Securities Law & Instruments


MRRS - trades in securitiesof foreign issuer in connection with U.S. offering by U.S. dealeron behalf of one Ontario participant, an accredited investor,exempt from registration requirements, provided conditions ins. 2.14(1) of MI 45-102 are satisfied.

Applicable Ontario StatutoryProvisions

Securities Act, R.S.O. 1990,c. S.5, as am., ss. 25(1), 53(1), 74(1).

Applicable Ontario Rule

Rule 45-501 Exempt Distributions.

Applicable Instrument

Multilateral Instrument 45-501Resale of Securities - s. 2.14(1).



R.S.O. 1990, CHAPTER S.5,AS AMENDED (The "Act")






(Subsection 74(1))

UPON the applicationof R2 Technology, Inc. (the "Filer") to the OntarioSecurities Commission (the "Commission") for a rulingpursuant to subsection 74(1) of the Act that certain tradesin shares of common stock (the "Shares") by U.S. BancorpPiper Jaffray Inc. (the "Dealer") to a business associateof the Filer residing in Ontario (the "Canadian Participant")shall not be subject to section 25 or 53 of the Act;

AND UPON consideringthe application and the recommendation of staff of the Commission;

AND UPON the Filer havingrepresented to the Commission that:

1. The Filer is a corporationincorporated under the laws of the State of Delaware withits principal executive offices located at 1195 West FremontAvenue, Sunnyvale, California 94087, USA.

2. The authorized share capitalof the Filer as at December 31, 2001 consists of 80,025,000Shares and 65,550,000 redeemable convertible preferred shares,of which 1,257,995 Shares and 29,507,541 redeemable convertiblepreferred shares were issued and outstanding.

3. The Filer is not, and hasno present intention of becoming, a reporting issuer in Ontario.

4. The Filer will be completingan initial public offering of the Shares in the United States(the "Offering") and has filed a registration statementon Form S-1, as amended, with the United States Securitiesand Exchange Commission (the "Preliminary Prospectus").

5. The Filer proposes to offer4,500,000 Shares under the Offering of which up to 225,000Shares, or five percent (5%), are reserved for sale to certaincustomers, partners and business associates of the Filer.

6. Upon completion of theOffering, the Shares will be listed on the Nasdaq NationalMarket (the "NASDAQ").

7. There is one (1) CanadianParticipant presently residing in the province of Ontario.

8. The Offering is being madeavailable in Ontario to a business associate of the Filer.Specifically, the business associate is the President andChief Operating Officer of a technology company, who has maintaineda close business relationship with the Filer's Chief ExecutiveOfficer for the past four (4) years and various other officersof the Filer for more than five (5) years. In addition, theCanadian Participant has provided the Filer with technologicaladvice in a networking relationship/technology knowledge capacityover the past several years, holds an MBA and has extensivebusiness and management experience.

9. The Canadian Participanthas represented to the Filer and the Dealer that he is an"accredited investor", within the meaning of CommissionRule 45-501 - Exempt Distributions.

10. The Shares will be offeredto the Canadian Participant at a price equal to the priceof the Shares offered to the public in connection with theOffering.

11. Participation in the Offeringis voluntary and a copy of the Preliminary and Final Prospectuses(which were prepared in accordance with U.S. federal securitieslaws) will be forwarded to the Canadian Participant.

12. After giving effect tothe Offering, the aggregate number of Shares held by Canadianresidents will be less than 10% of the issued and outstandingshares of the Filer and the number of registered Canadianresidents holding Shares will not be more than 10% of thetotal number of holders of issued and outstanding Shares ofthe Filer.

13. There is not expectedto be a market for the Shares in Ontario and it is intendedthat any resale of Shares acquired under the Offering willbe effected through the facilities of the NASDAQ in accordancewith its rules and regulations.

14. The annual reports, proxymaterials and other materials generally distributed to theFiler's shareholders resident in the United States will beprovided to the Canadian Participant at the same time andin the same manner as the documents provided to United Statesresident shareholders.

15. The Canadian Participantwill be provided with a notice advising that the CanadianParticipant will not have any rights against the Filer underthe Legislation and, as a result, must rely on other remedieswhich may be available, including common law rights of actionfor damages or rescission or rights of action under the civilliability provisions of U.S. federal securities laws.

16. The Dealer is currentlyregistered in Ontario under the category of InternationalDealer as evidenced by the Commission's most recent publishedlist of registrants dated June 20, 2002. Furthermore, theDealer is a U.S. investment bank providing a full range ofinvestment banking services, registered as a broker-dealerwith the United States Securities and Exchange Commission("SEC"); the National Association of SecuritiesDealers ("NASD"); and with the securities regulatoryauthorities in fifty-two (52) U.S. jurisdictions.

17. The Dealer will act asagent or plan administrator for the Canadian Participant andwill only open a restricted/liquidating account for the CanadianParticipant which account will be limited to holding onlythe Filer's Shares and will be closed following the sale ofall of the Filer's Shares held in such account.

AND UPON the Commissionbeing satisfied that to do so would not be prejudicial to thepublic interest;

IT IS RULED pursuantto subsection 74(1) of the Act that:

A. the trades in Sharesby the Dealer to the Canadian Participant or on behalf ofthe Canadian Participant are not subject to section 25 or53 of the Act; and

B. the first trade by theDealer in any Shares acquired under the Offering on behalfof the Canadian Participant shall be deemed a distributionunless the conditions in subsection (1) of section 2.14of Multilateral Instrument 45-102 Resale of Securities aresatisfied.

July 12, 2002.

"Theresa McLeod"                    "HaroldP. Hands"