FORM OF] DYNATRONICS CORPORATION NON-QUALIFIED STOCK OPTION AGREEMENT
Exhibit 4.4
[FORM OF]
DYNATRONICS CORPORATION
THIS STOCK OPTION AGREEMENT (this
“Agreement”) is made and
entered into between Dynatronics Corporation, a Utah corporation
(the “Company”), and [NAME OF
PARTICIPANT] (“Participant”), pursuant
to the
Dynatronics Corporation 2018 Equity Incentive Plan
(the “Plan”).
Grant
Date: [DATE OF GRANT]
Exercise Price per
Share: [EXERCISE PRICE PER SHARE]
Number
of Option Shares: [NUMBER OF SHARES]
Expiration Date:
[DATE OF EXPIRATION]
The
Company and the Participant agree as follows:
1. Option Grant; Type
of Option. The Company grants to the Participant on the
terms and conditions of this Agreement an option (the
“Option”) to the number of
Option Shares set forth above at the Exercise Price indicated
above, subject to the terms and conditions of this Agreement. The
Option granted hereunder is not an Incentive Stock Option within
the meaning of Section 422 of the Internal Revenue Code of 1986, as
amended (the “Code”), and is therefore
a Non-qualified Stock Option.
2. Consideration;
Subject to Plan. The grant of the Option is made in
consideration of the services to be rendered by the Participant to
the Company and is subject to the terms and conditions of the Plan.
Capitalized terms used in this Agreement but not otherwise defined
herein shall have the meanings ascribed to them in the
Plan.
3. Exercise Period and
Vesting.
3.1. Vesting.
The Option will become vested and exercisable with respect to
[VESTING RATE]% of the Option Shares on each of the [VESTING
SCHEDULE] anniversar[y][ies] of the Grant Date. For purposes of
this Agreement, the term “vest” shall mean with respect
to any portion of the Option, that portion thereof that may be
exercised pursuant to the terms of the Plan. The unvested portion
of the Option will not be exercisable on or after the
Participant’s termination of Continuous Service.
3.2. Expiration.
The Option will expire on the Expiration Date set forth above, or
earlier as provided in this Agreement or the Plan.
4. Termination of
Continuous Service.
4.1. Continuous
Service. For purposes of this Agreement, “Continuous Service” means
that the Participant’s service with the Company or an
affiliate of the Company, whether as an employee or director, is
not interrupted or terminated. The Participant's Continuous Service
shall not be deemed to have terminated merely because of a change
in the capacity in which the Participant renders service to the
Company or an affiliate as an employee or director or a change in
the entity for which the Participant renders such service,
provided that there is no
interruption or termination of the Participant’s Continuous
Service; provided
further that if any Award
is subject to Section 409A of the Code, this sentence shall only be
given effect to the extent consistent with Section 409A of the
Code. For example, a change in status from an employee of the
Company to a Director of an Affiliate will not constitute an
interruption of Continuous Service. The Committee or its delegate,
in its sole discretion, may determine whether Continuous Service
shall be considered interrupted in the case of any leave of absence
approved by that party, including sick leave, military leave or any
other personal or family leave of absence. The Committee or its
delegate, in its sole discretion, may determine whether a Company
transaction, such as a sale or spin-off of a division or subsidiary
that employs Participant, shall be deemed to result in a
termination of Continuous Service for purposes of affected Awards,
and such decision shall be final, conclusive and
binding.
4.2. Separation
from Service Generally. If the Participant’s
employment or service with the Company terminates (a
“Separation from
Service”) for any reason other than for cause as
provided in Section
4.3, or because of total
disability or death as provided in Sections 4.4 and 4.5, respectively, the
Option may be exercised at any time before the Expiration Date or
the expiration of ninety (90) days after the date of Separation
from Service, whichever is the first to occur, but only if and to
the extent the Participant was entitled to exercise the Option at
the date of Separation from Service.
4.3. Separation from
Service for Cause. Upon Participant’s Separation from
Service for cause, the Option, whether vested or unvested, shall
immediately terminate on the date of such Separation from Service
and cease to be exercisable.
4.4. Separation from
Service Because of Disability. Upon Participant’s
Separation from Service because of disability (as that term is
defined in Section 2 of the Plan), the Option may be exercised at
any time before the Expiration Date or before the date that is
twelve (12) months after the date of Separation from Service,
whichever is the first to occur, but only if and to the extent the
Participant was entitled to exercise the Option at the date of such
Separation from Service.
4.5. Separation from
Service Because of Death. If the Participant dies while
employed by or in the service of the Company, the Option may be
exercised at any time before the Expiration Date or before the date
that is twelve (12) months after the date of death, whichever is
the first to occur, but only if and to the extent the Participant
was entitled to exercise the Option at the date of death and only
by the person or persons to whom the Participant’s rights
under the Option shall pass by the Participant’s will or by
the laws of descent and distribution of the state or country of the
Participant’s domicile at the time of death.
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4.6. Leaves
of Absence. Absence on leave approved by the Company or on
account of illness or disability shall not be deemed a Separation
from Service or interruption of employment or service. Vesting of
the Option shall continue during a medical, family or military
leave of absence, whether paid or unpaid authorized by the
Committee pursuant to Section 10.4 of the Plan, and vesting of the
Option shall be suspended during any other unpaid leave of
absence.
4.7. Failure
to Exercise Option. To the extent that following the
Participant’s Separation from Service, the Option is not
exercised within the applicable periods described above, all
further rights to purchase shares of Common Stock pursuant to the
Option shall cease and terminate.
5. Method of Exercise
of Option.
5.1. Election
to Exercise. To exercise the
Option, the Participant (or in the case of exercise after
the Participant’s death
or incapacity, the Participant’s executor, administrator, heir
or legatee, as the case may be) must deliver to the Company a
notice of intent to exercise in the manner designated by or
otherwise acceptable to the Committee, indicating,
inter
alia:
(a) the
Participant’s election to
exercise the Option and the date on which Participant proposes to
complete such exercise, which may not be more than thirty (30) days
after delivery of the notice;
(b) the
number of Option Shares being
purchased;
(c) any
restrictions imposed on the shares; and
(d) any
representations, warranties and agreements regarding the
Participant’s investment intent
and access to information as may be required by the Company to
comply with applicable securities laws.
If
someone other than the Participant exercises the Option, then such
person must submit documentation reasonably acceptable to the
Company verifying that such person has the legal right to exercise
the Option.
5.2 Payment
of Exercise Price. The
entire Exercise Price of the
Option shall be payable in full at the time of exercise to the
extent permitted by applicable statutes and regulations, as
determined by the Committee upon receipt of a notice of exercise,
either:
(a) in
cash or by certified or bank check at the time the Option is
exercised;
(b) by
delivery to the Company of other shares of Common Stock, duly
endorsed for transfer to the Company, with a Fair Market Value on
the date of delivery equal to the Exercise Price (or portion thereof) due for the
number of shares being acquired, or by means of attestation whereby
the Participant identifies for delivery specific shares that have a
Fair Market Value on the date of attestation equal to the
Exercise Price (or portion thereof)
and receives a number of shares equal to the difference between the
number of shares thereby purchased and the number of identified
attestation shares (a “Stock for Stock
Exchange”);
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(c) through
a “cashless exercise program” established with a broker
with the approval of the Committee;
(d) by
reduction in the number of shares otherwise deliverable upon
exercise of such Option with a Fair Market Value equal to the
aggregate Exercise Price at the
time of exercise;
(e) by
any combination of the foregoing methods; or
(f) in
any other form of legal consideration that may be acceptable to the
Committee.
5.3 Withholding.
Prior to the issuance of shares upon the exercise of the Option,
the Participant must make arrangements satisfactory to the Company
to pay or provide for any applicable federal, state and local
withholding obligations of the Company. The Participant may satisfy
any federal, state or local tax withholding obligation relating to
the exercise of the Option by any of the following
means:
(a) tendering
a cash payment;
(b) authorizing
the Company to withhold shares of Common Stock from the Option
Shares otherwise issuable to the Participant as a result of the
exercise of the Option; provided,
however, that no shares of
Common Stock are withheld with a value exceeding the minimum amount
of tax required to be withheld by law; or
(c) delivering
to the Company previously owned and unencumbered shares of Common
Stock.
The
Company has the right to withhold from any compensation paid to a
Participant.
5.4 Issuance
of Shares. Provided that the
exercise notice and payment are in form and substance satisfactory
to the Company, the Company shall issue the Option Shares registered in the name of the
Participant, the Participant’s authorized assignee, or
the Participant’s legal
representative, and shall deliver certificates representing the
shares with the appropriate legends affixed
thereto.
6. No
Right to Continued Employment; No Rights as
Shareholder. Neither the Plan
nor this Agreement shall confer upon the Participant any right to
be retained in any position, as an Employee or Director of the
Company. Further, nothing in the Plan or this Agreement shall be
construed to limit the discretion of the Company to terminate the
Participant’s Continuous Service at any time, with or without
cause. The Participant shall not have any rights as a shareholder
with respect to any shares of Common Stock subject to the Option
prior to the date of exercise of the Option.
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7. Transferability.
The Option is not transferable by the Participant other than to a
designated beneficiary upon the Participant’s death or by will or the laws
of descent and distribution, and is exercisable during the
Participant’s lifetime only by
him. No assignment or transfer of the Option, or the rights
represented thereby, whether voluntary or involuntary, by operation
of law or otherwise (except to a designated beneficiary upon death
by will or the laws of descent or distribution) will vest in the
assignee or transferee any interest or right herein whatsoever, but
immediately upon such assignment or transfer the Option will
terminate and become of no further effect.
8. Adjustments.
The shares of Common Stock subject to the Option may be adjusted or
terminated in any manner as contemplated by Article 11 of the Plan.
9. Mergers,
Reorganizations, Etc. In the
event of a merger, consolidation, plan of exchange, acquisition of
property or stock, split-up, split-off, spin-off, reorganization or
liquidation to which the Company is a party or any sale, lease,
exchange or other transfer (in one transaction or a series of
related transactions) of all, or substantially all, of the assets
of the Company (each, a “Transaction”),
the Committee shall, in its sole discretion and to the extent
possible under the structure of the Transaction, select one of the
following alternatives for treating the Option:
9.1 The
Option shall remain in effect in accordance with its
terms.
9.2 The
Option shall be converted into an option to purchase stock in one
or more of the corporations, including the Company, that are the
surviving or acquiring corporations in the Transaction. The amount,
type of securities subject thereto and exercise price of the
converted option shall be determined by the Committee, taking into
account the relative values of the entities involved in the
Transaction and the exchange rate, if any, used in determining
shares of the surviving corporation(s) to be held by holders of
shares of the Company following the Transaction and the
requirements of any applicable laws and regulations. The converted
Option shall be vested only to the extent that the vesting
requirements relating to the Option have been satisfied at the time
of the Transaction.
9.3 The
Committee shall provide a period of ten (10) days or less before
the completion of the Transaction during which the Option may be
exercised to the extent then exercisable, and upon the expiration
of that period, the Option shall immediately terminate. The
Committee may, in its sole discretion, accelerate the
exercisability of the Option so that the Option is exercisable in
full during that period.
10. Tax
Liability and Withholding.
Notwithstanding any action the Company takes with respect to any or
all income tax, social insurance, payroll tax, or other tax-related
withholding (“Tax-Related
Items”), the ultimate
liability for all Tax-Related Items is and remains the
Participant’s responsibility and
the Company (a) makes no representation or undertakings regarding
the treatment of any Tax-Related Items in connection with the
grant, vesting, or exercise of the Option or the subsequent sale of
any shares acquired on exercise; and (b) does not commit to
structure the Option to reduce or eliminate the Participant’s liability for Tax-Related
Items.
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11. Compliance
with Law. The exercise of the
Option and the issuance and transfer of shares of Common Stock
shall be subject to compliance by the Company and the Participant
with all applicable requirements of federal and state securities
laws and with all applicable requirements of any stock exchange on
which the Company’s
shares of Common Stock may be listed. No shares of Common Stock
shall be issued pursuant to this Option unless and until any then
applicable requirements of state or federal laws and regulatory
agencies have been fully complied with to the satisfaction of the
Company and its counsel. The Participant understands that the
Company is under no obligation to register the shares of Common
Stock with the Securities and Exchange Commission, any state
securities commission or any stock exchange to effect such
compliance.
12. Successors
and Assigns of Company. The
Company may assign any of its rights under this Agreement. This
Agreement will be binding upon and inure to the benefit of the
successors and assigns of the Company. Subject to the restrictions
on transfer set forth herein, this Agreement will be binding upon
the Participant and the Participant’s beneficiaries, executors,
administrators and the persons to whom the Option may be
transferred by will or the laws of descent or
distribution.
13. Notices.
Any notice required to be delivered to the Company under this
Agreement shall be in writing and addressed to the Corporate
Secretary of the Company at the Company’s principal corporate offices. Any
notice required to be delivered to the Participant under this
Agreement shall be in writing and addressed to the Participant at
the Participant’s address
as shown on the signature page to this Agreement or in the records
of the Company. Either party may designate another address in
writing (or by such other method approved by the Company) from time
to time. Unless otherwise provided in writing, any notice required
or permitted under this Agreement shall be given in writing and
shall be conclusively deemed to have been duly given (a) when
hand-delivered to the other party; (b) when sent by facsimile to
the number set forth on the signature page below if sent between
8:00 a.m. and 5:00 p.m. recipient’s local time on a business
day, or on the next business day if sent other than between 8:00
a.m. and 5:00 p.m. recipient’s local time on a business day;
(c) three (3) business days after deposit in the U.S. mail,
certified or registered mail, return receipt requested, postage
prepaid; or (d) the next business day after deposit with a
nationally recognized overnight delivery service, postage prepaid
with next business day delivery guaranteed, provided that the
sending party receives a confirmation of delivery from the delivery
service provider. Any party making a communication hereunder by
facsimile shall promptly confirm by telephone to the party to whom
such communication was addressed each communication made by it by
facsimile pursuant hereto, but the absence of such confirmation
shall not affect the validity of any such
communication.
14. Amendments.
The Committee may at any time amend this Agreement,
provided
that no such amendment shall be made
without the written consent of the Participant if the amendment
would materially adversely affect the
Participant.
15. Interpretation.
Any dispute regarding the
interpretation of this Agreement shall be submitted by the
Participant or the Company to the Committee for review. The
resolution of such dispute by the Committee shall be final and
binding on the Participant and the Company.
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16. Options
Subject to Plan. This Agreement
is subject to the Plan as approved by the Company’s shareholders. The terms and
provisions of the Plan as it may be amended from time to time are
hereby incorporated herein by reference. In the event of a conflict
between any term or provision contained herein and a term or
provision of the Plan, the applicable terms and provisions of the
Plan will govern and prevail.
17. Discretionary
Nature of Plan. The Plan is
discretionary and may be amended, cancelled or terminated by the
Company at any time, in its discretion. The grant of the Option in
this Agreement does not create any contractual right or other right
to receive any Options or other Awards in the future. Future
Awards, if any, will be at the sole discretion of the Company. Any
amendment, modification, or termination of the Plan shall not
constitute a change or impairment of the terms and conditions of
the Participant’s
employment with the Company.
18. No
Impact on Other Benefits. The
value of the Participant’s Option is not part of his
normal or expected compensation for purposes of calculating any
severance, retirement, welfare, insurance or similar employee
benefit.
19. Severability.
The invalidity or unenforceability of any provision of the Plan or
this Agreement shall not affect the validity or enforceability of
any other provision of the Plan or this Agreement, and each
provision of the Plan and this Agreement shall be severable and
enforceable to the extent permitted by law.
20. Governing
Law; Jurisdiction and Venue.
This Agreement shall be construed in accordance with and governed
by the internal laws of the State of Utah, without giving effect to
any choice of law rule that would cause the application of the laws
of any state or jurisdiction other than the internal laws of the
State of Utah to the rights and duties of the parties hereto. All
disputes and controversies arising out of or in connection with
this Agreement shall be resolved exclusively by the state and
federal courts located in Salt Lake City, Salt Lake County, State
of Utah, and each party hereto agrees to submit to the jurisdiction
of said courts and agrees that venue shall lie exclusively with
such courts.
21. Entire
Agreement. This Agreement and
the Plan constitute and contain the entire agreement and
understanding of the parties hereto with respect to the subject
matter hereof and supersedes any and all prior negotiations,
correspondence, agreements (whether written or oral),
understandings, duties or obligations between the parties
respecting the subject matter hereof.
22. Counterparts.
This Agreement may be executed in
counterparts, each of which shall be deemed an original but all of
which together will constitute one and the same instrument.
Counterpart signature pages to this Agreement transmitted by
facsimile transmission, by electronic mail in portable document
format (.pdf), or by any other electronic means intended to
preserve the original graphic and pictorial appearance of a
document, will have the same effect as physical delivery of the
paper document bearing an original signature.
23. Acceptance.
The Participant hereby acknowledges
receipt of a copy of the Plan and this Agreement. The Participant
has read and understands the terms and provisions thereof, and
accepts the Option subject to all of the terms and conditions of
the Plan and this Agreement. The Participant acknowledges that
there may be adverse tax consequences upon exercise of the Option
or disposition of the underlying shares and that the Participant
should consult a tax advisor prior to such exercise or
disposition.
[SIGNATURE PAGE FOLLOWS]
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The
parties have executed this Agreement in duplicate effective as of
the Grant Date.
THE
COMPANY:
DYNATRONICS
CORPORATION
By:
_________________________________
Title:________________________________
PARTICIPANT:
_____________________________________
[NAME
OF PARTICIPANT]
Address:
______________________________________________
______________________________________________________
Phone:
(___) __________________________
E-mail:
__________________
