UNITED
STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_____________________________________
FORM 8-K
CURRENT REPORT
Pursuant
to Section 13 or 15(d)
of the
Securities Exchange Act of 1934
Date of
Report (Date of earliest event reported): July 7, 2020
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Dynatronics Corporation
(Exact
name of registrant as specified in its charter)
__________________________________________
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Utah
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0-12697
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87-0398434
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(State
or other jurisdiction of Incorporation)
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Commission
File Number
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(IRS
Employer Identification Number)
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1200 Trapp Rd, Eagan, Minnesota
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55121
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(Address
of principal executive offices)
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(Zip
Code)
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(801) 568-7000
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(Registrant’s
telephone number, including area code)
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Check
the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant
under any of the following provisions:
☐ Written
communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425)
☐ Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
☐ Pre-commencement communications
pursuant to Rule 14(d)-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
☐ Pre-commencement communications
pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
Securities
registered pursuant to Section 12(b) of the Act:
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Title of each class
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Trading Symbol(s)
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Name of each exchange on which registered
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Common
stock, no par value
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DYNT
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The
Nasdaq Capital Market
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Indicate
by check mark whether the registrant is an emerging growth company
as defined in Rule 405 of the Securities Act of 1933 (§230.405
of this chapter) or Rule 12b-2 of the Securities Exchange Act of
1934 (§240.12b-2 of this chapter).
Emerging
growth company ☐
If an
emerging growth company, indicate by check mark if the registrant
has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided
pursuant to Section 13(a)
of the Exchange Act. ☐
Item 5.02 Departure of Directors or Certain
Officers; Election of Directors; Appointment of Certain Officers;
Compensatory Arrangements of Certain Officers.
Resignation of Principal Executive Officer
On July
7, 2020, Brian Baker, citing the need for a reduced work schedule
to allow more flexibility to address health issues relating to the
COVID-19 virus, has stepped down as Chief Executive Officer of
Dynatronics Corporation (“Dynatronics” or
“Company”), effective
immediately. Mr. Baker will continue to serve as a member of the
Company’s board of directors (the “Board”) and subject to
the conditions and provisions of the Company’s equity
incentive plans, equity awards held by Mr. Baker will continue to
vest and be exercisable according to their respective terms. In
connection with Mr. Baker’s resignation, the Company and Mr.
Baker entered into a Separation and Pay Continuation Agreement
(“Separation
Agreement”). The Separation Agreement provides that
through October 7, 2020 (the “Separation Date”), Mr.
Baker will receive the same compensation and benefits, including
continued vesting of outstanding equity awards, as under his
existing employment agreement, effective August 19, 2019. The
Separation Agreement includes a general release of claims and
waivers customary in such agreements. Mr. Baker’s departure
is not the result of any disagreement with the Company on any
matter relating to the Company’s operations, policies or
practices.
The
Company also entered into a Consulting Agreement with Mr. Baker
(the “Baker
Consulting Agreement”), effective October 8, 2020,
pursuant to which Mr. Baker will provide consulting services to the
Company on a part-time basis following the Separation Date.
Pursuant to the Baker Consulting Agreement, Mr. Baker will provide
consulting services to the Company for up to 20 hours per week at a
rate of $150 per hour. In addition to the hourly rate, the Company
will pay Mr. Baker a flat monthly fee in the amount of $890 while
the Consulting Agreement is in effect.
The
foregoing summaries of the Separation Agreement and the Baker
Consulting Agreement do not purport to be complete and are
qualified in their entirety by reference to the Separation
Agreement and the Baker Consulting Agreement, a copy of each of
which will be filed with the Company’s Form 10-K for the
fiscal year ended June 30, 2020.
Appointment of New Principal Executive Officer and
Director
The
Board of Dynatronics has named John Krier as the Company’s
Chief Executive Officer effective July 7, 2020. Mr. Krier has
served as Chief Financial Officer of Dynatronics since March 2020.
Mr. Krier will continue to serve as the Company’s Chief
Financial Officer on an interim basis until a successor has been
identified and engaged. The Company will immediately commence a
search for a replacement. On the recommendation of the Nominating
Committee, the Board increased the number of directors constituting
the full Board from six to seven directors and appointed Mr. Krier
as a director to fill the resultant vacancy, with such appointment
effective immediately. Mr. Krier’s initial term as director
will expire at the Company’s 2021 Annual Meeting of
Shareholders.
Prior
to joining the Company as Chief Financial Officer, Mr. Krier served
as Vice President of Marketing of Breg, Inc.
(“Breg”), a global medical
device company from March 2014 to November 2019, and provided
consulting services to Breg from December 2019 until March 2020.
Prior to joining Breg, Mr. Krier was President of Viscent, LLC, an
orthopedic bracing supplier, from September 1, 2009 through October
1, 2012, and Executive Consultant to the Chief Executive Officer
and Board of Directors from October 2012 through September 2013.
Mr. Krier holds a B.S. degree in Business Administration from the
University of South Dakota. He is 43 years old.
In
connection with his appointment as Chief Executive Officer, Mr.
Krier entered into an employment agreement with the Company (the
“Krier Employment
Agreement”). Pursuant to the Krier Employment
Agreement, the Company will pay Mr. Krier an annual base salary of
$250,000 per year and he will be eligible for an annual bonus
targeted at a maximum payout of $75,000, and an annual equity award
of restricted stock units, or RSUs, up to a maximum value of
$75,000, which amount will be determined by the Compensation
Committee of the Board, based on results of operations and Mr.
Krier’s performance against goals established by the
Compensation Committee. On the date of his appointment, Mr. Krier
received a grant of 50,000 RSUs under the Dynatronics 2018 Equity
Incentive Plan (the “2018 Plan”), vesting in
four equal annual installments commencing on the first anniversary
of the grant date. Upon vesting, Mr. Krier will receive a number of
shares of common stock equal to the number of RSUs that have
vested. Also upon his appointment date, the Company granted Mr.
Krier a stock option under the 2018 Plan for the purchase of 15,000
shares of the Company’s common stock, vesting over a
four-year period with one-fourth of the shares vesting annually on
the anniversary of the grant date. The exercise price of the stock
option is the market price of the Company’s common stock on
the date of grant. Mr. Krier will operate from the Company’s
Eagan, Minnesota location.
The
Krier Employment Agreement continues until terminated by the
Company or by Mr. Krier in accordance with the terms of the
agreement. If the Company terminates Mr. Krier’s employment
during the first 12 months without cause as defined under the
agreement, the Company must pay Mr. Krier an amount equal to three
months base salary. In addition, in such event, one-half of the
initial equity compensation awards granted to him at the time of
his appointment as CEO will automatically vest, subject to his
execution of a release of all claims against the Company. Mr. Krier
is also subject to a non-solicitation, non-competition and
confidentiality agreement with post-termination restrictive
covenants. The Company has also entered into an indemnification
agreement with Mr. Krier on the same terms as it has with its other
directors and executive officers.
As
previously disclosed, Mr. Krier will continue to provide limited
consulting services to Breg through April 2021. The Audit Committee
of the Board has determined that Mr. Krier’s consulting
services to Breg will not conflict with the interests of the
Company or his duties at Dynatronics and that Mr. Krier will be
able to focus his full time and resources to Dynatronics as Chief
Executive Officer.
There
is no arrangement or understanding between Mr. Krier and any other
person pursuant to which Mr. Krier was appointed as a director
of the Company. Mr. Krier is not a party to any agreement or
transaction that would require disclosure under Item 404(a) of
Regulation S-K. There are no family relationships between Mr. Krier
and any director or executive officer of the Company that would
require disclosure under Items 401(d) or 404(a) of Regulation S-K
(17 CFR 229.401(d) and 229.404(a)).
This
summary description of the Krier Employment Agreement and the
equity award agreements between the Company and Mr. Krier is
qualified in its entirety by reference to the employment agreement
and the equity award agreements between the Company and Mr. Krier,
which will be filed as exhibits to the Company’s Annual
Report on Form 10-K for the year ended June 30, 2020.
SIGNATURE
Pursuant
to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
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Date:
July 8, 2020
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DYNATRONICS CORPORATION
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By:
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/s/
Jennifer Keeler
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Name: Jennifer
Keeler
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Title:
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General
Counsel
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