exv10w5



 






EXHIBIT 10.5




LETTER OF RESTRICTED STOCK GRANT

ORTHOLOGIC CORP.




March 3, 2005



Dr. James M. Pusey

OrthoLogic Corp.

1275 West Washington

Tempe, Arizona 85281




		
	     RE: 	OrthoLogic Corp. Restricted Stock Grant

(200,000 Shares)





Dear Dr. Pusey:




     In connection with your employment with OrthoLogic Corp. (the “Company”), the Company is
offering you a restricted stock grant for shares of Company stock. The grant is subject to the
following terms and conditions:



     1. Grant of Restricted Stock. The Company hereby grants to you an aggregate of
200,000 fully paid and nonassessable shares of the common stock, $.0005 par value, of the Company
(the “Restricted Stock”) upon the terms and conditions hereinafter set forth. The date of grant is
March 3, 2005 (hereinafter referred to as the “Grant Date”). On the Grant Date, you shall pay $100
to the Company as the full purchase price for the Restricted Stock.



     2. Restrictions. The Restricted Stock shall be forfeitable as described below until
the shares become vested upon the following events:




	 	(a)  	50% of the Restricted Stock covered by this Letter of Grant (100,000 shares)
shall become vested upon the acceptance by the FDA for filing of a New Drug Application
for Chrysalin for fresh fracture indications.
	 
	 	(b)  	50% of the Restricted Stock covered by this Letter of Grant (100,000 shares)
shall become vested upon the attainment of separate milestones, each established within
90 days after the Grant Date in good faith consultation between you and the
Compensation Committee of the Company’s Board of Directors. It is anticipated that
these milestones will be expected to be achievable prior to the initial New Drug
Application filing.





     The period of time during which the Restricted Stock is forfeitable is referred to as the
“Restricted Period.” If your employment with the Company terminates during the Restricted Period
for any reason, any Restricted Stock which has not yet become vested shall be forfeited to




 









 








Dr. James M. Pusey

March 3, 2005

Page 2


the Company on the date of such termination, without any further obligations of the Company to
you and all your rights with respect to such Restricted Stock shall terminate.




     Upon the occurrence of a Change of Control, all restrictions relating to the Restricted Stock
shall lapse; provided, however, that if the Corporation shall, on or before the date of such Change
of Control, request that Executive remain in the employ of the Corporation following the Change of
Control, then: the restrictions on the Restricted Stock shall instead lapse as to all but 10% of
the number of shares originally included in the Restricted Stock grant, and the restrictions on the
remainder shall lapse upon the completion by Executive of six months service thereafter or, if
earlier, the date on which the Corporation terminates Executive’s 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. Rights During Restricted Period. During the Restricted Period, you shall have the
right to vote the Restricted Stock and to receive cash dividends. If any stock dividend is
declared upon the Restricted Stock, or there is any stock split, stock distribution, or other
change in the corporate structure of the Company with respect to the Restricted Stock, the
aggregate number and kind of shares covered by this grant shall be proportionately and
appropriately adjusted (subject to the same restrictions applicable to the original Restricted
Stock). The Restricted Stock may not be sold, assigned, transferred, pledged, encumbered or
otherwise disposed of by you prior to vesting.



     4. Registration. The Company shall use its reasonable best efforts to register with
the United States Securities and Exchange Commission within 90 days of the date hereof and maintain
in effect at all times thereafter a registration statement under the Securities Act of 1933, as
amended (the “Securities Act”), in respect of the resale of all shares of Restricted Stock, until
such time as Executive is entitled to sell such shares pursuant to Rule 144(k) under the Securities
Act.



     5. Custody. The Restricted Stock shall be held in custody by the Company or an agent
for the Company until the applicable restrictions have expired. If any certificates are issued for
shares of Restricted Stock during the Restricted Period, such certificates shall bear an



 









 





Dr. James M. Pusey

March 3, 2005

Page 3


appropriate legend as determined by the Company referring to the applicable terms, conditions
and restrictions and you agree to deliver a signed, blank stock power to the Company relating
thereto. On each date that the Restricted Stock vests, the Company shall, or shall cause its
transfer agent to, deliver to you a stock certificate for those vested shares. Additionally, on
the final vesting date, the Company shall deliver to you the blank stock power that you signed and
delivered to the Company in connection with your Restricted Stock grant.




     6. Tax Withholding. If required by applicable regulations, the Company shall, at the
time of vesting, provide you with a statement of valuation of the Restricted Stock. The Company
may require, as a condition to the vesting of any shares of the Restricted Stock, that you
concurrently pay to the Company any taxes which the Company is required to withhold by reason of
such vesting. In lieu of part or all of such payment, you may request that the Company withhold a
portion of the shares otherwise becoming vested to defray all or a portion of any applicable taxes,
or request that the Company withhold the required amounts from other compensation payable to you.



     7. Other Conditions and Limitations. Unless the shares are subject to a then
effective registration statement under the Securities Act of 1933, 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.”



     8. Miscellaneous. Nothing herein contained shall impose any obligation on the Company
or any parent or subsidiary of the Company or on you with respect to your continued employment by
the Company or any parent or subsidiary of the Company.



     9. Counterparts. This Letter of Restricted Stock Grant may be executed in any number
of counterparts, and each such counterpart shall be deemed to be an original instrument, but all
such counterparts together shall constitute but one agreement. This Letter of Restricted Stock
Grant may be executed and delivered by facsimile.



     10. Governing Law. This Letter of Restricted Stock 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.



 









 





Dr. James M. Pusey

March 3, 2005

Page 4



     You should execute the enclosed copy of this Letter of Restricted Stock Grant and return it to
the Company as soon as possible. The additional copy is for your records.


	 	 	 	 	 
	 	Very truly yours,





ORTHOLOGIC CORP.

 	 
	 	By:  	/s/ Jock M. Holliman, III
 	 
	 	 	Jock M. Holliman, III 	 
	 	 	Chairman of the Board 	 
	 




ACCEPTED AND AGREED TO:



	 	 	 	 	 
	/s/ James M. Pusey	 	 
	 	 	 
	James M. Pusey	 	 
	 
	 	 	 	 
	Date:

	 	03/03/2005