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                                  EXHIBIT 10.42

                             EXECUTIVE LIFE PROGRAM
                  COLLATERAL ASSIGNMENT SPLIT DOLLAR AGREEMENT
        BETWEEN THE COMPANY AND DAVID A. PURCELL, DATED DECEMBER 1, 1999


This Split Dollar Agreement is entered into as of December 1, 1999, by and
between David A. Purcell, (the "Employee" or "Owner" when referred to in that
capacity) and ENCAD, Inc. (the "Employer").

                                    RECITALS

         Whereas, Employee is eligible for and wishes to participate in the
Employer's Executive Life Program (the "Program"); and

         Whereas, Owner will be the sole owner and possessor of the Policy and
assign an interest in the Policy's death benefit and cash value to the Employer
as collateral to secure repayment of Employer's premium payments with respect to
the Policy; and

         Whereas, it is the intent of the Employer and Owner to define the
limited extent of the Employer's security interest in the Policy;

         Now, therefore, Employer and Owner mutually agree that:

                SECTION (1): INTERESTS IN THE POLICY CASH VALUES The Policy,
which is the subject of this Split Dollar Agreement, is a variable universal
life policy issued by Nationwide Life Insurance Company (the "Insurer")
Policy Number **, on the life of the Employee. The Employer's interest in the
cash value of the Policy (the "Employer's Interest") shall be equal to the
sum of (a) plus (b), minus (c) where: (a) equals the total amount of the
premium payments made on the Policy during the five Policy Years following
the date of this Agreement, (b) equals the excess of the cash value of the
Policy over the sum of the premiums paid during the five Policy Years
following the date of this Agreement and the Owner's Interest as defined
below, and (c) equals the total loans or distributions taken by the Employer
as described in Section (4) below. The Owner's interest in the cash value of
the Policy (the "Owner's Interest") shall be equal to the cash value of the
Policy, if any, in excess of the premium payments made on the Policy during
the five years following the date of this Agreement, but in no event greater
than, **, and then reduced by the amount of any distributions from the cash
value of the Policy made to the Owner as permitted by this Agreement.
Notwithstanding anything in this Agreement to the contrary, in the event of
the bankruptcy or insolvency of the Employer during the term of this
Agreement, the Policy, including the Owner's Interest therein, shall be
subject to the claims of creditors of the Employer.

                          SECTION (2): PREMIUM PAYMENTS
On or before the due date of each premium payment on the Policies, or within the
grace period provided therein, Employer will pay the entire premium due on the
Policy. The current intent of the Employer is to make premium payments as they
are due until the termination of service of the Employee with the Employer, but
the Employer shall have the unrestricted right to cease the payment of any or
all premiums due at its discretion upon notice to the Owner of such intent.

The Employee shall have imputed income each year in an amount equal to the
annual cost of current death benefit protection on the life of the Employee,
measured by the lower of (a) the PS 58 rate, as set forth in Revenue Ruling
55-747 (or the corresponding applicable provision of any future Revenue Ruling),
or (b) the Insurer's current published premium rate for annually renewable term
insurance for standard risks.

** CONFIDENTIAL TREATMENT REQUESTED

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                       SECTION (3): DEATH BENEFIT AMOUNTS In the event of the
Employee's death prior to the termination of this Agreement, the death
benefit payable to the Owner (or the Owner's designated beneficiaries) shall
be equal to the present value at the time of Employee's death of the
distributions which may be permitted to the Owner under this Agreement as
defined in Section (4) below had the Employee survived, reduced by the amount
of any distributions payable to the Owner from the cash value during the
lifetime of the Employee, except that in no event, shall the amount of the
death benefit to be received by the Owner (or the Owner's designated
beneficiaries) be less than  **. For purposes of this Agreement, the present
value of the distributions which may be permitted to the Owner under this
Agreement shall be calculated assuming a discount rate of seven percent (7%).

In the event of Employee's death prior to the termination of this Agreement, the
death benefit payable to the Employer (or the Employer's designated
beneficiaries) under this Agreement shall be equal to the excess of the total
death proceeds under the Policy less the amount payable to the Owner (or the
Owner's designated beneficiaries) as defined above.

Owner understands that sufficiency of cash value in the Policy to provide
expected amounts of death benefit under this Agreement may vary as a result of
Policy performance and duration of premium payments and this is in no event
guaranteed by the Employer or the Insurer. The Employer makes no representation
or warranty as to the merits or risks of the investment performance of the
Policy.

                 SECTION (4): OWNERSHIP AND RIGHTS IN THE POLICY
The Policy will be owned exclusively by the Owner or the Owner's Assignee (for
purposes of this Agreement, Owner's Assignee shall be included in the definition
of Owner). Any rights in the Policy other than those specifically mentioned in
this Agreement must be exercised with the written consent of both the Owner and
the Employer (for purposes of this Agreement, Employer's Assignee shall be
included in the definition of Employer).

EMPLOYER'S RIGHTS. While this Agreement is in effect, the Employer has a
security interest in the Policy limited exclusively to: (a) that portion of the
cash value of the Policy equal to the Employer's Interest in the Policy; or (b)
the death benefit payable to the Employer as set forth in Section 3, above. The
Employer shall be permitted to receive a distribution from the Policy in the
form of a policy loan or withdrawal, but only to the extent of its Interest as
set forth in this Agreement. In addition, the Employer shall have the right to
make any investment choices permitted by the Policy with respect to the cash
value of the Policy, and Owner shall agree to waive this right as long as this
Agreement remains in force in accordance with the established procedures of the
Insurer.

OWNER'S RIGHTS. The Owner's rights include the right to irrevocably assign
any of their rights under the Policy, with the consent of the Employer and
the Insurer and to select and change beneficiaries to receive Owner's death
benefits. The Owner will not be permitted to borrow against, or partially or
totally surrender the Policy as long as the Collateral Assignment remains in
force. The Owner shall not be permitted to receive a distribution from the
cash value of the Policy while the Split Dollar Agreement remains in force,
except in accordance with the following rules: the Owner shall not receive a
distribution from the cash value of the Policy prior to the termination of
the Employee's service with the Employer. Beginning on the first day of the
sixth Policy Year, as defined in the Policy, the Owner may begin to receive
distributions from the Owner's Interest in the cash value of the Policy. The
distribution shall be made annually and shall be limited to an amount of * *,
and shall continue for a total of 10 years, or until the Owner's Interest is
exhausted.

** CONFIDENTIAL TREATMENT REQUESTED

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         SECTION (5): ASSIGNMENT OF POLICY TO SECURE EMPLOYER'S PAYMENTS
To secure Employer's Interest in the Policy under this Agreement, Owner will
collaterally assign the Policy to the Employer by signing the separate
Collateral Assignment. The Collateral Assignment cannot be altered without the
Employer's, Owner's, and Insurer's consent.

               SECTION (6): TERMINATION OF SPLIT DOLLAR AGREEMENT
This Split Dollar Agreement, and all obligations of the Employer to pay premiums
under it, will terminate upon the earliest to occur of the following:

    a)  Death of the Employee;

    b)  Written agreement of both the Owner and the Employer to terminate this
        Agreement; and,

    c)  Failure of the Employee or Owner to complete all necessary requirements
        for the Insurer to issue a policy, including the waiver of investment
        choices; and,

Upon Termination of this Agreement, the Employer shall receive the Employer's
Interest in the Policy as soon as is practical, but in no event shall receipt be
later than sixty (60) days from the earliest of the dates listed above. In the
event of termination of this Agreement for reason other than the death of the
Employee, the Employer's Interest in the Policy and under this Agreement shall
be satisfied either directly from the cash value of the Policy or by direct
payment by the Owner, at the discretion of the Owner. In this event, the
recovery of the Employer's Interest shall be limited to the cash value of the
Policy at that time. In the event of Termination of this Agreement by reason of
the death of the Employee, the Employer's Interest in the Policy and under this
Agreement shall be satisfied through direct payment from the Insurer from the
Policy proceeds.

           SECTION (7): PAYMENT OF PROCEEDS OR CASH VALUE TO EMPLOYER
Upon receipt of the Employer's Interest in the Policy, as provided in Section 1
above, whether from the Policy, or from the Owner, the Employer will release the
Collateral Assignment. Upon satisfaction of the Employer's Interest in the
Policy, the Owner shall have unrestricted ownership to the Policy.

Upon termination of this Split Dollar Agreement by reason of the death of the
Insured, the Insurer in satisfaction of the Owner's obligations, will issue a
check directly to the Employer as collateral assignee in an amount equal to the
Employer's Interest in the Policy.

                           SECTION (8): MISCELLANEOUS
NOT AN EMPLOYMENT AGREEMENT. This Split Dollar Agreement does not in any way
constitute an employment agreement, and the Employer reserves the right to
terminate Employee's employment to the same extent as though the Split Dollar
Agreement did not exist. This Split Dollar Agreement may be amended at any time
by written agreement signed on behalf of the Employer and by the Owner.

BINDING EFFECT. This Agreement shall be binding upon and inure to the benefit of
the Employer and its successors and assigns, and to the Employee and the
Employee's successors, assigns, heirs, executor or personal representative, and
beneficiaries.

NOTICES. Any notice, consent or demand required or permitted under this
Agreement shall be made in writing and shall be signed by the party making the
notice, consent, or demand. Such notice shall sent by United States certified
mail, postage pre-paid and shall be sent to the other party's last known address
as shown on the records of the Employer. The date of such mailing shall be
deemed to be the date of such notice, consent or demand.


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AMENDMENT OF AGREEMENT. This Agreement may be altered, amended or modified,
including the addition of any additional policy provisions, by a written
agreement signed by the Employer and the Owner. It shall be the responsibility
of the Employer to notify the Insurer of any amendments or changes to this
Agreement.

GOVERNING LAW. This Agreement shall be governed by and be construed in
accordance with the laws of the State of California.

                          SECTION (9): NAMED FIDUCIARY
The Employer is designated as the Named Fiduciary of this Agreement for purposes
of the Employee Retirement Income Security Act of 1974, as amended. The business
address and telephone number of the Named Fiduciary are as follows:

                        ENCAD, Inc.
                        C/O Sheryl Roland
                        6059 Cornerstone Court West
                        San Diego CA  92122-3734

The Named Fiduciary shall have the authority to control and manage the operation
and administration of the Executive Life Program, of which this Agreement forms
a part thereof. The Named Fiduciary is empowered to construe and interpret the
terms of the Program and this Agreement, to supply omissions consistent with the
intent of the Program and the Agreement, and to make all determinations and
resolve all disputes regarding eligibility for and the amount of, benefits under
the Program and Agreement, consistent with the terms of the Policy. The Named
Fiduciary may delegate some or all of its duties and responsibilities to another
person or entity (e.g. a committee designated by the Employer), including
persons who are not Named Fiduciaries. Any decisions and determinations made by
the Named Fiduciary (or its delegate) shall be conclusive and binding on all
parties. The Named Fiduciary shall have the sole discretion of carrying out its
responsibilities. Any person or entity claiming a benefit, requesting an
interpretation or ruling under the Plan, or requesting information under the
Plan (hereinafter referred to as "Claimant") shall present the request in
writing to the Employer, which shall respond in writing as soon as practicable.
If the claim or request is denied, the written notice of denial shall state the
reason for denial, with specific reference to the provisions on which the denial
is based, a description of any additional material or information required and
an explanation of why it is necessary, and an explanation of the program's
claims review procedure.

                         SECTION (10): CLAIMS PROCEDURES
Any person or entity claiming a benefit, requesting an interpretation or ruling
under the Plan, or requesting information under the Plan (hereinafter referred
to as "Claimant") shall present the request in writing to the Employer, which
shall respond in writing as soon as practicable. If the claim or request is
denied, the written notice of denial shall state the reason for denial, with
specific reference to the provisions on which the denial is based, a description
of any additional material or information required and an explanation of why it
is necessary, and an explanation of the program's claims review procedure.

REVIEW OF CLAIM. Any Claimant whose claim or request is denied or who has not
received a response within sixty (60) days may request a review by notice given
in writing to the Employer. Such request must be made within sixty (60) days
after receipt by the Claimant of the written notice of denial, or in the event
Claimant has not received a response sixty (60) days after receipt by the
Employer of Claimant's claim or request. The claim or request shall be reviewed
by the Employer which may, but shall not be required to, grant the Claimant a
hearing. On review, the Claimant may have representation, examine pertinent
documents, and submit issues and comments in writing.


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FINAL DECISION. The decision on review shall normally be made within sixty (60)
days after the Employer's receipt of Claimant's claim or request. If an
extension of time is required for a hearing or other special circumstances, the
Claimant shall be notified and the time limit shall be one hundred twenty (120)
days. The decision shall be in writing and shall state the reason and the
relevant provisions. All decisions on review shall be final and bind all parties
concerned.


IN WITNESS WHEREOF, the Employer and the Owner or the Owner's Assignee have
signed this Split Dollar Agreement, which is effective as of the effective date
of the Policy described herein.


                                                      /s/  Thomas L. Green
                                                    ---------------------------
                                                    OFFICER OF CORPORATION

                                                      V.P.
                                                    ----------------------------
                                                    TITLE

   /s/  Sheryl Roland                                 /s/   David A. Purcell
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    WITNESS                                         OWNER

                                                     11/8/99
                                                    ---------------------------
                                                    DATE