<PAGE>   1

                                                                 EXHIBIT 10.18 

                              AMENDED AND RESTATED
                              EMPLOYMENT AGREEMENT


        THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (this "AGREEMENT") is
made and entered into effective as of January 1, 1998, by and among LONG BEACH
FINANCIAL CORPORATION, a Delaware corporation ("LBFC"), and LONG BEACH MORTGAGE
COMPANY, a Delaware corporation ("LBMC") (collectively, the "COMPANY"), and
FRANK J. CURRY ("EXECUTIVE").

                                    RECITALS

        WHEREAS, the Company and Executive have entered into an Employment
Agreement dated April 15, 1997 (the "ORIGINAL EMPLOYMENT AGREEMENT"), which
provides the terms and conditions of Executive's employment with the Company.

        WHEREAS, the Company and Executive desire to amend and restate the terms
of the Original Employment Agreement effective as of January 1, 1998 (the
"EFFECTIVE DATE").

        NOW, THEREFORE, in consideration of the mutual agreements set forth
herein, the parties hereto agree that the Original Employment Agreement shall be
amended and restated in its entirety to read as follows, effective as of the
Effective Date:

                                       I.
                                   EMPLOYMENT

        1.1 POSITION AND DUTIES. The Company hereby engages and employs
Executive in the following capacities at LBFC and LBMC:

                      LBFC:         Executive Vice President

                      LBMC:         Executive Vice President and
                                    Chief Operating Officer

        The Company's Boards of Directors (collectively, the "BOARDS") may
provide such additional designations of title to Executive as the Boards, in
their discretion, may deem appropriate. Executive shall perform the executive
duties and functions related to the above positions, subject to the limitations
of authority set forth from time to time in any resolution of the Boards or
applicable law.

        1.2 BEST EFFORTS. Executive agrees to devote his full time and attention
to the Company, to use his best efforts to advance the business and welfare of
the Company, to render his services under this Agreement fully, faithfully,
diligently, competently and to the best of his ability, and not to engage in any
other employment activities. Notwithstanding anything herein to the contrary,
Executive shall not be precluded from (i) engaging in charitable activities and
community affairs and managing his personal investments and affairs, provided
that such 


<PAGE>   2


activities do not materially interfere with the proper performance of
his duties and responsibilities under this Agreement; or (ii) owning up to 1% of
a publicly-held company engaged in the same or similar business as the Company.

                                       II.
                            COMPENSATION AND BENEFITS

        2.1 BASE SALARY. For all services to be rendered by Executive under this
Agreement, the Company agrees to pay Executive an annual base salary ("BASE
SALARY") of $350,000 (subject to adjustment upward as recommended by the
Compensation Committees of the Boards), less deductions required by law, payable
in accordance with the normal payroll practices of the Company.

        2.2    ANNUAL PERFORMANCE BONUS.

               (a) PAYMENT OF PERFORMANCE BONUS. On or before April 15 each
year, the Company shall pay to Executive a cash bonus ("BONUS") of up to 175% of
Executive's Base Salary, as determined by the Boards, or the respective
Compensation Committees thereof, based on Executive's performance and the
performance of the Company during the prior calendar year. Except as provided in
Section 2.2(b), the Company shall not be obligated to pay Executive any Bonus
for his or the Company's performance in any year, unless Executive is employed
through December 31 of such year. All bonus calculations shall be based upon the
Company's audited financial statements through the end of the applicable
calendar year.

               (b) PRO-RATED BONUS UPON CHANGE IN CONTROL OR DEATH. Within 15
days following the consummation of a Change in Control (as defined below) or
Executive's death, the Company shall pay to Executive or to his estate or heirs
a pro-rated cash bonus ("PRO-RATED BONUS") equal to 100% of Executive's annual
Base Salary, pro-rated from January 1 through and including the date of such
Change in Control or death.

        2.3 OTHER BENEFITS. The Company has or will further provide to
Executive, at the Company's expense, the following other benefits ("OTHER
BENEFITS"):

               (a) An automobile (to be owned or leased by the Company at its
option and expense) of Executive's choice with a negotiated purchase price of no
more than $60,000, and reimbursement of all reasonable operating costs,
insurance and repairs;

               (b) An annual vacation leave of a minimum of three (3) weeks per
calendar year at full pay;

               (c) Full participation, on a basis commensurate with his position
with the Company, in all plans of life, accident, disability and health
insurance that generally are made available to senior executives of the Company;

               (d) An annual executive physical examination conducted by
Corporate Health Services at the University of California, Irvine, or such
comparable program approved by the 


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<PAGE>   3


Compensation Committee of the Board, with the cost of such examination to be
borne by the Company;

               (e) Stock options ("OPTIONS") for 500,000 shares of LBFC Common
Stock, which are incentive stock options to the extent permissible and which
have been granted as of April 28, 1997 by the Compensation Committee of the LBFC
Board pursuant to the terms of the LBFC 1997 Stock Incentive Plan dated February
18, 1997 (the "INCENTIVE PLAN"). The Options have an exercise price equal to
$6.50 and shall vest 20% on April 28, 1998 and 20% on each anniversary
thereafter until April 28, 2002, unless the vesting of such Options accelerate
pursuant to Sections 3.2(b) or 3.3(a) hereof or such Options expire or
accelerate pursuant to the Incentive Plan or action of the Compensation
Committee of the LBFC Board. The Options shall be "Stock Options" as defined in
the Incentive Plan and shall be exercisable in accordance with the terms
thereof; provided, however, that to the extent any terms of the Incentive Plan
are inconsistent with the terms of this Agreement (including, but not limited
to, the provisions regarding the vesting or exercise of any Options), the terms
of this Agreement shall govern. Executive acknowledges that such option grant is
intended to cover the three year period beginning on April 15, 1997 and that the
Company has no commitment to issue additional options to Executive during such
three year period or thereafter; and

               (f) Reimbursement for the cost of personal financial and estate
planning services by a financial planner or other professional of Executive's
choice of up to $5,000 for calendar year 1998 and $2,500 for each calendar year
thereafter.

        2.4 EXPENSE REIMBURSEMENT. The Company shall promptly reimburse
Executive for all reasonable business expenses incurred by Executive in
promoting the business of the Company, including expenditures for entertainment,
travel, or other expenses, provided that (i) such expenditures are of a nature
qualifying them as legitimate business expenses and (ii) Executive furnishes to
the Company adequate records and other documentary evidence reasonably required
by the Company to substantiate such expenditures in accordance with the
Company's policies and procedures.

                                      III.
                TERMINATION, SEVERANCE PAY AND CHANGE IN CONTROL

        3.1 AT WILL. Executive and the Company acknowledge and agree that
Executive's employment with the Company is expressly "at will." This means that
either party may terminate Executive's employment for any reason with or without
cause. Any termination of Executive's employment is, however, subject to the
terms and provisions of this Agreement as to Severance Pay (as defined below)
and Option vesting in accordance with Sections 3.2(a), 3.2(b) and 3.3(a).

        3.2 INVOLUNTARY TERMINATION.

               (a) SEVERANCE PAY. In the event that Executive's employment with
the Company is terminated by the Company for Cause (as defined below), Executive
shall not be entitled to any Severance Pay or employee benefits (including Other
Benefits); provided, 

                                       3

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however, that, notwithstanding any provision of the Incentive Plan, any Options
that are vested as of the date of such termination shall expire and become
unexercisable as of the earlier of (i) the date such Options would expire in
accordance with their terms had the Executive remained employed and (ii) 10
calendar days after the date of such termination. In the event that Executive's
employment with the Company is terminated by the Company other than for Cause,
then, subject to Section 3.6 and in consideration of Executive's compliance with
his obligations under Article IV and Article V and Executive's execution of a
general release in favor of the Company and its affiliates, Executive shall be
entitled to severance pay ("SEVERANCE PAY") in the form of monthly payments to
Executive in an amount equal to 1/12th of the sum of Executive's annual Base
Salary plus 50% of Executive's maximum Bonus potential for the year of
termination, payable in accordance with customary payroll practices, for twelve
(12) months following such termination. Executive acknowledges and agrees that
in the event Executive breaches any provision of Article IV or Article V or the
general release, his right to receive Severance Pay under this Section 3.2(a)
shall automatically terminate and Executive shall repay all Severance Pay
received.

               (b) BENEFITS. Following the effective date of termination,
Executive shall cease to be a Company employee and shall not be entitled to any
employee benefits (including Other Benefits), except as set forth in the
following two sentences. Notwithstanding anything herein to the contrary,
Executive's termination shall not preclude Executive from exercising his rights
under COBRA to pay for the continuation of benefits previously provided by the
Company. In the event that the Company terminates Executive's employment other
than for Cause (or, as provided in Section 3.3(a), Executive voluntarily
terminates his employment for Good Reason (as defined below)), all Options
granted pursuant to Section 2.3(e) shall vest as of the effective date of
termination.

               (c) CAUSE. For purposes of this Agreement, "CAUSE" shall mean (i)
an act or acts of personal dishonesty by Executive that were intended to result
in substantial personal enrichment of Executive at the expense of the Company;
(ii) Executive's conviction of any felony; or (iii) Executive's gross
negligence, gross incompetence, willful insubordination or misconduct,
intentional or persistent failure to perform stated duties or abide by the
Company's policies, or material breach of any provision of this Agreement,
including without limitation any representation or covenant contained in Article
IV or Article V of this Agreement.

        3.3    VOLUNTARY TERMINATION.

               (a) SEVERANCE PAY. In the event Executive voluntarily terminates
his employment with the Company without Good Reason, Executive shall not be
entitled to any Severance Pay or employee benefits (including Other Benefits).
In the event Executive voluntarily terminates his employment with the Company
for Good Reason, Executive shall be entitled, subject to Section 3.6, to
Severance Pay and all Options granted pursuant to Section 2.3(e) shall vest as
of the effective date of such termination to the same extent as if Executive's
employment with the Company had been terminated other than for Cause as provided
in Sections 3.2(a) and 3.2(b), provided that (i) Executive gives written notice
of his resignation within ninety


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(90) days of the occurrence of such Good Reason and advises, as part of such
resignation, that he is resigning because of the Good Reason, and (ii) the Good
Reason was other than for Cause.

               For purposes of this Agreement, a resignation tendered by
Executive pursuant to a direct request of the Boards (or either of them) or
another officer with higher executive status shall, for purposes of this
Agreement, be treated as an involuntary termination, entitling Executive to
Severance Pay and Option vesting in accordance with the provisions of Sections
3.2(a) and 3.2(b) so long as the request was not based on Cause.

               (b) GOOD REASON. For purposes of this Agreement, "GOOD REASON"
shall include (i) the material reduction or material adverse modification of
Executive's authority or duties (i.e., the substantial diminution or adverse
modification in Executive's title, status, overall position, responsibilities,
reporting relationship or general working environment); (ii) any reduction in
Executive's Base Salary or Bonus calculation or any material reduction in
employee benefits; or (iii) any requirement to move Executive's principal place
of employment to a location that is more than a 50 mile radius from the
Company's existing executive offices located at 1100 Town & Country Road,
Orange, California, in each case without Executive's prior written consent.

        3.4 DEATH. In the event of Executive's death, this Agreement shall
automatically terminate and shall be of no further force and effect. Termination
of Executive's employment as a result of his death shall not accelerate the
vesting of Executive's Options or result in any obligation by the Company to pay
to Executive's estate or heirs any Severance Pay or employee benefits (including
Other Benefits). Notwithstanding the termination of this Agreement, the Company
shall be obligated to pay Executive's estate or heirs the Pro-Rated Bonus
pursuant to the terms of Section 2.2(b).

        3.5 DISABILITY. In the event of Executive's Disability (as defined
below) during Executive's employment with the Company for any period of at least
three (3) consecutive months, the Company shall have the right, which may be
exercised in its sole discretion, to terminate this Agreement. In the event the
Company elects to terminate this Agreement due to Executive's Disability, the
vesting of Executive's Options shall not accelerate and Executive shall not be
entitled to any Severance Pay or employee benefits (including Other Benefits) at
any time, but Executive shall be entitled to normal disability benefits in
accordance with the policies established from time to time by the Company. For
purposes of this Agreement, "EXECUTIVE'S DISABILITY" shall mean the inability of
Executive to perform his employment services hereunder by reason of physical or
mental illness or incapacity as determined by a physician chosen by the Company
and reasonably satisfactory to Executive or his legal representative.

        3.6 CHANGE IN CONTROL. Within 15 days following the consummation of a
Change in Control, the Company shall pay to Executive a cash payment ("CHANGE IN
CONTROL PAYMENT") equal to the sum of (i) Executive's annual Base Salary then in
effect, plus (ii) 175% of such annual Base Salary. Following the consummation of
a Change in Control, Executive shall not be entitled to receive, and hereby
waives all right to Severance Pay pursuant to Section 3.2(a) or 3.3(a) in the
event Executive's employment with the Company is later terminated for any
reason. 

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<PAGE>   6


For purposes of this Section 3.6, "CHANGE IN CONTROL" shall have the meaning
ascribed to such term in Article VIII of the Incentive Plan. If Executive's
employment with the Company is terminated by the Company other than for Cause at
any time following the public announcement of a prospective Change in Control,
then, notwithstanding such termination, the Company shall pay to Executive,
within 15 days following the consummation of such Change in Control, the Change
in Control Payment based on Executive's Base Salary in effect on the date of
such termination; provided, however, that such Change in Control Payment shall
be reduced by the total amount of any Severance Pay received by Executive, and
Executive thereafter shall not be entitled to any further payments of Severance
Pay.

                                       IV.
                          NONDISCLOSURE OF INFORMATION
                        AND NON-SOLICITATION OF EMPLOYEES

        4.1 NONDISCLOSURE OF PROPRIETARY INFORMATION. At all times during and
after Executive's employment with the Company (whether or not such termination
is voluntary or involuntary, with or without Cause or Good Reason or by
disability), Executive agrees to keep in strict confidence and trust all
Proprietary Information (as defined below) and not to use or disclose (or induce
or assist in the use or disclosure of) any Proprietary Information without the
prior express written consent of the Company, except as may be necessary in the
ordinary course of performing Executive's duties as an officer of the Company.
Executive acknowledges that irreparable injury will result to the Company from
Executive's violation or continued violation of the terms of this Article IV,
and Executive expressly agrees that the Company shall be entitled, in addition
to damages and any other remedies provided by law, to an injunction or other
equitable remedy respecting such violation or continued violation. For purposes
of this Agreement, "PROPRIETARY INFORMATION" shall mean information generally
unavailable to the public that has been created, discovered, developed, or
otherwise become known to the Company or in which property rights have been
assigned or otherwise conveyed to the Company, including any modifications or
enhancements thereto, which information has material economic value or potential
material economic value to the Company or the business in which the Company is
or will be engaged. Proprietary Information shall include, but not be limited
to, financial, sales and distribution information; business plans, strategies
and forecasts; lists of employees, contractors, customers, agents and
independent brokers; trade secrets; processes; formulas; data; know-how;
negative know-how; improvements; discoveries; developments; designs; inventions;
techniques; proposals; reports; client information; and software programs and
information (whether or not expressed in written form). Such restrictions on the
use or disclosure of Proprietary Information do not extend to any item of
information which (i) is publicly known immediately prior to the time of its
disclosure, (ii) is lawfully received from a third party not bound in a
confidential relationship to the Company, (iii) is published or otherwise made
known to the public by the Company or (iv) was already known to Executive prior
to the date hereof.

        4.2 RETURN OF PROPRIETARY INFORMATION AND PROPERTY. Upon termination of
Executive's employment, Executive will deliver to the Company all Proprietary
Information and any equipment, supplies, facilities and other tangible property
owned, leased or contracted for by the Company which property is in Executive's
possession as of the date of such termination.


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<PAGE>   7

        4.3 NON-SOLICITATION. Executive agrees that, so long as he is employed
by the Company and for a period of one (1) year after termination of his
employment for any reason, he shall not (i) directly or indirectly solicit,
induce or attempt to solicit or induce any Company employee to discontinue his
or her employment with the Company, (ii) usurp any opportunity of the Company
that Executive became aware of during his tenure at the Company or which is made
available to him on the basis of the belief that Executive is still employed by
the Company, or (iii) directly or indirectly solicit or induce or attempt to
influence any person or business that is an account, customer or client of the
Company to restrict or cancel the business of any such account, customer or
client with the Company.

                                       V.
                                 NON-COMPETITION

        So long as Executive is employed by the Company and for a period of one
(1) year after termination of his employment for any reason, Executive shall
not, without the prior written consent of the Company, either directly or
indirectly, including without limitation through a partnership, joint venture,
corporation or other entity or as a consultant, director or employee, engage in
any activity which the Company shall determine in good faith to be in
competition with the Company, including, without limitation, any business
activities conducted by the Company as of the date hereof within those
geographic areas in which the Company conducts active business operations. The
parties hereto agree that both the scope and nature of the covenant and the
duration and area for which the covenant not to compete set forth in this
Article V is to be effective are reasonable in light of all facts and
circumstances.

                                       VI.
                                  MISCELLANEOUS

        6.1 SUCCESSORS AND ASSIGNS; BINDING AGREEMENT. This Agreement shall
inure to the benefit of and shall be binding upon the Company, its successors
and assigns. The obligations and duties of the Executive hereunder are personal
and otherwise not assignable. This Agreement shall inure to the benefit of and
be enforceable by the Executive's legal representatives. This Agreement shall
not be terminated by the voluntary or involuntary dissolution of the Company or
by any merger or consolidation, whether or not the Company is the surviving or
resulting corporation, or upon any transfer of all or substantially all of the
assets of the Company. In the event of any such dissolution, merger,
consolidation or transfer of assets, the provisions of this Agreement shall bind
and inure to the benefit of the surviving or resulting corporation, or the
corporation to which such assets shall have been transferred, as the case may
be; provided, however, that the Company will require any successor to all or
substantially all of the business and/or assets of the Company, by agreement in
form and substance satisfactory to Executive, to expressly assume and agree to
perform under this Agreement in the same manner and to the same extent that the
Company would be required to perform it if no such succession had taken place.

        6.2 ARBITRATION. Other than with respect to Article IV and Article V
hereof, any and all disputes arising out of the interpretation, application or
breach of this Agreement shall be 


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subject to arbitration pursuant to the Company's Mutual Agreement to Arbitrate
Claims, a copy of which is attached hereto as Exhibit A and incorporated herein
by this reference.

        6.3 NO WAIVER. The waiver by either party of a breach of any provision
of this Agreement shall not operate as or be construed as a waiver of any
subsequent breach thereof.

        6.4 GOVERNING LAW. This Agreement shall be construed and enforced in
accordance with the laws and decisions of the State of California.

        6.5 AMENDMENTS. No amendment or modification of the terms of this
Agreement shall be valid unless made by written agreement executed by the
parties hereto or their respective successors and legal representative.

        6.6 SEVERABILITY. In the event that any provision of this Agreement,
including without limitation any provision of Article IV or Article V, shall to
any extent be held invalid, unreasonable or unenforceable, in any circumstances,
the parties hereto agree that the remainder of this Agreement and the
application of such provision of this Agreement to other circumstances shall be
valid and enforceable to the fullest extent permitted by law. If any provision,
or any part thereof, is held to be unenforceable because of the scope or
duration of or the area covered by such provision, the parties hereto agree that
the court making such determination shall have the power, and is hereby asked by
the parties, to reduce the scope, duration and/or area of such provisions (and
to substitute appropriate provisions for any such unenforceable provisions) in
order to make such provisions enforceable to the fullest extent permitted by
law, and/or to delete specific words and phrases, and such modified provisions
shall then be enforceable and shall be enforced.

        6.7 ENTIRE AGREEMENT; NO OTHER CLAIMS. This Agreement constitutes the
entire agreement between the parties regarding the subject matter hereof, and
supersedes all prior or contemporaneous negotiations, understandings or
agreements of the parties, whether written or oral, with respect to such subject
matter. Executive acknowledges that all compensation and benefits of any nature
due to Executive from the Company's predecessor, Ameriquest Mortgage Company,
and its affiliates (collectively "Old Long Beach"), have been paid in full and
Executive waives any and all claims relating thereto for the benefit of Old Long
Beach and the Company.



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        IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement as of the day and year first above written.

                                       The "Company":

                                       LONG BEACH FINANCIAL CORPORATION,
                                       a Delaware corporation


                                       By:   /s/ DAVID S. ENGELMAN
                                             -----------------------------------
                                       Its:  Chairman of Compensation Committee


                                       By:   /s/ M. JACK MAYESH
                                             -----------------------------------
                                            Its:  Chairman of the Board

                                       LONG BEACH MORTGAGE COMPANY,
                                       a Delaware corporation


                                       By:   /s/ DAVID S. ENGELMAN
                                             -----------------------------------
                                       Its:  Chairman of Compensation Committee


                                       By:   /s/ M. JACK MAYESH
                                             -----------------------------------
                                       Its:  Chairman of the Board


                                       "Executive":

                                       /s/ FRANK J. CURRY
                                       -----------------------------------------
                                       Name:  Frank J. Curry



                                       9



<PAGE>   10




                                                                       EXHIBIT A



                      MUTUAL AGREEMENT TO ARBITRATE CLAIMS



         Executive recognizes that differences may arise between the Company and
Executive during or following Executive's employment with the Company, and that
those differences may or may not be related to Executive's employment. Executive
understands and agrees that by entering into the Employment Agreement (the
"EMPLOYMENT AGREEMENT") with the Company into which this Mutual Agreement to
Arbitrate Claims is incorporated by reference ("ARBITRATION AGREEMENT"),
Executive anticipates gaining the benefits of a speedy, impartial
dispute-resolution procedure.

         Executive understands that any capitalized terms used but not defined
in this Arbitration Agreement shall have the meanings ascribed thereto in the
Employment Agreement, provided that any reference in this Arbitration Agreement
to the Company will also be a reference to all subsidiary and affiliated
entities; all benefit plans; the benefit plans' sponsors, fiduciaries,
administrators, affiliates; and all successors and assigns of any of them.

        Claims Covered by the Agreement

        The Company and Executive mutually consent to the resolution by
arbitration of all claims ("claims"), whether or not arising out of Executive's
employment (or its termination), that the Company may have against Executive or
that Executive may have against the Company or against its officers, directors,
employees or agents in their capacity as such or otherwise. The claims covered
by this Arbitration Agreement include, but are not limited to, claims for wages
or other compensation due; claims for breach of any contract or covenant
(express or implied); tort claims; claims for discrimination (including, but not
limited to, race, sex, religion, national origin, age, marital status, medical
condition, or disability); claims for benefits (except where an employee benefit
or pension plan specifies that its claims procedure shall culminate in an
arbitration procedure different from this one), and claims for violation of any
federal, state, or other governmental law, statute, regulation, or ordinance,
except claims excluded in the Claims Not Covered section below.

        Except as otherwise provided in this Arbitration Agreement, both the
Company and Executive agree that neither shall initiate or prosecute any lawsuit
or administrative action (other than an administrative charge of discrimination)
in any way related to any claim covered by this Arbitration Agreement.

        Claims Not Covered by this Arbitration Agreement

        Claims Executive may have for workers' compensation or unemployment
compensation benefits are not covered by this Arbitration Agreement.




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        Also not covered are claims by the Company for injunctive and/or other
equitable relief for unfair competition and/or the use and/or unauthorized
disclosure of trade secrets or confidential information, as to which Executive
understands and agrees that the Company may seek and obtain relief from a court
of competent jurisdiction.

        Required Notice of All Claims and Statute of Limitations

        The Company and Executive agree that the aggrieved party must give
written notice of any claim to the other party within one (1) year of the date
the aggrieved party first has knowledge of the event giving rise to the claim;
otherwise the claim shall be void and deemed waived even if there is a federal
or state statute of limitations which would have given more time to pursue the
claim.

        Written notice to the Company, or its officers, directors, employees or
agents, shall be sent to its Chief Executive Officer at the Company's
then-current address. Executive will be given written notice at the last address
recorded in Executive's personnel file.

        The written notice shall identify and describe the nature of all claims
asserted and the facts upon which such claims are based. The notice shall be
sent to the other party by certified or registered mail, return receipt
requested.

        Discovery

        Each party shall have the right to take the deposition of one individual
and any expert witness designated by another party. Each party also shall have
the right to propound requests for production of documents to any party. The
subpoena right specified below shall be applicable to discovery pursuant to this
paragraph. Additional discovery may be had only where the Arbitrator selected
pursuant to this Agreement so orders, upon a showing of substantial need.

        Designation of Witnesses

        At least 30 days before the arbitration, the parties must exchange lists
of witnesses, including any expert, and copies of all exhibits intended to be
used at the arbitration.

        Subpoenas

        Each party shall have the right to subpoena witnesses and documents for
the arbitration.

        Arbitration Procedures

        The Company and Executive agree that, except as provided in this
Arbitration Agreement, any arbitration shall be in accordance with the
then-current Model Employment Arbitration Procedures of the American Arbitration
Association ("AAA") before an Arbitrator who is licensed to practice law in the
state of California ("Arbitrator"). The arbitration shall take place in or near
the city in which Executive is or was last employed by the Company, if 




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<PAGE>   12


Executive is or was employed in the State of California. If Executive is or was
employed outside the State of California, then at the Company's headquarters in
Orange, California.

        The Arbitrator shall be selected as follows. The AAA shall give each
party a list of 11 arbitrators drawn from its panel of labor-management dispute
arbitrators. Each party may strike all names on the list it deems unacceptable.
If only one common name remains on the lists of all parties, that individual
shall be designated as the Arbitrator. If more than one common name remains on
the lists of all parties, the parties shall strike names alternately until only
one remains. The party who did not initiate the claim shall strike first. If no
common name remains on the lists of all parties, the AAA shall furnish an
additional list or lists until the Arbitrator is selected.

        The Arbitrator shall apply the substantive law (and the law of remedies,
if applicable) of the state in which the claim arose, or federal law, or both,
as applicable to the claim(s) asserted. The Federal Rules of Evidence shall
apply. The Arbitrator, and not any federal, state, or local court or agency,
shall have exclusive authority to resolve any dispute relating to the
interpretation, applicability, enforceability or formation of this Agreement,
including but not limited to any claim that all or any part of this Agreement is
void or voidable. The arbitration shall be final and binding upon the parties.

        The Arbitrator shall have jurisdiction to hear and rule on pre-hearing
disputes and is authorized to hold pre-hearing conferences by telephone or in
person as the Arbitrator deems necessary. The Arbitrator shall have the
authority to entertain a motion to dismiss and/or a motion for summary judgment
by any party and shall apply the standards governing such motions under the
Federal Rules of Civil Procedure.

        Either party, at its expense, may arrange for and pay the cost of a
court reporter to provide a stenographic record of proceedings.

        Either party, upon request at the close of hearing, shall be given leave
to file a post-hearing brief. The time for filing such a brief shall be set by
the Arbitrator.

        The Arbitrator shall render an award and opinion in the form typically
rendered in labor arbitrations.

        Arbitration Fees and Costs

        The Company and Executive shall equally share the fees and costs of the
Arbitrator. Each party will deposit funds or post other appropriate security for
its share of the Arbitrator's fee, in an amount and manner determined by the
Arbitrator, 10 days before the first day of hearing. Each party shall pay for
its own costs and attorneys' fees, if any. However, if any party prevails on a
statutory claim which affords the prevailing party attorneys' fees, or if there
is a written agreement providing for fees, the Arbitrator may award reasonable
fees to the prevailing party.



                                       12


<PAGE>   13


        Judicial Review

        Either party may bring an action in any court of competent jurisdiction
to compel arbitration under this Agreement and to enforce an arbitration award.
A party opposing enforcement of an award may not do so in an enforcement
proceeding, but must bring a separate action in any court of competent
jurisdiction to set aside the award, where the standard of review will be the
same as that applied by an appellate court reviewing a decision of a trial court
sitting without a jury.

        Interstate Commerce

        Executive understands and agrees that the Company is engaged in
transactions involving interstate commerce and that Executive's employment
involves such commerce.

        Requirements for Modification or Revocation

        This Arbitration Agreement shall survive the termination of Executive's
employment. It can only be revoked or modified by a writing signed by the
parties which specifically states an intent to revoke or modify this Arbitration
Agreement.

        Sole and Entire Agreement

        This is the complete agreement of the parties on the subject of
arbitration of disputes, except for any arbitration agreement in connection with
any pension or benefit plan. This Agreement supersedes any prior or
contemporaneous oral or written understanding on the subject. No party is
relying on any representations, oral or written, on the subject of the effect,
enforceability or meaning of this Arbitration Agreement, except as specifically
set forth in this Arbitration Agreement.

        Construction

        If any provision of this Arbitration Agreement is adjudged to be void or
otherwise unenforceable, in whole or in part, such adjudication shall not affect
the validity of the remainder of this Arbitration Agreement.

        Consideration

        The promises by the Company and by Executive to arbitrate differences,
rather than litigate them before courts or other bodies, provide consideration
for each other.

        Employment Agreement

        This Arbitration Agreement is not, and shall not be construed to create,
any contract of employment, express or implied. Nor does this Arbitration
Agreement in any way alter the "at-will" status of Executive's employment.



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<PAGE>   14


        Voluntary Agreement

        EXECUTIVE ACKNOWLEDGES THAT EXECUTIVE HAS CAREFULLY READ THIS
ARBITRATION AGREEMENT, THAT EXECUTIVE UNDERSTANDS ITS TERMS, THAT ALL
UNDERSTANDINGS AND AGREEMENTS BETWEEN THE COMPANY AND EXECUTIVE RELATING TO THE
SUBJECTS COVERED IN THIS ARBITRATION AGREEMENT ARE CONTAINED IN IT, AND THAT
EXECUTIVE HAS ENTERED INTO THIS ARBITRATION AGREEMENT VOLUNTARILY AND NOT IN
RELIANCE ON ANY PROMISES OR REPRESENTATIONS BY THE COMPANY OTHER THAN THOSE
CONTAINED IN THIS ARBITRATION AGREEMENT ITSELF.

        EXECUTIVE FURTHER ACKNOWLEDGES THAT EXECUTIVE HAS BEEN GIVEN THE
OPPORTUNITY TO DISCUSS THIS ARBITRATION AGREEMENT WITH EXECUTIVE'S PRIVATE LEGAL
COUNSEL AND HAS AVAILED HIM/HERSELF OF THAT OPPORTUNITY TO THE EXTENT EXECUTIVE
WISHES TO DO SO.




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