Document:

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                                                              Exhibit 10(cc)

[THER-RX logo]
             EMPLOYMENT AND CONFIDENTIAL INFORMATION AGREEMENT

     This Agreement ("Agreement") is entered into on APRIL 8, 2004 between
                                                     -------------
JERALD J. WENKER ("Employee") and THER-RX CORPORATION ("Ther-Rx"), a wholly
----------------
owned subsidiary of KV PHARMACEUTICAL COMPANY ("KV"), a Delaware corporation
("Employer").

     In consideration of Employee's employment or continued employment by
Employer and other valuable consideration, the receipt and sufficiency of
which are acknowledged, Employee agrees as follows:

1.   AFFILIATES. Ther-Rx and/or KV have or may in the future have one or
more parents, subsidiaries and/or affiliated companies (collectively
referred to in the remainder of this Agreement along with Ther-Rx and KV as
the "Companies"). From time to time, Employer and the Companies may exchange
or use facilities, technology and/or Confidential Information (as that term
is defined in Paragraph 6 below) of the other. The covenants in this
Agreement are for the benefit and protection of the Employer and the
Companies.

2.   NATURE OF EMPLOYMENT. Employee is hereby employed by Employer in the
position of PRESIDENT. Employee acknowledges and agrees that his/her job
            ---------
title and/or responsibilities may change from time to time. Employee further
agrees that, at all times, (s)he shall devote his/her full time and best
efforts to performing all duties reasonably assigned by Employer.

3.   COMPENSATION. As compensation for Employee's services to Employer,
Employee will receive a base salary at the rate of THREE HUNDRED FIFTY
                                                   -------------------
THOUSAND dollars per year ($350,000.00), payable at such intervals as
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Employer pays its other employees at comparable employment levels. Employee
will be entitled to participate in the fringe benefits normally provided to
other employees at comparable employment levels. Employee's compensation
will be subject to Employer's normal compensation review for employees in
this job classification.

4.   TERM. The initial term of this Agreement shall begin on APRIL 8, 2004,
                                                             -------------
and continue until MARCH 31, 2005, unless terminated sooner in accordance
                   --------------
with this Agreement. If not terminated sooner, this Agreement will
automatically renew for successive one (1) year periods unless and until
either party terminates this Agreement. Termination of this Agreement by
either party, for any reason, will in no manner affect the covenants
contained in Sections 6-11 of this Agreement.

5.   TERMINATION.

     A. Employee may terminate this Agreement, for any reason, with ONE
                                                                    ---
HUNDRED TWENTY (120) calendar days advance written notice. Employer may
--------------  ---
elect to have the Employee cease work at any time during the notice period
for any reason, including without limitation, the reasons set forth in
Paragraph 5C below. In such event, Employer's obligation to provide Employee
with compensation and benefits will end when Employee ceases to work.
Employer's exercise of this option will not be construed as a termination by
Employer.

     B. Employer may terminate this Agreement for any reason by giving the
Employee THIRTY (30) calendar days advance written notice. Employer may, in
         ------  --
its sole discretion, either permit Employee to work during the notice
period, or pay Employee in lieu of having Employee continue to work. If
Employer exercises this right and option, it shall pay Employee, on
Employer's regularly scheduled paydays and in accordance with Employer's
regular pay practices, either: (A) Employee's regular weekly compensation
for the notice period or (B) one-half (1/2) of Employee's regular weekly
compensation for a period of twice the notice period. Employer reserves the
right to cease the payment(s) described above if, in Employer's reasonable
determination, Employee breaches this Agreement during the period of such
payments. If Employer elects to pay Employee in lieu of Employee continuing
to work, Employer will pay Employee's regular wages for the notice period,
less whatever compensation Employee receives from other full-time employment
during the notice period. Notwithstanding the foregoing, Employer may
terminate this Agreement without prior written notice to Employee or any
continuing compensation obligations if, in Employer's reasonable
determination, Employee has breached this Agreement or Employee has engaged
in dishonesty, disloyalty, failure to perform his/her duties to Employer or
any act which may be harmful to the reputation of Employer and/or the
Companies.

     C. Employee agrees to faithfully, diligently, and to the best of
her/his ability, experience and talents, perform all of the duties required
prior to notice if Employee continues to work during the notice period. In
all situations, Employee will comply with the terms of this Agreement and
will engage in honest, faithful and loyal conduct during the notice period.

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6.   CONFIDENTIAL INFORMATION. In the course of performing his/her
responsibilities, as well as through training pertaining to the business of
the Companies, Employee has or may come into possession of technical,
financial, sales and/or other business information pertaining to Employer
and/or the Companies which is not published or readily available to the
public, and from which the Employer and/or the Companies may derive economic
value, actual or potential, including, but not limited to, trade secrets,
techniques, designs, formulae, methods, processes, devices, machinery,
equipment, inventions, research and development projects, programs, plans
and data, clinical projects and data, plans for future developments,
marketing concepts and plans, pricing information, licensing agreements, and
lists of or other information pertaining to and/or received from Employer,
employees of the Companies, customers and/or suppliers (collectively
referred to as "Confidential Information"). Employee acknowledges that the
Confidential Information is important to and greatly affects the success of
the Employer and the Companies in a competitive marketplace. Employee
further agrees that while employed by Employer or any of the Companies, and
at all times thereafter, regardless of how, when and why that employment
ends, Employee will hold in the strictest confidence, and will not directly
or indirectly disclose, duplicate and/or use for himself/herself or any
other person or entity any Confidential Information without the prior
written consent of an officer of Employer, or unless required to do so in
order to perform his/her responsibilities while employed by Employer.

7.   PUBLICATION. It is expressly agreed between Employee and the Companies
that Employee will hold in confidence and not make use of any Confidential
Information at any time except as required in the course and performance of
the Employee's employment with Employer or as otherwise agreed to in writing
by the Corporate Communications Officer of Employer. Employee agrees not to
publish or cause or permit to be published or otherwise disclose any
article, oral presentation or material related to Employer and/or the
Companies, including without limitation the Employer's and/or the Companies'
Confidential Information and information related to any products or proposed
products, without obtaining the prior written consent of the Corporate
Communications Officer.

8.   NO OTHER CONTRACT. Except as listed below, Employee warrants that (s)he
is not bound by the terms of any other agreement, oral or written, which
would limit or preclude him/her from disclosing to Employer and/or the
Companies any idea, invention, discovery or other information pertaining or
related to Employee's responsibilities. Employee agrees to promptly provide
Employer with a copy of any and all agreements listed below and other
agreements which may prohibit or restrict his/her employment with Employer.
Employee further agrees not to disclose to Employer or the Companies, or to
seek to induce Employer or the Companies to use any confidential
information, material or trade secrets belonging to any other person or
entity. ____________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________

9.   RIGHT TO WORK PRODUCT. Any and all designs, inventions, discoveries,
improvements, specifications, technical data, reports, business plans and
other embodiments of Employee's work conceived, made, discovered and/or
produced by Employee during the period of his/her employment by Employer,
either solely or jointly with others and in the course of performing his/her
duties for Employer, which are based, in whole or part, upon Confidential
Information, the resources, supplies, facilities or business, technical or
financial information of Employer and/or the Companies, or which relate to
the business, the research or the anticipated research and development of
Employer and/or the Companies (collectively referred to herein as "Work
Product"), will be the sole property of Employer and available to Employer
at all times. Employee agrees to promptly disclose and assign and hereby
assigns to Employer, without royalty or other additional consideration, any
and all of Employee's proprietary rights to any and all Work Product.
Employee further agrees that during his/her employment by Employer and after
that employment ends, regardless of how, when and why, (s)he will, upon
Employer's request: (A) execute any and all applications for copyright
and/or patent of Work Product which may be prepared for his/her signature,
(B) assign to Employer and/or the Companies any and all such applications,
copyrights and patents relating to Work Product, and (C) assist Employer
and/or the Companies, as Employer and/or the Companies deem necessary, in
its application, defense and enforcement of any copyright or patent relating
to Work Product. Employer will pay all expenses of preparing, filing,
prosecuting and defending any such application and of obtaining such
copyrights and patents. In the event Employer does not employ Employee at
the time any request for such assistance is made by Employer, Employer will
pay Employee a reasonable amount for Employee's time and will schedule any
needed assistance so as not to interfere with Employee's then current
employment and obligations.

10.  RETURN OF PROPERTY. Upon the termination of Employee's employment with
Employer, regardless of how, when and why that employment ends, Employee
will immediately deliver to Employer all property of Employer and all
property of the Companies, including, without limitation, all Company
equipment, records, documents and computer disks (including all copies). If
Employee fails to return to Employer all property of Employer and the
Companies, Employee authorizes Employer to deduct from his/her final
paycheck such amount to cover the loss, to the extent permitted by
applicable law. Nothing contained herein shall limit Employer's right to
recover the full value of such property from Employee in any proceeding.

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11.  RESTRICTIVE COVENANTS.

     A. The parties agree that at the time this Agreement was entered, the
business of Employer was the marketing and sale of brand name prescription
pharmaceutical products (hereafter "the business of Employer"). Employee
agrees that during the thirty-six (36) consecutive months immediately
following termination of Employee's employment with Employer, regardless of
how, when or why that employment ends, Employee will not in any manner or in
any capacity, directly or indirectly, for himself/herself or any other
person or entity, actually or attempt to do any of the following:

     1.   To sell or market, manage or direct the sale or marketing, or
          indirectly or directly assist any other person in the sale or
          marketing of the same or similar brand name products as Employee
          marketed or sold for Employer under this Agreement, on behalf of
          or for any business that markets or sells any product or product
          line which is competitive with any product or product line
          Employer has sold during the most recent twenty-four (24) month
          period anywhere Employer conducted business.

     2.   Solicit, contact, divert, interfere with or take away any customer
          of Employer and/or the Companies that has conducted business or
          negotiations with Employer or the Companies during the twenty-four
          (24) months immediately preceding termination of employment.

     3.   Interfere with any of the suppliers of Employer and/or the
          Companies, including, without limitation, reducing in any material
          way the willingness or capability of any supplier to continue
          supplying Employer and/or the Companies with their present or
          contemplated requirements.

     4.   Solicit or interfere with the Employer's and/or the Companies'
          relationship with any of their employees or agents, or provide the
          names of any of Employer's and/or the Companies' employees or
          agents, to any third party.

     5.   Acquire any interest in any business that markets or sells any
          product or product line that is competitive with any product or
          product line Employer sold during the twenty-four (24) months
          immediately preceding termination of employment, except as
          permitted in Section 12 below.

     B. Employee further agrees that (s)he will not engage in any of the
activities listed above while employed by Employer.

     C. Employee acknowledges and agrees that his/her experience, knowledge
and capabilities are such that (s)he can obtain employment in unrelated
pharmaceutical, chemical, nutritional, food, industrial, household,
confectionery or other businesses, and that the enforcement of this
paragraph 11 by way of injunction would not prevent Employee from earning a
livelihood. Employee further agrees that if (s)he has any question(s)
regarding the scope of activities restricted by this Section 11, (s)he will,
to avoid confusion or misunderstanding, submit the question(s) in writing to
the Director, Human Resources of the Employer for a written response.
Employee additionally agrees to promptly inform and keep the Employer
advised of the identity of his/her employer (including any unit or division
to which Employee is assigned), his/her work location, and his/her title and
work responsibilities during the period covered by this Section 11.

     D. Employee agrees to fully disclose the terms of this Agreement to any
person or entity by which or with whom (s)he may hereafter become employed
or to which (s)he may hereafter render services, and agrees that Employer
may, if desired, send a copy of this Agreement, or otherwise make the
provisions hereof known, to any such entity.

     E. In the event of a breach by Employee of any of the terms of Section
11, the period of time the obligations hereunder apply will be automatically
extended for a period of time equal to the length of time Employee is in
breach.

12.  INVESTMENT SECURITIES. Nothing in this Agreement will limit the right
of Employee, as an investor, to hold or acquire the stock or other
investment securities of any business entity that is registered on a
national securities exchange or regularly traded on a generally recognized
over-the-counter market, so long as Employee's interest in any such business
entity does not exceed five percent (5%) of its ownership.

13.  MATERIAL BREACH. Any breach of this Agreement by the Employee will be a
material breach.

14.  EMPLOYEE CONSENT. In order to preserve their rights under this
Agreement, Employer and/or the Companies may advise any third party with
whom Employee may consider, establish or contract an employment, consulting
or service relationship of the existence of this Agreement and of its terms.
Employee agrees that Employer and the Companies will have no liability for
so acting.

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15.  CONTROLLING LAW. This Agreement will be governed and construed in
accordance with the laws of the State of Missouri and the rights and duties
of the parties pursuant to this Agreement or by operation of law by reason
of any matter relating to this Agreement, will be governed by the laws of
the State of Missouri, without regard to conflicts of laws principles. The
parties agree that any controversy arising with respect to this Agreement
will fall under the exclusive jurisdiction of the Circuit Court of the
County of St. Louis, Missouri, and each party hereby consents to the
jurisdiction and venue of that court.

16.  REMEDIES. Employee agrees that the promises in this Agreement are
reasonable and necessary to protect the legitimate business interests of
Employer and the Companies, and that any violation by Employee of any of the
promises in this Agreement would result in great damage and irreparable
injury to Employer and/or the Companies. Employee further agrees that if
Employee were to violate the covenants in Section 11 of this Agreement, the
unauthorized disclosure of Confidential Information would be inevitable and
result in great damage and irreparable harm. Employee agrees that in the
event of a breach of this Agreement, the Employer and/or the Companies have
the right to seek any and all legal and/or equitable remedies available for
any breach of this Agreement, including, but not limited to, enforcement by
injunction including ex parte temporary restraining order relief, in view of
such irreparable harm. Employee agrees that enforcement by way of Injunction
would not prevent Employee from making a living as described in Paragraph
11C. Employer is entitled to its attorneys' fees, costs, and any related
expenses incurred in the enforcement of this Agreement in the event of any
breach by Employee.

17.  SEVERABILITY. In the event any provision in this Agreement is deemed
unenforceable, in whole or in part, it will not invalidate either the
balance of the provisions or the remaining provisions of this Agreement. In
addition, the parties have attempted to limit Employee's right to compete
only to the extent necessary to protect Employer from unfair competition.
Consequently, the parties further agree that if any restrictive covenant in
this Agreement is deemed unenforceable, in whole or in part, because overly
broad in geographic scope, activity or time duration, that provision shall
be automatically modified so as to be enforceable to the maximum extent
reasonable.

18.  ASSIGNMENT. This Agreement is not assignable by Employee, and will be
binding upon Employee and Employee's heirs, executors and legal and/or
personal representatives. This Agreement is assignable by Employer, and will
inure to the benefit of Employer, its successors and assigns. If Employee
subsequently accepts employment with one of the Companies, this Agreement
will be automatically assigned to the employing Company without additional
covenant or notice to Employee. In the event of this or any other
assignment, sale, merger, or other change in the ownership or structure of
Employer, the resulting entity will step into the place of the Employer
under this Agreement without additional covenant or notice to Employee. If
the Agreement is assigned, the term "Employer" will mean the then-employing
Company and the term "Companies" will mean the then-employing Company's
parents, subsidiaries and affiliates.

19.  NONWAIVER. Failure of Employer and/or the Companies to exercise any of
its/their rights in the event Employee breaches any of the promises in this
Agreement shall not be construed as a waiver of such a breach or prevent
Employer and/or the Companies from later enforcing strict compliance with
the promises in this Agreement.

20.  MODIFICATION. This Agreement contains the parties' complete agreement,
and supersedes any other agreement, oral or written, pertaining to the
subject matter of this Agreement. This Agreement may be altered, amended or
revoked at any time only by a writing signed by both parties.

21.  ACKNOWLEDGMENT. Employee agrees that (s)he fully understands his/her
right to discuss all aspects of this Agreement with the legal or personal
advisors of his/her choice, and warrants that, to the extent (s)he desired,
(s)he has done so, (s)he has carefully read and fully understands all of the
provisions of this Agreement, and (s)he has voluntarily entered into this
Agreement.

IN WITNESS WHEREOF, Employee and Employer have executed this Agreement on
the day and year first written above.

EMPLOYEE                                EMPLOYER

/s/ Jerald J. Wenker                    /s/ Gerald R. Mitchell
----------------------------------      ---------------------------------------

                                        Title
                                             ----------------------------------Exhibit
          4.2A Certificate of Designation Series A Preferred

        
          

            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.

            

            

            
              
                 

              

              
                 

                
                  

                

              

              
                 

              

            

            (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 pari
              passu 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.

            

            (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.

            

            (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) Each
              share of Series A Preferred Stock outstanding on the Mandatory Conversion
              Date
              shall, automatically and without any action on the part of the holder
              thereof,
              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 Mandatory Conversion Date
              divided by
              (ii) the Conversion Price in effect on the Mandatory Conversion
              Date.

            

            (ii) As
              used
              herein, "Mandatory Conversion Date" shall be the first date that the
              Closing Bid
              Price (as defined below) of the Common Stock exceeds $1.50 for a period
              of ten
              (10) consecutive trading days so long as the first trading day of such
              ten
              trading day period shall commence following the Effectiveness Date;
provided,
              that,
              such
              date is at least one hundred eighty (180) days following the Effectiveness
              Date
              of the Registration Statement; provided further,
              that on
              the Mandatory Conversion Date, the Registration Statement is effective
              and has
              been effective, without lapse or suspension of any kind, for a period
              sixty (60)
              consecutive calendar days, or the shares of Common Stock into which
              the Series A
              Preferred Stock can be converted may be offered for sale to the public
              pursuant
              to Rule 144(k) ("Rule 144(k)") under the Securities Act of 1933, as
              amended.
              Notwithstanding the foregoing, the Mandatory Conversion Date shall
              be extended
              for as long as (i) a Triggering Event (as defined in Section 8(d) hereof)
              shall
              have occurred and be continuing, or (ii) any event shall have occurred
              and be
              continuing which with the passage of time and the failure to cure would
              result
              in a Triggering Event. The Mandatory Conversion Date and the Voluntary
              Conversion Date collectively are referred to in this Certificate of
              Designation
              as the "Conversion Date."

            

            (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.

            

            (iv) On
              the
              Mandatory Conversion Date, the outstanding shares of Series A Preferred
              Stock
              shall be converted automatically without any further action by the
              holders of
              such shares and whether or not 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 the certificates representing the Series
              A
              Preferred Stock for which the Mandatory Conversion Date has occurred
              to the
              Company 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 $.60 per share, subject to adjustment
              under
              Section 5(e) hereof; provided,
              however
              that the
              Conversion Price may only be adjusted to an amount greater than $.60
              per share
              to the extent that it is adjusted pursuant to Section 5(e)(i). 

            

            (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 provided further,
              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.

            

            
              
                 

              

              
                 

                
                  

                

              

              
                 

              

            

            (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.

            

            (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 during the sixty-one
              (61)
              days immediately preceding any Mandatory Conversion Date.

             

            (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 would exceed, 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. 

            

            
              
                 

              

              
                 

                
                  

                

              

              
                 

              

            

            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.

            

            
              
                 

              

              
                 

                
                  

                

              

              
                 

              

            

            (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. 

            

            (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).

            

            (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.

            

            IN
              WITNESS WHEREOF, the undersigned has executed and subscribed this Amended
              and
              Restated Certificate and does affirm the foregoing as true this 1st
              day of
              June, 2006.

            

            

            CHEMBIO
              DIAGNOSTICS, INC.

            

            

            By:
              _________________________________ 

            Name: 
              Richard
              J. Larkin

            Title: 
              Chief
              Financial Officer

            

            

            
              
                
                

              

              
                
                

                
                  

                

              

              
                
                

                
                  

                

              

            

            EXHIBIT
              I

            CHEMBIO
              DIAGNOSTICS, INC.

            

            CONVERSION
              NOTICE

            

            Reference
              is made to the 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:

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