FIRST AMENDMENT TO
LOAN AND SECURITY AGREEMENT 



        THIS
FIRST AMENDMENT TO LOAN AND SECURITY AGREEMENT (“Amendment”) is made
effective this 8th day of July, 2003 by and among LASALLE BUSINESS CREDIT, LLC,
successor by merger to LaSalle Business Credit, Inc., as Agent
(“Agent”) for STANDARD FEDERAL BANK NATIONAL ASSOCIATION
(“Lender”), MEDICAL TECHNOLOGY SYSTEMS, INC.
(“MTS”) and MTS PACKAGING SYSTEMS, INC. (“Packaging”,
and with MTS, each a “Borrower” and collectively, the
“Borrowers”. 




BACKGROUND 



            A.    
          Agent, Lender and Borrowers previously entered into that certain Loan and
          Security Agreement dated June 26, 2002 (as the same may be amended from time to
          time, the “Loan Agreement”). 



            B.    
          On or about October 15, 2002, MTS formed MTS Packaging Systems International
          Ltd., a company formed under the laws of England and Wales (the “UK
          Company”). 



            C.    
          MTS has transferred, or is in the process of transferring, to the UK Company
          accounts and inventory as described on Schedule 1 hereto
          having a value in excess of One Hundred Thousand Dollars ($100,000.00) (the
          “Transferred Assets”). 



            D.    
          Borrowers have requested that (1) the Agent and Lender consent to the formation
          of the UK Company, (2) notwithstanding the terms set forth in Sections
          12(o) and 13(d)) of the Loan Agreement, the UK Company be
          permitted to be a Guarantor under the Loan Agreement rather than a Borrower
          despite it having assets in excess of One Hundred Thousand Dollars ($100,000.00)
          in value; (3) notwithstanding any contrary provision of the Loan Agreement or
          any document relating thereto, the UK Company not be required to grant a
          security interest in any of its assets (including, without limitation, any
          intellectual property), and (4) notwithstanding any contrary provision of the
          Loan Agreement, or any document related thereto, the UK Company be permitted to
          maintain its assets in any location outside the United States as the UK Company
          may desire. 



            E.
              
          Agent, Lender and Borrowers also desire to amend the Loan Agreement in
          accordance with the terms and conditions set forth herein. 



            F.    
          Capitalized terms used herein and not otherwise defined shall have the meanings
          provided for such terms in the Loan Agreement. 



        NOW
THEREFORE, the parties hereto, intending to be legally bound hereby, agree as follows: 



            1.    
          Lender’s Consents and Agreements Regarding the UK
          Company. 



              
              (a)     
          Agent and Lender hereby consent and agree to the following with respect to the
          UK Company (notwithstanding any contrary provision of the Loan Agreement or any
          document related thereto): (i) MTS may form the UK Company as a wholly-owned,
          direct or indirect Subsidiary of MTS, (ii) the UK Company shall be a Guarantor
          under the Loan Agreement rather than a Borrower, despite the value of the UK
          Company’s assets exceeding One Hundred Thousand Dollars ($100,000.00),
          (iii) the UK Company shall not be required to grant a security interest in any
          of its assets, including, without limitation, any intellectual property, and
          (iv) the UK Company shall be permitted to maintain its assets in any location
          outside the United States as the UK Company may desire. Agent’s and
          Lender’s consent herein is contingent upon the execution and delivery to
          Agent of the following documents: 










              
                       (i)
              
          Certified copies of the formation and governing documents of the UK Company; 



              
                       (ii)      
          Continuing Unconditional Guaranty executed by the UK Company, in form and
          substance acceptable to Lender (the “Guaranty”); 



              
                       (iii)  
           
          Amendment to that certain Securities Pledge Agreement dated June 26, 2002
          executed by MTS, in form and substance acceptable to Lender; and 



              
                       (iv)     
          Original Stock Certificates of the UK Company and blank stock powers therefor. 



               
             (b)     
          Agent’s and Lender’s consent and agreement in this Amendment with
          respect to the UK Company is limited to the matters expressly set forth in
          Section 1(a) above. Nothing in this Amendment nor in any of
          the documents executed in connection herewith shall be deemed an obligation,
          agreement or commitment by Agent and/or Lender to agree to any other amendments
          or modifications to the Loan Agreement or any of the other Loan Documents,
          including, without limitation, any future deviation from the requirements set
          forth in Section 13(d) of the Loan Agreement. 



     2.        
            Agreement and Representation Regarding the UK Company.
          Borrowers do hereby represent and warrant that the UK Company is a wholly owned,
          direct or indirect, subsidiary of MTS. 



     3.        
             Definitions. 



             
                (a)     Section 1 of the Loan Agreement is hereby amended by
           adding the following definition: 




	 	
““Amortization
Difference” shall mean the following amounts as of the following dates: (a) One
Hundred Thirty-Eight Thousand Eighty Hundred Eighty-Nine and 34/100 Dollars ($138,889.43)
as of September 30, 2003, (b) Three Hundred Forty-Seven Thousand Two Hundred Twenty-Three
and 35/100 Dollars ($347,223.35) as of December 31, 2003, (c) Four Hundred Sixteen
Thousand Six Hundred Sixty-Eight and 02/100 Dollars ($416,668.02) as of March 31, 2004,
(d) Four Hundred Sixteen Thousand Six Hundred Sixty-Eight and 02/100 Dollars ($416,668.02)
as of June 30, 2004, (e) Two Hundred Seventy-Seven Thousand Seven Hundred Seventy-Eight
and 68/100 Dollars ($277,778.68) as of September 30, 2004 and (f) Sixty-Nine Thousand Four
Hundred Forty-Four Dollars and 67/100 ($69,444.67) as of December 31, 2004.” 





             
                (b)     The definition of “Debt
          Service Coverage Ratio” contained inSection 1 of the Loan Agreement is
          hereby deleted in its entirety and replaced with the following: 



	 	
““Debt
Service Coverage Ratio” shall mean, for any Person, with respect to any period of
determination, the ratio of (i) such Person’s net income after taxes for such
period (excluding any after-tax gains or losses on the sale of assets (other than the sale
of Inventory in the ordinary course of business) and excluding other after-tax
extraordinary gains or losses), plus depreciation and amortization deducted in
determining net income for such period, plus tax benefits which offset any income
tax expense provisions deducted in determining net income for such period, minus
Unfinanced Capital Expenditures for such period plus the after-tax increase in LIFO
reserves, or minus  the after tax decrease in LIFO reserves, to (ii) such
Person’s current principal maturities of long-term debt and capitalized leases paid
or scheduled to be paid during such period, plus any prepayments on indebtedness
owed to any other Person (exclusive of trade payables and Revolving Loans) and paid during
such period, minus the Amortization Difference, plus, if the period of
determination ends on and is for such Person’s Fiscal Year, any Permitted Dividends
paid during such Fiscal Year.” 













              
              (c)     The definition of “Excess Cash Flow”
          contained in Section 1 of the Loan Agreement is hereby deleted in its entirety. 



            4.
               Repayment of Term Loan B. Section
          2(e)(iii) of the Loan Agreement is deleted in its entirety and
          replaced with the following: 



               	 	
                    “(iii)  Repayment of Term Loan B. The principal of Term Loan B shall be repaid
                    in (i) thirteen (13) equal and consecutive monthly installments of principal of
                    Eighty-Three Thousand Three Hundred Thirty-Three and 33/100 Dollars (83,333.33),
                    payable on the first day of each month during the period beginning on and
                    including July 1, 2002 and ending on and including July 1, 2003 and (ii) six (6)
                    equal and consecutive monthly installments of principal of One Hundred Fifty-Two
                    Thousand Seven Hundred Seventy Eight Dollars ($152,778.00), payable on the first
                    day of each month during the period beginning on and including August 1, 2003
                    and ending on and including January 1, 2004; provided  that, on January
                    1, 2004, the Borrowers shall also repay any other remaining principal balance of
                    the Term Loan B and interest accrued and unpaid thereon. If any such payment due
                    date is not a Business Day, then such payment shall be made on the next
                    succeeding Business Day, and such extension of time shall be included in the
                    computation of the amount of interest and fees due hereunder.” 





            5.
              Mandatory Prepayments of Term Loans. Section
          2(e)(v)(B) of the Loan Agreement is hereby deleted in its
          entirety and replaced with the following: 




        
                     “(B)
             Intentionally Deleted.”



            6.    
          Change in Financial Statements due to Deletion of Excess Cash
          Flow. Section 9(c) of the Loan Agreement is
          hereby deleted in its entirety and replaced with the following: 



               	 	
                    “(c)        Financial Statements.
                        The Borrowers shall deliver to Agent
                    the following financial information of MTS and its Subsidiaries, all of which
                    shall be prepared in accordance with GAAP consistently applied, shall be
                    accompanied by a compliance certificate in the form of Exhibit
                    B hereto, which compliance certificate shall include a
                    calculation of all financial covenants contained in this Agreement, and shall be
                    in form and content satisfactory to the Agent: (i) no later than thirty (30)
                    days after the end of each calendar month, copies of internally prepared
                    financial statements for such month, including, without limitation, balance
                    sheets and statements of income, retained earnings and cash flow
                    (“Financial Statements”), on a consolidated and consolidating
                    basis, together with (A) a cumulative statement of income from the first day of
                    the then current Fiscal Year to the last day of such month, (B) a report
                    comparing Capital Expenditures for such month against the capital budget
                    schedule attached hereto as Schedule 9(c) and identifying
                    all expected changes in the timing or amount of Capital Expenditures, along with
                    a comparison between the actual figures for such month, the comparable figures
                    for the prior year period (only with respect to the balance sheet and income
                    statement) and the comparable figures in the current year’s budget, along
                    with management commentary. Such Financial Statements and additional financial
                    information shall have been certified by the Chief Financial Officer of MTS to
                    be true, accurate and complete in all material respects; and (ii) no later than
                    forty-five (45) days after the end of each of the first three of MTS’s
                    fiscal quarters, unaudited quarterly consolidated internally prepared Financial
                    Statements, which Financial Statements shall have been certified by the Chief
                    Financial Officer of MTS to be true, accurate and complete in all material
                    respects; (iii) no later than ninety (90) days after the end of each Fiscal
                    Year, audited consolidated annual Financial Statements, with an unqualified
                    opinion by independent certified public accountants selected by MTS and
                    reasonably satisfactory to Agent, which Financial Statements shall be
                    accompanied by (A) a letter from such accountants substantially in the form of
                    Exhibit E attached hereto and (B) copies of any management
                    letters, reports or other detailed information concerning significant aspects of
                    MTS’s operations and financial affairs given to MTS or any of its
                    Subsidiaries by such accountants.” 














       
        7.      Financial Covenants. 



              
               (a)     
          Section 14(d) of the Loan Agreement is hereby deleted in
          its entirety and replaced with the following: 



               	 	
                     “(d)     
                     Capital Expenditure Limitations. MTS and its Subsidiaries
                    on a consolidated basis shall not make Capital Expenditures in excess of (i) Two
                    Million Six Hundred Thousand Dollars ($2,600,000.00) during the Fiscal Year
                    ending March 31, 2004, (ii) One Million Eight Hundred Thousand Dollars
                    ($1,800,000.00), plus the Carryover Amount during the Fiscal Year ending March
                    31, 2005 and (iii) One Million Eight Hundred Thousand Dollars ($1,800,000.00)
                    during any Fiscal Year thereafter. As used herein “Carryover
                    Amount” shall mean (A) an amount equal to the remainder of (1) Two
                    Million Six Hundred Thousand Dollars ($2,600,000.00), minus (2) the
                    actual amount of Capital Expenditures for the Fiscal Year ending March 31, 2004,
                    provided Term Loan B has been repaid in full on or prior to June 1, 2004 and (B)
                    zero, if Term Loan B has not been repaid in full on or prior to June 1,
                    2004.” 





            8.  
             Amendment Fee. Contemporaneously with the execution hereof,
          and in addition to all other sums due from Borrowers to Agent and/or Lender,
          Borrowers shall pay to Agent an amendment fee in an amount equal to Seven
          Thousand Five Hundred Dollars ($7,500.00) (the “Amendment
          Fee”). The Amendment Fee may be debited from any account of either
          Borrower maintained with Agent, Lender or LaSalle Bank or charged to the
          Revolving Loan. 



            9.
                     
          Release. Borrowers and each Guarantor acknowledge and agree that
          it has no claims, suits or causes of action against Agent or Lender and hereby
          remises, releases and forever discharges Agent, Lender, their officers,
          directors, shareholders, employees, agents, successors and assigns from any
          claims, suits or causes of action whatsoever, in law or equity, which either
          Borrower or any Guarantor has or may have arising from any act, omission or
          otherwise, at any time up to and including the date of this Amendment. 











            10.
                     
          Additional Documents; Further Assurances. Borrowers shall execute
          and deliver to Agent, or to cause to be executed and delivered to Agent, at the
          sole cost and expense of Borrowers, from time to time, the Guaranty and any and
          all other documents, agreements, statements, certificates and information as
          Agent shall reasonably request to evidence or effect the terms of the Loan
          Agreement, as amended, or any of the Other Agreements, as amended, or to enforce
          or protect Agent’s interest in all Collateral. All such documents,
          agreements, statements, certificates and information shall be in form and
          content acceptable to Agent. 



            11.
                     
          Further Agreements and Representations. Each Borrower does
          hereby: 



               
                  (a)     
          ratify, confirm and acknowledge that, as amended hereby, the Loan Agreement and
          all Other Agreements are valid, binding and in full force and effect; 



               
                  (b)     
          covenant and agree to perform all obligations of such Borrower contained herein,
          in the Loan Agreement and in the Other Agreements, as amended hereby; 



               
                  (c)     
          acknowledge and agree that as of the date hereof, such Borrower has no defense,
          set-off, counterclaim or challenge against the payment of any sums owing under
          the Loan Agreement or any of the Other Agreements or the enforcement of any of
          the terms or conditions thereof; 



               
                  (d)     
          represent and warrant that no Default or Event of Default exists under the Loan
          Agreement; 



               
                  (e)     
          acknowledge and agree that nothing contained herein and no actions taken
          pursuant to the terms hereof is intended to constitute a novation of the Loan
          Agreement or any of the Other Agreements, and does not constitute a release,
          termination or waiver of any of the liens, security interests, rights or
          remedies granted to Agent therein, which liens, security interests, rights and
          remedies are hereby ratified, confirmed, extended and continued as security for
          the Liabilities as amended; and 



               
                  (f)     
          acknowledge and agree that such Borrower’s failure to comply with or
          perform any of its covenants, agreements or obligations contained in this
          Amendment shall constitute an Event of Default under the Loan Agreement and each
          of the Other Documents as amended. 



            12.
               
          Fees, Costs, Expenses and Expenditures. Each Borrower agrees to
          pay all of Agent’s expenses in connection with the review, preparation,
          negotiation, documentation and closing of this Amendment and the consummation of
          the transactions contemplated hereunder, including, without limitation, fees,
          disbursements, expenses and disbursements of counsel retained by Agent and all
          fees related to filings, recording of documents and searches, whether or not the
          transactions contemplated hereunder are consummated. 



            13.
                     
          Inconsistencies. To the extent of any inconsistency between the
          terms and conditions of this Amendment and the terms and conditions of the Loan
          Agreement or the Other Agreements, the terms and conditions of this Amendment
          shall prevail. All terms and conditions of the Loan Agreement and the Other
          Agreements not inconsistent herewith shall remain in full force and effect and
          are hereby ratified and confirmed by Borrowers. 



            14.
                     
          Binding Effect. This Amendment shall be binding upon and inure to
          the benefit of the parties hereto and their successors and assigns. 



            15.
                     
          Governing Law. This Amendment shall be governed by and construed
          in accordance with the laws of the Commonwealth of Pennsylvania. 



            16.
                     
          Headings. The headings of the articles, sections, paragraphs and
          clauses of this Amendment are inserted for convenience only and shall not be
          deemed to constitute a part of this Amendment. 





[SIGNATURES ON
FOLLOWING PAGE] 










        IN
WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed
effective as of the day and year first above written. 



	 	 	 
	 	MEDICAL TECHNOLOGY SYSTEMS, INC.	 
	 	 	
	 	By:	
	 
	 	Name/Title:	
	 
	 	 	 	 
	 	MTS PACKAGING SYSTEMS, INC.	 
	 	 	
	 	By:	
	 
	 	Name/Title:	
	 
	 	 	 	 
	 	LASALLE BUSINESS CREDIT, LLC,
        successor by merger to LaSalle Business Credit, Inc., as Agent for Standard Federal Bank National Association	 
	 	 	
	 	By:	
	 
	 	Name/Title:	
	 
	 	 	 	 
	 	STANDARD FEDERAL BANK NATIONAL ASSOCIATION	 
	 	 	
	 	By:	
	 
	 	Name/Title:	
	 
	 	 	 	 














RATIFICATION AND
CONFIRMATION OF GUARANTY 



        The
undersigned, intending to be legally bound hereby, (1) acknowledge and agree to the
foregoing Amendment, (2) agree to be bound by the foregoing Amendment including, without
limitation, by Section 4 thereof and (3) agree that those certain
Continuing Unconditional Guaranty Agreements from each of the undersigned to Agent dated
June 26, 2002 are in full force and effect. 



	 	 	 
	 	MEDICATION MANAGEMENT TECHNOLOGIES, INC.	 
	 	 	
	 	By:	
	 
	 	Name/Title:	
	 
	 	 	 	 
	 	MEDICATION MANAGEMENT SYSTEMS, INC.	 
	 	 	
	 	By:	
	 
	 	Name/Title:	
	 
	 	 	 	 
	 	MEDICAL TECHNOLOGY LABORATORIES, INC.	 
	 	 	
	 	By:	
	 
	 	Name/Title:	
	 
	 	 	 	 












Schedule 1 




Transferred Assets 




Various items of inventory and
related accounts.