Document:

exv10w1

 

EXHIBIT 10.1

EMPLOYMENT AGREEMENT

     THIS EMPLOYMENT AGREEMENT (this “Agreement”), dated as of the 3rd day of March,
2005, is between OrthoLogic Corp., a Delaware corporation (the “Corporation”) located at 1275 West
Washington, Tempe, Arizona 85281, and James M. Pusey (“Executive”).

     The Corporation desires to employ Executive, and Executive desires to accept such employment
on the terms and subject to the conditions hereinafter set forth.

     NOW, THEREFORE, in consideration of the premises and of the mutual covenants and obligations
hereinafter set forth, the parties hereto agree as follows:

     1. Employment;
Effectiveness of Agreement. Not later than March 18, 2005, or such
earlier date as may be specified by Executive (such date, the “Commencement Date,” for all purposes
hereof), the Corporation shall employ the Executive and the Executive shall accept employment by
the Corporation, upon the terms and conditions hereinafter set forth.

     2. Term of Service. The employment of the Executive hereunder shall commence on the
Commencement Date and continue until terminated pursuant to the terms of this Agreement. The
period of Executive’s employment is hereinafter referred to as the “Employment Period.”

     3. Duties. During the Employment Period, Executive shall serve as the Chief Executive
Officer (“CEO”) of the Corporation and shall serve the Corporation faithfully and to the best of
his ability. Subject to the approval of the shareholders, Executive will serve as a Director on
the Board of Directors. Subject to Executive’s continued employment, the Corporation will nominate
Executive for election, and re-election, as a Director on the Board of Directors at each annual
meeting of the shareholders beginning in 2006. Executive shall devote his full time, attention,
skill and efforts to the performance of such duties as are normal and customary to the position of
CEO as required by or reasonably requested by the Corporation’s Board of Directors. Subject to
paragraph 6(a)(ii), Executive’s responsibilities, title, working conditions, duties and/or any
other aspect of Executive’s employment may be changed, added to or eliminated during the Employment
Period at the sole discretion of the Corporation. Prior to serving on any outside board of
directors, Executive shall obtain the written consent of the Board of Directors, provided however
that no consent shall be required to serve on the boards of directors, or boards of trustees, for
not-for-profit organizations provided such service does not, in the good faith judgment of the
Company’s Board of Directors, impair Executive’s performance of his duties hereunder.

     4. Compensation; Bonus; Benefits; Reimbursement.

          (a) Base Salary. During the Employment Period, the Corporation shall pay to Executive
an annual base salary of $350,000 which shall be subject to review and, at the option of the
Compensation Committee of the Corporation, subject to increase, but not decrease, (such salary, as
the same may be increased from time to time as aforesaid, being referred to herein as the “Base
Salary”). The Base Salary shall be payable in such installments (but not less

 

 

frequently than monthly) as is the policy of the Corporation with respect to senior executives
of the Corporation.

          (b) Special Bonuses. Executive shall be entitled to a signing bonus of $125,000
payable on the Commencement Date, and an additional bonus of $125,000 payable (i) upon the
completion of one year of service with the Corporation or, (ii) if Executive’s employment is
terminated by the Company without Cause prior to the completion of one year of service, upon such
termination.

          (c) Bonuses. Executive shall be entitled to participate in a discretionary bonus plan
established for Executive from time to time by the Compensation Committee with reasonable
consultation with the Executive. Executive’s target bonus will be 50% of Base Salary upon the
achievement of individual and corporate performance objectives established jointly from time to
time by the Compensation Committee and the Executive. Such cash bonus, if earned, will be payable
to the Executive annually on or before the first day of March immediately following the end of the
calendar year for which it is earned. Any bonus will be paid in such manner so that it is not
subject to the provisions of Section 409A of the Internal Revenue Code of 1986, as amended, and
shall be interpreted in a manner consistent with that intention.

          (d) Equity Compensation.

               (i) Stock Options. On the date hereof, the Corporation shall grant to Executive
options to purchase 425,000 shares of the Corporation’s common stock at an exercise price equal to
the closing price of the Corporation’s common stock on the date hereof, as reported by the Nasdaq
Stock Market, and the Corporation shall grant to Executive on the Commencement Date an option to
purchase an additional 75,000 shares of the Corporation’s common stock at an exercise price equal
to the closing price of the Corporation’s common stock on the Commencement Date, as reported by the
Nasdaq Stock Market (collectively, the “Initial Option Grant”). The grant shall be evidenced by
one or more grant agreements (collectively, the “Stock Option Agreement”) which shall provide for
immediate vesting as to 10% and monthly vesting of the remainder in equal amounts over 48 months,
subject to continued employment. To the extent permitted by law and the Corporation’s 1997 Stock
Option Plan (“Plan”), the options will be qualified incentive stock options as defined under
Section 422 of the Internal Revenue Code of 1986; the remainder of the options will be nonqualified
stock options. During the Employment Period, the Executive shall be entitled to participate in
additional equity compensation plans and programs as may be determined from time to time in the
discretion of the Compensation Committee.

               (ii) Restricted Stock. On the date hereof, the Corporation shall grant to Executive
200,000 shares of restricted stock. Such grant shall be evidenced by a Letter of Restricted Stock
Grant which shall provide that such restricted stock shall be subject to restrictions on, among
other things, transferability, and that upon termination of employment all such restricted stock
that is at that time subject to restrictions shall be forfeited and reacquired by the Corporation.
The Letter of Restricted Stock Grant shall provide that the forfeiture provisions shall lapse as to
50% of the shares upon the acceptance by the FDA for filing of a New Drug Application for Chrysalin
for fresh fracture indications and that the forfeiture provisions shall

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lapse as to the other 50% of the shares, upon the attainment of separate milestones to be
established within 90 days after the Commencement Date in good faith consultation between Executive
and the Compensation Committee and which are expected (or required) to be achieved prior to the
initial New Drug Application filing.

               (iii) The Corporation shall use its reasonable best efforts to register with the United States
Securities and Exchange Commission within ninety (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 (“Securities Act”), covering (A) all shares issuable upon exercise of the Initial Option
Grant and (B) all shares of restricted stock granted to Executive as described in Section 4(d)(ii)
above; provided that this covenant shall not apply on or after the date on which Executive is
entitled to sell such shares pursuant to Rule 144(k) under the Securities Act.

          (e) Future Adjustments. On or before March 3 of each calendar year during the term of
this Agreement following the calendar year in which this Agreement commenced, the Compensation
Committee will review the Executive’s Base Salary and other compensation, including Executive’s
entitlement to participate in additional equity compensation plans, and may make adjustments in its
absolute discretion to such base salary and determine such bonus or additional equity compensation
based upon, among other factors: (i) Executive’s performance, (ii) the Corporation’s performance,
(iii) changes in costs of living, (iv) changes in Executive’s responsibilities, and (v) the benefit
to the Corporation of Executive’s efforts on its behalf; provided that Executive’s Base Salary
shall not be less than $350,000 per year during the term of this Agreement.

          (f) Benefits. During the Employment Period, Executive shall receive such medical,
dental and other fringe benefits as may be provided from time to time by the Corporation to senior
management generally.

          (g) Vacation. During the Employment Period, Executive shall be entitled to four weeks
paid vacation during each 12-month period worked.

          (h) Reimbursement of Expenses.

               (i) Business Expenses. During the Employment Period, the Corporation shall reimburse
Executive, in accordance with the policies and practices of the Corporation in effect from time to
time with respect to other members of senior management of the Corporation, for all reasonable and
necessary traveling expenses and other disbursements incurred by him for or on behalf of the
Corporation in connection with the performance of his duties hereunder upon presentation by the
Executive to the Corporation of appropriate documentation therefor.

               (ii) Relocation Expense. The Corporation shall reimburse Executive for the following
expenses relating to relocation to the Phoenix area:

                    (1) $15,000 for temporary housing expenses, and/or for the expense of temporarily maintaining
two homes if the Executive purchases a home in the Phoenix area prior to the sale of Executive’s
Boston residence;

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                    (2) $60,000 for the purchase of a home in the Phoenix area;

                    (3) reasonable costs of moving Executive’s household goods to the Phoenix area, in an amount
to be determined by mutual agreement;

                    (4) the amount, if any, by which the gross sales price (without deduction for sales
commissions or other expenses of sale) of Executive’s Boston condominium is less than $724,000, but
such reimbursement shall not exceed $50,000.

               (iii) Special Travel Expenses. The Corporation shall reimburse Executive for up to $30,000
per year in airfare expenses for travel by Executive to Pennsylvania to visit family for so long as
Executive’s immediate family maintains their primary residence is in Pennsylvania.

               (iv) The Corporation shall reimburse Executive for up to $5,000 in legal fees incurred in
connection with the negotiation and execution of this agreement.

          (i) Deductions. The Corporation shall deduct from any payments to be made by it to
the Executive under this Section 4 or Section 6 any amounts required to be withheld in respect of
any federal, state or local income or other taxes.

     5. Termination and At-Will Employment.

          (a) Executive understands and acknowledges that the Employment Period with the Corporation is
for an unspecified duration and constitutes “at-will” employment. Executive acknowledges that this
employment relationship may be terminated at any time, with or without cause, at the option either
of the Corporation or Executive, and with or without notice.

          (b) For convenience of reference, the date upon which any termination of the employment of the
Executive pursuant to this Section 5 hereof shall be effective is hereinafter referred to as the
“Termination Date.” If Executive dies during the Employment Period, the Termination Date shall be
deemed to be the date of Executive’s death.

     6. Effect of Termination of Employment.

          (a) As used herein, the following defined terms shall have the following meanings:

               (i) “Cause” shall mean Executive’s (i) conviction or entry of a plea of nolo contendere for a
crime or offense involving misappropriation of monies or other property, or any felony offense
(including Foreign Corrupt Practices Act of 1977) for any crime of moral turpitude, or his
commission of fraud or embezzlement; (ii) breach, other than an immaterial breach, by Executive of
his fiduciary duties to the Corporation, as determined under the laws of the State of Delaware;
(iii) gross insubordination or willful failure to discharge any of his duties or obligations under
this Agreement, which failure, if curable, is not cured within thirty (30) days after receipt of
written notice of such breach (the “Cure Period”), provided, however, that successive material
failures involving the same conduct by Executive shall be deemed incapable of being cured; (iv)
willful or knowing violation of any law, rule, or regulation of any

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governmental agency with jurisdiction over the Corporation which could reasonably be expected
to impair the Corporation’s ability to conduct its business in its usual manner or could reasonably
be expected to subject the Corporation to public disrespect, scandal or ridicule; (v) insobriety or
non-therapeutic use of drugs, chemicals or controlled substances either (A) in the course of
performing his duties and responsibilities under this Agreement or (B) in any other manner
affecting his ability to perform his duties and responsibilities under this Agreement; or (vi)
willful misconduct with respect to the business and affairs of the Corporation or any subsidiary or
affiliate thereof, including, but not limited to Executive’s willful violation of the Corporation’s
Code of Ethics, Insider Trading Policy or any other material Corporation policy applicable to all
senior management.

               (ii) “Good Reason” shall mean with respect to Executive (i) without his consent, he is not the
Chief Executive Officer of the Corporation; (ii) a material diminution in duties of Executive
described in this Agreement, (iii) the failure of the Corporation to obtain the agreement from any
successor to assume and agree to perform this Agreement or (iv) the material breach of this
Agreement by the Corporation, which neglect or failure, if curable, is not cured within thirty (30)
days after receipt of written notice of such breach.

               (iii) “Disability” shall mean Executive is incapacitated or disabled by accident, sickness or
otherwise so as to render Executive mentally or physically incapable of performing the essential
functions of his job required hereunder for six consecutive months.

          (b) If this Agreement is terminated by (i) the Corporation without Cause (other than by reason
of Executive’s death or Disability) or (ii) by Executive for Good Reason, neither Executive nor
Executive’s beneficiaries or estate shall have any further rights under this Agreement or any
claims against the Corporation arising out of this Agreement, except that Executive shall be
entitled to receive, upon execution of a general release and waiver of claims that is reasonably
acceptable to the Corporation (the “Release”), which Release shall expressly exclude all payments
and benefits to be provided to the Executive on or after termination, and so long as he continues
to comply with the provisions of any confidentiality, non-competition, or non-solicitation
agreement with the Corporation to which Executive is subject (including, without limitation, the
Confidentiality Agreement), the following:

               (i) Continuation of his Base Salary, less applicable withholdings, at the rate in effect at
the time of the termination of this Agreement, payable in the ordinary course of the Corporation’s
business as if Executive were continuing as an employee of the Corporation, for a period of twelve
months from the Termination Date;

               (ii) If applicable, and subject to a bonus plan adopted by the Compensation Committee, any
earned but unpaid bonus as of the Termination Date (which amount shall be paid within 30 days of
the Termination Date);

               (iii) Any reasonable out-of-pocket business expenses properly incurred but not yet reimbursed
(which amount shall be paid within 30 days of the Termination Date); and

               (iv) Continuation of Executive’s medical benefits until the earlier of (i) twelve (12) months
from the Termination Date, or (ii) the date on which Executive is eligible to

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receive medical benefits from another company; provided, that, in the event that any of the
Corporation’s medical benefit plans prohibit participation in such plan by the Executive following
his termination, 100% of the applicable COBRA premiums shall be payable by the Corporation for the
period described herein.

          (c) If this Agreement is terminated by the Corporation by reason of Executive’s death or
Disability, upon the Termination Date, neither Executive nor Executive’s beneficiaries or estate
shall have any further rights under this Agreement or any claims against the Corporation arising
out of this Agreement, except Executive shall be entitled to receive, upon his execution of the
Release reasonably acceptable to the Corporation (solely in the case of Disability), and so long as
he continues to comply with the provisions of any confidentiality, non-competition or
non-solicitation agreement with the Corporation of which Executive is subject (including, without
limitation the Confidentiality Agreement) (solely in the case of Disability), the following:

               (i) if applicable, and subject to a bonus plan adopted by the Compensation Committee, any
earned but unpaid bonus through the Termination Date (which amount shall be paid within 30 days of
the Termination Date); and

               (ii) any reasonable out-of-pocket business expenses properly incurred but not yet reimbursed
(which amount shall be paid within 30 days of the Termination Date).

     In addition to the foregoing set forth in this clause (c), in the event of termination of
Executive by reason of Death or Disability, Executive shall be entitled to any life insurance or
disability insurance benefits provided to all employees of the Corporation.

          (d) If this Agreement is terminated by the Corporation for Cause or by the Executive other
than for Good Reason, neither Executive nor Executive’s beneficiaries or estate shall have any
further rights under this Agreement or any claims against the Corporation arising out of this
Agreement, including in respect of any pro rata bonus amounts in respect of the year in which the
Termination Date occurs, except that Executive shall be entitled to receive accrued and unpaid
compensation and benefits which are then due and owing as of the Termination Date.

     In addition, if this Agreement is terminated by Executive for other than Good Reason prior to
the second anniversary of the Commencement Date, Executive shall pay to the Corporation, as special
damages in connection therewith, an amount equal to the amounts paid to Executive pursuant to
Section 4(h)(ii)(1) and (2), and the Corporation shall have a right of offset of such amount
against any amount then payable by Corporation to Executive.

          (e) Upon termination for any reason, Executive shall promptly deliver to the Corporation all
equipment, documents and other company property in his possession, custody or control.

     7. Effect of Change of Control.

          (a) Upon the occurrence of a Change of Control, the Initial Option Grant shall fully vest and
all restrictions relating to the Restricted Stock Award shall lapse; provided, however, that if the
Corporation shall, on or before the date of such Change of Control, request

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that Executive remain in the employ of the Corporation following the Change of Control, then:
(i) the Initial Option Grant shall instead vest as to all options except that number equal to 10%
of the number of options originally granted, and the remainder shall vest upon the completion by
Executive of six months service thereafter or, if earlier, the date on which the Corporation
terminates Executive’s employment; and (ii) the restrictions on the shares included in the
Restricted Stock Award Option Grant shall instead lapse as to all but 10% of the number of shares
originally included in the Restricted Stock Award, 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.

          (b) Upon the occurrence of a Change Control, Executive shall be entitled to receive a special
change of control bonus calculated in accordance with the following formula on the basis of the net
per share price received by the Corporation’s stockholders in such transaction:

	 	 	 	 	 
	Net Per Share Price	 	Bonus Amount	 
	Less than $10.00
	 	 	-0-	 
	$10.00
	 	$	500,000	 
	$25.00 or more
	 	$	2,000,000	 

For a net per share price between $10.00 and $25.00, the bonus amount shall be interpolated on a
straight line basis. The foregoing amounts shall be appropriately adjusted to reflect any stock
dividends, stock splits, recapitalizations and the like.

          (c) As used herein, the term “Change of Control” shall be defined as a change in ownership or
control of the Corporation effected through any of the following transactions:

               (i) a statutory share exchange, merger, consolidation or reorganization approved by the
Corporation’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 Corporation’s
outstanding voting securities immediately prior to such transaction;

               (ii) any stockholder approved transfer or other disposition of all or substantially all of the
Corporation’s assets (whether held directly or indirectly through one or more controlled
subsidiaries) except to or with a wholly-owned subsidiary of the Corporation); or

               (iii) 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 Corporation’s outstanding securities pursuant to transactions with the Corporation’s
stockholders and not solely by direct purchase from the Corporation.

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     8. Disclosure of Information; Right of Inventions. As a condition of the continuation
of this Employment Agreement, Executive has or, simultaneously with the execution of this Agreement
Executive shall, enter into the attached Confidential Information and Assignment of Inventions
Agreement.

     9. Restrictive Covenants.

          (a) Executive acknowledges and recognizes that during the Employment Period he will be privy
to confidential information of the Corporation and further acknowledges and recognizes that the
Corporation would find it extremely difficult to replace Executive in his capacity as an employee.
Accordingly, in consideration of the promises contained herein and the consideration to be received
by Executive hereunder, without the prior written consent of the Corporation, Executive shall not,
at any time during the employee/employer relationship between the Corporation and Executive or the
six month period after the termination of this Agreement, (x) “engage” (as hereafter defined) in
any Competing Business (as hereinafter defined) in the United States, Canada or Europe, or (y)
directly or indirectly (i) induce or solicit employees of the Corporation or any direct or indirect
subsidiary thereof to terminate their employment with the Corporation or any such direct or
indirect subsidiary or (ii) induce any entity or person with which the Corporation or any direct or
indirect subsidiary thereof has a business relationship to terminate or alter such business
relationship. As used herein, “Competing Business” shall mean any for-profit person or
organization that is designing, researching, developing, producing, marketing, distributing,
leasing, licensing or selling a pharmaceutical that is competitive with any product or product
candidate that is actively being designed, researched, developed, produced, marketed, distributed,
leased, licensed or sold by the Corporation during the term of this Agreement (hereafter,
“Conflicting Product”). For purposes of this Section 9, “engage” shall mean to serve as an
officer, director, consultant or employee of or to beneficially own more than 2% of the outstanding
equity of a Competing Business. Notwithstanding anything in Section 9 hereof to the contrary,
nothing in this Agreement shall preclude Executive from providing consulting or advisory services
to a Competing Business (other than as a director, general partner, officer or greater than 2%
equity holder) and being compensated therefor as long as Executive is not providing consulting
services or advice with respect to Conflicting Products.

          (b) Executive understands that the foregoing restrictions may limit his ability to earn a
livelihood in a business similar to the business of the Corporation or any subsidiary or affiliate
thereof, but he nevertheless believes that he has received and will receive sufficient
consideration provided hereunder to justify clearly such restrictions which, in any event (given
his education, skills and ability), Executive does not believe would prevent him from earning a
living.

     10. Non-Disparagement. Both during and after Executive’s employment with the
Corporation, Executive and the Corporation agree not to disparage the other party, and Executive
agrees not to disparage the Corporation’s officers, directors, employees, shareholders and agents,
in any manner likely to be harmful to them or their business, business reputation or personal
reputation; provided that nothing herein shall be deemed to limit or impair either Executive or the
Corporation from pursuing any right or remedy alleging a breach by the other party and provided
further that both Executive and the Corporation shall respond accurately and fully to

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any question, inquiry or request for information when required by legal process. Any willful
and material violation of this provision of this Agreement will nullify the Corporation’s
obligations to provide to Executive the benefits set forth in Section 6 hereof.

     11. Representations, Warranties and Covenants of the Employee.

          (a) Restrictions. Executive represents and warrants to the Corporation and covenants
during the term of this Agreement that:

               (i) there are and shall be no restrictions, agreements or understandings whatsoever to which
Executive is a party which would prevent or make unlawful Executive’s execution of this Agreement
or Executive’s services hereunder, which are or would be inconsistent or in conflict with this
Agreement or Executive’s services hereunder, or would prevent, limit or impair in any way the
performance by Executive of the obligations hereunder; and

               (ii) Executive has disclosed and will disclose to the Corporation all restraints,
confidentiality commitments or other employment restrictions that he has with any other employer,
person or entity which would limit the services that Executive may provide hereunder.

          (b) Obligations to Former Employers. Executive covenants that in connection with his
provision of services to the Corporation, he shall not breach any obligation (legal, statutory,
contractual or otherwise) to any former employer or other person, including, but not limited to,
obligations relating to confidentiality and proprietary rights.

     12. Miscellaneous Provisions.

          (a) Entire Agreement; Amendments.

               (i) This Agreement, the Stock Option Agreement, the Restricted Stock Award Agreement, the
Confidentiality Agreement, the Assignment of Inventions Agreement and the other agreements referred
to herein contain the entire agreement between the parties hereto with respect to the transactions
contemplated hereby and supersede all prior agreements or understandings between the parties with
respect thereto.

               (ii) This Agreement shall not be altered or otherwise amended, except pursuant to an
instrument in writing signed by each of the parties hereto.

          (b) Descriptive Headings. Descriptive headings are for convenience only and shall not
control or affect the meaning or construction of any provisions of this Agreement.

          (c) Notices. All notices or other communications pursuant to this Agreement shall be
in writing and shall be deemed to be sufficient if delivered personally, telecopied, sent by
nationally-recognized, overnight courier or mailed by registered or certified mail (return receipt
requested), postage prepaid, to the parties at the following addresses (or at such other address
for a party as shall be specified by like notice):

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               (i)    if to the Corporation, to:

OrthoLogic Corp.

1275 West Washington

Tempe, AZ 85281

Fax: (602) 286-2808

          with a copy to:

Quarles & Brady Streich Lang LLP

One Renaissance Square

2 North Central Avenue

Phoenix, AZ 85004

Fax: (602) 417-2980

Attention: Steven P. Emerick

               (ii)     if to Executive, to him at:

OrthoLogic Corp.

1275 West Washington

Tempe, AZ 85281

Fax: (602) 286-2808

               with a copy to:

Duane Morris LLP

470 Atlantic Avenue

Suite 500

Boston, MA 02210

Fax: (617) 289-9201

Attention: Martin B. Shulkin, Esq.

          (d) Counterparts. This Agreement 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 Agreement may be executed and delivered by
facsimile.

          (e) Governing Law. This Agreement shall be governed by and construed and enforced in
accordance with the laws of Arizona applicable to contracts made and performed wholly therein.

          (f) Benefits of Agreement; Assignment. The terms and provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their respective
successors, assigns, representatives, heirs and estate, as applicable. Anything contained herein
to the contrary notwithstanding, this Agreement shall not be assignable by any party hereto without
the consent of the other party hereto; provided, however, the Corporation may assign this Agreement
in connection with a sale of all or substantially all of the assets or a merger.

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          (g) Waiver of Breach. The waiver by either party of a breach of any provision of this
Agreement by the other party must be in writing and shall not operate or be construed as a waiver
of any subsequent breach by such other party.

          (h) Severability. In the event that any provision of this Agreement is determined to
be partially or wholly invalid, illegal or unenforceable in any jurisdiction, then such provision
shall, as to such jurisdiction, be modified or restricted to the extent necessary to make such
provision valid, binding and enforceable, or if such provision cannot be modified or restricted,
then such provision shall, as to such jurisdiction, be deemed to be excised from this Agreement;
provided, however, that the binding effect and enforceability of the remaining provisions of this
Agreement, to the extent the economic benefits conferred upon the parties by virtue of this
Agreement remain substantially unimpaired, shall not be affected or impaired in any manner, and any
such invalidity, illegality or unenforceability with respect to such provisions shall not
invalidate or render unenforceable such provision in any other jurisdiction.

          (i) Remedies. All remedies hereunder are cumulative, are in addition to any other
remedies provided for by law and may, to the extent permitted by law, be exercised concurrently or
separately, and the exercise of any one remedy shall not be deemed to be an election of such remedy
or to preclude the exercise of any other remedy. Executive acknowledges that in the event of a
breach of any of Executive’s covenants contained in Sections 8, 9, 10 or 11, the Corporation shall
be entitled to immediate relief enjoining such violations in any court or before any judicial body
having jurisdiction over such a claim.

          (j) Survival. Sections 4 through 11, this Section 12 and the defined terms used in
any section referred to in this Section 12(j), shall survive the termination of this Agreement.

          (k) Waiver of Jury Trial. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ALL
RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR ANY RELATED AGREEMENT.

     IN WITNESS WHEREOF, the parties have duly executed this Employment Agreement as of the date
first above written.

	 	 	 	 	 
	 	ORTHOLOGIC CORP.

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

 	 
	 	/s/ James M. Pusey
 	 
	 	James M. Pusey 	 
	 	 	 
	 

11exv10w2

 

Exhibit 10.2

CONFIDENTIAL INFORMATION AND

ASSIGNMENT OF INVENTIONS AGREEMENT

     This Agreement is made as of the                      day of                     ,      , between OrthoLogic, Corp., a
Delaware corporation with its principal place of business in Arizona (the “Company”), and
                                         (the “Individual”).

RECITALS

     A. The Individual is engaged by the Company, or is about to be engaged by the Company, as its
                                        (the “Engagement”).

     B. The Individual has been, or will be, given access by the Company to confidential and
proprietary information of the Company.

     C. The Company has retained the Individual pursuant to the terms of                                                             .

AGREEMENTS

     IN CONSIDERATION of the foregoing and other valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Individual and the Company agree as follows:

     1. Nondisclosure of Proprietary Information. The Company invents, develops,
manufactures and markets processes and products that involve experimental or inventive work. The
Company’s success depends upon the protection of these processes and products by patent or by
secrecy. The Individual has had, or may have, access to the Company’s “Proprietary Information.”
Access to this Proprietary Information is given to the Individual only if the Individual agrees to
keep that information secret as follows:

          (a) “Proprietary Information” shall mean: (i) any and all methods, inventions, improvements,
information, data or discoveries, whether or not patentable, relating to the business or operations
of the Company that are secret, proprietary, confidential or generally undisclosed, (including
information originated or provided by the Individual during the term of the Engagement) in any area
of knowledge, including information concerning trade secrets, processes, software, products,
patents, inventions, formulae, apparatus, techniques, technical data, improvements, specifications,
servicing, attributes and relative attributes relating to any of the Company’s equipment, devices,
processes or products; and (ii) if and to the extent maintained as confidential by the Company, the
identities of the Company’s customers and potential customers (“Customers”) including Customers the
Individual successfully cultivates or maintains during his Engagement using the Company’s products,
name or infrastructure; the identities of contact persons at Customers; the preferences, likes,
dislikes and technical and other requirements of Customers and contact persons with respect to
product types, pricing, sales calls, timing, sales terms, rental terms, lease terms, service plans,
and other marketing terms and techniques; the Company’s business methods, practices, strategies,
forecasts, know-how, pricing, and marketing plans and techniques; the identity of key accounts; the
identity of potential key accounts; and the identities of the Company’s key Patient Service
Representatives and employees. Notwithstanding the foregoing, Proprietary Information shall not be
deemed to include (i) information that was known to the

 

 

Individual prior to the Engagement with the Company; or (ii) information that is or hereafter
becomes publicly available or known to the general public without a breach or fault on the part of
the Individual; or (iii) information that is made available to third parties by the Company without
restrictions on disclosure; or (iv) information that is rightfully received by the Individual
subsequent to the termination of the Engagement from a third party without any obligation of
confidentiality, or (v) information that is independently developed by the Individual subsequent to
the termination of the Engagement without the use of Proprietary Information; or (vi) information
that the Individual is requested or required to disclose by a court, by governmental action or
otherwise in connection with legal proceedings (by oral question, interrogatories, requests for
information or documents, subpoena, civil investigative demand or similar process), provided the
Individual gives the Company reasonable notice of such request or requirement so that the Company
may seek a protective order, if appropriate.

          (b) The Individual acknowledges that the Company has exclusive property rights to all
Proprietary Information and the Individual hereby assigns all rights he might otherwise possess in
any Proprietary Information to the Company. Except as required in the performance of the duties of
his Engagement with the Company or as otherwise permitted pursuant to this Agreement, the
Individual will not at any time during or after the term of his Engagement, without the prior
written consent of the Company, directly or indirectly use, communicate, disclose, disseminate,
lecture upon, publish articles or otherwise put in the public domain, any Proprietary Information.

          (c) All documents, records, notebooks, notes, memoranda, data bases, and similar repositories
containing Proprietary Information made or compiled by the Individual at any time, including any
and all copies thereof, are and shall be the property of the Company, shall be held by him in trust
solely for the benefit of the Company, and shall be delivered to the Company by him on the
termination of his Engagement or at any other time upon the request of the Company.

          (d) The Individual agrees to certify in writing at or before final termination of the
Engagement that the Individual no longer has in the Individual’s possession, custody or control of
any copies of any business documents generated at or relating to the Company nor any Proprietary
Information, whether in hard copy, on a computer’s hard drive, on disks or in any other form or
media.

          (e) For a period of three (3) years following the termination of the Engagement, the
Individual agrees to provide notification, at the start of any new engagement or employment, to all
subsequent employers or contracting parties who are involved in any way in the medical products or
services industry or are otherwise competitors of the Company, of the terms and conditions of this
Agreement, along with a copy of this Agreement.

     2. Inventions.

          (a) For purposes of this Section 2, the term “Inventions” shall mean discoveries, concepts,
and ideas, whether patentable or not, including improvements, know-how, data, processes, methods,
formulae, and techniques, concerning any past, present or prospective Company activities that the
Individual makes, discovers or conceives (whether or not during the hours of his Engagement or with
the use of the Company’s facilities, materials or personnel), either solely or jointly with others
during his Engagement by the Company and, if based on Proprietary

2

 

Information, at any time after termination of such Engagement. All Inventions shall be solely
the property of the Company and the Individual agrees to perform the requirements of this Section
with respect thereto without the payment by the Company of any royalty or any consideration other
than as provided in this Agreement.

          (b) The Individual shall maintain written notebooks in which he shall set forth on a current
basis information as to all Inventions describing in detail the procedures employed and the results
achieved as well as information as to any studies or research projects undertaken on the Company’s
behalf, whether or not in the Individual’s opinion a given research project has resulted in an
Invention. The written notebooks shall at all times be the property of the Company and shall be
surrendered to the Company upon termination of his Engagement or upon request of the Company.

          (c) The Individual shall apply, at the Company’s request and expense, for United States and
foreign letters patent upon the Inventions, either in the Individual’s name or otherwise as the
Company shall desire.

          (d) The Individual hereby assigns to the Company all of his rights to Inventions, and to
applications for United States and/or foreign letters patent and to United States and/or foreign
letters patent granted upon Inventions.

          (e) The Individual shall acknowledge and deliver promptly to the Company without charge to the
Company but at its expense such written instruments (including applications and assignments) and do
such other acts, such as giving testimony in support of the Individual’s inventorship, as may be
necessary in the reasonable opinion of the Company to obtain, maintain, extend, reissue and enforce
United States and/or foreign letters patent relating to the Inventions and to vest the entire right
and title thereto in the Company or its nominee.

          (f) The Individual’s obligation to assist the Company in obtaining and enforcing patents for
Inventions in any and all countries shall continue beyond the Engagement provided the performance
of such obligations do not unreasonably interfere with the Individual’s then regular business
activities or employment, but the Company shall compensate the Individual at a reasonable rate for
time actually spent by him at the Company’s request on such assistance. If after reasonable
efforts the Company is unable for any reason whatsoever to secure the Individual’s signature to any
lawful and necessary document required to apply for or execute any patent application with respect
to any Inventions, including renewals, extensions, continuations, division or continuations in part
thereof, the Individual hereby irrevocably designates and appoints the Company and its duly
authorized officers and agents, as his agents and attorneys-in-fact to act for and in his behalf
and instead of the Individual, to execute and file any application and to do all other lawful
permitted acts to further the prosecution and issuance of patents with the same legal force and
effect as if executed by the Individual.

          (g) As a matter of record the Individual has identified on Exhibit A attached hereto all
inventions or improvements relevant to the activity of the Company which have been made or
conceived or first reduced to practice by the Individual alone or jointly with others prior to his
Engagement by the Company, that he desires to remove from the operation of this Section 2; and the
Individual covenants that such list is complete. It is understood and agreed that such inventions
and improvements shall not be subject to the provisions of this Agreement. If there is no

3

 

such list or if no Exhibit A is attached, the Individual represents that he has made no such
inventions and improvements at the time of signing this Agreement.

          (h) No provisions of this Section shall be deemed to limit the restrictions application to the
Individual under Section 1.

     3. Shop Rights. The Company shall also have the royalty-free right to use in its
business, and to make, use and sell products, processes and/or services derived from any
inventions, discoveries, concepts and ideas, whether or not patentable, including processes,
methods, formulas and techniques, as well as improvements thereof or know-how related thereto,
which are not within the scope of Inventions as defined in Section 2 but which are conceived or
made by the Individual during the period he is engaged by the Company with the use or assistance of
the Company’s facilities, materials or personnel.

     4. Compliance with Law and Amendment by Court: If there is any conflict between any
provision of this Agreement and any statute, law, regulation or judicial precedent, the latter
shall prevail, but the provisions of this Agreement thus affected shall be curtailed and limited
only to the extent necessary to bring them within the requirements of the law. If any part of this
Agreement shall be held by a court of proper jurisdiction to be indefinite, invalid or otherwise
unenforceable, the entire Agreement shall not fail on account thereof, but: (i) the balance of the
Agreement shall continue in full force and effect unless such construction would clearly be
contrary to the intention of the parties or would result in an unconscionable injustice; and (ii)
the court shall amend the Agreement to the extent necessary to make the Agreement valid and
enforceable.

     5. Freedom From Engagement Restrictions. The Individual represents and warrants that
the Individual has not entered into any agreement, whether express, implied, oral, or written, that
poses an impediment to the Individual’s Engagement by the Company including the Individual’s
compliance with the terms of this Agreement. In particular, the Individual is not subject to a
preexisting non-competition agreement, and no restrictions or limitations exist respecting the
Individual’s ability to perform fully the Individual’s obligations with the Company including the
Individual’s compliance with the terms of this Agreement.

     6. Third Party Trade Secrets. During the Individual’s Engagement by the Company, the
Individual agrees not to copy, refer to, or in any way use information which is proprietary to any
third party (including any previous employer). The Individual represents and warrants that the
Individual has not improperly taken any documents, listings, hardware, software, discs, or any
other tangible medium that embodies Proprietary Information from any third party, and that the
Individual does not intend to copy, refer to, or in any way use information which is proprietary to
any third party in performing the Individual’s duties for the Company.

     7. Injunctive Relief; Legal Fees. The Individual acknowledges that a breach of this
Agreement is likely to result in irreparable and unreasonable harm to the Company, that damages
caused by a breach would be extremely difficult to calculate, and that injunctive relief, as well
as damages, would be appropriate. In the event of any action to enforce the provisions of this
Agreement, the non-prevailing party shall be responsible for paying all reasonable costs and
expenses (including, without limitation, reasonable attorneys’ fees) incurred by the prevailing
party in connection with such action; provided, however, that if there is no clear
prevailing party in such

4

 

action, the court or arbiter hearing such action will make the determination as to each
party’s responsibility for paying such costs and expenses.

     8. Successors and Assigns. This Agreement shall be binding upon the Individual, his
heirs, executors, assigns, and administrators and shall inure to the benefit of the Company, its
successors, and assigns.

     9. Prior Agreements; Waiver; Severability. This Agreement constitutes the entire
Agreement between the parties pertaining to the subject matter contained in it and supersedes those
provisions of all prior and contemporaneous agreements, representations and understandings of the
parties pertaining to the same subject matter. No waiver of any of the provisions of this
Agreement shall be deemed to, or shall constitute a waiver of, any other provisions, whether or not
similar, nor shall any waiver constitute a continuing waiver. No waiver shall be binding unless
executed in writing by the party making the waiver.

     10. Governing Law. This Agreement is entered into in Arizona and shall be governed by
the laws of the State of Arizona for all purposes. The parties hereby submit themselves to the
courts of the State of Arizona, located in the County of Maricopa, for the purpose of personal
jurisdiction in any action to enforce this Agreement.

     11. Construction. The language in all parts of this Agreement shall in all cases be
construed as a whole according to its fair meaning and not strictly for or against either party.
The headings contained in this Agreement are for reference purposes only and will not affect the
meaning or interpretation of this Agreement in any way. All terms used in one number or gender
shall be construed to include any other number or gender as the context may require. The parties
agree that each party has reviewed this Agreement and has had the opportunity to have counsel
review the same and that any rule of construction to the effect that ambiguities are to be resolved
against the drafting party shall not apply in the interpretation of this Agreement. Whenever the
words “include,” “includes,” or “including” are used in the Agreement, they shall be deemed to be
followed by the words “without limitation.”

     12. Consultation. The Individual is advised to obtain the advice of legal counsel
before signing this Agreement. By their signatures below, the Individual and the Company’s
representative acknowledge that they have each read the entire contents of this Agreement, that
they fully understand the terms and conditions hereof, and that each has independently had an
opportunity to review and discuss the Agreement with the advisor(s) or counsel of their respective
choosing.

ORTHOLOGIC CORP.

By:

Name:

Title:

INDIVIDUAL

 

Name:

Date:

5

 

EXHIBIT A

Ladies and Gentlemen:

     The following is a complete list of all inventions or improvements relevant to the subject
matter of my engagement by OrthoLogic (the “Company”) which have been made or conceived or first
reduced to practice by me alone or jointly with others prior to my engagement by the Company:

                        No inventions or improvements

                        See below

     

     

     

                        Additional sheets attached

     

      

Name

Date:

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