LOAN MODIFICATION AGREEMENT

         This Loan Modification  Agreement is entered into as of May 5, 1998, by
and between Orthologic Corp.  ("Borrower") whose address is 1275 West Washington
Street,  Tempe,  AZ 85281 and Silicon Valley Bank ("Bank") whose chief executive
office is located at 3003  Tasman  Drive,  Santa  Clara,  CA 95054,  with a loan
production office located at 4455 East Camelback Road, Suite E-290,  Phoenix, AZ
85018.

1. DESCRIPTION OF EXISTING  INDEBTEDNESS:  Among other indebtedness which may be
owing by Borrower to Bank, Borrower is indebted to Bank pursuant to, among other
documents, a Loan and Security Agreement, dated March 2, 1998, as may be amended
from time to time,  (the "Loan  Agreement").  The Loan  Agreement  provided for,
among other things, a Committed  Equipment Line in the original principal amount
of Two Million  Five  Hundred  Thousand and 00/100  Dollars  ($2,500,000)  and a
Committed  Revolving  Line in the original  principal  amount of Ten Million and
00/100  Dollars  ($10,000,000).  Defined  terms used but not  otherwise  defined
herein shall have the same meanings as in the Loan Agreement.

Hereinafter,  all indebtedness owing by Borrower to Bank shall be referred to as
the "Indebtedness."

2.  DESCRIPTION OF COLLATERAL AND GUARANTIES.  Repayment of the  Indebtedness is
secured by the  Collateral  as  described  in the Loan  Agreement.  In addition,
Borrower has agreed not to sell,  transfer,  assign,  mortgage,  pledge,  lease,
grant a  security  interest  in,  or  encumber  any of  Borrower's  Intellectual
Property  pursuant to that certain  Negative  Pledge  Agreement,  dated March 2,
1998.

Hereinafter,  the  above-described  security documents and guaranties,  together
with  all  other  documents  securing  repayment  of the  Indebtedness  shall be
referred to as the "Security  Documents".  Hereinafter,  the Security Documents,
together with all other documents  evidencing or securing the Indebtedness shall
be referred to as the "Existing Loan Documents".

3.       DESCRIPTION OF CHANGE IN TERMS.

         A.       Modification(s) to Loan Agreement
                  ---------------------------------

                  1.       Section 2.3 (a)  entitled  "Interest  Rate" is hereby
                           amended in its entirety to read as follows:

                                    (a)  Interest  Rate.  (i)  Advances   accrue
                           interest on the  outstanding  principal  balance at a
                           per annum rate of .650 of a  percentage  point  above
                           the Prime Rate;  and (ii) Equipment  Advances  accrue
                           interest on the  outstanding  principal  balance at a
                           per annum rate of .450 of a  percentage  point  above
                           the Prime Rate. Upon Borrower achieving 2 consecutive
                           quarters of  profitability,  the interest rate on the
                           Committed  Revolving Line and the Committed Equipment
                           Line will reduce by .10% and will  further  reduce by
                           .10% upon Borrower  achieving 4 consecutive  quarters
                           of  profitability.  In addition,  upon improvement of
                           Borrower's  balance  sheet  sufficient  to  meet  the
                           Original Covenants (as amended herein),  the interest
                           rate for the Advances  under the Committed  Revolving
                           Line will  decrease to the original  interest rate of
                           .200 of a percentage point above the Prime Rate. Such
                           interest  rate change  shall be  effective  as of the
                           first day of the month  following  Bank's  receipt of
                           Borrower's financial  statements  indicating Borrower
                           has met the above-described  criteria. After an Event
                           of  Default,  Obligations  accrue  interest  at  5.00
                           percentage    points   above   the   rate   effective
                           immediately before the Event of Default. The interest
                           rate  increases  or  decreases  when the  Prime  Rate
                           changes.  Interest  is computed on a 360 day year for
                           the actual number of days elapsed.
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                  2.       Sub-sections  ( c) and (d) of  Section  6.2  entitled
                           "Financial  Statements,  Reports,  Certificates"  are
                           hereby amended in their entirety to read as follows

                           (c) Within 30 days after the last day of each  month,
                           Borrower  will  deliver  to  Bank  with  the  monthly
                           financial statements;  cash flow reports covering the
                           three  previous  months and the three future  months;
                           and a Compliance  Certificate signed by a Responsible
                           Officer in the form of Exhibit D.

                           (d) Bank has the right to audit  Borrower's  Accounts
                           at  Borrower's  expense,   but  the  audits  will  be
                           conducted on a  semi-annual  basis unless an Event of
                           Default has occurred and is continuing.

                  3.       Section 6.7 entitled "Financial  Covenants" is hereby
                           amended in its entirety to read as follows:

                           Borrower  will  maintain  as of the  last day of each
                           month:

                           (i) Quick  Ratio.  A ratio of Quick Assets to Current
                           Liabilities  of at  least  1.50  to  1.00.  (Original
                           Covenant is 2.00 to 1.00).

                           (ii)  Debt/Tangible Net Worth Ratio. A ratio of Total
                           Liabilities  less  Subordinated  Debt to Tangible Net
                           Worth plus Subordinated Debt of not more than 0.50 to
                           1.00. (Original Covenant is 0.50 to 1.00).

                           (iii)  Tangible Net Worth. A Tangible Net Worth of at
                           least  $41,000,000,  excluding any scheduled  expense
                           incurred or accounting  treatment for option payments
                           to Chrysalis. (Original Covenant is $50,000,000).

                           (iv)   Profitability.   Borrower   will  not   suffer
                           aggregate  losses in excess of $3,000,000 for any two
                           (2) consecutive quarters,  beginning with the quarter
                           ending June 30, 1998.  (Original Covenant is Borrower
                           will be profitable each quarter, except that Borrower
                           may suffer losses, provided such losses do not exceed
                           $5,000,000 in aggregate for the quarters ending March
                           31, 1998 and June 30, 1998  excluding  any  scheduled
                           expense  incurred or accounting  treatment for option
                           payments to Chrysalis).

                  4.       The following defined terms are hereby amended and or
                           added to Section 13 entitled "Definitions" to read as
                           follows:

                           "Borrowing  Base"  is 50%  of  Eligible  Accounts  as
                           determined  by  Bank  from   Borrower's  most  recent
                           Borrowing Base Certificate.

                           "Committed  Revolving  Line" is an  Advance  of up to
                           $7,500,000.

                           "Copyrights" are all copyright  rights,  applications
                           or registrations and like protections in each work or
                           authorship or derivative work,  whether  published or
                           not  (whether  or not it is a  trade  secret)  now or
                           later existing, created, acquired or held.

                           Sub-sections  (a),  (b) and (c ) of the defined  term
                           "Eligible  Accounts"  are  hereby  amended in part to
                           remove the number 120  reference  therein and replace
                           it with the number 90.
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<PAGE>
                           "Equipment  Advance"  is defined  in  Section  2.1.2,
                           however,  effective as of the hereof,  all  Equipment
                           Advances  available  under  Section  2.1.2 are hereby
                           suspended.   Accordingly,   Borrower   is  no  longer
                           entitled  to  further  Equipment  Advances  until  it
                           receives approval from Bank, in its sole discretion.

                           "Intellectual Property" is:

                           (a) Copyrights,  Trademarks,  Patents, and Mask Works
                           including amendments,  renewals,  extensions, and all
                           licenses or other  rights to use and all license fees
                           and royalties from the use;

                           (b) Any trade secrets and any  Intellectual  Property
                           Rights in computer  software  and  computer  software
                           products now or later existing,  created, acquired or
                           held;

                           (c) All  design  rights  which  may be  available  to
                           Borrower now or later created, acquired or held;

                           (d) Any claims for damages (past,  present or future)
                           for infringement of any of the rights above, with the
                           right,  but not the  obligation,  to sue and  collect
                           damages for use or infringement  of the  intellectual
                           property rights above;

                           All proceeds and products of the foregoing, including
                           all insurance, indemnity or warranty payments.

                           "Mask  Works" are all mask  works or  similar  rights
                           available for the protection of semiconductor  chips,
                           now owned or later acquired.

                           "Patents" are patents,  patent  applications and like
                           protections,   including   improvements,   divisions,
                           continuations,  renewals,  reissues,  extensions  and
                           continuations-in-part of the same.

                           "Trademarks"  are  trademark and service mark rights,
                           registered  or  not,  applications  to  register  and
                           registrations  and like  protections,  and the entire
                           goodwill of the business of Assignor  connected  with
                           the trademarks.

4.       CONSISTENT  CHANGES.  The Existing Loan  Documents  are hereby  amended
wherever necessary to reflect the changes described above.

5.       PAYMENT OF LOAN FEE.  Borrower shall pay to Bank a fee in the amount of
One Thousand and 00/100 Dollars ($1,000) (the "Loan Fee") plus all out-of-pocket
expenses.

6.       NO DEFENSES  OF  BORROWER.  Borrower  (and each  guarantor  and pledgor
signing  below) agrees that, as of the date hereof,  it has no defenses  against
the obligations to pay any amounts under the Indebtedness.

7.       CONTINUING  VALIDITY.  Borrower (and each guarantor and pledgor signing
below) understands and agrees that in modifying the existing Indebtedness,  Bank
is relying upon Borrower's  representations,  warranties, and agreements, as set
forth in the Existing Loan Documents.  Except as expressly  modified pursuant to
this Loan  Modification  Agreement,  the terms of the  Existing  Loan  Documents
remain unchanged and in full force and effect. Bank's agreement to modifications
to the existing Indebtedness pursuant to this Loan Modification  Agreement in no
way shall obligate Bank to make any future  modifications  to the  Indebtedness.
Nothing in this Loan  Modification  Agreement shall constitute a satisfaction of
the  Indebtedness.  It is the intention of Bank and Borrower to retain as liable
parties all makers and endorsers of Existing Loan Documents, unless the party is
expressly released by 
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<PAGE>
Bank in writing. No maker,  endorser, or guarantor will be released by virtue of
this Loan Modification Agreement.  The terms of this paragraph apply not only to
this Loan Modification  Agreement,  but also to all subsequent loan modification
agreements.

8.       CONDITIONS.  The effectiveness of this Loan  Modification  Agreement is
conditioned upon (1) Borrower's  payment of the Loan Fee, (2) and Bank's receipt
of the Amendment to Warrant Agreement executed by Borrower.

         This Loan  Modification  Agreement  is  executed  as of the date  first
written above.

BORROWER:                               BANK:

ORTHOLOGIC CORP.                        SILICON VALLEY BANK


By: /s/ Terry D. Meier                  By: /s/ Amy Lou Blunt
   ---------------------------------       -------------------------------------
Name:   Terry D. Meier                  Name:   Amy Lou Blunt
     -------------------------------         -----------------------------------
Title:  Sr. V.P. and CFO                Title:  Asst. to V.P.
      ------------------------------          ----------------------------------
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