Document:

Exhibit 10.7

 

UNIT SUBSCRIPTION AGREEMENT

 

This UNIT SUBSCRIPTION
AGREEMENT (this “Agreement”) is made as of the [__] day of September 2020, by and between Brookline Capital
Acquisition Corp., a Delaware corporation (the “Company”), having its principal place of business at 600 Lexington
Avenue, 33rd Floor, New York, NY 10022, and Brookline Capital Holdings LLC, a Delaware limited liability company
(the “Subscriber”), having its principal place of business at 600 Lexington Avenue, 33rd Floor,
New York, NY 10022.

 

WHEREAS, the Company
desires to sell to the Subscriber on a private placement basis (the “Offering”) an aggregate of 175,000 units
(or up to 186,250 units if the over-allotment option in connection with the IPO (as defined below) is exercised in full) (the “Units”)
of the Company, each Unit comprised of one share of common stock of the Company, par value $0.0001 per share (“Common
Stock”) and three quarters of one warrant, each whole warrant exercisable to purchase one share of Common Stock (“Warrant”),
for a purchase price of $10.00 per Unit. The shares of Common Stock underlying the Warrants are hereinafter referred to as the
“Warrant Shares”. The shares of Common Stock underlying the Units (excluding the Warrant Shares) are hereinafter
referred to as the “Placement Shares.” The Warrants underlying the Units are hereinafter referred to as the
“Placement Warrants.” The Units, Placement Shares, Placement Warrants and Warrant Shares, collectively, are
hereinafter referred to as the “Securities.” Each whole Placement Warrant is exercisable to purchase one share
of Common Stock at an exercise price of $11.50 during the period commencing on the later of (i) twelve (12) months from the date
of the closing of the Company’s initial public offering of units (the “IPO”) and (ii) 30 days following
the consummation of the Company’s initial business combination (the “Business Combination”), as such term
is defined in the registration statement in connection with the IPO, as amended at the time it becomes effective (the “Registration
Statement”), and expiring on the fifth anniversary of the consummation of the Business Combination; and

 

WHEREAS, the Subscriber
wishes to purchase 175,000 Units (or up to 186,250 Units if the over-allotment option in connection with the IPO is exercised in
full), and the Company wishes to accept such subscription from Subscriber.

 

NOW, THEREFORE, in
consideration of the premises and the mutual covenants hereinafter set forth and other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the Company and Subscriber hereby agree as follows:

 

1. Agreement to Subscribe

 

1.1. Purchase and Issuance
of the Units. Upon the terms and subject to the conditions of this Agreement, the Subscriber hereby agrees to purchase from the
Company, and the Company hereby agrees to sell to the Subscriber, on the Initial Closing Date (as defined below) 175,000 Units
in consideration of the payment of the Purchase Price (as defined below). On the Initial Closing Date, the Company shall, at its
option, deliver to the Subscriber the certificates representing the Securities purchased or effect such delivery in book-entry
form.

 

1.2. Purchase Price.
The Subscriber shall pay $1,750,000 (the “Purchase Price”) by wire transfer of immediately available funds or
by such other method as may be reasonably acceptable to the Company, to the trust account (the “Trust Account”)
at a financial institution to be chosen by the Company, maintained by Continental Stock Transfer & Trust Company, acting as
trustee (“Continental”), one (1) business day prior to the date of effectiveness of the Registration Statement.

 

1.3. Initial Closing.
The closing of the purchase and sale of 175,000 Units shall take place simultaneously with the closing of the IPO (the “Initial
Closing Date”). The closing of such Units shall take place at the offices of Ellenoff Grossman & Schole LLP, 1345
Avenue of the Americas, 11th Floor, New York, New York, 10105, or such other place as may be agreed upon by the
parties hereto.

 

1.4. Purchase and Issuance
of Additional Units. Upon the terms and subject to the conditions of this Agreement, the Subscriber hereby agrees to purchase from
the Company, and the Company hereby agrees to sell to the Subscriber, on the Over-allotment Closing Date (as defined below) up
to an aggregate of 11,250 Units in consideration of the payments of the Over-allotment Purchase Price (as defined below) and in
the same proportion as the amount of the over-allotment option is exercised. On the Over-allotment Closing Date (as defined below),
the Company shall, at its option, deliver to the Subscriber the certificates representing the Securities purchased or effect such
delivery in book-entry form.

 

     

     

    

 

1.5. Purchase Price.
The Subscriber shall pay up to $112,500 (if the over-allotment option in connection with the IPO is exercised in full) (the “Over-allotment
Purchase Price”) by wire transfer of immediately available funds or by such other method as may be reasonably acceptable
to the Company, to the Trust Account on the date of the consummation of the closing of the over-allotment option, and concurrently
with the consummation thereof, or on such earlier time and date as may be mutually agreed by the Company and the Subscriber (each
such date, an “Over-allotment Closing Date”; together with the Initial Closing Date, the “Closing Dates”
and each, a “Closing Date”).

 

1.6. Over-Allotment
Closing. The Over-allotment Closing Date shall take place at the offices of Ellenoff Grossman & Schole LLP, 1345 Avenue of
the Americas, 11th Floor, New York, New York, 10105, or such other place as may be agreed upon by the parties hereto.

 

1.7 Termination. This
Agreement and each of the obligations of the undersigned shall be null and void and without effect if a Closing does not occur
prior to March 31, 2020.

 

2. Representations and Warranties
of Subscriber

 

Subscriber represents and warrants to the
Company that:

 

2.1. No Government
Recommendation or Approval. Subscriber understands that no federal or state agency has passed upon or made any recommendation or
endorsement of the Company or the Offering of the Securities.

 

2.2. Accredited Investor.
Subscriber represents that it is an “accredited investor” as such term is defined in Rule 501(a) of Regulation D under
the Securities Act of 1933, as amended (the “Securities Act”), and acknowledges that the sale contemplated hereby
is being made in reliance, among other things, on a private placement exemption to “accredited investors” under the
Securities Act and similar exemptions under state law.

 

2.3. Intent. Subscriber
is purchasing the Securities solely for investment purposes, for Subscriber’s own account (and/or for the account or benefit
of its members or affiliates, as permitted, pursuant to the terms of an agreement (the “Insider Letter”) to
be entered into with respect to the Securities between, among others, Subscriber and the Company, as described in the Registration
Statement), and not with a view to the distribution thereof and Subscriber has no present arrangement to sell the Securities to
or through any person or entity except as may be permitted under the Insider Letter. Subscriber shall not engage in hedging transactions
with regard to the Securities unless in compliance with the Securities Act.

 

2.4. Restrictions on
Transfer. Subscriber acknowledges and understands the Units are being offered in a transaction not involving a public offering
in the United States within the meaning of the Securities Act. The Securities have not been registered under the Securities Act
and, if in the future Subscriber decides to offer, resell, pledge or otherwise transfer the Securities, such Securities may be
offered, resold, pledged or otherwise transferred only (A) pursuant to an effective registration statement filed under the Securities
Act, (B) pursuant to an exemption from registration under Rule 144 promulgated under the Securities Act, if available, or (C) pursuant
to any other available exemption from the registration requirements of the Securities Act, and in each case in accordance with
any applicable securities laws of any state or any other jurisdiction. Notwithstanding the foregoing, Subscriber acknowledges and
understands the Securities are subject to transfer restrictions as described in Section 8 hereof. Subscriber agrees that if any
transfer of its Securities or any interest therein is proposed to be made, as a condition precedent to any such transfer, Subscriber
may be required to deliver to the Company an opinion of counsel satisfactory to the Company with respect to such transfer. Absent
registration or another available exemption from registration, Subscriber agrees it will not resell the Securities (unless otherwise
permitted pursuant to the Insider Letter, as described in the Registration Statement). Subscriber further acknowledges that because
the Company is a shell company, Rule 144 may not be available to Subscriber for the resale of the Securities until the one year
anniversary following consummation of the initial Business Combination of the Company, despite technical compliance with the requirements
of Rule 144 and the release or waiver of any contractual transfer restrictions. 

 

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2.5. Sophisticated
Investor.

 

(i) Subscriber is
sophisticated in financial matters and is able to evaluate the risks and benefits of the investment in the Securities.

 

(ii) Subscriber is
aware that an investment in the Securities is highly speculative and subject to substantial risks because, among other things,
the Securities are subject to transfer restrictions and have not been registered under the Securities Act and therefore cannot
be sold unless subsequently registered under the Securities Act or an exemption from such registration is available. Subscriber
is able to bear the economic risk of its investment in the Securities for an indefinite period of time.

 

2.6. Independent Investigation.
Subscriber, in making the decision to purchase the Units, has relied upon an independent investigation of the Company and has not
relied upon any information or representations made by any third parties or upon any oral or written representations or assurances
from the Company, its officers, directors or employees or any other representatives or agents of the Company, other than as set
forth in this Agreement. Subscriber is familiar with the business, operations and financial condition of the Company and has had
an opportunity to ask questions of, and receive answers from the Company’s officers and directors concerning the Company
and the terms and conditions of the offering of the Units and has had full access to such other information concerning the Company
as Subscriber has requested. Subscriber confirms that all documents that it has requested have been made available and that Subscriber
has been supplied with all of the additional information concerning this investment which Subscriber has requested.

 

2.7 Organization and
Authority. Subscriber is duly organized, validly existing and in good standing under the laws of the State of Delaware and it possesses
all requisite power and authority necessary to carry out the transactions contemplated by this Agreement.

 

2.8. Authority. This
Agreement has been validly authorized, executed and delivered by Subscriber and is a valid and binding agreement enforceable in
accordance with its terms, subject to the general principles of equity and to bankruptcy or other laws affecting the enforcement
of creditors’ rights generally.

 

2.9. No Conflicts.
The execution, delivery and performance of this Agreement and the consummation by Subscriber of the transactions contemplated hereby
do not violate, conflict with or constitute a default under (i) Subscriber's charter documents, (ii) any agreement or instrument
to which Subscriber is a party or (iii) any law, statute, rule or regulation to which Subscriber is subject, or any agreement,
order, judgment or decree to which Subscriber is subject.

 

2.10. No Legal Advice
from Company. Subscriber acknowledges it has had the opportunity to review this Agreement and the transactions contemplated by
this Agreement and the other agreements entered into between the parties hereto with Subscriber’s own legal counsel and investment
and tax advisors. Except for any statements or representations of the Company made in this Agreement and the other agreements entered
into between the parties hereto, Subscriber is relying solely on such counsel and advisors and not on any statements or representations
of the Company or any of its representatives or agents for legal, tax or investment advice with respect to this investment, the
transactions contemplated by this Agreement or the securities laws of any jurisdiction.

 

2.11. Reliance on Representations
and Warranties. Subscriber understands the Units are being offered and sold to Subscriber in reliance on exemptions from the registration
requirements under the Securities Act, and analogous provisions in the laws and regulations of various states, and that the Company
is relying upon the truth and accuracy of the representations, warranties, agreements, acknowledgments and understandings of Subscriber
set forth in this Agreement in order to determine the applicability of such provisions.

 

2.12. No General Solicitation.
Subscriber is not subscribing for the Units as a result of or subsequent to any general solicitation or general 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 presented at any seminar or meeting or in a registration statement with respect to the
IPO filed with the Securities and Exchange Commission (“SEC”).

  

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2.13. Legend. Subscriber
acknowledges and agrees the certificates evidencing each of the Securities shall bear a restrictive legend (the “Legend”),
in form and substance substantially as set forth in Section 4 hereof.

 

3. Representations,
Warranties and Covenants of the Company

 

The Company represents
and warrants to, and agrees with, Subscriber that:

 

3.1. Valid Issuance
of Capital Stock. The total number of shares of all capital stock which the Company has authority to issue is 25,000,000 shares
of Common Stock and 1,000,000 shares of preferred stock, $0.0001 par value per share (“Preferred Stock”). As
of the date hereof, the Company has issued and outstanding 1,437,500 shares of Common Stock (of which up to 187,500 shares are
subject to forfeiture as described in the Registration Statement) and no shares of Preferred Stock. All of the issued shares of
capital stock of the Company have been duly authorized, validly issued, and are fully paid and non-assessable.

 

3.2 Title to Securities.
Upon issuance in accordance with, and payment pursuant to, the terms hereof and that certain warrant agreement to be entered into
between the Company and Continental, as warrant agent (the “Warrant Agreement”), as the case may be, each of
the Units, Placement Shares, Placement Warrants and Warrant Shares will be duly and validly issued, fully paid and non-assessable.
On the date of issuance of the Units and Warrant Shares shall have been reserved for issuance. Upon issuance in accordance with,
and payment pursuant to, the terms hereof and the Warrant Agreement, as the case may be, Subscriber will have or receive good title
to the Units, Placement Shares and Placement Warrants, free and clear of all liens, claims and encumbrances of any kind, other
than (i) transfer restrictions hereunder and pursuant to the Insider Letter and (ii) transfer restrictions under federal and state
securities laws.

 

3.3. Organization and
Qualification. The Company is a corporation duly incorporated, validly existing and in good standing under the laws of the State
of Delaware and has the requisite corporate power to own its properties and assets and to carry on its business as now being conducted.

 

3.4. Authorization;
Enforcement. (i) The Company has the requisite corporate power and authority to enter into and perform its obligations under this
Agreement and to issue the Securities in accordance with the terms hereof, (ii) the execution, delivery and performance of this
Agreement by the Company and the consummation by it of the transactions contemplated hereby have been duly authorized by all necessary
corporate action, and no further consent or authorization of the Company or its Board of Directors or stockholders is required,
and (iii) this Agreement constitutes valid and binding obligations of the Company enforceable against the Company in accordance
with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, fraudulent conveyance, moratorium,
reorganization, or similar laws relating to, or affecting generally the enforcement of, creditors’ rights and remedies or
by equitable principles of general application and except as enforcement of rights to indemnity and contribution may be limited
by federal and state securities laws or principles of public policy.

 

3.5. No Conflicts.
The execution, delivery and performance of this Agreement and the consummation by the Company of the transactions contemplated
hereby do not (i) result in a violation of the Company’s certificate of incorporation or by-laws, (ii) conflict with, or
constitute a default under any agreement or instrument to which the Company is a party or (iii) any law statute, rule or regulation
to which the Company is subject or any agreement, order, judgment or decree to which the Company is subject. Other than any SEC
or state securities filings which may be required to be made by the Company subsequent to the Closing, and any registration statement
which may be filed pursuant thereto, the Company is not required under federal, state or local law, rule or regulation to obtain
any consent, authorization or order of, or make any filing or registration with, any court or governmental agency or self-regulatory
entity in order for it to perform any of its obligations under this Agreement or issue the Units, Placement Shares, Placement Warrants
or Warrant Shares in accordance with the terms hereof.

 

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4. Legends

 

4.1. Legend. The Company
will issue the Units, Placement Shares and Placement Warrants, and when issued, the Warrant Shares, purchased by the Subscriber
in the name of the Subscriber. The Securities will bear the following Legend and appropriate “stop transfer” instructions:

 

“THE
SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”),
OR ANY STATE SECURITIES LAWS AND NEITHER THE SECURITIES NOR ANY INTEREST THEREIN MAY BE OFFERED, SOLD, TRANSFERRED, PLEDGED OR
OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR SUCH LAWS OR AN EXEMPTION
FROM REGISTRATION UNDER THE SECURITIES ACT AND SUCH LAWS WHICH, IN THE OPINION OF COUNSEL FOR THIS CORPORATION, IS AVAILABLE.”

 

“THE
SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO LOCKUP PURSUANT TO AN INSIDER LETTER BETWEEN, AMONG OTHERS, BROOKLINE
CAPITAL ACQUISITION CORP. AND BROOKLINE CAPITAL HOLDINGS LLC AND MAY ONLY BE OFFERED, SOLD, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED
DURING THE TERM OF THE LOCKUP PURSUANT TO THE TERMS SET FORTH IN THE INSIDER LETTER.”

 

4.2. Subscriber’s
Compliance. Nothing in this Section 4 shall affect in any way Subscriber’s obligations and agreements to comply with all
applicable securities laws upon resale of the Securities.

 

4.3. Company’s
Refusal to Register Transfer of the Securities. The Company shall refuse to register any transfer of the Securities, if in the
sole judgment of the Company such purported transfer would not be made (i) pursuant to an effective registration statement filed
under the Securities Act, or pursuant to an available exemption from the registration requirements of the Securities Act and (ii)
in compliance herewith and with the Insider Letter.

 

4.4 Registration Rights.
The Subscriber will be entitled to certain registration rights which will be governed by a registration rights agreement (“Registration
Rights Agreement”) to be entered into between, among others, the Subscriber and the Company, on or prior to the effective
date of the Registration Statement.

 

5. Waiver
of Liquidation Distributions.

 

In connection with
the Securities purchased pursuant to this Agreement, Subscriber hereby waives any and all right, title, interest or claim of any
kind in or to any distributions of the amounts in the Trust Account with respect to the Securities, whether (i) in connection with
the exercise of redemption rights if the Company consummates the Business Combination, (ii) in connection with any tender offer
conducted by the Company prior to a Business Combination, (iii) upon the Company’s redemption of shares of Common Stock sold
in the Company’s IPO upon the Company’s failure to timely complete the Business Combination or (iv) in connection with
a stockholder vote to approve an amendment to the Company’s amended and restated certificate of incorporation (A) to modify
the substance or timing of the Company’s obligation to redeem 100% of the Company’s public shares if the Company does
not timely complete the Business Combination or (B) with respect to any other provision relating to stockholders’ rights
or pre-Business Combination activity. In the event a Subscriber purchases shares of Common Stock in the IPO or in the aftermarket,
any additional shares so purchased shall be eligible to receive the redemption value of such shares of Common Stock upon the same
terms offered to all other purchasers of Common Stock in the IPO in the event the Company fails to consummate the Business Combination.

 

6. Terms of
Placement Warrants. Each Placement Warrant shall have the terms set forth in the Warrant Agreement.

 

7. [Reserved].

  

8. Terms of
the Units and Placement Warrants

 

8.1 The Units and their
component parts are substantially identical to the units to be offered in the IPO except that: (i) the Units and component parts
will be subject to transfer restrictions described in the Insider Letter, (ii) the Placement Warrants will be non-redeemable so
long as they are held by the initial holder thereof (or any of its permitted transferees), and may be exercisable on a “cashless”
basis if held by a Subscriber or its permitted transferees, as further described in the Warrant Agreement and (iii) the Units and
component parts are being purchased pursuant to an exemption from the registration requirements of the Securities Act and will
become freely tradable only after the expiration of the lockup described above in clause (i) and they are registered pursuant to
the Registration Rights Agreement to be signed on or before the date of the Prospectus or an exemption from registration is available.

 

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8.2 Subscriber agrees
to vote the Placement Shares in accordance with the terms of the Insider Letter and as otherwise described in the Registration
Statement.

 

9. Governing
Law; Jurisdiction; Waiver of Jury Trial

 

This Agreement shall
be governed by and construed in accordance with the laws of the State of New York for agreements made and to be wholly performed
within such state. The parties hereto hereby waive any right to a jury trial in connection with any litigation pursuant to this
Agreement and the transactions contemplated hereby.

 

10. Assignment; Entire Agreement;
Amendment

 

10.1. Assignment. Neither
this Agreement nor any rights hereunder may be assigned by any party to any other person other than by a Subscriber to a person
agreeing to be bound by the terms hereof, including the waiver contained in Section 7 hereof.

 

10.2. Entire Agreement.
This Agreement sets forth the entire agreement and understanding between the parties as to the subject matter thereof and merges
and supersedes all prior discussions, agreements and understandings of any and every nature among them.

 

10.3. Amendment. Except
as expressly provided in this Agreement, neither this Agreement nor any term hereof may be amended, waived, discharged or terminated
other than by a written instrument signed by all of the parties hereto.

 

10.4. Binding upon
Successors. This Agreement shall be binding upon and inure to the benefit of the parties hereto and to their respective heirs,
legal representatives, successors and permitted assigns.

 

11. Notices

 

11.1 Notices. Unless
otherwise provided herein, any notice or other communication to a party hereunder shall be sufficiently given if in writing and
personally delivered or sent by facsimile or other electronic transmission with copy sent in another manner herein provided or
sent by courier (which for all purposes of this Agreement shall include Federal Express or other recognized overnight courier)
or mailed to said party by certified mail, return receipt requested, at its address provided for herein or such other address as
either may designate for itself in such notice to the other. Communications shall be deemed to have been received when delivered
personally, on the scheduled arrival date when sent by next day or 2nd-day courier service, or if sent by facsimile upon receipt
of confirmation of transmittal or, if sent by mail, then three days after deposit in the mail. If given by electronic transmission,
such notice shall be deemed to be delivered (a) if by electronic mail, when directed to an electronic mail address at which the
stockholder has consented to receive notice; (b) if by a posting on an electronic network together with separate notice to the
stockholder of such specific posting, upon the later of (1) such posting and (2) the giving of such separate notice; and (c) if
by any other form of electronic transmission, when directed to the stockholder.

 

12. Counterparts

 

This Agreement may
be executed in one or more counterparts, all of which when taken together shall be considered one and the same agreement and shall
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. In the event that any signature is delivered by facsimile transmission or by e-mail
delivery of a “pdf” format data file, such signature shall 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 “.pdf” signature
page were an original thereof.

 

13. Survival;
Severability

 

13.1. Survival. The
representations, warranties, covenants and agreements of the parties hereto shall survive the Closing Dates.

 

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13.2. Severability.
In the event that any provision of this Agreement becomes or is declared by a court of competent jurisdiction to be illegal, unenforceable
or void, this Agreement shall continue in full force and effect without said provision; provided that no such severability shall
be effective if it materially changes the economic benefit of this Agreement to any party.

 

14. Headings.

 

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.

 

[remainder of page intentionally left blank]

 

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IN WITNESS WHEREOF,
the parties hereto have executed this Agreement to be effective as of the date first set forth above.

 

	 	COMPANY:
	 	 
	 	BROOKLINE CAPITAL ACQUISITION CORP.
	 	 	 
	 	By:	 
	 	 	Name: Samuel P. Wertheimer
	 	 	Title: Chief Executive Officer

 

	 	SUBSCRIBER:
	 	 
	 	BROOKLINE CAPITAL HOLDINGS LLC
	 	 	 
	 	By:	 
	 	 	Name: William B. Buchanan, Jr.
	 	 	Title: Managing Member

 

 

 

 

 

 

 

[Signature Page of the Unit Subscription
Agreement with Sponsor]Document

			
	

Exhibit 4.2
DESCRIPTION OF REGISTRANT’S SECURITIES 

As of June 30, 2020, Sharps Compliance Corp. (the “Company”) had one class of securities registered under Section 12 of the Securities Exchange Act of 1934 (the “Exchange Act”), the Company’s common stock. 

Description of Common Stock

The following is a summary and does not describe every right, term or condition of owning the Company’s common stock. It is subject to and is qualified in its entirety by reference to the Company’s Amended and Restated Certificate of Incorporation, as amended by the Certificate of Amendment to the Amended and Restated Certificate of Incorporation (the “Certificate of Incorporation”) and Amended and Restated Bylaws (the “Bylaws”). For a complete description, refer to the Certificate of Incorporation and the Bylaws and any applicable provisions of relevant law. 

General 

The Certificate of Incorporation authorizes the Company to issue up to 40,000,000 shares of common stock, par value $0.01 per share, and 1,000,000 shares of undesignated preferred stock, par value $0.01 per share. The authorized but unissued shares of the Company’s capital stock are available for future issuance without shareholder approval, unless otherwise required by applicable law or the rules of any applicable securities exchange. 

Voting

Each holder of the Company’s common stock is entitled to one vote for each share held of record on all matters on which shareholders generally are entitled to vote, except as otherwise required by law. The common stock votes as a single class on all matters relating to the election of directors to the board of directors and as provided by law. The rights of the holders of the Company’s common stock to vote on certain matters may be subject to the rights and preferences of the holders of any outstanding shares of any preferred stock that the Company may issue. The Certificate of Incorporation expressly prohibits cumulative voting. Except in respect of matters relating to the election of directors and as otherwise provided in the Certificate of Incorporation or required by law, all matters to be voted on by the stockholders must be approved by the affirmative vote of the holders of a majority in voting power of the shares present in person or represented by proxy at the meeting entitled to vote on the subject matter. The election of directors will be decided by a plurality of the votes of the shares present in person or represented by proxy and entitled to vote on the election. 

Dividends and Other Distributions    

Subject to preferences that may apply to shares of preferred stock outstanding at the time, holders of outstanding shares of our common stock are entitled to receive dividends out of assets legally available at the times, but only at such times and in such amounts as the Company’s board of directors (the “Board of Directors”) shall determine and declare. 

Preemptive Rights    

Holders of the Company’s common stock do not have preemptive or subscription rights to acquire any authorized but unissued shares of the Company’s capital stock upon any future issuance of shares. 

Liquidation Rights 

In the event of any voluntary or involuntary liquidation, dissolution, or winding up of the Company’s affairs, holders of the common stock would be entitled to share ratably in the assets that are legally available for distribution to stockholders after payment of the debts and other liabilities. If there is any preferred stock outstanding at such time, holders of the preferred stock may be entitled to distribution and/or liquidation preferences. In either such case, the Company must pay the applicable distribution to the holders of the preferred stock before the Company may pay distributions to the holders of the common stock.

Preferred Stock Issuances 

The Certificate of Incorporation authorizes the Board of Directors to issue up to 1,000,000 shares of one or more series of preferred stock. The Board of Directors will have the authority to determine the preferences, limitations and relative rights of shares of preferred stock and to fix the number of shares constituting any series and the designation of such series, without any further vote or action by the Company’s shareholders. As noted herein, the preferred stock could be issued with voting, liquidation, dividend and other rights superior to the rights of the Company’s common stock. 

Certain Anti-Takeover Effects 

The provisions of Delaware law and the Certificate of Incorporation and Bylaws may have the effect of delaying, deferring or discouraging another party from acquiring control of the Company in a coercive manner as described below. These provisions, summarized below, are expected to discourage and prevent coercive takeover practices and inadequate takeover bids. These provisions could have the effect of discouraging attempts to acquire the Company, which could deprive the stockholders of opportunities to sell their shares of common stock at prices higher than prevailing market prices. 
The Company is subject to the provisions of Section 203 of the Delaware General Corporation Law.  With some exceptions, this law prohibits the Company from engaging in some types of business combinations with a person who owns 15% or more of the Company’s outstanding voting stock for a three-year period after that person acquires the stock.  A business combination includes mergers, consolidations, stock sales, assets sales, and other transactions resulting in a financial benefit to the interested stockholder. 
The Certificate of Incorporation and Bylaws also contain provisions that may delay, defer, or discourage another party from acquiring control of the Company. The Certificate of Incorporation provides that the Board of Directors will be authorized to issue from time to time, without further stockholder approval, up to 1,000,000 shares of preferred stock in one or more series and to fix or alter the designations, powers and preferences, and the relative, participating, option, or other rights and any qualifications, limitations, or restrictions of the shares of each series.  Therefore, the Company may issue additional preferred stock in ways which may delay, defer or prevent a change in control without further action by the stockholders. 
The Bylaws prohibit the conduct of any business at a special meeting other than as specified in the notice for such meeting. The Bylaws also provide that nominations of persons for election to the Board of Directors may be made at a meeting of stockholders at which directors are to be elected pursuant to (1) the notice of meeting by or at the direction of the Board of Directors or any committee thereof or (2) otherwise properly made at the annual meeting, by or at the direction of the Board of Directors or (3) otherwise properly requested to be brought before the annual meeting by a stockholder pursuant to Rule 14a-8 promulgated under the Exchange Act. These provisions may have the effect of deferring, delaying, or discouraging hostile takeovers, or changes in control or management.
The Certificate of Incorporation and Bylaws also do not provide for cumulative voting in the election of directors. Cumulative voting allows a minority stockholder to vote a portion or all of its shares for one or more candidates for seats on the board of directors. Without cumulative voting, a minority stockholder will not be able to gain as many seats on our board of directors based on the number of shares of the stock the stockholder holds as the stockholder would be able to gain if cumulative voting were permitted. The absence of cumulative voting makes it more difficult for a minority stockholder to gain a seat on the Board of Directors to influence the Board of Directors’ decision regarding a takeover. 

Listing 

The Company’s common stock is listed on the NASDAQ Capital Market under the trading symbol “SMED.”

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