Document:

Exhibit 10.1 

EMPLOYMENT AGREEMENT  

        This agreement,
effective as of April 1, 2004 (the “Agreement”) is made by and between MEDICAL
TECHNOLOGY SYSTEMS, INC., a Delaware corporation (the “Company”), and MICHAEL
D. STEVENSON, a resident of the State of Florida (the “Executive”). 

BACKGROUND  

        The
Company desires to employ Michael D. Stevenson as a senior executive, and the Executive
desires to accept employment with the Company on the terms and conditions set forth below. 

TERMS  

               	 	1. 	
                    Employment 

               	 	a. 	
                    The Executive agrees to accept employment with the Company, or one or more of
                    the Company’s subsidiary corporations, to render the services specified in
                    this Agreement subject to the terms and conditions of this Agreement. All
                    compensation paid to the Executive by the Company or any subsidiary of the
                    Company, and all benefits and perquisites received by the Executive from the
                    Company or any of its subsidiaries, will be aggregated in determining whether
                    the Executive has received the compensation and benefits provided for herein. 

                    

               	 	b. 	
                    Term. The term of this contract will commence on April 1, 2004, and will
                    terminate March 31, 2005 unless the Agreement is terminated earlier as provided
                    in this Agreement (the “Term”). Beginning April 1, 2005, the Term will
                    automatically renew for successive one year periods unless either party provides
                    written notice of its decision not to extend the Term to the other party thirty
                    (30) days prior to the termination of the Agreement. 

                    

               	 	2. 	
                    Duties. 

                    

               	 	a. 	
                    General Duties. The Executive will perform the duties and
                    responsibilities assigned by the CEO subject to the authority of the Board of
                    Directors. 

                    

               	 	b. 	
                    Full Time Employment. During the Term of this Agreement, and excluding
                    any periods of vacation, family or sick leave, or holidays to which the
                    Executive is entitled, the Executive will devote his full business time and
                    energy to the business affairs and interests of the Company and its subsidiaries
                    and will use his reasonable commercial efforts and ability to promote the
                    interests of the Company and its subsidiaries. The Executive will diligently
                    endeavor to promote the business affairs and interests of the Company and its
                    subsidiaries and perform services contemplated by this Agreement in accordance
                    with the policies established by the Board from time to time. 

                    

               	 	c. 	
                    Certain Permissible Activities. If expressly approved in advance by the
                    Company in writing, the Executive may serve as a director of another
                    non-competing company. The Executive may also (i) make and manage personal
                    business investments of his choice, (ii) teach at educational institutions and
                    deliver lectures, and (iii) serve in any capacity with any civic, educational or
                    charitable organization, or any governmental entity or trade association without
                    seeking or obtaining approval by the Company so long as such activities and
                    service do not materially interfere or conflict with the performance of his
                    duties under this Agreement. 

                    

               	 	3. 	
                    Compensation and Expenses. 

                    

               	 	a. 	
                    Base Salary. In consideration for the services rendered by the Executive
                    for the period April 1, 2004 through March 31, 2005 under this Agreement, the
                    Company will pay the Executive an annual base salary in the total, gross amount
                    of $151,857 (the “Base Salary”), payable in equal installments no less
                    than semi-monthly. 

                    

               	 	b. 	
                    Base Salary Adjustment. The Board will have the sole discretion to
                    annually increase the Base Salary. The Board will not decrease the Base Salary
                    unless the Executive agrees in advance to the proposed decrease. 

                    

               	 	c. 	
                    Bonus. During the Term of this Agreement, the Executive will be eligible
                    to receive bonus compensation in accordance with Exhibits A and B and C on such
                    terms as recommended by the Compensation Committee and approved by the Board.
                    Exhibit A may be amended annually in accordance with the Company’s bonus
                    program. 

                    

               	 	d. 	
                    Expenses. In addition to any compensation paid to the Executive pursuant
                    to Section 3, the Company will reimburse, or advance funds to, the Executive for
                    all reasonable, ordinary, and necessary travel or entertainment expenses
                    incurred by him during the Term of this Agreement in accordance with the
                    Company’s then-current policy. 

                    

               	 	4. 	
                    Benefits. 

                    

     	 	a. 	
          Vacation. During the Term during of this Agreement, the Executive will be
          entitled to 25 vacation days annually (which will accrue and vest, except as set
          forth below on each April 1st) without loss of compensation or other benefits to
          which he is entitled under this Agreement. 

          

     	 	 	
          The Executive will take his vacation at such times as the Executive may select and the affairs
               of the Company or any of its subsidiaries or affiliates may permit.

          

2

     	 	b. 	
          Employee Benefit Programs. In addition to the compensation to which the
          Executive is entitled pursuant to the provisions of Section 3 of this Agreement,
          during the Term the Executive is eligible to participate in any stock option
          plan, stock purchase plan, pension or retirement plan, insurance or other
          employee benefit plan that is maintained at that time by the Company for its
          senior executive employees, including programs of life, disability, basic
          medical and dental, supplemental medical and dental insurance. 

          

     	 	  	
          Notwithstanding
        any provision of this Agreement to the contrary, the Company will not be obligated to
        provide the Executive with any of the benefits contained in this Section 4 (b) if the
        Executive, for any reason, is or becomes uninsurable with respect to coverage relating to
        any such benefit(s).

          

          	 	c. 	
               Automobile Allowance. During the Term of this Agreement, the Company will
               pay the Executive an additional $750.00 per month as an automobile allowance. 

               

          	 	d. 	
               Financial and Tax Planning. As additional consideration for the services
               provided by the Executive under this Agreement, the Company will reimburse the
               Executive for personal financial planning, tax preparation services, and
               accounting and legal fees related to such financial and tax planning, up to a
               maximum of $2,000 per year during the Term of the Agreement. 

               

               	 	5. 	
                    Termination. 

                   

     	 	a. 	
          Termination for Cause. The Company may terminate the Executive’s
          employment pursuant to this Agreement at any time for Cause and the termination
          will become effective immediately at the time the Company provides written
          notice to the Executive. If the Company decides to terminate the
          Executive’s employment under this Agreement for Cause, the Company will
          have no further obligations to make any payments to the Executive under this
          Agreement, except that the Executive will receive any unpaid accrued Base Salary
          through the date of termination of employment. Upon termination for Cause, the
          Executive will not be entitled to any Annual Bonus or Long Term Incentive Bonus
          payments other than those becoming due and payable prior to the termination
          date. For purposes of this Agreement, the term “Cause” will mean: 

          

          	 	(i) 	
                the Executive’s conviction of a felony; 

               

          	 	(ii) 	
               any act of theft, dishonesty, or insubordination by the Executive regardless of
               whether the Executive’s theft, dishonesty, or insubordination affects the
               Company or its business in any way; 

               

          	 	(iii) 	
               the Executive’s conviction of misappropriating assets or otherwise
               defrauding the Company or any of its subsidiaries or affiliates; 

               

3 

          	 	(iv) 	
               the Executive’s alcoholism or drug abuse that substantially impairs the
               ability of the Executive to perform the Executive’s duties hereunder; 

               

          	 	(v) 	
               gross negligence by the Executive in the performance of his duties under this
               Agreement that results in material damage to the Company or any affiliate; 

               

          	 	(vi) 	
               intentional or reckless conduct by the Executive that results in material damage
               to the Company; 

               

          	 	(vii) 	
               the committing by the Executive of an act involving moral turpitude that results
               in material damage to the Company; 

               

          	 	(viii) 	
               a material breach by the Executive of any provision of this Agreement, or
               failure to follow the written policies of the Company, which is not cured or
               corrected within thirty (30) days after receiving written notice of such breach
               or failure; or 

               

          	 	(ix) 	
               the Executive’s failure to follow the specific instructions of the Chief
               Executive Officer or Board of Directors within thirty (30) days after receiving
               written notice of such instruction. 

               

     	 	b. 	
          Death or Disability. This Agreement and the Company’s obligations
          under this Agreement will terminate upon the death or total disability of the
          Executive. For purposes of this Section 5(b), “total disability” means
          that for a period of six consecutive months in any twelve-month period the
          Executive is incapable of substantially fulfilling the duties set forth in this
          Agreement because of physical, mental or emotional incapacity resulting from
          injury, sickness or disease as determined by an independent physician mutually
          acceptable to the Company and the Executive. If the Agreement terminates due to
          the death or disability of the Executive, the Company will pay the Executive or
          his legal representative any unpaid accrued Base Salary through the date of
          termination of employment (or, if terminated as a result of a disability, until
          the date upon which the disability policy maintained pursuant to Section 4 (b)
          (ii) begins payment of benefits) plus any other compensation that may be earned
          and unpaid. If the Agreement is terminated because of death or disability of the
          Executive, any obligations that the Executive may owe the Company for repayment
          of loans or other amounts will be forgiven. 

          

               	 	c. 	
                    Voluntary Termination. The Executive may elect to terminate this
                    Agreement by delivering written notice to the Company sixty (60) days prior to
                    the date on which termination is elected. If the Executive voluntarily
                    terminates his employment the Company will have no further obligations to make
                    payments under this Agreement, except that the Company will pay to the Executive
                    any unpaid accrued Base Salary through the date of voluntary termination of
                    employment. The Executive will not be entitled to any Annual Bonus or Long Term
                    Incentive Bonus payments other than those becoming due and payable prior to the
                    voluntary termination date. 

                    

4

               	 	d. 	
                    Termination Without Cause. If the Executive is terminated for any reason
                    other than by death, disability, for Cause, or due to the Executive’s
                    voluntary resignation of employment, the Company will have no further obligation
                    to make payments under this Agreement, except that the Company will pay to the
                    Executive any unpaid accrued Base Salary through the date of termination of
                    employment. In addition, the Company will pay to the Executive severance in an
                    amount equal to two (2) times the Executive’s then current Base Salary. The
                    severance will be paid to the Executive in equal installments consistent with
                    the current payment schedule of the Executive’s Base Salary. The Company
                    will also pay to the Executive any Long Term Incentive Bonus earned during the
                    fiscal year of the Executive’s termination. 

                    

               	 	6. 	
                    Restrictive Covenants. 

               	 	a. 	
                    Competition with the Company. The Executive covenants and agrees that,
                    during the Term of this Agreement and for two (2) years after termination of the
                    Agreement for any reason, the Executive will not, without the prior written
                    consent of the Company or its successor, directly or indirectly (whether as a
                    sole proprietor, partner, stockholder, director, officer, employee or in any
                    other capacity as principal or agent), compete with the Company.
                    Notwithstanding this restriction, the Executive will be entitled during the term
                    of this Agreement and for the two years following termination of this Agreement
                    for any reason, to invest in stock of competing public companies so long as his
                    ownership is less than 5% of such company’s outstanding shares. 

                    

               	 	b. 	
                    Restrictions Governing Disclosure of Confidential Information. The
                    Executive agrees that during the Term of the Agreement, and for a period of two
                    (2) Years following the termination of the Agreement, for any reason, the
                    Executive will (i) hold in confidence and refrain from disclosing to any other
                    party all information, whether written or oral, tangible or intangible, of a
                    private, secret, proprietary, or confidential nature, of or concerning the
                    Company and its operations, and all files, letters, memoranda, reports, records,
                    computer disks or other computer storage medium, data, models or any
                    photographic or other tangible materials containing such information
                    (collectively hereinafter referred to as “Confidential
                    Information”), including without limitation, any sales, promotional or
                    marketing plans, programs, techniques, practices or strategies, any expansion
                    plans (including existing and entry into new geographic and/or product markets),
                    and any customer lists, (ii) use the Confidential Information solely in
                    connection with his employment with the Company and for no other purpose, (iii)
                    take all precautions necessary to ensure that the Confidential Information is
                    not shown, copied or disclosed to third parties, without the prior written
                    consent of the Company, and (iv) observe all security policies implemented by
                    the Company from time to time with respect to the Confidential Information. If
                    the Executive is ordered to disclose any Confidential Information, whether in a
                    legal or regulatory proceeding or otherwise, the Executive will provide the
                    Company with prompt notice of such request or order so that the Company may seek
                    to prevent disclosure. 

                    

5

               	 	c. 	
                    Subversion, Disruption or Interference. During the Term of the Agreement,
                    and for a period of two (2) years following the termination of the Agreement for
                    any reason, the Executive will not, directly or indirectly, solicit, interfere,
                    induce, influence, combine or conspire with, or attempt to interfere, solicit,
                    induce, influence, combine or conspire with, any of the Company’s
                    employees, sponsors, or consultants to terminate their relationship with, or
                    compete or ally against, the Company or any of the subsidiaries or affiliates of
                    the Company in the business in which the Company or any one of its subsidiaries
                    or affiliates is presently engaged. The Executive also agrees not to make any
                    disparaging remark or comment about the Company or its products or services, or
                    any of its subsidiaries or affiliates, or their officers, directors, or
                    employees. 

                    

               	 	d. 	
                    Enforcement of Restrictions. The parties agree that any violation by the
                    Executive of the covenants contained in this Section will cause irreparable
                    damage to the Company or any of its subsidiaries and affiliates and may, as a
                    matter of course, be restrained by process issued out of a court of competent
                    jurisdiction, in addition to any other remedies provided by law. In addition, if
                    the Executive breaches any provision in this section, the Company will
                    immediately cease the payment of any unpaid severance and the Executive will
                    immediately repay to the Company all severance already paid. 

                    

               	 	7. 	
                    Change of Control. 

                    

               	 	a. 	
                    For the purposes of this Agreement, a “Change of Control” will be
                    deemed to have taken place if (a) any person, other than the JADE Partnership or
                    the Siegel Family Revocable Trust, including a “group” as defined in
                    Section 13(d)(3) of the Securities Exchange Act of 1934, as amended, becomes the
                    owner or beneficial owner of the Company’s securities, following full
                    execution of this Agreement, having more than 50% of the combined voting power
                    of the then outstanding securities of the Company that may be cast for the
                    election of directors of the Company; provided, however, that a Change of
                    Control will not be deemed to have occurred if the person who becomes the owner
                    of more than 50% of the combined voting power of the Company is Todd E. Siegel
                    or an entity (or entities) controlled by Todd E. Siegel and (b) as a result of
                    the Change of Control, the Directors in office immediately prior to the Change
                    of Control, including nominees for any vacancies that may exist, constitute 50%
                    or less of the Board of Directors of the Company in office after the Change of
                    Control. 

                    

6 

               	 	b. 	
                    The Company and the Executive agree that, if the Executive is in the employ of
                    the Company on the date on which a Change of Control occurs (the “Change of
                    Control Date”), the Company will continue to employ the Executive and the
                    Executive will remain in the employ of the Company for the period commencing on
                    the Change of Control Date and ending on the expiration of the Term, to exercise
                    such authority and perform such executive duties as are commensurate with the
                    authority being exercised and duties being performed by the Executive
                    immediately prior to the Change of Control Date. If, after a Change of Control,
                    the Executive is requested, and, in his sole and absolute discretion, consents
                    to change his principal business location more than 50 miles beyond the location
                    of the Company’s headquarters in Pinellas County, Florida, the Company will
                    reimburse the Executive for his relocation expenses, including without
                    limitation, moving expenses, temporary living and travel expenses for a time
                    while arranging to move his residence to the changed location, closing costs, if
                    any, associated with the sale of his existing residence and the purchase of a
                    replacement residence at the changed location, plus an additional amount
                    representing a gross-up of any state or federal taxes payable by the Executive
                    as a result of any such reimbursements. If the Executive will not consent to
                    change his business location, the Executive may continue to provide the services
                    required of him under this Agreement in Pinellas County, Florida and the Company
                    will continue to maintain an office for the Executive at that location similar
                    to the Company’s office prior to the Change of Control Date. 

                    

               	 	c. 	
                    During the remaining Term after the Change of Control Date, the Company will (i)
                    continue to honor the terms of this Agreement, including as to Base Salary and
                    other compensation set forth in Section 3, and (ii) continue employee benefits
                    as set forth in Section 4 at levels in effect on the Change of Control Date (but
                    subject to such reductions as may be required to maintain such plans in
                    compliance with applicable federal law regulating employee benefits). 

                    

               	 	d. 	
                    If within 12 months after the Change of Control Date, (i) the Executive’s
                    employment is terminated by the Company other than for Cause (as defined in
                    Section 5(a)), or (ii) there is a material reduction in the Executive’s
                    compensation or employment related benefits, or a material change in the
                    Executive’s status, working conditions or management responsibilities, or a
                    material change in the business objectives or policies, the Executive will
                    receive, subject to the provisions of subparagraph (e) below, severance in an
                    amount equal to (2) two times the Executive’s current Base Salary, the
                    Executive’s entire Long Term Incentive Bonus, and all of the
                    Executive’s unvested and unexercised options will immediately become vested
                    and exercisable. 

                    

7 

               	 	e. 	
                    In the event that the payments and benefits provided for in this Agreement or
                    otherwise payable to the Executive (i) constitute “parachute payments”
                    within the meaning of Section 280G of the Internal Revenue Code of 1986, as
                    amended (the “Code”) and (ii) but for this Section 7.e., would be
                    subject to the excise tax imposed by Section 4999 of the Code, then the
                    Executive’s payments and benefits shall be reduced to such extent necessary
                    to result in no portion of such benefits being subject to excise tax under
                    Section 4999 of the Code. Within thirty (30) days after the amount of any
                    required reduction in payments and benefits is finally determined, the Company,
                    in consultation with the Executive, shall determine which amounts to reduce. Any
                    determination required under this Section 7.e. shall be made in writing by the
                    Company’s independent public accounting firm as in effect immediately prior
                    to the change of control (the “Accounting Firm”), whose determination
                    shall be conclusive and binding upon the Executive and the Company for all
                    purposes. For purposes of making the calculations required by this Section 7.e.,
                    the Accountants may, after taking into account the information provided by the
                    Executive, make reasonable assumptions and approximations concerning applicable
                    taxes and may rely on reasonable, good faith interpretations concerning the
                    application of Sections 280G and 4999 of the Code. The Company and the Executive
                    shall furnish to the Accounting Firm such information and documents as the
                    Accounting Firm may reasonably request in order to make a determination under
                    this Section 7.e. 

                    

               	 	8. 	
                    Assignability. The rights and obligations of the Company under this
                    Agreement will inure to the benefit of and be binding upon the successors and
                    assigns of the Company, provided that such successor or assign will acquire all
                    or substantially all of the assets and business of the Company. The
                    Executive’s rights and obligations under this Agreement may not be assigned
                    or alienated and any attempt to do so by the Executive will be void and
                    constitute a material breach hereunder. 

                    

               	 	9. 	
                    Indemnification. The Company and the Executive acknowledge that the
                    Executive’s service as an officer of the Company exposes the Executive to
                    risks of personal liability arising from, and pertaining to, the
                    Executive’s participation in the management of the Company. The Company
                    will defend, indemnify and hold harmless the Executive from any actual cost,
                    loss, damages, attorneys fees, or liability suffered or incurred by the
                    Executive arising out of, or connected to, the Executive’s service as an
                    officer of the Company or any of its current, former, or future subsidiaries to
                    the fullest extent allowed by law. The Company will not have any obligation to
                    the Executive under this section for any loss suffered if the Executive
                    voluntarily pays, settles, compromises, confesses judgment for, or admits
                    liability with respect to such loss without the approval of the Company. Within
                    thirty days after the Executive receives notice of any claim or action which may
                    give rise to the application of this section, the Executive will notify the
                    Company in writing of the claim or action. The Executive’s failure to
                    timely notify the Company of the claim or action will relieve the Company from
                    any obligation to the Executive under this section. 

                    

8 

               	 	10. 	
                    Severability. If any provision of this Agreement otherwise is deemed to
                    be invalid or unenforceable or is prohibited by the laws of the state or
                    jurisdiction where it is to be performed, this Agreement will be considered
                    divisible as to such provision and such provision will be inoperative in such
                    state or jurisdiction and will not be part of the consideration moving from
                    either of the parties to the other. The remaining provisions of this Agreement
                    will be valid and binding and of like effect as though such provision were not
                    included. 

                    

               	 	11. 	
                    Prior Employment Agreements. The Executive represents that he has not
                    executed any agreement with any previous employer which may impose restrictions
                    on his employment with the Company. 

                    

               	 	12. 	
                    Notice. Notices given pursuant to the provisions of this Agreement will
                    be sent by certified mail, postage prepaid, or by overnight courier, or
                    telecopier to the following addresses: 

                    

               	 	 	If to the Company: 

               	 	 	 Medical Technology Systems, Inc.

                        12920-M Automobile Blvd.
Clearwater, FL 34622 

               	 	 	If to the Executive: 

               	 	 	
                           Michael D. Stevenson
 15321 Lake Mourine Drive
 Odessa, FL  33556 

         Either
party may, from time to time, designate any other address to which any such notice to it
or him will be sent. Any such notice will be deemed to have been delivered upon the
earlier of actual receipt or four days after deposit in the mail, if by certified mail. 

     	 	13. 	
          Miscellaneous. 

          

     	 	a. 	
          Governing Law. This Agreement will be governed by and construed in
          accordance with the laws of the state of Florida. 

          

     	 	b. 	
          Venue. Any action filed to enforce this Agreement will be filed in
          Pinellas County, Florida or the United States District Court for the Middle
          District of Florida, Tampa Division. 

          

     	 	c. 	
          Waiver/Amendment. The waiver by any party to this Agreement of a breach
          of any provision hereof by any other party will not be construed as a waiver of
          any subsequent breach by any party. No provision of this Agreement may be
          terminated, amended, supplemented, waived or modified other than by an
          instrument in writing signed by the party against whom the enforcement of the
          termination, amendment, supplement, waiver or modification is sought. 

          

9 

     	 	d. 	
          Attorney’s Fees. In the event any action is commenced to enforce any
          provision of this Agreement, the prevailing party will be entitled to reasonable
          attorneys fees, costs, and expenses. 

          

     	 	e. 	
          Entire Agreement. This Agreement, and the attached Exhibits, comprise the
          entire agreement between the Executive and the Company. This Agreement
          supersedes all prior agreements and understandings between the parties with
          respect to the subject matter hereof and may not be modified or terminated
          orally. No modification, termination, or attempted waiver will be valid unless
          it is in writing and is executed by both of the parties. 

          

     	 	f. 	
          Counterparts. This Agreement may be executed in counterparts, all of
          which will constitute one and the same instrument. 

          

        IN
WITNESS WHEREOF, the Company and the Executive have executed this Agreement as of the day
and year first above written. 

						
	 	WITNESSES:	 	 	EXECUTIVE	 
	 	 	 	 	 	 
	 	
	
	 	
	 
	 	 	 	 	MICHAEL D. STEVENSON	 
	 	Print Name:	
	 	 	 
	 	 	 	 	 	 
	 	
	
	 	 	 
	 	 	 	 	 	 
	 	Print Name:	
	 	 	 

	 	 	 	 	COMPANY	 
	 	 	 	 	 	 	 
	 	 	 	 	MEDICAL TECHNOLOGY SYSTEMS, INC.,	 
	 	
	
	 	a Delaware corporation	 
	 	 	 	 	 	 	 
	 	Print Name:	
 	 	By:	
	 
	 	 	 	 	 	 	 
	 	
	
	 	Print Name:	Todd Siegel	 
	 	 	 	 	 	 	 
	 	Print Name:	
	 	As:	President	 

10 

EXHIBIT A 

Annual Bonus 

The executive shall receive an annual
bonus determined as follows: 

     	1.	
          Annual base salary times 50% (“Bonus Base”). 

          

     	2.	
          Bonus Base times  % of Bonus Base as provide below.* 

          

     	•	      
          The bonus compensation schedule shall be adjusted for each fiscal year no later
          than June 30th of the new fiscal year. 

          

     	•	      
          The annual bonus shall be payable no later than June 30th following
          the fiscal year ending March 31st. The Company may at it option, elect to make
          payments 
       prior to June 30 of any year. 

          

*As provided on attached schedule. 

A-1 

EXHIBIT B 

Long-Term Incentive
Bonus 

     	1.	
          Each executive will earn a long-term incentive bonus based upon the average
          return on capital achieved by the company over a three-year time period. 

     	2.	
          Return on capital is the percentage derived by dividing the net income available
          to common shareholders for each fiscal year by the total long-term capital
          invested in the company at the end of each fiscal year. 

     	3.	
          Long-term capital is the sum of (1) stockholders equity; and (2) total long-term
          debt, minus the amount borrowed on the revolving line of credit. 

     	4.	
          The amount of the long-term incentive bonus is determined based upon the
          following formula. 

     	 	
          (Annual Salary x 30%) x Percentage of Bonus Earned 

     	5.	
          Percentage of Bonus Earned is determined based upon the average return on
          capital achieved as follows: 

			
	Average ROC Achieved 	 	Percentage of Bonus Earned 
	
	 	

	16.0%-20.0%     
                             	 	25.0%
	21.0%	 	50.0%
	21.6%	 	55.0%
	22.2%	 	60.0%
	22.8%	 	65.0%
	23.4%	 	70.0%
	24.0%	 	75.0%
	24.6%	 	80.0%
	25.2%	 	85.0%
	25.8%	 	90.0%
	26.4%	 	95.0%
	
	 	

	27.0%	 	100.0% 
	 	 	 
	If 3-Year Average ROC Exceeds Target ROC  
	 	 	 
	27.6%	 	105.0%
	28.2%	  	110.0%
	28.8%	 	115.0%
	29.4%	 	120.0%
	30.0%	 	125.0%
	30.6%	 	130.0%
	31.2%	 	135.0%
	31.8%	 	140.0%
	32.4%	 	145.0%
	33.0%	 	150.0%

     	6.	
          The average ROC is determined at the end of each fiscal year and paid to the
          executive as follows: 

	a.	 	
For each fiscal year ending March 31, one-third (1/3) of the LTIB earned shall be paid no
later than June 30, of the following fiscal year; one-third (1/3) no later than June 30,
of the second following fiscal year; and one-third (1/3) no later than June 30, of the
third following fiscal year. 

	b.	 	Executive must be employed
with the company to receive unvested LTIB unless terminated according to Paragraph 7 of the Employment Agreement.

B-1

EXHIBIT C  

Restricted Common
Stock Grant 

        The
Executive shall be entitled to receive 5,000 shares of restricted common stock of the
Company each year for ten (10) years commencing with April 1, 2005, provided the Executive
is employed by the Company on the date the Executive is entitled to receive the shares
unless termination in accordance with Paragraph 7 of the Employment Agreement. 

C-1Exhibit 10.2

EMPLOYMENT AGREEMENT  

        This
agreement, effective as of September 1, 2004 (the “Agreement”) is made by and between
MEDICAL TECHNOLOGY SYSTEMS, INC., a Delaware corporation (the “Company”), and
MICHAEL BRANCA, a resident of the State of Florida (the “Executive”). 

BACKGROUND  

        The
Company desires to employ the Executive as the Company’s Chief Financial Officer, and
the Executive desires to accept employment with the Company on the terms and conditions
set forth below. 

TERMS  

     	 	1. 	
          Employment 

     	 	a. 	
          The Executive agrees to accept employment with the Company, or one or more of
          the Company’s subsidiary corporations, to render the services specified in
          this Agreement subject to the terms and conditions of this Agreement. All
          compensation paid to the Executive by the Company or any subsidiary of the
          Company, and all benefits and perquisites received by the Executive from the
          Company or any of its subsidiaries, will be aggregated in determining whether
          the Executive has received the compensation and benefits provided for herein. 

     	 	b. 	
          Term. The term of this contract will commence on September 1, 2004, and will terminate March 31,
        2007 unless the Agreement is terminated earlier as provided in this Agreement (the
        “Term”). Beginning April 1, 2007, the Term will automatically renew for
        successive one-year periods unless either party provides written notice of its decision
        not to extend the Term to the other party thirty (30) days prior to the termination of the
        Agreement. 

     	 	2. 	
          Duties. 

     	 	a. 	
          General Duties. The Executive will perform the duties and
          responsibilities assigned by the CEO subject to the authority of the Board of
          Directors. 

     	 	b. 	
          Full Time Employment. During the Term of this Agreement, and excluding
          any periods of vacation, family or sick leave, or holidays to which the
          Executive is entitled, the Executive will devote his full business time and
          energy to the business affairs and interests of the Company and its subsidiaries
          and will use his reasonable commercial efforts and ability to promote the
          interests of the Company and its subsidiaries. The Executive will diligently
          endeavor to promote the business affairs and interests of the Company and its
          subsidiaries and perform services contemplated by this Agreement in accordance
          with the policies established by the Board from time to time. 

     	 	c. 	
          Certain Permissible Activities. If expressly approved in advance by the
          Company in writing, the Executive may serve as a director of another
          non-competing company. The Executive may also (i) make and manage personal
          business investments of his choice, (ii) teach at educational institutions and
          deliver lectures, and (iii) serve in any capacity with any civic, educational or
          charitable organization, or any governmental entity or trade association without
          seeking or obtaining approval by the Company so long as such activities and
          service do not materially interfere or conflict with the performance of his
          duties under this Agreement. 

 

     	 	3. 	
          Compensation and Expenses. 

     	 	a. 	
          Base Salary. In consideration for the services rendered by the Executive
          for the period September 1, 2004 through March 31, 2006 under this Agreement, the
          Company will pay the Executive an annual base salary in the total, gross amount
          of $190,000 (the “Base Salary”), payable in equal installments no less
          than semi-monthly. 

     	 	b. 	
          Base Salary Adjustment. The Board will have the sole discretion to
          annually increase the Base Salary. The Board will not decrease the Base Salary
          unless the Executive agrees in advance to the proposed decrease. 

     	 	c. 	
          Bonus. During the Term of this Agreement, the Executive will be eligible
          to receive bonus compensation in accordance with Exhibits A and B and on such
          terms as recommended by the Compensation Committee and approved by the Board.
          Exhibit A may be amended annually in accordance with the Company’s bonus
          program. The Executive will receive a prorated bonus for fiscal year 2005 in an
          amount equal to 50% of the Executive’s Base Salary actually paid during
          fiscal year 2005. 

     	 	d. 	
          Expenses. In addition to any compensation paid to the Executive pursuant
          to Section 3, the Company will reimburse, or advance funds to, the Executive for
          all reasonable, ordinary, and necessary travel or entertainment expenses
          incurred by him during the Term of this Agreement in accordance with the
          Company’s then-current policy. 

     	 	4. 	
           Benefits. 

     	 	a. 	
          Vacation. During the Term during of this Agreement, the Executive will be
          entitled to 20 vacation days annually (which will accrue and vest, except as set
          forth below on each April 1st) without loss of compensation or other benefits to
          which he is entitled under this Agreement. 

     	 	 	
         The Executive will take his vacation at such times as the Executive may select and the affairs
        of the Company or any of its subsidiaries or affiliates may permit.

 2

     	 	b. 	
          Employee Benefit Programs. In addition to the compensation to which the
          Executive is entitled pursuant to the provisions of Section 3 of this Agreement,
          during the Term the Executive is eligible to participate in any stock option
          plan, stock purchase plan, pension or retirement plan, insurance or other
          employee benefit plan that is maintained at that time by the Company for its
          senior executive employees, including programs of life, disability, basic
          medical and dental, supplemental medical and dental insurance. 

     	 	  	
         Notwithstanding any provision of this Agreement to the contrary, the Company will not be obligated to
        provide the Executive with any of the benefits contained in this Section 4 (b) if the
        Executive, for any reason, is or becomes uninsurable with respect to coverage relating to
        any such benefit(s).

          	 	c. 	
               Automobile Allowance. During the Term of this Agreement, the Company will
               pay the Executive an additional $750.00 per month as an automobile allowance. 

          	 	d. 	
               Financial and Tax Planning. As additional consideration for the services
               provided by the Executive under this Agreement, the Company will reimburse the
               Executive for personal financial planning, tax preparation services, and
               accounting and legal fees related to such financial and tax planning, up to a
               maximum of $2,000 per year during the Term of the Agreement. 

          	 	e. 	
               Relocation. If, while employed by the Company, the Executive relocates
               his primary residence on or before September 1, 2008, the Company will reimburse
               the Executive for incurred relocation expenses up to $30,000. 

     	 	5. 	
          Termination.  

     	 	a. 	
          Termination for Cause. The Company may terminate the Executive’s
          employment pursuant to this Agreement at any time for Cause and the termination
          will become effective immediately at the time the Company provides written
          notice to the Executive. If the Company decides to terminate the
          Executive’s employment under this Agreement for Cause, the Company will
          have no further obligations to make any payments to the Executive under this
          Agreement, except that the Executive will receive any unpaid accrued Base Salary
          through the date of termination of employment. Upon termination for Cause, the
          Executive will not be entitled to any Annual Bonus or Long Term Incentive Bonus
          payments other than those becoming due and payable prior to the termination
          date. For purposes of this Agreement, the term “Cause” will mean: 

          	 	(i) 	
               the Executive’s conviction of a felony; 

3 

          	 	(ii) 	
               any act of theft, dishonesty, or insubordination by the Executive regardless of
               whether the Executive’s theft, dishonesty, or insubordination affects the
               Company or its business in any way; 

          	 	(iii) 	
               the Executive’s conviction of misappropriating assets or otherwise
               defrauding the Company or any of its subsidiaries or affiliates; 

          	 	(iv) 	
               the Executive’s alcoholism or drug abuse that substantially impairs the
               ability of the Executive to perform the Executive’s duties hereunder; 

               

          	 	(v) 	
               gross negligence by the Executive in the performance of his duties under this
               Agreement that results in material damage to the Company or any affiliate; 

               

          	 	(vi) 	
               intentional or reckless conduct by the Executive that results in material damage
               to the Company; 

               

          	 	(vii) 	
               the committing by the Executive of an act involving moral turpitude that results
               in material damage to the Company; 

               

          	 	(viii) 	
               a material breach by the Executive of any provision of this Agreement, or
               failure to follow the written policies of the Company , which is not cured or
               corrected within thirty (30) days after receiving written notice of such breach
               or failure; or 

               

          	 	(ix) 	
               the Executive’s failure to follow the specific instructions of the Chief
               Executive Officer or Board of Directors within thirty (30) days after receiving
               written notice of such instruction. 

               

     	 	b. 	
          Death or Disability. This Agreement and the Company’s obligations
          under this Agreement will terminate upon the death or total disability of the
          Executive. For purposes of this Section 5(b), “total disability” means
          that for a period of six consecutive months in any twelve-month period the
          Executive is incapable of substantially fulfilling the duties set forth in this
          Agreement because of physical, mental or emotional incapacity resulting from
          injury, sickness or disease as determined by an independent physician mutually
          acceptable to the Company and the Executive. If the Agreement terminates due to
          the death or disability of the Executive, the Company will pay the Executive or
          his legal representative any unpaid accrued Base Salary through the date of
          termination of employment (or, if terminated as a result of a disability, until
          the date upon which the disability policy maintained pursuant to Section 4 (b)
          (ii) begins payment of benefits) plus any other compensation that may be earned
          and unpaid. If the Agreement is terminated because of death or disability of the
          Executive, any obligations that the Executive may owe the Company for repayment
          of loans or other amounts will be forgiven. 

          

4

               	 	c. 	
                    Voluntary Termination. The Executive may elect to terminate this
                    Agreement by delivering written notice to the Company sixty (60) days prior to
                    the date on which termination is elected. If the Executive voluntarily
                    terminates his employment the Company will have no further obligations to make
                    payments under this Agreement, except that the Company will pay to the Executive
                    any unpaid accrued Base Salary through the date of voluntary termination of
                    employment. The Executive will not be entitled to any Annual Bonus or Long Term
                    Incentive Bonus payments other than those becoming due and payable prior to the
                    voluntary termination date. 

                    

               	 	d. 	
                    Termination Without Cause. If the Executive is terminated for
                any reason other than by death, disability, for Cause, or due to the Executive’s
                voluntary resignation of employment, the Company will have no further obligation to make
                payments under this Agreement, except that the Company will pay to the Executive any
                unpaid accrued Base Salary through the date of termination of employment. If the Executive
                is terminated without cause, the Company will pay to the Executive severance in an amount
                equal to (2.99) times the Executive’s then current Base Salary. The severance will be
                paid to the Executive in equal installments consistent with the current payment schedule
                of the Executive’s Base Salary. The Company will also pay to the Executive any Long
                Term Incentive Bonus earned during the fiscal year of the Executive’s termination. 

                    

               	 	6. 	
                    Restrictive Covenants. 

                    

               	 	a. 	
                    Competition with the Company. The Executive covenants and agrees that,
                    during the Term of this Agreement and for two (2) years after termination of the
                    Agreement for any reason, the Executive will not, without the prior written
                    consent of the Company or its successor, directly or indirectly (whether as a
                    sole proprietor, partner, stockholder, director, officer, employee or in any
                    other capacity as principal or agent) , compete with the Company.
                    Notwithstanding this restriction, the Executive will be entitled during the term
                    of this Agreement and for the two years following termination of this Agreement
                    for any reason, to invest in stock of competing public companies so long as his
                    ownership is less than 5% of such company’s outstanding shares. 

                    

               	 	b. 	
                    Restrictions Governing Disclosure of Confidential Information. The
                    Executive agrees that during the Term of the Agreement, and for a period of two
                    (2) Years following the termination of the Agreement, for any reason, the
                    Executive will (i) hold in confidence and refrain from disclosing to any other
                    party all information, whether written or oral, tangible or intangible, of a
                    private, secret, proprietary, or confidential nature, of or concerning the
                    Company and its operations, and all files, letters, memoranda, reports, records,
                    computer disks or other computer storage medium, data, models or any
                    photographic or other tangible materials containing such information
                    (collectively hereinafter referred to as “Confidential
                    Information”), including without limitation, any sales, promotional or
                    marketing plans, programs, techniques, practices or strategies, any expansion
                    plans (including existing and entry into new geographic and/or product markets),
                    and any customer lists, (ii) use the Confidential Information solely in
                    connection with his employment with the Company and for no other purpose, (iii)
                    take all precautions necessary to ensure that the Confidential Information is
                    not shown, copied or disclosed to third parties, without the prior written
                    consent of the Company, and (iv) observe all security policies implemented by
                    the Company from time to time with respect to the Confidential Information. If
                    the Executive is ordered to disclose any Confidential Information, whether in a
                    legal or regulatory proceeding or otherwise, the Executive will provide the
                    Company with prompt notice of such request or order so that the Company may seek
                    to prevent disclosure. 

                    

5 

               	 	c. 	
                    Subversion, Disruption or Interference. During the Term of the Agreement,
                    and for a period of two (2) years following the termination of the Agreement for
                    any reason, the Executive will not, directly or indirectly, solicit, interfere,
                    induce, influence, combine or conspire with, or attempt to interfere, solicit,
                    induce, influence, combine or conspire with, any of the Company’s
                    employees, sponsors, or consultants to terminate their relationship with, or
                    compete or ally against, the Company or any of the subsidiaries or affiliates of
                    the Company in the business in which the Company or any one of its subsidiaries
                    or affiliates is presently engaged. The Executive also agrees not to make any
                    disparaging remark or comment about the Company or its products or services, or
                    any of its subsidiaries or affiliates, or their officers, directors, or
                    employees. 

                    

               	 	d. 	
                    Enforcement of Restrictions. The parties agree that any violation by the
                    Executive of the covenants contained in this Section will cause irreparable
                    damage to the Company or any of its subsidiaries and affiliates and may, as a
                    matter of course, be restrained by process issued out of a court of competent
                    jurisdiction, in addition to any other remedies provided by law. In addition, if
                    the Executive breaches any provision in this section, the Company will
                    immediately cease the payment of any unpaid severance and the Executive will
                    immediately repay to the Company all severance already paid. 

                    

               	 	7. 	
                    Change of Control. 

                    

               	 	a. 	
                    For the purposes of this Agreement, a “Change of Control” will be
                    deemed to have taken place if (a) any person, other than the JADE Partnership or
                    the Siegel Family Revocable Trust, including a “group” as defined in
                    Section 13(d)(3) of the Securities Exchange Act of 1934, as amended, becomes the
                    owner or beneficial owner of the Company’s securities, following full
                    execution of this Agreement, having more than 50% of the combined voting power
                    of the then outstanding securities of the Company that may be cast for the
                    election of directors of the Company; provided, however, that a Change of
                    Control will not be deemed to have occurred if the person who becomes the owner
                    of more than 50% of the combined voting power of the Company is Todd E. Siegel
                    or an entity (or entities) controlled by Todd E. Siegel and (b) as a result of
                    the Change of Control, the Directors in office immediately prior to the Change
                    of Control, including nominees for any vacancies that may exist, constitute 50%
                    or less of the Board of Directors of the Company in office after the Change of
                    Control. 

                    

6 

               	 	b. 	
                    The Company and the Executive agree that, if the Executive is in the employ of
                    the Company on the date on which a Change of Control occurs (the “Change of
                    Control Date”) , the Company will continue to employ the Executive and the
                    Executive will remain in the employ of the Company for the period commencing on
                    the Change of Control Date and ending on the expiration of the Term, to exercise
                    such authority and perform such executive duties as are commensurate with the
                    authority being exercised and duties being performed by the Executive
                    immediately prior to the Change of Control Date. If, after a Change of Control,
                    the Executive is requested, and, in his sole and absolute discretion, consents
                    to change his principal business location more than 50 miles beyond the location
                    of the Company’s headquarters in Pinellas County, Florida, the Company will
                    reimburse the Executive for his relocation expenses, including without
                    limitation, moving expenses, temporary living and travel expenses for a time
                    while arranging to move his residence to the changed location, closing costs, if
                    any, associated with the sale of his existing residence and the purchase of a
                    replacement residence at the changed location, plus an additional amount
                    representing a gross-up of any state or federal taxes payable by the Executive
                    as a result of any such reimbursements. If the Executive will not consent to
                    change his business location, the Executive may continue to provide the services
                    required of him under this Agreement in Pinellas County, Florida and the Company
                    will continue to maintain an office for the Executive at that location similar
                    to the Company’s office prior to the Change of Control Date. 

                    

               	 	c. 	
                    During the remaining Term after the Change of Control Date, the Company will (i)
                    continue to honor the terms of this Agreement, including as to Base Salary and
                    other compensation set forth in Section 3, and (ii) continue employee benefits
                    as set forth in Section 4 at levels in effect on the Change of Control Date (but
                    subject to such reductions as may be required to maintain such plans in
                    compliance with applicable federal law regulating employee benefits). 

                    

               	 	d. 	
                    If within 12 months after the Change of Control Date, (i) the Executive’s
                    employment is terminated by the Company other than for Cause (as defined in
                    Section 5(a)), or (ii) there is a material reduction in the Executive’s
                    compensation or employment related benefits, or a material change in the
                    Executive’s status, working conditions or management responsibilities, or a
                    material change in the business objectives or policies, the Executive will
                    receive, subject to the provisions of subparagraph (e) below, severance in an
                    amount equal to (2.99) times the Executive’s current Base Salary, the
                    Executive’s entire Long Term Incentive Bonus, and all of the
                    Executive’s unvested and unexercised options will immediately become vested
                    and exercisable. 

                    

7 

               	 	e. 	
                    In the event that the payments and benefits provided for in this Agreement or
                    otherwise payable to the Executive (i) constitute “parachute payments”
                    within the meaning of Section 280G of the Internal Revenue Code of 1986, as
                    amended (the “Code”) and (ii) but for this Section 7.e., would be
                    subject to the excise tax imposed by Section 4999 of the Code, then the
                    Executive’s payments and benefits shall be reduced to such extent necessary
                    to result in no portion of such benefits being subject to excise tax under
                    Section 4999 of the Code. Within thirty (30) days after the amount of any
                    required reduction in payments and benefits is finally determined, the Company,
                    in consultation with the Executive, shall determine which amounts to reduce. Any
                    determination required under this Section 7.e. shall be made in writing by the
                    Company’s independent public accounting firm as in effect immediately prior
                    to the change of control (the “Accounting Firm”), whose determination
                    shall be conclusive and binding upon the Executive and the Company for all
                    purposes. For purposes of making the calculations required by this Section 7.e.,
                    the Accountants may, after taking into account the information provided by the
                    Executive, make reasonable assumptions and approximations concerning applicable
                    taxes and may rely on reasonable, good faith interpretations concerning the
                    application of Sections 280G and 4999 of the Code. The Company and the Executive
                    shall furnish to the Accounting Firm such information and documents as the
                    Accounting Firm may reasonably request in order to make a determination under
                    this Section 7.e. 

               	 	8. 	
                    Assignability. The rights and obligations of the Company under this
                    Agreement will inure to the benefit of and be binding upon the successors and
                    assigns of the Company, provided that such successor or assign will acquire all
                    or substantially all of the assets and business of the Company. The
                    Executive’s rights and obligations under this Agreement may not be assigned
                    or alienated and any attempt to do so by the Executive will be void and
                    constitute a material breach hereunder. 

               	 	9. 	
                    Indemnification. The Company and the Executive acknowledge that the
                    Executive’s service as an officer of the Company exposes the Executive to
                    risks of personal liability arising from, and pertaining to, the
                    Executive’s participation in the management of the Company. The Company
                    will defend, indemnify and hold harmless the Executive from any actual cost,
                    loss, damages, attorneys fees, or liability suffered or incurred by the
                    Executive arising out of, or connected to, the Executive’s service as an
                    officer of the Company or any of its current, former, or future subsidiaries to
                    the fullest extent allowed by law. The Company will not have any obligation to
                    the Executive under this section for any loss suffered if the Executive
                    voluntarily pays, settles, compromises, confesses judgment for, or admits
                    liability with respect to such loss without the approval of the Company. Within
                    thirty days after the Executive receives notice of any claim or action which may
                    give rise to the application of this section, the Executive will notify the
                    Company in writing of the claim or action. The Executive’s failure to
                    timely notify the Company of the claim or action will relieve the Company from
                    any obligation to the Executive under this section. 

                    

8 

               	 	10. 	
                    Severability. If any provision of this Agreement otherwise is deemed to
                    be invalid or unenforceable or is prohibited by the laws of the state or
                    jurisdiction where it is to be performed, this Agreement will be considered
                    divisible as to such provision and such provision will be inoperative in such
                    state or jurisdiction and will not be part of the consideration moving from
                    either of the parties to the other. The remaining provisions of this Agreement
                    will be valid and binding and of like effect as though such provision were not
                    included. 

                    

               	 	11. 	
                    Prior Employment Agreements. The Executive represents that he has not
                    executed any agreement with any previous employer which may impose restrictions
                    on his employment with the Company. 

                    

               	 	12. 	
                    Notice. Notices given pursuant to the provisions of this Agreement will
                    be sent by certified mail, postage prepaid, or by overnight courier, or
                    telecopier to the following addresses: 

               	 	 	If to the Company: 

               	 	 	 Medical Technology Systems, Inc.

                        12920-M Automobile Blvd.
Clearwater, FL 34622 

               	 	 	If to the Executive: 

               	 	 	
                           Michael Branca
5402 Burnt Hickory Drive
 Valrico, Florida 33594 

         Either
party may, from time to time, designate any other address to which any such notice to it
or him will be sent. Any such notice will be deemed to have been delivered upon the
earlier of actual receipt or four days after deposit in the mail, if by certified mail. 

     	 	13. 	
          Miscellaneous. 

          

     	 	a. 	
          Governing Law. This Agreement will be governed by and construed in
          accordance with the laws of the state of Florida. 

          

 9

     	 	b. 	
          Venue. Any action filed to enforce this Agreement will be filed in
          Pinellas County, Florida or the United States District Court for the Middle
          District of Florida, Tampa Division. 

          

     	 	c. 	
          Waiver/Amendment. The waiver by any party to this Agreement of a breach
          of any provision hereof by any other party will not be construed as a waiver of
          any subsequent breach by any party. No provision of this Agreement may be
          terminated, amended, supplemented, waived or modified other than by an
          instrument in writing signed by the party against whom the enforcement of the
          termination, amendment, supplement, waiver or modification is sought. 

          

     	 	d. 	
          Attorney’s Fees. In the event any action is commenced to enforce any
          provision of this Agreement, the prevailing party will be entitled to reasonable
          attorneys fees, costs, and expenses. 

          

     	 	e. 	
          Entire Agreement. This Agreement, and the attached Exhibits, comprise the
          entire agreement between the Executive and the Company. This Agreement
          supersedes all prior agreements and understandings between the parties with
          respect to the subject matter hereof and may not be modified or terminated
          orally. No modification, termination, or attempted waiver will be valid unless
          it is in writing and is executed by both of the parties. 

          

     	 	f. 	
          Counterparts. This Agreement may be executed in counterparts, all of
          which will constitute one and the same instrument. 

          

        IN
WITNESS WHEREOF, the Company and the Executive have executed this Agreement as of the day
and year first above written. 

						
	 	WITNESSES:	 	 	EXECUTIVE	 
	 	 	 	 	 	 
	 	
	
	 	
	 
	 	 	 	 	MICHAEL BRANCA	 
	 	Print Name:	
	 	 	 
	 	 	 	 	 	 
	 	
	
	 	 	 
	 	 	 	 	 	 
	 	Print Name:	
	 	 	 

10 

	 	 	 	 	COMPANY	 
	 	 	 	 	 	 	 
	 	 	 	 	MEDICAL TECHNOLOGY SYSTEMS, INC.,	 
	 	
	
	 	a Delaware Corporation	 
	 	 	 	 	 	 	 
	 	Print Name:	
 	 	By:	
	 
	 	 	 	 	 	 	 
	 	
	
	 	Print Name:	Todd Siegel	 
	 	 	 	 	 	 	 
	 	Print Name:	
	 	As:	President	 

11 

EXHIBIT A 

Annual Bonus 

The executive shall receive an annual
bonus determined as follows: 

     	1.	
          Annual base salary times 50% (“Bonus Base”). 

          

     	2.	
          Bonus Base times  % of Bonus Base as provide below.* 

          

     	•	      
          The bonus compensation schedule shall be adjusted for each fiscal year no later
          than June 30th of the new fiscal year. 

          

     	•	      
          The annual bonus shall be payable no later than June 30th following
          the fiscal year ending March 31st. The Company may at it option, elect to make
          payments prior to June 30 of any year. 

          

*As provided on attached schedule. 

A-1 

EXHIBIT B 

Long-Term Incentive
Bonus 

     	1.	
          Each executive will earn a long-term incentive bonus based upon the average
          return on capital achieved by the company over a three-year time period. 

     	2.	
          Return on capital is the percentage derived by dividing the net income available
          to common shareholders for each fiscal year by the total long-term capital
          invested in the company at the end of each fiscal year. 

     	3.	
          Long-term capital is the sum of (1) stockholders equity; and (2) total long-term
          debt, minus the amount borrowed on the revolving line of credit. 

     	4.	
          The amount of the long-term incentive bonus is determined based upon the
          following formula. 

     	 	
          (Annual Salary x 30%) x Percentage of Bonus Earned 

     	5.	
          Percentage of Bonus Earned is determined based upon the average return on
          capital achieved as follows: 

			
	Average ROC Achieved 	 	Percentage of Bonus Earned 
	
	 	

	16.0%-20.0%     
                             	 	25.0%
	21.0%	 	50.0%
	21.6%	 	55.0%
	22.2%	 	60.0%
	22.8%	 	65.0%
	23.4%	 	70.0%
	24.0%	 	75.0%
	24.6%	 	80.0%
	25.2%	 	85.0%
	25.8%	 	90.0%
	26.4%	 	95.0%
	
	 	

	27.0%	 	100.0% 
	 	 	 
	If 3-Year Average ROC Exceeds Target ROC  
	 	 	 
	27.6%	 	105.0%
	28.2%	  	110.0%
	28.8%	 	115.0%
	29.4%	 	120.0%
	30.0%	 	125.0%
	30.6%	 	130.0%
	31.2%	 	135.0%
	31.8%	 	140.0%
	32.4%	 	145.0%
	33.0%	 	150.0%

     	6.	
          The average ROC is determined at the end of each fiscal year and paid to the
          executive as follows: 

	a.	 	
For each fiscal year ending March 31, one-third (1/3) of the LTIB earned shall be paid no
later than June 30, of the following fiscal year; one-third (1/3) no later than June 30,
of the second following fiscal year; and one-third (1/3) no later than June 30, of the
third following fiscal year. 

	b.	 	Executive must be employed
with the company to receive unvested LTIB unless terminated according to Paragraph 7 of the Employment Agreement.

B-1

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