Document:

<PAGE>
                                                                    EXHIBIT 10.5

               THIRD AMENDMENT TO REVOLVING CREDIT, TRANCHE B LOAN
               AND SECURITY AGREEMENT, LIMITED WAIVER AND CONSENT

             THIRD AMENDMENT TO REVOLVING CREDIT, TRANCHE B LOAN AND SECURITY
AGREEMENT, LIMITED WAIVER AND CONSENT, dated as of February __, 2004
("AMENDMENT"), by and among MAYOR'S JEWELERS, INC., a Delaware corporation,
MAYOR'S JEWELERS OF FLORIDA, INC., a Florida corporation, and each of the other
Domestic Subsidiaries parties thereto (collectively, the "BORROWERS"), FLEET
RETAIL GROUP INC. (f/k/a Fleet Retail Finance Inc.)("FRGI"), GMAC COMMERCIAL
FINANCE, LLC (successor in interest to GMAC Business Credit, LLC) ("GMACCF"), as
syndication agent (the "SYNDICATION AGENT"), BACK BAY CAPITAL FUNDING LLC (the
"TRANCHE B LENDER" and collectively with FRGI and GMACCF, the "LENDERS"), and
FLEET RETAIL GROUP INC. (f/k/a Fleet Retail Finance Inc.), as administrative
agent for itself and the Lenders (the "ADMINISTRATIVE AGENT").

             WHEREAS, the Borrowers, the Lenders, and the Administrative Agent
are parties to a Revolving Credit, Tranche B Loan and Security Agreement, dated
as of August 20, 2002 (as amended and in effect from time to time, the "CREDIT
AGREEMENT"), pursuant to which the Lenders have extended credit to the Borrowers
on the terms and subject to the conditions set forth therein;

         WHEREAS, the Borrowers, the Lenders, and the Administrative Agent have
agreed, on the terms and conditions set forth herein, to amend certain
provisions of the Credit Agreement; and

         WHEREAS, capitalized terms which are used herein without definition and
which are defined in the Credit Agreement shall have the same meanings herein as
in the Credit Agreement.

         NOW, THEREFORE, in consideration of the foregoing, and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:

         SS.1. AMENDMENT TO SECTION 1.1 OF THE CREDIT AGREEMENT. Section 1.1 of
the Credit Agreement is hereby amended by:

                  (a) deleting the definition of "Appraised A/R Liquidation
         Value" in its entirety and substituting the following new definition in
         lieu thereof:

         "APPRAISED A/R LIQUIDATION VALUE. The product of (a) the net book value
                  of Eligible Private Label Accounts multiplied by (b) the
                  percentage determined from the then most recent appraisal of
                  Eligible Private Label Accounts undertaken at the request of
                  the Administrative Agent, to reflect the appraised estimate of
                  the net recovery on the Eligible Private Label Accounts on a
                  forced liquidation basis.";

                  (b) deleting the definition of "Appraised A/R Percentage" in
         its entirety and substituting the following new definition in lieu
         thereof:

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         "APPRAISED A/R PERCENTAGE. 65%.";

                  (c) deleting the definition of "Appraised A/R Tranche B
         Percentage" in its entirety and substituting the following new
         definition in lieu thereof:

         "APPRAISED A/R TRANCHE B PERCENTAGE. 65%.";

                  (d) deleting the definition of "Appraised Inventory Tranche B
         Percentage" in its entirety and substituting the following new
         definition in lieu thereof:

         "APPRAISED INVENTORY TRANCHE B PERCENTAGE. For each Eligible Inventory
                  Category, the Appraised Inventory Tranche B Percentage shall
                  be equal to one hundred and two and one-half percent (102.5%).
                  With respect to additional Eligible Inventory Categories, the
                  Appraised Inventory Tranche B Percentage shall be the
                  percentage determined by the Administrative Agent and the
                  Tranche B Lender."

                  (e) deleting the definition of "Borrowing Base" in its
         entirety and substituting the following new definition in lieu thereof:

         "BORROWING BASE. The result of the following:

                  (a)      Eighty-five percent (85%) multiplied by the Appraised
                           Inventory Liquidation Value of each Eligible
                           Inventory Category.

                                  PLUS

                  (b)      The lesser of (i) the Appraised A/R Percentage
                           multiplied by the Appraised A/R Liquidation Value and
                           (ii) $3,000,000.

                                  MINUS

                  (c)      All applicable Reserves.";

                  (f) deleting the definition of "Tranche B Borrowing Base" in
         its entirety and substituting the following new definition in lieu
         thereof:

         "TRANCHE B BORROWING BASE. The result of the following:

                  (a)      The aggregate amount with respect to all Eligible
                           Inventory Categories of the Appraised Inventory
                           Tranche B Percentage for each such Eligible Inventory
                           Category multiplied by the Appraised Inventory
                           Liquidation Value for such Eligible Inventory
                           Category.

                                  PLUS

                  (b)      The lesser of (i) the Appraised A/R Tranche B
                           Percentage multiplied by the Appraised A/R
                           Liquidation Value and (ii) $3,000,000.

                                       2
<PAGE>

                                  MINUS

                  (c)      All applicable Reserves."; and

                  (g) deleting the definition of "Tranche B Loan" in its
         entirety and substituting the following new definition in lieu thereof:

                  "TRANCHE B LOAN. Together with the Incremental Tranche B
                           Funding Amount, the aggregate principal amount of
                           $12,500,000, plus accrued and unpaid capitalized
                           Tranche B Loan PIK Interest in the amount of
                           $168,491.25. As of the Third Amendment Effective
                           Date, and after giving effect to the funding of the
                           Incremental Funding Amount, the outstanding principal
                           amount of the Tranche B Loan shall be equal to
                           $12,668,491.25."

                  (h) deleting the definition of "Yield Revenue" in its entirety
         and substituting the following new definition in lieu thereof:

                  "YIELD REVENUE. All amounts which are (or would be) payable on
                           account of the Tranche B Loan, the Tranche B Lender
                           Fees and the Tranche B Loan Interest Rate (as if all
                           interest were paid in cash on the relevant Tranche B
                           Loan Interest Payment Date) with respect to the
                           Tranche B Loan from the Third Amendment Effective
                           Date through the twelve (12) month anniversary of the
                           Third Amendment Effective Date."

                  (i) inserting the following new definitions in proper
         alphabetical order therein:

                  "ELIGIBLE PRIVATE LABEL ACCOUNTS. Accounts Receivable due on
                           the Borrowers' private label credit card programs
                           which are deemed in the reasonable discretion of the
                           Administrative Agent to be eligible. The
                           Administrative Agent shall act in good faith at all
                           times when determining such eligibility."

                  "INCREMENTAL TRANCHE B FUNDING AMOUNT. $2,000,000, which
                           amount shall be funded to the Borrowers by the
                           Tranche B Lender on the Third Amendment Effective
                           Date."

                  "THIRD AMENDMENT. The Third Amendment to Revolving Credit
                           Tranche B Loan and Security Agreement, Limited Waiver
                           and Consent dated as of February __, 2004."

                  "THIRD AMENDMENT EFFECTIVE DATE. The "Effective Date" as such
                           term is defined in the Third Amendment."

         SS.2. AMENDMENT TO SECTION 3 OF THE CREDIT AGREEMENT. Section 3 of the
Credit Agreement is hereby amended by deleting Sections 3.1 and 3.3 in their
entirety and substituting the following new Sections 3.1 and 3.3 in proper
numerical order in lieu thereof:

                  "3.1 COMMITMENT TO LEND. Subject to the terms and conditions
         set forth in this Agreement, the Tranche B Lender agrees to lend to the
         Borrowers on the Closing Date the principal amount of $12,500,000. In
         addition, subject to the terms and conditions of the Third Amendment,
         the Tranche B Lender agrees to lend to the Borrowers on the Third
         Amendment Effective Date the Incremental Tranche B Funding Amount."

                                       3
<PAGE>

                  "3.3. PAYMENTS OF PRINCIPAL OF TRANCHE B LOAN. Except as
         contemplated by ss.13.4, the Borrowers may not make any principal
         payments on account of the Tranche B Loan until the Borrowers'
         Obligations to the Revolving Credit Lenders have been paid in full and
         the Commitments have been terminated; PROVIDED, HOWEVER, beginning
         April 30, 2003, the Borrowers may prepay the Tranche B Loan in its
         entirety or in $1,000,000 increments if at such time (i) a Default does
         not exist and one would not result from such prepayment, (ii) after
         giving effect to such payment Availability is in excess of $10,000,000
         and (iii) the Borrowers shall have delivered to the Administrative
         Agent pro forma financial statements for the next 12 months
         demonstrating, in form and substance satisfactory to the Administrative
         Agent, that Availability will exceed $10,000,000 at all times during
         the next 12 months after giving effect to the prepayment of the Tranche
         B Loan. The Borrowers jointly and severally promise to pay on the
         Maturity Date, and there shall become absolutely due and payable on the
         Maturity Date, all of the Tranche B Loans outstanding on such date,
         together with any and all accrued and unpaid interest thereon. If the
         Borrowers prepay the Tranche B Loans in whole or in part, then, in view
         of the impracticality and extreme difficulty of ascertaining the actual
         amount of damages to Tranche B Lender or profits lost by the Tranche B
         Lender as a result thereof, and by mutual agreement of the parties as
         to a reasonable estimation and calculation of the lost profits or
         damages of the Tranche B Lender, the Borrowers shall pay a premium with
         respect to each such prepayment (the "TRANCHE B EARLY TERMINATION FEE")
         in an amount equal to the greater of (a) the Yield Revenue calculated
         with respect to such amounts less the aggregate amount of any payments
         made during the period from the Third Amendment Effective Date through
         the twelve (12) month anniversary of the Third Amendment Effective Date
         on account of components of Yield Revenue relating to such amounts and
         (b) one and one-fifth percent (1.20%) of the amount prepaid."

         SS.3. LIMITED WAIVER AND CONSENT. The Borrowers have requested, and the
Lenders hereby consent to the request by Mayor's Jewelers, Inc. to (i) authorize
a new series of preferred stock containing substantially identical terms and
rights to Mayor's Jewelers, Inc.'s currently-outstanding Series A Convertible
Preferred Stock with the exception of certain changes to such rights primarily
regarding the payment of dividends, future dividend rates and the conversion
ratio as more fully set forth in the attached Certificate of Designation of
Series A-1 Convertible Preferred Stock, and (ii) issue all of such shares of
preferred stock to Birks in a one-for-one exchange for its shares of Series A
Convertible Preferred Stock in accordance with that certain Exchange Agreement
(the "EXCHANGE AGREEMENT") by and between Mayor's Jewelers, Inc. and Henry Birks
& Sons Inc. in the form attached hereto. In addition, the Lenders hereby consent
to a preferred share dividend payment (the "BIRKS DIVIDEND PAYMENT") to be made
by Mayor's Jewelers, Inc. to Birks on or after the Third Amendment Effective
Date but prior to March 5, 2004 in an amount not to exceed $2,185,755.00. The
Lenders hereby further consent to any of the Borrowers entering into the
Exchange Agreement and the Amendment to Amended and Restated Registration Rights
Agreement referred to in the Exchange Agreement to effect the authorization and
issuance of the additional class of preferred stock, as well as the Birks
Dividend Payment. Solely in connection with the Birks Dividend Payment, the
Lenders hereby agree to waive the application of ss.9.4 of the Credit Agreement
so long as no Default or Event of Default would result therefrom.

         SS.4. REPRESENTATIONS AND WARRANTIES. Each of the Borrowers hereby
represents and warrants to the Administrative Agent and the Lenders as of the
date hereof, and as of any date on which the conditions set forth in ss.5 below
are met, as follows:

             (a) The execution and delivery by each of the Borrowers of this
Amendment and all other instruments and agreements required to be executed and
delivered by such Borrower in connection with the transactions contemplated
hereby or referred to herein (collectively, the "AMENDMENT DOCUMENTS"), and the
performance by each of the Borrowers of any of its obligations and agreements

                                       4
<PAGE>

under the Amendment Documents and the Credit Agreement and the other Loan
Documents, as amended hereby, are within the corporate or other authority of
such Borrower, have been authorized by all necessary corporate proceedings on
behalf of such Borrower and do not and will not contravene any provision of law
or such Borrower's charter, other incorporation or organizational papers,
by-laws or any stock provision or any amendment thereof or of any indenture,
agreement, instrument or undertaking binding upon such Borrower.

             (b) Each of the Amendment Documents, the Credit Agreement and the
other Loan Documents, as amended hereby, to which any Borrower is a party
constitute legal, valid and binding obligations of such Person, enforceable in
accordance with their terms, except as limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws relating to or affecting generally
the enforcement of creditors' rights.

             (c) No approval or consent of, or filing with, any governmental
agency or authority is required to make valid and legally binding the execution,
delivery or performance by the Borrowers of the Amendment Documents, the Credit
Agreement or any other Loan Documents, as amended hereby, or the consummation by
the Borrowers of the transactions among the parties contemplated hereby and
thereby or referred to herein.

             (d) The representations and warranties contained in ss.7 of the
Credit Agreement and in the other Loan Documents were true and correct as of the
date made. Except to the extent of changes resulting from transactions
contemplated or permitted by the Credit Agreement and the other Loan Documents,
changes occurring in the ordinary course of business (which changes, either
singly or in the aggregate, have not been materially adverse) and to the extent
that such representations and warranties relate expressly to an earlier date and
after giving effect to the provisions hereof, such representations and
warranties, after giving effect to this Amendment, also are correct as of the
date hereof.

             (e) Each of the Borrowers has performed and complied in all
material respects with all terms and conditions herein required to be performed
or complied with by it prior to or at the time hereof, and as of the date
hereof, after giving effect to the provisions of this Amendment and the other
Amendment Documents, there exists no Default or Event of Default.

             (f) Each of the Borrowers hereby acknowledges and agrees that the
representations and warranties contained in this Amendment shall constitute
representations and warranties as referred to in ss.13.1(e) of the Credit
Agreement, a breach of which shall constitute an Event of Default.

         SS.5. EFFECTIVENESS. This Amendment shall become effective as of the
date first written above (the "EFFECTIVE DATE) upon the satisfaction of each of
the following conditions, in each case in a manner satisfactory in form and
substance to the Administrative Agent and the Lenders:

             (a) This Amendment shall have been duly executed and delivered by
each of the Borrowers and each of the Lenders and shall be in full force and
effect;

             (b) The Administrative Agent shall have received all financial
statements and related financial information required to be delivered by the
Borrowers in accordance with Section 8.4(a) of the Credit Agreement, which
financial statements shall be in form and substance satisfactory to the
Administrative Agent and the Lenders;

             (c) The Administrative Agent shall have received from Birks the
most recently completed independent audited financial statements and interim
financial statements, together with the projections and business plan for the
following twelve month period, in each case in form and substance satisfactory
to the Administrative Agent and the Lenders;

                                       5
<PAGE>

             (d) The Administrative Agent shall have received evidence, in form
and substance satisfactory to the Administrative Agent, that the Borrowers have
obtained all consents and approvals necessary to effect the transactions
contemplated by the Amendment Documents;

             (e) The Administrative Agent shall have received from the Secretary
of each of the Borrowers a copy, certified by such Secretary to be true and
complete as of such date, of (i) the resolutions of each such Person's Board of
Directors or other management authorizing, to the extent it is a party thereto,
the execution, delivery and performance of the Amendment Documents, and (ii) the
names, titles, incumbency and signatures of the officers of each such Person who
are authorized to execute and deliver this Amendment and the other Amendment
Documents;

              (f) The Administrative Agent shall have received favorable legal
opinions addressed to the Administrative Agent and the Lenders, each dated as of
the date hereof and in form and substance satisfactory to the Administrative
Agent, from counsel to the Borrowers, concerning corporate authority matters and
the enforceability of the Amendment Documents and the transactions contemplated
thereby and concerning such other matters as the Administrative Agent may
request;

              (g) The Administrative Agent shall have received a favorable
fairness opinion addressed to the Independent Committee of the Board of
Directors of Mayor's Jewelers, Inc. from Capitalink L.C., which opinion shall be
in form and substance satisfactory to the Administrative Agent;

              (h) The Administrative Agent shall have received an officer's
certificate, in form and substance satisfactory to the Lenders, relating to the
deliberations of the Independent Committee of the Board of Directors of Mayor's
Jewelers, Inc. regarding the authority of the Borrowers to, among other things,
consummate the transactions contemplated by this Amendment;

              (i) Each of the Administrative Agent and the Tranche B Lender
shall have received from the Borrowers payment in full of all required amendment
fees as set forth in their respective fee letters of even date herewith; and

              (j) The Administrative Agent shall have received such other items,
documents, agreements, items or actions as the Administrative Agent may
reasonably request in order to effectuate the transactions contemplated hereby.

              SS.6. MISCELLANEOUS PROVISIONS.

              (a) Each of the Borrowers hereby ratifies and confirms all of its
Obligations to the Administrative Agent and the Lenders under the Credit
Agreement, as amended hereby, and the other Loan Documents, including, without
limitation, the Loans, and each of the Borrowers hereby affirms its absolute and
unconditional promise to pay to the Lenders and the Administrative Agent the
Loans, reimbursement obligations and all other amounts due or to become due and
payable to the Lenders and the Administrative Agent under the Credit Agreement
and the other Loan Documents, as amended hereby. Except as expressly amended
hereby, each of the Credit Agreement and the other Loan Documents shall continue
in full force and effect. This Amendment and the Credit Agreement shall
hereafter be read and construed together as a single document, and all
references in the Credit Agreement, any other Loan Document or any agreement or
instrument related to the Credit Agreement shall hereafter refer to the Credit
Agreement as amended by this Amendment.

                                       6
<PAGE>

              (b) Without limiting the expense reimbursement requirements set
forth in ss.16.2 of the Credit Agreement, the Borrower agrees to pay on demand
all costs and expenses, including reasonable attorneys' fees, of the
Administrative Agent incurred in connection with this Amendment.

              (c) THIS AMENDMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS (WITHOUT REFERENCE
TO CONFLICT OF LAWS) AND SHALL TAKE EFFECT AS A SEALED INSTRUMENT IN ACCORDANCE
WITH SUCH LAWS.

              (d) This Amendment may be executed in any number of counterparts,
and all such counterparts shall together constitute but one instrument. In
making proof of this Amendment it shall not be necessary to produce or account
for more than one counterpart signed by each party hereto by and against which
enforcement hereof is sought.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.]

                                       7
<PAGE>

            IN WITNESS WHEREOF, the undersigned have duly executed this
Amendment as a sealed instrument as of the date first set forth above.

                                     MAYOR'S JEWELERS, INC.

                                     By: /s/ JOHN BALL
                                        ---------------------------------------
                                        Name:  John Ball
                                        Title: Sr. VP, Chief Financial Officer

                                     MAYOR'S JEWELERS OF FLORIDA, INC.

                                     By: /s/ JOHN BALL
                                        ---------------------------------------
                                        Name:  John Ball
                                        Title: Sr. VP, Chief Financial Officer

                                     JBM RETAIL COMPANY, INC.

                                     By: /s/ MARC WEINSTEIN
                                        ---------------------------------------
                                        Name:  Marc Weinstein
                                        Title: President

                                     JBM VENTURE CO., INC.

                                     By: /s/ MARC WEINSTEIN
                                        ---------------------------------------
                                        Name:  Marc Weinstein
                                        Title: President

                                     MAYOR'S JEWELERS INTELLECTUAL PROPERTY
                                     HOLDING COMPANY

                                     By: /s/ MARC WEINSTEIN
                                        ---------------------------------------
                                        Name:  Marc Weinstein
                                        Title: President

                                       8
<PAGE>

                                     "ADMINISTRATIVE AGENT"

                                     FLEET RETAIL GROUP INC.
                                     (f/k/a Fleet Retail Finance Inc.)

                                     By: /s/ KEITH VERRAUTEREN
                                        ---------------------------------------
                                        Name:  Keith Verrauteren
                                        Title: Vice President

                                     "SYNDICATION AGENT"

                                     GMAC COMMERCIAL FINANCE, LLC

                                     By: /s/ EDWARD HILL
                                        ---------------------------------------
                                        Name:  Edward Hill
                                        Title: Senior Vice President

                                     "REVOLVING CREDIT LENDERS"

                                     FLEET RETAIL GROUP INC.
                                     (f/k/a Fleet Retail Finance Inc.)

                                     By: /s/ KEITH VERRAUTEREN
                                        ---------------------------------------
                                        Name:  Keith Verrauteren
                                        Title: Vice President

                                     GMAC COMMERCIAL FINANCE, LLC

                                     By: /s/ EDWARD HILL
                                        ---------------------------------------
                                        Name:  Edward Hill
                                        Title: Senior Vice President

                                     "TRANCHE B LENDER"

                                     BACK BAY CAPITAL FUNDING LLC

                                     By: /s/ KRISTEN M. O'CONNOR
                                        ---------------------------------------
                                        Name:  Kristen M. O'Connor
                                        Title: Director

                                       9<PAGE>
                                                                    EXHIBIT 10.6

                                February 20, 2004

Board of Directors
Mayor's Jewelers, Inc.
14051 N.W. 14th Street
Sunrise, Florida 33323

Back Bay Capital, LLC
40 Board Street, 10th Floor
Boston, MA 02109

Ladies and Gentlemen:

                  We have acted as special Delaware counsel to Mayor's Jewelers,
Inc., a Delaware corporation (the "Company"), in connection with the proposed
payment of a cash dividend in the aggregate amount of $2,185,755 on all of the
outstanding shares of Series A-1 Convertible Preferred Stock, par value $0.0001
per share (the "Series A-1 Preferred Stock"), of the Company (the "Dividend").
In this connection, you have requested our opinion as to certain matters under
the General Corporation Law of the State of Delaware (the "General Corporation
Law").

                  For the purpose of rendering our opinion as expressed herein,
we have been furnished with and have reviewed the following documents:

                  (i) the Certificate of Incorporation of the Company as filed
with the Secretary of State of the State of Delaware (the "Secretary of State")
on June 19, 1987, as amended by the Agreement and Plan of Merger of the Company
as filed with the Secretary of State on July 27, 1987, the Certificates of
Amendment of the Company as filed with the Secretary of State on June 23, 1989,
July 30, 1991, August 20, 1996 and July 12, 2000, respectively, and the
Certificates of Designations of the Company as filed with the Secretary of State
on December 3, 1996, August 20, 2002 and February 20, 2004, respectively
(collectively, the "Certificate of Incorporation");

                  (ii) the By-laws of the Company, as amended through the date
hereof (the "Bylaws"); and

                  (iii) a report from the Chief Financial Officer of the
Company, dated February 20, 2004, with respect to the surplus of the Company
before and after the payment of the Dividend (the "Officer's Report").

                  With respect to the foregoing documents, we have assumed: (i)
the authenticity of all documents submitted to us as originals; (ii) the
conformity to authentic originals of all documents submitted to us as certified,
conformed, photostatic, electronic or other copies or forms; (iii) the

<PAGE>

genuineness of all signatures, and the incumbency, authority, legal right and
power and legal capacity under all applicable laws and regulations, of each of
the officers and other persons and entities signing or whose signatures appear
upon each of said documents as or on behalf of the parties thereto; and (iv)
that the foregoing documents, in the forms submitted to us for our review, have
not been and will not be altered or amended in any respect material to our
opinions as expressed herein. We have not reviewed any documents other than the
documents listed above for purposes of rendering our opinion as expressed
herein, and we assume that there exists no provision of any such other document,
or any statement or information contained therein, that bears upon or is
inconsistent with our opinion as expressed herein. In addition, we have
conducted no independent factual investigation of our own but rather have relied
solely upon the foregoing documents as listed hereinabove, the statements and
information set forth therein and the additional matters recited or assumed
herein, all of which we assume to be true, complete and accurate in all material
respects.

                  We have also been advised and have assumed: (i) that the
Certificate of Incorporation and the Bylaws are the certificate of incorporation
and bylaws, respectively, of the Company; (ii) that there are no shares of
Series A Convertible Preferred Stock, par value $0.0001 per share, of the
Company (the "Series A Preferred Stock") outstanding; (iii) that there are
15,050 shares of Series A-1 Preferred Stock validly issued and outstanding; (iv)
that the Company has no more than 46,945,261 shares of common stock, par value
$.0001 per share, issued; (v) that there are 15,050 shares of Series A Preferred
Stock held as treasury stock; (vi) that no shares of the Series A Junior
Participating Preferred Stock, par value $.0001, of the Company have been
issued; and (vii) that there exists no resolution of the Board of Directors of
the Company (or any committee thereof) which allocates an amount in excess of
the par value of the outstanding shares of capital stock of the Company to the
capital account of the Company.

                                    ANALYSIS

                  STATUTORY AUTHORITY FOR PAYMENT OF DIVIDENDS.

                  Sections 170(a) and 173 of the General Corporation Law set
forth the general rules regarding declaration and payment of dividends. Section
170(a) provides in pertinent part as follows:

                  (a) The directors of every corporation, subject to any
                  restrictions contained in its certificate of incorporation,
                  may declare and pay dividends upon the shares of its capital
                  stock ... either (1) out of its surplus, as defined in and
                  computed in accordance with sections 154 and 244 of this
                  title, or (2) in the case there shall be no surplus, out of
                  its net profits for the fiscal year in which the dividend is
                  declared and/or the preceding fiscal year.

8 DEL. C.ss.170(a). Section 173 provides that "[n]o corporation shall pay
dividends except in accordance with this chapter." 8 DEL. C.ss.173.

                  Dividends may be paid only out of "surplus," as that term is
defined in the General Corporation Law. In the event there is no surplus,
dividends may be paid out of the net profits of the corporation for the fiscal
year in which the dividend is declared and/or the immediately preceding fiscal
year. Dividends may not be paid, however, out of net profits of the corporation

                                       2
<PAGE>

if the capital represented by the issued and outstanding stock of all classes
having a preference upon the distribution of assets is impaired. 8 DEL.
C.ss.170(a). The statute defines the term "surplus" in relation to the
corporation's "capital," as outlined below.

                      DETERMINATION OF CAPITAL AND SURPLUS.

                  Under Delaware law, for the purposes of determining legally
available funds for the payment of dividends and the repurchase of shares, the
amount of "surplus" of a corporation is the amount by which the net assets of
the corporation (defined in Section 154 of the General Corporation Law as the
amount by which total assets exceed total liabilities) exceed the capital of the
corporation. The "capital" of a corporation is determined pursuant to Sections
154 and 244 of the General Corporation Law. Section 154 of the General
Corporation Law generally defines "capital" as that portion of the consideration
received by the corporation for the issued shares of its capital stock that the
directors determine to be capital, but in no event less than the aggregate par
value of the issued shares. 8 DEL. C. ss. 154. The capital of a corporation, as
so determined, may be increased from time to time by the board of directors, 8
DEL. C. ss. 154, and the capital of a corporation may be reduced under the
procedures set forth in 8 DEL. C. ss. 244. Thus, the capital of a corporation in
respect of shares having par value is an amount equal to the aggregate par value
of the issued shares having par value, plus such portion of the net assets of
the corporation as the board of directors by resolution has directed to be
allocated to the capital in respect of such shares, minus such amounts by which
the board of directors by resolution has caused the capital in respect of such
shares to be reduced in accordance with 8 DEL. C. ss. 244, but in no event may
the capital in respect of shares of stock having par value be less than the
aggregate par value of the issued shares having par value.

                  Section 154 provides that "[t]he excess, if any, at any given
time, of the net assets of the corporation over the amount so determined to be
capital shall be surplus. Net assets means the amount by which total assets
exceed total liabilities. Capital and surplus are not liabilities for this
purpose." 8 DEL. C.ss. 154. As so determined, the surplus of a corporation is
consequently an amount equal to the present fair value of the total assets of
the corporation, minus the total liabilities of the corporation, minus the
capital of the corporation (determined as described above). ID.; KLANG V.
SMITH'S FOOD & DRUG CENTERS, 702 A.2d 150, 153-54 (Del. 1997); FARLAND V. WILLS,
C.A. No. 4888 (Del. Ch. Nov. 12, 1975); MORRIS V. STANDARD GAS & ELEC. CO., 63
A.2d 577 (Del. Ch. 1949).

                  The MORRIS decision provides some guidance on the type of
valuation process that should be used by a board of directors in determining
whether a corporation has surplus for purposes of paying a dividend under the
General Corporation Law. Specifically, in MORRIS, the board of the defendant
corporation had three meetings to consider whether the corporation had lawfully
available funds to pay a dividend, during which it was provided with extensive
information, including: (i) the financial records of the corporation; (ii) the
report of an independent outside appraiser as to the value of the corporation's

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<PAGE>

assets; (iii) the report of the Treasurer of the corporation as to his valuation
of the corporation's assets; and (iv) three opinions of legal counsel stating
that payment of the dividend was permissible under Delaware law.

                  Based on this record, the Court found that the board of the
defendant corporation "took great care to obtain data on the point in issue, and
exercised an informed judgment on the matter." The Court held that the statute
"permits ... no one objective standard of value" and that "the directors must be
given reasonable latitude in ascertaining value." 63 A.2d at 585. The Court also
held that under the circumstances presented it could not substitute "either
plaintiff's or its own opinion of value for that reached by the directors where
there is charge of no fraud or bad faith." ID. at 585; ACCORD IN RE AMSTED
INDUS., INC. LITIG., Cons. C.A. No. 8224, Appendix 6-7 (Del. Ch. Aug. 24, 1988),
AFF'D SUB NOM. BARKAN V. AMSTED INDUS., INC., 567 A.2d 1279 (Del. 1989).

                  In KLANG V. SMITH'S FOOD & DRUG CENTERS, INC., C.A. No. 15012,
slip op. at 9 (Del. Ch. May 13, 1997), a decision involving the determination of
surplus in connection with a repurchase of stock under Section 160 of the
General Corporation Law, the Court of Chancery rejected the plaintiff's argument
that "use of going-concern valuation methods are inappropriate in the context of
asset valuation and calculation of available corporate surplus," and, relying
upon MORRIS, rejected the notion that there is only one valuation standard for
the calculation of surplus under Delaware law. The Court explained:

                  Directors are not restricted in the way they value assets or
                  liabilities as long as they fulfill their "duty to evaluate
                  the assets on the basis of acceptable data and by standards
                  which they are entitled to believe reasonably reflect present
                  `values.'" Thus, the issue is not whether [the financial
                  advisor's] method is expressly permitted under section 160,
                  but whether [the company's] directors based their revaluation
                  on acceptable data and whether they were entitled to believe
                  that [the financial advisor's] valuation of [the company's]
                  assets reasonably reflected [the company's] values both before
                  and after the repurchase.

KLANG, slip op. at 10-11 (quoting MORRIS, 63 A.2d at 582). The Delaware Supreme
Court affirmed the decision of the Court of Chancery in KLANG. In so affirming,
the Delaware Supreme Court rejected plaintiff's claim that the valuation
methodology employed by defendant corporation was inappropriate as a matter of
law. According to the Court, the opinion of the financial advisor, when properly
analyzed, provided substantial evidence as to compliance with Section 160 of the
General Corporation Law. Having failed to demonstrate bad faith or fraud and
having failed to demonstrate that the defendant directors had failed to evaluate
the assets on the basis of acceptable data or by standards which they were
entitled to believe reasonably reflect present values, "we defer to the board's
determination of surplus, and hold that [defendant's] self-tender offer did not
violate 8 DEL. C.
ss. 160."

                  By way of contrast to MORRIS and KLANG, in FARLAND V. WILLS,
C.A. No. 4888 (Del. Ch. Nov. 12, 1975), the Court of Chancery criticized a board
for not having made a reasonable effort in valuing the assets of the corporation
in connection with certain stock purchase arrangements. In invalidating the

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<PAGE>

challenged stock purchases, the Court cited 8 DEL. C. ss. 160 and, following the
decision in MORRIS, held that even though the directors were not required to
make a formal appraisal of the corporation's assets, they did have a duty to
evaluate the assets and liabilities of the corporation on the basis of
acceptable data by standards that they are entitled to believe reasonably
reflect present "values." Slip op. at 12. SEE ALSO PEREIRA V. COGAN, 294 B.R.
449, 532 (S.D.N.Y. May 8, 2003) (finding board breached fiduciary duties in
paying illegal dividend without making reasonable effort to determine surplus).
Thus, a board of directors has reasonable latitude in ascertaining value for
purposes of calculating surplus but must use standards that reasonably reflect
the present value of the assets.

       RELIANCE ON BOOKS OF CORPORATION OR REPORTS OF OFFICERS OR EXPERTS.

                  In making a determination of whether or not a corporation has
surplus for purposes of paying a dividend, a board of directors generally may
rely on the books of the corporation if such reliance is made in good faith.
Section 141(e) of the General Corporation Law provides:

                  A member of the board of directors, or a member of any
                  committee designated by the board of directors, shall, in the
                  performance of such duties, be fully protected in relying in
                  good faith upon the records of the corporation and upon such
                  information, opinions, reports or statements presented to the
                  corporation by any of the corporation's officers or employees,
                  or committees of the board of directors, or by any other
                  person as to matters the member reasonably believes are within
                  such other person's professional or expert competence and who
                  has been selected with reasonable care by or on behalf of the
                  corporation.

8 DEL. C.ss.141(e). The principle set forth in Section 141(e) is restated with
particular reference to dividends in Section 172 of the General Corporation Law,
as follows:

                  A member of the board of directors, or a member of any
                  committee designated by the board of directors, shall be fully
                  protected in relying in good faith upon the records of the
                  corporation and upon such information, opinions, reports or
                  statements presented to the corporation by any of its officers
                  or employees, or committees of the board of directors, or by
                  any other person as to matters the director reasonably
                  believes are within such other person's professional or expert
                  competence and who has been selected with reasonable care by
                  or on behalf of the corporation, as to the value and amount of
                  the assets, liabilities and/or net profits of the corporation
                  or any other facts pertinent to the existence and amount of
                  surplus or other funds from which dividends might properly be
                  declared and paid, or with which the corporation's stock might
                  properly be purchased or redeemed.

                                       5
<PAGE>

8 DEL. C.ss.172. Thus, under Sections 141(e) and 172 of the General Corporation
Law, directors are protected from liability for wrongful declaration and payment
of a dividend when they rely in good faith upon the books and records of the
corporation, or rely in good faith upon the report of an independent expert
selected with reasonable care. KLANG V. SMITH'S FOOD & DRUG CENTERS, INC., C.A.
No. 15012, slip op. at 11-12 (Del. Ch. May 13, 1997), AFF'D, 702 A.2d 150 (Del.
1997). As noted by the Delaware Supreme Court in the context of a merger
proposal in SMITH V. VAN GORKOM, 488 A.2d 858, 876 (Del. 1985), the advice of
outside experts is not necessarily required in order for directors to exercise
due care. The Court stated: "[w]e do not imply that an outside valuation study
is essential to support an informed business judgment; nor do we state that
fairness opinions by independent investment bankers are required as a matter of
law. Often insiders familiar with the business of a going concern are in a
better position than are outsiders to gather relevant information; and under
appropriate circumstances, such directors may be fully protected in relying in
good faith upon valuation reports of their management." ID.

                                    ANALYSIS

                  We understand that the Board of Directors of the Company (the
"Board") has received the Officer's Report as to the fair market value of the
assets and liabilities of the Company immediately prior to and after the
Dividend. We have assumed for the purposes of our opinion as expressed herein
that: (a) the Officer's Report was prepared in good faith, in accordance with
informed professional judgment and was the product of the exercise of proper and
customary methodology used in determining such values; (b) the "capital" of the
Company, as recited in the following paragraphs, immediately preceding and
following the Dividends will in fact constitute the "capital" of the Company (as
defined in and calculated in accordance with Sections 154 and 244 of the General
Corporation Law) and is a true and correct calculation thereof and a court would
so find; (c) the fair values of the total assets and total liabilities of the
Company immediately prior to and after the Dividend, as determined by the Board
as set forth below, in fact constitute and will constitute the fair values of
the total assets and total liabilities of the Company immediately prior to and
immediately after the Dividend, and are true and correct determinations thereof,
and a court would so find; and (d) the Board duly adopted resolutions approving
the declaration and payment of the Dividend in accordance with the General
Corporation Law, the Certificate of Incorporation and the Bylaws.

                  We have been advised and assume for purposes of our opinion as
expressed herein that the Board has determined (a) on an informed basis in the
good faith exercise of its business judgment, (b) based upon due consideration
of all relevant data, and (c) based upon information that the Board reasonably
and in good faith believes reflects present fair values, and consistent with the
most recent balance sheet and other recent financial information of the Company
and the Officer's Report, that immediately prior to the declaration and payment
of the Dividend (i) the present fair value of the Company's net assets (I.E.,
the present fair value of total assets minus total liabilities) will be at least
$38,258,000 and (ii) the capital of the Company in respect of issued shares of
capital stock of the Company will not be more than $5,000. Accordingly, the
Company's surplus (net assets ($38,258,000) minus capital ($5,000)), prior to

                                       6
<PAGE>

the Dividend will be at least $38,253,000. Moreover, we are advised and assume
for purposes of our opinion as expressed herein that the Board has similarly
determined that, immediately following the payment of the Dividend, the present
fair value of the Company's net assets (I.E., the present fair value of total
assets minus total liabilities) will be at least $36,072,000 and that the
capital of the Company in respect of issued shares of capital stock will not be
more than $5,000, resulting in surplus subsequent to the payment of the
Dividends of at least $36,067,000.

                                     OPINION

                  Based upon and subject to the foregoing, and upon our review
of such other matters of law as we have deemed necessary and appropriate in
order to render our opinion as expressed herein, and subject to the assumptions,
limitations, exceptions and qualifications set forth herein, it is our opinion
that the declaration and payment of the Dividend would not contravene Section
170 of the General Corporation Law.

                  The foregoing opinion is limited to the General Corporation
Law, and we have not considered and express no opinion on the effect of any
other laws or the laws of any other state or jurisdiction, including federal
laws regulating securities or other federal laws, or the rules and regulations
of stock exchanges or of any other regulatory body. We have not considered and
express no opinion on the possible outcome of any challenge to the Dividend
based on equitable considerations, as to which we have no information. In
addition, we render no opinion as to: (i) the actual value of the assets or
liabilities of the Company and (ii) whether the Board has comported with its
fiduciary duties in connection with the proposed declaration and payment of the
Dividend.

                  Our opinion as expressed herein is rendered solely for your
benefit in connection with the matters addressed herein and, without our prior
written consent, may not be relied upon by you for any other purpose or be
furnished or quoted to, or be relied upon by, any other person or entity for any
purpose.

                                             Very truly yours,

                                             /s/ Richards, Layton & Finger, P.A.

                                             Richards,  Layton & Finger, P.A.

                                       7

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