EMPLOYMENT AGREEMENT


                  This Agreement is to be effective,  as of October 20, 1997, by
and between OrthoLogic Corp., a Delaware corporation (the "Company"), and Thomas
R. Trotter ("Employee").

RECITALS:
---------

         A. The Company  wishes to employ  Employee,  and Employee  wishes to be
employed by the Company.

         B. The  parties  wish to set  forth in this  Agreement  the  terms  and
conditions of such employment.

AGREEMENT:
----------

         In  consideration  of the mutual  covenants  and  agreements  set forth
herein, the parties agree as follows:

         1.  Employment and Duties.  Subject to the terms and conditions of this
Agreement, the Company employs Employee to serve in a managerial capacity and as
a member of its Board of  Directors  (the  "Board")  and  Employee  accepts such
employment and agrees to perform such reasonable  responsibilities and duties as
may be assigned to him from time to time by the Board. Employee's title shall be
President/CEO  of  the  Company,   with  general   responsibility   for  Company
operations.  Employee  will report to the Board.  During the term of  Employee's
employment pursuant to this Agreement, the Company shall use its best efforts to
maintain Employee as a member of the Board.

         2. Term. The term of this  employment  pursuant to this Agreement shall
begin on the effective date, and shall terminate as provided herein.

         3. Compensation.

                  (a) Salary.  The  Company  shall pay  Employee a minimum  base
annual salary,  before  deducting all applicable  withholdings,  of $260,000 per
year,  payable at the times and in the manner dictated by the Company's standard
payroll policies.  The minimum base annual salary shall be reviewed annually, at
the end of the  Company's  fiscal  year,  by the  Compensation  Committee of the
Board.

                  (b) Bonus.  Employee  shall be eligible to  participate  in an
incentive  bonus program as developed  and adopted,  and as revised from time to
time,  by the  Board.  Such  program  shall be based  upon  the  achievement  of
individual goals by Employee and upon Company
<PAGE>
performance.  Initially,  the program shall provide for a target bonus of 50% of
Employee's base salary for achievement of a Board-approved  plan. Any 1997 bonus
will be based on the Company's audited financial statements for all of 1997, but
will be prorated as to amount of payment to reflect the actual  number of months
Employee is employed  during the year.  Within 90 days of the effective  date of
this  Agreement,  the Board and Employee  will begin  meeting for the purpose of
negotiating in good faith the targets and objectives,  and a formula, to be used
in the bonus program.

                  (c)  Stock  Options.  The  Company  shall  grant  to  Employee
incentive  options (the parties  understand  that only a portion of such options
will qualify as incentive  options for tax  purposes),  from the Company's  1987
Stock Option Plan, to purchase  350,000  shares of the  Company's  common stock,
with an  exercise  price  equal to the  fair  market  value of the  stock on the
effective  date of the grant,  with such value  determined  as  specified in the
Company's  1987 Stock Option Plan. So long as Employee is still  employed by the
Company at each such time of vesting,  options to purchase  87,500  shares shall
vest on the first  anniversary  of  Employee's  employment  by the Company,  and
additional  options to purchase 7,292 shares shall vest on November 30, 1998 and
on the last day of each calendar month  thereafter,  until such shares are fully
vested;  provided that the 87,500 shares which would  ordinarily vest at the end
of the first year shall vest  immediately upon a termination of Employee without
cause, or upon the death of Employee, if such termination or death occurs during
the second six months of Employee's employment by the Company.

                           On the first anniversary of Employee's  employment by
the  Company,  if  Employee is still  employed by the Company at such time,  the
Company shall grant to Employee additional incentive options, from the Company's
1997 Stock Option  Plan,  to purchase  100,000  shares of the  Company's  common
stock,  with an exercise  price  equal to the fair market  value of the stock on
such anniversary,  with such value determined as specified in the Company's 1997
Stock Option Plan. So long as Employee is still  employed by the Company at each
such time of vesting,  options to purchase  2,084  shares shall vest on November
30,  1998 and on the last day of each  calendar  month  thereafter,  until  such
shares are fully vested.

         4.  Fringe  Benefits.  In  addition  to the  options  for shares of the
Company's  common stock  granted to Employee as part of this  Agreement  and any
other employee benefit plans (including  without  limitation  pension,  savings,
medical, dental and disability plans) generally available to employees, Employee
shall be eligible for the grant of additional options as determined from time to
time by the Board of Directors based upon Employee's performance hereunder.  The
manner  of  implementation  of such  benefits  with  respect  to such  items  as
procedures  and  amounts  are  discretionary  with  the  Company  but  shall  be
commensurate with Employee's executive capacity.  The Company agrees to maintain
term life insurance  during the term of this Agreement in an amount equal to two
times Employee's base salary,  as it may be adjusted from time to time, with the
beneficiary to be designated by Employee. During
                                        2
<PAGE>
Employee's employment, the Company will also provide Employee with an automobile
expense allowance of $450 per month.

         5. Expenses.

                  (a)  Reimbursement.   In  addition  to  the  compensation  and
benefits  provided  above,  the  Company  shall,  upon  receipt  of  appropriate
documentation, reimburse Employee each month for his reasonable travel, lodging,
entertainment,  promotion  and other  ordinary and necessary  business  expenses
consistent with Company policies.

                  (b) Moving.  Employee  shall be reimbursed  for (i) the direct
relocation costs of moving his household effects,  cars and family from Missouri
to the Phoenix  Metropolitan  Area;  (ii) the brokerage  commission  and closing
costs related to the sale of his existing home in Missouri;  (iii) closing costs
related to his new home in the Phoenix  Metropolitan  Area;  and (iv) $2,500 per
month for a period  of not to exceed  three  months  to cover  temporary  living
expenses in the Phoenix Metropolitan Area.

         6. Termination.

                  (a) For Cause. The Company may terminate Employee's employment
for cause upon written notice to Employee  stating the facts  constituting  such
cause,  provided that Employee  shall have 30 days following such notice to cure
any conduct or act, if curable,  alleged to provide  grounds for termination for
cause  hereunder.  In the event of termination  for cause,  the Company shall be
obligated to pay Employee  only the minimum base salary due him through the date
of termination. The written notice shall state the cause for termination.  Cause
shall  include  gross or willful  neglect of duty,  willful  failure to abide by
instructions or policies from or set by the Board of Directors, or conviction of
a felony or misdemeanor  punishable by at least one year in prison,  or pleading
guilty or nolo contendere to same.

                  (b)  Without  Cause.  The  Company  may  terminate  Employee's
employment at any time,  immediately and without cause, by giving written notice
to Employee.  If the Company terminates  Employee without cause, it shall pay to
Employee,  in a lump sum, one year's  minimum  base salary,  as in effect at the
time  of  termination,  less  applicable  withholdings.   Additionally,  if  the
termination  occurs  during  the  first  year of  Employee's  employment  by the
Company,  the  Company  shall pay,  in a lump sum, a  displacement  fee equal to
Employee's  base salary for the number of months  remaining  between the date of
termination and the first  anniversary of Employee's  employment by the Company.
At the  election of Employee,  which must be expressed by written  notice to the
Board  within 30 days  after the  occurrence  of an event as  described  in this
sentence,  a  termination  without  cause  shall  also be  deemed  to  occur  if
Employee's duties or job title are changed  materially,  if Employee's salary is
reduced below  $260,000 per year or if  Employee's  service as a director of the
Company is terminated as a result of actions by the Board or the stockholders of
the Company.
                                        3
<PAGE>
                  (c) Disability. If during the term of this Agreement, Employee
fails to perform his duties  hereunder on account of illness or other incapacity
for a period of 60 consecutive days, or for 90 days during any six-month period,
the Company shall have the right to terminate  this  Agreement  without  further
obligation  hereunder except as otherwise provided in disability plans generally
applicable to executive employees.

                  (d) Death. If Employee dies during the term of this Agreement,
this Agreement shall terminate immediately, and Employee's legal representatives
shall be entitled to receive the base salary due  Employee  through the last day
of the calendar month in which his death shall have occurred and any other death
benefits generally applicable to executive employees.

                  (e) Resignation.  Employee may resign his employment by giving
the Company  written  notice,  which shall also include his  resignations  as an
officer and as a director of the  Company.  In the event of such a  resignation,
the Company  shall be obligated to pay Employee only the minimum base salary due
him through the  effective  date of the  resignation  (any vested  options  will
remain  vested,  and will expire as provided in the Company's  Stock Option Plan
and Employee's Letter of Grant).

         7. Confidential  Information.  Employee  acknowledges that Employee may
receive,  or contribute to the  production  of,  Confidential  Information.  For
purposes of this  Agreement,  Employee  agrees that  "Confidential  Information"
shall mean any and all  information  or material  proprietary  to the Company or
designated as Confidential Information by the Company and not generally known by
non-the Company  personnel,  which Employee  develops or of or to which Employee
may obtain knowledge or access through or as a result of Employee's relationship
with the Company (including  information  conceived,  originated,  discovered or
developed in whole or in part by Employee).  Confidential  Information includes,
but is not limited to, the following types of information and other  information
of a similar nature (whether or not reduced to writing) related to the Company's
business:  discoveries,  inventions,  ideas,  concepts,  research,  development,
processes,   procedures,   "know-how",   formulae,  marketing  or  manufacturing
techniques and  materials,  marketing and  development  plans,  business  plans,
customer names and other information related to customers,  price lists, pricing
policies,  methods of operation,  financial information,  employee compensation,
and computer  programs and systems.  Confidential  Information also includes any
information  described  above which the Company  obtains from another  party and
which  the  Company  treats  as   proprietary  or  designates  as   Confidential
Information,  whether or not owned by or  developed  by the  Company,  including
Confidential  Information  acquired by the Company  from any of its  affiliates.
Employee  acknowledges  that the Confidential  Information  derives  independent
economic value, actual or potential,  from not being generally known to, and not
being  readily  ascertainable  by proper means by, other  persons who can obtain
economic  value from its disclosure or use.  Information  publicly known without
breach of this Agreement that is generally employed by the trade at or after the
time  Employee  first  learns of such  information,  or generic  information  or
knowledge which Employee would have learned
                                        4
<PAGE>
in the course of similar employment or work elsewhere in the trade, shall not be
deemed part of the Confidential Information. Employee further agrees:

                  a. To furnish  the  Company on demand,  at any time  during or
after  employment,  a complete  list of the names and  addresses of all present,
former and potential suppliers,  financing sources, clients, customers and other
contacts  gained  while an  employee of the  Company in  Employee's  possession,
whether or not in the possession or within the knowledge of the Company.

                  b.   That   all   notes,   memoranda,    electronic   storage,
documentation   and  records  in  any  way   incorporating   or  reflecting  any
Confidential  Information shall belong exclusively to the Company,  and Employee
agrees to turn over all copies of such  materials in  Employee's  control to the
Company upon  request or upon  termination  of  Employee's  employment  with the
Company.

                  c. That while employed by the Company and thereafter  Employee
will hold in confidence and not directly or indirectly reveal, report,  publish,
disclose  or  transfer  any of the  Confidential  Information  to any  person or
entity, or utilize any of the Confidential  Information for any purpose,  except
in the course of Employee's work for the Company.

                  d. That any idea in whole or in part  conceived  of or made by
Employee during the term of his employment,  consulting, or similar relationship
with the Company which relates  directly or indirectly to the Company's  current
or  planned  lines  of  business  and  is  made  through  the  use of any of the
Confidential  Information  of the  Company  or any of the  Company's  equipment,
facilities,  trade secrets or time, or which results from any work  performed by
Employee for the Company,  shall belong  exclusively to the Company and shall be
deemed a part of the  Confidential  Information  for purposes of this Agreement.
Employee hereby assigns and agrees to assign to the Company all rights in and to
such  Confidential  Information  whether  for  purposes of  obtaining  patent or
copyright protection or otherwise. Employee shall acknowledge and deliver to the
Company,  without  charge  to the  Company  (but at its  expense)  such  written
instruments  and do such other acts,  including  giving  testimony in support of
Employee's  authorship  or  inventorship,  as the case may be,  necessary in the
opinion of the Company to obtain  patents or copyrights or to otherwise  protect
or vest in the  Company  the entire  right and title in and to the  Confidential
Information.

         8. Loyalty During Employment Term. Employee agrees that during the term
of Employee's employment by the Company,  Employee will devote substantially all
of  Employee's  business  time and effort to and give  undivided  loyalty to the
Company, and will not engage in any way whatsoever,  directly or indirectly,  in
any  business  that is  competitive  with the  Company  or its  affiliates,  nor
solicit,  or in any  other  manner  work for or  assist  any  business  which is
competitive  with the Company or its  affiliates.  During the term of Employee's
employment  by  the  Company,   Employee  will  undertake  no  planning  for  or
organization of any business activity
                                        5
<PAGE>
competitive with the Company or its affiliates, and Employee will not combine or
conspire  with any other  employee  of the  Company or any other  person for the
purpose of organizing any such competitive business activity.  However, Employee
shall be entitled to make a passive  investment in a publicly  traded stock of a
competitor of the Company so long as he does not at any time own more than 5% of
the total outstanding stock of such competitor.

         9.  Non-competition;  Non-solicitation.  The parties  acknowledge  that
Employee will acquire much knowledge and information  concerning the business of
the Company  and its  affiliates  as the result of  Employee's  employment.  The
parties further  acknowledge  that the scope of business in which the Company is
engaged as of the date of execution of this  Agreement  is  world-wide  and very
competitive  and one in which few companies can  successfully  compete.  Certain
activities by Employee after this Agreement is terminated  would severely injure
the Company.  Accordingly,  until one year after  Employee  resigns  pursuant to
Section 6(e) or Employee's  employment is terminated  with cause as contemplated
by Section 6(a), Employee will not:

                  a. Engage in any work activity for or in conjunction  with any
business or entity that is in  competition  with or is preparing to compete with
the Company;

                  b. Persuade or attempt to persuade any  potential  customer or
client to which the  Company or any of its  affiliates  has made a  proposal  or
sale,  or with  which  the  Company  or any of its  affiliates  has been  having
discussions,  not to transact  business with the Company or such  affiliate,  or
instead to transact business with another person or organization;

                  c. Solicit the business of any customers,  financing  sources,
clients,   suppliers,  or  business  patrons  of  the  Company  or  any  of  its
predecessors or affiliates  which were customers,  financing  sources,  clients,
suppliers,  or business  patrons of the  Company at any time  during  Employee's
employment by the Company,  or within three years prior to the Effective Date of
Employee's employment,  provided,  however, that if Employee becomes employed by
or represents a business  that  exclusively  sells  products that do not compete
with  products  then  marketed or intended to be marketed by the  Company,  such
contact shall be permissible; or

                  d. Solicit, endeavor to entice away from the Company or any of
its affiliates,  or otherwise  interfere with the relationship of the Company or
any of its affiliates  with, any person who is employed by or otherwise  engaged
to perform  services  for the  Company  or any of its  affiliates,  whether  for
Employee's account or for the account of any other person or organization.

         10. Injunctive Relief. It is agreed that the restrictions  contained in
Sections 7, 8, and 9 of this Agreement are reasonable, but it is recognized that
damages  in the  event  of the  breach  of any of  those  restrictions  will  be
difficult or impossible to ascertain;  and, therefore,  Employee agrees that, in
addition to and without limiting any other right or remedy the Company may have,
                                        6
<PAGE>
the Company shall have the right to an injunction  against  Employee issued by a
court of competent  jurisdiction  enjoining any such breach  without  showing or
proving any actual  damage to the  Company.  This  paragraph  shall  survive the
termination of Employee's employment.

         11.  Part  of  Consideration.   Employee  also  agrees,   acknowledges,
covenants,  represents and warrants that he is fully and completely  aware that,
and further understands that, the restrictive covenants contained in Sections 7,
8, and 9 of this  Agreement are an essential part of the  consideration  for the
Company  entering into this Agreement and that the Company is entering into this
Agreement in full reliance on these acknowledgments,  covenants, representations
and warranties.

         12. Time and Territory Reduction.  If any of the periods of time and/or
territories  described in Sections 7, 8, and 9 of this  Agreement are held to be
in any  respect  an  unreasonable  restriction,  it is agreed  that the court so
holding may reduce the territory to which the restriction pertains or the period
of time in which it operates or may reduce both such  territory and such period,
to the minimum extent necessary to render such provision enforceable.

         13.  Survival.  The  obligations  described in Sections 7 and 9 of this
Agreement  shall survive any termination of this Agreement or any termination of
the employment relationship created hereunder.

         14. Nondelegability of Employee's Rights and Company Assignment Rights.
The obligations,  rights and benefits of Employee hereunder are personal and may
not be delegated, assigned or transferred in any manner whatsoever, nor are such
obligations, rights or benefits subject to involuntary alienation, assignment or
transfer.  Upon mutual  agreement  of the parties,  the Company upon  reasonable
notice to Employee may transfer  Employee to an affiliate of the Company,  which
affiliate shall assume the obligations of the Company under this Agreement. This
Agreement  shall  be  assigned  automatically  to any  entity  merging  with  or
acquiring the Company.

         15.  Governing Law. This  Agreement  shall be governed by and construed
and  enforced  in  accordance  with the  internal  laws of the State of Arizona,
exclusive of the conflict of law provisions thereof,  and the parties agree that
any  litigation  pertaining  to this  Agreement  shall be in courts  located  in
Maricopa County, Arizona.

         16.  Attorneys'  Fees.  If any party finds it necessary to employ legal
counsel or to bring an action at law or other proceeding against the other party
to enforce any of the terms hereof,  the party  prevailing in any such action or
other proceeding shall be paid by the other party its reasonable attorneys' fees
as well as court costs all as determined by the court and not a jury.

         17. Notices. All notices, demands,  instructions,  or requests relating
to this Agreement shall be in writing and, except as otherwise  provided herein,
shall be deemed to have been given
                                        7
<PAGE>
for all purposes (i) upon personal delivery, (ii) one day after being sent, when
sent by professional  overnight courier service from and to locations within the
Continental  United  States,  (iii) five days after  posting when sent by United
States  registered or certified mail, with return receipt  requested and postage
paid,  or (iv) on the  date  of  transmission  when  sent  by  facsimile  with a
hard-copy  confirmation;  if directed to the person or entity to which notice is
to be given at his or its  address set forth in this  Agreement  or at any other
address such person or entity has designated by notice.

                  To the Company:     ORTHOLOGIC CORP.
                                      2850 South 36th Street, Suite 16
                                      Phoenix, AZ 85034
                                      Attention:  Chairman of the Board

                  To Employee:        Thomas R. Trotter
                                      2300 North Ballas Road
                                      St. Louis, MO  63131

         18. Entire  Agreement.  This Agreement and the Invention,  Confidential
information  and  Non-Competition  Agreement  bearing  the  same  date  as  this
Agreement  constitute  the final  written  expression  of all of the  agreements
between the parties  (except those relating to Employee's  service as a director
of the Company), and are a complete and exclusive statement of those terms. They
supersede all understandings  and negotiations  concerning the matters specified
herein. Any representations,  promises,  warranties or statements made by either
party  that  differ in any way from the terms of these  two  written  Agreements
shall be given no force or effect. The parties specifically  represent,  each to
the other, that there are no additional or supplemental  agreements between them
related in any way to the matters herein contained unless specifically  included
or referred to herein. No addition to or modification of any provision of either
of such  Agreements  shall be binding  upon any party unless made in writing and
signed by all  parties.  To the extent that there is any  conflict  between this
Agreement  and  the  Invention,  Confidential  information  and  Non-Competition
Agreement, the provisions of this Agreement shall govern.

         19. Waiver. The waiver by either party of the breach of any covenant or
provision in this Agreement shall not operate or be construed as a waiver of any
subsequent breach by either party.

         20.  Invalidity of Any Provision.  The provisions of this Agreement are
severable,  it being  the  intention  of the  parties  hereto  that  should  any
provisions   hereof  be   invalid   or   unenforceable,   such   invalidity   or
unenforceability  of any  provision  shall not affect the  remaining  provisions
hereof, but the same shall remain in full force and effect as if such invalid or
unenforceable provisions were omitted.
                                        8
<PAGE>
         21. Counterparts.  This Agreement may be executed simultaneously in any
number of  counterparts,  each of which shall be deemed an  original  but all of
which together shall constitute one and the same agreement.

         22. Binding Effect;  Benefits. This Agreement shall be binding upon and
shall  inure to the benefit of the parties  hereto and their  respective  heirs,
successors,  executors,  administrators  and assigns.  Notwithstanding  anything
contained  in  this  Agreement  to the  contrary,  nothing  in  this  Agreement,
expressed or implied, is intended to confer on any person other than the parties
hereto or their respective  heirs,  successors,  executors,  administrators  and
assigns any rights,  remedies,  obligations or liabilities under or by reason of
this Agreement.

         This Agreement has been executed by the parties as of October 20, 1997.

                                ORTHOLOGIC CORP.
                                (the "Company")


                                By:  /s/ Allan M. Weinstein
                                     Allan M. Weinstein
                                     Chief Executive Officer


                                THOMAS R. TROTTER


                                By:  /s/ Thomas R. Trotter

                                                 "EMPLOYEE"
                                        9
<PAGE>
                        LETTER OF INCENTIVE OPTION GRANT
                     ORTHOLOGIC CORP. 1987 STOCK OPTION PLAN
                     ---------------------------------------

                                October 20, 1997


Thomas R. Trotter
2300 North Ballas Road
St. Louis, MO  63131

RE:      OrthoLogic Corp. 1987 Stock Option Plan

Dear Mr. Trotter:

         In order to provide additional incentive to certain selected employees,
OrthoLogic  Corp. (the "Company")  adopted the OrthoLogic 1987 Stock Option Plan
(the "Stock Option Plan"). By means of this letter,  the Company is offering you
incentive stock options pursuant to the Stock Option Plan. The Company's sale of
its  common  shares  underlying  the  option  granted  to you  hereby  has  been
registered  with the U.S.  Securities  and  Exchange  Commission.  A copy of the
prospectus,  including  a copy of the  Stock  Option  Plan  (the  "Prospectus"),
relating to that registration is also enclosed.

         The  option  granted  to you  hereunder  shall be subject to all of the
terms  and  conditions  of the  Stock  Option  Plan  and you  should  review  it
carefully.  In  addition,  such  option is  subject to the  following  terms and
conditions:

         1. Grant of Option.  The Company hereby grants to you,  pursuant to the
Stock  Option Plan,  the option to purchase  from the Company upon the terms and
conditions  and at the times  hereinafter  set forth,  an  aggregate  of 350,000
shares of the common stock, $.0005 par value, of the Company (the "Shares") at a
purchase price of $5.625 per share.  The date of grant of this option is October
20, 1997 (hereinafter referred to as the "Option Date").

                  This Option is an incentive stock option within the meaning of
the Internal Revenue Code of 1986, as amended,  except if required by applicable
tax rules, to the extent that the aggregate fair market value  (determined as of
the date these options are granted) of Shares  exercisable for the first time by
you during any  calendar  year (when  aggregated,  if  appropriate,  with shares
subject to other  incentive stock option grants made under the Stock Option Plan
and another plan maintained by the Company or any ISO Group member as defined in
the Stock Option Plan) exceeds $100,000 (or such other limit as is prescribed by
the Internal  Revenue Code, as amended),  the option  granted  hereby as to such
excess Shares shall be treated as a nonqualified  stock option  pursuant to Code
Section 422(d).
<PAGE>
         2. Exercise Term of Option.  Unless earlier  terminated,  Shares may be
purchased  between the time such shares are vested,  as described below, and the
date 10 years after the Option Date.

            Number of Shares        Vesting Schedule
            ----------------        ----------------

                 87,500             Shall vest on the first  anniversary of your
                                    employment  with the  Company,  pursuant  to
                                    your Employment Agreement which is effective
                                    October 20, 1997.

                 7,292              Shall vest on  November  30, 1998 and on the
                                    last day of each calendar month  thereafter,
                                    until such shares are fully vested;

                  Notwithstanding  the vesting  schedule  set forth  above,  the
87,500  shares  which  would  ordinarily  vest at the end of the  first  year of
employment shall vest immediately upon a termination of your employment  without
cause,  as defined in your  Employment  Agreement,  or upon your death,  if such
termination  or death occurs during the second six months of your  employment by
the Company.

                  100%  of  the   unvested   options  then  held  by  you  shall
automatically  become  exercisable  and vested upon the  occurrence,  before the
expiration or termination of such option, of the acquisition by a third party of
100% of the  Company's  outstanding  equity  securities,  a merger  in which the
Company is not the surviving corporation,  a sale of all or substantially all of
the Company's assets, or a similar reorganization of the Company.

         3. Nontransferability.  This option shall not be transferable otherwise
than by will or by the laws of descent and  distribution,  and the options shall
be exercisable  only by (a) you, during your lifetime (except as contemplated by
the next clause); or (b) your legal  representative or a person who acquired the
right to exercise these options by bequest or  inheritance,  during the one-year
period referred to in Section 7(iv) hereof.  Any attempted transfer in violation
of this restriction shall be void.

         4. Other Conditions and Limitations.

                  (a)      Any Shares  issued upon  exercise of the Option shall
                           not be issued  unless the  issuance  and  delivery of
                           Shares   pursuant   thereto  shall  comply  with  all
                           relevant   provisions  of  law   including,   without
                           limitation,  the  Securities Act of 1933, as amended,
                           the Securities Exchange Act of 1934, as amended,  the
                           rules and  regulations  promulgated  thereunder,  any
                           applicable state securities or "Blue Sky" law or laws
                           (or an exemption  from such  provision is available),
                           and the requirements of any stock exchange upon which
                           the
                                        2
<PAGE>
                           Shares  may  then be  listed  and  shall  be  further
                           subject to the  approval  of counsel  for the Company
                           with respect to such compliance.

                  (b)      No transfer of any Shares issued upon the exercise of
                           these option will be permitted by the Company, unless
                           any request for transfer is  accompanied  by evidence
                           satisfactory   to  the  Company   that  the  proposed
                           transfer  will  not  result  in a  violation  of  any
                           applicable  law, rule or regulation,  whether federal
                           or state,  including in the discretion of the Company
                           an opinion of counsel  reasonably  acceptable  to the
                           Company.

                  (c)      Inability of the Company to obtain  approval from any
                           regulatory  body  having   jurisdictional   authority
                           deemed by the  Company's  counsel to be necessary for
                           the lawful issuance and sale of any Shares  hereunder
                           shall  relieve  the  Company  of any  liability  with
                           respect to the  nonissuance or sale of such Shares as
                           to which such requisite authority shall not have been
                           obtained.

                  (d)      Unless  the Shares  are  subject to a then  effective
                           registration  statement  under the  Securities Act of
                           1933,  upon  exercise  of this option (in whole or in
                           part) and the  issuance  of the  Shares,  the Company
                           shall  instruct  its  transfer  agent to  enter  stop
                           transfer  orders  with  respect  to  Shares,  and all
                           certificates  representing  the Shares  shall bear on
                           the face thereof substantially the following legend:

                                    "The shares of common stock  represented  by
                                    this  certificate  have not been  registered
                                    under  the   Securities   Act  of  1933,  as
                                    amended,  and may not be sold,  offered  for
                                    sale,  assigned,  transferred  or  otherwise
                                    disposed  of unless  registered  pursuant to
                                    the  provisions of that Act or an opinion of
                                    counsel to the Company is  obtained  stating
                                    that such  disposition is in compliance with
                                    an    available    exemption    from    such
                                    registration."

         5.  Exercise of Option.  You may  exercise the option only by giving to
the  Chairman  of the  Board of the  Company  written  notice by  personal  hand
delivery,  or by  registered or certified  mail,  postage  prepaid,  with return
receipt  requested,  at the  following  address,  of your exercise of the option
including  the number of Shares that you intend to acquire,  accompanied  by the
full exercise price therefor:

                  Chairman of the Board
                  OrthoLogic Corp.
                  2850 South 36th Street
                  Phoenix, Arizona 85034
                                        3
<PAGE>
Payment of the option  price  shall be made  either in (i) cash or by check,  or
(ii) at your request and with the approval of the Company,  by delivering shares
of the Company's  common stock which have been  beneficially  owned by you for a
period of at least six months prior to the time of exercise  ("Delivered Stock")
or a combination of cash and Delivered  Stock.  Payment in the form of Delivered
Stock shall be in the amount of the fair  market  value of the stock at the date
of exercise,  determined  pursuant to the Stock  Option  Plan.  In no event will
Shares  be  transferred  to you  on  exercise  of  the  option  until  the  full
consideration therefor has been received by the Company.

         6. Valuation and  Withholding.  If required by applicable  regulations,
the Company shall, at the time of issuance of any Shares  purchased  pursuant to
the Stock Option  Plan,  provide you with a statement of valuation of the Shares
issued. The Company shall be entitled to withhold amounts from your compensation
or  otherwise  to  receive an amount  adequate  to  provide  for any  applicable
federal,  state and local income taxes (or require you to remit such amount as a
condition of  issuance).  The Company may, in its  discretion,  satisfy any such
withholding requirement,  in whole or in part, by withholding form the shares to
be issued the number of shares that would satisfy the withholding amount due.

         7.  Termination  of Option.  Notwithstanding  anything to the contrary,
this  option  can  become  exercisable  only  while you are an  employee  of the
Company,  and  shall not be  exercisable  after  the  earliest  of (i) the tenth
anniversary of the Option Date; (ii) three months after the date your employment
with the Company  terminates,  if such  termination is for any reason other than
permanent   disability,   death,  or  cause;  (iii)  the  date  your  employment
terminates,  if such  termination  is for cause,  as defined in your  Employment
Agreement  with the Company dated as of October 20, 1997; or (iv) one year after
the date your employment with the Company terminates, if such termination is the
result of death or permanent disability.

         8.  Notice of  Disposition  of  Shares.  If you  dispose  of any Shares
acquired on the  exercise of this option  within  either (a) two years after the
Option Date or (b) one year after the date of exercise of this option,  you must
notify the Company within seven days of such disposition.

         9. Miscellaneous. You will have no rights as a stockholder with respect
to the Shares  until the  exercise  of option and  payment of the full  purchase
price  therefor in  accordance  with the terms of the Stock Option Plan and this
Letter of Grant.  Nothing  herein  contained  shall impose any obligation on the
Company or any parent or subsidiary  of the Company.  Nothing  herein  contained
shall impose any obligation  upon you to exercise this option.  While the option
granted hereunder is intended to qualify as an incentive stock option under Code
Section  422A,  the Company  cannot  assure you that such option will,  in fact,
qualify as an incentive stock option,  and makes no representation as to the tax
treatment  to you  upon  receipt  or  exercise  of the  option  or sale or other
disposition of the shares covered by the option.
                                        4
<PAGE>
         10.  Governing  Law.  This  Letter  of Grant  shall be  subject  to and
construed in accordance  with the law of the State of Arizona,  except as may be
required by the Delaware General Corporation Law or the federal securities laws.
Venue for any  action  arising  from or  relating  to this  Agreement  shall lie
exclusively in Superior  Court,  Maricopa  County,  Arizona or the United States
District Court for the District of Arizona, Phoenix, Division.

         11. Relationship to the Stock Option Plan. The option contained in this
Letter of Grant is subject to the terms, conditions and definitions of the Stock
Option Plan. To the extent that the terms,  conditions  and  definitions of this
Letter of Grant are inconsistent  with the terms,  conditions and definitions of
the Stock Option Plan, the terms, conditions and definitions of the Stock Option
Plan shall govern.  You  acknowledge  receipt of a copy of the Stock Option Plan
and represent that you are familiar with the terms and provisions  thereof.  You
hereby accept this option subject to all such terms and provisions. You agree to
accept as binding,  conclusive and final all decisions or interpretations of the
Board or any committee  appointed by the Board upon any questions  arising under
the Stock Option Plan. You agree to consult your  independent  tax advisors with
respect to the income tax  consequences to you, if any, of  participating in the
Stock  Option Plan and  authorize  the Company to  withhold in  accordance  with
applicable law from any compensation otherwise payable to you any taxes required
to be withheld by federal,  state or local law as a result of your participation
in this Plan.

         12.  Communication.  No notice or other communication under this Letter
of Grant  shall be  effective  unless the same is in writing  and is  personally
hand-delivered,  or is sent by professional overnight delivery service or mailed
by  registered  or  certified  mail,  postage  prepaid and with  return  receipt
requested, addressed to:

                  a)       the  Company  at the  address  set forth in Section 5
                           above,  or such  other  address  as the  Company  has
                           designated in writing to you, in accordance  with the
                           provisions hereof, or 
                  b)       you at the address set forth at the beginning of this
                           letter,  or such other address as you have designated
                           in writing to the  Company,  in  accordance  with the
                           provisions hereof.

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

Sincerely yours,

/s/ Allan M. Weinstein

Allan M. Weinstein
Chief Executive Officer

                                                    ACCEPTED AND AGREED TO:

                                                    /s/ Thomas R. Trotter
                                                    Thomas R. Trotter
                                                    Optionee
                                        5
<PAGE>
                                               Date: October 20, 1997
                                                     ---------------------------
                                        6
<PAGE>
                                ORTHOLOGIC CORP.

                    NOTICE OF EXERCISE OF STOCK OPTION ISSUED
                        UNDER THE 1987 STOCK OPTION PLAN


To:      OrthoLogic Corp.
         2850 S. 36th St., Suite 16
         Phoenix, AZ  85034
         Attn:  Chairman of the Board

         I hereby  exercise my Option dated  October 20, 1987 to purchase  _____
shares of $.0005  par value per share  common  stock of  OrthoLogic  Corp.  (the
"Company")  at the option  exercise  price of $______  per share.  Enclosed is a
certified or cashier's check in the total amount of $_______, or payment in such
other form as the Company has  specified  or as  permitted  by the option  grant
letter.

         If such shares are not  registered  under the Securities Act of 1933, I
represent to you that I am acquiring said shares for investment purposes and not
with a view to any distribution thereof and understand that my stock certificate
may bear an appropriate  legend restricting the transfer of my shares and that a
stop-transfer order may be placed with the Company's transfer agent with respect
to such shares.

         I request that my shares be issued in my name as follows:

         -----------------------------------------------------------------------
         (Print  your  name in the  form in which  you  wish to have the  shares
         registered)

         -----------------------------------------------------------------------
                            (Social Security Number)

         -----------------------------------------------------------------------
                               (Street and Number)

         -----------------------------------------------------------------------
                              (City, State and Zip)

Dated:

Signature: _______________________
                                        7