EXHIBIT 10.1
LETTER OF INCENTIVE OPTION GRANT
ORTHOLOGIC CORP. 2005 EQUITY INCENTIVE PLAN
Date                     
Name & address
RE:      OrthoLogic Corp. 2005 Equity Incentive Plan
Dear                     ,
     In order to provide additional incentive to certain employees and
directors, OrthoLogic Corp. (the “Company”) adopted the OrthoLogic Corp. 2005
Equity Incentive Plan (the “2005 Plan”). By means of this letter (the “Letter of
Grant”), the Company is offering you an incentive stock option pursuant to the
2005 Plan. The Company’s sale of its common shares underlying the option granted
to you hereby has been or will be registered with the U.S. Securities and
Exchange Commission. A copy of the prospectus, including a copy of the 2005 Plan
relating to that registration, can be obtained from the Company by request.
     The option granted to you hereunder shall be subject to all of the terms
and conditions of the 2005 Plan, which you should carefully review. 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 2005
Plan, the option to purchase from the Company upon the terms and conditions and
at the times hereinafter set forth, an aggregate of                     shares
of the Company’s $0.0005 par value common stock (the “Shares”) at a purchase
price of $                     per Share. The date of grant of this option is
                                         (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 (the “Code”), 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 2005 Plan and any
other plan maintained by the Company or any ISO Group member as defined in the
2005 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 (NQO pursuant to Code
Section 422(d).
     2. Exercise Term of Option. Unless earlier terminated as described in
Section 7, the option will vest and may be exercised for the purchase of Shares
as described in the following schedule:

 

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[Optionee]
[Date]
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      Number of Shares   Vesting Schedule
 
   

     3. Nontransferability. This option shall not be transferable otherwise than
by will or by the laws of descent and distribution, and the option shall be
exercisable only by you during your lifetime.
     4. Other Conditions and Limitations.

  (a)   Any Shares issued upon exercise of this 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 or national market system of a national
securities association upon which the 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 the
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 to the lawful issuance
and sale of any Shares hereunder shall relieve the Company of any liability in
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

 

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[Optionee]
[Date]
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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 the
Executive Chairman of the Company written notice (including the number of Shares
that you are intending to acquire, accompanied by the full exercise price), by
personal hand delivery, by professional overnight delivery service, or by
registered or certified mail, postage prepaid with return receipt requested, at
the following address:
Executive Chairman
OrthoLogic Corp.
1275 West Washington
Phoenix, Arizona 85281
     Payment of the option price shall be made either in (i) cash or by check,
or (ii) at your request and with the written approval of the Company, (a) 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 (b) a combination of cash and Delivered Stock. The
Company may arrange for or cooperate in permitting broker-assisted cashless
exercise procedures. 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 2005 Plan.
     6. Valuation and Withholding. If required by applicable regulations, the
Company shall, at the time of issuance of any Shares purchased pursuant to the
2005 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 from the shares to be issued
the number of shares that would satisfy the withholding amount due.
     7. Termination of Incentive Stock 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 determined by the Company in
its sole discretion; or (iv) one year after the date your employment with the
Company terminates, if such termination is the result of death or permanent
disability.

 

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[Optionee]
[Date]
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     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 the option and payment of the full purchase
price therefor in accordance with the terms of the 2005 Plan and this Letter of
Grant. 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. 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 Section 422 of the Code, 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.
     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 2005 Plan. The option contained in this Letter of
Grant is subject to the terms, conditions and definitions of the 2005 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 2005 Plan,
the terms, conditions and definitions of the 2005 Plan shall govern. You hereby
accept this option subject to all terms and provisions of the 2005 Plan. 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 2005 Plan. You agree to consult your independent tax
advisors with respect to the income tax consequences to you, if any, of
participating in the 2005 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 the 2005 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 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 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.

 

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[Optionee]
[Date]
Page 5
     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.

                  Very truly yours,            
 
                OrthoLogic Corp.            
 
                             
 
               
By:
  John M. Holliman, III            
 
  Executive Chairman            
 
                        ACCEPTED AND AGREED TO:    
 
                             
 
      Name:        
 
               
 
      Date: