Document:

EXHIBIT 10.1.1

                 FIRST AMENDMENT TO LOAN AND SECURITY AGREEMENT

         THIS FIRST AMENDMENT TO LOAN AND SECURITY  AGREEMENT  ("Agreement")  is
entered into as of the 29th day of January,  2001 between COAST BUSINESS CREDIT,
a division of Southern Pacific Bank, a California  corporation  ("Coast"),  with
offices at 12121 Wilshire Boulevard,  Suite 1400, Los Angeles,  California 90025
and BLACK WARRIOR  WIRELINE  CORP., a Delaware  corporation  ("Borrower"),  with
chief executive offices located at 3748 Highway 45 North, Columbus,  Mississippi
39701.

                                    RECITALS

         A. Borrower and Coast have  heretofore  entered into a certain Loan and
Security Agreement dated as of January 24, 2000 (as the same has been and may be
hereafter  amended,  restated,  supplemented or otherwise  modified from time to
time, the "Credit Agreement"),  pursuant to which, among other things, Coast has
agreed,  subject to the terms and conditions set forth in the Credit  Agreement,
to make loans and financial accommodations to Borrower.

         B.  Pursuant  to the Credit  Agreement,  Coast  received  a  Continuing
Guaranty  and a Principal  and  Interest  Payment  Guaranty of SJMB,  L.P.,  and
others,  which  guarantees  were secured by a certain Stock Pledge  Agreement by
SJMB, L.P. of capital stock owned by it in Collins & Ware, Inc. and the proceeds
of the sale thereof.

         C. The Credit Agreement further provided that in the event of a sale of
such capital stock, the amount of  $10,000,000.00 of the sales proceeds would be
pledged  in cash to Coast  in a manner  satisfactory  to  Coast  to  secure  the
guaranties of SJMB, L.P. and others to Coast.

         D.  SJMB,  L.P.  entered  into an  agreement  for the sale of its stock
interest  in  Collins  & Ware,  Inc.  and that as a result of such  sale,  after
satisfaction  in full of various third party  obligations of SJMB,  L.P. the net
remaining cash proceeds were $8,200,000. SJMB, L.P. requested, and Coast agreed,
to accept said cash proceeds in lieu of the  $10,000,000  of cash proceeds which
SJMB, L.P., was obligated to deliver to Coast.

         E. SJMB,  L.P.,  has now requested  that in lieu of the cash deposit of
$8,200,000  with  Coast,  it provide an  unconditional,  irrevocable  commercial
letter of credit in the amount of $8,200,000 and Coast is willing to accept said
letter  of  credit in lieu of the cash  deposit  upon the  terms and  conditions
hereinafter set forth.

         F. Coast is willing  to modify  the terms of the Credit  Agreement  and
related  documents  to  reflect  acceptance  of an  unconditional,  irrevocable,
commercial  letter  of credit in the  amount of  $8,200,000  in lieu of the cash
proceeds from the sale of SJMB,  L.P.'s interest in Collins & Ware, Inc. in lieu
of the prior requirements upon the terms and conditions hereinafter set forth.

         G. Borrower has requested that Coast agree to further modify the Credit
Agreement in certain  additional  respects,  and Coast is willing to accommodate
such request pursuant to the terms and conditions of this Amendment.

<PAGE>

         H. The  following  Events of Default have  occurred and are  continuing
under the Credit  Agreement:  (a) Borrower failed to make a principal payment on
account of Term Loan A as required by Section 2.1(b) of the Credit  Agreement in
an amount equal to 50% of projected  less actual  Excess Cash Flow for the three
month period ending July 31, 2000, which payment was due on August 31, 2000, and
(b) Borrower is not in compliance  with the following  covenants:(i)  as of June
30,  2000,  the  covenant as to Minimum  Tangible Net Worth set forth in Section
8.1(a) of the Credit  Agreement;  (ii) for the quarter ending June 30, 2000, the
covenant as to Debt Service  Coverage  Ratio set forth in Section  8.1(b) of the
Credit Agreement;  and (iii) the limitation on capital expenditures set forth in
Section 8.5(b) of the Credit Agreement (collectively, the "Existing Defaults").

                                    AGREEMENT

         NOW THEREFORE,  in  consideration  of the mutual  promises,  covenants,
conditions,  representations and warranties  hereinafter set forth and for other
good and valuable consideration,  the receipt and sufficiency of which is hereby
acknowledged,  and  intended to be legally  bound  hereby,  the  parties  hereto
mutually agree as follows:

         1.       Recitals.  All the foregoing recitals are incorporated  herein
as though set forth at length.

         2.       Defined  Terms.  All  capitalized  terms  used  herein but not
elsewhere  defined shall have the respective  meanings ascribed to such terms in
the Credit Agreement, as amended by this Amendment.

         3.       Amendments  to  Credit  Agreement.  The  Credit  Agreement  is
amended as follows:

                  3.1      Amendments regarding sale of stock in Collins & Ware,
Inc.

                           3.1.1 Subparagraph 22 of Section 5.14 of the Schedule
to  Credit  Agreement  is  hereby  amended  by  deleting  "Ten  Million  Dollars
($10,000,000.00)" in the fourth line thereof and substituting "Eight Million Two
Hundred Thousand Dollars ($8,200,000.00)" in lieu thereof.

                           3.1.2 Coast  acknowledges  receipt of said $8,200,000
and has  released its  security  interest in the shares of Collins & Ware,  Inc.
pledged to it as reflected in that certain  Security  Agreement - Stock  Pledge,
dated as of January 24, 2000.

                           3.1.3 Said  $8,200,000  has been deposited with Coast
as collateral for  performance of the obligations of SJMB, L.P. and others under
its Continuing Guaranty to Coast dated January 24, 2000.  However,  upon receipt
of an  unconditional,  irrevocable,  commercial  letter  of credit  ("Letter  of
Credit")  issued by  Southwest  Bankcorporation  of Texas or  another  financial
institution,  and in form  and  substance,  acceptable  to Coast in its sole and
absolute  discretion,  in the  amount  of  $8,200,000.00,  the cash  deposit  of
$8,200,000.00  shall be returned to SJMB,  L.P.  The Letter of Credit  shall not
expire  prior to twelve (12) months from the date thereof and shall be renewable
for  additional  twelve  (12) month  periods  until April 30, 2006 no later than
thirty (30) days prior to its  scheduled  expiration  date.  Upon failure of the
Letter of Credit to be renewed at least thirty (30) days prior to its  scheduled
expiration  date,  or upon  the  occurrence  of an  uncured  default  under  the
Continuing  Guaranty,  Coast may draw upon the  entire  balance of the Letter of
Credit and apply it to the obligations due Coast under the Guaranty,  the Credit
Agreement or other Loan  Documents.  In the event that all obligations due Coast
under the Guaranty,  Credit  Agreement or other Loan Documents are paid in full,
the Letter of Credit shall be returned to SJMB, L.P.

<PAGE>

                           3.1.4  Simultaneously  with  the  execution  of  this
Agreement,  SJMB, L.P. and the other  Guarantors shall execute and deliver First
Amendments to Guaranty and such other documents as Coast may reasonably request,
in form and substance acceptable to Coast in its sole and absolute discretion.

                  3.2      Other Amendments to Credit Agreement.

                           3.2.1   Excess   Cash   Flow.   Notwithstanding   the
provisions of Section 2.1(b) of the Credit  Agreement,  Coast hereby agrees that
the  obligation  of  Borrower to make  principal  payments on Term Loan A in the
amount of fifty percent (50%) of Borrower's Excess Cash Flow for the immediately
preceding month shall be modified, solely on the following terms and conditions:

                                    a. No principal payments of Excess Cash Flow
shall  be made  when  due to  Coast  for the  months  of  August,  2000,  to and
including, June, 2001.

                                    b. All  principal  payments  of Excess  Cash
Flow  deferred  as set forth  above  shall be paid in full to Coast on or before
June 30, 2001.

                                    c.  In  the  event   that  the   controlling
shareholders of Borrower do not complete a sale of all or  substantially  all of
the  assets  of  Borrower,  or the  ownership  interests  therein,  in an amount
sufficient  to pay all  obligations  due Coast  under or  related  to the Credit
Agreement  and the Loan  Documents on or before June 30,  2001,  if the deferred
Excess Cash Flow payments set forth in subsection a. above have not been paid to
Coast by the Borrower on or before July 20, 2001,  St. James  Capital  Partners,
L.P.  shall,  on or before said date,  make,  or cause to be made, an additional
equity  investment  in Borrower in an amount  sufficient to pay in full to Coast
the aggregate amount of Excess Cash Flow due Coast for the period August,  2000,
to and  including,  June,  2001,  but not paid to Coast  as set  forth  above in
subsection  a.  Failure of said equity  investment  to be made or said  deferred
Excess  Cash Flow  payments  to be paid in full to Coast on or  before  July 20,
2001, shall be an Event of Default.

                                    d. St. James Capital Partners,  L.P., by its
execution  of this  Amendment,  hereby  agrees  to be bound by the terms of this
Section  3.2.1,  and agrees to execute  any  additional  documents  Coast  deems
necessary or appropriate to evidence its obligations hereunder.

                           3.2.2    Tangible Net Worth.

                                    a.   For   the   purposes   of   determining
Borrower's  compliance  with  Section  8.1(a) of the  Credit  Agreement  for the
quarter ending September 30, 2000 only, Tangible Net Worth may be less than that
of the previous quarter; provided, however, that the Tangible Net Worth for said
quarter ending  September 30, 2000 must still increase by an amount equal to 80%
of Borrower's  net income for said  quarter,  as presently  required,  and in no
event  shall  Tangible  Net  Worth  as  of  September  30,  2000  be  less  than
$5,000,000.00.

<PAGE>

                                    b.   For   the   purposes   of   determining
Borrower's  compliance  with  Section  8.1(a) of the  Credit  Agreement  for the
quarters  ending  December 31, 2000 and March 31, 2001 only,  Tangible Net Worth
may be less than  that of the  previous  quarter;  provided,  however,  that the
Tangible Net Worth as of September 30, 2000 must have increased by $1,000,000.00
on June 30, 2001. In determining Tangible Net Worth, accrued interest on debt of
Borrower  that is  subordinated  to  Borrower's  obligations  to Coast  shall be
considered as additional equity.

                           3.2.3 Debt Service  Coverage Ratio.  For the purposes
of  determining   Borrower's  compliance  with  Section  8.1(b)  of  the  Credit
Agreement,  the Debt Service Coverage Ratio for the quarter ending September 30,
2000 only shall be 1.0:1.0.  Thereafter,  Debt Service  Coverage  Ratio for each
quarter shall be 1.25:1.0.  In  determining  the Debt Service  Coverage  Ration,
there shall be excluded  from the  denominator  any interest on debt of Borrower
that by its terms is accrued in lieu of being paid in cash when due.

                           3.2.4 Actual  Revenue and EBITDA.  Section  8.1(c) of
the Credit Agreement is hereby deleted in its entirety.

                           3.2.5 Capital  Expenditures  Limits.  With respect to
Section 8.5(b) of the Credit  Agreement,  the limit on capital  expenditures  of
$50,000.00 per month set forth in the Schedule thereto is hereby deleted.

                           3.2.6    Other Documents and Agreements.

                                    a. Section  5-14(11) of the Credit Agreement
is hereby amended by, beginning on the second line thereof, deleting the balance
of said section after "L.P.".

                                    b. Section  5.14(22) of the Credit Agreement
is hereby  amended by deleting the following  language  from the first  sentence
thereof:

                  "provided,   however,  that  if  Borrower  complies  with  the
covenant  regarding  Revenues  and EBITDA  during  the  applicable  twelve  (12)
consecutive  months as set forth in  Subsection  (c) of Section 8.1 below,  such
pledged amount will be reduced to $4,000,000.00."

                           3.2.7 Waiver and Amendment Fee; Costs. Upon execution
and delivery of this Amendment,  Borrower shall be obligated to pay a Waiver and
Amendment  Fee to Coast in the  amount  of  $200,000,  which fee shall be deemed
fully earned upon the effectiveness of this Agreement.  The Waiver and Amendment
Fee shall be paid to Coast upon the earlier to occur of (a) June 30, 2001 or (b)
the sale of all or substantially all of the assets of Borrower, or the ownership
interests  therein.  In  addition,  Borrower  agrees to pay all fees,  costs and
expenses incurred by Coast in documenting this modification,  including the fees
and expenses of Coasts's legal counsel.

                           3.2.8  Letter  of  Credit  Fee.  Upon  execution  and
delivery of this  Amendment,  the Letter of Credit and the First  Amendments  to
Guaranty,  Borrower shall be obligated to pay a Letter of Credit Fee to Coast in
the amount of $5,000 per month,  which fee shall be deemed  fully earned at said
time.  The Letter of Credit  Fee shall  accrue and be paid to Coast in full upon
the  earlier  to  occur  of (a)  June  30,  2001 or (b)  payment  in full of all
obligations of Borrower to Coast.

<PAGE>

         4. Conditions to  Effectiveness.  The  effectiveness  of this Amendment
shall be subject to the  satisfaction  of the following  conditions in a manner,
form and substance reasonably satisfactory to Coast:

                  4.1  Delivery  of  Documents.  This  Amendment,  the Letter of
Credit and the First  Amendments to Guaranty shall have been delivered to Coast,
duly  authorized  and executed by Borrower and Coast,  together  with such other
instruments, documents, certificates,  consents, waivers, opinions and financing
statements as Coast may reasonably request.

                  4.2 Performance; No Default. Borrower shall have performed and
complied with all agreements  and conditions  contained in the Loan Documents to
be performed  by or complied  with by Borrower  prior to the date  hereof,  and,
other than the  Existing  Defaults,  no Event of  Default or Default  shall have
occurred and be continuing.

Upon this  Amendment  becoming  effective the Existing  Defaults shall be deemed
waived. This is a limited waiver only for the Existing Defaults and only for the
period  specified  therein and shall not be deemed to constitute a waiver of any
other Event of Default or any future breach of the Agreement or any of the other
Loan Documents.

         5.  Representations  and Warranties.  Borrower hereby confirms to Coast
that the  representations  and  warranties  set forth in Section 6 of the Credit
Agreement  (as the same may have been  modified or  supplemented  by, and giving
effect to, the  reports  and  disclosures  provided  to Coast by or on behalf of
Borrower prior to the date hereof) are true and correct in all material respects
as of the date  hereof,  and shall be deemed to be remade as of the date hereof.
Borrower further represents and warrants to Coast as follows:

                  a. All financial statements and other information delivered to
Coast by or on behalf of Borrower in connection with the Loan Documents and this
Amendment,  were true and correct as of the respective  dates  thereof,  and the
financial  condition of Borrower and its Subsidiaries has not materially altered
as of the  date of  this  Amendment  from  that  presented  by the  latest  such
financial statements and other information provided to Coast.

                  b. The  Obligations  of Borrower  under the Loan Documents are
absolute and unconditional,  and there exists no right of set-off or recoupment,
counterclaim  or defense of any nature  whatsoever to payment and performance of
Borrower's Obligations to Coast.

                  c. There are no proceedings  pending,  threatened  against, or
affecting  Borrower  in  any  court,  before  any  governmental   authority,  or
arbitration  board or  tribunal  which may now or in the future  have a Material
Adverse Effect.

<PAGE>

                  d. Borrower  hereby  ratifies and reaffirms the Loan Documents
to which it is a party  (as  amended  hereby),  and  represents  that all of the
foregoing are the valid, binding and enforceable obligations of Borrower .

                  e.  All of the  representations  and  warranties  of  Borrower
contained  in the  Loan  Documents  (as the  same  may  have  been  modified  or
supplemented  by, and giving effect to, the reports and disclosures  provided to
Coast by or on  behalf  of  Borrower  prior to the  date  hereof),  are true and
correct, in all material respects,  as of the date hereof and, as so modified or
supplemented, are hereby reaffirmed and ratified.

                  f. Other than the  Existing  Defaults,  no Default or Event of
Default has occurred and is continuing.

                  g. This Amendment and the documents and  instruments  executed
in connection  herewith have been  authorized by all necessary  action and, when
executed,  will  be the  legal,  valid  and  binding  obligations  of  Borrower,
enforceable against Borrower in accordance with their respective terms.

                  h.  Borrower's  execution,  delivery and  performance  of this
Amendment  do not and will not (i) violate any law,  rule,  regulation  or court
order to which Borrower is subject;  (ii) conflict with or result in a breach of
Borrower's Articles of Incorporation or Bylaws or any agreement or instrument to
which  Borrower is party or by which it or its  properties  are bound,  or (iii)
result  in  the  creation  or  imposition  of any  lien,  security  interest  or
encumbrance  on any  property  of  Borrower,  whether  now  owned  or  hereafter
acquired, other than liens in favor of Coast.

         6.  No  Further  Amendments.  Except  as  amended  hereby,  the  Credit
Agreement  and each of the other Loan  Documents  shall remain in full force and
effect in accordance with their  respective  terms.  Borrower  acknowledges  and
agrees that other than as specifically  set forth herein,  Coast does not waive,
diminish or limit any term or condition contained in the Credit Agreement or any
of the other Loan Documents. Coast's agreement to the terms of this Amendment or
any other  amendment  shall not be  deemed  to  establish  or create a custom or
course of dealing  between Coast,  on the one hand,  and Borrower,  on the other
hand.

         7. Counterparts;  Telecopy Execution. This Amendment may be executed in
one or more counterparts,  each of which shall be deemed to be an original,  and
all of which, when taken together, shall constitute one and the same instrument.
Delivery of an executed  counterpart of this Amendment by telefacsimile shall be
equally as  effective  as delivery of a manually  executed  counterpart  of this
Amendment.  Any party  delivering an executed  counterpart  of this Amendment by
telefacsimile  shall  also  deliver  a  manually  executed  counterpart  of this
Amendment,  but the failure to deliver a manually executed counterpart shall not
affect the validity, enforceability, and binding effect of this Amendment.

         8. Entire Agreement. The Credit Agreement, the other Loan Documents and
this Amendment  embody the entire agreement and  understanding  between Borrower
and Coast,  and supersede all prior agreements and  understandings  between said
parties relating to the subject matter thereof.  The parties each warrant to the
other that no promise,  inducement,  representation,  or agreement  that has not
been expressed  herein or is not otherwise set forth in such agreements has been
made to them in connection with the deliberations or negotiations  leading up to
the execution of this Amendment.

<PAGE>

         9. Further  Assurances.  Borrower  covenants and agrees that it will at
any time and from time to time do,  execute,  acknowledge  and deliver,  or will
cause to be done, executed,  acknowledged and delivered,  all such further acts,
documents and  instruments  as  reasonably  may be required by Coast in order to
effectuate fully the intent of this Amendment.

         10.  Governing Law. This  Amendment  shall be a contract made under and
governed by the laws of the State of  California,  without regard to conflict of
laws principles.

         11. Severability.  In the event that any provision of this Amendment is
deemed to be invalid by reason of the  operation  of any law or by reason of the
interpretation  placed  thereon  by any court or  governmental  authority,  this
Amendment shall be construed as not containing such provision and the invalidity
of such provision shall not affect the validity of any other provisions  hereof,
and any and all other  provisions  hereof which  otherwise  are lawful and valid
shall remain in full force and effect.

         12.  Headings  and  Recitals.  The  paragraph  headings  used  in  this
Amendment are for  convenience of reference only and in no way define,  describe
or limit the  scope or intent of this  Amendment.  The  foregoing  recitals  are
hereby incorporated herein by this reference thereto.

         13. No Strict  Construction.  The language used in this Amendment shall
be deemed to be the  language  chosen by the  parties  hereto to  express  their
mutual intent,  and no rule of strict  construction shall be applied against any
party hereto.

<PAGE>

         IN WITNESS  WHEREOF,  the parties have executed  this  Agreement on the
date first written above.

                                              BORROWER:

                                              BLACK WARRIOR WIRELINE CORP., a
                                              Delaware corporation

                                              By:
                                                --------------------------------
                                                President or Vice President

                                              By:
                                                --------------------------------
                                                Secretary or Assistant Secretary

                                              COAST:

                                              COAST BUSINESS CREDIT, a  division
                                              of Southern Pacific Bank

                                              By:
                                                   -----------------------------
                                              Name:
                                                   -----------------------------
                                              Title:
                                                   -----------------------------

<PAGE>

The foregoing First Amendment to Loan and Security  Agreement is hereby approved
and accepted and all obligations of the undersigned under that certain Principal
and Interest  Payment  Guaranty  dated January 24, 2000 as modified by the First
Amendment to Guaranty,  and that certain  Continuing  Guaranty dated January 24,
2000,  as modified by the First  Amendment to Guaranty,  as the case may be, are
hereby ratified and confirmed.

Dated:   As of January 29, 2001.

                                               GUARANTORS:

                                               SJMB,  L.P.,  a Delaware  limited
                                               partnership

                                               By:  SJMB,   L.L.C.,  a  Delaware
                                               limited  liability  company,  its
                                               general partner

                                                    By:
                                                         -----------------------
                                                    Name:
                                                         -----------------------
                                                    Title:
                                                         -----------------------

                                               ST. JAMES CAPITAL PARTNERS, L.P.,
                                               a Delaware limited partnership

                                               By: St. James  Capital  Corp.,  a
                                               Delaware corporation, its general
                                               partner

                                                    By:
                                                         -----------------------
                                                    Name:
                                                         -----------------------
                                                    Title:
                                                         -----------------------

                                               ---------------------------------
                                               Chuck Underbrink, an individualExhibit 4.16

                                                                       EXHIBIT D

NEITHER THIS WARRANT NOR THE SHARES ISSUABLE UPON EXERCISE HEREOF HAVE BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT")
OR ANY OTHER APPLICABLE SECURITIES LAWS IN RELIANCE UPON AN EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND SUCH OTHER SECURITIES LAWS.
NEITHER THIS WARRANT NOR THE SHARES ISSUABLE UPON EXERCISE HEREOF MAY BE SOLD,
PLEDGED, TRANSFERRED, ENCUMBERED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR IN A TRANSACTION
WHICH IS EXEMPT FROM REGISTRATION UNDER THE PROVISIONS OF THE SECURITIES ACT.

                             STOCK PURCHASE WARRANT

                  To Purchase 100,000 Shares of Common Stock of

                            Milestone Scientific Inc.

            THIS CERTIFIES that, for value received, Hillgreen Investments
Limited (the "Holder"), is entitled, upon the terms and subject to the
conditions hereinafter set forth, at any time on or after January 22, 2001 (the
"Initial Exercise Date") and on or prior to the close of business on January 22,
2004 (the "Termination Date") but not thereafter, to subscribe for and purchase
from Milestone Scientific Inc., a Delaware corporation (the "Company"), up to
100,000 shares (the "Warrant Shares") of Common Stock, $.001 par value, of the
Company (the "Common Stock"). The purchase price of one share of Common Stock
(the "Exercise Price") under this Warrant shall be $1.86. The Exercise Price and
the number of shares for which the Warrant is exercisable shall be subject to
adjustment as provided herein. Capitalized terms used and not otherwise defined
herein shall have the meanings set forth for such terms in that certain Private
Equity Line of Credit Agreement, dated January 19, 2001, between the Company and
Hillgreen Investments Limited (the "Purchase Agreement).
<PAGE>

            1. Title to Warrant. Prior to the Termination Date and subject to
compliance with applicable laws, this Warrant and all rights hereunder are
transferable, in whole or in part, at the office or agency of the Company by the
holder hereof in person or by duly authorized attorney, upon surrender of this
Warrant together with the Assignment Form annexed hereto properly endorsed.

            2. Authorization of Shares. The Company covenants that all shares of
Common Stock which may be issued upon the exercise of rights represented by this
Warrant will, upon exercise of the rights represented by this Warrant, be duly
authorized, validly issued, fully paid and nonassessable and free from all
taxes, liens and charges in respect of the issue thereof (other than taxes in
respect of any transfer occurring contemporaneously with such issue).

            3. Exercise of Warrant. Except as provided in Section 4 herein,
exercise of the purchase rights represented by this Warrant may be made at any
time or times on or after the Initial Exercise Date and before the close of
business on the Termination Date. Exercise of this Warrant or any part hereof
shall be effected by the surrender of this Warrant and the Notice of Exercise
Form annexed hereto duly executed, at the office of the Company (or such other
office or agency of the Company as it may designate by notice in writing to the
registered holder hereof at the address of such holder appearing on the books of
the Company) and upon payment of the Exercise Price of the shares thereby
purchased by wire transfer or cashier's check drawn on a United States bank, the
holder of this Warrant shall be entitled to receive a certificate for the number
of shares of Common Stock so purchased. Certificates for shares purchased
hereunder shall be delivered to the holder hereof within three (3) Trading Days
after the date on which this Warrant shall have been exercised as aforesaid.
This Warrant shall be deemed to have been exercised and such certificate or
certificates shall be deemed to have been issued, and Holder or any other person
so designated to be named therein shall be deemed to have become a holder of
record of such shares for all purposes, as of the date the Warrant has been
exercised by payment to the Company of the Exercise Price and all taxes required
to be paid by Holder, if any, pursuant to Section 5 prior to the issuance of
such shares, have been paid. If this Warrant shall have been exercised in part,
the Company shall, at the time of delivery of the certificate or certificates
representing Warrant Shares, deliver to Holder a new Warrant evidencing the
rights of Holder to purchase the unpurchased shares of Common Stock called for
by this Warrant, which new Warrant shall in all other respects be identical with
this Warrant. If, within one year of the date of this Warrant, the Company does
not have an effective Registration Statement to permit the public offering and
resale of the Company's securities which have been issued to Holder under the
Purchase Agreement, then this Warrant may also be exercised by means of a
"cashless exercise" in which the holder shall be entitled to receive a
certificate for the number of shares equal to the quotient obtained by dividing
[(A-B) (X)] by (A), where:

            (A) = the average of the high and low trading prices per share of
            Common Stock on the Trading Day preceding the date of such election;

            (B) =  the Exercise Price of the Warrants; and

            (X) = the number of shares issuable upon exercise of the Warrants in
            accordance with the terms of this Warrant.
<PAGE>

      Notwithstanding anything herein to the contrary, in no event shall the
holder be permitted to exercise this Warrant for shares of Common Stock to the
extent that (x) the number of shares of Common Stock owned by such Holder (other
than shares of Common Stock issuable upon exercise of this Warrant) plus (y) the
number of shares of Common Stock issuable upon exercise of this Warrant, would
be equal to or exceed 9.9% of the number of shares of Common Stock then issued
and outstanding, including shares issuable upon exercise of this Warrant held by
such holder after application of this Section 3(d). As used herein, beneficial
ownership shall be determined in accordance with Section 13(d) of the Exchange
Act. To the extent that the limitation contained in this Section 3(d) applies,
the determination of whether this Warrant is exercisable (in relation to other
securities owned by the holder) and of which a portion of this Warrant is
exercisable shall be in the sole discretion of such holder, and the submission
of a Notice of Exercise shall be deemed to be such holder's determination of
whether this Warrant is exercisable (in relation to other securities owned by
such holder) and of which portion of this Warrant is exercisable, in each case
subject to such aggregate percentage limitation, and the Company shall have no
obligation to verify or confirm the accuracy of such determination. Nothing
contained herein shall be deemed to restrict the right of a holder to exercise
this Warrant into shares of Common Stock at such time as such exercise will not
violate the provisions of this Section 3(d). The provisions of this Section 3(d)
may be waived by the Holder of this Warrant upon, at the election of the Holder,
with 61 days' prior notice to the Company, and the provisions of this Section
3(d) shall continue to apply until such 61st day (or such later date as may be
specified in such notice of waiver). No exercise of this Warrant in violation of
this Section 3(d) but otherwise in accordance with this Warrant shall affect the
status of the Common Stock issued upon such exercise as validly issued,
fully-paid and nonassessable.

            4. No Fractional Shares or Scrip. No fractional shares or scrip
representing fractional shares shall be issued upon the exercise of this
Warrant. As to any fraction of a share which Holder would otherwise be entitled
to purchase upon such exercise, the Company shall pay a cash adjustment in
respect of such final fraction in an amount equal to the such fraction
multiplied by the difference between the closing bid price on the exercise date
Exercise Price.

            5. Charges, Taxes and Expenses. Issuance of certificates for shares
of Common Stock upon the exercise of this Warrant shall be made without charge
to the holder hereof for any issue or transfer tax or other incidental expense
in respect of the issuance of such certificate, all of which taxes and expenses
shall be paid by the Company, and such certificates shall be issued in the name
of the holder of this Warrant or in such name or names as may be directed by the
holder of this Warrant; provided, however, that in the event certificates for
shares of Common Stock are to be issued in a name other than the name of the
holder of this Warrant, this Warrant when surrendered for exercise shall be
accompanied by the Assignment Form attached hereto duly executed by the holder
hereof; and the Company may require, as a condition thereto, the payment of a
sum sufficient to reimburse it for any transfer tax incidental thereto.

            6. Closing of Books. The Company will not close its shareholder
books or records in any manner which prevents the timely exercise of this
Warrant.

            7. Transfer, Division and Combination. (a) Subject to compliance
with any applicable securities laws, transfer of this Warrant and all rights
hereunder, in whole or in part,
<PAGE>

shall be registered on the books of the Company to be maintained for such
purpose, upon surrender of this Warrant at the principal office of the Company,
together with a written assignment of this Warrant substantially in the form
attached hereto duly executed by Holder or its agent or attorney and funds
sufficient to pay any transfer taxes payable upon the making of such transfer.
In the event that the Holder wishes to transfer a portion of this Warrant, the
Holder shall transfer at least 25,000 Warrant Shares to any such transferee.
Upon such surrender and, if required, such payment, the Company shall execute
and deliver a new Warrant or Warrants in the name of the assignee or assignees
and in the denomination or denominations specified in such instrument of
assignment, and shall issue to the assignor a new Warrant evidencing the portion
of this Warrant not so assigned, and this Warrant shall promptly be cancelled. A
Warrant, if properly assigned, may be exercised by a new holder for the purchase
of shares of Common Stock without having a new Warrant issued.

                  (b) This Warrant may be divided or combined with other
Warrants upon presentation hereof at the aforesaid office of the Company,
together with a written notice specifying the names and denominations in which
new Warrants are to be issued, signed by Holder or its agent or attorney.
Subject to compliance with Section 7(a), as to any transfer which may be
involved in such division or combination, the Company shall execute and deliver
a new Warrant or Warrants in exchange for the Warrant or Warrants to be divided
or combined in accordance with such notice.

                  (c) The Company shall prepare, issue and deliver at its own
expense (other than transfer taxes) the new Warrant or Warrants under this
Section 7.

                  (d) The Company agrees to maintain, at its aforesaid office,
books for the registration and the registration of transfer of the Warrants.

            8. No Rights as Shareholder until Exercise. This Warrant does not
entitle the holder hereof to any voting rights or other rights as a shareholder
of the Company prior to the exercise hereof. Upon the surrender of this Warrant
and the payment of the aggregate Exercise Price, the Warrant Shares so purchased
shall be and be deemed to be issued to such holder as the record owner of such
shares as of the close of business on the later of the date of such surrender or
payment.

            9. Loss, Theft, Destruction or Mutilation of Warrant. The Company
covenants that upon receipt by the Company of evidence reasonably satisfactory
to it of the loss, theft, destruction or mutilation of this Warrant certificate
or any stock certificate relating to the Warrant Shares, and in case of loss,
theft or destruction, of indemnity or security reasonably satisfactory to it
(which shall not include the posting of any bond), and upon surrender and
cancellation of such Warrant or stock certificate, if mutilated, the Company
will make and deliver a new Warrant or stock certificate of like tenor and dated
as of such cancellation, in lieu of such Warrant or stock certificate.

            10. Saturdays, Sundays, Holidays, etc. If the last or appointed day
for the taking of any action or the expiration of any right required or granted
herein shall be a Saturday, Sunday or a legal holiday, then such action may be
taken or such right may be exercised on the next succeeding day not a Saturday,
Sunday or legal holiday.
<PAGE>

            11. Adjustments of Exercise Price and Number of Warrant Shares. (a)
Stock Splits, etc. The number and kind of securities purchasable upon the
exercise of this Warrant and the Exercise Price shall be subject to adjustment
from time to time upon the happening of any of the following. In case the
Company shall (i) pay a dividend in shares of Common Stock or make a
distribution in shares of Common Stock to holders of its outstanding Common
Stock, (ii) subdivide its outstanding shares of Common Stock into a greater
number of shares of Common Stock, (iii) combine its outstanding shares of Common
Stock into a smaller number of shares of Common Stock or (iv) issue any shares
of its capital stock in a reclassification of the Common Stock, then the number
of Warrant Shares purchasable upon exercise of this Warrant immediately prior
thereto shall be adjusted so that the holder of this Warrant shall be entitled
to receive the kind and number of Warrant Shares or other securities of the
Company which he would have owned or have been entitled to receive had such
Warrant been exercised in advance thereof. Upon each such adjustment of the kind
and number of Warrant Shares or other securities of the Company which are
purchasable hereunder, the holder of this Warrant shall thereafter be entitled
to purchase the number of Warrant Shares or other securities resulting from such
adjustment at an Exercise Price per Warrant Share or other security obtained by
multiplying the Exercise Price in effect immediately prior to such adjustment by
the number of Warrant Shares purchasable pursuant hereto immediately prior to
such adjustment and dividing by the number of Warrant Shares or other securities
of the Company resulting from such adjustment. An adjustment made pursuant to
this paragraph shall become effective immediately after the effective date of
such event retroactive to the record date, if any, for such event.

                  (b) Reorganization, Reclassification, Merger, Consolidation or
Disposition of Assets. In case the Company shall reorganize its capital,
reclassify its capital stock, consolidate or merge with or into another
corporation (where the Company is not the surviving corporation or where there
is a change in or distribution with respect to the Common Stock of the Company),
or sell, transfer or otherwise dispose of all or substantially all its property,
assets or business to another corporation and, pursuant to the terms of such
reorganization, reclassification, merger, consolidation or disposition of
assets, shares of common stock of the successor or acquiring corporation, or any
cash, shares of stock or other securities or property of any nature whatsoever
(including warrants or other subscription or purchase rights) in addition to or
in lieu of common stock of the successor or acquiring corporation ("Other
Property"), are to be received by or distributed to the holders of Common Stock
of the Company, then Holder shall have the right thereafter to receive, upon
exercise of this Warrant, the number of shares of common stock of the successor
or acquiring corporation or of the Company, if it is the surviving corporation,
and Other Property receivable upon or as a result of such reorganization,
reclassification, merger, consolidation or disposition of assets by a holder of
the number of shares of Common Stock for which this Warrant is exercisable
immediately prior to such event. In case of any such reorganization,
reclassification, merger, consolidation or disposition of assets, the successor
or acquiring corporation (if other than the Company) shall expressly assume the
due and punctual observance and performance of each and every covenant and
condition of this Warrant to be performed and observed by the Company and all
the obligations and liabilities hereunder, subject to such modifications as may
be deemed appropriate (as determined in good faith by resolution of the Board of
Directors of the Company) in order to provide for adjustments of shares of
Common Stock for which this Warrant is exercisable which shall be as nearly
equivalent as practicable to the adjustments provided for in this Section 11.
For purposes of this Section 11, "common stock of the successor or acquiring
corporation" shall include stock of such
<PAGE>

corporation of any class which is not preferred as to dividends or assets over
any other class of stock of such corporation and which is not subject to
redemption and shall also include any evidences of indebtedness, shares of stock
or other securities which are convertible into or exchangeable for any such
stock, either immediately or upon the arrival of a specified date or the
happening of a specified event and any warrants or other rights to subscribe for
or purchase any such stock. The foregoing provisions of this Section 11 shall
similarly apply to successive reorganizations, reclassifications, mergers,
consolidations or disposition of assets.

            12. Voluntary Adjustment by the Company. The Company may at any time
during the term of this Warrant reduce the then current Exercise Price to any
amount and for any period of time deemed appropriate by the Board of Directors
of the Company.

            13. Notice of Adjustment. Whenever the number of Warrant Shares or
number or kind of securities or other property purchasable upon the exercise of
this Warrant or the Exercise Price is adjusted, as herein provided, the Company
shall promptly mail by registered or certified mail, return receipt requested,
to the holder of this Warrant notice of such adjustment or adjustments setting
forth the number of Warrant Shares (and other securities or property)
purchasable upon the exercise of this Warrant and the Exercise Price of such
Warrant Shares (and other securities or property) after such adjustment, setting
forth a brief statement of the facts requiring such adjustment and setting forth
the computation by which such adjustment was made. Such notice, in the absence
of manifest error, shall be conclusive evidence of the correctness of such
adjustment.

            14. Notice of Corporate Action. If at any time:

                  (a) the Company shall take a record of the holders of its
Common Stock for the purpose of entitling them to receive a dividend or other
distribution, or any right to subscribe for or purchase any evidences of its
indebtedness, any shares of stock of any class or any other securities or
property, or to receive any other right, or

                  (b) there shall be any capital reorganization of the Company,
any reclassification or recapitalization of the capital stock of the Company or
any consolidation or merger of the Company with, or any sale, transfer or other
disposition of all or substantially all the property, assets or business of the
Company to, another corporation or,

                  (c) there shall be a voluntary or involuntary dissolution,
liquidation or winding up of the Company;

then, in any one or more of such cases, the Company shall give to Holder (i) at
least 15 days' prior written notice of the date on which a record date shall be
selected for such dividend, distribution or right or for determining rights to
vote in respect of any such reorganization, reclassification, merger,
consolidation, sale, transfer, disposition, liquidation or winding up, and (ii)
in the case of any such reorganization, reclassification, merger, consolidation,
sale, transfer, disposition, dissolution, liquidation or winding up, at least 15
days' prior written notice of the date when the same shall take place. Such
notice in accordance with the foregoing clause also shall specify (i) the date
on which any such record is to be taken for the purpose of such dividend,
distribution or right, the date on which the holders of Common Stock shall be
entitled
<PAGE>

to any such dividend, distribution or right, and the amount and character
thereof, and (ii) the date on which any such reorganization, reclassification,
merger, consolidation, sale, transfer, disposition, dissolution, liquidation or
winding up is to take place and the time, if any such time is to be fixed, as of
which the holders of Common Stock shall be entitled to exchange their shares of
Common Stock for securities or other property deliverable upon such disposition,
dissolution, liquidation or winding up. Each such written notice shall be
sufficiently given if addressed to Holder at the last address of Holder
appearing on the books of the Company and delivered in accordance with Section
16(d).

                  15. Authorized Shares. The Company covenants that during the
period the Warrant is outstanding, it will reserve from its authorized and
unissued Common Stock a sufficient number of shares to provide for the issuance
of the Warrant Shares upon the exercise of any purchase rights under this
Warrant. The Company further covenants that its issuance of this Warrant shall
constitute full authority to its officers who are charged with the duty of
executing stock certificates to execute and issue the necessary certificates for
the Warrant Shares upon the exercise of the purchase rights under this Warrant.
The Company will take all such reasonable action as may be necessary to assure
that such Warrant Shares may be issued as provided herein without violation of
any applicable law or regulation, or of any requirements of the Principal Market
upon which the Common Stock may be listed.

                  The Company shall not by any action, including, without
limitation, amending its certificate of incorporation or through any
reorganization, transfer of assets, consolidation, merger, dissolution, issue or
sale of securities or any other voluntary action, avoid or seek to avoid the
observance or performance of any of the terms of this Warrant, but will at all
times in good faith assist in the carrying out of all such terms and in the
taking of all such actions as may be necessary or appropriate to protect the
rights of Holder against impairment. Without limiting the generality of the
foregoing, the Company will (a) not increase the par value of any shares of
Common Stock receivable upon the exercise of this Warrant above the amount
payable therefor upon such exercise immediately prior to such increase in par
value, (b) take all such action as may be necessary or appropriate in order that
the Company may validly and legally issue fully paid and nonassessable shares of
Common Stock upon the exercise of this Warrant, and (c) use all commercially
reasonable efforts to obtain all such authorizations, exemptions or consents
from any public regulatory body having jurisdiction thereof as may be necessary
to enable the Company to perform its obligations under this Warrant.

                  Upon the request of Holder, the Company will at any time
during the period this Warrant is outstanding acknowledge in writing, in form
reasonably satisfactory to Holder, the continuing validity of this Warrant and
the obligations of the Company hereunder.

                  Before taking any action which would cause an adjustment
reducing the current Exercise Price below the then par value, if any, of the
shares of Common Stock issuable upon exercise of the Warrants, the Company shall
take any corporate action which may be necessary in order that the Company may
validly and legally issue fully paid and non-assessable shares of such Common
Stock at such adjusted Exercise Price.

                  Before taking any action which would result in an adjustment
in the number of shares of Common Stock for which this Warrant is exercisable or
in the Exercise
<PAGE>

Price, the Company shall obtain all such authorizations or exemptions thereof,
or consents thereto, as may be necessary from any public regulatory body or
bodies having jurisdiction thereof.

                  16. Miscellaneous.

                  (a) Jurisdiction. This Warrant shall be binding upon any
successors or assigns of the Company. This Warrant shall constitute a contract
under the laws of New York without regard to its conflict of law principles or
rules, and be subject to arbitration pursuant to the terms set forth in the
Purchase Agreement.

                  (b) Restrictions. The holder hereof acknowledges that the
Warrant Shares acquired upon the exercise of this Warrant, if not registered,
will have restrictions upon resale imposed by state and federal securities laws.

                  (c) Nonwaiver and Expenses. No course of dealing or any delay
or failure to exercise any right hereunder on the part of Holder shall operate
as a waiver of such right or otherwise prejudice Holder's rights, powers or
remedies, notwithstanding all rights hereunder terminate on the Termination
Date. If the Company willfully fails to comply with any material provision of
this Warrant, the Company shall pay to Holder such amounts as shall be
sufficient to cover any costs and expenses including, but not limited to,
reasonable attorneys' fees, including those of appellate proceedings, incurred
by Holder in collecting any amounts due pursuant hereto or in otherwise
enforcing any of its rights, powers or remedies hereunder.

                  (d) Notices. Any notice, request or other document required or
permitted to be given or delivered to the holder hereof by the Company shall be
delivered in accordance with the notice provisions of the Purchase Agreement.

                  (e) Limitation of Liability. No provision hereof, in the
absence of affirmative action by Holder to purchase shares of Common Stock, and
no enumeration herein of the rights or privileges of Holder hereof, shall give
rise to any liability of Holder for the purchase price of any Common Stock or as
a stockholder of the Company, whether such liability is asserted by the Company
or by creditors of the Company.

                  (f) Remedies. Holder, in addition to being entitled to
exercise all rights granted by law, including recovery of damages, will be
entitled to specific performance of its rights under this Warrant. The Company
agrees that monetary damages would not be adequate compensation for any loss
incurred by reason of a breach by it of the provisions of this Warrant and
hereby agrees to waive the defense in any action for specific performance that a
remedy at law would be adequate.

(g) Successors and Assigns. Subject to applicable securities laws, this Warrant
and the rights and obligations evidenced hereby shall inure to the benefit of
and be binding upon the successors of the Company and the successors and
permitted assigns of Holder. The provisions of this Warrant are intended to be
for the benefit of all Holders from time to time of this Warrant and shall be
enforceable by any such Holder or holder of Warrant Shares.
<PAGE>

                  (h) Amendment. This Warrant may be modified or amended or the
provisions hereof waived with the written consent of the Company and the Holder.

                  (i) Severability. Wherever possible, each provision of this
Warrant shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Warrant shall be prohibited by or
invalid under applicable law, such provision shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the remainder of such
provisions or the remaining provisions of this Warrant.

                  (j) Headings. The headings used in this Warrant are for the
convenience of reference only and shall not, for any purpose, be deemed a part
of this Warrant.
<PAGE>

            IN WITNESS WHEREOF, the Company has caused this Warrant to be
executed by its officer thereunto duly authorized.

Dated January 19, 2001

                                 Milestone Scientific Inc.

                                 By: /s/ Leonard Osser
                                     ----------------------------------------
                                     Leonard Osser, Chairman & CEO

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