Document:

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                                                                    Exhibit 10.9

                          PRODUCTION PURCHASE AGREEMENT

                                     Between

                               R2 Technology, Inc.

                                       And

                               CANON U.S.A., INC.

Confidential treatment has been requested for portions of this exhibit. The copy
filed herewith omits the information subject to the confidentiality request.
Omissions are designated as * * *. A complete version of this exhibit has been
filed separately with the Securities and Exchange Commission.

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                                TABLE OF CONTENTS

                                                                            Page
                                                                            ----

         1.       Scope........................................................1

         2.       Terms and Conditions.........................................2

         3.       Term.........................................................3

         4.       Price........................................................3

         5.       Ordering, Delivery and Payment Terms.........................3

         6.       INTENTIONALLY OMITTED........................................4

         7.       Rescheduling.................................................4

         8.       Seller's Design Changes......................................4

         9.       Safety Standards and Legal Compliance........................5

         10.      Proprietary Rights...........................................5

         11.      Indemnification..............................................6

         12.      Insurance....................................................8

         13.      Inspection, Warranty and Service.............................8

         14.      Default.....................................................11

         15.      Product Discontinuance......................................12

         16.      Force Majeure...............................................12

         17.      Equal Opportunity...........................................13

         18.      Government Contracts........................................13

         19.      Survival....................................................13

         20.      Relationship of Parties.....................................13

         21.      Publicity...................................................13

         22.      Administration..............................................14

         23.      General.....................................................15

         24.      Exhibits....................................................16

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                               R2 Technology, Inc.

                          Production Purchase Agreement

         This Agreement, together with Exhibits A, B, C and D (the "Agreement")
is made and entered into this 27th day of April, 2000 by and between R2
Technology, Inc., a Delaware corporation, having a principal place of business
at 325 Distel Circle, Los Altos, California 94022 ("R2") and Canon U.S.A., Inc.,
a New York corporation, having a principal place of business at One Canon Plaza,
Lake Success, N.Y. 11042-1198 ("Seller").

                                   BACKGROUND

         R2 desires to purchase from Seller on a non-exclusive basis certain
Canon brand scanner products listed in Exhibit A, attached (the "Products"), for
                                       ---------
integration only by R2 and its authorized facilities into its Mammo 1000
ImageChecker Systems and successors of the same product which will be set forth
in R2's Business Plan (the "Systems") to be distributed by R2 only to
distributors, dealers and end users; and

         Seller is willing to sell the Products to R2 upon the terms and
conditions set forth in this Agreement.

         In consideration of the foregoing premises and the mutual covenants
contained herein, the parties hereto agree as follows:

         1.   Scope.
              -----

              1.1  All Purchase Orders. This Agreement shall apply to all
                   -------------------
purchase orders placed by R2 and accepted by Seller during the Term (as defined
below) for the Products.

              1.2  Subsidiaries. This Agreement also applies to subsidiaries of
                   ------------
R2 at such locations and doing business in such territories as are mutually
agreed to in writing by authorized representatives of the parties. A violation
of the terms of this Agreement by R2's subsidiaries referenced in the
immediately preceding sentence constitutes a breach of this Agreement by R2.

                   1.2.1 Territory. The Systems containing Products shall be
                         ---------
distributed by R2 to distributors, dealers and end users in the United States
and Canada only (the "Territory").

              1.3  Product Use. R2 acknowledges and confirms that Seller is
                   -----------
entering into this Agreement to accommodate R2's desire to integrate the
Products into R2's Systems at R2's facility in Los Altos, CA or other R2
designated facilities located in the Territory, R2 agrees to distribute the
Products as part of Systems sold only to distributors, dealers and end users.
Distributors include entities which sell R2's Systems to dealers as a normal and
customary part of their business. Dealers include entities which sell R2's
Systems to end users as a normal and customary part of their business. End users
include entities which utilize R2's Systems to provide a service to their
customers.

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     1.4 Business Plan. R2 has submitted to Seller a business plan, a copy of
         -------------
which is attached hereto as Exhibit C, (the "Business Plan"), and acknowledges
                            ---------
Seller's reliance upon the information furnished by R2 in the Business Plan in
concluding that R2 would be meeting the needs of a particular distribution
channel. R2 agrees to notify the Seller of any material changes to the Business
Plan affecting Seller and Seller reserves the right to terminate the Agreement
based on such changes in accordance with Section 14.1 of this Agreement. The
Business Plan includes a clear explanation of (i) the Systems in which the
Products will be integrated, including specifications therefor; (ii) R2's
program for distributing the Systems containing the Products, including R2's
proposed worldwide distribution channels which R2 understands is subject to R2
entering into agreements with Seller's affiliates; and (iii) R2's program for
providing support services for its Systems. Notwithstanding the foregoing, R2
and Seller acknowledge and agree that the Business Plan is merely a description
of R2's expectations with respect to the Products and the Systems, and Seller
shall have no obligation to the terms and conditions described in the Business
Plan.

     1.5 New Product Inclusion. R2 will notify Seller if it wishes to add a new
         ---------------------
product(s) or series of products of Seller's to this Agreement. If Seller
agrees, R2 and Seller shall then proceed to establish pricing, forecast and
delivery terms for each of such new product. Upon agreement on these items, the
parties will amend this Agreement to include such product(s).

  2. Terms and Conditions.
     --------------------

     2.1 This Agreement contains the exclusive terms and conditions, which apply
to all purchases of the Products, notwithstanding any purchase order,
acknowledgment or other business forms, transmitted by R2 or Seller. All Seller
acknowledgments and transmittals must reference this Agreement and the
applicable R2 purchase order.

     2.2 This Agreement does not constitute a purchase order. Purchases
hereunder will be made utilizing R2 purchase orders issued by R2's Purchasing
Department. R2 is liable under this Agreement only for those Products covered by
such a purchase order.

     2.3 R2 will use reasonable efforts to supply Seller with a forecast of its
intended purchases on a quarterly basis, but such forecast is for Seller's
convenience only, and in no way creates an obligation on R2's or Seller's part
to meet such forecast.

     2.4 Only insofar as the Products are incorporated into the Systems, the
Canon logo, serial numbers, lettering, labels and stickers will not be visible
to R2's customers. In the event R2 returns any Products to Seller, the original
Canon logo, serial numbers, lettering, labels and stickers will be on the
Products as provided. R2 agrees that it is covering Canon's logo, serial
numbers, lettering, labels and stickers at R2's own cost and responsibility. R2
agrees to indemnify Seller for any claims arising from or related to, R2
covering such logo, numbers, labels or stickers appearing on the Products.

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   3. Term. The term of this Agreement commenced on the date Seller started
      ----
doing business with R2 and will end on April 25, 2002 (the "Initial Term"),
except that this Agreement will be automatically renewed for additional one (1)
year periods (the "Term") subject to either party's right to terminate this
Agreement, with or without cause, during the Initial Term or the Term, upon
ninety (90) days notice, unless sooner terminated in accordance with the
provisions of the Agreement.

   4. Price.
      -----

     4.1 The prices for the Products from Seller to R2, including any applicable
discounts, are as specified in Exhibit A, attached hereto (the "Prices").
                               ---------

     4.2 R2 and Seller represent that to the best of their knowledge this
Agreement does not violate the provisions of the Robinson-Patman Act and the
Canadian Competition Act.

     4.3 The prices shown in Exhibit A, attached maybe adjusted downward on
                             ---------
mutual agreement, based on cost reductions resulting from higher quantities,
lower material cost, or labor and overhead cost reductions. Price reductions
shall apply to only to Products ordered by R2, but not yet delivered as of the
date of the effective date of such reduction.

     4.4 In the event of any price increase, such increase will apply only to
Products for which new orders were placed by R2 after the effective date of such
increase.

     4.5 The prices set forth in Exhibit A, attached do not include freight or
                                 ---------
taxes, and all applicable federal, state and local sales, use and like taxes
shall be separately stated on Seller's invoice. R2 shall be liable to Seller for
such sales, use or like taxes actually charged only if R2 has failed to (i)
comply with the statutory resale tax certificate requirements of states where
appropriate and (ii) furnish Seller with applicable resale or other exemption
certificate(s).

   5. Ordering, Delivery and Payment Terms.
      ------------------------------------

     5.1 The prices, as set forth in Exhibit A, attached are F.O.B. Seller's
designated warehouse located in California or elsewhere in the Territory and all
risk of loss or damage to the Products for Seller shall cease upon delivery to
the carrier selected by Seller or designated by R2 in its purchase order.

     5.2 Seller will use reasonable efforts to deliver Products to meet R2's
requested delivery dates, subject to the terms of this Agreement. Since Seller
itself will be subject from time to time to manufacturer production or shipping
delays, or both, R2 agrees that Seller may allocate distribution of the Products
in a fair and equitable manner among all of its customers, even though this may
effectively limit delivery of Products to R2.

     5.3 On or before November 15 of each year of the Initial Term or Term, as
applicable, of this Agreement, R2 will place a blanket order, specifying its
monthly and annual purchase requirements for the succeeding calendar year (each,
a "Blanket Order"). The total number of units of Product R2 agrees to order for
the year under each Blanket Order is guaranteed by R2. Products will be shipped
to R2 in accordance with the following ordering scheme: each week R2 will supply
a 13 week rolling order forecast of deliveries against the

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Blanket Order (the "Order Forecast"). The first six weeks of the Order Forecast
are frozen; that is, the first six weeks of the Order Forecast will constitute a
firm purchase order by R2 and the remaining seven weeks can be adjusted by R2.
It is understood and agreed by the parties that any Order Forecast submitted for
a specific month may not deviate from the Blanket Order previously submitted by
more than plus/minus 50% rounded up to the nearest whole number. If the Order
Forecast for a specific month exceeds 50% of the Blanket Order, Seller may fill
the Order Forecast, subject to the terms of this Agreement, for that month at
its discretion. If the Order Forecast for a specific month is less than 50% of
the Blanket Order, then R2 agrees that, subject to the terms of this Agreement,
it will pay Seller for the amount of Product committed to for that month in the
Blanket Order. R2 acknowledges that the Annual Blanket Order set forth in
Exhibit A, attached, is R2's Blanket Order for the Year 2000, and R2 guarantees
the purchase of 82 total units of Product for the Year 2000 in accordance with
the ordering scheme above, subject to the terms of the "Product Specifications"
Section of Exhibit B, attached. R2 acknowledges that it ordered, delivered and
accepted 4 units of Product in 1998 and 4 units of Product in 1999. The purchase
orders will (i) incorporate the terms of this Agreement, by reference to its
date, (ii) be received by Seller during the Initial Term or Term, as applicable,
of this Agreement, (iii) identify each item of Product by model number, (iv)
indicate quantity, price (on a pro forma basis, with the invoice price to be
determined in accordance with the provisions of this Agreement) and shipping
instructions, and (v) specify R2's requested delivery dates provided that they
are in accordance with the terms of this subsection.

      5.4 A purchase order will not be deemed binding on Seller (or R2) unless
and until Seller accepts the purchase order (1) by sending written confirmation
thereof to R2, or (2) in lieu of such confirmation, by shipping the units of
Product covered by such purchase order. Seller reserves the right to reject or
cancel any order, in whole or in part, before or after acceptance, for R2's
questionable credit standing or because of R2's breach of this Agreement. The
terms of R2's purchase orders will be null and void to the extent they vary
from, conflict with or supplement the terms of this Agreement.

      5.5 R2 will pay for the Products in full in accordance with the terms of
Seller's invoices therefor. Subject to approval of R2's credit from Seller's
Finance Department, R2 agrees to pay Seller for the Products on a net 30 day
basis from the date of the invoice. Invoices will show models of Product
ordered.

   6. INTENTIONALLY OMITTED.
      ---------------------

   7. Rescheduling.  R2 may reschedule delivery of all or any part of any
      ------------
purchase order, at no additional charge, by issuing a P.O. amendment and Seller
receiving such amendment no later than ninety (90) days before the original
Delivery Date.

   8. Seller's Design Changes.
      -----------------------

      8.1 Seller acknowledges that R2 is a company that manufactures Class III
Medical Devices in the United States and as such must adhere to the standards
and regulations of the U.S. F.D.A., particularly their guidelines for QSR and
GMP. In Canada, Seller's Product is a Class I Medical Device which does not
require a medical device license, and Seller acknowledges that R2's System will
be classified differently and subject to the medical device

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license standards and regulations of Health Canada. As such product changes must
be carefully evaluated and, validated, and verified prior to inclusion in
product for sales purposes. Seller shall notify R2 in writing (the original
notification to be provided to the Administrator as per Section 22
(Administration) and copies to R2 personnel as may be requested), at least
ninety days prior to the anticipated cut-in-date, of any impending changes in
design that Seller believes will impact performance of or manufacture that might
affect form, fit or function of the Products, including, changes in performance,
hardware, maintenance procedures, interchangeability, software,
interconnectability, reliability or compatibility of Products ordered. If said
design change, in R2's opinion, necessitates evaluation by R2 of compatibility
with R2's Systems, Seller, upon request from R2, will provide R2 with prototype
units of Product for evaluation. Said design change, once approved by R2, shall
cause the revision level or model number of the Product to be rolled. SELLER
WILL NOT IMPLEMENT SUCH CHANGES WITHOUT THE PRIOR WRITTEN CONSENT OF R2. Seller
is aware that any and all changes must be validated on a product sample 90 days
prior to production shipments under FDA/GMP regulations. If R2 agrees to a
change that does affect form, fit or function, the part number revision level
will change.

      8.2 On all mandatory changes affecting form, fit or function, Seller will,
at its own expense, supply R2 parts for all Products purchased by R2 affected
thereby. Mandatory changes, as used herein is defined as: Any change necessary
to ensure that Product (1) meets the Product Specifications set forth in
Exhibit B, attached; (2) except as set forth in Section 11.1, complies with
---------
applicable United States laws or regulations (as a Medical Image Digitizer
defined in 21 CFR Section 829.2030, and not in combination with the System and
Health Canada regulations (as a Class I Medical Device); or (3) meets the safety
requirements established by Underwriters Laboratories for information technology
equipment, set forth in UL 1950.

   9. Safety Standards and Legal Compliance.
      -------------------------------------

      9.1 Seller warrants that the Products satisfy the acceptance criteria set
forth in Exhibit B, attached.
         ---------

      9.2 Except as set forth in Section 11.1, in the United States, Seller
warrants and represents that Seller's Products, classified as a Medical Image
Digitizer defined in 21 CFR Section 829.2030, and not in combination with the
System, complies with all United States federal and state statutes and
regulations. Seller further warrants and represents that in Canada, Seller's
Products, and not in combination with the System, as a Class I Medical Device
complies with Health Canada regulations.

      9.3 Seller agrees to notify R2 of any post-sale warnings, hazardous
defects, retrofits or recalls which Seller implements with respect to any of the
Products.

  10. Proprietary Rights.
      ------------------

      10.1 Confidential Information.
           ------------------------

           10.1.1 Neither party will publicize or disclose the existence or
terms and conditions of this Agreement, or any transactions hereunder, without
the express, prior written consent of the other party. The obligations of
confidentiality in this Section 10.1.1 will not apply

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to information which (a) is or becomes public knowledge through no act or fault
of either party, (b) is proven by written evidence to have been independently
developed without any reference to the confidential information, or (c) is
required to be disclosed pursuant to any law or judicial or governmental
request, requirement or order, provided that there is reasonable prior notice to
the other party of the order, and a reasonable effort is made to seek legal
protection of the confidential information.

               10.1.2 The exchange, disclosure and use of confidential
information by the parties will be governed by the terms of the Mutual
Non-Disclosure Agreement executed by the parties and attached hereto as
Exhibit D.
---------

          10.2 INTENTIONALLY OMITTED.
               ---------------------

          10.3 Inventions. All discoveries, improvements and inventions
               ----------
(collectively, "Original Works") conceived or first reduced to practice, as
those terms are used before the U.S. Patent and Trademark Office, in the
performance of this Agreement by R2's personnel (except for those Original Works
related to the Products and those Original Works shall be the sole and exclusive
property of Seller), shall be the sole and exclusive property of R2 shall retain
any and all rights to file any patent applications thereon.

               10.3.1 All Original Works conceived or first reduced to practice,
as those terms are used before the U.S. Patent and Trademark Office, in the
performance of this Agreement by Seller's personnel shall be the sole and
exclusive property of Seller and Seller shall retain any and all rights to file
any patent applications thereon.

               10.3.2 All Original Works conceived or first reduced to practice,
as those terms are used before the U.S. Patent and Trademark Office, in the
performance of this Agreement jointly by Seller personnel and R2 personnel,
shall be the property jointly of Seller and R2 (except for those Original Works
related to the Products and those Original Works shall be the sole and exclusive
property of Seller), each party having an equal and undivided one-half (1/2)
interest therein. In such event, the parties shall mutually determine the
following: 1) whether an application or applications shall be filed on such
joint invention; 2) the party that will prepare and file such application or
applications; and 3) the country or countries in which the same is to be filed.
The patent expenses incurred shall be divided equally between the parties. In
the event the parties are not able to mutually agree to file an application or
applications on a joint invention, either party may prepare and file such
application or applications at its own expense.

               10.3.3 The provisions of this Section 10.3, 10.3.1 and 10.3.2
regarding rights of ownership (individual and joint), sharing of expenses and
licenses shall also apply to work of the parties and results obtained with
respect to copyrightable subject matter, mask work rights and trade secrets.

     11.  Indemnification.
          ---------------

          11.1 Intellectual Property and Product Liability Indemnification.
               -----------------------------------------------------------
Nothing in this Agreement constitutes a representation or warranty that the
Products are free from infringement of any patent, copyright, trade secret or
any other proprietary right of any third

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party. Seller will defend any claim, suit or proceeding and pay any settlement
amounts or damages awarded by a court of final appeal and competent jurisdiction
against R2 arising out of claims by third parties that (i) a Product infringes
or otherwise violates any United States patent, copyright, trademark or service
mark or (ii) a Product caused property damage or personal injury solely due to
the negligent acts or failure to act of Seller. The foregoing indemnification
obligation (i) shall only apply to a Product in the form finally delivered to R2
by Seller pursuant to this Agreement and for which all payments have been paid;
and (ii) shall not apply to claims based on any modification of the Products or
the combination, operation or use of the Products with materials not supplied by
Seller; (iii) shall only apply if R2 promptly notifies Seller of any such claim,
and cooperates with Seller, at Seller's expense, in the defense of such claim,
and gives Seller the sole right to control the defense and settlement of any
such claim. R2 shall have no authority to settle any claim on behalf of Seller.

               11.1.1 In the event of a claim of infringement, Seller shall have
the option to: (i) obtain, at Seller's expense, a license to permit the sale or
use of the Products by R2; or (ii) modify or replace such Products, at Seller's
expense, to make them non-infringing (and extend this indemnity thereto),
provided that any such replacement or modified Products are substantially
similar in features and functionality; or (iii) notwithstanding anything to the
contrary herein, Seller may cancel all outstanding orders for the Products
without any penalty or compensation to R2 and R2 and its distributors and
dealers will return the Products to Seller that are in its inventory, and Seller
will grant R2 a refund equal to the purchase price of the Products in inventory
as amortized on a straight-line basis over a five year period from the date of
delivery.

               11.1.2 Under no circumstances shall Seller be liable for any of
the following: (i) third party claims against R2 for losses other than those
under Section 11.1 and 11.1.1, (ii) loss of, or damage to, R2's records or data,
or (iv) special, incidental or indirect damages or for any economic
consequential damages (including lost profits or savings), even if Seller is
informed of their possibility. The maximum aggregate liability for which R2 is
entitled to recover damages from Seller, regardless of the basis of such claim
(including without limitation, fundamental breach, negligence,
misrepresentation, warranty, or other contract or tort claim), shall be limited
to the payment Seller receives from R2 during the Initial Term.

               11.1.3 This Section 11.1, 11.1.1, 11.1.2 and 11.1.3 constitutes
the entire and exclusive obligation of Seller with respect to any product
liability claim or infringement of any intellectual property right or rights for
any Products.

          11.2 R2 agrees to indemnify and hold Seller harmless from and against
any and all loss, damage or cost, including legal expenses and counsel fees, for
which Seller becomes liable to third parties by reason of acts, or failures to
act, of R2 in marketing and servicing its System incorporating the Products,
including, but not limited to: (a) breach of any representations and warranties
set forth in this Agreement; (b) representations and warranties made by R2's
personnel or agents regarding such Systems or the Products incorporated therein,
or the use or performance of the Products in connection with any other System
components or software programming and (c) improper installation, support or
maintenance of any System in which Products are incorporated.

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     12.  Insurance. During the term of this Agreement, Seller and R2, each at
          ---------
their own cost and expense, will carry and maintain occurrence-based insurance
with an "A" rated company or companies insuring R2 and Seller, respectively, as
follows:

          (A)  Comprehensive General Liability Insurance coverage for claims for
personal and bodily injury and property damage with a combined single limit of
$3,000,000.

          (B)  Workers Compensation Insurance adequate to comply with all
statutory requirements covering all persons employed hereunder, with Employers'
Liability Coverage with a limit of not less than $1,000,000.

     Seller also agrees to maintain, at its cost and expense, Product Liability
Insurance covering claims for property damage and bodily injury, but excluding
medical products liability with a limit of not less than $5,000,000. R2 also
agrees to maintain, at its cost and expense, Medical Products Liability
Insurance covering claims for property damage or bodily injury arising out of
related to R2's Systems with a limit of not less than $10,000,000.

     Each party will provide the other with a Certificate of Insurance naming
the other party as an additional insured on its respective policies for
Comprehensive General Liability, Products Liability (to be covered by Seller)
and Medical Products Liability (to be covered by R2). Each party will give the
other party thirty (30) days written notice before any of the policies are
canceled or materially altered and, in such event, will deliver replacement
insurance. All insurance policies required to be maintained will be primary and
will not require contribution from any coverage maintained by the other party
and will not contain any special or non-customary exclusions.

     13.  Inspection, Warranty and Service.
          --------------------------------

          13.1 R2 will inspect the Products, in accordance with the Acceptance
Criteria set forth in Exhibit B, attached, upon delivery and will be deemed to
                      ---------
have accepted the same if Seller does not receive R2's written notice of
rejection, specifying the reasons for such rejection, within thirty days (with a
target of less than 20 days) after the date of such delivery. As R2's sole
remedy for rejected Products, Seller will repair or replace, at Seller's option,
rejected Products at no charge, when returned by R2, at its expense to Seller at
15955 Alton Parkway, Irvine, CA 92718, within thirty days after Seller's receipt
of R2's rejection notice and ship, at Seller's expense, the repaired or replaced
Product to R2 in Los Altos, CA or its authorized facility in the continental
United States or Canada, except that if the Product is wrongfully rejected, R2
will be liable to Seller for all transportation charges to and from R2's
facility and will pay Seller an evaluation charge of one hundred dollars
($100.00 U.S.). R2 agrees to obtain a return authorization number prior to
returning any rejected Products and provide an explanation regarding rejection
of the Products.

          13.2 All units of Product are sold to R2 with a limited warranty which
is set forth in full in the Limited Warranty Statement that is attached hereto
as Exhibit B. This warranty applies to Product purchased in the United States
   ---------
and used in the Territory only. NO OTHER WARRANTIES, EXPRESS OR IMPLIED,
INCLUDING ANY IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR
PURPOSE

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RELATING TO THE USE OR PERFORMANCE OF THE PRODUCTS, IS MADE BY SELLER OR ANY
SELLER AFFILIATED COMPANY EITHER TO R2 OR R2'S PURCHASER(S). Seller will have
the right to change the term of the limited warranty upon prior notice to R2 and
subject to R2's prior approval, such approval not to be unreasonably withheld.

          13.3 NEITHER SELLER NOR ANY SELLER AFFILIATED COMPANY WILL BE LIABLE
FOR PERSONAL INJURY OR PROPERTY DAMAGE (UNLESS CAUSED SOLELY BY ITS NEGLIGENCE),
LOSS OF REVENUES OR PROFIT EXPENSE FOR SUBSTITUTE PRODUCT OR STORAGE CHARGES,
LOSS OR CORRUPTION OF DATA OR ANY OTHER INCIDENTAL, CONSEQUENTIAL OR SPECIAL
DAMAGES ARISING OUT OF THE USE OR INABILITY TO USE THE PRODUCTS OR SOFTWARE
WHICH MAY BE DISTRIBUTED BY SELLER, OR ANY NON-CANON BRAND COMPUTERS, PERIPHERAL
EQUIPMENT OR SOFTWARE WHICH MAY BE DISTRIBUTED BY SELLER, REGARDLESS OF THE
LEGAL THEORY ON WHICH THE CLAIM IS BASED AND EVEN IF SELLER HAS BEEN ADVISED OF
THE POSSIBILITY OF SUCH DAMAGES, NOR SHALL RECOVERY OF ANY KIND AGAINST SELLER
OR ANY SELLER AFFILIATED COMPANY BE GREATER IN AMOUNT THAN THE ACTUAL SELLING
PRICE TO R2 OF THE PRODUCTS CAUSING THE ALLEGED DAMAGE.

          13.4 This Agreement provides only for the sale of Products. No
software programming or design or implementation thereof will become part of the
definition of Products except operating system software furnished by Seller with
the Products. R2 or R2's purchaser will contract directly with persons other
than Seller for all required software programming, design, coding and
installation thereof and Seller will have no responsibility whatsoever in this
connection even if R2 discusses the same from time to time with employees of
Seller. The limited warranty provided in the Limited Warranty Statement,
attached, will only apply if the Products are used in conjunction with
compatible computers, peripheral equipment and software, as to each of which
items Seller will have no responsibility.

          13.5 NON-CANON BRAND EQUIPMENT AND SOFTWARE WHICH IS INCLUDED IN THE
PRODUCT OR AS MAY OTHERWISE BE DISTRIBUTED BY SELLER ARE SOLD "AS IS," WITHOUT
WARRANTY OF ANY KIND BY SELLER, INCLUDING ANY IMPLIED WARRANTY REGARDING
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. The sole warranty with
respect to such non-Canon brand items, if any, is given by the manufacturer or
producer thereof.

          13.6 R2 represents and warrants that: (i) R2 is purchasing the
Products from Seller solely for incorporation in the Systems described in the
Business Plan, and that it will not market the Products other than in such
Systems or use the Products for any purpose other than as described in the
Business Plan; (ii) R2's Systems will include only hardware and software that is
compatible with the Products; (iii) R2 is an experienced systems integrator and
needs no support from Seller or any Seller affiliated company in the Territory
in incorporating the Products in any of its Systems or in marketing the Products
in any part of the Territory; (iv) R2 has tested the Products and has determined
that it is suitable for the applications described in the Business Plan; (v)
based on its experience in, and knowledge of, the business in which it is
engaged, R2

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will establish and require implementation of such back-up procedures for Product
failure, as R2 deems prudent and in accordance with standard practices in the
industry; (vi) R2 is the sole owner of R2's Trademarks, patents and other
intellectual property related to the Systems and neither such of R2's
Trademarks, patents and other intellectual property nor use of such of R2's
Trademarks, patents or other intellectual property as set forth herein will
violate or infringe upon the right or interest of any third party; (vii) none of
the rights or interest herein granted to Seller has been transferred or assigned
to any third party and are free of any liens, claims and encumbrances whatsoever
in favor of any other party; (viii) there are no claims, litigation or other
proceedings pending or threatened which would adversely affect Seller's rights
or interest hereunder; and (ix) R2 will provide a system warranty to its
distributor, dealer and end user purchaser(s) stating that it is the only entity
providing a warranty with regard to the System. Without limiting the foregoing,
R2, in connection with its distribution efforts, is responsible for obtaining
all necessary governmental approvals and complying with all other applicable
laws and regulations in connection with R2's distribution efforts in the
Territory, except for those approvals set forth in this Agreement which have
been obtained by Seller.

     13.7 All repair work, other than repairs covered by the limited warranty
attached as Exhibit B, will have a limited warranty against defective material
            ---------
or workmanship under normal use for a period of ninety (90) days from the date
of shipment of the repaired Product by Seller. R2's sole remedy for a Product
repaired with defective material or workmanship will be replacement or repair of
the same, at Seller's discretion, without charge when returned by R2, at its
expense, to Seller at 15955 Alton Parkway, Irvine, CA 92718 and proven to be
defective upon inspection. The replaced or repaired Product will be warranted
for the an additional ninety (90) day warranty period of the repair using
defective material or workmanship and be shipped at Seller's expense to R2 or
its' designated location in the Territory. This limited warranty for a Product
repaired does not apply if the failure of the repair resulted from accident,
abuse or misapplication of the repaired Product and shall not extend to anyone
other than R2. NO OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING ANY IMPLIED
WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE RELATING TO
THE REPAIRS OR THE USE OR PERFORMANCE OF THE PRODUCTS, IS MADE BY SELLER OR ANY
SELLER AFFILIATED COMPANY EITHER TO R2 OR R2'S PURCHASER(S). Seller will have
the right to change the term of the limited warranty upon prior notice to R2 and
subject to R2's prior approval, such approval not to be unreasonably withheld.
The terms of Section 13.3 will also apply to this Section 13.7.

     13.8 Service: Seller will provide training up to two times per year (date
to be mutually agreed upon) for R2 service and manufacturing personnel at R2's
facility in Los Altos, CA or Canon Inc.'s facility in Japan, at Seller's option,
and Seller will provide manuals and documentation to assist R2 in operating,
servicing and installing the Product. R2 will be responsible for its
out-of-pocket expenses associated with the training, including without
limitation, transportation, meal and hotel expenses. R2 will also be responsible
for transportation and hotel expenses for one engineer of Seller if Seller
agrees to conduct the training at R2's facility in Los Altos, CA. Seller will
provide a spare parts listing with pricing, and use reasonable efforts to
maintain reasonable quantities of spare parts in inventory thus enabling
shipment of spare parts in inventory on the same day of notification provided
said notification occurs before 10:00 AM Pacific Time.

                                       10

<PAGE>

14.      Default.
         -------

         14.1     Either party may, by written notice, terminate this Agreement,
or cancel any purchase order hereunder without penalty, if:

                  (i)   the other party fails to comply with any of the material
provisions of this Agreement and such condition is not remedied within thirty
(30) days of receipt of written notice; or

                  (ii)  the other party becomes bankrupt or insolvent, suffers a
receiver to be appointed or makes an assignment for the benefit of creditors; or

                  (iii) R2 materially changes its Business Plan in a manner that
affects Seller without obtaining the prior written consent of Seller.

         14.2     Seller reserves the right, without limiting its other remedies
under this Agreement, to refuse to supply Products to R2 and/or to cancel this
Agreement if (i) R2 distributes the Products other than to distributors and
dealers and end users in the Territory, (ii) R2 does not implement or fails to
adhere to its Business Plan (including failure to comply with the specifications
for R2's Systems) except if approved in writing by Seller; or (iii) Seller
receives repeated complaints regarding the performance of R2's Systems from
distributors, dealers or end user purchasers of the Systems, and R2 fails to
cure such complaints to Seller's satisfaction after reasonable notice.

         14.3     Both parties agree to negotiate in good faith the settlement
of any dispute that may arise under this Agreement.

         14.4     Except as otherwise provided under this Agreement,
cancellation by R2 under this Agreement of any purchase order shall not excuse
Seller's performance or R2's obligations under this Agreement with respect to
any other purchase order.

         14.5     If this Agreement shall expire or be terminated for any reason
set forth in this Agreement, R2 agrees that it shall upon the effective date of
the expiration or termination: (i) refrain from exercising or attempting to
exercise any right or privilege granted to it hereunder; (ii) discontinue its
use of and relinquish any and all rights to any name, trade name or trademark to
the extent Seller has authorized or permitted R2 to use hereunder; and (iii) at
Seller's election, return or destroy all price lists, catalogs, signs,
promotional, advertising or technical material bearing such designations, and
any other material furnished to R2 free of charge by Seller during the Initial
Term or Term, as applicable, of this Agreement.

         14.6     Seller agrees to offer R2 spare parts required to
service/repair the Product at its then current price for the period ending five
years after termination of the Agreement (the "Five Year Period"). For R2 to
obtain spare parts after termination of the Agreement, Seller must receive a
final order six months prior to the expiration of the Five Year Period. In the
event of manufacturer production or shipping delays, Seller will allocate
distribution of spare parts in a fair and equitable manner among all customers,
even though this may effectively limit delivery of ordered quantities. Seller
reserves the right to limit the maximum number of units of a given part to be
shipped to R2 in any one month. R2 will place spare parts orders by formal
purchase

                                       11

<PAGE>

orders via R2's written purchase order form and will follow the procedure set
forth in Section 5.3 of the Agreement, except that (a) a spare part number will
be specified in lieu of the model number and (b) the lead time for spare parts
orders should generally be fourteen weeks after Seller's receipt of the order
(special parts orders generally require an additional four weeks due to special
handling requirements). In the event of discontinuance of a spare part, its
subsequent unavailability and need by R2, Seller and R2 will discuss mutually
satisfactory solutions which may include Seller providing information as to
alternate sources. R2 agrees to pay all freight from Seller's nearest warehouse
in Irvine, CA where the spare parts are available to R2's facility. Subject to
approval of R2's credit by Seller's Finance Department, payment for the spare
parts will be due thirty days after the invoice date. Seller also agrees to
offer R2 service/support for the Product at its then current labor rate for the
period ending five years after termination of the Agreement. R2 agrees to pay
all freight to ship the Product to Seller at 15955 Alton Parkway, Irvine, CA
92718 for service/support and Seller shall pay all freight for Seller to return
the Product to R2, or its designated location in the Territory, after it has
been serviced. Subject to approval of R2's credit by Seller's Finance
Department, payment for service/support and freight, if Seller is not provided
with R2's billing number for shipment, will be due thirty days after the invoice
date. Spare parts and service/support will only be available to R2's existing
customers which have existing service agreements during the Initial Term, and
Term (if applicable), of this Agreement.

          14.7   Except as otherwise provided in this Agreement, termination of
this Agreement is without prejudice to the rights and obligations of the parties
which have accrued up to and including the date of termination. Except as
otherwise provided in this Agreement, the parties agree that in the event of
termination prior to the end of the Initial Term or any subsequent term, R2 will
be responsible for payment for the total units of Product specified in its
13-week Order Forecast and Seller will be responsible for shipment of units of
Product in such Order Forecast.

     15.  Product Discontinuance. Except as otherwise set forth in this
          ----------------------
Agreement, Seller may discontinue the manufacture and/or sale of a Product upon
one year's prior written notice to R2. Within sixty days after the date of
notification of discontinuance ("Notice Date"), R2 may place and Seller will
accept an order in accordance with the terms of this Agreement for reasonable
quantities of such discontinued Product for delivery up to ten months following
Notice Date.

     16.  Force Majeure. Neither party shall be liable for any delay or failure
          -------------
in performance of its obligations hereunder caused by changes to applicable law
or regulations affecting the Products; governmental acts or directives (official
or unofficial); strikes (legal or illegal); acts of God; war (declared or
undeclared); insurrection; riot or civil commotion; fires; flooding or water
damage; explosions; embargoes; or delays in manufacturer's or supplier's
furnishing products, whether of the kind herein enumerated or otherwise; or
other causes beyond the parties' reasonable control and without fault or
negligence of such party (collectively, "force majeure"). In the event either
party is unable to carry out any of its material obligations hereunder by reason
of any force majeure and such condition extends for a period of six months, R2
or Seller, as the case may be, will be entitled to:

                                       12

<PAGE>

             (A)   terminate this Agreement or that portion of the Agreement
that is affected by the force majeure upon written notice to such other party;
or

             (B)   suspend the obligations of such party under this Agreement
for the duration of the delaying cause, and, in the case of R2, buy the
Product(s) elsewhere and deduct from any milestone or commitment to Seller the
quantity so purchased. The party whose obligations are suspended will resume
performance under this Agreement immediately after the delaying cause ceases
and, upon mutual agreement, the Initial Term and/or Term of the Agreement will
be extended for a period equivalent to the length of time the excused delay
endured.

     17.     Equal Opportunity. The "Equal Opportunity Clause" set forth in 41
             -----------------
CFR 60-1.4(a), the clause labeled "Affirmative Action of Disabled Veterans and
Veterans of the Vietnam Era" set forth in 41 CFR 60-250.4 and the clause labeled
"Affirmative Action for Handicapped Workers" set forth in 41 CFR 60-741.4 are
hereby incorporated by reference and all references in such clauses to "the
contractor" shall be deemed to be references to Seller.

     18.     Government Contracts. If R2 issues Seller a purchase order for
             --------------------
Products for integration in Systems to be sold under a prime contract with the
government or a subcontract thereunder, the terms that the Federal Acquisition
Regulation or other appropriate regulations require to be inserted in contracts
or subcontracts will be deemed to apply to any purchase order under this
Agreement.

     19.     Survival. Notwithstanding the termination or expiration of the term
             --------
of this Agreement or any renewal period thereof, it is acknowledged and agreed
that those rights and obligations which by their nature are intended to survive
such expiration or earlier termination shall survive including, without limiting
the forgoing, the following provisions: Article 10, 11, 12, 13, 21 and 23.

     20.     Relationship of Parties. Neither party shall have, or shall
             -----------------------
represent that it has, any power, right or authority to bind the other party, or
to assume or create any obligation or responsibility, express or implied, on
behalf of the other party or in the other party's name. Nothing stated in this
Agreement shall be construed as constituting Seller and R2 as partners, joint
venturers, or as creating the relationships of employer and employee, franchiser
and franchisee, master and servant, or principal and agent.

     21.     Publicity.
             ---------

             21.1     INTENTIONALLY OMITTED.
                      ---------------------

             21.2     R2 shall promote and market its Systems under R2's own
trade names. R2 agrees that it has no right, title or interest in and to the
name CANON or any Canon logo. R2 shall not use the name CANON, alone or in
combination with other names, in any way except as may be authorized by Seller.
R2 shall not use any designation consisting of or including the trade name and
trademark CANON, except as approved by Seller. Under no circumstances shall R2
use the CANON corporate logo independently from the Product logos.

                                       13

<PAGE>

                  21.3 R2 will, as set forth in detail in R2's Business Plan,
at its own cost and expense, promote its Systems incorporating the Products in
the Territory, which efforts should include, but not be limited to, the
following:

                  (A) Furnish each distributor, dealer and end user with R2's
printed form of warranty, and assisting customers in obtaining warranty and
out-of-warranty repairs and service.

                  (B) At the request and expense of distributors, dealers and
end users, R2 will accept Products for out-of-warranty (at the expense of
distributors, dealers and end-users) and in-warranty repair and R2 will ship the
Products to 15955 Alton Parkway, Irvine, CA 92718 and pay for the cost of the
repairs if the Product is out-of-warranty, and after repair, return the Products
to the respective distributors, dealers or end users. For in warranty Product,
Product returns will be handled in accordance with Section 13.1 above. All such
returns, including in-warranty returns, will be accompanied by such
documentation and be in accordance with such return procedures as may be
published by Seller from time to time.

         22.      Administration.
                  --------------

                  22.1 R2 and Seller shall each assign a primary and secondary
individual to administer this Agreement (each, an "Administrator") throughout
the Initial Term and the Term (if applicable).

         R2's Administrators are:

                  Primary:

                  Manager of QA
                  Dick Ball
                  R2 Technology, Inc.
                  325 Distel Circle
                  Los Altos, CA 94022
                  (650) 254-8988

                  Secondary:

                  Purchasing
                  Nancy Hipsman
                  R2 Technology, Inc.
                  325 Distel Circle
                  Los Altos, CA 94022
                  (650) 254-8988

                                       14

<PAGE>

         Seller's Administrators are:

                  Primary:

                  Administration Manager
                  Medical Systems
                  Hiro Matsuda
                  Canon U.S.A., Inc.
                  15955 Alton Parkway
                  Irvine, CA 92718
                  (949) 753-4298

                  Secondary:

                  Marketing Assistant Director
                  Medical Systems
                  Tsuneo Imai
                  Canon U.S.A., Inc.
                  15955 Alton Parkway
                  Irvine, CA 92718
                  (949) 753-4297

                  22.2 Each party will inform the Administrator of the other in
writing of a change of Administrator or such Administrator's address or
telephone number.

                  22.3 Any notice required or permitted to be given under this
Agreement will be given in writing and personally delivered, mailed by national
courier or United States certified mail, postage prepaid, return receipt
requested, in the United States mail, addressed to R2 or Seller, as the case may
be, at the address and to the parties set forth in this Section (except that for
Seller, R2 will also copy Steve Becker, Senior Manager Legal Division at Canon
U.S.A., Inc., One Canon Plaza, Lake Success, NY 11042) or at such other address
as the parties may direct by notice given as hereinabove provided. Notice will
be deemed given when received as evidenced by (i) sworn statement of server,
(ii) signature of the party served or (iii) return receipt or the date such
notice is first refused, if that be the case, respectively.

         23.      General.
                  -------

                  23.1 This Agreement and all of its referenced Exhibits, which
are incorporated herein by reference as if set forth in full, together with the
terms of all purchase orders accepted by Seller and not at variance with this
Agreement, but not the preprinted terms and conditions thereof, constitute the
entire agreement between the parties with respect to the subject matter hereof
and supersedes all other agreements. No deviation from these provisions shall be
binding unless in writing and signed by an authorized representative of the
party to be charged.

                  23.2 This Agreement shall be governed by and construed in
accordance with the laws of the State of New York applicable to contracts made
and wholly to be performed in New York. The parties (i) agree that any
litigation, action or proceeding arising out of or relating to this Agreement
must be instituted in any state or federal court in the State of New

                                       15

<PAGE>

York, and (ii) waive any objection which each might have now or hereafter with
respect to jurisdiction, venue or forum.

            23.3   The rights, duties and obligations of either party under
this Agreement may not be assigned in whole or in part by operation of law or
otherwise without the prior express written consent of the other party, and any
attempted assignment of any rights, duties or obligations hereunder without such
consent shall be null and void. This Agreement shall be binding on the parties
and their respective successors and permitted assigns.

            23.4   All rights and remedies conferred under this Agreement or by
any other instrument or law shall be cumulative and may be exercised singularly
or concurrently. Failure by either party to enforce any provision shall not be
deemed a waiver of future enforcement of that or any other provision. In the
event that any portion of this Agreement shall be held to be unenforceable, the
remaining portions of this Agreement shall remain in full force and effect.

            23.5   Headings of the Sections of this Agreement are inserted for
convenience only and do not constitute a part of this Agreement.

            23.6   If any provision of this Agreement or the application of any
such provision to any party or circumstance is held invalid, the remainder of
this Agreement, and the application of such provision other than to the extent
it is held invalid, will not be invalidated or affected thereby.

            23.7   This Agreement may be executed in any number of counterparts,
each of which will be deemed an original, but all of which together constitute
one and the same instrument.

      24.   Exhibits. The following is the list of Exhibits, which are attached
            --------
hereto and hereby incorporated into this Agreement by reference:

            (A)  Product Description, Production Pricing and Shipment Forecast

            (B)  Product Specifications/Test Specifications/Acceptance
                 Procedure/Limited Warranty

            (C)  Business Plan

            (D)  Non-Disclosure Agreement Between the Parties

         IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their duly authorized representatives.

                                       16

<PAGE>

Accepted for Seller:                      Accepted for R2:

CANON U.S.A., INC.                        R2 TECHNOLOGY, INC.

By: /s/  Yasushi Kuramoto                 By: /s/  Richard S. Enck
    -----------------------------------       ----------------------------------
Name:    Yasushi Kuramoto                 Name:       Richard S. Enck
     ----------------------------------        ---------------------------------
Title:    General Manager                 Title:   Chief Operating Officer
      ---------------------------------         --------------------------------
Date:      May 22, 2000                   Date:       April 25, 2000
     ----------------------------------        ---------------------------------

Reviewed by the Canon Legal Department

Approved By: Maria Benedis as to form
             -------------
Date: 5/8/00
     ------------

                                       17

<PAGE>

                                    EXHIBIT A

         PRODUCT DESCRIPTION, PRODUCTION PRICING, AND SHIPMENT FORECAST

            ***

----------------------------------
***Certain information on this page has been omitted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

                                      A-1

<PAGE>

                                    EXHIBIT B

                   PRODUCT SPECIFICATIONS/TEST SPECIFICATIONS/
                      ACCEPTANCE PROCEDURE/LIMITED WARRANTY

PRODUCT SPECIFICATIONS

***

TEST SPECIFICATIONS

R2 Test, Scanner Film Feeding, Canon FILM SCANNER 300++ IN PROCESS will be
submitted by July 30, 2000 and will be subject to Canon approval).

ACCEPTANCE PROCEDURE

R2 Acceptance Procedure, Canon FILM SCANNER 300++ IN PROCESS (will be submitted
by July 30, 2000 and will be subject to Canon approval).

LIMITED WARRANTY

                   FILM SCANNER 300++ PRODUCT LIMITED WARRANTY

Canon U.S.A., Inc. ("Canon USA") warrants the Film Scanner 300 ++ Product,
including the bar code reader (collectively, the "Product") to be free from
defects in workmanship and materials under normal use and service for a period
of * * * from delivery to R2 Technology, Inc. ("R2") (the "Warranty Period").
During the Warranty Period, Canon USA will replace, without charge, any
defective part in the Product.

This warranty will only apply if the Product is used in conjunction with
compatible computers, peripheral equipment and software, as to which items Canon
USA will have no responsibility.

THIS WARRANTY IS IN LIEU OF ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING
ANY IMPLIED WARRANTIES REGARDING MERCHANTABILITY OR FITNESS FOR A PARTICULAR
PURPOSE, RELATING TO THE USE OR PERFORMANCE OF THE PRODUCT. NO OTHER EXPRESS
WARRANTY OR GUARANTY, EXCEPT AS MENTIONED ABOVE, GIVEN BY ANY PERSON, FIRM OR
CORPORATION WITH RESPECT TO THE PRODUCT WILL BIND CANON USA.

This warranty will be void and of no force and effect if the Product is damaged
as a result of (a) neglect, alteration, electric current fluctuation or
accident, (b) improper use, including failure to follow operating instructions
or maintenance and environmental conditions prescribed in Canon USA's operator's
manual, (c) installation or repair by other than service representatives
qualified by Canon USA and acting in accordance with Canon USA's service
bulletins, (d) use of supplies

----------------------
* * *Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

                                      B-1

<PAGE>

or parts (other than those distributed by Canon USA) which damage the Product or
cause abnormally frequent service calls or service problems, or (e) use of the
Product with noncompatible computers, peripheral equipment or software. Nor does
this warranty extend to any Product on which the original identification marks
or serial numbers have been defaced, removed or altered.

CANON USA SHALL NOT BE LIABLE FOR PERSONAL INJURY OR PROPERTY DAMAGE (UNLESS
CAUSED BY CANON USA'S NEGLIGENCE), LOSS OF REVENUE OR PROFIT, FAILURE TO REALIZE
SAVINGS OR OTHER BENEFITS, EXPENDITURES FOR SUBSTITUTE EQUIPMENT OR SERVICES,
STORAGE CHARGES OR OTHER SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES CAUSED BY
THE USE, MISUSE OR INABILITY TO USE THE PRODUCT, REGARDLESS OF THE LEGAL THEORY
ON WHICH THE CLAIM IS BASED AND EVEN IF CANON USA HAS BEEN ADVISED OF THE
POSSIBILITY OF SUCH DAMAGES. NOR SHALL RECOVERY OF ANY KIND AGAINST CANON USA BE
GREATER IN AMOUNT THAN THE MAXIMUM LIABILITY SET FORTH IN SECTION 11.1.2 OF THE
AGREEMENT BETWEEN R2 AND CANON USA. WITHOUT LIMITING THE FOREGOING, THE
PURCHASER ASSUMES ALL RISKS AND LIABILITY FOR LOSS, DAMAGE OR INJURY TO PERSONS
AND PROPERTY OF THE PURCHASER OR OTHERS ARISING OUT OF THE USE, MISUSE OR
INABILITY TO USE ANY PRODUCT SOLD BY CANON USA NOT CAUSED DIRECTLY BY THE
NEGLIGENCE OF CANON USA. THIS WARRANTY WILL NOT EXTEND TO ANYONE OTHER THAN R2
AND STATES R2'S EXCLUSIVE REMEDY.

                                       2

<PAGE>

                                    EXHIBIT B
                                    ---------

                           B41 PRODUCT SPECIFICATIONS
                           --------------------------

                                      * * *

                                    EXHIBIT B
                                    ---------

                            B5 PRODUCT SPECIFICATIONS
                            -------------------------

                                      * * *

                                    EXHIBIT C
                                    ---------

                                  BUSINESS PLAN
                                  -------------

                                     * * *

------------------------
* * *Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

                                       3

<PAGE>

ImageChecker(R) System Specifications

<TABLE>
<CAPTION>
<S>                                    <C>                                        <C>
------------------------------------------------------------------------------------------------------------------------------------
Technical Specifications
------------------------------------------------------------------------------------------------------------------------------------
Module                                    Processor Unit                                          Display Unit
------------------------------------------------------------------------------------------------------------------------------------
                            M1000-Sl/(1)/               M1000-CL/(3)/            RADX 614A                       Mammolux 680
------------------------------------------------------------------------------------------------------------------------------------
Purpose                     Digitizes and Analyzes Radiological Images                      Displays ImageChecker Files
------------------------------------------------------------------------------------------------------------------------------------
Film Size                                                      18 x 24 cm or 24 x 30 cm
------------------------------------------------------------------------------------------------------------------------------------
Film Type                                                      All accredited film types
------------------------------------------------------------------------------------------------------------------------------------
Patient ID                                                        Code 128C barcode
------------------------------------------------------------------------------------------------------------------------------------
Spatial Resolution                            50 pm                                          R2 ImageChecker File
-----------------------------------------------------------------------------
Dynamic Range                                 12 bits
------------------------------------------------------------------------------------------------------------------------------------
Cycle Time               Typical times:                Typical times:
Variable, depending on   18 x 24 cm: 65-70s/film       18 x 24 cm: (less than)60s/film          Not Applicable
image size & complexity  24 x 30 cm: 100-105s/film     24 x 30 cm: (less than)60s/film
------------------------------------------------------------------------------------------------------------------------------------
Internal Processor                           Intel x86                                            Intel x86
------------------------------------------------------------------------------------------------------------------------------------
Buffer Capacity                            Not Applicable                                     1000 (4-film case)
------------------------------------------------------------------------------------------------------------------------------------
Dimensions (HxWxD)       116 x 56 x 94 cm              167 x 74 x 67 cm         159 x 132 x 76 cm             163 x 131 x 75 cm
------------------------------------------------------------------------------------------------------------------------------------
Weight                   131 kg                        181 kg                   300 kg                        310 kg
------------------------------------------------------------------------------------------------------------------------------------
Power                    100v - 50/60Hz, 600 VA        100V - 50/60Hz, 500  VA  100V - 50/60Hz, 1200 VA       Not applicable
                         115v - 50/60Hz, 690 VA        115V - 50/60Hz, 500  VA  115V - 50/60Hz, 920 VA        120V - 50/60Hz, 756 VA
                         230v - 50/60Hz, 713 VA        230V - 50/60Hz, 500  VA  230V - 50/60Hz, 1449 VA       Not applicable
------------------------------------------------------------------------------------------------------------------------------------
Communications                                               10/100 Base-T Ethernet, IPV 4
------------------------------------------------------------------------------------------------------------------------------------
Environmental Guidelines*
------------------------------------------------------------------------------------------------------------------------------------
Temperature              Op.                                 15 degrees to 30 degrees C
                         Non-Op.                            -30 degrees to 60 degrees C
------------------------------------------------------------------------------------------------------------------------------------
Humidity                 Op.                20-80% RH (25 degrees C) 20-65% RH (35 degrees C) (non-condensing)
                         Non-Op.                       15-90% RH (35 degrees C) (non-condensing)
------------------------------------------------------------------------------------------------------------------------------------
Altitude                 Op.                                    (less than)2,400m
                         Non-Op.                                (less than)15,240m
------------------------------------------------------------------------------------------------------------------------------------
Conformance to Standards
------------------------------------------------------------------------------------------------------------------------------------
Safety                                                             JIS/UL*/CSA/CE
EMC                                                           FCC Part 15/EN60601-1-2
------------------------------------------------------------------------------------------------------------------------------------
Optional printer can be configured with the ImageChecker System.
</TABLE>

---------------------------
/(1)/      SL = Single case Loader

/(2)/      CL = Continuous case Loader

/(3)/      See individual system specifications for details.

/(4)/      Mammolux Pending (Mammolux 680-Display Unit is available in the U.S.
           only, other certifications not applicable).

Manufacturer reserves the right to modify or change specifications without
notice.

<PAGE>

                                   EXHIBIT D

                        MUTUAL NON-DISCLOSURE AGREEMENT
                        -------------------------------

This Mutual Non-Disclosure Agreement (the "Agreement") is dated this 15th day
of April, 1999 and is between the parties set forth in Section 1 below.

1.     Parties.

       Canon U.S.A., Inc.                           R2 Technology, Inc.
       One Canon Plaza                              325 Distel Circle
       Lake Success, NY 11042                       Los Altos, CA 94022
       ("CUSA")                                     ("R2")

2.     Background. CUSA and its parent, subsidiary and affiliate corporations
possess certain proprietary, technical and other information relating to film
scanners (the "Canon Information"), as more fully described at the end of this
Agreement. R2 possesses certain proprietary, technical information relating to
R2's product currently named the "Mammo 1000 ImageChecker system" (the "R2
Information"), as more fully described at the end of this Agreement. The parties
are willing to disclose their respective Information to each other, solely for
the purpose of product development of mammographic film digitizers (the
"Purpose"). As used in this Agreement, the discloser of "Confidential
Information" (as defined in Section 3 below) will be referred to as "Discloser"
and the recipient of Confidential Information will be referred to as
"Recipient." The parties agree to the terms below.

3.     Confidential Information. The term "Confidential Information" means the
Canon Information and R2 Information that is disclosed by Discloser to Recipient
orally (provided that the oral communication has been reduced to written form
and received by the Recipient within 15 business days of the oral communication)
or in a written or other tangible form and marked as "Confidential."
Confidential Information expressly includes information derived from the Canon
Information or R2 Information disclosed by Discloser to Recipient in writing and
marked as "Confidential."

4.     Obligations. Recipient agrees to (a) keep the Confidential Information in
strict confidence, (b) not to disclose it to any third party and (c) not to use
the Confidential Information for any purpose other than for the specific Purpose
as described in Section 2 above, without the prior written consent of Discloser.
Recipient agrees to protect and safeguard the Confidential Information by using
the same degree of care, but no less than a reasonable degree of care to prevent
the unauthorized use, dissemination or publication of the Confidential
Information, as Recipient uses to protect its own confidential information of a
like nature. Recipient agrees to limit the disclosure of the Confidential
Information to its

                                       40

<PAGE>

employees who need to know the Information in order to accomplish the Purpose of
this Agreement. Recipient agrees that its employees who need to know the
Confidential Information (i) will be notified of the confidential nature of the
Confidential Information, and (ii) must agree to be bound by the terms of this
Agreement.

5.   Exceptions. The obligations of confidentiality in Section 4 will not apply
to any information which (a) was known to the Recipient prior to disclosure, as
evidenced by Recipient's written records; (b) is rightfully received by
Recipient from a third party having the right to disclose the information; (c)
is or becomes public knowledge through no act or fault of Recipient, (d) is
proven by written evidence to have been independently developed by Recipient
without any reference to the Confidential Information; or (e) is required to be
disclosed pursuant to any law or judicial or governmental request, requirement
or order, provided that Recipient gives reasonable notice to Discloser of the
order, if possible, and makes a reasonable effort to seek legal protection of
the Confidential Information.

6.   Period of Confidentiality. The obligations of confidentiality contained in
Section 4 will extend for a period of three (3) years from the date of each
disclosure of information.

7.   Termination. Upon termination of this Agreement, or upon the written
request of Discloser at any time, Recipient will immediately return to Discloser
all written Confidential Information, all written materials derived from, and
copies of, the Confidential Information. Upon termination, the Recipient may not
retain any copies of any materials referred to in this Section 7 for its files.

8.   Relationship Between Parties. No license or right, express or implied, is
granted to Recipient for any invention, patent application, patent, copyright,
know-how, trade secret, other intellectual property right, or application for
intellectual property, of Discloser or its parent or subsidiary corporations.
The parties make no representation that (a) the Confidential Information will be
disclosed or (b) any type of business relationship related to the Purpose of
this Agreement, the Confidential Information, or any other matter will be
concluded between them. Nothing in this Agreement will create an agency
relationship, partnership or joint venture between the parties.

9.   Specific Performance. The parties agree that the terms of this Agreement
are reasonable and necessary for the protection of the Confidential Information
and to prevent damage or loss to Discloser. Recipient agrees that any breach or
threatened breach of this Agreement by it or any of its authorized
representatives may cause Discloser irreparable injury for which there is no
adequate remedy at law. Therefore, the parties agree that Discloser will be
entitled, in addition to any other remedies available, to injunctive or other
equitable relief to require specific

                                       41

<PAGE>

performance under, or to prevent a breach of, this Agreement.

10.    Miscellaneous. This Agreement is governed by and construed in accordance
with the laws of the State of New York without regard to its conflict of laws
provisions. This Agreement is the complete agreement of the parties and
supersedes all previous agreements of representations, written or oral, between
the parties on this subject matter. All notices under this Agreement will be in
writing, addressed to the parties at their addresses set forth in Section 1
above and personally delivered, mailed by national traceable courier or United
States certified or registered mail, return receipt requested. Notice will be
deemed given when received as evidenced by signature or the date the notice is
first refused, if that be the case. This Agreement is not assignable by either
party without the prior written consent of the other. This Agreement may not be
amended except by a writing signed by the authorized representatives of both
parties. In the event that any of the provisions of this Agreement are found to
be unenforceable by a court of competent jurisdiction, the enforceability of the
remaining provisions will be unimpaired.

11.    Compliance with Laws. Recipient agrees not to export or convey any
technical data, equipment or materials supplied under this Agreement, in
contravention of any laws, ordinances or regulations enacted by the United
States, Japan or the European Economic Community.

CANON U.S.A., INC.                           R2 TECHNOLOGY, INC.

[ILLEGIBLE SIGNATURE]                        /s/ Richard Enck
-----------------------------                --------------------------------
Signature                                    Signature

                                             Richard Enck
-----------------------------                --------------------------------
Name                                         Name

                                                           COO
-----------------------------                --------------------------------
Title                                        Title

                                                          4/19/99
-----------------------------                --------------------------------
Date                                         Date

Canon Information: Specifications, drawings and other information related to
film scanners.

R2 Information: Cart drawings for the product currently named the "Mammo 1000
ImageChecker system."

REVIEWED BY THE CANON LEGAL DEPARTMENT
APPROVED BY: Maria Benedis                 as to form
            ----------------------------
Date: 4/29/99
     -----------------------------------

                                       42<PAGE>

                                                                   Exhibit 10.10

                              EMPLOYMENT AGREEMENT

        This Agreement is made and entered into effective as of May 15, 2000 by
and between Michael Klein (the "Executive") and R2 Technology, Inc., a
California corporation (the "Company").

        1.      Duties and Scope of Employment. The Company hereby employs the
                ------------------------------
Executive in the position of President and Chief Executive Officer of the
Company. The Executive will, to the best of his ability during this
employment, devote his full time and best efforts to the performance, duties and
functions of the position of President and Chief Executive Officer of the
Company, and in the performance of those duties will comply with the policies of
the Company and the direction of the Board of Directors. At the next meeting of
the Board of Directors after the commencement of the Executive's employment with
the Company, the excutive will be appointed as a member of the Company's Board
of Directors, and will serve in that capacity for as long as he remains the
President and Chief Executive Officer of the Company.

        2.      Compensation.
                ------------

                (a)     The Company agrees to pay the Executive and the
Executive agrees to accept as the compensation for his services, a monthly base
salary of $20,416.67, less applicable witholding, payable in accordance with the
Company's standard payroll policy.  The first and last payment by the Company to
the Executive shall be prorated, if necessary, to reflect a commencement or
termination date other than the first or last working day of a pay period.
Additionally, at least annually, the Board of Directors will consider increases
in the annual rate of salary in light of the Executive's individual performance
and other relevant individual and business factors.

                (b)     As additional compensation, the Executive will be
eligible to receive a cash bonus based on criteria set by the board of
directors annually.  For calendar year 2000 the Executive shall be entitled to a
cash bonus based on achievement of the revenue and operating income goals set
forth on Exhibit A.

                (c)     The Company will lend the Executive $75,000 upon his
commencement of employment with the Company.  This loan will be evidenced by a
promissory note payable to the Company which promissory note will bear interest
at the minimum rate to avoid imputed interest and be forgiven in its entirety on
the earlier of the first anniversary of the commencement of the Executive's
employment with the Company or a sale of the Company in which control is
transferred provided in either case that the Executive is employed by the
Company of that date.

        3.      Equity Compensation.
                -------------------

                (a)     The Company will grant the Executive a stock
option ("Option") exerciseable for either (a) 5% of the fully diluted capital
stock or (b) 4% of the fully diluted capital stock with an opportunity to earn
an additional 2% based on the attainment of performance objectives set forth in

<PAGE>

Exhibit A. The Executive shall elect one of these programs within 30 days of the
date of this Agreement. The percentages will be calculated as of the date of
this Agreement. The exercise price for the option shall be $1.10 per share (the
fair market value of the Company's Common Stock). The Option shall vest during
the Executive's employment over a 48 month period. 12/48 of the shares subject
to the Option shall vest at the end of one year following the commencement date
of the Executive's employment with the Company and an additional 1/48 of the
shares shall vest at the end of each full month thereafter until all of the
shares are excisable, provided in each case that the Executive's employment with
the Company has not terminated prior to such date. The vesting on the Option
shall accelerate in its entirety upon your involuntary or constructive
termination of employment following a sale of the business in which control is
transferred as more fully described in the Option.

          (b) The Executive will be entitled to vacation, fringe benefits and
reinbursement for reasonable out of pocket expenses in accordance with the
Company's standard practice covering executive personnel, as such may be in
effect from time to time.

     4.   Proprietary Information Agreement. The Executive shall enter into the
          ---------------------------------
Company's standard proprietary information agreement, a copy of which has been
delivered to the Executive.

     5.   Term of Termination.
          -------------------

          (a) The term of this Agreement shall commence on May 15, 2000 and
shall continue until terminated by either party in accordance with the
provisions of this Section 5.

          (b) This Agreement may be terminated by the Company for justifiable
cause (as hereinafter defined) upon 30 days notice without any severance
obligation on the part of the Company. For the purpose of this Agreement, the
term justifiable cause shall include acts of moral turpitude, the willful
habitual neglect of the executives' obligations under this Agreement misuse of
corporate funds, or any other act of gross misconduct.

          (c) This Agreement may be terminated by the Company upon 30 days
notice without justifiable cause provided that the Company shall pay the
Executive an amount equal to the sum of his then current monthly base salary as
a severance payment to him for a period of nine months following the date of
termination, or until the Executive finds other full time employment, whichever
is shorter. The executive's medical benefits shall continue during this
severance period. The payment to the Executive of the severance payment
described in this Section 5 shall discharge all of the Company's obligations to
the Executive.

          (d) This Agreement may be terminated by the Executive at any time upon
30 days written notice, in which case the Company shall have no severance
obligations to the Executive.

     6.   Miscellaneous.
          -------------

          (a)  This Agreement shall be binding upon the legal representatives
distributees, successors and assigns of the parties hereto.

                                      -2-

<PAGE>

                (b)     This Agreement contains the entire agreement of the
parties, and may not be changed or amended except with a writing signed by the
party against whom enforcement of such change or amendment is sought.

                (c)     This Agreement supercedes all prior written or oral
agreements between the Executive and the Company or any officer, director or
shareholder of the Company. It is agreed that a waiver by either party of a
breach of any provision of this Agreement shall not operate or be construed as a
waiver of any subsequent breach by the same party.

                (d)     In case one or more of the provisions contained in this
Agreement shall for any reason be held to be invalid, illegal or unenforceable
in any respect, such invalidity, illegality or unenforceability shall not effect
any other provisions of this Agreement but such provisions shall be deemed
deleted and such deletions shall not effect the validity of other provisions of
this Agreement.

                (e)     This Agreement shall be governed by and construed
according to the laws of the State of California. The parties hereto agree that
any dispute or controversy arising out of or relating to or in connection with
this Agreement, or the interpretation, validity, construction, performance,
breach or termination thereof shall be finally settled by binding arbitration to
be held in Santa Clara County, California under the employment dispute
resolution rules of the American Arbitration Association as then in effect. The
arbitrator may grant in junctions or other relief in such dispute or
controversy. The decision of the arbitrator shall be final, conclusive and
binding on the parties to the arbitration; and judgement may be entered on the
decision of the arbitrator in any court having jurisdiction.

        Executive has read and understands this Section 6(e) which discusses
arbitration. Executive understands that by signing this Agreement executive
agrees to submit any claims arising out of, relating to or in connection with
this Agreement or the interpretation, validity, construction, performance,
breach or termination thereof to binding arbitration and that this arbitration
clause constitutes a waiver of executive's right to a jury trial and relates to
the resolution of all disputes relating to the executive's relationship with the
Company.

        IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first above written.

                                              R2 Technology, Inc.

                                              By: /s/ Steve Lazarus
                                                  ------------------------------

                                              Title: DIRECTOR
                                                     ---------------------------

                                              Accepted:

                                              /s/ Michael S. Klein
                                              ----------------------------------

                                              Michael Klein

                                      -3-

<PAGE>

                                   EXHIBIT A

                                 Cash Bonus Mix

--------------------------------------------------------------------------------
  Variance      (10)%      Plan       (10)%      (11)%      (20)%      (30)%
  Revenue      $15,816   $17,573     $19,330    $19,500    $21,088    $22,845
--------------------------------------------------------------------------------
    Op
  Income
--------------------------------------------------------------------------------
  ($4,043)       80%        90%        100%       110%       120%       130%
--------------------------------------------------------------------------------
  ($3,234)       90%       100%        110%       120%       130%       140%
--------------------------------------------------------------------------------
  ($2,650)      100%       110%        120%       150%       160%       170%
--------------------------------------------------------------------------------
  ($1,617)      110%       120%        130%       160%       170%       180%
--------------------------------------------------------------------------------
   $    0       120%       130%        140%       170%       180%       190%
--------------------------------------------------------------------------------

                                Equity Bonus Mix

--------------------------------------------------------------------------------
  Variance      (10)%      Plan       (10)%      (11)%      (20)%      (30)%
  Revenue      $15,816   $17,573     $19,330    $19,500    $21,088    $22,845
--------------------------------------------------------------------------------
    Op
  Income
--------------------------------------------------------------------------------
  ($4,043)      4.0%       4.0%        4.5%       5.0%       6.0%       6.0%
--------------------------------------------------------------------------------
  ($3,234)      4.0%       5.0%       5.25%       5.5%       6.0%       6.0%
--------------------------------------------------------------------------------
  ($2,650)      4.0%      5.25%        5.5%       6.0%       6.0%       6.0%
--------------------------------------------------------------------------------
  ($1,617)      4.5%       5.5%        6.0%       6.0%       6.0%       6.0%
--------------------------------------------------------------------------------
   $    0       5.0%       6.0%        6.0%       6.0%       6.0%       6.0%
--------------------------------------------------------------------------------

                                      -4-

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