***Exhibit 10.16***

OptionNumber «OptionNumber»

**MERGE TECHNOLOGIESINCORPORATED**

**INCENTIVE STOCKOPTION**

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

Inorder to give the Employee an incentive, to induce the Employee to remain inthe employ of the Company (or its present or future subsidiaries), to encouragethe Employee to acquire or increase a proprietary interest in the Company andin consideration of the Employee’s covenants contained in the Employee’sAcknowledgement and Receipt hereof appearing below, the Company hereby grantsto the Employee the option to purchase from time to time, all or any part of atotal of «ShareWordAmount» («ShareNumberAmount») shares of the Company’s CommonStock, 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 andconditions:

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

2.             (a)           At any time or times after the datehereof (but in no event after the above expiration date or, except as providedin Paragraph 3 hereof, the prior termination of this Stock Option), theEmployee may exercise this Stock Option, in whole or in part, to the extent ofTwenty 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 asof [Vest Date Two], [Vest Date Three] and [Vest Date Four].

Exercise may only bemade in multiples of ten (10) shares, except when the quantity under Stock Optionis not evenly divisible by such sum.  Inthe latter case, the amount remaining after such division may be purchasedcoincident with or after the exercise producing such odd sum.

(b)           This Stock Option shall be exercisedonly by timely signed written notice delivered to the Company’s CorporateSecretary or his or her office, in terms of the prescribed *“Exercise of Option”* form attached heretoas **Exhibit A**, specifying thenumber of shares and accompanied by payment, in U. S. Dollars, inimmediately available funds provided by check, money order, certified check, orwire transfer, of the full Stock Option purchase price therefore and any amountrequired to be withheld by the Company for Federal, state and/or local taxpurposes (including any applicable Canadian tax requirements). The certificateor certificates for shares as to which the Option shall have been so exercisedshall be registered in the name of the person or persons exercising the Option.

(c)           The obligation of the Company to selland deliver shares upon the due exercise of this Stock Option shall be subjectto:  (i) all applicable laws, rules andregulations

 

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 and to such approvals of any governmentalagencies as may be required, including, but not by way of limitation, theeffectiveness of a Registration Statement under the Securities Act of 1933, asamended (the “Act”), or the availability of an exemption from registrationunder the said Act, whichever may be deemed necessary or appropriate by counselfor the Company; and (ii) the satisfaction of all stock exchange requirements,if any, necessary to accomplish the listing or complete the listing of theshares upon the stock exchange upon which the shares of the Company may belisted.

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

The foregoingnotwithstanding, in no event may this Stock Option be exercised by the Employeeor the Employee’s personal representative after the expiration date specifiedin Paragraph 1 hereof.

4.             This Stock Option is nottransferable other than by Will or the laws of descent and distribution, may beexercised during the life of the Employee only by the Employee personally, andafter the Employee’s death, only to the extent, if any, as provided inParagraph 3 hereof.  Any attemptedtransfer by the Employee (voluntarily or by operation of law) shall be null andvoid, and this Stock Option shall then become null and void.

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

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

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

8.             This Stock Optionand the Acknowledgement and Receipt hereof have been executed in two (2)counterparts, each of which when so executed and delivered shall be deemed anoriginal and all of which counterparts, taken together, shall constitute butone and the same instrument.
|   | MERGE TECHNOLOGIES  INCORPORATED |
|--------|----------------------------------|
|   | By:                              |   |
|   |                             | , President |
|        |                                  |  |  |

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**ACKNOWLEDGEMENT AND RECEIPT**

I herebyacknowledge the receipt of the foregoing Stock Option upon the terms andconditions therein stated.

Inconsideration thereof, I hereby covenant and agree:

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

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

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

Ihereby acknowledge receipt of a copy of the 2005 Equity Incentive Plan of MergeTechnologies Incorporated adopted March 4, 2005 by the Board of Directors ofthe Company and approved by the shareholders of the Company on May 24, 2005, asigned counterpart of the foregoing Stock Option and this Acknowledgement andReceipt.

Datedthis _______ 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:                            [Dateof Grant]

       Stock Option Number:                         «OptionNumber»

Ihereby exercise the foregoing Stock Option to the extent of___________________________ shares of the Common Stock of Merge TechnologiesIncorporated, 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 theaforesaid 2005 Equity Inventive Plan of Merge Technologies Incorporated adoptedMarch 4, 2005 by the Board of Directors of the Company and approved by the shareholdersof the Company on May 24, 2005, under which it was issued.

Unlessa registration statement under the Securities Act of 1933 is in effect withrespect to the shares to be issued, I hereby certify that I intend by thisexercise of such Stock Option to acquire such shares for purposes of investmentand that I have no intention of reselling them after I have acquired them.

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

Dated:                                                                                    

_____________________________________________

«FirstName» «LastName»

 

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