Document:

<PAGE>

                                                                    Exhibit 10.7

                              LICENSE AGREEMENT II
                              --------------------

         This Agreement ("Agreement"), dated December 23, 1996, between ARCH
Development Corporation, an Illinois not-for-profit corporation ("ARCH"), and R2
Technology, Inc., a California corporation ("Licensee").

                               Purpose and Intent
                               ------------------

         ARCH and License entered into a Co-Exclusive License Agreement dated
September 1, 1993 ("Co-Exclusive License") under which ARCH licensed to Licensee
certain patents and patent applications for use in a defined field. ARCH holds
rights to additional patents and patent applications useful in the same field
which Licensee desires to obtain rights to for commercialization. Therefore the
parties agree as follows.

                                    Agreement
                                    ---------

         1. Definitions. The following capitalized terms used in this Agreement
            -----------
shall mean.

            A. "Affiliate" means, as to any person or entity, any other person
or entity which directly or indirectly controls, is controlled by or is under
common control with such person or entity. Control shall mean the right to
control, or actual control of, management of such other entity, whether by
ownership of voting securities, by agreement, or otherwise.

            B. "Copyrights" means the copyrights for the Software.

            C. "Effective Date" means the date first above written.

            D. "Field" means computer aided diagnosis of diseases or disorders
in humans.

            E. "Gross Revenue" means all revenue received by the Licensee and
its Affiliates from the distribution of products which incorporate or utilize
Licensed Patents, Copyrights, Software or Technical Information. Gross Revenue
shall include all revenue received from licensing of Software pursuant to
Paragraph 2.C below. Gross Revenue shall not include revenue earned by the
Licensee and its Affiliates from the provision of services of any type,
including, by way of example, consulting services, customized application or
implementation support, installation, maintenance, technical support or warranty
service.

            F. "Inventors" means the persons listed as inventors on the Licensed
Patents.

            G. "Group IV Patents" mean the patents and patent applications
listed on Schedule A, including all divisions, continuations,
continuations-in-part, foreign counterparts and any valid patents which may
issue therefrom and any reissues, renewals, substitutions, or extensions of or
to any such patents or patent applications. Group IV Patents shall not include
any applications and any patents issuing from applications filed in countries
(i) that Licensee

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.

                                       1

<PAGE>

elected not to file in pursuant to Paragraph 6.A. and (ii) where Licensee's
rights are terminated under Paragraph 6.D.

     H. "Licensed Patents" means the Group IV Patents.

     I. "Net Revenue" means Gross Revenue less the following amounts directly
related to such revenue: (a) customary trade, quantity or cash discounts and
rebates actually allowed and taken; (b) amounts repaid or credited to customers
on account of rejections or returns of products subject to royalty hereunder;
and (c) freight and other transportation costs, including insurance charges,
bond duties, tariffs, sales and excise taxes and other governmental charges
based directly on sales, turnover or delivery of such products and actually paid
or allowed by the Licensee and its Affiliates or any Sublicensee. Net Revenue
shall be determined in accordance with generally accepted accounting principles
consistently applied.

     J. "Product" means any product covered by at least one Valid Claim
contained in a Licensed Patent or a product made by a process, method or
technique covered by at least one Valid Claim in a Licensed Patent or methods of
using any product covered by at least one Valid Claim contained in a Licensed
Patent.

     K. "Royalties" means all amounts payable under Paragraph 3.A.(2) and 3.B.
of this Agreement.

     L. "Software" means the computer programs listed and described on Schedule
B attached hereto, maintenance releases and bug fixes.

     M. "Sublicensee" means any person, company or other entity granted a
sublicense by Licensee under Paragraphs 2.B. or 2.C. below, as the case may be,
including Affiliates of the Sublicensee.

     N. "Sublicense" means a license agreement entered into by Licensee with a
Sublicensee under Paragraphs 2.B. or 2.C. below, as the case may be.

     O. "System" means any saleable system or unit containing or consisting of a
Product.

     P. "Territory" means the entire world.

     Q. "Technical Information" means any and all technical information,
know-how, data, processes, methods, protocols and procedures relating to the
Licensed Patents in the possession of ARCH as of the date of this Agreement
which is considered confidential within the meaning of Paragraph 93.A. of this
Agreement.

     R. "University" means the University of Chicago.

     S. "Valid Claim" means an issued claim of any unexpired patent or claim of
any pending patent application which has not been held unenforceable,
unpatentable or invalid by a decision of a court or governmental body of
competent jurisdiction, in a ruling that is unappealable or unappealed within
the time allowed for appeal; which has not been rendered

                                       2

<PAGE>

unenforceable through disclaimer or otherwise; and which has not been lost
through an interference proceeding or failure to pay a maintenance fee.
Notwithstanding the foregoing, a claim of a pending patent application shall
cease to be a Valid Claim if no patent has issued on such claim on or prior to
the fifth (5th) anniversary of the date of filing of such application provided
that such claim shall once again become a Valid Claim on the issue date of a
patent that subsequently issues and includes such claim.

     2. GRANT OF LICENSE AND RESERVATION OF RESEARCH RIGHTS
        ---------------------------------------------------

        A. Grant. ARCH hereby grants to Licensee and its Affiliates:
           -----

           (1) An exclusive license under the Group IV Patents to make, have
made, use, import, offer to sell and sell Products within the Field and within
the Territory and an exclusive license to use the Technical Information to make,
have made, use, import, offer to sell and sell products within the Field and
within the Territory; and

           (2) An exclusive license under the Copyrights to use, copy, modify,
prepare derivative works and compilations, distribute, perform and display
publicly the Software in the Territory.

        B. Sublicense. ARCH hereby grants to Licensee and its Affiliates an
           ----------
exclusive right to grant to third parties sublicenses under the Group IV Patents
on terms consistent with the terms of this Agreement.

        All Sublicenses shall provide that the Sublicensee may not grant further
Sublicenses to third parties, except to Affiliates of the Sublicensee. For each
Sublicense granted by Licensee to make or have made Products, Licensee shall pay
to ARCH * * * of all compensation paid by a Sublicensee to Licensee, including
any payments made by a third party to Licensee on behalf of a Sublicensee. For
all other sublicenses, the license revenue, including any payments made by a
third party on behalf of a Sublicensee, shall be treated as Gross Revenue.
Payments shall be made (or assigned as relevant) to ARCH within thirty (30) days
of receipt by Licensee. For this purpose compensation includes all fees, running
royalties, minimum royalties, milestone payments and other cash payments of any
kind and any in kind payments or equity amounts taken in lieu of cash. It is the
intent and agreement of the parties that ARCH will be paid * * * of any kind of
compensation paid by a Sublicensee for rights granted to such Sublicensee under
this Agreement without regard to how the compensation is structured, denominated
or paid.

        C. Software Sublicense. Licensee shall have the exclusive right under
           -------------------
the Copyrights to grant sublicenses to third parties on terms consistent with
the terms of this Agreement. All revenues received by Licensee from Software
Sublicenses shall be treated as Gross Revenue.

_________________________

*** 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>

                D. Sublicensee's Rights upon Termination of this Agreement.
                   -------------------------------------------------------

                Each Sublicense under Paragraph 2.B. shall state that if this
Agreement terminates for any reason, except expiration pursuant to Paragraph
11.A., the Sublicensee shall automatically terminate effective the same date
without the necessity of any notice from ARCH to the Sublicensee. In each case,
ARCH agrees to negotiate in good faith for a period of ninety (90) days
following the termination of this Agreement with each Sublicensee for a license
directly from ARCH granting the Sublicensee substantially the same rights as
those contained in the Sublicense with Licensee. If no agreement is reached
within the ninety (90) days, ARCH shall have no further obligation to the
Sublicensee.

                E. Data Access. ARCH agrees to deliver copies of Technical
                   -----------
Information within thirty (30) days after the execution of this Agreement.

                F. Reservation of Rights. ARCH reserves for itself and the
                   ---------------------
University the worldwide right to use the Technical Information and to practice
the inventions claimed in the Licensed Patents to make, have made, use, import,
offer to sell and sell Products within the Field for all educational and
research purposes it may choose in its own discretion and without any payment
therefore. In addition, the inventions claimed in the Licensed Patents were made
with the use of funds from the United States government. Therefore, there is
reserved from the rights granted hereunder the worldwide right of the United
States government to use the Technical Information and to practice or have
practiced the inventions claimed in the Licensed Patents to make, have made,
use, import, offer to sell and sell Products in any field or use for its own
purposes in such manner as it deems fit without any payment therefore.

                G. U.S. Laws. Any right granted in this Agreement greater than
                   ---------
that permitted under Public Law 96-517 or Public Law 98-620 shall be subject to
modification as may be required to conform to the provisions of those laws.

                H. Other Rights. ARCH has * * * executed concurrently herewith,
                   ------------
and the rights granted in * * * of this Agreement are subject to all of the
terms and conditions of those licenses and other rights.

                I. ARCH Covenant. Notwithstanding the reservations made in
                   -------------
Paragraphs 2.F. and 2.H. above, ARCH hereby agrees, during the term of this
Agreement, not to grant licenses under the Licensed Patents to other third
parties.

             3. Royalties and Other Payments
                ----------------------------

                A. License Payment and Running Royalties. For the license
                   -------------------------------------
granted in Paragraph 2.A. of this Agreement, Licensee shall pay ARCH (1) the sum
of * * * within thirty (30) days following the earlier of an initial public
offering of Licensee's stock or any financing arrangement providing funding to
Licensee of at least ten million U.S. Dollars (U.S. $10,000,000); (2) combined
with the royalty obligations of Licensee under the Agreement executed
concurrently herewith between ARCH and Licensee relating to Group I, Group II
and Group III Patents as defined therein, a running

_________________

* * * 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.

                                       4

<PAGE>

royalty equal to one percent (1%) of Net Revenue received by Licensee and its
Affiliates until the expiration of the last to expire of the Group I, Group II,
Group III and Group IV Patents as defined in this Agreement and License
Agreement I; and (3) payment of the sums specified in Paragraphs 2.B. and 6.C.

          B.   Minimum Running Royalties. Licensee shall pay ARCH the following
               -------------------------
minimum royalties:

               (1)  Until the minimum royalties due under Paragraph 3.B.(2) of
this Agreement become due and payable, minimum royalties for such calendar
quarter as set forth below:

          Calendar Quarters Ending                          Minimum Royalties
          ------------------------                          -----------------

          September 30, 1996 through March 31, 1997         $ 6,250
          June 30, 1997 and thereafter                      $12,500

               (2)  Beginning with the year of first commercial sale of a
product in the United States if the total running royalties payable under
Paragraph 3.A.(2) for any calendar year are less than * * *, Licensee shall pay
ARCH the difference between such amount and the actual running royalties due.
Such payment shall be made at the same time the payment for running royalties
for the fourth quarter for such year is due. If no running royalties are being
paid by Licensee for any year in which minimum royalties are due and payable,
the minimum royalties shall be paid in four equal installments within thirty
(30) days of the end of each calendar quarter.

               (3)  The minimum royalties paid in excess of the royalties paid
under Paragraph 3.A. (2) shall be applied as a credit toward future royalties,
provided such credit: (i) shall be applicable only to the four quarterly royalty
payments due immediately following payment of such minimum royalty; and (ii)
shall not exceed fifty percent (50%) of the minimum royalties otherwise due in
any quarter.

          C.   Calculation of Royalties. Royalties shall be payable in U.S.
               ------------------------
currency within forty-five (45) days after the end of each calendar quarter for
the term specified in Paragraph 11.A. below, beginning with the calendar quarter
in which the first commercial sale of a Product occurs. Each payment shall be
accompanied by a statement showing Net Revenue for each country in the Territory
and calculation of the Royalties due. There shall be deducted from all such
payments taxes required to be withheld by any governmental authority and
Licensee shall provide copies of the receipt for such taxes to ARCH along with
each Royalty payment. Any necessary conversion of currency into United States
dollars shall be made at the applicable rate of exchange of Citibank, N.A., in
New York, New York, on the last day of the calendar quarter for which the
Royalty is paid.

____________________

* * * 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.

                                       5

<PAGE>

          D.   Records. Licensee shall, and shall cause its Sublicensees and
               -------
Affiliates of either, to keep full and accurate books and records in sufficient
detail so that sums due ARCH hereunder can be properly calculated. Such books
and records shall be maintained for at least three (3) years after the Royalty
reporting period(s) to which they relate. During the term hereof and for three
(3) calendar year thereafter, Licensee shall permit, and shall cause its
Sublicensees and Affiliates of either to permit, accountants designated by ARCH,
to whom Licensee has no reasonable objection, to examine its books and records
for the purpose of verifying the accuracy of the written statements submitted by
Licensee and sums paid or payable. ARCH may conduct such examination no more
than once in any calendar year. After completion of any such examination, ARCH
shall promptly notify Licensee in writing of any proposed modification to
Licensee's statement of sums due and payable. If Licensee accepts such
modification, or if the parties agree on other modifications, one party shall
promptly pay or credit the other in accordance with such resolution. Such
examination shall be made at the expense of ARCH, except that if such
examination discloses a discrepancy of five percent (5%) or more in the amount
of Royalties and other payments due ARCH, then Licensee shall reimburse ARCH for
the cost of such examination and pay the amount due with interest from the date
at which such amount was due as provided in Paragraph 3.B. hereof.

          E.   Overdue Payments. Payments due to ARCH under this Agreement
               ----------------
shall, if not paid when due under the terms of this Agreement, bear simple
interest at the lower of the prime rate of interest (as published by Citibank,
N.A. on the date such payment is due) plus five percent (5%) or the highest rate
permitted by law, calculated on the basis of a 360-day year for the number of
days actually elapsed, beginning on the due date and ending on the day prior to
the day on which payment is made in full. Interest accruing under this Paragraph
shall be due to ARCH on demand or upon payment of past due amounts, whichever is
sooner. The accrual or receipt by ARCH of interest under this Paragraph shall
not constitute a waiver by ARCH of any right it may otherwise have to declare a
default under this Agreement or to terminate this Agreement.

          F.   Single Royalty Payment. Royalties shall be payable only once with
               ----------------------
respect to sales or leases of a single System regardless of the number of Group
I, Group II, Group III and Group IV Patents that cover the System.

     4.   Warrants. On the Effective Date Licensee shall issue to ARCH warrants
          --------
giving ARCH the right, but not the obligation, to purchase two hundred twelve
thousand five hundred (212,500) shares of common stock having voting rights at a
price of four dollars U.S. ($4 U.S.) per share. The warrants shall vest at the
rate of forty two thousand five hundred (42,500) per year, with the warrants to
purchase the first 42,500 shares vesting on the Effective Date and the remaining
warrants vesting in equal amounts on the first, second, third and fourth
anniversaries of this Agreement provided this Agreement has not terminated by
those anniversaries. The warrants may be exercised at any time after vesting and
shall expire ten (10) years after the Effective Date.

     5.   Unrestricted Gift. Within thirty (30) days of the Effective Date and
          -----------------
on the first, second, third and on fourth anniversaries of this Agreement,
Licensee shall make an unrestricted gift in the amount of one hundred seventy
thousand dollars U.S. ($170,000 U.S.) to University provided this Agreement has
not terminated by those anniversaries.

                                       6

<PAGE>

     6.   Prosecution and Maintenance of Patents: Patent Costs
          ----------------------------------------------------

          A.   Prosecution and Maintenance. ARCH shall be solely responsible for
               ---------------------------
the preparation, filing, prosecution and maintenance of the Group IV Patents.
ARCH shall cause its patent counsel to provide Licensee with a list of the
countries in which it has filed and/or intends to file applications. Such list
shall be provided to Licensee at least sixty (60) days prior to the expiration
of one (1) year from the corresponding United States priority date to allow
Licensee to suggest that additional countries be added to the list or that one
or more countries be deleted from the list. ARCH agrees to file applications in
the additional countries requested by Licensee unless it otherwise notifies
Licensee under Paragraph 6.B. Licensee agrees to cooperate, and agrees to cause
its Sublicensees and Affiliates of either to cooperate, with ARCH in the
preparation, filing, prosecution and maintenance of the Group IV Patents by
disclosing such information as may be necessary for the same and by promptly
executing such documents as ARCH may reasonably request in connection therewith.
Licensee and its Sublicensees and Affiliates of either shall bear their own
costs in connection with their cooperation with ARCH under this Paragraph. ARCH
will provide Licensee copies of all material documents received or prepared by
ARCH in the prosecution and maintenance of the Group IV Patents. ARCH shall
provide copies in a timely manner to allow Licensee an opportunity to comment
and request changes in ARCH's documents. ARCH agrees to include all reasonable
comments of Licensee.

          B.   Licensee's Rights to Prosecute and Maintain Patents. ARCH shall
               ---------------------------------------------------
notify Licensee in writing of any country(ies) where it either previously
declared its intention to file under Paragraph 6.A. and subsequently decided not
to file in such country(ies) or previously filed and decided to abandon the
patent application or issued patent. All such notices shall be given so as to
allow Licensee a reasonable time within which to file in countries where ARCH
either does not intend to file or is not going to continue the prosecution or
maintenance of the application or patent, whichever is relevant. In all cases
where Licensee elects to file, Licensee shall file, prosecute and maintain the
applications and patents in ARCH's name and at Licensee's expense. In the case
of Group IV Patents, such patents shall be included in the definition of Group
IV Patents, for all purposes of this Agreement.

          C. Patent Costs. Licensee agrees to pay all necessary and reasonable
             ------------
third party fees and expenses incurred by ARCH in obtaining and
maintaining the Group IV Patents in Canada, France, Germany, Japan, Netherlands,
United Kingdom and the United States, including those incurred by ARCH prior to
the date of this Agreement but not including any fees and expenses already paid
for by * * *. In this regard, Licensee agrees to pay ARCH $288,407 U.S. dollars
within thirty (30) business days of the date hereof as full reimbursement for
such prior fees and expenses incurred through December 5, 1996. Payment for fees
and expenses incurred after the date of this Agreement shall be invoiced to
Licensee on a monthly basis and Licensee agrees to pay such invoices within
thirty (30) days of receipt. Documentation received from the third party vendors
to support the amounts invoiced shall be included with each invoice. Licensee
may raise any objections to such amounts invoiced within the thirty (30) day
time period for payment provided Licensee has not preapproved such amount.

_________________

* * *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.

                                       7

<PAGE>

          D.   Failure to Pay Patent Costs. If Licensee declines or fails to
               ---------------------------
make advance payments or pay or reimburse ARCH for all or any portion of the
patent fees and expenses (including maintenance fees) as required by Paragraph
6.C. for any application or patent, Licensee's rights with respect to all such
applications and patents for which Licensee fails to make advance payments or
does not reimburse ARCH shall terminate effective sixty (60) days after written
notice from ARCH requesting such payment, unless payment in full is made within
such time. Such notice can be sent by ARCH at any time after the expiration of
the thirty (30) days provided in Paragraph 6.C. for payment of invoices if
Licensee has not objected to the amount invoiced or in the case of advance
payments, any time after the date fifteen (15) days before the payment must be
made by ARCH to a third party.

     7.   Due Diligence and Milestones.
          ----------------------------

          A.   Commercialization Plans. Licensee shall provide ARCH with its
               -----------------------
strategic and detailed plans for the commercialization of the Licensed Products.
Such plans shall include research and development plans, product milestones and
related timetable schedules, government or regulatory timetables and sales and
marketing plans. Licensee will update these plans at least on an annual basis.

          B.   Progress Report. Licensee will provide ARCH with Licensee's
               ---------------
quarterly report to stockholders beginning with the quarter ended September 30,
1996. Such report will include the Company's financial performance for the
quarter and will also cover significant developments that have occurred.
Licensee agrees to immediately notify ARCH in writing when commercial products
are first sold and when Licensee's obligation to begin making running Royalty
payments begins.

          C.   License shall commence marketing and distribution of products
which incorporate or utilize License Patents, Copyrights, Software or Technical
Information within three (3) years of the Effective Date. If Licensee fails to
commence marketing and distribution of such products within three (3) years of
the Effective Date, ARCH shall have the right to terminate this Agreement upon
sixty (60) days written notice, provided, however, that if Licensee is utilizing
its best efforts to obtain regulatory approval and commercialize such products
ARCH may, in its sole discretion, extend this Agreement for an additional period
of time.

     8.   All Patents; No other Warranties; Indemnification; Insurance
          ------------------------------------------------------------

          A.   All Patents. ARCH represents and warrants that it shall not
               -----------
assert any existing patents or patents that issue from patent applications
pending as of the Effective Date against Licensee, its Sublicensees or its
customers based upon Licensee's or its Sublicensee's manufacture, use,
importation, offer for sale or sale of Products.

          B.   Disclaimer of Warranties. Except as provided in Paragraph 8.A.,
               ------------------------
ARCH makes no representations or warranties of any kind, express or implied,
with respect to the invention(s) claimed in the Licensed Patents or with respect
to the Licensed Patents themselves or regarding the Technical Information,
including but not limited to, any representations or warranties about (i) the
validity, scope or enforceability of any of the Licensed Patents; (ii) the

                                       8

<PAGE>

accuracy, safety or usefulness for any purpose of any information provided by
ARCH to Licensee, its Sublicensees or Affiliates of either, with respect to the
invention(s) claimed in the Licensed Patents or with respect to the Licensed
Patents themselves or regarding the Technical Information, and any products
developed from or covered by them; (iii) whether the practice of any claim
contained in any of the Licensed Patents will or might infringe a patent or
other intellectual property right owned or licensed by a third party; (iv) the
patentability of any invention claimed in the Licensed Patents; or (v) the
accuracy, safety, or usefulness for any purpose of any product or process made
or carried out in accordance with or through the use of the Licensed Patents or
the Technical Information.

          C.   Indemnification. Licensee agrees, and agrees to cause its
               ---------------
Sublicensees and Affiliates of either, to indemnify, defend and hold harmless
ARCH, its Affiliates and all trustees, directors, officers, employees, fellows
and agents of any of the foregoing (including ARCH and its Affiliates, each an
"Indemnified Person") from and against any and all claims, demands, loss,
damage, penalty, cost or expense (including attorneys, and witnesses' fees and
costs) of any kind or nature, arising from the development, production, use,
sale or other disposition of Products or the Technical Information, and all
activities associated therewith by Licensee, its Sublicensees or Affiliates of
either, or any use of information provided by ARCH to Licensee, its Sublicensees
or Affiliates of either. Licensee agrees and agrees to cause each of its
Sublicenses and Affiliates of either to agree not to sue any Indemnified Person
in connection with the development, production, use, sale or other disposition
of Products or the use of Technical Information, and all activities associated
therewith. ARCH shall be entitled to participate at its option and expense
through counsel of its own selection, and may join in any legal actions related
to any such claims, demands, losses, damages, costs, expenses and penalties.
Licensee, its Sublicensees and Affiliates of either, shall not enter into any
settlement affecting any rights or obligations of any Indemnified Person or
which includes an express or implied admission of liability, negligence or
wrongdoing by any Indemnified Person, without the prior written consent of such
Indemnified Person.

          D.   Assumption of Risk. The entire risk as to the performance, safety
               ------------------
and efficacy of any invention claimed in the Licensed Patents or of any Products
or the Technical Information, is assumed by Licensee, its Sublicensees and
Affiliates of either, provided that such assumption of the risk shall not apply
to the intentional misconduct or gross negligence by Indemnified Persons.
Indemnified Persons shall not, except for their intentional misconduct or gross
negligence, be responsible or liable for any injury, loss, or damage of any
kind, including but not limited to direct, indirect, special, incidental or
consequential damages or lost profits to Licensee, any Sublicensee, Affiliates
of either or customers or any of the foregoing, or for any such injury, loss or
damage to any other individual or entity, regardless of legal theory based on
the development, manufacture, use, sale or other disposition of Products or the
Technical Information, and all activities associated therewith. The above
limitations on liability apply even though the Indemnified Person may have been
advised of the possibility of such injury, loss or damage. Licensee shall not,
and shall require all Sublicensees and Affiliates of either to not, make any
agreements, statements, representations or warranties or accept any liabilities
or responsibilities whatsoever with regard to any person or entity which are
inconsistent with this Paragraph.

                                       9

<PAGE>

          E.   Insurance. Licensee agrees and agrees to cause its Sublicensees
               ---------
and Affiliates of either to list ARCH and its Affiliates, at Licensees, its
Sublicensees, or Affiliates' of either of them, expense, whichever is relevant,
as additional named insureds under each liability policy that Licensee, its
Sublicensees and Affiliates of either shall have or shall obtain that includes
any coverage of claims relating to the Products, the Licensed Patents, or the
inventions claimed in the Licensed Patents. At ARCH's request, Licensee will
supply ARCH from time to time with copies of each such policy, and will notify
ARCH in writing at least 30 days prior to any termination of or change in
coverage under any such policies.

     9.   Confidentiality.
          ---------------

          A.   Confidentiality, Publications and Data Access. All information
               ---------------------------------------------
submitted by one party to the other concerning the Products, the Licensed
Patents, the invention(s) claimed in the Licensed Patents, and the Technical
Information shall be considered as confidential ("Confidential Information") and
shall be utilized only pursuant to the licenses granted hereunder. During the
term of this Agreement and for a period of ten.(10) years thereafter, neither
party shall disclose to any third party any Confidential Information received
from the other party without the specific written consent of such party.
Provided that Licensee may disclose Confidential Information belonging to ARCH
to potential sublicensees for the purpose of evaluating their interest in
entering into a Sublicense but only after entering into a confidentiality
agreement on the same terms as those contained in this Paragraph. The foregoing
shall not apply where Confidential Information a) was or becomes public through
no fault of the receiving party, b) was, at the time of receipt, already in the
possession of the receiving party as evidenced by its written records, c) was
obtained from a third party legally entitled to use and disclose the same, or d)
is required by law to be disclosed to a governmental agency.

          B.   Publications. ARCH shall provide to Licensee copies of any
               ------------
proposed written publication by ARCH containing any Confidential Information
and, to the extent ARCH is aware of them, proposed publications containing any
Confidential information by the Inventor(s). Licensee agree to provide copies of
any proposed written publication of Licensee, its Sublicensees and Affiliates of
either of them to ARCH. The parties shall provide copies of such proposed
written publications at least ninety (90) days in advance of publication in
order to protect potentially patentable subject matter. The receiving party may
request, and the disclosing party agrees, that publication will be withheld for
an additional thirty (30) days, if required, to obtain patent protection. The
receiving party may object to such proposed publication or disclosure on the
grounds that the publication contains Confidential Information of the objecting
party. At the request of the objecting party, Confidential Information of such
party shall be deleted from the publication.

     10.  Infringement. In the event of an infringement of a Licensed Patent the
          ------------
following shall apply:

          A.   Notice. Each party shall give the other written notice if one of
               ------
them becomes aware of any infringement by a third party of any Licensed Patent.
Upon notice of any such infringement, the parties shall promptly consult with
one another with a view toward reaching agreement on a course of action to be
pursued.

                                       10

<PAGE>

          B.   Licensee's Right to Bring Infringement Action.
               ---------------------------------------------

               (1)  If a third party infringes any patent included in the
Licensed Patents within the Field, Licensee shall have the right to institute
and prosecute an action or proceeding to abate such infringement and to resolve
such matter by settlement or otherwise. Licensee agrees to notify ARCH of its
intention to bring an action or proceeding prior to filing the same and in
sufficient time to allow ARCH the opportunity to discuss with Licensee the
choice of counsel for such matter. Licensee agrees to hire counsel reasonably
acceptable to ARCH. Licensee shall keep ARCH timely informed of material
developments in the prosecution or settlement of such action or proceeding.
Licensee shall be responsible for all costs and expenses of any action or
proceeding against infringers which Licensee initiates. ARCH shall cooperate
fully by joining as a party plaintiff if required to do so by law to maintain
such action or proceeding and by executing and making available such documents
as Licensee may reasonably request. Licensee agrees to promptly reimburse ARCH
for its reasonable third party out-of-pocket fees and expenses incurred in
joining an action or proceeding or cooperating with Licensee. ARCH may be
represented by counsel in any such legal proceedings, at ARCH's own expense,
subject to reimbursement under Paragraph 10.B.(3), acting in an advisory but not
controlling capacity.

               (2)  The prosecution, settlement, or abandonment of any action or
proceeding under Paragraph 10.B.(1) shall be at Licensee's reasonable discretion
provided that Licensee shall not have any right to surrender any of ARCH's
rights to the Licensed Patents or to grant any infringer any rights to the
Licensed Patents.

               (3)  Except as provided herein, all amounts of every kind and
nature recovered from an action or proceeding, of infringement by Licensee shall
belong to Licensee. If the amounts recovered by Licensee exceed Licensee's
reasonable third party out-of-pocket fees and expenses, Licensee shall reimburse
ARCH for ARCH's reasonable out-of-pocket fees and expenses incurred in hiring
its own counsel. After deduction of the fees and expenses of both parties to
this Agreement, any remaining amounts recovered shall be considered Net Revenue
under this Agreement and subject to Royalty payments in accordance with
Paragraph 3.

          C.   ARCH's Right to Bring Infringement Action. If a third party
               -----------------------------------------
infringes any patent included in the Licensed Patents within the Field which
ARCH wishes to prosecute, ARCH shall first notify Licensee in writing and
request that Licensee bring an action or proceeding against the infringing third
party. If Licensee declines or fails to bring such an action or proceeding
within ninety (90) of receipt of the notice, ARCH shall have the right, at its
discretion, to institute and prosecute an action or proceeding to abate such
infringement and to resolve such matter by settlement or otherwise. Licensee
shall cooperate fully by joining as a party plaintiff if required to do so by
law to maintain such action and by executing and making available such documents
as ARCH may reasonably request. If the amounts recovered by ARCH exceed its
reasonable out-of-pocket fees and expenses, ARCH agrees to pay Licensee for its
and its Sublicensees' reasonable out-of-pocket third party expenses incurred by
it in cooperating in the action or proceeding. Except as specifically provided
in this Paragraph, ARCH shall have the right to retain all amounts recovered of
every kind and nature. Amounts recovered by ARCH shall not be considered Net
Revenue under this Agreement and shall not give rise to Royalty payments under
Paragraph 3.

                                       11

<PAGE>

     11.  Termination
          -----------

          A.   Term. Unless terminated earlier pursuant to Paragraphs 11.B or
               ----
11.C, this Agreement shall terminate on the later of (i) the expiration of the
royalty obligations under Article 3 hereto and (ii) the day the Licensee ceases
to use the licenses granted in Article 2.

          B.   ARCH's Right to Terminate. ARCH shall have the right to terminate
               -------------------------
this Agreement as follows, in addition to all other available remedies:

               (1) If Licensee fails to make any Royalty or other payment when
due, this Agreement shall terminate effective sixty (60) days after ARCH's
written notice to Licensee to such effect, unless Licensee makes such payment
within the sixty (60) days.

               (2) If Licensee fails to observe any other material obligation of
this Agreement, this Agreement shall terminate effective sixty (60) days after
ARCH's written notice to Licensee describing such failure, unless Licensee cures
such failure within the sixty (60) days.

               (3) If Licensee shall have filed by or against it a petition
under any bankruptcy or insolvency law and such petition is not dismissed within
sixty (60) days of its filing, or if Licensee makes an assignment of all or
substantially all of its assets for the benefit of its creditors ARCH may
terminate this Agreement by written notice effective as of the (i) date of
filing by Licensee of any such petition, (ii) date of any such assignment to
creditors, or (iii) end of the sixty (60) days if a petition is filed against it
and not dismissed by such time, whichever is applicable.

               (4) If Licensee shall be dissolved, liquidated or otherwise
ceases to exist, other than for reasons specified in Paragraph 11.B.(3) above,
this Agreement shall automatically terminate as of (i) the date articles of
dissolution or a similar document is filed on behalf of Licensee with the
appropriate government authority or (ii) the date of establishment of a
liquidating trust or other arrangement for the winding up of the affairs of
Licensee.

          C.   Licensee's Right to Terminate. Licensee may terminate this
               -----------------------------
Agreement at any time by giving ARCH sixty (60) days prior written notice.

          D.   Survival. All causes of action accruing to either party under
               --------
this Agreement shall survive termination for any reason, as well as (1)
Licensee's obligation under Paragraphs 3.A, 3.B and 6.C to pay Royalties and
Patent Costs accrued prior to the date of termination and which were not paid or
payable before termination, along with Licensee's obligation to report Net
Revenue and to keep records as set forth in Paragraphs 3.C and 3.D and (2)
Paragraphs 8 and 9.

     12.  Arbitration.
          -----------

          A.   Panel. If the parties cannot satisfactorily settle any claim,
               -----
disagreement or controversy arising out of or related to this Agreement or its
interpretation, performance, nonperformance, breach or their respective rights
and obligations hereunder, such disagreement shall, at the request of either
party, be settled by arbitration as follows. All such disputes shall be referred
to an arbitration panel comprised of three persons, one to be selected by each
party

                                       12

<PAGE>

hereto and the third selected by the first two. The arbitrators shall be persons
involved in and familiar with the licensing and technology transfer field and
not affiliated with either party. Each party shall select an arbitrator within
twenty (20) days of request for arbitration by either party. The first two
arbitrators shall select the third member of the panel within fifteen (15) days
after their selection. The arbitration shall be held as soon as is reasonably
possible after selection of the arbitration panel. The proceedings shall be held
in an informal manner as reasonably determined by the arbitrators. Except for
the right of appeal as set forth in subparagraph b below, the parties shall be
bound by a decision of the arbitration panel with respect to the matter in
dispute. All proceedings of the arbitration panel shall be held in Wilmington,
Delaware. The panel's costs and fees shall be borne by the party bringing the
action. The arbitrators shall presume that all claims of all Licensed Patents
are valid and enforceable, and shall not have the power to assess the validity
or enforceability of the Licensed Patents.

            B.   Appeals. There shall be no appeal from an arbitration panel's
                 -------
unanimous decision. In the event of a majority decision by the arbitration
panel, a dissatisfied party may appeal the panel's decision to the American
Arbitration Association (AAA) for an independent binding decision. All appeals
shall be heard in Wilmington, Delaware. The dissatisfied party must make such an
appeal within thirty (30) days after receipt of the arbitration panel's decision
and if it loses the appeal must bear the parties' expenses and costs for such
appeal. The AAA is hereby authorized to make arrangements for such arbitration,
to be held under the procedures provided by its arbitration rules. Judgment upon
any award rendered by all or a majority of the appeal arbitrators or a unanimous
judgment of the initial panel, may be entered in any court in any country having
jurisdiction, after any and all applicable appeal periods have passed.

     13.    Advertising
            -----------

     Each party agrees not to use (and Licensee agrees to prohibit its
Affiliates and sublicensees from using) the name of the other party (and,
Licensee agrees not to use, the names of the University and the Inventors under
the Licensed Patents) in any commercial activity, marketing, advertising or
sales brochures except with the prior written consent of the other party, which
such consent may be granted or withheld in such party's sole and complete
discretion, provided that,

            (a)   with the prior written consent of ARCH not unreasonably
withheld or delayed, Licensee may disclose to the banks, commercial finance
institutions or prospective investors from which Licensee may attempt to obtain
debt or equity financing (i) the names of ARCH, the University and the
Inventor(s) under the Licensed Patents, (ii) the identities of ARCH, the
University and the Inventor(s) under the Licensed Patents and their respective
connections to, and ownership interests in, the Licensed Patents, and (iii) the
identity of the Inventor under the Licensed Patents as a founder and scientific
advisor to Licensee in advertising and sales materials; and

            (b)   with the prior written consent of Licensee not unreasonably
withheld or delayed, ARCH or its Affiliates may disclose (i) the name of
Licensee and (ii) the existence of this Agreement.

     14.    Termination of Co-Exclusive License.
            -----------------------------------

                                       13

<PAGE>

     Simultaneously, with execution of this Agreement by both parties, the
Co-Exclusive License Agreement of September 1, 1993 is terminated.

     15.    Miscellaneous
            -------------

            A.   United States Manufacture.  Licensee agrees that any Products
                 -------------------------
that are sold in the United States of America will be manufactured substantially
in the United States of America as required by 35 United States Code Section
204.

            B.   Export Regulations.  To the extent that the United States
                 ------------------
Export Control Regulations are applicable, neither Licensee nor ARCH shall,
without having first fully complied with such regulations, (i) knowingly
transfer, directly or indirectly, any unpublished technical data obtained or to
be obtained from the other party hereto to a destination outside the United
States, or (ii) knowingly ship, directly or indirectly, any product produced
using such unpublished technical data to any destination outside the United
States.

            C.   Entire Agreement, Amendment, Waiver. This Agreement and License
                 -----------------------------------
Agreement I together with the Schedules attached constitute the entire agreement
between the parties regarding the subject matter hereof, and supersedes all
prior written or oral agreements or understandings (express or implied) between
them concerning the same subject matter. This Agreement may not be amended or
modified except in a writing signed by duly authorized representatives of each
party. No waiver of any default hereunder by either party or any failure to
enforce any rights hereunder shall be deemed to constitute a waiver of any
subsequent default with respect to the same or any other provision hereof.

            D.   Notice. Any notice required or otherwise made pursuant to this
                 ------
Agreement shall be in writing, sent by registered or certified mail properly
addressed, or by facsimile with confirmed answer-back, to the other party at the
address set forth below or at such other address as may be designated by written
notice to the other party. Notice shall be deemed effective three (3) business
days following the date of sending such notice if by mail, on the day following
deposit with an overnight courier, if sent by overnight courier, or upon
confirmed answer-back if by facsimile.

If to ARCH:      ARCH Development Corporation
                 1115-25 East 58th Street
                 Chicago, Illinois 60637
                 Attention:  President

If to Licensee:  R2 Technology, Inc.
                 730 Distel Drive
                 Los Altos, California 94022
                 Attention:

            E.   Assignment. This Agreement shall be binding on the parties
                 ----------
hereto and upon their respective successors and assigns. Either party may at any
time, upon written notice to the other party, assign or delegate to a successor
to all or substantially all of its business any of its rights and obligations
hereunder, provided that, any such assignment or delegation shall in no

                                       14

<PAGE>

event relieve either party of its primary responsibility for the same. Except as
provided in the preceding sentence, Licensee may not assign or delegate any
right or obligation hereunder without the prior written consent of ARCH, which
consent shall not be unreasonably withheld, and any attempted assignment or
deletion in violation thereof shall be void. ARCH may assign this Agreement at
any time to any third party on written notice to Licensee. In such event, the
assignee shall be substituted for ARCH as a party hereto, and ARCH shall no
longer be bound hereby.

        F.   Governing Law.  The interpretation and performance of this
             -------------
Agreement shall be governed by the laws of the State of California applicable to
contracts made and to be fully performed in that state.

        G.   The University.  This Agreement is entered into by ARCH in its own
             --------------
private capacity and not on behalf of the University, nor as its contractor or
agent. It is understood and agreed that the University is not a party to this
Agreement and is not liable for nor assumes any responsibility or obligation
under this Agreement, and is not liable for any action or lack thereof by ARCH.

     IN WITNESS WHEREOF, the parties hereto have caused this agreement to be
executed by their respective duly authorized officers or representatives on the
date first above written.

ARCH Development Corporation                 R2 Technology, Inc.

By:  /s/                                     By:  /s/ James W. Pell
     ------------------------------------         ------------------------------
      Its: CEO                                     Its: CEO

                                       15

<PAGE>

--------------------------------------------------------------------------------
                                   SCHEDULE A
--------------------------------------------------------------------------------
  UCH #   PAT/APPLN.#   ISSUE/FILING   INVENTOR               TITLE
                            DATE
--------------------------------------------------------------------------------
 * * *

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

-------------------------

***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.

                                       16<PAGE>

                                                                    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.

<PAGE>

                                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

                                       i

<PAGE>

                               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.

                                        1

<PAGE>

     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.

                                       2

<PAGE>

   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

                                       3

<PAGE>

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

                                       4

<PAGE>

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

                                       5

<PAGE>

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

                                        6

<PAGE>

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.

                                        7

<PAGE>

     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

                                        8

<PAGE>

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

                                       9

<PAGE>

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

Product shall be supplied at the following price:

Canon U.S.A., Inc.
Model FILM SCANNER 300++,                       U.S.$(see schedule below)(Total)
(includes Bar Code Reader)
with specifications set forth in Exhibit B
                                 ---------

Pricing Schedule

Cumulative Quantity                                 Unit Price
-------------------                                 ----------
***                                                    ***
***                                                    ***
***                                                    ***
***                                                    ***
***                                                    ***

ANNUAL BLANKET ORDER FOR THE YEAR 2000 (Specific quantities and deliveries will
be released per Article 5 of this Agreement).

PRODUCT                          QUANTITY           SHIPMENT DATE
-------                          --------           -------------
FILM SCANNER 300                    4               March, 2000
                                    2               April, 2000
                                    2               May, 2000
                                    2               June, 2000
                                    4               July, 2000
                                    9               August, 2000
                                   12               September, 2000
                                   13               October, 2000
                                   15               November, 2000
                                   19               December, 2000
TOTAL                              82

----------------------
* * *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

Specification - R2 Engineering Specification, Canon FILM SCANNER 300++, ***
follow below. It is recognized that the B5 specification includes goal
specifications for film stack, mix and MTBSC. All orders from R2 for months
prior to September, 2000, will be delivered with the B4i specification. If
Seller, collaborating with R2, cannot deliver the units of Product specified in
Exhibit A, using the B5 test specification for orders delivered on or after
September, 2000, then each party reserves the right to cancel the Agreement
within ten days of Seller notifying R2 (described in the immediately succeeding
sentence), at no cost or penalty to either party, provided that R2 agrees to pay
for Product, ordered under R2's Order Forecast and as more fully described in
Article 5 of the Agreement, through August, 2000 and accepted in accordance with
this Exhibit B. Seller agrees to notify R2 by July 15, 2000 if Seller cannot
deliver the units of Product using the B5 test specification for orders on or
after September, 2000.

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>

                           B4I PRODUCT SPECIFICATIONS
                          --------------------------

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------
<S>                                                                <C>                                  <C>
R2 TECHNOLOGY, INC.                          * * *                                                        Page 1 of __
----------------------------------------------------------------------------------------------------------------------
ENGG SPECIFICATION                                                 Revision:                                      B4i
----------------------------------------------------------------------------------------------------------------------
Canon, 300++, Interim Entry Level                                  Revised:                                2000-04-03
----------------------------------------------------------------------------------------------------------------------
ORIGINATOR:  Paul Wallace                                          Created:                             July 14, 1998
----------------------------------------------------------------------------------------------------------------------
</TABLE>

                                    Authority
<TABLE>
<CAPTION>

----------------------------------------------------------------------------------------------------------------------
<S>                                                                <C>                                  <C>
  Rev          Date                  Author                                       Comments
----------------------------------------------------------------------------------------------------------------------
          * * *
----------------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------------
</TABLE>

REFERENCES:

* * *

----------------------------

* * *   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.

                                        1

<PAGE>

                                    EXHIBIT B
                                    ---------

                           B4I PRODUCT SPECIFICATIONS
                           --------------------------

                                     PURPOSE
                                     -------

This specification applies to an entry-level CCD FILM SCANNER, deemed acceptable
for market entry only (see * * * * * * for the spec of the scanner necessary for
market success). Deliverables will consist of:
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------
R2 P/N              DESCRIPTION                                                 CANON P/N
----------------------------------------------------------------------------------------------------------------------
<S>                 <C>                                                         <C>
* * *
----------------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------------
</TABLE>

                            BULK LOADER DESCRIPTION:
                            -----------------------

                                      * * *

----------------------------

* * *   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.

                                        2

<PAGE>

                                   EXHIBIT B
                                   ---------

                           B4I PRODUCT SPECIFICATIONS
                           --------------------------

                                  SPECIFICATION
                                  -------------

                            Digital Film Scan Format:
                            ------------------------

--------------------------------- ----------------------------------------------
SPECIFICATION                     DETAIL
--------------------------------- ----------------------------------------------
* * *
--------------------------------- ----------------------------------------------
* * *

                                  Film Rotation
                                  -------------

                                      * * *

                                 Film Scan Time
                                 --------------

                                      * * *

--------------------------------- ----------------------------------------------
SPECIFICATION                     DETAIL
--------------------------------- ----------------------------------------------
* * *
--------------------------------- ----------------------------------------------

--------------------------------- ----------------------------------------------

                               Film Characteristic
                               -------------------

--------------------------------- ----------------------------------------------
SPECIFICATION                     DETAIL
--------------------------------- ----------------------------------------------
* * *
--------------------------------- ----------------------------------------------

--------------------------------- ----------------------------------------------

--------------------------------- ----------------------------------------------

--------------------------------- ----------------------------------------------

----------------------------

* * *   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>

                                   EXHIBIT B
                                   ---------

                           B4I PRODUCT SPECIFICATIONS
                           --------------------------

                          Film Separator Characteristic
                          -----------------------------

--------------------------------- ----------------------------------------------
SPECIFICATION                     DETAIL
--------------------------------- ----------------------------------------------
* * *
--------------------------------- ----------------------------------------------

--------------------------------- ----------------------------------------------

--------------------------------- ----------------------------------------------

--------------------------------- ----------------------------------------------

                                   Electrical
                                   ----------

--------------------------------- ----------------------------------------------
SPECIFICATION                     DETAIL
--------------------------------- ----------------------------------------------
* * *
--------------------------------- ----------------------------------------------

--------------------------------- ----------------------------------------------

--------------------------------- ----------------------------------------------

--------------------------------- ----------------------------------------------

                                    Physical
                                    --------
<TABLE>
<CAPTION>
---------------------------------------- -------------------------------------- --------------------------------------
             SPECIFICATION                              METRIC                                IMPERIAL
---------------------------------------- -------------------------------------- --------------------------------------
<S>                                      <C>                                    <C>
* * *
---------------------------------------- -------------------------------------- --------------------------------------

---------------------------------------- -------------------------------------- --------------------------------------

---------------------------------------- -------------------------------------- --------------------------------------

---------------------------------------- -------------------------------------- --------------------------------------
</TABLE>

                                Temperature Range
                                -----------------

--------------------------------- ----------------------------------------------
SPECIFICATION                     DETAIL
--------------------------------- ----------------------------------------------
* * *
--------------------------------- ----------------------------------------------

--------------------------------- ----------------------------------------------

----------------------------

* * *   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.

                                        4

<PAGE>

                                   EXHIBIT B
                                   ---------

                           B4I PRODUCT SPECIFICATIONS
                           --------------------------

                                    Humidity
                                    --------

--------------------------------- ----------------------------------------------
SPECIFICATION                     DETAIL
--------------------------------- ----------------------------------------------
* * *
--------------------------------- ----------------------------------------------

--------------------------------- ----------------------------------------------

                                    Vibration
                                    ---------

--------------------------------- ----------------------------------------------
SPECIFICATION                     DETAIL
--------------------------------- ----------------------------------------------
* * *
--------------------------------- ----------------------------------------------

                                      Shock
                                      -----

--------------------------------- ----------------------------------------------
SPECIFICATION                     DETAIL
--------------------------------- ----------------------------------------------
* * *
--------------------------------- ----------------------------------------------

--------------------------------- ----------------------------------------------

                                   Regulatory
                                   ----------

--------------------------------- ----------------------------------------------
SPECIFICATION                     DETAIL
--------------------------------- ----------------------------------------------
* * *
--------------------------------- ----------------------------------------------

--------------------------------- ----------------------------------------------

--------------------------------- ----------------------------------------------

--------------------------------- ----------------------------------------------

                                    Altitude
                                    --------

--------------------------------- ----------------------------------------------
SPECIFICATION                     DETAIL
--------------------------------- ----------------------------------------------
* * *
--------------------------------- ----------------------------------------------

--------------------------------- ----------------------------------------------

                                    Interface
                                    ---------

                                      * * *

                           BARCODE LABEL SPECIFICATION
                           ---------------------------

                                      * * *

----------------------------

* * *   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.

                                        5

<PAGE>

                                    EXHIBIT B
                                    ---------

                           B4I PRODUCT SPECIFICATIONS
                           --------------------------

                                      * * *

                                    Service:
                                    -------

                                      * * *

                                 Operating Life:
                                 --------------

                                      * * *

                                  Film Jamming:
                                  ------------

                                      * * *

                           Front Panel User Controls:
                           -------------------------

                                      * * *

                            Rear Panel User Controls:
                            ------------------------

                                      * * *

                            SIDE Panel User Controls:
                            ------------------------

                                      * * *

                                Digitizing Depth:
                                ----------------

                                      * * *

                Modulation Transfer Function (In density space):
                -----------------------------------------------

                                      * * *
<TABLE>
<CAPTION>
---------------------------------------- -------------------------------------- --------------------------------------
SPATIAL                                  IN THE SCAN                            NORMAL TO THE
FREQUENCY                                DIRECTION (X)                          SCAN DIRECTION (Y)
---------------------------------------- -------------------------------------- --------------------------------------
<S>                                      <C>                                    <C>
* * *
---------------------------------------- -------------------------------------- --------------------------------------

---------------------------------------- -------------------------------------- --------------------------------------
* * *
</TABLE>

----------------------------

* * *   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.

                                        6

<PAGE>

                                   EXHIBIT B
                                   ---------

                           B4I PRODUCT SPECIFICATIONS
                           --------------------------

                                Reproducibility:
                                ---------------

                                      * * *

                       Noise and Artifact Characteristics:
                       ----------------------------------

                                      * * *

TABLE 1 - MINIMUM ACCEPTABLE DENSITY & MAXIMUM ACCEPTABLE NOISE CHARACTERISTICS.

--------------------------------- ----------------------------------------------
GRAY REGION DENSITY               PIXEL STD. DEV.
--------------------------------- ----------------------------------------------
* * *
--------------------------------- ----------------------------------------------

--------------------------------- ----------------------------------------------

--------------------------------- ----------------------------------------------

--------------------------------- ----------------------------------------------
* * *

                           Large Area Contrast Ratio:
                           -------------------------

                                      * * *

                               Density Linearity:
                               -----------------

                                      * * *

--------------------------------- ----------------------------------------------
ITEM                              SPECIFICATION
--------------------------------- ----------------------------------------------
* * *
--------------------------------- ----------------------------------------------

--------------------------------- ----------------------------------------------

--------------------------------- ----------------------------------------------

--------------------------------- ----------------------------------------------

--------------------------------- ----------------------------------------------

----------------------------

* * *   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.

                                        7

<PAGE>

                                   EXHIBIT B
                                   ---------

                           B4I PRODUCT SPECIFICATIONS
                           --------------------------

                              Geometric Linearity:
                              -------------------

                                      * * *

                               Density Uniformity:
                               ------------------

                                      * * *

                               Test Films Required
                               -------------------

                                      * * *

--------------------------------- ----------------------------------------------
R2P/N                                                        FILM
--------------------------------- ----------------------------------------------
* * *
--------------------------------- ----------------------------------------------

--------------------------------- ----------------------------------------------

--------------------------------- ----------------------------------------------

--------------------------------- ----------------------------------------------

--------------------------------- ----------------------------------------------

--------------------------------- ----------------------------------------------

                               Exterior Appearance
                               -------------------

                                      * * *

                              Year 2000 Compliance
                              --------------------

The product will be shown to be Y2k Ready as defined by the British Standard
Institution's guidelines for Year 2000 Conformity (DISC PD2000-1).

                             MECHANICAL DIMENSIONS:
                             ---------------------

                                      * * *

                                   Data Sheet:
                                   ----------

Each unit delivered will have a test data sheet, which demonstrates that the
supplied scanner meets this specification.

----------------------------

* * *   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.

                                        8

<PAGE>

                                    EXHIBIT B
                                    ---------

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

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------
<S>                                                                <C>                                  <C>
R2 TECHNOLOGY, INC.                          * * *                                                       Page 1 of 390
----------------------------------------------------------------------------------------------------------------------
ENGG SPECIFICATION                                                 Revision:                                       B5
----------------------------------------------------------------------------------------------------------------------
Canon, 300++, Interim Entry Level                                  Revised:                                2000-04-03
----------------------------------------------------------------------------------------------------------------------
ORIGINATOR:  Paul Wallace                                          Created:                             July 14, 1998
----------------------------------------------------------------------------------------------------------------------
</TABLE>

                                    Authority
<TABLE>
<CAPTION>

----------------------------------------------------------------------------------------------------------------------
<S>                                                                <C>                                  <C>
  Rev          Date                  Author                                       Comments
----------------------------------------------------------------------------------------------------------------------
          * * *
----------------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------------
</TABLE>

REFERENCES:

* * *

----------------------------

* * *   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.

                                        1

<PAGE>

                                    EXHIBIT B
                                    ---------

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

                                     PURPOSE
                                     -------

This specification applies to a CCD FILM SCANNER, deemed acceptable for market
success. Deliverables will consist of:

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------
R2 P/N              DESCRIPTION                                                 CANON P/N
----------------------------------------------------------------------------------------------------------------------
<S>                 <C>                                                         <C>
* * *
----------------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------------
</TABLE>

                            BULK LOADER DESCRIPTION:
                            -----------------------

                                     * * *

----------------------------

* * *   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.

                                        2

<PAGE>

                                   EXHIBIT B
                                   ---------

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

                                  SPECIFICATION
                                  -------------

                            Digital Film Scan Format:
                            ------------------------

--------------------------------- ----------------------------------------------
SPECIFICATION                     DETAIL
--------------------------------- ----------------------------------------------
* * *
--------------------------------- ----------------------------------------------
* * *

                                  Film Rotation
                                  -------------

                                      * * *

                                 Film Scan Time
                                 --------------

            SCSI command to start scanning to image in host memory:
            ------------------------------------------------------

--------------------------------- ----------------------------------------------
SPECIFICATION                     DETAIL
--------------------------------- ----------------------------------------------
* * *
--------------------------------- ----------------------------------------------

--------------------------------- ----------------------------------------------

                               Film Characteristic
                               -------------------

--------------------------------- ----------------------------------------------
SPECIFICATION                     DETAIL
--------------------------------- ----------------------------------------------
* * *
--------------------------------- ----------------------------------------------

--------------------------------- ----------------------------------------------

--------------------------------- ----------------------------------------------

--------------------------------- ----------------------------------------------

----------------------------

* * *   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>

                                   EXHIBIT B
                                   ---------

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

                          Film Separator Characteristic
                          -----------------------------

--------------------------------- ----------------------------------------------
SPECIFICATION                     DETAIL
--------------------------------- ----------------------------------------------
* * *
--------------------------------- ----------------------------------------------

--------------------------------- ----------------------------------------------

--------------------------------- ----------------------------------------------

--------------------------------- ----------------------------------------------

                                   Electrical
                                   ----------

--------------------------------- ----------------------------------------------
SPECIFICATION                     DETAIL
--------------------------------- ----------------------------------------------
* * *
--------------------------------- ----------------------------------------------

--------------------------------- ----------------------------------------------

--------------------------------- ----------------------------------------------

--------------------------------- ----------------------------------------------

                                    Physical
                                    --------
<TABLE>
<CAPTION>
---------------------------------------- -------------------------------------- --------------------------------------
             SPECIFICATION                              METRIC                                IMPERIAL
---------------------------------------- -------------------------------------- --------------------------------------
<S>                                      <C>                                    <C>
* * *
---------------------------------------- -------------------------------------- --------------------------------------

---------------------------------------- -------------------------------------- --------------------------------------

---------------------------------------- -------------------------------------- --------------------------------------

---------------------------------------- -------------------------------------- --------------------------------------
</TABLE>

                                Temperature Range
                                -----------------

--------------------------------- ----------------------------------------------
SPECIFICATION                     DETAIL
--------------------------------- ----------------------------------------------
* * *
--------------------------------- ----------------------------------------------

--------------------------------- ----------------------------------------------

----------------------------

* * *   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.

                                        4

<PAGE>

                                   EXHIBIT B
                                   ---------

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

                                    Humidity
                                    --------

--------------------------------- ----------------------------------------------
SPECIFICATION                     DETAIL
--------------------------------- ----------------------------------------------
* * *
--------------------------------- ----------------------------------------------

--------------------------------- ----------------------------------------------

                                    Vibration
                                    ---------

--------------------------------- ----------------------------------------------
SPECIFICATION                     DETAIL
--------------------------------- ----------------------------------------------
* * *
--------------------------------- ----------------------------------------------

                                      Shock
                                      -----

--------------------------------- ----------------------------------------------
SPECIFICATION                     DETAIL
--------------------------------- ----------------------------------------------
* * *
--------------------------------- ----------------------------------------------

--------------------------------- ----------------------------------------------

                                   Regulatory
                                   ----------

--------------------------------- ----------------------------------------------
SPECIFICATION                     DETAIL
--------------------------------- ----------------------------------------------
* * *
--------------------------------- ----------------------------------------------

--------------------------------- ----------------------------------------------

--------------------------------- ----------------------------------------------

--------------------------------- ----------------------------------------------

                                    Altitude
                                    --------

--------------------------------- ----------------------------------------------
SPECIFICATION                     DETAIL
--------------------------------- ----------------------------------------------
* * *
--------------------------------- ----------------------------------------------

--------------------------------- ----------------------------------------------

                                    Interface
                                    ---------

                                      * * *

----------------------------

* * *   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.

                                        5

<PAGE>

                                    EXHIBIT B
                                    ---------

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

                                      * * *

                          BARCODE LABEL SPECIFICATION
                          ---------------------------

                                      * * *

                                    Service:
                                    -------

                                      * * *

                                 Operating Life:
                                 --------------

                                      * * *

                                  Film Jamming:
                                  ------------

                                      * * *

                           Front Panel User Controls:
                           -------------------------

                                      * * *

                            Rear Panel User Controls:
                            ------------------------

                                      * * *

                            SIDE Panel User Controls:
                            ------------------------

                                      * * *

                                Digitizing Depth:
                                ----------------

                                      * * *

                Modulation Transfer Function (In density space):
                -----------------------------------------------

                                      * * *
<TABLE>
<CAPTION>
---------------------------------------- -------------------------------------- --------------------------------------
SPATIAL                                  IN THE SCAN                            NORMAL TO THE
FREQUENCY                                DIRECTION (X)                          SCAN DIRECTION (Y)
---------------------------------------- -------------------------------------- --------------------------------------
<S>                                      <C>                                    <C>
* * *
---------------------------------------- -------------------------------------- --------------------------------------

---------------------------------------- -------------------------------------- --------------------------------------
</TABLE>

----------------------------

* * *   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.

                                        6

<PAGE>

                                   EXHIBIT B
                                   ---------

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

                                Reproducibility:
                                ---------------

                                      * * *

                       Noise and Artifact Characteristics:
                       ----------------------------------

                                      * * *

TABLE 1 - MINIMUM ACCEPTABLE DENSITY & MAXIMUM ACCEPTABLE NOISE CHARACTERISTICS.

--------------------------------- ----------------------------------------------
GRAY REGION DENSITY               PIXEL STD. DEV.
--------------------------------- ----------------------------------------------
* * *
--------------------------------- ----------------------------------------------

--------------------------------- ----------------------------------------------

--------------------------------- ----------------------------------------------

--------------------------------- ----------------------------------------------
* * *

                           Large Area Contrast Ratio:
                           -------------------------

                                      * * *

                               Density Linearity:
                               -----------------

                                      * * *

--------------------------------- ----------------------------------------------
ITEM                              SPECIFICATION
--------------------------------- ----------------------------------------------
* * *
--------------------------------- ----------------------------------------------

--------------------------------- ----------------------------------------------

--------------------------------- ----------------------------------------------

--------------------------------- ----------------------------------------------

--------------------------------- ----------------------------------------------

----------------------------

* * *   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.

                                        7

<PAGE>

                                   EXHIBIT B
                                   ---------

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

                              Geometric Linearity:
                              -------------------

                                      * * *

                               Density Uniformity:
                               ------------------

                                      * * *

                               Test Films Required
                               -------------------

                                      * * *

--------------------------------- ----------------------------------------------
R2P/N                                                        FILM
--------------------------------- ----------------------------------------------
* * *
--------------------------------- ----------------------------------------------

--------------------------------- ----------------------------------------------

--------------------------------- ----------------------------------------------

--------------------------------- ----------------------------------------------

--------------------------------- ----------------------------------------------

--------------------------------- ----------------------------------------------

                               Exterior Appearance
                               -------------------

                                      * * *

                              Year 2000 Compliance
                              --------------------

The product will be shown to be Y2k Ready as defined by the British Standard
Institution's guidelines for Year 2000 Conformity (DISC PD2000-1).

                             MECHANICAL DIMENSIONS:
                             ---------------------

                                      * * *

                                   Data Sheet:
                                   ----------

Each unit delivered will have a test data sheet, which demonstrates that the
supplied scanner meets this specification.

----------------------------

* * *   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.

                                        8

<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

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00033-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00033-of-00352.parquet"}]]