UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN A PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
(Amendment No. )
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☒ Definitive Proxy
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Soliciting Material under § 240-14a-12
SANARA MEDTECH INC.
(Name
of Registrant as Specified in its Charter)
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SANARA MEDTECH INC.
1200
Summit Ave., Suite 414
Fort
Worth, Texas 76102
June
25, 2020
Dear
Shareholder:
The
Board of Directors and Management of Sanara MedTech Inc. invite you
to attend the Annual Meeting of Shareholders to be held
electronically as a virtual meeting at 10:00 a.m. Central time on
Thursday, July 9, 2020. Due to the potential health dangers and
related complexities of holding a meeting at a physical location,
the Annual Meeting will instead be conducted virtually by
electronic communication via the Internet. Details on electronic
attendance and matters on which action will be taken at the meeting
are explained in the notice and proxy statement following this
letter. Please read them carefully.
It is
important that your shares be voted at the meeting in accordance
with your preference. If you do not plan to attend our virtual
meeting, you may vote your shares through the Internet or by mail
using the enclosed proxy card and envelope. If you are a beneficial
holder with shares held through a broker, you will receive
instructions for voting your shares from your broker.
Thank
you for your continued support of Sanara MedTech Inc.
Ronald
T. Nixon
Executive Chairman
of the Board
J.
Michael Carmena
Vice
Chairman of the Board
SANARA MEDTECH INC.
1200
Summit Ave., Suite 414
Fort
Worth, Texas 76102
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held July 9, 2020
The
Annual Meeting of Shareholders of Sanara MedTech Inc., a Texas
corporation (the “Company”), will be held
electronically as a virtual meeting on July 9, 2020, at 10:00 a.m.,
Central time, for the following purposes:
(1)
To elect five
directors to hold office until the next Annual Meeting of
Shareholders;
(2)
To approve the
Company’s Restated 2014 Omnibus Long Term Incentive
Plan;
(3)
To approve, by
advisory vote, a resolution on executive compensation;
(4)
To recommend, by
advisory vote, the frequency of future advisory votes on executive
compensation; and
(5)
To transact any
other business as may properly come before the annual meeting or
any adjournment thereof.
Only
holders of record of the Company’s common stock at the close
of business on June 11, 2020, are entitled to notice of and to vote
at the annual meeting. A complete list of shareholders entitled to
vote will be available for examination by any Company shareholder
at the Company’s principal office at 1200 Summit Ave., Suite
414, Fort Worth, Texas 76102, during ordinary business hours for a
period of eleven days prior to the date of the annual Meeting.
Please contact our Corporate Secretary, Michael D. McNeil, at
817-529-2300 if you would like to make arrangements to examine the
shareholder list at our office.
Your
attention is directed to the proxy statement that follows for
further information about the matters to be considered at the
annual meeting. Our annual report to shareholders with financial
statements, which consists of our annual report on Form 10-K for
the year ended December 31, 2019, accompanies the proxy
statement.
To
ensure that your vote will be counted, please complete, sign and
date the enclosed proxy card and return it promptly in the enclosed
prepaid envelope, or
vote over the Internet, whether or not you plan to attend the
Annual Meeting. Your proxy may be revoked in the manner described
in the accompanying Proxy Statement at any time before it has been
voted at the Annual Meeting. If you are a beneficial holder with
shares held through a broker, you will receive instructions for
voting your shares from your broker.
By
Order of the Board of Directors
Michael
D. McNeil
Secretary
June
25, 2020
Fort
Worth, Texas
SANARA MEDTECH INC.
1200
Summit Ave., Suite 414
Fort
Worth, Texas 76102
____________________________
PROXY STATEMENT
For
ANNUAL MEETING OF SHAREHOLDERS
To Be Held July 9, 2020
This
Proxy Statement is provided in connection with the solicitation of
proxies by the Board of Directors of Sanara MedTech Inc. for its
annual meeting of shareholders to be held only by electronic
communication on Thursday, July 9, 2020, and any adjournment
thereof. The purpose of the meeting is to consider and vote on the
matters set forth in the accompanying Notice of Annual Meeting of
Shareholders. You are receiving this Proxy Statement because you
own shares of common stock of the Company that entitles you to vote
at the meeting. In this Proxy Statement, Sanara MedTech Inc. is
referred to as the “Company,” “Sanara,”
“we” or “us.” By use of a proxy, you can
vote on the matters to be decided at the meeting without attending
the virtual meeting through the Internet. You simply vote your
preferences through the Internet or by completing, signing and
dating the enclosed proxy card and mailing it in the enclosed
envelope, and your shares will be voted in accordance with your
instructions.
The
Company will begin sending this Proxy Statement and Proxy to
shareholders on June 25, 2020.
GENERAL MATTERS
Record Date; Shares Outstanding and Voting Rights
The
Board of Directors fixed the close of business on June 11, 2020 as
the record date for shareholders entitled to notice of and to vote
at the annual meeting. Only holders of common stock as of the
record date are entitled to vote at the annual meeting. As of the
record date, there were 6,203,402 shares of common stock
outstanding, which were held by approximately 241 holders of
record. Each share of common stock held as of the record date
entitles the holder to one vote on each matter to be voted on at
the meeting. Shareholders are not entitled to cumulate their votes
for the election of directors.
The
Board of Directors requests that you complete, sign, date and
return the enclosed proxy card promptly or vote through the
Internet, whether or not you plan to attend the virtual meeting. If
you own shares through a bank, broker or other intermediary, you
will receive separate instructions from them on how to direct them
to vote your shares. If you wish to vote at the annual meeting
those shares held through a broker, bank or other nominee, you must
first obtain a special proxy executed in your favor from that
broker, bank or other nominee and provide evidence of that proxy
when you register to attend the virtual meeting (described below).
If you fail to provide your broker or other nominee with voting
instructions, the broker or other nominee may exercise its
discretionary authority to vote the shares only on certain matters
without your instructions. If your broker or bank fails to vote the
shares on a matter, a “broker non-vote” will occur on
that matter, the voting effect of which is described
below.
A
majority of the outstanding shares must be represented in person or
by proxy at the annual meeting in order to constitute a quorum to
conduct business at the meeting. Abstentions and “broker
non-votes” are treated as shares that are present for
purposes of determining the presence of a quorum. Whether you vote
by mail or the Internet, your shares of stock will be voted at the
annual meeting in accordance with your instructions. If you do not
designate specific voting instructions on any matter, your shares
will be voted on the matter as recommended by the Board of
Directors in this Proxy Statement.
You may
revoke a proxy at any time before it is voted at the meeting. To
revoke your proxy, you may do so with a subsequent vote by
submitting another signed proxy card with a later date or voting
through the Internet at a later date, or you may send a written
notice of revocation to the corporate secretary of the Company at
our principal office, 1200 Summit Ave., Suite 414, Fort Worth,
Texas 76102. If your shares are held by a broker, bank or other
nominee, you may revoke your voting instruction to the broker, bank
or other nominee by so informing the entity in accordance with its
procedures.
Deadline to Vote by Proxy
Any
vote of a shareholder not voted at the annual meeting will be
counted only if (a) in the case of a vote by mailed proxy, the
proxy card is received not
later than the day prior to the date of the annual meeting or (b)
in the case of a vote through the Internet, the vote is made not
later than the day prior to the date of the annual
meeting.
Attendance and Voting at the Annual Meeting
The
Company’s virtual annual meeting will be held on July 9, 2020
at 10:00 a.m., Central time, and will be presented electronically
through the Internet in audio and video format. Online access to
the meeting will begin at 9:45 a.m., Central time. Shareholders
will not be able to physically attend the meeting.
Only
shareholders of record and beneficial owners on June 11, 2020, who
have registered as described below, will be allowed to attend the
virtual annual meeting.
Instructions for Shareholders to Attend the Virtual Annual
Meeting
Record Holders. If you were a
shareholder of record (i.e., you held your shares through a
certificate registered in your name) on June 11, 2020, you may
attend the virtual annual meeting, but you must first register to attend the
meeting by sending an email to info@stctransfer.com and
requesting a return email for instructions to register for the
Sanara MedTech meeting. To register, you will need to have the
proxy card that was mailed with this Proxy Statement in order to
provide a control number found on the card. You may attend the
annual meeting beginning at 9:45 a.m. on the date of the meeting by
accessing the Internet site provided to you at
registration
You will then be directed to a screen where you will enter your
registered name and meeting password obtained at your registration.
Please note that the meeting password is case sensitive. Once you
have completed these steps, select the “login” button,
which will take you to the virtual annual meeting page where you
can observe the actions and presentations at the meeting and, if
you choose, submit written or verbal questions. If you are a
shareholder of record and you have misplaced your proxy card with
your control number, please call Securities Transfer Corporation
at (469) 633-0101.
Beneficial Owners. If you were a
beneficial owner on June 11, 2020 (i.e., you held your shares in
“street name” through an intermediary, such as a
broker, bank or other nominee), you must register as described in
the preceding paragraph for record holders. However, in order to register, you must have
previously obtained a special proxy from the broker, bank or other
nominee that will allow you to separately vote your shares.
Contact your broker, bank or other nominee holding your shares to
obtain the special proxy, and when you have received it, you must
submit the special proxy to Securities Transfer Corporation to
receive a control number to use to access the virtual annual
meeting. Any control number that was provided with your proxy
materials, will not provide access to the virtual annual meeting
site. Requests for registration and submission of special proxies
should be labeled as “Legal Proxy” and must be received
by Securities Transfer Corporation no later than 5 p.m., Central
time, on July 6, 2020. All such requests should be submitted
(1) by email to info@stctransfer.com, (2) by fax to
(469) 633-0088, or (3) by mail to Securities Transfer
Corporation, Attn: Proxy Tabulation Department, 2901 N. Dallas
Parkway, Suite. 380, Plano, TX 75093. Obtaining a special proxy may
take several days, so shareholders are advised to register as far
in advance as possible. Once you have obtained your control
number, you may follow the steps set forth above for “Record
Holders” to attend the virtual annual meeting. If you have
questions please call Securities Transfer Corporation
at (469) 633-0101.
Voting Shares. Shareholders attending
the annual meeting will be able to vote during the meeting at
http://onlineproxyvote.com/SMTI, which is a separate website from
the page hosting the convening of the annual meeting.
Asking Questions. Shareholders
attending the annual meeting can ask questions by clicking the
Q&A icon on the toolbar appearing at the bottom of the Meeting
Page and then typing and submitting a question or clicking the
Raise Hand icon to request placement in a queue to verbally ask a
question.
Solicitation of Proxies
The
Company will bear the cost of soliciting proxies, including the
charges and expenses of brokerage firms, banks and other custodians
and nominees to forward proxy materials to beneficial owners of our
common stock. Solicitations will be made primarily by mail, but
certain directors, officers or other employees may solicit proxies
in person, by telephone or by other means. Such persons will not
receive special compensation for their solicitation
services.
Inspector of Elections
The
inspector of elections will be a representative from Securities
Transfer Corporation, the transfer agent and registrar for our
common stock.
Item 1. ELECTION OF DIRECTORS
Shareholders will
elect five directors at the annual meeting to serve until the next
annual meeting and a successor has been elected and qualified, or
the director’s earlier death, resignation or removal. The
Board of Directors has nominated each person listed below to stand
for election. The persons named as proxies on the accompanying
proxy card intend to vote for each of the nominees named in this
proxy statement. Each nominee has agreed to serve as a director if
elected. Although we have no reason to believe that any of them
will be unable or unwilling to serve, in the event that any nominee
named below should become unable or unwilling to serve, the Board
of Directors may reduce the size of the Board or nominate a
substitute for that nominee, and the proxies named on the
accompanying proxy card will vote any shares represented by such
proxies received by the Company for such other person thereafter
nominated for director by the Board of Directors.
Vote Required. Assuming the presence of
a quorum, in order to be elected a nominee for director must
receive the affirmative vote in the election of that nominee by
holders of a majority of outstanding shares of common stock. Each
share of common stock is entitled to one vote. The proxy card
provides a means for shareholders to vote for or to withhold
authority to vote for each nominee for director. A direction to
“withhold” a vote is a vote against the nominee. If a
shareholder executes and returns a proxy, but does not specify how
the shares represented by such shareholder’s proxy are to be
voted, the shares will be voted FOR the election of the nominees
for director. In determining whether the nominee has received the
required number of affirmative votes, abstentions and broker
non-votes will have the effect of voting against the
director.
The
Board of Directors recommends a vote “FOR” the election of each
nominee to the Board of Directors.
Director Nominees
The
following table sets forth the names, ages, and positions of the
nominees for election to the Board of Directors of Sanara MedTech
Inc. S. Oden “Denny” Howell, Jr., a current director
has decided not to stand for reelection at the annual meeting. The
Board received notice of Mr. Howell’s decision only recently
and has not had sufficient time to select and evaluate potential
candidates to replace Mr. Howell. As a result, members of the Board
have not nominated a new director to fill this seat which will
become vacant after the annual meeting. The Board anticipates
appointing a new director at a later time.
|
NAME
|
|
AGE
|
|
POSITION
|
|
YEAR FIRST ELECTED
|
|
Ronald
T. Nixon
|
|
64
|
|
Executive
Chairman
|
|
2019
|
|
James
W. Stuckert
|
|
82
|
|
Director
|
|
2015
|
|
J.
Michael Carmena
|
|
64
|
|
Vice
Chairman
|
|
2019
|
|
Ann
Beal Salamone
|
|
69
|
|
Director
|
|
2019
|
|
Kenneth
E. Thorpe
|
|
63
|
|
Director
|
|
2019
|
Ronald T. Nixon, age
64, has been a director of the Company since March 2019 and has
served as Executive Chairman of the Board since May 2019. As
Executive Chairman, he has been involved in strategy planning,
execution and identifying prospective partnerships and acquisitions
opportunities for the Company. Mr. Nixon is the Founder and
Managing Partner of The Catalyst Group, Inc., a private investment
firm that provides growth capital and strategic advisory services
to private companies. Mr. Nixon serves on the board of directors of
LHC Group, Inc. as well as a number of private companies, including
Trilliant Surgical, LLC, Rochal Industries, LLC, and Triad Life
Sciences, Inc. Mr. Nixon also serves on the Engineering Advisory
Board for the Cockrell School of Engineering at the University of
Texas at Austin, where he was the previous vice chairman. Mr. Nixon
holds a Bachelor’s degree in Mechanical Engineering from the
University of Texas at Austin and is a registered professional
engineer (inactive) in Texas.
James W. Stuckert,
age 82, has been a director of the Company since September 2015. He
has been engaged in personal investing activities from 2004 to
2019. Mr. Stuckert served as Chairman and Chief Executive Officer
of J.J.B. Hilliard, W.L. Lyons, LLC from December 1995 until
December 2003, prior to which he served in executive and broker
positions from 1963. J.J.B. Hilliard, W.L. Lyons, LLC is a
full-service financial asset management firm headquartered in
Louisville, Kentucky. Mr. Stuckert was an initial investor and
served 24 years on the board of directors of Royal Gold, Inc. He
previously has served as chairman of SenBanc Fund; a director of
DataBeam, Inc.; a board member of the Securities Industry
Association and chairman of its regional firms committee; and a
past member of the nominating committee of the New York Stock
Exchange. Mr. Stuckert has served as a member of the board of
trustees of the University of Kentucky and as chairman of its
Finance Committee and as chairman of its Presidential Search
Committee. He has also served as chairman of a local
hospital’s investment committee. Mr. Stuckert earned a
Bachelor’s degree in Mechanical Engineering and a Master of
Business Administration degree from the University of
Kentucky.
Ann Beal Salamone,
M.S., age 69, has been a director of the Company since
August 2019. Ms. Salamone is a co-founder of Rochal Industries, LLC
and has served as its chairman since September 2019, prior to which
she served as its president from 1986 to September 2019. She is one
of the principal inventors of Rochal’s liquid bandages,
antimicrobial compositions and skin regeneration products for burn
and wound treatment, and she has participated in the development of
products for electronics, water purification, personal care and
healthcare. Ms. Salamone has co-founded six companies and invested
in and served on the board of directors of several private
entrepreneurial companies. Ms. Salamone is a member of the National
Academy of Engineering and The Academy of Medicine, Engineering
& Science of Texas.
Kenneth E. Thorpe,
Ph.D., age 63, has been a director of the Company since
August 2019. He has been the Robert W. Woodruff Professor and Chair
of the Department of Health Policy & Management of the Rollins
School of Public Health of Emory University in Atlanta, Georgia
since 1999. From 1983 to 1999 he held faculty positions in the
public health departments at Tulane University, the University of
North Carolina at Chapel Hill, Harvard University and Columbia
University. Since 2007 Dr. Thorpe has served as Chairman of the
Partnership to Fight Chronic Disease. He served on the Board of
Directors of LHC Group, Inc. in 2010; was a consultant in the
Governor’s Office and Legislature of West Virginia in 2011;
and was Co-Chair of the Partnership for the Future of Medicare in
2013. From 1993 to 1995, Dr. Thorpe served as Deputy Assistant
Secretary for Health Policy in the U.S. Department of Health and
Human Services where he coordinated all financial estimates and
program impacts of the Clinton administration’s healthcare
reform proposals. In 1991 he was awarded the Young Investigator
Award as the most promising health services researcher in the
country under age 40 by the Association for Health Services
Research. He has authored multiple articles and books on healthcare
financing, insurance and healthcare reform. Dr. Thorpe received his
Bachelor of Arts degree from the University of Michigan, Master of
Arts degree from Duke University, and Ph.D. from the Rand Graduate
School.
J. Michael Carmena,
age 64, has served as Vice Chairman of the Board and Principal
Executive Officer of the Company since May 2019, and served as
Chief Executive Officer from February 2018 to May 2019. He served
as Chief Financial Officer from December 2016 to April 2018. Prior
to joining the Company, Mr. Carmena served as Senior Director,
Business & Sales Operations of Smith and Nephew plc (successor
to Healthpoint Biotherapeutics) from 2010 to 2013. He served as
Senior Director, Finance & Administration of Healthpoint
Biotherapeutics from 2008 to 2010 and as Controller from 1998 to
2008, prior to which he held senior financial positions in a
company engaged in oil and gas exploration and production, ranching
and financial asset management. Mr. Carmena began his professional
career in 1978 with Arthur Andersen & Co. and became a CPA in
1981. Mr. Carmena earned a Bachelor of Business Administration
degree from Texas Christian University.
EXECUTIVE OFFICERS
The
following table sets forth the names, ages, and positions of the
executive officers of Sanara MedTech Inc.
|
NAME
|
|
AGE
|
|
POSITION
|
|
Zachary
B. Fleming
|
|
45
|
|
Co-Chief
Operating Officer and President, Surgical
|
|
Shawn
M. Bowman
|
|
45
|
|
Co-Chief
Operating Officer and President, Wound Care
|
|
Michael
D. McNeil
|
|
55
|
|
Chief
Financial Officer
|
|
J.
Michael Carmena
|
|
64
|
|
Vice
Chairman and Principal Executive Officer
|
Zachary B. Fleming,
age 45, was appointed to the position of President, Surgical
Division on May 28, 2019, and was named Co-Chief Operating Officer
on January 28, 2020. Mr. Fleming joined the Company as Vice
President of Sales in November 2017 and was promoted to Vice
President, Surgical in September 2018. Mr. Fleming will be
responsible for the continued expansion and management of the
surgical sales force as well as new product introductions. Mr.
Fleming has spent over fourteen years in the medical industry with
Healthpoint Biotherapeutics, Smith & Nephew and Sanara MedTech.
Mr. Fleming earned a Bachelor of Science from Indiana
University.
Shawn M. Bowman, age
45, has served as President, Wound Care Division since May 2019,
and was named Co-Chief Operating Officer on January 28, 2020. Mr.
Bowman previously served as the Company’s Vice President and
General Manager, Wound Care since September 2018. Mr. Bowman will
be responsible for leading the strategic expansion of the
Company’s wound care division. Mr. Bowman has over eighteen
years of experience in the medical device, biologics and
pharmaceutical industries. Prior to joining Sanara MedTech, Mr.
Bowman built two successful teams as Senior Vice President of
Wellsense, and as a National Sales Director for Smith &
Nephew’s Advanced Wound Management Division. Mr. Bowman
earned a Bachelor of Science in Marketing from the University of
Connecticut.
Michael D. McNeil,
age 55, has served as Chief Financial Officer since April 2018.
Prior to joining the Company, Mr. McNeil served as Controller for
Smith and Nephew’s U.S. Advanced Wound Management Division
from 2012 to 2018. Mr. McNeil previously served as Controller and
Assistant Controller with Healthpoint Biotherapeutics from 1999 to
2012. Prior to his employment at Healthpoint, Mr. McNeil held
several finance and internal audit positions with Burlington
Resources, Snyder Oil Corporation, and Union Pacific Corporation.
Mr. McNeil earned his Bachelor of Science in Business
Administration from the University of Nebraska and is a Texas
certified public accountant.
J. Michael Carmena
has served as an executive officer of the Company since December
2016 as described above as a director of the Company.
BOARD STRUCTURE, CORPORATE GOVERNANCE AND DIRECTOR
COMPENSATION
Meetings and Committees of the Board of Directors
The
Board of Directors meets on a regular basis, at least quarterly, to
review significant developments affecting the Company and to act on
matters requiring the approval of the Board. In addition to
regularly scheduled meetings, the Board also holds special meetings
when the Company faces a matter requiring attention or action by
the Board. The Board of Directors does not currently have a
standing audit, compensation or nominating committee. The entire
Board currently performs the functions of each such committee. Due
to the small size of the Company as well as the size and nature of
its operations, the Board believes that the structure of the Board
of Directors does not necessitate these committees
The
Board of Director held 16 meeting during 2019. All directors
attended 100% of all Board meetings.
Independent Directors
For
purposes of determining the independence of the Company’s
directors, the Board of Directors has adopted the definition of
independence set forth in the rules of the Nasdaq Stock Market for
corporate governance requirements of listed companies. Under that
standard, a director is independent if the person has not been
employed by the Company at any time during the past three years and
the Board has made an affirmative determination that the person
does not have a relationship with the Company that would interfere
with the exercise of independent judgment in carrying out the
responsibilities of a Company director. Under that definition as
interpreted in the Nasdaq rules, and based upon information
provided by each director concerning his/her background, employment
and affiliations, the Board has determined that James W. Stuckert
and Kenneth E. Thorpe are independent. Oden “Denny”
Howell, who served as a director during 2019 and is not standing
for election at the annual meeting, also was determined to be
independent.
Nominations of Directors
The
Board of Directors does not have a nominating committee to nominate
directors for election to the Board. As the Board recently
increased in size, the Executive Chairman of the Board has become
responsible for identifying potential candidates to be nominated to
serve as a director, and the other existing directors participate
in evaluating these candidates. When identifying director nominees,
the directors may consider, among other factors, the potential
nominee’s knowledge and experience in the health care field,
the business, financial or other desirable expertise, and
independence from the Company. The directors will also consider the
number of other public companies for which the person serves as
director and the availability of the person’s time and
commitment to the Company. Although the Board views diversity of
directors to be an important and advantageous element for the
composition of the Board of Directors, the Board has no policy or
procedure for the consideration of diversity in identifying
nominees for director. In the case of current directors being
considered for re-nomination, the Board also considers the
director’s tenure as a member of the Board, the
director’s history of attendance at Board meetings and the
director’s preparation for and participation in such
meetings. The directors believe that this process currently
functions adequately to nominate directors without the need for a
formal nominating committee.
The
Board of Directors does not have a specific policy regarding
consideration of any persons recommended by shareholders to become
a director and does not believe such a policy would be significant
for the Company. The directors, particularly the Executive
Chairman, have communications with shareholders from time to time
and informally are able to hear and give consideration if warranted
to the views and recommendations of shareholders.
Board Leadership Structure
The
leadership structure of the Board of Directors provides that
two individuals serve the positions of Chairman of the Board and
Principal Executive Officer of the Company. The Board currently
believes that this leadership structure best serves the
Board’s objectives of oversight of management and the
performance of its roles and responsibilities on behalf of
shareholders. This structure facilitates the ability of the
Executive Chairman to focus efforts on strategic planning and
growth of the Company and allows the Principal Executive Officer to
concentrate on management and operations of the
Company.
Risk Management
The Board of
Directors is responsible for overseeing the Company’s
management and operations. The full Board of Directors serves in
the role of an audit committee, fulfilling its responsibilities for
general oversight of the integrity of the Company’s financial
statements, the Company’s compliance with legal and
regulatory requirements, the independent auditor’s
qualifications and independence, and risk assessment and
management. The Company believes that the Board provides effective
oversight of risk management functions. On a regular basis the
Company performs a risk review wherein the management team
evaluates the risks we expect to face in the upcoming year and over
a longer-term horizon. Plans are then developed to address the
risks identified. In addition, members of our management team
periodically present to the Board the strategies, issues and plans
for the areas of our business for which they are responsible. While
the Board oversees risk management, our management team is
responsible for the Company’s day-to-day risk management
processes. Additionally, the Board requires that management raise
exceptional issues to the Board of Directors. We believe this
division of responsibilities is the most effective approach for
addressing the risks we face and that the Board leadership
structure supports this approach.
Code of Ethics
The
Company adopted a Code of Ethics applicable to all directors,
officers and employees. The Code of Ethics can be found on the
Company’s website at http://sanaramedtech.com under the
Investors Relations tab.
Shareholder Communications with the Board
Any
matter intended for the Board of Directors, or for any individual
member of the Board, should be sent to: Director, Investor
Relations, Sanara MedTech Inc., 1200 Summit Ave., Suite 414, Fort
Worth, Texas 76102, with a request to forward the communication to
the intended recipient. In general, any shareholder communication
delivered to the Company for forwarding to Board members will be
forwarded in accordance with the shareholder’s instructions.
However, the Company reserves the right not to forward any abusive,
threatening, or otherwise inappropriate materials.
Director Compensation
The
Company reimburses each director for reasonable travel expenses
related to such director’s attendance at Board and committee
meetings. During 2019, the Company did not pay cash or equity
compensation to the members of its Board for their service as
directors. The Board expects members will be compensated with
annual grants of restricted stock having annual vesting
restrictions based on compensation generally valued at $60,000 per
year. In February 2020, directors received restricted stock grants
with three-year vesting restrictions.
The
Company does not sponsor a pension benefits plan, a non-qualified
deferred compensation plan or a non-equity incentive plan for its
directors.
SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL
OWNERS
The
following table sets forth, as of May 31, 2020, the number and
percentage of outstanding shares of our common stock owned by:
(a) each person who is known by us to be the beneficial owner
of more than 5% of our outstanding shares of common stock;
(b) each of our directors; (c) the named executive
officers as defined in Item 402 of Regulation S-K; and
(d) all current directors and executive officers, as a group.
As of May 31, 2020, there were 6,203,402 shares of common stock
issued and outstanding and no shares of Preferred Stock issued and
outstanding.
Beneficial
ownership has been determined in accordance with Rule 13d-3 under
the Securities Exchange Act of 1934. Under this rule, certain
shares may be deemed to be beneficially owned by more than one
person (if, for example, persons share the power to vote or the
power to dispose of the shares). In addition, shares are deemed to
be beneficially owned by a person if the person has the right to
acquire shares (for example, upon exercise of an option or warrant)
within 60 days of the date as of which the information is provided.
In computing the percentage ownership of any person, the number of
shares is deemed to include the number of shares beneficially owned
by such person by reason of such acquisition rights. As a result,
the percentage of shares beneficially owned by a person as shown in
the following table does not necessarily reflect the person’s
actual voting power at any particular date.
|
|
Common Stock
|
|
|
OFFICERS AND DIRECTORS:
|
Number of Shares Beneficially Owned
|
Beneficial Ownership Percentage
|
|
Ronald
T. Nixon (1)
|
3,418,996
|
55.1%
|
|
James
W. Stuckert (2)
|
943,993
|
15.2
|
|
S.
Oden “Denny” Howell Jr. (3)
|
483,574
|
7.8
|
|
J.
Michael Carmena (4)
|
6,733
|
|
|
Zachary
B. Fleming (5)
|
8,034
|
|
|
Shawn
M. Bowman (6)
|
5,354
|
|
|
Michael
D. McNeil (7)
|
1,846
|
|
|
Kenneth
E. Thorpe (8)
|
803
|
|
|
Ann
Beal Salamone (9)
|
803
|
|
|
All directors and executive officers as a group (5
persons)
|
4,870,136
|
78.4%
|
_______________
(1)
Mr. Nixon is a
Director of the Company and a Manager of Catalyst Rochal, LLC,
which owns 100% of the equity interest of CGI Cellerate RX, LLC
which owns 2,452,731 shares of the Company’s common stock. FA
Sanara, LLC owns 963,856 shares of the Company’s common
stock. FA Sanara, LLC is managed by Family Alignment, LLC, which is
managed by Catalyst Group, Inc. of which Mr. Nixon is President.
Mr. Nixon, through a relationship of control of CGI Cellerate RX,
LLC and FA Sanara, LLC, may be deemed to share beneficial ownership
of the shares of common stock beneficially owned by CGI Cellerate
RX, LLC and FA Sanara, LLC. Mr. Nixon has shared power to vote and
dispose 3,416,587 shares, and sole power to vote and dispose 2,409
shares.
(2)
Mr. Stuckert
is a Director of the Company
and may be deemed to beneficially own 39,004 shares held by
Diane V. Stuckert and 69,004 shares owned by Ten Grand Ltd. Mr.
Stuckert has the sole power to vote and dispose 943,993
shares.
(3)
Mr. Howell is a Director of the Company and has
the sole power to vote and dispose all shares he
beneficially owns.
(4)
Mr. Carmena is a
Director and executive officer of the Company and holds warrants
currently exercisable for the purchase of 5,000 shares of common
stock. Mr. Carmena has the sole power to vote and dispose all
shares he beneficially owns.
(5)
Mr. Fleming is an
executive officer of the Company and holds stock options currently
exercisable for the purchase of 2,000 shares of common stock. Mr.
Fleming has the sole power to vote and dispose all shares he
beneficially owns.
(6)
Mr. Bowman is an
executive officer of the Company and has the sole power to vote and
dispose all shares he beneficially owns.
(7)
Mr. McNeil is an
executive officer of the Company and holds stock options currently
exercisable to purchase of 1,000 shares of common stock. Mr. McNeil
has the sole power to vote and dispose all shares he beneficially
owns.
(8)
Mr. Thorpe is a
Director of the Company and has the sole power to vote and dispose
all shares he beneficially owns.
(9)
Ms. Salamone is a
Director of the Company and has the sole power to vote and dispose
all shares she beneficially owns.
EXECUTIVE COMPENSATION
The
following table and the accompanying notes provide summary
information for each of the last two fiscal years concerning cash
and non-cash compensation awarded to, earned by or paid to
executive officers (or those acting in a similar
capacity).
Summary Compensation Table
___________
(a)
The value of option
awards represents the grant date fair value of the stock options,
determined in accordance with FASB ASC Topic 718. The grant date
value was based on the closing price of the stock on the grant date
and determined under the Black Scholes valuation model. The
following assumptions on the date of grant were used in the grant
date fair value: (i) option exercise price equal to the fair market
value of the common stock; (ii) expected option life of 5 years;
(iii) dividend yield of 0%; (iv) risk free rate of return of 2.67%
for options granted in 2018; and (v) volatility of 145.77% for
options granted in 2018. The options became fully exercisable
during 2019 as a result of a specified change in share ownership of
the Company.
Employment Agreements
Effective June 1,
2019, the Company entered into employment agreements with two of
its executive officers, Shawn M. Bowman and Zachary B. Fleming.
Each agreement provides for an initial two-year term, with
automatic one-year renewals unless either party gives prior notice
to the other party to terminate the agreement. Each agreement
provides for an initial base salary of $225,000, a one-time bonus
payment of $25,000, an annual bonus opportunity equal to 50% of
base salary, and an initial stock grant equal to $112,500. The
initial stock grant vests in one-third increments for each year
completed after the date of issuance. In the event the executive is
terminated by the Company without cause, the executive is entitled
to receive a severance package which will include one year of base
salary following the effective date of termination, paid in twelve
equal monthly installments, and continued participation in any
health care benefits provided by the Company to its employees,
subject to the executive’s release of any
claims.
No executive
officer is entitled to payments as a result of a change in control
of the Company.
Retirement Plans
The
Company sponsors a 401(k) tax deferred savings plan, whereby the
Company matches a portion of employees’ contributions in
cash. Participation in the plan is voluntary, and all employees of
the Company who are at least 18 years of age are eligible to
participate. The Company matches employee contributions
dollar-for-dollar on the first 4% of an employee’s
pre‑tax
earnings, subject to individual IRS limitations.
Non-Qualified Deferred Compensation
The Company
does not sponsor any non-qualified defined compensation plans or
other non-qualified deferred compensation plans, and none of the
named executive officers contributes to any such
plans.
Outstanding Equity Awards at December 31, 2019
The
following table provides information concerning outstanding equity
awards as of December 31, 2019, for our named executive officers.
Market values were determined using the last sale price of our
common stock on December 31, 2019. No stock awards or performance
awards were made in 2019 under the Company’s equity incentive
plan, and those columns have been omitted from the following
table.
|
|
Option
Awards
|
|||
|
Name
|
Number of
Securities Underlying Unexercised Options
(Exercisable)
|
Number of
Securities Underlying Unexercised Options
(Unexercisable)
|
Option Exercise
Price
($)
|
Option
Expiration Date
|
|
J. Michael
Carmena
|
5,000
|
–
|
6.00
|
12/31/2022
|
|
Michael D.
McNeil
|
1,000
|
–
|
6.00
|
4/13/2023
|
|
Zachary B.
Fleming
|
2,000
|
–
|
6.00
|
12/31/2022
|
|
|
8,000
|
–
|
|
|
Compensation Determinations
The
Board of Directors makes all decisions regarding the compensation
of executive officers. The Board has not formed a compensation
committee for this purpose because of the small size of the
Company. Executive compensation typically consists of a base
salary, an annual cash bonus, and longer-term incentive
compensation of equity-based incentive awards. Annually, the
principal executive officer presents to the Board recommended
salary amounts for the coming year and bonus payments relating to
the prior year’s performance for all executive officers. The
Executive Chairman typically proposes any equity incentive awards
which generally would provide for annual vesting over a period of
at least three years. The entire Board of Directors considers and
approves the final amounts.
Compensation of
directors is generally proposed by the Executive Chairman and
presented to the full Board of Directors who approve the final
amounts.
INDEPENDENT AUDITOR MATTERS
MaloneBailey, LLP
provided audit services to the Company as an independent registered
public accounting firm for the year ended December 31, 2019. A
representative of MaloneBailey, LLP is expected to be in attendance
at the virtual annual meeting and to have an opportunity to make a
statement at the meeting if desired and to be available to respond
to appropriate questions.
The
Company’s executive management is primarily responsible for
preparation of the Company’s financial statements and the
financial reporting process, including the system of internal
controls over financial reporting. The Company’s independent
auditors are responsible for performing an independent audit of the
Company’s consolidated financial statements and internal
control over financial reporting, and for issuing an opinion on the
fair presentation in all material respects of the financial
statements in accordance with U.S. generally accepted accounting
principles.
Report of the Board of Directors Regarding the Company’s
Auditors
The
Board of Directors does not have a standing audit committee to
assist the Board in overseeing the financial reporting process. The
entire Board of Directors provides the general functions of an
audit committee by providing general oversight and monitoring
of:
●
the Company’s
financial statements and other financial information, including the
acceptability and quality of the applicable accounting principles
and the reasonableness of significant accounting
judgments;
●
compliance with
legal, regulatory and public disclosure requirements;
●
the relationship
with the independent auditors who report directly to the Board of
Directors, including their qualifications and
independence;
●
system of internal
controls; and
●
risk management and
risk assessment.
When
necessary and appropriate to carry out its duties, the Board
obtains advice and assistance from outside legal, accounting or
other advisors and receives funding for such advice and
assistance.
In
connection with performing the functions of an audit committee, the
Board of Directors reports as follows:
1. The Board has
reviewed and discussed the audited financial statements with the
Company’s executive management.
2. The Board has
discussed with the independent auditors the matters required to be
discussed by the applicable requirements of the Public Company
Accounting Oversight Board (the “PCAOB”).
3. The Board has
received the written disclosures and the letter from the
independent auditors required by applicable requirements of the
PCAOB regarding the independent auditors’ communications with
the Board of Directors (in its performance of the role of an audit
committee) concerning independence, and has discussed with the
independent auditors their independence.
4. Based on the review
and discussions referred to in paragraphs (1) through (3) above,
the Board of Directors approved the inclusion of the
Company’s audited financial statements in the Company’s
Annual Report on Form 10-K for the year ended December 31, 2019,
and filing with the Securities and Exchange
Commission.
Report
submitted by the Board of Directors,
Ronald
T. Nixon
James
W. Stuckert
S. Oden
“Denny” Howell Jr.
J.
Michael Carmena
Ann
Beal Salamone
Kenneth
E. Thorpe
Audit Fees. We engaged MaloneBailey,
LLP to conduct our annual audits and review of quarterly financial
statements for the years ended December 31, 2019 and December 31,
2018. Audit fees for services performed were $88,000 during 2019
and $68,303 during 2018.
Tax Fees. We engaged Haynie &
Company as our accountants for professional services provided for
tax compliance, tax advice and tax planning relating to the years
ended December 31, 2019 and December 31, 2018 and paid $24,951
during 2019 and $20,903 during 2018. No fees for tax-related
services were paid to our independent auditors.
All Other Fees. We paid no other fees
to our independent auditors.
Pre-Approval Policy. The policy of the
Board of Directors, in its capacity as the Company’s audit
committee, is the pre-approval of all audit, audit-related and
non-audit services provided by the independent auditors. These
services may include audit services, audit-related services, tax
services and other services. The Board of Directors approved all of
the fees described above. The Board may also pre-approve particular
services on a case-by-case basis. The independent auditors are
required to periodically report to the Board regarding the extent
of services provided by the auditors in accordance with that
policy. The Board may also delegate pre-approval authority to one
or more of its members, who must report any decisions to the Board
at the next scheduled Board meeting.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The
Company was a participant in the following transactions with
related parties since January 1, 2018.
Mr.
Howell and Mr. Stuckert each held a convertible note from the
Company payable in the principal amount of $600,000 and accrued
interest of $192,797 as of February 18, 2018. On February 19, 2018,
each convertible note and $192,797 of accrued interest were
converted to 113,257 shares of our common stock.
The
Company paid an affiliate of Catalyst Group Inc.
(“Catalyst”) a total of
$229,356 in 2019. The payments were related to professional
services provided to Cellerate, LLC by a Catalyst affiliate under
the terms of the Professional Services agreement between the
Catalyst affiliate and the Company which was executed upon the
formation of Cellerate, LLC. Amounts due to Catalyst and its
affiliate totaled $36,790 at December 31, 2019. The Sanara
Executive Chairman is the Founder and Managing Partner of
Catalyst.
The
Company paid Rochal Industries, LLC (“Rochal”) a total of
$1,663,073 in 2019. The payments included $1,500,000 under two
separate new product license agreements whereby the Company
obtained worldwide rights to market and sell certain FDA-cleared
products developed by Rochal. Other payments were primarily for
finished goods inventory of the licensed products. The Company will
pay Rochal royalties on the licensed products at the rate of 4% of
net sales during the term of the licenses. Amounts due to Rochal
totaled $31,878 at December 31, 2019.
On July
8, 2019, the Company executed a license agreement with Rochal
whereby the Company acquired an exclusive worldwide license to
market, sell and further develop antimicrobial products for the
prevention and treatment of microbes on the human body utilizing
certain Rochal patents and pending patent applications. The Company
makes initial payments of $1,500,000 under the license and will pay
royalties of 4% of net sales during the term of the license.
Currently, the products covered by the license agreement are
BIAKŌS™ Antimicrobial Wound Gel, and FDA-cleared
BIAKŌS™ Antimicrobial Skin and Wound
Cleanser.
On
October 1, 2019, the Company executed a license agreement with
Rochal whereby the Company acquired an exclusive worldwide license
to market, sell and further develop certain antimicrobial barrier
film and skin protectant products for use in the human health care
market utilizing certain Rochal patents and pending patent
applications. The Company makes initial payments of $1,000,000
under the license and will pay royalties of 4% of net sales during
the term of the license. Currently, the products covered by this
license agreement are BIAKŌS™ Antimicrobial Barrier Film
and Curashield™ No Sting Skin Protectant.
On May
4, 2020, the Company executed a product license agreement with
Rochal whereby the Company acquired an exclusive world-wide license
to market, sell and further develop certain products for human
medical use to enhance skin condition or treat or relieve skin
disorders, excluding uses primarily for beauty, cosmetic, or
toiletry purposes. The Company is making initial payments of
$1,950,000 under the license and will pay royalties of 4% of net
sales during the term of the license.
Ronald
T. Nixon, Executive Chairman of the Company, is also a director of
Rochal, and indirectly a significant shareholder of Rochal, and
through the potential exercise of warrants a majority shareholder
of Rochal. Ann Beal Salamone, a director of the Company, is a
significant shareholder, the former president and current Chairman
of the Board of Rochal.
On
October 15, 2019, the Company closed a private placement offering
of its common stock for an aggregate purchase price of $10,000,000.
The purchasers in the offering were related party entities to three
members of the Company’s Board of Directors, Ronald T. Nixon,
James W. Stuckert and Oden “Denny” Howell. The purchase
price of the common stock and amount of the offering were
determined by a special committee of the Board comprised of
disinterested Directors who engaged an independent third-party to
provide a valuation of the offering price and other relevant
information regarding the transaction.
John C.
Siedhoff was a director of the Company from 2014 until he resigned
that position January 31, 2019. During 2019 and January 2020, Mr.
Siedhoff received compensation in the amount of $260,000 in
consulting fees as a consultant to the Company. On January 31,
2019, Mr. Siedhoff entered into a consulting agreement with the
Company that terminates December 31, 2020. Under the agreement Mr.
Siedhoff earned consulting fees in the amount of $21,947 per month
through December 31, 2019. For the period January 1, 2020 through
December 31, 2020, Mr. Siedhoff will earn $10,000 per
month.
The
Company does not have a written policy regarding review and
approval of transactions with related parties. All members of the
Board of Directors have an understanding that any transaction
between the Company and any related person will be reviewed by the
Board and will take into consideration the importance and scrutiny
that must be given to such review to assure protection of the
Company’s interest. As part of that review, members of the
Board understand the importance of obtaining all relevant
information regarding the transaction and will when prudent obtain
independent valuation and expert advice. Additionally, to the
extent any Board member is a party to or could benefit from the
transaction, approval would require a majority of the disinterested
directors and may require deliberations without participation of
the interested person.
DELINQUENT SECTION 16(a) REPORTS
Section
16(a) of the Securities Exchange Act of 1934 requires our
directors, executive officers, and persons who own more than 10% of
a registered class of our equity securities to file reports with
the SEC of ownership and changes in ownership of our common stock
and other equity securities of the Company. Based solely on a
review of the Section 16(a) forms filed with the SEC and the
representations made by the reporting persons to us, during the
fiscal year ended December 31, 2019, two of our directors, Kenneth
E. Thorpe and Ann Beal Salamone, and two officers, Zachary B.
Fleming and Shawn M. Bowman, each filed late a single form, the
Initial Statement of Beneficial Ownership, due to an oversight by
Company counsel. Family Alignment, LLC and Catalyst Group, Inc.
filed a late amendment to the Form 3 filing of FA Sanara, LLC in
order to become a group for filing purposes with FA Sanara, LLC due
to a delay in receiving EDGAR filing codes from the SEC. All
transactions of our directors and officers were timely
reported.
Item 2. APPROVAL OF RESTATED 2014 OMNIBUS LONG TERM INCENTIVE
PLAN
In
2014, the Company adopted, and the shareholders approved, the
Company’s 2014 Omnibus Long Term Incentive Plan (the
“Plan”)
under which the Company may issue various equity securities and
cash bonuses to employees, directors and consultants selected to
participate in the Plan. Shareholder approval is required under the
Internal Revenue Code to issue incentive stock options under the
Plan. Shareholder approval is also a requirement of any stock
exchange on which the Company in the future desires to list the
common stock.
As a
result of the 1-for-100 reverse stock split of the Company’s
common stock in May 2019, the Board of Directors made adjustment to
a number of provisions of the Plan affected by the reverse stock
split, such as the number of shares authorized for issuance under
the Plan. Several other provisions were amended such as the
definition of “change in control” of the Company and
the effect of a change in control on outstanding awards under the
Plan. The Plan is currently effective, and the Company does not
believe such adjustments and changes were adverse to the
shareholders, but the Board of Directors believes it is advisable
to submit the restated Plan for shareholder approval.
If the
Plan is not approved by the shareholders, the Company will cease
issuing awards under the Plan, but awards previously issued under
the Plan would remain in effect under the current terms of the Plan
and the associated award agreements. The following summary and
discussion does not purport to be complete and is subject to and
qualified in its entirety by reference to the complete text of the
Plan which is attached as Exhibit A to this proxy
statement.
Description of the Plan
The
Plan authorizes the grant of stock options, stock appreciation
rights, restricted stock, restricted stock units, and performance
share awards to the Company’s officers, directors, employees
and consultants. Awards may be granted alone, in addition to, or in
combination with, any other awards under the Plan or any other
compensation plan. The Plan provides a pool of 2,000,000 shares,
which is equal to 10% of the total number of shares of common stock
authorized for issuance under the Company’s corporate
documents. The Plan will terminate on September 3, 2024, but
previously granted awards remain outstanding until they expire by
their terms or the terms of the Plan. In this summary, the term
“shares” means the Company’s common stock, and
the term “stock unit” means a unit or right whose value
is based on the value of a share.
Administration. The Plan is
administered by a committee appointed by and serving at the
pleasure of the Board of Directors (the “Committee”) composed of
at least two directors of the Company who qualify as an
“independent director” under the rules of The Nasdaq
Stock Market, Inc. and as a “non-employee director”
within the meaning of Rule 16b-3 under the Securities Exchange Act
of 1934. Unless otherwise determined by the Board, the Compensation
Committee of the Board will serve as the Committee. Currently the
Board of Directors has not appointed the Committee, and until the
Committee is appointed the Board of Directors is administering the
Plan in lieu of the Committee. The Committee is authorized, subject
to the terms of the Plan, to determine which participants will
receive awards, the times when such awards will be made, the times
when such awards will vest, the types of awards, the number of
shares to be issued under the awards, the value or amount of the
awards, and other terms and conditions of awards. All decisions
with respect to the Plan will be within the discretion of the
Committee.
Available Shares. To the extent an
award granted under the Plan terminates or is canceled or
forfeited, the shares allocable to the terminated, canceled or
forfeited portion of the award will be added back to the aggregate
number of shares available for grant under the Plan, and may again
be subject to future awards. If, however, shares are withheld or
delivered to the Company to satisfy the exercise price or tax
withholding obligation of any option or other award or equivalent
shares are purchased by the Company in the open market, then those
shares will not be added back to the pool of shares available for
grant under the Plan.
Grant Participants and Limitations.
Currently the Plan has 37 participants, which include the five
outside directors, the four executive officers, 28 other officers
and employees and two consultants. The grants of awards are subject
to the following limitations:
●
The maximum number
of shares of common stock that may be delivered pursuant to all
awards is 2,000,000 and the maximum number of stock options
qualifying as Incentive Stock Options under Section 422 of the
Internal Revenue Code (“ISOs”) is
1,000,000.
●
The maximum number
of shares subject to awards granted to any participant during any
calendar year, regardless of whether any award thereafter
terminates or is canceled or forfeited, is 100,000
shares.
●
The exercise price
of stock options cannot be less than 100% of the fair market value
of a share on the date of grant of the option.
●
The exercise price
of an ISO granted to a participant owning equity securities
possessing more than 10% of the voting power of all classes of
Company equity securities must be at least 110% of the fair market
value of a share on the date of grant.
●
The base amount of
a stock appreciation right (a “SAR”) cannot be less than
100% of the fair market value of a share on the date of grant of
the SAR.
Vesting of Awards. The Committee may
determine at the grant of an award the time or times at which
portions of an award vest, which means when (i) stock options or
SARs becomes exercisable, (ii) restricted stock or restricted stock
units are no longer subject to forfeiture and restrictions on
transfer and (iii) performance share awards are no longer subject
to restrictions and forfeiture. The Committee may also determine
the events (such as termination of employment) which, if an event
were to occur prior to the vesting of any portion of an award,
would result in the termination or forfeiture of the unvested
portion of the award.
Stock Options and Stock Appreciation
Rights. Stock options provide the holder the right to
purchase shares at the exercise price specified in the award. SARs
provide the holder the right to receive an amount in shares or cash
equal to the spread between the exercise price specified in the
award and the market price of a share at the time of exercise. SARs
may be granted alone or in tandem with stock options. Stock options
and SARs are subject to the terms and conditions determined by the
Committee, except that the exercise price of an option or base
value of an SAR cannot be less than 100% of the fair market value
of a share on the date of the grant. The Committee determines the
form in which payment of the exercise price may be made. Stock
options may be granted in the form of nonqualified stock options
or, if they meet certain requirements of the Internal Revenue Code,
ISOs, which are subject to U.S. income tax treatment described
below.
Restricted Stock and Restricted Stock
Units. Restricted stock is an award of shares subject to a
restriction period specified in the award. During the restriction
period, the shares cannot be transferred and are subject to
forfeiture. The Committee may determine whether the restricted
stock carries the rights to receive dividends and to vote the
shares during the restriction period. Restricted stock units are
similar to restricted stock except that the award takes the form of
stock units instead of actual shares. The Committee will determine
whether the restricted stock units may be settled in cash or shares
and whether during the restriction period, a holder of restricted
stock units may be paid cash (dividend equivalents) that are equal
in timing and amount to share dividends. Restricted stock units
will not have voting or other shareholder rights.
Performance Share Awards. Performance
share awards provide a right to receive shares in the future
conditioned upon the attainment of specified performance objectives
within a specified period and any other conditions, restrictions
and contingencies determined by the Committee. The extent of the
successful attainment of the performance criteria determines the
number of shares that will be distributed to the participant.
Performance measurement may be based on overall Company, business
unit or divisional performance and/or on relative performance as
compared with that of other publicly traded companies.
Adjustments. The Committee may make
appropriate adjustments in the number of shares available under the
Plan and the number of shares receivable and exercise price or
other consideration payable by a participant pursuant to an award
in order to reflect any stock split, stock dividend,
recapitalization, reorganization, consolidation, merger,
combination or exchange of shares, distribution to shareholders,
liquidation, dissolution or other similar event.
Amendments. The Board of Directors may
terminate or amend the Plan without participant or shareholder
approval, except that shareholder approval is required for any
amendment that would require shareholder approval under the rules
of the stock exchange on which the common stock is then listed, or
would be necessary in order for the Plan or awards to comply with
Section 422 of the Internal Revenue Code, or otherwise would be
required by applicable law or regulation.
Change in Control. Upon a change in
control of the Company, all outstanding stock options and SARs
automatically become fully vested and exercisable, all restricted
share awards automatically become fully vested, and performance
share awards provide for payout assuming achievement of 100% of the
performance objective and a prorated payout of shares based on the
number of months that have elapsed from the beginning of the
performance period to the date of the change in control as a
percentage of the number of months in the entire performance
period. A change in control is defined as a sale of substantially
all the assets of the Company or the merger or consolidation of the
Company that results in the Company’s shareholders prior to
the transaction holding less than 50% of the voting power of the
post-transaction company.
Award Grants in 2020. Prior to 2019,
the Company granted 8,000 stock options which are currently
outstanding and exercisable, and in 2019 granted no awards. As a
result of the 1-for-100 reverse stock split on May 10, 2019, the
Board of Directors adjusted the exercise price and number shares
exercisable from those outstanding options and adjusted the number
of shares subject to grant and other limitations under the Plan. In
2020 the Company has granted 180,100 shares of restricted stock,
consisting of 26,507 shares to outside directors, 40,910 shares to
executive officers, 97,683 shares to other employees, and 15,000
shares to consultants. If the Plan is approved by the
Company’s shareholders, all of the grants in 2020 will be
counted against the limitation of 2,000,000 total shares granted
under the Plan.
Federal Income Tax Consequences
The
following discussion generally summarizes certain federal income
and employment tax consequences of the issuance and receipt of
awards under the Plan in effect on the date of this Proxy
Statement. The rules governing the tax treatment of such awards are
complex, so the following discussion of tax consequences is general
in nature and is not complete. In addition, statutory provisions
and these rules are subject to change, as are their
interpretations, and their application may vary in individual
circumstances. This discussion does not purport to cover all
federal income or employment tax consequences, or other federal tax
consequences, associated with the Plan, nor does it address state,
local, or non-U.S. taxes. The Plan is not qualified under the
provisions of Section 401(a) of the Internal Revenue
Code.
Incentive Stock Options
(“ISOs”). A participant who is granted an ISO
recognizes no income upon the grant or the exercise of the ISO.
However, the excess of the fair market value of the shares of
common stock subject to the ISO on the date of exercise over the
ISO’s exercise price is an item includible in the
optionee’s alternative minimum taxable income (unless the
optionee exercises and sells the applicable underlying shares in
the same year). If an optionee holds the common stock acquired upon
exercise of the ISO for at least two years from the date of grant
of the ISO and at least one year following exercise (the
“Statutory Holding
Period”), the optionee’s gain, if any, upon a
subsequent disposition of the common stock is taxed as capital
gain. If, however, an optionee disposes of the common stock before
satisfying the Statutory Holding Period, then depending on
additional facts (e.g., the
amount realized in the applicable disposition, the fair market
value of the common stock on the date of exercise of the ISO, and
the ISO’s exercise price), part or all of the income/gain or
loss may be treated as taxable compensation income and/or as
capital gain or loss. The Company is not entitled to any deduction
regarding the grant or exercise of an ISO or the optionee’s
subsequent disposition of the shares acquired if the optionee
satisfies the Statutory Holding Period. However, if the Statutory
Holding Period is not satisfied, the Company is generally entitled
to a deduction in the year the optionee disposes of the common
stock in an amount equal to the optionee’s compensation
income.
Nonqualified Stock Options. Generally,
a participant who is granted a stock option that is not an ISO
recognizes no income upon grant of the option. At the time of
exercise, however, the optionee generally recognizes compensation
income equal to the excess, if any, of the fair market value of the
common stock on the date of exercise over the exercise price. This
income is subject to income and employment tax withholding by the
Company, which is generally entitled to an income tax deduction
corresponding to the compensation income recognized by the
optionee. When an optionee disposes of common stock received upon
exercise, the optionee will recognize capital gain or loss equal to
the difference between the sales proceeds received and the
optionee’s basis in the stock sold. The Company will not
receive a deduction for any capital gain recognized by the
optionee. The capital gain or loss will be treated as long-term if
the common stock has been held for more than one year from the date
of exercise.
Stock Appreciation Rights
(“SARs”). A participant who is granted a SAR
recognizes no income upon grant of the SAR. At the time of
exercise, however, the participant generally recognizes
compensation income equal to any cash received and the fair market
value of any common stock received. This income is subject to
income and employment tax withholding by the Company, which is
generally entitled to an income tax deduction corresponding to the
compensation income recognized by the participant.
Restricted Stock Awards. Generally,
restricted stock awards are subject to a “substantial risk of
forfeiture” within the meaning of Section 83 of the Internal
Revenue Code. A participant who is granted restricted stock that is
subject to such a substantial risk of forfeiture may make an
election under Section 83(b) of the Internal Revenue Code (a
“Section 83(b)
Election”) to have the fair market value of the common
stock (minus any amount paid by the participant for the stock)
taxed as compensation income at the date of grant. Any future
appreciation (or depreciation) in the value of the common stock is
taxed as capital gain (or loss) upon a subsequent sale of the
stock, with the holding period commencing on the date of grant. If
a participant does not make a Section 83(b) Election, then as
shares vest, they will be taxed as compensation income on the
vesting date in an amount equal to the fair market value of such
vesting common stock as of the vesting date (minus any amount paid
by the participant for the vesting portion of the restricted
stock). The participant’s basis in the common stock will be
the amount of compensation income recognized (plus any amount paid
by the participant for the restricted stock). Any future
appreciation (or depreciation) in the value of the common stock is
taxed as capital gain (or loss) upon a subsequent sale of the
stock, with the holding period commencing on the vesting date. Any
compensation income the participant recognizes from the grant of
restricted stock is subject to income and employment tax
withholding by the Company, which is generally entitled to an
income tax deduction corresponding to the compensation income
recognized by the participant.
Restricted Stock Units and Performance Share
Awards. The grant of a performance share award or a
restricted stock unit does not generate taxable income to a
participant or an income tax deduction by the Company. Any cash and
the fair market value of any common stock received as payout on a
performance share award or restricted stock unit will constitute
compensation income to the participant. The participant’s
income is subject to income and employment tax withholding by the
Company, which is generally entitled to an income tax deduction
corresponding to the compensation income recognized by the
participant.
Payment of Withholding Taxes. The
Company has the right to withhold or require a participant to remit
to the Company an amount sufficient to satisfy any federal, state,
local, or foreign withholding tax requirements on any grant,
exercise, or disposition, as applicable, of common stock under the
Plan.
Section 409A. Section 409A of the
Internal Revenue Code establishes tax rules applying to
“nonqualified deferred compensation plans.” The failure
of an award under the Plan to comply with, or to qualify for an
exemption from, Section 409A could result in significant adverse
tax results to the award recipient, including immediate taxation
upon vesting, a 20% additional tax penalty on the value of the
nonqualified deferred compensation, and the imposition of an
interest charge. The provisions of the Plan are intended to comply
with the applicable requirements of Section 409A, and the Committee
intends for awards under the Plan to be in compliance with (or
exempt from) Section 409A and for the Plan to be so interpreted and
administered.
Vote Required to Approve the Plan
Approval of
the Plan requires the affirmative vote for approval by holders of a
majority of the outstanding shares of common stock. Each share of
common stock is entitled to one vote. Abstentions and broker
non-votes will have the same effect as voting against approval of
the Plan. If a shareholder executes and returns a proxy, but does
not specify how the shares represented by such shareholder’s
proxy are to be voted, the shares will be voted FOR approval of the
Plan.
The
Board of Directors recommends a vote “FOR” approval of the
Plan.
Item 3. ADVISORY VOTE ON EXECUTIVE COMPENSATION
The
Company is soliciting your response of approval of the following
resolution of the executive compensation paid to our executive
officers as described under “Executive Compensation”
above, as required by rules of the Securities and Exchange
Commission. Your vote on this matter is advisory only and will not
be binding on the Board of Directors. However, the Board of
Directors will review the voting results of shareholders and take
that into consideration when making future decisions regarding
executive compensation.
RESOLVED, that the
compensation paid to the Company’s executive officers as
disclosed in the sections of this proxy statement entitled
“Executive Compensation” and “Approval of
Restated 2014 Stock Incentive Plan—Description of
Plan,” in accordance with the rules of the Securities and
Exchange Commission, is hereby APPROVED.
The
Board of Directors recommends a vote “FOR” approval of the
advisory vote on executive compensation.
Item 4. FREQUENCY OF FUTURE ADVISORY VOTES ON EXECUTIVE
COMPENSATION
Federal
legislation and rules of the Securities and Exchange Commission
require the Company to submit to shareholders for an advisory vote
how often we should present to shareholders the advisory vote on
executive compensation as we are doing this year in Item 3, above.
We are required to solicit your vote on whether the advisory vote
by shareholders on the Company’s payment of executive
compensation should be every 1, 2, or 3 years. Each shareholder may
vote on whether the Company should submit to shareholders the
advisory vote on executive compensation each year, every other
year, or every three years, or of course you may abstain from
voting. The number of years (1, 2 or 3) that receives the most
votes will be deemed to be the majority choice of
shareholders.
Decisions by the
Board of Directors on executive compensation are complex and take
into account many factors that are weighed by the Board each year,
including Company operational and financial performance, individual
performance, and compensation levels of executives in companies of
approximately the same size that compete with the Company or are
otherwise in the same industry. The Board must also determine and
weigh the appropriate methods and types of compensation that reward
short term performance and that also incentivize longer-term
performance to benefit shareholders.
The
Board of Directors believes that a frequency of three years for
shareholder advisory votes on executive compensation is the
appropriate period. A 3-year period is consistent with the
Company’s longer-term business strategy and allows the Board
time to evaluate the Company’s results and experience with
its executive compensation policy and to consider
shareholders’ response and feedback.
Although this is an
advisory vote and not binding on the Company, the Board of
Directors will carefully consider the vote of
shareholders.
The
Board of Directors recommends a vote “FOR” a frequency of 3
years.
OTHER MATTERS
Other Business at the 2020 Annual Meeting
The
Board of Directors is not aware of any business to be presented for
consideration at the annual meeting other than those matters
described in this proxy statement. If any other business should
properly come before the meeting, however, it is intended that the
persons named in the accompanying proxy card will vote on those
matters in accordance with their best judgment.
Submission of Shareholder Proposals for the 2021 Annual Meeting of
Shareholders
Shareholder
proposals intended to be presented pursuant to Rule 14a-8 under the
Securities Exchange Act of 1934 for inclusion in our proxy
statement and accompanying proxy card for our 2021 annual meeting
of shareholders must be received at our principal executive office
in Fort Worth, Texas on or before December 15, 2020, and must meet
the requirements of Rule 14a-8.
Annual Report on Form 10-K
Our
2019 Annual Report on Form 10-K for the year ended December 31,
2019 with audited financial statements as filed with the Securities
and Exchange Commission accompanies this proxy statement.
Additional copies will be furnished to our shareholders upon
written request to: Corporate Secretary, Sanara MedTech Inc., 1200
Summit Ave., Suite 414, Fort Worth, Texas 76102.
By
Order of the Board of Directors
Michael
D. McNeil
Chief Financial Officer
and Secretary
Fort
Worth, Texas
June
25, 2020
EXHIBIT A
SANARA MEDTECH INC.
RESTATED 2014 OMNIBUS LONG TERM INCENTIVE PLAN
February 10, 2020
General Purpose of Plan; Definitions
1.1 Name
and Purposes. The name of this
plan is the Sanara MedTech Inc. 2014 Omnibus Long Term Incentive
Plan. The purpose of this Plan is to enable Sanara MedTech Inc. and
its Affiliates to: (i) attract and retain skilled and qualified
officers, employees and Directors who are expected to contribute to
the Company’s success by providing long-term incentive
compensation opportunities competitive with those made available by
other companies; (ii) motivate participants to achieve the
long-term success and growth of the Company; (iii) facilitate
ownership of shares of the Company; and (iv) align the interests of
the participants with those of the Company’s
Shareholders.
1.2 Certain
Definitions. Unless the context
otherwise indicates, the following words shall have the following
meanings whenever used in this Plan:
“Affiliate”
means any corporation, partnership,
joint venture or other entity, directly or indirectly, through one
or more intermediaries, controlling, controlled by, or under common
control with the Company within the meaning of Section 414(b) or
(c) of the Code.
“Award”
means any Common Share, Stock Option,
Stock Appreciation Right, Restricted Share, Restricted Share Unit
or Performance Share granted pursuant to this
Plan.
“Base Value”
is defined in Section
7.3.
“Beneficial
Owner” means a
“beneficial
owner,” as such term is
defined in Rule 13d-3 under the Exchange Act (or any successor rule
thereto).
“Board”
means the Board of Directors of the
Company.
“Change in
Control” is defined in
Section 12.1.
“Code”
means the Internal Revenue Code of
1986, as amended from time to time, and lawful regulations and
guidance promulgated thereunder. Whenever reference is made to a
specific Internal Revenue Code section, such reference shall be
deemed to be a reference to any successor Internal Revenue Code
section or sections with the same or similar
purpose.
“Committee”
means the entity administering this
Plan as provided in Section 2.1.
“Common
Shares” means shares of
common stock of the Company, par value $0.001 per
share.
“Company”
means Sanara MedTech Inc., a
corporation organized under the laws of the State of Texas and,
except for purposes of determining whether a Change in Control has
occurred, any corporation or entity that is a successor to Sanara
MedTech Inc. or substantially all of the assets of Sanara MedTech
Inc. and that assumes the obligations of Sanara MedTech Inc. under
this Plan by operation of law or otherwise.
“Date of
Grant” means the date on
which the Committee grants an Award.
“Director”
means a member of the
Board.
“Disability”
shall be defined in the Award
agreements, as necessary.
“Employment”
as used herein shall be deemed to
refer to (i) a participant’s employment if the participant is
an employee of the Company or any of its Affiliates, (ii) a
participant’s services as a consultant, if the participant is
a consultant to the Company or its Affiliates and (iii) a
participant’s services as a non-employee director, if the
participant is a non-employee member of the Board; provided that,
for any Award that is or becomes subject to Section 409A of the
Code, termination of Employment means a “separation from service” under
Section 409A of the Code.
“Exchange
Act” means the Securities
Exchange Act of 1934, as amended from time to time, and any lawful
regulations and guidance promulgated thereunder. Whenever reference
is made to a specific Securities Exchange Act of 1934 section, such
reference shall be deemed to be a reference to any successor
section or sections with the same or similar
purpose.
“Exercise
Price” means the purchase
price of a Share pursuant to a Stock Option.
“Fair Market
Value” means: (i) if the
Common Shares are listed on a national securities exchange or
quoted in an interdealer quotation system, the last sales price or,
if unavailable, the average of the closing bid and asked prices per
Share on such date (or, if there was no trading or quotation of the
Common Shares on such date, on the next preceding date on which
there was trading or quotation); or (ii) if the Common Shares are
not listed on a national securities exchange or quoted in an
interdealer quotation system, the “Fair Market
Value” of Common Shares
shall be determined by the Committee in a reasonable manner
pursuant to a reasonable valuation method. Notwithstanding anything
to the contrary in the foregoing, as of any date, the
“Fair Market
Value” of Common Shares
shall be determined in a manner consistent with avoiding adverse
tax consequences under Code Section 409A. In addition,
“Fair Market
Value” with respect to
ISOs and related SARs shall be determined in accordance with
Section 6.2(f).
“Full-Value
Awards” means Restricted
Share Awards, Restricted Share Unit Awards, Performance Share
Awards and Common Share Awards.
“Incentive Stock
Option” and
“ISO”
mean a Stock Option which meets the
requirements of Section 422 of the Code.
“Non-Qualified Stock
Option” and
“NQSO”
mean a Stock Option that does not meet
the requirements of Section 422 of the Code.
“Outside
Director” means a
Director who meets the definitions of the terms “independent
director” set forth in
The Nasdaq Stock Market, Inc. rules, and “non-employee
director” set forth in
Rule 16b-3, or any successor definitions adopted by The Nasdaq
Stock Market, Inc. and Securities and Exchange Commission,
respectively, and similar requirements under any other applicable
laws, rules and regulations.
“participant”
is defined in Section
4.1.
“Parent”
means any corporation which qualifies
as a “parent
corporation” of the
Company under Section 424(e) of the Code.
“Performance
Period” is defined in
Section 8.4(g).
“Performance
Shares” means any Shares
issued pursuant to an Award granted under Article
9.
“person”
means a “person” as such term is used for purposes of Section 13(d)
or 14(d) of the Exchange Act.
“Plan”
means this Sanara MedTech Inc. 2014
Omnibus Long Term Incentive Plan, as amended from time to
time.
“Plan Year”
means the calendar
year.
“Restricted Share
Units” means Shares
issued by the Company pursuant to an Award granted under Article 8
that will be issued to a participant at a future time or times at
no cost or at a purchase price determined by the Committee, which
may be below their Fair Market Value, if continued Employment
and/or other terms and conditions specified by the Committee are
satisfied.
“Restricted
Shares” means Shares
which are issued by the Company pursuant to an Award granted under
Article 8 to a participant at no cost or at a purchase price
determined by the Committee which may be below their Fair Market
Value but which are subject to forfeiture and restrictions on their
sale or other transfer by the participant.
“Retirement”
shall be defined in the Award
agreements, as necessary.
“Rule 16b-3”
is defined in Article
17.
“Share”
or “Shares”
mean one or more of the Common
Shares.
“Shareholder”
means an individual or entity that
owns one or more shares of stock of the Company, including Common
Shares.
“Stock Appreciation
Rights” and
“SARs”
mean any right pursuant to an Award
granted under Article 7.
“Stock
Option” means a right to
purchase a specified number of Shares at a specified price which is
granted pursuant to Article 5; such right may be an Incentive Stock
Option or a Non-Qualified Stock Option.
“Stock
Power” means a power of
attorney executed by a participant and delivered to the Company
which authorizes the Company to transfer ownership of Restricted
Shares, Performance Shares or Common Shares from the participant to
the Company or a third party.
“Subsidiary”
means any corporation which qualifies
as a “subsidiary corporation” of the Company under
Section 424(f) of the Code.
“Vested”
means, with respect to a Common Share,
when the Common Share has been awarded; with respect to a Stock
Option, when the Stock Option first becomes exercisable; with
respect to a Stock Appreciation Right, when the Stock Appreciation
Right first becomes exercisable; with respect to Restricted Shares,
when the Shares are no longer subject to forfeiture and
restrictions on transferability; with respect to Restricted Share
Units and Performance Shares, when the Restricted Share Units or
Performance Shares are no longer subject to restrictions and
forfeiture and are convertible to, or replaceable with,
Shares. “Vest”
and “Vesting”
shall have correlative
meanings.
ARTICLE 2
Administration
2.1 Authority
and Duties of the Committee.
(a) The
Plan shall be administered by a Committee of at least two Directors
who are appointed by the Board. Unless otherwise determined by the
Board, the Compensation Committee of the Company shall serve as the
Committee that will administer the Plan, and all of the members of
the Committee shall be Outside Directors. Notwithstanding this
requirement that the Committee consist exclusively of Outside
Directors, no action or determination by the Committee or an
individual then considered to be an Outside Director shall be
deemed void because it is discovered that a member of the Committee
or such individual fails to satisfy the requirements for being an
Outside Director, except to the extent required by applicable law.
In the event that the Committee shall not have been appointed by
the Board, the Plan shall be administered by the Board, which shall
exercise all rights, powers and authority granted to the Committee
under this Plan.
(b) The
Committee has the power and authority to grant Awards pursuant to
the terms of this Plan to officers, employees, consultants and
Outside Directors.
(c) The
Committee has the sole and exclusive authority, subject to any
limitations specifically set forth in this Plan, to:
(i)
select
the officers, employees, consultants and Outside Directors to whom
Awards are granted;
(ii)
determine
the types of Awards granted and the timing of such
Awards;
(iii)
determine
the number of Shares to be covered by each Award granted
hereunder;
(iv)
determine
the other terms and conditions, not inconsistent with specific
requirements of this Plan, of any Award granted hereunder; such
terms and conditions include, but are not limited to, the Exercise
Price, the time or times when Stock Options or Stock Appreciation
Rights may be exercised (which may be based on performance
objectives), any Vesting, acceleration or waiver of forfeiture
restrictions, any performance criteria applicable to an Award, and
any restriction or limitation regarding any Option or Stock
Appreciation Right or the Common Shares relating thereto, based in
each case on such factors as the Committee, in its sole discretion,
shall determine;
(v)
determine
whether any conditions or objectives related to Awards have been
met;
(vi)
subsequently
modify or waive any terms and conditions of Awards, not
inconsistent with the terms of this Plan;
(vii)
adopt,
alter and repeal such administrative rules, guidelines and
practices governing this Plan as it deems advisable from time to
time;
(viii)
promulgate
such administrative forms as they from time to time deem necessary
or appropriate for administration of the Plan;
(ix)
construe,
interpret, administer and implement the terms and provisions of
this Plan, any Award and any related agreements;
(x)
correct
any defect, supply any omission and reconcile any inconsistency in
or between the Plan, any Award and any related
agreements;
(xi)
prescribe
any legends to be affixed to certificates representing Shares or
other interests granted or issued under the Plan; and
(xii)
otherwise
supervise the administration of this Plan.
(d) All
decisions made by the Committee pursuant to the provisions of this
Plan are final and binding on all persons, including the Company,
its Shareholders and participants, but may be made by their terms
subject to ratification or approval by, the Board, another
committee of the Board or Shareholders.
(e) The
Company shall furnish the Committee and its delegates with such
clerical and other assistance as is necessary for the performance
of the Committee’s duties under the Plan.
2.2 Delegation
of Duties. The Committee may
delegate ministerial duties to any other person or persons, and it
may employ attorneys, consultants, accountants or other
professional advisers for purposes relating to plan administration
at the expense of the Company.
2.3 Limitation
of Liability. Members of the
Board, members of the Committee and Company employees who are their
designees acting under this Plan shall be fully protected in
relying in good faith upon the advice of counsel and shall incur no
liability except for grossly negligent or willful misconduct in the
performance of their duties hereunder.
ARTICLE 3
Stock Subject to Plan
3.1 Total
Shares Limitation. Subject to
the provisions of this Article, the maximum number of Shares that
may be issued pursuant to Awards granted under this Plan is
2,000,000, which may be treasury Shares or unissued
Shares.
3.2 Other
Limitations.
(a) Stock Option
Limitations. The maximum number
of Shares available with respect to all Stock Options granted under
this Plan is 2,000,000 Shares. The maximum number of Shares
available with respect to ISOs granted under this Plan is 1,000,000
Shares.
(b) Full-Value Limitations.
The maximum number of Shares available
with respect to Full-Value Awards granted under this Plan is
2,000,000 Shares.
(c) Participant Limitation.
The aggregate number of Shares
underlying all Awards granted under this Plan to any participant in
any Plan Year (including but not limited to Awards of Options and
SARs), regardless of whether such Awards are thereafter canceled,
forfeited or terminated, shall not exceed 100,000
Shares.
3.3 Awards
Not Exercised; Effect of Receipt of Shares. If any outstanding Award, or portion thereof,
expires, or is terminated, canceled or forfeited, the Shares that
would otherwise be issuable with respect to the unexercised portion
of such expired, terminated, canceled or forfeited Award shall be
available for subsequent Awards under this Plan. If (i) the
Exercise Price of a Stock Option is paid in Shares, (ii) Shares
underlying the exercised portion of an SAR are not issued upon
exercise of the SAR, (iii) Shares are withheld to satisfy an
individual participant’s tax obligations or (iv) Shares are
repurchased by the Company on the open market with respect to
Awards under this Plan, the Shares received, not issued, withheld
or repurchased by the Company in connection therewith shall not be
added to the maximum aggregate number of Shares which may be issued
under Section 3.1.
3.4 Dilution
and Other Adjustments. If the
Committee determines that any dividend or other distribution
(whether in the form of cash, Shares, other securities or other
property), recapitalization, stock split, reverse stock split,
reorganization, redesignation, reclassification, merger,
consolidation, liquidation, split-up, reverse split, spin-off,
combination, repurchase or exchange of Shares or other securities
of the Company, issuance of warrants or other rights to purchase
Shares or other securities of the Company or other similar
corporate transaction or event affects the Shares such that an
adjustment is determined by the Committee to be appropriate in
order to prevent dilution or enlargement of the benefits or
potential benefits intended to be made available under this Plan,
then the Committee may, in such manner as it deems equitable,
adjust any or all of (i) the number and type of Shares (or other
securities or other property) which thereafter may be made the
subject of Awards, (ii) the number and type of Shares (or other
securities or other property) subject to outstanding Awards, (iii)
the limitations set forth above and (iv) the purchase or Exercise
Price or any performance objective with respect to any
Award; provided, however,
that the number of Shares or other
securities covered by any Award or to which such Award relates is
always a whole number. Notwithstanding the foregoing, unless
otherwise determined by the Committee, the foregoing adjustments
shall be made in conformity with: (I) Sections 422 and 424 of the
Code with respect to ISOs; (II) Treasury Department Regulation
Section 1.424-1 (and any successor thereto) with respect to NQSOs,
applied as if the NQSOs were ISOs; and (III) Section 409A of the
Code, to the extent necessary to avoid its application or avoid
adverse tax consequences thereunder.
ARTICLE 4
Participants; Award Agreements
4.1 Eligibility.
Officers, all other active common law
employees of the Company or any of its Affiliates, consultants and
Outside Directors who are selected by the Committee in its sole
discretion are eligible to participate in this Plan (individually,
a “participant”).
4.2 Award
Agreements. Each Award granted
under this Plan will be evidenced by minutes of a meeting, or by a
unanimous written consent without a meeting, of the Committee, and
by a written agreement dated as of the Date of Grant and executed
by the Company and by the appropriate participant. Each Award is
conditioned upon the participant’s execution of a written
agreement in the form prescribed by the Committee. Execution of an
Award agreement shall constitute (i) the participant’s
irrevocable agreement to, and acceptance of, the terms and
conditions of the Award set forth in such agreement and of the
terms and conditions of the Plan applicable to such Award and (ii)
the participant’s agreement to pay to the Company when due
the amount of any required tax withholding as provided in Article
16. Award agreements may differ from time to time and from
participant to participant.
ARTICLE 5
Stock Option Awards
5.1 Option
Grant. Each Stock Option may be
granted under this Plan as a Non-Qualified Stock Option or an
Incentive Stock Option and, if a Non-Qualified Stock Option, either
independently or in conjunction with the grant of an
SAR.
5.2 Terms
and Conditions of Grants. Stock
Options granted under this Plan are subject to the following terms
and conditions and may contain such additional terms, conditions,
restrictions and contingencies with respect to exercisability and
with respect to the Shares acquired upon exercise as may be
provided in the relevant agreement evidencing the Stock Options, as
the Committee deems desirable, so long as such terms and conditions
are not inconsistent with the terms of this
Plan:
(a) Exercise
Price. Subject to Section 3.4,
the Exercise Price will never be less than 100% of the Fair Market
Value of the Shares on the Date of Grant. Except as otherwise
provided in Section 3.4, no subsequent amendment of an outstanding
Stock Option may reduce the Exercise Price to less than 100% of the
Fair Market Value of the Shares on the Date of
Grant.
(b) Option Term.
Any unexercised portion of a Stock
Option granted hereunder shall expire at the end of the stated term
of the Stock Option. The Committee shall determine the term of each
Stock Option at the time of grant, which term shall not exceed ten
years from the Date of Grant. The Committee may extend the term of
a Stock Option, in its discretion, but not beyond the date
immediately prior to the tenth anniversary of the original Date of
Grant. If a definite term is not specified by the Committee at the
time of grant, then the term is deemed to be ten years. Unless
provided otherwise in an agreement evidencing the Stock Option or
determined by the Committee, each Stock Option shall terminate upon
the participant’s termination of
Employment.
(c) Vesting. Stock Options, or portions thereof, are
exercisable at such time or times and on such conditions as
determined by the Committee in its discretion at or after grant. If
the Committee provides that any Stock Option becomes Vested over a
period of time or on conditions, in its entirety or in
installments, the Committee may waive or accelerate those Vesting
provisions at any time.
(d) Method of Exercise.
Vested portions of any Stock Option
may be exercised in whole or in part at any time during the option
term by giving written notice of exercise to the Company specifying
the number of Shares to be purchased. The notice must be given by
or on behalf of a person entitled to exercise the Stock Option,
accompanied by payment in full of the Exercise Price, along with
the amount of any tax withholding. Subject to the approval of the
Committee, the Exercise Price may be paid:
(i)
in
cash in any manner satisfactory to the Committee;
(ii)
by tendering (by either actual delivery of
Shares or by attestation) unrestricted Shares that are owned on the
date of exercise by the person entitled to exercise the
Stock Option having an aggregate Fair
Market Value on the date of exercise equal to the applicable
Exercise Price;
(iii)
by
a combination of cash and unrestricted Shares that are owned on the
date of exercise by the person entitled to exercise the Stock
Option;
(iv)
by
delivery of irrevocable instructions to a broker to sell Shares
obtained upon exercise of the Stock Option and to deliver promptly
to the Company an amount out of the proceeds of such sale equal to
the Exercise Price for the Shares being purchased; and
(v)
by
another method permitted by law and affirmatively approved by the
Committee which assures full and immediate payment or satisfaction
of the Exercise Price.
The Committee may withhold its approval for any method of payment
for any reason, in its sole discretion, including but not limited
to concerns that the proposed method of payment will result in
adverse financial accounting treatment, adverse tax treatment for
the Company or a participant or a violation of the Sarbanes-Oxley
Act of 2002, as amended from time to time, and lawful regulations
and guidance promulgated thereunder.
(e) Issuance of Shares.
The Company will issue or cause to be
issued Shares as soon as practicable after exercise of a Stock
Option and receipt of full payment of the Exercise Price. Until the
issuance (as evidenced by the appropriate entry on the books of the
Company or of a duly authorized transfer agent of the Company) of
the Shares, in certificated or uncertificated form, no right to
vote or receive dividends or any other rights as a Shareholder will
exist with respect to the Shares, notwithstanding the exercise of
the Stock Option.
(f) Form. Unless the grant of a Stock Option is designated
at the time of grant as an ISO, it is deemed to be an NQSO. ISOs
are subject to the additional terms and conditions in Article
6.
(g) Special Limitations on Stock
Option Awards. Unless an Award
agreement approved by the Committee expressly provides otherwise,
Stock Options awarded under this Plan are intended to meet the
requirements for exclusion from coverage under Section 409A of the
Code and all Stock Option Awards shall be construed and
administered accordingly.
ARTICLE 6
Special Rules Applicable to Incentive Stock Options
6.1 Eligibility.
Notwithstanding any other provision of
this Plan to the contrary, an ISO may only be granted to employees
(including officers and Directors who are also employees) of the
Company or an Affiliate which is also a Parent or
Subsidiary.
6.2 Special
ISO Rules.
(a) Term. No ISO may be exercisable on or after the tenth
anniversary of the Date of Grant, and no ISO may be granted under
this Plan on or after the tenth anniversary of the effective date
of this Plan.
(b) Ten Percent
Shareholder. If a grantee owns
(at the time of the Award and after application of the rules
contained in Section 424(d) of the Code) equity securities
possessing more than 10% of the total combined voting power of all
classes of equity securities of the Company, its Parent or any
Subsidiary, the Exercise Price of the ISO will be at least 110% of
the Fair Market Value of the Shares as of the Date of Grant and
such ISO shall not be exercisable on or after the fifth anniversary
of the Date of Grant.
(c) Limitation on Grants.
The aggregate Fair Market Value
(determined with respect to each ISO at the time of grant) of the
Shares with respect to which ISOs are exercisable for the first
time by an optionee during any calendar year (under this Plan or
any other plan adopted by the Company or a Parent or a Subsidiary)
shall not exceed $100,000. If such aggregate Fair Market Value
shall exceed $100,000, such number of ISOs as shall have an
aggregate Fair Market Value equal to the amount in excess of
$100,000 shall be treated as NQSOs.
(d) Non-Transferability.
Notwithstanding any other provision
herein to the contrary, no ISO (and, if applicable, related Stock
Appreciation Right) may be transferred except by will or by the
laws of descent and distribution, nor may an ISO (or related Stock
Appreciation Right) be exercisable during an optionee’s
lifetime other than by him or her (or his or her guardian or legal
representative to the extent permitted by applicable
law).
(e) Termination of
Employment. No ISO may be
exercised more than three months following termination of
Employment for any reason (including Retirement) other than death
or Disability, nor more than one year following termination of
Employment due to death or Disability (as defined in Section 422 of
the Code), or such option will no longer qualify as an ISO and
shall thereafter be, and receive the tax treatment applicable to,
an NQSO. For this purpose, a termination of Employment is cessation
of Employment such that no Employment relationship exists between
the participant and the Company, a Parent or a
Subsidiary.
(f) Fair Market Value.
For purposes of any ISO granted
hereunder (or, if applicable, related Stock Appreciation Right),
the Fair Market Value of Shares shall be determined in the manner
required by Section 422 of the Code.
6.3 Subject
to Code Amendments. The
foregoing limitations are designed to comply with the requirements
of Section 422 of the Code and shall be automatically amended or
modified to comply with changes to Section 422 of the Code. Any ISO
which fails to meet the requirements of Section 422 of the Code is
automatically treated as an NQSO appropriately granted under this
Plan provided that it otherwise meets the Plan’s requirements
for being an NQSO.
ARTICLE 7
Stock Appreciation Rights
7.1 SAR
Grant and Agreement. A Stock
Appreciation Right may be granted under this Plan, either
independently or in conjunction with the grant of a Stock
Option.
7.2 SARs
Granted in
Conjunction with Option. Stock
Appreciation Rights may be granted in conjunction with all or part
of Stock Options granted under this Plan, at the same time as the
grant of the Stock Options, and will be subject to the following
terms and conditions:
(a) Term. Each Stock Appreciation Right, or applicable
portion thereof, granted with respect to a given Stock Option or
portion thereof terminates and is no longer exercisable upon the
termination or exercise of the related Stock Option, or applicable
portion thereof.
(b) Exercisability.
A Stock Appreciation Right is
exercisable only at such time or times and to the extent that the
Stock Option to which it relates is Vested and exercisable in
accordance with the provisions of Article 5 or otherwise as the
Committee may determine.
(c) Method of Exercise.
A Stock Appreciation Right may be
exercised by the surrender of the applicable portion of the related
Stock Option. Stock Options which have been so surrendered, in
whole or in part, are no longer exercisable to the extent the
related Stock Appreciation Rights have been exercised and are
deemed to have been exercised for the purpose of the limitation set
forth in Article 3 on the number of Shares to be issued under this
Plan. Upon the exercise of a Stock Appreciation Right, subject to
satisfaction of tax withholding requirements, the holder of the
Stock Appreciation Right is entitled to receive cash or Shares
equal in value to the excess of the Fair Market Value of a Share on
the exercise date over the Exercise Price per Share specified in
the related Stock Option, multiplied by the number of Shares in
respect of which the Stock Appreciation Right is exercised. Any
fractional Shares shall be paid in cash or, if the Committee
determines, rounded downward to the next whole Share. At any time
the Exercise Price per Share of the related Stock Option exceeds
the Fair Market Value of one Share, the holder of the Stock
Appreciation Right shall not be permitted to exercise such
right.
7.3 Independent
SARs. Stock Appreciation Rights
may be granted without related Stock Options, and independent Stock
Appreciation Rights will be subject to the following terms and
conditions:
(a) Term. Any unexercised portion of an independent Stock
Appreciation Right granted hereunder shall expire at the end of the
stated term of the Stock Appreciation Right. The Committee shall
determine the term of each Stock Appreciation Right at the time of
grant, which term shall not exceed ten years from the Date of
Grant. The Committee may extend the term of a Stock Appreciation
Right, in its discretion, but not beyond the date immediately prior
to the tenth anniversary of the original Date of Grant. If a
definite term is not specified by the Committee at the time of
grant, then the term is deemed to be ten years.
(b) Exercisability.
A Stock Appreciation Right is
exercisable, in whole or in part, at such time or times as
determined by the Committee at or after the time of
grant.
(c) Method of
Exercise. A Stock Appreciation
Right may be exercised in whole or in part during the term by
giving written notice of exercise to the Company specifying the
number of Shares in respect of which the Stock Appreciation Right
is being exercised. The notice must be given by or on behalf of a
person entitled to exercise the Stock Appreciation Right. Upon the
exercise of a Stock Appreciation Right, subject to satisfaction of
tax withholding requirements, the holder of the Stock Appreciation
Right is entitled to receive cash or Shares equal in value to the
excess of the Fair Market Value of a Share on the exercise date
over the Fair Market Value of a Share on the Date of Grant
(the “Base
Value”) multiplied by the
number of Stock Appreciation Rights being exercised. Any fractional
Shares shall be paid in cash or, if the Committee determines,
rounded downward to the next whole Share. At any time the Fair
Market Value of a Share on a proposed exercise date does not exceed
the Base Value, the holder of the Stock Appreciation Right shall
not be permitted to exercise such right.
7.4 Other
Terms and Conditions of SAR Grants. Stock Appreciation Rights are subject to such
other terms and conditions, not inconsistent with the provisions of
this Plan, as are determined from time to time by the
Committee.
7.5 Special
Limitations on SAR Awards. Unless an Award agreement approved by the
Committee expressly provides otherwise, Stock Appreciation Rights
awarded under this Plan are intended to meet the requirements for
exclusion from coverage under Section 409A of the Code and all
Stock Appreciation Rights Awards shall be construed and
administered accordingly.
ARTICLE 8
Restricted Share and Restricted Share Unit Awards
8.1 Restricted
Share Grants and Agreements. Restricted Share Awards consist of Shares which
are issued by the Company to a participant at no cost or at a
purchase price determined by the Committee which may be below their
Fair Market Value, but which are subject to forfeiture and
restrictions on their sale or other transfer by the participant.
The timing of Restricted Share Awards and the number of Shares to
be issued (subject to Section 3.4) are determined by the Committee
in its discretion.
8.2 Terms
and Conditions of Restricted Share Grants. Restricted Shares granted under this Plan are
subject to the following terms and conditions, which, except as
otherwise provided herein, need not be the same for each
participant, and may contain such additional terms, conditions,
restrictions and contingencies not inconsistent with the terms of
this Plan, as the Committee deems desirable:
(a) Purchase Price.
The Committee shall determine the
prices, if any, at which Restricted Shares are to be issued to a
participant, which may vary from time to time and from participant
to participant and which may be below the Fair Market Value of such
Restricted Shares at the Date of Grant.
(b) Restrictions.
All Restricted Shares issued under
this Plan will be subject to such restrictions as the Committee may
determine, which may include, without limitation, the
following:
(i)
a
prohibition against the sale, transfer, pledge or other encumbrance
of the Restricted Shares, such prohibition to lapse at such time or
times as the Committee determines (whether in installments, at the
time of the death, Disability or Retirement of the holder of such
shares, or otherwise, but subject to the Change in Control
provisions in Article 12 and the applicable Award
agreements);
(ii)
a
requirement that the participant forfeit such Restricted Shares in
the event of termination of the participant’s Employment with
the Company or its Affiliates prior to Vesting;
(iii)
the
elimination of any voting rights and rights to receive dividends
for such Restricted Shares prior to Vesting;
(iv)
a
prohibition against Employment or retention of the participant by
any competitor of the Company or its Affiliates, or against
dissemination by the participant of any secret or confidential
information belonging to the Company or an Affiliate;
(v)
any
applicable requirements arising under the Securities Act of 1933,
as amended, other securities laws, the rules and regulations of The
Nasdaq Stock Market or any other stock exchange or transaction
reporting system upon which such Restricted Shares are then listed
or quoted and any state laws, rules and regulations, including
“blue sky” laws; and
(vi)
such
additional restrictions as are required to avoid adverse tax
consequences under Section 409A of the Code.
The Committee may at any time waive such restrictions or accelerate
the date or dates on which the restrictions will
lapse.
(c) Performance-Based
Restrictions. The Committee
may, in its sole discretion, provide restrictions that lapse upon
the attainment of specified performance objectives. In such case,
the provisions of Sections 9.2, 9.3 and 9.4(b) will
apply.
(d) Delivery of Shares.
Restricted Shares will be certificated
and registered in the name of the participant and deposited,
together with a Stock Power, with the Company. Each such
certificate will bear a legend in substantially the following
form:
“The
transferability of this certificate and the Common Shares
represented by it are subject to the terms and conditions
(including conditions of forfeiture) contained in the Sanara
MedTech Inc. 2014 Omnibus Long Term Incentive Plan and an agreement
entered into between the registered owner and the Company. A copy
of this Plan and agreement are on file in the office of the
Secretary of the Company.”
At the end of any time period during which the Restricted Shares
are subject to forfeiture and restrictions on transfer, and after
the satisfaction by the participant of tax withholding
requirements, such Shares will be delivered free of all
restrictions (except as provided in Section 15.2) to the
participant or other appropriate person and with the foregoing
legend removed.
(e) Forfeiture of Shares.
If a participant who holds Restricted
Shares fails to satisfy the restrictions, Vesting requirements and
other conditions relating to the Restricted Shares prior to the
lapse, satisfaction or waiver of such restrictions and conditions,
except as may otherwise be determined by the Committee, the
participant shall forfeit the Shares and transfer them back to the
Company in exchange for a refund of any consideration paid by the
participant or such other amount which may be specifically set
forth in the Award agreement. A participant shall execute and
deliver to the Company one or more Stock Powers with respect to
Restricted Shares granted to such participant.
(f) Voting and Other
Rights. Except as otherwise
provided in the applicable Restricted Share Agreement, during any
period in which Restricted Shares are subject to forfeiture and
restrictions on transfer, the participant holding such Restricted
Shares shall have the other rights of a Shareholder with respect to
such Shares, including, without limitation, the right to vote such
Shares and the right to receive any dividends paid with respect to
such Shares; provided that if restrictions lapse upon the
attainment of specified performance objectives, then the
participant will receive any dividends only to the extent
performance objectives were achieved.
8.3 Restricted
Share Unit Awards and Agreements. Restricted Share Unit Awards consist of Shares
that will be issued to a participant at a future time or times at
no cost or at a purchase price determined by the Committee, which
may be below their Fair Market Value, subject to satisfaction of
continued Employment and/or other terms and conditions specified by
the Committee. The timing of Restricted Share Unit Awards and the
number of Restricted Share Units to be awarded (subject to Section
3.2) are determined by the Committee in its sole
discretion.
8.4 Terms
and Conditions of Restricted Share Unit Awards. Restricted Share Unit Awards are subject to the
following terms and conditions, which, except as otherwise provided
herein, need not be the same for each participant, and may contain
such additional terms, conditions, restrictions and contingencies
not inconsistent with the terms of this Plan, as the Committee
deems desirable:
(a) Purchase Price.
The Committee shall determine the
prices, if any, at which Shares are to be issued to a participant
after Vesting of Restricted Share Units, which may vary from time
to time and among participants and which may be below the Fair
Market Value of Shares at the Date of Grant.
(b) Restrictions.
All Restricted Share Units awarded under this Plan will be subject
to such restrictions as the Committee may determine, which may
include, without limitation, the following:
(i)
a
prohibition against the sale, transfer, pledge or other encumbrance
of the Restricted Share Unit;
(ii)
a
requirement that the participant forfeit such Restricted Share Unit
in the event of termination of the participant’s Employment
with the Company or its Affiliates prior to Vesting;
(iii)
a
prohibition against Employment of the participant by, or provision
of services by the participant to, any competitor of the Company or
its Affiliates, or against dissemination by the participant of any
secret or confidential information belonging to the Company or an
Affiliate;
(iv)
any
applicable requirements arising under the Securities Act of 1933,
as amended, other securities laws, the rules and regulations of The
Nasdaq Stock Market or any other stock exchange or transaction
reporting system upon which the Common Shares are then listed or
quoted and any state laws, rules and interpretations, including
“blue sky” laws; and
(v)
such
additional restrictions as are required to avoid adverse tax
consequences under Section 409A of the Code.
The Committee may at any time waive such restrictions or accelerate
the date or dates on which the restrictions will
lapse.
(c) Performance-Based
Restrictions. The Committee
may, in its sole discretion, provide restrictions that lapse upon
the attainment of specified performance objectives. In such case,
the provisions of Sections 9.2, 9.3 and 9.4(b) will
apply.
(d) Voting and Other
Rights. A participant holding
Restricted Share Units shall not be deemed to be a Shareholder
solely because of such units. Such participant shall have no rights
of a Shareholder with respect to such units; provided, however,
that an Award agreement may provide
for payment of an amount of money (or Shares with a Fair Market
Value equivalent to such amount) equal to the dividends paid from
time to time on the number of Common Shares that would become
payable upon vesting of a Restricted Share Unit Award but if
restrictions lapse upon the attainment of specified performance
objectives, then such dividend equivalents shall be paid only to
the extent performance objectives are achieved.
(e) Lapse of Restrictions.
If a participant who holds Restricted
Share Units satisfies the restrictions and other conditions
relating to the Restricted Share Units prior to the lapse or waiver
of such restrictions and conditions, after the satisfaction by the
participant of tax withholding requirements the Restricted Share
Units shall be converted to, or replaced with, Shares which are
free of all restrictions (except as provided in Section
15.2).
(f) Forfeiture of Restricted Share
Units. If a participant who
holds Restricted Share Units fails to satisfy the restrictions,
Vesting requirements and other conditions relating to the
Restricted Share Units prior to the lapse, satisfaction or waiver
of such restrictions and conditions, except as may otherwise be
determined by the Committee, the participant shall forfeit the
Restricted Share Units.
(g) Special Limitations on
Restricted Share Unit Awards. Restricted Share Units awarded under this Plan are
intended to be compliant with, or exempt from, Section 409A of the
Code and all Restricted Share Unit Awards shall be construed and
administered accordingly.
ARTICLE 9
Performance Share Awards
9.1 Performance
Share Awards and Agreements. A
Performance Share Award is a right to receive Shares in the future
conditioned upon the attainment of specified performance objectives
and such other conditions, restrictions and contingencies as the
Committee may determine. The timing of Performance Share Awards and
the number of Shares covered by each Award (subject to Section 3.2)
are determined by the Committee in its
discretion.
9.2 Performance
Objectives. At the time of grant of a Performance Share Award,
the Committee will specify the performance objectives which,
depending on the extent to which they are met, will determine the
number of Shares that will be distributed to the participant. The
Committee will also specify the period or periods during which any
performance objective must be met (the “Performance
Period”). The Committee
may designate a single goal criterion or multiple goal criteria for
performance measurement purposes. Performance measurement may be
based on absolute Company, business unit or divisional performance
and/or on relative performance as compared with that of other
publicly traded companies. The performance objectives and periods
need not be the same for each participant nor for each
Award.
9.3 Adjustment
of Performance Objective and Evaluations. The Committee may modify, amend or otherwise
adjust the performance objectives specified for outstanding
Performance Share Awards if it determines that an adjustment would
be consistent with the objectives of this Plan and taking into
account the interests of the participants and the public
Shareholders of the Company. The types of events which could cause
an adjustment in the performance objectives include, without
limitation, accounting changes which substantially affect the
determination of performance objectives, changes in applicable laws
or regulations which affect the performance objectives, and
divisive corporate reorganizations, including spin-offs and other
distributions of property or stock. The Committee may also
appropriately adjust any performance evaluation under a performance
objective or objectives to reflect any of the following events that
may occur during the Performance Period: (1) asset gains or losses;
(2) litigation, claims, judgments or settlements; (3) the effect of
changes in tax law, accounting principles or other such laws or
provisions affecting reported results; (4) accruals for
reorganization and restructuring programs; and (5) any
extraordinary, unusual, non-recurring or non-cash
items.
9.4 Other
Terms and Conditions. Performance Share Awards may contain such other
terms, conditions, restrictions and contingencies not inconsistent
with the terms of this Plan as the Committee deems desirable and
are subject to the following terms and
conditions:
(a) Delivery of Shares.
As soon as practicable after the
applicable Performance Period has ended, and the fulfillment of
time Vesting requirements, if any, and after the satisfaction by
the participant of tax withholding requirements, the participant
will receive a distribution of the number of Shares earned during
the Performance Period, depending upon the extent to which the
applicable performance objectives were achieved. Such Shares will
be registered in the name of the participant and will be free of
all restrictions except for any restrictions pursuant to Section
15.2.
(b) Termination; Time
Vesting. A Performance Share
Award or unearned portion thereof will terminate without the
issuance of Shares on the termination date specified at the time of
grant or, whether or not earned, upon the termination of Employment
of the participant during the time period or periods required for
Vesting as specified by the Committee. If a participant’s
Employment with the Company or its Affiliates terminates by reason
of his or her death, Disability or Retirement, the Committee in its
discretion may determine at or after the time of grant,
notwithstanding any Vesting requirements under Section 9.4(a), that
the participant (or the heir, legatee or legal representative of
the participant’s estate) will receive a distribution of
Shares representing a portion of the participant’s
then-outstanding Performance Share Awards in an amount which is not
more than the number of shares which would have been earned by the
participant if 100% of the performance objectives for the current
Performance Period had been achieved prorated based on the ratio of
the number of months of active Employment in the Performance Period
to the total number of months in the Performance
Period.
(c) Voting and Other
Rights. Awards of Performance
Shares do not provide the participant with voting rights or rights
to dividends prior to the participant becoming the holder of record
of Shares issued pursuant to an Award; provided, however, that an
Award agreement may provide for payment of an amount of money (or
Shares with a Fair Market Value equivalent to such amount) equal to
the dividends paid from time to time on the number of Common Shares
that would become payable upon vesting of a Performance Share Award
but such dividend equivalents shall be paid only to the extent
performance objectives are achieved. Prior to the issuance of
Shares, Performance Share Awards may not be sold, transferred,
pledged, assigned or otherwise encumbered.
9.5 Special
Limitations on Performance Share Awards. Unless an Award agreement provides otherwise,
Performance Shares Awarded under this Plan are intended to meet the
requirements for exclusion from coverage under Section 409A of the
Code and all Performance Share Awards shall be construed and
administered accordingly.
ARTICLE 10
Common Share Awards
10.1 Eligibility.
Notwithstanding any other provision of
this Plan to the contrary, a Common Share may only be granted to an
employee or Outside Director.
10.2 Terms
and Conditions of Common Share Awards.
(a) Purpose. Common Shares may be granted in consideration of
services rendered to the Company by employees or Outside Directors
in their capacity as Directors.
(b) Vesting. Common Shares shall be
fully-Vested.
(c) Delivery of
Shares. The Shares will be
delivered to the participant after the satisfaction by the
participant of tax withholding requirements.
ARTICLE 11
Transfers and Leaves of Absence
11.1 Transfer
of Participant. For purposes of
this Plan, the transfer of a participant among the Company and its
Affiliates is deemed not to be a termination of
Employment.
11.2 Effect
of Leaves of Absence. For
purposes of this Plan, the following leaves of absence are deemed
not to be a termination of Employment:
(a) a
leave of absence, approved in writing by the Company, for military
service, sickness or any other purpose approved by the Company, if
the period of such leave does not exceed 90 days;
(b) a
leave of absence in excess of 90 days, approved in writing by the
Company, but only if the employee’s right to reemployment is
guaranteed either by a statute or by contract, and provided that,
in the case of any such leave of absence, the employee returns to
work within 30 days after the end of such leave; and
(c) any
other absence determined by the Committee in its discretion not to
constitute a termination of Employment.
ARTICLE 12
Effect of Change in Control
12.1 Change
in Control Defined. “Change in
Control” means (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).
12.2 Acceleration
of Award. Except as otherwise
provided in this Plan or an Award agreement, immediately upon the
occurrence of a Change in Control:
(a) all
outstanding Stock Options automatically become fully
exercisable;
(b) all
Restricted Share Awards automatically become fully
Vested;
(c) subject
to Section 409A of the Code, all Restricted Share Unit Awards
automatically become fully Vested (or, if such Restricted Share
Unit Awards are subject to performance-based restrictions, they
shall become Vested on a pro-rated basis as described in Section
12.2(d)) and, to the extent Vested, converted to, or replaced with,
Shares at the election of the holder;
(d) all
participants holding Performance Share Awards become entitled to
receive a partial payout in an amount which is the number of Shares
which would have been earned by the participant if 100% of the
performance objectives for the current Performance Period had been
achieved pro-rated based on the ratio of the number of months of
active Employment in the Performance Period to the total number of
months in the Performance Period; and
(e) Stock
Appreciation Rights automatically become fully Vested and fully
exercisable.
12.3 Treatment
of Awards. If the Committee
determines that it would not trigger adverse taxation under Section
409A of the Code, upon the occurrence of a Change in Control, the
Committee may, but shall not be obligated to, (A) cancel Awards for
fair value, which, in the case of Stock Options and Stock
Appreciation Rights, shall equal the excess, if any, of the value
of the consideration to be paid in the Change in Control
transaction to holders of the same number of Shares subject to such
Stock Options or Stock Appreciation Rights (or, if no consideration
is paid in any such transaction, the Fair Market Value of the
Shares subject to such Stock Options or Stock Appreciation Rights
as of the date of the Change in Control) over the aggregate
Exercise Price or Base Value (as applicable) of such Stock Options
or Stock Appreciation Rights or (B) provide for the issuance of
substitute Awards that will substantially preserve the otherwise
applicable terms and value of any affected Awards previously
granted hereunder as determined by the Committee or (C) provide
that for a period of at least 15 days prior to the Change in
Control, such Awards shall be exercisable, to the extent
applicable, as to all Shares subject thereto and the Committee may
further provide that upon the occurrence of the Change in Control,
such Awards shall terminate and be of no further force and
effect.
ARTICLE 13
Transferability of Awards
13.1 Awards Are
Non-Transferable. Except as
provided in Sections 13.2 and 13.3, Awards are non- transferable
and any attempts to assign, pledge, hypothecate or otherwise
alienate or encumber (whether by operation of law or otherwise) any
Award shall be null and void.
13.2 Inter-Vivos
Exercise of Awards. During a
participant’s lifetime, Awards are exercisable only by the
participant or, as permitted by applicable law and notwithstanding
Section 13.1 to the contrary, the participant’s guardian or
other legal representative.
13.3 Limited
Transferability of Certain Awards. Notwithstanding Section 13.1 to the contrary,
Awards may be transferred by will and by the laws of descent and
distribution. Moreover, the Committee, in its discretion, may allow
at or after the time of grant the transferability of Awards which
are Vested, provided that the permitted transfer is made (a) if the
Award is an Incentive Stock Option, consistent with Section 422 of
the Code; (b) to the Company (for example in the case of forfeiture
of Restricted Shares), an Affiliate or a person acting as the agent
of the foregoing, or as otherwise determined by the Committee to be
in the interests of the Company; or (c) by a participant for no
consideration to Immediate Family Members or to a bona fide trust,
partnership or other entity controlled by and for the benefit of
one or more Immediate Family Members. “Immediate Family
Members” means the
participant’s spouse, children, stepchildren, parents,
stepparents, siblings (including half brothers and sisters),
in-laws and other individuals who have a relationship to the
participant arising because of a legal adoption. No transfer may be
made to the extent that transferability would cause Form S-8 or any
successor form thereto not to be available to register Shares
related to an Award. The Committee in its discretion may impose
additional terms and conditions upon
transferability.
ARTICLE 14
Amendment and Discontinuation
14.1 Amendment
or Discontinuation of this Plan. The Board may amend, alter, or discontinue this
Plan at any time, provided that no amendment, alteration, or
discontinuance may be made:
(a) which
would materially and adversely affect the rights of a participant
under any Award granted prior to the date such action is adopted by
the Board without the participant’s written consent thereto;
and
(b) without
Shareholder approval if Shareholder approval is required under
applicable laws, regulations or exchange requirements (including
Section 422 of the Code with respect to ISOs).
Notwithstanding the foregoing, this Plan may be amended without
obtaining the affected participants’ consent in order to: (i)
comply with any law; (ii) preserve any intended favorable tax
effects for the Company or participants; or (iii) avoid any
unintended unfavorable tax effects for the Company or
participants.
14.2 Amendment
of Grants. The Committee may
amend, prospectively or retroactively, the terms of any outstanding
Award, provided that no such amendment may be inconsistent with the
terms of this Plan (specifically including the prohibition on
granting Stock Options with an Exercise Price less than 100% of the
Fair Market Value of the Common Shares on the Date of Grant) or
would materially and adversely affect the rights of any holder
without his or her written consent.
ARTICLE 15
Share Certificates
15.1 Delivery
of Share Certificates. The
Company is not required to issue or deliver any Shares issuable
with respect to Awards under this Plan prior to the fulfillment of
all of the following conditions:
(a) payment
in full for the Shares and for any tax withholding;
(b) completion
of any registration or other qualification of such Shares under any
federal or state laws or under the rulings or regulations of the
Securities and Exchange Commission or any other regulating body
which the Committee in its discretion deems necessary or
advisable;
(c) admission
of such Shares to listing on The Nasdaq Stock Market or any stock
exchange on which the Shares are listed;
(d) in
the event the Shares are not registered under the Securities Act of
1933, as amended, qualification as a private placement under said
act;
(e) obtaining
of any approval or other clearance from any federal or state
governmental agency which the Committee in its discretion
determines to be necessary or advisable; and
(f) full
satisfaction of the Committee that the issuance and delivery of
Shares under this Plan is in compliance with applicable federal,
state or local law, rule, regulation or ordinance or any rule or
regulation of any other regulating body, for which the Committee
may seek approval of counsel for the Company.
Notwithstanding the foregoing, with respect to any Award that is or
becomes subject to Section 409A of the Code, a payment may only be
delayed where the Company or any Affiliate reasonably anticipates
that the making of the payment will violate federal securities laws
or other applicable law and provided that the payment is made at
the earliest date at which the Company or Affiliate reasonably
anticipates that the making of the payment will not cause such
violation.
15.2 Applicable
Restrictions on Shares. Shares
issued with respect to Awards may be subject to such stock transfer
orders and other restrictions as the Committee may determine
necessary or advisable under any applicable federal or state
securities law rules, regulations and other requirements, the
rules, regulations and other requirements of The Nasdaq Stock
Market or other stock exchange upon which the Shares are
then-listed, and any other applicable federal or state law and will
include any restrictive legends the Committee may deem appropriate
to include.
15.3 Book
Entry. In lieu of the issuance
of stock certificates evidencing Shares, the Company or its
transfer agent may use a “book entry”
system in which a computerized or
manual entry is made in the records of the Company or the transfer
agent to evidence the issuance of such Shares. Such Company records
are, absent manifest error, binding on all
parties.
ARTICLE 16
Tax Withholding
16.1 General.
The Committee shall cause the Company
or its Affiliates to withhold any taxes which it determines it is
required by law or required by the terms of this Plan to withhold
in connection with any payments incident to this Plan. The
participant or other recipient shall provide the Committee with
such Stock Powers and additional information or documentation as
may be necessary for the Committee to discharge its obligations
under this Section.
16.2 Method
of Payment by Participant. The Company will specify the amount of tax
withholding payable by a participant in connection with the Vesting
of the participant’s Award. The participant shall pay such
amount of tax withholding in cash or if provided in the Award
Agreement by such other manner permitted in the Award agreement,
which may include, subject to Committee
approval:
(i)
tendering (by either actual delivery of
Shares or by attestation) unrestricted Shares that are owned by the
participant prior to the date of Vesting having an aggregate Fair
Market Value on the date of Vesting equal to the amount of such
withholding tax;
(ii)
the withholding of Shares otherwise issuable
pursuant to the Award on the date of Vesting having an
aggregate Fair Market Value on the date of Vesting equal to the
amount of such withholding tax;
(iii)
by
a combination of cash and either of the foregoing enumerated
methods;
(iv)
another method
approved by the Committee.
16.3 Delivery
of Withholding Proceeds. The
Company or its Affiliates shall deliver withholding proceeds to the
Internal Revenue Service and/or other taxing
authority.
ARTICLE 17
General Provisions
17.1 No Implied
Rights to Awards, Employment or Directorship. No potential participant has any claim or right to
be granted an Award under this Plan, and there is no obligation of
uniformity of treatment of participants under this Plan. Neither
this Plan nor any Award hereunder shall be construed as giving any
individual any right to continued Employment with the Company or
any Affiliate. The Plan does not constitute a contract of
Employment or for services, and the Company and each Affiliate
expressly reserve the right at any time to terminate employees or
service providers free from liability, or any claim, under this
Plan, except as may be specifically provided in this Plan or in an
Award agreement.
17.2 Other
Compensation Plans. Nothing
contained in this Plan prevents the Board from adopting other or
additional compensation arrangements, subject to Shareholder
approval if such approval is required, and such arrangements may be
either generally applicable or applicable only in specific
cases.
17.3 Rule
16b-3 Compliance. The Plan is
intended to comply with all applicable conditions of Rule 16b-3
under the Exchange Act, as such rule may be amended from time to
time (“Rule
16b-3”). All transactions
involving any participant subject to Section 16(b) of the Exchange
Act shall be subject to the conditions set forth in Rule 16b-3,
regardless of whether such conditions are expressly set forth in
this Plan. Any provision of this Plan that is contrary to Rule
16b-3 does not apply to such participants.
17.4 Compliance
with Section 409A. The parties
intend that this Plan and Awards be, at all relevant times, in
compliance with (or exempt from) Section 409A of the Code and all
other applicable laws, and this Plan shall be so interpreted and
administered. In addition to the general amendment rights of the
Company with respect to the Plan, the Company specifically retains
the unilateral right (but not the obligation) to make,
prospectively or retroactively, any amendment to this Plan or any
related document as it deems necessary or desirable to more fully
address issues in connection with compliance with (or exemption
from) Section 409A of the Code and other laws. In no event,
however, shall this section or any other provisions of this Plan be
construed to require the Company to provide any gross-up for the
tax consequences of any provisions of, or payments under, this
Plan. The Company and its Affiliates shall have no responsibility
for tax or legal consequences to any Participant (or beneficiary)
resulting from the terms or operation of this
Plan.
17.5 Successors.
All obligations of the Company with
respect to Awards granted under this Plan are binding on any
successor to the Company, whether as a result of a direct or
indirect purchase, merger, consolidation or otherwise of all or
substantially all of the business and/or assets of the
Company.
17.6 Severability.
In the event any provision of this
Plan, or the application thereof to any person or circumstances, is
held illegal or invalid for any reason, the illegality or
invalidity shall not affect the remaining parts of this Plan, or
other applications, and this Plan is to be construed and enforced
as if the illegal or invalid provision had not been
included.
17.7 Governing
Law. This Plan and all Award
agreements pursuant thereto are construed in accordance with and
governed by the internal laws of the State of Texas. This Plan is
not intended to be governed by the Employee Retirement Income
Security Act of 1974 and shall be so construed and
administered.
ARTICLE 18
Effective Date; Expiration
18.1 Effective
Date. The effective date of
this Plan is the date on which the Shareholders of the Company
approve it at a duly held Shareholders’ meeting. No Awards
may be granted under this Plan after the tenth anniversary of such
date, but Awards granted before such tenth anniversary may remain
outstanding under this Plan until they expire according to their
terms and the other terms of this Plan.
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Control
Number:
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Number
of Shares:
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Registered
Shareholder:
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SANARA MEDTECH INC.
1200
Summit Ave., Suite 414
Fort
Worth, Texas 76102
PROXY
Solicited on Behalf of the Board of Directors for Annual Meeting of
Shareholders, July 9, 2020
The
undersigned hereby appoints J. Michael Carmena and Michael D.
McNeil, and each of them, as proxies with full power of
substitution, to represent and to vote as set forth herein all the
shares of the common stock of Sanara MedTech Inc. which the
undersigned is entitled to vote at the 2020 Annual Meeting of
Shareholders and any adjournments or postponements thereof, as
designated below. If no designation
is made, the proxy, when properly executed, will be voted: (i)
“FOR” the election of the director nominees named below
in Item 1, (ii) “FOR” Item 2, approval of the Restated
2014 Omnibus Long Term Incentive Plan, (iii) “FOR” Item
3, approval of the advisory vote on executive compensation, (iv)
“FOR” a frequency of 3 years to vote on executive
compensation in Item 4, and (v) in the discretion of the proxies
upon such other matter as may properly come before the Annual
Meeting.
Item 1 To approve the
election of five directors to serve on the Company’s board of
directors until the 2021 annual meeting of shareholders or until
their successors are duly elected and qualified.
☐
FOR the election as
a director of the five nominees listed below.
NOMINEES:
Ronald T. Nixon,
James W. Stuckert, J. Michael Carmena, Ann Beal Salamone, Kenneth
E. Thorpe
☐
WITHHOLD AUTHORITY
FOR ALL NOMINEES
☐
WITHHOLD AUTHORITY
to vote for the following nominees:
____________________________________________
INSTRUCTION: To
withhold authority to vote for individual nominees, write their
names on the line above.
Item 2 To approve the
Company’s Restated 2014 Omnibus Long Term Incentive
Plan.
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☐
For
|
☐
Against
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☐
Abstain
|
Item 3 To approve, on
an advisory basis, the compensation of the Company’s
executive officers.
|
☐
For
|
☐
Against
|
☐
Abstain
|
Item 4 To recommend,
by advisory vote, the frequency of future advisory votes on the
Company’s executive compensation.
|
☐
Each year
|
☐
Every 2 years
|
☐
Every 3 years
|
In his
or her discretion, the proxy is authorized to vote upon any other
matters which may properly come before the Annual Meeting, or any
adjournment or postponement thereof.
THIS
PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
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Dated:
___________________________________________, 2020
______________________________________________________
Signature
______________________________________________________
Signature
(Joint Owners)
Please
date and sign name exactly as it appears hereon. Executors,
administrators, trustees, etc. should so indicate when signing. If
the stockholder is a corporation, the full corporate name should be
inserted and the proxy signed by an officer of the corporation
indicating his/her title
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|
|
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[SEE VOTING INSTRUCTIONS ON REVERSE
SIDE]
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VOTING
INSTRUCTIONS
Please
sign, date and mail this Proxy Card promptly to the following
address in the enclosed postage-paid envelope:
Securities Transfer
Corporation
2901 N.
Dallas Parkway, Suite 380
Plano,
Texas 75093
Attention: Proxy
Department
OR
You may
sign, date and submit your Proxy Card by facsimile to (469)
633-0088.
OR
You my
sign, date, scan and email your scanned Proxy Card to
proxyvote@stctransfer.com.
OR
You may
vote online through the Internet:
1.
Go to
http://onlineproxyvote.com/SMTI/ at any time 24 hours a
day.
2.
Login using the
control number located in the top left hand corner of this proxy
card.
3.
Access the proxy
voting link within that website to vote your proxy.
If you vote your proxy on the Internet, you do not need to mail
back, fax or email your Proxy Card.
The
Proxy Statement, the form of Proxy Card and the Company’s
Annual Report to Shareholders are available at
http://onlineproxyvote.com/SMTI/