CHEMBIO LETTERHEAD]
Exhibit
10.2 Letter Agreement
[CHEMBIO
LETTERHEAD]
March
28,
2006
Mr.
Xxxxxx Xxxx
Crestview
Capital Master, LLC
Re: Securities
Purchase Agreement dated as of January 26, 2005 among Chembio Diagnostics,
Inc.
(“Chembio”), Crestview Capital Master, LLC (“Crestview”), and other purchasers
(the “Agreement”)
Dear
Xxx:
The
purpose of this letter is to confirm our understandings regarding the purchase
by Crestview of additional securities of Chembio pursuant to the Agreement.
Capitalized terms in this letter that are not otherwise defined herein have
the
same meanings given to such terms in the Agreement. A First Closing was held
in
2005 in which Crestview purchased $3,000,000 of Preferred Stock and Warrants.
Pursuant to Section 2.1(b) of the Agreement, Crestview is obligated to purchase
an additional $1,000,000 of Preferred Stock and Warrants in a Second Closing
upon notice from Chembio that Chembio, as of any fiscal quarter of 2005:
(1)
achieved at least $5,000,000 in aggregate contract revenues; and (2) has
annualized growth profits of at least $2,250,000. This will confirm that
Chembio
and Crestview have agreed that these conditions have been satisfied and that
Crestview is aware of the rationale used by Chembio in the calculations as
set
forth in Exhibit A.
The
shares of Common Stock underlying the Preferred Stock and the Warrants to
be
issued to you in connection with this transaction are entitled to registration
rights pursuant to a Registration Rights Agreement entered into in connection
with the Agreement. In connection with this Second Closing, and in order
to
avoid a costly and detrimental expense at this time, we ask that you waive
all
registration rights relating to the securities purchased in this Second Closing.
We plan to complete a new round of financing within the next few months,
and we
will include (piggyback) the resale of the Common Stock underlying the Preferred
Stock and Warrants purchased by you in the Second Closing in our next
registration statement.
In
connection with this Second Closing, you also confirm that Crestview has
had the
opportunity to: (i) discuss Chembio’s business, management and financial affairs
with management of Chembio; (2) ask questions of, and receive answers from,
management of Chembio regarding the terms and conditions of this investment;
and
(3) review all reports filed by Chembio with the SEC since January
2005.
We
also
appreciate your agreement to close this transaction on March 29, 2006. Upon
receipt of a signed copy of this letter from Crestview and a wire payment
to us
in the amount of $1,000,000 (wire instructions are attached in Schedule A),
we
will cause to be registered in the name of Crestview and delivered to Crestview:
(1) a stock certificate representing 20 shares of Preferred Stock, and (2)
a
warrant certificate in the form set forth in the Agreement, representing
a
warrant to purchase 1,557,377 shares of Common Stock at an exercise price
of
$.61 per share for a period of five years.
Should
you have any questions regarding this matter, please contact us. We appreciate
your cooperation in promptly completing this transaction.
Very
Truly Yours,
By:__________________________
Xxxxxxx
X. Xxxxxx, Chief Financial Officer
AGREED
AND ACKNOWLEDGED:
CRESTVIEW
CAPITAL MASTER, LLC
By:_______________________________
Xxxxxx
Xxxx, Authorized Signatory
Dated
as
of March 28, 2006