<PAGE>


                             EMPLOYMENT AGREEMENT

         THIS AGREEMENT is made and entered into as of December 15, 2002 by and
between MORRIS MEDICAL, INC. d/b/a MEDEX, a Texas corporation (the "Company"),
and Edward Kraus, an individual residing in the State of Texas ("Employee").

                             W I T N E S S E T H:

         WHEREAS, Company is in the business of marketing and selling health
care supplies, materials, devices and equipment (the "Business");

         WHEREAS, pursuant to a Share Purchase Agreement entered into by
Company's parent, SMT Enterprises Corporation, and Valesc Inc., Valesc will
acquire 100% of the Company's capital stock (the "Acquisition");

         WHEREAS, it is a condition to the closing of the Acquisition that the
Company and Employee enter into this Agreement;

         NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, the parties hereto, intending to be legally bound, hereby
agree as follows:

         1.  Employment.  Company hereby employs Employee and Employee hereby
accepts employment with Company for the period and upon the terms and conditions
contained in this Agreement.

         2.  Office and Duties.

                  (a) Employee shall serve Company as the President and shall
have all of the rights and duties of a president of a Texas corporation, and
such other authority and responsibilities as the Board of Directors of Company
may determine or direct from time to time.

                  (b) Throughout the term of this Agreement, Employee shall
devote his working time, energy, skill and best efforts to the performance of
his duties hereunder in a manner which will faithfully and diligently further
the business and interests of Company.

         3.  Term. This Agreement shall be for an initial term commencing on
January 1, 2003 and ending on December 31, 2003 (the "Initial Term"), and shall
be automatically extended for successive periods of one year each (each, a
"Renewal Term") upon the same terms and conditions set forth in this Agreement
unless this Agreement is terminated by either party by giving the other party
written notice of termination at least three months before the expiration of the
then current term. (The Initial Term and all Renewal Terms (if any) shall be
collectively referred to herein as the "term".)

         4.  Compensation and Benefits.

                  (a) Commissions. For all of the services rendered by Employee
to Company, during each month of the Initial Term of his employment, Employee
shall receive all commission income attributable to him (the "Employee
Commissions") (i) up to $13,000, and (ii) 50% of




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amounts in excess of $13,000, payable in monthly installments and otherwise in
accordance with Company's regular payroll practices, subject to deduction of all
expenses incurred in connection with Employee's activities, including allocable
overhead, and subject to retention for all required deductions and withholdings
therefrom.

                  (b) Bonus. Employee shall be eligible to participate in
bonuses awarded to senior management to the extent that such bonuses are awarded
or authorized by the Board of Directors of Company from time to time during the
term of this Agreement.

         5. Benefits; Expenses.

                  (a) Throughout the term of this Agreement and as long as they
are kept in force by Company, Employee shall be entitled to participate in and
receive the benefits of any profit sharing or retirement plans and any health,
life, accident or disability insurance plans or programs made available to other
similarly situated employees of Company, subject to all of the terms and
conditions of such plans and programs.

                  (b) Company will reimburse Employee for all reasonable
expenses incurred by Employee in connection with the performance of Employee's
duties hereunder upon receipt of receipts therefor and in accordance with
Company's regular reimbursement procedures and practices in effect from time to
time.

         6. Confidential Information.

                  (a) Employee acknowledges that Company has developed certain
proprietary and confidential information, whether written or oral, tangible or
intangible, whether machine readable or otherwise, which Company holds
confidential and which have not yet been disclosed to and are not generally
known by the public (collectively, the "Confidential Information").

                  (b) Employee acknowledges that, while he is employed by
Company, he shall have access to such Confidential Information and agrees that
all Confidential Information which he shall obtain, acquire or have access to,
both during and after any expiration, termination or non-renewal of his
employment, and for all purposes, shall be regarded and maintained by him in the
strictest confidence, and shall not be disclosed, communicated or divulged,
directly or indirectly, to any unauthorized person without the prior written
consent of Company, except as may otherwise be required by law.

                  (c) Employee agrees that all written material and documents
constituting Confidential Information are and shall remain the sole property of
Company. Upon any expiration, termination or non-renewal of his employment with
Company for any reason whatsoever, Employee shall immediately return all such
materials and all copies thereof in his possession or under his control to
Company.

                  (d) Notwithstanding the foregoing, the parties acknowledge
that the term "Confidential Information" shall not apply to any information
which: (i) is or becomes a part of the public domain through no wrongful act of
Employee; or (ii) is rightfully obtained by Employee from a third party without
restriction and without breach of this Agreement or any



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similar agreement; or (iii) is independently developed by Employee without
access to Company's information; or (iv) is known to Employee on or prior to the
date of disclosure to Employee; or (v) is required to be used or disclosed by
applicable law, as evidenced by a written opinion of counsel reasonably
acceptable to Company. In any such event, Employee shall not have any obligation
with respect to any such information.

         7. Ownership.

            (a) Any and all writings, inventions, improvements, processes,
procedures and/or techniques which Employee may make, conceive, discover or
develop, either solely or jointly with any other person or persons, at any time
during the term of this Agreement, which relate to or are useful in connection
with or relating to the Business, shall be the sole and exclusive property of
Company. Employee shall make full disclosure to Company of all such writings,
inventions, improvements, processes, procedures and techniques, and shall do
everything necessary or desirable to vest absolute title thereto in Company.
Employee shall not be entitled to any additional or special compensation or
reimbursement regarding any and all such writings, inventions, improvements,
processes, procedures and techniques.

             (b) Employee acknowledges and agrees that all copyrightable
material generated or developed in connection with the services he provides to
Company, if any, will be considered works made for hire and that such material
will, upon its creation, be owned exclusively by Company. To the extent that
Employee may be entitled to claim any ownership interest in any of the writings,
inventions, improvements, processes, procedures and/or techniques described in
paragraph (a) above, whether copyrightable, patentable or otherwise, Employee
hereby assigns and transfers to Company all of his right, title and interest in
and to such materials, under patent, copyright, trade secret, trademark other
applicable laws, in perpetuity or for the longest period otherwise permitted by
law.

         8. Non-Solicitation.

            (a) Business Activities. Employee will not, directly or
indirectly, during the period of employment, own an interest in, operate, join,
control or participate in, or be connected as an officer, employee, agent,
independent contractor, partner, shareholder or principal of any corporation,
partnership, proprietorship, firm, association, person or other entity providing
services and/or products or a combination thereof which directly or indirectly
compete with the Company's Business, and Employee will not undertake planning
for or organization of any business activity competitive with the Company's
Business or combine or conspire with other employees or representatives of the
Company's Business for the purpose of organizing any such competitive business
activity.

             (b) Solicitation of Customers, Suppliers, Etc. Employee will
not, either during the period of employment, or during the period of six months
after termination of employment, directly or indirectly, either for itself or
for any other person, firm, or corporation, compete for, solicit, divert, or
take away, or attempt to divert or take away, any of the customers, suppliers,
or advertisers of the Company whom Employee called upon, had contact with, or
whom Employee solicited or serviced or with whom Employee became acquainted
while engaged as an employee in the Company's business.


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                  (c) Solicitation of Employees, Etc. Employee will not at any
time, directly or indirectly, either for itself or for any other person, firm,
or corporation, induce or influence (or seek to induce or influence) any person
who is engaged (as an employee, agent, independent contractor or otherwise) by
the Company to terminate his or her employment or engagement.

                  (d) Injunctive Relief. Employee acknowledges that the
violation of the covenants contained in this Section would be detrimental and
cause irreparable injury to the Company and its affiliates which could not be
compensated by money damages. Employee agrees that an injunction from a court of
the State of Texas, or other court of competent jurisdiction, is the appropriate
remedy for these provisions, and consents to the entry of an appropriate
judgment enjoining Employee from violating these provisions in the event there
is a find of their breach.

                  (e) Severability. Employee agrees, in the event that any
provision of this Section or any word, phrase, clause, sentence or other portion
thereof shall be held to be unenforceable or invalid for any reason, such
provision or portion thereof shall be modified or deleted in such a manner so as
to make this Section, as modified, legal and enforceable to the fullest extent
permitted under applicable laws. The validity and enforceability of the
remaining provisions or portions thereof shall not be affected thereby and shall
remain valid and enforceable to the fullest extent permitted under applicable
laws. A waiver of any breach of the provisions of this Section shall not be
construed as a waiver of any subsequent breach of the same or any other
provision.

         9. Termination of Employment; Severance.  Notwithstanding any other
provision of this Agreement:

            (a) Termination "for cause" by Company. During the term of
this Agreement, Company may, by action of its Board of Directors (with Employee
abstaining from the vote on any such action), terminate Employee's employment
with Company "for cause" (as defined below) by sending written notice to
Employee specifying with reasonable particularity the basis for such
termination. Upon any such termination, Employee's right to any further
compensation hereunder shall cease and terminate, except that Employee shall be
entitled to receive, on the terms and at the times specified in this Agreement:
(i) any salary earned through the date of termination of employment; (ii) the
reimbursement of any expenses incurred prior to the date of termination; and
(iii) a severance payment equal to one month's salary. For purposes of this
paragraph (a), termination by Company "for cause" shall mean and include
Employee's: (a) material breach, as determined by the Company, of any
proprietary information or confidentiality agreement entered into with Company,
including without limitation, the theft or other misappropriation of Company's
Confidential Information; (b) indictment or conviction (including any plea of
nolo contendre) of any felony or any crime involving fraud or dishonesty
(whether or not related to his employment); (c) participation in any fraud
against Company; or (d) material breach, as determined by the Company, of his
duties to Company, which breach Employee shall have failed to correct within
thirty days of receipt of written notification of the same by Company.

                  (b) Termination "without cause" by Company. During the term of
this Agreement, Company may, by action of its Board of Directors (with Employee
abstaining from



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the vote on any such action), terminate Employee's employment with Company
"without cause" (as defined below) by sending written notice to Employee
specifying with reasonable particularity the basis for such termination. Upon
any such termination, Employee's right to any further compensation hereunder
shall cease and terminate, except that Employee shall be entitled to receive, on
the terms and at the times specified in this Agreement: (i) any salary earned
through the date of termination of employment; (ii) the reimbursement of any
expenses incurred by Employee prior to the date of termination; and (iii) a
severance package, in which Employee shall receive an amount equal to (x)
Employee's monthly compensation at the time of termination, multiplied by (y)
the number of months remaining in the Initial Term or any Renewal Term, as
applicable; provided that such severance package shall not exceed $50,000. For
purposes of this paragraph (b), an event or occurrence constituting termination
"without cause" shall be any termination by Company that is not termination "for
cause" as described in paragraph (a) above, including without limitation the
failure of Company to renew Employee's employment at the end of the Initial
Term.

                  (c) Termination "for good reason" by Employee.

                            (i)     During the term of this Agreement, Employee
may terminate his employment with Company "for good reason" (as defined below)
by sending written notice to Company specifying with reasonable particularity
the basis for such termination. Upon any such termination, Employee's right to
any further compensation hereunder shall cease and terminate, except that
Employee shall be entitled to receive, on the terms and at the times specified
in this Agreement: (i) any salary earned through the date of termination of
employment; (ii) the reimbursement of any expenses incurred by Employee prior to
the date of termination; and (iii) a severance package, in which Employee shall
receive an amount equal to (x) Employee's monthly compensation at the time of
termination, multiplied by (y) the number of months remaining in the Initial
Term or any Renewal Term, as applicable; provided that such severance package
shall not exceed $50,000. For purposes of this paragraph (c), termination "for
good reason" by Employee shall mean and include: (a) a forced relocation of
Employee; (b) a "change of control" of Company (as defined below); or (c) a
material breach of this Agreement by Company, which breach Company shall have
failed to correct within thirty days of receipt of written notification of the
same by Employee.

                            (ii)    As used in this paragraph (c), "change of
control" of Company shall occur either: (A) upon the sale of a controlling
interest in the capital stock of Company in a single transaction or in a group
of related transactions to one or more buyers acting in concert; (B) upon the
sale of all or substantially all of Company's assets; or (C) upon any corporate
merger or consolidation resulting in one or more parties, who did not previously
hold a controlling interest in the capital stock of Company, owning a
controlling interest in the capital stock of Company or its successor entity.

                  (d) Voluntary Termination by Employee. If Employee desires to
voluntarily terminate his employment with Company for any reason other than "for
good reason" (as defined above), then Employee must give Company at least one
month's prior written notice of his intention to do so. Upon any such
termination, Employee's right to any further compensation hereunder shall cease
and terminate, except that Employee shall be entitled to receive, on the terms
and at the times specified in this Agreement: (i) any salary earned through the
date of



                                -5-

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termination; (ii) the reimbursement of any expenses incurred by Employee
prior to the date of termination; and (iii) a severance payment equal to one
month's salary. For purposes of this paragraph (d), an event or occurrence
constituting voluntary termination shall be any termination by Employee that is
not termination "for good reason" as described in paragraph (c) above.

                  (e) Termination on Disability. If, during the term of this
Agreement, Employee has become "disabled" (as defined below), then Company may,
by action of its Board of Directors (with Employee abstaining from the vote on
any such action), terminate Employee's employment with Company, upon written
notice to Employee. Upon any such termination, Employee's right to any further
compensation hereunder shall cease and terminate, except that Employee shall be
entitled to receive, on the terms and at the times specified in this Agreement:
(i) any salary earned through the date of termination; (ii) the reimbursement of
any expenses incurred by Employee prior to the date of termination; and (iii) a
severance package, in which Employee shall receive an amount equal to (x)
Employee's monthly compensation at the time of termination, multiplied by (y)
the number of months remaining in the Initial Term or any Renewal Term, as
applicable; provided that such severance package shall not exceed $50,000. For
purposes of this paragraph (e), Employee shall be deemed to be "disabled" if, in
the opinion of a medical doctor selected by Company, he has been unable to
perform, due to physical or mental disability, substantially all of his duties
of employment for a period of sixty days within any twelve consecutive calendar
months. In the event of a dispute as to whether or not Employee shall be
considered to be disabled, such facts shall be determined by a medical doctor
selected jointly by each of the medical doctors engaged by Employee and Company.

                  (f) Termination on Death. In the event of Employee's death
during the term of this Agreement, then this Agreement shall automatically
terminate upon the date of death. Upon any such termination, Employee's right to
any further compensation hereunder shall cease and terminate, except that
Employee's estate (or a beneficiary otherwise designated in writing by Employee)
shall be entitled to receive, on the terms and at the times specified in this
Agreement: (i) any salary earned through the last day of the month of Employee's
death; (ii) the reimbursement of any expenses incurred by Employee prior to the
date of death; and (iii) a severance package, in which Employee's estate (or
designated beneficiary) shall receive an amount equal to (x) Employee's monthly
compensation at the time of termination, multiplied by (y) the number of months
remaining in the Initial Term or any Renewal Term, as applicable; provided that
such severance package shall not exceed $50,000.

                  (g) Resignation on Termination. Upon the termination of this
Agreement, whether by reason of its expiration or non-renewal, Employee shall
promptly submit to Company a written resignation from all positions held in
Company, if any, including without limitation any position as an officer or
director of Company.

                  (h) Timing of Payments. Any payments required to be made under
this Section to Employee shall be due and payable within sixty days after the
date of termination.

         10. Survival.  Except as specifically provided herein, the
provisions of Sections 6 through 10 hereof shall survive any expiration,
termination or non-renewal of this Agreement.


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         11. Prior Agreements. Employee represents to Company: (a) that there
are no restrictions, agreements or understandings whatsoever to which Employee
is a party which would prevent or make unlawful his execution of this Agreement
or his employment hereunder; and (b) that his execution of this Agreement and
his employment hereunder shall not constitute a breach of any contract,
agreement or understanding, oral or written, to which he is a party or by which
he is bound.

         12. Miscellaneous.

                  (a) Notices. All notices, requests, demands and other
communications required or permitted to be made hereunder shall be in writing
and shall be given by personal delivery, by registered or certified mail, return
receipt requested, first class postage prepaid, or by nationally recognized
overnight delivery service, in each case addressed to the party entitled to
receive the same at the address specified below:


(i)      If to Employee, then to:               (ii)     If to Company, then to:

c/o SMT Enterprises Corporation                 c/o Valesc Inc.
2300 Coit Road, Suite 300B                      2300 Coit Road, Suite 300B
Plano, TX 75075                                 Plano, TX 75075
attn: Edward Kraus                              attn: Jeremy Kraus


Any party may alter the address to which communications are to be sent by giving
notice of such change of address in conformity with the provisions of this
Section providing for the giving of notice. Notice shall be deemed to be
effective, if personally delivered, when delivered; if mailed, at midnight on
the third business day after being sent by registered or certified mail; and if
sent by nationally recognized overnight delivery service, on the next business
day following delivery to such delivery service.

                  (b) Amendment and Modification.  This Agreement may be
amended, modified and supplemented only by written agreement duly executed and
delivered by each of the parties hereto.

                  (c) Waivers. No waiver of any of the provisions of this
Agreement shall be valid or effective unless in writing and signed by the
parties against whom such waiver is sought to be enforced, and no waiver of any
breach or condition of this Agreement shall be deemed to be a continuing waiver
or a waiver of any other breach or condition.

                  (d) Governing Law.  This Agreement and the legal relations
among the parties hereto shall be governed by and construed in accordance with
the laws of the State of Texas.

                  (e) Counterparts. This Agreement may be executed
simultaneously in one or more counterparts, each of which shall be deemed to be
an original, but all of which together shall constitute one and the same
instrument.

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                  (f) Headings. The headings of the sections of this Agreement
are for reference purposes only and shall not constitute a part hereof or affect
in any way the meaning or interpretation of this Agreement.

                  (g) Entire Agreement. This Agreement sets forth the entire
agreement and understanding between and among the parties with respect to the
subject matter hereof, and supersedes all prior agreements, understandings,
inducements and conditions, whether express or implied, oral or written, except
as herein contained. The express terms hereof shall control and supersede any
course of performance and/or usage of trade inconsistent with any of the terms
hereof.

                  (h) Successors and Assigns. Neither party shall have the right
or power to assign or transfer any of its rights or delegate any of its duties
hereunder without the express prior written consent of all other parties hereto,
except that Company may assign this Agreement to any successor-in-interest to
all or substantially all of its business. Subject to the foregoing restriction,
this Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective heirs, successors and permitted assigns.

                  (i) Severability. The provisions of this Agreement are
independent of and separable from each other, and no provision shall be affected
or rendered invalid or unenforceable by virtue of the fact that for any reason
any other or others of them may be found to be invalid or unenforceable in whole
or in part under applicable law.

                  (j) Arbitration. Except as otherwise provided in Section
8(b)(iii), any dispute arising under or in connection with this Agreement or the
transactions contemplated herein shall be subject to arbitration before the
American Arbitration Association in New York, New York. Such tribunal shall have
the right to award reasonable legal fees and disbursements incurred to the
winning party. Any arbitration award rendered between the parties hereto shall
be binding, unless modified or vacated by a court of competent jurisdiction.




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                  IN WITNESS WHEREOF, the parties have caused this Agreement to
be executed by their duly authorized agents on the day and year first above
written.

                                             MORRIS MEDICAL, INC. d/b/a MEDEX



                                             By: ___________________________
                                                    Name:
                                                    Title:



                                             -------------------------------
                                             Edward Kraus




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