Document:

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                             CONFIDENTIAL TREATMENT
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                                                                   EXHIBIT 10.11
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                        SETTLEMENT AND LICENSE AGREEMENT

         This Settlement and License Agreement (this "Agreement") is made and
entered into effective as of the 4th day of March, 2004 (the "Effective Date"),
by and between Intellisync Corp., a Delaware corporation ("Intellisync"), and
Extended Systems Incorporated, a Delaware corporation ("ESI") (each a "party"
and collectively the "parties").

                                    RECITALS

         WHEREAS Intellisync has filed a lawsuit against ESI in the United
States District Court for the Northern District of California, Oakland Division,
Case No C02-1916 DLJ ("the Litigation") concerning Intellisync's allegations,
among other things, that ESI's synchronization software products infringe U.S.
Patent Nos. 5,392,390; 5,666,553; 5,684,990; 5,701,423; 5,943,676; 5,141,664;
6,212,529; and 6,405,218; all of which are owned by Intellisync;

         WHEREAS ESI has threatened, but has not filed, a counterclaim relating
to, among other things, antitrust and unfair competition;

         WHEREAS Intellisync and ESI desire to settle each of the claims
asserted in the Complaint on the terms and conditions respectively set forth in
this Agreement; and

         WHEREAS ESI desires to take certain non-exclusive patent licenses from
Intellisync;

         NOW, THEREFORE, FOR AND IN CONSIDERATION OF THE COVENANTS, CONDITIONS
AND UNDERTAKINGS HEREINAFTER SET FORTH, IT IS HEREBY AGREED BY AND BETWEEN THE
PARTIES AS FOLLOWS:

                                A G R E E M E N T

         1. Definitions.

            "Affiliate" shall mean any legal entity (such as a corporation,
partnership, or limited liability company) which directly or indirectly
controls, is controlled by, or is under common control with a party or its
successors or assigns, or any successor or assign of such an entity. For the
purposes of this definition, the term "control" means (i) beneficial ownership
of at least fifty percent (50%) of the voting securities of a corporation or
other business organization with voting securities or (ii) a fifty percent (50%)
or greater interest in the net assets or profits of a partnership or other
business organization without voting securities.
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            "Licensed Patents" shall mean United States Patents Nos. [***], as
well as all foreign counterpart patents and patent applications thereto; all
reissues, reexaminations, renewals, extensions, divisionals, continuations, and
continuations-in-part of the foregoing patents and patent applications; and any
patents which issue on the foregoing.

            "Licensed Product" shall mean any product, process or service
thereof that, absent the license granted hereunder, would infringe one or more
claims of the Licensed Patents.

         2. License Grants.

            2.1 License Grant. Intellisync hereby grants to ESI a nonexclusive,
worldwide, irrevocable, fully paid-up right and license under the Licensed
Patents (including the right to grant sublicenses only to (1) ESI's Affiliates,
(2) end user customers buying Licensed Products from ESI or its Affiliates, (3)
Original Equipment Manufacturer customers buying Licensed Products from ESI or
its Affiliates, (4) ESI distributors buying for resale Licensed Products from
ESI or its Afffiliates, (5) ESI resellers buying for resale Licensed Products
from ESI or its Affiliates) and (6) Independent Software Vendor (ISV) customers
buying Licensed Products from ESI or its Affiliates), for the respective lives
of each of the Licensed Patents:

               (a) to make, use, lease, sell, offer to sell, import, export, and
otherwise transfer Licensed Products, and to practice any method or process and
use any product involved in the manufacture or use thereof; and

               (b) to have made Licensed Products by another manufacturer for
the use, lease, sale, offer for sale, import, or export by ESI.

            2.2 Covenant Not to Sue. Commencing on the Effective Date and ending
on the fifth anniversary of this Agreement, Intellisync and ESI each hereby
covenant not to sue on the basis of any patent, US or foreign, for the term of
this Agreement, and/or any extensions or renewals thereof, or on any claims
based on breach of the End User License Agreement for Satellite Forms version
4.1 or earlier, against the other party, or its Affiliates, its distributors,
its resellers, its end user customers buying Licensed Products from ESI or its
Affiliates, its Original Equipment Manufacturer customers buying Licensed
Products from ESI or its Affiliates, or its Independent Software Vendor (ISV)
customers buying Licensed Products from ESI or its Affiliates, hereunder for any
claim of patent infringement. No patent infringement damages shall accrue during
this five-year period. All applicable statutes of limitation shall be tolled
during this five-year period. Neither party may at any time assert any cause of
action or defense (such as, by way of example and not by way of limitation,
laches, waiver, or delay) based in any way on the other party's failure to
assert a claim or commence an action during this five-year period.

***     Confidential treatment requested pursuant to a request for confidential
        treatment filed with the Securities and Exchange Commission. Omitted
        portions have been filed separately with the Commission.
<PAGE>

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         3. Consideration.

            3.1 In consideration of the licenses granted and covenants made
herein, ESI shall pay to Intellisync a one-time fee of Two Million dollars
($2,000,000) within two (2) business days from execution of this Agreement; the
parties agree that this payment reflects a royalty of [***] assessed on the
parties' estimate of past and future ESI revenue in respect of Licensed
Products.

            3.2 In partial consideration for Intellisync's grant of licenses
hereunder and the dismissal of the Action, ESI agrees that, for a period of five
years from the Effective Date, it shall not cause or assist, directly or
indirectly, any actions in the United States courts, the U.S. Patent and
Trademark Office, any administrative law body, any foreign patent office, or any
foreign court, which might affect the validity or issuance of any Intellisync
patents or patent applications.

            3.3 In further partial consideration for Intellisync's grant of
licenses hereunder and the dismissal of the Action, ESI agrees that it shall not
voluntarily support, assist, or aid any third party in patent litigation
involving Intellisync.

            3.4 In further partial consideration for Intellisync's grant of
licenses hereunder and the dismissal of the Action, ESI acknowledges the
validity of each of the Licensed Patents, and agrees that it, its Affiliates,
and any of its successors in interest under this Agreement shall not assert the
invalidity of any of the Licensed Patents as a defense to a patent infringement
action.

            3.5 In further partial consideration for Intellisync's grant of
licenses hereunder and the dismissal of the Action, ESI shall mark, or shall
cause to be marked, on the documentation (paper or electronic) accompanying the
next release and all future releases of all Licensed Products with a notice
containing the words "Manufactured and sold under one or more of the following
patents" and the following patent numbers: [***]. Upon the issuance of an
additional patent included in the Licensed Patents, such as a continuation or
continuation-in-part, Intellisync shall notify ESI, and within a practical
period of time, ESI shall mark, or shall cause to be marked, all new production
of Licensed Products with such patent number in a like matter. If either party
experiences a change of control permitted under this Agreement or changes their
name, the terms Intellisync or ESI in this paragraph shall be changed to their
new names in subsequent uses within a commercially reasonable period of time.
Marking products shall not be used as an admission of infringement as to ESI or
any successor in interest.

***     Confidential treatment requested pursuant to a request for confidential
        treatment filed with the Securities and Exchange Commission. Omitted
        portions have been filed separately with the Commission.
<PAGE>

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         4. Settlement of Pending Litigation.

            Within two (2) business days of Intellisync's receipt of the payment
called for in Section 3.1, Intellisync and ESI shall cause to be filed in the
action pending in the United States District Court for the Northern District of
California, Oakland Division (Case No. C02-1916 DLJ) a fully executed stipulated
order in the form attached hereto as Exhibit 1. Each party will bear its own
costs, attorneys' fees, and expenses relating to the Litigation.

         5. Term and Termination.

            5.1 Term. The term of this Agreement shall be from the Effective
Date and remain in effect for a period of five (5) years, unless earlier
terminated in accordance with the provisions of this Agreement.

            5.2 Termination. A party hereto may, but is under no obligation to,
terminate this Agreement upon sixty (60) days written notice of termination to
the other party given at any time upon or after:

               (a) the filing by the other party of a petition in bankruptcy or
insolvency;

               (b) any adjudication that the other party is bankrupt or
insolvent;

               (c) the making by the other party of any assignment for the
benefit of creditors; or

               (d) the institution of any proceedings for the liquidation or
winding up of the other party's business or for the termination of its corporate
charter.

         6. Representations and Warranties.

            6.1 Intellisync Representations and Warranties. Intellisync hereby
represents and warrants to ESI that (i) it has the legal power, authority and
right to enter into this Agreement and to perform all of its obligations
hereunder, and (ii) it has not previously granted, and will not grant, any
rights in the Licensed Patents, the exclusivity provisions of which would be
inconsistent with the rights granted to ESI herein.

            6.2 ESI Representations and Warranties. ESI hereby represents and
warrants to Intellisync that it has the legal power, authority and right to
enter into this Agreement and to perform all of its obligations hereunder.

         7. Confidentiality

            7.1 Either party may disclose the existence of this Agreement and
the terms of this Agreement, provided, however, the amount, rates, and/or
magnitude of any and all payments and royalties hereunder shall be confidential
and therefore redacted in public disclosures unless specifically required to be
disclosed to regulatory authorities. A copy of this Agreement, redacted in
accordance with the above provision, is attached as Exhibit 2.
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            7.2 Notwithstanding the above, either party hereto may disclose this
Agreement to such party's agents, attorneys and other representatives or any
court of competent jurisdiction or any other party empowered hereunder as
reasonably required to resolve any dispute between the parties hereto or as
otherwise required by law.

            7.3 The parties understand and acknowledge that each may be required
by law to file, or otherwise make public, material information about this
Agreement. In such event the disclosing party will submit the redacted Agreement
to the body requiring the disclosure. If the requiring body requires information
that has been redacted, the disclosing party will notify the other party to
allow them to consult with the disclosing party regarding the response to the
requiring body. Only if the response is denied or fails will the readacted
information be submitted to the requiring body. The disclosing party will
provide the other party sufficient time so as not to delay the disclosing party
in complying with the disclosure request or any deadlines set therein. In all
events, both parties will make commercially reasonable efforts to maintain the
redacted portions of the Agreement confidential.

            7.4 Press Releases and Statements. The parties will agree on the
form of a press release as set forth in Exhibit 3 or other statement announcing
the existence (but not the financial terms) of this Agreement. The parties agree
that, approximately contemporaneously with the issuance of this press release,
ESI may file an 8K statement with the Securities and Exchange Commission
disclosing the total amount of payment required under Section 3.1.

         8. Releases.

            8.1 Releases. Each party, for itself, its legal representatives,
predecessors, successors, and assigns, and each of its past and present
officers, directors, shareholders, employees, Affiliates, divisions,
partnerships, joint ventures, attorneys, and agents, hereby unconditionally
releases and forever discharges the other party and each of its legal
representatives, predecessors, successors, and assigns, and each of its past and
present officers, directors, shareholders, employees, Affiliates, divisions,
partnerships, joint ventures, attorneys, agents, and users, from any and all
claims, causes of action, demands, costs, obligations, damages, and liabilities
of every kind, nature, and description whatsoever arising before the Effective
Date, whether in law or in equity, individual or derivative, state or federal,
U.S. or foreign, known or unknown, suspected or unsuspected, whether or not
concealed or hidden, that arose under or relate to, or were asserted or could
have been asserted in connection with, the Complaint.

            8.2 Section 1542 Waiver. As further consideration for the Agreement
and for the purpose of implementing full and complete mutual releases,
Intellisync and ESI hereby expressly acknowledge and agree that the releases
described above extend to all claims of every nature and kind, known or unknown,
suspected or unsuspected, past, present or future, however arising, and that any
and all rights granted to such pursuant to Section 1542 of the California Civil
Code or any analogous applicable other state, federal or foreign law or
regulation are hereby expressly waived. Section 1542 of the Civil Code of the
State of California reads as follows:
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            A general release does not extend to claims which the creditor does
not know or suspect to exist in his favor at the time of executing the release,
which if known by him must have materially affected his settlement with the
debtor.

         9. Miscellaneous.

            9.1 Assignment; Change of Control. The rights or privileges provided
for in this Agreement may be assigned or transferred by Intellisync to a third
party, provided that Intellisync provides written notice to ESI of such
assignment and such third party promptly accepts in writing such assignment or
transfer and accepts all obligations under this Agreement.

            9.2 The license granted to ESI in Section 2.1 of this Agreement
shall not be assignable (other than to an entity which is an Affiliate of ESI)
without the prior written consent of Intellisync and any attempt to assign it
without that consent will be void. Notwithstanding the foregoing, ESI may
assign, upon written notice to Intellisync, the license grant in Section 2.1 of
this Agreement to the surviving corporation in any acquisition, merger or
consolidation to which it is a party or to any entity who acquires all or
substantially all of ESI's capital stock or assets ("Change of Control")
provided that such surviving corporation (a) pay to Intellisync an additional
one-time fee of [***] upon the closing of such Change of Control (in addition to
any sums owed or already paid under this Agreement) and (b) is not one of the
Restricted Entities set forth in Exhibit 4. Any purported transfer, assignment
or delegation in violation of the foregoing will be null and void and of no
force or effect. In no event may ESI transfer to another entity the covenant not
to sue contained in section 2.2 of this Agreement, and in no event shall the
limitation on the accrual of damages in section 2.2 apply to any products sold
by such third party prior to or following a Change of Control. However, no
damages shall accrue on ESI's own sales of Licensed Products between the
Effective Date of this Agreement and the earlier of (a) file years, or (b) the
date of any such Change of Control.

            9.3 Entire Agreement. This Agreement, together with any Exhibits
attached hereto, constitutes the entire agreement between the parties with
respect to the subject matter hereof and supersedes any prior understandings,
agreement or representations by or between the parties, written or oral, that
may have related in any way to the subject matter hereof.

            9.4 Independent Contractors. The relationship of Intellisync and ESI
established by this Agreement is that of independent contractors. Nothing in
this Agreement shall be construed to create any other relationship between
Intellisync and ESI. Neither party shall have any right, power or authority to
assume, create or incur any expense, liability or obligation, express or
implied, on behalf of the other.

***     Confidential treatment requested pursuant to a request for confidential
        treatment filed with the Securities and Exchange Commission. Omitted
        portions have been filed separately with the Commission.
<PAGE>

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            9.5 Force Majeure. Neither party hereto shall be in default by
reason of any failure in the performance of this Agreement in accordance with
its terms if such failure is due to acts of God, war, strikes, riots, storms,
fires or any other cause whatsoever beyond the reasonable control of the party.
The party so prevented or delayed in the performance of its obligations shall
promptly notify the other party and shall be excused from such performance to
the extent and during the period of such prevention or delay.

            9.6 Compliance with Laws. In exercising its rights under this
Agreement, each party shall fully comply in all material respects with the
requirements of any and all applicable laws, regulations, rules and orders of
any governmental body having jurisdiction over the exercise of the rights
hereunder.

            9.7 No Waiver. A waiver, express or implied, by either party of any
right under this Agreement or of any failure to perform or breach hereof by the
other party shall not constitute or be deemed to be a waiver of any other right
hereunder or of any other failure to perform or breach hereof by such party,
whether of a similar or dissimilar nature thereto.

            9.8 Modifications. No amendment of any provisions of this Agreement
shall be valid unless the same shall be in writing and signed by both parties.

            9.9 Notices. Any notice or report required or permitted to be given
or made under this Agreement by either party shall be in writing and delivered
to the other party at its address indicated below (or to such other address as a
party may specify by notice hereunder) by courier or by registered or certified
airmail, postage prepaid, or by facsimile; provided, however, that all facsimile
notices shall be promptly confirmed, in writing, by registered or certified
airmail, postage prepaid. All notices shall be effective as of the date received
by the addressee at the address provided for the addressee.

If to Intellisync:

                 INTELLISYNC CORP.
                 2550 N. First Street, Suite 500
                 San Jose, CA  95131

                 Attention:  Woodson M. Hobbs and Chuck Runge

                 with a copy to:

                 Milbank Tweed Hadley & McCloy, LLP
                 3000 El Camino Real
                 Five Palo Alto Square, 7th Floor
                 Palo Alto, CA  94306

                 Attention:  James Pooley and L. Scott Oliver
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If to ESI:

                 EXTENDED SYSTEMS, INC.
                 5777 N. Meeker Avenue
                 Boise, ID  83711

                 Attention:  Charles W. Jepson and Valerie A. Heusinkveld

                 with a copy to:

                 TOWNSEND and TOWNSEND and CREW LLP
                 370 Lytton Avenue
                 Palo Alto, CA  94301

                 Attention:  Theodore G. Brown

Any party may change the address of designated recipient to which notices,
requests, demands, claims and other communications hereunder are to be delivered
by giving the other party notice in the manner herein set forth.

            9.10 Governing Law. This Agreement shall be construed, and the legal
relations between the parties hereto shall be determined, in accordance with the
laws of the State of California, without reference to conflicts of laws
principles. The parties agree that the U.S. District Court for the Northern
District of California, as applicable, shall retain jurisdiction over this
Agreement for the purpose of resolving any disputes relating to it and its
subject matter.

            9.11 Construction. The headings of sections are inserted for
convenience of reference only and are not intended to be a part of or to affect
the meaning or interpretation of this Agreement.

            9.12 Severability. If any term or provision of this Agreement, or
the application of such term or provision to either party or circumstance, is
held to be illegal, invalid or unenforceable, then, the remainder of this
Agreement, or the application of such term or provision to such party or
circumstances other than those to which it is held illegal, invalid or
unenforceable, shall not be affected thereby.

            9.13 Trademarks. Nothing in this Agreement shall be construed as
conferring upon either party the right to include in advertising, packaging, or
other commercial activity any reference to the other party, its trademarks,
trade names, service marks, or other trade identity in a manner likely to cause
confusion.
<PAGE>

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            9.14 Relationship of Parties. Nothing in this AGREEMENT shall be
construed as creating a partnership, joint venture, or other formal business
organization of any kind.

            9.15 No Other Warranties. EXCEPT AS SPECIFICALLY SET FORTH HEREIN,
NO OTHER WARRANTIES OR REPRESENTATIONS, EITHER EXPRESS OR IMPLIED, ARISING BY
LAW OR OTHERWISE, INCLUDING BUT NOT LIMITED TO IMPLIED WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE, ARE GIVEN BY EITHER PARTY
UNDER THIS AGREEMENT, including but not limited to, any warranty or
representation: (a) as to the validity of any patent; (b) that any manufacture,
importation, sale, lease, use, or other disposition of products will be free
from infringement of a third party's intellectual property rights; (c) that
either party will enforce any intellectual property rights it may have in any
patent against third parties; (d) that either party will secure or maintain any
patent; or (e) as to the quality, merchantability, or fitness for a particular
purpose of any product. IN NO EVENT SHALL EITHER PARTY HAVE ANY OBLIGATION OR
LIABILITY ARISING FROM TORT, FOR LOSS OF REVENUE OR PROFIT, OR FOR SPECIAL,
INDIRECT, INCIDENTAL, OR CONSEQUENTIAL DAMAGES HOWEVER CAUSED, UNDER ANY THEORY
OF LIABILITY, ARISING IN ANY WAY OUT OF THIS AGREEMENT OR EITHER PARTY'S PATENT
RIGHTS.

            9.16 No Other Promises. Nothing contained in this Agreement shall be
construed as:

               9.16.1 restricting the right of either party or any of its
Affiliates to make, use, sell, lease, or otherwise dispose of any particular
product or products not herein licensed;

               9.16.2 conferring any license or other right, by implication,
estoppel or otherwise, under any patent application, patent, or patent right,
except as herein expressly granted under the Licensed Patents;

               9.16.3 conferring any license or right with respect to any
trademark, trade or brand name, a corporate name of either party, any of their
respective Affiliates, or any other name or mark or contraction, abbreviation,
or simulation thereof;

               9.16.4 imposing on either party any obligation to institute any
suit or action for infringement of any patents, or to defend any suit or action
brought by a third party that challenges or concerns the validity of any patents
licensed under this Agreement;

               9.16.5 a warranty or representation by either party that any
manufacture, use, sale, lease or other disposition of Licensed Products will be
free from infringement of any patent other than the patents licensed herein;

               9.16.6 imposing on either party any obligation to file any patent
application, secure any patent, or maintain any patent in force; or
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               9.16.7 an obligation on either party to furnish any manufacturing
or technical information under this Agreement except as the same is specifically
provided for herein.

            9.17 Counterparts. This Agreement and any amendments, waivers,
consents or supplements hereto may be executed in any number of counterparts,
and by different parties in separate counterparts, each of which when so
executed and delivered shall be deemed an original, but all such counterparts
together shall constitute but one and the same agreement. Each such agreement
shall become effective upon the execution of a counterpart hereof or thereof by
each of the parties hereto.

            IN WITNESS WHEREOF, each party has caused this Agreement to be
executed as of the date first written above by its duly authorized
representatives.

AGREED TO:                                 AGREED TO:

Intellisync Corp.                          Extended Systems, Inc.

By:     /s/ WOODSON HOBBS                  By:     /s/ CHARLES W. JEPSON
    ------------------------------------       ---------------------------------

Name:  WOODSON HOBBS                       Name: CHARLES W. JEPSON
       ---------------------------------         -------------------------------

Title:   PRESIDENT & CEO                   Title:   PRESIDENT & CEO
         -------------------------------         -------------------------------

Date: MARCH 4, 2004                        Date: MARCH 4, 2004
      ----------------------------------         -------------------------------ACCUIMAGE DIAGNOSTIC CORP
                               501 GRANDVIEW DRIVE
                          SOUTH SAN FRANCISCO, CA 94080

                              EMPLOYMENT AGREEMENT

         This Employment Agreement ("Agreement") is entered into and effective
this 1st day of January, 2004 ("Effective Date") by and between ACCUIMAGE
DIAGNOSTIC CORP., a Nevada corporation ("Company") and AVI FALIKS ("Faliks"),
regarding the terms and conditions of his employment by and with the Company

                                    RECITALS

         A. Company is engaged in the development, marketing and support of
software for the visualization, analysis and management of medical imaging date
("Business").
         B. Company wishes to employ Faliks and Faliks wishes to be employed to
provide his services to Company on the terms and conditions set forth below.

         NOW, THEREFORE, for good and sufficient consideration, the parties
agree as follows:

                                    AGREEMENT

POSITION AND DUTIES. Faliks will be employed full-time as Chief Executive
Officer of Company, effective January 1, 2004, or such other position and duties
as the Company's Board of Directors ("Board") may determine and assign,
consistent with Faliks' background, experience and performance. As Chief
Executive Officer, Faliks will report to the Board, will have profit and loss
responsibility for the Company, responsibility for the Company's Strategic
Marketing, Business Development and overall Strategic and yearly Business Plan
as well as overall responsibility for directing the Company toward the
achievement of its business objectives as approved by the Board, plus those
duties of an executive officer of the Company established from time to time by
the board and such additional duties as may be mutually agreed from time to
time.

         1. TERM. Faliks' employment will be at will and for a one-year term,
terminable at the will of either Faliks or the Company on thirty (30) days
written notice, subject to the terms and conditions set forth below.

         2. STANDARDS OF PERFORMANCE. Faliks agrees to perform all of his duties
in a fully professional manner pursuant to the standards of skill, competence,
and efficiency expected of his position, and subject to the direction and
control of the board. He agrees to devote his energy and attention and give his
best efforts and skills to the furtherance and best interests of the Company,
and to the performance of his duties hereunder.

<PAGE>

         The above notwithstanding, and specifically subject to Board approval
and the provisions of Section 6 below, the expenditure of reasonable amounts of
time for personal business, charitable, community or professional activities
will not be deemed a breach of this Agreement, provided that such activities,
individually or in the aggregate, do not interfere materially with the
performance of his duties hereunder, and further provided that in engaging in
such activities he complies fully with the non-compete and confidentiality
provisions of this Agreement and/or related policies of the Company, as they may
be modified from time to time. Faliks understands and agrees that the
performance of his duties and his employment with the Company generally are
subject to all of the policies of the Company, the Board, the Company's Articles
of Incorporation and Bylaws, and to and all laws and regulations applicable to
corporations generally and to the medical imaging industry in particular.

         3.       COMPENSATION, BENEFITS AND PERSONNEL POLICIES.

         (a) Salary. As compensation for all services rendered pursuant to this
Agreement, including serving as a member of the Board, if so elected, Faliks
shall be entitled to a base salary in a gross amount equivalent to $1.00.

         (b) Options & Equity. To be determined by the Board.

         (c) Faliks will also be covered by and/or entitled to participate in
Company's policies and/or plans regarding benefits of employment, including all
pension, profit sharing and other retirement plans, and all group health,
hospitalization and disability insurance plans and other employee welfare
benefit plans, as are customarily available to and on the same terms as other
key executives. In addition, Faliks' employment is subject to Company's
personnel and financial policies as they may be developed and modified from time
to time.

         (d) The Company will reimburse Faliks promptly for reasonable
out-of-pocket expenses incurred in connection with the performance of his
duties, including but not limited to travel expenses, food and lodging while
away from home, and reasonable entertainment expenses, consistent with such
policies as the Company may establish from time to time and provided that Faliks
provides appropriate and timely expense reports with appropriate supporting
documentation.

<PAGE>

         (e) During each calendar year of employment, Faliks is entitled paid
vacation, sick leave and other paid leaves in accordance with the Company's
policies with respect to paid leaves for executives.

         4.       TERMINATION OF EMPLOYMENT

         (a) WITHOUT CAUSE. Company may terminate Faliks' employment without
cause effective upon thirty (30) days' written notice. In the event that the
Company terminates Faliks' employment without cause Faliks shall be entitled to:
(i) payment of all earned but unpaid compensation through the date of
termination, (ii) group health coverage for an additional two month period,
payable pursuant to the Company's regular payroll practices at the time
("Severance Period"), and (iii) vesting of any options that otherwise would have
vested during the Severance Period. All unvested/unvestable options shall be
forfeit as of the date of termination and the Company shall be relieved of any
further obligations under the Agreement in this regard.

         (b) WITH CAUSE. The Company may also terminate Faliks' employment, at
any time and without any prior notice, written or otherwise, for cause which,
for purposes of this Agreement, is defined as any one of the following: (i)
criminal conduct, an act of dishonesty or material breach of this Agreement;
(ii) repeated or demonstrated failure or refusal to perform the material duties
of his position after receiving at least ten (10) days' written notice of the
nature of the failure or refusal to perform, or any failure or refusal to follow
a lawful directive of the Board; or (iii) taking any action or conducting
himself in a manner which is contrary or inimical to the best interests or
reputation of the Company, its parent, subsidiaries or affiliated companies. In
the event the Company terminates Faliks for cause, he will be entitled only to
compensation earned, pro rata, and any options that have vested pursuant to
their terms, up to the date of his termination. All unvested options shall be
forfeit as of the date of termination and the Company shall be relieved of any
further obligations hereunder.

         (c) INCAPACITY. If during the period of his employment Faliks becomes
temporarily disabled from performing his duties hereunder through illness or
otherwise, he will be entitled to a leave of absence with continuation of
compensation and benefits for the duration of the disability up to a maximum in
the aggregate of three (3) months. If it reasonably appears to the Company in
the good faith exercise of its judgment that the disability will be permanent,
or in any event if such disability lasts longer than three months, the Company
will have the right to terminate Faliks' employment immediately thereafter and
Faliks will be entitled to receive whatever benefits he may be entitled to
receive pursuant to the Company's benefit plans or policies

<PAGE>

         (d) DEATH. If Faliks should die while actively employed pursuant to
this Agreement, the Company shall pay to his estate or designated beneficiaries
within sixty (60) days: (i) any earned but unpaid compensation through the date
of death; (ii) any bonus as determined by the Board to be appropriate, pro rate
through the date of death, and (iii) any other death benefit made available to
similarly situated executives in accordance with the terms and conditions of
Company's regular policies or programs.

         (e) RESIGNATION. In the event Faliks elects to resign, Faliks shall
provide at least thirty (30) days' written notice of such election to resign and
shall be entitled to payment of all earned but unpaid compensation and any
options that have vested pursuant to their terms, up to the date of termination.
All unvested options shall be forfeit as of the date of termination and the
Company shall be relieved of any further obligations under the Agreement.

         5. NON-SOLICITATION AND NON-COMPETITION.

(a)      NON-COMPETITION. During Faliks' employment and during any Severance
         Period thereafter, he will not engage, either directly or beneficially,
         in any outside business or financial activity, nor render any service
         in any capacity to anyone in the business of medical imaging
         technology. For purposes of this Section 6 and of Section 7, below,
         Faliks agrees and understands that the Company is defined to include
         any parent, subsidiary, predecessor, successor or affiliate of the
         Company, and further that "engaging in business" or "rendering any
         service" includes serving as an officer, director, employee,
         shareholder, investor, consultant (with or without compensation) or
         adviser to any other entity which engages in the Company's business in
         the United States Faliks agrees that with respect to any other outside
         work during the employment period, including self-employment, he is
         required to obtain the advance written approval of the Company's Board
         of Directors, which will evaluate his request taking into account such
         factors as his work schedule, duties and responsibilities, and actual
         or apparent conflict or incompatibility of employment, and any
         potential impact on his performance. The Board's determination shall be
         made in its sole discretion, and shall be final.

(b)      NON-SOLICITATION. During his employment, during any Severance Period,
         and for one year thereafter, except as required by his duties for the
         Company, Faliks will not, directly or indirectly, or in concert with
         others, employ nor solicit nor influence nor otherwise cause any
         employee of the Company or any of its affiliated companies to leave
         their employment with the Company.

<PAGE>

         6.       CONFIDENTIALITY, TRADE SECRETS, AND ASSIGNMENT OF INVENTIONS.

         (a) Faliks acknowledges and agrees that during the course of his
employment with Company, and in preparation therefore and thereafter, he will be
privy to many trade secrets and/or proprietary and other confidential or
privileged information (together "Proprietary Information") regarding the
Company which may affect, among other things, the successful conduct,
furtherance and protection of the Company's business and good will. For these
purposes, confidential information means all business information of whatever
nature regarding the Company (including any and all parents, subsidiaries,
predecessors, successors or affiliates), or about any of its products or
services or potential products or services, business plans, executives,
employees, and methods of doing business, which is not generally known to the
public at large. Trade secrets mean information which derives independent
economic value from not being generally known to the public or to others who can
derive economic value from its disclosure or use and is the subject of
reasonable efforts to maintain its secrecy. This Proprietary Information
specifically includes but is not limited to technological information, customer
lists, types and prices of merchandise and orders, future plans, sales methods,
and salary and other personnel information. Faliks agrees to keep all such
information in strictest confidence and not to disclose it except for legitimate
purposes of the Company and with the Company's express written consent, either
during his employment or at any time thereafter.

         (b) On termination of his employment, Faliks shall promptly deliver to
the Company all equipment belonging to it, all code and computer programs of
whatever nature, as well as all manuals, letters, correspondence, reports, price
lists, customer lists, sales information, and all copies thereof, and all other
materials of a confidential nature regarding the Company's business that are in
his possession or control. Faliks further agrees that the remedy at law for any
breach of the provisions of Sections 6 and 7 herein will be inadequate, and that
the Company will be entitled to seek appropriate injunctive relief in addition
to any remedy at law in case of any such breach.

         (c) Faliks acknowledges and specifically agrees that fully all work he
performs within the scope of his employment, and/or all work which relates at
the time of conception or reduction to the Company's business, or actual or
anticipated research or development of the Company, and/or all work which
results from any work Faliks performs for the Company, whether such work is
performed during regular business hours or otherwise, and whether utilizing the
Company's equipment, supplies, facilities or trade secret information or
otherwise, shall belong to the Company. Faliks agrees to assign, or offer to
assign, or to take such other reasonable action to assure that any and all
rights to such work shall belong or otherwise be transferred to the Company. The
foregoing notwithstanding, the parties agree that nothing in this subsection
covers, nor is intended to cover, any rights to an invention required to be
excluded from the provisions hereof by California Labor Code Section 2870, as it
may be modified from time to time, a copy of which is attached to this
Agreement.

<PAGE>

         (d) Faliks further agrees, as a condition of continued employment, to
promptly disclose to the Company all ideas, processes, inventions, improvements,
developments, methods, designs, analyses, drawings, reports and discoveries
coming within the scope of the Company's business or related to its products or
to any research, design, development, application or production work carried on
by the Company, or to any problems or programs specifically assigned to Faliks,
conceived alone or with others during his employment, and whether or not
conceived during regular working hours. All such ideas, processes, programs,
applications, trademarks, inventions, improvements, developments and
discoveries, whether patentable or not, shall be the Company's sole and
exclusive property, and Faliks assigns and hereby agrees to assign his entire
right title and interest in and to the same to the Company, and to take such
other reasonable action to assure that such work shall belong to and be
protected on behalf of the Company.

         7. GOVERNING LAW. This Agreement will be governed by and construed
according to the laws of the State of California.

         8. RESOLUTION OF DISPUTES. Any controversy between Faliks and the
Company involving his employment with the Company or termination thereof,
including but not limited to enforcement, construction, or application of any
term, provision, or condition of this Agreement, except with respect to
paragraphs 6 and 7 hereof, shall be referred to non-binding mediation by a sole
mediator to be selected by agreement between the parties within ten (10)
business days. The mediation shall be scheduled and conducted as promptly as
practicable, and the costs of mediation shall be borne equally by the parties.

         If the parties cannot themselves agree on a mediator, or if mediation
does not resolve the matter, then either party shall submit the controversy or
claim, within 180 days, to final and binding arbitration in accordance with the
Federal Arbitration Act and the rules of the Judicial and Mediation Services
("JAMS") then in effect, such arbitration to be conducted in the County of San
Mateo, California. Failure to initiate arbitration within such one hundred and
eighty (180) day period, or as mutually extended, shall constitute a waiver of
any and all such claims, and they shall be forever barred. Both parties will
attempt to agree upon a mutually acceptable arbitrator. If they are unable to
agree upon an arbitrator, then an arbitrator will be selected in accordance with
the then-current rules of the JAMS. The parties further agree that arbitrator
shall be entitled to award money damages including reasonable attorneys' fees to
the prevailing party, but shall not be entitled to award any other remedy at law
or equity including but not limited to exemplary damages, specific performance
or injunctive relief. The costs of the arbitrator will be shared equally by both
parties. The parties agree that, except as specifically excepted herein,
arbitration will be their exclusive form for resolving disputes with one another
regarding the employment relationship and this Agreement, and they expressly
waive any entitlement they may have to have controversies between them decided
by a jury or a court of law.

<PAGE>

         9. ENTIRE AGREEMENT. The Agreement sets forth the entire agreement and
understanding between the parties relating to the subject matter of it, and
supersedes and merges all prior discussions between the parties about such
subject matter.

         10. SEVERABILITY. In the event that one or more of the provisions
contained in this Agreement are held to be invalid, illegal, or unenforceable to
any respect by a court of competent jurisdiction, such holding shall not impair
the validity, legality or enforceability of the remaining provisions herein.

         11. SUCCESSORS AND ASSIGNS. This Agreement be binding and Faliks'
heirs, executors, administrators, and other legal representatives and will be
for the benefit of the Company, its successors, and assigns.

         12. NOTICES. Any notice or other communication required or given
hereunder shall be in writing and delivered personally or sent by telecopier,
certified, registered, or express mail, postage prepaid, and shall be deemed
given when so delivered personally or by telecopier, or if mailed, two days
after the date of mailing as follows:

                  If to the Company, addressed to it at:

                           AccuImage Diagnostic Corp.

                           501 Oyster Point Blvd.

                           South San Francisco, CA 94080

                           Attention: Chairman of the Board

                  If to Faliks, addressed to him at:

                           Aviel Faliks, Ph.D.

                           101 Summer St., Apt. 414

                           Stamford, CT 06901

Or at such other address as either party may from time to time specify by giving
notice as provided herein.

<PAGE>

         13. INDEMNIFICATION AND INSURANCE. The Company will indemnify Faliks to
the fullest extent permitted by the laws of the State of Nevada, as in effect at
the time the subject act or omission, and Faliks shall be entitled to the
protection of any insurance policies the Company may elect to maintain generally
for the benefit of its directors and officers insuring against all costs,
charges and expenses whatsoever incurred or sustained by Faliks in connection
with any action, suit or proceeding to which Faliks may be made a part by reason
of being or having been an officer or employee of the Company or any of its
subsidiaries, predecessors, or serving or having served any other enterprises at
the request of the Company (other than any dispute, claim or controversy brought
by the Company against Faliks for breach of any provision of this agreement).

         14. SOURCE OF FUNDS. Any and all payments provided pursuant to this
Agreement shall be made in cash from the general funds of the Company and no
special or separate fund or insurance arrangement shall be established or
created and no other aggregation of assets made to assure payment. To the extent
that any person acquires a right to receive payments from the company hereunder,
such right shall be no greater than the right of an unsecured creditor of the
Company.

         15. AMENDMENTS AND WAIVERS. This agreement may not be amended,
modified, canceled, renewed, extended, or in any form waived, except by written
instrument signed by both parties, or in the case of a waiver, by the party to
be charged.

         IN WITNESS WHEREOF the parties hereto have executed this agreement as
of the month and date first above written

                                     AVI FALIKS

                                 /s/ AVI FALIKS
                                ----------------

                           ACCUIMAGE DIAGNOSTIC CORP.

                               /s/ C. ALLEN WALL
                               ----------------------
                               By: C. Allen Wall, M.D.

                               Its: Chairman of the Board

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