Document:

Exhibit 10.3

 

CERTAIN PORTIONS OF THE EXHIBIT THAT ARE NOT
MATERIAL AND WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED
HAVE BEEN REDACTED PURSUANT TO ITEM 601(b)(10)(iv) OF REGULATION
S-K. [***] INDICATES THAT INFORMATION HAS BEEN
REDACTED.

 

MASTER SUPPLY AGREEMENT

 

This
Supply Agreement effective as of the 2nd day of March, 2020 (the
“Effective Date”), and all schedules incorporated by
reference (collectively the “Agreement”) is by and
between Ascentron Inc. (“Supplier”), an Oregon
corporation, with an office at 994 Antelope Rd White City OR
97503 and
Dynatronics Corporation (“Dynatronics”), a Utah
corporation, with an office at 7030 Park Centre Drive Cottonwood
Heights UT 84121. Supplier and Dynatronics are sometimes referred
to herein individually as “Party” and together as
“Parties”.

 

WHEREAS, Supplier manufactures/assembles
various electronic products;

 

WHEREAS, Supplier will furnish the
necessary personnel, material, equipment and facilities to
manufacture/assembly of various products for Dynatronics in
accordance with Specifications (as defined below) provided by
Dynatronics;

 

WHEREAS, Supplier desires to manufacture
the Products (as defined below) and desires to sell certain
quantities of Products to Dynatronics pursuant to the terms and
conditions set forth in this Agreement; and

 

WHEREAS, Dynatronics desires to purchase
from Supplier certain quantities of Products pursuant to the terms
and conditions set forth in this Agreement.

 

NOW, THEREFORE, intending to be legally
bound hereby, the Parties hereto agree as follows:

 

ARTICLE 1

DEFINITIONS

 

1.1.

“Act” means the Federal
Food, Drug and Cosmetic Act, as amended from time to
time.

 

1.2.

“Ascentron Quote Letter
Terms” are the discrete quotes provided by
Ascentron.

 

1.3.

“Confidential Information”
means any: (i) information or material in tangible form disclosed
hereunder that is marked as "Confidential" at the time it is
delivered to the receiving Party; or (ii) information
disclosed orally hereunder which is identified as confidential or
proprietary when disclosed or is known or should be known to be
confidential. The foregoing notwithstanding, information shall be
considered Confidential Information if it would be apparent to a
reasonable person, familiar with the disclosing Party’s
business and the industry in which it operates, that such
information is of a confidential or proprietary nature the
maintenance of which is important to the disclosing Party. To the
extent that it can be established by the receiving Party by written
proof, “Confidential Information” shall not include
information that (i) was already known to the receiving Party,
other than under an obligation of confidentiality, at the time of
disclosure; (ii) was available to the public or otherwise part of
the public domain at the time of its disclosure to the receiving
Party; (iii) became available to the public or otherwise part of
the public domain after its disclosure and other than through any
act or omission of the receiving Party in breach of this Agreement;
(iv) was subsequently lawfully disclosed to the receiving Party by
a person other than a Party hereto; or (v) was independently
developed by a person having no knowledge of, or access to, the
other Party’s Confidential Information.

 

1.4.

“Complaint” means any
oral, written or electronic communication that alleges deficiencies
related to the identity, quality, durability, reliability, safety,
effectiveness or performance of a Product or portion thereof that
has been manufactured by Supplier or its affiliates after it is
released for sale.

 

1.5.

“FDA” means the United
States Food and Drug Administration, or any successor
thereto.

 

 

 

 

CERTAIN PORTIONS OF THE EXHIBIT
THAT ARE NOT MATERIAL AND WOULD BE COMPETITIVELY HARMFUL IF
PUBLICLY DISCLOSED HAVE BEEN REDACTED PURSUANT TO ITEM
601(b)(10)(iv) OF REGULATION S-K. [***] INDICATES THAT INFORMATION
HAS BEEN REDACTED. 

 

1.6.

“Governmental Authority”
means any applicable government regulatory authority with
jurisdiction over the Products in the United States of America,
including, but not limited to the FDA, or in any other jurisdiction
in which Products or products containing the Products are sold or
proposed to be sold.

 

1.7.

“Inventory” means raw
materials, packaging and finished goods.

 

1.8.

“MDRs” means Medical
Device Reports, as defined and required by the FDA.

 

1.9.

“Party” means either
Supplier or Dynatronics and “Parties” means Supplier
and Dynatronics.

 

1.10.

“Product(s)” means the
products listed on Schedule A, manufactured in
accordance with the Specifications and otherwise in compliance with
this Agreement, or such other products and their Specifications
that may be added from time to time to this Agreement by the
written agreement of the Parties.

 

1.11.

“Purchase Order(s)” means
a document used by Dynatronics to order the Products (in hard copy
or electronic form).

 

1.12.

“QS Regulations” means the
Quality System Regulations promulgated by the FDA, as amended from
time to time, governing the manufacture of medical
devices.

 

1.13.

“Recalled Products” means
Product(s) that is recalled for manufacturing defect.

 

1.14.

“Specifications” means the
bill of materials, schematics, assembly drawings, designs, test
specifications, current revision number, approved vendor list and
other manufacturing information for each Product as set forth on
Schedule B, which
is attached hereto, made a part hereof and incorporated herein by
reference, as such Schedule may be amended from time to time by the
written agreement of the Parties.

 

1.15.

“Warranty Period” means
the eighteen (18) months after the date of delivery to end-user the
Product for any defects.

 

ARTICLE 2

SUPPLY OF PRODUCT

 

2.1            

Supply of Product by Supplier.
Supplier agrees to manufacture, sell and supply the Products
ordered by Dynatronics pursuant to the terms and conditions of this
Agreement. Dynatronics and Supplier agree that mutually agreed upon
metrics of performance shall be established in writing and measured
and reported at agreed upon intervals. If Dynatronics notifies
Supplier that Supplier failed to meet the agreed upon metrics,
Supplier shall make best commercial efforts to bring its
performance back into the agreed upon range within 
[***]
days.

 

2.2            

Price. Supplier shall sell, and
Dynatronics shall purchase Products manufactured pursuant to this
Agreement at the price per each unit of Product as set forth on
Schedule C, subject
to meeting the purchase requirements set forth herein. Supplier
shall not charge Dynatronics for any costs, expenses or fees other
than the price per unit of Product without the prior written
consent of Dynatronics. The prices set forth on Schedule C may be
updated annually; however, if any Product is priced at an amount
not agreeable to Dynatronics, Dynatronics may remove the Product
from Schedule C. Price increases will be limited to [***]. Should
pricing increase [***] or more, Ascentron shall provide Dynatronics
with the details and Dynatronics shall be provided the opportunity
to negotiate with raw material suppliers directly or change
materials to mitigate the increases.

 

 Additional
costs associated with [***],
are the responsibility of Dynatronics and shall be submitted with
documentation for payment. Price increases or minimum buys related
to [***]
will be submitted for consideration. [***].

 

 

 

 

 
CERTAIN PORTIONS OF THE EXHIBIT THAT ARE NOT
MATERIAL AND WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED
HAVE BEEN REDACTED PURSUANT TO ITEM 601(b)(10)(iv) OF REGULATION
S-K. [***] INDICATES THAT INFORMATION HAS BEEN
REDACTED.

 

2.3            

Blanket Purchase Order and Monthly
Forecasting. During the term of this Agreement, Dynatronics
shall place a blanket Purchase Order for the Products using a form
or method mutually agreed upon by the Parties, which specifies (i)
the Product(s) and quantity for each being purchased, (ii) forecast
delivery dates, (iii) Specifications (if different than the ones
provided as part of this Agreement), and (iv) the location and
manner of delivery. Such Purchase Orders shall not be deemed to
modify any term of this Agreement or its exhibits, except the
Specifications.

 

Within
[***],
Dynatronics shall use best efforts to prepare and provide Ascentron
with (i) a [***]
forecast as to Dynatronics’ estimated requirements of
Products for [***].

 

2.4            

Orders. Supplier agrees to
supply Dynatronics’ firm orders for the Products. If Supplier
discovers any potential delay that threatens the timely or full
delivery of Products with respect to any order, Supplier shall
promptly notify Dynatronics of such delay. Supplier shall provide a
written plan for correction of such delay. The required
notification and any plan for correction shall be considered for
informational purposes only and shall not release Supplier from any
other obligations under this Agreement.

 

 

2.5            

Specifications. The Products
sold to Dynatronics hereunder shall strictly comply with the
Specifications and be compliant with FDA and other laws and
regulations governing the manufacture and sale of the Products.
Supplier shall not make any changes to the materials used (or
vendors of such materials) to manufacture the Products or the
processes used to manufacture the Products without the prior
written consent of Dynatronics, whose consent can be withheld for
any or no reason. Dynatronics may request in writing that Supplier
incorporate an engineering change into a Product at any time upon
notice to Supplier. Such request shall include a description of the
proposed change sufficient to permit Supplier to evaluate it.
Supplier’s evaluation shall be in writing and shall state the
impact of the requested change on delivery schedule and expected
cost. Supplier shall not be obligated to proceed with the requested
engineering change until the Parties have agreed on the changes to
the Product, Specifications, part revision level, delivery schedule
and pricing. When engineering changes are agreed to, the Parties
shall memorialize the changes in a document, signed by the
Parties.

 

2.6            

Certificate; Inspection and
Acceptance. Each shipment of Product must be accompanied by
final Product testing and inspection results and a certificate
signed by the Supplier stating that the Products comply with the
Specifications and all other terms and conditions of this Agreement
(“Certificate”); the Certificate shall be set forth by
Product serial number and must be signed by Supplier.

 

Dynatronics, upon
receipt of Products from Supplier, shall have ninety (90)
days to inspect the
Products and the Certificate and determine whether or not they
comply with the Specifications or to determine if there are any
shortages. If Dynatronics determines during its inspection of
Products that the Products do not comply with the Specifications or
the Certificate is unreliable, Dynatronics shall notify Supplier
and provide Supplier with samples of nonconforming Products (to the
extent Dynatronics deems possible) along with such notice and
provide Supplier with the results of Dynatronics’
inspections. If Supplier’s inspection confirms
Dynatronics’ determination or any part thereof, then
Supplier, at its expense and at Dynatronics’ option, within
thirty (30) days following the completion of Supplier’s
investigation into Dynatronics’ determination, either shall
bring the Products in question into conformance with the
Specifications or shall replace the Products that Dynatronics
determined failed to comply with the Specifications, in either
case, at no additional charge to Dynatronics.

 

2.7            

Shipping Terms;Shipping Costs; Risk of
Loss; Title. All quantities of Products shall be shipped to
FOB White City, OR, on the carrier specified by Dynatronics. Upon
delivery to Dynatronics’ carrier, title to the Products and
the risk of damage or loss to the Products shall pass to
Dynatronics. Dynatronics shall bear all shipping costs and shall be
responsible for any and all insurance coverage for shipment of
Products.

 

2.8            

Terms of Payment. Supplier
shall invoice Dynatronics not earlier than each shipment of
Products. The invoice shall include Supplier’s name, address,
invoice date, the order number, the total price calculated pursuant
to the terms of the Agreement, and the name, if applicable, title,
complete mailing address where payment is to be sent and must be
submitted to the appropriate invoice address set forth in this
Agreement, or in the order. The purchase price, as set forth in
Section 2.2, shall be paid in United States dollars, by ACH on
11⁄2% 15 days (wherein payment is received by Supplier within 15
days), net 45 days from the receipt of the invoice.

 

2.9            

Lot Documentation or Serial Number
Controls; Registration Documentation. Supplier shall produce
such documentation as reasonably requested by Dynatronics to comply
with documentation requirements of any Governmental Authority
(“Documentation”). Such
Documentation shall include, without limitation, Dynatronics
preapproval of any engineering change notices, device history
records, non-conformance and complaint investigation reports,
corrective and preventive action records, certificates of
compliance set forth by serial number, and other quality-related
records, as requested by Dynatronics.

 

 

 

 

 
CERTAIN PORTIONS OF THE EXHIBIT THAT ARE NOT
MATERIAL AND WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED
HAVE BEEN REDACTED PURSUANT TO ITEM 601(b)(10)(iv) OF REGULATION
S-K. [***] INDICATES THAT INFORMATION HAS BEEN
REDACTED.

 

2.10            

Conflict with Forms. If there
is a conflict between Supplier’s invoice or packing slip and
this Agreement, the applicable Ascentron Quote Letter Terms
attached as Schedule D or Purchase Order and this Agreement, the
terms of this Agreement shall govern followed by the applicable
Ascentron Quote Letter Terms.

 

2.11            

Facilities. Supplier shall
provide sufficient space and a sufficiently clean manufacturing
environment to support the manufacture of Products.

 

2.12            

Quality System. Supplier shall
maintain a quality system that is capable of meeting the
requirements of US FDA GMP requirements and IS013485-2016
certification.

 

2.13            

Process and Change Control

 

2.13.1                      

Supplier shall not
make any changes to Specifications or component raw materials of
Products without the prior written consent of Dynatronics quality
assurance manager.

 

2.13.2                      

Supplier shall
fully cooperate with Dynatronics for the manufacture and ongoing
supply of Products for Dynatronics. Pricing for any design changes
shall be negotiated in good faith by both Parties.

 

2.14            

Packaging and Storage. Supplier
shall package and ship Products under conditions designed to
maintain the Products proper packaging conditions and in a manner
to keep it from potential mix-up or damage.

 

 

 

 

 
CERTAIN PORTIONS OF THE EXHIBIT THAT ARE NOT
MATERIAL AND WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED
HAVE BEEN REDACTED PURSUANT TO ITEM 601(b)(10)(iv) OF REGULATION
S-K. [***] INDICATES THAT INFORMATION HAS BEEN
REDACTED.

 

ARTICLE 3

MATERIALS; AUDITS; REGULATORY REQUIREMENTS

 

3.1            

Source of Supply. Supplier
shall manufacture the Products only at its facility located at 994
Antelope Rd White City OR 97503 (“Facility”) and
any other Dynatronics-approved facilities in the United States,
whose approval may be reasonably withheld for any
reason.

 

3.2            

Vendor Approvals. Dynatronics
shall at all times have the right to approve in writing the vendors
and subcontractors used to supply materials and/or services used in
the manufacture of the Products and vendors not approved in writing
shall not be utilized by Supplier.Upon execution of this Agreement
Supplier will provide a list of outsourced operations and the name
and location of each outsourced supplier Although Dynatronics has
the right to approve subcontractors, Supplier will be completely
and solely responsible for all activities and obligations performed
by subcontractors under this Agreement and shall indemnify
Dynatronics for the same. Supplier shall be solely responsible for
vetting any such subcontractor’s qualifications, including,
but not limited to, audits and validations.

 

3.3            

Audits and Supplier
Responsibilities. Supplier shall permit Dynatronics to
perform quality audits and other audits at: (i) the Facility; (ii)
any of Supplier’s manufacturing facilities in the United
States manufacturing Products pursuant to this Agreement; (iii) at
the facilities of proposed and approved vendors of materials for
the manufacturing of Products; and, (iv) at the facilities of
proposed and approved subcontractors (“Audits”). Such
Audits shall be conducted at Dynatronics’ discretion, and
Dynatronics shall use best efforts to conduct the Audits during
normal business hours and upon reasonable advance notice of the
date of such intended Audit. Audits will be conducts to review the
processes and controls in place at each location and to ensure
compliance with this Agreement, Specifications and applicable law,
including, without limitation, the Quality System Regulations
promulgated by the FDA, as amended from time to time, and required
through ISO 13485 (the “QS Regulations”). Supplier
shall use its reasonable efforts to accommodate Dynatronics’
requests to perform such Audits on the date Dynatronics so
requests. Supplier and subcontractors, if any, will manufacture the
Products in accordance with QS Regulations, including without
limitation, a device history record for each Product. Supplier is
responsible for conducting and documenting corrective and
preventive actions based upon the analysis of quality data
available to Supplier and Dynatronics may request copies of such
documentation at any time for any reason. Supplier agrees to
implement corrective actions in a reasonable period of time, not to
exceed  [***]
to all non-conformances identified by Dynatronics, during Audits or
otherwise. Supplier shall be responsible for any changes required
(i) to maintain or achieve compliance with existing quality systems
of product regulations and standards, the Specifications or other
requirements under this Agreement; and/or (ii) to correct
non-conformances from a Governmental Authority or ISO notified body
inspection report.

 

3.4            

Product Non-Conformances or
Changes. Supplier shall notify Dynatronics of any
non-conformance with or deviation from the Specifications or
compliance with any laws or any other term and condition of this
Agreement that is associated with the components, production,
testing or inspection of any Product. In the event that Supplier
recommends release of Product to Dynatronics that does not conform
to the Specifications or any other term and condition of this
Agreement, all such non-conformances and deviations must be agreed
to in writing by Dynatronics (at Dynatronics’ discretion).
Notwithstanding the foregoing, Dynatronics is not required to agree
to such non-conformances or deviations.

 

3.5            

Product Complaints. Supplier
shall advise Dynatronics, by telephone or facsimile, within [***]
after it becomes aware of any (i) Complaint, whether written or
oral, relating to the Products, (ii) serious injury from the use
of, or malfunction of, Products and (iii) any defect in, or
condition of, the Products or any other fact or circumstance which
may result in a violation or alleged violation of any applicable
statutes, laws, rules, regulations, ordinances or decrees of any
Governmental Authority, which Supplier subsequently shall confirm
in writing, within [***].
Supplier further agrees to investigate any Complaint identified by
Dynatronics. Supplier shall investigate each Complaint and shall
maintain a written record of each such investigation. Supplier
shall send Dynatronics copies of each such Complaint and a full
report on each such investigation promptly after receiving such
Complaint or completing such investigation, as the case may be, but
in no event later than [***]
after the applicable event. Such report shall include all data on
Complaints respecting the Products, including lot or serial number,
as appropriate, of the Product in question. Supplier shall
cooperate with Dynatronics to the extent reasonably necessary to
resolve outstanding Complaints and Dynatronics shall have primary
responsibility to file all MDRs required to be filed with the FDA
or other relevant Governmental Authority.

 

Dynatronics shall
notify Supplier by telephone or facsimile, within [***] after
it becomes aware of any (i) Complaint, whether written or oral,
relating to the Products, (ii) serious injury from the use of, or
malfunction of, Products and (iii) any defect in, or condition of,
the Products or any other fact or circumstance which may result in
a violation or alleged violation of any applicable statutes, laws,
rules, regulations, ordinances or decrees of any Governmental
Authority, which Dynatronics subsequently shall confirm in writing
to Supplier, within [***].

 

3.6            

Recalls, Corrections and
Removals. If Dynatronics believes that any Product should be
recalled or withdrawn from distribution or sale, that a field
correction should be made, or that an advisory letter should be
issued regarding reliability or defects in any such Product (any of
which shall be referred to herein as a “Recall
Action”), Supplier agrees to cooperate with Dynatronics in
taking such action. Dynatronics may initiate a Recall Action
without Supplier’s consent. If a Recall Action is required by
law or desired by Dynatronics, Supplier shall take all other
actions to assist in promptly executing any Recall Action as
directed by Dynatronics. This Section shall not in any way impair
the obligations of either Party under law, or with respect to the
recall of Products required by law or properly mandated by
Governmental Authority.

 

Recall
Actions due to the failure of a Product to comply with the
Specifications or any other term or condition of this Agreement,
shall be at Supplier’s sole cost and expense and limited to
transportation costs, labor and replacement material;however, any
costs or expense associated with Recall Actions of Product required
by law or desired by Dynatronics that are solely the result of the
Product Specifications failing to meet laws and/or regulations
shall be at sole cost and expense of Dynatronics.

 

If
Dynatronics determines during its inspection of Recalled Products
that the Products do not comply with the Specifications,
Dynatronics shall notify Supplier and use best efforts to provide
Supplier with samples of nonconforming Products (to the extent
Dynatronics deems possible) along with such notice and provide
Supplier with the results of its inspections. If either Party was
notified of the Product issue within the Warranty Period and
Supplier’s inspection does not materially dispute
Dynatronics’ determination, then Supplier, at its expense and
at Dynatronics’ option, within thirty (30) days following the
completion of Supplier’s investigation into
Dynatronics’ determination, either shall: (i) bring the
Products in question into conformance with the Specifications
within a time period provided by Dynatronics; or, (ii) shall
replace the Products that Dynatronics determined failed to comply
with the Specifications with complaint Products; however, , in
either case, either options shall be at no additional charge to
Dynatronics. Additionally, if Supplier’s inspection does not
materially dispute Dynatronics’ determination and the
Products are still within the Warranty Period, then Supplier will
also be responsible to reimburse Dynatronics for the direct
shipping costs of recalling the Product(s) and distributing
replacement Products if that option is elected by
Dynatronics,

 

During
the term of this Agreement and for a period of [***]
thereafter, Supplier shall maintain complete and accurate records,
including sales and service records for such periods as may be
required by applicable law, of all Products and Product components
Supplier or subcontractor manufactures for purposes of assisting
Dynatronics in determining the extent and nature of any Recall
Action under this Section and service records to enable Dynatronics
to conduct any Recall Action.

 

 

 

 

CERTAIN PORTIONS OF THE EXHIBIT
THAT ARE NOT MATERIAL AND WOULD BE COMPETITIVELY HARMFUL IF
PUBLICLY DISCLOSED HAVE BEEN REDACTED PURSUANT TO ITEM
601(b)(10)(iv) OF REGULATION S-K. [***] INDICATES THAT INFORMATION
HAS BEEN REDACTED.

 

3.7            

Quality Agreement. Dynatronics
and Supplier upon terms mutually agreeable to both Parties have
executed a Supplier Quality Requirements that expressly addresses
quality/regulatory responsibilities of both Parties, a copy of
which is set forth in Schedule E to this Agreement.
At either Party’s request, the Supplier Quality Requirements
may be subject to periodic updates, which changes shall require the
written consent of both Parties.

 

ARTICLE
4

REPRESENTATIONS
AND WARRANTIES; DUTIES OF SUPPLIER

 

4.1            

Compliance with Specifications and
Laws; Product Warranties. Supplier represents and warrants
that (i) it will convey good title to all Products delivered to
Dynatronics, free from any security interest, liens or other
encumbrances (ii) the Products manufactured hereunder shall be
manufactured in strict compliance with (A) the Specifications and
all other terms and conditions of this Agreement and (B) all
applicable laws, rules and regulations, including, without
limitation, the QS Regulations. The Products manufactured hereunder
shall be free from defects in materials caused by Ascentron and
workmanship for a period of eighteen (18) months from the date of
delivery of the Products to Dynatronics. Dynatronics shall have all
responsibility for the design of the Products and that the
Specifications as delivered to Supplier, meet the appropriate laws
and regulations of the United States. Upon notification by
Dynatronics of any malfunction or defect in the Products or other
non-compliance with the Specifications or other terms and
conditions of this Agreement, Supplier will provide Dynatronics
with instructions on returning the Product under a warranty claim
during the Warranty Period. Upon receipt of any Products returned
by Dynatronics pursuant to this Section of this Agreement, Supplier
shall, at Dynatronics’ option and Supplier’s sole costs
and expense, either correct or replace the nonconforming or
defective Product, or refund the purchase price of the Products.
The warranties set forth in this Agreement shall extend to all
Parties along the supply chain and to the end users of the
Products.

 

4.1.1 Warranty
Exclusions: Supplier shall not
be responsible to replace Product or reimburse Dynatronics for
warranty claims for: (i) any first articles, prototypes,
preproduction units, or test units of a Product; (ii) any Products
which have been repaired by the end user or a third party, without
Supplier’s approval; (iii) any Products which have been
altered or modified in any way by the end user or a third party;
(iv) any Products with defects or failures due to errors in the
Specifications or defects in Dynatronics provided tooling or test
fixtures, devices, or software;(v) any Products with defects that
cannot be detected using Dynatronics specified inspection and
testing procedures; (vi) any Products with defects or failures due
to use of components or processes, that are compliant with
Environmental Laws, including, but not limited to, solder
joint failures and other malfunctions caused by lead-free or hybrid
soldering processes; or (vii) any
Products with defects or failures cause by Dynatronics due to
misuse, abnormal use, neglect, impact, exposure to harmful
liquids, improper handling in accordance with static
sensitive electronic device handling requirements, or extreme environmental conditions outside of the
design tolerances for the Product. To the extent they are
transferrable, Supplier agrees to transfer all manufacturer and
distributor warranties it receives relating to any parts or
components incorporated into the Products to
Dynatronics.

 

Each
shipment of Product shall be accompanied by the Certificate
described in Section 2.6 of this Agreement.

 

4.2            

Authority to Enter into this
Agreement. Each Party represents to the other Party that it
has the power and authority to enter into this Agreement and to
perform all of its obligations hereunder. Neither Party is a party
to any agreement, order or decree which would prevent it from
performing its obligations hereunder.

 

4.3            

No Debarment. Supplier
certifies that neither it nor any of its employees or contractors
has been debarred under Section 306(a) or Section 306(b) of the Act
and that no debarred person will in the future be employed to
manufacture the Products. Supplier also certifies that no person
working in the manufacture of Products has a conviction that could
lead to debarment under Section 306(a) or Section 306(b) of the
Act. Furthermore, Supplier agrees to notify Dynatronics immediately
of any action toward conviction or debarment under Section 306(a)
or Section 306(b) of the Act of any person working in the
manufacture of the Products.

 

4.4            

Supplier Representation and
Warranties. Supplier represents and warrants that it
shall:

(a)

manufacture, label
and package the Products in accordance with the Specifications and
the terms of this Agreement;

(b)

maintain reasonable
production levels in order to supply Dynatronics’
requirements for Products under this Agreement consistent with the
Sections 2.3 and 2.4 above;

(c)

provide adequate
personnel, equipment and resources to enable it to fulfill its
obligations under this Agreement, including, without limitation,
its obligation to repair Products, as applicable, during the
Warranty Period;

(d)

in the event that
any vendors or subcontractors do not timely deliver any critical
materials used in the Products, use commercially best efforts to
pursue all of its rights and remedies against such vendors and/or
subcontractors to identify and secure replacement vendors and/or
subcontractors;

(e)

promptly notify
Dynatronics, but not later than [***], if
Supplier becomes aware of, or receive any notice from any vendor or
subcontractor with respect to, any problems with any tool, die,
mold or other manufacturing equipment operated by any vendor or
subcontractor;

(f)

notify Dynatronics
within [***] hours
of receipt of contact from the FDA or other Governmental Authority
with authority over the Products if such entity contacts Supplier
to investigate or inspects Supplier or any of its facilities with
respect to Products produced, manufactured, repaired or serviced by
Supplier;

(g)

perform or comply
with all of Supplier’s obligations under this Agreement and
the Supplier Quality Requirements;

(h)

not, directly or
indirectly, sell the Products to anyone other than Dynatronics
during the Agreement or thereafter for period of 5
years.

 

 

 

 

 
CERTAIN PORTIONS OF THE EXHIBIT THAT ARE NOT
MATERIAL AND WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED
HAVE BEEN REDACTED PURSUANT TO ITEM 601(b)(10)(iv) OF REGULATION
S-K. [***] INDICATES THAT INFORMATION HAS BEEN
REDACTED.

 

ARTICLE 5

CONFIDENTIALITY AND INTELLECTUAL PROPERTY

 

5.1            

Confidential Information.
Except as expressly provided herein, the Parties agree that, for
the term of this Agreement and thereafter as long as such
information remains confidential, the receiving Party shall keep
completely confidential and shall not publish or otherwise disclose
and shall not use for any purpose except for the purposes
contemplated by this Agreement any Confidential Information
furnished to it by the disclosing Party hereto.

 

5.2            

Permitted Use and Disclosures.
Notwithstanding the foregoing, each Party hereto may use or
disclose information disclosed to it by the other Party to the
extent such use or disclosure is reasonably necessary in complying
with applicable law or governmental regulations, provided that if a
Party is required to make any such disclosure of another
Party’s Confidential Information, it will give reasonable
advance written notice to the latter Party of such disclosure and,
will use reasonable efforts to secure confidential treatment of
such information prior to its disclosure (whether through
protective orders or otherwise).

 

5.3            

Confidential Terms. Except as
expressly provided herein, each Party agrees not to disclose any
terms of this Agreement to any third party without the consent of
the other Party; provided, disclosures may be made as required by
securities or other applicable laws, or to affiliates, or to a
Party’s accountants, attorneys and other professional
advisors, provided that such accountants, attorneys and other
professional advisors are bound to retain the terms of this
Agreement as confidential. Neither Party shall issue a press
release or other public announcement concerning this Agreement, the
transactions contemplated herein or the relationship between
Dynatronics and Supplier without the prior written consent of an
authorized representative of the other Party. Each Party agrees
that any breach or threatened breach of Sections 5.1 through 5.3
may cause irreparable harm to the non-breaching Party for which
monetary damages would be inadequate and that the non-breaching
Party may seek to enforce Sections 5.1 through 5.3 by way of an
injunction in addition to any other available legal
remedies.

 

5.4            

Intellectual Property.
Dynatronics affirms that it believes to (or its applicable
affiliate or third party through whom Dynatronics has acquired
rights) hold title to and is the owner of all Specifications (and
updates), technology, trade secrets, know-how, proprietary
information and other information regarding the Products and all
other intellectual property rights in the Products, including
manufacturing and processes to the extent such processes are unique
to Dynatronics Products (collectively, “Dynatronics’
Property”). Dynatronics hereby grants to Supplier a limited,
non-transferable, non-exclusive revocable license to use
Dynatronics’ Property for the purposes of this Agreement only
and only during the Term of this Agreement. After the termination
or expiration of this Agreement, (i) such license shall expire and
Supplier shall have no further rights to use Dynatronics’
Property and (ii) Supplier shall return to Dynatronics all written
documents and other materials relating to Dynatronics’
Property. All intellectual property rights pertaining to
inventions, developments or improvements made to the Products in
the course of the services and manufacturing of Products by
Supplier, including the Specifications and any updates are the
property of Dynatronics. Supplier will, upon the written direction
from Dynatronics, and without charge, execute any and all papers
and documents prepared or submitted by Dynatronics as may be
reasonably required to
transfer or secure to Dynatronics full title and authority over
such rights. Supplier agrees to provide reasonable assistance to
Dynatronics in any applications to protect such intellectual
property rights.

 

Unless
otherwise called for in the Specifications, this Agreement shall
not constitute a license to use Dynatronics’ (or any
Dynatronics affiliate’s) name, trademarks or tradenames for
any purpose and upon the termination of this Agreement, the use, if
any, by Supplier of any such name, trademarks, or tradenames shall
cease.

 

Supplier will not
alter the original labeling or packaging of the Products without
the prior written consent of Dynatronics.

 

Supplier shall
promptly and fully notify Dynatronics of any actual, threatened or
suspected infringement of Dynatronics’ Property or any
Dynatronics’ intellectual property rights which comes to
Supplier’s notice, and of any claim by a third party so
coming to its notice that the importation or sale of the Products
infringes any rights of any other person. Supplier shall at the
request and expense of Dynatronics do all such things as may be
reasonably required to assist Dynatronics in taking or resisting
any proceedings in relation to such infringement or
claim.

 

 

 

 

CERTAIN PORTIONS OF THE EXHIBIT
THAT ARE NOT MATERIAL AND WOULD BE COMPETITIVELY HARMFUL IF
PUBLICLY DISCLOSED HAVE BEEN REDACTED PURSUANT TO ITEM
601(b)(10)(iv) OF REGULATION S-K. [***] INDICATES THAT INFORMATION
HAS BEEN REDACTED. 

 

ARTICLE 6

INDEMNIFICATION AND INSURANCE

 

6.1            

Indemnification of Dynatronics.
Supplier shall indemnify and defend Dynatronics and its affiliates,
and the directors, officers, members, employees, counsel, agents
and representatives of Dynatronics and its affiliates, and the
successors and assigns of any of the foregoing (the
“Dynatronics Indemnitees”), and hold the Dynatronics
Indemnitees harmless from and against any and all claims, demands,
actions, liabilities, damages, losses, judgments, costs of expenses
(including interest and penalties and reasonable attorneys’ fees and
professional fees and expenses of litigation) (collectively,
“Claims”) of third parties arising out of manufacture
of the Products by Supplier, in connection with, or resulting from
(i) Supplier’s breach of this Agreement (including, without
limitation, the failure of the Products to comply with the
Specifications), (ii) the negligence or willful misconduct of
Supplier, (iii) the deliberate use of known defective inventory in
the manufacture of any Product or (iv) any claims by employees of
Supplier for liabilities arising out of employment by Supplier,
including without limitation, wages, benefits, workers’
compensation, or violations of law.

 

6.2
   
                 

Indemnification of Supplier.
Dynatronics shall indemnify and defend Supplier and the directors,
officers, employees, counsel, agents and representatives of
Supplier and the successors and permitted assigns of any of the
foregoing (the “Supplier Indemnitees”) from and against
any and all third party Claims arising out of or in connection with
or as a result of the use to which the Products are put by
Dynatronics, or those who use products that contain Products or
have such Products or products used on them, in connection with
treatment, and all liabilities for personal injury, death, property
damage, product liability, recall or infringement of intellectual
property rights arising out of the design, sale or use of the
Product, except to the
extent such third party claims are subject to indemnification by
Supplier as provided in Section 6.1.

 

6.3            

Comparative Negligence. In any
case in which claims arise out of, or are caused by, both
Supplier’s negligence and Dynatronics’ negligence, a
comparative negligence standard shall apply with respect to the
Parties’ enumerated obligations under Article 6.

 

6.4            

Procedure for Third Party
Claims. A Party that intends to claim indemnification under
this Agreement (the “Indemnitee”) shall promptly notify
the other Party (the “Indemnitor”) in writing of any
Claims in respect of which the Indemnitee or its affiliates,
directors, officers, members, employees, counsel, agents or
representatives intends to claim such indemnification, and the
Indemnitor, at its cost and expense, shall have the right to
participate in, and to the extent the Indemnitor so desires, to
assume the defense thereof with counsel mutually satisfactory to
the Parties; provided, however, that an Indemnitee shall have the
right to retain its own counsel, with the fees and expenses to be
paid by the Indemnitor, if representation of such Indemnitee by the
counsel retained by the Indemnitor would be inappropriate due to
actual or potential differing interests between such Indemnitee and
the other Party represented by such counsel in such proceeding. The
Indemnitor shall control the defense and/or settlement of any such
Claims, and this indemnity agreement shall not apply to amounts
paid in connection with any Claims if such payments are made
without the consent of the Indemnitor, which consent shall not be
unreasonably withheld, delayed or conditioned. The failure to
deliver written notice to the Indemnitor within a reasonable time
after the commencement of any such Claim, if and to the extent
prejudicial to its ability to defend such Claim, shall to such
extent relieve such Indemnitor of any liability to the Indemnitee
under this Article 6. At the Indemnitor’s request and
expense, the Indemnitee and its employees and agents shall
cooperate fully with the Indemnitor and its legal representatives
in the investigation of any Claims covered by this indemnification
and provide full information with respect thereto.

 

6.5            

Insurance. Supplier agrees to
maintain in force with a company or companies acceptable to
Dynatronics, commercial general liability insurance providing
coverage for liability arising from Supplier’s activities
under this Agreement and product liability insurance with respect
to the products sold hereunder, including without limitation, the
Products, with minimum annual limits of [***] per
occurrence and  [***] in the
aggregate during the Term of this Agreement and thereafter for five
years after the termination or expiration of this Agreement. This
insurance coverage shall satisfy the following requirements: (i) be
issued by carriers having a Best’s Rating of A or better, and
a Best’s Financial Size Category of Class VII or better, (ii)
be primary, with the policies of Dynatronics being excess and
non-contributing, (iii) be endorsed to provide a waiver of
subrogation in favor of Dynatronics, (iv) be endorsed to include
Dynatronics as an “additional insured”, and (v) contain
a provision in which the insurance carrier will provide sixty (60)
days prior written notice to Dynatronics of cancellation,
suspension, non-renewal or substantial modification. Supplier shall
furnish Dynatronics with certificates of insurance and, at
Dynatronics’ request, copies of all insurance policies and
renewals thereof to be maintained by Supplier hereunder. All
certificates of insurance must be received and acceptable to
Dynatronics, no later than the Effective Date of this Agreement,
and annually thereafter.

 

6.6            

Limitation of Liability.
EXCEPT AS OTHERWISE PROVIDED IN
THIS PARAGRAPH, IN NO EVENT SHALL EITHER PARTY BE LIABLE FOR
INDIRECT, INCIDENTAL, CONSEQUENTIAL, SPECIAL OR PUNITIVE DAMAGES OF
ANY KIND OR NATURE ARISING OUT OF OR RELATING TO THIS AGREEMENT.
THE LIMITATIONS SET FORTH IN THIS SECTION 6.6 DO NOT APPLY TO: (I)
DAMAGES OCCASIONED BY THE WILLFUL MISCONDUCT OR GROSS NEGLIGENCE OF
A PARTY; (II) CLAIMS THAT ARE THE SUBJECT OF INDEMNIFICATION UNDER
THIS AGREEMENT; (III) DAMAGES OCCASIONED BY A PARTY’S BREACH
OF ITS OBLIGATIONS WITH RESPECT TO CONFIDENTIAL INFORMATION OR
INTELLECTUAL PROPERTY; (IV) DAMAGES OCCASIONED BY SUPPLIER’S
ABANDONMENT OF THE WORK; AND (V) SUPPLIER’S FAILURE TO SUPPLY
DYNATRONICS’ FINAL ORDER (AS DEFINED IN SECTION
7.4).

 

 

 

 

 
CERTAIN PORTIONS OF THE EXHIBIT THAT ARE NOT
MATERIAL AND WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED
HAVE BEEN REDACTED PURSUANT TO ITEM 601(b)(10)(iv) OF REGULATION
S-K. [***] INDICATES THAT INFORMATION HAS BEEN
REDACTED.

 

ARTICLE 7

TERM AND TERMINATION

 

7.1.    

Term. This Agreement shall
commence on the Effective Date and shall continue for thirty-six
consecutive (36) months after the Effective Date, unless earlier
terminated in accordance with the provisions of this Agreement (the
“Initial Term”). The Parties agree to meet [***]
prior to termination of the Initial Term to discuss an extension of
the Initial Term. Notwithstanding the foregoing, Dynatronics shall
have the right, but not the obligation, to extend the Initial Term
in its sole discretion for up to two (2) additional two (2) year
periods by giving written notice of such extension to the Supplier.
Any extension term, together with the Initial Term, shall be
referred to as the “Term”.

 

7.2.

Termination for Cause. Either
Party may terminate this Agreement as follows:

 

(a) if
the other Party has materially breached or defaulted in the
performance of any of its obligations hereunder, and such breach or
default has continued for [***]
after written notice thereof was provided to the breaching or
defaulting Party specifying the nature of such breach or default.
Any termination shall, at the discretion of the non-breaching
Party, become effective at the end of such [***]
period unless the breaching or defaulting Party has cured any such
breach or default prior to the expiration of the [***]
period;

 

(b)
immediately if the other Party is unable to obtain or renew any
permit, license or other governmental approval necessary to carry
on the business contemplated under this
Agreement; 

 

(c)
immediately upon written notice to the other Party in the event
that proceedings in bankruptcy or insolvency are instituted by or
against the other Party, or a receiver is appointed, or if any
substantial part of the assets of the other Party is the object of
attachment, sequestration or other type of comparable proceeding,
and such proceeding is not vacated or terminated within

[***] after its commencement of
institution.

 

7.3            

[***]

 

7.4            

Final Order. In the event
Dynatronics terminates the Agreement for cause, Dynatronics shall
have the right, at its discretion, to place a final order of
Products prior to or on the effective date of termination (the
“Final Order”). The number of units of Products ordered
through the Final Order shall not [***] of, whichever is greater,
either (a) the units forecasted for the next six (6) months in the
most recent forecast provided by Dynatronics prior to the notice of
termination or (b) the units ordered or delivered in the six (6)
months immediately preceding the notice of termination. (Pricing
and payment terms must be agreed to in advance by Ascentron (to be
prepared in a similar manner to earlier quotes) – if not,
Ascentron cannot be forced to accept the final order) All Product
must be taken by Dynatronics within 6 months of the first shipment
against the final order. For the avoidance of doubt, Supplier
acknowledges and agrees that it shall not increase the price of
Products for the final order and the pricing in effect on the date
of termination shall be the pricing for all final orders. However,
notwithstanding the foregoing, if Supplier provides substantiated
proof that the overall costs of the Product(s) have increased at
least [***] then
the overall costs associated with the current pricing, then upon
review and approval form Dynatronics, Supplier may increase the
final order pricing by the agreed upon amount.

 

7.5            

Effect of Breach or
Termination.

 

(a)

Accrued Obligation. Termination
of this Agreement for any reason shall not release any Party hereto
from any liability which, at the time of such termination, has
already accrued to the other Party or which is attributable to a
period prior to such termination and shall not preclude either
Party from pursuing all rights and remedies it may have hereunder
or at law or in equity with respect to any breach of this
Agreement.

 

(b)

Confidential Information. Upon
expiration or termination of this Agreement, each Party shall cease
to use all Confidential Information of the other Party and promptly
return to the other Party all Confidential Information received
from the other Party. The Parties may retain one copy of the other
Party’s Confidential Information but only for the purposes of
keeping record of what that Party has used, or had access to, prior
to the expiration or termination of the Agreement.

 

(c)

Survival. Any provision of this
Agreement which contemplates performance or observance subsequent
to any termination or expiration of this Agreement (in whole or in
part) shall survive any termination or expiration of this Agreement
(in whole or in part, as applicable) and continue in full force and
effect.

 

 

 

 

CERTAIN PORTIONS OF THE EXHIBIT
THAT ARE NOT MATERIAL AND WOULD BE COMPETITIVELY HARMFUL IF
PUBLICLY DISCLOSED HAVE BEEN REDACTED PURSUANT TO ITEM
601(b)(10)(iv) OF REGULATION S-K. [***] INDICATES THAT INFORMATION
HAS BEEN REDACTED.

 

ARTICLE 8

MISCELLANEOUS

 

8.1            

Governing Law. This Agreement
and any dispute arising from the performance or breach thereof
shall be governed by and construed and enforced in accordance with
the laws of the State of Utah, without reference to conflict of
laws principles. The Parties hereby irrevocably consent to the
jurisdiction of courts situated in the State of Utah both state and
Federal, and hereby waive any and all defenses to such
jurisdiction, including but not limited to, forum non
conveniens.

 

8.2            

Waiver. Neither Party may waive
or release any of its rights or interests in this Agreement except
in writing signed by both Parties. A delay or omission by either
Party hereto to exercise any right or power under this Agreement
shall not be construed to be a waiver thereof. The failure of
either Party to assert a right hereunder or to insist upon
compliance with any term or condition of this Agreement shall not
constitute a waiver of that right or excuse a subsequent failure to
perform any such term or condition.

 

8.3            

Assignment. Supplier may not
assign this Agreement without the prior written consent of
Dynatronics. Dynatronics may assign this Agreement without the
prior written consent of Supplier, including without limitation, to
an affiliate of Dynatronics. This Agreement shall be binding and
inure to the benefit of permitted successors and
assigns.

 

8.4            

Notices. All notices, requests
and other communications hereunder shall be in writing, in English,
and shall be delivered (i) personally (which shall include delivery
by courier or overnight delivery service), (ii) by facsimile or
(iii) by certified or registered mail, postage prepaid, return
receipt requested, at the addresses noted below, or such other
address as may be specified in writing to the other Party
hereto:

 

Supplier:              
Ascentron Inc

994
Antelope Rd

                            
White City OR 97503 

                            
Attention: David Hollingsworth

 

Dynatronics:        
Dynatronics Corp.

1200
Trapp Road

Eagan,
MN 55121

Attention: Brian
Baker, Dynatronics CEO

 

With
required copy to:

Dynatronics
Corp.

1200
Trapp Road

Eagan,
MN 55121

Attention: General
Counsel

 

8.5            

Force Majeure. Neither Party
shall be liable for failure or delay in the performance of its
obligations under this Agreement for the time and to the extent
such failure or delay is caused by riots, civil commotions, wars,
hostilities between nations, embargoes, actions by governmental
agencies, acts of God, storms, fires, floods, accidents, sabotage,
explosions, or other similar or different contingencies, each and
any of which failures or delays shall be beyond the reasonable
control of the Party invoking this provision and such failure or
delay could not have been prevented by reasonable precautions and
cannot reasonably be circumvented by the non-performing Party
through the use of alternate sources, workaround plans or other
means. The Party invoking this provision shall provide the other
Party with full particulars thereof as soon as it becomes aware of
the same (including its best estimates of the likely extent and
duration of the interference with its activities), and shall use
reasonable efforts to overcome the difficulties created thereby and
to resume performance of its obligations as soon as practicable. If
the performance of any obligation under this Agreement is delayed
owing to a force majeure event described in this Section for any
continuous period of more than thirty (30) days, the Parties hereto
shall consult with respect to an equitable solution, which may
include the immediate termination of this Agreement. In addition,
at Dynatronics’ option in the event of a failure or delay in
Supplier’s performance: (i) Dynatronics may terminate for
cause or modify any affected portion of any order, or terminate for
cause any affected portion of this Agreement, and the charges
payable hereunder shall be equitably adjusted to reflect such
termination; or (ii) Dynatronics may terminate this Agreement
without liability to Supplier as of a date specified by Dynatronics
in a written notice of termination to Supplier. Supplier shall not
have the right to any additional payments from Dynatronics for
costs or expenses incurred by Supplier as a result of any force
majeure occurrence.

 

 

 

 

CERTAIN PORTIONS OF THE EXHIBIT
THAT ARE NOT MATERIAL AND WOULD BE COMPETITIVELY HARMFUL IF
PUBLICLY DISCLOSED HAVE BEEN REDACTED PURSUANT TO ITEM
601(b)(10)(iv) OF REGULATION S-K. [***] INDICATES THAT INFORMATION
HAS BEEN REDACTED.

 

8.6            

Independent Contractor.
Supplier is acting as an independent contractor, and Supplier
personnel (including its subcontractors) shall not be considered or
represented as employees or agents of Dynatronics. Supplier is not
otherwise an agent of Dynatronics and has no authority to represent
Dynatronics as to any matters, except as expressly authorized in
this Agreement. This Agreement does not grant, and neither Party
shall have, any right or authority, express or implied, to incur,
create or assume any liability or obligation, enter into any
agreement, make any representation or warranty, file any document
with any Governmental Authority, or serve or accept any legal
process on behalf of the other Party, or to settle any claim by or
against the other Party hereto, or to bind or otherwise render the
other Party liable in any way, without the express written consent
of the other Party. Each Party hereto shall be responsible for the
selection, training and supervision of, and the payment of
compensation and benefits to, its employees who assist it in the
performance of its obligations hereunder and in no event shall
either Party have any obligation to, or authority over, such
employees of the other Party. Each Party shall be solely
responsible for all costs and expenses incurred by it in connection
with this Agreement and its performance of its obligations
thereunder.

 

8.7            

Severability. In the event that
any provision of this Agreement conflicts with the law under which
this Agreement is to be construed or if any such provision is held
invalid by an arbitrator or a court with jurisdiction over the
Parties, such provision shall be deemed to be restated to reflect
as nearly as possible the original intentions of the Parties in
accordance with applicable law. The remainder of this Agreement
shall remain in full force and effect.

 

8.8            

Entire Agreement. This
Agreement, including any attached Exhibits and Schedules,
constitutes the entire agreement between the Parties with respect
to the subject matter in this Agreement and supersedes all prior
agreements, whether written or oral, between the Parties relating
to the subject matter hereof.

 

8.9            

Cumulative Remedies. Except as
otherwise expressly provided herein, all remedies provided for in
this Agreement shall be cumulative and in addition to and not in
lieu of any other remedies available to either Party at law, in
equity or otherwise.

 

8.10            

Third Party Beneficiaries.
Except for Dynatronics affiliates and except with respect to
end-users of the Products, this Agreement shall not be deemed to
create any rights in third parties, including suppliers and
customers of a Party, or to create any obligations of a Party to
any such third parties.

 

8.11            

Amendments. No amendment,
modification or alteration to this Agreement shall bind either
Party unless made in writing and executed by duly authorized
representatives of both Parties.

 

8.12            

Headings. The headings in this
Agreement are for convenience of reference only and shall not
affect the meaning or interpretation of the subject matter
contained in the section or article to which a particular heading
relates.

 

8.13            

Counterparts. This Agreement
may be executed in counterparts, or facsimile versions, each of
which shall be deemed to be an original, and both together shall be
deemed to be one and the same instrument.

 

 

IN WITNESS WHEREOF, the Parties hereto
have caused this Agreement to be executed and delivered as of the
Effective Date.

 

	

Dynatronics
Corporation

	

Ascentron
Inc

	

By: /s/
Brian D. Baker 

 

Name:
Brian Baker

 

Title:
CEO

 

Date:
February 27, 2020

	

By: /s/
David Hollingsworth

 

Name:
David Hollingsworth

 

Title:
VP Business Development

 

Date:
February 28, 2020

 

 

 

 

 
CERTAIN PORTIONS OF THE EXHIBIT THAT ARE NOT
MATERIAL AND WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED
HAVE BEEN REDACTED PURSUANT TO ITEM 601(b)(10)(iv) OF REGULATION
S-K. [***] INDICATES THAT INFORMATION HAS BEEN
REDACTED.

 

SCHEDULE A

 

PRODUCTS

 

 

	

Part Number

	

Description

	

UOM

	

D125B

	

DYNATRON 125 ULTRASOUND

	

EA

	

D525T

	

DYNATRON 525

	

EA

	

D625T

	

DYNATRON 625

	

EA

	

D715T

	

SOLARIS PLUS 705

	

EA

	

D716T

	

SOLARIS PLUS 706

	

EA

	

D718T

	

SOLARIS PLUS 708

	

EA

	

D719T

	

D719T 5 CHANNEL COMBO-STIM-LIGHT-US

	

EA

	

D825T

	

DYNATRON 825

	

EA

	

D925T

	

DYNATRON 925

	

EA

	

DCP3

	

TRI-WAVE LIGHT PROBE

	

EA

	

DLP3

	

TRI-WAVE LIGHT PAD

	

EA

	

DTSP1

	

THERMOSTIM PROBE

	

EA

 

 

 

 

 
CERTAIN PORTIONS OF THE EXHIBIT THAT ARE NOT
MATERIAL AND WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED
HAVE BEEN REDACTED PURSUANT TO ITEM 601(b)(10)(iv) OF REGULATION
S-K. [***] INDICATES THAT INFORMATION HAS BEEN
REDACTED.

 

SCHEDULE B

 

SPECIFICATIONS

 

 

1.

The specifications
referenced below apply to the items ordered under this Agreement
and will be provided to the supplier separately and/or attached to
blanket purchase orders issued.

 

	

Part Number

	

Applicable Specifications

	

D125B

	

[***]

	

D525T

	

[***]

	

D625T

	

[***]

	

D715T

	

[***]

	

D716T

	

[***]

	

D718T

	

[***]

	

D719T

	

[***]

	

D825T

	

[***]

	

D92T5

	

[***]

	

DCP3

	

[***]

	

DLP3

	

[***]

	

DTSP1

	

[***]

 

2.

Revision control
for components, procedures and or labeling identified in the Device
Master Records (DMR) will follow the agreements in section 2.5 and
2.13 of this document and Design Control / Change Control in the
Supplier Quality Agreement on form [***].

 

3.

Formal Change
Orders will be processed by Dynatronics and the Supplier will be
notified of these changes. An agreed upon implementation plan will
be executed without undue delay.

 

 

 

 

CERTAIN PORTIONS OF THE EXHIBIT
THAT ARE NOT MATERIAL AND WOULD BE COMPETITIVELY HARMFUL IF
PUBLICLY DISCLOSED HAVE BEEN REDACTED PURSUANT TO ITEM
601(b)(10)(iv) OF REGULATION S-K. [***] INDICATES THAT INFORMATION
HAS BEEN REDACTED. 

 

SCHEDULE C

 

PRICING/FORECAST

 

 

1.

The pricing
reflected below are applicable to items ordered under this
Agreement.

 

	

Ascentron Box Build

	

With PCBAs purchased from Dynatronics

	

With Ascentron built PCBAs

	

Part Number

	

UOM

	

Unit price

	

Unit price

	

D125B

	

EA

	

[***]

	

[***]

	

D525T

	

EA

	

[***]

	

[***]

	

D625T

	

EA

	

[***]

	

[***]

	

D715T

	

EA

	

[***]

	

[***]

	

D716T

	

EA

	

[***]

	

[***]

	

D718T

	

EA

	

[***]

	

[***]

	

D719T

	

EA

	

[***]

	

[***]

	

D825T

	

EA

	

[***]

	

[***]

	

D92T5

	

EA

	

[***]

	

[***]

	

DCP3

	

EA

	

[***]

	

[***]

	

DLP3

	

EA

	

[***]

	

[***]

	

DTSP1

	

EA

	

[***]

	

[***]

 

 

 

 

 

CERTAIN
PORTIONS OF THE EXHIBIT THAT ARE NOT MATERIAL AND WOULD BE
COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED HAVE BEEN REDACTED
PURSUANT TO ITEM 601(b)(10)(iv) OF REGULATION S-K. [***] INDICATES
THAT INFORMATION HAS BEEN
REDACTED. 

 

SCHEDULE D

 

ASCENTRON QUOTE LETTER TERMS

 

 

1.

Ascentron quotes
applicable to this agreement are referenced below.

 

	

Part Number

	

Quote #

	

Date

	

D125B

	

T7673C

	

February
10, 2020

	

D525T

	

T7674C

	

February
10, 2020

	

D625T

	

T7675C

	

February
10, 2020

	

D715T

	

T7676C

	

February
10, 2020

	

D716T

	

T7677C

	

February
10, 2020

	

D718T

	

T7678C

	

February
10, 2020

	

D719T

	

T7679C

	

February
10, 2020

	

D825T

	

T7680C

	

February
10, 2020

	

D92T5

	

T7681C

	

February
10, 2020

	

DCP3

	

T7869A

	

January
23, 2020

	

DLP3

	

T7876

	

February
26, 2020

	

DTSP1

	

T7868

	

January
6, 2020

 

 

 

 

CERTAIN PORTIONS OF THE EXHIBIT
THAT ARE NOT MATERIAL AND WOULD BE COMPETITIVELY HARMFUL IF
PUBLICLY DISCLOSED HAVE BEEN REDACTED PURSUANT TO ITEM
601(b)(10)(iv) OF REGULATION S-K. [***] INDICATES THAT INFORMATION
HAS BEEN REDACTED. 

 

SCHEDULE E

 

SUPPLIER QUALITY REQUIREMENTS

 

 

1.

The terms and
requirements specified under Quality Agreement [***],
issued on 06/02/2019 and fully executed between Dynatronics
Corporation and Ascentron, Inc. on 09/06/2019, are applicable to
this supply agreement.Exhibit 10.4

 

 

March
16, 2020

 

Mr.
John Krier

Minneapolis,
MN 55419

 

Re: DYNA
Employment Offer – Chief Financial Officer

 

Dear
John:

 

On
behalf of Bird & Cronin LLC and its parent company, Dynatronics
Corporation and its affiliate Hausman Enterprises, LLC
(collectively “DYNA”), I am pleased to offer you the
position of Chief Financial Officer. Your proven qualifications and
experience qualify you to receive this offer:

 

Position/Title: 

The position of
Chief Financial Officer for DYNA is classified as an exempt
position under the Fair Labor Standards Act. You will not be
eligible for overtime pay.

 

You
will report directly to Brian Baker, DYNA’s Chief Executive
Officer.

 

Employer: 

Your employer will
be Bird & Cronin LLC (“Employer”) and you will be
eligible for Dynatronics’ benefits as described
below.

 

Pay Rate: 

Starting base
salary will be $230,000.00 USD a year, paid bi-weekly (every other
Friday) paid via direct deposit by Employer.

 

Annual Cash Bonus: 

You will be
eligible for an annual cash bonus, pro rata, for a maximum payout
of $40,250.00 USD, payable within sixty (60) days at the end of the
DYNA’s fiscal year. The cash bonus will be based on
DYNA’s results and the successful completion of individual
performance against set goals. The Compensation Committee of the
Board of Directors will assess the goals to determine annual
payout.

 

Annual Equity Award: 

You will be
eligible for an annual equity award, pro rata, of Restricted Stock
Units (“RSUs”) up to a maximum value of $40,250 USD.
The RSUs will be priced at the closing market share price of
DYNA’s common stock on the date of the grant. Fifty percent
(50%) of the RSUs will vest on the date of the grant and fifty
percent (50%) of the RSUs will vest on the first anniversary date
of the grant. The annual equity award will be based on DYNA’s
results and the successful completion of individual performance
against set goals. The Compensation Committee of the Board of
Directors will assess the goals to determine annual
award.

 

Equity Award: 

On your start date,
you will be granted a stock option for purchase of 35,000 shares of
DYNA’s common stock (“Stock Option”). The
exercise price of the Stock Option will be based on the closing
market share price of DYNA’s common stock on the date of the
grant. The Stock Option grant shall vest in equal amounts over a
four-year period with twenty-five (25%) of the Stock Options
vesting on the first, second, third and fourth anniversaries of the
date of the grant.

 

Responsibilities: 

The following
duties of this position with be those that are customary for a
Chief Financial Officer of a publicly-traded company and as further
set forth in the job description which will include providing
services for DYNA.

 

Benefits: 

In addition to your
compensation, you will be eligible to receive additional benefits
which are offered by Dynatronics. Benefit eligibility begins on the
1st of the
month following hire date. The Dynatronics benefits are described
in detail in the employee Benefits
Guide with the current 401(k) and PTO policies summarized
below.

 

Paid Time
Off:                                 

You will be
eligible for Dynatronics’ unlimited, flexible Paid Time Off
(PTO) policy, which does not prescribe vacation/sick days or a set
PTO accrual. You will simply continue to receive your regular pay
when taking time away from work for vacation or other personal
reasons. However, extended leaves of absences (e.g., medical leave
under FMLA) are excluded and will need to be separately
negotiated.

 

401(k): You will be eligible
for Dynatronics’ 401(k) retirement program administered by
Fidelity Investments. You will become eligible to participate in
this program on the 1st of the month
following hire date. You will be eligible for a match of 50% of
your contributions, up to a maximum of 6% of eligible compensation
and caps at $3000 annually. The Employer’s contributions vest
over a 6-year period (Year 1: 10%, Year 2: 20%, Year 3: 40%,
..., Year 6: 100%).

 

Expenses: 

Your Employer will
promptly reimburse you for all reasonable business expenses
incurred by you in performing your duties.

 

Code of Ethics: 

Your Employer and
Dynatronics are committed to maintaining the highest ethical
standards and to conducting business with the highest level of
integrity. Employees are required to adhere to all policies,
including its Code of Business
Ethics and uphold an uncompromising standard of conduct,
honesty, integrity, and ethics in dealing with each other and with
customers, regulators, vendors, and all other third parties. In
addition to personally complying with the Code of Business Ethics, employees have
a responsibility to report any violations of such policy. Failure
to abide by this Code or report any violation will result in
disciplinary action, up to and including termination of
employment.

 

Other Employment: 

Until April 2021,
Dynatronics allows you to be a part-time consultant for Breg based
on the Consulting Agreement between you and Breg that you provided
to Dynatronics. However, you acknowledge that you will be able to
dedicate your time and energy to DYNA on a full-time basis and
fulfill all your obligations and duties. Likewise, you may not
extend your Consulting Agreement with Breg and may not engage in
any other secondary employment or consulting services without
advanced written permission from Dynatronics President & CEO,
whose permission may be withheld for any reason.

 

Non-compete: 

As a condition of
employment, you will be required to sign a confidentiality
agreement and non-compete agreement that will limit your ability to
be employed by a competitor of your Employer, Dynatronics or its
affiliates for a 12-month period following your
termination.

 

Prior Covenants: 

You represent that
you are not party to any restrictive covenant from prior employment
limiting your ability to perform the duties described in this offer
of employment and that accepting this offer of employment will not
knowingly violate any restrictive covenant imposed on you by a
prior employer. You and Dynatronics agree that Dynatronics has no
interest in any information you may have that is deemed proprietary
or confidential under any restrictive covenants with any prior
employer or other third party. You will not divulge such
information, directly or indirectly, to Dynatronics. You will not
use or disclose proprietary or confidential information or trade
secrets of any former employer or other person or other entity with
which you have any agreement or duty of
confidentiality.

 

At will: 

As an at-will
employer, your Employer reserves the right to terminate any
employee at any time for any reason or for no reason at all. It
should be understood that this offer of employment is not a
contract nor is it a guarantee of employment for any specific
period of time. This provision is subject to the laws of the state
in which you live.

 

Start Date: 

Once you have
accepted our offer, we would like your official employment start
date to be no later than Monday, March 30, 2020. This date is
negotiable, depending on your availability. Employment is also
dependent on an acceptable background check (employment
verification, credit, criminal, education, etc.,) and acceptable
results from a drug testing screen and both must be completed and
results received prior to your employment state date.

 

We are
genuinely excited about adding you to our team and hope you share
in our enthusiasm about the future potential of Dynatronics. We
look forward to hearing back from you by the end of business on the
20th day of March, 2020.

 

Sincerely,

BIRD
& CRONIN LLC

 

 

 

/s/
Brian D. Baker

Chief Executive Officer

 

   

/s/ John A.
Krier

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