CHANGE IN CONTROL ADDENDUM TO EMPLOYMENT AGREEMENT
Exhibit 10.3
CHANGE IN CONTROL ADDENDUM TO
THIS
CHANGE IN CONTROL ADDENDUM TO EMPLOYMENT AGREEMENT (the
“Addendum”) is made and
entered into effective as of the 26th day of August, 2019, by and
between Dynatronics Corporation, a Utah corporation (the
“Company”), and Xxxxx Xxxxx
(“Executive”).
The
Company and Executive entered into that certain employment
agreement accepted and approved by the Board of Directors of the
Company effective August 26, 2019, pursuant to which the Company
has employed Executive as Chief Executive Officer (the
“Agreement”). Except as
otherwise provided in this Addendum, all capitalized terms used but
not defined in this Addendum shall have the meanings given to them
in the Agreement.
The
Company and Executive (as evidenced by their execution hereof)
desire to supplement the Agreement as provided herein.
NOW,
THEREFORE, in consideration of the agreements and obligations set
forth herein and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the
parties hereby agree as follows:
1. Incorporation by Reference.
This Addendum is attached to the Agreement as Exhibit D and is hereby
incorporated into and made a part of the Agreement.
2. Severance Payment. Upon a
Change in Control, as defined herein, subject to Executive’s
execution of a general release of known and unknown claims in a
form satisfactory to the Company, notwithstanding the terms of any
equity incentive plan or award agreements, as applicable, all
outstanding unvested equity awards granted to Executive during the
term of his employment prior to termination shall become fully
vested and exercisable for the remainder of their full
term.
3. Section 409A. This Addendum and
the Agreement are intended to comply with Section 409A of the
Internal Revenue Code of 1986, as amended (“Section 409A”), including
the exceptions thereto, and shall be construed and administered in
accordance with such intent. Notwithstanding any other provision of
the Agreement (including this Addendum), payments provided
thereunder or hereunder may only be made upon an event and in a
manner that complies with Section 409A or an applicable exemption.
Any payments hereunder that may be excluded from Section 409A
either as separation pay due to an involuntary separation from
service, as a short-term deferral, or as a settlement payment
pursuant to a bona fide legal dispute shall be excluded from
Section 409A to the maximum extent possible. For purposes of
Section 409A, any installment payments provided under this
Agreement shall each be treated as a separate payment. To the
extent required under Section 409A, any payments to be made
hereunder in connection with a termination of employment shall only
be made if such termination constitutes a “separation from
service” as defined under Section 409A. Notwithstanding the
foregoing, Company makes no representation that the payments and
benefits provided hereunder comply with Section 409A and in no
event shall Company be liable for all or any portion of any taxes,
penalties, interest, or other expenses that may be incurred by
Executive on account of non-compliance with Section
409A.
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4. Section 280G. If any of the
payments or benefits received or to be received by Executive (in
connection with a Change in Control or termination of employment,
whether pursuant to the terms of the Agreement, this Addendum or
any other plan, arrangement, or agreement, or otherwise) (all such
payments collectively referred to herein as the “280G Payments”)
constitute “parachute payments” within the meaning of
Section 280G of the Code and would, but for this provision, be
subject to the excise tax imposed under Section 4999 of the Code
(the “Excise
Tax”), then such 280G Payments shall be reduced in a
manner determined by the Company (by the minimum possible amounts)
that is consistent with the requirements of Section 409A until no
amount payable to Executive will be subject to the Excise Tax. If
two economically equivalent amounts are subject to reduction but
are payable at different times, the amounts shall be reduced (but
not below zero) on a pro rata basis.
5. Change in Control. For purposes
of this Addendum, “Change in Control” shall
mean the occurrence of any of the following:
a. one person (or more
than one person acting as a group) acquires ownership of stock of
the Company that, together with the stock held by such person or
group, constitutes more than 50% of the total fair market value or
total voting power of the stock of the Company; provided that, a Change in Control shall not
occur if any person (or more than one person acting as a group)
owns more than 50% of the total fair market value or total voting
power of the Company’s stock and acquires additional
stock;
b. one person (or more
than one person acting as a group) acquires (or has acquired during
the twelve-month period ending on the date of the most recent
acquisition) ownership of the Company’s stock possessing 30%
or more of the total voting power of the stock of the
Company;
c. a majority of the
members of the Board of Directors of the Company are replaced
during any twelve-month period by directors whose appointment or
election is not endorsed by a majority of the Board of Directors of
the Company before the date of such appointment or election;
or
d. the complete
liquidation of the Company or the sale or other disposition by the
Company of all or substantially all of the Company’s
assets.
e. Notwithstanding the
foregoing, it is agreed that any change in the equity ownership of
Prettybrook Partners, LLC or Provco Ventures I, LP, or their
affiliated entities, shall not trigger the provisions of this
Section 5.
6. Agreement Affirmed. As modified
hereby, the Agreement is hereby affirmed and deemed to continue in
full force and effect.
7. Counterparts. This Addendum may
be executed in one or more counterparts, any one of which need not
contain the signatures of more than one party, but all such
counterparts taken together will constitute one and the same
instrument. Counterparts may be delivered via facsimile, electronic
mail (including .pdf or any electronic signature complying with the
U.S. federal ESIGN Act of 2000, e.g., xxx.xxxxxxxx.xxx) or other
transmission method and any counterpart so delivered shall be
deemed to have been duly and validly delivered and be valid and
effective for all purposes.
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8. Incorporation by Reference. The
terms of the Agreement (as modified hereby) are hereby incorporated
herein by this reference.
9. Assignment. This Addendum shall
be binding upon, and inure to the benefit of, the parties hereto
and their respective successors, heirs, legal representatives and
permitted assigns. Executive may not directly or indirectly assign
any of his rights or delegate any of his obligations under this
Addendum, by operation of law or otherwise.
10. Expenses. Except as otherwise
provided in this Agreement, each of the Company and the Executive
shall bear its own expenses incurred in connection with the
negotiation and execution of this Addendum and the Agreement, and
each other agreement, document and instrument contemplated by the
Agreement, and the consummation of the transactions contemplated
hereby and thereby.
11. No Third Party Beneficiaries.
This Addendum is for the sole benefit of the parties hereto and
their permitted assigns and nothing herein, express or implied, is
intended to or shall confer upon any other person any legal or
equitable benefit, claim, cause of action, remedy or right of any
kind.
12. Governing Law. This Addendum
shall be governed by and construed in accordance with the internal
laws of the State of Utah without giving effect to any choice or
conflict of law provision or rule (whether of the State of Utah or
any other jurisdiction).
[SIGNATURES TO FOLLOW]
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IN
WITNESS WHEREOF, the parties have executed this Change in Control
Addendum to the Employment Agreement as of the date above
written.
“COMPANY”
DYNATRONICS
CORPORATION
By:
_______________________________
Title:
______________________________
“EXECUTIVE”
XXXXX
XXXXX
___________________________________
(Signature)
