CO-PROMOTION AGREEMENT

                                     BETWEEN

                                   ORTHOLOGIC

                                       AND

                          SANOFI PHARMACEUTICALS, INC.
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                                TABLE OF CONTENTS


                                                                            PAGE
                                                                            ----

ARTICLE 1 - Definitions and Interpretation ................................    1
ARTICLE II - Committee ....................................................    8
ARTICLE III - Term and Termination ........................................    9
ARTICLE IV - Disclaimer of Warranties Limitation of Liability .............   11
ARTICLE V - Co-promotional Activities .....................................   12
ARTICLE VI - Compensation / Obligations ...................................   16
ARTICLE VII - Reports and Records .........................................   18
ARTICLE VIII - Trademark and Corporate Name ...............................   19
ARTICLE IX - Food and Drug Administration Compliance and Discontinuance
of Product ................................................................   20
ARTICLE X - Indemnification ...............................................   21
ARTICLE XI - Insurance ....................................................   23
ARTICLE XII - Confidential Information ....................................   23
ARTICLE XIII - Relationship of the Parties ................................   25
ARTICLE XIV - Termination for Breach or Default ...........................   25
ARTICLE XV - Property of the Parties ......................................   26
ARTICLE XVI - Injunctive Relief ...........................................   26
ARTICLE XVII - General Representations and Warranties .....................   26
ARTICLE XVIII - Force Majeure .............................................   28
ARTICLE XIX - Successors and Assignment ...................................   29
ARTICLE XX - Entire Agreement - Modifications .............................   29
ARTICLE XXI - Compliance with Law .........................................   29
ARTICLE XXII - Severability ...............................................   30
ARTICLE XXIII - Dispute Resolution and Governing Law ......................   30
ARTICLE XXIV - Waiver .....................................................   31
ARTICLE XXV - Survivability ...............................................   31
ARTICLE XXVI - Notices ....................................................   32
ARTICLE XXVII - Heading ...................................................   33
ARTICLE XXVIII- Language ..................................................   33
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ARTICLE XXIX - Exhibits and Schedules .....................................   33
ARTICLE XXX - No Third Party Rights .......................................   33
ARTICLE XXXI - Counterparts ...............................................   33
ARTICLE XXXII - Currency ..................................................   34
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                             CO-PROMOTION AGREEMENT

This exclusive  co-promotion  agreement (this "Agreement"),  is made and entered
into as of the 23rd day of June,  1997 (the  "Effective  Date")  between  SANOFI
PHARMACEUTICALS,  INC.,  a Delaware  corporation,  with its  principal  place of
business located at 90 Park Avenue, New York, New York 10016-1389 ("Sanofi") and
ORTHOLOGIC CORP., a Delaware  corporation,  with its principal place of business
located at 2850 South 36th Street, Phoenix, Arizona 85034 ("OrthoLogic").

                                   WITNESSETH:
                                   -----------

WHEREAS,  Sanofi  owns  certain  rights in and to the Product as per the License
Agreement;

WHEREAS, OrthoLogic has expertise in promoting device products; and

WHEREAS,  Sanofi and OrthoLogic desire to enter into this Agreement with respect
to OrthoLogic's promotion of the Product to the Target Audience.

NOW,  THEREFORE,  in  consideration  of  the  mutual  covenants  and  agreements
contained herein, Sanofi and OrthoLogic hereby agree as follows:

                                    ARTICLE I
                                    ---------
                         DEFINITIONS AND INTERPRETATION

         1.1  Definitions - The following  terms, as used herein (unless a clear
contrary interpretation appears), have the following meanings:

         "Affiliate" means (i) with respect to (a) Sanofi; (b) Sanofi, a societe
anonyme  organized  under the laws of  France,  and ( c) any  successor  thereto
("Sanofi  France") and any Person  directly or  indirectly  controlled by Sanofi
France and (ii) with  respect to  OrthoLogic  or any other  Person,  any Person,
directly or indirectly,  controlled by, controlling or under common control with
such Person.  For the purposes of this definition,  "control"  (including,  with
correlative  meaning,  the terms  "controlling" and "controlled") shall mean the
possession, directly or
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indirectly,  of the power to direct or cause the direction of the management and
policies of such Person, whether through the ownership of voting securities,  by
contract or otherwise.

         "Agreement" has the meaning specified in the preliminary statements.

         "Attributable Unit" means the Units, net of returns, that are purchased
by a Third Party and shipped to OrthoLogic's Target Audience.

         "Claims" has the meaning specified in Article 1 0.1.1

         "Committee" means the joint committee composed of representatives  from
OrthoLogic and Sanofi established pursuant to Article 2.1 hereof.

         "Competitive  Product"  means  drugs or devices  that  include the same
indications as the Product.

         "Complaint" has the meaning specified in Article 9.3.l.

         "Confidential Information" has the meaning specified in Article 12.1.

         "Contract Year" means each  sequential  twelve (12) month period during
the Term with the first such period commencing on January 1, 1998.

         "Customers"  means Persons involved in the distribution and utilization
of the  Product,  including,  but not limited to,  wholesalers,  physicians  and
managed care organizations.

         "Detail"  or  "Detailing"  means a personal  contact by a  professional
sales  representative with a health care practitioner,  health care institution,
their  employees  or agents  for the  purpose  of  providing  information  on or
stimulating  interest in the use of purchase  of  pharmaceutical  or health care
products.

         "Effective Date" means the date the last Party executes this Agreement.
                                       2
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         "FDA" means the United States Food and Drug Administration or any other
government body or agency that succeeds it.

         "FDA Approval"  means receipt of all approvals from the FDA required to
market the Product in the Territory.

         "Fidia" means Fidia S.p.A., an Italian  corporation in  amministrazione
straordinaria  under the laws of Italy,  with its  principal  place of  business
located at Via Ponte della Fabbrica 3/A, Abano Terme (PD), Italy.

         "GSI" has the meaning specified in Schedule B.

         "Indemnified Party" has the meaning specified in Article 10.3.

         "Indemnifying Party" has the meaning specified in Article 10.3.

         "License Agreement" has the meaning specified in Article 3.2(e).

         "Licensed Use" means the use of the Product in the Territory.

         "Marketing Plan" has the meaning specified in Article 2.1.

         "Minimum  Promotional  Amount"  has the  meaning  specified  in Article
5.3.4.

         "Minimum Unit Sales Amount" has the meaning specified in Article 5.3.5.

         "Net Sales"  means the gross sales  invoiced  for the Product by Sanofi
and its Affiliates to Third Parties less deductions:. (i) distribution, quantity
and/or cash discounts,  allowances and/or Rebates actually allowed or given, and
transportation  and insurance costs for shipments to customers;  (ii) credits or
refunds  actually  allowed for returned Units,  and (iii) sales and other excise
taxes directly  related to that sale, to the extent that such items are included
in the gross invoice price (but not including taxes assessed  against the income
derived from such sale).  Sales between or among Sanofi and its Affiliates shall
be excluded from the  computation 
                                       3
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of Net Sales  except  where such  Affiliates  are end users but Net Sales  shall
include the subsequent  final sales to Third Parties by such  Affiliate.  In the
event of a Recall, Net Sales will be adjusted mutually between the Parties.

         "Net Selling  Price" or "NSP" for any  calendar  period means Net Sales
for that period divided by the number of Units,  net of returns,  sold by Sanofi
and its Affiliates during the same period.

         "Nonsalable Returns" means Returns that cannot be resold.

         "OCU" means OrthoLogic's  compensation per Unit, net of returns,  which
is  calculated  as the Net Selling  Price minus the Trade  Transfer  Price minus
payments  made to  Sanofi  pursuant  to  Articles  6.2.2  (i)  and  (ii) of this
Agreement.

         "OrthoLogic" has the meaning specified in the preliminary statements.

         "OrthoLogic's  Annual  Unit  Forecast"  has the  meaning  specified  in
Article 5.3.2.

         ".Party" means Sanofi or OrthoLogic and, when used in the plural, shall
mean OrthoLogic and Sanofi.

         "Payment  Period"  means the period  commencing on the first day of the
launch  of the  Product  and  ending  on the last day of each of the  succeeding
calendar quarters during the Term.

         "Person" means any natural person,  corporation,  firm, business trust,
joint venture, association, organization, company, partnership or other business
entity, or any government or any agency or political subdivision thereof.

         "Product"   means   Hyalgane   hyaluronic   acid   sodium  salt  as  an
intra-articular device or drug for human use for the treatment of arthropathies,
the  manufacturing   specifications  of  which  are  described  in  the  License
Agreement.
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         "Providing Party" has the meaning specified in Article 12.l..

         "Rebate" means the return of a payment or a charge back to the customer
based on certain  criteria set forth in the contract that the customer must meet
for the contracted  products and/or any Federal or state statutory  requirements
(i.e.,  market share,  formulary  acceptance,  dollar volume or growth over some
average).

         "Recall" shall mean any action  (including  replacement  and repair) to
correct  misbranded,  adulterated or unmarketable  Product,  which is either (i)
specifically  mandated by the FDA or other regulatory  authorities;  (ii) agreed
upon by Sanofi and Fidia, or (iii)  determined by either Sanofi or Fidia in good
faith, after consultation with the other party, for reasons of safety,  efficacy
or other material Product defect materially affecting Product marketability.

         "Receiving Party" has the meaning specified in Article 12.l.

         "Renewal Term" has the meaning specified in Article 3.1.

         "Residual Period" has the meaning specified in Article 3.1 (a).

         "Returns"  means the Product that is returned and  attributable  to the
Target Audience.

         "Sample  Product"  means a Unit  which  is used to  promote  the use of
"Hyalgan"  at no cost to the Target  Audience  and which is provided by Fidia in
reasonable quantities and identified with appropriate wording.

         "Sanofi" has the meaning specified in the preliminary statements.

         "Sanofi Group" has the meaning specified in Article 10.2.l.

         "Shared  Accounts"  means  accounts  which  are  involving   orthopedic
surgeons and other types of physicians who prescribe the Product, including, but
not   limited   to,   health   maintenance   organizations,   group   purchasing
organizations, co-operative purchasing groups and multi- disciplined practices.
                                       5
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         "Target  Audience"  means  orthopedic  surgeons,  who graduated from an
accredited program, as well as accounts which are deemed to be "Shared Accounts"
in the Territory, which shall use the Product for the Licensed Use.

         "Term" has the meaning specified in Article 3. 1.

         "Territory"  means the USA, which includes the 50 states,  the District
of Columbia and USA military bases around the world.

         "Third  Party"  means any Person who or which is neither a Party nor an
Affiliate of a Party.

         "Trademark"  means the mark "Hyalgan"  United States  Registration  No.
1,420,772  (12/16/86) owned by Fidia, and any other marks owned or controlled by
Fidia and used by Sanofi pursuant to the License Agreement.

         "Trade  Transfer  Price" means an amount of 30% of Net Selling Price as
defined in the License Agreement,  provided, however, that during the first four
(4) years of the term of the License  Agreement,  the Trade Transfer Price shall
not be less than Sixteen  Dollars  ($16.00) per Unit (the "Floor") nor more than
Eighteen Dollars ($18.00) per Unit (the "Cap"). On or before September 30, 2001,
the Floor  and the Cap shall be  negotiated  in good  faith by Sanofi  and Fidia
based upon the  prevailing  economic  and  competitive  dynamics  affecting  the
marketplace.   If  Sanofi  and  Fidia  do  not  reach  agreement  prior  to  the
commencement  of the next calendar  year,  the Floor and the Cap agreed upon for
the previous calendar year will be adjusted by an amount equal to the percentage
increase  or  decrease  in the all  items  index of the US  Department  of Labor
(Bureau of Labor  Statistics)  Consumer Price Index ("CPI") for the USA from the
base month of August 1999, provided,  however,  that at no time shall the annual
increase or decrease  exceed 4%. During the remainder of the term of the License
Agreement,  the new Floor and the new Cap will be annually adjusted by an amount
equal to the  percentage  increase or decrease in the CPI from the base month of
August 2001,  provided,  however,  that at no time shall the annual  increase or
decrease exceed four percent (4%), nor 
                                       6
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shall the Trade Transfer Price exceed 30% of Net Selling Price as defined in the
License Agreement.

         "Unit" means one (1) 2ml-vial or pre-filled  syringe containing 20mg of
the Product,  as  requested by Sanofi in its purchase  order of the Product plus
package insert.

         "USA" means the United States of America.

         "Wholesaler   Acquisition   Cost"   means   the   published   price   a
wholesaler/distributor will pay Sanofi for the Product.

         1.2  Interpretation - In  this  Agreement,  unless  a  clear   contrary
              intention appears:

                  (i)      the singular  number  includes the plural  number and
                           vice versa;

                  (ii)     reference  to any  person  or  entity  includes  such
                           person's or entity's successors and assigns;

                  (iii)    reference to this  Agreement  means such agreement as
                           amended,  modified or supplemented  from time to time
                           in accordance with the terms hereof;

                  (iv)     reference  to  any  law,  rule,  regulation,   order,
                           decree, requirement,  policy, guideline, directive or
                           interpretation means as amended, modified,  codified,
                           replaced  or  reenacted  in whole or in part,  and in
                           effect on the determination date, including rules and
                           regulations promulgated thereunder;

                  (v)      "hereundee",  "hereof", "hereto" and words of similar
                           import shall be deemed  references to this  Agreement
                           as a whole and not to any particular Article, Section
                           or other provision hereof;

                  (vi)     "including" (and with correlative  meaning "include")
                           means  including  without  limiting the generality of
                           any description preceding such term; and

                  (vii)    relative to the  determination of any period of time,
                           "from" means "from and  including  to" and "to" means
                           "to but excluding".
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                                   ARTICLE 11
                                   ----------
                                    COMMITTEE

         2.1 The Parties with FIDIA shall establish the Committee  consisting of
a mutually  agreed number of employees of Sanofi,  OrthoLogic  and FIDIA,  which
shall meet periodically, as the Parties and FIDIA agree, but not less than every
quarter.  For  purposes of the  Committee,  FIDIA's  role will be  advisory  and
observational.  The  Parties  and FIDIA  will meet to direct the  marketing  and
promotion of the Product to the Target Audience,  including,  but not limited to
the following:  (a) to review and coordinate  marketing and sales plans; (b) set
sales  forecasts;  (c )  coordinate  development  and  allocation  by  market of
promotional materials; (d) discuss Detailing efforts for OrthoLogic; (e) discuss
research and development  activities of the Product; (f) report on the status of
clinical  studies;  (g) establish  sampling and marketing  unit  strategies  and
procedures;  (h)  establish  and  update  Target  Audience  account  lists;  (i)
establish  and  periodically  review  procedures  for  handling  inquires to the
Product,  including but not limited to, medical,  product  inquires,  technical,
product  complaints,  safety issues and adverse reactions,  and adverse events ;
and (j) to  discuss  any  other  issues or topics  concerning  promotion  of the
Product.  In  particular,  the  Committee  shall  determine the initial plan for
OrthoLogic's  marketing and promotion of the Product to the Target Audience (the
"Marketing Plan"). In addition,  with respect to Shared Accounts, the Committee,
on a quarterly basis, will approve, for purposes of Compensation,  a percentage,
which will vary from time to time based on a joint written  presentation  of the
Parties  from an  account  by  account  analysis  performed  by Sanofi  Division
Managers and  OrthoLogic's  Area Vice  Presidents,  to be used when  calculating
Attributable Units allocated from the Shared Accounts to OrthoLogic.  Each Party
shall have an equal  opportunity to express its views regarding  decisions to be
taken by the  Committee.  In the event of a  difference  of  opinion  within the
Committee regarding a decision, either Party shall be afforded an opportunity to
convey its views to the senior  executives of the other Party,  but Sanofi shall
have the ultimate decisional authority.
                                       8
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                                   ARTICLE III
                                   -----------
                              TERM AND TERMINATION

         3.1 Term.  This Agreement shall continue in force for an initial period
commencing as of the Effective Date and, unless sooner terminated as provided in
this Agreement,  shall terminate on December 31, 2002 unless renewed pursuant to
Article 3.1 (b) (the "Term"). Thereafter, Sanofi may, at its sole option, invoke
one of the following:

                  (a) at the expiration of the Term or any Renewal Term,  Sanofi
shall pay to  OrthoLogic an amount equal to 50% of the gross  compensation  paid
OrthoLogic  pursuant to this Agreement for the last calendar year, which will be
paid on a quarterly basis during the next calendar year (the "Residual Period");
or

                  (b) Sanofi shall renew this Agreement under the same terms and
conditions  hereunder  for an  additional  one (1)  year  period  (the  "Renewal
Term")and  the Minimum Sales Unit  requirement  for that year shall be at 50% of
the last calendar year's Attributable Units; or

                  (c) Sanofi shall enter into a "revised" co-promotion agreement
with  OrthoLogic on terms and  conditions  established by the Committee that are
mutually beneficial to the Parties.

         Sanofi shall notify  OrthoLogic  one hundred twenty (120) days prior to
the  expiration of the Term as to which option in Article 3.1 above Sanofi shall
exercise.

         3.2 Termination.  Notwithstanding  the provisions of Article 3.1 above,
this Agreement may be terminated in accordance with the following provisions:

                  (a) Either Party hereto may  terminate  this  Agreement at any
time upon  written  notice to the other  Party if the other  Party:  (i) files a
petition  of any type as to its  bankruptcy  (which  petition  is not  dismissed
within ninety (90) days); (ii) is declared  bankrupt;  (iii) becomes  insolvent;
(iv) makes an assignment for the benefit of creditors; (v) goes into liquidation
or receivership; or (vi) otherwise loses legal control of its business;
                                       9
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                  (b) Either Party may  terminate  this  Agreement  upon written
notice to the other Party if Minimum Unit Sales as described in Article 5.3.5 of
this Agreement are not met.

                  (c) Either Party may  terminate  this  Agreement  upon written
notice to the other Party if an event of Force  Majeure  continues for more than
six (6) months as provided in Article XVIII below;

                  (d) Either Party may  terminate  this  Agreement  upon written
notice to the other Party if the other Party is in material breach or default of
this Agreement and not cured as provided in Article XIV of this Agreement;

                  (e) Sanofi may terminate this Agreement  immediately  upon the
termination of the Exclusive License and Distribution Agreement made and entered
into on the same date as the Effective Date by and between Fidia and Sanofi (the
"License Agreement");

                  (f) Sanofi may terminate  this Agreement upon thirty (30) days
written  notice  to  OrthoLogic  in the  event  that  conditions  are not met as
described in Article 5.3.4 and 5.3.5 of this Agreement

         3.3 Non-Compete. During the Term and for a period of one (1) year after
the early  termination  or expiration  of the Term,  or any renewal  thereafter,
OrthoLogic  shall not market,  promote,  distribute or sell in the Territory any
Competitive Product.

         3.4 Effect of  Termination.  Termination,  expiration,  cancellation or
abandonment  of this  Agreement  through any means and for any reason  shall not
relieve  the  Parties of any  obligation  accruing  prior  thereto  and shall be
without prejudice to the rights and remedies of either Party with respect to any
antecedent breach of any of the provisions of this Agreement

         3.5 Surviving  Obligations.  Notwithstanding  any  termination  of this
Agreement, the indemnification provisions of Article X of this Agreement and the
confidentiality provisions of Article XII of this Agreement shall survive.
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                                   ARTICLE IV
                                   ----------
                            DISCLAIMER OF WARRANTIES
                             LIMITATION OF LIABILITY

         4.1 Warranty and Disclaimers and Limitations.

                  4.1.1 Sanofi  warrants and  represents  that all quantities of
the Product shall meet all specifications and quality standards described in the
License Agreement,  as may be amended from time to time by Sanofi and Fidia, and
that Sanofi shall adhere to all  applicable  governmental  laws and  regulations
relating to the distribution, sale and shipment of the Product in the Territory.
Sanofi further  warrants that all necessary  approvals from government  agencies
relating to the sale of the Product hereunder have been obtained.

                  4.1.2  THE  LIMITED  WARRANTY  PROVIDED  IN  ARTICLE  4.1.1 IS
SANOFI'S  SOLE  WARRANTY  WITH RESPECT TO THE PRODUCT AND IS MADE IN LIEU OF ANY
AND ALL OTHER WARRANTIES,  EXPRESS OR IMPLIED,  INCLUDING WARRANTIES OF QUALITY,
PERFORMANCE, MERCHANTABILITY AND FITNESS FOR A PARTICULAR USE OR PURPOSE. SANOFI
MAKES NO OTHER  REPRESENTATIONS  OR  WARRANTIES  OF ANY KIND WITH RESPECT TO THE
PRODUCT.

         4.2  Limitation  of  Liability.  EXCEPT  WITH  RESPECT  TO  CLAIMS  FOR
INDEMNIFICATION  UNDER  ARTICLE X OF THIS  AGREEMENT,  IN NO EVENT SHALL  EITHER
PARTY BE LIABLE FOR ANY INDIRECT,  INCIDENTAL, SPECIAL OR CONSEQUENTIAL DAMAGES,
INCLUDING LOSS OR PROFITS,  REVENUE,  DATA OR USE,  INCURRED BY THE OTHER PARTY,
WHETHER IN CONTRACT OR TORT OR BASED ON A WARRANTY,  EVEN IF THE OTHER PARTY HAS
BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
                                       11
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                                    ARTICLE V
                                    ---------
                            CO-PROMOTIONAL ACTIVITIES

         5.1  Appointment.  Sanofi hereby  appoints  OrthoLogic as its exclusive
co-promotion  marketing agent for sales of the Product to the Target Audience as
specified  in Section  3.3.  1.  OrthoLogic  and Sanofi  shall use  commercially
reasonable  efforts to simultaneously  (i) conduct the training for each Party's
respective sales organization and (ii) commence  Detailing.  OrthoLogic will not
appoint  sub-agents  without  Sanofi's  prior  written  approval,   except  that
OrthoLogic is permitted to utilize independent contractors equal to 10% of their
sales force at any one time during the Term.

         5.2  Publicity.  Neither  Party shall issue any press release or public
announcement  or otherwise  divulge the existence of this Agreement or its terms
without the prior written consent of the other Party except as and to the extent
that  such  Party  shall  be  obligated  by law,  rules  or  regulations  of any
governmental  or regulatory  body.  Notwithstanding  the foregoing,  the Parties
hereto agree to prepare a mutually  agreeable  press  release for  dissemination
subsequent to the execution hereof.

         5.3 OrthoLogic's Obligations.

                  5.3.1  Marketing  and  Forecasts.  OrthoLogic  shall  use best
efforts to market and  promote  the  Product  to the Target  Audience  and shall
conduct face to face Detailing  with a minimum of 50% of the Target  Audience at
least six (6) times per calendar  year during the Term and shall afford Sanofi a
reasonable  opportunity  to verify  the level of such  promotional  activity  by
providing, among other things,  OrthoLogic's internal promotional sales activity
reports. OrthoLogic shall maintain an adequate and competent marketing and sales
organization  for  Detailing  to the Target  Audience  and agrees to promote the
Product  by  accepted   promotional   practices  and  in  accordance   with  FDA
requirements.

                  5.3.2 Annual Unit Production Forecast. OrthoLogic shall advise
Sanofi in writing on or before  the 15" day of  September  for each year of this
Agreement as to its estimated Unit requirements,  exclusive of Samples,  for the
next Contract  Year  ("OrthoLogic's  Annual Unit  Forecast").  OrthoLogic  shall
advise Sanofi as well for the Unit  requirements for 
                                       12
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the Product Samples for the following  Contract Year.  OrthoLogic's  Annual Unit
Forecast  and the  requirements  for the  Product  Samples  shall be provided by
OrthoLogic on a monthly-based  schedule.  OrthoLogic further agrees that, to the
extent its failure to achieve the Unit Sales equal to  OrthoLogic's  Annual Unit
Forecast requires Sanofi to incur additional  inventory  carrying charges,  that
these additional charges shall be borne by OrthoLogic and deducted from payments
to OrthoLogic.

                  5.3.3 Record Keeping.  OrthoLogic shall maintain  complete and
accurate records regarding its performance  hereunder for such periods as may be
required by applicable law.

                  5.3.4 Promotional Materials.  OrthoLogic shall be responsible,
at its own sole expense and cost,  for the  advertising,  promotion  and medical
education  of  the  Target  Audience,   including,   but  not  limited  to,  the
distribution  of promotional  materials  provided by Sanofi or Fidia pursuant to
Section 5.4.6 below, samples, reminder pieces, promotional materials,  seminars,
symposia, luncheons and Continuing Medical Education programs. OrthoLogic agrees
to spend at a minimum  the  amounts  specified  in Schedule A, which is attached
hereto and made part of this Agreement,  in connection with the foregoing during
the Term (the "Minimum Promotional Amount").  Notwithstanding the foregoing, the
Minimum  Promotional  Amount  shall  specifically  exclude  costs  and  expenses
associated  with  OrthoLogic's  sales force,  managed  care,  sales  support and
marketing personnel expenses. OrthoLogic shall not use any promotional materials
for the Product other than materials  provided by Sanofi or Fidia,  or except as
developed by OrthoLogic and expressly authorized in advance of use in writing by
Sanofi.  The cost of any such authorized (i.e.,  non-Sanofi)  materials shall be
borne by  OrthoLogic.  OrthoLogic  shall provide  Sanofi with copies of all head
office  correspondence  to its field sales force with regard to promotion of the
Product.

                  5.3.5 Minimum Unit Sales.  OrthoLogic agrees that Attributable
Units will be equal to or greater than 50% of , 425,000 and 450,000 for Contract
years 4 and 5 respectively (the "Minimum Unit Sales").

                  5.3.6 Performance.  Anything in this Agreement to the contrary
notwithstanding,  if any performance or activity of OrthoLogic, that is required
or  contemplated  by this  
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Agreement,  is  prevented  or impeded  by any action of Fidia or Sanofi,  by any
Force Majeure under Article XVIII of this Agreement or by any other condition or
event  beyond the  control  of  OrthoLogic,  (i) any  failure  or  shortfall  in
OrthoLogic's  performance  shall be excused for the duration of the condition or
event;  (ii) an  identical  amount  of time  shall be  added to any time  period
contemplated  by this  Agreement  which is affected by such delay;  and (iii) an
equitable adjustment shall be made with respect to any quantitative requirements
to address such factors as  reallocation  of resources by OrthoLogic and loss of
momentum in the marketplace.

         5.4 Sanofi's Obligations.

                  5.4.1 Product Supply. Sanofi shall use commercially reasonable
efforts to supply the  Product for  customer  orders on a timely  basis.  If the
Product becomes unavailable,  including a recall, during the Term for any reason
and  the  period  of  such   unavailability   extends  beyond  two  (2)  months,
OrthoLogic's  Detailing  obligation  as set forth in Article  5.3.1 herein above
shall be  suspended.  If the  period of  unavailability  extends  beyond six (6)
months,  then, either Party may upon sixty (60) days prior written notice to the
other Party  terminate this Agreement  without  further  obligation,  except for
obligations already accrued.

                  5.4.2 Sale Prices and Term.  All sales of the Product shall be
at prices and upon terms established by Sanofi in conjunction with Article 11 of
this  Agreement and Sanofi shall have the right,  in its sole  discretion,  from
time to time,  to establish,  change,  alter or amend prices and other terms and
conditions of sale, provided that it provides OrthoLogic with at least seven (7)
days written notice in advance of any such change. The Parties agree that it may
be necessary from time to time to offer customers discounts from the established
list prices.  Periodically,  Committee will establish  guidelines for the amount
and  duration of such  discounts.  OrthoLogic  shall not process  orders for the
Product,  or make price  quotations or delivery  promises without Sanofi's prior
written approval,  provided,  however,  that OrthoLogic is permitted to have its
sales force complete  Sanofi  approved order forms and submit the order forms to
Sanofi.

                  5.4.3 Processing Orders. Sanofi is responsible for the Product
distribution in the Territory.  All orders received by Sanofi are subject to its
approval and  acceptance  and Sanofi  reserves the right to accept,  reject,  in
whole or in part, any or all orders  received and/or 
                                       14
<PAGE>
accepted for the Product at any time, for any reason. If OrthoLogic receives any
orders it shall refer such to Sanofi. All the Product sales shall be invoiced by
Sanofi and shall be made in  accordance  with Sanofi's  terms and  conditions of
sale  including,  without  limitation,  prices,  credit terms,  cash  discounts,
returns and  allowances.  Sanofi shall be  responsible  for all credit risks and
collections of all payments due from customers for the shipped  Product.  Sanofi
shall  not  be  liable  to  OrthoLogic  for  any  rejection,   cancellation   or
modification  of any customer  order  referred to Sanofi by  OrthoLogic,  or any
failure to deliver the Product ordered pursuant to such order.

                  5.4.4  Delivery of the Product.  Sanofi shall ship and deliver
the Product to customers  placing orders pursuant to this Agreement.  As between
OrthoLogic  and  Sanofi,  all risk of loss or  damage to or  destruction  of the
Product shall be borne by Sanofi.

                  5.4.5  Invoicing.  Sanofi  shall  invoice the customer for the
Units ordered and shipped pursuant to such order.

                  5.4.6   Promotional   Materials.   Sanofi   shall   supply  at
OrthoLogic's  sole  expense,   reasonable  quantities  of  relevant  promotional
materials at Sanofi's cost to OrthoLogic at a fixed  location as OrthoLogic  may
specify.  If OrthoLogic  requests  shipment to more than one location,  it shall
bear the incremental expense thereof. All such promotional material shall comply
with FDA regulations.

                  5.4.7  Training.  Sanofi shall be  responsible  for  providing
reasonable quantities of existing training materials to OrthoLogic's sales force
and shall make available at times and places to be agreed reasonable  numbers of
Sanofi personnel for training purposes. Sanofi and OrthoLogic agree to, prior to
the date of the Product  launch,  a co-launch  meeting  which shall be held at a
time and place mutually  agreed to by the Parties.  Sanofi and OrthoLogic  shall
each be  responsible  for their  respective  travel and  accommodation  expenses
associated  with sending their employees and  representatives  to said co-launch
meeting.  Sanofi  and  OrthoLogic  shall  share  all other  costs  and  expenses
associated  with said  co-launch  meeting in  proportion  to the number of their
respective attendees.
                                       15
<PAGE>
                  5.4.8 Access to Account Files. Sanofi shall provide OrthoLogic
with access to account files  purchased by Sanofi from the  distributor  showing
Units  purchased by account.  If  OrthoLogic  wishes to access  information  not
purchased by Sanofi,  Sanofi will  authorize  such access,  but at  OrthoLogic's
expense.

                  5.4.9  Sampling.   Sanofi  shall  supply  to  OrthoLogic,   in
reasonable quantities, the Sample Product at a cost of 50% of the Trade Transfer
Price for the first twelve (12) months of the Term and 75% of the Trade Transfer
Price for the remainder of the Term consistent with OrthoLogic's forecast.

                                   ARTICLE VI
                                   ----------
                           COMPENSATION / OBLIGATIONS

         6.1 Compensation.

                  6.1.1 Commission to OrthoLogic:

         As compensation hereunder, OrthoLogic shall be paid by Sanofi an amount
equal to the  Attributable  Units  times OCU, as  illustrated  in the example in
Schedule  B  attached  hereto  and  made  part of this  Agreement.  OrthoLogic's
commission  payments  shall be made monthly by Sanofi  within ten (10)  business
days of receipt of  wholesaler  report and shall equal thirty five percent (35%)
of Net Sales attributable to Target Audience for that month.  Within thirty (30)
days after the end of each calendar  quarter,  the commission paid to OrthoLogic
shall be adjusted and payments made between the Parties within ten (10) business
days, based on the actual Attributable Units times OCU in that quarter.

                  6.1.2 If at any time  during  the  Term,  the GSI is less than
Seventy  Dollars  ($70.00),  the  Parties  mutually  agree to  discuss a revised
commission structure.

         6.2 Obligations.

                  6.2.1 (i) Milestone  Payments to Fidia.  OrthoLogic  agrees to
pay Fidia the below  listed  milestone  payments to be  received  by Sanofi,  on
behalf of Fidia,  in  connection  with the 
                                       16
<PAGE>
Product and which payments shall be directly passed through to Fidia.  The total
of  these  milestone  payments  will  not be  less  than  Four  Million  Dollars
($4,000,000) and shall be paid as follows:

                  (a) One Million Dollars ($1,000,000) payable upon execution of
this Agreement;

                  (b) One Million  Dollars  ($1,000,000)  payable six (6) months
after the launch of the Product by OrthoLogic;

                  (c) One  Million  Dollars payable twelve (12) months after the
launch of the Product by OrthoLogic; and.

                  (d) One Million Dollars payable eighteen (18) months after the
launch of the Product, but not later than December 31, 1998.

                           (ii) OrthoLogic  agrees to pay Sanofi a royalty which
will be passed  through  to Fidia on  combined  annual  Net Sales of Sanofi  and
OrthoLogic  in excess of $30 Million  Dollars.  The Parties  shall share the 10%
royalty  payment due Fidia in accordance  with the  respective  Party's pro rata
share of combined sales for that year. Sanofi will invoice OrthoLogic any amount
due on a quarterly basis and OrthoLogic will pay said amounts within 10 business
days. The aggregate royalty payments by OrthoLogic and Sanofi to Fidia shall not
exceed $20 Million  Dollars for the term of the License  Agreement.  At any time
during the Term, if the GSI is less than Seventy Dollars  ($70.00),  the Parties
mutually agree to discuss a lower royalty rate.

         6.2.2.   Obligations to Sanofi:

                  OrthoLogic agrees to compensate Sanofi the following:

                           (i) A Royalty  equal to 10% of the Net Selling  Price
per Unit times the Attributable Units.
                                       17
<PAGE>
                           (ii)  Overhead in the amount  equal to $6.75 per Unit
times the  Attributable  Units.  This  amount  shall be fixed for a period of 12
months from the Effective Date, thereafter the per Unit amount shall be adjusted
annually by an amount  equal to the  percentage  increase or decrease in the all
items index of the US Department of Labor (Bureau of Labor Statistics)  Consumer
Price Index  ("CPI") for the USA from the base month of August  1997,  provided,
however,  that at no time shall the annual  increase  or  decrease  exceed  four
percent (4%).

                                   ARTICLE VII
                                   -----------
                               REPORTS AND RECORDS

         7.1 Reports.  Sanofi  shall keep true and  accurate  accounts of Actual
Unit Sales and the OCU and of sums payable to OrthoLogic  hereunder.  Commencing
with the Product  launch under this  Agreement and at the end of every  calendar
quarter thereafter,  Sanofi shall deliver to OrthoLogic written sale and payment
reports  containing the  calculations by Units or other forms or reports used to
compute payments due OrthoLogic  hereunder for the Payment Period covered by the
report.  Each sale and payment report and other reports required hereunder shall
be delivered  within  forty-five (45) business days after the end of the Payment
Period which it covers.

         7.2 Examination of Records. During the Term and for a period of two (2)
years thereafter, OrthoLogic shall have the right, at its own expense, to have a
public accounting firm, to which Sanofi has no reasonable objection, examine the
relevant books and records of account of Sanofi during reasonable business hours
not more often than once each  calendar  year,  to  determine  whether  accurate
accounting and payment have been made by Sanofi hereunder. The public accounting
firm shall treat as  confidential,  and shall not  disclose to  OrthoLogic,  any
information  other than  information  which  relates to the accuracy of Sanofi's
accounting of amounts payable hereunder to OrthoLogic.
                                       18
<PAGE>
                                  ARTICLE VIII
                                  ------------
                          TRADEMARK AND CORPORATE NAME

         8.1 Use of Trademark.  OrthoLogic  shall use the Trademark  only in the
form, manner, and logotype, including identifying the Trademark by any necessary
notices of Trademark  registration,  specifically  approved by Sanofi unless the
Parties agree together, in writing, on further uses of the Trademark.

         8.2 Acknowledgment. Sanofi represents that it has certain rights to the
Trademark  and that all rights  accruing from its use shall inure to the benefit
of  Sanofi.  OrthoLogic  agrees  not to  contest  or deny  the  validity  of the
Trademark or Sanofi's  rights to the Trademark.  OrthoLogic  agrees that it will
not register  the  Trademark or any  colorable  imitation  thereof or in any way
assist a Third Party to do so.

         8.3  Rights  on   Termination.   OrthoLogic   agrees  that,   following
termination of this Agreement for any reason,  it will claim no right,  title or
interest  in,  or any  right to use the  Trademark  by  reason  of its  previous
activities under this Agreement. Immediately upon termination of this Agreement,
OrthoLogic shall cease all use of the Trademark and shall turn over to Sanofi or
destroy  all  stocks of  advertising  and  promotional  materials  which use the
Trademark.

         8.4 Use of Corporate  Names. It is the intent of the Parties to promote
sales of the Product through the use of their respective corporate names. Except
as otherwise  authorized pursuant to this Article VIII or required by Federal or
state laws and regulations,  the Parties agree that each will obtain the consent
of the other  Party  prior to using  the other  Party's  corporate  name,  which
consent shall not be unreasonably withheld.
                                       19
<PAGE>
                                   ARTICLE IX
                                   ----------
                     FOOD AND DRUG ADMINISTRATION COMPLIANCE
                          AND DISCONTINUANCE OF PRODUCT

         9.1 Relations with the FDA. Sanofi and Fidia,  as applicable,  shall be
responsible for all interactions  with the FDA regarding the Product,  including
the filing of  required  reports,  but shall keep  OrthoLogic  informed  of such
contacts insofar as they relate to the Target Audience.

         9.2  Relationship  with Customers.  OrthoLogic  shall have all inquires
relating  to the  Product  including,  but  not  limited  to,  medical,  product
inquires,  technical,  product complaints,  safety issues and adverse reactions,
adverse events routed directly to Sanofi Medical staff. OrthoLogic will develop,
in  cooperation  with Sanofi,  a system to  immediately  forward  requests  from
Customers associated with the Product to Sanofi.

         9.3 Complaints and Records.

                  9.3.1  Complaints.  The Parties  agree to report to each other
any and all  complaints  and medical  device  reports (as per FDA  regulations),
including, but not limited to, adverse reactions, product anomalies or stability
problems  relative  to or having a bearing  on the  Product  or its  performance
(collectively,  the "Complaint")  which they receive with respect to the Product
within the time required by applicable law and  regulations.  In any event,  the
Party  learning of the Complaint will notify the other Party as soon as possible
the next  working  day . For  purposes  of this  Agreement,  Sanofi  will assume
responsibility for reporting the Complaint to the FDA as provided in the License
Agreement.  In any event,  either Party shall  promptly  notify the other of any
Complaint  received by such Party in sufficient detail and in sufficient time to
allow  compliance  with  any  and all  regulatory  requirements  imposed  in the
Territory.

                  9.3.2 Records.  Each of Sanofi and OrthoLogic shall maintain a
record of all  Complaints  which they receive.  Each Party shall have the right,
upon reasonable notice and at reasonable intervals during normal business hours,
to examine the complaint  files,  medical device  reports,  and other filings or
records of the other Party, which are related to the Product.

         9.4 Recall.  In the event that Sanofi and/or Fidia  determines  that an
event,  incident or  circumstance  has occurred which may result in the need for
removal of the Product from the 
                                       20
<PAGE>
market, in whole or in part, it shall advise and consult OrthoLogic with respect
thereto. If Sanofi and/or Fidia removes the Product from the marketplace, Sanofi
and Fidia shall be  responsible  as provided  in the License  Agreement  for the
recall process  including  communications  with the FDA and shall bear all costs
and expenses of recall, including,  without limitation,  expenses or obligations
to Third  Parties,  the cost of notifying  customers and costs  associated  with
shipment of the recalled  Product from a customer to Sanofi or Fidia,  provided,
however,  that if the Recall  results from an action by  OrthoLogic,  OrthoLogic
shall promptly pay all costs and expenses of Sanofi and Fidia in connection with
the Recall.

         9.5  Record  Keeping.  Sanofi  shall  maintain  complete  and  accurate
records,  for such periods as may be required by applicable law, but in no event
less than three (3) years, of all the Product sold by it.

         9.6 Discontinuance. Sanofi or Fidia may at any time make changes in, or
discontinue the manufacture,  sale or use of the Product if safety,  regulatory,
or  manufacturing  reasons,  in Sanofi's or FIDIA's opinion warrant such action.
Sanofi shall promptly  notify  OrthoLogic of any  discontinuance  or significant
change in the Product,  giving OrthoLogic as much notice as reasonably  possible
under the  circumstances,  attempting,  in any event,  to provide  OrthoLogic at
least six (6) months' advance notice of any discontinuance.

                                    ARTICLE X
                                    ---------
                                 INDEMNIFICATION

         10.1 Indemnification by Sanofi.

                  10.1.1  Indemnification  by  Sanofi.  Except  for  any  Claims
(defined below) arising under Article 10.2,  Sanofi shall indemnify,  defend and
hold OrthoLogic harmless from and against all claims, damages, losses, costs and
expenses,  including reasonable attorney's fees (collectively,  "Claims"), which
OrthoLogic  may incur by reason of any Claims (a)  alleging  that the Product or
the  Trademark,  or  their  use  as  provided  hereunder,  violate  any  patent,
trademark,  trade secret,  know-how or other intellectual property rights of any
sort;  (b)  resulting  from an injury,  illness or death of any  Person,  to the
extent that such Claim  arises out of or results  from the  tortious  conduct or
inaction of Sanofi or its officers,  employees or agents in 
                                       21
<PAGE>
connection with the Product;  ( c) arising out of or resulting from the material
breach of  Sanofi's  representations  and  warranties  in  Article  17.2 of this
Agreement;  or (d) resulting from injury, illness or death of any person arising
out of or relating to the distribution or use of the Product.

                  10.1.2 If such Claim in Article 1 0.1.1 above  arises in whole
or in part from  OrthoLogic's  tortious conduct or inaction,  then the amount of
such Claim that Sanofi shall indemnify OrthoLogic for pursuant to Article 10.1.1
above  shall  be  reduced  by an  amount  in  proportion  to the  percentage  of
OrthoLogic's  responsibilities  for  such  Claim  as  determined  by a court  of
competent  jurisdiction in a final and  non-appealable  decision or in a binding
settlement between the Parties.

         10.2 Indemnification by OrthoLogic.

                  10.2.1  Indemnification  by OrthoLogic.  Except for any Claims
arising under Article 10.1 above,  OrthoLogic shall  indemnify,  defend and hold
Sanofi and its Affiliates and their respective  officers,  directors,  employees
and agents (the "Sanofi Group") harmless from and against all Claims,  which the
Sanofi Group may incur by reason of any Claims (a) arising out of the activities
of OrthoLogic's marketing,  promotion and sales efforts which are not authorized
by Sanofi  pursuant  to this  Agreement;  (b) any  breach by  OrthoLogic  of its
representations  or  obligations  under this  Agreement;  (c ) resulting from an
injury, illness or death of any Person, to the extent that such Claim arises out
of or  results  from the  tortious  conduct or  inaction  of  OrthoLogic  or its
officers, employees or agents in connection with the Product; or (d) arising out
of or resulting from any material  breach of  OrthoLogic's  representations  and
warranties in Article 17.2 of this Agreement above.

                  10.2.2 If such Claim in Article  10.2 above arises in whole or
in part from the Sanofi's tortious conduct or inaction,  then the amount of such
Claim that  OrthoLogic  shall indemnify the Sanofi Group for pursuant to Article
10.2.1 above shall be reduced by an amount in  proportion  to the  percentage of
Sanofi's  responsibilities  for such Claim as determined by a court of competent
jurisdiction in a final and  non-appealable  decision or in a binding settlement
between the Parties.
                                       22
<PAGE>
         10.3 Indemnification Procedure. The party seeking indemnification under
this  Article X (the  "Indemnified  Party")  shall (a) give the other party (the
"Indemnifying  Party") notice of the relevant  Claim,  (b) reasonably  cooperate
with the Indemnifying Party, at the Indemnifying Party's expense, in the defense
of such Claim,  and (c ) give the  Indemnifying  Party the sole right to control
the defense and settlement of any such Claim, except that the Indemnifying Party
shall not enter into any settlement that affects the Indemnified  Party's rights
or interest without the Indemnified Party's prior written consent, which consent
shall  not be  unreasonably  withheld.  The  Indemnified  Party  shall  have  no
authority  to  settle  any  Claim  on  behalf  of the  Indemnifying  Party.  The
Indemnified  Party may, at its option and its own  expense,  participate  in the
defense of any such claim with legal counsel of its own choice.

                                   ARTICLE XI
                                   ----------
                                    INSURANCE

         11.1 Unless  otherwise  agreed to in writing,  each Party shall, at its
own expense,  carry and maintain during the Term, with companies satisfactory to
the other, product liability insurance against losses arising out of, including,
but  not  limited  to,  its  activities  in  respect  to the  distribution,  the
marketing,  promotion and sale of the Product and all components thereof, naming
the other Party as an  additional  named insured under such policy (or policies)
of  insurance,  and  in  an  amount  of  not  less  than  Five  Million  Dollars
($5,000,000)  per  occurrence  and in the  annual  aggregate.  Such  policy  (or
policies) of insurance shall contain a Broad Form Vendors Endorsement, and shall
be written on an  occurrence  basis,  or if on a claims  made basis shall have a
retroactive date at least equal to the Effective Date. Each Party agrees that it
shall provide to the other Party within thirty (30) days of the Effective  Date,
and  from  time to time  thereafter  upon  the  Parties  reasonable  request,  a
certificate of insurance evidencing compliance with these provisions.

                                   ARTICLE XII
                                   -----------
                            CONFIDENTIAL INFORMATION

         12.1 Sanofi and  OrthoLogic  agree that all  materials,  documents  and
information provided to them or their employees or agents by the providing Party
hereto  (the  "Providing  Party")  and all  information  developed  by the Party
receiving said  materials,  documents and 
                                       23
<PAGE>
information (the "Receiving Party") exclusively  pursuant to this Agreement,  is
and shall be  considered as  confidential  information  to the  Providing  Party
(collectively,  the  "Confidential  Information")  and the sole  property of the
Providing  Party.   The  Receiving  Party  agrees  to  hold  such   Confidential
Information in strict  confidence for five (5) years after the expiration of the
Term and shall disclose the  Confidential  Information to the Receiving  Party's
respective agents,  employees,  officers and directors, and representatives only
on a  need-to-know  basis  and  only if the  foregoing  Parties  are  bound  and
obligated by the same  provisions  of  confidentiality  as used by the Receiving
Party;  provided  that (a) the  Receiving  Party will have no  obligations  with
respect to any  Confidential  Information  that is now or later becomes publicly
available  through no fault of the  Receiving  Party,  (b) the  Receiving  Party
obtains such  Confidential  Information  from a Third Party entitled to disclose
it, (c ) the Receiving  Party already has in its  possession  such  Confidential
Information  as  indicated  in its  written  records,  or (d) such  Confidential
Information is required by any law, rule, regulation, order, decision, decree or
subpoena or other  judicial,  administrative  or legal  process to be disclosed,
provided, however, that the Receiving Party gives the Providing Party sufficient
advance written notice to permit it to seek a protective  order or other similar
order with respect to such  Confidential  Information  and thereafter  discloses
only the minimum  Confidential  Information required to be disclosed in order to
comply. The Receiving Party shall include in its contracts with their respective
agents, subcontractors,  employees, officers and directors, and representatives,
confidentiality undertaking consistent with this Article XII.

         12.2 Upon the expiration of the Term, the Receiving Party will promptly
return to the Providing Party or destroy or delete,  as appropriate,  all of the
Confidential Information,  as well as all written material or electronic storage
which incorporates any Confidential Information, except that one (1) copy of the
Confidential Information may be retained for archival purposes.

         12.3  The  Receiving   Party   acknowledges   that  the  disclosure  of
Confidential   Information   without  the  Providing   Party's  express  written
permission will cause the Providing Party  irreparable  harm and that the breach
or  threatened  breach of the  nondisclosure  provisions  of Article XII of this
Agreement will entitle the Providing Party to injunctive  relief, in addition to
any other legal remedies that may be available to it.
                                       24
<PAGE>
         12.4 All obligations of confidentiality and non-disclosure set forth in
this Agreement will survive, without limitation, upon expiration of the Term.

                                  ARTICLE XIII
                                  ------------
                           RELATIONSHIP OF THE PARTIES

         13.1 Nothing  contained in this  Agreement  shall be deemed to create a
partnership or joint venture between the Parties,  and each of the Parties shall
in all matters connected herewith be independent contractors. Except as required
by this  Agreement,  which  provides for  OrthoLogic to represent  Sanofi in the
promotion  of the Product,  neither of the Parties  shall hold itself out as the
agent of the other,  nor shall either of the Parties incur any  indebtedness  or
obligation  in the name of, or which shall be binding on the other,  without the
prior written  consent of the other.  The personnel of Sanofi are paid by Sanofi
and the personnel of OrthoLogic are paid by  OrthoLogic,  and each Party assumes
full  responsibility  for its own personnel  under the laws and  regulations  of
governmental authority in the Territory. In the event that either of the Parties
violates the  provisions  of this Article XIII,  said Party shall  indemnify the
other  against any debt or obligation so incurred and shall hold the other Party
harmless therefrom.

                                   ARTICLE XIV
                                   -----------
                        TERMINATION FOR BREACH OR DEFAULT

         14.1 In addition to the provisions of Article III hereof,  either Party
may terminate  this  Agreement  for material  breach or default if such material
breach or  default  is not cured  within  ninety  (90) days  after the giving of
notice by the other  Party  specifying  such  breach or  default.  In  addition,
OrthoLogic may terminate upon the discontinuance of manufacture,  sale or use of
the Product by Sanofi.

         14.2 In  promoting  sale of the  Product,  OrthoLogic  agrees to act in
accordance with accepted  marketing  standards and FDA  requirements.  If Sanofi
believes  that  OrthoLogic  has breached or is in default of this  Agreement for
failure  to  comply  with  such  standards  or  requirements,  Sanofi  will give
OrthoLogic prompt notice thereof, and the Parties will work together to cure any
breach or default. If the breach or default is not cured within ninety (90)
                                       25
<PAGE>
days after the giving of the notice described in the preceding sentence,  Sanofi
may terminate this Agreement.

         14.3 The failure of either Party to terminate  pursuant to this Article
XIV shall not preclude said Party from thereafter terminating for any subsequent
violation whether similar or not.

                                   ARTICLE XV
                                   ----------
                             PROPERTY OF THE PARTIES

         15.1 In the event of termination of this Agreement for whatever  cause,
in addition to either Party's  obligations  hereunder,  a Party in possession of
property of the other Party shall return such property to the other Party or its
designee no later than thirty (30) days after the effective date of termination.

                                   ARTICLE XVI
                                   -----------
                                INJUNCTIVE RELIEF

         16.1 The Parties  acknowledge that the covenants in Article XII of this
Agreement in respect of the  Confidential  Information it obtains  hereunder are
unique and integral to this  Agreement  and that  monetary  damages  would be an
inadequate remedy at law in the event of a breach.  For that reason, the Parties
consent  that  such  covenants  shall be  enforceable  in a court of  equity  by
temporary or  permanent  injunction,  restraining  order or a decree of specific
performance.  The remedies provided above shall be cumulative and not exclusive,
and in addition to any other  remedies which the other Party may have under this
Agreement or applicable law.

                                  ARTICLE XVII
                                  ------------
                     GENERAL REPRESENTATIONS AND WARRANTIES

         17.1  Representation  and Warranties of OrthoLogic.  OrthoLogic  hereby
represents and warrants to Sanofi that:
                                       26
<PAGE>
                  17.1.1 it is a corporation  duly organized,  validly  existing
and  in  good  standing  under  the  laws  of  the  state  and  country  of  its
incorporation  and has the corporate  power to own its assets and properties and
to carry on its business as now being and heretofore conducted;

                  17.1.2  OrthoLogic  is duly  authorized to execute and deliver
this Agreement and to perform its obligations hereunder;

                  17.1.3  the  execution,   delivery  and  performance  of  this
Agreement  have  been  duly  authorized,  do  not  violate  its  certificate  of
incorporation, by laws or similar governing instruments or applicable law and do
not,  and with  the  passage  of time  will  not,  materially  conflict  with or
constitute a breach under any other  agreement,  judgment or instrument to which
it is a party or by which it is bound; and

                  17.1.4 it shall promote,  market, and sell the Product only in
accordance  with the term of this  Agreement  (including,  but not  limited  to,
Article  14.2 of this  Agreement  and the  Marketing  Plan),  and shall not take
customer  orders  or  distribute  the  Product  except  as  expressly   provided
hereunder.

         17.2 Representation and Warranties of Sanofi.  SANOFI hereby represents
and warrants to OrthoLogic that:

                  17.2.1 it is a corporation  duly organized,  validly  existing
and  in  good  standing  under  the  laws  of  the  state  and  country  of  its
incorporation  and has the corporate  power to own its assets and properties and
to carry on its business as now being and heretofore conducted;

                  17.2.2  Sanofi is duly  authorized to execute and deliver this
Agreement and to perform its obligations hereunder;

                  17.2.3  the  execution,  delivery,  and  performance  of  this
Agreement  have  been  duly  authorized,  do  not  violate  its  certificate  of
incorporation, by-laws or similar governing instruments or applicable law and do
not,  and with  the  passage  of time  will  not,  materially
                                       27
<PAGE>
conflict  with or  constitute  a breach under any other  agreement,  judgment or
instrument to which it is a party or by which it is bound;

                  17.2.4 to the best of Sanofi's knowledge,  the Product and the
Trademark, and their use as permitted or contemplated hereunder, do not infringe
upon  any  Third  Party  intellectual   property  rights,   including,   without
limitation, any Patent, trademark, copyright or trade secret; and

                  17.2.5 that Sanofi has taken  commercially  reasonable efforts
to secure a source of supply of the  Product  under the  License  Agreement  for
purposes of this Agreement.

         17.3 Joint Representations of the Parties. Sanofi and OrthoLogic hereby
represent and warrant the following:

                  17.3.1 that Fidia is a third party beneficiary with respect to
         payment of the  milestone  payments  described in Article 6.2.1 of this
         Agreement. The Parties agree that upon written request by Fidia, Sanofi
         shall assign to Fidia, without recourse,  all right, title and interest
         of Sanofi in said  milestone  payments,  including  any cause of action
         arising thereunder against OrthoLogic.

                                  ARTICLE XVIII
                                  -------------
                                  FORCE MAJEURE

         18.1  Neither  Party  shall be liable for any  default or delay in such
Party's  performance  if such default or delay is caused by any event beyond the
reasonable  control of such Party,  including,  but not limited to, acts of God,
fire,  explosion,  weather,  disease,  war,  insurrection,  civil strife, riots,
government action, power failure or other similar event; provided, however, that
such  performance  shall  be  excused  only to the  extent  of and  during  such
disability.  The Party so affected  will give prompt  notice of such event,  and
shall use its commercial  reasonable effort to avoid,  remove, or alleviate such
causes of  nonperformance  and shall  
                                       28
<PAGE>
continue performance hereunder with the utmost dispatch whenever such causes are
removed.

                                   ARTICLE XIX
                                   -----------
                            SUCCESSORS AND ASSIGNMENT

         19.1 This  Agreement  shall be binding upon and inure to the benefit of
the Parties hereto and their respective successors and permitted assigns. Except
as stated  herein,  neither Party shall assign any rights or  obligations  under
this  Agreement  without  the prior  written  consent  of the other  Party.  Any
purported  assignment  in violation  of the  preceding  sentence  shall be void.
Either Party may assign any rights or obligations  under this Agreement  without
the written consent of the other Party to, an Affiliate or to a purchaser of all
or substantially all of the assets to which this Agreement  relates,  whether by
merger or  acquisition.  Any permitted  assignee shall assume all obligations of
its assignor under this Agreement.

                                   ARTICLE XX
                                   ----------
                        ENTIRE AGREEMENT - MODIFICATIONS

         20.1 This Agreement sets forth and constitutes the entire agreement and
understanding between the Parties with respect to the subject matter hereof, and
supersedes  any  and  all  prior   agreements,   understandings,   promises  and
representations,  whether  written or oral,  between the Parties with respect to
the subject  matter  hereof.  This  Agreement  may not be released,  discharged,
amended or modified in any manner  except by an  instrument  in writing,  making
specific   reference  to  this   Agreement,   and  signed  duly  by   authorized
representatives of both Parties.

                                   ARTICLE XXI
                                   -----------
                               COMPLIANCE WITH LAW

         21.1 Each Party shall  comply with,  and shall not be in violation  of,
any valid applicable, federal, state or local statutes, laws, ordinances, rules,
regulations, or other governmental orders including,  without limitation,  those
of the FDA which  materially  affect the 
                                       29
<PAGE>
research,  purchase,  promotion,  sale, manufacture,  shipment,  distribution or
storage of the Product in the Territory.

                                  ARTICLE XXII
                                  ------------
                                  SEVERABILITY

         22.1 If and solely to the extent that any  provision of this  Agreement
shall be invalid or  unenforceable,  or shall render this entire Agreement to be
unenforceable  or invalid,  such offending  provision  shall be of no effect and
shall not affect the validity of the  remainder of this  Agreement or any of its
provisions;  provided,  however,  that the  Parties  shall use their  respective
reasonable  efforts to renegotiate  the offending  provisions to best accomplish
the original intentions of the Parties.

                                  ARTICLE XXIII
                                  -------------
                      DISPUTE RESOLUTION AND GOVERNING LAW

         23.1 Dispute  Resolution.  The Parties agree that any disputes  between
them  concerning  this  Agreement  shall be  resolved  by a meeting or  meetings
between  the  senior  executives  of Sanofi  and  OrthoLogic  and other  Parties
familiar with this  Agreement as determined  by such senior  executives.  In the
event  that  Sanofi and  OrthoLogic  are unable to  satisfactorily  resolve  the
dispute(s) as specified herein within 30 calendar days, then such disputes shall
be finally settled in accordance with Articles 23.2, 23.3 and 23.4.

         23.2  Governing  Law.  This  Agreement  is a New  York  contract.  This
Agreement  shall be governed by and construed in accordance with the laws of the
State of New York without reference to the choice of law doctrine of such state.

         23.3 Consent to Jurisdiction.

                  23.3.1 Any claim, suit, action or proceeding arising out of or
in any way  relating  to this  Agreement  shall  be  adjudicated  by a court  of
competent  jurisdiction in the State New York,  City of New York,  County of New
York, 
                                       30
<PAGE>
with respect to any claim,  suit, action or proceeding  arising out of or in any
way relating to this  Agreement,  and  undertake to bring any such claim,  suit,
action or proceeding against the other Party only in said courts in the State of
New York, City of New York, County of New York.

                  23.3.2 Each Party hereto  irrevocably  waives,  to the fullest
extent  permitted  by  applicable  law,  any defense or  objection it may now or
hereafter have to the laying of venue of any proceeding hereunder brought in the
courts of the State of New York or of the United  States  sitting in the Borough
of Manhattan  and any claim that any  proceeding  hereunder  brought in any such
court has been brought in an inconvenient forum.

         23.4 Jury Waiver.  Sanofi and OrthoLogic  hereby waive trial by jury in
any judicial proceeding involving,  directly or indirectly,  any matter (whether
in tort,  contract  or  otherwise)  in any way  arising  out of,  related to, or
connected with this Agreement or the relationship established hereunder.

                                  ARTICLE XXIV
                                  ------------
                                     WAIVER

         24.1 No  waiver  of any  right  under  this  Agreement  shall be deemed
effective  unless contained in writing and signed by the Party charged with such
waiver,  and no waiver of any right shall be deemed to be a waiver of any future
right or any other right arising  under this  Agreement.  All rights,  remedies,
undertakings,  obligations  and agreements  contained in this Agreement shall be
cumulative  and none of them shall be a limitation of any other  remedy,  right,
undertaking, obligation, or agreement.

                                   ARTICLE XXV
                                   -----------
                                  SURVIVABILITY

         25.1 The  provisions of this  Agreement  that are expressly or by their
sense and context intended to survive the termination of this Agreement shall do
so.
                                       31
<PAGE>
                                  ARTICLE XXVI
                                  ------------
                                     NOTICES

         26.1 Any notice,  consent or approval  permitted or required under this
Agreement shall be in writing and shall be sent by registered or certified mail,
postage prepaid,  or by recognized domestic overnight courier or by facsimile to
the  addresses  set forth below or to such other address in the USA as the Party
to whom notice is to be given has  furnished  in writing to the other  Party.  A
notice of  change in  address  shall  not be  deemed  to have been  given  until
received by the addressee.

If to OrthoLogic:        OrthoLogic Corp.
                         2850 South 36th Street
                         Phoenix, Arizona 85034
                         Attn:  Chairman/CEO
                         Fax: (602) 470-7080

                         with copy to:

                         Quarles & Brady
                         One Camelback Road
                         Suite 400
                         Phoenix, AZ 85012
                         Fax: (602) 230-5598


If to Sanofi:            Sanofi Pharmaceuticals, Inc.
                         90 Park Avenue
                         New York, New York 10016
                         Attn:  President
                         Fax:   (212) 551-4900

                         with copy to:

                         Sanofi, Inc.
                         90 Park Avenue
                         New York, New York 10016
                         Attn: General Counsel
                         Fax- (212) 551-4921

All notices shall be deemed to be effective on the date of receipt.
                                       32
<PAGE>
                                  ARTICLE XXVII
                                  -------------
                                    HEADINGS

         27.1 The  descriptive  headings  in this  Agreement  are  inserted  for
convenience only, and do not constitute a part of this Agreement.

                                 ARTICLE XXVIII
                                 --------------
                                    LANGUAGE

         28.1 The governing language of this Agreement is English.  In the event
of any  dispute  concerning  the  construction  or  meaning  of this  Agreement,
reference  shall be made only to this Agreement as written in English and not to
any translation into any other language.

                                  ARTICLE XXIX
                                  ------------
                             EXHIBITS AND SCHEDULES

         29.1 Each of the exhibits  and  schedules  to this  Agreement  forms an
integral part hereof and is incorporated herein by reference.

                                   ARTICLE XXX
                                   -----------
                              NO THIRD PARTY RIGHTS

         30.1 Except as otherwise provided herein, this Agreement is intended to
be solely  for the  benefit of the  Parties  and is not  intended  to confer any
benefits  upon,  or create any  rights in favor of,  any  Person  other than the
Parties hereto.

                                  ARTICLE XXXI
                                  ------------
                                  COUNTERPARTS

         31.1 This Agreement may be executed in any number of counterparts, each
of which shall be deemed an original, but all of which together shall constitute
a single instrument.
                                       33
<PAGE>

                                  ARTICLE XXXII
                                  -------------
                                    CURRENCY

         32.1  In  this  Agreement,   unless  expressly  stated  otherwise,  all
references to money payments mean lawful currency of the USA and payment in that
currency.
                                       34
<PAGE>
         IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be
executed  by their duly  authorized  officers as of the day and year first above
written.

ORTHOLOGIC CORP.                                SANOFI PHARMACEUTICALS, INC.

By: /s/ Allan M. Weinstein                   By:  /s/ George M. Doherty
   ------------------------------               --------------------------------
Name:   Allan M. Weinstein                   Name:    George M. Doherty
     ----------------------------                 ------------------------------
Title:     Chairman/CEO                      Title:     President and CEO
      ---------------------------                  -----------------------------
                                       35
<PAGE>
                                   Scheduled A

                           Minimum Promotional Amount
                                     ($000)


                         1997(1)   1998      1999      2000      2001      2002
                         ----      ----      ----      ----      ----      ----
Promotional
Spend                    $ 750    $1,500    $2,000    $2,750    $2,750    $2,750



(1) Launch Period (Effective Date to December 31, 1997).
<PAGE>
                                  Schedule B(1)

         OrthoLogic Compensation Schedule for Illustrative Purposes Only
               (Example: $100.00 WAC, 1000 Units Sold, 4% Returns)
<TABLE>
<CAPTION>

                                                Price      Units       Sales        OCU
                                                           Sold
-------------------------------------------------------------------------------------------
<S>                                          <C>            <C>      <C>         <C>      
Wholesaler Acquisition Cost (WAC):           $ 100.00
         Quantity Discounts                       0%
         Free Goods                               0%
Gross Sales Invoice: ("GSI"):                $ 100.00      1000      $100,000
    Less:
         Distribution (% GSI)                     7%                 $  7,000
         Rebates (% GSI)                          5%                 $  5,000
         Returns (% GSI)                          4%         40      $  4,000
         Discounts (% GSI)                        3%                 $  3,000
Net Selling Price Per Unit "NSP":            $  81.00       960      $ 81,000    $   84.38
    Less:
         Trade Transfer Price (% of NSP)     $  18.00       960      $ 17,280    $   18.00
         Nonsalable Returns                     18.00        10      $    180    $    0.19
         Overhead to Sanofi                      6.75       960      $  6,480    $    6.75
         Royalty to Sanofi (% of Net Sales)      10%                    8,100    $    8.44
Payment to OrthoLogic:                                               $ 48,960    $   51.00
</TABLE>


(1) The  referenced Net Sales  deductions  are  consistent  with and reflect the
entirety of the deductions contained in the Net Sales definition.