Document:

dynatronicsexh42.htm

Exhibit 4.2

DYNATRONICS CORPORATION

 

B-WARRANT

June 30, 2015

 

  

  

  

TABLE OF CONTENTS

 

	
Section 1.

	
Definitions

	
1

	 	 	 
	
Section 2.

	
Exercise

	
1

	 	 	 
	
(a)

	
Exercise of Warrant

	
1

	 	 	 
	
(b)

	
Exercise Price

	
2

	 	 	 
	
(c)

	
Cashless Exercise

	
2

	 	 	 
	
(d)

	
Mechanics of Exercise

	
2

	 	 	 
	
(e)

	
Holder’s Exercise Limitations

	
4

	 	 	 
	
(f)

	
Immediate Exercise Upon Certain Events

	
6

	 	 	 
	
Section 3.

	
Certain Adjustments

	
6

	 	 	 
	
(a)

	
Stock Dividends and Splits

	
6

	 	 	 
	
(b)

	
[RESERVED]

	
6

	 	 	 
	
(c)

	
Subsequent Rights Offerings

	
6

	 	 	 
	
(d)

	
Pro Rata Distributions

	
7

	 	 	 
	
(e)

	
Fundamental Transaction

	
7

	 	 	 
	
(f)

	
Calculations

	
10

	 	 	 
	
(g)

	
Notice to Holder

	
10

	 	 	 
	
Section 4.

	
Transfer of Warrant

	
11

	 	 	 
	
(a)

	
Transferability

	
11

	 	 	 
	
(b)

	
New Warrants

	
11

	 	 	 
	
(c)

	
Warrant Register

	
11

	 	 	 
	
(d)

	
Transfer Restrictions

	
12

	 	 	 
	
(e)

	
Representation by the Holder

	
12

 

  

  

  

 

	
Section 5.

	
Miscellaneous

	
12

	 	 	 
	
(a)

	
No Rights as Stockholder Until Exercise

	
12

	 	 	 
	
(b)

	
Loss, Theft, Destruction or Mutilation of Warrant

	
12

	 	 	 
	
(c)

	
Saturdays, Sundays, Holidays, etc.

	
12

	 	 	 
	
(d)

	
Authorized Shares

	
12

	 	 	 
	
(e)

	
Jurisdiction

	
13

	 	 	 
	
(f)

	
Restrictions

	
13

	 	 	 
	
(g)

	
Nonwaiver and Expenses

	
13

	 	 	 
	
(h)

	
Notices

	
14

	 	 	 
	
(i)

	
Limitation of Liability

	
14

	 	 	 
	
(j)

	
Remedies

	
14

	 	 	 
	
(k)

	
Successors and Assigns

	
14

	 	 	 
	
(l)

	
Amendment

	
14

	 	 	 
	
(m)

	
Severability

	
14

	 	 	 
	
(n)

	
Headings

	
14

 

  

  

  

 

NEITHER THIS SECURITY NOR THE SECURITIES FOR WHICH THIS SECURITY IS EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY. THIS SECURITY AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES.

 

COMMON STOCK PURCHASE WARRANT

DYNATRONICS CORPORATION

No. B-

 

Warrant Shares: _______                                                                                Issuance Date: June 30, 2015

 

THIS COMMON STOCK PURCHASE WARRANT (the “Warrant”) certifies that, for value received, _____________ or its assigns (the “Holder”) is entitled, upon the terms and subject to the limitations on exercise and the conditions hereinafter set forth, at any time on or after such date that the Holder has purchased all of the shares of Common Stock underlying the A-Warrants issued to Holder under the Purchase Agreement(the “Initial Exercise Date”) and on or prior to the close of business on the six year anniversary of the Initial Exercise Date (the “Termination Date”) but not thereafter, to subscribe for and purchase from Dynatronics Corporation, a Utah corporation (the “Company”), up to ______ shares (as subject to adjustment hereunder, the “Warrant Shares”) of Common Stock. The purchase price of one share of Common Stock under this Warrant shall be equal to the Exercise Price, as defined in Section 2(b).

 

Section 1. Definitions. Capitalized terms used and not otherwise defined herein shall have the meanings set forth in that certain Securities Purchase Agreement (the “Purchase Agreement”), dated May 1, 2015, among the Company and the purchasers signatory thereto.

 

Section 2. Exercise. (a) Exercise of Warrant. Exercise of the purchase rights represented by this Warrant may be made, in whole or in part, at any time or times on or after the Initial Exercise Date and on or before the Termination Date by delivery to the Company (or such other office or agency of the Company as it may designate by notice in writing to the registered Holder at the address of the Holder appearing on the books of the Company) of a duly executed e-mail or facsimile copy of the Notice of Exercise in the form annexed hereto and within three (3) Trading Days of the date said Notice of Exercise is delivered to the Company, the Company shall have received payment of the aggregate Exercise Price of the shares thereby purchased pursuant to the cashless exercise procedure specified in Section 2(c) below. No ink-original Notice of Exercise shall be required, nor shall any medallion guarantee (or other type of guarantee or notarization) of any Notice of Exercise form be required. Notwithstanding anything herein to the contrary, the Holder shall not be required to physically surrender this Warrant to the Company until the Holder has purchased all of the Warrant Shares available hereunder and the Warrant has been exercised in full, in which case, the Holder shall surrender this Warrant to the Company for cancellation within three (3) Trading Days of the date the final Notice of Exercise is delivered to the Company. Partial exercises of this Warrant resulting in purchases of a portion of the total number of Warrant Shares available hereunder shall have the effect of lowering the outstanding number of Warrant Shares purchasable hereunder in an amount equal to the applicable number of Warrant Shares purchased. The Holder and the Company shall maintain records showing the number of Warrant Shares purchased and the date of such purchases. The Company shall deliver any objection to any Notice of Exercise within one (1) Business Day of receipt of such notice. The Holder and any assignee, by acceptance of this Warrant, acknowledge and agree that, by reason of the provisions of this paragraph, following the purchase of a portion of the Warrant Shares hereunder, the number of Warrant Shares available for purchase hereunder at any given time may be less than the amount stated on the face hereof.

 

  

  

  

 

(b) Exercise Price. The exercise price per share of the Common Stock under this Warrant shall be $2.75, subject to adjustment hereunder (the “Exercise Price”).

 

(c) Cashless Exercise

 

(i) This Warrant may be exercised, in whole or in part, in the sole discretion of the Holder:

 

(i) By means of a traditional broker-assisted “cashless exercise”, using a broker reasonably acceptable to the Company, whereby the exercise proceeds generated from the broker-assisted sale of the Common Stock shares underlying the Warrant are paid to the Company; or

 

(ii) By means of a “cashless exercise” in which the Holder shall be entitled to receive a number of Warrant Shares equal to the quotient obtained by dividing [(A-B) (X)] by (A), where:

 

	
  

	
(A) = the VWAP on the Trading Day immediately preceding the date on which Holder elects to exercise this Warrant by means of a “cashless exercise,” as set forth in the applicable Notice of Exercise;

 

	
  

	
(B) = the Exercise Price of this Warrant, as adjusted hereunder; and

 

	
  

	
(X) = the number of Warrant Shares that would be issuable upon exercise of this Warrant in accordance with the terms of this Warrant if such exercise were by means of a cash exercise rather than a cashless exercise.

 

 

  

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(d) Mechanics of Exercise.

 

(i) Delivery of Warrant Shares Upon Exercise. Warrant Shares purchased hereunder shall be transmitted by the Transfer Agent to the Holder by crediting the account of the Holder’s prime broker with The Depository Trust Company through its Deposit or Withdrawal at Custodian system (“DWAC”) if the Company is then a participant in such system and either (A) there is an effective registration statement permitting the issuance of the Warrant Shares to or resale of the Warrant Shares by the Holder or (B) the shares are eligible for resale by the Holder without volume or manner-of-sale limitations pursuant to Rule 144, and otherwise by physical delivery to the address specified by the Holder in the Notice of Exercise by the date that is one (1) Trading Day after the delivery to the Company of the Notice of Exercise (such date, the “Warrant Share Delivery Date”). The Warrant Shares shall be deemed to have been issued, and Holder or any other person so designated to be named therein shall be deemed to have become a holder of record of such shares for all purposes, as of the date the Warrant has been exercised, with payment to the Company of the Exercise Price (or by cashless exercise, if permitted) and all taxes required to be paid by the Holder, if any, pursuant to Section 2(d)(vi) prior to the issuance of such shares, having been paid. If the Company fails for any reason to deliver to the Holder the Warrant Shares subject to a Notice of Exercise within two Trading Days after the Warrant Share Delivery Date, the Company shall pay to the Holder, in cash, as liquidated damages and not as a penalty, for each $1,000 of Warrant Shares subject to such exercise (based on the VWAP of the Common Stock on the date of the applicable Notice of Exercise), $10 per Trading Day (increasing to $20 per Trading Day on the fifth Trading Day after such liquidated damages begin to accrue) for each Trading Day after such Warrant Share Delivery Date until such Warrant Shares are delivered or Holder rescinds such exercise.

 

(ii) Delivery of New Warrants Upon Exercise. If this Warrant shall have been exercised in part, the Company shall, at the request of a Holder and upon surrender of this Warrant certificate, at the time of delivery of the Warrant Shares, deliver to the Holder a new Warrant evidencing the rights of the Holder to purchase the unpurchased Warrant Shares called for by this Warrant, which new Warrant shall in all other respects be identical with this Warrant.

 

(iii) Rescission Rights. If the Company fails to cause the Transfer Agent to transmit to the Holder the Warrant Shares pursuant to Section 2(d)(i) by the Warrant Share Delivery Date, then the Holder will have the right to rescind such exercise.

 

(iv) Compensation for Buy-In on Failure to Timely Deliver Warrant Shares Upon Exercise. In addition to any other rights available to the Holder, if the Company fails to cause the Transfer Agent to transmit to the Holder the Warrant Shares pursuant to an exercise on or before the Warrant Share Delivery Date, and if after such date the Holder is required by its broker to purchase (in an open market transaction or otherwise) or the Holder’s brokerage firm otherwise purchases, shares of Common Stock to deliver in satisfaction of a sale by the Holder of the Warrant Shares which the Holder anticipated receiving upon such exercise (a “Buy-In”), then the Company shall (A) pay in cash to the Holder the amount, if any, by which (x) the Holder’s total purchase price (including brokerage commissions, if any) for the shares of Common Stock so purchased exceeds (y) the amount obtained by multiplying (1) the number of Warrant Shares that the Company was required to deliver to the Holder in connection with the exercise at issue times (2) the price at which the sell order giving rise to such purchase obligation was executed, and (B) at the option of the Holder, either reinstate the portion of the Warrant and equivalent number of Warrant Shares for which such exercise was not honored (in which case such exercise shall be deemed rescinded) or deliver to the Holder the number of shares of Common Stock that would have been issued had the Company timely complied with its exercise and delivery obligations hereunder. For example, if the Holder purchases Common Stock having a total purchase price of $11,000 to cover a Buy-In with respect to an attempted exercise of shares of Common Stock with an aggregate sale price giving rise to such purchase obligation of $10,000, under clause (A) of the immediately preceding sentence the Company shall be required to pay the Holder $1,000. The Holder shall provide the Company written notice indicating the amounts payable to the Holder in respect of the Buy-In and, upon request of the Company, evidence of the amount of such loss. Nothing herein shall limit a Holder’s right to pursue any other remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Company’s failure to timely deliver shares of Common Stock upon exercise of the Warrant as required pursuant to the terms hereof.

 

  

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(v) No Fractional Shares or Scrip. No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this Warrant. As to any fraction of a share which the Holder would otherwise be entitled to purchase upon such exercise, the Company shall, at its election, either pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied by the Exercise Price or round up to the next whole share.

 

(vi) Charges, Taxes and Expenses. Issuance of Warrant Shares shall be made without charge to the Holder for any issue or transfer tax or other incidental expense in respect of the issuance of Warrant Shares, all of which taxes and expenses shall be paid by the Company, and such Warrant Shares shall be issued in the name of the Holder or in such name or names as may be directed by the Holder; provided, however, that in the event that Warrant Shares are to be issued in a name other than the name of the Holder, this Warrant when surrendered for exercise shall be accompanied by the Assignment Form attached hereto duly executed by the Holder and the Company may require, as a condition thereto, the payment of a sum sufficient to reimburse it for any transfer tax incidental thereto. The Company shall pay all Transfer Agent fees required for same-day processing of any Notice of Exercise and all fees to the Depository Trust Company (or another established clearing corporation performing similar functions) required for same-day electronic delivery of the Warrant Shares.

 

(vii) Closing of Books. The Company will not close its stockholder books or records in any manner which prevents the timely exercise of this Warrant, pursuant to the terms hereof.

 

(e) Holder’s Exercise Limitations. Upon written notice to the Company by the Holder substantially in the form attached hereto as Exhibit C (the “Beneficial Ownership Limitation Notice”), the Company shall not effect any exercise of this Warrant, and a Holder shall not have the right to exercise any portion of this Warrant, pursuant to Section 2 or otherwise, to the extent that after giving effect to such issuance after exercise as set forth on the 

 

  

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applicable Notice of Exercise, the Holder (together with the Holder’s Affiliates, and any other Persons acting as a group together with the Holder or any of the Holder’s Affiliates), would beneficially own in excess of the Beneficial Ownership Limitation (as defined below). For purposes of the foregoing sentence, the number of shares of Common Stock beneficially owned by the Holder and its Affiliates shall include the number of shares of Common Stock issuable upon exercise of this Warrant with respect to which such determination is being made, but shall exclude the number of shares of Common Stock which would be issuable upon (i) exercise of the remaining, nonexercised portion of this Warrant beneficially owned by the Holder or any of its Affiliates and (ii) exercise or conversion of the unexercised or nonconverted portion of any other securities of the Company (including, without limitation, any other Common Stock Equivalents) subject to a limitation on conversion or exercise analogous to the limitation contained herein beneficially owned by the Holder or any of its Affiliates. Except as set forth in the preceding sentence, for purposes of this Section 2(e), beneficial ownership shall be calculated in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder, it being acknowledged by the Holder that the Company is not representing to the Holder that such calculation is in compliance with Section 13(d) of the Exchange Act and the Holder is solely responsible for any schedules required to be filed in accordance therewith. To the extent that the limitation contained in this Section 2(e) applies, the determination of whether this Warrant is exercisable (in relation to other securities owned by the Holder together with any Affiliates) and of which portion of this Warrant is exercisable shall be in the sole discretion of the Holder, and the submission of a Notice of Exercise shall be deemed to be the Holder’s determination of whether this Warrant is exercisable (in relation to other securities owned by the Holder together with any Affiliates) and of which portion of this Warrant is exercisable, in each case subject to the Beneficial Ownership Limitation, and the Company shall have no obligation to verify or confirm the accuracy of such determination. In addition, a determination as to any group status as contemplated above shall be determined in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder. For purposes of this Section 2(e), in determining the number of outstanding shares of Common Stock, a Holder may rely on the number of outstanding shares of Common Stock as reflected in (A) the Company’s most recent periodic or annual report filed with the Commission, as the case may be, (B) a more recent public announcement by the Company or (C) a more recent written notice by the Company or the Transfer Agent setting forth the number of shares of Common Stock outstanding. Upon the written or oral request of a Holder, the Company shall within two Trading Days confirm orally and in writing to the Holder the number of shares of Common Stock then outstanding. In any case, the number of outstanding shares of Common Stock shall be determined after giving effect to the conversion or exercise of securities of the Company, including this Warrant, by the Holder or its Affiliates since the date as of which such number of outstanding shares of Common Stock was reported. The “Beneficial Ownership Limitation” shall be 4.99% of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock issuable upon exercise of this Warrant. The Holder, upon not less than 61 days’ prior notice to the Company, may increase or decrease the Beneficial Ownership Limitation provisions of this Section 2(e), provided that the Beneficial Ownership Limitation in no event exceeds 9.99% of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock upon exercise of this Warrant held by the Holder and the provisions of this Section 2(e) shall continue to apply. Any such increase or decrease will not be effective until the 61st day after such notice is delivered to the Company. The provisions of this paragraph shall be construed and implemented in a manner otherwise than in strict conformity with the terms of this Section 2(e) to correct this paragraph (or any portion hereof) which may be defective or inconsistent with the intended Beneficial Ownership Limitation herein contained or to make changes or supplements necessary or desirable to properly give effect to such limitation. The limitations contained in this paragraph shall apply to a successor holder of this Warrant.

 

  

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(f) Immediate Exercise Upon Certain Events. Notwithstanding anything herein to the contrary, the Warrants shall be immediately exercisable in the event that, subject to the receipt of Shareholder Approval, holders of 4.99% or more of the outstanding voting securities of the Company accept any direct or indirect purchase offer, tender offer or exchange offer (whether by the Company or another Person) pursuant to which holders of Common Stock are permitted to sell, tender or exchange their shares for other securities, cash or property (a “Tender Offer”). In such case, the Termination Date shall be the six year anniversary of the Tender Offer.

 

Section 3. Certain Adjustments.

 

(a) Stock Dividends and Splits. If the Company, at any time while this Warrant is outstanding: (i) pays a stock dividend or otherwise makes a distribution or distributions on shares of its Common Stock or any other equity or equity equivalent securities payable in shares of Common Stock (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the Company upon exercise of this Warrant), (ii) subdivides outstanding shares of Common Stock into a larger number of shares, (iii) combines (including by way of reverse stock split) outstanding shares of Common Stock into a smaller number of shares or (iv) issues by reclassification of shares of the Common Stock any shares of capital stock of the Company, then in each case the Exercise Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding treasury shares, if any) outstanding immediately before such event and of which the denominator shall be the number of shares of Common Stock outstanding immediately after such event, and the number of shares issuable upon exercise of this Warrant shall be proportionately adjusted such that the aggregate Exercise Price of this Warrant shall remain unchanged. Any adjustment made pursuant to this Section 3(a) shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification.

 

(b) [RESERVED]

 

(c) Subsequent Rights Offerings. In addition to any adjustments pursuant to Section 3(a) above, if at any time the Company grants, issues or sells any Common Stock Equivalents or rights to purchase stock, warrants, securities or other property pro rata to the record holders of any class of shares of Common Stock (the “Purchase Rights”), then the Holder will be entitled to acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which the Holder could have acquired if the Holder had held the number of shares of Common Stock acquirable upon complete exercise of this Warrant (without regard to any limitations on exercise hereof, including without limitation, the Beneficial Ownership Limitation) immediately before the date on which a record is taken for the grant, issuance or sale of such Purchase Rights, or, if no such record is taken, the date as of which the record holders of shares of Common Stock are to be determined for the grant, issue or sale of such Purchase Rights (provided, however, to the extent that the Holder’s right to participate in any such Purchase Right would result in the Holder exceeding the Beneficial Ownership Limitation, then the Holder shall not be entitled to participate in such Purchase Right to such extent (or beneficial ownership of such shares of Common Stock as a result of such Purchase Right to such extent) and such Purchase Right to such extent shall be held in abeyance for the Holder until such time, if ever, as its right thereto would not result in the Holder exceeding the Beneficial Ownership Limitation).

 

  

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(d) Pro Rata Distributions. During such time as this Warrant is outstanding, if the Company shall declare or make any dividend or other distribution of its assets (or rights to acquire its assets) to holders of shares of Common Stock, by way of return of capital or otherwise (including, without limitation, any distribution of cash, stock or other securities, property or options by way of a dividend, spin off, reclassification, corporate rearrangement, scheme of arrangement or other similar transaction) (a “Distribution”), at any time after the issuance of this Warrant, then, in each such case, the Holder shall be entitled to participate in such Distribution to the same extent that the Holder would have participated therein if the Holder had held the number of shares of Common Stock acquirable upon complete exercise of this Warrant (without regard to any limitations on exercise hereof, including without limitation, the Beneficial Ownership Limitation) immediately before the date of which a record is taken for such Distribution, or, if no such record is taken, the date as of which the record holders of shares of Common Stock are to be determined for the participation in such Distribution (provided, however, to the extent that the Holder’s right to participate in any such Distribution would result in the Holder exceeding the Beneficial Ownership Limitation, then the Holder shall not be entitled to participate in such Distribution to such extent (or in the beneficial ownership of any shares of Common Stock as a result of such Distribution to such extent) and the portion of such Distribution shall be held in abeyance for the benefit of the Holder until such time, if ever, as its right thereto would not result in the Holder exceeding the Beneficial Ownership Limitation).

 

(e) Fundamental Transaction

 

(i) If, at any time while this Warrant is outstanding, (i) the Company, directly or indirectly, in one or more related transactions effects any merger or consolidation of the Company with or into another Person, (ii) the Company, directly or indirectly, effects any sale, lease, license, assignment, transfer, conveyance or other disposition of all or substantially all of its assets in one or a series of related transactions, (iii) any, direct or indirect, purchase offer, tender offer or exchange offer (whether by the Company or another Person) is completed pursuant to which holders of Common Stock are permitted to sell, tender or exchange their shares for other securities, cash or property and has been accepted by the holders of 50% or more of the outstanding Common Stock, (iv) the Company, directly or indirectly, in one or more related transactions effects any reclassification, reorganization or recapitalization of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or property, or (v) the Company, directly or indirectly, in one or more related transactions consummates a stock or share purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement) with another Person or group of Persons whereby such other Person or group acquires more than 50% of the outstanding shares of Common Stock (not including any shares of Common Stock held by the other Person or other Persons making or party to, or associated or affiliated with the other Persons making or party to, such stock or share purchase agreement or other business combination) (each a “Fundamental Transaction”), then, upon any subsequent exercise of this Warrant, the Holder shall have the right to receive, for each Warrant Share that would have been issuable upon such exercise immediately prior to the occurrence of such Fundamental Transaction, at the option of the Holder (without regard to any limitation in Section 2(e) on the exercise of this Warrant), the number of shares of Common Stock of the successor or acquiring corporation or of the Company, if it is the surviving corporation, and any additional consideration (the “Alternate Consideration”) receivable as a result of such Fundamental Transaction by a holder of the number of shares of Common Stock for which this Warrant is exercisable immediately prior to such Fundamental Transaction (without regard to any limitation in Section 2(e) on the exercise of this Warrant).

 

  

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(ii) For purposes of any such exercise, the determination of the Exercise Price shall be appropriately adjusted to apply to such Alternate Consideration based on the amount of Alternate Consideration issuable in respect of one share of Common Stock in such Fundamental Transaction, and the Company shall apportion the Exercise Price among the Alternate Consideration in a reasonable manner reflecting the relative value of any different components of the Alternate Consideration.

 

(iii) If holders of Common Stock are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then the Holder shall be given the same choice as to the Alternate Consideration it receives upon any exercise of this Warrant following such Fundamental Transaction.

 

(iv) Notwithstanding anything to the contrary, in the event of a Fundamental Transaction that is (1) an all cash transaction, (2) a “Rule 13e-3 transaction” as defined in Rule 13e-3 under the Exchange Act, or (3) a Fundamental Transaction involving a person or entity not traded on a national securities exchange, the Company or any Successor Entity (as defined below) shall, at the Holder’s option, exercisable at any time concurrently with, or within 30 days after, the consummation of the Fundamental Transaction, purchase this Warrant from the Holder by paying to the Holder a “Warrant Settlement Payment” (defined in subsection (v) below), equal in value to the Black Scholes Value of the remaining unexercised portion of this Warrant on the date of the consummation of such Fundamental Transaction (referred to herein as the “Warrant Settlement Right”). “Black Scholes Value” means the value of this Warrant based on the Black and Scholes Option Pricing Model obtained from the “OV” function on Bloomberg, L.P. (“Bloomberg”) determined as of the day of consummation of the applicable Fundamental Transaction for pricing purposes and reflecting (A) a risk-free interest rate corresponding to the U.S. Treasury rate for a period equal to the time between the date of the public announcement of the applicable Fundamental Transaction and the Termination Date, (B) an expected volatility equal to the greater of 100% and the 100 day volatility obtained from the HVT function on Bloomberg as of the Trading Day immediately following the public announcement of the applicable Fundamental Transaction, (C) the underlying price per share used in such calculation shall be the sum of the price per share being offered in cash, if any, plus the value of any non-cash consideration, if any, being offered in such Fundamental Transaction and (D) a remaining option time equal to the time between the date of the public announcement of the applicable Fundamental Transaction and the Termination Date.

 

  

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(v) The Warrant Settlement Payment shall be paid using the same type or form of consideration that is being offered and paid to the holders of Common Stock of the Company in connection with the Fundamental Transaction, whether that consideration be in the form of cash, stock, or any combination thereof, or whether the holders of Common Stock are given the choice to receive from among alternative forms of consideration in connection with the Fundamental Transaction. By way of example only, if the holders of Common Stock are to receive cash only in connection with the Fundamental Transaction, the holders of this Warrant shall also receive cash only in payment of the Warrant Settlement Payment. If the holders of Common Stock are to receive shares of stock only in connection the Fundamental Transaction, the holders of this Warrant shall be paid the Warrant Settlement Payment with shares of the same stock. Likewise, if the holders of Common Stock are given the right and option to choose from among alternative forms of consideration as payment for their shares in connection with the Fundamental Transaction, the holders of this Warrant shall be given the same right to choose from among the same alternative forms of consideration as payment for their Warrant Settlement Payment. In no case shall the holders of this warrant receive cash only for their Warrant Settlement Payment, if the holders of the Common Stock of the Company are not also receiving cash only for their shares of Common Stock in connection with the Fundamental Transaction.

 

(vi) The Company shall cause any successor entity in a Fundamental Transaction in which the Company is not the survivor (the “Successor Entity”) to assume in writing all of the obligations of the Company under this Warrant and the other Transaction Documents in accordance with the provisions of this Section 3(e) pursuant to written agreements in form and substance reasonably satisfactory to the Holder and approved by the Holder (without unreasonable delay) prior to such Fundamental Transaction and shall, at the option of the Holder, deliver to the Holder in exchange for this Warrant a security of the Successor Entity evidenced by a written instrument substantially similar in form and substance to this Warrant which is exercisable for a corresponding number of shares of capital stock of such Successor Entity (or its parent entity) equivalent to the shares of Common Stock acquirable and receivable upon exercise of this Warrant (without regard to any limitations on the exercise of this Warrant) prior to such Fundamental Transaction, and with an exercise price which applies the exercise price hereunder to such shares of capital stock (but taking into account the relative value of the shares of Common Stock pursuant to such Fundamental Transaction and the value of such shares of capital stock, such number of shares of capital stock and such exercise price being for the purpose of protecting the economic value of this Warrant immediately prior to the consummation of such Fundamental Transaction), and which is reasonably satisfactory in form and substance to the Holder. Upon the occurrence of any such Fundamental Transaction, the Successor Entity shall succeed to, and be substituted for (so that from and after the date of such Fundamental Transaction, the provisions of this Warrant and the other Transaction Documents referring to the “Company” shall refer instead to the Successor Entity), and may exercise every right and power of the Company and shall assume all of the obligations of the Company under this Warrant and the other Transaction Documents with the same effect as if such Successor Entity had been named as the Company herein.

 

  

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(f) Calculations. All calculations under this Section 3 shall be made to the nearest cent or the nearest 1/100th of a share, as the case may be. For purposes of this Section 3, the number of shares of Common Stock deemed to be issued and outstanding as of a given date shall be the sum of the number of shares of Common Stock (excluding treasury shares, if any) issued and outstanding.

 

(g) Notice to Holder.

 

(i) Adjustment to Exercise Price. Whenever the Exercise Price is adjusted pursuant to any provision of this Section 3, the Company shall promptly mail to the Holder a notice setting forth the Exercise Price after such adjustment and any resulting adjustment to the number of Warrant Shares and setting forth a brief statement of the facts requiring such adjustment.

 

(ii) Notice to Allow Exercise by Holder. If (A) the Company shall declare a dividend (or any other distribution in whatever form) on the Common Stock, (B) the Company shall declare a special nonrecurring cash dividend on or a redemption of the Common Stock, (C) the Company shall authorize the granting to all holders of the Common Stock rights or warrants to subscribe for or purchase any shares of capital stock of any class or of any rights, (D) the approval of any stockholders of the Company shall be required in connection with any reclassification of the Common Stock, any consolidation or merger to which the Company is a party, any sale or transfer of all or substantially all of the assets of the Company, or any compulsory share exchange whereby the Common Stock is converted into other securities, cash or property, or (E) the Company shall authorize the voluntary or involuntary dissolution, liquidation or winding up of the affairs of the Company, then, in each case, the Company shall cause to be mailed to the Holder at its last address as it shall appear upon the Warrant Register of the Company, at least 20 calendar days prior to the applicable record or effective date hereinafter specified, a notice stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution, redemption, rights or warrants, or if a record is not to be taken, the date as of which the holders of the Common Stock of record to be entitled to such dividend, distributions, redemption, rights or warrants are to be determined or (y) the date on which such reclassification, consolidation, merger, sale, transfer or share exchange is expected to become effective or close, and the date as of which it is expected that holders of the Common Stock of record shall be entitled to exchange their shares of the Common Stock for securities, cash or other property deliverable upon such reclassification, consolidation, merger, sale, transfer or share exchange; provided that the failure to mail such notice or any defect therein or in the mailing thereof shall not affect the validity of the corporate action required to be specified in such notice. To the extent that any notice provided hereunder constitutes, or contains, material, non-public information regarding the Company or any of the Subsidiaries, the Company shall simultaneously file such notice with the Commission pursuant to a Current Report on Form 8-K. The Holder shall remain entitled to exercise this Warrant during the period commencing on the date of such notice to the effective date of the event triggering such notice except as may otherwise be expressly set forth herein.

 

  

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Section 4. Transfer of Warrant.

 

(a) Transferability. Subject to compliance with any applicable securities laws and the conditions set forth in Section 4(d) hereof and to the provisions of Section 4.1 of the Purchase Agreement, this Warrant and all rights hereunder (including, without limitation, any registration rights) are transferable, in whole or in part, upon surrender of this Warrant at the principal office of the Company or its designated agent, together with a written assignment of this Warrant substantially in the form attached hereto duly executed by the Holder or its agent or attorney and funds sufficient to pay any transfer taxes payable upon the making of such transfer. Upon such surrender and, if required, such payment, the Company shall execute and deliver a new Warrant or Warrants in the name of the assignee or assignees, as applicable, and in the denomination or denominations specified in such instrument of assignment, and shall issue to the assignor a new Warrant evidencing the portion of this Warrant not so assigned, and this Warrant shall promptly be cancelled. Notwithstanding anything herein to the contrary, the Holder shall not be required to physically surrender this Warrant to the Company unless the Holder has assigned this Warrant in full, in which case, the Holder shall surrender this Warrant to the Company within three (3) Trading Days of the date the Holder delivers an assignment form to the Company assigning this Warrant full. The Warrant, if properly assigned in accordance herewith, may be exercised by a new holder for the purchase of Warrant Shares without having a new Warrant issued.

 

(b) New Warrants. This Warrant may be divided or combined with other Warrants upon presentation hereof at the aforesaid office of the Company, together with a written notice specifying the names and denominations in which new Warrants are to be issued, signed by the Holder or its agent or attorney. Subject to compliance with Section 4(a), as to any transfer which may be involved in such division or combination, the Company shall execute and deliver a new Warrant or Warrants in exchange for the Warrant or Warrants to be divided or combined in accordance with such notice. All Warrants issued on transfers or exchanges shall be dated the original issuance date and shall be identical with this Warrant except as to the number of Warrant Shares issuable pursuant thereto.

 

  

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(c) Warrant Register. The Company shall register this Warrant, upon records to be maintained by the Company for that purpose (the “Warrant Register”), in the name of the record Holder hereof from time to time. The Company may deem and treat the registered Holder of this Warrant as the absolute owner hereof for the purpose of any exercise hereof or any distribution to the Holder, and for all other purposes, absent actual notice to the contrary.

 

(d) Transfer Restrictions. If, at the time of the surrender of this Warrant in connection with any transfer of this Warrant, the transfer of this Warrant shall not be either (i) registered pursuant to an effective registration statement under the Securities Act and under applicable state securities or blue sky laws or (ii) eligible for resale without volume or manner-of-sale restrictions or current public information requirements pursuant to Rule 144, the Company may require, as a condition of allowing such transfer, that the Holder or transferee of this Warrant, as the case may be, comply with the provisions of Section 5.7 of the Purchase Agreement.

 

(e) Representation by the Holder. The Holder, by the acceptance hereof, represents and warrants that it is acquiring this Warrant and, upon any exercise hereof, will acquire the Warrant Shares issuable upon such exercise, for its own account and not with a view to or for distributing or reselling such Warrant Shares or any part thereof in violation of the Securities Act or any applicable state securities law, except pursuant to sales registered or exempted under the Securities Act.

 

Section 5. Miscellaneous.

 

(a) No Rights as Stockholder Until Exercise. This Warrant does not entitle the Holder to any voting rights, dividends or other rights as a stockholder of the Company prior to the exercise hereof as set forth in Section 2(d)(i), except as expressly set forth in Section 3.

 

(b) Loss, Theft, Destruction or Mutilation of Warrant. The Company covenants that upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant or any stock certificate relating to the Warrant Shares, and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it (which, in the case of the Warrant, shall not include the posting of any bond), and upon surrender and cancellation of such Warrant or stock certificate, if mutilated, the Company will make and deliver a new Warrant or stock certificate of like tenor and dated as of such cancellation, in lieu of such Warrant or stock certificate.

 

  

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(c) Saturdays, Sundays, Holidays, etc.If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall not be a Business Day, then, such action may be taken or such right may be exercised on the next succeeding Business Day.

 

(d) Authorized Shares.

 

The Company covenants that, during the period the Warrant is outstanding, it will reserve from its authorized and unissued Common Stock a sufficient number of shares to provide for the issuance of the Warrant Shares upon the exercise of any purchase rights under this Warrant. The Company further covenants that its issuance of this Warrant shall constitute full authority to its officers who are charged with the duty of issuing the necessary Warrant Shares upon the exercise of the purchase rights under this Warrant. The Company will take all such reasonable action as may be necessary to assure that such Warrant Shares may be issued as provided herein without violation of any applicable law or regulation, or of any requirements of the Trading Market upon which the Common Stock may be listed. The Company covenants that all Warrant Shares which may be issued upon the exercise of the purchase rights represented by this Warrant will, upon exercise of the purchase rights represented by this Warrant and payment for such Warrant Shares in accordance herewith, be duly authorized, validly issued, fully paid and nonassessable and free from all taxes, liens and charges created by the Company in respect of the issue thereof (other than taxes in respect of any transfer occurring contemporaneously with such issue).

 

Except and to the extent as waived or consented to by the Holder, the Company shall not by any action, including, without limitation, amending its certificate of incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary or appropriate to protect the rights of Holder as set forth in this Warrant against impairment. Without limiting the generality of the foregoing, the Company will (i) not increase the par value of any Warrant Shares above the amount payable therefor upon such exercise immediately prior to such increase in par value, (ii) take all such action as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable Warrant Shares upon the exercise of this Warrant and (iii) use commercially reasonable efforts to obtain all such authorizations, exemptions or consents from any public regulatory body having jurisdiction thereof, as may be, necessary to enable the Company to perform its obligations under this Warrant.

 

Before taking any action which would result in an adjustment in the number of Warrant Shares for which this Warrant is exercisable or in the Exercise Price, the Company shall obtain all such authorizations or exemptions thereof, or consents thereto, as may be necessary from any public regulatory body or bodies having jurisdiction thereof.

 

  

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(e) Jurisdiction. All questions concerning the construction, validity, enforcement and interpretation of this Warrant shall be determined in accordance with the provisions of the Purchase Agreement.

 

(f) Restrictions. The Holder acknowledges that the Warrant Shares acquired upon the exercise of this Warrant, if not registered and the Holder does not utilize cashless exercise, will have restrictions upon resale imposed by state and federal securities laws.

 

(g) Nonwaiver and Expenses. No course of dealing or any delay or failure to exercise any right hereunder on the part of Holder shall operate as a waiver of such right or otherwise prejudice the Holder’s rights, powers or remedies, notwithstanding the fact that all rights hereunder terminate on the Termination Date. If the Company willfully and knowingly fails to comply with any provision of this Warrant, which results in any material damages to the Holder, the Company shall pay to the Holder such amounts as shall be sufficient to cover any costs and expenses including, but not limited to, reasonable attorneys’ fees, including those of appellate proceedings, incurred by the Holder in collecting any amounts due pursuant hereto or in otherwise enforcing any of its rights, powers or remedies hereunder.

 

(h) Notices. Any notice, request or other document required or permitted to be given or delivered to the Holder by the Company shall be delivered in accordance with the notice provisions of the Purchase Agreement.

 

(i) Limitation of Liability. No provision hereof, in the absence of any affirmative action by the Holder to exercise this Warrant to purchase Warrant Shares, and no enumeration herein of the rights or privileges of the Holder, shall give rise to any liability of the Holder for the purchase price of any Common Stock or as a stockholder of the Company, whether such liability is asserted by the Company or by creditors of the Company.

 

(j) Remedies. The Holder, in addition to being entitled to exercise all rights granted by law, including recovery of damages, will be entitled to specific performance of its rights under this Warrant. The Company agrees that monetary damages would not be adequate compensation for any loss incurred by reason of a breach by it of the provisions of this Warrant and hereby agrees to waive and not to assert the defense in any action for specific performance that a remedy at law would be adequate.

 

(k) Successors and Assigns. Subject to applicable securities laws, this Warrant and the rights and obligations evidenced hereby shall inure to the benefit of and be binding upon the successors and permitted assigns of the Company and the successors and permitted assigns of Holder. The provisions of this Warrant are intended to be for the benefit of any Holder from time to time of this Warrant and shall be enforceable by the Holder or holder of Warrant Shares.

 

(l) Amendment. This Warrant may be modified or amended or the provisions hereof waived with the written consent of the Company and the Holder.

 

(m) Severability. Wherever possible, each provision of this Warrant shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Warrant shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provisions or the remaining provisions of this Warrant.

 

  

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(n) Headings. The headings used in this Warrant are for the convenience of reference only and shall not, for any purpose, be deemed a part of this Warrant.

 

********************

(Signature Page Follows)

 

  

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IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its officer thereunto duly authorized as of the date first above indicated.

	
DYNATRONICS CORPORATION

	
By:__________________________________________

Name: Kelvyn Cullimore, Jr.

Title: Chief Executive Officer

 

  

  

  

 

NOTICE OF EXERCISE

 

TO: DYNATRONICS CORPORATION

 

(1) The undersigned hereby elects to purchase ________ Warrant Shares of the Company pursuant to the terms of the attached Warrant (only if exercised in full), and tenders herewith payment of the exercise price in full, together with all applicable transfer taxes, if any.

 

(2) Payment shall be on a cashless basis as described in subsection 2(c).

(3) Please issue said Warrant Shares in the name of the undersigned or in such other name as is specified below:

_______________________________

 

The Warrant Shares shall be delivered to the following DWAC Account Number:

_______________________________

 

_______________________________

 

_______________________________

 

(4) Accredited Investor. The undersigned is an “accredited investor” as defined in Regulation D promulgated under the Securities Act of 1933, as amended.

 

[SIGNATURE OF HOLDER]

 

Name of Investing Entity: ______________________________________________________________

 

Signature of Authorized Signatory of Investing Entity: _______________________________________

 

Name of Authorized Signatory: _________________________________________________________

 

Title of Authorized Signatory: ___________________________________________________________

 

Date: _______________________________________________________________________________

 

  

  

  

 

EXHIBIT B

 

ASSIGNMENT FORM

 

(To assign the foregoing Warrant, execute this form and supply required information. Do not use this form to purchase shares.)

 

FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced thereby are hereby assigned to

 

	
Name:

	 
	 	
(Please Print)

	
Address:

	 
	 	
(Please Print)

	
Dated: _______________ __, ______

	 
	
Holder’s Signature: 

	 
	
Holder’s Address: 

	 

 

  

  

  

 

EXHIBIT C

 

NOTICE OF BENEFICIAL OWNERSHIP LIMITATION

 

In accordance with Section 2(e) of that certain B-Warrant (the “Warrant”) of Dynatronics Corporation, a Utah corporation (the “Corporation”) issued to the undersigned, the undersigned hereby elects that, effective immediately, the Corporation shall not effect any exercise of the Warrant, and that the undersigned shall not have the right to exercise any portion of the Warrant, to the extent that, after giving effect to the exercise set forth on the applicable Notice of Exercise, the undersigned (together with its Affiliates, and any Persons acting as a group together with the undersigned or any of the undersigned’s Affiliates) would beneficially own in excess of the Beneficial Ownership Limitation. All terms not defined herein shall have the meanings assigned to them in the Warrant.

	
[HOLDER]

By:___________________________________

Name:

Title:Exhibit 10.1

 

Execution Version

 

SEPARATION AGREEMENT

 

Volt Information Sciences, Inc., a New York corporation (the “Company”), and Ronald Kochman (“Executive”), have entered into this Separation Agreement (this “Separation Agreement”) as of June 25, 2015.

 

RECITALS

 

A.                                    Executive and the Company previously entered into a letter agreement, dated as of December 26, 2012 (the “Letter Agreement”).

 

B.                                    The parties desire to enter into this Separation Agreement in order to (i) establish the terms of Executive’s separation from service with the Company, (ii) confirm the payments and benefits to which Executive is entitled under the Letter Agreement as a result of Executive’s separation from service with the Company, and (iii) confirm Executive’s obligations to the Company pursuant to the Letter Agreement following Executive’s separation from service with the Company.

 

NOW THEREFORE, in consideration of the mutual promises contained in this Separation Agreement, the parties agree as follows:

 

1.                                      Termination of Employment.

 

(a)                                 Effective as of 11:59 pm, Eastern Time, on June 25, 2015, Executive hereby resigns as the Chief Executive Officer of the Company, and will promptly execute such documents and take such actions as may be necessary or reasonably requested by the Company to effect or memorialize the resignation of such position, at which time Executive’s employment with the Company will terminate (the “Termination Date”).  As of the Termination Date, Executive will resign all positions Executive holds as an officer, director, employee, trustee, or committee member of the Company and its subsidiaries and affiliates.  Executive will promptly execute such documents and take such actions as may be necessary or reasonably requested by the Company to effect or memorialize the resignation of such positions.  Executive’s resignation as of the Termination Date will be considered a termination for Good Reason (as such term is defined in the Letter Agreement).

 

(b)                                 Executive’s termination pursuant to Section 1(a) will be a “separation from service” as defined in Section 409A of the Internal Revenue Code of 1986, as amended, and the regulations and official guidance issued thereunder, (“Section 409A”), a (“Separation From Service”).

 

2.                                      Payments and Other Consideration.  The Executive will be entitled to receive the accrued payments and benefits contemplated by Section 6.5 of the Letter Agreement in accordance with the terms of the Letter Agreement (the “Accrued Obligations”).  In addition, subject to Executive’s compliance with the terms and conditions of the Letter Agreement, Executive is also entitled to receive:

 

 

(a)                                 in full satisfaction of any bonus amount contemplated in Section 6.6(b) of the Letter Agreement, payment of an amount equal to $479,167.00, to be paid in a lump sum on the first payday that occurs after the Effective Date specified in the Release (as defined in Section 3 hereof); provided, that, the Company shall have the right to seek the repayment of any amount paid pursuant to this Section 2(a) if Executive fails to comply with the provisions of Sections 8 or 9 of the Letter Agreement;

 

(b)                                 an aggregate cash amount equal to $1,150,000 in respect of severance pay, representing payment of 24 months of Executive’s current monthly base salary.  Such aggregate amount will be divided into equal monthly portions and payable in accordance with the Company’s regular pay practices commencing on the first payday that occurs following the six-month anniversary of the Termination Date (the “Deferred Payment Date”), with such payments continuing for a period of 24 months from the Deferred Payment Date.  If at any time Executive fails to comply with Sections 8 or 9 of the Letter Agreement, any remaining installments payable pursuant to this Section 2(b) shall cease;

 

(c)                                  long term incentives of $90,000 for Fiscal Year 2013, plus $180,000 for Fiscal Year 2014 earned under Sections 4.4 and 4.5 of the Letter Agreement, which shall be paid in a lump sum on the first payday that occurs after the Effective Date of the Release; provided, that, the Company shall have the right to seek the repayment of any amount paid pursuant to this Section 2(c) if Executive fails to comply with the provisions of Sections 7 or 8 of this Separation Agreement;

 

(d)                                 the vesting of 13,333 shares of Volt common stock for Fiscal Year 2013, and the vesting of 26,667 shares of Volt common stock for Fiscal Year 2014 earned under Sections 4.4 and 4.5 of the Letter Agreement, which shares shall become vested in full on the Effective Date of the Release, provided that the Release becomes effective and is not revoked;

 

(e)                                  in respect of the medical benefits, and consistent with Section 6.6 of the Letter Agreement, the Company will provide Executive with such medical benefits in which he participates on the Termination Date, or their equivalent, provided that such benefits may, at the Company’s option, be provided through reimbursement of the premiums Executive incurs to continue coverage under the Company’s medical plans in effect on the Termination Date pursuant to COBRA (the “COBRA Premium Amount”), or the cost that he incurs to obtain such benefits through other means in an amount not to exceed the COBRA Premium Amount, in either case until the 24-month anniversary of the Termination Date;

 

(f)                                   Notwithstanding anything to the contrary in the Non-Qualified Stock Option Agreements (the “Option Agreements”), Executive will become fully vested in his outstanding stock option awards listed on Exhibit B (the “Options”) on the Effective Date of the Release, provided that the Release becomes

 

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effective within 60 calendar days following the Termination Date and provided Executive is in full compliance with the terms and conditions of this Separation Agreement, including but not limited to Sections 7 and 8 hereof, as of the Effective Date of the Release.  The Company acknowledges that such Options were granted by the Board to Executive on the dates referenced in Exhibit B. Notwithstanding anything to the contrary in the Option Agreements, Executive will have until the 18-month anniversary of the Termination Date to exercise any outstanding options to acquire shares of the Company’s common stock (the “Post-Termination Exercise Period”), and any outstanding, unexercised options will be cancelled for no consideration therefor at the end of the Post-Termination Exercise Period. If Executive is not in full compliance with the terms and conditions of this Separation Agreement, including but not limited to Sections 7 and 8 hereof, at any time during the Post-Termination Exercise Period, any outstanding, unexercised options will be cancelled for no consideration therefor at such time.  Such Options shall be exercised pursuant to the Notice of Exercise in the form attached hereto as Exhibit C;

 

(g)                                  Executive shall be reimbursed for his attorney’s fees in an amount not to exceed $10,000 in connection with review and negotiation of this Separation Agreement, which reimbursement shall be paid no earlier than the Effective Date of the Release and no later than 30 days after a written invoice is submitted to the Company, provided that Executive is in full compliance with the terms and conditions of this Separation Agreement, including but not limited to Sections 7 and 8 hereof, at the time for such reimbursement,

 

in each case paid or provided as set forth in, and subject to the terms and conditions of, the Letter Agreement, but subject in all events to Section 16 of the Letter Agreement.

 

The benefits provided for under Section 2(a)-(g) herein are collectively referred to as the Severance Benefits (the “Severance Benefits”).  Payment of the Severance Benefits will be in complete satisfaction of any and all compensation, severance or other benefits otherwise due to Executive upon termination of employment (including, but not limited to, any amounts otherwise payable under Section 6.6 of the Letter Agreement).

 

3.                                      General Release Agreement.  As contemplated by the Letter Agreement, as a condition to the receipt of the Severance Benefits, Executive must first execute and deliver to the Company (and, if applicable, not revoke) the General Release Agreement attached hereto as Exhibit A (the “Release”), which Release will constitute a part of this Separation Agreement.

 

4.                                      Affirmations.  Executive affirms that Executive has not filed or caused to be filed, and is not presently a party to any claim, complaint or action against the Company or any of its subsidiaries or affiliates in any forum.  Executive also affirms that Executive has no known workplace injuries or occupational diseases, and has been provided and has not been denied any leave requested under the Family and Medical Leave Act.

 

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Executive disclaims and waives any right of reinstatement with the Company or any of its subsidiaries or affiliates.

 

5.                                      Benefits.  Executive will cease participating in all Company health benefit coverage and other benefit coverage in accordance with applicable plan documents, effective upon the Termination Date or such other date as provided in such plan documents.  Executive acknowledges that the Company has advised Executive that, pursuant to COBRA, Executive has a right to elect continued coverage under the Company’s group health plan for a period of 18 months, or such longer period as permitted under applicable law, from the Termination Date.

 

6.                                      Restrictive Covenants.  Executive acknowledges and agrees that any and all of Executive’s obligations and restrictive covenants contained in the Letter Agreement (including, but not limited to, Sections 8, 9 and 12 thereof) will continue in effect in accordance with the terms and conditions thereof.

 

7.                                      Non-Disparagement.  From and after the Termination Date, the Executive shall not make any negative, disparaging, detrimental or derogatory remarks or statements (written, oral, telephonic, electronic, or by any other method) about the Company or its subsidiaries or any of their respective owners, partners, managers, directors, officers, employees or agents, including, without limitation, any remarks or statements that could be reasonably expected to adversely affect in any manner (i) the conduct of the Company’s or its subsidiaries’ businesses or (ii) the business reputation or relationships of the Company or its subsidiaries and/or any of their past or present officers, directors, agents, employees, attorneys, successors and assigns.  Similarly, from and after the Termination Date, the board of directors of the Company and senior management of the Company shall not make any such statements about the Executive.  This Section will not apply to prevent Executive or the Company from providing truthful testimony required by law, such as in response to a governmental request or subpoena, nor shall it limit either party from complying with accounting, reporting or disclosure obligations.  Furthermore, if either party breaches its obligations in Section 7, the other party may truthfully respond.

 

8.                                      Cooperation.  Executive will reasonably cooperate to provide support and other services to the Company during the 60 day period following the Termination Date to assist the interim Chief Executive Officer in transitioning to the Company.  Further, Executive will reasonably cooperate with the Company and with the Company’s legal counsel in connection with any present and future (actual or threatened) litigation, administrative proceeding or investigation involving the Company that relates to events, occurrences or conduct occurring (or claimed to have occurred) during the period of the Executive’s employment by the Company, and with respect to which the Executive has pertinent information, provided, that, if the Company’s request for assistance exceeds ten hours per week, Executive will be compensated for his time on an hourly rate based on his base salary on the Termination Date.  To the extent that the Company requests Executive’s assistance, any request will be reasonable in nature and scope.

 

9.                                      Governing Law.  This Separation Agreement will be governed by and construed and enforced according to the laws of the State of New York, without regard to conflict

 

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of laws principles thereof.  Any dispute, controversy or claim arising under Section 11 of the Letter Agreement will be treated in accordance with Section 14 of the Letter Agreement.

 

10.                               Mutual Agreement to Arbitrate Claims.  Except as limited or qualified in this Section 10, the parties agree to resolve by binding arbitration all claims or controversies (“claims”) arising out of this Separation Agreement, except for: claims that cannot be subject to arbitration as a matter of law; claims for workers’ compensation or unemployment compensation; claims under an employee benefit or pension plan that specifies a different procedure; and claims for injunctive relief and/or specific performance, including pursuant to Section 11 of the Letter Agreement.  This Separation Agreement does not prohibit the filing of or pursuit of relief through a court action for temporary equitable relief in aid of arbitration or any administrative charges or complaints filed with any governmental agency.  The aggrieved party must give written notice to the other party or parties no later than the expiration of the statute of limitations that the law prescribes for the claim.  Otherwise, the claim shall be deemed waived.  The aggrieved party should give written notice as soon as possible after the event or events in dispute so that arbitration may take place promptly.  Written notice must be given to those against whom or which a claim is to be brought, and must identify and describe all claims, the facts upon which such claims are based, and the relief or remedy sought.  Claims shall be resolved under the JAMS Employment Arbitration Rules & Procedures (and no other rules).  The claims shall be resolved by a single arbitrator mutually selected by the parties who is experienced in employment law and licensed to practice in New York.  Venue shall be in New York City.  The arbitrator shall set a limited time period and establish procedures designed to reduce the cost and time for discovery while allowing the parties an opportunity, adequate in the sole judgment of the arbitrator, to discover relevant information from the opposing parties about the subject matter of the dispute.  The arbitrator shall rule upon motions to compel or limit discovery and shall have the authority to impose sanctions, including attorneys’ fees and costs, to the same extent as a competent court of law or equity, should the arbitrator determine that discovery was sought without substantial justification or that discovery was refused or objected to without substantial justification.  At the request of either party, the arbitrator will enter an appropriate protective order to maintain the confidentiality of information produced or exchanged in the course of the arbitration proceedings.  The arbitrator shall apply New York law and shall award any remedy available under such law, including attorney’s fees when permitted by statute or contract.  The arbitrator shall issue a written decision setting forth the factual and legal basis for the award.  The arbitrator’s decision shall be final, binding and conclusive upon the parties.  Suit may be brought to compel arbitration or to enforce any arbitration award in a court of competent jurisdiction.

 

11.                               Nonadmission of Wrongdoing.  The parties agree that neither this Separation Agreement nor the furnishing of the consideration set forth herein will be deemed or construed at any time for any purpose as an admission by any party of any liability, wrongdoing or unlawful conduct of any kind.

 

12.                               Amendment; Waiver. This Separation Agreement may not be modified, altered or

 

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changed except upon express written consent of both of the parties.  The failure of any party to insist upon the performance of any of the terms and conditions in this Separation Agreement, or the failure to prosecute any breach of any of the terms and conditions of this Separation Agreement, will not be construed thereafter as a waiver of any such terms or conditions.  This entire Separation Agreement will remain in full force and effect as if no such forbearance or failure of performance had occurred.

 

13.                               Entire Agreement.  This Separation Agreement (including, without limitation, the Release, which will constitute a part of this Separation Agreement) sets forth the entire agreement between the parties hereto and, except for the Letter Agreement, as amended hereby, fully supersedes any prior agreements or understandings between the parties concerning the specific subject matter of this Separation Agreement.  Each party acknowledges that it has not relied on any representations, promises, or agreements of any kind made to it in connection with the other party’s decision to enter into this Separation Agreement, except for those set forth in this Separation Agreement and the Letter Agreement.  The provisions of Sections 13, 16 and 17 of the Letter Agreement are hereby incorporated by reference.

 

14.                               Severability.  If any provision of this Separation Agreement is declared or determined by any court of competent jurisdiction to be illegal, invalid or unenforceable, the legality, validity and enforceability of the remaining parts, terms or provisions will not be affected thereby, and said illegal, unenforceable or invalid part, term or provision will be deemed not to be part of this Separation Agreement.

 

15.                               Withholding for Taxes.  The Company may withhold from any amounts payable hereunder all federal, state, city or other taxes as will be required to be withheld pursuant to any applicable law or government regulation or ruling.

 

16.                               Binding Effect; Assignment.  This Separation Agreement will inure to the benefit of and be binding upon the heirs, executors, administrators, successors and assigns of the parties, including, without limitation, any successor to the Company.  The parties represent and warrant that they have not transferred or assigned to any person or entity any rights or obligations herein.  This Separation Agreement is not assignable by either party without the prior written consent of the other, except that the Company may assign this Separation Agreement to any assignee of or successor to substantially all of the business or assets of the Company or any direct or indirect subsidiary thereof without prior written consent of Executive.

 

17.                               Captions; Drafter Protection.  The headings and captions herein are provided for reference and convenience only, and will not be employed in the construction of this Separation Agreement.  It is agreed and understood that the general rule pertaining to construction of contracts, that ambiguities are to be construed against the drafter, will not apply to this Separation Agreement.

 

18.                               Consultation with Attorney; Voluntary Agreement.  Executive acknowledges that (a) the Company has advised Executive of Executive’s right to consult with an attorney of Executive’s own choosing prior to executing this Separation Agreement, (b) Executive has carefully read and fully understands all of the provisions of this

 

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Separation Agreement, and (c) Executive is entering into this Separation Agreement, including, without limitation, the Release, knowingly, freely and voluntarily in exchange for good and valuable consideration.

 

[Signature Page Follows]

 

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Execution Version

 

IN WITNESS WHEREOF, the parties have executed this Separation Agreement as of the date first written above.

 

 

	
 
    	
COMPANY:
    
	
 
    	
 
    
	
 
    	
Volt   Information Sciences, Inc.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Michael Dean
    
	
 
    	
Name:   Michael Dean
    
	
 
    	
Title:   Chairman of the Board of Directors
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
EXECUTIVE:
    
	
 
    	
 
    
	
 
    	
Ronald   Kochman
    
	
 
    	
 
    
	
 
    	
/s/   Ronald Kochman
    

 

 

EXHIBIT A

 

Volt Information Sciences, Inc. General Release Agreement

 

EXECUTIVE:  Ronald Kochman

 

This General Release Agreement constitutes a part of the Separation Agreement between Executive and Company (and, for the avoidance of doubt, any capitalized terms not defined in this General Release Agreement will have the meaning set forth in the Separation Agreement).  You must execute and this release must become effective with 52 calendar days following your Termination Date.  The Company will have no obligation to make any payments or provide any benefits contemplated by Section 2 of the Separation Agreement (other than the Accrued Obligations) in the event this release does not become effective.  In consideration of the benefits and payments paid to Executive pursuant to the letter agreement previously entered into and dated as of December 26, 2012 (the “Letter Agreement”), and the Separation Agreement, Executive hereby agrees as follows:

 

OBLIGATIONS OWED TO THE COMPANY

 

All debts owed by you to the Company will be deducted from, and at the time that, any amounts payable to you hereunder.  Debts include, without limitation, personal expenses incurred by you from the Company calling cards, long distance charges, credit card charges and overpayments of any kind.

 

NON-COMPETE; NON-DISCLOSURE

 

You agree to continue to be subject to the restrictive covenants contained in the Letter Agreement including, without limitation, the provisions of Section 8 and Section 9 of the Letter Agreement.

 

GENERAL RELEASE

 

You, on your own behalf, and on behalf of your heirs and assigns, and all persons claiming under you, hereby fully and forever unconditionally release and discharge the Company, all of its affiliated and related corporations, their predecessors, successors and assigns, together with their divisions and departments, and all past or present officers, directors, employees, insurers and agents of any of them (hereinafter referred to collectively as “Releasees”), of and from, and you covenant not to sue or assert against Releasees, for any purpose, all claims, administrative complaints, demands, actions and causes of action, of every kind and nature whatsoever, whether at law or in equity, and both negligent and intentional, arising from or in any way related to your employment by Company, based in whole or in part upon any act or omission occurring on or before the date of this general release, without regard to your present actual knowledge of the act or omission, which you may now have, or which you, or any person acting on your behalf may at any future time have or claim to have, including specifically, but not by way of limitation, matters which may arise at common law or under federal, state or local laws, such as claims based on Title VII of the Civil Rights

 

 

Act of 1964, the Civil Rights Act of 1991, the Civil Rights Act of 1866, the Age Discrimination in Employment Act of 1967 (including the Older Workers Benefit Protection Act), the Americans with Disabilities Act, the Fair Labor Standards Act, the Equal Pay Act, the Family and Medical Leave Act, the Employee Retirement Income Security Act of 1974, the New York State and New York City Human Rights Laws, and U.S. and New York State Labor Laws (as any of the foregoing may be amended from time to time), and any common law, public policy, contract (whether oral or written, express or implied) or tort law, including claims for defamation, and any other local, state or federal law, regulation or ordinance applicable in the United States or any foreign jurisdiction.  You warrant that you have not assigned or transferred any right or claim described in this general release.  You expressly assume all risk that the facts and law concerning this general release may be other than as presently known to you.  You acknowledge that, in signing this general release, you are not relying on any information provided to you by Releasees or upon Releasees to provide information not known to you.

 

Notwithstanding the foregoing, the release provided by Executive under this General Release Agreement shall not include any claim for indemnity, including costs and reasonable fees attributable to defense of any claim, which Executive may have pursuant to the Company’s Articles of Incorporation or Bylaws, under applicable provisions of New York law, or under any applicable insurance policy.  Upon request, the Company agrees to make available for review by Executive or his representative copies of any applicable insurance policies or other Company documents relating to such rights.

 

THIS SECTION APPLIES ONLY TO EMPLOYEES 40 YEARS OF AGE AND OLDER

 

If you are 40 years of age or older, you have 21 calendar days in which to consider and review this General Release Agreement prior to signing it.  If you desire to knowingly waive the 21 calendar day review period prior to your execution of this General Release Agreement, please initial:

 

Further, for a period of seven calendar days following your execution of this General Release Agreement, you may revoke this General Release Agreement by providing notice of such revocation to the Company.  Any such notice shall be given to Volt Information Sciences, Inc., Attn: President, by any of the following means:

 

	
By US Mail:
    	
Volt Information Sciences, Inc.
    
	
 
    	
1065 Avenue of the Americas
    
	
 
    	
New York, New York 10018
    

 

Such notice, if given, must be actually received by the Company within seven calendar days following your execution of this General Release Agreement.  You agree that if you exercise your revocation right, the respective rights and obligations of the parties to this General Release Agreement, the Separation Agreement and the Letter Agreement will be automatically void and you will immediately pay to the Company, upon demand, any and all payments made by the Company to you hereunder or thereunder.

 

 

EFFECTIVE DATE

 

This General Release Agreement shall become effective on the eighth (8th) day after you sign it, provided that you have not revoked it prior to that time (the “Effective Date”).

 

ACKNOWLEDGMENT

 

You acknowledge that you have read this General Release Agreement, understand its terms, and have had an opportunity to have answered to your satisfaction any questions concerning the terms hereof.  You execute this General Release Agreement voluntarily and of your own free will and choice, after having been advised to seek your own legal counsel, without threat, coercion or duress, intending to be legally bound.

 

	
 
    	
 
    	
Date:
    	
 
    
	
Signature
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Printed   Name
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Address
    	
 
    	
WITNESS
    

 

EXHIBIT B

 

 

Stock Option Grants

 

	
Grant Date
    	
 
    	
Number of Options Granted
    	
 
    	
Exercise Price
    	
 
    
	
April 7, 2009
    	
 
    	
8,000
    	
 
    	
$
    	
6.39
    	
 
    
	
July 3, 2014
    	
 
    	
20,000
    	
 
    	
$
    	
10.00
    	
 
    
	
July 3, 2014
    	
 
    	
40,000
    	
 
    	
$
    	
12.00
    	
 
    
	
July 3, 2014
    	
 
    	
40,000
    	
 
    	
$
    	
14.00
    	
 
    

 

EXHIBIT C

 

 

NOTICE OF EXERCISE

 

Volt Information Sciences, Inc.

1065 Avenue of the Americas, 20th Fl.

New York, New York 10018

Attention:  Secretary

 

I hereby exercise my Option pursuant to that certain Non-Qualified Stock Option Agreement dated                    (the “Stock Option Agreement”) awarded under the Volt Information Sciences, Inc. 2006 Incentive Stock Plan (the “Plan”), subject to all of the terms and conditions of the Stock Option Agreement and the Plan referred to therein, and hereby notify you of my election to purchase the following stated number of Shares of Stock of Volt Information Sciences, Inc., a New York corporation (the “Company”), from the award therein as indicated below at the following stated Option Price per Share.

 

Number of Shares -                                                               Option Price per Share - $                                                                               Total Option Price - $

 

If this Notice of Exercise involves fewer than all of the Shares that are subject to option under the Stock Option Agreement, I retain the right to exercise my option for the balance of the Shares remaining subject to option, all in accordance with the terms of the Stock Option Agreement.

 

I agree to provide the Company with such other documents and representations as it deems appropriate in connection with this option exercise.

 

Payment of Exercise Price.

 

o (1) This Notice of Exercise is accompanied by a check in the amount of $      ; and/or

o (2) This Notice of Exercise is accompanied by a certificate for        Shares of Stock, with a duly executed stock power, having an aggregate Fair Market Value on the date of exercise equal to the amount of the above Total Option Price, in payment of the total exercise price for the Shares; and/or

o (3) Payment of the Total Option Price will be made by cashless exercise in accordance with the Company’s cashless exercise procedures as in effect on the date hereof.

 

Tax Withholding.  Subject to any satisfaction of tax withholding pursuant to the next paragraph, I hereby authorize the Company (and any of its Subsidiaries) to withhold from my regular pay or any extraordinary pay from the Company (and any of its Subsidiaries) the applicable minimum amount of any taxes required by law and the Stock Option Agreement to be withheld as a result of this exercise, to the extent not satisfied by the following:  o (1) my attached check in the amount $        , and/or o (2) the attached certificate for           Shares of Stock, with a duly executed stock power, having a value (based on the Stock’s Fair Market Value on the date of exercise) of $         per Share in full or partial payment of taxes the Company (and any of its Subsidiaries) is required to withhold with respect to this option exercise.

 

 

o [Check only if desired]  I request that the Company withhold from the Shares of Stock otherwise to be issued to me in connection with this exercise a sufficient number of Shares of Stock having a value (based on the Stock’s Fair Market Value on the date of exercise) needed to satisfy the payment of o all or o $         of the applicable minimum amount of any taxes required by law and the Stock Option Agreement to be withheld as a result of this exercise.

 

My current address and my Social Security Number are as follows:

 

Address:

 

Social Security Number:

 

	
Date:
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Ronald Kochman

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