$0.01 Uses in Priority Payment Clause

Priority Payment

Pursuant to the provisions of NMSA 1978, Section 53-11-16 (2001) and Article 4 of the Articles of Incorporation, as amended, of Biomoda, Inc. (the "Corporation"), the Board of Directors of the Corporation has duly adopted the following resolutions on August 22, 2011, establishing a series of Preferred Stock of the Corporation and fixing the designations, preferences, privileges and voting powers of such series and the restrictions and limitations thereon:

Priority Payment. Upon the occurrence of a Liquidation, the holders of shares of Series B Preferred Stock shall be entitled to be paid for each share of Series B Preferred Stock held thereby, out of, but only to the extent of, the assets of the Corporation legally available for distribution to its stockholders, an amount equal to $0.01 (as adjusted for stock splits, stock dividends, combinations or other recapitalizations of the Series B Preferred Stock, the "Liquidation Preference") plus, as provided in Section 3 above, all accrued and unpaid dividends, if any, with respect to each share of Series B Preferred Stock, before any payment or distribution is made to any Junior Stock. If the assets of the Corporation available for distribution to the holders of Series B Preferred Stock shall be insufficient to permit payment in full to such holders of the sums which such holders are entitled to receive in such case, then all of the assets available for distribution to holders of the Series B Preferred Stock shall be distributed among and paid to such holders ratably in proportion to the amounts that would be payable to such holders if such assets were sufficient to permit payment in full.