MEDSTONE INTERNATIONAL INC/
EMPLOYMENT AGREEMENT WITH EVA NOVOTNY
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<TYPE>EX-10.32
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<DESCRIPTION>EMPLOYMENT AGREEMENT WITH EVA NOVOTNY
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  <p align=right><font size=2 face="Times New Roman"><b>Exhibit 10.32</b></font></p> <p align=center><font size=2 face="Times New Roman"><b>MEDSTONE INTERNATIONAL, INC.<br> EMPLOYMENT AGREEMENT<br></b><b>Executive Vice
President of Sales and Marketing<br></b>(Eva Novotny)</font></p> <p><font size=2 face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This Employment Agreement is entered, effective August 13, 2002 (the <u>Commencement
Date</u>), by and between Medstone International, Inc., a Delaware Corporation (<u>Medstone</u>), and <u>Eva Novotny&#160; </u>(<u>Employee</u>) in order to secure his [her] services in the future and in recognition of his [her] past
services.</font></p> <p><font size=2 face="Times New Roman"><b>1.</b>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<b>EMPLOYMENT</b></font></p> <p><font size=2 face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Employee shall
be employed as Medstone&#146;s&#160; <u>Executive Vice President of Sales and Marketing&#160;&#160; </u>&#160;for the term of this Agreement.&#160; If his [her] title or responsibilities are materially diminished without Employee&#146;s consent,
such act shall be considered a termination of this Agreement by Medstone.</font></p> <p><font size=2 face="Times New Roman"><b>2.</b>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<b>DEVOTION OF TIME</b></font></p> <p><font size=2
face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Employee shall devote his [her] full working time and energy to his [her] responsibilities as <u>Executive Vice President of Sales and Marketing </u>&#160;and shall
fulfill those responsibilities in good faith and in accordance with the terms of this Agreement.</font></p> <p><font size=2 face="Times New Roman"><b>3.</b>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<b>TERM</b></font></p> <p><font size=2
face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Unless earlier terminated in accordance with Section 6, the term of Employee&#146;s employment by Medstone under this Agreement shall commence on the date set forth
in the first paragraph and shall be for one (1) full year.</font></p> <p><font size=2 face="Times New Roman"><b>4.</b>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<b>BASE SALARY</b></font></p> <p><font size=2
face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Employee&#146;s base salary shall be a minimum of&#160;&#160; <u>$130,000</u>&#160;&#160; per year unless increased from time to time during the term of this
Agreement by Medstone&#146;s Board of Directors.</font></p> <p><font size=2 face="Times New Roman"><b>5.</b>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<b>OTHER BENEFITS</b></font></p> <p><font size=2
face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Employee shall receive such other employee benefits as are generally available to other employees of Medstone such as group health and dental insurance, extended
long-term disability insurance, etc.&#160; Employee shall be reimbursed for reasonable business related expenses.&#160; In addition, at the sole discretion of the Board of Directors, the employee may be granted a special bonus or stock
options.</font></p> <p><font size=2 face="Times New Roman"><b>6.</b>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<b>TERMINATION</b></font></p> <p><font size=2
face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Employee&#146;s employment under this Agreement shall automatically terminate upon Employee&#146;s death,
which shall not be deemed to be a termination without Good Cause.</font></p> <font size=2 face="Times New Roman"><br clear=all> </font>

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  <font size=2 face="Times New Roman"> </font> <p><font size=2 face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Medstone may at
any time terminate Employee&#146;s employment by Medstone under this Agreement by giving notice of such termination to the other party.&#160; If such termination is without Good Cause, Employee shall be entitled to the remedies and benefits set
forth in this Section 6 and in Section 4 of this Agreement.&#160; Such remedies and benefits shall be in lieu of any other damages or payments, and shall be deemed to be agreed liquidated damages, for such a termination.&#160; &#147;<u>Good
Cause</u>&#148; for Medstone to terminate Employee&#146;s employment shall mean (i) willful and habitual breach of Employee&#146;s duties or obligations under the terms of this Agreement, (ii) habitual gross neglect of his [her] duties or
obligations, (iii) his [her] commission of fraud, embezzlement or misappropriation, or other willful acts of dishonesty or willful misconduct, or commission of a crime of moral turpitude whether or not a criminal or civil charge is filed in
connection therewith, (iv) his [her] willful unauthorized disclosure of Medstone&#146;s confidential information, or (v) his [her] failure, due to physical or mental disability, to effectively perform his [her] duties for a period of ninety (90)
days during any consecutive period of twelve (12) months.</font></p> <p><font size=2 face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If during the term of
Employee&#146;s employment hereunder either (i) Employee&#146;s employment is terminated by Medstone without Good Cause or (ii) there is an Acquisition while Employee continues to be employed by Medstone and Employee does not immediately enter into
an employment agreement with a buying or surviving party in the Acquisition, Employee shall receive a severance payment equal to one (1) times the amount of Employee&#146;s then current annual base salary.&#160; Any such severance payment shall be
paid fully in cash to Employee on the date of the termination or closing of the Acquisition, as the case may be.&#160; As used in this paragraph, an &#147;<u>Acquisition</u>&#148; means the sale, transfer or other disposition in one or in a series
of transactions, including (without limitation) a merger or consolidation of Medstone in which it is not the surviving party, of all or substantially all of the assets, stock&#160; or business of Medstone to another person or entity or to persons or
entities which are affiliated or acting in concert with respect to such sale, transfer or other disposition, other than the sale of Medstone&#146;s products in the ordinary course of its business or a contribution of its assets to a partnership,
limited liability company or other entity which is controlled by Medstone.</font></p> <p><font size=2 face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
termination of Employee&#146;s employment pursuant to this Section&nbsp;6 shall not release either party from any accrued obligation to pay any sum to the other party (whether then or thereafter payable) or operate to discharge any liability
incurred prior to the termination date.</font></p> <p><font size=2 face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If (i) Medstone terminates Employee&#146;s
employment and claims that such termination is for Good Cause, and (ii) an arbitrator or court determines that such termination was without Good Cause, upon such determination Medstone shall pay to Employee, in addition to amounts otherwise payable
under this Agreement, a special additional payment equal to one half (50%) the severance payment otherwise payable to Employee on account of such termination under Section 6(c).</font></p> <p><font size=2
face="Times New Roman"><b>7.</b>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<b>WAIVER</b></font></p> <p><font size=2 face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;No waiver by either of the parties of any failure by the
other party to keep or perform any provision, covenant or condition of this Agreement shall be deemed to be a waiver of any preceding or succeeding breach of the same, or of any provision, covenant or condition.&#160; All rights and remedies herein
granted or referred to are cumulative; resort to one shall not preclude resort to any other or any other right or remedy provided by the law.</font></p> <p align=center><font size=2 face="Times New Roman">2</font></p>

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  <font size=2 face="Times New Roman"></font> <p><font size=2 face="Times New Roman"><b>8.</b>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<b>ARBITRATION</b></font></p> <p><font size=2
face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Any controversy or claim arising out of or relating to this Agreement or the breach hereof shall be settled by arbitration before a single arbitrator in Orange
County, California.&#160; The arbitration shall be administered by and held in accordance with the Commercial Arbitration Rules of the American Arbitration Association.&#160; Judgment upon the award rendered by the arbitrator may be entered in any
court having jurisdiction thereof.&#160; The costs of the arbitration, including any AAA administration fee, the arbitrator&#146;s fee, and costs for the use of facilities during the hearings, shall initially be borne equally by the parties to the
arbitration.&#160; However, reimbursement for such fees and costs and such party&#146;s attorneys&#146; fees shall be awarded to the prevailing or most prevailing party by the arbitrator.</font></p> <p><font size=2
face="Times New Roman"><b>9.</b>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<b>ENFORCEABILITY</b></font></p> <p><font size=2 face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The invalidity or enforceability of any term or
provision hereof shall not affect the validity or enforceability of any other term or provision.&#160; </font></p> <p><font size=2 face="Times New Roman"><b>10.</b>&nbsp;&nbsp;&nbsp;&nbsp;<b>ATTORNEYS FEES</b></font></p> <p><font size=2
face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In any arbitration or other legal proceeding to enforce or interpret the terms of this Agreement, the prevailing party shall be entitled to reasonable attorneys&#146;
fees and costs in addition to any other relief to which it or he may be entitled.</font></p> <p><font size=2 face="Times New Roman"><b>11.</b>&nbsp;&nbsp;&nbsp;&nbsp;<b>CHOICE OF LAW</b></font></p> <p><font size=2
face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This Agreement shall be construed and governed by the laws of the State of California.</font></p> <p><font size=2
face="Times New Roman"><b>12.</b>&nbsp;&nbsp;&nbsp;&nbsp;<b>ENTIRE AGREEMENT</b></font></p> <p><font size=2 face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This Agreement may be executed in counterparts and the
counterparts read together shall constitute the complete and entire agreement between the parties regarding the subject matter hereof, superseding all prior agreements, representations, proposals and negotiations, either oral or in writing, between
the parties with respect to the subject matter hereof.</font></p> <p><font size=2 face="Times New Roman"><b>13.</b>&nbsp;&nbsp;&nbsp;&nbsp;<b>MODIFICATIONS</b></font></p> <p><font size=2
face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This Agreement shall not be modified or amended except by a written document executed by both parties to this Agreement.</font></p> <p><font size=2
face="Times New Roman"><b>14.</b>&nbsp;&nbsp;&nbsp;&nbsp;<b>SUCCESSORS</b></font></p> <p><font size=2 face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This Agreement will be binding upon the heirs, executors,
administrators, successors, assignees, and other legal representatives of the parties to this Agreement. </font></p> <p><font size=2 face="Times New Roman"><b>15.</b>&nbsp;&nbsp;&nbsp;&nbsp;<b>DRAFTING </b></font></p> <p><font size=2
face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This Agreement has been negotiated at arm&#146;s length and between persons sophisticated and knowledgeable in the matters dealt with.&#160; Accordingly, any rule of
law (including California Code of Civil Procedure Section&nbsp;1654) or legal decision that would require interpretation against the drafter of this Agreement is not applicable and is waived.</font></p> <p align=center><font size=2
face="Times New Roman">3</font></p> <BR>

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  <p><font size=2 face="Times New Roman">The parties have entered into this Agreement as of the date set forth in the first paragraph above.</font></p>
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<td width="39%" colspan="3" valign=bottom> <p><font size=2 face="Times New Roman">MEDSTONE INTERNATIONAL, INC.,<br> a Delaware Corporation</font></p> </td>
<td width="60%" colspan="2" valign=top> <p><font size=2 face="Times New Roman">Employee</font></p> </td> </tr>
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<td width="3%" valign=bottom> <p><font size=2 face="Times New Roman">By:</font></p> </td>
<td width="32%" valign=bottom> <p align=center><font size=2 face="Times New Roman">/s/ DAVID V. RADLINSKI</font></p> </td>
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<td width="37%" valign=bottom> <p align=center><font size=2 face="Times New Roman">/s/ EVA NOVOTNY</font></p> </td>
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<td width="32%" valign=bottom> <p align=center><font size=1 face="Times New Roman"><b>David V. Radlinski,<br> Chairman and CEO</b></font></p> </td>
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<td width="37%" valign=top> <p align=center><font size=1 face="Times New Roman"><b>Eva Novotny</b></font></p> </td>
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