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                                                                  Exhibit 10.38


                                    AGREEMENT

      This is an Agreement entered into as of October 10, 1997 by and between
Dental/Medical Diagnostic Systems, Inc., a Delaware Corporation with its
principal office located at 200 North Westlake Blvd., Suite 202, Westlake
Village, CA 91362, "DMD" and Suni Imaging Microsystems, a California
corporation, with an address at 185 E. Dana Street, Mountain View, CA 94041
("SUNI"). This Agreement will be effective as of the Effective Date set forth
below.

                            BACKGROUND AND OBJECTIVES

      A. DMD develops, manufactures and markets technology and devices intended
to assist dentists and other professionals to diagnose and/or treat dental and
oral diseases, conditions and/or imperfections, and to assist dental and other
oral medical and dental treatment professionals to educate patients with respect
to their conditions and treatment options.

      B. DMD wishes to develop and offer for sale a digital dental x-ray system
intended to successfully compete on the basis of superior functionality,
superior image quality and clarity, and competitive price to incorporate into a
turn-key digital x-ray imaging system to be assembled and marketed worldwide by
DMD.

      C. SUNI is independently developing technology and an image capture and
processing device capable of creating high quality high definition x-ray images
for display on computer monitors or for printing using low-level x-ray radiation
emissions. SUNI has expertise in developing semiconductor chip processors for
x-ray imaging, computer software and associated systems and documentation for
components similar to those required by DMD.

      D. DMD has selected SUNI to design, develop, document and provide
manufacturing set up know-how and integrate a semiconductor chip processor for
x-ray imaging, computer software and associated systems and documentation into
DMD's proposed X-Ray System, as defined below.

      E. SUNI will own all Intellectual Property Rights in and to the CCD Chip
Design, CCD Chip Technology, Tooling, Licensed Technology, SUNI Software and
Developed Subsystem, each as defined below. Subject to SUNI's ownership as set
forth in the preceding sentence, DMD will own all Intellectual Property Rights
in and to the X-Ray System and DMD Software, as defined below.

      Now, therefore, the parties agree as follows:

1. DEFINITIONS.

            1.1. "Advance Payment" shall mean the advance payment of royalties
            as set forth in Section 4.1.

            1.2. "Affiliate" shall mean a Subsidiary and any entity in which a
            party owns or controls fifty percent (50%) or more of the voting
            interests, or any entity where


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            more than fifty percent (50%) of its voting interests are owned or
            controlled by the same entity that owns more than fifty percent
            (50%) of a party.

            1.3. "Agreement" shall mean this document, including any
            Attachments.

            1.4. "CCD Chip" means a charged coupled semiconductor imaging chip
            which processes x-ray images and which meets the applicable parts of
            the Design and Engineering Specification.

            1.5. "CCD Chip Technology," means CCD Chip technology and know-how
            owned or used by SUNI, including but not limited to (1) CCD Chip
            circuit design; (2) CCD Chip physical design databases; (3) CCD Chip
            manufacturing processes; (4) CCD Chip specifications; (5) any
            improvements or derivative works of the above developed by SUNI
            pursuant to Section 2 of this Agreement; and (6) Documentation that
            is related to the foregoing.

            1.6. "Commercial Commencement" shall mean whichever of the following
            dates is the first to occur: (a) such date as is nine (9) months
            following filing by DMD of a 510k application with the FDA for the
            X-Ray System; or (b) the last day of the first month in which DMD
            invoices a customer for an X-Ray System that is sold in the United
            States of America.

            1.7. "Confidential Information" shall mean all information of a
            party marked confidential, restricted, or proprietary by such party;
            and any oral disclosures, which, in order to be considered
            Confidential Information, must be stated as such and reduced to
            writing within twenty (20) days thereafter, which writing shall
            indicate that the disclosed information is confidential.

            1.8. "Days" or "days" shall mean calendar days unless otherwise
            specified.

            1.9. "Deliverables" are the items to be provided by SUNI to DMD as
            specified in the Statement of Work.

            1.10. "Deliverable Failure" means any error, unresolved problem, or
            defect caused by or resulting from (1) an incorrect functioning of
            code or firmware, or (2) an incorrect or incomplete statement or
            diagram in the Documentation, if such error, problem, or defect
            renders the Developed Subsystem or Tooling inoperable, causes the
            Developed Subsystem to fail to meet Design and Engineering
            Specifications thereof, causes Documentation to be inaccurate or
            incomplete in any material respect, causes incorrect results, or
            causes incorrect functions to occur when any such materials are used
            for their intended purposes.

            1.11. "Dental Field" means (i) dentistry, oral surgery,
            orthodontistry, oral hygiene, cosmetic dentistry, periodontics and
            all other medical and cosmetic professions providing dental care to
            humans and animals or providing services to or educating the
            foregoing professions, and (ii) research, development, design,
            production, manufacture, distribution, marketing, leasing,
            servicing, repairing and/or selling of goods and services to or for
            use by persons engaged in the activities described in the preceding
            clause (i).

            1.12. "Design and Engineering Specification" means the functional
            and performance specification of the Developed Subsystem and Tooling
            including the


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            electrical and mechanical specification details as defined by SUNI
            and agreed by DMD as set forth in Section 2.1 below, and which,
            when so agreed, will be incorporated as Attachment 1 and will be
            subject to modification by mutual agreement of the parties from time
            to time.

            1.13. "Developed Subsystem" means the subsystem developed by SUNI
            for DMD that comprises solely the CCD Chip, the image capture board,
            SUNI Software, and cable and that meets the Design and Engineering
            Specifications.

            1.14. "Development Work," means the work performed under this
            Agreement by SUNI in order to produce the Developed Subsystem and
            Tooling for DMD.

            1.15. "Discretionary Rejection" shall have the meaning set forth in
            Section 2.9(b)(ii).

            1.16. "DMD Approved Vendor" shall mean vendors selected by SUNI, and
            subject to approval by DMD, which approval will not unreasonably be
            withheld, for the purpose of manufacturing the Developed Subsystem
            and Tooling.

            1.17. "DMD Software" means software developed by or for DMD that is
            used to retrieve an image from the system memory that is separate
            from the Developed Subsystem. DMD Software does not include the test
            image capture routine.

            1.18. "Documentation" means the documentation provided by SUNI to
            DMD in paper form and in digital format (Word for Windows for text,
            and an application as determined by SUNI for designs and technical
            specifications) that includes (1) a list of each component of the
            Developed Subsystem and Tooling and estimated manufacturing costs,
            (2) manufacturing flow, directions and instructions for each
            sub-system to be built from the separate components in (1) above,
            (3) updates to the above from time to time, all of which shall be
            appropriate for reasonably qualified DMD personnel or personnel of
            DMD's subcontractors to use for the intended purpose, and (4) any
            other form of documentation that is set forth in the Statement of
            Work.

            1.19. "Effective Date" shall mean the date on which the parties have
            initialed each of Attachments 1 through 4 to this Agreement, as set
            forth in Section 32 below.

            1.20. "Final Prototype Developed Subsystem" means the final
            prototype of the Developed Subsystem with all required
            functionality, performance and Documentation for final test
            purposes, manufactured with production ready Tooling using the
            actual production methods and equipment specified by SUNI in the
            Documentation, and which has been determined by SUNI to satisfy the
            Design and Engineering Specifications and the manufacturing cost
            targets contained therein.

            1.21. "Improvements" means modifications to the Developed Subsystem
            and Tooling that improve functionality, performance or
            manufactureability of the CCD Chip at the 2 micron lithography
            level.

            1.22. "Initial Prototype Developed Subsystem" means a prototype of
            the Developed Subsystem which is functionally equivalent to
            production versions of the Developed Subsystem but which is not
            necessarily manufactured using manufacturing processes required for
            commercial production of the Developed Subsystem or with actual


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            production tooling, but which has been determined by SUNI to satisfy
            the applicable sections of the Design and Engineering Specifications
            and the manufacturing cost targets.

            1.23. "Intellectual Property Rights" means any and all Patents,
            copyrights, mask works, trade secrets and other intellectual
            property rights in any country of the world.

            1.24. "Licensed Products," means the Developed Subsystem or
            components of the Developed Subsystem or products that incorporate
            the Licensed Technology or CCD Chip, including, but not limited to,
            an X-Ray System.

            1.25. "Licensed Technology," means all currently existing
            inventions, methods, designs, code and know-how, whether or not
            copyrighted or copyrightable or patented or patentable that have
            been developed by, for, or used by SUNI in the Developed Subsystem
            design or Tooling, or both, and any future Improvements that DMD
            elects to license pursuant to Section 5.2 below.

            1.26. "Net Receipts" from Licensed Products shall mean the total
            amount actually invoiced by DMD to DMD's customer for Licensed
            Products (exclusive of training, installation, maintenance and
            support charges separately invoiced), less (i) any prices separately
            charged by DMD , as per DMD's published price list for hardware or
            software used in connection with the Licensed Products, including
            without limitation, work stations, personal computers, monitors,
            video cassette recorders and optional accessories; (ii) DMD
            authorized returns; (iii) free warranty replacements; (iv) sales,
            use and excise taxes; (v) freight (specifically billed or prepaid);
            and (vi) insurance for freight. If DMD's customer is an Affiliate of
            DMD that is purchasing the Licensed Product for resale purposes,
            then Net Receipts shall mean the total amount actually invoices by
            such DMD Affiliate to its customer for Licensed Products, less the
            deductions specified in this Subsection above (with the DMD
            Affiliate substituted for DMD).

            1.27. "Patents" means patents and patent applications and all
            foreign counterparts, reissues, divisions, renewals, extensions,
            provisionals, continuations and continuations-in-part of any such
            patents or patent applications.

            1.28. "Prototypes" means the Initial Prototype Developed Subsystem
            and the Final Prototype Developed Subsystem.

            1.29. "Regulatory Agency" shall mean any regulatory agency
            governmental or private, including but not limited to agencies
            regulating medical device safety, product safety, and/or
            electromagnetic emissions, the approval of which is required by DMD
            or the government of the United States prior to delivery or
            marketing of the X-Ray Systems in the United States, Puerto Rico,
            and the territories and possessions of the United States and which
            are included in the Regulatory Specification or by an applicable
            regulatory agency of Canada or the European Community.

            1.30. "Regulatory Specification" shall mean the functional and
            performance specification to be prepared by DMD that identifies
            electrical and mechanical features that must be included in the
            Developed System pursuant to the requirements


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            of Regulatory Agencies, a copy of which is attached to this
            Agreement as Attachment 5.

            1.31. "Statement of Work", means the list of the Deliverables,
            including source code, each with a target date for completion by
            SUNI of the Deliverable and of the Developed Subsystem and Tooling,
            as set forth in Attachment 2.

            1.32. "Subsidiary" shall mean any entity in which a party owns or
            controls more than fifty percent (50%) of the voting interests.

            1.33. "SUNI Software" means software developed by or for SUNI to
            create an image in the system memory that is separate from the
            Developed Subsystem and to provide the test image display routine
            function.

            1.34. "Tooling", means CCD Chip mask set for the DMD Approved
            Vendor, and other hardware and software (in object code and source
            code) as set forth in Attachment 3 that will be required by DMD for
            the production of the Developed Subsystem by DMD or its
            subcontractors in quantities contemplated by DMD under this
            Agreement.

            1.35. "X-Ray System" shall mean a digital x-ray system and each of
            its component parts proposed to be marketed and sold by DMD, that
            incorporates the Developed Subsystem and that also may include, but
            not be limited to, the following additional items: DMD Software,
            personal computer, peripheral devices such as monitors, video
            cassette recorder and/or other recording devices, networking servers
            and cabling, hand-held mouthpiece, and/or an x-ray emitter.

2. DEVELOPMENT WORK.

            2.1. Design and Engineering Specification. SUNI will provide a
            proposed Design and Engineering Specification to DMD on or before
            the date specified in the Statement of Work. DMD and SUNI will use
            commercially reasonable best efforts to reach agreement on the
            Design and Engineering Specification within thirty (30) days from
            DMD's receipt of the proposed Design and Engineering Specification.
            If the parties have failed to agree to the proposed Design and
            Engineering Specification within such time period, then either party
            may terminate this Agreement upon ten(10) days notice to the other,
            and neither party shall have any liability to the other arising out
            of such failure or termination. No Sections of this Agreement shall
            survive termination under this Section 2.1

            2.2. Performance of Development Work. SUNI shall use reasonable best
            efforts: (a) to perform all Development Work, and (b) to achieve
            each milestone and provide the Deliverables in accordance with the
            Statement of Work in conformity with the Design and Engineering
            Specifications; provided however, that SUNI shall deliver the
            Initial Prototype Developed Subsystem and the Final Prototype
            Developed Subsystem in accordance with Section 2.3 below.

            2.3. Delivery Dates. Subject to Sections 2.4 and 2.5 below, SUNI
            shall (a) complete and deliver the Initial Prototype Developed
            Subsystem no later than six (6) months after the Effective Date, and
            (b) deliver the Final Prototype Developed Subsystem to DMD no later
            than twelve (12) months after the Effective Date (the "Delivery
            Date"), in each case, subject to change by mutual agreement as


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            contemplated by Section 2.8 below. Each party acknowledges that
            SUNI's ability to perform in accordance with the Statement of Work
            schedule will be subject to DMD's timely performance of its
            obligations under this Agreement and to the ability of any DMD
            Approved Vendor to deliver CCD Chip Prototypes within the required
            timeframe. SUNI shall provide DMD with progress reports, in
            accordance with the Statement of Work. Each such report shall
            reflect/indicate:

               (i)    Status of progress to current SOW milestone;

               (ii)   Short description of problems in meeting such milestone;

               (iii)  Proposed recovery method to meet next milestone if needed;

               (iv)   Any other information related to the Development Work
                      reasonably requested by DMD;

               (v)    Any anticipated changes in the projected cost of the
                      Developed Subsystem or Tooling.

            2.4. Design Assumptions. Delivery Dates are based upon a CCD Chip
            that incorporates scintillator-based technology.

            2.5. DMD Approved Vendors. SUNI shall be responsible for having made
            by the DMD Approved Vendors the Initial Prototype Developed
            Subsystem and the Final Prototype Developed Subsystem. If a defect
            in a Prototype or delay in delivery of a Prototype is caused by a
            DMD Approved Vendor and such defect or delay results in a delay in
            SUNI's performance of its obligations under this Agreement, then the
            Statement of Work schedule and Delivery Dates specified in Section
            2.3 above shall automatically be extended by the delay caused by the
            DMD Approved Vendor.

            2.6. Costs of Development Work. SUNI shall bear all costs of the
            Development Work, other than as agreed as set forth in Section 2.8
            below and as set forth in Section 3.5 below.

            2.7. Progress Reviews. The parties agree to conduct regular program
            reviews as shown on the Statement of Work, to ensure their mutual
            satisfaction with the performance of the Development Work under the
            Agreement. The parties agree to meet at a mutually agreeable time
            and location to discuss and inspect the status of the Development
            Work.

            2.8. Changes to Specifications and Statement of Work. Prior to
            delivery of the Initial Prototype Developed Subsystem, DMD and SUNI
            shall meet to discuss any changes to the Design and Engineering
            Specifications suggested by the other party, including, but not
            limited to changes required by Regulatory Agencies. If a change is
            required by a Regulatory Agency, then SUNI will make such change,
            and DMD will pay for all costs that SUNI incurs in implementing such
            change. All other changes will be subject to the parties' mutual
            agreement on changes to the Statement of Work and timing and payment
            for the incremental cost of such changes. DMD may also specify
            changes to the Developed Subsystem design, schedule, and/or related
            deliverable items in writing at any time; provided, however, that if
            SUNI reasonably concludes that such change will result in a change
            to the cost or time required for performance by SUNI of the
            Development Work, or if SUM expects the


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            change to affect the form, fit, function or manufacturing cost of
            the Developed Subsystem, then SUNI will so notify DMD within ten
            days after receipt of DMD's request. SUNI shall not implement any
            change prior to the parties' written agreement on such
            adjustment(s). If changes are to be paid for at an hourly rate, then
            such rate shall be SUNI's standard rates for comparable work at the
            time such changes are made.

2.9. Acceptance and Testing Procedures.

            (a) Acceptance and Testing. DMD, with the assistance of SUNI if
            requested by DMD, will examine and test each Prototype upon delivery
            to determine whether the Prototype conforms to the Design and
            Engineering Specifications and in the exercise of its sole
            discretion generates image quality and clarity acceptable to DMD.
            DMD shall, within ten (10) working days from delivery of each
            Prototype: (i) accept the Prototype and so inform SUNI in writing;
            or (ii) reject the Prototype and provide SUNI with a written
            statement of nonconformity to the Design and Engineering Statement,
            specifying in detail the Prototype's nonconformity, or, in the case
            of an Initial Prototype Developed Subsystem specifying the basis for
            a Discretionary Rejection, as described in greater detail in
            subsection 2.9(b)(ii) below. If DMD does not provide such a
            statement of non-conformity to the Design and Engineering
            Specifications or notice of Discretionary Rejection within the said
            acceptance period, then DMD will be deemed to have accepted the
            Prototype.

            (b) Consequences of Rejection.

                (i) Failure to Conform to Design and Engineering Specification.
                    If DMD provides a statement of non-conformity within the
                    acceptance period, pursuant to Subsection (a) above, then
                    SUNI will use reasonable best efforts to correct the
                    nonconformity within fifteen (15) days from SUNI's receipt
                    of the statement of non-conformity. DMD shall re-test the
                    Prototype within ten (10) days of delivery of the corrected
                    Prototype, and the test and acceptance procedures set forth
                    in this Section shall apply to such re-test. If after two
                    (2) re-test cycles, SUNI has been unable to correct a
                    non-conformity that was the subject of a written statement
                    of nonconformity by DMD, in accordance with this Section,
                    then, unless the parties have otherwise developed a mutually
                    agreeable plan to correct the non-conformity, DMD may: (A)
                    terminate this Agreement upon sixty (60) days prior notice
                    to SUNI, and/or (B) obtain SUNI technical information
                    pursuant to Section 11 below and correct the non-conformity
                    itself. DMD may deduct from future royalties payable to SUNI
                    the reasonable cost of such corrections pursuant to Section
                    4.5 below. If DMD elects to terminate this Agreement and to
                    obtain the technical information as set forth in this
                    Section, then the following Sections shall survive such
                    termination: Sections 4 (Royalty); 6 (Intellectual Property
                    Ownership); 7 (License) 8 (Exclusive Marketing; Sensor
                    Technology Development); 11 (Delivery of Technology); 13


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                    (Confidential Information); 14 (Indemnification) 15
                    (Liability); and 16 through 33.

               (ii) Discretionary Rejection. If DMD rejects an Initial
                    Prototype Developed Subsystem during the acceptance period
                    due to a determination by DMD that the Initial Prototype
                    Developed Subsystem does not produce image quality and
                    clarity acceptable to DMD in its sole discretion (a
                    "Discretionary Rejection"), then all Advance Payments due to
                    SUNI on or prior to the date specified in the Statement of
                    Work for delivery to DMD of the Initial Prototype Developed
                    Subsystem under Section 4.1 of this Agreement (the "Initial
                    Prototype Milestone Payments") and pursuant to Section 2.8
                    shall be deemed earned and shall not be refundable to DMD.
                    In such case, the obligation of DMD to make any further
                    Advance Payments shall be immediately suspended unless and
                    until SUNI, at its option, has delivered to DMD an Initial
                    Prototype Developed Subsystem determined by DMD in the
                    exercise of its sole discretion to generate image quality
                    and clarity acceptable to DMD, at which time, all Advance
                    Payments that would otherwise have become due during the
                    period that payments were suspended, shall be come due and
                    payable. If DMD advises SUNI in writing that it has elected
                    not to make any further Advance Payments, then SUNI shall be
                    relieved of any further obligations under this Agreement
                    (including but not limited to obligations under this Section
                    2 or Section 3 below). If as a result of a Discretionary
                    Rejection, the Initial Prototype Milestone Payments are
                    deemed earned by SUNI, DMD may take a credit against
                    subsequent royalty obligations to SUNI (after the fourth
                    anniversary of Commercial Commencement) in an amount equal
                    to the Initial Prototype Milestone Payments that have been
                    paid to SUNI

            2.10. Access to SUNI Facilities. SUNI shall promptly upon request by
            DMD at any time after the date of this Agreement until the earlier
            of the date that this Agreement is terminated or the delivery of the
            Final Prototype Developed Subsystem, provide to DMD reasonable
            access to SUNI's facilities and information to inspect the progress
            of the Development Work, and, in connection with such inspection,
            shall provide to DMD access to technical advisory staff for a
            reasonable time.

            2.11. Improvements as of Agreement Date. The Deliverables delivered
            hereunder shall, to the extent not otherwise contemplated by the
            Design and Engineering Specifications, incorporate the latest
            improvements to the CCD Chip Technology as of the Effective Date of
            this Agreement, to the extent applicable in or useful in the Dental
            Field. SUNI shall offer to DMD Improvements made after the Effective
            Date of this Agreement in accordance with Section 5.2 below.

            2.12. Software. SUNI will be responsible for the development of all
            SUNI Software. DMD will be responsible for the development of all
            DMD Software and for all changes to the Developed Subsystem and
            Tooling that may be required as a


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            result of changes in the operating system specified in the Design
            and Engineering Specifications.

3. MANUFACTURE.

            3.1. DMD Right to Manufacture. DMD shall have the right to
            manufacture, or have manufactured by a DMD Approved Vendor, the
            Developed Subsystem and Tooling as set forth in Section 7 below.

            3.2. SUNI Assistance. SUNI shall provide all reasonable assistance
            to the DMD Approved Vendor(s) and Documentation as set forth in the
            Statement of Work.

            3.3. Technical Support. SUNI shall, at no additional cost for up to
            180 days following Commercial Commencement, provide to DMD and the
            DMD Approved Vendor(s) technical support to facilitate a smooth and
            cost effective commencement of production of the Developed Subsystem
            and Tooling. SUNI will provide manufacturing drawings and
            specifications to DMD in accordance with good commercial practice.

            3.4. Training. SUNI shall, at no additional cost for up to 180 days
            following Commercial Commencement, provide to DMD's personnel at
            DMD's facilities in California, adequate training, as reasonably
            determined and scheduled by DMD, for the integration and manufacture
            of the Developed Subsystem as part of the X-Ray System, and provide
            consulting services to DMD's software engineers to facilitate smooth
            and efficient integration and transfer of responsibility for the
            software and firmware included with the Developed Subsystems with
            the other software and hardware components of the X-Ray System.
            Thereafter, such training shall be provided by SUNI at a mutually
            agreed cost to the parties consistent with SUNI's standard charges
            to customers for similar services.

            3.5. Tooling. Subject to the following sentence, SUNI will be
            responsible for the cost of obtaining and delivering to DMD Tooling
            for Prototypes. If the mask set to be used by the DMD Approved
            Vendor is a six (6) inch Orbit Semiconductor mask set, then DMD will
            be responsible for the cost of Tooling for Prototypes. Production
            mask set Tooling, which DMD shall own, shall be retained for
            production of CCD Chips by the DMD Approved Vendor for the CCD
            Chips. DMD will be responsible for the cost of obtaining production
            masks and production Tooling. If a mask is broken after delivery to
            DMD or to a DMD Approved Vendor, then DMD will pay for the
            replacement mask. If a Prototype mask is defective and if SUNI is
            responsible for such defect, then SUNI will pay for the replacement
            mask.

            3.6. DMD Personnel. DMD personnel receiving training and technical
            support from SUNI will have reasonable technical background and
            experience in the areas in which such training and support is to be
            provided.

4. ROYALTY. Subject to all the terms and conditions expressed in this Agreement,
and in consideration for the rights and licenses granted in Section 7 and the
hardware, software Tooling, services and support required to be provided by SUNI
hereunder, DMD shall pay royalties to SUNI as follows:

            4.1. Advance Payments. During the development phase DMD shall pay to
            SUNI prepaid royalties (the "Advance Payments") as set forth below.
            All Advance


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**CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
  EXCHANGE COMMISSION

            Payments paid to SUNI shall be recoupable as full credit from
            royalties otherwise payable to SUNI after the fourth anniversary of
            Commercial Commencement pursuant to Section 4.5 of this Agreement.

                  (a) Subject to Section 4.1(b) below, the Advance Payment shall
                  be paid in installments as follows:

<TABLE>
<CAPTION>
                               TIME                                     AMOUNT
            ---------------------------------------------              ---------
            <S>                                                        <C>
            Upon the Effective Date                                    $   **

            On the last day of the first calendar month
            during which the Effective Date occurs                     $   **

            On the last day of the second calendar month
            after the Effective Date                                   $   **

            On the last day of the third calendar month
            after the Effective Date                                   $   **

            On the last day of the fourth calendar month
            after the Effective Date                                   $   **

            On the last day of the fifth calendar month
            after the Effective Date                                   $   **

            Upon the last day of each calendar month
            commencing upon the earlier of the date that
            is: (i) the calendar month of delivery to
            DMD of the first production Developed
            Subsystem by DMD Approved Vendors; or (ii)
            three (3) months after DMD's acceptance of
            the Final Prototype Developed System until
            total payments under this Section 4.1(a)
            equal $1,250,000. These Advance Payments are
            subject to Subsection (b)(ii) below.                       $   **
                                                                       =========
</TABLE>


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            (b) Relief from Advance Payment Obligations. DMD may be relieved of
            its obligations to make Advance Payments under any of the
            circumstances described below:

               (i)  Failure of SUNI to Achieve a Reasonable Rate of Progress. If
                    SUNI fails to make reasonable progress towards meeting the
                    milestones set forth in the Statement of Work, then DMD may
                    give SUNI notice of the failure, and SUNI will then have
                    fifteen (15) days from receipt of such notice to achieve a
                    reasonable rate of progress with respect to the applicable
                    milestones. If SUNI fails to achieve reasonable progress
                    within such fifteen (15) day period, then DMD may either:
                    (A) terminate this Agreement and will be relieved of the
                    obligation to make any further Advance Payments; or (B)
                    suspend payment of Advance Payments. If DMD elects to
                    terminate this Agreement under this 4.1(b)(i), then the
                    following Sections shall survive such termination: Sections
                    4 (Royalty); 6 (Intellectual Property Rights); 7 (License);
                    8 (Exclusive Marketing; Sensor Technology Development); 11
                    (Delivery of Technology); 13 (Confidential Information); 14
                    (Indemnification); 15 (Liability); and 16 through 33. If DMD
                    elects to suspend Advance Payments then: (A) if SUNI
                    achieves a reasonable rate of progress during the next
                    thirty (30) days after the suspension, DMD will pay to SUNI
                    the withheld Advance Payments; and (B) if SUNI fails to
                    achieve a reasonable rate of progress during the next thirty
                    (30) days after the suspension, then the Agreement will
                    terminate and the Sections of this Agreement set forth in
                    the preceding sentence shall survive such termination. Upon
                    termination of this Agreement pursuant to this Subsection
                    4.1 (b)(i), DMD may obtain SUNI technology and may complete
                    the Developed Subsystem itself, pursuant to the terms and
                    conditions of Section 11 below. DMD shall be entitled to
                    deduct from any future royalty payments otherwise due under
                    this Agreement, the reasonable costs of completing the
                    Developed Subsystem so that it conforms to the Design and
                    Engineering Specifications, as set forth in Section 4.5
                    below.

               (ii) Discretionary Rejection. Upon a Discretionary Rejection by
                    DMD, DMD may be relieved of its obligation to make Advance
                    Payments that would otherwise be due after delivery of the
                    Initial Prototype Developed Subsystem, as set forth in
                    Section 2.9(b)(ii) above.

      4.2. Production Phase Royalty Payment. DMD shall pay SUNI royalties as
      follows for each and every Licensed Product shipped. Royalties accrue on
      Licensed Products sold, leased or otherwise transferred by DMD or, as
      applicable, by DMD Affiliates, to their customers. No royalties shall be
      paid by DMD for Licensed Products which are used internally by DMD for
      purposes that include testing, evaluation, support, marketing,
      demonstration or training provided that the duration


                                                                         Page 11

<PAGE>   12
**CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
  EXCHANGE COMMISSION

      of such testing, evaluation, support, marketing, demonstration or training
      does not exceed thirty (30) days. Royalties shall accrue on Licensed
      Products used for more than thirty (30) days for testing, evaluation,
      support, marketing, demonstration or training. Royalties shall accrue as
      follows:

            (a) For the period ending on the fourth anniversary of Commercial
            Commencement:

               (i)  ** % of all Net Receipts until Net Receipts equal $ **
                    and

               (ii) ** % of all Net Receipts after Net Receipts exceed $ **

            (b) For the period following the fourth anniversary of Commercial
            Commencement: ** % of all Net Receipts.

            (c) Notwithstanding the foregoing, the minimum royalty payable for
            each Licensed Product under this Section 4.2 shall be U.S. $ **.

      4.3. Payment of Production Royalties. Within sixty (60) days after the end
      of each calendar quarter during the term hereof, DMD shall provide SUNI
      with a written report setting forth the amount of royalties earned by SUNI
      during that calendar quarter pursuant to this Agreement and the amount of
      any Advance Payment or Correction Amount applied against such royalty in
      accordance with Section 4.5 below. DMD shall provide with each report a
      check in the amount of any payment to be made, as indicated in the report.

      4.4. Audit. DMD shall, for a period of two (2) years following the date of
      each royalty report issued, keep records adequate to verify the substance
      of the report and any accompanying payment. SUNI shall have the right, no
      more than once each calendar year, to select a mutually acceptable
      independent Certified Public Accountant to inspect the records of DMD
      relating to the Licensed Products at a single location on reasonable
      notice and during regular business hours to verify the reports and
      payments made hereunder. The entire cost of such inspection shall be borne
      by SUNI, and such Certified Public Accountant shall not disclose to SUNI
      any information other than information relating to the computation and
      accuracy of such reports and payments. Any information as to DMD's
      customers will be treated as DMD confidential information and shall not be
      disclosed to anyone other than the auditors. If the audit reveals that DMD
      has under-reported royalties by more than ten percent (10%) in any
      calendar year, DMD shall reimburse SUNI for the audit fees following
      delivery to DMD of the auditors report detailing such under reporting of
      royalties. In any event, DMD shall promptly repay, or apply against any
      outstanding prepaid royalties, the underpayment.

      4.5. Recovery of Advance Payments and Correction Amounts. All Advance
      Payments and reasonable amounts paid by DMD to correct defects in or to
      complete the Developed Subsystem in accordance with Sections 2.9(b)(ii),
      or 4.1(b)(i) (the "Correction Amounts") are recoupable by credit against
      future royalty payments due to SUNI under Section 4.2 after the fourth
      anniversary of Commercial Commencement, as set forth in this Section. DMD
      may deduct up to fifty percent (50%) of the royalty payments due for the
      first two (2) calendar quarters of each calendar year after the fourth
      anniversary of Commercial Commencement until such


                                                                         Page 12

<PAGE>   13

      time as such deductions are equal to one hundred percent (100%) of the
      Advance Payments paid to SUNI and 100% of DMD's reasonable Correction
      Amounts. If, after the first two (2) calendar quarters of each calendar
      year DMD has not recouped one hundred percent (100%) of the Advance
      Payments and Correction Amounts, then DMD may recoup the balance of the
      Advance Payments and Correction Amounts from up to one hundred percent
      (100%) of future quarterly royalty payments otherwise payable during the
      balance of that calendar year.

      4.6. Late Payments. All late payments of amounts due under this Agreement
      shall bear interest at a rate equal to the Bank of America Prime Rate plus
      one percent (1%) from the date due until paid in full.

5. MAINTENANCE AND SUPPORT.

      5.1.Support. SUNI shall provide the following support services to DMD and
      to each DMD Approved Vendor as follows, at no charge until the 90th day
      following Commercial Commencement, and, if thereafter requested by DMD,
      shall be provided at rates consistent with SUNI's standard rates or upon
      such other terms as may be mutually agreed:

            (a) Telephone Support. SUNI will provide reasonable telephone
            hot-line support for DMD and DMD Approved Vendors during SUNI's
            normal hours of business for manufacture and product de-bugging of
            CCD Chip wafers; and

            (b) Technical Support and Training. SUNI will provide technical
            support and training to DMD pursuant to Sections 3.3 and 3.4 above.

      5.2.Improvements. During the term of this Agreement, SUNI will disclose to
      DMD all Improvements that may be applicable to the Dental Field, and, if
      DMD elects to have SUNI implement such Improvements as part of the
      Developed Subsystem or Tooling, then SUNI shall deliver such Improvements
      to DMD, and DMD shall pay for the cost of any modifications required to
      enable DMD to use such Improvements in the Dental Field or to integrate
      such Improvements into the Developed Subsystem, consistent with the scope
      of DMD's license under this Agreement, at rates consistent with SUNI's
      then standard rates during the term of this Agreement.

6. INTELLECTUAL PROPERTY OWNERSHIP.

      6.1.SUNI Rights. SUNI shall own all Intellectual Property Rights in and to
      the Licensed Technology, CCD Chip Technology, SUNI Software, Tooling,
      masks and Developed Subsystem.

      6.2. DMD Rights. Subject to SUNI's ownership of Intellectual Property
      Rights as set forth in Section 6.1 above, DMD shall own all Intellectual
      Property Rights in and to the X-Ray System and DMD Software and shall own
      all right, title and interest in and to the physical embodiment of the
      Tooling for the production version of the Developed Subsystem.

      6.3. Patent Prosecution. Attachment 4 to this Agreement includes a list of
      those countries in which, as of the date of this Agreement, SUNI intends
      to seek patent protection with respect to CCD Chip Technology and Licensed
      Technology. DMD may, from time to time, provide SUNI with a list of those
      countries in which DMD


                                                                         Page 13

<PAGE>   14
** CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE SECURITIES
   AND EXCHANGE COMMISSION

      wishes to obtain patent protection for any of the CCD Chip Technology or
      Licensed Technology. If any such country is not included on the Attachment
      4 list, then SUNI will seek and maintain patent protection in such
      countries, provided that SUNI will first provide DMD with an estimate of
      the cost of such protection, and DMD reimburses SUNI's reasonable costs
      (including reasonable attorneys fees) in so doing.

      6.4. Compensation. Each party shall be responsible for any compensation
      which may be due its employees who make inventions.

      6.5. Notice of Infringement. In performing SUNI's obligations under this
      Agreement, SUNI agrees to avoid knowingly delivering, designing, and/or
      developing an item that infringes one or more unlicensed patents, utility
      models, design registrations, copyrights or trade secrets of any third
      party. If during the course of performing SUNI's obligations under this
      Agreement SUNI knows or becomes aware of any such patent, utility model,
      design registration or copyright that SUNI believes might be infringed,
      SUNI agrees to notify DMD promptly in writing of such possible
      infringement.

7. LICENSE.

      7.1. Grant of License. SUNI hereby grants to DMD and DMD hereby accepts an
      irrevocable exclusive (subject to Section 7.3 below) worldwide right and
      license ("License") in the Dental Field:

            (a) Tooling. To use, disclose (subject to Section 13 below) make and
            have made Tooling by a DMD Approved Vendor; and

            (b) Developed Subsystems. To use, disclose (subject to Section 13
            below), modify, maintain, make, have made by a DMD Approved Vendor,
            sell, promote, distribute and lease Developed Subsystems and to
            prepare derivative works of software that is included within the
            Developed Subsystem for use in the Dental Field.

      7.2. Sublicense Rights. DMD may grant sublicenses of the rights set forth
      in Section 7.1 above to its Subsidiaries; provided that DMD shall remain
      responsible for such sublicensee's performance of all obligations that
      apply to DMD under this Agreement. All royalty payments under this
      Agreement for both DMD and DMD Subsidiaries shall be made by DMD directly
      to SUNI.

      7.3. Circumstances Under Which the License Converts to a Non-exclusive
      License. The License granted under Subsection 7.1 above shall
      automatically become nonexclusive if any of the following circumstances
      occurs:

            (a) DMD Fails to Pay Minimum Royalty Payments. The License granted
            under Subsection 7.1 above shall become non-exclusive if DMD fails,
            with respect to any of the periods specified below to pay to SUNI
            the minimum royalty amount specified for such period in the table
            below:

<TABLE>
<CAPTION>
           12 Months ending on:                                      Amount:
           -------------------------------------------             -----------
           <S>                                                     <C>
           90 days following the first anniversary of              $  **
           Commercial Commencement
</TABLE>


                                                                         Page 14

<PAGE>   15

** CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
   EXCHANGE COMMISSION


<TABLE>
           <S>                                                     <C>
           90 days following the second anniversary of             $   **
           Commercial Commencement

           90 days following the third anniversary of              $   **
           Commercial Commencement

           90 days following the fourth anniversary of             $   **
           Commercial Commencement

           90 days following each subsequent                       $   **
           Anniversary of Commercial Commencement
</TABLE>

            All minimum royalty payments are due on the last day of the
            applicable period. Late payments will bear interest in accordance
            with Section 4.6. Notwithstanding anything to the contrary in the
            foregoing, if DMD fails to pay a late payment in full within sixty
            (60) days from the due date, then the license will convert to a
            non-exclusive license.

            (b) DMD Offers For Sale a Competing Product. The License granted
            under Section 7.1 above shall become non-exclusive if DMD or a DMD
            Affiliate offers for sale or lease any product in the Dental Field
            that contains a semiconductor imaging chip unit that processes x-ray
            images other than a Licensed Product that contains CCD Chip
            Technology.

            (c) DMD Exercises its Rights to Receive Technology in Order to
            Complete or Correct the Developed Subsystem. If DMD exercises its
            rights under either of Sections 2.9(b)(i) or 4.1(b)(i) to obtain
            SUNI technical information pursuant to Section 11 of this
            Agreement, and if DMD has not obtained a production version of the
            Developed Subsystem within six (6) months after the date that is the
            later of the date on which such technical information is delivered
            to DMD and the date that was SUNI's Delivery Date for the Final
            Prototype Developed Subsystem, then the License granted under
            Section 7.1 above shall become non-exclusive.

            (d) Notice by DMD. The License granted under Section 7.1 above shall
            become non-exclusive if DMD provides SUNI with written notice
            electing to convert the License into a non-exclusive license.

      7.4. SUNI Rights if License Becomes Non-exclusive. If the License granted
      under Section 7.1 above becomes non-exclusive, then SUNI shall have the
      right to license the Licensed Technology to others for use in the Dental
      Field; provided, however, that except where the License becomes
      non-exclusive upon DMD's election as set forth in Section 7.3(d) above, no
      other licensee may have greater or more favorable rights in the Dental
      Field in any respect than are afforded to DMD hereby.

      7.5. No Trademark License. Nothing in this Agreement shall be construed as
      authorizing a party to use any trademark or trade name of the other.

8. EXCLUSIVE MARKETING; SENSOR TECHNOLOGY DEVELOPMENT.

      8.1. Exclusive Marketing by SUNI. So long as the license granted under
      Section 7.1


                                                                         Page 15

<PAGE>   16

      remains exclusive, SUNI shall not sell or license to any person other than
      DMD, or develop other than for DMD, any device competitive with the X-Ray
      System or the Developed Subsystem for use or sale in the Dental Field.
      SUNI shall not, however, be restricted by this Section 8.1 from
      developing, selling or licensing any products or services for use outside
      the Dental Field.

      8.2. Sensor Technology Development.

            (a) If DMD desires to add features to the Developed System or to
            market a device competitive with the X-Ray System then before it may
            do so, DMD will first give SUNI written notice of DMD's proposal for
            additional features or a competing product. Within thirty (30) days'
            of SUNI's receipt of such notice SUNI shall inform DMD, in writing,
            as to whether SUNI desires to engage in discussions with DMD
            concerning SUNI's performance of the work required to add features
            or develop a competing product. If SUNI notifies DMD that it is not
            interested in engaging in such discussions or fails to respond
            within the thirty (30) day period to DMD's request, then on the date
            that is six (6) months after the expiration of SUNI's thirty (30)
            day response period, DMD may commence promotion and sale of a
            product that is competitive with the X-Ray System. IF SUNI notifies
            DMD within the thirty (30) day response period that SUNI wants to
            engage in such discussions, then SUNI and DMD will have another
            sixty (60) days from the date of SUNI's response to complete an
            agreement concerning SUNI's work on the additional features or
            development of a competing product. If SUNI and DMD fail to reach
            agreement within such time period, then on the date that is six (6)
            months after the expiration of the sixty (60) day negotiation
            period, DMD may commence promotion and sale of a product that is
            competitive with the X-Ray System.

            (b) If, in compliance with Section 8.2(a) above, DMD shall offer for
            sale any product in the Dental Field other than a Licensed Product
            that contains a semiconductor imaging chip unit that processes x-ray
            images, then the License granted under Section 7.1 shall immediately
            cease to be exclusive.

9. REPRESENTATIONS AND WARRANTIES.

      9.1. Representations and Warranties of DMD and SUNI. SUNI and DMD each
      represent and warrant to the other that:

            (a) It has all requisite power and authority to enter into this
            Agreement and to carry out the transactions contemplated by this
            Agreement;

            (b) The execution, delivery and performance of this Agreement and
            the consummation of the transactions contemplated by this Agreement
            have been duly authorized by all requisite action on the part of
            such party; and

            (c) This Agreement has been duly executed and delivered by such
            party and (assuming the due authorization, execution and delivery
            hereof by the other party) is a valid and binding obligation of such
            party, enforceable against it in accordance with its terms except as
            enforcement of such terms may be limited by bankruptcy, insolvency,
            reorganization, moratorium or similar laws affecting the


                                                                         Page 16

<PAGE>   17

            enforcement of creditors' rights generally and by the availability
            of equitable remedies and defenses.

      9.2. Representations and Warranties of SUNI. SUNI represents and warrants
      to DMD that:

            (a) To SUNI's knowledge, all Deliverables have been or will be
            designed for DMD, and SUNI either owns or has acquired rights in and
            to, or will acquire right in and to, all Deliverables and no portion
            of such items or their use or distribution violates any patent,
            copyright, trade secret right, or similar right of any third party.

            (b) SUNI has the rights it needs to satisfy its obligations
            hereunder. Further, for so long as DMD's rights under this Agreement
            remain in effect, SUNI agrees that it will not take any action which
            would prevent DMD and its Subsidiaries from marketing the Developed
            Subsystem anywhere in the world.

            (c) SUNI shall use reasonable best efforts to perform all
            Development Work and to provide the Deliverables in accordance with
            the Statement of Work and Design and Engineering Specifications.

            (d) To SUNI's knowledge, the CCD Chip does not and will not infringe
            upon, or violate or misappropriate, in whole or in part, the rights
            of any third party or entity, including but not limited to any
            patent, copyright, trade secret, trade mark, service mark rights.

            (e) To SUNI's knowledge, the CCD Chip is not the subject of any
            litigation or claim that has given or might give rise to litigation
            or any investigation or proceeding.

            (f) SUNI will perform its obligations arising pursuant to this
            Agreement in a diligent and professional manner using experienced
            personnel.

            (g) SUNI is free to enter into this Agreement and will not do or
            permit any act which will materially interfere with or derogate from
            the full performance of the Development Work or the exercise of
            DMD's rights granted herein.

            (h) The entering into and carrying out of the terms of this
            Agreement will not violate or constitute a breach of any law,
            judgment or agreement binding on SUNI.

            (i) Immediately upon each element of the X-Ray System (other than
            the Developed Subsystem and Tooling) coming into existence, title to
            such element and all Intellectual Property Rights associated
            therewith shall be owned by DMD free and clear of all liens,
            interests or adverse claims imposed by or with the consent of SUNI.
            SUNI shall promptly execute all documents necessary to assign such
            rights to DMD.

      9.3. LIMITATION ON WARRANTIES. EXCEPT AS EXPRESSLY SET FORTH IN THIS
      SECTION 9 ABOVE, NEITHER PARTY MAKES ANY WARRANTIES, EXPRESS OR IMPLIED,
      INCLUDING, BUT NOT LIMITED TO, WARRANTIES OF MERCHANTABILITY, FITNESS FOR
      A PARTICULAR PURPOSE AND NONINFRINGEMENT.


                                                                         Page 17
<PAGE>   18

10. TERM AND TERMINATION. This Agreement will continue in effect unless and
until terminated as follows:

      10.1. Automatic Termination. This Agreement will terminate automatically
      if the Effective Date has not occurred on or before the date that is
      thirty (30) days after the date first set forth above in this Agreement,
      unless both parties agree, in writing, to an extension of such thirty (30)
      day period. Neither party shall have any liability to the other as a
      result of a termination under this Section 10.1.

      10.2. Termination by SUNI. SUNI may terminate this Agreement upon written
      notice to DMD for the material breach by DMD of any of its material
      obligations under this Agreement if DMD has not cured such breach within
      the applicable notice period specified below.

            (a) The notice period shall be ninety (90) days for a failure to pay
            an amount due under this Agreement, provided that the reason for the
            late payment is a bona fide cash flow problem that DMD is
            experiencing, and DMD has not been late in delivering any other
            payments due under the Agreement during the twelve (12) month period
            preceding the payment due date.

            (b) The notice period shall be thirty (30) days for a failure to pay
            an amount due under this Agreement if the ninety (90) day notice
            period described in Subsection 10.1(a) above does not apply.

            (c) The notice period shall be sixty (60) days for any breach not
            specified in subsections (a) and (b) above.

      10.3. Termination by DMD. DMD may terminate this Agreement upon sixty (60)
      days written notice to SUNI for the material breach by SUNI of any
      material representation, warranty or obligation of SUNI contained or
      referred to herein, provided that SUNI has failed to cure such breach
      within such sixty (60) days; or (ii) pursuant to Sections 2.9(b)(i) or
      4.1(b)(i) above.

      10.4. Termination by Either Party. Either party may terminate this
      Agreement if the other party becomes the subject of bankruptcy proceedings
      not terminated within sixty days (60) of any filing. SUNI acknowledges
      that if SUNI, as a debtor under the U.S. Bankruptcy Code, rejects this
      Agreement, then DMD may elect to retain its rights under this Agreement as
      provided in Section 365 (n) of the Bankruptcy Code. Upon written request
      of DMD to SUNI or the Bankruptcy Trustee, SUNI or such Bankruptcy Trustee
      shall not interfere with the rights of DMD as provided in this Agreement.

      10.5. Discretionary Rejection is Not a Breach. Notwithstanding the
      provisions of Sections 10.2 and 10.3 above a Discretionary Rejection shall
      not be deemed to constitute a breach by SUNI of its obligations under this
      Agreement.

11. DELIVERY OF SUNI TECHNOLOGY

      11.1. Circumstances for Delivery. If, and only if, one or more of the
      circumstances described under this Section 11.1 below exists, then DMD may
      require SUNI to deliver to DMD the CCD Chip Technology and Licensed
      Technology, pursuant to the terms and conditions described in Subsection
      11.2 below:

            (a) SUNI or its successor ceases doing business, or


                                                                         Page 18

<PAGE>   19
            (b) After failure to cure within the notice period specified in
            subsection 10.2 above SUNI is in material breach of its obligations
            to support the CCD Chips or is otherwise in material breach of this
            Agreement and such breach makes it reasonably necessary for DMD to
            have access to the CCD Chip Technology for the purposes set forth in
            Section 11.2 below, DMD elects, in lieu of terminating this
            Agreement, to receive the Technology from DMD under this Section
            11; or

            (c) DMD is entitled to receive the Technology under either of
            Sections 2.9(b)(i) or 4.1(b)(i)

     11.2. Delivery of SUNI Technology and License. If one or more of the
     circumstances described in Subsection 11.1 above exists, then DMD may
     require SUNI to deliver or cause to be delivered to DMD a copy of the then
     most recent version of the CCD Chip Technology, Developed Subsystem,
     Tooling and Licensed Technology, and all engineering schematics, design
     information, plans, flow charts, data structures, any work in progress to
     develop the Developed Subsystem and Tooling, and any available compilers,
     assemblers, or other computer programs necessary to create an executable
     version of the system, together with source code for SUNI Software and all
     related documentation. DMD shall have a nontransferable, non-sublicensable
     license to use such CCD Chip Technology and Licensed Technology internally
     for the sole and limited purpose of manufacturing, maintaining, developing,
     selling and distributing the Developed Subsystem. In addition, to the
     extent Tooling or third party licensed technology held by SUNI would be
     necessary or useful for DMD to have for the purpose of manufacturing,
     maintaining and Developing the Developed Subsystem, SUNI will grant a
     license or sublicense, as applicable, to DMD solely for the limited purpose
     of using such Tooling or third party technology or modifying or maintaining
     such Tooling for purposes consistent with the license set forth in Section
     7.1(a) above. If such third party proprietary technology is not
     transferable to DMD, then SUNI will identify for DMD the existence and
     source of such technology in the Statement of Work. DMD ASSUMES ALL RISK,
     RESPONSIBILITY AND LIABILITY ARISING OUT OF ITS USE AND MODIFICATION OF THE
     CCD CHIP TECHNOLOGY, LICENSED TECHNOLOGY AND TOOLING PURSUANT TO THIS
     SECTION AND WILL INDEMNIFY AND HOLD HARMLESS SUNI FROM AND AGAINST ANY
     LOSSES, COSTS, LIABILITY OR DAMAGES THAT SUNI MAY SUFFER AS A RESULT OF
     DMD'S ACTIVITIES UNDER THIS SECTION 11.

12. COMPLIANCE WITH GOVERNMENTAL REQUIREMENTS.

     12.1. Each party agrees to comply, and do all things necessary to comply
     with all applicable laws, regulations and ordinances that it is required to
     comply with in the ordinary course of the conduct of its business, and
     hereby certifies that as of the date of this Agreement it is in such
     compliance.

     12.2. DMD shall advise SUNI of all requirements of all laws, regulations
     and ordinances of Regulatory Agencies applicable to the Dental Field
     insofar as they relate to the activities to be performed by SUNI under this
     Agreement in the form of a change to the Design and Engineering
     Specification. SUNI shall make all required changes in accordance with
     Section 2.8 of this Agreement.


                                                                         Page 19

<PAGE>   20

     12.3. DMD shall supply to SUNI, on a timely basis, as part of the
     Regulatory Specifications, any features that are required for the Developed
     Subsystem pursuant to regulations of Regulatory Agencies , and in any
     event, shall provide such feature no later than the date specified in the
     schedule incorporated in the Statement of Work as the "Regulatory
     Specifications Cut-Off Date." Any regulations applicable to the Design and
     Engineering Specifications adopted by a Regulatory Agency and not delivered
     to SUNI by the "Regulatory Specifications Cut-Off Date" may be included in
     the Design and Engineering Specifications only in accordance with Section
     2.8 of this Agreement.

13. CONFIDENTIAL INFORMATION.

      13.1. Confidential Information. DMD and SUNI each acknowledge that the
      other possesses and will continue to possess information that has been
      created, discovered, developed by or received by it, which information has
      commercial value in its business or that of its customers and is not in
      the public domain.

      13.2. Obligations. DMD and SUNI will each use at least the same degree of
      care to prevent disclosing to third parties the Confidential Information
      of the other as it employs to avoid unauthorized disclosure, publication
      or dissemination of its own information of a similar nature (including but
      not limited to the use of written confidentiality agreements with
      employees); provided, however, that the parties may disclose such
      information to entities performing services required hereunder where (a)
      use of such entity is authorized under this Agreement, (b) such disclosure
      is necessary or otherwise naturally occurs in that entity's scope of
      responsibility, (c) the entity agrees in writing to assume the obligations
      described in this Section, and (d) the disclosing party assumes full
      responsibility for the acts or omissions of such entity no less than if
      the acts or omissions were those of the disclosing party. Any disclosure
      to such entity shall be under the terms and conditions as provided herein.
      Without limiting the generality of the foregoing, neither party will
      publicly disclose the other's Confidential Information except to the
      extent permitted by Section 13.5 without the prior written consent of the
      other. Furthermore, neither DMD nor SUNI will (i) make any use of the
      Confidential Information of the other except as contemplated by this
      Agreement, or (ii) acquire any right in or assert any lien against the
      Confidential Information of the other except as contemplated by this
      Agreement.

      13.3. Exclusions. Notwithstanding Section 13.2, this Section 13 will not
      apply to any particular information which a party can demonstrate was (a)
      at the time of disclosure to it, in the public domain; (b) after
      disclosure to it, published or otherwise becomes part of the public domain
      through no fault of the receiving party; (c) in the possession of the
      receiving party at the time of disclosure to it; (d) received after
      disclosure to it from a third party who had a lawful right to disclose
      such information to it; or (e) independently developed by the receiving
      party without reference to or use of Confidential Information of the
      furnishing party. In addition, a party shall not be considered to have
      breached its obligations under this Section 13 for disclosing Confidential
      Information of the other party to the extent required to satisfy any legal
      requirement of a competent government body provided that, (1) immediately
      upon receiving any such request and to the extent that it may legally do
      so, such party advises the other party promptly; (2) makes a reasonable
      effort to obtain a protective order prior to making such disclosure in
      order that


                                                                         Page 20

<PAGE>   21

      the other party may interpose an objection to such disclosure; and (3)
      takes action to assure confidential handling of the Confidential
      Information.

      13.4. Loss of Confidential Information. In the event of any disclosure or
      loss of, or inability to account for, any Confidential Information of the
      furnishing party, the receiving party will notify the furnishing party
      immediately in writing of such occurrence.

      13.5. Publicity. SUNI agrees not to disclose the fact that SUNI has
      furnished or contracted to furnish to DMD the Developed Subsystem or
      Tooling and/or services hereunder, or the terms and conditions of this
      Agreement, without the express written consent of DMD. Neither party will
      make any public announcement of this Agreement or its terms, or use the
      name of the other party, without the other party's prior written request,
      which consent shall not unreasonably be withheld.

14. INDEMNIFICATION.

      14.1. Indemnification by SUNI.

            (a) Obligation to Provide "Work Around". If a third party asserts a
            claim that the Developed Subsystem or Tooling infringes the third
            party's Intellectual Property Right (a "Claim"), then SUNI will use
            commercially reasonable efforts, either: (A) to develop and
            implement a non-infringing substitute for the infringing component
            of the Developed Subsystem or Tooling, so long as the Developed
            Subsystem and Tooling continue to conform to the Design and
            Engineering Specification; or (B) at SUNI's expense, to obtain a
            license from such third party that enables DMD to continue to
            exercise its rights to the Developed Subsystem and Tooling as set
            forth in this Agreement, provided that such license is available at
            a reasonable rate not to exceed the amount of future royalties
            payable to SUNI under this Agreement. If SUNI elects to implement a
            work-around as set forth in Subsection (A) above, then SUNI will
            provide to DMD an estimate of designing and implementing the
            work-around plus reasonable overhead. DMD will pay SUNI upon receipt
            of invoices from SUNI for all such costs. DMD may recover all
            amounts that it pays to SUNI in accordance with the preceding
            sentence by deducting from royalties otherwise payable to SUNI up to
            one-twelfth (1/12) of such amounts during each month of the twelve
            (12) month period that commences in the first month after DMD's
            payment of such amounts.

            (b) Obligation to Defend DMD. SUNI, at its own expense, will defend
            DMD against all Claims.

            (c) Obligation to Indemnify DMD. In addition to the obligations set
            forth in Subsections 14.1 (a) and 14.1 (b) above:

              (i)   Damages Finally Awarded. SUNI will indemnify DMD against
                    damages finally awarded against DMD in favor of a third
                    party in a Claim or paid to the third party as a result of a
                    settlement of the Claim; and

              (ii)  Indemnified Losses. SUNI will indemnify and hold harmless
                    DMD against Indemnified Losses that DMD suffers as a result
                    of a Claim. For purposes of this Subsection, "Indemnified
                    Losses" are


                                                                         Page 21

<PAGE>   22

                    costs, expenses, losses, damages, and liabilities incurred
                    or suffered by DMD as a result of the Claim; provided that
                    SUNI has approved such Indemnified Losses, in writing,
                    before DMD incurred or suffered such losses (which approval
                    will not unreasonably be withheld or delayed).

              (iii) Limitation On SUNI's Liability Under this Subsection. Any
                    liability that SUNI incurs pursuant to this Subsection 14.1
                    (c) will be limited to an amount that is equal to thirty
                    three and a third percent of the amount of all Advance
                    Payments made under this Agreement plus all royalties (other
                    than Advance Payments) paid under this Agreement, provided
                    that the total amount of such liability shall only be
                    recoverable from: (A) up to fifty percent (50%) of royalties
                    paid by DMD to SUNI under this Agreement prior to the date
                    that the Claim is made; plus (B) a 50% decrease in the
                    applicable royalty rate under this Agreement until such time
                    as all amounts due under this Section have been paid in full
                    Notwithstanding anything to the contrary in the foregoing,
                    such limitation on SUNI's liability will not apply to
                    Indemnified Losses that DMD incurs or suffers as a result of
                    SUNI's knowing and willful infringement of a third party's
                    Intellectual Property Rights.

      (d) Exceptions to SUNI's Obligations Under Section 14.1. SUNI's
      obligations under this Section 14.1 shall not extend to any infringement:

              (i)   caused solely by DMD's failure to pay for or implement a
                    non-infringing substitute offered or provided by SUNI in
                    accordance with Section 14.1 (a) above;

              (ii)  caused by a mandatory design change requested by DMD,

              (iii) arising out of the use or combination of the Developed
                    Subsystem or Tooling with any other components,

              (iv)  caused by any change made by DMD to the Developed Subsystem
                    or Tooling if SUNI's unchanged Developed Subsystem or
                    Tooling, as applicable, does not infringe or allegedly
                    infringe the Intellectual Property Right in question; or

              (v)   resulting from corrections to or completion of the Developed
                    Subsystem or Tooling made by or for DMD pursuant to Section
                    11 above.

      If an infringement or misappropriation action or claim against SUNI is
      based on any of the circumstances described in this Section 14(d), then
      DMD shall at its own expense defend and indemnify SUNI as set forth in
      Section 14.2 below.

14.2. Indemnification by DMD.

      (a) Obligation to Defend SUNI. DMD, at its own expense will defend SUNI
      against any claim by third parties that (i) technology owned by DMD as set
      forth in Sections 6.2 or 9.2(i) above, infringes third party Intellectual
      Property Rights;


                                                                         Page 22

<PAGE>   23

            (ii) against claims based on one or more of the circumstances set
            forth in Subsection 14.1(d) above, except that with respect to
            Section 14.1(d)(iii) above, such this Section shall apply only if
            the claim arises out of the use or combination of the Developed
            Subsystem of Tooling with any other components where DMD supplies
            such components or creates the combination; and (iii) as set forth
            in Section 11.2 above (a "DMD Claim").

            (b) Obligation to Indemnify SUNI. In addition to the foregoing
            obligation:

              (i)   Damages Finally Awarded. DMD will indemnify SUNI against
                    damages finally awarded against SUNI in favor of a third
                    party in a DMD Claim or paid to the third party as a result
                    of a settlement of the DMD Claim; and

              (ii)  Indemnified Losses. DMD will indemnify and hold harmless
                    SUNI against SUNI Indemnified Losses that SUNI suffers as a
                    result of a DMD Claim. For purposes of this Subsection
                    14.2(b)(ii), "SUNI Indemnified Losses" are costs, expenses,
                    losses, damages, and liabilities incurred or suffered by
                    SUNI as a result of the DMD Claim; provided that DMD has
                    approved such SUNI Indemnified Losses, in writing, before
                    SUNI incurred or suffered such losses (which approval will
                    not unreasonably be withheld or delayed).

              (iii) Limitations on DMD Liability Under this Subsection. Any
                    liability that DMD incurs pursuant to Subsections 14.2(b)(i)
                    and (b)(ii) will be limited to an amount that is equal to
                    thirty three and a third percent of the amount of all
                    Advance Payments made under this Agreement plus all
                    royalties paid under this Agreement, provided that the total
                    amount of such liability shall only be recoverable from: (A)
                    an amount equal to up to fifty percent(50%) of royalties
                    paid by DMD to SUNI under this Agreement prior to the date
                    that the Claim is made; plus (B) a fifty percent (50%)
                    increase in the applicable royalty rate under this Agreement
                    until such time as all amounts due under this Section have
                    been paid in full. Notwithstanding anything to the contrary
                    in the foregoing, such limitation on DMD's liability will
                    not apply to SUNI Indemnified Losses that SUNI incurs or
                    suffers as a result of DMD's knowing and willful
                    infringement of a third party's intellectual Property Rights
                    or with respect to DMD's indemnity obligations with respect
                    to the circumstances described in Section 11.2 above.

      14.3. Conditions of Indemnification. If either party receives a claim or
      is subject to any claim as to which it is entitled to be defended or to
      indemnification under Sections 14.1 or 14.2 above, then such indemnified
      party shall promptly notify the indemnifying party in writing of the
      claim. The indemnifying party's obligations under this Section 14 shall be
      contingent upon: (i) the indemnifying party having sole control of the
      defense or settlement of the claim (provided that if a settlement will
      adversely affect DMD's license rights or either party's costs under this
      Agreement, or otherwise affect the rights of the


                                                                         Page 23

<PAGE>   24

      indemnified party, the indemnifying party shall not settle the case
      without the prior consent of the indemnified party), and (ii) the
      indemnified party providing all reasonable assistance requested by the
      indemnifying party, at the indemnifying party's expense. THE REMEDIES FOR
      INFRINGEMENT SET FORTH IN THIS SUBSECTION ARE EACH PARTY'S SOLE AND
      EXCLUSIVE REMEDY FOR INFRINGEMENT.

15. LIABILITY.

      15.1. General. Each party is responsible for its own acts and for the acts
      of its employees.

      15.2. No Consequential Damages. EXCEPT IN THE CASE OF A WILLFUL AND
      INTENTIONAL BREACH OF A MATERIAL PROVISION OF THIS AGREEMENT, NEITHER
      PARTY WILL BE LIABLE TO THE OTHER WITH RESPECT TO ANY SUBJECT MATTER OF
      THIS AGREEMENT UNDER ANY CONTRACT, NEGLIGENCE, STRICT LIABILITY OR OTHER
      LEGAL OR EQUITABLE THEORY FOR ANY SPECIAL, INCIDENTAL, CONSEQUENTIAL OR
      INDIRECT DAMAGES OR LOST PROFITS. THIS LIMITATION SHALL APPLY EVEN IF A
      PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.

      15.3. Limitation on Liability. EXCEPT FOR EACH PARTY'S INDEMNITY
      OBLIGATIONS, WHICH ARE SUBJECT TO THE LIMITATIONS ON LIABILITY SET FORTH
      IN SECTION 14 ABOVE, NEITHER PARTY'S AGGREGATE LIABILITY FOR ALL CLAIMS
      ARISING OUT OF THIS AGREEMENT SHALL EXCEED THE FOLLOWING AMOUNTS:

            (a) DMD's Maximum Liability. DMD's aggregate liability shall not
            exceed an amount equal to:

                (i)   the amount of royalties DMD has paid to SUNI, plus

                (ii)  all royalties paid under this Agreement and the amount of
                      royalties both due and owing and payable to SUNI under
                      this Agreement; less

                (iii) any amounts paid by DMD pursuant to Section 14;

                Provided that the total amount of liability under this Section
                shall only be recoverable from: (A) an amount equal to up to
                fifty percent (50%) of royalties paid by DMD to SUNI under this
                Agreement prior to the date that the Claim is made; plus (B) a
                fifty percent (50%) increase in the applicable royalty rate
                under this Agreement until such time as all amounts due under
                this Section have been paid in full.

            The foregoing limitation on DMD's liability shall not apply as to
            any direct damages that SUNI suffers as a result of DMD's willful
            and intentional breach of a material provision of this Agreement and
            failure to cure such breach within the applicable notice and cure
            period.

            (b) SUNI's Maximum Liability. SUNI's aggregate liability shall not
            exceed an amount equal to:


                                                                         Page 24
<PAGE>   25
                      (i)    Prior to Payment of All Advance Payments. Up to
                             such time as DMD has paid all Advance Payments to
                             SUNI, SUNI's liability shall not exceed
                             thirty-three and one-third percent (33-1/3%) of the
                             amount of Advance Payments paid to SUNI.

                      (ii)   After Payment of All Advance Payments. After such
                             time as DMD has paid all Advance Payments to SUNI,
                             then SUNI's liability shall not exceed an amount
                             equal to:

                             A.    Thirty Three and One Third Percent of the
                             Advance Payments paid to SUNI; plus

                             B.    all royalties (other than Advance Payments)
                             paid under this Agreement, less

                             C.    any amounts paid by SUNI pursuant to Section
                             14;

                             Provided that the total amount of liability under
                             this Section shall only be recoverable from: (A) up
                             to fifty percent (50%) of royalties paid by DMD to
                             SUNI under this Agreement prior to the date that
                             the Claim is made; plus (B) a 50% decrease in the
                             applicable royalty rate under this Agreement until
                             such time as all amounts due under this Section
                             have been paid in full.

                      (iii)  Exception to Limitation on Liability. The foregoing
                             limitation on SUNI's liability shall not apply as
                             to any direct damages that DMD suffers as a result
                             of SUNI's willful and intentional breach of a
                             material provision of this Agreement and failure to
                             cure such breach within the applicable notice and
                             cure period.

     15.4. Definition of "Willful and Intentional Breach". For purposes of this
Section 15, a "willful and intentional breach" shall mean a breach that results
from a party's willful act or omission where the party engaged in such act or
omission with knowledge and intent that such act or omission would result in a
breach of a material provision of this Agreement.

16. TAXES. The royalties specified in Section 4 above are exclusive of any
federal, state or local excise, sales, use and similar tax and other
governmental assessments, and, to the extent such taxes may apply, DMD shall
promptly pay all such amounts that are assessed or imposed (including, without
limitation, interest and penalties) with respect to the licenses granted and
Development Work performed under this Agreement, other than with respect to
SUNI's net income. Except as set forth above, SUNI will pay all taxes imposed in
connection with its performance under this Agreement. DMD will pay all taxes
imposed on DMD-owned assets and sales or retailers use taxes imposed on the
Developed Subsystem(s) or services provided hereunder.

17. SUNI'S EMPLOYEES. SUNI will have an appropriate agreement with each of
SUNI's employees, or others whose services SUNI may require sufficient to enable
SUNI to comply with all of the provisions of this Agreement.

18. SUNI NOT AGENT OF DMD. SUNI is and will remain at all times during this
Agreement an independent contractor. SUNI shall not be the agent or local
representative of DMD for any purpose whatsoever. SUNI is not granted any right
or authority to create any obligations, expressed or implied on behalf of DMD,
or to bind DMD in any manner whatsoever.




                                                                         Page 25
<PAGE>   26
19. SURVIVAL. Subject to Section 2.1 above, and except as otherwise expressly
set forth in this Agreement, the rights and obligations of Sections 4 (Royalty),
6 (Intellectual Property Rights); 13 (Confidential Information); 14
(Indemnification); 15 (Liability) and 16 through 33, shall survive and continue
after any expiration or termination of this Agreement and shall bind the parties
and their legal representatives, successors, heirs and assigns.

20. ASSIGNMENT. SUNI's rights and obligations under this Agreement are personal
and not assignable (either voluntarily or by operation of law) without the prior
written consent of DMD except to a successor to all or substantially all of
SUNI's assets or to a majority of SUNI's voting stock; provided, however, that
if such successor is a direct competitor of DMD, then DMD's prior consent shall
be required, which consent may be withheld in DMD's sole discretion. DMD shall
not assign its rights and obligations hereunder without the prior written
consent of SUNI, which shall not be unreasonably withheld. This Agreement shall
be binding upon and inure to the benefit of each party's permitted successors
and assigns.

21. NOTIFICATION. All notices which any party may be required or desire to give
to another Party shall be in writing and shall be given by personal service,
facsimile, or registered or certified mail to the party at its respective
address or facsimile telephone number set forth below. Mailed notices shall be
deemed to be given upon actual receipt by the party to be notified. Notices
delivered by facsimile shall be confirmed in writing by overnight courier and
shall be deemed to be given upon actual receipt by the party to be notified.

      If to DMD:                President
                                Dental/Medical Diagnostic Systems, Inc.
                                200 North Westlake Blvd., Suite 202
                                Westlake Village, CA 91362

      If to SUNI:               President
                                SUNI Imaging Microsystems, Inc.
                                185 E. Dana Street
                                Mountain View, CA 94041

22. NON-WAIVER. The failure of any party at any time to require performance by
any other party of any provision of this Agreement shall not affect in any way
the full right to require such performance at any subsequent time; nor shall the
waiver by any party of a breach of any provision of this Agreement be taken or
held to be a waiver of the provision itself.

23. FORCE MAJEURE. No party shall be liable for, nor shall it be considered in
breach of this Agreement due to any failure to perform its obligations under
this Agreement as a result of natural calamity, act of God or a public enemy,
act of any military, civil or, to the extent not resulting from the intentional
or negligent acts or omissions of that party, and (i) act of regulatory
authority or (ii) change in any law or regulation. In such event, the party
whose performance is so prevented shall give prompt written notice to the other
and shall take all reasonable steps to avoid or remove such causes of
nonperformance. If it reasonably appears that the time for delivery or
performance under this Agreement will be extended for more than




                                                                         Page 26

<PAGE>   27
three (3) months due to Force Majeure, the party due performance shall have the
right to terminate this agreement without obligation to the other.

24. INJUNCTIVE RELIEF. Each party agrees that in the event of any breach by the
other party of any of the covenants and agreements set forth in Sections 7
(License), 11 (Delivery of Technology) or 13 (Confidentiality) of this Agreement
the non-breaching party may encounter extreme difficulty in attempting to prove
the actual amount of damages suffered by it as a result of such breach and may
not have adequate remedy at law in such event. Each party therefore agrees that,
in addition to any other remedy available at law or in equity, in the event of
such breach, either party shall be entitled to seek and receive specific
performance and temporary, preliminary and permanent injunctive relief from
violation of any of said covenants and agreements from any court of competent
jurisdiction without necessity of proving irreparable harm or the amount of any
actual damage to either party resulting from such breach.

25. REMEDIES. The remedies for breach set forth in this Agreement are, unless
specifically stated to the contrary in any instance, cumulative and are in
addition to any other remedies in law or equity. Unless specifically stated to
the contrary in any instance, the election of one or more remedies shall not bar
the use of other remedies.

26. SEVERABILITY. If any provision of this Agreement is held invalid or
unenforceable for any reason, such invalidity shall not affect the validity of
the remaining provisions of this Agreement, and the Parties shall attempt to
substitute for the invalid provision a valid provision which closely
approximates the intent and economic effect of the invalid provisions.

27. SECTION HEADINGS. The section headings in this Agreement are solely for
convenience and shall not be considered in its interpretation.

28. INTERPRETATION. This Agreement and all of the provisions of this Agreement
shall be deemed drafted by all of the parties hereto. This Agreement shall not
be interpreted strictly for or against any Party, but solely in accordance with
the fair meaning of the provisions hereof to effectuate the purpose and intent
of this Agreement.

29. COUNTERPARTS. This Agreement may be executed by the parties in one or more
counterparts, and each of which when so executed shall be an original, but all
such counterparts shall constitute one and the same instrument.

30. GOVERNING LAW. This Agreement, its validity, construction and effect shall
be governed by the internal laws of the State of California, without giving
effect to its rules relating to conflicts of laws.

31. TIME IS OF THE ESSENCE. The parties agree that time is of the essence in the
performance of their respective material obligations hereunder.

32. EXHIBITS. The following Exhibits and Attachments are attached to this
Agreement and incorporated by reference:


         Attachment 1      Design and Engineering Specification

         Attachment 2      Statement of Work

         Attachment 3      Tooling (hardware and software required by
                           DMD)



                                                                         Page 27

<PAGE>   28
         Attachment 4      Countries in which SUNI intends to seek
                           patent protection.

         Attachment 5      Regulatory Specification

33. PREVAILING PARTY. The prevailing party in any litigation between the parties
that arises out of this Agreement shall be entitled to recover reasonable
attorneys fees, costs and expense that the party incurred as a result of such
litigation.

34. ENTIRE AGREEMENT. This Agreement and its exhibits contains the entire
understanding of the parties with respect to the matters contained herein. There
are no promises, covenants or undertakings, either oral or in writing, other
than those expressly set forth in this Agreement. This Agreement may not be
modified except by a writing signed by authorized representatives of all
parties.

35. RESCISSION RIGHT. If either party sends to the other party before 3:00 PM
PST on October 13, 1997, a written notice that such party is rescinding this
Agreement, then this Agreement shall terminate and be of no further force and
effect. Neither party shall have any liability arising out of a termination or
rescission under this Section 35.

        IN WITNESS WHEREOF, the parties to this Agreement have caused it to be
executed by their duly authorized officers as of the date set forth on the cover
hereof.


DENTAL/MEDICAL DIAGNOSTICS, INC.




By:  /s/  R. E. WITTMAN
  ---------------------------------
Its:      Vice President
          and CFO




SUNI IMAGING MICROSYSTEMS, INC.


By:  /s/  PAUL SUNI                                     10-21-97
  ---------------------------------
Its:      President and CEO





                                                                         Page 28

<PAGE>   29

                                  ATTACHMENT 1

                     DESIGN AND ENGINEERING SPECIFICATION

<PAGE>   30
ATTACHMENT 1 -
                                       **

**CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
  EXCHANGE COMMISSION


                                                                               1
<PAGE>   31
ATTACHMENT 1 -
                                       **

**CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
  EXCHANGE COMMISSION


                                                                             2
<PAGE>   32
                                       **


**CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
  EXCHANGE COMMISSION






                              ___________________

                        Suni Imaging Microsystems, Inc.

                                  PROPRIETARY
<PAGE>   33




                                       **










**CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE
  SECURITIES AND EXCHANGE COMMISSION






                              ___________________

                        Suni Imaging Microsystems, Inc.

                                  PROPRIETARY
<PAGE>   34
                     **










**CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE
  SECURITIES AND EXCHANGE COMMISSION






                              ___________________

                        Suni Imaging Microsystems, Inc.

                                  PROPRIETARY
<PAGE>   35


                                    **










**CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE
  SECURITIES AND EXCHANGE COMMISSION






                              ___________________

                        Suni Imaging Microsystems, Inc.

                                  PROPRIETARY
<PAGE>   36
** CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE SECURITIES
   AND EXCHANGE COMMISSION



                                     **



                        Suni Imaging Microsystems, Inc.
                                  PROPRIETARY
<PAGE>   37


                                       **


** CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE SECURITIES
   AND EXCHANGE COMMISSION


<PAGE>   38

                                       **

** CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE SECURITIES
   AND EXCHANGE COMMISSION


<PAGE>   39
                                       **




** CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
   EXCHANGE COMMISSION



                        -------------------------------
                        Suni Imaging Microsystems, Inc.

                                  PROPRIETARY

<PAGE>   40
SUNI IMAGING MICROSYSTEMS, INC.




                                       **


                                SUNI PROPRIETARY


**CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
  EXCHANGE COMMISSION
<PAGE>   41
                                  ATTACHMENT 2

                               STATEMENT OF WORK
<PAGE>   42
ATTACHMENT 2 -- SUNI/DMD Statement of Work

SUNI/DMD STATEMENT OF WORK



                                    **



** CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE SECURITIES
   AND EXCHANGE COMMISSION


                                                                               3

<PAGE>   43
ATTACHMENT 2 -- SUNI/DMD Statement of Work



                                    **



** CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE SECURITIES
   AND EXCHANGE COMMISSION

                                                                               4


<PAGE>   44
                                  ATTACHMENT 3

                TOOLING (HARDWARE AND SOFTWARE REQUIRED BY DMD)
<PAGE>   45
** CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
   EXCHANGE COMMISSION


ATTACHMENT 3--Required Tooling

**








                                                                             5
<PAGE>   46
                                  ATTACHMENT 4

           COUNTRIES IN WHICH SUNI INTENDS TO SEEK PATENT PROTECTION
<PAGE>   47
ATTACHMENT 4--Countries where SUNI intends to file for patent protection

Countries where SUNI Intends to seek patent protection.



                                    **



** CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
   EXCHANGE COMMISSION



                                                                           6
<PAGE>   48
                                  ATTACHMENT 5

                            REGULATORY SPECIFICATION

                        [To be provided at a later date]