October 18, 2004


Pegasus Imaging Corporation
4522 Spruce Street, Suite 200
Tampa, FL  33607
Attention:  John A. Berlin

                    Re:  That  certain  ASSET  PURCHASE  AGREEMENT  dated  as of
                         August 5, 2004 by and among (i) TMS,  INC., an Oklahoma
                         corporation ("TMS"), and (ii) PIC ACQUISITION, INC., an
                         Oklahoma   corporation   ("Buyer")  and  (iii)  PEGASUS
                         IMAGING CORPORATION,  a Florida corporation  ("Parent")
                         (the "Purchase Agreement")

Ladies and Gentlemen:

     This letter amends the Purchase Agreement effective as of October 16, 2004.
Capitalized  terms that are not defined in this letter have the  meanings  given
them in the Purchase Agreement.

     By your  execution of the  acknowledgement  to this letter set forth below,
you hereby agree to the following.

     1. TMS and Parent agree that, subject to the overall direction and approval
of the Board of Directors and the  President of TMS,  Parent shall (i) supervise
and direct the  management  and  operation  of the  Business,  (ii)  provide the
necessary technical,  marketing and sales personnel to supplement TMS's existing
personnel  in or order that the  Business  continue  to operate in the  ordinary
course,  and (iii) use its commercially  reasonable efforts to maintain customer
relations related to the Purchased Assets (the "Management  Services") beginning
October   16,  2004   through   the  date  of  the  Special   Meeting  of  TMS's
shareholders (the  "Special Meeting").  If TMS obtains Shareholder Approval, the
Management  Services  shall  continue  through the Closing Date. If TMS does not
obtain Shareholder  Approval,  the Management Services shall cease on the day of
the Special Meeting or December 15, 2004, whichever occurs first.

     a)   TMS  shall  pay to  Parent a fee for the  Management  Services  in the
          amount of $1,000 per  calendar  day  beginning on October 16, 2004 and
          ending on the earlier of (i) the day the Management Services cease, or
          (ii) the day preceding the Closing Date.

     b)   In addition to the amount  described in  subparagraph  (a) above,  TMS
          shall  reimburse  Parent  for  reasonable  travel,  hotel and  related
          out-of-pocket   expenses  directly   attributable  to  the  Management
          Services,  which  expenses  are  currently  estimated  at no more than
          $25,000 for the period beginning  October 16, 2004 and ending December
          15,  2004.  To the extent  that  travel  costs  exceed  the  estimated
          amounts,  TMS shall  reimburse  Parent  only for those costs which are
          approved by TMS's  President  in  advance,  which  approval  shall not
          unreasonably be withheld.

     c)   In addition to the amounts  identified  in  subparagraphs  (a) and (b)
          above,  TMS shall  reimburse  Parent for  non-travel  costs  which are
          directly  attributable to the Management  Services as provided in this
          paragraph.  To the extent  non-travel costs exceed $500 per item, such
          costs shall be submitted to TMS's President for approval and TMS shall
          reimburse  Parent  only for those  costs  which are  approved by TMS's
          President and which do not require such approval, which approval shall
          not unreasonably be withheld.  The amounts identified in subparagraphs
          (a), (b), and (c) of this paragraph 1 are collectively  referred to as
          the "Management Fee."

     d)   TMS shall  reimburse  Parent for its  reasonable  legal and  financial
          service fees directly  attributable  to the discussions and agreements
          which led to the granting of the  extension of the Closing  Date,  but
          only in an amount up to $5,000.

     e)   The Management Fee is intended to compensate  Parent and Buyer for all
          expenses  that  may be  incurred  as a  result  of TMS  retaining  the
          Business and Purchased Assets longer than was  contemplated  under the
          Purchase  Agreement.  TMS  agrees,  however,  to continue to work with
          Parent  and  Buyer  to  minimize  all  expenses  so long as TMS is not
          required to  compromise  the integrity of  information  related to its
          business  or  its  ability  to  continue  as a  going  concern  if the
          transaction is not approved.  TMS  acknowledges and agrees that Parent
          is providing the Management  Services as the intended purchaser of the
          Business and  Purchased  Assets for Parent and Buyer's  benefit.  This
          paragraph 1 shall not be construed as creating any  obligation  of TMS
          to  reimburse  Parent or Buyer for  expenses  other than as  expressly
          stated herein and in the Purchase Agreement.

     f)   The  amount  described  in  subparagraph  (a)  will be paid to  Parent
          bi-monthly in the weekly check run that occurs on or about the 15th or
          30th  day  of  each  month,  as  applicable.   Amounts   described  in
          subparagraphs (b) and (c) will be paid within five business days after
          Parent  presents an invoice to TMS's  President.  Each  invoice  shall
          include a reasonably  detailed  description of each expense item along
          with the corresponding amount.

     g)   If the transaction is closed, any amounts paid by TMS to Parent and/or
          Buyer  pursuant this  paragraph 1 shall not reduce the amount due from
          Buyer at Closing.

     2. The  Closing  Date and the date  specified  in  Section  10.1(b)  of the
Purchase Agreement each shall be extended to December 15, 2004.

     3. The Note Payment Date (which is defined in Section 1.1 of the Agreement)
is  extended  to the date  which is the  earlier of (a) the date that is fifteen
(15) days after the Liquidation Date, or (b) August 15, 2005.

     4. The  definition  of the  Liquidation  Date is  revised to state that the
Liquidation  Date  is  the  date,  selected  by TMS in  its  sole  and  absolute
discretion,  as of which TMS is liquidated,  provided,  however, such date shall
not be prior to January 31, 2005.

     5. The Work In Process  attributable  to the Boeing NATO contract  shall be
included in Current Net Asset Value at September 30, 2004 and will be calculated
to apportion  the margin under the contract to TMS as of September  30, 2004 and
to Buyer  after  September  30,  2004 using the method  shown on the Boeing NATO
Schedule (the "Schedule")  attached to this letter.  The final  calculation will
update the  "Projected  Hours"  described on the Schedule to "Actual Hours" upon
delivery of the final release candidate of the software to Boeing.

     6. TMS agrees that the $10,440 adjustment for transaction costs paid by TMS
prior  to  September  30,  2004  shall be added  back to cash  for  purposes  of
calculating  Current Net Asset Value at September 30, 2004 and shall be invoiced
and paid to Buyer by TMS at Closing.

     Except as expressly amended in this letter,  the provisions of the Purchase
Agreement are and shall remain in full force and effect and are hereby  ratified
and confirmed by the parties.

     This letter may be executed and acknowledged in multiple counterparts, each
of which shall be deemed an original, but all of which together shall constitute
one and the same.

                                    Very truly yours,

                                    TMS, Inc.

                                    By:    DEBORAH D. MOSIER
                                    Name:  Deborah D. Mosier
                                    Title:    President


Acknowledged and agreed to this 22nd day of October, 2004.

PIC Acquisition, Inc.

By:    JOHN A. BERLIN
Name:  John A. Berlin
Title: President


Pegasus Imaging Corporation

By:    JOHN A. BERLIN
Name:  John A. Berlin
Title: President