EXHIBIT 10.4
LETTER OF STOCK OPTION GRANT
ORTHOLOGIC CORP.
March 3, 2005
Dr. James M. Pusey
OrthoLogic Corp.
1275 West Washington
Tempe, Arizona 85281
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RE:
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OrthoLogic Corp. Stock Option
Grant
(300,000 Shares)
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Dear Dr. Pusey:
In
connection with your employment with OrthoLogic Corp. (the
“Company”), the Company is offering you a nonqualified
stock option to purchase shares of Company stock. The option is
subject to the following terms and conditions:
1. Grant
of Option . The Company hereby grants to you a nonqualified
stock option to purchase from the Company upon the terms and
conditions and at the times hereinafter set forth, an aggregate of
300,000 shares of the common stock, $.0005 par value, of the
Company (the “Shares”) at a purchase price of $5.88 per
Share. The date of grant of this option is March 3, 2005
(hereinafter referred to as the “Option
Date”).
2.
Exercisability of Option . This option shall be immediately
exercisable as to 10% of the total shares covered by this option
and shall become exercisable as to 1/48 of the remaining 90% for
each full month of employment with the Company after the Option
Date (5,625 shares per month), so that, by way of example, the
option will be exercisable for 107,500 shares if you continue in
employment for one full year, 165,000 shares if you continue in
employment for two full years, 232,500 shares if you continue in
employment for three full years and all 300,000 shares if you
continue in employment for four full years. No fractional shares
shall be issued upon exercise of this option and if the application
of the fractions set forth above would result in a fractional
share, the number of shares exercisable shall be rounded up to the
next full share.
Notwithstanding
the foregoing, upon a Change in Control, you shall be entitled to
exercise this option with respect to all shares covered by this
option (300,000 shares); provided, however, that if the Company
shall, on or before the date of such Change of Control, request
that
Dr. James M. Pusey
March 3, 2005
Page 2
you remain in the employ of the
Company following the Change of Control, then you shall be entitled
to exercise this option with respect to the greater of (i) 90%
of the shares covered by this option (270,000 shares) or
(ii) the number of shares then exercisable as of the Change in
Control, and the remaining portion of this option shall become
exercisable upon your completion of six months service thereafter
or, if earlier, the date on which the Company terminates your
employment.
For
purposes of this Letter of Grant, the term “Change of
Control” shall be defined as a change in ownership or control
of the Company effected through any of the following transactions:
(a) a statutory share exchange, merger, consolidation or
reorganization approved by the Company’s stockholders, unless
securities representing more than 50% of the total combined voting
power of the voting securities of the successor corporation are
immediately thereafter beneficially owned, directly or indirectly,
by the persons who beneficially owned the Company’s
outstanding voting securities immediately prior to such
transaction; (b) any stockholder approved transfer or other
disposition of all or substantially all of the Company’s
assets (whether held directly or indirectly through one or more
controlled subsidiaries) except to or with a wholly-owned
subsidiary of the Company); or (c) the acquisition, directly
or indirectly by any person or related group of persons of
beneficial ownership (within the meaning of Rule 13d-3 of the
Securities Exchange Act of 1934, as amended (the “Exchange
Act”) of securities possessing more than 50% of the total
combined voting power of the Company’s outstanding securities
pursuant to transactions with the Company’s
stockholders.
3.
Termination of Option . Notwithstanding anything to the
contrary herein, the extent to which this option may be exercised
shall not increase after your employment with the Company
terminates, and this option shall not be exercisable after the
earliest of (i) the tenth anniversary of the Option Date;
(ii) two years 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
employmen
