Document:

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                                                                    EXHIBIT 10.2

                              EMPLOYMENT AGREEMENT

                  This is an EMPLOYMENT AGREEMENT "Agreement" effective as of
January 21, 1999 ("Effective Date"), between HOWARD DITTRICH, M.D., an
individual ("Employee"), and MOLECULAR BIOSYSTEMS, INC., a Delaware corporation
("the Company").

                  1.  EMPLOYMENT.

                           a.  POSITION.  The Company agrees to employ Employee
as its EXECUTIVE VICE PRESIDENT.

                           b.  DUTIES.  Employee shall diligently, and to the
best of his ability, perform all such duties incident to his position and use
his best efforts to promote the interests of the Company.

                           c. TIME TO BE DEVOTED TO EMPLOYMENT. Employee shall
devote his full time and energy to the business of the Company and shall not be
engaged in any competitive business activity without the express written consent
of the Company. However, it is understood and agreed that Employee will be
entitled to at least ten paid days off each year to attend any continuing
medical education classes or courses that he chooses. In addition, Employee will
be entitled to at least one half paid day off each week for purposes of carrying
out clinical activities at the University of California, San Diego hospitals and
clinics as part of his status as a clinical professor of medicine. Employee
hereby represents that he is not a party to any agreement which would be an
impediment to entering into this Employment Agreement and that he is permitted
to enter into this Employment Agreement and perform the obligations hereunder.

                           d.  AT-WILL EMPLOYMENT.  Employee shall be employed
on an at-will basis and may terminate his employment and may be terminated from
his employment at any time with or without cause, subject to the severance
payment provisions set forth in paragraphs 14 and 16 below.

                  2.  COMPENSATION AND BENEFITS.

                           a.  ANNUAL SALARY. In consideration of and as
compensation for the services agreed to be performed by Employee hereunder, the
Company agrees to pay Employee, as of the Effective Date of this Agreement, an
annual Base Salary of $250,000, payable in accordance with the Company's regular
payroll schedule, less applicable withholdings and deductions. Employee`s
annual Base Salary is subject to being increased as part of the Company's annual
salary review process. If Employee is an Officer of the Company, changes to
Base Salary must be approved by the Board of Directors of the Company (the
"Board").
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                           b.  PARTICIPATION IN BENEFIT PLANS.  Employee shall
be entitled to participate in any vacation or other benefit plan, to the extent
eligible, that is generally available to the other employees of the Company at
the same level as Employee. The Company reserves the right to amend, modify or
terminate any employee benefits at any time for any reason.

                           c.  REIMBURSEMENT OF EXPENSES.  The Company shall
reimburse Employee for all reasonable business expenses incurred by Employee on
behalf of the Company provided that: (i) such reasonable expenses are ordinary
and necessary business expenses incurred on behalf of the Company, and (ii)
Employee provides the Company with itemized accounts, receipts and other
documentation for such reasonable expenses as are reasonably required by the
Company. In addition, the Company will pay on Employee's behalf the following
professional license fees and memberships: California Physician and Surgeon,
Drug Enforcement Agency ("DEA"), American College of Cardiology, American Heart
Association, American Society of Echocardiography, American College of Medicine,
and the American Medical Association (local, state and national).

                           d.  EDUCATION BENEFIT.  The Company agrees to pay on
behalf of the Employee reasonable tuition/enrollment costs associated with an
executive development/training. The Company must approve all training
costs/expenses associated with the course/training and the course curriculum, in
advance. The training/development should require no more than a two-week period
away from the job.

                  3. DEFINITIONS. The following definitions shall apply with
respect to this agreement.

                           a.  BASE SALARY means the Employee's annual salary;
it shall not include overtime pay, commissions or any other benefits and special
allowances for which the Employee is eligible (e.g., bonuses). If Employee's
annual salary is adjusted following the Effective Date of this Agreement, the
adjusted annual salary would then represent Employee's Base Salary. "Weekly
Salary" shall mean the Base Salary divided by fifty-two. "Monthly Salary" shall
mean Base Salary divided by 12.

                           b. CHANGE OF CONTROL shall mean a change in ownership
or control of the Company effected through any of the following transactions:

                                    (1) a merger, consolidation or
reorganization approved by the Company's stockholders, unless securities
representing more than fifty percent (50%) of the total combined voting power of
the voting securities of the successor corporation are immediately thereafter
beneficially owned, directly or indirectly and in substantially the same
proportion, by the persons who beneficially owned the Company's outstanding
voting securities immediately prior to such transaction, or

                                    (2) any stockholder-approved transfer or
other disposition of all or substantially all of the Company's assets, or

                                    (3) the acquisition, directly or indirectly
by any person or related group of persons (other than the Company or a person
that directly or indirectly controls, is controlled by, or is under common
control with, the Company), of beneficial ownership (within

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the meaning of Rule 13d3 of the 1934 Act) of securities possessing more than
fifty percent (50%) of the total combined voting power of the Company's
outstanding securities pursuant to a tender or exchange offer made directly to
the Company's stockholders, or

                                    (4) a change in the composition of the Board
over a period of thirty-six (36) consecutive months or less such that a majority
of the Board members ceases, by reason of one or more contested elections for
Board membership, to be comprised of individuals who either (A) have been Board
members continuously since the beginning of such period or (B) have been elected
or nominated for election as Board members during such period by at least a
majority of the Board members described in clause (A) who were still in office
at the time the Board approved such election or nomination.

                           c. CONSTRUCTIVE TERMINATION means within two years
after a Change of Control during which two-year period any of the following
events take place AND Employee gives written notice of his intent to resign his
employment with the Company and said resignation is submitted within thirty (30)
days of the event: (i) a reduction in the Base Salary of the Employee of more
than fifteen percent (15%); (ii) a relocation (or demand for relocation) of
Employee's place of employment to a location more than fifty (50) miles from
Employee's current place of employment; (iii) a significant or material
reduction in Employee's job duties or level of responsibility.

                           d. 1934 ACT means the Securities Exchange Act of
1934, as amended, and the rules and regulations promulgated thereunder.

                           e. TERMINATION FOR CAUSE means a termination of
Employee's employment by the Company due to the Employee's:

                                    (1) Misconduct that has a material adverse
effect on the Company's operations, prospects, reputation or business;

                                    (2) Conviction of a felony;

                                    (3) Act of fraud against, or theft of
property belonging to, the Company; or

                                    (4) Gross negligence or the repeated failure
of Employee to perform his duties and responsibilities to the reasonable
satisfaction of the Board or superior after written notice of such failure, or
any breach by Employee of his fiduciary duties to the Company or any breach by
Employee of his confidentiality or proprietary information agreement with the
Company.

                           f. TERMINATION WITHOUT CAUSE means a termination of
Employee's employment by the Company for any reason other than those specified
in subparagraph 3.e.(1) through (4) above.

                           g. DISABILITY means that as a result of any physical
or mental injury or disability, Employee is unable to perform the essential
functions of his job, with or without reasonable accommodation. A notice will be
issued when the Company has reasonably

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determined that Employee has become unable to perform substantially his services
and duties hereunder with or without reasonable accommodation because of any
physical or mental injury or disability, and that it is reasonably likely that
he will not be able to resume substantially performing his services and duties
on substantially the terms and conditions as set forth in this Employment
Agreement.

                  4. EMPLOYMENT. The Company shall be entitled to all of the
benefits and profits arising from or incident to the work, services and advice
rendered by the Employee relating to the work performed for the Company. The
Employee shall make all information available to the Company that relates to the
Company's business of which he has any knowledge and shall not use any such
information or the benefits of any such information for his personal profit or
that of any third party. The Employee agrees to use his best efforts to promote
the interests of the Company including, where appropriate, the publication of
articles in medical and scientific journals and the participation in medical and
scientific seminars and symposiums relating to the business and affairs of the
Company and/or his research efforts performed for and on behalf of the Company.

                  5. DISCLOSURES. Employee shall promptly disclose in writing to
the officials designated by the Company to receive such disclosures, complete
information concerning each and every invention, discovery, improvement, device,
design, apparatus, practice, process, method or product (hereinafter referred to
as "Inventions"), whether Employee considers them patentable or not, made,
developed, perfected, devised, conceived or reduced to practice by Employee,
either solely or in collaboration with others, during the period of Employee's
employment by the Company, and up to and including a period of twelve (12)
months after termination of employment, whether or not during regular working
hours, relating either directly or indirectly to the business, products,
practices or techniques of the Company or to the Company's actual or
demonstrably anticipated research or development, or resulting from any work
performed by Employee for the Company or with the equipment, supplies,
facilities or confidential information of the Company.

                  6. CONFIDENTIALITY. Employee recognizes that his employment
with the Company will involve contact with information of substantial value to
the Company, which is not generally known in the trade and which gives the
Company an advantage over its competitors who do not know or use it, including
but not limited to techniques, designs, drawings, processes, inventions,
developments, equipment, prototypes, sales and customer information, and
business and financial information, relating to the business, products,
practices or techniques of the Company (hereinafter referred to as "Confidential
Information"). Employee shall at all times regard and preserve as confidential
such Confidential Information obtained by Employee from whatever source and
shall not, either during Employee's employment or thereafter, publish or
disclose any part of such Confidential Information in any manner, or use the
same except on behalf of the Company, without the prior written consent of the
Company. Further, Employee shall, during his employment and thereafter, refrain
from any acts or omissions that would reduce the value of such Confidential
Information to the Company.

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                  7. ASSIGNMENT OF RIGHTS. Employee hereby agrees that any
Inventions made, developed, perfected, devised, conceived or reduced to practice
by Employee during the period of his employment by the Company, and any other
Inventions made, developed, perfected, devised, conceived or reduced to practice
by Employee during said period of twelve (12) months after termination of his
employment if based upon the Confidential Information of the Company, relating
either directly or indirectly to the business, products, practices or techniques
of the Company or to the Company's actual or demonstrably anticipated research
or development, or resulting from any work performed by Employee for the Company
or with the equipment, supplies, facilities or Confidential Information of the
Company, are the sole property of the Company, and hereby assigns and agrees to
assign to the Company, its successors and assigns, all of my right, title and
interest in and to said Inventions, and any patent applications or Letters
Patent thereon.

                                  NOTIFICATION

                  THIS AGREEMENT DOES NOT APPLY TO AN INVENTION FOR WHICH NO
EQUIPMENT, SUPPLIES, FACILITY, OR TRADE SECRET INFORMATION OF THE COMPANY WAS
USED AND WHICH WAS DEVELOPED ENTIRELY ON EMPLOYEE'S OWN TIME, AND (A) WHICH DOES
NOT RELATE (1) TO THE BUSINESS OF THE COMPANY OR (2) TO THE COMPANY'S ACTUAL OR
DEMONSTRABLY ANTICIPATED RESEARCH OR DEVELOPMENT, OR (B) WHICH DOES NOT RESULT
FROM ANY WORK PERFORMED BY EMPLOYEE FOR THE COMPANY, AS DEFINED AND PROVIDED BY
SECTION 2870 OF THE CALIFORNIA LABOR CODE.

                  8. COVENANT OF COOPERATION. Employee shall, at any time during
employment or thereafter, upon request and without further compensation
therefor, but with all reasonable expenses incurred by Employee to be
reimbursed, do all lawful acts, including but not limited to the execution of
papers and oaths, the giving of testimony, and the obtaining of evidence that in
the opinion of the Company, its successors or assigns, may be necessary or
desirable for obtaining, sustaining, reissuing or enforcing Letters Patent in
the United States and throughout the world for said Inventions, and for
perfecting, recording or maintaining the title of the Company, its successors
and assigns, to said Inventions and to any patent applications made and any
Letters Patent granted for said Inventions in the United States and throughout
the world.

                  9. PATENT ENFORCEMENT. The Company shall have the sole
discretion whether to obtain, maintain, modify or enforce any domestic or
foreign patent for said Inventions assigned to the Company pursuant to this
Agreement. The Company is free to enter into any licensing or assignment
agreement with any third party or to use whatever means it deems best to
develop, promote or market said Inventions assigned to the Company pursuant to
this Agreement or any domestic or foreign patent thereof.

                  10. CLAIMS BY THIRD PARTY. As to any Inventions which were
made, developed, perfected, devised, conceived or reduced to practice by
Employee during the period of his employment by the Company, and up to and
including a period of twelve (12) months after termination of his employment,
but which are claimed for any reason to belong to an entity or person other than
the Company, Employee will promptly disclose the same in writing to the Company
and shall not disclose the same to others if the Company, within twenty (20)
days thereafter, shall claim ownership of such Inventions under the terms of
this Agreement.

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                  11. RECORD KEEPING. Employee shall keep complete, accurate and
authentic accounts, notes, data and records of any and all of said Inventions in
the manner and form requested by the Company. Such accounts, notes, data and
records, including all copies thereof, shall be the property of the Company, and
upon its request, Employee will promptly surrender the same to it, or if not
previously surrendered, Employee will promptly surrender the same to the Company
at the conclusion of his employment.

                  12. RECORDS PROPERTY OF COMPANY. Employee agrees that all
accounts, notes, data sketches, drawings and other documents and records, and
all material and physical items of any kind, including all reproductions and
copies thereof, which relate in any way to the business, products, practices or
techniques of the Company or contain Confidential Information, made by Employee
or that come into Employee's possession by reason of his employment are the
property of the Company and shall be promptly surrendered to the Company at the
conclusion of Employee's employment.

                  13. NON-SOLICITATION. During Employee's employment with the
Company and for one (1) year thereafter, Employee will not solicit any employee
of the Company to leave the Company for any reason or to accept employment with
any other company. As part of this restriction, Employee will not interview any
employee of the Company or provide any input to any third party regarding any
such person for the purpose of offering such person employment elsewhere during
the period in question. However, this obligation shall not affect any
responsibility Employee may have as an employee of the Company with respect to
the bona fide hiring and firing of Company personnel.

                  14. SEVERANCE. PAYMENTS AND OTHER BENEFITS IN THE EVENT OF
TERMINATION OF EMPLOYMENT FOLLOWING A CHANGE OF CONTROL.

                           a.  In the event that either of the following two
events occur within two years after a Change of Control, the Company will
provide the following payment and benefits to Employee: (i) Employee's
employment is terminated by the Company Without Cause, or (ii) Employee's
employment terminates as a result of a Constructive Termination:

                                    (1) The Company shall make the following
payments to Employee:

                                            (A)  ACCRUED SALARY AND BENEFITS.
The Company shall pay Employee's Base Salary through the effective date of
termination of Employee's Employment. In addition to the Severance Payments
payable to an eligible employee as described below, such employee shall receive
the following: (i) payment for accrued but unused vacation time; and (ii) group
health coverage, including eligible medical, dental and vision insurance through
the last day of the calendar month during which the termination occurs (group
health coverage after such date being governed by COBRA.)

                                            (B) SEVERANCE PAYMENTS. The Company
shall pay to Employee two times the sum of (a) his Base Salary in effect
immediately prior to the Change of Control and (b) a payment equal to the higher
of (x) 100% Employee's annual target bonus as determined under the Company's
incentive compensation plan or (y) an average of the last three

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actual bonuses accorded to Employee. If an incentive compensation plan has not
been implemented, then the determination in (y) will govern.

                                            (C) MANNER OF PAYMENT. Severance
Payments may be paid in accordance with regular payroll periods, in a single
lump sum payment, or any combination thereof, as deemed appropriate by the
Company. Taxes and other appropriate deductions will be withheld; however, 401k
contributions will not be allowed.

                                    (2) The Company shall provide the following
benefits to Employee:

                                            (A)  COBRA.  An eligible Employee's
existing coverage under the Company's group health plan (and, if applicable, the
existing group health coverage for eligible dependents) will end on the last day
of the month in which the eligible Employee's employment terminates. The
eligible Employee and his eligible dependents may then be eligible to elect
temporary continuation coverage under the Company's group health plan in
accordance with the Consolidated Omnibus Budget Reconciliation Act of 1985, as
amended ("COBRA"). The eligible Employee (and, if applicable, his eligible
dependents) will be provided with a COBRA election form and notice which
describe his rights to continuation coverage under COBRA. If an eligible
Employee elects COBRA continuation coverage, then the Company will pay for COBRA
coverage (such payments shall not include COBRA coverage with respect to the
Company's Section 125 health care reimbursement plan) for (i) eighteen (18)
months, or (ii) the maximum period permitted under COBRA guidelines, but not to
exceed 24 months. If Employee does exhaust the COBRA period, the Company will
reimburse Employee for the cost of an individual health insurance policy in an
amount not to exceed the amount of the monthly COBRA premium previously paid by
the Company pursuant to this paragraph for the remainder of the two year period
following Employee's termination of employment. After such period of
Company-paid coverage, the eligible employee (and, if applicable, his eligible
dependents) may continue coverage at his own expense in accordance with COBRA or
other applicable laws. No provision of this agreement will affect the
continuation coverage rules under COBRA. Therefore, the period during which the
eligible employee must elect to continue the Company's group health plan
coverage under COBRA, the length of time during which COBRA coverage will be
made available to the eligible employee, and all the eligible employee's other
rights and obligations under COBRA will be applied in the same manner that such
rules would apply in the absence of this Plan. In the event, however, an
Employee becomes eligible for benefits under another plan prior to the
expiration of the period in which the Company is paying benefit premiums, the
Company shall no longer be obligated to pay such benefit premiums. The Employee
is required to notify the Company of eligibility for benefits under another plan
and is expected to enroll in the new group plan at the first eligible
opportunity unless Employee chooses, at Employee's sole expense, to continue
COBRA benefits through the Company. If Employee fails to notify the Company of
Employee's eligibility for alternative benefits, the Company shall have the
right to discontinue payment of COBRA premiums upon thirty (30) days notice to
Employee. In no event shall a cash payment be made to Employee in lieu of the
payment of COBRA premiums. The payment of COBRA premiums by the Company shall
not extend the maximum eligible COBRA coverage period.

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                                            (B) OUTPLACEMENT SERVICES. The
Company will make available to Employee, upon his request, outplacement services
provided by a reputable outplacement counselor selected by the Company for a
period of nine months following termination. The Company will assume the cost of
all such outplacement services. In no event will a cash payment be made in lieu
of outplacement benefits.

                  15. ACCELERATION OF STOCK OPTIONS IN THE EVENT OF A CHANGE OF
CONTROL. In the event of a Change of Control (whether or not followed by
termination of Employee's employment), all stock options under any Company stock
option plan which Employee holds at the time of such Change of Control shall
become fully "vested" (i.e., immediately exercisable). The Company shall also
extend the period of exercisability of those stock options to the maximum of
four years, or the natural expiration of the stock options, whichever is
earlier.

                  16. SEVERANCE PAYMENTS AND OTHER BENEFITS IN THE EVENT OF
TERMINATION OTHER THAN FOLLOWING A CHANGE OF CONTROL.

                           a.  In the event Employee's employment is terminated
Without Cause other than within two (2) years following a Change in Control, the
Company shall provide the payments and other benefits specified below to
Employee:

                                    (1) The Company shall make the following
payments to Employee:

                                            (A)  ACCRUED SALARY AND BENEFITS.
The Company shall pay Employee's Base Salary through the effective date of
termination of Employee's Employment. In addition, employee shall receive the
following: (i) payment for accrued but unused vacation time; and (ii) group
health coverage, including eligible medical, dental and vision insurance through
the last day of the calendar month during which the termination occurs (group
health coverage after such date being governed by COBRA.)

                                            (B) SEVERANCE PAYMENTS. If such
termination of employment occurs on or before December 31, 2000, then the
Company shall pay to Employee a severance payment equal to his Monthly Salary,
in effect immediately prior to termination, for twelve (12) months. If such
termination of employment occurs after December 31, 2000, then the Company shall
pay to Employee a severance payment equal to his Monthly Salary in effect
immediately prior to termination, for fifteen (15) months. In either event, the
period during which the severance benefits are paid will be referred to as the
"Severance Period."

                                            (C) MANNER OF PAYMENT. These
Severance Payments may be paid in accordance with regular payroll periods over
the duration of the Severance Period, in a single lump sum, or any combination
thereof, as deemed appropriate by the Company. Taxes and other appropriate
deductions will be withheld however, 401(k) contributions will not be allowed.

                                    (2) The Company shall provide the following
benefits to Employee:

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                                            (A)   COBRA.  An eligible Employee's
existing coverage under the Company's group health plan (and, if applicable, the
existing group health coverage for eligible dependents) will end on the last day
of the month in which the eligible Employee's employment terminates. The
eligible Employee and his or her eligible dependents may then be eligible to
elect temporary continuation coverage under the Company's group health plan in
accordance with the Consolidated Omnibus Budget Reconciliation Act of 1985, as
amended ("COBRA"). The eligible Employee (and, if applicable, his or her
eligible dependents) will be provided with a COBRA election form and notice
which describe his or her rights to continuation coverage under COBRA. If an
eligible Employee elects COBRA continuation coverage, then the Company will pay
for COBRA coverage (such payments shall not include COBRA coverage with respect
to the Company's Section 125 health care reimbursement plan) for the Severance
Period. After such period of Company-paid coverage, the eligible employee (and,
if applicable, his eligible dependents) may continue coverage at his own expense
in accordance with COBRA or other applicable laws. No provision of this
agreement will affect the continuation coverage rules under COBRA. Therefore,
the period during which the eligible employee must elect to continue the
Company's group health plan coverage under COBRA, the length of time during
which COBRA coverage will be made available to the eligible employee, and all
the eligible employee's other rights and obligations under COBRA will be applied
in the same manner that such rules would apply in the absence of this Plan. In
the event, however, an Employee becomes eligible for benefits under another plan
prior to the expiration of the period in which the Company is paying benefit
premiums, the Company shall no longer be obligated to pay such benefit premiums.
The Employee is required to notify the Company of eligibility for benefits under
another plan and is expected to enroll in the new group plan at the first
eligible opportunity unless Employee chooses, at Employee's sole expense, to
continue COBRA benefits through the Company. If Employee fails to notify the
Company of Employee's eligibility for alternative benefits, the Company shall
have the right to discontinue payment of COBRA premiums upon thirty (30) days
notice to Employee. In no event shall a cash payment be made to Employee.

                                            (B) OUTPLACEMENT. The Company will
make available to Employee, upon his request, outplacement services provided by
a reputable outplacement counselor selected by the Company for a period of nine
months following termination. The Company will assume the cost of all such
outplacement services. In no event will a cash payment be made in lieu of
outplacement benefits.

IN NO EVENT SHALL EMPLOYEE BE ENTITLED TO OR RECEIVE SEVERANCE BENEFITS UNDER
BOTH THIS PARAGRAPH 16 AND PARAGRAPH 14. Similarly, if Employee is eligible to
receive severance benefits under any other severance plan created by the Company
then it will reduce dollar for dollar any benefit due under this Agreement.

                  17. SECTION 280G LIMITATION ON SEVERANCE PAYMENTS. The
Severance Payments as described in Paragraph 14(1)(B) of this Agreement shall be
reduced as necessary so that the present value, as determined in accordance
Section 280G(d)(4) of the Internal Revenue Code, of the sum of (i) the Severance
Payments and (ii) all other payments, if any, that must be taken into account
for purposes of computation under Section 280G(b)(2)(A)(ii) of the Internal
Revenue Code in respect of Employee does not exceed 2.99 times Employee's base
amount, as "base amount" is defined in Section 280G(b)(3) of the Internal
Revenue Code.

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                  18. RETENTION BONUS PROGRAM. Employee will continue to
participate in the Retention Package program as explained in the memorandum to
Employee dated December 3, 1998.

                  19. RETENTION BONUS. Employee has been paid a retention bonus
by the Company in the amount of $62,500. This payment has not yet been earned by
the Employee and will not be earned unless and until Employee remains employed
through December 31, 2000. If employee resigns his employment for any reason or
there is a Termination for Cause, either of which occurs prior to December 31,
2000, then Employee will repay the full $62,500 within thirty days of the date
of termination of his employment. If Employee's employment terminates as a
result of a Termination Without Cause, then the entire retention bonus will be
forgiven.

                  20. RESIGNATION, DEATH OR DISABILITY. Employee will not be
entitled to any Severance Benefits or Severance Payments under Paragraphs 14 or
16, or under any other plan, or any other provision of this Agreement, if his
employment is terminated by the Company for Cause or if his employment
terminates due to disability, death or resignation (other than a resignation
which constitutes a CONSTRUCTIVE TERMINATION).

                  21. EXCLUSIVITY. Employee shall not, while employed by the
Company engage in any other employment or business venture for his account or on
behalf of others that relates, directly or indirectly, to the business and
affairs of the Company without the prior written consent of the Company.

                  22. PROHIBITION AGAINST ASSIGNMENT. Employee agrees that this
Agreement and the rights, interests and benefits hereunder shall not be
assigned, transferred, pledged or hypothecated in any way by Employee or any
executor, administrator, heir, legatee, distributee or any other person claiming
under Employee by virtue of this Agreement and shall not be subject to
execution, attachment or similar process. Any attempt to assign, transfer,
pledge or hypothecate or otherwise dispose of this Agreement or of such rights,
interests and benefits contrary to the foregoing provisions, or the levy of any
attachment or similar process thereon shall be null and void and without effect
and shall relieve the Company of any and all liability hereunder.

                  23. NOTICE. Any and all notices, designations, consents,
offers, acceptances or any other communication provided for herein shall be
given in writing by registered or certified mail, return receipt requested,
which shall be addressed, in the case of the Company, to its office in San
Diego, California, and in Employee's case to his last known place of residence
as reflected on the Company's records.

                  24. ENTIRE AGREEMENT. This Agreement, and any stock option or
stock purchase agreements between the Employee and Company, constitute the
entire agreement between Employee and the Company and contains all of the
agreements between the parties with respect to the subject matter hereof; this
Agreement supersedes any and all other agreements, either oral or in writing,
between the parties with respect to the subject matter hereof.

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                  25. BINDING EFFECT. This Agreement shall be binding upon and
inure to the benefit of Employee and the Company and their respective heirs,
legal representatives, executors, administrators, and successors.

                  26. NO OTHER AGREEMENTS. Employee affirms that Employee has no
agreement with any other party that would preclude his compliance with his
obligations under this Agreement as set forth above.

                  27. GOVERNING LAW. This Agreement shall be subject to and
governed by the laws of the State of California.

                  28. AMENDMENT OF AGREEMENT. No change or modification of this
Agreement shall be valid unless the same is in writing and signed by Employee
and the Company. No waiver of any provision of this Agreement shall be valid
unless in writing and signed by the person or party to be charged.

                  29. SEVERABILITY. If any portion or portions of this Agreement
shall be, for any reason, deemed to be invalid or unenforceable, the remaining
portion or portions shall nevertheless be valid, enforceable and carried into
effect, unless to do so would clearly violate the present legal and valid
intention of the parties hereto.

                  30. BREACH. In the event either party breaches this Agreement
and the other party prevails in an action to enforce the terms of this
Agreement, the losing party agrees to pay to the prevailing party all reasonable
attorneys' fees and costs incurred by the prevailing party in prosecuting such
action, and all damages suffered by the prevailing party.

                  31. HEADINGS. The headings of this Agreement are inserted for
convenience only and are not to be considered in construction of the provisions
hereof.

                  32. WAIVER OR BREACH. The waiver by either of the parties
hereto of any breach of any provision hereof shall not be construed to be a
waiver of any succeeding breach of that provision or a waiver of any other
provision of this Agreement.

                  33. ARBITRATION OF DISPUTES. Any dispute arising under this
Agreement shall be resolved through final and binding arbitration conducted
pursuant to the rules of the American Arbitration Association. This shall be in
lieu of any right to a jury trial, which right is expressly waived.

                  34. GENERIC DRUG ENFORCEMENT ACT CERTIFICATION. The
undersigned, certifies that he (1) has never been charged with or convicted of a
federal felony for conduct relating to the development, approval, or regulation
of any drug product or device regulated by the United States Food and Drug
Administration, and (2) has never been debarred or subject to a debarment
proceeding under the Generic Drug Enforcement Act of 1992.

                                       11
<PAGE>

                  WHEREAS, the parties have executed this Agreement as of the
date first above written.

                                      MOLECULAR BIOSYSTEMS, INC.

                                      By:
                                         ------------------------------------
                                          Officer of Molecular Biosystems, Inc.

                                      By:
                                         ------------------------------------
                                          Howard Dittrich. M.D.

                                       12<PAGE>

                                                                    EXHIBIT 10.3

                              EMPLOYMENT AGREEMENT

                  This is an EMPLOYMENT AGREEMENT "Agreement" effective as of
January 21, 1999 ("Effective Date"), between JONI HARVEY, an individual
("Employee"), and MOLECULAR BIOSYSTEMS, INC., a Delaware corporation ("the
Company").

                  1.       EMPLOYMENT.

                           a.       POSITION.  The Company agrees to employ
Employee as its VICE PRESIDENT OF OPERATIONS.

                           b.       DUTIES.  Employee shall diligently, and to
the best of her ability, perform all such duties incident to her position and
use her best efforts to promote the interests of the Company.

                           c. TIME TO BE DEVOTED TO EMPLOYMENT. Employee shall
devote her full time and energy to the business of the Company and shall not be
engaged in any competitive business activity without the express written consent
of the Company. Employee hereby represents that she is not a party to any
agreement which would be an impediment to entering into this Employment
Agreement and that she is permitted to enter into this Employment Agreement and
perform the obligations hereunder.

                           d.       AT-WILL EMPLOYMENT.  Employee shall be
employed on an at-will basis and may terminate her employment and may be
terminated from her employment at any time with or without cause, subject to the
severance payment provisions set forth in paragraphs 14 and 16 below.

                  2.       COMPENSATION AND BENEFITS.

                           a.       ANNUAL SALARY. In consideration of and as
compensation for the services agreed to be performed by Employee hereunder, the
Company agrees to pay Employee, as of the Effective Date of this Agreement, an
annual Base Salary of $150,000, payable in accordance with the Company's regular
payroll schedule, less applicable withholdings and deductions. Employee `s
annual Base Salary is subject to being increased as part of the Company's annual
salary review process.. If Employee is an Officer of the Company, changes to
Base Salary must be approved by the Board of Directors of the Company (the
"Board").

                           b.       PARTICIPATION IN BENEFIT PLANS.  Employee
shall be entitled to participate in any vacation or other benefit plan, to the
extent eligible, that is generally available to the other employees of the
Company at the same level as Employee. The Company reserves the right to amend,
modify or terminate any employee benefits at any time for any reason.
<PAGE>

                           c.       REIMBURSEMENT OF EXPENSES.  The Company
shall reimburse Employee for all reasonable business expenses incurred by
Employee on behalf of the Company provided that: (i) such reasonable expenses
are ordinary and necessary business expenses incurred on behalf of the Company,
and (ii) Employee provides the Company with itemized accounts, receipts and
other documentation for such reasonable expenses as are reasonably required by
the Company.

                  3. DEFINITIONS. The following definitions shall apply with
respect to this agreement.

                           a.       BASE SALARY means the Employee's annual
salary; it shall not include overtime pay, commissions or any other benefits and
special allowances for which the Employee is eligible (e.g., bonuses). If
Employee's annual salary is adjusted following the Effective Date of this
Agreement, the adjusted annual salary would then represent Employee's Base
Salary. "Weekly Salary" shall mean the Base Salary divided by fifty-two.
"Monthly Salary" shall mean Base Salary divided by 12.

                           b.       CHANGE OF CONTROL shall mean a change in
ownership or control of the Company effected through any of the following
transactions:

                                    (1)     a merger, consolidation or
reorganization approved by the Company's stockholders, unless securities
representing more than fifty percent (50%) of the total combined voting power of
the voting securities of the successor corporation are immediately thereafter
beneficially owned, directly or indirectly and in substantially the same
proportion, by the persons who beneficially owned the Company's outstanding
voting securities immediately prior to such transaction, or

                                    (2)     any stockholder-approved transfer or
other disposition of all or substantially all of the Company's assets, or

                                    (3)     the acquisition, directly or
indirectly by any person or related group of persons (other than the Company or
a person that directly or indirectly controls, is controlled by, or is under
common control with, the Company), of beneficial ownership (within the meaning
of Rule 13d3 of the 1934 Act) of securities possessing more than fifty percent
(50%) of the total combined voting power of the Company's outstanding securities
pursuant to a tender or exchange offer made directly to the Company's
stockholders, or

                                    (4)     a change in the composition of the
Board over a period of thirty-six (36) consecutive months or less such that a
majority of the Board members ceases, by reason of one or more contested
elections for Board membership, to be comprised of individuals who either (A)
have been Board members continuously since the beginning of such period or (B)
have been elected or nominated for election as Board members during such period
by at least a majority of the Board members described in clause (A) who were
still in office at the time the Board approved such election or nomination.

                           c.       CONSTRUCTIVE TERMINATION means within two
years after a Change of Control during which two-year period any of the
following events take place AND Employee gives written notice of her intent to
resign her employment with the Company and said
<PAGE>

resignation is provided to the Company within thirty (30) days of the event :
(i) a reduction in the Base Salary of the Employee of more than fifteen percent
(15%); (ii) a relocation (or demand for relocation) of Employee's place of
employment to a location more than fifty (50) miles from Employee's current
place of employment; (iii) a significant or material reduction in Employee's job
duties or level of responsibility.

                           d.       1934 ACT means the Securities Exchange Act
of 1934, as amended, and the rules and regulations promulgated thereunder.

                           e.       TERMINATION FOR CAUSE means a termination of
Employee's employment by the Company due to the Employee's:

                                    (1)     Misconduct that has a material
adverse effect on the Company's operations, prospects, reputation or business;

                                    (2)     Conviction of a felony;

                                    (3)     Act of fraud against, or theft of
property belonging to, the Company; or

                                    (4)     Gross negligence or the repeated
failure of Employee to perform her duties and responsibilities to the reasonable
satisfaction of the Board or superior after written notice of such failure, or
any breach by Employee of her fiduciary duties to the Company or any breach by
Employee of his confidentiality or proprietary information agreement with the
Company.

                           f.       TERMINATION WITHOUT CAUSE means a
termination of Employee's employment by the Company for any reason other than
those specified in subparagraph 3.e.(1) through (4) above.

                           g.       DISABILITY means that as a result of any
physical or mental injury or disability, Employee is unable to perform the
essential functions of her job, with or without reasonable accommodation. A
notice will be issued when the Company has reasonably determined that Employee
has become unable to perform substantially her services and duties hereunder
with or without reasonable accommodation because of any physical or mental
injury or disability, and that it is reasonably likely that she will not be able
to resume substantially performing her services and duties on substantially the
terms and conditions as set forth in this Employment Agreement.

                  4. EMPLOYMENT. The Company shall be entitled to all of the
benefits and profits arising from or incident to the work, services and advice
rendered by the Employee relating to the work performed for the Company. The
Employee shall make all information available to the Company that relates to the
Company's business of which she has any knowledge and shall not use any such
information or the benefits of any such information for her personal profit or
that of any third party. The Employee agrees to use her best efforts to promote
the interests of the Company including, where appropriate, the publication of
articles in medical and scientific journals and the participation in medical and
scientific seminars and symposiums
<PAGE>

relating to the business and affairs of the Company and/or her research efforts
performed for and on behalf of the Company.

                  5. DISCLOSURES. Employee shall promptly disclose in writing to
the officials designated by the Company to receive such disclosures, complete
information concerning each and every invention, discovery, improvement, device,
design, apparatus, practice, process, method or product (hereinafter referred to
as "Inventions"), whether Employee considers them patentable or not, made,
developed, perfected, devised, conceived or reduced to practice by Employee,
either solely or in collaboration with others, during the period of Employee's
employment by the Company, and up to and including a period of twelve (12)
months after termination of employment, whether or not during regular working
hours, relating either directly or indirectly to the business, products,
practices or techniques of the Company or to the Company's actual or
demonstrably anticipated research or development, or resulting from any work
performed by Employee for the Company or with the equipment, supplies,
facilities or confidential information of the Company.

                  6. CONFIDENTIALITY. Employee recognizes that her employment
with the Company will involve contact with information of substantial value to
the Company, which is not generally known in the trade and which gives the
Company an advantage over its competitors who do not know or use it, including
but not limited to techniques, designs, drawings, processes, inventions,
developments, equipment, prototypes, sales and customer information, and
business and financial information, relating to the business, products,
practices or techniques of the Company (hereinafter referred to as "Confidential
Information"). Employee shall at all times regard and preserve as confidential
such Confidential Information obtained by Employee from whatever source and
shall not, either during Employee's employment or thereafter, publish or
disclose any part of such Confidential Information in any manner, or use the
same except on behalf of the Company, without the prior written consent of the
Company. Further, Employee shall, during her employment and thereafter, refrain
from any acts or omissions that would reduce the value of such Confidential
Information to the Company.

                  7. ASSIGNMENT OF RIGHTS. Employee hereby agrees that any
Inventions made, developed, perfected, devised, conceived or reduced to practice
by Employee during the period of her employment by the Company, and any other
Inventions made, developed, perfected, devised, conceived or reduced to practice
by Employee during said period of twelve (12) months after termination of her
employment if based upon the Confidential Information of the Company, relating
either directly or indirectly to the business, products, practices or techniques
of the Company or to the Company's actual or demonstrably anticipated research
or development, or resulting from any work performed by Employee for the Company
or with the equipment, supplies, facilities or Confidential Information of the
Company, are the sole property of the Company, and hereby assigns and agrees to
assign to the Company, its successors and assigns, all of my right, title and
interest in and to said Inventions, and any patent applications or Letters
Patent thereon.

                                  NOTIFICATION

                  THIS AGREEMENT DOES NOT APPLY TO AN INVENTION FOR WHICH NO
EQUIPMENT, SUPPLIES, FACILITY, OR TRADE SECRET INFORMATION OF THE COMPANY WAS
USED AND WHICH WAS
<PAGE>

DEVELOPED ENTIRELY ON EMPLOYEE'S OWN TIME, AND (a) WHICH DOES NOT RELATE (1) TO
THE BUSINESS OF THE COMPANY OR (2) TO THE COMPANY'S ACTUAL OR DEMONSTRABLY
ANTICIPATED RESEARCH OR DEVELOPMENT, OR (b) WHICH DOES NOT RESULT FROM ANY WORK
PERFORMED BY EMPLOYEE FOR THE COMPANY, AS DEFINED AND PROVIDED BY SECTION 2870
OF THE CALIFORNIA LABOR CODE.

                  8. COVENANT OF COOPERATION. Employee shall, at any time during
employment or thereafter, upon request and without further compensation
therefor, but with all reasonable expenses incurred by Employee to be
reimbursed, do all lawful acts, including but not limited to the execution of
papers and oaths, the giving of testimony, and the obtaining of evidence that in
the opinion of the Company, its successors or assigns, may be necessary or
desirable for obtaining, sustaining, reissuing or enforcing Letters Patent in
the United States and throughout the world for said Inventions, and for
perfecting, recording or maintaining the title of the Company, its successors
and assigns, to said Inventions and to any patent applications made and any
Letters Patent granted for said Inventions in the United States and throughout
the world.

                  9. PATENT ENFORCEMENT. The Company shall have the sole
discretion whether to obtain, maintain, modify or enforce any domestic or
foreign patent for said Inventions assigned to the Company pursuant to this
Agreement. The Company is free to enter into any licensing or assignment
agreement with any third party or to use whatever means it deems best to
develop, promote or market said Inventions assigned to the Company pursuant to
this Agreement or any domestic or foreign patent thereof.

                  10. CLAIMS BY THIRD PARTY. As to any Inventions which were
made, developed, perfected, devised, conceived or reduced to practice by
Employee during the period of her employment by the Company, and up to and
including a period of twelve (12) months after termination of her employment,
but which are claimed for any reason to belong to an entity or person other than
the Company, Employee will promptly disclose the same in writing to the Company
and shall not disclose the same to others if the Company, within twenty (20)
days thereafter, shall claim ownership of such Inventions under the terms of
this Agreement.

                  11. RECORD KEEPING. Employee shall keep complete, accurate and
authentic accounts, notes, data and records of any and all of said Inventions in
the manner and form requested by the Company. Such accounts, notes, data and
records, including all copies thereof, shall be the property of the Company, and
upon its request, Employee will promptly surrender the same to it, or if not
previously surrendered, Employee will promptly surrender the same to the Company
at the conclusion of her employment.

                  12. RECORDS PROPERTY OF COMPANY. Employee agrees that all
accounts, notes, data sketches, drawings and other documents and records, and
all material and physical items of any kind, including all reproductions and
copies thereof, which relate in any way to the business, products, practices or
techniques of the Company or contain Confidential Information, made by Employee
or that come into Employee's possession by reason of her employment are the
property of the Company and shall be promptly surrendered to the Company at the
conclusion of Employee's employment.
<PAGE>

                  13. NON-SOLICITATION. During Employee's employment with the
Company and for one (1) year thereafter, Employee will not solicit any employee
of the Company to leave the Company for any reason or to accept employment with
any other company. As part of this restriction, Employee will not interview any
employee of the Company or provide any input to any third party regarding any
such person for the purpose of offering such person employment elsewhere during
the period in question. However, this obligation shall not affect any
responsibility Employee may have as an employee of the Company with respect to
the bona fide hiring and firing of Company personnel.

                  14. SEVERANCE. PAYMENTS AND OTHER BENEFITS IN THE EVENT OF
TERMINATION OF EMPLOYMENT FOLLOWING A CHANGE OF CONTROL.

                           a.  In the event that either of the following two
events occur within two years after a Change of Control, the Company will
provide the following payment and benefits to Employee: (i) Employee's
employment is terminated by the Company Without Cause, or (ii) Employee's
employment terminates as a result of a Constructive Termination:

                                    (1)     The Company shall make the
following payments to Employee:

                                            (A)     ACCRUED SALARY AND BENEFITS.
The Company shall pay Employee's Base Salary through the effective date of
termination of Employee's Employment. In addition to the Severance Payments
payable to an eligible employee as described below, such employee shall receive
the following: (i) payment for accrued but unused vacation time; and (ii) group
health coverage, including eligible medical, dental and vision insurance through
the last day of the calendar month during which the termination occurs (group
health coverage after such date being governed by COBRA.)

                                            (B)      SEVERANCE PAYMENTS.   The
Company shall pay to Employee 1.5 times the sum of (a) her Base Salary in effect
immediately prior to the Change of Control and (b) a payment equal to the higher
of (x) 100% of the Employee's annual target bonus as determined under the
Company's incentive compensation plan or (y) an average of the last three actual
bonuses accorded to Employee. If an annual incentive compensation plan has not
been implemented for the current year, then the determination in (y) will
govern.

                                            (C) MANNER OF PAYMENT. Severance
Payments may be paid in accordance with regular payroll periods, in a single
lump sum payment, or any combination thereof, as deemed appropriate by the
Company. Taxes and other appropriate deductions will be withheld; however, 401k
contributions will not be allowed.

                                    (2) The Company shall provide the following
benefits to Employee:

                                            (A)      COBRA.  An eligible
Employee's existing coverage under the Company's group health plan (and, if
applicable, the existing group health coverage for eligible dependents) will end
on the last day of the month in which the eligible Employee's employment
terminates. The eligible Employee and her eligible dependents may then be
eligible to elect temporary continuation coverage under the Company's group
health plan in accordance
<PAGE>

with the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended
("COBRA"). The eligible Employee (and, if applicable, her eligible dependents)
will be provided with a COBRA election form and notice which describe her rights
to continuation coverage under COBRA. If an eligible Employee elects COBRA
continuation coverage, then the Company will pay for COBRA coverage (such
payments shall not include COBRA coverage with respect to the Company's Section
125 health care reimbursement plan) for eighteen (18) months. After such period
of Company-paid coverage, the eligible Employee (and, if applicable, his or her
eligible dependents) may continue COBRA coverage at his or her own expense in
accordance with COBRA. No provision of this agreement will affect the
continuation coverage rules under COBRA. Therefore, the period during which the
eligible employee must elect to continue the Company's group health plan
coverage under COBRA, the length of time during which COBRA coverage will be
made available to the eligible employee, and all the eligible employee's other
rights and obligations under COBRA will be applied in the same manner that such
rules would apply in the absence of this Plan. In the event, however, an
Employee becomes eligible for benefits under another plan prior to the
expiration of the period in which the Company is paying benefit premiums, the
Company shall no longer be obligated to pay such benefit premiums. The Employee
is required to notify the Company of eligibility for benefits under another plan
and is expected to enroll in the new group plan at the first eligible
opportunity unless Employee chooses, at Employee's sole expense, to continue
COBRA benefits through the Company. If Employee fails to notify the Company of
Employee's eligibility for alternative benefits, the Company shall have the
right to discontinue payment of COBRA premiums upon thirty (30) days notice to
Employee. In no event shall a cash payment be made to Employee in lieu of the
payment of COBRA premiums. The payment of COBRA premiums by the Company shall
not extend the maximum eligible COBRA coverage period.

                                            (B)      OUTPLACEMENT SERVICES.
The Company will make available to Employee, upon her request, outplacement
services provided by a reputable outplacement counselor selected by the Company
for a period of six months following termination. The Company will assume the
cost of all such outplacement services. In no event will a cash payment be made
in lieu of outplacement benefits.

                  15. ACCELERATION OF STOCK OPTIONS IN THE EVENT OF A CHANGE OF
CONTROL. In the event of a Change of Control (whether or not followed by
termination of Employee's employment), all stock options under any Company stock
option plan which Employee holds at the time of such Change of Control shall
become fully "vested" (i.e., immediately exercisable). The Company shall also
extend the period of exercisability of those stock options to the maximum of
four years, or the natural expiration of the stock options, whichever is
earlier.

                  16. SEVERANCE PAYMENTS AND OTHER BENEFITS IN THE EVENT OF
TERMINATION OTHER THAN FOLLOWING A CHANGE OF CONTROL.

                           a.       In the event Employee's employment is
terminated Without Cause other than within two (2) years following a Change in
Control, the Company shall provide the payments and other benefits specified
below to Employee:
<PAGE>

                                    (1)     The Company shall make the following
payments to Employee:

                                            (A) ACCRUED SALARY AND BENEFITS.
The Company shall pay Employee's Base Salary through the effective date of
termination of Employee's Employment. In addition, employee shall receive the
following: (i) payment for accrued but unused vacation time; and (ii) group
health coverage, including eligible medical, dental and vision insurance
through the last day of the calendar month during which the termination
occurs (group health coverage after such date being governed by COBRA.)

                                            (B) SEVERANCE PAYMENTS.  The
Company shall pay to Employee a severance payment equal to twelve (12) months
of Employee's Monthly Salary, in effect immediately prior to termination.
This twelve-month period will be referred to as the Severance Period.

                                            (C) MANNER OF PAYMENT. These
Severance Payments may be paid in accordance with regular payroll periods over
the duration of the Severance Period, in a single lump sum, or any combination
thereof, as deemed appropriate by the Company. Taxes and other appropriate
deductions will be withheld however, 401(k) contributions will not be allowed.

                                    (2)     The Company shall provide the
following benefits to Employee

                                            (A) COBRA.  An eligible
Employee's existing coverage under the Company's group health plan (and, if
applicable, the existing group health coverage for eligible dependents) will end
on the last day of the month in which the eligible Employee's employment
terminates. The eligible Employee and her eligible dependents may then be
eligible to elect temporary continuation coverage under the Company's group
health plan in accordance with the Consolidated Omnibus Budget Reconciliation
Act of 1985, as amended ("COBRA"). The eligible Employee (and, if applicable,
her eligible dependents) will be provided with a COBRA election form and notice
which describe her rights to continuation coverage under COBRA. If an eligible
Employee elects COBRA continuation coverage, then the Company will pay for COBRA
coverage (such payments shall not include COBRA coverage with respect to the
Company's Section 125 health care reimbursement plan) for the Severance Period.
After such period of Company-paid coverage, the eligible employee (and, if
applicable, her eligible dependents) may continue COBRA coverage at her own
expense in accordance with COBRA. No provision of this agreement will affect the
continuation coverage rules under COBRA. Therefore, the period during which the
eligible employee must elect to continue the Company's group health plan
coverage under COBRA, the length of time during which COBRA coverage will be
made available to the eligible employee, and all the eligible employee's other
rights and obligations under COBRA will be applied in the same manner that such
rules would apply in the absence of this Plan. In the event, however, an
Employee becomes eligible for benefits under another plan prior to the
expiration of the period in which the Company is paying benefit premiums, the
Company shall no longer be obligated to pay such benefit premiums. The Employee
is required to notify the Company of eligibility for benefits under another plan
and is expected to enroll in the new group plan at the first eligible
opportunity unless Employee
<PAGE>

chooses, at Employee's sole expense, to continue COBRA benefits through the
Company. If the Employee fails to notify the Company of Employee's eligibility
for alternative benefits, the Company shall have the right to discontinue
payment of COBRA premiums upon thirty (30) days notice to Employee. In no event
shall a cash payment be made to eligible employees in lieu of the payment of
COBRA premiums. The payment of COBRA premiums by the Company shall not extend
the maximum eligible COBRA coverage period.

                                            (B) OUTPLACEMENT. The Company will
make available to Employee, upon her request, outplacement services provided by
a reputable outplacement counselor selected by the Company for a period of six
months following termination. The Company will assume the cost of all such
outplacement services. In no event will a cash payment be made in lieu of
outplacement benefits.

IN NO EVENT SHALL EMPLOYEE BE ENTITLED TO OR RECEIVE SEVERANCE BENEFITS UNDER
BOTH THIS PARAGRAPH 16 AND PARAGRAPH 14. Similarly, if Employee is eligible to
receive severance benefits under any other severance plan created by the Company
then it will reduce dollar for dollar any benefit due under this Agreement.

                  17. SECTION 280G LIMITATION ON SEVERANCE PAYMENTS. The
Severance Payments as described in Paragraph 14a(1)(B) of this Agreement shall
be reduced as necessary so that the present value, as determined in accordance
Section 280G(d)(4) of the Internal Revenue Code, of the sum of (i) the Severance
Payments and (ii) all other payments, if any, that must be taken into account
for purposes of computation under Section 280G(b)(2)(A)(ii) of the Internal
Revenue Code in respect of Employee does not exceed 2.99 times Employee's base
amount, as "base amount" is defined in Section 280G(b)(3) of the Internal
Revenue Code .

                  18. OUTSTANDING LOAN. Employee has an outstanding loan balance
due to the Company in the amount of $15,315. This loan balance will be forgiven
in its entirety if and when the Company determines, in its sole discretion, that
Employee has completed satisfactorily the technology transfer/manufacturing
outsourcing project. If a Termination Without Cause occurs prior to the loan
forgiveness date, then the loan balance would be forgiven at that time.
Otherwise, the entire loan balance is due and payable within thirty (30) days of
the effective date of any termination of Employee's employment.

                  19. RETENTION BONUS PROGRAMS. Employee will continue to
participate in the Retention Package program as explained in the memorandum to
Employee dated December 3, 1998 except that if the Company terminates Employee
Without Cause as defined in paragraph 3e herein prior to February 1, 2000, her
stock grant and stock option outlined in paragraphs 2 and 3 of the memorandum
dated December 3, 1998 will become immediately vested in full.

                  20. RESIGNATION, DEATH OR DISABILITY. Employee will not be
entitled to any Severance Benefits or Severance Payments under Paragraphs 14 or
16, or under any other plan, or any other provision of this Agreement, if her
employment is terminated by the Company for Cause or if her employment
terminates due to disability, death or resignation (other than a resignation
which constitutes a CONSTRUCTIVE TERMINATION).
<PAGE>

                  21. EXCLUSIVITY. Employee shall not, while employed by the
Company engage in any other employment or business venture for her account or on
behalf of others that relates, directly or indirectly, to the business and
affairs of the Company without the prior written consent of the Company.

                  22. PROHIBITION AGAINST ASSIGNMENT. Employee agrees that this
Agreement and the rights, interests and benefits hereunder shall not be
assigned, transferred, pledged or hypothecated in any way by Employee or any
executor, administrator, heir, legatee, distributee or any other person claiming
under Employee by virtue of this Agreement and shall not be subject to
execution, attachment or similar process. Any attempt to assign, transfer,
pledge or hypothecate or otherwise dispose of this Agreement or of such rights,
interests and benefits contrary to the foregoing provisions, or the levy of any
attachment or similar process thereon shall be null and void and without effect
and shall relieve the Company of any and all liability hereunder.

                  23. NOTICE. Any and all notices, designations, consents,
offers, acceptances or any other communication provided for herein shall be
given in writing by registered or certified mail, return receipt requested,
which shall be addressed, in the case of the Company, to its office in San
Diego, California, and in Employee's case to her last known place of residence
as reflected on the Company's records.

                  24. ENTIRE AGREEMENT. This Agreement, and any stock option or
stock purchase agreements between the Employee and the Company, constitute the
entire agreement between Employee and the Company and contains all of the
agreements between the parties with respect to the subject matter hereof; this
Agreement supersedes any and all other agreements, either oral or in writing,
between the parties with respect to the subject matter hereof.

                  25. BINDING EFFECT. This Agreement shall be binding upon and
inure to the benefit of Employee and the Company and their respective heirs,
legal representatives, executors, administrators, and successors.

                  26. NO OTHER AGREEMENTS. Employee affirms that Employee has no
agreement with any other party that would preclude her compliance with her
obligations under this Agreement as set forth above.

                  27. GOVERNING LAW. This Agreement shall be subject to and
governed by the laws of the State of California.

                  28. AMENDMENT OF AGREEMENT. No change or modification of this
Agreement shall be valid unless the same is in writing and signed by Employee
and the Company. No waiver of any provision of this Agreement shall be valid
unless in writing and signed by the person or party to be charged.

                  29. SEVERABILITY. If any portion or portions of this Agreement
shall be, for any reason, deemed to be invalid or unenforceable, the remaining
portion or portions shall nevertheless be valid, enforceable and carried into
effect, unless to do so would clearly violate the present legal and valid
intention of the parties hereto.
<PAGE>

                  30. BREACH. In the event either party breaches this Agreement
and the other party prevails in an action to enforce the terms of this
Agreement, the losing party agrees to pay to the prevailing party all reasonable
attorneys' fees and costs incurred by the prevailing party in prosecuting such
action, and all damages suffered by the prevailing party.

                  31. HEADINGS. The headings of this Agreement are inserted for
convenience only and are not to be considered in construction of the provisions
hereof.

                  32. WAIVER OR BREACH. The waiver by either of the parties
hereto of any breach of any provision hereof shall not be construed to be a
waiver of any succeeding breach of that provision or a waiver of any other
provision of this Agreement.

                  33. ARBITRATION OF DISPUTES. Any dispute arising under this
Agreement shall be resolved through final and binding arbitration conducted
pursuant to the rules of the American Arbitration Association. This shall be in
lieu of any right to a jury trial, which right is expressly waived.

                  34. GENERIC DRUG ENFORCEMENT ACT CERTIFICATION. The
undersigned, certifies that she (1) has never been charged with or convicted of
a federal felony for conduct relating to the development, approval, or
regulation of any drug product or device regulated by the United States Food and
Drug Administration, and (2) has never been debarred or subject to a debarment
proceeding under the Generic Drug Enforcement Act of 1992.

    (THIS SECTION HAS BEEN INTENTIONALLY LEFT BLANK FOR FORMATTING REASONS.)
<PAGE>

                  WHEREAS, the parties have executed this Agreement as of the
date first above written.

                                       MOLECULAR BIOSYSTEMS, INC.

                                       By:
                                          --------------------------------------

                                           Officer of Molecular Biosystems, Inc.

                                       By:
                                          --------------------------------------
                                           Joni Harvey

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00001-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00001-of-00352.parquet"}]]