AMENDMENT NO. 2
                                       TO
                              EMPLOYMENT AGREEMENT

         AMENDMENT NO. 2, dated as of December 31, 2002 ("Amendment No. 2") to
the Employment Agreement, dated as of November 1, 1999, as amended to date (the
"Agreement"), by and between eAcceleration Corp., a Delaware Corporation (the
"Company") and Diana T. Ballard ("Employee").

         WHEREAS, the Company and the Employee desire to amend the terms of the
Agreement, pursuant to the terms and conditions set forth herein, as of the date
hereof.

         NOW, THEREFORE in consideration of the premises and of the mutual
covenants contained herein, and intending to be legally bound, the parties
hereto agree as follows:

         1.  Paragraph 2 of the Agreement is hereby deleted in its entirety and
             replaced with the following:

             " Term. Subject to earlier termination on the terms and
             conditions hereinafter provided, and further subject to
             certain provisions hereof which survive the term hereof, the
             term of this Agreement (the "Term") shall be comprised of a
             five (5) year period of employment commencing on January 1,
             2003, and shall be extended thereafter for additional one-year
             periods unless or until the Company or the Employee provides
             sixty (60) days' notice to the other party of the termination
             of this Agreement."

         2.  Subparagraph (b) of Paragraph 4 of the Agreement is hereby deleted
             in its entirety and replaced with the following:

                  "(b) In addition to the salary provided in clause (a) above,
             not later than one hundred ten (110) days after the end of the 2002
             fiscal year of the Company, the Company shall pay to Employee, as
             incentive compensation, an amount equal to two and one-half percent
             (2.5%) of the Company's Cash Flow (as defined below) for such
             fiscal year. For all quarterly periods during the Term, beginning
             with the first quarter of the Company's 2003 fiscal year, the
             Company, not later than sixty (60) days after the end of each such
             quarterly period, shall pay to Employee an amount equal to two
             and one-half percent (2.5%) of the Company's Cash Flow for
             such quarterly period; provided, however, that for the fourth
             quarter of each fiscal year, such amounts are required to be
             paid not later than one hundred ten (110) days after the end
             of such quarterly period. For purposes of this Agreement,
             "Cash Flow" shall mean, during any fiscal period, an amount
             equal to (i) the net income of the Company before taxes,
             depreciation, amortization, and extraordinary items, in each
             case computed in accordance with United States generally
             accepted accounting principles, consistently applied, plus
             (ii) the Company's deferred revenue minus (iii) the Company's
             deferred expenses. The Company agrees to furnish to Employee a
             copy of the Company's annual audited financial statements not
             later than one hundred and five (105) days after the end of
             each fiscal year of the Company, and quarterly unaudited
             financial


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             statements not later than fifty-five (55) days after the end
             of each fiscal quarter during the term of this Agreement."

         3.  The first sentence of Paragraph 10 of the Agreement is hereby
             deleted in its entirety and replaced with the following:

                  "10. Notices.  Any notice to be given to the Company hereunder
             shall be deemed sufficient if addressed to the Company in writing
             and delivered or mailed by certified or registered mail to it at
             1050 NE Hostmark Street 100B, Poulsbo Washington 98730, Attention:
             President, or to such other address as the Company may hereafter
             designate, and a copy to Neil M. Kaufman, Esq., Kaufman &
             Associates, LLC, 50 Charles Lindbergh Boulevard, Suite 206,
             Uniondale, New York 11553."

         4.  Affirmation of Agreement.  Except as expressly amended hereby, the
             terms and provisions of the Agreement shall remain in full force
             and effect.

         5.  Counterparts.  Amendment No. 2 may be executed in counterparts,
             which taken together shall constitute one and the same instrument,
             and either of the parties hereto may execute Amendment No. 2 by
             signing either such counterpart.


         IN WITNESS WHEREOF, the undersigned have executed and delivered
Amendment No. 2 as of the date first above written.


                                           eACCELERATION CORP.


                                           By:   /s/ E. Edward Ahrens
                                              ----------------------------------
                                              E. Edward Ahrens
                                              Chief Financial Officer


                                                 /s/ Diana T. Ballard
                                              ----------------------------------
                                              Diana T. Ballard