Document:

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                                                                 EXHIBIT NO. 4.2

                           CERTIFICATE OF DESIGNATIONS
                                       OF
                                   AMDL, INC.
                             A DELAWARE CORPORATION

        The undersigned, Gary Dreher and Vivian Frazier, hereby certify that:

        1. They are the duly elected and acting President and Secretary of AMDL,
Inc., a Delaware corporation (the "Corporation").

        2. The Corporation, in its Certificate of Incorporation, has authorized
10,000,000 shares of preferred stock. By resolution, the Board of Directors of
the Corporation has designated 11,000 shares of preferred stock authorized by
the Certificate of Incorporation as "Series A Preferred Stock." No shares of
Preferred Stock have been issued.

        3. Pursuant to authority given by the Corporation's Certificate of
Incorporation, the Board of Directors of the Corporation has duly adopted the
following recital and resolution:

           WHEREAS, Article IV of the Certificate of Incorporation of the
Corporation authorizes this Corporation to issue 10,000,000 shares of preferred
stock, $.001 par value per share, issuable from time to time in one or more
series (the "Preferred Stock").

           RESOLVED, the Board of Directors hereby determines that it is in the
best interests of this Corporation to designate 11,000 shares of the Preferred
Stock as "Series A" upon the following terms and conditions:

        Section 1. Designation. The initial series of Preferred Stock shall be
designated and known as "Series A Preferred Stock." The number of authorized
shares constituting such series shall be 11,000. The Series A Preferred Stock
shall have a par value of $.001 per share.

        Section 2. Definitions. For the purposes of this Certificate of
Designations, the following terms shall have the meanings indicated:

           "Common Stock" shall mean the Corporation's $.001 par value common
stock.

           "Conversion Price" has the meaning assigned to such term in Section
7(a).

           "Initial Conversion Price" shall mean $2.00 per share of Series A
Preferred Stock.

           "Junior Stock" shall mean any capital stock of the Corporation,
including without limitation the Common Stock, ranking junior to the Series A
Preferred Stock with respect to dividends, distribution in liquidation or any
other preferences, rights and powers.

           "Liquidation Preference" shall mean $500 per share of Series A
Preferred Stock.

           "Parity Stock" shall mean any capital stock of the Corporation
ranking on a parity with the Series A Preferred Stock with respect to dividends,
distributions in liquidation and all other preferences, rights or powers.

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           "Person" shall mean any individual, firm, corporation, partnership,
trust, incorporated or unincorporated association, joint venture, joint stock
company, government (or an agency or political subdivision thereof) or other
entity of any kind, and shall include any successor (by merger or otherwise) of
such entity.

           "Public Offering" shall mean any offering of the Common Stock to the
public pursuant to an effective registration statement under the Securities Act
of 1933, as then in effect, or any comparable statement under any similar
federal statute then in force, in which the aggregate gross proceeds shall be at
least $10,000,000.

           "Registration Statement" shall mean a registration statement under
the Securities Act of 1933, as then in effect, or any comparable statement under
any similar federal statute then in force.

           "Senior Stock" shall mean any capital stock of the Corporation
ranking senior to the Series A Preferred Stock with respect to dividends,
distribution in liquidation or any other preference, right or power.

        Section 3. Ranking. The Series A Preferred Stock shall, with respect to
rights on liquidation, dissolution or winding up, rank senior to all other
equity securities of the Corporation, including the Common Stock and any other
series or class of the Corporation's preferred or common stock, now or hereafter
authorized.

        Section 4. Dividends. The holders of shares of Series A Preferred Stock
shall be entitled to receive dividends at the rate of eight percent (8%) per
annum of the Liquidation Preference per share, payable semi-annually
("Dividends"). The Dividends shall commence to accrue on the date of purchase of
such shares of Series A Preferred Stock and shall be payable commencing July 15,
2000 and on January 15 and July 15 of each year thereafter (each a "Dividend
Date"), to holders of record on December 31 and June 30 of each year,
respectively. The Dividends shall be payable in shares of Common Stock at the
rate of one share of Common Stock for the equivalent dollar amount of the
Conversion Price in effect on the applicable Dividend Date. No fractional shares
of Common Stock will be issued in connection with the payment of Dividends. In
lieu of fractional shares of Common Stock, the Corporation shall issue one (1)
additional share of Common Stock to each holder of Series A Preferred Stock
entitled to the portion of the Dividend equal to a fraction of a share of common
stock. The Corporation shall declare and pay the Dividend on a current basis.

        Section 5. Voting Rights.

           (a) The holder of each share of Series A Preferred Stock shall have
the right to one vote for each share of Common Stock into which such holder's
shares of Series A Preferred Stock could then be converted, and with respect to
such vote, such holder shall have full voting rights and powers equal to the
voting rights and powers of the holders of Common Stock, and the holders of
Series A Preferred Stock shall be entitled to notice of any stockholders'
meeting in accordance with the bylaws of the Corporation and shall be entitled
to vote thereon together with the holders of shares of Common Stock.

           (b) Unless the consent or approval of a greater number of shares
shall then be required by law, the affirmative vote of the holders of more than
50% of the outstanding shares of the Series A Preferred Stock shall be necessary
to (i) authorize, increase the authorized number of shares of or issue
(including on conversion or exchange of any convertible or exchangeable
securities or by reclassification) any shares of any class or classes of Senior
Stock or Parity Stock or any additional shares of Series A Preferred Stock, (ii)
authorize, adopt or approve any amendment to the Articles of Incorporation, the
Bylaws or this Certificate of Designations that would increase or decrease the
par value of the shares of the Series A Preferred Stock, alter or change the
powers, preferences or rights of the shares of Series A Preferred Stock or alter
or change the powers, preferences or rights of any other capital stock of the
Corporation if after such alteration or change such capital stock would be
Senior Stock or Parity Stock, (iii) amend, alter or repeal the Articles of
Incorporation or this Certificate of Designations so as to affect the shares of
Series A Preferred Stock adversely, including, without limitation, by granting
any voting right to any holder of notes, bonds, debentures or other debt
obligations of the Corporation, or (iv) authorize or issue any security
convertible into, exchangeable for or evidencing the right to purchase or
otherwise receive any shares of any class or classes of Senior Stock or Parity
Stock.

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        Section 6. Liquidation, Dissolution or Winding Up.

           (a) In the event of any liquidation, dissolution or winding up of the
Corporation, either voluntary or involuntary, before any distribution or payment
to holders of Junior Stock may be made, the holder of each share of Series A
Preferred Stock shall be entitled to be paid an amount equal to the Liquidation
Preference of such share, plus all accrued or declared but unpaid dividends on
such shares of Series A Preferred Stock pro rated for the number of days from
the last Dividend Date to the date of declaration by the Board of Directors of
the winding up of the Corporation.

           (b) If, upon any liquidation, dissolution or winding up of the
Corporation, the assets of the Corporation available for distribution to the
holders of Series A Preferred Stock shall be insufficient to permit payment in
full to such holders of the sums which such holders are entitled to receive in
such case, then all of the assets available for distribution to holders of the
Series A Preferred Stock shall be distributed among and paid to such holders
ratably in proportion to the amounts that would be payable to such holders if
such assets were sufficient to permit payment in full. The consolidation or
merger of the Corporation into or with another corporation or corporations and
the sale of all or substantially all of the assets of the Corporation to another
corporation or any other entity shall be deemed a liquidation, dissolution or
winding up of the Corporation within the meaning of this Section 6.

        Section 7. Conversion of Preferred Stock into Common Stock.

           (a) Right to Convert. The outstanding shares of Series A Preferred
Stock shall be convertible, at any time at the option of the holders thereof,
subject to the restrictions set forth in Section 7(c), into fully paid and
nonassessable shares of Common Stock at the Initial Conversion Price, subject to
adjustment as set forth in this Section 7 (the "Conversion Price").

           (b) Number of shares of Common Stock Issuable upon Conversion. The
number of shares of Common Stock to be issued upon conversion of shares of
Series A Preferred Stock shall be equal to the product of (X) and (Y), where (X)
is a fraction, the numerator of which is the Liquidation Preference and the
denominator of which is the applicable Conversion Price and (Y) is the number of
shares of Series A Preferred Stock to be converted.

           (c) Automatic Conversion. The outstanding shares of Series A
Preferred Stock shall be automatically converted into shares of Common Stock at
the Conversion Price at such time as (i) the Common Stock is listed for trading
on the Nasdaq Small Cap Market or Nasdaq National Market System and (ii) a
Registration Statement covering the Common Stock issuable upon conversion of the
Series A Preferred Stock has been declared effective by the Securities and
Exchange Commission ("SEC").

           (d) Restrictions on Conversion. Notwithstanding the provisions of
Section 7(a) above, in the event of a Public Offering, shares of Series A
Preferred Stock may not be converted into shares of Common Stock during the
period of time commencing on the date the Corporation files a Registration
Statement with the SEC covering the Common Stock until the date which is the
earlier of (i) 270 days following the filing of the Registration Statement with
the SEC, or (ii) 180 days following the closing of the Public Offering.

           (e) Antidilution Adjustments. The Conversion Price of the Series A
Preferred Stock shall be adjusted from time to time in certain cases as follows:

               (i) Dividend, Subdivision, Combination or Reclassification of
Common Stock. If the Corporation shall, at any time or from time to time, (A)
declare a dividend on the Common Stock payable in shares of its capital stock
(including Common Stock), (B) subdivide the outstanding Common Stock, (C)
combine the outstanding Common Stock into a smaller number of shares, or (D)
issue any shares of its capital stock in a reclassification of the Common Stock
(including any such reclassification in connection with a consolidation or
merger in which the Corporation is the continuing corporation), then in each
such case, the Initial Conversion Price or the Conversion Price in effect at the
time of the record date for such dividend or at the effective date of such

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subdivision, combination or reclassification shall be adjusted to that price
which will permit the number of shares of Common Stock into which the Series A
Preferred Stock may be converted to be increased or reduced in the same
proportion as the number of shares of Common Stock are increased or reduced in
connection with such dividend, subdivision, combination or reclassification. Any
such adjustment shall become effective immediately after the record date of such
dividend or the effective date of such subdivision, combination or
reclassification. Such adjustment shall be made successively whenever any event
listed above shall occur. In the event, if a dividend is declared, such dividend
is not paid, the Conversion Price shall be adjusted to the Conversion Price in
effect immediately prior to the record date of such dividend.

               (ii) De Minimis Adjustments. No adjustment of the Conversion
Price shall be made if the amount of such adjustment would result in a change in
the Conversion Price per share of less than $.05 but in such case any adjustment
that would otherwise be required then to be made shall be carried forward and
shall be made at the time of and together with the next subsequent adjustment,
which together with any adjustment so carried forward, would result in a change
in the Conversion Price in excess of $.05 per share. All calculations under this
Section 7(e) shall be made to the nearest cent, or the nearest 1/100th of a
share, as the case may be. If the Corporation shall, at any time or from time to
time, issue Common Stock by way of dividends on any stock of the Corporation or
subdivide or combine the outstanding shares of the Common Stock, such amount of
$.05 (as theretofore increased or decreased, if such amount shall have been
adjusted in accordance with the provisions of this clause) shall forthwith be
proportionately increased in the case of a combination or decreased in the case
of a subdivision or stock dividend so as appropriately to reflect the same.
Notwithstanding the provisions of the first sentence of this Section 7(e)(iii),
any adjustment postponed pursuant to this Section 7(e)(ii) shall be made no
later than the earlier of (a) two years from the date of the transaction that
would, but for the provisions of the first sentence of this Section 7(e)(ii),
have required such adjustment and (b) the date of any redemption or conversion
of the shares of Series A Preferred Stock.

               (iii) Fractional Shares. Notwithstanding any other provision of
this Certificate of Designations, the Corporation shall not be required to issue
fractions of shares upon conversion of any shares of Series A Preferred Stock or
to distribute certificates which evidence fractional shares. In lieu of
fractional shares of Common Stock, the Corporation shall pay therefore, at the
time of any conversion of shares of Series A Preferred Stock as herein provided,
an amount in cash equal to such fraction multiplied by the Conversion Price then
in effect.

           (f) Reorganization and Reclassification Adjustment. If there occurs
any capital reorganization or any reclassification of the Common Stock of the
Corporation, then each share of Series A Preferred Stock shall thereafter be
convertible into the same kind and amounts of securities (including shares of
stock) or other assets, or both, which were issuable or distributable to the
holders of outstanding Common Stock of the Corporation upon such reorganization
or reclassification in respect of that number of shares of Common Stock into
which such shares of Series A Preferred Stock might have been converted
immediately prior to such reorganization or reclassification; and, in any such
case, appropriate adjustments (as determined in good faith by the Board of
Directors of the Corporation) shall be made to assure that the provisions set
forth herein (including provisions with respect to changes in, and other
adjustments of, the Conversion Price) shall thereafter be applicable, as nearly
as reasonably may be practicable, in relation to any securities or other assets
thereafter deliverable upon the conversion of the Series A Preferred Stock.

           (g) Mechanics of Conversion. The option to convert shall be exercised
by surrendering for such purpose to the Corporation, certificates representing
the shares to be converted, duly endorsed in blank or accompanied by proper
instruments of transfer, and at the time of such surrender, the Person in whose
name any certificate for shares of Common Stock shall be issuable upon such
conversion shall be deemed to be the holder of record of such shares of Common
Stock on such date, notwithstanding that the share register of the Corporation
shall then be closed or that the certificates representing such Common Stock
shall not then be actually delivered to such person.

           (h) Certificate as to Adjustments. Whenever the Conversion Price or
the securities or other property deliverable upon the conversion of the Series A
Preferred Stock shall be adjusted pursuant to the provisions hereof, the
Corporation shall promptly give written notice thereof to each holder of shares
of Series A

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Preferred Stock at such holder's address as it appears on the transfer books of
the Corporation and shall forthwith file, at its principal executive office and
with any transfer agent or agents for the shares of Series A Preferred Stock and
the Common Stock, a certificate, signed by the Chairman of the Board, Chief
Executive Officer or one of the Vice Presidents of the Corporation, and by its
Chief Financial Officer, its Treasurer or one of its Assistant Treasurers,
stating the adjusted Conversion Price and the securities or other property
deliverable per share of Series A Preferred Stock calculated to the nearest cent
or to the nearest one one-hundredth of a share and setting forth in reasonable
detail the method of calculation and the facts requiring such adjustment and
upon which such calculation is based. Each adjustment shall remain in effect
until a subsequent adjustment hereunder is required.

           (i) Reservation of Common Stock. The Corporation shall at all times
reserve and keep available for issuance upon the conversion of the shares of
Series A Preferred Stock, the maximum number of its authorized but unissued
shares of Common Stock as is reasonably anticipated to be sufficient to permit
the conversion of all outstanding shares of Series A Preferred Stock, and shall
take all action required to increase the authorized number of shares of Common
Stock if at any time there shall be insufficient authorized but unissued shares
of Common Stock to permit such reservation or to permit the conversion of all
outstanding shares of Series A Preferred Stock.

           (j) No Conversion Charge or Tax. The issuance and delivery of
certificates for shares of Common Stock upon the conversion of shares of Series
A Preferred Stock shall be made without charge to the holder of shares of Series
A Preferred Stock for any issue or transfer tax, or other incidental expense in
respect of the issuance or delivery of such certificates or the securities
represented thereby, all of which taxes and expenses shall be paid by the
Corporation.

        Section 8. No Redemption of Series A Preferred Stock. The Corporation
shall not have the right to redeem the Series A Preferred Stock.

        Section 9. Notice of Certain Events. In case the Corporation shall
propose at any time or from time to time (A) to declare or pay any dividend
payable in stock of any class to the holders of Common Stock or to make any
other distribution to the holders of Common Stock, (B) to offer to the holders
of Common Stock rights or warrants to subscribe for or to purchase any
additional shares of Common Stock or shares of stock of any class or any other
securities, rights or options, (C) to effect any reclassification of its Common
Stock, (D) to effect any consolidation, merger or sale, transfer or other
disposition of all or substantially all of the property, assets or business of
the Corporation which would, if consummated result in the mandatory conversion
of shares of Series A Preferred Stock, or (E) to effect the liquidation,
dissolution or winding up of the Corporation, then, in each such case, the
Corporation shall mail to each holder of shares of Series A Preferred Stock via
first class mail at such holder's address as it appears on the transfer books of
the Corporation, a written notice of such proposed action, which shall specify
(1) the date on which a record is to be taken for the purpose of such dividend,
distribution or rights or warrants or, if a record is not to be taken, the date
as of which the holders of shares of Common Stock of record to be entitled to
such dividend, distribution or rights are to be determined, or (2) the date on
which such reclassification, consolidation, merger, sale, conveyance,
dissolution, liquidation or winding up is expected to become effective, and such
notice shall be so given as promptly as possible but in any event at least ten
(10) business days prior to the applicable record, determination or effective
date, specified in such notice.

        Section 10. Certain Remedies. Any registered holder of shares of Series
A Preferred Stock shall be entitled to an injunction or injunctions to prevent
breaches of the provisions of this Certificate of Designations and to enforce
specifically the terms and provisions of this Certificate of Designations in any
court of the United States or any state thereof having jurisdiction, this being
in addition to any other remedy to which such holder may be entitled at law or
in equity.

        Section 11. Method of Election. For purposes of this Certificate of
Designations, any election required or allowed to be made by the majority of the
holders of Series A Preferred Stock shall be effective upon receipt by the
Corporation of the written consent of a majority of such holders.

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        Section 12. Status of Reacquired Shares. Shares of Series A Preferred
Stock which have been issued and converted shall (upon compliance with any
applicable provisions of the laws of the State of Delaware) have the status of
authorized and unissued shares of Preferred Stock issuable in series
undesignated as to series and may be redesignated and reissued.

        The undersigned President and Secretary of AMDL, Inc. hereby declare and
certify under penalty of perjury that the foregoing Certificate is the act and
deed of the Corporation and that the facts herein stated are true.

        Executed at Tustin, California on December ___, 1999.

                                        ________________________________________
                                        GARY L. DREHER President

                                        ________________________________________
                                        VIVIAN FRAZIER, Secretary

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                                                               EXHIBIT NO. 10.54

                                   AMDL, INC.

                              EMPLOYMENT AGREEMENT

        This Employment Agreement (the "Agreement") is made this 23rd day of
November, 1999 by and between AMDL, INC., a Delaware corporation (the "Company")
and Gary L. Dreher, (the "Employee").

                                    RECITALS

        A. The Company desires to employ the Employee and the Employee desires
to be employed by the Company as of the "Effective Date" hereof, upon the terms
and conditions set forth in this Agreement.

        B. Effective October 1, 1999, the Company and Employee entered into a
"Salary Continuation Agreement," which Salary Continuation Agreement shall be
cancelled and of no further force or effect as of the Effective Date.

                                    AGREEMENT

        NOW, THEREFORE, in consideration of the mutual promises and covenants
contained herein, the parties agree as follows:

                                    ARTICLE 1
                          EMPLOYMENT, TERMS AND DUTIES

        1.1 TERM. The Company agrees to employ the Employee and Employee hereby
accepts such employment in accordance with the terms of this Agreement, for a
period of five (5) years commencing on January 1, 2000 (the "Effective Date"),
unless the Agreement is earlier terminated as provided herein.

        1.2 SERVICES AND EXCLUSIVITY OF SERVICES. So long as this Agreement
shall continue in effect, Employee shall devote Employee's full business time,
energy and ability exclusively to the business, affairs and interests of the
Company and matters related thereto; shall use Employee's best efforts and
abilities to promote the Company's interests; and shall perform the services
contemplated by this Agreement in accordance with policies established by the
Board of Directors of the Company (the "Board"). Without the prior express
written authorization of the Board, Employee shall not, directly or indirectly,
during the term of this Agreement: (a) render services to any other person or
firm for compensation, or (b) engage in any activity competitive with or adverse
to the Company's business, whether alone, as a partner, officer, director,
employee or significant investor of or in any other entity. (An investment of
greater than 5% of the outstanding capital or equity securities of an entity
shall be deemed significant for these purposes.)

            1.2.1 OTHER BUSINESS ACTIVITIES. Company and Employee acknowledge
that Employee is a member of the Board of Directors of Optimumcare Corporation
with an equity interest that may exceed 5% if Employee exercises his stock
options. Optimumcare Corporation is involved with the care of psychiatric
patients, and is deemed to be an association which is not competitive with the
Company, and will not require any commitment of employee's business time or
effort. Company and Employee also acknowledge that Employee's wholly owned
company, Medical Market International LLC, is and will continue to be involved
in testing of wine grapes and wine for sugar. This work will be performed by
others, and will not require any of Employee's business time or effort.

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        1.3 DUTIES AND RESPONSIBILITIES. During the term of this Agreement,
Employee shall serve as President and Chief Executive Officer of the Company;
shall discharge the obligations and responsibilities normally associated with
such office; and shall use his best efforts to promote the interests of the
Company and refrain from acts which may adversely affect the reputation or
business of the Company.

        1.4 RETURN OF PROPRIETARY PROPERTY. The Employee agrees that all
property in the Employee's possession belonging to the Company, including
without limitation, all documents, reports, manuals, memoranda, computer
print-outs, customer lists, credit cards, keys, identification, products, access
cards and all other property relating in any way to the business of the Company
is the exclusive property of the Company, even if the Employee authored, created
or assisted in authoring or creating, such property. The Employee shall return
to the Company all such documents (and copies and summaries thereof) and
property immediately upon termination of employment or at any time upon the
request of the Company. All personal property brought by Employee to Company
shall be returned to Employee.

                                    ARTICLE 2
                            COMPENSATION AND BENEFITS

        2.1 BASE SALARY. During the term of this Agreement, the Company will pay
the Employee a base salary at the rate of Eighteen Thousand Five Hundred and
00/100 Dollars ($18,500.00) per month (the "Base Salary") commencing on January
1, 2000, payable in accordance with the Company's usual payroll practice.

        2.2 STOCK OPTIONS. The Company has previously granted to Employee
options to purchase an aggregate of 250,000 shares of the Company's common stock
at an exercise price of $.68 per share (the "Options") pursuant to the Company's
1999 Stock Option Plan. The Options are represented by an Incentive Stock Option
Agreement dated June 30, 1999 and a Non-Qualified Stock Option Agreement dated
June 30, 1999. Nothing shall prevent the Company from granting additional stock
options to Employee in the future.

        2.3 BONUS. The Company shall pay to Employee an annual cash bonus (the
"Bonus") equal to the amount computed hereinbelow (the "Performance Share
Amount") for each of the calendar years, 2000, 2001, 2002 or 2003, (each, a
"Bonus Year") as the case may be, subject to meeting the Company's "Sales Goal"
(as that term is defined below) for the applicable Bonus Year. The Performance
Share Amount shall equal 100,000 times the difference between: (i) the "Average
Bid Price" (as defined below) for the applicable Bonus Year, and (ii) $.68;
provided, however, in any Bonus Year, the maximum Bonus payable to Employee
shall not exceed ten percent (10%) of net sales of the Company for such Bonus
Year. The Bonus shall be payable as follows: On January 31 of each Bonus Year,
an amount equal to eighty percent (80%) of the Bonus shall be paid to Employee
based upon the internal unaudited financial statements of the Company for the
prior year. The balance of the Bonus for such Bonus Year (as adjusted for the
actual amount of Bonus computed based the final year end audited financial
statements of the Company) shall be paid when such financial statements are
available, but without interest, provided, however, if the audited financial
statements are not available by April 15 of the next year, Company shall pay the
balance of the Bonus computed on the basis of the unaudited internal financial
statements, and the parties shall adjust any amounts due to or from Employee
therefor when the audited financial statements become available.

            2.3.1 The "Average Bid Price" shall mean for any fiscal (calendar)
year the average of the Bid Price of the Company's Common Stock as quoted on
NASDAQ, the OTC Bulletin Board or on the "pink sheets" published by the National
Daily Quotation Bureau, as the case may be, on the trading day nearest the 15th
and 30th day of each month (each, a "Quote Date") for the months of July through
December for such Bonus Year. Assuming the Sales Goal is met for 2000, the
following is an example of the calculation of the Bonus for Bonus Year 2000:

                  The Bid Prices on each Quote Date are summed and the sum is
divided by 12. If the Average Bid Price for the months of July through December
2000 was $4.12, then the Performance Share Amount for 2000 shall be $344,000
[($4.12 - $.68) x 100,000].

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<PAGE>   3

            2.3.2 The Sales Goal for 2000 shall be $2,000,000. The Sales Goal
for 2001 shall be $4,000,000. The Sales Goal for 2002 shall be $6,000,000. The
Sales Goal for 2003 shall be $9,000,000. "Sales Goal" is defined as net sales as
that term is defined by generally accepted accounting standards, (i.e. gross
sales, less returns and allowances) of medical, diagnostic, cosmetic or
therapeutic products or devices and related services, whether sold by the
Company as an OEM for other manufacturers or distributors or manufactured and
distributed directly by the Company.

            2.3.3 The Bonus payable to Employee shall be due and payable only if
Employee is employed on the last day of each fiscal year; provided, however, if
Employee is terminated by the Company without "cause," then the Bonus shall be
payable for such year regardless of the date of termination, assuming the Sales
Goal is met for such Bonus Year.

        2.4 TERMINATION FOLLOWING A CHANGE IN CONTROL. The Company and Employee
have entered into that certain Salary Continuation Agreement dated October 1,
1999 ("Continuation Agreement") that provides for the payment to Employee of
Termination Benefits following a Termination Event and a Change in Control (as
defined in Section 2.4.1 below). After a Change in Control (as defined in
Section 2.4.1) of the Company and the occurrence of a Termination Event (as
defined in Section 2.4.2), the Employee shall be entitled to Termination
Benefits (as defined in Section 2.4.3) during the term of this Agreement, all as
provided in this Agreement.

            2.4.1 DEFINITION OF "CHANGE IN CONTROL." A "Change in Control" of
the Company shall be deemed to have occurred upon the occurrence of any one or
more of the following events:

                  (a) any "person" (as such term is used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act")),
other than the Employee or a trustee or other fiduciary holding securities under
an employee benefit plan of the Company, hereafter becomes the "beneficial
owner" (as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of the Company representing 30% or more of the
combined voting power of the Company's then outstanding securities;

                  (b) during any period (other than any period prior to the
execution of this Agreement), individuals who at the beginning of such period
constitute the Board and any new directors (other than directors designated by a
person who has entered into an agreement with the Company to effect a
transaction described in paragraph (a) or (c) of this Section 2.4.1) whose
election by the Board or nomination for election by the Company's shareholders
was approved by a vote of at least a majority of the directors then still in
office who either were directors at the beginning of the period or whose
election or nomination for election was previously so approved, cease for any
reason to constitute a majority thereof; or

                  (c) the shareholders of the Company approve a merger or
consolidation of the Company with any other corporation, other than a merger or
consolidation which would result in the voting securities of the Company
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity) at least 51% of the combined voting power of the voting
securities of the Company or such surviving entity outstanding immediately after
such merger or consolidation; or

                  (d) the shareholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or disposition by the
Company of all or substantially all of the Company's assets.

            2.4.2 DEFINITION OF "TERMINATION EVENT." A Termination Event shall
be deemed to have occurred upon the occurrence of any one or more of the
following events:

                  (a) Termination by the Company of Employee's employment for a
reason other than the Employee's willful and continued failure to substantially
perform the duties with the Company (other than any such failure resulting from
incapacity due to physical or mental illness or any such actual or anticipated
failure by the Employee for reasons set forth in Section 2.4.2(b) below) after a
written demand for substantial performance

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<PAGE>   4

is delivered to the Employee by the Board, which demand specifically identifies
the manner in which the Board believes that the Employee has not substantially
performed his duties.

                  For purposes of this Section 2.4.2(a), no act, or failure to
act, on the part of the Employee shall be deemed "willful" unless done, or
omitted to be done, not in good faith and without reasonable belief that such
action or omission was in the best interest of the Company.

                  (b) The occurrence of any of the following events described in
subparagraphs (i) - (vii) of this paragraph (b), without the express written
consent of the Employee. Notwithstanding any other provision of this Agreement,
the Employee's continued employment shall not constitute consent to, or a waiver
of rights with respect to, any circumstance constituting a Termination Event as
described in this Section 2.4.2(b).

                      (i) the assignment of any duties inconsistent with the
        Employee's status as President of the Company or a substantial adverse
        alteration in the nature or status of his responsibilities from those in
        effect immediately prior to the Change in Control of the Company;

                      (ii) a reduction of the Employee's annual salary by the
        Company as in effect on the date thereof or as the same may be increased
        from time to time except for across-the-board salary reductions
        similarly affecting all senior executives of the Company and all senior
        executives of any person in control of the Company;

                      (iii) the relocation of the Company's principal executive
        offices to a location more than fifty (50) miles from the location of
        such offices immediately prior to the Change in Control of the Company
        or the Company's requirement that the Employee be based anywhere other
        than the Company's principal executive offices except for required
        travel on the Company's business to an extent substantially consistent
        with the Employee's present business travel obligations;

                      (iv) the failure by the Company, without the consent of
        the Employee, to pay any portion of the Employee's current compensation
        except pursuant to an across-the-board compensation deferral similarly
        affecting all senior executives of the Company and all senior executives
        of any person in control of the Company, within seven days of the date
        such compensation is due;

                      (v) the failure by the Company to continue in effect any
        compensation plan in which the Employee participates immediately prior
        to the Change in Control of the Company which is material to the
        Employee's total compensation, including but not limited to the
        Company's profit sharing plan, or any substitute plans adopted prior to
        the Change in Control of the Company, unless an equitable arrangement
        (embodied in an ongoing substitute or alternative plan) has been made
        with respect to such plan, or the failure by the Company to continue the
        Employee's participation therein (or in such substitute or alternative
        plan) on a basis not materially less favorable, both in terms of the
        amount of benefits provided and the level of the Employee's
        participation relative to other participants, as existed at the time of
        the Change in Control of the Company;

                      (vi) the failure by the Company to continue to provide the
        Employee with benefits substantially similar to those currently enjoyed
        under any of the Company's pension, life insurance, medical, health and
        accident, or disability plans in which the Employee was participating at
        the time of the Change in Control of the Company, the taking of any
        action by the Company which would directly or indirectly materially
        reduce any of such benefits or deprive the Employee of any material
        fringe benefit enjoyed by the Employee at the time of the Change in
        Control of the Company, or the failure by the Company to provide the
        Employee with the number of paid vacation days to which the Employee is
        entitled on the basis of years of service with the Company in accordance
        with the Company's normal vacation policy in effect at the time of the
        Change in Control of the Company; or

                      (vii) the failure of the Company to obtain a satisfactory
        agreement from any successor to assume and agree to perform this
        Agreement, as contemplated in Section 3.1.

                                      -4-
<PAGE>   5

                  (c) The term "date of termination" used in this Agreement
shall mean the date on which a Termination Event is deemed to have occurred.

            2.4.3 DEFINITION OF "TERMINATION BENEFITS;" PAYMENT OF TERMINATION
BENEFITS.

                  (a) The term "Termination Benefits" shall mean the payment or
provision of all of the following at such times as provided below:

                      (i) salary through the date of termination at the rate in
        effect at that time, plus all other amounts to which the Employee is
        entitled under any compensation plan of the Company, shall be paid at
        the time such payments are due, but in any event no later than six (6)
        months after the date of termination;

                      (ii) a severance payment (in an amount equal to twelve
        (12) months' salary at the rate in effect on the termination date
        (hereinafter, "Severance Payment") shall be paid in twelve (12) equal
        monthly payments after the date of termination; provided, however, that
        the Severance Payment will be reduced to the maximum amount, determined
        under Section 280G(b) of the Internal Revenue Code of 1986, as amended
        (the "Code"), which may be paid to the Employee and not be deemed
        "excess parachute payments" (as defined in Section 280G(b) of the Code),
        if any;

                      (iii) the Company shall pay all legal fees and expenses
        incurred by the Employee as a result of such termination (including all
        such fees and expenses, if any, incurred in contesting or disputing any
        such termination or in seeking to obtain or enforce any right or benefit
        provided by this Agreement or in connection with any tax audit or
        proceeding to the extent attributable to the application of Section
        280G(b) of the Code, to any payment or benefit provided hereunder),
        within five days after request for payment by the Employee accompanied
        with such evidence of fees and expenses incurred as the Company
        reasonably may require; and

                      (iv) any and all options to purchase securities of the
        Company held by Employee on the date of termination (whether issued
        prior to or after the date hereof and whether or not fully vested and
        immediately exercisable) shall be fully vested and immediately
        exercisable by the Employee from and after the date of termination.

                  (b) The Employee shall not be required to mitigate the amount
of any payment provided for in this Section 2.4.3 by seeking other employment or
otherwise, nor shall the amount of any payment or benefit provided for in this
Section 2.4.3 be reduced by any compensation earned by the Employee as the
result of employment by another employer, by retirement benefits, by offset
against any amount claimed to be owed by the Employee to the Company, or
otherwise.

                  (c) The Company will vigorously and diligently defend any
contest or dispute between the Employee or the Company and the Internal Revenue
Service in connection with any tax audit or proceeding to the extent
attributable to the application of Section 280G(b) of the Code to the payments
made or to be made to the Employee pursuant to this Section 2.4. The Company
agrees to indemnify and hold the Employee harmless from any loss or expense
experienced by the Employee as the result of the failure by the Company to fully
perform its obligation under this Section 2.4.

            2.4.4 TERMINATION IN THE ABSENCE OF A CHANGE IN CONTROL. The
Employee hereby acknowledges and agrees that the rights and benefits provided
under this Agreement shall be triggered to benefit the Employee only after a
Change in Control of the Company and the occurrence of a Termination Event and
shall not be triggered to benefit the Employee in the absence of a Change in
Control of the Company. These provisions have been entered into solely to
address the legitimate concerns of the Company arising as the result of a
possible Change in Control of the Company, all as summarized in the Recitals to
this Agreement. The provisions of this Agreement are not intended to and do not
purport to provide any assurances or rights to the Employee's continued
employment with the Company.

                                      -5-
<PAGE>   6

            2.4.5 SALARY CONTINUATION AGREEMENT. The Salary Continuation
Agreement is hereby terminated effective as of the Effective Date of this
Agreement.

        2.5 ADDITIONAL BENEFITS. Employee and Company agree and acknowledge that
Employee shall be entitled to participate in Company's medical insurance
program, as it exists from time to time for all employees.

        2.6 VACATION. Employee shall be entitled to twenty-five (25) days paid
vacation each year during the term of this Agreement. Vacation time shall accrue
at the rate of 2.08 days per month until 25 days have been accrued.

        2.7 OVERALL QUALIFICATION. The Company reserves the right to modify,
suspend or discontinue any and all benefits at any time (whether before or after
termination of employment) without notice to or recourse by Employee so long as
such action is taken generally with respect to all other senior level executives
and does not single out Employee.

        2.8 LIFE INSURANCE. The Company, at the Company's expense, subject to
Employee's insurability, will obtain term life insurance on the life of Employee
in the amount of $2 million; $1 million of the benefits shall be payable to the
Company and $1 million of the benefits shall be payable to Employee's estate.
Employee acknowledges that a portion or all of the cost of such insurance may be
deemed compensation to Employee.

                                    ARTICLE 3
                                   TERMINATION

        3.1 This Agreement and all obligations hereunder (except the obligations
contained in Article 5, which shall survive any termination hereunder) shall
terminate upon the earliest to occur of any of the following:

            3.1.1 EXPIRATION OF TERM; RESIGNATION. The expiration of the term
provided for in Section 1.1 or the voluntary termination or resignation by
Employee or retirement from the Company in accordance with the normal retirement
policies of the Company or the mutual agreement of the Company and Employee. In
the event of any termination under this Section 3.1.1, Employee will not be
entitled to receive any further payments or benefits from the Company and the
Company shall be released from any and all obligations under this Agreement.

            3.1.2 DEATH OR DISABILITY OF THE EMPLOYEE. The death or any illness,
disability or other incapacity of Employee that results in Employee being unable
to perform Employee's duties with the Company on a full-time basis for a period
of three (3) consecutive months, or for shorter periods aggregating ninety (90)
or more days in any twelve (12) month period. If Employee shall become ill,
disable or incapacitated as set forth above, Employee's employment may be
terminated by written notice from the Company to Employee, after which Employee
will not be entitled to receive any further payments or benefits from the
Company and the Company shall be released from any and all obligations under
this Agreement.

            3.1.3 FOR CAUSE. The Company may, by delivering written notice to
Employee, terminate Employee's employment and all of the Employee's rights to
receive Base Salary, Bonus and any benefits hereunder for cause. Such written
notice shall be effective upon delivery to Employee. For purposes of this
Agreement, the term "cause" shall be defined as any of the following:

                  (i) Employee's material breach of any of the duties and
        responsibilities under this Agreement (other than as a result of
        illness, incapacity or disability), which breach is not cured within ten
        (10) days after written notice thereof to Employee, or engaging in any
        activities competitive with or injurious to the Company, in either case
        in the good faith reasonable judgment of the Board of Directors;

                  (ii) Employee's conviction by, or entry of a plea of guilty or
        nolo contendere in, a court of competent and final jurisdiction for a
        felony or a misdemeanor involving moral turpitude (other than minor
        traffic violations or similar offenses);

                                      -6-
<PAGE>   7

                  (iii) Employee's commission of an act of fraud upon the
        Company or personal dishonesty, or willful or negligent misconduct;

                  (iv) Employee's willful failure or refusal to perform
        Employee's duties or responsibilities under this Agreement or Employee's
        material violation of any duty of loyalty to the Company or a breach of
        Employee's fiduciary duty involving personal profit.

               In the event Employee's employment is terminated at any time for
cause, Employee will not be entitled to any further payments or benefits from
the Company and the Company shall be immediately released from any and all
obligations under this Agreement.

        3.2 EXCLUSIVE REMEDY. Employee agrees that the payments expressly
provided and contemplated by Section 3 of this Agreement shall constitute the
sole and exclusive obligation of the Company in respect of Employee's employment
with and relationship to the Company and that the payment thereof shall be the
sole and exclusive remedy for any breach of contract claim which may be brought
as a result of any termination of Employee's employment.

                                    ARTICLE 4
                                BUSINESS EXPENSES

        4.1 BUSINESS EXPENSES. During the term of this Agreement, to the extent
that such expenditures satisfy the criteria under the Internal Revenue Code for
deductibility for federal income tax purposes as ordinary and necessary business
expenses, the Company shall reimburse Employee promptly for reasonable business
expenditures, including travel, entertainment and parking, made and
substantiated in accordance with policies, practices and procedures established
from time to time by the Company and, incurred in the pursuit and furtherance of
the Company's business and goodwill.

        4.2 CAR ALLOWANCE. Company and Employee acknowledge that Employee will
need to use his personal automobile for business travel and hereby agree that
the sum of $750.00 to be paid monthly shall constitute complete and proper
reimbursement for this usage and maintenance expense. No vouchers need be
supplied by Employee.

                                    ARTICLE 5
                            CONFIDENTIAL INFORMATION

        5.1 CONFIDENTIAL INFORMATION. At all times during and after the
expiration of this Agreement, the Employee will hold in strict confidence and,
without the express prior written authorization of the Company's Board of
Directors, the Employee shall not disclose to any person or entity, any
financial or marketing data of the Company (including, without limitation,
financial statements of the Company), or any technique, process, formula,
developmental or experimental work, work in progress, business methods, business
or marketing plans or trade secrets of or used in the business of the Company,
or any other proprietary or confidential information relating to the Company or
the services, business affairs of the Company, including, without limitation,
any information relating to inquiries made by the Company (collectively, the
"Confidential Information"). The Employee agrees that the Employee will not make
use of any of the Confidential Information during the term of this Agreement
other than for the exclusive benefit of the Company and that the Employee shall
not make any use whatsoever of the Confidential Information at any time after
termination of the Employee's employment with the Company. Upon termination of
such employment, the Employee shall deliver to the Company (i) all documents,
records, notebooks, work papers and all similar repositories containing any
Confidential Information or any other information concerning the Company,
whether prepared by the Employee, the Company or anyone else and (ii) all
tangible personal property belonging to the Company that is in the Employee's
possession. The foregoing restrictions shall not apply to (i) information which
is or becomes, other than as a result of a breach of this Agreement, generally
available to the public, (ii) information related to the terms of the Employee's
compensation or benefits as an employee of the Company, (iii) information known
to the Employee prior to the effective date of this Agreement or (iv) the
disclosure of information required pursuant to a subpoena or other legal
process; provided that the Employee

                                      -7-
<PAGE>   8

shall notify the Company, in writing, of the receipt of any such subpoena or
other legal process requiring such disclosure immediately after receipt thereof
and the Employee shall assist the Company in any efforts it may undertake to
quash such subpoena or other legal process or obtain an appropriate protective
order prior to any such disclosure by the Employee.

        5.2 SOLICITATION OF EMPLOYEES. In consideration and recognition of the
fact that Employee's position with the Company is an executive position
involving fiduciary responsibility to the Company and access to the Company's
confidential, proprietary information, Employee agrees that Employee will not,
directly or indirectly, solicit or take away any employees of the Company for
employment by any enterprise that competes with, or is engaged in a
substantially similar business to, the business of the Company as presently
conducted or proposed to be conducted. This Section 5.2 shall survive for a
period of one (1) year from the date of termination of this Agreement.

                                    ARTICLE 6
                               DISPUTE RESOLUTION

        6.1 DISPUTES SUBJECT TO ARBITRATION. Except as to any action which
requires ex parte relief, expeditious orders of court, restraining orders,
injunctive relief or the like in order to maintain the status quo or protect a
party's interest, any controversy, dispute or claim arising out of, in
connection with, or in relation to the interpretation, performance or breach of
this Agreement or otherwise arising out of the execution hereof including any
claim based on contract, tort or statute, shall be resolved, at the request of
any party, by submission to binding arbitration at the Orange County, California
offices of Judicial Arbitration & Mediation Services, Inc. ("JAMS"), and any
judgment or award rendered by JAMS shall be final, binding and unappealable, and
judgment may be entered by any state or federal court having jurisdiction
thereof. Any party can initiate arbitration by sending written notice of
intention to arbitrate (the "Demand") by registered or certified mail to all
parties and to JAMS. The Demand shall contain a description of the dispute, the
amount involved, and the remedy sought. If and when a Demand for arbitration is
made by any party, the parties agree to execute a Submission Agreement, provided
by JAMS, setting forth the rights of the parties and the rules and procedures to
be followed at the arbitration hearing (the "Rules"). Any controversy concerning
whether a dispute is an arbitrable dispute or as to the interpretation or
enforceability of this Section 6.1 shall be determined by the arbitrator. The
arbitrator shall be a retired or former judge agreed to between the parties from
the JAMS' panel. If the parties are unable to agree, JAMS shall provide a list
of three available judges and each party may strike one. The remaining judge
shall serve as the arbitrator. The parties shall be entitled to full rights of
discovery as set forth in the Code of Civil Procedure for civil actions tried in
the Superior Courts of the State of California, subject to such orders as may be
entered by JAMS. Each party hereto intends that the provisions to arbitrate set
forth herein shall be valid, enforceable and irrevocable. The designation of a
situs or a governing law for this undertaking or the arbitration shall not be
deemed an election to preclude application of the Federal Arbitration Act, if it
would be applicable. In his or her award, the arbitrator shall allocate, in his
or her discretion, among the parties to the arbitration all costs of the
arbitration, including the fees of the arbitrator and reasonable attorneys'
fees, costs and expert witness expenses of the parties. The parties hereto agree
to comply with any award made in any such arbitration proceedings that has
become final in accordance with the Rules and agree to the entry of a judgment
in any jurisdiction, upon any award rendered in such proceeding becoming final
under the Rules. The arbitrator shall be entitled, if appropriate, to award any
remedy in such proceedings permitted in a civil proceeding under the laws of the
State of California including, if appropriate, monetary damages, specific
performance and all other forms of legal and equitable relief. In the event JAMS
is no longer in business and there is no comparable successor, then the parties
shall use the services of the American Arbitration Association, Inc. ("AAA"),
subject to AAA's Commercial Arbitration Rules and the provisions of this Section
6.1. In the event the AAA is no longer in business and there is no comparable
successor, then the parties shall agree upon another arbitrator within ten (10)
calendar days after receipt of the Demand. If the parties cannot agree upon
another arbitrator, then a single neutral arbitrator shall be appointed pursuant
to Section 1281.6 of the California Code of Civil Procedure.

                                      -8-
<PAGE>   9

                                    ARTICLE 7
                                  MISCELLANEOUS

        7.1 MODIFICATIONS. This Agreement supersedes all prior agreements and
understandings between the parties relating to the employment of the Employee by
the Company, and it may not be changed or terminated orally. No modification,
termination, or attempted waiver of any other provisions of this Agreement will
be valid unless in writing signed by both parties hereto.

        7.2 ENFORCEABILITY AND SEVERABILITY. If any term of this Agreement is
deemed void, voidable, invalid or unenforceable for any reason by an arbitrator
or a court of competent jurisdiction, such term will be deemed severable from
all other terms of this Agreement, which will continue in full force and effect.
In the event that any term is held by an arbitrator or a court of competent
jurisdiction to over broad as written, the term will be deemed amended to narrow
its application to the extent necessary to make the term enforceable.

        7.3 WITHHOLDING. To the extent required by any applicable law,
including, without limitation, any federal or state income tax or excise tax law
or laws, the Federal Insurance Contributions Act, the Federal Unemployment Tax
Act or any comparable federal, state or local laws, the Company retains the
right to withhold such portion of any amount or amounts payable to the Employee
under this Agreement as the Company deems necessary.

        7.4 CAPTIONS. The various headings or captions in this Agreement are for
convenience only and shall not affect the meaning or interpretation of this
Agreement.

        7.5 GOVERNING LAW. The validity, interpretation, construction,
performance, enforcement and remedies of or relating to this Agreement, and the
rights and obligations of the parties hereunder, shall be governed by the
substantive laws of the State of California, and any and every legal proceeding
(other than arbitration proceedings conducted in accordance with Article 5
hereof) arising out of or in connection with this Agreement shall be brought in
the appropriate courts of the State of California, each of the parties hereby
consenting to the exclusive jurisdiction of said courts for this purpose.

        7.6 SUCCESSION. This Agreement shall inure to the benefit of and be
binding upon the Company and its successors and assigns and any such successor
or assignee shall be deemed substituted for the Company under the terms of this
Agreement for all purposes. As used herein, "successor" and "assignee" shall
include any person, firm, corporation or other business entity which at any
time, whether by purchase, merger or otherwise, directly or indirectly acquires
the stock of the Company or to which the Company assigns this Agreement by
operation of law or otherwise. The obligations and duties of Employee hereunder
are personal and otherwise not assignable. Employee's obligations under Sections
1.4, 3.2, 5.1, 5.2 and 6.1 of this Agreement will survive the termination of
Employee's employment, regardless of the manner of such termination.

        7.7 WAIVERS. No failure on the part of either party to exercise, and no
delay in exercising, any right or remedy hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any right or remedy
hereunder preclude any other further exercise thereof or the exercise of any
right or remedy granted hereby or by law.

        7.8 INJUNCTIVE RELIEF. The Employee acknowledges and agrees that any
breach or threatened breach of this Agreement or the Proprietary Information
Agreement might cause irreparable harm to the Company and that in such case, the
Company would have no adequate remedy at law. In the event of a breach or
threatened breach by the Employee of this Agreement, the Company may, in
addition to any other rights and remedies it may have pursuant to this
Agreement, immediately seek any judicial action that the Company may deem
necessary or appropriate, including without limitation, the obtaining of
injunctive relief against the Employee without the necessity of posting a bond
or other security and without prejudice to any other remedies which may be
available to the Company at law or in equity.

                                      -9-
<PAGE>   10

        7.9 ENTIRE AGREEMENT. This Agreement constitutes the entire
understanding between the parties hereto with respect to the subject matter
hereof and supersedes all prior or contemporaneous agreements or understandings,
oral or written, between the parties hereto with respect to the subject matter
hereof.

        7.10 REPRESENTATION BY COUNSEL; INTERPRETATION. The Company and Employee
each acknowledges that each party to this Agreement has been represented by
counsel in connection with this Agreement and the matters contemplated by this
Agreement. Accordingly, any rule of law or any legal decision that would require
interpretation of any claimed ambiguities in this Agreement against the party
that drafted it has no application and is expressly waived. The provisions of
this Agreement shall be interpreted in a reasonable manner to effect the intent
of the parties.

        7.11 NOTICES. All notices, requests, demands or other communications
under this Agreement shall be in writing and shall be validly given or made to
another party if given by personal delivery, telex, facsimile, telegram, or if
deposited in the United States mail, certified or registered, postage prepaid,
return receipt requested. If such notice, demand or other communication is given
by personal delivery, telex, facsimile or telegram, service shall be
conclusively deemed made at the time of receipt. If such notice, demand or other
communication is given by mail, such notice shall be conclusively deemed given
forty-eight (48) hours after the deposit thereof in the United States mail
addressed to the party to whom such notice, demand or other communication is to
be given as hereinafter set forth:

        If to Company:       AMDL, Inc.
                             2492 Walnut Avenue, Suite 100
                             Tustin, California  92780-7039

        If to Employee:      Gary L. Dreher
                             6301 Acacia Hill Drive
                             Yorba Linda, California  92886

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

                                  "EMPLOYEE"

                                  ______________________________________________
                                  Gary L. Dreher

                                  "COMPANY"

                                  By: __________________________________________
                                      Vivian B. Frazier, Chief Financial Officer

                                      -10-

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