**Exhibit 10.12****EMPLOYMENT AGREEMENT**     **EMPLOYMENT AGREEMENT**dated as of May 2, 2007 between **JOE W. MARTIN**(the “**Executive**”) and**MILESTONE SCIENTIFIC INC.**(The “**Company**”).     **WHEREAS**, the Company would like to employ the Executive as its Chief Executive Officer; and     **WHEREAS**, the Company and the Executive desire to provide for the terms and conditions of thefuture employment of the Executive by the Company.     **NOW**, **THEREFORE**, in consideration of the premises and covenants herein contained, the partieshereto agree as follows:     **1. Initial Term.**Subject to the terms and conditions hereof, the Company employs theExecutive and the Executive accepts such employment for the period commencing May 21, 2007 andending December 31, 2007 (the “**Initial Term**”), unless an election is made under Section 2 or theInitial Term is extended or terminated as provided in Sections 2 and 7, respectively.     **2. Extended Employment Term.**The Initial Term shall be extended until December 31, 2012unless prior to December 31, 2007, either party notifies the other, with or without cause or goodreason, that he or it chooses not to extend the Employment Term.     **3. Duties and Responsibilities.**Until December 31, 2007, the Executive shall serve as theCompany’s Chief Executive Officer — Medical. Thereafter, and subject to Section 2, the Executiveshall serve as the Chief Executive Officer of the Company and as the holder of such other seniorexecutive positions consistent therewith as the Board may determine. He shall report to, and besubject to, the direction of the Company’s Board of Directors with such duties and responsibilitiesas are commensurate with his title and position. The Executive shall work on a full-time basis andshall devote his time, energy and attention to the business of the Company.     **4. Compensation.**     **(a) Basic Compensation**. In payment for services to be rendered by the Executive hereunder,the Executive shall be entitled to annual Basic Compensation consisting of the cash component andstock component described below less any withholding required by law. (i) The cash component shall consist of $300,000 per annum, payablemonthly or on such more frequent schedule as the Company may elect, less theamount, if any, up to $150,000 per year as the Executive by written noticedecides to take in stock for periods subsequent to such notice.  (ii) The stock component shall consist of a stock allotment for thebenefit of the Executive at the end of each calendar year during his employment(the “Annual Allotment”) consisting of such number of shares of the Company’sCommon Stock (the “Shares”) as provided in (A) below which Shares shall beissuable as provided in (B) below. (A) The Annual Allotment for each year shall be suchnumber of Shares which, when valued at their average closing price on theAmerican Stock Exchange or on such other market or exchange on which suchShares are then traded which publish actual closing prices, or at theaverage of the closing bid and asked prices in the absence of closingprices, during the first fifteen (15) trading days of the last full monthof each year during the Executive’s employment, shall equal the amount theExecutive has determined to take in stock as provided in 4(a)(i), providedthat for the Initial Term, and in the event that the last year of theExecutive’s employment is less than twelve (12) full months, the number ofshares included in that year’s Annual Allotment shall be based on theamount as the Executive has determined, to take in stock as provided in4(a)(i), multiplied by a fraction the numerator of which shall be thenumber of full months the Executive was employed during such year and thedenominator of which shall be twelve (12).  (B) The aggregate number of Shares included in the AnnualAllotments shall be issued and delivered to the Executive within fifteen(15) days after the expiration the earlier of the Initial Term or theExtended Employment Term.  (C) The Executive acknowledges that the Shares issuableunder this Section 4(a) and the Bonus Shares issuable under Section 4(b)will be taken by him for investment and not for distribution thereof andwill not be sold or otherwise disposed of in violation of the SecuritiesAct of 1933 as amended and the rules and regulations promulgatedthereunder.     (b) **Bonus.**The Executive shall be entitled to a bonus of $400,000 each year during hisemployment based on the Company achieving certain threshold operating targets established by itsBoard of Directors for each calendar year during the Executive’s employment excluding for purposesof calculation of cash flow and net income the bonuses, if any paid to the current Chief ExecutiveOfficers for 2007. The Executive may also receive such other discretionary bonus amounts as theBoard may determine. For calendar year 2007 the bonus shall be awarded based on meeting thefollowing thresholds:
 

 
     Target Bonus AmountThe sale of 1,200 STA units $100,000  The generation of net revenues of at least $8 million $100,000  The achievement of cash flow break-even $100,000  The achievement of positive net income $100,000      For purposes of this Agreement, operating cash flow shall mean cash flow from operationsadjusted for financial transactions plus accounts receivable increases and less accounts payableincreases. The Cash Flow Bonus and Earnings Bonus shall be payable only to the extent that paymentthereof will not reduce operating cash flow or earnings as the case may be below break even. Theaggregate bonus earned by Executive in any year will be payable one-half (1/2) in cash payable atthe expiration of the year and one-half (1/2) by an allotment of Shares (the “Bonus Shares”)determined (based on a valuation equal to one-half (1/2) of the Bonus Amount for such year) asprovided in Section 4(a)(ii)(A) at the end of such year and issuable within 15 days after theexpiration of the earlier of the Initial Term or the Extended Employment Term.     (c) **Options.**If in any year the Executive receives an allotment of Bonus Shares under Section4(b) above, he shall also be entitled to receive options to purchase two times the number of BonusShares included in the allotment. The options shall be issued at the same time that the BonusShares are allotted and shall be exercisable at a per share purchase price equal to 100% of fairmarket value on the date of grant or 110% of fair market value if the Executive is the owner of 10%or more of the Company’s outstanding shares. Such options shall have a five (5) year duration andshall vest and become exercisable to the extent of one-third (1/3) of the options granted at theexpiration of each of the first three (3) years from the date of grant. The vested options shallbe exercisable only while Executive is employed by the Company or within thirty (30) days after anytermination of employment. The options shall contain anti-dilution protection in the event ofstock dividends and splits and such other provisions as are customary in option grants of thiskind.     **5. Expenses.**During the Initial Term and the Extended Employment Term, the Executive shallbe entitled to receive prompt reimbursement for all reasonable expenses incurred by him (inaccordance with the policies and procedures established from time to time by the Board of Directorsof the Company) in performing services hereunder, provided that such expenses are incurred andaccounted for in accordance with the policies and procedures established by the Company.     **6. Other Benefits**. The Executive shall be entitled to the following additional benefits: **(i)** Four weeks of paid vacation during each year of the term following the InitialTerm.  **(ii)** Paid holidays in accordance with the Company’s usual holiday schedule, plus eightadditional paid holiday, or personal days, to be taken at such time as the Executivedetermines.  **(iii)** Such major medical, and family health coverage benefits and long-term disabilitygroup plan coverage generally available to the Company’s officers. To the extent theExecutive qualifies, the Executive may participate in, or benefit under, any employeebenefit plan, arrangement or perquisite made available by the Company to its keyexecutives.  **(iv)** Ordinary and necessary business related expenses as shall be incurred by theExecutive in the course of the performance of his duties under this Agreement.  **(v)** A monthly car allowance in the amount of $1,000.  **(vi)** Reasonable and necessary moving expenses to cover relocation to New Jersey.     **7. Termination.**Following the Initial Term, the Executive’s employment hereunder may beterminated under the following circumstances:     **(a) **The Company shall have the right to terminate the employment of the Executive under thisAgreement for disability in the event the Executive suffers an injury, or physical or mentalillness or incapacity of such character as to substantially disable him from performing his dutieshereunder for a period of more than one hundred eighty (180) consecutive days upon the Companygiving at least thirty (30) days written notice of termination; provided, however, that if theExecutive is eligible to receive disability payments pursuant to a disability insurance policy orpolicies paid for by the Company, the Executive shall assign such benefits to the Company for allperiods as to which he is receiving payment under this Agreement.     **(b) **This Agreement shall terminate upon the death of Executive.     **(c) **The Company may terminate this Agreement at any time for “Cause” because of (i) hisbecoming the subject of criminal charges or violating such rules and regulations of the Securitiesand Exchange Commission as may result in criminal action or material fines against the Company.(ii) Executive’s material breach of any term of this Agreement or (iii) the willful engaging by theExecutive in misconduct which is materially injurious to the Company, monetarily or otherwise;provided, in the case or (ii) or (iii), however, that the Company shall not terminate thisAgreement pursuant to this Section 7(c) unless the Company shall first have
 

 
delivered to theExecutive a notice which specifically identifies such breach or misconduct, specifies reasonablecorrective action and the Executive shall not have cured the breach or corrected the misconductwithin fifteen (15) days after receipt of such notice.     **(d) **The Executive may terminate his employment for “Good Reason” on five days writtennotice if: (i) he is assigned, without his express written consent, any dutiesinconsistent with his positions, duties, responsibilities, authority and statuswith the Company as of the date hereof, or a change in his reportingresponsibilities or titles as in effect as of the date hereof, except inconnection with the termination of his employment by him without Good Reason; or  (ii) his compensation is reduced or  (iii) any purchaser or purchasers of substantially all of the businessor assets of the Company do not agree, at or prior to the closing of any suchtransaction, by agreement in form and substance satisfactory to the Executive toperform this Agreement in the same manner and to the same extent that the Companywould be required to perform if no sale was consummated.     **8. Nondisclosure; Noncompetition.**     **(a) **The Executive agrees not to use or disclose, either while in the Company’s employ or atany time thereafter, except with the prior written consent of the Board of Directors, any tradesecrets, proprietary information, or other information that the Company considers confidentialrelating to processes, suppliers (including but not limited to a list or lists of suppliers),customers (including but not limited to a list or lists of customers), compositions, improvements,inventions, operations, processing, marketing, distributing, selling, cost and pricing data, ormaster files utilized by the Company, not presently generally known to the public, and which is,obtained or acquired by the Executive while in the employ of the Company.     **(b) **During his employment and for a period of two years thereafter, the Executive shall not,directly or indirectly; (i) in any manner, engage in any business which competes with any businessconducted by the Company (including any subsidiary) and will not directly or indirectly own,manage, operate, join, control or participate in the ownership, management, operation or controlof, or be employed by or connected in any manner with any corporation, firm or business that is soengaged (provided, however, that nothing herein shall prohibit the Executive from owning not morethan three percent (3%) of the outstanding stock of any publicly held corporation), (ii) persuadeor attempt to persuade any employee of the Company to leave the employ of the Company or to becomeemployed by any other entity, or (iii) persuade or attempt to persuade any current client or formerclient with leaving, or to reduce the amount of business it does or intends or anticipates doingwith the Company.     **(c) **During his employment with the Company, and for two years thereafter, the Executive shallnot take any action which might divert from the Company any opportunity learned about by him duringhis employment with the Company (including without limitation during the Initial Term and theExtended Employment Term) which would be within the scope of any of the businesses then engaged inor planned to be engaged in by the Company.     **(d) **In the event that this Agreement shall be terminated, then notwithstanding suchtermination, the obligations of the Executive pursuant to this Section 8 of this Agreement shallsurvive such termination.     **9. Successors; Binding Agreement.**     **(a) **The Company shall require any purchaser or purchasers of the Company or any purchaser orpurchasers of substantially all of the business or assets of the Company, by agreement in form andsubstance satisfactory to the Executive, to assume and agree to perform this Agreement in the samemanner and to the same extent that the Company would be required to perform it if no such purchasehad taken place. As used in this Agreement, “Company” shall mean the Company as hereinbeforedefined and any successor to its business or assets which executes and delivers the agreementprovided for in this Section 9(a) or which otherwise becomes bound by all the terms and provisionsof this Agreement by operation of law.     **(b) **This agreement shall inure to the benefit of and be enforceable by the Executive’spersonal or legal representatives, executors, administrators, successors, heirs, distributees,devisees and legatees. If the Executive should die while any amount would still be payablehereunder if the Executive had continued to live, all such amounts, unless otherwise providedherein, shall be paid in accordance with the terms of this Agreement to the Executive’s devisee,legatee or other designee or, if there be no such designee, to the Executive’s estate.     **10. Amendment; Waiver**. No provisions of this Agreement may be modified, supplemented, waivedor discharged unless such waiver, modification or discharge is agreed to in a writing signed by theExecutive and the Company. No waiver by either party hereto at any time of any breach by the otherparty hereto of, or in compliance with, any condition or provision of this Agreement to beperformed by such other party shall be deemed a waiver of similar or dissimilar provisions orconditions at the same or at any prior or subsequent time. No agreements or representations, oralor otherwise, express or implied, with respect to the subject matter hereof have been made byeither party which are not set forth expressly in this Agreement.     **11. Applicable Law.**The validity, interpretation, construction and performance of thisAgreement shall be governed by the laws of the State of New Jersey without regard to its conflictof laws principles.     **12. Severability of Covenants**. In the event that any provision of this Agreement, includingany sentence, clause or part hereof, shall be deemed contrary to law or invalid or unenforceable inany respect by a court of competent jurisdiction, the remaining provisions shall not be affected,but shall remain in full force and effect and any invalid and enforceable provisions shall bedeemed, without further action on the part of the undersigned, modified, amended and limited solelyto the extent necessary to render the same valid and enforceable.
 

 
     **13. Remedies.**     **(a) **In the event of a breach or threatened breach of any of the Executive’s covenants underSection 8, the Executive acknowledges that the Company will not have an adequate remedy at law.Accordingly, in the event of any such breach or threatenedbreach, the Company will be entitled to such equitable and injunctive relief as may be available torestrain the Executive from the violation of the provisions thereof.     **(b) **Nothing herein shall be construed as prohibiting the Company, on the one hand, and theExecutive, on the other hand, from pursuing any remedies available at law or in equity for anybreach or threatened breach of the provisions of this Agreement by the other party, including therecovery of damages.     **(c) **If the Company terminates this Agreement at any time without Cause (as defined above insection 7(c)) or the Executive terminates his employment for a Good Reason (as defined above inSection 7(d)), after January 1, 2008, the Executive shall be entitled under this Section 13(c) toreceive an amount equal to the amount of the compensation payments that, but for his termination ofemployment, would have been payable to the Executive under Section 4(a) as follows:   Termination under Section 13(c) Compensation under Section 4(a)Within the first full calendar yearof the Executive’s employment an amount equal to the amount ofcompensation payments for 4 months   Within the second full calendar yearof the Executive’s employment an amount equal to the amount ofcompensation payments for 12 months   Within or after the third fullcalendar year of the Executive’semployment an amount equal to the amount ofcompensation payments for one 18monthsThe Executive shall also be entitled to the amounts of any bonus payments under§4(b) for the year of termination to the extent that targets were achievedprior to the date of termination.     **(f) **The above amounts shall be deemed liquidated damages, and not a penalty. The Executiveshall not be required to mitigate the amount of any payment received pursuant to this paragraph norshall the amount payable under this paragraph be reduced by any compensation earned by theExecutive after the date of his termination of employment.     **14. Notices.**Any notice, request, instruction or other document to be given hereunder by anyparty to the other party shall be in writing and shall be deemed to have been duly given whendelivered personally or five (5) days after dispatch by registered or certified mail, postageprepaid, return receipt requested, to the party to whom the same is so given or made:   **If to the Company**   addressed to: Milestone Scientific Inc.  220 South Orange Avenue  Livingston Corporate Park  Livingston, New Jersey 07039   with a copy to: Morse, Zelnick, Rose & Lander, LLP  405 Park Avenue  New York, New York 10022   **If to the Executive**   addressed to: Mr. Joe W. Martin  2990 Bissonet Street, Apt.# 11201  Houston, TX 77005or to such other address as the one party shall specify to the other party in writing.     **15. Entire Agreement**. This Agreement sets forth the entire agreement of the parties heretoin respect of the subject matter contained herein and supersedes all prior agreements, promises,covenants, arrangements, communications, representations or warranties, whether oral or written, byany officer, employee or representative of any party hereto; and any prior agreement of the partieshereto in respect of the subject matter contained herein is hereby terminated and canceled.
 

 
     **IN WITNESS WHEREOF**, the parties have executed this Agreement on the date and year first abovewritten.      **MILESTONE SCIENTIFIC INC.**