CERTIFICATE OF CORRECTION

CERTIFICATE OF DESIGNATIONS, PREFERENCES AND RIGHTS
OF
SERIES A 5% CONVERTIBLE PREFERRED STOCK
OF
BIOMERICA, INC.

Biomerica, Inc. (the “Company”), a corporation organized and existing under the laws of the State of Delaware, hereby certifies that a Certificate of Designation, Preferences and Rights of Series A 5% Convertible Preferred Stock of the Company (the “Certificate of Designation”) was filed with the Secretary of State of the State of Delaware on February 24, 2020, and the Certificate of Designation requires correction as permitted by Section 103 of the General Corporation Law of the State of Delaware.

1. The defects of said Certificate of Designation to be corrected are as follows:

(a) The second to last sentence of Section 4(a) of the Certificate of Designation inadvertently omitted the word “Series A Preferred Stock” when describing the ratable sharing of distributions of the assets available for distribution to the stockholders of the Company, if the assets of the Company available for distribution to its stockholders are insufficient to pay the holders of shares of Series A Preferred Stock the full amount to which they are entitled under Section 4(a).

Section 4(a) of the Certificate of Designation inadvertently included the following:

“If the assets of the Company available for distribution to its stockholders are insufficient to pay the holders of shares of Series A Preferred Stock the full amount to which they are entitled under this Section 4(a), the holders of shares of Series A Preferred Stock shall share ratably in any distribution of the assets available for distribution in proportion to the respective amounts which would otherwise be payable in respect of the shares held by them upon such distribution if all amounts payable on or with respect to such shares were paid in full.”

Section 4(a) of the Certificate of Designation should include the following:

“If the assets of the Company available for distribution to its stockholders are insufficient to pay the holders of shares of Series A Preferred Stock the full amount to which they are entitled under this Section 4(a), the holders of shares of Series A Preferred Stock shall share ratably in any distribution of the assets available for distribution in proportion to the respective amounts which would otherwise be payable in respect of the shares of Series A Preferred Stock held by them upon such distribution if all amounts payable on or with respect to such shares of Series A Preferred Stock were paid in full.”

(b) (i) Clause (B) of the second to last sentence of Section 5(e)(vi) and the last sentence of Section 5(e)(vi) described the exception for anti-dilution adjustments for issuances of Additional Shares of Common Stock at a price per share less than the Conversion Price, or without consideration, as an aggregate amount of $2,000,000 of Additional Shares of Common Stock, rather than a cumulative amount of $2,000,000 of Additional Shares of Common Stock, and (ii) the last sentence of Section 5(e)(vi) inadvertently omitted the words “following the Issuance Date” when describing the issuances of Additional Shares of Common Stock, at a price per share less than the Conversion Price, or without consideration, in excess of a cumulative amount of $2,000,000, that would trigger an anti-dilution adjustment in accordance with Section 5(e)(vi).

Section 5(e)(vi) of the Certificate of Designation inadvertently included the following:

“No adjustment to the Conversion Price is required under Section 5(e)(vi):…(B) in respect of sales of Additional Shares of Common Stock resulting in an aggregate of or less than $2,000,000 in cash proceeds to the Company... If the Company sells Additional Shares of Common Stock resulting in an aggregate of more than $2,000,000 in cash proceeds to the Company, an adjustment to the number of shares of Common Stock is required under Section 5(e)(vi) in respect of the Additional Shares of Common Stock resulting from the aggregate cash proceeds to the Company in excess of $2,000,000 as reasonably determined based on the time such securities are sold.”

Section 5(e)(vi) of the Certificate of Designation should include:

“No adjustment to the Conversion Price is required under Section 5(e)(vi):…(B) in respect of sales of Additional Shares of Common Stock resulting in a cumulative amount of $2,000,000 or less in cash proceeds to the Company... If the Company sells Additional Shares of Common Stock following the Issuance Date resulting in a cumulative amount of more than $2,000,000 in cash proceeds to the Company, an adjustment to the number of shares of Common Stock is required under Section 5(e)(vi) in respect of the Additional Shares of Common Stock resulting from cumulative cash proceeds to the Company in excess of $2,000,000 as reasonably determined based on the time such securities are sold.”

2. That the Certificate of Designation should be corrected to read in its entirety as follows on Exhibit A, attached hereto.

Signed, effective as of February 26, 2020.

Biomerica, Inc.

By: /s/ Zackary Irani

Name: Zackary Irani
Title: Chief Executive Officer

Exhibit A

Certificate of Designation

CERTIFICATE OF DESIGNATIONS, PREFERENCES AND RIGHTS
OF
SERIES A 5% CONVERTIBLE PREFERRED STOCK
OF
BIOMERICA, INC.

Pursuant to Section 151 of the
Delaware General Corporation Law

Biomerica, Inc. (the “Company”), a corporation organized and existing under the laws of the State of Delaware, hereby certifies that pursuant to the provisions of Section 151 of the Delaware General Corporation Law, its Board of Directors adopted the following resolution, which resolution remains in full force and effect as of the date hereof:

WHEREAS, the Board of Directors of the Company (the “Board”) is authorized, within the limitations and restrictions stated in the Certificate of Incorporation of the Company (the “Certificate of Incorporation”), to fix by resolution or resolutions the designation of preferred stock and the powers, preferences and relative participating, optional or other special rights and qualifications, limitations or restrictions thereof, including, without limiting the generality of the foregoing, such provisions as may be desired concerning voting, redemption, dividends, dissolution or the distribution of assets, conversion or exchange, and such other subjects or matters as may be fixed by resolution or resolutions of the Board under the Delaware General Corporation Law;

WHEREAS, the Certificate of Incorporation of the Company authorizes 5,000,000 shares of preferred stock, $0.08 par value per share (the “Preferred Stock”); and

WHEREAS, it is the desire of the Board to establish and fix the number of shares to be included in a new series of Preferred Stock and the designation, rights, preferences, and limitations of the shares of such new series.

NOW, THEREFORE, BE IT RESOLVED, that the Board does hereby provide for the issue of a series of Preferred Stock and does hereby in this Certificate of Designation (the “Certificate of Designation”) establish and fix and herein state and express the designation, rights, preferences, powers, restrictions, and limitations of such series of Preferred Stock as follows:

1. Designation and Rank. There is a series of Preferred Stock that is designated as “Series A 5% Convertible Preferred Stock” (the “Series A Preferred Stock”) and the number of Shares constituting such series is 571,429. The Series A Preferred Stock rank senior to the Company’s common stock, par value $0.08 per share (the “Common Stock”), and to all other classes and series of equity securities of the Company that by their terms do not rank senior to or on parity with the Series A Preferred Stock. The rights, preferences, powers, restrictions, and limitations of the Series A Preferred Stock are as set forth herein.

2. Dividends. From and after the date of the issuance of any shares of Series A Preferred Stock (the “Issuance Date”), dividends at the rate per annum of $0.175 per share accrue on such shares of Series A Preferred Stock (subject to appropriate adjustment in the event of any stock dividend, stock split, combination or other similar recapitalization with respect to the Series A Preferred Stock) (the “Accruing Dividends”). Accruing Dividends accrue from day to day following the respective Issuance Date, whether or not declared, and are cumulative; provided, however, that except as set forth in the following sentence of this Section 2 or Section 4, such Accruing Dividends are payable only when, as, and if declared by the Board and the Company has no obligation to pay such Accruing Dividends. The Company shall not declare, pay or set aside any dividends on shares of any other class or series of capital stock of the Company (other than dividends on shares of Common Stock payable in shares of Common Stock) unless (in addition to the obtaining of any consents required elsewhere in this Certificate of Designations) the holders of the Series A Preferred Stock then outstanding shall first receive, or simultaneously receive, a dividend on each outstanding share of Series A Preferred Stock in an amount at least equal to the greater of (i) the amount of the aggregate Accruing Dividends then accrued on such share of Series A Preferred Stock and not previously paid and (ii) (A) in the case of a dividend on Common Stock or any class or series that is convertible into Common Stock, that dividend per share of Series A Preferred Stock as would equal the product of (1) the dividend payable on each share of such class or series determined, if applicable, as if all shares of such class or series had been converted into Common Stock and (2) the number of shares of Common Stock issuable upon conversion of a share of Series A Preferred Stock, in each case calculated on the record date for determination of holders entitled to receive such dividend or (B) in the case of a dividend on any class or series that is not convertible into Common Stock, at a rate per share of Series A Preferred Stock determined by (1) dividing the amount of the dividend payable on each share of such class or series of capital stock by the original issuance price of such class or series of capital stock (subject to appropriate adjustment in the event of any stock dividend, stock split, combination or other similar recapitalization with respect to such class or series) and (2) multiplying such fraction by an amount equal to the Series A Original Issue Price (as defined below); provided that if the Company declares, pays or sets aside, on the same date, a dividend on shares of more than one class or series of capital stock of the Company, the dividend payable to the holders of Series A Preferred Stock pursuant to this Section 2 is calculated based upon the dividend on the class or series of capital stock that would result in the highest Series A Preferred Stock dividend. The “Series A Original Issue Price” means $3.50 per share, subject to appropriate adjustment in the event of any stock dividend, stock split, combination, or other similar recapitalization with respect to the Series A Preferred Stock.

3. Voting Rights.

(a) Class Voting Rights. So long as any shares of the Series A Preferred Stock remain outstanding, the Company shall not, without the affirmative vote or consent of the holders of at least a majority of the shares of the Series A Preferred Stock outstanding at the time, given in person or by proxy, either in writing or at a meeting, in which the holders of the Series A Preferred Stock vote separately as a class, do any of the following:

(i) alter, amend, or change any rights, preferences, or privileges of the Series A Preferred Stock;

(ii) amend the Company’s Certificate of Incorporation or Bylaws in any manner that would impair or reduce the rights of the Series A Preferred Stock;

(iii) amend, alter, or repeal any provision of this Certificate of Designations;

(iv) for a period of three years following the Issuance Date, create, or authorize the creation of, or issue or obligate itself to issue shares of, any additional class or series of capital stock unless the same ranks junior to the Series A Preferred Stock with respect to the distribution of assets on the liquidation, dissolution or winding up of the Company, the payment of dividends and rights of redemption, or increase the authorized number of shares of Series A Preferred Stock or increase the authorized number of shares of any additional class or series of capital stock of the Company unless the same ranks junior to the Series A Preferred Stock with respect to the distribution of assets on the liquidation, dissolution or winding up of the Company, the payment of dividends and rights of redemption;

(v) for a period of three years following the Issuance Date, (A) reclassify, alter or amend any existing security of the Company that is pari passu with the Series A Preferred Stock in respect of the distribution of assets on the liquidation, dissolution or winding up of the Company, the payment of dividends or rights of redemption, if such reclassification, alteration or amendment would render such other security senior to the Series A Preferred Stock in respect of any such right, preference, or privilege or (B) reclassify, alter or amend any existing security of the Company that is junior to the Series A Preferred Stock in respect of the distribution of assets on the liquidation, dissolution or winding up of the Company, the payment of dividends or rights of redemption, if such reclassification, alteration or amendment would render such other security senior to or pari passu with the Series A Preferred Stock in respect of any such right, preference or privilege; or

(vi) purchase or redeem (or permit any subsidiary to purchase or redeem) or pay or declare any dividend or make any distribution on, any shares of capital stock of the Company other than (A) redemptions of or dividends or distributions on the Series A Preferred Stock as expressly authorized herein, and (B) repurchases of stock from former employees, officers, directors, consultants or other persons who performed services for the Company or any subsidiary in connection with the cessation of such employment or service at the lower of the original purchase price or the then-current fair market value thereof.

(b) Notwithstanding the foregoing, in the event that any holder of shares of Series A Preferred Stock has elected, pursuant to Section 6.1(b) of the Stock Purchase Agreement, dated as of February 21, 2020, by and among the Company and the Purchasers party thereto (the “Stock Purchase Agreement”), to restrict its receipt of Confidential Information (as defined in the Stock Purchase Agreement), and the exercise by such holder of such holder’s right to vote or consent with respect to a matter pursuant to Section 3(a) would necessitate disclosure of Confidential Information by the Company to the holder, then the holder is deemed to have waived such right with respect to such matter, and for purposes of determining whether any such vote or consent has been approved, the Series A Preferred Stock held by such holder is deemed not to be outstanding with respect to such vote or consent.

(c) General Voting Rights. Except (i) with respect to transactions upon which the Series A Preferred Stock is entitled to vote separately pursuant to Section 3(a) above and (ii) as otherwise required by the Delaware General Corporation Law, the Series A Preferred Stock is non-voting.

4. Liquidation Preference.

(a) Payment. In the event of the liquidation, dissolution or winding up of the affairs of the Company, whether voluntary or involuntary, the holders of shares of Series A Preferred Stock then outstanding are entitled to receive, out of the assets of the Company available for distribution to its stockholders, before any payment is made or any assets distributed to the holders of the Common Stock or any other class or series of Preferred Stock that is junior to the Series A Preferred Stock (“Junior Stock”), an amount (the “***Liquidation* *Preference Amount***”) per share of the Series A Preferred Stock equal to (i) the Series A Original Issue Price plus (ii) the Accruing Dividends (provided, however, if the date of such liquidation is prior to the two (2) year anniversary date of the Issuance Date, then the Accruing Dividends are deemed to be $0.35 per share (i.e., two (2) years’ worth of Accruing Dividends)). Subject to Section 4(b), if the Liquidation Preference Amount has been paid in full to all holders of Series A Preferred Stock, the holders of other stock of the Company shall be entitled to receive all remaining assets of the Company (or proceeds thereof) according to their respective rights and preferences. If the assets of the Company available for distribution to its stockholders are insufficient to pay the holders of shares of Series A Preferred Stock the full amount to which they are entitled under this Section 4(a), the holders of shares of Series A Preferred Stock shall share ratably in any distribution of the assets available for distribution in proportion to the respective amounts which would otherwise be payable in respect of the shares of Series A Preferred Stock held by them upon such distribution if all amounts payable on or with respect to such shares of Series A Preferred Stock were paid in full. All payments for which this Section 4(a) provides shall be in cash, property or a combination thereof.

(b) Certain Events Deemed a Liquidation; Election as to Consideration. Upon the consent of the Board, a consolidation or merger of the Company with or into any other corporation or corporations, or a sale, exclusive license or other disposition of all or substantially all of the assets of the Company, or the effectuation by the Company of a transaction or series of related transactions in which, following such transaction(s), the holders of the outstanding voting power of the Company prior to the transaction(s) cease to hold, directly or indirectly, a majority of the outstanding voting power of the surviving entity, is deemed to be a liquidation, dissolution, or winding up within the meaning of this Section 4 (a “Deemed Liquidation Event”). Notwithstanding anything to the contrary herein, including Section 4(a), in the event of the occurrence of a Deemed Liquidation Event, each holder of Series A Preferred Stock has the option to receive (i) an amount equal to the Liquidation Preference Amount or (ii) the amount that such holder would have received if it had converted its Series A Preferred Stock into Common Stock immediately prior to the closing of such transaction (without giving effect to the liquidation preference of, or any dividends payable on, any other capital stock of the Company).

(c) Notice. The Company shall give written notice of any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Company within the meaning of this Section 4, stating a payment date and the place where the distributable amounts are payable, by mail, postage prepaid, no less than 20 days prior to the payment date stated therein, or 10 days prior to the stockholder meeting to approve the relevant transaction, whichever is earlier, to the holders of record of the Series A Preferred Stock at their respective addresses as the same shall appear on the books of the Company.

(d) Surrender of Certificates. On the effective date of any liquidation, dissolution or winding up within the meaning of this Section 4, the Company shall pay cash and/or such other consideration to which the holders of shares of Series A Preferred Stock are entitled under this Section 4. Each holder of shares of Series A Preferred Stock shall surrender the certificate or certificates representing such shares, duly assigned or endorsed for transfer to the Company (or accompanied by duly executed stock powers relating thereto), at the principal executive office of the Company or the offices of the transfer agent for the Company, or shall notify the Company or any transfer agent that such certificates have been lost, stolen or destroyed and shall execute an affidavit or agreement reasonably satisfactory to the Company to indemnify the Company from any loss incurred by it in connection therewith (an “Affidavit of Loss”), whereupon the Company shall cancel and retire each surrendered certificate.

(e) Allocation of Consideration. The amount deemed paid or distributed to the holders of capital stock of the Company upon any such involuntary liquidation, dissolution or winding up of the affairs of the Company within the meaning of this Section 4 shall be the cash or the value of the property, rights or securities to be paid or distributed to such holders pursuant to such event. The value of such property, rights or securities shall be determined in good faith by the Board upon any such involuntary liquidation, dissolution or winding up of the affairs of the Company within the meaning of this Section 4. If any portion of the consideration payable to the stockholders of the Company in connection with a transaction described in the foregoing sentence is payable only upon satisfaction of contingencies (the “Additional Consideration”), (i) the portion of such consideration that is not Additional Consideration (such portion, the “Initial Consideration”) shall be allocated among the holders of capital stock of the Company in accordance with Sections 4(a) as if the Initial Consideration were the only consideration payable in connection with such transaction; and (b) any Additional Consideration which becomes payable to the stockholders of the Company upon satisfaction of such contingencies shall be allocated among the holders of capital stock of the Company in accordance with Section 4(a) after taking into account the previous payment of the Initial Consideration as part of the same transaction. Consideration placed into escrow or retained as a holdback to be available for satisfaction of indemnification or similar obligations in connection with such transaction shall be deemed to be Additional Consideration.

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

(a) Right to Convert. At any time on or after the Issuance Date, the holder of any shares of Series A Preferred Stock may, at such holder’s option, elect to convert (a “Voluntary Conversion”) all or any portion of the shares (in minimum amounts of 100,000 and integral multiples thereof, or such lesser amount as the holder then holds) of Series A Preferred Stock held by such person into fully paid and nonassessable shares of Common Stock. Each share of Series A Preferred Stock to be converted shall convert into a number of shares of Common Stock equal to the quotient of (i) the Series A Original Issue Price, divided by (ii) the Conversion Price (as defined in Section 5(d) below) then in effect as of the date of the delivery by such holder of its notice of election to convert. In the event of a liquidation, dissolution or winding up of the Company, the Conversion Rights shall terminate at the close of business on the last full day preceding the date fixed for the payment of any such amounts distributable on such event to the holders of Series A Preferred Stock; provided, however, the shares of Series A Preferred Stock are considered to be convertible for purposes of clause (ii) of the last sentence of Section 4(b). In the event of such a liquidation, dissolution or winding up, the Company shall provide to each holder of shares of Series A Preferred Stock notice of such liquidation, dissolution or winding up, which notice the Company shall send at least 10 days prior to the termination of the Conversion Rights and (ii) state the amount per share of Series A Preferred Stock that will be paid or distributed on such liquidation, dissolution or winding up, as the case may be.

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

(i) (i) Holder’s Delivery Requirements. To convert Series A Preferred Stock into full shares of Common Stock on any date (the “Voluntary Conversion Date”), the holder thereof shall (A) transmit by email (or otherwise deliver as permitted by Section 5(i)), for receipt on or prior to 5:00 p.m., New York time, on such date, a copy of a fully-executed notice of conversion in the form attached hereto as Exhibit I (the “Conversion Notice”), to the Company at 17571 Von Karman Avenue, Irvine, CA 92614, Attention: Chief Executive Officer, and (B) surrender to a common carrier for delivery to the Company as soon as practicable following such Voluntary Conversion Date the original certificates representing the shares of Series A Preferred Stock being converted (or an Affidavit of Loss with respect to such shares in the case of their loss, theft or destruction) (the “Preferred Stock Certificates”) and the originally executed Conversion Notice.

(ii) Company’s Response. Upon receipt by the Company of a copy of a Conversion Notice, the Company shall promptly send, via email, a confirmation of receipt of such Conversion Notice to such holder. Upon receipt by the Company of a copy of the fully-executed Conversion Notice, the Company shall issue and deliver or cause its designated transfer agent (the “Transfer Agent”) to issue and deliver, as applicable, within five business days following the date of receipt by the Company of the fully-executed Conversion Notice (such fifth business day being the **“Delivery Date”**), to the holder a stock certificate representing the shares of Common Stock as specified in the Conversion Notice, registered in the name of the holder or its designee, for the number of shares of Common Stock to which the holder is entitled. If the number of shares of Preferred Stock represented by the Preferred Stock Certificate(s) submitted for conversion is greater than the number of shares of Series A Preferred Stock being converted, then the Company shall, as soon as practicable and in no event later than five business days after receipt of the Preferred Stock Certificate(s) and at the Company’s expense, issue and deliver to the holder a new Preferred Stock Certificate representing the number of shares of Series A Preferred Stock not converted.

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

(c) Mandatory Conversion.

(i) The Company may require the conversion of each share of Series A Preferred Stock outstanding on the Share Trigger Date (as defined in Section 5(c)(ii)) by written notice to the holder. Upon the giving of such notice, all outstanding shares of Series A Preferred Stock shall, automatically and without any action on the part of the holder thereof, convert into a number of fully-paid and nonassessable shares of Common Stock equal to the quotient of (i) Series A Original Issue Price on the date of such notice, divided by (ii) the Conversion Price in effect on the Share Trigger Date.

(ii) As used herein, “Share Trigger Date” means the date that the Closing Sale Price (as defined below) of the Common Stock equals or exceeds $9.00 for a period of five (5) consecutive Trading Days with a minimum average trading volume of 35,000 shares per day over such period; provided, that, on the Share Trigger Date, (A) a registration statement under the Securities Act of 1933, as amended, providing for the resale of the shares of Common Stock issuable upon conversion of the Series A Preferred Stock is effective or all of the shares of Common Stock into which the Series A Preferred Stock can be converted may be offered for sale to the public by the holders thereof without any volume restrictions, pursuant to Rule 144 (“Rule 144”) under the Securities Act of 1933, as amended, and (B) trading in the Common Stock shall not have been suspended by the Securities and Exchange Commission, or the Trading Market (as defined in the Stock Purchase Agreement). The date of conversion of all outstanding shares of Series A Preferred Stock pursuant to Section 5(c)(i) is referred to in this Certificate of Designation as the “Mandatory Conversion Date.” The Mandatory Conversion Date and the Voluntary Conversion Date collectively are referred to in this Certificate of Designation as the “Conversion Date.”

(iii) The term “Closing Sale Price” means, for any security as of any date, the last closing price of such security on the Trading Market as reported by Bloomberg, or, if no Closing Sale Price is reported for such security by Bloomberg, the last closing trade price of such security as reported by Bloomberg, or, if no last closing trade price is reported for such security by Bloomberg, the average of the bid and asked prices of the market makers for such security on the Trading Market. If the Closing Sale Price cannot be calculated for such security on such date on any of the foregoing bases, the Closing Sale Price of such security on such date shall equal the price of the Common Stock triggering mandatory conversion of the Series A Preferred Stock on the Share Trigger Date.

(iv) On the Mandatory Conversion Date, the outstanding shares of Series A Preferred Stock are converted automatically without any further action by the holders of such shares and whether or not the certificates representing such shares are surrendered to the Company or the Transfer Agent; provided, however, that the Company shall not be obligated to issue the certificates representing shares of Common Stock issuable upon conversion of any shares of Series A Preferred Stock unless either certificates evidencing such shares of Series A Preferred Stock are delivered to the Company or the holder notifies the Company that such certificates have been lost, stolen, or destroyed and executes an Affidavit of Loss to indemnify the Company from any loss incurred by it in connection therewith. Upon the occurrence of a mandatory conversion of the Series A Preferred Stock pursuant to this Section 5, the holders of the Series A Preferred Stock shall surrender the certificates representing the Series A Preferred Stock for which the Mandatory Conversion Date has occurred or an Affidavit of Loss with respect thereto to the Company and the Company shall cause the Transfer Agent to deliver the shares of Common Stock issuable upon such conversion (in the same manner set forth in Section 5(b)(ii)) to the holder within five business days of the holder’s delivery of the applicable Preferred Stock Certificates or Affidavit of Loss.

(v) The Company shall issue a press release for publication using a broadly disseminated news or press release service selected by the Company prior to the opening of business on the first Trading Day following the Mandatory Conversion Date, announcing such mandatory conversion. “Trading Day” means a day during which trading in securities generally occurs on the principal national or regional securities exchange on which the Common Stock is then listed or, if the Common Stock is not listed on a national or regional securities exchange, on the principal other market on which Common Stock is then traded. If the Common Stock is not so listed or traded, “Trading Day” means a Business Day. “Business Day” means any day other than a Saturday, Sunday or other day on which commercial banks in the City of New York are authorized or required by law or executive order to close. The Company shall also give notice by mail or by publication (with subsequent prompt notice by mail) to the holders of the Series A Preferred Stock (not more than four Business Days after the date of the press release) of the mandatory conversion announcing the automatic conversion of the Preferred Stock. In addition to any information required by applicable law or regulation, the press release and notice of a mandatory conversion described in this Section 5(c)(v) shall state, as appropriate: (i) the Mandatory Conversion Date; (ii) the number of shares of Common Stock issued upon conversion of each share of Series A Preferred Stock; and (iii) that dividends on the Series A Preferred Stock to be converted ceased to accrue on the Mandatory Conversion Date.

(d) Conversion Price. “Conversion Price” means $3.50 per share, subject to adjustment under Section 5(e) hereof.

(e) Adjustments of Conversion Price.

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

(ii) Adjustments for Dividends and Distributions in Shares of Common Stock. If the Company at any time or from time to time after the Issuance Date, makes or issues or sets a record date for the determination of holders of Common Stock entitled to receive a dividend or other distribution payable in shares of Common Stock, then, and in each event, the Conversion Price is automatically decreased as of the time of such issuance or, if such record date has been fixed, as of the close of business on such record date, by multiplying the Conversion Price then in effect by a fraction:

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

(2) the denominator of which is the total number of shares of Common Stock issued and outstanding immediately prior to the time of such issuance or the close of business on such record date plus the number of shares of Common Stock issuable in payment of such dividend or distribution; provided, however, that if such record date has been fixed and such dividend is not fully paid or if such distribution is not fully made on the date fixed therefor, the Conversion Price is automatically adjusted pursuant to this paragraph as of the time of actual payment of such dividends or distributions; and provided further, however, that no such adjustment is required if the holders of Series A Preferred Stock simultaneously receive (i) a dividend or other distribution of shares of Common Stock in a number equal to the number of shares of Common Stock as they would have received if all outstanding shares of Series A Preferred Stock had been converted into Common Stock on the date of such event or (ii) a dividend or other distribution of shares of Series A Preferred Stock which are convertible, as of the date of such event, into such number of shares of Common Stock as is equal to the number of additional shares of Common Stock being issued with respect to each share of Common Stock in such dividend or distribution.

(iii) Adjustment for Other Dividends and Distributions. If the Company shall at any time or from time to time after the Issuance Date, make or issue or set a record date for the determination of holders of Common Stock entitled to receive a dividend or other distribution payable in assets (other than cash dividends payable out of earnings or surplus in the ordinary course of business) or equity or debt securities of the Company other than shares of Common Stock, then, and in each event, the Company shall revise the applicable Conversion Price and provide (by adjustments of the Conversion Price or otherwise) so that the holders of Series A Preferred Stock receive upon conversions thereof, in addition to the number of shares of Common Stock receivable thereon, the amount of assets and/or the number of securities of the Company which they would have received had their Series A Preferred Stock been converted into Common Stock immediately prior to such event and had thereafter, during the period from the date of such event to and including the Conversion Date, retained such assets and/or securities (together with any distributions payable thereon during such period), giving application to all adjustments called for during such period under this Section 5(e)(iii) with respect to the rights of the holders of the Series A Preferred Stock; provided, however, that if such record date has been fixed and such dividend is not fully paid or if such distribution is not fully made on the date fixed therefor, the Conversion Price is automatically adjusted pursuant to this paragraph as of the time of actual payment of such dividends or distributions; and provided further, however, that no such adjustment is necessary if the holders of Series A Preferred Stock simultaneously receive a dividend or other distribution of assets and/or the number of securities that they would have received if all outstanding shares of Series A Preferred Stock had been converted into Common Stock immediately prior to such event.

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

(v) Adjustments for Reorganization, Merger, or Consolidation. If there shall occur any reorganization, recapitalization, reclassification, consolidation or merger involving the Company in which the Common Stock (but not the Series A Preferred Stock) is converted into or exchanged for securities, cash or other property (an “Organic Change”), then, following any such Organic Change, each share of Series A Preferred Stock shall thereafter be convertible in lieu of the Common Stock into which it was convertible prior to such event into the kind and amount of securities, cash or other property which a holder of the number of shares of Common Stock of the Corporation issuable upon conversion of one share of Series A Preferred Stock immediately prior to such Organic Change would have been entitled to receive pursuant to such transaction; and, in such case, appropriate adjustment (as determined in good faith by the Board) shall be made in the application of the provisions in this Section 5 with respect to the rights and interests thereafter of the holders of the Series A Preferred Stock, to the end that the provisions set forth in this Section 5 (including provisions with respect to changes in and other adjustments of the Series A Conversion Price) shall thereafter be applicable, as nearly as reasonably may be, in relation to any securities or other property thereafter deliverable upon the conversion of the Series A Preferred Stock.

(vi) Adjustments for Issuance of Additional Shares of Common Stock. If the Company issues or sells any additional shares of Common Stock (otherwise than as provided in the foregoing subsections (i) through (v) of this Section 5(e), pursuant to Common Stock Equivalents (hereafter defined) granted or issued prior to the Issuance Date, or in accordance with Section 5(e)(ix) below) (the “Additional Shares of Common Stock”), at a price per share less than the Conversion Price, or without consideration, the Conversion Price then in effect upon each such issuance are adjusted to that price (rounded to the nearest cent) determined by multiplying the Conversion Price by a fraction:

(1) the numerator of which is equal to the sum of (A) the number of shares of Common Stock outstanding (including, for purposes of such calculation, shares of Common Stock issuable upon conversion of the outstanding shares of Series A Preferred Stock) immediately prior to the issuance of such Additional Shares of Common Stock plus (B) the number of shares of Common Stock (rounded to the nearest whole share) which the aggregate consideration for the total number of such Additional Shares of Common Stock so issued would purchase at a price per share equal to the then Conversion Price, and

(2) the denominator of which is equal to the number of shares of Common Stock outstanding (including, for purposes of such calculation, shares of Common Stock issuable upon conversion of the outstanding shares of Series A Preferred Stock) immediately after the issuance of such Additional Shares of Common Stock;

No adjustment to the Conversion Price is required under Section 5(e)(vi): (A) upon the issuance of any Additional Shares of Common Stock that are issued pursuant to the exercise of any warrants or other subscription or purchase rights or pursuant to the exercise of any conversion or exchange rights in any Common Stock Equivalents (as defined below), if any such adjustment shall previously have been made upon the issuance of such warrants or other rights or upon the issuance of such Common Stock Equivalents (or upon the issuance of any warrant or other rights therefore) pursuant to Section 5(e)(vii); (B) in respect of sales of Additional Shares of Common Stock resulting in a cumulative amount of $2,000,000 or less in cash proceeds to the Company; or (C) following the Share Trigger Date. If the Company sells Additional Shares of Common Stock following the Issuance Date resulting in a cumulative amount of more than $2,000,000 in cash proceeds to the Company, an adjustment to the number of shares of Common Stock is required under Section 5(e)(vi) in respect of the Additional Shares of Common Stock resulting from cumulative cash proceeds to the Company in excess of $2,000,000 as reasonably determined based on the time such securities are sold.

(vii) Issuance of Common Stock Equivalents. The provisions of this Section 5(e)(vii) apply if, at any time after the Issuance Date, the Company shall issue or sell (a) any securities convertible into or exchangeable for, directly or indirectly, Common Stock (“Convertible Securities”), other than the Series A Preferred Stock, or (b) any rights, warrants or options to purchase any such Common Stock or Convertible Securities (collectively, the “Common Stock Equivalents”), other than Convertible Securities or Common Stock Equivalents which are themselves exempted pursuant to Section 5(e)(ix). If the price per share for which Additional Shares of Common Stock may be issuable pursuant to any such Convertible Securities or Common Stock Equivalents is less than the applicable Conversion Price then in effect, or if, after any such issuance of Convertible Securities or Common Stock Equivalents, the price per share for which Additional Shares of Common Stock may be issuable thereafter is amended or adjusted, and such price as so amended is less than the applicable Conversion Price in effect at the time of such amendment or adjustment, then the applicable Conversion Price upon each issuance of Convertible Securities or Common Stock Equivalents or amendment thereof is automatically adjusted as provided in subsection (vi) of this Section 5(e). No adjustment is required to the Conversion Price upon the issuance of Common Stock pursuant to the exercise, conversion or exchange of any Convertible Securities or Common Stock Equivalents where an adjustment to the Conversion Price was previously made as a result of the issuance or purchase of any Convertible Securities or Common Stock Equivalents.

(viii) Determination of Consideration. For purposes of this Section 5(e), the consideration received by the Company for the issuance or deemed issuance of any Additional Shares of Common Stock shall be computed as follows:

(1) Cash and Property: Such consideration shall (A) insofar as it consists of cash, be computed at the aggregate amount of cash received by the Company, excluding amounts paid or payable for accrued interest; (B) insofar as it consists of property other than cash, be computed at the fair market value thereof at the time of such issue, as determined in good faith by the Board; and (C) in the event Additional Shares of Common Stock are issued together with other shares or securities or other assets of the Company for consideration which covers both, be the proportion of such consideration so received, computed as provided in clauses (A) and (B) above, as determined in good faith by the Board; and

(2) Options and Convertible Securities. The consideration per share received by the Company for Additional Shares of Common Stock deemed to have been issued pursuant to Section 5(e), relating to Options and Convertible Securities, shall be determined by dividing: (A) the total amount, if any, received or receivable by the Company as consideration for the issue of such Options or Convertible Securities, plus the minimum aggregate amount of additional consideration (as set forth in the instruments relating thereto, without regard to any provision contained therein for a subsequent adjustment of such consideration) payable to the Company upon the exercise of such Options or the conversion or exchange of such Convertible Securities, or in the case of Options for Convertible Securities, the exercise of such Options for Convertible Securities and the conversion or exchange of such Convertible Securities, by (B) the maximum number of shares of Common Stock (as set forth in the instruments relating thereto, without regard to any provision contained therein for a subsequent adjustment of such number) issuable upon the exercise of such Options or the conversion or exchange of such Convertible Securities, or in the case of Options for Convertible Securities, the exercise of such Options for Convertible Securities and the conversion or exchange of such Convertible Securities.

(ix) Certain Issuances Excepted. Anything herein to the contrary notwithstanding, the Company shall not be required to make any adjustment to the Conversion Price upon the authorization or issuance of the following securities:

(1) shares of Common Stock, rights, options or warrants to subscribe for, purchase or otherwise acquire Common Stock or Series A Preferred Stock (“Options”), or Convertible Securities issued as a dividend or distribution on Series A Preferred Stock;

(2) shares of Common Stock or Options issued to employees or directors of, or consultants or advisors to, the Company or any of its subsidiaries pursuant to a plan, agreement or arrangement approved by the Board;

(3) shares of Common Stock or Convertible Securities actually issued upon the exercise of Options or shares of Common Stock actually issued upon the conversion or exchange of Convertible Securities, in each case provided such issuance is pursuant to the terms of such Option or Convertible Security;

(4) shares of Common Stock, Options or Convertible Securities issued to banks, equipment lessors, or other financial institutions, or to real property lessors, pursuant to a debt financing, equipment leasing or real property leasing transaction approved by the Board;

(5) shares of Common Stock, Options or Convertible Securities issued to suppliers or third party service providers in connection with the provision of goods or services pursuant to transactions approved by the Board;

(6) shares of Common Stock, Options or Convertible Securities issued as acquisition consideration pursuant to the acquisition of another corporation by the Company by merger, purchase of substantially all of the assets or other reorganization or to a joint venture agreement or to any Deemed Liquidation Event, provided that such issuances are approved by the Board;

(7) shares of Common Stock, Options or Convertible Securities issued in connection with sponsored research, collaboration, technology license, development, OEM, marketing or other similar agreements or strategic partnerships approved by the Board; or

(8) shares of Common Stock, Options or Convertible Securities issued pursuant to that certain At Market Issuance Sales Agreement, dated December 1, 2017, between the Company and B. Riley FBR, Inc.

(f) No Impairment. The Company shall not, by amendment of its Certificate of Incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed hereunder by the Company, but will at all times in good faith assist in the carrying out of all the provisions of this Section 5 and in the taking of all such action as may be necessary or appropriate in order to protect the Conversion Rights of the holders of the Series A Preferred Stock against impairment. In the event a holder shall elect to convert any shares of Series A Preferred Stock as provided herein, the Company cannot refuse conversion based on any claim that such holder or anyone associated or affiliated with such holder has been engaged in any violation of law, unless, and only for so long as, (i) an order from the Securities and Exchange Commission prohibiting such conversion or (ii) an injunction from a court, on notice, restraining and/or adjoining conversion of all or a portion of said shares of Series A Preferred Stock has been issued until the completion of arbitration/litigation of the dispute and the proceeds of which is payable to such holder in the event it obtains judgment.

(g) Certificates as to Adjustments. Upon occurrence of each adjustment or readjustment of the Conversion Price or number of shares of Common Stock issuable upon conversion of the Series A Preferred Stock pursuant to this Section 5, the Company at its expense shall promptly compute such adjustment or readjustment in accordance with the terms hereof and furnish to each holder of such Series A Preferred Stock a certificate setting forth such adjustment and readjustment, showing in detail the facts upon which such adjustment or readjustment is based, and in any event within 10 days of such event. The Company shall, upon written request of the holder of such affected Series A Preferred Stock, at any time, furnish or cause to be furnished to such holder a like certificate setting forth such adjustments and readjustments, the Conversion Price in effect at the time, and the number of shares of Common Stock and the amount, if any, of other securities or property which at the time would be received upon the conversion of a share of such Series A Preferred Stock. Notwithstanding the foregoing, the Company shall not be obligated to deliver a certificate unless such certificate would reflect an increase or decrease of at least one percent of such adjusted amount.

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

(i) Notices. All notices and other communications hereunder must be in writing and are deemed given if delivered personally or by e-mail within three business days following being mailed by certified or registered mail, postage prepaid, return-receipt requested, addressed to the holder of record at its address appearing on the books of the Company. The Company will give written notice to each holder of Series A Preferred Stock at least 20 days prior to the date on which the Company closes its books or takes a record (a) with respect to any dividend or distribution upon the Common Stock, (b) with respect to any pro rata subscription offer to holders of Common Stock, or (c) for determining rights to vote with respect to any Organic Change, dissolution, liquidation or winding-up and in no event shall such notice be provided to such holder prior to such information being made known to the public. The Company will also give written notice to each holder of Series A Preferred Stock at least 10 days prior to the date on which any Organic Change, dissolution, liquidation or winding-up will take place; provided, however, that in no event shall such notice be provided to such holder prior to such information being made known to the public.

(j) Fractional Shares. The Company shall not issue any fractional shares of Common Stock upon conversion of the Series A Preferred Stock. In lieu of any fractional shares to which the holder would otherwise be entitled, the Company shall round the number of shares to be issued upon conversion up to the nearest whole number of shares.

(k) Reservation of Common Stock. The Company shall, so long as any shares of Series A Preferred Stock are outstanding, reserve and keep available out of its authorized and unissued Common Stock, solely for the purpose of effecting the conversion of the Series A Preferred Stock, such number of shares of Common Stock equal to the aggregate number of shares of Common Stock as shall from time to time be sufficient to effect the conversion of all of the Series A Preferred Stock then outstanding. If at any time the number of authorized but unissued shares of Common Stock shall not be sufficient to effect the conversion of all then outstanding shares of Series A Preferred Stock, the Company shall promptly take such corporate action as may be necessary to increase its authorized but unissued shares of Common Stock to such number as is sufficient for such purpose, including, without limitation, engaging in best efforts to obtain the requisite stockholder approval of any necessary amendment to this Certificate. The Company shall allocate the initial number of shares of Common Stock reserved for conversions of the Series A Preferred Stock and any increase in the number of shares so reserved pro rata among the holders of the Series A Preferred Stock based on the number of shares of Series A Preferred Stock held by each holder of record at the time of issuance of the Series A Preferred Stock or increase in the number of reserved shares, as the case may be. In the event a holder sells or otherwise transfers any of such holder’s shares of Series A Preferred Stock, the Company shall allocate each transferee a pro rata portion of the number of reserved shares of Common Stock reserved for such transferor. The Company shall allocate any shares of Common Stock reserved and which remain allocated to any person or entity that does not hold any shares of Series A Preferred Stock to the remaining holders of Series A Preferred Stock, pro rata based on the number of shares of Series A Preferred Stock then held by such holder.

(l) Retirement of Series A Preferred Stock. Conversion of Series A Preferred Stock is deemed to have been effected on the Conversion Date. Upon conversion of only a portion of the number of shares of Series A Preferred Stock represented by a certificate surrendered for conversion, the Company shall issue and deliver to such holder at the expense of the Company, a new certificate covering the number of shares of Series A Preferred Stock representing the unconverted portion of the certificate so surrendered as required by Section 5(b)(ii).

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

(n) Conversion Cap. Notwithstanding anything to the contrary herein, prior to the receipt of all approvals, if any, of the shareholders of the Company necessary for purposes of the rules and regulations of the applicable Trading Market shares of Series A Preferred Stock shall not be converted pursuant to this Section 5: (i) in the aggregate into more than 19.99% of the shares of Common Stock outstanding immediately prior to the Issuance Date, subject to the appropriate adjustment in the event of a stock split, stock dividend, combination or other similar recapitalization, or (ii) by any beneficial holder (as such term is defined under Rule 13d-3 of the Exchange Act) or “group” (as such term is defined under Rule 13d-5 of the Exchange Act) (such beneficial holder or group, a “Capped Holder”), if (A) the aggregate number of shares of Common Stock issued to such Capped Holder upon such conversion and any Conversion Shares then held by the Capped Holders, plus (B) the number of shares of Common Stock underlying shares of Series A Preferred Stock that would be held at such time by the Capped Holders (after giving effect to such conversion), plus (C) the aggregate number of shares of Common Stock held by such Capped Holder immmediately prior to the Issuance Date, would in the aggregate exceed more than 19.99% of the shares of Common Stock outstanding immediately prior to the Issuance Date (without regard to any limitation on conversion pursuant to this Section 5(n)), then such Capped Holder shall be entitled to convert such number of shares of Series A Preferred Stock as would result in the sum of clauses (A), (B) and (C) (after giving effect to such conversion) being equal to 19.99% of the shares of Common Stock outstanding immediately prior to the Issuance Date, subject to appropriate adjustment in the event of a stock split, stock dividend, combination or other similar recapitalization. Any shares of Series A Preferred Stock which a holder has elected to convert but which, by reason of the previous sentence are not so converted, shall be treated as if the holder had not made such election to convert and such shares of Series A Preferred Stock shall remain outstanding.

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

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

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

[Remainder of Page Left Blank - Signature Page Follows]

Signed, effective as of February 24, 2020.

Biomerica, Inc.

By: /s/ Zackary Irani

Name: Zackary Irani
Title: Chief Executive Officer

BIOMERICA, INC.

Stock PURCHASE AGREEMENT

This Stock Purchase Agreement (this “Agreement”) is dated as of February 21, 2020 (the “Effective Date”) by and among Biomerica, Inc., a Delaware corporation (the “Company”), and each purchaser listed on the Schedule of Purchasers attached hereto (each, a “Purchaser” and collectively, the “Purchasers”).

RECITALS:

A. The Company and each Purchaser is executing and delivering this Agreement in reliance upon the exemption from securities registration afforded by Section 4(a)(2) of the Securities Act and Rule 506(b) of Regulation D under the Securities Act.

B. The Company has authorized a new series of cumulative convertible preferred shares of the Company designated as Series A Convertible Preferred Stock, the terms of which are set forth in the certificate of designations for such series of preferred shares (the “Certificate of Designations”) in the form attached hereto as Exhibit A (the “Series A Preferred Shares”), which Series A Preferred Shares are convertible into shares of the Company’s Common Stock (as converted, the “Conversion Shares”), in accordance with the terms of the Certificate of Designations.

C. Each Purchaser wishes to purchase, and the Company wishes to sell, upon the terms and conditions stated in this Agreement, the aggregate number of Series A Preferred Shares set forth opposite such Purchaser’s name in column (3) on the Schedule of Purchasers attached hereto.

AGREEMENT

The Company and each of the Purchasers agree as follows:

ARTICLE I
DEFINITIONS

1.1 Definitions. In addition to the terms defined elsewhere in this Agreement, the following terms have the meanings indicated:

“Affiliate” means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common control with a Person, as such terms are used in and construed under Rule 144.

“ATM Agreement” means that certain At Market Issuance Sales Agreement, dated December 1, 2017, between the Company and B. Riley FBR, Inc.

“Board of Directors” means the board of directors or other similar governing body of the Company.

“Business Day” means any day other than Saturday, Sunday, or other day on which commercial banks in the City of New York are authorized or required by law to remain closed.

“Closing” means the closing of the purchase and sale of the Series A Preferred Shares pursuant to Section 2.1.

“Closing Date” means the date of the Closing.

“Common Stock” means the common stock of the Company, par value $0.08 per share.

“Competitor” means any Person, directly or indirectly, primarily engaged in the development, manufacture and marketing of medical diagnostic devices.

“Consent” means any consents, approvals, orders, authorizations, notifications, notices, estoppel certificates, releases, registrations, ratifications, declarations, filings, waivers, exemptions, or variances.

“Contract” means any note, bond, mortgage, indenture, guarantee, other evidence of indebtedness, license, lease, option, employment agreement, contract, undertaking, understanding, covenant, agreement, or other instrument.

“Convertible Securities” means any stock or securities (other than Options) convertible into or exercisable or exchangeable for Common Stock.

“Eligible Market” means The New York Stock Exchange, Inc. or the NASDAQ Stock Market.

“Encumbrance” means a claim, lien, charge, Tax, right of first refusal, mortgage, encumbrance, pledge, other security interest of any kind or other restriction.

“Exchange Act” means the U.S. Securities Exchange Act of 1934, as amended.

“GAAP” means United States generally accepted accounting principles, consistently applied.

“Governmental Authorizations” means any approval, consent, Permit, waiver, or other authorization issued, granted, given, or otherwise made available by or under the authority of any Governmental Entity or pursuant to any Legal Requirement.

“Governmental Entity” means any:

(i) nation, state, county, city, town, village, district, or other political jurisdiction of any nature;

(ii) federal, state, local, municipal, foreign, or other government;

(iii) governmental or quasi-governmental authority of any nature (including any governmental agency, branch, department, official, or entity and any court or other tribunal);

(iv) multi-national organization or body; or

(v) body exercising, or entitled to exercise, any administrative, executive, judicial, legislative, police, regulatory, or taxing authority or power of any nature.

“Holder” means the Purchaser or any transferee of the Purchaser.

“Intellectual Property” means with respect to the Company and its Subsidiaries, collectively (a) all rights to service customer accounts; (b) trademarks, trade names, service marks, service names, domain names, uniform resource locators (URLs), keywords, designs, logos and assumed names; (c) copyrights and other rights in original works of authorship, (d) patents and industrial design registrations or applications (including any continuations, divisionals, continuations-in-part, renewals, reissues, and applications for any of the foregoing); (e) computer software programs or applications (in both source and object code versions), including any related technical documentation; (f) trade secrets and invention disclosures, that are owned by the Company, its Subsidiaries or any other Person and that have been or are used by the Company or its Subsidiaries in the operation of their respective businesses, or that are used in or necessary for the conduct of the respective businesses of the Company or its Subsidiaries as currently conducted or contemplated to be conducted; and (g) know-how and general intangibles of like nature, together with all goodwill, registrations and applications related to any of the foregoing whether or not protectable as a matter of law.

“Knowledge” means, as it relates to the Company, the actual knowledge of Zackary S. Irani and Janet Moore, in each case upon reasonable inquiry.

“Law” means any law, statute, regulation, ordinance, rule, order, decree, judgment, consent decree, settlement agreement or governmental requirement enacted, promulgated, entered into, agreed, or imposed by any Governmental Entity.

“Legal Requirement” means any federal, state, provincial, local, municipal, foreign, international, multinational, or other administrative order, constitution, Law, principle of common law, or treaty.

“Losses” means any and all losses, claims, damages, liabilities, settlement costs, and expenses, including, without limitation, costs of preparation and reasonable attorneys’ fees.

“Material Adverse Effect” means a material adverse effect (financial or otherwise) on the business, assets, liabilities, financial condition, property, prospects, or results of operations of the Company or any Subsidiary.

“Options” means any rights, warrants, or options to subscribe for or purchase Common Stock or Convertible Securities.

“Permit” means a permit, license, franchise, qualification, certification, registration, certificate of occupancy, approval, or other authorization issued by any Governmental Entity.

“Person” means any individual, corporation (including any non-profit corporation), general or limited partnership, limited liability company, joint venture, estate, trust, association, organization, labor union, or other entity or Governmental Entity.

“Preferred Stock” means any preferred stock of Company.

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

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

“Purchaser Material Adverse Effect” means a material adverse effect (financial or otherwise) on the business, assets, liabilities, financial condition, property, prospects, or results of operations of the applicable Purchaser.

“Registration Effective Date” means the date that the Registration Statement is first declared effective by the SEC.

“Registrable Securities” means (a) the Conversion Shares and (b) any shares of Common Stock issued or issuable with respect to any shares described in (a) above by way of a stock dividend or stock split or in exchange for or upon conversion of such shares or otherwise in connection with a combination of shares, distribution, recapitalization, merger, consolidation, other reorganization or other similar event with respect to the Common Stock.

“Registration Statement” means each registration statement required to be filed under the Registration Rights Agreement, including (in each case) the Prospectus, amendments and supplements to such registration statement or Prospectus, including pre- and post-effective amendments, all exhibits thereto, and all material incorporated by reference or deemed to be incorporated by reference in such registration statement.

“Rule 144,” “Rule 415,” and “Rule 424” mean Rule 144, Rule 415 and Rule 424, respectively, promulgated by the SEC under the Securities Act, as such Rules may be amended from time to time, or any similar rule or regulation hereafter adopted by the SEC having substantially the same effect as such Rule.

“SEC” means the U.S. Securities and Exchange Commission.

“Securities” means, collectively, the Series A Preferred Shares and the Conversion Shares.

“Securities Act” means the U.S. Securities Act of 1933, as amended.

“Short Sales” means all “short sales” as defined in Rule 200 promulgated under Regulation SHO under the Exchange Act, whether or not against the box, and forward sale contracts, Options, puts, calls, short sales, “put equivalent positions” (as defined in Rule 16a-1(h) under the Exchange Act) and similar arrangements, and sales and other transactions through non-U.S. broker dealers or foreign regulated brokers.

“Subsidiary” means a majority-owned subsidiary, as defined in Rule 405 promulgated by the SEC under the Securities Act.

“Tax” or “Taxes” means any tax (including any income tax, capital gains tax, value-added tax, sales tax, property tax, gift tax, or estate tax), levy, assessment, tariff, duty (including any customs duty), deficiency, or other fee, and any related charge or amount (including any fine, penalty, interest, or addition to tax), imposed, assessed, or collected by or under the authority of any Governmental Entity or payable pursuant to any tax-sharing agreement.

“Tax Return” means any return (including any information return), report, statement, schedule, notice, form, or other document or information filed with or submitted to, or required to be filed with or submitted to, any Governmental Entity in connection with the determination, assessment, collection, or payment of any Tax or in connection with the administration, implementation, or enforcement of or compliance with any Legal Requirement relating to any Tax.

“Trading Day” means (a) any day on which the Common Stock is listed or quoted and traded on its primary Trading Market, or (b) if the Common Stock is not then listed or quoted and traded on any Eligible Market, then any Business Day.

“Trading Market” means the NASDAQ Stock Market or any other Eligible Market on which the Common Stock is then listed or quoted.

“Transaction Documents” means this Agreement, the Certificate of Designations, the Transfer Agent Instructions, the certificates representing the Series A Preferred Shares, the Registration Rights Agreement and all of the other agreements, certificates and documents described in Section 2.2 below.

“Transfer Agent” means Issuer Direct Corporation or any other transfer agent selected by the Company.

“Transfer Agent Instructions” means the Irrevocable Transfer Agent Instructions, in the form of Exhibit B, executed by the Company and delivered to and acknowledged in writing by the Transfer Agent upon the Closing.

1.2 Additional Definitions. In addition to the terms set forth in Section 1.1, each of the following terms is defined in the section set forth opposite such term:

Defined Term		Location
Agreement		Preamble
Bank		§3.1(s)
BHC		§3.1(s)
BHC Act		§3.1(s)
BHC Subsidiary		§3.1(s)
Board Observer		§6.5
Certificate of Designations		Recitals
Company		Preamble
Company Intellectual Property Rights		§3.1(n)
Company Material Contracts		§3.1(i)
Confidential Information		§6.1
Conversion Shares		Recitals
Disqualification Event		§3.1(t)
Effective Date		Preamble
Enforceability Exception		§3.1(d)
Financial Statements		§3.1(f)
Incentive Plans		§3.1(b)
Issuer Covered Person		§3.1(t)
Money Laundering Laws		§3.1(aa)
New Securities		§6.2
Palm		§6.5
Permitted Encumbrances		§3.1(m)
Preemptive Rights Notice		§6.2
Pro Rata Allotment		§6.2
Purchase Price		§2.1
Purchaser(s)		Preamble
Registration Rights Agreement		§4.1(e)
SEC Reports		§3.1(f)
Series A Preferred Shares		Recitals

ARTICLE II
PURCHASE AND SALE

2.1 Purchase of Series A Preferred Shares; Closing.

(a) Subject to the satisfaction (or waiver) of the conditions set forth in below, the Company shall issue and sell to each Purchaser, and each Purchaser severally, but not jointly, shall purchase from the Company on the Closing Date, such number and series of Series A Preferred Shares as is set forth opposite such Purchaser’s name in column (2) on the Schedule of Purchasers. The aggregate purchase price for the Securities to be purchased by each Purchaser at the Closing (the “Purchase Price”) is the amount set forth opposite such Purchaser’s name in column (3) of the Schedule of Purchasers. For the avoidance of doubt and subject to the satisfaction (or waiver) of the conditions set forth in Article IV below, no Purchaser is obligated to purchase any Series A Preferred Shares hereunder other than such Series A Preferred Shares set forth opposite such Purchaser’s name on the Schedule of Purchasers.

(b) The Closing shall occur at the offices of counsel to the Company immediately following the satisfaction (or waiver) of the conditions set forth in Article IV below, or at such other location or time as the parties may agree.

2.2 Closing Deliveries.

(a) Company Deliveries. At the Closing, unless otherwise designated, the Company shall deliver or cause to be delivered to each Purchaser the following:

(i) copies of a good standing certificate of the Company issued by the Secretary of State of Delaware, as of a date within 10 days preceding the Closing Date;

(ii) a copy of the Certificate of Incorporation of the Company, as amended to date, as certified by the Secretary of State of the State of Delaware within 60 days preceding the Closing Date, which reflects the Certificate of Designations as part thereof or attachment thereto;

(iii) certificates for the Series A Preferred Shares such Purchaser is purchasing hereunder (in each case, in such denominations as the Purchaser reasonably requests) in the name of the Purchaser as set forth in column (1) of the Schedule of Purchasers;

(iv) resolutions adopted by the Board of Directors approving this Agreement, the other Transaction Documents, the issuance of the Series A Preferred Shares, and the transactions contemplated by this Agreement;

(v) a certificate of the Secretary or other duly authorized officer of the Company dated as of the Closing Date (A) certifying the resolutions adopted by the Board of Directors approving this Agreement, the other Transaction Documents, the issuance of the Series A Preferred Shares, and the transactions contemplated by this Agreement; (B) certifying the current versions of the Certificate of Incorporation, as amended, and Bylaws of the Company; and (c) certifying as to the signatures and authority of persons signing this Agreement and the other Transaction Documents on behalf of the Company;

(vi) a certificate of the Company’s Chief Executive Officer dated as of the Closing Date certifying the Company’s fulfillment of the conditions to closing specified in Sections 4.1(a) and (b);

(vii) the signed Transfer Agent Instructions in the form attached hereto as Exhibit B;

(viii) reimbursement to Purchasers or their counsel, at Purchasers’ option, of the out of pocket expenses of Purchasers (including legal fees) incurred in connection with the transactions contemplated by this Agreement pursuant to Section 7.2; and

(ix) each of the other Transaction Documents, if any, to which the Company is a party, duly executed by the Company.

(b) Purchaser Deliveries. At the Closing, each Purchaser shall deliver or cause to be delivered to the Company: (i) each Transaction Document to which such Purchaser is a party duly executed by such Purchaser and (ii) the Purchase Price set forth opposite such Purchaser’s name in column (3) of the Schedule of Purchasers, in United States dollars and in immediately available funds, by wire transfer to an account designated in writing by the Company for such purpose.

ARTICLE III
REPRESENTATIONS AND WARRANTIES

3.1 Representations and Warranties of the Company. Except as disclosed in the SEC Reports or the corresponding subsections of the Disclosure Schedule, the Company hereby represents and warrants to each of the Purchasers as follows:

(a) Organization. The Company and each of the Company’s Subsidiaries is duly organized, validly existing and in good standing under the Laws of its state of incorporation and has the requisite corporate power and authority to own, lease and operate its properties and to carry on its business as it is now being conducted, as described in the SEC Reports. The Company and each of the Company’s Subsidiaries is duly qualified or licensed to do business as a foreign corporation and is in good standing in each jurisdiction in which the nature of the business conducted by it makes such qualification or licensing necessary, except where the failure to be so qualified or in good standing would not have a Material Adverse Effect.

(b) Capitalization.

(i) As of January 16, 2020, the authorized capital stock of the Company consists of 25,000,000 shares of Common Stock and 5,000,000 shares of Preferred Stock, none of which have been designated as Series A Preferred Stock. As of January 16, 2020, there are outstanding (A) 9,892,074 shares of Common Stock of the Company; (B) Options to purchase 80,000 shares of Common Stock of the Company issued pursuant to the Company’s 2010 Stock Incentive Plan; (C) Options to purchase 700,750 shares of Common Stock of the Company issued pursuant to the Company’s 2014 Stock Incentive Plan; (D) Options to purchase 782,084 shares of Common Stock of the Company issued pursuant to the Company’s 2017 Stock Incentive Plan; and (E) Options to purchase 175,000 shares of Common Stock of the Company issued pursuant to the Company’s 2020 Stock Incentive Plan (collectively, the 2010 Stock Incentive Plan, the 2014 Stock Incentive Plan, the 2017 Stock Incentive Plan and the 2020 Stock Incentive Plan are referred to as the “Incentive Plans”). All of the issued and outstanding shares of Common Stock are validly issued, fully paid and non-assessable and the issuance thereof was conducted in compliance with all applicable state and federal securities Laws and either was not subject to preemptive rights or was issued in compliance therewith.

(ii) Except as contemplated by or in connection with the Incentive Plans, the ATM Agreement and the Transaction Documents, (A) there are no outstanding debt securities of the Company; (B) there are no preemptive rights, rights of first refusal, participation rights or any similar rights obligating the Company to issue or sell shares of capital stock of the Company, Options or Convertible Securities; (C) there are no outstanding shares of capital stock, Options, or Convertible Securities, or Contracts, commitments, understandings or arrangements by which the Company is or may become bound to issue additional shares of capital stock of the Company, Options, Convertible Securities or securities or rights convertible into, any shares of capital stock of the Company; (D) there are no agreements or arrangements under which the Company is obligated to register the sale of any of its equity securities under the Securities Act; (E) there are no outstanding equity securities of the Company which contain any redemption or similar provisions, and there are no Contracts, commitments, understandings or arrangements by which the Company is or may become bound to redeem a security of the Company; (F) there are no securities of the Company containing anti-dilution or similar provisions that are triggered by the issuance of the Series A Preferred Shares; and (G) the Company does not have any stock appreciation rights plans or agreements.

(c) Issuance of the Series A Preferred Shares. The Series A Preferred Shares are duly authorized and, when issued and paid for in accordance with the Transaction Documents, will be free and clear from all Encumbrances with respect to the issue thereof (other than Encumbrances imposed by this Agreement and the Registration Rights Agreement, applicable securities Laws, and those imposed by the Purchasers). The Series A Preferred Shares will be entitled to all the rights and preferences set forth in the Certificate of Designations. Upon conversion of the Series A Preferred Shares and the issuance of the Conversion Shares, the Conversion Shares will be validly issued, fully paid and nonassessable and free from all Encumbrances with respect to the issue thereof (other than Encumbrances imposed by this Agreement and the Registration Rights Agreement, applicable securities Laws and those imposed by the Purchasers), with the Holders being entitled to all rights accorded to a Holder of Common Stock.

(d) Authorization; Validity of Agreement. The Company has the requisite corporate power and authority to execute, deliver and perform this Agreement, the Certificate of Designations, and each of the other Transaction Documents to be executed and delivered by the Company pursuant to this Agreement, and to consummate the transactions contemplated hereby and thereby. Each of this Agreement and the other Transaction Documents to be executed and delivered by the Company pursuant to this Agreement have been duly authorized by all necessary corporate action on the part of the Company, executed and delivered by the Company and assuming the due authorization, execution and delivery hereof and thereof by the other parties hereto and thereto, are valid and binding obligations of the Company, enforceable against it in accordance with their respective terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar Laws affecting creditors’ and contracting parties’ rights generally and except as enforceability may be subject to general principles of equity (regardless of whether such enforceability is considered in a Proceeding in equity or at Law) (the “Enforceability Exception”).

(e) Consents; Non-Contravention.

(i) Except for the approval of the Board of Directors and filings required by applicable federal and state securities Laws, which will be timely made by the Company following the Closing, no Governmental Authorization or Consent is necessary in connection with the execution, delivery and performance by the Company of this Agreement or the consummation of the transactions contemplated hereby except Governmental Authorizations or Consents that, if not made or obtained, would not have a Material Adverse Effect.

(ii) The execution, delivery and performance by the Company of this Agreement do not and will not (A) violate any Law; (B) violate or conflict with, result in a breach or termination of, or constitute a default (or a circumstance which, with or without notice or lapse of time or both, would constitute a default) under any Company Material Contract or Permit; (C) give any third party any right of termination or acceleration under, permit cancellation of, or result in the creation of any Encumbrance (except for any Permitted Encumbrance) upon any of the assets or properties of the Company or any of its Subsidiaries under any Company Material Contract; (D) permit the acceleration of the maturity of any indebtedness of the Company or any of its Subsidiaries or indebtedness secured by such entity’s assets or properties; or (E) violate or conflict with any provision of the Certificate of Incorporation or Bylaws of the Company or any of its Subsidiaries, except in the cases of clauses (A)-(D), where the violation, conflict, breach, termination, cancellation, creation of any Encumbrance, or acceleration, would not have a Material Adverse Effect.

(f) SEC Reports; Financial Statements. The Company has filed all reports, schedules, forms, statements and other documents required to be filed by the Company under the Securities Act and the Exchange Act, including pursuant to Section 13(a) or 15(d) thereof, for the two years preceding the date hereof (or such shorter period as the Company was required by Law or regulation to file such material) (the foregoing materials, including the exhibits thereto and documents incorporated by reference therein, being collectively referred to herein as the “SEC Reports”) on a timely basis or has received a valid extension of such time of filing and has filed any such SEC Reports prior to the expiration of any such extension. As of their respective dates, the SEC Reports complied in all material respects with the requirements of the Securities Act and the Exchange Act, as applicable, and none of the SEC Reports, when filed, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. The consolidated financial statements of the Company included in the SEC Reports (the “Financial Statements”) comply in all material respects with applicable accounting requirements and the rules and regulations of the SEC with respect thereto as in effect at the time of filing. Such Financial Statements have been prepared in accordance with GAAP (except (i) as may be otherwise indicated in the Financial Statements or the notes thereto, or (ii) in the case of unaudited interim statements, to the extent they may exclude footnotes or may be condensed or summary statements) and fairly present in all material respects the financial position of the Company on a consolidated basis as of and for the dates thereof and the results of operations and cash flows for the periods then ended, subject, in the case of unaudited statements, to normal, immaterial, year-end audit adjustments.

(g) Liabilities. There are no material liabilities of the Company, which are of a type required to be reflected on a balance sheet prepared in accordance with GAAP, whether accrued, absolute, contingent or otherwise except (i) those disclosed by or reflected in the Financial Statements; or (ii) those which have been incurred in the ordinary course of business of the Company, consistent with past practice, since the latest date reflected in the Financial Statements.

(h) Material Changes; Undisclosed Events, Liabilities or Developments. Since November 30, 2019, (i) there has been no event, occurrence or development that has had or that could reasonably be expected, individually or in the aggregate, to result in or cause a Material Adverse Effect, (ii) the Company has not incurred any material liabilities (contingent or otherwise) other than liabilities incurred in the ordinary course of business of the Company consistent with past practice, (iii) the Company has not altered its method of accounting, except as required by GAAP or applicable Law, (iv) the Company has not declared or made any dividend or distribution of cash or other property to its stockholders or except pursuant to the Incentive Plans, purchased, redeemed or made any agreements to purchase or redeem any shares of its capital stock; and (v) the Company has not filed any petition in bankruptcy under any provisions of federal or state bankruptcy Law or consented to the filing of any bankruptcy petition against it under any similar Law.

(i) Material Contracts. The SEC Reports set forth a true, complete and correct list of every Contract which constitutes a material contract (as such term is defined in Item 601(b)(10)) currently in effect to which the Company or any of its Subsidiaries is a party (the “Company Material Contracts”). Each of the Company Material Contracts is in full force and effect. None of the Company, nor any Subsidiary, nor to the Knowledge of the Company, any other Person party to a Company Material Contract, is in material breach of or material default under a Company Material Contract. None of the Company nor any of its Subsidiaries have provided or received any notice or communication regarding any claim or allegation by any Person of any existing default, or event that with notice or lapse of time or both, would constitute a default or event of default under any Company Material Contract.

(j) Taxes. As of the date of this Agreement, all material Taxes (including any interest or penalties relating thereto) and assessments which are due and payable by the Company and each of its Subsidiaries have been fully paid or accrued. The Financial Statements reflect an adequate reserve determined in accordance with GAAP for all Taxes payable by the Company and its Subsidiaries for the taxable periods accrued as of the date of such Financial Statements (except with respect to matters contested in good faith). There are no material Encumbrances for Taxes on the properties or assets of the Company or any of its Subsidiaries except for Permitted Encumbrances. All material Tax Returns of the Company and each of its Subsidiaries have been filed. There are no audits, examinations, or similar administrative or court Proceedings or controversies by any taxing authority pending against the Company or any of its Subsidiaries as to Taxes of any nature payable by the Company or any of its Subsidiaries. None of the Company or any of its Subsidiaries has received any notice of any proposed Tax assessment that would, if made have a Material Adverse Effect.

(k) Compliance. Neither the Company nor any of its Subsidiaries: (i) is in violation of any judgment, decree or order of any court, arbitrator or governmental body or (ii) is in violation of any statute, rule, ordinance or regulation of any governmental authority, including without limitation all foreign, federal, state and local Laws applicable to its business, except in each case as could not have or reasonably be expected to result in or cause a Material Adverse Effect.

(l) Regulatory Permits. Each of the Company and its Subsidiaries possess all Governmental Authorizations necessary to conduct its business as described in the SEC Reports, except where the failure to possess such Governmental Authorizations could not reasonably be expected to result in or cause a Material Adverse Effect, and neither the Company nor any of its Subsidiaries has received any notice of Proceedings relating to the revocation or modification of any such Governmental Authorizations necessary for either the Company or any of its Subsidiaries to conduct its business as described in the SEC Reports.

(m) Title to Assets. Each of the Company and its Subsidiaries has good and marketable title in fee simple to all real property owned by it and good and marketable title in all personal property owned by it that is material to the business of the Company or any of its Subsidiaries, as applicable, in each case free and clear of all Encumbrances, except for (i) Encumbrances as do not materially affect the value of such property and do not materially interfere with the use made and proposed to be made of such property by such entity, (ii) liens for the payment of Taxes not yet due and payable, (iii) mechanics, carriers’, workmen’s or similar liens arising in the ordinary course of business, (iv) easements, rights of way and similar Encumbrances affecting real property, (v) purchase money liens arising in the ordinary course of business, and (vi) other Encumbrances as would not reasonably be expected to have a Material Adverse Effect ((i) through (vi) collectively, the “Permitted Encumbrances”). The Company and its Subsidiaries have a valid leasehold interest in all material respects in any real property and facilities held under lease by either the Company or any of its Subsidiaries. The Company and each of its Subsidiaries are in compliance in all material respects with each lease to which it is a party.

(n) Patents and Trademarks. Each of the Company and its Subsidiaries has, or has rights to use, all patents, patent applications, trademarks, trademark applications, service marks, trade names, trade secrets, inventions, copyrights, licenses and other Intellectual Property rights and similar rights necessary or material for use in connection with its business as described in the SEC Reports and which the failure to so have could reasonably be expected to have or cause a Material Adverse Effect (collectively, the “Company Intellectual Property Rights”). Neither the Company nor any of its Subsidiaries has received a notice (written or otherwise) that any of the Company Intellectual Property Rights used by either the Company or any of its Subsidiaries violates or infringes upon the rights of any Person. To the Knowledge of the Company, all such Company Intellectual Property Rights are enforceable and there is no existing infringement by another Person of any of the Company Intellectual Property Rights. Each of the Company and its Subsidiaries has taken reasonable security measures to protect the secrecy, confidentiality and value of all the Company Intellectual Property Rights, except where failure to do so could not, individually or in the aggregate, reasonably be expected to have or cause a Material Adverse Effect.

(o) Insurance. Each of the Company and its Subsidiaries is insured by insurers of recognized financial responsibility against such Losses and risks and in such amounts as are prudent and customary in the businesses in which the Company and its Subsidiaries is engaged.

(p) Litigation. There are no actions, suits, arbitrations, regulatory proceedings or other litigation, Proceedings or governmental investigations pending or, to the Knowledge of the Company, threatened against the Company or any of its Subsidiaries or any of their officers or directors in their capacity as such, that could reasonably be expected to have a Material Adverse Effect. Neither the Company nor any of its Subsidiaries is subject to any order, judgment, decree, injunction, stipulation or consent order of or with any court or other Governmental Entity that could reasonably be expected to have a Material Adverse Effect. Neither the Company nor any of its Subsidiaries has entered into any agreement to settle or compromise any Proceeding pending or threatened in writing against it which has involved any obligation for which either the Company or any of its Subsidiaries or their properties or business has any continuing obligation that could reasonably be expected to have a Material Adverse Effect. There are not, to the Knowledge of the Company, any Proceedings by or against either the Company or any of its Subsidiaries that challenge or would reasonably be expected to have the effect of preventing, making illegal or delaying the transactions contemplated hereby.

(q) Labor Relations. No material strike, lockout, or similar labor dispute exists or, to the Knowledge of the Company, is imminent with respect to the employees of the Company or any of its Subsidiaries, which could reasonably be expected to have a Material Adverse Effect. None of the employees of the Company or any of its Subsidiaries is represented by a union that relates to such employee’s relationship with the Company or any of its Subsidiaries, and neither the Company nor any of its Subsidiaries is a party to a collective bargaining agreement. Each of the Company and its Subsidiaries is in material compliance with all U.S. federal, state, local and foreign Laws and regulations relating to employment and employment practices, terms and conditions of employment and wages and hours, except where the failure to be in compliance could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

(r) Brokers. Neither the Company, nor any of its agents or representatives has retained any finder, broker, or investment banker in connection with the transactions contemplated by this Agreement. No fees or commissions payable in cash, securities, or other form of compensation are, or will become, payable by the Company to any finder, broker, or investment banker in connection with the transactions contemplated by this Agreement.

(s) Bank Holding Company. The Company is not a bank holding company (a “BHC”), as defined in Section 2(a) of the Bank Holding Company Act of 1956, 12 U.S.C. §§ 1841-1847, as amended (together with any substitute or successor statute, and any related regulations, the “BHC Act”) and none of the Company or any of its Subsidiaries, as defined in the BHC Act (a “BHC Subsidiary”), of the Company is a bank, as defined in the BHC Act (a “Bank”).

(t) No Disqualification Event. With respect to the Securities to be offered and sold hereunder in reliance on Rule 506 under the Securities Act, none of the Company, any of its predecessors, any Affiliated issuer, nor, to the Knowledge of the Company, any director, executive officer, other officer of the Company participating in the offering of the Securities hereunder, any beneficial owner of 20% or more of the Company’s outstanding voting equity securities, calculated on the basis of voting power, nor any promoter (as that term is defined in Rule 405 under the Securities Act) connected with the Company in any capacity at the time of Closing (each, an “Issuer Covered Person”) is subject to any of the “Bad Actor” disqualifications described in Rule 506(d)(1)(i) to (viii) under the Securities Act (a “Disqualification Event”), except for a Disqualification Event covered by Rule 506(d)(2) or (d)(3). The Company has exercised reasonable care to determine whether any Issuer Covered Person is subject to a Disqualification Event. The Company has complied, to the extent applicable, with its disclosure obligations under Rule 506(e), and has furnished to the Purchasers a copy of any disclosures provided thereunder.

(u) Sarbanes-Oxley; Internal Accounting Controls. The Company and each of its Subsidiaries are in material compliance with the applicable requirements of the Sarbanes-Oxley Act of 2002 that are effective as of the date hereof, and the applicable rules and regulations promulgated by the SEC thereunder that are effective as of the date hereof. The Company and its the Subsidiaries maintain a system of internal accounting controls that complies with the requirements of the Exchange Act and is sufficient to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP. The Company and its Subsidiaries have established disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company and its Subsidiaries and designed such disclosure controls and procedures to ensure that information required to be disclosed by the Company in the reports it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms. Since November 30, 2019, there have been no changes in the internal control over financial reporting (as such term is defined in the Exchange Act) of the Company and its Subsidiaries that have materially affected, or is reasonably likely to materially affect, the internal control over financial reporting of the Company and its Subsidiaries.

(v) Investment Company. The Company is not an “investment company” within the meaning of the Investment Company Act of 1940, as amended.

(w) Listing and Maintenance Requirements. The Common Stock is registered pursuant to Section 12(b) or 12(g) of the Exchange Act, and the Company has taken no action designed to, or which to the Knowledge of the Company is likely to have the effect of, terminating the registration of the Common Stock under the Exchange Act nor has the Company received any notification that the SEC is contemplating terminating such registration. The Company has not, in the twelve months preceding the date hereof, received notice from any Trading Market on which the Common Stock is or has been listed or quoted to the effect that the Company is not in compliance with the listing or maintenance requirements of such Trading Market. The Company is in material compliance with all such listing and maintenance requirements. The Common Stock is currently eligible for electronic transfer through the Depository Trust Company or another established clearing corporation and the Company is current in payment of the fees to the Depository Trust Company (or such other established clearing corporation) in connection with such electronic transfer.

(x) No Integrated Offering. Assuming the accuracy of the Purchasers’ representations and warranties set forth in Section 3.2 of this Agreement, neither the Company, nor any of its Affiliates, nor any Person acting on its or their behalf has, directly or indirectly, made any offers or sales of any security or solicited any offers to buy any security, under circumstances that would cause this offering of the Securities to be integrated with prior offerings by the Company for purposes of (i) the Securities Act which would require the registration of the Securities under the Securities Act, or (ii) any applicable stockholder approval provisions.

(y) Solvency. Based on the consolidated financial condition of the Company as of the Closing Date, after giving effect to the receipt by the Company of the proceeds from the sale of the Securities hereunder, the fair saleable value of the Company’s assets exceeds the amount that will be required to be paid on or in respect of the Company’s existing debts and other liabilities (including known contingent liabilities) as they mature.

(z) Foreign Corrupt Practices. None of the Company or any of its Subsidiaries, nor to the Knowledge of the Company, any agent or other person acting on behalf of the Company or any of its Subsidiaries, has (i) directly or indirectly, used any funds for unlawful contributions, gifts, entertainment or other unlawful expenses related to foreign or domestic political activity, (ii) made any unlawful payment to foreign or domestic government officials or employees or to any foreign or domestic political parties or campaigns from corporate funds, (iii) failed to disclose fully any contribution made by the Company or any of its Subsidiaries (or made by any person acting on its behalf of which the Company is aware) which is in violation of applicable Law, or (iv) violated any provision of the Foreign Corrupt Practices Act.

(aa) Money Laundering. The operations of the Company and its Subsidiaries are in material compliance with applicable financial record-keeping and reporting requirements of the Currency and Foreign Transactions Reporting Act of 1970, as amended, applicable money laundering statutes and applicable rules and regulations thereunder (collectively, the “Money Laundering Laws”), and no action or Proceeding by or before any court or governmental agency, authority or body or any arbitrator involving the Company or any of its Subsidiaries with respect to the Money Laundering Laws is pending or, to the Knowledge of the Company, threatened.

(bb) Offering. Subject in part to the truth and accuracy of the Purchasers’ representations set forth in Section 3.2 of this Agreement, the offer, sale, and issuance of Series A Preferred Shares as contemplated by this Agreement is exempt from the registration requirements of the Securities Act and does not result in a violation of the qualification or registration requirements of the any applicable state securities Laws.

(cc) No Other Representations. Except for the representations and warranties contained in this Section 3.1, neither the Company nor any other Person acting on behalf of the Company makes any representation or warranty, express or implied, with respect to the Company, its Subsidiaries or with respect to any other information provided to the Purchasers in connection with the transactions contemplated by this Agreement and the other Transaction Documents. Neither the Company nor any other Person will have or be subject to any liability or indemnification obligation to the Purchasers or any other Person resulting from the distribution to the Purchasers, or the Purchasers’ use of, any such information, including any information, documents, projections, forecasts or other estimates, plans or budgets of future revenues, expenses or expenditures, future results of operations (or any component thereof) of the Company or any of its Subsidiaries or the future business, operations or affairs of the Company or any of its Subsidiaries made available to the Purchasers in certain “data rooms” (electronic or otherwise) or management presentations in expectation of the transactions contemplated by this Agreement and the other Transaction Documents, unless any such information is expressly included in a representation or warranty contained in this Section 3.1.

3.2 Representations and Warranties of the Purchasers. Each Purchaser hereby, as to itself only and for no other Purchaser, represents and warrants to the Company as follows:

(a) Organization; Authority. Such Purchaser is an entity duly organized, validly existing and in good standing under the Laws of the jurisdiction of its organization with the requisite corporate or partnership or other applicable power and authority to execute, deliver and perform this Agreement and the other Transaction Documents to which it is a party and to consummate the transactions contemplated hereby and thereby. Each of this Agreement and the other Transaction Documents to be executed and delivered by such Purchaser pursuant to this Agreement has been duly authorized by all necessary action on the part of such Purchaser. This Agreement has been duly executed and delivered by such Purchaser and, assuming the due authorization, execution and delivery hereof by the other parties hereto, is a valid and binding obligation of such Purchaser, enforceable against it in accordance with its terms, except as enforceability may be limited by the Enforceability Exception.

(b) Consents; Conflicts.

(i) No Governmental Authorization or Consent is necessary in connection with the execution, delivery and performance by the such Purchaser of this Agreement or the consummation of the transactions contemplated hereby except for such Governmental Authorizations or Consents that, if not made or obtained, would not have a Purchaser Material Adverse Effect.

(ii) The execution, delivery and performance by such Purchaser of this Agreement does not and will not (A) violate any Law; (B) violate or conflict with, result in a breach or termination of, or constitute a default (or a circumstance which, with or without notice or lapse of time or both, would constitute a default) under any Contract or Permit by which such Purchaser is bound or to which its assets are subject; or (C) violate or conflict with any provision of the organizational documents of the Purchaser, except in the cases of clauses (A) or (B), where the violation or breach would not have a Purchaser Material Adverse Effect.

(c) Brokers. Neither the Purchaser, nor any of its agents or representatives has retained any finder, broker, or investment banker in connection with the transactions contemplated by this Agreement. No fees or commissions payable in cash, securities, or other form of compensation are, or will become, payable by the Purchaser to any finder, broker, or investment banker in connection with the transactions contemplated by this Agreement.

(d) Investment Intent. Such Purchaser is (i) acquiring the Series A Preferred Shares and (ii) upon conversion of the Series A Preferred Shares will acquire the Conversion Shares issuable upon conversion of the Series A Preferred Shares, in the ordinary course of business for investment purposes, for its own account, and not with a view towards, or for resale in connection with, a sale or distribution thereof that would be in violation of the Securities Act. Such Purchaser does not have any agreement or understanding, directly or indirectly, with any Person to distribute any of the Securities.

(e) Purchaser Status. At the time such Purchaser was offered the Securities it was, and at the date hereof it is an “accredited investor” as defined in Rule 501(a) under the Securities Act and shall provide the Company with such information or documentation reasonably requested to support the Purchaser’s status as an accredited investor.

(f) Experience of the Purchaser. Such Purchaser, either alone or together with its representatives, has such knowledge, sophistication and experience in business and financial matters so as to be capable of evaluating the merits and risks of the prospective investment in the Series A Preferred Shares, and has so evaluated the merits and risks of such investment. Such Purchaser is able to bear the economic risk of an investment in the Series A Preferred Shares and, at the present time, is able to afford a complete loss of such investment.

(g) Access to Information. Such Purchaser acknowledges that it has been afforded (i) the opportunity to ask such questions as it has deemed necessary of, and to receive answers from, representatives of the Company concerning the terms and conditions of the offering of the Series A Preferred Shares and the merits and risks of investing in the Series A Preferred Shares; (ii) access to information about the Company and its Subsidiaries and their respective financial condition, results of operations, business, properties, management and prospects sufficient to enable it to evaluate its investment; and (iii) the opportunity to obtain such additional information that the Company possesses or can acquire without unreasonable effort or expense that is necessary to make an informed investment decision with respect to the investment. Such Purchaser has made such independent investigation of the Company, its management and related matters as such Purchaser deems to be necessary or advisable in connection with its purchase of the Securities, and is able to bear the economic and financial risk of the Securities. Such Purchaser understands and acknowledges that its purchase of the Securities involves a high degree of risk and uncertainty. Such Purchaser has sought such accounting, legal and Tax advice as it has considered necessary to make an informed investment decision. Neither such inquiries nor any other investigation conducted by or on behalf of such Purchaser or its representatives or counsel modifies, amends, or affects such Purchaser’s right to rely on the truth, accuracy, and completeness of the Company’s representations and warranties contained in the Transaction Documents.

(h) No Registration. Such Purchaser understands that (i) the Securities are being privately placed by the Company pursuant to an exemption from registration provided under Section 4(a)(2) and/or Rule 506 of Regulation D of the Securities Act and neither the offer nor sale of any Securities has been registered under the Securities Act or any state “blue sky” laws; (ii) the Securities being acquired by such Purchaser pursuant to this Agreement are characterized as “restricted securities” under the Securities Act inasmuch as they are being acquired by such Purchaser from the Company in a transaction not involving a public offering and, subject to such Purchaser’s rights under this Agreement, such Purchaser must continue to bear the economic risk of the investment in its Securities indefinitely unless the offer and sale of its Securities are subsequently registered under the Securities Act and all applicable state securities or “blue sky” Laws or an exemption from such registration is available; (iii) it is not anticipated that there will be any public market for the Series A Preferred Shares; (iv) a restrictive legend in the form set forth in Section 5.1(b) of this Agreement shall be placed on the certificates representing the Series A Preferred Shares and a restrictive legend in the form set forth in Section 5.1(b) shall be placed on the certificates representing the Conversion Shares; and (v) a notation shall be made in the appropriate records of the Company indicating that the Securities are subject to restrictions on transfer.

(i) No General Solicitation. Such Purchaser acknowledges and agrees that neither the Company nor any other Person offered to sell the Securities to it by means of any form of general solicitation or advertising, including but not limited to: any advertisement, article, notice or other communication published in any newspaper, magazine or similar media or broadcast over television or radio or any seminar or meeting whose attendees were invited by any general solicitation or general advertising. Such Purchaser further acknowledges and agrees that it was solicited or became aware of the investment in the Securities either through (i) a substantive, pre-existing relationship with the Company, (ii) direct contact with the Company or its agents outside of any public offering effort, and/or (iii) through contacts by the Company not identified through any public offering.

(j) Reliance Upon Purchaser’s Representations and Warranties. Such Purchaser understands and acknowledges that the Securities are being offered and sold in reliance on a transactional exemption from the registration requirements of federal and state securities Laws, and that the Company is relying upon the truth and accuracy of the representations, warranties, agreements, acknowledgments and understandings of such Purchaser set forth in this Agreement (i) in concluding that the offer and sale of the Securities is a “private offering” and, as such, is exempt from the registration requirements of the Securities Act, and (ii) to determine the applicability of such exemptions in evaluating the suitability of such Purchaser to purchase the Securities.

(k) Short Selling. Such Purchaser represents and warrants that it has not entered into any Short Sales of the Common Stock owned by it between the time it first began discussions with the Company about the transactions contemplated by this Agreement and the date hereof.

ARTICLE IV
CONDITIONS

4.1 Conditions Precedent to the Obligations of the Purchasers. The obligation of each Purchaser to acquire the Series A Preferred Shares set forth opposite such Purchaser’s name on the Schedule of Purchasers at the Closing is subject to the satisfaction or waiver by such Purchaser, at or before the Closing, of each of the following conditions:

(a) Representations and Warranties. The representations and warranties of the Company in this Agreement are true and correct in all material respects as of the date when made and as of the Closing as though made on and as of such date.

(b) Performance. The Company and each other Purchaser has performed, satisfied and complied in all material respects with all covenants, agreements, and conditions required by the Transaction Documents to be performed, satisfied or complied with by it at or prior to the Closing.

(c) Good Standing. The Company has delivered to such Purchaser a certificate evidencing the formation and good standing of the Company issued by the Secretary of State of the State of Delaware, as of a date within 10 days of the Closing Date.

(d) Filing of the Certificate of Designations. The Certificate of Designations in the form attached as Exhibit A has been filed on or prior to the Closing Date with the Secretary of State of the State of Delaware and is in full force and effect.

(e) Registration Rights Agreement. The Company and the Purchasers (other than such Purchaser relying on this condition) have entered into the Registration Rights Agreement in the form attached hereto as Exhibit C (the “Registration Rights Agreement”).

(f) Laws. No Law has been enacted or promulgated, and no action has been taken, by any Governmental Authority of competent jurisdiction which temporarily, preliminarily or permanently restrains, precludes, enjoins or otherwise prohibits the consummation of the transactions contemplated by this Agreement and the Transaction Documents or the Acquisition Agreement, or makes the transactions contemplated by this Agreement and the Transaction Documents illegal.

(g) No Actions. No Action by any Governmental Authority is pending seeking to restrain, preclude, enjoin or prohibit the transactions contemplated by this Agreement or the Transaction Documents.

4.2 Conditions Precedent to the Obligations of the Company. The obligation of the Company to sell the Series A Preferred Shares set forth opposite each Purchaser’s name on the Schedule of Purchasers is subject to the satisfaction or waiver by the Company, at or before the Closing, of each of the following conditions:

(a) Representations and Warranties. The representations and warranties of the Purchasers in this Agreement are true and correct in all material respects as of the date when made and as of the Closing Date as though made on and as of such date; and

(b) Performance. The Purchasers have performed, satisfied, and complied in all material respects with all covenants, agreements and conditions required by this Agreement to be performed, satisfied, or complied with by the Purchasers at or prior to the Closing.

(c) Laws. No Law has been enacted or promulgated, and no action has been taken, by any Governmental Authority of competent jurisdiction which temporarily, preliminarily or permanently restrains, precludes, enjoins or otherwise prohibits the consummation of the transactions contemplated by this Agreement and the Transaction Documents or the Acquisition Agreement, or makes the transactions contemplated by this Agreement and the Transaction Documents illegal.

(d) No Actions. No Action by any Governmental Authority is pending seeking to restrain, preclude, enjoin, or prohibit the transactions contemplated by this Agreement or the Transaction Documents.

ARTICLE V
AGREEMENTS OF THE COMPANY AND THE PURCHASERS
FOLLOWING THE CLOSING

5.1 Transfer Restrictions.

(a) Restricted Securities. The Securities may only be offered, sold, pledged, transferred or otherwise disposed of pursuant to an effective Registration Statement under the Securities Act or pursuant to an available exemption from the registration requirements of the Securities Act, and in compliance with any applicable state securities Laws. In connection with any transfer of Securities other than pursuant to an effective Registration Statement or to the Company, except as otherwise set forth herein, the Company may require the transferor to provide to the Company an opinion of counsel selected by the transferor, the form and substance of which opinion will be reasonably satisfactory to the Company, to the effect that such transfer is in compliance with the Securities Act. Each Purchaser will not, directly or indirectly, offer, sell, pledge, transfer or otherwise dispose of (or solicit any offers to buy, purchase, or otherwise acquire or take a pledge of) any of the Series A Preferred Shares, except to an Affiliate of that Purchaser, without the consent of the Company, which consent the Company shall not unreasonably withhold, delay, or condition, and provided that the transferee agrees in writing to take and hold the transferred Series A Preferred Shares subject to the applicable provisions and upon the applicable conditions specified in this Agreement and the Transaction Documents. Notwithstanding the foregoing, the Company may prohibit the transfer of any Securities by a Purchaser to a Competitor of the Company.

(b) Restrictive Legend. The Purchasers agree to the imprinting, so long as is required by this Section 5.1(b), of a legend substantially in the following form on any certificate evidencing Securities:

NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE CONVERTIBLE HAS BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS.

THE SECURITIES MAY BE TRANSFERRED ONLY IN ACCORDANCE WITH THE TERMS OF AN AGREEMENT BETWEEN THE COMPANY AND THE STOCKHOLDER, A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE COMPANY.

Certificates evidencing the Conversion Shares will not be required to contain such legend or any other restrictive legend and the Company shall use its commercially reasonable efforts to remove restrictive legends and issue certificates without legends: (i) while a Registration Statement covering the resale of the Conversion Shares is effective under the Securities Act, (ii) following or in connection with any sale of such Conversion Shares pursuant to Rule 144 if the Holder provides the Company with a legal opinion (and the documents upon which the legal opinion is based) reasonably acceptable to the Company to the effect that the Conversion Shares can be sold under Rule 144, or (iii) if the Holder provides the Company with a legal opinion (and the documents upon which the legal opinion is based) reasonably acceptable to the Company to the effect that a legend is not required under applicable requirements of the Securities Act (including controlling judicial interpretations and pronouncements issued by the staff of the SEC).

(c) Pledge of Securities. The Company acknowledges and agrees that any Purchaser may from time to time pledge or grant a security interest in some or all of the Conversion Shares pursuant to a bona fide margin agreement in connection with a bona fide margin loan. Such a pledge or grant would not be subject to approval or consent of the Company and no legal opinion of legal counsel to the pledgee, secured party or pledgor will be required in connection therewith, but such a legal opinion shall be required in connection with a subsequent transfer or foreclosure following default by such Purchaser’s transferee of the pledge. Further, no notice will be required of a pledge, but any Purchaser’s transferee shall promptly notify the Company of any such subsequent transfer or foreclosure. Each Purchaser acknowledges that the Company shall not be responsible for any pledges relating to, or the grant of any security interest in any of the Conversion Shares or for any agreement, understanding or arrangement between such Purchaser and its pledgee or secured party. At the appropriate Purchaser’s expense, the Company shall execute and deliver such reasonable documentation as a pledgee or secured party of Conversion Shares may reasonably request in connection with a pledge or transfer of the Conversion Shares, including the preparation and filing of any required Prospectus supplement to any Registration Statement filed pursuant to the Registration Rights Agreement under Rule 424(b)(3) of the Securities Act or other applicable provision of the Securities Act to appropriately amend the list of selling stockholders thereunder.

5.2 Furnishing of Information. As long as any Purchaser owns Securities, the Company covenants to use its commercially reasonable efforts to timely file (or obtain extensions in respect thereof and file within the applicable grace period) all reports required to be filed by the Company after the date hereof pursuant to the Exchange Act. As long as any Purchaser owns any Securities, if the Company is not required to file reports pursuant to such Laws, it will prepare and furnish to the Purchasers and make publicly available in accordance with Rule 144 such information as is required for the Purchasers to sell the Securities under Rule 144. The Company further covenants that it will take such further action as any Purchaser or subsequent Holder of Securities may reasonably request to satisfy the provisions of Rule 144 applicable to the issuer of securities relating to transactions for the sale of securities pursuant to Rule 144, but only to the extent that the Company, or counsel of the Company agree, that the Purchaser or subsequent Holder is able to avail themselves of the exemption created by Rule 144.

5.3 Integration. The Company shall not, and will use its best efforts to ensure that no Affiliate of the Company shall, sell, offer for sale or solicit offers to buy or otherwise negotiate in respect of any security (as defined in Section 2 of the Securities Act) that would be integrated with the offer or sale of the Securities in a manner that would require the registration under the Securities Act of the sale of the Securities to the Purchasers, or that would be integrated with the offer or sale of the Securities for purposes of the rules and regulations of any Trading Market. The Company shall not issue any shares of Series A Preferred Shares except under this Agreement.

5.4 Reservation and Listing of Common Stock.

(a) Reservation of Shares. The Company shall use its commercially reasonable efforts to maintain a reserve from its duly authorized shares of Common Stock for issuance of the Conversion Shares that equals 130 % of the number of shares of Common Stock issuable upon conversion of the Series A Preferred Shares. If at any time the then authorized shares of Common Stock are insufficient for the Company to satisfy its obligations in full under this Agreement, the Company shall use its commercially reasonable efforts to promptly take such actions as may be required to increase the number of authorized shares.

(b) Listing or Quotation Maintenance. The Company shall use commercially reasonable efforts to maintain the listing or quotation of its Common Stock on the Trading Market or another Eligible Market.

5.5 Securities Laws Disclosure; Publicity. The Company shall issue a press release announcing the transaction contemplated hereby within five Business Days of Closing, and the Purchasers will have the right to approve or modify the press release in cooperation with the Company. The Company and the Purchasers shall consult with each other in issuing any other press releases or otherwise making public statements or filings and other communications with the SEC or any regulatory agency or Trading Market with respect to the transactions contemplated hereby, and neither party will issue any such press release or otherwise make any such public statement, filing or other communication without the prior consent of the other, except if such disclosure is required by Law, in which case the disclosing party shall promptly provide the other party with prior notice of such public statement, filing or other communication.

5.6 Bank Holding Company. So long as the Series A Preferred Shares are outstanding, the Company and any BHC Subsidiary of the Company shall not become a Bank or a BHC.

5.7 Short Selling. Each Purchaser understands and acknowledges, severally and not jointly with any other Purchaser, that the Commission currently takes the position that coverage of Short Sales of securities “against the box” prior to the effective date of a registration statement is a violation of Section 5 of the Securities Act. Each Purchaser agrees, severally and not jointly, that it will not engage in any Short Sales that result in the disposition of the Conversion Shares by such Purchaser until such time as a Registration Statement is declared or deemed effective by the Commission.

5.8 Use of Proceeds. The Company shall use the net proceeds from the sale of the Series A Preferred Shares hereunder (a) to pay any and all expenses incurred by the Company in connection with the sale of the Series A Preferred Shares hereunder, (b) to pay for the filing and maintaining of any Registration Statement required by this Agreement or the Transaction Documents, and (c) for the general corporate purposes of the Company.

ARTICLE VI
ADDITIONAL COVENANTS

6.1 Confidentiality.

(a) Each Purchaser agrees, severally and not jointly, that it shall not disclose any Confidential Information (as defined below) to any Person without the consent of the Company, other than (a) to such Purchaser’s officers, directors, employees, agents and advisors under fiduciary or contractual obligations of confidentiality at least as restrictive as those contained in this Agreement, (b) as required by any Law, rule or regulation or judicial process, (c) as requested or required by any state, federal or foreign Governmental Authority or regulatory authority or examiner, and (d) in connection with the exercise of any remedies hereunder or any suit, action or Proceeding relating to this Agreement or any other Transaction Document or the enforcement of rights hereunder or thereunder in a related court Proceeding so long as such Confidential Information is (i) filed under seal with the applicable court, (ii) used in a manner consistent with any applicable protective order entered by any applicable court Proceeding, or (iii) as may be agreed between such Purchaser and the Company. “Confidential Information” means information which is provided on a confidential basis to such Purchaser, but does not include any such information that (i) is publicly available at the time of disclosure or becomes publicly available other than as a result of a breach of this Section 6.1 or (ii) becomes available to the Purchaser on a non-confidential basis from a source other than the Company, any of its employees, directors, Subsidiaries or Affiliates or any of their respective agents or representatives.

(b) Each Purchaser may from time to time notify the Company in writing that it has elected to restrict its receipt of Confidential Information relating to the Company. Such notice may either direct the Company to disclose Confidential Information solely to one or more persons designated by such Purchaser or direct that the Company not disclose Confidential Information to such Purchaser, in either case, during the period specified in such notice (which period shall commence at least three Business Days following the Company’s receipt of such notice). The Company shall, and shall cause its Affiliates, officers, employees and agents to, comply with the restrictions specified in any such notice.

6.2 Right to Participate in Certain Sales of Additional Securities.

(a) For a period of three years after the Closing, subject to the terms and conditions of this Section 6.2 the Company agrees that it will not sell or issue any shares of capital stock of the Company, or other securities convertible into or exchangeable for capital stock of the Company, or Options, warrants or rights carrying any rights to purchase capital stock of the Company (the “New Securities”), unless the Company first submits written notice (the “Preemptive Rights Notice”) to the Purchasers identifying the terms of the proposed sale (including the price, number or aggregate principal amount and type of securities and all other material terms) and offers to each Purchaser the opportunity to purchase its Pro Rata Allotment (as hereinafter defined) of the New Securities on terms and conditions, including price, not less favorable than those on which the Company proposes to sell such New Securities to a third party or parties. The Company’s offer to the Purchasers shall remain open for a period of 20 days after the Preemptive Rights Notice, during which time the Purchasers may accept such offer by written notice to the Company setting forth the maximum number of New Securities sought to be purchased by any such Purchaser. Any New Securities so offered that are not purchased by the Purchasers pursuant to such offer may be sold by the Company, but only at a price not less than the price and on other terms and conditions not more favorable to the purchasers than as set forth in the Preemptive Rights Notice, at any time within 90 days following the termination of the above-referenced 20 day period. For purposes of this Section 6, the “Pro Rata Allotment” of the New Securities of Purchasers is based on the ratio that the Conversion Shares held by or issuable to such Purchaser upon conversion of its Series A Preferred Shares on the date of the Preemptive Rights Notice bears to the sum of the total number of shares of Common Stock outstanding on the date of the Preemptive Rights Notice (including the Conversion Shares issuable upon conversion of the Series A Preferred Stock on an as-converted basis).

(b) Notwithstanding the foregoing, the right to purchase the New Securities is inapplicable with respect to any issuance or proposed issuance by the Company of any (i) shares of Common Stock, Options or Convertible Securities issued as a dividend or distribution on Series A Preferred Shares; (ii) shares of Common Stock, Options or Convertible Securities issued by reason of a dividend, stock split, split-up or other distribution on shares of Common Stock; (iii) shares of Common Stock or Options issued to employees or directors of, or consultants or advisors to, the Company or any of its subsidiaries pursuant to a plan, agreement or arrangement approved by the Board of Directors; (iv) shares of Common Stock or Convertible Securities actually issued upon the exercise of Options or shares of Common Stock actually issued upon the conversion or exchange of Convertible Securities; (v) shares of Common Stock, Options or Convertible Securities issued to suppliers or third party service providers in connection with the provision of goods or services pursuant to transactions approved by the Board of Directors; (vi) shares of Common Stock, Options or Convertible Securities issued as acquisition consideration pursuant to the acquisition of another corporation by the Company by merger, purchase of substantially all of the assets or other reorganization or to a joint venture agreement or to any Deemed Liquidation Event (as such term is defined in the Certificate of Designations), provided that such issuances are approved by the Board of Directors; (vii) shares of Common Stock issued pursuant to an effective registration statement filed under the Securities Act; (viii) shares of Common Stock, Options or Convertible Securities issued in bona fide financing transactions resulting, in one transaction or a series of related transactions, in less than $2.0 million of proceeds to the Company; or (ix) shares of Common Stock, Options or Convertible Securities issued pursuant to the ATM Agreement.

6.3 Authorizations. The Company shall use its best efforts to obtain all necessary legal and contractual authorizations of this Agreement and the Transaction Documents, including those of the Board of Directors and its shareholders. If the Company fails to obtain any such authorizations (including those referenced by Section 2.2(a)) and the transactions contemplated hereby do not close as a result of such failure, the Company shall promptly pay all reasonable documented expenses of the Purchasers in cash by wire transfer of immediately available funds, pursuant to wire instructions delivered by the Purchasers in writing.

6.4 Break-Up Fees. If the Chief Executive Officer of the Company and the Purchasers agree on final Transaction Documents, and the Company (a) fails to obtain the approval of the Board of Directors pursuant to Section 2.2(a)(iv) and (b) enters into a debt or equity financing with another purchaser within 150 days of January 6, 2020, Company will promptly pay the Purchasers, in cash by wire transfer of immediately available funds, pursuant to wire instructions delivered by the Purchasers in writing, a break-up fee equal to 1.5% of the Purchase Price set forth opposite each Purchaser’s name in column (3) of the Schedule of Purchasers, plus each Purchaser’s documented expenses in connection with the negotiation and execution of the Transaction Documents. In the event the Chief Executive Officer of the Company and the Purchasers agree on final Transaction Documents, and the Company (a) fails to obtain the approval of the Board of Directors pursuant to Section 2.2(a)(iv) and (b) the Company enters into an agreement to sell all or substantially all of the stock or assets of the Company within 180 days of January 6, 2020, the Company shall pay to the Purchaser an amount equal to (a) the greater of (i) 5% of the Purchase Price set forth opposite each Purchaser’s name in column (3) of the Schedule of Purchasers; and (ii) 5% of the product of (A) the number of shares of Common Stock outstanding and (B) the difference between (a) the price per share at which the Company agreed to sell all or substantially all of the stock or assets of the Company and (b) $3.50, but in any case, not more than $500,000; plus (2) the Purchaser’s documented expenses in connection with the negotiation and execution of the Transaction Documents.

6.5 Board Observation Rights. So long as Palm Global Small Cap Master Fund LP (“Palm”) is the Holder of any Series A Preferred Shares or at least five percent of the Company’s outstanding Common Stock, it will be entitled to have one representative attend and participate in all functions (including those conducted by telephone) of the Board of Directors, as an observer, but such observer will not be a member of the Board of Directors and will have no voting rights (the “Board Observer”), and provided, that Palm and such Board Observer shall have each executed the Board Observation Agreement in the form attached hereto as Exhibit D. The Board Observer will initially be Joshua S. Horowitz (subject to change from time to time by Palm as determined in its sole discretion).

6.6 Indemnification. Subject to Section 6.7 hereof, from and after the Closing, the Company shall indemnify, defend, and hold harmless each of the Purchasers, and their respective employees, officers, directors, agents, Affiliates, and permitted transferees from and against any and all loss, cost, damage, or expense, including reasonable attorney’s fees, resulting from, or arising out of:

(a) any failure of the Company promptly to carry out, perform, satisfy, or discharge any of its covenants, agreements, undertakings, liabilities, or obligations under this Agreement or in any Transaction Document;

(b) any breach of any representation or warranty of the Company contained in this Agreement, in any Transaction Document, or in any certificate delivered at the Closing in respect hereof; and

(c) any Proceeding instituted against the Purchaser with respect to any of the transactions contemplated by this Agreement or any of the Transaction Documents (unless such Proceeding is based upon a breach of such Purchaser’s representations, warranties or covenants under the Transaction Documents or any violations by such Purchaser of state or federal securities Laws or any conduct by such Purchaser which constitutes a breach of fiduciary duty, fraud, negligence, gross negligence, willful misconduct or malfeasance).

6.7 Limitations on Indemnification. The Company’s obligations under Section 6.6 are subject to the following:

(a) no claim for indemnification under Section 6.6(b) may be asserted by a Purchaser unless notice of such claim is provided to the Company by such Purchaser in writing on or before the first anniversary of the Closing Date;

(b) the aggregate liability of the Company for indemnification of each Purchaser under Section 6.6(b) will not exceed such Purchaser’s Purchase Price, plus its reasonable attorney’s fees incurred in connection with such breach and enforcement of its rights under Section 6.6(b); and

6.8 Indemnification by Purchasers. From and after the Closing, each Purchaser, severally and not jointly, agrees to indemnify and hold the Company, its employees, officers, directors, agents, Affiliates, and permitted transferees from and against any and all loss, cost, damage, or expense, including reasonable attorney’s fees, resulting from, or arising out of:

(a) any failure of such Purchaser to promptly to carry out, perform, satisfy, or discharge any of its covenants, agreements, undertakings, liabilities, or obligations under this Agreement or in any Transaction Document;

(b) any breach of any representation or warranty of such Purchaser contained in this Agreement, in any Transaction Document, or in any certificate delivered at the Closing in respect hereof; and

(c) any information furnished by such Purchaser in writing to the Company expressly for use in the Registration Statement or any preliminary Prospectus, Prospectus or issuer free writing Prospectus (as defined in Rule 433 of the Securities Act) relating thereto, any amendment or supplement thereto or any document incorporated by reference therein;

provided that the liability of such Purchaser shall be limited to such Purchaser’s Purchase Price.

6.9 Conduct of Indemnification Proceedings.

(a) Any Person entitled to indemnification hereunder shall (i) give prompt written notice to the indemnifying party of any claim with respect to which it seeks indemnification; provided that the failure to give such notice shall not limit the rights of such Person or relieve the indemnifying party from any liability that it may have under Sections 6.6 and 6.8 above unless and only to the extent that failure to give such notice materially prejudices the indemnifying party; and (ii) unless in such indemnified party’s reasonable judgment a conflict of interest between such indemnified and any indemnifying parties may exist with respect to such claim, permit such indemnifying party to assume the defense of such claim with counsel reasonably satisfactory to the indemnified party; provided that any Person entitled to indemnification hereunder shall have the right to employ separate counsel and to participate in the defense of such claim at the expense of such indemnified person, unless (x) the indemnifying party has agreed to pay such fees or expenses or (y) the indemnifying party shall have failed to assume the defense of such claim and employ counsel reasonably satisfactory to such Person. If such defense is not assumed by the indemnifying party when permitted hereunder, the indemnified party shall be entitled to assume and control such defense and to settle and agree to pay in full such claim without the consent of the indemnifying party without prejudice to the ability of the indemnified party to enforce its claim for indemnification against the indemnifying party hereunder.

(b) Except as otherwise provided in the preceding paragraph, the indemnifying party shall not be subject to any liability for any settlement made by the indemnified party without its consent, which consent shall not be unreasonably withheld or delayed. If such defense is assumed by the indemnifying party pursuant to the provisions hereof, such indemnifying party shall not settle or otherwise compromise the applicable claim (i) unless (A) such settlement or compromise contains a full and unconditional release of the indemnified party and (B) such settlement or compromise does not include any statement as to or any admission of fault, culpability or a failure to act by or on behalf of the indemnified party or (ii) if such settlement or compromise provides for injunctive or other non-monetary relief, in each case, unless the indemnified party otherwise consents in writing. An indemnifying party who is not entitled to, or elects not to, assume the defense of a claim shall not be obligated to pay the fees and expenses of more than one counsel for all parties indemnified by such indemnifying party with respect to such claim, unless in the reasonable judgment of any indemnified party, a conflict of interest may exist between such indemnified party and any other of such indemnified parties with respect to such claim, in which event the indemnifying party shall be obligated to pay the reasonable fees and disbursements of such additional counsel or counsels.

6.10 Compliance with Securities Law Exemption. The Company and authorized agents acting on its behalf shall not take any action that would cause the loss of the exemptions from securities registration afforded by Section 4(a)(2) of the Securities Act and Rule 506(b) of Regulation D under the Securities Act.

ARTICLE VII
MISCELLANEOUS

7.1 Termination. This Agreement may be terminated (i) by the Purchasers purchasing a majority of the Series A Preferred Shares, by written notice to the other parties, if the Closing has not been consummated by the tenth Trading Day following the Effective Date of this Agreement; or (ii) by the Company, if the Closing has not been consummated by the tenth Trading Day following the Effective Date of this Agreement, provided that a party shall not have the right to terminate under this Section 7.1 if the conditions precedent to such party’s obligation to close have been fully satisfied and such party has failed or refused to close after being requested in writing to close by the other party, and provided that no such termination will affect the right of any party to sue for any breach by the other party (or parties).

7.2 Fees and Expenses. Except as expressly set forth in this Agreement to the contrary, each party will pay the fees and expenses of its advisers, counsel, accountants, and other experts, if any, and all other expenses incurred by such party incident to the negotiation, preparation, execution, delivery, and performance of this Agreement. At Closing, the Company shall pay the Purchasers’ actual attorney’s fees and out of pocket costs incurred in connection with the negotiation of this Agreement and the issuance of the Securities, not to exceed $35,000, and all Transfer Agent fees, stamp taxes and other Taxes and duties levied in connection with the issuance of the Securities.

7.3 Entire Agreement. The Transaction Documents, together with the Exhibits and Schedules thereto, contain the entire understanding of the parties with respect to the subject matter hereof and supersede all prior agreements and understandings, oral or written, with respect to such matters, which the parties acknowledge have been merged into such documents, exhibits and schedules. At or after the Closing, and without further consideration, the Company shall execute and deliver to the Purchasers such further documents as may be reasonably requested in order to give practical effect to the intention of the parties under the Transaction Documents.

7.4 Notices. All notices required or permitted hereunder will be in writing and will be deemed effective: (i) upon personal delivery; (ii) in the case of delivery by mail within the continental United States, on the fourth Business Day after such notice or other communication will have been deposited in the mail, postage prepaid, return receipt requested; (iii) when sent by either facsimile or email at the applicable facsimile number or email address set forth below upon confirmation of transmission or receipt of mailing; or (iv) in the case of delivery by internationally recognized overnight delivery service, when received, addressed as follows:

(a) If to the Company:

Biomerica, Inc.

17571 Von Karman Ave.

Irvine, California 92614

Attn: Zachary S. Irani

Facsimile No.: (949) 645-2111

Email: zirani@biomerica.com

With a copy to (which will not constitute notice):

Womble Bond Dickinson (US) LLP

470 Atlantic Avenue

Suite 600

Boston, MA 02210

Attn: Caitlin MacDowell, Esq.

Email: caitlin.macdowell@wbd-us.com

(b) If to the Purchaser, to its address, facsimile number, and email address set forth on the Schedule of Purchaser, with copies to such Purchaser’s representatives as set forth in column (4) on the Schedule of Purchasers,

(c) Or to such other address and/or facsimile number or email address and/or to the attention of such other Person as the recipient party has specified by written notice given to each other party five days prior to the effectiveness of such change. Written confirmation of receipt (A) given by the recipient of such notice, consent, waiver or other communication, (B) mechanically or electronically generated by the sender’s facsimile machine or computer containing the time, date, recipient facsimile number or email address and an image of the first page of such transmission or (C) provided by an overnight courier service will be rebuttable evidence of personal service, receipt by facsimile or email or receipt from an overnight courier service in accordance with clause (i), (ii), (iii), or (iv) above, respectively.

7.5 Amendments; Waivers. No provision of this Agreement may be waived or amended except in a written instrument signed, in the case of an amendment, by the Company and each of the Purchasers or, in the case of a waiver, by the party against whom enforcement of any such waiver is sought. No waiver of any default with respect to any provision, condition or requirement of this Agreement will be deemed to be a continuing waiver in the future or a waiver of any subsequent default or a waiver of any other provision, condition or requirement hereof, nor will any delay or omission of either party to exercise any right hereunder in any manner impair the exercise of any such right. Notwithstanding the foregoing, a waiver or consent to depart from the provisions hereof with respect to a matter that relates exclusively to the rights of Purchasers under and that does not directly or indirectly affect the rights of other Purchasers may be given by Purchasers holding at least most of the Registrable Securities to which such waiver or consent relates.

7.6 Construction. The headings herein are for convenience only, do not constitute a part of this Agreement and will not be deemed to limit or affect any of the provisions hereof. The language used in this Agreement will be deemed to be the language chosen by the parties to express their mutual intent, and no rules of strict construction will be applied against any party.

7.7 Successors and Assigns. This Agreement will be binding upon and inure to the benefit of the parties and their successors and permitted assigns including all subsequent purchasers of the Securities, other than any purchaser of Conversion Shares distributed pursuant to an effective Registration Statement. The Company may not assign this Agreement or any rights or obligations hereunder without the prior written consent of Holders of at least a majority of the Series A Preferred Shares then outstanding. Any Purchaser may assign some or all of its rights (except those of indemnification or reimbursement) under this Agreement to any Person to whom such Purchaser assigns or transfers any Securities, provided such transferee agrees in writing to be bound, with respect to the transferred Securities, by the provisions hereof that apply to the “Purchasers.”

7.8 No Third-Party Beneficiaries. This Agreement is intended for the benefit of the parties hereto and their respective successors and permitted assigns and is not for the benefit of, nor may any provision hereof be enforced by, any other Person.

7.9 Governing Law; Venue; Waiver of Jury Trail. ALL QUESTIONS CONCERNING THE CONSTRUCTION, VALIDITY, ENFORCEMENT, AND INTERPRETATION OF THIS AGREEMENT ARE INTENDED TO BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE. THE COMPANY AND PURCHASERS HEREBY IRREVOCABLY SUBMIT TO THE EXCLUSIVE JURISDICTION OF THE STATE AND FEDERAL COURTS SITTING IN OR FOR ORANGE COUNTY, CALIFORNIA FOR THE ADJUDICATION OF ANY DISPUTE BROUGHT BY THE COMPANY OR ANY PURCHASER HEREUNDER, 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 WAIVE, AND AGREE NOT TO ASSERT IN ANY SUIT, ACTION OR PROCEEDING BROUGHT BY THE COMPANY OR ANY PURCHASER, ANY CLAIM THAT IT IS NOT PERSONALLY SUBJECT TO THE JURISDICTION OF ANY SUCH COURT, OR THAT SUCH SUIT, ACTION OR PROCEEDING IS IMPROPER. 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 AGREEMENT AND AGREES THAT SUCH SERVICE WILL CONSTITUTE GOOD AND SUFFICIENT SERVICE OF PROCESS AND NOTICE THEREOF. NOTHING CONTAINED HEREIN WILL BE DEEMED TO LIMIT IN ANY WAY ANY RIGHT TO SERVE PROCESS IN ANY MANNER PERMITTED BY LAW. THE COMPANY AND PURCHASERS HEREBY WAIVE ALL RIGHTS TO A TRIAL BY JURY.

7.10 Survival. The representations, warranties, agreements, and covenants contained herein will survive the Closing and the delivery and/or exercise of the Securities, as applicable, for a period of one year.

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

7.12 Severability. If any provision of this Agreement is held to be invalid or unenforceable in any respect, the validity and enforceability of the remaining terms and provisions of this Agreement will not in any way be affected or impaired thereby and the parties will attempt to agree upon a valid and enforceable provision that is a reasonable substitute therefor, and upon so agreeing, will incorporate such substitute provision in this Agreement.

7.13 Remedies. In addition to being entitled to exercise all rights provided herein or granted by Law, including recovery of damages, each of the Purchasers and the Company shall be entitled to specific performance under the Transaction Documents. The parties agree that monetary damages may not be adequate compensation for any loss incurred by reason of any breach of obligations described in the foregoing sentence and hereby agrees to waive in any action for specific performance of any such obligation the defense that a remedy at Law would be adequate.

7.14 Payment Set Aside. To the extent that the Company makes a payment or payments to any Purchaser hereunder or any Purchaser enforces or exercises its rights hereunder or thereunder, and such payment or payments or the proceeds of such enforcement or exercise or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside, recovered from, disgorged by or are required to be refunded, repaid or otherwise restored to the Company by a trustee, receiver or any other Person under any Law (including, without limitation, any bankruptcy Law, state or federal Law, common Law or equitable cause of action), then to the extent of any such restoration the obligation or part thereof originally intended to be satisfied will be revived and continued in full force and effect as if such payment had not been made or such enforcement or setoff had not occurred.

7.15 Adjustments in Share Numbers and Prices. If any stock split, subdivision, dividend or distribution payable in shares of Common Stock (or other securities or rights convertible into, or entitling the Holder thereof to receive directly or indirectly shares of Common Stock), combination or other similar recapitalization or event occurs after the date hereof, each reference in any Transaction Document to a number of shares or a price per share will be amended to appropriately account for such event.

7.16 Independent Nature of Purchasers’ Obligations and Rights. The obligations of each Purchaser under any Transaction Document are several and not joint with the obligations of any other Purchaser, and no Purchaser will be responsible in any way for the performance of the obligations of any other Purchaser under any Transaction Document. The decision of each Purchaser to purchase the Securities pursuant to this Agreement has been made by such Purchaser independently of any other Purchaser and independently of any information, materials, statements or opinions as to the business, affairs, operations, assets, properties, liabilities, results of operations, condition (financial or otherwise) or prospects of the Company or any of its Subsidiaries which may have been made or given by any other Purchaser or by any agent or employee of any other Purchaser, and no Purchaser or any of its agents or employees will have any liability to any other Purchaser (or any other Person) relating to or arising from any such information, materials, statements or opinions. Nothing contained herein or in any Transaction Document, and no action taken by any Purchaser pursuant thereto, will be deemed to constitute the Purchasers as a partnership, an association, a joint venture or any other kind of entity, or create a presumption that the Purchasers are in any way acting in concert or as a group with respect to such obligations or the transactions contemplated by the Transaction Document. Each Purchaser acknowledges that no other Purchaser has acted as agent for such Purchaser in connection with making its investment hereunder and that no other Purchaser will be acting as agent of such Purchaser in connection with monitoring its investment hereunder. Each Purchaser will be entitled to independently protect and enforce its rights, including without limitation the rights arising out of this Agreement or out of the other Transaction Documents, and it will not be necessary for any other Purchaser to be joined as an additional party in any Proceeding for such purpose.

[Signature pages to follow]

BIOMERICA, INC.

REGISTRATION RIGHTS AGREEMENT

THIS REGISTRATION RIGHTS AGREEMENT (this “Agreement”) is made as of February 26, 2020 by and among Biomerica, Inc., a Delaware corporation (the “Company”), and each of the investors set forth on the signature pages hereto (each, the “Investor” and collectively, the “Investors”).

RECITALS

A. The Company and the Investors are parties to that certain Stock Purchase Agreement, dated as of February 21, 2020 (the “Purchase Agreement”), relating to the issue and sale to the Investors of shares of Series A Cumulative Convertible Preferred Stock of the Company (the “Series A Preferred Stock”);

B. The shares of Series A Preferred Stock are convertible into shares the common stock of the Company, par value $0.08 per share (the “Common Stock”); and

C. The obligations of the Company and the Investors under the Purchase Agreement are conditioned, among other things, upon the execution and delivery of this Agreement by the Company and the Investors.

AGREEMENT

The parties hereto agree as follows:

SECTION 1
DEFINITIONS

1.1 Definitions. For purposes of this Agreement, the following capitalized terms have the following meaning:

“Agreement” has the meaning ascribed to such term in the preamble hereof.

“Business Day” means any day other than Saturday, Sunday or other day on which commercial banks in the City of New York are authorized or required by law to remain closed.

“Common Stock” has the meaning ascribed to such term in the recitals hereof.

“Company” has the meaning ascribed to such term in the preamble hereof.

“Company Demand Registration Notice” has the meaning set forth in Section 2.1(a).

“Company Underwriting Notice” has the meaning set forth in Section 2.3(a)(i)(B).

“Control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a person, whether through the ownership of voting securities, by contract or otherwise, and the terms “Controlling” and “Controlled” (and the lower-case versions of the same) have meanings correlative thereto.

“Damages” means any loss, damage, or liability (joint or several) to which a party hereto may become subject under the Securities Act, the Exchange Act, or other federal or state law, insofar as such loss, damage, or liability (or any action in respect thereof) arises out of or is based upon: (i) any untrue statement or alleged untrue statement of a material fact contained in any registration statement of the Company, including any preliminary prospectus or final prospectus contained therein or any amendments or supplements thereto; (ii) an omission or alleged omission to state therein a material fact required to be stated therein, or necessary to make the statements therein not misleading; or (iii) any violation or alleged violation by the indemnifying party (or any of its agents or Affiliates) of the Securities Act, the Exchange Act, any state securities law, or any rule or regulation promulgated under the Securities Act, the Exchange Act, or any state securities law.

“Eligible Market” means The New York Stock Exchange, Inc. or the NASDAQ Stock Market.

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

“Excluded Registration” means: (i) a registration on Form S-8 or otherwise relating to the sale of securities to employees of the Company or its Affiliate pursuant to a stock option, stock purchase, or similar plan; (ii) a registration on Form S-4 or otherwise relating to a transaction governed by Rule 145; (iii) a registration on any form that does not include substantially the same information as would be required to be included in a registration statement covering the sale of the Registrable Securities; (iv) a registration in which the only Common Stock being registered is Common Stock issuable upon conversion or exchange of debt securities that are also being registered; or (v) a registration covering shares of Common Stock issued by the Company pursuant to the ATM Agreement (as defined in the Stock Purchase Agreement).

“Form S-1” means such form under the Securities Act as in effect on the date hereof or any successor registration form under the Securities Act subsequently adopted by the SEC.

“Form S-3” means such form under the Securities Act as in effect on the date hereof or any registration form under the Securities Act subsequently adopted by the SEC that permits incorporation of substantial information by reference to other documents filed by the Company with the SEC.

“Holder” means any holder of Registrable Securities who is a party to this Agreement.

“Holder Demand Registration Notice” has the meaning set forth in Section 2.1(a).

“Holder Notice” has the meaning set forth in Section 2.3(a)(ii).

“Holder Underwriting Notice” has the meaning set forth in Section 2.3(a)(i)(B).

“Initiating Holders” means, collectively, Holders who properly initiate a registration request under this Agreement.

“Investor(s)” has the meaning ascribed to such term in the preamble hereof.

“Person” means an individual, a partnership, a corporation, a limited liability company, an association, a joint stock company, a trust, a joint venture, an unincorporated organization and a governmental entity or any department, agency or political subdivision thereof.

“Piggyback Registration” has the meaning set forth in Section 2.2.

“Piggyback Underwriting Notice” has the meaning set forth in Section 2.3(a)(i)(B).

“Purchase Agreement” has the meaning ascribed to such term in the recitals hereof.

“Registrable Securities” means (a) the shares of Common Stock issuable or issued upon conversion of the Series A Preferred Stock and (b) any shares of Common Stock issued or issuable with respect to any shares described in (a) above by way of a stock dividend or stock split or in exchange for or upon conversion of such shares or otherwise in connection with a combination of shares, distribution, recapitalization, merger, consolidation, other reorganization or other similar event with respect to the Common Stock; provided, however, that Registrable Securities shall not include: (i) any shares of Common Stock that have been registered under the Securities Act and disposed of pursuant to an effective Registration Statement or otherwise transferred to a Person who is not entitled to the registration and other rights hereunder; (ii) any shares of Common Stock that have been sold or transferred by the Holder thereof pursuant to Rule 144 (or any similar provision then in force under the Securities Act) and the transferee thereof does not receive “restricted securities” as defined in Rule 144; and (iii) any shares of Common Stock that cease to be outstanding (whether as a result of repurchase and cancellation, conversion or otherwise).

“Registration Statement” has the meaning set forth in Section 2.1.

“Rule 144” means Rule 144 under the Securities Act or any successor rule thereto.

“Rule 145” means Rule 145 under the Securities Act or any successor rule thereto.

“SEC” means the Securities and Exchange Commission.

“Securities Act” means the Securities Act of 1933, as amended.

“Selling Expenses” means all underwriting discounts, selling commissions, and stock transfer taxes applicable to the sale of Registrable Securities, and fees and disbursements of counsel for any Holder, except for the fees and disbursements of the Selling Holder Counsel borne and paid by the Company as provided in Section 2.6.

“Selling Holder Counsel” has the meaning set forth in Section 2.6.

“Series A Preferred Stock” has the meaning ascribed to such term in the recitals hereof.

“Subsidiary” of any specified Person means a majority-owned subsidiary, as defined in Rule 405 promulgated by the SEC under the Securities Act.

“Underwriting Initiating Holder” has the meaning set forth in Section 2.3(a)(i).

SECTION 2
REGISTRATION RIGHTS

2.1 Demand Registration.

(a) Registration Statement Demand. Subject to the terms and conditions of this Agreement, if the Company receives written notice (each, a “Holder Demand Registration Notice”) from the Holders of at least a majority of the Registrable Securities then outstanding, requesting that the Company file a registration statement with respect to the resale of outstanding Registrable Securities held by such Holders, then the Company shall: (i) within ten days after the date such request is received by the Company, send written notice thereof (each, a “Company Demand Registration Notice”) to all Holders other than the Initiating Holders; and (ii) use reasonable efforts to, as soon as practicable, but no later than 45 days after the date such request is given by the Initiating Holders (or if such day is not a Business Day, then by the end of the next Business Day), file a registration statement on Form S-1 or, if the Company is eligible to register the resale of all Registrable Securities on Form S-3, on Form S-3 (each, a “Registration Statement”) under the Securities Act covering the resale of all Registrable Securities that the Initiating Holders requested to be registered and any additional Registrable Securities requested to be included in such Registration Statement by any other Holders, as specified by a written notice given by each such Holder to the Company within 10 days of the date the Company Demand Registration Notice is given, and in each case, subject to the limitations set forth herein. The Holders will be permitted to one demand registration pursuant to this Section 2.1 upon the earlier to occur of (A) the conversion of all of the outstanding shares of Series A Preferred Stock into Registrable Securities; or (B) the date that is nine months after the date of the Closing (as defined in the Purchase Agreement).

(b) Notwithstanding the foregoing obligations, if the Company furnishes to Holders requesting a registration pursuant to this Section 2.1 a certificate signed by the Company’s Chief Executive Officer or Chairman of the Board stating that in the good faith judgment of the Company’s Board of Directors it would be materially detrimental to the Company and its shareholders for such registration statement to either become effective or remain effective for as long as such registration statement otherwise would be required to remain effective, because such action would: (i) materially interfere with a significant acquisition, corporate reorganization, or other similar transaction involving the Company; (ii) require premature disclosure of material non-public information that the Company has a bona fide business purpose for preserving as confidential; or (iii) render the Company unable to comply with requirements under applicable law or a material agreement of the Company, then the Company may defer taking action with respect to such filing for a period of not more than 120 days after the request of the Initiating Holders is received by the Company; provided, however, that the Company may not invoke this right more than once in any twelve month period; and provided further that the Company shall not register the sale of any equity securities for its own account or that of any other shareholder during such 120 day period other than an Excluded Registration.

2.2 Piggyback Registration. If the Company proposes to register (including, for this purpose, a registration effected by the Company for shareholders other than the Holders) any shares of its Common Stock under the Securities Act in connection with the public offering of such shares solely for cash (other than in an Excluded Registration), the Company shall, at such time, promptly give each Holder written notice of such registration. Upon the request of each Holder given within 20 days after such notice is given by the Company, the Company shall, subject to the provisions of Section 2.3, cause to be registered all of the Registrable Securities that each such Holder has requested to be included in such registration (each such registration, a “Piggyback Registration”). Each Holder has the right to participate in up to two Piggyback Registrations.

2.3 Underwriting Requirements.

(a) (i) If any Holders intend to dispose of Registrable Securities by means of an underwritten offering (each such Holder, an “Underwriting Initiating Holder”), they will so advise the Company in writing as follows:

(A) if the Underwriting Initiating Holders intend to effect such underwritten offering pursuant to a registration statement that has not yet been filed with the SEC, such Underwriting Initiating Holders will advise the Company of their intent to effect an underwritten offering and the amount of Registrable Securities they intend to include therein in the Holder Demand Registration Notice they furnish to the Company in accordance with Section 2.1(a) (and the Company shall include such information in the applicable Company Demand Registration Notice); or

(B) if the Underwriting Initiating Holders intend to effect such underwritten offering pursuant to a registration statement that has already been filed with the SEC in accordance with Section 2.1(a) (regardless of whether such registration statement has been declared effective), such Underwriting Initiating Holders will advise the Company of their intent to effect an underwritten offering and the amount of Registrable Securities that they intend to include therein in a notice (a “Holder Underwriting Notice”) to be received by the Company at least 20 days prior to the anticipated date of commencement of marketing efforts for such underwritten offering. Upon receiving a Holder Underwriting Notice, the Company shall: (1) within ten days after such receipt, send a notice (the “Company Underwriting Notice”) to all Holders (other than the Underwriting Initiating Holders) of Registrable Securities included in such registration statement, advising such Holders of the information contained in the Holder Underwriting Notice and of the right of such Holders under this Agreement to participate in the applicable underwritten offering; and (2) include in such underwritten offering all Registrable Securities requested to be included in such offering by such other Holders, as specified by written notice (each, a “Piggy-Back Underwriting Notice”) given by each such Holder to the Company within ten days of the date the Company Underwriting Notice is given, and in each case, subject to the limitations set forth herein.

(ii) The Company may select the underwriter(s) for any underwritten offering pursuant to this Section 2.3, if acceptable to a majority in interest of the participating Holders (determined according to each participating Holder’s relative share of Registrable Securities proposed to be included in such underwritten offering according to its Holder Registration Demand Notice, Holder Underwriting Notice, Piggy-Back Registration Notice or Piggy-Back Underwriting Notice, as applicable (each a “Holder Notice”)). In such event, the right of any Holder to include such Holder’s Registrable Securities in such underwritten offering will be conditioned upon such Holder’s participation in such underwriting and the inclusion of such Holder’s Registrable Securities in the underwriting to the extent provided herein. All Holders proposing to distribute their Registrable Securities through such underwriting will (together with the Company as provided in Section 2.4(e)) enter into an underwriting agreement in customary form with the lead underwriter(s) selected for such underwriting. Notwithstanding any other provision of this Section 2.3, if the underwriter(s) advise(s) the Underwriting Initiating Holders in writing that marketing factors require a limitation on the number of shares to be underwritten, then the Underwriting Initiating Holders will so advise all Holders of Registrable Securities that otherwise would be underwritten pursuant hereto, and the number of Registrable Securities that may be included in the underwritten offering, which number will be determined by the Company based on the advice of the underwriter(s), will be allocated among such Holders of Registrable Securities, including the Underwriting Initiating Holders, in proportion (as nearly as practicable) to the number of Registrable Securities originally proposed to be offered by each Holder in the applicable Holder Notices or in such other proportion as will mutually be agreed to by all such selling Holders. To facilitate the allocation of shares in accordance with the above provisions, the Company or the underwriters may round the number of shares allocated to any Holder to the nearest 100 shares.

(b) In connection with any offering involving an underwriting of shares of the Common Stock pursuant to Section 2.2, the Company is not required to include any of the Holders’ Registrable Securities in such underwriting unless the Holders accept the terms of the underwriting as agreed upon between the Company and its underwriters, and then only in such quantity as the underwriters in their sole discretion determine will not jeopardize the success of the offering by the Company or other shareholders of the Company. If the total number of securities, including Registrable Securities, requested by shareholders to be included in such offering exceeds the number of securities to be sold that the underwriters in their reasonable discretion determine is compatible with the success of the offering, then the Company is required to include in the offering only that number of such securities, including Registrable Securities, which the underwriters and the Company in their sole discretion determine will not jeopardize the success, of the offering. If the underwriters determine that less than all of the Registrable Securities requested to be registered can be included in such offering, then the Registrable Securities that are included in such offering will be allocated among the selling Holders in proportion (as nearly as practicable to) the number of Registrable Securities owned by each selling Holder or in such other proportions as will mutually be agreed to by all such selling Holders. To facilitate the allocation of shares in accordance with the above provisions, the Company or the underwriters may round the number of shares allocated to any Holder to the nearest 100 shares.

(c) For purposes of Section 2.1, a registration will not be counted as “effected” if, as a result of an exercise of the underwriter’s cutback provisions in Section 2.3(a), fewer than 50% of the total number of Registrable Securities that Holders have requested to be included in such registration statement are actually included.

2.4 Obligations of the Company. Whenever required under this Section 2 to effect the registration of any Registrable Securities, the Company shall:

(a) use reasonable efforts to cause such registration statement to become effective and keep such registration statement effective for a period of up to 90 days or, if earlier, until the distribution contemplated in the registration statement has been completed; provided, however, that, in the case of any registration of Registrable Securities that are intended to be offered on a continuous or delayed basis, subject to compliance with applicable SEC rules, the Company shall use reasonable efforts to keep the registration statement effective (including by amendment, supplement or replacement) until such securities are no longer Registrable Securities;

(b) prepare and file with the SEC such amendments and supplements to such registration statement, and the prospectus used in connection with such registration statement, as may be necessary to comply with the Securities Act in order to enable the disposition of all Registrable Securities covered by such registration statement;

(c) furnish to the selling Holders such numbers of copies of a prospectus, including a preliminary prospectus, as required by the Securities Act, and such other documents as the Holders may reasonably request in order to facilitate their disposition of their Registrable Securities;

(d) use reasonable efforts to register and qualify the Registrable Securities covered by such registration statement under applicable securities laws of states or other jurisdictions; provided, that the Company is not required to qualify to do business or to file a general consent to service of process in any such states or jurisdictions, unless the Company is already subject to service in such jurisdiction and except as may be required by the Securities Act;

(e) in the event of any underwritten public offering, enter into and perform its obligations under an underwriting agreement, in usual and customary form, with the underwriter(s) of such offering;

(f) use reasonable efforts to cause all such Registrable Securities covered by such registration statement to be listed on an Eligible Market;

(g) provide a transfer agent and registrar for all Registrable Securities registered pursuant to this Agreement and provide a CUSIP number for all such Registrable Securities, in each case not later than the effective date of such registration;

(h) promptly make available for inspection by the selling Holders, any managing underwriter(s) participating in any disposition pursuant to such registration statement, and any attorney or accountant or other agent retained by any such underwriter or selected by the selling Holders, all financial and other records, pertinent corporate documents, and properties of the Company, and cause the Company’s officers, directors, employees, and independent accountants to supply all information reasonably requested by any such seller, underwriter, attorney, accountant, or agent, in each case, as necessary or advisable to verify the accuracy of the information in such registration statement;

(i) notify each selling Holder, promptly after the Company receives notice thereof, of the time when such registration statement has been declared effective or a supplement to any prospectus forming a part of such registration statement has been filed; and

(j) after such registration statement becomes effective, notify each selling Holder of any request by the SEC that the Company amend or supplement such registration statement or prospectus.

2.5 Furnish Information. It will be a condition precedent to the obligations of the Company to take any action pursuant to this Section 2 with respect to the Registrable Securities of any selling Holder that such Holder will furnish to the Company such information regarding itself, the Registrable Securities held by it, and the intended method of disposition of such securities as is reasonably required to effect the registration or sale of such Holder’s Registrable Securities.

2.6 Expenses of Registration. The Company shall pay (or reimburse the Holders of the Registrable Securities included in a registration statement) for all fees and expenses incident to the performance of or compliance with this Agreement, including without limitation (a) all registration and filing fees and expenses, including without limitation those related to filings with the SEC, any Eligible Market and in connection with applicable state securities or Blue Sky laws, (b) printing expenses (including without limitation expenses of printing certificates for Registrable Securities and of printing prospectuses requested by the Holders of the Registrable Securities included in a Registration Statement), (c) messenger, telephone and delivery expenses incurred by the Company, (d) fees and disbursements of counsel for the Company, (e) fees and expenses of all independent certified public accountants, underwriters (excluding commissions relating to sales of Registrable Securities) and other Persons retained by the Company in connection with the consummation of the transactions contemplated by this Agreement, (f) all listing fees to be paid by the Company to the Eligible Market, and (g) fees and disbursements of one counsel for the Holders of the Registrable Securities as a group in connection with the transactions contemplated by this Agreement in which such Holders participate. In all events, the Purchasers will be solely responsible for paying all brokerage fees, underwriter commissions or similar compensation relating to their sale of Registrable Securities, legal fees of counsel retained by any Holder of Registrable Securities other than the one counsel retained for the Holders of the Registrable Securities as a group, and any income taxes resulting from any such sale of Registrable Securities.

2.7 Indemnification. If any Registrable Securities are included in a registration statement under this Section 2:

(a) To the extent permitted by law, the Company shall indemnify, defend, and hold harmless each selling Holder, and the partners, members, officers, directors, and shareholders of each such Holder; legal counsel and accountants for each such Holder; any underwriter (as defined in the Securities Act) for each such Holder; and each Person, if any, who controls such Holder or underwriter within the meaning of the Securities Act or the Exchange Act, against any Damages, and the Company shall pay to each such Holder, underwriter, controlling Person, or other aforementioned Person any legal or other expenses reasonably incurred thereby in connection with investigating or defending any claim or proceeding from which Damages may result, as such expenses are incurred; provided, however, that the indemnity agreement contained in this Section 2.7(a) will not apply to amounts paid in settlement of any such claim or proceeding if such settlement is effected without the consent of the Company, which consent will not be unreasonably withheld, nor will the Company be liable for any Damages to the extent that they arise out of or are based upon actions or omissions made in reliance upon and in conformity with written information furnished by or on behalf of any such Holder, underwriter, controlling Person, or other aforementioned Person expressly for use in connection with such registration.

(b) To the extent permitted by law, each selling Holder, severally and not jointly, will indemnify, defend, and hold harmless the Company, and each of its directors, each of its officers who has signed the registration statement, each Person (if any), who Controls the Company, legal counsel and accountants for the Company, any underwriter (as defined in the Securities Act), any other Holder selling securities in such registration statement, and any controlling Person of any such underwriter or other Holder, against any Damages, in each case only to the extent that such Damages arise out of or are based upon actions or omissions made in reliance upon and in conformity with written information furnished by or on behalf of such selling Holder expressly for use in connection with such registration; and each such selling Holder will pay to the Company and each other aforementioned Person any legal or other expenses reasonably incurred thereby in connection with investigating or defending any claim or proceeding from which Damages may result, as such expenses are incurred; provided, however, that the indemnity agreement contained in this Section 2.7(b) will not apply to amounts paid in settlement of any such claim or proceeding if such settlement is effected without the consent of the Holder, which consent will not be unreasonably withheld; and provided further that in no event will the aggregate amounts payable by any Holder by way of indemnity or contribution under Sections 2.7(b) and 2.7(d) exceed the proceeds from the offering received by such Holder (net of any Selling Expenses paid by such Holder), except in the case of fraud or willful misconduct by such Holder.

(c) Promptly after receipt by an indemnified party under this Section 2.7 of notice of the commencement of any action (including any governmental action) for which a party may be entitled to indemnification hereunder, such indemnified party will, if a claim in respect thereof is to be made against any indemnifying party under this Section 2.7, give the indemnifying party notice of the commencement thereof. The indemnifying party will have the right to participate in such action and, to the extent the indemnifying party so desires, participate jointly with any other indemnifying party to which notice has been given, and to assume the defense thereof with counsel mutually satisfactory to the parties; provided, however, that an indemnified party (together with all other indemnified parties that may be represented without conflict by one counsel) will have the right to retain one separate counsel, with the fees and expenses to be paid by the indemnifying party, if representation of such indemnified party by the counsel retained by the indemnifying party would be inappropriate due to actual or potential differing interests between such indemnified party and any other party represented by such counsel in such action. The failure to give notice to the indemnifying party within a reasonable time of the commencement of any such action will relieve such indemnifying party of any liability to the indemnified party under this Section 2.7, to the extent that such failure materially prejudices the indemnifying party’s ability to defend such action. The failure to give notice to the indemnifying party will not relieve it of any liability that it may have to any indemnified party otherwise than under this Section 2.7.

(d) To provide for just and equitable contribution to joint liability under the Securities Act in any case in which either: (i) any party otherwise entitled to indemnification hereunder makes a claim for indemnification pursuant to this Section 2.7 but it is judicially determined (by the entry of a final judgment or decree by a court of competent jurisdiction and the expiration of time to appeal or the denial of the last right of appeal) that such indemnification may not be enforced in such case, notwithstanding the fact that this Section 2.7 provides for indemnification in such case; or (ii) contribution under the Securities Act may be required on the part of any party hereto for which indemnification is provided under this Section 2.7, then, and in each such case, such parties will contribute to the aggregate losses, claims, damages, liabilities, or expenses to which they may be subject (after contribution from others) in such proportion as is appropriate to reflect the relative fault of each of the indemnifying party and the indemnified party in connection with the statements, omissions, or other actions that resulted in such loss, claim, damage, liability, or expense, as well as to reflect any other relevant equitable considerations. The relative fault of the indemnifying party and of the indemnified party will be determined by reference to, among other things, whether the untrue or allegedly untrue statement of a material fact, or the omission or alleged omission of a material fact, relates to information supplied by the indemnifying party or by the indemnified party and the parties’ relative intent, knowledge, access to information, and opportunity to correct or prevent such statement or omission; provided, however, that, in any such case: (x) no Holder will be required to contribute any amount in excess of the public offering price of all such Registrable Securities offered and sold by such Holder pursuant to such registration statement; and (y) no Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) will be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation; and provided further, that in no event will a Holder’s liability pursuant to this Section 2.7(d), when combined with the amounts paid or payable by such Holder pursuant to Section 2.7(b), exceed the proceeds from the offering received by such Holder (net of any Selling Expenses) paid by such Holder), except in the case of willful misconduct or fraud by such Holder.

(e) Notwithstanding the foregoing, to the extent that the provisions on indemnification and contribution contained in the underwriting agreement entered into in connection with the underwritten public offering are in conflict with the foregoing provisions, the provisions in the underwriting agreement will control.

(f) Unless otherwise superseded by an underwriting agreement entered into in connection with an underwritten public offering, the obligations of the Company and Holders under this Section 2.7 will survive the completion of any offering of Registrable Securities in a registration under this Section 2, and otherwise will survive the termination of this Agreement.

2.8 Reports Under Exchange Act. With a view to making available to the Holders the benefits of Rule 144 and any other rule or regulation of the SEC that may at any time permit a Holder to sell securities of the Company to the public without registration, the Company shall file in a timely manner all reports and other documents required, if any, to be filed by it under the Securities Act and the Exchange Act and the rules and regulations adopted thereunder and make available information necessary to comply with Rule 144, if available with respect to resales of the Registrable Securities under the Securities Act, at all times, all to the extent required from time to time to enable such Holder to sell Registrable Securities without registration under the Securities Act within the limitation of such exemptions.

2.9 Participation in Underwritten Registrations. No Person may participate in any registration hereunder that is underwritten unless such Person (a) agrees to sell such Person’s securities on the basis provided in any underwriting arrangements approved by the Person or Persons entitled hereunder to approve such arrangements and (b) completes and executes all questionnaires, powers of attorney, indemnities, underwriting agreements and other documents required under the terms of such underwriting arrangements; provided, that no holder of Registrable Securities included in any underwritten registration will be required to make any representations or warranties to the Company or the underwriters (other than representations and warranties regarding such holder, such holder’s ownership of its shares of Common Stock to be sold in the offering and such holder’s intended method of distribution) or to undertake any indemnification obligations to the Company or the underwriters with respect thereto, except as otherwise provided in Section 2.7.

SECTION 3
MISCELLANEOUS

3.1 Successors and Assigns. The rights under this Agreement may only be assigned (but only with all related obligations) by a Holder to a transferee of Registrable Securities that is an Affiliate of a Holder; provided, however, that (x) the Company is, within a reasonable time after such transfer, furnished with written notice of the name and address of such transferee and the Registrable Securities with respect to which such rights are being transferred; and (y) such transferee agrees in a written instrument delivered to the Company to be bound by and subject to the terms and conditions of this Agreement. The terms and conditions of this Agreement inure to the benefit of and are binding upon the respective successors and permitted assignees of the parties. Nothing in this Agreement, express or implied, is intended to confer upon any party other than the parties hereto or their respective successors and permitted assignees any rights, . remedies, obligations or liabilities under or by reason of this Agreement, except as expressly provided herein.

3.2 Governing Law; Venue; Jury Trial Waiver.

(a) This Agreement is to be construed in accordance with and governed by the laws of the State of Delaware. The Company hereby agrees that any legal action or proceeding against it with respect to this Agreement may be brought in the courts of the State of California or of the United States of America located in or for Orange County, California, as the Holders may elect, and, by execution and delivery hereof, the Company accepts and consents for itself and in respect of its property, generally and unconditionally, to the jurisdiction of the aforesaid courts and agrees that such jurisdiction will be exclusive, unless waived by the Holder, as applicable, in writing, with respect to any action or proceeding brought by the Company against the Holders. The Company irrevocably waives, to the fullest extent permitted by law, any objection which it may now or hereafter have to the laying of the venue of any such proceeding brought in such a court and any claim that any such proceeding brought in such a court has been brought in an inconvenient forum. Nothing herein will affect the right of the Holder to bring proceedings against the Company in the courts of any other jurisdiction.

(b) EACH OF THE HOLDERS AND THE COMPANY HEREBY KNOWINGLY, VOLUNTARILY, AND INTENTIONALLY WAIVES ANY RIGHTS IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY ACTION, CLAIM, SUIT, PROCEEDING OR OTHER LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS AGREEMENT. THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE HOLDERS ENTERING INTO THIS AGREEMENT.

3.3 Counterparts; Facsimile. This Agreement may be executed in several counterparts, each of which will be deemed an original, but all of which together will constitute one and the same instrument. The delivery of an executed counterpart of a signature page of this Agreement by telecopy or other electronic imaging means will be effective as delivery of a manually executed counterpart of this Agreement.

3.4 Titles and Subtitles. The titles and subtitles used in this Agreement are used for convenience only and are not to be considered in construing or interpreting this Agreement.

3.5 Notices. Except as may be otherwise provided herein, all notices, requests, waivers and other communications made pursuant to this Agreement will be in writing and will be conclusively deemed to have been duly given (a) when hand delivered to the other party; (b) when sent by electronic transmission to the email address set forth below if sent between 8:00 a.m. and 5:00 p.m. recipient’s local time on a Business Day, or on the next Business Day if sent by electronic transmission to the email address set forth below if sent other than between 8:00 a.m. and 5:00 p.m. recipient’s local time on a Business Day; (c) three Business Days after deposit in the U.S. mail with first class or certified mail receipt requested postage prepaid and addressed to the other party at the address set forth below; (d) the next Business Day after deposit with a national overnight delivery service, postage prepaid, addressed to the parties as set forth below or on the signature pages to this Agreement with next Business Day delivery guaranteed, provided that the sending party receives a confirmation of delivery from the delivery service provider; or (e) when received by another party. A party may change or supplement the addresses set forth on the signature page hereto, or designate additional addresses (or electronic addresses for electronic transmissions), for purposes of this Section 3.5 by giving the other party written notice of the new address ill the manner set forth above.

3.6 Amendments and Waivers. Any term of this Agreement may be amended and the observance of any term of this Agreement may be waived (either generally or in a particular instance, and either retroactively or prospectively) only with the written consent of the Company and the Holders of a majority of the Registrable Securities then outstanding; provided, that any provision hereof may be waived by any waiving party on such party’s own behalf, without the consent of any other party. The Company shall give prompt notice of any amendment or termination hereof or waiver hereunder to any party hereto that did not consent in writing to such amendment, termination, or waiver. Any amendment, termination, or waiver effected in accordance with this section will be binding on all parties hereto, regardless of whether any such party has consented thereto. No waivers of or exceptions to any term, condition, or provision of this Agreement, in any one or more instances, will be deemed to be or construed as a further or continuing waiver of any such term, condition, or provision.

3.7 Severability. If one or more provisions of this Agreement are held to be unenforceable under applicable law, such provision are excluded from this Agreement and the balance of the Agreement will be interpreted as if such provision were so excluded and enforceable in accordance with its terms.

3.8 Aggregation of Stock. All shares of Registrable Securities held or acquired by Affiliates will be aggregated together for the purpose of determining the availability of any rights under this Agreement and such Affiliated persons may apportion such rights as among themselves in any manner they deem appropriate.

3.9 Delays or Omissions. No delay or omission to exercise any right, power, or remedy accruing to any party under this Agreement, upon any breach or default of any other party under this Agreement, will impair any such right, power, or remedy of such non-breaching or non-defaulting party, nor will it be construed to be a waiver of or acquiescence to any such breach or default, or to any similar breach or default thereafter occurring, nor will any waiver of any single breach or default be deemed a waiver of any other breach or default theretofore or thereafter occurring. All remedies, whether under this Agreement or by law or otherwise afforded to any party, will be cumulative and not alternative.

[Remainder of Page Intentionally Left Blank]

Signed:
			BIOMERICA, INC.,
			as the Company


			By: /s/ Zackary Irani
			Name: Zackary Irani
			Title: Chief Executive Officer


			Address for notices:

			Biomerica, Inc.
			17571 Von Karman Ave.
			Irvine, California 92614
			Attn: Zachary S. Irani
			Facsimile No.: (949) 645-2111
			Email: zirani@biomerica.com

			With a copy to (which will not constitute notice):

			Womble Bond Dickinson (US) LLP
			470 Atlantic Avenue
			Suite 600
			Boston, MA 02210
			Attn: Caitlin MacDowell, Esq.
			Email: caitlin.macdowell@wbd-us.com

Exhibit Number		Description
3.1		Certificate of Correction of the Certificate of Designation for the Series A Convertible Preferred Stock, filed with the Secretary of State of Delaware on February 26, 2020.
10.1		Stock Purchase Agreement, dated February 21, 2020, by and among Biomerica, Inc., a Delaware corporation, and each purchaser listed on the Schedule of Purchasers attached thereto.
10.2		Registration Rights Agreement, dated February 26, 2020, by and among by and among Biomerica, Inc., a Delaware corporation, and each holder listed on the Schedule of Holders attached thereto.
10.3		Board Observer Agreement, dated February 26, 2020, by and between Biomerica, Inc., a Delaware corporation and Palm Global Small Cap Master Fund LP.
99.1		Press Release entitled “Biomerica Announces $2.0 Million Investment by Palm Global Small Cap Master Fund” issued by the Company on February 26, 2020.

(1)	(2)	(3)	(4)

Purchaser	Number of Series A Preferred Shares	Purchase Price	Name, Address, Facsimile Number, and Email Address of Purchaser and Representative
Palm Global Small Cap Master Fund LP	571,429 shares of Series A Preferred	$2,000,001.50	Purchaser: Palm Global Small Cap Fund, L.P. Attn: Joshua Horowitz 19 West Elm Street Greenwich, CT 06830 Fax: (203) 422-5605 E-mail: jhorowitz@palmventures.com Purchaser’s Representative: Joshua Horowitz 19 West Elm Street Greenwich, CT 06830 Fax: (203) 422-5605 E-mail: jhorowitz@palmventures.com

			Palm Global Small Cap Master Fund LP, as
			Investor


			By: /s/ Joshua Horowitz
			Name: Joshua Horowitz
			Title: Portfolio Manager

Dated: February 27, 2020	Biomerica, Inc.

	By:	/s/ Zackary S. Irani
		Zackary S. Irani
		Chief Executive Officer