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                           ASSET ACQUISITION AGREEMENT

     This is an Asset Acquisition  Agreement (the "Agreement"),  dated April 30,
1998,  among  562577 B.C.  Ltd., a British  Columbia,  Canada  corporation  (the
"Seller"), Peritronics Medical Ltd., a British Columbia, Canada corporation (the
"Shareholder"), LifeServ Technologies, Inc., a Florida corporation (the "Buyer")
and Medical Technology Systems, Inc., a Delaware corporation ("Med Tech").

                                   Background

     The Seller is engaged in the business of providing  healthcare  information
systems,  including  owning and operating a Fetal  Monitoring and  Point-of-Care
Documentation System (the "Fetal Monitoring System" and collectively with all of
the Seller's operations, the "Business"). The Shareholder constitutes all of the
shareholders  of the  Seller  and is  entering  into this  Agreement  to provide
certain  assurances  in order to induce the Buyer to enter into this  Agreement.
The Buyer,  a wholly-owned  subsidiary of Med Tech, is a healthcare  information
systems  company  that  provides  clinical   information   systems,   medication
dispensing,  and  medications  management  systems for hospitals and other acute
care  facilities.  The Buyer  wishes to purchase  from the Seller and the Seller
wishes to sell to the Buyer certain assets of the Seller related to the Business
effective April 30, 1998 ("Effective Date"), subject to the terms and conditions
set forth below.  Accordingly,  in  consideration  of the mutual  covenants  and
agreements set forth below, the parties agree as follows:

                                      Terms

1.   Definitions.

     "Accredited  Investor"  has  the  meaning  set  forth  in  Rule  501(a)  of
Regulation D promulgated under the Securities Act.

     "Assets" has the meaning set forth in Section 2.

     "Assumed  Liabilities"  means all  Liabilities of the Business set forth on
Schedule A of this Agreement, but only to the extent that such Liabilities arise
out of or are attributable to items that would properly be accrued under GAAP as
of the Closing Date; provided,  however,  that the Assumed Liabilities shall not
include  any  Liabilities  not  specifically  set  forth on  Schedule  A of this
Agreement,  including,  without limitation:  (i) any Liability of the Seller for
income,  transfer,  sales,  franchise use, and other Taxes arising in connection
with the consummation of the  transactions  contemplated  hereby  (including any
income Taxes  arising  because  Seller is  transferring  the  Assets),  (ii) any
Liability of the Seller for the unpaid  Taxes of any Person under United  States
Treasury  Regulation  ss.1.1502-6 (or any similar provision of state,  local, or
foreign law), as a transferee or successor, by contract, or otherwise, (iii) any
obligation of the Seller to indemnify any Person  (including any Shareholder) by
reason of the fact that such Person was a director,  officer, employee, or agent
of the  Seller or was  serving at the  request of any such  entity as a partner,
trustee, director, officer, employee, or agent of another

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entity  (whether such  indemnification  is for  judgments,  damages,  penalties,
fines, costs,  amounts paid in settlement,  losses,  expenses,  or otherwise and
whether  such  indemnification  is pursuant to any  statute,  charter  document,
bylaw,  agreement,  or otherwise) (iv) any Liability of the Seller for costs and
expenses  incurred  in  connection  with  this  Agreement  and the  transactions
contemplated  hereby,  (v) any  Liability or obligation of the Seller under this
Agreement (or under any related agreement between the Seller on the one hand and
the  Buyer  on the  other  hand  entered  into  on or  after  the  date  of this
Agreement),  (vi) any  obligations  of any kind  relating  to any  Person  whose
approval is or may be required in connection with the transactions  contemplated
by this Agreement  (provided,  however,  any fees payable pursuant to compliance
with the HSR Act shall be shared equally by the Buyer and the Seller), (vii) any
obligations related to any severance pay or similar compensation to employees of
the Seller,  arising  from the  termination  of any such  employee  prior to the
Closing  Date or related to the  transactions  contemplated  by this  Agreement,
(viii) any liability of the Seller, in any real property,  owned or leased,  and
any  obligation  or liability  of the Seller  arising  thereunder,  and (ix) any
deferred  compensation  obligations  to any  of the  individuals  set  forth  on
Schedule A to this Agreement.

     "Business"  has the  meaning  set forth in the  Background  Section of this
Agreement.

     "Buyer" has the meaning set forth in the preface above.

     "Cash Consideration" has the meaning set forth in Section 3(a).

     "Closing" has the meaning set forth in Section 3(c).

     "Closing Date" has the meaning set forth in Section 3(c).

     "Code" means the Internal Revenue Code of 1986, as amended.

     "Confidential  Information"  means any information  concerning the business
and affairs of the Seller  prior to Closing or the Buyer  subsequent  to Closing
that is not already generally available to the public, including trade secrets.

     "ERISA"  means the Employee  Retirement  Income  Security  Act of 1974,  as
amended.

     "Excess Cash Flow" means the Net Sales (as defined  herein) of  Peritronics
Fetal Monitoring  Systems (or sales of fetal  monitoring  systems to Peritronics
customer list as defined in Schedule B) minus the operating expenses  associated
with the Net Sales.

     "Fetal  Monitoring  System"  has the  meaning  set forth in the  Background
Section above.

     "GAAP" means generally accepted accounting principles.

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     "HSR Act" means the Hart-Scott-Rodino  Antitrust  Improvements Act of 1976,
as amended.

     "Intellectual  Property"  means (a) all inventions  (whether  patentable or
unpatentable and whether or not reduced to practice),  all improvements thereto,
and all patents, patent applications, and patent disclosures,  together with all
reissuances,  continuations,  continuations-in-part,  revisions, extensions, and
reexaminations  thereof, (b) all trademarks,  service marks, trade dress, logos,
trade names, and corporate names,  together with all translations,  adaptations,
derivations,  and  combinations  thereof and including  all goodwill  associated
therewith,  and all  applications,  registrations,  and  renewals in  connection
therewith,  (c) all copyrightable  works, all copyrights,  and all applications,
registrations,  and renewals in connection therewith, (d) all mask works and all
applications, registrations, and renewals in connection therewith, (e) all trade
secrets and confidential  business  information  (including ideas,  research and
development,  know-how,  formulas,  compositions,  manufacturing  and production
processes and techniques,  technical data,  designs,  drawings,  specifications,
customer  and supplier  lists,  pricing and cost  information,  and business and
marketing plans and proposals),  (f) all computer  software  (including data and
related documentation), (g) all other proprietary rights, and (h) all copies and
tangible embodiments thereof (in whatever form or medium).

     "Liability" means any liability (whether known or unknown, whether asserted
or unasserted,  whether  absolute or contingent,  whether  accrued or unaccrued,
whether liquidated or unliquidated,  and whether due or to become due) including
any liability for Taxes.

     "Med Tech" means Medical Technology Systems, Inc., a Delaware corporation.

     "Med Tech Common Stock" means the common  stock,  par value $.01 per share,
of Medical Technology Systems, Inc.

     "Net Sales" means the  proceeds  received by the Buyer from the sale of the
Peritronics  Fetal Monitoring  Systems (or sales to customers on the Peritronics
customer list, attached hereto as Schedule B) less the following: (i) the direct
cost of hardware  purchased by the Buyer to install the Fetal Monitoring System,
including any amounts paid for installation of the Fetal Monitoring System; (ii)
the cost of freight to ship the Fetal Monitoring  System to the customer;  (iii)
any amount paid to  customize  the software  component  of the Fetal  Monitoring
System as  required  by the  customer;  (iv) any amount  paid to train  customer
personnel  in the use of the Fetal  Monitoring  System;  (v) any amount  paid to
integrate the customer's  database into the Fetal  Monitoring  System;  (vi) any
taxes and licenses pertaining to sales of the Fetal Monitoring System; and (vii)
any  commissions  paid to employees or agents of agents of the Buyer relating to
sales of the Fetal Monitoring System.

     "Person"  means  any  natural  person,   general  or  limited  partnership,
corporation,  limited  liability  company,  firm,  association,  or other  legal
entity.

     "Purchase Price" has the meaning set forth in Section 3(a).

     "Returns" has the meaning set forth in Section 6(q).

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     "Securities Act" means the Securities Act of 1933, as amended.

     "Security Interest" means the Universal Commercial Code filing #9717561018,
filed  in  Sacramento,  California  on June 20,  1997 in favor of Eron  Mortgage
Corporation  on behalf of Henry  Rathje,  Ron Waters,  Frank  Biller,  and James
Cunnian, attached hereto as Schedule D.

     "Seller" has the meaning set forth in the preface above.

     "Seller Benefit Plans" has the meaning set forth in Section 6(n).

     "Seller ERISA Affiliate" has the meaning set forth in Section 6(n).

     "Seller ERISA Plans" has the meaning set forth in Section 6(n).

     "Shareholder" has the meaning set forth in the preface above.

     "Stock Consideration" has the meaning set forth in Section 3(a).

     "Termination  for  Cause"  means  termination  for:  willful  disobedience;
insubordination;  unwillingness  to meet  documented and reasonable  performance
standards; or gross misconduct.

2. Sale of Business and Assets.  The parties  hereby agree that,  on the Closing
Date, the Seller shall sell and the Buyer shall purchase,  for the consideration
set forth below, all of the Seller's assets and the Business as a going concern,
including without limitation,  all property,  rights, and business of every type
and description, real, personal and mixed, tangible and intangible, constituting
the Business,  all of the Seller's  goodwill,  all contracts and contract rights
with customers of the Business, all contracts and contract rights with temporary
employees  or   contractors   of  the  Business,   any  employee  or  contractor
non-competition  agreements in favor of Seller, leases and lease deposits, sales
and supply contracts,  leases, all cash on hand in banks,  accounts  receivable,
all Intellectual Property (including, without limitation, source code for all of
the  Seller's   products)  and  Confidential   Information,   use  of  the  name
"Peritronics",  and any variations thereof,  patents,  trademarks,  trade names,
brand names, and copyrights, and all pending applications therefor and interests
thereunder, inventions, processes, know-how, formulae, trade secrets, equipment,
fixtures, rights under contracts and agreements,  franchises,  all rights in any
funds of whatever  nature,  books and records  (excluding  the corporate  minute
books and stock transfer  records),  candidate and employee lists, all telephone
and fax numbers,  all telephone  listings,  and all other property and rights of
every kind and nature  owned or held by the Seller on the  Closing  Date or then
used by the Seller,  whether or not specifically  referred to in this Agreement.
Such  sale  shall  be made  free  and  clear  of all  liens,  encumbrances,  and
restrictions of any kind.

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3. Purchase and Sale of the Assets. (a) Purchase  Consideration.  Subject to the
terms of this Agreement and in reliance on the representations and warranties of
the Seller and the  Shareholder  set forth below,  the Buyer shall  purchase the
Assets on the Closing  Date.  The purchase  price for the Assets (the  "Purchase
Price")  shall consist of (i) $350,000 in cash (the "Cash  Consideration"),  and
(ii) 250,000 shares of Med Tech Common Stock (the "Stock Consideration"), all of
which shall be payable to the Seller as set forth below. The Seller is obligated
to pay to the Buyer the Cash Consideration only from Net Sales.

     (b) Payment.  The Stock  Consideration  shall be delivered to the Seller no
later than ninety days after the Closing Date. The Cash  Consideration  shall be
payable as follows:  -$10,000  paid on May 8, 1998 -$20,000 paid at Closing -The
remainder paid in monthly installments,  commencing on the 15th day of the month
following  the  Closing  Date,  equal  to 50% of the  Excess  Cash  Flow for the
previous  calendar month. The monthly  installments  shall be payable until such
time as the Cash  Consideration has been paid,  however,  the Cash Consideration
shall be paid in full no later than nine months after the Closing Date.

     (c) Closing. The closing of the transactions contemplated by this Agreement
(the  "Closing")  shall  take  place at the  offices  of the  Seller  located at
2700-700  West  Georgia  Street,  Vancouver,  British  Columbia,  V7Y 1B8,  five
business days after Shareholder  approval,  no later than July 31, 1998, or such
other date as may be agreed upon in writing by the parties (the "Closing Date").

     (d) Deliveries at Closing. At the Closing,  the Seller shall deliver to the
Buyer a bill of sale and such other good and sufficient  instruments of transfer
and  conveyance  as in the  reasonable  opinion of the Buyer's  counsel shall be
effective to vest in the Buyer good and marketable title to the Assets.

4. No Assumption of  Liabilities.  Except for the obligations of Seller that are
described in Schedule A to this Agreement, the Buyer is not assuming or becoming
liable for any of the Seller's liabilities,  obligations,  debts,  contracts, or
other commitments of the Seller of any kind, known or unknown,  whether fixed or
contingent,  and whether arising in contract, in tort, or otherwise.  The Seller
and the Shareholder have supplied the Buyer with documentation  evidencing these
Liabilities as requested by the Buyer.

5.  Proration of Expenses.  To the extent they relate to the Assets,  all sales,
use, and personal  property taxes and  assessments,  accrued and assessed (other
than sales taxes  relating  to the  transfer of the  Assets),  if any,  shall be
prorated as of the Effective Date, with the Seller  responsible for the portions
of such items  accruing on or before the close of business on the Effective Date
and the Buyer  responsible  for the  portions of such items  accruing  after the
Effective  Date.  Personal  property taxes and assessments are to be prorated on
the basis of calendar year 1998.

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6. Representations and Warranties of the Seller and the Shareholder.  The Seller
and the Shareholder,  jointly and severally,  represent and warrant to the Buyer
as follows:

     (a) Organization and Standing. The Seller is a corporation organized and in
good standing under the laws of the province of its incorporation. The Seller is
qualified to do business as a foreign  corporation in each jurisdiction in which
its activities require such qualification.  No part of the Business is conducted
by or through any entity other than the Seller.  The Shareholder owns all of the
outstanding  shares of each class of stock of the Seller. As of the date of this
Agreement,  there  are no  options,  warrants,  calls,  subscriptions,  or other
rights,  agreements,  or commitments  relating to the issued or unissued capital
stock of the Seller.

     (b) Power and Authority.  The Seller has the requisite  corporate authority
to enter into this Agreement and to incur and perform its obligations under this
Agreement. The Seller has all necessary corporate power to own, lease, hold, and
operate all of its  properties  and assets and to carry on the Business as it is
now being  conducted.  The execution,  delivery and performance by the Seller of
this Agreement has been authorized by all necessary  corporate action including,
without  limitation,  approval by the board of directors of the Seller. Upon its
execution  and delivery,  this  Agreement  shall  constitute a valid and binding
agreement of the Seller and the Shareholder,  enforceable against the Seller and
the  Shareholder  in  accordance  with its  terms,  subject  only to  applicable
bankruptcy, moratorium, and similar laws.

     (c) Title to Assets. The Seller has good and marketable title to all of the
Assets, free and clear of all liens, encumbrances, security interests, or claims
of any kind or nature  except  the  Security  Interest  in the  process of being
assigned to the Seller by the form of  agreement  set out in Schedule E attached
hereto.  The Seller has no agreements to mortgage,  pledge,  or subject to lien,
charge, security interest, or other encumbrance any of the Assets.

     (d) Approvals and Consents.  The execution,  delivery,  and  performance of
this Agreement (and the transactions  contemplated by this Agreement) do not and
will not: (i)  contravene  any  provision of the  Articles of  Incorporation  or
Bylaws of the Seller;  (ii) result in a breach of,  constitute a default  under,
result  in the  modification  or  cancellation  of, or give rise to any right of
termination,  modification,  or acceleration  in respect of any indenture,  loan
agreement,  mortgage,  lease,  or any other  contract or  agreement to which the
Seller or any of the Assets are bound,  except for contracts entered into in the
ordinary  course  of  business  during  the  term of the  Operations  Management
Agreement  between the parties  dated  September  15, 1997;  (iii) result in the
creation of any security interest, pledge, lien, charge, claim, option, right to
acquire,  encumbrance,  restriction on transfer,  or adverse claim of any nature
whatsoever upon any of the Assets; (iv) violate any writ, order, injunction,  or
decree of any court or any  federal,  state,  municipal,  or other  domestic  or
foreign  governmental   department,   commission,   board,  bureau,  agency,  or
instrumentality,  which  violation  or  default  in any such case  would  have a
material adverse effect on the Business.

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     (e) Litigation. There are no actions, suits, proceedings, or investigations
at law or in  equity,  by or before  any  court,  governmental  instrumentality,
agency,  or  arbitral  tribunal,  now  pending or  threatened  that could have a
material adverse effect on the Business or any of the Assets,  or the ability of
the Seller to consummate the transactions contemplated by this Agreement.

     (f)  Patents  and  Trademarks.   The  Seller  has  the  right  to  use  all
Intellectual  Property  necessary for, or currently  used in, its Business.  The
Seller's Business does not violate or infringe the Intellectual  Property rights
of any third Person.  No  proceedings  have been  instituted or threatened  that
assert  infringement  of the  Intellectual  Property  rights of any third  party
against the Seller.

     (g) Business  Names.  Within the past five years,  the  Shareholder has not
used a business name other than "Peritronics" and variations thereof.

     (h) Collective Bargaining Agreements and Employment Contracts. There are no
employment contracts or collective  bargaining agreements to which the Seller is
a party or by which the Seller is bound,  and there is no pending or  threatened
labor  dispute,  labor  union  organizing  attempt,  strike,  or  work  stoppage
affecting   either  the  Seller  or  the  Business.   The  Seller  has  made  no
representation  or  assurance  to any of its  employees  with  respect to future
salary or compensation adjustments.

     (i)  Insurance  Policies.  Attached  to this  Agreement  as Schedule C is a
complete and correct list and summary description of all insurance policies held
by the Seller with respect to the Assets, true and complete copies of which have
been delivered to the Buyer.  The Seller has complied with all of the provisions
of such policies and the policies are in full force and effect.

     (j) Compliance with Laws. To the Seller's knowledge,  there is no violation
of any applicable  laws,  regulations,  or orders relating to the conduct of the
Seller's  Business,  and there is no use of buildings  or equipment  used by the
Seller in the Business that violates any applicable laws, codes, ordinances,  or
regulations,  whether federal, state, or local, that, in either case, would have
a material adverse effect on the Assets.

     (k) Conveyance Not  Fraudulent.  The Seller is not making the  transactions
contemplated  by this  Agreement  with the intent to hinder,  delay,  or defraud
either  present  or  future  creditors.   The  Purchase  Price  constitutes  the
reasonably equivalent value for the Assets.

     (l)  Assets  Represent   Substantially  the  Entire  Business.  The  Assets
represent substantially the entire operating assets of the Business.

     (m) Real Property. None of the Assets consist of real property owned by the
Seller.

     (n) Improper Payments.  Neither the Seller nor, to the Seller's  knowledge,
any  person  acting on behalf of the Seller  has made any  payment or  otherwise
transmitted  anything of value,  directly or indirectly,  to (i) any official of
any  government  or agency or political  subdivision  thereof for the purpose of
influencing any decision affecting the Business, (ii) any customer, supplier, or
competitor for the purposes of obtaining,  retaining,  or directing business for
the Seller, or (iii) any political party or any candidate for elective political
office,  nor has any fund or other asset of the Seller been  maintained that was
not fully and accurately recorded on the Seller's books of account.

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     (o)  Existing  Customers.  The Seller has no knowledge or reason to believe
that any existing  customers of the Seller will not continue to do business with
the Buyer after the Closing Date.

     (p) No  Misrepresentations.  None of the  representations and warranties of
the Seller  set forth in this  Agreement  or in the  attached  exhibits  nor any
information or statements  contained in the lists or documents provided or to be
provided by the Seller to the Buyer,  notwithstanding any investigation  thereof
by the Buyer,  contains any untrue  statement of a material  fact,  or omits the
statement of any material fact necessary to render the same not misleading.

     (q) Brokers'  Fees.  The Seller has no Liability or  obligation  to pay any
fees  or  commission  to any  broker,  finder,  or  agent  with  respect  to the
transactions  contemplated  by this  Agreement  for which the Buyer could become
liable or obligated.

     (r)  Investment.  The Seller and the  Shareholder  (i) understand  that the
Stock  Consideration  has not  been,  and will not be,  except as  described  in
Section 9, registered  under the Securities  Act, or under any state  securities
laws,  and is  being  offered  and  sold in  reliance  upon  federal  and  state
exemptions  for  transactions  not  involving  any  public  offering,  (ii)  are
acquiring the Stock  Consideration  solely for their own account for  investment
purposes,   and  not  with  a  view  to  the  distribution  thereof,  (iii)  are
sophisticated  investors with knowledge and experience in business and financial
matters, (iv) have received certain information concerning the Buyer and has had
the opportunity to obtain  additional  information as requested by the Seller or
the  Shareholder  in order to  evaluate  the  merits and the risks  inherent  in
holding the Stock Consideration, (v) are able to bear the economic risk and lack
of  liquidity  inherent  in  holding  the  Stock  Consideration,  and  (vi)  are
Accredited Investors.

7.  Representations  and  Warranties  of the  Buyer.  The Buyer  represents  and
warrants to the Seller as follows:

     (a) The  Buyer is a  corporation  organized  under the laws of the State of
Florida, and its status is active.

     (b) The Buyer has the  requisite  corporate  authority  to enter  into this
Agreement and to incur and perform its  obligations  under this  Agreement.  The
Buyer has all necessary  corporate  power to own,  lease,  hold, and operate the
Assets and carry on the  Business as it is now being  conducted.  The Buyer will
use its reasonable best efforts to obtain all necessary corporate action for the
execution,  delivery and  performance by the Buyer of this  Agreement.  Upon the
execution and delivery of this  Agreement,  this  Agreement  shall  constitute a
valid and  binding  agreement  of the Buyer,  enforceable  against  the Buyer in
accordance with its terms,  subject only to applicable  bankruptcy,  moratorium,
and similar laws.

     (c) The Buyer will  utilize  their  reasonable  best  efforts to manage the
operations of the Seller in such a manner as to preserve, safeguard and maintain
the Seller's customer base until the Closing Date.

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                                       9

8.  Pre-Closing  Covenants.  The parties  agree as follows  with  respect to the
period between the execution of this Agreement and the Closing.

     (a) General.  Each of the parties will use its  reasonable  best efforts to
take all action and to do all things  necessary,  appropriate,  or convenient to
consummate and make effective the transactions contemplated by this Agreement.

     (b) Notices and Consents. The Seller will give any notices to third parties
and will obtain any  third-party  consents the Buyer may  reasonably  request in
connection  with the  transactions  contemplated  by this  Agreement or that may
otherwise be  necessary to convey the Seller's  full rights in the Assets to the
Buyer.

     (c) Full  Access.  The Seller will permit  representatives  of the Buyer to
have full access to all premises,  properties,  books, records,  contracts,  tax
records, and documents of or pertaining to the Business or the Assets during the
Seller's normal business hours or any other  reasonable time for purposes of the
Buyer's due diligence investigation and evaluation of the Assets.

     (d) Notice of  Developments.  The Seller will give prompt written notice to
the Buyer of any material development affecting the Assets. Each party will give
prompt  written  notice to the other of any material  development  affecting the
ability of the  parties to  consummate  the  transactions  contemplated  by this
Agreement. No disclosure by any party pursuant to this subsection, however, will
affect the other  party's  right,  if any, to refuse to close under the terms of
this Agreement.

     (e) Public  Statements.  The parties shall  cooperate in all respects as to
public   statements  and   announcements   with  respect  to  the   transactions
contemplated  by this  Agreement.  No party  shall  issue any press  release  or
announcement  relating to the subject matter of this Agreement without the prior
approval of the other party (which approval shall not be unreasonably withheld);
however,  either party may make any public  disclosure it believes in good faith
is required by law or regulation (in which case the disclosing party will advise
the other party prior to making the disclosure).

     (f) Exclusivity.  Neither the Seller nor the Shareholder shall (i) solicit,
initiate,  or encourage the  submission of any proposal or offer from any person
or entity  relating to the  acquisition  of any  capital  stock or assets of the
Seller  (including any  acquisition  structured as a merger,  consolidation,  or
share  exchange),  or  (ii)  participate  in  any  discussions  or  negotiations
regarding, furnish any information with respect to, or assist or participate in,
or  facilitate in any other manner any effort or attempt by any person or entity
to do or seek any of the foregoing.

     (g)  Shareholder  Approval.  The Seller shall take all action  necessary or
advisable  to secure  the  requisite  vote or  consent  of its  Shareholder,  as
required by Canadian law, to approve or adopt this Agreement.

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     (h)  Regulatory  Approval.  The  Shareholder  will use its best  efforts to
obtain all necessary governmental and regulatory approvals necessary to complete
this Agreement no later than July 31, 1998.

     (i)  Security  Interest  Assignment.  The  Seller  shall  take  all  action
necessary to assign the Security Interest to itself prior to the Closing Date.

9.  Registration  Rights.  "Piggy  Back"  Registrations.  If Medical  Technology
Systems,  Inc.  shall  determine  to register any of its  securities  during the
one-year  period  commencing  on the  Closing  Date,  other than a  registration
relating solely to employee benefit plans, or a registration on any registration
form that does not permit secondary sales or does not include  substantially the
same information as would be required to be included in a registration statement
covering the sale of Med Tech Common Stock, Med Tech will:


          (i) Promptly give to the Seller written notice thereof; and

          (ii)  Use all  commercially  reasonable  efforts  to  include  in such
     registration  all the Stock  Consideration  transferred to the Seller under
     this Agreement and specified in a written request, made by the Buyer within
     20 days  after the date of  mailing  of the  written  notice by the  Seller
     described in clause (i) above. If the  underwriter  advises the Seller that
     marketing  considerations  require  a  limitation  on the  number of shares
     offered pursuant to any registration  statement,  then the Seller may offer
     all of the  securities  it proposes to register  for its own account or the
     maximum amount that the underwriter  considers saleable and such limitation
     on any remaining securities that may, in the opinion of the underwriter, be
     sold will be imposed pro rata among all holders of Stock  Consideration who
     are entitled to include shares in such registration  statement according to
     the number of shares of Stock  Consideration  each such holder requested to
     be included in such registration statement.

          As long as the  Stock  Consideration  is  owned by the  Seller  or the
     Shareholder, such shares shall have the registration rights and obligations
     set forth in this Section.

10.  Post-Closing  Covenants.  The parties  agree as follows with respect to the
period following the Closing:

     (a) General. In case at any time after the Closing any further
action is necessary  or  desirable to carry out the purposes of this  Agreement,
each of the parties will take such further  action  (including the execution and
delivery  of such  further  instruments  and  documents)  as the other party may
reasonably  request,  all at the sole cost and expense of the  requesting  party
(unless  the  requesting  party is entitled to  indemnification  therefor  under
Section 13 of this Agreement).

     (b)  Transition.  The Seller and the  Shareholder  will not take any action
(other than  actions  required to be taken by the Seller  under this  Agreement)
that is designed or intended to have the effect of (i)  discouraging any lessor,
licensor,  customer,  supplier,  or other business  associate of the Seller from
maintaining the same business  relationships with the Buyer after the Closing as
it maintained with the Seller prior to the Closing or (ii) inducing any employee
of the Buyer to terminate his employment  with the Buyer.  The Seller will refer
all customer  inquiries relating to the Business to the Buyer from and after the
Closing.

<PAGE>
                                       11

     (c) Name Change.  At the Closing,  the Seller shall assign the right to use
the name  "Peritronics" and variations thereof to the Buyer, shall cease the use
of such name, and shall  cooperate with the Buyer in the assumption of such name
by the Buyer in all jurisdictions  where the Seller is currently qualified to do
business. Within six months after the Closing Date, the Shareholder shall either
dissolve or change its name to a new name bearing no  resemblance to its present
name.

     (d) Non-Compete Agreement.  (i) The Seller and the Shareholder hereby agree
that,  for a period of two years  commencing on the Closing Date,  they will not
accept a position as a consultant,  agent, or independent  contractor,  or be or
become the owner of any of the  outstanding  equity  interest  in, or  otherwise
participate  in  the  business  of  any  entity  in the  business  of  providing
obstetrical  information  systems in any area of the United  States,  within one
hundred miles of a Buyer-owned,  a Buyer-licensed,  or Buyer-franchised location
(except that the Shareholder may work with or for the Buyer and its affiliates).
Also for a period of two years  commencing on the Closing  Date,  the Seller and
the  Shareholder  will not solicit the  business of any customer of the Buyer or
the Seller relating to providing  obstetrical  information systems in the United
States or disclose any  confidential  information  regarding the  Business.  For
purposes  of this  Section  10(d),  the  word  "customers"  means  organizations
(whether  corporations,  partnerships,  or  otherwise)  or persons who have done
business  of any  nature  with the  Buyer,  the  Seller,  or any  subsidiary  or
affiliate  of the Buyer or Seller prior to the Closing Date or during a two year
period  commencing on the Closing Date, and with whom the Buyer, the Seller,  or
any of the  Buyer's  or  Seller's  subsidiaries  or  affiliates  has  engaged in
discussions  regarding  a  possible  business  relationship  during the two year
period commencing on the Closing Date.

          (ii) If the  above  covenant  not to  compete  is  found by a court of
     competent  jurisdiction to be unreasonable in either  geographical scope or
     duration,  then such court may  determine the scope or duration that is, in
     its determination,  reasonable and therefore enforceable, and such covenant
     shall be enforced with retroactive  effect as modified.  The Seller and the
     Shareholder  understand that the Buyer will suffer  irreparable harm in the
     event of any breach of the provisions of this Section 10(d) and that in the
     event of an actual or threatened breach of its provisions,  the Buyer shall
     be entitled to an  injunction  to restrain  the Seller and the  Shareholder
     from such  action.  Nothing in this  Section  10(d) shall be  construed  as
     prohibiting  the Buyer from pursuing any other available  remedy,  legal or
     equitable, for such breach or threatened breach.

     (e) Employment. The Buyer agrees that in the event any employees of the
are terminated  after the Closing Date,  said  employees  shall receive not less
than 60 days notice of termination, except for Termination for Cause.

     (f)  Stock   Consideration.   The   certificates   representing  the  Stock
consideration  shall be imprinted with a legend in  substantially  the following
form:

<PAGE>
                                       12

                  THE SHARES OF STOCK  REPRESENTED BY THIS  CERTIFICATE HAVE NOT
                  BEEN  REGISTERED  UNDER THE SECURITIES ACT OF 1933, AS AMENDED
                  OR ANY STATE SECURITIES LAWS AND CANNOT BE TRANSFERRED WITHOUT
                  AN  OPINION  OF COUNSEL  SATISFACTORY  TO  MEDICAL  TECHNOLOGY
                  SYSTEMS,  INC.  THAT SUCH  TRANSFER  WILL NOT VIOLATE ANY SUCH
                  SECURITIES LAWS.

Any holder of the Stock  Consideration  desiring  to  transfer  such shares must
first  furnish  the  Buyer  with  a  written   opinion  of  counsel   reasonably
satisfactory to Medical Technology  Systems,  Inc. that such holder may transfer
the shares as  desired  without  registration  under the  Securities  Act or any
applicable  state  law.  The  Seller  shall be  permitted  to  assign  the Stock
Consideration to the Shareholder. As long as the Stock Consideration is owned by
the Seller or the Shareholder,  such shares shall have the  registration  rights
and obligations set forth in Section 9.

11.  Conditions  to  Obligation  of the Buyer.  The  obligation  of the Buyer to
consummate the transactions to be performed by it in connection with the Closing
is subject to satisfaction of the following conditions:

     (a) Representations  and Warranties.  The representations and warranties of
the Seller and the  Shareholder set forth in Section 6 shall be true and correct
in all material respects at and as of the Closing Date;

     (b) Assets. The Seller shall not have:

          (i)  incurred  or  become  subject  to,  or  agreed to incur or become
     subject to, any  obligation or liability,  absolute or  contingent,  except
     current liabilities incurred in the ordinary course of business;

          (ii)  mortgaged,  pledged,  or  subjected  to lien,  charge,  security
     interest, or other encumbrance, or agreed to do so, any of the Assets;

          (iii) sold or transferred,  or agreed to sell or transfer,  any of the
     Assets,  or  cancelled  or  agreed  to  cancel,  any debts due it or claims
     therefor,  except, in each case, for full consideration and in the ordinary
     course of business;

          (iv) engaged in any transactions  adversely  affecting the Business or
     the Assets or  suffered  any  extraordinary  losses or waived any rights of
     substantial value not in the ordinary course of business;

     (c)  Performance.  The Seller and the Shareholder  shall have performed and
complied  with  all of  their  respective  covenants  in all  material  respects
hereunder through the Closing Date;

<PAGE>
                                       13

     (d)  Consents.  The Seller shall have  procured  all  material  third party
consents contemplated in Section 8(b);

     (d) No  Impediments.  No action,  suit, or  proceeding  shall be pending or
threatened before any court or  quasi-judicial  or administrative  agency of any
federal,  state, local, or foreign jurisdiction wherein an unfavorable judgment,
order, decree, stipulation, injunction, or charge would (i) prevent consummation
of any of the transactions contemplated by this Agreement, (ii) cause any of the
transactions   contemplated   by  this  Agreement  to  be  rescinded   following
consummation,  or (iii)  affect  adversely  the  right  of the  Buyer to own and
operate  the  Assets  (and  no  such  judgment,   order,  decree,   stipulation,
injunction, or charge shall be in effect);

     (e) Change of Name.  The Seller  shall  have taken all steps  necessary  or
appropriate to cease the use of the name  "Peritronics"  and to assign the right
to use such name to the Buyer.  Within six months  after the Closing  Date,  the
Seller and the  Shareholder  shall  either  dissolve or change its name to a new
name bearing no resemblance to its present name.

     (f) Real Property and Environmental  Matters. The Buyer shall be satisfied,
in its sole  discretion,  that all leases assumed by the Buyer will be valid and
enforceable,  and that no  environmental  or safety  hazards exist at any of the
Seller's places of business.

     (g) Satisfaction.  All actions to be taken by the Seller in connection with
consummation of the transactions  contemplated hereby and all documents required
to effect the transactions  contemplated hereby will be reasonably  satisfactory
in form and substance to the Buyer and its counsel.

12.  Conditions  to Obligation  of the Seller.  The  obligation of the Seller to
consummate the transactions to be performed by it in connection with the Closing
is subject to satisfaction of the following conditions:

     (a) Representations  and Warranties.  The representations and warranties of
the Buyer  set forth in  Section  7 shall be true and  correct  in all  material
respects at and as of the Closing Date;

     (b)  Performance.  The Buyer shall have  performed and complied with all of
its covenants hereunder in all material respects through the Closing Date;

     (c) No  Impediments.  No action,  suit, or  proceeding  shall be pending or
threatened before any court or  quasi-judicial  or administrative  agency of any
federal,  state, local or foreign jurisdiction wherein an unfavorable  judgment,
order, decree, stipulation, injunction, or charge would (i) prevent consummation
of any of the transactions  contemplated by this Agreement, or (ii) cause any of
the  transactions  contemplated  by this  Agreement  to be  rescinded  following
consummation (and no such judgment, order, decree,  stipulation,  injunction, or
charge shall be in effect);

     (d)  Satisfaction.  All actions to be taken by the Buyer in connection with
consummation of the transactions  contemplated hereby and all documents required
to effect the transactions  contemplated hereby will be reasonably  satisfactory
in form and substance to the Seller and its counsel.

<PAGE>
                                       14

13. Indemnification.  (a) The Seller and the Shareholder, jointly and severally,
agree to indemnify and hold the Buyer harmless from, against,  and in respect of
the following:

          (i) any and all liabilities,  obligations,  debts,  contracts  (except
     those arising out of LifeServ's  management of  Peritronics  Medical,  Inc.
     under the Operations  Management  Agreement,  effective as of September 15,
     1997, among Med Tech,  Medication  Management  Systems,  Inc.,  Peritronics
     Medical,  Limited and Peritronics  Medical,  Inc.), or other commitments of
     the Seller of any kind, known or unknown, whether fixed or contingent,  and
     whether arising in contract, in tort, or otherwise, including any claims by
     the Shareholder or any creditors of the Seller;

          (ii) any damage or deficiency  resulting  from any  misrepresentation,
     breach of warranty,  or non-fulfillment of any agreement on the part of the
     Seller under this  Agreement or from any  misrepresentation  in or omission
     from any  certificate or other  instrument  furnished or to be furnished to
     the Buyer by the Seller pursuant to this Agreement;

          (iii)  any and  all  liabilities,  obligations,  damages,  fines,  and
     penalties  imposed on the Buyer by any third party or  governmental  entity
     relating to the conduct of the  Seller's  Business  prior to the  Effective
     Date or the Buyer's  relationship  with the Seller's  former  employees and
     independent contractors after the Closing Date; and

          (iv) all actions, suits,  proceedings,  claims, demands,  assessments,
     judgments, legal fees, costs, and expenses incident to any of the foregoing
     or arising  out of any act or  omission of the Seller in the conduct of the
     Business  prior to the  Effective  Date except for any costs,  liabilities,
     legal fees or  expenses  sustained  or  incurred as a result of any action,
     suit or proceeding  that is commenced,  threatened or presented as a result
     of any action,  deed or omission  performed  or  permitted  by Buyer or its
     employees,  officers and directors from September 15, 1997 to the Effective
     Date, in its operation of the Business.

     (b) The Buyer agrees to give timely  notice to the Seller of the  assertion
of any claim or demand or the institution of any action,  suit, or proceeding in
respect of which  indemnification  may be claimed  hereunder  and to provide the
Seller with an  opportunity  to participate in the defense or settlement of such
action,  suit,  or  proceeding  at the Seller's own expense.  Any failure by the
Buyer  to give  such  notice  shall  have no  effect  on the  Buyer's  right  to
indemnification under Section 13(a).

     (c) The  indemnification  provided  for in this  Section  13 shall  only be
applicable to claims  asserted within three years of the date of this Agreement.
Notwithstanding the foregoing, the foregoing time limitation for claims of Buyer
shall not apply to the  liabilities of Seller or Shareholder  under this Section
13 that are based upon fraud or willful misconduct.

<PAGE>
                                       15

14. Termination.

     (a)  Termination of Agreement.  The parties may terminate this Agreement as
provided below:

          (i) the parties may terminate this Agreement by mutual written consent
     at any time prior to the Closing;

          (ii) the Buyer may terminate  this  Agreement by giving written notice
     to the Seller at the Closing if any  condition  described in Section 12 has
     not been  satisfied  (unless the failure  results  primarily from the Buyer
     breaching  any  representation,  warranty,  or covenant  contained  in this
     Agreement); and

          (iii) the Seller may terminate this Agreement by giving written notice
     to the Buyer at the Closing if any  condition  described  in Section 12 has
     not been satisfied  (unless the failure  results  primarily from the Seller
     breaching  any  representation,  warranty,  or covenant  contained  in this
     Agreement).

     (b) Effect of Termination.  If any party terminates this Agreement pursuant
to Section 14(a),  all  obligations  of the parties  hereunder  shall  terminate
without any  liability of any party to any other party (except for any liability
of any party then in breach).

15. General Provisions.

     (a) Benefit and Assignment.  This Agreement shall be binding upon and inure
to the  benefit  of the  parties  hereto  and their  respective  successors  and
assigns.  The rights of the Seller hereunder may not be assigned.  The rights of
the Buyer may be assigned to a subsidiary  or  affiliate of the Buyer,  provided
that any such  assignment  shall in no way relieve the Buyer of its  obligations
and  responsibilities  under this Agreement  unless the Seller consents  thereto
(such consent not to be unreasonably withheld).

     (b) Governing Law. This Agreement  shall be governed by and construed under
the laws of the State of Florida.

     (c)  Notices.  All  notices,  requests,  demands  and other  communications
hereunder  shall be in  writing,  and shall be deemed to have been duly given if
delivered by overnight delivery service or hand delivered, addressed as follows:

                  If to the Buyer:

                           LifeServ Technologies, Inc.
                           12920 Automobile Boulevard
                           Clearwater, Florida 34622
                           Attn:  Michael T. Felix

<PAGE>
                                       16

                  With a copy to:

                           Holland & Knight
                           400 N. Ashley Street
                           Suite 2300
                           Tampa, Florida  33602
                           Attn:  Robert J. Grammig, Esq.


                  If to the Seller or the Shareholder:

                           562577  B.C. Ltd.
                           2700-700 West Georgia Street
                           Vancouver, B.C., Canada  V7Y 1B8
                           Attn:  John H. Vice

                           With a copy to:

                           Peritronics Medical Ltd.
                           2700-700 West Georgia Street
                           Vancouver, B.C., Canada  V7Y 1B8
                           Attn:  Michael C. Scholz


16. Expenses.  Except as otherwise  provided in this Agreement,  any expenses in
connection with this Agreement or the transactions  contemplated herein shall be
paid for by the party incurring such expenses.

17.  Sales and Other  Taxes.  Any sales taxes shall be paid by the Buyer and all
other applicable transfer taxes hereunder shall be paid by the Seller.

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

19.  Headings.  All paragraph  headings herein are inserted for convenience only
and  shall not  modify  or affect  the  construction  or  interpretation  of any
provision of this Agreement.

20. Amendment, Modification and Waiver. This Agreement may be modified, amended,
and supplemented by mutual written  agreement of the parties hereto, at any time
prior to the Closing.  Each party may waive any condition intended to be for its
benefit. Each amendment, modification, supplement, or waiver shall be in writing
executed by both parties.

<PAGE>
                                       17

21. Entire  Agreement.  This Agreement,  including its Exhibits,  represents the
entire  Agreement  of the  parties  and  supersede  all prior  negotiations  and
discussions  by and among the parties  hereto with respect to the subject matter
hereof.

     IN WITNESS WHEREOF,  the parties hereto have executed this Agreement on the
date set forth above.

                              SELLER:

                              562577 B.C. LTD.

                              By:       ____________________________________

                              Its:      ____________________________________



                              SHAREHOLDER:

                              PERITRONICS MEDICAL LTD.

                              By:      ____________________________________

                              Its:     ____________________________________


                              BUYER:

                              LIFESERV TECHNOLOGIES, INC.

                              By:       ___________________________________

                              Its:      ___________________________________


                              MEDICAL TECHNOLOGY SYSTEMS, INC.

                              By:       ___________________________________

                              Its:      ___________________________________


<PAGE>
                                       18


                        SCHEDULE A - ASSUMED LIABILITIES

The Buyer accepts no assumed  liabilities  on the part of the Seller,  except in
conjunction with the operation of the Business to the Closing Date, as follows:

                  Vendor Name                                  Amount Owed

          ADP Investor Communications                              783.85
          Alco Metal Fabricators                                 3,356.00
          Arrow Electronics                                     69,819.37
          B&B Enameling Inc.                                       208.20
          Business & Legal Reports Inc.                            428.58
          Compass Computer Group                               114,927.50
          Computer Product Plus                                  3,648.89
          Computer Product Plus                                  1,777.88
          Control Master Products Inc.                             460.74
          Datascope Corp                                         2,094.13
          Esna Biomedical Systems                                1,378.10
          Expo-3                                                 1,455.40
          FTG Data Systems                                       1,156.25
          Future Care                                              750.00
          GCX Corporation                                        1,064.56
          Gregory & Gregory                                        697.50
          Howard Stellar                                         3,869.44
          ITT Hartford                                             778.78
          Internet Technology                                   13,682.25
          Kenneth Wilking                                        3,173.70
          Lyben Computer Systems                                    41.45
          LifeServ Sales Commissions                            77,147.55
          LifeServ Management Fees                             187,500.00
          M Michael Sikula                                         460.94
          MDI Inc.                                                 873.10
          Modern Service Office Supply                           2,277.68
          Mouser Electronics                                       678.64
          Nik Gupta, CPA                                           425.00
          On-Line Electronics                                    1,396.64
          Phon-Tronics                                             100.00
          Pyramid Medical                                        7,861.00
          Relsys                                                36,761.80
          Snell & Wilmer                                        16,988.25
          Sourcefile                                             1,500.00
          Staples Direct                                           931.62
          Steven's Air Transport                                 1,926.66
          Sun Medical                                           17,420.50
          Terminix                                                 300.00
          Uline Inc.                                               167.85
          Unishippers                                            6,839.48
          United Service Network                                 9,619.81
                                                     ---------------------
                            Total:                             596,729.09
                                                     =====================

<PAGE>
                                       19


                     SCHEDULE B - PERITRONICS CUSTOMER LIST


Alta Bates - Oakland, CA
South Jersey - Cherry  Hill, NJ
S.W. Washington - Vancouver, WA
University of Chicago - Chicago, IL
Sacred Heart Group - Spokane,
WA Holy Family - Spokane,  WA
Our Lady of Lourdes - Pasco, WA
St. Lukes - Boise, ID West Lake
Community - Chicago, IL
Mt. Sinai - Chicago, IL
Genessee - Genessee, NY
McClaren - Detroit, MI
Charleston Area Medical Center - WV
Hancock Medical Center - Bay St. Louis, MS
E. Maine Medical Center - ME
Hamilton Health Sciences - Ontario, Canada
Credit Valley Hospital - Ontario, Canada

<PAGE>
                                       20

                             SCHEDULE C - INSURANCE

<PAGE>
                                       21

                      SCHEDULE D - UCC1 FINANCING STATEMENT

<PAGE>
                                       22

                       SCAHEDULE E - ASSIGNMENT AGREEMENT


<PAGE>
                                       1


THIS AGREEMENT dated for reference the 1st day of May, 1998.


BETWEEN:

          PERITRONICS  MEDICAL LTD. a company duly incorporated  pursuant to the
          laws of British  Columbia and having its registered and records office
          at Suite 2700, 700 West Georgia Street,  Vancouver,  British Columbia,
          V7Y1B8

                  (hereinafter referred to as the "Company")

                                OF THE FIRST PART

AND:

                  HENRY RATHJE, Businessman, of 5649-124A Street, Surrey,
                  British Columbia V3X 2S6

                  (hereinafter referred to as the "Creditor")

                               OF THE SECOND PART

AND:

                  562577 B.C. LTD., a company duly incorporated  pursuant to the
                  laws of British Columbia and having its registered and records
                  office at Suite  2700,  700 West  Georgia  Street,  Vancouver,
                  British Columbia, V7Y 1B8

                  (hereinafter referred to as the "Assignee")

                                OF THE THIRD PART

WHEREAS:

     The Company is indebted to the  Creditor  for the reasons and in the amount
set out in Schedule "A" hereto, to this agreement (the "Debt");

     Eron Mortgage  Corporation  (the "Trustee") holds in trust for the Creditor
certain security over the assets of the Company's subsidiary Peritronics Medical
Inc. (the "Security") for the repayment of the debt as described in Schedule "B"
to this agreement (the "Debt");

<PAGE>
                                       2

     The  Company  wishes to assign  the Debt and  obtain an  assignment  of the
Security  from the Creditor to the Assignee in  consideration  for allotting and
issuing shares in the capital of the Company to the Creditor; and

     The  Creditor  is  prepared  to accept  shares  and assign the Debt and its
interest in the Security to the  Assignee,  which form of assignment is attached
as Schedule "C".


NOW  THEREFORE  WITNESSETH  that in  consideration  of the  premises  and of the
covenants and agreements set out herein,  the parties hereto  covenant and agree
as follows:

ACKNOWLEDGMENT OF DEBT

     1. The Company  acknowledges and agrees that it is indebted to the Creditor
in the  amount of the Debt.  The  Company  further  acknowledges  the debt is in
default and both Peritronics  Medical Inc. ("PMI") and the Company are incapable
of repaying the Debt.


ALLOTMENT AND ISSUANCE OF SHARES

     1. The Company  agrees to allot and issue to the Creditor  those numbers of
shares in the capital of the Company (the  "Shares")  set out in Schedule "A" to
this  agreement  as full  and  final  consideration  for the  assignment  by the
Creditor to the Assignee of Debt and Security and the Creditor agrees to release
the Company from payment of the Debt.

     2. For the  purposes of this  agreement,  "issue Date" shall mean the fifth
business  day after the date that the  Company  receives  notification  from the
Vancouver  Stock Exchange (the  "Exchange")  that it has accepted this agreement
for filing and has approved the issuance of the Shares.

     3. On the Issue Date,  the Company  shall deliver to or to the direction of
the Creditor, share certificates representing the Shares.

     4. The number of Shares  shall be subject to  adjustment  in the  following
events and manner:

          (a) In the event of any  subdivision or  subdivisions of the Shares as
     such are  constituted  on the Issue Date,  into a greater number of Shares,
     the Company will  thereafter  deliver at the time of the issuance of Shares
     under this agreement,  such additional number of Shares as result from said
     subdivision  or   subdivisions   without  the  Creditor  giving  any  other
     consideration therefor;

<PAGE>
                                       3


          (b) In the event of any  consolidation or consolidations of the Shares
     as such are  constituted on the Issue Date, into a lesser number of Shares,
     the Company  shall  thereafter  deliver and the  Creditor  shall accept the
     lesser number of Shares as result from such consolidation or consolidations
     in lieu of the Shares the Creditor were to receive under this agreement;

          (c) In the event of any change of the  Shares as such are  constituted
     on the Issue  Date,  the  Company  shall  thereafter  deliver the number of
     Shares  of the  appropriate  class  resulting  from the said  change as the
     Creditor  would have been  entitled  to receive in respect of the number of
     Shares to be issued pursuant to this agreement;

          (d) In the event of any capital  reorganization or reclassification of
     the Shares (other than a change in the par value thereof) of the Company or
     in the event of any merger or  amalgamation of the Company with or into any
     other  company or in the event of any sale of the assets of the  Company as
     or  substantially  as an entirety,  then the Creditor shall thereafter have
     the right to receive the kind and amount of shares and other securities and
     property  receivable upon such, capital  reorganization,  reclassification,
     merger,  amalgamation  or sale  which a  shareholder  of a number of Shares
     equal to the number of Shares  receivable  pursuant to this agreement would
     have received as a result of such.  The  subdivision  or  consolidation  of
     Shares at any time  outstanding  into a greater or lesser  number of Shares
     (whether  with or without  par  value)  shall not be deemed to be a capital
     reorganization or a reclassification  of the capital of the Company for the
     purposes of this paragraph (d);

          (e) The adjustments provided for in this agreement are cumulative; and

          (f) The Company  shall not be required to issue  fractional  Shares or
     other  securities in  satisfaction  of its  obligations  hereunder.  If any
     fractional  interest  in a Share or other  security  would,  except for the
     provisions of this  paragraph  (f), be  deliverable  on the Issue Date, the
     Company shall, at its option,  in lieu of delivering a fractional  Share or
     other  security  therefor,  satisfy  the right to receive  such  fractional
     interest by payment to the Creditor of an amount in cash equal (computed in
     the case of a  fraction  of a cent to the next lower  cent) to the  current
     market  value  of the  right to  subscribe  for  such  fractional  interest
     (computed on the basis of the most recent  closing  price On the  Vancouver
     Stock Exchange for Shares).

          (g)  Determination of Adjustments:  If any questions shall at any time
     arise with respect to any adjustments to be made  hereunder,  such question
     shall be  conclusively  determined by a firm of Chartered  Accountants,  in
     Vancouver, B.C. that the Company and the Creditor shall jointly select, and
     who shall have access to all  appropriate  records  and such  determination
     shall be binding upon the Company and the Creditor;

<PAGE>
                                       4


     5. The Creditor hereby  understands and agrees to a hold  restriction to be
placed on the share certificate issued pursuant to this distribution which is 12
months  past the  date in which  the debt  was  incurred,  pursuant  to  Section
142(2)(d) of the Securities Rules under the Securities Act,  R.S.B.C.  1996, c.o
418 (the "Rules").

     6. The  Creditor  agrees to cause the  Trustee  to  assign  absolutely  the
Security  to the  Assignee  and  undertakes  to execute  all  further  documents
necessary  to carry out the  assignment  so that the Assignee has full title and
right to the Security.

REGULATORY APPROVALS AND RESTRICTIONS ON DISPOSITION

     1. The rights and obligations of the Company and the Creditor is subject to
and  conditional  upon receipt of the acceptance for filing of this agreement by
the Exchange.

     2. The  Company  shall use its best  efforts to obtain the  acceptance  for
filing of this agreement by the Exchange.

     3. The Company is relying on Section 128(e) of the Rules.

     4. The Creditor represents and warrants to the Company that:

          (i)  the Debt  constitutes  the entire  amount due and  payable by the
               Company and PMI to him;

          (ii) upon delivery of the Shares by the Company in accordance with the
               provisions of this agreement, the Debt and Security will be fully
               assigned to the  Assignee to hold the same with power to take all
               lawful  measures  which we might have taken for full  recovery of
               the Debt through execution under the Security;

          (iii)releases the Company from any and all covenants  and  obligations
               relating to the Debt;

          (iv) he  has  not  preciously   assigned,   encumbered,   parted  with
               possession  of or  otherwise  granted any interest in the Debt or
               any of his rights relating thereto ;

          (v)  he will be the beneficial owner of the Shares;

          (vi) the Shares  are not being  acquired  as a result of any  material
               information that has not been generally disclosed to the public;

<PAGE>
                                       5


          (vii)he will seek his own  independent  legal  advice  with  regard to
               this agreement as well as any  restrictions  imposed by the Rules
               or  the  British  Columbia   Securities  Act  on  his  respecting
               disposition of the Shares.

GENERAL PROVISIONS

     1. Time shall be of the essence of this agreement.

     2. The  Company and the  Creditor  shall  execute any and all such  further
deeds,  documents and assurances and shall do any and all such further and other
things  as may be  necessary  to  implement  and  carry  out the  intent of this
agreement.

     3. The provisions herein contained  constitute the entire agreement between
the  parties  and   supersede  all  previous   understandings,   communications,
representations and agreements,  whether written or verbal,  between the parties
with respect to the subject matter of this agreement.

     4. This agreement shall be governed by and construed in accordance with the
laws of the Province of British Columbia.

     5. In the event the Creditor is a resident of the United States, the shares
represented by this agreement,  once issued, will not have been registered under
the United  States  Securities  Act of 1933 (the "Act") or any State  securities
laws,  and will be  "RESTRICTED  SECURITIES" as that term is defined in Rule 144
under the Act.  The shares,  once issued,  may not be offered for sale,  sold or
otherwise  transferred  within the United States except pursuant to an Effective
Registration  Statement under the Act and any applicable  State securities laws,
or pursuant to an exemption from registration under the Act, the availability of
which will be established to the satisfaction of the Company.

     6. All dollar  amounts  referred to in Schedule "A" to this  agreement have
been expressed in Canadian currency, unless otherwise indicated.

     7. This agreement shall enure to the benefit of and be binding upon each of
the parties and their respective heirs,  executors,  administrators,  successors
and permitted assigns, as the case may be.

<PAGE>
                                       6


IN WITNESS  WHEREOF the parties  hereto have executed  these presents on the day
and year first above written.


THE CORPORATE SEAL of              )
PERITRONICS MEDICAL LTD. was       )
hereto affixed in the presence of: )
                                   )
                                   )                 c/s
---------------------------        )
Authorized Signatory               )
                                   )
---------------------------        )
Authorized Signatory               )
                                   )
                                   )
SIGNED, SEALED AND DELIVERED by    )
HENRY RATHJE in the presence       )
of:                                )
                                   )        ---------------------------
                                   )        HENRY RATHJE
---------------------------        )
Witness                            )
                                   )
---------------------------        )
Address                            )
                                   )
---------------------------
Occupation