Document:

<PAGE>
EXHIBIT 10.1

                       SETTLEMENT AND COMPROMISE AGREEMENT
                       -----------------------------------

         This Settlement, Release and Compromise Agreement (this "Agreement") is
made this 15th day of March, 2004, by and among Radnet Management, Inc. and its
Related Parties (1) (the "Company"), DVI Financial Services Inc. ("DVIFS"), DVI,
Inc. ("DVI"); DVI Business Credit Corporation ("DVIBC"), the Equipment
Corporations as defined herein, U.S. Bank, National Association ("USBNA"), Lyon
Financial Services, Inc. d/b/a/ US Bank Portfolio Services ("USBPS") (USBNA and
USBPS shall be collectively referred to herein as "USB") and certain limited
liability company affiliates of DVIFS and DVIBC commonly known as the Special
Purpose Vehicles(2) (the "SPVs").

                                    RECITALS
                                    --------

         A. On August 25, 2003, DVIFS, DVI and DVIBC (the "Debtors") voluntarily
filed petitions for reorganization with the United States Bankruptcy Court for
the District of Delaware ("Bankruptcy Court") under chapter 11 of the Bankruptcy
Code, 11 U.S.C. ss. 101, et sec. ("Bankruptcy Code");

         B. The Debtors are debtors and debtors-in-possession in
jointly-administered chapter 11 cases (the "Bankruptcy Cases") pending before
the Bankruptcy Court;

         C. The Company, DVIFS and DVIBC entered into various lease, loan and
other financial accommodation agreements as set forth by affiliate name and
contract number on Exhibit "A" attached hereto (the "Financing Agreements"). The
Financing Agreements entered into between DVIFS and the Company shall be
referred to herein as the "DVIFS Contracts." The Financing Agreements entered
into between DVIBC and the Company shall be referred to herein as the "DVIBC
Contracts." The DVIFS Contracts and the DVIBC Contracts shall be collectively
referred to herein as the "DVI Contracts";

         D. DVIFS and DVIBC have transferred their rights and interests to
certain of the Financing Agreements to the SPVs. The Financing Agreements which
have been transferred to the SPVs shall be referred to herein as the "SPV
Contracts." In addition, DVIFS has assigned equipment relating to the SPV
Contracts to certain affiliated corporations (the "Equipment Corporations").(3)
USBNA is the trustee for the note holders (the "Noteholders") pursuant to

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

(1) The Related Parties are Howard G. Berger, Fran Renee Berger, Antelope
Valley MRI, Antelope Valley Imaging, Diagnostic Imaging Services, Inc.,
Healthcare Imaging Center, Imaging Center of La Habra, Medical Diagnostic
Imaging, Oncology Services, Radnet Management I, Inc. Radnet Management II,
Inc., Radnet Sub, Inc., San Gabriel Imaging Center, Santa Rosa Imaging, Socal MR
Site Management, Inc., North County Imaging, Stockton Imaging, Temecula Valley
Imaging Center, Tower Imaging, Beverly Radiology Group, Beverly Radiology Group
II, Beverly Radiology Group III and Primedex Health Systems, Inc.

(2) The Special Purpose Vehicles are DVI Business Credit Receivable Corporation
III, DVI Receivables LLC III, DVI Receivables LLC VIII, DVI Receivables LLC X,
DVI Receivables LLC XI, DVI Receivables LLC XII, DVI Receivables LLC XIV, DVI
Receivables LLC XV, DVI Receivables LLC XVI, DVI Receivables LLC XVII, DVI
Receivables LLC XVIII, DVI Receivables LLC XIX, DVI Receivables LLC XV, DVI
Funding, LLC.

(3) The Equipment Corporations are DVI Receivables Corporation III, DVI
Receivables Corporation VIII, DVI Receivables Corporation X, DVI Receivables
Corporation XI, DVI Receivables Corporation XII, DVI Receivables

                                       1
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certain Indentures and Amended and Restated Indentures between USBNA and the
Debtors and their related entities concerning the SPV Contracts and is also the
sub-servicing agent, trustee, and/or collateral agent of certain collateral
securing certain of the Financing Agreements (the "Trustee"). USBPS is the
servicing agent and attorney-in-fact of the SPV Contracts (the "Servicing
Agent");

         E. DVIFS has retained ownership of certain of the Financial Agreements
that were not been transferred to the SPVs (the "Owned Contracts");

         F. The Owned Contracts and the SPV Contracts shall be referred to
herein as the "Contracts";

         G. USB's participation in this Agreement is limited solely to its
capacity as Trustee and as Servicing Agent, and this Agreement shall not be
construed to bind or affect USB in any other way;

         H. The parties have agreed to compromise the Company's payment
obligations under the DVIFS Contracts. The parties have agreed to treat this
compromise as if the payment provided for herein satisfies the Company's payment
obligations under the DVIFS Contracts;

         I. As a condition of this compromise, the Company has agreed to payoff
on the Effective Date as defined herein the full balance owed on the DVIBC
Contracts as of the Effective Date;

         J. Upon the terms and subject to the conditions set forth herein and
pursuant to Rule 9019 of the Federal Rules of Bankruptcy Procedure ("Bankruptcy
Rules"), the parties and the Company desire to enter into this Agreement
providing for the full and final satisfaction of any and all indebtedness of the
Company to the Debtors or the SPVs with regard to the Contracts upon the Payment
of Seventy-Two Million, Seven Hundred Thousand Dollars ($72,700,000) as more
specifically adjusted herein in immediately available funds and other
consideration as set forth in detail herein, the "Transaction"); and

         K. The parties recognize that time is of the essence and desire to
consummate the Transaction as promptly as practicable on the Effective Date. The
parties anticipate closing upon the Transaction on or before April 30, 2004.

                                    AGREEMENT
                                    ---------

         NOW, THEREFORE, in consideration of the mutual representations,
warranties, covenants and agreements set forth in this Agreement, and for other
good and valuable

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

Corporation XIV, DVI Receivables Corporation XVI, DVI Receivables Corporation
XVII, DVI Receivables Corporation XVIII, DVI Receivables Corporation XIX, DVI
Receivables Corporation XV. The Equipment Corporations join this Agreement for
the sole purpose of conveying title to the equipment on an "as is, whereas"
basis.

                                       2

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consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:

         1. INCORPORATION OF RECITALS. The foregoing Recitals are incorporated
herein by reference.

         2. PAYOFF CONSIDERATION. On the Effective Date, in consideration of the
full and final satisfaction the Company's payment obligations under the
Contracts, the Company shall (a) pay to the Debtors and/or USB as Servicing
Agent, in immediately available funds, an aggregate amount equal to Seventy-Two
Million, Seven Hundred Thousand Dollars ($72,700,000) (the "Payoff
Consideration"). Notwithstanding the foregoing, the Payoff Consideration shall
be (a) increased, dollar for dollar, by the amount, if any, that the outstanding
balance of the DVIBC Contracts as of 12:01 a.m. eastern time on the Effective
Date (the "DVIBC Balance") exceeds $4,400,000; and (b) decreased, dollar for
dollar, by the amount, if any, that the DVIBC Balance is less than $4,400,000.
Payment of the Payoff Consideration shall be made by wire transfer(s) in
accordance with the instructions set forth on Schedule I attached hereto (the
"Wire Instructions"). The Payoff Consideration shall be split between the
parties as set forth on Schedule II hereto.

         3. THIRD PARTY CLAIMS. On or prior to the Effective Date, the Company
shall satisfy all claims of third parties (the "Third Party Claims") related to
any of the Contracts which have not been fully funded by DVIFS or DVIBC (the
"Third Party Claims"). The Company's obligations herein include the obligation
to effectuate the withdraw or reduction of any proof of claim filed in the
Bankruptcy Cases by any party asserting a Third Party Claim. The reduction of
any proof of claim as contemplated herein shall be made to the extent of the
applicable Third Party Claim. The Company will not be obligated to effectuate a
reduction in any proof of claim for portions of said claim which do not relate
to the Contracts. Notwithstanding the foregoing, the Company will not be
obligated to pay more than four hundred and fifty thousand dollars ($450,000) in
aggregate with regard to the Third Party Claims.

         4. CONDITION PRECEDENT TO THE OBLIGATIONS OF THE DEBTORS AND USB. The
obligations of Debtors and USB contained herein are contingent upon the
following:

         a)       On the Effective Date, the Company must pay the Payoff
                  Consideration;

         b)       Prior to the Effective Date, the Company must satisfy the
                  Third Party Claims;

         c)       The Company must deliver to the Debtors documents reasonably
                  satisfactory to the Debtors effectuating the waiver,
                  withdrawal, reduction or satisfaction of the Third Party
                  Claims;

         d)       The representations and warranties of the Company contained
                  herein, are true and correct and reaffirmed by the Company on
                  the Effective Date;

                                       3

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         e)       The Person executing this Agreement on behalf of the Company
                  and the Related Parties must be duly authorized and empowered
                  to execute this Agreement on behalf of the Company and the
                  Related Parties;

         f)       The Equipment Corporations and/or DVIFS shall upon closing,
                  assign any rights, title or interest they may have in the
                  equipment related to the Financing Agreements to the Company
                  by way of quit claim without any representation or warranty.

         5. TERMINATION OF CONTRACTS. Upon the complete performance of the
conditions set forth in paragraph 4 above, the Debtors and USB hereby
acknowledge and agree that the Company's payment obligations under each of the
Contracts will be fully satisfied.

         6. EFFECTIVE DATE. The Transaction shall be effective upon the date
(the "Effective Date") that all of the following have occurred:

                  (a) all of the parties hereto execute this Agreement;

                  (b) the Payoff Approval Order shall have been entered and
shall be final, in full force and effect, and shall provide that the Debtors are
authorized and, subject to the conditions set forth in this Agreement, directed
to enter into the transactions contemplated by this Agreement and to execute and
deliver all documents and perform all acts necessary or appropriate to
effectuate the Transaction with the Company;

                  (c) the ten-day period for filing a notice of appeal with
respect to the Payoff Approval Order under Rule 8002(a) of the Bankruptcy Rules
has passed and no appeal has been. filed or extension of the appeal period
pursuant to Bankruptcy Rule 8002(b) has occurred; and

                  (d) All other conditions set forth in this Agreement have been
satisfied.

         7. RELEASES.

         (a) COMPANY RELEASE. In connection with and as a condition to the
consummation of the Transaction, and as a material inducement to the Debtors,
the SPVs and USB to agree to the Transaction, the Company releases and forever
discharges, effective upon the delivery of the Payoff Consideration as provided
for herein, the Debtors, the SPVs, USB, the Noteholders and their respective
Affiliates and each of their respective officers, directors, managers, members,
agents, employees, attorneys, predecessors, shareholders, successors and assigns
(collectively, the "Released Parties") from any and all causes of action,
claims, suits, claims for sums of money, contracts, controversies, agreements,
costs, damages, judgments, disputes and demands whatsoever, whether in law or
equity, of the Company against, with respect to or involving any of the Released
Parties, whether known or unknown, foreseen or unforeseen, which the Company may
have or have had or may in the future have against any of the Released Parties
arising under, or with respect to the Contracts. Notwithstanding the foregoing,
nothing contained herein shall be construed as effectuating a release on any
claim arising under or related to this Agreement.

                                        4

<PAGE>

         (b) DEBTORS', SPVS, AND USB RELEASE. In connection with and as a
condition to the consummation of the Transaction, and as a material inducement
to the Company to agree to the Transaction, the Debtors, the SPVs and USB,
solely in its capacity as Trustee and Servicing Agent of the SPV Contracts,
release and forever discharge, effective upon the delivery of the Payoff
Consideration as provided for herein, the Company and its Affiliates and their
respective officers, directors, managers, members, agents, employees, attorneys,
predecessors, shareholders, successors and assigns (collectively, the "Company
Released Parties") from any and all causes of action, claims, suits, claims for
sums of money, contracts, controversies, agreements, costs, damages, judgments,
disputes and demands whatsoever, whether in law or equity, of the Company
against, with respect to or involving any of the Company Released Parties,
whether known or unknown, foreseen or unforeseen, which the Debtors, the SPVs
and USB solely in its capacity as Trustee and Servicing Agent of the SPV
Contracts may have or have had or may in the future have against any of the
Company Released Parties and arising under, or with respect to the Contracts.
Notwithstanding the foregoing, nothing contained herein shall be construed as
effectuating a release on any claim arising under or related to this Agreement.

         8. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby
represents and warrants to the Debtors, the SPVs and USB and each Affiliate
thereof that upon execution of this Agreement:

         (a)      it has full power and authority to execute and deliver this
                  Agreement;

         (b)      this Agreement constitutes the legal, valid and binding
                  obligation of the Company, enforceable against it in
                  accordance with its terms;

         (c)      the Contracts are the only indebtedness owed by it to the
                  Debtors, the SPVs and/or any Affiliates of thereof;

         (e)      it is the owner of all claims that are covered by this
                  Agreement that have been or may be asserted by it and that are
                  released hereby and that it has not assigned or otherwise
                  transferred and will not assign or otherwise transfer any such
                  claims to any other Person;

         (f)      no person or entity other than the Company, its successors or
                  assigns has any interest in the claims, obligations, actions,
                  demands, rights, costs, expenses, compensation, or causes of
                  action for damages or other relief referred to in this
                  Agreement;

         (g)      no further consents, approvals or orders of any kind or nature
                  are required to make this Agreement complete, final and
                  binding other than entry of the Payoff Approval Order; and

         (h)      it has cash available on hand, or will have permitted
                  borrowing capacity under facilities or equity or debt based
                  financing commitments that together are sufficient to enable
                  it to deliver the Payoff Consideration and other consideration
                  described herein at the Effective Date

                                        5

<PAGE>

         (i)      the Person executing this Agreement is the duly authorized
                  representative of the Company with full power and authority to
                  enter into this Agreement and bind the Company.

         9. REPRESENTATIONS AND WARRANTIES OF DEBTORS, THE SPVS AND USB AS
TRUSTEE AND AS SERVICING AGENT OF THE SPV CONTRACTS. The Debtors and USB as
Trustee and Servicing Agent of the SPV Contracts hereby respectively represent
and warrant to the Company that upon entry of the Payoff Approval Order:

                  (a) the Debtors and USB as Trustee and as Servicing Agent of
         the SPV Contracts respectively has full power and authority to execute
         and deliver this Agreement;

                  (b) this Agreement constitutes the legal, valid and binding
         obligation of the respective parties in accordance with its terms.

         10. TERMINATION. This Agreement may be terminated at any time prior to
the Effective Date:

                  (a) by the mutual written consent of the parties;

                  (b) by the Debtors if the Debtors have reason to believe that
         the Company does not have the financial resources necessary to
         consummate the Transaction; or

                  (c) by either the Debtors or USB or the Company upon notice to
         the other parties hereto if (i) the Bankruptcy Court has not entered
         the Payoff Approval Order on or before March 31, 2004; or (ii) the
         Effective Date shall not have occurred on or before April 30, 2004.

         11. RELEASE OF SECURITY INTERESTS; UCC TERMINATION STATEMENTS. Upon
receipt of the Payoff Consideration, all guaranties, suretyships, Liens
(including security interests in all Collateral) and all right, title and
interest in and to the assets, business, properties and rights of the Company,
its subsidiaries and any other individuals or entity that have been granted,
pledged, conveyed, transferred and set over to the Debtors or the SPVs pursuant
to any Contract or to otherwise secure repayment of the Company's obligations
under the Contracts shall automatically be released, terminated and of no
further force and effect without requiring further action of the Debtors, USB or
the SPVs. Upon payment of the Payoff Amount by the Company pursuant to the Wire
Instructions, the Company by or through its attorneys is authorized to file
termination statements terminating all UCC financing statements on file that
relate to the Contracts and the Debtors, the SPVs and USB hereby agree to
deliver promptly to the Company, (a) originally executed releases any other
liens granted to the Debtors or the SPVs relating to the Contracts and (b)
possessory Collateral in the possession of the Debtors, USB or the SPVs pledged
as Collateral to secure repayment of the Contracts. The Debtors and/or USB also
agree to execute and deliver such other releases, documents and agreements as
the Company may reasonably request to evidence the foregoing release.

                                        6

<PAGE>

         12. FURTHER ASSURANCES. The Debtors, the SPVs and USB agree to use
their best efforts to cause any and all Affiliates of Debtors and the SPVs to
take any and all actions necessary or appropriate to consummate the terms of the
Transaction.

         13. DEFINITIONS.

         In addition to the terms defined elsewhere in this Agreement (including
the Preamble and the Recitals), the following terms shall have the following
meanings when used in this Agreement:

         "ACTION" shall mean any claim, dispute, demand, cause of action or
action asserted in any arbitration, litigation, adversary proceeding, mediation,
suit, investigation or other proceeding and any appeal therefrom.

         "AFFILIATE" shall mean, with respect to any Person, any Person which,
directly or indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with, such Person. As used in this
definition, the term "control" (including the terms "controlled by" and "under
common control with") means the possession, directly or indirectly, of the power
to (a) vote one-third (1/3) or more of the voting power of the outstanding
voting securities of such Person, or (b) otherwise direct the management
policies of such Person by contract or otherwise.

         "COLLATERAL" shall mean the collateral in which the Debtors or SPVs
have been granted a Lien pursuant to the Pledge or Security Agreement and any
and all security of any kind for or in respect of the Contracts.

         "GOVERNMENTAL AUTHORITY" shall mean any foreign, federal, state, local
or other governmental, administrative or regulatory authority, body, agency,
court, tribunal or similar entity including any arbitrator or arbitration panel,
including, without limitation, the Bankruptcy Court.

         "LAW" shall mean any law, statute, rule, regulation, ordinance,
standard, requirement, administrative ruling, order or process promulgated by
any Governmental Authority as in effect from time to time (including, without
limitation, any zoning or land use law or ordinance, building code, securities,
blue sky, civil rights or occupational health and safety law or regulation and
any court, administrative agency or arbitrator's order or process).

         "LIEN" shall mean any mortgage, pledge, hypothecation, assignment,
deposit arrangement, security interest, encumbrance, lien (statutory or other),
preference, priority, or other security agreement or preferential arrangement,
of any kind or nature whatsoever.

         "PAYOFF APPROVAL MOTION" shall mean the Debtor's motion filed with the
Bankruptcy Court seeking approval of the Payoff Approval Order.

         "PAYOFF APPROVAL ORDER" shall mean an older of the Bankruptcy Court
customary for a discounted payoff transaction similar to the Transaction
contemplated herein, substantially in the form and substance of the order
attached hereto as SCHEDULE III.

                                       7

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         "PERSON" shall mean any individual, general or limited partnership,
corporation, limited liability company, association, business trust, joint
venture, Governmental Authority, business entity.

         14. NOTICES. Unless otherwise specifically provided herein, any notice
or other communication required or permitted to be given hereunder will, be in
writing and addressed to the respective party as set forth below its signature
hereunder, or to such other address as the party may designate in writing to the
other.

         15. PURPOSE. The parties hereto acknowledge and agree that this
Agreement is made in order to compromise and settle disputed claims between and
among all parties, so as to avoid time-consuming litigation, and the burden,
inconvenience and expense associated therewith, and without admission of any
liability or wrongdoing by any party hereto with respect to any matters.

         16. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Company shall survive the Effective Date.

         17. ASSIGNMENT: SUCCESSORS. This Agreement and all of the terms and
provisions hereof shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and assigns. Prior to the Effective Date,
neither this Agreement nor any of the rights, interests or obligations hereunder
may be assigned by the any of the parties.

         18. GOVERNING LAW.

         (a) THIS AGREEMENT AND THE RIGHTS AND DUTIES OF THE PARTIES HERETO
SHALL BE GOVERNED BY THE LAWS OF STATE OF DELAWARE (WITHOUT REGARD TO PRINCIPLES
OF CONFLICTS OF LAW).

         (b) Until the entry of an order either closing or dismissing the
Bankruptcy Cases, each party hereto (i) irrevocably elects as the sole judicial
forum for the adjudication of any matters arising under or in connection with
the Agreement, and consent to the exclusive jurisdiction of, the Bankruptcy
Court; (ii) expressly waives any defense or objection to jurisdiction or venue
based on the doctrine of forum non-conveniens; and (iii) stipulates that the
Bankruptcy Court shall have in personam jurisdiction and venue over such party.

         (c) After the entry of an order either closing or dismissing the
Bankruptcy Cases, each party to this Agreement hereby irrevocably submits to the
exclusive jurisdiction of any Delaware federal court (a "Delaware Court") in any
Action arising out of or relating to this Agreement, and each such party hereby
irrevocably agrees that all claims in respect of such Action shall be heard and
determined in such Delaware Court. Each party, to the extent permitted by
applicable Laws, hereby expressly waives any defense or objection to
jurisdiction or venue based on the doctrine of forum non-conveniens, and
stipulates that any Delaware Court shall have in personam jurisdiction and venue
over such party for the purpose of litigating any dispute or controversy between
the parties arising out of or related to this Agreement. In the event any party
shall commence or maintain any Action arising out of or related to this
Agreement in a forum other than an Delaware Court, the other party shall be
entitled to request the dismissal or stay of such Action, and each such party
stipulates for itself that such Action shall be dismissed or stayed. To the
extent that any party to this Agreement has or hereafter may

                                        8

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acquire any immunity from jurisdiction of any Delaware Court or from any legal
process (whether through service or notice, attachment prior to judgment,
attachment in aid of execution or otherwise) with respect to itself or its
property, each such party hereby irrevocably waives such immunity.

         (d) After the entry of an order either closing or dismissing the
Bankruptcy Cases, each party irrevocably consents to the service of process of
any of the Delaware Courts in any such Action by any means permitted by the
rules applicable in such Delaware Court including, if permissible, personal
delivery of the copies thereof or by the mailing of the copies thereof by
certified mail, return receipt requested, postage prepaid, to it as its address
specified herein, such service to become effective upon the earlier of (i) the
date ten (10) calendar days after such mailing or (ii) any earlier date
permitted by applicable Law.

         (e) THE PARTIES HERETO HEREBY EXPRESSLY WAIVE ANY RIGHT TO A TRIAL BY
JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHT, POWER, OR
REMEDY UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE CONTEMPLATED
TRANSACTIONS OR UNDER OR IN CONNECTION WITH ANY AMENDMENT, INSTRUMENT, DOCUMENT,
OR AGREEMENT DELIVERED OR WHICH MAY IN THE FUTURE BE DELIVERED IN CONNECTION
HEREWITH OR THEREWITH OR ARISING FROM ANY RELATIONSHIP EXISTING IN CONNECTION
WITH THIS AGREEMENT OR ANY CONTEMPLATED TRANSACTION, AND AGREE THAT ANY SUCH
ACTION SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY. THE TERMS AND
PROVISIONS OF THIS SECTION CONSTITUTE A MATERIAL INDUCEMENT FOR THE PARTIES
ENTERING INTO THIS AGREEMENT.

         19. ENTIRE AGREEMENT. This Agreement contains the entire agreement and
understanding of the parties with respect to the matters discussed herein,
supersedes all prior agreements and understandings between the parties on these
particular issues, is intended to be a binding agreement between the parties and
shall not be changed, modified, amended, extended, terminated, waived, or
discharged except by an instrument signed in writing by all the parties hereto.
Additionally, the consideration recited herein is the full, complete and entire
consideration for this Agreement, and there is to be no further consideration to
be exchanged by any party hereto.

         20. AGREEMENT NOT SEVERABLE. Should any material provision of this
Agreement be deemed unenforceable or void by a court of competent jurisdiction,
this Agreement shall be null and void in its entirety.

         21. COUNTERPARTS. This Agreement may be executed in counterparts, each
of which shall be an original or facsimile, but all of which together shall
constitute one of the same instrument.

                  [Remainder of Page Intentionally Left Blank.
                            Signature Page Follows.]

                                        9

<PAGE>

         IN WITNESS WHEREOF, the patsies have executed this Settlement, Release
and Compromise Agreement as of the date first written above.

COMPANY:                                     DEBTORS:

RADNET MANAGEMENT, INC.                      DVI FINANCIAL SERVICES, INC.

By: /s/ Howard G. Berger, MD                 By: /s/ John P. Boyle
Name: Howard G. Berger, MD                   Name: John P. Boyle
Title: President & CEO                       Title: VP and CEO

TRUSTEE:                                     DVI, INC.

US BANK, NATIONAL ASSOCIATION
As Trustee

By: /s/ signature                            By: /s/ John P. Boyle
Name:                                        Name: John P. Boyle
Title:                                       Title: VP and CEO

RELATED PARTIES:

HOWARD G. BERGER, M.D.                       DVI BUSINESS CREDIT CORPORATION
As an authorized representative
of the Related Parties

By: /s/ Howard G. Berger, MD                 By: /s/ G. Alexander Cole
                                             Name: G. Alexander Cole
                                             Title: VP & Chief Credit Officer

SPVs:

LYON FINANCIAL SERVICES, INC. d/b/a          DVI RECEIVABLES VIII, INC. as the
US Bancorp Portfolio Services,               sole member and manager of the SPVs
as Agent and Attorney in Fact for            as Agent and Attorney in Fact for
the SPVs                                     the SPVs

By: /s/ signature                            By: /s/ John P. Boyle
Name:                                        Name: John P. Boyle
Title:                                       Title: VP and CEO

DVI BUSINESS CREDIT RECEIVABLES              EQUIPMENT CORPORATIONS as defined
CORPORATION III                              herein by their respective
                                             authorized representative

By: /s/ G. Alexander Cole                    By: /s/ John P. Boyle
Name: G. Alexander Cole                      Name: John P. Boyle
Title: President                             Title: VP and CEO

                                       10
<PAGE>

                                   SCHEDULE I
                                   ----------

                                WIRE INSTRUCTIONS

                            TO BE SUPPLIED BY DEBTORS

                                       11
<PAGE>

                                   SCHEDULE II
                       ALLOCATION OF PAYOFF CONSIDERATION
                       ----------------------------------

   OWNED CONTRACTS (DVIFS)                              $13,600,000
   SPV CONTRACTS                                        $54,700,000
   DVIBC CONTRACTS                                      $ 4,400,000(4)

---------------
(4) Plus or minus the adjustment as described in paragraph 2.

                                       12
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                                  SCHEDULE III
                                  ------------

                              PAYOFF APPROVAL ORDER
                              ---------------------

                      IN THE UNITED STATES BANKRUPTCY COURT
                          FOR THE DISTRICT OF DELAWARE

In re:                               ) Chapter 11
                                     )
DVI, INC.,                           ) Case Nos. 03-12656
DVI FINANCIAL SERVICES INC. and      ) through 03-12658
DVI BUSINESS CREDIT CORPORATION,     )
                                     ) Jointly Administered
           Debtors.
                                        Hearing Date: March 2, 2004 @ 10:30 a.m.
                                        Response Date: Jan. 28, 2004

                     ORDER APPROVING COMPROMISE BETWEEN THE
         DEBTOR AND RADNET MANAGEMENT INC. AND RELATED ENTITIES [DOCKET
                                      1161]

         Upon consideration of the Motion of DVI Financial Services Inc.
("DVIFS") For Entry of an Order Approving Settlement Between the DVIFS and
Radnet Management, Inc. and Related Entities Pursuant to Federal Rule of
Bankruptcy Procedure 9019 (the "Motion") and any objections that may have been
filed to the Motion, and it appearing that the compromise outlined in the
Motion, as amended hereby, is fair and reasonable and in the best interests of
the Debtors' estates and their respective creditors, it is hereby

         ORDERED as follows:

         1.       The Motion is granted.

         2.       The definition of "Contracts" in the Motion shall include
                  contract number 001-0003441-011.

         3.       The Payoff Amount as defined in the Motion shall be no less
                  than $13,600,000.

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         4.       The Settlement is approved in its entirety and the terms and
                  provisions of the Settlement are incorporated herein by
                  reference,

         5.       DVIFS is authorized and, subject to the conditions set forth
                  in the Settlement and Compromise Agreement, directed to enter
                  into the transactions contemplated by the Settlement and
                  Compromise Agreement and to execute and deliver all documents
                  and perform all acts necessary or appropriate to effectuate
                  the Settlement and Compromise Agreement with the Company
                  without further Order of Court.

         6.       Capitalized terms not defined or amended herein shall have the
                  meaning as set forth in the Motion.

                                        BY THE COURT:

                                        MARY F. WALRATH
                                        CHIEF U.S. BANKRUPTCY JUDGE

Dated:

                                       14
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                             EXHIBIT A (page 1 of 4)
                             -----------------------

                              FINANCING AGREEMENTS

001-0000002-002          DIAGNOSTIC IMAGING SERVICES, INC.
001-0001231-037          RADNET MANAGEMENT, INC.
001-0001231-051          RADNET MANAGEMENT, INC.
001-0002785-002          RADNET MANAGEMENT I, INC.
001-0003155-002          RADNET MANAGEMENT, INC.
001-0003155-012          RADNET MANAGEMENT, INC.
001-0003155-015          RADNET MANAGEMENT, INC.
001-0003155-016          RADNET MANAGEMENT, INC.
001-0003155-028          RADNET MANAGEMENT, INC.
001-0003155-029          RADNET MANAGEMENT, INC.
001-0003155-030          RADNET MANAGEMENT, INC.
001-0003155-031          RADNET MANAGEMENT, INC.
001-0003155-032          RADNET MANAGEMENT, INC.
001-0003155-033          RADNET MANAGEMENT, INC.
001-0003155-034          RADNET MANAGEMENT, INC.
001-0003155-035          RADNET MANAGEMENT, INC.
001-0003155-036          RADNET MANAGEMENT, INC.
001-0003155-037          RADNET MANAGEMENT, INC.
001-0003155-038          RADNET MANAGEMENT, INC.
001-0003441-009          DIAGNOSTIC IMAGING SERVICES, INC.

                                       15

<PAGE>

                             EXHIBIT A (page 2 of 4)
                             -----------------------

                              FINANCING AGREEMENTS
                              --------------------

001-0003441-010          HEALTHCARE IMAGING CENTER
001-0003441-011          NORTH COUNTY IMAGING
001-0003502-007          STOCKTON IMAGING
001-0003502-008          SANTA CLARITA IMAGING
001-0003502-009          RADNET MANAGEMENT, INC.
021-0000873-007          DIAGNOSTIC IMAGING SERVICES, INC.
021-0001231-032          RADNET MANAGEMENT, INC.
021-0001231-041          RADNET MANAGEMENT, INC.
023-0003024-003          RADNET MANAGEMENT II, INC.
024-0001231-034          RADNET MANAGEMENT, INC.
024-0001231-035          RADNET MANAGEMENT, INC.
024-0003155-007          RADNET MANAGEMENT, INC.
024-0003155-008          RADNET MANAGEMENT, INC.
025-0001231-040          RADNET MANAGEMENT, INC.
025-0001231-042          RADNET MANAGEMENT, INC.
025-0001231-043          RADNET MANAGEMENT, INC.
025-0001231-044          RADNET MANAGEMENT, INC.
025-0002661-001          SOCAL MR SITE MANAGEMENT, INC.
025-0002661-004          SOCAL MR SITE MANAGEMENT, INC.
026-0001231-045          RADNET MANAGEMENT, INC.

                                       16

<PAGE>

                             EXHIBIT A (page 3 of 4)
                             -----------------------

                              FINANCING AGREEMENTS
                              --------------------

026-0001231-046          RADNET MANAGEMENT, INC.
026-0002661-002          SOCAL MR SITE MANAGEMENT, INC.
026-0002661-003          SOCAL MR. SITE MANAGEMENT, INC.
026-0002785-001          RADNET MANAGEMENT I, INC.
029-0000873-011          DIAGNOSTIC IMAGING SERVICES
029-0003155-006          RADNET MANAGEMENT, INC.
029-0003155-010          RADNET MANAGEMENT, INC.
029-0003218-001          ANTELOPE VALLEY MRI
029-0003222-001          TEMECULA VALLEY IMAGING
029-0003225-001          IMAGING CENTER OF LA HABRA
029-0003230-001          SANTA ROSA IMAGING
030-0003024-001          RADNET MANAGEMENT II, INC.
030-0003024-002          RADNET MANAGEMENT II, INC.
030-0003155-013          RADNET MANAGEMENT, INC.
030-0003441-001          DIAGNOSTIC IMAGING SERVICES
031-0002839-002          SAN GABRIEL IMAGING CENTER
031-0003155-001          RADNET MANAGEMENT, INC.
031-0003155-011          RADNET MANAGEMENT I, INC.
031-0003441-005          MEDICAL DIAGNOSTIC IMAGING
031-0003441-008          DIAGNOSTIC IMAGING SERVICES, INC.

                                       17
<PAGE>

                             EXHIBIT A (page 4 of 4)
                             -----------------------

                              FINANCING AGREEMENTS
                              --------------------

031-0003502-001          RADNET MANAGEMENT, INC.
031-0003502-005          ONCOLOGY SERVICES
031-0003564-001          TOWER IMAGING
032-0001231-047          RADNET MANAGEMENT, INC.
032-0001231-048          RADNET MANAGEMENT, INC.
032-0001232-010          RADNET SUB, INC
032-0003441-003          DIAGNOSTIC IMAGING SERVICES
032-0003502-002          ANTELOPE VALLEY IMAGING
084-0003155-003          RADNET MANAGEMENT, INC.
084-0003155-004          RADNET MANAGEMENT, INC.
084-0003155-009          RADNET MANAGEMENT, INC.
083-0003155-014          RADNET MANAGEMENT, INC.
083-0003155-017          RADNET MANAGEMENT, INC.
083-0003155-018          RADNET MANAGEMENT, INC.
083-0003155-019          RADNET MANAGEMENT, INC.
083-0003441-012          RADNET MANAGEMENT, INC.
83-1231-49               RADNET MANAGEMENT, INC.
83-1231-50               RADNET MANAGEMENT, INC.

                                       18

<PAGE>

                                     RADNET
                                MANAGEMENT, INC.
                                ----------------

April 28, 2004

VIA FACSIMILE
-------------

DVI Financial Services
2500 York Road
Jamison, PA 18929

         Re:      Settlement and Compromise Agreement
                  Dated March 15, 2004 Between Radnet Management, Inc.
                  And its related Parties and DVI, Inc. et al. (the "Settlement
                  Agreement")

Gentlemen:

         This will confirm that Radnet Management, Inc., and its Related Parties
(the "Company") has requested DVI Financial Services Inc. ("DVIFS") to agree not
to exercise its right to terminate the Settlement Agreement between April 30,
2004 and July 1, 2004 to allow the Company additional time to secure its
financing.

         This will also confirm that DVIFS has agreed to the Company's request
conditioned upon a payment to DVIFS in the amount of $100,000 (the "Extension
Fee"). The Extension Fee is due on or before May 1, 2004, by wire transfer. The
Extension Fee will be non-refundable and will not be credited against the Payoff
Consideration on the Effective Date. In addition, if the Effective Date does not
occur by May 31, 2004, the portion of the Payoff Consideration relating to the
DVIFS Owned Contracts in the amount of $13,600,000 shall bear interest starting
June 1, 2004 at $6,800 per day (18 percent per annum) until paid or until the
Settlement Agreement is terminated.

         Nothing herein shall be construed as a waiver of DVIFS's right to
terminate the Settlement Agreement prior to July 1, 2004: a) upon the mutual
written consent of the parties; or b) if DVIS has good reason to believe that
the Company will not have the financial resources necessary to sonsummate the
Transaction by July 1, 2004. If the Settlement Agreement is terminated by any
party prior to the Effective Date, the parties acknowledge that notwithstanding
anything set forth herein or in the Settlement Agreement, the Company is
responsible for the payment of the full amount due and owing under the Financing
Agreements including all interest.

<PAGE>

DVI Financial Services
April 28, 2004
Page Two

         Capitalized terms not otherwise defined herein shall have the same
meaning as set forth in the Settlement Agreement.

         If the foregoing accurately sets forth our understanding, kindly
evidence your assent to the terms and conditions herein set forth by causing a
copy of this letter to be signed, dated and returned to the undersigned.

                                             Radnet Management, Inc.
                                             and Related Parties

                                             By: /s/ Howard Berger, M.D.
                                                 -------------------------------
                                                 Howard Berger, M.D.,
                                                 Authorized Representative
                                                 and/or President

Accepted and agreed as of this 29
day of April, 2004.

DVI Financial Services Inc.

    /s/ Montgomery W. Cornell
    -------------------------
    Name: Montgomvery W. Cornell
    Title: Authorized Signatory

<PAGE>

                                     RADNET
                                MANAGEMENT, INC.
                                ----------------

April 28, 2004

VIA FACSIMILE 507-537-5201
--------------------------

Joe Andries
US Bank Portfolio Services
1301 Madrid Street
Marshall, Minnesota 56258

         Re:      Settlement and Compromise Agreement
                  Dated March 15, 2004 Between Radnet Management, Inc.
                  And its related Parties and DVI, Inc. et al. (the "Settlement
                  Agreement")

Dear Mr. Andries:

         This will confirm that Radnet Management, Inc., and its Related Parties
(the "Company") has requested USB to agree not to exercise its right to
terminate the Settlement Agreement between April 30, 2004 and July 1, 2004 to
allow the Company additional time to secure its financing.

         This will also confirm that USB has agreed to the Company's request
conditioned upon a payment to USB in the amount of $100,000 (the "Extension
Fee"). The Extension Fee is due on or before May 1, 2004, by wire transfer. The
Extension Fee will be non-refundable and will not be credited against the Payoff
Consideration on the Effective Date. In addition, if the Effective Date does not
occur by May 31, 2004, USB, in connection with the SPV Contracts will receive,
in addition to their share of the Payoff Consideration, payment of $5,000 per
day (a rate of $150,000 per month) until paid or until the Settlement Agreement
is terminated.

         Nothing herein shall be construed as a waiver of USB's right to
terminate the Settlement Agreement prior to July 1, 2004 upon the mutual written
consent of the parties. If the Settlement Agreement is terminated by any party
prior to the Effective Date, the parties acknowledge that notwithstanding
anything set forth herein or in the Settlement Agreement, the Company is
responsible for the payment of the full amount due and owing under the Financing
Agreements including all interest.

<PAGE>

Mr. Joe Andries
US Bank Portfolio Services
April 28, 2004
Page Two

         Capitalized terms not otherwise defined herein shall have the same
meaning as set forth in the Settlement Agreement.

         If the foregoing accurately sets forth our understanding, kindly
evidence your assent to the terms and conditions herein set forth by causing a
copy of this letter to be signed, dated and returned to the undersigned.

                                             Radnet Management, Inc.
                                             and Related Parties

                                             By: /s/ Howard Berger, M.D.
                                                 -------------------------------
                                                 Howard Berger, M.D.,
                                                 Authorized Representative
                                                 and/or President

Accepted and agreed as of this 29
day of April, 2004.

USB /s/ Joseph Andries
    -------------------------
    Joseph Andries
    Senior Vice President<PAGE>
                                                                   EXHIBIT 10.1

                          CONSULTING SERVICES AGREEMENT

         This Consulting Services Agreement ("Agreement"), dated
April__________________15th,____ 2004, is made by and between Timothy J.
Connolly ("Consultant"), whose address is 1770 St. James Place, Ste 116,
Houston, Texas 77056 and Power Technology, Inc. ("Company"), having its
principal place of business at 15 Ocean View Road, B.C. VON 2E0, Canada
collectively, the "Parties"). THIS Agreement supersedes and replaces any prior
Agreements in place between the Parties.

         WHEREAS, Company is a corporation and desires to further develop its
business and customers;

         WHEREAS, Consultant has extensive background in the area of business
consulting, development, outside accounting and legal personnel, identification,
and hiring, and management advisory services; and

         WHEREAS, Company desires to engage Consultant to provide information,
evaluation and consulting services to Company in Consultant's area of knowledge
and expertise on the terms and subject to the conditions set forth herein.

         NOW, THEREFORE, in consideration for those services Consultant provides
to Company, the Parties agree as follows:

1.       SERVICES OF CONSULTANT

         Consultant agrees to perform for Company all necessary services
required in providing general business strategic consulting and management
advisory services for Company as more specifically set forth in Exhibits A and B
attached hereto. The services to be provided by Consultant will not be in
connection with the offer or sale of securities in a capital-raising
transaction, and will not directly or indirectly promote or maintain a market
for Company's securities. Timothy J. Connolly will primarily provide the
services in conjunction with technical professional who will act only under his
direct supervision. The Consultant shall provide sixteen hours of consulting
monthly. There shall be no credit or carrying over of unused hours from month to
month.

2.       CONSIDERATION

         o        Company agrees to pay Consultant, as its fee and as
                  consideration for services provided $5,000 per month paid
                  quarterly in advance. These payments will be made in cash for
                  a period of 12 months, or at the option of consultant, paid in
                  shares of the Company's common stock if publicly traded at the
                  lower of $.01 per share or 1/2 the closing price on the date
                  immediately prior to Consultant's election to be paid in
                  stock.

<PAGE>

         o        The Company grants Consultant warrants for the right to
                  purchase up to 5,000,000 shares of the common stock of the
                  Company at $.01 per share upon demand for two years from the
                  date of this Agreement.

         o        Consultant will not own more than 4.9% of the Company at any
                  time, unless mutually agreed by Consultant and Company. The
                  Company shall not take any steps that would cause Consultant
                  to ever own more than 4.9% of common shares outstanding
                  without Consultant's specific prior written permission.

         All the shares and underlying the options or warrants rights under this
Agreement will be registered upon demand by Consultant on a Form S-8
Registration Statement or such other form as appropriate to the requirements of
the exchange under which the Company's stock is trading and filed with and
declared effective (if required) by the U.S. Securities and Exchange Commission.
The underlying shares, upon issuance, shall be issued in the name of the
Consultant.

3.       EXPENSES

         Company agrees to reimburse Consultant for all reasonable out of pocket
expenses previously agreed in advance by Company.

4.       CONFIDENTIALITY

         Each Party agrees that during the course of this Agreement, information
that is confidential or of a proprietary nature may be disclosed to the other
party, including, but not limited to, product and business plans, software,
technical processes and formulas, source codes, product designs, sales, costs
and other unpublished financial information, advertising revenues, usage rates,
advertising relationships, projections, and marketing data ("Confidential
Information"). Confidential Information shall not include information that the
receiving party can demonstrate (a) is, as of the time of its disclosure, or
thereafter becomes part of the public domain through a source other than the
receiving party, (b) was known to the receiving party as of the time of its
disclosure, (c) is independently developed by the receiving party, or (d) is
subsequently learned from a third party not under a confidentiality obligation
to the providing party.

5.       LATE PAYMENT

         Company shall pay to Consultant all fees within 30 days of the due
date. Failure of Company to finally pay any fees within 30 days after the
applicable due date shall be deemed a material breach of this Agreement,
justifying suspension of the performance of the "Services" provided by
Consultant, will be sufficient cause for immediate termination of this Agreement
by Consultant. Any such suspension will in no way relieve Company from payment
of fees, and, in the event of collection enforcement, Company shall be liable
for any costs associated with such collection, including, but not limited to,
legal costs, attorneys' fees, courts costs, and collection agency fees.

                                       2

<PAGE>

6.       INDEMNIFICATION

(a)      COMPANY

         Company agrees to indemnify, defend, and hold harmless Consultant, its
directors, officers, employees, attorneys, and agents, and to defend any action
brought against said parties with respect to any and all claims, demands, causes
of action, debts or liabilities, including reasonable attorneys' fees, arising
out of work performed under this Agreement, including breach of Company of this
Agreement, unless caused by the actions of Consultant.

(b)      CONSULTANT

         Consultant agrees to indemnify, defend, and shall hold harmless
Company, its directors, officers, employees, attorneys, and agents, and defend
any action brought against same with respect to any claim, demand, cause of
action, debt or liability, including reasonable attorneys' fees, to the extent
that such an action arises out of the negligence or willful misconduct of
Consultant, including breach by Consultant of the Agreement.

(c)      NOTICE

         In claiming any indemnification hereunder, the indemnified party shall
promptly provide the indemnifying party with written notice of any claim, which
the indemnified party believes falls within the scope of the foregoing
paragraphs. The indemnified party may, at its expense, assist in the defense if
it so chooses, provided that the indemnifying party shall control such defense,
and all negotiations relative to the settlement of any such claim. Any
settlement intended to bind the indemnified party shall not be final without the
indemnified party's written consent, which shall not be unreasonably withheld,

7.       LIMITATION OF LIABILITY

         Unless Consultant is found to be grossly negligent Consultant shall
have no liability with respect to Consultant's obligations under this Agreement
or otherwise for consequential, exemplary, special, incidental, or punitive
damages even if Consultant has been advised of the possibility of such damages.
IN any event, the liability of Consultant to Company for any reason and upon any
cause of action, regardless of the form in which the legal or equitable action
may be brought, including, without limitation, any action in tort or contract,
shall not exceed 100% of the cash value of the monthly fee paid by Company to
Consultant for the specific service provided that is in question. The value of
any options or warrants granted under this Agreement are specifically excluded
from the cash value paid under the terms of this agreement,

                                       3

<PAGE>

8.       TERMINATION AND RENEWAL

(a)      TERM

         This Agreement shall become effective on the date appearing next to the
signatures below and terminate two years thereafter.

(b)      TERMINATION

         Either Party may terminate this Agreement if the other party materially
breaches any of its representations, warranties or obligations under this
Agreement. Except as may be otherwise provided in this Agreement, such breach,
by either party will result in. the other party being responsible to reimburse
the non-defaulting party for all costs incurred directly as a result of the
breach of this Agreement, and shall be subject to such damages as may be allowed
by law including all attorneys' fees and costs of enforcing this Agreement.

(c)      TERMINATION AND PAYMENT

         Consultant shall have the right to terminate this agreement with 90
days notice during its term. Upon any termination or expiration of this
Agreement, Company shall pay all unpaid and outstanding fees through the
effective date of termination or expiration of this Agreement. Upon such
termination, Consultant shall provide and deliver to Company any and all
outstanding services due through the effective termination date of this
Agreement.

9.        MISCELLANEOUS

(a)      INDEPENDENT CONTRACTOR

         This Agreement establishes an "independent contractor" relationship
between Consultant and Company.

(b)      RIGHTS CUMULATIVE; WAIVERS

         The rights of each of the Parties under this Agreement are cumulative.
The rights of each of the Parties hereunder shall not be capable of being waived
or varied other than by an express waiver or variation in writing. Any failure
to exercise or any delay in exercising any of such rights shall not operate as a
waiver or variation of that or any other such right. Any defective or partial
exercise of any of such rights shall not preclude any other or further exercise
of that or any other such right. No act or course of conduct or negotiation on
the part of any party shall in any way preclude such party from exercising any
such right or constitute a suspension or any variation of any such right.

                                       4

<PAGE>

(c)      BENEFIT: SUCCESSORS BOUND

         This Agreement and the terms, covenants, conditions, provisions,
obligations, undertakings, rights, and benefits hereof, shall be binding upon,
and shall inure to the benefit of, the undersigned parties and their heirs,
executors, administrators, representatives, successors, and permitted assigns.

(d)      ENTIRE AGREEMENT

         This Agreement contains the entire Agreement between the Parties with
respect to the subject matter hereof There are no promises, Agreements,
conditions, undertakings, understandings, warranties, covenants or
representations, oral or written, express or implied, between them with respect
to this Agreement or the matters described in this Agreement, except as set
forth in this Agreement. Any such negotiations, promises, or understandings
shall not be used to interpret or constitute this Agreement.

(e)      ASSIGNMENT

         Neither this Agreement nor any other benefit to accrue hereunder shall
be assigned or transferred by either Party, either in whole or in part, without
the written consent of the other party, and any purported assignment in
violation hereof shall be void. The sole exception of this provision shall be
right of the Consultant to assign this contract to any entity that is majority
owned by the Consultant.

(f)      AMENDMENT

         Only an instrument in writing executed by all the Parties hereto may
amend this Agreement.

(g)      SEVERABILITY

         Each part of this Agreement is intended to be severable. In the event
that any provision of this Agreement is found by any court or other authority of
competent jurisdiction to be illegal or unenforceable, such provision shall be
severed or modified to the extent necessary to render it enforceable and as so
severed or modified, this Agreement shall continue in full force and effect.

(h)      SECTION HEADINGS

         The Section headings in this Agreement are for reference purposes only
and shall not affect in any way the meaning or interpretation of this Agreement.

(i)      CONSTRUCTION

         Unless the context otherwise requires, when used herein, the singular
shall be deemed to include the plural, the plural shall be deemed to include e h
of the singular,

                                       5

<PAGE>

and pronouns of one or no gender shall be deemed to include the equivalent
pronoun of the other or no gender,

(j)      FURTHER ASSURANCES

         In addition to the instruments and documents to be made, executed and
delivered pursuant to this Agreement, the parties hereto agree to make, execute
and deliver or cause to be made, executed and delivered, to the requesting party
such other instruments and to take such other actions as the requesting party
may reasonably require to carry out the terms of this Agreement and the
transactions contemplated hereby.

(k)      NOTICES

         Any notice which is required or desired under this Agreement shall be
given in writing and may be sent by personal delivery or by mail (either a.
United States mail, postage prepaid, or b. Federal Express or similar generally
recognized overnight carrier), addressed as follows (subject to the right to
designate a different address by notice similarly given):

TO COMPANY:

Power Technology, Inc,
15 Ocean View Road
B.C. VON 2EO, Canada 604-925-0716

TO CONSULTANT:

Timothy J. Connolly
1770 St. James Place, Suite 116
Houston, TX 77057
713-621-2737

(1)      GOVERNING LAW

         This Agreement shall be governed by the interpreted in accordance with
the laws of the State of Texas without reference to its conflicts of laws rules
or principles. Each of the parties consents to the exclusive jurisdiction of the
federal courts of the State of Texas in connection with, any dispute arising
under this Agreement and hereby waives, to the maximum extent permitted by law,
any objection, including any objection based on FORUM NON COVENIENS, TO the
bringing of any such proceeding in such jurisdictions.

                                       6

<PAGE>

(m)      CONSENTS

         The person signing this Agreement on behalf of each party hereby
represents and warrants that he has the necessary power, consent and authority
to execute and deliver this Agreement on behalf of such party.

(n)      SURVIVAL OF PROVISIONS

         The provision(s) contained in this Agreement shall survive the
termination of this Agreement for one year from date of termination.

(o)      EXECUTION IN COUNTERPARTS

         This Agreement may be executed in any number of counterparts, each of
which shall be deemed an original and all of which together shall constitute one
and the same Agreement.

         IN WITNESS WHEREOF, the Parties have caused this Agreement to be
executed and have agreed to and accepted the terms herein ON THE DATE WRITTEN
ABOVE.

POWER TECHNOLOGY, INC.

/s/ Lee A Balak
------------------------------------
BY: Lee A Balak, President
ITS: President

[Consultant]

/s/ Timothy J. Connolly
------------------------------------
BY: Timothy J. Connolly

                                       7

<PAGE>

                                    EXHIBIT A

SERVICES

I.       Consultant shall perform the following services pursuant to the terms
         of this Agreement:

         (A) General management strategic consulting services, including but not
limited:. to:

                  (1)      advising on corporate structure;

                  (2)      advising on marketing; and

                  (3)      Developing strategic alliances.

                  (4)      Implementation of financial systems, structures and
                           controls

                  (5)      Retaining Internet traffic engineering services to
                           increase sales and brand identity as shown on the
                           attached Exhibit B

                  (6)      Retaining of appropriate legal and accounting
                           personnel for the Company

         (B) Consulting on matters of the board of directors of the Company,
including but not limited to:

                  (1)      assisting the board of directors in developing
                           policies and procedures; and

                  (2)      assisting the board of directors of the Company in
                           mergers, acquisitions, and other business
                           combinations.

         The above services will be further defined and delineated by the
Company's board of directors from time to time as necessary. However, Consultant
shall not perform any services directly in connection with the offer or sale of
Company securities, financings, or any services in connection with securities or
which directly or indirectly promote or maintain a market for Company's
securities. Any such services must be provided by others under a separate
Agreement with separate compensation.

                                       8

<PAGE>

                                    EXHIBIT B

                    INTERNET TRAFFIC ENGINEERING SERVICES TO
                        INCREASE SALES AND BRAND IDENTITY
           ---------------------------------------------------------

SUMMARY: Traffic Engineering increases sales and public awareness of companies
and their web sites. Services combine PROVEN INTERNET SALES TECHNIQUES with
BRANDING IDENTITY, DEVELOPMENT AND CORPORATE SALES COMMUNICATIONS PROGRAMS.

We identify your Internet audience and develop a sales message that they will
respond to. Your message is built into your web site along with structure and
functionality that drives visitors THROUGH THE SITE to take action.

Then we build numerous "e-highways" that drive traffic to your site. This is
accomplished by customizing proven e-commerce sales techniques to work for your
Company.

Applying web search methods that deliver your message and increase web site
traffic increases sales results, Effectiveness is- enhanced with direct
distribution to targeted sources that are interested in what you do. Our
programs generate exposure featuring your Company, your team, your products and
the solutions you provide.

Traffic Engineering builds roads that drive customers to your site. These roads
and the traffic they produce remain in place, benefiting your Company long after
our services are completed.

                          WEB SITE ENHANCEMENT SERVICES
                          -----------------------------

1)       Perform effectiveness analysis and review of Company sites:

2)       Present options to enhance site structure, layout and content in order
         to develop an effective web site designed to present the Company,
         create action, generate sales and produce increased public awareness

3)       Provide and incorporate new pages and content as needed to enhance site
         image, functionality and effectiveness. New pages to be developed
         include (but are not limited to); Corporate Profile, Growth Plan,
         Management and News

                      CUSTOMER IDENTIFICATION, BRANDING AND
                      -------------------------------------
                      SALES MESSAGE PRESENTATION SERVICES
                      -----------------------------------

1)       Identify the Company's potential Internet audience including; new
         customers to reach, main sales base, solutions offered, funding
         sources, effective sales message, possible Joint Venture avenues

                                       9

<PAGE>

2)       Develop branding identity, sales messages and strategies to reach
         identified Internet audiences

                       SEARCH ENGINE OPTIMIZATiON SERVICES
                       -----------------------------------
                      FOR TOP RANKINGS ON GOOGLE AND YAHOO
                      ------------------------------------

1)       Perform market research to determine "Key Words" that customers will
         use to find the Company

2)       Multiply top key word rankings by inserting specially designed sets of
         META tag code into all of the Company's site page

3)       Advise on site PAGE structure designed to maximize search engine
         placements

4)       Submit site pages to Major Search Engines and selected specialty Search
         Engines

5)       Obtain top Search Engine rankings

6)       Maintain top positions by monitoring, adjusting and conducting
         re-submission programs

                BRAND DEVELOPMENT AND SALES INFORMATION SERVICES
                ------------------------------------------------

1)       Produce Media Coverage Featuring Your Products, Solutions, Management
         Team and Corporate Growth Plan

2)       Utilize proven media editor and writer contact programs to locate,
         communicate and produce free, independent media coverage.

                    POP UNDER SALES AND BRANDING CAMPAIGN TO
                    ----------------------------------------
                       REACH 1,000,000 PLUS NEW PROSPECTS
                       ----------------------------------

1)       Build attention grabbing gateway pages that lead viewers into the
         Company's web sites
2)       Conduct "Pop-Under" advertisement program featuring gateway pages
3)       Monitor and track results to select optimum gateway page
4)       Continue running "Pop Under" advertisement campaign using top gateway
         page
5)       Conduct advertisement program to reach 1.000.000 plus new, unique
         visitors and prospective customers

                                       10

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