1.9 “ R2 Lung CAD Product ” means any CAD Lung Program that R2 makes commercially available at any time during the term of this Agreement, including any related documentation, Updates, Upgrades and New Features.

1.10 “ Territory ” means those countries, regions or geographical markets identified on Exhibit A.

1.11 “ Trademarks ” with respect to a party means the trademarks, service marks, logos and other proprietary marks that such party may own or have the right to license from time to time.

1.12 “ Updates ” means software bug fixes and corrections to a R2 Lung CAD Product that R2 makes generally available for field use, if any.  Updates do not include improvements or enhancement to the operating system, applications software or hardware and do not include New Features.

1.13 “ Upgrades ” means a release or version of a R2 Lung CAD Product that contains significant improvements to performance or functionality of existing features of a CAD Lung Program.  Upgrades do not include New Features.

1.14 “ Vital Nodule Probe ” means a lung visualization program developed by Vital.

1.15  “ Vital Workstation ” means any Vital workstation and the components thereof, including without limitation the Vitrea®, Vitrea® 2 or any successor product brand workstation, consisting of hardware, display devices and software, including Vitrea®, Vitrea® 2 or successor software applications.

1.16 “ Warranty Period ” means the period after delivery and installation of the R2 Lung CAD Product at a Customer location during which R2 agrees to provide maintenance and support of such Product under warranty to Customers at no additional charge to such Customers, but such period shall in no event be longer than one (1) year from such delivery and installation.

In addition to the foregoing, terms such as “sale,” “purchase,” “distribute” and variants and synonyms thereof, when used with reference to software herein, are used for convenience only and refer to transactions involving the grant of a software license for the R2 Lung CAD Product.

2. Marketing

2.1 Marketing, Sales and Appointment .  R2 hereby appoints Vital, and Vital hereby accepts such appointment, as a non-exclusive marketing, promotion and sales representative in the Territory for the referral of Customers to R2 for R2’s sale of the R2 Lung CAD Product to both existing and prospective Customers.  Vital shall promote and market the R2 Lung CAD Product to the exclusion of all other CAD Lung Programs not owned by R2 to existing Customers as well as prospective Customers in the Territory.   Vital shall provide R2 detailed contact and product information regarding its Customers and prospective Customers so that R2 can efficiently market and sell directly to such existing and prospective Customers.  The parties shall promote and market the R2 Lung CAD Product as set forth in Exhibit B.  Vital shall neither advertise the R2 Lung CAD Product outside of the Territory nor solicit orders from outside of the Territory without R2’s prior written consent.  Vital shall comply with the applicable policies and procedures of R2 as in effect from time to time and as communicated to Vital.

2.2 Authority .  R2 shall lead the sale of the R2 Lung CAD Product to Customers.  Each Customer shall execute a license agreement directly with R2 for the license of the R2 Lung CAD Product.  Vital’s sole authority shall be (a) to provide sales leads to R2 for the purpose of R2 soliciting orders for the R2 Lung CAD Product in the Territory and (b) to perform the tasks listed in this Agreement or such other tasks as the parties may mutually agree upon from time to time.  Vital shall not have the authority to make any commitments or agreements or incur any liabilities whatsoever on behalf of R2, nor shall R2 be liable for any acts, omissions to act, contracts, commitments, promises or representations made by Vital, except as specifically authorized under this Agreement or in writing by the Chief Executive Officer or Chief Financial Officer of R2.  Unless otherwise mutually agreed upon in writing by the parties, Vital shall not be responsible for completing any contract for the R2 Lung CAD Product or for delivering the R2 Lung CAD Product to any potential customer.

2.3 Relationship .  Except as may be expressly set forth in Exhibit C for the provision of first line support, Vital shall conduct all of its business in Vital’s own name and in a businesslike and professional manner. Nothing in this Agreement shall be deemed to create an agency, joint venture or partnership relation between the parties hereto. It is understood and agreed that R2 and Vital are not, by reason of this Agreement or anything herein contained, constituted or appointed the agent or representative of the other party for any purpose whatsoever, nor shall anything herein contained be deemed or construed as granting to R2 or Vital any right or authority to assume or to create any obligation or responsibility, express or implied, for, on behalf of, or in the name of the other party, or to bind Company in any way or manner whatsoever. The relationship of the parties established by this Agreement is that of independent contractors, and nothing contained in this Agreement should be construed to give either party the power to direct or control the day-to-day activities of the other.  All financial and other obligations associated with each party’s business are the sole responsibility of each party.

2.4 Materials .  R2 will provide assistance to Vital in the form of providing reasonable quantities of promotional and other marketing materials in English and such other languages as may be available from time to time.  Vital shall be responsible for any translation of promotional and marketing materials distributed within the Territory that it produces or has produced (but it has no obligation to so produce), and in the event that Vital completes any such translations, Vital shall certify to R2 that any such translations have been appropriately verified, if, and only to the extent that, such verification is required by a regulatory agency in the country for which the translation was made.  Vital shall provide to R2 for review an example of each item of promotional, advertising and educational materials and programs and other literature relating to the R2 Lung CAD Product that Vital intends to use to market and promote the R2 Lung CAD Product at least thirty (30) days prior to the commercial release of such materials or commencement of such programs.  R2 reserves the right to reject any promotional materials that contain inaccurate claims regarding the R2 Lung CAD Product.

2.5 Product Presentation .  Each party represents and warrants that it will: (a) present the R2 Lung CAD Product fairly to potential Customers; (b) not disparage the other party, the other party’s Trademarks, or the other party’s products or services in any material respect; (c) avoid deceptive, misleading or unethical business practices; and (d) avoid false or misleading representations with regard to the R2 Lung CAD Product.

2.6 Trademarks .  Vital recognizes and concedes for all purposes that all Trademarks affixed to the R2 Lung CAD Product or any accompanying labels, marketing materials, containers and cartons, whether or not registered, constitute R2’s exclusive property and cannot be used except in connection with promoting and marketing the R2 Lung CAD Product.  Subject to the terms and conditions of this Agreement, R2 hereby grants, and Vital hereby accepts, a non-exclusive, non-transferable, non-assignable, royalty-free license to use R2’s Trademarks solely for purposes of marketing the R2 Lung CAD Product in the Territory as set forth in this Agreement; provided, however, that Vital will provide R2 with samples of each use of Trademark prior to such use and will refrain from all uses that R2 informs Vital are detrimental to R2’s investment in such Trademarks.  Vital agrees to state in appropriate places on all materials using the Trademarks that the Trademarks are trademarks of R2 and to include the appropriate trademark symbols. R2 grants no other rights than those expressly granted hereunder, and Vital acknowledges R2’s exclusive ownership of the Trademarks and the renown of R2’s Trademarks worldwide. Vital shall promptly inform R2 in writing of any known or reasonably suspected violation of R2’s trademarks or copyrights.  Vital agrees that any use of R2’s Trademarks, and all associated goodwill, shall inure to the benefit of R2.  Vital agrees it will not use, register or otherwise appropriate any name, mark or logo which is similar to or may be confused with any name, mark or logo licensed by R2 hereunder.

2.7 Branding .  In the event that a Customer licenses the ImageChecker-Lung Version 2 or any successor CAD Lung Program of R2,Vital shall position an R2 Trademark of R2’s choosing on the launch button of the Vital Workstation as well as display prominently an R2 Trademark of R2’s choosing on the screen of the Vital Workstation when appropriate, but the foregoing shall not require Vital to retrofit or modify any Vital Workstation in a Customer’s possession prior to the grant of such license.

2.8 Customer Installation and Training .  As between the parties, R2 shall be responsible for the installation and all training in the use of the R2 Lung CAD Product at all Customer sites.  R2 may offer one day of customer training free of charge at the Customer site, at designated training centers or through online methodologies.

2.9  Service and Support .    As between the parties, R2 will be responsible for providing in-warranty and after-warranty technical support of the R2 Lung CAD Product in accordance with its standard support terms ( the “R2 Software Maintenance Program”), except that Vital will, provide first-level technical support of the R2 Lung CAD Product to Customers, as part of the R2 Software Maintenance Program as set forth in Exhibit C.  R2 will provide second-level maintenance and support to Customers as part of the R2 Software Maintenance Program free of charge during the Warranty Period and thereafter for Customers purchasing membership in the R2 Software Maintenance Program, as further set forth in Exhibit C.  Vital acknowledges that the support will be provided to Customers free of charge during the Warranty Period, and R2 will endeavor to require Customers to commit to at least one year of membership in the R2 Software Maintenance Program beyond the Warranty Period.  New Features, if any, may be subject to additional fees to Customers for which Vital will receive a share of the license revenue during the term of the Agreement as set forth in this Agreement.

2.10 Training .  Vital shall ensure that its service personnel are sufficiently skilled and knowledgeable about the R2 Lung CAD Product.  R2 shall provide all necessary training to Vital regarding the use and maintenance of the R2 Lung CAD Product as reasonably necessary, for Vital to fulfill its service obligations to the Customers.  Such training shall take place at the dates and locations as mutually agreed between the parties.

2.11 Hardware and Support .  As between the parties, R2 shall provide the  hardware platforms (“Servers”) to the Customers for the R2 Lung CAD Product.  R2 will install the Servers.  R2 will retain any Server installation fees paid by Customers.  Any Server support offered by R2 to its Customers is not addressed in this Agreement, and Vital shall not be entitled to share in any revenue derived by R2 from offering and performing hardware support services.

2.12 Product Access .  Beginning with the release of the ImageChecker-Lung Version 2, R2 Lung CAD Products will be accessed through the Vital Nodule Probe.

2.13 ImageChecker-Lung Version 2 Release and Integration .  It is the expectation of the parties that R2 will deliver the ImageChecker-Lung Version 2 to Vital in final form by June 30, 2005.  Vital shall integrate such product with the Vital Workstation by September 1, 2005, provided that for every day past June 30, 2005 for which R2 is delayed in delivering the ImageChecker-Lung Version 2 to Vital, Vital’s deadline for integration shall be extended by one (1) day.  R2 agrees to provide reasonable assistance to Vital in successfully integrating the ImageChecker-Lung Version 2 with the Vital Workstation.

3. EXCLUSIVITY

3.1 By R2 .  R2 shall not license or otherwise provide any CAD Lung Program or underlying technology to any vendors of freestanding workstations for sale in the United States, Canada or European Union and identified on Exhibit D (“Workstation Vendors”).  Notwithstanding the foregoing, R2 shall not be restricted from providing CAD Lung Programs or underlying technology to: (a) any other third party workstation vendor not listed in Exhibit D; (b) any PACS vendor identified on Exhibit D that sells workstations in conjunction with PACS (“PACS Vendor”); provided that R2 shall not provide the CAD Lung Programs or underlying technology to any PACS Vendor for use with such vendor’s sale of freestanding workstations; (c) or to any third party OEM or PACS company that in turn contracts with any Workstation Vendor identified on Exhibit D.

3.2 By Vital .  Except for as set forth in this Section 3.2, during the term, Vital shall not promote, market or sell any CAD Lung Program or any underlying technology in connection with any Vital product or services (including the Vital Workstation), other than R2 Lung CAD Products.  R2 acknowledges that Vital may sell its Vital Nodule Probe product (and any other product) to the extent that it is not a CAD Lung Program or a product with similar features.  Vital shall not agree to the integration of the Vital Nodule Probe to any third party CAD Lung Program or one developed internally by Vital, nor shall it agree to permit others to conduct such integration.  Vital shall not make publicly available any application programming interfaces that would allow such integration by a third party.  Vital agrees that it will not develop or market a temporal comparison product designed for use with a R2 Lung CAD Product.

4. GOVERNMENTAL APPROVALS

4.1 Health and Safety Laws and Regulations .  Both parties shall monitor the appropriate information sources closely for changes in laws and regulations, and other requirements relating to the R2 Lung CAD Product, and shall notify the other party promptly in writing of any and all such changes of which it becomes aware.  If R2 is required by any regulatory agency to recall the R2 Lung CAD Product, or if R2 or a regulatory authority initiates a recall of the R2 Lung CAD Product, Vital shall cooperate with and assist R2 in locating, and retrieving if necessary, recalled R2 Lung CAD Products from Customers.

4.2 Compliance with Local Laws .  Each party agrees to comply with all local laws and regulations applicable to the distribution of their respective products in each country within the Territory.

5. Prices and CONSIDERATION

5.1 License fees for the R2 Lung CAD Products .  R2 shall have sole and exclusive control over all prices, discounts, allowances, refunds, development, specifications, delivery, and other terms governing the licensing of the R2 Lung CAD Product, including, without limitation, the extension of credit.  Vital agrees that it shall quote to Customers only the prices and terms of a license for the R2 Lung CAD Product provided by R2, and Vital shall not alter or change such prices or terms of license unless otherwise authorized by R2 in writing on a case-by-case basis.  Prices and terms of license quoted by R2 are subject to change by R2 at any time upon prior written notice.  R2 shall render all invoices directly to the Customers and shall send notification of all Commissionable Transactions to Vital at the same time as it makes Commission payments pursuant to Section 5.3. It is expressly understood by Vital that full responsibility for all contracts for the R2 Lung CAD Product and collection rests with R2.  All orders for the R2 Lung CAD Product shall be taken and contracts executed in the name of R2, which shall invoice Customers and carry accounts in its own name as creditor.  Vital shall have no authority to accept or receive any payments from Customers for the R2 Lung CAD Product, whether directly or indirectly, nor any compensation in kind for the R2 Lung CAD Product, and shall not do so.

5.2 Commissions .  R2 shall pay Vital a commission (a “Commission”) on each Commissionable Transaction as follows:

(a) Vital shall receive a minimum Commission equal to * of the software license consideration received by R2 (excluding consideration received for support, hardware sales, training and installation) in respect of each Commissionable Transaction where Vital employees exclusively recommend the applicable Customer to R2, but are not Active Participants, as defined below, in the sale or license by R2 to such Customer; and

(b) Vital shall receive a further commission equal to * of the consideration received by R2 (excluding support, hardware sales, training and installation) in respect of each Commissionable Transaction in relation to which Vital actively markets and  introduces R2 to Customers or prospective Customers or assists in the sales process of such R2 Lung CAD Product.  The act of only providing a list of Customers to R2 shall not qualify Vital for a commission under this Section 5.2 (b).  If R2 determines that Vital is not meeting the requirements to earn a commission under this Section 5.2(b), then R2 shall notify Vital of its lack of performance, so that Vital has the opportunity to earn such commission.

Notwithstanding the foregoing, the consideration payable to Vital for each Commissionable Transaction for purposes of this Section 5.2 shall be reduced (a) by * per person day of training for the R2 Lung CAD Product that R2 provides to a Customer free of charge in accordance with Section 2.8 of this Agreement, and (b) by * per person day of installation of the R2 Lung CAD Product that R2 provides at a Customer’s site in accordance with Section 2.8 of this Agreement.

5.3 Payment of Commission .  Unless otherwise agreed by the parties, Commissions with respect to any particular contract signed by a Customer resulting in a Commissionable Transaction shall be deemed earned at the end of the calendar month following R2’s receipt of a valid contract or purchase order from a Customer and payable within thirty (30) days following the calendar month in which such fees are collected.The payment of Commissions shall be in U.S. dollars post-conversion and shall be made by check or wire transfer to the order of Vital.

5.4 Maintenance Fee Sharing .  In exchange for providing first-level support of the R2 Lung CAD Product to Customers, Vital will receive * of the R2 Software Maintenance Program fees actually received by R2.  Such amounts shall be payable within thirty (30) days following the calendar month in which such fees are collected.

* Confidential Treatment Requested

5.5 Minimum Revenues .

(a) Sales to Customers shall generate for R2 certain specified minimum revenues (the “Applicable Minimums”) payable to R2, net only of Commissions, on a Quarterly basis from the Product Revenues as follows:

(i) Starting with the Quarter ending September 30, 2005 and ending with the Quarter ending March 31, 2006 (the “Initial Period”), the Applicable Minimums shall be as follows:  Vital shall generate for R2 Product Revenues per Quarter of * (such Quarterly amount being the “Guaranteed Minimum”); provided that any Product Revenues that Vital generates for R2, including Product Revenues related to the LN 1000 version of the R2 Lung CAD Product,  between the Effective Date and June 30, 2005 shall count against the Applicable Minimum for the first Quarter of the Initial Period ; and

(ii) Subsequent to the Initial Period and subject to the provisions of subsection (iii) below, the Applicable Minimums per Quarter for the remainder of the term of the Agreement (the “Subsequent Period”) shall be equal to the Applicable Minimum of the immediately preceding Quarter unless the Product Revenues generated by Vital for R2 during the preceding Quarter fell below the Applicable Minimum for that Quarter.  In such event, the Applicable Minimum for the current Quarter shall be calculated as follows:  the lowe