SECOND AMENDMENT TO
LOAN AND SECURITY AGREEMENT 



        THIS
SECOND AMENDMENT TO LOAN AND SECURITY AGREEMENT (“Amendment”) is made
effective this 18th day of June, 2004 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 amended by that certain First
          Amendment to Loan and Security Agreement dated July 8th, 2003 and as the same
          may be further amended from time to time, the “Loan
          Agreement”). 



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



             C.    
          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.    
          Definitions. 




	(a)	 	
          The definition of “Business Day” set forth in Section
          1 of the Loan Agreement is hereby deleted in its entirety and
          replaced with the following:






	 	 	
““Business
Day” shall mean any day other than a Saturday, a Sunday or (i) with respect to
all matters, determinations, fundings and payments in connection with LIBOR Rate Loans,
any day on which banks in London, England or Chicago, Illinois are required or permitted
to close, and (ii) with respect to all other matters, any day that banks in Philadelphia,
Pennsylvania are required or permitted to close.” 





	(b)	 	
          The definition of “Debt Service Coverage Ratio” set forth in
          Section 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), any other after-tax extraordinary gains
or losses and, during Borrowers’ fiscal year ending March 31, 2005 only, the Original
Issue Discount, the Deferred Financing Costs and the Leasehold Write-Off, 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, plus, any Permitted
Dividends paid during such period.” 













	(c)	 	 The definition of “Maximum Loan
Limit” set forth in Section 1 of the Loan Agreement is hereby deleted in its entirety and
          replaced with the following: 





	 	 	
““Maximum
Loan Limit” shall mean Ten Million Dollars ($10,000,000.00), plus the Overadvance
Amount.” 





	(d)	 	 The definition of “Maximum Revolving Loan Limit” set forth in
          Section 1 of the Loan Agreement is hereby deleted in its
          entirety and replaced with the following: 





	 	 	
““Maximum
Revolving Loan Limit” shall mean Eight Million Five Hundred Thousand Dollars
$8,500,000.00).” 





	(e)	 	The definition of “Minimum Net
           Availability” set forth in Section 1 of the Loan Agreement is
        hereby deleted in its entirety and replaced with the following:  





	 	 	
““Minimum
Net Availability” shall mean, at any time of determination, an amount equal to
(a) the lesser of: (i) the Maximum Revolving Loan Limit; and (ii) the Revolving Loan Limit
available to the Borrowers at such time; plus  the Availability Block, minus
(b) the sum of: (i) all sums due and owing by the Borrowers to the Borrowers’ trade
creditors which are outstanding beyond trade terms usually and customarily afforded to the
Borrowers by their trade creditors (as determined by Agent from time to time in the
reasonable exercise of its discretion); plus (ii) the outstanding principal balance
of all Revolving Loans and Letter of Credit Obligations; plus (iii) all taxes due
to any federal, state or local taxing authority due and not yet paid.” 





	(f)	 	The definition of “Tangible Net
        Worth” set forth in Section
          1 of the Loan Agreement is hereby deleted in its entirety and
          replaced with the following:   





	 	 	
““Tangible
Net Worth” shall mean, with respect to a Person, the sum of (i) such
Person’s shareholders’ equity, defined in accordance with GAAP, less (ii)
the book value (to the extent included in such shareholders’ equity) of all assets
reflected as goodwill (which shall in no event include trademarks, patents or other
intellectual property or capitalized development costs), plus  (iii) plus the
amount of any LIFO reserve, all as determined under GAAP, consistently applied.” 





	(g)	 	The definition of “Term Loans” set
        forth in Section
          1 of the Loan Agreement is hereby deleted in its entirety and
          replaced with the following: 





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““Term
Loans” shall mean, collectively, Term Loan A, Term Loan B and Term Loan C.” 






	(h)	 	Section 1 of the Loan
        Agreement is hereby amended by adding the following definitions alphabetically where they would
        otherwise appear:






	 	 	
““Availability
Block” shall mean (a) commencing June 18, 2004 and at all time through and
including September 30, 2005, an amount equal to Five Hundred Thousand Dollars
($500,000.00) and (b) commencing October 1, 2005 and at all times thereafter, an amount
equal to Zero Dollars ($0). 





	 	 	
“Deferred
Financing Costs” shall mean an amount equal to the lesser of (i) Four Hundred
Thousand Dollars ($400,000.00) or (ii) the amount of deferred financing costs incurred by
Borrowers prior to June 17, 2004 and actually expensed by Borrowers, as required by GAAP. 





	 	 	
“Interest
Period” shall mean any continuous period of thirty (30), sixty (60) or ninety
(90) days, as selected from time to time by Borrowers. 





	 	 	
“Leasehold
Write-Off” shall mean an amount equal to the lesser of (i) Two Hundred
Seventy-Five Thousand Dollars ($275,000.00) or (ii) the amount actually expensed by
Borrowers in connection with the relocation of Borrowers’ headquarters from 12920
Automobile Boulevard, Clearwater, FL to 2003 Gandy Boulevard North, St. Petersburg, FL. 





	 	 	
“LIBOR
Rate” shall mean, with respect to any LIBOR Rate Loan for any Interest Period, a
rate per annum equal to the offered rate for deposits in United States dollars for a
period equal to such Interest Period as it appears on Telerate page 3750 as of 11:00 a.m.
(London time) two Business Days prior to the first day of such Interest Period.
“Telerate page 3750” means the display designated as “Page 3750” on
the Telerate Service (or such other page as may replace page 3750 of that service or such
other service) as may be nominated by the British Bankers’ Association as the vendor
for the purpose of displaying British Bankers’ Association interest settlement rates
for United States dollar deposits). 





	 	 	
“LIBOR
Rate CapEx Loan” shall mean a Capital Expenditure Loan bearing interest with
reference to the LIBOR Rate. 





	 	 	
“LIBOR
Rate Revolving Loan” shall mean a Revolving Loan bearing interest with reference
to the LIBOR Rate. 





	 	 	
“LIBOR
Rate Term C Loan” shall mean any portion of Term Loan C bearing interest with
reference to the LIBOR Rate. 





	 	 	
“LIBOR
Rate Loans” shall mean the Loans bearing interest with reference to the LIBOR
Rate, including, without limitation, each LIBOR Rate CapEx Loan, each LIBOR Rate Revolving
Loan and each LIBOR Rate Term C Loan. 






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“Original
Issue Discount” shall mean an amount equal to the lesser of (i) Seven Hundred
Forty-One Thousand Dollars ($741,000.00) or (ii) the actual amount of the original issue
discount expensed by Borrowers in connection with the repayment in full of the
Subordinated Debt. 





	 	 	
“Overadvance
Amount” shall mean for each period listed in Column A below, an amount up to the
amount listed in Column B below for such period: 




	Column A	 	Column B
	
	 	

	 	 	 
	June 18, 2004 through July 31, 2004		$     3,000,000.00
	August 1, 2004 through August 31, 2004		$     2,900,000.00
	September 1, 2004 through September 30, 2004		$     2,800,000.00
	October 1, 2004 through October 31, 2004		$     2,700,000.00
	November 1, 2004 through November 30, 2004		$     2,500,000.00
	December 1, 2004 through December 31, 2004		$     2,300,000.00
	January 1, 2005 through January 31, 2005		$     2,100,000.00
	February 1, 2005 through February 28, 2005		$     1,800,000.00
	March 1, 2005 through March 31, 2005		$     1,500,000.00
	April 1, 2005 through April 30, 2005		$     1,200,000.00
	May 1, 2005 through May 31, 2095		$     1,000,000.00
	June 1, 2005 through June 30, 2005		$        800,000.00
	July 1, 2005 through July 31, 2005		$        600,000.00
	August 1, 2005 through August 31, 2005		$        400,000.00
	September 1, 2005 through September 30, 2005		$        200,000.00
	October 1, 2005 and at all times thereafter		$                       0 





	 	 	
“Prime
Rate Loans” shall means the Loans bearing interest with reference to the Prime
Rate. 





	 	 	
“Tax”
shall mean, in relation to any LIBOR Rate Loans and the applicable LIBOR Rate, any tax,
levy, impost, duty, deduction, withholding or charges of whatever nature (i) required to
be paid by Lender and/or (ii) to be withheld or deducted from any payment otherwise
required hereby to be made by Borrower to Lender; provided, that the term “Tax”
shall not include any taxes imposed upon the net income of Lender.” 





             2.    
          Revolving Loans. Sections 2(a) is
          hereby deleted in its entirety and replaced with the following:



	(a)	 	
         Revolving Loans. Subject to the terms and conditions of
          this Agreement and the Other Agreements, during the Term, Agent on behalf of
          Lender shall make revolving loans and advances (the “Revolving
          Loans”) to one or more Borrowers in an aggregate amount up to the
          lesser of: (x) the Maximum Revolving Loan Limit minus the Letter of
          Credit Obligations or (y) the sum of the following sublimits (the
          “Revolving Loan Limit”) minus the Letter of Credit
          Obligations: 





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          	 	(i)	
               Up to eighty-five percent (85%) of the face amount (less maximum discounts,
               credits and allowances which may be taken by or granted to Account Debtors in
               connection therewith in the ordinary course of each Borrower’s business) of
               Eligible Accounts of the Borrowers; plus 





          	 	(ii)	
               Up to the lesser of: (A) the sum of (without duplication) sixty percent (60%) of
               the lower of cost or market value on a FIFO basis of the Eligible Inventory of
               each Borrower; and (B) Two Million Five Hundred Thousand Dollars ($2,500,000);
               plus 





          	 	(iii)	
               the Overadvance Amount; minus 





          	 	(iv)	
               the Availability Block; minus 





          	 	(v)	
               such reserves as Lender elects, in its reasonable discretion, to establish from
               time to time. 





	 	 	
All Revolving Loans shall be deemed to be advanced, first, under the Overadvance Amount
portion of the Revolving Loan Limit and, second, under the remainder of the Revolving Loan
Limit. The aggregate unpaid principal balance of the Revolving Loans made to all
Borrowers, plus the outstanding Letter of Credit Obligations of the Borrowers shall
not at any time exceed the lesser of (i) the Revolving Loan Limit and (ii) the
Maximum Revolving Loan Limit (as each of such amounts may be increased or decreased by
Agent, in its sole discretion). If at any time the outstanding Revolving Loans made to all
Borrowers exceed either the Revolving Loan Limit or the Maximum Revolving Loan Limit, or
any portion of the Revolving Loans plus the outstanding Letter of Credit Obligations
exceed any applicable sublimit within the Revolving Loan Limit, the Borrowers shall
immediately, and without the necessity of demand by Agent, pay to Agent such amount as may
be necessary to eliminate such excess, and Agent shall apply such payment to the
outstanding Revolving Loans in such order as Agent shall determine in its sole discretion;
provided, however, that if such excess results from any establishment of reserves by Agent
or from the imposition of any modification to the eligibility criteria set forth in the
definitions of Eligible Accounts and Eligible Inventory or in this Section
 2(a) in such a manner that items heretofore eligible thereunder are
rendered ineligible, Borrowers shall have five (5) days to eliminate such excess. 





	 	 	
Each Borrower hereby authorizes Agent, in its sole discretion, to charge any accounts of the
Borrowers maintained at LaSalle Bank or advance Revolving Loans to make any payments of
principal, interest, fees, costs or expenses required to be made under this Agreement or
the Other Agreements. All Revolving Loans shall, in Agent’s sole discretion, be
evidenced by one or more promissory notes in form and substance satisfactory to Agent.
However, if such Revolving Loans are not so evidenced, such Revolving Loans may be
evidenced solely by entries upon the books and records maintained by Agent. 





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A request for a Revolving Loan shall be made or shall be deemed to be made, each in the
following manner: Borrower shall give Agent same day notice, no later than 12:00 P.M.
(Philadelphia time) for such day, of its request for a Revolving Loan as a Prime Rate
Loan, and at least three (3) Business Days prior notice of its request for a Revolving
Loan as a LIBOR Rate Loan, in which notice Borrower shall specify the amount of the
proposed borrowing and the proposed borrowing date; provided, however, that no such
request for a Revolving Loan may be made at a time when there exists an Event of Default
and no such request for a Revolving Loan as a LIBOR Rate Loan may be made at any time when
there exists an event which, with the passage of time or giving of notice, will become an
Event of Default. Each check or request for payment against the control disbursement
account maintained by Borrowers at LaSalle Bank shall constitute a request for a Revolving
Loan as a Prime Rate Loan. As an accommodation to the Borrowers, Agent may permit
telephone requests for Revolving Loans and electronic transmittal of instructions,
authorizations, agreements or reports to Agent by Borrowers. Unless such Borrower
specifically directs Agent in writing not to accept or act upon telephonic or electronic
communications from it, Agent shall have no liability to such Borrower for any loss or
damage suffered by such Borrower as a result of Agent’s honoring of any requests,
execution of any instructions, authorizations or agreements or reliance on any reports
communicated to it telephonically or electronically and purporting to have been sent to
Agent by such Borrower, and Agent shall have no duty to verify the origin of any such
communication or the authority of the Person sending it (but such request must purport to
be sent by an Authorized Officer). 





	 	 	
Each Borrower hereby irrevocably authorizes Agent to disburse the proceeds of each Revolving
Loan requested by such Borrower, or deemed to be requested by such Borrower, as follows:
the proceeds of each Revolving Loan requested under Section 2(a)
shall be disbursed by Agent in lawful money of the United States of America in immediately
available funds, in the case of the initial borrowing, in accordance with the terms of the
written disbursement letter from Borrower, and in the case of each subsequent borrowing,
by wire transfer or Automated Clearing House (ACH) transfer to such bank account as may be
agreed upon by such Borrower and Agent from time to time, or elsewhere if pursuant to a
written direction from such Borrower.” 





             3.    
          Capital Expenditure Loans. Section
          2(d) of the Loan Agreement is hereby deleted in its entirety and
          replaced with the following:




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 "(d) Capital Expenditure Loans. Subject to the terms and
          conditions of this Agreement and the Other Agreements, after the initial Loans
          are advanced hereunder, but in no event after the date which is six months prior
          to the last day of the Term, Agent shall make one (1) advance to the Borrowers
          of up to eighty percent (80%) of the purchase price (exclusive of sales taxes,
          delivery charges and other “soft” costs related to such purchase) of
          Equipment which (i) has been purchased by either Borrower on or after May 1,
          2004 with the working capital of such Borrower or (ii) is to be purchased with
          the proceeds of such advance, which Equipment is acceptable to Agent in its
          reasonable discretion, and upon which Agent on behalf of Lender shall have a
          first priority perfected security interest; provided, that (i) the
          maximum amount advanced hereunder for such purchases shall not exceed Three
          Hundred Thousand Dollars ($300,000.00), (ii) at least five (5) Business Days
          prior to any such advance hereunder, the Borrowers shall have furnished to Agent
          an invoice and acceptance letter for the Equipment being purchased and shall
          have executed such documents and taken such other actions as Agent shall
          required to assure that Agent has a first priority perfected security interest
          in such Equipment, and (iii) the Borrowers shall have executed and delivered to
          Agent a CapEx Note in the form of Exhibit D annexed hereto.
          The CapEx Line shall not be available for advance at any time during which a
          Default or Event of Default has occurred unless the Agent in its sole discretion
          waives such Default or Event of Default in writing.” 





             4.    
           Term Loan C. Section 2 of the Loan
          Agreement is hereby amended by adding the following as Section 2(c)A
          thereto: 



	 	 	
 “(c)A
Term Loan C Subject to the terms and conditions of this Agreement and
the Other Agreements, Lender shall make a term loan to the Borrowers in an amount equal to
One Million Two Hundred Thousand Dollars ($1,200,000.00) (“Term Loan C”).
Term Loan C shall be advanced on June 18, 2004.”





             5.    
  Repayment of the Capital Expenditure Loan. Section
          2(e)(iv) of the Loan Agreement is hereby deleted in its entirety
          and replaced with the following:  



	 	 	
          “(iv)The principal of the Capital Expenditure Loan shall be repaid in (A)
          consecutive monthly installments, payable on the first day of each month during
          the period beginning on and including the first day of the month next succeeding
          the month in which such Capital Expenditure Loan is made, each in an amount
          equal to (I) Four Thousand Dollars ($4,000.00) for each payment made on or prior
          to June 30, 2005, (II) Eight Thousand Dollars ($8,000.00) for each payment made
          on or prior to June 30, 2006, but after July 1, 2005, (III) Thirteen Thousand
          Dollars ($13,000.00) for each payment made on or prior to June 30, 2007, but
          after July 1, 2006 and (B) one final payment of the remaining principal balance
          thereof, together with all interest and fees accrued and unpaid thereon, on the
          last day of the Term. 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.”






7











             6.    
           Repayment of Term Loan C. Section 2(e)
          of the Loan Agreement is hereby amended by adding the following as Section
          2(e)(vi) thereto:  



	 	 	
  “(vi) Repayment of Term Loan C. The principal of Term Loan C shall be repaid
          in (i) twelve (12) equal and consecutive monthly installments of principal of
          Sixteen Thousand Dollars ($16,000.00), payable on the first day of each month
          during the period beginning on and including August 1, 2004 and ending on and
          including July 31, 2005, (ii) twelve (12) equal and consecutive monthly
          installments of principal of Thirty-Two Thousand Dollars ($32,000.00), payable
          on the first day of each month during the period beginning on and including
          August 1, 2005 and ending on and including July 31, 2006, (iii) eleven (11)
          equal and consecutive monthly installments of principal of Fifty-Two Thousand
          Dollars ($52,000.00), payable on the first day of each month during the period
          beginning on and including August 1, 2007 and ending on and including June 30,
          2007 and (ii) one final payment of the remaining principal balance thereof,
          together with all interest and fees accrued and unpaid thereon, on the last day
          of the Term. 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.” 






             7.    
            Interest Rate. Section 4(a) of the
          Loan Agreement is hereby deleted in its entirety and replaced with the
          following:   



	(a)	 	
           Interest Rate. Subject to the terms and conditions set
          forth herein, each Loan shall bear interest as follows:





          	 	(i)	
                Each Revolving Loan (other than Revolving Loans supported by the Overadvance
               Amount) shall bear interest at the per annum rate of interest set forth in
               subsection (A) or (B) below: 





          	 	 (A)	
                the Prime Rate in effect from time to time.





          	 	 (B)	
                               two and one quarter of one percent (2.25%) in excess of the LIBOR Rate for the
               applicable Interest Period selected by Borrowers by irrevocable notice (in
               writing, by telecopy, telex, telegram, electronic mail or cable) given to Agent
               not less than three (3) Business Days prior to the first day of each respective
               Interest Period; provided that: (I) each such period occurring after such
               initial period shall commence on the day on which the immediately preceding
               period expires; (II) the final Interest Period shall be such that its expiration
               occurs on or before the end of the Term; and (III) if for any reason Borrowers
               shall fail to timely select a period, then such Revolving Loans shall continue
               as, or revert to, Prime Rate Loans, such rate to remain fixed for such Interest
               Period.





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          	 	(ii)	
                Each Revolving Loan (other than Revolving Loans supported by the Overadvance
               Amount) shall bear interest at the per annum rate of interest set forth in
               subsection (A) or (B) below: 





          	 	 (A)	
                one percent (1%) per annum in excess of the Prime Rate in effect from time to
               time.





          	 	 (B)	
                 three and one quarter of one percent (3.25%) in excess of the LIBOR Rate for the
               applicable Interest Period selected by Borrowers by irrevocable notice (in
               writing, by telecopy, telex, telegram, electronic mail or cable) given to Agent
               not less than three (3) Business Days prior to the first day of each respective
               Interest Period; provided that: (I) each such period occurring after such
               initial period shall commence on the day on which the immediately preceding
               period expires; (II) the final Interest Period shall be such that its expiration
               occurs on or before the end of the Term; and (III) if for any reason Borrowers
               shall fail to timely select a period, then such Revolving Loans shall continue
               as, or revert to, Prime Rate Loans, such rate to remain fixed for such Interest
               Period.





          	 	(iii)	Intentionally Deleted. 





          	 	(iv)	Intentionally Deleted. 






          	 	(v)	Term Loan C shall bear interest
                at the per annum rate of interest set forth in subsection (A) or (B) below: 





          	 	 (A)	
              one-half of one percent (.5%) per annum in excess of the Prime Rate





          	 	 (B)	
                             two and three quarter of one percent (2.75%) in excess of the LIBOR Rate for the
               applicable Interest Period selected by Borrowers by irrevocable notice (in
               writing, by telecopy, telex, telegram, electronic mail or cable) given to Agent
               not less than three (3) Business Days prior to the first day of each respective
               Interest Period; provided that: (I) each such period occurring after such
               initial period shall commence on the day on which the immediately preceding
               period expires; (II) the final Interest Period shall be such that its expiration
               occurs on or before the end of the Term; and (III) if for any reason Borrowers
               shall fail to timely select a period, then such portion of Term Loan C shall
               continue as, or revert to, Prime Rate Loans, such rate to remain fixed for such
               Interest Period.





          	 	(vi)	 Each Capital Expenditure
                Loan shall bear interest at the per annum rate of interest set forth in subsection
                (A) or (B) below:





          	 	 (A)	
              one-half of one percent (.5%) per annum in excess of the Prime Rate in effect
               from time to time.






9











          	 	 (B)	
              two and three quarter of one percent (2.75%) in excess of the LIBOR Rate for the
               applicable Interest Period selected by Borrowers by irrevocable notice (in
               writing, by telecopy, telex, telegram, electronic mail or cable) given to Agent
               not less than three (3) Business Days prior to the first day of each respective
               Interest Period; provided that: (I) each such period occurring after such
               initial period shall commence on the day on which the immediately preceding
               period expires; (II) the final Interest Period shall be such that its expiration
               occurs on or before the end of the Term; and (III) if for any reason Borrowers
               shall fail to timely select a period, then such Capital Expenditure Loans shall
               continue as, or revert to, Prime Rate Loans, such rate to remain fixed for such
               Interest Period. 






          	 	  	
             All such interest to be payable on Prime Rate Loans shall be payable on the first Business Day
        of each month in arrears. All such interest to be payable on LIBOR Rate Loans shall be
        payable on the first Business Day of each month in arrears and on the last Business Day of
        such Interest Period. Said rates of interest shall increase or decrease by an amount equal
        to each increase or decrease in the Prime Rate, effective on the effective date of each
        such change in the Prime Rate. Upon the occurrence of an Event of Default and during the
        continuance thereof, each Loan shall bear interest at the rate of two percent (2%) per
        annum in excess of the interest rate otherwise payable thereon, which interest shall be
        payable on demand. All interest shall be calculated on the basis of a 360-day year.” 





             8.    
           Other LIBOR Provisions. Section 4 of
          the Loan Agreement is hereby amended by adding the following as Section
          4(d) thereto:



	(d)	 	
        Other Libor Provisions.





          	 	(i)	                Subject to the provisions of this Agreement, Borrower shall have the option (A)
               as of any date, to convert all or any part of the Prime Rate Loans to, or
               request that new Loans be made as, LIBOR Rate Loans of various Interest Periods,
               (B) as of the last day of any Interest Period, to continue all or any portion of
               the relevant LIBOR Rate Loans as LIBOR Rate Loans; (C) as of the last day of any
               Interest Period, to convert all or any portion of the LIBOR Rate Loans to Prime
               Rate Loans; and (D) at any time, to request new Loans as Prime Rate Loans;
               provided, that Loans may not be continued as or converted to LIBOR Rate Loans,
               if the continuation or conversion thereof would violate the provisions of this
               Agreement or if an Event of Default or an event which, with the passage of time
               or giving of notice, will become an Event of Default, has occurred.






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          	 	(ii)	 Lender’s determination of LIBOR as provided above shall be conclusive,
               absent manifest error. Furthermore, if Lender determines, in good faith (which
               determination shall be conclusive, absent manifest error), prior to the
               commencement of any Interest Period that (A) U.S. Dollar deposits of sufficient
               amount and maturity for funding the Loans are not available to Lender in the
               London Interbank Eurodollar market in the ordinary course of business, or (B) by
               reason of circumstances affecting the London Interbank Eurodollar market,
               adequate and fair means do not exist for ascertaining the rate of interest to be
               applicable to the Loans requested by Borrower to be LIBOR Rate Loans or the
               Loans bearing interest at the rates set forth in Section
               4(a)(i)(B), Section 4(a)(ii)(B),
               Section 4(a)(v)(B) or Section 
               4(a)(iv)(B) of this Agreement shall not represent the
               effective pricing to Lender for U.S. Dollar deposits of a comparable amount for
               the relevant period (such as for example, but not limited to, official reserve
               requirements required by Regulation D to the extent not given effect in
               determining the rate), Lender shall promptly notify Borrower and (1) all
               existing LIBOR Rate Loans shall convert to Prime Rate Loans upon the end of the
               applicable Interest Period, and (2) no additional LIBOR Rate Loans shall be made
               until such circumstances are cured.





          	 	(iii)	
                If, after the date hereof, the introduction of, or any change in any applicable
               law, treaty, rule, regulation or guideline or in the interpretation or
               administration thereof by any governmental authority or any central bank or
               other fiscal, monetary or other authority having jurisdiction over Lender or its
               lending offices (a “Regulatory Change”), shall, in the opinion
               of counsel to Lender, make it unlawful for Lender to make or maintain LIBOR Rate
               Loans, then Lender shall promptly notify Borrower and (A) the LIBOR Rate Loans
               shall immediately convert to Prime Rate Loans on the last Business Day of the
               then existing Interest Period or on such earlier date as required by law and (B)
               no additional LIBOR Rate Loans shall be made until such circumstance is cured. 






          	 	(iv)	
                If, for any reason, a LIBOR Rate Loan is paid prior to the last Business Day of
               any Interest Period or if a LIBOR Rate Loan does not occur on a date specified
               by Borrower in its request (other than as a result of a default by Lender),
               Borrower agrees to indemnify Lender against any loss (including any loss on
               redeployment of the deposits or other funds acquired by Lender to fund or
               maintain such LIBOR Rate Loan) cost or expense incurred by Lender as a result of
               such prepayment. 





          	 	(v)	
              If any Regulatory Change (whether or not having the force of law) shall (A)
               impose, modify or deem applicable any assessment, reserve, special deposit or
               similar requirement against assets held by, or deposits in or for the account of
               or loans by, or any other acquisition of funds or disbursements by, Lender; (B)
               subject Lender or the LIBOR Rate Loans to any Tax or change the basis of
               taxation of payments to Lender of principal or interest due from Borrower to
               Lender hereunder (other than a change in the taxation of the overall net income
               of Lender); or (C) impose on Lender any other condition regarding the LIBOR Rate
               Loans or Lender’s funding thereof, and Lender shall determine (which
               determination shall be conclusive, absent any manifest error) that the result of
               the foregoing is to increase the cost to Lender of making or maintaining the
               LIBOR Rate Loans or to reduce the amount of principal or interest received by
               Lender hereunder, then Borrower shall pay to Lender, on demand, such additional
               amounts as Lender shall, from time to time, determine are sufficient to
               compensate and indemnify Lender from such increased cost or reduced amount. 






11










          	 	(vi)	
              Lender shall receive payments of amounts of principal of and interest with
               respect to the LIBOR Rate Loans free and clear of, and without deduction for,
               any Taxes. If (A) Lender shall be subject to any Tax in respect of any LIBOR
               Rate Loans or any part thereof or, (B) Borrower shall be required to withhold or
               deduct any Tax from any such amount, the LIBOR Rate applicable to such LIBOR
               Rate Loans shall be adjusted by Lender to reflect all additional costs incurred
               by Lender in connection with the payment by Lender or the withholding by
               Borrower of such Tax and Borrower shall provide Lender with a statement
               detailing the amount of any such Tax actually paid by Borrower. Determination by
               Lender of the amount of such costs shall be conclusive, absent manifest error.
               If after any such adjustment any part of any Tax paid by Lender is subsequently
               recovered by Lender, Lender shall reimburse Borrower to the extent of the amount
               so recovered. A certificate of an officer of Lender setting forth the amount of
               such recovery and the basis therefor shall be conclusive, absent manifest error.  





          	 	(vii)	
              Each request for LIBOR Rate Revolving Loan shall be in an amount not less than
               Five Hundred Thousand and No/100 Dollars ($500,000.00), and in integral
               multiples of Fifty Thousand and No/100 Dollars ($50,000.00). Each request for
               LIBOR Rate CapEx Loan shall be in an amount not less than Fifty Thousand and
               No/100 Dollars ($50,000.00), and in integral multiples of, One Thousand and
               No/100 Dollars ($1,000.00). Each request for a LIBOR Rate Term C Loan shall be
               in an amount not less than One Hundred Thousand and No/100 Dollars
               ($100,000.00), and in integral multiples of, One Thousand and No/100 Dollars
               ($1,000.00).   





          	 	(viii)	
                  Unless otherwise specified by Borrower, all Loans shall be Prime Rate Loans.  





          	 	(ix)	
                  No more than six (6) Interest Periods may be in effect with respect to
               outstanding LIBOR Rate Revolving Loans and LIBOR Rate Term C Loans at any one
               time. No more than one (1) Interest Period may be in effect with respect to
               outstanding LIBOR Rate CapEx Loans at any one time.”  





             9.      
         Term. The reference contained in Section
          10(i) to “July 1, 2005” is hereby deleted and replaced
          with “July 1, 2007". 



             10.    
          Prepayment Premium. The last sentence of Section
          10(i) is hereby deleted in its entirety and replaced with the
          following: 



12 










          	 	 	
              “If, during the Term of this Agreement, the Revolving Loan facility is terminated by Borrowers
        or this Agreement is terminated as a result of the occurrence of an Event of Default, then
        the Borrowers agree to repay and satisfy in full all of the Liabilities, and additionally,
        as a prepayment fee, the Borrowers shall pay to Agent an amount equal to (i) three percent
        (3%) of the Maximum Loan Limit, if such prepayment occurs at anytime on or prior to July
        1, 2005 and (ii) two percent (2%) of the Maximum Loan Limit if such prepayment occurs at
        any time prior to the date thirty (30) days prior to the last day of the Term but after
        July 1, 2005.” 





             11.    
         Use of Proceeds. Section 12(g) of the
          Loan Agreement is hereby deleted in its entirety and replaced with the
          following:



          	 	
              “ (g)  Use of Proceeds. All monies and other property obtained by
               any Borrower from Agent pursuant to this Agreement shall be used solely as
               follows: (a) the proceeds of the initial Loans shall be used to refinance all
               existing indebtedness of each Borrower or any Guarantor owing to South Trust
               Bank; (b) a portion of Term Loan C shall be used to repay Borrowers’
               outstanding obligations in under Term Loan A and (c) the proceeds of the
               remainder of Term Loan C and all other Loans shall be used for working capital
               and general corporate purposes.” 





             12.    
        Financial Covenants. Section 14 of the
          Loan Agreement is hereby deleted in its entirety and replaced with the
          following::



          	14.	 	
               FINANCIAL COVENANTS. MTS and its Subsidiaries shall
          maintain and keep in full force and effect each of the financial covenants set
          forth below:





          	(a) 	 	
               Tangible Net Worth. MTS and its Subsidiaries on a
          consolidated basis shall maintain at all times during each time period set forth
          below a Tangible Net Worth of not less than the amount set forth below opposite
          each such time period:






 13










	Period	 	Tangible Net Worth
	
	 	

	 	 	 
	As of March 31, 2004	 	$800,000 plus the greater of (i) $4,600,000
        and (ii) 95% of Tangible Net Worth at March 31, 2003 (the "2004 Tangible Net Worth Requirement")	 
	 	 	
	As of April 1, 2004 and at all times through and including June 29, 2004	 	$7,478,000.00	 
	 	 	
	As of June 30, 2004 and at all times through and including September 29, 2004	 	$6,678,000.00	 
	 	 	
	As of September 30, 2004 and at all times through and including March 30, 3005	 	$                                                                                                                                                            6,705,000.00	 
	 	 	
	As of March 31, 2005	 	$7,105,000.00 (the "2005 Tangible Net Worth Requirement")	 
	 	 	
	As of April 1, 2005 and at all times
        through and including September 29, 2005	 	the greater of (i) the 2005 Tangible
        Net Worth Requirement and (ii) 95% of Tangible Net Worth at March 31, 2005	 
	 	 	
	As of September 30, 2005
        and at all times through and including March 30, 2006	 	(i) the 2005 Tangible Net
        Worth Requirement and (ii) 95% of Tangible Net Worth at March 31, 2005	 
	 	 	
	As of March 31, 2006	 	$800,000 plus the greater of (i) the 2005
        Tangible Net Worth Requirement and (ii) 95% of Tangible Net Worth at March 31, 2005 (the "2006 Tangible Net Worth Requirement")	 
	 	 	
	
        As of April 1, 2006 and at all times through and including March 30, 2007	 	the greater of (i) the 2006
        Tangible Net Worth Requirement and (ii) 95% of Tangible Net Worth at March 31, 2006	 
	 	 	
	As of March 31, 2007	 	$800,000 plus the greater of(i) the 2006 Tangible
        Net Worth Requirement and (ii) 95% of Tangible Net Worth at March 31, 2006 (the "2007 Tangible Net Worth Requirement")	 
	 	 	
	As of April 1, 2007 and at all times thereafter	 	the greater of (i) the 2007 Tangible Net Worth Requirement and (ii)
        95% of Tangible Net Worth at March 31, 2007	 






          	(b) 	 	
              Debt Service Coverage Ratio. MTS and its Subsidiaries on a
          consolidated basis will maintain a Debt Service Coverage Ratio for each time
          period set forth below of not less than the ratio set forth below opposite each
          such time period:






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	Measuring Period	 	Debt Service Coverage Ratio	
	
	 	
	
	 	 	 	 
	Fiscal quarter ending June 30, 2004	 	1.25:1.00	 
	Two fiscal quarters ending September 30, 2004	 	1.25:1.00	 
	Three fiscal quarters ending December 31, 2004	 	1.25:1.00	 
	Four fiscal quarters ending March 31, 2005	 	1.25:1.00	 
	Fiscal quarter ending June 30, 2005 and as of the end of each fiscal quarter     
        thereafter, in each case together with the three preceding fiscal quarters	 	1.25:1.00	 






          	(c) 	 	
              Capital Expenditure Limitations. MTS and its Subsidiaries
          on a consolidated basis shall not make Capital Expenditures in excess of (i)
          Three Million Dollars ($3,000,000.00) during the Fiscal Year ending March 31,
          2005 and (ii) One Million Eighty Hundred Thousand Dollars ($1,800,000.00) during
          any Fiscal Year thereafter. 





          	(d) 	 	
           Availability. Borrowers will maintain a Minimum Net
          Availability of not less than Seven Hundred Fifty Thousand Dollars ($750,000);
          provided, however, that Minimum Net Availability may be less than Seven Hundred
          Fifty Thousand Dollars ($750,000) for a total of five (5) days during each
          calendar month.” 





             13.    
         Deletion of Material Adverse Effect Provisions



          	(a) 	 	
            Section 12(b)(vii) of the Loan Agreement is hereby deleted
          in its entirety and replaced with the following: 





          	“(vii)	 	
           Default. Promptly advise Agent of the occurrence of any Default or Event
          of Default hereunder or under any of the Subordinated Debt Documents or any of
          the Preferred Stock Documents.”  





          	(b) 	 	
                Section 15(c) of the Loan Agreement is hereby deleted in
          its entirety and replaced with the following:





          	"(c) 	 	
                 Breaches or Amendments of Other Obligations. A default or event of
          default or breach under, or other failure of any Obligor to perform, keep or
          observe any of the covenants, conditions, promises, agreements or obligations of
          such Obligor (after the expiration of any applicable cure or grace periods)
          under: (i) any of the Subordinated Debt Documents or Preferred Stock Documents
          shall be amended or modified in any respect prohibited hereunder without
          Agent’s prior written consent; or (ii) any other agreement with any Person,
          if such failure is reasonably likely to have a Material Adverse Effect.” 





          	(c) 	 	
          Section 15(p) of the Loan Agreement is hereby deleted in
          its entirety and replaced with the following: 





          	“(p) 	 	
            Intentionally Deleted.” 







15 











          	(d) 	 	
          Section 17(o) of the Loan Agreement is hereby deleted in
          its entirety and replaced with the following: 





          	“(o) 	 	
            Intentionally Deleted.”  





             14.    
        Change of Address. The reference to “c/o LaSalle
          Business Credit, Inc., 1735 Market Street, 6th Floor,
          Philadelphia, PA 19103, Attention: Jeffrey M. Joslin, facsimile number: (267)
          386-8844” set forth in Section 19 of the Loan
          Agreement is hereby deleted in its entirety and replaced with the “c/o
          LaSalle Business Credit, LLC, 2 Commerce Square, Suite 2610, Philadelphia, PA
          19103". 



             15.    
        Notes. Contemporaneously with the execution of this
          Amendment, Borrower shall execute and deliver to Agent an Amended and Restated
          Revolving Note in the face amount of Eight Million Five Hundred Thousand Dollars
          ($8,500,000.00) (the “Amended and Restated Note”) and Term Note
          C in the face amount of One Million Two Hundred Thousand Dollars ($1,200,000.00)
          (the “Term Note C”), each of which shall be in form and content
          acceptable to Agent. 



             16.    
        Merger and Name Change 



	(a)	 	
        Borrowers have informed Agent that Borrowers are contemplating the following
          actions: (i) an amendment to the articles of incorporation of MTS in order to
          change the name of MTS to “MTS Medication Technologies” (the
          “Name Change”) and (ii) subsequent to the Name Change, the
          merger of Packaging with and into MTS (the “Merger”). MTS, a
          Delaware corporation, will be the corporation surviving the Merger. Agent and
          Lender hereby consent to the Name Change and the Merger and, solely for the
          purpose of avoiding the occurrence of a Default or an Event of Default which
          could be caused by the Name Change and/or the Merger, waive Borrowers’
          compliance with those provisions of the Loan Agreement and the Other Agreements
          which would prohibit the Name Change and/or the Merger. Agent’s and
          Lender’s consent and waiver is contingent upon the execution and delivery
          to Agent of the following documents: 





          	 	(i)	
           Copy of the authorizing resolutions regarding the Name Change, certified to be
          true and correct by the Secretary of MTS; 





          	 	(ii)	
          Copy of the articles of amendment to the articles of incorporation of MTS,
          certified to be true and correct by the Secretary of MTS; 





          	 	(iii)	
         Copy of the authorizing resolutions regarding the Merger, certified to be true
          and correct by the Secretary of MTS and Packaging, as applicable; 





          	 	(iv)	
        Evidence that the state of formation of the surviving company is the State of
          Delaware. 





          	 	(v)	
           Copy of the articles of merger, certified to be true and correct by the
          Secretary of MTS and Packaging; and  





          	 	(vi)	
          Copy of the by-laws of the company surviving the merger, certified to be true
          and correct by the Secretary of such company.  





	(b)	 	
       The foregoing consent and waiver is given solely in connection with the Name
          Change and the Merger and shall not be deemed to be an agreement, obligation or
          commitment by Agent or Lender to consent to any other transactions which would
          be prohibited by the terms and conditions of the Loan Agreement or any of the
          Other Agreements. 






16 











             17.    
        Conditions Precedent. In addition to all of the other terms
          and conditions set forth herein, this Amendment is contingent upon the
          following:



	(a)	 	
         Immediately after giving effect to the repayment in full of the Subordinated
          Indebtedness, the Borrowers shall have Minimum Net Availability of not less than
          Seven Hundred Fifty Thousand Dollars ($750,000); and






	(b)	 	
                  Agent shall have received satisfactory confirmation of the amount required to
          repay the Subordinated Indebtedness in full as of the date hereof.





             18.    
         Amendment/References. The Loan Agreement and the Other
          Agreements are hereby amended to be consistent with the terms of this Amendment.
          All references in the Loan Agreement and the Other Agreements to (a) the
          “Liabilities” shall include, without limitation, all sums due in
          connection with Term Loan C, (b) the “Loan Agreement” shall mean the
          Loan Agreement as amended hereby; (c) the “Loans” shall include,
          without limitation, Term Loan C and (d) the “Other Agreements” shall
          include, without limitation, this Amendment, the Amended and Restated Note, Term
          Note C and all other instruments or agreements executed pursuant to or in
          connection with the terms hereof. 



             19.    
         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 Ninety-Five
          Thousand Dollars ($95,000.00) (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.  



             20.    
        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.  



             21.    
       Additional Documents; Further Assurances. Borrowers shall take
          such other actions and 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, all 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 or to evidence or effect the
          Name Change and/or the Merger. All such documents, agreements, statements,
          certificates and information shall be in form and content acceptable to Agent. 



             22.    
        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; 






17











	(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.  





             23.    
         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.  



             24.    
          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.



             25.    
           Binding Effect. This Amendment shall be binding upon and inure to
          the benefit of the parties hereto and their successors and assigns. 



             26.    
          Governing Law. This Amendment shall be governed by and construed
          in accordance with the laws of the Commonwealth of Pennsylvania.



             27.    
         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] 



18











        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:	
	 





 21












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 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:	
	 







20