EMPLOYMENT AGREEMENT
This Agreement is to be effective, as of October 20, 1997, by
and between OrthoLogic Corp., a Delaware corporation (the "Company"), and Xxxxxx
X. Xxxxxxx ("Employee").
RECITALS:
---------
A. The Company wishes to employ Employee, and Employee wishes to be
employed by the Company.
B. The parties wish to set forth in this Agreement the terms and
conditions of such employment.
AGREEMENT:
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In consideration of the mutual covenants and agreements set forth
herein, the parties agree as follows:
1. Employment and Duties. Subject to the terms and conditions of this
Agreement, the Company employs Employee to serve in a managerial capacity and as
a member of its Board of Directors (the "Board") and Employee accepts such
employment and agrees to perform such reasonable responsibilities and duties as
may be assigned to him from time to time by the Board. Employee's title shall be
President/CEO of the Company, with general responsibility for Company
operations. Employee will report to the Board. During the term of Employee's
employment pursuant to this Agreement, the Company shall use its best efforts to
maintain Employee as a member of the Board.
2. Term. The term of this employment pursuant to this Agreement shall
begin on the effective date, and shall terminate as provided herein.
3. Compensation.
(a) Salary. The Company shall pay Employee a minimum base
annual salary, before deducting all applicable withholdings, of $260,000 per
year, payable at the times and in the manner dictated by the Company's standard
payroll policies. The minimum base annual salary shall be reviewed annually, at
the end of the Company's fiscal year, by the Compensation Committee of the
Board.
(b) Bonus. Employee shall be eligible to participate in an
incentive bonus program as developed and adopted, and as revised from time to
time, by the Board. Such program shall be based upon the achievement of
individual goals by Employee and upon Company
performance. Initially, the program shall provide for a target bonus of 50% of
Employee's base salary for achievement of a Board-approved plan. Any 1997 bonus
will be based on the Company's audited financial statements for all of 1997, but
will be prorated as to amount of payment to reflect the actual number of months
Employee is employed during the year. Within 90 days of the effective date of
this Agreement, the Board and Employee will begin meeting for the purpose of
negotiating in good faith the targets and objectives, and a formula, to be used
in the bonus program.
(c) Stock Options. The Company shall grant to Employee
incentive options (the parties understand that only a portion of such options
will qualify as incentive options for tax purposes), from the Company's 1987
Stock Option Plan, to purchase 350,000 shares of the Company's common stock,
with an exercise price equal to the fair market value of the stock on the
effective date of the grant, with such value determined as specified in the
Company's 1987 Stock Option Plan. So long as Employee is still employed by the
Company at each such time of vesting, options to purchase 87,500 shares shall
vest on the first anniversary of Employee's employment by the Company, and
additional options to purchase 7,292 shares shall vest on November 30, 1998 and
on the last day of each calendar month thereafter, until such shares are fully
vested; provided that the 87,500 shares which would ordinarily vest at the end
of the first year shall vest immediately upon a termination of Employee without
cause, or upon the death of Employee, if such termination or death occurs during
the second six months of Employee's employment by the Company.
On the first anniversary of Employee's employment by
the Company, if Employee is still employed by the Company at such time, the
Company shall grant to Employee additional incentive options, from the Company's
1997 Stock Option Plan, to purchase 100,000 shares of the Company's common
stock, with an exercise price equal to the fair market value of the stock on
such anniversary, with such value determined as specified in the Company's 1997
Stock Option Plan. So long as Employee is still employed by the Company at each
such time of vesting, options to purchase 2,084 shares shall vest on November
30, 1998 and on the last day of each calendar month thereafter, until such
shares are fully vested.
4. Fringe Benefits. In addition to the options for shares of the
Company's common stock granted to Employee as part of this Agreement and any
other employee benefit plans (including without limitation pension, savings,
medical, dental and disability plans) generally available to employees, Employee
shall be eligible for the grant of additional options as determined from time to
time by the Board of Directors based upon Employee's performance hereunder. The
manner of implementation of such benefits with respect to such items as
procedures and amounts are discretionary with the Company but shall be
commensurate with Employee's executive capacity. The Company agrees to maintain
term life insurance during the term of this Agreement in an amount equal to two
times Employee's base salary, as it may be adjusted from time to time, with the
beneficiary to be designated by Employee. During
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Employee's employment, the Company will also provide Employee with an automobile
expense allowance of $450 per month.
5. Expenses.
(a) Reimbursement. In addition to the compensation and
benefits provided above, the Company shall, upon receipt of appropriate
documentation, reimburse Employee each month for his reasonable travel, lodging,
entertainment, promotion and other ordinary and necessary business expenses
consistent with Company policies.
(b) Moving. Employee shall be reimbursed for (i) the direct
relocation costs of moving his household effects, cars and family from Missouri
to the Phoenix Metropolitan Area; (ii) the brokerage commission and closing
costs related to the sale of his existing home in Missouri; (iii) closing costs
related to his new home in the Phoenix Metropolitan Area; and (iv) $2,500 per
month for a period of not to exceed three months to cover temporary living
expenses in the Phoenix Metropolitan Area.
6. Termination.
(a) For Cause. The Company may terminate Employee's employment
for cause upon written notice to Employee stating the facts constituting such
cause, provided that Employee shall have 30 days following such notice to cure
any conduct or act, if curable, alleged to provide grounds for termination for
cause hereunder. In the event of termination for cause, the Company shall be
obligated to pay Employee only the minimum base salary due him through the date
of termination. The written notice shall state the cause for termination. Cause
shall include gross or willful neglect of duty, willful failure to abide by
instructions or policies from or set by the Board of Directors, or conviction of
a felony or misdemeanor punishable by at least one year in prison, or pleading
guilty or nolo contendere to same.
(b) Without Cause. The Company may terminate Employee's
employment at any time, immediately and without cause, by giving written notice
to Employee. If the Company terminates Employee without cause, it shall pay to
Employee, in a lump sum, one year's minimum base salary, as in effect at the
time of termination, less applicable withholdings. Additionally, if the
termination occurs during the first year of Employee's employment by the
Company, the Company shall pay, in a lump sum, a displacement fee equal to
Employee's base salary for the number of months remaining between the date of
termination and the first anniversary of Employee's employment by the Company.
At the election of Employee, which must be expressed by written notice to the
Board within 30 days after the occurrence of an event as described in this
sentence, a termination without cause shall also be deemed to occur if
Employee's duties or job title are changed materially, if Employee's salary is
reduced below $260,000 per year or if Employee's service as a director of the
Company is terminated as a result of actions by the Board or the stockholders of
the Company.
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(c) Disability. If during the term of this Agreement, Employee
fails to perform his duties hereunder on account of illness or other incapacity
for a period of 60 consecutive days, or for 90 days during any six-month period,
the Company shall have the right to terminate this Agreement without further
obligation hereunder except as otherwise provided in disability plans generally
applicable to executive employees.
(d) Death. If Employee dies during the term of this Agreement,
this Agreement shall terminate immediately, and Employee's legal representatives
shall be entitled to receive the base salary due Employee through the last day
of the calendar month in which his death shall have occurred and any other death
benefits generally applicable to executive employees.
(e) Resignation. Employee may resign his employment by giving
the Company written notice, which shall also include his resignations as an
officer and as a director of the Company. In the event of such a resignation,
the Company shall be obligated to pay Employee only the minimum base salary due
him through the effective date of the resignation (any vested options will
remain vested, and will expire as provided in the Company's Stock Option Plan
and Employee's Letter of Grant).
7. Confidential Information. Employee acknowledges that Employee may
receive, or contribute to the production of, Confidential Information. For
purposes of this Agreement, Employee agrees that "Confidential Information"
shall mean any and all information or material proprietary to the Company or
designated as Confidential Information by the Company and not generally known by
non-the Company personnel, which Employee develops or of or to which Employee
may obtain knowledge or access through or as a result of Employee's relationship
with the Company (including information conceived, originated, discovered or
developed in whole or in part by Employee). Confidential Information includes,
but is not limited to, the following types of information and other information
of a similar nature (whether or not reduced to writing) related to the Company's
business: discoveries, inventions, ideas, concepts, research, development,
processes, procedures, "know-how", formulae, marketing or manufacturing
techniques and materials, marketing and development plans, business plans,
customer names and other information related to customers, price lists, pricing
policies, methods of operation, financial information, employee compensation,
and computer programs and systems. Confidential Information also includes any
information described above which the Company obtains from another party and
which the Company treats as proprietary or designates as Confidential
Information, whether or not owned by or developed by the Company, including
Confidential Information acquired by the Company from any of its affiliates.
Employee acknowledges that the Confidential Information derives independent
economic value, actual or potential, from not being generally known to, and not
being readily ascertainable by proper means by, other persons who can obtain
economic value from its disclosure or use. Information publicly known without
breach of this Agreement that is generally employed by the trade at or after the
time Employee first learns of such information, or generic information or
knowledge which Employee would have learned
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in the course of similar employment or work elsewhere in the trade, shall not be
deemed part of the Confidential Information. Employee further agrees:
a. To furnish the Company on demand, at any time during or
after employment, a complete list of the names and addresses of all present,
former and potential suppliers, financing sources, clients, customers and other
contacts gained while an employee of the Company in Employee's possession,
whether or not in the possession or within the knowledge of the Company.
b. That all notes, memoranda, electronic storage,
documentation and records in any way incorporating or reflecting any
Confidential Information shall belong exclusively to the Company, and Employee
agrees to turn over all copies of such materials in Employee's control to the
Company upon request or upon termination of Employee's employment with the
Company.
c. That while employed by the Company and thereafter Employee
will hold in confidence and not directly or indirectly reveal, report, publish,
disclose or transfer any of the Confidential Information to any person or
entity, or utilize any of the Confidential Information for any purpose, except
in the course of Employee's work for the Company.
d. That any idea in whole or in part conceived of or made by
Employee during the term of his employment, consulting, or similar relationship
with the Company which relates directly or indirectly to the Company's current
or planned lines of business and is made through the use of any of the
Confidential Information of the Company or any of the Company's equipment,
facilities, trade secrets or time, or which results from any work performed by
Employee for the Company, shall belong exclusively to the Company and shall be
deemed a part of the Confidential Information for purposes of this Agreement.
Employee hereby assigns and agrees to assign to the Company all rights in and to
such Confidential Information whether for purposes of obtaining patent or
copyright protection or otherwise. Employee shall acknowledge and deliver to the
Company, without charge to the Company (but at its expense) such written
instruments and do such other acts, including giving testimony in support of
Employee's authorship or inventorship, as the case may be, necessary in the
opinion of the Company to obtain patents or copyrights or to otherwise protect
or vest in the Company the entire right and title in and to the Confidential
Information.
8. Loyalty During Employment Term. Employee agrees that during the term
of Employee's employment by the Company, Employee will devote substantially all
of Employee's business time and effort to and give undivided loyalty to the
Company, and will not engage in any way whatsoever, directly or indirectly, in
any business that is competitive with the Company or its affiliates, nor
solicit, or in any other manner work for or assist any business which is
competitive with the Company or its affiliates. During the term of Employee's
employment by the Company, Employee will undertake no planning for or
organization of any business activity
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competitive with the Company or its affiliates, and Employee will not combine or
conspire with any other employee of the Company or any other person for the
purpose of organizing any such competitive business activity. However, Employee
shall be entitled to make a passive investment in a publicly traded stock of a
competitor of the Company so long as he does not at any time own more than 5% of
the total outstanding stock of such competitor.
9. Non-competition; Non-solicitation. The parties acknowledge that
Employee will acquire much knowledge and information concerning the business of
the Company and its affiliates as the result of Employee's employment. The
parties further acknowledge that the scope of business in which the Company is
engaged as of the date of execution of this Agreement is world-wide and very
competitive and one in which few companies can successfully compete. Certain
activities by Employee after this Agreement is terminated would severely injure
the Company. Accordingly, until one year after Employee resigns pursuant to
Section 6(e) or Employee's employment is terminated with cause as contemplated
by Section 6(a), Employee will not:
a. Engage in any work activity for or in conjunction with any
business or entity that is in competition with or is preparing to compete with
the Company;
b. Persuade or attempt to persuade any potential customer or
client to which the Company or any of its affiliates has made a proposal or
sale, or with which the Company or any of its affiliates has been having
discussions, not to transact business with the Company or such affiliate, or
instead to transact business with another person or organization;
c. Solicit the business of any customers, financing sources,
clients, suppliers, or business patrons of the Company or any of its
predecessors or affiliates which were customers, financing sources, clients,
suppliers, or business patrons of the Company at any time during Employee's
employment by the Company, or within three years prior to the Effective Date of
Employee's employment, provided, however, that if Employee becomes employed by
or represents a business that exclusively sells products that do not compete
with products then marketed or intended to be marketed by the Company, such
contact shall be permissible; or
d. Solicit, endeavor to entice away from the Company or any of
its affiliates, or otherwise interfere with the relationship of the Company or
any of its affiliates with, any person who is employed by or otherwise engaged
to perform services for the Company or any of its affiliates, whether for
Employee's account or for the account of any other person or organization.
10. Injunctive Relief. It is agreed that the restrictions contained in
Sections 7, 8, and 9 of this Agreement are reasonable, but it is recognized that
damages in the event of the breach of any of those restrictions will be
difficult or impossible to ascertain; and, therefore, Employee agrees that, in
addition to and without limiting any other right or remedy the Company may have,
6
the Company shall have the right to an injunction against Employee issued by a
court of competent jurisdiction enjoining any such breach without showing or
proving any actual damage to the Company. This paragraph shall survive the
termination of Employee's employment.
11. Part of Consideration. Employee also agrees, acknowledges,
covenants, represents and warrants that he is fully and completely aware that,
and further understands that, the restrictive covenants contained in Sections 7,
8, and 9 of this Agreement are an essential part of the consideration for the
Company entering into this Agreement and that the Company is entering into this
Agreement in full reliance on these acknowledgments, covenants, representations
and warranties.
12. Time and Territory Reduction. If any of the periods of time and/or
territories described in Sections 7, 8, and 9 of this Agreement are held to be
in any respect an unreasonable restriction, it is agreed that the court so
holding may reduce the territory to which the restriction pertains or the period
of time in which it operates or may reduce both such territory and such period,
to the minimum extent necessary to render such provision enforceable.
13. Survival. The obligations described in Sections 7 and 9 of this
Agreement shall survive any termination of this Agreement or any termination of
the employment relationship created hereunder.
14. Nondelegability of Employee's Rights and Company Assignment Rights.
The obligations, rights and benefits of Employee hereunder are personal and may
not be delegated, assigned or transferred in any manner whatsoever, nor are such
obligations, rights or benefits subject to involuntary alienation, assignment or
transfer. Upon mutual agreement of the parties, the Company upon reasonable
notice to Employee may transfer Employee to an affiliate of the Company, which
affiliate shall assume the obligations of the Company under this Agreement. This
Agreement shall be assigned automatically to any entity merging with or
acquiring the Company.
15. Governing Law. This Agreement shall be governed by and construed
and enforced in accordance with the internal laws of the State of Arizona,
exclusive of the conflict of law provisions thereof, and the parties agree that
any litigation pertaining to this Agreement shall be in courts located in
Maricopa County, Arizona.
16. Attorneys' Fees. If any party finds it necessary to employ legal
counsel or to bring an action at law or other proceeding against the other party
to enforce any of the terms hereof, the party prevailing in any such action or
other proceeding shall be paid by the other party its reasonable attorneys' fees
as well as court costs all as determined by the court and not a jury.
17. Notices. All notices, demands, instructions, or requests relating
to this Agreement shall be in writing and, except as otherwise provided herein,
shall be deemed to have been given
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for all purposes (i) upon personal delivery, (ii) one day after being sent, when
sent by professional overnight courier service from and to locations within the
Continental United States, (iii) five days after posting when sent by United
States registered or certified mail, with return receipt requested and postage
paid, or (iv) on the date of transmission when sent by facsimile with a
hard-copy confirmation; if directed to the person or entity to which notice is
to be given at his or its address set forth in this Agreement or at any other
address such person or entity has designated by notice.
To the Company: ORTHOLOGIC CORP.
0000 Xxxxx 00xx Xxxxxx, Xxxxx 00
Xxxxxxx, XX 00000
Attention: Chairman of the Board
To Employee: Xxxxxx X. Xxxxxxx
0000 Xxxxx Xxxxxx Xxxx
Xx. Xxxxx, XX 00000
18. Entire Agreement. This Agreement and the Invention, Confidential
information and Non-Competition Agreement bearing the same date as this
Agreement constitute the final written expression of all of the agreements
between the parties (except those relating to Employee's service as a director
of the Company), and are a complete and exclusive statement of those terms. They
supersede all understandings and negotiations concerning the matters specified
herein. Any representations, promises, warranties or statements made by either
party that differ in any way from the terms of these two written Agreements
shall be given no force or effect. The parties specifically represent, each to
the other, that there are no additional or supplemental agreements between them
related in any way to the matters herein contained unless specifically included
or referred to herein. No addition to or modification of any provision of either
of such Agreements shall be binding upon any party unless made in writing and
signed by all parties. To the extent that there is any conflict between this
Agreement and the Invention, Confidential information and Non-Competition
Agreement, the provisions of this Agreement shall govern.
19. Waiver. The waiver by either party of the breach of any covenant or
provision in this Agreement shall not operate or be construed as a waiver of any
subsequent breach by either party.
20. Invalidity of Any Provision. The provisions of this Agreement are
severable, it being the intention of the parties hereto that should any
provisions hereof be invalid or unenforceable, such invalidity or
unenforceability of any provision shall not affect the remaining provisions
hereof, but the same shall remain in full force and effect as if such invalid or
unenforceable provisions were omitted.
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21. Counterparts. This Agreement may be executed simultaneously in any
number of counterparts, each of which shall be deemed an original but all of
which together shall constitute one and the same agreement.
22. Binding Effect; Benefits. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective heirs,
successors, executors, administrators and assigns. Notwithstanding anything
contained in this Agreement to the contrary, nothing in this Agreement,
expressed or implied, is intended to confer on any person other than the parties
hereto or their respective heirs, successors, executors, administrators and
assigns any rights, remedies, obligations or liabilities under or by reason of
this Agreement.
This Agreement has been executed by the parties as of October 20, 1997.
ORTHOLOGIC CORP.
(the "Company")
By: /s/ Xxxxx X. Xxxxxxxxx
Xxxxx X. Xxxxxxxxx
Chief Executive Officer
XXXXXX X. XXXXXXX
By: /s/ Xxxxxx X. Xxxxxxx
"EMPLOYEE"
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LETTER OF INCENTIVE OPTION GRANT
ORTHOLOGIC CORP. 1987 STOCK OPTION PLAN
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October 20, 1997
Xxxxxx X. Xxxxxxx
0000 Xxxxx Xxxxxx Xxxx
Xx. Xxxxx, XX 00000
RE: OrthoLogic Corp. 1987 Stock Option Plan
Dear Xx. Xxxxxxx:
In order to provide additional incentive to certain selected employees,
OrthoLogic Corp. (the "Company") adopted the OrthoLogic 1987 Stock Option Plan
(the "Stock Option Plan"). By means of this letter, the Company is offering you
incentive stock options pursuant to the Stock Option Plan. The Company's sale of
its common shares underlying the option granted to you hereby has been
registered with the U.S. Securities and Exchange Commission. A copy of the
prospectus, including a copy of the Stock Option Plan (the "Prospectus"),
relating to that registration is also enclosed.
The option granted to you hereunder shall be subject to all of the
terms and conditions of the Stock Option Plan and you should review it
carefully. In addition, such option is subject to the following terms and
conditions:
1. Grant of Option. The Company hereby grants to you, pursuant to the
Stock Option Plan, the option to purchase from the Company upon the terms and
conditions and at the times hereinafter set forth, an aggregate of 350,000
shares of the common stock, $.0005 par value, of the Company (the "Shares") at a
purchase price of $5.625 per share. The date of grant of this option is October
20, 1997 (hereinafter referred to as the "Option Date").
This Option is an incentive stock option within the meaning of
the Internal Revenue Code of 1986, as amended, except if required by applicable
tax rules, to the extent that the aggregate fair market value (determined as of
the date these options are granted) of Shares exercisable for the first time by
you during any calendar year (when aggregated, if appropriate, with shares
subject to other incentive stock option grants made under the Stock Option Plan
and another plan maintained by the Company or any ISO Group member as defined in
the Stock Option Plan) exceeds $100,000 (or such other limit as is prescribed by
the Internal Revenue Code, as amended), the option granted hereby as to such
excess Shares shall be treated as a nonqualified stock option pursuant to Code
Section 422(d).
2. Exercise Term of Option. Unless earlier terminated, Shares may be
purchased between the time such shares are vested, as described below, and the
date 10 years after the Option Date.
Number of Shares Vesting Schedule
---------------- ----------------
87,500 Shall vest on the first anniversary of your
employment with the Company, pursuant to
your Employment Agreement which is effective
October 20, 1997.
7,292 Shall vest on November 30, 1998 and on the
last day of each calendar month thereafter,
until such shares are fully vested;
Notwithstanding the vesting schedule set forth above, the
87,500 shares which would ordinarily vest at the end of the first year of
employment shall vest immediately upon a termination of your employment without
cause, as defined in your Employment Agreement, or upon your death, if such
termination or death occurs during the second six months of your employment by
the Company.
100% of the unvested options then held by you shall
automatically become exercisable and vested upon the occurrence, before the
expiration or termination of such option, of the acquisition by a third party of
100% of the Company's outstanding equity securities, a merger in which the
Company is not the surviving corporation, a sale of all or substantially all of
the Company's assets, or a similar reorganization of the Company.
3. Nontransferability. This option shall not be transferable otherwise
than by will or by the laws of descent and distribution, and the options shall
be exercisable only by (a) you, during your lifetime (except as contemplated by
the next clause); or (b) your legal representative or a person who acquired the
right to exercise these options by bequest or inheritance, during the one-year
period referred to in Section 7(iv) hereof. Any attempted transfer in violation
of this restriction shall be void.
4. Other Conditions and Limitations.
(a) Any Shares issued upon exercise of the Option shall
not be issued unless the issuance and delivery of
Shares pursuant thereto shall comply with all
relevant provisions of law including, without
limitation, the Securities Act of 1933, as amended,
the Securities Exchange Act of 1934, as amended, the
rules and regulations promulgated thereunder, any
applicable state securities or "Blue Sky" law or laws
(or an exemption from such provision is available),
and the requirements of any stock exchange upon which
the
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Shares may then be listed and shall be further
subject to the approval of counsel for the Company
with respect to such compliance.
(b) No transfer of any Shares issued upon the exercise of
these option will be permitted by the Company, unless
any request for transfer is accompanied by evidence
satisfactory to the Company that the proposed
transfer will not result in a violation of any
applicable law, rule or regulation, whether federal
or state, including in the discretion of the Company
an opinion of counsel reasonably acceptable to the
Company.
(c) Inability of the Company to obtain approval from any
regulatory body having jurisdictional authority
deemed by the Company's counsel to be necessary for
the lawful issuance and sale of any Shares hereunder
shall relieve the Company of any liability with
respect to the nonissuance or sale of such Shares as
to which such requisite authority shall not have been
obtained.
(d) Unless the Shares are subject to a then effective
registration statement under the Securities Act of
1933, upon exercise of this option (in whole or in
part) and the issuance of the Shares, the Company
shall instruct its transfer agent to enter stop
transfer orders with respect to Shares, and all
certificates representing the Shares shall bear on
the face thereof substantially the following legend:
"The shares of common stock represented by
this certificate have not been registered
under the Securities Act of 1933, as
amended, and may not be sold, offered for
sale, assigned, transferred or otherwise
disposed of unless registered pursuant to
the provisions of that Act or an opinion of
counsel to the Company is obtained stating
that such disposition is in compliance with
an available exemption from such
registration."
5. Exercise of Option. You may exercise the option only by giving to
the Chairman of the Board of the Company written notice by personal hand
delivery, or by registered or certified mail, postage prepaid, with return
receipt requested, at the following address, of your exercise of the option
including the number of Shares that you intend to acquire, accompanied by the
full exercise price therefor:
Chairman of the Board
OrthoLogic Corp.
0000 Xxxxx 00xx Xxxxxx
Xxxxxxx, Xxxxxxx 00000
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Payment of the option price shall be made either in (i) cash or by check, or
(ii) at your request and with the approval of the Company, by delivering shares
of the Company's common stock which have been beneficially owned by you for a
period of at least six months prior to the time of exercise ("Delivered Stock")
or a combination of cash and Delivered Stock. Payment in the form of Delivered
Stock shall be in the amount of the fair market value of the stock at the date
of exercise, determined pursuant to the Stock Option Plan. In no event will
Shares be transferred to you on exercise of the option until the full
consideration therefor has been received by the Company.
6. Valuation and Withholding. If required by applicable regulations,
the Company shall, at the time of issuance of any Shares purchased pursuant to
the Stock Option Plan, provide you with a statement of valuation of the Shares
issued. The Company shall be entitled to withhold amounts from your compensation
or otherwise to receive an amount adequate to provide for any applicable
federal, state and local income taxes (or require you to remit such amount as a
condition of issuance). The Company may, in its discretion, satisfy any such
withholding requirement, in whole or in part, by withholding form the shares to
be issued the number of shares that would satisfy the withholding amount due.
7. Termination of Option. Notwithstanding anything to the contrary,
this option can become exercisable only while you are an employee of the
Company, and shall not be exercisable after the earliest of (i) the tenth
anniversary of the Option Date; (ii) three months after the date your employment
with the Company terminates, if such termination is for any reason other than
permanent disability, death, or cause; (iii) the date your employment
terminates, if such termination is for cause, as defined in your Employment
Agreement with the Company dated as of October 20, 1997; or (iv) one year after
the date your employment with the Company terminates, if such termination is the
result of death or permanent disability.
8. Notice of Disposition of Shares. If you dispose of any Shares
acquired on the exercise of this option within either (a) two years after the
Option Date or (b) one year after the date of exercise of this option, you must
notify the Company within seven days of such disposition.
9. Miscellaneous. You will have no rights as a stockholder with respect
to the Shares until the exercise of option and payment of the full purchase
price therefor in accordance with the terms of the Stock Option Plan and this
Letter of Grant. Nothing herein contained shall impose any obligation on the
Company or any parent or subsidiary of the Company. Nothing herein contained
shall impose any obligation upon you to exercise this option. While the option
granted hereunder is intended to qualify as an incentive stock option under Code
Section 422A, the Company cannot assure you that such option will, in fact,
qualify as an incentive stock option, and makes no representation as to the tax
treatment to you upon receipt or exercise of the option or sale or other
disposition of the shares covered by the option.
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10. Governing Law. This Letter of Grant shall be subject to and
construed in accordance with the law of the State of Arizona, except as may be
required by the Delaware General Corporation Law or the federal securities laws.
Venue for any action arising from or relating to this Agreement shall lie
exclusively in Superior Court, Maricopa County, Arizona or the United States
District Court for the District of Arizona, Phoenix, Division.
11. Relationship to the Stock Option Plan. The option contained in this
Letter of Grant is subject to the terms, conditions and definitions of the Stock
Option Plan. To the extent that the terms, conditions and definitions of this
Letter of Grant are inconsistent with the terms, conditions and definitions of
the Stock Option Plan, the terms, conditions and definitions of the Stock Option
Plan shall govern. You acknowledge receipt of a copy of the Stock Option Plan
and represent that you are familiar with the terms and provisions thereof. You
hereby accept this option subject to all such terms and provisions. You agree to
accept as binding, conclusive and final all decisions or interpretations of the
Board or any committee appointed by the Board upon any questions arising under
the Stock Option Plan. You agree to consult your independent tax advisors with
respect to the income tax consequences to you, if any, of participating in the
Stock Option Plan and authorize the Company to withhold in accordance with
applicable law from any compensation otherwise payable to you any taxes required
to be withheld by federal, state or local law as a result of your participation
in this Plan.
12. Communication. No notice or other communication under this Letter
of Grant shall be effective unless the same is in writing and is personally
hand-delivered, or is sent by professional overnight delivery service or mailed
by registered or certified mail, postage prepaid and with return receipt
requested, addressed to:
a) the Company at the address set forth in Section 5
above, or such other address as the Company has
designated in writing to you, in accordance with the
provisions hereof, or
b) you at the address set forth at the beginning of this
letter, or such other address as you have designated
in writing to the Company, in accordance with the
provisions hereof.
You should execute the enclosed copy of this Letter of Grant and return
it to the Company as soon as possible. The additional copy is for your records.
Sincerely yours,
/s/ Xxxxx X. Xxxxxxxxx
Xxxxx X. Xxxxxxxxx
Chief Executive Officer
ACCEPTED AND AGREED TO:
/s/ Xxxxxx X. Xxxxxxx
Xxxxxx X. Xxxxxxx
Optionee
5
Date: October 20, 1997
---------------------------
6
ORTHOLOGIC CORP.
NOTICE OF EXERCISE OF STOCK OPTION ISSUED
UNDER THE 1987 STOCK OPTION PLAN
To: OrthoLogic Corp.
0000 X. 00xx Xx., Xxxxx 00
Xxxxxxx, XX 00000
Attn: Chairman of the Board
I hereby exercise my Option dated October 20, 1987 to purchase _____
shares of $.0005 par value per share common stock of OrthoLogic Corp. (the
"Company") at the option exercise price of $______ per share. Enclosed is a
certified or cashier's check in the total amount of $_______, or payment in such
other form as the Company has specified or as permitted by the option grant
letter.
If such shares are not registered under the Securities Act of 1933, I
represent to you that I am acquiring said shares for investment purposes and not
with a view to any distribution thereof and understand that my stock certificate
may bear an appropriate legend restricting the transfer of my shares and that a
stop-transfer order may be placed with the Company's transfer agent with respect
to such shares.
I request that my shares be issued in my name as follows:
-----------------------------------------------------------------------
(Print your name in the form in which you wish to have the shares
registered)
-----------------------------------------------------------------------
(Social Security Number)
-----------------------------------------------------------------------
(Street and Number)
-----------------------------------------------------------------------
(City, State and Zip)
Dated:
Signature: _______________________
7
