Registration Rights Agreement

REGISTRATION RIGHTS AGREEMENT


REGISTRATION RIGHTS AGREEMENT (this "AGREEMENT"), dated as of January 13, 2000, by and among BioShield Technologies, Inc., a Georgia corporation, with headquarters at 5655 Peachtree Parkway, Atlanta, Georgia 30092 (the "COMPANY"), and the undersigned buyer (the "BUYER" OR "BUYERS").


WHEREAS:


A. In connection with the Securities Purchase Agreement by and among the parties of even date herewith (the "SECURITIES PURCHASE AGREEMENT"), the Company has agreed, upon the terms and subject to the conditions of the Securities Purchase Agreement, to issue and sell to the Buyer 200 shares of the Company's Series A Convertible Preferred Stock (the "PREFERRED STOCK"), which will be convertible into shares of the Company's common stock, no par value per share (the "COMMON STOCK") (as converted, the "CONVERSION SHARES") in accordance with the terms of (i) the Company's Amendments to its Articles of Incorporation (the "ARTICLES"); and


B. To induce the Buyers to execute and deliver the Securities Purchase Agreement, the Company has agreed to provide certain registration rights under the Securities Act of 1933, as amended, and the rules and regulations thereunder, or any similar successor statute (collectively, the "1933 ACT"), and applicable state securities laws:


NOW, THEREFORE, in consideration of the premises and the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company and the Buyers hereby agree as follows:


1. DEFINITIONS.


As used in this Agreement, the following terms shall have the following meanings:


a. "INVESTOR" means the Buyer and any transferee or assignee
thereof to whom the Buyer assigns its rights under this Agreement and
who agrees to become bound by the provisions of this Agreement in
accordance with Section 9.


b. "PERSON" means a corporation, a limited liability company,
an association, a partnership, an organization, a business, an
individual, a governmental or political subdivision thereof or a
governmental agency.


c. "REGISTER," "REGISTERED," and "REGISTRATION" refer to a
registration effected by preparing and filing one or more Registration
Statements in compliance with the 1933 Act and pursuant to Rule 415
under the 1933 Act or any successor rule providing for offering
securities on a continuous basis ("RULE 415"), and the declaration or
ordering of


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effectiveness of such Registration Statement(s) by the United States
Securities and Exchange Commission (the "SEC").


d. REGISTRABLE SECURITIES" means the Conversion Shares issued
or issuable upon conversion of the Preferred Stock, and any shares of
capital stock issued or issuable with respect to the Conversion Shares
or the Preferred Stock as a result of any stock split, stock dividend,
recapitalization, exchange or similar event, excluding any dividend or
distribution of the securities of Electronic Medical Distribution, Inc.


e. "REGISTRATION STATEMENT" means a registration statement of
the Company filed under the 1933 Act.


Capitalized terms used herein and not otherwise defined herein shall have the respective meanings set for-the in the Securities Purchase Agreement.


2. REGISTRATION.


a. Mandatory Registration. The Company shall prepare, and, on
or prior to February 13, 2000 file (the "FILING DEADLINE") with the SEC
a Registration Statement or Registration Statements (as is necessary)
on Form S-3 or SB-2 (or, if such form is unavailable for such a
registration, on such other form as is available for such a
registration, subject to the consent of each Buyer and the provisions
of Section 2(e), which consent will not be unreasonably withheld),
covering the resale of all of the Registrable Securities, which
Registration Statement(s) shall state that, in accordance with Rule 416
promulgated under the 1933 Act, such Registration Statement(s) also
covers such indeterminate number of additional shares of Common Stock
as may become issuable upon conversion of the Preferred Stock to
prevent dilution resulting from stock splits, stock dividends or
similar transactions. Such Registration Statement shall initially
register for resale at least 1,000,000 shares of Common Stock, subject
to adjustment as provided in Section 3(b), and such registered shares
of Common Stock shall be allocated among the Investors pro rata based
on the total number of Registrable Securities issued or issuable as of
each date that a Registration Statement, as amended, relating to the
resale of the Registrable Securities is declared effective by the SEC.
The Company shall use its best efforts to have the Registration
Statement declared effective by the SEC within one hundred (100) days
after the issuance of the Preferred Stock (the "REGISTRATION
DEADLINE"). The Company shall permit the registration statement to
become effective within five (5) business days after receipt of a "no
review" notice from the SEC. If the Registration Statement has not been
declared effective by the Registration Deadline, under the Pledge
Agreement dated as of even date herewith between certain shareholders
of the Company and the Buyer, the Buyer has certain rights to convert
some or all of the Preferred Stock and foreclose upon shares of Common
Stock of the Company pledged pursuant to that Pledge Agreement.


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b. Underwritten Offering. If any offering pursuant to a
Registration Statement pursuant to Section 2(a) involves an
underwritten offering, the Buyers shall have the right to select one
legal counsel and an investment banker or bankers and manager or
managers to administer their interest in the offering, which investment
banker or bankers or manager or managers shall be reasonably
satisfactory to the Company.


c. Piggy-Back Registrations. If at any time prior to the
expiration of the Registration Period (as hereinafter defined) the
Company proposes to file with the SEC a Registration Statement relating
to an offering for its own account or the account of others under the
1933 Act of any of its securities (other than on Form S-4 or Form S-8
or their then equivalents relating to securities to be issued solely in
connection with any acquisition of any entity or business or equity
securities issuable in connection with stock option or other employee
benefit plans) the Company shall promptly send to each Investor who is
entitled to registration rights under this Section 2(c) written notice
of the Company's intention to file a Registration Statement and of such
Investor's rights under this Section 2(c) and, if within twenty (20)
days after receipt of such notice, such Investor shall so request in
writing, the Company shall include in such Registration Statement all
or any part of the Registrable Securities such Investor requests to be
registered, subject to the priorities set forth in Section 2(d) below.
No right to registration of Registrable Securities under this Section
2(c) shall be construed to limit any registration required under
Section 2(a). The obligations of the Company under this Section 2(c)
may be waived by Investors holding a majority of the Registrable
Securities. If an offering in connection with which an Investor is
entitled to registration under this Section 2(c) is an underwritten
offering, then each Investor whose Registrable Securities are included
in such Registration Statement shall, unless otherwise agreed by the
Company, offer and sell such Registrable Securities in an underwritten
offering using the same underwriter or underwriters and, subject to the
provisions of this Agreement, on the same terms and conditions as other
shares of Common Stock included in such underwritten offering.


d. Priority in Piggy-Back Registration Rights in connection
with Registrations or Company Account. If the registration referred to
in Section 2(c) is to be an underwritten public offering for the
account of the Company and the managing underwriter(s) advise the
Company in writing, that in their reasonable good faith opinion,
marketing or other factors dictate that a limitation on the number of
shares of Common Stock which may be included in the Registration
Statement is necessary to facilitate and not adversely affect the
proposed offering, then the Company shall include in such registration:
(1) first, all securities the Company proposes to sell for its own
account, (2) second, up to the full number of securities proposed to be
registered for the account of the holders of securities entitled to
inclusion of their securities in the Registration Statement by reason
of demand registration rights, and (3) third, the securities requested
to be registered by the Investors and other holders of securities
entitled to participate in the registration, drawn from them pro rata
based on the number each has requested to be included in such
registration.


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3. RELATED OBLIGATIONS.


Whenever an Investor has requested that any Registrable Securities be registered pursuant to Section 2(c) or at such time as the Company is obligated to file a Registration Statement with the SEC pursuant to Section 2(a), the Company will use its best efforts to effect the registration of the Registrable Securities in accordance with the intended method of disposition thereof and, pursuant thereto, the Company shall have the following obligations:


a. The Company shall promptly prepare and file with the SEC a
Registration Statement with respect to the Registrable Securities (on
or prior to the thirtieth (30th) day following the date of issuance of
any Preferred Stock, for the registration of Registrable Securities
pursuant to Section 2(a)) and use its best efforts to cause such
Registration Statement(s) relating to Registrable Securities to become
effective as soon as possible after such filing (by the one hundredth
(100th) day following the issuance of the relevant Preferred Stock for
the registration of Registrable Securities pursuant to Section 2(a),
and keep the Registration Statement(s) effective pursuant to Rule 415
at all times until the earlier of (i) the date as of which the
Investors may sell all of the Registrable Securities without
restriction pursuant to Rule 144(k) promulgated under the 1933 Act (or
successor thereto) or (ii) the date on which (A) the Investors shall
have sold all the Registrable Securities and (B) none of the Preferred
Stock is outstanding the period ending on such earlier date being
referred to herein as (the "REGISTRATION PERIOD"), which Registration
Statement(s) (including any amendments or supplements thereto and
prospectuses contained therein) shall not contain any untrue statement
of a material fact or omit to state a material fact required to be
stated therein, or necessary to make the statements therein, in light
of the circumstances in which they were made, not misleading.


b. The Company shall prepare and file with the SEC such
amendments (including post-effective amendments) and supplements to the
Registration Statement(s) and the prospectus(es) used in connection
with the Registration Statement(s), which prospectus(es) are to be
filed pursuant to Rule 424 promulgated under the 1933 Act, as may be
necessary to keep the Registration Statement(s) effective at all times
during the Registration Period, and, during such period, comply with
the provisions of the 1933 Act with respect to the disposition of all
Registrable Securities of the Company covered by the Registration
Statement(s) until such time as all of such Registrable Securities
shall have been disposed of in accordance with the intended methods of
disposition by the seller or sellers thereof as set forth in the
Registration Statement(s). In the event the number of shares available
under a Registration Statement filed pursuant to this Agreement is
insufficient to cover all of the Registrable Securities, the Company
shall amend the Registration Statement, or file a new Registration
Statement (on the short form available therefor, if applicable), or
both, so as to cover all of the Registrable Securities, in each case,
as soon as practicable, but in any event within fifteen (15) days after
the necessity therefor arises (based on the market price of the Common
Stock and other relevant factors on which the Company reasonably elects
to rely). The Company shall use its best efforts to cause such
amendment and/or new


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Registration Statement to become effective as soon as practicable
following the filing thereof. For purposes of the foregoing provision,
the number of shares available under a Registration Statement shall be
deemed "insufficient to cover all of the Registrable Securities" if at
any time the number of Registrable Securities issued or issuable upon
conversion of the Preferred Stock is greater than the quotient
determined by dividing (i) the number of shares of Common Stock
available for resale under such Registration Statement by (ii) 1.0. For
purposes of the calculation set forth in the foregoing sentence, any
restrictions on the convertibility of the Preferred Stock shall be
disregarded and such calculation shall assume that the Preferred Stock
are then convertible into shares of Common Stock at the then prevailing
Conversion Rate (as defined in the Preferred Stock).


c. The Company shall furnish to each Investor whose
Registrable Securities are included in the Registration Statement(s)
and its legal counsel without charge (i) promptly after the same is
prepared and filed with the SEC at least one copy of the Registration
Statement and any amendment thereto, including financial statements and
schedules, all documents incorporated therein by reference and all
exhibits, the prospectus(es) included in such Registration Statement(s)
(including each preliminary prospectus ) and, with regards to the
Registration Statement, any correspondence by or on behalf of the
Company to the SEC or the staff of the SEC and any correspondence from
the SEC or the staff of the SEC to the Company or its representatives,
(ii) upon the effectiveness of any Registration Statement, ten (10)
copies of the prospectus included in such Registration Statement and
all amendments and supplements thereto (or such other number of copies
as such Investor may reasonably request) and (iii) such other
documents, including any preliminary prospectus, as such Investor may
reasonably request in order to facilitate the disposition of the
Registrable Securities owned by such Investor.


d. The Company shall use reasonable efforts to (i) register
and qualify the Registrable Securities covered by the Registration
Statement(s) under such other securities or "blue sky" laws of such
jurisdictions in the United States as any Investor reasonably requests,
(ii) prepare and file in those jurisdictions, such amendments
(including post-effective amendments) and supplements to such
registrations and qualifications as may be necessary to maintain the
effectiveness thereof during the Registration Period, (iii) take such
other actions as may be necessary to maintain such registrations and
qualifications in effect at all times during the Registration Period,
and (iv) take all other actions reasonably necessary or advisable to
quality the Registrable Securities for sale in such jurisdictions;
provided, however, that the Company shall not be required in connection
therewith or as a condition thereto to (a) qualify to do business in
any jurisdiction where it would not otherwise be required to qualify
but for this Section 3(d), (b) subject itself to general taxation in
any such jurisdiction, or (c) file a general consent to service of
process in any such jurisdiction. The Company shall promptly notify
each Investor who holds Registrable Securities of the receipt by the
Company of any notification with respect to the suspension of the
registration or qualification of any of the Registrable Securities for
sale under the


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securities or "blue sky" laws of any jurisdiction in the United States
or its receipt of actual notice of the initiation or threatening of any
proceeding for such purpose.


e. In the event Investors who hold a majority of the
Registrable Securities being offered in the offering select
underwriters for the offering, the Company shall enter into and perform
its obligations under an underwriting agreement, in usual and customary
form, including, without limitation, customary indemnification and
contribution obligations, with the underwriters of such offering.


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f. As promptly as practicable after becoming aware of such
event, the Company shall notify each Investor in writing of the
happening of any event, of which the Company has knowledge, as a result
of which the prospectus included in a Registration Statement, as then
in effect, includes an untrue statement of a material fact or omission
to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which
they were made, not misleading, and promptly prepare a supplement or
amendment to the Registration Statement to correct such untrue
statement or omission, and deliver ten (10) copies of such supplement
or amendment to each Investor (or such other number of copies as such
Investor may reasonably request). The Company shall also promptly
notify each Investor in writing (i) when a prospectus or any prospectus
supplement or post-effective amendment has been filed, and when a
Registration Statement or any post-effective amendment has become
effective (notification of such effectiveness shall be delivered to
each Investor by facsimile on the same day of such effectiveness and by
overnight mail) (ii) of any request by the SEC for amendments or
supplements to a Registration Statement or related prospectus or
related information, (iii) of the Company's reasonable determination
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