Exhibit 10.3
------------
Dynatronics Corporation
Stock Option Agreement
for Nonqualified Stock Options
Pursuant to the terms and conditions of Dynatronics Corporation's 2005 Equity
Incentive Award Plan (the "Plan"), Dynatronics Corporation (the "Company")
hereby grants to the Participant an Option to purchase shares of the Company's
common stock on the following terms and conditions:
1. Identifying Provisions. As used in this Option, the following terms
shall have the following respective meanings:
a. Participant is:
b. Date of Grant is:
c. Number of Covered Shares is:
d. Exercise Price Per Share is:
e. Expiration Date:
2. Award. This Agreement specifies the terms of the option ("Option")
granted to the Participant to purchase the number of Covered Shares of Stock at
the Exercise Price set forth above in Paragraph 1. The Option is not an
"incentive stock option" as that term is used in Code section 422.
3. Date of Exercise. Except as limited by this Agreement or by the
Plan, this Option shall become exercisable immediately at the Grant Date and
shall remain exercisable until and including the Expiration Date of this Option,
whereupon the Option shall expire and may thereafter no longer be exercised.
If this Option is subject to a vesting schedule, an installment shall
not become exercisable on the otherwise applicable vesting date if the
Participant's Date of Termination (as defined in Paragraph 8, below) occurs on
or before such vesting date. Notwithstanding the foregoing provisions of this
Paragraph 3, the Option shall become exercisable with respect to all of the
Covered Shares (to the extent it is not then otherwise exercisable) as follows:
a. The Option shall become fully exercisable upon the
Participant's Date of Termination, if the Date of Termination occurs by
reason of the Participant's death or Disability.
1
b. The Option may be exercised on or after the Date of Termination
only as to that portion of the Covered Shares as to which it was
exercisable immediately prior to the Date of Termination, or as to
which it became exercisable on the Date of Termination in accordance
with this Paragraph 3.
4. Expiration. The Option shall not be exercisable after the Company's
close of business on the Expiration Date. The Expiration Date shall be the
earliest to occur of:
a. The tenth-year anniversary of the Grant Date;
b. If the Participant's Date of Termination occurs by reason of
death, Disability or Retirement, the 90-day anniversary of such Date of
Termination; or
c. If the Participant's Date of Termination occurs for reasons
other than death, Disability, or Retirement, the 90-day anniversary of
such Date of Termination.
5. Method of Exercise. Subject to the terms of this Agreement and the
Plan, the Option may be exercised in whole or in part by filing a written notice
with the Secretary of the Company at its corporate headquarters prior to the
Company's close of business on the Expiration Date. Such notice shall specify
the number of Covered Shares the Participant elects to purchase, and shall be
accompanied by payment of the Exercise Price for such shares. Payment shall be
by cash or by check payable to the Company. Except as otherwise provided by the
Committee before the Option is exercised, (i) all or a portion of the Exercise
Price may be paid by the Participant by delivery of mature shares of Stock owned
by the Participant and acceptable to the Committee having an aggregate Fair
Market Value (as of the date of exercise) that is equal to the amount of cash
that would otherwise be required; and (ii) the Participant may pay the Exercise
Price by authorizing a third party to sell shares of Stock (or a sufficient
portion of the shares) acquired upon exercise of the Option and remit to the
Company a sufficient portion of the sale proceeds to pay the entire Exercise
Price and any tax withholding resulting from such exercise. The Option shall not
be exercisable if and to the extent the Company determines that such exercise
would violate applicable state or federal securities laws or the rules and
regulations of any securities exchange on which the Stock is traded. If the
Company makes such a determination, it shall use all reasonable efforts to
obtain compliance with such laws, rules or regulations. In making any
determination hereunder, the Company may rely on the opinion of counsel for the
Company.
6. Withholding. All deliveries and distributions under this Agreement
are subject to withholding of all applicable taxes. At the election of the
Participant, and subject to such rules and limitations as may be established by
the Committee from time to time, such withholding obligations may be satisfied
2
through the surrender of shares of Stock which the Participant already owns and
has held for a minimum of six months, or to which the Participant is otherwise
entitled under the Plan. The Company may also satisfy its withholding
obligations under this Section by offsetting such amounts against salary or
other payments owed to Participant.
7. Transferability. Except as otherwise provided in this Paragraph 7,
the Option is not transferable other than as designated by the Participant by
will or by the laws of descent and distribution, and during the Participant's
life, may be exercised only by the Participant. However, the Participant, with
the prior approval of the Committee, may transfer the Option for no
consideration to or for the benefit of the Participant's Immediate Family
(including, without limitation, to a trust for the benefit of the Participant's
Immediate Family or to a partnership or limited liability company for one or
more members of the Participant's Immediate Family), subject to such limits as
the Committee may establish, and the transferee shall remain subject to all
terms and conditions applicable to the Option prior to such transfer. The
foregoing right to transfer the Option shall apply to the right to consent to
amendments to this Agreement and, in the discretion of the Committee, shall also
apply to the right to transfer ancillary rights associated with the Option. The
term "Immediate Family" means the Participant's spouse, parents, children,
stepchildren, adoptive relationships, sisters, brothers and grandchildren.
8. Definitions. Capitalized terms in this Agreement shall have the
meaning given them in the Plan, or elsewhere in this Agreement. In addition, the
following definitions shall apply:
"Affiliate" has the meaning set forth in Rule 12b-2 of the regulations
promulgated under the Exchange Act.
"Date of Termination" is the first day occurring on or after the Grant
Date on which the Participant ceases to be employed by the Company or any
Subsidiary or ceases to serve as a member of the board of directors of the
Company or a Subsidiary or as a consultant to the Company or a Subsidiary,
regardless of the reason for the termination of such employment, directorship or
consulting arrangement; provided that a termination of employment shall not be
deemed to occur by reason of a transfer of the Participant between the Company
and a Subsidiary or between two Subsidiaries; and further provided that the
Participant's employment shall not be considered terminated while the
Participant is on an authorized leave of absence from the Company or Subsidiary.
9. Heirs and Successors. This Agreement shall be binding upon, and
inure to the benefit of, the Company and its successors and assigns, and upon
any person acquiring, whether by merger, consolidation, purchase of assets or
otherwise, all or substantially all of the Company's assets and business. If any
rights exercisable by the Participant or benefits deliverable to the Participant
under this Agreement have not been exercised or delivered, respectively, at the
time of the Participant's death, such rights shall be exercisable by the
Designated Beneficiary, and such benefits shall be delivered to the Designated
Beneficiary in accordance with the provisions of this Agreement and the Plan.
The "Designated Beneficiary" shall be the beneficiary or beneficiaries
designated by the Participant in a writing filed with the Committee in such form
and at such time as the Committee shall require. If a deceased Participant fails
to designate a beneficiary, or if the Designated Beneficiary does not survive
the participant, any rights that would have been exercisable by the Participant
3
and any benefits distributable to the Participant shall be exercised by or
distributed to the legal representative of the estate of the Participant. If a
deceased Participant has designated a beneficiary but the Designated Beneficiary
dies before the Designated Beneficiary's exercise of all rights under this
Agreement or before the complete distribution of benefits to the Designated
Beneficiary under this Agreement, then any rights that would have been
exercisable by the Designated Beneficiary shall be exercised by the legal
representative of the estate of the Designated Beneficiary, and any benefits
distributable to the Designated Beneficiary shall be distributed to the legal
representative of the estate of the Designated Beneficiary.
10. Administration. The authority to manage and control the operation
and administration of this Agreement shall be vested in the Committee, and the
Committee shall have all powers with respect to this Agreement as it has with
respect to the Plan. Any interpretation of the Agreement by the Committee and
any decision made by it with respect to the Agreement is final and binding on
all persons.
11. Plan Governs. This Option is subject to and the Participant is
bound by all of the terms and conditions of the Plan, as the same may have been
amended from time to time in accordance with its terms. A copy of the Plan in
its present form is available from the office of the Secretary of the Company.
In the event of a conflict between the terms of the Plan and the terms of this
Agreement, the terms and provisions of the Plan shall govern.
12. Not an Employment Contract. The Option does not confer any right on
the Participant with respect to continuation of employment or other service with
the Company or any Subsidiary, nor will it interfere in any way with any right
the Company or any Subsidiary would otherwise have to terminate or modify the
terms of such Participant's employment or other service at any time.
13. Rights in Stock before Issuance and Delivery. No person shall be
entitled to the privileges of stock ownership in respect of any shares issuable
upon exercise of this Option unless and until such shares have been issued to
such person as fully-paid shares.
14. Notices. Any notice to be given to the Company shall be addressed
to the Company in care of its Corporate Secretary at its principal offices and
any notice to be given to the Participant shall be addressed to the Participant
at the address set forth beneath the Participant's signature hereto or at such
other address as the Participant may hereafter designate in writing to the
Company. Any such notice shall be deemed duly given when enclosed in a properly
sealed envelope or wrapper addressed as before said, registered or certified and
deposited postage and registry or certification fees prepaid in a post office or
branch post office regularly maintained by the United States Postal Service.
15. Other Terms. This Agreement has been executed and delivered by the
Company in Salt Lake City, Utah and shall be construed and enforced in
accordance with the laws of said state, other than any choice of law rules
calling for the application of laws of another jurisdiction. This Agreement may
be amended by written agreement of the Participant and the Company, without the
consent of any other person. If the Company enters into a transaction which is
intended to be accounted for using the pooling-of-interests method of
accounting, but it is determined by the Board that the Option or any aspect
thereof could reasonably be expected to preclude such treatment, then the Board
may modify (to the minimum extent required) or revoke (if necessary) the Option
or any of the provisions thereof to the extent that the Board determines that
such modification or revocation is necessary to enable the transaction to be
subject to pooling-of-interests accounting.
4
IN WITNESS WHEREOF the Company has granted this Option on the Date of
Grant specified above.
Dynatronics Corporation
0000 Xxxx Xxxxxx Xxxxx
Xxxx Xxxx Xxxx, Xxxx 00000
By: ____________________________________
Its: Secretary/Treasurer
Participant:
_________________________________________
Signature
Address:
_________________________________________
_________________________________________
City/State/Zip
5
NOTICE OF EXERCISE
------------------
Dynatronics Corporation
0000 Xxxx Xxxxxx Xxxxx
Xxxx Xxxx Xxxx, Xxxx 00000
Ladies and Gentlemen:
The undersigned hereby elects to purchase, pursuant to the provisions of the
Stock Option Agreement and Option held by the undersigned, dated ___________,
_________ shares of Stock of Dynatronics Corporation, a Utah corporation,
issuable upon exercise of said Option.
The undersigned hereby attaches the purchase price payable for such shares at
$______ per share in the form of ____________________________________ (specify
cash, check, money order, other securities, etc.).
Dated:
Signature
Printed Name
Address:
(Social Security Number)
6
