smti_ex41





 







Exhibit 4.1

 



DESCRIPTION OF SECURITIES


 


Sanara
MedTech Inc. (“Sanara,” the “Company,”
“we,” “our” or “us”) has common
stock registered under Section 12 of the Securities Exchange Act of
1934, as amended.


 


The
following is a brief description of the terms of our capital stock.
This summary does not purport to be complete in all respects. This
description is subject to, and qualified in its entirety by
reference to, the Texas Business Organizations Code (the
“TBOC”) and federal law and our Certificate of
Formation, as amended (“Certificate of Formation”) and
our bylaws, copies of which have been filed with the Securities and
Exchange Commission and also are available upon
request.


 


We
have authorized 22,000,000 shares of capital stock, 20,000,000 of
which are designated as common stock, par value $0.001 per share,
and 2,000,000 of which are designated as “blank check”
preferred stock, par value $10.00 per share, none of which are
currently designated as an outstanding series.


 



Common Stock


 



Voting Rights


 


Holders
of shares of common stock are entitled to one vote for each share
held of record on all matters to be voted on by shareholders.
Except as otherwise provided by law, matters other than the
election of directors require the affirmative vote of the holders
of a majority of shares entitled to vote thereon. Holders of our
common stock do not have any cumulative voting rights, which means
that a plurality of the shares voted can elect all of the directors
then standing for election. Holders of common stock vote together
as a single class.


 



Dividend Rights


 


Subject
to preferential dividend rights of any other class or series of
stock, the holders of shares of common stock are entitled to
receive dividends, including dividends of equity, as and when
declared by our board of directors, subject to any limitations
applicable by law and to the rights of the holders, if any, of our
preferred stock. Our board of directors is not obligated to declare
a dividend.


 



Liquidation Rights


 


Upon
our liquidation, dissolution or winding-up, the holders of our
common stock are entitled to share equally, identically and ratably
in all assets remaining, subject to the prior satisfaction of all
outstanding debt and liabilities and the preferential rights and
payment of liquidation preferences, if any, on any outstanding
shares of preferred stock.


 



Other Rights and Preferences


 


Subject
to the preferential rights of any other class or series of stock,
all shares of common stock have equal dividend, distribution,
liquidation and other rights, and have no preference, appraisal or
exchange rights, except for any appraisal rights provided by Texas
law. Furthermore, holders of common stock have no conversion,
sinking fund or redemption rights, or preemptive rights to
subscribe for any of our securities.


 


The
rights, powers, preferences and privileges of holders of common
stock are subject to, and may be adversely affected by, the rights
of holders of shares of any series of preferred stock which we may
designate and issue in the future.


 



Transfer Agent and Registrar


 


The
transfer agent and registrar for our common stock is Securities
Transfer Corporation, Plano, Texas.


 




 








 






 


 



Listing


 


Our
common stock is listed on The Nasdaq Capital Market under the
symbol “SMTI.”


 



Preferred Stock


 


Our board of directors is authorized, subject to
limitations prescribed by Texas law, to issue up to 2,000,000
shares of preferred stock in one or more series, to establish from
time to time the number of shares to be included in each series,
and to fix the designation, powers, preferences, and rights of the
shares of each series and any of its qualifications, limitations,
or restrictions, in each case without further vote or action by our
shareholders. Our board of directors can also increase or decrease
the number of shares of any series of preferred stock, but not
below the number of shares of that series then outstanding, without
any further vote or action by our shareholders. Our board of
directors may authorize the issuance of preferred stock with voting
or conversion rights that could adversely affect the voting power
or other rights of the holders of our common stock. The issuance of
preferred stock, while providing flexibility in connection with
possible acquisitions and other corporate purposes, could, among
other things, have the effect of delaying, deferring, or preventing
a change in control of our company and might adversely affect the
market price of our common stock and the voting and other rights of
the holders of our common stock. In
addition, the issuance of preferred stock could adversely affect
the voting power of holders of common stock and the likelihood that
such holders will receive dividend payments and payments upon
liquidation. In some circumstances, the issuance of preferred stock
could have the effect of decreasing the market price of our common
stock.


 



Texas Anti-Takeover Law and Provisions of our Certificate of
Formation and Bylaws


 


A
number of provisions of Texas law, our Certificate of Formation and
our bylaws could have an anti-takeover effect and make more
difficult the acquisition of the Company by means of a tender
offer, a proxy contest or otherwise and the removal of our
directors or management. These provisions are intended to
discourage coercive takeover practices and inadequate takeover bids
and to encourage persons seeking to acquire control of the Company
to negotiate first with our board of directors.


 


We
are subject to the provisions of Title 2, Chapter 21, Subchapter M
of the TBOC, which provides that a Texas corporation that qualifies
as an “issuing public corporation” (as defined in the
TBOC) may not engage in specified types of business combinations,
including mergers, consolidations and asset sales, with a person,
or an affiliate or associate of that person, who is an
“affiliated shareholder.” The restrictions in Title 2,
Chapter 21, Subchapter M of the TBOC do not apply to corporations
that have elected, in the manner provided under the TBOC, not to be
subject to such provisions. Our Certificate of Formation
affirmatively states that the Company elects not to be governed by
such provisions, and neither our Certificate of Formation nor
bylaws provide a similar restriction on business
combinations.


 


However,
provisions of our Certificate of Formation and bylaws may delay or
discourage transactions involving an actual or potential change in
our control or change in our management, including transactions in
which shareholders might otherwise receive a premium for their
shares, or transactions that our shareholders might otherwise deem
to be in their best interests. Therefore, these provisions could
adversely affect the price of our common stock. Among other things,
for example, our Certificate of Formation and bylaws:


 




●

do
not provide for cumulative voting rights (therefore allowing the
holders of a majority of the shares of common stock entitled to
vote in any election of directors to elect all of the directors
standing for election, if they should so choose);








●

empower
our board of directors, without shareholder approval, to issue our
preferred stock, the terms of which, including voting power, are
set by our board of directors;








●

require
that special meetings of the shareholders be called by the Chairman
of the board of directors, the President or the board of directors,
or by the holders of not less than ten percent (10%) of all the
shares issued, outstanding and entitled to vote;








●

permit
our board of directors to alter, amend or repeal our bylaws or to
adopt new bylaws; and








●

enable
our board of directors to increase the number of persons serving as
directors and to fill vacancies created as a result of the increase
by a majority vote of the directors present at a meeting of
directors.






 


 




 








 






 



Indemnification of Directors and Officers


 


Pursuant
to the TBOC, a corporation has the power to indemnify its directors
and officers against judgments and certain expenses other than
judgments that are actually and reasonably incurred in connection
with a proceeding, provided that there is a determination that the
individual acted in good faith and in a manner reasonably believed
to be in or not opposed to the best interests of the corporation
and, with respect to any criminal proceeding, had no reasonable
cause to believe the individual’s conduct was unlawful. Such
determination will be made, in the case of an individual who is a
director or officer at the time of such determination:


 




●

by
a majority of the disinterested and independent directors, even
though less than a quorum;








●

by
a majority vote of a committee of the directors if the committee is
designated by a majority vote of the directors, who at the time of
the vote are disinterested and independent, even though less than a
quorum, and is composed solely of one or more directors who are
disinterested and independent;








●

by
special legal counsel selected by the directors, or selected by a
committee of the directors as described in the preceding two
subparts above;








●

by
the owners or members of the corporation in a vote that excludes
the ownership or membership interests held by each director who is
not disinterested and independent; or








●

by
a unanimous vote of the owners or members of the
corporation.






 


No
indemnification may be made in respect of any proceeding in which
such individual is liable to the corporation or improperly received
a personal benefit and is found liable for willful misconduct,
breach of the duty of loyalty owned to the corporation, or an act
or omission deemed not to be committed in good faith.


 


The
TBOC requires indemnification of directors and officers for
reasonable expenses relating to a wholly successful defense on the
merits or otherwise in defense of a proceeding.


 


The
TBOC permits a corporation to advance expenses relating to the
defense of any proceeding to directors and officers, contingent
upon, among other things, such individuals’ commitment to
repay any advances unless it is determined ultimately that such
individuals are entitled to be indemnified.


 


Our
Certificate of Formation and bylaws provide for indemnification by
us of our directors and officers to the fullest extent permitted by
Texas Law.


 



Limitation of Personal Liability of Directors


 


Our
Certificate of Formation provides that our directors will not be
personally liable to us or any of our shareholders for monetary
damages for an act or omission in the director’s capacity as
a director to the fullest extent permitted by Texas
law.


 


The
TBOC provides that a corporation’s certificate of formation
may include a provision limiting the personal liability of a
director to the corporation or its shareholders for monetary
damages for an act or omission as a director. However, no such
provision can eliminate or limit the liability of a director
for:


 




●

any
breach of the director’s duty of loyalty to the corporation
or its shareholders;








●

acts
or omissions not in good faith or that constitute a breach of a
duty owed to the corporation or involve intentional misconduct or a
knowing violation of the law;








●

violation
of certain provisions of the Texas Law; or








●

any
transaction from which the director received an improper
benefit.