<PAGE>
DYNATRONICS CORPORATION
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
November 28, 1995
TO THE SHAREHOLDERS OF DYNATRONICS CORPORATION:
Please take notice that the annual meeting of shareholders of
Dynatronics Corporation, a Utah corporation (the "Company"), will be
held, as provided by the bylaws of the Company, as amended, on Tuesday,
November 28, 1995, at 4:00 p.m., Mountain Standard Time, for the
following purposes:
1. To elect a Board of six directors to serve for the ensuing year.
2. To consider and act upon a proposal to amend the Company's 1992
Stock Option Plan to increase the number of shares issuable under
such plan from 500,000 to 1,000,000.
3. To consider and act upon a proposal that the shareholders ratify
the appointment of KPMG Peat Marwick as the Company's independent
auditors for the 1996 fiscal year.
4. To transact such other business as may properly be brought before
the meeting or any adjournment thereof.
Nominees for directors are set forth in the enclosed Proxy
Statement.
Only shareholders of record at the close of business on Friday,
October 6, 1995 will be entitled to vote at this meeting.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Bob Cardon
---------------------------------------
Bob Cardon, Corporate Secretary
Salt Lake City, Utah
October 23, 1995
IMPORTANT
Whether or not you expect to attend the Annual Meeting in person, to
assure that your shares will be represented, please complete, date, sign
and return the enclosed proxy without delay in the enclosed envelope.
Your proxy will not be used if you are present at the meeting and desire
to vote your shares personally.
<PAGE>
PROXY STATEMENT
DYNATRONICS CORPORATION
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD NOVEMBER 28, 1995
This Proxy Statement is furnished pursuant to Regulation 14A
under the Securities Exchange Act of 1934 in connection with the Annual
Meeting of Shareholders of Dynatronics Corporation ("Dynatronics" or the
"Company") to be held at 7030 Park Centre Drive, Salt Lake City, Utah
84121 at 4:00 p.m. (local time) on November 28, 1995, and at any and all
adjournments or postponements thereof. This Proxy Statement, the Notice
of Annual Meeting, and a copy of the Company's Annual Report will be
provided to shareholders of record as of October 6, 1995 and will be
mailed on or about October 23, 1995. The cost of disseminating this
information will be paid by the Company.
ANY SHAREHOLDER WHO EXECUTES A PROXY MAY REVOKE IT AT ANYTIME
BEFORE IT IS EXERCISED BY GIVING ANOTHER PROXY OR BY LETTER OR TELEGRAM
DIRECTED TO THE COMPANY.
THE SOLICITATION OF PROXIES TO WHICH THIS PROXY STATEMENT RELATES
IS BEING MADE ON BEHALF OF THE COMPANY BY ITS BOARD OF DIRECTORS.
The matters to be considered and voted upon at the Annual Meeting
will be:
1. Election of six directors to serve until the next Annual Meeting of
Shareholders or until their successors are elected and qualified;
2. Approval of an amendment to the Company's 1992 Stock Option Plan to
increase the number of options available under the plan from 500,000 to
1,000,000.
3. Ratification of the selection of KPMG Peat Marwick as the
independent auditors of the Company; and
4. Transaction of such other business as may properly come before the
meeting.
It is important that proxies be returned promptly. Stockholders are
requested to vote, sign, date and return the proxy in the enclosed self-
addressed envelope.
The Board of Directors recommends that the stockholders vote FOR the
election of its nominees for directors, FOR the adoption of the
amendments to the 1992 Stock Option Plan, and FOR the proposal to ratify
the selection of KPMG Peat Marwick as independent public accountants.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
As of the close of business on the record date (October 6, 1995),
the date for determining shareholders entitled to notice of and to vote
at the meeting, Dynatronics had issued and outstanding 7,964,397 shares
of common stock, no par value, all of which are entitled to vote and be
voted at the meeting. Each share is entitled to one vote and only
shareholders of record of the Company's common stock as of the close of
business on the record date shall be entitled to vote their shares.
Shareholders will not be allowed to cumulate their shares. Holders of a
majority of such shares must be represented at the Annual Meeting to
constitute a quorum for purposes of conducting any business.
<PAGE>
Each of the proposed actions to be considered require the
affirmative approval of a majority of the votes cast at the Annual
Meeting where holders of a majority of the shares issued and outstanding
are present in person or by proxy.
The following tables set forth, as of October 23, 1995, the number
of shares of common stock, no par value, of the Company owned
beneficially by all the persons known to be holders of more than five
percent (5%) of the Company's voting securities:
<TABLE>
<CAPTION>
Amount and
nature of
Name and Address Title of Beneficial Percent of
Beneficial Owner Class Ownership Class (9)
_________________ ________ ___________ __________
<S> <C> <C> <C>
Kelvyn H. Cullimore, Jr. Common 742,225 (1) 9.3%
7030 Park Centre Drive Stock
Salt Lake City, UT 84121
Edward A. Loeser, M.D. Common 447,830 (2) 5.6%
8646 Oak Valley Drive Stock
Sandy, UT 84093
</TABLE>
The following tables set forth, as of October 23, 1995, the number
of shares of common stock, no par value, of the Company owned
beneficially by (a) each director and executive officer and (b) all
executive officers and directors of the Company as a group:
<TABLE>
<CAPTION>
Title of Amount and Nature of
Percent of
Name of Beneficial Owner Class Beneficial Ownership Class (9)
________________________ _________ ____________________ ___________
<S> <C> <C> <C>
Kelvyn H. Cullimore Common Stock 178,256 (3) 2.2%
Kelvyn H. Cullimore, Jr. Common Stock 742,225 (1) 9.3%
Edward A. Loeser, M.D. Common Stock 447,830 (2) 5.6%
E. Keith Hansen, M.D. Common Stock 227,350 (4) 2.9%
Larry K. Beardall Common Stock 68,000 (5) *
K. Fred Skousen, Ph.D. Common Stock 28,000 (6) *
V. LeRoy Hansen Common Stock 28,000 (7) *
John S. Ramey Common Stock 18,000 (8) *
All officers and directors Common Stock 1,745,661 (9)(10) 21.0%
</TABLE>
*Less than 1 percent
<PAGE>
(1) Includes 609,105 shares owned directly, 51,120 shares owned by Mr.
Cullimore's wife and minor children, 30,000 shares owned by a family
corporation of which Mr. Cullimore, Jr. is Vice President, and
exercisable options for the purchase of 52,000 shares.
(2) Includes 101,629 shares owned by a retirement plan as to which Dr.
Loeser is trustee and has beneficial ownership, 294,201 shares owned by
family trusts and exercisable options for the purchase of 52,000 shares.
(3) Includes 91,256 shares owned directly, 5,000 shares owned by Mr.
Cullimore's wife, 30,000 shares owned by a family corporation of which
Mr. Cullimore is President, and exercisable options for the purchase of
52,000 shares.
(4) Includes 181,350 shares owned directly and exercisable options for
the purchase of 46,000 shares.
(5) Includes 37,000 shares owned directly and exercisable options for
the purchase of 31,000 shares.
(6) Includes exercisable options for the purchase of 28,000 shares.
(7) Includes exercisable options for the purchase of 28,000 shares.
(8) Includes 5,000 shares owned by a retirement plan as to which Mr.
Ramey is beneficiary and exercisable options for the purchase of 13,000
shares.
(9) The "Percent of Class" calculation is based on shares and options
beneficially owned divided by 7,964,397--the number of shares
outstanding as of October 11, 1995 plus non-issued securities which are
subject to exercisable options by the particular beneficial owner
identified in the table.
(10) The calculation of beneficially owned shares of all officers and
directors as a group eliminates the duplicate entries of shares owned by
a family corporation which are reflected in the beneficial ownership of
both Kelvyn H. Cullimore and Kelvyn H. Cullimore, Jr.
PROPOSAL 1 - ELECTION OF DIRECTORS
At the Annual Meeting of Shareholders, six (6) directors will be
elected. The Board of Directors has no reason to believe that any
nominees named herein will be unable or unwilling to serve. Each person
identified as a nominee has consented to be named as such.
Directors of the Company hold office until the next annual meeting of
the Company's shareholders and until their successors have been elected
and duly qualified. Executive officers are elected by the Board of
Directors of the Company at the first meeting after each annual meeting of
shareholders and hold office until their successors are elected and duly
qualified. The Company has no executive committees. Vacancies on the
board which are created by the retirement, resignation or removal of a
director may be filled by the vote of the remaining members of the Board,
with such new director serving the remainder of the term or until his
successor shall be elected and qualify.
The bylaws presently provide for a board comprised of seven directors.
As this proxy statement was being prepared, the Board of Directors was
advised by one of its members, Edward A. Loeser, that he will not stand
for reelection. There is presently no nominee for this position.
Consequently, the Board of Directors may determine whether it will fill
the vacancy or leave it unfilled until the next meeting of the
shareholders, as provided by the bylaws of the Company. Only six nominees
will be voted upon at the Annual Meeting.
<PAGE>
There were seven regular meetings of the Board of Directors held during
the fiscal year ending June 30, 1995. No director attended fewer than 75%
of the meetings. The Company had no standing audit or nominating
committee during the fiscal year ending June 30, 1995. The Company does
have a Compensation Committee comprised of the outside directors of the
Company's Board of Directors. There was one meeting of the Compensation
Committee of the Board of Directors held during the fiscal year ending
June 30, 1995. All members of the Compensation Committee were in
attendance.
There are no material legal proceedings to which any director or
executive officer is a party adverse to the Company.
The directors and officers of the Company at October 11, 1995 were:
<TABLE>
<CAPTION>
Director
or Officer Position
Name Age Since with Company
- ----- --- --------- ------------
<S> <C> <C> <C>
Kelvyn H. Cullimore* 60 1983 Chairman of the Board
Kelvyn H. Cullimore, Jr.* 39 1983 President, CEO and Director
Larry K. Beardall* 39 1986 Executive Vice President
of Sales and Marketing and
Director
E. Keith Hansen, M.D.* 50 1983 Director
V. LeRoy Hansen* 57 1987 Director
Edward A. Loeser, M.D. 51 1983 Director
K. Fred Skousen, Ph.D. 53 1987 Director
John S. Ramey 44 1992 Vice President of Operations
and Research & Development
Keith E. Turner 46 1992 Treasurer
Robert J. Cardon 32 1992 Corporate Secretary
A new nominee for director of the Company is:
Name Age
- ----- ----
Joseph H. Barton* 67
</TABLE>
* Nominee for election to the Board of Directors
Kelvyn H. Cullimore is the father of Kelvyn H. Cullimore, Jr. V.
LeRoy Hansen and E. Keith Hansen are cousins. K. Fred Skousen and Larry
K. Beardall are brothers-in-law.
Directors of the Company hold office until the next annual meeting of
the Company's shareholders and until their successors have been elected
and duly qualified. In the event of the resignation of a Board Member,
the Board of Directors elects an individual to fill the remainder of the
term. Executive
<PAGE>
officers are elected by the Board of Directors of the Company at the first
meeting after each annual meeting of shareholders and hold office until
their successors are elected and duly qualified. The Company has a
Compensation Committee composed of the outside directors of the board
which reviews and approves compensation matters for executive officers of
the Company. Members of this Committee are: Dr. Fred Skousen, Dr. Keith
Hansen, Dr. Ed Loeser, and Roy Hansen.
Kelvyn H. Cullimore has served as Chairman of the Board of the Company
since its incorporation in April, 1983. From 1983 until 1992, Mr.
Cullimore served as President of the Company. Mr. Cullimore received a
B.S. in Marketing from Brigham Young University in 1957, and following
graduation, worked for a number of years as a partner in a family-owned
home furnishings business in Oklahoma City, Oklahoma. Mr. Cullimore has
participated in the organization and management of various enterprises,
becoming the president or general partner in several business entities,
including real estate, motion picture, and equipment partnerships. Since
1986, Mr. Cullimore has served as Chairman and President of ITEC
Attractions, an affiliate of the Company. In 1992, ITEC successfully
completed its initial public offering. Since that time, Mr. Cullimore has
been directly involved with this company and has moved his residence to
Branson, MO, the site of ITEC's first operation. From 1979 until 1992,
Mr. Cullimore served as Chairman of the Board of American Consolidated
Industries ("ACI"). ACI was merged with and into the Company in December,
1992.
Kelvyn H. Cullimore, Jr. was elected President and Chief Executive
Officer of the Company in December of 1992. He has been a Director since
the incorporation of the Company. He served as Secretary/Treasurer of the
Company from 1983 until 1992 and Administrative Vice President from 1988
until 1992. Mr. Cullimore graduated from Brigham Young University with a
degree in Financial and Estate Planning in 1980. Since graduation, Mr.
Cullimore has served on the Board of Directors of several businesses,
including Dynatronics Marketing Company and ACI, both of which were
affiliates of the Company until they were merged into the Company. In
addition, he has served as Secretary/Treasurer of ACI and Dynatronics
Marketing Company. From 1983 until 1992 Mr. Cullimore served as Executive
Vice President and Chief Operating Officer of ACI. Since 1986, Mr.
Cullimore has served on the Board of Directors of ITEC Attractions.
Larry K. Beardall was elected Executive Vice President of the Company
in December of 1992. He has served as a Director and the Vice President
of Sales and Marketing for the Company since July of 1986. Mr. Beardall
joined Dynatronics in February of 1986 as Director of Marketing. He
graduated from Brigham Young University with a degree in Finance in 1979.
Prior to his employment with Dynatronics, Mr. Beardall worked with GTE
Corporation in Durham, North Carolina as the Manager of Mergers and
Acquisitions and then with Donzis Protective Equipment in Houston, Texas
as National Sales Manager. He also served on the Board of Directors of
Nielsen & Nielsen, Inc., the marketing arm for Donzis.
E. Keith Hansen, M.D. has been a Director of the Company since 1983.
Dr. Hansen obtained a Bachelor of Arts degree from the University of Utah
in 1966 and an M.D. from Temple University in 1972. He has been in
private practice in Sandy, Utah since 1976. Dr. Hansen was also a
Director of American Consolidated Industries, an affiliate of the Company
until 1992, and he is Vice President and Director of Mountain Resources
Corporation and a Director of Accent Publishers, each of which is based in
Salt Lake City, Utah.
V. LeRoy Hansen has been a Director of the Company since 1987. Mr.
Hansen received a Bachelor of Science degree in Economics from the
University of Utah in 1965. From 1960-1980, Mr. Hansen was employed by
AT&T in numerous management positions. From 1976-1978, he served at&T
headquarters in Market Management Concept Development and Implementation
as well as Long Range Financial Planning. From 1980 to 1988, he co-
founded Mountain Resources Corporation, an energy development company and
served as vice president. Since 1988, Mr. Hansen founded
<PAGE>
and serves as president of Associated Enterprises, Inc., a corporation
providing management and business development consulting services. In May
of 1992, Mr. Hansen founded Silver Summit, L.C., a real estate development
company.
John S. Ramey joined the Company in December, 1992 as Vice President
of Research and Development and currently serves as Vice President of
Operations and Research and Development. Prior to joining the Company,
Mr. Ramey worked for 16 years with Phillips Semi-conductors--Signetics, an
integrated circuit manufacturing company as Manager of Product
Engineering. From 1983 to 1989 Mr. Ramey also served as President of
Enertronix, a small public corporation. Since 1989 Mr. Ramey has served
as Vice President of JRH Technology, a private engineering firm. Mr.
Ramey earned his MBA degree in 1991 from the University of Phoenix (in
Salt Lake City, Utah) and a BS degree in electronics in 1977 from Brigham
Young University.
Keith E. Turner served as Controller of the Company from February 1989
to March 1994, and Treasurer since December 1992. Mr. Turner also serves
as Chief Financial Officer of ITEC Attractions, a position he has held
since June 1991. From 1986 to 1989, Mr. Turner was self-employed,
providing services in accounting, sales and customer relations and pursued
various personal business interests and opportunities. From 1983 to 1986
he was business administrator of a law firm in Salt Lake City, Utah. Mr.
Turner also has experience in real estate appraisal and manufacturing
management. He received a B.S. in Accounting from Brigham Young
University in 1974 and an M.B.A. from the University of Utah in 1975.
Robert J. Cardon was appointed Secretary of the Corporation in
December of 1992. From 1988 until 1992, Mr. Cardon served as
Administrative Assistant to the President of Dynatronics. He also serves
as Corporate Secretary of ITEC Attractions, a position which he has held
since 1992. From 1987 to 1988, Mr. Cardon was employed as a registered
representative of an investment banking firm. He received his B.A. in
1987 and his M.B.A. in 1990, both from Brigham Young University.
Additional nominee for Election to the Board
- --------------------------------------------
Joseph H. Barton has been nominated to become a director of the
Company. Mr. Barton received a civil engineering degree from the
University of California at Berkeley and has held various executive
positions including president of J. H. Barton Construction Company, senior
vice president of Beverly Enterprises, and president of KB Industries, a
building and land development company. Most recently, Mr. Barton served
as senior vice president of GranCare, Inc. from 1989 to 1994 and currently
is a consultant for Covenant Care, Inc, a California-based healthcare
company.
Certain Relationships and Related Transactions
- ----------------------------------------------
The Company provides ITEC, an affiliate, with office space and
administrative services at the Company's headquarters in Salt Lake City,
Utah. Office space consists of offices and allocated use of common and
conference areas. Administrative services include secretarial,
administrative and accounting functions. During fiscal 1995, the Company
charged ITEC $72,000 for the space and services provided by the Company.
In fiscal 1995, the Company guaranteed a bank loan in the amount of
$500,000. In addition, the Company is carrying a receivable of $228,824
from ITEC. This receivable represents unpaid reimbursements for shared
services during the fiscal year. The guarantee and receivable are
collateralized by a security interest in ITEC's proprietary film entitled,
"Ozarks: Legacy and Legend."
<PAGE>
In August,1993, the Company entered into a consulting agreement with
Gene Morgan Financial ("GMF") in Los Angeles for financial consulting and
public relations services for the Company. Mr. Morgan, the principal
owner of GMF was a stockholder of the Company at the time of the original
transaction. Under the terms of the consulting agreement, GMF was granted
a total of 1,350,075 options to acquire stock of the Company. Of such
options, 150,075 are exercisable at a price of $.875 per share. However,
because GMF is no longer an operating entity and is not capable of
providing the services contemplated under the consulting agreement, the
remaining 1,200,000 options have been canceled.
Compliance with Section 16(a) of the Securities Exchange Act of 1934
- --------------------------------------------------------------------
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's officers and directors, and persons who own more than ten
percent of a registered class of the Company's equity securities, to file
reports of ownership and changes in ownership with the Securities and
Exchange Commission. Officers, directors and greater than ten-percent
shareholders are required by regulation of the Securities and Exchange
Commission to furnish the Company with copies of all Section 16(a) forms
which they file.
Based solely on review of the copies of such forms furnished to the
Company, the Company believes that during its 1995 fiscal year all Section
16(a) filings applicable to its officers, directors and greater than ten-
percent beneficial owners were made with the exception of Dr. Ed Loeser,
a director, who failed to timely file a Form 4 for certain stock
transactions in March 1995. The Form 4 filing was due by April 10, 1995
and was not filed until April 20, 1995.
COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS
REPORT OF THE COMPENSATION COMMITTEE
The Compensation Committee applies a consistent philosophy to
compensation for all executives. This philosophy is based on the premise
that the achievements of the Company result from the coordinated efforts
of all individuals working toward common objectives. The executive
management team is responsible for achieving those objectives through
teamwork that is focused on meeting the expectations of customers and
shareholders.
Compensation Philosophy
The goals of the compensation program are to align compensation with
business objectives and performance, and to enable the Company to attract,
retain and reward executive officers who contribute to the long-term
success of the Company. The Company's compensation program for executive
officers
is based on the same four principles applicable to compensation decisions
for all employees of the Company:
The Company pays competitively. The Company is committed to
providing a program that helps attract and retain the best
people in the industry. To ensure that pay is competitive, the
Committee regularly compares its pay practices with those of
other leading companies and sets its pay parameters based on
this review.
<PAGE>
The Company pays for relative sustained performance. Executive
officers are rewarded based upon corporate performance,
department performance and individual performance. Corporate
performance and department performance are evaluated by
reviewing the extent to which strategic and business plan goals
are met, including such factors as operating profit, performance
relative to competitors and timely new product introductions.
Individual performance is evaluated by reviewing organizational
and management development progress and the degree to which
teamwork and Company values are fostered.
The Company strives for fairness in the administration of pay.
The Company believes that executives should understand the
performance evaluation and pay administration process.
The process of assessing performance includes setting objectives and
key goals, ongoing feedback on performance, and evaluating the
accomplishments of objectives/key goals.
Compensation Vehicles
The Company has had a long and successful history of using a simple
total compensation program that consists of salary, bonus and equity-based
compensation. Having a compensation program that allows the Company to
successfully attract and retain key employees permits it to provide useful
products and services to customers, enhance shareholder value, motivate
technological innovation, foster teamwork, and adequately reward
employees. The vehicles are:
Cash-Based Compensation
Salary
The Compensation Committee sets base salaries for executives by
reviewing the base salaries for competitive positions in the
industry and by a review of each executive's performance.
Bonus
The Company has a bonus plan under which it distributes to certain
executive officers, a percentage of its profits before income taxes
and other adjustments. The Committee believes that the executive
management team shares the responsibility for the Company achieving
profits.
Equity-Based Compensation
Stock Option Program
The purpose of this program is to provide additional incentives to
employees to work to maximize shareholder value. The option program
also utilizes vesting periods to encourage employees to continue in
the employ of the Company.
COMPENSATION COMMITTEE
----------------------
V. LeRoy Hansen, Chairman
K. Fred Skousen, Ph.D
E. Keith Hansen, M.D.
Edward A. Loeser, M.D.
<PAGE>
Cash Compensation of Officers
- -----------------------------
The following table sets forth the compensation of the Company's chief
executive officer and all executive officers whose total annual salary and
bonus exceeded $100,000 during the fiscal year ended June 30, 1995.
<TABLE>
<CAPTION>
Summary Compensation Table
Long Term Compensation
-----------------------------
Annual Compensation Awards Payouts
------------------------------ ------------------- -------
Name Other Restricted
and Annual Stock LTIP All Other
Principal Compen- Award(s) Options/ Payouts Compen-
Position Year Salary($) Bonus($) sation(1) ($ ) SAR(#) ($) sation($)
- ---------- ------ --------- -------- --------- --------- -------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Kelvyn H. Cullimore, Jr. 1995 $90,000 $10,321 $7,195 $ -0- -0- $ -0- $ -0-
President/CEO 1994 $85,000 $ -0- $9,539 $ -0- 52,000 $ -0- $ -0-
1993 $80,000 $27,854 $10,999 $ -0- -0- $ -0- $ -0-
</TABLE>
(1) The Company provides automobiles for certain executive officers and
pays all vehicle operating expenses. The Company also provides life
insurance for its officers. The amount of this column includes the
approximate value of these benefits to the named officer.
During the last completed fiscal year, the Company made no awards
under any long term incentive plan and no stock appreciation rights were
granted.
The following chart sets forth a five year comparison of the yearly
percentage change in the cumulative total shareholder return on the
Company's common stock in relation to the cumulative total return of the
NASDAQ market and to a peer group index of companies in similar
industries.
Bonus Plan
- ----------
The Company maintains a discretionary incentive bonus plan
administered by the Compensation Committee. Pursuant to the plan, the
Compensation Committee granted incentive bonuses to certain officers and
employees of the Company during the year. The total amount expensed in
fiscal 1995 was $70,404 of which $54,295 was for officers and is included
under the annual bonus category in the compensation table above.
Salary Continuation Plan
- ------------------------
During fiscal 1988, the Company's Board of Directors adopted a Salary
Continuation Agreement (Agreement) for Officers of the Company. The
Agreement provides for a pre-retirement benefit to the employee's
designated beneficiary in the event that the employee dies before reaching
age 65 and a retirement benefit upon reaching age 65. The pre-retirement
benefit provides for payment of 50 percent of the employee's compensation
at the time of death for a period of 15 years or until the employee would
have reached age 65, whichever is longer. The retirement benefit provides
for payment of 50% of the employee's annualized salary at the time of
retirement paid for 15 years. All benefits under this plan are capped at
$75,000 per year per participant and benefits are only payable in the
event of retirement at age 65 or death of the employee.
<PAGE>
Presently, Kelvyn H. Cullimore, Kelvyn H. Cullimore, Jr. and Larry K.
Beardall are covered under this plan.
Funding for obligations arising in connection with the Agreement is
provided by life insurance policies on participating employees, of which
the Company is the owner and beneficiary. The face amounts of the
policies have been determined so that sufficient cash values and death
benefits will be provided to meet the obligations as they occur. In
fiscal 1995, the Company expensed $35,890 relating to salary continuation
obligations. No benefits have been paid under this salary continuation
plan.
Profit-Sharing and 401(k) Plan
- ------------------------------
The Company has adopted a Profit-Sharing and 401(k) Plan (the "Plan")
which consists of a profit-sharing plan and a salary reduction
arrangement. Employees who are age 20 and have completed at least six
months of service with the Company are eligible to participate in the
Plan.
Eligible employees may make contributions to the Plan in the form of
salary deferrals up to 15% of total compensation, not to exceed $9,000,
the maximum allowable amount of salary deferrals for calendar 1994. The
Company matches annual employee contributions at 25% of employee
contributions, up to a maximum of $500 per employee per year.
Participants under the Plan are 100% vested in their salary deferral
contributions and vest 20% a year after 2 years of participation in
Company matching contributions. Amounts deferred by employees under the
Plan are included under "Salary" in the compensation table for applicable
executives above. Amounts contributed by the Company for each applicable
individual are included in the "Other Compensation" column in the table
above.
Stock Options Outstanding
- -------------------------
On August 12, 1993, options to purchase 456,300 shares were granted
under the 1992 Stock Option Plan as follows: Kelvyn H. Cullimore, Jr.,
52,000 shares; to all executive officers as a group, 227,000 shares
(exclusive of Cullimore, Jr.); and to others, 229,895 shares. Options are
to purchase shares of the common stock, no par value, of the Company and
are exercisable one year from the date of grant. The per share exercise
price of these options is $.875.
During fiscal 1995, there were no options granted to or exercised by
the Company's current officers or directors. The following table sets
forth the stock options granted to the Company's chief executive officer
and all other executive officers whose total compensation exceeded
$100,000 during fiscal 1995.
Aggregated Option/SAR Exercises In Last Fiscal Year
and Fiscal Year-End Option/SAR Values
<PAGE>
<TABLE>
<CAPTION>
Number of
Securities Value of
Underlying Unexercisable
Unexercisable In-the-Money
Options/SARs at Options/SARs at
June 30, 1995 June 30, 1995
Shares
Acquired on Exercisable/ Exercisable/
Name Exercise Value Realized($) Unexercisable Unexercisable
- ----- -------- ---------------- ------------- -------------
<S> <C> <C> <C> <C>
Kelvyn H. Cullimore, Jr. 0 0 52,000/0 $3,250.00/$0
President/CEO
</TABLE>
Remuneration of Directors
- -------------------------
Directors who receive remuneration as officers of the Company are paid
$100 per meeting for attendance at regular and special director's
meetings. Outside directors are paid an annual retainer of $3,600. In
addition, the Company pays all expenses incurred by directors in
connection with attendance at board meetings.
Each outside director also participates in an annual bonus program.
The full annual bonus per director is one-half of one percent of the
Company's pre-tax profits. A total of $8,600 was paid to the outside
directors under this plan for the fiscal year 1995.
PROPOSAL - 2 AMENDMENT TO 1992 STOCK OPTION PLAN
In February, 1992, the Board of Directors of the Company adopted a
stock option plan, under which options for the purchase of up to 500,000
shares of common stock, no par value, of the Company, may be granted
pursuant to the plan at the discretion of the Board of Directors, or a
Committee of the Board formed to administer the plan. This plan was
ratified by shareholders of the Company at the Annual Meeting of
Shareholders held on December 15, 1992. The Board of Directors proposes
to amend this plan to increase the number of options available under the
plan to 1,000,000 to allow for options to be available for new employees,
officers and directors. In addition, the proposed amended and restated
plan permits the issuance of incentive stock options as well as non-
statutory stock options.
The Amended and Restated 1992 Stock Option Plan (the "Plan") must be
approved by the stockholders of the Company within 12 months of its
adoption by the Board. The Plan provides for the grant of options to
purchase up to an aggregate of 1,000,000 authorized but unissued shares of
common stock of the Company or shares which have been reacquired by the
Company. Shares that are subject to options under the Plan that terminate
or expire unexercised will return to the pool of such shares available for
grant under the Plan. The number of shares issuable under the Plan is
subject to adjustment to take account of recapitalizations,
reorganizations or similar corporate events.
Options under the Plan may be granted to employees, officers and
directors of the Company as determined by the Committee appointed by the
Board (the "Committee"), or, if there is none, the Board itself, which
administers the Plan. Options granted under the Plan may be either
incentive stock options ("ISOs") intended to qualify under Section 422A of
the Internal Revenue Code of 1986, as amended (the "Code"), or options
that do not qualify as ISOs ("nonqualified options"). The exercise price
of shares subject to any ISO cannot be less than the fair market value of
the shares of the Company's common stock at the time the ISO is granted.
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The exercise price in the case of any nonqualified option granted under
the Plan will be such price as is determined by the Committee. Any person
holding capital stock possessing more than 10% of the total combined
voting power of all classes of stock of the Company is not eligible to
receive ISOs under the 1992 Plan unless the exercise price per share is at
least 110% of the "fair market value" of the Company's shares as defined
by the Plan on the date the ISO is granted.
The Committee has the authority to determine the rate at which options
under the Plan will vest. Subject to vesting, any options granted under
the Plan may be exercised at any time after the date of grant and before
the expiration of ten years from the date of the grant; provided, however,
an ISO granted to a 10% shareholder may not have a term exceeding five
years from the date of the grant. Under the Plan, the full exercise price
is payable in cash. All options granted under the Plan are non-
transferable by the participant, other than by will or the laws of descent
and distribution.
Members of the Committee do not participate in the Plan. They do
receive an annual grant of options pursuant to a formula as permitted by
Section 16b of the Securities Exchange Act of 1934. Under this formula,
a Committee member who is also a first-time director of the Company
receives a one-time grant of an option to acquire 15,000 shares. Each
year thereafter, a member of the Committee receives an annual grant of an
option to acquire 3,000 shares.
The Committee may amend the Plan without further approval of the
stockholders, except for amendments which would increase the number of
shares subject to the Plan (except for adjustments described above), or
would extend the period during which an award may be granted or exercised,
or extend the term of the Plan. A copy of the Plan has been filed as an
appendix to this Proxy Statement.
The Board recommends that the shareholders vote FOR Proposal 2, amending
the Company's 1992 Stock Option Plan.
PROPOSAL 3 - RATIFICATION OF SELECTION OF AUDITORS
The firm of KPMG Peat Marwick served as independent public accountants
for the Company for the fiscal year ended June 30, 1995. The Board of
Directors desires the firm to continue in this capacity for the current
fiscal year. Accordingly, a resolution will be presented to the meeting
to ratify the selection of KPMG Peat Marwick by the Board of Directors as
independent accountants to audit the accounts and records of the Company
for the fiscal year ending June 30, 1996, and to perform other appropriate
services. The Board recommends that the shareholders vote FOR Proposal 3,
ratifying the selection of KPMG Peat Marwick as auditors for the Company
for fiscal 1996. If the stockholders fail to ratify the selection, the
Board of Directors will reconsider its decision.
Representatives of KPMG Peat Marwick are expected to be present at the
Annual Meeting of Shareholders of the Company, will have the opportunity
to make a statement if they desire and may be available to respond to
appropriate questions. During the two most recent fiscal years, there has
been no resignation or dismissal of the independent accountants engaged by
the Company.
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GENERAL
Expenses which are incurred in connection with the solicitation of
proxies for use at the Annual Meeting will be borne by the Company. While
there is no formal agreement to do so, the Company will reimburse banks,
brokerage houses and other custodians, nominees and fiduciaries for their
reasonable expenses in forwarding annual meeting materials to their
principals.
SHAREHOLDER PROPOSALS
Shareholder proposals intended to be presented at the 1996 Annual
Meeting of the Company's Shareholders must be received by the Company at
its corporate headquarters on or before July 31, 1996, in order to be
included in the Proxy Statement and Form of Proxy relating to that
meeting.
OTHER MATTERS
The Board of Directors of the Company knows of no other matters to be
presented at the Annual Meeting of Shareholders to which this Proxy
Statement relates.
AVAILABILITY OF INFORMATION
THE COMPANY WILL PROVIDE, WITHOUT CHARGE, TO EACH SHAREHOLDER TO WHOM
THIS PROXY STATEMENT IS DELIVERED, UPON WRITTEN OR ORAL REQUEST, A COPY OF
THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED JUNE 30, 1995,
INCLUDING THE FINANCIAL STATEMENTS AND SCHEDULES THERETO, AS FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION. SUCH DOCUMENT SHALL BE SENT BY
FIRST CLASS MAIL OR OTHER EQUALLY PROMPT MEANS. WRITTEN OR ORAL REQUEST
FOR SUCH INFORMATION SHOULD BE DIRECTED TO MR. BOB CARDON, CORPORATE
SECRETARY, DYNATRONICS CORPORATION, 7030 PARK CENTRE DRIVE, SALT LAKE
CITY, UTAH 84121.
DYNATRONICS CORPORATION
By order of the Board of Directors
/s/ Bob Cardon
- ------------------------------------
Bob Cardon, Corporate Secretary
