ORTHOLOGIC CORP
EX-10.3
<DOCUMENT>
<TYPE>EX-10.3
<SEQUENCE>3
<FILENAME>p69834exv10w3.htm
<DESCRIPTION>EX-10.3
<TEXT>
<HTML>
<HEAD>
<TITLE>exv10w3</TITLE>
</HEAD>
<BODY bgcolor="#FFFFFF">
<!-- PAGEBREAK -->
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>
<DIV style="font-family: 'Times New Roman',Times,serif">


<P align="right" style="font-size: 10pt"><B>Exhibit&nbsp;10.3</B>



<P align="center" style="font-size: 10pt"><B>THIRD AMENDED AND RESTATED EMPLOYMENT AGREEMENT</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This Agreement is to be effective as of November&nbsp;8, 2004, by and between
OrthoLogic Corp., a Delaware corporation (the &#147;Company&#148;), and Sherry A. Sturman
(&#147;Employee&#148;), and supersedes in its entirety the Second Amended and Restated
Employment Agreement, dated March&nbsp;2, 2004, between the Company and Employee.


<P align="center" style="font-size: 10pt">RECITALS:



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A.&nbsp;The parties wish to set forth in this Agreement the terms and
conditions of employment.


<P align="center" style="font-size: 10pt">AGREEMENT:



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In consideration of the mutual covenants and agreements set forth herein,
the parties agree as follows:


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.&nbsp;EMPLOYMENT AND DUTIES.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;DEFINITION OF &#147;ELECTION.&#148; Within the limitations described in
Sections&nbsp;7 and 8 of this Agreement, either party may give the other notice that
she or it has elected to begin a two-year transition leading to the termination
of Employee&#146;s employment by the Company. Such a notice is referred to in this
Agreement as an &#147;Election.&#148; The &#147;Election Effective Date&#148; shall be the date of
the Election, in the case of an Election by the Company pursuant to Section&nbsp;7
hereof, or 30&nbsp;days after the date of the Election, in the case of an Election
by Employee pursuant to Section&nbsp;8 hereof.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;DUTIES BEFORE AN ELECTION. Subject to the terms and conditions of
this Agreement, prior to the Election Effective Date, the Company employs
Employee to serve in the capacity of Senior Vice President / Chief Financial
Officer and Employee accepts such employment and agrees to perform such
reasonable responsibilities and duties as may be assigned to her from time to
time by the Company&#146;s Chief Executive Officer (&#147;CEO&#148;). Employee&#146;s title shall
be Senior Vice President / Chief Financial Officer with general responsibility
for all administrative functions. Such title and duties may be changed from
time to time by the CEO. Employee will report directly to the CEO.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;DUTIES AFTER AN ELECTION. Effective upon the Election Effective Date,
Employee will report to the CEO. Employee shall not have an official title or
any set work hours. While various projects assigned to Employee may require
more or less time within any given month, it is contemplated that, without her
consent, Employee will not be asked to work on Company matters: (i)&nbsp;for more
than 4&nbsp;days (or the equivalent thereof) per quarter during the period
commencing on the Election Effective Date and ending on the first anniversary
of the Election Effective Date; and (ii)&nbsp;for more than 2&nbsp;days (or the
equivalent thereof) per quarter during the 12&nbsp;months following the period
described in the foregoing clause (i). It is understood that Employee may have
limited availability during normal business hours. Employee agrees to use her
reasonable best efforts to be available during normal business hours when
necessary to accomplish a specific assigned project. Employee understands that
from and after the Election


<P align="center" style="font-size: 10pt">&nbsp;
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">



<P align="left" style="font-size: 10pt">Effective Date, and until the end of the term of this Agreement, the
Company will not provide her with an office, but will provide reasonable
secretarial and other staff support and will provide ancillary office equipment
such as dictating equipment and a desk-top computer that Employee may continue
to use until the end of the term at another location selected by her. After
the Election Effective Date, Employee shall not be entitled to use any Company
owned or supported laptop computers or cell phones except to the extent
required by specific projects assigned to Employee.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.&nbsp;TERM. Before an Election, Employee&#146;s employment shall have an
indefinite term and shall continue until terminated as provided in this
Agreement. Upon an Election, the term of Employee&#146;s employment by the Company
shall convert automatically to a term beginning on the Election Effective Date
and ending on the two year anniversary of the Election Effective Date (the
&#147;Election Term&#148;). After the Election, any extension or renewal of such term
shall require the written consent of both parties.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.&nbsp;COMPENSATION.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;SALARY. (i)&nbsp;Before the Election Effective Date, the Company shall pay
Employee a minimum base annual salary, before deducting all applicable
withholdings, of $200,000 per year, payable at the times and in the manner
dictated by the Company&#146;s standard payroll policies; (ii)&nbsp;during the period
commencing on the Election Effective Date and ending on the first anniversary
of the Election Effective Date, Employee&#146;s base annual salary shall remain at
the same level as it was on the Election Effective Date; and (iii)&nbsp;during the
12&nbsp;months following the period described in the foregoing clause (ii),
Employee&#146;s base annual salary shall be $50,000, regardless of the level of base
annual salary being paid to Employee prior to the Election Effective Date.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;BONUS. (i)&nbsp;Before the Election Effective Date, Employee shall be
eligible to participate in such bonus and incentive programs as determined from
time to time by the Board. Any bonuses shall be based upon the achievement of
individual goals and Company performance. Employee&#146;s bonus, if any, will be
calculated using $200,000 as Employee&#146;s annual base salary, pro rated as
necessary to reflect the number of months worked by Employee prior to the
Election Effective Date; (ii)&nbsp;Employee shall not be entitled to accrue any
additional bonus amount after the Election Effective Date, but any bonuses
fully earned prior to the Election Effective Date shall remain due in
accordance with their terms.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;STOCK OPTIONS. From time to time, as determined by the Compensation
Committee of the Company&#146;s Board of Directors in its discretion, the Company
shall grant to Employee options to purchase shares of the Company&#146;s common
stock, with an exercise price equal to the fair market value of the stock on
the effective date of the grant.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.&nbsp;FRINGE BENEFITS. Both before and after the Election Effective Date, in
addition to the compensation, bonus and options described in Section&nbsp;3, and any
other employee benefit plans (including without limitation pension, savings and
disability plans) generally available to employees, the Company shall include
Employee in any group health insurance plan and, if eligible, any group
retirement plan instituted by the Company. The manner of implementation of such
benefits with respect to such items as procedures and amounts are


<P align="center" style="font-size: 10pt">2
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">



<P align="left" style="font-size: 10pt">discretionary with the Company. Upon Employee&#146;s acceptance of employment
with another employer in connection with which Employee works, or is expected
to work, 1,000 hours or more per year, Employee shall no longer be entitled to
participate in any health, dental, retirement or other employee benefit plans
of the Company. During the term of Employee&#146;s employment under this Agreement,
Employee shall be considered as an employee for the purposes of any Company
stock option plans.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.&nbsp;VACATION. Employee shall be entitled to vacation with pay in
accordance with the Company&#146;s vacation policy as in effect from time to time.
In addition, Employee shall be entitled to such holidays as the Company may
approve from time to time.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.&nbsp;TERMINATION.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;FOR CAUSE. The Company may terminate this Agreement for cause upon
written notice to Employee stating the facts constituting such cause, provided
that Employee shall have 30&nbsp;days following such notice to cure any conduct or
act, if curable, alleged to provide grounds for termination for cause
hereunder. In the event of termination for cause, the Company shall be
obligated to pay Employee only the minimum base salary due her through the date
of termination. The written notice shall state the cause for termination.
Cause shall include neglect of duties, willful failure to abide by instructions
or policies from or set by the Board of Directors, commission of a felony or
serious misdemeanor offense or pleading guilty or <I>nolo contendere </I>to same,
Employee&#146;s breach of this Agreement or Employee&#146;s breach of any other material
obligation to the Company.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;DISABILITY. If during the term of this Agreement, Employee fails to
perform her duties hereunder on account of illness or other incapacity for a
period of 45 consecutive days, or for 60&nbsp;days during any six-month period, the
Company shall have the right to terminate this Agreement without further
obligation hereunder except as otherwise provided in disability plans generally
applicable to employees.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;DEATH. If Employee dies during the term of this Agreement, this
Agreement shall terminate immediately, and Employee&#146;s legal representatives
shall be entitled to receive the base salary due Employee through the last day
of the calendar month in which her death shall have occurred and any other
death benefits generally applicable to executive employees.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;RESIGNATION. Employee may resign her employment by giving the Company
written notice. In the event of such a resignation, the Company shall be
obligated to pay Employee only the minimum base salary due her through the
effective date of the resignation.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.&nbsp;ELECTION BY THE COMPANY. The Company may make an Election at any time
with or without cause.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.&nbsp;ELECTION BY EMPLOYEE. Employee may make an Election on or at any time
after June&nbsp;30, 2005, with or without cause.


<P align="center" style="font-size: 10pt">3
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.&nbsp;CONFIDENTIAL INFORMATION. Employee acknowledges that Employee may
receive, or contribute to the production of, Confidential Information. For
purposes of this Agreement, Employee agrees that &#147;Confidential Information&#148;
shall mean any and all information or material proprietary to the Company or
designated as Confidential Information by the Company and not generally known
by non-Company personnel, which Employee develops or of or to which Employee
may obtain knowledge or access through or as a result of Employee&#146;s
relationship with the Company (including information conceived, originated,
discovered or developed in whole or in part by Employee). Confidential
Information includes, but is not limited to, the following types of information
and other information of a similar nature (whether or not reduced to writing)
related to the Company&#146;s business: discoveries, inventions, ideas, concepts,
research, development, processes, procedures, &#147;know-how&#148;, formulae, marketing
or manufacturing techniques and materials, marketing and development plans,
business plans, customer names and other information related to customers,
price lists, pricing policies, methods of operation, financial information,
employee compensation, and computer programs and systems. Confidential
Information also includes any information described above which the Company
obtains from another party and which the Company treats as proprietary or
designates as Confidential Information, whether or not owned by or developed by
the Company, including Confidential Information acquired by the Company from
any of its affiliates. Employee acknowledges that the Confidential Information
derives independent economic value, actual or potential, from not being
generally known to, and not being readily ascertainable by proper means by,
other persons who can obtain economic value from its disclosure or use.
Information publicly known without breach of this Agreement that is generally
employed by the trade at or after the time Employee first learns of such
information, or generic information or knowledge which Employee would have
learned in the course of similar employment or work elsewhere in the trade,
shall not be deemed part of the Confidential Information. Employee further
agrees:


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;To furnish the Company on demand, at any time during or after
employment, a complete list of the names and addresses of all present, former
and potential suppliers, financing sources, clients, customers and other
contacts gained while an employee of the Company in Employee&#146;s possession,
whether or not in the possession or within the knowledge of the Company.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;That all notes, memoranda, electronic storage, documentation and
records in any way incorporating or reflecting any Confidential Information
shall belong exclusively to the Company, and Employee agrees to turn over all
copies of such materials in Employee&#146;s control to the Company upon request or
upon termination of Employee&#146;s employment with the Company.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;That while employed by the Company and thereafter, Employee will hold
in confidence and not directly or indirectly reveal, report, publish, disclose
or transfer any of the Confidential Information to any person or entity, or
utilize any of the Confidential Information for any purpose, except in the
course of Employee&#146;s work for the Company.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;That any idea in whole or in part conceived of or made by Employee
during the term of her employment, consulting, or similar relationship with the
Company which relates directly or indirectly to the Company&#146;s current or
planned lines of business and is made through the use of any of the
Confidential Information of the Company or any of the Company&#146;s


<P align="center" style="font-size: 10pt">4
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">



<P align="left" style="font-size: 10pt">equipment, facilities, trade secrets or time, or which results from any
work performed by Employee for the Company, shall belong exclusively to the
Company and shall be deemed a part of the Confidential Information for purposes
of this Agreement. Employee hereby assigns and agrees to assign to the Company
all rights in and to such Confidential Information whether for purposes of
obtaining patent or copyright protection or otherwise. Employee shall
acknowledge and deliver to the Company, without charge to the Company (but at
its expense) such written instruments and do such other acts, including giving
testimony in support of Employee&#146;s authorship or inventorship, as the case may
be, necessary in the opinion of the Company to obtain patents or copyrights or
to otherwise protect or vest in the Company the entire right and title in and
to the Confidential Information.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.&nbsp;LOYALTY DURING EMPLOYMENT TERM. Employee agrees that during the term
of Employee&#146;s employment by the Company, Employee will devote substantially all
of Employee&#146;s business time and effort to and give undivided loyalty to the
Company, and will not engage in any way whatsoever, directly or indirectly, in
any business that is competitive with the Company or its affiliates, nor
solicit, or in any other manner work for or assist any business which is
competitive with the Company or its affiliates. During the term of Employee&#146;s
employment by the Company, Employee will undertake no planning for or
organization of any business activity competitive with the Company or its
affiliates, and Employee will not combine or conspire with any other employee
of the Company or any other person for the purpose of organizing any such
competitive business activity.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.&nbsp;NON-COMPETITION; NON-SOLICITATION. The parties acknowledge that
Employee will acquire much knowledge and information concerning the business of
the Company and its affiliates as the result of Employee&#146;s employment. The
parties further acknowledge that the scope of business in which the Company is
engaged as of the date of execution of this Agreement is world-wide and very
competitive and one in which few companies can successfully compete. Certain
activities by Employee after this Agreement is terminated would severely injure
the Company. Accordingly, until one year after this Agreement is terminated or
Employee leaves the employment of the Company for any reason, Employee will
not:


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;Engage in any work activity for or in conjunction with any business or
entity that is in competition with or is preparing to compete with the Company;


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;Persuade or attempt to persuade any potential customer or client to
which the Company or any of its affiliates has made a proposal or sale, or with
which the Company or any of its affiliates has been having discussions, not to
transact business with the Company or such affiliate, or instead to transact
business with another person or organization;


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;Solicit the business of any customers, financing sources, clients,
suppliers, or business patrons of the Company or any of its predecessors or
affiliates which were customers, financing sources, clients, suppliers, or
business patrons of the Company at any time during Employee&#146;s employment by the
Company, or within three years prior to the effective date of Employee&#146;s
employment, provided, however, that if Employee becomes employed by or
represents a business that exclusively sells products that do not compete with
products then marketed or intended to be marketed by the Company, such contact
shall be permissible; or


<P align="center" style="font-size: 10pt">5
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;Solicit, endeavor to entice away from the Company or any of its
affiliates, or otherwise interfere with the relationship of the Company or any
of its affiliates with, any person who is employed by or otherwise engaged to
perform services for the Company or any of its affiliates, whether for
Employee&#146;s account or for the account of any other person or organization.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;12.&nbsp;INJUNCTIVE RELIEF. It is agreed that the restrictions contained in
Sections&nbsp;9, 10 and 11 of this Agreement are reasonable, but it is recognized
that damages in the event of the breach of any of those restrictions will be
difficult or impossible to ascertain; and, therefore, Employee agrees that, in
addition to and without limiting any other right or remedy the Company may
have, the Company shall have the right to an injunction against Employee issued
by a court of competent jurisdiction enjoining any such breach without showing
or proving any actual damage to the Company. This paragraph shall survive the
termination of Employee&#146;s employment.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;13.&nbsp;PART OF CONSIDERATION. Employee also agrees, acknowledges, covenants,
represents and warrants that she is fully and completely aware that, and
further understands that, the restrictive covenants contained in Sections&nbsp;9,
10, and 11 of this Agreement are an essential part of the consideration for the
Company entering into this Agreement and that the Company is entering into this
Agreement in full reliance on these acknowledgments, covenants, representations
and warranties.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;14.&nbsp;TIME AND TERRITORY REDUCTION. If any of the periods of time and/or
territories described in Sections&nbsp;9, 10 and 11 of this Agreement are held to be
in any respect an unreasonable restriction, it is agreed that the court so
holding may reduce the territory to which the restriction pertains or the
period of time in which it operates or may reduce both such territory and such
period, to the minimum extent necessary to render such provision enforceable.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;15.&nbsp;SURVIVAL. The obligations described in Sections&nbsp;9 and 11 of this
Agreement shall survive any termination of this Agreement or any termination of
the employment relationship created hereunder.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;16.&nbsp;NONDELEGABILITY OF EMPLOYEE&#146;S RIGHTS AND COMPANY ASSIGNMENT RIGHTS.
The obligations, rights and benefits of Employee hereunder are personal and may
not be delegated, assigned or transferred in any manner whatsoever, nor are
such obligations, rights or benefits subject to involuntary alienation,
assignment or transfer. Upon mutual agreement of the parties, the Company, upon
reasonable notice to Employee, may transfer Employee to an affiliate of the
Company, which affiliate shall assume the obligations of the Company under this
Agreement. This Agreement shall be assigned automatically to any entity merging
with or acquiring the Company.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;17.&nbsp;GOVERNING LAW. This Agreement shall be governed by and construed and
enforced in accordance with the internal laws of the State of Arizona,
exclusive of the conflict of law provisions thereof, and the parties agree that
any litigation pertaining to this Agreement shall be in courts located in
Maricopa County, Arizona.


<P align="center" style="font-size: 10pt">6
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;18.&nbsp;ATTORNEYS&#146; FEES. If any party finds it necessary to employ legal
counsel or to bring an action at law or other proceeding against the other
party to enforce any of the terms hereof, the party prevailing in any such
action or other proceeding shall be paid by the other party its reasonable
attorneys&#146; fees as well as court costs all as determined by the court and not a
jury.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;19.&nbsp;NOTICES. All notices, demands, instructions, or requests relating to
this Agreement shall be in writing and, except as otherwise provided herein,
shall be deemed to have been given for all purposes (i)&nbsp;upon personal delivery,
(ii)&nbsp;one day after being sent, when sent by professional overnight courier
service from and to locations within the Continental United States, (iii)&nbsp;five
days after posting when sent by United States registered or certified mail,
with return receipt requested and postage paid, or (iv)&nbsp;on the date of
transmission when sent by facsimile with a hard-copy confirmation; if directed
to the person or entity to which notice is to be given at her or its address
set forth in this Agreement or at any other address such person or entity has
designated by notice.

<DIV align="left">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="65%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="6%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="25%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
    <TD width="77%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">To the Company:
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">ORTHOLOGIC CORP.</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">1275 West Washington Street</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Tempe, AZ 85281</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Attention: Chief Executive Officer</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">To Employee:
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Sherry A. Sturman</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">1275 W. Washington St.</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Tempe, AZ 85281</TD>
</TR>

<!-- End Table Body -->
</TABLE>
</DIV>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;20.&nbsp;ENTIRE AGREEMENT. This Agreement, the Invention, Confidential
Information and Non-Competition Agreement dated February&nbsp;3, 1999, and documents
regarding the grant of stock options constitute the final written expression of
all of the agreements between the parties and are a complete and exclusive
statement of those terms. They supersede all understandings and negotiations
concerning the matters specified herein. Any representations, promises,
warranties or statements made by either party that differ in any way from the
terms of this written Agreement shall be given no force or effect. The parties
specifically represent, each to the other, that there are no additional or
supplemental agreements between them related in any way to the matters herein
contained unless specifically included or referred to herein. No addition to or
modification of any provision of this Agreement shall be binding upon any party
unless made in writing and signed by all parties. To the extent that there is
any conflict between this Agreement and the Invention, Confidential Information
and Non-Competition Agreement, the provisions of this Agreement shall govern.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;21.&nbsp;WAIVER. The waiver by either party of the breach of any covenant or
provision in this Agreement shall not operate or be construed as a waiver of
any subsequent breach by either party.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;22.&nbsp;INVALIDITY OF ANY PROVISION. The provisions of this Agreement are
severable, it being the intention of the parties hereto that should any
provisions hereof be invalid or unenforceable, such invalidity or
unenforceability of any provision shall not affect the


<P align="center" style="font-size: 10pt">7
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">



<P align="left" style="font-size: 10pt">remaining provisions hereof, but the same shall remain in full force and
effect as if such invalid or unenforceable provisions were omitted.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;23.&nbsp;ATTACHMENTS. All attachments or exhibits to this Agreement are
incorporated herein by this reference as though fully set forth herein. In the
event of any conflict, contradiction or ambiguity between the terms and
conditions in this Agreement and any of its attachments, the terms of this
Agreement shall prevail.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;24.&nbsp;INTERPRETATION OF AGREEMENT. When a reference is made in this
Agreement to an article or section, such reference shall be to an article or
section of this Agreement unless otherwise indicated. The headings contained in
this Agreement are for reference purposes only and shall not affect in any way
the meaning or interpretation of this Agreement. Whenever the words &#147;include,&#148;
&#147;includes,&#148; or &#147;including&#148; are used in this Agreement, they shall be deemed to
be followed by the words &#147;without limitation.&#148;


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;25.&nbsp;COUNTERPARTS. This Agreement may be executed simultaneously in any
number of counterparts, each of which shall be deemed an original but all of
which together shall constitute one and the same agreement.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;26.&nbsp;BINDING EFFECT; BENEFITS. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective heirs,
successors, executors, administrators and assigns. Notwithstanding anything
contained in this Agreement to the contrary, nothing in this Agreement,
expressed or implied, is intended to confer on any person other than the
parties hereto or their respective heirs, successors, executors, administrators
and assigns any rights, remedies, obligations or liabilities under or by reason
of this Agreement.


<P align="center" style="font-size: 10pt">8
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This Agreement has been executed by the parties as the date first written
above.

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="45%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="45%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="45%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="5" valign="top" align="left">ORTHOLOGIC CORP.</TD>
</TR>

<TR valign="bottom">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="5" valign="top" align="left">(&#147;Company&#148;)</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">By:</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" valign="top" align="left">/s/ Thomas R. Trotter</TD>
</TR>

<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" valign="top" align="left">Name: Thomas R. Trotter</TD>
</TR>
<TR valign="bottom">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" valign="top" align="left">Title: President/Chief Executive Officer</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="5" valign="top" align="left">/s/ Sherry A. Sturman</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" colspan="3" valign="top"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="5" valign="top" align="left">Sherry A. Sturman</TD>
</TR>

<!-- End Table Body -->
</TABLE>
</DIV>




<P align="center" style="font-size: 10pt">9
</DIV>


</BODY>
</HTML>

</TEXT>
</DOCUMENT>
