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" .

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

(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

(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

(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.

(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

(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:

(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.

(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

(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:

(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

(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.

           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

(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

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

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.

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

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.

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

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.

(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

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

6.1   Valid Organization, Good Standing and Qualification

.

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.

(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

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

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

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