Document:

CERTIFICATE OF DESIGNATION OF SERIES
                         AND DETERMINATION OF RIGHTS AND
                       PREFERENCES OF SERIES C CONVERTIBLE
                PREFERRED STOCK OF VSUS TECHNOLOGIES INCORPORATED

     VSUS Technologies Incorporated, a Delaware corporation (the "Company"),
acting pursuant to the Delaware General Corporation Law, does hereby submit the
following Certificate of Designation of Series and Determination of Rights and
Preferences of its Convertible Preferred Stock, Series C.

     FIRST: The name of the Company is VSUS Technologies Incorporated.

     SECOND: By unanimous consent of the Board of Directors of the Company,
dated on or about October 22, 2004, the following resolutions were duly adopted:

     WHEREAS, the Certificate of Incorporation ("Certificate of Incorporation")
of the Company authorizes preferred stock consisting of 20,000,000 shares, par
value $.001 per share, issuable from time to time in one or more series; and

     WHEREAS, the Board of Directors of the Company is authorized, subject to
limitations prescribed by law, by the provisions of clause (b) of Article FOURTH
of the Company's Certificate of Incorporation, as amended, to establish and fix
the number of shares to be included in any series of Preferred Stock and the
designation, rights, preferences, powers, restrictions and limitations of the
shares of such series; and

     WHEREAS, it is the desire of the Board of Directors to establish and fix
the number of shares to be included in a new series of Preferred Stock and the
designation, rights, preferences and limitations of the shares of such new
series;

     NOW, THEREFORE, BE IT RESOLVED, that pursuant to clause (b) of Article
FOURTH of the Certificate of Incorporation, there is hereby established a new
series of One Thousand One Hundred and Fifty (1,150) shares of Preferred Stock
of the Company (the "Series C Preferred Stock") to have the designation, rights,
preferences, powers, restrictions and limitations set forth in a supplement of
Article FOURTH as follows:

1.   Voting Rights. The holder of each share of Series C Preferred Stock shall
be entitled to cast ten thousand (10,000) votes per share of Series C Preferred
Stock held on the record date for the vote or written consent of stockholders.
The holder of each share of Series C Preferred Stock shall be entitled to notice
of any stockholders' meeting in accordance with the bylaws of the Company and
shall vote with holders of the Common Stock upon all matters submitted to a vote
of the holders of Common Stock. Additionally, the holders of Series C Preferred
Stock shall be entitled to notice of any meeting in accordance with the bylaws
of the Company and shall be entitled to vote as a class on any matters affecting
the holders of Series C Preferred Stock as a class.

2.   Optional Conversion. The holders of the Series C Preferred Stock shall have
conversion rights as follows (the "Conversion Rights"):

     (a) Right to Convert. Each share of Series C Preferred Stock (including any
accrued and unpaid dividends) shall be convertible, at the option of the holder
thereof, on or after April 1, 2008, into ten thousand (10,000) shares of Common
Stock at a price per share equal to $0.68 (the "Conversion Price"). The
Conversion Price shall be subject to adjustment as provided below.

     (b) Mechanics of Conversion.

          (i) In order to convert shares of Series C Preferred Stock into shares
of Common Stock, the holder shall surrender the certificate or certificates for
such shares of Series C Preferred Stock at the office of the transfer agent (or
at the principal office of the Company if the Company serves as its own transfer
agent), together with written notice that such holder elects to convert all or
any number of the shares represented by such certificate or certificates. Such
notice shall state such holder's name or the names of the nominees in which such
holder wishes the certificate or certificates for shares of Common Stock to be
issued. If required by the Company, certificates surrendered for conversion
shall be endorsed or accompanied by a written instrument or instruments of
transfer, in form satisfactory to the Company, duly executed by the registered
holder or his or its attorney duly authorized in writing. The date of receipt of
such certificates and notice by the transfer agent or the Company shall be the
conversion date ("Conversion Date"). The Company shall, as soon as practicable
after the Conversion Date, issue and deliver at such office to such holder, or,
subject to compliance with applicable securities laws, to his or its nominees, a
certificate or certificates for the number of shares of Common Stock to which
such holder shall be entitled, together with cash in lieu of any fraction of a
share.

          (ii) The Company shall at all times during which the Series C
Preferred Stock shall be outstanding, reserve and keep available out of its
authorized but unissued stock, solely for the purpose of effecting the
conversion of all the outstanding shares of Series C Preferred Stock, such
number of its duly authorized shares of Common Stock as shall from time to time
be sufficient to effect the conversion of all outstanding Series C Preferred
Stock, and if at any time the number of authorized but unissued shares of Common
Stock shall not be sufficient to effect the conversion of all the outstanding
shares of Series C Preferred Stock, the Company shall use all reasonable efforts
and take such action as may be necessary to increase its authorized but unissued
shares of Common Stock to such number of shares as shall be sufficient for such
purpose. Before taking any action which would cause an adjustment reducing the
Conversion Price below the then par value of the shares of Common Stock issuable
upon conversion of the Series C Preferred Stock, the Company will take any
corporate action which may, in the opinion of its counsel, be necessary in order
that the Company may validly and legally issue fully paid and nonassessable
shares of Common Stock at such adjusted Conversion Price.

          (iii) All shares of Series C Preferred Stock, which shall have been
surrendered for conversion as herein provided shall no longer be deemed to be
outstanding and all rights with respect to such shares, including the rights, if
any, to receive dividends, notices and to vote, shall

                                       2

immediately cease and terminate on the Conversion Date, except only the right of
the holders thereof to receive shares of Common Stock in exchange therefor and
any dividends declared and unpaid prior to the Conversion Date. Any shares of
Series C Preferred Stock so converted shall be retired and cancelled and shall
not be reissued, and the Company may from time to time take such appropriate
action as may be necessary to reduce the number of shares of authorized Series C
Preferred Stock accordingly.

     (c) Adjustment for Stock Splits and Combinations. If the Company shall, at
any time, or from time to time after the initial issuance of the Series C
Preferred Stock (the "Original Issue Date"), effect a subdivision of the
outstanding Common Stock, the Conversion Price then in effect immediately before
that subdivision shall be proportionately decreased. If the Company shall at any
time or from time to time after the Original Issue Date combine the outstanding
shares of Common Stock, the Conversion Price then in effect immediately before
the combination shall be proportionately increased. Any adjustment under this
paragraph shall become effective at the close of business on the date the
subdivision or combination becomes effective.

     (d) Adjustment for Reclassification, Exchange, or Substitution. If the
Common Stock issuable upon the conversion of the Series C Preferred Stock shall
be changed into the same or a different number of shares of any class or classes
of stock, whether by capital reorganization, reclassification, or otherwise
(other than a subdivision or combination of shares or stock dividend provided
for above, or a reorganization, merger, consolidation, or sale of assets
provided for below), then and in each such event the holder of each share of
Series C Preferred Stock shall have the right thereafter to convert such share
into the kind and amount of shares of stock and other securities and property
receivable upon such reorganization, reclassification, or other change, by
holders of the number of shares of Common Stock into which such shares of Series
C Preferred Stock might have been converted immediately prior to such
reorganization, reclassification, or change, all subject to further adjustment
as provided herein.

     (e) Adjustment for Merger or Reorganization, etc. In case of any
consolidation or merger of the Company with or into another corporation or the
sale of all or substantially all of the assets or capital stock of the Company
to another entity or individual, each share of Series C Preferred Stock shall
thereafter be convertible into the kind and amount of shares of stock or other
securities or property to which a holder of the number of shares of Common Stock
of the Company deliverable upon conversion of such Series C Preferred Stock
would have been entitled upon such consolidation, merger or sale; and, in such
case, appropriate adjustment (as determined in good faith by the Board of
Directors) shall be made in the application of the provisions set forth in this
Section 2 with respect to the rights and interest thereafter of the holders of
the Series C Preferred Stock, to the end that the provisions set forth in this
Section 2 (including provisions with respect to changes in and other adjustments
of the Conversion Price) shall thereafter be applicable, as nearly as reasonably
may be, in relation to any shares of stock or other property thereafter
deliverable upon the conversion of the Series C Preferred Stock.

     (f) No Impairment. The Company will not, by amendment of its Certificate of
Incorporation or through any reorganization, transfer of assets, consolidation,
merger, dissolution,

                                       3

issue or sale of securities or any other voluntary action, avoid or seek to
avoid the observance or performance of any of the terms to be observed or
performed hereunder by the Company, but will at all times in good faith assist
in the carrying out of all the provisions of this Section 2 and in the taking of
all such action as may be necessary or appropriate in order to protect the
Conversion Rights of the holders of the Series C Preferred Stock against
impairment.

     (g) Certificate as to Adjustments. Upon the occurrence of each adjustment
or readjustment of the Conversion Price pursuant to this Section 2, the Company
at its expense shall promptly compute such adjustment or readjustment in
accordance with the terms hereof and furnish to each holder, if any, of Series C
Preferred Stock a certificate setting forth such adjustment or readjustment and
showing in detail the facts upon which such adjustment or readjustment is based
and shall file a copy of such certificate with its corporate records. The
Company shall, upon the written request at any time of any holder of Series C
Preferred Stock, furnish or cause to be furnished to such holder a similar
certificate setting forth: (1) such adjustments and readjustments, (2) the
Conversion Price then in effect, and (3) the number of shares of Common Stock
and the amount, if any, of other property which then would be received upon the
conversion of Series C Preferred Stock. Despite such adjustment or readjustment,
the form of each or all Series C Preferred Stock Certificates, if the same shall
reflect the initial or any subsequent conversion price, need not be changed in
order for the adjustments or readjustments to be valued in accordance with the
provisions of this Certificate of Designation, which shall control.

3.   Restrictions and Limitations. So long as any shares of Series C Preferred
Stock remain issued and outstanding, the Company shall not without the consent
of the holders of a majority of the shares of Series C Preferred Stock then
outstanding:

     (a) Amend, alter or repeal any provision of the Certificate of
Incorporation (including this Certificate of Designation), or the By-Laws of the
Company;

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     (b) Authorize, or increase the authorized amount of, any additional class
or series of stock; or

     (c) Effect any reclassification of the Series C Preferred Stock.

4.   No Re-issuance of Series C Preferred Stock. No share or shares of Series C
Preferred Stock acquired by the Company by reason of redemption, purchase,
conversion or otherwise shall be reissued, and all such shares shall be returned
to the status of undesignated shares of the Company's Preferred Stock.

5.   Dividends. The holders of Series C Preferred Stock shall not be entitled to
receive dividends when and as declared, out of the net profits of the Company.

6.   Liquidation Preference. The holders of Series C Preferred Stock shall not
be entitled to a liquidation preference in the event of any liquidation,
dissolution or winding up of the Company. Neither a consolidation, merger or
other business combination of the Company with or into another corporation or
other entity nor a sale or transfer of all or part of the Company's assets for
cash, securities or other property will be considered a liquidation, dissolution
or winding up of the Company.

7.   Redemption. The shares of Series C Preferred Stock shall not be redeemable.

8.   Ranking. The Series C Preferred Stock shall rank junior to all other series
of Preferred Stock as to the distributions of assets, unless the terms of any
such series shall provide otherwise.

9.   Amendment. This Certificate of Designation constitutes an agreement between
the Company and the holders of the Series C Preferred Stock. It may be amended
by vote of both the Board of Directors of the Company and the holders of a
majority of the outstanding shares of Series C Preferred Stock.

     IN WITNESS WHEREOF, the Company has caused this Certificate to be executed
by its Chief Executive Officer this 22nd day of October, 2004.

                                       By:  /s/ Amiram Ofir
                                           -------------------------------------
                                           Name:  Amiram Ofir
                                           Title: Chief Executive Officer

                                       5WAIVER AND FIRST AMENDMENT TO
                  SECOND AMENDED AND RESTATED REVOLVING CREDIT,
                        TERM LOAN AND SECURITY AGREEMENT

         THIS WAIVER AND FIRST AMENDMENT TO SECOND AMENDED AND RESTATED
REVOLVING CREDIT, TERM LOAN AND SECURITY AGREEMENT (this "AMENDMENT") is made
and entered into as of this 16 day of August, 2004, by and between each of
OPTICARE HEALTH SYSTEMS, INC., a Delaware corporation, OPTICARE EYE HEALTH
CENTERS, INC., a Connecticut corporation, PRIMEVISION HEALTH, INC., a Delaware
corporation, and OPTICARE ACQUISITION CORPORATION, a New York corporation
(collectively, the "BORROWER"), and CAPITALSOURCE FINANCE LLC, a Delaware
limited liability company (the "LENDER").

                                    RECITALS

         A. Pursuant to that certain Second Amended and Restated Revolving
Credit, Term Loan and Security Agreement dated as of March 29, 2004, by and
between Opticare Health Systems, Inc., Opticare Eye Health Centers, Inc. and
Primevision Health, Inc., each as borrower, and Lender (as amended to date and
as amended, supplemented, modified and restated from time to time, collectively,
the "LOAN AGREEMENT"), the Lender agreed to make available to such borrowers the
Revolving Facility.

         B. Borrower has informed Lender that it has failed to maintain the
minimum Fixed Charge Ratio pursuant to Section 1 of Annex I to the Loan
Agreement for the Test Periods ending on March 31, 2004, April 30, 2004, May 31,
2004 and June 30, 2004, and has requested that Lender waive any Defaults or
Events of Default caused by such failure.

         C. Lender has agreed to waive certain Defaults and Events of Default,
and to enter into certain amendments to the Loan Agreement upon the terms and
conditions set forth herein and in the Loan Agreement provided (among other
things) that the parties hereto execute and deliver this Amendment and otherwise
comply with the agreements set forth herein and in the Loan Agreement.

         D. In furtherance of the foregoing, the parties hereto desire to enter
into this Amendment to amend certain aspects of the Loan Agreement as more
particularly provided herein.

         NOW, THEREFORE, in consideration of the foregoing, the terms and
conditions, premises and other mutual covenants set forth in this Amendment, and
other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, Lender and Borrower hereby agree as follows:

         SECTION 1. DEFINITIONS. Unless otherwise defined herein, all
capitalized terms used and not defined herein shall have the meanings assigned
to such terms in the Loan Agreement.

         SECTION 2. AMENDMENTS TO LOAN AGREEMENT. The sections, definitions,
schedules, annexes and exhibits of and to the Loan Agreement referenced and/or
set forth on Annex A to this Amendment are hereby amended and restated in full
to read as set forth on such Annex A, which annex is incorporated herein and
made a part hereof and of the Loan Agreement.

         SECTION 3. WAIVER. Lender hereby waives any Default or Event of Default
that has occurred with respect to Borrower's failure to maintain the minimum
Fixed Charge Ratio pursuant to Section 1 of Annex I to the Loan Agreement for
the Test Periods ending on March 31, 2004, April 30, 2004, May 31, 2004 and June
30, 2004.

         SECTION 4. REPRESENTATIONS AND WARRANTIES.

         (a) Notwithstanding any other provision of this Amendment, each
Borrower hereby (a) confirms and makes all of the representations and warranties
set forth in the Loan Agreement and other Loan Documents with respect to such
Borrower and this Amendment and confirms that they are true and correct, (b)
represents and warrants that they are Affiliates of each other, and (c)
specifically represents and warrants to Lender that it has good and marketable
title to all of its respective Collateral, free and clear of any Lien or
security interest in favor of any other Person (other than Permitted Liens).

         (b) Each Borrower hereby represents and warrants as of the date of this
Amendment and as of the Effective Date as follows: (i) it is duly incorporated
or organized, validly existing and in good standing under the laws of its
jurisdiction of organization; (ii) the execution, delivery and performance by it
of this Amendment and the Loan Documents, as applicable, are within its powers,
have been duly authorized, and do not contravene (A) its articles of
organization, operating agreement, or other organizational documents, or (B) any
applicable law; (iii) no consent, license, permit, approval or authorization of,
or registration, filing or declaration with any Governmental Authority or other
Person, is required in connection with the execution, delivery, performance,
validity or enforceability of this Amendment or the Loan Documents, as
applicable, by or against it; (iv) this Amendment and the Loan Documents, as
applicable, have been duly executed and delivered by it; (v) this Amendment and
the Loan Documents, as applicable, constitute its legal, valid and binding
obligations enforceable against it in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally or by general principles of equity; and (vi) it is
not in default under the Loan Agreement and no Default or Event of Default
exists, has occurred or is continuing.

         SECTION 5. EXPENSES. Borrower shall pay all costs and expenses incurred
by Lender or any of its Affiliates, including, without limitation, documentation
and diligence fees and expenses, all search, audit, appraisal, recording,
professional and filing fees and expenses and all other out-of-pocket charges
and expenses (including, without limitation, UCC and judgment and tax lien
searches and UCC filings and fees for post-Closing UCC and judgment and tax lien
searches) in connection with entering into, negotiating, preparing, reviewing
and executing this Amendment and the Loan Documents contemplated hereby and all
related agreements, documents and instruments, including, without limitation,
the UCC-1 Financing Statements and searches required hereunder and under the
Loan Agreement, and all of the same may be charged to Borrower's account and
shall be part of the Obligations. In addition and without limiting the
foregoing, Borrower shall pay all taxes (other than taxes based upon or measured
by Lender's income or revenues or any personal property tax), if any, in
connection with the issuance of the amended note and the recording of the
security documents and financing statements therefor and pursuant to the
Security Documents contemplated hereby.

         SECTION 6. REFERENCE TO THE EFFECT ON THE LOAN AGREEMENT. Upon the
effectiveness of this Amendment, (i) each reference in the Loan Agreement to
"this Agreement," "hereunder," "hereof," "herein" or words of similar import
shall mean and be a reference to the Loan Agreement as amended by this
Amendment, and (ii) each reference in any other Loan Document to the "Loan
Agreement" shall mean and be a reference to the Loan Agreement as amended by
this Amendment. Each reference herein to the Loan Agreement shall be deemed to
mean the Loan Agreement as amended by this Amendment. Except as specifically
amended hereby, the Loan Agreement and all other Loan Documents shall remain in
full force and effect and the terms thereof are expressly incorporated herein
and are ratified and confirmed in all respects. This Amendment is not intended
to be or to create, nor shall it be construed as or constitute, a novation or an
accord and satisfaction but shall constitute an amendment of the Loan Agreement.
The parties hereto agree to be bound by the terms and conditions of the Loan
Agreement as

amended by this Amendment as though such terms and conditions were set forth
herein in full. The execution, delivery and effectiveness of this Amendment
shall not, except as expressly provided in this Amendment, operate as a waiver
of any right, power or remedy of Lender, nor constitute a waiver of any
provision of the Loan Agreement or any other Loan Document or any other
documents, instruments and agreements executed or delivered in connection
therewith or of any Default or Event of Default under any of the foregoing
whether arising before or after the Effective Date or as a result of performance
hereunder.

         SECTION 7. GOVERNING LAW AND JURY TRIAL. THIS AMENDMENT AND THE RIGHTS
AND OBLIGATIONS OF THE PARTIES UNDER THIS AMENDMENT SHALL BE GOVERNED BY AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE CHOICE OF LAW PROVISIONS SET
FORTH IN THE LOAN AGREEMENT AND SHALL BE SUBJECT TO THE WAIVER OF JURY TRIAL AND
NOTICE PROVISIONS OF THE LOAN AGREEMENT.

         SECTION 8. HEADINGS AND COUNTERPARTS. The captions in this Amendment
are intended for convenience and reference only and do not constitute and shall
not be interpreted as part of this Amendment and shall not affect the meaning or
interpretation of this Amendment. This Amendment may be executed in one or more
counterparts, all of which taken together shall constitute but one and the same
instrument. This Amendment may be executed by facsimile transmission, which
facsimile signatures shall be considered original executed counterparts for all
purposes, and each party to this Amendment agrees that it will be bound by its
own facsimile signature and that it accepts the facsimile signature of each
other party to this Amendment.

         SECTION 9. AMENDMENTS. This Amendment may not be changed, modified,
amended, restated, waived, supplemented, discharged, canceled or terminated
orally or by any course of dealing or in any other manner other than by the
written agreement of Lender and both Borrowers. This Amendment shall be
considered part of the Loan Agreement for all purposes under the Loan Agreement.

         SECTION 10. ENTIRE AGREEMENT. This Amendment, the Loan Agreement and
the other Loan Documents constitute the entire agreement between the parties
with respect to the subject matter hereof and thereof and supersedes all prior
agreements and understandings, if any, relating to the subject matter hereof and
thereof and may not be contradicted by evidence of prior, contemporaneous or
subsequent oral agreements between the parties. There are no unwritten oral
agreements between the parties.

         SECTION 11. MISCELLANEOUS. Whenever the context and construction so
require, all words used in the singular number herein shall be deemed to have
been used in the plural, and vice versa, and the masculine gender shall include
the feminine and neuter and the neuter shall include the masculine and feminine.
This Amendment shall inure to the benefit of Lender, all future holders of any
note, any of the Obligations or any of the Collateral and all Transferees, and
each of their respective successors and permitted assigns. No Borrower may
assign, delegate or transfer this Amendment or any of its rights or obligations
under this Amendment without the prior written consent of Lender. No rights are
intended to be created under this Amendment for the benefit of any third party
donee, creditor or incidental beneficiary of Borrower or any Guarantor. Nothing
contained in this Amendment shall be construed as a delegation to Lender of any
Borrower's or any Guarantor's duty of performance, including, without
limitation, any duties under any account or contract in which Lender has a
security interest or Lien. This Amendment shall be binding upon Borrowers and
their respective successors and assigns.

         SECTION 12. EFFECTIVE DATE. Notwithstanding the date of execution or
delivery of this Amendment or any other date set forth herein, this Amendment
shall be effective on the date (the "EFFECTIVE DATE") upon which the following
conditions precedent are satisfied:

         (a) execution and delivery to Lender of this Amendment by each
Borrower;

         (b) receipt by Lender of all fees, charges and expenses payable to
Lender on or prior to the Effective Date, including, without limitation, a
$25,000 amendment fee (which fee shall include all legal fees referred to in
Section 5 above); and

         (c) receipt by Lender of a guaranty agreement in form and substance
acceptable to Lender executed by Palisade Concentrated Equity Partnership, L.P.

                        [SIGNATURES APPEAR ON NEXT PAGE]

                  IN WITNESS WHEREOF, the parties have caused this Waiver and
First Amendment to Second Amended and Restated Revolving Credit, Term Loan and
Security Agreement to be executed by their respective officers thereunto duly
authorized as of the date first written above.

LENDER:                              CAPITALSOURCE FINANCE LLC,
                                     a Delaware limited liability company

                                     By:/s/ Keith D. Reuben
                                        --------------------------------
                                     Name:  Keith D. Ruben
                                     Title:  COO
BORROWERS:

                                     OPTICARE HEALTH SYSTEMS, INC.,
                                     a Delaware corporation

                                     By:/s/ Dean J. Yimoyines
                                        --------------------------------
                                     Name: Dean J. Yimoyines
                                     Its: CEO

                                     PRIMEVISION HEALTH, INC.,
                                     a Delaware corporation

                                     By:/s/ Dean J. Yimoyines
                                        --------------------------------
                                     Name: Dean J. Yimoyines
                                     Its: President

                                     OPTICARE EYE HEALTH CENTERS, INC.,
                                     a Connecticut corporation

                                     By:/s/ Dean J. Yimoyines
                                        --------------------------------
                                     Name: Dean J. Yimoyines
                                     Its: CEO

                                     OPTICARE ACQUISTION CORP.

                                     By:/s/ Dean J. Yimoyines
                                        --------------------------------
                                     Name: Dean J. Yimoyines
                                     Its: President

                                     ANNEX A
                                       TO
                               FIRST AMENDMENT TO
             SECOND AMENDED AND RESTATED REVOLVING CREDIT, TERM LOAN
                             AND SECURITY AGREEMENT

         Effective as of the Effective Date, the Loan Agreement is hereby
amended as follows:

         1. AMENDMENT TO SECTION 2.1(C) OF THE LOAN AGREEMENT. Subsection (c) of
Section 2.1 of the Loan Agreement is hereby amended and restated in its entirety
as follows:

                  "Borrower shall be permitted to borrow on August 17, 2004, in
         addition to the Availability (the "Overadvance") in a single draw not
         to exceed $2,000,000 (the "Maximum Overadvance Amounts"). The
         Overadvance shall be part of the Revolving Facility, evidenced by the
         Revolving Note and, when aggregated with all other Advances, be subject
         at all times to the Facility Cap. The Overadvance shall be repaid in
         eleven monthly installments of $100,000 commencing on October 1, 2004,
         and the aggregate balance of the Overadvance shall be due and payable
         in full in cash on August 31, 2005, and if at any time the aggregate
         outstanding balance of the Overadvance exceeds the Maximum Osveradvance
         Amount, the Borrower shall immediately repay such excess. No
         Overadvance shall be made at any time that a Default or Event of
         Default shall have occurred and be continuing past any cure period. Any
         mandatory prepayment of the Overadvance pursuant to Section 2.10 hereof
         shall permanently reduce the Overadvance."

         2. AMENDMENT TO SECTION 2.3 OF THE LOAN AGREEMENT. Section 2.3 of the
Loan Agreement is hereby amended and restated in its entirety as follows:

                  "Interest on outstanding Advances under the Revolving Note
         shall be payable monthly in arrears on the first day of each calendar
         month at an annual rate of Prime Rate plus 1.5%, provided, however,
         that, notwithstanding, any provision of any Loan Document, (i) the
         interest on all outstanding Overadvances under the Revolving Note shall
         be payable monthly in arrears on the first day of each calendar month
         at an annual rate of Prime Rate plus 5.5%, (ii) the interest on all
         outstanding Advances (including all Overadvances) under the Revolving
         Note shall be not less than 6.0%, and (iii) in each case shall be
         calculated on the basis of a 360-day year and for the actual number of
         calendar days elapsed in each interest calculation period. Interest
         accrued on each Advance under the Revolving Note shall be due and
         payable on the first day of each calendar month, in accordance with the
         procedures provided for in Section 2.5 and Section 2.9, commencing
         February 1, 2002, and continuing until the later of the expiration of
         the Term and the full performance and irrevocable payment in full in
         cash of the Obligations and termination of this Agreement."

         3. AMENDMENT TO SECTION 3.4 OF THE LOAN AGREEMENT. Section 3.4(a) of
the Loan Agreement is hereby amended and restated in its entirety as follows:

                  (a) Revolver Early Termination Fee. If (i) Borrower terminates
         the Revolving Facility under Section 11.1 hereof, (ii) Borrower is
         required to make payment in full of the

         Revolving Facility and/or Obligations relating to the Revolving
         Facility upon the occurrence of an Event of Default, (iii) a voluntary
         or involuntary Change of Control or payment pursuant to Section 2.11
         occurs, (iv) any other voluntary or involuntary prepayment of the
         Revolving Facility and/or Obligations relating to the Revolving
         Facility by Borrower or any other Person occurs (other than reductions
         to zero of the outstanding balance of the Revolving Facility resulting
         from the ordinary course operation of the provisions of Section 2.5),
         whether by virtue of Lender's exercising its right of set-off or
         otherwise, (v) Lender accelerates the Revolving Note or makes any
         demand on the Revolving Note, or (vi) any payment or reduction of the
         outstanding balance of the Revolving Note and/or the Revolving
         Facility is made during a bankruptcy, reorganization or other
         proceeding or is made pursuant to any plan of reorganization or
         liquidation or any Debtor Relief Law, (each, a "REVOLVER
         TERMINATION"), then, at the effective date of any such termination,
         Borrower shall pay Lender (in addition to the then outstanding
         principal, accrued interest and other Obligations relating to the
         Revolving Facility pursuant to the terms of this Agreement and any
         other Loan Document), as yield maintenance for the loss of bargain and
         not as a penalty, an amount equal to (x) if the revolver termination
         occurs prior to December 31, 2005, 4% of the Facility Cap, or (y) if
         the revolver termination occurs on or after December 31, 2005, but
         prior to expiration of the Revolving Facility Term, 3% of the Facility
         Cap; provided, however, that in the event the revolver termination
         arises pursuant to a voluntary prepayment of the Revolving Facility
         and Obligations relating to the Revolving Facility by Borrower
         pursuant to a refinancing by a third party commercial financial
         institution whose primary business is providing senior secured
         financing the yield maintenance for the loss of bargain shall be equal
         to an amount equal to (x) if the revolver termination occurs prior to
         December 31, 2005, the greater of (1) 4% of the Facility Cap and (2)
         the Yield Maintenance Amount, and (y) if the revolver termination
         occurs prior to expiration of the Revolving Facility Term, the greater
         of (1) 3% of the Facility Cap and (2) the Yield Maintenance Amount.

         4.       AMENDMENT TO ANNEX I OF THE LOAN AGREEMENT.

         (a) Section 1 of Annex I to the Loan Agreement is hereby amended and
restated in its entirety as follows.

                  "Commencing on the last calendar day of the Test Period ending
         March 31, 2005, and at the end of any calendar month during which any
         of the Obligations are outstanding thereafter, the Fixed Charge Ratio
         shall not be less than 1.0 to 1 for the most recent Test Period then
         ended."

         (b) Section 2 of Annex I to the Loan Agreement is hereby amended and
restated in its entirety as follows:

                           "Until full performance and satisfaction, and
         indefeasible payment in full in cash, of all the Obligations, Borrower,
         individually and collectively on a consolidated and consolidating
         basis, will maintain a minimum Tangible Net Worth at all times (a) from
         the Closing Date through November 13, 2003, equal to (-$26,965,000)
         which is Borrower's Tangible Net Worth as of September 30, 2001, (b)
         from November 14, 2003 through March 31, 2004, equal to (-$10,000,000),
         (c) from April 1, 2004 through August 15, 2004 equal to (-$2,000,000),
         and (d) from August 16, 2004 through the end of the Term, equal to
         (-$3,000,000); provided however, that if Borrower's minimum Tangible
         Net Worth at any time declines below the levels set forth in this
         covenant due to asset sales, then such decline shall not constitute a
         default hereunder."

         (c) Annex I is hereby amended by adding a new Section 3 to read in full
as follows:

                  "3) DEBT SERVICE COVERAGE RATIO (EBITDA TO DEBT SERVICE)

                  For each DSCR Test Period ending on the last day of each
         calendar month set forth below, the Debt Service Coverage Ratio shall
         not be less than ratio set forth across from such month:

         Month                                  DSCR
         -----                                  ----
         October   2004                         0.7: 1.0
         November 2004                          0.8: 1.0
         December 2004                          0.8: 1.0
         January 2005                           0.9: 1.0
         February 2005                          1.0: 1.0

          (d) Annex I is hereby amended by adding the following definition
thereto in proper alphabetical order to read in full as follows:

                  "Debt Service Coverage Ratio" shall mean, at any date of
          determination, for Borrower individually and collectively on a
          consolidated and consolidating basis, the ratio of (a) EBITDA for the
          DSCR Test Period most recently ended on or before such date, to (b)
          the sum of (i) scheduled or other required payments of principal on
          the Revolving Loan (excluding scheduled or other required payments of
          principal on the Overadvance) and Term Loan, and (ii) Interest Expense
          (with respect to the Revolving Loan and Term Loan for such period) for
          the DSCR Test Period most recently ended on or before such date, in
          each case taken as one accounting period."

                  "DSCR Test Period" shall mean the three (3) most recent
          calendar months then ended (taken as one accounting period); provided,
          however, that (i) for the calendar month ended October 31, 2004, the
          DSCR Test Period shall be such calendar month; and (ii) for the
          calendar month ended November 30, 2004, the DSCR Test Period shall be
          the two preceding calendar months then ended (taken as one accounting
          period).

          (e) Annex I is hereby amended by amending and restating the following
definitions to read as follows:

                  "Fixed Charges" shall mean, the sum of the following: (a)
          Total Debt Service, (b) Capital Expenditures, (c) income taxes paid in
          cash or accrued, and (d) dividends and/or Distributions paid in cash.

                  "Total Debt Service" shall mean the sum of (i) scheduled or
          other required payments of principal on Indebtedness (excluding
          scheduled or other required payments of principal on the Overadvance),
          and (ii) Interest Expense, in each case for such period.

         5. AMENDMENT TO APPENDIX A OF THE LOAN AGREEMENT;.

          (a) Appendix A is hereby amended by adding the following definition
thereto in proper alphabetical order to read in full as follows:

                  "First Amendment" shall mean that certain Waiver and First
          Amendment to Second Amended and Restated Revolving Credit, Term Loan
          and Security Agreement, dated as of August 16, 2004, by and between
          the Borrowers and Lender.

         (b) Appendix A is hereby amended by amending and restating the
following definitions to read as follows:

                  "Revolving Facility Term" shall mean the period commencing on
         the Closing Date and ending on the date that is five (5) years after
         the Closing Date"

                  "Yield Maintenance Amount" shall mean an amount equal to the
         difference between (x) the all-in effective yield (measured as a
         percentage per annum), excluding the Commitment Fee, which could be
         earned on the Revolving Balance from the Closing Date through and
         including January 25, 2007, and (y) the total interest and fees,
         excluding the Commitment Fee, actually paid by Borrower to Lender on
         the Revolving Facility prior to the later of the Termination Date or
         the date of prepayment. As used herein, "Revolving Balance" shall mean,
         on any date of determination, the average outstanding balance under the
         Revolving Facility for the immediately preceding twelve (12) months
         ending on such date.

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