Document:

EMPLOYMENT AGREEMENT
                              --------------------

This Employment Agreement is entered into as of the 27th day of November 1996 by
and between UNICO AMERICAN  CORPORATION,  a Nevada  corporation (the "Company"),
and Cary Cheldin (the "Executive").

WHEREAS, the Company desires to employ the Executive,  and the Executive desires
to accept such employment, on the terms and conditions of this Agreement.

Accordingly, the parties hereto agree as follows:

1.  Employment of Executive.
    -----------------------
Effective  12-1-1996,  the Company  shall employ the  Executive for the Term (as
hereinafter  defined)  to render the  services  and to perform  the duties  with
respect to the business of the Company as  hereinafter  provided.  The duties of
the Executive shall be the duties of executive vice president

1.1     Acceptance of Employment by the Executive.
        -----------------------------------------
The Executive  hereby  accepts the  employment  and agrees to fulfill the duties
described above. Under no circumstances shall the Executive be obligated without
his  consent to relocate  his  residence  in order to render the  services or to
perform his duties outside of the Los Angeles metropolitan area.

1.2     Termination of Existing Contracts.
        ---------------------------------
The Executive  hereby agrees that all agreements and contracts,  whether written
or oral,  relating to the current employment of the Executive will be terminated
as of the commencement of the Tern.

2.  Term of Employment.
    ------------------
The term of  Executive's  employment  under this  Agreement  (the "Term")  shall
commence on December 1, 1996, and continue until December 1, 2001.

3.  Compensation and Other Benefits.
    --------------------------------

3.1     Salary.
        ------
As  compensation  for services to be rendered  pursuant to this  Agreement,  the
Company shall pay the Executive,  during the Term, a salary at an annual rate of
$205,000  (the  "Annual  Salary")  to be  paid  in  equal  installments  no less
frequently than two (2) times per month in accordance with the Company's  normal
payroll  practices.  The Annual Salary shall be subject to increase from time to
time at the  discretion  of the Board of  Directors  of the  Company,  provided,
however, that the Annual Salary shall be increased,  effective January 1 of each
year during the Term, by an amount not less than the difference, if any, between

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(i) the rate of Annual Salary in effect on the immediately  preceding  January 1
multiplied by the aggregate  percentage  increase,  if any, in The United States
Department of Labor,  Bureau of Labor  Statistics  Consumer Price Index of Urban
Wage Earners and Clerical  Workers,  Los Angeles - Long Beach - Anaheim  Average
(the "Consumer Price Index"),  during the preceding twelve (12) calendar months,
and (ii) the  aggregate  amount of any  discretionary  increases  in the  Annual
Salary granted by the Board of Directors  (excluding any payments of a Mandatory
Bonus,  as defined below, or other  discretionary  bonus) during the immediately
preceding calendar year.

3.2     Annual Bonus.
        ------------
The Company  shall pay to the  Executive a bonus (the  "Mandatory  Bonus") on or
before December 31 of each year, provided that the net income of the Company for
the most recent four (4)  quarters  (prior to  deductions  for income  taxes and
current  Mandatory  Bonuses  but  including  discretionary  bonuses  paid to all
employees) is equal to or greater than $4,000,000  (the "Net Income Goal").  The
amount of said Mandatory Bonus shall be in an amount  determined by the Board of
Directors, in its discretion,  but shall not be less than an amount equal to one
hundred percent (100%) of the aggregate bonus paid to the Executive  during such
immediately preceding calendar year, less any amounts paid to the Executive as a
discretionary  bonus paid since the  immediately  preceding  January 1; provided
however, that in no event shall the Mandatory Bonus be reduced to less than zero
(0).

Nothing  herein  shall  prevent the Board of  Directors  from  electing,  in its
discretion,  to  grant a  bonus  to the  Executive,  in  such  amount  as may be
determined  by the Board of  Directors  in the event the Net Income  Goal is not
met.  Notwithstanding  the foregoing,  if the Executive is terminated other than
for Cause, the Executive will be entitled to the minimum  Mandatory Bonus amount
calculated  in  accordance  with the  foregoing,  regardless  of whether the Net
Income Goal is attained.

3.3     Participation in Employee Benefit Plans.
        ---------------------------------------
The Executive shall be permitted during the Term, if and to the extent eligible,
to participate in any group life,  hospitalization or disability insurance plan,
health program,  pension plan, similar benefit plan, vacation benefits, or other
so-called  "fringe  benefits"  of the  Company,  which may be available to other
comparable  or lower  ranking  executives  of the Company  generally on the same
terms as such other executives.

3.4     General Business Expenses.
        -------------------------
The Company shall pay or reimburse the  Executive  for all  reasonable  expenses
incurred by the Executive  during the Term in the performance of the Executive's
services  under this  Agreement.  Such  payment  shall be upon  presentation  of
itemized expense statements or vouchers or such other supporting  information as
the Company may require,  including,  whenever possible, actual bills, receipts,
or other evidence of expenditures.

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4.  Non-competition.
    ---------------
The Executive agrees that be shall not compete against the Company.

5.  Termination.
    ------------

5.1     Termination Upon Death.
        ----------------------
If  the  Executive  dies  during  the  Term,  this  Employment  Agreement  shall
terminate,  except that the Executive's legal  representatives shall be entitled
to receive (i) unpaid  Annual Salary  accrued up to the date of the  Executive's
death,  and  (ii) a pro rata  portion  of the  Mandatory  Bonus  payable  in the
calendar year  following the year during which such death  occurred equal to the
product of (a) the amount which, but for the Executive's  death, would have been
paid to the Executive as such Mandatory Bonus multiplied by (b) a fraction,  the
denominator  of which is 365 and the  numerator  of which is the  number of days
elapsed from the last previous January 1 to the date of the Executive's death.

5.2     Termination for Cause.
        ---------------------
Subject to all of the provisions  hereof, the Company has the right, at any time
during the Term, exercisable by serving written notice,  effective in accordance
with its terms, to terminate the Executive's employment under this Agreement and
discharge the Executive for "Cause" (as hereinafter  defined).  If such right is
exercised,  the Company's  obligation  to the Executive  shall be limited to the
payment of unpaid Annual Salary  accrued up to the effective  date  specified in
the  Company's  notice of  termination.  As used in this  Section  5.2, the term
"Cause" shall mean (i) chronic  alcoholism or drug addiction,  (ii) fraud, (iii)
unlawful appropriation of any money or other assets or properties of the Company
or any affiliate of the Company,  (iv) a material breach by the Executive of the
terms of this  Agreement,  (v) the  conviction  of the  Executive  of any felony
involving moral turpitude or other serious crime involving moral turpitude, (vi)
the Executive's gross moral turpitude  relevant to his office or employment with
the Company or any affiliate of the Company,  and (vii) the  Executives  willful
engagement in misconduct which is demonstrably  and materially  injurious to the
Company and its  subsidiaries  taken as a whole.  (No act, or failure to act, on
the part of the Executive shall be considered  "willful" unless done, or omitted
to be done, by the  Executive not in good faith and without a reasonable  belief
that the action or  omission  was in the best  interests  of the Company and its
subsidiaries.)

5.3     Termination Upon Disability.
        ---------------------------
If during  the Term the  Executive  becomes  physically  or  mentally  disabled,
whether totally or partially;  so that the Executive is unable  substantially to
perform his services  hereunder for (i) a period of four (4) consecutive  months
or (ii) short periods  aggregating  six (6) months during any twelve  (12) month
period,  the Company may at any time, while the disability is continuing,  after
the last day of the fourth  consecutive  month of  disability or the last day on
which the shorter periods of disability equal an aggregate of six (6) months, by
written notice to the Executive, terminate the Executive's employment hereunder.
If

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such right to terminate is exercised,  the Company's obligation to the Executive
shall be limited to the payment of (i) unpaid  Annual  Salary  accrued up to the
effective date specified in the Company's notice of termination  (which shall be
the last day of the calendar month in which such notice is given) and (ii) a pro
rata portion of the Mandatory  Bonus payable in the calendar year  following the
year  during  which such  disability  occurred  equal to the  product of (a) the
amount which, but for such suspension,  would have been paid to the Executive as
such Mandatory Bonus,  multiplied by (b) a fraction, the denominator of which is
365 and the  numerator  of which is the  number  of days  elapsed  from the last
previous  January 1 to the effective date  specified in the Company's  notice of
termination.

6.  Insurance.
    ---------
The  Company may from time to time apply for and take out in its own name and at
its own expense, naming itself or others as the designated beneficiary (which it
may change from time to time),  policies for health,  accident,  disability,  or
other  insurance  upon the  Executive  in any amount or amounts that it may deem
necessary or  appropriate to protect its interest.  The Executive  agrees to aid
the Company in procuring  such  insurance by submitting to medical  examinations
and by filling  out,  executing,  and  delivering  such  applications  and other
instruments in writing as may reasonably be required by an insurance  company or
companies to which any application or applications  for insurance may be made by
or for the Company.

7.  Indemnification.
    ---------------
To the fullest  extent  permitted  under the laws of the state of the  Company's
incorporation  at the  time of any  action,  the  Company  shall  indemnify  the
Executive,  if the Executive is made a party,  or threatened to be made a party,
to any threatened,  pending, or completed action,  suit, or proceeding,  whether
civil, criminal,  administrative,  or investigative,  by reason of the fact that
the  Executive is or was an officer or director of the Company or any  affiliate
of the Company,  in which  capacity the Executive is or was serving the Company,
against  any  and  all  liabilities,   costs,   expenses  (including  reasonable
attorneys' fees), judgments,  fines, and amounts paid in settlement actually and
reasonably incurred by him in connection with such action,  suit, or proceeding.
This  Section  7 shall  not limit in any way the  Executive's  rights  under any
agreement relating specifically to indemnification.

8.  Other Provisions.
    -----------------

8.1     Notices.
        -------
Any notice or other  communication  required or permitted  hereunder shall be in
writing  and  shall  be  delivered  personally,  telegraphed,  telexed,  sent by
facsimile  transmission,  by  courier,  or sent  by  certified,  registered,  or
overnight courier postage prepaid. Any such notice shall be deemed given when so
delivered  personally,  telegraphed,  telexed,  by courier, or sent by facsimile
transmission,  or, if  mailed,  five (5) days  after the date of  deposit in the
United States mail, as follows:

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       (i)  If to the Company, to:

       Unico American Corporation
       23251 Mulholland Drive
       Woodland Hills, California 91364
       Attention: President

       (ii)  If to the Executive, to:

       Cary Cheldin
       23251 Mulholland Drive
       Woodland Hills, CA 91364

Any party may change its  address  for notice  hereunder  by notice to the other
parties hereto.

8.2     Entire Agreement.
        ----------------
This Agreement contains the entire agreement between the parties with respect to
the subject matter hereof and supersedes all prior agreements,  written or oral,
with respect thereto.

8.3     Waivers and Amendments.
        ----------------------
This  Employment  Agreement  may be amended,  modified,  superseded,  cancelled,
renewed, or extended, and the terms and conditions hereof may be waived, only by
a written  instrument  signed by the parties or, in the case of a waiver, by the
party waiving  compliance.  No delay on the part of any party in exercising  any
right,  power, or privilege  hereunder  shall operate as a waiver  thereof,  nor
shall any  waiver on the part of any party of any  right,  power,  or  privilege
hereunder,  nor any single or partial exercise of any right, power, or privilege
hereunder, preclude any other or further exercise thereof or the exercise of any
other right, power, or privilege hereunder.

8.4     Governing Law.
        -------------
This Agreement shall be governed by and construed in accordance with the laws of
the  State of  California  applicable  to  agreements  made and to be  performed
entirely within such State.

8.5     Counterparts.
        ------------
This Agreement may be executed in two or more counterparts,  each of which shall
be deemed an original,  but all of which together  shall  constitute one and the
same instrument.

8.6     Headings.
        --------
The headings in the Agreement  are for reference  purposes only and shall not in
any way affect the meaning or interpretation of this Agreement.

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<PAGE>

8.7     Binding Effect.
        --------------
All of the terms and provisions of this Agreement  shall inure to the benefit of
and be binding upon the successors  and assigns of each of the parties,  whether
or not there shall have been a formal assignment hereof.

IN WITNESS  WHEREOF,  the parties have  executed  this  Agreement as of the date
first above written.

COMPANY:     UNICO AMERICAN CORPORATION
                        A Nevada Corporation

               BY:              /s/ Erwin Cheldin
                                -----------------
               NAME:            Erwin Cheldin
               ITS:             President

               BY:              /s/ Roger Platten
                                -----------------
               NAME             Roger Platten
               ITS:             Vice President

EXECUTIVE:                      /s/ Cary Cheldin
                                ----------------
                                Cary Cheldin

                                       6To:        Unico American Corporation                           January 10, 2000
           23251 Mulholland Drive
           Woodland Hills, CA 91364
           Attention: Erwin Cheldin, President

From:      Cary Cheldin
           23251 Mulholland Drive
           Woodland Hills, CA 91364

Re:        Amendment to Employment Agreement

Pursuant to Sections 8.1 and 8.3 of the "Employment  Agreement"  entered into on
the 27th day of November,  1996, between myself and Unico American  Corporation,
I, Cary Cheldin,  hereby agree to waive certain rights as described below. These
waivers are  retroactive  to December 1, 1996,  and shall remain  effective from
December 1, 1996,  until the expiration of the Employment  Agreement on December
1, 2001.  Nothing  contained  in the  following  waivers  shall be  construed to
require me to reimburse the company for any compensation, however defined, which
has already been paid to me.

Waivers:

1. I, Cary Cheldin,  hereby waive my right to the minimum annual salary increase
provided under Section 3.1 of the Employment  Agreement,  provided however, that
the annual salary in effect on December 31, 1999,  is not  decreased  during the
remaining term of the agreement.

2. I, Cary Cheldin,  hereby waive my right to  protection  against the company's
decision,  if any, to decrease my annual bonus, as provided under Section 3.2 of
the Employment Agreement.

By Executive:                    /s/ Cary Cheldin
                                 ----------------
                                 Cary Cheldin

Date:                            1-11-00

By Unico American Corporation:   /s/ Erwin Cheldin
                                 -----------------
                                 Erwin Cheldin

Date:                            1-11-00

By Unico American Corporation:   /s/ Roger Platten
                                 -----------------
                                 Roger Platten

Date:                            1-11-00

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