Document:

Exhibit 4.1 Form of Warrant - Series C

    
      
        

      

      
        

      

      Exhibit
        4.1 Form of Warrant - Series C

      
        
          

            EXHIBIT
              C   

             

            NEITHER
              THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS EXERCISABLE
              HAVE
              BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE
              SECURITIES
              COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION
              UNDER
              THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY,
              MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
              STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION
              FROM,
              OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF
              THE
              SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS
              AS
              EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT,
              THE
              SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY. THIS
              SECURITY
              AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS SECURITY MAY BE PLEDGED
              IN
              CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY
              SUCH
              SECURITIES.

            

            COMMON
              STOCK PURCHASE WARRANT

            

            To
              Purchase __________ Shares of Common Stock of

             

            CHEMBIO
              DIAGNOSTICS, INC.

             

            THIS
              COMMON STOCK PURCHASE WARRANT (the “Warrant”)
              certifies that, for value received, _____________ (the “Holder”),
              is
              entitled, upon the terms and subject to the limitations on exercise
              and the
              conditions hereinafter set forth, at any time on or after the date
              hereof (the
“Initial
              Exercise Date”)
              and on
              or prior to the close of business on the fifth anniversary of the Initial
              Exercise Date (the “Termination
              Date”)
              but
              not thereafter, to subscribe for and purchase from Chembio Diagnostics,
              Inc., a
              Nevada corporation (the “Company”),
              up to
              ______ shares (the “Warrant
              Shares”)
              of
              Common Stock, par value $0.01 per share, of the Company (the “Common
              Stock”).
              The
              purchase price of one share of Common Stock under this Warrant shall
              be equal to
              the Exercise Price, as defined in Section 2(b). 

             

            Section
              1. Definitions.
              Capitalized terms used and not otherwise defined herein shall have
              the meanings
              set forth in that certain Securities Purchase Agreement (the “Purchase
              Agreement”),
              dated
              September 29, 2006, among the Company and the purchasers signatory
              thereto.

             

            Section
              2. Exercise.

             

            a) Exercise
              of the purchase rights represented by this Warrant may be made, in
              whole or in
              part, at any time or times on or after the Initial Exercise Date and
              on or
              before the Termination Date by delivery to the Company of a duly executed
              facsimile copy of the Notice of Exercise Form annexed hereto (or such
              other
              office or agency of the Company as it may designate by notice in writing
              to the
              registered Holder at the address of such Holder appearing on the books
              of the
              Company); and, within 3 Trading Days of the date said Notice of Exercise
              is
              delivered to the Company, the Company shall have received payment of
              the
              aggregate Exercise Price of the shares thereby purchased by wire transfer
              or
              cashier’s check drawn on a United States bank. Notwithstanding anything herein
              to the contrary, the Holder shall not be required to physically surrender
              this
              Warrant to the Company until the Holder has purchased all of the Warrant
              Shares
              available hereunder and the Warrant has been exercised in full, in
              which case,
              the Holder shall surrender this Warrant to the Company for cancellation
              within 3
              Trading Days of the date the final Notice of Exercise is delivered
              to the
              Company. Partial exercises of this Warrant resulting in purchases of
              a portion
              of the total number of Warrant Shares available hereunder shall have
              the effect
              of lowering the outstanding number of Warrant Shares purchasable hereunder
              in an
              amount equal to the applicable number of Warrant Shares purchased.
              The Holder
              and the Company shall maintain records showing the number of Warrant
              Shares
              purchased and the date of such purchases. The Company shall deliver
              any
              objection to any Notice of Exercise Form within 1 Business Day of receipt
              of
              such notice. In the event of any dispute or discrepancy, the records
              of the
              Holder shall be controlling and determinative in the absence of manifest
              error.
              The Holder and any assignee, by acceptance of this Warrant, acknowledge
              and
              agree that, by reason of the provisions of this paragraph, following
              the
              purchase of a portion of the Warrant Shares hereunder, the number of
              Warrant
              Shares available for purchase hereunder at any given time may be less
              than the
              amount stated on the face hereof.

             

            b) Exercise
              Price.
              The
              exercise price of the Common Stock under this Warrant shall be $1.00,
              subject
              to adjustment hereunder (the “Exercise
              Price”).

             

            c) Cashless
              Exercise.
              If at
              any time after one year from the date of issuance of this Warrant there
              is no
              effective Registration Statement registering, or no current prospectus
              available
              for, the resale of the Warrant Shares by the Holder, then this Warrant
              may also
              be exercised at such time by means of a “cashless exercise” in which the Holder
              shall be entitled to receive a certificate for the number of Warrant
              Shares
              equal to the quotient obtained by dividing [(A-B) (X)] by (A),
              where:

             

            (A)
              = the
              VWAP on the Trading Day immediately preceding the date of such
              election;

            

            (B)
              = the
              Exercise Price of this Warrant, as adjusted; and 

            

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

            

            Notwithstanding
              anything herein to the contrary, on the Termination Date, this Warrant
              shall be
              automatically exercised via cashless exercise pursuant to this Section
              2(c).

            

            d) The
              Company shall not effect any exercise of this Warrant, and a Holder
              shall not
              have the right to exercise any portion of this Warrant, pursuant to
              Section 2(c)
              or otherwise, to the extent that after giving effect to such issuance
              after
              exercise as set forth on the applicable Notice of Exercise, such Holder
              (together with such Holder’s Affiliates, and any other person or entity acting
              as a group together with such Holder or any of such Holder’s Affiliates), as set
              forth on the applicable Notice of Exercise, would beneficially own
              in excess of
              the Beneficial Ownership Limitation (as defined below).  For purposes of
              the foregoing sentence, the number of shares of Common Stock beneficially
              owned
              by such Holder and its Affiliates shall include the number of shares
              of Common
              Stock issuable upon exercise of this Warrant with respect to which
              such
              determination is being made, but shall exclude the number of shares
              of Common
              Stock which would be issuable upon (A) exercise of the remaining, nonexercised
              portion of this Warrant beneficially owned by such Holder or any of
              its
              Affiliates and (B) exercise or conversion of the unexercised or nonconverted
              portion of any other securities of the Company (including, without
              limitation,
              any other [Preferred Stock or Warrants) subject to a limitation on
              conversion or
              exercise analogous to the limitation contained herein beneficially
              owned by such
              Holder or any of its affiliates.  Except as set forth in the preceding
              sentence, for purposes of this Section 2(d)(i), beneficial ownership
              shall be
              calculated in accordance with Section 13(d) of the Exchange Act and
              the rules
              and regulations promulgated thereunder, it being acknowledged by a
              Holder that
              the Company is not representing to such Holder that such calculation
              is in
              compliance with Section 13(d) of the Exchange Act and such Holder is
              solely
              responsible for any schedules required to be filed in accordance therewith.
              To
              the extent that the limitation contained in this Section 2(d) applies,
              the
              determination of whether this Warrant is exercisable (in relation to
              other
              securities owned by such Holder together with any Affiliates) and of
              which a
              portion of this Warrant is exercisable shall be in the sole discretion
              of a
              Holder, and the submission of a Notice of Exercise shall be deemed
              to be each
              Holder’s determination of whether this Warrant is exercisable (in relation
              to
              other securities owned by such Holder together with any Affiliates)
              and of which
              portion of this Warrant is exercisable, in each case subject to such
              aggregate
              percentage limitation, and the Company shall have no obligation to
              verify or
              confirm the accuracy of such determination. In addition, a determination
              as to
              any group status as contemplated above shall be determined in accordance
              with
              Section 13(d) of the Exchange Act and the rules and regulations promulgated
              thereunder. For purposes of this Section 2(d), in determining the number
              of
              outstanding shares of Common Stock, a Holder may rely on the number
              of
              outstanding shares of Common Stock as reflected in (x) the Company’s most recent
              Form 10-QSB or Form 10-KSB, as the case may be, (y) a more recent public
              announcement by the Company or (z) any other notice by the Company
              or the
              Company’s Transfer Agent setting forth the number of shares of Common Stock
              outstanding.  Upon the written or oral request of a Holder, the Company
              shall within two Trading Days confirm orally and in writing to such
              Holder the
              number of shares of Common Stock then outstanding.  In any case, the number
              of outstanding shares of Common Stock shall be determined after giving
              effect to
              the conversion or exercise of securities of the Company, including
              this Warrant,
              by such Holder or its Affiliates since the date as of which such number
              of
              outstanding shares of Common Stock was reported. The “Beneficial
              Ownership Limitation”
shall
              be 4.99% of the number of shares of the Common Stock outstanding immediately
              after giving effect to the issuance of shares of Common Stock issuable
              upon
              exercise of this Warrant. The Beneficial Ownership Limitation provisions
              of this
              Section 2(d)(i) may be waived by such Holder, at the election of such
              Holder,
              upon not less than 61 days’ prior notice to the Company to change the Beneficial
              Ownership Limitation to 9.99% of the number of shares of the Common
              Stock
              outstanding immediately after giving effect to the issuance of shares
              of Common
              Stock upon exercise of this Warrant, and the provisions of this Section
              2(d)
              shall continue to apply. Upon such a change by a Holder of the Beneficial
              Ownership Limitation from such 4.99% limitation to such 9.99% limitation,
              the
              Beneficial Ownership Limitation may not be further waived by such Holder.
              The
              provisions of this paragraph shall be construed and implemented in
              a manner
              otherwise than in strict conformity with the terms of this Section
              2(d)(i) to
              correct this paragraph (or any portion hereof) which may be defective
              or
              inconsistent with the intended Beneficial Ownership Limitation herein
              contained
              or to make changes or supplements necessary or desirable to properly
              give effect
              to such limitation. The limitations contained in this paragraph shall
              apply to a
              successor holder of this Warrant.

             

            e) Mechanics
              of Exercise.
              

             

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

             

            ii. Delivery
              of Certificates Upon Exercise.
              Certificates for shares purchased hereunder shall be transmitted by
              the transfer
              agent of the Company to the Holder by crediting the account of the
              Holder’s
              prime broker with the Depository Trust Company through its Deposit
              Withdrawal
              Agent Commission (“DWAC”)
              system
              if the Company is a participant in such system, and otherwise by physical
              delivery to the address specified by the Holder in the Notice of Exercise
              within
              3 Trading Days from the delivery to the Company of the Notice of Exercise
              Form,
              surrender of this Warrant and payment of the aggregate Exercise Price
              as set
              forth above (“Warrant
              Share Delivery Date”).
              This
              Warrant shall be deemed to have been exercised on the date the Exercise
              Price is
              received by the Company. The Warrant Shares shall be deemed to have
              been issued,
              and Holder or any other person so designated to be named therein shall
              be deemed
              to have become a holder of record of such shares for all purposes,
              as of the
              date the Warrant has been exercised by payment to the Company of the
              Exercise
              Price (or by cashless exercise, if permitted) and all taxes required
              to be paid
              by the Holder, if any, pursuant to Section 2(e)(vii) prior to the issuance
              of
              such shares, have been paid. 

             

            iii. Delivery
              of New Warrants Upon Exercise.
              If this
              Warrant shall have been exercised in part, the Company shall, at the
              time of
              delivery of the certificate or certificates representing Warrant Shares,
              deliver
              to Holder a new Warrant evidencing the rights of Holder to purchase
              the
              unpurchased Warrant Shares called for by this Warrant, which new Warrant
              shall
              in all other respects be identical with this Warrant.

             

            iv. Rescission
              Rights.
              If the
              Company fails to cause its transfer agent to transmit to the Holder
              a
              certificate or certificates representing the Warrant Shares pursuant
              to this
              Section 2(e)(iv) by the Warrant Share Delivery Date, then the Holder
              will have
              the right to rescind such exercise.

             

            v. Compensation
              for Buy-In on Failure to Timely Deliver Certificates Upon
              Exercise.
              In
              addition to any other rights available to the Holder, if the Company
              fails to
              cause its transfer agent to transmit to the Holder a certificate or
              certificates
              representing the Warrant Shares pursuant to an exercise on or before
              the Warrant
              Share Delivery Date, and if after such date the Holder is required
              by its broker
              to purchase (in an open market transaction or otherwise) or the Holder’s
              brokerage firm otherwise purchases shares of Common Stock to deliver
              in
              satisfaction of a sale by the Holder of the Warrant Shares which the
              Holder
              anticipated receiving upon such exercise (a “Buy-In”),
              then
              the Company shall (1) pay in cash to the Holder the amount by which
              (x) the
              Holder’s total purchase price (including brokerage commissions, if any) for
              the
              shares of Common Stock so purchased exceeds (y) the amount obtained
              by
              multiplying (A) the number of Warrant Shares that the Company was required
              to
              deliver to the Holder in connection with the exercise at issue times
              (B) the
              price at which the sell order giving rise to such purchase obligation
              was
              executed, and (2) at the option of the Holder, either reinstate the
              portion of
              the Warrant and equivalent number of Warrant Shares for which such
              exercise was
              not honored or deliver to the Holder the number of shares of Common
              Stock that
              would have been issued had the Company timely complied with its exercise
              and
              delivery obligations hereunder. For example, if the Holder purchases
              Common
              Stock having a total purchase price of $11,000 to cover a Buy-In with
              respect to
              an attempted exercise of shares of Common Stock with an aggregate sale
              price
              giving rise to such purchase obligation of $10,000, under clause (1)
              of the
              immediately preceding sentence the Company shall be required to pay
              the Holder
              $1,000. The Holder shall provide the Company written notice indicating
              the
              amounts payable to the Holder in respect of the Buy-In, together with
              applicable
              confirmations and other evidence reasonably requested by the Company.
              Nothing
              herein shall limit a Holder’s right to pursue any other remedies available to it
              hereunder, at law or in equity including, without limitation, a decree
              of
              specific performance and/or injunctive relief with respect to the Company’s
              failure to timely deliver certificates representing shares of Common
              Stock upon
              exercise of the Warrant as required pursuant to the terms hereof.

             

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

             

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

             

            viii. Closing
              of Books.
              The
              Company will not close its stockholder books or records in any manner
              which
              prevents the timely exercise of this Warrant, pursuant to the terms
              hereof.

             

            Section
              3. Certain Adjustments.

             

            a) Stock
              Dividends and Splits.
              If the
              Company, at any time while this Warrant is outstanding: (A) pays a
              stock
              dividend or otherwise make a distribution or distributions on shares
              of its
              Common Stock or any other equity or equity equivalent securities payable
              in
              shares of Common Stock (which, for avoidance of doubt, shall not include
              any
              shares of Common Stock issued by the Company upon exercise of this
              Warrant, the
              Company’s Series A Convertible Preferred Stock, the Company’s Series B 9%
              Convertible Preferred Stock or the Company’s Series C 7% Convertible Preferred
              Stock), (B) subdivides outstanding shares of Common Stock into a larger
              number
              of shares, (C) combines (including by way of reverse stock split) outstanding
              shares of Common Stock into a smaller number of shares, or (D) issues
              by
              reclassification of shares of the Common Stock any shares of capital
              stock of
              the Company, then in each case the Exercise Price shall be multiplied
              by a
              fraction of which the numerator shall be the number of shares of Common
              Stock
              (excluding treasury shares, if any) outstanding immediately before
              such event
              and of which the denominator shall be the number of shares of Common
              Stock
              outstanding immediately after such event and the number of shares issuable
              upon
              exercise of this Warrant shall be proportionately adjusted. Any adjustment
              made
              pursuant to this Section 3(a) shall become effective immediately after
              the
              record date for the determination of stockholders entitled to receive
              such
              dividend or distribution and shall become effective immediately after
              the
              effective date in the case of a subdivision, combination or
              re-classification.

             

            b) Subsequent
              Equity Sales.
              If the
              Company or any Subsidiary thereof, as applicable, at any time while
              this Warrant
              is outstanding, shall offer, sell, grant any option to purchase or
              offer, sell
              or grant any right to reprice its securities, or otherwise dispose
              of or issue
              (or announce any offer, sale, grant or any option to purchase or other
              disposition) any Common Stock or Common Stock Equivalents entitling
              any Person
              to acquire shares of Common Stock, at an effective price per share
              less than the
              then Exercise Price (such lower price, the “Base
              Share Price”
and
              such issuances collectively, a “Dilutive
              Issuance”),
              as
              adjusted hereunder (if the holder of the Common Stock or Common Stock
              Equivalents so issued shall at any time, whether by operation of purchase
              price
              adjustments, reset provisions, floating conversion, exercise or exchange
              prices
              or otherwise, or due to warrants, options or rights per share which
              are issued
              in connection with such issuance, be entitled to receive shares of
              Common Stock
              at an effective price per share which is less than the Exercise Price,
              such
              issuance shall be deemed to have occurred for less than the Exercise
              Price on
              such date of the Dilutive Issuance), then, the Exercise Price shall
              be reduced
              to equal the Base Share Price and the number of Warrant Shares issuable
              hereunder shall be increased such that the aggregate Exercise Price
              payable
              hereunder, after taking into account the decrease in the Exercise Price,
              shall
              be equal to the aggregate Exercise Price prior to such adjustment.
              Such
              adjustment shall be made whenever such Common Stock or Common Stock
              Equivalents
              are issued. The Company shall notify the Holder in writing, no later
              than the
              Trading Day following the issuance of any Common Stock or Common Stock
              Equivalents subject to this section, indicating therein the applicable
              issuance
              price, or of applicable reset price, exchange price, conversion price
              and other
              pricing terms (such notice the “Dilutive
              Issuance Notice”).
              For
              purposes of clarification, whether or not the Company provides a Dilutive
              Issuance Notice pursuant to this Section 3(b), upon the occurrence
              of any
              Dilutive Issuance, after the date of such Dilutive Issuance the Holder
              is
              entitled to receive a number of Warrant Shares based upon the Base
              Share Price
              regardless of whether the Holder accurately refers to the Base Share
              Price in
              the Notice of Exercise. 

             

            c) Pro
              Rata Distributions.
              If the
              Company, at any time prior to the Termination Date, shall distribute
              to all
              holders of Common Stock (and not to Holders of the Warrants) evidences
              of its
              indebtedness or assets or rights or warrants to subscribe for or purchase
              any
              security other than the Common Stock (which shall be subject to Section
              3(b)),
              then in each such case the Exercise Price shall be adjusted by multiplying
              the
              Exercise Price in effect immediately prior to the record date fixed
              for
              determination of stockholders entitled to receive such distribution
              by a
              fraction of which the denominator shall be the VWAP determined as of
              the record
              date mentioned above, and of which the numerator shall be such VWAP
              on such
              record date less the then per share fair market value at such record
              date of the
              portion of such assets or evidence of indebtedness so distributed applicable
              to
              one outstanding share of the Common Stock as determined by the Board
              of
              Directors in good faith. In either case the adjustments shall be described
              in a
              statement provided to the Holders of the portion of assets or evidences
              of
              indebtedness so distributed or such subscription rights applicable
              to one share
              of Common Stock. Such adjustment shall be made whenever any such distribution
              is
              made and shall become effective immediately after the record date mentioned
              above.

             

            d) Fundamental
              Transaction.
              If, at
              any time while this Warrant is outstanding, (A) the Company effects
              any merger
              or consolidation of the Company with or into another Person, (B) the
              Company
              effects any sale of all or substantially all of its assets in one or
              a series of
              related transactions, (C) any tender offer or exchange offer (whether
              by the
              Company or another Person) is completed pursuant to which holders of
              Common
              Stock are permitted to tender or exchange their shares for other securities,
              cash or property, or (D) the Company effects any reclassification of
              the Common
              Stock or any compulsory share exchange pursuant to which the Common
              Stock is
              effectively converted into or exchanged for other securities, cash
              or property
              (in any such case, a “Fundamental
              Transaction”),
              then,
              upon any subsequent exercise of this Warrant, the Holder shall have
              the right to
              receive, for each Warrant Share that would have been issuable upon
              such exercise
              immediately prior to the occurrence of such Fundamental Transaction,
              at the
              option of the Holder, (a) upon exercise of this Warrant, the number
              of shares of
              Common Stock of the successor or acquiring corporation or of the Company,
              if it
              is the surviving corporation and any additional consideration, and
              Alternate
              Consideration receivable upon or as a result of such reorganization,
              reclassification, merger, consolidation or disposition of assets by
              a Holder of
              the number of shares of Common Stock for which this Warrant is exercisable
              immediately prior to such event or (b) if the Company is acquired in
              an all cash
              transaction, cash equal to the value of this Warrant as determined
              in accordance
              with the Black-Scholes option pricing formula (the “Alternate
              Consideration”).
              For
              purposes of any such exercise, the determination of the Exercise Price
              shall be
              appropriately adjusted to apply to such Alternate Consideration based
              on the
              amount of Alternate Consideration issuable in respect of one share
              of Common
              Stock in such Fundamental Transaction, and the Company shall apportion
              the
              Exercise Price among the Alternate Consideration in a reasonable manner
              reflecting the relative value of any different components of the Alternate
              Consideration. If holders of Common Stock are given any choice as to
              the
              securities, cash or property to be received in a Fundamental Transaction,
              then
              the Holder shall be given the same choice as to the Alternate Consideration
              it
              receives upon any exercise of this Warrant following such Fundamental
              Transaction. To the extent necessary to effectuate the foregoing provisions,
              any
              successor to the Company or surviving entity in such Fundamental Transaction
              shall issue to the Holder a new warrant consistent with the foregoing
              provisions
              and evidencing the Holder’s right to exercise such warrant into Alternate
              Consideration. The terms of any agreement pursuant to which a Fundamental
              Transaction is effected shall include terms requiring any such successor
              or
              surviving entity to comply with the provisions of this Section 3(d)
              and insuring
              that this Warrant (or any such replacement security) will be similarly
              adjusted
              upon any subsequent transaction analogous to a Fundamental
              Transaction.

             

            e) Exempt
              Issuance.
              Notwithstanding the foregoing, no adjustments, Alternate Consideration
              nor
              notices shall be made, paid or issued under this Section 3 in respect
              of an
              Exempt Issuance.

             

            f) Calculations.
              All
              calculations under this Section 3 shall be made to the nearest cent
              or the
              nearest 1/100th of a share, as the case may be. The number of shares
              of Common
              Stock outstanding at any given time shall not include shares of Common
              Stock
              owned or held by or for the account of the Company, and the description
              of any
              such shares of Common Stock shall be considered on issue or sale of
              Common
              Stock. For purposes of this Section 3, the number of shares of Common
              Stock
              deemed to be issued and outstanding as of a given date shall be the
              sum of the
              number of shares of Common Stock (excluding treasury shares, if any)
              issued and
              outstanding.

             

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

             

            h) Notice
              to Holders.
              

             

            i. Adjustment
              to Exercise Price.
              Whenever the Exercise Price is adjusted pursuant to this Section 3,
              the Company
              shall promptly mail to each Holder a notice setting forth the Exercise
              Price
              after such adjustment and setting forth a brief statement of the facts
              requiring
              such adjustment. If the Company issues a variable rate security, despite
              the
              prohibition thereon in the Purchase Agreement, the Company shall be
              deemed to
              have issued Common Stock or Common Stock Equivalents at the lowest
              possible
              conversion or exercise price at which such securities may be converted
              or
              exercised in the case of a Variable Rate Transaction (as defined in
              the Purchase
              Agreement), or the lowest possible adjustment price in the case of
              an MFN
              Transaction (as defined in the Purchase Agreement.

             

            ii. Notice
              to Allow Exercise by Holder.
              If (A)
              the Company shall declare a dividend (or any other distribution) on
              the Common
              Stock; (B) the Company shall declare a special nonrecurring cash dividend
              on or
              a redemption of the Common Stock; (C) the Company shall authorize the
              granting
              to all holders of the Common Stock rights or warrants to subscribe
              for or
              purchase any shares of capital stock of any class or of any rights;
              (D) the
              approval of any stockholders of the Company shall be required in connection
              with
              any reclassification of the Common Stock, any consolidation or merger
              to which
              the Company is a party, any sale or transfer of all or substantially
              all of the
              assets of the Company, of any compulsory share exchange whereby the
              Common Stock
              is converted into other securities, cash or property; (E) the Company
              shall
              authorize the voluntary or involuntary dissolution, liquidation or
              winding up of
              the affairs of the Company; then, in each case, the Company shall cause
              to be
              mailed to the Holder at its last address as it shall appear upon the
              Warrant
              Register of the Company, at least 20 calendar days prior to the applicable
              record or effective date hereinafter specified, a notice stating (x)
              the date on
              which a record is to be taken for the purpose of such dividend, distribution,
              redemption, rights or warrants, or if a record is not to be taken,
              the date as
              of which the holders of the Common Stock of record to be entitled to
              such
              dividend, distributions, redemption, rights or warrants are to be determined
              or
              (y) the date on which such reclassification, consolidation, merger,
              sale,
              transfer or share exchange is expected to become effective or close,
              and the
              date as of which it is expected that holders of the Common Stock of
              record shall
              be entitled to exchange their shares of the Common Stock for securities,
              cash or
              other property deliverable upon such reclassification, consolidation,
              merger,
              sale, transfer or share exchange; provided,
              that
              the failure to mail such notice or any defect therein or in the mailing
              thereof
              shall not affect the validity of the corporate action required to be
              specified
              in such notice. The Holder is entitled to exercise this Warrant during
              the
              20-day period commencing on the date of such notice to the effective
              date of the
              event triggering such notice.

             

            Section
              4. Transfer
              of Warrant.

             

            a) Transferability.
              Subject
              to compliance with any applicable securities laws and the conditions
              set forth
              in Sections 5(a) and 4(d) hereof and to the provisions of Section 4.1
              of the
              Purchase Agreement, this Warrant and all rights hereunder are transferable,
              in
              whole or in part, upon surrender of this Warrant at the principal office
              of the
              Company, together with a written assignment of this Warrant substantially
              in the
              form attached hereto duly executed by the Holder or its agent or attorney
              and
              funds sufficient to pay any transfer taxes payable upon the making
              of such
              transfer. Upon such surrender and, if required, such payment, the Company
              shall
              execute and deliver a new Warrant or Warrants in the name of the assignee
              or
              assignees and in the denomination or denominations specified in such
              instrument
              of assignment, and shall issue to the assignor a new Warrant evidencing
              the
              portion of this Warrant not so assigned, and this Warrant shall promptly
              be
              cancelled. A Warrant, if properly assigned, may be exercised by a new
              holder for
              the purchase of Warrant Shares without having a new Warrant issued.
              

             

            b) New
              Warrants.
              This
              Warrant may be divided or combined with other Warrants upon presentation
              hereof
              at the aforesaid office of the Company, together with a written notice
              specifying the names and denominations in which new Warrants are to
              be issued,
              signed by the Holder or its agent or attorney. Subject to compliance
              with
              Section 4(a), as to any transfer which may be involved in such division
              or
              combination, the Company shall execute and deliver a new Warrant or
              Warrants in
              exchange for the Warrant or Warrants to be divided or combined in accordance
              with such notice.

             

            c) Warrant
              Register.
              The
              Company shall register this Warrant, upon records to be maintained
              by the
              Company for that purpose (the “Warrant
              Register”),
              in
              the name of the record Holder hereof from time to time. The Company
              may deem and
              treat the registered Holder of this Warrant as the absolute owner hereof
              for the
              purpose of any exercise hereof or any distribution to the Holder, and
              for all
              other purposes, absent actual notice to the contrary.

             

            d) Transfer
              Restrictions.
              If,
              at the
time
              of
              the surrender of this Warrant in connection with any transfer of this
              Warrant,
              the transfer of this Warrant shall not be registered pursuant to an
              effective
registration
              statement under the Securities Act
              and
under
              applicable state securities or blue sky laws, the Company may require,
              as a
              condition of allowing such transfer (i) that the Holder or transferee
              of this
              Warrant, as the case may be, furnish to the Company a written opinion
              of counsel
              (which opinion shall be in form, substance and scope customary for
              opinions of
              counsel in comparable transactions) to the effect that such transfer
              may be made
              without
              registration under
              the
              Securities Act and under applicable state securities or blue sky laws,
              (ii) that
              the holder or transferee execute and deliver to the Company an investment
              letter
              in form and substance acceptable to the Company and (iii) that the
              transferee be
              an “accredited
              investor” as defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7), or (a)(8)
              promulgated under the Securities Act or a qualified institutional buyer
              as
              defined in Rule 144A(a) promulgated under the Securities Act.

             

            Section
              5. Miscellaneous.

             

            a) Title
              to Warrant.
              Prior
              to the Termination Date and subject to compliance with applicable laws
              and
              Section 4 of this Warrant, this Warrant and all rights hereunder are
              transferable, in whole or in part, at the office or agency of the Company
              by the
              Holder in person or by duly authorized attorney, upon surrender of
              this Warrant
              together with the Assignment Form annexed hereto properly endorsed.
              The
              transferee shall sign an investment letter in form and substance reasonably
              satisfactory to the Company.

             

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

             

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

             

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

             

            e) Authorized
              Shares.
              

             

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

             

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

             

            Before
              taking any action which would result in an adjustment in the number
              of Warrant
              Shares for which this Warrant is exercisable or in the Exercise Price,
              the
              Company shall obtain all such authorizations or exemptions thereof,
              or consents
              thereto, as may be necessary from any public regulatory body or bodies
              having
              jurisdiction thereof.

             

            f) Jurisdiction.
              All
              questions concerning the construction, validity, enforcement and interpretation
              of this Warrant shall be determined in accordance with the provisions
              of the
              Purchase Agreement.

             

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

             

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

             

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

             

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

             

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

             

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

             

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

             

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

             

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

             

            

            ********************

            
              
                
                

              

              
                
                

                
                  

                

              

              
                
                

              

            

            

            

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

             

            

            Dated:
              September __, 2006

             

            
              	
                      CHEMBIO
                        DIAGNOSTICS, INC.

                       

                    
	
                      By:__________________________________________

                      Name:

                      Title:

                    

            

             

             

            

            
              
                
                

                
                

              

              
                
                

                
                  

                

              

              
                
                

                
                

              

            

             

            NOTICE
              OF EXERCISE

            

            TO: CHEMBIO
              DIAGNOSTICS, INC.

            

            (1) The
              undersigned hereby elects to purchase ________ Warrant Shares of the
              Company
              pursuant to the terms of the attached Warrant (only if exercised in
              full), and
              tenders herewith payment of the exercise price in full, together with
              all
              applicable transfer taxes, if any.

             

            (2) Payment
              shall take the form of (check applicable box):

             

            [
              ] in
              lawful money of the United States; or

             

            [
              ] the
              cancellation of such number of Warrant Shares as is necessary, in accordance
              with the formula set forth in subsection 2(c), to exercise this Warrant
              with
              respect to the maximum number of Warrant Shares purchasable pursuant
              to the
              cashless exercise procedure set forth in subsection 2(c).

             

            (3) Please
              issue a certificate or certificates representing said Warrant Shares
              in the name
              of the undersigned or in such other name as is specified below:

             

            _______________________________

             

            

            The
              Warrant Shares shall be delivered to the following:

            

            _______________________________

             

            _______________________________

             

            _______________________________

            

            (4)
              Accredited
              Investor.
              The
              undersigned is an “accredited investor” as defined in Regulation D promulgated
              under the Securities Act of 1933, as amended.

            

            [SIGNATURE
              OF HOLDER]

             

            Name
              of
              Investing Entity:
              ________________________________________________________________________

            Signature
              of Authorized Signatory of Investing Entity:
              _________________________________________________

            Name
              of
              Authorized Signatory:
              ___________________________________________________________________

            Title
              of
              Authorized Signatory:
              ____________________________________________________________________

            Date:
              ________________________________________________________________________________________

            

            

            

            
              
                
                

              

              
                
                

                
                  

                

              

              
                
                

              

            

            

             

            ASSIGNMENT
              FORM

            

            (To
              assign the foregoing warrant, execute

            this
              form
              and supply required information. 

            Do
              not
              use this form to exercise the warrant.)

            

            

            

            FOR
              VALUE
              RECEIVED, the foregoing Warrant and all rights evidenced thereby are
              hereby
              assigned to

             

            

            _______________________________________________
              whose address is

            

            _______________________________________________________________.

            

            

            

            _______________________________________________________________

            

            Dated:
              ______________, _______

            

            

            Holder’s
              Signature: _____________________________

            

            Holder’s
              Address: _____________________________

             

            _____________________________

            

            

            

            Signature
              Guaranteed: ___________________________________________

            

            

            NOTE:
              The
              signature to this Assignment Form must correspond with the name as
              it appears on
              the face of the Warrant, without alteration or enlargement or any change
              whatsoever, and must be guaranteed by a bank or trust company. Officers
              of
              corporations and those acting in a fiduciary or other representative
              capacity
              should file proper evidence of authority to assign the foregoing
              Warrant.Exhibit 4.2 Registration Rights

    
      
        

      

      
        

      

      Exhibit 4.2 Registration Rights

      
        
          

              EXHIBIT
              B 

            

            REGISTRATION
              RIGHTS AGREEMENT

            

            This
              Registration Rights Agreement (this “Agreement”)
              is
              made and entered into as of September 29, 2006, among Chembio Diagnostics,
              Inc.,
              a Nevada corporation (the “Company”),
              and
              the purchasers signatory hereto (each such purchaser is a “Purchaser”
and
              collectively, the “Purchasers”).

            

            This
              Agreement is made pursuant to the Securities Purchase Agreement, dated
              as of the
              date hereof among the Company and the Purchasers (the “Purchase
              Agreement”).

            

            The
              Company and the Purchasers hereby agree as follows:

            

            1.
              Definitions

            

             Capitalized
              terms used and not otherwise defined herein that are defined in the
              Purchase
              Agreement shall have the meanings given such terms in the Purchase
              Agreement.
              As used
              in this Agreement, the following terms shall have the following
              meanings:

            

            “Advice”
shall
              have the meaning set forth in Section 6(d).

            

            “Effectiveness
              Date”
means,
              with respect to the initial Registration Statement required to be filed
              hereunder, the 120th
              calendar
              day following the date hereof (150th
              calendar
              day following the date hereof in the event of a full review by the
              Commission of
              the initial Registration Statement) and, with respect to any additional
              Registration Statements which may be required pursuant to Section 3(c),
              the
              60th
              calendar
              day following the date on which the Company first knows, or reasonably
              should
              have known, that such additional Registration Statement is required
              hereunder;
provided,
              however,
              that in
              the event the Company is notified by the Commission that one of the
              above
              Registration Statements will not be reviewed or is no longer subject
              to further
              review and comments, the Effectiveness Date as to such Registration
              Statement
              shall be the fifth Trading Day following the date on which the Company
              is so
              notified if such date precedes the dates required above.

            

            “Effectiveness
              Period”
shall
              have the meaning set forth in Section 2(a).

            

            “Event”
shall
              have the meaning set forth in Section 2(b).

            

            “Event
              Date”
shall
              have the meaning set forth in Section 2(b).

            

            “Filing
              Date”
means,
              with respect to the initial Registration Statement required hereunder,
              the
              45th
              calendar
              day following the date hereof and, with respect to any additional Registration
              Statements which may be required pursuant to Section 3(c), the 15th
              day
              following the date on which the Company first knows, or reasonably
              should have
              known that such additional Registration Statement is required hereunder.
              

            

            “Holder”
or
              “Holders”
means
              the holder or holders, as the case may be, from time to time of Registrable
              Securities. 

            

            “Indemnified
              Party”
shall
              have the meaning set forth in Section 5(c).

            

            “Indemnifying
              Party”
shall
              have the meaning set forth in Section 5(c).

            

            “Losses”
shall
              have the meaning set forth in Section 5(a).

            

            “Plan
              of Distribution”
shall
              have the meaning set forth in Section 2(a).

            

            “Proceeding”
means
              an action, claim, suit, investigation or proceeding (including, without
              limitation, an investigation or partial proceeding, such as a deposition),
              whether commenced or threatened.

            

            “Prospectus”
means
              the prospectus included in a Registration Statement (including, without
              limitation, a prospectus that includes any information previously omitted
              from a
              prospectus filed as part of an effective registration statement in
              reliance upon
              Rule 430A promulgated under the Securities Act), as amended or supplemented
              by
              any prospectus supplement, with respect to the terms of the offering
              of any
              portion of the Registrable Securities covered by a Registration Statement,
              and
              all other amendments and supplements to the Prospectus, including post-effective
              amendments, and all material incorporated by reference or deemed to
              be
              incorporated by reference in such Prospectus.

            

            “Registrable
              Securities”
means,
              as of the date in question, (i) all of the shares of Common Stock issuable
              upon
              conversion in full of the shares of Preferred Stock, (ii) all shares
              of Common
              Stock issuable as dividends on the Preferred Stock assuming all dividend
              payments are made in shares of Common Stock and the Preferred Stock
              is held for
              at least 3 years, (iii) all Warrant Shares, (iv) any securities issued
              or
              issuable upon any stock split, dividend or other distribution, recapitalization
              or similar event with respect to the foregoing and (v) any additional
              shares
              issuable in connection with any anti-dilution provisions associated
              with the
              Preferred Stock and Warrants (in each case, without giving effect to
              any
              limitations on conversion set forth in the Certificate of Designation
              or
              limitations on exercise set forth in the Warrant).

            

            “Registration
              Statement”
means
              the registration statements required to be filed hereunder and any
              additional
              registration statements contemplated by Section 3(c), including (in
              each case)
              the Prospectus, amendments and supplements to such registration statement
              or
              Prospectus, including pre- and post-effective amendments, all exhibits
              thereto,
              and all material incorporated by reference or deemed to be incorporated
              by
              reference in such registration statement. 

            

            “Rule
              415”
means
              Rule 415 promulgated by the Commission pursuant to the Securities Act,
              as such
              Rule may be amended from time to time, or any similar rule or regulation
              hereafter adopted by the Commission having substantially the same purpose
              and
              effect as such Rule.

            

            “Rule
              424”
means
              Rule 424 promulgated by the Commission pursuant to the Securities Act,
              as such
              Rule may be amended from time to time, or any similar rule or regulation
              hereafter adopted by the Commission having substantially the same purpose
              and
              effect as such Rule.

            

            “Selling
              Shareholder Questionnaire”
shall
              have the meaning set forth in Section 3(a).

            

            2.
              Shelf
              Registration

            

            (a)
              On or
              prior to each Filing Date, the Company shall prepare and file with
              the
              Commission a “Shelf” Registration Statement covering the resale of 130% of the
              Registrable Securities on such Filing Date for an offering to be made
              on a
              continuous basis pursuant to Rule 415. The Registration Statement shall
              be on
              Form S-3 (except if the Company is not then eligible to register for
              resale the
              Registrable Securities on Form S-3, in which case such registration
              shall be on
              another appropriate form in accordance herewith, such as Form SB-2)
              and shall
              contain (unless otherwise directed by the Holders) substantially the
              “Plan
              of Distribution”
              attached hereto as Annex
              A.
              Subject
              to the terms of this Agreement, the Company shall use its best efforts
              to cause
              the Registration Statement to be declared effective under the Securities
              Act as
              promptly as possible after the filing thereof, but in any event prior
              to the
              applicable Effectiveness Date, and shall use its best efforts to keep
              such
              Registration Statement continuously effective under the Securities
              Act until all
              Registrable Securities covered by such Registration Statement have
              been sold or
              may be sold without volume restrictions pursuant to Rule 144(k) as
              determined by
              the counsel to the Company pursuant to a written opinion letter to
              such effect,
              addressed and acceptable to the Company’s transfer agent and the affected
              Holders (the “Effectiveness
              Period”).
              The
              Company shall telephonically request effectiveness of a Registration
              Statement
              as of 5:00 pm Eastern Time on a Trading Day. The Company shall immediately
              notify the Holders via facsimile of the effectiveness of a Registration
              Statement on the same Trading Day that the Company telephonically confirms
              effectiveness with the Commission, which shall be the date requested
              for
              effectiveness of a Registration Statement. The Company shall, by 9:30
              am Eastern
              Time on the Trading Day after the Effective Date (as defined in the
              Purchase
              Agreement), file a final Prospectus with the Commission as required
              by Rule 424.
              Failure to so notify the Holder within 1 Trading Day of such notification
              of
              effectiveness or failure to file a final Prospectus as aforesaid shall
              be deemed
              an Event under Section 2(b).

            

            (b)
              If:
              (i) a Registration Statement is not filed on or prior to its Filing
              Date (if the
              Company files a Registration Statement without affording the Holders
              the
              opportunity to review and comment on the same as required by Section
              3(a), the
              Company shall not be deemed to have satisfied this clause (i)), or
              (ii) the
              Company fails to file with the Commission a request for acceleration
              in
              accordance with Rule 461 promulgated under the Securities Act, within
              five
              Trading Days of the date that the Company is notified (orally or in
              writing,
              whichever is earlier) by the Commission that a Registration Statement
              will not
              be “reviewed,” or not subject to further review, or (iii) prior to its
              Effectiveness Date, the Company fails to file a pre-effective amendment
              and
              otherwise respond in writing to comments made by the Commission in
              respect of
              such Registration Statement within 20 calendar days after the receipt
              of
              comments by or notice from the Commission that such amendment is required
              in
              order for a Registration Statement to be declared effective, or (iv)
              a
              Registration Statement filed or required to be filed hereunder is not
              declared
              effective by the Commission by its Effectiveness Date, or (v) after
              the
              Effectiveness Date, a Registration Statement ceases for any reason
              to remain
              continuously effective as to all Registrable Securities for which it
              is required
              to be effective, or the Holders are not permitted to utilize the Prospectus
              therein to resell such Registrable Securities for 10 consecutive calendar
              days
              but no more than an aggregate of 15 calendar days during any 12-month
              period
              (which need not be consecutive Trading Days) (any such failure or breach
              being
              referred to as an “Event”,
              and
              for purposes of clause (i) or (iv) the date on which such Event occurs,
              or for
              purposes of clause (ii) the date on which such five Trading Day period
              is
              exceeded, or for purposes of clause (iii) the date which such 20 calendar
              day
              period is exceeded, or for purposes of clause (v) the date on which
              such 10 or
              15 calendar day period, as applicable, is exceeded being referred to
              as
“Event
              Date”),
              then
              in addition to any other rights the Holders may have hereunder or under
              applicable law, on each such Event Date and on each monthly anniversary
              of each
              such Event Date (if the applicable Event shall not have been cured
              by such date)
              until the applicable Event is cured, the Company shall pay to each
              Holder an
              amount in cash, as partial liquidated damages and not as a penalty,
              equal to
              1.5% (1% as to an Event caused solely under clause (i) above) of the
              aggregate
              purchase price paid by such Holder pursuant to the Purchase Agreement
              for any
              Registrable Securities (including the Preferred Stock overlying such
              Registrable
              Securities) then held by such Holder. The parties agree that (1) the
              Company
              will not be liable for liquidated damages under this Agreement with
              respect to
              any Warrants or Warrant Shares and (2) the maximum aggregate liquidated
              damages
              payable to a Holder under this Agreement shall be 9% of the aggregate
              Subscription Amount paid by such Holder pursuant to the Purchase Agreement.
              If
              the Company fails to pay any partial liquidated damages pursuant to
              this Section
              in full within seven days after the date payable, the Company will
              pay interest
              thereon at a rate of 18% per annum (or such lesser maximum amount that
              is
              permitted to be paid by applicable law) to the Holder, accruing daily
              from the
              date such partial liquidated damages are due until such amounts, plus
              all such
              interest thereon, are paid in full. The partial liquidated damages
              pursuant to
              the terms hereof shall apply on a daily pro-rata basis for any portion
              of a
              month prior to the cure of an Event.

            

            3.
              Registration
              Procedures

            

            In
              connection with the Company’s registration obligations hereunder, the Company
              shall:

            

            (a) Not
              less
              than three Trading Days prior to the filing of each Registration Statement
              or
              any related Prospectus or any amendment or supplement thereto (including
              any
              document that would be incorporated or deemed to be incorporated therein
              by
              reference), the Company shall, (i) furnish to each Holder copies of
              all such
              documents proposed to be filed, which documents (other than those incorporated
              or deemed to be incorporated by reference) will be subject to the review
              of such
              Holders, and (ii) cause its officers and directors, counsel and independent
              certified public accountants to respond to such inquiries as shall
              be necessary,
              in the reasonable opinion of respective counsel to conduct a reasonable
              investigation within the meaning of the Securities Act. The Company
              shall not
              file the Registration Statement or any such Prospectus or any amendments
              or
              supplements thereto to which the Holders of a majority of the Registrable
              Securities shall reasonably object in good faith, provided that, the
              Company is
              notified of such objection in writing no later than 3 Trading Days
              after the
              Holders have been so furnished copies of such documents. Each Holder
              agrees to
              furnish to the Company a completed Questionnaire in the form attached
              to this
              Agreement as Annex B (a “Selling
              Shareholder Questionnaire”)
              not
              less than two Trading Days prior to the Filing Date or by the end of
              the fourth
              Trading Day following the date on which such Holder receives draft
              materials in
              accordance with this Section.

             

            (b) (i)
              Prepare and file with the Commission such amendments, including post-effective
              amendments, to a Registration Statement and the Prospectus used in
              connection
              therewith as may be necessary to keep a Registration Statement continuously
              effective as to the applicable Registrable Securities for the Effectiveness
              Period and prepare and file with the Commission such additional Registration
              Statements in order to register for resale under the Securities Act
              all of the
              Registrable Securities; (ii) cause the related Prospectus to be amended
              or
              supplemented by any required Prospectus supplement (subject to the
              terms of this
              Agreement), and as so supplemented or amended to be filed pursuant
              to Rule 424;
              (iii) respond as promptly as reasonably possible to any comments received
              from
              the Commission with respect to a Registration Statement or any amendment
              thereto
              and as promptly as reasonably possible provide the Holders true and
              complete
              copies of all correspondence from and to the Commission relating to
              a
              Registration Statement; and (iv) comply in all material respects with
              the
              provisions of the Securities Act and the Exchange Act with respect
              to the
              disposition of all Registrable Securities covered by a Registration
              Statement
              during the applicable period in accordance (subject to the terms of
              this
              Agreement) with the intended methods of disposition by the Holders
              thereof set
              forth in such Registration Statement as so amended or in such Prospectus
              as so
              supplemented.

             

            (c) If
              during
              the Effectiveness Period, the number of Registrable Securities at any
              time
              exceeds 85% of the number of shares of Common Stock then registered
              in a
              Registration Statement, then the Company shall file as soon as reasonably
              practicable but in any case prior to the applicable Filing Date, an
              additional
              Registration Statement covering the resale by the Holders of not less
              than 130%
              of the number of such Registrable Securities.

            

            (d) Notify
              the Holders of Registrable Securities to be sold (which notice shall,
              pursuant
              to clauses (ii) through (vi) hereof, be accompanied by an instruction
              to suspend
              the use of the Prospectus until the requisite changes have been made)
              as
              promptly as reasonably possible (and, in the case of (i)(A) below,
              not less than
              five Trading Days prior to such filing) and (if requested by any such
              Person)
              confirm such notice in writing no later than one Trading Day following
              the day
              (i)(A) when a Prospectus or any Prospectus supplement or post-effective
              amendment to a Registration Statement is proposed to be filed; (B)
              when the
              Commission notifies the Company whether there will be a “review” of such
              Registration Statement and whenever the Commission comments in writing
              on such
              Registration Statement (the Company shall provide true and complete
              copies
              thereof and all written responses thereto to each of the Holders);
              and (C) with
              respect to a Registration Statement or any post-effective amendment,
              when the
              same has become effective; (ii) of any request by the Commission or
              any other
              Federal or state governmental authority for amendments or supplements
              to a
              Registration Statement or Prospectus or for additional information;
              (iii) of the
              issuance by the Commission or any other federal or state governmental
              authority
              of any stop order suspending the effectiveness of a Registration Statement
              covering any or all of the Registrable Securities or the initiation
              of any
              Proceedings for that purpose; (iv) of the receipt by the Company of
              any
              notification with respect to the suspension of the qualification or
              exemption
              from qualification of any of the Registrable Securities for sale in
              any
              jurisdiction, or the initiation or threatening of any Proceeding for
              such
              purpose; (v) of the occurrence of any event or passage of time that
              makes the
              financial statements included in a Registration Statement ineligible
              for
              inclusion therein or any statement made in a Registration Statement
              or
              Prospectus or any document incorporated or deemed to be incorporated
              therein by
              reference untrue in any material respect or that requires any revisions
              to a
              Registration Statement, Prospectus or other documents so that, in the
              case of a
              Registration Statement or the Prospectus, as the case may be, it will
              not
              contain any untrue statement of a material fact or omit to state any
              material
              fact required to be stated therein or necessary to make the statements
              therein,
              in light of the circumstances under which they were made, not misleading;
              and
              (vi) the occurrence or existence of any pending corporate development
              with
              respect to the Company that the Company believes may be material and
              that, in
              the determination of the Company, makes it not in the best interest
              of the
              Company to allow continued availability of the Registration Statement
              or
              Prospectus; provided that any and all of such information shall remain
              confidential to each Holder until such information otherwise becomes
              public,
              unless disclosure by a Holder is required by law; provided,
              further,
              notwithstanding each Holder’s agreement to keep such information confidential,
              the Holders make no acknowledgement that any such information is material,
              non-public information. 

             

            (e) Use
              its
              best efforts to avoid the issuance of, or, if issued, obtain the withdrawal
              of
              (i) any order suspending the effectiveness of a Registration Statement,
              or (ii)
              any suspension of the qualification (or exemption from qualification)
              of any of
              the Registrable Securities for sale in any jurisdiction, at the earliest
              practicable moment.

            

            (f) Furnish
              to each Holder, without charge, at least one conformed copy of each
              such
              Registration Statement and each amendment thereto, including financial
              statements and schedules, all documents incorporated or deemed to be
              incorporated therein by reference to the extent requested by such Person,
              and
              all exhibits to the extent requested by such Person (including those
              previously
              furnished or incorporated by reference) promptly after the filing of
              such
              documents with the Commission.

            

            (g) Promptly
              deliver to each Holder, without charge, as many copies of the Prospectus
              or
              Prospectuses (including each form of prospectus) and each amendment
              or
              supplement thereto as such Persons may reasonably request in connection
              with
              resales by the Holder of Registrable Securities. Subject to the terms
              of this
              Agreement, the Company hereby consents to the use of such Prospectus
              and each
              amendment or supplement thereto by each of the selling Holders in connection
              with the offering and sale of the Registrable Securities covered by
              such
              Prospectus and any amendment or supplement thereto, except after the
              giving of
              any notice pursuant to Section 3(d).

            

            (h) Prior
              to
              any resale of Registrable Securities by a Holder, use its commercially
              reasonable efforts to register or qualify or cooperate with the selling
              Holders
              in connection with the registration or qualification (or exemption
              from the
              Registration or qualification) of such Registrable Securities for the
              resale by
              the Holder under the securities or Blue Sky laws of such jurisdictions
              within
              the United States as any Holder reasonably requests in writing, to
              keep each
              registration or qualification (or exemption therefrom) effective during
              the
              Effectiveness Period and to do any and all other acts or things reasonably
              necessary to enable the disposition in such jurisdictions of the Registrable
              Securities covered by each Registration Statement; provided, that the
              Company
              shall not be required to qualify generally to do business in any jurisdiction
              where it is not then so qualified, subject the Company to any material
              tax in
              any such jurisdiction where it is not then so subject or file a general
              consent
              to service of process in any such jurisdiction.

            

            (i) If
              NASDR
              Rule 2710 requires any broker-dealer to make a filing prior to executing
              a sale
              by a Holder, make an Issuer Filing with the NASDR, Inc. Corporate Financing
              Department pursuant to NASDR Rule 2710(b)(10)(A)(i) and respond within
              five
              Trading Days to any comments received from NASDR in connection therewith,
              and
              pay the filing fee required in connection therewith.

            

            (j) If
              requested by the Holders, cooperate with the Holders to facilitate
              the timely
              preparation and delivery of certificates representing Registrable Securities
              to
              be delivered to a transferee pursuant to a Registration Statement,
              which
              certificates shall be free, to the extent permitted by the Purchase
              Agreement,
              of all restrictive legends, and to enable such Registrable Securities
              to be in
              such denominations and registered in such names as any such Holders
              may
              reasonably request.

            

            (k) Upon
              the
              occurrence of any event contemplated by this Section 3, as promptly
              as
              reasonably possible under the circumstances taking into account the
              Company’s
              good faith assessment of any adverse consequences to the Company and
              its
              stockholders of the premature disclosure of such event, prepare a supplement
              or
              amendment, including a post-effective amendment, to a Registration
              Statement or
              a supplement to the related Prospectus or any document incorporated
              or deemed to
              be incorporated therein by reference, and file any other required document
              so
              that, as thereafter delivered, neither a Registration Statement nor
              such
              Prospectus will contain an untrue statement of a material fact or omit
              to state
              a material fact required to be stated therein or necessary to make
              the
              statements therein, in light of the circumstances under which they
              were made,
              not misleading. If
              the
              Company notifies the Holders in accordance with clauses (ii) through
              (vi) of
              Section 3(d) above to suspend the use of any Prospectus until the requisite
              changes to such Prospectus have been made, then the Holders shall suspend
              use of
              such Prospectus. The Company will use its best efforts to ensure that
              the use of
              the Prospectus may be resumed as promptly as is practicable. The Company
              shall
              be entitled to exercise its right under this Section 3(j) to suspend
              the
              availability of a Registration Statement and Prospectus, subject to
              the payment
              of partial liquidated damages pursuant to Section 2(b), for a period
              not to
              exceed 60 days (which need not be consecutive days) in any 12 month
              period.

             

            (l) Comply
              with all applicable rules and regulations of the Commission.

            

            (m) The
              Company may require each selling Holder to furnish to the Company a
              certified
              statement as to the number of shares of Common Stock beneficially owned
              by such
              Holder and, if required by the Commission, the person thereof that
              has voting
              and dispositive control over the Shares. During any periods that the
              Company is
              unable to meet its obligations hereunder with respect to the registration
              of the
              Registrable Securities solely because any Holder fails to furnish such
              information within three Trading Days of the Company’s request, any liquidated
              damages that are accruing at such time shall be tolled and any Event
              that may
              otherwise occur solely because of such delay shall be suspended, until
              such
              information is delivered to the Company.

            

            4.
              Registration
              Expenses.
              All
              fees and expenses incident to the performance of or compliance with
              this
              Agreement by the Company shall be borne by the Company whether or not
              any
              Registrable Securities are sold pursuant to the Registration Statement.
              The fees
              and expenses referred to in the foregoing sentence shall include, without
              limitation, (i) all registration and filing fees (including, without
              limitation,
              fees and expenses (A) with respect to filings required to be made with
              the
              Trading Market on which the Common Stock is then listed for trading,
              (B) in
              compliance with applicable state securities or Blue Sky laws reasonably
              agreed
              to by the Company in writing (including, without limitation, fees and
              disbursements of counsel for the Company in connection with Blue Sky
              qualifications or exemptions of the Registrable Securities and determination
              of
              the eligibility of the Registrable Securities for investment under
              the laws of
              such jurisdictions as reasonably requested by the Holders) and (C)
              if not
              previously paid by the Company in connection with an Issuer Filing,
              with respect
              to any filing that may be required to be made by any broker through
              which a
              Holder intends to make sales of Registrable Securities with NASD Regulation,
              Inc. pursuant to the NASD Rule 2710, so long as the broker is receiving
              no more
              than a customary brokerage commission in connection with such sale,
              (ii)
              printing expenses (including, without limitation, expenses of printing
              certificates for Registrable Securities), (iii) messenger, telephone
              and
              delivery expenses, (iv) fees and disbursements of counsel for the Company,
              (v)
              Securities Act liability insurance, if the Company so desires such
              insurance,
              and (vi) fees and expenses of all other Persons retained by the Company
              in
              connection with the consummation of the transactions contemplated by
              this
              Agreement. In addition, the Company shall be responsible for all of
              its internal
              expenses incurred in connection with the consummation of the transactions
              contemplated by this Agreement (including, without limitation, all
              salaries and
              expenses of its officers and employees performing legal or accounting
              duties),
              the expense of any annual audit and the fees and expenses incurred
              in connection
              with the listing of the Registrable Securities on any securities exchange
              as
              required hereunder. In no event shall the Company be responsible for
              any broker
              or similar commissions or, except to the extent provided for in the
              Transaction
              Documents, any legal fees or other costs of the Holders.

            

            5.
              Indemnification

            

            (a)
              Indemnification
              by the Company.
              The
              Company shall, notwithstanding any termination of this Agreement, indemnify
              and
              hold harmless each Holder, the officers, directors, members, partners,
              agents,
              brokers (including brokers who offer and sell Registrable Securities
              as
              principal as a result of a pledge or any failure to perform under a
              margin call
              of Common Stock), investment advisors and employees (and any other
              Persons with
              a functionally equivalent role of a Person holding such titles, notwithstanding
              a lack of such title or any other title) of each of them, each Person
              who
              controls any such Holder (within the meaning of Section 15 of the Securities
              Act
              or Section 20 of the Exchange Act) and the officers, directors, members,
              shareholders, partners, agents and employees (and any other Persons
              with a
              functionally equivalent role of a Person holding such titles, notwithstanding
              a
              lack of such title or any other title) of each such controlling Person,
              to the
              fullest extent permitted by applicable law, from and against any and
              all losses,
              claims, damages, liabilities, costs (including, without limitation,
              reasonable
              attorneys’ fees) and expenses (collectively, “Losses”),
              as
              incurred, arising out of or relating to (1) any untrue or alleged untrue
              statement of a material fact contained in a Registration Statement,
              any
              Prospectus or any form of prospectus or in any amendment or supplement
              thereto
              or in any preliminary prospectus, or arising out of or relating to
              any omission
              or alleged omission of a material fact required to be stated therein
              or
              necessary to make the statements therein (in the case of any Prospectus
              or form
              of prospectus or supplement thereto, in light of the circumstances
              under which
              they were made) not misleading, or (2) any violation or alleged violation
              by the
              Company of the Securities Act, Exchange Act or any state securities
              law, or any
              rule or regulation thereunder, in connection with the performance of
              its
              obligations under this Agreement, except to the extent, but only to
              the extent,
              that (i) such untrue statements or omissions are based solely upon
              information
              regarding such Holder furnished in writing to the Company by such Holder
              expressly for use therein, or to the extent that such information relates
              to
              such Holder or such Holder’s proposed method of distribution of Registrable
              Securities and was reviewed and expressly approved in writing by such
              Holder
              expressly for use in a Registration Statement, such Prospectus or such
              form of
              Prospectus or in any amendment or supplement thereto (it being understood
              that
              the Holder has approved Annex A hereto for this purpose) or (ii) in
              the case of
              an occurrence of an event of the type specified in Section 3(d)(iii)-(vi),
              the
              use by such Holder of an outdated or defective Prospectus after the
              Company has
              notified such Holder in writing that the Prospectus is outdated or
              defective and
              prior to the receipt by such Holder of the Advice contemplated in Section
              6(d).
              The Company shall notify the Holders promptly of the institution, threat
              or
              assertion of any Proceeding arising from or in connection with the
              transactions
              contemplated by this Agreement of which the Company is aware.

            

            (b)
              Indemnification
              by Holders.
              Each
              Holder shall, severally and not jointly, indemnify and hold harmless
              the
              Company, its directors, officers, agents and employees, each Person
              who controls
              the Company (within the meaning of Section 15 of the Securities Act
              and Section
              20 of the Exchange Act), and the directors, officers, agents or employees
              of
              such controlling Persons, to the fullest extent permitted by applicable
              law,
              from and against all Losses, as incurred, to the extent arising out
              of or based
              solely upon: (x) such Holder’s failure to comply with the prospectus delivery
              requirements of the Securities Act or (y) any untrue or alleged untrue
              statement
              of a material fact contained in any Registration Statement, any Prospectus,
              or
              any form of prospectus, or in any amendment or supplement thereto or
              in any
              preliminary prospectus, or arising out of or relating to any omission
              or alleged
              omission of a material fact required to be stated therein or necessary
              to make
              the statements therein not misleading (i) to the extent, but only to
              the extent,
              that such untrue statement or omission is contained in any information
              so
              furnished in writing by such Holder to the Company specifically for
              inclusion in
              such Registration Statement or such Prospectus or (ii) to the extent
              that (1)
              such untrue statements or omissions are based solely upon information
              regarding
              such Holder furnished in writing to the Company by such Holder expressly
              for use
              therein, or to the extent that such information relates to such Holder
              or such
              Holder’s proposed method of distribution of Registrable Securities and was
              reviewed and expressly approved in writing by such Holder expressly
              for use in
              the Registration Statement (it being understood that the Holder has
              approved
              Annex A hereto for this purpose), such Prospectus or such form of Prospectus
              or
              in any amendment or supplement thereto or (2) in the case of an occurrence
              of an
              event of the type specified in Section 3(d)(ii)-(vi), the use by such
              Holder of
              an outdated or defective Prospectus after the Company has notified
              such Holder
              in writing that the Prospectus is outdated or defective and prior to
              the receipt
              by such Holder of the Advice contemplated in Section 6(d). In no event
              shall the
              liability of any selling Holder hereunder be greater in amount than
              the dollar
              amount of the net proceeds received by such Holder upon the sale of
              the
              Registrable Securities giving rise to such indemnification
              obligation.

            

            (c)
              Conduct
              of Indemnification Proceedings.
              If any
              Proceeding shall be brought or asserted against any Person entitled
              to indemnity
              hereunder (an “Indemnified
              Party”),
              such
              Indemnified Party shall promptly notify the Person from whom indemnity
              is sought
              (the “Indemnifying
              Party”)
              in
              writing, and the Indemnifying Party shall have the right to assume
              the defense
              thereof, including the employment of counsel reasonably satisfactory
              to the
              Indemnified Party and the payment of all fees and expenses incurred
              in
              connection with defense thereof; provided, that the failure of any
              Indemnified
              Party to give such notice shall not relieve the Indemnifying Party
              of its
              obligations or liabilities pursuant to this Agreement, except (and
              only) to the
              extent that it shall be finally determined by a court of competent
              jurisdiction
              (which determination is not subject to appeal or further review) that
              such
              failure shall have prejudiced the Indemnifying Party.

            

            An
              Indemnified Party shall have the right to employ separate counsel in
              any such
              Proceeding and to participate in the defense thereof, but the fees
              and expenses
              of such counsel shall be at the expense of such Indemnified Party or
              Parties
              unless: (1) the Indemnifying Party has agreed in writing to pay such
              fees and
              expenses; (2) the Indemnifying Party shall have failed promptly to
              assume the
              defense of such Proceeding and to employ counsel reasonably satisfactory
              to such
              Indemnified Party in any such Proceeding; or (3) the named parties
              to any such
              Proceeding (including any impleaded parties) include both such Indemnified
              Party
              and the Indemnifying Party, and such Indemnified Party shall reasonably
              believe
              that a material conflict of interest is likely to exist if the same
              counsel were
              to represent such Indemnified Party and the Indemnifying Party (in
              which case,
              if such Indemnified Party notifies the Indemnifying Party in writing
              that it
              elects to employ separate counsel at the expense of the Indemnifying
              Party, the
              Indemnifying Party shall not have the right to assume the defense thereof
              and
              the reasonable fees and expenses of one separate counsel shall be at
              the expense
              of the Indemnifying Party). The Indemnifying Party shall not be liable
              for any
              settlement of any such Proceeding effected without its written consent,
              which
              consent shall not be unreasonably withheld. No Indemnifying Party shall,
              without
              the prior written consent of the Indemnified Party, effect any settlement
              of any
              pending Proceeding in respect of which any Indemnified Party is a party,
              unless
              such settlement includes an unconditional release of such Indemnified
              Party from
              all liability on claims that are the subject matter of such
              Proceeding.

            

            Subject
              to the terms of this Agreement, all reasonable fees and expenses of
              the
              Indemnified Party (including reasonable fees and expenses to the extent
              incurred
              in connection with investigating or preparing to defend such Proceeding
              in a
              manner not inconsistent with this Section) shall be paid to the Indemnified
              Party, as incurred, within ten Trading Days of written notice thereof
              to the
              Indemnifying Party; provided, that the Indemnified Party shall promptly
              reimburse the Indemnifying Party for that portion of such fees and
              expenses
              applicable to such actions for which such Indemnified Party is not
              entitled to
              indemnification hereunder, determined based upon the relative faults
              of the
              parties.

            

            (d)
              Contribution.
              If the
              indemnification under Section 5(a) or 5(b) is unavailable to an Indemnified
              Party or insufficient to hold an Indemnified Party harmless for any
              Losses, then
              each Indemnifying Party shall contribute to the amount paid or payable
              by such
              Indemnified Party, in such proportion as is appropriate to reflect
              the relative
              fault of the Indemnifying Party and Indemnified Party in connection
              with the
              actions, statements or omissions that resulted in such Losses as well
              as any
              other relevant equitable considerations. The relative fault of such
              Indemnifying
              Party and Indemnified Party shall be determined by reference to, among
              other
              things, whether any action in question, including any untrue or alleged
              untrue
              statement of a material fact or omission or alleged omission of a material
              fact,
              has been taken or made by, or relates to information supplied by, such
              Indemnifying Party or Indemnified Party, and the parties’ relative intent,
              knowledge, access to information and opportunity to correct or prevent
              such
              action, statement or omission. The amount paid or payable by a party
              as a result
              of any Losses shall be deemed to include, subject to the limitations
              set forth
              in this Agreement, any reasonable attorneys’ or other reasonable fees or
              expenses incurred by such party in connection with any Proceeding to
              the extent
              such party would have been indemnified for such fees or expenses if
              the
              indemnification provided for in this Section was available to such
              party in
              accordance with its terms.

            

            The
              parties hereto agree that it would not be just and equitable if contribution
              pursuant to this Section 5(d) were determined by pro rata allocation
              or by any
              other method of allocation that does not take into account the equitable
              considerations referred to in the immediately preceding paragraph.
              Notwithstanding the provisions of this Section 5(d), no Holder shall
              be required
              to contribute, in the aggregate, any amount in excess of the amount
              by which the
              net proceeds actually received by such Holder from the sale of the
              Registrable
              Securities subject to the Proceeding exceeds the amount of any damages
              that such
              Holder has otherwise been required to pay by reason of such untrue
              or alleged
              untrue statement or omission or alleged omission, except in the case
              of fraud by
              such Holder.

            

            The
              indemnity and contribution agreements contained in this Section are
              in addition
              to any liability that the Indemnifying Parties may have to the Indemnified
              Parties.

            

            6.
              Miscellaneous

            

            (a) Remedies.
              In the
              event of a breach by the Company or by a Holder, of any of their obligations
              under this Agreement, each Holder or the Company, as the case may be,
              in
              addition to being entitled to exercise all rights granted by law and
              under this
              Agreement, including recovery of damages, will be entitled to specific
              performance of its rights under this Agreement. The Company and each
              Holder
              agree that monetary damages would not provide adequate compensation
              for any
              losses incurred by reason of a breach by it of any of the provisions
              of this
              Agreement and hereby further agrees that, in the event of any action
              for
              specific performance in respect of such breach, it shall waive the
              defense that
              a remedy at law would be adequate.

            

            (b) No
              Piggyback on Registrations.
              Except
              as set forth on Schedule
              6(b)
              attached
              hereto, neither the Company nor any of its security holders (other
              than the
              Holders in such capacity pursuant hereto) may include securities of
              the Company
              in the Registration Statement other than the Registrable Securities.
              The Company
              shall not file any other registration statements until the initial
              Registration
              Statement required hereunder is declared effective by the Commission,
              provided
              that this Section 6(b) shall not prohibit the Company from filing amendments
              to
              registration statements already filed.

            

            (c) Compliance.
              Each
              Holder covenants and agrees that it will comply with the prospectus
              delivery
              requirements of the Securities Act as applicable to it in connection
              with sales
              of Registrable Securities pursuant to the Registration Statement.

            

            (d) Discontinued
              Disposition.
              Each
              Holder agrees by its acquisition of such Registrable Securities that,
              upon
              receipt of a notice from the Company of the occurrence of any event
              of the kind
              described in Section 3(d), such Holder will forthwith discontinue disposition
              of
              such Registrable Securities under a Registration Statement until such
              Holder’s
              receipt of the copies of the supplemented Prospectus and/or amended
              Registration
              Statement, or until it is advised in writing (the “Advice”)
              by the
              Company that the use of the applicable Prospectus may be resumed, and,
              in either
              case, has received copies of any additional or supplemental filings
              that are
              incorporated or deemed to be incorporated by reference in such Prospectus
              or
              Registration Statement. The Company will use its best efforts to ensure
              that the
              use of the Prospectus may be resumed as promptly as it practicable.
              The Company
              agrees and acknowledges that any periods during which the Holder is
              required to
              discontinue the disposition of the Registrable Securities hereunder
              shall be
              subject to the provisions of Section 2(b).

            

            (e) Piggy-Back
              Registrations.
              If at
              any time during the Effectiveness Period there is not an effective
              Registration
              Statement covering all of the Registrable Securities and the Company
              shall
              determine to prepare and file with the Commission a registration statement
              relating to an offering for its own account or the account of others
              under the
              Securities Act of any of its equity securities, other than on Form
              S-4 or Form
              S-8 (each as promulgated under the Securities Act) or their then equivalents
              relating to equity securities to be issued solely in connection with
              any
              acquisition of any entity or business or equity securities issuable
              in
              connection with the stock option or other employee benefit plans, then
              the
              Company shall send to each Holder a written notice of such determination
              and, if
              within fifteen days after the date of such notice, any such Holder
              shall so
              request in writing, the Company shall include in such registration
              statement all
              or any part of such Registrable Securities such Holder requests to
              be
              registered; provided, that, the Company shall not be required to register
              any
              Registrable Securities pursuant to this Section 6(e) that are eligible
              for
              resale pursuant to Rule 144(k) promulgated under the Securities Act
              or that are
              the subject of a then effective Registration Statement.

            

            (f) Amendments
              and Waivers.
              The
              provisions of this Agreement, including the provisions of this sentence,
              may not
              be amended, modified or supplemented, and waivers or consents to departures
              from
              the provisions hereof may not be given, unless the same shall be in
              writing and
              signed by the Company and Holders holding at least 81% of the then
              Registrable
              Securities. Notwithstanding the foregoing, a waiver or consent to depart
              from
              the provisions hereof with respect to a matter that relates exclusively
              to the
              rights of Holders and that does not directly or indirectly affect the
              rights of
              other Holders may be given by Holders of all of the Registrable Securities
              to
              which such waiver or consent relates; provided,
              however,
              that
              the provisions of this sentence may not be amended, modified, or supplemented
              except in accordance with the provisions of the immediately preceding
              sentence.

            

            (g) Notices.
              Any and
              all notices or other communications or deliveries required or permitted
              to be
              provided hereunder shall be delivered as set forth in the Purchase
              Agreement.

            

            (h) Successors
              and Assigns.
              This
              Agreement shall inure to the benefit of and be binding upon the successors
              and
              permitted assigns of each of the parties and shall inure to the benefit
              of each
              Holder. The Company may not assign its rights or obligations hereunder
              without
              the prior written consent of all of the Holders of the then Registrable
              Securities. Each Holder may assign their respective rights hereunder
              in the
              manner and to the Persons as permitted under the Purchase
              Agreement.

            

            (i) No
              Inconsistent Agreements.
              Neither
              the Company nor any of its subsidiaries has entered, as of the date
              hereof, nor
              shall the Company or any of its subsidiaries, on or after the date
              of this
              Agreement, enter into any agreement with respect to its securities,
              that would
              have the effect of impairing the rights granted to the Holders in this
              Agreement
              or otherwise conflicts with the provisions hereof. Except as set forth
              on
Schedule
              6(i),
              neither
              the Company nor any of its subsidiaries has previously entered into
              any
              agreement granting any registration rights with respect to any of its
              securities
              to any Person that have not been satisfied in full.

            

            (j) Execution
              and Counterparts.
              This
              Agreement may be executed in two or more counterparts, all of which
              when taken
              together shall be considered one and the same agreement and shall become
              effective when counterparts have been signed by each party and delivered
              to the
              other party, it being understood that both parties need not sign the
              same
              counterpart. In the event that any signature is delivered by facsimile
              transmission or by e-mail delivery of a “.pdf” format data file, such signature
              shall create a valid and binding obligation of the party executing
              (or on whose
              behalf such signature is executed) with the same force and effect as
              if such
              facsimile or “.pdf” signature page were an original thereof.

            

            (k) Governing
              Law.
              All
              questions concerning the construction, validity, enforcement and interpretation
              of this Agreement shall be determined with the provisions of the Purchase
              Agreement.

            

            (l) Cumulative
              Remedies.
              The
              remedies provided herein are cumulative and not exclusive of any remedies
              provided by law.

            

            (m) Severability.
              If any
              term, provision, covenant or restriction of this Agreement is held
              by a court of
              competent jurisdiction to be invalid, illegal, void or unenforceable,
              the
              remainder of the terms, provisions, covenants and restrictions set
              forth herein
              shall remain in full force and effect and shall in no way be affected,
              impaired
              or invalidated, and the parties hereto shall use their commercially
              reasonable
              efforts to find and employ an alternative means to achieve the same
              or
              substantially the same result as that contemplated by such term, provision,
              covenant or restriction. It is hereby stipulated and declared to be
              the
              intention of the parties that they would have executed the remaining
              terms,
              provisions, covenants and restrictions without including any of such
              that may be
              hereafter declared invalid, illegal, void or unenforceable.

            

            (n) Headings.
              The
              headings in this Agreement are for convenience of reference only and
              shall not
              limit or otherwise affect the meaning hereof.

            

            (o) Independent
              Nature of Holders’ Obligations and Rights.
              The
              obligations of each Holder hereunder are several and not joint with
              the
              obligations of any other Holder hereunder, and no Holder shall be responsible
              in
              any way for the performance of the obligations of any other Holder
              hereunder.
              Nothing contained herein or in any other agreement or document delivered
              at any
              closing, and no action taken by any Holder pursuant hereto or thereto,
              shall be
              deemed to constitute the Holders as a partnership, an association,
              a joint
              venture or any other kind of entity, or create a presumption that the
              Holders
              are in any way acting in concert with respect to such obligations or
              the
              transactions contemplated by this Agreement. Each Holder shall be entitled
              to
              protect and enforce its rights, including without limitation the rights
              arising
              out of this Agreement, and it shall not be necessary for any other
              Holder to be
              joined as an additional party in any proceeding for such purpose.

            

            ********************

            
              
                
                

              

              
                
                

                
                  

                

              

              
                
                

              

            

            

            IN
              WITNESS WHEREOF, the parties have executed this Registration Rights
              Agreement as
              of the date first written above.

            

              

            
              	
                      CHEMBIO
                        DIAGNOSTICS, INC.

                       

                    
	
                      By:__________________________________________

                      Name:

                      Title:

                    

            

             

            

            

            

            

            

            

            

            

            [SIGNATURE
              PAGE OF HOLDERS FOLLOWS]

            

            
              
                
                

              

              
                
                

                
                  

                

              

              
                
                

              

            

            [HOLDER’S
              SIGNATURE PAGE TO CEMI RRA]

            

            Name
              of
              Holder: __________________________

            Signature
              of Authorized Signatory of Holder:
              __________________________

            Name
              of
              Authorized Signatory: _________________________

            Title
              of
              Authorized Signatory: __________________________

             

            

            

            [SIGNATURE
              PAGES CONTINUE]

            

             

            

            
              
                
                

              

              
                
                

                
                  

                

              

              
                
                

              

            

             ANNEX
              A

            

            Plan
              of Distribution

             

            Each
              Selling Stockholder (the “Selling
              Stockholders”)
              of the
              common stock and any of their pledgees, assignees and successors-in-interest
              may, from time to time, sell any or all of their shares of common stock
              on the
              [principal Trading Market] or any other stock exchange, market or trading
              facility on which the shares are traded or in private transactions.
              These sales
              may be at fixed or negotiated prices. A Selling Stockholder may use
              any one or
              more of the following methods when selling shares:

             

            
              	 	
                      ·

                    	
                      ordinary
                        brokerage transactions and transactions in which the broker-dealer
                        solicits purchasers;

                    

            

             

            
              	 	
                      ·

                    	
                      block
                        trades in which the broker-dealer will attempt to sell the
                        shares as agent
                        but may position and resell a portion of the block as principal
                        to
                        facilitate the transaction;

                    

            

             

            
              	 	
                      ·

                    	
                      purchases
                        by a broker-dealer as principal and resale by the broker-dealer
                        for its
                        account;

                    

            

             

            
              	 	
                      ·

                    	
                      an
                        exchange distribution in accordance with the rules of the
                        applicable
                        exchange;

                    

            

             

            
              	 	
                      ·

                    	
                      privately
                        negotiated transactions;

                    

            

             

            
              	 	
                      ·

                    	
                      settlement
                        of short sales entered into after the effective date of the
                        registration
                        statement of which this prospectus is a
                        part;

                    

            

             

            
              	 	
                      ·

                    	
                      broker-dealers
                        may agree with the Selling Stockholders to sell a specified
                        number of such
                        shares at a stipulated price per
                        share;

                    

            

             

            
              	 	
                      ·

                    	
                      through
                        the writing or settlement of options or other hedging transactions,
                        whether through an options exchange or otherwise;
                        

                    

            

             

            
              	 	
                      ·

                    	
                      a
                        combination of any such methods of sale;
                        or

                    

            

             

            
              	 	
                      ·

                    	
                      any
                        other method permitted pursuant to applicable
                        law.

                    

            

             

            The
              Selling Stockholders may also sell shares under Rule 144 under the
              Securities
              Act of 1933, as amended (the “Securities
              Act”),
              if
              available, rather than under this prospectus.

             

            Broker-dealers
              engaged by the Selling Stockholders may arrange for other brokers-dealers
              to
              participate in sales. Broker-dealers may receive commissions or discounts
              from
              the Selling Stockholders (or, if any broker-dealer acts as agent for
              the
              purchaser of shares, from the purchaser) in amounts to be negotiated,
              but,
              except as set forth in a supplement to this Prospectus, in the case
              of an agency
              transaction not in excess of a customary brokerage commission in compliance
              with
              NASDR Rule 2440; and in the case of a principal transaction a markup
              or markdown
              in compliance with NASDR IM-2440. 

             

            In
              connection with the sale of the common stock or interests therein,
              the Selling
              Stockholders may enter into hedging transactions with broker-dealers
              or other
              financial institutions, which may in turn engage in short sales of
              the Common
              Stock in the course of hedging the positions they assume. The Selling
              Stockholders may also sell shares of the common stock short and deliver
              these
              securities to close out their short positions, or loan or pledge the
              common
              stock to broker-dealers that in turn may sell these securities. The
              Selling
              Stockholders may also enter into option or other transactions with
              broker-dealers or other financial institutions or the creation of one
              or more
              derivative securities which require the delivery to such broker-dealer
              or other
              financial institution of shares offered by this prospectus, which shares
              such
              broker-dealer or other financial institution may resell pursuant to
              this
              prospectus (as supplemented or amended to reflect such
              transaction).

             

            The
              Selling Stockholders and any broker-dealers or agents that are involved
              in
              selling the shares may be deemed to be “underwriters” within the meaning of the
              Securities Act in connection with such sales. In such event, any commissions
              received by such broker-dealers or agents and any profit on the resale
              of the
              shares purchased by them may be deemed to be underwriting commissions
              or
              discounts under the Securities Act. Each Selling Stockholder has informed
              the
              Company that it does not have any written or oral agreement or understanding,
              directly or indirectly, with any person to distribute the Common Stock.
              In no
              event shall any broker-dealer receive fees, commissions and markups
              which, in
              the aggregate, would exceed eight percent (8%).

             

            The
              Company is required to pay certain fees and expenses incurred by the
              Company
              incident to the registration of the shares. The Company has agreed
              to indemnify
              the Selling Stockholders against certain losses, claims, damages and
              liabilities, including liabilities under the Securities Act. 

             

            Because
              Selling Stockholders may be deemed to be “underwriters” within the meaning of
              the Securities Act, they will be subject to the prospectus delivery
              requirements
              of the Securities Act including Rule 172 thereunder. In addition, any
              securities
              covered by this prospectus which qualify for sale pursuant to Rule
              144 under the
              Securities Act may be sold under Rule 144 rather than under this prospectus.
              There is no underwriter or coordinating broker acting in connection
              with the
              proposed sale of the resale shares by the Selling Stockholders.

             

            We
              agreed
              to keep this prospectus effective until the earlier of (i) the date
              on which the
              shares may be resold by the Selling Stockholders without registration
              and
              without regard to any volume limitations by reason of Rule 144(k) under
              the
              Securities Act or any other rule of similar effect or (ii) all of the
              shares
              have been sold pursuant to this prospectus or Rule 144 under the Securities
              Act
              or any other rule of similar effect. The resale shares will be sold
              only through
              registered or licensed brokers or dealers if required under applicable
              state
              securities laws. In addition, in certain states, the resale shares
              may not be
              sold unless they have been registered or qualified for sale in the
              applicable
              state or an exemption from the registration or qualification requirement
              is
              available and is complied with.

             

            Under
              applicable rules and regulations under the Exchange Act, any person
              engaged in
              the distribution of the resale shares may not simultaneously engage
              in market
              making activities with respect to the common stock for the applicable
              restricted
              period, as defined in Regulation M, prior to the commencement of the
              distribution. In addition, the Selling Stockholders will be subject
              to
              applicable provisions of the Exchange Act and the rules and regulations
              thereunder, including Regulation M, which may limit the timing of purchases
              and
              sales of shares of the common stock by the Selling Stockholders or
              any other
              person. We will make copies of this prospectus available to the Selling
              Stockholders and have informed them of the need to deliver a copy of
              this
              prospectus to each purchaser at or prior to the time of the sale (including
              by
              compliance with Rule 172 under the Securities Act).

             

            

             

            

            

            
              
                
                

              

              
                
                

                
                  

                

              

              
                
                

              

            

            Annex
              B

             

            CHEMBIO
              DIAGNOSTICS, INC.

             

            Selling
              Securityholder Notice and Questionnaire

             

            The
              undersigned beneficial owner of common stock, par value $0.01 per share
              (the
“Common
              Stock”),
              of
              Chembio Diagnostics, Inc., a Nevada corporation (the “Company”),
              (the
“Registrable
              Securities”)
              understands that the Company has filed or intends to file with the
              Securities
              and Exchange Commission (the “Commission”)
              a
              registration statement on Form [S-3 (the “Registration
              Statement”)
              for
              the registration and resale under Rule 415 of the Securities Act of
              1933, as
              amended (the “Securities
              Act”),
              of
              the Registrable Securities, in accordance with the terms of the Registration
              Rights Agreement, dated as of September 29, 2006 (the “Registration
              Rights Agreement”),
              among
              the Company and the Purchasers named therein. A copy of the Registration
              Rights
              Agreement is available from the Company upon request at the address
              set forth
              below. All capitalized terms not otherwise defined herein shall have
              the
              meanings ascribed thereto in the Registration Rights Agreement.

             

            Certain
              legal consequences arise from being named as a selling securityholder
              in the
              Registration Statement and the related prospectus. Accordingly, holders
              and
              beneficial owners of Registrable Securities are advised to consult
              their own
              securities law counsel regarding the consequences of being named or
              not being
              named as a selling securityholder in the Registration Statement and
              the related
              prospectus.

             

            NOTICE

             

            The
              undersigned beneficial owner (the “Selling
              Securityholder”)
              of
              Registrable Securities hereby elects to include the Registrable Securities
              owned
              by it and listed below in Item 3 (unless otherwise specified under
              such Item 3)
              in the Registration Statement.

             

            
              
                
                

              

              
                
                

                
                  

                

              

              
                
                

              

            

            The
              undersigned hereby provides the following information to the Company
              and
              represents and warrants that such information is accurate:

             

            QUESTIONNAIRE

             

            1. Name.

             

            
              	 	
                      (a)

                    	
                      Full
                        Legal Name of Selling
                        Securityholder

                    

            

             

            
              	 
	 

            

            

            
              	 	
                      (b)

                    	
                      Full
                        Legal Name of Registered Holder (if not the same as (a) above)
                        through
                        which Registrable Securities Listed in Item 3 below are
                        held:

                    

            

             

            
              	 
	 

            

            

            
              	 	
                      (c)

                    	
                      Full
                        Legal Name of Natural Control Person (which means a natural
                        person who
                        directly or indirectly alone or with others has power to
                        vote or dispose
                        of the securities covered by the
                        questionnaire):

                    

            

             

            
              	 
	 

            

            

             

            2.
              Address for Notices to Selling Securityholder:

             

            
              	 
	 
	 
	
                      Telephone: 

                    
	
                      Fax: 

                    
	
                      Contact
                        Person: 

                    

            

            

            3.
              Beneficial Ownership of Registrable Securities:

             

            
              	 	
                      (a)

                    	
                      Type
                        and Number of Registrable Securities beneficially owned (not
                        including the
                        Registrable Securities that are issuable pursuant to the
                        Purchase
                        Agreement):

                    

            

             

            
              	 
	 
	 
	 

            

            

             

            
              
                
                

              

              
                
                

                
                  

                

              

              
                
                

              

            

            4.
              Broker-Dealer Status:

             

            
              	 	
                      (a)

                    	
                      Are
                        you a broker-dealer?

                    

            

             

            Yes
               No
              

             

            
              	 	
                      (b)

                    	
                      If
                        “yes” to Section 4(a), did you receive your Registrable Securities
                        as
                        compensation for investment banking services to the
                        Company.

                    

            

             

            Yes
               No
              

             

            
              	 	
                      Note:

                    	
                      If
                        no, the Commission’s staff has indicated that you should be identified as
                        an underwriter in the Registration
                        Statement.

                    

            

             

            
              	 	
                      (c)

                    	
                      Are
                        you an affiliate of a
                        broker-dealer?

                    

            

             

            Yes
               No
              

             

            
              	 	
                      (d)

                    	
                      If
                        you are an affiliate of a broker-dealer, do you certify that
                        you bought
                        the Registrable Securities in the ordinary course of business,
                        and at the
                        time of the purchase of the Registrable Securities to be
                        resold, you had
                        no agreements or understandings, directly or indirectly,
                        with any person
                        to distribute the Registrable
                        Securities?

                    

            

             

            Yes
               No
              

             

            
              	 	
                      Note:

                    	
                      If
                        no, the Commission’s staff has indicated that you should be identified as
                        an underwriter in the Registration
                        Statement.

                    

            

             

            5.
              Beneficial Ownership of Other Securities of the Company Owned by the
              Selling
              Securityholder.

             

            Except
              as set forth below in this Item 5, the undersigned is not the beneficial
              or
              registered owner of any securities of the Company other than the Registrable
              Securities listed above in Item 3.

             

            
              	 	
                      (a)

                    	
                      Type
                        and Amount of Other Securities beneficially owned by the
                        Selling
                        Securityholder:

                    

            

             

            
              	 
	 
	 

            

            

            

             

            
              
                
                

              

              
                
                

                
                  

                

              

              
                
                

              

            

            6.
              Relationships with the Company:

             

            Except
              as set forth below, neither the undersigned nor any of its affiliates,
              officers,
              directors or principal equity holders (owners of 5% of more of the
              equity
              securities of the undersigned) has held any position or office or has
              had any
              other material relationship with the Company (or its predecessors or
              affiliates)
              during the past three years.

             

            State
              any
              exceptions here:

             

            
              	 
	 
	 

            

            

             

            The
              undersigned agrees to promptly notify the Company of any inaccuracies
              or changes
              in the information provided herein that may occur subsequent to the
              date hereof
              at any time while the Registration Statement remains effective.

             

            By
              signing below, the undersigned consents to the disclosure of the information
              contained herein in its answers to Items 1 through 6 and the inclusion
              of such
              information in the Registration Statement and the related prospectus
              and
              any
              amendments or supplements thereto.
              The
              undersigned understands that such information will be relied upon by
              the Company
              in connection with the preparation or amendment of the Registration
              Statement
              and the related prospectus.

             

            IN
              WITNESS WHEREOF the undersigned, by authority duly given, has caused
              this Notice
              and Questionnaire to be executed and delivered either in person or
              by its duly
              authorized agent.

             

            Dated:
                Beneficial
              Owner:  

            

            By:  

            Name:

            Title: 

            

            PLEASE
              FAX A COPY OF THE COMPLETED AND EXECUTED NOTICE AND QUESTIONNAIRE,
              AND RETURN
              THE ORIGINAL BY OVERNIGHT MAIL, TO:

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