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NOMINATION NOTICE
SMHL MORTGAGE ORIGINATION AND MANAGEMENT AGREEMENT

TO:               PERPETUAL TRUSTEES AUSTRALIA LIMITED
                  ABN 86 000 431 827
                  of Level 7, 39 Hunter Street, Sydney, New South Wales
                  (TRUSTEE)

AND:              MEMBERS EQUITY BANK PTY LIMITED
                  ABN 56 070 887 679
                  of Level 17, 360 Collins Street, Melbourne, Victoria
                  (MORTGAGE MANAGER)

FROM:             ME PORTFOLIO MANAGEMENT LIMITED
                  ABN 79 005 964 134
                  of Level 17, 360 Collins Street, Melbourne, Victoria
                  (MANAGER)

We refer to the Mortgage Origination and Management Agreement dated 4 July 1994
between the Trustee and National Mutual Property Services (Aust) Pty Limited as
novated and amended (MOMA).

Pursuant to clause 19.1 of the MOMA we hereby nominate the following Fund as a
Fund for the purposes of clause 19 of the MOMA:

                  SMHL Global Fund No. 8

A word or phrase (unless otherwise defined in this Nomination Notice) defined in
the MOMA has the same meaning as in the MOMA when used in this Nomination
Notice.

DATED:            August 2005

SIGNED for and on behalf of
ME PORTFOLIO MANAGEMENT LIMITED
by two of its Authorised Signatories:

--------------------------                 ------------------------------
Authorised Signatory                       Authorised Signatory

--------------------------                 ------------------------------
Name (please print)                        Name (please print)LOAN AGREEMENT

         LOAN AGREEMENT, dated as of September 1, 2005, is entered into between
OPTICARE HEALTH SYSTEMS, INC., a Delaware corporation and OPTICARE EYE HEALTH
CENTERS, INC., a Connecticut corporation (collectively the "Borrowers" and
individually a "Borrower") and REFAC, a Delaware corporation.

                               W I T N E S S E T H

         WHEREAS, Borrowers are parties to a Second Amended and Restated
Revolving Credit, Term Loan and Security Agreement, dated March 29, 2004 and
amended on August 16, 2004, August 27, 2004 and January 12, 2005, with
CapitalSource Finance LLC ("CapitalSource"), a Delaware limited liability
company (such agreement, together with the amendments thereto hereinafter being
collectively referred to as the "CapitalSource Loan Agreement"); and

         WHEREAS, OptiCare Health Systems, Inc. ("OHS") has entered into a
merger agreement (the "Merger Agreement"), dated August 22, 2005, with Refac and
its subsidiary, OptiCare Merger Sub, Inc.; and

         WHEREAS, Borrowers Overadvance facility under the CapitalSource Loan
Agreement terminates on August 31, 2005; and

         WHEREAS, Borrowers have requested a loan in the amount of One Million
Dollars ($1,000,000) to provide it with additional financing pending the closing
of the Merger Agreement; and

         WHEREAS, Refac is willing to provide such loan upon the terms and
conditions hereinafter set forth:

         NOW, THEREFORE, in consideration of the agreements herein contained,
the parties hereto agree as follows:

         1. LOAN.
            ----

         Refac hereby agrees to loan the Borrowers the principal amount of One
Million Dollars ($1,000,000) in accordance with the terms set forth in the
promissory note (the "Note") attached hereto as Exhibit "A".

                                   Page 1 of 4

         2. SECURITY INTEREST.
            -----------------

         2.1 CapitalSource holds a first security interest in and to the
"Collateral" defined in the CapitalSource Loan Agreement. Promptly after the
execution of this Agreement, Borrowers shall notify CapitalSource, in writing,
of the loan made hereunder. If, in the opinion of counsel for Borrowers, they
require the consent of CapitalSource in order to grant a security interest in
the Collateral to Refac, they shall use their best efforts to get such consent.

         2.2 If such consent is not necessary or is obtained, as security for
the payment of the Note, Borrowers shall grant Refac a security interest in such
Collateral, subordinate to the security interest held by CapitalSource and shall
sign and deliver to Refac all such financing statements, instruments or other
documents necessary to perfect and/or protect such security interest.

         2.3 If Borrowers are able to grant the security interest contemplated
by this Paragraph 2, the "Applicable Interest Rate" provided for in the Note
shall be 9.75% commencing upon the date that such security interest is perfected
and Borrowers agree to reimburse Refac for any and all filing fees and costs of
preparing and any and all documents necessary to perfect and/or protect same.

         3. REPRESENTATIONS AND WARRANTIES.
            ------------------------------

         Borrowers hereby make the following representations and warranties to
Refac, each of which is material and is being relied upon by Refac:

         3.1 Borrowers hereby acknowledge and agree that Refac is relying upon
all of the representations and warranties made by OHS in the Merger Agreement
with the same force and effect as if set forth herein in full.

         3.2 The execution and delivery of this Agreement and the Note and the
performance by Borrowers of their obligations as set forth therein or any other
instrument or documents executed thereto, have been duly authorized by all
necessary corporate action and do not and will not conflict with, result in a
violation of, or constitute a default under any provisions of any Certificate of
Incorporation or By-law or any agreement or instrument binding upon any of the
Borrowers, or any law, or governmental regulation, or court decree or order.

                                   Page 2 of 4

         4. MISCELLANEOUS.
            -------------

         4.1 Headings. The various headings in this Agreement are inserted for
convenience only and shall not affect the meaning or interpretation of this
Agreement or any provision hereof.

         4.2 Notices. All notices, requests, claims, demands and other
communications under this Agreement shall be in writing and shall be deemed
given (i) upon personal delivery, (ii) one business day after being sent via a
nationally recognized overnight courier service if overnight courier service is
requested or (iii) upon receipt of electronic or other confirmation of
transmission if sent via facsimile, in each case at the addresses or fax numbers
(or at such other address or fax number for a party as shall be specified by
like notice) set forth below:

                     (a) if to REFAC, at

                         One Bridge Plaza
                         Fort Lee, NJ 07024
                         Attn: Robert L. Tuchman
                         Fax:  (201) 585-2020

                         with a copy to:

                         Skadden, Arps, Slate, Meagher & Flom LLP
                         Four Times Square
                         New York, NY 10036
                         Attn: Stephen M Banker
                         Fax:  (917) 777-2760

                         (b) if to the Borrowers, to

                         OptiCare Health Systems, Inc.
                         87 Grandview Avenue
                         Waterbury, CT 06708
                         Attn: Christopher J. Walls
                         Fax:  (203) 596-2227

         4.3 Governing Law. This Agreement and the Note shall be governed
by, and construed in accordance with, the laws of the State of New York, without
regard to the principles of conflicts of laws thereof.

         4.4 Entire Agreement; No Third-Party Beneficiaries. This Agreement,
together with the Note, (a) constitutes the entire agreement and supersede all
prior agreements

                                   Page 3 of 4

and understandings, whether written or oral, among the parties with respect to
the subject matter hereof and (b) is not intended to confer upon any person
other than the parties hereto any rights or remedies hereunder.

         4.5 Counterparts; Facsimile. This Agreement may be executed in two or
more counterparts, all of which shall be considered one and the same agreement
and shall become effective when one or more counterparts have been signed by
each of the parties and delivered to the other parties. Facsimile transmission
of any signed original document and/or retransmission of any signed facsimile
transmission will be deemed the same as delivery of an original. At the request
of any party, the parties will confirm facsimile transmission by signing a
duplicate original document.

         4.6 Binding. This Agreement shall be binding upon the parties hereto
and their respective successors, and shall inure to the benefit of the parties
hereto and successors of Refac.

         IN WITNESS WHEREOF, the parties hereto caused this Agreement to be duly
executed the day and year first above written.

                        REFAC

                        By:  /s/ Robert L. Tuchman
                             --------------------------------
                             Name:  Robert L. Tuchman
                             Title: Chief Executive Officer

                        OPTICARE HEALTH SYSTEMS, INC.

                        By:  /s/ Christopher J. Walls
                             --------------------------------
                             Name:  Christopher J. Walls
                             Title: Chief Executive Officer

                        OPTICARE EYE HEALTH CENTERS, INC.

                        By:  /s/ Christopher J. Walls
                             --------------------------------
                             Name:  Christopher J. Walls
                             Title: Chief Executive Officer

                                   Page 4 of 4OPTICARE HEALTH SYSTEMS, INC.

                                 PROMISSORY NOTE

$1,000,000                                                    SEPTEMBER 1, 2005
                                                         WATERBURY, CONNECTICUT

         OPTICARE HEALTH SYSTEMS, INC., a Delaware corporation and OPTICARE EYE
HEALTH CENTERS, INC., a Connecticut corporation (collectively, the "Borrowers"
and individually, a "Borrower"), for value received, hereby jointly and
severally unconditionally promise to pay to the order of REFAC (the "Holder"), a
Delaware corporation on the Maturity Date (as defined herein) the principal
amount of One Million Dollars ($1,000,000), together with interest thereon as
provided herein. The Borrowers further agree to pay interest accrued on the
unpaid principal amount outstanding hereunder from time to time from the date
hereof, in like money, in the manner and at the rates and on the dates specified
herein.

         1. Interest; Payments.

            (a) The entire principal balance, together with any accrued but
unpaid interest and charges due on any late payments shall be due and payable on
January 25, 2007 (the "Maturity Date"). Notwithstanding the foregoing or
anything herein to the contrary, if the merger provided for in the Merger
Agreement (the "Merger Agreement"), dated August 22, 2005, between Refac,
OptiCare Merger Sub, Inc. and OptiCare Health Systems, Inc. ("OHS") is not
completed on or before January 31, 2006, the Maturity Date shall be March 31,
2006.

            (b) If the Maturity Date would fall on a day that is not a Business
Day (as defined below), the payment due on the Maturity Date will be made on the
next succeeding Business Day with the same force and effect as if made on the
Maturity Date. "Business Day" means any day which is not a Saturday or Sunday
and is not a day on which banking institutions are generally authorized or
obligated to close in the city of New York, New York.

            (c) Until this Promissory Note (the "Note") is paid in full,
interest shall accrue on the unpaid principal amount at the Applicable Interest
Rate (calculated on the basis of a 360-day year consisting of twelve 30-day
months) from the date hereof up to but excluding the Maturity Date. For purposes
of this Note, "Applicable Interest Rate" shall mean Prime Rate plus 5.5%. "Prime
Rate" shall have the same meaning as in the Second Amended and Restated
Revolving Credit, Term Loan and Security Agreement, dated March 29, 2004 and
amended on August 16, 2004, August 27, 2004 and January 12, 2005, between the
Borrowers and CapitalSource Finance LLC ("CapitalSource"), a

                                  Page 1 of 6

Delaware limited liability company. Such agreement, together with the amendments
thereto is herein collectively referred to as the "CapitalSource Loan
Agreement".

            (d) Payment of interest on this Note shall be made by wire transfer
of immediately available funds on the fifteenth day of each calendar month
commencing October 15, 2005 to an account designated by Holder or, if no such
account is designated, by certified or official bank check sent to Holder at its
address set forth in Section 4(a) hereof or to such other address as Holder may
designate for such purpose from time to time by written notice to OHS, in such
coin or currency of the United States of America as at the time of payment shall
be legal tender for the payment of public and private debts.

            (e) Payment of the principal and accrued interest on the Maturity
Date shall be made by wire transfer of immediately available funds to an account
designated by Holder or, if no such account is designated, by certified or
official bank check sent to Holder at its address set forth in Section 4(a)
hereof or to such other address as Holder may designate for such purpose from
time to time by written notice to OHS, in such coin or currency of the United
States of America as at the time of payment shall be legal tender for the
payment of public and private debts.

            (f) The obligations to make the payments provided for in this Note
are absolute and unconditional and not subject to any defense, set-off,
counterclaim, rescission, recoupment or adjustment whatsoever. The Borrowers
hereby expressly waive demand and presentment for payment, notice of
non-payment, notice of dishonor, protest, notice of protest and diligence in
taking any action to collect any amount called for hereunder, and shall be
directly and primarily liable for the payment of all sums owing and to be owing
hereon, regardless of and without any notice, diligence, act or omission with
respect to the collection of any amount called for hereunder.

            (g) If any payment hereunder is not made within ten (10) days from
its due date, a late charge of five percent (5%) of each payment so overdue may
be charged by Holder for the purpose of defraying the expenses incident to
handling such delinquent payment.

            (h) All agreements herein made are expressly limited so that in no
event whatsoever, whether by reason of advancement of proceeds hereof,
acceleration of maturity of the unpaid balance hereof or otherwise, shall the
amount paid or agreed to be paid to Holder for the use of the money advanced or
to be advanced hereunder exceed the maximum rate permitted by law (the "Maximum
Rate"). If, for any circumstances whatsoever, the fulfillment of any provision
of this Note or any other agreement or instrument now or hereafter evidencing,
securing or in any way relating to the debt evidenced hereby shall involve the
payment of interest in excess of the Maximum Rate, then, ipso facto, the
obligation to pay interest hereunder shall be reduced to the Maximum Rate; and
if, for any circumstance whatsoever, Holder shall ever receive interest, the
amount of which would exceed the amount collectible at the Maximum Rate, such

                                  Page 2 of 6

amount as would be excessive interest shall be applied to the reduction of the
principal balance remaining unpaid hereunder and not to the payment of interest.
This provision shall control every other provision in any and all other
agreements and instruments existing or hereafter arising between the Borrowers
and Holder with respect to the debt evidenced hereby.

            (i) Borrowers may prepay all or part of the unpaid principal balance
due hereunder at any time or from time to time without penalty.

         2. Events of Default.

            The occurrence of any of the following events shall constitute an
event of default (an "Event of Default"):

            (a) A default in the payment of the principal or interest on this
Note, when and as the same shall become due and payable.

            (b) A default in the performance, or a breach, of any of the
covenants of OHS contained in the Merger Agreement.

            (c) A default in the performance, or a breach, of any other covenant
or agreement of any of the Borrowers in or pursuant to this Note, the Merger
Agreement or the CapitalSource Loan Agreement.

            (d) Any material breach of a representation, warranty or
certification made by any of the Borrowers in or pursuant to this Note, the
Merger Agreement or the CapitalSource Loan Agreement.

            (e) A default or event of default which remains uncured following
any applicable grace or cure period shall have occurred with respect to the
Borrowers' indebtedness to CapitalSource.

            (f) The entry of a decree or order by a court having jurisdiction
adjudging any of the Borrowers as bankrupt or insolvent, or approving a petition
seeking reorganization, arrangement, adjustment or composition of or in respect
of any of the Borrowers under federal bankruptcy law, as now or hereafter
constituted, or any other applicable federal or state bankruptcy, insolvency or
other similar law, and the continuance of any such decree or order unstayed and
in effect for a period of 60 days; or the commencement by any of the Borrowers
of a voluntary case under federal bankruptcy law, as now or hereafter
constituted, or any other applicable federal or state bankruptcy, insolvency, or
other similar law, or the consent by any of the Borrowers to the institution of
bankruptcy or insolvency proceedings against it, or the filing by any of the
Borrowers of a petition or answer or consent seeking reorganization or relief
under federal bankruptcy law or any other applicable federal or state law, or
the consent by any of the Borrowers to the filing of such petition or to the
appointment of a receiver, liquidator,

                                  Page 3 of 6

assignee, trustee, sequestrator or similar official of such Borrower or of any
substantial part of the property of such Borrower, or the making by any of the
Borrowers of an assignment for the benefit of creditors, or the admission by any
of the Borrowers in writing of its inability to pay its debts generally as they
become due, or the taking of corporate action by any such Borrower in
furtherance of any such action.

         3. Remedies Upon Default.

            Upon the occurrence of an Event of Default, Holder, by notice in
writing given to OHS, may declare the entire principal amount then outstanding
of, and the accrued interest on, this Note to be due and payable immediately,
and upon any such declaration the same shall become and be due and payable
immediately, without presentation, demand, protest or other formalities of any
kind, all of which are expressly waived by the Borrowers. Holder may institute
such actions or proceedings in law or equity as it shall deem expedient for the
protection of its rights and may prosecute and enforce its claims against all
assets of the Borrowers, and in connection with any such action or proceeding
shall be entitled to receive from the Borrowers payment of the principal amount
of this Note, plus accrued interest to the date of payment, plus reasonable
expenses of collection, including, without limitation, reasonable attorneys'
fees and expenses actually incurred.

         4. Miscellaneous.

            (a) Any notice or other communication required or permitted to be
given hereunder shall be in writing and shall be sent by registered or certified
mail, postage prepaid, overnight courier, confirmed telex or facsimile
transmission or otherwise by hand or by messenger, addressed (i) if to the
Borrowers, to the attention of OHS, at its offices at 87 Grandview Avenue,
Waterbury, Connecticut 06708 to the attention of Chief Executive Officer, or
(ii) if to Holder, at its offices at One Bridge Plaza, Fort Lee, New Jersey
07024, to the attention of Chief Executive Officer and (iii) in either case, to
such other address as the party shall have furnished to the other party in
writing in accordance with the provisions of this Section 4(a). Notice to the
estate of any party shall be sufficient if addressed to the party as provided in
this Section 4(a). Any notice or other communication given by certified mail
shall be deemed given at the time of certification thereof, except for a notice
changing a party's address which shall be deemed given at the time of receipt
thereof. Any notice given by other means permitted by this Section 4(a) shall be
deemed given at the time of receipt thereof.

            (b) Upon receipt of evidence reasonably satisfactory to OHS, of the
loss, theft, destruction or mutilation of this Note (and upon surrender of this
Note if mutilated), the Borrowers shall execute and deliver to Holder a new Note
of like date, tenor and denomination.

            (c) No course of dealing and no delay or omission on the part of
Holder or the Borrowers in exercising any right or remedy shall operate as a
waiver thereof or

                                  Page 4 of 6

otherwise prejudice Holder's or the Borrowers' rights, powers or remedies, as
the case may be. No right, power or remedy conferred by this Note upon Holder or
the Borrowers shall be exclusive of any other right, power or remedy referred to
herein or now or hereafter available at law, in equity, by statute or otherwise,
and all such remedies may be exercised singly or concurrently.

            (d) This Note may be amended only by a written instrument executed
by the Borrowers (or its successor or permitted assignee, if applicable) and
Holder hereof. Any amendment shall be endorsed upon this Note and all future
Holders shall be bound thereby.

            (e) If one or more provisions of this Note are held to be
unenforceable under applicable law, such provision shall be excluded from this
Note and the balance of this Note shall be interpreted as if such provision were
so excluded and shall be enforceable in accordance with its terms.

            (f) This Note shall be governed by and construed in accordance with
the laws of the State of New York, without giving effect to principles governing
conflicts of law.

            (g) The Borrowers irrevocably consent to the exclusive jurisdiction
of any of the federal and state courts located in the State of New York sitting
in New York County, New York in connection with any action or proceeding arising
out of or relating to this Note, any document or instrument delivered pursuant
to, in connection with or simultaneously with this Note, or a breach of this
Note or any such document or instrument.

                                  [END OF PAGE]

                                  Page 5 of 6

         IN WITNESS WHEREOF, intending to be legally bound hereby, each of the
Borrowers have executed this Note under seal, intending to be legally bound
hereby, the day and year first above written.

                                  OPTICARE HEALTH SYSTEMS, INC.

                                  By: /s/ Christopher J. Walls
                                      ----------------------------------
                                      Name:  Christopher J. Walls
                                      Title: Chief Executive Officer

                                  OPTICARE EYE HEALTH CENTERS, INC.

                                  By: /s/ Christopher J. Walls
                                      ----------------------------------
                                      Name:  Christopher J. Walls
                                      Title: Chief Executive Officer

                                  Page 6 of 6

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