Document:

CO-MARKETING AGREEMENT

        This
Co-Marketing Agreement (this “Agreement”) is made effective _________,
2004 (the “Effective Date”), between Cardinal Health 103, Inc., Cardinal
Health 106, Inc. and Cardinal Health 110, Inc. (individually and collectively,
“Cardinal Health”), with its principal place of business at 7000 Cardinal
Place, Dublin, Ohio 43017, Attn: Mas Kang, facsimile number (614) 757-5331, and Medical
Technology Systems, Inc. (“MTS”), with its principal place of business at
12920 Automobile Boulevard, Clearwater, Florida 33762, Attn: Todd Siegel, facsimile number
(727) 576-6311. Each of Cardinal Health 103, Inc., Cardinal Health 106, Inc. and Cardinal
Health 110, Inc. shall be jointly and severally liable for the obligations of Cardinal
Health under this Agreement. 

Recitals

        WHEREAS,
MTS manufactures, markets and sells the equipment and supplies to be used in packaging
pharmaceutical products set forth on Exhibit A (collectively, the
“Products”), which are the subject of this Agreement. 

        WHEREAS,
Cardinal Health is a pharmaceutical wholesaler with hospital/managed care, alternate care,
group purchasing organization and retail customers. 

        WHEREAS,
MTS desires Cardinal Health to provide certain marketing and sales services with respect
to the Products, and Cardinal Health desires to provide such services, all as more fully
described below. 

        NOW,
THEREFORE, the parties hereby agree as follows: 

            
         §1.       
          Exclusive Appointment; Acceptance of Appointment. 

            
                      a.    
           
          Upon the terms and conditions set forth in this Agreement, MTS hereby appoints
          Cardinal Health as its exclusive marketer for the Products solely to the
          entities set forth on Exhibit B attached hereto (hereinafter referred to
          as, “Strategic Customers”). In addition, MTS shall grant to
          Cardinal Health a first right of refusal to market, sell and distribute under
          the terms of this Agreement (i.e., add to Exhibit A) any MTS product not
          currently covered by this Agreement or any product that MTS develops during the
          Term (as hereinafter defined) of this Agreement for a period of thirty (30) days
          after notice from MTS that such product is available for general release;
          provided, however, this right of first refusal shall only apply to products that
          are substantially similar to the Products, are intended for use by the same type
          of customers as the Strategic Customers and do not compete with any product
          manufactured or marketed by Cardinal Health or any of its affiliates. 

            
                      b.       
          Cardinal Health hereby accepts such appointment and shall, at its own expense
          (except as otherwise set forth in this Agreement), use its best efforts to
          promote, market and sell the Products to the Strategic Customers. 

            
                      c.       
          Notwithstanding anything to the contrary that may be contained in this
          Agreement, but subject to the proposal process described in Section 6, MTS may
          market, sell and/or distribute the Products to Strategic Customers to which
          Cardinal Health presents a proposal but fails, within one hundred eighty (180)
          days after first providing such proposal, to enter into an agreement with
          Cardinal Health to obtain the Products, or the Strategic Customer provides
          written notice of rejection of the proposal prior to the expiration of such one
          hundred eighty (180) day period; provided, however, the pricing offered by MTS
          to such Strategic Customer for the Products shall not be more favorable than the
          pricing offered to Cardinal Health under this Agreement. Cardinal Health shall
          provide to MTS immediate notice of a Strategic Customer’s rejection of a
          proposal. 

            
                      d.       
          In the event that a Strategic Customer terminates its relationship with Cardinal
          Health and Cardinal Health removes the Products provided to such Strategic
          Customer, MTS may not, for a period of six (6) months from the date of such
          termination, market, sell or distribute the Products to such Strategic Customer.
          For a period of thirty (30) days from the date of termination of the agreement
          between Cardinal Health and the Strategic Customer, MTS shall have the right to
          purchase from Cardinal Health the Products removed from such Strategic Customer
          for an amount equal to (i) the fair market value of such Products (based on a
          five (5) year straight-line depreciation formula), or (ii) Cardinal
          Health’s remaining obligation on such Products, whichever is greater. 

            
                      e.       
          During the Term of this Agreement, neither party shall enter into an agreement
          with a competitor of the other party to market, sell, provide and/or obtain the
          Products, or new products developed by a party during the term of this Agreement
          that are substantially similar to the Products. A list of each party’s
          competitors is set forth on Exhibit C attached hereto. Notwithstanding
          the foregoing, Cardinal Health retains the right to provide services similar to
          those provided by Cardinal Health under this Agreement to Affiliates or
          subsidiaries of Cardinal Health that may manufacture or supply products similar
          to the Products or that compete with the Products. Further notwithstanding the
          foregoing, MTS or its Affiliates may enter into an agreement with a competitor
          of Cardinal Health to sell packaging supplies and labels, and other products
          that are not substantially similar to the Products or are not intended for use
          by the same type of customers as the Strategic Customers. Except as otherwise
          set forth in this Agreement, during the Term of this Agreement, MTS shall not,
          directly or indirectly, solicit or engage in negotiations or discussions with,
          disclose any of the terms of this Agreement to, accept any offer from, furnish
          any information to, or otherwise cooperate, assist or participate with, any
          person or organization (other than Cardinal Health and its representatives and
          Affiliates) regarding the provision to MTS of the services as described herein.
          For the purposes of this Agreement, “Affiliate” means, with respect to
          any entity, any other entity Controlling, Controlled by or under common Control
          with such entity, and “Control” and its derivatives means the legal,
          beneficial or equitable ownership, directly or indirectly, of at least fifty
          percent (50%) of the aggregate of all voting equity interests in an entity or
          equity interests having the right to at least fifty percent (50%) of the profits
          of an entity or, in the event of dissolution, to at least fifty percent (50%) of
          the assets of an entity and, in the case of a partnership, also includes the
          holding by an entity of the position of sole general partner. 

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           §2.       
          Term and Termination. 

            
                      a.       
          This Agreement shall commence as of the Effective Date and continue for a period
          of five (5) years (the “Initial Term”), unless earlier
          terminated in accordance with the provisions hereof. Thereafter, this Agreement
          will automatically renew for one (1)-year periods (“Renewal
          Term”) unless written notice of non-renewal is provided by either party
          at least ninety (90) days prior to the end of the Initial Term or the applicable
          Renewal Term. The Initial Term and any Renewal Term(s) shall be collectively
          referred to as the “Term.” 

            
                      b.       
          In the event either party breaches any of its representations, warranties,
          certifications or obligations under this Agreement, and such breach remains
          uncured for thirty (30) days after receipt by the non-breaching party of written
          notice thereof, then in addition to any and all other rights and remedies it may
          have, the non-breaching party may terminate this Agreement immediately upon
          written notice. 

            
                      c.       
          Notwithstanding the foregoing, either party may terminate this Agreement at any
          time without cause upon providing not less than ninety (90) days prior written
          notice thereof to the other party, provided that in the event that Cardinal
          Health exercises its right to terminate the Agreement pursuant to this Section
          2(c), the restrictions on MTS in Sections 1(d), (e) and (f) shall expire sixty
          (60) days after Cardinal Health provides such notice to MTS. 

            
                      d.       
          In the event of a Change in Control (as hereinafter defined) of MTS, Cardinal
          Health may, in its sole discretion, terminate this Agreement immediately upon
          written notice to MTS. “Change in Control” shall mean: (i) a change in
          the record or beneficial ownership of securities of MTS representing fifty
          percent (50%) or more of (A) the economic interest in MTS or (B) the voting
          power in the election of directors of MTS; (ii) the sale or other transfer of
          all or substantially all of the assets of MTS (including without limitation the
          sale or other transfer of assets or earning power aggregating more than fifty
          percent (50%) of the assets or earning power of MTS) or the merger or other
          consolidation of MTS into any other person or entity, with the result of such
          merger or other consolidation being that MTS is not the survivor; (iii) a
          liquidation or dissolution of MTS; or (iv) a transaction or series of related
          transactions having, directly or indirectly, the same effect as any of the
          foregoing. 

          
            §3.       
          Product Sales. 

            
                      a.       
          Cardinal Health’s affiliate, Cardinal Health 111, Inc., will purchase the
          Products from MTS at the prices set forth on Exhibit D attached hereto
          (unless otherwise agreed in writing by MTS), pursuant to mutually agreed upon
          terms and conditions as set forth in the Product purchase agreement(s) between
          Cardinal Health 111, Inc. and MTS for sale or lease to the Strategic Customers
          (each such agreement, a “Product Purchase Agreement”). Cardinal
          Health retains the sole right to determine the terms and conditions, including,
          but not limited to, pricing, under which to sell, license and/or lease the
          Products to the Strategic Customers; provided, however, the terms and conditions
          (excluding price and payment terms) of such sale, license or lease shall at, a
          minimum, match the terms and conditions required of Cardinal Health 111, Inc. by
          MTS in the Product Purchase Agreement. 

3 

            
                      b.       
          Except as otherwise set forth on Exhibit D or as otherwise mutually
          agreed between the parties, MTS represents and warrants that, as of the
          Effective Date of this Agreement, the Product prices set forth on Exhibit D are
          not greater than the prices offered to or paid by other customers of MTS
          (excluding the MTS National Accounts as hereinafter defined) for the Products.
          If at any time during the Term of this Agreement, MTS offers or enters into an
          agreement with any other person or entity, excluding those MTS customers (the
          “MTS National Accounts”) specified on Exhibit C,
          purchasing the Products at prices more favorable than those set forth on Exhibit
          D, this Agreement shall be amended to adjust the Product prices set forth on
          Exhibit D prospectively to match the more favorable prices. MTS and Cardinal
          Health shall review these MTS National Accounts and the circumstances
          surrounding their exclusion from this “best price” warranty to
          determine their continued applicability. 

            
                      c.       
          Strategic Customers shall receive priority from MTS with regard to field and
          customer service calls and installation scheduling as, and to the extent, set
          forth in the Product Purchase Agreement. 

            
                      d.       
          Unless otherwise specified in an applicable Product Purchase Agreement: 

            
                      
                  1.       
          Payment terms for the OnDemand® system are 33% of the purchase price is due
          upon execution of the Product Purchase Agreement, 33% of the purchase price is
          due upon delivery, and the remaining 34% of the purchase price is due thirty
          (30) days after installation. Payments for all other Products are due 30 days
          after shipment. Cardinal Health shall be responsible for all freight charges.
          The Products will be shipped to Cardinal Health or the Strategic Customer,
          F.O.B. shipping point, unless otherwise provided in a Product Purchase
          Agreement. 

            
                      
                  2.       
          If Cardinal Health fails to make any payment due under the Product Purchase
          Agreement on or before the due date, then (without prejudice to its other rights
          and remedies) MTS may charge Cardinal Health interest (both before and after
          judgement) on the undisputed amount unpaid, at the annual rate of 18% or the
          maximum rate permitted by law, whichever is less, from time to time until
          payment is made in full. Time for payment shall be of the essence. Cardinal
          Health shall provide notice of any disputed amounts to MTS within ten (10) days
          of receipt of the invoice, including a reasonable explanation of Cardinal
          Health’s good-faith basis for the dispute. 

            
                      
                  3.       
          Cardinal Health shall be responsible for all federal, state, provincial,
          municipal and value added or other taxes which are now or may hereafter be
          required in connection with or imposed upon or are in relation to the price
          payable in connection with the ownership, lease, license, bailment, rental or
          use of the Products or any component thereof. 

         §
4.       Training.

            
                      a.       
          MTS shall provide to Cardinal Health, at no charge and on mutually agreed dates
          and locations, on-site and/or off-site Product training sessions for Cardinal
          Health’s sales personnel. Cardinal Health shall assume all expenses,
          including travel and lodging, for Cardinal Health personnel attending such
          training sessions. 

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                      b.       
          MTS shall provide, at its own expense, periodic site visits and additional
          “refresher” training to Strategic Customers that utilize an OnDemand
          or MTS Series Product as may be further set forth in the Product Purchase
          Agreement(s). 

           
           §5.       
          Sales Materials and Other Marketing. 

            
                      a.       
          Cardinal Health shall develop and print, at its own cost and expense, all sales
          literature, promotional materials and similar items necessary for the promotion
          of the Products (the “Sales Materials”) based on information
          provided by MTS (the “Sales Information”). Prior to each use
          thereof, Cardinal Health shall submit all Sales Materials to MTS for its review
          and approval, such approval not to be unreasonably withheld. Cardinal Health
          shall modify any Sales Materials that MTS notifies Cardinal Health in writing
          does not conform, in any material respect, to MTS marketing standards within
          five (5) business days of receiving notice of such non-conformity from MTS. MTS
          shall inform Cardinal Health if any material changes occur which warrant changes
          in the Sales Materials so that said Sales Materials continue to remain compliant
          with this Section 5. 

            
                      b.       
          MTS warrants and represents that, to the best of its knowledge, the Sales
          Information, as originally provided by MTS, and the Sales Materials directly
          developed from such Sales Information without modification or combination, when
          approved by MTS, are true and accurate and do not infringe on any third
          party’s intellectual property right (including patent, trademark, service
          mark, copyright, trade dress, trade secret and other proprietary rights). 

            
                      c.       
          Cardinal Health warrants and represents that, to the best of its knowledge, the
          Sales Materials, as originally provided to MTS for approval, and excluding the
          Sales Information as originally provided by MTS, are true and accurate and do
          not infringe on any third party’s intellectual property right (including
          patent, trademark, service mark, copyright, trade dress, trade secret and other
          proprietary rights). 

            
                      d.       
          Except with regard to MTS Property or Proprietary Rights (as hereinafter
          defined), MTS shall have no proprietary right in the Sales Materials prepared by
          Cardinal Health. MTS shall have no right to use the Sales Materials prepared by
          Cardinal Health without Cardinal Health’s prior written consent. To the
          extent permitted by this Agreement, each party shall: (i) use all Sales
          Materials and Sales Information provided by the other party solely for purposes
          of performing their respective obligations hereunder; (ii) take all steps
          necessary to ensure that no person or entity has or will have unauthorized
          access to any of the Sales Materials and Sales Information; and (iii) not
          reproduce, modify or translate, or permit to be reproduced, modified or
          translated, any of the Sales Materials and Sales Information provided hereunder,
          or any portion thereof. 

            
                      e.       
          Cardinal Health and MTS will each provide opportunities to the other to
          participate in trade shows and other industry meetings, as applicable. Each
          party will be responsible for its expenses incurred in attending such events,
          including, but not limited to, admission fees, travel and lodging. 

 5

            
                      f.       
          Cardinal Health and MTS will co-develop additional marketing materials (i.e.,
          testimonials, effectiveness studies) and press releases or other market
          communications as may be mutually agreed upon. 

            
                      g.       
          Cardinal Health shall not make any promises or representations or give any
          warranties, guarantees or indemnities in respect of the Products except such as
          may be expressly authorized in writing by MTS. 

          
            §6.       
          Strategic Customer Proposals. 

            
                      a.       
          In order to add additional Strategic Customers to Exhibit A, each party may
          identify potential customers for the Products and suggest them as proposed
          Strategic Customers (each, a “Proposed Strategic Customer”) by
          entering the Proposed Strategic Customer in MTS’ lead tracking system. The
          proposing party will provide the other party with contact and other information
          and/or use commercially reasonable good faith efforts to arrange telephone
          conferences and meetings with the Proposed Strategic Customer to facilitate the
          parties’ evaluation of the Proposed Strategic Customer’s against
          mutually agreed qualification criteria for such Proposed Strategic
          Customer’s use of the Products. If the Proposed Strategic Customer meets
          such criteria, the Proposed Strategic Customer will be considered a
          “Strategic Customer” for the purposes of this Agreement. If the
          Proposed Strategic Customer does not meet such criteria, the Proposed Strategic
          Customer will be considered outside the scope of this Agreement. 

            
                      b.       
          The Program Managers (as hereinafter defined) shall use commercially reasonable,
          good faith efforts to jointly develop selling strategies and timelines for each
          Strategic Customer. Cardinal Health shall have primary responsibility for
          developing and presenting proposals for Strategic Customers; provided, however,
          MTS shall provide information and support in the development and presentation of
          such proposals as reasonably requested by Cardinal Health. The content and
          structure, including, not limited to the price of the Products, shall be
          determined solely by Cardinal Health. In the event MTS has a proposal pending
          with any Strategic Customer prior to execution of this Agreement, MTS shall
          provide Cardinal Health with a copy of that proposal, including applicable
          Product pricing. 

            
                      c.       
          MTS shall provide to Cardinal Health, for purposes of developing the proposals,
          an estimate of the fees associated with MTS’ freight, installation,
          facility, interface, service, supplies and other life-cycle costs associated
          with the Products. MTS shall not provide this information directly to the
          Strategic Customer, unless authorized by Cardinal Health. In addition, MTS
          shall, at its own expense, perform and/or provide all site inspections, sales
          support, customer demonstrations, and facility visits in support of Cardinal
          Health’s proposal. 

            
                      d.       
          Only Cardinal Health’s Senior Vice President – Alternate Care Sales,
          Executive Vice President – Health Systems Sales and Marketing (in
          conjunction with local field sales management) shall be authorized to present
          proposals that include MTS’ OnDemand® system. Only Cardinal Health
          sales management (i.e., Business Development Managers, Leader® Regional
          Managers, Sales Managers and Regional Sales Directors) shall be authorized to
          present proposals that include the MTS 350, 400 and 500 systems. Only Cardinal
          Health Sales Directors (or their authorized designees) shall be authorized to
          present proposals that include the Autobond®, Gemini, Surebond and
          Deblistering systems. 

6

            
                      e.       
          Cardinal Health shall promptly notify MTS in writing and in advance of all
          proposals to Strategic Customers and Prospective Strategic Customers, and all
          related meetings with such entities, and give MTS a reasonable opportunity to
          attend any such proposal presentation or meeting. Cardinal Health shall also
          provide MTS with quarterly sales forecasts, progress reports and sales reports
          with respect to sales initiatives for such Strategic Customers and Prospective
          Strategic Customers. 

          
            §7.       
          Steering Committee and Program Managers. 

            
                      a.       
          A steering committee shall be formed that consists of both Cardinal Health and
          MTS senior-level representatives (the “Steering Committee”).
          The Steering Committee shall meet on a quarterly basis, or as otherwise mutually
          agreed, at a mutually agreed upon location to establish goals and objectives of
          this Agreement and monitor performance under this Agreement, including but not
          limited to, sales and sales pipeline reporting; sales, service and customer
          issues; modifications to Exhibit B (Strategic Customers), Exhibit C
          (Competitors) and Exhibit D (Product Pricing); review of new programs, products
          and services; review of any other changes that would affect this Agreement; and
          review of MTS product forecasts for the Products. 

            
                      b.       
          Each party shall designate an employee to act as program manager (the
          “Program Manager”). The Program Managers shall serve as the
          primary point of contact under this Agreement on a day to day basis, and perform
          such other duties as may be mutually agreed upon. 

           
           §8.       
          Reserved. 

          
           §9.       
          Injunctive Relief. Each party acknowledges and agrees that the other
          party’s remedies at law for any violation or attempted violation by such
          party of any of its obligations under this Agreement would be inadequate and
          agrees that, in the event of any such violation or attempted violation, such
          other party shall be entitled to seek a temporary restraining order, temporary
          and permanent injunctions, and other equitable relief, without the necessity of
          posting any bond or proving any actual damage, in addition to all other rights
          and remedies which may be available to such other party from time to time. 

             
         §10.     
          Alternative Dispute Resolution. The parties shall use reasonable efforts
          to amicably settle, as appropriate, all disputes, controversies, or differences,
          which may arise between them. The parties agree that any dispute, controversy or
          difference that arises in connection with the Agreement, excluding those
          relating to a breach of Section 12, Confidential Information, of this Agreement,
          noncompliance with applicable law, or for which either party has the right to
          and desires to terminate this Agreement, shall first be presented to the
          respective presidents of MTS and Cardinal Health, or their designees, for
          resolution. If no resolution is reached, then such dispute shall be settled by
          three (3) arbitrators; one to be selected by MTS, one to be selected by Cardinal
          Health and the third to be selected by the two (2) arbitrators, in a binding,
          non-reviewable and non-appealable alternate dispute resolution process to be
          conducted in accordance with the rules of the American Arbitration Association.
          The existence of the dispute, the dispute resolution process and the
          arbitrators’ award shall be maintained confidential, provided that the
          arbitrators’ award may be entered as a final judgment in any court having
          jurisdiction. The arbitration shall take place in Atlanta, Georgia or such other
          mutually agreeable location, and shall apply the governing law of this
          Agreement. This process shall be the sole mechanism and forum of such
          controversy or dispute, unless otherwise expressly set forth in this Agreement.
          The provisions of this Section 10 shall not apply to those instances in which
          either party is entitled to seek injunctive relief pursuant to the terms of this
          Agreement and desires to do so. 

7 

          
            §11.     
          Proprietary Rights. 

            
                      a.
               
          Cardinal Health acknowledges that MTS and/or its licensor(s) is the owner of all
          rights, title, and interests in and to all proprietary materials and information
          (including Sales Information) that may be provided to Cardinal Health under this
          Agreement (collectively, the “MTS Property”), including without
          limitation all related patent, copyright, trademark, and other intellectual
          property rights (collectively, the “Proprietary Rights”). The
          MTS Property (in all its tangible and intangible manifestations), the
          Proprietary Rights, and all existing or new enhancements, developments,
          concepts, methods, techniques, know-how, processes, adaptations, derivative
          works, ideas, and expressions of ideas relating to the MTS Property are and will
          remain the exclusive property of MTS or its licensor(s). Except as expressly
          provided in this Agreement, Cardinal Health will have no right, title, or
          interest in the MTS Property or any Proprietary Rights. Cardinal Health will not
          make any claim or representation of ownership of the MTS Property or any right
          or interest therein (except a license, if any, granted to Cardinal Health to
          perform its obligations under this Agreement) , or permit or facilitate the
          performance of any act that is in violation of this Agreement or which might
          jeopardize the Proprietary Rights. Nothing in this Agreement constitutes a
          waiver of any rights of MTS under the U.S. or international patent, copyright or
          trademark laws or any other Federal, state or other law. 

            
                      b.       
          Upon termination of all or any portion of this Agreement for any reason,
          Cardinal Health’s rights with respect to MTS Property which is related to
          the terminated portion of this Agreement will automatically expire, and Cardinal
          Health shall immediately return such MTS Property to a return location specified
          by MTS. 

          
            §12.     
          Confidential Information. 

            
                      a.       
          Neither party shall, in any manner or at any time, directly or indirectly,
          disclose any of the other party’s Confidential Information (defined below)
          to any person, firm, association, organization or entity, or use, or permit or
          assist any person, firm, association, organization, or entity (other than the
          other party or its Permitted Recipients, as defined below) to use, any such
          Confidential Information, excepting only disclosures (1) required by law, as
          reasonably determined by the party disclosing such Confidential Information (the
          “Disclosing Party”) or otherwise deemed advisable by its legal
          counsel, or (2) made on a confidential basis to the Disclosing Party’s
          shareholders, directors, officers, employees (limited to those who need to know
          such Confidential Information in connection with the fulfillment by the
          Disclosing Party of its obligations under this Agreement), and legal,
          accounting, financial, investment and other professional advisors (collectively,
          the “Permitted Recipients”); provided that each party shall (A)
          make its Permitted Recipients aware of the requirements of this Agreement, (B)
          take reasonable steps to prohibit disclosure of such Confidential Information by
          any Permitted Recipient to any other person or entity except another Permitted
          Recipient, including without limitation at least such steps as that Party
          customarily takes to protect its own Confidential Information, and (C) be
          responsible and liable for any disclosure or use of such Confidential
          Information by any of its Permitted Recipients, except disclosures or uses
          permitted by this Agreement. 

8 

            
                      b.       
          For purposes of this Agreement, “Confidential Information” of a
          party shall mean all terms and conditions contained in this Agreement, all trade
          secrets, proprietary data, patient information, Strategic Customer data, and
          other information of a confidential nature relating directly or indirectly to
          that party or its business, including without limitation financial, tax,
          accounting, pricing and other information regarding business operations or
          structure; information relating to proprietary systems and processes;
          information relating to relationships with customers, suppliers, employees,
          independent contractors and other third parties; business plans, ideas,
          concepts, policies and procedures; marketing and advertising methods or
          practices; client lists and information regarding fees and prices for services
          or products; and any and all other information which that party is obligated to
          treat as confidential pursuant to any law or any agreement or course of dealing
          by which that party is bound; provided that Confidential Information shall not
          include the existence of this Agreement and information which (i) is or becomes
          generally known or available to the public or within the industry to which such
          information relates and did not become so known through the breach of this
          Agreement by either party, (ii) is lawfully acquired from a third party without
          any breach of any confidentiality restriction, (iii) is already in the
          possession of a party at the time it is disclosed to that party by the other
          party, or (iv) was or is independently developed by or for the other party
          without reference to the Confidential Information as evidenced by the receiving
          party’s written records. 

            
                      c.       
          Upon the written request of either party at any time, the other party shall
          promptly either, in the requesting party’s sole discretion, deliver to the
          requesting party or destroy all documents and other materials which contain any
          Confidential Information of the requesting party and which are in the other
          party’s possession or under its reasonable control. 

          
            §13.    
          Independent Contractor. The relationship between the parties is that of
          independent contractors. This Agreement does not establish or create any
          employment, franchise, partnership, joint venture, agency or other similar legal
          relationship between the parties, an employer-employee relationship between MTS
          and any employee of Cardinal Health, or an express or implied license grant by
          either party to the other party under any patent, trademark, copyright, trade
          secret, or other intellectual property right except for the limited rights
          necessary for the other party to satisfy its obligations under this Agreement.
          Neither party shall have any authority or power to bind the other party, to
          create any liability against the other party, or to incur any obligations on
          behalf of the other party in any way or for any purpose, except as expressly
          authorized in or pursuant to this Agreement, and neither party shall hold itself
          out as having any such authority. 

          
            §14.     
          Representations and Warranties. Each party represents and warrants to the
          other party that it has the right to enter into this Agreement. TO THE FULLEST
          EXTENT PERMITTED UNDER APPLICABLE LAW, AND EXCEPT FOR THE EXPRESS WARRANTIES SET
          FORTH IN THIS AGREEMENT, EACH PARTY DISCLAIMS ALL OTHER WARRANTIES, TERMS OR
          CONDITIONS, EXPRESS OR IMPLIED, EITHER IN FACT OR BY OPERATION OF LAW,
          INCLUDING, WITHOUT LIMITATION, ANY WARRANTIES, TERMS OR CONDITIONS REGARDING
          MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT, OR
          SATISFACTORY QUALITY. 

9

          
            §15.     
          Indemnification. 

            
                      a.       
          Each party (the “indemnitor”) shall defend, indemnify and hold
          harmless the other party, its subsidiaries and affiliates, and their directors,
          officers, employees, and agents (individually and collectively, the
          “indemnitee”), from and against all third-party claims against,
          and any related losses, liabilities or damages (including reasonable
          attorneys’ fees and expenses) that are incurred by the indemnitee as a
          result of bodily injury, death or physical damage to real or tangible personal
          property (excluding software or systems), to the extent such injury, death or
          damage is caused by the negligent act or willful misconduct of the indemnitor in
          the performance of the indemnitor’s responsibilities in connection with
          this Agreement. 

            
                      b.       
          MTS shall further defend, indemnify and hold harmless Cardinal Health, its
          subsidiaries and affiliates, and their directors, officers, employees, and
          agents from and against all third-party claims against, and any related losses,
          liabilities or damages (including reasonable attorneys’ fees and expenses)
          that are incurred by Cardinal Health, directly or indirectly, as a result of or
          arising from (i) any failure by MTS to perform and observe fully all obligations
          and conditions to be performed or observed by MTS under this Agreement, (ii) any
          breach by MTS of any representation or warranty contained in this Agreement,
          (iii) any intellectual property infringement actions (including patent,
          trademark, service mark, copyright, trade dress, trade secret and other
          proprietary rights) brought by a third party in connection with the Sales
          Information as originally provided to Cardinal Health by MTS, and (iv) any
          inaccuracy in the Sales Information as originally provided by MTS to Cardinal
          Health for the Sales Materials. Notwithstanding the foregoing, MTS shall have no
          indemnification obligations under this Section 15(b) to the extent that any such
          obligation arises from or is attributable to: (1) compliance with any designs,
          specifications or instructions Cardinal Health hereafter specifically requests
          MTS to comply with; (2) any alteration or replacement by Cardinal Health or any
          third party of any Sales Materials as approved by MTS, or any Sales Information
          MTS provides to Cardinal Health (unless MTS makes such alteration or
          replacement); or (3) the use of the Sales Information or Sales Materials in
          combination with other materials not provided by MTS. 

            
                      c.       
          Cardinal Health shall further defend, indemnify and hold harmless MTS, its
          subsidiaries and affiliates, and their directors, officers, employees, and
          agents from and against all third-party claims against, and any related losses,
          liabilities or damages (including reasonable attorneys’ fees and expenses)
          that are incurred by MTS, directly or indirectly, as a result of or arising from
          (i) any failure by Cardinal Health to perform and observe fully all obligations
          and conditions to be performed or observed by Cardinal Health under this
          Agreement, (ii) any breach by Cardinal Health of any representation or warranty
          contained in this Agreement, (iii) any intellectual property infringement
          actions (including patent, trademark, service mark, copyright, trade dress,
          trade secret and other proprietary rights) brought by a third party in
          connection with Cardinal Health’s marketing, distribution and/or use of the
          Sales Materials, except to the extent such action is related to the Sales
          Information originally provided by MTS; and (iii) Cardinal Health’s misuse
          or alteration of the Sales Materials as approved by MTS. 

10 

            
                      d.       
          The indemnitor’s obligation to indemnify and hold harmless the indemnitee
          pursuant to this Section 15 is subject to the indemnitee (i) having given
          indemnitor prompt written notice of the claim or of the commencement of the
          related action, as the case may be, (ii) permitting the indemnitor to
          exclusively defend, compromise, settle or appeal any such damage claim or
          judgment, (iii) providing the indemnitor with all available information,
          assistance and cooperation, at the indemnitor’s expense, to enable the
          indemnitor to defend, compromise, settle or appeal any such damage claim or
          judgment, and (iv) being able to participate in the defense or appeal, at its
          own expense (such expense not being indemnified) with attorneys of its own
          choice. The indemnitee shall not enter into any settlement of the claim without
          the indemnitor’s prior written consent, such consent not to be unreasonably
          withheld. 

          
            §16.    
          Limitations on Liability. 

            
                      a.       
          UNDER NO CIRCUMSTANCES WILL EITHER PARTY, EACH PARTY’S AFFILIATES, OR THEIR
          RESPECTIVE OFFICERS, PARTNERS, DIRECTORS, OR EMPLOYEES, OR THIRD PARTY
          PROVIDERS, BE LIABLE FOR ANY INDIRECT, INCIDENTAL, SPECIAL, CONSEQUENTIAL
          (EXCLUDING THOSE CONSEQUENTIAL DAMAGES ARISING FROM EACH PARTY’S
          INDEMNIFICATION OBLIGATIONS AS TO THIRD PARTY CLAIMS AS SET FORTH IN SECTION 15
          ABOVE), EXEMPLARY OR PUNITIVE DAMAGES, INCLUDING, WITHOUT LIMITATION, LOST
          PROFITS AND LOST DATA, REGARDLESS OF WHETHER A PARTY IS ADVISED OF THE
          POSSIBILITY OF SUCH DAMAGES OR WHETHER SUCH DAMAGES COULD HAVE BEEN FORESEEN OR
          PREVENTED BY EITHER PARTY. 

            
                      b.       
          FURTHER, EXCEPT WITH RESPECT TO EACH PARTY’S INDEMNIFICATION OBLIGATIONS
          SET FORTH IN SECTION 15, AND EXCLUDING THOSE DAMAGES ARISING OUT OF A BREACH OF
          A PARTY’S CONFIDENTIALITY OBLIGATIONS AS SET FORTH IN SECTION 12, IN NO
          EVENT WILL THE AGGREGATE LIABILITY OF EITHER PARTY, EACH PARTY’S AFFILIATES
          OR THEIR RESPECTIVE OFFICERS, PARTNERS, DIRECTORS, EMPLOYEES AND THIRD PARTY
          PROVIDERS TO THE OTHER PARTY ARISING OUT OF OR IN CONNNECTION WITH THIS
          AGREEMENT EXCEED TWO MILLION DOLLARS ($2,000,000). 

          
            §17.    
          Non-Solicitation. During the Term of this Agreement, and for a period of
          one (1) year thereafter, neither party will, directly or indirectly, solicit for
          employment any employee of the other party or any of the other party’s
          affiliates. However, this will not prohibit either party from employing persons
          who (i) approach the hiring party on their own initiative or in response to
          public advertising by the hiring party without any direct or indirect
          solicitation or encouragement from the hiring party, or (ii) are solicited on
          behalf of the hiring party by persons involved in employment searches who have
          no access to the Agreement and who conduct the solicitation on their own
          initiative without direction on the basis of any agreement. 

11

          
            §18.     
          Insurance. 

            
                       a.       
          Each party hereto shall, at all times, maintain the following insurance
          coverages during the term of this Agreement: 

            
                           
              1.       
          Workers’ Compensation insurance with statutory limits on its employees; 

            
                           
              2.       
          Employer’s Liability — $1,000,000 per accident; 

            
                           
              3.       
          Commercial General Liability — $1,000,000 per occurrence; 

            
                           
              4.       
          Product and Completed Operations Liability — $5,000,000 per occurrence; 

            
                           
              5.       
          Business Auto Liability including Hired and Non-Owned Autos — $1,000,000
          per accident. 

            
                      b.       
          Each party shall furnish the other party with certificates of insurance
          evidencing the above coverages upon request. Such certificates or policies shall
          be in a form and underwritten by a carrier and/or placed through such
          party’s standard broker. Cardinal Health may self-insure any or a portion
          of the required insurance. 

          
            §19.    
          Notices. All notices and other communications under this Agreement to
          either party shall be in writing and shall be deemed given when (a) delivered
          personally to that party, (b) telecopied (which is confirmed) to that party at
          the telecopy number for that party set forth at the beginning of this Agreement,
          (c) mailed by certified mail (return receipt requested) to that party at the
          address for that party set forth at the beginning of this Agreement, or (d)
          delivered to Federal Express, UPS, or any similar express delivery service for
          delivery the next business day to that party at that address. Either party may
          change its address or telecopy number for notices under this Agreement by giving
          the other party notice of such change. 

          
            §20.     
          Taxes; Compliance With Laws. 

            
                      a.       
          Cardinal Health will retain sole responsibility for collecting and remitting any
          sales, use, excise, gross receipts, or other federal, state, or local taxes or
          other assessments and related interest and penalties related thereto with
          respect to the sales made by and services rendered by Cardinal Health hereunder. 

            
                      b.       
          Each party represents and warrants to the other that it complies with and shall
          comply with federal and state laws and regulations applicable to its respective
          business in performing its obligations hereunder. 

          
            §21.    
          Announcements. Neither party shall issue any press release or other
          public announcement, verbally or in writing, referring to the other party or any
          entity which it controls, is controlled by or under common control of
          such party, without the consent of such other party. Nothing contained herein
          shall limit the right of either party to issue a press release or public
          announcement if, in the opinion of such party’s counsel, such press release
          or public announcement is required pursuant to state or federal securities laws,
          rules or regulations, or other applicable laws, in which case the party required
          to make the press release or public announcement shall use its commercially
          reasonable efforts to obtain the approval of the other party as to the form,
          nature and extent of the press release or public announcement prior to issuing
          the press release or making the public announcement. 

12 

          
            §22.     
          Force Majeure. The parties’ obligations under this Agreement will be
          excused (other than payment obligations) if and to the extent that any delay or
          failure to perform such obligations is due to fire or other casualty, product or
          material shortages, strikes or labor disputes, transportation delays, change in
          business conditions (other than insignificant changes), manufacturer
          out-of-stock or delivery disruptions, acts of God, seasonal supply disruptions,
          or other causes beyond the reasonable control of the affected party, provided
          that the effects of such causes could not have been reasonably circumvented or
          avoided by, such party. 

          
            §23.     
          Non-Waiver. The failure of either party to enforce any provision of this
          Agreement will not be considered a waiver of any future right to enforce such
          provision. 

          
            §24.     
          Complete Agreement. This Agreement contains the entire agreement between
          the parties and supersedes all other agreements and understandings between the
          parties with respect to the subject matter of this Agreement. No alterations,
          additions, or other changes to this agreement shall be made or be binding unless
          made in writing and signed by both parties. 

          
            §25.     
          Governing Law; Invalid Provisions; Severability. This Agreement shall be
          governed by and construed in accordance with the laws of the State of New York.
          If this Agreement, or one or more of the provisions hereof, is held invalid,
          illegal, or unenforceable within any governmental jurisdiction or subdivision
          thereof, this Agreement or any such provision or provisions will not as a
          consequence thereof be deemed to be invalid, illegal, or unenforceable in any
          other governmental jurisdiction or subdivision thereof. If any provision of this
          Agreement is invalid, illegal or unenforceable, such invalidity, illegality or
          unenforceability will not affect any other provision of this Agreement. This
          Agreement will be construed as if such invalid, illegal or unenforceable
          provision had never been contained herein; and there will be deemed substituted
          such other mutually agreed upon provision as will most nearly accomplish the
          intent of MTS and Cardinal Health to the extent permitted by applicable law. If
          any part of this Agreement is determined to be invalid or declared null and void
          by any court of competent jurisdiction, then such part will be reformed, if
          possible, to conform to the law and, in any event, the remaining part of this
          Agreement will remain in full force and effect. 

          
            §26.     
          Successors; Assignment. This Agreement shall be binding upon, inure to
          the benefit of, and be enforceable by and against the parties and their
          respective successors and assigns. Neither this Agreement nor any of the rights,
          interests, or obligations under this Agreement shall be transferred or assigned
          by either of the parties without the prior written consent of the other party,
          which consent shall not be unreasonably withheld. 

[SIGNATURE PAGE FOLLOWS]

 13

	MEDICAL TECHNOLOGY SYSTEMS, INC.	  	CARDINAL HEALTH 103, INC.
	 	  	  	  	 
	By:	________________________________	 	By:	________________________________
	 	 	 	 	 
	Name:	________________________________	 	Name:	________________________________
	 	 	 	 	 
	Title:	________________________________	 	Title:	________________________________
	 	 	 	 	 
	Date:	________________________________	 	Date:	________________________________
	 	 	 	 	 
	 	  	CARDINAL HEALTH 106, INC.
	 	  	  	  	 
	 		 	By:	________________________________
	 	 	 	 	 
			 	Name:	________________________________
	 	 	 	 	 
			 	Title:	________________________________
	 	 	 	 	 
			 	Date:	________________________________
	 	 	 	 	 
	 	  	CARDINAL HEALTH 110, INC.
	 	  	  	  	 
	 		 	By:	________________________________
	 	 	 	 	 
			 	Name:	________________________________
	 	 	 	 	 
			 	Title:	________________________________
	 	 	 	 	 
			 	Date:	________________________________
	 	 	 	 	 

14 

EXHIBIT A 

Products 

OnDemandTM System
Products 

		
	Item #	Product Description
	  OD4-A-S	  Fully Automated Single Dose
	  OD4-SA-S	  Semi Automated Single Dose
	  OD4-SA-SS	  Semi Automated Select Seal
	  OD4-SA-U	  Semi Automated Unit Dose
	  OD4-SA-C7	  Semi Automated Care 7
	  OD4-SA-M28T	  Semi Automated Multi Dose
	  OD4-SA-M28R	  Semi Automated Multi Dose

MTS Pre-Pack Equipment Products 

		
	Item #	Product Description
	100-15	Gemini Sealer
	100-19	4-UP Autobond Sealer
	100-20	3-UP Autobond Sealer
	100-21	2-UP Autobond Sealer
	100-35	MTS-350
	100-40	MTS-400
	100-60	Deblister Machine
	100-73	Surebond Sealer
	100-80	MTS-500
	100-84	Rena Conveyor
	100-85	Label Printer Applicator

15 

EXHIBIT C 

Competitors

Cardinal Health Competitors 

	AmerisourceBergen 

	McKesson 

	Morris Dickson 

	Walsh 

	Dohmen 

	Harvard 

	Kinray 

	Rochester Drug 

	Owens & Minor 

	Omnicell 

	Other businesses whose primary source of revenue, 50% or greater, are derived from drug wholesaling services. 

MTS Competitors 

	Rx Systems 

	Drug Package 

	AutoMed 

	Shorewood 

	Jones Packaging 

	Useful Products 

	Opus 

	Medicine on Time 

	Specialty Carts 

	Artromick (excluding medical carts) 

	Euclid 

MTS National Accounts 

	Omnicare - Covington, KY
   
	PharMerica - Tampa, FL
   
	 Neighborcare - Baltimore, MD
   
	 Kindred - Louisville, KYSECOND AMENDMENT TO
LOAN AND SECURITY AGREEMENT 

        THIS
SECOND AMENDMENT TO LOAN AND SECURITY AGREEMENT (“Amendment”) is made
effective this 18th day of June, 2004 by and among LASALLE BUSINESS CREDIT, LLC,
successor by merger to LaSalle Business Credit, Inc., as Agent
(“Agent”) for STANDARD FEDERAL BANK NATIONAL ASSOCIATION
(“Lender”), MEDICAL TECHNOLOGY SYSTEMS, INC. (“MTS”)
and MTS PACKAGING SYSTEMS, INC. (“Packaging”, and with MTS,
each a “Borrower” and collectively, the “Borrowers”. 

BACKGROUND 

             A.    
          Agent, Lender and Borrowers previously entered into that certain Loan and
          Security Agreement dated June 26, 2002 (as amended by that certain First
          Amendment to Loan and Security Agreement dated July 8th, 2003 and as the same
          may be further amended from time to time, the “Loan
          Agreement”). 

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

             C.    
          Capitalized terms used herein and not otherwise defined shall have the meanings
          provided for such terms in the Loan Agreement. 

        NOW
THEREFORE, the parties hereto, intending to be legally bound hereby, agree as follows: 

             1.    
          Definitions. 

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

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

	(b)	 	
          The definition of “Debt Service Coverage Ratio” set forth in
          Section 1 of the Loan Agreement is hereby deleted in its
          entirety and replaced with the following:

	 	 	
““Debt
Service Coverage Ratio” shall mean, for any Person, with respect to any period of
determination, the ratio of (i) such Person’s net income after taxes for such
period, excluding any after-tax gains or losses on the sale of assets (other than the sale
of Inventory in the ordinary course of business), any other after-tax extraordinary gains
or losses and, during Borrowers’ fiscal year ending March 31, 2005 only, the Original
Issue Discount, the Deferred Financing Costs and the Leasehold Write-Off, plus
depreciation and amortization deducted in determining net income for such period,
plus tax benefits which offset any income tax expense provisions deducted in
determining net income for such period, minus Unfinanced Capital Expenditures for
such period plus the after-tax increase in LIFO reserves, or minus the after
tax decrease in LIFO reserves, to (ii) such Person’s current principal maturities of
long-term debt and capitalized leases paid or scheduled to be paid during such period,
plus any prepayments on indebtedness owed to any other Person (exclusive of trade
payables and Revolving Loans) and paid during such period, plus, any Permitted
Dividends paid during such period.” 

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

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

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

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

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

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

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

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

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

2 

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

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

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

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

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

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

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

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

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

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

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

3

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

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

	Column A	 	Column B
	
	 	

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

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

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

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

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

4

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

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

          	 	(iii)	
               the Overadvance Amount; minus 

          	 	(iv)	
               the Availability Block; minus 

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

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

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

5 

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

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

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

6

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

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

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

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

	 	 	
          “(iv)The principal of the Capital Expenditure Loan shall be repaid in (A)
          consecutive monthly installments, payable on the first day of each month during
          the period beginning on and including the first day of the month next succeeding
          the month in which such Capital Expenditure Loan is made, each in an amount
          equal to (I) Four Thousand Dollars ($4,000.00) for each payment made on or prior
          to June 30, 2005, (II) Eight Thousand Dollars ($8,000.00) for each payment made
          on or prior to June 30, 2006, but after July 1, 2005, (III) Thirteen Thousand
          Dollars ($13,000.00) for each payment made on or prior to June 30, 2007, but
          after July 1, 2006 and (B) one final payment of the remaining principal balance
          thereof, together with all interest and fees accrued and unpaid thereon, on the
          last day of the Term. If any such payment due date is not a Business Day, then
          such payment shall be made on the next succeeding Business Day, and such
          extension of time shall be included in the computation of the amount of interest
          and fees due hereunder.”

7

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

	 	 	
  “(vi) Repayment of Term Loan C. The principal of Term Loan C shall be repaid
          in (i) twelve (12) equal and consecutive monthly installments of principal of
          Sixteen Thousand Dollars ($16,000.00), payable on the first day of each month
          during the period beginning on and including August 1, 2004 and ending on and
          including July 31, 2005, (ii) twelve (12) equal and consecutive monthly
          installments of principal of Thirty-Two Thousand Dollars ($32,000.00), payable
          on the first day of each month during the period beginning on and including
          August 1, 2005 and ending on and including July 31, 2006, (iii) eleven (11)
          equal and consecutive monthly installments of principal of Fifty-Two Thousand
          Dollars ($52,000.00), payable on the first day of each month during the period
          beginning on and including August 1, 2007 and ending on and including June 30,
          2007 and (ii) one final payment of the remaining principal balance thereof,
          together with all interest and fees accrued and unpaid thereon, on the last day
          of the Term. If any such payment due date is not a Business Day, then such
          payment shall be made on the next succeeding Business Day, and such extension of
          time shall be included in the computation of the amount of interest and fees due
          hereunder.” 

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

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

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

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

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

8

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

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

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

          	 	(iii)	Intentionally Deleted. 

          	 	(iv)	Intentionally Deleted. 

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

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

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

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

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

9

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

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

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

	(d)	 	
        Other Libor Provisions.

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

 10

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

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

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

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

11

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

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

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

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

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

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

12 

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

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

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

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

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

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

 13

	Period	 	Tangible Net Worth
	
	 	

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

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

14 

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

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

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

             13.    
         Deletion of Material Adverse Effect Provisions

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

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

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

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

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

          	“(p) 	 	
            Intentionally Deleted.” 

15 

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

          	“(o) 	 	
            Intentionally Deleted.”  

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

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

             16.    
        Merger and Name Change 

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

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

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

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

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

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

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

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

16 

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

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

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

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

             19.    
         Amendment Fee. Contemporaneously with the execution hereof,
          and in addition to all other sums due from Borrowers to Agent and/or Lender,
          Borrowers shall pay to Agent an amendment fee in an amount equal to Ninety-Five
          Thousand Dollars ($95,000.00) (the “Amendment Fee”). The
          Amendment Fee may be debited from any account of either Borrower maintained with
          Agent, Lender or LaSalle Bank or charged to the Revolving Loan.  

             20.    
        Release. Borrowers and each Guarantor acknowledge and agree that
          it has no claims, suits or causes of action against Agent or Lender and hereby
          remises, releases and forever discharges Agent, Lender, their officers,
          directors, shareholders, employees, agents, successors and assigns from any
          claims, suits or causes of action whatsoever, in law or equity, which either
          Borrower or any Guarantor has or may have arising from any act, omission or
          otherwise, at any time up to and including the date of this Amendment.  

             21.    
       Additional Documents; Further Assurances. Borrowers shall take
          such other actions and execute and deliver to Agent, or to cause to be executed
          and delivered to Agent, at the sole cost and expense of Borrowers, from time to
          time, all documents, agreements, statements, certificates and information as
          Agent shall reasonably request to evidence or effect the terms of the Loan
          Agreement, as amended, or any of the Other Agreements, as amended, or to enforce
          or protect Agent’s interest in all Collateral or to evidence or effect the
          Name Change and/or the Merger. All such documents, agreements, statements,
          certificates and information shall be in form and content acceptable to Agent. 

             22.    
        Further Agreements and Representations. Each Borrower does
          hereby:  

	(a)	 	
                 ratify, confirm and acknowledge that, as amended hereby, the Loan Agreement and
          all Other Agreements are valid, binding and in full force and effect; 

	(b)	 	
                covenant and agree to perform all obligations of such Borrower contained herein,
          in the Loan Agreement and in the Other Agreements, as amended hereby; 

	(c)	 	
               acknowledge and agree that as of the date hereof, such Borrower has no defense,
          set-off, counterclaim or challenge against the payment of any sums owing under
          the Loan Agreement or any of the Other Agreements or the enforcement of any of
          the terms or conditions thereof; 

17

	(d)	 	
         represent and warrant that no Default or Event of Default exists under the Loan
          Agreement;  

	(e)	 	
        acknowledge and agree that nothing contained herein and no actions taken
          pursuant to the terms hereof is intended to constitute a novation of the Loan
          Agreement or any of the Other Agreements, and does not constitute a release,
          termination or waiver of any of the liens, security interests, rights or
          remedies granted to Agent therein, which liens, security interests, rights and
          remedies are hereby ratified, confirmed, extended and continued as security for
          the Liabilities as amended; and  

	(f)	 	
        acknowledge and agree that such Borrower’s failure to comply with or
          perform any of its covenants, agreements or obligations contained in this
          Amendment shall constitute an Event of Default under the Loan Agreement and each
          of the Other Documents as amended.  

             23.    
         Fees, Costs, Expenses and Expenditures. Each Borrower agrees to
          pay all of Agent’s expenses in connection with the review, preparation,
          negotiation, documentation and closing of this Amendment and the consummation of
          the transactions contemplated hereunder, including, without limitation, fees,
          disbursements, expenses and disbursements of counsel retained by Agent and all
          fees related to filings, recording of documents and searches, whether or not the
          transactions contemplated hereunder are consummated.  

             24.    
          Inconsistencies. To the extent of any inconsistency between the
          terms and conditions of this Amendment and the terms and conditions of the Loan
          Agreement or the Other Agreements, the terms and conditions of this Amendment
          shall prevail. All terms and conditions of the Loan Agreement and the Other
          Agreements not inconsistent herewith shall remain in full force and effect and
          are hereby ratified and confirmed by Borrowers.

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

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

             27.    
         Headings. The headings of the articles, sections, paragraphs and
          clauses of this Amendment are inserted for convenience only and shall not be
          deemed to constitute a part of this Amendment. 

[SIGNATURES ON
FOLLOWING PAGE] 

18

        IN
WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed
effective as of the day and year first above written. 

	 	 	 
	 	MEDICAL TECHNOLOGY SYSTEMS, INC.	 
	 	 	
	 	By:	
	 
	 	Name/Title:	
	 
	 	 	
	 	 	
	 	MTS PACKAGING SYSTEMS, INC.	 
	 	 	
	 	By:	
	 
	 	Name/Title:	
	 
	 	 	
	 	 	
	 	LASALLE  BUSINESS
CREDIT,  LLC, successor by merger to 	 
	 	
        LaSalle Business  Credit,  Inc.,  as  Agent  for Standard 	 
	 	
         Federal Bank National Association	 
	 	 	
	 	By:	
	 
	 	Name/Title:	
	 
	 	 	
	 	 	
	 	
         STANDARD FEDERAL BANK NATIONAL ASSOCIATION	 
	 	 	
	 	By:	
	 
	 	Name/Title:	
	 

 21

RATIFICATION AND
CONFIRMATION OF GUARANTY 

        The
undersigned, intending to be legally bound hereby, (1) acknowledge and agree to the
foregoing Amendment, (2) agree to be bound by the foregoing Amendment and (3) agree that
those certain Continuing Unconditional Guaranty Agreements from each of the undersigned to
Agent dated June 26, 2002 are in full force and effect. 

	 	 	 
	 	MEDICATION MANAGEMENT TECHNOLOGIES, INC.	 
	 	 	
	 	By:	
	 
	 	Name/Title:	
	 
	 	 	
	 	 	
	 	MEDICATION MANAGEMENT SYSTEMS, INC.	 
	 	 	
	 	By:	
	 
	 	Name/Title:	
	 
	 	 	
	 	 	
	 	MEDICAL TECHNOLOGY LABORATORIES, INC.	 
	 	 	
	 	By:	
	 
	 	Name/Title:	
	 

20

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