8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549
______________________

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934

Date of Report: March 3, 2005
(Date of earliest event reported)

ORTHOLOGIC CORP.

(Exact name of registrant as specified in its charter)

Delaware	000-21214	86-0585310
(State or other jurisdiction of incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)

1275 West Washington Street, Tempe, Arizona	85281
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code:
(602) 286-5520

     Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

     o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

     o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

     o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

     o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

TABLE OF CONTENTS

Section 1 – Registrant’s Business and Operations
	Item 1.01 Entry into a Material Definitive Agreement.
Section 5 – Corporate Governance and Management
	Item 5.02 Departure of Directors or Principal Officers; Election of Directors; Appointment of Principal Officers.
Section 7 – Regulation FD
	Item 7.01 Regulation FD Disclosure.
Section 9 – Financial Statements and Exhibits
	Item 9.01 Financial Statements and Exhibits.
SIGNATURES
EX-10.1
EX-10.2
EX-10.3
EX-10.4
EX-10.5
EX-99.1

Section 1 – Registrant’s Business and Operations

Item 1.01 Entry into a Material Definitive Agreement.

     On March 4, 2005, OrthoLogic Corp. (the “Company”) announced that it had entered into an employment agreement with Dr. James M. Pusey, dated as of March 3, 2005 (the “Employment Agreement”), pursuant to which Dr. Pusey will serve as the Company’s Chief Executive Officer. The Employment Agreement is filed with this Current Report on Form 8-K (“Form 8-K”) as Exhibit 10.1 and is incorporated herein by reference. A form of the Confidential Information and Assignment of Inventions Agreement executed by employees in connection with the commencement of their employment with the Company is filed with this Form 8-K as Exhibit 10.2 and is incorporated herein by reference.

     Under the Employment Agreement, Dr. Pusey’s employment shall commence no later than March 18, 2005, or such earlier date as may be specified by Dr. Pusey (the “Commencement Date”) and may be terminated at any time, with or without cause, at the option of either the Company or Dr. Pusey. It provides for a minimum base salary of $350,000, which may be increased subject to annual reviews, and allows for Dr. Pusey’s participation in a discretionary bonus program, which provides for a bonus of up to 50% of his base salary. Dr. Pusey is also entitled to a signing bonus of $125,000 payable on the Commencement Date and an additional bonus of $125,000 payable after one year of employment or upon termination without cause if such termination occurs prior to the one year anniversary. In addition, the Employment Agreement provides for the reimbursement of certain business, relocation and travel expenses as well as the medical, dental and other fringe benefits generally granted to the Company’s senior management.

     On the date of execution of the Employment Agreement (the “Signing Date”), the Company granted to Dr. Pusey options to purchase 425,000 shares of the Company’s common stock at an exercise price equal to the closing price of the Company’s common stock on the Signing Date, as reported by the Nasdaq Stock Market, and granted to Dr. Pusey, effective as of the Commencement Date, an option to purchase an additional 75,000 shares of the Company’s common stock at an exercise price equal to the closing price of the Company’s common stock on that date, as reported by the Nasdaq Stock Market (the grant of the options to purchase 425,000 shares and 75,000 shares are collectively, the “Initial Option Grant”). The grants are evidenced by a Letter of Stock Option Grant for 200,000 shares and a Letter of Stock Option Grant for 300,000 shares, each of which provide for immediate vesting upon effectiveness of the grants as to 10% of the shares covered thereby and monthly vesting of the remainder in equal amounts over a period of 48 months, subject to continued employment by Dr. Pusey. The Letter of Stock Option Grant for 200,000 shares and the Letter of Stock Option Grant for 300,000 shares are filed with this Form 8-K as Exhibits 10.3 and 10.4, respectively, and are incorporated herein by reference.

     On the Signing Date, the Company also granted to Dr. Pusey 200,000 shares of restricted stock of the Company (the “Restricted Shares”). The grant is evidenced by a Letter of Restricted Stock Grant, which is filed with this Form 8-K as Exhibit 10.5 and is incorporated herein by reference. The Letter of Restricted Stock Grant provides that the Restricted Shares shall be

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subject to restrictions on transferability and forfeiture, with such restrictions to lapse as to 50% of such stock upon the acceptance by the FDA for filing of a New Drug Application for Chrysalin for fresh fracture indications, and with the restrictions to lapse as to the remaining 50% upon the attainment of certain milestones to be mutually agreed upon by Dr. Pusey and the Compensation Committee of the Company’s Board of Directors.

     In the event that the Company undergoes a change of control or a sale of substantially all of its assets, the Employment Agreement provides that Dr. Pusey will be entitled to receive a special bonus of up to $2.0 million, and at least 90% of the shares included in the Initial Option Grant will fully vest and the restrictions on at least 90% of the Restricted Shares will fully lapse upon such a change of control or sale of assets.

Section 5 – Corporate Governance and Management

Item 5.02 Departure of Directors or Principal Officers; Election of Directors; Appointment of Principal Officers.

     (b) On March 3, 2005, Thomas R. Trotter resigned from the positions of President and Chief Executive Officer of the Company effective as of the commencement of the employment of Dr. James M. Pusey as the Company’s President and Chief Executive Officer.

     (c) On March 3, 2005, the Company entered into an employment agreement with Dr. James M. Pusey to serve as the Company’s President and Chief Executive Officer, which employment will be effective on or prior to March 18, 2005.

     Dr. Pusey, 46, most recently served as an executive vice president of neurology at Serono, Inc. USA, a unit of Serono, SA (Geneva, Switzerland). Serono, Inc. USA is a biotechnology company and a developer of recombinant prescription medicines, headquartered in Rockland, Mass. From December 1999 to July 2003, Dr. Pusey was employed by AstraZeneca Pharmaceuticals USA, where he served as Vice President of Marketing and then as a Vice President and Therapeutic Area Leader. Prior to his employment with AstraZeneca, Dr. Pusey held a senior management position with SmithKline Beecham, a research based pharmaceutical company.

     The material terms of the Company’s employment agreement with Dr. Pusey are described in Item 1.01 of this Form 8-K and are incorporated herein by reference.

Section 7 – Regulation FD

Item 7.01 Regulation FD Disclosure.

     On March 4, 2005, the Company issued a press release announcing the naming of Dr. Pusey as President and Chief Executive Officer of the Company. A copy of this press release is attached to this Form 8-K as Exhibit 99.1.

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Section 9 – Financial Statements and Exhibits

Item 9.01 Financial Statements and Exhibits.

(c) Exhibits

Exhibit No.		Description
	10.1	Employment Agreement dated as of March 3, 2005 between the Company and James M. Pusey
	10.2	Form of Confidential Information and Assignment of Inventions Agreement
	10.3	Letter of Stock Option Grant for 200,000 shares of the Company’s common stock, dated March 3, 2005
	10.4	Letter of Stock Option Grant for 300,000 shares of the Company’s common stock, dated March 3, 2005
	10.5	Letter of Restricted Stock Grant, dated March 3, 2005
	99.1	Press release dated March 4, 2005

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SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Dated: March 4, 2005	ORTHOLOGIC CORP.
	/s/ Sherry A. Sturman
	Sherry A. Sturman Chief Financial Officer

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EX-10.1

EXHIBIT 10.1

EMPLOYMENT AGREEMENT

     THIS EMPLOYMENT AGREEMENT (this “Agreement”), dated as of the 3^rd day of March, 2005, is between OrthoLogic Corp., a Delaware corporation (the “Corporation”) located at 1275 West Washington, Tempe, Arizona 85281, and James M. Pusey (“Executive”).

     The Corporation desires to employ Executive, and Executive desires to accept such employment on the terms and subject to the conditions hereinafter set forth.

     NOW, THEREFORE, in consideration of the premises and of the mutual covenants and obligations hereinafter set forth, the parties hereto agree as follows:

     1. Employment; Effectiveness of Agreement. Not later than March 18, 2005, or such earlier date as may be specified by Executive (such date, the “Commencement Date,” for all purposes hereof), the Corporation shall employ the Executive and the Executive shall accept employment by the Corporation, upon the terms and conditions hereinafter set forth.

     2. Term of Service. The employment of the Executive hereunder shall commence on the Commencement Date and continue until terminated pursuant to the terms of this Agreement. The period of Executive’s employment is hereinafter referred to as the “Employment Period.”

     3. Duties. During the Employment Period, Executive shall serve as the Chief Executive Officer (“CEO”) of the Corporation and shall serve the Corporation faithfully and to the best of his ability. Subject to the approval of the shareholders, Executive will serve as a Director on the Board of Directors. Subject to Executive’s continued employment, the Corporation will nominate Executive for election, and re-election, as a Director on the Board of Directors at each annual meeting of the shareholders beginning in 2006. Executive shall devote his full time, attention, skill and efforts to the performance of such duties as are normal and customary to the position of CEO as required by or reasonably requested by the Corporation’s Board of Directors. Subject to paragraph 6(a)(ii), Executive’s responsibilities, title, working conditions, duties and/or any other aspect of Executive’s employment may be changed, added to or eliminated during the Employment Period at the sole discretion of the Corporation. Prior to serving on any outside board of directors, Executive shall obtain the written consent of the Board of Directors, provided however that no consent shall be required to serve on the boards of directors, or boards of trustees, for not-for-profit organizations provided such service does not, in the good faith judgment of the Company’s Board of Directors, impair Executive’s performance of his duties hereunder.

     4. Compensation; Bonus; Benefits; Reimbursement.

          (a) Base Salary. During the Employment Period, the Corporation shall pay to Executive an annual base salary of $350,000 which shall be subject to review and, at the option of the Compensation Committee of the Corporation, subject to increase, but not decrease, (such salary, as the same may be increased from time to time as aforesaid, being referred to herein as the “Base Salary”). The Base Salary shall be payable in such installments (but not less

frequently than monthly) as is the policy of the Corporation with respect to senior executives of the Corporation.

          (b) Special Bonuses. Executive shall be entitled to a signing bonus of $125,000 payable on the Commencement Date, and an additional bonus of $125,000 payable (i) upon the completion of one year of service with the Corporation or, (ii) if Executive’s employment is terminated by the Company without Cause prior to the completion of one year of service, upon such termination.

          (c) Bonuses. Executive shall be entitled to participate in a discretionary bonus plan established for Executive from time to time by the Compensation Committee with reasonable consultation with the Executive. Executive’s target bonus will be 50% of Base Salary upon the achievement of individual and corporate performance objectives established jointly from time to time by the Compensation Committee and the Executive. Such cash bonus, if earned, will be payable to the Executive annually on or before the first day of March immediately following the end of the calendar year for which it is earned. Any bonus will be paid in such manner so that it is not subject to the provisions of Section 409A of the Internal Revenue Code of 1986, as amended, and shall be interpreted in a manner consistent with that intention.

          (d) Equity Compensation.

               (i) Stock Options. On the date hereof, the Corporation shall grant to Executive options to purchase 425,000 shares of the Corporation’s common stock at an exercise price equal to the closing price of the Corporation’s common stock on the date hereof, as reported by the Nasdaq Stock Market, and the Corporation shall grant to Executive on the Commencement Date an option to purchase an additional 75,000 shares of the Corporation’s common stock at an exercise price equal to the closing price of the Corporation’s common stock on the Commencement Date, as reported by the Nasdaq Stock Market (collectively, the “Initial Option Grant”). The grant shall be evidenced by one or more grant agreements (collectively, the “Stock Option Agreement”) which shall provide for immediate vesting as to 10% and monthly vesting of the remainder in equal amounts over 48 months, subject to continued employment. To the extent permitted by law and the Corporation’s 1997 Stock Option Plan (“Plan”), the options will be qualified incentive stock options as defined under Section 422 of the Internal Revenue Code of 1986; the remainder of the options will be nonqualified stock options. During the Employment Period, the Executive shall be entitled to participate in additional equity compensation plans and programs as may be determined from time to time in the discretion of the Compensation Committee.

               (ii) Restricted Stock. On the date hereof, the Corporation shall grant to Executive 200,000 shares of restricted stock. Such grant shall be evidenced by a Letter of Restricted Stock Grant which shall provide that such restricted stock shall be subject to restrictions on, among other things, transferability, and that upon termination of employment all such restricted stock that is at that time subject to restrictions shall be forfeited and reacquired by the Corporation. The Letter of Restricted Stock Grant shall provide that the forfeiture provisions shall lapse as to 50% of the shares upon the acceptance by the FDA for filing of a New Drug Application for Chrysalin for fresh fracture indications and that the forfeiture provisions shall

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lapse as to the other 50% of the shares, upon the attainment of separate milestones to be established within 90 days after the Commencement Date in good faith consultation between Executive and the Compensation Committee and which are expected (or required) to be achieved prior to the initial New Drug Application filing.

               (iii) The Corporation shall use its reasonable best efforts to register with the United States Securities and Exchange Commission within ninety (90) days of the date hereof and maintain in effect at all times thereafter a registration statement under the Securities Act of 1933, as amended (“Securities Act”), covering (A) all shares issuable upon exercise of the Initial Option Grant and (B) all shares of restricted stock granted to Executive as described in Section 4(d)(ii) above; provided that this covenant shall not apply on or after the date on which Executive is entitled to sell such shares pursuant to Rule 144(k) under the Securities Act.

          (e) Future Adjustments. On or before March 3 of each calendar year during the term of this Agreement following the calendar year in which this Agreement commenced, the Compensation Committee will review the Executive’s Base Salary and other compensation, including Executive’s entitlement to participate in additional equity compensation plans, and may make adjustments in its absolute discretion to such base salary and determine such bonus or additional equity compensation based upon, among other factors: (i) Executive’s performance, (ii) the Corporation’s performance, (iii) changes in costs of living, (iv) changes in Executive’s responsibilities, and (v) the benefit to the Corporation of Executive’s efforts on its behalf; provided that Executive’s Base Salary shall not be less than $350,000 per year during the term of this Agreement.

          (f) Benefits. During the Employment Period, Executive shall receive such medical, dental and other fringe benefits as may be provided from time to time by the Corporation to senior management generally.

          (g) Vacation. During the Employment Period, Executive shall be entitled to four weeks paid vacation during each 12-month period worked.

          (h) Reimbursement of Expenses.

               (i) Business Expenses. During the Employment Period, the Corporation shall reimburse Executive, in accordance with the policies and practices of the Corporation in effect from time to time with respect to other members of senior management of the Corporation, for all reasonable and necessary traveling expenses and other disbursements incurred by him for or on behalf of the Corporation in connection with the performance of his duties hereunder upon presentation by the Executive to the Corporation of appropriate documentation therefor.

               (ii) Relocation Expense. The Corporation shall reimburse Executive for the following expenses relating to relocation to the Phoenix area:

                    (1) $15,000 for temporary housing expenses, and/or for the expense of temporarily maintaining two homes if the Executive purchases a home in the Phoenix area prior to the sale of Executive’s Boston residence;

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                    (2) $60,000 for the purchase of a home in the Phoenix area;

                    (3) reasonable costs of moving Executive’s household goods to the Phoenix area, in an amount to be determined by mutual agreement;

                    (4) the amount, if any, by which the gross sales price (without deduction for sales commissions or other expenses of sale) of Executive’s Boston condominium is less than $724,000, but such reimbursement shall not exceed $50,000.

               (iii) Special Travel Expenses. The Corporation shall reimburse Executive for up to $30,000 per year in airfare expenses for travel by Executive to Pennsylvania to visit family for so long as Executive’s immediate family maintains their primary residence is in Pennsylvania.

               (iv) The Corporation shall reimburse Executive for up to $5,000 in legal fees incurred in connection with the negotiation and execution of this agreement.

          (i) Deductions. The Corporation shall deduct from any payments to be made by it to the Executive under this Section 4 or Section 6 any amounts required to be withheld in respect of any federal, state or local income or other taxes.

     5. Termination and At-Will Employment.

          (a) Executive understands and acknowledges that the Employment Period with the Corporation is for an unspecified duration and constitutes “at-will” employment. Executive acknowledges that this employment relationship may be terminated at any time, with or without cause, at the option either of the Corporation or Executive, and with or without notice.

          (b) For convenience of reference, the date upon which any termination of the employment of the Executive pursuant to this Section 5 hereof shall be effective is hereinafter referred to as the “Termination Date.” If Executive dies during the Employment Period, the Termination Date shall be deemed to be the date of Executive’s death.

     6. Effect of Termination of Employment.

          (a) As used herein, the following defined terms shall have the following meanings:

               (i) “Cause” shall mean Executive’s (i) conviction or entry of a plea of nolo contendere for a crime or offense involving misappropriation of monies or other property, or any felony offense (including Foreign Corrupt Practices Act of 1977) for any crime of moral turpitude, or his commission of fraud or embezzlement; (ii) breach, other than an immaterial breach, by Executive of his fiduciary duties to the Corporation, as determined under the laws of the State of Delaware; (iii) gross insubordination or willful failure to discharge any of his duties or obligations under this Agreement, which failure, if curable, is not cured within thirty (30) days after receipt of written notice of such breach (the “Cure Period”), provided, however, that successive material failures involving the same conduct by Executive shall be deemed incapable of being cured; (iv) willful or knowing violation of any law, rule, or regulation of any

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governmental agency with jurisdiction over the Corporation which could reasonably be expected to impair the Corporation’s ability to conduct its business in its usual manner or could reasonably be expected to subject the Corporation to public disrespect, scandal or ridicule; (v) insobriety or non-therapeutic use of drugs, chemicals or controlled substances either (A) in the course of performing his duties and responsibilities under this Agreement or (B) in any other manner affecting his ability to perform his duties and responsibilities under this Agreement; or (vi) willful misconduct with respect to the business and affairs of the Corporation or any subsidiary or affiliate thereof, including, but not limited to Executive’s willful violation of the Corporation’s Code of Ethics, Insider Trading Policy or any other material Corporation policy applicable to all senior management.

               (ii) “Good Reason” shall mean with respect to Executive (i) without his consent, he is not the Chief Executive Officer of the Corporation; (ii) a material diminution in duties of Executive described in this Agreement, (iii) the failure of the Corporation to obtain the agreement from any successor to assume and agree to perform this Agreement or (iv) the material breach of this Agreement by the Corporation, which neglect or failure, if curable, is not cured within thirty (30) days after receipt of written notice of such breach.

               (iii) “Disability” shall mean Executive is incapacitated or disabled by accident, sickness or otherwise so as to render Executive mentally or physically incapable of performing the essential functions of his job required hereunder for six consecutive months.

          (b) If this Agreement is terminated by (i) the Corporation without Cause (other than by reason of Executive’s death or Disability) or (ii) by Executive for Good Reason, neither Executive nor Executive’s beneficiaries or estate shall have any further rights under this Agreement or any claims against the Corporation arising out of this Agreement, except that Executive shall be entitled to receive, upon execution of a general release and waiver of claims that is reasonably acceptable to the Corporation (the “Release”), which Release shall expressly exclude all payments and benefits to be provided to the Executive on or after termination, and so long as he continues to comply with the provisions of any confidentiality, non-competition, or non-solicitation agreement with the Corporation to which Executive is subject (including, without limitation, the Confidentiality Agreement), the following:

               (i) Continuation of his Base Salary, less applicable withholdings, at the rate in effect at the time of the termination of this Agreement, payable in the ordinary course of the Corporation’s business as if Executive were continuing as an employee of the Corporation, for a period of twelve months from the Termination Date;

               (ii) If applicable, and subject to a bonus plan adopted by the Compensation Committee, any earned but unpaid bonus as of the Termination Date (which amount shall be paid within 30 days of the Termination Date);

               (iii) Any reasonable out-of-pocket business expenses properly incurred but not yet reimbursed (which amount shall be paid within 30 days of the Termination Date); and

               (iv) Continuation of Executive’s medical benefits until the earlier of (i) twelve (12) months from the Termination Date, or (ii) the date on which Executive is eligible to

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receive medical benefits from another company; provided, that, in the event that any of the Corporation’s medical benefit plans prohibit participation in such plan by the Executive following his termination, 100% of the applicable COBRA premiums shall be payable by the Corporation for the period described herein.

          (c) If this Agreement is terminated by the Corporation by reason of Executive’s death or Disability, upon the Termination Date, neither Executive nor Executive’s beneficiaries or estate shall have any further rights under this Agreement or any claims against the Corporation arising out of this Agreement, except Executive shall be entitled to receive, upon his execution of the Release reasonably acceptable to the Corporation (solely in the case of Disability), and so long as he continues to comply with the provisions of any confidentiality, non-competition or non-solicitation agreement with the Corporation of which Executive is subject (including, without limitation the Confidentiality Agreement) (solely in the case of Disability), the following:

               (i) if applicable, and subject to a bonus plan adopted by the Compensation Committee, any earned but unpaid bonus through the Termination Date (which amount shall be paid within 30 days of the Termination Date); and

               (ii) any reasonable out-of-pocket business expenses properly incurred but not yet reimbursed (which amount shall be paid within 30 days of the Termination Date).

     In addition to the foregoing set forth in this clause (c), in the event of termination of Executive by reason of Death or Disability, Executive shall be entitled to any life insurance or disability insurance benefits provided to all employees of the Corporation.

          (d) If this Agreement is terminated by the Corporation for Cause or by the Executive other than for Good Reason, neither Executive nor Executive’s beneficiaries or estate shall have any further rights under this Agreement or any claims against the Corporation arising out of this Agreement, including in respect of any pro rata bonus amounts in respect of the year in which the Termination Date occurs, except that Executive shall be entitled to receive accrued and unpaid compensation and benefits which are then due and owing as of the Termination Date.

     In addition, if this Agreement is terminated by Executive for other than Good Reason prior to the second anniversary of the Commencement Date, Executive shall pay to the Corporation, as special damages in connection therewith, an amount equal to the amounts paid to Executive pursuant to Section 4(h)(ii)(1) and (2), and the Corporation shall have a right of offset of such amount against any amount then payable by Corporation to Executive.

          (e) Upon termination for any reason, Executive shall promptly deliver to the Corporation all equipment, documents and other company property in his possession, custody or control.

     7. Effect of Change of Control.

          (a) Upon the occurrence of a Change of Control, the Initial Option Grant shall fully vest and all restrictions relating to the Restricted Stock Award shall lapse; provided, however, that if the Corporation shall, on or before the date of such Change of Control, request

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that Executive remain in the employ of the Corporation following the Change of Control, then: (i) the Initial Option Grant shall instead vest as to all options except that number equal to 10% of the number of options originally granted, and the remainder shall vest upon the completion by Executive of six months service thereafter or, if earlier, the date on which the Corporation terminates Executive’s employment; and (ii) the restrictions on the shares included in the Restricted Stock Award Option Grant shall instead lapse as to all but 10% of the number of shares originally included in the Restricted Stock Award, and the restrictions on the remainder shall lapse upon the completion by Executive of six months service thereafter or, if earlier, the date on which the Corporation terminates Executive’s employment.

          (b) Upon the occurrence of a Change Control, Executive shall be entitled to receive a special change of control bonus calculated in accordance with the following formula on the basis of the net per share price received by the Corporation’s stockholders in such transaction:

Net Per Share Price	Bonus Amount
Less than $10.00		-0-
$10.00	$	500,000
$25.00 or more	$	2,000,000

For a net per share price between $10.00 and $25.00, the bonus amount shall be interpolated on a straight line basis. The foregoing amounts shall be appropriately adjusted to reflect any stock dividends, stock splits, recapitalizations and the like.

          (c) As used herein, the term “Change of Control” shall be defined as a change in ownership or control of the Corporation effected through any of the following transactions:

               (i) a statutory share exchange, merger, consolidation or reorganization approved by the Corporation’s stockholders, unless securities representing more than 50% of the total combined voting power of the voting securities of the successor corporation are immediately thereafter beneficially owned, directly or indirectly, by the persons who beneficially owned the Corporation’s outstanding voting securities immediately prior to such transaction;

               (ii) any stockholder approved transfer or other disposition of all or substantially all of the Corporation’s assets (whether held directly or indirectly through one or more controlled subsidiaries) except to or with a wholly-owned subsidiary of the Corporation); or

               (iii) the acquisition, directly or indirectly by any person or related group of persons of beneficial ownership (within the meaning of Rule 13d-3 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) of securities possessing more than 50% of the total combined voting power of the Corporation’s outstanding securities pursuant to transactions with the Corporation’s stockholders and not solely by direct purchase from the Corporation.

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     8. Disclosure of Information; Right of Inventions. As a condition of the continuation of this Employment Agreement, Executive has or, simultaneously with the execution of this Agreement Executive shall, enter into the attached Confidential Information and Assignment of Inventions Agreement.

     9. Restrictive Covenants.

          (a) Executive acknowledges and recognizes that during the Employment Period he will be privy to confidential information of the Corporation and further acknowledges and recognizes that the Corporation would find it extremely difficult to replace Executive in his capacity as an employee. Accordingly, in consideration of the promises contained herein and the consideration to be received by Executive hereunder, without the prior written consent of the Corporation, Executive shall not, at any time during the employee/employer relationship between the Corporation and Executive or the six month period after the termination of this Agreement, (x) “engage” (as hereafter defined) in any Competing Business (as hereinafter defined) in the United States, Canada or Europe, or (y) directly or indirectly (i) induce or solicit employees of the Corporation or any direct or indirect subsidiary thereof to terminate their employment with the Corporation or any such direct or indirect subsidiary or (ii) induce any entity or person with which the Corporation or any direct or indirect subsidiary thereof has a business relationship to terminate or alter such business relationship. As used herein, “Competing Business” shall mean any for-profit person or organization that is designing, researching, developing, producing, marketing, distributing, leasing, licensing or selling a pharmaceutical that is competitive with any product or product candidate that is actively being designed, researched, developed, produced, marketed, distributed, leased, licensed or sold by the Corporation during the term of this Agreement (hereafter, “Conflicting Product”). For purposes of this Section 9, “engage” shall mean to serve as an officer, director, consultant or employee of or to beneficially own more than 2% of the outstanding equity of a Competing Business. Notwithstanding anything in Section 9 hereof to the contrary, nothing in this Agreement shall preclude Executive from providing consulting or advisory services to a Competing Business (other than as a director, general partner, officer or greater than 2% equity holder) and being compensated therefor as long as Executive is not providing consulting services or advice with respect to Conflicting Products.

          (b) Executive understands that the foregoing restrictions may limit his ability to earn a livelihood in a business similar to the business of the Corporation or any subsidiary or affiliate thereof, but he nevertheless believes that he has received and will receive sufficient consideration provided hereunder to justify clearly such restrictions which, in any event (given his education, skills and ability), Executive does not believe would prevent him from earning a living.

     10. Non-Disparagement. Both during and after Executive’s employment with the Corporation, Executive and the Corporation agree not to disparage the other party, and Executive agrees not to disparage the Corporation’s officers, directors, employees, shareholders and agents, in any manner likely to be harmful to them or their business, business reputation or personal reputation; provided that nothing herein shall be deemed to limit or impair either Executive or the Corporation from pursuing any right or remedy alleging a breach by the other party and provided further that both Executive and the Corporation shall respond accurately and fully to

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any question, inquiry or request for information when required by legal process. Any willful and material violation of this provision of this Agreement will nullify the Corporation’s obligations to provide to Executive the benefits set forth in Section 6 hereof.

     11. Representations, Warranties and Covenants of the Employee.

          (a) Restrictions. Executive represents and warrants to the Corporation and covenants during the term of this Agreement that:

               (i) there are and shall be no restrictions, agreements or understandings whatsoever to which Executive is a party which would prevent or make unlawful Executive’s execution of this Agreement or Executive’s services hereunder, which are or would be inconsistent or in conflict with this Agreement or Executive’s services hereunder, or would prevent, limit or impair in any way the performance by Executive of the obligations hereunder; and

               (ii) Executive has disclosed and will disclose to the Corporation all restraints, confidentiality commitments or other employment restrictions that he has with any other employer, person or entity which would limit the services that Executive may provide hereunder.

          (b) Obligations to Former Employers. Executive covenants that in connection with his provision of services to the Corporation, he shall not breach any obligation (legal, statutory, contractual or otherwise) to any former employer or other person, including, but not limited to, obligations relating to confidentiality and proprietary rights.

     12. Miscellaneous Provisions.

          (a) Entire Agreement; Amendments.

               (i) This Agreement, the Stock Option Agreement, the Restricted Stock Award Agreement, the Confidentiality Agreement, the Assignment of Inventions Agreement and the other agreements referred to herein contain the entire agreement between the parties hereto with respect to the transactions contemplated hereby and supersede all prior agreements or understandings between the parties with respect thereto.

               (ii) This Agreement shall not be altered or otherwise amended, except pursuant to an instrument in writing signed by each of the parties hereto.

          (b) Descriptive Headings. Descriptive headings are for convenience only and shall not control or affect the meaning or construction of any provisions of this Agreement.

          (c) Notices. All notices or other communications pursuant to this Agreement shall be in writing and shall be deemed to be sufficient if delivered personally, telecopied, sent by nationally-recognized, overnight courier or mailed by registered or certified mail (return receipt requested), postage prepaid, to the parties at the following addresses (or at such other address for a party as shall be specified by like notice):

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               (i)    if to the Corporation, to:

OrthoLogic Corp.
1275 West Washington
Tempe, AZ 85281
Fax: (602) 286-2808

          with a copy to:

Quarles & Brady Streich Lang LLP
One Renaissance Square
2 North Central Avenue
Phoenix, AZ 85004
Fax: (602) 417-2980
Attention: Steven P. Emerick

               (ii)     if to Executive, to him at:

OrthoLogic Corp.
1275 West Washington
Tempe, AZ 85281
Fax: (602) 286-2808

               with a copy to:

Duane Morris LLP
470 Atlantic Avenue
Suite 500
Boston, MA 02210
Fax: (617) 289-9201
Attention: Martin B. Shulkin, Esq.

          (d) Counterparts. This Agreement may be executed in any number of counterparts, and each such counterpart shall be deemed to be an original instrument, but all such counterparts together shall constitute but one agreement. This Agreement may be executed and delivered by facsimile.

          (e) Governing Law. This Agreement shall be governed by and construed and enforced in accordance with the laws of Arizona applicable to contracts made and performed wholly therein.

          (f) Benefits of Agreement; Assignment. The terms and provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors, assigns, representatives, heirs and estate, as applicable. Anything contained herein to the contrary notwithstanding, this Agreement shall not be assignable by any party hereto without the consent of the other party hereto; provided, however, the Corporation may assign this Agreement in connection with a sale of all or substantially all of the assets or a merger.

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          (g) Waiver of Breach. The waiver by either party of a breach of any provision of this Agreement by the other party must be in writing and shall not operate or be construed as a waiver of any subsequent breach by such other party.

          (h) Severability. In the event that any provision of this Agreement is determined to be partially or wholly invalid, illegal or unenforceable in any jurisdiction, then such provision shall, as to such jurisdiction, be modified or restricted to the extent necessary to make such provision valid, binding and enforceable, or if such provision cannot be modified or restricted, then such provision shall, as to such jurisdiction, be deemed to be excised from this Agreement; provided, however, that the binding effect and enforceability of the remaining provisions of this Agreement, to the extent the economic benefits conferred upon the parties by virtue of this Agreement remain substantially unimpaired, shall not be affected or impaired in any manner, and any such invalidity, illegality or unenforceability with respect to such provisions shall not invalidate or render unenforceable such provision in any other jurisdiction.

          (i) Remedies. All remedies hereunder are cumulative, are in addition to any other remedies provided for by law and may, to the extent permitted by law, be exercised concurrently or separately, and the exercise of any one remedy shall not be deemed to be an election of such remedy or to preclude the exercise of any other remedy. Executive acknowledges that in the event of a breach of any of Executive’s covenants contained in Sections 8, 9, 10 or 11, the Corporation shall be entitled to immediate relief enjoining such violations in any court or before any judicial body having jurisdiction over such a claim.

          (j) Survival. Sections 4 through 11, this Section 12 and the defined terms used in any section referred to in this Section 12(j), shall survive the termination of this Agreement.

          (k) Waiver of Jury Trial. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY RELATED AGREEMENT.

     IN WITNESS WHEREOF, the parties have duly executed this Employment Agreement as of the date first above written.

ORTHOLOGIC CORP.
By:	/s/ Jock M. Holliman, III
	Name:	Jock M. Holliman, III
	Title:	Chairman of the Board
EXECUTIVE:
/s/ James M. Pusey
James M. Pusey

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EX-10.2

Exhibit 10.2

CONFIDENTIAL INFORMATION AND
ASSIGNMENT OF INVENTIONS AGREEMENT

     This Agreement is made as of the                      day of                     ,      , between OrthoLogic, Corp., a Delaware corporation with its principal place of business in Arizona (the “Company”), and                                          (the “Individual”).

RECITALS

     A. The Individual is engaged by the Company, or is about to be engaged by the Company, as its                                         (the “Engagement”).

     B. The Individual has been, or will be, given access by the Company to confidential and proprietary information of the Company.

     C. The Company has retained the Individual pursuant to the terms of                                                             .

AGREEMENTS

     IN CONSIDERATION of the foregoing and other valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Individual and the Company agree as follows:

     1. Nondisclosure of Proprietary Information. The Company invents, develops, manufactures and markets processes and products that involve experimental or inventive work. The Company’s success depends upon the protection of these processes and products by patent or by secrecy. The Individual has had, or may have, access to the Company’s “Proprietary Information.” Access to this Proprietary Information is given to the Individual only if the Individual agrees to keep that information secret as follows:

          (a) “Proprietary Information” shall mean: (i) any and all methods, inventions, improvements, information, data or discoveries, whether or not patentable, relating to the business or operations of the Company that are secret, proprietary, confidential or generally undisclosed, (including information originated or provided by the Individual during the term of the Engagement) in any area of knowledge, including information concerning trade secrets, processes, software, products, patents, inventions, formulae, apparatus, techniques, technical data, improvements, specifications, servicing, attributes and relative attributes relating to any of the Company’s equipment, devices, processes or products; and (ii) if and to the extent maintained as confidential by the Company, the identities of the Company’s customers and potential customers (“Customers”) including Customers the Individual successfully cultivates or maintains during his Engagement using the Company’s products, name or infrastructure; the identities of contact persons at Customers; the preferences, likes, dislikes and technical and other requirements of Customers and contact persons with respect to product types, pricing, sales calls, timing, sales terms, rental terms, lease terms, service plans, and other marketing terms and techniques; the Company’s business methods, practices, strategies, forecasts, know-how, pricing, and marketing plans and techniques; the identity of key accounts; the identity of potential key accounts; and the identities of the Company’s key Patient Service Representatives and employees. Notwithstanding the foregoing, Proprietary Information shall not be deemed to include (i) information that was known to the

Individual prior to the Engagement with the Company; or (ii) information that is or hereafter becomes publicly available or known to the general public without a breach or fault on the part of the Individual; or (iii) information that is made available to third parties by the Company without restrictions on disclosure; or (iv) information that is rightfully received by the Individual subsequent to the termination of the Engagement from a third party without any obligation of confidentiality, or (v) information that is independently developed by the Individual subsequent to the termination of the Engagement without the use of Proprietary Information; or (vi) information that the Individual is requested or required to disclose by a court, by governmental action or otherwise in connection with legal proceedings (by oral question, interrogatories, requests for information or documents, subpoena, civil investigative demand or similar process), provided the Individual gives the Company reasonable notice of such request or requirement so that the Company may seek a protective order, if appropriate.

          (b) The Individual acknowledges that the Company has exclusive property rights to all Proprietary Information and the Individual hereby assigns all rights he might otherwise possess in any Proprietary Information to the Company. Except as required in the performance of the duties of his Engagement with the Company or as otherwise permitted pursuant to this Agreement, the Individual will not at any time during or after the term of his Engagement, without the prior written consent of the Company, directly or indirectly use, communicate, disclose, disseminate, lecture upon, publish articles or otherwise put in the public domain, any Proprietary Information.

          (c) All documents, records, notebooks, notes, memoranda, data bases, and similar repositories containing Proprietary Information made or compiled by the Individual at any time, including any and all copies thereof, are and shall be the property of the Company, shall be held by him in trust solely for the benefit of the Company, and shall be delivered to the Company by him on the termination of his Engagement or at any other time upon the request of the Company.

          (d) The Individual agrees to certify in writing at or before final termination of the Engagement that the Individual no longer has in the Individual’s possession, custody or control of any copies of any business documents generated at or relating to the Company nor any Proprietary Information, whether in hard copy, on a computer’s hard drive, on disks or in any other form or media.

          (e) For a period of three (3) years following the termination of the Engagement, the Individual agrees to provide notification, at the start of any new engagement or employment, to all subsequent employers or contracting parties who are involved in any way in the medical products or services industry or are otherwise competitors of the Company, of the terms and conditions of this Agreement, along with a copy of this Agreement.

     2. Inventions.

          (a) For purposes of this Section 2, the term “Inventions” shall mean discoveries, concepts, and ideas, whether patentable or not, including improvements, know-how, data, processes, methods, formulae, and techniques, concerning any past, present or prospective Company activities that the Individual makes, discovers or conceives (whether or not during the hours of his Engagement or with the use of the Company’s facilities, materials or personnel), either solely or jointly with others during his Engagement by the Company and, if based on Proprietary

2

Information, at any time after termination of such Engagement. All Inventions shall be solely the property of the Company and the Individual agrees to perform the requirements of this Section with respect thereto without the payment by the Company of any royalty or any consideration other than as provided in this Agreement.

          (b) The Individual shall maintain written notebooks in which he shall set forth on a current basis information as to all Inventions describing in detail the procedures employed and the results achieved as well as information as to any studies or research projects undertaken on the Company’s behalf, whether or not in the Individual’s opinion a given research project has resulted in an Invention. The written notebooks shall at all times be the property of the Company and shall be surrendered to the Company upon termination of his Engagement or upon request of the Company.

          (c) The Individual shall apply, at the Company’s request and expense, for United States and foreign letters patent upon the Inventions, either in the Individual’s name or otherwise as the Company shall desire.

          (d) The Individual hereby assigns to the Company all of his rights to Inventions, and to applications for United States and/or foreign letters patent and to United States and/or foreign letters patent granted upon Inventions.

          (e) The Individual shall acknowledge and deliver promptly to the Company without charge to the Company but at its expense such written instruments (including applications and assignments) and do such other acts, such as giving testimony in support of the Individual’s inventorship, as may be necessary in the reasonable opinion of the Company to obtain, maintain, extend, reissue and enforce United States and/or foreign letters patent relating to the Inventions and to vest the entire right and title thereto in the Company or its nominee.

          (f) The Individual’s obligation to assist the Company in obtaining and enforcing patents for Inventions in any and all countries shall continue beyond the Engagement provided the performance of such obligations do not unreasonably interfere with the Individual’s then regular business activities or employment, but the Company shall compensate the Individual at a reasonable rate for time actually spent by him at the Company’s request on such assistance. If after reasonable efforts the Company is unable for any reason whatsoever to secure the Individual’s signature to any lawful and necessary document required to apply for or execute any patent application with respect to any Inventions, including renewals, extensions, continuations, division or continuations in part thereof, the Individual hereby irrevocably designates and appoints the Company and its duly authorized officers and agents, as his agents and attorneys-in-fact to act for and in his behalf and instead of the Individual, to execute and file any application and to do all other lawful permitted acts to further the prosecution and issuance of patents with the same legal force and effect as if executed by the Individual.

          (g) As a matter of record the Individual has identified on Exhibit A attached hereto all inventions or improvements relevant to the activity of the Company which have been made or conceived or first reduced to practice by the Individual alone or jointly with others prior to his Engagement by the Company, that he desires to remove from the operation of this Section 2; and the Individual covenants that such list is complete. It is understood and agreed that such inventions and improvements shall not be subject to the provisions of this Agreement. If there is no

3

such list or if no Exhibit A is attached, the Individual represents that he has made no such inventions and improvements at the time of signing this Agreement.

          (h) No provisions of this Section shall be deemed to limit the restrictions application to the Individual under Section 1.

     3. Shop Rights. The Company shall also have the royalty-free right to use in its business, and to make, use and sell products, processes and/or services derived from any inventions, discoveries, concepts and ideas, whether or not patentable, including processes, methods, formulas and techniques, as well as improvements thereof or know-how related thereto, which are not within the scope of Inventions as defined in Section 2 but which are conceived or made by the Individual during the period he is engaged by the Company with the use or assistance of the Company’s facilities, materials or personnel.

     4. Compliance with Law and Amendment by Court: If there is any conflict between any provision of this Agreement and any statute, law, regulation or judicial precedent, the latter shall prevail, but the provisions of this Agreement thus affected shall be curtailed and limited only to the extent necessary to bring them within the requirements of the law. If any part of this Agreement shall be held by a court of proper jurisdiction to be indefinite, invalid or otherwise unenforceable, the entire Agreement shall not fail on account thereof, but: (i) the balance of the Agreement shall continue in full force and effect unless such construction would clearly be contrary to the intention of the parties or would result in an unconscionable injustice; and (ii) the court shall amend the Agreement to the extent necessary to make the Agreement valid and enforceable.

     5. Freedom From Engagement Restrictions. The Individual represents and warrants that the Individual has not entered into any agreement, whether express, implied, oral, or written, that poses an impediment to the Individual’s Engagement by the Company including the Individual’s compliance with the terms of this Agreement. In particular, the Individual is not subject to a preexisting non-competition agreement, and no restrictions or limitations exist respecting the Individual’s ability to perform fully the Individual’s obligations with the Company including the Individual’s compliance with the terms of this Agreement.

     6. Third Party Trade Secrets. During the Individual’s Engagement by the Company, the Individual agrees not to copy, refer to, or in any way use information which is proprietary to any third party (including any previous employer). The Individual represents and warrants that the Individual has not improperly taken any documents, listings, hardware, software, discs, or any other tangible medium that embodies Proprietary Information from any third party, and that the Individual does not intend to copy, refer to, or in any way use information which is proprietary to any third party in performing the Individual’s duties for the Company.

     7. Injunctive Relief; Legal Fees. The Individual acknowledges that a breach of this Agreement is likely to result in irreparable and unreasonable harm to the Company, that damages caused by a breach would be extremely difficult to calculate, and that injunctive relief, as well as damages, would be appropriate. In the event of any action to enforce the provisions of this Agreement, the non-prevailing party shall be responsible for paying all reasonable costs and expenses (including, without limitation, reasonable attorneys’ fees) incurred by the prevailing party in connection with such action; provided, however, that if there is no clear prevailing party in such

4

action, the court or arbiter hearing such action will make the determination as to each party’s responsibility for paying such costs and expenses.

     8. Successors and Assigns. This Agreement shall be binding upon the Individual, his heirs, executors, assigns, and administrators and shall inure to the benefit of the Company, its successors, and assigns.

     9. Prior Agreements; Waiver; Severability. This Agreement constitutes the entire Agreement between the parties pertaining to the subject matter contained in it and supersedes those provisions of all prior and contemporaneous agreements, representations and understandings of the parties pertaining to the same subject matter. No waiver of any of the provisions of this Agreement shall be deemed to, or shall constitute a waiver of, any other provisions, whether or not similar, nor shall any waiver constitute a continuing waiver. No waiver shall be binding unless executed in writing by the party making the waiver.

     10. Governing Law. This Agreement is entered into in Arizona and shall be governed by the laws of the State of Arizona for all purposes. The parties hereby submit themselves to the courts of the State of Arizona, located in the County of Maricopa, for the purpose of personal jurisdiction in any action to enforce this Agreement.

     11. Construction. The language in all parts of this Agreement shall in all cases be construed as a whole according to its fair meaning and not strictly for or against either party. The headings contained in this Agreement are for reference purposes only and will not affect the meaning or interpretation of this Agreement in any way. All terms used in one number or gender shall be construed to include any other number or gender as the context may require. The parties agree that each party has reviewed this Agreement and has had the opportunity to have counsel review the same and that any rule of construction to the effect that ambiguities are to be resolved against the drafting party shall not apply in the interpretation of this Agreement. Whenever the words “include,” “includes,” or “including” are used in the Agreement, they shall be deemed to be followed by the words “without limitation.”

     12. Consultation. The Individual is advised to obtain the advice of legal counsel before signing this Agreement. By their signatures below, the Individual and the Company’s representative acknowledge that they have each read the entire contents of this Agreement, that they fully understand the terms and conditions hereof, and that each has independently had an opportunity to review and discuss the Agreement with the advisor(s) or counsel of their respective choosing.

ORTHOLOGIC CORP.

By:

Name: Title:

INDIVIDUAL

Name: Date:

5

EXHIBIT A

Ladies and Gentlemen:

     The following is a complete list of all inventions or improvements relevant to the subject matter of my engagement by OrthoLogic (the “Company”) which have been made or conceived or first reduced to practice by me alone or jointly with others prior to my engagement by the Company:

                        No inventions or improvements

                        See below

                        Additional sheets attached

Name

Date:

EX-10.3

EXHIBIT 10.3

LETTER OF STOCK OPTION GRANT
ORTHOLOGIC CORP. 1997 STOCK OPTION PLAN

March 3, 2005

Dr. James M. Pusey
OrthoLogic Corp.
1275 West Washington
Tempe, Arizona 85281

          RE:  OrthoLogic Corp. 1997 Stock Option Plan
(200,000 shares)

Dear Dr. Pusey:

     In order to provide additional incentive to certain selected employees, OrthoLogic Corp. (the “Company”) adopted the OrthoLogic 1997 Stock Option Plan (the “Stock Option Plan”). By means of this letter, the Company is offering you an 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 including a copy of the Stock Option Plan (the “Prospectus”) 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 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:

(a)	effective on the date hereof (the “Option Date”), an aggregate of 125,000 shares of the common stock, $.0005 par value, of the Company (“Common Stock”) at a purchase price of $5.88 per share (“Option Date Grant”); and
(b)	effective on the date of commencement of your employment with the Company (the “Commencement Date”), an aggregate of 75,000 shares of Common Stock at a purchase price equal to the closing price of the Common Stock on that date, as reported by the Nasdaq Stock Market (the “Commencement Date Grant”).

The shares subject to the Option Date Grant and the Commencement Date Grant are referred to herein collectively as the “Shares.”

Dr. James M. Pusey
March 3, 2005
Page 2

     This option is intended to be an incentive stock option (“ISO”) to the maximum extent permitted by law. In accordance with Internal Revenue Code rules, the aggregate fair market value (determined as of the date of grant) of shares with respect to which ISOs are exercisable for the first time during any calendar year (under the Plan or under any other incentive stock option plan of the Company or Subsidiary of the Company) may not exceed $100,000. If the fair market value of shares on the date of grant with respect to which options are exercisable for the first time during any calendar year exceeds $100,000, then the options for the first $100,000 of shares to become exercisable in such calendar year (in the order of Commencement Date Grant options then Option Date Grant options) will be ISOs and the options for the amount in excess of $100,000 that become exercisable in that calendar year will be treated as non-qualified stock options (“NSOs”).

     2. Exercisability of Option. The Option Date Grant option shall be immediately exercisable as to 10% of the total shares covered thereby and shall become exercisable as to 1/48 of the remaining 90% for each full month of employment with the Company after the Option Date (2,343.75 shares per month). The Commencement Date Grant option shall be immediately exercisable upon its effectiveness as to 10% of the total shares covered thereby and shall become exercisable as to 1/48th of the remaining 90% for each full month of employment with the Company after the Option Date (1,406.25 shares per month). By way of example, the options will be exercisable in the aggregate for 65,000 shares if you continue in employment for one full year, 110,000 shares if you continue in employment for two full years, 155,000 shares if you continue in employment for three full years and all 200,000 shares if you continue in employment for four full years. No fractional shares shall be issued upon exercise of this option and if the application of the fractions set forth above would result in a fractional share, the number of shares exercisable shall be rounded up to the next full share.

     Notwithstanding the foregoing, upon a Change in Control, you shall be entitled to exercise this option with respect to all shares covered by this option (200,000 shares); provided, however, that if the Company shall, on or before the date of such Change of Control, request that you remain in the employ of the Company following the Change of Control, then you shall be entitled to exercise this option with respect to the greater of (i) 90% of the shares covered by this option (180,000 shares) or (ii) the number of shares then exercisable as of the Change in Control, and the remaining portion of this option shall become exercisable upon your completion of six months service thereafter or, if earlier, the date on which the Company terminates your employment.

     For purposes of this Letter of Grant, the term “Change of Control” shall be defined as a change in ownership or control of the Company effected through any of the following transactions: (a) a statutory share exchange, merger, consolidation or reorganization approved by the Company’s stockholders, unless securities representing more than 50% of the total combined voting power of the voting securities of the successor corporation are immediately thereafter beneficially owned, directly or indirectly, by the persons who beneficially owned the

Dr. James M. Pusey
March 3, 2005
Page 3

Company’s outstanding voting securities immediately prior to such transaction; (b) any stockholder approved transfer or other disposition of all or substantially all of the Company’s assets (whether held directly or indirectly through one or more controlled subsidiaries) except to or with a wholly-owned subsidiary of the Company); or (c) the acquisition, directly or indirectly by any person or related group of persons of beneficial ownership (within the meaning of Rule 13d-3 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) of securities possessing more than 50% of the total combined voting power of the Company’s outstanding securities pursuant to transactions with the Company’s stockholders.

     3. Termination of Option. Notwithstanding anything to the contrary herein, the extent to which this option may be exercised shall not increase after your employment with the Company terminates, and this option shall not be exercisable after the earliest of (i) the tenth anniversary of the Option Date; (ii) two years 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; or (iv) three years after the date your employment with the Company terminates, if such termination is the result of death or permanent disability. For purposes of this Letter of Grant, cause shall be determined pursuant to your employment agreement then in effect and if you are not then subject to an employment agreement, in the Company’s reasonable discretion. You acknowledge that any incentive stock options exercised more than 90 days after the date on which your employment terminates (one year in the case of termination due to death or permanent disability), shall no longer qualify as incentive stock options under the Internal Revenue Code.

     4. 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 bequest or inheritance, during the three-year period referred to in Section 3(iv) hereof. Any attempted transfer in violation of this restriction shall be void.

     5. Other Conditions and Limitations. 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.”

Dr. James M. Pusey
March 3, 2005
Page 4

     6. Exercise of Option. You may exercise the option including the number of Shares that you are intending to acquire, accompanied by the full exercise price, only by giving the Company written notice 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:

Chief Financial Officer
OrthoLogic Corp.
1275 West Washington Street
Tempe, AZ 85281

     Payment of the option price shall be made either in (i) cash or by check, or (ii) at your request and with the approval of the Company, 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 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.

     7. 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.

     8. Notice of Disposition of Shares. If you dispose of any Shares acquired upon the exercise of the portion of the option treated as an ISO 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 a portion of the option granted hereunder is intended to qualify as an incentive stock option under Code Section 422, the Company cannot assure you that such option will, in fact, qualify as incentive stock options, and makes no representation as to the tax

Dr. James M. Pusey
March 3, 2005
Page 5

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, absent fraud or manifest error. 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.

     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 6 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.

     13. Share Amounts. All share amounts set forth in this Agreement shall be equitably adjusted to reflect stock splits, stock dividends, stock combinations, reorganizations and the like.

     14. Counterparts. This Agreement may be executed in any number of counterparts, and each such counterpart shall be deemed to be an original instrument, but all such counterparts together shall constitute but one agreement. This Agreement may be executed and delivered by facsimile.

Dr. James M. Pusey
March 3, 2005
Page 6

     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:	/s/ Jock M. Holliman, III
	Jock M. Holliman, III
	Chairman of the Board

ACCEPTED AND AGREED TO:

/s/ James M. Pusey

James M. Pusey

Date:          03/03/2005

EX-10.4

EXHIBIT 10.4

LETTER OF STOCK OPTION GRANT
ORTHOLOGIC CORP.

March 3, 2005

Dr. James M. Pusey
OrthoLogic Corp.
1275 West Washington
Tempe, Arizona 85281

     RE:  OrthoLogic Corp. Stock Option Grant
(300,000 Shares)

Dear Dr. Pusey:

     In connection with your employment with OrthoLogic Corp. (the “Company”), the Company is offering you a nonqualified stock option to purchase shares of Company stock. The option is subject to the following terms and conditions:

     1. Grant of Option. The Company hereby grants to you a nonqualified stock option to purchase from the Company upon the terms and conditions and at the times hereinafter set forth, an aggregate of 300,000 shares of the common stock, $.0005 par value, of the Company (the “Shares”) at a purchase price of $5.88 per Share. The date of grant of this option is March 3, 2005 (hereinafter referred to as the “Option Date”).

     2. Exercisability of Option. This option shall be immediately exercisable as to 10% of the total shares covered by this option and shall become exercisable as to 1/48 of the remaining 90% for each full month of employment with the Company after the Option Date (5,625 shares per month), so that, by way of example, the option will be exercisable for 107,500 shares if you continue in employment for one full year, 165,000 shares if you continue in employment for two full years, 232,500 shares if you continue in employment for three full years and all 300,000 shares if you continue in employment for four full years. No fractional shares shall be issued upon exercise of this option and if the application of the fractions set forth above would result in a fractional share, the number of shares exercisable shall be rounded up to the next full share.

     Notwithstanding the foregoing, upon a Change in Control, you shall be entitled to exercise this option with respect to all shares covered by this option (300,000 shares); provided, however, that if the Company shall, on or before the date of such Change of Control, request that

Dr. James M. Pusey
March 3, 2005
Page 2

you remain in the employ of the Company following the Change of Control, then you shall be entitled to exercise this option with respect to the greater of (i) 90% of the shares covered by this option (270,000 shares) or (ii) the number of shares then exercisable as of the Change in Control, and the remaining portion of this option shall become exercisable upon your completion of six months service thereafter or, if earlier, the date on which the Company terminates your employment.

     For purposes of this Letter of Grant, the term “Change of Control” shall be defined as a change in ownership or control of the Company effected through any of the following transactions: (a) a statutory share exchange, merger, consolidation or reorganization approved by the Company’s stockholders, unless securities representing more than 50% of the total combined voting power of the voting securities of the successor corporation are immediately thereafter beneficially owned, directly or indirectly, by the persons who beneficially owned the Company’s outstanding voting securities immediately prior to such transaction; (b) any stockholder approved transfer or other disposition of all or substantially all of the Company’s assets (whether held directly or indirectly through one or more controlled subsidiaries) except to or with a wholly-owned subsidiary of the Company); or (c) the acquisition, directly or indirectly by any person or related group of persons of beneficial ownership (within the meaning of Rule 13d-3 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) of securities possessing more than 50% of the total combined voting power of the Company’s outstanding securities pursuant to transactions with the Company’s stockholders.

     3. Termination of Option. Notwithstanding anything to the contrary herein, the extent to which this option may be exercised shall not increase after your employment with the Company terminates, and this option shall not be exercisable after the earliest of (i) the tenth anniversary of the Option Date; (ii) two years 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; or (iv) three years after the date your employment with the Company terminates, if such termination is the result of death or permanent disability. For purposes of this Letter of Grant, cause shall be determined pursuant to your employment agreement then in effect and if you are not then subject to an employment agreement, in the Company’s reasonable discretion.

     4. Registration. The Company shall use its reasonable best efforts to register with the United States Securities and Exchange Commission within 90 days of the date hereof and maintain in effect at all times thereafter a registration statement under the Securities Act of 1933, as amended (the “Securities Act”), in respect of all shares issuable to you to pursuant to the options granted hereunder; provided that this covenant shall not apply from and after the date on which you are entitled to sell such shares pursuant to Rule 144(k) under the Securities Act.

     5. 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,

Dr. James M. Pusey
March 3, 2005
Page 3

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 bequest or inheritance, during the three-year period referred to in Section 3(iv) hereof. Any attempted transfer in violation of this restriction shall be void.

     6. Other Conditions and Limitations. 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.”

     7. Exercise of Option. You may exercise the option including the number of Shares that you are intending to acquire, accompanied by the full exercise price, only by giving the Company written notice 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:

Chief Financial Officer
OrthoLogic Corp.
1275 West Washington Street
Tempe, AZ 85281

     Payment of the option price shall be made either in (i) cash or by check, or (ii) at your request and with the approval of the Company, 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 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.

     8. Valuation and Withholding. If required by applicable regulations, the Company shall, at the time of issuance of any Shares purchased, 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

Dr. James M. Pusey
March 3, 2005
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part, by withholding from the shares to be issued the number of shares that would satisfy the withholding amount due.

     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 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.

     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. 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 7 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.

     12. Share Amounts. All share amounts set forth in this Agreement shall be equitably adjusted to reflect stock splits, stock dividends, stock combinations, reorganizations and the like.

     13. Counterparts. This Agreement may be executed in any number of counterparts, and each such counterpart shall be deemed to be an original instrument, but all such counterparts together shall constitute but one agreement. This Agreement may be executed and delivered by facsimile.

Dr. James M. Pusey
March 3, 2005
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:	/s/ Jock M. Holliman, III
	Jock M. Holliman, III
	Chairman of the Board

ACCEPTED AND AGREED TO:

/s/ James M. Pusey
James M. Pusey
Date:	03/03/2005

EX-10.5

EXHIBIT 10.5

LETTER OF RESTRICTED STOCK GRANT
ORTHOLOGIC CORP.

March 3, 2005

Dr. James M. Pusey
OrthoLogic Corp.
1275 West Washington
Tempe, Arizona 85281

     RE:  OrthoLogic Corp. Restricted Stock Grant
(200,000 Shares)

Dear Dr. Pusey:

     In connection with your employment with OrthoLogic Corp. (the “Company”), the Company is offering you a restricted stock grant for shares of Company stock. The grant is subject to the following terms and conditions:

     1. Grant of Restricted Stock. The Company hereby grants to you an aggregate of 200,000 fully paid and nonassessable shares of the common stock, $.0005 par value, of the Company (the “Restricted Stock”) upon the terms and conditions hereinafter set forth. The date of grant is March 3, 2005 (hereinafter referred to as the “Grant Date”). On the Grant Date, you shall pay $100 to the Company as the full purchase price for the Restricted Stock.

     2. Restrictions. The Restricted Stock shall be forfeitable as described below until the shares become vested upon the following events:

(a)

50% of the Restricted Stock covered by this Letter of Grant (100,000 shares) shall become vested upon the acceptance by the FDA for filing of a New Drug Application for Chrysalin for fresh fracture indications.

(b)

50% of the Restricted Stock covered by this Letter of Grant (100,000 shares) shall become vested upon the attainment of separate milestones, each established within 90 days after the Grant Date in good faith consultation between you and the Compensation Committee of the Company’s Board of Directors. It is anticipated that these milestones will be expected to be achievable prior to the initial New Drug Application filing.

     The period of time during which the Restricted Stock is forfeitable is referred to as the “Restricted Period.” If your employment with the Company terminates during the Restricted Period for any reason, any Restricted Stock which has not yet become vested shall be forfeited to

Dr. James M. Pusey
March 3, 2005
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the Company on the date of such termination, without any further obligations of the Company to you and all your rights with respect to such Restricted Stock shall terminate.

     Upon the occurrence of a Change of Control, all restrictions relating to the Restricted Stock shall lapse; provided, however, that if the Corporation shall, on or before the date of such Change of Control, request that Executive remain in the employ of the Corporation following the Change of Control, then: the restrictions on the Restricted Stock shall instead lapse as to all but 10% of the number of shares originally included in the Restricted Stock grant, and the restrictions on the remainder shall lapse upon the completion by Executive of six months service thereafter or, if earlier, the date on which the Corporation terminates Executive’s employment.

     For purposes of this Letter of Grant, the term “Change of Control” shall be defined as a change in ownership or control of the Company effected through any of the following transactions: (a) a statutory share exchange, merger, consolidation or reorganization approved by the Company’s stockholders, unless securities representing more than 50% of the total combined voting power of the voting securities of the successor corporation are immediately thereafter beneficially owned, directly or indirectly, by the persons who beneficially owned the Company’s outstanding voting securities immediately prior to such transaction; (b) any stockholder approved transfer or other disposition of all or substantially all of the Company’s assets (whether held directly or indirectly through one or more controlled subsidiaries) except to or with a wholly-owned subsidiary of the Company); or (c) the acquisition, directly or indirectly by any person or related group of persons of beneficial ownership (within the meaning of Rule 13d-3 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) of securities possessing more than 50% of the total combined voting power of the Company’s outstanding securities pursuant to transactions with the Company’s stockholders.

     3. Rights During Restricted Period. During the Restricted Period, you shall have the right to vote the Restricted Stock and to receive cash dividends. If any stock dividend is declared upon the Restricted Stock, or there is any stock split, stock distribution, or other change in the corporate structure of the Company with respect to the Restricted Stock, the aggregate number and kind of shares covered by this grant shall be proportionately and appropriately adjusted (subject to the same restrictions applicable to the original Restricted Stock). The Restricted Stock may not be sold, assigned, transferred, pledged, encumbered or otherwise disposed of by you prior to vesting.

     4. Registration. The Company shall use its reasonable best efforts to register with the United States Securities and Exchange Commission within 90 days of the date hereof and maintain in effect at all times thereafter a registration statement under the Securities Act of 1933, as amended (the “Securities Act”), in respect of the resale of all shares of Restricted Stock, until such time as Executive is entitled to sell such shares pursuant to Rule 144(k) under the Securities Act.

     5. Custody. The Restricted Stock shall be held in custody by the Company or an agent for the Company until the applicable restrictions have expired. If any certificates are issued for shares of Restricted Stock during the Restricted Period, such certificates shall bear an

Dr. James M. Pusey
March 3, 2005
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appropriate legend as determined by the Company referring to the applicable terms, conditions and restrictions and you agree to deliver a signed, blank stock power to the Company relating thereto. On each date that the Restricted Stock vests, the Company shall, or shall cause its transfer agent to, deliver to you a stock certificate for those vested shares. Additionally, on the final vesting date, the Company shall deliver to you the blank stock power that you signed and delivered to the Company in connection with your Restricted Stock grant.

     6. Tax Withholding. If required by applicable regulations, the Company shall, at the time of vesting, provide you with a statement of valuation of the Restricted Stock. The Company may require, as a condition to the vesting of any shares of the Restricted Stock, that you concurrently pay to the Company any taxes which the Company is required to withhold by reason of such vesting. In lieu of part or all of such payment, you may request that the Company withhold a portion of the shares otherwise becoming vested to defray all or a portion of any applicable taxes, or request that the Company withhold the required amounts from other compensation payable to you.

     7. Other Conditions and Limitations. Unless the shares are subject to a then effective registration statement under the Securities Act of 1933, 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.”

     8. Miscellaneous. 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.

     9. Counterparts. This Letter of Restricted Stock Grant may be executed in any number of counterparts, and each such counterpart shall be deemed to be an original instrument, but all such counterparts together shall constitute but one agreement. This Letter of Restricted Stock Grant may be executed and delivered by facsimile.

     10. Governing Law. This Letter of Restricted Stock 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.

Dr. James M. Pusey
March 3, 2005
Page 4

     You should execute the enclosed copy of this Letter of Restricted Stock Grant and return it to the Company as soon as possible. The additional copy is for your records.

Very truly yours, ORTHOLOGIC CORP.
By:	/s/ Jock M. Holliman, III
	Jock M. Holliman, III
	Chairman of the Board

ACCEPTED AND AGREED TO:

/s/ James M. Pusey
James M. Pusey
Date:	03/03/2005

EX-99.1

EXHIBIT 99.1

NEWS BULLETIN	RE:	OrthoLogic Corp.
		1275 W. Washington St.
		Tempe, AZ 85281
		(602) 286-5520
FROM:		www.orthologic.com
		TRADED: Nasdaq: OLGC
THE BERLIN GROUP, INC.
INVESTOR RELATIONS COUNSEL

AT THE COMPANY:
Thomas R. Trotter
President/CEO
(602) 286-5500

AT THE BERLIN GROUP:
Lawrence Delaney Jr.
(714) 734-5000

OrthoLogic Names Pharmaceutical Industry Veteran
Dr. James M. Pusey President and CEO

Tempe, Ariz., Friday, March 4, 2005—OrthoLogic Corp. (Nasdaq: OLGC) announced today that the company has appointed James M. Pusey, M.D., president and chief executive officer effective March 18, 2005. Dr. Pusey succeeds Thomas R. Trotter, who has been president and CEO of OrthoLogic since 1997.

Dr. Pusey, 46, served most recently as an executive vice president of Serono, Inc. USA, headquartered in Rockland, Mass., a unit of Serono, SA (Geneva, Switzerland), and the world’s third-largest biotechnology company. Before that, Dr. Pusey held senior management positions with SmithKline Beecham and AstraZeneca Pharmaceuticals USA.

Dr. Pusey holds Bachelor of Medicine and Bachelor of Surgery degrees from the Royal Free Hospital School of Medicine, London University, and a Masters of Business Administration from the London Business School. Dr. Pusey has spent the last eight years living and working in the U.S.

“On behalf of OrthoLogic’s Board of Directors, I am pleased to welcome Dr. Pusey as the company’s new president and CEO,” said John M. Holliman III, chairman of the board. “He has had an outstanding career in the pharmaceutical industry and brings a wealth of talent and experience to OrthoLogic. His particular expertise in clinical trial management and FDA interface, as well as significant experience in marketing and business development within the pharmaceutical and biotechnology sectors, makes him particularly well suited for this position. In addition, his early background as an intensive care physician provides him with excellent insight into the clinical applications for our drug product candidates that make up the Chrysalin® Product Platform.”

Holliman added, “We are also very pleased that Tom Trotter has agreed to remain a member of OrthoLogic’s Board of Directors until our Annual Stockholders Meeting on Friday, April 15, 2005 and will continue to be available to the company as a consultant in the future. Tom has done an outstanding job of managing OrthoLogic over the last seven years and overseeing our transition from a medical device company to a drug-development company.”

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OrthoLogic Names Pharmaceutical Industry Veteran Dr. James Pusey President and CEO
Page 2

“I am very pleased to be joining OrthoLogic as president and CEO,” said Dr. Pusey. “The company is well positioned to move forward with a number of exciting formulations in different therapeutic areas using the Chrysalin Product Platform. Working as a physician treating patients, as well as in industry with several major pharmaceutical and biotechnology companies, has given me a valuable perspective into the world of drug development. I am looking forward to adding that experience to the excellent management team at OrthoLogic.”

About OrthoLogic Corp.

OrthoLogic is a drug-development company focused on commercializing several potential therapeutics comprising the Chrysalin® Product Platform, a series of product candidates aimed at treating traumatic and chronic orthopedic indications in bone and soft tissue as well as oral/maxillofacial bone repair, cardiovascular repair and wound healing. All of these potential products are based on the Chrysalin synthetic peptide, also known as TP508.

OrthoLogic owns an exclusive license for all worldwide medical indications for the peptide, and is actively pursuing five orthopedic indications for Chrysalin. These include fracture repair and spine fusion, which are in human clinical trials, and cartilage defect repair, which is in late-stage preclinical trials. Ligament and tendon repair indications are in the preclinical studies stage. In non-orthopedic areas, a human clinical trial for chronic diabetic ulcers has been completed. OrthoLogic’s product development pipeline also includes Chrysalin-based product candidates for dental bone formation and myocardial revascularization.

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