================================================================================
Exhibit 10.4
------------
EMPLOYMENT AGREEMENT
--------------------
THIS EMPLOYMENT AGREEMENT (this "Agreement") executed and effective the
1st day of July, 2010 (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 ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, a resident of Ohio
("Employee").
RECITALS
A. The Company desires to retain the services of Employee, and Employee
desires to render such services, upon the terms and conditions contained herein.
B. The Board of Directors of the Company (the "Board"), by appropriate
resolutions, authorized the employment of Employee as provided for in this
Agreement.
AGREEMENT
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 Employee, and Employee hereby
accepts employment, as Nutritional Products Manager, upon the terms and
conditions contained herein. As Nutritional Products Manager, Employee shall
have broad responsibility to promote the sale of nutritional products carried by
the company, identify the best vendors from whom to purchase the products and
approve the best formulations for the Company to offer. Employee shall also be
responsible for advising Company regarding compliance and governmental
regulations for the sale of nutritional supplements to the best of Employee's
ability. Employee shall work with Company's regulatory legal counsel in regards
to these issues.
1.02 Other Duties. During the Contract Term, Employee agrees to be a
resource in assisting sales representatives in Region 5 (Ohio and Pennsylvania),
monitoring business activities at the Company's operations in Girard, OH, and
generally providing marketing assistance to the Company as requested. At the
request of Employee, the parties will mutually agree to a more specific
definition of such duties including a limit to the number of meetings outside of
Ohio the Employee may be required to attend.
1.03 Place of Operations and Time Commitment. Employee may perform his
duties from any location provided that he sufficiently monitors business
operations at the Company's Girard, OH, facility as mutually agreed with
Company. Employee will devote the time necessary to adequately perform the
duties described in this Agreement.
1
ARTICLE II
TERM OF AGREEMENT
The term of this Agreement shall commence on the Effective Date and shall
remain in effect for a period of three (3) years (the "Contract Term") unless
sooner terminated hereunder. Upon mutual agreement of the parties, this
Agreement may be renewed for two additional one year extensions upon 30 days
notice prior to the termination of the Agreement.
ARTICLE III
COMPENSATION
During the Contract Term, the Company shall pay, or cause to be paid to
Employee in cash in accordance with the normal payroll practices of the Company
(including deductions, withholdings and collections as required by law), the
following:
3.01 Annual Base Salary. Employee's annual base salary ("Annual Base
Salary") will be Eighteen Thousand Dollars ($18,000.00) as of the Effective
Date.
3.02 Bonus. Employee will be paid a bonus of 5% of gross sales of
non-Nutura brand nutritional supplement sales that exceed $45,000 per quarter.
No bonus will be paid on the first $45,000 of sales each fiscal quarter.
In the event Employee's employment is terminated for any reason, for the
quarter in which such termination occurs, Employee shall be paid a pro rated
portion of the bonus compensation provided for herein through the date of
termination.
ARTICLE IV
OTHER BENEFITS
4.01 Employee Benefits. During the Contract Term:
(a) Employee shall be entitled to participate in the Company's
401(k) program, including the Company's annual matching contribution (currently
up to $500),
(b) Employee shall be entitled to receive health and dental
insurance as it is provided to all employees of Region 5 except that Employee
will be exempt from any employee requirement to share in the cost of the
premiums. This coverage shall extend to Employee, Employee's spouse and any
eligible dependents. If at any time insurance benefits are terminated for
employees of Region 5, Employee's health insurance benefits will be replaced
with alternative coverage approximately equivalent in benefits and cost.
2
(c) Employee shall be eligible for any other employee benefit
program that is generally offered to all employees of the Company except that
any stock options must be specifically approved by the Company's Board of
Directors.
4.02 Expense Reimbursement.
(a) Employee shall receive a monthly expense allowance of
five-hundred dollars ($500) beginning with the Effective Date of this Agreement.
Eligible expenses for reimbursement shall include (i) receipted expenditures for
vehicle operation, including fuel, maintenance and repairs, monthly vehicle
payments, licensing, taxes and insurance, (ii) cellular phone usage, (iii) home
computer use, (iv) work related local entertainment and local travel expenses
within assigned Territory, and (v) any other job related expenses approved by
the Company.
(b) In addition to the expense reimbursement provided in Section
4.02(a), Employee shall be entitled to receive prompt reimbursement for all
reasonable, non-local employment-related expenses incurred by Employee,
including regional or overnight travel, attending trade shows, meetings at the
Company's headquarters, attending continuing education seminars related to
nutrition, and other non-local business-related travel requested by the Company.
Employee shall be reimbursed upon the Company's receipt of documentation in
accordance with practices, policies and procedures of the Company.
(c) Employee shall have the right to arrange for, schedule and book
all business related travel and to charge same to his personal credit card, to
be reimbursed to him pursuant to 4.02(b) above.
4.03 Nutrition Products. Employee shall be entitled to purchase Nutura
nutrition products for his personal use and the personal use of his immediate
family members, from Company at Company's cost.
ARTICLE V
RESTRICTIVE COVENANTS
5.01 Trade Secrets; Confidential and Proprietary Business Information.
(a) The Company has advised Employee and Employee 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 Employee), 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.
3
(b) Employee acknowledges that Employee 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) Either during or for a period of two (2) years following
termination of employment by the Company, Employee 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 Employee's employment) nor use in any manner, any
Protected Information, or cause any such information of the Company to enter the
public domain.
5.02 Non-Competition
(a) Employee agrees that Employee shall not during Employee's
employment with the Company, and, for a period of two (2) years after the
termination of this Agreement, 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
5.02(c).
(b) Employee agrees that Employee shall not during Employee's
employment with the Company, and, for a period of two (2) years after the
termination of this Agreement, 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 5.02(b) shall, however, restrict
Employee from making any investment in any company whose stock is listed on a
national securities exchange; provided that (i) such investment does not give
Employee 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 Employee's duties hereunder and Employee's interest in such
investment.
(c) For purposes of this Section 5.02, "Prohibited Business" shall
be defined as any business and any branch, office or operation thereof, which is
a competitor of the Company and 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.)
4
5.03 Non-Solicitation. From the date hereof until two (2) years after
Employee's termination of employment with the Company, Employee, and any person
or entity directly or indirectly controlling, controlled by or under common
control with Employee, shall not, directly or indirectly (a) encourage any
employee, supplier, or customer of the Company, its affiliates, or its
successors in interest to leave his or her employment with the Company, its
affiliates, or its successors in interest, (b) employ, hire, solicit or cause to
be employed, hired or solicited (other than by the Company, its affiliates, or
its successors in interest), or encourage others to employ or hire any person
who within one (1) year prior thereto was employed by the Company, its
affiliates, or its successors in interest, or (c) establish a business with, or
encourage others to establish a business with, any person who within one (1)
year prior thereto was an employee, supplier, or customer of the Company, its
affiliates, or its successors in interest.
5.04 Survival of Undertakings and Injunctive Relief.
(a) The provisions of Sections 5.01, 5.02 and 5.03 shall survive the
termination of Employee's employment with the Company irrespective of the
reasons therefor.
(b) Employee acknowledges and agrees that the restrictions imposed
upon Employee by Sections 5.01, 5.02 and 5.03 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
Employee's future employment by others. Furthermore, Employee acknowledges that,
in view of the Protected Information which Employee has or will acquire or has
or will have access to and in view of the necessity of the restrictions
contained in Sections 5.01, 5.02 and 5.03, any violation of any provision of
Sections 5.01, 5.02 and 5.03 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, Employee consents and agrees
that if Employee violates any of the provisions of Sections 5.01, 5.02 or 5.03
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 Employee from committing or continuing any violation
of such Sections of this Agreement.
In the event of any such violation of Sections 5.01, 5.02 or 5.03 of this
Agreement, Employee further agrees that the time periods set forth in such
Sections shall be extended by the period of such violation.
ARTICLE VI
TERMINATION
6.01 Termination of Employment. Employee's employment may be terminated
(i) at any time during the Contract Term by mutual agreement of the parties, or
(ii) as otherwise provided in this Article.
5
6.02 Termination without Cause. The Company may terminate Employee's
employment without cause by giving Employee seven (7) days prior written notice
of such termination. In the event Employee's employment is terminated without
cause during the first one half (1/2) of Employee's Contract Term, Employee
shall be entitled to receive eighteen months of salary, payable within thirty
(30) days of the notice of termination which would include the average bonus
estimated for an 18 month period as mutually agreed and based on the prior
bonuses earned pursuant to this Agreement. Employee shall also be entitled to a
continuation of their Health Insurance benefits as provided for in the
Agreement. If COBRA or other laws prevent the Company from providing the Health
Insurance benefits as defined in this Agreement after termination without cause,
the Company shall pay to Employee an equivalent of the monthly health insurance
costs incurred by the Company in the month immediately prior multiplied times
the remaining months left under the Agreement. Other than the items of Salary
and Health Insurance described, no other benefits will be provided. In the event
Employee's employment is terminated without cause during the last one half (1/2)
of Employee's Contract Term, Employee shall be entitled to receive the balance
of Employee's Annual Base Salary, payable on the Company's standard payroll
days, the average bonus estimated to have been paid for the period as mutually
agreed and based on the prior bonuses earned pursuant to this Agreement, and all
health and dental insurance benefits that Employee, his spouse and child, would
have been entitled to receive, during the remainder of the Contract Term, which
benefits shall be provided at Company's expense. In the event Employee's
employment is terminated without cause hereunder, the restrictive covenants
contained in Sections 5.02 and 5.03 shall not apply.
6.03 Death or Disability. In the event Employee, during the Contract Term,
dies or becomes permanently disabled or incapacitated such that he is unable to
perform his duties under this Agreement, the Company shall pay Employee, in the
event of disability, or Employee's surviving spouse, if any, in the event of
death, but shall not otherwise pay Employee's estate, pursuant to Section 6.02
as if Employee had been terminated without cause.
6.04 Termination for Cause. The Company may terminate Employee's
employment for Cause by giving Employee 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, the Chief Executive Officer, or the President, which
directions are consistent with Employee's duties as set forth under this
Agreement and have been given to Employee in writing but which directions
Employee has failed to follow or implement within fifteen (15) days after said
written notice, other than a failure resulting from Employee's complete or
partial incapacity due to physical or mental illness or impairment;
(ii) failure to follow Company policy or specific instructions
from Employee's superior(s), which failures continue after fifteen (15) days
after written notice thereof by the Company; however, no warning shall be
required in the case of significant insubordination causing financial harm to
the Company or significant harm to the reputation of the Company;
6
(iii) a conviction for a violation of a state or federal
criminal law involving the commission of a felony;
(iv) a willful act by Employee that constitutes gross
negligence in the performance of Employee's duties under this Agreement and
which materially injures the Company. No act, or failure to act, by Employee
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;
(v) a material breach by Employee of the terms of this
Agreement, which breach has not been cured by Employee within fifteen (15) days
of written notice of said breach by the Company;
(vi) repeated unethical business practices by Employee in
connection with the Company's business, which unethical business practices
continue after fifteen (15) days after written notice thereof by the Company;
(vii) habitual abuse of alcohol or drugs by Employee;
(viii) intentional misuse of or damage to Company property;
(ix) theft or destruction of property, money or goods
belonging to the Company or its employees;
(x) falsification of Company records;
(xi) gambling while on Company property or while engaged in
Company activities; provided, however, that Employee may ▇▇▇▇▇▇ when not on
Company business or Company time, while attending trade shows for Company
located in a gambling venue (e.g. Las Vegas);
(xii) excessive absenteeism or failure to report to work
without proper excuse pursuant to the assigned duties as defined in this
Agreement; or
(xiii) violation of the Company's sexual harassment policies.
Upon termination for Cause, Employee 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. Notwithstanding any provision to the contrary in
any option or equity award agreement between the Company and Employee, in the
event Employee's employment shall terminate on account of Termination for Cause,
Employee shall forfeit and shall not be entitled to exercise any unexercised
options, warrants, or similar rights to equity of the Company, whether or not
vested or unvested, as of the date of termination. Notwithstanding the forgoing,
Employee shall not forfeit any rights relative to the shares of stock in Company
that Employee acquired as a result of the merger of the Therapy and Health Care
Products, Inc. and Dynatronics Distribution Company, LLC.
7
ARTICLE VII
MISCELLANEOUS
7.01 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 Employee and
Employee's estate and the Company and any assignee of or successor to the
Company.
7.02 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
Employee, and any such attempt to dispose of any right to benefits payable
hereunder shall be void.
7.03 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.
7.04 Amendment and Waiver. This Agreement shall not be altered, amended or
modified except by written instrument executed by the Company and Employee. 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.
7.05 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:
If to the Company: Dynatronics Corporation
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
8
With a copy to: DURHAM ▇▇▇▇▇ & ▇▇▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
If to Employee: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Either party may from time to time designate a new address by notice given in
accordance with this Section. Notice and communications shall be effective when
actually received by the addressee.
7.06 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.
7.07 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.
7.08 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.
7.10 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.
7.11 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. The parties acknowledge
that Employee is also the Landlord for the Company's operations in Girard, OH.
If at anytime, or for any reason, it becomes necessary for Company to leave the
demised premises, it will trigger an increase of compensation under paragraph
3.01 from $18,000 per year to $42,000 per year only for the duration of the
Agreement.
7.12 Attorneys' Fees. If any legal action or other proceeding is brought
for the enforcement of this Agreement, or because of an alleged dispute, breach,
default, or misrepresentation in connection with any of the provisions of this
Agreement, the successful or prevailing party shall be entitled to recover
reasonable attorneys' fees, and any other fees and costs incurred in the action
or proceeding, in addition to any other relief to which such party may be
entitled. Without limiting the generality of the foregoing, any reasonable costs
9
and expenses, including without limitation reasonable attorneys' fees, incurred
in enforcing any judgment or arbitration award shall be recoverable by the
prevailing party as a separate item of recovery, and this provision is intended
to be severable from the other provisions of this Agreement and shall survive
any judgment or arbitration award and shall not be deemed to be merged into the
judgment or award.
IN WITNESS WHEREOF the parties have executed this Employment Agreement on
the date first written above.
Dynatronics Corporation,
a Utah corporation
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇▇.
-------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇▇.
------------------------------
Title: President and CEO
-----------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇,
an individual
/s/ ▇▇▇▇ ▇▇▇▇▇▇
-----------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
10
--------------------------------------------------------------------------------