EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT
(this "Agreement") executed
and effective the 1st day of March 2009 (the "Effective Date"), by
and between DYNATRONICS CORPORATION, a Utah corporation having its principal
place of business in Salt Lake City, Utah (the "Company"), and XXXXX
X. XXXXXXXX, a resident of Utah (the “Executive”).
R
E C I T A L S:
A.
The Company desires to retain the services
of the Executive, presently a shareholder, officer and director of the Company,
and the Executive desires to render such services, upon the terms and conditions
contained herein.
B.
The Compensation Committee of the Board of
Directors of the Company (the "Board" or “Board of Directors”),
by appropriate resolutions, authorized the employment of the Executive as
provided for in this Agreement. Reference to the “Compensation
Committee” in this Agreement shall mean the Compensation Committee of the
Board as the same may from time to time be constituted or, if such committee
shall for any reason cease to function then the Board or any other committee of
the Board filling the role of the Compensation Committee.
C.
The Parties acknowledge that this Agreement
is intended as an interim arrangement. The Parties intend to negotiate and enter
into a long-term agreement for Executive’s continuing employment to be effective
on or before January 1, 2010.
A
G R E E M E N T:
NOW, THEREFORE, in consideration of the
covenants contained herein, the above recitals and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
ARTICLE
I
DUTIES
1.01 Duties. The
Company hereby employs the Executive, and the Executive hereby accepts
employment, as the Company's Executive Vice President Sales & Marketing upon
the terms and conditions contained herein. The Executive will exercise the
authority and assume the responsibilities: (i) specified in the Company's
Bylaws; (ii) of an Executive Vice President of a corporation of the size and
nature of the Company; and (iii) prescribed by the Board from time to time, with
the current description set forth in Exhibit A, attached hereto and by reference
made a part hereof. During the Contract Term of this Agreement, the Board shall
continue to nominate Executive for re-election to the Board of Directors of the
Company. The Board shall use its reasonable best efforts to cause the
Executive to remain as a Director during the entire Contract Term as defined
under Article II. Executive shall not receive compensation for his service as a
director except as provided by this Agreement.
1.02 Other
Business. During the Contract Term, and excluding any periods
of vacation, sick leave or disability to which the Executive is entitled, the
Executive agrees to devote his full attention and time to the business and
affairs of the Company and, to the extent necessary to discharge the duties
assigned to him hereunder, to use his best efforts to perform faithfully and
efficiently such duties. Notwithstanding the foregoing, but subject to (i) the
advance approval of the Board of Directors, and (ii) the provisions of Article
VI hereof, the Executive shall be entitled to serve on the board of directors of
up to two (2) public companies other than the Company and a reasonable
number of privately held companies including companies operated or controlled by
the Executive or a relative or family member of the Executive.
ARTICLE
II
TERM OF
AGREEMENT
The initial term of this Agreement
shall commence on the Effective Date and shall terminate at 11:59 p.m. Mountain
Standard Time on December 31, 2009 (the "Initial Contract
Term") unless sooner terminated hereunder. Thereafter, the
term of this Agreement shall be automatically renewed for successive one-year
terms (each a “Renewal
Contract Term”) without action by either party; provided, however, that
either party may terminate its obligations hereunder at the end of any Renewal
Contract Term by giving the other party written notice of termination at least
60 days and no more than 180 days before the end of said Renewal Contract
Term. The Initial Contract Term and any Renewal Contract Terms are
hereinafter collectively referred to as the “Contract
Term.”
ARTICLE
III
COMPENSATION
During the Contract Term, the Company
shall pay, or cause to be paid to the Executive in cash in accordance with the
normal payroll practices of the Company for senior executive officers (including
deductions, withholdings and collections as required by law), the
following:
3.01 Annual Base
Salary. At the Effective Date, Executive’s annual base salary
("Annual Base
Salary") is equal to One Hundred and Fifty-two Thousand Dollars
($152,000). During the Contract Term, the Compensation Committee will
set Executive’s salary in the Compensation Committee’s sole
discretion. Notwithstanding the foregoing, in the event of a Change
of Control (as defined in Article V, below), Executive’s Annual Base Salary
shall be increased annually on July 1 of each remaining year in the Contract
Term at an amount equal to the greater of five percent (5%) of the Annual Base
Salary in the preceding year or an amount determined by the Compensation
Committee.
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3.02 Quarterly Bonus. A
cash bonus (the “Quarterly Bonus”)
shall be paid quarterly to Executive in an amount determined by the Compensation
Committee based on and from the Pre-Tax Operating Profits of the
Company. For purposes of this Agreement, “Pre-Tax Operating
Profits” shall mean the income of the Company before taxes and shall
exclude extraordinary items such as the gain on the sale of assets or the
recognition of gains or losses not associated with operations. For purposes of
this Agreement, the Compensation Committee shall have sole discretion in
determining whether an amount in question shall be included in calculating
operating profit. Notwithstanding anything set forth above, the
Compensation Committee may make adjustments in its absolute discretion to the
structure of the Quarterly Bonus program from time to time and such adjustments
shall be binding upon Executive. The Committee and Executive may
mutually agree to suspend or delay payments of the Quarterly Bonus from time to
time if they deem it to be in the best interests of the Company to do
so. At the Effective Date, the Quarterly Bonus payable to Executive
shall be an amount equal to four percent (4%) of Pre-Tax Operating
Profits. Bonuses under this Section 3.02 shall be calculated and paid
to Executive within 45 days from the end of each fiscal quarter except for the
quarter ending June 30, for which any accrued bonus shall be paid within 60
days. Notwithstanding the foregoing, in the event of a Change in
Control (as defined in Article V, below), the Quarterly Bonus will be an amount
equal to four percent (or such greater amount as the Compensation Committee may
determine) of the Company’s Pre-Tax Operating Profits, prior to payment of any
other bonuses based on Pre-Tax Operating Profits.
ARTICLE
IV
OTHER
BENEFITS
4.01 Incentive Savings and
Retirement Plans. The Executive shall be entitled to participate, during
the Contract Term, in all incentive (including annual and long-term incentive)
savings and retirement plans, practices, policies and programs generally
available to other senior executives of the Company.
4.02 Welfare Benefits.
Immediately upon the Effective Date and throughout the Contract Term, the
Executive and/or the Executive's family, as the case may be, shall be entitled
to participate in, and shall receive all benefits under, all welfare benefit
plans, practices, policies and programs generally provided by the Company
(including without limitation, medical, prescription, dental, disability,
employee life, group life, dependent life, accidental death and travel accident
insurance plans and programs) at a level that is equal to other senior
executives of the Company.
4.03 Fringe
Benefits. Immediately upon the Effective Date and throughout
the Contract Term, the Executive shall be entitled to participate in all fringe
benefit programs generally provided by the Company to its senior
executives. As of the Effective Date, those fringe benefits include
(i) use of a luxury class Company vehicle or a corresponding automobile
allowance, including the payment of gas, oil, maintenance and insurance in
connection with such vehicle or allowance, as the case may be, (ii) life
insurance benefit with a minimum face value of $100,000, with premiums paid by
the Company, (iii) additional disability insurance benefits paid by the Company
at levels not less than currently provided by group and individual policies in
effect as of the Effective Date, and (iv) a term life insurance policy in the
face amount of $750,000 with Executive as owner of the policy and beneficiaries
as designated by Executive. Executive acknowledges that the payment
of benefits under this Section 4.03 may be subject in part or full to
withholding and payment of income and other taxes for which Executive shall be
responsible.
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4.04 Expenses. During
the Contract Term, the Executive shall be entitled to receive prompt
reimbursement for all reasonable employment-related expenses which are incurred
by the Executive. The Executive shall be reimbursed upon the
Company's receipt of accountings in accordance with practices, policies and
procedures applicable to senior executives of the Company.
4.05 Office and Support
Staff. During the Contract Term, the Executive shall be
entitled to an office, furnishings, and other appointments, commensurate with
the position occupied by Executive, all of which shall be adequate for the
performance of the Executive's duties. Executive may hire staff to
assist Executive in his duties.
4.06 Vacation. The
Executive shall be entitled to up to five (5) weeks paid vacation per calendar
year commencing with the Effective Date. Such paid vacation days shall accrue
without cancellation, expiration or forfeiture, subject however to the policy of
the Company that no vacation days may be carried over from any prior
year.
4.07 Stock
Options. Executive holds fully-vested options (the “Options”)
to purchase 25,000 shares of the Company's common stock par value $.001 per
share (the “Common Stock”) at $1.42 per share with an expiration date of
November 22, 2015 and 40,000 shares of Common Stock at $1.72 per share with an
expiration date of May 24, 2015. Subject to (i) the terms of the Company’s 1992
Amended and Restated Stock Option Plan, (ii) the terms of the Company’s 2005
Equity Incentive Plan or any successor plan thereto (the “Stock Plans”) and
(ii) Section 422 of the
Internal Revenue Code of 1986, as amended (the “Code”), the Options shall
be deemed qualified Incentive Stock Options under Section 422 of the
Code.
ARTICLE
V
CHANGE OF
CONTROL
5.01 Definitions. The following
terms shall have the meaning set forth below:
(a) The
term “Company
Acquisition” shall mean an acquisition of another corporation, limited
liability company, limited partnership, partnership or similar entity by the
Company by any means, including, without limitation, by means of a merger,
acquisition of assets or acquisition of ownership interests.
(b) The
term "Continuing
Directors" shall mean those members of the Board at any relevant time (i)
who were directors on the Effective Date or (ii) who subsequently were approved
for nomination, election or appointment to the Board by at least two-thirds of
the Continuing Directors on the Board at the time of such approval (the
directors described in subsection (ii) are referred to herein as the "Approved
Directors"). “Approved Directors” shall not include those
appointed to the Board as a term of a negotiated merger or acquisition or
similar Change in Control transaction.
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(c) The
term “Change in
Control” shall mean a change in control of beneficial ownership of the
Company's voting securities of a nature that would be required to be reported
pursuant to Item 6(e) of Schedule 14A of Regulation 14A under the Securities
Exchange Act of 1934, as amended (the "Exchange Act") or any
similar item on a successor or revised form; provided, however, that a Change in
Control shall be deemed to have occurred when:
(i) Any
"person" (as such term is used in Sections 13(d) and 14(d) of the Exchange Act)
is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities representing fifty percent
(50%) or more of the combined voting power of the Company's then outstanding
voting securities; or
(ii) During
any period of three (3) consecutive years, the individuals who at the beginning
of such period constituted the Board, together with any Approved Directors
elected during such period, cease for any reason to constitute at least a
majority of the Board; or
(iii) The
shareholders of the Company approve an agreement for the sale or disposition by
the Company of all or substantially all of the Company’s assets.
(d) The
term "Good
Reason,” in connection with the termination by the Executive of his
employment with the Company subsequent to a Change in Control or Company
Acquisition, shall mean:
(i) A
diminution in the responsibilities, title or office of the Executive such that
he does not serve as Executive Vice President of the Company (which diminution
was not for Cause (as defined below) or the result of the Executive's
disability), or the assignment (without the Executive's express written consent)
by the Company to the Executive of any significant duties that are inconsistent
with the Executive's position, duties, responsibilities and status as Executive
Vice President of the Company;
(ii) The
Company's transfer or assignment of the Executive, without the Executive's prior
express written consent, to any location other than the Company's principal
place of business in Salt Lake County, Utah, except for required travel on
Company business to an extent that does not constitute a substantial abrupt
departure from the Executive's normal business travel obligations;
(iii) The
failure by the Company to continue in effect any material benefit or
compensation plan, life insurance plan, health and medical benefit plan,
disability plan or any other benefit plan in which the Executive is a
participant, or the taking of any action by the Company that would adversely
affect the Executive's right to participate in, or materially reduce the
Executive's benefits under, any of such plans or benefits, or deprive the
Executive of any material fringe benefit enjoyed by the Executive (except where
such failure to continue in effect or taking of such action affects
all senior executives of the Company who participate in the applicable plan or
receive the applicable benefits); or
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(iv) The
removal of the Executive from the Board of Directors or the failure of the Board
to nominate him for re-election as a director of the Company (except if such
decision not to serve was made voluntarily by the Executive) at any time from
his initial election to the Board through the end of the Contract
Term.
(e) The
terms "Parachute
Payments" and "Excess Parachute
Payments" shall each have the meanings attributed to them under Section
280G of the Internal Revenue Code, or any successor section, and any regulations
which may be promulgated in connection with said section.
5.02 Bonus
Payment. In the event of a Change in Control, Executive shall
be paid within thirty (30) days of the closing of such event a bonus of $200,000
for his efforts in facilitating the Change in Control. In the event
of a sale of a substantial portion of the business that does not result in a
Change in Control, Executive shall be paid a bonus of $100,000. If a
Change in Control is effected within six months of termination of Executive
without Cause as provided in paragraph 7.03, Executive will be entitled to this
bonus payment within thirty (30) days of the closing of such Change in Control
transaction.
5.03 Severance
Payments. During the Contract Term, if (a) within six (6)
months after a Change in Control occurs the Executive voluntarily terminates his
employment with the Company or (b) within twelve (12) months after a Change in
Control or a Company Acquisition occurs, the Executive's employment is
terminated either (1) by the Company for any reason other than (A) for Cause (as
defined below), (B) as a result of the Executive's death or disability, or (C)
as a result of the Executive's retirement in accordance with the Company's
general retirement policies, or (2) by the Executive for Good Reason,
then:
(i) the
Executive shall be paid an amount in cash equal to (x) one and one-half times
(1.5x) the Annual Base Salary in effect at the time of such termination and (y)
one and one-half times (1.5x) the average Quarterly Bonus paid annually the
Company to Executive over the previous three (3) complete fiscal years; 50% of
such amount to be paid within thirty (30) days after such termination and the
balance to be paid ratably over the subsequent six (6) months.
(ii) The
Company shall maintain in full force and effect for eighteen (18) months after
termination, all employee health and medical benefit plans and programs
including, without limitation, the Executive’s 401(k) Plan, in which the
Executive, his family, or both, were participants immediately prior to
termination; provided that such continued participation is possible under the
general terms and provisions of such plans and programs; provided, however, that
if the Executive becomes eligible to participate in a health and medical benefit
plan or program of another employer which confers substantially similar
benefits, the Executive shall cease to receive benefits under this subparagraph
in respect of such plan or program;
(iii) all
of the Options and other stock options, warrants and other similar rights
granted by the Company to the Executive, if any, shall immediately and entirely
vest and shall be immediately delivered to the Executive without restriction or
limitation of any kind (except for normal transfer
restrictions);
6
(iv) the
Company shall transfer to the Executive title, free and clear of all
encumbrances, to either (i) the Company-owned vehicle used by the Executive at
the time the Executive’s employment with the Company terminates (the “Company Vehicle”), or
(ii) a vehicle of substantially similar market value as the market value of
the Company Vehicle at the time Executive’s employment with the Company
terminates.
Any
obligation owed or amount payable pursuant to this Section 5.03 together with
any compensation pursuant to Article III that is payable for services rendered
through the effective date of termination, shall constitute the sole obligation
of the Company payable with respect to the termination of the
Executive. Notwithstanding any other provision of this Agreement, all
payments required to be made under this Section 5.03 shall be made no later than
2 ½ months after the end of the Company’s or the Executive’s tax year (whichever
is earlier) following the date of termination of Executive.
5.04 Parachute Payment
Limitation. Notwithstanding any other provision of this
Agreement, if the severance payments under Section 5.03 of this Agreement,
together with any other Parachute Payments made by the Company to the Executive,
if any, are characterized as Excess Parachute Payments, then the following rules
shall apply:
(a) The
Company shall compute the net value to the Executive of all such severance
payments after reduction for the excise taxes imposed by Section 4999, of the
Code and for any normal income taxes that would be imposed on the Executive if
such severance payments constituted the Executive's sole taxable
income;
(b) The
Company shall next compute the maximum amount of severance payments that can be
provided without any such payments being characterized as Excess Parachute
Payments, and reduce the result by the amount of any normal income taxes that
would be imposed on the Executive if such reduced severance benefits constituted
the Executive's sole taxable income;
(c) If
the amount derived in Section 5.04(a) is greater than the amount derived in
Section 5.04(b), then the Company shall pay the Executive the full amount of
severance payments without reduction. If the amount derived in Section 5.04(a)
is not greater than the amount derived in Section 5.04(b), then the Company
shall pay the Executive the maximum amount of severance payments that can be
provided without any such payments being characterized as Excess Parachute
Payments.
5.05 No Mitigation. The
Executive shall not be required to mitigate the amount of any payment provided
for in Section 5.03 by seeking other employment or otherwise, nor shall the
amount of any payment provided for in Section 5.03 be reduced by any
compensation earned by the Executive as a result of employment by another
company, self-employment or otherwise.
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ARTICLE
VI
RESTRICTIVE
COVENANTS
6.01 Trade Secrets. Confidential
and Proprietary Business Information.
(a) The
Company has advised the Executive and the Executive has acknowledged that it is
the policy of the Company to maintain as secret and confidential all Protected
Information (as defined below), and that Protected Information has been and will
be developed at substantial cost and effort to the Company. "Protected
Information" means trade secrets, confidential and proprietary business
information of the Company, any information of the Company other than
information which has entered the public domain (unless such information entered
the public domain through effects of or on account of the Executive), and all
valuable and unique information and techniques acquired, developed or used by
the Company relating to its business, operations, employees, customers and
suppliers, which give the Company a competitive advantage over those who do not
know the information and techniques and which are protected by the Company from
unauthorized disclosure, including but not limited to, customer lists (including
potential customers), sources of supply, processes, plans, materials, pricing
information, internal memoranda, marketing plans, internal policies, and
products and services which may be developed from time to time by the Company
and its agent or employees.
(b) The
Executive acknowledges that the Executive will acquire Protected Information
with respect to the Company and its successors in interest, which information is
a valuable, special and unique asset of the Company's business and operations
and that disclosure of such Protected Information would cause irreparable damage
to the Company.
(c) During
the Contract Term and for a period of two (2) years following termination of
employment by the Company, the Executive shall not, directly or indirectly,
divulge, furnish or make accessible to any person, firm, corporation,
association or other entity (otherwise than as may be required in the regular
course of the Executive's employment) nor use in any manner, any Protected
Information, or cause any such information of the Company to enter the public
domain.
6.02 Non-Competition
(a) The
Executive agrees that the Executive shall not during the Executive's employment
with the Company, and, for a period of two (2) years after the termination of
his employment, directly or indirectly, in any capacity, engage or participate
in, or become employed by or render advisory or consulting or other services in
connection with any Prohibited Business as defined in Section
6.02(c).
(b) The
Executive agrees that he shall not during his employment with the Company, and,
for a period of two (2) years after the termination of his employment, make any
financial investment, whether in the form of equity or debt, or own any
interest, directly or indirectly, in any Prohibited Business. Nothing in this
Section 6.02(b) shall, however, restrict the Executive from making any
investment in any company whose stock is listed on a national securities
exchange; provided that (i) such investment does not give the Executive the
right or ability to control or influence the policy decisions of any Prohibited
Business, and (ii) such investment does not create a conflict of interest
between the Executive's duties hereunder and the Executive's interest in such
investment.
8
(c) For
purposes of this Section 6.02, "Prohibited Business"
shall be defined as any business and any branch, office or operation thereof,
which is a competitor of the Company or which has established or seeks to
establish contact, in whatever form (including, but not limited to solicitation
of sales, or the receipt or submission of bids), with any entity who is at any
time a client, customer or supplier of the Company (including but not limited to
all subdivisions of the federal government.)
6.03 Non-Solicitation. From
the date hereof until two (2) years after the Executive's termination of
employment with the Company, the Executive shall not, directly or indirectly (a)
encourage any employee, distributor or supplier of the Company or its successors
in interest to leave his or her employment or association with the Company or
its successors in interest, (b) employ, hire, solicit or cause to be employed,
hired or solicited (other than by the Company or its successors in interest), or
encourage others to employ or hire any person who within two (2) years prior
thereto was employed by the Company or its successors in interest, or (c)
establish a business with, or encourage others to establish a business with, any
person who within two (2) years prior thereto was an employee, distributor or
supplier of the Company or its successors in interest.
6.04 Survival of Undertakings and
Injunctive Relief.
(a) The
provisions of Sections 6.01, 6.02 and 6.03 shall survive the termination of the
Executive's employment with the Company regardless of the reasons
therefor.
(b) The
Executive acknowledges and agrees that the restrictions imposed upon the
Executive by Sections 6.01, 6.02 and 6.03 and the purpose of such restrictions
are reasonable and are designed to protect the Protected Information and the
continued success of the Company without unduly restricting the Executive's
future employment by others. Furthermore, the Executive acknowledges that, in
view of the Protected Information which the Executive has or will acquire or has
or will have access to and in view of the necessity of the restrictions
contained in Sections 6.01, 6.02 and 6.03, any violation of any provision of
Sections 6.01, 6.02 and 6.03 hereof would cause irreparable injury to the
Company and its successors in interest with respect to the resulting disruption
in their operations. By reason of the foregoing the Executive consents and
agrees that if the Executive violates any of the provisions of Sections 6.01,
6.02 or 6.03 of this Agreement, the Company and its successors in interest as
the case may be, shall be entitled, in addition to any other remedies that they
may have, including money damages, to an injunction to be issued by a court of
competent jurisdiction, restraining the Executive from committing or continuing
any violation of such Sections of this Agreement.
In the event of any such violation of
Sections 6.01, 6.02 or 6.03 of this Agreement, the Executive further agrees that
the time periods set forth in such Sections shall be extended by the period of
such violation.
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ARTICLE
VII
TERMINATION
7.01 Termination of
Employment. The Executive's employment may be terminated (i) at any time
during the Contract Term by mutual agreement of the parties, (ii) at the end of
any Renewal Contract Term if written notice of non-renewal is given by either
party to the other at least sixty (60) and not more than one hundred and eighty
(180) days prior to the end of said Renewal Contract Term or (iii) as otherwise
provided in this Article.
7.02 Termination for
Cause. The Company may terminate the Executive's employment for Cause by
giving the Executive seven (7) days prior written notice of such
termination. For purposes of this Agreement, "Cause" for
termination shall mean
(i) the
willful failure or refusal to carry out the reasonable directions of the Board,
which directions are consistent with the Executive's duties as set forth under
this Agreement but which directions the Executive has failed to follow or
implement within thirty (30) days after written notice of such failure, other
than a failure resulting from the Executive's complete or partial incapacity due
to physical or mental illness or impairment;
(ii) a
conviction for a violation of a state or federal criminal law involving the
commission of a felony;
(iii) a
willful act by the Executive that constitutes gross negligence in the
performance of the Executive's duties under this Agreement and which materially
injures the Company. No act, or failure to act, by the Executive shall be
considered "willful" unless committed without good faith and without a
reasonable belief that the act or omission was in the Company's best
interest;
(iv) a
material breach by the Executive of the terms of this Agreement, which breach
has not been cured by the Executive within fifteen (15) days of written notice
of said breach by the Company;
(v) repeated
unethical business practices by the Executive in connection with the Company’s
business, which unethical business practices continue after fifteen (15) days
after written notice thereof by the Company;
(vi) habitual
use of alcohol or drugs by the Executive; or
(vii) violation
of the Company’s Code of Ethics or similar code of business conduct adopted by
the Company for its executive officers.
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Upon
termination for Cause, the Executive shall not be entitled to payment of any
compensation other than salary and benefits under this Agreement earned up to
the date of such termination and any stock options, warrants or similar rights
which have vested at the date of such termination.
7.03 Termination Without
Cause. Should the Executive's employment be terminated for a
reason other than as specifically set forth in Sections 7.01 and 7.02 or Article
V above the Company shall pay and/or provide to the Executive each of the
benefits and payments provided in Sections 5.02 and 5.03
(i)-(iv).
ARTICLE
VIII
MISCELLANEOUS
8.1 Assignment,
Successors. This Agreement may not be assigned by either party
hereto without the prior written consent of the other party. This Agreement
shall be binding upon and inure to the benefit of the Executive and the
Executive's estate and the Company and any assignee of or successor to the
Company.
8.2 Nonalienation of
Benefits. Benefits payable under this Agreement shall not be
subject in any manner to anticipation, alienation, sale, transfer, assignment,
pledge, encumbrance, charge, garnishment, execution or levy of any kind, either
voluntary or involuntary, prior to actually being received by the Executive, and
any such attempt to dispose of any right to benefits payable hereunder shall be
void.
8.3 Severability. If
all or any part of this Agreement is declared by any court or governmental
authority to be unlawful or invalid, such unlawfulness or invalidity shall not
serve to invalidate any portion of this Agreement not declared to be unlawful or
invalid. Any paragraph or part of a paragraph so declared to be unlawful or
invalid shall, if possible, be construed in a manner which will give effect to
the terms of such paragraph or part of a paragraph to the fullest extent
possible while remaining lawful and valid.
8.4 Amendment and
Waiver. This Agreement shall not be altered, amended or
modified except by written instrument executed by the Company and the Executive.
A waiver of any term, covenant, agreement or condition contained in this
Agreement shall not be deemed a waiver of any other term, covenant, agreement or
condition and any waiver of any other term, covenant, agreement or condition,
and any waiver of any default in any such term, covenant, agreement or condition
shall not be deemed a waiver of any later default thereof or of any other term,
covenant, agreement or condition.
8.5 Notices. All
notices and other communications hereunder shall be in writing and delivered by
hand or by first class registered or certified mail, return receipt requested,
postage prepaid, addressed as follows:
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|
If
to the Company:
|
DYNATRONICS
CORPORATION
|
|
0000
Xxxx Xxxxxx Xxxxx
|
|
|
Xxxx
Xxxx Xxxx, Xxxx 00000
|
|
|
With
a copy
|
DURHAM
XXXXX & XXXXXXX
|
|
(which
shall not
|
Attn:
Xxxxx X. Xxxxxxx, Esq.
|
|
constitute
notice) to:
|
000
Xxxx Xxxxxxxx, Xxxxx 000
|
|
Xxxx
Xxxx Xxxx, Xxxx 00000
|
|
|
If
to the Executive:
|
Xxxxx
X. Xxxxxxxx
|
|
0000
Xxxxxxxxxxx Xxx
|
|
|
Xxxxx,
XX 00000
|
Either
party may from time to time designate a new address by notice given in
accordance with this Section.
8.6 Counterpart
Originals. This Agreement may be executed in counterparts,
each of which shall be deemed to be an original but all of which together will
constitute one and the same instrument.
8.7 Entire
Agreement. This Agreement forms the entire agreement between
the parties hereto with respect to any severance payment and with respect to the
subject matter contained in the Agreement.
8.8 Applicable Law. The
provisions of this Agreement shall be interpreted and construed in accordance
with the laws of the state of Utah, without regard to its choice of law
principles.
8.9 Effect on Other
Agreements. This Agreement shall supersede entirely all prior
agreements (including, without limitation, any existing employment agreement),
promises and representations regarding employment by the Company and severance
or other payments contingent upon termination of employment not referenced by
this agreement. Notwithstanding the foregoing, the Executive shall be
entitled to any other severance plan applicable to other senior executives of
the Company.
8.10 Extension or
Renegotiation. The parties hereto agree that at any time prior
to the expiration of this Agreement, they may extend or renegotiate this
Agreement upon mutually agreeable terms and conditions.
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8.11 Compliance with Section
409A. Company and the Executive intend that their exercise of
authority or discretion under this Agreement shall comply with Section 409A. If
when the Executive's employment terminates the Executive is a specified
employee, as defined in Section 409A, and if any payments under this Agreement
will result in additional tax or interest to the Executive because of section
409A, then despite any provision of this Agreement to the contrary the Executive
shall not be entitled to the payments until the earliest of (x) the date that is
at least six months after termination of the Executive's employment for reasons
other than the Executive's death, (y) the date of the Executive's death, or (z)
any earlier date that does not result in additional tax or interest to the
Executive under Section 409A. As promptly as possible after the end of the
period during which payments are delayed under this provision, the entire amount
of the delayed payments shall be paid to the Executive in a single lump sum. If
any provision of this Agreement does not satisfy the requirements of Section
409A, the provision shall nevertheless be applied in a manner that is consistent
with those requirements. If any provision of this Agreement would subject the
Executive to additional tax or interest under Section 409A, Company shall reform
the provision. However, Company shall maintain to the maximum extent practicable
the original intent of the applicable provision without subjecting the Executive
to additional tax or interest, and Company shall not be required to incur any
additional compensation expense as a result of the reformed provision.
References in this Agreement to Section 409A include rules, regulations, and
guidance of general application issued by the Department of the Treasury under
Internal Revenue Code Section 409A.
[Signatures
appear on the following page.]
13
IN
WITNESS WHEREOF the parties have executed this Agreement on the date first
written above.
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DYNATRONICS
CORPORATION,
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a
Utah corporation
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By: /s/ Xxxxxx X. Xxxxxxxxx,
Xx.
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Name: Xxxxxx X. Xxxxxxxxx,
Xx.
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Title: President and
CEO
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XXXXX
X. XXXXXXXX,
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an
individual
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/s/ Xxxxx X.
Xxxxxxxx
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Xxxxx
X. Xxxxxxxx
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EXHIBIT
A
Responsibilities
and Authority of Executive Vice President Sales & Marketing
Responsibilities:
Second in command of the
Company
Assumes responsibility of President/CEO
in the latter’s absence
Manages and directs all Sales and
Marketing functions
Hiring of personnel for his
department
Develops Sales and Marketing
strategies
Develops product definition for all
manufactured products
Drives for improvement of existing
products
Establishes Customer Service Policies
and Procedures
Evaluates products for
distribution
Management Team Member
Member Board of Directors
Authority:
Acts in full stead of President/CEO in
the latter’s absence
Fully
empowered to decide and implement Marketing and Sales strategies including
retaining and dismissing the services of dealers and sales
representatives
Establishment of incentive programs
within allowed budgets
Hires
needed personnel to meet the Marketing and Sales business plan (compensation
packages require advance approval of the President/CEO)
Approves
expenditures for sales travel, trade shows, advertising and other budget
categories within his purview (as approved by the Board)
Latitude to discount sales as
appropriate
May grant exceptions to Company
policies for employees under his management
Signs
Purchase Orders for equipment, supplies, and services for his department: </=
$5,000 (Higher amounts require approval of President/CEO)
Approves selling price of all
Dynatronics for-sale product
Approves non-manufactured products for
distribution
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