OrthoLogic Corp. 1987 Stock Option Plan
                                   As Amended

1.   Purpose
     -------

     The purpose of the  OrthoLogic  Corp Stock  Option Plan (the  "Plan") is to
attract and retain the best available  employees,  consultants and directors for
positions of substantial responsibility, to provide additional incentive to such
employees,  consultants and directors of OrthoLogic Corp, a Delaware corporation
(the  "Company")  or any parent or subsidiary of the Company which now exists or
hereafter is  organized  or acquired by or acquires the Company,  and to promote
the success of the business of the Company.

2.   Incentive and Nonqualified Stock Options
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     Two types of options (referred to herein as "Options," without  distinction
between  such two types)  may be granted  under the Plan:  options  intended  to
qualify as incentive  stock options  ("incentive  stock  options") under Section
422A of the Internal  Revenue Code of 1986, as amended (the  "Code");  and other
options not  specifically  authorized  or  qualified  for  favorable  income tax
treatment by the Code ("nonqualified stock options").

3.   Eligibility and Administration
     ------------------------------

     (a) Any employee  (including any officer or director who is an employee) of
the Company or any of its  subsidiaries  shall be eligible to receive  incentive
stock  options  under the Plan.  An employee  may receive  more than one type of
option under the Plan.

     (b) Any director of the Company or  consultant to the Company who is not an
employee  of  the  Company  or  any  of  its  subsidiaries  or a  member  of the
Compensation  Committee  of the  Board  of  Directors  of the  Company  shall be
eligible to receive  nonqualified  stock options under the Plan. Any director of
the  Company  who is a member  of the  Compensation  Committee  of the  Board of
Directors  and is not an  employee  of the  Company (a  "Compensation  Committee
Member") shall be eligible to receive options only as set forth in Section 9.

     (c) The Plan shall be administered by the Board of Directors of the Company
or a committee  appointed  by the Board of  Directors.  No director or committee
member shall be liable for any action or  determination  made in good faith with
respect to the Plan or any option granted under it.

4.   Shares Subject to Options
     -------------------------

     The stock  available for grant of options under the Plan shall be shares of
the Company's authorized but unissued, or reacquired Common Stock. The aggregate
number of shares which may be issued
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pursuant to exercise of incentive stock options and  nonqualified  stock options
granted  under the Plan shall be 4,160,000  shares.  If any  outstanding  option
under the Plan for any  reason  expires or is  terminated,  the shares of Common
Stock  allocable  to the  unexercised  portion  of the  option  shall  again  be
available  for  options  under the Plan as if no options had been  granted  with
respect to such shares.

5.   Terms and Conditions of Options
     -------------------------------

     Options granted under the Plan shall be evidenced by agreements ("Letter of
Grant") in such form and containing  such  provisions  which are consistent with
the Plan as the Board or committee shall from time to time approve.  Each Letter
of Grant shall specify  whether the option granted thereby is an incentive stock
option or a nonqualified stock option. Such Letters of Grant may incorporate all
or any of the terms hereof by reference  and shall comply with and be subject to
the following terms and conditions:

     (a) Each  Letter of Grant  shall  specify  the  number of  incentive  stock
options and/or nonqualified stock option shares subject to the option.

     (b) The purchase price for the shares subject to (i) a nonqualified  option
may be any amount determined in good faith by the Board or committee and (ii) an
incentive  option  shall not be less than 100% of the fair  market  value of the
stock on the date the option is granted, provided,  however, the option price on
an  incentive  stock option shall not be less than 110% of the fair market value
of such stock on the date the option is granted  to an  individual  then  owning
(after the  application  of the family  and other  attribution  rules of Section
425(d) of the Code),  more than 10% of the total  combined  voting  power of all
classes of stock of the Company or any  subsidiary  or parent  corporation.  For
purposes of the Plan,  "fair market value" at any date shall be (i) the reported
closing price of such stock on the New York Stock Exchange or other  established
stock  exchange or the National  Market  System of NASDAQ on such date, or if no
sale of such stock shall have been made on that date, on the  preceding  date on
which  there  was  such a sale,  (ii) if such  stock is not  then  listed  on an
exchange or the National Market System of NASDAQ, the average of the closing bid
and asked  prices  per share for such  stock in the  over-the-counter  market as
quoted on  NASDAQ on such  date,  or (iii) if such  stock is not then  listed or
quoted as referenced  above, an amount  determined in good faith by the Board or
the committee.

     (c) The  purchase  price  for any  share  purchased  pursuant  to an option
previously  granted or to be  granted  under the Plan shall be paid in full upon
exercise of the option by any of the  following  methods:  (i) by cash,  (ii) by
check, or (iii) unless provided otherwise in the particular grant agreement,  by
transferring  to the Company shares of stock of the Company at their fair market
value as of the date of exercise of the option as determined in accordance  with
paragraph 5(b). The Company may arrange for or
<PAGE>
cooperate  in  permitting  cashless  exercise  procedures  and  may  extend  and
maintain,  or arrange for the extension or maintenance of, credit to an optionee
to finance  the  optionee's  purchase  of shares  pursuant  to the  exercise  of
options, on such terms as may be approved by the Board or the committee, subject
to applicable  regulations of the Federal Reserve Board and any other applicable
laws or regulations in effect at the time such credit is extended.

     (d) No option shall be exercisable  after the expiration of the earliest of
(i) in the case of an incentive stock option, ten years from the date the option
is granted  or, five years from the date the option is granted in the case of an
incentive stock option granted to an individual owning (after the application of
the family  and other  attribution  rules of Section  425(d) of the Code) at the
time such option was granted,  more than 10% of the total combined  voting power
of all classes of stock of the Company or any subsidiary or parent  corporation,
(ii) in the case of a nonqualified option, eleven years from the date the option
is granted,  (iii) in the case of an incentive stock option,  three months after
the  date  the  optionee's  employment  with the  Company  and its  subsidiaries
terminates,  if  such  termination  is  for  any  reason  other  than  permanent
disability,  death or cause,  (iv) the date the optionee's  employment  with the
Company  and its  subsidiaries  terminates,  if  termination  is for  cause,  as
determined  by the Board or  committee in its sole  discretion,  or (v) one year
after the date the optionee's  employment or  directorship  with the Company and
its  subsidiaries  terminates  if such  termination  is the  result  of death or
permanent  disability;  provided,  however,  that the option  agreement  for any
option may  provide  for  shorter  periods in each of the  foregoing  instances.
Options to  directors  or  consultants  who are not  employees  may be exercised
within such time period as the Board or  committee  determines  after the person
ceases to be a director or consultant.  The term  "permanent  disability"  shall
mean a disability of the type defined in Section 105(d)(4) of the Code.

     (e) No option  shall be  exercisable  during the lifetime of an optionee by
any person other than the optionee,  his guardian or legal  representative.  The
Board or  committee  shall have the power to set the time or times  within which
each option shall be exercisable and to accelerate the time or times of exercise
which  conditions shall be set forth  specifically in each individual  Letter of
Grant.  To the extent that an  optionee  has the right to exercise an option and
purchase  shares  pursuant to the Letter of Grant,  the option may be  exercised
from time to time by written notice to the Company  stating the number of shares
being  purchased and  accompanied  by payment in full of the purchase  price for
such shares.

     (f) No option shall be transferable  by an optionee  otherwise than by will
or the laws of descent and distribution.

     (g) The aggregate  fair market value  (determined as of the time the option
is granted) of the stock with respect to which
<PAGE>
incentive  stock  options are  exercisable  for the first time by such  optionee
during any calendar year (under all such plans of the Company and any subsidiary
corporation) shall not exceed $100,000.

     (h)  Unless the  shares of stock  covered by the Plan have been  registered
with the  Securities  and  Exchange  Commission  pursuant  to  Section  5 of the
Securities  Act of 1933, as amended,  each optionee shall by accepting an option
represent  and agree,  for  himself and his  transferees  by will or the laws of
descent and  distribution,  that all shares of stock purchased upon the exercise
of  the  option  will  be  acquired  for   investment  and  not  for  resale  or
distribution.  If the  shares of stock  under the Plan have not been  registered
with the Securities and Exchange Commission as described above, the optionee, at
the time of exercise shall  represent that he is qualified to exercise an option
as required by the securities  laws. If an optionee is not qualified to purchase
securities,  the  Company  shall  not be  required  to issue  shares  to such an
optionee. Upon such exercise of any portion of an option, the person entitled to
exercise  the  same  shall  upon  request  of  the  Company   furnish   evidence
satisfactory to the Company  (including a written and signed  representation) to
the  effect  that the  shares  of stock  are being  acquired  in good  faith for
investment and not for resale or distribution.  Furthermore,  the Company may if
it deems appropriate affix a legend to certificates representing shares of stock
purchased  upon  exercise of options  indicating  that such shares have not been
registered  with the  Securities  and Exchange  Commission and may so notify its
transfer agent.

     (i) An  optionee  or  transferee  of an  option  shall  have no rights as a
shareholder  of the  Company  with  respect to any shares  covered by any option
until  the date of the  issuance  of a share  certificate  for such  shares.  No
adjustment shall be made for dividends (ordinary or extraordinary, whether cash,
securities  or other  property) or  distributions  or other rights for which the
record  date is prior to the date such share  certificate  is issued,  except as
provided  for in paragraph  5(k).  Nothing in the Plan or in any Letter of Grant
shall  confer  upon any  employee  any right to  continue  in the  employ of the
Company or any of its  subsidiaries,  or  interfere in any way with any right of
the Company or any  subsidiary  to terminate  the  optionee's  employment at any
time.

     (j) The Company shall not be required to issue  fractional  shares upon the
exercise of an option.

     (k) If the  outstanding  shares of stock of the class then  subject to this
Plan  are  increased  or  decreased,  or are  changed  into or  exchanged  for a
different  number or kind of shares  or  securities,  as a result of one or more
reorganizations,  recapitalizations,  stock splits,  reverse stock splits, stock
dividends  and the like,  appropriate  adjustments  shall be made in the  number
and/or type of shares or securities  for which options may thereafter be granted
under  this Plan and for which  options  then  outstanding  under  this Plan may
thereafter be exercised.  Any such  adjustments in outstanding  options shall be
made without
<PAGE>
changing the aggregate exercise price applicable to the unexercised  portions of
such options.

     (l) Subject to the terms and conditions  and within the  limitations of the
Plan,  the Board or committee may modify,  extend or renew  outstanding  options
granted  under the Plan,  accept the  surrender of  outstanding  options (to the
extent not theretofore exercised),  and authorize the granting of new options in
substitutions   therefor   (to   the   extent   not   theretofore    exercised).
Notwithstanding the foregoing,  no modification of an option shall,  without the
consent of the  optionee,  alter or impair any rights of the optionee  under the
option.  Notwithstanding anything herein to the contrary, the Board or committee
may not reprice  outstanding  options nor may the Board or the committee  accept
the surrender of outstanding  options in conjunction with a grant of new options
in  substitution  therefor  at an  exercise  price  lower  than the price of the
options surrendered, and this sentence may not be amended without consent of the
Board and ratification by the Company's stockholders.

     (m) Each option may contain such other terms, provisions and conditions not
inconsistent with the Plan as may be determined by the Board or committee,  such
as without limitation discretionary performance standards, mandatory purchase of
shares on the open market on a pro rata basis or tax withholding provisions.

6.   Termination or Amendment of the Plan
     ------------------------------------

     The  Board or  committee  may at any time  terminate  or  amend  the  Plan;
provided that,  without  approval of the shareholders of the Company there shall
be, except by operation of the provisions of paragraph  5(k), no increase in the
total  number  of  shares  covered  by the  Plan,  and no change in the class of
persons  eligible to receive options under the Plan; and provided  further that,
without the consent of the optionee,  no amendment or termination  may adversely
affect any outstanding option or any unexercised portion thereof.

7.   Shareholder Approval and Term of the Plan
     -----------------------------------------

     The Plan shall be effective as of October 1987,  subject to ratification by
the shareholders of the Company.  Unless sooner  terminated by the Board, in its
sole discretion, the Plan will expire in October 1997.

8.   Acceleration of Exercisability and Vesting Under Certain
     --------------------------------------------------------
     Circumstances.
     -------------

     Notwithstanding  any  provision  in the Plan to the  contrary,  unless  the
particular letter of grant provides otherwise,  75% of the unvested options held
by each optionee  shall  automatically  become  exercisable  and vested upon the
occurrence,  before  the  expiration  or  termination  of  such  option,  of the
acquisition  by a  third  party  of  100% of the  Company's  outstanding  equity
securities, a merger in which the Company is not the surviving corporation, a
<PAGE>
sale  of  all  or  substantially  all  of the  Company's  assets,  or a  similar
reorganization of the Company (collectively, "Accelerating Events"). The balance
of each optionee's unvested options will vest and become exercisable in 12 equal
monthly  installments  following the occurrence of any  Accelerating  Event,  or
according to the optionee's  individual  vesting schedule as applicable  without
regard to this  Section  8,  whichever  is  earlier.  If an  optionee  loses his
position with the Company as a result of or  subsequent to the  occurrence of an
Accelerating  Event, 100% of the unexpired and unvested options granted pursuant
to this Plan (other  than  options  granted  pursuant to Section 9 of this Plan)
held by such  optionee  shall  automatically  become  vested  upon  such loss of
position.  This  Section 8 shall apply to options  granted  before and after the
effective date of this Section 8.

9.   Automatic Grants to Certain Directors.
     -------------------------------------

     (a)  Effective  May 21,  1993,  each  Compensation  Committee  Member shall
automatically  be  granted  options to acquire  36,000  shares of the  Company's
Common Stock.

     (b)  Effective  upon  the  date  of the  Annual  Meeting  of the  Company's
stockholders  held in 1996, (i) each  Compensation  Committee  Member elected on
that date for a three-year  term as a member of the Company's Board of Directors
shall automatically be granted options to acquire 36,000 shares of the Company's
Common Stock; (ii) each  Compensation  Committee Member then serving as a member
of the class of  directors  whose  terms  expire at the 1997  Annual  Meeting of
Stockholders shall  automatically be granted options to acquire 12,000 shares of
the Company's  Common Stock; and (iii) each  Compensation  Committee Member then
serving as a member of the class of  directors  whose  terms  expire at the 1998
Annual Meeting of Stockholders shall automatically be granted options to acquire
24,000 shares of the Company's Common Stock.

     (c) Thereafter,  each Compensation  Committee Member shall automatically be
granted  options for 36,000  shares of the  Company's  Common Stock on each date
upon  which  such  person is  elected  to a  three-year  term as a member of the
Company's Board of Directors.

     (d) Any person who becomes a Compensation  Committee  Member on the date of
such  person's  election to the Board of  Directors  shall,  effective  upon the
initial  date of such  person's  membership  on the Board of  Directors  and the
Compensation Committee thereof, automatically be granted options for a number of
shares  determined  by  multiplying  1,500 by the  number of  calendar  quarters
remaining  prior to the  scheduled  expiration  of the term of such  person as a
member of the Company's Board of Directors.

     (e) Options  granted  pursuant to this Section 9 shall have a ten-year term
and shall vest at the rate of 3,000 shares at the end of each three-month period
following the effective date of grant, provided that options can vest only while
the optionee remains a member of the Company's Board of Directors.  The exercise
price of
<PAGE>
options granted pursuant to this Section 9 shall be the fair market value of the
Company's Common Stock on the date of grant.

     (f) This  Section 9 shall not be  amended  more than once  every six months
other than to comport  with changes in the  Internal  Revenue  Code of 1986,  as
amended, the Employee Retirement Income Security Act, or the rules thereunder.