Exhibit 10.16

Option Number «OptionNumber»

MERGE TECHNOLOGIES INCORPORATED

INCENTIVE STOCK OPTION

This INCENTIVE STOCK OPTION, designated as an Incentive Stock Option intended to
qualify under Section 422(b) of the Internal Revenue Code of 1986, as amended
(“Stock Option”), is granted [Date of Grant], by MERGE TECHNOLOGIES
INCORPORATED, a Wisconsin corporation (the “Company”), to «FirstName» «LastName»
(“Employee”), pursuant to the 2005 Equity Incentive Plan of Merge Technologies
Incorporated adopted March 4, 2005 by the Board of Directors of the Company and
approved by the shareholders of the Company on May 24, 2005 (hereinafter, the
“Plan”), and resolutions adopted by the Board of Directors (hereinafter, the
“Board”) on [Date of Resolutions].

In order to give the Employee an incentive, to induce the Employee to remain in
the employ of the Company (or its present or future subsidiaries), to encourage
the Employee to acquire or increase a proprietary interest in the Company and in
consideration of the Employee’s covenants contained in the Employee’s
Acknowledgement and Receipt hereof appearing below, the Company hereby grants to
the Employee the option to purchase from time to time, all or any part of a
total of «ShareWordAmount» («ShareNumberAmount») shares of the Company’s Common
Stock, One Cent ($0.01) par value, at a price of ______________ Dollars and
________________ Cents in the currency of the United States of America (US
$______) per share (hereinafter, the “Options”), upon the following terms and
conditions:

1.             The term of the Stock Option shall be for six (6) years from the
date hereof, and it shall expire on [Expiration Date], unless sooner terminated
as hereinafter provided.

2.             (a)           At any time or times after the date hereof (but in
no event after the above expiration date or, except as provided in Paragraph 3
hereof, the prior termination of this Stock Option), the Employee may exercise
this Stock Option, in whole or in part, to the extent of Twenty Five Percent
(25%) of such number of shares on [Vest Date One], and, thereafter, an
additional Twenty Five Percent (25%) of such number of shares as of [Vest Date
Two], [Vest Date Three] and [Vest Date Four].

Exercise may only be made in multiples of ten (10) shares, except when the
quantity under Stock Option is not evenly divisible by such sum.  In the latter
case, the amount remaining after such division may be purchased coincident with
or after the exercise producing such odd sum.

(b)           This Stock Option shall be exercised only by timely signed written
notice delivered to the Company’s Corporate Secretary or his or her office, in
terms of the prescribed “Exercise of Option” form attached hereto as Exhibit A,
specifying the number of shares and accompanied by payment, in U. S. Dollars, in
immediately available funds provided by check, money order, certified check, or
wire transfer, of the full Stock Option purchase price therefore and any amount
required to be withheld by the Company for Federal, state and/or local tax
purposes (including any applicable Canadian tax requirements). The certificate
or certificates for shares as to which the Option shall have been so exercised
shall be registered in the name of the person or persons exercising the Option.

(c)           The obligation of the Company to sell and deliver shares upon the
due exercise of this Stock Option shall be subject to:  (i) all applicable laws,
rules and regulations

 

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 and to such approvals of any governmental agencies as may be required,
including, but not by way of limitation, the effectiveness of a Registration
Statement under the Securities Act of 1933, as amended (the “Act”), or the
availability of an exemption from registration under the said Act, whichever may
be deemed necessary or appropriate by counsel for the Company; and (ii) the
satisfaction of all stock exchange requirements, if any, necessary to accomplish
the listing or complete the listing of the shares upon the stock exchange upon
which the shares of the Company may be listed.

3.             This Stock Option, to the extent not then already exercised or
otherwise terminated or lapsed or expired, shall termi­nate and all vesting
shall cease on the effective date of the Employee’s cessation of employment;
provided, however, that the Employee (or his personal representative of his
estate) shall have the right to purchase such quantity of shares which the
Employee could have purchased pursuant to this Stock Option as of the effective
date of the Employee’s cessation of employment for a period of six (6) months
following such cessation of employment; provided, further, however, that such
Options shall not be eligible for treatment as an Incentive Stock Option in the
event such Options are not exercised within ninety (90) days following the
Employee’s cessation of employment.

The foregoing notwithstanding, in no event may this Stock Option be exercised by
the Employee or the Employee’s personal representative after the expiration date
specified in Paragraph 1 hereof.

4.             This Stock Option is not transferable other than by Will or the
laws of descent and distribution, may be exercised during the life of the
Employee only by the Employee personally, and after the Employee’s death, only
to the extent, if any, as provided in Paragraph 3 hereof.  Any attempted
transfer by the Employee (voluntarily or by operation of law) shall be null and
void, and this Stock Option shall then become null and void.

5.             Neither this Stock Option, shares of stock issued upon the
exercise of it, any excess of market value over option price, nor any other
rights, profits, values or interests resulting from the granting of this Stock
Option shall be considered as “compensation” for purposes of any present or
future employee benefit plan of the Company.

6.             This Stock Option is subject to the terms and conditions of the
Plan as of the date hereof and the uniform rules and regulations from time to
time issued by the Board or committee of the Board pursuant thereto.

7.             The Company hereby represents and warrants to the Employee that
it has reserved and will at all times while this Stock Option is in force, have
available sufficient shares to fulfill this Stock Option.

8.             This Stock Option and the Acknowledgement and Receipt hereof have
been executed in two (2) counterparts, each of which when so executed and
delivered shall be deemed an original and all of which counterparts, taken
together, shall constitute but one and the same instrument.

 

MERGE TECHNOLOGIES INCORPORATED

 

By:

 

 

 

, President

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ACKNOWLEDGEMENT AND RECEIPT

I hereby acknowledge the receipt of the foregoing Stock Option upon the terms
and conditions therein stated.

In consideration thereof, I hereby covenant and agree:

1.             That except as otherwise provided in the aforesaid Stock Option
Agreement, my rights, interests and benefits thereunder are personal to me and
may not be assigned, transferred or pledged by me in any way, voluntarily or by
operation of law.

2.             That this Stock Option Agreement shall be binding upon me, my
heirs, legatees, executors and administrators, and shall inure to the benefit of
and be binding upon the Company, its successors and assigns.

3.             That upon exercise of all or any part of the aforesaid Stock
Option, I will, as a condition to receiving such shares, execute and deliver to
the Company such instruments and undertakings as may, in the opinion of counsel
to the Company, be required to comply with those matters described in Section
2(c) of the Stock Option.

I hereby acknowledge receipt of a copy of the 2005 Equity Incentive Plan of
Merge Technologies Incorporated adopted March 4, 2005 by the Board of Directors
of the Company and approved by the shareholders of the Company on May 24, 2005,
a signed counterpart of the foregoing Stock Option and this Acknowledgement and
Receipt.

Dated this _______ day of [month / year].

________________________________________

«FirstName» «LastName»

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Exhibit A

Exercise of Option

Corporate Secretary

MERGE TECHNOLOGIES INCORPORATED

6737 West Washington Street, Suite 2250

Milwaukee, Wisconsin  53214

RE:          Stock Option Dated:                            [Date of Grant]

       Stock Option Number:                         «OptionNumber»

I hereby exercise the foregoing Stock Option to the extent of
___________________________ shares of the Common Stock of Merge Technologies
Incorporated, One Cent ($.01) par value, at the option price of
__________________ Dollars and ________________ Cents in the currency of the
United States of America (US $______) per share, in accordance with the terms
and conditions of the aforesaid 2005 Equity Inventive Plan of Merge Technologies
Incorporated adopted March 4, 2005 by the Board of Directors of the Company and
approved by the shareholders of the Company on May 24, 2005, under which it was
issued.

Unless a registration statement under the Securities Act of 1933 is in effect
with respect to the shares to be issued, I hereby certify that I intend by this
exercise of such Stock Option to acquire such shares for purposes of investment
and that I have no intention of reselling them after I have acquired them.

I further agree that said shares when issued to me (and any additional or other
shares acquired by me in relation to such number of shares whether as a stock
dividend or otherwise) shall be subject to the Plan and that I will comply with
said provi­sions and perform all of the covenants on my part required under the
Plan, the Stock Option and my Acknowledgement and Receipt thereof.

Dated: 
                                                                                 

_____________________________________________

«FirstName» «LastName»

 

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