**Exhibit 10.32**

**MEDSTONE INTERNATIONAL, INC. EMPLOYMENT AGREEMENT****Executive VicePresident of Sales and Marketing**(Eva Novotny)

          This Employment Agreement is entered, effective August 13, 2002 (the CommencementDate), by and between Medstone International, Inc., a Delaware Corporation (Medstone), and Eva Novotny  (Employee) in order to secure his [her] services in the future and in recognition of his [her] pastservices.

**1.**      **EMPLOYMENT**

          Employee shallbe employed as Medstone’s  Executive Vice President of Sales and Marketing    for the term of this Agreement.  If his [her] title or responsibilities are materially diminished without Employee’s consent,such act shall be considered a termination of this Agreement by Medstone.

**2.**      **DEVOTION OF TIME**

          Employee shall devote his [her] full working time and energy to his [her] responsibilities as Executive Vice President of Sales and Marketing  and shallfulfill those responsibilities in good faith and in accordance with the terms of this Agreement.

**3.**      **TERM**

          Unless earlier terminated in accordance with Section 6, the term of Employee’s employment by Medstone under this Agreement shall commence on the date set forthin the first paragraph and shall be for one (1) full year.

**4.**      **BASE SALARY**

          The Employee’s base salary shall be a minimum of   $130,000   per year unless increased from time to time during the term of thisAgreement by Medstone’s Board of Directors.

**5.**      **OTHER BENEFITS**

          Employee shall receive such other employee benefits as are generally available to other employees of Medstone such as group health and dental insurance, extendedlong-term disability insurance, etc.  Employee shall be reimbursed for reasonable business related expenses.  In addition, at the sole discretion of the Board of Directors, the employee may be granted a special bonus or stockoptions.

**6.**      **TERMINATION**

          (a)         Employee’s employment under this Agreement shall automatically terminate upon Employee’s death,which shall not be deemed to be a termination without Good Cause.

          (b)         Medstone may atany time terminate Employee’s employment by Medstone under this Agreement by giving notice of such termination to the other party.  If such termination is without Good Cause, Employee shall be entitled to the remedies and benefits setforth in this Section 6 and in Section 4 of this Agreement.  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.  “GoodCause” for Medstone to terminate Employee’s employment shall mean (i) willful and habitual breach of Employee’s duties or obligations under the terms of this Agreement, (ii) habitual gross neglect of his [her] duties orobligations, (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 inconnection therewith, (iv) his [her] willful unauthorized disclosure of Medstone’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.

          (c)         If during the term ofEmployee’s employment hereunder either (i) Employee’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 intoan 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’s then current annual base salary.  Any such severance payment shall bepaid fully in cash to Employee on the date of the termination or closing of the Acquisition, as the case may be.  As used in this paragraph, an “Acquisition” means the sale, transfer or other disposition in one or in a seriesof 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  or business of Medstone to another person or entity or to persons orentities which are affiliated or acting in concert with respect to such sale, transfer or other disposition, other than the sale of Medstone’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.

          (d)         Thetermination of Employee’s employment pursuant to this Section 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 liabilityincurred prior to the termination date.

          (e)         If (i) Medstone terminates Employee’semployment 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 payableunder 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).

**7.**      **WAIVER**

          No waiver by either of the parties of any failure by theother 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.  All rights and remedies hereingranted 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.

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**8.**      **ARBITRATION**

          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 OrangeCounty, California.  The arbitration shall be administered by and held in accordance with the Commercial Arbitration Rules of the American Arbitration Association.  Judgment upon the award rendered by the arbitrator may be entered in anycourt having jurisdiction thereof.  The costs of the arbitration, including any AAA administration fee, the arbitrator’s fee, and costs for the use of facilities during the hearings, shall initially be borne equally by the parties to thearbitration.  However, reimbursement for such fees and costs and such party’s attorneys’ fees shall be awarded to the prevailing or most prevailing party by the arbitrator.

**9.**      **ENFORCEABILITY**

          The invalidity or enforceability of any term orprovision hereof shall not affect the validity or enforceability of any other term or provision.  

**10.**    **ATTORNEYS FEES**

          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’fees and costs in addition to any other relief to which it or he may be entitled.

**11.**    **CHOICE OF LAW**

          This Agreement shall be construed and governed by the laws of the State of California.

**12.**    **ENTIRE AGREEMENT**

          This Agreement may be executed in counterparts and thecounterparts 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, betweenthe parties with respect to the subject matter hereof.

**13.**    **MODIFICATIONS**

          This Agreement shall not be modified or amended except by a written document executed by both parties to this Agreement.

**14.**    **SUCCESSORS**

          This Agreement will be binding upon the heirs, executors,administrators, successors, assignees, and other legal representatives of the parties to this Agreement. 

**15.**    **DRAFTING**

          This Agreement has been negotiated at arm’s length and between persons sophisticated and knowledgeable in the matters dealt with.  Accordingly, any rule oflaw (including California Code of Civil Procedure Section 1654) or legal decision that would require interpretation against the drafter of this Agreement is not applicable and is waived.

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