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ex4_1.htm

    
      

    

    
      

    

    
      Exhibit
        4.1

      SECOND
        AMENDED AND RESTATED CERTIFICATE OF DESIGNATION

       

      OF
        THE RELATIVE RIGHTS AND PREFERENCES

       

      OF
        THE

       

      SERIES
        A CONVERTIBLE PREFERRED STOCK

       

      OF

       

      CHEMBIO
        DIAGNOSTICS, INC.

       

      The
        undersigned, the Chief Financial Officer of Chembio Diagnostics, Inc., a
        Nevada
        corporation (the “Company”), in accordance with the provisions of the
        Nevada Revised Statutes, does hereby certify that, pursuant to the authority
        conferred upon the Board of Directors by the Articles of Incorporation of
        the
        Company, the following resolution amending and restating the Certificate
        of
        Designation of the Series A Convertible Preferred Stock, was duly adopted
        with shareholder consent:

       

      RESOLVED,
        that pursuant to the authority expressly granted to and vested in the Board
        of
        Directors of the Company by provisions of the Articles of Incorporation of
        the
        Company (the “Articles of Incorporation”), there hereby is created out of
        the shares of Preferred Stock, par value $.01 per share, of the Company
        authorized in Article IV of the Articles of Incorporation (the
“Preferred Stock”), a series of Preferred Stock of the Company, to be
        named “Series A Convertible Preferred Stock,” consisting of Two Hundred
        Fifty (250) shares, which series shall have the following designations, powers,
        preferences and relative and other special rights and the following
        qualifications, limitations and restrictions:

       

      1.  Designation
        and Rank.  The designation of such series of the Preferred Stock
        shall be the Series A Convertible Preferred Stock, par value $.01 per share
        (the “Series A Preferred Stock”).  The maximum number of
        shares of Series A Preferred Stock shall be Two Hundred Fifty (250)
        shares.  The Series A Preferred Stock shall rank senior to the
        common stock, par value $.01 per share (the “Common Stock”), and to all
        other classes and series of equity securities of the Company which by their
        terms do not rank senior to the Series A Preferred Stock (“Junior
        Stock”).  The Series A Preferred Stock shall be subordinate
        to and rank junior to all indebtedness of the Company now or hereafter
        outstanding.

       

      2.  Dividends.

       

      (a)  Payment
        of Dividends.  Subject to Section 5(c)(ii) hereof, the holders of
        record of shares of Series A Preferred Stock shall be entitled to receive,
        out of any assets at the time legally available therefor and when and as
        declared by the Board of Directors, dividends at the rate of eight percent
        (8%)
        of the stated Liquidation Preference Amount (as defined in Section 4
        hereof) per share per annum commencing on the date of issuance (the “Issuance
        Date”) of the Series A Preferred Stock (the “Dividend Payment”),
        and no more, payable semi-annually at the option of the Company in cash,
        shares
        of Series A Preferred Stock or shares of Common Stock.  If the
        Company elects to pay any dividend in shares of Common Stock, the number
        of
        shares of Common Stock to be issued to the holder shall be an amount equal
        to
        the quotient of (i) the Dividend Payment divided by (ii) the volume
        weighted average trading price (the “VWAP”) of the Common Stock for the
        10 trading days preceding the dividend record date.  As used in this
        Certificate, the term “volume weighted average trading price”, or “VWAP”, shall
        mean, for any period of time, the sum of the purchase prices charged for
        all
        shares sold during that period of time divided by the number of shares sold
        during that period of time.  If the Company elects to pay any dividend
        in shares of Series A Preferred Stock, the number of shares of
        Series A Preferred Stock to be issued to the holder shall be an amount
        equal to the quotient of (i) the Dividend Payment divided by (ii) the
        VWAP of the Common Stock for the 10 trading days preceding the dividend record
        date and then issuing that number of shares of Series A Preferred Stock
        that would at the time of the calculation be convertible into the number
        of
        shares determined by dividing the Dividend Payment by the 10-day VWAP;
provided, that, the Company may only elect to pay any dividend in
        shares of Series A Preferred Stock if the amount of such shares shall not
        be less than one-tenth of one share of Series A Preferred Stock or a
        multiple of one-tenth of one share of Series A Preferred
        Stock.  If the Company elects or is required to pay any dividend in
        Common Stock or Series A Preferred Stock, the Company will give the holders
        of record of shares of the Series A Preferred Stock ten (10) trading days
        notice prior to the date of the applicable Dividend Payment.  In the
        case of shares of Series A Preferred Stock outstanding for less than a full
        year, dividends shall be pro rated based on the portion of each year during
        which such shares are outstanding.  Dividends on the Series A
        Preferred Stock shall be cumulative, shall accrue and be payable
        semi-annually.  Dividends on the Series A Preferred Stock are
        prior and in preference to any declaration or payment of any distribution
        (as
        defined below) on any outstanding shares of Junior Stock.  Such
        dividends shall accrue on each share of Series A Preferred Stock from day
        to day whether or not earned or declared so that if such dividends with respect
        to any previous dividend period at the rate provided for herein have not
        been
        paid on, or declared and set apart for, all shares of Series A Preferred
        Stock at the time outstanding, the deficiency shall be fully paid on, or
        declared and set apart for, such shares on a pro rata basis with all other
        equity securities of the Company ranking on a parity with the Series A
        Preferred Stock as to the payment of dividends before any distribution shall
        be
        paid on, or declared and set apart for Junior Stock.  Notwithstanding
        the foregoing, if the Company elects to pay any dividend in shares of Common
        Stock or in shares of Series A Preferred Stock, so long as Vicis Capital
        Master Fund owns any shares of Series A Preferred Stock, Vicis Capital
        Master Fund will be deemed to have elected to receive such dividend in cash
        unless it otherwise notifies the Company no later than five (5) trading days
        prior to the date of the applicable Dividend Payment.  Such payment to
        Vicis Capital Master Fund will not affect the Company’s election to make the
        applicable Dividend Payment in stock so long as the only holder receiving
        the
        Dividend Payment in cash is Vicis Capital Master Fund.

      
        1

        
          

        

      

       

      (b)  So
        long
        as any shares of Series A Preferred Stock are outstanding, the Company
        shall not declare, pay or set apart for payment any dividend or make any
        distribution on any Junior Stock (other than dividends or distributions payable
        in additional shares of Junior Stock), unless at the time of such dividend
        or
        distribution the Company shall have paid all accrued and unpaid dividends
        on the
        outstanding shares of Series A Preferred Stock.

       

      (c)  In
        the
        event of a dissolution, liquidation or winding up of the Company pursuant
        to
        Section 4, all accrued and unpaid dividends on the Series A Preferred
        Stock shall be payable on the date of payment of the preferential amount
        to the
        holders of Series A Preferred Stock.  In the event of (i) a
        mandatory redemption pursuant to Section 9 or (ii) a redemption upon
        the occurrence of a Major Transaction (as defined in Section 8(c)) or a
        Triggering Event (as defined in Section 8(d)), all accrued and unpaid dividends
        on the Series A Preferred Stock shall be payable on the date of such
        redemption.  In the event of a voluntary conversion pursuant to
        Section 5(a), all accrued and unpaid dividends on the Series A
        Preferred Stock being converted shall be payable on the day immediately
        preceding the Voluntary Conversion Date (as defined in Section
        5(b)(i)).

       

      (d)  For
        purposes hereof, unless the context otherwise requires, “distribution” shall
        mean the transfer of cash or property without consideration, whether by way
        of
        dividend or otherwise, payable other than in shares of Common Stock or other
        equity securities of the Company, or the purchase or redemption of shares
        of the
        Company (other than redemptions set forth in Section 8 below or repurchases
        of Common Stock held by employees or consultants of the Company upon termination
        of their employment or services pursuant to agreements providing for such
        repurchase or upon the cashless exercise of options held by employees or
        consultants) for cash or property.

       

      3.  Voting
        Rights.

       

      (a)  Class
        Voting Rights.  The Series A Preferred Stock shall have the
        following class voting rights (in addition to the voting rights set forth
        in
        Section 3(b) hereof).  So long as any shares of the Series A
        Preferred Stock remain outstanding, the Company shall not, without the
        affirmative vote or consent of the holders of at least three-fourths (3/4)
        of
        the shares of the Series A Preferred Stock outstanding at the time, given
        in person or by proxy, either in writing or at a meeting, in which the holders
        of the Series A Preferred Stock vote separately as a
        class:  (i) amend, alter or repeal the provisions of the
        Series A Preferred Stock, whether by merger, consolidation or otherwise, so
        as to adversely affect any right, preference, privilege or voting power of
        the
        Series A Preferred Stock; provided, however, that any
        creation and issuance of another series of Junior Stock shall not be deemed
        to
        adversely affect such rights, preferences, privileges or voting powers;
        (ii) repurchase, redeem or pay dividends on, shares of Common Stock or any
        other shares of the Company’s Junior Stock (other than de minimus repurchases
        from employees of the Company in certain circumstances); (iii) amend the
        Articles of Incorporation or By-Laws of the Company so as to affect materially
        and adversely any right, preference, privilege or voting power of the
        Series A Preferred Stock; provided, however, that any
        creation and issuance of another series of Junior Stock shall not be deemed
        to
        adversely affect such rights, preferences, privileges or voting powers;
        (iv) effect any distribution with respect to Junior Stock;
        (v) reclassify the Company’s outstanding securities; (vi) voluntarily
        file for bankruptcy, liquidate the Company’s assets or make an assignment for
        the benefit of the Company’s creditors; or (vii) change the nature of the
        Company’s business.  Notwithstanding the foregoing to the contrary, so
        long as at least $1,000,000 of Series A Preferred Stock is outstanding, the
        Company shall not, without the affirmative vote or consent of the holders
        of at
        least three-fourths (3/4) of the shares of the Series A Preferred Stock
        outstanding at the time, authorize, create, issue or increase the authorized
        or
        issued amount of any class or series of stock, including but not limited
        to the
        issuance of any more shares of previously authorized Common Stock or Preferred
        Stock, ranking paripassu or senior to the Series A Preferred
        Stock (except for shares of Series A Preferred Stock to be issued to
        certain holders of promissory notes issued by the Company in satisfaction
        of
        outstanding indebtedness in an amount not to exceed $750,000 and the issuance
        of
        shares of Series A Preferred Stock with respect to the payment of dividends
        on such shares of Series A Preferred Stock), with respect to the
        distribution of assets on liquidation, dissolution or winding up.

       

      (b)  General
        Voting Rights.  Except with respect to transactions upon which the
        Series A Preferred Stock shall be entitled to vote separately as a class
        pursuant to Section 3(a) above and except as otherwise required by Nevada
        law, the Series A Preferred Stock shall have no voting
        rights.  The Common Stock into which the Series A Preferred Stock
        is convertible shall, upon issuance, have all of the same voting rights as
        other
        issued and outstanding Common Stock of the Company.

       

      4.  Liquidation
        Preference.

       

      (a)  In
        the
        event of the liquidation, dissolution or winding up of the affairs of the
        Company, whether voluntary or involuntary, the holders of shares of the
        Series A Preferred Stock then outstanding shall be entitled to receive, out
        of the assets of the Company available for distribution to its stockholders,
        an
        amount equal to $30,000 per share (the “Liquidation Preference Amount”)
        of the Series A Preferred Stock plus any accrued and unpaid dividends
        before any payment shall be made or any assets distributed to the holders
        of the
        Common Stock or any other Junior Stock.  If the assets of the Company
        are not sufficient to pay in full the Liquidation Preference Amount plus
        any
        accrued and unpaid dividends payable to the holders of outstanding shares
        of the
        Series A Preferred Stock and any series of preferred stock or any other
        class of stock on a parity, as to rights on liquidation, dissolution or winding
        up, with the Series A Preferred Stock, then all of said assets will be
        distributed among the holders of the Series A Preferred Stock and the other
        classes of stock on a parity with the Series A Preferred Stock, if any,
        ratably in accordance with the respective amounts that would be payable on
        such
        shares if all amounts payable thereon were paid in full.  The
        liquidation payment with respect to each outstanding fractional share of
        Series A Preferred Stock shall be equal to a ratably proportionate amount
        of the liquidation payment with respect to each outstanding share of
        Series A Preferred Stock.  All payments for which this
        Section 4(a) provides shall be in cash, property (valued at its fair market
        value as determined by an independent appraiser reasonably acceptable to
        the
        holders of a majority of the Series A Preferred Stock) or a combination
        thereof; provided, however, that no cash shall be paid to holders
        of Junior Stock unless each holder of the outstanding shares of Series A
        Preferred Stock has been paid in cash the full Liquidation Preference Amount
        plus any accrued and unpaid dividends to which such holder is entitled as
        provided herein.  After payment of the full Liquidation Preference
        Amount plus any accrued and unpaid dividends to which each holder is entitled,
        such holders of shares of Series A Preferred Stock will not be entitled to
        any further participation as such in any distribution of the assets of the
        Company.

      
        2

        
          

        

      

      
      

      (b)  A
        consolidation or merger of the Company with or into any other corporation
        or
        corporations, or a sale of all or substantially all of the assets of the
        Company, or the effectuation by the Company of a transaction or series of
        related transactions in which more than 50% of the voting shares of the Company
        is disposed of or conveyed, shall not be deemed to be a liquidation,
        dissolution, or winding up within the meaning of this
        Section 4.  In the event of the merger or consolidation of the
        Company with or into another corporation, the Series A Preferred Stock
        shall maintain its relative powers, designations and preferences provided
        for
        herein and no merger inconsistent therewith shall result.

       

      (c)  Written
        notice of any voluntary or involuntary liquidation, dissolution or winding
        up of
        the affairs of the Company, stating a payment date and the place where the
        distributable amounts shall be payable, shall be given by mail, postage prepaid,
        no less than forty-five (45) days prior to the payment date stated therein,
        to
        the holders of record of the Series A Preferred Stock at their respective
        addresses as the same shall appear on the books of the Company.

       

      5.  Conversion.  The
        holder of Series A Preferred Stock shall have the following conversion
        rights (the “Conversion Rights”):

       

      (a)  Right
        to Convert.

       

      (i)  Subject
        to Section 5(a)(ii) below, at any time on or after the Issuance Date, the
        holder
        of any such shares of Series A Preferred Stock may, at such holder’s
        option, subject to the limitations set forth in Section 7 herein, elect to
        convert (a “Voluntary Conversion”) all or any portion of the shares of
        Series A Preferred Stock held by such person into a number of fully paid
        and nonassessable shares of Common Stock equal to the quotient of (i) the
        Liquidation Preference Amount of the shares of Series A Preferred Stock
        being converted divided by (ii) the Conversion Price (as defined in
        Section 5(d) below) then in effect as of the date of the delivery by such
        holder of its notice of election to convert.  In the event of a notice
        of redemption of any shares of Series A Preferred Stock pursuant to
        Section 8 hereof, the Conversion Rights of the shares designated for
        redemption shall terminate at the close of business on the last full day
        preceding the date fixed for redemption, unless the redemption price is not
        paid
        on such redemption date, in which case the Conversion Rights for such shares
        shall continue until such price is paid in full.  In the event of a
        liquidation, dissolution or winding up of the Company, the Conversion Rights
        shall terminate at the close of business on the last full day preceding the
        date
        fixed for the payment of any such amounts distributable on such event to
        the
        holders of Series A Preferred Stock.  In the event of such a
        redemption or liquidation, dissolution or winding up, the Company shall provide
        to each holder of shares of Series A Preferred Stock notice of such
        redemption or liquidation, dissolution or winding up, which notice shall
        (i) be sent at least fifteen (15) days prior to the termination of the
        Conversion Rights and (ii) state the amount per share of Series A
        Preferred Stock that will be paid or distributed on such redemption or
        liquidation, dissolution or winding up, as the case may be.

       

      (ii)  A
        holder
        of Series A Preferred Stock may not convert greater than twenty percent
        (20%) of its shares of Series A Preferred Stock until the earlier of
        (A) six (6) months following the effective date (the “Effectiveness
        Date”) of the registration statement providing for the resale of the shares
        of Common Stock issuable upon conversion of the Series A Preferred Stock
        (the “Registration Statement”) or (B) ten (10) months following the
        Issuance Date.

       

      (b)  Mechanics
        of Voluntary Conversion.  The Voluntary Conversion of
        Series A Preferred Stock shall be conducted in the following
        manner:

       

      (i)  Holder’s
        Delivery Requirements.  To convert Series A Preferred Stock
        into full shares of Common Stock on any date (the “Voluntary Conversion
        Date”), the holder thereof shall (A) transmit by facsimile (or
        otherwise deliver), for receipt on or prior to 5:00 p.m., New York time on
        such
        date, a copy of a fully executed notice of conversion in the form attached
        hereto as Exhibit I (the “Conversion Notice”), to the
        Company, and (B) surrender to a common carrier for delivery to the Company
        as soon as practicable following such Voluntary Conversion Date but in no
        event
        later than three (3) business days after such date the original certificates
        representing the shares of Series A Preferred Stock being converted (or an
        indemnification undertaking with respect to such shares in the case of their
        loss, theft or destruction) (the “Preferred Stock Certificates”) and the
        originally executed Conversion Notice.

       

      (ii)  Company’s
        Response.  Upon receipt by the Company of a facsimile copy of a
        Conversion Notice, the Company shall immediately send, via facsimile, a
        confirmation of receipt of such Conversion Notice to such
        holder.  Upon receipt by the Company of a copy of the fully executed
        Conversion Notice, the Company or its designated transfer agent (the
“Transfer Agent”), as applicable, shall, within three (3) business days
        following the date of receipt by the Company of the fully executed Conversion
        Notice (so long as the applicable Preferred Stock Certificates and original
        Conversion Notice are received by the Company on or before such third business
        day), issue and deliver to the Depository Trust Company (“DTC”) account
        on the Holder’s behalf via the Deposit Withdrawal Agent Commission System
        (“DWAC”) as specified in the Conversion Notice, registered in the name of
        the holder or its designee, for the number of shares of Common Stock to which
        the holder shall be entitled.  If the number of shares of Preferred
        Stock represented by the Preferred Stock Certificate(s) submitted for conversion
        is greater than the number of shares of Series A Preferred Stock being
        converted, then the Company shall, as soon as practicable and in no event
        later
        than three (3) business days after receipt of the Preferred Stock Certificate(s)
        and at the Company’s expense, issue and deliver to the holder a new Preferred
        Stock Certificate representing the number of shares of Series A Preferred
        Stock not converted.

       

      
        
          
          

        

        
          3

          
            

          

        

         

      

      (iii)  Dispute
        Resolution.  In the case of a dispute as to the arithmetic
        calculation of the number of shares of Common Stock to be issued upon
        conversion, the Company shall cause its Transfer Agent to promptly issue
        to the
        holder the number of shares of Common Stock that is not disputed and shall
        submit the arithmetic calculations to the holder via facsimile as soon as
        possible, but in no event later than three (3) business days after receipt
        of
        such holder’s Conversion Notice.  If such holder and the Company are
        unable to agree upon the arithmetic calculation of the number of shares of
        Common Stock to be issued upon such conversion within two (2) business days
        of
        such disputed arithmetic calculation being submitted to the holder, then
        the
        Company shall within two (2) business days submit via facsimile the disputed
        arithmetic calculation of the number of shares of Common Stock to be issued
        upon
        such conversion to the Company’s independent, outside accountant.  The
        Company shall cause the accountant to perform the calculations and notify
        the
        Company and the holder of the results no later than four (4) business days
        from
        the time it receives the disputed calculations.  Such accountant’s
        calculation shall be binding upon all parties absent manifest
        error.  The reasonable expenses of such accountant in making such
        determination shall be paid by the Company in the event the holder’s calculation
        was correct, or by the holder in the event the Company’s calculation was
        correct, or equally by the Company and the holder in the event that neither
        the
        Company’s or the holder’s calculation was correct.  The period of time
        in which the Company is required to effect conversions or redemptions under
        this
        Certificate of Designation shall be tolled with respect to the subject
        conversion or redemption pending resolution of any dispute by the Company
        made
        in good faith and in accordance with this Section 5(b)(iii).

       

      (iv)  Record
        Holder.  The person or persons entitled to receive the shares of
        Common Stock issuable upon a conversion of the Series A Preferred Stock
        shall be treated for all purposes as the record holder or holders of such
        shares
        of Common Stock on the Conversion Date.

       

      (v)  Company’s
        Failure to Timely Convert.  If within five (5) business days of
        the Company’s receipt of an executed copy of the Conversion Notice (so long as
        the applicable Preferred Stock Certificates and original Conversion Notice
        are
        received by the Company on or before such third business day) (the “Share
        Delivery Period”) the Transfer Agent shall fail to issue and deliver to a
        holder the number of shares of Common Stock to which such holder is entitled
        upon such holder’s conversion of the Series A Preferred Stock or to issue a
        new Preferred Stock Certificate representing the number of shares of
        Series A Preferred Stock to which such holder is entitled pursuant to
        Section 5(b)(ii) (a “Conversion Failure”), in addition to all other
        available remedies which such holder may pursue hereunder and under the
        Series A Convertible Preferred Stock and Warrant Purchase Agreement (the
“Purchase Agreement”) among the Company and the initial holders of the
        Series A Preferred Stock (including indemnification pursuant to
        Section 6 thereof), the Company shall pay additional damages to such holder
        on each business day after such fifth (5th) business day that such conversion
        is
        not timely effected in an amount equal 0.5% of the product of (A) the sum
        of the number of shares of Common Stock not issued to the holder on a timely
        basis pursuant to Section 5(b)(ii) and to which such holder is entitled and,
        in
        the event the Company has failed to deliver a Preferred Stock Certificate
        to the
        holder on a timely basis pursuant to Section 5(b)(ii), the number of shares
        of
        Common Stock issuable upon conversion of the shares of Series A Preferred
        Stock represented by such Preferred Stock Certificate, as of the last possible
        date which the Company could have issued such Preferred Stock Certificate
        to
        such holder without violating Section 5(b)(ii) and (B) the Closing Bid
        Price (as defined in Section 5(c)(iii) below) of the Common Stock on the
        last
        possible date which the Company could have issued such Common Stock and such
        Preferred Stock Certificate, as the case may be, to such holder without
        violating Section 5(b)(ii).  If the Company fails to pay the
        additional damages set forth in this Section 5(b)(v) within five (5) business
        days of the date incurred, then such payment shall bear interest at the rate
        of
        2.0% per month (pro rated for partial months) until such payments are
        made.

       

      (c)  Mandatory
        Conversion.

       

      (i)  One
        minute after this Second Amended and Restated Certificate is effective with
        the
        Nevada Secretary of State (the "Conversion Time") on the Plan Closing Date
        (defined below), each share of Series A Preferred Stock automatically and
        without any action on the part of the holder thereof, shall convert into
        a
        number of fully paid and nonassessable shares of Common Stock equal to the
        quotient of (i) the Liquidation Preference Amount of the shares of Series
        A
        Preferred Stock outstanding on the Plan Closing Date divided by (ii) the
        Conversion Price in effect at the Conversion Time on the Plan Closing
        Date.  Any accrued but unpaid dividends on the Series A Preferred
        Stock outstanding at the Conversion Time on the Plan Closing Date will be
        issued
        by the Company at the Conversion Time on the Plan Closing Date in shares
        of
        Common Stock, with the number of shares of Common Stock to be issued equal
        to
        the quotient of (i) the accrued unpaid dividend divided by (ii) the Conversion
        Price in effect at the Conversion Time on the Plan Closing Date.

       

      (ii)  As
        used
        herein, “Plan Closing Date” shall be December 19, 2007.

       

      (iii)  The
        term
“Closing Bid Price” shall mean, for any security as of any date, the last
        closing bid price of such security on the OTC Bulletin Board for such security
        as reported by Bloomberg, or, if no closing bid price is reported for such
        security by Bloomberg, the last closing trade price of such security as reported
        by Bloomberg, or, if no last closing trade price is reported for such security
        by Bloomberg, the average of the bid prices of any market makers for such
        security as reported in the “pink sheets” by the National Quotation Bureau,
        Inc.  If the Closing Bid Price cannot be calculated for such security
        on such date on any of the foregoing bases, the Closing Bid Price of such
        security on such date shall be the fair market value as mutually determined
        by
        the Company and the holders of a majority of the outstanding shares of
        Series A Preferred Stock.

       

      
        
          
          

        

        
          4

          
            

          

        

         

      

      (iv)  On
        the
        Plan Closing Date, the Corporation may cause the outstanding shares of Series
        A
        Preferred Stock to be converted automatically without any further action
        by the
        holders of such shares and regardless of whether the certificates representing
        such shares are surrendered to the Company or its Transfer Agent; provided,
        however, that the Company shall not be obligated to issue the shares of Common
        Stock issuable upon conversion of any shares of Series A Preferred Stock
        unless
        certificates evidencing such shares of Series A Preferred Stock are either
        delivered to the Company or the holder notifies the Company that such
        certificates have been lost, stolen, or destroyed, and executes an agreement
        satisfactory to the Company to indemnify the Company from any loss incurred
        by
        it in connection therewith.  Upon the occurrence of the automatic
        conversion of the Series A Preferred Stock pursuant to this Section 5, the
        holders of the Series A Preferred Stock shall surrender to the Company the
        certificates representing the Series A Preferred Stock that has been
        automatically converted, and the Company shall cause its Transfer Agent to
        deliver the shares of Common Stock issuable upon such conversion (in the
        same
        manner set forth in Section 5(b)(ii)) to the holder within three (3) business
        days of the holder’s delivery of the applicable Preferred Stock
        Certificates.

       

      (d)  Conversion
        Price.

       

      (i)  The
        term
“Conversion Price” shall mean $0.40 per share for the holders of the
        Series A Preferred Stock on the Plan Closing Date, provided, however, that
        the
        Conversion Price for the Series A Preferred Stock held by Lawrence A. Siebert
        shall be $0.48 per share on the Plan Closing Date.

       

      (ii)  Notwithstanding
        the foregoing to the contrary, if during any period (a “Black-out
        Period”), a holder of Series A Preferred Stock is unable to trade any
        Common Stock issued or issuable upon conversion of the Series A Preferred
        Stock immediately due to the postponement of filing or delay or suspension
        of
        effectiveness of a registration statement or because the Company has otherwise
        informed such holder of Series A Preferred Stock that an existing
        prospectus cannot be used at that time in the sale or transfer of such Common
        Stock (provided that such postponement, delay, suspension or fact that the
        prospectus cannot be used is not due to factors solely within the control
        of the
        holder of Series A Preferred Stock or due to the Company exercising its
        rights under Section 3(n) of the Registration Rights Agreement (as defined
        in the Purchase Agreement)), such holder of Series A Preferred Stock shall
        have the option but not the obligation on any Conversion Date occurring within
        ten (10) trading days following the expiration of the Black-out Period of
        using
        the Conversion Price applicable on such Conversion Date or any Conversion
        Price
        selected by such holder of Series A Preferred Stock that would have been
        applicable had such Conversion Date been at any earlier time during the
        Black-out Period or within the ten (10) trading days thereafter.

       

      (e)  Adjustments
        of Conversion Price.

       

      (i)  Adjustments
        for Stock Splits and Combinations.  If the Company shall at any
        time or from time to time after the Issuance Date, effect a stock split of
        the
        outstanding Common Stock, the Conversion Price shall be proportionately
        decreased.  If the Company shall at any time or from time to time
        after the Issuance Date, combine the outstanding shares of Common Stock,
        the
        Conversion Price shall be proportionately increased.  Any adjustments
        under this Section 5(e)(i) shall be effective at the close of business on
        the
        date the stock split or combination becomes effective.

       

      (ii)  Adjustments
        for Certain Dividends and Distributions.  If the Company shall at
        any time or from time to time after the Issuance Date, make or issue or set
        a
        record date for the determination of holders of Common Stock entitled to
        receive
        a dividend or other distribution payable in shares of Common Stock, then,
        and in
        each event, the Conversion Price shall be decreased as of the time of such
        issuance or, in the event such record date shall have been fixed, as of the
        close of business on such record date, by multiplying the Conversion Price
        then
        in effect by a fraction:

       

      (1)  the
        numerator of which shall be the total number of shares of Common Stock issued
        and outstanding immediately prior to the time of such issuance or the close
        of
        business on such record date; and

       

      (2)  the
        denominator of which shall be the total number of shares of Common Stock
        issued
        and outstanding immediately prior to the time of such issuance or the close
        of
        business on such record date plus the number of shares of Common Stock issuable
        in payment of such dividend or distribution.

       

      (iii)  Adjustment
        for Other Dividends and Distributions.  If the Company shall at
        any time or from time to time after the Issuance Date, make or issue or set
        a
        record date for the determination of holders of Common Stock entitled to
        receive
        a dividend or other distribution payable in securities of the Company other
        than
        shares of Common Stock, then, and in each event, an appropriate revision
        to the
        applicable Conversion Price shall be made and provision shall be made (by
        adjustments of the Conversion Price or otherwise) so that the holders of
        Series A Preferred Stock shall receive upon conversions thereof, in
        addition to the number of shares of Common Stock receivable thereon, the
        number
        of securities of the Company which they would have received had their
        Series A Preferred Stock been converted into Common Stock on the date of
        such event and had thereafter, during the period from the date of such event
        to
        and including the Conversion Date, retained such securities (together with
        any
        distributions payable thereon during such period), giving application to
        all
        adjustments called for during such period under this Section 5(e)(iii) with
        respect to the rights of the holders of the Series A Preferred Stock;
provided, however, that if such record date shall have been fixed
        and such dividend is not fully paid or if such distribution is not fully
        made on
        the date fixed therefor, the Conversion Price shall be adjusted pursuant
        to this
        paragraph as of the time of actual payment of such dividends or distributions;
        and providedfurther, however, that no such adjustment shall be
        made if the holders of Series A Preferred Stock simultaneously receive
        (i) a dividend or other distribution of shares of Common Stock in a number
        equal to the number of shares of Common Stock as they would have received
        if all
        outstanding shares of Series A Preferred Stock had been converted into
        Common Stock on the date of such event or (ii) a dividend or other
        distribution of shares of Series A Preferred Stock which are convertible,
        as of the date of such event, into such number of shares of Common Stock
        as is
        equal to the number of additional shares of Common Stock being issued with
        respect to each share of Common Stock in such dividend or
        distribution.

      
        5

        
          

        

      

      
      

      (iv)  Adjustments
        for Reclassification, Exchange or Substitution.  If the Common
        Stock issuable upon conversion of the Series A Preferred Stock at any time
        or from time to time after the Issuance Date shall be changed to the same
        or
        different number of shares of any class or classes of stock, whether by
        reclassification, exchange, substitution or otherwise (other than by way
        of a
        stock split or combination of shares or stock dividends provided for in Sections
        5(e)(i), (ii) and (iii), or a reorganization, merger, consolidation, or sale
        of
        assets provided for in Section 5(e)(v)), then, and in each event, an appropriate
        revision to the Conversion Price shall be made and provisions shall be made
        (by
        adjustments of the Conversion Price or otherwise) so that the holder of each
        share of Series A Preferred Stock shall have the right thereafter to
        convert such share of Series A Preferred Stock into the kind and amount of
        shares of stock and other securities receivable upon reclassification, exchange,
        substitution or other change, by holders of the number of shares of Common
        Stock
        into which such share of Series A Preferred Stock might have been converted
        immediately prior to such reclassification, exchange, substitution or other
        change, all subject to further adjustment as provided herein.

       

      (v)  Adjustments
        for Reorganization, Merger, Consolidation or Sales of Assets.  If
        at any time or from time to time after the Issuance Date there shall be a
        capital reorganization of the Company (other than by way of a stock split
        or
        combination of shares or stock dividends or distributions provided for in
        Section 5(e)(i), (ii) and (iii), or a reclassification, exchange or substitution
        of shares provided for in Section 5(e)(iv)), or a merger or consolidation
        of the
        Company with or into another corporation where the holders of outstanding
        voting
        securities prior to such merger or consolidation do not own over 50% of the
        outstanding voting securities of the merged or consolidated entity, immediately
        after such merger or consolidation, or the sale of all or substantially all
        of
        the Company’s properties or assets to any other person (an “Organic
        Change”), then as a part of such Organic Change an appropriate revision to
        the Conversion Price shall be made if necessary so that the holder of each
        share
        of Series A Preferred Stock shall have the right thereafter to convert such
        share of Series A Preferred Stock into the kind and amount of shares of
        stock and other securities or property of the Company or any successor
        corporation resulting from Organic Change.  In any such case,
        appropriate adjustment shall be made in the application of the provisions
        of
        this Section 5(e)(v) with respect to the rights of the holders of the
        Series A Preferred Stock after the Organic Change to the end that the
        provisions of this Section 5(e)(v) (including any adjustment in the Conversion
        Price then in effect and the number of shares of stock or other securities
        deliverable upon conversion of the Series A Preferred Stock) shall be
        applied after that event in as nearly an equivalent manner as may be
        practicable.

       

      (vi)  Adjustments
        for Issuance of Additional Shares of Common Stock.  In the event
        the Company, shall, at any time, from time to time, issue or sell any additional
        shares of Common Stock or any securities convertible or exercisable into,
        or
        exchangeable for, directly or indirectly, Common Stock (the “Additional
        Shares of Common Stock”), at a price per share less than the Conversion
        Price then in effect or without consideration, the Conversion Price then
        in
        effect shall be reduced to a price equal to the consideration per share paid
        for
        such Additional Shares of Common Stock.

       

      (vii)  Certain
        Issues Excepted.  Anything herein to the contrary notwithstanding,
        the Company shall not be required to make any adjustment to the Conversion
        Price
        upon (i) the Company’s issuance of any Additional Shares of Common Stock
        (other than for cash) and warrants therefore in connection with a merger,
        acquisition or consolidation, (ii) the Company’s issuance of Additional
        Shares of Common Stock pursuant to a bona fide firm underwritten public offering
        of the Company’s securities, (iii) the Company’s issuance of Additional
        Shares of Common Stock or warrants therefore in connection with strategic
        alliances or other partnering arrangements so long as such issuances are
        not for
        the purpose of raising capital, (iv) the Company’s issuance of Common Stock
        or the issuance or grants of options to purchase Common Stock pursuant to
        the
        Company’s stock option plans and employee stock purchase plans as they now
        exist, (v) any issuances of warrants issued pursuant to the Purchase
        Agreement, (vi) securities issued pursuant to the conversion or exercise of
        convertible or exercisable securities issued or outstanding on or prior to
        the
        date hereof or issued pursuant to the Purchase Agreement, (vii) any
        warrants issued to the placement agent for the transactions contemplated
        by the
        Purchase Agreement, and (viii) the payment of any dividends on the
        Series A Preferred Stock.

       

      (f)  No
        Impairment.  The Company shall not, by amendment of its Articles
        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 to be observed or performed hereunder by the Company, but will
        at all
        times in good faith, assist in the carrying out of all the provisions of
        this
        Section 5 and in the taking of all such action as may be necessary or
        appropriate in order to protect the Conversion Rights of the holders of the
        Series A Preferred Stock against impairment.  In the event a
        holder shall elect to convert any shares of Series A Preferred Stock as
        provided herein, the Company cannot refuse conversion based on any claim
        that
        such holder or any one associated or affiliated with such holder has been
        engaged in any violation of law, unless, an injunction from a court, on notice,
        restraining and/or adjoining conversion of all or of said shares of
        Series A Preferred Stock shall have been issued and the Company posts a
        surety bond for the benefit of such holder in an amount equal to 100% of
        the
        Liquidation Preference Amount of the Series A Preferred Stock such holder
        has elected to convert, which bond shall remain in effect until the completion
        of arbitration/litigation of the dispute and the proceeds of which shall
        be
        payable to such holder in the event it obtains judgment.

       

      (g)  Certificates
        as to Adjustments.  Upon occurrence of each adjustment or
        readjustment of the Conversion Price or number of shares of Common Stock
        issuable upon conversion of the Series A Preferred Stock pursuant to this
        Section 5, the Company at its expense shall promptly compute such
        adjustment or readjustment in accordance with the terms hereof and furnish
        to
        each holder of such Series A Preferred Stock a certificate setting forth
        such adjustment and readjustment, showing in detail the facts upon which
        such
        adjustment or readjustment is based.  The Company shall, upon written
        request of the holder of such affected Series A Preferred Stock, at any
        time, furnish or cause to be furnished to such holder a like certificate
        setting
        forth such adjustments and readjustments, the Conversion Price in effect
        at the
        time, and the number of shares of Common Stock and the amount, if any, of
        other
        securities or property which at the time would be received upon the conversion
        of a share of such Series A Preferred Stock.  Notwithstanding the
        foregoing, the Company shall not be obligated to deliver a certificate unless
        such certificate would reflect an increase or decrease of at least one percent
        of such adjusted amount.

      
        6

        
          

        

      

      
      

      (h)  Issue
        Taxes.  The Company shall pay any and all issue and other taxes,
        excluding federal, state or local income taxes, that may be payable in respect
        of any issue or delivery of shares of Common Stock on conversion of shares
        of
        Series A Preferred Stock pursuant thereto; provided, however,
        that the Company shall not be obligated to pay any transfer taxes resulting
        from
        any transfer requested by any holder in connection with any such
        conversion.

       

      (i)  Notices.  All
        notices and other communications hereunder shall be in writing and shall
        be
        deemed given if delivered personally or by facsimile or three (3) business
        days
        following being mailed by certified or registered mail, postage prepaid,
        return-receipt requested, addressed to the holder of record at its address
        appearing on the books of the Company.  The Company will give written
        notice to each holder of Series A Preferred Stock at least twenty (20) days
        prior to the date on which the Company closes its books or sets a record
        date
        (I) with respect to any dividend or distribution upon the Common Stock,
        (II) with respect to any pro rata subscription offer to holders of Common
        Stock or (III) for determining rights to vote with respect to any Organic
        Change, dissolution, liquidation or winding-up and in no event shall such
        notice
        be provided to such holder prior to such information being made known to
        the
        public.  The Company will also give written notice to each holder of
        Series A Preferred Stock at least twenty (20) days prior to the date on
        which any Organic Change, dissolution, liquidation or winding-up will take
        place; provided, however, no such notice shall be required to be
        provided to such holder prior to such information being made known to the
        public.

       

      (j)  Fractional
        Shares.  No fractional shares of Common Stock shall be issued upon
        conversion of the Series A Preferred Stock.  In lieu of any
        fractional shares to which the holder would otherwise be entitled, the Company
        shall pay cash equal to the product of such fraction multiplied by the average
        of the Closing Bid Prices of the Common Stock for the five (5) consecutive
        trading immediately preceding the Voluntary Conversion Date or any Mandatory
        Conversion Date, as applicable.

       

      (k)  Reservation
        of Common Stock.  The Company shall, so long as any shares of
        Series A Preferred Stock are outstanding, reserve and keep available out of
        its authorized and unissued Common Stock, solely for the purpose of effecting
        the conversion of the Series A Preferred Stock, such number of shares of
        Common Stock as shall from time to time be sufficient to effect the conversion
        of all of the Series A Preferred Stock then outstanding; provided that the
        number of shares of Common Stock so reserved shall at no time be less than
        the
        number of shares of Common Stock for which the shares of Series A Preferred
        Stock are at any time convertible.  The initial number of shares of
        Common Stock reserved for conversions of the Series A Preferred Stock and
        each increase in the number of shares so reserved shall be allocated pro
        rata
        among the holders of the Series A Preferred Stock based on the number of
        shares of Series A Preferred Stock held by each holder of record at the
        time of issuance of the Series A Preferred Stock or increase in the number
        of reserved shares, as the case may be.  In the event a holder shall
        sell or otherwise transfer any of such holder’s shares of Series A
        Preferred Stock, each transferee shall be allocated a pro rata portion of
        the
        number of reserved shares of Common Stock reserved for such
        transferor.  Any shares of Common Stock reserved and which remain
        allocated to any person or entity which does not hold any shares of
        Series A Preferred Stock shall be allocated to the remaining holders of
        Series A Preferred Stock, pro rata based on the number of shares of
        Series A Preferred Stock then held by such holder.

       

      (l)  Regulatory
        Compliance.  If any shares of Common Stock to be reserved for the
        purpose of conversion of Series A Preferred Stock require registration or
        listing with or approval of any governmental authority, stock exchange or
        other
        regulatory body under any federal or state law or regulation or otherwise
        before
        such shares may be validly issued or delivered upon conversion, the Company
        shall, at its sole cost and expense, in good faith and as expeditiously as
        possible, endeavor to secure such registration, listing or approval, as the
        case
        may be.

       

      6.  No
        Preemptive Rights.  Except as provided in Section 5 hereof
        and in the Purchase Agreement, no holder of the Series A Preferred Stock
        shall be entitled to rights to subscribe for, purchase or receive any part
        of
        any new or additional shares of any class, whether now or hereinafter
        authorized, or of bonds or debentures, or other evidences of indebtedness
        convertible into or exchangeable for shares of any class, but all such new
        or
        additional shares of any class, or any bond, debentures or other evidences
        of
        indebtedness convertible into or exchangeable for shares, may be issued and
        disposed of by the Board of Directors on such terms and for such consideration
        (to the extent permitted by law), and to such person or persons as the Board
        of
        Directors in their absolute discretion may deem advisable.

       

      7.  Conversion
        Restrictions.

       

      (a)  Notwithstanding
        anything to the contrary set forth in Section 5 of this Certificate of
        Designation, at no time may a holder of shares of Series A Preferred Stock
        convert shares of the Series A Preferred Stock if the number of shares of
        Common Stock to be issued pursuant to such conversion would exceed, when
        aggregated with all other shares of Common Stock owned by such holder at
        such
        time, the number of shares of Common Stock which would result in such holder
        beneficially owning (as determined in accordance with Section 13(d) of the
        Securities Exchange Act of 1934, as amended, and the rules thereunder) in
        excess
        of 4.999% of the then issued and outstanding shares of Common Stock outstanding
        at such time; provided, however, that upon a holder of
        Series A Preferred Stock providing the Company with sixty-one (61) days
        notice (pursuant to Section 5(i) hereof) (the “Waiver Notice”) that
        such holder would like to waive Section 7(a) of this Certificate of
        Designation with regard to any or all shares of Common Stock issuable upon
        conversion of Series A Preferred Stock, this Section 7(a) shall be of
        no force or effect with regard to those shares of Series A Preferred Stock
        referenced in the Waiver Notice; provided,
        further,
        that this provision shall be of no further force or effect with respect to
        Common Stock issuable upon conversion of the Series A Preferred Stock
        in
        connection with the Plan.

      
        7

        
          

        

      

      
      

      (b)  Notwithstanding
        anything to the contrary set forth in Section 5 of this Certificate of
        Designation, at no time may a holder of shares of Series A Preferred Stock
        convert shares of the Series A Preferred Stock if the number of shares of
        Common
        Stock to be issued pursuant to such conversion, when aggregated with all
        other
        shares of Common Stock owned by such holder at such time, would result in
        such
        holder beneficially owning (as determined in accordance with Section 13(d)
        of
        the Securities Exchange Act of 1934, as amended, and the rules thereunder)
        in
        excess of 9.999% of the then issued and outstanding shares of Common Stock
        outstanding at such time; provided, however, that upon a holder of
        Series A Preferred Stock providing the Company with a Waiver Notice that
        such
        holder would like to waive Section 7(b) of this Certificate of Designation
        with
        regard to any or all shares of Common Stock issuable upon conversion of Series
        A
        Preferred Stock, this Section 7(b) shall be of no force or effect with regard
        to
        those shares of Series A Preferred Stock referenced in the Waiver Notice;
        provided, further, that this provision shall be of no further force or effect
        with respect to Common Stock issuable upon conversion of the Series A Preferred
        Stock in connection with the Plan.

       

      (c)  For
        purposes of this Certificate of Designation, the term “Plan” shall mean any
        action the Company takes, with any required approval of the holders thereof,
        on
        or before the Final Plan Date as contemplated by the Plan Summary and
        accompanying materials provided to holders on December 4, 2007, in connection
        with the reduction or other modification of terms of the Company's
        then-outstanding preferred stock, warrants and options, including, but not
        limited to, actions the Company takes to (i) facilitate the conversion of
        the
        Series A, B and C Convertible Preferred Stock; (ii) reduce the exercise price
        of
        any of the Company's outstanding warrants or options; (iii) offer the holders
        of
        the Company's warrants and options the opportunity to exercise such warrants
        and
        options on a cash and/or cashless basis; and (iv) make other amendments to
        the
        documents governing these securities to effect these modifications, and to
        facilitate the conversion and exercise of these securities. The term “Final Plan
        Date” shall mean the date that is six months and twelve days after the Plan
        Closing Date.

       

      8.  Redemption.

       

      (a)  Redemption
        Option Upon Major Transaction.  In addition to all other rights of
        the holders of Series A Preferred Stock contained herein, simultaneous with
        the occurrence of a Major Transaction (as defined below), each holder of
        Series A Preferred Stock shall have the right, at such holder’s option, to
        require the Company to redeem all or a portion of such holder’s shares of
        Series A Preferred Stock at a price per share of Series A Preferred
        Stock equal to 100% of the Liquidation Preference Amount, plus any accrued
        but
        unpaid dividends and liquidated damages (the “Major Transaction Redemption
        Price”); provided that the Company shall have the sole option to pay the
        Major Transaction Redemption Price in cash or shares of Common
        Stock.  If the Company elects to pay the Major Transaction Redemption
        Price in shares of Common Stock, the price per share shall be based upon
        the
        lesser of (i) the Conversion Price then in effect on the day preceding the
        date of delivery of the Notice of Redemption at Option of Buyer Upon Major
        Transaction (as hereafter defined) or (ii) the Closing Bid Price on the day
        preceding the date of delivery of the Notice of Redemption at Option of Buyer
        Upon Major Transaction.  The holder of such shares of Common Stock
        shall have demand registration rights with respect to such shares.

       

      (b)  Redemption
        Option Upon Triggering Event.  In addition to all other rights of
        the holders of Series A Preferred Stock contained herein, after a
        Triggering Event (as defined below), each holder of Series A Preferred
        Stock shall have the right, at such holder’s option, to require the Company to
        redeem all or a portion of such holder’s shares of Series A Preferred Stock
        at a price per share of Series A Preferred Stock equal to 120% of the
        Liquidation Preference Amount, plus any accrued but unpaid dividends and
        liquidated damages (the “Triggering Event Redemption Price” and,
        collectively with the “Major Transaction Redemption Price,” the “Redemption
        Price”); provided that with respect to the Triggering Events described in
        clauses (i), (ii), (iii) and (v) of Section 8(d), the Company shall have
        the sole option to pay the Triggering Event Redemption Price in cash or shares
        of Common Stock; and provided, further, that with respect to the
        Triggering Event described in clause (iv) of Section 8(d), the Company
        shall pay the Triggering Event Redemption Price in cash.  If the
        Company elects to pay the Triggering Event Redemption Price in shares of
        Common
        Stock in accordance with this Section 8(b), the price per share shall be
        based upon the lesser of (i) the Conversion Price then in effect on the day
        preceding the date of delivery of the Notice of Redemption at Option of Buyer
        Upon Triggering Event or (ii) the Closing Bid Price on the day preceding
        the date of delivery of the Notice of Redemption at Option of Buyer Upon
        Triggering Event.  The holder of such shares of Common Stock shall
        have demand registration rights with respect to such shares.

       

      (c)  “Major
        Transaction”.  A “Major Transaction” shall be deemed to
        have occurred at such time as any of the following events:

       

      (i)  the
        consolidation, merger or other business combination of the Company with or
        into
        another Person (other than (A) pursuant to a migratory merger effected
        solely for the purpose of changing the jurisdiction of incorporation of the
        Company or (B) a consolidation, merger or other business combination in
        which holders of the Company’s voting power immediately prior to the transaction
        continue after the transaction to hold, directly or indirectly, the voting
        power
        of the surviving entity or entities necessary to elect a majority of the
        members
        of the board of directors (or their equivalent if other than a corporation)
        of
        such entity or entities).

       

      (ii)  the
        sale
        or transfer of more than 50% of the Company’s assets other than inventory in the
        ordinary course of business in one or a related series of transactions;
        or

       

      (iii)  closing
        of a purchase, tender or exchange offer made to the holders of more than
        50% of
        the outstanding shares of Common Stock in which more than 50% of the outstanding
        shares of Common Stock were tendered and accepted.

      
        
           

           8
            
            

          

        

      

      
        
           

        

      

      (d)  “Triggering
        Event”.  A “Triggering Event” shall be deemed to have
        occurred at such time as any of the following events:

       

      (i)  at
        any
        time within two (2) years after the Issuance Date, the resale of the shares
        of
        Common Stock issuable upon conversion of the Series A Preferred Stock is
        covered by the Registration Statement which has been declared effective,
        (i) the effectiveness of the Registration Statement lapses for any reason
        (including, without limitation, the issuance of a stop order) or (ii) the
        Registration Statement is unavailable to the holder of the Series A
        Preferred Stock for sale of the shares of Common Stock, and such lapse or
        unavailability continues for a period of twenty (20) consecutive trading
        days,
        and the shares of Common Stock into which such holder’s Series A Preferred
        Stock can be converted cannot be sold in the public securities market pursuant
        to Rule 144(k) (“Rule 144(k)”) under the Securities Act of 1933, as
        amended, provided that the cause of such lapse or unavailability is not
        due to factors solely within the control of such holder of Series A
        Preferred Stock.

       

      (ii)  the
        suspension from listing, without subsequent listing on any one of, or the
        failure of the Common Stock to be listed on at least one of the OTC Bulletin
        Board, the Nasdaq National Market, the Nasdaq SmallCap Market, the New York
        Stock Exchange, Inc. or the American Stock Exchange, Inc., for a period of
        seven
        (7) consecutive trading days;

       

      (iii)  the
        Company’s notice to any holder of Series A Preferred Stock, including by
        way of public announcement, at any time, of its inability to comply (including
        for any of the reasons described in Section 9) or its intention not to
        comply with proper requests for conversion of any Series A Preferred Stock
        into shares of Common Stock; or

       

      (iv)  the
        Company’s failure to comply with a Conversion Notice tendered in accordance with
        the provisions of this Certificate of Designation within ten (10) business
        days
        after the receipt by the Company of the Conversion Notice and the Preferred
        Stock Certificates; or

       

      (v)  the
        Company breaches any representation, warranty, covenant or other term or
        condition of the Purchase Agreement, this Certificate of Designation or any
        other agreement, document, certificate or other instrument delivered in
        connection with the transactions contemplated thereby or hereby, except to
        the
        extent that such breach would not have a Material Adverse Effect (as defined
        in
        the Purchase Agreement) and except, in the case of a breach of a covenant
        which
        is curable, only if such breach continues for a period of a least ten (10)
        days.

       

      (e)  Mechanics
        of Redemption at Option of Buyer Upon Major Transaction.  No
        sooner than fifteen (15) days nor later than ten (10) days prior to the
        consummation of a Major Transaction, but not prior to the public announcement
        of
        such Major Transaction, the Company shall deliver written notice thereof
        via
        facsimile and overnight courier (“Notice of Major Transaction”) to each
        holder of Series A Preferred Stock.  At any time after receipt of
        a Notice of Major Transaction (or, in the event a Notice of Major Transaction
        is
        not delivered at least ten (10) days prior to a Major Transaction, at any
        time
        within ten (10) days prior to a Major Transaction), any holder of Series A
        Preferred Stock then outstanding may require the Company to redeem, effective
        immediately prior to the consummation of such Major Transaction, all of the
        holder’s Series A Preferred Stock then outstanding by delivering written
        notice thereof via facsimile and overnight courier (“Notice of Redemption at
        Option of Buyer Upon Major Transaction”) to the Company, which Notice of
        Redemption at Option of Buyer Upon Major Transaction shall indicate (i) the
        number of shares of Series A Preferred Stock that such holder is electing
        to redeem and (ii) the applicable Major Transaction Redemption Price, as
        calculated pursuant to Section 8(a) above.

       

      (f)  Mechanics
        of Redemption at Option of Buyer Upon Triggering Event.  Within
        two (2) days after the occurrence of a Triggering Event, the Company shall
        deliver written notice thereof via facsimile and overnight courier (“Notice
        of Triggering Event”) to each holder of Series A Preferred
        Stock.  At any time after the earlier of a holder’s receipt of a
        Notice of Triggering Event and such holder becoming aware of a Triggering
        Event,
        any holder of Series A Preferred Stock then outstanding may require the
        Company to redeem all of the Series A Preferred Stock by delivering written
        notice thereof via facsimile and overnight courier (“Notice of Redemption at
        Option of Buyer Upon Triggering Event”) to the Company, which Notice of
        Redemption at Option of Buyer Upon Triggering Event shall indicate (i) the
        number of shares of Series A Preferred Stock that such holder is electing
        to redeem and (ii) the applicable Triggering Event Redemption Price, as
        calculated pursuant to Section 8(b) above.

      
        9

        
          

        

      

      
      

      (g)  Payment
        of Redemption Price.  Upon the Company’s receipt of a Notice(s) of
        Redemption at Option of Buyer Upon Triggering Event or a Notice(s) of Redemption
        at Option of Buyer Upon Major Transaction from any holder of Series A
        Preferred Stock, the Company shall immediately notify each holder of
        Series A Preferred Stock by facsimile of the Company’s receipt of such
        Notice(s) of Redemption at Option of Buyer Upon Triggering Event or Notice(s)
        of
        Redemption at Option of Buyer Upon Major Transaction and each holder which
        has
        sent such a notice shall promptly submit to the Company such holder’s Preferred
        Stock Certificates which such holder has elected to have
        redeemed.  Other than with respect to the Triggering Event described
        in clause (iv) of Section 8(d), the Company shall have the sole option to
        pay the Redemption Price in cash or shares of Common Stock in accordance
        with
        Sections 8(a) and (b) and Section 9 of this Certificate of
        Designation.  The Company shall deliver the applicable Major
        Transaction Redemption Price immediately prior to the consummation of the
        Major
        Transaction; provided that a holder’s Preferred Stock Certificates shall
        have been so delivered to the Company; provided further that if the
        Company is unable to redeem all of the Series A Preferred Stock to be
        redeemed, the Company shall redeem an amount from each holder of Series A
        Preferred Stock being redeemed equal to such holder’s pro-rata amount (based on
        the number of shares of Series A Preferred Stock held by such holder
        relative to the number of shares of Series A Preferred Stock outstanding)
        of all Series A Preferred Stock being redeemed.  If the Company
        shall fail to redeem all of the Series A Preferred Stock submitted for
        redemption (other than pursuant to a dispute as to the arithmetic calculation
        of
        the Redemption Price), in addition to any remedy such holder of Series A
        Preferred Stock may have under this Certificate of Designation and the Purchase
        Agreement, the applicable Redemption Price payable in respect of such unredeemed
        Series A Preferred Stock shall bear interest at the rate of .5% per month
        (prorated for partial months) until paid in full.  Until the Company
        pays such unpaid applicable Redemption Price in full to a holder of shares
        of
        Series A Preferred Stock submitted for redemption, such holder shall have
        the option (the “Void Optional Redemption Option”) to, in lieu of
        redemption, require the Company to promptly return to such holder(s) all
        of the
        shares of Series A Preferred Stock that were submitted for redemption by
        such holder(s) under this Section 8 and for which the applicable Redemption
        Price has not been paid, by sending written notice thereof to the Company
        via
        facsimile (the “Void Optional Redemption Notice”).  Upon the
        Company’s receipt of such Void Optional Redemption Notice(s) and prior to
        payment of the full applicable Redemption Price to such holder, (i) the
        Notice(s) of Redemption at Option of Buyer Upon Major Transaction shall be
        null
        and void with respect to those shares of Series A Preferred Stock submitted
        for redemption and for which the applicable Redemption Price has not been
        paid
        and (ii) the Company shall immediately return any Series A Preferred
        Stock submitted to the Company by each holder for redemption under this
        Section 8(d) and for which the applicable Redemption Price has not been
        paid.  A holder’s delivery of a Void Optional Redemption Notice and
        exercise of its rights following such notice shall not effect the Company’s
        obligations to make any payments which have accrued prior to the date of
        such
        notice other than interest payments.  Payments provided for in this
        Section 8 shall have priority to payments to other stockholders in
        connection with a Major Transaction.

       

      (h)  Demand
        Registration Rights.  If the Redemption Price upon the occurrence
        of a Major Transaction or a Triggering Event is paid in shares of Common
        Stock
        and such shares have not been previously registered on a registration statement
        under the Securities Act, a holder of Series A Preferred Stock may make a
        written request for registration under the Securities Act pursuant to this
        Section 8(h) of all of its shares of Common Stock issued upon such Major
        Transaction or Triggering Event.  The Company shall use its reasonable
        best efforts to cause to be filed and declared effective as soon as reasonably
        practicable (but in no event later than the ninetieth (90th) day after such
        holder’s request is made) a registration statement under the Securities Act,
        providing for the sale of all of the shares of Common Stock issued upon such
        Major Transaction or Triggering Event by such holder.  The Company
        agrees to use its reasonable best efforts to keep any such registration
        statement continuously effective for resale of the Common Stock for so long
        as
        such holder shall request, but in no event later than the date that the shares
        of Common Stock issued upon such Major Transaction or Triggering Event may
        be
        offered for resale to the public pursuant to Rule 144(k).

       

      9.  Inability
        to Fully Convert.

       

      (a)  Holder’s
        Option if Company Cannot Fully Convert.  If, upon the Company’s
        receipt of a Conversion Notice or on a Mandatory Conversion Date, the Company
        cannot issue shares of Common Stock registered for resale under the Registration
        Statement for any reason, including, without limitation, because the Company
        (w) does not have a sufficient number of shares of Common Stock authorized
        and available, (x) is otherwise prohibited by applicable law or by the
        rules or regulations of any stock exchange, interdealer quotation system
        or
        other self-regulatory organization with jurisdiction over the Company or
        its
        securities from issuing all of the Common Stock which is to be issued to
        a
        holder of Series A Preferred Stock pursuant to a Conversion Notice or
        (y) fails to have a sufficient number of shares of Common Stock registered
        for resale under the Registration Statement, then the Company shall issue
        as
        many shares of Common Stock as it is able to issue in accordance with such
        holder’s Conversion Notice and pursuant to Section 5(b)(ii) above and, with
        respect to the unconverted Series A Preferred Stock, the holder, solely at
        such holder’s option, can elect, within five (5) business days after receipt of
        notice from the Company thereof to:

       

      (i)  require
        the Company to redeem from such holder those Series A Preferred Stock for
        which the Company is unable to issue Common Stock in accordance with such
        holder’s Conversion Notice (“Mandatory Redemption”) at a price per share
        equal to the Major Transaction Redemption Price as of such Conversion Date
        (the
“Mandatory Redemption Price”); provided that the Company shall
        have the sole option to pay the Mandatory Redemption Price in cash or shares
        of
        Common Stock;

       

      (ii)  if
        the
        Company’s inability to fully convert Series A Preferred Stock is pursuant
        to Section 9(a)(y) above, require the Company to issue restricted shares
        of
        Common Stock in accordance with such holder’s Conversion Notice and pursuant to
        Section 5(b)(ii) above;

       

      (iii)  void
        its
        Conversion Notice and retain or have returned, as the case may be, the shares
        of
        Series A Preferred Stock that were to be converted pursuant to such
        holder’s Conversion Notice (provided that a holder’s voiding its Conversion
        Notice shall not effect the Company’s obligations to make any payments which
        have accrued prior to the date of such notice).

      
        
          
          

        

        
          10

          
            

          

        

        
          
          

        

      

      (b)  Mechanics
        of Fulfilling Holder’s Election.  The Company shall immediately
        send via facsimile to a holder of Series A Preferred Stock, upon receipt of
        a facsimile copy of a Conversion Notice from such holder which cannot be
        fully
        satisfied as described in Section 9(a) above, a notice of the Company’s
        inability to fully satisfy such holder’s Conversion Notice (the “Inability to
        Fully Convert Notice”).  Such Inability to Fully Convert Notice
        shall indicate (i) the reason why the Company is unable to fully satisfy
        such holder’s Conversion Notice, (ii) the number of Series A Preferred
        Stock which cannot be converted and (iii) the applicable Mandatory
        Redemption Price.  Such holder shall notify the Company of its
        election pursuant to Section 9(a) above by delivering written notice via
        facsimile to the Company (“Notice in Response to Inability to
        Convert”).

       

      (c)  Payment
        of Redemption Price.  If such holder shall elect to have its
        shares redeemed pursuant to Section 9(a)(i) above, the Company shall pay
        the Mandatory Redemption Price to such holder within thirty (30) days of
        the
        Company’s receipt of the holder’s Notice in Response to Inability to Convert,
        provided that prior to the Company’s receipt of the holder’s Notice in Response
        to Inability to Convert the Company has not delivered a notice to such holder
        stating, to the satisfaction of the holder, that the event or condition
        resulting in the Mandatory Redemption has been cured and all Conversion Shares
        issuable to such holder can and will be delivered to the holder in accordance
        with the terms of Section 8(g).  If the Company shall fail to pay
        the applicable Mandatory Redemption Price to such holder on a timely basis
        as
        described in this Section 9(c) (other than pursuant to a dispute as to the
        determination of the arithmetic calculation of the Redemption Price), in
        addition to any remedy such holder of Series A Preferred Stock may have
        under this Certificate of Designation and the Purchase Agreement, such unpaid
        amount shall bear interest at the rate of 1.0% per month (prorated for partial
        months) until paid in full.  Until the full Mandatory Redemption Price
        is paid in full to such holder, such holder may (i) void the Mandatory
        Redemption with respect to those Series A Preferred Stock for which the
        full Mandatory Redemption Price has not been paid and (ii) receive back
        such Series A Preferred Stock.

       

      (d)  Pro-rata
        Conversion and Redemption.  In the event the Company receives a
        Conversion Notice from more than one holder of Series A Preferred Stock on
        the same day and the Company can convert and redeem some, but not all, of
        the
        Series A Preferred Stock pursuant to this Section 9, the Company shall
        convert and redeem from each holder of Series A Preferred Stock electing to
        have Series A Preferred Stock converted and redeemed at such time an amount
        equal to such holder’s pro-rata amount (based on the number shares of
        Series A Preferred Stock held by such holder relative to the number shares
        of Series A Preferred Stock outstanding) of all shares of Series A
        Preferred Stock being converted and redeemed at such time.

       

      10.  Vote
        to Change the Terms of or Issue Preferred Stock.  The affirmative
        vote at a meeting duly called for such purpose or the written consent without
        a
        meeting, of the holders of three-fourths (3/4) of the then outstanding shares
        of
        Series A Preferred Stock, shall be required (a) for any change to this
        Certificate of Designation or the Articles of Incorporation which would amend,
        alter, change or repeal any of the powers, designations, preferences and
        rights
        of the Series A Preferred Stock or (b) for the issuance of shares of
        Series A Preferred Stock other than pursuant to the Purchase Agreement
        except for shares of Series A Preferred Stock to be issued to certain
        holders of promissory notes issued by the Company in satisfaction of outstanding
        indebtedness in an amount not to exceed $750,000 and/or as dividends paid
        in
        shares of Series A Preferred Stock.

       

      11.  Lost
        or Stolen Certificates.  Upon receipt by the Company of evidence
        satisfactory to the Company of the loss, theft, destruction or mutilation
        of any
        Preferred Stock Certificates representing the shares of Series A Preferred
        Stock, and, in the case of loss, theft or destruction, of any indemnification
        undertaking by the holder to the Company and, in the case of mutilation,
        upon
        surrender and cancellation of the Preferred Stock Certificate(s), the Company
        shall execute and deliver new preferred stock certificate(s) of like tenor
        and
        date; provided, however, the Company shall not be obligated to
        re-issue Preferred Stock Certificates if the holder contemporaneously requests
        the Company to convert such shares of Series A Preferred Stock into Common
        Stock.

       

      12.  Remedies,
        Characterizations, Other Obligations, Breaches and Injunctive
        Relief.  The remedies provided in this Certificate of Designation
        shall be cumulative and in addition to all other remedies available under
        this
        Certificate of Designation, at law or in equity (including a decree of specific
        performance and/or other injunctive relief), no remedy contained herein shall
        be
        deemed a waiver of compliance with the provisions giving rise to such remedy
        and
        nothing herein shall limit a holder’s right to pursue actual damages for any
        failure by the Company to comply with the terms of this Certificate of
        Designation.  Amounts set forth or provided for herein with respect to
        payments, conversion and the like (and the computation thereof) shall be
        the
        amounts to be received by the holder thereof and shall not, except as expressly
        provided herein, be subject to any other obligation of the Company (or the
        performance thereof).  The Company acknowledges that a breach by it of
        its obligations hereunder will cause irreparable harm to the holders of the
        Series A Preferred Stock and that the remedy at law for any such breach may
        be inadequate.  The Company therefore agrees that, in the event of any
        such breach or threatened breach, the holders of the Series A Preferred
        Stock shall be entitled, in addition to all other available remedies, to
        an
        injunction restraining any breach, without the necessity of showing economic
        loss and without any bond or other security being required.

       

      13.  Specific
        Shall Not Limit General; Construction.  No specific provision
        contained in this Certificate of Designation shall limit or modify any more
        general provision contained herein.  This Certificate of Designation
        shall be deemed to be jointly drafted by the Company and all initial purchasers
        of the Series A Preferred Stock and shall not be construed against any
        person as the drafter hereof.

       

      14.  Failure
        or Indulgence Not Waiver.  No failure or delay on the part of a
        holder of Series A Preferred Stock in the exercise of any power, right or
        privilege hereunder shall operate as a waiver thereof, nor shall any single
        or
        partial exercise of any such power, right or privilege preclude other or
        further
        exercise thereof or of any other right, power or privilege.

      
        
          
          

        

        
          11

          
            

          

        

        
          
          

        

      

      IN
        WITNESS WHEREOF, the undersigned has executed and subscribed this Second
        Amended
        and Restated Certificate and does affirm the foregoing as true this 19th
        day of
        December, 2007.

       

      CHEMBIO
        DIAGNOSTICS, INC.

       

      
 

       

      By:

       

      Name:  Richard
        J.
        Larkin

       

      Title:  Chief
        Financial
        Officer

       

      
        
          
          

        

        
          12

          
            

          

        

        
          
          

        

      

      EXHIBIT
        I

       

      

       

      CHEMBIO
        DIAGNOSTICS, INC.

       

      

       

      CONVERSION
        NOTICE

       

      Reference
        is made to the Second Amended and Restated Certificate of Designation of
        the
        Relative Rights and Preferences of the Series A Preferred Stock of Chembio
        Diagnostics, Inc. (the “Certificate of Designation”).  In
        accordance with and pursuant to the Certificate of Designation, the undersigned
        hereby elects to convert the number of shares of Series A Preferred Stock,
        par value $.01 per share (the “Preferred Shares”), of Chembio
        Diagnostics, Inc., a Nevada corporation (the “Company”), indicated below
        into shares of Common Stock, par value $.01 per share (the “Common
        Stock”), of the Company, by tendering the stock certificate(s) representing
        the share(s) of Preferred Shares specified below as of the date specified
        below.

       

      Date
        of
        Conversion:

       

      Number
        of
        Preferred Shares to be converted:

       

      Stock
        certificate no(s). of Preferred Shares to be converted:

       

      The
        Common Stock have been sold pursuant to the Registration Statement (as defined
        in the Purchase Agreement):  YES ____ NO____

       

      Please
        confirm the following information:

       

      Conversion
        Price:

       

      Number
        of
        shares of Common Stock to be issued:

       

      Number
        of
        shares of Common Stock beneficially owned or deemed beneficially owned by
        the
        Holder on the Date of
        Conversion:  _________________________

       

      Please
        issue the Common Stock into which the Preferred Shares are being converted
        and,
        if applicable, any check drawn on an account of the Company in the following
        name and to the following address:

       

      Issue
        to:

       

      Facsimile
        Number:

       

      Authorization:

       

      By:

       

      Title:

       

      Dated:ex4_4.htm

    
      

    

    
      

    

    
      Exhibit
        4.4

      THIS
        WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE HEREOF HAVE
        NOT
        BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
        ACT"), OR ANY STATE SECURITIES LAW AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE
        DISPOSED OF UNLESS REGISTERED UNDER THE SECURITIES ACT AND UNDER APPLICABLE
        STATE SECURITIES LAWS OR THE ISSUER SHALL HAVE RECEIVED AN OPINION OF COUNSEL
        TO
        THE HOLDER OF THE SECURITIES (UNLESS THE ISSUER IN ITS SOLE DISCRETION
        DETERMINES TO USE ITS OWN COUNSEL), WITH ANY SUCH COUNSEL TO THE HOLDER AND
        ANY
        SUCH OPINION OF SUCH COUNSEL TO BE REASONABLY ACCEPTABLE TO THE ISSUER, THAT
        REGISTRATION OF SUCH NOTE UNDER THE SECURITIES ACT AND UNDER THE PROVISIONS
        OF
        APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED.

      

      WARRANT
        TO PURCHASE

      

      SHARES
        OF
        COMMON STOCK

      

      OF

      

      CHEMBIO
        DIAGNOSTICS, INC.

      

      Expires
        May 5, 2009

      

      

      
        	
                No.:  _____________

              	
                Number
                  of Shares:  ______________

              
	
                Original
                  Date of Issuance: May 5,
                  2004

              	
                Reissuance
                  Date:  December 19,
                  2007

              

      

      

      

      FOR
        VALUE
        RECEIVED, subject to the provisions hereinafter set forth, the undersigned,
        Chembio Diagnostics, Inc., a Nevada corporation (together with its successors
        and assigns, the “Issuer”), hereby certifies that ___________________ or
        its registered assigns is entitled to subscribe for and purchase, during
        the
        Term (as hereinafter defined), up to __________________ (___________) shares
        (subject to adjustment as hereinafter provided) of the duly authorized, validly
        issued, fully paid and non-assessable Common Stock of the Issuer, at an exercise
        price per share equal to the Warrant Price then in effect, subject, however,
        to
        the provisions and upon the terms and conditions hereinafter set
        forth.  Capitalized terms used in this Warrant and not otherwise
        defined herein shall have the respective meanings specified in Section 9
        hereof.

       

      1.           Term.  The
        term of this Warrant shall commence on May 5, 2004 and shall expire at 5:00
        p.m., Eastern Time, on May 5, 2009 (such period being the
“Term”).

       

      2.           Method
        of Exercise Payment; Issuance of New Warrant; Transfer and
        Exchange.

       

      (a)           Time
        of Exercise.  The purchase rights represented by this Warrant may
        be exercised in whole or in part during the Term commencing on the effective
        date of a registration statement under the Securities Act providing for the
        resale of the Warrant Stock and the shares of Common Stock issuable upon
        conversion of the Issuer’s Series A Convertible Preferred Stock issued pursuant
        to the Purchase Agreement and expiring on May 5, 2009.

       

      (b)           Method
        of Exercise.

       

      (i)           The
        Holder hereof may exercise this Warrant, in whole or in part (A) by the
        surrender of this Warrant (with the exercise form attached hereto duly executed)
        at the principal office of the Issuer, and by the payment to the Issuer of
        an
        amount of consideration therefor equal to the Warrant Price in effect on
        the
        date of such exercise multiplied by the number of shares of Warrant Stock
        with
        respect to which this Warrant is then being exercised, payable by certified
        or
        official bank check or by wire transfer to an account designated by the Issuer;
        or (B) by notifying the Company that this Warrant is being exercised pursuant
        to
        a Cashless Exercise (as defined in Section 2(b)(ii) below).

       

      (ii)           Cashless
        Exercise At the option of the Holder, this Warrant may be exercised by means
        of
        a “cashless exercise” (a “Cashless Exercise”) in which the Holder shall be
        entitled to receive a certificate for the number of Warrant Shares equal
        to the
        quotient obtained by dividing [(A-B) (X)] by (A), where:

       

      (A)
        = the
        VWAP for the ten-Trading Day period that ends on the first Trading Day
        immediately preceding the date of such election;

       

      (B)
        = the
        applicable Exercise Price of this Warrant in effect on the date of exercise,
        as
        adjusted; and

       

      (X)
        = the
        number of Warrant Shares issuable upon exercise of this Warrant in accordance
        with the terms of this Warrant by means of a cash exercise rather than a
        cashless exercise.

       

      (iii)           Notwithstanding
        anything herein to the contrary, for any Notice of Exercise Form dated on
        the
        Plan Closing Date received from a Holder who exercises its warrants on cashless
        basis at $0.45 per share before 10:00p.m. ET on the Plan Closing Date, the
        value
        of (A) in the equation set forth in Section 2(b)(ii) above shall be equal
        to the
        greater of $0.53 or the VWAP for the ten-Trading Day period that ends on
        the
        second Trading Day prior to the date of the Notice of Exercise
        Form.

       

      (v)           Notwithstanding
        anything herein to the contrary, for any Notice of Exercise Form dated between
        and inclusive of the Plan Closing Date and the Final Plan Date received from
        a
        Holder who exercises at least 10% of all of such Holder's warrants and options
        for cash before 10:00p.m. ET on the Plan Closing Date the value of (A) in
        the
        equation set forth in Section 2(b)(ii) above shall be equal to the greater
        of
        $0.53 or the VWAP for the ten-Trading Day period that ends on the second
        Trading
        Day prior to the date of the Notice of Exercise Form.  Any Exercise Form
        dated on the Final Plan Date must be received by the Company within five
        Trading
        Days of the Final Plan Date to be effective.

       

      (vi)           Notwithstanding
        anything herein to the contrary, a Holder who does not exercise (i) at least
        10%
        of all of such Holder's warrants and options issued by the Company for cash
        at
        an exercise price of $0.40 per share before 10:00p.m. ET on the Plan Closing
        Date, or (ii) its warrants on cashless basis at $0.45 per share by 10:00p.m.
        ET
        on the Plan Closing Date shall not be permitted to exercise its Warrants
        on a
        cashless basis pursuant to Section 2(b)(ii) above until April 1,
        2008.

       

      (c)           Issuance
        of Stock Certificates.  In the event of any exercise of the rights
        represented by this Warrant in accordance with and subject to the terms and
        conditions hereof, (i) certificates for the shares of Warrant Stock so purchased
        shall be dated the date of such exercise and delivered to the Holder hereof
        within a reasonable time, not exceeding three (3) Trading Days after such
        exercise or, at the request of the Holder (provided that a registration
        statement under the Securities Act providing for the resale of the Warrant
        Stock
        is then in effect), issued and delivered to the Depository Trust Company
        (“DTC”) account on the Holder’s behalf via the Deposit Withdrawal Agent
        Commission System (“DWAC”) within a reasonable time, not exceeding three
        (3) Trading Days after such exercise, and the Holder hereof shall be deemed
        for
        all purposes to be the holder of the shares of Warrant Stock so purchased
        as of
        the date of such exercise and (ii) unless this Warrant has expired, a new
        Warrant representing the number of shares of Warrant Stock, if any, with
        respect
        to which this Warrant shall not then have been exercised (less any amount
        thereof which shall have been canceled in payment or partial payment of the
        Warrant Price as hereinabove provided) shall also be issued to the Holder
        hereof
        at the Issuer’s expense within such time.

       

      (d)           Transferability
        of Warrant.  Subject to Section 2(f) and Section 2(g), this
        Warrant may be transferred by a Holder without the consent of the
        Issuer.  If transferred pursuant to this paragraph and subject to the
        provisions of subsection (f) of this Section 2, this Warrant may be transferred
        on the books of the Issuer by the Holder hereof in person or by duly authorized
        attorney, upon surrender of this Warrant at the principal office of the Issuer,
        properly endorsed (by the Holder executing an assignment in the form attached
        hereto) and upon payment of any necessary transfer tax or other governmental
        charge imposed upon such transfer.  This Warrant is exchangeable at
        the principal office of the Issuer for Warrants for the purchase of the same
        aggregate number of shares of Warrant Stock, each new Warrant to represent
        the
        right to purchase such number of shares of Warrant Stock as the Holder hereof
        shall designate at the time of such exchange.  All Warrants issued on
        transfers or exchanges shall be dated the Original Issue Date and shall be
        identical with this Warrant except as to the number of shares of Warrant
        Stock
        issuable pursuant thereto.

       

      (e)           Continuing
        Rights of Holder.  The Issuer will, at the time of or at any time
        after each exercise of this Warrant, upon the request of the Holder hereof,
        acknowledge in writing the extent, if any, of its continuing obligation to
        afford to such Holder all rights to which such Holder shall continue to be
        entitled after such exercise in accordance with the terms of this Warrant,
        provided that if any such Holder shall fail to make any such request, the
        failure shall not affect the continuing obligation of the Issuer to afford
        such
        rights to such Holder.

       

      (f)           Compliance
        with Securities Laws.

       

      (i)           The
        Holder of this Warrant, by acceptance hereof, acknowledges that this Warrant
        or
        the shares of Warrant Stock to be issued upon exercise hereof are being acquired
        solely for the Holder’s own account and not as a nominee for any other party,
        and for investment, and that the Holder will not offer, sell or otherwise
        dispose of this Warrant or any shares of Warrant Stock to be issued upon
        exercise hereof except pursuant to an effective registration statement, or
        an
        exemption from registration, under the Securities Act and any applicable
        state
        securities laws.

       

      (ii)           Except
        as provided in paragraph (iii) below, this Warrant and all certificates
        representing shares of Warrant Stock issued upon exercise hereof shall be
        stamped or imprinted with a legend in substantially the following
        form:

       

      THIS
        WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE HEREOF HAVE
        NOT
        BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
        ACT”), OR ANY STATE SECURITIES LAW AND MAY NOT BE SOLD, TRANSFERRED OR
        OTHERWISE DISPOSED OF UNLESS REGISTERED UNDER THE SECURITIES ACT AND UNDER
        APPLICABLE STATE SECURITIES LAWS OR THE ISSUER SHALL HAVE RECEIVED AN OPINION
        OF
        COUNSEL TO THE HOLDER OF THE SECURITIES (UNLESS THE ISSUER IN ITS SOLE
        DISCRETION DETERMINES TO USE ITS OWN COUNSEL), WITH ANY SUCH COUNSEL TO THE
        HOLDER AND ANY SUCH OPINION OF SUCH COUNSEL TO BE REASONABLY ACCEPTABLE TO
        THE
        ISSUER, THAT REGISTRATION OF SUCH NOTE UNDER THE SECURITIES ACT AND UNDER
        THE
        PROVISIONS OF APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED.

       

      (iii)           The
        Issuer agrees to reissue certificates representing any of the Warrant Stock,
        without the legend set forth above if at such time, prior to making any transfer
        of any such securities, the Holder shall give written notice to the Issuer
        describing the manner and terms of such transfer and removal as the Issuer
        may
        reasonably request.  Such proposed transfer and removal will not be
        effected until:  (a) either (i) the Issuer has received an opinion of
        counsel reasonably satisfactory to the Issuer, to the effect that the
        registration of such securities under the Securities Act is not required
        in
        connection with such proposed transfer, (ii) a registration statement under
        the
        Securities Act covering such proposed disposition has been filed by the Issuer
        with the Securities and Exchange Commission and has become effective under
        the
        Securities Act, (iii) the Issuer has received other evidence reasonably
        satisfactory to the Issuer that such registration and qualification under
        the
        Securities Act and state securities laws are not required, or (iv) the Holder
        provides the Issuer with reasonable assurances that such security can be
        sold
        pursuant to Rule 144 under the Securities Act; and (b) either (i) the Issuer
        has
        received an opinion of counsel reasonably satisfactory to the Issuer, to
        the
        effect that registration or qualification under the securities or “blue sky”
laws of any state is not required in connection with such proposed disposition,
        or (ii) compliance with applicable state securities or “blue sky” laws has been
        effected or a valid exemption exists with respect thereto.  The Issuer
        will respond to any such notice from a holder within five (5) business
        days.  In the case of any proposed transfer under this Section 2(f),
        the Issuer will use reasonable efforts to comply with any such applicable
        state
        securities or “blue sky” laws, but shall in no event be required, (x) to qualify
        to do business in any state where it is not then qualified, (y) to take any
        action that would subject it to tax or to the general service of process
        in any
        state where it is not then subject, or (z) to comply with state securities
        or
“blue sky” laws of any state for which registration by coordination is
        unavailable to the Issuer.  The restrictions on transfer contained in
        this Section 2(f) shall be in addition to, and not by way of limitation of,
        any
        other restrictions on transfer contained in any other section of this
        Warrant.  Whenever a certificate representing the Warrant Stock is
        required to be issued to a the Holder without a legend, in lieu of delivering
        physical certificates representing the Warrant Stock, provided the Issuer’s
        transfer agent is participating in the DTC Fast Automated Securities Transfer
        program, the Issuer shall use its reasonable best efforts to cause its transfer
        agent to electronically transmit the Warrant Stock to the Holder by crediting
        the account of the Holder’s Prime Broker with DTC through its DWAC system (to
        the extent not inconsistent with any provisions of this Warrant or the Purchase
        Agreement).

       

      (g)           In
        no event may the Holder exercise this Warrant in whole or in part unless
        the
        Holder is an “accredited investor” as defined in Regulation D under the
        Securities Act.

       

      3.           Stock
        Fully Paid; Reservation and Listing of Shares; Covenants.

       

      (a)           Stock
        Fully Paid.  The Issuer represents, warrants, covenants and agrees
        that all shares of Warrant Stock which may be issued upon the exercise of
        this
        Warrant or otherwise hereunder will, when issued in accordance with the terms
        of
        this Warrant, be duly authorized, validly issued, fully paid and non-assessable
        and free from all taxes, liens and charges created by or through the
        Issuer.  The Issuer further covenants and agrees that during the
        period within which this Warrant may be exercised, the Issuer will at all
        times
        have authorized and reserved for the purpose of the issue upon exercise of
        this
        Warrant a sufficient number of shares of Common Stock to provide for the
        exercise of this Warrant.

       

      (b)           Reservation.  If
        any shares of Common Stock required to be reserved for issuance upon exercise
        of
        this Warrant or as otherwise provided hereunder require registration or
        qualification with any governmental authority under any federal or state
        law
        before such shares may be so issued, the Issuer will in good faith use its
        reasonable best efforts as expeditiously as possible at its expense to cause
        such shares to be duly registered or qualified.  If the Issuer shall
        list any shares of Common Stock on any securities exchange or market it will,
        at
        its expense, list thereon, maintain and increase when necessary such listing,
        of, all shares of Warrant Stock from time to time issued upon exercise of
        this
        Warrant or as otherwise provided hereunder (provided that such Warrant Stock
        has
        been registered pursuant to a registration statement under the Securities
        Act
        then in effect), and, to the extent permissible under the applicable securities
        exchange rules, all unissued shares of Warrant Stock which are at any time
        issuable hereunder, so long as any shares of Common Stock shall be so
        listed.  The Issuer will also so list on each securities exchange or
        market, and will maintain such listing of, any other securities which the
        Holder
        of this Warrant shall be entitled to receive upon the exercise of this Warrant
        if at the time any securities of the same class shall be listed on such
        securities exchange or market by the Issuer.

       

      (c)           Covenants.  The
        Issuer shall not by any action including, without limitation, amending the
        Articles of Incorporation or the by-laws of the Issuer, or through any
        reorganization, transfer of assets, consolidation, merger, dissolution, issue
        or
        sale of securities or any other 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 the Holder
        hereof against dilution (to the extent specifically provided herein) or
        impairment.  Without limiting the generality of the foregoing, the
        Issuer will (i) not permit the par value, if any, of its Common Stock to
        exceed
        the then effective Warrant Price, (ii) not amend or modify any provision
        of the
        Articles of Incorporation or by-laws of the Issuer in any manner that would
        adversely affect the rights of the Holders of the Warrants in their capacity
        as
        Holders of the Warrants, (iii) take all such action as may be reasonably
        necessary in order that the Issuer may validly and legally issue fully paid
        and
        nonassessable shares of Common Stock, free and clear of any liens, claims,
        encumbrances and restrictions (other than as provided herein) upon the exercise
        of this Warrant, and (iv) use its reasonable best efforts to obtain all such
        authorizations, exemptions or consents from any public regulatory body having
        jurisdiction thereof as may be reasonably necessary to enable the Issuer
        to
        perform its obligations under this Warrant.

       

      (d)           Loss,
        Theft, Destruction of Warrants.  Upon receipt of evidence
        satisfactory to the Issuer of the ownership of and the loss, theft, destruction
        or mutilation of any Warrant and, in the case of any such loss, theft or
        destruction, upon receipt of indemnity or security satisfactory to the Issuer
        or, in the case of any such mutilation, upon surrender and cancellation of
        such
        Warrant, the Issuer will make and deliver, in lieu of such lost, stolen,
        destroyed or mutilated Warrant, a new Warrant of like tenor and representing
        the
        right to purchase the same number of shares of Common Stock.

       

      4.           Adjustment
        of Warrant Price.  The price at which such shares may be purchased
        upon exercise of this Warrant shall be subject to adjustment from time to
        time
        as set forth in this Section 4.  The Issuer shall give the Holder
        notice of any event described below which requires an adjustment pursuant
        to
        this Section 4 in accordance with Section 5.

       

      (a)           Recapitalization,
        Reorganization, Reclassification, Consolidation, Merger or
Sale.

       

      (i)           In
        case the Issuer after the Original Issue Date shall do any of the following
        (each, a “Triggering Event”):  (a) consolidate or merge with or
        into another corporation where the holders of outstanding Voting Stock prior
        to
        such merger or consolidation do not own over 50% of the outstanding Voting
        Stock
        of the merged or consolidated entity immediately after such merger or
        consolidation, or (b) sell all or substantially all of its properties or
        assets
        to any other Person, or (c) change the Common Stock to the same or different
        number of shares of any class or classes of stock, whether by reclassification,
        exchange, substitution or otherwise (other than by way of a stock split or
        combination of shares or stock dividends or distributions provided for in
        Section 4(b) or Section 4(c)), or (d)
        effect a capital reorganization (other than the transactions executed in
        connection with the Plan or by way of a stock split or combination of shares
        or
        stock dividends or distributions provided for in Section 4(b) or Section
        4(c)), then, and in the case of each such Triggering Event, proper
        provision shall be made so that, upon the basis and the terms and in the
        manner
        provided in this Warrant, the Holder of this Warrant shall be entitled upon
        the
        exercise hereof at any time after the consummation of such Triggering Event,
        to
        the extent this Warrant is not exercised prior to such Triggering Event,
        to
        receive at the Warrant Price in effect at the time immediately prior to the
        consummation of such Triggering Event in lieu of the Common Stock issuable
        upon
        such exercise of this Warrant prior to such Triggering Event, the securities,
        cash and property to which such Holder would have been entitled upon the
        consummation of such Triggering Event if such Holder had exercised the rights
        represented by this Warrant immediately prior thereto, subject to adjustments
        (subsequent to such corporate action) as nearly equivalent as possible to
        the
        adjustments provided for elsewhere in this Section 4.

       

      (ii)           Notwithstanding
        anything contained in this Warrant to the contrary, a Triggering Event shall
        not
        be deemed to have occurred if, prior to the consummation thereof, each Person
        (other than the Issuer) which may be required to deliver any securities,
        cash or
        property upon the exercise of this Warrant as provided herein shall assume,
        by
        written instrument delivered to, and reasonably satisfactory to, the Holder
        of
        this Warrant, (A) the obligations of the Issuer under this Warrant (and if
        the
        Issuer shall survive the consummation of such Triggering Event, such assumption
        shall be in addition to, and shall not release the Issuer from, any continuing
        obligations of the Issuer under this Warrant) and (B) the obligation to deliver
        to such Holder such shares of securities, cash or property as, in accordance
        with the foregoing provisions of this subsection (a), such Holder shall be
        entitled to receive, and such Person shall have similarly delivered to such
        Holder a written acknowledgement executed by the President or Chief Financial
        Officer of the Company, stating that this Warrant shall thereafter continue
        in
        full force and effect and the terms hereof (including, without limitation,
        all
        of the provisions of this subsection (a)) shall be applicable to the securities,
        cash or property which such Person may be required to deliver upon any exercise
        of this Warrant or the exercise of any rights pursuant hereto.

       

      (b)           Stock
        Dividends, Subdivisions and Combinations.  If at any time the
        Issuer shall:

       

      (i)           make
        or issue or set a record date for the holders of its Common Stock for the
        purpose of entitling them to receive a dividend payable in, or other
        distribution of, shares of Common Stock,

       

      (ii)           subdivide
        its outstanding shares of Common Stock into a larger number of shares of
        Common
        Stock, or

       

      (iii)           combine
        its outstanding shares of Common Stock into a smaller number of shares of
        Common
        Stock,

       

      then
        (1)
        the number of shares of Common Stock for which this Warrant is exercisable
        immediately after the occurrence of any such event shall be adjusted to equal
        the number of shares of Common Stock which a record holder of the same number
        of
        shares of Common Stock for which this Warrant is exercisable immediately
        prior
        to the occurrence of such event would own or be entitled to receive after
        the
        happening of such event, and (2) the Warrant Price then in effect shall be
        adjusted to equal (A) the Warrant Price then in effect multiplied by the
        number
        of shares of Common Stock for which this Warrant is exercisable immediately
        prior to the adjustment divided by (B) the number of shares of Common Stock
        for
        which this Warrant is exercisable immediately after such
        adjustment.

       

      Notwithstanding
        the foregoing, if such record date shall have been fixed and such dividend
        is
        not fully paid or if such distribution is not fully made on the date fixed
        therefor, the Warrant Price shall be adjusted pursuant to this paragraph
        as of
        the time of actual payment of such dividends or distributions.

       

      (c)           Certain
        Other Distributions.  If at any time the Issuer shall make or
        issue or set a record date for the determination of the holders of its Common
        Stock for the purpose of entitling them to receive any divi­dend or other
        distribution of:

       

      (i)           cash
        (other than a cash dividend payable out of earnings or earned surplus legally
        available for the payment of dividends under the laws of the jurisdiction
        of
        incorporation of the Issuer),

       

      (ii)           any
        evidences of its indebtedness, any shares of stock of any class or any other
        securities or property of any nature whatsoever (other than cash, Convertible
        Securities or Additional Shares of Common Stock), or

       

      (iii)           any
        warrants or other rights to subscribe for or purchase any evidences of its
        indebtedness, any shares of stock of any class or any other securities or
        property of any nature whatsoever (other than cash, Convertible Securities
        or
        Additional Shares of Common Stock), then (1) the number of shares of Common
        Stock for which this Warrant is exercisable shall be adjusted to equal the
        product of the number of shares of Common Stock for which this Warrant is
        exercisable immediately prior to such adjustment multiplied by a fraction
        (A)
        the numerator of which shall be the Per Share Market Value of Common Stock
        at
        the date of taking such record and (B) the denominator of which shall be
        such
        Per Share Market Value minus the amount allocable to one share of Common
        Stock
        of any such cash so distributable and of the fair value (as determined in
        good
        faith by the Board of Directors of the Issuer and supported by an opinion
        from
        an investment banking firm of recognized national standing acceptable to
        (but
        not affiliated with) the Holder) of any and all such evidences of indebtedness,
        shares of stock, other securities or property or warrants or other subscription
        or purchase rights so distributable, and (2) the Warrant Price then in effect
        shall be adjusted to equal (A) the Warrant Price then in effect multiplied
        by
        the number of shares of Common Stock for which this Warrant is exercisable
        immediately prior to the adjustment divided by (B) the number of shares of
        Common Stock for which this Warrant is exercisable immediately after such
        adjustment.  A reclassification of the Common Stock (other than a
        change in par value, or from par value to no par value or from no par value
        to
        par value) into shares of Common Stock and shares of any other class of stock
        shall be deemed a distribution by the Issuer to the holders of its Common
        Stock
        of such shares of such other class of stock within the meaning of this Section
        4(c) and, if the outstanding shares of Common Stock shall be changed into
        a
        larger or smaller number of shares of Common Stock as a part of such
        reclassification, such change shall be deemed a subdivision or combination,
        as
        the case may be, of the outstanding shares of Common Stock within the meaning
        of
        Section 4(b).

       

      Notwithstanding
        the foregoing, if such record date shall have been fixed and such dividend
        is
        not fully paid or if such distribution is not fully made on the date fixed
        therefor, the Warrant Price shall be adjusted pursuant to this Section 4(c)
        as
        of the time of actual payment of such dividends or distributions.

       

      (d)           Issuance
        of Additional Shares of Common Stock.  In the event the Issuer
        shall at any time following the Original Issue Date issue any Additional
        Shares
        of Common Stock (otherwise than as provided in the foregoing subsections
        (a)
        through (c) of this Section 4), at a price per share less than $.60 or without
        consideration, then the Warrant Price upon each such issuance shall be adjusted
        to the price equal to the consideration per share paid for such Additional
        Shares of Common Stock.

       

      (e)           Issuance
        of Common Stock Equivalents.  If at any time the Issuer shall
        issue or sell any Common Stock Equivalents, whether or not the rights to
        exchange or convert thereunder are immediately exercisable, and the aggregate
        price per share for which Common Stock is issuable upon such conversion or
        exchange plus the consideration received by the Issuer for issuance of such
        Common Stock Equivalent divided by the number of shares of Common Stock issuable
        pursuant to such Common Stock Equivalent shall be less than $.60 or without
        consideration, then the Warrant Price then in effect shall be adjusted as
        provided in Section 4(d).  No further adjustment of the Warrant Price
        then in effect shall be made under this Section 4(e) upon the issuance of
        any
        Common Stock Equivalents which are issued pursuant to the exercise of any
        warrants or other subscription or purchase rights therefor, if any such
        adjustment shall previously have been made upon the issuance of such warrants
        or
        other rights pursuant to this Section 4(e).  No further adjustments of
        the Warrant Price then in effect shall be made upon the actual issue of such
        Common Stock upon conversion or exchange of such Common Stock
        Equivalents.

       

      (f)           Other
        Provisions applicable to Adjustments under this Section.  The
        following provisions shall be ap­plicable to the making of adjustments of
        the number of shares of Common Stock for which this Warrant is exercisable
        and
        the Warrant Price then in effect provided for in this Section 4:

       

      (i)           Computation
        of Consideration.  To the extent that any Additional Shares of
        Common Stock shall be issued for cash consideration, the consideration received
        by the Issuer therefor shall be the amount of the cash received by the Issuer
        therefor, or, if such Additional Shares of Common Stock are offered by the
        Issuer for subscription, the subscription price, or, if such Additional Shares
        of Common Stock are sold to underwriters or dealers for public offering without
        a subscription offering, the initial public offering price (in any such case
        subtracting any amounts paid or receivable for accrued interest or accrued
        dividends and without taking into account any compensation, discounts or
        expenses paid or incurred by the Issuer for and in the underwriting of, or
        otherwise in connection with, the issuance thereof).  In connection
        with any merger or consolidation in which the Issuer is the surviving
        corporation (other than any consolidation or merger in which the previously
        outstanding shares of Common Stock of the Issuer shall be changed to or
        exchanged for the stock or other securities of another corporation), the
        amount
        of consideration therefore shall be, deemed to be the fair value, as determined
        reasonably and in good faith by the Board, of such portion of the assets
        and
        business of the nonsurviving corporation as the Board may determine to be
        attributable to such Additional Shares of Common Stock.  The
        consideration for any Additional Shares of Common Stock issuable pursuant
        to any
        Convertible Securities or warrants or other rights to subscribe for or purchase
        the same shall be the consideration received by the Issuer for issuing such
        Convertible Securities or warrants or other rights plus the additional
        con­sideration payable to the Issuer upon exercise of such warrants or other
        rights.  In the event of any consolidation or merger of the Issuer in
        which the Issuer is not the surviving corporation or in which the previously
        outstanding shares of Common Stock of the Issuer shall be changed into or
        exchanged for the stock or other securities of another corporation, or in
        the
        event of any sale of all or substantially all of the assets of the Issuer
        for
        stock or other securities of any corporation, the Issuer shall be deemed
        to have
        issued a number of shares of its Common Stock for stock or securities or
        other
        property of the other corporation computed on the basis of the actual exchange
        ratio on which the transaction was predicated, and for a consideration equal
        to
        the fair market value on the date of such transaction of all such stock or
        securities or other property of the other corporation.  In the event
        any consideration received by the Issuer for any securities consists of property
        other than cash, the fair market value thereof at the time of issuance or
        as
        otherwise applicable shall be as determined in good faith by the
        Board.  In the event Common Stock is issued with other shares or
        securities or other assets of the Issuer for consideration which covers both,
        the consideration computed as provided in this Section 4(f)(i) shall be
        allocated among such securities and assets as determined in good faith by
        the
        Board.

       

      (ii)           When
        Adjustments to Be Made.  The adjustments required by this Section
        4 shall be made whenever and as often as any specified event requiring an
        adjustment shall occur, except that any adjustment of the number of shares
        of
        Common Stock for which this Warrant is exercisable that would otherwise be
        required may be postponed (except in the case of a subdivision or combination
        of
        shares of the Common Stock, as provided for in Section 4(b)) up to, but not
        beyond the date of exercise if such adjustment either by itself or with other
        adjustments not previously made adds or subtracts less than one percent (1%)
        of
        the shares of Common Stock for which this Warrant is exercisable immediately
        prior to the making of such adjustment.  Any adjustment representing a
        change of less than such minimum amount (except as aforesaid) which is postponed
        shall be carried forward and made as soon as such adjustment, together with
        other adjustments required by this Section 4 and not previously made, would
        result in a minimum adjustment or on the date of exercise.  For the
        purpose of any adjustment, any specified event shall be deemed to have occurred
        at the close of business on the date of its occurrence.

       

      (iii)           Fractional
        Interests.  In computing ad­justments under this Section 4,
        fractional interests in Common Stock shall be taken into account to the
        near­est one one-hundredth (1/100th) of a
        share.

       

      (iv)           When
        Adjustment Not Required.  If the Issuer shall take a record of the
        holders of its Common Stock for the purpose of entitling them to receive
        a
        dividend or distribution or subscription or purchase rights and shall,
        thereafter and before the distribution to stockholders thereof, legally abandon
        its plan to pay or deliver such dividend, distribution, subscription or purchase
        rights, then thereafter no adjustment shall be required by reason of the
        taking
        of such record and any such adjustment previously made in respect thereof
        shall
        be rescinded and annulled.

       

      (g)           Form
        of Warrant after Adjustments.  The form of this Warrant need not
        be changed because of any adjustments in the Warrant Price or the number
        and
        kind of Securities purchasable upon the exercise of this Warrant.

       

      (h)           Escrow
        of Warrant Stock.  If after any property becomes distributable
        pursuant to this Section 4 by reason of the taking of any record of the holders
        of Common Stock, but prior to the occurrence of the event for which such
        record
        is taken, and the Holder exer­cises this Warrant, any shares of Common Stock
        issuable upon exercise by reason of such adjustment shall be deemed the last
        shares of Common Stock for which this Warrant is exercised (notwithstanding
        any
        other provision to the contrary herein) and such shares or other property
        shall
        be held in escrow for the Holder by the Issuer to be issued to the Holder
        upon
        and to the extent that the event actually takes place, upon payment of the
        current Warrant Price.  Notwithstanding any other provision to the
        contrary herein, if the event for which such record was taken fails to occur
        or
        is rescinded, then such escrowed shares shall be cancelled by the Issuer
        and
        escrowed property returned.

       

      (i)           Notwithstanding
        any other provision set forth in this Section 4, no adjustment to the Warrant
        Price shall be required because of any issuance or sale of Additional Shares
        of
        Common Stock or Common Stock Equivalents upon conversion of the preferred
        stock
        or the exercise of warrants and/or options in connection with the
        Plan.

       

      5.           Notice
        of Adjustments.  Whenever the Warrant Price or Warrant Share
        Number shall be adjusted pursuant to Section 4 hereof (for purposes of this
        Section 5, each an “adjustment”), the Issuer shall cause its Chief Financial
        Officer to prepare and execute a certificate setting forth, in reasonable
        detail, the event requiring the adjustment, the amount of the adjustment,
        the
        method by which such adjustment was calculated (including a description of
        the
        basis on which the Board made any determination hereunder), and the Warrant
        Price and Warrant Share Number after giving effect to such adjustment, and
        shall
        cause copies of such certificate to be delivered to the Holder of this Warrant
        promptly after each adjustment.  Any dispute between the Issuer and
        the Holder of this Warrant with respect to the matters set forth in such
        certificate may at the option of the Holder of this Warrant be submitted
        to one
        of the national accounting firms currently known as the “big four” selected by
        the Holder, provided that the Issuer shall have ten (10) days after
        receipt of notice from such Holder of its selection of such firm to object
        thereto, in which case such Holder shall select another such firm and the
        Issuer
        shall have no such right of objection unless the Issuer identifies a valid
        conflict of interest for such firm with any of the parties.  The firm
        selected by the Holder of this Warrant as provided in the preceding sentence
        shall be instructed to deliver a written opinion as to such matters to the
        Issuer and such Holder within thirty (30) days after submission to it of
        such
        dispute.  Such opinion shall be final and binding on the parties
        hereto.  The costs and expenses of such accounting firm shall be paid
        equally by the Company and the Holder.

       

      6.           Fractional
        Shares.  No fractional shares of Warrant Stock will be issued in
        connection with any exercise hereof, but in lieu of such fractional shares,
        the
        Issuer shall make a cash payment therefor equal in amount to the product
        of the
        applicable fraction multiplied by the Per Share Market Value then in
        effect.

       

      7.           Ownership
        Cap and Certain Exercise Restrictions.

       

      (a)           Notwithstanding
        anything to the contrary set forth in this Warrant, at no time may a Holder
        of
        this Warrant exercise this Warrant if the number of shares of Common Stock
        to be
        issued pursuant to such exercise would exceed, when aggregated with all other
        shares of Common Stock owned by such Holder at such time, the number of shares
        of Common Stock which would result in such Holder beneficially owning (as
        determined in accordance with Section 13(d) of the Exchange Act and the rules
        thereunder) in excess of 4.999% of the then issued and outstanding shares
        of
        Common Stock; provided, however, that upon a holder of this
        Warrant providing the Issuer with sixty-one (61) days notice (pursuant to
        Section 13 hereof) (the “Waiver Notice”) that such Holder would like to
        waive this Section 7(a) with regard to any or all shares of Common Stock
        issuable upon exercise of this Warrant, this Section 7(a) will be of no force
        or
        effect with regard to all or a portion of the Warrant referenced in the Waiver
        Notice; provided, further, that this provision shall be of no
        further force or effect (i) during the sixty-one (61) days immediately preceding
        the expiration of the term of this Warrant, (ii) upon the Holder’s receipt of a
        Call Notice (as defined in Section 8 hereof), or (iii) upon the issuance
        of
        Common Stock pursuant to the exercise of this Warrant in connection with
        the
        Plan.

       

      (b)           The
        Holder may not exercise the Warrant hereunder to the extent such exercise
        would
        result in the Holder beneficially owning (as determined in accordance with
        Section 13(d) of the Exchange Act and the rules thereunder) in excess of
        9.999%
        of the then issued and outstanding shares of Common Stock, including shares
        issuable upon exercise of the Warrant held by the Holder after application
        of
        this Section; provided, however, that upon a holder of this
        Warrant providing the Company with a Waiver Notice that such holder would
        like
        to waive this Section 7(b) with regard to any or all shares of Common Stock
        issuable upon exercise of this Warrant, this Section 7(b) shall be of no
        force
        or effect with regard to those shares of Warrant Stock referenced in the
        Waiver
        Notice; provided, further, that this provision shall be of no
        further force or effect (i) during the sixty-one (61) days immediately preceding
        the expiration of the term of this Warrant, (ii) upon the Holder’s receipt of a
        Call Notice, or (iii) upon the issuance of Common Stock pursuant to the exercise
        of this Warrant in connection with the Plan.

       

      8.           Call.  Notwithstanding
        anything herein to the contrary, commencing twelve (12) months following
        the
        effective date of a registration statement under the Securities Act providing
        for the resale of the Warrant Stock and the shares of Common Stock issuable
        upon
        conversion of the Issuer’s Series A Preferred Stock issued pursuant to the
        Purchase Agreement (the “Registration Statement”), the Issuer, at its
        option, may call up to one hundred percent (100%) of this Warrant if the
        Per
        Share Market Value of the Common Stock has been greater than $3.00 (as may
        be
        adjusted for any stock splits or combinations of the Common Stock) for a
        period
        of twenty (20) consecutive Trading Days immediately prior to the date of
        delivery of the Call Notice (a “Call Notice Period”) by providing the
        Holder of this Warrant written notice pursuant to Section 13 (the “Call
        Notice”); provided, that (a) the Registration Statement is
        then in effect and has been effective, without lapse or suspension of any
        kind,
        for a period of 60 consecutive calendar days, (b) trading in the Common Stock
        shall not have been suspended by the Securities and Exchange Commission or
        the
        OTC Bulletin Board and (c) the Issuer is in material compliance with the
        terms
        and conditions of this Warrant and the other Transaction Documents (as defined
        in the Purchase Agreement); provided, further, that the
        Registration Statement is in effect from the date of delivery of the Call
        Notice
        until the date which is the later of (i) the date the Holder exercises the
        Warrant pursuant to the Call Notice and (ii) the 20th day after
        the
        Holder receives the Call Notice (the “Early Termination
        Date”).  The rights and privileges granted pursuant to this
        Warrant with respect to the shares of Warrant Stock subject to the Call Notice
        (the “Called Warrant Shares”) shall expire on the Early Termination Date
        if this Warrant is not exercised with respect to such Called Warrant Shares
        prior to such Early Termination Date.  In the event this Warrant is
        not exercised with respect to the Called Warrant Shares, the Issuer shall
        remit
        to the Holder of this Warrant (A) $.01 per Called Warrant Share and (B) a
        new
        Warrant representing the number of shares of Warrant Stock, if any, which
        shall
        not have been subject to the Call Notice upon the Holder tendering to the
        Issuer
        the applicable Warrant certificate.

       

      9.           Definitions.  For
        the purposes of this Warrant, the following terms have the following
        meanings:

       

      “Additional
        Shares of Common Stock” means all shares of Common Stock issued by the
        Issuer after the original issue date, and all shares of Other Common, if
        any,
        issued by the Issuer after the original issue date, except:  (i)
        securities issued (other than for cash) in connection with a merger,
        acquisition, or consolidation, (ii) securities issued pursuant to a bona
        fide
        firm underwritten public offering of the Issuer’s securities, (iii) securities
        issued pursuant to the conversion or exercise of convertible or excercisable
        securities issued or outstanding on or prior to the original issue date or
        issued pursuant to the Purchase Agreement, (iv) the Warrant Stock, (v)
        securities issued in connection with strategic alliances or other partnering
        arrangements so long as such issuances are not for the purpose of raising
        capital, (vi) Common Stock issued or options to purchase Common Stock granted
        or
        issued pursuant to the Issuer’s stock option plans and employee stock purchase
        plans as they now exist, (vii) any warrants issued to the placement agent
        for
        the transactions contemplated by the Purchase Agreement, and (viii) the payment
        of any dividend on the Series A Convertible Preferred Stock of the
        Issuer.

       

      “Articles
        of Incorporation” means the Articles of Incorporation of the Issuer as in
        effect on the Original Issue Date, and as hereafter from time to time amended,
        modified, supplemented or restated in accordance with the terms hereof and
        thereof and pursuant to applicable law.

       

      “Board”
        shall mean the Board of Directors of the Issuer.

       

      “Capital
        Stock” means and includes (i) any and all shares, interests, participations
        or other equivalents of or interests in (however designated) corporate stock,
        including, without limitation, shares of preferred or preference stock, (ii)
        all
        partnership interests (whether general or limited) in any Person which is
        a
        partnership, (iii) all membership interests or limited liability company
        interests in any limited liability company, and (iv) all equity or ownership
        interests in any Person of any other type.

       

      “Common
        Stock” means the Common Stock, par value $.01 per share, of the Issuer and
        any other Capital Stock into which such stock may hereafter be
        changed.

       

      “Common
        Stock Equivalent” means any Convertible Security or warrant, option or other
        right to subscribe for or purchase any Additional Shares of Common Stock
        or any
        Convertible Security.

       

      “Convertible
        Securities” means evidences of Indebtedness, shares of Capital Stock or
        other Securities which are or may be at any time convertible into or
        exchangeable for Additional Shares of Common Stock.  The term
“Convertible Security” means one of the Convertible Securities.

       

      “Final
        Plan Date” shall mean the date that is six months and twelve days after the
        Plan Closing Date.

       

      “Governmental
        Authority” means any governmental, regulatory or self-regulatory entity,
        department, body, official, authority, commission, board, agency or
        instrumentality, whether federal, state or local, and whether domestic or
        foreign.

       

      “Holders”
        mean the Persons who shall from time to time own any Warrant.  The
        term “Holder” means one of the Holders.

       

      “Independent
        Appraiser” means a nationally recognized or major regional investment
        banking firm or firm of independent certified public accountants of recognized
        standing (which may be the firm that regularly examines the financial statements
        of the Issuer) that is regularly engaged in the business of appraising the
        Capital Stock or assets of corporations or other entities as going concerns,
        and
        which is not affiliated with either the Issuer or the Holder of any
        Warrant.

       

      “Issuer”
        means Chembio Diagnostics, Inc., a Nevada corporation, and its
        successors.

       

      “Majority
        Holders” means at any time the Holders of Warrants exercisable for a
        majority of the shares of Warrant Stock issuable under the Warrants at the
        time
        outstanding.

       

      “Original
        Issue Date” means May 5, 2004.

       

      “OTC
        Bulletin Board” means the over-the-counter electronic bulletin
        board.

       

      “Other
        Common” means any other Capital Stock of the Issuer of any class which shall
        be authorized at any time after the date of this Warrant (other than Common
        Stock) and which shall have the right to participate in the distribution
        of
        earnings and assets of the Issuer without limitation as to amount.

       

      “Outstanding
        Common Stock” means, at any given time, the aggregate amount of outstanding
        shares of Common Stock, assuming full exercise, conversion or exchange (as
        applicable) of all options, warrants and other Securities which are convertible
        into or exercisable or exchangeable for, and any right to subscribe for,
        shares
        of Common Stock that are outstanding at such time.

       

      “Person”
        means an individual, corporation, limited liability company, partnership,
        joint
        stock company, trust, unincorporated organization, joint venture, Governmental
        Authority or other entity of whatever nature.

       

      “Per
        Share Market Value” means on any particular date (a) the closing bid price
        for a share of Common Stock in the over-the-counter market, as reported by
        the
        OTC Bulletin Board or in the National Quotation Bureau Incorporated or similar
        organization or agency succeeding to its functions of reporting prices) at
        the
        close of business on such date, or (b) if the Common Stock is not then reported
        by the OTC Bulletin Board or the National Quotation Bureau Incorporated (or
        similar organization or agency succeeding to its functions of reporting prices),
        then the average of the “Pink Sheet” quotes for the relevant determination
        period, or (c) if the Common Stock is not then publicly traded the fair market
        value of a share of Common Stock as determined by the Board in good faith;
        provided, however, that the Majority Holders, after receipt of the
        determination by the Board, shall have the right to select, jointly with
        the
        Issuer, an Independent Appraiser, in which case, the fair market value shall
        be
        the determination by such Independent Appraiser; and provided,
further that all determinations of the Per Share Market Value shall
        be
        appropriately adjusted for any stock dividends, stock splits or other similar
        transactions during such period.  The determination of fair market
        value shall be based upon the fair market value of the Issuer determined
        on a
        going concern basis as between a willing buyer and a willing seller and taking
        into account all relevant factors determinative of value, and shall be final
        and
        binding on all parties.  In determining the fair market value of any
        shares of Common Stock, no consideration shall be given to any restrictions
        on
        transfer of the Common Stock imposed by agreement or by federal or state
        securities laws, or to the existence or absence of, or any limitations on,
        voting rights.

       

      “Plan”
        shall mean any action the Company takes, with any required approval of the
        holders thereof, on or before the Final Plan Date as contemplated by the
        Plan
        Summary and accompanying materials provided to holders on December 4, 2007,
        in
        connection with the reduction or other modification of terms of the Company's
        then-outstanding preferred stock, warrants and options, including, but not
        limited to, actions the Company takes to (i) facilitate the conversion of
        the
        Series A, B and C Convertible Preferred Stock; (ii) reduce the exercise price
        of
        any of the Company's outstanding warrants or options; (iii) offer the holders
        of
        the Company's warrants and options the opportunity to exercise such warrants
        and
        options on a cash and/or cashless basis; and (iv) make other amendments to
        the
        documents governing these securities to effect these modifications, and to
        facilitate the conversion and exercise of these securities.

       

      “Plan
        Closing
        Date”
shall
        be
        December 19, 2007.

       

      “Purchase
        Agreement” means the Series A Convertible Preferred Stock and Warrant
        Purchase Agreement dated as of May 5, 2004 among the Issuer and the investors
        a
        party thereto.

       

      “Securities”
        means any debt or equity securities of the Issuer, whether now or hereafter
        authorized, any instrument convertible into or exchangeable for Securities
        or a
        Security, and any option, warrant or other right to purchase or acquire any
        Security.  “Security” means one of the Securities.

       

      “Securities
        Act” means the Securities Act of 1933, as amended, or any similar federal
        statute then in effect.

       

      “Subsidiary”
        means any corporation at least 50% of whose outstanding Voting Stock shall
        at
        the time be owned directly or indirectly by the Issuer or by one or more
        of its
        Subsidiaries, or by the Issuer and one or more of its Subsidiaries.

       

      “Term”
        has the meaning specified in Section 1 hereof.

       

      “Trading
        Day” means (a) a day on which the Common Stock is traded on the OTC Bulletin
        Board, or (b) if the Common Stock is not traded on the OTC Bulletin Board,
        a day
        on which the Common Stock is quoted in the over-the-counter market as reported
        by the National Quotation Bureau Incorporated (or any similar organization
        or
        agency succeeding its functions of reporting prices); provided,
however, that in the event that the Common Stock is not listed or
        quoted
        as set forth in (a) or (b) hereof, then Trading Day shall mean any day except
        Saturday, Sunday and any day which shall be a legal holiday or a day on which
        banking institutions in the State of New York are authorized or required
        by law
        or other government action to close.

       

      “Voting
        Stock” means, as applied to the Capital Stock of any corporation, Capital
        Stock of any class or classes (however designated) having ordinary voting
        power
        for the election of a majority of the members of the Board of Directors (or
        other governing body) of such corporation, other than Capital Stock having
        such
        power only by reason of the happening of a contingency.

       

      “Warrant
        Price” shall be as follows, except as may be adjusted from time to time as
        shall result from the adjustments specified in this Warrant, including Section
        4
        hereto:

       

      
        	
                 

              	
                (i)

              	
                For
                  the period 4:01p.m. eastern time ET through 9:59p.m. ET on the
                  Plan
                  Closing Date, $0.40 per share for all or any portion of this Warrant
                  exercised for cash;

              

      

       

      
        	
                 

              	
                (ii)

              	
                For
                  the period 4:01p.m. ET through 9:59p.m. ET on the Plan Closing
                  Date, $0.45
                  per share for all or any portion of this Warrant exercised through
                  a
                  Cashless Exercise;

              

      

       

      
        	
                 

              	
                (iii)

              	
                For
                  the period beginning 10:00p.m. ET on the Plan Closing Date through
                  9:59p.m. ET on the Final Plan Date, $0.45 for all or any part of
                  this
                  Warrant exercised by a Holder who exercised at least 10% of all
                  of such
                  Holder’s warrants and options for cash at the Plan Closing
                  Date;

              

      

       

      
        	
                 

              	
                (iv)

              	
                For
                  the period beginning 10:00p.m. ET on the Plan Closing Date, $0.90
                  per
                  share for any Holder that did not exercise at least 10% of all
                  of such
                  Holder’s warrants and options for cash at an exercise price of $0.40 per
                  share at the Plan Closing Date; and

              

      

       

      
        	
                 

              	
                (v)

              	
                For
                  the period beginning 10:00p.m. ET on the Final Plan Date, $0.90
                  per share
                  for all or any portion of this Warrant that has not been exercised
                  on or
                  before 9:59p.m. ET on the Final Plan
                  Date.

              

      

       

       

      “Warrant
        Share Number” means at any time the aggregate number of shares of Warrant
        Stock which may at such time be purchased upon exercise of this Warrant,
        after
        giving effect to all prior adjustments and increases to such number made
        or
        required to be made under the terms hereof.

       

      “Warrant
        Stock” means Common Stock issuable upon exercise of any Warrant or Warrants
        or otherwise issuable pursuant to any Warrant or Warrants.

       

      “Warrants”
        means the Warrants issued and sold pursuant to the Purchase Agreement,
        including, without limitation, this Warrant, and any other warrants of like
        tenor issued in substitution or exchange for any thereof pursuant to the
        provisions of Section 2(c), 2(d) or 2(e) hereof or of any of such other
        Warrants.

       

      10.           Other
        Notices.  In case at any time:

       

      (a)           the
        Issuer shall make any distributions to the holders of Common Stock;
        or

       

      (b)           the
        Issuer shall authorize the granting to all holders of its Common Stock of
        rights
        to subscribe for or purchase any shares of Capital Stock of any class or
        other
        rights; or

       

      (c)           there
        shall be any reclassification of the Capital Stock of the Issuer;
        or

       

      (d)           there
        shall be any capital reorganization by the Issuer; or

       

      (e)           there
        shall be any (i) consolidation or merger involving the Issuer or (ii) sale,
        transfer or other disposition of all or substantially all of the Issuer’s
        property, assets or business (except a merger or other reorganization in
        which
        the Issuer shall be the surviving corporation and its shares of Capital Stock
        shall continue to be outstanding and unchanged and except a consolidation,
        merger, sale, transfer or other disposition involving a wholly-owned
        Subsidiary); or

       

      (f)           there
        shall be a voluntary or involuntary dissolution, liquidation or winding-up
        of
        the Issuer or any partial liquidation of the Issuer or distribution to holders
        of Common Stock; then, in each of such cases, the Issuer shall give written
        notice to the Holder of the date on which (i) the books of the Issuer shall
        close or a record shall be taken for such dividend, distribution or subscription
        rights or (ii) such reorganization, reclassification, consolidation, merger,
        disposition, dissolution, liquidation or winding-up, as the case may be,
        shall
        take place.  Such notice also shall specify the date as of which the
        holders of Common Stock of record shall participate in such dividend,
        distribution or subscription rights, or shall be entitled to exchange their
        certificates for Common Stock for securities or other property deliverable
        upon
        such reorganization, reclassification, consolidation, merger, disposition,
        dissolution, liquidation or winding-up, as the case may be.  Such
        notice shall be given at least twenty (20) days prior to the record date
        or
        effective date for the event specified in such notice.

       

      11.           Amendment
        and Waiver.  Any term, covenant, agreement or condition in this
        Warrant may be amended, or compliance therewith may be waived (either generally
        or in a particular instance and either retroactively or prospectively), by
        a
        written instrument or written instruments executed by the Issuer and the
        Majority Holders; provided, however, that no such amendment or
        waiver shall reduce the Warrant Share Number, increase the Warrant Price,
        shorten the period during which this Warrant may be exercised or modify any
        provision of this Section 11 without the consent of the Holder of this
        Warrant.

       

      12.           Governing
        Law.  THIS WARRANT SHALL BE GOVERNED BY AND CONSTRUED IN
        ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT
        TO
        PRINCIPLES OF CONFLICTS OF LAW.

       

      13.           Notices.  Any
        and all notices or other communications or deliveries required or permitted
        to
        be provided hereunder shall be in writing and shall be deemed given and
        effective on the earlier of (i) the date of transmission, if such notice
        or
        communication is delivered via facsimile at the facsimile telephone number
        specified for notice prior to 5:00 p.m., eastern time, on a Trading Day,
        (ii)
        the Trading Day after the date of transmission, if such notice or communication
        is delivered via facsimile at the facsimile telephone number specified for
        notice later than 5:00 p.m., eastern time, on any date and earlier than 11:59
        p.m., eastern time, on such date, or (iii) actual receipt by the party to
        whom
        such notice is required to be given.  The addresses for such
        communications shall be with respect to the Holder of this Warrant or of
        Warrant
        Stock issued pursuant hereto, addressed to such Holder at its last known
        address
        or facsimile number appearing on the books of the Issuer maintained for such
        purposes, or with respect to the Issuer, addressed to:

       

      Chembio
        Diagnostics, Inc.

      3661
        Horseblock Road

      Medford,
        NY 11763

      Attention:  Lawrence
        A. Siebert, President

      Tel.
        No.:  (631) 924-1135

      Fax
        No.:  (631) 924-6033

       

      Copies
        of
        notices to the Issuer shall be sent to Patton Boggs LLP, 1801 California
        Street,
        Suite 4900, Denver, CO 80202, Attention:  Alan Talesnick, Tel.
        No.:  (303) 830-1776, Fax No.:  (303)
        894-9239.  Copies of notices to the Holder shall be sent to Jenkens
& Gilchrist Parker Chapin LLP, 405 Lexington Avenue, New York, New York
        10174, Attention:  Christopher S. Auguste,  Facsimile
        No.:  (212) 704-6288.  Any party hereto may from time to
        time change its address for notices by giving at least ten (10) days written
        notice of such changed address to the other party hereto.

       

      14.           Warrant
        Agent.  The Issuer may, by written notice to each Holder of this
        Warrant, appoint an agent for the purpose of issuing shares of Warrant Stock
        on
        the exercise of this Warrant pursuant to subsection (b) of Section 2 hereof,
        exchanging this Warrant pursuant to subsection (d) of Section 2 hereof or
        replacing this Warrant pursuant to subsection (d) of Section 3 hereof, or
        any of
        the foregoing, and thereafter any such issuance, exchange or replacement,
        as the
        case may be, shall be made at such office by such agent.

       

      15.           Remedies.  The
        Issuer stipulates that the remedies at law of the Holder of this Warrant
        in the
        event of any default or threatened default by the Issuer in the performance
        of
        or compliance with any of the terms of this Warrant are not and will not
        be
        adequate and that, to the fullest extent permitted by law, such terms may
        be
        specifically enforced by a decree for the specific performance of any agreement
        contained herein or by an injunction against a violation of any of the terms
        hereof or otherwise.

       

      16.           Successors
        and Assigns.  This Warrant and the rights evidenced hereby shall
        inure to the benefit of and be binding upon the successors and assigns of
        the
        Issuer, the Holder hereof and (to the extent provided herein) the Holders
        of
        Warrant Stock issued pursuant hereto, and shall be enforceable by any such
        Holder or Holder of Warrant Stock.

       

      17.           Modification
        and Severability.  If, in any action before any court or agency
        legally empowered to enforce any provision contained herein, any provision
        hereof is found to be unenforceable, then such provision shall be deemed
        modified to the extent necessary to make it enforceable by such court or
        agency.  If any such provision is not enforceable as set forth in the
        preceding sentence, the unenforceability of such provision shall not affect
        the
        other provisions of this Warrant, but this Warrant shall be construed as
        if such
        unenforceable provision had never been contained herein.

       

      18.           Headings.  The
        headings of the Sections of this Warrant are for convenience of reference
        only
        and shall not, for any purpose, be deemed a part of this Warrant.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      IN
        WITNESS WHEREOF, the Issuer has executed this Warrant as of the day and year
        first above written.

      

      

      CHEMBIO
        DIAGNOSTICS, INC.

      

      

      By:                                                                

      Name:                      Lawrence
        A. Siebert

      Title:                      President

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      
        	
                No.:  _____________

              	
                Number
                  of Shares:  _____________

              
	
                Original
                  Date of Issuance:  May 5,
                  2009

              	
                Reissuance
                  Date:  December 19,
                  2007

              

      

      

       

      EXERCISE
        FORM

      

      CHEMBIO
        DIAGNOSTICS, INC.

      

      The
        undersigned _______________, pursuant to the provisions of the within Warrant,
        hereby elects to purchase _____ shares of Common Stock of Chembio Diagnostics,
        Inc. covered by the within Warrant.

      

      Dated:  _________________

      Signature

      ___________________________

      

      Address

      _____________________

      _____________________

      

      Number
        of
        shares of Common Stock beneficially owned or deemed beneficially owned by
        the
        Holder on the date of
        Exercise:  _________________________

      

      ASSIGNMENT

      

      FOR
        VALUE
        RECEIVED, _________________ hereby sells, assigns and transfers unto
        __________________ the within Warrant and all rights evidenced thereby and
        does
        irrevocably constitute and appoint _____________, attorney, to transfer the said
        Warrant on the books of the within named corporation.

      

      Dated:  _________________

      Signature

      ___________________________

      

      Address

      _____________________

      _____________________

      

       

      
        	
                No.:  _____________

              	
                Number
                  of Shares:  _____________

              
	
                Original
                  Date of Issuance:  May 5,
                  2009

              	
                Reissuance
                  Date:  December 19,
                  2007

              

      

       

      PARTIAL
        ASSIGNMENT

      

      FOR
        VALUE
        RECEIVED, _________________ hereby sells, assigns and transfers unto
        __________________ the right to purchase _________ shares of Warrant Stock
        evidenced by the within Warrant together with all rights therein, and does
        irrevocably constitute and appoint ___________________, attorney, to transfer
        that part of the said Warrant on the books of the within named
        corporation.

      

      Dated:  _________________

      Signature

      ___________________________

      

      Address

      _____________________

      _____________________

      

      FOR
        USE
        BY THE ISSUER ONLY:

      

      This
        Warrant No. W-___ canceled (or transferred or exchanged) this _____ day of
        ___________, _____, shares of Common Stock issued therefor in the name of
        _______________, Warrant No. W-_____ issued for ____ shares of Common Stock
        in
        the name of _______________.

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