agent shall have received all documents or other evidence which it reasonably
may request in connection with such proceedings and
transactions.  Each Obligor shall have delivered to Agent a
certificate, in form and substance satisfactory to Agent, dated the date hereof
and signed on behalf of such Obligor or by an officer of such Obligor,
certifying (a) true copies of the articles of incorporation, bylaws, certificate
of formation or organization and operating agreement, as applicable, of such
Obligor in effect on such date, (b) true copies of all corporate or limited
liability company actions, as applicable, taken by such Obligor relative to the
Loan Documents, and (c) the names, true signatures and incumbency of the
officers, managers or members, as applicable, of such Obligor authorized to
execute and deliver this Agreement and the other Loan
Documents.  Agent may conclusively rely on such certificate unless and
until a later certificate revising the prior certificate has been received by
Agent.

     

    
      
        
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    11.5
Waiver Agreements

     

    .  Agent
shall have received a Waiver Agreement, satisfactory in form and substance to
Agent, from each landlord and warehouseman for each location at which any
Obligor maintains books or records, whether in electronic or paper format and
for each other location leased by any Obligor which Agent, in its reasonable
discretion, deems material.

     

    11.6 Delivery of Other
Documents

     

    .  The
following documents shall have been delivered by or on behalf of Obligors to
Agent:

     

    (a) Good
Standing and Tax Lien Certificates.  A good standing
certificate from the state of incorporation of each Obligor certifying to the
good standing and status of such Obligor, good standing/foreign qualification
certificates from all other jurisdictions in which such Obligor is required to
be qualified to do business, and tax lien certificates for such Obligor from
each jurisdiction in which such Obligor is formed or required to be qualified to
do business.

     

    (b) Authorization
Documents.  Evidence of authorization of each Obligor's
execution and full performance of this Agreement, the Loan Documents and all
other documents and actions required hereunder.

     

    (c) Insurance.  Evidence
of the insurance coverage required under Section
7.12.

     

    (d) Opinion
of Counsel.  An
opinion of counsel for Obligors in form and content satisfactory to
Agent.

     

    (e) Lien
Search.  Copies of record searches on each Obligor (including UCC searches and
judgments, suits, tax and other lien searches) acceptable to Agent.

     

    (f) No
Material Adverse Change.  Evidence satisfactory to the Agent
that no material adverse change has occurred with respect to any Obligor since the date of the
most recent financial statements of such Person delivered to Agent.

     

    (g) Licenses
and Approvals.  Copies of all licenses, approvals, consents,
authorizations and filings of each Obligor, required or necessary for the
operation by such Obligor of its business.

     

    (h) Mortgaged
Property Documents.  (i) A title insurance policy insuring
Agent's mortgage lien on the Mortgaged Property in an amount and in form and
content satisfactory to Agent with no restrictions, liens, encumbrances or
exceptions, except as approved by Agent; (ii) copies of all approvals, permits
and authorizations related to ownership and operation of the Mortgaged Property;
and (iii) a satisfactory survey of the Mortgaged Property.

     

    (i) Other
Documents.  Such other documents as may be required to be
submitted to Agent by the terms hereof or of any Loan Document.

     

    11.7 Undrawn
Availability

     

    .  Borrower
shall have Undrawn Availability of at least Fifteen Million Dollars
($15,000,000.00).

     

    11.8 Non-Waiver of
Rights

     

    .  By
completing the closing hereunder, or by making Advances hereunder, Agent does
not thereby waive a breach of any warranty or representation made by any Obligor
hereunder or any agreement, document, or instrument delivered to Agent
or

     

    
      
        
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    otherwise
referred to herein, and any claims and rights of Agent resulting from any breach
or misrepresentation by any Obligor are specifically reserved by
Agent.

     

    12. CERTAIN CONDITIONS TO
SUBSEQUENT ADVANCES

     

    .  Subsequent
Advances shall be conditioned upon the following conditions and each request by
Borrower for an Advance shall constitute a representation by Borrower to Agent
that each condition has been met or satisfied:

     

    12.1 Representations and
Warranties

     

    .  All
representations and warranties of each Obligor contained herein or in
the Loan Documents shall be true at and as of the date of such Advance as if
made on such date, and each request for an Advance shall constitute
reaffirmation by each Obligor that such representations and warranties are then
true.

     

    12.2 No
Default

     

    .  No
condition or event shall exist or have occurred at or as of the date of such
Advance which would constitute a Default or Event of Default
hereunder.

     

    12.3 Other
Requirements

     

    .  Agent
shall have received all certificates, authorizations, affidavits, schedules and
other documents which are provided for hereunder or under the Loan Documents, or
which Agent may reasonably request.

     

    13. DEFAULT
AND REMEDIES.

     

    13.1 Events of
Default

     

    .  The
occurrence of any one or more of the following events shall constitute an Event
or Events of Default hereunder:

     

    (a) The
failure of any Obligor to pay any amount of principal or interest on the Note,
or any fee or other sums payable hereunder, or any other Lender Indebtedness on
the date on which such payment is due, whether on demand, at the stated maturity
or due date thereof, or by reason of any requirement for the prepayment thereof,
by acceleration or otherwise;

     

    (b) The
failure of any Obligor to duly perform or observe any obligation, covenant or
agreement contained in any of Sections
7.4, 7.8, 7.11, 7.14, 7.16, 7.17, 7.20, 7.24, 7.25. 7.26. 7.28. 7.30 or
7.31 and such failure continues unremedied for a period of ten (10) days,
provided that, in the event such failure is incapable of remedy or was willfully
caused or willfully permitted by any Obligor, Obligors shall not be entitled to
any grace period hereunder;

     

    (c) The
failure of any Obligor to duly perform or observe any obligation, covenant or
agreement on its part contained herein not otherwise specifically constituting
an Event of Default under this Section
13.1;

     

    (d) The
failure of any Obligor to pay any Indebtedness for borrowed money due to any
third Person which individually or in the aggregate exceeds One Hundred Thousand
Dollars ($100,000.00), or the existence of any other event of default under any
loan, security agreement, mortgage or other agreement pertaining thereto binding
Obligors, after the expiration of any notice and/or grace periods permitted in
such documents;

     

    (e) The
failure of any Obligor to pay or perform any other obligation to Agent or any
Lender under any other agreement or note or otherwise arising, whether or not
related to this Agreement, after the expiration of any notice and/or grace
periods permitted in such documents;

     

    
      
        
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    (f) The
adjudication of any Obligor as a bankrupt or insolvent, or the entry of an Order
for Relief against any Obligor or the entry of an order appointing a receiver or
trustee for any Obligor or any of its respective property or approving a
petition seeking reorganization or other similar relief under the bankruptcy or
other similar laws of the United States or any state or any other competent
jurisdiction;

     

    (g) A
proceeding under any bankruptcy, reorganization, arrangement of debt,
insolvency, readjustment of debt or receivership law is filed by or against any
Obligor or any Obligor makes an assignment for the benefit of creditors, or any
Obligor takes any action to authorize any of the foregoing;

     

    (h) The
suspension of the operation of any Obligor's present business, any Obligor
becoming unable to meet its debts as they mature or the admission in writing by
any Obligor to such effect, or any Obligor calling any meeting of all or any
material portion of its creditors for the purpose of debt
restructure;

     

    (i) The
indictment or threatened indictment of any Obligor under any criminal statute,
or the commencement or threatened commencement of criminal or civil proceedings
against any Obligor pursuant to which statute or proceedings the penalties or
remedies sought or available include forfeiture of any property of any Obligor,
or any Obligor engages or participates in any "check kiting" activity regardless
of whether a criminal investigation has been commenced.

     

    (j) All or
any part of the Collateral or the assets of any Obligor are attached, seized,
subjected to a writ or distress warrant, or levied upon, or come within the
possession or control of any receiver, trustee, custodian or assignee for the
benefit of creditors;

     

    (k) The entry
of a final judgment for the payment of money against any Obligor which, within
ten (10) days after such entry, shall not have been discharged or execution
thereof stayed pending appeal or shall not have been discharged within five (5)
days after the expiration of any such stay;

     

    (l) Any
representation or warranty of any Obligor in any of the Loan Documents is
discovered to be untrue in any material respect or any statement, certificate or
data furnished by any Obligor pursuant hereto is discovered to be untrue in any
material respect as of the date as of which the facts therein set forth are
stated or certified;

     

    (m) Any
Obligor voluntarily or involuntarily dissolves or is dissolved, terminates or is
terminated;

     

    (n) Any
Obligor is enjoined, restrained, or in any way prevented by the order of any
court or any administrative or regulatory agency, the effect of which order
restricts such Obligor from conducting all any material part of its
business;

     

    (o) A breach
by any Obligor occurs under any material agreement, document or instrument,
whether heretofore, now or hereafter existing between any Obligor and any other
Person;

     

    (p) An event
or condition occurs or fails to occur which has a Material Adverse
Effect;

     

    
      
        
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    (q) The
Collateral or the prospects of the payment of the Lender Indebtedness is
jeopardized or impaired;

     

    (r) Any
material uninsured damage to, or loss, theft, or destruction of, any of the
Collateral occurs;

     

    (s) Any
strike, lockout, labor dispute, embargo, condemnation, act of God or public
enemy, or other casualty loss occurs resulting in the cessation or substantial
curtailment of production or other revenue producing activities at any facility
of any Obligor for more than thirty (30) consecutive days;

     

    (t) The loss,
suspension, revocation or failure to renew any license or permit now held or
hereafter acquired by any Obligor, which loss, suspension, revocation or failure
to renew might have a material adverse effect on the business profits, assets or
financial condition of such Obligor;

     

    (u) Any
change in the ownership of any Guarantor as described on Schedule
6.3, any issuance of equity interests, debentures, warrants or other
securities of any Guarantor or any pledge of the stock or membership interests
of any Guarantor;

     

    (v) Any
projection delivered to Agent pursuant hereto indicates that an Event of Default
will occur;

     

    (w) Any
breach by any Obligor or any creditor of its obligations under any subordination
agreement now or hereafter executed in favor of Agent or any
Lender;

     

    (x) The
occurrence of an Event of Default under any of the other Loan Documents;
or

     

    (y) The
validity or enforceability of this Agreement, or any of the Loan Documents, is
contested by any Obligor or any stockholder or member, as applicable, of any
Obligor, or any Obligor denies that it has any or any further liability or
obligation hereunder or thereunder.

     

    13.2 Remedies

     

    .  At
the option of the Agent, upon the occurrence of an Event of Default, or at any
time thereafter:

     

    (a) The
entire unpaid principal of the Loan, all other Lender Indebtedness, or any part
thereof, all interest accrued thereon, all fees due hereunder and all other
obligations of any Obligor to Agent or Lenders hereunder or under any other
agreement, note or otherwise arising will become immediately due and payable
without any further demand or notice;

     

    (b) The Line
will immediately terminate and Obligors will receive no further extensions of
credit thereunder;

     

    (c) Agent may
increase the interest rate on the Loan to the applicable default rate set forth
herein, without notice;

     

    (d) Agent may
reduce availability for advances under the formula in the Borrowing Base Amount,
reduce the Maximum Line Amount or require additional reserves without
notice;

     

    
      
        
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    (e) Agent may
enter any premises occupied by any Obligor and take possession of the Collateral
and any records relating thereto; and/or

     

    (f) Agent may
exercise each and every right and remedy granted to it under the Loan Documents,
under the Uniform Commercial Code and under any other applicable law or at
equity.

     

    If an
Event of Default occurs under Section
13.1(e) or (f),
all Lender Indebtedness shall become immediately due and payable.

     

    13.3 Sale or Other Disposition of
Collateral

     

    .  The
sale, lease or other disposition of the Collateral, or any part thereof, by
Agent after an Event of Default may be for cash, credit or any combination
thereof, and Agent may purchase all or any part of the Collateral at public or,
if permitted by law, private sale, and in lieu of actual payment of such
purchase price, may set-off the amount of such purchase price against the Lender
Indebtedness then owing.  Any sales of the Collateral may be adjourned
from time to time with or without notice.  The Agent may cause the
Collateral to remain on any Obligor's premises or otherwise or to be removed and
stored at premises owned by other persons, at Obligors' expense, pending sale or
other disposition of the Collateral.  Obligors, at Agent's request,
shall assemble the Collateral consisting of inventory and tangible assets and
make such assets available to Agent at a place to be designated by
Agent.  Agent shall have the right to conduct such sales on any
Obligor's premises, at Obligors' expense, or elsewhere, on such occasion or
occasions as Agent may see fit.  Any notice required to be given by
Agent of a sale, lease or other disposition or other intended action by Agent
with respect to any of the Collateral which is deposited in the United States
mail, postage prepaid and duly addressed to Obligors at the address specified in
Section
14.1 below, at least five (5) business days prior to such proposed
action, shall constitute fair and reasonable notice to Obligors of any such
action.  The net proceeds realized by Agent upon any such sale or
other disposition, after deduction for the expenses of retaking, holding,
storing, transporting, preparing for sale, selling or otherwise disposing of the
Collateral incurred by Agent in connection therewith and all other costs and
expenses related thereto including attorney fees, shall be applied in such order
as Agent, in its sole discretion, elects, toward satisfaction of the Lender
Indebtedness.  Agent shall account to Obligors for any surplus
realized upon such sale or other disposition, and Obligors shall remain liable
for any deficiency.  The commencement of any action, legal or
equitable, or the rendering of any judgment or decree for any deficiency shall
not affect Agent's security interest in the Collateral.  Obligors
agree that Agent has no obligation to preserve rights to the Collateral against
any other parties.  Agent is hereby granted a license or other right
to use, after an Event of Default, without charge, each Obligor's labels,
general intangibles, intellectual property, equipment, real estate, patents,
copyrights, rights of use of any name, trade secrets, trade names, trademarks,
service marks and advertising matter, or any property of a similar nature, as it
pertains to the Collateral, in completing production of, advertising for sale
and selling any inventory or other Collateral and each Obligor's rights under
all contracts, licenses, approvals, permits, leases and franchise agreements
shall inure to Agent's benefit.  Agent shall be under no obligation to
marshal any assets in favor of Obligors or any other party or against or in
payment of any or all of the Lender Indebtedness.

     

    13.4 Actions with Respect to
Accounts

     

    .  Each
Obligor hereby irrevocably makes, constitutes and appoints Agent (and any of
Agent's designated officers, employees or agents) as its true and lawful
attorney-in-fact, with full power of substitution, with power to sign its name
and to take any of the following actions, in its name or the name of Agent, as
Agent may determine, without notice to Obligors and at Obligors'
expense:

     

    
      
        
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    Verify
the validity and amount of or any other matter relating to the Collateral by
mail, telephone, telecopy or otherwise;

     

    (a) Notify
all account debtors that such Obligor's accounts have been assigned to Agent and
that Agent has a security interest therein;

     

    (b) Direct
all account debtors to make payment of all such Obligor's accounts directly to
Agent and forward invoices directly to such account debtors;

     

    (c) Take
control in any manner of any cash or non-cash items of payment or proceeds of
such accounts;

     

    (d) Notify
the United States Postal Service to change the address for delivery of mail
addressed to such Obligor to such address as Agent may designate;

     

    (e) Have
access to any lockbox or postal boxes into which such Obligor's mail is
deposited and receive, open and dispose of all mail addressed to such Obligor
(any sums received pursuant to the exercise of the rights provided in Sections
13.4 (a) through (f) above may, at Agent's option, be deposited in the
cash collateral account provided for herein);

     

    (f) Take
control in any manner of any rejected, returned, stopped in transit or
repossessed goods relating to any accounts;

     

    (g) After the
occurrence of an Event of Default, enforce payment of and collect any accounts,
by legal proceedings or otherwise, and for such purpose Agent may:

     

    (1) Demand
payment of any accounts or direct any account debtors to make payment of
accounts directly to Agent;

     

    (2) Receive
and collect all monies due or to become due to such Obligor;

     

    (3) Exercise
all of such Obligor's rights and remedies with respect to the collection of
accounts;

     

    (4) Settle,
adjust, compromise, extend, renew, discharge or release the
accounts;

     

    (5) Sell or
assign the accounts on such terms, for such amount and at such times as Agent
deems advisable;

     

    (6) Prepare,
file and sign such Obligor's name or names on any Proof of Claim or similar
document in any proceeding filed under federal or state bankruptcy, insolvency,
reorganization or other similar law as to any account debtor;

     

    (7) Prepare,
file and sign such Obligor's name or names on any Notice of Lien, Claim of
Mechanic's Lien, Assignment or Satisfaction of Lien or Mechanic's Lien or
similar document in connection with the Collateral;

     

    (8) Endorse
the name of such Obligor upon any chattel papers, documents, instruments,
invoices, freight bills, bills of lading or similar documents or
agreements

     

    
      
        
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    (9) relating
to the accounts or goods pertaining thereto or upon any checks or other media of
payment or evidences of a security interest that may come into Agent's
possession;

     

    (10) Sign the
name of such Obligor to verifications of accounts and notices thereof sent by
account debtors to such Obligor; or

     

    (11) Take all
other actions necessary or desirable to protect such Obligor's or Agent's
interest in the accounts.

     

    Obligors
ratify and approve all acts of said attorneys and agrees that said attorneys
shall not be liable for any acts of commission or omission, nor for any error of
judgment or mistake of fact or law, except willful misconduct.  This
power, being coupled with an interest, is irrevocable.  Each Obligor
agrees to assist the Agent in the collection and enforcement of its accounts and
not to hinder, delay or impede the Agent in its collection or enforcement of
said accounts.

     

    13.5 Set-Off

     

    .  Without
limiting the rights of Agent or any Lender under applicable law, Agent and each
Lender has and may exercise a right of set-off, a lien against and a security
interest in all property of each Obligor now or at any time in Agent's or any
Lender's possession in any capacity whatsoever, including but not limited to any
balance of any deposit, trust or agency account, or any other bank account with
Agent or any Lender, as security for all Lender Indebtedness.  At any
time and from time to time following the occurrence of an Event of Default, or
an event which with the giving of notice or passage of time or both would
constitute an Event of Default, Agent or any Lender may without notice or
demand, set off and apply any and all deposits (general or special, time or
demand, provisional or final) at any time held and other indebtedness at any
time owing by Agent or such Lender to or for the credit of any Obligor against
any or all of the Lender Indebtedness and the Obligors' obligations under the
Loan Documents.

     

    13.6 Turnover of Property Held by
Agent

     

    .  Each
Obligor irrevocably authorizes any Affiliate of Agent or any Lender, upon and
following the occurrence of an Event of Default, at the request of Agent and
without further notice, to turnover to Agent any property of such Obligor held
by such Affiliate, including without limitation, funds and securities for such
Obligor's account and to debit, for the benefit of Agent and Lenders, any
deposit account maintained by such Obligor with such Affiliate (even if such
deposit account is not then due or there results a loss or reduction of interest
or the imposition of a penalty in accordance with law applicable to the early
withdrawal of time deposits), in the amount requested by Agent up to the amount
of the Lender Indebtedness, and to pay or transfer such amount or property to
Agent for application to the Lender Indebtedness.

     

    13.7 Delay or Omission Not
Waiver

     

    .  Neither
the failure nor any delay on the part of Agent or any Lender to exercise any
right, remedy, power or privilege under the Loan Documents upon the occurrence
of any Event of Default or otherwise shall operate as a waiver thereof or impair
any such right, remedy, power or privilege.  No waiver of any Event of
Default shall affect any later Event of Default or shall impair any rights of
Agent.  No single, partial or full exercise of any rights, remedies,
powers and privileges by the Agent or any Lender shall preclude further or other
exercise thereof.  No course of dealing between Agent or any Lender
and any Obligor shall operate as or be deemed to constitute a waiver of Agent's
or any Lender's rights under the Loan Documents or affect the duties or
obligations of Obligors.

     

    13.8 Remedies Cumulative;
Consents

     

    .  The
rights, remedies, powers and privileges provided for herein shall not be deemed
exclusive, but shall be cumulative and shall be in

     

    
      
        
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    addition
to all other rights, remedies, powers and privileges in Agent's favor at law or
in equity.  Whenever Agent's consent or approval is required, such
consent or approval shall be at the sole and absolute discretion of
Agent.

     

    13.9 Certain Fees, Costs,
Expenses, Expenditures and Indemnification

     

    .  Obligors
agree to pay on demand all costs and expenses of Agent and/or any Lender,
including without limitation:

     

    (a) all costs
and expenses in connection with the preparation, review, negotiation, execution,
delivery and administration of the Loan Documents, and the other documents to be
delivered in connection therewith, or any amendments, extensions and increases
to any of the foregoing (including, without limitation, reasonable attorney's
fees and expenses, and the cost of appraisals and reappraisals of Collateral),
and the cost of periodic lien searches and tax clearance certificates, as Agent
or any Lender deems advisable;

     

    (b) all
losses, costs and expenses in connection with the enforcement, protection and
preservation of the Agent's and Lender's rights or remedies under the Loan
Documents, or any other agreement relating to any Lender Indebtedness, or in
connection with legal advice relating to the rights or responsibilities of Agent
and Lenders (including without limitation court costs, reasonable attorney's
fees and expenses of accountants and appraisers); and

     

    (c) any and
all stamp and other taxes payable or determined to be payable in connection with
the execution and delivery of the Loan Documents, and all liabilities to which
Agent or any Lender may become subject as the result of delay in paying or
omission to pay such taxes.

     

    In the
event any Obligor shall fail to pay taxes, insurance, assessments, costs or
expenses which it is required to pay hereunder, or fails to keep the Collateral
free from security interests or liens (except as expressly permitted herein), or
fails to maintain or repair the Collateral as required hereby, or otherwise
breaches any obligations under the Loan Documents, Agent in its discretion, may
make expenditures for such purposes and the amount so expended (including
reasonable attorney's fees and expenses, filing fees and other charges) shall be
payable by Obligors on demand and shall constitute part of the Lender
Indebtedness.

     

    Obligors
agrees to indemnify and hold harmless, Agent, Lenders and Agent's and Lenders'
officers, directors, shareholders, employees and agents, from and against any
and all claims, liabilities, losses, damages, costs and expenses (whether or not
such Person is a party to any litigation), including reasonable attorney's fees
and costs and costs of investigation, document production, attendance at
depositions or other discovery with respect to or arising out of this Agreement
or any of the other Loan Documents, the use of any proceeds advanced hereunder,
the transactions contemplated hereunder, or any claim, demand, action or cause
of action being asserted against any Obligor or any of its
Affiliates.

     

    With
respect to any amount required to be paid by Obligors under this Section, in the
event Obligor fails to pay such amount on demand, Obligors shall also pay to
Agent interest thereon at the highest Default Rate set forth
herein.

     

    Obligors'
obligations under this Section shall survive termination of this Agreement and
repayment of the Lender Indebtedness.

     

    
      
        
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        13.10 Time is of the Essence

     

    .  Time is
of the essence in Obligors' performance of its obligations under the Loan
Documents.

     

    13.11 Acknowledgement of
Confession of Judgment Provisions

     

    .  EACH
OBLIGOR ACKNOWLEDGES AND AGREES THAT THE NOTE AND THE LOAN DOCUMENTS CONTAIN
PROVISIONS WHEREBY AGENT MAY ENTER JUDGMENT BY CONFESSION AGAINST SUCH OBLIGOR.
BEING FULLY AWARE OF ITS RIGHTS TO PRIOR NOTICE AND HEARING ON THE QUESTION OF
THE VALIDITY OF ANY CLAIMS THAT MAY BE ASSERTED AGAINST IT BY AGENT UNDER THE
NOTE AND LOAN DOCUMENTS BEFORE JUDGMENT CAN BE ENTERED, EACH OBLIGOR HEREBY
WAIVES THESE RIGHTS AND AGREES AND CONSENTS TO AGENT ENTERING JUDGMENT AGAINST
OBLIGOR BY CONFESSION.  ANY PROVISION IN A CONFESSION OF JUDGMENT IN
ANY OF THE LOAN DOCUMENTS FOR AN ATTORNEY'S COLLECTION COMMISSION SHALL IN NO
WAY LIMIT OBLIGORS' LIABILITY TO REIMBURSE AGENT FOR ALL LEGAL FEES ACTUALLY
INCURRED BY AGENT, EVEN IF SUCH FEES ARE IN EXCESS OF THE ATTORNEY'S COLLECTION
COMMISSION PROVIDED FOR IN SUCH CONFESSION OF JUDGMENT.

     

    14. COMMUNICATIONS
AND NOTICES.

     

    14.1 Communications and
Notices

     

    .  All
notices, requests and other communications made or given in connection with the
Loan Documents shall be in writing and, unless receipt is stated herein to be
required, shall be deemed to have been validly given if delivered personally to
the individual or division or department to whose attention notices to a party
are to be addressed, or by private carrier, or registered or certified mail,
return receipt requested, or by telecopy with the original forwarded by
first-class mail, in all cases, with charges prepaid, addressed as follows,
until some other address (or individual or division or department for attention)
shall have been designated by notice given by one party to the
other:

     

    To
Obligors:

     

    c/o
Hooper Holmes, Inc.

    170 Mt.
Airy Road

    Basking
Ridge, NJ   07920

    Attention:  Michael
Shea, Chief Financial Officer

    Telecopy
Number:  (908) 953-6304

    

    and

    

    Hooper
Holmes, Inc.

    170 Mt.
Airy Road

    Basking
Ridge, NJ   07920

    Attention:  Mark
C. Rosenblum, Senior Vice Present and General Counsel

    Telecopy
Number:  (908) 953-6304

    

    With a
copy to:

     

    Schenck,
Price, Smith & King

    10
Washington Street

    Morristown,
NJ   07963-0905

    
      
        
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    Attention:
Edward W. Ahart, Esquire

    Telecopy
Number:  (973) 540-7300

    

     

    To
Agent:

     

    
      	
               
      

            	
              TD
      Bank, N.A

            

    

    
      	
               
      

            	
              2005
      Market Street - 2nd
      Floor

            

    

    Philadelphia,
PA   19103

    
      	
               
      

            	
              Attention:  William
      H. Moul, Jr., Vice President

            

    

    Telecopy
Number:  (215) 282-4033

    

    With a
copy to:

    

    
      	
               
      

            	
              WolfBlock
      LLP

            

    

     

    
      	
               
      

            	
              1650
      Arch Street, 22nd Floor

            

    

     

    
      	
               
      

            	
              Philadelphia,
      PA  19103-2087

            

    

     

    
      	
               
      

            	
              Attention:
      Elizabeth A. Grzywacz, Esquire

            

    

     

    
      	
               
      

            	
              Telecopy
      Number:  (215) 405-3906

            

    

     

    15. WAIVERS.

     

    15.1 Waivers

     

    .  In
connection with any proceedings under the Loan Documents, including without
limitation any action by Agent or any Lender in replevin, foreclosure or other
court process or in connection with any other action related to the Loan
Documents or the transactions contemplated hereunder, each Obligor
waives:

     

    (a) all
errors, defects and imperfections in such proceedings;

     

    (b) all
benefits under any present or future laws exempting any property, real or
personal, or any part of any proceeds thereof from attachment, levy or sale
under execution, or providing for any stay of execution to be issued on any
judgment recovered under any of the Loan Documents or in any replevin or
foreclosure proceeding, or otherwise providing for any valuation, appraisal or
exemption;

     

    (c) presentment
for payment, demand, notice of demand, notice of non-payment, protest and notice
of protest of any of the Loan Documents, including the Note;

     

    (d) any
requirement for bonds, security or sureties required by statute, court rule or
otherwise;

     

    (e) any
demand for possession of Collateral prior to commencement of any suit;
and

     

    (f) all
rights to claim or recover attorney's fees and costs in the event that any
Obligor is successful in any action to remove, suspend or prevent the
enforcement of a judgment entered by confession.

     

    15.2 Forbearance

     

    .  Agent
may release, compromise, forbear with respect to, waive, suspend, extend or
renew any of the terms of the Loan Documents, without notice to any

     

    
      
        
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    Obligor.

     

    15.3 Limitation on
Liability

     

    .  Each
Obligor shall be responsible for and Agent and Lenders are hereby released from
any claim or liability in connection with:

     

    (a) Safekeeping
any Collateral;

     

    (b) Any loss
or damage to any Collateral;

     

    (c) Any
diminution in value of the Collateral; or

     

    (d) Any act
or default of another Person.

     

    Agent and
Lenders shall only be liable for any act or omission on its part constituting
willful misconduct or gross negligence.  In the event that Agent or
any Lender breaches its required standard of conduct, each Obligor agrees that
Agent's and each Lender's liability shall be only for direct damages suffered
and shall not extend to consequential or incidental damages.  In the
event any Obligor brings suit against Agent or any Lender in connection with the
transactions contemplated hereunder and Agent or any Lender is found not to be
liable, each Obligor will indemnify and hold Agent harmless from all costs and
expenses, including attorney's fees, incurred by Agent or such Lender in
connection with such suit.  This Agreement is not intended to obligate
Agent to take any action with respect to the Collateral or to incur expenses or
perform any obligation or duty of any Obligor.

     

    16. SUBMISSION
TO JURISDICTION.

     

    16.1 Submission to
Jurisdiction

     

    .  Each
Obligor hereby consents to the exclusive jurisdiction of any state or federal
court located within the State of New Jersey, and irrevocably agrees that,
subject to the Agent's election, all actions or proceedings relating to the Loan
Documents or the transactions contemplated hereunder shall be litigated in such
courts, and each Obligor waives any objection which it may have based on lack of
personal jurisdiction, improper venue or forum non conveniens
to the conduct of any proceeding in any such court and waives personal service
of any and all process upon it, and consents that all such service of process be
made by mail or messenger directed to it at the address set forth in Section
14.1.  Nothing contained in this Section
16.1 shall affect the right of Agent or any Lender to serve legal process
in any other manner permitted by law or affect the right of Agent or any Lender
to bring any action or proceeding against Obligor or its property in the courts
of any other jurisdiction.

     

    17. USA
Patriot Act Provisions.

     

    17.1 USA Patriot Act
Notice

     

    .  Agent
hereby notifies the Obligors that pursuant to the requirements of the USA
Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001))
(the "Patriot Act"), it
is required to obtain, verify and record information that identifies the
Obligors, which information includes the names and addresses of the Obligors and
other information that will allow Agent to identify the Obligors in accordance
with the Patriot Act.

     

    17.2 Collateral
Provisions.

     

    (a) Without
in any way limiting the generality of Section
5 hereof, no
(i) account, instrument, chattel paper or other obligation or property of any
kind due from, owed by, or

     

    
      
        
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    (b) belonging
to, a Sanctioned Person or (ii) lease in which the lessee is a Sanctioned
Person, shall be Collateral.

     

    (c) Agent may
reject or refuse to accept any Collateral for credit toward payment of the
Lender Indebtedness that is an account, instrument, chattel paper, lease, or
other obligation or property of any kind due from, owed by, or belonging to, a
Sanctioned Person.

     

    17.3 OFAC
Compliance

     

    .  None
of any Obligor, any Subsidiary of any Obligor or any affiliate of any Obligor
(a) is a Sanctioned Person, (b) has more than 15% of its assets in Sanctioned
Countries, or (c) derives more than 15% of its operating income from investments
in, or transactions with Sanctioned Persons or Sanctioned
Countries.  The proceeds of the Loan will not be used and have not
been used to fund any operations in, finance any investments or activities in or
make any payments to, a Sanctioned Person or a Sanctioned Country.

     

    18. SETTLEMENT AMONG
LENDERS.

     

    18.1 Between Settlement
Dates

     

    .

     

    (a) Agent
shall have the discretion to request that Issuing Bank issue all letters of
credit and that TD make all cash Advances under the Line, for the account and on
behalf of the Lenders, and TD or Issuing Bank may, in their sole discretion,
cause such issuance and/or make such advances.  Unless Agent receives
written notice from a Lender prior to the date on which any Advance is to be
made under this Agreement that such Lender will not make available to Agent such
Lender's Pro Rata Share of any such Advance, Agent may assume that each Lender
will make such amounts available to Agent in immediately available funds in
accordance with the terms of this Agreement and, in reliance thereon, Agent may
cause such Advance to be made to Borrower.

     

    (b) Borrower
acknowledges and agrees that the provisions of this Section
18 are solely for the benefit of Agent, Lenders and Issuing Bank and
nothing in this Section
18 shall be deemed an obligation, agreement or commitment by Agent,
Issuing Bank or any Lender to make any advances or extensions of credit to
Borrowers after the occurrence and during the continuance of any Default or
Event of Default.

     

    18.2 Settlement
Date

     

    .  Agent
shall make a determination of each Lender's Pro Rata Share of the Line (by
applying each Lender's Pro Rata Percentage to the total outstanding advances
thereunder) periodically but not less frequently than once every week on the
same day of each week, unless such day is not a Business Day, in which event
such determination shall be made the next Business Day (each a "Settlement
Date"), which
outstanding amount shall be calculated as of the close  of the
Business Day immediately preceding each respective Settlement Date.  A
Settlement Date shall occur notwithstanding any intervening Event of Default or
other occurrence, event or circumstance, including without limitation the
commencement of a bankruptcy or reorganization proceeding.  Amounts of
principal paid to Agent by Borrower from time to time shall, between Settlement
Dates, be applied first to TD's Pro Rata Share of Advances, each as of the close
of the Business Day preceding such Settlement Date.  Each settlement
schedule shall show the amount, if any, due from each Lender to Agent (for its
own account or on behalf of TD) or from Agent to each Lender, which amount shall
be paid by federal funds, via wire transfer to the party entitled thereto to be
received on or before (a) 3:00 P.M. Philadelphia time on the Settlement Date,
provided such settlement schedule has been delivered prior to 2:00 P.M.
Philadelphia time on the Settlement Date, or (b) 11:00 A.M. on the next Business
Day, if such settlement schedule has been delivered after 2:00 P.M. Philadelphia
time on the Settlement Date.  The obligations of Lenders

     

    
      
        
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    under
this Section
18.2 are unconditional, not subject to setoff, and irrevocable and may
not be terminated at any time.

     

    18.3 Remittance to
Agent

     

    .  Each
Lender is absolutely and unconditionally obligated, without setoff or deduction
of any kind, to remit to Agent on each Settlement Date any amount showing to be
owing to Agent by such Lender on the settlement schedule for such
date.  Agent shall also be entitled to recover any and all actual
losses and damages either may incur (including without limitation, reasonable
attorneys' fees) from any Lender failing to remit payment on the Settlement Date
in accordance with this Agreement.  Agent may set off the obligations
of any Lender under this paragraph against any distributions or payments of the
Lender Indebtedness to which such Lender would otherwise be entitled at any
time, or Agent may withhold such distributions or payments of such Lender
Indebtedness to which such Lender would otherwise be entitled and make such
distributions or payments to TD in an amount equal to, and as a repayment of,
such Lender's Pro Rata Percentage of the advance made by TD on such Lender's
behalf.

     

    18.4 Alternate
Procedures

     

    .  Agent
may, in its discretion, provide the Lenders with notice that Borrower has
requested a cash Advance under the Line on the same Business Day as such
request, and request each Lender to provide Agent with such Lender's Pro Rata
Percentage of such requested cash Advance prior to Agent's making such cash
Advance.  Upon receipt of such notice from Agent prior to 2:00 P.M.,
Philadelphia time, on the date the cash Advance is requested, each Lender shall
remit to Agent such Lender's respective Pro Rata Percentage of such requested
cash Advance, prior to 3:00 P.M. Philadelphia time on the Business Day Agent is
scheduled to make such cash Advance.  Except as expressly provided
herein, neither Agent nor any other Lender shall be obligated, for any reason
whatsoever, to remit the share of any other Lender.  Agent shall not
be required to make the full amount of the requested cash Advance unless and
until it receives funds representing each other Lender's Pro Rata Percentage of
such requested cash Advance, but Agent shall remit to Borrower that portion of
the requested cash Advance equal to the Pro Rata Percentage as applicable, of
such requested cash Advance which it has received from the Lenders.

     

    18.5 Failure to
Advance

     

    .  If
Agent does not receive each other Lender's Pro Rata Percentage of such requested
cash advance and (a) Borrower requests that Agent fund such Lender's Pro Rata
Percentage of such cash advance or (b) Agent otherwise elects, in its sole
discretion, without any obligation at any time to any Lender to do so, to make
the requested cash advance on behalf of such Lenders or any of them, Agent shall
be entitled to receive each Lender's Pro Rata Percentage of each cash advance,
together with interest at a per annum rate equal to the applicable interest rate
set forth herein for the applicable Loan for such advance, during the period
commencing on the date such cash advance is made and ending on (but excluding)
the date Agent recovers such amount.  Each Lender is absolutely and
unconditionally obligated, without deduction or setoff of any kind, to forward
to Agent its Pro Rata Percentage of each cash advance made pursuant to the terms
of this Agreement.  Agent shall also be entitled to recover any and
all actual losses and damages (including, without limitation, reasonable
attorneys' fees) from any Lender failing to remit upon demand of
Agent.  Agent may set off the obligations of a Lender under this
paragraph against any distributions or payments of the Obligations which Agent
would otherwise make available to such Lender at any
time.  Notwithstanding the foregoing, Agent shall have no duty or
obligation at any time for any reason to make any advance on behalf of any
Lender.

     

    18.6 Defaulting
Lender

     

    .  To
the extent and during the time period in which any Lender fails to provide or
delays providing its respective payment to Agent pursuant to the terms of this
Agreement (any such Lender being referred to, during such period, as a "Defaulting
Lender"), such
Lender's percentage of all payments of the Lender Indebtedness (but not its Pro
Rata Percentage

     

    
      
        
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    of future
advances required to be funded by such Lender) shall decrease to reflect the
actual percentage which its actual outstanding advances under the Loans bears to
the total outstanding advances under the Loans of all Lenders.  In
addition, notwithstanding any definition or other provision of this Agreement to
the contrary, during any period in which a Lender is a Defaulting Lender, all
calculations for voting purposes among the Lenders shall be made as if the
Defaulting Lender were not a Lender or a Required Lender and not a party to this
Agreement.

     

    19. AGENT.

     

    19.1 Appointment of
Agent

     

    .  Each
Lender hereby designates Agent to act as Agent for such Lender under this
Agreement and the Loan Documents.  Each Lender hereby irrevocably
authorizes, and each holder of a Note by the acceptance of such Note shall be
deemed irrevocably to authorize, Agent to take such action on its behalf under
the provisions of this Agreement, the Loan Documents and any other instruments
and agreements referred to herein or therein and to exercise such powers and to
perform such duties hereunder and thereunder as are specifically delegated to or
required of Agent by the terms hereof and thereof and such other powers as are
reasonably incidental thereto.  Except as expressly set forth in this
Agreement to the contrary, Obligors are authorized by Lenders to deal solely
with Agent in all matters which affect Lenders under this Agreement and the
other Loan Documents.

     

    19.2 Holding of Collateral and
Collections

     

    .  Except
as otherwise permitted under this Agreement, Agent shall hold all Collateral,
payments of principal and interest, fees, costs, expenses and collections
received pursuant to this Agreement or the other Loan Documents, for the pro
rata benefit of the Lenders in accordance with their respective Pro Rata
Percentages.  To the extent any other Lender from time to time holds
any Collateral, it shall hold such Collateral for the pro rata benefit of all
Lenders in accordance with their respective Pro Rata Percentages.

     

    19.3 Fees

     

    .  Any sharing among
Agent and Lenders of fees payable under this Agreement shall be addressed in a
separate agreement among Agent and Lenders.

     

    19.4 Collections and
Disbursements

     

    .

     

    (a) The Agent
will have the right to collect and receive all payments of the Lender
Indebtedness, and to collect and receive all reimbursements for draws made under
the letters of credit issued under this Agreement together with all fees,
charges or other amounts due to Agent and/or Lenders under this Agreement and
the other Loan Documents.  If Agent should for any reason receive less
than the full amount of the interest or other compensation due under the Loan
Documents, each Lender's share of such interest or compensation shall decrease
in proportion to each Lender's Pro Rata Percentage.

     

    (b) If any
such payment received by the Agent is rescinded, determined to be unenforceable
or invalid or is otherwise required to be returned for any reason at any time,
whether before or after termination of this Agreement and the other Loan
Documents, each Lender will, upon written notice from the Agent, promptly pay
over to the Agent its Pro Rata Percentage of the amount rescinded, held
unenforceable or invalid or required to be returned, together with interest and
other fees thereon if also required to be rescinded or returned. If Agent does
not receive such sums from any Lender within one (1) Business Day after receipt
by such Lender of the written notice from Agent referred to above, Agent shall
also be entitled to receive from such Lender interest on such amount at a per
annum rate equal to the Prime Based Rate during the period commencing on the
date of receipt by such Lender of such written notice from Agent and ending on
(but excluding) the

     

    
      
        
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    (c) date
Agent recovers such amount.

     

    (d) All
payments by the Agent and the Lenders to each other hereunder or under the Loan
Documents shall be in immediately available funds.  The Agent will at
all times maintain proper books of account and records reflecting the interest
of each Lender in the Lender Indebtedness, in a manner customary to the Agent's
keeping of such records, which books and records shall be available for
inspection by each Lender at reasonable times during normal business hours, at
such Lender's sole expense.

     

    (e) The
proceeds from the sale or disposition of any Collateral and all other payments
received by Agent shall be applied, first to reasonable expenses incurred by
Agent as provided in Section
19.16, below, then to all sums due Issuing Bank in connection with the
issuance of any Letters of Credit, then to accrued but unpaid fees in accordance
with each Lender's Pro Rata Percentage (to the extent Lenders share in such
fees),  then to accrued but unpaid interest on the Lender Indebtedness
in accordance with each Lender's Pro Rata Percentage, then to the principal
balance of the Lender Indebtedness in accordance with each Lender's Pro Rata
Percentage and then to expenses, if any, incurred by Lenders (to the extent
subject to reimbursement by Obligors under the Loan Documents) in accordance
with their Pro Rata Percentages.

     

    (f) To the
extent necessary for each Lender's actual percentage of all outstanding Advances
to equal its applicable Pro Rata Percentage, the Lender which obtains a greater
share of any payments (by set off or otherwise) than its applicable Pro Rata
Percentage shall acquire a participation in the applicable outstanding balances
of the Pro Rata Shares of the Lenders as determined by Agent in order that such
Lender's percentage of outstanding Advances is equal to its Pro Rata
Percentage.

     

    19.5 Delegation of Duties;
Discretion; Instructions

     

    .  Agent
may perform any of its duties hereunder or under the Loan Documents by or
through its agents or employees.  As to any matters not expressly
provided for by the Loan Documents or this Agreement, the Agent may exercise its
discretion to take or refrain from taking any action.  If Agent is
required to act or to refrain from acting under the terms of this Agreement upon
the instructions of all Lenders or Required Lenders, as applicable, it shall be
fully protected in so acting or refraining from acting upon the required
instructions.  Notwithstanding the foregoing, Agent shall not be
required to take any action which exposes Agent to liability or which is
contrary to any of the Loan Documents or applicable law.  Agent may
require that it be furnished with an indemnification from each Lender for such
Lender's Pro Rata Percentage of such liability, in form reasonably satisfactory
to Agent as a condition of Agent acting or refraining from acting upon the
instructions of all Lenders or Required Lenders.  If Agent is one of
the Lenders, an indemnification from Agent to itself will not be
required.

     

    19.6 Nature of
Duties

     

    .  Agent
shall have no duties or responsibilities except those expressly set forth in
this Agreement and the Loan Documents.  Neither Agent nor any of its
officers, directors, employees or agents shall be (a) liable for any action
taken or omitted by them as such hereunder or in connection herewith, unless
caused by their gross negligence or willful misconduct, or (b) responsible in
any manner to any Lender for any recitals, statements, representations or
warranties made by the Obligors or any officer thereof contained in any of the
Loan Documents or in any certificate, report, statement or other documents
referred to or provided for in, or received by Agent or any Lender under or in
connection with, this Agreement or any of the Loan Documents or for the value,
validity, effectiveness, genuineness, enforceability or sufficiency of this
Agreement, the Collateral or any of the Loan Documents or for any failure of the
Obligors to perform their obligations under the Loan Documents or for the
financial condition of any Obligor.  Any liability of

     

    
      
        
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    the Agent
to the Lenders hereunder or under any of the Loan Documents shall be limited
only to direct loss or liability suffered by such Lender and shall not be for
indirect, consequential or incidental liability.  Agent shall not be
under any obligation to any Lender to ascertain or to inquire  as to
the observance or performance of any of the agreements contained in, or
conditions of, this Agreement or any of the Loan Documents, or to inspect the
properties, books or records of the Obligors.  Except as expressly
provided herein and in the Loan Documents, the duties of the Agent shall be
mechanical and administrative in nature.  Agent shall not have, by
reason of this Agreement, a fiduciary relationship in respect of any
Lender.  Nothing in this Agreement, expressed or implied, is intended
to or shall be so construed as to impose upon Agent any obligation in respect of
this Agreement, except as expressly set forth herein and in the Loan
Documents.

     

    19.7 Lack of Reliance on the
Agent

     

    .  Independently
and without reliance upon Agent or any other Lender, each Lender has made and
shall continue to make (a) its own independent investigation of the financial
condition and affairs of the Obligors in connection with the extension of credit
to the Obligors and the continuance of such credit facilities and the taking or
not taking of any action in connection herewith, and (b) its own appraisal of
the credit worthiness of Obligors.  Agent shall have no duty or
responsibility either initially or on a continuing basis, to provide Lenders
with any credit or other information with respect thereto, coming into its
possession.  Lenders acknowledge and agree that Agent has not made any
representations or warranties to any Lender regarding the financial conditions,
affairs or creditworthiness of Obligors.

     

    19.8 Resignation

     

    .  Agent
may resign on thirty (30) days' prior written notice to each of the
Lenders.  Upon any resignation of Agent, the Required Lenders shall
have the right to appoint a successor Agent.  Upon the acceptance of
the appointment as a successor Agent, such successor Agent shall succeed to and
become vested with all rights, powers, obligations and duties of the resigning
Agent and the resigning Agent shall be discharged from all of its obligations
hereunder, provided that such resigning Agent shall execute such UCC assignment
statements and other documents and take such other actions as are reasonably
requested by Lenders in connection with the appointment of a successor
Agent.

     

    19.9 Certain Rights of
Agent

     

    .  If
Agent shall request instructions from the Lenders with respect to any act or
action (including failure to act) in connection with the Loan Documents, Agent
shall be entitled to refrain from such act or taking such action unless and
until Agent shall have received instructions from all Lenders or the Required
Lenders, as applicable.  Agent shall not incur liability to any Person
by reason of so refraining.  Without limiting the foregoing, no Lender
shall have any right of action whatsoever against Agent as a result of Agent
acting in accordance with the written instructions of all Lenders or the
Required Lenders, as applicable.  All requests for instructions by
Agent and all responses by the Lenders to such requests must be in writing,
which writing may include a telecopied transmission.

     

    19.10 Reliance

     

    .  Agent
shall be entitled to rely, and shall be fully protected in relying, upon any
notice, writing, resolution, statement, certificate, telex, teletype or
telecopier message, cablegram, order or other document believed by it to be
genuine and correct and to have been signed, sent or made by the proper person
or entity, and, with respect to all legal matters pertaining to this Agreement,
the Loan Documents and its duties hereunder and thereunder, upon the advice of
counsel selected by it.  Agent may employ agents and attorneys-in-fact
and shall not be liable for the default or misconduct of any such agents or
attorneys-in-fact selected by Agent with reasonable care.

     

    19.11 Notice of
Default

     

    .  Agent
shall not be deemed to have knowledge or notice of

     

    
      
        
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    the
occurrence of any Event of Default under the Loan Documents unless Agent has
received written notice from a Lender or Obligors referring to the Loan
Documents, describing such Event of Default and stating that such notice is a
"notice of default".  In the event that any Lender shall have "actual
knowledge" of the occurrence of any Event of Default, such Lender shall promptly
notify Agent in writing.  Upon such notice of the occurrence of an
Event of Default, Agent shall promptly give notice thereof to the
Lenders.  For purposes hereof, a Lender shall be deemed to have
"actual knowledge" if any such information is known to an officer of such Lender
responsible for the credit facilities contemplated hereunder.

     

    19.12 The Agent in its Capacity as
Lender

     

    .  With
respect to the advances and credit accommodations made by TD to Borrower under
the Loan Documents, TD shall have the same rights and powers hereunder as any
other Lender as if it were not performing the duties as Agent specified herein;
and the term "Lender" or any similar terms shall, unless the context clearly
otherwise indicates, include  TD in its individual capacity as a
Lender.

     

    19.13 Other
Loans

     

    .  Agent
may engage in other business with any Obligor as if it were not performing the
duties specified herein, and may accept fees and other consideration from any
Obligor for services in connection therewith without having to account for the
same to the Lenders.  In the event that any Lender obtains collateral
(other than the Collateral described in this Agreement) to secure any other loan
or credit accommodation extended by such Lender to any Obligor and such other
collateral also secures any of the Lender Indebtedness, such Lender may apply
the proceeds of such other collateral towards payment of all other obligations
of such Obligor to such Lender before applying any proceeds thereof to any
Lender Indebtedness for the pro rata benefit of the
Lenders.  Notwithstanding the foregoing, any items or funds against
which a Lender or Lender Affiliate exercises a right of set-off or turnover
under Sections
13.5 and 13.6 of this Agreement shall be applied toward the Lender
Indebtedness.  In the event that any Lender extends credit
accommodations to any Obligor other than in connection with the transactions
contemplated in this Agreement, and such credit accommodations are secured by
the Collateral, such Lender agrees that all proceeds of the Collateral shall be
used first to pay all Lender Indebtedness incurred in connection with the
transaction contemplated in this Agreement.

     

    19.14 Disclosure of Information;
Audits

     

    .  Each
Lender, at the request of another Lender, will share with such other Lender such
financial and other information in the possession of the Lender regarding the
Obligors as may be reasonably requested by another Lender.  Obligors
consent to the disclosure of all of such information.  To the extent
any Lender performs an audit of the financial condition and operations of any
Obligor or the Collateral, such Lender shall make the results of such audit
available to the other Lenders.  Notwithstanding the foregoing, no
Lender shall have any liability to the other Lenders related to the audit
performed by such Lender except for errors in connection with such audit which
constitute gross negligence or willful misconduct by the Lender or Lender's
agent performing such audit.

     

    19.15 Actions by Agent;
Amendments; Waivers

     

    .

     

    (a) Subject
to the other provisions of Section
19 of this Agreement, Agent shall have the sole and exclusive right and
obligation to service and administer the Lender Indebtedness, the Collateral and
the Loan Documents, including, without limitation, the right to exercise all
rights, remedies, privileges and options under the Loan Documents, including,
without limitation, the right to determine whether advances are to be made
hereunder and whether any letters of credit should be issued, amended, extended
or reinstated or whether draws should be honored thereunder.

     

    
      
        
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    (b) Notwithstanding
the provisions of Section
19.15(a) above, Agent shall not enter into any waiver, amendment,
supplement, replacement or extension of this Agreement, any of the other Loan
Documents or any of the terms or conditions thereof without the prior written
consent of Required Lenders, except with respect to any waiver, amendment,
supplement, replacement or extension which would do any of the following, in
which case the prior written consent of all Lenders shall be
required:

     

    (1) change
the maximum amount available under the Loan, decrease the interest rates
provided in this Agreement or extend the Contract Period;

     

    (2) amend or
modify the definition of "Borrowing Base Amount";

     

    (3) amend,
alter or modify this Section
19.15;

     

    (4) decrease
the amount or extend the payment terms of any sums due under the Loan or any
fees required to be paid by Obligors hereunder or under this Agreement (except
fees payable solely to Agent or its Affiliates);

     

    (5) release
any Obligor from its obligations with respect to all Lender Indebtedness except
in connection with the termination of this Agreement and repayment of all Lender
Indebtedness;

     

    (6) release
or subordinate the Agent's security interest for the pro rata benefit of the
Lenders in any portion of the Collateral without payment to Lenders in
accordance with their Pro Rata Percentage of sums received by Agent from
Obligors in connection with such release or subordination, except for releases
in connection with transactions by Obligors permitted in this Agreement;
or

     

    (7) change
the definition of Required Lenders.

     

    (c) Any
action taken in accordance with the terms of this Section
19.15, including any amendment, supplement, waiver, consent or election,
shall apply equally to each of the Lenders and shall be binding upon the
Lenders, the Agent and all participants.  In the case of any waiver of
any Event of Default, the Event of Default waived shall be deemed to be cured
and not continuing, but no waiver of a specific Event of Default shall extend to
any subsequent Event of Default (whether or not the subsequent Event of Default
is the same as the Event of Default which was waived), or impair any right
consequent thereon.

     

    (d) After the
occurrence of an Event of Default, Agent shall take such action as may be
directed by the Required Lenders, provided that until it receives such
direction, Agent shall have the sole and exclusive right, with communication (to
the extent reasonably practicable under the circumstances) with all Lenders, to
exercise or refrain from exercising any and all rights, remedies, privileges and
options under the Loan Documents and available at law or in equity as Agent
shall deem advisable in the best interest of the Lenders to protect and enforce
the rights of the Agent and the Lenders and collect the Lender Indebtedness,
including, without limitation, instituting and pursuing all legal actions
against Obligors, or defending any and all actions brought by any Lender or
other Person, or incurring expenses or otherwise making expenditures to protect
the Lender Indebtedness, the Collateral or the Agent's and the Lenders' rights
and remedies.

     

    (e) To the
extent Agent is required to obtain or otherwise elects to seek

     

    
      
        
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        58

        
          

        

      

      
         

      

    

    (f) the
consent of Lenders to an action Agent desires to take, if any Lender fails to
notify Agent, in writing, of its consent or dissent to any request of Agent
hereunder within five (5) Business Days of such Lender's receipt of such written
request (which may include a telecopied transmission), such Lender shall be
deemed to have given its consent thereto, unless such Lender has given the Agent
written notice (which may include a telecopied transmission) within such five
(5) Business Day period requesting an additional five (5) Business Days to
respond.  If such Lender then fails to consent or dissent within the
additional five (5) Business Day period, such Lender shall be deemed to have
given its consent thereto.

     

    19.16 Sharing of Risk;
Indemnification; Expenses

     

    .

     

    (a) To the
extent Agent is not reimbursed by Obligors, the Lenders will reimburse and
indemnify the Agent in proportion to their respective Pro Rata Percentages, for
and against any and all liabilities, obligations, losses (except the failure of
the Agent to receive the fees which are to be retained by Agent in full),
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind or nature whatsoever, including, without limitation, attorneys'
fees, which may be imposed on, incurred by or asserted against Agent in
performing its duties hereunder or under the Loan Documents, or in any way
relating to or arising out of this Agreement or the Loan Documents.

     

    (b) All
reasonable out-of-pocket costs and expenses incurred by Agent and not reimbursed
on demand by Obligors, in connection with the creation, amendment,
administration, termination and enforcement of the Lender Indebtedness and/or
the exercise of the Agent's rights and duties hereunder or under the Loan
Documents (including, without limitation, audit expenses, counsel fees and
expenditures to protect, preserve and defend Agent's and each Lender's rights
and interest under the Loan Documents) shall be shared and paid on demand by
Lenders, pro rata based on their respective Pro Rata Percentages.  Any
such sums not paid on demand shall accrue interest at the Prime Based Rate until
paid.

     

    (c) Agent may
deduct from payments or distributions to be made to Lenders such funds as may be
necessary to pay or reimburse Agent for the reimbursement, indemnification and
expense obligations of the Lenders described in this Section
19.16.

     

    (d) In
connection with reimbursement, indemnification and expense obligations set forth
in this Section
19.16, Agent shall provide a reasonable accounting to Lenders describing
such expenses or indemnification obligations.

     

    19.17 Consultation with
Counsel

     

    .  The
Agent may consult with legal counsel and any other professional advisors or
consultants deemed necessary or appropriate and selected by Agent and shall not
be liable for any action taken or suffered in good faith by it in accordance
with the advice of such counsel.

     

    19.18 Documents

     

    .  The
Agent shall not be under a duty to examine or pass upon the effectiveness,
genuineness or validity of this Agreement or any of the  other Loan
Documents or any other instrument or document furnished pursuant hereto or in
connection therewith, and the Agent shall be entitled to assume that the same
are valid, effective and genuine and what they purport to be.  In
addition the Agent shall not be liable for failing to make any inquiry
concerning the accuracy, performance or observance of any of the terms,
provisions or conditions of such instrument or document.

     

    
      
        
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        59

        
          

        

      

      
         

      

    

    19.19
Several Obligations

     

    .  The
obligation of each Lender is several, and neither the Agent nor any other Lender
shall be responsible for any obligation or commitment hereunder of any other
Lender.

     

    19.20 No Third Party
Beneficiary

     

    .  The
provisions of Section
19 of this Agreement are intended solely for the benefit of Agent and
Lenders and not for the benefit of any third party, including without
limitation, Obligors and any amendment to Section
19 of this Agreement shall not require any Obligor's
consent.

     

    19.21 Participations
and Assignments.

     

    (a) Each
Lender may at any time grant participations of its Pro Rata Share in and to its
interests under this Agreement (collectively, "Participations") to any other
lending office of such Lender or to any other bank, lending institution or other
entity which the granting Lender reasonably determines has the requisite
sophistication to evaluate the merits and risks of investments in Participations
("Participants");
provided however that: (i) all amounts payable by the Obligors to each Lender
hereunder and voting rights of each Lender hereunder shall be determined as if
such Lender had not granted such Participation; (ii) any agreement pursuant to
which any Lender may grant a Participation (A) shall provide that such Lender is
not delegating and therefore shall retain the sole right and responsibility to
exercise all of its rights and privileges under this Agreement, including,
without limitation, the right to approve any amendment, modification or waiver
of any provisions of this Agreement and (B) shall not release or discharge such
Lender from its duties and obligations, which shall remain absolute, hereunder,
including its obligation to make advances hereunder; and (iii) upon entering
into any such Participation, the Lender granting such participation shall give
thirty (30) days prior written notice thereof to Agent.

     

    (b) Each
Lender may at any time assign all or any portion of its Pro Rata Share (together
with its rights and obligations with respect thereto) and its right, title and
interest therein and in and to this Agreement and the other Loan Documents to a
Lender or any Affiliate of a Lender, or to any other bank or financial
institution, in each case with thirty (30) days prior written notice to Agent
and Obligors and subject to the prior written consent of the Agent; provided
however that (i) any assignment to another Lender (which is then a party to this
Agreement) or to any other bank or financial institution shall be in the minimum
amount of Five Million Dollars ($5,000,000.00); (ii) the parties to such
assignment shall execute an Assignment and Acceptance in the form of Exhibit
"D" hereto and such other documents reasonably requested by Agent, and
Obligors shall execute such replacement Line Notes, amendments and other items
as may be requested by Agent; and (iii) the parties to the assignment shall pay
Agent a processing fee of Three Thousand Five Hundred Dollars ($3,500.00) at the
time of providing such assignment to Agent.

     

    (c) Notwithstanding
anything to the contrary contained herein, each Lender may at any time
collaterally assign all or any portion of its rights under this Agreement and
its Note to any Federal Reserve Bank to secure overnight deposits, provided that
no such assignment shall release the assigning Lender from its obligations
hereunder.

     

    20. SUBROGATION

     

    20.1 Subrogation

     

    .  Each
Obligor expressly waives any and all rights of subrogation, reimbursement,
indemnity, exoneration, contribution or any other claim which such Obligor may
now or hereafter have against any other Obligor or other Person directly or
contingently liable for the Lender Indebtedness hereunder, or against or with
respect to any other Obligor's

     

    
      
        
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        60

        
          

        

      

      
         

      

    

    property
(including, without limitation, any property which is Collateral for the Lender
Indebtedness), arising from the existence or performance of this Agreement,
until termination of this Agreement and repayment in full of the Lender
Indebtedness.

     

    21. MISCELLANEOUS.

     

    21.1 Brokers

     

    .  The
transaction contemplated hereunder was brought about and entered into by Agent,
Lenders and Obligors acting as principals and without any brokers, agents or
finders being the effective procuring cause thereof.  Agent represents
to Obligors that Agent has not committed any Obligor to the payment of any
brokerage fee or commission in connection with this
transaction.  Obligors represent to Agent that no Obligor has
committed Agent to the payment of any brokerage fee or commission in connection
with this transaction.  If any such claim is made against Agent by any
broker, finder or agent or any other Person, Obligors agree to indemnify, defend
and hold Agent harmless against any such claim, at Obligors' own cost and
expense, including Agent's attorneys' fees.  Obligors further agree
that until any such claim or demand is adjudicated in Agent's favor, the amount
claimed and/or demanded shall be deemed part of the Lender Indebtedness secured
by the Collateral.

     

    21.2 Use of Agent's
Name

     

    .  No
Obligor shall use Agent's or any Lender's name or the name of any of Agent's or
any Lender's Affiliates in connection with any of its business or activities
except as may otherwise be required by the rules and regulations of the
Securities and Exchange Commission or any like regulatory body and except as may
be required in its dealings with any governmental agency.

     

    21.3 No Joint
Venture

     

    .  Nothing
contained herein is intended to permit or authorize any Obligor to make any
contract on behalf of Agent or any Lender, nor shall this Agreement be construed
as creating a partnership, joint venture or making Agent or any Lender an
investor in any Obligor.

     

    21.4 Survival

     

    .  All
covenants, agreements, representations and warranties made by any Obligor in the
Loan Documents or made by or on its behalf in connection with the transactions
contemplated herein shall be true at all times this Agreement is in effect and
shall survive the execution and delivery of the Loan Documents, any
investigation at any time made by Agent or on its behalf and the making by Agent
or any Lender of the loans or advances to any Obligor.  All statements
contained in any certificate, statement or other document delivered by or on
behalf of any Obligor pursuant hereto or in connection with the transactions
contemplated hereunder shall be deemed representations and warranties by such
Obligor.

     

    21.5 No Assignment by
Obligor

     

    .  No
Obligor may assign any of its rights hereunder without the prior written consent
of Agent, and Agent shall not be required to lend hereunder except to Obligors
as they presently exist.

     

    21.6 Binding
Effect

     

    .  This
Agreement and all rights and powers granted hereby will bind and inure to the
benefit of the parties hereto and their respective permitted successors and
assigns.

     

    21.7 Severability

     

    .  The
provisions of this Agreement and all other Loan Documents are deemed to be
severable, and the invalidity or unenforceability of any provision shall not
affect or impair the remaining provisions which shall continue in full force and
effect.

     

    
      
        
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        61

        
          

        

      

      
         

      

    

    21.8
No Third Party
Beneficiaries

     

    .  The
rights and benefits of this Agreement and the Loan Documents shall not inure to
the benefit of any third party.

     

    21.9 Modifications

     

    .  No
modification of this Agreement or any of the Loan Documents shall be binding or
enforceable unless in writing and signed by or on behalf of the party against
whom enforcement is sought.

     

    21.10 Holidays

     

    .  If
the day provided herein for the payment of any amount or the taking of any
action falls on a Saturday, Sunday or public holiday at the place for payment or
action, then the due date for such payment or action will be the next succeeding
Business Day.

     

    21.11 Law
Governing

     

    .  This
Agreement has been made, executed and delivered in the State of New Jersey and
will be construed in accordance with and governed by the laws of such State,
without regard to conflict of law principles.

     

    21.12 Integration

     

    .  The
Loan Documents shall be construed as integrated and complementary of each other,
and as augmenting and not restricting Agent's or any Lender's rights, powers,
remedies and security.  The Loan Documents contain the entire
understanding of the parties thereto with respect to the matters contained
therein and supersede all prior agreements and understandings between the
parties with respect to the subject matter thereof and do not require parol or
extrinsic evidence in order to reflect the intent of the parties.  In
the event of any inconsistency between the terms of this Agreement and the terms
of the other Loan Documents, the terms of this Agreement shall
prevail.

     

    21.13 Exhibits and
Schedules

     

    .  All
exhibits and schedules attached hereto are hereby made a part of this
Agreement.

     

    21.14 Headings

     

    .  The
headings of the Articles, Sections, paragraphs and clauses of this Agreement are
inserted for convenience only and shall not be deemed to constitute a part of
this Agreement.

     

    21.15 Counterparts

     

    .  This
Agreement may be executed in any number of counterparts, all of which taken
together shall constitute one and the same instrument, and any of the parties
hereto may execute this Agreement by signing any such counterpart.

     

    21.16 Waiver of Right to Trial by
Jury

     

    .  OBLIGORS,
AGENT AND LENDERS WAIVE ANY RIGHT TO TRIAL BY JURY ON ANY CLAIM, DEMAND, ACTION
OR CAUSE OF ACTION (a) ARISING UNDER ANY OF THE LOAN DOCUMENTS OR (b) IN ANY WAY
CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF ANY OBLIGOR, AGENT OR
LENDER WITH RESPECT TO ANY OF THE LOAN DOCUMENTS OR THE TRANSACTIONS RELATED
HERETO OR THERETO, IN EACH CASE WHETHER SOUNDING IN CONTRACT OR TORT OR
OTHERWISE.  OBLIGORS, AGENT AND LENDERS AGREE AND CONSENT THAT ANY
SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL
WITHOUT A JURY, AND THAT ANY PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL
COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE
CONSENT OF OBLIGORS, AGENT AND LENDERS TO THE WAIVER OF THEIR RIGHT TO TRIAL BY
JURY.  OBLIGORS ACKNOWLEDGE THAT THEY HAVE HAD THE OPPORTUNITY TO
CONSULT WITH COUNSEL REGARDING THIS SECTION, THAT THEY FULLY UNDERSTAND ITS
TERMS, CONTENT AND EFFECT, AND THAT THEY

     

    
      
        
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        62

        
          

        

      

      
         

      

    

    VOLUNTARILY
AND KNOWINGLY AGREE TO THE TERMS OF THIS SECTION.

     

    21.17 Marketing
Release

     

    .  Obligors
hereby consent to the publication and other advertisement by Agent and/or any
Lender in various media of the transactions occurring under this
Agreement.

     

    21.18 Credit
Inquiries

     

    .  Obligors
hereby consent to Agent and/or any Lender responding form time to time to credit
inquiries regarding each of the Obligors.

     

    [REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]

    
      
        
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        63

        
          

        

      

      
         

      

    

    IN WITNESS WHEREOF, the
parties hereto have executed this Agreement as of the date first above
written.

     

    
      	
               
      

            	
              OBLIGORS:

            

    

     

    
      	
               
      

            	
              HOOPER
      HOLMES, INC.

            

    

     

    
      	
               
      

            	
              By:/s/ Michael J.
      Shea

            

    

    
      	
               
      

            	
              Name/Title:
      Michael J. Shea, SVP, CFO

            

    

     

    
      	
               
      

            	
              HOOPER
      INFORMATION SERVICES, INC.

            

    

     

    
      	
               
      

            	
              By:/s/ Michael J.
      Shea

            

    

    
      	
               
      

            	
              Name/Title:
      Michael J. Shea, SVP, CFO

            

    

     

    MID-AMERICA
AGENCY SERVICES, INCORPORATED

     

    
      	
               
      

            	
              By:/s/ Michael J.
      Shea

            

    

    
      	
               
      

            	
              Name/Title:
      Michael J. Shea, SVP, CFO

            

    

     

    
      	
               
      

            	
              TEG ENTERPRISES,
      INC.

            

    

     

    
      	
               
      

            	
              By:/s/ Michael J.
      Shea

            

    

    
      	
               
      

            	
              Name/Title:
      Michael J. Shea, SVP, CFO

            

    

     

    
      	
               
      

            	
              HERITAGE
      LABS INTERNATIONAL, LLC

            

    

     

    
      	
               
      

            	
              By:/s/ Michael J.
      Shea

            

    

    
      	
               
      

            	
              Name/Title:
      Michael J. Shea, SVP, CFO

            

    

     

    
      	
               
      

            	
              HOOPER
      DISTRIBUTION SERVICES, LLC

            

    

     

    
      	
               
      

            	
              By:/s/ Michael J.
      Shea

            

    

    
      	
               
      

            	
              Name/Title:
      Michael J. Shea, SVP, CFO

            

    

     

    

     

    [SIGNATURES
CONTINUED ON FOLLOWING PAGE]

     

    

     

    [SIGNATURE PAGE TO LOAN AND SECURITY
AGREEMENT]

     

    
      
        
          · 

        

         

      

      
         

        
          

        

      

      
         

      

    

    [SIGNATURES
CONTINUED FROM PREVIOUS PAGE]

     

    

     

    
      	
               
      

            	
              AGENT:

            

    

     

    
      	
               
      

            	
              TD
      BANK, N.A.

            

    

     

    
      	
               
      

            	
              By:/s/ William H. Moul,
      Jr.

            

    

    
      	
               
      

            	
              Name/Title:William H. Moul, Jr.,
      Vice President

            

    

     

    
      	
               
      

            	
              LENDERS:

            

    

     

    
      	
               
      

            	
              TD
      BANK, N.A.

            

    

     

    
      	
               
      

            	
              By:/s/ William H. Moul,
      Jr.

            

    

    
      	
               
      

            	
              Name/Title:William H. Moul, Jr.,
      Vice President

            

    

     

    

    

     

    

     

    

     

    

     

    

     

    

     

    

     

    

     

    

     

    

     

    

     

    

     

    

     

    

     

    [SIGNATURE PAGE TO LOAN AND SECURITY
AGREEMENT]

     

    
      
        
          · 

        

         

      

      
         

        
          

        

      

      
         

      

    

    EXHIBITS

    Exhibit
"A"                                -           Line
Note

     

    Exhibit
"B"                                -           Form
of Borrowing Base Certificate

     

    Exhibit
"C"                                -           Form
of Compliance Certificate

     

    Exhibit
"D"                                           Form
of Assignment and Acceptance

     

    

     

    
      
        
          · 

        

         

      

      
         

        
          

        

      

      
         

      

    

    SCHEDULES

     

    
      	
              Schedule
      A

            	
              Lenders;
      Pro Rata Percentage and Pro Rata
Share

            

    

     

    
      	
              Schedule
      1.1(ff)

            	
              Increased
      Account Debtors

            

    

     

    
      	
              Schedule
      5.1(i)

            	
              Commercial
      Tort Claims

            

    

     

    
      	
              Schedule
      6.1

            	
              States
      of organization and foreign qualification and organizational ID
      numbers

            

    

     

    
      	
              Schedule
      6.3

            	
              Ownership
      Interests, Pledges, etc. of each
Obligor

            

    

     

    
      	
              Schedule
      6.4

            	
              Stock
      owned by each Obligor

            

    

     

    
      	
              Schedule
      6.7

            	
              Pending
      or Threatened Litigation or Proceedings Against or Affecting each
      Obligor

            

    

     

    
      	
              Schedule
      6.14

            	
              Names
      (including tradenames) and Addresses of each Obligor, identifying chief
      executive office

            

    

     

    
      	
              Schedule
      6.16

            	
              Employee
      Pension Benefit Plan Obligations of each
Obligor

            

    

     

    
      	
              Schedule
      6.17

            	
              Material
      Leases, Contracts, Agreements or
Commitments

            

    

     

    
      	
              Schedule
      6.18

            	
              Intellectual
      Property

            

    

     

    
      	
              Schedule
      6.21

            	
              Deposit
      Accounts

            

    

     

    
      	
              Schedule
      7.3

            	
              Permitted
      Indebtedness for Borrowed Money

            

    

     

    
      	
              Schedule
      7.4

            	
              Permitted
      Investments and Loans

            

    

     

    
      	
              Schedule
      7.9

            	
              Permitted
      Liens and Security Interests

            

    

     

    
      	
              Schedule
      7.16

            	
              Wachovia
      Accounts and Bank of America
Accounts

            

    

     

    
      	
              Schedule
      7.20

            	
              Permitted
      Loans to Affiliates, Shareholders, Officers or
  Directors

            

    

     

    

     

    
      
        
          · 

        

         

      

      
         

        
          

        

      

      
         

      

    

    
      	
               
      

            	
              SCHEDULE
      "A"

            

    

     

    

     

    
      	
              Lenders

            	
              Pro
      Rata Share

            	
              Pro
      Rata Percentage

            
	
              TD
      Bank, N.A.

            	
              $15,000,000

            	
              100%

            
	 
      	 
      	 
      

    

    
      
        
          · 

        

         

      

      
         

        
          

        

      

      
         

      

    

    
      	
               
      

            	
              SCHEDULE
      1.1(ee)

            

    

     

    
      	
               
      

            	
              Increased
      Account Debtors

            

    

     

    1. ING

     

    2. Prudential

     

    3. American
General

     

    4. Met
Life

     

    5. Benicomp

     

    6. Bravo

     

    7. SHPS

     

    
      
        
          · 

        

         

      

      
         

        
          

        

      

      
         

      

    

    
      	
               
      

            	
              SCHEDULE
      7.16

            

    

     

    
      	
               
      

            	
              Permitted
      Accounts

            

    

     

    
      	
              Bank

            	
              Account
      Name

            	
              Account
      No.

            
	
              Wachovia
      Bank, N.A.

            	
              Main

            	
              2000001092099

            
	
              Wachovia
      Bank, N.A.

            	
              Wire
      Transfer

            	
              2000013063854

            
	
              Wachovia
      Bank, N.A.

            	
              Rapidraft

            	
              2079950015967

            
	
              Wachovia
      Bank, N.A.

            	
              Accounts
      Payable

            	
              2079950015763

            
	
              Wachovia
      Bank, N.A.

            	
              HISI
      - Hooper Information Services

            	
              2000006153852

            
	
              Wachovia
      Bank, N.A.

            	
              Credit
      Card Funding

            	
              2000011048884

            
	
              Wachovia
      Bank, N.A.

            	
              D&D
      Accounts Payable

            	
              2079950092281

            
	
              Wachovia
      Bank, N.A.

            	
              HDSI
      - Hooper Distribution Services

            	
              2000011549723

            
	
              Wachovia
      Bank, N.A.

            	
              HHI
      - A/P Direct Deposit

            	
              2000018631838

            
	
              Wachovia
      Bank, N.A.

            	
              Branch
      Payroll

            	
              2000002926931

            
	
              Bank
      of America, N.A.

            	
              Hooper
      Holmes, Inc.

            	
              00000159004438

            
	
              Bank
      of America, N.A.

            	
              Hooper
      Holmes, Inc.

            	
              00000080226893

            
	
              Bank
      of America, N.A.

            	
              Hooper
      Holmes, Inc.

            	
              00002220011308

            
	
              Bank
      of America, N.A.

            	
              Hooper
      Holmes, Inc.

            	
              00002220011293

            

    

    

     

    
      
        
          ·ex10-8.htm

    
 

    EXHIBIT 10.8
 

    CYTRX
CORPORATION 2008 STOCK INCENTIVE PLAN

     

    
      	
              1.

            	
              PURPOSE.

            

    

     

    (a)           The
purpose of the Plan is to provide to eligible recipients an opportunity to
benefit from increases in value of the Common Stock through Stock
Awards.

     

    (b)           The
Company, by means of the Plan, seeks to attract and retain the services of
persons eligible to receive Stock Awards, to bind the interests of eligible
recipients more closely to the Company’s own interests by offering them
opportunities to acquire Common Stock and to afford eligible recipients
stock-based compensation opportunities that are competitive with those afforded
by similar businesses.

     

    (c)           The
persons eligible to receive Stock Awards are the Employees, Directors and
Consultants of the Company and its Affiliates.

     

    
      	
              2.

            	
              DEFINITIONS.

            

    

     

    (a)           “Affiliate” means any
“parent corporation” or “subsidiary corporation” of the Company, whether now or
hereafter existing, as those terms are defined in Sections 424(e) and (f),
respectively, of the Code.

     

    (b)           “Board” means the
Board of Directors of the Company.

     

    (c)           “Code” means the
Internal Revenue Code of 1986, as amended.

     

    (d)           “Committee” means a
committee of one or more members of the Board appointed by the Board in
accordance with subsection 3(c).

     

    (e)           “Common Stock” means
the common stock, $0.001 per value per share, of the Company.

     

    (f)           “Company” means CytRx
Corporation, a Delaware corporation.

     

    (g)           “Consultant” means any
individual engaged by the Company or an Affiliate to render consulting or
advisory services, and who is compensated for such services, or who is a member
of the Board of Directors of an Affiliate.  For clarity, the term
“Consultant”
shall not include a Director who is not compensated by the Company other than by
way of fees and other compensation for his or her service as a
Director.

     

    (h)           “Corporate
Transaction” means (i) a sale, lease or other disposition of all or
substantially all of the capital stock or assets of the Company, (ii) a merger
or consolidation of the Company in which the Company is not the surviving
corporation or (iii) a reverse merger in which the Company is the surviving
corporation but the shares of Common Stock outstanding immediately preceding the
merger are converted by virtue of the merger into other property, whether in the
form of securities, cash or otherwise

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    (i)           “Covered Employee”
means the chief executive officer and the four other highest compensated
officers of the Company for whom total compensation is required to be reported
to stockholders under the Exchange Act, as determined for purposes of Section
162(m) of the Code.

     

    (j)           “Director” means a
member of the Board of Directors of the Company.

     

    (k)           “Disability” means the
permanent and total disability of a person within the meaning of Section
22(e)(3) of the Code.

     

    (l)           “Employee” means any
“employee” of the Company or an Affiliate within the meaning of the
Code.

     

    (m)           “Exchange Act” means
the Securities Exchange Act of 1934, as amended.

     

    (n)           “Fair Market Value”
means the value of the Common Stock determined as follows:

     

    (i)           If
the Common Stock is listed on any established stock exchange, including the
Nasdaq Stock Market, the Fair Market Value of a share of Common Stock shall be
the closing sales price for such stock (or the closing bid, if no sales were
reported) as quoted on such exchange (or the exchange with the greatest volume
of trading in the Common Stock) on the day of determination, as reported in
The Wall Street
Journal or such other source as the Board deems reliable; or

     

    (ii)           In
the absence of such listing of the Common Stock, the Fair Market Value shall be
determined in good faith by the Board.

     

    (o)           “Incentive Stock
Option” means an Option intended to qualify as an “incentive stock
option” within the meaning of Section 422 of the Code and the regulations
promulgated thereunder.

     

    (p)           “Non-Employee
Director” means a Director who is considered a “non-employee director”
within the meaning of Rule 16b-3.

     

    (q)           “Nonstatutory Stock
Option” means an Option not intended to qualify as an Incentive Stock
Option.

     

    (r)           “Officer” means a
person who is an “officer” of the Company within the meaning of Section 16 of
the Exchange Act and the rules and regulations promulgated
thereunder.

     

    (s)           “Option” means an
Incentive Stock Option or a Nonstatutory Stock Option granted pursuant to the
Plan.

     

    (t)           “Option Agreement”
means a written agreement between the Company and an Optionholder evidencing the
terms and conditions of an individual Option grant. Each Option Agreement shall
be subject to the terms and conditions of the Plan.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    (u)           “Optionholder” means a
person to whom an Option is granted pursuant to the Plan or, if applicable, such
other person who holds an outstanding Option.

     

    (v)           “Outside Director”
means a Director who is considered an “outside director” within the meaning of
Section 162(m) of the Code.

     

    (w)           “Participant” means a
person to whom a Stock Award is granted pursuant to the Plan or, if applicable,
such other person who holds an outstanding Stock Award.

     

    (x)           “Plan” means this
CytRx Corporation 2008 Stock Incentive Plan as originally adopted by the Board
on November 21, 2008, and as it may be amended from time to time.

     

    (y)           “Rule 16b-3” means
Rule 16b-3 promulgated under the Exchange Act or any successor to Rule 16b-3, as
in effect from time to time.

     

    (z)           “Securities Act” means
the Securities Act of 1933, as amended.

     

    (aa)           “Stock Award” means
any right granted under the Plan, including an Option, a stock bonus and a right to acquire
restricted stock.

     

    (bb)           “Service” means a
Participant’s service with the Company or an Affiliate, whether as an Employee,
Director or Consultant.  For purposes of the Plan, a Participant’s
Service shall not be deemed to have terminated solely because of a change in the
capacity in which the Participant renders services to the Company or an
Affiliate or a change in the entity for which the Participant renders such
Service.  By way of example, a change in status from an Employee of
the Company to a Consultant or a Director, by itself, will not constitute a
termination of Service.  The Board or the Chief Executive Officer of
the Company, in that party’s sole discretion, may determine whether a
Participant’s Service shall be considered interrupted in the case of the
Participant’s leave of absence approved by that party, including sick leave,
military leave or any other personal leave.

     

    (cc)           “Stock Award
Agreement” means a written agreement between the Company and a holder of
a Stock Award evidencing the terms and conditions of an individual Stock Award
grant. Each Stock Award Agreement shall be subject to the terms and conditions
of the Plan.

     

    (dd)           “Ten Percent
Stockholder” means a person who owns (or is deemed to own pursuant to
Section 424(d) of the Code) stock possessing more than ten percent of the total
combined voting power of all classes of stock of the Company or of any
Affiliate.

     

    
      	
              3.

            	
              ADMINISTRATION.

            

    

     

    (a)           Administration by
Board.  The Board shall administer the Plan unless and to the
extent the Board delegates administration to a Committee as provided in
subsection 3(c).

     

    (b)           Powers of
Board.  The Board shall have the power, subject to, and within
the limitations of, the express provisions of the Plan:

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

           
(i)           To
determine from time to time who, among the persons eligible under the Plan,
shall be granted Stock Awards; when and how each Stock Award shall be granted;
what type or combination of types of Stock Award shall be granted; the number of
shares of Common Stock with respect to which a Stock Award shall be granted to
each such person; and the other terms and provisions of each Stock Award granted
(which need not be identical).

     

    (ii)           To
construe and interpret the Plan and all Stock Awards, and to establish, amend
and revoke rules and regulations for the Plan’s administration.  The
Board, in the exercise of this power, may correct any defect, omission or
inconsistency in the Plan or in any Stock Award Agreement, in a manner and to
the extent it shall deem necessary or expedient to make the Plan fully
effective.

     

    (iii)           To
amend the Plan or a Stock Award as provided in Section 12.

     

    (iv)           To
terminate or suspend the Plan as provided in Section 13.

     

    (v)           Generally,
to exercise such powers and to perform such acts as the Board deems necessary or
expedient to promote the best interests of the Company.

     

    (c)           Delegation to
Committee.

     

    (i)           General.  The Board
may delegate administration of the Plan to a Committee of one or more Directors,
and the term “Committee” shall
apply to any Director or Directors to whom such authority has been delegated. If
administration is delegated to a Committee, the Committee shall have, in
connection with the administration of the Plan, all of the powers theretofore
possessed by the Board, including the power to delegate to a subcommittee any of
the administrative powers the Committee is authorized to exercise (and
references in this Plan to the Board shall thereafter be to the Committee or
subcommittee), subject, however, to such resolutions, not inconsistent with the
provisions of the Plan, as may be adopted from time to time by the Board. The
Board may abolish the Committee at any time and restore to the Board the
administration of the Plan.

     

    (ii)           Committee
Composition.  In the discretion of the Board, the Committee may
consist solely of two or more Outside Directors or two or more Non-Employee
Directors.  Within the scope of such authority, the Board or the
Committee may (1) delegate to a committee of one or more Directors who are not
Outside Directors the authority to grant Stock Awards to eligible persons who
are either (a) not then Covered Employees and are not expected to be Covered
Employees at the time of recognition of income resulting from such Stock Award
or (b) not persons with respect to whom the Company wishes to comply with
Section 162(m) of the Code or (2) delegate to a committee of one or more
Directors who are not Non-Employee Directors the authority to grant Stock Awards
to eligible persons who are not then subject to Section 16 of the Exchange
Act.

     

    (d)           Effect of Board’s
Decision.  All determinations, interpretations and
constructions made by the Board in good faith shall not be subject to review by
any person and shall be final, binding and conclusive on all
persons.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    (e)           Cancellation and Re-Grant of Stock
Awards.  Notwithstanding anything to the contrary in the Plan,
the Board shall have no authority to: (i)
reprice any outstanding Stock Awards under the Plan, (ii) cancel and re-grant
any outstanding Stock Awards under the Plan; or (iii) effect any other action
that is treated as a repricing for financial accounting purposes.

     

    
      	
              4.

            	
              SHARES
      SUBJECT TO THE PLAN.

            

    

     

    (a)           Share
Reserve.  Subject to the provisions of subsection 11(a)
relating to adjustments upon changes in Common Stock, the shares of Common Stock
that may be issued pursuant to Stock Awards shall not exceed in the aggregate
10,000,000 shares of Common Stock.

     

    (b)           Reversion of Shares to the Share
Reserve.

     

    (i)           Shares Available For Subsequent
Issuance.  If any (i) Stock Award shall for any reason expire
or otherwise terminate, in whole or in part, without having been exercised in
full, (ii) shares of Common Stock issued to a Participant pursuant to a Stock
Award are forfeited to or repurchased by the Company, including any repurchase
or forfeiture caused by the failure to meet a contingency or condition required
for the vesting of such shares, then the shares of Common Stock not issued under
such Stock Award, or forfeited to or repurchased by the Company, shall revert to
and again become available for issuance under the Plan.

     

    (ii)           Shares Not Available For Subsequent
Issuance.  If any shares subject to a Stock Award are not
delivered to a Participant because the Stock Award is exercised through a
reduction of shares subject to the Stock Award (i.e., a “net exercise”), the
number of shares that are not delivered to the Participant shall no longer be
available for issuance under the Plan. If any shares subject to a Stock Award
are not delivered to a Participant because such shares are withheld in
satisfaction of the withholding of taxes incurred in connection with the
exercise of an Option, or the issuance of shares under a stock bonus award or
restricted stock award, the number of shares that are not delivered to the
Participant shall no longer be available for subsequent issuance under the
Plan.

     

    (c)           Source of
Shares.  The shares of Common Stock subject to the Plan may be
unissued shares or treasury shares.

     

    
      	
              5.

            	
              ELIGIBILITY.

            

    

     

    (a)           Eligibility for Specific Stock
Awards.  Incentive Stock Options may be granted only to
Employees. Stock Awards other than Incentive Stock Options may be granted to
Employees, Directors and Consultants.

     

    (b)           Ten Percent
Stockholders.  A Ten Percent Stockholder shall not be granted
an Incentive Stock Option unless the exercise price of such Option is at least
110% of the Fair Market Value of the Common Stock at the date of grant and the
Option is not exercisable after the expiration of five years from the date of
grant.

     

    (c)           Section 162(m)
Limitation.  Subject to the provisions of Section 11 relating
to adjustments upon changes in the shares of Common Stock, no Employee shall be
eligible to be

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    granted
Options covering more than 1,000,000 shares of Common Stock during any
twelve-month period.

     

    (d)           Consultants.  A
Consultant shall not be eligible for the grant of a Stock Award if, at the time
of grant, a Form S-8 Registration Statement under the Securities Act (“Form S-8”) is not
available to register either the offer or the sale of the Company’s securities
to such Consultant because of the nature of the services that the Consultant is
providing to the Company, or because the Consultant is not a natural person, or
as otherwise provided by the rules governing the use of Form S-8, unless the
Company determines both (i) that such grant (A) shall be registered in another
manner under the Securities Act (e.g., on a Form S-3
Registration Statement) or (B) does not require registration under the
Securities Act in order to comply with the requirements of the Securities Act,
if applicable, and (ii) that such grant complies with the securities laws of all
other relevant jurisdictions.

     

    
      	
              6.

            	
              OPTION
      PROVISIONS.

            

    

     

    (a)           Each
Option shall be in such form and shall contain such terms and conditions as the
Board shall deem appropriate. All Options shall be designated as Incentive Stock
Options or Nonstatutory Stock Options at the time of grant, and, if certificates
are issued, a separate certificate or certificates will be issued for shares of
Common Stock purchased on exercise of each type of Option. The provisions of
separate Options need not be identical, but each Option shall include (through
inclusion or incorporation by reference in the Option or otherwise) the
substance of each of the following provisions:

     

    (i)           Term.  Subject to
the provisions of subsection 5(b) regarding Ten Percent Stockholders, no Option
shall be exercisable after the expiration of ten years from the date it was
granted.

     

    (ii)           Exercise Price of an Incentive Stock
Option.  Subject to the provisions of subsection 5(b) regarding
Ten Percent Stockholders, the exercise price of each Incentive Stock Option
shall be not less than the Fair Market Value of the Common Stock subject to the
Option on the date the Option is granted.

     

    (iii)           Exercise Price of a Nonstatutory
Stock Option.  The exercise price of each Nonstatutory Stock
Option shall be not less than the Fair Market Value of the Common Stock subject
to the Option on the date the Option is granted.

     

    (iv)           Consideration.  The
purchase price of Common Stock acquired pursuant to an Option shall be paid, to
the extent permitted by applicable statutes and regulations, either (i) in cash
at the time the Option is exercised or (ii) at the discretion of the Board (1)
by delivery to the Company of other Common Stock; (2) according to a deferred
payment or other similar arrangement with the Optionholder; (3) by a “net
exercise” arrangement pursuant to which the Company will reduce the number of
shares of Common Stock issued upon exercise by the largest whole number of
shares with a Fair Market Value that does not exceed the aggregate exercise
price; provided,
however, that the Company shall accept cash or other payment from the
Participant to the extent of any remaining balance of the aggregate exercise
price not satisfied by such holding back of whole shares; provided, further, however,
that shares of Common Stock

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    will no
longer be outstanding under an Option to the extent that (i) shares are used to
pay the exercise price pursuant to the “net exercise,” (ii) shares are
delivered to the Participant as a result of such exercise, and (iii) shares are
withheld to satisfy tax withholding obligations; (4) by means of so-called
cashless exercises as permitted under applicable rules and regulations of the
Securities and Exchange Commission and the Federal Reserve Board; or (5) in
any other form of legal consideration that may be acceptable to the
Board.  Payment of the Common Stock’s par value, if any, shall not be
made by deferred payment.  In the case of any deferred payment
arrangement, interest shall be compounded at least annually and shall be charged
at the minimum rate of interest necessary to avoid (1) the treatment as
interest, under any applicable provisions of the Code, of any amounts other than
amounts stated to be interest under the deferred payment
arrangement.

     

    (v)           Transferability of an Incentive Stock
Option.  An Incentive Stock Option shall not be transferable
except by will or by the laws of descent and distribution and shall be
exercisable during the lifetime of the Optionholder only by the Optionholder.
Notwithstanding the foregoing, the Optionholder may, by delivering written
notice to the Company, in a form satisfactory to the Company, designate a third
party who, in the event of the death of the Optionholder, shall thereafter be
entitled to exercise the Option.

     

    (vi)           Transferability of a Nonstatutory
Stock Option.  A Nonstatutory Stock Option shall be
transferable to the extent provided in the Option Agreement. If the Nonstatutory
Stock Option does not provide for transferability, then the Nonstatutory Stock
Option shall not be transferable except by will or by the laws of descent and
distribution and shall be exercisable during the lifetime of the Optionholder
only by the Optionholder. Notwithstanding the foregoing, the Optionholder may,
by delivering written notice to the Company, in a form satisfactory to the
Company, designate a third party who, in the event of the death of the
Optionholder, shall thereafter be entitled to exercise the Option.

     

    (vii)           Vesting
Generally.  The total number of shares of Common Stock subject
to an Option may, but need not, vest and become exercisable in periodic
installments that may, but need not, be equal. The Option may be subject to such
other terms and conditions on the time or times when it may be exercised (which
may be based on performance or other criteria) as the Board may deem
appropriate. The vesting provisions of individual Options may vary. The
provisions of this subsection 6(a)(vii) are subject to any Option provisions
governing the minimum number of shares of Common Stock as to which an Option may
be exercised.  Notwithstanding the foregoing, unless the Option
Agreement otherwise provides, upon the occurrence of a Corporate Transaction,
all Options under the Option Agreement shall become immediately vested and
exercisable; except that in the case of an Incentive Stock Option, the
acceleration of vesting and exercisability shall not occur without the
Optionee’s written consent.

     

    (viii)          Termination of
Service.  In the event an Optionholder’s Service terminates
(other than upon the Optionholder’s death or Disability), the Optionholder may
exercise his or her Option (to the extent that the Optionholder was entitled to
exercise such Option as of the date of termination) but only within such period
of time ending on the earlier of (i) the date three months following the
termination of the Optionholder’s Service (or such longer or shorter period
specified in the Option Agreement), or (ii) the expiration of the term of the
Option as set forth in the Option Agreement. If, after termination, the
Optionholder does not exercise
his or her Option within the time specified in the Option Agreement, the Option
shall terminate.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (ix)           Extension of Termination
Date.  An Optionholder’s Option Agreement may provide that, if
the exercise of the Option following the termination of the Optionholder’s
Service (other than upon the Optionholder’s death or Disability) would be
prohibited at any time solely because the issuance of shares of Common Stock
would violate the registration requirements under the Securities Act, then the
Option shall terminate on the earlier of (i) the expiration of the term of the
Option set forth in the Option Agreement or (ii) the expiration of a period of
three months after the termination of the Optionholder’s Service during which
the exercise of the Option would not be in violation of such registration
requirements.

     

    (x)           Disability of
Optionholder.  In the event that an Optionholder’s Service
terminates as a result of the Optionholder’s Disability, the Optionholder may
exercise his or her Option (to the extent that the Optionholder was entitled to
exercise such Option as of the date of termination), but only within such period
of time ending on the earlier of (i) the date twelve months following such
termination (or such longer or shorter period specified in the Option Agreement)
or (ii) the expiration of the term of the Option as set forth in the Option
Agreement. If, after termination, the Optionholder does not exercise his or her
Option within the time specified herein, the Option shall
terminate.

     

    (xi)           Death of
Optionholder.  In the event (i) an Optionholder’s Service
terminates as a result of the Optionholder’s death or (ii) the Optionholder dies
within the period (if any) specified in the Option Agreement after the
termination of the Optionholder’s Service for a reason other than death, then
the Option may be exercised (to the extent the Optionholder was entitled to
exercise such Option as of the date of death) by the Optionholder’s estate, by a
person who acquired the right to exercise the Option by bequest or inheritance
or by a person designated to exercise the Option upon the Optionholder’s death
pursuant to subsection 6(e) or 6(f), but only within the period ending on the
earlier of (1) the date eighteen months following the date of death (or such
longer or shorter period specified in the Option Agreement) or (2) the
expiration of the term of such Option as set forth in the Option Agreement. If,
after death, the Option is not exercised within the time specified herein, the
Option shall terminate.

     

    
      	
              7.

            	
              PROVISIONS
      OF STOCK AWARDS OTHER THAN OPTIONS.

            

    

     

    (a)           Stock Bonus
Awards.  Each stock bonus agreement shall be in such form and
shall contain such terms and conditions as the Board shall deem appropriate. The
terms and conditions of stock bonus agreements may change from time to time, and
the terms and conditions of separate stock bonus agreements need not be
identical, but each stock bonus agreement shall include (through incorporation
of provisions hereof by reference in the agreement or otherwise) the substance
of each of the following provisions:

     

    (i)           Consideration.  A
stock bonus may be awarded in consideration for past services actually rendered
to or for the benefit of the Company or an Affiliate.

     

    (ii)           Vesting
Generally.  Shares of Common Stock awarded under the stock
bonus agreement may, but need not, be subject to a share repurchase option in
favor of the Company
in accordance with a vesting schedule to be determined by the
Board.  Notwithstanding the foregoing, unless the stock bonus
agreement otherwise provides, all shares subject to the agreement shall become
fully vested upon the occurrence of a Corporate Transaction.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (iii)           Termination of Participant’s
Service.  In the event a Participant’s Service terminates, the
Company may reacquire any or all of the shares of Common Stock held by the
Participant which have not vested as of the date of termination under the terms
of the stock bonus agreement. The Company will not exercise its repurchase
option until at least six months (or such longer or shorter period of time
required to avoid a change to earnings for financial accounting purposes) have
elapsed following receipt of the stock bonus unless otherwise specifically
provided in the stock bonus agreement.

     

    (iv)           Transferability.  Rights
to acquire shares of Common Stock under the stock bonus agreement shall be
transferable by the Participant only upon such terms and conditions as are set
forth in the stock bonus agreement, as the Board shall determine in its
discretion, so long as Common Stock awarded under the stock bonus agreement
remains subject to the terms of the stock bonus agreement.

     

    (b)           Restricted Stock
Awards.  Each restricted stock purchase agreement shall be in
such form and shall contain such terms and conditions as the Board shall deem
appropriate. The terms and conditions of the restricted stock purchase
agreements may change from time to time, and the terms and conditions of
separate restricted stock purchase agreements need not be identical, but each
restricted stock purchase agreement shall include (through inclusion or
incorporation by reference in the agreement or otherwise) the substance of each
of the following provisions:

     

    (i)           Purchase Price.  The
purchase price under each restricted stock purchase agreement shall be such
amount as the Board shall determine and designate in such restricted stock
purchase agreement.

     

    (ii)           Consideration.  The
purchase price of Common Stock acquired pursuant to the restricted stock
purchase agreement shall be paid either: (i) in cash at the time of purchase;
(ii) at the discretion of the Board, according to a deferred payment or other
similar arrangement with the Participant; or (iii) in any other form of legal
consideration that may be acceptable to the Board in its
discretion.

     

    (iii)           Vesting
Generally.  Shares of Common Stock acquired under the
restricted stock purchase agreement may, but need not, be subject to forfeiture
to the Company or other restrictions that will lapse in accordance with a
vesting schedule to be determined by the Board.  Notwithstanding the
foregoing, unless the stock purchase agreement otherwise provides, all
restricted shares subject to the agreement shall become fully vested upon the
occurrence of a Corporate Transaction.

     

    (iv)           Termination of Participant’s
Service.  In
the event a Participant’s Service terminates, any or all of the shares of Common
Stock held by the Participant that have not vested as of the date of termination
under the terms of the restricted stock purchase agreement
shall be forfeited to the Company in accordance with the restricted stock
purchase agreement.

    
 

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    

     

    (v)           Transferability.  Rights
to acquire shares of Common Stock under the restricted stock purchase agreement
shall be transferable by the Participant only upon such terms and conditions as
are set forth in the restricted stock purchase agreement, as the Board shall
determine in its discretion, so long as Common Stock awarded under the
restricted stock purchase agreement remains subject to the terms of the
restricted stock purchase agreement.

     

    
      	
              8.

            	
              COVENANTS
      OF THE COMPANY.

            

    

     

    (a)           Availability of
Shares.  During the terms of the Stock Awards, the Company
shall keep available at all times the number of shares of Common Stock required
to satisfy such Stock Awards.

     

    (b)           Securities Law
Compliance.  The Company shall seek to obtain from each
regulatory commission or agency having jurisdiction over the Plan such authority
as may be required to grant Stock Awards and to issue and sell shares of Common
Stock upon exercise of the Stock Awards; provided, however, that this
undertaking shall not require the Company to register under the Securities Act
the Plan, any Stock Award or any Common Stock issued or issuable pursuant to any
such Stock Award. If, after reasonable efforts, the Company is unable to obtain
from any such regulatory commission or agency the authority which counsel for
the Company deems necessary for the lawful issuance and sale of Common Stock
under the Plan, the Company shall be relieved from any liability for failure to
issue and sell Common Stock upon exercise of such Stock Awards unless and until
such authority is obtained.

     

    
      	
              9.

            	
              USE
      OF PROCEEDS FROM STOCK.

            

    

     

    Proceeds
from the sale of Common Stock pursuant to Stock Awards shall constitute general
funds of the Company.

     

    
      	
              10.

            	
              MISCELLANEOUS.

            

    

     

    (a)           Acceleration of Exercisability and
Vesting.  The Board shall have the power to accelerate the time
at which a Stock Award may first be exercised or the time during which a Stock
Award or any part thereof will vest in accordance with the Plan, notwithstanding
the provisions in the Stock Award stating the time at which it may first be
exercised or the time during which it will vest.

     

    (b)           Stockholder
Rights.  No Participant shall be deemed to be the holder of, or
to have any of the rights of a holder with respect to, any shares of Common
Stock subject to such Stock Award unless and until such Participant has
satisfied all requirements for exercise of the Stock Award pursuant to its
terms.

     

    (c)           No Employment or other Service
Rights.  Nothing in the Plan or any instrument executed or
Stock Award granted pursuant hereto shall confer upon any Participant any right
to continue to serve the Company or an Affiliate in the capacity in effect at
the time the Stock Award was granted or shall affect the right of the Company or
an Affiliate to terminate (i) the employment of an Employee with or without
notice and with or without cause, (ii) the service of a Consultant pursuant to
the terms of such Consultant’s agreement with the Company or an Affiliate or
(iii) the service of a Director pursuant to the Bylaws of the Company or an
Affiliate, and any applicable provisions of the corporate law of the state in
which the Company or the Affiliate is incorporated, as the case may
be.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (d)           Incentive Stock Option Dollar
Limitation.  To the extent that the aggregate Fair Market Value
(determined at the time of grant) of Common Stock with respect to which
Incentive Stock Options are exercisable for the first time by any Optionholder
during any calendar year (under all plans of the Company and its Affiliates)
exceeds $100,000, the Options or portions thereof which exceed such limit
(according to the order in which they were granted) shall be treated as
Nonstatutory Stock Options.

     

    (e)           Investment
Assurances.  The Company may require a Participant, as a
condition of exercising or acquiring Common Stock under any Stock Award, (i) to
give written assurances satisfactory to the Company as to the Participant’s
knowledge and experience in financial and business matters and/or to employ a
purchaser representative reasonably satisfactory to the Company who is
knowledgeable and experienced in financial and business matters and that he or
she is capable of evaluating, alone or together with the purchaser
representative, the merits and risks of exercising the Stock Award; and (ii) to
give written assurances satisfactory to the Company stating that the Participant
is acquiring Common Stock subject to the Stock Award for the Participant’s own
account and not with any present intention of selling or otherwise distributing
the Common Stock. The foregoing requirements, and any assurances given pursuant
to such requirements, shall be inoperative if (1) the issuance of the shares of
Common Stock upon the exercise or acquisition of Common Stock under the Stock
Award has been registered under a then currently effective registration
statement under the Securities Act or (2) as to any particular requirement, a
determination is made by counsel for the Company that such requirement need not
be met in the circumstances under the then applicable securities laws. The
Company may, upon advice of counsel to the Company, place legends on stock
certificates issued under the Plan as such counsel deems necessary or
appropriate in order to comply with applicable securities laws, including, but
not limited to, legends restricting the transfer of the Common
Stock.

     

    (f)           Withholding
Obligations.  To the extent provided by the terms of a Stock
Award Agreement, the Participant may satisfy any federal, state or local tax
withholding obligation relating to the exercise or acquisition of Common Stock
under a Stock Award by any of the following means (in addition to the Company’s
right to withhold from any compensation paid to the Participant by the Company)
or by a combination of such means: (i) tendering a cash payment; (ii)
authorizing the Company to withhold shares of Common Stock from the shares of
Common Stock otherwise issuable to the Participant as a result of the exercise
or acquisition of Common Stock under the Stock Award, provided, however, that no
shares of Common Stock are withheld with a Fair Market Value exceeding the
minimum amount of tax required to be withheld by law (or such lesser amount as
may be necessary to avoid variable award accounting); or (iii) delivering to the
Company owned and unencumbered shares of Common Stock of the
Company.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    11.           ADJUSTMENTS
UPON CHANGES IN STOCK.

     

    (a)           Capitalization
Adjustments.  If any change is made in the Common Stock subject
to the Plan, or subject to any Stock Award, without the receipt of consideration
by the Company (through merger, consolidation, reorganization, recapitalization,
reincorporation, stock dividend, dividend in property other than cash, stock
split, liquidating dividend, combination of shares, exchange of shares, change
in corporate structure or other transaction not involving the receipt of
consideration by the Company), the Plan will be appropriately adjusted in the
class and maximum number of shares subject to the Plan pursuant to subsection
4(a) and the maximum number of shares subject to award to any person pursuant to
subsection 5(c) and 10(g), and the outstanding Stock Awards will be
appropriately adjusted in the class and number of shares and price per share of
Common Stock subject to such outstanding Stock Awards. The Board shall make such
adjustments, and its determination shall be final, binding and conclusive. (The
conversion of any convertible securities of the Company shall not be treated as
a transaction “without receipt of consideration” by the Company.)

     

    (b)           Dissolution or
Liquidation.  In the event of a dissolution or liquidation of
the Company, all outstanding Stock Awards shall terminate immediately prior to
such event, and shares of bonus stock and restricted stock subject
to the Company’s repurchase option or to forfeiture under subsections 7(a)(iii) and 7(b)(iii)
may be repurchased by the Company or forfeited notwithstanding the fact that the
holder of such stock is still in Service.

     

    (c)           Corporate
Transaction.  In the event of a Corporate Transaction, any
surviving corporation or acquiring corporation may assume any Stock Awards
outstanding under the Plan or may substitute similar stock awards (including an
award to acquire the same consideration paid to the stockholders in the
transaction described in this subsection 11(c)) for those outstanding under the
Plan.  Unless the Stock Award Agreement otherwise provides, in the
event any surviving corporation or acquiring corporation does not assume such
Stock Awards or substitute similar stock awards for those outstanding under the
Plan, then the Stock Awards shall terminate if not exercised at or prior to such
event.

     

    
      	
              12.

            	
              AMENDMENT
      OF THE PLAN AND STOCK AWARDS.

            

    

     

    (a)           Amendment of
Plan.  The Board at any time, and from time to time, may amend
the Plan. However, except as provided in Section 11 relating to adjustments upon
changes in Common Stock, no amendment shall be effective unless approved by the
stockholders of the Company to the extent stockholder approval is necessary to
satisfy the requirements of Section 422 of the Code, Rule 16b-3 or any
securities exchange listing requirements.

     

    (b)           Stockholder
Approval.  The Board may, in its sole discretion, submit any
other amendment to the Plan for stockholder approval, including, but not limited
to, amendments to the Plan intended to satisfy the requirements of Section
162(m) of the Code and the regulations thereunder regarding the exclusion of
performance-based compensation from the limit on corporate deductibility of
compensation paid to certain executive officers.

     

    (c)           Contemplated
Amendments.  It is expressly contemplated that the Board may
amend the Plan in any respect the Board deems necessary or advisable to provide
eligible

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Employees
with the maximum benefits provided or to be provided under the provisions of the
Code and the regulations promulgated thereunder relating to Incentive Stock
Options or to bring the Plan or Incentive Stock Options granted under it into
compliance therewith.

     

    (d)           No Impairment of
Rights.  Rights under any Stock Award granted before amendment
of the Plan shall not be impaired by any amendment of the Plan unless the
Participant consents thereto in writing.

     

    (e)           Amendment of Stock
Awards.  The Board at any time, and from time to time, may
amend the terms of any one or more Stock Awards; provided, however, that the
rights under any Stock Award shall not be impaired by any such amendment unless
the Participant consents thereto in writing.

     

    
      	
              13.

            	
              TERMINATION
      OR SUSPENSION OF THE PLAN.

            

    

     

    (a)           Plan Term.  Unless
sooner terminated by the Board pursuant to Section 3, the Plan shall
automatically terminate on the day before the tenth anniversary of the date the
Plan is adopted by the Board. No Stock Awards may be granted under the Plan
while the Plan is suspended or after it is terminated.

     

    (b)           No Impairment of
Rights.  Suspension or termination of the Plan shall not impair
rights and obligations under any Stock Award granted while the Plan is in effect
except with the written consent of the Participant.

     

    
      	
              14.

            	
              EFFECTIVE
      DATE OF PLAN.

            

    

     

    The Plan
shall become effective upon approval of the stockholders of the Company,
provided that such approval is received before the expiration of one year from
the date the Plan is approved by the Board of Directors, and provided further
that the Board of Directors may grant Options (but not award bonus stock or
restricted stock) pursuant to the Plan prior to stockholder approval if the
exercise of such Options by its terms is contingent upon subsequent stockholder
approval of the Plan.

     

    
      	
              15.

            	
              CHOICE
      OF LAW.

            

    

     

    The law
of the State of Delaware shall govern all questions concerning the construction,
validity and interpretation of this Plan, without regard to conflict of laws
rules.

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