Document:

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.smti_ex1012

 

Exhibit 10.1.2

 

RESTRICTED STOCK AGREEMENT

 

RESTRICTED STOCK
AGREEMENT (the “Agreement”) granted on [
Insert
Date ], between SANARA MEDTECH INC., a Texas corporation
(the “Company”) and [
Insert
Name ] (the “Recipient”).

 

WHEREAS, the Board
of Directors of the Company has determined to grant restricted
stock awards to certain Company employees under the Company’s
2014 Omnibus Long Term Incentive Plan upon the terms and conditions
set forth herein;

 

NOW,
THEREFORE, the Company and the Recipient agree as
follows:

 

1.      Grant
of Award. The Company hereby grants to the Recipient under
the Company’s 2014 Omnibus Long Term Incentive Plan (the
“Plan”)
a Restricted Share Award consisting of [ insert number ]
shares of common stock, par value $0.001 per share (the
“Common
Stock”), of the Company (the “Restricted Stock”), on
the terms and conditions and subject to the restrictions set forth
in this Agreement. The grant of the Restricted Stock is made in
consideration of the services rendered and to be rendered by the
Recipient to the Company.

 

The
Recipient shall be issued stock certificates evidencing the
Restricted Stock which shall be registered in the name of the
Recipient and shall bear an appropriate legend referring to the
terms, conditions, and restrictions of the Restricted Stock,
substantially in the following form:

 

The
transferability of this certificate and the common stock
represented hereby are subject to the terms, conditions and
restrictions (including conditions of forfeiture) contained in the
Restricted Stock Agreement entered into between the registered
owner and Sanara MedTech Inc., and in the 2014 Omnibus Long Term
Incentive Plan of Sanara MedTech Inc. A copy of the Agreement and
such Plan are on file in the offices of Sanara MedTech Inc., 1200
Summit Ave, Suite 414, Fort Worth, Texas 76102.

 

The
stock certificates evidencing the shares of Restricted Stock shall
be held in custody by the Company or, if specified by the Board of
Directors, with a third party custodian or trustee, until the
restrictions thereon shall have lapsed, and, as a condition of this
Restricted Share Award, the Recipient shall deliver a stock power,
duly endorsed in blank, relating to the shares of Restricted
Stock.

 

2.      Transfer
Restrictions. Subject to satisfaction of the vesting
provisions set forth in Section 4 of this Agreement, the shares of
Restricted Stock are non-transferable and may not be assigned,
alienated, pledged, attached, sold or otherwise transferred or
encumbered by the Recipient or become subject to execution,
attachment or similar process. Any attempt to assign, alienate,
pledge, attach, sell or otherwise transfer or encumber any shares
of Restricted Stock or the rights relating thereto until vested as
provided herein shall be wholly ineffective and, if any such
attempt were to be made, all unvested shares of Restricted Stock
will be forfeited by the Recipient, and all of the
Recipient’s rights to such shares shall immediately terminate
without any payment or consideration by the Company.

 

 

  Employee

 

 

 

 

 

 

3.      Voting
and Dividend Rights. Recipient agrees that during the period
in which any Restricted Stock is unvested and subject to the
restrictions provided herein, the Recipient shall not have the
right to vote, or to receive cash dividends (except as contemplated
in Section 5 hereof) payable on, such unvested shares of Restricted
Stock. Any dividend or distribution payable with respect to
Restricted Stock that shall be paid in shares of Common Stock or
other property (excluding cash) or any consideration (including
cash) receivable for conversion of or in exchange for any shares of
Restricted Stock, shall be subject to the same restrictions
applicable to the unvested Restricted Stock (with such
modifications thereof as the Board of Directors may provide in its
absolute discretion), and shall be held in custody by the Company
or with a third party custodian or trustee until the vesting of the
corresponding Restricted Stock.

 

4. 
Vesting. Except as
otherwise provided herein, and provided that from the date hereof
through the applicable vesting date set forth below the Recipient
remains in continuous employment with the Company or a subsidiary
of the Company, the restrictions on the Restricted Stock shall
lapse and the Restricted Stock shall vest in accordance with the
vesting schedule below.

 

	

Vesting
Date

	

Shares
Vesting

	

[
Insert
Date ]

	

[
Insert Number
of Shares ]

	

[
Insert
Date ]

	

[
Insert Number
of Shares ]

	

[
Insert
Date ]

	

[
Insert Number
of Shares ]

 

The
foregoing vesting period notwithstanding, upon the occurrence of a
Change in Control, 100% of the unvested shares of Restricted Stock
shall vest as of the date of the Change in Control. “Change
in Control” shall mean (i) a sale of all or substantially all
of the assets of the Company to any person or entity that is not a
wholly owned subsidiary of the Company; (ii) a merger or
consolidation to which the Company is a party if all persons who
were shareholders of the Company immediately prior to the effective
date of the merger or consolidation become beneficial owners (as
defined in Rule 13d-3 under the Securities Exchange Act of 1934, as
amended) of securities having less than 50% of the total combined
voting power for election of directors (or comparable governing
body) of the surviving corporation or other entity following the
effective date of such merger or consolidation; or (iii) the
approval by shareholders of the Company of any plan or proposal for
the liquidation of the Company or its subsidiaries (other than into
the Company).

 

Upon
termination of the Recipient’s employment with the Company or
any of its subsidiaries (or the successor of any such company) for
any reason, the Recipient shall on such date immediately forfeit
all rights in the shares of Restricted Stock which shall not have
become vested, and the ownership of such shares shall immediately
fully vest in the Company, which shall have no further obligations
to the Recipient under this Agreement.

 

Upon
the vesting as to any portion of the Restricted Stock, the Company
will cause a new certificate evidencing such number of vested
shares of Common Stock to be delivered to the Recipient, free of
the legend regarding restrictions on transfer; provided that the Company shall
not be obligated to issue any fractional share of Common
Stock.

 

5.      Capitalization;
Adjustments. In the event of a dividend or other
distribution (other than ordinary cash dividends), merger,
consolidation, recapitalization, stock split, reorganization,
reclassification, merger, exchange of securities of the Company, or
other corporate transaction affecting the capital structure of the
Company, the Board of Directors or a committee designated by the
Board of Directors may in its discretion make adjustments and take
actions as contemplated by Section 3.4 of the Plan.

 

 

 

2

 

 

 

 

 

6.      Tax
Withholding. The Recipient shall be required to pay to the
Company the amount of any required withholding taxes due as a
result of the vesting of any Restricted Stock. The Company shall
have no obligation to deliver a Common Stock certificate to the
Recipient until receipt from the Recipient of the amount of funds
in payment of such required withholding taxes, and if unpaid by
Recipient the Company may take all such other action as the Board
of Directors deems necessary to satisfy such tax withholding
payment obligation.

 

7.      Section
83(b) Election. The Recipient may make an election under
Internal Revenue Code Section 83(b) regarding federal income tax
treatment of the Restricted Stock. Any such election must be made
within 30 days after the date of grant, and the Recipient must
provide the Company with a copy of an executed version and
satisfactory evidence of filing with the U.S. Internal Revenue
Service. The Recipient agrees to assume full responsibility for
ensuring that the election is actually and timely filed with the US
Internal Revenue Service and for all tax consequences resulting
from the election.

 

8.      No
Right to Continued Service or Future Awards. This Agreement
shall not confer upon the Recipient any right to continued
employment or to any position with the Company, nor limit the
discretion of the Company to terminate the Recipient’s
employment at any time for any reason. The grant of the Restricted
Stock in this Agreement does not create any contractual right or
other right to receive any Restricted Share Awards or other award
in the future. Future awards of compensation, if any, will be at
the sole discretion of the Board of Directors.

 

9.      Compliance
with Laws. The issuance and transfer of shares of Common
Stock shall be subject to compliance by the Company and the
Recipient with all applicable requirements of federal and state
securities laws and with all applicable requirements of any stock
exchange on which the Common Stock may be listed. No shares of
Common Stock shall be issued or transferred unless and until any
then applicable requirements of federal and state laws and
regulatory agencies have been fully complied with to the
Company’s satisfaction. The Company shall be under no
obligation to register the shares of Common Stock with the
Securities and Exchange Commission or any state securities
commission or to list the shares on any stock exchange to effect
such compliance.

 

10.    
Governing Law. THIS
AGREEMENT SHALL BE CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF TEXAS WITHOUT REGARD TO CONFLICT OF LAW
PRINCIPLES. ALL DISPUTES, CONTROVERSIES OR DIFFERENCES WHICH MAY
ARISE OUT OF, IN RELATION TO, OR IN CONNECTION WITH THIS AGREEMENT
OR THE BREACH THEREOF SHALL BE BROUGHT AND ADJUDICATED IN THE STATE
OR FEDERAL COURTS LOCATED IN TARRANT COUNTY, TEXAS. RECIPIENT
HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF THE STATE AND
FEDERAL COURTS OF THE STATE OF TEXAS.

 

 

 

3

 

 

 

 

 

11.     
Restricted Stock Subject
to the Plan. This Agreement is subject to the Plan, the
terms and provisions of which may be amended from time to time. In
the event of a conflict between any term or provision contained
herein and a term or provision of the Plan, the applicable term or
provision of the Plan will prevail.

 

12.     
Interpretation. The
interpretation of this Agreement and any dispute relating thereto
shall be decided by the Board of Directors of the Company or a
committee designated by the Board of Directors and shall be final
and binding on the Recipient and the Company.

 

13.    
Successors and
Assigns. The Company may assign any of its rights under this
Agreement, which will be binding upon and inure to the benefit of
the Company’s successors and assigns.

 

14.   
Severability. The
invalidity or unenforceability of any provision of this Agreement
shall not affect the validity or enforceability of any other
provision, and each provision of this Agreement shall be severable
and enforceable to the extent permitted by law.

 

15.   
Counterparts. This
Agreement may be executed in counterparts, each of which shall be
deemed an original but all of which together will constitute one
and the same instrument. Counterpart signature pages to this
Agreement transmitted by facsimile transmission, electronic mail in
portable document format (.pdf), or by any other electronic means
intended to preserve the original graphic and pictorial appearance
of a document, will have the same effect as physical delivery of
the paper document bearing an original signature.

 

IN
WITNESS WHEREOF, the parties hereto have executed this Agreement on
[ Insert
Date ]

 

	
 

	

SANARA
MEDTECH INC.

 

 

By      
                 
                 
                 
             
  

[
Insert Name of
Authorized Representative ]

[
Insert Title of
Authorized Representative ]

 

 

RECIPIENT

 

 

    
      
                 
                 
                 
              
                                                                         

[
Insert
Name ]

 

 

 

 

 

4

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