EXHIBIT A

BIOMERICA, INC.

2020 STOCK INCENTIVE PLAN

 

ARTICLE 1. INTRODUCTION.

 

     The Plan was adopted by the Board effective February 10, 2020, and
submitted to shareholders for approval at the Biomerica Annual Shareholder
meeting in December, 2020. The purpose of the Plan is to promote the long-term
success of the Company and the creation of stockholder value by (a) encouraging
Employees, Outside Directors and Consultants to focus on critical long-range
objectives, (b) encouraging the attraction and retention of Employees, Outside
Directors and Consultants with exceptional qualifications and (c) linking
Employees, Outside Directors and Consultants directly to stockholder interests
through increased stock ownership. The Plan seeks to achieve this purpose by
providing for Awards in the form of Restricted Shares or Options (which may
constitute incentive stock options or non-statutory stock options).

 

The Plan shall be governed by, and construed in accordance with, the laws of the
State of California.

 

ARTICLE 2. ADMINISTRATION.

 

     2.1 COMMITTEE COMPOSITION. The Plan shall be administered by the Board of
Directors of the Company, provided the Board may delegate administration of the
Plan to a Committee consisting exclusively of two or more Outside Directors of
the Company, who shall be appointed by the Board. In addition, the composition
of the Committee shall satisfy:

 

          (a) Such requirements as the Securities and Exchange Commission may
establish for administrators acting under plans intended to qualify for
exemption under Rule 16b-3 (or its successor) under the Exchange Act; and

 

          (b) Such requirements as the Internal Revenue Service may establish
for outside directors acting under plans intended to qualify for exemption under
Section 162(m)(4)(C) of the Code.

 

     2.2 COMMITTEE RESPONSIBILITIES. The Board (or the Committee, if applicable)
shall (a) review management's recommendation as to the Employees, Outside
Directors and Consultants who are to receive Awards under the Plan, (b)
determine the type, number, vesting requirements and other features and
conditions of such Awards, (c) interpret the Plan and (d) make all other
decisions relating to the operation of the Plan. The Board and Committee may
adopt such rules or guidelines as it deems appropriate to implement the Plan.
The Board's and Committee's determinations under the Plan shall be final and
binding on all persons.

 

     2.3 COMMITTEE FOR NON-OFFICER GRANTS. The Board may also appoint a
secondary committee of the Board, which shall be composed of one or more
directors of the Company who need not satisfy the requirements of Section 2.1.
Such secondary committee may administer the Plan with respect to Employees and
Consultants who are not considered officers or directors of the Company under
section 16 of the Exchange Act or covered employees under Section 162(m)(3) of
the Code, may grant Awards under the Plan to such Employees and Consultants and
may determine all features and conditions of such Awards. Within the limitations
of this Section 2.3, any reference in the Plan to the Committee shall include
such secondary committee.

 

ARTICLE 3. SHARES AVAILABLE FOR GRANTS.

 

     3.1 BASIC LIMITATION. Common Shares issued pursuant to the Plan may be
authorized but unissued shares or treasury shares. The aggregate number of
Options and Restricted Shares awarded under the Plan shall not exceed NINE
HUNDRED THOUSAND (900,000). The limitations of this Section 3.1 and Section 3.2
shall be subject to adjustment pursuant to Article 9.

 

     3.2 ADDITIONAL SHARES. If Options are forfeited or terminate for any other
reason before being exercised, then the corresponding Common Shares shall again
become available for the grant of Options or Restricted Shares under the Plan.
If Restricted Shares or Common Shares issued upon the exercise of Options are
forfeited, then such Common Shares shall again become available for the grant of
NSOs and Restricted Shares under the Plan. The aggregate number of Common Shares
that may be issued under the Plan upon the exercise of ISOs shall not be
increased when Restricted Shares or other Common Shares are forfeited.

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ARTICLE 4.     ELIGIBILITY.

 

     4.1 NONSTATUTORY STOCK OPTIONS AND RESTRICTED SHARES. Only Employees,
Outside Directors and Consultants shall be eligible for the grant of NSOs and
Restricted Shares.

 

     4.2 INCENTIVE STOCK OPTIONS. Only Employees who are employees of the
Company, a Parent or a Subsidiary shall be eligible for the grant of ISOs. In
addition, an Employee who owns more than 10% of the total combined voting power
of all classes of outstanding stock of the Company or any of its Parents or
Subsidiaries shall not be eligible for the grant of an ISO unless the
requirements set forth in section 422(c)(5) of the Code are satisfied.

 

ARTICLE 5.     OPTIONS.

 

     5.1 STOCK OPTION AGREEMENT. Each grant of an Option under the Plan shall be
evidenced by a Stock Option Agreement between the Optionee and the Company. Such
Option shall be subject to all applicable terms of the Plan and may be subject
to any other terms that are not inconsistent with the Plan. The provisions of
the various Stock Option Agreements entered into under the Plan need not be
identical. A Stock Option Agreement may provide that a new Option will be
granted automatically to the Optionee when he or she exercises a prior Option
and pays the Exercise Price in the form described in Section 6.2.

 

     5.2 NUMBER OF SHARES. Each Stock Option Agreement shall specify the number
of Common Shares subject to the Option and shall provide for the adjustment of
such number in accordance with Article 9. The limitations set forth in the
preceding sentence shall be subject to adjustment in accordance with Article 9.

 

     5.3 EXERCISE PRICE. Each Stock Option Agreement shall specify the Exercise
Price; provided that the Exercise Price under an ISO shall in no event be less
than 100% of the Fair Market Value of a Common Share on the date of grant and
the Exercise Price under an NSO shall in no event be less than 85% of the Fair
Market Value of a Common Share on the date of grant. In the case of an NSO, a
Stock Option Agreement may specify an Exercise Price that varies in accordance
with a predetermined formula while the NSO is outstanding.

 

     5.4 VESTING, EXERCISABILITY AND TERM. Unless otherwise approved by the
Board of Directors and provided in the Stock Option Agreement, an Optionee's
right to exercise the Option shall vest pro rata over a period of four (4)
years, with 25% of the Option vesting on each of the first, second, third and
fourth anniversaries of the date of grant. The Stock Option Agreement shall also
specify the term or expiration of the Option; provided that the term of an ISO
shall in no event exceed 10 years from the date of grant. A Stock Option
Agreement may provide for accelerated exercisability in the event of the
Optionee's death, disability or retirement or other events and may provide for
expiration prior to the end of its term in the event of the termination of the
Optionee's service.

 

     5.5 EFFECT OF CHANGE IN CONTROL. Notwithstanding Section 5.4 above, each
Option shall automatically fully vest (e.g., become exercisable) as to all or
part of the Common Shares subject to such Option in the event that a Change in
Control (as defined in Section 14.4 below) occurs with respect to the Company,
subject to the following limitations.

 

     5.6 MODIFICATION OR ASSUMPTION OF OPTIONS. Within the limitations of the
Plan, the Board or the Committee may modify, extend or assume outstanding
options or may accept the cancellation of outstanding options (whether granted
by the Company or by another issuer) in return for the grant of new options for
the same or a different number of shares and at the same or a different exercise
price. The foregoing notwithstanding, no modification of an Option shall,
without the consent of the Optionee, alter or impair his or her rights or
obligations under such Option.

 

     5.7 BUYOUT PROVISIONS. The Committee may at any time (a) offer to buy out
for a payment in cash or cash equivalents an Option previously granted or (b)
authorize an Optionee to elect to cash out the vested portion of an Option
previously granted, in either case at such time and based upon such terms and
conditions as the Board or the Committee shall establish.

 

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ARTICLE 6.     PAYMENT FOR OPTION SHARES.

 

     6.1 GENERAL RULE. The entire Exercise Price of Common Shares issued upon
exercise of Options shall be payable in cash or cash equivalents at the time
when such Common Shares are purchased, except as follows:

 

          (a) In the case of an ISO granted under the Plan, payment shall be
made only pursuant to the express provisions of the applicable Stock Option
Agreement. The Stock Option Agreement may specify that payment may be made in
any form(s) described in this Article 6.

 

          (b) In the case of an NSO, the Committee may at any time accept
payment in any form(s) described in this Article 6.

 

     6.2 EXERCISE/SALE. To the extent that this Section 6.2 is applicable, all
or any part of the Exercise Price and any withholding taxes may be paid by
delivering (on a form prescribed by the Company) an irrevocable direction to a
securities broker approved by the Company to sell all or part of the Common
Shares being purchased under the Plan and to deliver all or part of the sales
proceeds to the Company.

 

     6.3 EXERCISE/PLEDGE. To the extent that this Section 6.3 is applicable, all
or any part of the Exercise Price and any withholding taxes may be paid by
delivering (on a form prescribed by the Company) an irrevocable direction to
pledge all or part of the Common Shares being purchased under the Plan to a
securities broker or lender approved by the Company, as security for a loan, and
to deliver all or part of the loan proceeds necessary to cover the Exercise
Price to the Company.

 

     6.4 PROMISSORY NOTE. To the extent that this Section 6.4 is applicable, all
or any part of the Exercise Price and any withholding taxes may be paid by
delivering (on a form prescribed by the Company) a full-recourse promissory
note, which may include a security interest in the shares issued under the
Option. However, the par value of the Common Shares being purchased under the
Plan, if newly issued, shall be paid in cash or cash equivalents.

 

     6.5 OTHER FORMS OF PAYMENT. To the extent that this Section 6.5 is
applicable, all or any part of the Exercise Price and any withholding taxes may
be paid in any other form that is consistent with applicable laws, regulations
and rules.

 

ARTICLE 7.

 

     7.1 ACCELERATED EXERCISABILITY. All NSOs granted to an Outside Director
under this Article 7 shall become exercisable in full in the event of:

 

          (a) the termination of such Outside Director's service because of
death, total and permanent disability or retirement at or after age 70; or

 

          (b) a Change in Control (as defined in Section 14.4 below) with
respect to the Company, except as provided in the next following sentence.

 

     7.2 EXERCISE PRICE. The Exercise Price under all NSOs granted to an Outside
Director under this Article 7 shall be equal to 100% of the Fair Market Value of
a Common Share on the date of grant, payable in one of the forms described in
Sections 6.1, 6.2, 6.3 and 6.4.

 

     7.3 TERM. Unless otherwise provided in the Stock Option Agreement, all NSOs
granted to an Outside Director under this Article 7 shall terminate on the
earliest of (a) the 10th anniversary of the date of grant, or (b) the date 12
months after the termination of such Outside Director's service as a Director.

 

     7.4 AFFILIATES OF OUTSIDE DIRECTORS. The Committee may provide that the
NSOs that otherwise would be granted to an Outside Director under this Article 7
shall instead be granted to an affiliate of such Outside Director. Such
affiliate shall then be deemed to be an Outside Director for purposes of the
Plan, including that the service-related vesting and termination provisions
pertaining to the NSOs shall be applied with regard to the service of the
Outside Director.

 

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ARTICLE 8.     RESTRICTED SHARES.

 

     8.1 RESTRICTED STOCK AGREEMENT. Each grant of Restricted Shares of Common
Stock under the Plan shall be evidenced by a Restricted Stock Agreement between
the recipient and the Company. Such Restricted Shares shall be subject to all
applicable terms of the Plan and may be subject to any other terms that are not
inconsistent with the Plan. The provisions of the various Restricted Stock
Agreements entered into under the Plan need not be identical.

 

     8.2 PAYMENT FOR AWARDS. Subject to the following sentence, Restricted
Shares may be sold or awarded under the Plan for such consideration as the Board
or the Committee may determine, including (without limitation) cash, cash
equivalents, full-recourse promissory notes, past services and future services.
To the extent that an Award consists of newly issued Restricted Shares, the
Award recipient shall furnish consideration with a value not less than the par
value of such Restricted Shares in the form of cash, cash equivalents or past
services rendered to the Company (or a Parent or Subsidiary), as the Committee
may determine.

 

     8.3 VESTING CONDITIONS. Unless otherwise approved by the Board of Directors
and provided in the Restricted Stock Agreement, the Restricted Shares shall vest
pro rata over a period of four (4) years, with 25% of the Option vesting on each
of the first, second, third and fourth anniversaries of the date of grant. A
Restricted Stock Agreement may provide for accelerated vesting in the event of
the Participant's death, disability or retirement or other events. All
Restricted Shares shall become vested in the event that a Change in Control (as
defined in Section 14.4) occurs with respect to the Company, except as provided
in the next following sentence.

 

     8.4 VOTING AND DIVIDEND RIGHTS. The holders of Restricted Shares awarded
under the Plan shall have the same voting, dividend and other rights as the
Company's other stockholders.

 

ARTICLE 9.     PROTECTION AGAINST DILUTION.

 

     9.1 ADJUSTMENTS. In the event of a subdivision of the outstanding Common
Shares, a declaration of a dividend payable in Common Shares, a declaration of a
dividend payable in a form other than Common Shares in an amount that has a
material effect on the price of Common Shares, a combination or consolidation of
the outstanding Common Shares (by reclassification or otherwise) into a lesser
number of Common Shares, a recapitalization, a spin-off or a similar occurrence,
the Board of the Committee shall make such adjustments as it, in its sole
discretion, deems appropriate in one or more of (a) the number of Options and
Restricted Shares available for future Awards under Article 3, (b) the
limitations set forth in Section 5.2, (c) the number of Common Shares covered by
each outstanding Option or (d) the Exercise Price under each outstanding Option.
Except as provided in this Article 9, a Participant shall have no rights by
reason of any issue by the Company of stock of any class or securities
convertible into stock of any class, any subdivision or consolidation of shares
of stock of any class, the payment of any stock dividend or any other increase
or decrease in the number of shares of stock of any class.

 

     9.2 DISSOLUTION OR LIQUIDATION. To the extent not previously exercised,
Options shall terminate immediately prior to the dissolution or liquidation of
the Company.

                          

     9.3 REORGANIZATIONS. In the event that the Company is a party to a merger
or other reorganization, outstanding Options and Restricted Shares shall be
subject to the agreement of merger or reorganization. Such agreement may, but is
not required to, provide for one or more of the following: (a) the continuation
of the outstanding Awards by the Company, if the Company is a surviving
corporation, (b) the assumption of the outstanding Awards by the surviving
corporation or its parent or subsidiary, (c) the substitution by the surviving
corporation or its parent or subsidiary of its own awards for the outstanding
Awards, (d) full exercisability or vesting and accelerated expiration of the
outstanding Awards or (e) settlement of the full value of the outstanding Awards

in cash or cash equivalents followed by cancellation of such Awards.

 

ARTICLE 10.    AWARDS UNDER OTHER PLANS.

 

     The Company may grant awards under other plans or programs. Such awards may
be settled in the form of Common Shares issued under this Plan. Such Common
Shares shall be treated for all purposes under the Plan like Restricted Shares
and shall, when issued, reduce the number of Common Shares available under
Article 3.

 

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ARTICLE 11.    LIMITATION ON RIGHTS.

 

     11.1 RETENTION RIGHTS. Neither the Plan nor any Award granted under the
Plan shall be deemed to give any individual a right to remain an Employee,
Outside Director or Consultant. The Company and its Parents, Subsidiaries and
Affiliates reserve the right to terminate the service of any Employee, Outside
Director or Consultant at any time, with or without cause, subject to applicable
laws, the Company's certificate of incorporation and by-laws and a written
employment agreement (if any).

 

     11.2 STOCKHOLDERS' RIGHTS. A Participant shall have no dividend rights,
voting rights or other rights as a stockholder with respect to any Common Shares
covered by his or her Award prior to the time when a stock certificate for such
Common Shares is issued or, in the case of an Option, the time when he or she
becomes entitled to receive such Common Shares by filing a notice of exercise
and paying the Exercise Price. No adjustment shall be made for cash dividends or
other rights for which the record date is prior to such time, except as
expressly provided in the Plan.

 

     11.3 REGULATORY REQUIREMENTS. Any other provision of the Plan
notwithstanding, the obligation of the Company to issue Common Shares under the
Plan shall be subject to all applicable laws, rules and regulations and such
approval by any regulatory body as may be required. The Company reserves the
right to restrict, in whole or in part, the delivery of Common Shares pursuant
to any Award prior to the satisfaction of all legal requirements relating to the
issuance of such Common Shares, to their registration, qualification or listing
or to an exemption from registration, qualification or listing.

 

ARTICLE 12.    WITHHOLDING TAXES.

 

     12.1 GENERAL. To the extent required by applicable federal, state, local or
foreign law, a Participant or his or her successor shall make arrangements
satisfactory to the Company for the satisfaction of any withholding tax
obligations that arise in connection with the Plan. The Company shall not be
required to issue any Common Shares or make any cash payment under the Plan
until such obligations are satisfied.

 

ARTICLE 13.    FUTURE OF THE PLAN.

 

     13.1 TERM OF THE PLAN. The Plan, as set forth herein, shall become
effective upon approval of the Plan by the Company's stockholders (expected to
be obtained on or about December 10, 2020). The Plan shall remain in effect
until December 10, 2030, unless earlier terminated under Section 13.2, except
that no ISOs shall be granted on or after the 10th anniversary of the later of
(a) the date when the Board adopted the Plan or (b) the date when the Board
adopted the most recent increase in the number of Common Shares available under
Article 3 which was approved by the Company's stockholders.

 

      13.2 AMENDMENT OR TERMINATION. The Board may, at any time and for any
reason, amend or terminate the Plan. An amendment of the Plan shall be subject
to the approval of the Company's stockholders only to the extent required by
applicable laws, regulations or rules. No Awards shall be granted under the Plan
after the termination thereof. The termination of the Plan, or any amendment
thereof, shall not affect any Award previously granted under the Plan.

 

 

 

 

ARTICLE 14. DEFINITIONS.

 

     14.1 "AFFILIATE" means any entity other than a Subsidiary, if the Company
and/or one or more Subsidiaries own not less than 50% of such entity.

 

     14.2 "AWARD" means any award of an Option or a Restricted Share under the
Plan.

 

     14.3 "BOARD" means the Company's Board of Directors, as constituted from
time to time.

 

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     14.4 "CHANGE IN CONTROL" shall mean:

 

          (a) the consummation of a merger or consolidation of the Company with
or into another entity or any other corporate reorganization, if more than 50%
of the combined voting power of the continuing or surviving entity's securities
outstanding immediately after such merger, consolidation or other reorganization
is owned by persons who were not stockholders of the Company immediately prior
to such merger, consolidation or other reorganization;

 

          (b) the sale, transfer or other disposition of all or substantially
all of the Company's assets;

 

          (c) a change in the identity of a majority of the members of the
Company's Board of Directors that becomes effective on a single date (provided,
however, that the appointments of new directors upon the deaths or resignations

of directors by the remaining directors then in office shall not constitute a
change in identity with respect to such departed director); or

 

          (d) any transaction as a result of which any person is the "beneficial
owner" (as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of the Company representing at least 50% of the total
voting power represented by the Company's then outstanding voting securities.
For purposes of this Subsection (d), the term "person" shall have the same
meaning as when used in sections 13(d) and 14(d) of the Exchange Act but shall

exclude (i) a trustee or other fiduciary holding securities under an employee
benefit plan of the Company or of a Parent or Subsidiary and (ii) a corporation
owned directly or indirectly by the stockholders of the Company in substantially
the same proportions as their ownership of the common stock of the Company.  A
transaction shall not constitute a Change in Control if its sole purpose is to
change the state of the Company's incorporation or to create a holding company
that will be owned in substantially the same proportions by the persons who held
the Company's securities immediately before such transaction.

 

     14.5 "CODE" means the Internal Revenue Code of 1986, as amended.

 

     14.6 "COMMITTEE" means a committee of the Board, as described in Article 2.

 

     14.7 "COMMON SHARE" means one share of the common stock of the Company.

 

     14.8 "COMPANY" means Biomerica, Inc., a Delaware corporation.

 

     14.9 "CONSULTANT" means a consultant or adviser who provides bona fide
services to the Company, a Parent, a Subsidiary or an Affiliate as an
independent contractor. Service as a Consultant shall be considered employment
for all purposes of the Plan, except as provided in Section 4.2.

 

     14.10 "EMPLOYEE" means an employee of the Company, a Parent, a Subsidiary
or an Affiliate.

 

     14.11 "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.

 

     14.12 "EXERCISE PRICE" means the amount for which one Common Share may be
purchased upon exercise of such Option, as specified in the applicable Stock
Option Agreement.

 

     14.13 "FAIR MARKET VALUE" means the market price of Common Shares,
determined by the Board or the Committee in good faith on such basis as it deems
appropriate. Whenever possible, the determination of Fair Market Value by the
Committee shall be based on the prices reported in The Wall Street Journal. Such
determination shall be conclusive and binding on all persons.

 

     14.14 "ISO" means an incentive stock option described in section 422(b) of
the Code.

 

     14.15 "NSO" means a stock option not described in sections 422 of the Code.

 

     14.16 "OPTION" means an ISO or NSO granted under the Plan and entitling the
holder to purchase Common Shares.

 

     14.17 "OPTIONEE" means an individual or estate who holds an Option.

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     14.18 "OUTSIDE DIRECTOR" shall mean a member of the Board who is not an
Employee. Service as an Outside Director shall be considered employment for all
purposes of the Plan, except as provided in Section 4.2.

  

     14.19 "PARENT" means any corporation (other than the Company) in an
unbroken chain of corporations ending with the Company, if each of the
corporations other than the Company owns stock possessing 50% or more of the
total combined voting power of all classes of stock in one of the other
corporations in such chain. A corporation that attains the status of a Parent on
a date after the adoption of the Plan shall be considered a Parent commencing as

of such date.

 

     14.20 "PARTICIPANT" means an individual or estate who holds an Award.

 

     14.21 "PLAN: means this Biomerica, Inc. 2020 Stock Incentive Plan, as
amended from time to time.

 

     14.22 "RESTRICTED SHARE" means a Common Share awarded under the Plan.

 

     14.23 "RESTRICTED STOCK AGREEMENT" means the agreement between the Company
and the recipient of a Restricted Share that contains the terms, conditions and
restrictions pertaining to such Restricted Share.

 

     14.24 "STOCK OPTION AGREEMENT" means the agreement between the Company and
an Optionee that contains the terms, conditions and restrictions pertaining to
his or her Option.

 

     14.25 "SUBSIDIARY" means any corporation (other than the Company) in an
unbroken chain of corporations beginning with the Company, if each of the
corporations other than the last corporation in the unbroken chain owns stock
possessing 50% or more of the total combined voting power of all classes of
stock in one of the other corporations in such chain. A corporation that attains
the status of a Subsidiary on a date after the adoption of the Plan shall be
considered a Subsidiary commencing as of such date.

 

ARTICLE 15.    EXECUTION.

 

     To record the adoption of the Plan by the Board, the Company has caused its
duly authorized officer to execute this document in the name of the Company.

 

                    BIOMERICA, INC.

 

 

                    By: /s/ Janet Moore

                               

                    Name: Janet Moore

                               

                    Title: Secretary

                                  

 

Date approved by Board of Directors: February 7, 2020

                        

Date Approved by Shareholders: _______________________________

               

 

      

 

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