<PAGE>

                FIRST AMENDMENT TO CREDIT AGREEMENT

   This First Amendment to Credit Agreement ("First Amendment") is 
entered into as of October 10, 1997, by and between Spectrum 
Medical Industries, Inc., a California corporation and Spectrum 
Laboratories, Inc, a California corporation, (collectively 
"Borrower") and City National Bank, a national banking association 
("CNB").


                             RECITALS

   A.   Borrower and CNB are parties to that certain Credit 
Agreement, dated as of February 28, 1997 ("Agreement").

   B.   Borrower and CNB desire to supplement and amend the 
Agreement as hereinafter set forth.

   NOW THEREFORE, the parties agree as follows:

1.   DEFINITIONS.  Capitalized terms used in this Amendment 
without definition shall have the meanings set forth in the Loan 
Agreement.

2.   AMENDMENTS.  The Agreement is amended as follows:

   2.1    Section 1.  DEFINITIONS is amended as follows:

   2.1.1  Delete the definition of "NOTE" in its entirety and add 
the following new definition:

          ""Notes" means the Notes referenced in Section 2."

   2.1.2  Delete the definition of "TERMINATION DATE" in its 
entirety and replace it with:

          ""TERMINATION DATE" means May 1, 1998.  Notwithstanding 
the foregoing, CNB may, at its option, terminate this Agreement 
pursuant to Section 7.3; the date of any such termination will 
become the Termination Date as that term is used in this 
Agreement."

   2.2    Section 2.  LOANS. is amended as follows:

   2.2.1  Add the following new sections 2.1A, 2.1A.1, 2.1A.2, 
2.1A.3, and 2.7 as follows:

                                 1


           2.1A REVOLVING CREDIT LOANS.  CNB agrees to make loans 
("Revolving Credit Loans") to Borrower up to, but not including, 
the Termination Date, at Borrower's request, up to the amount of 
Five Hundred Thousand and No/100 dollars ($500,000.00)(the 
"Revolving Credit Commitment").  The Revolving Credit Loans may be 
repaid and reborrowed at any time up to the Termination Date; 
provided, however, that the aggregate unpaid principal amount of 
outstanding Revolving Credit Loans will at no time exceed the 
Revolving Credit Commitment.  Borrower will have a period of not 
less than thirty (30) consecutive days during the twelve-month 
period ending on the Termination Date during which time there will 
be no outstanding Revolving Credit Loans.  All Revolving Credit 
Loans will be paid by Borrower to CNB on the Termination Date.  
The Revolving Credit Loans will be evidenced by a promissory note 
("Revolving Credit Note") in the form attached hereto as Exhibit 
"B".

          2.1A.1  INTEREST ON REVOLVING CREDIT LOANS.  Each 
Revolving Credit Loan will bear interest from disbursement until 
due (whether at stated maturity, by acceleration or otherwise) at 
a fluctuating rate equal to the Prime Rate plus one quarter 
percent (0.25%) per annum.  Interest will be payable monthly in 
arrears on the first day of each month, starting on November 1, 
1997, and on the date the Revolving Credit Loans are paid in full.

          2.1A.2  REVOLVING COMMITMENT FEE.  Borrower shall pay 
CNB a non-refundable fee ("Revolving Commitment Fee") equal to one 
quarter percent (1/4%) of the Revolving Credit Commitment at the 
time the Revolving Credit Commitment is extended to Borrower.

          2.1A.3  PROCEDURE FOR REVOLVING CREDIT LOANS.  Each 
Revolving Credit Loan may be made by CNB at the oral or written 
request of anyone who is authorized in writing by Borrower to 
request Revolving Credit Loans until written notice of the 
revocation of such authority is received by CNB."

   "2.7  CASH/SECURITIES COLLATERAL.  Borrower agrees that the 
aggregate principal amount of the Cash/Securities Collateral shall 
at no time be less than One Million Sixty-Six Thousand and No/100 
Dollars ($1,066,000.00)."

2.2.3   Section 2.1.3 ADDITIONAL TERM LOAN PAYMENT. is amended by 
deleting the date "June 1, 1997" from both the first sentence and 
the last sentence and replacing it with a new date of "December 1, 
1997" in both the first sentence and in the last sentence.

2.3   Section 4.  REPRESENTATION AND WARRANTIES. is amended as 
follows:

   At the end of Section 4.8 USE OF PROCEEDS. add the following 
sentence: "Borrower will use the proceeds of the Revolving Credit 
Loans for Borrower's general working capital needs."

                                 2

<PAGE>

3.  CONDITIONS PRECEDENT.  This Amendment shall become effective 
upon the fulfillment of all of the following conditions to CNB's 
satisfaction:

   3.1   CNB shall have received this Amendment duly executed by 
Borrower;

   3.2   CNB shall have received the Revolving Credit Note duly 
executed by Borrower; and

   3.3   CNB shall have received the non-refundable Revolving 
Commitment Fee of $1,250.00.

4.  EXISTING AGREEMENT.  Except as expressly amended herein, the 
Loan Agreement shall remain in full force and effect, and in all 
other respects is affirmed.

5.  COUNTERPARTS.  This Amendment may be executed in any number of 
counterparts, and all such counterparts taken together shall be 
deemed to constitute one and the same instruments.

6.  GOVERNING LAW.  This Amendment and the rights and obligations 
of the parties hereto shall be construed in accordance with, and 
governed by the laws of the State of California.

   IN WITNESS WHEREOF, the parties have executed this Amendment as 
of the day and year first above written.

SPECTRUM MEDICAL INDUSTRIES, INC.,
a California corporation

By:   /s/ Roy T. Eddleman
      -------------------------
      Roy T. Eddleman, Chairman

SPECTRUM LABORATORIES, INC.,
a California corporation

By:   /s/ Roy T. Eddleman
      -------------------------
      Roy T. Eddleman, Chairman

CITY NATIONAL BANK, a national banking association

By:   /s/ Ben A. Sottile
      -------------------------
      Ben A. Sottile, Vice President

                                 3

<PAGE>

GUARANTORS CONSENT

By:   /s/ Roy T. Eddleman
      -------------------------
      Roy T. Eddleman

Spectrum Molecular Separations, Inc.

By:   /s/ Roy T. Eddleman
      -------------------------
      Roy T. Eddleman
Title: Chairman and Chief Executive Officer

Hydro-med Products, Inc.

By:   /s/ Roy T. Eddleman
      -------------------------
      Roy T. Eddleman
Title: Chairman and Chief Executive Officer

SLI Acquisition Corp.

By:   /s/ Roy T. Eddleman
      -------------------------
      Roy T. Eddleman, Chairman
Title: Chairman and Chief Executive Officer

Spectrum Europe B.V.

By:   /s/ Roy T. Eddleman
      -------------------------
      Roy T. Eddleman
Title: Chairman and Chief Executive Officer


                                 4


<PAGE>


                                                         EXHIBIT B

                        REVOLVING CREDIT NOTE

$500,000.00                                  La Mirada, California
                                                  October 10, 1997

For Value Received, the undersigned, Spectrum Medical Industries, 
Inc., a California corporation and Spectrum Laboratories, Inc., a 
California corporation ("Borrower), promises to pay on the 
Termination Date to the order of City National Bank, a national 
banking association ("CNB"), at its Office located at 14241 East 
Firestone Blvd., La Mirada, CA 90638-5568, the principal amount of 
Five Hundred Thousand and no/100 Dollars ($500,000.00) or so much 
thereof as may be advanced and be outstanding, with interest 
thereon to be computed on each Revolving Credit Loan from the date 
of its disbursement at a rate computed on the basis of a 360-day 
year, actual days elapsed, at the rates, times and in accordance 
with the terms of that certain Credit Agreement between Borrower 
and CNB, dated as of February 28, 1997, as may be amended from 
time to time (the "Credit Agreement").  Capitalized terms not 
defined herein shall have the meanings given them in that certain 
Credit Agreement.

   All or any portion of the principal of this Revolving Credit 
Note ("Note") may be borrowed, repaid and reborrowed from time to 
time prior to the Termination Date, provided at the time of any 
borrowing no default exists under this Note and no Event of 
Default or Potential Event of Default exists under the terms and 
conditions of the Credit Agreement and provided, further that the 
total borrowings outstanding at any one time shall not exceed the 
Revolving Credit Commitment.  Each borrowing and repayment of a 
Revolving Credit Loan shall be noted in the books and records of 
CNB.  The excess of borrowings over repayments as noted on such 
books and records shall constitute presumptive evidence of the 
principal balance due hereon from time to time and at any time.

   If payment on this Note becomes due and payable on a non-
business day, the maturity thereof shall be extended to the next 
business day and, with respect to payments of principal or 
interest thereon shall be payable during such extension at the 
then applicable rate.  Upon the occurrence of one or more of the 
Events of Default specified in the Credit Agreement, all amounts 
remaining unpaid on this Note may become or be declared to be 
immediately payable as provided in the Credit Agreement, without 
presentment, demand or notice of dishonor, all of which are 
expressly waived.  Borrower agrees to pay all costs of collection 
of this Note and reasonable attorneys' fees (including attorneys' 
fees allocable to CNB's in-house counsel) in connection therewith 
irrespective of whether suit is brought thereon.

   This is the Revolving Credit Note referred to in the Credit 
Agreement and is entitled to the benefits thereof.

<PAGE>

   Upon CNB's written notice to Borrower of the occurrence of an 
Event of Default, the outstanding principal balance (and interest, 
to the extent permitted by law) shall bear additional interest 
from the date of such notice at the rate of Five Percent (5.0%) 
per annum higher than the interest rate as determined and computed 
above, and continuing thereafter until the Event of Default is 
cured.

   This Note shall be governed by the laws of the State of 
California.  If this Note is executed by more than one Borrower, 
all obligations are joint and several.


"Borrower"


Spectrum Medical Industries, Inc.,
a California corporation

BY:
    -------------------------------
    Roy T. Eddleman, Chmn./CEO

Spectrum Laboratories, Inc.,
a California corporation

By:
   --------------------------------
   Roy T. Eddleman, Chmn./CEO



                                 2


<PAGE>


                                                         

                        REVOLVING CREDIT NOTE

$500,000.00                                  La Mirada, California
                                                  October 10, 1997

For Value Received, the undersigned, Spectrum Medical Industries, 
Inc., a California corporation and Spectrum Laboratories, Inc., a 
California corporation ("Borrower), promises to pay on the 
Termination Date to the order of City National Bank, a national 
banking association ("CNB"), at its Office located at 14241 East 
Firestone Blvd., La Mirada, CA 90638-5568, the principal amount of 
Five Hundred Thousand and no/100 Dollars ($500,000.00) or so much 
thereof as may be advanced and be outstanding, with interest 
thereon to be computed on each Revolving Credit Loan from the date 
of its disbursement at a rate computed on the basis of a 360-day 
year, actual days elapsed, at the rates, times and in accordance 
with the terms of that certain Credit Agreement between Borrower 
and CNB, dated as of February 28, 1997, as may be amended from 
time to time (the "Credit Agreement").  Capitalized terms not 
defined herein shall have the meanings given them in that certain 
Credit Agreement.

   All or any portion of the principal of this Revolving Credit 
Note ("Note") may be borrowed, repaid and reborrowed from time to 
time prior to the Termination Date, provided at the time of any 
borrowing no default exists under this Note and no Event of 
Default or Potential Event of Default exists under the terms and 
conditions of the Credit Agreement and provided, further that the 
total borrowings outstanding at any one time shall not exceed the 
Revolving Credit Commitment.  Each borrowing and repayment of a 
Revolving Credit Loan shall be noted in the books and records of 
CNB.  The excess of borrowings over repayments as noted on such 
books and records shall constitute presumptive evidence of the 
principal balance due hereon from time to time and at any time.

   If payment on this Note becomes due and payable on a non-
business day, the maturity thereof shall be extended to the next 
business day and, with respect to payments of principal or 
interest thereon shall be payable during such extension at the 
then applicable rate.  Upon the occurrence of one or more of the 
Events of Default specified in the Credit Agreement, all amounts 
remaining unpaid on this Note may become or be declared to be 
immediately payable as provided in the Credit Agreement, without 
presentment, demand or notice of dishonor, all of which are 
expressly waived.  Borrower agrees to pay all costs of collection 
of this Note and reasonable attorneys' fees (including attorneys' 
fees allocable to CNB's in-house counsel) in connection therewith 
irrespective of whether suit is brought thereon.

   This is the Revolving Credit Note referred to in the Credit 
Agreement and is entitled to the benefits thereof.

<PAGE>

   Upon CNB's written notice to Borrower of the occurrence of an 
Event of Default, the outstanding principal balance (and interest, 
to the extent permitted by law) shall bear additional interest 
from the date of such notice at the rate of Five Percent (5.0%) 
per annum higher than the interest rate as determined and computed 
above, and continuing thereafter until the Event of Default is 
cured.

   This Note shall be governed by the laws of the State of 
California.  If this Note is executed by more than one Borrower, 
all obligations are joint and several.


"Borrower"


Spectrum Medical Industries, Inc.,
a California corporation

BY:/s/ Roy T. Eddleman
    -------------------------------
    Roy T. Eddleman, Chmn./CEO

Spectrum Laboratories, Inc.,
a California corporation

By:/s/ Roy T. Eddleman
   --------------------------------
   Roy T. Eddleman, Chmn./CEO



                                 2