exv10w2



 






Exhibit 10.2




LETTER OF INCENTIVE OPTION GRANT

ORTHOLOGIC CORP. STOCK OPTION PLAN




January 16, 2006




Les M. Taeger

1918 E. Coconino Drive

Chandler, AZ 85249




RE: OrthoLogic Corp. 1997 Stock Option Plan




Dear Les,



In order to provide additional incentive to selected employees, OrthoLogic Corp. (the “Company”)
adopted the OrthoLogic 1997 Stock Option Plan (the “Stock Option Plan”). By means of this letter
(the “Letter of Grant”), the Company is offering you an incentive stock option pursuant to the
Stock Option Plan. The Company’s sale of its common shares underlying the option granted to you
hereby has been registered with the U.S. Securities and Exchange Commission. A copy of the
prospectus supplement, including a copy of the Stock Option Plan relating to that registration is
enclosed.



The option granted to you hereunder shall be subject to all of the terms and conditions of the
Stock Option 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 Stock Option Plan,
the option to purchase from the Company upon the terms and conditions and at the times hereinafter
set forth, an aggregate of 150,000 shares of the Company’s $0.0005 par value common stock (the
“Shares”) at a purchase price of $5.15 per share. The date of grant of this option is January 16,
2006 (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 Stock Option Plan and any other plan
maintained by the Company or any ISO Group member as defined in the Stock Option 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
pursuant to Code Section 422(d).




 









 





Les M. Taeger

1/16/2006

Page 2




     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:



	 	 	 
	Total	 	 
	Number of Shares	 	Vesting Schedule
	150,000

	 	3,125 shares will vest on the Option Date and on the 16th of each calendar month thereafter until the option is fully exercisable
	 
	 	 






     3. Nontransferability. This option shall not be transferable otherwise than by will or by
the laws of descent and distribution, and the options shall be exercisable only by (a) you, during
your lifetime (except as contemplated by the next clause); or (b) your legal representative or a
person who acquired the right to exercise these options by request or inheritance, during the
one-year period referred to in Section 7(iv) hereof. Any attempted transfer in violation of this
restriction shall be void.



     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.



 









 





Les M. Taeger

1/16/2006

Page 3





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
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 President 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:



President

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. 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 Stock Option Plan. As provided in the Stock Option Plan, the Company may arrange for or cooperate in permitting broker-assisted cashless exercise procedures.




     6. Valuation and Withholding. If required by applicable regulations, the Company shall, at
the time of issuance of any Shares purchased pursuant to the Stock Option 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.



 









 





Les M. Taeger

1/16/2006

Page 4




     7. Termination of 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.



     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 Stock Option 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 Code Section 422A, the Company
cannot assure you that such option will, in fact, qualify as incentive stock options, 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 Stock Option Plan. The option contained in this Letter of Grant is
subject to the terms, conditions and definitions of the Stock Option 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 Stock Option Plan, the terms, conditions and definitions of the
Stock Option Plan shall govern. You hereby accept this option subject to all terms and provisions
of the Stock Option 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 Stock Option Plan. You agree to consult your independent tax advisors with respect to
the income tax consequences to you, if any, of participating in the Stock Option 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 Stock Option Plan.



 









 





Les M. Taeger

1/16/2006

Page 5




     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:




	 	a)	 	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
	 
	 	b)	 	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.




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.




	 	 	 	 	 
	/s/ James M. Pusey	 	 
	 	 	 
	By:

	 	James M. Pusey
	 	 
	 

	 	President and Chief Executive Officer	 	 
	 
	 	 	 	 
	JMP/bd
	 	 	 	 






	 	 	 	 	 
	 	 	ACCEPTED AND AGREED TO:
	 
	 	 	 	 
	 	 	/s/ Les M. Taeger
	 	 	 
	 	 	Les M. Taeger

Optionee
	 
	 	 	 	 
	 

	 	Date:
	 	1/16/06