Document:

ex99_3.htm

    
      

    

    
      

    

    
      CHEMBIO
        DIAGNOSTICS, INC.

      

      SECOND
        AMENDED AND RESTATED

      CERTIFICATE
        OF DESIGNATION OF PREFERENCES,

      RIGHTS
        AND LIMITATIONS

      OF

      SERIES
        C 7% CONVERTIBLE PREFERRED STOCK

      

      PURSUANT
        TO SECTION 78.1955 OF THE

      NEVADA
        REVISED STATUTES

      

      The
        undersigned, Richard J. Larkin, does hereby certify that:

      

      1.
        He is
        the Chief Financial Officer of Chembio Diagnostics, Inc., a Nevada corporation
        (the “Corporation”).

      

      2.
        The
        Corporation is authorized to issue 10,000,000 shares of preferred stock,
        297.82698 of which have been issued.

      

      3.
        The
        following resolutions were duly adopted by the Board of Directors:

      

      WHEREAS,
        the Articles of Incorporation of the Corporation provides for a class of
        its
        authorized stock known as preferred stock, comprised of 10,000,000 shares,
        $0.01
        par value, issuable from time to time in one or more series;

      

      WHEREAS,
        the Board of Directors of the Corporation is authorized to fix the dividend
        rights, dividend rate, voting rights, conversion rights, rights and terms
        of
        redemption and liquidation preferences of any wholly unissued series of
        preferred stock and the number of shares constituting any Series and the
        designation thereof, of any of them; and

      

      WHEREAS,
        it is the desire of the Board of Directors of the Corporation, pursuant to
        its
        authority as aforesaid, to fix the rights, preferences, restrictions and
        other
        matters relating to a series of the preferred stock, which shall consist
        of,
        except as otherwise set forth in the Purchase Agreement, up to 205 shares
        of the
        preferred stock which the Corporation has the authority to issue, as
        follows;

      

      WHEREAS,
        the Board of Directors with shareholder consent desires to amend certain
        provisions as follows:

      

      NOW,
        THEREFORE, BE IT RESOLVED, that the Board of Directors does hereby provide
        for
        the issuance of a series of preferred stock for cash or exchange of other
        securities, rights or property and does hereby fix and determine the rights,
        preferences, restrictions and other matters relating to such series of preferred
        stock as follows:

      

      
        
          

        

      

      TERMS
        OF PREFERRED STOCK

      

      Section
        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.  For the
        purposes hereof, the following terms shall have the following
        meanings:

      

      “Alternate
        Consideration” shall have the meaning set forth in Section
        7(e).

      

      
        
           

        

        
          1

          
            

          

        

        
           

        

      

      “Bankruptcy
        Event” means any of the following events: (a) the Corporation or any
        Significant Subsidiary (as such term is defined in Rule 1-02(w) of Regulation
        S-X) thereof commences a case or other proceeding under any bankruptcy,
        reorganization, arrangement, adjustment of debt, relief of debtors, dissolution,
        insolvency or liquidation or similar law of any jurisdiction relating to
        the
        Corporation or any Significant Subsidiary thereof; (b) there is commenced
        against the Corporation or any Significant Subsidiary thereof any such case
        or
        proceeding that is not dismissed within 60 days after commencement; (c) the
        Corporation or any Significant Subsidiary thereof is adjudicated insolvent
        or
        bankrupt or any order of relief or other order approving any such case or
        proceeding is entered; (d) the Corporation or any Significant Subsidiary
        thereof
        suffers any appointment of any custodian or the like for it or any substantial
        part of its property that is not discharged or stayed within 60 calendar
        days
        after such appointment; (e) the Corporation or any Significant Subsidiary
        thereof makes a general assignment for the benefit of creditors; (f) the
        Corporation or any Significant Subsidiary thereof calls a meeting of its
        creditors with a view to arranging a composition, adjustment or restructuring
        of
        its debts; or (g) the Corporation or any Significant Subsidiary thereof,
        by any
        act or failure to act, expressly indicates its consent to, approval of or
        acquiescence in any of the foregoing or takes any corporate or other action
        for
        the purpose of effecting any of the foregoing.

      

      “Base
        Conversion Price” shall have the meaning set forth in Section
        7(b).

      

      “Buy-In”
        shall have the meaning set forth in Section 6(d)(iii).

      

      “Change
        of Control Transaction” means the occurrence after the date hereof of any of
        (i) an acquisition after the date hereof by an individual or legal entity
        or
“group” (as described in Rule 13d-5(b)(1) promulgated under the Exchange Act) of
        effective control (whether through legal or beneficial ownership of capital
        stock of the Corporation, by contract or otherwise) of in excess of 50% of
        the
        aggregate voting power of the Corporation, or (ii) the Corporation merges
        into
        or consolidates with any other Person, or any Person merges into or consolidates
        with the Corporation and, after giving effect to such transaction, the
        stockholders of the Corporation immediately prior to such transaction own
        less
        than 50% of the aggregate voting power of the Corporation or the successor
        entity of such transaction, or (iii) the Corporation sells or transfers its
        assets, as an entirety or substantially as an entirety, to another Person
        and
        the stockholders of the Corporation immediately prior to such transaction
        own
        less than 50% of the aggregate voting power of the acquiring entity immediately
        after the transaction, or (iv) the execution by the Corporation of an agreement
        to which the Corporation is a party or by which it is bound, providing for
        any
        of the events set forth above.

      

      “Closing
        Date” means the Trading Day when all of the Transaction Documents have been
        executed and delivered by the applicable parties thereto, and all conditions
        precedent to (i) each Holder’s obligations to pay the Subscription Amount and
        (ii) the Corporation’s obligations to deliver the Securities have been satisfied
        or waived.

      

      “Commission”
        means the Securities and Exchange Commission.

      

      “Common
        Stock” means the Corporation’s common stock, par value $0.01 per share, and
        stock of any other class of securities into which such securities may hereafter
        be reclassified or changed into.

      

      “Common
        Stock Equivalents” means any securities of the Corporation or the
        Subsidiaries which would entitle the holder thereof to acquire, directly
        or
        indirectly, at any time Common Stock, including without limitation, any debt,
        preferred stock, rights, options, warrants or other instrument that is at
        any
        time convertible into or exchangeable for, or otherwise entitles the holder
        thereof to receive, Common Stock.

      

      “Conversion
        Amount” means the sum of the Stated Value at issue.

      

      “Conversion
        Date” shall have the meaning set forth in Section 6(a).

      

      “Conversion
        Price” shall have the meaning set forth in Section 6(b).

      

      “Conversion
        Shares” means, collectively, the shares of Common Stock into which the
        shares of Preferred Stock are convertible in accordance with the terms
        hereof.

      

      
        
           

        

        
          2

          
            

          

        

        
           

        

      

      “Conversion
        Shares Registration Statement” means a registration statement that meets the
        requirements of the Registration Rights Agreement and registers the resale
        of
        all Conversion Shares by the Holder, who shall be named as a “selling
        stockholder” thereunder, all as provided in the Registration Rights
        Agreement.

      

      “Dilutive
        Issuance” shall have the meaning set forth in Section 7(b).

      

      “Dilutive
        Issuance Notice” shall have the meaning set forth in Section
        7(b).

      

      “Dividend
        Payment Date” shall have the meaning set forth in Section 3(a).

      

      “Effective
        Date” means the date that the Conversion Shares Registration Statement is
        declared effective by the Commission.

      

      “Equity
        Conditions” means, during the period in question, (i) the Corporation shall
        have duly honored all conversions scheduled to occur or occurring by virtue
        of
        one or more Notices of Conversion of the applicable Holder on or prior to
        the
        dates so requested or required, if any, (ii) the Corporation shall have paid
        all
        liquidated damages and other amounts owing to the applicable Holder in respect
        of the Preferred Stock, (iii) there is an effective Conversion Shares
        Registration Statement pursuant to which the Holders are permitted to utilize
        the prospectus thereunder to resell all of the shares of Common Stock issuable
        pursuant to the Transaction Documents (and the Corporation believes, in good
        faith, that such effectiveness will continue uninterrupted for the foreseeable
        future), (iv) the Common Stock is trading on a Trading Market and all of
        the
        shares issuable pursuant to the Transaction Documents are listed for trading
        on
        such Trading Market (and the Corporation believes, in good faith, that trading
        of the Common Stock on a Trading Market will continue uninterrupted for the
        foreseeable future), (v) there is a sufficient number of authorized, but
        unissued and otherwise unreserved, shares of Common Stock for the issuance
        of
        all of the shares of Common Stock issuable pursuant to the Transaction
        Documents, (vi) there is no existing Triggering Event or no existing event
        which, with the passage of time or the giving of notice, would constitute
        a
        Triggering Event, (vii) the issuance of the shares in question to the applicable
        Holder would not violate the limitations set forth in Section 6(c), (viii)
        there
        has been no public announcement of a pending or proposed Fundamental Transaction
        or Change of Control Transaction that has not been consummated and (ix) the
        applicable Holder is not in possession of any information that constitutes,
        or
        may constitute, material non-public information.

      

      “Exchange
        Act” means the Securities Exchange Act of 1934, as amended, and the rules
        and regulation promulgated thereunder.

      

      “Exempt
        Issuance” means the issuance of (a) shares of Common Stock or options to
        employees, officers, consultants, or directors of the Corporation pursuant
        to
        any stock or option plan or other resolution duly adopted by a majority of
        the
        non-employee members of the Board of Directors of the Corporation or a majority
        of the members of a committee of non-employee directors established for such
        purpose, (b) securities upon the exercise of or conversion of any Securities
        issued hereunder, convertible securities, options or warrants issued and
        outstanding on the date of the Purchase Agreement, provided that such securities
        have not been amended since the date of the Purchase Agreement to increase
        the
        number of such securities or to decrease the exercise or conversion price
        of any
        such securities (except pursuant to any anti-dilution adjustment contained
        therein), (c) securities issued pursuant to acquisitions or strategic
        transactions, provided any such issuance shall only be to a Person which
        is,
        itself or through its subsidiaries, an operating company in a business
        reasonably deemed by the Corporation’s Board of Directors to be strategically
        advantageous to the business of the Corporation and in which the Corporation
        receives benefits in addition to the investment of funds, but shall not include
        a transaction in which the Corporation is issuing securities primarily for
        the
        purpose of raising capital or to an entity whose primary business is investing
        in securities, (d) shares issued as dividend payments on the Series A
        Convertible Preferred Stock, the Series B 9% Convertible Preferred Stock
        and the
        Preferred Stock, and (e) shares of Common Stock or Common Stock Equivalents
        issued between the Plan Closing Date and the Final Plan Date in connection
        with
        the Company’s Plan.

       

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

      

       “Fundamental
        Transaction” shall have the meaning set forth in Section 7(e).

      

      “Holder”
        shall have the meaning given such term in Section 2.

      

      “Junior
        Securities” means the Common Stock and all other Common Stock Equivalents of
        the Corporation other than those securities which are explicitly senior or
        paripassu to the Preferred Stock in dividend rights or liquidation
        preference.

      

      “Liquidation”
        shall have the meaning given such term in Section 5.

      

      “New
        York Courts” shall have the meaning given such term in Section
        10(e).

      

      
        
           

        

        
          3

          
            

          

        

        
           

        

      

      “Notice
        of Conversion” shall have the meaning given such term in Section
        6(a).

      

      “Original
        Issue Date” shall mean the date of the first issuance of any shares of the
        Preferred Stock regardless of the number of transfers of any particular shares
        of Preferred Stock and regardless of the number of certificates which may
        be
        issued to evidence such Preferred Stock.

      

      “Person”
        means a corporation, an association, a partnership, an organization, a business,
        an individual, a government or political subdivision thereof or a governmental
        agency.

      

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

      

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

      

      “Purchase
        Agreement” means the Securities Purchase Agreement, dated as of September
        29, 2006, to which the Corporation and the original Holders are parties,
        as
        amended, modified or supplemented from time to time in accordance with its
        terms.

      

      “Registration
        Rights Agreement” as to a Holder, means the Registration Rights Agreement
        entered into to which the Corporation and such Holder are parties, as amended,
        modified or supplemented from time to time in accordance with its
        terms.

      

      “Securities
        Act” means the Securities Act of 1933, as amended, and the rules and
        regulations promulgated thereunder.

      

      “Share
        Delivery Date” shall have the meaning given such term in Section
        6(d).

      

      “Stated
        Value” shall have the meaning given such term in Section 2.

      

      “Subscription
        Amount” shall mean, as to each Purchaser, the amount to be paid for the
        Preferred Stock purchased pursuant to the Purchase Agreement (or, if applicable
        to a Holder, any other Securities Purchase Agreement entered into for the
        sale
        of Preferred Stock as permitted hereunder) as specified below such Purchaser’s
        name on the signature page of the Purchase Agreement (or other Securities
        Purchase Agreement, as applicable) and next to the heading “Subscription
        Amount”, in United States Dollars and in immediately available
        funds.

      

      “Subsidiary”
        shall have the meaning given to such term in the Purchase
        Agreement.

      

      “Threshold
        Period” shall have the meaning set forth in Section 6(a).

      

      “Trading
        Day” means a day on which the Common Stock is traded on a Trading
        Market.

      

      “Trading
        Market” means the following markets or exchanges on which the Common Stock
        is listed or quoted for trading on the date in question: the OTC Bulletin
        Board,
        the Nasdaq SmallCap Market, the American Stock Exchange, the New York Stock
        Exchange or the Nasdaq National Market.

      

      “Transaction
        Documents” shall have the meaning set forth in the Purchase Agreement or, as
        to any Holders party to another Securities Purchase Agreement, as such term
        is
        defined in such agreement.

      

      
        
           

        

        
          4

          
            

          

        

        
           

        

      

      “Triggering
        Event” shall have the meaning set forth in Section 9(a).

      

      “Triggering
        Redemption Amount” for each share of Preferred Stock means the sum of (i)
        the greater of (A) 130% of the Stated Value and (B) the product of (a) the
        VWAP
        on the Trading Day immediately preceding the date of the Triggering Event
        and
        (b) the Stated Value divided by the then Conversion Price, (ii) all accrued
        but
        unpaid dividends thereon and (iii) all liquidated damages and other amounts
        due
        in respect of the Preferred Stock.

      

      “Triggering
        Redemption Payment Date” shall have the meaning set forth in Section
        9(b).

      

      “VWAP”
        means, for any date, the price determined by the first of the following clauses
        that applies: (a) if the Common Stock is then listed or quoted on a Trading
        Market, the daily volume weighted average price of the Common Stock for such
        date (or the nearest preceding date) on the Trading Market on which the Common
        Stock is then listed or quoted as reported by Bloomberg Financial L.P. (based
        on
        a Trading Day from 9:30 a.m. Eastern Time to 4:02 p.m. Eastern Time); (b)
        if the
        Common Stock is not then listed or quoted on a Trading Market and if prices
        for
        the Common Stock are then reported in the “Pink Sheets” published by the Pink
        Sheets, LLC (or a similar organization or agency succeeding to its functions
        of
        reporting prices), the most recent bid price per share of the Common Stock
        so
        reported; or (c) in all other cases, the fair market value of a share of
        Common
        Stock as determined by an independent appraiser selected in good faith by
        the
        Purchasers and reasonably acceptable to the Corporation.

      

      Section
        2.  Designation, Rank, Amount and Par Value.  The
        series of preferred stock shall be designated as its Series C 7% Convertible
        Preferred Stock (the “Preferred Stock”) and the number of shares so
        designated shall be 205 (which shall not be subject to increase without the
        consent of all of the holders of the Preferred Stock (each, a “Holder”
and collectively, the “Holders”)).  Each share of Preferred
        Stock shall have a par value of $0.01 per share and a stated value equal
        to
        $50,000 (the “Stated Value”).  The Preferred Stock shall rank
        pari passu to the Corporation’s Series A Convertible Preferred Stock and the
        Corporation’s Series B 9% Convertible Preferred Stock as to payment of dividends
        and liquidation preference.  Capitalized terms not otherwise defined
        herein shall have the meaning given such terms in Section 1 hereof.

      

      Section
        3.  Dividends.

      

      a)           Dividends
        in Cash or in
        Kind.  Holders shall
        be entitled
        to receive, and the Corporation shall pay, cumulative dividends at the rate
        per
        share (as a percentage of the Stated Value per share) of 7% per
        annum,
        payable semi-annually on January 1 and
        July 1, beginning on July 1, 2007 and on each Conversion Date (with respect
        only
        to Preferred Stock being converted) (each such date, a “Dividend Payment
        Date”) (if any
        Dividend Payment Date is not a Trading Day, the applicable payment shall
        be due
        on the next succeeding Trading Day) in cash or duly authorized, validly issued,
        fully paid and non-assessable shares of Common Stock as set forth in this
        Section 3(a), or a combination thereof (the amount to be paid in shares of
        Common Stock, the “Dividend Share
        Amount”).  The form of dividend
        payments to each Holder shall be determined in the following order of priority:
        (i) if funds are legally available for the payment of dividends and the Equity
        Conditions have not been met during the 20 consecutive Trading Days immediately
        prior to the applicable Dividend Payment Date, in cash only; (ii) if funds
        are
        legally available for the payment of dividends and the Equity Conditions
        have
        been met during the 20 consecutive Trading Days immediately prior to the
        applicable Dividend Payment Date, at the sole election of the Corporation,
        in
        cash or shares of Common Stock which shall be valued solely for such purpose
        at
        90% of the average of the VWAPs for the 20 consecutive Trading Days ending
        on
        the Trading Day that is immediately prior to the Dividend Payment Date; (iii)
        if
        funds are not legally available for the payment of dividends and the Equity
        Conditions have been met during the 20 consecutive Trading Days immediately
        prior to the applicable Dividend Payment Date, in shares of Common Stock
        which
        shall be valued solely for such purpose at 90% of the average of the VWAPs
        for
        the 20 consecutive Trading Days ending on the Trading Day that is immediately
        prior to the Dividend Payment Date; (iv) if funds are not legally available
        for
        the payment of dividends and the Equity Condition relating to an effective
        Conversion Shares Registration Statement has been waived by such Holder,
        as to
        such Holder only, in unregistered shares of Common Stock which shall be valued
        solely for such purpose at 90% of the average of the VWAPs for the 20
        consecutive Trading Days ending on the Trading Day that is immediately prior
        to
        the Dividend Payment Date; and (v) if funds are not legally available for
        the
        payment of dividends and the Equity Conditions have not been met during the
        20
        consecutive Trading Days immediately prior to the applicable Dividend Payment
        Date, then, at the election of such Holder, such dividends shall accrue to
        the
        next Dividend Payment Date or shall be accreted to, and increase, the
        outstanding Stated Value.  The Holders shall have the same rights and
        remedies with respect to the delivery of any such shares as if such shares
        were
        being issued pursuant to Section 6.  On the Closing Date the
        Corporation shall have notified the Holders whether or not it may legally
        pay
        cash dividends as of the Closing Date.  The Corporation shall promptly
        notify the Holders at any time the Corporation shall become able or unable,
        as
        the case may be, to legally pay cash dividends.  If at any time the
        Corporation has the right to pay dividends in cash or Common Stock, the
        Corporation must provide the Holders with at least 20 Trading Days’ notice of
        its election to pay a regularly scheduled dividend in Common Stock (the
        Corporation may indicate in such notice that the election contained in such
        notice shall continue for later periods until revised by a subsequent
        notice).  Dividends on the Preferred Stock shall be calculated on the
        basis of a 360-day year, consisting of twelve 30 calendar day periods, shall
        accrue daily commencing on the Original Issue Date, and shall be deemed to
        accrue from such date whether or not earned or declared and whether or not
        there
        are profits, surplus or other funds of the Corporation legally available
        for the
        payment of dividends.  Except as otherwise provided herein, if at any
        time the Corporation pays dividends partially in cash and partially in shares,
        then such payment shall be distributed ratably among the Holders based upon
        the
        number of shares of Preferred Stock held by each Holder on such Dividend
        Payment
        Date.  Any dividends, whether paid in cash or shares of Common Stock,
        that are not paid within three Trading Days following a Dividend Payment
        Date
        shall continue to accrue and shall entail a late fee, which must be paid
        in
        cash, at the rate of 18% per annum or the lesser rate permitted by applicable
        law (such fees to accrue daily, from the Dividend Payment Date through and
        including the date of payment).  If at any time the Corporation
        delivers a notice to the Holders of its election to pay the dividends in
        shares
        of Common Stock, the Corporation shall timely file a prospectus supplement
        pursuant to Rule 424 disclosing such election.

      
         

        
          5

          
            

          

        

        
           

        

      

      b)           So
        long as any Preferred Stock shall
        remain outstanding, neither the Corporation nor any Subsidiary thereof shall
        redeem, purchase or otherwise acquire directly or indirectly any Junior
        Securities.  So long as any Preferred Stock shall remain outstanding,
        neither the Corporation nor any Subsidiary thereof shall directly or indirectly
        pay or declare any dividend or make any distribution (other than a dividend
        or
        distribution described in Section 6 or dividends due and paid in the ordinary
        course on preferred stock of the Corporation at such times when the Corporation
        is in compliance with its payment and other obligations hereunder) upon,
        nor
        shall any distribution be made in respect of, any Junior Securities so long
        as
        any dividends due on the Preferred Stock remain unpaid, nor shall any monies
        be
        set aside for or applied to the purchase or redemption (through a sinking
        fund
        or otherwise) of any Junior Securities.

       

      Section
        4.  Voting Rights.  Except as otherwise provided
        herein and as otherwise required by law, the Preferred Stock shall have no
        voting rights.  However, so long as any shares of Preferred Stock are
        outstanding, the Corporation shall not, without the affirmative vote of the
        Holders of at least 81% of the shares of the Preferred Stock then outstanding,
        (a) alter or change adversely the powers, preferences or rights given to
        the
        Preferred Stock or alter or amend this Certificate of Designation, (b) authorize
        or create any class of stock ranking as to dividends, redemption or distribution
        of assets upon a Liquidation (as defined in Section 5) senior to or otherwise
        pari passu with the Preferred Stock, (c) amend its articles of incorporation
        or
        other charter documents so as to affect adversely any rights of the Holders,
        (d)
        increase the authorized number of shares of Preferred Stock, or (e) enter
        into
        any agreement with respect to the foregoing.

      

      Section
        5.  Liquidation.  Upon any liquidation,
        dissolution or winding-up of the Corporation, whether voluntary or involuntary
        (a “Liquidation”), the Holders shall be entitled to receive out of the
        assets of the Corporation, whether such assets are capital or surplus, for
        each
        share of Preferred Stock an amount equal to the Stated Value per share plus
        any
        accrued and unpaid dividends thereon and any other fees or liquidated damages
        owing thereon before any distribution or payment shall be made to the holders
        of
        any Junior Securities, and if the assets of the Corporation shall be
        insufficient to pay in full such amounts, then the entire assets to be
        distributed to the Holders shall be distributed among the Holders ratably
        in
        accordance with the respective amounts that would be payable on such shares
        if
        all amounts payable thereon were paid in full, paripassu with the
        Corporation’s Series A Convertible Preferred Stock and the Series B 9%
        Convertible Preferred Stock treated together as a class based upon the
        liquidation preferences of each such series.  A Fundamental
        Transaction or Change of Control Transaction shall not be treated as a
        Liquidation.  The Corporation shall mail written notice of any such
        Liquidation, not less than 45 days prior to the payment date stated therein,
        to
        each record Holder.

      

      Section
        6.  Conversion.

      

      a)           Conversions
        at Option of
        Holder.  Each share of
        Preferred
        Stock shall be convertible into that number of shares of Common Stock (subject
        to the limitations set forth in Sections 6(c)) determined by dividing the
        Stated
        Value of such share of Preferred Stock by the Conversion Price, at the option
        of
        the Holder, at any time and from time to time from and after the Original
        Issue
        Date.  Holders shall effect conversions by providing the Corporation
        with the form of conversion notice attached hereto as Annex A
        (a “Notice of Conversion”).  Each
        Notice of
        Conversion shall specify the number of shares of Preferred Stock to be
        converted, the number of shares of Preferred Stock owned prior to the conversion
        at issue, the number of shares of Preferred Stock owned subsequent to the
        conversion at issue and the date on which such conversion is to be effected,
        which date may not be prior to the date the Holder delivers such Notice of
        Conversion to the Corporation by facsimile (the “Conversion Date”).  If
        no Conversion Date is
        specified in a Notice of Conversion, the Conversion Date shall be the date
        that
        such Notice of Conversion to the Corporation is deemed delivered
        hereunder.  The calculations and entries set forth in the Notice of
        Conversion shall control in the absence of manifest or mathematical
        error.  To effect conversions, as the case may be, of shares of
        Preferred Stock, a Holder shall not be required to surrender the certificate(s)
        representing such shares of Preferred Stock to the Corporation unless all
        of the
        shares of Preferred Stock represented thereby are so converted, in which
        case
        such Holder shall deliver the certificate representing such shares of Preferred
        Stock promptly following the Conversion Date at issue.  Shares of
        Preferred Stock converted into Common Stock or redeemed in accordance with
        the
        terms hereof shall be canceled and may not be reissued.

      

      b)           Conversion
        Price.  The conversion price for the Preferred Stock shall equal
        $0.48 per share for the holders of the Preferred Stock on the Plan Closing
        Date
        (the “Conversion Price”).

      

      
        
           

        

        
          6

          
            

          

        

        
           

        

      

      c)           Beneficial
        Ownership Limitation.  The Corporation shall not effect any
        conversion of the Preferred Stock, and a Holder shall not have the right
        to
        convert any portion of the Preferred Stock, to the extent that, after giving
        effect to the conversion set forth on the applicable Notice of Conversion,
        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)
        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 conversion
        of
        the Preferred Stock with respect to which such determination is being made,
        but
        shall exclude the number of shares of Common Stock which are issuable upon
        (A)
        conversion of the remaining, unconverted Stated Value of Preferred Stock
        beneficially owned by such Holder or any of its Affiliates and (B) exercise
        or
        conversion of the unexercised or unconverted portion of any other securities
        of
        the Corporation subject to a limitation on conversion or exercise analogous
        to
        the limitation contained herein (including the Warrants) beneficially owned
        by
        such Holder or any of its Affiliates.  Except as set forth in the
        preceding sentence, for purposes of this Section 6(c), beneficial ownership
        shall be calculated in accordance with Section 13(d) of the Exchange Act
        and the
        rules and regulations promulgated thereunder. To the extent that the limitation
        contained in this Section 6(c) applies, the determination of whether the
        Preferred Stock is convertible (in relation to other securities owned by
        such
        Holder together with any Affiliates) and of how many shares of Preferred
        Stock
        are convertible shall be in the sole discretion of such Holder, and the
        submission of a Notice of Conversion shall be deemed to be such Holder’s
        determination of whether the shares of Preferred Stock may be converted (in
        relation to other securities owned by such Holder together with any Affiliates)
        and how many shares of the Preferred Stock are convertible, in each case
        subject
        to such aggregate percentage limitations. To ensure compliance with this
        restriction, each Holder will be deemed to represent to the Corporation each
        time it delivers a Notice of Conversion that such Notice of Conversion has
        not
        violated the restrictions set forth in this paragraph and the Corporation
        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 6(c),
        in
        determining the number of outstanding shares of Common Stock, a Holder may
        rely
        on the number of outstanding shares of Common Stock as stated in the most
        recent
        of the following: (A) the Corporation’s most recent Form 10-QSB or Form 10-KSB,
        as the case may be, (B) a more recent public announcement by the Corporation
        or
        (C) a more recent notice by the Corporation or the Corporation’s transfer agent
        setting forth the number of shares of Common Stock outstanding.  Upon
        the written or oral request of a Holder, the Corporation 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 Corporation, including the
        Preferred Stock, 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 conversion of Preferred Stock held by the applicable
        Holder.
        The Beneficial Ownership Limitation provisions of this Section 6(c) may be
        waived by such Holder, at the election of such Holder, upon not less than
        61
        days’ prior notice to the Corporation, 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
        conversion of Preferred Stock held by the applicable Holder and the provisions
        of this Section 6(c) 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 shall 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
        6(c) 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 Preferred Stock.  Notwithstanding anything set
        forth in this Section 6(c), the 4.99% and 9.99% beneficial ownership limitations
        imposed by this Section 6(c) shall not apply to Common Stock issuable upon
        conversion of the Preferred Stock in connection with the Plan.

       

      d)           Mechanics
        of
        Conversion.

      

      i.           Delivery
        of Certificate Upon
        Conversion.  Not later than
        three
        Trading Days after each Conversion Date (the “Share Delivery
        Date”), the Corporation
        shall deliver to
        the Holder (A) a certificate or certificates which, after the Effective Date,
        shall be free of restrictive legends and trading restrictions (other than
        those
        required by the Purchase Agreement) representing the number of shares of
        Common
        Stock being acquired upon the conversion of shares of Preferred Stock, and
        (B) a
        bank check in the amount of accrued and unpaid dividends (if the Corporation
        has
        elected or is required to pay accrued dividends in cash).  After the
        Effective Date, the Corporation shall, upon request of the Holder, deliver
        any
        certificate or certificates required to be delivered by the Corporation under
        this Section electronically through the Depository Trust Company or another
        established clearing corporation performing similar functions if the
        Corporation’s transfer agent is a participant in such system.  If in
        the case of any Notice of Conversion such certificate or certificates are
        not
        delivered to or as directed by the applicable Holder by the third Trading
        Day
        after the Conversion Date, the Holder shall be entitled to elect by written
        notice to the Corporation at any time on or before its receipt of such
        certificate or certificates thereafter, to rescind such conversion, in which
        event the Corporation shall immediately return the certificates representing
        the
        shares of Preferred Stock tendered for conversion.

      

      
        
           

        

        
          7

          
            

          

        

         

      

      ii.           Obligation
        Absolute; Partial
        Liquidated Damages.  The Corporation’s
        obligation to issue and deliver the Conversion Shares upon conversion of
        Preferred Stock in accordance with the terms hereof are absolute and
        unconditional, irrespective of any action or inaction by a Holder to enforce
        the
        same, any waiver or consent with respect to any provision hereof, the recovery
        of any judgment against any Person or any action to enforce the same, or
        any
        setoff, counterclaim, recoupment, limitation or termination, or any breach
        or
        alleged breach by such Holder or any other Person of any obligation to the
        Corporation or any violation or alleged violation of law by such Holder or
        any
        other Person, and irrespective of any other circumstance which might otherwise
        limit such obligation of the Corporation to such Holder in connection with
        the
        issuance of such Conversion Shares; provided,
however,
        that such delivery shall not operate
        as a waiver by the Corporation of any such action that the Corporation may
        have
        against such Holder.  In the event a Holder shall elect to convert any
        or all of the Stated Value of its Preferred Stock, the Corporation may not
        refuse conversion based on any claim that such Holder or any one associated
        or
        affiliated with such Holder has been engaged in any violation of law, agreement
        or for any other reason, unless an injunction from a court, on notice to
        Holder,
        restraining and/or enjoining conversion of all or part of the Preferred Stock
        of
        such Holder shall have been sought and obtained, and the Corporation posts
        a
        surety bond for the benefit of such Holder in the amount of 150% of the Stated
        Value of Preferred Stock which is subject to the injunction, which bond shall
        remain in effect until the completion of arbitration/litigation of the
        underlying dispute and the proceeds of which shall be payable to such Holder
        to
        the extent it obtains judgment.  In the absence of such injunction,
        the Corporation shall issue Conversion Shares and, if applicable, cash, upon
        a
        properly noticed conversion.  If the Corporation fails to deliver to a
        Holder such certificate or certificates pursuant to Section 6(e)(i) on the
        second Trading Day after the Share Delivery Date applicable to such conversion,
        the Corporation shall pay to such Holder, in cash, as liquidated damages
        and not
        as a penalty, for each $5,000 of Stated Value of Preferred Stock being
        converted, $50 per Trading Day (increasing to $100 per Trading Day after
        the
        third Trading Day and increasing to $200 per Trading Day after the sixth
        Trading
        Day after such damages begin to accrue) for each Trading Day after such second
        Trading Day after the Share Delivery Date until such certificates are
        delivered.  Nothing herein shall limit a Holder’s right to pursue
        actual damages or declare a Triggering Event pursuant to Section 9 for the
        Corporation’s failure to deliver Conversion Shares within the period specified
        herein and such Holder shall have the right to pursue all remedies available
        to
        it hereunder, at law or in equity including, without limitation, a decree
        of
        specific performance and/or injunctive relief.  The Exercise of any
        such rights shall not prohibit a Holder from seeking to enforce damages pursuant
        to any other Section hereof or under applicable law.

       

      iii.           Compensation
        for Buy-In on Failure
        to Timely Deliver Certificates Upon Conversion.  If the Corporation
        fails
        to deliver to a Holder the applicable certificate or certificates by the
        Share
        Delivery Date pursuant to Section 6(e)(i), and if after such Share Delivery
        Date
        such Holder is required by its brokerage firm to purchase (in an open market
        transaction or otherwise), or the Holder’s brokerage firm purchases, shares of
        Common Stock to deliver in satisfaction of a sale by such Holder of the
        Conversion Shares which such Holder was entitled to receive upon the conversion
        relating to such Share Delivery Date (a “Buy-In”),
        then the Corporation shall (A) pay
        in cash to such Holder (in addition to any other remedies available to or
        elected by such Holder) the amount by which (x) such Holder’s total purchase
        price (including any brokerage commissions) for the shares of Common Stock
        so
        purchased exceeds (y) the product of (1) the aggregate number of shares of
        Common Stock that such Holder was entitled to receive from the conversion
        at
        issue multiplied by (2) the actual sale price at which the sell order giving
        rise to such purchase obligation was executed (including any brokerage
        commissions) and (B) at the option of such Holder, either reissue (if
        surrendered) the shares of Preferred Stock equal to the number of shares
        of
        Preferred Stock submitted for conversion or deliver to such Holder the number
        of
        shares of Common Stock that would have been issued if the Corporation had
        timely
        complied with its delivery requirements under Section 6(e)(i).  For
        example, if a Holder purchases shares of Common Stock having a total purchase
        price of $11,000 to cover a Buy-In with respect to an attempted conversion
        of
        shares of Preferred Stock with respect to which the actual sale price (including
        any brokerage commissions) giving rise to such purchase obligation was a
        total
        of $10,000 under clause (A) of the immediately preceding sentence, the
        Corporation shall be required to pay such Holder $1,000.  The Holder
        shall provide the Corporation written notice indicating the amounts payable
        to
        such Holder in respect of the Buy-In and, upon request of the Corporation,
        evidence of the amount of such loss.  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 Corporation’s failure to timely deliver
        certificates representing shares of Common Stock upon conversion of the shares
        of Preferred Stock as required pursuant to the terms hereof.

      

      iv.           Reservation
        of Shares Issuable Upon
        Conversion.  The Corporation
        covenants
        that it will at all times reserve and keep available out of its authorized
        and
        unissued shares of Common Stock solely for the purpose of issuance upon
        conversion of the Preferred Stock and payment of dividends for three years
        from
        any point in time on the Preferred Stock, each as herein provided, free from
        preemptive rights or any other actual contingent purchase rights of Persons
        other than the Holders, not less than such number of shares of the Common
        Stock
        as shall (subject to any additional requirements of the Corporation as to
        reservation of such shares set forth in the Purchase Agreement) be issuable
        (taking into account the adjustments and restrictions of Section 7) upon
        the
        conversion of all outstanding shares of Preferred Stock.  The
        Corporation covenants that all shares of Common Stock that shall be so issuable
        shall, upon issue, be duly and validly authorized, issued and fully paid,
        nonassessable and, if the Conversion Shares Registration Statement is then
        effective under the Securities Act, registered for public sale in accordance
        with such Conversion Shares Registration Statement.

      

      v.           Fractional
        Shares.  Upon a conversion
        hereunder, the Corporation shall not be required to issue stock certificates
        representing fractions of shares of Common Stock, but may if otherwise
        permitted, make a cash payment in respect of any final fraction of a share
        based
        on the VWAP at such time.  If the Corporation elects not, or is
        unable, to make such a cash payment, the Holders shall be entitled to receive,
        in lieu of the final fraction of a share, one whole share of Common
        Stock.

      

      vi.           Transfer
        Taxes.  The issuance of
        certificates for shares of the Common Stock on conversion of the Preferred
        Stock
        shall be made without charge to the Holders thereof for any documentary stamp
        or
        similar taxes that may be payable in respect of the issue or delivery of
        such
        certificates, provided that the Corporation shall not be required to pay
        any tax
        that may be payable in respect of any transfer involved in the issuance and
        delivery of any such certificate upon conversion in a name other than that
        of
        the Holders of such shares of Preferred Stock so converted and the Corporation
        shall not be required to issue or deliver such certificates unless or until
        the
        Person or Persons requesting the issuance thereof shall have paid to the
        Corporation the amount of such tax or shall have established to the satisfaction
        of the Corporation that such tax has been paid.

      
        8

        
          

        

      

      

      

      Section
        7.  Certain Adjustments.

      

      a)           Stock
        Dividends and Stock
        Splits.  If
        the Corporation, at any time while this Preferred Stock is outstanding: (A)
        pays
        a stock dividend or otherwise makes a distribution or distributions payable
        in
        shares of Common Stock on shares of Common Stock or any other Common Stock
        Equivalents (which, for avoidance of doubt, shall not include any shares
        of
        Common Stock issued by the Corporation upon conversion of, or payment of
        a
        dividend on, this Preferred Stock, the Series A Convertible Preferred Stock
        or
        the Series B 9% Convertible Preferred Stock); (B) subdivides outstanding
        shares
        of Common Stock into a larger number of shares; (C) combines (including by
        way
        of a reverse stock split) outstanding shares of Common Stock into a smaller
        number of shares; or (D) issues, in the event of a reclassification of shares
        of
        the Common Stock, any shares of capital stock of the Corporation, then the
        Conversion Price shall be multiplied by a fraction of which the numerator
        shall
        be the number of shares of Common Stock (excluding any treasury shares of
        the
        Corporation) outstanding immediately before such event and of which the
        denominator shall be the number of shares of Common Stock outstanding
        immediately after such event.  Any adjustment made pursuant to this
        Section 7(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, at any time while this Preferred Stock is
        outstanding, the Corporation or any Subsidiary, as applicable, sells or grants
        any option to purchase or sells or grants any right to reprice its securities,
        or otherwise disposes of or issues (or announces any 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 that is lower than the then Conversion Price (such lower price, the
        “Base Conversion Price” and such issuances collectively, a “Dilutive
        Issuance”) (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 that is lower than the Conversion Price, such issuance
        shall be deemed to have occurred for less than the Conversion Price on such
        date
        of the Dilutive Issuance), then the Conversion Price shall be reduced to
        equal
        the Base Conversion Price.  Notwithstanding the foregoing, no
        adjustment will be made under this Section 7(b) in respect of an Exempt
        Issuance.  The Corporation shall notify the Holders in writing, no
        later than the Business Day following the issuance of any Common Stock or
        Common
        Stock Equivalents subject to this Section 7(b), indicating therein the
        applicable issuance price, or 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
        Corporation provides a Dilutive Issuance Notice pursuant to this Section
        7(b),
        upon the occurrence of any Dilutive Issuance, the Holders are entitled to
        receive a number of Conversion Shares based upon the Base Conversion Price
        on or
        after the date of such Dilutive Issuance, regardless of whether a Holder
        accurately refers to the Base Conversion Price in the Notice of
        Conversion.

      

      c)           Subsequent
        Rights
        Offerings.  If the Corporation,
        at any
        time while the Preferred Stock is outstanding, shall issue rights, options
        or
        warrants to all holders of Common Stock (and not to Holders) entitling them
        to
        subscribe for or purchase shares of Common Stock at a price per share less
        than
        the VWAP at the record date mentioned below, then the Conversion Price shall
        be
        multiplied by a fraction, of which the denominator shall be the number of
        shares
        of the Common Stock outstanding on the date of issuance of such rights or
        warrants plus the number of additional shares of Common Stock offered for
        subscription or purchase, and of which the numerator shall be the number
        of
        shares of the Common Stock outstanding on the date of issuance of such rights
        or
        warrants plus the number of shares which the aggregate offering price of
        the
        total number of shares so offered (assuming receipt by the Corporation in
        full
        of all consideration payable upon exercise of such rights, options or warrants)
        would purchase at such VWAP.  Such adjustment shall be made whenever
        such rights or warrants are issued, and shall become effective immediately
        after
        the record date for the determination of stockholders entitled to receive
        such
        rights, options or warrants.

      

      d)           Pro
        Rata
        Distributions.  If the Corporation,
        at any
        time while Preferred Stock is outstanding, shall distribute to all holders
        of
        Common Stock (and not to Holders) evidences of its indebtedness or assets
        or
        rights or warrants to subscribe for or purchase any security, then in each
        such
        case the Conversion Price shall be determined by multiplying such Conversion
        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
        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.

      

      
        
           

        

        
          9

          
            

          

        

        
           

        

      

      e)           Fundamental
        Transaction.  If, at any time
        while this
        Preferred Stock is outstanding, (A) the Corporation effects any merger or
        consolidation of the Corporation with or into another Person, (B) the
        Corporation 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 Corporation 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 Corporation 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 conversion of this Preferred Stock, the Holders shall
        have
        the right to receive, for each Conversion Share that would have been issuable
        upon such conversion immediately prior to the occurrence of such Fundamental
        Transaction, the same kind and amount of securities, cash or property as
        it
        would have been entitled to receive upon the occurrence of such Fundamental
        Transaction if it had been, immediately prior to such Fundamental Transaction,
        the holder of one share of Common Stock (the “Alternate
        Consideration”).  For purposes of
        any such
        conversion, the determination of the Conversion 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 Corporation shall apportion the Conversion
        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 Holders shall be given the same choice as to the Alternate
        Consideration it receives upon any conversion of this Preferred Stock following
        such Fundamental Transaction.  To the extent necessary to effectuate
        the foregoing provisions, any successor to the Corporation or surviving entity
        in such Fundamental Transaction shall file a new Certificate of Designation
        with
        the same terms and conditions and issue to the Holders new preferred stock
        consistent with the foregoing provisions and evidencing the Holders’ right to
        convert such preferred stock 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 7(e) and insuring that this Preferred Stock
        (or
        any such replacement security) will be similarly adjusted upon any subsequent
        transaction analogous to a Fundamental Transaction.

       

      f)           Exempt
        Issuance.  Notwithstanding the foregoing, no adjustment will be
        made under this Section 7 in respect of an Exempt Issuance.

      

      g)           Calculations.  All
        calculations under
        this Section 7 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 owned or held by or
        for
        the account of the Corporation, 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 7, 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.

      

      h)           Notice
        to Holders.

      

      i.           Adjustment
        to Conversion
        Price.  Whenever the Conversion
        Price is adjusted pursuant to any provisions of this Section 7, the Corporation
        shall promptly mail to each Holder a notice setting forth the Conversion
        Price
        after such adjustment and setting forth a brief statement of the facts requiring
        such adjustment.  If the Corporation issues a variable rate security,
        despite the prohibition thereon in the Purchase Agreement (or other Securities
        Purchase Agreement if applicable to a Holder), the Corporation 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 Conversion by
        Holder.  If
        (A) the Corporation shall declare a dividend (or any other distribution)
        on the
        Common Stock; (B) the Corporation shall declare a special nonrecurring cash
        dividend on or a redemption of the Common Stock; (C) the Corporation 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 Corporation shall be
        required in connection with any reclassification of the Common Stock, any
        consolidation or merger to which the Corporation is a party, any sale or
        transfer of all or substantially all of the assets of the Corporation, of
        any
        compulsory share exchange whereby the Common Stock is converted into other
        securities, cash or property; (E) the Corporation shall authorize the voluntary
        or involuntary dissolution, liquidation or winding up of the affairs of the
        Corporation; then, in each case, the Corporation shall cause to be filed
        at each
        office or agency maintained for the purpose of conversion of the Preferred
        Stock, and shall cause to be mailed to the Holders at their last addresses
        as
        they shall appear upon the stock books of the Corporation, 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.  Holders
        are entitled to convert the Conversion Amount of Preferred Stock during the
        20-day period commencing the date of such notice to the effective date of
        the
        event triggering such notice.

      

      
        
           

        

        
          10

          
            

          

        

        
           

        

      

      Section
        8.  Forced Conversion.

       

      a)           As
        used herein, the “Forced Conversion Date” shall be the Plan Closing
        Date.

       

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

       

      c)           As
        soon as practicable after the Forced Conversion Date, the Corporation will
        send
        a notice to all Holders stating (i) the date as of which the Forced Conversion
        Date occurred, and (ii) how many shares of Common Stock the Holder’s Preferred
        Stock was converted into.

       

      Section
        9.  Redemption Upon Triggering Events.

      

      a)           “Triggering
        Event” means any one
        or more of the
        following events (whatever the reason and whether it shall be voluntary or
        involuntary or effected by operation of law or pursuant to any judgment,
        decree
        or order of any court, or any order, rule or regulation of any administrative
        or
        governmental body):

      

      i.           the
        failure of a Conversion Shares
        Registration Statement to be declared effective by the Commission on or prior
        to
        the 210th
        day after the Original Issue
        Date;

       

      ii.           if,
        during the Effectiveness Period,
        the effectiveness of the Conversion Shares Registration Statement lapses
        for any
        reason for more than an aggregate of 25 calendar days (which need not be
        consecutive days) during any 12 month period, or the Holder shall not be
        permitted to resell Registrable Securities under the Conversion Shares
        Registration Statement for more than an aggregate of 25 calendar days (which
        need not be consecutive days) during any 12 month period, and in each case
        the
        shares of Common Stock into which such Holder’s Preferred Stock can be converted
        cannot be sold in the public securities market pursuant to Rule 144(k) under
        the
        Securities Act, provided, that the cause of such lapse or unavailability
        is not
        due to factors solely within the control of such holder of Preferred
        Stock;

      

      iii.           the
        Corporation shall fail to deliver
        certificates representing Conversion Shares issuable upon a conversion hereunder
        that comply with the provisions hereof prior to the 9th
        Trading Day after such shares are
        required to be delivered hereunder, or the Corporation shall provide written
        notice to any Holder, including by way of public announcement, at any time,
        of
        its intention not to comply with requests for conversion of any shares of
        Preferred Stock in accordance with the terms hereof;

      

      iv.           one
        of the Events (as defined in the
        Registration Rights Agreement) described in subsections (i), (ii) or (iii)
        of
        Section 2(b) of the Registration Rights Agreement shall not have been cured
        to
        the satisfaction of the Holders prior to the expiration of 30 days from the
        Event Date (as defined in the Registration Rights Agreement) relating thereto
        (other than an Event resulting from a failure of a Conversion Shares
        Registration Statement to be declared effective by the Commission on or prior
        to
        the 210th day after the Original Issue Date, which shall be covered by Section
        9(a)(i));

      

      v.           the
        Corporation shall fail for any
        reason to pay in full the amount of cash due pursuant to a Buy-In within
        15 days
        after notice therefor is delivered hereunder or shall fail to pay all amounts
        owed on account of an Event within 15 days of the date due;

      

      vi.           the
        Corporation shall fail to have
        available a sufficient number of authorized and unreserved shares of Common
        Stock to issue to such Holder upon a conversion hereunder;

      

      vii.           the
        Corporation shall fail to observe
        or perform any other covenant, agreement or warranty contained in, or otherwise
        commit any breach of the Transaction Documents, and such failure or breach
        shall
        not, if subject to the possibility of a cure by the Corporation, have been
        remedied within 30 calendar days after the date on which written notice of
        such
        failure or breach shall have been given;

      

      
        
           

        

        
          11

          
            

          

        

        
           

        

      

      viii.           the
        Corporation shall redeem more than
        a de minimis
        number of Junior Securities other than
        as to repurchases of Common Stock or Common Stock Equivalents from departing
        officers and directors of the Corporation, provided that, while any of the
        Preferred Stock remains outstanding, such repurchases shall not exceed an
        aggregate of $100,000 from all officers and directors;

      

      ix.           the
        Corporation shall be party to a
        Change of Control Transaction;

      

      x.           there
        shall have occurred a Bankruptcy
        Event; or

      

      xi.           the
        Common Stock shall fail to be
        listed or quoted for trading on a Trading Market for more than 7 Trading
        Days,
        which need not be consecutive Trading Days.

      

      b)           Upon
        the occurrence of a Triggering
        Event, each Holder shall (in addition to all other rights it may have hereunder
        or under applicable law) have the right, exercisable at the sole option of
        such
        Holder, to require the Corporation to redeem all of the Preferred Stock then
        held by such Holder for a redemption price, in cash, equal to the Triggering
        Redemption Amount.  The Triggering Redemption Amount shall be due and
        payable within 5 Trading Days of the date on which the notice for the payment
        therefor is provided by a Holder (the “Triggering Redemption
        Payment
        Date”).  If
        the Corporation fails to pay the Triggering Redemption Amount hereunder in
        full
        pursuant to this Section on the date such amount is due in accordance with
        this
        Section, the Corporation will pay interest thereon at a rate of 18% per annum
        (or such lesser amount permitted by applicable law), accruing daily from
        such
        date until the Triggering Redemption Amount, plus all such interest thereon,
        is
        paid in full.  For purposes of this Section, a share of Preferred
        Stock is outstanding until such date as the Holder shall have received
        Conversion Shares upon a conversion (or attempted conversion) thereof that
        meets
        the requirements hereof or has been paid the Triggering Redemption Amount
        plus
        all accrued but unpaid dividends and all accrued but unpaid liquidated damages
        in cash.

       

      Section
        10.  Miscellaneous.

      

      a)           No
        Debt.  So long as at
        least 5 shares of
        Preferred Stock are outstanding, the Corporation will not and will not permit
        any of its Subsidiaries to directly or indirectly enter into, create, incur,
        assume or suffer to exist (or allow any of its Subsidiaries to do so) any
        indebtedness or liens of any kind on or with respect to any of its property
        or
        assets now owned or hereafter acquired or any interest therein or any income
        or
        profits therefrom, other than (1) accounts payable, equipment leases, other
        current payables and other accrued liabilities incurred in connection with
        short-term operating liabilities, (2) accrued interest on the Corporation’s
        existing indebtedness as set forth on Schedule 10 hereto, and (3) up to
        $2,000,000 for non-equity linked debt financing.

      

      b)           Notices.  Any
        and all notices or
        other communications or deliveries to be provided by the Holders hereunder,
        including, without limitation, any Notice of Conversion, shall be in writing
        and
        delivered personally, by facsimile, sent by a nationally recognized overnight
        courier service, addressed to the Corporation, at the address set forth above,
        facsimile number 631-924-6033,
        Attn: Chief
        Financial Officer, Richard Larkin such other
        address or facsimile number
        as the Corporation may specify for such purposes by notice to the Holders
        delivered in accordance with this Section.  Any and all notices or
        other communications or deliveries to be provided by the Corporation hereunder
        shall be in writing and delivered personally, by facsimile, sent by a nationally
        recognized overnight courier service addressed to each Holder at the facsimile
        telephone number or address of such Holder appearing on the books of the
        Corporation, or if no such facsimile telephone number or address appears,
        at the
        principal place of business of the Holder.  Any notice or other
        communication or deliveries hereunder shall be deemed given and effective
        on the
        earliest of (i) the date of transmission, if such notice or communication
        is
        delivered via facsimile at the facsimile telephone number specified in this
        Section prior to 5:30 p.m. (New York City time), (ii) the date after the
        date of
        transmission, if such notice or communication is delivered via facsimile
        at the
        facsimile telephone number specified in this Section later than 5:30 p.m.
        (New
        York City time) on any date and earlier than 11:59 p.m. (New York City time)
        on
        such date, (iii) the second Business Day following the date of mailing, if
        sent
        by nationally recognized overnight courier service, or (iv) upon actual receipt
        by the party to whom such notice is required to be given.

      

      c)           Absolute
        Obligation.  Except as expressly
        provided herein, no provision of this Certificate of Designation shall alter
        or
        impair the obligation of the Corporation, which is absolute and unconditional,
        to pay the liquidated damages (if any) on, the shares of Preferred Stock
        at the
        time, place, and rate, and in the coin or currency, herein
        prescribed.

      

      d)           Lost
        or Mutilated Preferred Stock
        Certificate.  If a Holder’s Preferred
        Stock certificate shall be mutilated, lost, stolen or destroyed, the Corporation
        shall execute and deliver, in exchange and substitution for and upon
        cancellation of a mutilated certificate, or in lieu of or in substitution
        for a
        lost, stolen or destroyed certificate, a new certificate for the shares of
        Preferred Stock so mutilated, lost, stolen or destroyed but only upon receipt
        of
        evidence of such loss, theft or destruction of such certificate, and of the
        ownership hereof, and indemnity, if requested, all reasonably satisfactory
        to
        the Corporation.

      

      
        
           

        

        
          12

          
            

          

        

        
           

        

      

      e)           Governing
        Law.  All questions
        concerning
        the construction, validity, enforcement and interpretation of this Certificate
        of Designation shall be governed by and construed and enforced in accordance
        with the internal laws of the State of New York, without regard to the
        principles of conflicts of law thereof.  Each party agrees that all
        legal proceedings concerning the interpretations, enforcement and defense
        of the
        transactions contemplated by any of the Transaction Documents (whether brought
        against a party hereto or its respective affiliates, directors, officers,
        shareholders, employees or agents) shall be commenced in the state and federal
        courts sitting in the City of New York, Borough of Manhattan (the “New York Courts”).  Each
        party hereto hereby
        irrevocably submits to the exclusive jurisdiction of the New York Courts
        for the
        adjudication of any dispute hereunder or in connection herewith or with any
        transaction contemplated hereby or discussed herein (including with respect
        to
        the enforcement of any of the Transaction Documents), and hereby irrevocably
        waives, and agrees not to assert in any suit, action or proceeding, any claim
        that it is not personally subject to the jurisdiction of any such court,
        or such
        New York Courts are improper or inconvenient venue for such
        proceeding.  Each party hereby irrevocably waives personal service of
        process and consents to process being served in any such suit, action or
        proceeding by mailing a copy thereof via registered or certified mail or
        overnight delivery (with evidence of delivery) to such party at the address
        in
        effect for notices to it under this Certificate of Designation and agrees
        that
        such service shall constitute good and sufficient service of process and
        notice
        thereof.  Nothing contained herein shall be deemed to limit in any way
        any right to serve process in any manner permitted by law.  Each party
        hereto hereby irrevocably waives, to the fullest extent permitted by applicable
        law, any and all right to trial by jury in any legal proceeding arising out
        of
        or relating to this Certificate of Designation or the transactions contemplated
        hereby.  If either party shall commence an action or proceeding to
        enforce any provisions of this Certificate of Designation, then the prevailing
        party in such action or proceeding shall be reimbursed by the other party
        for
        its attorneys fees and other costs and expenses incurred with the investigation,
        preparation and prosecution of such action or proceeding.

      

      f)           Waiver.  Any
        waiver by the
        Corporation or the Holder of a breach of any provision of this Certificate
        of
        Designation shall not operate as or be construed to be a waiver of any other
        breach of such provision or of any breach of any other provision of this
        Certificate of Designation.  The failure of the Corporation or the
        Holder to insist upon strict adherence to any term of this Certificate of
        Designation on one or more occasions shall not be considered a waiver or
        deprive
        that party of the right thereafter to insist upon strict adherence to that
        term
        or any other term of this Certificate of Designation.  Any waiver must
        be in writing.

      

      g)           Severability.  If
        any provision of this
        Certificate of Designation is invalid, illegal or unenforceable, the balance
        of
        this Certificate of Designation shall remain in effect, and if any provision
        is
        inapplicable to any Person or circumstance, it shall nevertheless remain
        applicable to all other Persons and circumstances.  If it shall be
        found that any interest or other amount deemed interest due hereunder violates
        applicable laws governing usury, the applicable rate of interest due hereunder
        shall automatically be lowered to equal the maximum permitted rate of
        interest.

      

      h)           Next
        Business Day.  Whenever any payment
        or
        other obligation hereunder shall be due on a day other than a Business Day,
        such
        payment shall be made on the next succeeding Business Day.

      

      i)           Headings.  The
        headings contained
        herein are for convenience only, do not constitute a part of this Certificate
        of
        Designation and shall not be deemed to limit or affect any of the provisions
        hereof.

      

      j)           Status
        of Converted or Redeemed
        Preferred Stock.  Shares of Preferred
        Stock
        may only be issued if permitted pursuant to the Purchase
        Agreement.  If any shares of Preferred Stock shall be converted,
        redeemed or reacquired by the Corporation, such shares shall resume the status
        of authorized but unissued shares of preferred stock and shall no longer
        be
        designated as Series C 7% Convertible Preferred Stock.

      

      
        
           

        

        
          13

          
            

          

        

        
           

        

      

      

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

      

      RESOLVED,
        FURTHER, that the Chairman, the president or any vice-president, the Chief
        Financial Officer and the secretary or any assistant secretary, of the
        Corporation be and they hereby are authorized and directed to prepare and
        file a
        Restated and Amended Certificate of Designation of Preferences, Rights and
        Limitations in accordance with the foregoing resolution and the provisions
        of
        the Nevada Revised Statutes.

      

      IN
        WITNESS WHEREOF, the undersigned have executed this Certificate this 19th
        day of
        December, 2007.

      

      __________________________

      Richard
        J. Larkin

      Title:
        Chief Financial Officer

      
        
           

        

        
          14

          
            

          

        

        
           

        

      

      

      
        
          

        

      

      ANNEX
        A

      

      NOTICE
        OF
        CONVERSION

      

      (TO
        BE
        EXECUTED BY THE REGISTERED HOLDER IN ORDER TO CONVERT SHARES OF PREFERRED
        STOCK)

      

      The
        undersigned hereby elects to convert the number of shares of Series C 7%
        Convertible Preferred Stock indicated below, into shares of common stock,
        par
        value $0.01 per share (the “Common Stock”), of Chembio Diagnostics, Inc.,
        a Nevada corporation (the “Corporation”), according to the conditions
        hereof, as of the date written below.  If shares are to be issued in
        the name of a Person other than undersigned, the undersigned will pay all
        transfer taxes payable with respect thereto and is delivering herewith such
        certificates and opinions as reasonably requested by the Corporation in
        accordance therewith.  No fee will be charged to the Holder for any
        conversion, except for such transfer taxes, if any.

      

      Conversion
        calculations:

      

      
        	
                Date
                  to Effect Conversion:
                  _____________________________________________

              
	
                Number
                  of shares of Preferred Stock owned prior to Conversion:
                  _______________

              
	
                Number
                  of shares of Preferred Stock to be Converted:
                  ________________________

              
	
                Stated
                  Value of shares of Preferred Stock to be Converted:
                  ____________________

              
	
                Number
                  of shares of Common Stock to be Issued:
                  ___________________________

              
	
                Applicable
                  Conversion
                  Price:____________________________________________

              
	
                Number
                  of shares of Preferred Stock subsequent to Conversion:
                  ________________

              
	
                 

                [HOLDER]

                 

                By:___________________________________

                Name:

                Title:ex99_4.htm

    
      

    

    
      

    

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

      

      WARRANT
        TO PURCHASE

      

      SHARES
        OF
        COMMON STOCK

      

      OF

      

      CHEMBIO
        DIAGNOSTICS, INC.

      

      Expires
        May 5, 2009

      

      

      
        	
                No.:  _____________

              	
                Number
                  of Shares:  ______________

              
	
                Original
                  Date of Issuance: May 5,
                  2004

              	
                Reissuance
                  Date:  December 19,
                  2007

              

      

      

      

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

       

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

       

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

       

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

       

      (b)           Method
        of Exercise.

       

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

       

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

       

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

       

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

       

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

       

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

       

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

       

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

       

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

       

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

       

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

       

      (f)           Compliance
        with Securities Laws.

       

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

       

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

       

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

       

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

       

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

       

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

       

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

       

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

       

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

       

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

       

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

       

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

       

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

       

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

       

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

       

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

       

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

       

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

       

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

       

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

       

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

       

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

       

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

       

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

       

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

       

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

       

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

       

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

       

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

       

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

       

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

       

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

       

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

       

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

       

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

       

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

       

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

       

      7.           Ownership
        Cap and Certain Exercise Restrictions.

       

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

       

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

       

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

       

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

       

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

       

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

       

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

       

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

       

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

       

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

       

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

       

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

       

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

       

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

       

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

       

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

       

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

       

      “Original
        Issue Date” means May 5, 2004.

       

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

       

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

       

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

       

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

       

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

       

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

       

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

       

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

       

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

       

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

       

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

       

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

       

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

       

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

       

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

       

      
        	
                 

              	
                (i)

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

              

      

       

      
        	
                 

              	
                (ii)

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

              

      

       

      
        	
                 

              	
                (iii)

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

              

      

       

      
        	
                 

              	
                (iv)

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

              

      

       

      
        	
                 

              	
                (v)

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

              

      

       

       

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

       

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

       

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

       

      10.           Other
        Notices.  In case at any time:

       

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

       

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

       

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

       

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

       

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

       

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

       

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

       

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

       

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

       

      Chembio
        Diagnostics, Inc.

      3661
        Horseblock Road

      Medford,
        NY 11763

      Attention:  Lawrence
        A. Siebert, President

      Tel.
        No.:  (631) 924-1135

      Fax
        No.:  (631) 924-6033

       

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

       

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

       

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

       

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

       

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

       

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

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

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

      

      

      CHEMBIO
        DIAGNOSTICS, INC.

      

      

      By:                                                                

      Name:                      Lawrence
        A. Siebert

      Title:                      President

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

      
        	
                No.:  _____________

              	
                Number
                  of Shares:  _____________

              
	
                Original
                  Date of Issuance:  May 5,
                  2009

              	
                Reissuance
                  Date:  December 19,
                  2007

              

      

      

       

      EXERCISE
        FORM

      

      CHEMBIO
        DIAGNOSTICS, INC.

      

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

      

      Dated:  _________________

      Signature

      ___________________________

      

      Address

      _____________________

      _____________________

      

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

      

      ASSIGNMENT

      

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

      

      Dated:  _________________

      Signature

      ___________________________

      

      Address

      _____________________

      _____________________

      

       

      
        	
                No.:  _____________

              	
                Number
                  of Shares:  _____________

              
	
                Original
                  Date of Issuance:  May 5,
                  2009

              	
                Reissuance
                  Date:  December 19,
                  2007

              

      

       

      PARTIAL
        ASSIGNMENT

      

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

      

      Dated:  _________________

      Signature

      ___________________________

      

      Address

      _____________________

      _____________________

      

      FOR
        USE
        BY THE ISSUER ONLY:

      

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

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